Grand City Properties S.A.

Thanks. Hello, and good morning to everyone.

Thanks for joining us today. In the name of GCP, I kindly welcome you to our results call for the first 9 months of 2024.

With me today are CEO, Refael Zamir; CFO, Idan Hadad; Chairman of the Board of Directors; Christian Windfuhr; COO, Sebastian Faltin; and Head of Investor Relations and Capital Markets, Michael Bar Yosef. Christian Windfuhr, Refael Zamir and Idan Hadad will guide you through the results presentation directly after this introduction.

You will find the results presentation for this call on the company website in the section Investor Relations under Publications. [Operator Instructions] With this, I will hand over to Christian Windfuhr to begin with the presentation.

Good morning, and welcome to our Q3 2024 financial results presentation. We are happy to present you our 9 months financial results with strong like-for-like and improved market sentiment.

So far this year, we have seen continued growth in rental income, driven by the ongoing supply and demand imbalance in key metropolitan areas in Germany and London. As rental levels in these markets continue to rise, we expect these trends to continue in the medium term, supporting both rental growth as well as accelerating upside potential.

During the 9 months period, we also took steps to strengthen our financial position. We successfully launched exchange offers for our perpetual notes in April and September, which were well received by investors, reflected in the high acceptance rate of 85%.

This strong response has allowed us to further improve our balance sheet and enhance our credit rating metrics under S&P's methodology. In addition, our proactive debt management efforts remains on track.

We have repaid over EUR 500 million of debt year-to-date, which is an important part of our ongoing strategy to reduce leverage, extend our maturity schedule and improve our financial flexibility. With strong investor demand, continued strong operations and an overall improvement in the economical market outlook, we clearly see a shift in momentum, which is turning positive again after several challenging years.

We see this also in the valuation outlook. While it's still early to predict exact numbers, initial signs suggest that we have reached the bottom of devaluations as yield expansion has mostly stopped.

Going forward, we expect a stable or even slight positive momentum to return, initially driven by strong operational growth in the coming periods. We will now move on to the details in the following slides, starting with Slide 3.

We will go into greater detail of these figures in the upcoming slides, but allow me to highlight some of the most important KPIs. For the first 9 months of 2024, our net rental income increased by 3% year-over-year, while adjusted EBITDA rose by 5%, contributing to a stable FFO I of EUR 141 million, which is consistent with our full year guidance.

Despite experiencing a slight devaluation in the first half of the year, our LTV ratio stands at 36% as of September, stable compared to 37% at the end of December. Similarly, our EPRA LTV remained stable at 48%, and our net debt-to-EBITDA ratio improved further to 9.1x compared to 10x at the end of December 2023.

Additionally, our ICR was 5.8x in the first 9 months of 2024, up from 5.6x for the full year '2023. These figures highlight the conservative approach we take in managing our balance sheet and underscore the strength of our financial position.

Our portfolio's vacancy rate remains low at 3.9%, and in-place rent has increased to EUR 9 per square meter as of September, up from EUR 8.6 per square meter at the end of 2023. Our like-for-like rental growth is better than we expected at the beginning of the year and stood at 3.5% as of September, driven by increases in in-place rents.

On Slide 4, we present some key trends and highlights. Our operational performance remains very strong, with positive momentum continuing throughout the year.

The ongoing supply and demand imbalance in key metropolitan areas is contributing to further increases in market rents, which is benefiting our portfolio. As a result, our reversionary potential has expanded further, now standing at 24%, mostly in our German portfolio, which actually guarantees us rental growth for the next few years, even in case that market rent momentum would slow.

This growth is despite already solid like-for-like rental growth, demonstrating the continued strength and upside potential in our rental income. In terms of property values, we see clear signs that we have reached the bottom of the current cycle with the June revaluation.

The negative momentum we observed in previous periods has halted, and market yields are now at more attractive levels, particularly when considering the ongoing rental growth momentum. We anticipate that any potential future value improvements will be more driven by strong operational growth, with stable to slightly higher values possible for year-end, followed by positive revaluations from 2025 onwards.

In the capital markets, sentiment has improved significantly in recent months, which has been reflected in a higher level of activity within the real estate sector. The positive shift has supported the success of our own capital market initiatives so far this year, including the successful perpetual notes exchange and our first bond issuance in 3 years.

Both initiatives were met with strong investor interest, including high participation and oversubscription. Furthermore, we maintain a sizable disposable pipeline which we could execute, but we have become more selective in our approach, shifting our focus from liquidity to price.

With positive developments in the transaction market, we anticipate a rise in market activities moving forward. And let me now hand over to Refael for the following slides.

Thank you, Christian, and good morning. Turning to Slide 6.

The ongoing supply/demand imbalance in Germany and London market remain a key driver for our operational success. The strong employment market, combined with ongoing immigration and growing number of refugees, is increasing the pressure on housing demand.

As a result, asking rents continue to rise. Additionally, demographic shifts, particularly the decreasing size of household, are further increasing demand for rental properties.

City-specific trends also show a strong backdrop. For example, in Berlin, housing completion and building permits remain far below the 20,000 unit target set by the government.

At the same time, Berlin experienced its third-highest rate of migration since 1991. In Cologne, population growth, especially among young people and immigrants, is driving demand, but the city is issuing fewer building permit relative to its population size compared to other major German cities.

And Leipzig has seen solid population growth over the last 5 years, but the city saw a decrease in housing completion and significant growth in building permits issued in 2023. Overall, those trends continue to push rental price higher, creating supportive environment for our portfolio rental growth.

Moving to Slide 7, we present our strong operational dynamic with like-for-like total net rental growth, which stood at 3.5% for the period, driven by in-place rent increase. As previously mentioned, the ongoing supply/demand imbalance in a key metropolitan market continue to support favorable market dynamics.

Our portfolio is well positioned in those key metropolitan area, which allowed us to take advantage of this imbalance and generate organic rental growth over the medium to long term. Looking ahead, we expect rental growth in Germany to remain high, which is primarily due to the delayed effect of the regulatory framework.

In London, we are currently experiencing the strongest rental growth supported by the absence of the rent control, which allowed us to catch up to increasing market rent faster. As of September 2024, our portfolio in-place rents stand at EUR 9 per square meter, which reflect a compounded annual growth rate of 3.9% since December 2021.

We see further potential for rent increases as there remains substantial upside relative to the market potential in key locations, and looking forward, we have anticipated that future like-for-like rental growth will continue to be primarily driven by increases in the in-place rents. Turning to Slide 8, we provide an overview of our portfolio composition.

Our portfolio remains well diversified, with the largest concentration in Berlin with 23%; North Rhine-Westphalia with 21%; and London, 19%. Smaller allocations are in Dresden, Leipzig, Halle with 13%; Hamburg, Bremen with 5%; and other locations such as Munich, Nuremberg, Fürth, 4%; and Mannheim, Kaiserslautern, Frankfurt and Mainz, 5%.

During the 9 months period of 2024, we signed disposal totaling approximately EUR 230 million, of which around EUR 100 million is expecting to be completed in December 2024. The total completed disposal amount to EUR 170 million, of which EUR 130 million refer to deals signed in 2024 and EUR 40 million disposal signed in 2023.

Those were completed at a slight discount of under 2% at the rent factor of 17x. The properties sold are primarily located in London, with additional disposal in North Rhine-Westphalia, Berlin and Hessen as well as condominiums.

In Slide 9, we present our results for the 9 months of 2024. Solid net rental income amounted to EUR 317 million, reflecting an increase of 3% compared to the same period in 2023.

With strong increase of 5% over year, we present adjusted EBITDA of EUR 250 million. The growth in both metrics was driven mainly by the solid like-for-like rental growth of 3.5%, although this is partially offset by the impact of the net disposals.

Property operating costs were 9% lower compared to 9 months 2023, mainly due to the lower utility cost, particularly heating expenses, which are recoverable from tenants. We did not carry out portfolio revaluation as of 30 of September 2024, and therefore, there was no movement in this item for the quarter.

Overall, we report a moderate loss of EUR 17 million for the 9 months of 2024 compared to a significant loss of approximately EUR 398 million for the same period in 2023. The losses in both years were mainly driven by negative revaluation in the first of the year, but in 2024, this was mostly offset by stronger operational performance.

During the 9 months of 2024, the negative revaluation were only 2% in comparison to 6% during the same period of 2023. On Slide 10, we summarize the FFO I and FFO II results for the 9 months of 2024.

In the 9 months of 2024, our FFO I amounted to EUR 141 million, stable in comparison to the same period of 2023. Our strong operational performance, combined with proactive management decisions, referring to our interest rate exposure as well as liability management activity, offset the negative impact on the FFO I from the resetting of the 2 perpetual notes in 2023.

This results in an FFO I yield of 9%. Turning to Slide 11, we provide an update on our maintenance and capital expenditures.

Our focus continues to be on enhancing the asset quality of our portfolio. For the 9 months of 2024, we invested EUR 18.5 per square meter on combined repositioning CapEx and maintenance.

Of this, EUR 14.1 per square meter was allocated to repositioning CapEx. In addition, we invested approximately EUR 2 million on modernization projects.

Those investments are made on a selective basis and include initiatives such as adding balconies, installing elevators and upgrading technical infrastructure to ensure optimal power, water and heating supply. We also invested EUR 18 million in pre-letting modification, which support bringing more apartments to cash generation.

Investments aimed to improve energy efficiency and reduction of CO2 emissions, such as replacing windows and upgrading heating system are categorized according based on the project. Adjusted FFO I for the period amounted to EUR 83 million compared to EUR 87 million in the same period of 2023.

On Slide 12, we showed our EPRA NAV metrics. Our EPRA NAV metrics are as follows.

EPRA NRV per share and EPRA NRV are down by 1%. EPRA NTA per share is stable and EPRA NTA is down by 1%.

EPRA NDV per share and EPRA NDV are down by 5% compared to end of 2023. The decrease in the EPA NAV KPIs was mainly due to the revaluation of sales recorded in H1 2024, which were mostly offset by strong operational profit reflecting by FFO I of EUR 141 million.

Idan, please continue.

Thank you, Refael. On Slide 14, we present an overview of our strong financial profile.

As of September 2024, the company maintained a very comfortable and robust liquidity position amounting to EUR 1.5 billion in cash and liquid assets, an increase from EUR 1.2 billion at the end of December 2023. This liquidity position comfortably covers our debt maturities through the end of 2027.

Our LTV ratio remains low at 36%, showing improvement from H1 2024. It is broadly stable compared to December 2023 and aligned with our LTV in 2021.

We have also achieved a further reduction in our net debt-to-EBITDA ratio, which now stands at 9.1x. Through proactive hedging activities in Q3, 95% of our debt is now hedged, predominantly fixed and swapped, with the remaining 5% covered through caps.

Only 5% of our debt remains variable, offering potential benefits from any future decreases in interest rates, which would positively impact both the variable and capped portions of our debt. Our interest coverage ratio stands at 5.8x.

Additionally, EUR 6.2 billion or 72% of our portfolio remains unencumbered, underscoring our strong access to bank financing. Lastly, our corporate credit rating affirmed by S&P in December 23 remain BBB+ with a negative outlook.

Slide 15, we provide an update on our debt maturity schedule. As a result of July bond issuance and our ongoing liability management efforts, we have successfully reduced our refinancing risk.

Our current cost of debt stands at 2.1% and an average debt maturity of 5.1 years. It is important to note that the issuance of a higher coupon bond and the repurchase of lower coupon bonds resulted in a natural increase in our overall cost of debt.

For further enhanced downside protection, we maintain undrawn credit lines totaling EUR 275 million. And with this, allow me to hand over to Christian to conclude the presentation.

Thank you very much, Idan. Allow me to point out that in the appendix of our presentation, you will find more details on our portfolio distribution and some more data on the German and London housing market in general, ESG information, financial policy, analyst coverage and share development as well as management and our credit rating metrics.

Finally, on Slide 17, I would like to conclude with our guidance for 2024. With the majority of the year behind us, we see ourselves well positioned to reach the guidance for 2024 towards the top of the range.

Our guidance for 2024 is FFO I between EUR 180 million to EUR 190 million; FFO I per share between EUR 1.04 to EUR 1.10; total net rent like-for-like growth over 3%; LTV below the 45% internal limit. Thank you for your attention, and allow me now to move on to our Q&A.

[Operator Instructions] I will now start with the first question. Could you provide some insights on your operating market trends and development?

As we have highlighted in the presentation, the fundamentals driving the widening supply and demand gap continued to support our strong operational achievements. We expect a persistent supply and demand gap over the long term as many influencing factors will take time to adjust.

This imbalance is likely to drive market rent growth and maintain low vacancy rates for years to come. At the same time, we see that the inflationary pressures have decreased across Europe and reaching below 2% in recent data, while wage growth is starting to catch up with the increases in living expenses.

These trends are supporting the rent affordability and the overall rental market. These dynamics have contributed to rising rental prices and increased market rent potential in both Germany and London.

Our portfolio in Germany and London is directly benefiting from these favorable market trends. We have seen accelerated like-for-like in-place rental growth, and our potential upside relative to market rent remains substantial, reaching 24% and even increasing in recent periods amid strong like-for-like rental growth.

The upside potential is expected to increase further in the midterm, driven by the delayed impact of Germany's regulated environment, which is currently causing market rents to rise even faster than our like-for-like in-place rents. This positions us strongly to achieve sustained internal growth for many years ahead.

Could you give a more detailed breakdown of your like-for-like rental growth? What was the growth rate in London?

Which regions were the main contributors? And what is your outlook?

Thank you. The total like-for-like rental growth was 3.5% as of September 2024.

The increase was the result of 3.6% in-place rental growth, further acceleration compared to previous period, but was negative impact by 0.1% as a result of occupancy fluctuations. As the portfolio has reached a low and stable vacancy rate, changes in vacancy are expected to be less impactful as we focus more on extracting rentals upside.

The main contributor to the in-place rent growth was the strong reversion on re-netting, contributing 2.1% while indexation was 1.5%. We note that the like-for-like doesn't include expansion and new construction and comes at low CapEx and high accretion to EBITDA.

In Germany, all our main region remains strong, with the strongest like-for-like growing coming from Dresden, Leipzig and Munich. Rental growth continued to be strongest in London at around 5% as the rent in London is not restricted, which enable us to capture increased market rents faster.

We continue our focus in London on risk expansion at higher rents, thereby supporting operational efficiency by reducing operational cost and void periods, but also extend the period by which the full reversionary potential is achieved. Looking ahead, we anticipate that we will continue to achieve strong like-for-like in-place rental growth.

We expect that the inflation from recent years to gradually be incorporated into rent table rates over the coming years, which should support an accelerated pace of in-place rental growth as we have already observed over the past year. Additionally, the significant gap between the in-place rent and market rent is generating strong rent increase upon re-netting, and we expect this to remain the primary driver of the like-for-like growth and therefore, internal growth for the years to come.

We conservatively expect growth level around 3% in the midterm but do acknowledge that the rates could end up higher. We see the rent like-for-like as a strong sustainable organic growth engine, which will continue to drive up operational profitability for many years to come.

Given your strong liquidity position, what are your views on financing? Do you continue to obtain secured financing?

Or do you expect to shift back to the bond market entirely?

We view our diverse financing sources mix as a strong advantage, providing access to funding in all market environments, and together with a strong liquidity position, reducing refinancing risk. We raised EUR 100 million in bank loans in the 9-month period and continue to have discussions with several banks for further funding.

In this area, we are focusing our efforts on maintaining strong relationships with local and regional banks. These banks are generally more reliable as a source of funding if you have well-established relationships, also resulting in more stable and competitive margins throughout the cycle.

For example, with many of our local banking partners, we have seen no significant change in margin over last year despite the negative market environment. Looking at the bond market, we raised very successfully EUR 500 million of bonds in July at an attractive coupon, and then we have seen further improvement of spreads.

We currently see around 150 basis points for a 5-year term. Going forward, we will continue to maintain a balanced financing sources mix, and we currently see full access to all sources of financing.

As a result of this, the high liquidity balance we have built over recent years to reduce the refinancing risk now has become a lower priority. This would allow us to reduce the balance by buying back debt.

Do you expect to continue to deleverage? Or has your view on leverage changed?

Despite the negative valuation since mid-2022, our LTV remains relatively stable and stands at conservative 36% as of September, the same level as in December 2021. We successfully offset the negative revaluations through disposals, strong operational results and dividend suspension.

EPRA LTV is 48%. As we have signed that we have reached the end of the devaluation, we succeeded to maintain a stable LTV throughout recent years, thanks to proactive management, a key pillar of our strategy in navigating this environment.

Looking forward, we remain committed to keep our policy of maintaining a strong and resilient balance sheet with a conservative leverage and a robust liquidity position. The valuation dynamics shifting to positive, we feel are at a good and healthy leverage, also considering signed property disposals, which will further decrease our leverage.

We will continue to sell properties around book values.

Could you provide some more details on your disposal progress? How do you see the transaction market?

Are you looking at buying again? And do you expect to remain a net seller in the coming periods?

Year-to-date, we signed EUR 230 million, and in addition, we have a substantial pipeline of possible deals, but we have become much more selective as we are seeing momentum shift to more positive. Out of the EUR 230 million signed deals, EUR 100 million is expecting to be completed, with full payments in December 2024.

The property is mainly located in NRW and Braunschweig, and this transaction, like others, will support deleverage. In the 9-month period, we completed approximately EUR 170 million of disposal, which include the sales of over 650 units, mostly in London as well as properties in NRW, Berlin and Hessen, at an average in-place rent factor of 17x at a slight book discount of less than 2%.

The disposal include vendor loan amounted to EUR 60 million, supporting and speeding up the transaction process. Furthermore, we received in Q3 over EUR 25 million of vendor loan as a full completion for a disposal carried in the end of 2023.

Looking ahead, we see the transaction market continue to improve as there is growing consensus that we have reached the bottom for valuation levels, while operation remains very strong. In parallel, the decrease in interest rates are supportive for this trend.

We expect that we will continue to sell properties around book value while our stock is trading at a significant discount to book value as we view it's sensible to redeploy the capital in more accretive ways. We therefore expect to also be a net seller in the first half of 2025.

Could you share your views on the expected fall of the German government and the potential impact this could have on GCP and the regulatory environment in Germany?

For now, it seems that new legislations are on hold as we are heading towards early elections. Currently, we see more potential for upside than downside, but are very cautious about how this might eventually turn out.

Regarding existing regulation, the primary existing framework, the Mietpreisbremse is set to expire by the end of 2025 on the federal level. Prior to the fall of the current government, the coalition parties agreed to extend the existing framework to 2028.

Initially, SPD and The Greens wanted to implement stricter regulations as was included in the original coalition agreement between the parties forming the government. However, this has so far not been implemented and was not part of the extension agreement.

The draft law for the extension was published at the end of October but has not yet been signed into law. With the fall of the current government, it is unclear whether any new laws will come into effect until new elections have been held, resulting in some uncertainty regarding the continuation of this regulation after 2025.

However, the new government may still extend the existing framework, especially as the CDU was the governing party when this regulation was initially put into place. When we look at the current political landscape and discussions, rent affordability and regulations have reduced in prominence in comparison to previous preelection period, which with a greater focus currently on the state of the economy and the geopolitical environment.

We therefore expect that regulatory risks, particularly related to more strict regulations, is lower compared to the previous elections. And while there is a possibility that the Mietpreisbremse will expire without replacement, we expect it will be prolonged by a new government, mostly in its current form.

Can you provide an update on whether you expect to pay a dividend based on 2024 FFO?

The Board will take the decision based on market condition next year closer to the next AGM. We are encouraged by the positive shift in market sentiment and hope to see it reflected in the valuation and real estate transaction.

The effect on our rating will be part of the consideration. We will have our portfolio revaluate for the year-end results, which is prior to our AGM and therefore, think that it's better to wait further to the next AGM before making the decision.

Can you provide some guidance on the valuation trend in 2025 and onwards?

We currently expect the valuation momentum to start to shift back to positive, driven by good operational growth and market momentum, while we expect it to remain mostly stable. We expect a stable to slight positive valuation result in the next period.

We expect some in comparison starting in 2026, and while it is possible that this will already come earlier, depending on market momentum. We think it is too early to give more exact guidance on this.

We'd rather be conservative in expecting compression but to see the positive driver, which can provide tailwind for faster value growth.

Your figures seem to be in line with the higher end of your guidance. What are your expectations for Q4?

Could you provide some expectations for 2025?

We reiterate our full year 2024 guidance, which we increased as part of our first half year results. Our FFO I guidance is in the range of EUR 180 million to EUR 190 million, reflecting FFO I per share of EUR 1.04 to EUR 1.10.

For the 9 months results, we are well positioned to meet the guidance and expect to be at the higher end of the range. We will publish our guidance for 2025 as part of our full year 2024 results.

Meanwhile, in the next few quarters, we expect to continue to be net sellers. We have a strong operating platform and expect EBITDA growth also in a scenario of further moderate disposals.

In recent years, we saw inflationary pressures, which have previously impacted our cost base. As these pressures have now reduced significantly, we see higher like-for-like rental growth also supportive in increasing our EBITDA margin.

We expect net finance expenses to be slightly higher next year, primarily from the annual effect of the EUR 500 million bond issued in July, while perpetual notes contribution should be slightly lower compared to 2024 due to the note exchange.

Thank you. I think those were the questions so far, then we will now start the open Q&A part.

[Operator Instructions] We are now looking forward to your questions.

I've got 2 questions. The first one is you mentioned that you acquired properties in NRW and Braunschweig.

If we look into the portfolio map on Page 8, I also saw that in London, in Q3, the number of units have increased by 100 units. At which price you bought in London on average?

And the second question is on portfolio investments, CapEx investments. How much -- or how much of that you received subsidies for CO2 reducing investments?

Okay. Thank you, Kai, for your questions.

Maybe I'll start with the second question as to CapEx. We didn't get significant subsidies yet.

We're evaluating them. But -- and this -- in the repositioning CapEx, currently, we don't see a need for significant subsidies.

As acquisition, so we didn't have acquisition, Braunschweig. I think that might be a mistake.

I'm happy to talk to you after the call and see where you see that. However, in London, we did take over an asset.

We took over an asset from a loan-to-own portfolio that we had. It came to maturity, and we evaluated options that we decided to take over the asset.

It's a good asset, which is neighboring one of our current assets in London. It's 100 units which are newly refurbished and is a good addition to our portfolio, and will continue to drive growth in London.

Thank you.

Just 1 follow-up question from my side. On the CapEx, if I have a look at Page 11 of your presentation, the repositioning CapEx and maintenance, they've gone up year-on-year on a 9-month basis.

Do you have a scenario how CapEx, repositioning CapEx, might evolve during the next time, given that we have still maybe a little bit of inflation? Maybe you can be a bit more specific on drivers, if you'd like to.

And also keeping in mind that there are ESG requirements, might it make sense to step up the CapEx even more at Grand City?

Thank you, Manuel. Yes, we've seen a CapEx increase compared to last year, but as you can see in the last quarter, the repositioning CapEx have stayed stable.

We saw some inflationary impacts in the last 2 years, but now we see that the cost is stabilizing. We expect to be in the range of EUR 18, EUR 19 per square meter on an annual basis, and we expect to maintain that level also going forward.

Thank you.

I have 2 questions. So the first one is around your liquidity.

So you mentioned you have EUR 1.5 billion of cash, which is roughly 18% of your assets value. Do you plan to hold this large cash balance and repay debt whenever the bonds come off of maturity?

Or do you have anything else in your mind? Are you looking for any acquisition opportunities?

And my second question is, as you mentioned, the values are bottoming out and your leverage is well within your policy thresholds. Is share buyback something that you can consider?

Is that an accretive exercise from your perspective?

Thank you, Neeraj. Look, we look at our net debt balance.

That's what's important for us. To maintain high liquidity is good for us, but we more look at the net debt and the leverage itself.

Currently, we save the cash to EUR 1.5 billion for repayments and to maintain a strong cash balance going forward. As to share buybacks, it's -- we see the share price, we see an opportunity.

But currently, it's not something that we're interested to do. Our focus is still on keeping leverage low and that will work the other direction.

Thank you.

Just a couple of questions. I think in your statement in the presentation, you mentioned you expect further yield expansion as rents grow.

Just wondering what level do you see as being a sustainable yield on the portfolio? And do you expect that to continue moving forward?

And secondly, I think dividend guidance, I appreciate it's subject to the AGM and you've not committed to anything. It's currently 75% of FFO, but I think your AFFO is more like 50% to 60% of FFO.

So I was wondering what the thought is around over distributing and leveraging up to pay the dividend, or would you reassess similar to other companies and look to have your dividend cash covered moving forward, if you were to reinstate it?

Let me answer the dividend part. As we mentioned on the dividend, we are, at the moment, seeing good signs in the market, better than the past 2 years regarding the dividend, but we want to wait with the decision about the dividend when we do our financial results -- full year financial results early next year.

And, of course, dividend is subject to AGM. Changing our dividend policy to AFFO, for the moment, this is not in the cards.

We are not considering this. So we want to stick to our policy of the 75% of FFO I per share.

Yes. Paul, your second question, yield expansion.

Look, currently, we feel comfortable with our yield. We also see disposals around book value.

So it reflects -- the yield is reflective of where we see the market. We do expect that rental growth will drive valuations next year, but only partial.

So partial will probably also contribute to some yield expansion. However, going forward, maybe '26, '27, potentially we'll see yields stay stabilized, and in some scenarios, we could also see that maybe yield would start to compress.

Thank you.

There seems to be no further questions. So thank you very much for joining our call for the 9 months, and we hope to see you during future conferences or on other operations, and wish you well.

Thank you very much. Bye-bye.