LAMDA Development S.A. (LAMDA) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the Lamda Development conference call and live webcast to present and discuss the First Half 2021 Financial Results. All participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question-and-answer session. [Operator Instructions] At this time, I would like to turn the conference over to Mrs. Konstantina Karatopouzi, Chief Operating Officer. Mrs. Karatopouzi, you may now proceed.

Thank you very much. Good afternoon to everyone. Thank you very much for joining our first half [ 2021 ] results presentation. Today, I have with me here with Mr. Harris Goritsas, our CFO; and Mrs. Dimitris Haralabopoulos, our Investor Relations and Financial Strategy Director. For a number of months, we were updating you for the progress of the transaction closing of the Hellinikon Project and about when the [ CPS ] would finally be fulfilled. So now we're actually in a very happy situation that we're able to announce more and update you about the effect that the transaction did actually took place on the 25th of June. It has on our financial statement up to now and on our prospects going forward. As you know, that [ they ] acquired the shares of Hellinikon S.A. and paid the first installment of the transaction consideration of EUR 300 million. So therefore, the consolidated financial statements of the Group include the value of the land acquired and the related profit, which we will explain further. According to the IFRS standard, land acquired was revalued by our external valuer, and this exercise resulted in a revaluation gain of EUR 306 million. This represents the difference between the fair value of our investment assets as on that date, 30th of June, and the respective cost. This is not only important because evidently, it has a material positive financial impact, but it's also an indication of the captures and envisage value from the projects. Mr. Goritsas will explain further in his presentation and the pathology applied and how this revaluation gain has risen. In addition, of course, the assets and liabilities of the Group have materially increased by EUR 1.4 billion and EUR 1.7 billion [ sorry ] assets and EUR 1.4 billion, respectively. And again, more detail will follow. It's important to highlight that we are now in the position to show the value generated from the project to date and how it's going to be materialized gradually during the development of the project and how will be reflected in our books. And clearly, we're optimistic that we will continue to have such positive effects on the project going forward. With regards now to the implementation of the development plan, we're on track to complete most of the preparatory infrastructure works of the project. We started with the second phase of the demolitions of specific buildings. And we estimate by year-end has completed 60% of the total demolition. We have also appointed so far the infrastructure project manager, Hill International has already been announced and the Independent Engineer SETEC for infrastructure works. And we're also in the final stage of the selection for the -- of the project manager for the buildings. We have also completed 90% of the relevant studies, referring to the infrastructure works, and we anticipate completing those by the end of November. In terms of tenders going forward, we have launched the first tender for the infrastructure work worth EUR 250 million. And we anticipate to receive offers in relation to this tender within November, complete the relevant process and start the works in -- within the first quarter of 2022. Also, we started a tender for an ECI contract, which has [ reflected ] the early contractor involvement for the Marina Residential Tower construction. And this is expected to be completed by year-end. In terms of business development, we have already signed very important agreement related to the development of the project. Just as a reminder, at the end of last year, we signed a strategic operation agreement with TEMES, which is a leading investor developer and operator of high-end tourism and real estate destinations in Greece. In order to joint development of 2 luxury hotels and residential complexes on the coastal front. The total investment of this development for the 2 hotels and the residencies is in the region of EUR 300 million. Recently, in June 2021, we signed the strategic operation agreement with Fourlis, which entails the implementation by Fourlis of a Retail Park, approximately [ 330,000 ] square meters of GFA, which will consist of a big box unit tenancies. And the retail park will be developed within the Vouliagmenis Complex. And the total investment undertaken by Fourlis for the development of the park is estimated at EUR 55 million. The purchase price will be paid by Fourlis and the land [ amounts to 30 ]. In July 2021, we also signed the first agreement related to the office space, which concerns a purchase by PIRAEUS BANK of an office space of 40,000 square meters for the future relocation of the bank's headquarters in the state of the art Commercial District in Vouliagmenis Avenue. Lamda will undertake the development of this premium office space, and the total transaction consideration for this agreement was EUR 147 million. Now with regard to the commercial progress on the reservations of residential units, both for the Marina Residential Tower and the beach villas. There's a huge demand to date for both of these projects, which lead to a large number of reservations booked. Specifically for the units on the Marina Residential Tower, deposits already submitted by customers correspond to 75% of the NSA, the net sellable area and the potential future revenue of EUR 338 million. Of course, after those said -- sales contracts are completed. As far as the beach villas, customer deposits have been received for all 27 units, and this corresponds to potential future revenue of EUR 345 million, again, after completing the relevant contracts. Finally, with regards to the casino, we have not yet received an official response from the states given that the deadline was for today, clearly. Understanding, however, is that there is a good progress in the discussions, which are currently underway between the operator and the state. And we expect to be officially informed in the next couple of weeks. And therefore, we remain optimistic that the issue will soon be resolved. Now turning out to our shopping centers. There's also very good indications of recovery from the pandemic crisis. Customers have clearly started or returning to the shopping centers, and we see a gradual return to previous buying habits. Even though the footfall and sales figures are not yet back to the 2019 levels, we see a recovery trend and definitely a big improvement compared to 2020. We highlight the strong growth in customer consumption, especially the fact that a quarter of our tenants registered higher sales versus the sales of 2019 during this period. And this clearly shows that the gap between the record-high 2019 levels is gradually closing. Now the significant restrictions that were in place like click away and click inside measures. They've been abolished since mid-May. And the other very important element is that occupancy rates remain unchanged at levels reaching or approximately 99%. We have signed agreement with tenants, whether new contracts or renewals, and all of them are at pre-COVID financial terms, which is also very important. Now the improvement of this visibility, of this -- of coming out from this crisis is reflected also in the valuation performed by our external valuer, which gave rise to a valuation gain of EUR 6.2 million. So this clearly depicts the valuation upside potential as the pandemic crisis gradually retreat. Also importantly, we know that the continuation of the loyalty of our tenants who continue to invest in our shopping centers. They continue to show trust by improving their offering and the experience to the customers. We treasure the good cooperation we have developed with our tenants over the years, and through which we have addressed yet one more difficult period, and we shall continue to invest in our shopping centers as well. So this is a short introduction from my side, and I will pass the floor now to Mr. Goritsas, who will run through the results presentation. And of course, at the end, we will open the floor for questions. Thank you very much.

Thank you, Konstantina, and good afternoon to all on the call from my side as well. Exciting times for all of us at Lamda. As Konstantina has colored. I will provide more color on the financial results of Lamda Development for the first semester of 2021, referring to the slides of the presentation that is posted on the company's website as well as on the live webcast page. So let's start with Slide #1 and the key highlights of the Group. NAV for the first 6 months of 2021 increased 26%, reaching almost EUR 1.4 billion, or EUR 7.88 per share. This EUR 0.3 billion increase attributed to the Ellinikon consolidation and the consequent valuation of a portion of its assets, as we will talk during our presentation. In terms of P&L, we report 4% growth versus prior year on EBITDA before valuations and Ellinikon direct expenses, mainly attributed to the full consolidation of Marina Flisvos. I would like to remind that Lamda acquired the remaining 50% of this operation at the end of February 2020. Thus, in 2021, there's a positive timing effect on our first 6 months' results. Total Group EBITDA after valuations and Ellinikon direct expenses stood at a record high EUR 315.7 million, with net gains after tax and minorities of EUR 226.6 million compared to net losses of EUR 5.7 million, same period last year. A point that we would like to stress as Ellinikon may override it, is the fact that our existing malls registered for the first 6 months of 2021, a revaluation gain of EUR 6 million. This is an encouraging development during the pandemic period, reflecting independent values, improved visibility on the timing of the potential return to normal operating conditions. Turning to Slide 2 of the presentation, and our existing shopping malls performance. Retail EBITDA was impacted by COVID-19 pandemic, with our malls remaining closed 30 days more in Athens and 6 days more in Thessaloniki versus same period last year, while 40% effective government deposed rent reduction applied to the full 6 months in 2021 versus 4 months in 2020 same period. This is a driving factor behind the 17% year-on-year decline on retail EBITDA, now standing at EUR 16.1 million. Important to note at this slide, some facts for our shopping malls that indicate a positive future. First, the improved quarter 2 EBITDA performance of plus 60% -- sorry, 30% on the back of the minus 33% of quarter one, indicating the strong recovery trends that Konstantina has mentioned. Second, our tenant position, which for the -- put the position for Athens for the day after in our shopping malls, with opening of new flagship stores from ZARA and public Mediterranean at Golden Hall, and the new entrance from IKEA at The Mall Athens, to commence operations before Christmas 2021. This set at -- I would say, evenly more important, occupancy rate calls at approximately 99%, with a new lease and contract renewals during the pandemic period signed at pre-pandemic rent levels. On Slide 3, we captured the Ellinikon key recent developments. Konstantina commented on those, therefore, I will not stay on this slide more. Just to amplify the key message of what Ellinikon can bring to the future results of the Group, which is captured here at this slide as corresponding contracted value, thus, future revenues for only 2 out of [indiscernible] of developments that we have in our business plan. Zooming now into Ellinikon and how this impacted our financial statements, I will turn to Slide 5, where we captured the 2 key components of the transaction. The EUR 0.9 billion, which is the cash consideration of buying the land from the Greek State, and the EUR 0.7 billion, which is a contractual obligation to perform infrastructure works of public interest, which will be delivered to the Greek State without the latter pain and consideration. Both are captured in the liability side as obligations, and we have not yet either paid the full amount, not executed the infra works. And of course, in the asset side, we capture them as corresponding land and infra. As said, this -- since both of those figures will be paid in the future, the IFRS framework calls for present value calculation. This treatment is captured on Slide 6, where by using a 3.4% discount rate that corresponds to the existing cost of debt for the Group, which is tradable on the assets exchange linked with Ellinikon project, brings a nominal value of EUR 1.6 billion, down to EUR 1.4 billion. On Slide 7, we captured the 3 distinct asset categories that based on IFRS, we have to classify all property types. Those categories are first, investment property. For example, the new malls, offices and hotels that will be built and commercially managed either by us directly or by JVs that we will participate. Second category, inventory. For example, the beach villas and the apartments at the Marina Residential Tower that the Group will construct and sell. Thirdly, properly planned and equipment. For example, the sale center and the offices that the Group will build and self-use. Out of those 3 categories, the investment property calls based on IFRS standards always for a fair value remeasurement, i.e., an independent value to value the future benefits and using a discount cash flow method to break them to present value. The rest 2 categories, meaning inventories and [indiscernible] are captured as cost of acquisition, always at present value, as we have explained. So moving now to Slide 8, we depict the P&L benefit of EUR 0.3 billion, delivering deriving from the comparison of the fair value of the investment property and its land value, booked at acquisition date. This EUR 0.3 billion benefit increases the asset amount in the balance sheet and is registered in the P&L as gained from revaluations. On Slide 9, we captured the total net impact of Ellinikon transaction. In summary, as we have said, we registered a total asset of EUR 1.7 billion, which includes the revaluation gains for the investment property assets. This figure is reduced by the transaction consideration paid and outstanding, as well as the investment obligation for infrastructure works of public interest, leading to a net positive impact on the balance sheet and the P&L of EUR 0.3 billion. Moving on to the section where we'll comment the performance of our shopping malls. I will turn to Slide 11, where we see the development of revenues and EBITDA in our existing shopping malls. Following relevant legislation, our shopkeepers have been exempted for paying the full rent via an effective discount of 40% that penalizes our revenues. This development fully explains the revenue decline of 12% across our 3 malls and is a key driver of the 17% reduction at EBITDA level. The next 3 slides, 12, 13, and 14, capture the details of revenue and EBITDA for our 3 malls separately during the first 6 months of 2021. I will not go through the details on those slides. If we review the tenant sales and footfall changes in H1 2021 versus H1 2020, it is obvious that COVID-19 pandemic is the driver of this negative performance for both our base rent and other sources of revenues and respectively, EBITDA. Remember that last year, in H1 2020, our shopping malls operated without any restriction during January and February months. So on Slide 15, we capture the COVID-19 impact for our shopping malls. Obviously, this disruption that was explained, delivers a negative impact to EBITDA of EUR 3.3 million for the first 6 months, while NAV is impacted by NAV is impacted by EUR 2.2 million after taxation and minority interests. On the positive side, we have raised the revaluation gains on all our shopping malls, capitalizing our high occupancy rates and our ability to bring new existing or signed new contracts with tenants at pre-COVID rent levels. Slide 16 and 17 indicate the 2 key KPIs of tenant sales and footfall during the period from June to August, where our shopping malls operated without restrictions. Just to mention again at this point that as of mid-May, all major restrictions stopped of -- on operating from the Greek government have been listed. On Slide 16, the comparison is versus the same period last year, where it's obvious that our tenants experienced double-digit growth from sales month by month. This is very encouraging for our second semester of this year, where we believe the performance of our malls will be stronger, assuming no reappearance of hard restrictions from the Greek state. On Slide 17, the comparison versus the same period in 2020 -- in 2019 now, a record year for us. With that comparison, the key message is that our tenants are closing the gap. Overall, tenant sales stood at approximately negative 12%, while for 25% of them, sales are already higher than 2019 levels, indeed very [ positive ] trends. The last section of our presentation for today covers the overall group Half 1 2021 results. If we turn to Slide 19, and the total EBITDA performance for the group, always before valuations, we observe this was improved from the negative 17% of retail to positive 4%, landing on EUR 15.9 million for the first semester. The key driver of this swing is the Flisvos Marina EBITDA improvement, mainly due to the adjustment following the change in the consolidation method as of February 2020 and the positive impact of COVID-19 government rent relief. To mention here that the group rents -- the Marina [ Flisvos area ] from the Hellenic Public Properties Company, thus, the rent relief positively impacts our P&L in this case. Turning to Slide 20 now and the net results of the group. The EUR 15.9 million EBITDA before valuations of the previous slide is materially improved by the Hellinikon valuation gains, resulting to a net profit of EUR 224.6 million in the first semester of 2021 compared to a net loss of EUR 5.7 million, same period 2020. Worth mentioning the increased expenses for Hellinikon project are the preparatory works are progressing and payroll expense increasing due to the enlargement of our organization and the increased interest cost due to the new corporate bond of 200 -- EUR 320 million issued in June 2020. In terms of comparison versus 2020 first semester, there is not much to say as the conditions were very different due to the COVID-19 pandemic and the absence of Hellinikon from the numbers. So Slide 21 presents a valuation of our shopping malls as derived from the independent values appraisals. 2 key messages here. First, during the COVID-19 period, we have managed to register valuation gains, following a very professional deal with management of our malls. And second, we are just EUR 30 million or 3% below the historic high valuation of 2019, and we believe this indicates future upside, assuming no return to COVID-19 crisis, which at this point of time is a common belief. On Slide 22, total invested portfolio value is increasing by EUR 1.7 billion from the addition of Hellinikon into our portfolio and by EUR 9 million, excluding Hellinikon, driven mainly by the EUR 6 million valuation gain of our existing shopping malls as explained. Interesting to note that with the inclusion of Hellinikon, the shopping mall's contribution to the group's overall portfolio of assets is balanced to almost 30% from almost 80% before Hellinikon acquisition. On Slide 23, where we present the NAV Bridge, the 26% increase, both on absolute figures and on NAV per share is mainly driven by the Hellinikon valuation gains as we have analyzed. The next 2 slides, 24 and 23 provides a summary view on our balance sheet and its key metrics for June 2021 compared to December 2020. Hellinikon is significantly altering the balance sheet view in numerous lines based on IFRS treatment explained, while cash reduction is mainly due to the EUR 300 million payment for the first installment of the acquisition price for the Hellinikon and the reclassification of restricted cash, short and long-term for securing the bank guarantee towards the Greek state. With that, we have concluded the presentation, and we are now ready for the Q&A session.

[Operator Instructions] The first question comes from the line of Svyriadi, Natalia with Eurobank Equities.

Yes. I was actually hoping if you could elaborate a bit on the revaluation of the assets. And mainly, I was looking for Slide 8, where we have independent valuations, investment property figures, the EUR 630 million for the investment property and the land at present value and the revaluation gain, which we actually saw in the P&L. On the slide, just on top of this, I'm trying to understand the investment property is shown as the balance sheet, EUR 852 million. What is the difference there? Is this referring to the income generated from the assets in this one versus the other one? Or is there a different discount, is it different way of calculating because it is talking about investment property also there. I was trying to see if we're looking at the same thing in a 2 different valuation methods or something on that. And I also have a question on the restricted cash. You just mentioned before maybe I'm mistaking, but I remember that was EUR 347 million. Have we added something to that? And it is for the second installment and for the project's development also, if this is correct, I would like -- if you could confirm that? Maybe a last question on what you see yields going to in the existing mall and once the other malls are actually in the picture.

Okay. Thank you very much for your question. It's quite understandable why you have both of those questions. So thank you for giving us the opportunity to explain. First of all, with regards to the investment property valuation, EUR 852 million that you see on the balance sheet, which includes the revaluation gain. Okay, let's -- we have -- you have 2 questions there. One is to do with the difference from the 630 million, you see on Slide 8. And the second one has to do with how it's done. I'll start with the second one because I think it's a little bit easier to -- for understanding purposes. The EUR 630 million that you see on Slide 8 is the valuation of the assets, which are included in this category, and it's being performed by our external valuer, okay? So we've given them our business plan. And based on the assumptions that they incorporate in terms of discount rates and forecasts and yields that they're expecting, they come up with this valuation. Now when we take this valuation, we compare it with the cost of the land as it's booked in our books, and that's how you come up with the EUR 311 million. Now the reason -- so that's the simplest. And it's the usual way that the valuation is done for all these assets. It's the same way we do the valuation of our parent shopping centers. Similar way, let's say, that accelerate our value performance valuation, we come up with EUR 630 million. Now the next step that we've done, what we've done on the valuation, on our balance sheet, we also have to account for the infrastructure works that are planned to be done. So the slide that Harris went through earlier on Slide 6, you see that their infrastructure works, which is in essence, based on our -- on the contract that we have with the state, a liability of EUR 703 million. At the same time, this is reflected as an asset, so the value of the EUR 703 million, the discounted value of that, it also increases the value of our assets. So it's split between all the assets, the investment assets and the inventory and [indiscernible] So the amount that goes on the investment asset is approximate EUR 220 million that you see there, and that's why the value on the balance sheet is higher.

Okay. Okay. That's pretty clear, actually.

We don't give any news on the concept of the liability in the asset, we appreciate, but that's the accounting treatment on the balance sheet. So that's the difference between.

Okay. This was easier for me to understand than the independent valuation's actual number. So -- okay, I understand that. Okay.

Now the second question about the restricted cash. You're right that the bank guarantee -- the size of the bank guarantee is EUR 347 million. The amount of the restricted half-year is higher. The reason for that is that, in essence, this amount is not restricted exactly just to cover the bank guarantee. This is the agreement that we have with the banks. And this money is actually going to be released, and that's why it's on 2 different lines of the balance sheet. So the first of the 2 -- the first amount of EUR 167 million, and the agreement of the bank is that they just want to be secured that the EUR 167 million that we've already raised, it's going to be kept on the side for the payment of the second installment. So one to 2 years passed from the 25th of June, that we have to pay the second installment, subject to certain conditions that permits are issued. This amount will just be released to be paid, so in essence, the same thing as we would have done if we kept the cash in our bank account. It's just that they deal with the bank needs that they want it on a separate account to make sure that it's not used for any other purpose and to ensure that the money is paid for the segment installment. The second amount, the EUR 210 million is going to be released once the SPVs, which are intended to be created for the development of the shopping centers, which are going to be -- use the security for the loan. Once that is done, then the EUR 210 million is also going to be released. Since the banks will have a guarantee, let's say, security, the assets, the shares of the SPVs that will have the shopping centers. So it's going to replace the security of the cash with the new SPVs. At the time that we had to do the agreement with the banks, clearly, the SPVs were not created because we had to buy the shares first. So for this in-between period, between the time of the agreement of the banks and the time that we're able to capitalize the subsidiaries and provide the security to the banks, who agreed to temporarily to put that money on the side. So in the next few months, theoretically, this money is going to be released. Hence the difference, one is short term and the other one is long term.

Long term. Okay, understood.

And your third question -- sorry. And the third question related to our anticipation about the yields, correct, of the shopping centers?

Yes, yes. If you see an upside, I think you had a slide where we saw yields at around 7%. Should we expect this around 6%? Or this is too low in the medium-term and the other malls coming in?

This is definitely our expectation. I think we've mentioned this numerous times in previous presentations that this is one of the main, let's say, drivers of the upside of the existing shopping centers. Our shopping centers have been finalized in the past exactly because they were operating, let's say, in Greece, in essence, and in this environment, so despite very good performance, the yields are maintained at high levels exactly to reflect -- and the value is reflecting the risk of the Greek, let's say, economy and our shopping centers. So over time, we have seen these reducing. Now of course, during the pandemic crisis, the improvement or the lowering of the yields has sort of stopped, so we're expecting to chose this lowering of the yields will continue. And as we have presented also in our investor presentation, this is our target over the medium term, that we'll go from an average of 7% to 6%.

6%. Okay. Yes, this is what I remember also. Okay.

The next question comes from the line of Murphy, Andy with Edison Investment Research.

Afternoon. Yes, it's Andy Murphy from Edison Research in London. And I've got 4 questions, if I may, but they're all quite short and they're all sort of related to the same sort of subject, which is where -- what's happening in the malls currently. So I'll just work through them quite quickly, and I think you'll probably be able to take them on quite quickly. So in terms of the rent reductions that your tenants benefited from during COVID, and can you let me know or can you ask now whether any of that will be repaid, or is that effectively lost rental income? And secondly, from where we're at now and now most of the restrictions have been lifted, are there any ongoing COVID-related costs that investors should be aware of? And if so, are they material? And thirdly, just in terms of the spending nature of the shoppers that the people are turning up, are they spending more, or are they spending less than they would have been before? And then just finally, on the footfall, I noticed that the Athens Mall, your footfall was down 56% versus 2019. And that reduction is far greater than it is at either of the other 2. I was wondering if you could highlight what the difference is between the Athens Mall and the other 2? That was it.

Thanks. Okay. Thanks for the questions. Four questions, I have noted, so let me address it one by one. First of all, the effective rent reduction of 40%, it goes as such we have -- based on government mandate, we have granted 100% reduction to our tenants, and then the government subsidized us by 60%. So we request the money from the government at 60% level, so the rest, 40% is lost. It will not be recovered. So this impacts the results. Of course, now that the pandemic, we hopefully believe it's out, this mandate from government has stopped with June, if not, with July onwards, there is not going to be any other support from the government to the tenant. So we -- if things are continuing as such, this 40% is on our past and the revenues will tend to normal levels. Your second question was about COVID-related costs. And if we see this going on or continuing. Look, we take it very seriously, the health and safety measures. We have done a lot of extra things to all our shopping malls and all our operations, I would say, not only on our shopping malls. We will continue to pay attention on this health and safety measures. We don't believe COVID is really completely out. So yes, the answer is that we will continue to expand for such measures, of course, not at these levels that we have to do in the past.

If I may. Hi, Andy. Dimitris here. [indiscernible] as regards to restrictions, the only outstanding critical restriction is the maximum number of visitors to our shopping malls. So click-inside -- as Konstantina mentioned in her opening remarks, click-inside and click-away measures have been abolished since mid-May.

Okay. The third question had to do with how shoppers spending, if they spend more or less. If I understand correctly, your question was about renovating their premises. Can you elaborate more?

No, no. Yes. I was just wondering whether people do turn up in the malls or generally spending more time there and spending more money or spending less time and spending less money? Just whether -- I think, it's just about the sort of the personal dynamic of sort of just human activity, really, how that might have changed?

And I may use the word that is commonly used on European wise. We kind of see a revenge spending. So yes, indeed, shoppers visit less our shopping malls, but yet again, they consume more. This is an important change. And this is reflected also on the spread between the footfall and the tenant sales that has widened significantly in certain cases. So consumption [ they ] compared to the reopening period in 2020 has improved significantly in 2021, which backs my original comment.

Yes. And if I may add on that one, if you again see the Slide 16, you will see that the footfall, it's greater than -- actually, it's less than the tenant sales increase. So in essence, yes, less footfall, but one can derive from this slide that sales are increased thus shoppers are spending more. So [ visiting ] less spending more.

Got it.

The fourth question had to do with the Athens Mall. And the steep reduction on footfall, very good cuts here. There is a good explanation behind that because this also puzzled us. One can -- and should know that this mall, the Athens Mall is very dependent on public transportation. So you -- if you want to reach it, shoppers have to go by train or by train is -- was the main destination before crisis. More than 60% of the tenants -- sorry, of the shoppers were using the train based on our statistics before crisis. So you can understand that this has a bigger impact because of the COVID-19 pandemic. Less people are using public transportation in Greece. The other explanation that we have given is that this is a destination for younger shoppers, younger population. Those population, Greece at least, they have not vaccinated 100%. So the measures about you going into a mall for nonvaccinated people is more strict. They cannot stay, for example, in the food and beverage categories. So you can understand that this mall is impacted from this reason as well.

There's also the element of the cinemas, which have been closed, and this is an important feature. The cinemas have been closed by legislation. So there's an important flow of customers related to the cinemas. And of course, the F&B.

And now that the cinema is open, there is still restriction in the number of people. It's almost half capacity. So again, the cinema is not going to be fully occupied. Hence, the people who are attending are less than compared to before.

The next question comes from the line of [ Pelio Zarkalis of Safa Finance ].

I had a question, but it was answered basically. I wanted some clarifications regarding the revaluation gains and basically Slide 8, but I am pretty covered with the answer you gave. Thank you.

The next question comes from the line of Zouzoulas, Constantinos with Axia Ventures.

I have few questions from my side. Let's go back to the independent valuation of this EUR 630 million that we started discussions. As you said, this is based on a business plan you presented to the valuator and reflects the property categories like malls, other retail offices and all these things. What will be the trigger to -- for you to proceed to an adjustment in your business plan or the evaluator or the valuator, I don't know. Is it going to be an agreement that you make -- a new agreement that you make with the office -- for the offices or something else? And how often can we see revaluations for this part?

Okay. First of all, thank you for your question. First of all, let me clarify, when we say we give the business plan, clearly, we don't give all the details because it's an independent valuation. So they put in their own assessment in terms of cost per square meter or income per square meter and so on. This is an important point. We say what the use is, we envisage as in terms of the square meters or what our plan is and then they prepare their valuation. Now in terms of update, as a minimum twice a year, we will publish revised valuations. And in these valuations, effectively, we give any change that we have in our plans. So if we decide to change a shopping center, have more square meters, we will inform the [ valuer ] and they'll incorporate in their valuation. If we have any, for example, now that we have the villas and the MRT that we know specific reservations that have been made. We will inform them and tell them, look, this is the new data that we have. And they will take it into account in order to form their revised expectations as well. It will be even more important for them when we actually sign contracts, of course, which means that they've got a better and more clear understanding in terms of how the sales are going to proceed. So any material updates that we have in our business plans or in terms of actuals, we will give them as an update.

Okay [indiscernible].

I just wanted to add, it's the same process that we have followed to date with what we do with our current assets. Of course, the difference is that they're under operation. So it's easier to assess. But any updates we provide.

Okay. So if there is an agreement for the offices, a new agreement or you signed contracts for the new malls. Are you going to providing the specific data, so they can be adjusted?

Yes.

All right.

The other thing that it's worth mentioning [indiscernible] this point of time is that because this land is still a land, it's not developed yet. The valuator took a more, let's say, conservative stand in their valuation view, plus they are using a 15-years discount period, not a 10 years discount period that they use on nonoperating mall. This is why -- because the first 5 years, they assume it's a construction period. And the next from year 6 to year 15 is the -- is a normal operating cycle that typically, they value. So you can imagine that the exit values, the exit -- [ instead of ] they are using of year 15, they discounted for 15 years versus 10 years. So as we progress with our plan, and we deliver what we have promised, more of the risk of the development or the time element of the construction will go out. And thus, again, if we deliver on our promises, we assume that the valuation will be improved.

Right. This is clear. My next question refers to Page 3. And on the villas, you mentioned how much you received -- what's the contract value of the deposits. And then you mentioned about the full construction cost to be undertaken by the buyers. What exactly do you mean by that?

Okay. Let us -- let's provide a little more color. As we said, the -- for the villas, we'll have a peculiarity in terms of how we commercialize the sale. The envisioned sale will be done in 2 steps. The first step will be to sell the land of the villa to the new owner and then, of course, the new owner will decide how to build the actual villa into the land and what support they will require from us in terms of design or in terms of overviewing the construction. With this treatment, what the IFRS standard calls is that at the moment that you sign for the sale of the land, you register that in your P&L as revenue. And then the other revenue, if any, from the construction of the villa is registered on the completion rate of the construction. That's a difference in the valuation methodology based on IFRS standards, of course. I don't know if this answers your question.

This -- so this EUR 345 million corresponds to both -- revenues from both?

Yes, yes.

Correct.

Correct.

Okay. This is clear now. Next question, if I may. What will be the accounting-driven for the execution of the infrastructure works?

What do you mean accounting-treatment of the execution?

Are we going to be -- is this going to impact the P&L, going to have expenses over?

Okay. Okay, good question. Thank you for that. Let me elaborate a little bit. It's going to be a little bit more technical, but it's the only way to explain it. Based on the standards and based on the agreement that we have signed with the Greek State, we have the obligation to construct the infrastructure works in the area of Hellinikon. Based on that obligation, we have to reset the liability of EUR 703 million at a nominal value. This goes to the asset side as well and increases the assets because, in essence, in simple terms, the infrastructure adds value to the asset. So the IFRS standard says that you have to increase your asset by this cost, assuming that -- so we have done that already. It is part of our assets and of course, part of our liability. As we -- the liability will be eliminated as we pay for those assets, that we incur for those costs. And of course, the asset side, the interest rate will remain in the asset side for the assets that we are going to hold and classify as investment properties. That's why Konstantina was explaining that this has to be added back to the asset, the EUR 220 million on the previous question. Of course, this will be a cost for the inventory side of the balance sheet and will be part of the selling price, I mean, on the selling cost side on the deal, when you sell the inventory, call it, a house, for example, or call it, a villa, for example.

Okay. Okay, this is clear. And my last question has to do with the residential properties. Apparently, there is a big demand for the villas and the MRT and presales are there or you have already booked everything. What about the next bunch of residencies? When should we expect the presales to open? What's the timetable there?

The next one you're referring to the condos or the residential area, which is in the first phase that we brought, right?

Correct.

Look, there is a number of projects which are opening at the moment, and some of them are in design phase and some of them are very close to open. But I would prefer to refrain from actually giving you a specific timeline, and we will give this in the next presentation that we will do.

The next question comes from the line of [indiscernible] with Europe Securities.

My questions have been already covered. So I have just one quick question. What is the EBITDA? And the annual EBITDA and the annual revenues that we should expect from Marina Flisvos on a normalized level, I mean, in the post-COVID era?

Thank you for this question. I mean, Marina Flisvos, we already said, because we have captured the 50% -- look, the annual turnover of the Marina is around EUR 15 million, so it depends on the cost side of what we incur for this investment. Typically, we do not disclose details of our different investments in that level, so I will stay on that level, providing you with the revenues.

[Operator Instructions] The next question comes from the line of Polys Polycarpou with ResearchGreece.

I further have to go back to the EUR 851 million that you have both on the balance sheet and the presentation. Can you please provide a breakdown of how this EUR 851 million as an investment property under development comes out, please?

A breakdown, you mean what it includes?

Yes.

The EUR 852 million includes all the investment assets. So it includes the 2 shopping malls, we have many small.

Can we have a split because -- I mean, how much is more, how much is -- you know, can we have a split on that?

No, we can't provide. You mean the actual valuations at the moment? No, unfortunately, we cannot provide that because at the moment, they're not, let's say, published or we're going to do this going forward when we're able to show for all the assets. So at the moment, we cannot provide the per asset valuation. I can tell you what the categories are included in there.

Okay, let's go. Yes.

So we have the 2 shopping centers. We have many small Marina Galleria. We have all the retail, which is spread all over the site, so you have little retail units, almost in all the -- near the residencies, in the business district, near the office spaces. So there's a lot of retail space, all of the sites. So this is all in this category of investment property. The of the offices which are not intended for sale, so the case that we mentioned earlier that we've already announced like the [indiscernible] this is not included in this category because we're selling that land. We have a lot of different projects of food and beverage. So any unit which we have in the business plan as again, scattered food and beverage, clearly not those join the shopping centers. They're included in this category. The IRC, the casino and the sports area, education, and that's about it those categories.

Okay, fine. I understand. But somebody could assume that 70% of that EUR 851 million has to do with the 2 malls and the IRC.

70%.

Sorry?

70 -- you said, 7-0.

Yes.

I don't think that's that high, but not far away.

Okay, fair enough. And just to understand, again, that how you derive that EUR 851 million? You mentioned that the land, which is associated with that investment is EUR 319 million, correct?

Correct. Yes.

Okay. Okay.

This is the part just to emphasize this because I think it's important. The EUR 319 million is part of the land of the EUR 1.4 billion that we mentioned -- sorry, the EUR 793 million that we have on the balance sheet is present value of the land. It's a present value of the land that we acquired, which is allocated to these investment assets.

Sorry, Konstantina, can you please repeat that? I apologize. I missed that. Can you please repeat that?

All right. The cost of the land to start off with is the EUR 915 million that we incur -- we're going to incur to buy the shares of this plant, correct? Okay. This amount is discounted on our balance sheet to EUR 793 million. It's on Slide 6.

Yes.

All right? Vision what we're required to do according to IFRS standards because part of it we paid, but the rest of it we're going to pay in the future. So it's discounted to today. Out of that EUR 793 million, the EUR 319 million relates to the investment property. So this is our cost. Okay?

So my next question would be how come on the residential, on the inventory side.

Yes.

The cost is still at EUR 800 million. That doesn't reconcile with the EUR 793 million if you already booked in 318 in the investment portfolio? [indiscernible]

Yes. Because it's again -- yes, yes, I'll answer that. I understand your question. Because, again, the amount that is allocated on the land on this category inventory. Again, we allocate the infrastructure elements as well, okay? So all the cost of the infrastructure, the present value of it, the 400 -- the 591, again is split on the 3 categories.

If I may try to put a different spin on the -- on asset that is above the 318 and have 311 other valuation gains. Just in simple terms consider that the incubated valuator at in order to derive to their present value of those assets, they are using their model, the infrastructure as a cash outflow, as a hit to their valuation because it's a cost. It's a cost to construct together with a building and to deliver, let's say, a shopping mall. So in order to compare that with your book value and derive to the revaluation gain, you have to exclude the infrastructure work. That's why when you comparing in order to register the revenue, the gain, which hits also your P&L, you exclude infrastructure work. When you register those assets in your balance sheet, you have to add back the infrastructure work. That's the [ difference ].

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mrs. Karatopouzi for any closing comments. Thank you.

Thank you very much for your time. We appreciate it's a little bit complicated the change of our balance sheet at the moment. So if there are any follow-up question, Dimitris Haralabopoulos is available to answer them going forward. And please rest assured, I mean, next time we have our call, end of November, we can pick up again on any other questions and, of course, update with any other changes we have by then. Thank you very much for your time.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.