MERLIN Properties SOCIMI, S.A. (MRL) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. And welcome to the 2019 results presentation. I must advise you that this conference is being recorded today. I would now like to hand the conference over to Fernando Ramírez. Please go ahead, sir.

Thank you very much. Dear ladies and gentlemen, welcome to our full year 2019 results presentation. First of all, as usual, we would like to highlight the importance of abiding by the disclaimer contained in the presentation. We are going to be making a full presentation then followed by an open Q&A session. And well, we have a lot to cover today. So let me go directly to the speakers: Ismael Clemente, our CEO; Miguel Ollero, CFO (sic) [ COO ] and Corporate General Manager; and David Brush, our CIO. So many thanks. And without further delay, I'll pass the word directly to Ismael.

Thank you, Fernando. Well, 2019 has been a fantastic year in terms of performance. It is being a year in which we have focused particularly on occupancy. We have reached a total occupancy for the company of 94.8%. That will be 94.4% if excluding the effect of the Juno transaction, which put our offices from 91.9% naturally to 92.8%. But it happened within the year, so we have to report the adjusted occupancy for the year. The delivery of projects has been tremendous. During the year, we have delivered 11 projects at returns above underwriting. And the improvement in occupancy has led to a significant cost dilution and improvement of the margins. So all in all, it's a year to be proud of. I mean certain aspects like offices is being a record for us. Our life, as you all know, is relatively short, but it's being a fantastic year in terms of release spread and like-for-like increase of cash flow. In terms of financial performance, the FFO per share has reached EUR 0.67, 9.2% above last year and 6.4% above the guidance we last gave to you of EUR 0.63. The EPRA NAV per share has gone up 5.4% and has reached EUR 15.60. The leverage has been reduced a little bit to 40.6%, while improving all the rest of the financial ratios, mainly owing to the fact that we draw on lines at the end of the year for the purchase of the DCN stake. In the absence of that extraordinary purchase, it will have dropped to 39.4% pro forma. In terms of operating performance, the business has performed excellently with solid growth in occupancy, in like-for-like rents and in release spread across the board. There has been a high like-for-like rental growth in offices with 7.3% year-on-year, the highest recorded to date, as I commented before, combined with a strong rise in occupancy of 264 basis points. In terms of shopping centers, the numbers are solid. So sooner or later, the Armageddon will come, but we continue performing solidly and enjoying good cash flow until it happens. So tenant sales have gone up by 4%, with a very significant rental growth and a very meaningful hike in occupancy. What is more important, the occupancy cost ratio, the fourth ratio, remains at 12.6%, which is quite comfortable for all of our tenants. And rents are in the region of EUR 250 per year on average, which is quite comfortable and certainly less than half many of the things we are reading about in other parts of Europe in terms of the price that our tenants pay for occupying our shopping centers. Logistics continue enjoying a very robust performance. The deal compression remains the tone in the market, and rents continue going up significantly. We don't stop delivering projects, but we continue filling them pretty well. So very interesting. The better the company is developing in logistics, which is clearly now paying off as we increase the relative weight of logistics in our whole portfolio. In terms of value creation, we have continued with our strategic asset recycling, which, as you know, has it rules in the fact that we put -- bought a couple of portfolios in the market, Testa and Metrovacesa. So we did a couple of bulk acquisitions, which now we are trimming as we deem appropriate in order to get sources for the uses we are making in our CapEx campaign. So we are reducing exposure to secondary retail. We are reducing exposure to peripheral office, while we are increasing exposure to logistics. The year, as aforesaid, has been fantastic in Landmark, Flagship and Best II and III with 11 projects delivered at very, very attractive returns, as will be detailed afterwards. This has been a year in which we have put a lot of emphasis in improving our ESG standards, having achieved 82% score in GRESB, which is well, very important for us because this we know company is relatively young, and we are trying to do things by the book and try to be as serious as possible in our commitment with our stakeholders and society in general. Our DPS reached EUR 0.52, meeting the guidance. We will comment about what we will do for year 2020. But basically, we are going to repeat the guidance for the year in order to be prudent because we don't know what will happen in 2020 with all the macro effects that might happen, taking into account the global situation on coronavirus, et cetera, plus the fact that we have a number of assets disconnected from cash generation in our portfolio that will return in 2021, by the way, fully let. So we have a good predictability of cash flow in 2021. On Page 5, you will see how logistics are gaining, little by little, weight in our portfolio. And this is spot. This is not pro-formed. So this year, we have reduced our exposure to net leases from 16% to 15% and in shopping centers from 21% to 19%, while we have increased logistics from 9% to 10% and other from 4% to 6% as a consequence of adding DCN into the other caption. On Page 6, you see that our total shareholder return for the year has been 8.8%, comprising EUR 0.80 of NAV growth and EUR 0.50 of DPS paid in the natural year. On Page 7, I refer to the MERLIN full year '19 dividend, which will reach EUR 244 million, adding EUR 0.32 to the dividend -- interim dividend paid already in October 2019 of EUR 0.20. As for guidance 2020, we will repeat the EUR 0.52, and we'll discuss later why we are getting to that number. So without further prelude, I pass the word to Miguel Ollero, who will comment on the financial results of the year.

Good afternoon, everybody. We are now passing into Page 9 of the presentation with the financial results of the company for the year. Just to highlight that the company has been able to achieve the EUR 526 million of rents, which implies a 5.2% increase over the year, mainly boosted by office with a 6.7% increase, and logistics, a 6.9% increase, which are the 2 main drivers of the growth. It is also true that in shopping centers, there was some big increase in rents over last year because Almada has been generating cash flow for the whole 2019, whereas in 2018, it was not part of the portfolio for the full year. If you look at the net rents, they are at EUR 463.3 million. It is a 6.9% increase on a margin of 88.1%, which is well above the 86.7% we were reaching last year. In EBITDA basis, it was EUR 425.5 million with a margin of close to 81%, again above the previous year and 5.4% higher in total numbers. And finally, what is more important, this year has been mainly FFO-driven in the sense that we have been able to achieve a 313.3% -- EUR 313.3 million of FFO in the company, which means a margin of 59.6%, well ahead of the 57.4% we had in the previous year. So it's more than 2% increase in the margins on FFO ratios for the company. And also in AFFO, well above the EUR 300 million mark, EUR 303.3 million for the year with a 12% increase with regards to the previous year. So as we've said, and we are going to be commenting later on, improvements in occupancy, lease spreads, renegotiations and additions in the portfolio are proving to be reinforcement and boosting the cash flow generation of the company. On the EPRA NAV basis, on the value of our company itself, we have reached the EUR 7.3 billion mark with a 5.4% increase over the year, not counting on the dividend that we have been distributing over the year that we price an 8.8% increase. So finally as we highlight that in FFO and AFFO, we have been exceeding the guidance we were providing, and we have been reaching a top level of -- in both marks. We move on to Page 10. We have here what has been the evolution of the rents over the years. We had like-for-like increase of 4.5%, which is remarkable. And you have here that it has been driven mainly by office with a 7.3% increase on a like-for-like basis. We will move on now to Page 11. We have already here the occupancy levels we have been reaching. It's now worth commenting beforehand that we have reached the 94.8% occupancy overall, within the portfolio, with a bigger step for our -- in offices with 264 basis points increase in occupancy. The same in the shopping centers with 204 basis points increase, reaching the 93.3% occupancy. We will talk about later, but postmerger transaction, the shopping center portfolio will be at 94.7% occupancy overall, which is approaching the 95% occupancy in our shopping centers portfolio. Also, finally, in terms of average life of our lease agreements in place is 5.6 years. That is well above any single company across our sector in Europe. Now I pass the word to David who is going to review in further detail the evolution from an operational standpoint of all the different asset classes across the portfolio. Go ahead.

Thank you very much, Miguel. Starting with -- apologies on -- I'm putting myself back to my right spot here. So starting on Page 13 of the presentation in offices. Really a fantastic year for offices, as we've mentioned previously. The 7.3% that we saw in like-for-like is actually up from 1.2% last year. It is the highest in the company since inception of the company's history. And really it's a combination of both increases in occupancy as well as a very strong release spread that we've seen across the portfolio. You can see as well, it's -- the like-for-like growth was across all markets. The 5.2% in Madrid, again, that's the highest that we've recorded during the period of the company. If you look at the following page, on like-for-like, that like-for-like of 7.2%, again, that also -- excuse me, the release spread at 7.2%, that's also the highest that we have achieved in company history. It is a continuation of the acceleration that we've seen across the board. So not only are we seeing rents increasing and the release spread increasing but we're actually seeing an acceleration in that increase. And given where we see today in this part of the year, the negotiations that we're having and the leases we've already signed, we expect that the -- for next year -- for 2020, we'll see that between 8% and 9%. So we're guiding to a further acceleration in the release spread that we've had. At the same time, as reported earlier, we finished the year at 92.8% occupancy. We're also guiding to an occupancy of -- in excess of 93%, something approaching 93.25% or higher. And you can see this, as we've always pointed before, this release spreads across a very large number of contracts, so it's very representative of the portfolio. If you look at the following page, Page 15, we'll comment about our flexible office space, LOOM. We now have 6 spaces operating in Madrid with 1 new space to be opened in the second quarter, very shortly. And we have 1 space operating in Barcelona at the moment with 3 new spaces set to operate -- open, and in fact, in Cornellá, we're opening very, very shortly. One thing to highlight on our space, 80% of these LOOM space is within our own buildings, and that's part of the strategy we discussed at our Investor Day. And likewise, 80% of our tenants are enterprise tenants. So we actually see that either advancing even further than that as more and more of our business moves to enterprise. And if you look at Page 16, you can see why we see it that way. We look at flexible as an integral part of our overall client solution. We don't see it as a distinct and separate activity. It's just part of what we can offer our tenants. In a lot of cases, we're offering our tenants both the traditional space and flex together. And we see that's the way the market is moving. Tenants want a core of their portfolio to be traditional, but they also want a portion of their portfolio to be flex to handle any movement around the core of the business. And so that's integral to how we look at growing that activity. Moving on to shopping centers. And again, this -- our shopping center business is also very, very fundamentally strong. We saw a like-for-like growth of 3.1%. Just to highlight on that EUR 15.4 million you see from acquisitions, that's not an acquisition we made in this year, but that's actually reflecting Almada, which is only in the portfolio for 50% of last -- half of last year. So this is actually the 50% excess in this year. So it's not a new acquisition, but simply the full Almada impact. Ismael highlighted before but the underlying fundamentals in the retail sector in Spain are very strong as seen in our portfolio and particularly strong in 2018. We saw an increase in tenant sales, 1.2% in 2018 to 4% in 2019, so a meaningful increase in the portfolio. That's a combination, I think, of both the improvements that we've made in the assets. So it's the positive effect of the Flagship plan as well as the underlying strength of the market. And you see it in footfall as well. Last year, we were down 1.2%. That was also the effect of Flagship as we had a lot of properties under construction, and so the footfall was impacted by that activity. Now in 2019, you see a 1.7% increase because of that, a lot of those properties coming online. I will highlight, as we've said before, we have Porto Pi and El Saler that are going into their refurbishment, and that's the last of our 2 big Flagship assets. So we will likely see a same impact on visitors this year as we've got 2 of our major centers going under construction. But that said, we've really seen the positive impacts of the Flagship that we've done and the ones we've already completed and the strong underlying market that supports that activity. If you look at the release spread as well, that was 4.2%, a very good performance, higher than the 3.5% that we achieved last year. And then finally, if you look at the bottom, the portfolio occupancy hits 93.3%. We will discuss later, the transaction that we announced as a postperiod transaction, which was the contribution of 3 of our assets into another vehicle. That will bring the occupancy to our own portfolio to 94.7% on a post-transaction basis. Page 20 is really more qualitative than quantitative. What we're doing in our portfolio is not only the refurbishment and the bringing up to current modern standards and modern design, but it's also retenanting of those centers and bringing in the types of tenants that are very much in demand today and really kind of forcing out those tenants that have not updated their image and are not really in touch with the current consumer. It's important to have the most in-demand tenants in the center. So you can see we've been doing a lot of retenanting in the portfolio to ensure that, that's what we have in place. In logistics, again, more of the same, continuing like-for-like at 3.6%. When you're as high in occupancy as we are in logistics, it's hard to generate occupancy growth. So most of that like-for-like, in fact -- in fact, all of that like-for-like has come from release spread. The like-for-like growth, again, pretty evenly balanced across the market. And as you can see, the occupancies are very, very high. The Barcelona from 99.6% to 96.6% is very much a moment in time. Tenants have moved out in the fourth quarter, so it's a -- we know this is a snapshot. It's not reflective of the market and you can see -- we already see that in that market, in those spaces where those tenants moved out, we've already got significant activity, and we're confident that we will be re-let to the 99% in a very short period. Again, turning the page. Release spread is quite strong, a much smaller set of contracts. We did not have a lot of rollover in the portfolio in 2019. You'll see the same in 2020. We've got very -- only 11% of our tenants have expiries in 2020. So it will be a small number of contracts that roll in 2020. But that said, a 7.6% release spread on top of last year's 9.2% release spread. You can see that rents are growing quite meaningfully in the logistics market. And with that, I will turn it back to Miguel, who will talk about valuation and debt position.

Thank you, David. We are moving on now to Page 26 of the presentation. Here, you have the GAV summary for the company. So we are right now at EUR 12.75 billion company in terms of assets. Main concentration in office, as you all know. The passing yield for the year according to latest valuation is 4.1%, bringing the gross yield potential, 4.8%. Shopping centers, 5.1% with a gross yield potential of 5.4%. The net leases is at 4.6% and logistics at 5.8%, with a gross potential yield of 6.5%. Moving on the following page, you have here the GAV bridge for the year. It is a solid revaluation in the year of 5.9%, with a like-for-like of 3.3%. We will see later. And it is important to highlight that investment acquisitions -- main acquisition of the year are in Portugal, with 3 office buildings, Art, TFM and Nestlé. Also on logistic, we had the acquisition of the Ribarroja, a warehouse in Valencia, and also the investment in the Cabanillas business park -- logistics Park I extension. Then on disposals, main highlights you will see later, but it's the Juno transaction, so it was the sale of 26 peripheral office buildings in the month of December. Then revaluation-wise, we have EUR 364 million of revaluation for the year, mainly concentrated in office with EUR 260 million, and logistics with EUR 55 million, giving the figure of EUR 12.75 billion of gross asset value. If we move on to in the next page, you will see here, which is the like-for-like evolution by every single asset class, combined with the yield compression or widening that we have been experiencing in the valuation. So you will see that offices is going up 4.8% with a 27 basis points yield compression. In shopping centers, despite 9 basis points yield widening, the valuation was nearly even. That means that the better performance of the shopping centers, either in occupancy or in increasing rents, have been able to offset the widening of the yields in the valuation. This is our bet. So market yields, something we can do almost anything, but we can be improving the operational performance of the shopping center and [indiscernible] to be able to offset the valuation hits on the widening. Then on net leases, we were flat. And finally in logistics, as a reflection of the market, we are 9% up in logistics, with 42 basis points yield compression. On average, it was 14 bps of yield compression all over the portfolio. Now we move on to the debt profile of the company. It's important to say that in the year, we were conducting 2 main actions from a liability management standpoint. Some of them was a huge refinancing of our portfolio. Basically, we made a EUR 1.6 billion ESG-linked financing attached to the bank syndicate for the corporate loan we had and also the financing that we have in place for the logistic portfolio. In addition to that, by the year-end, we were putting in place another landmark financial transaction with a 15-year bond, EUR 500 million at 1.825% (sic) [ 1.875% ] coupon. That also in the month of January, where we have been able to tap with our EUR 100 million additional amount at a better terms than the ones we were able to get in December. So we continue managing the liability side of the company, improving the ratios and the maturity of the portfolio. If you move to Page 30, we can analyze a little bit more which are the main metrics for the liability side of the company. We also highlight that we'll continue deleveraging, although slightly, the company with a 40.6% loan-to-value by the year-end. And also, I should highlight that we have been able to increase the average maturity. So we were, last year at 5.9. We have now, though this should be right now at 4.9, but we are right now at 6.4. So it is an increase of 30% of the maturity -- of the average maturity life of our portfolio of loans within the year. And at the same time, we have been able to make it a -- making a decrease in the cost of the debt from 2.13% to 2.09%. So it has been also a great achievement for the company. And also finally, highlighting that the fixed rate debt is approaching 100%. What it means is that we are not open to interest rates, we have decided to play this way. And it's important to say that any potential hike in interest rate is not affecting us in the future. Now we are passing into the next section that is ESG and technology. David will cover that for me.

Thank you, Miguel. So starting Page 32, really, we look at 3 different elements in terms of ESG, starting with broader is the benchmarking. And Ismael mentioned it earlier, from the GRESB score at 82%, we exceed our European average, we exceed the global average and we exceed our peer group. So we're scoring higher in that than any of the benchmarks against which we measure ourselves. If you look at certifications, I think a couple of things we're very proud of. On accessibility, 100% of our shopping centers now have rated the accessibility for disabled and for partially blind people. So that was an effort of ours to go through as part of our process and make sure we were 100% accessible. On the efficiency side, the office buildings, we made -- and the shopping centers and logistics, we've made great progress in getting closer to our target of -- you can see there 99% for offices, 100% for shopping centers and 97% for logistics. That's an ongoing process that we have for each of those categories. On the quality side, of course, having to do with quality of operations in the buildings. We've got 850,000 square meters certified. And with regard to connectivity, we've been working with WiredScore. We will be the first company that they're working within Europe to get ratings -- connectivity ratings for all of our office buildings with regard to comms and WiFi and the like. And then finally, on social engagement, we've continued to make a strong push of engaging, not just the company, but also the employees of the company through a matching program. And so with the company direct, we're supporting 17 foundations. And when you add in the matching programs from employees, which has a very high participation rate, we're now supporting 16 (sic) [ 61 ] foundations both in Spain and around the world. But that social engagement piece is also a big part of our focus with regard to ESG and I think working quite well. On technology, we really look at technology in 3 different ways, all of which -- these are not separate silos or pillars. They each are integrated with each other quite directly. In the first, it's, what are we deploying in our portfolio? And so we're going through in all of our buildings and upgrading the comms rooms. So a complete upgrade of the hardware in those buildings. With regard to shopping centers, working with people like Vodafone and the like to have better data availability for the movements and the demographics of our tenants. We're seeing also with new buildings, Powernet and Cisco, for the latest in terms of WiFi and again, comms applications. Within our own -- direct with our tenants, tenant experience, we are developing our -- working with a company to implement the tenant engagement app, which we'll be rolling out in March and also in April within a portion of our portfolio, with the idea of then rolling that across the overall portfolio. Again, a better way for us to engage with -- directly with our tenants, at the same time, have better data with which to make future decisions. And then finally, with Mayordomo, again, is that user experience, Smart Points within the buildings, that allow us to provide a better overall tenant experience. With the PropTech Challenge, we took a view to mentoring companies that are developing within this proptech space. And in fact, with those companies that we mentored, we're actually working with 3 of them now, as we said, Mayordomo, KeepEyeOnBall and Fillit, in different pilots within our own portfolio. So we found them and reward them through the challenge, and we're now, in fact, deploying their technology into our space. The balance use proptech ecosystem, ibuwo: innovation for the Built World. Within our LOOM space, part of our strategy, and that which is not enterprise is to actually group and create different ecosystems. We have one for blockchain technology, one for mobility, and ibuwo is innovation for the Built World. So a more, what I would call, narrowly defined proptech, focused on building and construction and mobility services. And so we'll create that ecosystem and then group, different ventures and entities that are focusing on that business to help propel and stimulate that ecosystem. And then finally, we took -- made an investment in Fifth Wall, a venture company fund out of California, as a way to get both access to the technology that they're seeing, and also, it's a great clearinghouse for all of the different companies that are LPs, which are predominantly real estate companies. It's created a great network for us to check and see what others have done and then we compare experiences. So when you're looking at different technologies you want to apply, you have a leg up by knowing what others who've already been through the pain of having looked at a lot of different things and chosen one and implemented one, you learn from their experience, and we found that to be quite valuable. And Fifth Wall provides that forum, if you will, for how that works. So those 3 things are really the way we're looking at and integrating technology into our overall corporate strategy. And with that, I'm happy to turn it back to Ismael to talk about the value creation portion the presentation.

Thank you, David. So let's now talk about what has kept us busy during the year in terms of acquisitions and also what is keeping us busy at present for the coming years regarding the CapEx plans. On Page 35, you have pictures of the 3 assets added during the year in Portugal. It is more and more unlikely that we will be continuing our aggressive acquisition strategy in Portugal, given how the market has behaved recently and the, let's say, the temperature we are seeing in deals. And therefore, I mean, what we are doing is now starting a new phase of redevelopment of our own assets like the one we have done in Spain. Art and TFM are located in the highly demanded expo area, were bought on the basis of reversionary potential, which partially explains the extraordinary performance of Lisbon this year in terms of release spread. Art is occupied by BNP, Huawei, Sage and DHL, and TFM by shared service companies like Bold, Syngenta or Webhelp. In the case of the headquarters of Nestlé, we bought an asset located in the Western Corridor with the intention to do a CapEx plan to create a Nestlé European Research and Development Center in Lisbon, let on a long-term basis back to Nestlé Europe. On Page 36, you can see the addition we did in the year in terms of land ready for logistics, which was basically an extension of our Cabanillas Park I. With this land, in terms of buildability, it will be in the region of 315,000 square meters, which makes it the largest logistic park in the Madrid area, fantastically located in the A2 corridor, which is, let's say, the most dynamic logistic area of Madrid. And that was the rest of the land available in the -- in that sector. So no, we are happy with the competitive positioning we got in that area, which is famous for XXL logistic warehouses. In terms of LOOM, we added 2 buildings. One, the 22@ District in Barcelona, and the other one in Plaza de Cataluña for LOOM with very interesting features for an addition of stock to our already successful business of LOOM in Barcelona. On the following page, on 37, we talk about Madrid Nuevo Norte. As you know, we added during the year, a 14.46% stake in DCN, which is the developing entity of Madrid Nuevo Norte. Many of you might not be completely familiar with this development. This is basically a fantastic, spectacular development of what today is the railway-occupied area to the north of Madrid. It will span across 2.6 million square meters of GLA, of which Castellana Norte, DCN, owns approximately 1.2 million. That is in the region of 45% of the total buildability, however, concentrated in offices and ground floor retail, which comprised of 81% of the total buildability owned by DCN. The other 19% is residential, but it's residential free of any social protection. So it's free rent, free disposable residential for, let's say, upscale luxury flats. Very important to highlight that the concentration of users is not even across all the colors you see in the map. So the office users are concentrated in the southern part, which is the blue and orange, which, by the way, are the ones in which Distrito Castellana Norte enjoys at 99% and 100% ownership, respectively. The areas to the north of the city beyond the M30 ring road, which you see in the pink, green and yellow colors, are the one that -- the ones that have more residential use and the ones in which Distrito Castellana Norte owns relatively lower percentages of ownership, which, in the case of Phase 4a is even minoritary, in the other 2 is majoritary. This project is, by far, the largest development in Europe, but not only by gross square meterage. It's also very peculiar in the way it is communicated. I mean the new Chamartín station will be the hub for the high-speed train to the north of Spain. It will be communicated with Atocha through a subterranean railway, Atocha remaining the hub for serving the south of Spain. That tunnel is already ready and built, so it doesn't need to be infrastructured. It's already existing. Just pending the new construction of the Chamartín station to be opened. This will need a total of -- to the tune of EUR 6 billion for the development of all the infrastructure needed in the area. But we believe this will become the future prime CBD of Madrid because connections to and from the airport by direct train will be very easy. The whole development will be right on top of a subway interchanger, which will also be connected to bus and will also be connected to high-speed trains. So in terms of mobility, this is probably the best picture of the mobility of the future. We own our 14.46% stake in DCN. We are trying to bring our knowledge and long-term holding willingness into that company. We are working in cooperation with BBVA and San José. As many times said, our long-term ambition will be to be leading that company, but that will always depend on what our partners want to do. The approval for this project, I must say with all due prudence because we are dealing with public administration, and you never know, but in principle, should happen within the year. So -- and with that, the planning and infrastructure period will start. In fact, in the following page, you have an aerial render of how the sector will look like. There will be office and luxury residential surrounding a new park. I mean a green land for Madrid in the north. That area, which you see diffused, is the railway station, which is important to mention that the planning and architectural contest for the works on the station has already been RFP-ed, so has already been launched by the national railway authority, by Adif, about 2 weeks ago, so this is now officially in motion. So that RFP will define the volume and appearance of that diffused area that you see to the south of the development and where we will be the final purchasers of all the lucrative buildability, meaning the ground floor commercial and the office use of that station comprising a minimum of 180,000 square meters. So although that is not represented in the render, in reality, there will be also buildings in that area. On Page 39, we comment on the divestments carried out during 2019. We have achieved an average premium to appraisal value of 4.3% in offices. We're successful in the sale of our portfolio of a lot of office buildings, 26, relatively small buildability, 133,000 and even smaller percentage of our rent, EUR 11.8 million. By doing that, we have increased our exposure to prime CBD and new business areas from 88% to 91% and have significantly reduced the weight of periphery from 12% to just 9% at present. In shopping centers, postclosing, we have contributed 3 assets, Thader, La Fira and Nassica, in exchange for a 34.4% of Silicius, which is a multiproduct SOCIMI vehicle listed in the Spanish secondary market in the map. The transaction has been executed on a NAV-neutral basis, and we have received shares under a certain scheme for share redemption, which is scheduled over time. So that share redemption agreement entitles us to redeem 50% of our stake by year 2 in cash. And as such, it has been accounted for as a true sale. The other 50% will be redeemed within backstop of 5 years in cash and, if not redeemed, will be specified in assets other than retail. And David can comment afterwards on the composition of their portfolio and what are the chances for asset specification. The disposal amounts to EUR 175 million and this comes together with the sale of 2 self-standing retail assets in the Bonaire retail park in Valencia to a fund at a 5.2% premium-to-NAV carried during the year. So the combination of these transactions in retail have allowed us to reduce the total exposure to say, shopping centers from 21% to 19%. And what is more important, the exposure to secondary retail, what we call noncore retail, from 2.9% to now just 0.9%, which makes the remaining 3 assets much less relevant for the composition of our portfolio. On Page 40, you see examples of the 2019 deliveries. As you all know, we delivered during the first half of the year, Torre Glòries, at a yield on cost of 7%, beating the 6.5% underwriting on the basis of better rents achieved than the ones that we have underwritten, now 100% let, and now we are concentrating on the design and execution of the observatory on the top of the tower, which we believe is going to be not only a landmark attraction for Barcelona but also a significant cash generator for us, for MERLIN. In Madrid, in the case of Torre Chamartín, we delivered it on cost at 6.2% versus 6.2% underwriting. So bang on. We achieved a slightly lower rent than we had underwritten, but we got also some efficiencies during the construction, particularly on the structure caption. So at the end, we were able to be bang on with our own internal expectation. And now it's 100% let, and we are working on the direct accesses from -- to and from the A1 highway, which will significantly benefit the existing tenants because they will be able to access Madrid in a much shorter commuting time. On Page 41, you have the typical, because we do it on every quarter and semiannual presentation, review of how are we progressing on the different CapEx plans we have in motion. In Landmark, having delivered Torre Chamartín and Torre Glòries, this is a year in which we will be delivering Marqués de Pombal 3, Castellana at 83-85 and Diagonal 605 and doing the lion's share of the works of Monumental, which will be delivered during the first half of 2021. What is important to mention is that those projects are highly let. In the case of Marqués de Pombal and Castellana, 100%. In the case of Diagonal 605, 95%. And in the case of Monumental, which comes later in time, 82%. These may look like simple detail, but it's important because it gives you a very interesting degree of certainty of future cash flow. I mean so we are now able to predict what will happen to our cash flow over the coming years. Adequa 4 and Adequa 7 will be delivered in principle in 2022. We are now working on the planning of the works and on the costing. The activity during the year makes that the pending CapEx is now much lower, only EUR 175 million. And out of the EUR 42 million additional rents, EUR 4.5 million have already been captured. And of the EUR 37 million coming from year '20 onwards, you can consider that around EUR 20 million are already prelet. So only, say, 17% are subject to market fluctuations. On Page 42, you will see our activity during the year in shopping centers in 42 and 43. On 42, as you all know, we delivered X-Madrid in Alcorcón, which is a shopping center, which, as you know, is a relatively new concept to the market. It has been fantastically welcomed by the market, has been acclaimed by the critic. It is 95% commercialized, which is no small feat in the current era of hate against retail. And the tenants are demanding more space. In fact, just last week, we added Triumph to the Harley-Davidson flag we have in the shopping center and we are now working with another motorbike distributor to open a shop in the shopping center, not only to sell bikes, in reality to sell merchandise associated with -- and fashion associated with their brands to a completely different customer base than the one they can enjoy in ordinary shopping centers. We keep a very busy program of entertainment, which is part of the core philosophy of a shopping center like this. So we are doing -- during the coming months, we are doing the Spanish Climbing Cup. We are doing a Harley gathering. We are doing a bowling tournament, the freestyle cup of ONGRAVITY, which is rock climbing and we are attracting a lot of people around the Citywave Madrid surf area. 1.2 million visitors achieved in less than 2 months and you need to consider that in the shopping center, our construction and technical teams plus the leasing teams have done a great effort because we suffered the bankruptcy of the construction company during the construction period. And we needed to finalize the shopping center to finish the works ourselves. So that has been a fantastic team effort, and we are very proud of the team that was in charge of this project. In Page 43, you see Larios and Tres Aguas. Larios has been a fantastic success. Opened -- with a yield on cost of 6.6% versus 6.4% underwriting. It has become the top-of-the-mind mall for all retailers in Malaga and is now at full occupancy. If not mistaken, I believe occupancy is 99.1%. So we are achieving the highest footfall in 6 years. And between new tenants and renewals, we are really feeling the power, the pricing power of a good concept with retailers. In the case of Tres Aguas, after a relatively modest investment, we opened the cost with a yield on cost of 11.2%, short of the 15.1% underwriting, but this is simply the consequence of a business decision where we traded income for term with a certain very important anchor. So the occupancy gain has been 900 basis points after the refurbishment. And we are also achieving the highest sales in 5 years, which will also translate into pricing power for rent -- for rents. On Page 44, we review the evolution of the Flagship program with Larios, Arturo Soria, X-Madrid and Tres Aguas already delivered and working intensely in El Saler and starting in Porto Pi in Majorca and Callao 5 in which we are currently trying to obtain the municipal licensing for the refurbishment. So again, as commented with offices, visibility of income is very significant with EUR 4 million out of the EUR 17.7 million already captured in 2019. And out of the remaining EUR 12.3 million and EUR 1.4 million equity method, we think that around EUR 7 million are already let and the rest are to be let. So it's quite significant the progress achieved and the certainty and the visibility on future cash flows. On Page 45 and 46, we bring your attention to the evolution of the Best II and Best III plans. In Best II, we delivered Madrid-Pinto II, Guadalajara-Cabanillas III, Toledo-Seseña, Guadalajara-Cabanillas F and are working on the delivery for this year of San Fernando II, Azuqueca III and the extension to Cabanillas Park I. In all cases, except one, Cabanillas F, we achieved significant levels of prelet. And in the case of the pipeline for this year, we are already well advanced in prelet for San Fernando II, and working on Azuqueca III and the expansion of Cabanillas Park I. For '21, we are engaged in the development of the Carrefour central warehouse in Azuqueca, which, as you know, is 100% prelet to the French multinational. And we'll wait before developing Cabanillas Park II, which is a significant scheme, 210,000 square meters, for which we are in negotiations with a very, very large tenant that may take up a significant chunk of this project. Again, EUR 1.2 million captured, and out of the remaining EUR 24.7 million, around EUR 8 million already captured in future developments. In Best III, we delivered in the year, Valencia Ribarroja let to Dachser, and we'll be delivering in this year Zaragoza-Plaza and the remainder of Sevilla ZAL. Lisbon Park, Madrid San Fernando and Valencia will come beyond 2020. Again, a significant amount of cash flow already captured. Out of the EUR 24.5 million, we have already captured EUR 1 million and have secured in the region of EUR 6 additional million. So very interesting evolution of that project as well. That leads to Page 47, where we compare the cash flow or the top line, the total income. We had rental income we had at the inception of the CapEx plans for the full year 2019, so we started from EUR 470, say, million full year 2017, evolved to around EUR 500 million in '18, around EUR 526 million in '19, and the rest is what we expect to be bagging in the coming years in order to get to the potential gross rental income of EUR 667 million you have in '22, to which you need to subtract the noncore disposals that we have planned and takes you to the postdisposal GRI of EUR 650 million roughly. Very important to say that the reversionary potential continues to be significant. Of course, it diminishes in size every year because we capture more and more as we -- as the program advances. And then for the remainder of the plan, the green, the blue and the 2 reds, as we were commenting, given the status of prelet, around 40% of those figures in total are already secured under prelet agreements, which is important because not only we will be enjoying the additional income when we inaugurate the different projects, but also, there will be a substantial NAV creation because, as you all know, most of these things we account for, of course. On Page 48, what we have done is a reconciliation of sources and uses, simply to say that the CapEx program that has been the subject of significant debates over past conference calls now is completely self-funded, with the exception of the little addition of DCN until 2022, which is only EUR 49 million that we will be funding through some sort of noncore disposal in miscellaneous. If there were further noncore disposals, which now will be driven mainly by our own, let's say, filling of obsolescence or matureness of our own asset base, so if there are further noncore disposals, though -- they will be used to ensure that sources and uses match also for the whole of the DCN development. And if there is an excess, it will be used for debt repayment, continuing with our commitment to reduce debt in this company below the 40% mark, and what is more important, if at all possible to single-digit in terms of debt-to-EBITDA, which is important for us in the long run. As for outlook, 2020, on Page 50. It is important to say that we have reconciliated here the net effect of different actions that have happened during 2019 and will be affecting the 2020 full year. So we will be enjoying EUR 1.5 million extra, deriving from acquisitions, but we will be missing EUR 11.9 million from disposals, plus we will feel a net effect of EUR 13 million, given that we have disconnected from cash generation, 3 of our main assets, Castellana, 83-85, Monumental, Plaza Ruiz Picasso, and to a certain extent, also Diagonal 605, although we are doing the refreshment with tenants inside, but as you can imagine, it is not linear that we obtain full rents from those kind of actions. So those EUR 13 million that we will be missing as a net effect during the year will be back in full in the following year, and not only in full, they will convert into EUR 27 million already secured of cash flow additional in the following year. There will be some assets added back to inventory that will bring EUR 4.3 million. And as a consequence, the temporary net effect for 2020 is a cash flow miss of EUR 19 million. That when reconciliated with the current cash flow generation, which is EUR 0.67, will lead, in principle, the year to deliver a cash flow of EUR 0.63. We are adding back EUR 0.02, counting on an organic growth of our portfolio of 3.8%, and are guiding to EUR 0.65 of cash flow generation next year. If the organic growth is bigger than 3.8%, we will be shrinking that cash flow miss, as many of you call it during this morning's literature. So the forward office report and the forward logistics report and the forward shopping center report are giving us better numbers than 3.8%. However, we are in a complex year, not only politically in Spain, but also globally. So we want to be prudent on our cash flow estimates and as such, are pointing to EUR 0.65. So if there is more, we will be very happy to report as the year progresses, but we want to be as prudent as possible, considering the circumstances in Spain and in the world. And as for closing remarks on Page 52, simply to repeat that 2019 has been a remarkable year in cash flow generation. The FFO per share has grown 9.2%, and the adjusted FFO per share has grown 12%, in excess of 12%. Offices has performed outstandingly, with a 7.3% increase in like-for-like rents and in occupancy. Shopping centers continue to prove their resilience, with tenant sales rising and a very sound business behavior. We don't see any, let's say, ill patterns in our shopping centers, what we see is all normal. I mean what we have been seeing in the many years that we have operated shopping centers in the past. Logistics continues showing strong momentum. We never stopped adding inventory, and we keep filling up that inventory no matter the fact that in some cases, it is prelet, in some other cases, it is spec, and as a consequence, it takes an additional period of months or even years to let that space. The returns continue to surprise us on the upside in terms of rents achieved versus rents underwritten. In value creation, the CapEx plans, the Landmark, Flagship and Best II and III plans have ended the year with substantial deliveries. All of them have very, very compelling returns. And what is more important, the self-funding for those plans is now concluded, well ahead of our objective of 2022 full year. So we have spared 3 years in closing the gap between sources and uses in terms of funding of the CapEx plans. The active management of our portfolio has resulted in what I would describe as smart capital recycling, which is also, in turn, resulting in enhanced quality of our office and retail portfolios, as well as having taken a strategic stake in one of the most ambitious real estate schemes in Europe. We remain a high-growth company with a 24% growth potential in rent, now more and more predictable because of the degree of certainty we have in the LOIs and prelets signed on future pipeline, which -- and that translates in a much lower risk of execution at this point, which is very, very important. The outlook for 2020 is positive. The market backdrop is good. In offices, supply and demand remain in balance, owing to a very muted reaction of supply. There is almost no remarkable new supply coming into stream in Madrid, a little more in Barcelona, although it will be significantly hampered by the recent moratorium in the 22@ District. In shopping centers, we see continued good momentum in commercialization and, what is more important, tenant performance. Of course, only time will tell what is the net effect of the coronavirus hysteria in the shopping center portfolio. Likely, it will have an effect and an impact, that is clearly undeniable. And in logistics, the -- both occupancy and rents continue to be subject to significant tension. Although long term, we also see a number of amateur actors entering the market and in certain areas like the A2 corridor in Madrid, there could be a punctual risk of oversupply given the number of new entrants, particularly insurance companies and/or, generally speaking, funds. The FFO guidance of EUR 0.65 per share has already been explained, that temporary loss of FFO is mainly due to the fact that, in our engine, we have disconnected 4 of the main cylinders, and those will not be functioning, they will not be blowing during 2020, but they will be back into full action in 2021. And as such, we are repeating DPS guidance at EUR 0.52 for 2020, which we believe is prudent, because we're in a moment in which retaining a little bit of cash flow is not harmful. It's good, given the uncertainties that surround us as we speak. Thanks a lot for your attention, and over to you for Q&A. You have here the full company at your disposal. Thank you.

Okay. So let's go straight into the Q&A session. Operator, if you can please proceed.

Thank you for that. [Operator Instructions] And we have a few questions coming in from earlier, and the first one comes from Pedro Alves.

Two, if I may. The first one on your portfolio valuation, namely, if you could share with us some color on the drivers of the like-for-like growth in your gross asset value and your outlook for yield evolution. We saw one of your peers is quite optimistic in terms of potential further yield compression this year. I know your portfolio is not perfectly comparable, but looking into your figures, probably the yield evolution seems relatively soft and particularly the expansion in shopping centers, which is a little bit against the good performance in terms of rental growth and footfall and the delivery of X-Madrid. We would expect some NAV creation from X-Madrid. So my question is to understand a bit the assumptions of the appraiser and your outlook for yields. And the second question is on the incentive levels, which declined significantly in 2019 with a positive impact in net rental margins, should we assume the same margin in 2020 and beyond? That will be my questions.

Why don't I start? This is David Brush, I'll take the first part of the question, and I think, Miguel Ollero will take the second part of the question. On the first part of the question, I think with respect to offices and warehouse logistics, yes, I see an opportunity for further yield compression. I will say that it's difficult things to predict because it's tied to external things. It's tied to what we think the ECB and the Fed will do and how much liquidity will be in the market because, right now, real estate yields are extraordinarily compelling relative to other fixed income options in the market. We think, when we look at that from a macro perspective, that the circumstances will stay in place. There's even a possibility that you'll see even further monetary easing, and that's very, very supportive of continued yield compression. The second thing I would say about that is there is an enormous amount of unallocated or allocated but uninvested capital for real estate. It's at historical highs whether you look at private equity, whether you look at value-added funds or core fund. So that pressure of capital is continuing to push down yields. In the absence of other alternatives that are of equal return, real estate should continue to benefit. And then finally, when you look at the circumstances, or the fundamentals in Spain, where you're still talking about prices per square meter, and you're talking about rents that are below the historical peaks, and you look at an economic performance that continues to be at the high end of economic performance in Europe, Spain looks to be the most attractive market within Europe in which to invest. All of those things would tell you that there will be more likelihood of further yield compression in both offices and within warehouse logistics. When you look at our net lease portfolio, it is what it is, frankly, because it is like -- it's a bond-like equivalent, and with the advantage of a 1.5x inflation multiplier, but it's a bond-like equivalent. So as you saw this year, it was a 1.5% GAV increase on that net lease portfolio, I don't think you're going to see anything substantially different. The multiple of inflation is what will drive the further growth in asset value rather than any kind of yield compression. Again, lest you see that being a bond-like equivalent, that we can convince the valuers that they should look at it as a bond rather than look at it as a [indiscernible]. That leaves retail. What we have been the beneficiary of, and why you see that our yield compression is -- our valuation has been stable in retail is that we've been generating meaningfully more rental income through our retail portfolio. And as you add X-Madrid, as you add the benefit of Larios, which will be full year this year versus only half year for 2019, and as you look at the impact of the Flagship plan, we're driving more cash flow through that portfolio. And that's why when you look this year, on a year-over-year basis, relatively flat. So whatever yield expansion you might see in retail, in our portfolio, it was offset by the increase in income. So I wouldn't look at any major increase in GAV and in retail. But at the same token, I don't think there's a significant risk of a reduction. So that's how I look at the 4 different asset categories. And just to remind, 50% of our portfolio is offices. We're now down to 19% in retail and about 15% net lease, with balance in logistics. So if you think about what I just said in these different asset categories, it's helpful to have that allocation in mind. So on the question of incentives, I'm going to hand that over to Miguel.

Great. On incentives, the point is that in the year 2019, we have been linearizing some of the major lease agreements carried out during the year. They are going to be realized over the compulsory life of the lease agreement. That in place have an adjustment of EUR 5.1 million in the year. This will have a minor impact because it's going to be over time, over the life of the lease agreement is going to be expensed, over the life compulsory of the tenant lease. And so over time, we are going to be going back over the following years to the level we used to be because on new contracts, we will be doing the same. So it's going to be recycling. Going back to the recent levels we used to be. Also, it is also linked to the way you are already occupying the portfolio. So you have to assume that we are approaching full occupancy. So it's not going to be something relevant. This is only settling down because, in order to be compliant with IFRS, we have to be conducting this kind of linearization of these contracts because, in principle, as you know, we try to match cash with P&L in this company.

So I'll put a little color on that. We historically had taken a very conservative view in saying we're going to expense those items in the year in which they occur. One of the perverse sort of unintended consequences are our auditors told us, no, that's not what the IFRS requirement is, you need to amortize those over the life of the contract. So we've had to go from a more conservative accounting policy that we were implementing to one that is a little less conservative, and there'll be this transition period where it will look lower until we go through the full -- 1 full cycle of amortization, and then it will look more consistent going forward. With the added part of what Miguel said at the end, a big part of what we're amortizing is leasing commissions and fit out contributions. And as our portfolio gets higher and higher degree of letting, there's less of that activity. So part of the reduction you've seen will be a function -- is a function of that -- less activity. Part of that is a function of this new accounting policy that we've been -- what's the right word? That we've been compelled to follow to be consistent with the market.

And we have our next question coming from the line of Jaap Kuin.

Can you hear me?

Yes, yes.

Okay. Great. Maybe the first one on the DCN. So I think I understood you saying there's about EUR 6 billion government funding requirement. And I was wondering if you could elaborate a bit on kind of what is kind of mandatory initial government spending layout that is kind of required for you to start doing some work with DCN. And for example, could you actually start some work or start some redevelopment work without any government CapEx and what would be kind of expected timelines on, let's say, first completions of assets depending on kind of the approvals you highlighted likely this year?

Okay. Jaap, look, out of the EUR 6 billion, this is a project which is going to be developed under the modality of public initiative, which, on the negative side, it means you are subject to the speed of execution of the public administration. On the positive, the contributions by the private sector are capped. So from a numerical standpoint, it means that the contributions of DCN to the total development are capped. According to our estimates, for the areas which are north of the M30, which are the ones which are more densely populated by residential, the level of infrastructure required in order to have final plots is lower, meaning there is less things happening on the underground, and as such, they can be -- the buildings can be erected a little earlier in the calendar. So in normal circumstances, and please take whichever predictions on dates for this project with a pinch of salt, because as aforesaid, this is public initiative, we believe that between '25 and '26, we should be able to convert that buildability into actual buildable plots and start, let's say, operating that buildability of building, that buildability, eventually, if it is residential, and we don't want to develop it, selling that buildability to the world. For the area south of the M30, the density and complexity of infrastructure is higher. So our estimate is that before being able to erect the main office buildings, at least the tallest one, it will be year '27, '28, but also the lion's share of the infrastructure contribution is significantly back-ended on our side. So this is the way the development works. As for the acquisition of the land from public authorities, it is vendor-financed for 20 years. So it will not be a significant burden at a fixed rate of 2%. So it will not mean a significant burden for DCN to acquire that land and be the owner -- legitimate owner of that land. And it will also not coincide with most of the CapEx expenses that DCN will need to incur into the development of the land. As a quick -- very quick reconciliation for your benefit, we have spent in the region of EUR 168 million into our -- let's assume for a minute that DCN is a, let's say, asset-transparent entity, so that we get our pro-rata share of the 14.5%, 14.46% we own in DCN in assets, which is not the case. I mean DCN is going to be the entity developing. But for ease of reference, let's assume that -- for a minute that it is an asset-transparent entity. So we have spent EUR 168 million in the acquisition of 14.46% of the total buildability corresponding to DCN, and we will be spending EUR 49 million plus EUR 191 million in the development of the infrastructure until the moment in which the plots are ready to build, ready to start the basement and structure construction for the buildings. So that means that our attributable share of buildability from DCN is between 170,000, 180,000 square meters. And the cost that we will have incurred up to that moment will be in the region of EUR 410 million. So you can easily calculate that the APP, what in private equity, we will call the attributable purchase price, will be in the region of EUR 2,300 per square meter buildable office use. Of course, in this project, the main problem is that you can calculate margins, it is very difficult to calculate an IRR, because the speed of development depends on the public administration. But for a company of our size, and if we want to have longer-term growth once we finish with the Landmark I and, predictably, Landmark II project, with the Flagship I, predictably Flagship II project and Best II, III, which will be followed by Best IV, once we finish with our organic growth in 2028, 2030, that -- this company will be, let's say, at full potential, whatever the cycle has made at this moment. I mean we will be adapted to market, let's say. So DCN will then kick in. So we will ensure that we have more growth capacity from year -- there will be, of course, some overlapping. So from year '25 onwards, we have more growth capacity stemming out of the DCN project, if that more or less gives you color on your question.

Yes. Great. That's great. And then maybe just a final one on the disposal of the 3 retail assets. I suppose that getting the shares was not your first option, or I guess, it should have been the cash option. So maybe just quickly run through the rationale of taking shares in the vehicle and why you think that's a good alternative.

I'll give a little bit of more -- more meat on the bones of the transaction as well, because I think when you see that, you'll understand our rationale. And I think part of it really -- the big part of it is the structure of the transaction. So again, to kind of go through the structure with a little more detail, and then I think by the end of it, you'll see the rationale. The vehicle into which we're contributing these assets will have a gross value after contribution of EUR 675 million. And the LTV will be 22%. So it's a very low leveraged vehicle, which is important, because then the cash, ability to leverage for cash comes into play when we talk about the 2-year put that we have. The target leverage is only 35%, and as we will start off with 34% of the vehicle, we're the largest shareholder, so we have a meaningful input on any changes to that structure. And then the dividend yield target is 5%, because there are some projects in that company that are going through the end of refurbishment, so we'll be generating cash flow at a later date. But as we've looked at and underwritten, the dividend yield would be 5%. So it's similar to the yield on which we're contributing the assets. So there's not a big FFO impact, at least over time. Initially, yes, but not over time. It's multiproduct. About half of it is office, and more than half of it is in Madrid and Barcelona. So again, good underlying quality. The structure of the deal is the following: we have a right within 2 years to put 50% of the NAV for cash and receive cash flow share. So liquidity, even though we didn't want to take -- we would rather have all cash, we've talked before, the market for retail is obviously much more limited, so we have an opportunity here. We moved the assets at GAV, and we have a right within 2 years to put asset NAV for cash. So it's a 2-year on the liquidity. In the meantime, we have a 5% dividend yield on what we're positioned. Then we have a second event, liquidity event, which happens up to the year 5, that's the backstop date, where, again, we can put that back for cash. There's a -- there's an added piece of that structure, which says, if the entity does not want to pay us in cash or does not have cash, then we can substitute -- we can choose assets. So we choose the assets that we would want to come back in. And because we know in the vehicle, there are office assets in Madrid, particularly in Barcelona that we like, we have an idea today which assets those will be, and they'll be office assets consistent with our overall portfolio. So we put it all together, it's a transaction that allows us to remove 3 assets from our balance sheet that we wanted to remove, we do it at GAV, and we have built in liquidity that allows -- that gives us a minimum price that's equal to the price at which we sold and we have a structure that gives us the control of -- in that vehicle during the time that we own it. So all that together, when we said, yes, I would rather have sold cash, but as Ismael is fond saying, I'd like to be George Clooney, but that's not possible. This was a very good alternative, we think, and accomplished a lot of objectives with a minimal amount of risk.

Okay. Great. And maybe if I can tempt you to estimate the difference between kind of realized price or kind of total valuation on the back of the share deal, if you would have done a straight sale into the market for cash only? What do you think the difference would have been?

That's a theoretical question because one of the assets that -- when you look at the assets we've sold, as we said before, Thader is one of the assets we mentioned. That asset on its own, without being part of an overall portfolio, would have been very difficult to sell. So I'm not sure I can even come up with it. It's theoretical because we had no offer in the market. So that's a -- I can say it's a better execution. I can't speculate on how much better an execution.

And we have a next question coming through from the line of José Cravo.

So 3 questions, if I may. The first one, could you remind us that the FFO positive impact when you add back Castellana 85, Monumental and Plaza Ruiz Picasso in '21? That would be my first question. My second question would be on Cabanillas F logistics park. So if I understood correctly, this park, or the construction is -- the asset has been delivered, but you haven't been able to let it. Can you give us some more visibility on this? And my third question, if you could repeat the occupancy that you said that you've mentioned for office in this year?

Okay. Well, the occupancy for offices this year, this in our, let's say, performance maximization, 2019 has been a year of, let's say, maximization of occupancy. This year, we are going to be focusing a little bit more on rental income. So if you have operated hotels, sometimes you focus on average room rate, sometimes you focus on occupancy, and those 2 together lead to an improvement in RevPAR. So in our case, 2022 is going to be a rent year. Occupancy will, therefore, not increase or we don't expect it to increase stellarly. We are expecting the year to end in the region of 93.2%, okay? So that is our internal benchmark for the year. In terms of -- you were asking about Cabanillas F, it is not let yet. We have a number of negotiations in process with 3 different tenants. But it's not yet let. So you cannot extract any sort of cash flow forecast from it, at least until we sign an LOI with 1 of the 3 interested parties. The other question was the FFO once you add back the buildings. So north of EUR 0.70, I would say, EUR 0.72, in the region of EUR 0.72 when you add back those buildings.

And we have another question coming through from the line of Oliver Carruthers.