Lighthouse Properties p.l.c. (LTE) Earnings Call Transcript & Summary

Good morning, everyone, and welcome. I'd like to welcome you to our results presentation for the financial year ended 31 December 2024. I'm joined here this morning by my colleagues, Razvan Sin, who is our Head of Leasing; as well as Kobus van Biljon, who is our Financial Director. It's been a good year for Lighthouse. We're excited to show you what we've been up to. There's been [ a lot ] happening. We've done a lot of acquisitions. We've rotated out of our Hammerson position. And we've completely transformed the business, I think, over the course of the year. In terms of proceedings, I will deliver my part of the presentation. It covers the overview, some of the acquisitions as well as the highlights for the year. After that, I'll hand over to Kobus, who will cover the financial results and some of the financial KPIs. And Razvan will take you through some of the leasing initiatives as well as the projects we've been busy with. In terms of questions, I think at any point in time, there should be a chat box on your screen. You can type in your question, send it through, we'll receive them here and we will answer them at the end of the presentation. I'll start with the overview. And I think before I leave here, I'd just like to talk to this picture a bit. It's the food court at Forum Coimbra. It was refurbished. It was completed in the early part of 2024, completely redid the floor. We -- there were some cone structures in the upper areas of this part of the mall. They were removed. It's improved the lighting, improved the look and feel. And I think most importantly, we increased the seating area. We did this by shrinking the voids to create more seating for the shoppers. It's actually -- was overtrading. It was a bit on the small side. Since then, it's actually improved the seating, and performance has continued to improve. I'll cover our strategy. It's nothing [Audio Gap] Europe and many other places around the world, there is depopulation and there is urbanization. So we're only focusing on the metros. If you look in Spain, along the coastal regions, those areas are growing quite nicely. We're focusing there and avoiding the depopulating areas altogether. Tenant-focused, this is -- when we talk to this, it's specifically Primark as well as Zara. And it's getting to a point now, it's not just Zara, it's having a flagship Zara with their current concepts. And I think I'll just skip to the last bullet, it's conservative risk management. I think I'll explain this by way of maintaining low levels of gearing, having capacity to take advantage of market conditions. And at the beginning of 2024, we were sitting with an LTV ratio of around 14%, put us in a very good position to take advantage of the market, which became a buyer's market. We were able to use our leverage, use our low gearing to acquire 4 shopping centers. And then again, in the beginning of this year, '25, we were on 25% LTV, again, putting us in a position to already have acquired 1 center, and we are in discussions and due diligence and actually exclusivity on another asset also in Spain. I'll take you through some of the highlights. Distributable earnings of [ EUR 0.025671 ] [Audio Gap] across the portfolio in all of our centers in all of our jurisdictions and very attractive number if you think of the inflation over the same period, which was between 2% and 3%. LTV increased from 14%, now currently 25% at year-end. Since we've acquired Alcalá Magna, it's now sitting at 31%, and we'll grow a bit more from there with the completion of the acquisition that's currently under exclusivity. I think one of the most -- the largest accomplishment or the biggest accomplishments for the year was rotation out of Hammerson. It was 16% at the end of the year and end of 2023, which was sold out completely during the course of 2024. I mean that's come down from 22.8% at the end of '22. So it's a full rotation out of that holding. We also disposed of Planet Koper, and these proceeds were used to acquire 4 shopping centers. Total invested was EUR 542.5 million. And I think we were among the most, if not the most active investors in the Iberian market over the course of 2024. I think I'll use this slide to [Audio Gap] extremely attractive for buyers. Institutional investors had reached a tipping point where they are now forced to sell or had to sell assets. And we had liquidity in the form of Hammerson. So the decision was made to liquidate that position and rotate into physical assets. I think we were surprised at the speed at which that was done. We thought probably in the beginning, it would be a 2- to 3-year strategy to implement. It was implemented in less than 12 months. So we opened the year 29% of our assets with Hammerson. This was our largest exposure. Spain was 18%. It was a single asset. Portugal was 21%, again, a single asset. France is our largest physical property exposure, it was 4 assets, 60% of those 4 assets. Then Slovenia was 8%. We had 1 asset in Slovenia. During the year, we've acquired 3 assets in Spain, 1 in Portugal. We've disposed of Planet Koper in Slovenia, and we've also disposed of our Hammerson holding and rotated into those physical assets. So you can see at 2024, it's become a lot more clear. The strategy is a lot more defined. And then that's continued, if you look at 2025 and our projection, we already have acquired 1 asset. We are in discussions on an exclusivity on a further one, and we anticipate Spain and Portugal to be about 86% of our total exposure at the end of the year with France being 14%. So if you have a look at Lighthouse, the business has become very simple. You're buying -- you're investing in Lighthouse, you're investing 85% or 86% in Iberia, 14% in France. It's only shopping malls. It's only dominant shopping malls. There's no retail parks. There's no residential. It's a very clear, concise, easy-to-understand strategy. This slide summarizes a lot of what I've already said, but I think the most important is the vacancies, which I'll speak to. Our portfolio vacancy at the end of the year was 2%. It had come down quite nicely. This was off the back of a reduction in France. It was at about just under 8% at the beginning of the year, declined to 5.8% by the end of the year. I think what is worth noting, it's not just a reduction in the vacancies. It's also a massive improvement in the quality of [Audio Gap] just over 14% growth on NPI. So France did have a nice recovery for the year. And then Spain, sitting at 0.9%. Most of this vacancy is concentrated at H2O, which is the center you see in your picture there. That mall was acquired with the refurbishment provisioned in. It is about EUR 10 million. We're looking to decrease the size of that lake. We're also redoing the interior, improving the look and feel. Also we'll be retiling the center. That project is currently underway, and Razvan will speak to it a little bit later. So this is just a slide summarizing our strategy. [Audio Gap] strong economic underpins. We do see and we have seen many opportunities where yields are attractive. We see yields of 8.5%, 9% for some centers that come across our desk, usually won't have a Primark or don't have a Primark. It may have a Zara, but you'll see the old Zara. And if you look closely, there will be a better-performing, larger, stronger Zara within the proximity. So there's risk attached to that yield. So we prefer to buy quality. And I think the slight sacrifice on yield outweighs the slightly higher yield you would get on a poorer-quality asset. Summary of the acquisitions for the year. I think what's worth noting here is the [Audio Gap] to formal processes and with 3 or 4, 5 different bids being received and becoming I think -- and then along with that, you're seeing a compression in the yield. So we think the tempo will slow down going forward, and the tempo and frequency at which we acquire will also slow down. And I've been asked -- I think it's a good time to cover the growth and where we see the growth coming from because we have been asked a few times saying that these assets are fairly mature that we've been buying. They're 15-plus years old, mostly fully occupied. They got all the tenants, have already got Primark, already got Zara. They're already dominant. So what's the upside? How are we going to grow our income? And what's the return upside going to be from these centers? And it's fairly simple. You're buying these specific centers at a very specific point in the evolution of that mall. And this is where consolidation is happening. And if you look at the centers we've acquired, you see Salera there, was acquired in January. And just in January, actually at the end of January, Zara closed on the high street of Castellón. And this is the only mall in that city and that caters to the broader region. And all the sales just simply migrate from having gone to the city center to this mall. And that will continue as you improve and keep on enhancing the tenant mix and quality. And then you see the vacancy at the end of the year, 0.2.%. Just a picture of the interior of Salera, just to give you a [Audio Gap] Then you look at H2O, this is the second acquisition for the year. Look at the sales growth, 10.1%; look at the footfall growth, 3.7%. And this is [Audio Gap] there were also new tenants coming, Druni, also another, one of the major perfumeries in Spain. Also Inditex brands expanded their offerings and upgraded to latest concepts and vacancy sitting at 2.6%. We acquired it at 3.5%. It's come down somewhat. And with that refurbishment, which I mentioned earlier, we expect that to continue declining. The other thing worth noting on this center is it's in a very rapidly growing residential node within Madrid, probably one of the fastest-growing residential nodes in Madrid. So it always -- in addition to consolidation, it will always have a tailwind from just simply population growing quite rapidly. It's a picture of the interior of H2O. You see Druni, which I mentioned earlier, the perfumery; Pull&Bear; I also mentioned the Inditex brand that upgraded and extended. And this floor has actually already been lifted up and retiled on the upper level. We haven't got to the bottom level yet. It was provided for on acquisition. The floor was identified as being of a poor quality. It was deteriorating in some places, and it's undergoing a full replacement. So I think that will further drive the footfalls and sales of the mall. So Alegro Montijo, acquired this in September. Also good sales growth, 7.3%; also nice footfall growth of 7.6%. Primark opened quite late yet. It was a new entrant to the center. It opened in the fourth quarter of the year. So the Primark impact was only for 3 months. And I think the first month was 30-odd percent up and then 20-odd percent for the following month. So a big boost in the footfall growth following Primark having opened. And you see the vacancy sitting at 0%. And there's another picture of the food courts in Alegro Montijo. Another picture of the interior of Alegro Montijo, you see it's quite an upmarket finish. We've got to see the Portuguese paving on the bottom there on the flooring side, nice natural light, a full array of tenants. And I think you can see from the picture, this is a proper regional shopping center. Then last acquisition done during 2024, quite in October. This is Espai Girones, sales growth of 13.8%. The story here is Alcampo. You see the brand on the top of the mall there that's all shown. They replaced an underperforming grocer. And when I say underperforming, it was on a national scale. It was a concept that wasn't working. They vacated and they were replaced with Alcampo on almost double the surface, and that's simply what's pushing that sales growth to these types of levels. Interestingly, this mall has one of the best-performing Zaras in our portfolio. It is actually trading on an old concept. We are well advanced in discussions and with them close to signing leases. We do have the rights already to expand the existing Zara and upgrade that to their flagship concept. And we think when that does happen, they will likely move and close on the high street and carry on, again pushing footfalls and sales growth into the future. It's a picture of the interior of Espai Girones. Just see the Primark on the bottom left, on the bottom there just behind the escalator. And bottom right, you just see the entrance to the Alcampo that was recently added. I'll just recap on the most recent acquisition. It's done just over 2 weeks ago, not even. It was acquired on the 6th of March. It's acquired for EUR 96.3 million. It's one of our smaller assets in Iberia now. This was paid for by a subrogation of an existing loan that the seller already had. So that's loan simply transferred across from us along with the center, and then the balance of the proceeds was funded from existing cash resources. Those cash resources came out of the disposal of Planet Koper. It's a picture of Alcalá Magna. It's not in the -- this isn't in the December numbers because it was acquired post year-end. But you see another good year of sales growth. It's off the back of Primark, which opened earlier in the year, so a strong impact there, especially on the footfalls. And another good thing with the center would be that Zara have already signed a lease and are going to increase the footprint they're currently on, and they will upgrade to latest flagship concept, and that will be included in the purchase price. It will be funded by the seller effectively. And again, I think once that's completed, we'll see more sales growth and footfall growth into the future. It's a picture of the interior of Alcalá Magna, again, nice finishes. You see the Primark in the back there. For those that are interested, they replaced H&M. And yes, I mean, we're happy with the center. And I think the Zara, as I mentioned earlier, coming in will also further improve the footfall and growth going forward. And then lastly, I'll just cover the portfolio performance. I've mentioned some of this already. I've gone through the weightings. I think worth noting the growth in net property income is a like-for-like growth in net property income. So if you look at Spain, it's literally 1 asset, the Torrecárdenas. If you look at Portugal, that's the performance of 1 asset. France, on the other hand, is the entire portfolio of 4 assets held on both sides of the year. Sales growth, 7.8% for the year, I mentioned that earlier, very strong performance out of Spain. And footfall growth, I think across the geographies, also nice growth in footfalls. And then I mentioned this as well, vacancies at 2% at the end of the year and the breakdown of the jurisdictions. With that, I will hand over to Kobus. But before I do, I'll just -- I mentioned the food court earlier in Forum Coimbra. And I mentioned filling in the voids and shrinking the voids and creating more seating. You can see it down there where those wood slats are, that was the void that was filled in and it was done in 2 sections, and this is what they did to create the additional seating. With that, I hand over to Kobus to take you through the financial results.

Good morning. Lighthouse shares in issue increased during the year as a result of partial scrip distributions as well as the equity raised during September. Distributions of EUR 0.025671 per share equate 100% or 100% payout ratio of the distributable earnings. The net asset value per share increased to EUR 0.427 per share, and the loan-to-value ratio at December 31 was 25%. After the acquisition of Alcalá Magna, the indicative loan-to-value is circa 31%. Should Lighthouse proceed with the transaction that's currently under exclusivity, the loan-to-value ratio is expected to increase to 38%, which would be a peak and at the upper end of the Board's targeted range. This slide sets out Lighthouse's borrowings at December 31 as well as corresponding covenant LTV levels. The weighted average loan term is 4.8 years, and it has increased mainly due to refinancings during the year. The weighted average effective interest rate is 5.2%, and that is following the refinancing of Lighthouse's last cheap debt during December 2024. The graph on this slide indicates Lighthouse's debt maturity profile and also indicates the maturity of the transaction debt acquired with Alcalá Magna. It's worth noting that the hedge profiles match the related debt profiles. The transaction debt acquired has also been hedged. Lighthouse's properties have been valued by independent valuation experts at 31 December 2024. The valuation gains in Iberia were partially offset by valuation losses in France. Indicated in the table would be the capitalization rates on a weighted average basis for each of the regions. The France figure is on a like-for-like basis, but the 2024 numbers for Spain and Portugal include the acquisitions and, therefore, are not on a like-for-like basis with 2023. And with that, I'll hand over to Razvan. Thank you.

Thank you, Kobus. Good morning. In the next slide, I will present our direct portfolio with a focus on the performance KPIs, the leasing activity and our main projects. Lighthouse Properties direct portfolio comprised 10 shopping centers at the end of December 2024. With the addition of Alcalá Magna, the total GLA will be approximately 470,000 square meters of GLA and a fair value of more than EUR 1.2 billion. The occupancy is 98%. This is higher than previously reported, it was 96.7%. This is because of the addition of the 4 shopping centers in Spain that have an occupancy close to 100%. And the lower vacancy in France, vacancy in France is 5.8% compared to 7.9%, and we expect this number to reduce further in 2025. Vacancy in Spain and Portugal, close to 0, with the exception of H2O where it's 2.5%. We are making good progress in the negotiations to lease the remaining space. Our largest tenants by income. The accumulated rental income of the 10 largest tenants is 29.7% of the total rental income. So we don't have a major exposure to a single tenant or to a large group of tenants. Out of the 11 malls across the 3 countries, Inditex, who's our largest tenant, is present in all of them with one exception in France. Maybe add to what Justin was mentioning before, it is important to have Zara on the right concept because they are closing stores and they are consolidating in the strong shopping centers. So out of the 7 Zara stores in Iberia, 3 have the right size and the new concept. And 2, this is Coimbra and Alcalá Magna, have already signed the lease agreements for the extension and refurbishment. And the 2 remaining ones are very advanced in negotiations. So -- and this is something from the -- it's the demand of the tenant who is asking to consolidating our shopping centers. So the goal is that by the end of 2026, all of the Zara stores will be on the right concept and the right size. Primark is present in all the shopping centers in Iberia and in 2 out of the 4 malls in France. It is important to have the major fashion anchors, Zara and Primark, but also the other ones. This is because they are very selective for their locations. They only open in the dominant shopping centers, and the rest of the tenants are following them. So they are -- the tenants are rating the shopping centers very highly if the anchor tenants are present. H&M is the third largest tenant. They are going through a challenging and difficult period. They are closing stores in Iberia, not in France and in the other countries, but they do closed 24 stores in Iberia, 2 in Portugal and 22 in Spain. They're not closing any of the stores in our portfolio. In 2 of our cities, this is Girona and Almería, they are closing the competing stores and they are consolidating in our malls. And H&M has very good locations, low rentals. So in case we have to reduce part of their surface, this would actually be an opportunity. And we have a lot of demand for that space. Mango and Cortefiel, they are 2 tenants in Iberia that are expanding very aggressively. They reported very good results. And maybe just to focus on the cinemas, we have cinemas in all but one shopping center. Pathé is our largest cinema tenant, we have 2 large locations with them in France. It was a difficult year for the cinemas. Nevertheless, in our portfolio, ticket sales are only 6% down compared to 2023. We expect this year to be flat, consider I think -- considering that there is more content coming from the movie distributors. And we don't have any discussions about reducing the size or closing or discounts or anything like that. Performance metrics. Vacancy at 2%, Collection rate, 99%. It materially improved. It was 97.3% previously. Collection is close to 100% in Iberia. In France, it's 96.6%. We made a lot of progress in France. We managed to clean the portfolio. We replaced the nonperforming, nonpaying tenants with major brands. And the portfolio in France is much, much healthier now going forward. Average OCR, 10.6%, came down from 11.9% at end of 2023. As you know, the occupancy cost is a function of sales. Our sales -- the sales in our portfolio are growing. This is translated in a lower occupancy cost. So OCR in Spain is 10%; Portugal, 10.7%; and France, slightly higher at 11.9%. This 10.6% average gives us a lot of room to increase the rents when the leases expire and allow -- yes, it allows us to increase the rental income. Average rental reversion is 6.3%. This is substantial. And I expect the reversion in 2025 to be higher than that. The average rental reversion, it excludes indexation. Indexation is applied on indexation day for each lease, and it includes only the renewals and the like-for-like replacements. So it excludes any resizings or relocations. So for example, if we have a large tenant, a large unit that is split into several small ones, and this involves CapEx such as landlord works or fit-out contribution, we don't include that rental uplift in the average rental reversion. Weighted average unexpired lease term, 6.19 years. So more than 50% of our leases expire in 5 years or later. Next part of the presentation is focused on the leasing activity. So we'll have more -- less tables and more pictures and logos. In this slide, you see the picture of Salera with the basement level and the ground floor dedicated to fashion and the first floor dedicated to leisure with the cinema and the entertainment center and the food court. Some of the deals that we signed in 2024 and some of the new openings, I will not mention all of them. Some of them were already mentioned. Primark opened in H2O and in Alegro Montijo. Both Primark and Zara, they signed the leases for extending in Forum Coimbra. I think it's important to mention that we're focused on the tenants with the highest performance, for example, JD Sports, Normal is also one of them. We signed 4 lease agreements. Three of these stores already opened in '24 and 1, the one in Docks 76 will open by the end of March this year. Brands such as Rituals, Starbucks are very selective. Rituals opened in Forum Coimbra, in Docks Vauban; Starbucks in Torrecárdenas, Salera and Saint Sever. I would mention only one contract here, which is very important, is the lease agreement signed with the Darty Electronics in Docks 76. This is the market leader in electronics and home appliances. They will open by the end of the year. They are replacing Esprit, who closed all the stores in France. So we are replacing a nonperforming tenant with a very strong tenant. They are part of the Groupe Fnac Darty, it's one of the biggest retailers in Europe. And also, it's an activity that the Docks 76 didn't have, this would be electronics. So we expect Docks 76 to be stronger with Darty and also with the opening of Normal this year. We are very focused on improving the tenant mix. I think the tenant mix is one of the most important elements in a shopping center. In a successful shopping center, it's important to have the latest concept. Justin already mentioned that. And sometimes it's difficult to fully quantify the impact of the opening of a Primark or a Zara on the footfalls and on the sales. So last year, we had many openings, 3 new Primark stores that opened, some at the beginning of the year, some in the second half. So in this slide, I try to present the impact of these openings on the footfalls and on the sales. So Alegro Montijo, Primark opened in October. The impact on the footfalls was plus 18.6% in Q4, and sales improved in Q4 with 12.3%. Very similar in H2O, Primark opened in September 2024, very positive footfalls in Q4, growing 14.5% and sales with 16%. In Alcalá Magna, we had the opening of Primark in April. Impressive sales growth in Q4, 11.1%, and footfalls almost 18%. Obviously, these figures are much higher than the averages for 2024, and I think they demonstrate how these concepts are attracting customers and then how they attract higher sales. In the 2 pictures, you see the new concept from Zara in Alegro Montijo on the left and the new Primark store in Alcalá Magna. The new openings in 2024, some of them were already mentioned. I will not mention all of them. So in H2O, we had the opening of Primark, Druni, Bershka, Deichmann, Ale-Hop. You can also see in these pictures the new floor that's much improved, the feeling of the mall. In France, we lowered the vacancy by bringing in new tenants, but we also replaced many of the tenants. In Docks Vauban, the total number of openings, they accumulate more than 3,000 square meters. So a new large Action store, a new JD flagship, Normal, Rituals and Jack&Jones. Saint Sever, several openings, the same, more than 3,500 square meters. All of them opened in 2024, Bershka, Starbucks, Normal, Foot Locker opening a new concept and Chaussea. Moving to projects. The largest part of our CapEx is concentrated in 3 large projects. This is the refurbishment of H2O with a project cost of EUR 10 million. This cost was already included in the acquisition. The yield is 7.5%, which is the acquisition yield, including this -- the cost of the refurbishment. We already started with the replacement of the floor. We will continue with the improvements in the look and feel and quite a major project involving the lake and the exterior area. We will create a new park, which I think it will be a big attraction for the catchment area. Forum Coimbra, project cost, EUR 12 million. We are extending Primark and Zara. Both lease agreements are signed. All the permits have been received. So the project is fully approved now. We are currently trading -- tendering, and the completion is expected in the second part of 2026. Extension of Rivetoile, a cost of EUR 5.8 million. The works are ongoing, and we expect the project to be finalized by the end of the year. We are creating 12 new additional units, and we are improving the traffic flow on the ground floor. Part of these new units are already secured and part are in advanced negotiations. With this, I finish my part, and back to you, Justin.

Thank you, Razvan. And I think before we open up to questions, I'll take you through the outlook. We have guided 5% growth in our distributable earnings per share. This gets you to around about that EUR 0.027 per share of earnings for distribution. And I think it's worth noting it's been -- this growth has been impacted by the refinancing of Forum Coimbra. It's quite a common theme refinancing this legacy, very cheap debt with a lot higher cost of debt. I mean in the case of Forum Coimbra, it went from around 2.4% to over 5% interest cost, impacting our earnings by about EUR 2 million and dropping our guidance, our growth at least from about what would have been 9% to 5%. The good news is that this is the last of our legacy cheap debt. Everything is now more or less at market levels, and the impact of this will be minimal or immaterial going forward. There could potentially be upside. Also, we do not have any more maturities until 2027. So we quite -- it's quite certain for at least for '25 and '26, what our interest costs are going to be. We financed -- or we finalized another -- a last -- a recent acquisition, sorry, Alcalá Magna, which I've spoken about earlier, and we anticipate to close on another acquisition before the second half of the year. We do have sufficient liquidity to acquire this asset. That will come from raising a loan secured by Espai Girones, which we acquired fully cash. So we do have sufficient liquidity to acquire this asset. And then I think all these acquisitions we do and without having these refinancing impacts, we expect a very strong growth into '26 as well. And I think lastly, Iberia will remain a key target focus of ours. And like I said earlier, we're looking to get that portfolio to about 87% by year-end. And with that, I'll open up to questions. I think Kobus will read them out loud or whatever you've written during the course of the presentation, and either myself or Razvan or Kobus will respond to the question.

Please discuss the like-for-like net property income growth in Spain of 1.3%, especially since it looks lower than indexation.

Thank you, Anton, for that question. I'm glad you asked it because I think if you understand the like-for-like, you're literally looking at Torrecárdenas in 2023 versus Torrecárdenas in 2024. So it's one center. So there's no portfolio impact. So there are always these slight variations and distortions within those numbers. And in this specific situation, 2023 was overstated. There was a catch-up on some of the service charges, which actually artificially inflated '23's NPR, which then just put a bit of a lid on the growth of that asset, but still performing extremely well. And I think into the next year, that impact won't be there. So the growth will be more regular. If you look at Coimbra, it's the other way around. It's over 6%. And in that situation, we've got what we call key money. Key money is when you literally get a bidding war on space and tenants will -- the demand is so high that they will give you an incentive, a financial incentive to take one tenant over the other. In that sense, we've got over 300,000 of key money that pushed the earnings on that one center. So it looks like Portugal is growing at over 6%. It's only one center, but that's one -- so key money has pushed it. So next year, we will have the same issue, maybe. If we don't get more key money, then that base would be lower, and Coimbra's growth will be also a little bit on the low side.

What are the terms of the debt being acquired with a latest Spanish acquisition?

Yes. So we -- like I mentioned earlier, we subrogated an existing loan. The margin there was 1.95%, I mean, at that stage. The base rate is approximately working about 2.3%, and that will get you to all-in rates of about 4.2%. And that's -- there is no -- the reason for the subrogation was to avoid having to pay the raising fee. So we don't pay raising fee. So that will be our holding cost of debt, and there's about 3 years left on that loan.

What is the indicative indexation for 2025? And please confirm the indexation achieved in 2024.

I hand over to Razvan.

I will -- thank you. I will answer that question. So for 2025, indexation in Spain, 2.8%; in Portugal, we expect somewhere between 2% and 2.5%; and France, 2.5%. And in 2024, France, the last applied indexation was 3.03%; Spain, 3.10%; and Portugal, 1.9%.

Please discuss what a normalized effective tax rate would be for the company going forward.

I think Kobus can answer the tax question.

All right. So a normalized rate over the medium term would be approximately 8% of profit before tax, but it will probably take us a year or two to get there fully. We're not quite there yet. Does the sales growth performance in the centers where Primark opened include the Primark sales?

No. The answer is no because Primark doesn't communicate the sales. It's one of the few tenants that don't communicate sales, so we don't include them.

How are the CapEx projects going to be funded?

So CapEx projects will be funded -- we do -- as we sit here, we got around about EUR 55 million of listed investments in there, so that will be funded by a rotation out of that into the CapEx projects. And you will also see there is a scrip option up to 50%, and that will also go towards funding the CapEx that we have planned.

Could you give us an idea of your strategic intentions around the French assets?

So with France, it's actually, as you saw, a nice growth of NPI just over 14%. It's -- there's been a lot of work done to the French portfolio. It's looking a lot better than when we acquired it. The tenant profile is far better than when we acquired it, and the growth is starting to come through. So for now, the strategy would be to hold the assets and at least wait for the initiatives to deliver what they've intended to do. And so for now, I think the French assets will remain whole. Okay. I think then that there are no further questions. So with that, thank you all again for attending, and wish you a pleasant day. And if there are any questions further, feel free to reach out to either myself, Kobus or Razvan, and we can address you then. Thank you very much. Goodbye.