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

[Operator Instructions] Please note that this call is being recorded. I would now like to turn the conference over to the CEO, Rüdiger Dany. Please go ahead, sir.

Hello. Good morning, everybody, and welcome to the results presentation of NEPI Rockcastle for the year 2024. Well, actually, a year ago, I was here and I was very happy to present you the best results of the company so far, that was 2023. So sorry for repeating myself, it's another record year of the company. We've beaten '23 and the set of results, I think, for 2024 also quite good for our shareholders. So pleasant to have you here. And I'm starting again with a quote because also in 2023, we had this imagination that we could grow the company that we see opportunities in the market, that we have the trust of our shareholders, the loyalty, and also maybe the trust in asset management team, but we saw opportunities coming up, but it was more of an imagination. And then I found this quote, which says like, " Logic brings from A to Z; but imagination takes you everywhere. " So it took us a bit further than just the logic that you might have had in the beginning of the year. And we could execute some really nice, I think, deals over the year in order to let the company grow, and now we go a little bit more into the details of this. So that led to the fact that now we are operating 60 assets across these jurisdictions. Obviously, acquiring these 2 assets had a big impact on our Polish portfolio, 34% now. It equals up more or less with Romania, and that is and has been the strongest growing market last year within the portfolio. So I think it's the right place to be. And we will be even more, especially for our retailers, the #1 to talk to if they want to expand within this region. And the underlying assumptions here, obviously, also for the near future is that we saw this growth of GDP within our region. And the growth of GDP has also been reflected into the purchasing power, purchasing power up 10%, and that has driven obviously the turnover of our retailers, which was up more than 8%. I mean, Marek will come to it a little bit later, but that has been driving mainly our business. And that's also what we are foreseeing at least for the coming years and especially for 2025. When you compare this to the rest of Europe, Central Eastern Europe seems to outperform all Europe, again with a plus of 3%, while the euro area in total will be somewhere around 1%. So again, NEPI Rockcastle at the right place in the right time with the management that takes opportunities that are coming up. Now we've been delivering, I think, on our strategy. You remember that we have the four pillars of growth where we see the company, where we see the, let's say, opportunities within the company. One, sits obviously within the existing income-producing part of the portfolio, and we saw a growth of net rental income in 2024 of 13.2%, another double-digit number. And that obviously was the main driver for the fact that I can announce to you that we have a 5.6% growth on distributable earnings per share for U.S. shareholders, which we will distribute the second half very soon. And that the driver of that obviously was, as said, the like-for-like growth of turnovers of our retailers throughout the portfolio. This growth obviously comes, of course, from good economics within the region also, stomach feeling of customers. They are more resilient to crisis. Inflation does not really shock them as much maybe as it would do to Germans. So there is also this soft part that we need to take into consideration. But I think also the activities we do spending money on the operating assets, making them better, getting a better branch and tenant mix, optimizing also here the nonrecoverable costs, I think that is what has been driving here our business in the portfolio we're operating. Now at the same time, we are one of the few companies in Europe in retail real estate that still has a development pipeline of close to EUR 800 million. And we've been working on this, I'll come to this a little bit later when we talk about developments, where does this money sit. But in principle, this will deliver over the next years until the end of 2028, another 8% on income-producing GLA. So that's what our development team is working on. And then we have, let's say, the optimization of portfolio, letting the portfolio grow, and there, obviously, we had this year, 2 major events taking place. Anca and the team, M&A was extremely busy. We saw these opportunities coming up by beginning of the year. And fortunately, NEPI Rockcastle in a position to really strike a deal if we want to because we have such a strong balance sheet, and we are positioned like this, and that's why we were able to acquire two additional assets, super core assets in Poland, total investment around EUR 760 million on Magnolia Park. We'll come to it a little bit later. But these assets are absolute core assets. They are, let's say, proven in the market, and the market for a long time, producing their NOIs. And then on top of this, in December, beginning of December, we could actually do the signing as well on Silesia, which is another really strong asset in Poland. These cities are leading cities, obviously, in the country. So super nice acquisitions for us. And most important is that we, as NEPI Rockcastle, so we take them on board, manage them ourselves, and we already have identified, let's say, undermanaged parts of the business where we can say, okay, let's create additional value here for our shareholders. Similar as what we did with, as you might remember, as we did with Forum Gdansk, which is just flying. So -- but at the same time, let's not forget it's absolutely great that we get this kind of EUR 56 million additional NOI on board. But at the same time, we decided to exit from Serbia. Serbia, a country that is rather small, you have no visa, there's a town, you have the capital Belgrade, which is completely over retailed. So not really a reason for us to go there, and lose money, and that's why we said low liquidity, a country without an investment grade. So that's why we said, let's dispose Novi Sad, which was performing very well, has been distributing to our growth over the last years, but we could sell the asset with an 80% -- 18% premium to book value. So I think a really good pricing as well. And that's why we said let's reshuffle rather this money into a market where we have more relevance, where we can gain even more relevance like in Poland. So here, a trade-off a bit between the -- obviously, between the NOIs. Now on top of this, you remember, end of '22, we decided to start our own small start-up, I would call it, NEPI Rockcastle energy. We invested EUR 34 million into photovoltaics on the rooftops of our shopping centers in Romania. And what you see here is that this investment already in the following year in '23, has generated EUR 9 million additional revenue for our shareholders. That is a yield of more than 20%. And because it is -- it worked out as we were planning it in our business plan, we decided to go further because these investments are obviously not only enhancing, let's say, our income stream. But on the other side, it's helping us tremendously on the ESG side in order to reach our targets when it comes to emissions. And that's why we said we're going to roll it out, not only in Romania, we roll it across total portfolio. And that's where we are currently on the way of spending another EUR 10 million. We have 24 projects across 7 countries. Out of this 24, we are currently already under construction with 16. The rest is in permitting and commissioning, and we will finish it by the end of 2026. So next year, we'll have them all on board. And on top of this, we decided together with the Board to spend another EUR 100 million on photovoltaic greenfields, meaning we bought 2 plots. We currently with 1 plot already starting soon on construction. Hopefully, by autumn this year, we will deliver -- we will have the first energy being delivered to our assets from these plots here, and we're looking, obviously, at a very similar yield on cost than we do with the first investment. So it is a steadily small, but steadily growing business within NEPI Rockcastle and will deliver you over the next years more and more additional revenues. Now -- but we're also delivering on a strategy when it comes to our financial stability because even though we have been acquiring assets more than EUR 760 million, and of course, also have been disposing, we could keep actually our loan-to-value at 32.1%. I think that's a pretty good result also when you compare it a bit to our peers. So we are not over leveraging the message. We are not overleveraging the company by just being bullish and buying assets. So that is, I think, very important to point out. We had on top of this, and this has, of course, helped with 32%. We had another uplift on valuations by the end of the year, which is nice, 18.2% across the portfolio. So that shows as well that -- and we believe that there is more room for improvement also in 2025. So I think that valuations will be impacted positive also in the near future. ESG, as said, 6% of the portfolio we are currently already producing ourselves, and you see how we roll out the energy program, the energy business, and that will steadily grow over the next coming years. Even though we have already 84% of the energy that gets used by our clients as renewable electricity, but we buy most of this, obviously, at the moment in the free market. And sooner or later, we're going to replace it with our own production. So that's the ratio behind it. Well, who is doing that? We had about 16 -- 19 assets that were partially managed by third parties. And 2 years ago, we said we're going to integrate this all. We want to make sure that we have a grip on the portfolio from A to Z, everything. Also the management on site, and that has been concluded now. We have integrated 19 assets into our full organization. And we talk about here not only people, we also talk about digitalization. We talk about getting, obviously, the economy of scale out of the total portfolio. And that is what we're doing here by incorporating this 19 assets. And that leads to the fact that we are now over 650 NEPI Rockers that are working for you every day. And by the way, I'm just the one here to tell the story, but the 650 behind me are actually producing the results that we are showing today. So just to mention. Now market leader in the region is great because it gives you the EUR 0.60 per share. But it comes actually from this growth of NOI, obviously now growing on NOI more than 13%. We are now at almost EUR 560 million and the whole company has shifted a little bit, let's say, upwards in the whole market. And you -- and what I'm actually proud of is a bit to point out is our occupancy rate. It's the first time in the history of the company that we have less than 2% vacancy. And that is a bit of an applause here to our leasing team who did, especially in the second half of the year, an amazing job on signing contracts. And it shows you that, that's what I'm always saying, it shows you this demand of retailers, especially from Western Europe that want to come to Central Eastern Europe and want to open stores because this is the region where they still see growth in their turnovers. Just read an article yesterday of the CEO of DOUGLAS, who is explicitly saying that their strategy is to open more stores and explicitly in Central Eastern Europe. It's just a matter of logic because they need to follow where the turnover is. And when we look at the relationship between us as a landlord and our retailers, then it's, of course, about their cost. And you see that our occupancy ratio is flat, last year as well, I think it was 12.1% (sic) [ 12.2% ] now we are 12.2%. So what does it tell you? It tells you that we do -- our retailers do a healthy business and it's a win-win situation. They do 8.3% more turnovers. Their margins are good and they have a cost relation to us, which is healthy. At the same time, NEPI Rockcastle is benefiting from their will to expand and from the additional turnover that they are producing over the year. So that's a healthy situation. Now what does it mean overall to the company? And I think this is something you need to take in consideration also a bit looking into the future because NEPI Rockcastle has now moved into the first quartile actually within the peer group that we have in Europe. So the company has been, let's say, a bit moving up the leagues. And that is, of course, also shown by the fact that our investment property value moved up from EUR 6.8 billion by more than 16% to almost EUR 8 billion. So we are meanwhile, an EUR 8 billion company that you're owning. So I think that's something worth mentioning. And we had a ride as well, not only driven, of course, by our results and by our sales, by our total shareholder return up by 22%, driven obviously also by the fact that our share price has moved quite positively up to almost EUR 7.50. So with this, I would like to hand over to my dear colleague, Marek, to guide you a bit more through the world of our operations and where these numbers come from. And I will see you later. Thank you for your attention so far.

Thank you, Rudi. Good morning. It's always a pleasure to be back in South Africa and show you and explain a bit another -- yet another time, the exceptional results of the operations of the group. But I would like to emphasize as well why is it important to actually understand where the numbers come from. And there are 2 reasons. First of all, of course, operations fuel the DPS growth year-on-year, no doubt. But as well, running 60 properties, which are producing such a great result, lays foundation for our further growth. We are not stopping where we are today. We do have a plan. We have ambitions, we have organization and hopefully, investor support to actually do more. And I guess, as long as our underlying assets are delivering what we expect them to deliver or more, just gives you a path for the further growth of NEPI Rockcastle. So without further ado, let's look at high-level view first, let's understand where the NOI comes country by country, and we got to exceptional result of 9.2% for like-for-like NOI growth properties. If we add non-like-for-like factors, which mainly is the disposal of Novi Sad, but as well, we've been able to replace and overcompensate actually lost NOI by buying Silesia and Magnolia, we got to as high as 13.2%, which is exceptional number. And let's focus a bit on some of the countries which have delivered the growth and some of the outliers. And of course, 22% in Poland is purely the result of the two acquisitions we have concluded in quarter 3 of last year and that was supported, of course, by organic growth. Then you look at Lithuania and Bulgaria with 14%, which is nothing else than actually us enjoying now the effect of the hard work we put into Bulgarian and Lithuanian properties, with all the asset management initiatives, CapEx well spent. And now we can see the effect of that, and that is not over yet. You may ask a question why Hungary is at 0%. Well, it was budgeted as such. We are very busy doing a gigantic refurbishment, retenanting and fine-tuning of Arena in Budapest, and we are just in the middle of the works, which means closing some of the stores to actually reopen them bigger, better, et cetera, et cetera. You will see the only property in Hungary that will have the latest Inditex stores. And that will, of course, translate into better operations. 97% of leasing, we assumed, is already done. So we are busy just building the units handing over them to tenants. Tenants are fitting out and gradually opening. So hopefully, a year from now, we will see much better numbers for Hungary. And then you see Czech Republic, Croatia, Romania is a function of organic growth, but as well, and I will speak about it a bit later, the recoverability of our cost which we have successfully remained our stable level of 93%, but I will get to those details in a second. But of course, it all starts at the level of customers. As you can see, with around 350 million customers visiting our shopping centers, which is slightly positive year-on-year. But more importantly, our customers spend more cash in our shopping centers and the average spend is up 8%, which is a very good result, which then leads to 8.5% turnover growth in like-for-like properties, which is way above the inflation of around 2.6%. Even if you look at the growth in local currencies, the growth is higher than local inflation, which proves customers are back in shopping centers, they spend more and they want more, which is very good for us. And now when we see that the ecosystem of retailers is so healthy and the operations in NEPI portfolio is healthy, they want more and they open with us. And that leads actually and gives us fuel for our negotiations with tenants. And that actually helped a lot to take our EPRA retail vacancy to 1.4%, which is the lowest recorded in the history of the company. Of course, the same great operations of tenants leads to renegotiating of expiring lease agreement. And the team was able to deliver 2.4% base rental uplift on top of indexation, which was in the range of 4-ish percent, which is another great example and tells you that the demand for modern retail space in A-class shopping center is there and is increasing. And I will tell you a bit more details soon. So that was one of the engines for the growth. That's the income, but as well, we have been very rigid on the cost side, and you can see that our operational recovery of 93% is same number as last year, and that is in an environment where the operational costs of running shopping centers, as you all would know, are increasing and make no mistakes there. The cost of running shopping center is running faster than expected inflation just -- this is just a fact. So us being able to recover still 93% is a great success. All of that combined led to still very healthy portfolio of our tenants who recorded 12.2% occupancy to cost ratio. This is important because that gives us fuel for further renegotiation of lease agreements, and that will stimulate further the EPS growth. Before I go to next slide, since I'm here, I would like to thank Marius and [ Justina ] for leading the team because as Rudi said, there are professional behind whose continuous efforts led us to where we are today, and we can proudly present the numbers. So thank you again, guys. Now let's look a bit closer at the growth, and we are very happy to say that all the retail segments are doing very good and excellent. And 2 things I want to point out and Rudi mentioned DOUGLAS, I can add to that Rituals and I will tell you about Rituals in a second. Health and beauty is just having times of their life, super cool. We are opening a lot of stores, and we are enjoying the operations and so are the tenants entering the openings with us. But just as important, entertainment, we all remember how cinemas were suffering, but we are happy to say that year-on-year, cinemas has shown growth in our portfolio. And only in Q4 of last year, the Q4 to Q4 growth was 16%. And the lineup of movies in '25 and '26 makes us quite optimistic about how the cinema market will evolve in the part of the world we operate. And of course, the performance, as I said, led to 2.4% BRU, but I'd like to break it down to numbers. What it means 2.4% BRU. Well, we played with 15% of the expiring gross rental income, 85% was simply indexed, but 15% is what the team was busy doing. Seems low, but 15% actually means over 1,300 lease agreements that the teams had to renegotiate and sign in only 1 year. And that's a super great result. You can see 65% are renewals, but as much as 35% are new leases. And I'm particular, proud and happy because that means new tenants, new concept, redesigning, rethinking the way that the operations are run, and we are very focused on keeping it there, always reinvent and be ahead of the competition. You can see that cost ratio at 12.2% as I mentioned. But for the first time in history, we went over EUR 3,000 per square meter of turnover for the group, which is another proof of very sound retail operations within the portfolio. Now moving forward, of course, strong operations leads to EPRA vacancy lowest ever. On overall portfolio, it's 1.7%, and the reason for that is the higher vacancy in office and industrial. But as you can see, it's actually immaterial from a group point of view, only 2.7% by GLA and retail EPRA at 1.4%. We are surely getting to a point where you can't get much lower than that because you always do some changes to your shopping centers, and there's always a bit of vacancy. So if we meet next year and it's not 0.4%, don't be disappointed. I think somewhere around 1% is the long-term vacancy we'll probably run. And now, of course, it's not only about how we lease, but to whom we'll lease. And our ultimate goal is to actually team up with the best performing in their categories. And you can see at our top 10 tenants, and we have added some more flavor to that. You can see the new openings that we have managed to secure with all those top of our tenants. And when we say new stores with, let's say, extend new stores, that means new openings, but as well rightsizing, changing the size within the existing property, which is just as important because we have no mathematical proof that when tenants redesign, reinvent themselves, it translates in better sales per square meters. And I don't have to explain that better sales per square meter means higher rentals, and this is the beauty of the business. And now when we look at the expiries, I mean, this graph is very similar. Each time we report, it's simply a function of us signing most of the agreements for 5 years. But one important thing when we met in August, our expiry profile has shown 16% in 2025. You can see by now, it's only 9.1%. Almost half of the job was done in the second half of the year, and we are well on track to deliver what we expect at the budget, if not higher. Moving forward, because numbers are numbers and leasing is pleasing, but the beauty of the business is the openings. And you can see some we just picked some of them the new Reserved, Lefties, Nike, et cetera. When you look at Victoria's Secret, actually, when Victoria's Secret opened in Mega Mall, the upper floor of mall was totally blocked. I mean the number of customers that the brand attracted was enormous, and we can see how every day those new concepts are bringing fresh new footfall to our shopping centers. And this is the beauty of actually the extra effort to get new tenants to our ecosystem. So these were the openings of last year, but we are busy this year. Those are the agreements signed not opened yet. I mentioned Arena, Budapest you can see for over 4,000 square meters of Zara will open in Arena Mall. It's almost doubling the size they operate today, and I'm sure that will be a great success, and thus having seen the track record of rightsizing of Zara in Paradise in Bulgaria. We can be sure that this is a very good change for them all and that will translate into better operations. When you look at those tenants, please note the sizes that we occupy. So these are really big units. This is the trend, tenants getting bigger, better, and I think this is our responsibility to actually manage the portfolio in such a way that we allow them to do what's best for their business because they know where the turnover is coming from. And ultimately, we are benefiting from their great operations. So we are very happy to see that, but it's not over. We'll open more exciting brands. And this is where I'm very proud of because we love moving brands from abroad, but we like to move them across the portfolio. So think about that NEPI was actually the company that brought Primark to Arena, Budapest. It was actually NEPI who said to Rituals, you would do so Poland, you need to come to Bucharest. And we opened the first one in Romania, and Marius, correct me if I am wrong, but they said it was the best opening worldwide, amazing, just amazing, proving the story of CEE being outstanding place to run your operations. JD Sports, they were looking to expand out of the operations we run from Poland, and we took them by hand to check saying, why don't you open in Liberec, you will be happy. They are happy and the list of new openings is just getting longer every day with them. We are very happy, super successful concept. SportsDirect, the first one in Craiova. It took us a few years to convince them. And some of our guys in leasing team were like SportsDirect again, now they won't open. And we said they will open. You need to work with them, convince them. Never give up and one day, they will come. And we have Craiova and more to come. So this is the way to go and win this. We all know the brand. So we are very happy that we are actually the platform for our tenants to grow and see and we have become known for having the organization, ability to actually help those brands to grow extensively. So as you know noticed, as you noticed, we like new ways of managing. We like new tenants, but none of that would have been possible if our dear CFO, haven't find a way for new ways of funding the growth because we can have dreams, but without cash, the dreams become just the dreams, and we want to turn the dreams into reality. So with that, I would like to hand over to Eliza. Congratulate her on the 2024.

Thank you, Marek. Good morning, everybody. It's a pleasure and an honor also to be here with you this year, and to look back at 2024, which for me was a year to remember, both personally and professionally. Last year, in February, I attended this meeting online, if you remember. As I welcome my second son in my life. Now my son is already 1 year old, and he witnessed in full the 2024 success of NEPI Rockcastle. So we do it in the family. And Marek mentioned about the courageous moves that we did in operations. And how we are opening new markets for our tenants. And here at NEPI, the way we do one thing, we do everything. And in finance, what happened this year is that we bet for more. And this year, it was a year with bold strategic decisions. It was a year in which we seize the opportunities, and we acted upon them at the right moment with the right consideration for the short-term effects and the long-term effects. And about this courage to dare for more, I will speak on my three topics that you already got used: distributable earnings, funding, and valuation. So let me start with the distributable earnings. I have here the classical chart and we managed to deliver, as Rüdiger mentioned, a 5.6% growth on a per share basis. If we are looking at the main components, the organic growth was 3.7% on a per share basis. If you are looking at the minus element, this almost perfectly equal and offset each other, which means that our focus on bringing new opportunities in the area of developments, in the area of new energy, in the area of acquisitions is something that brings value for the shareholders and bring also returns. I know I'm aware that we can use whatever positive columns here to offset the negative effect. But what I want to convey here is that we, as a leadership team, we don't settle for only administering the portfolio. We are looking for new ways and we are looking to achieve more and better for our shareholders, adapting, innovating and making the best possible choices for bringing more at home. And in order to illustrate that, last year in February, we came with a 4% guidance. We took into consideration the effect of our developments. We took into consideration to a large extent, the revenue from our energy activity. But advancing in the year, we started to have even more clarity, and we took a set of strategic decisions, this was the exit from Serbia, then we had EUR 760 million acquisitions, and we also focused on our funding, bringing EUR 500 million bond issue together with EUR 370 million in equity, whether via scrip or by an equity raise. All of this brought 1.6% extra growth in the DPS, positioning the company for a long-term growth. If you are looking also at how much we enlarge the distributable P&L, we increased from almost EUR 370 million to EUR 413 million. This is a growth for supporting shareholder of almost 12%. On a per share basis, yes, we are at 5.6%. Yet if you are looking at how much the business grew in terms of distributable P&L, we are at a solid 12%. And if you are looking at how much the overall assets of our balance sheet increased, we are at 16%. So we positioned the company in a new league. And if you are also looking, we changed a bit the logo so that to play in the big league. We have a payout of 90%. This is way about -- above the average peers in Europe, which are in the range of 70% to 75%. And as Rüdiger mentioned beyond this payout is the total shareholder return, which is at 22%. We delivered the same total shareholder return last year, which means that NEPI Rockcastle is a very good company to invest in from a shareholder point of view. A circular is going to be published in relation to the settlement option, but we are offering discretion to you to elect in between the 2 cash offering, which is repayment of capital and the distribution out of profits with the tax implication that you need to take into consideration. So open your wallets at the beginning of April, with all the details that are going to be published in the circular soon. Moving to the funding. This year was marked by EUR 1 billion fund. And this was split in between debt and equity, as I already mentioned. Speaking about debt, I would say that in October, it was already a hunger for NEPI issuing a bond. We had a book oversubscribed 6x. We have experienced and I have experienced since NEPI of 4x oversubscription, but 6x was something outstanding for us as well. This was, let's say, more than words could say about the trust of our shareholders. And capitalizing on that, we offer the bond for over 7 years, enlarging our debt cover up until 2032. We have been able to tighten and to get the best commercial terms in the context, a margin of 205 basis points over mid-swap. And we managed to strengthen and enlarge our investor base, allocating this EUR 500 million over 140 investors. When it comes about RCF, you got used with the fact that we have a liquidity buffer of only EUR 600 million, but we need to extend and to maintain our banks happy with this RCF. We managed to generate EUR 100 million more this year from Erste and SMBC, wanting to join the company, and there are still 3 or 4 banks that would like to partner with NEPI in secured fund or in RCF, which means once again that we are a very trustworthy company. Two weeks after issuing the bonds, we embarked on another daring project, which was the equity raise, EUR 300 million, the first one done after the merger in 2017 and the largest one launched on 2 stock exchanges, Amsterdam and JSE, with 2/3 of the proceeds being allocated here in the home country in South Africa and 1/3 to new investors, the ones that recognized and appreciated the NEPI as a future investment. What's ahead of us in terms of NEPI Rockcastle visibility, considering all the moves in the portfolio, we are much more biased towards emerging markets than frontier markets. and we are qualified to be included in the EPRA Nareit Emerging Index: enhancing our visibility, most probably helping us with better liquidity, easy access to capital markets, and tracking by fund investors and the ones that are tracking indexes. So we are expecting this inclusion at the end of Q2 with positive effects unfolding afterwards. I will move forward to what I call a snapshot of 100,000 words, in the way that we have here the main ingredients of a safe, stable, and sustainable business. We ended the year with a net cost of debt of 2.7%, which is a great achievement in the context. However, we cannot beat the market. We try to bring the best outcome for our investors, but 2.7% is going to become 3.1% or 3.2% this year. We are going to enlarge our net cost of debt to 3.1% to 3.2% because we cannot beat Euribor. If you are looking at the loan-to-value, as Rüdiger mentioned, yes, it's not a mistake. We are in 32% year-on-year almost. We have a self-imposed threshold of 35%, but we have a strong preference to stay in the low 30%. This doesn't mean that we don't exceed this. If we have good opportunities, if we need to make bold moves, we are going to exceed that, but making sure that we have the right means to get back to our prudent financing. The fact that we are a well-rated company reaching the upper limit for the geographies and we keep the right level of liquidity of over EUR 1 billion. So that will be agile and to take benefit of any opportunity that may come ahead of us is something that you must probably got used with that, but it's a lot of work behind it. I would say that it's my personal belief that we are a company with the right balancing between boldness and prudence. And we have the right flexibility when it comes to leveraging on new opportunities in the market. And with that, I will move to the portfolio valuation. I'm very proud to be the CFO of the company that has EUR 8 billion in property. It's an increase of almost 32% relative to the moment when we took the leadership of this company, and it's almost 60% as Rüdiger mentioned relative to the previous year. I strongly believe in the potential of uplifting the fair valuation. And I have the confidence that the appraisers are going to see this potential. Nevertheless, they are stuck with a valuation yield in the range of 6.95% to 7% for our portfolio. But the disposal of Novi Sad this year was, let's say, a testament of how much value we can generate in our properties because we managed to get a EUR 25 million gain out of this disposal, which represents approximately 18% relative to the book value. EUR 195 million, this is the fair value gain that we got this year with EUR 35 million allocated to the new acquisitions to Silesia and Magnolia. Rüdiger is going to be mentioned a bit more on each of them, how much, but EUR 160 million came from the regular portfolio. This is more than 2% on a like-for-like basis. And this comes from Romania, from Poland, and from Bulgaria, mirroring somehow the growth that Marek spoke about in the NOI. If we are looking at the top properties apart from Magnolia and Silesia, we had Forum Gdansk, another acquisition of ours. We had in Romania, Mega Mall and City Park and we had in Bulgaria Paradise that as my colleagues from operations are saying it's purely flying. So what can I say? Good valuation increase and looking forward for some other good effects. And in finance as well as in NEPI, we are committed to excellence. We are not afraid of taking bold moves, and we are doing that so that to enlarge our balance sheet, to enlarge the valuation of the assets, to finance the development projects, while keeping still a safe business with a prudent LTV. Done with my finance portion, but I will spend a few more minutes because we are conducting our business in the last year with the mind also to the ESG. And our efforts are well recognized. This year, we got an EDGE Certification for our diversity and inclusion practices. We got a gold prize when it comes about sustainability practices from EPRA. We have been rated as a Negligible Risk by Sustainalytics. And by GRESB, we have been allocated 2 more stars in relation to our investment property portfolio. As Rüdiger mentioned, we have embarked in an energy transition via the green energy program that we have. This already covers 6% of the group needs, and we are aiming to get to almost 50% at the end of 2026. This is going to have an effect on our footprint, on our carbon footprint because this is going to reduce the carbon footprint by approximately 40% relative to a situation in which we would use a nonrenewable source of electricity. Currently, we are covering almost entirely our portfolio by renewable energy. And when it comes about standards, we are committed to keep our properties BREEAM certified. We have a decarbonization path for our operations. And this year, in March, when we are going to publish the annual report, you are going to see a sustainability report with a limited review opinion by auditors. So this is in a nutshell what we are doing in sustainability. And before turning the floor to Rüdiger, I would like also to mention the fact that all these figures are the results of a team that knows how to deal with challenges, that is embracing changing and is pushing boundaries so that to make an NEPI Rockcastle the leader that it is today. And I would like to thank to my team and to all the teams in the company for the hard effort that they put. Thank you. Rüdiger, over to you.

I think you can feel the enthusiasm, but there are skill behind it as well. Let me take you a little bit through the developments and acquisitions of NEPI Rockcastle. As said, it was for us really an amazing ride, I mean, to have the chance to acquire 2 assets, of this size of this quality in one of our top markets does not come along so easy. But the opportunities were in the market. And Anca and the team are just working day and night to get it over with, because everything happened in a very short period of time, so the equity raise, the bond raise, the acquisition of the assets is everything happened more or less in 4 months. So -- and that was, of course, kind of a heavy task. But it was worth it, as you can see. Magnolia, it's 100,000 square meter monster in this region. It's completely dominating the region. There are competitors in town, that Magnolia is definitely the #1. And it will -- with the asset management activities that we are already now rolling out, we are expecting close to EUR 27 million NOI to deliver to the portfolio. And you see that already cash out was EUR 353 million for the asset. But by the end of the year, the values were valuing it already with EUR 375 million. So I think the pricing was okay. And the same happened here in Silesia. That is an even stronger asset when we look at it from an NOI perspective, again, looking at the first year, I think we'll get somewhere to EUR 32 million NOI. We only have a very few number of assets in our portfolio that reached more than EUR 30 million. One is Paradise. So EUR 30 million is for us like this is top end for the portfolio. And again, we bought this asset for EUR 407 million and already valuation up to EUR 421 million. So again, we will see now in the near future, of course, how these assets are performing. But you've seen what we've done Forum Gdansk, buying it with EUR 250 million. And currently, it stands at, Eliza, EUR 330 million. And that is all driven by operational -- additional operational results. So we see here a potential also to do similar to these assets here. So this will be contributing to the growth of NEPI Rockcastle in the near future. But not only that, I talked about it already. We have a quite a development pipeline to deliver. And here, we're just splitting it a little bit up for you to understand where are we actually allocating this EUR 800 million. And of course, the majority of this more than EUR 630 million go into our real estate development in shopping centers, 2 greenfield developments that we're currently working on, one in Plovdiv, second biggest city of Bulgaria, you saw numbers of growth in Bulgaria. That is one of the new markets that are evolving. And obviously, we are the, by far, strongest player in the country, and we want to conquer as well the second biggest city. We are close there to start construction, hopefully, soon getting the building permit. We have another one in Romania, in Galati where we are already open in a shopping center, and we want to spend around EUR 60 million there for another Retail Park because the asset is -- the current asset is growing tremendously and retailers are asking for more space. And then we have further on extensions, refurbishments, so optimizing the current portfolio where we extended the asset, as you saw it this year, the opening of 6,000 square meters in Romania, but as Marek said, we as well are spending quite a substantial amount also on our asset in Budapest in order to put it again back to the best-in-class in Budapest. So that's where we are investing this EUR 630 million, and I will come to some of the projects a bit later. EUR 110 million, as I said, on photovoltaics on our energy business in order to actually pump up this income stream. So as said, 23 energy projects in 6 countries, 15 megawatt, and then we will deliver until '28, the another EUR 100 million investment in another 160 megawatt. Residential, we identified 2 new projects that we have now in our development pipeline, where we started with the design process. One is in Brasov in Romania, which is like skiing resort and a resort for a place for people from Bucharest to go on the weekend. So it's a touristic -- very touristic area. And we already own the plot with a little bit of retail on it. And as we always say, we will not become a resi developer, but since we have the plot, let's make some additional money here. And the other one is in Craiova, you remember that we opened Craiova 65,000 square meter that first time this year is in the numbers of total NOI. But right next to it, again, we have additional reserves on the plot, and we will do a residential building there as well. Just as a short reminder, the first resi development that we did, 255 flats in Vulcan residential assets called and in Bucharest, had a profitability of 40%. So we're expecting something in that range for these assets here as well. Let's go a little bit into these bigger redevelopments that we are doing. And biggest one, of course, is Bucharest. And a lot of you -- some of you at least have been with us in Bucharest on the investor tour trip and we would obviously invite you this year as well on an investor tour to look at the new assets that we acquired, but also to look at what we are doing here with our development pipeline. So Promenada in Bucharest under construction. We are out of the ground. As you can see now, we are getting to the first floor of the asset. This will be an 85-meter tower. We will extend the shopping centers, so the retail part, but this is actually a multi-use project because we are adding here hotel and we're adding here offices, we are adding here cinemas, we're adding here theaters. So it's going to be actually the new ground zero actually of Bucharest once it's finished. And that is in time and budget so far. Ploiesti Shopping center, that's the one that we just extended the shopping center. Actually, you see the extension here with a ramp for cars to go up into a new parking of 200 parkings because I told you the -- let's say, the nice problem to have at the -- with the asset was that we simply didn't have enough parking for as many customers as we had. So this is not only in the extension of the retail part, but very important was to create additional parking because the entire asset obviously will benefit from having this additional parking. And then the rollout, obviously, of our PV panels, I've already talked about it. So 24 are currently in the 7 countries under process, and that will deliver us another 15 megawatt. Now looking into the future on the organic growth, and I can already hear it, already when we came this morning, the first questions came, really, why do you have only 1.5% of distributable earnings growth. After you're doing all this great stuff, you're buying assets with EUR 56 million and additional NOI and then your guidance is so low. So I think there is just a little bit of understanding of the numbers, I think, because purely from a nominal perspective, of course, the company will grow more than 1.5%. We will grow with 5% relative to 2024, when we look at just the nominal number of distributable earnings. But when we look at it on a distributable earnings per share, that is a different view because we have 8% more shares out there. We did an equity raise EUR 300 million. We did the scrip dividend, and that all leads, of course, to more shares. So the distribution per share is not growing with the same speed as our business grows. That's the simple logic, that's number one. And number two, is that, obviously, our cost of capital, our cost of funding is going up. We have been replacing a bond of EUR 500 million with the IFC loan and that was -- we actually got it already distributed, I think, in January '23. And that obviously has a different price tag than what we have signed in the days where money did cost nothing, right? So these are the 2 main factors that I would like you to take in consideration when we talk about distribution per share, but I would like you also to take into consideration the fact that your company you're invested in will grow nominally by 5%. So that's a little bit looking into the future. This is our guidance. Fortunately, in '23, business went even better than we thought in the beginning. Let's hope it's going to take place the same way now in '25. What happened there is simply that turnover of our retailers were growing stronger than we were expecting. That was the main reason on turnover and why we needed to or did increase the guidance. Hopefully, it goes this way. I can only tell you for the month of January, party isn't over, meaning retailers are still doing quite well, also a solid plus in January, but it's 1 out of 12. Let's see where the business goes. We are well prepared. And I think what is important, and you saw it especially in the -- also in the presentation of my 2 colleagues, we moved NEPI Rockcastle a little bit up into a different league. We are very well prepared for further growth of NEPI Rockcastle with, let's say, the solid balance sheet and the solid financing that we have from one side, but also, let's say, the capabilities we have within the operational part and with the four pillars of growth that we are implementing into the company. So we look forward with a lot of confidence. And as long, let's say, these are the things where I'm always telling my colleagues, there are things we can control and things we can't control. Let's concentrate on what we can control. But at the same time, looking at macroeconomics, as long as the macroeconomic and geopolitical situation in Europe stays as it is at the moment. And you all see the turbulences that we are facing there in Europe with our dear friends from the United States, with not so close friends more in the East. So it is a very vibrant situation at the moment. As long as the situation stays within the parameters more or less as we are now, we believe we can deliver and maybe a little bit overdeliver of the this projections for 2025. So thank you for listening to us. And one more time, thank you explicitly for your participation, most of you, in our equity raise. One more time that gives us as management, a lot of support, and that's why we thank you for being with us and trusting us that NEPI Rockcastle will see a good future. With this, I think solid as a rock as we are, and we deliver. And I would say thank you for being with us. And I think it's now time for a bit of Q&A. So bombard us, if you like to, we are here to hear your questions. Maybe my colleagues can come up the stage.

Rudi. Mweishö from Standard Bank. Just wanted to get your breakdown for the contribution of energy investments and capital injections for FY '25 and '26, respectively. What's the expectation there?

So when it comes about the energy project, the -- we won't harvest the income now in 2025. We are going to put only the CapEx necessary, so that to start to harvest income in 2026. So the projection on the energy revenue stays flat at approximately EUR 9 million to EUR 10 million, as it was in 2024. And the projection on the amount that we are going to spend for -- out of the EUR 110 million is that half of it is going to be spent in 2025.

Well, maybe to add here just because we also need to talk a little bit about the future and we do it step-by-step, and we are not going let's say, very crazy on the math. But you need to understand if we roll this out further. Currently, we are producing only 6%, and we're making EUR 9 million. Can you imagine how much we make if it would be 100%. So this is a potential revenue stream for the company of around EUR 50 million in the future. I can't promise. I will not promised. All I'm saying is, gradually rolling it out, also, of course, every business has its risks and its chances, not only chances, also risk. But gradually rolling it out, I think we have a potential here that we should look after well. And that's why we also positioned it within the company more or less with its own P&L. So we make it very transparent. We want to have full transparency on how the business goes. And I think that has potential just maybe to add to your question.

And just two more. Who did you buy those two Polish assets from, just trying to figure out if it was maybe another listed entity probably just forgot?

No. Number one, Magnolia, we bought from Union Investment. You will know it's one of the big players in Europe when it comes to retail real estate to real estate in principle and worldwide, but this is a company that is -- comes from Germany. That was number one. And number two was a consortium of three owners, which we bought it from, one was ECE/Cura. And then we had on top of this to other sellers where I'm not 100% sure whether they would all like to be named. So I hope this helps enough.

Okay. Understood. And just lastly, can you give us the expected tax expense for FY '25 and '26. It seems like something that's topical right now.

Yes, I've noticed a few reports this morning stating that the tax is going to be the one, let's say, determining the growth in the DPS for next year, the taxation is going to be more or less let's say, equal with what we had this year, a 10% most probably an increase based on the preliminary calculation. We put in our financial statements that we are subject to the Pillar 2 directive, but based on the preliminary calculation, this won't impact us for 2025. So the taxation is responsible maybe for only 1 percentage point decrease in the DPS, nothing more than that.

Great set of results here. Safiriyu from Standard Bank. What are the main drags on growth for 2025 compared to 2024 in your view?

Yes. As said, drags growth on what? I mean we are showing a 5% growth operationally. So I think there is not really a drag on it. On the operational side, what is the drag on the distributable earnings per share, obviously, is that there are more shares out there in the market. And secondly, that, yes, our funding costs, our financing costs are going upwards, which is something, of course, as Eliza said, we can beat the European Central Bank. That's just a matter of fact.

Maybe a question for Rudi or Marek. We've seen quite a dramatic strengthening in the zloty, and that's a much larger part of your portfolio, particularly after the latest acquisitions. I know all the figures are in euros, but just what's your comment on the impact on a sort of asset level, portfolio level, particularly in Poland with zloty strength over the last couple of months.

Very good question. So it's actually very good news because our tenants rents are denominated in euro when pay in zloty, so actually, for them, it's effectively cheaper to run the operations. They import in dollars and in euro. So it's actually cheaper for them at the level of goods -- cost of goods to be sold, but at the same time, when we run our properties, the costs are zloty. We collect from tenants zloty, not euro for the operational part. So by all means, this only supports the efficiency of our tenants. And then that translates to, of course, potentially higher rentals. And yes, I think too strong or too weak any currency is not where we want to be. We want it to be stable, but yes, we are where we are. But what it tells you about actually what external investors think about Poland because that's actually the testimony of where they think the economy will grow. That's another conclusion to be made. So yes from that perspective, we see it very positively.

Well, when you look at it, [ Stephen, ] a bit more over a longer period of time, you see that all the jurisdictions we're operating in actually more or less the -- all of these currency are so much linked to the euro that usually, there is not a lot of volatility. Number one, over a longer period of time. we've seen now, as you said, in Poland, the strengthening of the zloty net, I would say, that is positive for us, but you need to see that all this volatility does not really affect us too much, why? Because all our contracts are nominated in euro, full stop. So that means these fluctuations on the rental income side are not really causing us a headache unless they would, of course, go ballistically to different levels. We see that at the same time, it's good that you mentioned it in Hungary. We all know that the Hungarian economy is struggling. We all see that Mr. Orbán has difficulties to attract additional foreign money into the country. The [ whoof ] been has devaluated. So that is also not necessarily good news. We see this. But so far, and you saw this with the collection rate, we have a collection rate of 99% on euros. So this does not so far has not, let's say, affected our business on a portfolio level. I hope this answers your question. Any further questions?

Just on your capital allocation, you still need to spend almost EUR 800 million. Can you talk to us about the sources of funding in light of your LTV limits being on 30%, 35%?

Yes. Out of the EUR 800 million pipeline, EUR 241 million has already been spent. So we are left with EUR 600 million. And this is going to be a combination once again of debt, unsecured debt bonds and additional equity in various forms. There are -- and we are also -- as Rüdiger mentioned, we are also looking at enhancing our portfolio and doing asset rotation if they make sense for us, and if they bring more value for the shareholders. So these are the three main sources of financing that we are going to use, and we are still committed to stay within the 35% self-imposed threshold. Shall we move to phone? Do we have any question?

Okay. Do we have somebody who send us an e-mail or ask my phone. Please, Anca.

Good morning, everyone. A question on cost of debt. First of all, a clarification for Eliza, if the guidance, let's say, that you mentioned for '25, on 3.1%, 3.2% is gross or net debt?

Is relative to 2.7%. So we are speaking 40 to 50% -- to 50 basis points enlargement of the cost of debt. So the delta is going to be 40 to 50 basis points.

Again, a question on the cost of debt. Please explain the timing and reason on increasing net cost of debt, given limited maturities in '25. Do you plan on refinancing in '26 and '27 that early.

On refinancing of '26, '27, this is a function of the market opportunities and how the interest rate is going to, let's say, unfold. Yes, we have -- we won't show on the balance sheet of EUR 500 million short-term debt at the end of 2025. So we are monitoring the market for the right move in this direction. So that's about the maturities in '26 and '27. And when it comes about the cost of debt, so just -- let's have a look at the bonds that we issued in October, which was with a coupon of 4.25% replacing a bond with a coupon of 1.75%. So it was great in the context, yet the Euribor is no longer negative. So the delta of 2.5% is something that is going to affect the distributable earnings in absolute terms and on a per share basis.

Can you give a bit more details on the terms achieved on the IFC loan?

This was something that -- this is a question that becomes recurrent. No, we cannot give terms and additional this. We factored in in the average cost of debt we are publishing quarterly.

A question for Marek. Is the -- can you give us more color on the indexation growth assumed for this year, meaning 2025?

Yes. Looking at the statistics that have been published, we should get somewhere around 2.5% to 3% depending on the country because the way we index varies from country to country, but in that range more or less.

And another one, I think for Rudi. Can you explain a bit about your ideas about potential risks and opportunities related to the ongoing war that we have next to our borders?

Yes, already waiting for this question. Well, again, of course, I'm definitely not smarter than all the politicians on the planet and military strategies and so forth. But in principle, I can say, let's go a little bit back when that happened. The biggest effect we had was the demographic effect in the 3 countries where we are bordering to Ukraine, where our portfolio bought us to Ukraine, right? So we had more than 4 million people moving from Ukraine into that region and 4 million makes a difference. Alone out of this, more than 3 million were in Poland. And some of them came with nothing and all needed to start. So of course, that had an impact, a positive impact, I have to say. So what is going to happen if there would be peace tomorrow. First of all, I think we would definitely all appreciate that, stop seeing people being threatened, killed. But on top of this, currently, most of those that came to the Western part. I think a lot of them, they will stay. There are predictions currently that more than maximum 40% will move back into their country immediately because why -- where do you go to, to your bombed cities. So first, you need to rebuild. And I think that a lot of families also will stay there have been enjoying actually, I think, their time. They have been well integrated. That's something totally different than what you see with migration may be happening from Syria or Afghanistan into Europe. This, let's say, population out of Ukraine had it much more easy to and be integrated into our societies, also with a lot of support of the states. A lot of them found jobs, are happy where they are. So I think that will be the most impact to see of how many actually would stay over time when it comes to that. So else-wise, this conflict did not have a direct impact on our operations. We only saw, as you remember, the increase of energy costs right after the -- sorry for that. So I don't see here that there will be a magnificant difference on that at the very moment.

Thank you, Rudi. Related to that, we have another question. On the -- on your views on the current political situation in Romania and with the future elections and the past elections and how it would affect our business or not...

Can you repeat, please?

If your view around the political situation that we have currently in Romania.

Okay, yes. Well, yes, we all saw this. I mean, yes, we are operating in developing markets. I mean we are not operating in markets which maybe are more structured, let's say, things like this can happen. So we had this elections of the President in Romania, and there was a lot of turbulences around it. And then the rating for the country was affected. And I think there is a lot of storm in a glass of water. I think that in principle, Romania shows a lot of stability, has been showing a lot of growth over the last year. It's amazing actually on how this country is moving upwards. And they have this, I would say, the typical pain of growing. And we have politically a situation, obviously, where not everybody is happy. That's also normal in a democracy, and there is still a rather young democracy. So I believe that in the long run or longer run, and we have the elections now coming up. We'll see what's going to happen. But I'm not worried in principle about Romania being a very stable partner to the European Union and to NATO. Everything else would be suicide mission. So I don't believe that, that has a direct impact. What we see in Romania and that what we also need to take into consideration is the state deficit. The state deficit is very high and the government -- whichever government, they need to close the gap, and that's where you see where -- what the country is struggling with. So these are the more, I think, the more important topic for a country like Romania than the latest political, let's say, turbulences. I don't take this -- maybe my Romanian colleagues, and I do understand that I don't take this more serious.

Thank you, Rudi, for the answer. Another one related to acquisitions. What's your view on the future acquisitions probably related to the fact that you bought 2 shopping centers last year? And what is the firepower that NEPI has for any future potential acquisitions?

Well, first of all, of course, the acquisitions are driven by opportunities. There is -- if you have no seller, there is nothing to buy. So -- and that's what we saw last year that there was really, really, really good projects coming to the market product. And fortunately, NEPI Rockcastle has the ability to go even for big tickets like there are not too many participants in the market that can down pay an asset with EUR 400 million without CP or financing, right? So that puts us in a really good position. Now looking ahead, we currently are not working closely on any additional product. We are observing the market. There is potential potentially as it's coming to the market, which -- where we would be very interested to acquire them in order to grow also on acquisition base. But at the same time, we're also looking at those assets which do not show as much growth potential, which are maybe more around the size of 20,000 square meters in our portfolio, where we say, "They are operating well, there's nothing wrong with them." But if we can let's say, reallocate the capital into maybe a stronger asset that shows us more growth, then we will not only look on the acquisition side, we will also look into the disposal side, both at the same time, because just selling off NOI without replacement doesn't make sense for you as shareholders.

A question for During the '24 results presentation, there was a comment regarding an issue with the Romanian tax authorities. What is the current status now?

The current status is ongoing, and we have in the financial statements a note addressing this. So we have several entities under tax controls. Some of the tax control team understood better the business and the consistent model across all the jurisdictions. And nevertheless, we decided to litigate for the 3 controls that have already been concluded. And we will continue to do the same for all the other ones that are coming, so that to support our position in establishing good practice across the group. And in yes, we want to defend our position into that. We have a theoretical exposure based on probabilities weighted on probabilities of EUR 12.5 million that we are going to update depending on the course of the tax authorities implementing their adjustment policy and denying some of the expenses for deductibility, and we will keep you posted. Currently, we go, we litigate, and we support our position. And Romania is the only country in which we have tax controls with this outcome, because in Poland and Hungary, a lot of things that were happening in 2023 and 2024, the controls are a normal course of business, and they have been closed with no findings identified. Romania, it's a less mature market. And it's still -- it takes time up until understanding a complex corporate model. So we go the legal way.

And we wouldn't do it this if we don't feel confident that we have very good chances to have not such a negative impact in that we will win this case.

Absolutely.

One question for Marek. What costs are you finding it more challenging to achieve close to 100% recovery on property-related costs, which cost we find more.

It's not a matter of the category of cost, it's rather -- is what a question of geographical differentiation of how the lease agreements are actually structured. And you -- I think you can see that detailed in our financials, how the recovery between countries vary, and if you look at more major developed countries like Poland, the recovery is less, simply as a function of much more retail, much more competitive market and applying more of those, which we don't like to have caps and to whatnot, limiting our recoverability. So it's not a matter of category, of course, it's a matter of leasing, but you would notice as well speaking of Poland and we have actually increased from 80% to 88%. I believe, on the recoverability. I may be confusing the numbers. What I want to say is that with each releasing cycle, we are trying to fix recoverability. So we focus on base centers, of course, but just as important on ability to transfer to our tenants, the increasing cost of operations of our shopping centers.

Thank you, Marek. Now we discuss about cost, another question, but now on the income. Based on leases concluded to date, what are you expecting in terms of uplift rebasing?

For the '25 I believe this question.

Yes.

Well, I think disclosing that would be a bit too early. We are only in February, and there is still a lot of work to do. You have seen that out of 16% reported in August, we are down to 9%. So still a long way to go. But if the market and the sales are as they have shown in January, I have strong -- we have strong reason to believe that 2.4 percentage which we achieved for '24 will be surpassed. But let's see. Let's see what future brings, fingers crossed for good sales of our tenants because this is the foundation for everything. But we have reasons to be optimistic after what we see in January and February.

One question for Eliza, on the admin costs. How do you see the growth in '25, if any, for the admin costs and what is driving the cost increase?

Okay. We don't provide separate guidance for the admin cost. We provide guidance for the overall distributable earnings. But what we are looking at is the EPRA cost ratio, which is below 10% and it's far below our peers in Europe, which has approximately 15% and up. So we will stay in this 10% relative to the gross rental income when it comes about gross administrative expenses, the owner cost, administrative expenses together with nonrecoverable expenses on the NOI side. So have this in mind that we are committed to stay in the 10% range.

And we offer consultancy to our peers, of course.

A question on segment reporting, maybe for Eliza, but with the help the other two gentlemen. Can you please outline why profit before tax and other was down in Romania, Hungary, Slovakia, Croatia despite positive NOI growth?

Because we have also bigger taxation. We need to have a look at the profit before tax, I do think is down, but let us have a look.

Versus '23?

Yes, yes, yes. It's -- we need to have a look on that.

Okay. And a question on the property valuation in Hungary?

EUR 27 million down. Yes. This comes first as a result of the valuation yield, which widened relative to the entire portfolio, as Hungary has seen as a much riskier market than it has been in 2023. That's one of the reasons, and Rudi could elaborated a bit on the matter. And the second reason is that we have 2 properties over there, Mammut and Arena Mall. And in Arena Mall, we are conducting a significant refurbishment and the valuers cannot put the right value on it. So these are the main reasons triggering the devaluation.

One question for Rüdiger. Can you indicate how much the Plovdiv development will cost and what yield do you expect on completion?

Yes. We are around EUR 175 million that we would spend on the asset out of which, of course, we have already secured the plot. I said we are close. We hope to achieve to get the building permit soon in order to be able to start. The yields, we don't -- we have never or we don't talk about yields on development projects. The reason here simply is a matter of competition. We didn't make only good experiences in the past mentioning this. But obviously, as a shareholder, I can just tell you that developments and especially greenfield developments, obviously need to have a better yielding than if you would buy a standing asset, right, because you take a development risk. So we're getting here rather closer to double digit than if we would buy a standing asset as we did now in Poland with these two assets. So that's taken care of. Otherwise, the Investment Committee, and I see some of Board members sitting here, they wouldn't approve the investment.

No more questions. We only have one comment from [ Mr. Laurence Dany ] saying that he's very proud of his father.

That was nice.

So yes, I have 4 kids, and I think they are all in front of the screen, and then later on they will give me a lot of -- but thank you, [ Laurence. ] Thank you for your comment highly welcome. All right. Well, I think we come to the end of the session, are we? So one more time for this. I would like to stand up one more time, ladies and gentlemen. Thank you for your trust so far. We hope we come back with good news in 6 months' time. And we are working on it, and it was a pleasure to have you here all in the room and to have you maybe on your screens, including my 4 kids. And pleasure to -- that we have been here. So -- and I hope we see each other later on in one-to-one talks where you can bombard us even more. Okay. Thank you.

Thank you.

Thank you.