Immobiliare Grande Distribuzione SIIQ S.p.A. (IGD) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call operator. Welcome to IGD's Presentation of 2020 Full Year Results. [Operator Instructions] Let me now turn the conference over to Mr. Claudio Albertini, CEO of IGD. Mr. Albertini, go ahead, please.

Thank you. Good afternoon to all of you. As you've already seen in the press release and from the presentation, late this morning, our Board of Directors approved the 2020 accounts to be then submitted for final approval to the AGM. I'm here talking from Bologna with our colleagues from the Bologna headquarters and Mr. Gasperoni, our Chairman is here with us. Let me start by walking you through the presentation that was sent to you. Let's start from Page 3. And here, we have the so-called key points. That's how we call them. And these key points refer to the 2020 fiscal year. Despite what have happened in 2020, we can say that our shopping center format still proved to be applicable and valid. Europe was not different from Italy. So when restrictions were raised or made softer, the visitors went back to the shopping centers and footfalls went up. And so we had a sustainable and strong footfalls, we recovered about 90% of visitors, and we also increased -- saw an increase in the average ticket. And then second point, let me remind you of the main features in our portfolio. It's urban shopping centers. In our portfolio, they are dominant. They have a dominant position in their catchment areas. And they all have food anchors. And food anchors were very important during the 2020 pandemic, and they're going to be important just as well in 2021. And they were always open despite the restrictions. And another important point is the third point on the list. It's the 2020 COVID impact. All the impacts were expensed through the year -- throughout the year. We will still see an impact of COVID in 2021. That will also be expensed as soon as we know the correct amount to be upside to 2021. But the 2020 impact was expensed despite the fact that through the IFRS 16 accounting principle, we could have spread those effects over the next years, the following years going forward. And then another distinctive feature. At year-end, our cash flow stood at EUR 117 million -- EUR 1-1-7 million. So financial needs for 2021 are fully covered. And also for the first few months of 2022. Also, at the beginning of the presentation, you surely noticed that for a couple of weeks now, we have started the disposal of the hyper and supermarket portfolio worth approximately EUR 185 million, and I'll get back to this later. And we've had some positive interest shown in the disposal. Let's now move on to Page 4, and we dive into the highlights. The rental income stood at EUR 150 million, down 3.4% was the -- following the next 3 indicators I'm going to walk you through that are in green boxes. As we say at the bottom of the page, we've already -- we have EUR 18.5 million. So net rental income have an EUR 18.5 million impact and down to EUR 109 million -- EUR 109.5 million, down 19.8%. Core business EBITDA is down the same percentage to EUR 99.4 million, and FFO stands at EUR 59.3 million, down 28.8%. If you remember, in the top part range of the guidance, 25%, 28%, that's the guidance we gave you last year. Let's move on to Page 5. Market value of our real estate portfolio, excluding leasehold, let me remind you, we have 3 malls that are on leasehold, stood at EUR 2.265 billion, down 4.9% versus last year. And here again, I'll tell you about this indicator at a later stage. And EPRA NAV indicator, now called NRV, is down 8.9%, landing at EUR 10.38 per share with a financial occupancy in Italy, standing at 94.3%. So still quite high, whilst in Romania, slightly lower, 93.6%. Let's now move on to the -- to how things went after the COVID-19 emergency in Italy. We give you a snapshot, a summary snapshot. For those of you who are connected from abroad for the -- but this tells you -- gives you a snapshot of what happened in Italy in the first months of 2020. You see -- we'll see later that was -- we had a good start of the year with good footprint, stable footprint and a slight increase in tickets and sales. Then starting from the last week in February and then early March, and that only looked like an epidemic that was then turned into a pandemic, a global pandemic. That's when problems started. There was a national lockdown. And so 66 days of restrictions were applied to our shopping centers. Our shopping centers were fully closed. Exception made for essential services. And there again, let me reiterate that we have hypermarkets in our malls in addition to other essential services, power pharmacies and pharmacies and to tobacconists, and that was until May 18. Those were the restrictions. And then starting from May 18, there was a lowering of restrictions with the picking up of recovery that seemed to be going back to normal, and we'll see this in some indicators in August, September and October prove that they were very similar to pre-lockdown levels or very close to pre-lockdown levels. And then between half October and the early November, we have the second wave of COVID infections. And so in Italy, before Christmas, we had again restrictions until January 6, 2021, and restrictions, targeted restrictions in certain regions. We've introduced the color ratings, yellow, orange and red. And those restrictions led to another 21 days of closing in our shopping malls. And after mid-October, shopping malls in Italy are closed on Saturdays and Sundays and pre-holiday days. So IGD's shopping center were always open, but with nonessential stores closed for 87 days throughout 2020. That is to say 24% of the total days we had 2020, and that was the impact of 2020. Page 8. I'm moving quite fast through the slides. The top priority was to have our shopping malls be put in the safest possible conditions. We also invested money to a few hundred millions were -- few hundred thousands of euros were invested for thermal, temperature monitoring devices, increase in -- for cleaning or security. And then Page 9. These are the negative trends that were recorded in 2020 due to restrictions. Let me show you in detail 3 lines. So the dark sales, it's mall tenant sales and then hypermarket sales, the red line. And footfalls, it's the gray line, green gray line. We closed the year with mall tenant sales that were down 27.6%. Footfalls were down 29.5%. In both indicators, the ratios were better than the CNCC benchmark. It's the National Association for Shopping Malls. So we have had a slightly better -- still in the negative, but slightly better performance than the CNCC average, about 2 percentage points better, and footfalls about 5 percentage points higher. And hypermarkets had a swinging performance throughout the year, landing with a minus 2.8%. And they have their -- the decline in their sales was 1/10 lower than that of shopping malls. And then there was a quarter during which there seemed to be a recovery somehow. And there were footfalls increasing and through August, September and October. That was it. And then we recorded less footfalls but more targeted ones, and we recovered a lot of -- 87% of footfalls were recovered, and the average ticket increased 17%, about EUR 26, up EUR 3.8. And also overall tenant sales have improved over those last 3 months, and I'm talking about August, September and October. Then starting from the second half of October, we had new restrictions kicking in, and that was it. And I mentioned that before. Let me tell you now, again, as I said, there is this 27.6% of declining sales in galleries, there are some which performs better and others that performed worse than this average. You see to the left-hand side, you see merchandise categories, household goods, and consumer electronics, the performance there were almost positive. Personal and health care, culture, leisure, gift items and sports equipment. All sectors which were impacted, yes, but to a lesser extent than the ones you see on the right-hand side. Restaurants being the one most affected. Entertainment, we have 4 cinema theaters, which unfortunately are still closed, and then clothing, and mostly formal office clothing because of smart working. It was heavily affected and declined heavily. Footwear, too, as well as services because many people, despite the fact that we increased the amount of services provided in our shopping centers, including diagnostic clinics, in particular, but many people postponed their visits to the doctor and other similar centers to better times, and this is something quite common, not only common to shopping centers. On Page 12 now, we maintain the controlled risk profile. Occupancy, as you saw in the highlights, remained high, 94.3% in Italy, 93.6% in Romania. With a signal, which I believe should be interpreted in a positive way, there was a slight downside in renewals and turnovers. But for Italy, that only accounted for the decline of 0.38% and minus 0.47% out of 290 contracts of renewals in Romania. Then negotiations, which we engaged in with our tenants. They were particularly difficult. They were handled on one by case-by-case basis. We entered into individual negotiations with individual tenants, and we maintained 2 criteria. First of all, no changes were made on existing leases. Existing leases remained unchanged. We granted deferrals and temporary reductions, only temporary. Only for the period of 2020, which involved that in terms of both discounts and reductions, we had an overall outlay of EUR 18.5 million, all of which expensed in 2020 and which accounts for less than 2 months worth of abatements granted. Hypermarkets were always open. As I said, they strengthened the civil role through remaining always open. Our shopping centers are not large. They're on average, with a few exceptions, fewer than 6,000 square meters in terms of sales area, and they are mostly located in sole-owned properties where we have hypermarkets and other stores. Coming now to actual figures, and we are on Page 13. Net rental income goes from EUR 136.6 million in 2019 to EUR 128 million without considering the COVID net direct impact. With the latter, we are down to EUR 109.5 million. For malls in Italy, on a like-for-like basis, we recorded a decline of some EUR 4 million whereas on a non-like-for-like basis, the decline in Italy is EUR 0.8 million, and this is due to a change in rental income and variable revenues. And there was an increase in direct costs due to greater provisions, mostly, and then EUR 18.5 million worth of discounts introduced to handle the COVID net direct impact. I'm on Page 14 now. Here, we would like to tell you something about our rent collection rate in 2020, broken down between Italy and Romania. This is a final figure for 2020. In Italy, we collected 91% net of discounts granted and 94% in Romania. But again, for 2021 already, for Italy, we've already cashed in or collected 1/3 of the remaining parts. On top of managing the emergency and our relationship with tenants, our leasing and commercial activities did not stop, of course. We kept working, which led us to further innovating our offering and our proposals in our shopping centers. We introduced new merchandise categories. I'm referring to pharmacies and diagnostic clinics. In particular, for diagnostic clinics, we recently signed a contract with a leading insurance company, which is going to open a few diagnostic clinics in our shopping centers. I'm not in a position to give you any names as yet though. We worked on communication. We invested human resources to digital communication and tenant initiatives were carried out. We will introduce 30 led walls in our shopping centers for digital communication, and we will invest in other areas of digital technology. And we've actually encouraged some tenants to increase deliveries directly at the shopping center, home delivery organized by tenants. On the following slides, you see retailers, which continued to open in Italy. These are not huge names, but well-known names, nonetheless. For example, Mondo Convenienza in Ravenna, Chicco in Tiburtino, Kasanova in Centro d'Abruzzo and Pepco, a Polish international chain that opened in Centro Borgo and will open elsewhere in our network. Our leasing activity continued with a positive result despite the emergency situation. The same holds true for Romania, where we kept working with new retailers and new stores were opened as well as cafeterias and restaurants. I'd like to go now to Page 18. We believe that the true omnichannel approach is also something that requires shopping centers. There is no alternative. There will be an increased level of integration between online and offline. We started in 2019 by introducing in almost all our shopping centers, Amazon, mostly lockers, but also Poste Italiane lockers. We continued in 2020 with a structured use of social media, Facebook and Instagram. And for 2021, it is our aim to define and identify the first digital marketing plan and above all, implement customer relationship management system -- a customer relationship management system, CRM, in our shopping centers. And in future years, we will want to further liaise with our tenants and with their customers or tenants with customers in an increasingly more proactive way with customized offerings. I'm on Page 19 now. We remain committed to sustainability. This morning, our Board of Directors -- you can find this on our website -- approved our 11th corporate sustainability report with the payoff, which is becoming GREAT. It has been the same for several years. Green, responsible, ethical, attractive, together. Each of these letters that make up this word, this acronym reflect what we've been doing. Green, for example. Let me go quickly through it. We invested EUR 1.2 million in energy efficiency measures. We installed 19 EV charging station. We continued with ISO 14001 certification. And green is the most important part of our sustainability commitment, but we also remain focused on the responsible part of the acronym. As I said in the beginning, we were highly focused in particular this year on ensuring the health and safety of our colleagues as well as our shopping centers. Ethical. Well, this is another unique trade of ours. We obtain the UNI ISO 37001 certification. Before us, Romanian subsidiary had obtained it. That is the only Romanian company having this certification in Romania. Perhaps it is not the only one, but certainly the first one. And we got the second renewal of the 3 stars legality rating and the maximum score awarded. And also this year, we formalized our adhesion to the United Nations Global Compact with all the targets and goals that were set for the period between now and 2030. Attractive. We defined a digital plan, as I said before, and put it together hard with strengthened -- alas, this was not envisaged. But anyway, we strengthened our relationship with our tenants, in particular, with a view to managing the lockdown stage and its consequences. I'm on Page 21 now. Here, you'll find a summary view of our portfolio. As usual, it was assessed by 4 independent appraisers at market value. Portfolio was down 4.86%, including leasehold properties, 3 leasehold shopping malls lands to fair value assessment or appraisal down 5.22%. So from EUR 2.436 million to 2.309 -- sorry, billion sales, EUR 2.436 billion to EUR 2.309 billion. On Page 22, you will see how our portfolio has been moving over time. Net of leasehold from EUR 2.381 billion in 2019, broken down in the different asset classes, shopping malls, Romania and hypermarkets. You see how it moved over time. And you see the EUR 115 million decline in fair value change is due to DCF assumptions. 30% is a change in new rates applied by appraisers and 75% cash flow variations, forward-looking cash flow variations that are already factoring in the COVID impact I mentioned before. And then some CapEx were not included in the assessment in the appraisal led by the individual appraisers, and they were expensed over the year. And we are talking about Porta Medicea, [ EUR 6.5 million ] change in value for fair value for Porta Medicea, and also the [ EUR 0.5 million ] of fair value change for Romania as well to then to then get to EUR 2.265 billion at the end of 2020. Asset management activities in 2020 and it's going to be the same for 2021 and 2022, but it was flexible and sustainable. And as we already said in other conference calls, this year, we sizably reduced our investment plan. Our CapEx plan for -- we're talking about 2021, we have disclosed EUR 58 million, and we deferred about EUR 40 million worth of investment to 2021 and future years for total investment in 2020 that stood at roughly EUR 18.3 million. In 2021 and 2022, we want to be very conservative and at the same time, flexible. We are going to invest in undeferrable assets or activities. Extraordinary maintenance and pre-letting, but we still have a foot on the brake when it comes to other investments that we were supposed to engage in 2020, but we haven't. And that were deferred. In the next page, there were -- we also deferred the opening of the Porta a Mare project. It's going to be the first half of 2022. That's the new deadline. Casilino, we have already restarted it, restyling and remodeling. And then Porto Grande, La Favorita and Porta a Mare will also be restarted as soon as we have a better picture of we can do and as soon as things improve versus what they are like now. And then Page 25, if you remember in our strategic plan, we'd already disclosed a disposal, a portfolio disposal to keep our loan-to-value in the 45% range or area, but it went up to 49.9%. So for 2 weeks now, we've started a process to dispose of hyper and supermarket stand-alone portfolio. It means hypermarkets and supermarkets are not in shopping malls where we actually own the mall. So they are actually stand-alone or they are in shopping centers where the mall is owned by third parties. And we gave mandate to a well-known player, CBRE, and as premier international adviser, and our target disposal target is about EUR 185 million. We are confident that we can complete the disposal by the end of -- they have an appealing net initial yield and stable cash flow with long-term contracts, spanning 2038, 2037. So with possible further extension, so they are appealing. And the cashing in stemming from the disposal should have an impact on our loan-to-value of about 4-point decrease in loan-to-value. Let's now move on to the section 4, our financial results. So Page 27. Core business EBITDA is down from EUR 125.2 million to EUR 99.4 million, factoring in COVID effects, down EUR 8.5 million (sic) [ EUR 18.5 million ] due to COVID net direct impact. And then, of course, we have rental income decline. That also affected our accounts. Financial management figure net of accounting items and IFRS 16, nonrecurring charges from EUR 31 million to EUR 29.6 million, net of any negative carry. So we have a decline in financial management, and I'm going to the next page. So we've tried to limit the decline FFO going from 83 to 77.8. And then, of course, we land at 59.3 full year 2020, EUR 0.54 per share. That's the FFO. As I said at the beginning, the result it's in the top part of the range, but it's still in line with the part of the range we disclosed in August when we revised the guidance, although not knowing exactly what would have happened later. Let me reiterate. Once again, I know I gave it before, I said that before, but all of 2020 COVID effect, EUR 18.5 million, were fully expensed in 2020. If then we'll have other effects, I'm sure we'll have them, of further rebate or something like that, they will be part of the FFO and the profit and loss account for 2021. NRV or the former NAV is EUR 10.38, down 8.9%. All other indicators were slightly lower in declining. We're talking about NTA and NDV. They declined less. So NRV is EUR 10.38 per share. 2020. So a very much focused on liability management for the financial part. And here, I would like to mention some of the main things that we have been doing. First of all, we renewed in 2020 our committed credit lines. That is to say revocable credit lines by 2 leading credit institutions, for a total of EUR 60 million. We extended the duration to 2023. So whatever happens, we have these committed credit lines, which have been renewed and on which we pay, which are irrevocable and for which we pay something so that we are safe here. We got a state guaranteed fund through MPS. With such a guarantee for EUR 36.3 million, we have an ad hoc account here and liquidity is in the use for the expenses envisaged by this type of funding. That is to say working capital and current expenses. We used about half of the amount so far. We maintained -- we were in constant dialogue with our rating agencies. The agencies that are -- have been rating us for some time. Specifically, I'd like to point out that we still investment-grade for Fitch despite the fact that the outlook remains negative, which allows us not to trigger any step-up clause on our outstanding bonds. Finally, we started all the procedures needed for early repayment of the outstanding amount of the EUR 300 million loan, which is EUR 71 million, which was the subject of a tender offer exchange when we issued the EUR 400 million bond. And on the 1st of March, we will actually repay EUR 70.7 million using our cash on hand. This has a cost of 2.65%, if I'm not mistaken, and liquidity has a remuneration of 0, which is why we asked for early repayment despite the fact that it was in the 3 months earlier, but at least the 31st of May. So we are reimbursing 3 months early anyway. At the end of May, we should have paid anyway. We're supposed to have paid anyway. Financial structure, I'm on Page 32 now. Here, you find a breakdown. Our debt is balanced, well balanced between market, legacy bond and banking systems, 56% market and 43% and something the banking system. 3/4 of it is unsecured, that is to say there are no guarantees, which means that we have an opportunity going forward to go through secured transactions should we feel it is necessary for us to do so. Net debt at the end of the year, net of EUR 117 million worth of cash was EUR 1.155 billion, slightly down compared with the previous year when a EUR 1.162 billion, which was quite good because despite all the negative effects, we managed to preserve rather than increase net debt. Loan-to-value is up. But as you can see here in the box, the second bullet, it increased mainly due, alas, to the increase in the value -- to the fair value decrease. And the loan-to-value is 49.9% without considering IFRS 16, which was introduced 2 years ago. Without this, it would be about 2 percentage points lower. ICR is at 3.2x, with an average cost of debt which is slightly down 2.3% as compared to 2.35%. On the following page, you find our debt maturity. Starting from 2021 going to beyond 2026, where the blue part are the maturing bonds. The yellow part or the orange part is a bank loan. And the part for 2021, as I said before, will be reimbursed a few days from now. We have already reimbursed part of it. In 2022, we have EUR 150 million worth of a maturing bond. We believe that with the disposal that should be completed by the end of the first quarter and beginning of the second, we can have the liquidity together with the cash flow of the year, which we need to easily reimburse this maturing bond, too. In 2023, we have a bank loan, a syndicated bank loan by BNP, EUR 200 million worth of it. And the public bond with EUR 400 million worth that didn't -- which matures in 2024 and again, another one in 2024, which is worth EUR 100 million. This allows us to fully cover this year's maturities as well as part of the following year. We believe that we can complete the actual disposal in the first half year period, which means that we will have everything we need to fully cover next year, too. Let me come now to the final parts, dividend and outlook. Consolidated accounts end with a loss of EUR 74.3 million. The same holds true for the holding company. Based on the SIIQ regulation, so there's no obligation to distribute dividend this year. This is not the only reason why we decided not to distribute any dividends this year. At this stage, we felt it was very important for us to be extremely cautious and maintain an investment-grade profile. Therefore, the Board decided to propose to the AGM that no dividend be distributed. This was a difficult decision taken by the Board, consider that since our listing in 2005, IGD paid out dividend for 15 consecutive years. And on a growing level, apart from last year, which was slightly down because we were already seeing a rather critical situation. So this is an event which we consider to be a one-off event and the result of the emergency situation. As I said here, to the right-hand side, as soon as external conditions allow, and I believe that in 2021, conditions should improve if vaccinations proceed at a faster pace. So it is our intention, starting from next year, to resume a dividend policy in line with previous years. Coming now to the outlook. Again, we've been bold here. We're trying to be as bold as possible. As you know, 2021 is still a difficult year. Yesterday, our health minister announced the current measures that current restrictions will be maintained until after Easter. That is to say until after the 6th of April. And with that, we will also have a maintenance of weekend closures for shopping centers. And let's hope this is the only thing that is going to be maintained. We were cautious in our approach to 2021. We already made provisions, and we envisaged discounts despite the fact that they were not envisaged as being of the same size as in 2020. Since we are expecting the economy to recover slightly in the second half of the period with openings also resuming, which would lead us to considering something that you might consider perhaps a bit reckless. But we expect our FFO to grow next year in a range of 3% to 4%. I know that some of our peers preferred not to provide any guidance. We do. And then we will see when we meet again in early May for the first quarter results, we will try and give you an update either then or perhaps when we meet again for the half year results, but that is what we always do at that time. We always provide you with an update. Of course, and this is always on condition that we have a recovery starting from the second half year period of this year with a vaccination plan that proceeds apace, and this 3% to 4% does not include the effects of the disposal. Were the disposal to be completed by the end of the first half year period, then this 3% to 4% will have to be amended. I finished. I'd like to close by referring you to Page 37, where you see our agenda on the 15th of April. We convened our Annual General Meeting on first call, but that is when it will be held. Not only will the AGM approve the accounts, but I remind you that we have an expiring Board of Directors therefore, at that time, they -- we will present the new list -- the new list and new names. On the 6th of May, as I said, we present results of the first quarter. On the 5th of August, we will present the results for the first 6 months. And on the 4th of November, those for the third quarter. I'd like to thank you for your attention. I remain available for any questions you may have.

[Operator Instructions] First question comes from the line of Simonetta Chiriotti, Mediobanca.

I have a few questions. The first one, when you gave us the cash in target for disposals, I'd like to know whether that target implies a sale, a disposal at values in line with the book value of the assets you're going to dispose of. And also, I'd like to know how you are moving when it comes to 2021. Are you going to move when it comes to negotiations with tenants? In what you said about FFO there's not much room to recoup the rebase that you granted last year. So as far as I understand, these are confirmed practically, as the room for further recovering them, it's quite limited. So are you going to have the negotiations? What route, what pathway are you going to follow in that respect? And then one final question. What are the parameters that you use? Or what are the most important things you take into account when it comes to dividend payout decisions? So FFO, a loan-to-value going back to your previous targets? Is that the main factor or any other factors that may come into play when it comes to dividend payout?

Yes. So I can provide you with additional info. Yes, the price, we listed EUR 185 million. I mean the price of the disposal is in line with our book value, slightly higher than our book. So it's a target price with a yield given the quality of assets and tenants should enable us to get the cash in we assumed on when it comes to our growth assumptions. Of course, we know that we will have to grant further extensions or further rebates or somehow grant lower rents, which made assumption for a lower figure. But generally speaking, again, we want to be very conservative, but we're talking about EUR 10 million, EUR 11 million worth of rebates that were assumed, which we hope we'll be using more or less -- sorry, using less of those. But the provisions we made in 2021 are very conservative. We think in 2021, we will have savings on what we provisioned in 2020 and use less of those provisions. But again, we were very conservative in our assumptions. But Mr. Minister of Health yesterday said that there will be an extension of rescission until Easter. So we think this -- so our approach, I think, was quite consistent or even could be considered excessively cautionary. But what we said before is mainly applicable to 2020. It's one of a kind. It's one-of-a-kind situation. Loan-to-value is our northern light, so to say, when it comes to dividend payout. And we want to get down to 45%, as we said. In our budget best case without disposals, thanks to the not paying out of the dividend and the cash flow we have, we could take it down 2 further points plus with the disposal of 3 to 4 points lower. So we should hit the 45% area by year-end. And then we can start applying our dividend policy again. Ever since 2005, we've always paid dividends. Only in 2020, have we -- are we not going to pay them. But starting from 2022 versus 2021, we'll start paying them out again. But now we want to have a financial setup that is as sound as possible. This is what we want to achieve. We could have used freed up reserves, not reserve from -- because of losses, we're not forced to impair. But we were driven in our decisions by being very conservative and very cautious. So 2/3 of FFO, this is what we mentioned before. Then in 2022, once we complete the disposal and we get back to our loan-to-value we should have 2/3 of FFO as a parameter as we had in the previous years.

Can I ask a further clarification? You said EUR 10 million to EUR 11 million of further rebate or expansion or its actual discounts and rebates?

Yes, not extensions. It was a bit more last year. So last year, it was EUR 18.5 million. This year you're expecting EUR 10 million, so the FFO growth will be computed through the calculation of the delta. We have not -- the parliament has not yet approved the so-called [Foreign Language], the relief they are going to grant for the different professions and for the different industries. And this [Foreign Language], this relief, the government is going to grant. There was an aid to our tenants, a relief for our tenants, depending on the type of business they are in. So 7% of their lease and 60% of their rent. And you're going to get a tax credit for that, plus they -- the cap was removed because large tenants could not benefit from it, and now there's no more cap. So it's still pending. Probably they're going to add further relief or further -- they're going to grant further relief or aids to ski plants and equipment because of the fact that people could not go skiing. And it's probably one of the law decree that will be passed by the new government or that will be submitted to the parliament by the new government. This could really help us when it comes to negotiating with our tenants. We were partly helped in 2020 through the different [Foreign Language], the relief provisions. And because this is starting to affect a broader base of tenants, and our contracts it's normally rents -- sorry, leases, it's leases, not rents. So that really makes us hope for the best. It's clear that if we complete the vaccine campaigns, everything is going to improve. Unless we get the vaccines, they're going to lock us up again as we go forward.

Next question comes from Davide Candela of Intesa Sanpaolo.

I have three questions. The first relates to your disposals. But it's something more I'd like to understand further to what you said. Specifically, what was the rationale that led you to choosing those specific assets? Is this because they are more liquid or perhaps because you want to extract more value? Could you give us some color -- some more color on this? And then again, on disposals. In case of the capital gain after the sale of the portfolio, under the rules, do you have an obligation to distribute the capital gain through dividend following upon the actual disposal? And then I'll have a further question. It concerns negotiations for the month of November and December, renegotiations which are still ongoing from what I read from the press release. The impact we might expect from these. Have they already been provided for with provisions in 2020 so we are not to expect any impact in 2021? Or would they also be reflected in 2021? And then one last question. Can you remind us of the possible impacts deriving from the triggering of the step-up clause on the financial charges.

Thank you for your question. That gives me the opportunity of being clearer. The rationale we followed to identify our portfolio is the following. They are 2 supermarkets and 6 hypermarkets. And as I said on the slide, they are stand-alone properties. They are found in shopping centers where we do not own the mall. So we preserved our unitary ownership of shopping centers. Where we own both the mall and the hypermarket, those type of markets were not part of the portfolio that we want to dispose of. We focused on the hyper and supermarket asset class because selling malls is the last thing one would want to do at the current juncture. This is an asset class where after talking to our adviser, are the -- is an asset class that market showed an interest in. The procedure has already started and it started off well. We've already received about 15 expressions of interest from entities to which our advisers are sending the NTA and everything needed, confirming the fact that, that is an asset class, which is interesting. These were the 2 guiding criteria. Hyper and supermarkets, an attractive and interesting category for investors, more specifically for long-term institutional investors, and these are contracts expiring between 2037 and 2038, all of them. And on the other hand, within that asset class, we opted for the least strategic ones. We've always attached a great deal of importance to the fact of having the entire property, the entire ownership of the shopping centers, both malls and hyper and supermarkets, which means that when we go through remodeling, which we will do in the future, to be much more flexible -- to be much more rapid and flexible in reductions and creations of new spaces in our malls. Where we only own hypermarket that is more difficult because you have to liaise with the other owners. So these were the 2 criteria. Capital gains. There is an obligation to distribute 50% of the capital gains. Well, that is a problem I'd like to have. Again, on realized gains, which will have to be distributed in 2 years. So not -- you have 2 years' time to do that. We don't -- didn't do that right away. So again, we have 2 years. Were we to have a capital gain of EUR 10 million, we would do that EUR 5 million each for every year. And it is a problem I'd like to have next year and the following one. Provisions, we were not too clear probably. Provisions made in 2020, concern 2020, and they are extremely conservative to the point that we might even have some savings in 2021 that we can use for 2021. But that 2021 is a different chapter altogether. It just started. We have our tenants which had some days of closure after the -- until the 6th of January, then we went back to yellow, orange and red coloring with weekends being always closed. We will have to manage this stage with them. In our 2021 budget, we have already envisaged and included in the guidelines I gave you, those EUR 10 million roughly of provisions, EUR 10 million to EUR 11 million worth of provisions, quite conservative on the step-up. And I stand corrected by Bonvicini. Actually, Mr. Bonvicini will take this question.

Good afternoon. As our CEO just said, we chose not to distribute any dividends in order to maintain a low loan-to-value level and to safeguard our position in an investment-grade area. So we want the clause not to be triggered. That said, the correct answer is it depends. It depends, in particular, on when the rating is -- the divestment-grade rating is lost. The bond which within our debt structures leads our overall position, the step-up is applied starting from the following coupon. Now this coupon is on the 28th of November, so it would only affect 1 month, very little indeed for this year. On another EUR 100 million bond, it affects the current coupon. Since that, it was the old type of clause that we'll be using. For the bond that we are currently reimbursing, it will not apply because we are repaying. And for the bond maturing in 2022, there is no step-up clause involved. So the overall answer is if you imagine, in the future, a full year, that would be EUR 500 million, on which you have apply a 1.25% step-up clause, but this will not hold true for the current year.