VGP NV (VGP) Earnings Call Transcript & Summary

Good morning to everybody, and welcome to our webcast presentation of the full year 2022 financial results. It's been a year of very big turmoil with the war in Ukraine and indexation activities, inflation very high rising. But despite all these macroeconomic effects, VGP, I think, has done a very solid operating performance. We have a strong rental activity seen in 2022 with EUR 73.4 million of signed and renewed leases. So the annualized committed leases are now standing at EUR 303.2 million, an 18.4% increase year-on-year. And that represents also more than 5 million square meters, 5.2 million square meters of leased property throughout Europe. We have also had a very strong year in terms of deliveries, a record year. We delivered 44 projects to our customers. So they also started to generate rental income that represents a record 1,141,000 square meters. And that also implements that EUR 73.6 million of new leases started generating income from that moment on when they were delivered. We have 26 projects at the year-end under construction, representing 814,000 square meters, which today are more than 90% pre-let. And we've seen in the market a lot of activity in speculative buildings, which have been started up in the last year, which was probably the worst year to ever start speculative buildings with a high increase in inflation. But we've been very careful, very cautious and we have really tried to lease them out at attractive prices so that we still have a nice profit on our developments. So we have been really very cautious. Our net rental and renewable energy income increased with 51% at share to EUR 107 million, and that will continue at a similar pace in 2023 as we see a lot of deliveries now of our buildings starting to generate income. We have more than 200 megawatt power of solar system, either already installed or in the pipeline. We have strong improvements in our ESG ratings. We have a very big focus on that. And you've all seen it was also written in the [ data ] last week, I made myself a little bit of fuss about it that we were not contained inside of this new index on Sustainalytics based on Sustainalytics. Actually, Euronext used the wrong performance indicator out of 2022 because if we compare to the 2022 Sustainalytics score, which we had, we should have been inside already. So there was a mistake, and everybody makes a mistake now and then. But for us, it is really important, ESG, we do a lot of effort on it. The operating profit of EUR 177.5 million before unrealized valuation losses of EUR 293 million. We have also EUR 87 million of realized gains. We've also made EUR 87.2 million of realized gains through the disposals and closing with our joint ventures, that EUR 87 million more than the historical profit which we already had in our books by the end of the year 2021. So all of our disposals, which we did in 2022 were at a higher valuation, notwithstanding the valuations, which we have in our books today, but they were all done at a higher valuation than the valuation at the end of the year 2021. We make nice progress on our joint venture. We have advanced discussions on new joint ventures, which are going to be realized this year we hope, and we have a couple of closings in the pipeline. We already did one in January. In January, we closed our 10th transaction with Randgold, which was EUR 114 million of gross asset value, out of which we recuperated EUR 80 million, which was paid in cash in January on our accounts. In 2022, our CapEx amounted to EUR 858 million. And we had a record despite everything which has been written and despite everything which has been set, we had a record year in closings with the joint venture in 2022. We had EUR 887 million of gross asset value transactions closed, and that is without the Randgold 10th transaction, which I just mentioned. So if you count that to it, we did more than EUR 1 billion actually in gross asset value, out of which we recycled EUR 347 million net cash, plus the EUR 80 million, which I just said, out of which we also did EUR 87 million of realized gains extra on the ones which we historically booked before. The joint venture activity is set to continue in 2023, in January, we already did the 10th closing with our joint venture #1. As I said, EUR 81 million net cash recycled and additional joint venture closings are anticipated in 2023. We are currently working on one for which we have just started due diligence, and we are in negotiations with a number of parties on various parts of our portfolio to create new joint ventures, and there is no sale foreseen. We had a very strong available liquidity position, a lot more than last year of EUR 1.1 billion at year-end, which is EUR 705 million of cash, actually plus EUR 400 million of undrawn credit facilities, which we have available. And the year-end gearing ratio stood at 34.4%, which is well below our target of 35% to 45%. For your information, we've also calculated the proportional LTV, it's 49.4%, but that is no covenant on any of our debt instruments, which we have. Our average run cost of debt is, at the moment, 2.31%. And we foresee we have 2 bonds which mature in 2023. One is carrying a 3.9% interest for EUR 150 million, which will be paid back at my 52nd birthday in April. And the second one, carrying 2.75% is EUR 225 million, which will mature in September 2023, and we aim to pay them out of our available liquidity. And then our cost of debt will go down to 2.09%. We also intend to propose to the general shareholders meeting, a dividend payout, a gross dividend payout of EUR 2.75 per share. With VGP, we're really focused on growing throughout Europe. And if you look at the map, we have now, I think, 108 parks throughout the European countries where we are active in. We lately added France where we have a new team, a very good team, I would say. We bought last year our first land plot in Rouen, where we are currently negotiating the final details around our first lease agreements, which we aim to sign in the first half year of this year. We also aim to start construction there soon. We put our money where our heart is. I always say we really try to buy top locations everywhere in close vicinity to the major economic regions of our European continent. And if you look at it, we have, of course, the main market where we are activists in Germany, where we have around EUR 3.5 billion of assets, which is 54% of our total assets. And then the Czech Republic, our country of origin, where I started is the second with EUR 813 million of assets. But the other countries, Spain, the Netherlands, Italy, Slovakia, they're quickly growing, and we expect to continue to be able to do that in the coming years as the market fundamentals remain really very strong. We can go to the next slide. I will give you a market update, a little bit first on the macroeconomic things. If you look at the European average vacancy rate, we can see that it's a bit varying from country to country. As I said, last year, we saw a huge up price in speculative buildings, which have been planned, but they have been mostly leased out. But the European average vacancy rate at the moment is the lowest, which I have ever seen, and I'm since 1998 in this business. So it's 25 years. It's the lowest which I've ever seen. And we have also, thanks to that, seen the biggest increase in rental value over the past years or the past 2 years. The vacancy rate underlines that there is an increasingly severe supply shortages in many markets, but we don't really know what the impact of COVID has been throughout the years. And I don't think we really understand how it's going to impact us in the coming years that COVID has caused a lot of interruptions logistically-wise, what we can say today is that we have an enormous demand still for logistics space and that we also see, and you will see it later in our numbers that the industrialization of Europe is a fact. We see a lot of industrial activity coming back, and we're aiming to be a good partner for the industry going forward also. We can go to the next one. If you look at the prime logistics rents, they are really at the highest growth rate in over 20 years. I mean as long as I can remember, we've always released and released at the same prices. We've never seen a real increase, which is not anymore the case today. You see by colors on the left side, the brown ones is where we are active in and the blue ones is where we don't have a park yet. But you see the prime logistic rents, the pink one is an increase, and you see all through all of the countries where we are active in, it's all pink, it's all rising. And that is very much reflected also in the renewals, which we did last year. We had EUR 10 million of rental income, which was terminated, and we managed to release it out with an average of 12% higher rental price. We can go to the next slide. Yes. On the operational performance, yes, as I said, we signed really a lot of lease agreements last year, a lot of nice ones, especially in Germany and also very long term all the time, we are really focused on leasing out long term. So we designed and the renewed rental income, EUR 73.4 million, of which EUR 53.8 million were new or renewed leases. So it grew by 18.4%. This is every year, the base of which we grow off is a bit bigger. So it's difficult, in percentage, to match the year before, but we did, I think, a very nice deal of contracts. In total, it's 481 tenant contracts now and the committed annualized leases are at EUR 303.2 million were at year-end because we signed meanwhile in January and February, it's also started relatively well, a number of new lease agreements. The occupancy rate at the moment is at 99% for the completed portfolio completely including the joint ventures. Yes. It's also leased to a very diversified and blue-chip tenant base. We try to focus on tenants which are economically strong and invest a lot in our own buildings also. We want them to stay. We want them to be there. So it is divided, well divided in all the asset classes, which is under logistics or qualified on the logistics. We go from light industrial, where I think it's worthwhile to mention our new BMW and KraussMaffei deliveries, which we did in Munich, after which I will go through in detail at the end of the presentation, a lot of logistics. And for example, we signed just in December, a very big new lease agreement with Rhenus Logistics in Magdeburg, which will have a fantastic yield on cost for us. We do a lot of e-commerce and the e-commerce has had an incredible boom throughout the COVID years where there was a lot of impossibilities to go shopping. So it's normal that they have a little setback, but I am a strong believer in the strong fundamentals of e-commerce and that they will catch on with the growth again from next year or the year after on. And then we have a lot of other pharmaceuticals, et cetera, which are using also our warehouses as they are very multi-tenantly organized. The top 10 tenants represent 35% of our committed leases. And it's also good to know that, of course, 60% of our lease agreements have been built and delivered in the last 2 years, 60%. But it's also reflected in the weighted average lease term of 8.3 years over the last 10 years, we haven't sold any building other than to a joint venture, no other building has been sold, except for the Mango building in Barcelona. That was the only exception. And still, we have our weighted average lease term of 8.3 years, which I think is best in class, if we look at all the portfolios around Europe. So it's a reflection also of the fast growth of VGP and our ability to sign long-term leases with our customers, ensuring also long-term stable income. Yes, you can also see, of course, in the portfolio at share, how it's grown organically. It's grown at an annual compounded growth rate of 30.2% since 2016. In 2016, when I signed the first joint venture with Allianz, which I negotiated for more than 18 months before we had a deal because it's complex to say how you're going to work together in the long-term vehicle. You can see that it has grown considerably, and we are now at EUR 4.6 billion at share. We come from less than EUR 1 billion in 2016. So I think VGP is one of the fastest-growing companies inside of our sector. And we've done that with a minimum of capital increases so far, thanks to the system of joint venture of loadings with Allianz, which works perfectly well also today. We can go to the next slide. Yes. Our active annualized rental income, we are a little bit difficult to understand sometimes for a lot of people because we are a combination of a developer and the REIT underneath to which we offload. And so our rental income growth starts now to gear up really very quickly. The component of the REIT structure is becoming more and more important if you look into our income streams. And in December '21, only EUR 164.6 million of our rental income, contracted rental income was actually activated was delivered to our customers and started to generate rental income. New leases activated during 2022, thanks to the delivery. So things which we've handed over to our customers and start now, they start to pay rent represents EUR 73.6 million of incremental rental income. So that goes up to EUR 238.2 million, out of which EUR 72.7 million is 100% owned only by VGP and EUR 165.6 million sits in the joint ventures. And there is another EUR 65 million of leases, which will be for the big majority activated during this year, some of them next year and no further, I think, which then comes to EUR 303.2 million of rental income, which is the total committed annualized rental income at the end of 2022. That's the contracts which we have signed and which is an average weighted lease term of 8.3 years to go. That's a bit the explanation of our rental income growth, and you can very well see it in the next slide. Our net rental and renewable energy income has grown year-on-year with 51%, and we expect it to do the same another more than 50%, around 50% growth during 2023. So if you look in 2016, this is at share, so with our part in the joint venture. At share, in 2016, it was EUR 23.9 million, then it went up. And you can see the different years, how we jumped in, in the last year, it jumped 51%, and we expect it to jump again by a good 50% during 2023. Yes. Our portfolio, as I already said, it's geographically well diversified and it's predominantly already income generating today. And if you look at it by country, you can see, I already explained it first. Germany is more than 50%, and we aim to keep Germany is going to remain the big driver of growth in our portfolio going forward, although we expect also a lot of fronts, we see a lot of positive trends in the French market. And we have a lot of nice land plots all over Europe. So we expect a big contribution out of the other countries also. The Western European countries represented, mainly for our EPRA presentation, it is important. It represents 75% of our total portfolio value as of December 2022. And you can see completed, we have more than EUR 5 billion in total, including the 100% of the JVs, more than EUR 5 billion of assets that's 78% of our balance sheet. Under construction is around EUR 638 million of value and we have development land of EUR 779 million. But inside of that development land are also a couple of brownfields, which are at the moment still income generating. For example, we bought a Siemens office compound in Nuremberg, very big site, 20 hectares, which are still renting, and we have a more than 7% yield on it until the end of 2026, at least, maybe until 2028, which gives us ample time to prepare all the necessary permits to reconstruct it, we want to make a real nice industrial park out of that one. Yes, we can go to the next slide. In 2022, as already explained, we delivered 44 buildings. We already delivered also a couple of buildings now in January. So it's also very well on track in January, which represents EUR 71.9 million rental income by 62 new contracts, and is 98.7% let. But currently, it's already more let. We leased out some of the remaining space. It's not a lot. 100% of it will be [indiscernible] very good or better rated. And actually, more than 60% of our portfolio of buildings which we have to do today has got a certification, a green certification. And if you look at the geographical spread, it's also Germany in the first place, but then it's spread all over all the countries where we delivered. The largest share of these new developments were delivered for tenants, which are active in light industrial and land our job in the future, it is mainly to convince also the local communities to let us develop new parks. And Europe needs new developments. Europe needs innovation and new things. And part of it is, of course, to convince the local communities that we can do something new that we can replace old derelict buildings, brownfields by new ones and sometimes also do even a greenfield development. And that's why we also have a little bit more of the light industrial component. It is absolutely necessary to convince the local authorities to do such developments with us. Of course, logistics goes with it. But as some examples of deliveries in '22, we really have really nice buildings there. We try to build them even if it's lighter industrial activity, very diverse. So it's also easily usable for logistic purposes but we have very nice names like CATL, which you all know, I think it's the cathode and the battery producer, a huge company, KraussMaffei, a huge company. There are 2 parts. One makes the [indiscernible] tanks. That's not this one. The other one makes the plastic molding machinery, that's our customer. But for example, also [ Trek ] the biking company, which makes spikes, electric bikes very famous or BMW, which is taking more and more space up in our Munich Park, and we are negotiating about the last extension in Munich now with them, which we hope to be able to announce soon that it will be signed with BMW also. Yes, we can go further. Our portfolio under construction is for the biggest part pre-let, and I have hammered on it that it needs to be because last year, we saw an incredible increase in construction costs. And if I say I'm going to give you an example of the incredible increase in construction costs, so you understand the difficulties which we had to cope with. I will take the example of the corrugated metal sheets which we put on the roof, which is an example which speaks for everything. Last year, when we bought it in, in 2021, when we bought it in and they were already more expensive, we bought them for EUR 21 per square meter. And you can count this through to our own entire construction. Last year, when the war began, we had to pay EUR 30, and we were lucky that we got some. It was really fighting to get every square meter. Today, they're throwing them at our head then they cost EUR 16 per square meter. So that's what I also meant with we have no idea about what is this COVID thing has cost and what the dynamics in the market are. We have an idea, but it is still difficult to understand how the impacts are going to work out. But what we see today is fundamentally that there is a lot of stock available in the construction market and that depending on country by country, we see prices coming down to attractive levels again to be able to take advantage of that in the future going forward. The 814,000 square meters of 26 buildings, which are under construction or which are under construction equates to 51.3 million leases once we are fully let, but it's already more than 90% pre-let today. Western Europe represents 73.5%. It's not everywhere possible because you need some infrastructure locally, but we go at least for very good and for the bigger part in excellent. You can also see in the pictures, which are an example. For example, you see also the EV chargers, which we are now implementing in all of our parks. And it's our own investment with VGP Renewable Energy. So we have also an income out of that. And you can also see that we are trying to optimize the CO2 use in our buildings by the use of wooden beams and structures more and more in our parks where it is available. Yes, we can go to the next one. Yes. So as we already said, the developments are very well spread. Of course, Germany is a big one because in Germany, we also have a lot bigger leases. It's very big constructions, which we are constructing there the last leases, which we have signed in Magdeburg on the right, on the top, you see a building which is 70,000 square meters, which is leased out to the Bundeswehr, the German Army for a period of 10 years. And then Am Alten Flughafen, you see it is a brownfield which we redid in Giessen. There we are constructing a very large development for Zalando, including also a second building, which is used is leased out to UPS and to Rhenus. Zalando is a 20-year lease and the UPS and Rhenus is a 10-year lease. Yes. We can go to the next one. Our land bank, our land bank is there to support further growth. As I already explained, some of it are also brownfields, which are underway. We own 7 million square meters in December 2021. We deployed 1 million square meters during 2022. We acquired 2 million square meters during 2022. And we have a committed land bank, which it's committed over a couple of years still to go because some of these projects are really very long term. We try to think in the future, super locations, but they're not so easy to come to of another 2.4 million. And then we have signed a couple of letters of intent 300,000 square meters. We are going to focus this year mainly on the development of our existing land bank and are looking at opportunities to buy new ones, mainly in 3 countries, Germany, because there, we are at the end of our land bank, and we have a couple of them in the land bank, which is acquired and committed in 2022 and going to be acquired in 2023, but we need to replenish our land bank. Last year, we saw a lot of opportunities in the German market, but the price was totally irrealistic and you could not make a return on it higher than 3% or 4% yield, which is below today market yields, but we have seen them all come back. And I mean really hundred thousands of square meters, millions of square meters all come back today, they have not been sold, although there were offers which were 5x higher than ours. Sometimes we were #16 in the offering, and we were just immediately excluded, but it was crazy money. And if you look today, the market comes back to its senses and we see, again, possibilities, which we would like to take advantage of. And we have enough liquidity to be able to jump to that. That's why we did the capital raise today that we have enough liquidity to participate in these things going forward. That's what we're looking at. We can go. In the development pipeline, is embedded 5 million square meters of development, which we can do. And we have an ambitious growth plan, and we're thinking very much about it how to deploy that. And I'm sure I'm very optimistic that the right time will come soon to continue constructing. Our land bank is geographically very well diversified across countries where we operate in. We remain vigilantly focused on expanding it. As I said last year, we really didn't buy anything new. The only new land plot which we bought last year was Rouen. All the others are just an execution of things which we already contracted long time before. And you can also see that in the value of our land, our land is valued at its cost price and the average cost price per square meter is EUR 84. So that is where we are looking at. And that is including the Netherlands, Austria, Germany, Spain, in Germany. We've seen offers of EUR 300, EUR 500 per square meter. We even have seen in [indiscernible] in Berlin offers of close to EUR 1,000 per square meter, which there is no tenant in my opinion, who can pay the necessary to make a nice yield on that. So that's why we didn't participate, but it's a new focus in this year. And I think we did the right thing last year in being so prudent. Yes, I'm confident we are going to be able to do, again, nice profitable projects in the years in front of us. We can go to the next slide. Last year, energy prices sorted. So our tenants where for the first year, the people who really pushed us a lot to increase our solar panel rollout. Now it was impossible to change the pace because we were already at 100% of pace to roll it out, but it has changed a little bit the income-generating model because now a lot of these installations are delivering directly energy to our customers with a long-term fixed income contract, which is, of course, a lot greener if you look at it than when you just deliver it into the grid. Our operational solar producing capacity increased to 56.6 megawatt peak. It grew by 66%. We have 75 megawatt peak under construction, of which is all going to be delivered during 2023. And we have another 72.7 megawatt peak of contracted solar panel installations which are going to be started up during this year and the first half of next year. Our gross renewable income over 2022 was EUR 5.9 million, and that only equates to a small portion because most of the solar panel installations were delivered during this year. So they only started generating income later this year. So if we look at the revenue, the yield on costs, which we made on that, then it was more than 20%. Of course, this was fueled by an extreme high energy price over the last year, which is not anymore the case, but we still make a very nice yield on our investment overall. Maybe important to also say is that once all these photovoltaic projects will have come to completion, we, VGP Renewable Energy, will produce and deliver more energy than coming from solar power than the combined consummation of all of our tenants together. So we're going to really be on a clean footprint operating further on. And you can see a couple of achievements in '22. We delivered our park in Munich, which delivers directly to our customer for the bulk of it, 11.5 megawatt peak plant, and it saves 9 million kilowatt hours of grid consumption per year. It's mainly used by KraussMaffei. And in Nijmegen where we deliver in the grid, we are building a 17.61 megawatt peak installation, which I think is one of the biggest ones in Europe on the roof. We have already 4.8-megawatt peak in use since 2021. And the final part will now be connected in 2023. So that's a good example of that was not in the EUR 5.9 million of income over last year. Yes. Okay. I think it's time to give the word to my brother Piet, our CFO, to make a summary of our financial performance.

Thank you. I'm happy to do so. Let me start with a summary of our financial results showing essentially 4 strong KPIs in which you could summarize a bit the portfolio. On the one hand, and I think Jan has already mentioned it a few times, we have a steady growth of our total portfolio. At share, it went to 4.6. But if you look at it at 100%, we are at EUR 6.4 billion versus EUR 5.7 billion in 2021. Our rental income has grown at 18.4%, EUR 303.2 million, of which EUR 238.2 million has been activated. The buildings have been handed over. The tenants starts paying the rent, and we will see a growth to come in the next years, as already explained. And then thirdly, I think a very important one is our operating profit normalized for any noncash movements. So the unrealized valuation adjustments went up from EUR 45.4 million to EUR 177.5 million, which is an increase of 291% as well as we have an intention to propose to the General Shareholders Meeting a dividend payout of approximately EUR 75 million or EUR 275 per share, which is lower than last year, but reflects a similar even higher [indiscernible] return than previous year. If we go to the next slide, then we see our income statement. Maybe first, a general comment to the income statement is that we did some updates this year. That is because our renewable activity has grown so much, and we didn't really specify it beforehand. It wasn't immaterial in our P&L. But as it has grown so much, we have updated our segment reporting as well as we renamed a part of our income statement as gross rental and now renewable energy income where it was mentioning before, only the gross rental income and net rental income. It is now showing the net rental and renewable income, which increased from EUR 15.4 million to EUR 43 million or up by 179%. And the rental income that is inside and which is on our own balance sheet, went up to with 158% or up to EUR 45.3 million. Of course, it increased so much because we delivered so much assets, EUR 1.1 million, which started during the year to become cash generative. And our gross renewable income is up EUR 0.5 million. It's now EUR 5.9 million as just explained. If we look a little bit to the other lines in our P&L, we firstly come across our joint venture management fee income. It's very important to note, well, it is similar than last year, [ 21.5% ], but there are underlying dynamics inside. First off, we charge an asset management fee to the JVs for the whole management that we do. And as there are more assets in the JV, this recurring income has increased from EUR 14.2 million to EUR 17.9 million, which is recurring and will continue to increase in the next year because we are offloading or we have been offloading to the JVs during the year. We have done one in the beginning of this year, and you will see an annualized effect only already of those transactions.

Maybe I can just do an extra, we have also prolonged last year the lifetime of our joint ventures with Allianz at least of the Randgold joint venture. And we also have the intention to prolong it with another 10 years the Aurora joint venture, which ensure also that this income, this asset management income will run until now it is fixed until 2036. So that's something which we achieved also during last year.

Yes. And then the second part of it is we have a development fee. So we are constructing on behalf of the JV, but it was less in 2020 and 2021. So that went from 73.6%. But that's why it's stable. But the underlying, as Jan also confirmed there for a very long-term recurring and committed and growing. Then obviously, we have the net valuation gains on investment properties for EUR 610 million profitable or positive last year is now EUR 97.2 million negative. But it's very important to note that this contains EUR 87.2 million effective realized gains on disposals to the JVs, whereas we have EUR 184.4 million unrealized valuation losses. A like-for-like on the entire portfolio, it is 7.33%. And our portfolio is now valued at an average yield of 5.29%, which was 4.64% in December '21.

Maybe I'd just also add something there. The 5.29% gives us really a very comfortable feeling about the valuation going forward. We are currently, as I already explained before, in negotiations about a couple of new joint ventures on various parts of our portfolios. And the tentatively agreed pricing is well above our current valuations, which we have in our books. So we are making a profit on it. If we look at it today, we feel comfortable that this is priced rightly and that we are not going to have to take any further losses on our disposals going forward in today's market as far as we can look and what is agreed today.

Okay. Then the next line is the admin expenses. This has seen a favorable movement. We come from EUR 52 million to EUR 34 million. First off, we have 61 full-time equivalents more than last year. So we are now at 383. But a big part of our admin or a considerable part of our admin expenses definitely last year was an accrual for our long-term incentive plan of EUR 16 million, which is related to the net asset value growth of the company, not to our share price, but to the net asset value of our company. Obviously, this year, we have seen a different trend because also the equity, the raise is also compensated in the calculation. Hence, we took a EUR 4 million back. That is already a bridge of EUR 20 million. And then we have seen some increases in wages because we are with more people and others are some more variances in cost, but that was all not that material. The share of the net profit from the JVs and associates, it was also a positive contribution last year is a negative contribution now. But of course, this is all masked by an unrealized valuation loss within the JVs. In fact, if you look at the operating result that is higher than last year, it's EUR 8.5 million. I will also show it on the next slide. And all of the JVs, they are now valued at 4.68%. They came from 4.28% in the last year. So that makes actually our operating result is EUR 115.6 million minus, but it's, in fact, if you take out the noncash unrealized valuation changes, we have a profit of EUR 177.5 million, as already explained, 291% higher than in the previous year. On the next slide, we have the updated segment reporting, as I was referring to. In fact, we have now 3 distinguishable categories. We also had that last year, but we made investment in asset management. We made into one investment. We have now development, and we have the renewable energy. We showed the renewable energy because it's a high focus of us. It has strong growth. I will maybe start with zooming in on that one a little bit. As already mentioned, we have EUR 5.5 million net rental renewable energy income, which is up about EUR 5 million from the previous year and shows an EBITDA of EUR 3.9 million. On the investment side, there, it shows our net rental income, our joint venture management fee and our share in the operational result in the JVs outside any valuation changes and admin expenses, which are allocated through the 3 categories. There, we see a strong EBITDA growth of EUR 81.7 million to [indiscernible] million. And then we have the development. And the development now obviously has an unrealized loss, which is here net EUR 83.9 million, down from EUR 592.8 million, but these are the net valuation gains on the investment properties l [indiscernible] the JVs. And inside of that, there is EUR 213.5 million of unrealized valuation losses. In fact, if we take into account everything we will realize, then we have EUR 100 million of EBITDA on developed in 2022. We can go to the next slide. When we come to the balance sheet. First off the assets and then on the liabilities. So the assets, the total balance sheet increased from EUR 3.9 billion to EUR 4.9 billion. And the big movements, you can see obviously on our investment property, we went from EUR 1.8 billion to EUR 2.4 billion. This is, of course, the big CapEx we have done in last year, which was on this line in investment property, EUR 840 million. And then we had an unrealized valuation loss of EUR 177 million and some transfers to held for sale because we have the last joint venture closing Randgold 10, which we signed in December and was transactioned in January, rebook investment property to help [indiscernible] sold in the beginning of this year. That makes that inside of our total investment property that we have on our own balance sheet that we have a completed portfolio of EUR 1.5 billion, knowing that in total, we have 5.2 million square meters that we lease out, including the JVs, of that 2.2 million is on our own balance sheet. From that 2.2 million, we delivered 1.1 million in last year, 814,000 in construction, which is EUR 632 million. And then we still have development land of 573 million. The investments in the joint ventures. So there are a number of joint ventures. The biggest ones are obviously the ones that we have with Allianz, JV1, JV2 and JV3, the movements there is we have done some disposal JVs, it increases our equity. We received dividends, profit distribution in total of EUR 60 million, which went EUR 37 million through dividends and the remaining part went through repayment of shareholder loan but they are all profit distributions. And then we have variations on the other noncurrent receivables and the trade and other receivables. Essentially, these are extra investments we done into the JV financings we did and we received the EUR 17 million from Allianz when we closed the Munich, of which another EUR 7 million will be received in 2023 and another EUR 10 million on the last building, which we are having a look at with BMW be completed. The cash, it shows here EUR 699.2 million. It's to be noted that in the disposal group held for sale, there is another EUR 6.2 million, but that has been sold in the beginning of the year. But at the end of the year, we, in fact, had EUR 705 million of cash. And we have untapped revolving credit facilities of EUR 400 million. Last year, there were EUR 200 million. By December, we increased them with EUR 100 million to EUR 300 million. And in December, we increased in again with EUR 100 million fully uncapped and now the amount to EUR 400 million. If we go to the next slide to the equity and the liabilities. So our shareholders' equity, it's increased from EUR 2.175 billion to EUR 2.2 billion. We have, of course, done a capital increase in December, a rights issue, which was subscribed by 95% of the existing shareholders, I think, somewhat of a Belgian record, which resulted in the issue of 5.4 million new shares. And we have now an IFRS net asset value per share of EUR 80. The sharp eyes among you have seen that in the schedule of the press release, which has, in the meantime, been updated that the number of shares had to be corrected, but we have already [indiscernible] on this. In terms of the other points in our balance sheet on the liabilities, it's mainly on the debt. We did a raise of a bond of EUR 1 billion in retrospective, a very well timing. It was in timing. It was EUR 500 million on 5 years, 500 million in 8 years. One is at 1.6%, the other at 2.2%. And we will repay EUR 375 million of bonds, one is EUR 150 million in April, EUR 225 million in September, as already explained, and we intend to do that now from our available cash and the cash recycling that we have in view and have already done so far during this year. And in fact, all of our debt, except for a very small part on the Schuldschein, but it is immaterial, is fully fixed. And also Fitch confirms this they have done once the study on stress test in one of their releases on us in which our interest lines remains completely stable. We have a consolidated gearing of 34.4%, well inside of a target zone where we want to be. On the consolidated gearing, we have some covenants. They are at 65%. So we are well below that. And for the sake of completeness, we have also calculated our proportionally consolidated loan-to-value, which is 49.4%, which is in VGP not a covenant, which is a covenant within the JVs itself. But there, we are also well below any covenants on the finances that we have there in place. On the next slide, I've tried to make it very simple. How did we go from the liquidity end of December to the liquidity end of 2022. And it's very easy to say. So we start with EUR 400 million, EUR 200 million cash on the account, EUR 200 million untapped reserves that we had at the end of last year. We received EUR 347 million of cash disposals to the JV, EUR 4.5 million to the Schuldschein, we invested into our JVs, EUR 122 million for acquisitions of land, further financing needs there. We raised equity of EUR 300 million. We increased our RCFs with EUR 200 million from EUR 200 million to EUR 400 million. We spent the CapEx of EUR 850 million. We paid out a dividend of EUR 150 million, and then we have miscellaneous other operating cash, which was about EUR 73.6 million, resulting that we have available liquidity at the end of the year of EUR 1.1 billion. If we go to the next slide, our average cost of debt has gone year-over-year down. Obviously, in the last 2 years, we have been able to also issue low-cost bonds. And we are now at 2.3% average cost of debt. If we repay those bond maturities with existing cash this year, it will go further down to 2.10% approximately. And then the next slide shows the maturity profile of our bonds. In fact, we have now 375 this year, but then we have quite some relief in the next year. So we have only EUR 78 million to repay in 2024, EUR 18 million the year after and then EUR 214 million in 2026. It's 4.5 years average of our debt maturity. And in terms for the completeness, we have a lot of headroom to our covenants that we have always have had. So the gearing ratio already explained. 100% of our assets are unencumbered, only inside of the JVs, but on our own assets, everything is unencumbered. The interest cover ratio is 16.5% versus 1.2%. debt [indiscernible] ratio is 14.8% versus 1.2%. And if you have a look a little bit inside of our LTV is then you see Randgold, the first joint venture at 37.4% LTC versus internal covenants there. It's an amortized very conservative debt. We amortized quite a lot also inside of the JVs. It's well above 65%. So we are well there. Aurora, the new joint venture, [indiscernible] already fully completed standing portfolio. Aurora is still acquiring assets where we are still in the investment period, where we had 42.4% and the proportion of [indiscernible] 49.4%. I think, Jan, it's back to you.

Yes. I will give you an update on the joint venture, something everybody is wanting to hear from me. I understand from all the calls, which we got this morning. So first, a little bit on the existing ones. So the first is the VGP European logistics. The one we started in 2016, we already have net cash proceedings out of it of EUR 1.2 billion from out of the JV, which we reinvested mostly in our pipeline. The last closing was in January. It was a gross asset value of EUR 114 million, and it generated a net cash of EUR 81 million. That's already received on the account meanwhile. The second joint venture is a joint venture which also may be important to say is that there is, we also calculated once the IRRs, which we make on our divestments to the JV at the moment when we sell them. And on the last closing on the one which we did in January 2023, we sold 3 assets, and on average, they were at a 25% IRR. So meaning from the moment, we bought the land until the moment we sell the completed asset, that is our IRR, which we made on it. The one which we did before in July and in June and on July '22, there we made a 37% IRR to give you an idea on how profitable it was. If you look at our second joint venture, the Aurora one, it has happened the last one in July '22. Also, March 22 were also very high double-digit IRRs, which we did. So we did EUR 364 million, out of which we cashed EUR 210 million in March '22. And we did another EUR 24 million out of which cash that was just the Portuguese asset, which was a bit later, which we did in July just after the numbers were presented. If you look at Munich, -- so Munich is now completely closed. We have delivered everything. There is still a payment to be done by Allianz now in March. And we have -- we can still build 1 building for which we are in well progressed negotiations with one of our tenants to be delivered next year in the beginning of the year for which we also have the necessary permits available, which we'll start constructing. That IRR, and we have it since a long time on our balance sheet is 21%. Just to give you an idea, I wanted to showcase it once to have an idea about the profitability of our parks once we transfer them. And then on the 4 joint venture, we have many ongoing discussions with various groups. We have 3 ongoing discussions. We had a lot of interest last year from various people to buy assets from us, which we don't want to because we'd like to stay in charge of our parks, and we don't need to sell the assets. We also want to be selective and only do these liquidity events, which we need to be able to go forward and to reinvest what we really need to invest, not to have too much liquidity, even though we do have a lot of it today, but we have a big CapEx in front of us. But actually, everything which we are due to spend this year is more than enough covered. We can go on until the end of 2024 without having to do any other disposal into a joint venture. But at the moment, we are discussing with 3 big parties. One is for replacement joint venture in -- for our German assets, which is a relatively big transaction, which is to be discussed. We have a tentative agreement on the pricing. We have exchanged our heads of terms and we have an agreement on the content. They are doing the pre-due diligence at the moment. I cannot say yet who it is, but it is a big party specialized investor inside of real estate. The second one is the Scandinavic investor, who is looking at our assets, which are more Eastern European based, where we will be able to announce a deal probably in the first half of this year also. And the third one is also -- is a combined club of people who are doing already joint ventures together in other jurisdictions and now have said that they would like to step inside of our structure, which is existing. And these 3 negotiations are day-to-day ongoing, and I hope to be able to tell you a little bit more in the near future. Normally, we should have in the first half year a relatively quick now news about it, which we can communicate to the market. For the ESG update, I would like to ask Martijn, who is in charge of it to give us an update.

Thank you, Jan. I'll start -- explain a little bit what we have changed on our ESG strategy, then I'll touch on some of the highlights we've achieved in 2022. And then I'll give the word back to Jan to talk a little bit about the achievements by the VGP Foundation. We've had a very successful year from an ESG rollout perspective. Jan already alluded to at the beginning on the ESG ratings, the Sustainalytics one being mentioned where indeed we were rated 12.1 score, which equates to scoring part of the 5% best companies rated by Sustainalytics. So that's close to the 500 best-rated companies in their universe of the 15,000 companies they rate globally. I think that's quite an achievement. Also with CDP, we've had a significant improvement, where they've noted our ESG management improvements. So overall, I think, reflective of the steps taken. On the strategy, in 2019, we first disclosed our ESG strategy. And since then, we've made a considerable improvement on our CO2 footprint. So if you look at it on a per employee basis, our CO2 emissions have reduced on our own footprint, meaning our own employees, 45% until 2029. And we'll talk on some of the initiatives that will help bring that down further. Also in 2019, we started the VGP Foundation. As said, Jan will come back on that. But what we've done this year is we've actually broadened out the scope of the ESG strategy to also include steps we've taken on a circular economy, reducing the embodied carbon in our buildings. Jan already mentioned the improvement on sustainable transportation, the EV rollout in all our parks being one of our priorities as well. This has come out of a materiality assessment that we've done. And E-taxonomy is also one of the analysis we are doing on all of our parks to assess the compliance. That's all been done with a sort of a new governance team, where we have 15 people now focused on ESG topics across the group, and that includes sustainable ratings for our buildings. If you look at the ESG achievements for 2022, I think the 45% of the portfolio being Paris-aligned. Close to 45% is in 2050 is I think probably best in class. This is a location -based analysis, taking into account the photovoltaic rollout that we currently have underway. And if you look at that 134 megawatt peak, we are able to produce 115,000 megawatt hours. And as Jan mentioned earlier, we are getting close to covering all of our tenants, at least in 2021. It's fully covered. We're reassessing in 2022, but that I think is probably one of the best achievements. We've submitted our CO2 reductions to the science-based target initiative. So we're waiting for their response. But our Scope 1 and Scope 2 reduction of 50% in 2030, a 55% reduction on our end-use portfolio, our tenant consumption and a 20% reduction on embodied carbon in our building activities is what we've submitted. That last one being a new target, but that's all set as to be in line with the science-based target minimum requirements and also our CO2 analysis and calculations are being assured by our auditor, Deloitte. In terms of the photovoltaic projects in the pipeline, Jan mentioned, we are really focused on making sure that this is used by our tenants. 97% of the contracts that we've signed last year had a green lease class, meaning we've committed jointly with our tenants to annually review their consumption and look at ways to further improve their consumption. And at the same time, what we've done for our own offices, you see at the right top that actually since the 1st of January of 2022, all VGP offices across Europe are actually supplied by green energy through a pan-European power purchase agreement signed between VGP and VGP Renewable Energy Netherlands, the operator of VGP Park Rosendal, where we are actually purchasing that energy to supply to our offices across Europe. And then in terms of the building standard, we've made improvements. We've spoken about the wooden barrel structure. But also, we've changed our heating systems as heat pumps being our standard instead of gas-powered heating. And by now, we have 17 buildings supplied with heat pumps. Going to the next slide. Another important point is the improvement on eco-efficiency. So the heat pumps is one thing. But actually, we're also looking at LED rollout. So that's one of the things that we will continue to focus on in 2023 as well, replacing conventional lighting with LED lighting. We've implemented a number of water saving and retention techniques, which in the meanwhile, last year resulted in 105,000 cubic meters of rain water that could be reused in our parks. And we have quite a number of biodiversity initiatives underway, not only planted trees in our own parks and biotope setup in -- within our park, you see 488,000 square meters of biotopes actually realized within our parks, but also outside of our parks, a lot of work has been done through the VGP Foundation, and maybe that's a good segue to hand it over back to Jan to give you a few words on the achievement of the foundation.

Yes. Thank you. As you all know, we have started the foundation in 2019 with the aim to give something back to society or to the nature. And so we are investing in 3 segments or donating, doing charity in 3 sections. One is, yes, as I said, we put the money where our heart is. So one is a nature conservation where we have done so far, 19 projects of wide life protection or our biodiversity projects, mainly through cooperation with NABU, the German natur bund, which International President, Olaf Tschimpke, is part of our Board in our foundation. And these consists of -- we planted 70,000 trees last year. We did a lot of tea plant restorations. We did educational projects on the carpets and et cetera. Our people did 650 community support hours last year, which will be a multiple this year because it's a new KPI inside of our strategy, where people are doing really community work. It goes from planting trees over helping to pay in schools for handicap children, et cetera. And maybe also important to highlight is that we also donated last year, we were very affected by the war in the beginning when it started because we are active in a couple of countries, which are immediately neighboring Ukraine which have seen an enormous amount of refugees. I had 6 of them -- 6 families in my own house for a while also. And we have donated EUR 3 million to the United Nations to help these people to be welcomed into Slovakia, the Czech Republic and Romania, which are the neighboring countries where we are active in. Actually, it turns out that with these donations for the help of refugees, we are the second largest donator in these countries for refugee help after the United States of America. So it's very funny when the United Nations sends us a picture. There is a picture of all the sovereign nations, and there is one of our logo. So it makes me happy somehow to see that we can also bring something to relief, pain inside of the world. And as I said, going forward, we already donated to our foundation, EUR 12 million, of which we have spent less than half so far. It's really hard warming to see also how these people, which are doing this community work, how they are doing it mostly on a voluntary basis and how engaged they are to really help. And I am particularly proud of it that most of the people inside of VGP actively work together and bring us new projects and are really also contributing to making it -- to really help us to preserve biodiversity and to help making the world a little bit better place. We can go to the next part. To close off our presentation, I wanted to give you a couple of examples of things that we have done over the past years and which I'm particularly proud. And of course, one of the things which has been a difficult one to achieve has been our VGP Park in Munich, where we needed a cooperation of the fresh start buyer and the [indiscernible] to be able to swap the land so that we could do a new thing. We could only do that to household 2 of the most iconic companies which Bayern has Krauss Maffei, which exists since 1800, more than 160 years, which was in the first place a locomotive producer and was since 117 years in Allach, and is now moving. And the second one is the BMW factory, which is now taking more and more space inside of the park also. So the location is really prime. It's very close to where the mess is every year, the former airport, which has moved. And actually, since they moved the airport, this is the largest movement inside of Munich area, which has happened since the -- since 30 years. The land area is 674,000 square meters, roughly 24 hectares out of that is now a biotope which we have created on the spot, right next to it with water retention, with plants and et cetera. The gross lateral area, which we're going to have once it's fully developed is 314,000 square meters. It's directly adjacent to the exit of the part of junction on the A94 directly adjacent also to the ring road around Munich. So you do not interfere with the local communities. You have a direct access and exit from the highway. You don't need to drive through any living areas. It's only 5 minutes to Munich Mesa, as I said, and 30 minutes now to the new airport. And we have an S-band connection, which was maybe the most important thing. Many people can come just by train to work because the connection is really -- it's 10 minutes' walk, it's 500 meters away where we have an SBM connection right next to our park. Yes, we can go to the next slide. So as I said, it's fully leased to 2 iconic Bavarian production companies. I did the negotiations myself with the local authorities. It was quite -- it took us a long time. But Krauss Maffei today is moving into -- and then all the equipment which they move inside is all brand new. So the gross lettable area, which they have there is 211,500 square meters. It's their new headquarters. It's a production facility, a test plant, 3 production halls, main administration building, 4 office and social buildings and then we have a multi-store electric vehicle equipped car park fully equipped for electric vehicles. We have canteen, cafeteria and approximately 15,000 square meter of showroom, which they call their customer experience center where they can also show the machines, which -- and they are really high-tech machinery, which they produce is very well known. In the whole world, they export to all continents on the globe. And the second one is BMW, which originally wanted to have their FIZ, logistics center there. FIZ is Forschungs- und Innovationszentrum. It means their R&D center. But they changed during the course of the construction, their aim although it's still part of logistic warehouse, it's now mainly a production area and they're taking up more and more space. We have still some space available where they are developing batteries for electric vehicles. They invested an enormous amount of money inside. You can see on the picture the last building, there is a tower up there that is where they also produce batteries. They employ a lot of highly skilled engineers and they now pay also locally taxes, which is, of course, very welcomed by the local authorities. And we have also an EV equipped parking house. The EV equipped parking houses are run by ourselves. We ourselves did the investment in the technology to charge the vehicles. VGP Park Munich is also a fine example of our sustainable solutions. It's not only got DGNB Gold certification. The energy efficiency features are many, and it varies from groundwater heat pumps where we are connected to. We have EV charging stations for all the cars, as I said. We have green roof and facade. Part of the roof is green and the facade is into a large extent also a greenfield. We have a lot of green areas. As I said, we did biodiversity, 24 hectares of biodiversity things. We have a lot of natural light because it's a production area. People really like that also. And we have smart window shutter system, smart sliding systems, which go on and off, et cetera. So yes, I think it's a fine example of how a modern park should really look like and how it should be integrated inside this new habitat. We can go to the next slide. It's also on renewable energy. It's one of Germany's largest rooftop solar panel installations. It has a capacity of 12.5 megawatt peak. And the vast majority, the advantage of it is also that we have a very long-term tenancies with Krauss Maffei and with BMW, both are 15 years plus prolongations. And they also signed a very long agreement with us to -- with the commitment to use all the energy firstly, from the PV installations for which we have given them a fixed price and which is, I have to say, a nice yield for us also. And the remaining energy, there is a small part of it is sold to the grid, yes. Yes, we have some impressions. You can see it's a large park. We'd like to do an Investor Day maybe once on the spot. So you can -- we can show you around. It's not -- because this is really an iconic one, we'd like to show it once also to our investors now that it is really ready. I think it's one fine example of we're always saying that we need to do something for our industrial -- our industry in Europe to keep them here. And I think this is a fine example of how you should do something. It is ideal logistics and they need to invest in the logistics. It's the ideal layout. It's an ideal -- if you look at it where they come from, the 127-year-old buildings, which have been slowly but steadily expanded, and there were so many lots of old buildings and then they had to go with one machine part to another machine building. And so ineffective. This is really the top of the bill of an effective logistic and production hub, how it should be, I think, which we have engineered together with them. We have really done everything out of the construction. And I have to say thank you to the German team, which we have because they've constructed this completely with our general contractor. This is completely constructed by our VGP internal people. Over the period, we started construction in 2019, and it's been successfully and well below budget. We were EUR 33 million below budget, delivered at the end of 2022, in December 2022. Yes. We can go to the next slide. I also want to show you once a long-term investment because doing a land opportunity is not always as straightforward as it looks like. And sometimes, it's difficult. Now in Holland and in Belgium, we have the same problem. There is a lot of fuss about nitrogen and nitrogen compensation, which has to go. And that's why a lot of projects have been stopped in the Netherlands because they cannot get the permits necessary to show that they are compensating the nitrogen problematic. In Moerdijk, which is a location where people have been working on since over the last 22 years to give it a little bit of perspective, the local authorities have planned an enlargement of the port of the Port of Moerdijk. And the Port of Moerdijk lies exactly in the middle between its 1 of the 5 deep harbors of Holland, and it lies exactly in the middle between Antwerp and Rotterdam. And Moerdijk itself disposes over 2,800 hectares, industrial and logistic hub where they are full, completely full, and they needed an expansion. And it's a fine example of how people can work together between somebody private who is taking the drive and the local authorities who are -- then the dynamic of the 2 together works very well to push it forward. It's taken a lot of times, and we stepped in in 2019 when we first entered the Dutch market. And we are -- we took a 50-50 with our local partner, [ Rosavin Hopper ] and the local port authority. The land area in total was 200 hectares. It's net of 140 hectares. It is now irrevocably permitted. DSV has bought part of it and is going to start up its construction of its first 200,000 warehouse, square meter warehouse, which is going to be started up this year. And we have a potential gross lettable area of 900,000 square meters in total, of which roughly half will be VGP's. Yes, it has got excellent interland connections. It's the only land plot which we have, which has 2 highway connections, 2 separate highway connections from 2 different highways. So you can imagine the sheer size of it, and it's very close to the main ports, Antwerp, Rotterdam. And for example, Lidl is using Moerdijk as its main import hub inside of Continental Europe. So that is where they have all their warehouses, and they also are buying a big plot of land inside in our new park. They are buying it from the port, from the part of the port, and we are going to develop our part directly. As you can see, you can see the highways everywhere around and the exits. We have -- our first phase is the one on the bottom of the first picture. That is where we can construct roughly 300,000 square meters. We have a lot of tenants in place. It took us a bit longer to develop the land because we have to preload it. So there is 1 meter of sand or 1.5 meters of sand, which has to be put on it and which had to sink into the ground. But we are there now. And in the second half of this year, we are going to start our constructions in Moerdijk. We have a lot of interest from tenants parties, and I hope that to be able to announce you our first lease agreement soon. And we can go to the next one, yes. And I think that's it. That's a little bit. So to give you -- we also have La Naval. We're now in -- you know the shipyard which we bought in Bilbao, we completely demolished it meanwhile, and we have signed an LOI now with [ HeizeiWind ] to develop 80% of it. There is a lot going on in VGP. But to make a summary of our press release and our call today is in the first place I am confident about 2023. We have a very nice liquidity position. We have very good tenants. There is a lot of new income coming inside of our balance sheet. We see a continued healthy occupier demand. We've been very careful last year, not to buy things which are overpriced, and it pays off, I think, today, if we look at it. We see the construction costs namely coming down, and it's coming down faster than everybody thinks. We have invested a lot in our technical competence, and that is what I wanted to show you with the showcase of Munich. We are doing the same for Zalando. We are doing the same for a lot of other tenants with complete robotization, automatization, all done by our internal engineers. And our ESG measures, as Martijn explained to you, they are becoming increasingly important factors of distinction for us. We really want to be best in class, even if it costs a bit of money. I think it's very important towards the future. We are on the outlook for new opportunities. We see many things coming on the market, and we are just waiting for the right time to pick the ones which we think are most interesting. We are focused on developing our existing land bank at profitable developments with profitable developments against attractive conditions, like we also did in the past months. We really signed very nice leases. And we expect to be able to announce concrete developments with our new joint ventures soon. As I speak, we are really in very advanced negotiations going on. I don't consider it myself so important as all the analysts seem to think [ of my position ], but it helps us, and it has always helped me, and I did it in the first place to create a joint venture to grow, and that is what we are focusing on in the future. Thank you very much for your attention. And if there are any questions, we -- the 3 of us and Dirk, who's here also, we are all ready to answer whatever question you may have. Thank you.

Thank you. So a few questions on my side. First, thank you for the presentation. For the JV number 4, you mentioned several partners potentially. Do I understand correctly that there could be several closings within that JV with different partners? And then the second question is how is it going to be structured, the same way done with Allianz, 50-50? Or do you think differently?

Yes. So there is -- the fourth JV, we have to take a look at [Technical Difficulty] on various parts of the portfolio, discussions with various different parties on roll to make new joint ventures. So it won't be one joint venture. It will be a couple of joint ventures, which we are discussing at the moment, in variation new locations and various parts of the portfolio. And they are all, at the moment, what we have on the table, it's all the same structure type than we had before 50-50, in which we don't consolidate, they don't consolidate. It's a common control, and we are going to do all the assets and property management.

Maybe if I may, what would be the amount of disposals that you would get for this year in total in GAV?

That's a very difficult question. Yes, in terms of rental income, we have EUR 130 million on our own balance sheet. So a considerable part of that could be up.

What we are discussing today is a relative large amount of disposals of transfers towards the JVs, but we would like to do it in consequent steps so that we profit from the rental income, which we still have and that we do not take up too much liquidity, which we can't invest immediately right away in new projects, which are very profitable. So we are going to do it [Foreign Language], at a pace where we think it's necessary. But we have -- there is appetite for all of the assets which we have in our -- on our balance sheet.

And so you started this year less than 500 square meter in terms of new projects. What would be for you the guidance for this year? And what would be the targeted amount of CapEx, new project for this year?

Yes. So we do every year a KPI budget review with all of the countries which we are active in and they are very bullish. If I look at what they want to construct, they are very bullish and they see a lot of opportunities. I want to be sure that we have -- that the construction prices are there where we are and that what we construct remains for a big part, pre-let. I think it is -- it would be unwise to go and run off and do things like that. But to give you -- we always set a guidance between 400,000 to 600,000 of new start-ups, and I think that is valid also for the year 2023. That's what we are effectively looking at. And on the CapEx...

There is a note to be published, which says the total of our commitments outstanding at the end of 2022, that includes land purchases as well as investments inside the buildings, and that totals EUR 520 million. But that EUR 520 million is not to be spent all during this year because some will be spent over -- it's the future commitments that we have. I think around EUR 400 million is what we really have commitment during this year.

And to give you an idea, if we start up 400,000 to 500,000 square meters, the actual CapEx which is related to that extra would be between EUR 50 million to EUR 80 million in this year because the bulk comes then in the next year. So it's not going to increase a lot on that.

Following on the development pipeline. I did some quick calculation. If you stated the pipeline at the start of this year is around 814,000 square meters, and then you expect EUR 51 million rental income. And then if I just apply your average 5.29, is then the ballpark value when finished around EUR 1,200 per square meter. Is that kind of ballpark right?

I'm sure that if you calculated it, it must be, right. I never calculated it by square meter price, but it must be around that value, yes.

Okay. Then I'm wondering about -- you spent some time on explaining that the construction costs are coming down. Can we then kind of pinpoint around where the yield on cost is around for this year?

Well, I'm going to give you a bit of broader answer to give you an idea about where the market was. So you have to calculate if you buy land and you're going to develop it that as a rule of thumb, you need 2 square meters of land for 1 square meter of developed building at least, that is a little bit the rule of thumb, plus the construction cost. And the construction cost last year, it was somewhere between in the cheapest countries, EUR 450 per square meter and in the most expensive country is EUR 950 per square meter. So it was tremendous. It -- really, it increased 30% to 50% throughout the market. And that is why we refrained -- we'd only just constructed what we had to and where we had good rental agreements for. If we now go -- if now look, we have put in our KPIs, our development yields, which we would like to do and our development yields are everywhere. And also on the new German things which we are doing now, which we are constructing, are everywhere well above 7%, and we aim for higher. So whether it is Spain, Portugal, Italy, where everywhere looking at least 7.5% to 8%, and we try to be higher.

Okay. Following on to the solar income, which was a nice surprise. You also referred to that there were some exceptional energy prices. And as you're selling locally that must have had an impact. Can you also pinpoint kind of yield on cost for that division where that situation?

So we calculate in our business plans, which we had before, we calculate with a yield on cost of between 8% to 12%, that was our target. But due to the very big rise in energy prices last year, we had a yield on cost. It's not sustainable completely, but we were able to contract a lot of contracts long term with a lot higher income than we had foreseen. So there, we are hitting 20% of yield on cost.

If you look at the average price at which we sold energy last year, that was EUR 250 per megawatt hour -- so if you look at where we have secured our contracts, they're considerably lower for some of our larger parks. We're at, say, EUR 75. So obviously, the energy price is at the levels where they are, depending on how sustainable that is, the revenues will clearly be lower end of what Jan mentioned. But at the same time, we've increased our production. So where last year, we produced 27,000 megawatt hours, if you annualize the production we had at December 31 of 2022, it's 45,000 already. And then we have another sort of 50 megawatt peak that will start to come into operations, depending on when grid connection is occurring in the coming sort of 12 to 18 month, so that will further boost it. But particularly, the energy price obviously makes it difficult to predict. The good thing is that we have these floors. So we have at least a subsidy or a contract with a tenant where we have a minimum price.

Thank you for the presentation. Just on 2023, you previously mentioned 7% indexation to be fed through in the contracts. How do you see that now in terms of what could be reflected in your rental income?

Yes. Well, you have to -- on our own portfolio, we have 2.2 million square meters of which half was delivered last year. And all of our contracts are indexed and all of our contracts are indexed towards the CPI or towards another indexation. But -- and they start counting from the moment when we deliver. But some of these contracts only start to be adapted to that indexation later on. So we catch up, but in a little bit later on we have a void period or 1 or 2 years. There is a bit of caps inside. But that is -- so it is -- we're going to capture the biggest part of the inflation, but it will be with a delay effect going forward due to the age of our assets, if you look at it, because there's so many delivered. I mean we delivered to the joint ventures also. We delivered 600,000 square meters or 650,000 square meters in '21, 1.1 million in '22. So if you already look at that, we have 800,000 under construction. So it's all brand new. So it also takes some time before inflation kicks in.

Tenant needs to be 1 year in before the indexation comes where it starts from the lease. Whereas in the JVs, they are completed existing portfolios, sometimes already longer. There we see the normal indexation levels, reflecting what the market is.

Yes. And maybe just a note, a side note towards that. Last year, we had some terminations. We had EUR 10 million of rental income which we had to re-lease, which terminated and we had to re-lease, and that we leased out at an average price of 12% higher than it was before than the previous contract.

If I can come back to the yield expansion there. I've got 2 questions like, one, can you give a bit more color on where it's really situated because it's significant from [ 64 to 529 ]. And also, I think you mentioned that the JV is now valued at [ EUR 4.68 ]. Why exactly then if you compare your portfolio to the JV, why that's so different?

The difference comes from the geographical spread. Obviously, that's the first thing, because it's another combination of countries inside of our own portfolio, and that's inside of the JV, which is mostly Germany, the first one, where the yields are lower and it's the Western European countries where the yields are a bit lower still today. The expansion comes mostly in our portfolio also out of the German and the Western European assets, which have been -- Germany has overreacted a little bit, in my opinion because the offers which we see coming in today, they are not as bad as what the valuators think the market is in. So we still see transactions happening at pricing, which are to our understanding a little bit higher than the valuation is today. And if we look at the -- in Eastern Europe, there is -- how would you call it? There is a step behind. The Eastern European yields actually have a little bit contracted because there was so much difference between the Western European and the Eastern European yields that they have now a little bit more leveled out. Western Europe has still got better yields, but the Eastern Europeans have approached a little bit more, which is also, I think, logical. There was too much a bigger difference between the 2 of them. Specifically in the Czech Republic, it's mainly fueled by the fact that there is no availability, 0, there is no land availability. There is no thing and the rental price, the ERV of the tech assets have increased tremendously. We have seen effective leases signed in Prague, all above EUR 7 per square meter per month, which is -- to give you an idea, when I signed our Horni Pocernice in Prague in 2005 to 2009 when we were -- we were at an average price of EUR 4.35 and now they are at EUR 7, EUR 7 to EUR 7.5. And that is where the increase in value comes from. It's just -- it is -- there is no availability and the rental prices are really very high. We can also see that in our own portfolio, we are -- the ones which we just leased out now, they are at substantial higher prices than we had before. That's where the difference in valuation comes from. Are there any questions on the line?

Yes, we have a question from Paul May from Barclays.

Just noting the losses reported in the developments in the year. I appreciate the subs changing. My understanding was that you were still generating profit on your developments given the yield on cost versus the valuation yield. Whether this would imply that, that isn't the case and doesn't seem to be driven by land write-downs, which actually had a positive uplift in the year. So just trying to reconcile why the developments were written down?

Indeed, we have an unrealized valuation change, which was for the entire portfolio, about 7%, but we also had the profit on the developments that we initiated during the year 2022 that amounted to approximately EUR 51 million.

The properties under construction, is there's a net loss of EUR 110 million for the year. So -- sorry, can you explain what the loss was related to if it wasn't properties under construction?

EUR 110 million?

Note in the investment properties, it says properties under construction, net gain losses from value adjustments, EUR 110 million under construction in the year. Just wonder what that relates to.

If there are any losses on projects under construction, it must have been losses occurred during 2022 of things which were already under construction in 2021 or even in 2020 and which will be for valued higher which there is less than of the historical margin, which has gone down. That is the explanation about it because we had taken -- they were valued at a higher yield before and they were valid afterwards at a lower yield. What the real difference is, I told you the IRRs, which we realized on our disposals. We wish we can -- next time, we can certainly give also an IRR on the things which we are going to have completed during now, so that you have a historical view of how much profit there was on it. But I'm completely confident that it is a very nice profit. It's just -- that is the explanation of the EUR 122 million. It must have been the -- or EUR 110 million. It's revaluation of assets, which we had already valued for the first time or for the second time in the years before.

Last year, at the end of the year, we had 1.6 million under construction. Now we have 800,000 in construction, and we initiated 470,000 and delivered the difference. And so there is a big part -- the revaluation of the 2021 assets, indeed, and that's why that is showing a negative amount there, that's Jan confirmed.

And then the second question, you mentioned, obviously, an expected profit on cost or expected profit on cost, you say high IRRs on to be started constructions. And you mentioned that the -- I think the local company manager and local country teams are very, very bullish on wanting to start new projects. What is the thing that, I suppose, stopping you doing that? Is it purely access to capital? I imagine they only want to start projects if they've got tenants in mind. And as you say, you're going to get a huge profit on those developments, but you seem a little reluctant to start them. Is it just purely access to capital? Just checking what the neck maybe.

Yes, yes. No, the main driver for me, there is 2 things at the moment. So we are really waiting for the right opportunity to see that the construction prices are down at a level, which is towards acceptable and which correlates to the rental. And the second is pre-let. My pre-let ratio, I am not going to start widely developing speculatively in a market which we don't understand the dynamics of it. Today, we see a lot of healthy demand, and there is a lot of tenants which have asked us to cooperate with them to start new developments and it's -- we've got invitations over the past weeks and months of a lot of tenants, which are asking us, can you develop something for us here in that park or in that park. But we want -- it's for us, I want to be conservative in going and not to do too many speculative developments. I really want to be sure that what we start is also the metrics -- the mathematics of it are correct. So I want to see that we have a pre-let in place for as much as possible and not taking too many speculative developments going forward. We've always been prudent on that. But now I'm extra prudent.

Okay. And -- but as you mentioned, you're being driven by demand from tenants. I think as you mentioned, they're wanting you to develop those, which I suppose would cover the pre-let requirement if they're asking you to build it, I'm guessing they want to occupy it. How much do construction costs need to come down to make the IRRs work? Or do the IRRs work today, but they'll be even better with lower construction costs. Is that what you're highlighting to? I'm trying to understand exactly what the reference to the construction cost is.

Yes. So we are -- all of our people are making a business case when they are negotiating. We are currently negotiating a couple of very big leases in Italy, Spain, Germany, the Netherlands and where everywhere we've said we need a minimum targeted yield of [ x along that ] -- and we didn't really tender out the construction cost over the past months because it was just ridiculous how high they were and we see them coming down now. So we are at a verge, I think that we are going to start up new constructions in April, May running out of the year. And I think that there we're going to be -- my gut feeling is that we are going to be, again, looking at yields which are bringing us a profit of at least 30%, which is what we are aiming at and which has always been the bottom of our business plan.

The next question is coming from Pieter Runneboom from Van Lanschot Kempen.

I have one question from my side on the market specifically. You showed rents were up 35%. Is there also something you are seeing in Moerdijk or in other Dutch locations? And what kind of rents are you targeting here?

We just made a couple of offers for interested parties, both on our parks in Nijmegen, where we can still construct -- where we have a building permit for a very nice construction of 100,000 square meters and where we have a lot of interest as well as in Moerdijk and we effectively are speaking about rental prices, which are a lot higher than what we originally assumed for in our business plan. So we -- I have to ask it, how high the rental price was now. But I think we are at about -- above EUR 60 per square meter -- around EUR 60 per square meter per year now in the Netherlands and in Moerdijk which is considerably higher than we were 2 years ago, indeed.

One other question of mine. So if you're working with other companies or other partners on selling to them, how does this work with Allianz [indiscernible] other developments you are doing? Did you agree with them that they are not using this [indiscernible] or -- how does this work?

[indiscernible] to do other joint ventures for that part, which was due to go into the fourth joint venture. All the other joint ventures which we have, they just continued going further as is, I think, more than well demonstrated by all the closings which we've done in the past months. We've done Randgold 3 closings -- 2 closings in the last months. We -- in Aurora, we did one last year in June. We are working on a new one for this year. Munich, they just paid in December. And this -- so the rest of the portfolio which we have now, that is -- which was aimed to go into the -- there we are negotiating with various parties over various things from various jurisdictions where we are totally free to do what we want. And then there is, of course, a lot of -- there's a number of countries today, which are outside of the joint venture parameters with Allianz, which are also targeted by the new investors. Maybe it was in the presentation, I don't remember. But last year, we announced that we would start operations also besides Denmark, where we are active, also in Sweden and in Greece, and we stopped those. We've frozen the 2 countries until we have a better view on the logistic development in those countries. I think Sweden is a bit overheated and Greece is a bit difficult at the moment. So we stopped those.

The next question is coming from Marios Pastou from Societe Generale.

So just a follow-up actually on the previous question regarding the negotiations you have with potentially new partners for the JV that didn't go ahead towards the end of last year. I just wanted to check, does that -- do your negotiations with new joint venture partners or potential partners are inhibited at all by the fact you have this agreement with Allianz for right of first refusal in those locations. So effectively, you'll be agreeing a disposal into a JV with one party, but essentially, Allianz holds this right to refuse or first refusal of properties going down the line or outside of what they've already refused towards the end of last year. Yes, just some further color would be very helpful and how the structure would work.

We agreed with them that there would be no right of first refusal anymore on those buildings, which were supposed to go inside of the new joint venture. So we are free to offer it in the market. There is no right of first refusal anymore from Allianz on those particular assets.

I think it's a quarter past 12. I think we let people go.

Okay. I hope this answers your questions, and thank you very much for your attention, and I hope to see you soon again.

We remain available for any other follow-up questions.

Thank you.

Thank you, everyone. This concludes your conference call for today. You may now disconnect. Thank you for joining, and enjoy the rest of your day.