ICG plc ($ICG)

Good afternoon, and good morning to those joining from North America. Thank you for joining us today to talk about ICG Real Estate. I am pleased to be joined by Krysto Nikolic, who joined ICG in 2022 to lead our global real estate business. And today, we want to explain where ICG Real Estate fits within the firm, how the platform has been built and why we believe it will represent an increasingly important contributor to the firm's growth in the coming years. Real estate is a large and investable market, and we believe our platform is increasingly well positioned to meet client demand in a disciplined and scalable way. We're pleased to share our perspectives with you today, and we'll leave time for questions at the end. The long-term opportunity in real estate for ICG is underpinned by a number of clear strengths. Across both debt and equity, we have built positions in real estate segments such as net lease, where we see durable investment opportunities alongside client demand and where our underwriting approach is well suited to the risk profile. We invest across the capital structure and consistent with ICG's broader DNA, we are comfortable with complexity where it supports downside protection and managing risk in an appropriate fashion. A key differentiator, and Krysto will talk about this later, is our ability to originate opportunities through long-standing corporate relationships across the wider ICG platform. Taken together, origination track record and client demand and in the context of an attractive point in the European real estate cycle, we believe the platform is well positioned to grow. As a reminder, ICG today manages approximately $130 billion of AUM. Nearly half of this sits within structured capital and secondaries, which has been the firm's primary growth engine over the past 5 years. Just under 40% is in private debt and around 14% in Real Assets, where AUM has nearly tripled since March '21. As a firm, we have deliberately focused on building multiple levers of growth to support clients' investment needs across investment -- across different strategies and market environments. Together, alongside our established strategies, we have several platforms that are scaling. Real estate is a core part of that group alongside infrastructure and LP secondaries. To put ICG Real Estate into context, the platform today represents approximately $12 billion of AUM or around 9% of the firm's total with roughly 2/3 in real estate equity. So this is already a material business within ICG and one that we believe has the potential to continue scaling over time. A little bit of history. The real estate platform began in 2011 as a U.K.-focused real estate debt strategy. Real estate equity has been built organically since 2019, consistent with ICG's broader approach to launching new strategies. This chart shows AUM growth over the past 15 years, during which time the platform has delivered an aggregate AUM CAGR of approximately 29%. Today, real estate equity represents the majority of AUM on the platform, reflecting strong execution and client demand. An important factor in launching and scaling new strategies is the ability to seed and warehouse assets. In real estate equity, we've seeded approximately $420 million of assets on a gross basis. Just over half of this has been syndicated to third-party investors with most of the remainder transferred into funds as capital has been raised. As a result, residual balance sheet exposure to those assets was very limited. So it's a really good example of how we use our balance sheet efficiently to grow fee-earning AUM. This approach of seeding, syndicating and scaling has been successfully executed across a number of ICG strategies and real estate equity is another clear example of this capability generating value for our shareholders. This chart on this slide compares ICG's real estate fundraising with global real estate fundraising, both indexed to 100 since 2020. Over that time, we've raised nearly $7 billion. And while fundraising can obviously vary year-to-year based on our fund sizes and timing, the data clearly illustrates that we have continued to attract capital and to gain market share in what has been a difficult market globally. From a client perspective, increasing scale and a growing track record are making us more relevant to larger institutional investors. We have expanded our client base in North America and Asia Pacific. We've diversified across client types, and we've seen an increase in average ticket sizes. We show on the right-hand side that relative to FY '20. As strategies scale, this supports broader client relevance and access to larger pools of capital over time. As we've seen in other strategies, European Corporate, Strategic Equity and direct lending, this can become a very powerful and self-reinforcing phenomenon. And we show here some examples of larger client commitments since 2022, highlighting both geographic reach and client diversity. These commitments reflect relationships that have developed as the platform has scaled and ticket sizes that would have been difficult or even impossible to achieve earlier in the platform's life. Generating attractive investment performance at scale matters, both in terms of client relevance and the underlying economics of ICG. From a financial perspective, growth in real estate equity has driven a significant increase in fee-earning AUM. This has shifted the mix of revenues towards longer duration management fees typically charged on committed capital and at higher fee rates. Over the past 5 years, a roughly 4-fold increase in fee-earning AUM has translated into an almost 11-fold increase in management fees within the real estate equity business. And so before handing over to Krysto, a few closing thoughts. ICG Real Estate has been built organically, leveraging both the human and financial capital of ICG. And as a result, we've developed a set of competitive advantages, strong corporate connectivity, a focused mid-market strategy in Europe and disciplined underwriting, which together have delivered a strong track record of investment returns. And we've seen evidence increasingly clear over the last 12, 18 months that our approach is generating results for our clients and for our shareholders. And that is why we want to spend more time unpacking this part of the business with you today. And with that, I'll hand over to Krysto to talk more about our platform positioning in the market.

Thank you, Chris, and thanks to everyone for joining the call today. It's a pleasure to speak to you all. I'm going to do two things. The first is to speak about our real estate platform. And the second is to give a summary of how we see the market today. Our real estate platform now comprises close to 50 dedicated professionals based in London, Paris and in New York, but working in deep collaboration with the broader ICG platform. Our business skews towards senior originators. We have 31 either managing directors and principals in the group. That drives, we think, really differentiated origination across our business. And we are a full-control investor. In most of our transactions, ICG holds 100% of the equity position in our investments. That necessitates a very deep vertical integration across all of the disciplines necessary to execute our investments, all the way from origination to execution and then full cradle-to-grave management of the investments thereafter. We operate in both the real estate debt market and the real estate equity market. As Chris says, we are across the capital structure investor. We are constantly assessing the relative risk/return that is on offer as you work up and down the capital structure. And we have across those two strategies since inception of our real estate business just after the GFC, deployed around $16 billion of capital to -- into European real estate markets. That 14-year track record has been across 25 separate funds and SMAs with many of our LPs being with us since the inception of the platform. Very happily, we have been recognized for our activities in a number of real estate publications, both for our fund performance, but also recognition that individual deals can often be standouts in the context of the European investment landscape. Looking specifically at first, real estate debt and then secondly, real estate equity, we have been a pioneer in the real estate debt landscape since just after the GFC. It seems like today, many alternatives managers have real estate debt platforms. We were one of the very first to establish a real estate lending program in 2014, and that has been one of the most active real estate lending platforms in Europe over the past 12 years. We've committed over $11 billion of capital into principally first mortgage senior secured lending, always against very high-quality underlying real estate and backing the very best sponsors in the marketplace. That can sometimes be property companies. Increasingly, in today's market, it is backing best-in-class financial sponsors, but the underlying investment discipline is the same, senior secured first mortgages on very high-quality real estate generally delivering double-digit or close to double-digit IRRs. We have had a very active period of realizations in the past 18 months to 24 months, taking our total realized value to close to $9 billion. Our real estate equity business is somewhat new in its activities. It was established in 2018 and since then has grown to $5.5 billion of gross assets in our business. We'll come on to this a little bit later, but we are a 100% control investor in real estate equity. We invest into a number of sectors that we hold high conviction around. And importantly, we have become a market leader in buying assets directly from European corporates in the form of triple net leases that allow us to construct large-scale diversified cash flows that are typically inflation-linked and are backed by some of the largest and most blue-chip corporates in the European marketplace. And you'll see some of the brands and companies that we've worked with on the bottom of Page 16 here. That $5.5 billion of GAV generates a little under $400 million of annual cash flow back to our investors every single year with a very high degree of predictability. And as we think about investing both real estate credit and real estate equity regardless of where we are investing in the capital structure, a core principle of our investing is that we imbue it with a very deep sense of the thematics that underlie each of the sectors in which we invest. And you can see the breakdown of those on Page 17. Particularly recognizing that real estate has gone through a meaningful structural shift in the last few years, particularly in the real estate office sector, this has been -- this has never been more important to investing. And so we invest in and around real estate that is anchored on digital and AI growth. That has pointed us towards being some of the biggest investors in European data centers and logistics. We have invested in line with the growing population densities driven in European cities and urbanization trends that really drive a need for increased housing and essential services, whether that be social infrastructure or food retail. And then as assets and corporates grapple with the really significant funding needs that they have to implement CapEx upgrades, particularly around ESG and energy, we have been one of the largest funders of assets going through that transition process. That has been a very important and large part of our business in the past few years. I mentioned earlier our real estate equities business focus on triple net lease. This is a style of investing in real estate that allows us to buy or create assets where we are not exposed to the underlying cost volatility of the real estate. So when we buy or we create a triple net lease real estate asset, what are we getting? We're getting a long-term, very predictable inflation-linked cash flow stream backed by a high-quality corporate credit. That allows us to get that cash flow net of insurance, net of taxes and net of repairs and maintenance. What it creates is a highly visible long-term cash flow that can be financed very efficiently, and with a high degree of visibility, dividended back to our investors on a quarterly basis. As investors think about what they want from real estate investing, particularly after this last period of disruption, they want cash yield, they want predictability, and they want good quality corporate credits backing up those cash flows, and that's what net lease gives us. How do we get to the net leases? In three primary ways. About 50% of our transactions, we buy directly from corporates. So we will implement an OpCo/PropCo structure with the underlying corporate where we will own the real estate and lease it back to the corporate. That allows the corporate to do a number of things, but principally allows them to receive capital to either improve their balance sheet; fund growth initiatives in their business; in many cases, fund M&A. Secondly, we will build or create new assets that are built-to-suit and very specific to the underlying corporate occupier. We will be a financing provider in essence, to brand new assets that are operationally critical to the corporate. And then in a number of instances, we are opportunistically acquiring triple net leases in the market. In today's volatile real estate world, we've been buying from open-ended liquidating funds. We've been buying from other distressed or motivated sellers in the marketplace. And that has been a very attractive place for us to access triple net lease over the past period of time. And you'll see on Page 19, a snapshot of some of the real estate investments we've made in the past period of time. MIRA Tech Park is one of the largest research clusters in Europe, primarily focused on mobility and defense sectors. We have been financing in our real estate credit business, the construction of new logistics and R&D warehouses on site there. We've had a series of exits in that investment that have been very attractive. The second investment you'll see here is a series of digital infrastructure assets that we own in Central London that are leased back to Vodafone. We own irreplaceable operationally critical digital infrastructure here with a Vodafone 20-year lease. That is an incredibly valuable asset-backed income stream. And on the bottom of the page, we are one of the largest owners of essential retail and food grocery in Italy. This transaction was the sale and leaseback of 23 Coop food stores in the Italian market, where we worked with a very high-quality institution in the form of Coop to structure a sale and leaseback transaction to release capital back to them. And as a result, we ended up with really pristine high-quality real estate. Our strategies are easy to explain on paper, but the real-world proof is in delivering good returns for our investors. And I'm happy to say that across the board, we are either top quartile or second quartile across all of our strategies, both in terms of net IRR and DPI. And that relative performance has never been more important as it is today. Real estate has gone through a very difficult period from a performance perspective. And as we go into what we perceive to be a new cycle, that all-weather strategy that we've implemented and the fact that our portfolios have come through the storm very nicely, that's going to account for an awful lot going forward. So turning to where we see the market today. Our strategies, we think, are very relevant for a market that is incredibly attractive from an investment perspective. First, you heard me speak earlier about our focus on buying real estate directly from corporates. These are corporates in practically every sector in the European landscape. They're typically one of the largest owners of real estate across the board. It's a surprising statistic, but about 55% of all real estate is actually held by owner-occupier corporates in Europe. They are going through a rapid divestment program for a number of reasons. They need capital for CapEx. They need capital to replace bank financing that may not be available to mid-market companies in today's more challenged capital markets. And increasingly, we're seeing corporates engage in a series of special situations that require them to spin off their real estate to make something happen. These can be M&A processes, these can be strategic reviews, large-scale recapitalizations. There are a number of special sets that drive their need to sell real estate, and we've been one of the biggest buyers of assets out of that type of situation. And the backdrop is attractive in two ways. First, valuations have reset. We're typically buying real estate at somewhere between a 20% to 30% discount to peak pricing, and that's for the very best real estate. Lower quality real estate has actually revalued more significantly than that. But our basis in the real estate we're acquiring today is down somewhere between 25% to 30%. It's interesting that Europe has repriced more aggressively than other regions around the world, and we think represents even better value than in the United States or in Asia. But that revaluation would not be attractive if the underlying real estate fundamentals in the marketplace weren't as attractive as they are today. When we think about what drives NOI growth, what drives earnings growth in real estate, it's a fairly simple demand-and-supply analysis. Demand in Europe has continued to be reasonably strong in the sectors that we invest in, backed by some of the secular tailwinds I spoke about earlier. But the really profound driver of NOI growth in European real estate has been the complete lack of new supply. There's been a real lack of new delivery into new European real estate since the GFC. And sitting here in 2026 amidst all of the disruption we're seeing in the markets today, we believe that supply will be constrained all the way through to 2030. And that is a big driver for the demand and supply imbalance that we see driving NOI growth today. Some of that is already being reflected in how we are seeing investors allocate capital region by region today. Europe has certainly repositioned itself as a very attractive place for real estate capital to be deployed. Some of that is the valuation reset. Some of it is the demand and supply fundamentals that I mentioned. A large part of it is a growing sense that Europe is a reasonably stable place to be investing capital today. All of those things add up to increased flows of capital into the European marketplace. So in summary, what are we focused on? We'll be buying assets from noncore owners. We'll be one of the biggest financiers of the huge CapEx needs that are burdening corporates today. We're investing behind primarily two very large themes in onshoring, which is completely reconfiguring global supply chains and supply chain fragility is definitely top of mind for corporates. And we're investing in the increased needs for compute amidst the digitalization and AI disruption we're seeing in the marketplace today. Our business will continue to create value asset by asset and company by company. It's a very intensive process that we lead internally here at ICG. And as I said, we're full-control investors. We'll continue to invest up and down the capital structure. The creativity that we offer borrowers and corporates has become a hallmark of our investing. Plugging into the ICG corporate DNA and network is a huge advantage for us. It would be incredibly difficult for us to prosecute our strategy as a monoline real estate shop. We really do drive huge benefits by being part of the broader ICG platform. And as I mentioned earlier, one of the hallmarks of our investing is the constant reassessment of risk/return as you move up and down the capital structure. Again, that is something that is difficult for a monoline real estate shop to implement and has been a part of our business since 2014, and it will continue going forward. With that, I'll pass it back to Chris.

Thank you, Krysto. And before opening up for questions, a couple of closing remarks. So we firmly believe that ICG Real Estate is well positioned for continued momentum. Our funds are performing well on key metrics, and we operate in attractive markets. Institutional investors remain under-allocated to real estate and are looking to increase exposure. And this is something we are hearing directly in client discussions. As a reminder, we're currently in the market with the seventh vintage of our Real Estate Debt strategy. We're wrapping up fundraising for the second vintage of Metropolitan, one of our real estate equity strategies. And later in the year, we'll be out with the third vintage of Strategic Real Estate, another real estate equity strategy. Against that backdrop, with a clear investment strategy that Krysto has outlined, some evident competitive advantages and ongoing demand, we believe the platform is positioned to continue gaining market share. As a result, and at an attractive point in the cycle, we believe ICG Real Estate is emerging as another driver of future growth for ICG, attracting further capital from our clients, generating compounding fee streams and increasing operating leverage that will support further FRE growth for our shareholders. And with that, we are very happy to take your questions.

[Operator Instructions] So maybe while we wait for a couple of questions coming through. One question that just arrived is what impact do you expect the current market volatility to have on the real estate business? Krysto, this is for you.

Thanks for the question. I think it has some short-term and perhaps some medium- to long-term implications. The short term is that capital markets are clearly in a state of volatility. That means that transactions to some degree, have slowed down as both buyers and sellers wait to see what happens in the Middle East. That will clear up either sooner or later and to some degree, [ is out ] with our control. The broader implications, though, I think, are yet another reinforcement of the sector focus that we have. If you think about the two big issues that the capital markets have faced in 2026, the first is AI and the disruption in the software industry. And the second is the war in the Middle East. As we think about what that means for how corporates use real estate, it has really meaningful implications. AI is driving clearly a very significant increase in demand for data centers and for logistics warehousing. The effects in warehousing and logistics are to some degree, a second order effect, but they're really profound. As an example, if AI drives another uptick in e-commerce spend, we're going to see what we saw post-COVID, which is that there isn't enough warehousing to accommodate that increase in e-commerce spend. The war in the Middle East, again, I think, is intensifying the behavior that we see in corporates to protect against supply chain fragility. Corporates have moved from a just-in-time to a just-in-case model of inventory management. And again, that means that they want to have goods onshore, closer to the end user, and they do not rely anymore on complicated global supply chains. That is driving yet another leg up in the demand for industrial and warehouse space. So it's a super fascinating time for the real estate industry to be thinking about these issues.

Thank you, Krysto. We have one verbal question from James Allen at Berenberg.

Can you hear me okay?

Yes, we can.

Perfect. I've got two questions, if I can. The first one is, I think I noticed on one of the earlier slides that the U.K. is a much larger geography in terms of where the AUM is located versus the group average. Is that purely reflective of the demand versus supply imbalance that you're seeing across Europe more generally? Or are there other reasons for that, too? And then secondly, presumably data centers are very competitive at the moment. What are you seeing in terms of pricing in that market? And how are you ensuring that you remain sensible on pricing and underwriting?

Yes. Thanks for both questions. The concentration in the U.K. right now is really just a reflection of where we see the greatest opportunity set in deal flow. The market here in the U.K. has become slightly more dislocated than on the continent. Rates are higher that has obvious implications for real estate values. And the market has just been a little bit more active and liquid. And so that has driven a higher focus on the U.K. from an investing perspective. But that will shift and evolve depending on where the opportunity set is. There's no structural reason for us to be particularly focused on the U.K.

And in terms of the client concentration in terms of where you -- coming from the U.K. as well, any observations on that?

So we have a growing diversity of clients across the world, both by type and by geography. Historically, the real estate group did have a number of U.K. DB pension funds in its mix. That has, for obvious reasons, moderated in the last few years. And we've diversified the LP base to, I think, a little under 100 LPs now really across the world. So in our most recent vehicles, we've raised capital from the U.S., Europe, Middle East, Asia, Australia as well. Australia has been a big market for us. So it's been a really positive period of diversifying the capital base.

Second, the data center question.

And the question on data centers is excellent. It's absolutely the right question to ask. There is a huge amount of liquidity in that sector. Our focus has been to find very specific parts of the value chain that are relatively undercapitalized. And if you think about the construction of a data center, there are really three parts to the build. There's the preplanning and pre-power connectivity piece of land where the cost of capital is very high because the venture is very high risk. There is a finished product leased to a hyperscaler with a very great corporate covenant behind it. And that is, too, low risk and attracts all sorts of core and very low cost of capital. So we don't play at either end of the spectrum. So far, we have been playing specifically in the part of the value creation that is post planning and post power, but before the end product has a takeout, either a leasing takeout or an investment market takeout. And we actually think that, that part of the value chain is undercapitalized, and we can extract really good risk/return playing in that space. And we've actually been playing it quite interestingly in credit investments that have profit participation in them. That's been the primary way that we've invested in the space where we get the downside protection of the credit investing, but we share in some of the ups if things go well.

Thank you, Krysto. Another question that came through the portal. So the Real Assets business has deployed around $2 billion per annum in recent years, clearly in a challenging and uncertain market. Could you give us a sense of how well resourced the platform is and how much you feel comfortable deploying in a given year across both real estate debt and equity strategies?

Yes. So our business, we think, is exceptionally well resourced for the opportunity set that we see in front of us, which, as I mentioned in the main presentation, is very significant today. We think that we have a team that's set up to invest billions and billions of dollars of capital a year, so in excess of what we have invested in the past few years. The opportunity set is great and the team is structured and enabled to do higher levels of volume. And given the pickup in LP sentiment and some of the progress we've made on the fundraising side that Chris mentioned, we feel pretty confident about achieving that growth in the coming years.

And that also directly ties to the final -- the point on the final slide about the significant operating leverage potential as the platform continues to scale.

Thank you. Another question [indiscernible] through the portal. What is the return profile of your Metro fund series? And how does it compare to the Strategic Real Estate strategy? And would ICG consider having a breakout net lease strategy focused just on data center?

So good question. I'll deal with the first question initially, which was the difference between our Strategic Real Estate equity strategy and our Metropolitan equity strategy, there are two or three primary differences. The first is a risk/return difference. Strategic Real Estate targets a 14% gross return. So it is a distinctly mid-return vehicle. Metropolitan targets 18% to 20% gross returns. And so in real estate parlance, we have a core plus value-add product in the form of Strategic Real Estate, and we have an opportunistic product in the form of Metropolitan. They do also have different sector focus. Strategic Real Estate is diversified to invest in every sector and Metropolitan thus far has been exclusively focused on European logistics and supply chain infrastructure. Would we consider a dedicated data center strategy? I don't think so. We have a great track record in data centers. It's getting a lot of attention, but we can service that through our existing fund series. Although interestingly, we have had LP inbounds and interest in forming dedicated capital around data centers, particularly as an adjacency or SMAs in and around fund series.

Thank you. Another one coming [indiscernible] through the portal, so looking out 5, 10 years, how do you see real estate fee-earning AUM growing? Should this strategy continue to be close to 10% of total ICG fee-earning AUM or more?

Well, I think Krysto can comment on the opportunity for real estate, the long-term trajectory. In terms of the percentage of overall contribution, I think we would expect it to continue to accrete as a percentage of the group, but we're not targeting a specific percentage of AUM coming from real estate. We have a number of strategies that are going to grow. They'll grow at different pace, different speeds depending on the market environment. But I think it's fair to assume that real estate will -- we expect real estate to continue to grow very attractively. I don't know, Krysto, if you've got a long-term view of what you think the real estate business might look like in a 10-year time frame?

Well, I think the only comment is that we are set up and capable of investing significantly more capital, as I mentioned in my answer earlier. The real handbrake on the business over the last 3 or 4 years has been less about ICG real estate and it's been more about the marketplace, which, as you'll appreciate, has gone through a very significant downturn in restructuring. We're coming out of that downturn in restructuring now. We're very well positioned amidst that. Some of our competitors are having a much tougher time. And so we feel pretty good about the prospects ahead.

Thank you, Krysto. Another one more on the themes that we're investing in. If you can elaborate on the reasons why you're playing some things via equity, for instance, infra, essential retail rather than debt, like living and vice versa?

Yes. Very good question. It's not always obvious why that's the case because people might think that if it's an attractive thematic in equity, it would be in debt as well. That's not the case because flows of capital between equity and credit can behave in quite different ways. So to give you an example, real estate equity in the residential space is incredibly expensive. In many cases, we see cap rates in the 3s and 4s. Some of the risks inherent in residential investing, we don't think are reflected in the price that you have to pay to own a residential building. And so we haven't invested any capital on the equity side in European residential. We have, however, found a really profound dislocation in the provision of real estate credit to residential construction. So we are being paid equity-like returns to provide capital in a fixed income format on senior secured mortgages to residential construction. So that relationship between risk and return as you move from debt to equity, it isn't a linear one. There are very sharp breaks in that risk/return spectrum that we try to play around. And that's true as we move through each of the asset classes. Residential is probably the sharpest contrast that we see in the market today.

One on performance fee. So performance fee in real estate, how important are they for ICG Real Estate? How are they structured? And do investors expect them? Has there been any change given the recent soft cycle? And linked to that, also on co-investment, is there -- is this a future for the market? And how much is that offered? Is that changing at all currently?

So I would say that real estate doesn't behave meaningfully different to other private markets asset classes. Performance fees are an integral part of the product offering that is widely accepted by LPs. And even during this more difficult period, there's been -- there's really been no pushback on the architecture of the fee construct, either on performance fees or indeed on management fees, where, as Chris mentioned, on the real estate equity strategies, fees on committed capital rather than invested capital continue to be common place, and that's what we achieve. Co-invest is a part of the program. It's a small part of the program. We try to keep it capped and very focused because the funds are the primary method through which we're deploying capital. And it is part of the real estate marketplace. I would say it's probably less prevalent than in other private markets asset classes, but it is part of the program.

And maybe unlike within certain corporate strategies, real estate co-invest will often have some management fee. That's [ contributed ] to it. Not the full fund level, but it's not all fee free.

Yes. That's absolutely right.

Are there any real estate capabilities that ICG doesn't have today where inorganic growth could make sense?

Potentially. There's a lot of different ways to invest in real estate, and we see smart people doing smart things in the marketplace. There is a lot of growth that remains in our core product offerings, and our focus is on extracting that first. But there are parts of the real estate market, including, as I think an earlier question that was asked, some of the sectors that are more infrastructure adjacent that are certainly areas for growth that could be captured by us over time.

One last question. What level of yields are you buying up now? And how does it compare to the recent peak?

It varies very significantly asset class by asset class and geography by geography. But if we take a middle of the road U.K. logistics asset as an example, at its very, very peak, the very best assets would trade for high 3s cap rates. That has probably moved out to mid-5s cap rates now. So 150 to 175 basis points. Now one thing that people will appreciate is that 175 basis points moving from high 3s to low 5s is very different in terms of its value change -- underlying value change than going from 6% to 7.5%. It's a really profound driver of the valuation reset that we spoke about earlier.

Thank you, Krysto. And with that, I think we are at the end of the presentation and the Q&A. If you have, of course, any further questions, Chris and myself are available to speak one-on-one on the back of it. There will be a recording that will be published on the website in the coming days. Thank you for your time, and have a good afternoon.