Eurocommercial Properties N.V. (ECMPA) Earnings Call Transcript & Summary

Hello, and welcome to the Eurocommercial Properties Full Year Annual Results 2021. Please note, this conference is being recorded. [Operator Instructions] I will now hand over to your host, Evert van Garderen, Chief Executive Officer, to begin today's conference. Thank you.

Good morning, everyone, and thank you for joining us this morning. I'm happy to be on this call with Roberto Fraticelli, our CFO; and Peter Mills, our CIO, to present your commercial results for the year 2021. After my introduction, Peter Mills will talk in more detail about the property portfolio and ESG, followed by Roberto Fraticelli, who will discuss in more detail the financial results. I will start with an overview of the operations of Eurocommercial during the financial year 2021, and we'll finish this presentation later with some remarks on the dividend proposal and the new dividend policy. We then open the call for any questions and suggestions you may have. Operationally, the business in 2021 can be split more or less in 2 halves. And whereas the first half of 2021 are still significantly impacted by COVID-19, we are pleased to report that the second half of 2021 showed a strong operational performance. The diversification, over 4 countries, and the quality of the EUR 4 billion retail property portfolio have again been key to the performance of the company during 2021. After the sales of properties announced today, the new weightings are as follows: Belgium, 15%; France, 21%; Sweden, 23%; and Italy, 41%. Our suburban shopping centers focused on everyday goods and anchored by hypermarkets and supermarkets showed strong resilience. 62% of the space in these shopping centers is dedicated to essential and everyday goods. Our 5 flagship centers have more exposure to discretionary retail due to their different function, but still have 41% exposure to essential and everyday goods. Due to lockdown orders from governments, our shopping centers have been closed several times in 3 of the 4 geographies where we operate our shopping centers. Only Sweden has seen some restrictions, but no closures. On average, our centers have been closed for 3 months in 2021. And the graph provides a good overview of what happened since the start of the pandemic in respect of lockdowns, footfall numbers and sales in our shops. In the second half of 2021, there was full recovery in retail sales after the centers reopened, albeit on a slightly reduced footfall. The retail sales in the second half of 2021 have been very strong when compared to the previous year, but also when compared to 2019, as the overall turnover of the shops in the portfolio was 1.4% better. Sweden was the star with plus 14% compared to 2020 and plus 5.7% compared to 2019. Also Italy, with 41% weighting in the portfolio, scored remarkably well with a plus of 39% compared to 2020 and flat compared to 2019. We were very encouraged by the latest available turnover numbers in our stores, which are the February 2022 numbers, showing even an overall increase of 2.7% for the portfolio compared to the same month pre-pandemic levels of 2019. If we look at the various sectors and compare 2021 turnovers to 2019, we see some clear winners, which are the hypermarkets and supermarkets, but also gifts and jewelry, sports and home goods. Health and beauty, telecom and electrical also fully recovered to pre-pandemic levels. Clearly, food and beverage still had more difficult circumstances during the second half of 2020 due to restrictions, including the face mask, limiting opening hours and the health pass. Despite the 2021 pandemic, it was another active leasing year. We are still well positioned to lease our retail space to attractive tenants under sustainable conditions at affordable rent levels. Introducing new tenants and new concepts of existing tenants will ensure that our shopping centers remain attractive for the customers and continue to have their purpose and stay relevant in their catchments. We are proud to be able to report that on 264 relettings and renewals, last year that was 277, but still more than the 245 in 2019, an average rental uplift of 5.1% was achieved. As you can see from the bar chart, the uplift on renewals and relettings varies over time. But over a 10-year period, we're still in very positive territory. The volatility is very much the result of which lease transactions are concluded in which period. The country breakdown shows the usual pattern that in Belgium and Sweden, we have more renewals and relettings than in France and Italy, which is explained by the average length of the leases and tenant break options. It is important to note that the leasing activity did not slow down during 2021 and that we were able to attract new tenants with our 100 new lettings, achieving an uplift of 7.2%. These new deals were concluded under normal lease conditions and terms, so no need for short-term leases or extraordinary concessions. This leasing activity is continuing with already 61 new leases signed as from the 1st of January until to date. Over the past years, the word indexation was hardly mentioned as indexations was very low and barely contributed to rental growth. This started changing since the summer of 2021, and we now see material indexation appearing again. Although the indexation rates differ among our countries, the 2022 average indexation for the entire portfolio is assessed at 3.6%. In Italy, the indexation was 3.8%, and both for France and Sweden, it's 2.8%. For Belgium, it's a bit more difficult to calculate the indexation for 2022 as every month, those leases, which started in that particular month, are indexed using the [ index ] for that month. This being the case, we will only know what the indexation invoice was by the end of the year. Therefore, we used an estimate of 5.6%, having regard to the average for the first 3 months of 2022, which was 6.4%, and the expectations about what the index to be used will be for the rest of 2022. The indexation is expected to contribute to the rental income for 2022 for an amount of around EUR 7 million. And as the occupancy cost ratios for our tenants are low for the sector, on average around 10%, the rents will remain affordable also including the indexation. For Sweden, the indexation has already been invoiced and collected, and in France and Italy, most of the billing is taking place in the second quarter of 2022. Low vacancy is usually a good indicator for the quality of the portfolio. Over the last 10 years, we have reported vacancy rates for our property portfolio ranging between 0.5% and 1.6%. The EPRA vacancy rate remained very low at 1.5% in December 2021 for the entire portfolio. For France, the rate was slightly higher than the portfolio average. But since December, a number of new lettings, particularly for some larger units, have been achieved. So we expect the vacancy rate in France to improve in the first half of 2022. Our leasing and rent collection teams have again been extremely busy in 2021 with the execution of our strategy for the lockdown periods, which was to find mutually acceptable solutions for rent payments and the rent concessions for the lockdown periods only and to keep the existing leasing agreements unchanged. This strategy resulted in very high rent collection rates for Belgium and Sweden. And we are pleased to report that for 2021, we have already collected 96% of the invoiced rents in Belgium and 98% in Sweden. In Italy, we also had a good score taking into account the long lockdown periods in that country. Of the due and collectible rents, 98% is collected, meaning that we have nearly finished all negotiations on the remaining outstanding amounts with tenants. For France, we report a lower collection rate, which is due to the complicated French government support package for tenants for the third COVID-19 wave and the time it will take before tenants receive their money from the government. Upon receipt, the tenants then have 12 months to pay their rent to their landlord. This obviously slows down the collection of rent outstanding for the months March, April and May 2021. In our interim report for the first 6 months of 2021, we reported a total amount for rent concessions for 2021 of EUR 14 million, which is about 6% of the annual portfolio rent. We are currently reporting an amount of EUR 13 million as we have now finalized most of the negotiations with tenants and the granted amount was slightly lower than the amount assessed in the summer. On the map, you can see that Eurocommercial owns 2 of the 3 largest shopping centers in the Milan area. We own Carosello and 50% of Fiordaliso. The other 50% of Fiordaliso is owned by our joint venture partner, Gruppo Finiper, who also owns Il Centro, the largest shopping center in the north of the Milan area. If you look at their locations and their retail offer you can understand why we call Carosello and Fiordaliso flagship shopping centers. Last year, we presented our largest shopping center in Gigli, as a nice example of our leasing activities. This year, we will discuss the remerchandising of the shopping center, Fiordaliso, in Milan as a nice example of our leasing activity. The redevelopment and remerchandising of Fiordaliso started in 2018, when the Finiper hypermarket firstly reduced in size, allowing the innovation of the East Mall. Part of the first phase, which was completed on time for Christmas 2019, included the opening of a new Primark, the relocation in the center of an enlarged H&M and an enlarged OVS, plus the reconfiguration of a Media World store. The second phase, which started at the end of 2020 saw the remodeling of the Eastern entrance with 10 newly refurbished units and the subsequent repositioning of the hypermarket to the outside, although still connected to the shopping center through the Eastern entrance. In the third phase, the vacant former hypermarket was demolished and partly converted into a new multilevel car park and partly converted into 7,000 square meters of 10 new shops, which opened in November 2021 for new retailers, including Adidas, Hollister, New Yorker, Game7, while JD Sports and Bershka relocated to new enlarged stores. The fourth and final phase has recently started and involves the refurbishment of 2,500 square meter food court with the addition of 6 new pre-let restaurants, including wagamama, Mexican restaurant, Calavera and [ Giusto Spirito ], scheduled to be completed by the end of the summer of 2022. The works will also include the refurbishment of the remainder of the mall, thereby completing Fiordaliso retail offer and reconfirming it as the dominant regional shopping center to the south of Milan with a total of 150 stores. Part of the whole process of remerchandising of the center includes also the entrance of new retailers who have committed to Fiordaliso such as Sephora, which will take unit previously occupied by JD Sports; Signor Vino, which will take the unit previously occupied by the small Bershka; and completing the restaurants offered by Piazza Italia, which has already taken the unit of [ Risto 's ] free flow restaurant, strengthening also the Media World Piazza and finally, Miniso, a Japanese inspired lifestyle product retailer, offering high-quality household goods, cosmetics and food at affordable prices. Finally, also Apple consolidated its position in the center, refurbishing its store and enlarging it by taking 150 square meter extra space. The project's success can be seen by Fiordaliso's outstanding performance during 2021, when footfall was 6.1% higher than in the pre-pandemic 2019. And 70% of this footfall was realized in the second half of 2021, in particular, October and November showed strong growth figures due to the opening of the new part in the mall. And this is the moment to hand over to Peter Mills, who will discuss in more detail our property portfolio and will report on our environmental, social and government strategy and performance.

Thank you, Evert Jan. Overall, the valuations increased by 0.8% since the properties were last independently valued in June, and slightly decreased by 0.3% over the 12 months. Generally, the 6-month valuation increase resulted from stable or even marginally higher initial yields or exit yields depending on valuation methodology applied to higher net operating income resulting from the rental uplifts achieved on the renewals and relettings and higher-than-anticipated indexation. The overall EPRA net initial yield on the portfolio increased from 5% to 5.1%. And in their reporting, the value has generally identified the low vacancy levels in the portfolio and solid income supported by steady tenant demand and rent affordability with the OCRs reassuringly remaining at around the low pre-pandemic levels. In Belgium, the value of Woluwe shopping declined by 0.6% over 6 months, mainly due to a slight downward correction in ERVs and a more conservative approach to the future extension. In France, where our valuations were more or less flat over 6 months, the overall EPRA net in this yield remains at 5%, although it is worth noting that excluding the prime mixed-use central Paris asset, Passage du Havre, with its low initial yield of only 3.7%, the yield on the remaining predominantly suburban and provincial hypermarket anchored shopping centers is 5.4%. In Italy, although the overall EPRA net initial yield was slightly up at 5.4%, the valuations increased by 1.4% over 6 months, resulting from higher income, particularly generated from the 3 Italian flagships, the Gigli, Fiordaliso and Carosello, which together are valued at a net initial yield of 5.1%, with the remaining 5 smaller hypermarket anchored shopping centers valued at 6%. In Sweden, the valuations increased by 1.4% over 6 months, again, mainly as a result of higher net operating income with the overall net initial yield remaining at 5%. The Swedish values were able to refer to a range of shopping center transactions at the end of last year, including Solna Centrum, Väsby and Bålsta Center, all completing net yields of 5% or just below. We have again provided a valuation split separating our 5 flagship shopping centers, which are illustrated here grouped together. These flagships increasingly attract a broad international tenant base as we have just seen in the remerchandising slide on Fiordaliso, which follows similar remerchandising at the Gigli that we presented last year. These assets representing 45% of the portfolio are much larger with an average value of over EUR 400 million and are lower yielding at around 4.7%. The remaining 20, mainly suburban hypermarket-anchored shopping centers, have different and more defensive characteristics with over 60% of their floor space devoted to a broad range of essential and everyday retail, including groceries and a range of services supporting their more local communities. These assets comprise 55% of the portfolio. They are much smaller with an average value of around EUR 100 million and are higher-yielding at 5.4% overall. During 2021, the company completed the sale of Les Trois Dauphins, Grenoble, its city center mixed-use investment to the Credit Agricole Group for a price of EUR 34.4 million. This was followed in December by the sale of Chasse Sud, the Géant hypermarket anchored retail park located south of Lyon, for a price of EUR 80 million. In addition, this year, we have already agreed and today announced 2 further sales. On Tuesday, we completed the sale of Les Grands Hommes, Bordeaux for a price of EUR 22.5 million. Then yesterday, we sold the 50% ownership of the office and residential parts of Passage du Havre in Central Paris, together with 2 smaller adjoining buildings, to our joint venture partner, AXA, for a price of EUR 57 million. The company will remain the asset manager and owner of 50% of the retail gallery in the main building of Passage du Havre, with its GLA of around 14,000 square meters, including the main anchor, Fnac and around 40 tenants. These sales form the final parts of the company's EUR 200 million disposal program announced in August 2020, including the sales at the end of that year of its only other 2 standalone retail parks in the portfolio, both located in Sweden at Moraberg outside Södertälje and Bronsen in Norrköping. The sale of its small mixed-use properties in Grenoble and Bordeaux, where asset management initiatives and remerchandising have been completed, leaves the company with a more homogenous shopping center portfolio in its 4 markets and is also consistent with the decision to sell its nonretail holding in Passage du Havre. On the acquisition side, last November saw the company complete the purchase from its joint venture partner, AXA, of their 50% share in Shopping Etrembières at a price of EUR 45 million. Together with nearby Val Thoiry this purchase increases our exposure to this important and wealthy region of France, right next to the Swiss border and Geneva. Our ESG and business strategies remain carefully aligned so that business decisions can be approached with a more long-term view in order to evaluate both their environmental and social-economic impact and the future demands and expectations of our customers, tenants and employees. Our approach is articulated around these 3 strategic pillars shown on the slide: Be green, be engaged and be responsible. Be green forms the foundation of our operations and provides us with the opportunity to make changes that will reduce our imprint and operational costs as we focus on the transition to a low carbon economy with the target to operate carbon neutral by 2030. To reduce our carbon emissions, we have set a reduction target for our Scope 1 and 2 emissions to be 0 by 2030. To achieve this, we have developed a carbon pathway and we continue to improve the environmental quality of our shopping centers by implementing standards and technologies to improve energy and water efficiency and waste recycling. This includes reducing energy consumption, procuring renewable electricity and where possible, generating energy on-site through further solar panel installations, rock heating and groundwater heating and cooling. We are investigating how to reduce our Scope 3 emissions and will set a reduction target on those carbon emissions. During 2021, we updated our green lease documentation following constructive collaboration with our tenants with whom we exchange ESG ambitions, targets and responsibilities. As part of its environmental policy, the company uses the comprehensive range of environmental criteria incorporated in the BREEAM certification process in order to standardize and improve the sustainable quality of its buildings and their management. In February this year, we completed our initial certification program with all our shopping centers being BREEAM certified 3 years ahead of the original target date of 2025. During this year, we also initiated our sustainable finance program, closing 3-year sustainability-linked loans and later sustainably linked interest rate swap contracts, all containing sustainability KPIs. We remain fully engaged with our customers and tenants and our shopping centers continue to form an integral part of their local communities, bringing improved social and environmental values. The company have established and, in 2021, further expanded the Eurocommercial Retail Academy illustrated on this slide, working together with our retailers to improve sales technique and customer service, and therefore, the overall shopping experience. The Retail Academy is already well established in all 7 Swedish shopping centers and the 3,600 staff employed within. The response has been very positive among participants, and we have received equally positive feedback on the program and its content from central management at many of the retail companies. The academy is therefore being rolled out in Italy and France, with the objective to have it fully established in at least 15 shopping centers by the end of 2023. Also last year, despite the difficulties arising from COVID-19, we have undertaken several further engagement surveys with our customers with improving satisfaction scores, while introducing Net Promoter Scores in order to more closely monitor customer satisfaction. This year, tenant surveys in every shopping centers are scheduled following early postponement due to the pandemic. We launched job portals in almost all our shopping centers last year to promote local employment opportunities. At Fiordaliso, we ran the Generation Italy program with Intesa SanPaolo to assist young people to find employment through training and education. And in Woluwe Shopping, pictured here, the center organizes and supports a program to identify and encourage young entrepreneurial talent who can establish small-scale businesses to broaden their experience and commercial education. I've already mentioned the BREEAM certification program illustrated on this slide, which also shows other ESG performance awards in 2021, including the EPRA Gold Award for sustainability reporting for an eighth consecutive year. The company achieved its highest-ever score of 84 in the 2021 GRESB Assessment, a continuous improvement from previous years and an increase of 21 points since 2018. This result is both above the GRESB average and our peer group average. And as a result, Eurocommercial maintained its Green Star status for the eighth consecutive year, receiving 4 GRESB stars in 2021. And I will now hand over to Roberto Fraticelli for the financial review.

Thanks, Peter. Hello, everybody. Let's start with the numbers. Okay. This slide, you will see shortly. Yes. This gives you a quick overview of the most important financial data. You see the total net borrowings at December decreased slightly to EUR 1.68 billion from the EUR 1.77 billion in 2020. And you can also see that our loans are spread among 15 -- more than 15 different banks with a particular concentration, let's say, around 30% for the Dutch, the German and the Italian banks. In April, we closed a 50-year (sic) [ 3-year ] sustainability-linked loan, like Peter mentioned, for a total amount of EUR 100 million with ABN AMRO on 2 properties in Italy. And in May, we entered into sustainability linked revolving credit facilities with ING for an amount of EUR 25 million. March, so this month, we also signed a new 5-year loan of EUR 66.5 million with ING to refinance 2 existing loans on the Curno shopping centers in Italy, which was expiring -- were expiring in April 2022. The new loan qualifies as a green loan, and the relevant proceeds will be used to refinance Curno, which is a green asset, and also a sustainability-linked loan as the margin is linked to 2 sustainability KPIs at group level and 2 at asset level. And the average term of the loan book, as you can see, is almost 4 years, with most repayments, which are foreseen in the years 2025 and 2026. Also, the overall interest rate, including margins at -- was 2% compared to 1.9% in December, and 82% of interest costs are hedged mostly by interest rate swaps, but also by a number of fixed interest coupon loans. And you see that also, leverage interest rate swap hedging term is almost 6 years. If we go then to the next slide, our fantastic loan-to-value. Yes, the loan-to-value ratio, which is calculated on the basis of proportionally consolidated balance sheet as per 31st of December after reducing purchases costs decreased to 42.3%, compared to December when it was 43.8% in 2020. For comparison purposes, our loan-to-value ratio adding back purchases costs as per 31st of December 2021 was 41.2% and our loan-to-value ratio adding back purchases costs and using the IFRS consolidated balance sheet was 40.1%. There you can see the decline. We need to remember that the group covenant ratio -- loan-to-value ratio agreed with all financing banks is 60%. Also, what is important to note, this is the last part, so the loan-to-value ratio considering the completed sales of Les Grands Hommes and the 50% of the residential and office parts of Passage Du Havre further reduced to 40.5% on a proportional consolidated basis. Still for comparison purposes, this loan-to-value ratio, adding back purchases cost goes down to 39.5%, and adding back purchases costs and using the IFRS consolidated balance sheet reduced to 38.3%. So we have therefore reached our goal of 40% loan-to-value, and a big thanks to our team because they made it possible. If we go further, we go see the direct results. We're trying to give you some good overview on what's happened in comparison to the previous year. So as you can see, the direct investment result on a proportionally consolidated basis for the 12 months in 2021 decreased slightly to EUR 110.6 million compared to the EUR 112 million for 2020. The main reason being the EUR 14.1 million COVID rent concessions to retailers, of which EUR 5.3 million straight-line brand concessions under IFRS 16 and a conservative bad debt provision for an amount of EUR 4.4 million. The residual future rent concessions, which still need to be straight lined as a result of the application of IFRS 16, you may remember, there was Italy mainly, is EUR 7 million. The lower net property income of EUR 3.7 million compared to 202,0 deriving from the asset disposal program, was partially compensated by higher rental income of the properties you see at EUR 1.7 million up, and the lower net interest expenses, EUR 1.6 million. The relative increase in corporate income tax is mainly related to higher corporate tax in Sweden. The relative increase in property expenses is mainly related to an extraordinary correction in the personnel costs, which took place in 2020. If we exclude the above-mentioned correction, the costs remain in line with the years 2020 and 2019. Finally, to enable a better comparison of the results, we're extrapolating in the overview the impact of the COVID-19 measures on our direct results. As you can see, the relative impact of COVID release is positive, plus EUR 2.1 million. That is mainly due to the fact that notwithstanding the rent concessions given in 2020 were nominally higher, EUR 24 million compared to 2021, part of the rent concessions given in 2020 have to be straight-lined according to IFRS 16. This implies a lower impact on the 2020 accounts and higher due to the straight-lining impact on the 2021 accounts. And then finally, EPRA NTA. This is this last slide coming. Coming? Yes. It gives you a quick look at the relative change in the EPRA NTA for depository seat from the EUR 40.1 at the end of 2020 to the current EUR 40.1. The 2 major movements besides, of course, the direct and indirect results are the dividends of EUR 0.50 per share, which was paid out in July. The increase in the number of shares, which we might remember, was 5.6% related to the scrip dividend and the variance of EUR 0.8 related to the negative adjustments of the fair value of differential instruments. And with that, thank you very much. And I'll hand over to Evert here.

Thank you, Roberto, for presenting all these figures. In the press release, we included the dividend proposal, which we will table at the General Meeting scheduled for Tuesday, 14th of June 2022, for approval by the shareholders. The last time the company paid a dividend was on the 2nd of July 2021. Due to the uncertainty caused by the COVID-19 pandemic, the shareholders approved a reduced cash dividend of EUR 0.50 per share and a dividend in shares of one new share for every existing 18 shares. The dividend in shares ensured that the company would maintain its status as a fiscal investment institution in the Netherlands, the FBI and its fiscal SIIC status in France. For the financial year 2021, the dividend to be distributed by Eurocommercial in accordance with the FBI rules and the SIIC rules is just above EUR 100 million. Such distribution can be made either in cash or in shares or a combination thereof. As the last of the COVID-19 restrictions in our 4 countries have already been or are about to be lifted by the respective governments as from 1st of May at the latest, and we believe we have left the period of rent concessions behind us, we proposed to increase the cash dividend to EUR 1.50 per share and to pay a mandatory scrip dividend of 1 new share for every 75 existing shares to ensure that the company is complying with its fiscal dividend distribution obligation. The total cash dividend amounts to EUR 78.2 million, and the distribution in scrip dividend amounts to EUR 22.3 million. The company has been well known for its stable to increasing dividend policy since its inception in 1991. And the Management Board and Supervisory Board believe it is now appropriate to introduce a new dividend policy for the company. Just before the pandemic started, the company had announced to introduce an interim dividend next to a final dividend, but then had to postpone the implementation of this policy due to the lockdowns impacting the business of the company. We believe that we can now announce that we will pursue this policy of an interim and a final dividend. It means that in January 2023, there will be the first interim dividend with a final dividend paid in July 2023. For the interim dividend, we aim to pay around 40% of the total cash dividend paid in the previous financial year. We also believe that it is in the best interest of stakeholders that the new dividend policy has a clear payout ratio range and also a payout ratio target for cash dividend, which many of our peers already have. The company's payout ratio for cash dividends will raise between 65% and 85% of the direct investment result, but with a target of 75%. A mandatory scrip dividend may still be distributed if that is necessary to maintain the company's FBI and SIIC status. Although the uncertainties caused by the COVID-19 pandemic are now behind us, unfortunately, these have rapidly been replaced by new uncertainties due to the horrible war in Ukraine and the related geopolitical tensions. The impact on energy prices and supply of goods and in general, on economies is very unclear and makes it difficult to determine the outlook. Today, the company's results are not directly affected by the war in Ukraine and the sanctions against Russia, but that could change would the conflict escalate. However, the indirect impact on the company's results is far from clear. Consumer spending could start to subdue. Some major international tenants may be hit in their businesses, for example, in the supply of goods and energy and construction costs could increase further and for a longer period of time. We, therefore, have to remain cautious and propose to pay a cash dividend of EUR 1.50, which is at the lower end of the new payout ratio range. The ex-dividend date will be Thursday, June 16, 2022, and the dividend payment date will be Friday, the 1st of July 2022. I would like to conclude this presentation with a statement that as Management Board, we are truly thankful to all our teams in the various countries for their hard work and their continuing commitment to our company. And I will now hand over to the operator for questions.

[Operator Instructions] The first question comes from the line of Steven Boumans of ABN ODDO.

Maybe first, to start with indexation. Do you expect to be able to fully price through the indexation that you mentioned? And maybe second to that, could you please remind us whether there are any caps on the indexation going forward?

Yes, Steve. And now thank you for this question. Of course, as I said in my opening remarks, indexation was a word which was not really part of our vocabulary for quite some years, but it's back, and quite strongly. As you can see, we were able to put in a table in our press release because we're slightly late in presenting the results than our peers, and therefore, these indexation figures were available. So far, yes, we think we can indeed receive the indexation, which is now clear from the figures we have. And it's, of course, under the contract. It's something which we can invoice. And therefore, we are entitled to that as a landlord. A good example is Sweden. I mean that's already done and in the till, in the bank, as we can say. For the other countries, France, Italy, it's happening soon, mostly in April. We don't have any signs that, that should immediately be a problem. Of course, remember, we have had low OCRs. OCR is still a metric which is not that easy to determine for longer periods. I mean we can probably now look back for, say, 10 months in a bit more normal situation that you can start measuring OCRs again. But we've always had relatively low OCRs in the portfolio, and that is, of course, helping us in this indexation. It's probably a bit more difficult to say what will happen in Belgium, because obviously there, we have, every month, a number of contracts, which we will then index according to the applicable index for that month. So that's something you can probably see later on in the year. But so far, the signs we have is that it should all be collectible. And in terms of your second question, are there any caps in the portfolio overall? There are no caps. There are maybe a few contracts where there is some sort of cap there. But normally, the indexation is not capped and also, there is no regulation that could sometimes be the case in a certain jurisdiction that there is, by law, a cap. That is then not the case. Maybe good to flag that in France, they have, very recently, on the 14th of March, published a decree whereby they have changed the index applicable to commercial leases. So in order to actually, let's say, dampen the effect of indexation a bit because there was one component which was quite high, so that -- there has been a change. But still, if you look at that index, you will probably see between 2% to 3%, which, I think, is still a healthy level. So that's basically a summary of where we are on indexation, Steven.

Okay. Very clear. I have a second question, if I may. That's on the investment program. Of course, it has been halted due to COVID. But what can we expect for '22?

Well, for '22, we have, of course, in our portfolio, a number of extension possibilities. We just received, in France, the permit for extending Val Thoiry, close to Geneva. That was quite a long process to get to this position. And that is clearly a project we are looking into further. We have started some preliminary works, but it is in a number of phases. So don't see us immediately in the next months, investing a lot of money in a certain property because these are projects which will come on stream later on. There's one project which we are really working on now right now, which is the third phase in Sweden of our shopping center in Gävle, a bit to the Northeast of Stockholm called Valbo. There, there is a third phase, and that's about in a maximum of EUR 10 million, which we will spend to complete it. But -- and it's pre-let, so that's a project we'll do. But for the rest, Steven, for this year, we still will continue working on getting further extension possibilities also in the Italian portfolio. Obviously, we're working further on the extension in Woluwe, in Belgium, where we are in quite further advanced stages to obtain a permit. We have made some amendments to our request, which we submitted last year as a result of the process there. We have recently another meeting with the region and the municipality to make clear what we then will accommodate having heard some suggestions, remarks, objections from those 2 authorities. No. So we are clearly looking forward to further upgrade the portfolio and take advantage of extension possibilities we have. But we're just coming out of, of course, a disposal program of the EUR 200 million, which we had announced and now completed and delivered. So we're, of course, happy that we can announce that. And now it's a matter of looking forward. On the other hand, I must repeat, we are currently in a situation, with what is happening in Ukraine, Russia, which, of course, creates some uncertainty. Again, I mentioned various aspects like what is the consumer going to do? What can we further expect from -- maybe, indeed, inflation, et cetera. So I think a cautious view on the next month is probably the best we can do and don't jump into big adventures for now.

We currently have no questions on the line. [Operator Instructions] We have no further questions in the line. We will move now to the webcast questions.

Okay. I see there is a question from Jaap Kuin of Kempen. I will read his question. "Is there an opportunity to buy a stake in Il Centro? Would you be interested in that? And additionally, could you describe your increased caution on the extension in Belgium?" Okay. Well, thank you, Jaap, for your questions. The first one is about Italy, Il Centro. It was shown on the map. And I think maybe, Roberto, you visit Il Centro a bit more than I do. I've seen it recently, but it's nice. But also, of course, when we go to Carosello or Fiordaliso, that's also very nice centers. But maybe a comment there?

Yes. No, sure, Jaap. You always have interesting questions. I mean , Il Centro is a very nice asset. And as you know, we have a very good relationship with Finiper, who owns shopping centers as we are partnered in Fiordaliso. So of course, every once in a while, we have a nice chats, but I wouldn't go further than that.

Yes. And then maybe, Jaap, on your other question about Belgium. It's not that we are increased cautious on the extension in Belgium. I think actually, we have made quite some steps. And maybe, Peter, you would like to comment on that a little bit more in detail where we are today, et cetera.

Thank you, Evert Jan. I think the -- we did a public consultation phase at the end of last year, which highlighted 1 or 2 sensitive areas from both the regions, who ultimately are the giver of the approval and the municipality. And it's fair to say that I think the areas that they were particularly concerned about was the height of the building. And so we have, in response to that, removed 1 floor of the residential, which won't affect the economics, but will improve that sensitivity. Mobility is very important, both inside and outside the centers, so that's traffic, pedestrian bicycles and also inside. And so as a response to that, we've had to reduce the line by 1 meter or 2 on the building line. We've had to be very careful about our approach to potential flooding and the second basement level in our approach to that. So we've been working since the end of last year and that public consultation with both the region and the municipality. We had our last meeting on the 11th of March in a big group, where we met and demonstrated how we were going to solve those issues. So we're now in a position to resubmit, which we are going to do by June. What all that means is that in effect, we've had a delay of around 6 months, I would say, on the project. But it doesn't affect the economics, although we haven't tested the building costs with contractors. And if we get to that position so that we get a consent in the first quarter of next year, then we anticipate an accelerated pre-letting program. And assuming that goes well and we have our planning, which we expect we will get from the region, that's also something we would look to, possibly, a joint venture partner at some stage. Because by the time we've done the project, that will take the end value to somewhere near EUR 700 million.

Okay. Well, thank you, Peter. I think that was a very comprehensive answer for Jaap's question. Let's see whether there are more questions coming in.

I don't see any questions for now.

We have questions on the line if you would like to take it.

Yes, please.

The next question comes from Steven Boumans of ABM ODDO.

Maybe 1 additional question, if I may. We are, of course, already almost end of March. Could you please comment -- you mentioned all the uncertainties. Can you comment on the consumer behavior in the past couple of weeks when inflation accelerated and yet Ukraine uncertainty in the different countries for the consumer behavior?

Yes. Let's say that, that's obviously difficult to get a hand on because it is now, for 1 month, the situation where this war is ongoing. And we had February turnover numbers in which we reported about, which were very encouraging. Talking to our country teams, I don't sense that there is an immediate change in consumer behavior. We still follow our footfall numbers. Of course, for March, it's too early to tell what the turnovers are going to be. But it's probably just, for now, more the sentiment maybe. And what you read in the press, we all read the press and look at the television. But we haven't seen any effects on the ground, and it's probably something which also may have to do with certain supplies. It's not only the spending as such on the consumer side, but maybe some product may not be available. So -- but for now, it's more a matter of being cautious because of what is happening in the world than that we, on the ground, can immediately measure changes. But we cannot exclude them, of course. So that's all I can say. I don't know, Peter, anything you would like to add? I mean we have, of course, our weeklies with the country teams, but...

No. I mean we went through the February numbers yesterday. We were 2.7% up overall. I mean one has to say there was an outstanding performance again from Sweden, plus 13% compared to February, the pre-pandemic February. There was a plus in Italy, our largest markets, and small but very manageable negatives in Belgium and France. And the teams are saying that really, from what they're seeing, the inflation is not in those because it hasn't been passed on as yet and there's very little evidence of discounting in the shops. So, so far, so good, but with caution. I mean, I think the one thing they did all flag was the improved performance of the restaurants and the F&B trade, which perhaps is one of the sectors that, in our numbers, we're still lagging a little bit last year due to the restrictions that lingered a little bit longer. But there's been a strong recovery in all our markets in the F&B. So I mean, we're encouraged with those, but still cautious.

Does that answer your question, Steven?

Yes, absolutely.

Okay. I can see that there is an -- I saw, at least, there's another question via the chatbox. And I think that is one from Inna Maslova. I can maybe read it out now. "A question Woluwe. When would you estimate to be able to secure a permit?" Well, I think, we're just referring to what Peter said about the process, our expectation is that we will be able to submit the, let's say, amended permit request, honoring the remarks made by the authorities in the summer, and then we will have a similar process like in 2021 in autumn, all with the aim to hopefully then be able to receive the permit possibly in the first quarter of 2023. So that is currently the planning. And that would mean that, yes, we can, of course, also start looking into more detail about the construction, the letting, et cetera. So it's not something which is very far out. And we're quite encouraged by the way the authorities now have responded to our amended permit request. Let me see, is there another question. That is a question from [ Hana Roman ]. Apologies if this has already been covered, but what is the outlook for the like-for-like rental growth in 2022? Well, the outlook for rental growth like-for-like, I think most of that is going to be reflected already in what we have set for the indexation, our table included in the press release where we, for now, have included the amount of almost -- of around EUR 7 million of extra rental income because of that indexation. On top of that, of course, there are always individual new lease agreements signed or renewed. It's probably a fair comment that there could be cases where some of the rental growth you could have achieved on, let's say, more organic growth are -- may be replaced by indexation, but we have to see how that works out in the various negotiations. But I would say the outlook, because of this indexation, is actually better than we had in the previous years. Any further addition to make, Peter or Roberto?

Just to add that, I mean, in the uplift in the letting program at 5.1% overall last year. I mean, so far, I mean, the main -- 2 of the main contributors to that, Italy and Sweden, have shown good uplifts from what they've done so far in 2022. So in Italy, we have -- since January, we've signed 29 new leases. That was a period up to the 15th of March. Along these leases, we've achieved 7.4% increase in rent. In Sweden, we have signed 22 new leases already this quarter with a 7% uplift. So the letting renewal program still looks very encouraging. I would echo what Evert Jan said that they're with high indexation coming through in the figures as well. It may be the leasing teams will have slightly harder challenges ahead when it comes to the renewals. But so far, it looks encouraging.

Okay. Well, thank you. Let me see. Is there another question coming in? Is there a further question? No? No, I think there are no further questions. So I think that concludes this conference call for our annual results 2021. And I would like to thank all participants for listening, also for the questions we got. And I hope it was all helpful and clear. And again, thank you for participating, and I wish you a good day.

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