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

Good morning, everyone, and welcome to our presentation. This is the presentation of Lighthouse properties. As for the interim period ended 30 June 2026. So we're covering the first 6 months of the financial year. Again, I'd like to just thank you all for being here with us. We do know everyone very busy, especially at this time of the year and we do appreciate you taking the time to be with us this morning. As usual, I'm joined by my colleagues, Razvan Sin, our Head of Retail; and our new CFO, who will be presenting for the first time David Swarts. And just in terms of housekeeping, Q&A, we will hold that at the end. So if you do have any questions, there should be a tab on your screen that questions and you kick on that, and there should be a box that you take your question into. And then at the end of the presentation, we will read them aloud and answer them accordingly. Before I move on, I'd like to talk to the pictures and just to share a bit of color. This is H2O. It's one of our 2 centers in Madrid. We've recently finished a quite an extensive refurbishment here, we replaced the flooring, improve the lighting, replace the ballasts refurbished the food court. There was a large exterior artificial lake, which we partially folding create a park space and the green area. And I think most importantly, we've been focusing on the tenanting here. All the intersect brands other there in Zara have all been extended and refurbished are currently trading in their latest concepts. We've agreed with Zara to refurbish and extend their store and they would be concluding that during the course of 2027. And what we've also done is signed a lease of lefties and left will be taking the space left behind by the arcade and Boeing operator. They have relocated to which we've spoken about it previously, but they have relocated to a trampoline park the location of the trampoline park who vacated [indiscernible] scheme due to national insolvency. So it's exciting, we have left is coming here now they have all the [ Inditex ] brands. And despite all these ongoing works and relocations and letting and tenanting malls continue to perform well. Sales still growing for the period vacancies have dropped just below 1%, and we expect that to -- we expect them all to become fully let on the left ear is fully operational, which will be towards the end of 2026. In terms of the content and what we're going to be covering this morning, I'll start with an overview, I'll take you through our strategy as one of some of the highlights for the period, and then we'll hand over to Dave, who will take you through the financial results and some of the financial KPIs. And then Razvan will take you through the operations. We'll take you through the letting initiatives and some of the projects we're busy with and the projects we plan to commence within the coming months. And then we'll complete within an outlook and I will provide an update on the guidance, and then we will also follow up with the Q&A session at the end. Again, talking to the picture, this is a Solera it's our mall in Caspian in Spain on the Militerranean coast. It's our largest mall probably our most powerful mall in Spain. You do see at the bottom there, Bershka as well as Stradavarius they've relocated here. They were undersized in overtrading and have opted to move to these locations. And it is from where they were in a secondary location. But I think they were so desperate to have the size that they needed, and they were happy to compromise on the location. So they now have anchored this part of the mall that was fairly cold before it was anchored by Sports Direct as well as unicorns. Much more powerful offering here and it's completely reenergized and reactivated this part of the mill. And the other thing that's standards enabled us to bring some new tenants to the mall as well. So we've got [indiscernible], which is one of the Apple premium resellers, which wasn't present in the more before. We do a culpa now have joined them all as well as Cortefiel. Also performing nicely. This sales growth at Salera was about 8.5% for the period and the malls effectively fully invest and then just to kick off with an overview. Again, on the picture, this is our Color Magna. It's 1 of our 2 malls that we own in Madrid. It's in one of the rapidly growing residential notes. It's the smallest mall in our [indiscernible] And despite the small size is 32,000 square meters, it's performing extremely well. it keeps surprising us. The sales goal was about 12.3% for the period. Vacancy is very low at 0.6%. And despite the size, it does have all the tenants with a who've refurbished and on the latest flagship concept. We've got Powermark as well, also the lefts and a very strong record on as well. And again, despite this size, it's attracting over 7 million people. It's punching well above its way, very strong center, especially given it its size. Just a recap on the strategy. Nothing much has changed and been consistent with the strategy over the past couple of years. What we're trying to do is provide a stable investment with sustainable growing distributions, which are all underpinned by dominant and defensive mall. So with this in mind, we've got a very specific investment criteria when it comes to acquiring new malls and investing our capital we do any focus on dominance and defensive moat. And in our minds, to be dominant, you do need to have the key tenants. You did Zara and Zara on the [indiscernible] concept, and you do need a Primark and in most instances, you'll see in the cities that we are. If we're outside of the major metropolitans. We usually do have the only Zara and the only Primark in that specific city and it's just important to have Zara on the latest fanship concept. They are consolidating. So they are closing the stores. If you see a situation where Zara have invested money in the store and upgrade to flagship consequent there's an older Zara within proximity the high risk, the beta will also close. So we've been focusing a lot on getting all these are up to the latest flagship concept. H2O, which I mentioned earlier, is the last remaining one, which we've agreed with them to do, and that will be done during the course of next year. Again, we only focus on cities with a strong economic underpin. So provincial capitals, agriculture, mining, tourism is often the case or it could even be -- we do some don't in the major metropolitan, we are in Madrid. We mentioned the 2 malls earlier. We also do have a mall in Lisbon. I think what's important is that there's a growing population in these respective cities. There is urbanization happening in Europe across is prevalent in Spain. So we avoid the cities of these declining populations. You do need that great population just to give you that tailwind when it comes to footfall growth and sales growth. We're focusing on Western Europe, specifically Iberia. We intend to do so for the foreseeable future. And on the acquisition side, it has a base at some what we are seeing. The sale opportunities that has become extremely competitive. So we are trying to focus more and more on enhancing the assets. We're investing capital in the assets themselves. Those this investment does come into return. So it includes extensions, refurbishments, moving tenants around bringing the correct tenants in, and we are attracting very attractive returns on these capital deployments. And in terms of acquisitions, we -- even though we do think there will be a few acquisitions there for, we do still constantly monitor. I think all opportunities to come across our desk. We're well known in the market. And we continue monitoring, I think when there is weakness or there is specific opportunity we will be able to execute on it. Just with that strategy in mind, looking back, we see how we've executed it over the past few years. We started on Iberian expansion quite our first mall in Spain, this was Torrecardenas. That was then followed up in 2024, which I think was the best year to be buying centers in Iberia is when we're acquiring centers at yields of between 7.5% and 8%. We followed that up in 2025 with 2 additional acquisitions. These sales were between 7% and 7.5%. So we did see yield compression happening already. But starting in 2026, you'll probably have read in the press there some big acquisitions happening. Some malls are being acquired, but these yields have dropped 6.5% sort of and below. So it does become less attractive to buy. There is a lot of capital chasing the few assets in Iberia. It's become a very attractive investment destination, especially for offshore and foreign capital. In terms of the debt refinancing. I think when we acquired a lot of these centers that came with existing loans. Some of these loans are amortizing, so it was quite a drag on our cash flow, that will be refinanced. There's no more material amortization in the portfolio. and our debt maturity has been extended as well. And a lot of the focus was Razvan will take you through some of the detail through some of the detail a bit later, has been focusing on improving the existing assets and value creation, and we are seeing nice returns. And this is how we're driving our growth in the next couple of years. On the financial highlights for the first half, I think the most important number there, that's 9.7% growth in distribution was built on the that we achieved for the first half of last year. So you are starting to see nice consistent growth coming through. It was driven by acquisitions that we made during the first half of last year. They're now contributing for a full 6-month period as well as the strong sales growth, which we'll touch on a bit later, but there has been strong sales growth across all geographies, pushing up your turnover rentals, also helping with your indexation and your and these renewals. On the LTD side, 35.9%. It improved slightly from the 361%.because of valuations, we did revalue at the end of 2025. We haven't revalued for the interim. We only we value at year-end. So that benefit comes through from the valuations that we've already done. And you do see that coming through in that NAV increased per share of 4.9%. That's due to the revaluation that we've done at the 2 are up last year, and I think cap rates have compressed further, so we do expect that NAV growth to continue towards the end of the year. In terms of refinancing, we've been quite busy here, and these both happened after the period end. [indiscernible] being refinanced by area. So we repaid the old facilities and then we had our new facilities, which have extended our debt maturity profile. And then I think quite importantly, we have secured terms with [ Natixis ] to refinance the French loan, which was maturing in March. We were surprised at how competitive that process we came for the lenders. There were 5 potential lenders you could have garden with. We ended up electing to go to a Texas, who was the existing lender, main reason being execution risk. They weren't familiar with the assets, and they had all the security already. So it makes sense to go with them. But they also did reduce the margin. When we borrowed from them, originally, that margin was 300 basis points in 2022. Reduced 175 basis points. So quite a major reduction in the margin there. And I think it's an acknowledgment and recognition of the improvement in the market conditions fry, but also the improvement in the assets much better quality assets, much better quality, tenant profiles, much also being improved from various enhancements and extensions that have been done in refurbishments that have been down to those centers. Just to take you through the operational highlights. As you see Spain, Portugal, that's 87% of our portfolio to the major part of our business, which is under 13% being France. Like-for-like NPI growth at a portfolio level drag down somewhat by Portugal. So I think it's important to understand that Portuguese portfolio, there's only 2 assets in that portfolio. One is for Quimbra, other ones for [indiscernible] having quite a major extension done mostly with [indiscernible] brands and then involves some boys and moving tenants around also some rent freeze and some tenants being closed that did drag down the NPI. You do see a contrast with the sales growth of 9.5% for the period. But we do expect that NPI to normalize into 2027. And I think we'll see a number of for Portugal for 2027 once these projects are completed and trading normalizes again. On the sales growth plan continues to outperform also very strong far above inflation at 7.7%. And funds also performing nicely 5.7%, taking the portfolio total to 7.9%. Growth in footfall 3%. It is difficult to continue growing footfall, but a tailwind that helps us is being in these growing population areas and bringing the right tenants and attracting more and more shoppers and also keeping the malls relevant and aspirational and this is driving footfall, which intent does help you drive sales. EPRA vacancies. Iberian portfolio speak to the quality, it's almost fully left to 0.3% in Spain and fully let in Portugal and then France sitting at about 6%, but being fairly stable at about that 6% level, taking our total portfolio vacancy to 1.1%. This is just a slight evolution of the portfolio from over the past 12 months. You can see a bit of a stability and some [ staticness ] happening here. The only difference being we acquired the grocer, a grocer in Captain in Espacio Mediterranea towards the end of 2025 and it did bump up the Spanish exposure. But from 58% to 59.1%. But if you're investing in light as you primarily investing in Iberian portfolio. There are only 8 assets that all of those assets are dominant are effectively fully let and are growing quite nicely. And then the balance being 128% is invested into French assets, that's a portfolio of 4 assets. And with that, I'll hand you over to David, who's presenting for the first time. He'll take you through the financial results. Welcome, David.

Thank you for that introduction, Justin. I'm going to take us through the financial results for the 6 months ended 30 June 2026. As Justin has already mentioned, the most important metric on this slide is the increase in distribution per share, which is 9.7% for the 6 months ended 30 June 2026 compared to the prior period. And this is off the back of a 10.9% increase in distributable income, offset slightly by an increase in shares due to a scrip dividend for the second half of December Distributable income increased mainly due to an increase in property rental and related revenue, and this is as a result of the acquisition of 2 properties in 2025. These push Mediterraneo in June 25 as well as [indiscernible] in March 2025. We've also had some rental indexation, which Razvan will take us through a bit later as well as ongoing asset management initiatives. This increase in property rental has been offset by an increase mainly in finance costs also as a result of the acquisition of these 2 assets and therefore, the loans to fund these assets increased as well. Our payout ratio remained at 100% from the previous period, and our net asset value increased by 4.9% compared to -- and this is, as Justin has also mentioned earlier, mainly due to an increase in fair value adjustments in our investment properties at December 2025. I'll now talk you through our debt profile. As Justin has mentioned also, we focus on a strong balance sheet and also on a disciplined LTV ratio, and we do extensive hedging our interest-bearing borrowings as of 30 June '26 remained relatively stable compared to December '25. It decreased from EUR 581 million to EUR 578 million. And this decrease is mainly due to amortization of loans, which we are planning on largely eliminating going forward, which I'll talk to in the next slide. Our LTV ratio decreased slightly from 36.1% at December 25 to 35.9% at June 2026. Our cost of borrowings also remained stable at 4.97% compared to 4.99% for the comparable period in the prior year. And this is mainly as a result of our fixed borrowings, which fixed all our debt, either through fixed loans or through interest rate derivatives and that remained 100% fixed for the current and comparable period. Our weighted average debt maturity decreased from 4.7 years at December '25 to 4.3 years at June 2026. On the right-hand side of the slide, you will see that we have quite a significant amount of debt maturing and this is mainly due to our French portfolio that is expiring in March 2027. And moving on to the next slide, then talking about the refinancing. We have 2 debt streams that happened after June 2026. Firstly, we refinanced 2 properties in Spain, and this was stories. We increased our debt on these 2 loans to EUR 128.1 million. And this was a 6-year bullet debt profile within our amortization on the debt. We have a significant improvement on our margin achieved from 226 basis points previously obtained to 185 basis points for the new debt. And this was already closed in the beginning of July 2026. This new facility gives us better covenant flexibility because we now have one day facility covering all our Spanish properties, except for Salera, which is in a joint venture and this also enhanced cash extraction from these properties as a result of this refinancing. Then moving on to the debt that is expiring in March 2027. As I mentioned, it's the France debt and we're expecting to close this refinancing in the fourth quarter of 2026. We decided to remain within Texas, which is the incumbent and a lender due to execution risk on this facility. And the margin on this facility decreased significantly from 300 basis points that we achieved in 2022 to 175 basis points for the current facility. The facility is also expected to increase to EUR 126 million and this would be a 5-year bullet loan compared to the current loan or the French portfolio, which has quite a significant amortization portion on that. This refinancing is also going to provide us with better covenant flexibility and also enhance cash extraction due to less covenants than we had in the previous facility. Post the refinancing of both the Spanish debt, in [indiscernible] as well as the French debt, our expected cost of debt is going to increase from around 4.97% for the 6 months ended 30 June to around 5.05%. And this increase is mainly due to a significant increase in the base rates but it's offset significantly by our improved margins on both the Spanish as well as the French debt, which I've already spoken to. Our average maturity of debt is also then expected to increase from 4.3 years as at 30 June '26 to 5.2 years post the refinance. And as mentioned before, the group will now have no material amortizing loan outstanding anymore which will reduce the cash drag on our debt. And with that, I'll give over to Razvan to take us through the operations.

Thank you, David. Good morning, everyone. In the following slides, I will take you through the operational highlights for the first half of 2026. This is a picture with prone. This is the more that we are extending mainly to introduce and expand the data they are currently busy fitting out and they will open the new flagship store in October this year performance metrics. EPRA vacancy, 1.1%. This is down from 1.3% at the end of 2025. Spain, 0.3%, down from 0.5%. This is mainly due to the leasing of the vacant space in Portugal vacancy is practically 0. France is flat at 6.1%. Collection rates 98.7%. It's more than 99% in Spain and Portugal. 97% in France. Going forward, we expect vacancy and collection rate to stabilize and maybe some -- maybe we'll see some improvement in France in 2027. Average occupancy cost 10.5%. This is slightly lower than previously reported. It was 10.6% as sales increase, we are also increasing the base rent when less expire. But in these 6 months, sales increased materially. So average occupancy cost is down, and this will allow us to deliver a consistent rental uplift going forward as this is expired. Indexation, 2.9% in Spain, 2% in Portugal. And in France, in Q1, negative 0.5% -- it was communicated only for Q1. It will be published for Q2 in September. And our expectation is that for the full year in France, indexation will be somewhere around 1%. On the right side, the risk expiry profile by monthly rental. No major changes here, approximately 40% of the leases expire in the next 5 years. average rental reversion, 6.5%. It was 5.1% in 2021. So we managed to increase the base rent at a higher level than in 2025, and this talks to the occupancy cost that I mentioned before. This level excludes indexation, which is applied on indexation date. Leasing activity, 85 leases in the first 6 months were signed. This is for more than 38,000 square meters of GLA. On the right side, the sales variation by sector. Sales improved across all countries with growth exceeding the inflation materially. As Justin already mentioned, sales improved with 7.9% across the portfolio. The highest increase was in the leisure sector, 17.4% due to the exceptional performance of the Cinema this year. The rest of the laser tenants, meaning molding centers, our Cape games and [indiscernible] centers also performed well, but not at the level of the cinemas. Cinema tickets increased with 29.2% in the first half compared to the first half of million and the growth was driven by content and blockbusters, and we expect this growth to continue also in the second half. The 29% growth in ticket sales corresponds to growth in sales, the total growth in sales of more than 35% for the cinemas due to the increase in prices for concessions and tickets. For the rest of the sectors, services increased 11.9%. Personal Care, 7.9% in fashion, which is the largest category. It represents 36% of the rental income. It increased to 6.2%. And within fashion, the best performer was the [ Inditex ] group with all the 7 brands. The increase was more than 10%. Top 10 tenant by rental income. The largest pertinent represents 31.5% of the rental income. Inditex is our main tenant with the 7 brands and the together, they account for 12% of the income, while data alone, which is the flagship of the group, represents 4.9% ahead of Primark with 4.7%. The 2 brands are very selective, both Zara and Primark they only opened in dominant malls, and there are many times followed by other tenants. So tenants consider the present of the 2 tenants the Primark and data in a mall an indicator of the quality of that small so they are following the 2 brands. Inditex is present in 11 out of the 12 months and Primark is present in 10 out of 12. As Justin mentioned, it is important to have them, but also it is important to have them on the right concept on the latest concept and on the right side, right size because they -- this means that they invest in their stores to update. This is especially important for data they are continuing the consolidation process. They are closing the secondary locations and they are enlarging the performing ones. In our portfolio, we have 8 data stores in Iberia, so in all 8 malls. There are 7 out of those 8 are -- have been refurbished recently. And the last one is H2, which will be extended and refurbished 2027 Spain operational highlights. Spain represents 59.1% of the direct portfolio by fair value. GDP growth of 2.7%, well above the European average. It's one of the highest in Western Europe. Like-for-like NPI growth of 5.6%. Tenant sales up 7.7%. In general, in shopping centers in Spain, sales increased with 6%. So the portfolio is outpacing the market average with 7.7% compared to 6%. Footfall growth, 2.4% up EPRA vacancy 0.3% down from 0.4%. And on the right side, some of the projects and leasing highlights that we've been busy with in this first 6 months at Salera, Decisive, they relocated and opened larger stores. This allowed us to introduce Rosedale and Cortefiel left is also in Salera. They refurbished and opened the latest concept in April. But one the extension of the mall for data is advancing well, and it's within budget. Zara took over the unit, and they will open in October. Despite Mediterranean, Primark signed the renewal, and they quickly refurbished the store. And in June, they opened a new concept. We opened 2 new brands, Mango, Teen and [indiscernible] and also in Mediterraneo, we handed over the space to Perfumer and they are expected to open in September. At H2O. Previously, we communicated that we are in negotiations with a large fashion tenant. Consequently, we signed a lease agreement with [ Lefties. ] This is a large store, 3,200 square meters. We are preparing the space for them now and they will open before December this year. So NPI growth of 5.6% in Spain. Considering all the initiatives that we had in Spain, we have considerable room for improvement in 2027. And this is because a lot of the large stores have been temporarily are or will be temporarily closed during 2026. And here, I refer to that in spite ones, [indiscernible] Lefties, which were closed for a period in Sale left is, we will open at the end of the year in H2O and first Inditex and Primark in claimer. But this is portable. Some of the openings in Spain. You can see Primark and Mango in Mediterraneo and Bershka Cortefiel and [indiscernible] Moving to Portugal, which is -- which represents 28.1% of the portfolio, GDP growth 2.1%. Again, 1 of the highest in Western Europe, like-for-like NPI growth of 1.7%. This is low because of the rental voids and because of the projects that we are busy with. We have some disruptions, mainly with Inditex and with Primark in Coimbra [indiscernible] sales increased with 9.5%. This is compared to an increase of 5.1% in shopping centers in general in Portugal. Footfall growth, 3.1% and EPRA vacancy is 0%. Some of the projects and leasing initiatives. We have 2 ongoing projects Coimbra basically the extension of the mall for Inditex and for Primark. The Inditex part was finalized. So that Adidas Becca, Polaner are now open. -- that opened a flagship almost 4,000 square meters. And in July, just now they closed the competing stores in the city. So this is part of the consolidation strategy ones Zara opened in Fortnite close to the second store. And the second project in Coimbra is the extension of the mall on the second floor to add a new medical center the least with the medical center has been signed, and we will deliver the space by the end of the year, and they will open at the beginning of next year. Some of the openings Sephora and LEGO in Coimbra and Zara flagship together with Westport also in Gambro and in formats Autocar opened in the retail park. Operational highlights for France, which represents 12.8% of the portfolio. GDP growth here is only 0.2%. Like-for-like NPI growth 6.6%, driven by the asset management and leasing initiatives. Tenant sales increased with 5.7%. Footfalls portfolio increased with 4.5%. This is compared with negative growth in sales in shopping centers in general, in funds. So sales in shopping centers, in comparable shopping centers in France were negative minus 0.5%. And this is despite the strong performance of the cinemas, and footfall increased with only 0.8%. Pro vacancy is stable at 6.1%. And on the right side, some of the projects and leasing highlights. New Yorkers and Popeyes signed the leases for new stores with openings in Q4 in [indiscernible] we opened 2 new restaurants, [indiscernible] and Rotacos and we have 1 more Italian concept on a large surface opening in the second part of the year. At [ Santazer, ] we opened rituals and the Dock76, we signed the disagreement with New Yorker who will open in Q2 next year. So also in France, we have 2 large spaces to New York stores that will be operational only in 2027. I think the main message that I want to send is that we delivered strong NPI growth in 2026, but we had some major disruptions. Several of the large tenants were not fully operational because of extensions and refurbishments. And these tenants will be fully operational in 2027, which will drive further NPI growth. And with this, I finish the operational part and then back to you, Justin. Thank you, Razvan.

And I think we will just continue the outlook and give you an update on the guidance, and then we'll -- we'll move on to the Q&A section. I think in terms of outlook, we will remain disciplined on that investment approach, which I spoke of earlier. It's very important that we have dominant assets, and we won't compromise on quality and exchange for yield. So given that we do expect the acquisitions to moderate for the foreseeable future. But on the flip side of that, we're seeing very strong economic performance out of Iberia. Strong sales growth, that momentum remains strong, and we don't see changing in the foreseeable future as well. So it will continue driving our growth. And as you've seen with risen, there's a lot happening in the portfolio. There's lots of moving parts. There's a lot of projects that are currently already will be completed mostly towards the end of this year and some during the course of next year, but this will continue as these get less up, we'll continue driving our growth into 2027. So expecting 2027 to be another good year. But with regards to 2026, we have upgraded our guidance and increased it from EUR 25 for the full year to EUR 0.03, and that takes our growth from an improvement from 6.9% to that 8.7% level, which we're very pleased with. I think it does show the quality of that portfolio and the strength of some of the asset management initiatives and that does build on again. I think last year, the increase was about 7.5%. So it's an improvement even on that. So we're very happy with that number. And I think that concludes the presentation, and then we will hand over to the Q&A section. And, I think we're having some questions I've been astern the presentation. David will read them up on and then either Razvan, myself or David will answer porting.

All right. So we have a few questions. I'll try and group some of them together. The first 1 talks about our asset management across the portfolio. with attractive yields. So the question is, can you provide a summary of these across the portfolio and also the budgeted yields?

So there's a few of them and they do come at various yields. We for example, from [indiscernible] that was a $12 million project and that was primarily to extend Primark as well as all of the Inditex brands. The yield on that was around 7.5%. But just when we talk yew just talk about incremental costs over the incremental rental increase over the cost that incurred. Over and above that, you do get further benefit. I mean, in Queenborough, specifically Zara closed in the competing scheme, which means that they'll consolidate into our scheme, which means there'll be more put full means there will be more sales across the portfolio. So that 7.5% is probably understated to what your real return is. You may also get a slight compression in cap rate because you've become more dominant but that's an example in Queenborough. We just have [indiscernible] That one was about EUR 6.6 million and about a 5.5% yield. So quite low. But again, I think the that will be improved because of the dominance that's created by that other competing ores and the competing schemes are closing Salera was. We spoke of that earlier, we moved stagers as well as Bershka, they're setting CapEx of around EUR 2 million. But the yield on that CapEx was around -- and we are also -- some other initiatives we're looking at them. We are looking at buying some space back from the grocers to downsize them and bring some new tenants there. Those are going to be -- there's one in particular, it's a cost of around 6 million the yield, they will probably be north of 8%. And then we are also working on and it's largely tenant-driven because everything we do when it comes to extensions will be pre-let. We have got some options like H2O, for example, there is an idea where at least we do have rights and the ability to extend that more project level cost around A6 million, the yield will be north of 10%. So this is the type of deals that we're looking at where we do get these attractive returns. And this is what we are saying is a more attractive investment destination for capital than buying new centers at low 6s. That's probably not the quality we would like to be buying at the sent.

Okay. So the next question, the tax rate for the distributable income was 2.9% in 16 in what tax rate are you allowing for the FY '26 guidance? And also where do you expect it to settle in the long term as well as what tax rate is included when dividends are distributed from Portugal. So we are expecting the average rate for FY '26 to be around 3.1%. On a stabilized basis, we're expecting it to settle around 4% to 4.5% on the total portfolio. And then a question around the tax in Portugal. When distributions are made out of Portugal, there's a 10% tax rate applicable to that distribution. Okay. So the next question then, the Portuguese and Spanish NPI were lower in 1H '26 and 2H '25 and the distributable income guidance suggests that 2H '26 NPI growth will be good. Can you give color about seasonality in these portfolios?

Yes. I mean we did speak about Portugal earlier and the impact of some of the voyage, ran freeze, et cetera, that are happening there, which won't reappear in the second half of the year. And are the easy to seasonality of others. I mean a huge amount of the trading. I mean, Roman can probably speak to it, but there's a far greater period of sales or the densities sales are much higher in the second half of the year expression year, you have summer, obviously, which is the August month with sales are strong. Then you have the December period as well. Obviously, the sales are strong as well in and fires so the NPI is mainly driven by the project and by the tenant closing for sometimes 1, 2, if it's a large tenant to be 3 months closed for an extension and refurbishment. So this is what drives mainly the NPI. There is seasonality because in the second part of the year, there is back to school in September and then it's the winter holidays. And this would have an effect on the -- a small effect on the turnover rent, but it's -- I would say, it's a minor impact on the NPI.