Swiss Prime Site AG (SPSN) Earnings Call Transcript & Summary

[Interpreted] Good morning here at the Prime Tower or online, anywhere -- from anywhere in Switzerland or the rest of the world. Warm welcome to our media press conference for the first 6 months. So what message will you take with you today? Well, it won't just be a message for those who are here today, but also the Aperol. But what am I trying to say? There are 2 things that we will take with you. First of all, that we have been able to increase the FFO I in an environment in the context of closing Jelmoli and also making several acquisitions that we've been able to compensate for. So that's the main message and FFO I is the cash figure that ultimately is responsible for the dividend. And the second piece of information is that the market trusts this company. We have been able to raise CHF 840 million new fresh capital, [ CHF 540 million ] was asset and the capital increase. And we would like to thank everyone for this, and this is the start of this conference. And this kind of confidence is not a matter of course. So key issue -- topics of the first 6 months of this year, I'm not going to read out everything, but let's start with the strategy. You all know the strategy is clear. Closure of Jelmoli at the end of February, which means that the 2 pillars, direct real estate and commercial real estate. And the second pillar is asset management. Some secondary locations are also part of the portfolio, but it's primarily residential asset management, and that makes us unique, particularly after the integration of Fundamenta. So we're not just talking about commercial real estate, but also about residential real estate. And so what are the highlights of our portfolio? Despite the sales last year and some of them were essential, we grew to CHF 13.3 billion, revaluations of CHF 102 million, and those are mainly due to new rentals. The like-for-like growth was 2.2%. So that's a very attractive like-for-like growth. We were able to purchase 2 properties. The first one in Geneva was in the first 6 months. The one in Lausanne was actually communicated last week, not quite in the first half of the year. But nevertheless, these are very important first acquisitions from the capital increase. We also sold some properties to the tune of CHF 70 million, 6 noncore properties as we call them. And those were achieved 4.1% over fair value. And this shows that we have an excellent portfolio, but it also shows that we are evaluating very well. So our evaluation seem to be correct, proven by the fact that we are able to sell above fair value. The second slide here now concerns the operative -- operational performance. The like-for-like growth was 2.2%, as I mentioned, and the major part due to new rental contracts. And on the whole, we lost a little in rental income, CHF 17 million to be precise, temporarily due to the refurbishments, not just of Jelmoli, but also Fraumünsterpost and Talacker so that rental income will return. And I also saw that some of you said that the rental income is not quite as expected. And well, actually, we have been announcing this for 2 years that this would happen with the closure of the Jelmoli, but everyone was still surprised. Anyway, we were able to largely compensate for this. And you can see where, which is with the increase in asset management by 41%. The vacancy rate is about 4.0%. And we expect that we will have a vacancy rate of 3.8% by the end of the year. And let me say a few words about this vacancy rate, which is maybe not so obvious. We increased -- or we improved the vacancy rate like-for-like. And this made a contribution to these positive revaluations, better rental contracts and lower costs, but the reason why it is increasing a little is because the new projects such as Alto Pont-Rouge and JED have been added to the portfolio. I have tried to explain this several times. These new projects are usually not fully rented out at the time that they are added to the portfolio. So maybe they're rented out at 80%. And this automatically leads to a higher vacancy rate compared with a company that does not do project development. This explains why the vacancy rate has increased but will go down again towards the end of the year, but the like-for-like vacancy rate has decreased, and that's the message you need to take with you. We've been able to sign new attractive rental contracts and fill the gap. So all of this led to a stable EBITDA, largely at the level of the previous year. The capital increase of CHF 300 million already was aimed at a pipeline. So 50% was invested in acquisitions in Geneva and Lausanne, and we also have further acquisitions in the pipeline. And we were able to -- the net yield is 4% in the 2 investments. The LTV was at 38.4%. The end of 2024, it was 38.3%. But -- and actually at the mid of 2024, it was above 39%. And this level is now despite the payout of the dividend in the first half year. This always has an effect on the LTV in the first 6 months of the year. And the most important figure is the increase of the FFO I by 3.4% in the first 6 months of this year. I'm not going to discuss all of the figures here, just the ones that I haven't discussed yet. One is the fees, which means the asset management fees, CHF 38 million. This is an increase of almost 41% compared to last year. And this is also an increase of net asset value by 2% to CHF 102 million round it up. So this first 6 months has been very successful. This doesn't always look like that on the surface, but there's a lot of work behind it in order to compensate the lack in rental income due to the new projects, and we've been able to add projects to the portfolio. We reduced vacancies, we reduced costs and we did excellent financing activities, and that has led to this excellent result. Now a couple of words on the market transactions. Let me start on the left, transactions. The transaction market is doing well compared to a year ago. We are seeing a lot of transactions just for our portfolio. Just looking at Swiss Prime side, we have CHF 600 million transactions in asset management in the first 6 months. And we bought properties for the number of CHF 200 million. That's -- and that was transactions worth CHF 870 million. And so there is a transaction market that is very healthy and that is going well. And we're not the only ones. There are a lot of international investors that have done capital increases, and that capital needs to be invested now, of course. And what else are we seeing? Well, sales and leaseback transactions, we've done 2. The second one was a classical sale and leaseback on the property in Lausanne. The first was semi-classical because we didn't lease in the same location, but in a different building, but the idea behind it was the same. So the transaction market is working well. Now let's talk about rental income. The demand remains high, and we can see that here and then when we do -- when we are able to achieve rental contracts above market rates, then this shows that we have excellent locations and that the demand for those locations remains strong. And so what are the effects of the funds in the U.S.? Of course, we looked at this with respect to our portfolio. Our tenants are service providers. So we do not rent out to exporting companies, who are affected by the tariffs temporarily. Of course, we're hoping for this to change again. But our tenants are service providers who are not affected immediately. Of course, whether this will have an effect in the years to come, I can't tell, obviously. But at the moment, things are doing -- look good, and we are able to receive the leases on time. Last point, valuations. I already mentioned revaluations based on better rental income, lower like-for-like vacancy rates and a reduction of property costs. And so the question is of whether we can look at both commercial and residential properties, and there was a gap here. But if you now look at the discount rates for commercial real estate, there's hardly any change, but there was change in residential real estate with a clear reduction of discount rates, both nominal and real discount rates with significant increased valuations and the effects that it has on the asset management. And now it's over to the figures from Marcel.

[Interpreted] Thank you very much, René, and a cordial welcome to you to -- on this not very sunny day at Prime Tower. I'll take about 10 minutes to lift the mood with our figures, and beginning with income. I'm not going to begin at the top, but at the bottom of this table. From my point of view, this is the relevant figure for you to take home today. I'm talking about the adjusted operating income, adjusted for Jelmoli, makes sense in this first half year. Jelmoli closed its operations at the end of February. So it's not surprising that we have less income there. And this is the relevant figure. As far as I'm concerned, we have just under 2% more operating income in the first half year. attributable to asset management and our rental income, beginning with rental income, as René said, we had very strong underlying like-for-like growth of 2.2%, and I'll be giving you more detail about this later on. In absolute terms, we're slightly below that, 2.8% -- minus 2.8%, about 2/3 of the loss of rental income was compensated for. I think this is a strong performance, and I'll be giving more details about this later on. For asset management, it's been mentioned briefly, very strong growth by 41% -- just under 41% due to 3 components. On the one hand, higher average AUMs as we demonstrated, went up to CHF 13.7 billion at the end of the first half year. Secondly, higher capital increases and the ensuing transactions. Capital increases on the basis for new money to be invested in properties. This almost doubled or more or less doubled compared to the previous year. And the third component is fundamental, the acquisition we made last April -- April of last year. Of course, we have the full half year included here compared to the previous year, where it was in -- for only 3 months. So much for income. Let me move on to the other side, expenses. And again, I propose to begin at the bottom. Again, here, significant components in absolute terms, of course, are due to the closure of Jelmoli's operations at the end of February and the personnel costs and other costs is considerably lower than the previous years. And despite the higher operating income that we achieved, as outlined, operating expenses were reduced. And in my mind, this is really a strong figure because we had Fundamenta with about 60 people that we took over and consolidated for the entire half year, not only for 4 months. And yet, we managed to reduce operating expenses because we have about CHF 4 million of synergies in asset management or in the group from the sale of -- from the acquisition of Fundamenta and thus reduce the entire cost ratio. Second component I would like to highlight is the top line, real estate costs, which was reduced significantly by around 8%, which is due to 2 reasons. On the one hand, it's due to our strong focus on the team on where to be more efficient in using our resources. And on the other hand, it's the result of portfolio adjustments that we made in recent time. We tended to take smaller properties and sell them, which produced a higher cost ratio. And you can impressively see this in this figure that we reduced by around 8%. I'll be giving you more details about this. We have a plus/minus stable operating profit of 0.9% lower than the previous year as a combination of the 2 figures I mentioned before, revaluations, I'll be talking about in the next few charts. And then, of course, this year, we're moving on from operating profit to FFO and profit. So focus on the table that you can hopefully read here the 2 important components that have changed. On the one hand, you can see the cost-effective interest expense -- cash effective interest expenses that were reduced. And this reflects that we have reached a certain peak as far as our financing cost is concerned. We will see that average financing cost has fallen by about 13 bps compared to the previous year, which reflects, I believe, the end of our transformation on the financing side. We are now betting on a financing portfolio that is highly efficient across the various cycles, and that has helped us to fully benefit from the lower interest rates. On the other hand, you can see a decrease in taxes. We did a good job in the first half year in this regard, with some tax administrations. We made new agreements that meant that in the future, our tax load will be slightly lower and in the first half year. This is reflected, as you can see here. In total, this gives us an increase of around 6.5% of FFO increase in absolute figures, and we have had a higher number of shares on the basis of the shares -- of share -- it's a plus of 3.4% to CHF 2.10 in the first half year. The intrinsic value of our share rose by around 2%. We're talking about the first half year, that's to be borne in mind. So the first half year includes dividend payout, and yet we have a rise of 1.9% over the previous year. Now I'd like to give you more details for real estate and asset management. Let's begin with real estate. The development of rental income is shown here. We showed this chart in the past. The difference to what we're having here is this is the consolidated level. You can see the split as we're having it at consolidated level. In the past, it was a bit more complicated, as a large part of the income was from Jelmoli, and there was a difference between the segment's view and the consolidated view, given that Jelmoli will now be externally let or does not generate any rental income. This should improve comparability and readability. Now you can see the composition of CHF 17 million that was capital recycling, but around CHF 8 million sales that primarily occurred in the second half year of 2024 are now having effect on the rents and the larger block is around CHF 9 million of redevelopments composed of CHF 6 million to CHF 6.5 million due to Jelmoli, the third-party lettings that we had and the other CHF 2.5 million to CHF 3 million is due to Fraumünsterpost and Talacker. This is very temporary. Talacker will go online again in September. October is fully let currently and Fraumünsterpost will go online at the end of 2026. And Jelmoli, as we communicated several times, will be online 2027 with clearly higher rents compared to the ones that we lost. More than -- this was compensated for more than 2/3, as we've mentioned before, due to smart planning, as René mentioned, around CHF 5 million from new objects, new projects, Alto Pont-Rouge and JED, the new construction at JED, Schlieren, then Basel, Stücki Park, that have contributed to this. CHF 1.2 million is the acquisitions, particularly Geneva that are having an effect already partially. And the important part here is how much can be generated from our portfolio, around CHF 4 million from the existing properties. Now this adds up to the 2.2% EPRA like-for-like growth, which we mentioned before. The bottom part, 1.4% on real rents is important to us. Why is it important? There are really 2 things to read out from this. First of all, the portfolio is in the right place. If you're in the right place, it's difficult to generate like-for-like growth. And you're close enough to tenants, close enough to the market. I think with 1.4%, we can demonstrate we're very close to tenants. It's, by the way, the same figure as we had last year. The absolute figure of 2.2% is slightly lower because inflation is lower. So the indexing component went down and the real component is a little higher than 2023 and the same as 2024 and shows the consistency that we're having in the portfolio. René mentioned it a minute ago on a like-for-like basis, our vacancy rate decreased. It was mentioned, a decrease of 2.9% if we work out new developments, and we can see that in the EPRA like-for-like growth, positive figure from the reduction of vacancy rate. Next, on asset management, we are giving you a little more transparency where the fees are coming from very strong growth in underlying fees, management fees on the one hand and construction development and other fees. All of those fees are recurring. They're not transaction dependent, average growth of 27%, 28% in these 2 areas. That's the big volume of fees. For the nonrecurring fees, I mentioned it before, we doubled -- more or less doubled issues and you can see it went up to around CHF 11 million for the nonrecurring fees. This clearly adds up to more than 2/3 of recurring fees or recurring income. And if you look at them, only the management fees in itself show a clear gap to costs, around CHF 14 million of costs. So this shows the stability of our business models, as it's operated by Prime Solutions. EBITDA rose by 64%, and we benefited from the synergies. Clearly, the ones that I mentioned before, the EBITDA margin increased to around 63%, increased by around 8%. A few words on the balance sheet. The key part of our balance sheet is our portfolio. You can see the portfolio composition here and how we come up from CHF 13.5 billion to CHF 13.3 billion. You can see the purchases and the investments in our major developments, in particular, BERN 131 and some leftovers from JED sticky part, but the large part is, of course, the new projects, in particular, Jelmoli and YOND. And then we have the CHF 105 million valuation result. You can see at the bottom, just about 2/3 of the valuation result is not due to discount rate changes, but is self-generated like-for-like growth or like-for-like reduction of vacancy and good renewals that we had. Around 33%, 34% is due to valuations. We can see the assumptions that Wüest & Partner made. Expectations have lowered slightly as far as inflation is concerned from 1.25% to 1%. So there is a relatively considerable reduction of the nominal discount rate and the larger lever is the real discount rate, which remained the same more or less or went down by 1 bp, if you look at it a little more closely. Two more charts on financing. I mentioned it a minute ago, very briefly, we are broadly financed, and we are actually where we got started or wanted to be 4 years ago. And we have convertible and -- unsecured bonds, convertible bonds, secured mortgages and unsecured loans in the Swiss market. You can see the average maturities, more or less stable. We want to be around 4.5 years. We kept that stable. The average interest rate, which shows the turning around in the interest rate development for the first time that I've been presenting. We are below 1%, 0.98%, which is a clear reduction over what we saw last year at 1.1%. Just to answer the question that will be asked, if we did any new financing, we would be slightly below what we are having in terms of average interest rate, but certainly no higher interest rates than this. And perhaps another figure I haven't mentioned LTV in the half year period is slightly higher usually because you only have a half year of profit, but they have paid out the dividend. But we're currently very comfortable with what we're having there with LTV at 38.4% to use it and to maintain stability at the same time. And in conclusion, perhaps a word about maturities. The average is 4.2 years. We have a larger maturity this year in unsecured loans, private placements actually that we prolonged CHF 120 million at 0.17%. As you can see, there are highly appealing opportunities. The CHF 250 million is a bond that will mature in September. For the next 24 months, we want to make sure that we don't have to go to the capital market or other sources just for reasons of stability and safe planning with our liquidity reserves of just under CHF 1 billion. I think this is -- we're very comfortable there so much as far as finances are concerned. Let me hand it back to René.

[Interpreted] So now let's look at the individual segments. Starting with the portfolio. I don't need to explain the different locations across Switzerland. You've seen it before. What's important now is that we still have 137 properties, and that shows how capital upcycling should be done by selling and then investing the cash into developments with a better -- at a better location. We have expanded our exposure in the French speaking part of Switzerland. And as I already mentioned, this is Lausanne [indiscernible] will one day become one. And that's an interesting region. And it's also a region which is where we are seeing transport investments in transport infrastructure. So that's interesting. The more you position yourself, the more you can then benefit from future developments in terms of property fair values. So this is the portfolio distribution. We already mentioned that after the Jelmoli transformation, we now have almost 50% in offices, sales 20%. Let me remind you, in 2009, we purchased the Jelmoli property portfolio. And there we had a retail share of 35%. So we've done a lot of work to reduce that rate. I think if you have retail in a prime location, it should be between 18% and 20%. That's what we think is a good measure. And also around 50% offices is also a good rate in our opinion. And then on the right, you can see our various tenants. I'll mention Globus in a moment. And now here, the portfolio upcycling. You know this quadrant in the top right-hand corner. And I would like to thank those who've made it easy for us because we have sold Oftringen, Romanel and Dietikon. These are places that many people won't even know by name. And then we invested in Geneva, Lausanne, Bern, and that's exactly the kind of thing that we want to see. That's a typical capital upcycling. The area shown in red is our pipeline for sales, plus/minus 1% of total volume. So that will be approximately CHF 130 million. That is going to be sold this year and next year. And then the upcycling strategy will be concluded. And that means that all of our properties will be in quadrants 1 or 4. Vacancies, well, we've heard a lot about it. We currently have 4%. And by the end of the year, we're going to be below 3.8%. We have some major new tenants that are shown here and some major contract extensions amongst them with Ernst & Young. I'm mentioning this because there are direct neighbors here on the Heerbrugg along the rail line. And so here, this is our acquisition in Lausanne-West. You will see that there's a new train station and the new ice rink of the HC Lausanne, new flats are being built. So there's a lot going on here. It's a thriving location that is going to continue to thrive. By the end of 2026, the tramline will be opened. And then the last step is going to be to connect Renens as well. So this is a promising 4% net yield, and we already have 15 very renowned tenants already. And this slide is always interesting, and it's particularly interesting today. Now the WAULT is almost 5 years, and let me just point out that the 17% that are going to run out or reach the end of the end of '26 also include Globus. And I have good news here because we have agreed with Globus to continue operating all 3 locations or actually 4 because Oftringen is also one of them, which is not just Globus, but also their location. So it's actually 4 locations, but 3 sales locations. And the second piece of good news is that the contracts are going to be remodeled, and I think both parties will benefit. The future contracts for the 3 locations are not going to have the same duration because this is always a problem. So Geneva is going to be extended by 10 years with a fixed-term contract, Lausanne by 8 years and Lucerne by 7 years. So 10 years for Geneva, always counting from the 1st of January 2027 because the current contracts are still valid until the end of '26. So from the 1st of January '27, 10 years for Geneva, 8 years for Lausanne and 7 years for Lucerne. And that doesn't mean that there won't be an extension after that, but we just wanted some kind of staggering in the terms. And the third piece of good news is that the negotiations concerning the necessary adjustments of the rental contracts are ongoing and nearing conclusion. So that's my news on Globus. And apart from that, the slide is what you're used to. Now this is a more interesting slide here for you. You can see the Fraumünsterpost on the left-hand side is going to be concluded next year, proper refurbished. And then BERN 131 has now been completed. Some tenants have already started occupying the buildings such as Zurich Insurance. And then Destination Jelmoli in Zurich. You will see that the investments are not CHF 130 million, but CHF 150 million now. So we've been able to hedge that better. And now the current status is that whether we would be able to ease the old burdens and now we have the new security and then for the construction site on the 1st of September, work is going to start. And that's where -- when the refurbishment is going to start properly. Then the YOND Campus in Zurich, this is a continuation of the YOND project that is already completed, the 4 properties here. And now we are continuing the development project with almost 50% degree of letting with Züriwerk as a tenant, amongst others. And then a smaller project from Basel, Steinenvorstadt, where we have just recently submitted the construction application. We are going to continue to communicate our sustainability strategy in more detail again at the end of the year. But let me just say that we are going to be at net zero at the end of 2040, and we're still working on this actively. And we're certainly one of the most active companies in terms of circular economy. And so this is going to change the entire business approach. Let me always give you the example. If you have a material that you need for a construction project, this requires energy to produce. And if you can reuse it after 50 years for another 50 years, it doesn't take a genius to work out that this help save a lot of energy. And that's why the circular economy is so important. And then also to give you additional information, BERN 131 is being built with wood from the Canton of Bern. It's not because that's where I'm from, but it's simply because often local wood can be sourced, but local wood does not mean that it's Swiss wood. Local wood could also come from Germany, Austria or the Czech Republic. The only criterion is whether that type of tree is also growth in Switzerland. So here, we actually used wood that actually grew in Bern. So now here, asset management. I don't think I need to explain any more about this slide. We have these 3 pillars, fund management, asset management and real estate advisory. We now have assets under management of the CHF 13.7 billion and CHF 540 million of new capital in the first 6 months. And as you can see, if you look at the CHF 540 million, this is almost the same level as in the total of 2024. That means that we have almost reached our objective for the entire year. Now here, the income and cost performance, CHF 138 million have already been shown. And let me just point out again, and Marcel said this, too, if you look at all of the recurring fees shown on Slide 14, in additional to the management fees and the development fees, if you add all that -- because each of those products also have their own business plan for the properties, and that means that if you add all of those, this will bring you to CHF 27.3 million recurring fees. And then with all of the costs, that's CHF 14 million. And so if you now look at the entire recurring fees, that is 200% of the costs, and that makes this business so stable and robust. And of course, we have a lot of synergies within the corporation that we can use within the structure and on these platforms. Now the outlook. This is the last slide for today. So first of all, the vacancies are going to be below 3.8% by the end of the year, not much below that, if you're asking, then the LTV below 39%. After 6 months, it was 38.4%. So the LTV is going to be below 39%. And assets under management. I said that it's going to be tangibly above CHF 14 billion. And so tangibly was a question of what this means. And so to define this, this means between CHF 14 billion and CHF 14.5 billion. And then the FFO I, as we published in the media release, is going to be at the upper end of the guidance. And that means that formally the guidance has been confirmed. And material means that you have -- we now have more shares than we had in February when the guidance was issued. So that's a material improvement of the guidance, even though formally it's the same. So that was just my comment. And I think now we can start with your question -- or let me just say, overall, [indiscernible] ill and I've been missing him, but he's here now. But let me just say one question after another, we'll start in the room, and then we'll also take questions online. And of course, here with me, Anastasius Tschopp for asset management questions, Urs Baumann for anything to do with developments and Karin Voigt for the portfolio. So now let's go.

[Interpreted] Thank you. The first group of questions relates to Slide 25. Well, it was mentioned that by the end of '26, Globus will account for a large part of the maturities. Now you're in negotiations, of course. Can you make a statement about the level of rents and the investments required and the counterparty risk? Who is going to be the counterparties? Is it companies or is it a group of companies? And what about the rental deposits?

[Interpreted] Well, that's a very long question. Given the current negotiations, I cannot comment on everything. We assume that the fair values of the properties remain the same. That's as much as I can say. Now how this will be expressed in rental agreements? We are currently negotiating, but we want to maintain fair value constant.

[Interpreted] Now remaining with this slide of the 17%, if you deduct 4.8%, you still end up with 12%. The question is, where could the vacancy rate be next year if you have a lot of maturities? And what are the discussions that you're having? Can we assume that we'll be below 4%?

[Interpreted] Well, I'll pass it over to Karin in a moment. My medium-term goal for vacancies is 3.0, medium term. Now over to Karin.

[Interpreted] Well, we're not going to generate vacancies. We are actively working on reletting and the modifications that are going on are looking positive. So the question is not going to go up.

This brings me to the second question on Slide 24. Looking at the picture, it's relatively easy to find out what property this is. Thank you very much. Question is, who is the counterparty for the rental contracts? Is it one single or is it several counterparties. If it was only one, how about the default risk?

[Interpreted] Well, we are talking about one single counterparty currently. But if anything goes wrong, we can take over the 15 -- 10 rental agreements directly. Thank you. Next question.

How will you proceed on the Maag premises?

[Interpreted] Well, for the Maag premises, I think you were able to read it. The court approved the objections, and we are currently thinking of taking it to the next level. I think September 11 is the deadline. There is a court holiday at the moment and we keep hearing. Well, could we perhaps move on to the Lacaton and Vassal project. And those who are loyal with the ones who object, I can say we are not going to do that. We have a plan B. We're going to go back to the plan B, but we're certainly not going to move on with the other object that we haven't settled for. So anyone else in the room to ask a question? You all have the same questions as Ken have?

[Interpreted] Holger Frisch from Zürcher Kantonalbank. Question on transactions. Two transactions were made in the first half year. How about the other transactions that were in the pipeline at the Capital Markets Day?

[Interpreted] Well, they continue to be in the pipeline. We're not exclusive in all regards. That's why I cannot really comment on that. But we would assume that the second part of the capital raises, including outside capital, we issued CHF 200 million of the CHF 300 million, and we would like to invest as much again. We are confident that we will be able to do that. And it should be invested by the end of the first half year of 2026 when full rental income will be visible from 2027. So we're still working on the basis of the pipeline including projects in the French-speaking part of Switzerland, but not only.

[Interpreted] And then I saw that there were 3 properties up for sale, which you reclassified as existing properties. What were they -- what properties were they? And what were the reasons for you to decide not to sell them?

[Interpreted] Well, we didn't decide not to sell them, but we are showing the probability within the next 12 months. And all 3 of them depend on certain approvals -- construction approvals that we need to get because we're talking about modifications that will no longer fit our portfolio, but are highly value accretive. So we're not assuming that we'll be managing to sell them within 12 months, but maybe 15 months.

[Interpreted] My final question on Jelmoli. On the annual results, investment costs were announced to be CHF 130 million, but now they're CHF 150 million. Is it due to legacies?

[Interpreted] Well, it's much simpler to build a new property, I can tell you. I can tell you exactly how much it costs. But for refurbishments or modifications, well, you need to bear in mind that there were 5 stages and there are walls and you don't know where you have pollutants that you need to clean up. So we've found out in the meantime, and we have the final figure referring to that. And then there are static effects. Ever since we took over Jelmoli, earthquake standards have increased. So you dismantle all the pillars and then the statics experts will come in and measure and tell you where you need to reinforce because of possible earthquakes. No one will accept a fixed price on that basis because no one can really estimate the situation. That's the reason why we have an addition of CHF 20 million. Any more questions from the hall?

We had one question from Eleanor Frew from Barclays. She had trouble dialing and she had a couple of questions. I will read them out, one after the other, narrowing guidance to the upper end. But given analyzing H1 FFO I takes full year above guidance. Why not increase? Can you walk us through H2 impact that gives lower FFO per share?

[Interpreted] Well, fundamentally, you cannot simply double the figures. There are some seasonality effects included. And if we look at our guidance, we are not far away from doubling. Of course, we do more detailed calculations than doubling. So that's our guidance. But at the upper end of it.