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

Good afternoon. This is the Chorus Call operator. Welcome to the conference call presenting IGD's Full Year 2021 Results. [Operator Instructions] Let me now turn the conference over to Mr. Albertini, CEO of IGD.

Good afternoon to all of you. As you know, we had a Board meeting this morning, and the Board approved the 2021 results. And we already have a proposal for the -- both the AGM and the EGM of IGD. Timing was not a happy one, so to say, to present our results. It's a day today that is not very happy for financial markets because of what has been -- because of what has happened. And despite that, our results are overall, from our perspective, are generally satisfactory. Let me start from Page 3 of the presentation that you probably have before you. So 2021 at glance, good operating performance, especially after restrictions were lifted in Italy for shopping centers, shopping malls, and I'm particularly referring to weekend closings and pre-holiday closings. We started -- well, the restrictions were lifted after May 18th. So from June to December, we had a good performance from the perspective of tenant sales. We always make a comparison with 2019 because that's the "last normal year" and it was a good year for us, by the way, performance-wise. So over those 7 months where the main restrictions were lifted, restrictions for our business, with the same level of tenant sales, occupancy went up of about 100 basis. We are back to being above 95% occupancy. And with the business plan, we disclosed [ high growth of ] December, we want to go back to pre-pandemic levels within the business plan time frame, that is to say, up to 97%. And there's a robust, strong increase in profitability, despite the fact that 2021 witnessed a hit from our point of view. FFO went up 9.2%, so we exceeded the guidance provided. And we'd already revised it upwards in August, if you remember, our FFO guidance. In February 2021, during the full year 2020 presentation, we've given you a 3% to 4% range. That guidance was then revised upwards after looking into the interim results, 7% -- 7% to 8% was the range then and up 9.2% if that exceeds the top half of the range. So -- and then dividend yield. Dividend yield was given versus the closing of last night. This morning, we were below last night's value. And I think that after we disclosed our results after our earnings report, it's been recovering a bit. So we'll see what happens during the day. A very important thing, however, for 2021 was our financial setup, a financial structure that has been further enhanced and strengthened our loan-to-value ended below 45%, 44.8% to be precise. If you remember, end of December 2020, it was nearly 55.0% with a loan-to-value which was 49.9%. So we recovered more than 500 basis points. Another important piece of information as to our financial structure is that thanks to the disposal transaction we completed in November last year and also, thanks to the cash we generated over the year. At year-end, we have about EUR 160 million of cash at hand with which we can cover our maturities for 2022. And we're also working, and I'll say that again, on the refinancing for a loan -- the 2023 loan. So we -- it's a growing result satisfactory as far as we are concerned and also laying the foundations and paving the way to start with our -- embark in our 2022, 2024 business plan that was approved in December last year, so about a couple of months ago. If you go to Page 4, you see our financial highlights and Page 5. So rental income is flat EUR 145.1 million, down 0.4%. Net rental income is up, as they are not as impacted by the COVID effect. So it's EUR 118.5 million, up 8.2%. Core business EBITDA is back to being above EUR 100 million, it's EUR 107.3 million, up about 8%. And FFO, I've already mentioned that it's slightly less than EUR 65 million and up 9.2%. And also the note on the bottom of the page is very important, and it will be copied to the next slide as well. This year, starting from 2020, all of COVID costs were all accounted for as one-off net impact for the fiscal year 2021. And that's -- the same apply to 2020. Let's go to the next slide. So FFO, EUR 52.8 million versus a loss of about EUR 74.3 million in 2020. We recovered very well on our fair value valuation that are flat on a like-for-like basis versus a loss of 120 basis points last year. The market value for our real estate market value is EUR 2.140 billion, down 5.6% in absolute terms. But on a like-for-like basis, it will be up 0.64%, also growing is the former NAV. Now it's EPRA NRV, it's EUR 10.85 per share, up 4.5%. And loan-to-value is down 510 basis points, and we land at 44.8%. Let's now move on to the operating performance. And here, you have a summary of a comparison of the main indicators between 2020 and 2021, starting from the outlook in 2020, we had 87 days of closing between March and the summer, it was a stop and go throughout the year. And then in 2021, the closing days were 44, half of them practically. And so a positive result, indeed, but still affected by, again, the closings. COVID net impact between losses and rebates were EUR 18.5 million in 2020, and this year, much lower, we are at EUR 7.2 million. And all that occur with an average ticket up 24% versus 2019. And again, all the comparisons are with 2019. But last year already, the increase in the average ticket was of 18%, 1-8 percent. So there are less footfalls, but more targeted and with higher purchases. And then tenant sales, full year down 27.6% versus 2019 in 2020 and down 11.1% in 2021 always versus 2019. And then footfalls full year again down 22.2% versus 2019, but they were down 29.5% in 2020, again, always versus 2019. And we have our industry benchmarks, the CNCC, the National Center for shopping malls and shopping centers, including many properties, and 316 were the shopping centers, [ 130 ] were the shopping centers included in the benchmark. And both for tenant sales and footfalls, we performed slightly better than the benchmark. We slightly outperformed the benchmark. What can we expect for 2020 (sic) [ 2021 ]? When I'll come back to this later, we indeed expect a scenario that closer to normality somehow. A few days ago, of course, we were talking about something normal with reference to the pandemic, and therefore, on the pandemic side. Also, thanks to the provisions approved yesterday by Draghi government, that is the state of emergency will come to an end at the end of March, March 31. So almost all restrictions or the main restrictions should be lifted. Mr. Draghi was very clear. He said we want to reopen everything. And from that perspective, therefore, good news indeed, but the bad news are with respect to what is happening right now in Eastern Europe. You know very well what I am referring to. And we've already had some hints at this -- at the end of the year due to the increased energy bill. It's a perfect storm somehow where we have a very strong growth in energy prices in all countries, chunking of the supply chain with a very strong demand and supply that was not enough to somehow meet it. And so geopolitical tensions were then added to it tension as to the cost of energy. We are concerned, not yet alarmed, but somehow concerned about the consumption trends for the next few months. Indeed, they will be affected by what is happening now, and we are concerned I say, but prepared. We are trying to use the levers we have available and working with our tenants. As I was saying, what happened ever since the restrictions were lifted, May 18, 2021, that was the beginning. And then no longer being closed over the weekend. And then until May, you see the trend was characterized by the minus -- double-digit minus signs. And then after that, there are still minus signs before the figures. But as to the tenant sales, we are back in the positive around October, which was the best performing months. And then it went back to well slightly negative in November, December. But if we consider June as the beginning of the time computed, from June to December, practically, we broke even. And starting -- footfall, starting from June, we're down 16%, 1-6 percent. I always like to read the indicators the other way around. I would say we have recovered 84% of footfalls rather than losing 16% because many of these are those who go less to the shopping center, but they buy more when they go to the mall. Occupancy. It's the next page, Page 9, it's growing again. And it's been growing throughout the year, especially in the second half when restrictions were lifted, as we said before, and then very effective and targeted leasing activities and then improving the occupancy rate. And in 2021, we lost -- closed 23,000 square meters closed, but we remarketed 25,000. Not all of them are open yet, but we already have signed contracts for them, even for those who have not yet opened in 2021. So we did a lot of work to recover and that led to an increase in occupancy. Page 10 now. The occupancy went up of about 124 basis points to be precise, it's 95.16% with a flat upside, 135 renewals in Italy, and Romania 353. Romania is showing slightly positive upside. And with occupancy, they recovered a bit less than Italy. They're slightly below 95%. Our merchandising mix is indeed changing. It's Page 11 now. You know that one of the goals in our business plan was -- and not only in the new business plan, but also in the previous one, it's the changing merchandising mix to -- with a slow reduction, decline of the apparel of clothing. Three years, you see 2019, 2020 and 2021, it's 3 years, so we are reducing the reliance on clothing. You see clothing stores, accessories, footwear, luxury, sports, which is a ever-growing component in our shopping centers. So the mix is growing vis-à-vis, well, with more innovative product classes, also home goods, household goods, 8.8%. And then culture, leisure and gift items were flat over the last few years. And then personal and healthcare, 4.4%. And then electronics, we'll see that later. Stressing that it's one of the sectors that performed best in our shopping centers in 2021 together with household goods. And then entertainment, again, it's flat, just like restaurants. Let me remind you, those are the industries, the sectors that suffered most, think of cinemas of playgrounds for kids or -- and the type of clients we are, it's closer to fast food and traditional restaurants. And then services, it will be included in the business plan. I was talking about tenant sales. And here, you have a breakdown for '21. Top of the list, you see household goods and it's also with some new addition to our tenant mix in 2021. Strong demand also from customers. People are spending more time at home. And therefore, they want to make their homes more welcoming. They buy a lot of household goods, and this is a segment which is performing very well. Electronics is also up 14%. Culture, leisure, sport, as I said before. And clothings is minus 4%, but actually, it's a positive piece of information. Clothes, this is the segment which was impacted the most because of working from home and people were not buying clothes to go to work. So having this down to minus 4% is somehow reassuring. Child and shoes, minus 15%. The segment, industries, which were hit the most are personal and health care and services. We have more than 20 dental clinics. People were putting off their visits at the dental clinics. They were waiting for better times to go to the dentists and the same holds true for restaurants. Restaurants were badly hit by pandemic. In the following pages, following slides, you see some examples of a few new innovative brands we have added to our tenant mix. The first one is Dyadea, health care and outpatient centers. We opened the first medical center of Dyadea in Centro Borgo, Bologna. This is quite an old -- I mean, old dated shopping mall close to Bologna. This will be just the first of a long series. We are confident that new openings will take place with Dyadea. Another one will be opened in Catania, a similar medical center with another tenant. So this is an area of segment we want to focus on going forward. [ IPoke ], this is a new restaurant brand. Young people love it. IPoke is Hawaiian food. We've opened it in 3 shopping malls as well and Portobello. Portobello has been on the news on financial news paper, household goods. But there are also some more traditional tenants such as Pandora on Page 14, a new opening in Catania. And this PEPCO, this is a Polish brand, a new Polish brand. We started with them in Romania with our Romanian portfolio. They were interested also in opening up in Italy, and we have already opened a few locations and a few more will be opened in '22. Electronics is another segment where we are betting on. We are quite confident with -- we're talking about Romania. Well, Romania -- in Romania, we had 44 new openings in '21. I'll give you -- these are some examples with some new brands. Page 16. What about collection rates? Well, we're doing well in this area, too. In 2021, we are almost at 100%, slightly better in Romania, 96%; Italy is 94%. The collection improved quite drastically during the second half of the year. All of this happened in -- during the year when despite the strong demand from our tenants for help, we granted a temporary discounts, monthly payments as opposed to quarterly payments, monthly billing. For 3 quarters, we used monthly billing. So 2021 was not an easy year. And despite that, we have achieved very good results. And we've seen that our comparables, we fare very well compared to our comparables. I'll now move to the next 3 pages, starting on Page 17. This morning, our Board of Directors approved the financial budget for 2021, but the Board has also approved the sustainability budget for the 3 years in a row. It's been 3 years that we examined and approved the sustainability budget. This year, we have decided to disclose the summary of our sustainability project and plan mid-March our sustainability report. Our full sustainability report will be published on our website. And this will be the 12th sustainability report for IGD. We've used -- we have created an acronym becoming GREAT and each letter of GREAT accounts for a different area. So G is for green, R for responsible, E for ethical, A for attractive, and T for together. And here, you have some of the main indicators for this acronym those that we take to the attention of our investors. So not just the green targets, but we've also been able to hit the nail on the head in other sustainability areas. I'd like to mention a few words on ratings that we have been awarded as far as sustainability is concerned. Well, first of all, EPRA has granted us for the fourth time in a row, the BPR Gold award. And then also as far as the sustainability budget, this is the seventh year in a row. Quite a few awards and ratings indeed with the quality score, we have the best score for quality score as far as governance is concerned. We've already received 5 ESG independent -- 11 independent ESG rating. It was 6 ESG ratings in 2020. So we have 5 more, 4 of the 6 indicators are increasing. Let me also mention that we are included in 8 stock ESG-focused indexes. On Page 19, you see some certifications, for example, Biosafety Trust Certification, ISO 37001, which is the anti-bribery certification. And then you have UNI ISO14001 certification. Almost the entire portfolio has the ISO14001 certification. And finally, the BREEAM certification for shopping centers. Our business plan aims at increasing the number of certifications. One of the big news for 2021 is the fair value evaluation of our portfolio. We are working with 4 big independent appraisals. Like-for-like, as I said, we have grown by 0.64% in terms of portfolio fair value. There is a big spread between our net yields versus some govs using a 5-year time frame because our contracts have a 5-year term. Next slide, you see some of the value, the fair value per asset class '21 and 2021 (sic) [ '20 and 2021 ]. You see that the power credit is a more in Italy, 1.451. The hypermarket segment is going down in Italy. So we've gone down by EUR 140 million. This asset class has gone down below 20%. So hypermarket accounts for less than 20%. And then on the right side, you see some other initial -- net initial yield indicators and also the net initial yield topped up. In 2021, we had in -- total investments for roughly EUR 23 million. Some of them had an impact in terms of devaluation. So with our fair valuations, we're able to cover for most of our CapEx. Portfolio evolution is on Page 23. We went from EUR 2.265 billion at year-end. The malls asset class went up to 69.2%. Hyper went down below 20% threshold. Some of the main activities we've carried out in 2024 are summarized on Page 24. Some of the main investments were focused on 2 hypermarket remodeling. As you know very well, we are continuing in this action. We are remodeling the hypermarket services. We have already reduced hypermarket services in the past. In 2021, we invested in Casilino and Cone. And here, you have some figures, some fact and figures about this remodeling. But probably, the most important transaction for 2021 is described on Slide 25. The dismissal -- the disposal we made at the end of '21. It was not an easy transaction with a British U.K. counterpart. We disposed of a portfolio, including 5 hypermarkets and 1 supermarket. The total value of the transaction was slightly above EUR 140 million, which means at book value. The cash in -- the net cash in was EUR 25 million into the vehicle that was created to manage this portfolio. So the total net cash in was EUR 115 million. What about 2022? You see that on Page 26. We are still investing in ESG-oriented projects. Please focus on the first 2 boxes on this slide. This is what we're doing in Ravenna, which is to be regarded as our key asset. We are now revamping and decarbonizing the Ravenna more. We aim at zero emissions by 2023, which is absolutely in line with our business plan targets. But we -- right now, we are also installing some -- setting some AI devices, and we'll be doing this also in other shopping malls. This -- given the current increase of the energy bill, we are working on the production of alternative or renewable energy. So this is an example of what we are doing in Mantua and Grosseto, where we are setting some photovoltaic shelters, car shelters. The idea is to provide our visitors with more comfort, allowing them to park their car below a shelter, particularly -- this is particularly pleasing during very hot days in Italy or protecting them from the rain during rainy days. But at the same time, this will enable us to produce 250 kilowatts in Mantua and 3x as much in Grosseto. In line with our business plan, and now I'm on Page 27, but also opening up new smart working areas or working -- joint working areas. This is what we are doing at Centro Nova, but there is something even more interesting. This is what we are doing in Roma, Casilino on Page 28, we called it Casilino Sky Park. They are on the top -- on the roof top of Casilino. We are opening up green areas, the play areas, sport facilities. This project will be finalized at the end of 2022. You have it rendering. The top photo is rendering. There's 2 small pictures you see below are real photos of paddle fields. And we are really aiming paddle courts. So this will be open at the end of 2022. We're -- on Page 29, you see some other projects that we have in our pipeline. We're currently working in Catania and Palermo for the hypermarket remodeling. In Catania, the hypermarket has already been reduced. We now have a new tenant. Palermo will open in the coming weeks. And as we did for Catania, we will attend the inauguration evening. So the new services will be given very soon. So I think the work -- the building work will be finalized in the coming weeks. As you see, the total investment is roughly EUR 3 million. We're moving on with 2 major restylings, starting in 2021. One will be completed in Mantua in the second half of 2022, and then San Benedetto del Tronto H1 2023. And they will be a very strong restyling of the shopping mall and a remodeling of the food court, the building of new services, et cetera, and then the photovoltaic panels on top of the shelters outside and on the rooftops. And then you saw a lot of our efforts, a lot of our CapEx is focused on Porta Medicea in Livorno. We were delayed because of the pandemic last year. So we've moved the opening back in Q3 between July and September. It's -- we don't have a precise date yet, but we are working on it. And I'd like to stress, however, that we have lots of interest in the residential part. We've sold the -- all of the 73 flats of Piazza Mazzini, that happened in the past, and there are 42 more flats to be sold. They should be delivered together with the actual opening of [ Officine Storiche ]. We already have 22 binding proposals and 18 we have preliminary contracts already signed out of 42 flats. Let's now move on to economic and financial data. Net rental income, as I said at the beginning, grows from EUR 108.5 million to EUR 118.5 million in 2021. It's a clear growth, mainly driven by the lower COVID impact, taking up about EUR 11 million. On a like-for-like basis, it's down EUR 4 million because of a decline in the shopping mall asset class, we have been marketing them with opening time and therefore, incoming rent flows that are still slow and are not yet complete. And so we get to a growth of net rental income of 8.2%. Romania grew 9% versus Italy that grew 8.1% on average. Page 33, that's our core business EBITDA. It's back above the EUR 100 million threshold. We stood at EUR 99.4 million last year, and we are back to EUR 107.3 million 2021. Thanks to the change in COVID, the reduction of COVID impact. And EBITDA margin, core business EBITDA margin is again below 70%. That's also the financial management is improving, Page 34, both in absolute terms, that is to say including nonrecurring items. So net of nonrecurring or one-offs is up 7.2%. But also if we include them, it's still improving EUR 3 million. The average cost goes from 2.5% to 2.3%. It's the average cost of our debt stock. I'm about to wrap up. Let's move to Page 35, FFO. As I said before, at the beginning of the presentation, we exceeded, we outperformed the guidance that was revised upward in August in the range, 7% to 8%, and it's growing, thanks to the EBITDA growth. We are EUR 64.7 million, up 9.2%. So 1 -- more than 1 percentage point versus the top part of the range. Also improving the EPRA capital ratios. You see NRV, which basically is the former NAV, net asset value, going from EUR 10.38 to EUR 10.85, not having paid out dividends in 2021 help towards that indeed. That one happened in 2022 as we will be -- as you've seen, we will -- we're back to paying dividends. So we're going to be back to being a dividend company. This is a very interesting slide indeed because it shows your quarter-on-quarter how the company generated cash instead of burning it, and thanks to our management. Plus, we cashed in, thanks to the disposal of the [indiscernible] portfolio, about EUR 10 million per quarter in the first 2. And then as the cash flow generated and after the restrictions were lifted, cash flow started moving better and the tenants started paying more, would give them some delays, extensions, et cetera. And so Q3 performance was the best in terms of operating cash flow. And then also cash flow from IVQ, 14.6%. The debt went down EUR 168 million and EUR 984 million is a net financial position. In the comparison between '20 and '21, all indicators are improving. All the ratios are improving, loan-to-value improved by 5 percentage points, but also our ICR improved 3.3x. Average cost of debt, down another 10 basis points. And the net debt on EBITDA is -- coverage is below the double-digit threshold. So we are at 9.2x, with the opportunity to further decrease over this year. Page 38. The cash at year-end was slightly less than EUR 160 million, and then it increased in Q1, and we will use the cash at hand to cover to service our maturities for 2022, bonds at maturity and cash -- ordinary cash procedures in cash transactions. And then in 2023, we have some more -- well, we have stronger maturities and then also in 2024, we are envisaging a refinancing ahead of time of our 2023 maturities. We are working on the issuance of a green bond. I'm saying bond green. And anyway, Mr. Albertini was saying that in Italian anyway, it's going to be a green bond and we're working to refinance in Q2 practically. Can I say that? Okay. Thank you very much. I was asking colleagues who are experts in finance for permission to say this. Jokes aside, we are working on this issuance, and we hope we are confident that if markets will allow for it. This is not the right time to maybe to mention it. But we hope to have the issuance in the second quarter with ratings that were improved by the agency that covers, its situating from S&P Global, which went from negative to stable. S&P, it's one notch slower, but they improved their outlook from negative to stable over the course of 2021. Very well. We are about to wrap up a proposed dividend per share. This morning, during the Board meeting, a resolution to be submitted to the AGM on April 14 is a EUR 0.35 dividend per share, with a dividend yield of 8.4%. And the coupon is 9 and then, again, the dividend per share paid out. Guidance we had given were EUR 0.25 to EUR 0.30. Why did we make a decision to give a higher dividend to pay out a -- if you remember during the disposal transaction, there's a certain share of dividends that according to the SIIQ regulation have to be distributed over 2 years and with the proportions, we can decide upon. So instead, we have decided to use this little treasure of dividends to paid out now rather than spread it over 2 years. Somehow, you will find all the details in the press release that we sent to you. Well, at least part of that money, EUR 7 million to round up our dividend. We had about -- well, mandatory was about EUR 0.29, and so we are paying out EUR 0.35. And for the next fiscal year, in 2023, the Board and the AGM will approve a new dividend. And so we take this forward. It's another EUR 10 million because of the SIIQ regulations we have, it is mandatory for us to pay out that amount. That is EUR 7 million this year and EUR 7 million the next year, but we did -- it started this year already embedding it into our dividend per share. We think shareholders will appreciate it regardless of whether they are small, medium or large shareholders. IGD, ever since 2005, when we went public, when we were floated, we've always paid dividends from 2005 onwards, to really preserve our financial structure. And last year, we couldn't pay out the dividend, and it was a painful decision, and it did not work out positively for our share price. But this year, we are back to being a dividend company, as I said, and we want to retain that also going forward for the coming years, all years. Last year, too. The last year, the fiscal year was quite challenging, again. It's still challenging this year to even maybe less so, but we have a growth outlook in our FFOs, that's the -- as I said before, there's uncertainties. There are light areas and dark areas going forward. The pandemic is improving, but Mr. Nardi said, we're going to open everything. So for us, that is good news indeed. But there are still clouds ahead of us, especially now. And it's clouds that are very thick inflation at the end of the year. Strong growth of the economy, so strong demand on primary goods and staples and energy, demand for energy, but we didn't expect supply not be able to match demand. We didn't expect this geopolitical crisis. I hope I'm wrong. I hope this is going to be the perfect storm. So black swan, if you wish. But we are living a pandemic crisis, and we're entering an energy crisis. Ever since I have been CEO, it would be the fourth crisis, 2008/2009, the sub-prime crisis. And from the real estate bubble, then 2012 -- '11, 2012, the sovereign debt crisis and then end of the pandemic, we wouldn't have wanted to have now this type of threat ahead of us. I think IGD somehow geared up for the challenge. Somehow, we are ready even in our financial structure, we are working to mitigate risks, and we want to be close to our turnout. So we -- while we throw a harpy on the hurdle somehow. On the other side of the hurdle, we want to give you this guidance at 9% to 10% growth of our FFO. So we should be above EUR 70 million again as far as FFOs are concerned. I wrap up with slide Page 43. This is our agenda, the shareholders meeting, April 14. And then earnings report on May 5, it's going to be Q1 results. We'll see what happens. We hope things will improve from now and then what was the first, the interim report November 3, the earnings report Q3. On the right-hand side, you see the -- our Investor Relations appointments will be attending the STAR Conference on March 23. We were called to the TP ICAP Conference in Paris. And then on June 27, from June 27 to July 1 is the Italian Sustainability Week at the Italian Stock Exchange. And you know that we are working on that and therefore, will be a player there. It took me about 14 minutes, but we have 2 hours. So now we have all the time to take your questions. So I'm here with the colleagues from the headquarters and other colleagues as well to take all of your questions and provide clarifications.

[Operator Instructions] First question comes from the line of Dario Michi with BNP Paribas Exane.

Good afternoon, everyone, and thank you very much for the presentation. I have a series of questions. The first one has to do with inflation. During your first, previous call, your guidelines was 1.5% inflationary impact on 2022.

Sorry, maybe you should speak up or there are some interruptions, I can't hear you.

During your previous call, your guidance, as far as inflation was concerned was 1.5% for 2022. Is this expectation too conservative based on what's happening right now? And what could the impact be in terms of the requests coming from your tenants? Similar question on the same topic. What's, in your opinion, the impact of the energy crisis? You were mentioning the crisis in your presentation. What's the impact for your tenants? Do you think your tenants will ask for a rescheduling of the payment terms? Third question, outlook for 2022, footfalls in January were -- was going down. What would you expect for the rest of the year? And finally, I'm curious about the portfolio value dynamics for the Porta a Mare mall development. What impact -- what has -- what somehow impacts the portfolio valuation growth?

I give the floor to Roberto Zoia.

Yes, indeed, we were quite prudential and conservative in our guidelines. We were not expecting such a hike in the inflation. The inflation that was used for the first bill was 3.8% at the end of Q1. Well, these tenants responded quite well. Almost 70% of our tenants have paid their bills. To some of them, we have granted some soft terms, we have put off the payments, we have granted some extensions, we have accepted monthly payment rather than -- instead of quarterly payments. But as I said, the collection rate is quite good. 70% of our tenants have paid their bills already. The energy crisis will impact our tenants, the entire supply chain, which -- well, it will depend on the products they sell. Some -- so there will be different impact depending on their business supply chain. What really worries me is actually the slowdown in the consumption rate because the energy bills, the cost of energy, the inflation will erode the purchasing power of the final consumers.

This situation is constantly changing. Right now, we are going through a dramatic time in history, given what's happening in the Donbass in Ukraine. Well, we'll see what happens in a few weeks. We are already implementing some mitigation measures. Our commercial department is constantly in touch with the tenants. Over the last 3 years, we have focused on creating a very strong relationship with our tenants, all the discounts and the extensions that we have granted are the results of hundreds of meetings. Last year only, we had 900 meetings with our tenants. We have now have constant direct dialogue with them. They feel we are close to them. So we are worried about the emerging political situation, but we are not in an alarm mode. We are monitoring the situation, and we're worried. It's well beyond our scope of action. We are trying to do our best to mitigate the risks, I mean, as much as we can. We will be monitoring how the situation evolves at a global level. I think as far as Porta a Mare is concerned, I think Roberto is better placed to answer. Roberto Zoia?

Well, the development, the pipeline is quite easy. The valuation were made with the value at the end of the works minus the cost of the works at completion. In 2021, we have spent some EUR 10 million. So given the same valuation, we should have landed at 104. We -- as a matter of fact, we landed at 99, which means there was a right down on Porta a Mare, which is due to 3 main areas. The review on the Officine Storiche segment part. Second, costs are expected to grow at completion. And three, on 3 small areas. We have extended the time before we will be able to produce them revenues. Talking about the fair values, what's really important is to understand the amount of total CapEx and the final value. I don't know whether I was clear enough and whether I actually answered your question.

Yes, you did.

Next question is from Simonetta Chiriotti with Mediobanca.

I have 2 questions. First question as to the impact of inflation on asset valuation. If I understand correctly, it's -- it was positive. But I wonder whether you expect other factors to come into play to offset this? I don't think there'll be another rate hike or that we'll talk about rate hike given the geopolitical situation. But as any risk premia that need to be factored into the valuation to really mirrors reflect the situation with the raising inflation, rates are not growing and consumption that is under pressure. So that was the first question. Second question instead is on figures. Would it be possible to have the FFO adjusted value for the first 9 months of 2020 and 2021, so that we can compute the FFO adjusted of Q4 for both years. Because after the 2 months, you still gave the unadjusted FFO with a negative carry still embedded in it. And then the guidance, I think you're giving is on the FFO adjusted value or figure isn't it? Just to be clear.

Let me answer the first question. Again, it's Roberto Zoia answering this question on inflation and rates. And then Raffaele Nardi will answer the second question. Mr. Zoia answering. After this year's valuation, there was or appraisals, if you wish all 4 appraisals and valuers factored in an increase on inflation, not the one we see right now, of course, because the -- it was a discounted cash flow, a 10-year discounted cash flow with an average of 150, 170 inflation rate over a 10-year time frame. What will happen in 2022, it might be that if inflation still shows this type of trend, maybe something on discount rates will have to be applied to somehow mitigate inflation. If there were still to be an inflation between 3 and 4, it is clear that discount rates at that point would be increased by the appraisers, not to 0 said that, but somehow to mitigate it and offset it and not have any distortions so to say, in the following years, should inflation go back to previous levels.

This is Raffaele speaking. Can you hear me?

Yes. I can hear you fine.

I can confirm that the FFO -- we are providing is the adjusted FFO, because it's consistent with the disclosure we've made so far. So FFO end of September was EUR 48.4 million and it included about EUR 3.1 million of negative carry that we have stripped off and about EUR 400,000 in the last quarter after negative carry for 2021.

So sorry, because I need to find the right balance in these figures. So in first 9 months of 2021, it was EUR 48.4 million, including EUR 3.1 million of negative carry, if I'm not mistaken. First 9 months of 2020, is it possible to know how much the negative carry was?

In 2020, first 9 months is EUR 3.1 million sorry, says Raffaele. And then EUR 400,000 that is what we included or embedded for 2021.

In the last quarter?

Yes, exactly. So for the first 9 months, instead, that was the first 9 months. And they are all both comparison, EUR 3.1 million in 2020 and EUR 400,000 in 2021, first 9 months, end of September. And in Q4, there was nothing left because there was no more effect driven by the negative carry we have computed. And from now on, there will be no more. Of course, about in the past, now there'd be no more negative carry. We do value the negative carry because it's referred to issuances that are not used or acquired right away. The negative carry is used or embedded. As Mr. Raffaele said, will be -- if we issue a bond to get an early refinancing of the maturities. And if you don't get the purchases for the instruments you have issued, you have a negative carry. It will depend on the amount once we actually do the issue and that it will be reduced until you've used the entire round of the issuance until you've covered the entire issuance.

[Operator Instructions] Mr. Albertini, there are no more questions.

Thank you very much. So I hope to see you again on May 15 after the first quarter 2022 report.

This is the operator. The conference call has ended. You may disconnect. [Statements in English on this transcript were spoken by an interpreter present on the live call.]