Redefine Properties Limited (RDF) Earnings Call Transcript & Summary

Good morning, everybody. Thank you for joining us this morning. My name is Leon Kok, and I'm the CFO of Redefine Properties. I'm standing in for Andrew Konig, our CEO, this morning. He, unfortunately, had to attend a personal matter. The purpose of our engagement this morning is to give you an update and overview of our Polish logistics portfolio. Joining me this morning, all the way from Amsterdam is Pieter Prinsloo, the CEO of Redefine Europe, and he will deal with the items as indicated in the agenda there. [Operator Instructions] Just be reminded that Redefine Properties is currently in a closed period until the release of our year-end results, which is scheduled for November 30. So we will really appreciate it if you can keep the questions to the content of the presentation today. The European Logistics Investment company was incorporated in the Netherlands and is owned by Redefine Europe and Madison International Realty at 46.5% each, and Griffin Partners, the balance, at 7%. ELI consists of a Polish-focused logistics platform of approximately 527,000 square meters of standing assets, 145,000 square meters of assets under development and a substantial development pipeline of roughly 1 million square meters. ELI was set up with the acquisition of a portfolio of 9 operating assets, which is located throughout Poland in 2018. ELI has firsthand access to acquire and develop prime logistics projects via write-at-first look or write-at-first refusal agreement on all projects of Panattoni in Poland. Since the initial acquisition in 2018, ELI has already developed 8 assets with another 5 under construction and 6 properties currently under due diligence for future developments. Panattoni is the developer and our partners Griffin Real Estate is the asset and property manager. ELI concluded the sale of its assets in Strykow earlier this year for EUR 51.8 million at a net investment yield of 6.1%. This compares very favorably to the prevailing market yields and certainly is an indication of the strong appetite from investors for Polish logistics assets. With the original acquisition in 2018 by Redefine Europe, which is a Netherlands-based wholly owned subsidiary of Redefine Properties, it held 95%, and Griffin Partners held the balance of 5%. In December 2019, Redefine Europe agreed to sell 46.5% and 2% of its shares in ELI to Madison, Realty and Griffin, respectively. This transaction was concluded in March 2020. In terms of the agreements, Madison and Griffin agreed to a total equity commitment of EUR 150 million and EUR 13.4 million, respectively, over the next 5 years. Net after the settlement of the purchase price and receipts of the future earn-out for the assets under construction, Madison's equity commitment is EUR 66.3 million and Griffin's EUR 9.8 million. Redefine agreed to match the equity commitment of Madison and will reinvest EUR 66.3 million into the platform, which will be funded from the proceeds of the original disposal of the 48.5% in ELI. The objective of ELI is clear, it's for us to grow it into a market-leading logistics portfolio, capitalizing on the strong economic and real estate fundamentals in the Polish logistics sector. We will achieve this to expand the new development opportunities to provide scale. The objective is to create a platform of roughly EUR 1 billion in gross asset value, which equates to over 2 million square meters in size over the next 5 to 7 years. We will seek to reap the benefits from operating in a liquid real estate market with high investor appeal and producing hard currency free cash flow. We will look to leverage off the joint venture arrangements with our investment in local partners with access to capital, an extensive development pipeline and knowledge of the Polish real estate market. We will also look to actively manage the portfolio by securing long-term leases with high-quality tenants, maintaining low operational expenses, while optimizing capital structure as well as ensuring transparency and regulatory compliance. I will now hand over to Pieter in Amsterdam to give us an overview of the Polish market and a more in-depth look at the portfolio itself. Thank you, Pieter.

Good morning, everyone, and thank you for the introduction, Leon. It gives me great pleasure to be speaking to you today. I think most of you are fully aware of all the positive factors still driving the Polish economy. I think this has been well reported recently by many of the listed funds that invest in Poland. And I want to focus on the logistics market and what's driving its good performance. Poland is becoming a significant logistic hub for international players and has a competitive advantage, especially when it comes to lower operating costs and lower labor costs when compared to its Western peers. Another trend we're seeing currently is an increase in the demand for last-mile facilities supported by growth in e-commerce and e-groceries. And you will see later in our presentation a number of the future developments are focused in providing these facilities. Furthermore, there's a demand to provide for smaller units. And a good example is our recently completed Warsaw development. We are -- we cater for restarts of units. The growth is further supported by the kind of global consolidation in supply chains and also a strong growth in local manufacturing. We're starting to hear more and more about automation being introduced into logistics. But I think in Poland, it's still fairly early days, even though I see that the government has provided some funding to support the sector. One of the major driving forces in Poland is the improvement of its road infrastructure, where there is currently a lot of work being done. What we further see is also the entry from European and U.S. companies wanting to have a facilities closer to their market base or their customer base. Many of the new tenants we're signing now are international companies. A good example is the 2 new [indiscernible] developments we're currently doing, which is both tenanted to U.S. companies. If you look at the map here on the right-hand side, you'll see the logistics hubs as they are spread across Poland. The large circles includes the size of the hubs. And you can see there's about 4 or 5 major hubs. And the smallest circles is new emerging nodes, where there's more labor available and lower operating costs as well, and these starting now to come to the fore. We're trying to get a balanced portfolio. We have good exposure to all the major hubs, but we're also looking at the new emerging nodes. We can move on to the next slide. It's now the investment activity. We'll see there's been high transaction activity so far this year, and new records has been set, despite the outbreak of COVID-19. The high field activity even continued into the third quarter of this year. We've had where it was EUR 1.2 million as of June, now in end of September, it stands at EUR 1.9 billion. Most transactions are corporate and portfolio deals, and we're seeing numerous international investors entering the market, mainly from Asia, the U.S. and the U.K. As Leon explained earlier, the transaction we did with Madison is a good example as Madison is a U.S. company. Average yields now stand at around 6.25% for quality assets. Long lease assets are trading at around 5% and also inner city projects at 5.5%. As Leon mentioned also earlier in the presentation, the one transaction we did earlier this year was to a U.K. REIT and the yield there was at 6.1%. There might be a potential of shortage of industrial space coming, which could lead to further yield compressions in the market. I'll now go on to the next slide, leasing activity. The total size of the industrial stock in Poland is almost at 20 million square meters spread over 400 industrial parks, and that makes Poland today the seventh largest European logistics market. Most of the construction and leasing activity is focused around the major hubs, as I explained in the earlier slides. Since the start of COVID, developers have adopted a more cautious approach, and we're seeing a reduction in speculative developments compared to the previous year. In June, the average vacancy was approximately 7.8%. This is a slight increase from the year before. However, rental levels were mostly unchanged year-on-year. If I can move then to the next slide. Yes, I just want to explain a little bit about how we structure our leases for logistics. And I pointed out here some key terms. First of all, rentals are paid in euros and not in the local Polish currency. Average rentals. You can see ranges there from around EUR 3 to EUR 5 per square meter, dependent on the region. And on the right-hand side, you can see the table of the rentals that's been achieved in different regions. Lease periods. Average lease terms are between 5 to 10 years. For our smaller industrial boxes, we get -- we're looking at 3 years. While the built-to-suit leases are longer term, and they're between 10 to 15 years. Rental installations are normally linked to European inflation, which is currently, I think, around about the 1%, 1.5%. But sometimes, we build in a floor of not less than 1% into our leases. What's quite important is the key incentives that's been given to tenants, and that can be as high as 20% to 30% of contract value. The 2 main incentives are -- the key is the cash incentive that will cover some of the fit out costs, and that's normally paid up front. And it's more or less about 3 months of the lease value. The entry periods is another incentive. That's normally between 1 and 2 months for every year of the lease. You can either pay it in the beginning of the lease or we can spread it over the lease term. We also do sometimes leases with no incentives where the tenants prefer a better rental and -- which suit their requirements. Costs. Some of the highly specified fit out costs, we sometimes contribute to those. And that will be amortized over a lease term, and that's normally for longer leases. We can move on to the next slide. Impact of COVID so far, just an overview. Certainly, logistics proved to be more resilient in Poland during COVID compared to other real estate asset classes. Our leasing even benefited from a stronger demand from e-commerce. And we were able to secure a number of short-term leases to help the tenants during this period. The construction work continued, getting the lockdown, and we were able to complete many of our developments. With the reduction in speculative developments, we are also benefiting from lower construction costs for our new projects. There was no forced closure from government at any of our premises. But we did see some of the manufacturing plants closed for a few weeks during the lockdown period. The negative economic impact on Europe that result in request for rent relief and rent reduction in general, but we did not have any rent reductions in our portfolio. For a small percentage of tenants, rent deferent were given, and that was spread over a 12-month period. We further assisted our tenants by providing lease incentives, mainly upfront, with the extension of our leases, and this was for about 7% by GLA order portfolio. Since June, we have not received any further requests. Most importantly, our cash flow did not suffer and our rent collection to date is almost at 100%. However, you might have picked up in the news over the last couple of weeks, the number of infections across Europe has increased again, and that includes Poland as well. So we are seeing some restrictions being introduced in the various countries. So there still is uncertainty how that is going to affect the operations. But if we were to see the same pattern playing out as earlier this year, we hope not to see any significant impact on our business. I'm going to hand back now to South Africa, but I want to play a short video on our portfolio of assets. And thereafter, I will return to the presentation. [Presentation]

Okay. Thank you for the video. I'm going to continue the presentation now just to look at some of the property information on our portfolio. So I'm now on the portfolio overview slide. Number of completed properties, currently we have 17. Number of our development stands at 8. Total GLA is 527,000 square meters. Our current vacancy versus as at August 31 stands at 9.4%. We had a very active 2020. And recently, we completed a number of our projects where the vacancy in the new projects in the last 2 to 3 months is still a bit higher. It's around 14%. If you look at our year-on-year outstanding portfolio, that vacancy is around 5.5%. Asset value is at EUR 365 million. And then our weighted average unexpired lease term, it's quite nice at 4.8 years. I'll now go to the breakdown of the standing portfolio slide. Quite comprehensive information on the sheet. I'm not going to go all of it -- through all of it, just the valuations, as I mentioned, at EUR 365 million in the portfolio. We've revalued this at end of August. And the valuations have been very stable over the last year with no significant change. As I said, we had quite an active 2020 where you can see in color. We did 2 developments in 2019. And this year, we completed another 6 developments. If you look at the right-hand side, you can look at the yield range for the portfolio. The yield averages stands at 6.8%, which we still view as relatively conservative when it compared to the current market yields. We'll now go on to the development slide. These developments are still under construction. We can see here that the 2 BTS developments that I mentioned earlier. That's a 50% joint venture with Panattoni. The value I've shown here, however, is the gross values. And then we've busy with a few of our second phases at our properties, where we've completed the first phases successfully. And I think what's quite important here is all these developments we're currently undertaking are 100% pre-let. You can also see the yields there on the right-hand side that the average yield is about 7.6%. These developments, in terms of completion, Bielsko and Ruda should be completed by December this year, while the balance of the portfolio will be completed during the first 6 months of 2021. We also have some bulk available in our portfolio. At Lublin, we're currently doing our second phase. And net of that, we still got about 49,000 square meters available. Opole, we've done the first phase successfully now, and we've still got about 15,000 left. Czeladz is land we bought earlier this year. It's well-located land in a quite a substantial industrial hub in upper Silesia. And we're looking to do a start of developments in 2021. Gdansk, we also have done our first development there. And as soon as we get the occupancy to close to 100%, we'll look at further developments there. If we move to projects under consideration, it's about 6 projects we're currently looking at. You can see on the type of tenant what I referred to earlier in the presentation, there's a lot of focus on inner city logistics development. The [ Wroclaw 1 ] development there mentioned at the top. That transaction has actually been approved last week, and we're looking to start with construction probably by end of this year or early next year. Then just a bit of information on our bank funding that we get in Poland. Most of our bank funding or all our bank funding is provided either by Polish or European banks. You can see our total assets there, which include current developments and land holdings is at EUR 416 million. Our total bank debt is around close to EUR 204 million. So that gives us a loan to value before cash of 49%. Net after cash, it's around -- it's approximately 46%. You can see a very nice weighted average term of debt there for 5 years. Average interest rate is quite low at 2.1%. And then we've had -- we've got 65% of our interest hedged at this point in time. We still have a number of development loans, which we'll need to convert into investment loans and then we'll look at hedging those as well. You can see in terms of the bank covenants requirements that we are still well within those parameters. But that has recently become a bit more difficult to see -- to secure bank funding. But logistics is one of the asset classes that banks are still willing to fund. Interest rates has increased, however, by approximately 50 to 60 basis points. If we move on to the next slide that is industrial GLA by type. Just a bit of information. You can see we're well spread across 4 major types there for retailers, third-party logistics production and distribution. We can then move on to the next slide of our top 10 tenants there. The biggest tenant there, Kaufland, you will notice that its lease period is quite short at 1.5 years. We are already well advanced in renewing this lease, and it should be completed within the next month. If you look further down that list at another tenant Terg [indiscernible] that was actually one of the lettings we did during COVID. And you can see there's a fairly short list in there as well, and we were able to provide them with the space they need. And we're looking at converting that now to a long-term lease as well, if possible. Then just lastly, from my side, if you look at the lease expiry profile, as I said before, is quite well spread over the next couple of years. Very little by way of lease expires in August 2021, but we're already working on those. Then you'll see for 2022, that's a bit higher at 18%, half of that space is made up by Kaufland. And as I mentioned in the previous slide, we're well advanced in renewing that lease. Excluding that, the rest is spread over the portfolio. So I think that's from my side in terms of presentation. I will now hand back to Leon to conclude the presentation. Thank you.

Thank you, Pieter. In terms of our immediate priorities, as obviously, the focus is to maintain the occupancy, fill those vacancies that Pieter spoke about, retain our tenants and focus on our cash flow by collecting all rental payments. Then is to complete the assets currently under construction to -- for Redefine to receive that earn-out fee. And then to work hard at securing pre-letting on our land holdings to kick start that future developments. And then to further explore opportunities to grow the platform through the new development opportunities. We are very excited about the future outlook of ELI because we've got access to a substantial development pipeline in prime markets and locations. We also believe there's opportunity to refinance the developments on completion at better interest rates as and when the lending markets improve. The strong investor appetite for logistics assets in Poland creates a highly liquid market, which, in our view, bodes well for the future. We have a fantastic opportunity here to create a large and diversified portfolio with a good mix between build to spec, inner city, multi-tenanted and single-tenanted developments in prime nodes. And with that, we conclude the presentation. Thank you very much. We will now take any questions if there are. Let me see if any have come through.

Pieter, I'm going to lean on you. So let's deal with the first one from Anton de Goede at Coronation. Can you please comment on supply and land availability, which seems less constrained than Western Europe?

Yes, I think because there's less developed areas, so there are still land available for new logistics developments. However, a lot of these land came from previously farmland. That's been rezoned. The government has actually now stopped that process of converting farmland into industrial land as they want to protect their farms. So I think in the future, on the supply side, we'll be a bit more restricted, if I can put it like that.

Next question is from Isaac from IDP Properties. What percentage is ELI redefined total asset base? And what's the medium to long-term goal? Currently, the ELI portfolio is in our books, just over [ EUR 1 billion ]. So it's relatively small at this stage, particularly given the recent transaction of us selling down to Madison and Griffin. So it's approximately between 3% to 4%. Given the expansion in the pipeline, we can easily double that in the foreseeable future. So in combination with our investments in EPP, our Polish exposure itself will roughly be around 15% over the short to medium term. The next question is from Louis Kruger from 36ONE Asset Management. And the question is, Pieter, and I think this is for you again. Vacancies seems stubborn. Do you have a problem asset? Or what is preventing it from coming down? With close to 25% of leases up for renewal in the next 18 months, what is the expectation for reversions?

Thank you, Leon. Yes. I think what happens is that many of the developments we did recently this year had still quite a percentage of vacancy in them. We normally kick start a development when it's 50%, 60% let, maybe even less, sometimes 40% let, and then we try to lease the space during that development period. So by completion, it could be that we -- around 10%, 15% still vacant. But that's normally work itself out of the system within the next 6 months. The -- when we achieve high vacancy. I think the vacancy will improve going forward in the next couple -- well, for the next financial year because all the developments we're doing now is 100% pre-let. So once that's included in the portfolio, that should reduce the average vacancy in the portfolio. I think in terms of renewals, as I said, we are already working on the larger renewals to get it being -- to beat those down and retain those tenants. I think with the smaller tenants, there is quite a bit of a turnover of tenants happening because many of the tenants are growing quite rapidly and they need more space. So if we can accommodate them, obviously, in our portfolio, we would like to retain them. But sometimes, they need to move because of a growth requirements.

Thank you, Pieter. The next question is from Londiwe Buthelezi from Fin24. And the question is, given what you've done with ELI, are there plans to try and replicate the strategy in South Africa? What is your assessment of the potential to expand into logistics in South Africa? Now Londiwe, we currently do have a well-diversified and attractive local industrial portfolio. And yes, we would agree with the statements that certainly, logistics is very appealing, and we would continue to pursue opportunities to expand within that node within the industrial sector. But we wouldn't necessarily look to introduce another equity partner within our South African business. The next question is from Monsara at [indiscernible]. Pieter, I think it's for you again. Please comment on expected like-on-like rental performance over the last 2 years? And what do you expect going forward?

If you mean rental performance in terms of rental growth, in the last 2 years, rentals have been quite stable. We haven't seen any significant growth in rental. I think it's because of the continuous pipeline of new developments coming on to the market that we're able to meet the demand. But it also kind of puts a cap on potential rental growth. I think going forward, for the next 2 years, it's difficult to tell what the market is -- how the market is going to behave in terms of the impact of COVID. But I think if markets were to normalize next year, and to the extent that there has been a pullback on speculative developments, we could see some rental growth coming through.

Thank you, Pieter. Then from Alistair at Business Day. Will your Central Eastern European focus beyond Poland? Or will you go to any other countries and possibly buy assets from people like Atterbury Europe? Alistair, we believe that within Poland, there's sufficient opportunity for us. And given capital constraints, for now, our focus will be exclusively on Poland in terms of our European foray. Then the next question is from Peter Clark at Ninety One. What is the long-term end game? Is there an exit strategy? Or is this a long-term hold? Now Peter, in the current climate, it's very difficult to speak about long term. And I think all our horizons in terms of -- time horizons have shortened, given the uncertainty we currently face. So as we stand now, we certainly do believe that this is a long-term hold. It is a very attractive opportunity for us from an expansion point of view as well as diversification within Poland. So we would certainly like to pursue this in the long term and make sure that we benefit from the substantial pipeline and all those other good factors that we spoke about earlier. The next question is from Paulo at Clearance Capital. Pieter, and I think there's another one for you. Could you talk to the reversion potential on the Kaufland lease that is being negotiated?

Yes, the Kaufland lease currently is -- I think it's at basically the same rental as the end lease or the in rental. So there's no negative rent reversion on that lease.

Thank you. Then the next question -- sorry, you got a surname -- yes, from Baker. And it's from Anchor Capital. The question is, the proceeds from the sale, have they remained in country, given their future commitment to expansion, will they temporarily reduce group LTV? The answer is quite simple that the bulk of that was repatriated back to us and will temporarily reduce LTV given the differential, obviously, in funding costs. But an element of that was retained in country. Then from Ross Krige at JPMorgan. Will all developments going forward only be done if these are 100% pre-let and then -- sorry, I didn't catch the answer on the likelihood of reversions on the Kaufland and other renewals. Pieter?

In terms of the renewals and Kaufland, no, as I said, we're maintaining the same rental that we've got with them. As I said, there is no significant increase or decrease in the rent. I think no, we won't -- we're not always that fortunate to achieve 100% pre-let on new developments. And it really depends also in the market that we operate in the bigger major logistic hubs, where we know there's a consistent demand for space. As I said there, we normally can start a development when we -- between 40% and 50% pre-let. And then through the development phase, the timing thereof, we work towards securing tenants for the balance of this space.

Thank you. Then Bandy from Standard Bank. And Pieter, I think it's again for you. Most of your assets are pretty large, big box logistics. How do you see relative yield dynamic playing out relative to last mile? Also, can you comment again on land supply versus demand for logistics in Poland?

Yes. In terms -- yes, it is -- as I said, up to now, many of the transactions we did is for larger tenants because that's where the demand is, especially with regards to tenants that's in the manufacturing sector. They normally require quite large industrial space. They tend to stay longer in those as well. With regards to last mile facilities, as I said, that's something that's coming more across our board. Those normally attract higher rentals because they're closer to the inner cities of the different nodes. They're normally tenanted by smaller tenants. So we do get a little bit of a better rental there. So we're not necessarily more expensive to build, but maybe the land cost is more expensive. So that kind of balances out in terms of the yield we achieve on those assets or those developments. Yes. As I said, in terms of land availability, I think in future, you're going to look at either using the existing stock that, as already previously been zoned and ready for development, which I think there's still quite a good demand and a good supply for it. I think converting, as I said previously, farmland or residential and the logistics, it's a problem because the government is putting a cap on that. Inner city developments could possibly be brownfield development. That means all the older buildings, underdeveloped sites that will be demolished and cleared and then redeveloped into modern facilities. And for instance, there, we're looking at -- 2 on our list, potential developments, 1 in Kraków and 1 in Warsaw as those kinds of developments.

Thank you, Pieter. And then just a follow-up question from Monsara at [indiscernible]. And it refers back to their previous question around rental performance historically. So Pieter, I'm not sure if you can answer this one to say just maybe please be more specific on the numbers, what has the growth been, if at all? So I think maybe just talk to escalations within rentals over the last 2 years or so.

Yes. I think the rental levels, as I said, will follow inflation. So it normally grows 1% or 2%. I think generally, the market rentals over the last 2 years have been flat, as you -- as I gave you that range before between EUR 3 and EUR 5, depending on the size, the location and the type of tenant we're dealing with. I think what has happened coming through now with COVID is tenants are pushing a little bit harder for better incentives. So landlords, developers are protecting their rental levels right per square meter, but they might be a bit more forgiving on lease periods, rent-free periods and cash incentives upfront.

Thanks, Pieter. Then independent question. ELI's market share relative to the entire industrial property market.

At the moment, we're still fairly small. I mean we -- if you include our new developments, we're around the 600,000 square meters compared to the market of 20,000 -- 20 million. So it's a very small percentage. We hope to grow it one day, as we said, maybe 1 million or 2 million square meters, and then we'll have between 3% and 5% of the market. But currently, we're still very small.

Thank you. Ridwaan at Nedbank. Can you unpack the earn-out fee, which developments remain and the amount relative to expectations? So I can just maybe answer the one, but on the earn-out fee, it's about EUR 18.6 million, which is still to be earned over the next 24 months or so. In terms of the specific developments, Pieter, maybe you can just mention which those are?

Yes. So what is due now within the next month is a fee on one of the Warsaw phases. Then during the course of next year, we're looking to get another fee on the second phase of Warsaw and the second phase of Bielsko. And then the last remaining fee will be the fee on the Lublin developments. We've already received 1 fee earlier this year on the Phase I Bielsko development.

Thank you. Then from [ Jarrod Houston ] at All Weather. The question is, are there any put options with the equity investors introduced in ELI? I can confirm there are no put options to any of the equity investors introduced into ELI. Another one from Paulo at Clearance Capital. How long is the arrangements or agreement with Panattoni regarding the right of first look? Does it have an expiry date? Pieter?

Yes. Currently, the initial arrangement is for 5 years. I think we basically maybe used up 1 or 2 years of that. So that's initial arrangement. And then obviously, if the arrangement continues to benefit both parties, we can look at an extension of that arrangement.

Quite right. Another question from Anton at Coronation. How do key incentives differ from normal cash incentives or tenant installations? Pieter?

Okay. So the cash incentive is actually cash contribution that you pay [indiscernible] a tenant that is utilized -- utilize our cash saving with regards to these tenant installations. You split out costs, maybe to fit out these offices and put some of his own internal installations in place. That's cash incentives. Then second incentive we normally work on is the rental -- rent-free periods, as I explained before. So that means for certain periods of the lease, they don't pay a rental. Sometimes they take these upfront or these days, we try to spread it over the lease term to even out the cash flow. And then as I say, with the large developments where we've got BTSs, sometimes there's a specific infrastructure requirement like cross-stocking or additional parking facilities or some kind of special arrangement with the tenant that we will contribute towards those improvements and then we amortize that cost over the lease term.

Thank you. Then a question from Anne Marie, Pieter, again for you, from Ninety One. So to confirm, do the current developments need to draw down on any of the equity commitments from Madison or Redefine? Were those commitments exclusively for future projects?

In terms of, as you said, we've got about just over EUR 18 million available in terms of the earnout. Our committed projects for next year is about EUR 14 million, I think yes, roughly EUR 14 million. So in theory, the one should be enough to pay the other one. There are obviously some timing differences between when we get the earn-out fee when those assets are completed and they qualify for earn-out. And when we have to promote new capital for new projects. So to the extent that there's a timing difference, we always -- we need to fund it, but then as soon as we get the earn-out fee, we use that again to rebuy back to Redefine.

Thank you. So with that, ladies and gentlemen, thank you very much for attending with us. Pieter, thank you for your in-depth analysis there from Amsterdam. And we look forward to engage with all of you, again, on November 30 when we release our year-end results. Thank you for attending and all the best. Keep safe.

Thank you.