PSP Swiss Property AG

Thank you, and good morning to everybody. I hope you and your families are all well.

I think before I start with going to the half year results, I want to say that we are very glad on how we went through this COVID crisis, and I want to address a big thank you, first and foremost, to our employees, which really did an extraordinary job over the last quarter together with our partners and with our tenants. So I think we went very well at this point through this crisis.

And at the outside, I'm very confident that at PSP, we are very well positioned to attack and handle the next challenges. As always, I will do a quick rundown through a few slides in order that we have more time for the Q&A.

I think this should not take more than roughly 10 minutes. I think it's the best use of time if we go then directly into your questions.

Let me start on Page 4 of the presentation with the current market environment. I think I can confirm that we see a quite resilient office market in the Swiss main cities, especially in the CBD areas.

We see a recovering business sentiment in all our markets after the shock of the COVID crisis. That means that we start seeing tenants being interested in the surface.

It's clear that many companies are currently reviewing their expansion plans that they might reconsider headcounts and surfaces. But generally, we have observed a quite healthy environment despite this shock phase, especially and even more so on the transactional markets.

In the prime area, we are back at pre-COVID levels or even in certain segments at even lower yields, which has also been materialized in the valuations we have seen. If you go on the Slide 5, as a run down, as mentioned, you are now of -- portfolio now of CHF 8.1 billion.

We did an acquisition in the first quarter. We reported that.

Today, we report a vacancy rate of 3.4% and a renewal rate of 92% for the expire of the year. And we improved our guidance to around 3% vacancy year-end from below 3.5%.

On the financing costs, we're able to reduce the passing average cost of debt further from 80 -- 58 -- 0.58% to 0.52%, for the midyear by a stable loan-to-value. Clearly, we paid out a dividend in the second quarter.

So that increased a little bit the loan-to-value. But we run at the healthy CHF 900 million credit lines whereof CHF 730 million committed and the confirmation of the rating from both the rating agencies.

With regard to the COVID implications and in the Q&A, we'll clearly talk about it more. We took a hit on the rent reliefs of CHF 2.3 million on the top line in the Q2.

We have rent collection of 94%. And as per midyear, we have outstanding lockdown-related rent receivables of CHF 5.2 million.

All these numbers are part of our confirmed EBITDA guidance for the full year. On Slide 7, I think here, just 1 number.

It's the EPRA EPS, which is for the half year CHF 2.12. It's an increase of 7.2%.

As you know, the EPRA EPS excludes all the tax-related effects that we had last year, excludes also the condominium sales. So it's a pure operating number.

And I think with CHF 2.12 for the half year, we are very well positioned to continue on our dividend policy and on the projections, therefore. If you go on Slide 8, on the consolidated income to highlight is the increase of the rental income of 1.2%.

This stems on the 1 hand from a continued vacancy reduction and from rental income from the development projects. It includes the mentioned CHF 2.3 million hit from the COVID on the second quarter.

It includes also a reduced turnover rent, which we have not calculated and factored in for the second quarter. And it includes, obviously, also the lost rental income due to the sales of 2 properties last year.

Nevertheless, an increase of 1.2% of the top line. On a like-for-like basis, if we include the COVID effect, this CHF 2.3 million rent losses, it's a negative 0.9%.

If we exclude that effect, and we look at the pure like-for-like, it's a positive 0.7%. On the property sales and revenues on the condominiums is CHF 1.3 million are purely the accounted percentage of completion returns from Parco Lago.

You will see here in Q3, the revenues we generated through the sales of the Zurlindenstrasse reported under subsequent events. I will quickly mention that later.

But that's where this gain of more than CHF 7 million will come in, in the Q3. If you go on the cost side, you see a general reduction of the operating expenses of 6.2%.

We mentioned during our Q1 releases that we wanted to take some extra cost measures to just soften a bit the impact of the COVID crisis. Clearly, the operating expenses came down also due to the fact that we were able to further reduce the vacancy rate.

So the ancillary expenses on the vacant space are not paid anymore by the landlord. Secondly, the maintenance and renovation expenses, the reduction of roughly CHF 800,000 are also due to the fact that we postponed selectively renovations just those to reduce traffic on the buildings and just really to soft a little bit the impact on the P&L.

However, this will be -- this is a minor element, but released a little bit the expense line. The improvement on the general and administrative expense lines of roughly CHF 500,000 is related to the legal compensations we received due to the fact that we won the Steiner case.

There, we were reimbursed by CHF 500,000. So the operating expense in general came down by 6.2%, and we should see that pattern for the full year.

So we'll have probably for the full year, a lower cost line than last year. Final number on the P&L on Page 10.

The net financial expenses, which have been reduced by further CHF 3 million, now at CHF 7 million. It's clearly a sign of the -- our ability to fund at very interesting conditions.

So we had some expiring swaps. But also we did some very interesting new bond issuance.

So also for the year, you will see this continuous pattern with perhaps a cost line around plus/minus CHF 14 million for the year compared to the CHF 19 million we have seen last year. If we move to Slide 14, you see the development of the vacancy rate with a vacancy rate of 3.4% at midyear.

Based on what we see on Slide 15 and our discussions with other tenants, we are confident that we can further reduce this vacancy rate from 3.4% by a few percentage points in order to have a clear new guidance of around 3% for the full year. Slide 16, on the expiry profile, we are quite ahead with the discussions for 2021.

What I can say from the top 10 expiries, 9 have been renewed. And 1, we knew that they will take the building.

And this means roughly 1/3 value-wise of the 21 expiries, we have already sold. So also here, our efforts and focus is really on advanced renewals and discussions on those expiries.

Let me give you a brief heads up on the valuations, Page 17. You saw the revaluation gains of CHF 31.4 million for the first half of the year, which are split between investment portfolio, CHF 26.4 million, development portfolio CHF 4.9 million.

Drivers are a 4 basis point yield compression on the portfolio. We have seen a slight increase of the structural vacancy from 5.2% to 5.3%, contrary and to our vacancy rate development.

But I think this is a bit of a precautionary measure also by the valuers, and also some market rent adjustments by the valuer. Generally, we see this positive development, especially on the prime assets where we have seen this further when -- and also for small yield compression.

And that's what we also observe in the transaction market. It's not that -- a very liquid market.

But on the transactions we have seen, as I mentioned at the beginning, we see still quite aggressive a bit. Let me now go quickly to Slide 20 and 21 on the debt side.

I think generally, we are very much focused on keeping a very diversified lender portfolio. We increased our lines by 2 uncommitted credit lines.

We should bond the notes by around of CHF 370 million in the first half of the year. And we still have a lot of unused credit lines and no refinancing needs by the year-end.

So I think from a pure debt point of view, we are well positioned. And if we look at the ratios on Slide 21, clearly, in our view, strong loan-to-value figure.

The cost of debt, the passing cost of debt, which I wouldn't say reached lows, but it's starting to bottom. And clearly, ICR figures, which position us very well in our rating grade.

If we spill forward to Slide 32, to give you an overview on development projects. I think here, if you go to the table on Slide 32, Rue du Marché has seen a delay but will open September 1.

We will clearly forego 3 months of rental income, but the product is basically finished, and we look very much forward of this opening term. Parco Lago, Paradiso has also seen a delay of 3 months.

But compared to May, we are today more comfortable and more positive that we are able to hand over a significant amount of the -- more than 40 apartments we have sold in Q3 and Q4. And half of these as a quite strong contributor to our EBITDA guidance.

The project Bahnhofplatz , Zurich and Bahnhofquai, which is almost fully let, is developing according to plan for the let space. And also ATMOS, we plan to hand over the surface, January 1 to the tenants in order that they can start then their fit out.

So on the major projects, everything goes according to plan. And as you see on the bottom line, clearly, we have an additional CHF 270 million of expected CapEx.

If we take out the proceeds from Parco Lago, we'll have a net CapEx of roughly CHF 170 million, CHF 180 million, which I would say is moderate in the overall portfolio complex, but generates an additional roughly CHF 30 million of rental income over the next few years. To close, Slide 30 -- 38.

What I mentioned as the subsequent event we closed as per August 1, the disposal of an asset in Zurich, Zurlindenstrasse, which was originally an office property. We developed a concept to develop a residential property.

And then we decided not to develop it and sell the apartment ourselves but sell the project. And we tried to find a partner, whereby we can adequately swap that asset with an asset which was of interest of us.

And we were able to swap it with an asset which is adjacent to our -- in Bern, really next to the main station of Bern, which originally, both were together. So pre-IPO of Zurich financial services, our asset and the ones we swapped by 1 property, they were then split, and we are able now to buy it back through this asset swap, and we are very glad on how this went through.

And as mentioned, you will see then the gain going through the P&L in the Q3. With this, I would like to end on Slide 40.

The confirmation of our EBITDA guidance of around CHF 260 million for the year. And the new vacancy rate guidance of around 3% for the year-end.

With that, I would like to start the Q&A and leave the floor up for questions.

I was just wondering what measures are you taking to protect occupancy in current environment? Is this coming at the expense of rent discounts or rent-free periods?

Well, thank you, Andres, for the question. I think there are 2 elements.

The -- first of all, is what we do in our buildings with our employees. I think here, we are benefiting from a setup that we have offices, which are post-COVID compatible.

So clearly, the people are safe in our environment. With regard to the tenants, I have to honestly say that we have not yet had discussions with the office tenants on those elements, request of giving back space.

We had 2 tenants which gave signs that they want to give back space and this was pre-COVID and they're already factored in. So for the surfaces, we see we have in our portfolio.

We don't see yet those elements you mentioned.

And my second question is regarding the 94% collection rate. I was just wondering, does that exclude deferred rents and rent reliefs in the denominator?

It is. In the denominator, it's the full amount of revenue plus ancillary expenses that we are asked for, I have to say the rent reliefs we gave is rather low.

So we have settled with the majority. We have a little bit of postponement of rents, but this is rather moderate.

So the rent relief, as a pure hit, is CHF 2.3 million. Then the rent postponements to be able -- we pay in the staggered period, is a very small amount.

Right. But these are -- are these included in the denominator?

Or are they taken out?

It's all included. It's all included in the denominator.

Okay. And my last question, regarding the CHF 5 million outstanding receivables.

What are the odds that these are collected?

I think the odds are, I would say, quite well and also have been already collected. There are a few discussions with a couple of larger tenants.

However, we have embedded in our EBITDA guidance of around CHF 260 million, a large part of it. So we are comfortable with our guidance.

I have a couple of general ones. First, could you elaborate on the assessment of your city hotel sites?

Then could you maybe give like a general outlook in terms of how you see revaluations going forward? Thirdly, you mentioned that office demand picked up in Q2.

Is it an ongoing trend that you expect also to continue in the second half of the year?

Thank you, Andreas. With regard to the city hotel sites, I think generally, clearly, the city hotels are facing a very challenging environment.

If we take, for instance, Geneva, we hear and read that especially the 5-star hotels are currently suffering. We are positioned in Geneva with a citizenM concept in the very center.

And I think there, we are, first of all, well positioned with a product, with the location, but also with a partner which thinks long term. And we have a fixed base rent.

So we are quite confident with the launch of this hotel. Also, clearly, that the operator would have loved to start in another environment.

But there is not much of such a product in the Geneva city center. So here, we are, I would say, we are moderate positive.

On the second one, in Zurich Waisenhausplatz, which will open end of next year. It's the same concept.

It's a very central location with a very competitive quality price setup. So here, I think the ones which will suffer are rather the larger or the older setups.

So from that end, I'm not so worried about these city hotels. Also -- and that's the link clearly then to the revaluation that if you look at valuers, they are perhaps a bit more cautious if they look at operating -- or operated assets.

So to your second question, long term, it's very difficult to say. But what we observe is that the historical active players in the Swiss market, and it's always been a Swiss-dominated market, are still very active on the investment side, mainly for prime assets, clearly then for the residential part.

But also for prime office with a good visibility of the earnings. And if we continue with that interest environment, I would say that this will prevail.

With regard to the pickup in demand, in Q2, we had a showstopper, obviously, March, April, May. So it's also not so difficult to see a bit of a pickup in demand.

We had a quite good year-end '19, a good start into '20 with interest, and this has completely came to stop at the beginning of Q2. But we saw in the discussions with tenants that demand is coming back.

And I really believe that many tenants will have to rethink on how they structure their office. But I believe also that they will keep going to the office.

They need offices, but probably with a slightly adjusted concept. And there, we truly believe that being in point of interest, being in central locations, having modern, sustainable products is a medium, long-term advantage.

Okay. Like a small add-on.

So with regard to the whole home office trend, do you expect actually not that much pressure on your existing contracts also medium to long term? Or what would be your best guess in the Swiss market for prime office?

Do you expect actually a decreasing additional demand due to the home office trend? Or is it more the pressure on like the general market condition?

I think if I may start with the caveat, I think we have to this -- because this is an international call. I think we have to distinguish between the Swiss cities and the big international cities where we have, on top of it, a big commuting problem.

And here in Switzerland, luckily due to the small size of the cities, the commuting is less of an issue. So people are able to get, in a healthy way, to the offices.

Having said that, I think COVID showed that home office is technologically feasible, but it was a forced home office. It was not a voluntary home office.

It was not that the company sent the employees at home because they are more efficient and more innovative at home. They sent them at home because in the office, it was not safe enough.

So I think at the end, the office -- the people which are working really on a variety of tasks need to be brought together. The home office phase of COVID showed that there is a need for flexibility, timing wise, location wise.

But I truly believe that companies will come back to having people in their offices, perhaps in different setups. Perhaps they need, in certain cases, even more space.

It's just not feasible anymore to have space of 8 to 10 square meters per employee. And so I think this will have an impact on the type of asset, on the quality of assets.

And as I mentioned at the beginning, having assets also on a relative small size in the city centers, I think, in our view, is an advantage because companies need to bring their people and their employees together because at the end, the employees want to work together and to be more efficient. So I think this is a trend which started.

Technology accelerated it. But it will have even perhaps a positive impact on how we work together, and we see it in our site.

We had home office for about 4 weeks during May. Since beginning of June, we are all in the office.

But we can, at the outset, through our collaborative spaces, through our space we give to employees, ensure and have a good confidence that we can work in that manner together. And I think this will have also a trend for other tenants.

I have -- my first question targets your guidance. You improved or you increased your guidance on vacancy right?

You lowered that by 50 basis points, but you kept your EBITDA target. So my question is, what did change in the composition of your EBITDA guidance?

When I also -- and this is a related question. When I remember correctly, it was the Q1 numbers, you said that this disposal of the Zurlindenstrasse should also contribute to your EBITDA target.

Now you've decided to make an asset swap, which obviously changed the matter. Can you elaborate on that a little?

Of course, thank you. Clearly, the vacancy reduction will have an impact on EBITDA and the top line, of course.

But this has always a delayed factor. So whatever you knew now or you have close of rents agreements in October, November, you see then the effect on a later stage.

It's not -- and it's even not 50 basis points. We were at below 3.5 to around 3.

So is it perhaps a 20, 30 basis point improvement. It's a sign of confidence that we are able to keep that low vacancy rate.

On the second point, on the EBITDA guidance -- in our EBITDA guidance, there is -- there are forecasts for the proceeds of Parco Lago, which, in May, with the stop of the development, we were not sure if we are able to reach those handovers of the apartments. So there was not a question about the project.

But just on the handover of the size of the apartments. I think, here, we are positive now that we get close to those numbers we had.

And clearly, the around CHF 260 million is perhaps a bit of a stronger around CHF 260 million than in May, but not sufficiently strong with the visibility that we increased our EBITDA guidance.

Okay. That's another question.

It seems that your anchor shareholder, Alony Hetz, is currently leaving or exiting the company. Do you, first of all, expect to -- him to reduce his stake completely?

And secondly, what will be the impact on your Board? At the moment, I think he has 2 seats.

I think on the first question, he's a shareholder, and he will decide on what to do with the shares. I cannot foresee if he's further using or not.

But I think with a 3.5 percentage point stake for the liquidity of the stock and for the market, it's not really relevant. With regard to the Board seat, I think this is up to the Chairman, to the Board to reflect towards the end of the year.

What I always said and confirmed is that there are both very valuable Board members and represented typical shareholders and not really represented the stake they had. So they were from that end, always very strong and valuable contributors to our Board.

So what the decision will be there towards the end of the year for the next AGM on their side or on the Chairman side, that will have to be seen, but I'm not worried about these elements.

I have a question regarding the expiry profile of leases on Page 16. Could you just tell us where you stand in 2021 and 2022 with these relatively high numbers of expiries?

The first one.

Yes. Thank you.

Thank you, Ken. As I mentioned on the 2021, we have a quite large, how should I say, discussion rate and resolution rate for the largest tenants.

From that end, we are very, I would say, quite positive on this renewal of the expires of '21. On the top 10, majority have been already closed.

And also on '22, if I go to the largest ones, there's not a very peak one where today, I'm worried. Clearly, the discussions for '22, in that sense, have not yet fully started.

But if I look at the expiry profile and the single tenants in the assets, I don't have indications now that the vacancy rate is extremely shooting up. So I think here, especially also for next year, the visibility is quite good on a reasonable vacancy rate for a portfolio like we have.

The second question would be on co-working. What is the current demand your clients are seeing?

And where do you see the outlook for that type of tenant base going forward?

What we have seen through the COVID crisis from our COVID tenants, as you know, our contribution to rental income is between 1% and 2%, it's quite moderate. But they kept -- the majority of them kept it open.

We had no rent relief discussions or only limited one, if there was more to postpone a rent. And thirdly, they did quite well, and they restarted those.

So I think there is a demand for flex space. Clearly, also there perhaps to adjust a bit to COVID-friendly flex space, but that was just recently in 2 of our tenant spaces.

And I truly believe that there is a demand for this space. However, seeing it and how they opened, also now in Lausanne, it's something we shouldn't and don't operate because these are really small micro cosmoses and networks.

You need really to have a dedicated operation running it. So for us, it's a tenant, which adds value to the building, or like in Zurich West, really adds value to the whole area.

And a very short and simple one to the end. The deferred taxes related to the revaluations.

Could you just give us the number?

Deferred tax related to the valuation, one second, was -- I have to check on this end. Deferred tax to the valuation was CHF 7.6 million.

I've got 2 quick questions. The first one is on Page 51 of the first half report where you show the split of the like-for-like by areas.

Could you maybe elaborate a bit about the relatively strong result for -- sorry, for the negative result here for Bern, and the slide maybe 1 for Zurich and Geneva. And what the set forth is coming from the COVID impact?

And the second question is on the Page #36 of the presentation. Just to check you plan to spend CapEx for development projects for about CHF 90 million for the remainder of the year, which was -- as of March, I think it was about CHF 139 million.

The data is just what you've spent in Q2? Or has there been any other changes?

Thank you, Kai. With regard to the CapEx, I mentioned, it was not really the postponed -- we have postponed some of the projects slightly also due to the fact that either in certain areas of the sites where we closed or we had reduced work.

On the other hand, we also wanted to reduce a bit the traffic in those buildings. So from that end, we -- I have to say, it's now not an extraordinary reduction.

But clearly, we had a lockdown also of 2.5, 3 months. Once you start also smaller works to run down until you are ramping it up, this takes a bit of time.

So these were not 1 specific action we have taken because we are not confident on the projects. On all the projects we're running, on all the CapEx plans, we still think we have not changed anything to it.

With regard to the like-for-like you mentioned on Page 51, on the slides. And if you go on the major changes now on, for instance, Bern.

We have had a -- on the one hand -- and these are always small numbers because we talk about CHF 80,000, CHF 70,000 or CHF 50,000. And it's not -- it's perhaps percentage-wise, a bigger number, but Swiss franc-wise, it's quite a small number.

It's on the one hand, a renewal on the Waisenhausplatz and Zeughausgasse where we renewed at a little bit lower rates. But this is really on range instead of CHF 650,000 to CHF 580,000.

The larger one in Lausanne, if I remember correctly, is on Sévelin where we had -- and no it's not a lot on sorry -- on the Geneva one is Rue de la Fontaine where we have vacated the building. We are repositioning it, and we have clearly an increase of the vacancy.

But Rue de la Fontaine is really behind Place du Molard. And we are currently in the process of building really a very, very nice office setup there.

And the second element is from the Port Noir, the star in Geneva, where we have not figured in and factored in the turnover rents. That is also true for the Zurich drop of 0.8%.

That's the missing turnover rent, which is linked to the [ base ] and the hotel.

Yes. Three quick questions.

The first one, what is the current utilization rate of your offices, of your buildings?

I didn't understand the question. The yield?

The utilization rate. How -- what is the occupancy -- utilization rate of those assets?

Now I understood. Yes.

I think if -- the portfolio is so big. And I think we have a range of -- if you think about our tenants, which can go from 20% to 100%, but we don't measure utilization rates of our tenants.

We have utilization rate in our building of 100%.

Okay. The second question is on your renewals in 2020 and 2021, those who are already closed.

What sort of pricing, and also what sort of length of those new contracts of -- or new renewals are you closing right now?

Yes. On the renewals, we are, I would say, renewing flat.

As you know, we have CPI indexation in the contracts, but this is not captured because we have basically no inflation. And also on the rent, the ones we are closing now is closer at flat rent in average.

There are the 1 or the other, where we are able -- especially for next year, we have a larger one. We are able to increase the rents on this specific asset by roughly 10%.

But then this is folded into a flat, I would say, development on the overall portfolio.

Okay. And the third question is on your CapEx plan.

Do you have any sort of NAV gains to be expected over the CHF 180 million net CapEx you expect over the next 2, 3 years?

Well, theoretically, all these transactions -- projects besides Parco Lago, which will fully be NAV accretive, are mark-to-market. Clearly, the ones, perhaps at the earlier stage, will benefit from letting success.

The ones now already at later stage, I think there, if the mark -- transaction market continues to be strong, they might benefit from the lighter yield compression when they are finished. But typically, those projects are all mark-to-market.

Also 3 quick questions from my side. First one is on that CHF 5.2 million additional receivables.

So do I understand it correctly that CHF 0.7 million are related to that new upcoming law that's coming in Switzerland? So that gives you another CHF 4.5 million that are not related to, let's say, a legal solution.

Could you elaborate which sectors are mainly included in that CHF 4.5 million? Are these all lockdown-related segments?

Or is this also office-related segment? And then I would like to understand a bit better what are the conditions that would force you to basically make a rental holiday in the third or fourth quarter?

Is that after a specific time period? Or after unsuccessful negotiation?

Or when you -- when a dispute would go to court? That will be the first question.

Second one, just quickly on your hotel exposure. Just as a reminder, I mean, I get it right that you have 0 operational risks yourself with the hotel.

So these are old contracts where you only get rents from your hotels. And then the last question is on the revaluations.

And here, on the gap between your reported CHF 30 million revaluation and a CHF 100 million effect of a 4 basis point discount rate reduction, mathematically. So I assume that you have here also negative revaluations.

Could you elaborate a bit what type these are? Are these all lockdown-related segments like hotel and retail?

Or is there also office-related segments? And if you especially could comment on the situation in Zurich North, in your revaluations.

And just maybe as a try, I mean if you would have to guess for the full year, would you expect overall positive or negative revaluations for PSP?

Thank you very much. On the first one, it's clear -- it's correct.

The CHF 0.7 million are part of the CHF 5.2 million. Overall, this CHF 5.2 million are exclusively linked to lockdown-related tenants.

I will not specify which sectors are part. But what I can say is that we have solved basically all the retailers, and the retailers all paid the rents.

And we have already factored in, basically, the thermal bath exposure. So the rest is, I would say, pretty obvious in which segment it is.

But it's only related to the lockdown. To your hotel question, I can confirm that we have no operational activities within the hotels.

It's all contracts with very well-established operators. And beside 1 case, which has also fixed rent, they are all fixed rent based on long -- with long contracts.

And on your revaluations question, it's correct. This 4 basis points would have had a stronger uplift.

As I mentioned, there were 2 factors which were considered in. One, a slight increase by the value of the structural vacancy, which clearly has an impact, and also some market rent adjustments on selective properties done by the valuer.

So I think this is -- in a portfolio of 170 assets, you have always ups and downs. But I can clearly say that whatever was central, had uplift.

Whatever was -- be it in the outskirts, and you can take the Zurich North example. There, you had a little bit of adjustment of market rents, not even because there was an evidence.

I think it's also, in some cases, a cautionary measure. And of course, there were also office properties in because we don't have pure retail restaurants or hotel properties.

These are all mixed-use properties. But generally, I think this was quite a good balance to the portfolio.

If I would have to guess for the full year, excluding a second lockdown or COVID crisis and foreseeing a stable interest rate environment, I would judge -- I would guess, an overall positive number. But that's really from today's view under these 2 premises.

Just some quick questions from me. So the 6% rent that was not collected.

Sorry, if I missed it before, was it mostly in retail portion? And with regards to your bigger retail portion in the portfolio, is that mostly discretionary or leisure related?

And my next question is on distribution. So what is your target or outlook for, say, the next 3 to 5 years on distribution?

Thank you very much. Perhaps if I can specify on this retail.

On this -- the retail we have is almost exclusively highest retail. And we have basically collected all the rents from the retailer.

So this CHF 5.2 million is not linked to retail exposure. I would say it's predominantly linked to the total [ base ] we had and to some restaurants where we have discussions.

So the retail here is not part of it. On the distribution, if you look on our dividend distribution history, I think we are known for a quite high stability of the payout.

And if we paid out CHF 3.60, this year, for last business year, it was because we are confident that we can continue to pay this dividend amount. And based on my statement that in the first half of the year, the ERPA EPS was -- which is the base, already CHF 2.12.

As per today, we have no signs that we cannot continue on that path for 2020. If we look at our top line growth to development pipeline.

We also have a good visibility that we can continue on that path of a flat or slightly, if I've said, increased dividend policy over the next 3 to 5 years. That's the visibility we have as per today.

Congratulations to a great set of results. Two questions from my end.

The first one would be in regard of project Grubenstrasse 6. And it seems to be from speculative nature.

In general, in which cities, what kind of use and what kind of sizes of developments are you currently comfortable to conducting speculative nature?

Thank you very much. I think the Grubenstrasse is a CHF 30 million investment, right on the back of the [ Le Mont ] side, attached to train station, which is only a few stops from the main station.

It's a speculative development. But it's a very well controlled development project.

So I would say whatever is in that range, CHF 30 million, CHF 50 million. In the city centers, almost city centers, if we can get it at -- in today's world, reasonable yields is something we feel very comfortable because it allows us also to develop a kind of a modern product, which has then a competitive advantage for the neighboring spaces in that area.

But I can assure you that you will not see us doing large-scale development projects.

Well received. And my second and last question would be in regard of Bärenplatz at Bern has a perfect showcase for a good pre-leasing rate, the 30% as reported.

I am curious, given the kind of post-COVID, in the middle of COVID situation as well in Switzerland. How is the leasing environment to get you for full 100% leasing?

And how should we think about retail versus office given office seems to be still in a good run? What do we need to adjust in terms of returns or return expectations?

On Bärenplatz, we have not adjust. We are finalizing now an agreement for the top floors.

With a related hotel, we will manage these retention parts. We are in discussions with the offices.

This is reasonable sizes. It's very central.

I think here on this project, also considering the size and the timing we still have until the completion, I think this is -- this will be a very good product in a very central location. I'm really also here not worried in front of the parliament next to the National Bank to have this roughly 1,000 square meter of office.

Thank you. I would like to thank everybody for participating in the call, and I really wish everybody best of luck and health.

And we will talk and meet in the virtual roadshow we will have in the next couple of days. Thanks to everybody, and take care.

Bye-bye.