VGP NV (VGP) Earnings Call Transcript & Summary

Welcome to the VGP conference call to discuss the results of the first half of 2020. Today's call will be hosted by Mr. Jan Van Geet, CEO; Mr. Dirk Stoop, CFO; and Mr. Martijn Vlutters, IR. Mr. Jan Van Geet, please go ahead.

Good morning, everybody, and welcome to our press release on the -- I'm going to run you through the presentation and give you some flavor of the actual situation and how we are doing in times of COVID. So as you all have seen, we have a record net profit for the period of EUR 196.9 million after taxes. That's positively affected by the new 50-50 VGP Park München joint venture, which is in money terms our biggest single project to date that's made this profit, which we recognize realized. Otherwise, it would have been roughly the same, I think, in our books, but then as fair value gain, yes. We have a very resilient business performance and the impact of COVID-19 remains very limited so far. We signed an additional renewed rental income of EUR 20.1 million year-to-date. It was on the 30th of June actually. We signed a little bit more readily in time. We have a total that makes that -- at 30th of June, we have a total signed rental income of EUR 165.2 million, that's including the joint venture at 100%. Compared to the 30th of June 2019, that's an increase of 28%. We actually have 33 buildings with 795,000 square meters under construction and another 8 due to start up in the coming months, which are all pre-let or for 91% pre-let. We have completed, and that's maybe the thing I want to go most in detail on later on, the acquisition of a number of really trophy land plots during the period. And the owned and secured land bank today amounts to 6.89 million square meters. That's 11% more than last year. We delivered in the first 6 months 12 projects, 190,000 square meters of lettable area, which were all pre-let. And meanwhile, we delivered another 120,000 until today. So until today, we already delivered for this year 311,000. And we have more than 200,000 square meters to be still delivered during 2020. We expanded our partnership with Allianz. We launched a third 50-50 joint venture in respect of VGP Park Munich, which has the same governments as all the other joint ventures. The main difference is that in these projects, they participate in the development financing. We have a permanent focus on opportunities to continue to expand our portfolio pipeline. As I said, I have a lot of things to talk about today. And we reduced our gearing to 35% as of June 30, following a successful capital raising of EUR 200 million, which you've all seen also. This resulted in resilient financial performance over the last 12 months. We have a very strong growth of the total portfolio value. You see from the first half of '19 to the first half of 2020 went up from -- with 44% from EUR 2.249 billion to EUR 3.231 billion. We have a continued growth in committed annualized rental income. We went up 28% from EUR 129.3 million to EUR 165.2 million. And it's all very long contracted leases. So you'll see the detail of that a little bit later. We record, thanks to all of these, a net profit record -- record one, which is positively affected by the new 50-50 VGP Park Munich, of course. And that leads to record earnings per share. And this despite the dilution, we have 2 million shares more issued. It went up by 152% from EUR 4.04 per share to EUR 10.19 per share. As you know, we are very bound on sustainable development goals. Our sustainable development goals, we have launched our VGP Renewable Energy, which we will really focus on going forward. We have 18.1 megawatt peak of solar panels installed on our roofs, which is mostly owned by third parties today. And we have a 13 -- 17.6 megawatts peak under construction, which are all -- which all will be owned through VGP Renewable Energy, and that represents an investment value of about EUR 20 million, which we have already committed into renewable energy. I think we have a fantastic platform, adding 263 tenants to which we can offer a lot of add-ons in this renewable energy, and it's something which we really want to focus on. We have 100% now target BREEAM for all of our new developments. Everything which has been started up since the 30th of June last year has the BREEAM Very Good certification. And all the projects launched since 2020 are also on track for certification. And then you know we have our foundation, our charity foundation. We have identified and contracted the first 12 support projects, which are mainly related to major consolidation, a little bit -- 2 projects around child state and a couple of projects around cultural heritage. On the operational performance, the first 6 months were obviously a little bit challenging because our tenants where a lot of them had to close down their operations partly, which has slowed down a little bit of the things, but we see this mitigated by for a big part in an enormous growth of e-commerce demand. So we have resilient leasing growth. And over the last weeks and in the coming months, we expect to sign a number of very large lease agreements, which we're finalizing now. So in total, we have 263 tenant contracts, which has driven the committed annualized leases up to EUR 165 million at the 30th of June. That EUR 37 million is through our own portfolio and already EUR 128.2 million sits in the various joint ventures. We had an occupancy rate of everything which was completed of a record 99.9%, which is, yes, there is a couple of transitions, but we are virtually 100% leased. It's driving a continuous portfolio growth. So you can see we do a lot of continued investments. The compounded annual growth rate is 41.5%. And our -- in the first half -- at the end of the first half, we have EUR 3.23 billion assets under management. If you look at the capital expenditures, you see 2019, we had a capital expenditure of EUR 540 million. We have roughly spent half of that amount in the first half of 2020. And you can see also that the net cash flow -- inflow from divestments, so our joint venture with Allianz functions really very well, has already generated EUR 1.253 million (sic) [ EUR 1.253 billion ] of cash recycled out of that. That's going fast. And we have 2.5 additional closings before the year anticipated. We're going to have a top-up in our VGP Park München. And then we have 2 closings, 1 in the Randgold and 1 in the Aurora portfolio. These 2 closings should push the earn-out of the BMW building, the cash distribution of between EUR 300 million to EUR 350 million coming in, again, recycling into our balance sheet. If you look at the investment portfolio breakdown, then you see that Germany has been our main driver. Now I expect the other countries, especially Spain, Italy and the Netherlands, to do -- to become a very big contributor going forward. So the investment portfolio has grown to EUR 3.231 million (sic) [ EUR 3.231 billion ], up 6.6% (sic) [ 16.6% ] year-to-date. And as of June 2020, Western Europe represents 75% of the total portfolio. And under EPRA, it's 94% of the operating EBITDA, including the joint ventures at share. Now Germany contributed 73% of the combined portfolio growth, but the Netherlands continued to grow at the fastest relative space with, again, a big lease agreement to be signed this week. We have an agreement. It's already confirmed by e-mail. And we managed to sign a super land plot, really trophy, and its purchase subject to some milestones to be achieved. To give you an idea how well the Netherlands have performed over the last 12 months, we have signed more than 135,000 square meter of lease agreements in the Netherlands alone. We still invested a lot in this year despite COVID in our teams in Spain and Italy and also in Romania. And we feel that we are now operating really well, and we expect a lot of strong performance of those countries in the coming months and years ahead of us. So if you look at the portfolio breakdown, then you see the completed versus under construction versus the land bank. The completed today is EUR 2.1 billion. Development land is EUR 405 million in our books, including the joint venture. And under construction, it's EUR 696 million of value. And the development land -- to give you an idea, on the development land, we have in our books at the 30th of June a fair value gain of EUR 1.8 million. So it's really virtually valued at cost price in our books. We didn't take any extra profit on it. We have a very long-term portfolio lease, and it's very diversified. And we try to enhance it a lot, so to be even more diversified. We've used the request from some of the tenants for a little bit of rental relief to negotiate about lease agreement prolongation so that we have a win-win situation. And that's really reflected. Now you can see the combined total portfolio is leased for a weighted average lease of 8.7 years. And the joint venture is 8.2 years. And our own portfolio stands at 10.3 years, which I think is best in class. And if you look at the tenant portfolio breakdown, you see that logistics is 37.1%; e-commerce represents now 19.9%; light industrial, of course, KraussMaffei is light industrial and is a big player, it represents 29.4%, but also BMW is represented in that, Volkswagen is represented in that, Drylock is represented in that. And then automotive-related is relatively going down. Before, it was a lot more, but we have only 10.8% today at automotive-related business, which is mainly based -- it's mainly the BMW. You can see the BMW and the Volkswagen leases which we have. In the first half of 2020, we did a solid delivery of new developments, a couple of really nice trophy buildings also. So we delivered 190,000 square meters. As of the 24th of August, this has grown to 311,000 square meters. And here you can see that e-commerce is growing fast because the largest share of new development delivered for tenants are active, which are active in e-commerce at 38%. And actual, we have 4 buildings in Germany related to e-commerce under offer or we are about to sign lease agreements with that. We have the German, the Spanish and the Italian portfolio. There's a lot of e-commerce-related new leases under negotiation at the moment. In Spain, we just signed park, which is also e-commerce-related, and we have another couple of potential tenants coming up. We also delivered BMW in time, had to deliver at the 1st of August, which we managed without a problem despite COVID. And they just announced that they will install their R&D center, their Competence Centre for the development of batteries in our building in Parsdorf. So they leased the last part. We are exchanging now the lease agreement. That's been announced by them officially a couple of weeks ago, and they received a check from the Bayern government for EUR 60 million to support them for this project. As of June 2020, 33 buildings are under construction. I'm on Page 12. This equates to EUR 49.5 million of new lease contracts and everything will be leased. And the portfolio under construction was 73.4% pre-let. And Western Europe reflects 82% of the total development line. I have to say that we have frozen most of the speculative buildings to core and shell until we find a tenant now, but there is a lot of demand. So we are going ahead as soon as we lease out the space. You can see on the right bottom, you can see an actual picture of our building in the Netherlands with the first installation of solar panels, which we operate and which is completely -- the energy of which is completely sold to Ahold, which has taken a 10-year lease inside of this building. If you look at the geographic breakdown, and you see that Germany is really dominant. It's still 53%, but the Netherlands are growing. We are starting up a new completely pre-let building in the next week. Spain is growing a lot. And then you will see Italy in the second half because in Italy, we are signing a couple of big pre-let buildings in the coming weeks also. Italy will slowly grow from other into a big contributor to revenue growth. We have, and I stick to it, the land bank is everything. We have a well advanced land bank to support our future growth. So if you look at the buildup of it, then you see that land owned in December 2019 was 4.4 million. We deployed already 650,000 of that in 2020. We acquired 1,170,000 in the first half. And we secured 1,960,000 square meter over the first half. So that amounts to 6,890,000 square meters of which we can roughly construct 3.1 million, 3.2 million square meters. And we have signed letters of intent for another 850,000 square meters. Now this year will be the year in which one of our nicest projects which we have in the pipeline, our big park in Bratislava, is coming active. We had already purchased it, but it's subject to -- the payment is subject to having the infrastructure, and there is an exit of the highway, especially built for us. It will bring us very close to the city center, whereas all of our competitors are 10 kilometer, 8 kilometer staggered out of the city center. So we will have a very unique position in Bratislava. We also managed to buy Gießen. You will find details in the appendix. And to give you an idea on the agility of our company, how Gießen was, which we call in German the [indiscernible] of the market. It's a 30 hectare plot. And [indiscernible], they announced on Friday, the 3rd of April, that they would not acquire the land plot because of other strategic reasons. It's very close to Frankfurt, as you all know. We've bought it on the 7th of May with the notary deed signed. And I think that is the real strength of VGP, the ability to react so fast, and we paid 50 -- almost EUR 50 million for it. And thanks to the reputation in the market, which we have, I think, and the certainty that we can offer that we can really land these deals. And the agility of the team, which really did a very good job on the due diligence, which was necessary. We also have several new plots on the way, as already said, in Italy. And we have secured land lots, a very big land lot in the Netherlands on a really trophy location, which we think will be one of the motors of our future profits. But it will take a while because there is a lot of conditions precedent that need to be fulfilled first before we can really start the development. Again, it's both subject to all these conditions precedent being fulfilled. That's a bit of flavor on the commercial update. If we go to the financials, so the operating profit was up EUR 121.8 million to EUR 217.9 million. The increase is driven by the higher net valuation gain, up EUR 139.3 million, which compensates the lower share in result of the joint venture and higher administrative expenses. Now the higher administrative expenses, they all relate, EUR 5 million, relates to an accrual. So it's not an actual cost, but it's an accrual made for the new long-term incentive plan, which we have put in place and which is a long-term incentive plan, which relates to people. They have a lockup of 5 years of our top people, which have a participation in the growth of the net asset value over the coming 5 years. On a look-through basis, our net rental is up by EUR 2.7 million year-on-year to EUR 26.9 million. The net valuation gains from the property portfolio were EUR 204.6 million, and they're partly positively affected by the new 50-50 VGP Park joint venture. And the own standing property portfolio is valued today on a weighted average yield of 5.81% versus 5.76% at the end of 2019. The increase in yield -- actually, yields have decreased over the past months. The increase in yield is just due to a mix change following the entering of the VGP Park Munich joint venture in June 2020. The transaction of Munich has been done at fixed yields. So we have a yield fixed for the BMW, but we also have a fixed yield -- exit yield for the buildings which are due to be delivered in 2022, and in the last one in 2026 which all are at a fixed yield, which is the real market yield today. So as I already said, the administrative expenses, it's roughly the same as last year, despite the fact that we have a little bit more people, but it's -- there is an accrual made for money, which is going to be spent for the remuneration over the years to come, thanks to the new long-term incentive plan. If you look at our income by segment, and I am on the next page, then as we always do, we have splitted up our EBITDA in the 3 segments. The first one relates to net rental income. So you see that the EBITDA coming out of the net rental, which has been cleared of any fair value gains, amounts to EUR 25.3 million. And we have put the administration expenses related to that in that. The development, which is the valuation gains, up EUR 140.7 million year-on-year. And where we also have put the relative administration expenses again, so we have an EBITDA of EUR 194.3 million. And the property and asset management, which is being most affected by this accrual because the real income went up from EUR 4.9 million to EUR 6.1 million over the first half year, so the EBITDA is EUR 2.9 million. From the first -- from the full year -- and when we will report our full year results in February next year, we will introduce a fourth pillar, and that will be the income from our investments into renewable energy. So that you will get with the next presentation. If you look at the balance sheet and look at the asset side of the balance sheet, you will see we have investment properties of EUR 834.4 million, of which EUR 238.5 million reclassified as held for sale. We have a completed portfolio of EUR 173 million; under construction, EUR 344 million; and the development land on our own balance sheet, EUR 318 million. The investment in joint ventures and associates increased to EUR 534.2 million, which is EUR 147 million increase, which is reflecting the closing of the third joint venture in respect of VGP Park Munich. And then the noncurrent receivables and the trade and other receivables, they are mainly due to noncurrent balance due by Allianz in respect of VGP Park München in both cases. The cash position at the 30th of June was EUR 92.5 million, and we have EUR 150 million of nondrawn unsecured credit facilities available today. And as I said, we already are working on the closing of the next joint venture with Allianz, which is going to occur on the 1st of October normally or the last day of September. And there will be a next one, which should be occurring on the 1st of November or during November, which will bring in relative big cash amounts or free up a lot of cash receipts -- lot of cash. If we go to the shareholders' equity and liabilities, our equity is now over EUR 1 billion, EUR 1.035 billion, up EUR 335 million since December. This, of course, includes the effect of EUR 200 million equity capital raising. I also remind you that we paid out EUR 60 million of a dividend in the meantime. And if you look at the liabilities, we are EUR 922 million, of which the financial debt is EUR 782 million. And the trade debt and the liabilities related to disposal group are mainly due to upcoming joint venture closings in the second half of 2020. Our gearing at the end of June 2020 stood at 35%. You know that our group's target is maximum consolidated gearing of 65%. You all know also that I like to operate on a far less gearing. It's what our covenants are, which we agreed, but want to operate the business on a far smaller gearing. So we want to keep a very strong balance sheet, but I think the CapEx up to half of 2021 is normally covered without having to go to any debt market today. To summarize and a little bit on outlook. So I have to say that we're all a bit wary about this COVID situation, which slows down. And obviously, it's going to have an impact, but I think it will be mitigated to a large extent by the e-commerce, which plays very much in our e-commerce and new technology, which plays a big advantage for us, which is a big advantage to us. So we achieved many new milestones. Our third joint venture with Allianz has taken our cooperation to a new level, and we are very intensively discussing further joint ventures and/or the extension of the existing joint ventures. We have a nice land bank. We expanded it with some -- and I -- if I say so, I think it's proven in the past, we really have some trophy new positions for which we already registered a lot of indications. Now it's our tactics never to market land plot before we have the final permits so that when we sign a contract, we are absolutely sure that we can deliver everything in due date. So we will -- this will come a little bit later. The effects will come a little bit later kicking in, but we really have a couple of very nice new land plots, which assure us a nice position in the future. And yes. So I already said, it's a little bit of uncertainty due to COVID-19, but we still remain confident that e-commerce and increasing emphasis on the resilience of logistics supply chains will help us. We are, I think -- you can't speak of a winner in these markets, but I think if there is any type of real estate, which is less affected by it -- by these current measures, then I think it's us. Yes. We anticipate 2 additional closings, and then we have the closing of the new -- the BMW building also. We expect also in the coming months to be able to announce the expansion of our first joint venture, which was originally budgeted for EUR 1.7 billion targeted and to more than EUR 2 billion. Now we have a virtual agreement on that. And I'll promise that we will continue to be vigilant. So we're going to try to enter a couple of new markets. Also, I have the feeling now that our teams have stabilized and that they're really good in what they are doing. So we can spend a little bit more time on looking around for other opportunities in the market. And as I already said before, we will -- from 2020 full year numbers, we will introduce the fourth financial reporting pillar, which will be based on the income generated out of our renewable energy from which we really want to make an extra business line inside of VGP. Yes. In our appendix, which is staying behind it, you can find a couple of things. You can see the net cash proceeds, which has come out of the first to -- European Logistics 1 and 2 closings. So you see EUR 895 million for the first joint venture and EUR 96 million for the second joint venture. This will increase a lot, I think, with EUR 300 million, EUR 350 million in the second half. Then you see our VGP Park Munich. You will see on Page 25, I think, so the construction work started really in September by taking up the model. And you can see now that the BMW building is ready. You can see the parking building North is almost ready. It was due for delivery on the 1st of October. You can see the first solar panel installations on the first part of the BMW building, which are done. And you can see the buildings of KraussMaffei starting to be constructed. So it's going on. And then as I already told you, in Gießen, we bought this -- really this land plot and you can see the location is really top, top, top. It's an old military plot, which has been a brownfield, which has been completely cleaned up by the seller. We have all certificates for that, and we can start construction as soon as next year. We are asking for our building permit now. We can construct 160,000 square meters of that. And so far, we have a couple of clients who are interested to take the whole site. So we think it's a pleasant problem because I was so happy that we bought this new land plot to be able to continue construction in Germany, but it looks like it's going to be very quickly leased. So we have to continue to work on new acquisitions. But you can see there is a visualization on the next page that it's a really very well integrated in the city, city logistic also, but also for big logistics, it's really a very nice land plot. We have a nice land plot in Magdeburg, where we already signed a lease agreement with REWE just after we started construction this year. We are going to start construction. And then you see our new VGP Park in Bratislava, where you can see that by November this year, the infrastructure works, which are already further than it is on these pictures, are almost finished. And we have directly for our park. So we have almost 60 hectares, and we can go straight 260,000 square meters on that. The exit should be ready and delivered at the end of this year, and they are really on track. And we are starting up our first building in the second half year, and probably we will have 2 buildings pre-let on that site. I think I've said enough about our development. We are hands on looking forward to it. We have now more than 230 people inside of VGP. And I have to say that it was a challenge in the beginning to do the homework, but we've learned a lot of things. It's a very useful instrument. We've seen that we have been operating -- been able to operate really very well from home out. And it's, of course, our first priority that our people stay healthy. But all of our construction sites have been running without any interference. The only one was Italy, and that's only been for 2 weeks and has no impact at all on our -- no fines or no late deliveries at all. Thank you very much for listening. If -- I'm going to hand over to Martijn or to our speaker. If anybody has any questions, we'd be happy to reply to them. Thank you.

Operator, you can open the line for questions.

[Operator Instructions] We can now take our first question from Pieter Runneboom from Kempen.

Could you tell something about the current market in terms of where market rents are going, the price of land and what construction costs have done?

The price of land has gone up significantly over the last months and years. It's a trend which continues to be. We see still a lot of upward pressure on the land prices because there is so much competition today to buy land. I already told you about Gießen. We bought that land plot for EUR 145 per square meter. But -- and thanks to the fact that we were so fast, but the seller got in the end -- he really needed the money also quickly. But the seller in the end got offers up to EUR 190 per square meter. So there is a lot of competition for land pricing today. We have a very big land bank, as you know. The rental prices have remained stable and are reflecting really what the land price is. So where the land price is higher, like Munich or like Madrid or like Barcelona, there also we see a lot higher rent. And then where the land plot -- where there is still a lot of land available like Magdeburg, where the land prices are a lot lower, but the yields -- our yields -- we have to say, there is one thing, which is a little bit alarming, and it is construction prices over the last months have gone down significantly. Now this is partly through the fact that we have been focusing a lot, really a lot on efficiency inside of our own group. So we are now buying a lot below budget. But it's also, of course, because the construction market has been affected in other sides of the business through COVID and that the contractors are really looking to fill their order books. So -- and we are constructing so much. So it's going to -- that has a very positive effects on our yields. And on the investment side, we've seen a couple of deals in the market. So the best deals, which we have seen in Germany, is 3.6% for a logistic asset, and that's very recent. It's after the year half being closed. So I would say -- I would call it that the market is on fire. We see really that the yields are still at least remaining at the same level as last year and, in some prime assets, even compressing further. Does that answer your question?

We can now take our next question from Joachim Vansanten from KBC Securities.

So a few questions. First question from my side is concerning the land bank. So compared with the first quarter of 2020, the secured land bank has indeed increased. However, if you include the letters of intent, the land bank has decreased from 8.8 million square meters to 7.7 million square meters. What is the reason for this?

There is a couple of projects, which we had LOI signed, which we have stopped because we just can't get the permit. And that's why we do these things. We always sign subject to having the permits in place. And so there have been a couple of LOIs, which we have signed, where we did our due diligence, where we wanted to go ahead, but we just can't get past the local government. That's one of the reasons. And the second reason is that we have deployed a lot of land now because we have so much under construction.

Yes. Okay. Clear. Then second question is, if I look at the effective tax rate for this half of the year, it's much lower compared to last year. What explains this?

This is due to specifically the transaction of Munich, which has been deconsolidated. So there is an effect on deferred taxes for that. So it's really driven by the deconsolidation of VGP Park Munich.

Okay. So Munich is not included for the tax calculation?

Yes, it's included, but there are -- it's a very technical IFRS question that you ask me there. We can go through it in a separate call, if you want to truly have the details. But let's say that the effects -- it's a bit a perverse effect. By deconsolidating VGP Park Munich, we had to also deconsolidate some deferred taxes, which we took in the past. So the effect is that there is a very slight -- only a very slight impact on our deferred tax line with the deconsolidation of VGP Park Munich.

Okay. Yes, maybe I'll call later for that one. I had to get it...

No problem. And we can explain that in detail.

Okay. And then one last question is you mentioned that VGP might be looking for -- to enter new markets. What markets would be interesting?

All the European countries where we are not active yet.

Okay. That's very broad.

That is the reality. I want to be -- I feel like European, I want to be a European player. Most of my tenants go -- we see that we have a lot of tenants, which we have already in Germany, also now taking up space in Spain or in Italy or even in Romania or in Austria. So we really want to go ahead to the new countries also. We feel that we should do that. And I -- last year, we couldn't because we had so much work in our countries. When you start up a new country, it takes a while before you get the reputation and the skills in the house. And we have a lot of new countries started up. But I feel now that the team is ready so that we can shift part of our attention to new markets. And obviously, the first focus would be, I think, on the Scandinavian countries and France. We'll see. I can't say anything to it yet, but that's our first focus.

We can now take our next question from Frederic Renard of Kepler.

I've got 2 questions. First question relating to Southern Europe and Eastern Europe. We know that those markets were a little bit lagging in pre-COVID world in terms of e-commerce penetration. We see now, in a post-COVID world, e-commerce touching in. And do you see, therefore, more potential to grow more quickly, for instance, in Spain? Because you mentioned Italy, but in Spain, do you see big opportunities over there?

Yes. So yes, we have to make a clear distinction between Eastern Europe -- if you look at our numbers, and it's a good remark, you will see it yourself that we have completely shifted from a totally Eastern European-based company, where we are still very active, to a total Western European-based company. And that's mainly thanks to e-commerce because e-commerce is a lot more active in the Western European countries than in the Eastern European countries. That's for sure an effect, which is in our portfolio. But to speak about Southern Europe, we have signed a couple of leases this year in Spain and Amazon called -- you know that Jonathan Watkins is working for us, and he came from Amazon. He was the chief of the logistics, I think, in Amazon. And he called when he still was at Amazon, Spain a sleeping giant, which is slowly but certainly waking up. And we see that there is a lot of e-commerce activity, both in Italy and in Spain today. The -- we -- as you know, we are focusing on land plots, and we're focusing on trophy land plots. We are not participating in those tenders in which the tenant controls the land plots, which go -- because they go at ridiculously low yields to their development deals. I speak about development yields of 4.2%, 4.3%. There's so much competition on it. But on those buildings, which we have under construction, they are -- we signed a lot of leases now in Spain, which are all e-commerce related. And we see a lot of activity indeed with e-commerce related starting in Spain and in Italy. I think it will take us a little bit -- it will be a little bit delayed, but the Eastern European countries, for sure, they will follow.

And there's spending also in new location in Spain because you're mostly Madrid or close to the East Coast. And does that open new area in the Southern part of Spain, for instance?

Yes. Yes. Yes. We are looking in Spain to all the bigger cities. So we're currently looking into the main cities of every main region, from Bilbao, over Pamplona to Malaga, to Alicante. We are really looking regionally now because we see a lot of demand in the regions also. And the same goes for Italy. The big city, there's a lot of demand.

Yes. And then a second question regarding financial and regarding the dividend. Last year, you increased tremendously the dividend. I was wondering, considering that it will be another vintage year, how are you going to reward the shareholder? Are you tending to give a dividend yield in line with the market or in line with previous year? Or do you intend to distribute a range of the net result which, in fact, is your guidance, but which, if I'm not mistaken, was not respected between brackets the last years? So what's your view on the dividend position?

I think I can only answer that after we publish the full year we'll take a look at it. But it's our firm intention to pay out a dividend, which is at least as high as the one which we paid out this year.

Okay. That's the minimum threshold?

Yes. Any further questions?

There are no further questions at this time. So I'd like to hand it back to you for any additional or closing remarks.

I would like to thank you all for taking the time to listen to us, and I'm really looking forward to my investors, to see them, I hope, physically once because over a phone is only over a phone. As soon as COVID allows it to, I'm sure we'll be back soon. Thank you very much for attending our call.

Thank you. Bye-bye.

This concludes today's call. Thank you for your participation. You may now disconnect.