First Property Group plc (FPO.L) Earnings Call Transcript & Summary

Good morning, and welcome to the First Property Group Plc Preliminary Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Ben Habib, CEO. Good morning, sir.

Good morning, everyone. Thank you very much for joining us this morning for our preliminary results announcement for the year to 31st March 2023. There's a presentation which is available on the website. Which section is it in Jeremy on the website?

It's under Media News, Presentations.

Yes. So you've got to Investors, then you click on Media News, and then you...

No. You go to homepage and at top that says Media News.

Well, you will be able to follow the presentation on -- as we go through it here. There's some preliminary information on the group on Pages 1 -- on Pages 2 and 3, which I intend to skip and in the Page 4, just background information, which we'll cover off during the course of the presentation in any event. Before I talk about the results and how the last year has been, I think it would be very helpful for shareholders to understand the genesis of the group to try and have a picture of where we were before lockdowns in particular and where we are now. So before lockdowns, rather like now, we were -- had a big exposure to Poland, which we still -- as I mentioned, as we still do. And the big properties that we owned in Poland as a company, with an office block called Krakow have been [indiscernible] in Warsaw and an office block in Gdynia, and 48% of an office block called Blue Tower in Warsaw. All 3 of these buildings were fully leased. And we were therefore quite a high income-generating company before we went into lockdown. We assessed back in 2019 before we knew about the pandemic. Well, actually the post market was quite toppy. And so we decided to sell Chalubin, our interest, which was a 52% interest in Chalubinskiego, which we contracted to sell in November 2019. And that completed in about April 2020, that sale just after lockdowns had started the pandemic can hear the lockdown has started. And the buyer followed through with the contract, which was an admirable observance of their obligations. That, of course, meant that we lost the income on the property that we sold to them, Chalubinskiego. But we cashed up quite significantly. So getting by memory, I think that released about GBP 17 million of cash into the group. So as we travel through lockdown, we had quite a big cushion of cash underpinning the group. Then the other property, which is a very high income producer, the 1 in Gdynia, which we bought knowing that it was very over rented, and we adopted a special treatment for its asset value when we bought it in 2014, which was to depreciate it rather than marking it down by value as the value fell in is the least got to attend. Because it was so over rented. We depreciated it instead in order to make sure that the net value of that property in our books at the lease expiry, which, as I mentioned, was a very over rented lease. A lease expiry in October 2020, the net value of the property would be nil in our books. In other words, the asset value will be below the value of the debt. And we did that because we failed that we might have a problem with the bank in October 2020, if the tenant were to vacate and leave us with a 13,500 square meter building in Gdynia. As it happens, we actually got an agreement to lease in place with the tenant for about 6,500 square meters. But the bank dragged its heels and we were unable to get the tenant over the line with bank approval to sign that new lease. So instead, what transpired with Gdynia was that the tenant left, it became an entirely vacant building. And from a relative position of strength because we've written down the value of the -- the net value of this property in our books to nil, we negotiated -- we renegotiated the financing on this property, and the bank agreed to take a reduction in debt from EUR 25 million down to EUR 12 million with us putting EUR 4 million in. So we effectively bought the property, if you like, of the bank for EUR 16million, EUR 4 million of which we put in ourselves and EUR 12 million of which was a deferred consideration. So we went at the beginning of the lockdown, just to recap, being quite a high income-generating company with these 2 significant earning properties to 1 of the big sold and 1 of the big coming back and with us having to reposition it. And then -- the other -- what we did with the other -- the rest of the cash that was freed up when we sold Chalubinskiego was in part to invest it in U.K. special opportunities, which, in turn, bought some selling shareholders in U.K. PPP, which is a U.K. fund as the name suggests, that we manage. And I think we now own about 11% of special opportunities. And we also then last August, bought another 32% of Blue Tower. Remember, we own 48% of Blue Tower, but 100% leased. But the 32% we bought was from the bank called PKO SA. And they have been owner occupiers of this space, but have vacated it. And so we picked up 7 -- well they largely vacated it, it was 7,100-odd square meters of space, 2,000 square meters, of which they occupied on the sale and leaseback when we bought it. But the office space, 5,000-odd square meters was vacant when we bought it. We did quite a good deal with the bank when we bought that space. We agreed to pay for it in 7 installments over a 6-year period with PLN 9 million upfront and PLN 5 million payments all the way through to the last 1 with a balancing payment at the end on the seventh payment. So what we've become is a company which used to be high income generating, but is now repositioning the property in Gdynia, repositioning the 32% we just bought in Blue Tower and obviously, looking for other opportunities in which to make money. During -- immediately after rather, our investment in special ops, you might recall, I mentioned we bought -- we increased our interest in special ops to 11% during the lockdown period when we bought out to exiting partners in the U.K. PPP fund. After we made that investment, we made some immediate sales by U.K. PPP. And as it now transpires at what was a very good time to sell a property in the U.K. market, which was the tail end of 2021, beginning of 2022, before we had this inflationary spike, which we're now in. So the company has gone from being high income generating to repositioning these 2 Polish assets but still predominantly exposed to Poland, 88% of our NAV roughly is exposed to Poland. And our fortunes therefore, turn much more on the Polish property market, the Polish economy than they do on the United Kingdom. So that's a backdrop which I hope is helpful for shareholders, and they can understand why our profits have reduced. But NAV nevertheless, is held pretty solidly up. It's off a little bit, but it's basically solidly up at around 46p a share. The challenge for the group going forward, I'm slightly jumping ahead in the presentation, but the challenge for the group going forward, obviously, is to lease up these 2 vacant properties to resuscitate our earnings and then with the benefit of having resuscitating our earnings, start moving our dividend back up. Shareholders will recall that when we had higher earnings we were -- we had a positive approach to dividend payments, and we will go back to that progressive approach to dividend payments once we've leased up these 2 buildings. The Gdynia property now is about 28% leased, and I'm pleased to say we've got quite a lot of demand for that space. We've got a few deals going on, which I hope to be able to announce in the next few weeks. And similarly, we've got quite a lot of demand for the Warsaw office, the 32% of Blue Tower that we bought in August last year. But I'll come back to both of these properties in greater detail as we go through the presentation. So starting -- having done that backdrop, starting on Page 6, just catching up with what we've done since the interim results is we sold a couple of supermarkets that we had owned in Poland for GBP 5.5 million, which generated a profit of GBP 680,000 in Sterling. And we bought out, I think, about 5%.

Yes, just 6%.

6% of 5th Property Trading from an existing shareholder who wanted to exit and slightly irritatingly, that required us now to consolidate 5th Property Trading even though we don't own over 50% of it. So these sets of results consolidate the performance of 5th Property Trading into them, which previously used to be accounted for as an associate. So the accounts are a bit confusing as a result of that consolidation. When you compare this year's results to last year's results, but that's how we got there. And then, of course, I'm going to come back to the senior debt product that we launched when I talk about the state of the markets and the economy generally. But we have launched a debt product. We've never been a lender before. But I think given what's been going on in the markets, both in terms of interest rates as well as the impact it's had on lending institutions it makes a lot of sense for First Property Group to be using its expertise to enter that part of the market. On Page 7, you have a summary of AUM and the weighted average unexpired fund management contract term, which is now 2 years 9 months. Last year, it was 3-year 7 months. Of course, that keeps ticking down unless we either extend the life of a fund or we -- you sold a new fund, which has a longer life and pushes the weighted average back up again. But just going back to AUM, quite remarkable reduction in AUM from last year. Significantly as a result of sales that we made in U.K. PPP and other funds, we sold about GBP 69 million worth of properties during the course of last year. And there were markdowns. As inflation has gone up, interest rates have gone up, the market has come off quite significantly, particularly for offices in this country. And so there has been a marked reduction in the value of offices in the United Kingdom and therefore, in our Fprop offices fund. We did pay a second interim dividend. It would have been a final in the normal way being paid in September, but we paid it as an interim dividend because the chancellor had changed the tax treatment of dividends in the budget in the last budget, and we wish to get this cash out to shareholders at a time when it was in a more favorable tax environment for them. Turning over to Page 8. So after all the various changes in the group last year, the sales of properties and investments and so on that we made, we generated a statutory profit before tax of GBP 2.5 million, down significantly from the previous year, where we made a profit of GBP 7 million. And that was because in the previous year, we had the benefit of a profit made on the restructuring of that loan on Gdynia, which I mentioned, where we negotiated the rent -- where we negotiated the obligated debt obligation down from EUR 25 million to EUR 16 million. All of that work is back to diluted earnings per share of 1.7p versus 6p last year and with the dividend being held steady. On Page 9, we have a breakdown of the various property values that we hold. Just to remind shareholders that First Property Group accounts for its properties at the lower of purchase price or market value. So we've got GBP 47 million worth of properties on our books as at 31st March 2023. That's up from GBP 36 million last year, partly due to the consolidation of 5th Property Trading into our accounts and also partly due to the acquisition of 32% of Blue tower, which I've already mentioned. At market value, those properties, the GBP 47 million I mentioned would be worth GBP 53.97 million, GBP 54 million roughly. Associates of -- our Investments & Associates have obviously gone down in value because 5th Property Trading move from being an Associated investment into being a consolidated investment, and our cash balances went up slightly during the course of the year. And of course, it's very comforting to have that cash balance at the moment given the tumultuous market in which we are now operating. And of course, we are a leveraged property company. Some of our funds have leverage. So to be cashed up at a time when banks are retreating from the market is a very sensible thing to be. Our gross debt, turning over to Page 10. Our gross debt is up from last year. That's partly due to the consolidation again of 5th Property Trading, but also because of the deferred consideration which we accounted a debt on the purchase of the 32% more that we've acquired in -- the additional 32% we acquired in Blue Tower. Net debt, which is after putting cash against it is GBP 22 million, which brings us back to a gearing ratio with the properties held at book effectively at cost of around 40%. And if you mark the property portfolio to value, then we've got a leverage ratio of around 36%. Net assets at book value of GBP 43 million when you mark the properties to their market value and tax effect, then we end up with a NAV of about GBP 52.5 million, which is 46.5p, slightly up from last year. I should say that last year's NAV is lower. We had to restate last year's NAV as a result of the reduction in values in the office market, because the shareholders might recall, Fprop offices, the fund which we have a big office exposure in, is a fund from which we were not earning fees, but we had a profit share interest. And that profit share interest was subject to clawback. And so with the reduction in values and offices in the market, we decided as the Board of Directors actually to reverse out any benefit from that profit, which we expect will end up at nil, frankly, unless there's a big turnaround in the fortunes of the United Kingdom's office market between now and the end of the life of the fund. On Page 11, we have a chart which sets out how our NAV has moved over the years as well as our cash, cash being the purple line and our NAV, both NAV being dark blue and the gray -- the gray bit being properties marked-to-value and tax affected. So we've been through the credit -- not the credit card, sorry. We've been through COVID lockdowns, COVID-inspired lockdowns, actually pretty robust. A lot of companies had significant trouble as they went through the lockdowns and partly as a result of the big sale we made beforehand, partly as a result of the kinds of properties we own, significantly, partly as a result of being exposed to Poland rather than the United Kingdom, I think we've had a much better experience. The Polish economy by the way, ever since we've invested there, that has always performed better than the British economy. And I hope that continues to be the case going forward. Page 12 sets out a NAV bridge. So it shows you how NAV has moved from last year to this year, taking into account profits, FX movements and dividend payments. I don't think there's any need for me to chart that movement. It's self evident, I think, from the graph. Page 13 was a graph we were very proud of because we had had until COVID lockdowns, we had had a progressively higher dividend. That changed, of course, when we saw that very high income producing property and we became cash conservers and now we've moved to the repositioning the Gdynia property and the 32% of Blue tower that we own. But our intention firmly is that as profits recover, we will push our dividend back up again. So just now talking a little bit about our new product. First thing to say is that it is I think, as I've mentioned, largely a conceptual product, we have tested the market, and there's a real appetite for it, but we haven't done any deals yet. And we're slightly doing our DD on how to get into the market in the best possible way at the moment. As shareholders will be aware, the Bank of England is actually fail to control inflation in the way that it had hoped it would. And so interest rates may end up higher than we had anticipated when we initially conceived of this product. And so it's no -- given that we want to make fixed interest rate loans, it's no disadvantage just to be monitoring a bit what goes on in the commercial property space before we actually make our first loan. The principle behind it though is as follows. Over the last 10 years or so, banks have been actually quite sensible. They've been lending not more than 50%, 55% loan-to-value on commercial property, requiring debt ammo and charging sensible margins in order to provide their zones. But because of the interest rate increases over the last year, significant, I think we've had 14 increases in U.K. base rate in 12 months, which is remarkable when you think how steady it had been for all those years after 2008. A steady and load had been since 2008. There's been a withdrawal of banks from the market and the tightening of their credit terms and obviously, a reduction in the value of commercial property generally, particularly offices. And what was the 50%, 55% LTV loan before is now sitting at around 60%, 65% LTV because these come down. And with banks retreating, borrowers on the whole will only be able to borrow 40% to 45%, we think, in the current environment. And that creates a real problem for a borrower that has to refinance because they're going to have a shortfall on cash, and they're going to find that, that shortfall is coming at a time where the investment markets are very difficult. And so our aim being expert in investment property, commercial property, investing in commercial property, is to use that expertise to judicially identify properties where we can provide loans of 65% LTV where we're comfortable making that higher LTV bearing in mind, of course, that that's a much lower risk than actually buying the underlying asset. So we're 35% down the risk curve, if you like, as a result of being a lender rather than being an investor. And the other major attraction, obviously, from our perspective is that with interest rates where they are, thus 1 year rate, I think, is around 4.5% and about to go up and margins being it for the best property now, margins are around 3.5%. We think an interest only loan, like the ones that we're going to propose, and we're going to make them interest only. So borrowers can hold their position, that ammo isn't going to be a problem for them. The amortization of debt during the life of the loan is not going to be a problem for them. That allows us to charge a slightly higher interest rate. So before the current increase that we expected -- before the increase that we expect to open back of England of about 0.5%, we were penciling and charging an all-in fixed rate of around 10% for the 65% loan-to-value loans, which is a very high interest rate compared to where interest rates have been in the past and therefore, very impactive when you think that only a year ago, if you wanted to buy a property, the yield you would get is around 6.5%. So if you can lend at much lower risk and make 10% plus, it's going to be plus now as opposed to buying the underlying asset, I think that's the place to be. It's also much easier for a company to scale a product like this because when you invest in the underlying product, you have to pay stamp duty, you have to pay legal fees, et cetera, as you go in. If you're a lender, there's no stamp duty and the legal fees are paid for by your borrower. So getting in and out of the position is much less costly and the income you made is therefore that better protected. You don't need a capital gain as you do with investment property in order to defray the cost of stamp duty and your purchase costs. So we think that this could be a really good opportunity for the group. And I'm very excited about it, and we're certainly going to be giving it the best swing of our back as we go forward. Initially, testing the market to see whether our thesis is right and whether we can find product that we wish to lend against, and of course, then raising the funds required in order to do this at scale. And we do have very good relationships with a number of institutions with whom we've had some preliminary conversations and we will develop those conversations as we go forward. But there's nothing -- I would not count on any profits coming to First Property Group in the immediate future from this product. It is something that I hope will be an income and profit generation in the short term, but not in the immediate term. Anyway, so enough on that product. And on Page 15 is a statement by myself on the results, which please read it at your leisure. And Page 16 is a slide on "Why invest in Fprop plc?" Just to recap, we are an experienced nimble management team. We've made significant changes a number of times in our life, and I've explained a few of the significant changes we've made in the last few years as we've reacted to lockdowns and now this high interest rate environment and what we're doing to address all of that. We have a positive attitude to the dividend, and we will increase the dividend as soon as we possibly can. We have 2 legs to our business, which I think is helpful. The asset management side as well as being a direct investor. So we take a proprietary approach to asset management, we co-invest, and this gives us a much broader array of ability to make money. And our growth is going to come from, as I've already touched on principally from leasing up the property in Gdynia, leasing up the property in Warsaw, the 32% of Blue Tower, that we just bought. And hopefully, once the economy settles, inflation begins to come down and the investment landscape clears up. And we should get some benefit in our existing portfolio of assets as we go forward. So that's the basic summary of First Property Group, how we've done in the last year and why I think we're still a solid bet for investment. Turning to the market, which I've touched on already, so I won't labor. Poland, Kazakhstan over our entire period of investing there since 2005, it's been greater than the U.K. It's got a very high inflation rate, but it has been growing. It hasn't got the kind of driven labor market that we've got here. And it's been a beneficiary of the war in Ukraine, if I can say that without being politically incorrect. The refugee influx that it's had from Ukraine has helped to boost GDP. And there's obviously been a lot of investment from Western powers into their military NATO and so on, a lot of support for Poland from Western Europe and the U.S. And so all of that has been very helpful for Poland. And so far an invasion by Russia, which I think is a remote possibility by an invasion, we do think that Poland is a much better jurisdiction in which to invest. And as I mentioned at the outset 88% our NAV roughly is exposed to the Polish market, which is -- which gives me great comfort. The U.K. market, I think, is in much greater difficulty. Growth is -- was non-existent. And even when it was non-existent, that was being trumpeted as an achievement by our government. But I think with the interest rate rise you're going to get today and the trajectory of inflation, I can't see how we will avoid a recession in the United Kingdom. My own view for what it's worth is that the Bank of England is likely to overdo interest rate rises because it's not waiting for the effect of interest rate rises that's already made to have their impact on the mortgage market. Historically, in the U.K., most people were on variable rate mortgages. So when the Bank of England raised interest rates, borrowers felt that almost immediately. Nowadays, the majority of borrowers are on fixed interest rate, and they vary from 2 to 5 years. So it will take a while for the interest rates that have already -- the interest rate increases that have already taken place to have their impact on the consumer. And there's a real danger and I'm almost 90% certain that the Bank of England will fall into this track. There's a real danger that it will over increase interest rates. And as these fixed rate mortgages expire, there's going to be a real mortgage problem with people defaulting on their mortgages. Remember, most people when they buy a property make their calculations based on whatever the interest rate is to maximize their buying potential. Back in 2000, the average house price was about 3 or 4 -- I think it was about 4x average salary in the U.K. It's now close to 8x the average salary in the U.K. So if you have a reversal of that asset value growth, you're going to see major burdens on U.K. banks. And whilst the mortgage collapse will be of great tragedy to lots of people in the country, the bigger economic implication will be what happens to the banks because the banks are going to get caught in the crosshairs of this debacle. If you read some of the output from think tanks and economists, they're saying banks are much better capitalized now than they were 10 years ago or whatever. But I don't put my store by that. Even on the best of days, banks are highly leveraged institutions, that's what they are. And so if we get a wholesale collapse in the U.K. mortgage market, we could have real problems in our banking market. And if we have real problems in our banking market, we have real problems in the economy. And it seems to me at the moment, the government and the Bank of England really don't know how to get out of this very difficult spot. So I'm quite bearish on the United Kingdom. And I think that basically concludes my presentation. There is, of course, a lot more information again available for you all to read as you go through the presentation. But I don't think it will really add much to your sum total of understanding of where we are as a group and how we're moving forward by me going through it line by line. So I think if that satisfactory for everyone, I'll just move to questions.

[Operator Instructions] As you can see, we received a number of questions throughout today's presentation. And if I could just ask you to read out those questions and give responses where it's appropriate to do so. I'll pick up from you at the end.

So just going through the questions, we had a couple of pre-submitted questions. One of which is what percentage of an asset value is exposed to Poland. I've answered that about 88%, about 4.5% is exposed to Romania and the remainder, about 6.5% exposed to the U.K. What are your views on the property market? Well I've discussed that extensively. You have a Swedish shareholder -- sorry, you have a Swedish shareholder who is quite well an activist. He has over 20% sales consolidated. He is seeking, because you are too small or share buybacks. Bear in mind, the discount to NAV, I would have thought that with over 20% he must have an agenda. No doubt he has an agenda. Presumably he sees value in our shares. Otherwise, he wouldn't have bought the shares. Our aim is firmly to deliver, obviously, for all shareholders. And as I've mentioned, the way we're going to do that and the only way to do it is to get these 2 properties in Gdynia and Warsaw leased up and survey the market, manage our debt, manage our cash, be prudent and if possible launch this new debt product successfully and make money in other avenues. By the way, there's always opportunity where there's adversity. And typically, First Property Group, this is no guarantee, of course, but typically, First Property Group has done well in periods of difficulty. I have to say this is quite a different kind of period of difficulty to any that we've experienced. I think probably any of our working lives, we're almost back to the 1970s, and there may be some of you who were working in the '70s, I started life in the '80s. And even though my first brush with a recession with 3 years into starting my career, that recession, the late '80s, early '90s recession, was born out of demand-led economic growth. This recession is born out of a collapse in -- this recessionary environment is born out of a collapse in the supply side of the economy. And that's much more akin to what was going on in the 1970s. I remember that 1 of your funds bought a large building in Horsham about 4 years ago, does the funds sit [indiscernible] Yes, that Fprop Offices still owns it. We're managing it, and we've got a couple of interesting initiatives afoot with the tenant, which is royal standard lines. Is the cost of complying with net zero an issue for Polish commercial property as it is in the U.K.? Well, there's definitely a move in Poland towards net zero and ESG in the same way as there is in the U.K. The Polish government isn't quite as far down the line with it as we are. And I mean, we know that for a fact because the Polish government refuses to stop burning coal in its power plants. So all our properties, when you measure the net output, the core carbon emissions output of a building for ESG purposes, you take into account the nature of the power supply. And because a lot of Poland's power supply is from dirty fuel. Actually, all our properties in Poland look a lot dirtier, if you like, than our properties in the U.K. And that will change as Poland, if it goes greener, that will automatically change. But the Pols and if I may say so, it's a policy I endorse personally. The Pols have approached Net Zero with a much more sensible attitude than we have. We've decided to go to net zero ahead of the technology, it's steering our North Sea reserves, it's steering fracking. And I don't know if shareholders are aware, but our government signed, called the North Sea transition deal in March 2021 in lockdown. It was part of the build back better initiative. You might remember that when we were going to unlock, the theory was that we'd emerge into a much better world, a much greener world. And the North Sea transition deal is effectively a deal with the fossil fuel companies and renewable energy companies to progressively shut down North Sea, shut down the reserve capability of our gas reserves, et cetera, and move towards renewables. So we've been actively shutting down our fossil fuel industry. And of course, now we have a huge supply side shock coming from the increase in fossil fuels. And we've got a ridiculous position of being an importer of frac LNG from the United States. Well, actually, if we hadn't turned our back on our own gas resources in the United Kingdom, we would have been able to be significantly better off than we are now. It's a fundamental failure in government policy. And I think that is a significant contributory factor to our inability to control inflation. So I hope that answers your net zero question. At the parent company level, are you cash flow positive or negative month by month? I think we are basically cash flow positive, but we've got quite a lot of CapEx that we need to do in the properties to get them ready to be -- once we sign a lease, we have to fit them out and the 32% we bought in Blue Tower needs a new ventilation system as well. So there's quite a lot of CapEx that goes with that. But the brilliant thing is, the minute you lease it up, you stop the burn, if you like, on that vacant property, which is costing you utilities, property taxes, unrecovered insurance costs, et cetera. You stop that immediately and it goes from being a negative to being a positive. And so you see quite a marked turnaround in the prospects and fortunes of a property as you go from being vacant to being leased. And I'm hopeful, as I mentioned, that we'll be announcing some good stuff as far as those 2 properties are concerned in the very near future. So I'm hoping that equation will get progressively better as we go forward. The challenge, of course, is to manage our cash balances as we need to invest in those properties to ensure that we make the requisite level of return required to be able to go forward with confidence. So it's quite -- it's a balancing act that we have to go through over the next 12 to 24 months. So how's the battle is being aware that you have to do that balancing act? We're fully aware of it. We are managing our cash very carefully. And we'll -- I'm very confident we'll get through it. And as I say, there's good news, hopefully coming down the line on leasing of those 2 properties. And I think that deals with all the questions unless there aren't any others. There's 1 more question. Are the rental income planning any option scheme for '23, 2024? No. Beyond the existing option scheme and grants no other option schemes or grants are planned.

I think you've actually addressed all those questions from investors. And of course, the company will review all the questions later today and will publish their responses on the Investor Meet Company platform. But just before redirecting investors to provide you with their feedback, which knows particularly important to the company, Ben, could I just ask you for a few closing comments?

Well, I think, I've said everything that I wanted to say. We live in very, very uncertain times. I have to say and admit that I didn't see -- the credit crunch in 2008, I think, will come to be seen as a relative walk in the park compared to where we are at the moment. This is a supply side shock which is being met by our policy -- with the policy response of raising interest rates. I don't think you can control the cost of fuel, the cost of food by raising interest rates. Actually, all you do is pilot pain all the consumer at a time when we're already very high tax as an economy. So this is going to be a really challenging time for the United Kingdom. And I'm delighted that 88% of our NAV is in Poland, frankly. The investment markets are broken, but at least the real economy in Poland is doing well. And that's important so that we can keep income levels up. We can lease these vacant properties, and we can be -- we can grow our profits.

Perfect. And thank you once again for updating the investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order for the management team can better understand your views and expectations. It's going to take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management of First Property Group plc, I would like to thank you for attending today's presentation, and good morning to you all.

Thank you.