NEPI Rockcastle N.V. (NRP) Earnings Call Transcript & Summary

Good morning. Okay. So with a 3-minute delay, apologies. Welcome, everybody. Thank you for coming to our 2019 full year results presentation. I think the first question is where are the presentations? So we've decided to be a bit more green-friendly. The presentations are online, and I think it also keep everybody a bit more focused on the screen and what me and my colleagues will be saying. I think we are also live on a webcast. It's rolling. Thank you. So I'm here with a good part of our team. So Mirela, our CFO, that you know; Marek, our Executive Director, which you also know; Eliza, Deputy CFO; Marius Barbu, he is responsible for Asset Management in the Eastern portfolio. Please feel free to ask us all any questions. And also, Robert Emslie, our Chairman, is here for any delicate questions if you have any. So let's begin. I think that we have a very good set of results to present. We're very proud to present these results. I hope that in this presentation, you'll find some new color to what we've been doing throughout the year. We've published our condensed financials, I think it was this morning at 7:00-something and last night on Euronext on our website. Yes. Although they were not very condensed, I think you got some good info from there. And if you haven't had a chance to see them yet, we will be going through a lot of the detail. Let me see what I have there. Okay. So we have changed the format of the presentation a little bit. The main sections are structured around what we've done in 2019, where we are today, and where we are heading, and Mirela and Marek will help me with this presentation. The main figures for 2019 or the main one figure is our 6.6% growth in distributable earnings. This is in line with guidance, slightly above. And the biggest achievement that I want to highlight here is the fact that we've achieved this growth in the context of a very large portfolio in just over EUR 6 billion or 2 million square meters, and while maintaining a safe balance sheet, namely 32% LTV, which you can see here. Another interesting figure. We have about 320 million visitors to our centers and roughly EUR 330 million of distributable income. So that translates to about over EUR 1 per visitor to our shopping centers. Now that's just a coincidence, not a direct link, but I thought it was an interesting figure. In 2019, we invested about EUR 280 million in developments and acquisitions of land. This is about EUR 24 million more than we did in 2018. And our unencumbered assets has increased, and our cost of debt and LTV have remained relatively the same as the previous year. The main activities of 2019 were asset management and development. So the growth that we have produced in 2018 -- sorry, in 2019 is due mainly to our asset management operations. We've had healthy NOI growth, which both Marek and I will talk about in a minute. We've opened developments, and also there was impact, of course, from the acquisitions and developments that we did in 2018, which were only impacting 2018 partially. As you may have noticed, we did not do any large acquisitions of properties. This was because we did not consider anything was worthy to be acquired into our portfolio. So you may know that there were only 2 main transactions in the CEE, and neither of these was a good fit for us. So we were, of course, aware of them. The main figure behind our DPS growth is the growth in like-for-like NOI. So this is 6.2%. And this is a very strong figure, in my view, a sustainable figure at that. And behind it, we have a strong portfolio of assets, which has 3.3% gross rental income generated by overage rent. This is that top-up rent that we get from our tenants, most of our tenants have top-up turnover rent. And even more important than that, our base rents are -- guaranteed the rental income has increased by about 4.9%. So the guaranteed income base is increasing, which is indicative that the region in which we operate from a retail perspective is functioning very well. Occupancy ratio, 2.1%. This is down 0.3% from the previous year, sorry -- the vacancy ratio is down, not the occupancy ratio. The vacancy ratio is down 0.3%, and the occupancy ratio is relatively stable around 12%. Now what's behind these figures is this other set of figures, which is growth in the retail sales of our tenants. And that on average, on a like-for-like basis, is about 6.8%. And this is what's been driving our performance. And I don't have another slide what's behind these figures, by the way. But what is behind these figures is our asset management team that is driving the centers, producing adequate tenant mixes, good layouts and so on. Very interestingly, the Electronics segment was the largest growing in our portfolio which, as you know, is also the most prone to e-commerce. So given that this segment is growing, it means we have a very good balance between e-commerce and physical sales. You may note that the Poland figure is a bit lower than the others. This is an impact from the Sunday trading ban. Marek may mention a bit more about this. But nevertheless, our NOI is up also in that country. Some more details about our asset management activities. We have, or not me personally, but our team has signed 715 new leases during 2019. This excludes renewals or short-term leases, such as [ Kosice and Zilina ] and that kind. That's, in my view, a very large figure, and it's indicative of the fact that we always bring new things to our centers, keep them fresh and so on. It actually amounts to about 13% of our total leases that we have. The main development that we did during 2019, our Festival in Romania and Solaris in Poland, and we will show you a brief video of these 2. It will be about 1.5 minutes. [Presentation]

So Sibiu development, about 15 months from the start of construction, 42,500 square meters, 3 levels above ground. The first Kaufland hypermarket that's not owned by Kaufland, so it's the first time there are tenants in Romania. We opened this property with about 95% occupancy. And we have a total 99% letting rate at the time of opening. So some tenants just didn't make it to the opening. This property is also about 12 minutes’ walk from the City Center, Sibiu being a more touristic city in Romania. The next video is Solaris in Poland. This is a City Center property. It's extremely well located. We added about 9,000 square meters to the existing 18,000. The property is actually a little bit larger, because we do not own the cinema, although we have integrated concept with the cinema. So it's one building, but the cinema is owned by the actual operator. And the new extension makes this a top location in the city. We actually control the city. It's a 3-level property. [Presentation]

So the last slide that I will do before Mirela takes over is the slide on our disposals for 2019. We have, as you know, sold our Cluj property. That was an office development we did with a JV partner, which was a very good deal for us. And we also signed an agreement to sell the rest of our Romanian office portfolio in late December, and that will close at the end of March. One deal was above book value, while the other one is at book value. Of course, these were all considered in the forecast that we provided. You may remember that initially, we expected to sell the larger office portfolio a little bit earlier. We managed to do it in December. All in all, we think it was a very good timing for us as offices are considered a good opportunity. So we took advantage of this market opportunity as we focused on retail. This, of course, does not preclude us from developing other mixed-use properties, including offices. Mirela will join us to tell you a bit more about what we accomplished in 2019 and then talk a bit about where we stand today.

Good Morning. Yes. Nice to see you again. As you can see, I've gone green with the notes as well. So we're doing our best. So I'll start with some information. I think I need the -- it's here. I'm sorry. So I'll start with some information on the funding activity this year. Yes. If there are any questions, please interrupt me. Otherwise, we'll answer questions also at the end of the presentation. So 2019 was an excellent year for our capital markets activity. As you can see, the big number on this page is EUR 1 billion in bonds that we've issued this year. So we had a really great year. We took advantage of the low interest rate environment, and also our capital markets team had -- has made significant efforts to improve our general funding arrangements, let's say. So most of this cash that we got from the bond was used in liability management. We've repaid during the year about EUR 200 million of the bonds that was due in 2021. And actually, in January 2020, so just a few weeks ago, we repaid the remaining part. And also, we've extended some other loans and we repaid some secured debt. So you'll see a bit later our maturity profile looks much better at the moment. We've signed a new revolving facility, which is unsecured, and the new feature is that the interest rate is linked to our [ ECG ] rating, so that's something quite interesting. And this brings our total revolving facility capacity to EUR 575 million. So we are in a great position from a liquidity perspective. The cost of debt is similar to last year. This is mostly because the facilities that we signed during the year haven't had yet time to show the lower cost in the income statement. And also, what's very good is that you, mostly our shareholders, have made a very good choice and were supportive when choosing shares instead of cash for the dividend payment. So a very good year. I'll move on to this slide. You've seen this chart before, so nothing new. I think the main message here is really long-term sustainable growth. So we have here the growth in our investment property portfolio over the last 10 years. NOI grew at a similar pace, and we should mention that it's not only a growth in size but also in the quality of the portfolio. And those that visit our assets every year know that the size and quality of the assets, their location and so on has improved gradually over the years. The occupancy and collection rates are, actually, it's maximum. I don't think that you can go higher than that. And this is thanks to our asset management team and also finance team. Okay. Sorry. We'll go now towards the present. So we've covered the 2019 performance. And we'll explain a bit more. As you can see, the title is very hipster for this page. So this actually shows that we are -- when we say we're up-to-date with all the latest trends, this is a good example. So again, long-term growth. This is the main target, and our main strategy is to deliver -- to add value. And you will see here on the left side the main pillars that are supporting this strategy. So a great portfolio, operational excellence and prudent financial strategy. We are the largest retail real estate company in the CEE and one of the largest in Continental Europe. And actually, this provides quite significant benefits. I mean, first of all, we have good access to liquidity and deal opportunities, and we also have a strong platform and team, which gives us the ability to execute such opportunities and transactions. Okay. We have here again something that you've seen before. This is the big picture that shows how our portfolio is geographically diversified. We have -- as you know, Poland and Romania are the largest countries in our portfolio. And actually, Romania is expected to decrease to probably around 34% in a couple of months after we finalize the sale of our office portfolio there. As Alex mentioned, one of the most important asset that we have is actually the footfall, which has grown consistently in the past few years. And we've also included here some macroeconomic indicators to give you a better picture of how these countries look like and the consumption. And we'll also have some slides later on about this. As you can see, Serbia is the only country in the portfolio, which is noninvestment-grade and non-EU, and it represents only 3%. We have here a snapshot of the portfolio. So total GLA increased to 2.1 million square meters, and the value is now about EUR 6 billion. We have -- as you know, the properties are quite new, located in large cities, and we have strong catchment areas and purchasing power. What's important to mention is that the leasing is managed by a central team. So key tenant relationships are handled internally. And we have had significant asset management initiatives that enhance the quality of the portfolio. And Marek will tell you a bit about it in a few minutes. The tenant base is quite strong and sustainable. You see more or less the same brands as we've had over the past years. All of them are top brands in the region. We don't have significant exposure to a single tenant. And also, if you look at the top 10 tenants, they only represent about 21% of the portfolio, so from a risk perspective, we're quite diversified. The remaining lease term is 4 years. This is more or less in line with what we had also in the last years, between 4 and 5 years, and this is the lease term to the first break option, so not the full duration of the contract. And this is a level that we're comfortable with. On one hand, it's long enough to reduce risk. But on the other hand, it's short enough to allow us flexibility and the opportunity to negotiate higher rents. We have quite a busy slide here, so I'll just go through the main numbers. Alex has already mentioned most of the operational performance indicators. So the conclusion here, seeing this all in the same page, is that the strong tenant sales and sustainable occupancy cost ratios, combined with low vacancy and high collection rate, result in a continuous growth of the net operating income, which is our main target. On the financial performance indicators, the cost of debt is similar to last year. We hedge all the interest rate risks, and the majority of our assets are unencumbered, as you can see. And also, our EPRA yields are consistent with the average portfolio yields resulting from the recent valuation. So this is actually quite important to mention, that the yield generally remained quite close to last year. The overall portfolio yield was 6.82% compared to 6.84% in 2018. And so the growth -- the fair value gain that you see in the income statement is 90% due to the increase in rental income. So again, outlining the good performance of the properties. I will also note that we started publishing also the EPRA cost ratio, which shows the unrecoverable expenses as a proportion of rental income. And as you can see, this is quite low. Okay. With the risk of repeating myself, the financial strategy is to maintain the investment-grade rating and constantly improving it. We have a 35% LTV target. We are currently at 32%. We consider that, let's say, the best place to be in is somewhere between 30% and 35%, which allows us to deliver good growth and have a nice capital structure but also keep a prudent approach. We have significant headroom in our bond covenants. As you can see, this is again something that was constant over the last few years. What's very important to mention here is the very strong liquidity position. So EUR 861 million in liquidity, a combination of revolving facilities, cash and also the remaining part of the listed securities portfolio. So this gives us a great position, and we can take advantage of the opportunities that are in the market in terms of the development of our pipeline. Our liability management during the year improved significantly the debt maturity profile. As you can see, we have virtually no debt outstanding in 2020. We have some debt in 2021, but the blue part of the bar that you see there has already been repaid in January. So this is the picture as of end of December. And if we combine, let's say, '21 with '22, the outstanding debt is now less than EUR 400 million, which for a company of our size, it's quite small. So this means that if in 2019, most of our capital raising efforts were focused on improving the debt maturity profile and the liquidity, from now on we can focus on the acquisition and development pipeline even more because we are in a great position to do so. Okay. Marek, thank you very much, and I'll be here for questions.

Thank you, Mirela. Good morning. It's good to be here again and see so many faces. Let me talk a bit about the retail in our region. And I would like to say what I said half year ago, is that Eastern Europe is far from being categorized as what a lot of people in the industry overuse, which is retail apocalypse, and we want to show you how we make sure that this phrase will not apply to our region, and give you some examples of how we approach retail market these days. In that picture, you can see Promenada in Bucharest, and you can see a big logo and banner of guests. This is us supporting guests opening new stores. This is not a product placement initiative of ours. Know that we love guests, but this is just coincidentally. They are opening now -- they're opening out stores with us, and we are happy to have them. So what are our key initiatives for coming future. We focus on continuous improvement of tenant mix and quality of the buildings we operate, at the same time, being very focused on sustainable operations, which means operational efficiency. We are very busy retenanting, rightsizing, improving quality, extending the most where we can, and this strategy proves to be right. We know we cannot stop. Retail is changing very fast. And so far, the strategy seems to be proving we are right, seeing the growth of NOI, which is a function mainly of increasing performance of our tenants. We are very busy, and where we are very focused on, actually monitoring across the whole portfolio, performance of our tenants and leasing strategy for each project includes focusing on those tenants who are leasing and who are the best performers in their class, in their sector, so that they bring most of the value to our portfolio. So these are some examples of the tenants that we are bringing to the region. All of the brands you can see, and some of them are really big names like Monki, Cineplexx, Xiaomi, those are the tenants who opened for the first time and given the geography's stores. So we brought -- so we can say we brought Monki to Poland. We brought Xiaomi to Bucharest. We brought Nespresso to Sofia, and so on and so on. I think this is, to a large extent, a function of us being the biggest landlord in Eastern Europe to actually attract all those tenants, because we are the most exposed to the market, and we can actually offer over 50 proper locations to all the brands. They respect it. We talk to them on, let's say, multinational level, and there's a lot of interesting things happenings as we speak. And I think this slide would be even more interesting when we meet in half year from now. So I think it's important to note that this tenant relation is a key strength of ours, and I think this is where we outperform our peers in the region. And we will continue to focus on building those relations further. Speaking of existing building and existing tenant mix. You can see the percentage of how much of the mix of tenants was updated in those 4 properties, such as Solaris, Buzau, Sibiu and Alfa Centre. That's exactly what we do. We continuously identify the properties where we can add value by changing -- by updating the tenant mix, by getting a little bit of the tail of tenants whose performance is not what we expect our tenants to produce in our malls. But with that comes as well our laser -- sharp focus on operational excellence. Tenants expect from us that we manage our properties in paralleled way, so that they are motivated to actually open with us their latest stores. And you can see some examples of C&A, Zara, Deichmann, Sinsay and so on that we have opened, making Bonarka -- Zara opened their first concept of new logo with all those online/offline facilities, the first-ever store, it has grown from 1,800 to 3,500 square meters performing to date very, very well. Peek & Cloppenburg, we mentioned Bonarka here because those are only rightsizing initiatives. But Marius could tell you more about the store we opened with them. The newest concept they opened in Europe was actually in Zagreb last year. So this -- that's exactly where we want to be. We need to be -- when we're working through the -- what our clients need to see that these tenants have the latest concepts or the best offering, and this is why we are so busy with all those tenants. And by the way, all of them are internationally recognizable, well positioned for further growth. And we have very strong relationship with all of them, and there is more to come. When it comes to adapting to new retail, we have given half year ago more examples of online tenants going offline, and we can proudly say that we opened since then 7 more with eMag, eobuwie and Notino. And by the way, we teamed with them, with eobuwie and Notino, we teamed across the whole portfolio. So now we can -- I think Notino is in 4 countries. eobuwie started in Poland, but we are busy discussing their strategy going to the rest of our portfolio. So again, this is the huge leverage that we are using every day to make sure that we are the first to attract those, well, online tenants going offline, which are the guys who make the biggest difference to your tenant mix. But not only would we attract those online tenants, but we help them where we can. We manage parking from a managed common areas. We can give those tenants access to infrastructure in our malls to support the online, how do you say, online activities so that the client will remember the story in our malls, where they can go online, offline and just get the best of both worlds. Those online and offline are very friendly these days, and we need to make use of that. And you can see that 29%, we have -- of our malls, we have pickup points for online tenants, and that will -- that number would increase to 100% shortly. And of course, there is big discussion about our focus on leisure and entertainment. Actually, food is one of the fastest increasing sector in our portfolio. So whenever you see new extensions, refurbishment, there's a big focus -- there's -- a big effort puts into enhancing or increasing the share of that particular sector in our GLA. And I will give you very shortly some examples of what we do and how we do it. And as a result of those initiatives, the first thing that we see is increasing footfall. That goes up, and it's not honeymoon effect. It goes up and it stays there, and it differs from 12% to 32%, depending on the location we opened last year. But the turnovers follow very shortly. So it's not just opening effect. It actually makes the huge operational difference to our properties and to our tenants, which is exactly what will ensure our long-term growth. And then a bit about digital marketing tool. We are -- we said about that half year ago as well. We are developing a lot of -- well, customer-friendly tools, applications, parking applications, loyalty cards. This is all to make shopping in our malls more convenient and using the latest technology to ensure that our tenants are getting most of their visits. Some examples of development. So it was a busy year. It was -- these are 6 buildings in Solaris that was extension. Arena Park, we developed a greenfield retail park next to our mall in Krusevac that was a greenfield development. We extended Buzau, and we had the 2 investments in Sibiu, one was the extension, the other was greenfield development. I would call us one of the most, if not the most, active investor and developer in retail market. I don't think there's anyone who would be that much focused and would do that much to actually improve that many properties at that time. It keeps us busy. But we feel -- we'll see and we are sure there's a long-term benefit being busy on development side of our business. And these are some examples of ongoing developments. I think some of you, maybe most of you, visited last year Zielona Gora and Ozas. So Zielona Gora is in the middle of a redevelopment. It's scheduled to open mid-November. And I just wanted to show you, might have -- might recognize the building to the left. This is the old wool factory, which was located just next to Focus, which was part of the transaction we did buying the property and which -- we would turn that into a new parking, but the front of the building is actually retail. So you can see in the ground over there Starbucks, Pizza Hut and some proper brands who opened their first stores in the region for the first time. It's trading very well. So this is the way we want to go, make quality building in the rich catchment areas and make them, long term, sustainable. Ozas is actually a very interesting example. I like that one. I like to call it dungeon project. No dragon was identified yet. But what we did, to your left, you can see the existing long corridor. I mean I haven't seen more unfriendly access to the building, and we said we have to improve it. And you know what, that was one of the first priorities. So what we did, we identified there's around 6,000 square meters of unused basement area. So the upper left picture, this is what it looks today. And as we speak, the construction is happening to turn that into that nice, light and customer-friendly. What will happen on both sides, sorry -- on both sides of this corridor, this is the corridor, we will open that up, and we will -- we have already actually leased 100% of that 6,000 square meters to kids play, which will occupy 4,500 square meters opening in April. And there are 2 more tenants opening later in the year. And that will take this entrance in Ozas to a totally different level. Not only we are increasing GLA by about 11%, but we are introducing what was missing there, which is entertainment. Once we are done with Ozas, there are some more initiatives that will come this year. The share of leisure entertainment, cinema, food court will go up to around 30%, and this is where we need to be, between 20% to 30%, and that this is happening as we speak. And this is the entrance today, and this is the entrance in April. So that's exactly where we want to be and what we want to do. So just to sum up. Focus on food court for food and dining, entertainment, in connection with attracting the best concepts available, will assure our success going long term. But we are very focused on getting this everyday services that our customers need in order to ensure every day visits to our malls. So it's combined weekend shopping destination for fashion comparison with the servicing, which we all need to do every day and can't actually do that online. So this is our response to the ever-changing retail environment. So ESG, we -- 2019, I think that was the very important year for us because we -- this was the year when we did most -- a lot of big progress on ESG. To start with environmental, we have been always busy with making sure our buildings are very efficient in terms of consuming the media. But we started measuring that and there is a -- there are KPIs and there is focus on actually waste recycling, water consumption, energy consumption. This is all under close look, and we can -- we actually have year-on-year decreases in water consumption, energy consumption. Just to give you an example, by the end of 2021, all of the lighting and common areas of our malls, which is over 50 today, will be LED. And when you use LED, you reduce that energy consumption by 80%. So not only this is operational efficiency, and that has bottom line, but as well this is a very green solution. And this is our strategy going forward. On social front, we are very busy there. Over 200 events we run every year and they are run locally on the properties we manage. So we team up with local societies. We do charities. We do local sponsorships. We team up with local sports team. We help kids. There is a lot of that all happening on local level. Over 200, that's a lot, and we make -- we always make sure that we do -- we are visible and we are a proper citizen and we try to team up with the local societies. But as well, we make sure that our team is getting proper training, so you can see there's over 450 days of training. And we do entertain ourselves as well, so we make sure that it's work and fun and pleasure at NEPI Rockcastle. On governance side, 2019 was the first year where actually we have been audited and we got -- and you can see it here, we started to report in EPRA standards. And we -- for the efforts, we have been given our Silver price award. It was the first year where we actually were -- Sustainalytics rated us and they rated us low, which is good in ESG. And -- but it's important to say that we are rated low, but we learned by being audited, well, we can improve ourselves, and we believe this -- the rating we'll get for '19 will be even lower. And as well, MSCI, we got -- we were rated as leader. And not only we, again, do the audits, but we make sure that we learn from those audits and we can imply -- apply the best practice into our everyday routine. That's all for me. I know there will be questions. Alex, over to you.

Thank you. Thank you. So on the next slide. So first, let me say this. So Mirela and Marek just presented where we are today as a company and the main ingredients that allow us to take advantage of the future. But one main ingredient is missing, and it's the one that's most difficult to quantify numerically, and that's our team. And I'm sure some of our team is listening to this webcast as we speak. So I take this occasion to thank you. Thank you very much, and I'm sure those present also have thanks to you. As you can see on the slide here, we like to learn. We also like to have some fun, as Marek said. I think the biggest attribute of our team is that we always get a little bit better at what we do. So as you can see in our ability to manage the portfolio in competitive markets, to our reporting, to the digital systems that we use, and to the end result in our assets and our distribution growth. In some numbers, more than 3/4 of our team is property-focused. Even the categories of our colleagues, which are -- don't have property in their titles, say, for example, the legal team, even they have know-how and experience that is focused on the real estate sector. And this is something that sets us apart from our peers in the CEE in Europe. So as a team, we are split across 11 jurisdictions, 9 different countries in which we own assets and 2 other offices in the Netherlands and Isle of Man. So talking a little bit about the future. We would like to put the CEE in context as an opportunity. And we used to show a bubble diagram, which had the size of -- the relative size of the markets that we operate in. We decided to broaden the scope a little bit to show our region in context, so no more different sizes of the dots. But you can see here that the countries that we're in, which are represented by the blue, have very high-growth rate potential despite low consumption per capita. The Western European countries have lower growth potential despite higher consumption per capita. In the context of growing disposable income in our region and higher economic growth in our region, we believe that our retail assets are well set up to take advantage of this growing market, which will translate into higher income for us. So I don't think there's a better region to operate retail than the one we're in. Of course, we are always looking to identify new opportunities. And of course, we've considered going further West, we've considered going further East or South, but the risk/return benefit remains the most attractive in the region that we operate in. So onto the most interesting part, which I'm sure was amongst the first numbers that our stakeholders look at, the guidance for next year. Before I get to that, I want to put it in the context of our vision and value. So in our minds and what we discussed with our team at our team events is what we like to do. What we like to do is create communities, shape people's lifestyle. So yes, of course, it all starts with a building. It all starts with the right location of a building, but it needs extra vibe. It needs management, and that's what the team that I've just presented is doing, and I think we're doing it well. In all the locations that we have, we have managed to remain the most attractive destination in that catchment area. And of course, it takes time, effort and Capex, of course, to keep these things fresh. And with all this effort, we're managing to achieve a real growth, which is -- which was over 4% above the inflation rate. So I think that's very, very valuable. Going forward, we have guided a 6% growth. The main driver of this growth will be, of course, the organic growth of our assets. Given how large the asset base is, this has to be the main driver because any incremental acquisition or development can only move the needle so much. So ensuring that our asset base is high quality, well maintained and continuously attracting that biggest asset of ours, namely the footfall, is what will ensure our continued success. Of course, we always keep in mind how to keep ourselves diversified. And when I say diversified, I mean we are considering some mixed-use developments, the first of which is the Promenada extension, which will again have an office on top. And as we mentioned last year, we're busy with permitting some residential developments on our spare plots next to our existing shopping centers, which cannot be used for retail extension. Of course, all of this will be in the context of maintaining a prudent financial profile, which Mirela spoke about before, with a target LTV of 35%. We have a very solid liquidity position, which allows us to take advantage of any opportunities that arise. And on ESG matters, Marek explained, we are in a very good standing. What's behind that 6% figure as far as pipeline, this is the development pipeline. What you see at the bottom here is what we've completed last year, while the darker blue and the yellow section are the things that are under construction, which Marek also touched on. We have a big greenfield opening in Q2 in Targu Mures, and that is a property that some of us will visit on our investor tour. The detailed figures behind this bar chart are on the following page, where we split them into properties that are currently under construction and properties that are currently under permitting. As we speak, we are looking at further acquisitions of development land. Over the next 2 slides, we have the properties that are currently under development with some details next to each one. So we have Zielona Gora. This will be finished later this year. We have Targu Mures, which I mentioned. Bonarka is one of our largest assets. This has been undergoing material tenant reconfiguration, and we're making use of some additional -- some space in the corridors that was just a common area. So now it's going to be much better use generating income while maintaining an attractive tenant feel. Shopping City Buzau, this we started quite a while ago and all the extension to the property has taken place. And now until Q2, we are just refurbishing the old part. The refurbishment, which will include, we're creating some open terrace that was part of the initial building before. So we're taking down the roof, leaving some structure, and it's making an old property that didn't have much of a social feel, one that will -- we expect will be the hotspot in the respective city due to this leisure offering. Last but not least, Forum Liberec, we're busy redoing the food and entertainment area. The next category, these are the ones that we have under permitting. Very briefly, the Promenada Mall in Bucharest, we have finally achieved zoning at the end of last year. So we are now busy with tendering the works and agreeing the terms with the tenants that we need to relocate to be able to break through the end part of the building. So this is the new bit. And evidently, there are tenants at the end, which will need to give up a little bit of their space, while we're doing the actual construction work. So Peek & Cloppenburg and Zara, which coincidentally happened to be there under the building, we need to retract their store space by a few meters for duration of a couple of years. In Plovdiv, we are busy with the zoning. In Arena Mall, we got the zoning at the end of last year and environmental permit, so we're now working on the other permits necessary for the extension. Craiova, this is the land plot that we acquired last year. We will get zoning, we expect sometime this year. We are now busy with the environmental permit. The next property is Bialystok. It's just a smaller addition. And in Ozas, Marek already mentioned what we're busy with. But the -- it's on here because we're also planning a further extension, both on the roof and the reconfiguration of the park -- car park, excuse me, and an extension of it in front. That is the main presentation. The conclusions are pretty much the same as last year. So we like consistency. We are very proud of our achievements, which -- the first of which is the growth in distribution per share. We aim for the long term to provide growth in capital value and preservation of capital and the income stream to grow a little bit but consistently. And despite this relatively prudent approach in my view, I think we have managed to fare very well in our market and relative to our peers. We will continue to focus on asset management, maintaining a prudent financial profile. And the guidance that we have provided includes us pursuing the -- a couple of acquisitions, but we will not jump on those unless we believe that they are the right thing to add to the portfolio. With that, thank you to our team. Thank you for coming. And we will take any questions that you may have, after which we will take the questions that we have from online. So any questions from the room?

If not, Alex, I think while we are waiting for the courage for questions inside, we'll just go to the conference call and just find out if there's any questions there. Are there any calls -- questions on the call?

There are no questions on the line.

We do have some questions that we have received via the webcast.

We have provided a number of ways to get questions, either by voice or by text, and the following are from the text platform.

The first question comes from David Rossouw at Fairtree. And he asks, could you please elaborate on the development yields and the value uplift from these?

I can elaborate to some extent on that. So we -- as you know, we haven't indicated the development deals for a while because it impacts our negotiations with landowners. What I can tell you is that the development yields vary in a range from 6% to 9%. And we pursue these on an opportunistic basis, given that our portfolio overall is valued at 6.8%. You can understand there is upside in the majority of those developments. The yields that I have told you are net initial yield on costs -- yields on cost and all the developments that we have done have a ramp-up period. So 3, 4 years after the development, that yield usually looks much better.

The second question comes from Jakub Caithaml at Wood & Co. And he asks, do you see opportunities for acquisitions in the region? He's also got a follow-up question, where he asks, can you indicate how many assets, what value of prospective acquisitions have you already analyzed in the last year?

Okay. So I think I touched on this earlier in the presentation. I said that we have not done any acquisitions in 2019, and there are only 2 retail transactions that happened in the respective year, neither of which was of interest to us. As we speak, there are a number of opportunities on the market. However, as I mentioned, I don't want us to jump on properties that we don't think are worthy of our portfolio. So as I've said before, we're trying to maintain a steady or growing quality of our portfolio. The market, as it stands, is not one where there are lots of very good properties available for sale. So to answer, are we in a DD on any particular one, it's not something that I can disclose. But should we be in a position where we have to, this will be public information.

Another follow-up question around the acquisitions, also from Jakub. And he asks, would you say it's possible to acquire assets at more favorable pricing than it was in the case 12 to 24 months ago?

It's a very tough question. I can only respond what the market has shown, and anybody here can see what was transacted. And yes, some properties are trading at better prices and some are not trading at all, and the cause of that is anybody's assessment.

Another question also from Jakub. And he asks, you report tenant sales growth at 6.8% across your portfolio. Is this in local currency in terms of euros?

It's in terms of euros.