Eurocommercial Properties N.V. (OTC:EUCMF) Q4 2020 Earnings Conference Call August 28, 2020 5:00 AM ET
Jeremy Lewis – Chief Executive Officer
Evert Jan van Garderen – Chief Financial Officer
Benjamin Frois – Director
Pascal Le Goueff – Director
Roberto Fraticelli – Director
Peter Mills – Director
Valeria Di Nisio – Group Leasing Director
Conference Call Participants
Rob Virdee – Green Street Advisors
Jaap Kuin – Kempen
Niko Levikari – ABN AMRO
Pierre Clouard – Kepler Cheuvreux
Good morning, and welcome to our 12 Months Interim Results Call. Our speakers today are Mr. Lewis, our CEO; Mr. van Garderen, our CFO; our four country Directors, Mr. Le Goueff, Mr. Frois, Mr. Fraticelli and Mr. Mills. In addition, our Group Leasing Director, Valeria Di Nisio; our Research Manager, Ilaria Vitaloni; and our Group Economist, Caterina Liori, are available to answer your questions at the end. Mr. Lewis, you can go ahead.
Right. Thank God, I demuted myself just in time. As you’re probably aware, I’m heading rapidly to the end of my career. And it’s probably suitable that it probably should have been – it has been the most difficult six months of the 30 years I’ve been with Eurocommercial for everyone. It really has been tough. But I think the performance of our teams have been fantastic, I have to say. To retain our tiny vacancies just over 1%, to still see rental growth after the lockdown period is very, very encouraging. And I can’t praise my colleagues highly enough. So the important thing is, when I go, the company is in very, very good hands.
The decision we made during the lockdown was to hit it hard and hit it head-on and get as much out of the way as possible, to continue our good relations with our tenants that we’ve always had. As you know, our OCRs are well-known for being low, and that’s still – that’s in good stead. The vacancies – valuations of our company, but I’ve got to say one thing because there are still, I’m afraid, some talk about what happens in the U.S. and the UK will naturally happen in Europe. That is complete and utter non-sense, I’m afraid.
The circumstances of shopping centers are completely different in all countries. In the U.S. supermarkets, there aren’t any hards months, very few of them, are all in the strip centers, as they call them, strip malls. None of them aging malls have anything but the fading department stores. But of course, the most important difference is in the U.S., the retail density, i.e., the amount of square meters per capital is at least five and probably more times the amount in our markets.
So as the UK is concerned, as you know, people who have born with me for a long time, I’ve been talking for about 20 years that the UK rents are far too high, and in particular, business rents are far too high. So it’s natural there have been many retailer failures. The other thing that people keep forgetting when they see the increase in use of the Internet, which has been significant, is that the average high street in the UK, the shops close at 5 or best 5:30. So nobody can do any shopping afterwards. And naturally, they will tend to use the Internet. And of course, the same applies as in the U.S. is that shopping centers or malls as they reluctantly call, they are often in town, of course, have very, very few supermarkets. Again, there are a lot many hypermarkets in the UK.
So they haven’t had the benefits that we’ve had in all our countries of having major food stores where people can come every day if they want. Obviously, deliveries have increased a bit, but you should remember that for every delivery that a supermarket makes, they probably lose money. And if you charge GBP5 for a delivery, just think how long it takes one person to go and to collect the goods, you soon realize with a minimum wage of GBP9 that is not economic. We’ve seen no evidence at all over the last five years, since people have been saying this, nor do we expect any in the future of what’s happened in those two markets spreading to our markets. And I think the evidence is there was – rents are still falling in both those markets.
Actually since the lockdown, the negotiations we’ve done under the direction of Valeria with our superb leasing teams, we are actually getting pretty darn good growth still and, in some cases, during August up to 14% rental growth. So obviously, everybody is concerned about further lockdowns and all this. That’s out of our hands. All I can say is that we have maintained our good relationship with our tenants. Our vacancies remain low, and there is still rental growth. I think they are the important things. And indeed, the turnover levels are around 90% already of 2019 levels.
Valuations. And again, we’re seeing massive devaluations in the UK and the U.S. We are not seeing them in our markets. And I think where there are similarities in Klepierre might be a good example of – obviously that are similar to ours. We’re around 3% on average. Clearly, the best market for us, which is now 23% of our portfolio, is Sweden, where the valuation drops were almost non-existent, 0.5%. And again, people may – or some people have said, well, it’s different in Europe. It isn’t. The valuation firms are exactly the same firms that are doing the valuations in the UK. I’m sure they all have one single insurance policy. So they all have to be careful.
So the markets are different. There is no doubt of that at all. So please, will people stop saying the disease of England will spread to Europe. It has not, and people have been saying that five years, and it will not, in my view. We can argue that, of course. So anyway, valuations down a bit, which is more or less what we expected.
Looking forward to December – and I’m going to make a brave comment here, but perhaps I won’t be around to be punished for it. And that is if, and it’s a big if, of course, if economic circumstances and, of course, the wretched COVID is no worse than it is today, and interest rates has – indeed the Fed has announced, and I expect ECB to do the same, the interest rates are going to be low for many years, then I don’t expect values in our portfolios to go down significantly at all in December. If anything, I expect they may stay the same.
There are some deals on the go. And I suppose I should talk because everybody – I saw many people are talking about rights issues. We have no plans for a rights issue at all at the moment. We are, however, continuing with our sales program. There were two deals that have been agreed in principle with buyers before the COVID struck, which are still agreed in principle. But again, we’re not going to make any announcement until the actual contracts are signed. But we have no reason to believe that they won’t be, but who knows. So we’re not going to say anything at all. They amount to about €70 million.
We’ve also got other properties earmarked for sale that, obviously, will be held back until after the COVID. And I suppose Les Atlantes as far as France is concerned, that we will be putting on the market subject to, of course, circumstances, about another €150 million it’s worth. So assuming those deals go ahead and so far we’ve never sold in the history of the company a property ever significantly below valuation, which supports them, so that is our plan for the moment for further sales. There’s, of course, nothing wrong with the properties, but we are conscious of gearing levels and the concerns that the market has.
A general comment about the famous word, dividend. If the circumstances that we face today with the rental levels we face today and the encouragement that we’re getting from our vacancies and from the rental uplifts, particularly in Italy, I would have to say, then we could pay a dividend, an interim one even. We will not make that decision though until around the time of the EGM because we don’t know what’s going to happen. So we will be cautious as we always have been. Clearly, we would like to pay dividends as soon as it is safe to do so. And of course, as some people have pointed out, we have an obligation under the FBI rules in the Netherlands to make a dividend. But remember, that dividend could be cash, shares or a combination of the 2.
So if we go on to visitor numbers, yes, I mean, they’re about at 83% now of what they were. In terms of retail sales growth, we’ve talked about averaging 90%, which I think is pretty darn good over the same period last year. The important thing, I think, though, is not so much what’s happening in rental uplifts during the COVID, but after. We’ve got – by the end of August, 80 leases have been updated since the 1st of July. And the average uplift there is not 9% as it was previously but 13%. So actually, in a funny way, things are getting better. God knows whether it will last, but we’ll see. So there we are. If that remains the case, then, as I say, I don’t expect any significant change in values in December, but who knows.
Occupancy levels, I’ve talked about interesting facts, though. I think that the vast majority of our centers are the previously despised, boring hypermarket-based suburban centers. But they are now coming to their own, because, clearly, with our large free car parks, that easy accessibility to where people live in the suburbs. And the hypermarket operators are not stupid. They put the hypermarkets where the people are. The car journeys are easy and especially in France, the road systems are such that they’re very easy to get to. So clearly, people are frightened to actually hold on the public transport at the moment. And so I think we can expect that the use of our shopping centers, such as they are, and especially in Sweden one – I mean all markets in effect.
But what are they in Brussels is a sort of semi suburban, I suppose. And we’ve always been very proud of its wonderful connections with the Metro, with the trams and the buses, and maybe it suffered a bit from that. We’ll see because that valuation was slightly lower than the others, down 4%, not 3%, but only slightly. I think the other thing we’ve got to consider is that the Internet and purchases on the Internet as opposed to physical shops have been around for 10 years or something now. So yes, of course, there was an increase in the lockdown period, as you would expect, but as I say, people are coming back to our centers now.
So there was no fundamental change for use of the Internet for retailers. There was an increase, but that was a relative thing. And I think we’ll see probably some continued slight increase, but I don’t expect it to be fundamental, especially for our kind of centers. There’s a contrast, though, and I think people better start thinking about that with the really fundamental change of the use of home working or teleworking or video conferencing and all the rest group, which, again, to avoid public transport going to city centers is becoming stronger. That is a step change. Now how long it last? God knows, but it is a pretty fundamental change because companies, including ours, and I have to say, I find it actually a bit harder to work than going to the office. Nonetheless, we have coped, as you can see from our results, pretty darn well.
So we haven’t laid anybody off. We don’t intend to lay anybody off. As you know, we’ve got a very low ratio of people per million of income or assets, but they are very, very good people. So the negotiations, yes, most of them are completed because we started early, before the COVID-19 negotiations, and rent collections are coming in pretty well. France has been a bit slower than anywhere else, I’m sad to say, but Pascal can defend his country, I’m sure, very well. And that is because the government, well meaning, appointed Madam Prost, who was badly named because she was not nearly as rapid as her compatriot, the racing driver.
But what happened was she was appointed as the médiatrice or I called her médiatrice. That was probably a bit unfair. And that was supposed to get everybody together and sort things out, but it just didn’t work. And I think the Fastighetsägarna, the Retailers’ Association took a fairly firm stand. But on the evidence we see now, we expect those things to be sorted out. [Indiscernible] As always in France, [indiscernible] as faith would there, so nothing at all happened during all this, as you would expect, but no, I think we will see that sorted out.
There has been talk about everybody going to turnover rents. Well, of course, that’s a complete surprise with the UK. That’s never happened in the past, apart from one or two of the better companies. But clearly, turnover – proportion of turnover rents have been around for 50 years in – especially in the U.S. and, of course, as you know, the many years I spent in Australia. But certainly, in our company for 30 years, we’ve always had on all the retail tenants, a proportion of the rent, if you like, a topper, payable on the basis of a percentage of turnover if that works out to be higher than the base rent. So we’re very used to it. They’re not in the UK and they’re now grappling with those changes.
We don’t have any CVAs on at the moment. We’ve got very few tenants in administration. And indeed, a couple of the major retail chains, Camaieu, et cetera, have all found buyers. And I think some of them are probably going to reduce the number of shops. I won’t go into details. Pascal can do that. But we’re not expecting any increase in vacancies coming up as a result of those purchases of those companies that went into administration. So I think, again, the situation is completely different in the UK.
So there we are. That’s a very overall comment. I’ve probably forgotten dozens of things. But I think we’ve done pretty well, I think, in the circumstances. When I say we, I mean everyone else, of course. I wish I could travel more, but some – given my age, I’m supposed to be vulnerable. I don’t feel very vulnerable, but – so I’m not getting around as much as I should. But I can do no more than congratulate sincerely the work that everybody has done. So that, talking of the workers, Pascal, I’m sorry, Benjamin. Just a word about Benjamin who now is the Asset Manager for Belgium. He was translated from Paris, flown into Brussels, and I think has done a remarkable job up there.
So with that sort of fanfare, don’t let me down, Benjamin, would you like to talk about Brussels?
Thank you, Jeremy. So let’s talk about Belgium and our Woluwe shopping center. Well, the last 6 months of 2019 were strong, with retail sales up 4%, and we also got off to a good start to 2020 with our retailers continuing on an upward sales until February. Unfortunately, the COVID-19 pandemic abruptly ended the positive tenancy when it struck in early March. From the 18th of March, almost all our shops were forced to close, except our Maje supermarket, the pharmacy and one or two small grocery stores. On the 11th of May, the vast majority of them were able to reopen with the exception of bars and restaurants, which were only able to do so from the 8th of June.
Post lockdown restrictions imposed by the authorities have been relatively strict in Belgium. In addition to the obligation of a one-way traffic inside the mall and customer having to wear a mask, only one shopper was allowed for a maximum of 30 minutes, this restriction was only relaxed last week with two shoppers now allowed without any time restriction. We sense that a significant element of our usual clientele extended their summer breaks and delaying returning to Brussels due to teleworking measures imposed by both European institution and also many corporates.
The postponement of the sales period to August instead of July has probably not helped an already disoriented customer either. Notwithstanding these headwinds, we are now witnessing steady improvement in visitor numbers since the full reopening of our center, with August looking much better than the preceding months. After an immediate reduction of 90% in April, digital numbers were at 68% in June and have now increased to over 90% in August.
A similar trend is observed also for turnover. So what about the rent? Generally speaking, to help our tenant get through the COVID crisis, we offered most of them a 50% rent reduction during the lockdown period, increased to 100% rent-free for food and beverage operator. We have now finalized negotiation with 96% of our tenants, and this concession represented a total amount of €2.8 million or 11% of our annual rent.
In terms of rent collection, 92% of the negotiated rent for Q2 has now been cashed and over 93% of the rent for the month of July. Back on the merchandising front now. Notwithstanding COVID, we have continued to attract new brands, as highlighted by the recent openings of Courir and Maje, respectively, in May and June. And since July, we have agreed term with no less than four new tenants, and we have also completed in August the lease renewal of Fnac Darty Groupe subsidiary, Vanden Borre.
Further new deals are expected to come in the coming months as tenant demand continues to hold up. And this tenant demand bodes well for our mixed-use and committed extension project. Our planning application was declared complete by Brussels region on the 25th of March. The first stage of the instruction process started this June. And given some delays related to COVID, we now expect to obtain our final building permit within the first half of 2022.
And with that, I will hand over to Pascal for France.
Pascal Le Goueff
Thank you, Benjamin, and good morning, everyone. So as Belgium, France had a very strict confinement, which had a serious negative effect on the economy. From the 15th of March, the government decided to close all the non-essential retails, including cinema, bars, restaurants. Population has been asked to stay home and was allowed to go out only with a certificate. So food stores, supermarkets and hypermarkets, telephone shops were allowed trade but with stringent restrictions in terms of space occupancy.
Nevertheless, the recovery has been better-than-expected in our centers since the 11th of May, the starting date of the confinement. Digital numbers have steadily increased to end up with 82% of last year level in June, outperforming the CNCC index, which has released 78%. CNCC index is the shopping center organization in France. In July, visitor numbers continue to improve with 84% of last year level, in line with the CNCC index.
Looking at tenant sales, we had a steady progression in May. And for the month of June, tenant sales recovered to more than 95% of the same period in 2019. And again, we outperformed the CNCC index, which has released 83.6%. In July, turnover continued to improve and show an increase of plus 1% compared to July 2019. So our star performance in France were Chasse Sud with 15.5%. Chasse Sud is south of suburb of Lyon, Val Thoiry in the suburb of Geneva with plus 6.4% and MoDo in Paris north suburbs with plus 5.1%.
These positive figures show clearly that our typical suburban centers, retail park incurred by an hypermarket with good road access, free parking, good visibility are, in general, resilient, but in this period extremely resilient. We had also positive results in Bordeaux, Les Grands Hommes where we convince our tenants to open their store on the street and where Regus has opened last Wednesday, two days ago, their premium concept called Signature on the totality of the first floor. The rent has been multiplied by three on that floor.
Regarding the leases agreement. As Jeremy said, we are in France behind our colleagues in Sweden and Belgium and Italy, with 52% amendments agreed. We have been delayed in our negotiation by the strong position of the largest tenants, the largest retailers who had experienced difficult time last December and last January due to the movement against the pension reform. But we have also been delayed by, as Jeremy said, again, the médiatrice, Mrs. Prost, named by the government. And we failed to settle an agreement between landlords and retailers on the venue during the lockdown period. But we are very confident to find an agreement with the tenant from Les Atlantes.
But even with this 52% agreement, the rents are paid in July. Our rent collection seen casting more than 85% of the rent in July, and we are not expecting major default of payment for the third quarter. One of the reasons of this encouraging number is certainly due to the mobilization and reactivity of our center managers who have implemented health and safety measures in all our centers from the beginning of the lockdown. And just when the lockdown started, the shops were closed, but the malls were opened to give access to the hypermarket. It has been a key element to reassure customers and employees and restore confidence, which is absolutely essential in our business.
Regarding re-letting and renewals, we have produced plus 3% total growth from the 37 deals we made. If we look only at renewals, we renewed 19 leases at an average uplift of 9.5%. Several deals have been initiated or signed during the second quarter of 2020. In restaurants will replace a fashion retailer and we will multiply the rent by four. In Les Portes de Taverny, an independent shoes retailers will replace the pharmacy, which has been transferred on the bigger unit in the center. In MoDo we have agreed terms with a medical center to let a vacant unit. And in Les Atlantes, a lease has been signed with open [indiscernible] on 1,200 square meter.
So in terms of vacancy, we have maintained our vacancy level at a low level, with 11 units out of 509 units. It’s similar level than six months ago, where we had 12 vacant units in last December. And we are not expecting any significant increase of the vacancy level in France due to the demands of the retailers.
Finally, a word about our project in Etrembieres, this project has been delayed due to the lockdown. But this project is entirely pre-let to the group, Agapes, a restaurant operator, which will install two brands, Les Trois Brasseurs and Il Ristorante, on 1,600 square meter. Authorization has been granted and construction works will start in the coming months, and we expect completion in spring 2022.
On that note, I hand over to Roberto.
Thanks, Pascal. Hi, everybody. Just continued on COVID-19, of course, the lockdown in Italy was strict and long, and that especially feared the young children at home. Most shops had to close from mid-March, let’s say, to mid-May, and the economy was actually brought to a virtual standstill with a significant impact on most businesses. So that’s also encouraging that the Italian government took several steps, and it’s still taking several steps. So there were important economic measures, which were perhaps to help the economy rebound.
Among these three are more important to mention for our sectors. One is the famous Cassa Integrazione furlough, which is applicable to most companies until the year-end. Then there are tax reductions and also a tax credit up to a maximum of 60% of the rent paid on the three-month period related to the lockdown. So let’s see. If we look at visitors and turnover numbers, I mean, the visitor numbers are encouraging as they are currently around 80% of the pre-COVID figures. And that’s really a good result, especially if you consider the circumstances which we have now, where you have no events that can be organized and for related to entertainment and food is limited.
If we look at turnovers, they were 82% in June compared to June 2019, with a significant increase, of course, over the previous period, which was still affected by the lockdown measures. July figures are very similar, notwithstanding the fact that this year’s sales will take place in August and not in July. So that’s also an interesting point to see in August what will happen.
If you look at our negotiations with tenants, as you know, we entered into negotiations with our tenants pretty soon and really have to thank our teams, leasing, asset, rent recollection and administration, which is often forgotten but they’ve done a fantastic job. They’ve been working incredibly hard, and they reached agreements over 88% by MGR of our tenants. And if we look at rent collection, in H1, we already collected 85% of the invoiced rent, which is 72% for Q2. July figures are at 97% as most tenants have been offered the possibility of paying monthly in advance instead of quarterly in advance, and that’s until the end of the year.
Occupancy is still at 99.2%. I think that shows a bit the resilience of our portfolio. If we then take-on, on the leasing activity, which Jeremy, of course, also mentioned and Pascal. And the 85 re-lettings and renewals over the past 12 months reduced an average uplift in rent of 14%. And of course, the leasing activity was comprehensively slow during the lockdown, but the situation remarkably improved in the past few weeks, especially since the beginning of July, when we signed 40 new leases achieving double-digit rental uplift. So we think it’s a very good point because when you talk about the average we always think those are agreements which have been made pre-COVID, but that’s not the case.
Last but not least, I Gigli. We opened the new tariffs at the end of July. That helped Mercato Centrale, which is our food court add much more needed extra space, especially important if you consider the COVID-19 restrictions. The works for the restructuring of the old market and the toy shop into 14 units are progressing well with opening expected through Christmas. And we are leasing at good tenants like Nike, Adidas, okay. We’re in discussion with JD Sports. So plenty of good news to come.
And now over to fantastic Peter.
Thank you, Roberto. Well, the COVID period in Sweden began on 12th of March with the announcement of the first restrictions on public gatherings together with guidelines on social distancing, recommendations to work from home, avoiding the use of public transport. And the effect on the shopping centers was immediate. And in the following weeks, visitor numbers were reduced to around 70% of previous levels.
However, in contrast to our other markets, the Swedish government were motivated on keeping the economy going, which included keeping all shopping centers fully opened and trading throughout. Our seven provincial shopping centers certainly benefited from their dominant market position in their regions, but also from their very strong provision of daily goods, particularly our hypermarkets, the ICA, Coops, City Gross and Systembolaget, the state alcohol monopoly, which helped maintain footfall levels throughout.
While these everyday goods, representing around 20% of our rental income, paid in full as normal, many of our other retailers contacted us towards the end of March as their Q2 rental payments became due. The situation was helped by the constructive arrangements agreed between the landlords and retailers associations and the government, which resulted in the support initiative – rent support initiative covering Q2 rent only, and provided that if a landlord offered a qualifying tenant a rent discount of up to 50%, then within certain parameters, the government would refund the landlord half the discount.
Our leasing team acted early and decisively within this framework, which resulted in a relatively small total net rent concession of around €2 million and the collection of 95% of the rent due for Q2. Footfall and retail sales have recovered steadily. So that by the end of July, visitor numbers had reached comparable levels to July last year, while retail sales have actually increased and by the end of July were 3.1% up on a like-for-like basis, with the majority of retail sectors now showing positive growth, including hypermarkets at 9%; home goods, plus 11%; sport, plus 9%; electricals plus 17%; books and toys, plus 27%; and guest and jewelry, plus 7%. Even fashion and restaurants, which initially suffered badly, are now recovering well and were only down 12% and 7%, respectively, by the end of July.
So assisted by this positive recovery in sales, Q3 rent collection has been a normal standard routine, although tenants have been offered the opportunity to pay monthly in advance instead of quarterly, which, in fact, they have a right to do under Swedish law. So our July recovery is, therefore, 96% of rents due without any significant concessions, and we would now expect to maintain these high rent collection rates going forward.
The Swedish leasing team have been active throughout the last 12 months, completing 75 lease renewals and re-lettings, producing an average uplift in rent of around 5%. The success of earlier project pre-letting means that the very small outstanding amounts of committed CapEx is mainly linked to finishing the construction of several large new retail units, which will be delivered to the tenant this autumn and will all be immediately income producing.
The most significant of these are the 8,200 square meter Ecco Haarlem store at [indiscernible] let on a 10-year lease, and two further large H&M stores at Valbo and Elins Esplanad, where we are also adding new units of over 1,000 square meters for New York and Nordic Wellness. Once the new H&M stores are open, we will have delivered five new full concept H&M stores, including H&M Home over the last two years. The COVID crisis has definitely accelerated the trend for larger retail groups to rationalize their store portfolio, concentrating on a smaller number of profitable units in prime locations.
H&M are the most important of several examples. And indeed, since opening their new and large stores in our shopping centers outside Kristianstad and Halmstad, they have already this year closed their old city center locations. Finally, a brief word on the investment market, where the volume of retail investment transactions has been relatively subdued, although there has been one important shopping center transaction completed during the COVID period, with the sale of Farsta Centrum to a joint venture between Alecta and the Finnish pension fund, Keva, at a price of around SEK 4 billion and at a net initial yield estimated to be just under 5%.
Farsta is leasehold and had it been freehold our valuers estimate the yield would have been some 15 to 20 basis points lower. There have also been several transactions on stand-alone supermarkets and hypermarkets at historically low yields of under 5%, and there remains good investor appetite for retail parks, led to tenants into discount, DIY, sports household and electrical sectors who have all performed outstandingly well during the COVID period.
And now I will hand over to Evert Jan for the financial review.
Evert Jan van Garderen
Thank you, Peter. Good morning, everybody. In this conference call, I would like to say a few words about the accounting for the granted rent concessions, the key financial figures and the funding of the company. The granted rent concessions in our four markets have been accounted for under IFRS. And therefore, we had to account for the rent concessions in Sweden as a reduction of the rental income for an amount of €2 million in the second quarter of this calendar year. This was due to the Swedish government rent supportive initiative, which resulted in a rebate of half the discounts granted. Swedish peer companies reported in the same way as these concessions are not considered lease modifications as referred to in IFRS 16.
In the case of Belgium, France and Italy, the granted rent concessions are considered as lease modifications, which implies that the amounts granted will be amortized over the remaining terms of the leases or until the first tenant break option. The total amount to be amortized as from the July 1, 2020 is at the moment €19.7 million. And this amortization will result in a lower rental income for the next financial reporting periods.
On the basis of our lease administration systems, we’ve calculated that the amount in the next six months until the 31st of December will be €6.8 million and that the expected remaining amounts for 2021 and 2022 will be €5.9 million and €2.8 million, respectively. And for 2023 and onwards, the remaining amounts to amortize annually will not be really material. As a consequence of this way of accounting, the cash flow from rents will be higher than the reported rental income, but we’re pleased to see that this effect will diminish rapidly in the next two years with some residual effect for 2023 and the years thereafter.
The direct investment result per depository receipt was €2.41, just €0.01 lower than the result for the previous year being €2.42, despite the rent concessions granted. The reason for this is that IFRS 16 is applicable to the largest part of these rent concessions amount. But it also implies that for the next six months until 31st December, the impact will be approximately €0.14 on the direct investment result per depository receipt. In case all rent concessions could have been charged to the second quarter of this calendar year, the direct investment result per depository receipt would have only been €2.01, so €0.40 lower.
In the second quarter of 2020, we extended two long-term loans, which were to mature in July with principal amounts of €50 million for a loan in Italy and SEK 500 million, which is €45 million, for a loan in Sweden. The loan in Italy is now expiring in July 2021, and we have agreed with the Swedish bank to enter into negotiations in the next month to prolong the loan for three to five years. The maturity profile of the loan book is very sound, as presented on Slide 19 of the presentation, with only three long-term loans maturing in July 2022 for a total amount of €110 million.
In July, we entered into two loans guaranteed by the Italian state for a total amount of €24 million and a term of three years. And the terms and conditions agreed are similar to those four transactions completed in the recent past. Currently, the average term of the loan portfolio is nearly five years, and the interest costs are hedged for 75% at the end of June for an average term of almost seven years, mostly by interest rate swaps, but also by a number of fixed interest coupon loans. The average interest rate for the loan book is now 2%.
The adjusted net equity stood at €2.1 billion at the end of June, €50 million lower than at the end of December. The net loan to property value ratio increased to 45.5% from 44% reported at the end of December. And this calculation is made on a proportional consolidated basis, which we think is the most fair calculation. However, we note that there are also other loan-to-value ratio calculations, which we also show on the Slide 20 as well and would obviously lead to lower ratios.
Finally, I would like to conclude that we have a robust balance sheet with headroom against our loan-to-value ratio covenant agreed with all our banks, which stands at 60%, which is a percentage in line with market practice.
And that concludes my brief observations. And now I would like to hand over to the operator to invite participants in the conference call to ask questions.
[Operator Instructions] The first question comes from the line of Rob Virdee from Green Street Advisors. Please ask your question.
Hi, good morning.
Rob Virdee from Green Street. I have three questions. One is detailed and two a bigger picture. If you could take them 1 by one, that would be great. So firstly, the detailed one. I note that the headline rent collection figure you provided is after agreed rent concessions and deferrals. So could you give me that figure for the first half or the second quarter on an invoiced basis? And where we are collecting the rents on a country-by-country basis on an invoiced basis?
Evert Jan van Garderen
Yes. No, no, no, sure. Let’s say, of course, if the rent concessions, which were given, let’s say, then, let’s say, you don’t invoice for that. So what we have showed here is that what is due and payable after you’ve given a rent concession or alternatively when you have, for example, allowed a tenant to pay later, then, of course, you don’t invoice for that. So really, these percentages are based on what is due and payable as we expressed compared to what is collected.
Yes. I guess I’ll go through and reckon out what it should be.
But of course, what we’ve done is told you that the total amount in Euros of the concessions we’ve made, the 21.7% or whatever, and indeed have then set out later in the press release the details as Evert Jan has summarized of what the amortized amounts will be. I have to say our preference would have been to hit it all at once to get it out of the way, but that’s not what accounting rules allow. Yes. Next question.
Fine. Thank you. Secondly, it’s clear to everyone, I think, that tenants are suffering from the reduced footfall in Continental Europe. So my question is…
Well I think they’re mostly reasonably happy with how things are going. I wouldn’t say it’s – if you look at our footfall numbers, they don’t suggest too much pain. But anyway, go on, yes.
Okay. That’s very interesting. I do see that. But the question is really when many tenants already operate on fairly thin margins, in your discussion with your tenants, how – what proportion of them are loss-making with footfall where it is? And what I’m trying to get to is where do you think rents need to fall, if at all, for all of your tenants to be profitable? It may…
If turnover levels stay roughly where they are, which so far, I mean, you could say, obviously, as some of these turnover levels reflect the fact there’s sort of pent-up demand but leave that aside. But all I would say, if the – this is turnover levels. It’s not footfall. It’s turnover that matters. The amount of money they make, not the amount of our payment that’s worn out.
And I know people talk about footfall in the U.K. because most of the shops don’t actually have a turnover clause. But no, I would say if – and Valeria can comment, I’m sure, in a second because she’s at the shop end. But I would say that if tenants really thought they were going to lose profitability, they would have told us. They’ve had the opportunity to do so. So yes, of course, what the tenants will do very sensibly is where the shops are not profitable, they will close them as they always have and they always will. Nobody knows how deep the recession is going to be, and there is bound to be a recession if not this year, then next year.
We don’t know how deep that’s going to be. All I can say is what happened in 2008 when there were disasters elsewhere. But in our markets, we managed to sell-through with the same vacancy levels we’ve always had. And I don’t expect it to be fairly different this time because governments are obviously very keen to try and minimize the recession. But of course, if turnovers generally drop significantly, then tenants are going to tell us, as they always have and always will.
So – but so far, so good is all I can say. Please, it’s totally different from the situation in the U.K. It really is. I mean, I talked earlier about turnover rent. I think there are four of our 1,200 tenants or something – I mean, 1,800 tenants. Four who just pay turnover rent, and they are obviously good old H&M, who was a prime moves of this and some, but not all of Inditex. But we’ll see. So very fewer just as cleanly turnover. So I don’t know what’s going to happen. But for the moment, we’re reasonably confident.
That’s just really clear. Just lastly then, just on your disposal plan, if you could give a bit more color. So I appreciate you saying two sites agreed and you’ve earmarked some others. Where are the others just on a country basis maybe? And what’s the quantum? And perhaps if you could give me a little bit of color on the investment market in France because, obviously, we’ve had those transactions early on in the year, and 1 of your peers has got their portfolio on the block?
Yes. I mean I think our peer who should be named – should be encouraged by the sort of resurgence in turnover and portfolio in the hypermarket-based centers. But for the average center, the honest answer is we don’t know. I mean, obviously, the big [indiscernible] portfolio was quite exceptional. All I can say is looking at the deals that we believe we are doing, and I repeat that we’re not going to announce anything until it’s a signed contract, even though there is in principle agreement in writing. But those two transactions are very, very close to our valuation.
So it’s hard to judge, but Pascal can perhaps add some color. But there have been no sort of routine, if you like, so that 100 shop hypermarket led shopping centers sold. So it’s difficult to tell what’s going to happen in France. But in terms of color, I mean, there’s – I think we probably hinted 1 in France and 1 in Sweden there. The other ones, I’d rather not comment, but they will not be all in my country is all I can say. But again, we have no even agreements, not even formally we have them on the market. So it’s too early to tell. I’m telling you what our tension is but what matters is the realization, I think, not the intent. Pascal?
Pascal Le Goueff
Can I just give a comment from France and about the investment market? Obviously, there was this portfolio of [indiscernible] at a yield of 4.8%. But there was another deal in Lille. There was the sale of the Printemps owned by LaSalle sold to a French SCPI at a yield of 4.6%. And this deal has started before the lockdown, before the COVID, but it has been completed and signed in the beginning of July, without any concessions. The total price is around €100 million. I think it’s an interesting comparable for…
It’s encouraging, yes. Yes, I would have thought so. But we shall see, but we don’t expect major changes really. And I think with interest rates being clearly lower for longer now and, I think, therefore, fixed interest markets being debatable. I’m a perpetual optimist, of course. But I expect increasing interest in good, solid investments. We’ll see. But I would say that, wouldn’t I, so – but I believe it. So we’ll see.
I always worry with the interest rates lower for longer, the implication is cash flows and recession…
Recession, of course. Of course. Of course, I know. I know. Okay. We’ll see. Thank you. Next question.
Thank you. The next question comes from the line of Jaap Kuin from Kempen. Please ask your question.
Good morning, Jaap.
Good morning. Yes, thanks. A couple of questions. One or two clarifications. Just following up on the disposal plans. I mean, could you broadly indicate what range of volume you’re thinking about?
I thought I did earlier. It could amount – I mean, the two deals we’ve got on at the moment are – I won’t go to precise numbers, but under €100 million. The ones we’re contemplating or intending to do were in the order of €150 million. But I repeat, you should not pencil those in until we tell you there are deals. That’s our planning. So in total, hopefully, we are around if these deals come off, big if, I suppose, but I think they will, but then we’re talking of a couple of hundred, which obviously gives us confidence if those deals come off, that we have no reason to contemplate the rights issue, which we are certainly not doing at the moment.
Yes. Okay. And then I guess, a quick side question on valuations. Obviously, you present your own thoughts on what are relevant transactions. But if you, for example, look at Sweden, where most of your peers have shown, well, significant – I mean, reasonable value decreases at Västerås [ph] and Atrium Ljungberg. All of them showed negative movements. What makes your portfolio different in Sweden?
Because it’s better. Peter, would you like to comment?
Yes. I mean, Atrium Ljungberg, as you know, are heavily downsizing their retail components in their portfolio. In fact, they were the seller of the property I just mentioned, which was Farsta Centrum, which was, I think, a very relevant comparable done and exchanged and completed during the COVID period. It’s a municipal center. It is in the southern suburbs of Stockholm. But I think it’s an isolated catchment and I think in many ways is directly comparable to – even though it’s part of a bigger city comparable to our provincial centers, certainly our valuers thoughts. So no, I mean, what I hear from the valuers of our direct peers, I would say, will have more direct comparable shopping centers as they actually were very much in line.
And in fact, just to give you a little bit more color. I mean, we were only down 0.5%. What the valuers had to make judgment on was the rental income going forward. What they allowed for, there was a slight increase in exit yield in one or two cases. But their judgment was based on the lowest OCRs, for how long was there going to be an income correction. And in May when they did the numbers, they made a judgment that it was going to be a very short-term and modest correction, which they allowed for in their cash flows. And I congratulate them. They were absolutely spot on because what we’ve just shown with our 96% collection in July, in is that full collection, which we would expect going forward is their judgment was absolutely correct.
I mean, just on judgment, I mean we said much earlier in the year that we didn’t think that the June valuations will be down very much. And I think circumstances approved, we were correct. So we’re not in the business of making outrageous promises that we don’t think will be kept. And I think our track record over 30 years proves that.
And do you maintain a view for, let’s say, December? Or do you think that Italian…
Yes. I repeat, as I said earlier, that providing we don’t have a serious recession during that period and providing, most importantly, that there’s no wide recurrence of lockdowns. I mean there will be, of course, smaller lockdowns here and there. I’m assuming there will, of course, be a vaccine at some point as late this year or early next year. But providing the current circumstances don’t change, I don’t expect the valuations to be significantly down. We’ll see. But that’s – I’m sticking my neck out, but then that’s something I’ve been used to doing over many years.
Yes. That’s clear. Thanks for that by the way. No need in hiding. And then a couple of – just also following up on the previous question on the collection rate. If I do the math, which is – I don’t think I can do it correctly, but you indicate 10% of annualized rents are kind of the rent holidays, which would – obviously the majority of it would be Q2, some of it in Q3, which…
Well, in finery, it should have all been Q2 because there haven’t been any significant concessions after that date at all. But of course, the accounting rules mean we’ve got to amortize it over the sales of years which is, for us, a bit of a pain frankly.
Yes. So kind of the basic model will be 78%, kind of 60% because it is annualized quarterly – for quarterly, it will be 40%. So that means like a cash collection rate of roughly around 50%, which is in the end in line with the industry? Is that – does that make any sense?
Well, we don’t know how other people define it. All we can say is we have given you the number, the exact numbers of our giveaways, if you like or concessions or help to time turn. So – and I’m not conscious what other people have done. Anyway, that’s up to them. All I can say, I think we’ve been as clear as we possibly can be. And that obviously, Evert Jan has made the point about invoices and how they have been met.
Yes. Okay. And then maybe on covenants, we’ve had a discussion on that before. And now you’ve shown a group 60% LTV covenant. This is, I think, the first time we read about it in many years. So is this the result of renegotiations with banks? Have you obtained any waivers? And/or are there any other relevant covenants?
Evert Jan van Garderen
Yes. We have not obtained any waivers, let’s say. Of course, there have always been questions what our covenants, et cetera. It’s – of course – what is important that these covenants are at asset levels because the way we finance. But in the case where there is a group covenant, this is the one, the 60%, and that’s a market practice. So we said let’s disclose it, but in a proper way, not telling one or two analysts, but put it in our press release in the market. So there we are and everybody knows now what it is.
But the reason we did that this time is clearly it’s a matter of concern to most sensible analysts and investors. So we thought it was better to come clean, if you like, so.
Yes. Not because – yes, exactly. And so there’s absolutely no covenant, which will be more strict than this one.
Evert Jan van Garderen
No. Let’s say, we – first of all, the covenants are – and have always been at asset level. And in the cases where there is a group covenant, this is the one. And there’s nothing else. So in that respect, very clear. But again, I repeat it will not surprise you because it’s a covenant which you see also with a lot of our peers. And that’s, of course, how our banks also look at us. So we don’t have anything more strict or else than this. And let’s say, at the group level, this is really only one and, of course, on the famous consolidated basis – proportional consolidated basis.
No, I’m very glad we don’t have a lot of bonds issued because those markets are obviously volatile. And of course, the liquidity requirements are pretty strict. That some companies are concerned about, so they have to keep large amounts of liquidity. We don’t because every deal is a separate deal on an individual property. So the possibility of contagion is almost impossible.
Yes. Thanks. And then my last question on the remaining negotiations that are outstanding. I guess you highlight 83%, which I guess includes most of Belgium and Sweden. So I would assume that that kind of 20% is mainly referring to French and Italian negotiations, which probably will be kind of the more tougher ones compared to the other countries. So could you maybe highlight some expectations there? Is that going to be more difficult, less difficult…
Yes. No, no, I’ll hand over to…
Maybe in the light of the kind of the footfall in Italy as well because in the end, it’s kind of – it touched 80% of last year, but maybe not recovering full forward. So let’s say, if that’s kind of the most tough part of the renegotiation, if footfall is not really breaking through at 80%, so what’s kind of the outlook there for…
All I can say is look at the rent increases since then, and Roberto will obviously comment. No, I mean, the delay is for the reasons I’ve given in France, and Pascal can comment there. But no, I don’t think – particularly in Italy, I don’t expect the negotiations to be any more difficult. They’re, of course, long-winded, Italy being Italy, but Roberto can comment. But no, I don’t think it necessarily says that things are going to be different, and rents are going to fall. Don’t forget, please, that Italy is our most advantageous market because the retail densities are the lowest in Europe overall. So – and especially with things like good old Segrate [ph] being canceled now, then we’re pretty confident.
Roberto. I’ll shut up and let you carry on. Go on.
No, no, but I mean, Valeria can comment as well. But let’s say in Italy, of course, we have August when everything is shut. So if you want to go on negotiating, then it takes a little while longer than the normal. But let’s say, if you look at those negotiations that we still have to finalize, there are, of course, the part related to food, which has been exactly then where – of course, you have the COVID-19 measures which are still in place. Of course, the cinemas are also been affected. But Valeria and her team there have really done a fantastic job.
The negotiations are still ongoing. So the only reason why they’re not mentioned there is that because they are not finalized yet. But we do not expect, let’s say, a lot of troubles. Of course, there have been some groups which are having more difficulties because of the lower rental incomes. Those were groups or tenants, which were already in discussion before. So there’s nothing new in there. But Valeria, if you want to add?
Valeria Di Nisio
Yes, Roberto. Thank you. I certainly can confirm what you just said. On the 15th of August, of course, Italy was shut for holiday, thank God, because we needed to recover from the last 9 months of hard negotiations. And I must say different from the usual for us. And in fact, out of the total, as we said, 12% are yet to be finalized, which represent in numbers really only 115 units for about 60 tenants, brands, but are already ongoing. And in fact, I’ve already booked meetings for next week because, finally, everybody is back onboard.
I would like also to add the fact that, as Roberto said, the most important were the food and beverage because, obviously, that sector has suffered the most. Other sectors, on the other hand, like the sport, have actually achieved a turnover growth, which is higher than last year on the same period. So hence, it was in a way, quite easy to sign the agreements with them. The 1 thing I would like to point out, I’m sorry, I want to take this opportunity because maybe Jeremy did not point out…
Sorry, go on. Yes.
Valeria Di Nisio
In fact from the – it’s true that, well, out of 205 new leases signed in the year to June, we have achieved a 9% increase in rent. But from the 1st of April, during COVID and even more from the 1st of July till today, we signed another 80 leases for increasing rather 13%. Of these, bear in mind that 27% – almost 28% are brand-new tenants coming in our centers. And this is I’m talking for most all countries. This is a clear sign that retailers have been waiting to come in our centers. Notwithstanding COVID, I’ve been happy to pay a premium. Hence, I’m extremely confident to restart my usual job, which is leasing and not COVID agreement or recollection, strictly talking.
Thank you, Valeria.
Valeria Di Nisio
I’m sure Pascal can add more.
Pascal Le Goueff
Yes. Regarding France, I explained that they had a strong position, these retailers, after the lockdown period. But the reason why we are very confident and we are nearly there in terms of agreements – to get agreements with our largest tenants under the top 20, the reason is the performance they had these last two months in terms of footfall and in terms of turnover. It was unexpected from us, but from the tenant as well. So we were minus 4.8% in June. We are positive in July. And according to the latest information in August, it should be not too bad for August. So the position of the retailers in France has softened a little bit. And now we are in a situation where we will sign an agreement in the coming weeks with them.
But as you said earlier, Pascal, they are actually paying the July rents. So…
Pascal Le Goueff
They paid the July much, yes.
Yes. So that suggests some confidence. We shall see. We do our best, of course.
Great. Thanks for the leveled answer. Thanks.
Thank you. [Operator Instructions] The next question comes from the line of Niko Levikari from ABN AMRO. Please ask your question.
Evert Jan van Garderen
Good morning, Niko.
Good morning, everyone. A lot of the questions already asked. But maybe just to touch upon a few points. Looking at the funding, in terms of, let’s say, I wanted to ask if you see any notable changes from the bank side, let’s say, for renewals of the mortgage loans. Do you see any indication that, let’s say, the banks are only willing to lend for a shorter period of time, let’s say, if the average is now around five years? Maybe that’s the first thing that we can touch upon.
Evert Jan van Garderen
Yes. No, thank you, Niko. Let’s say, what I said also in my introduction is that we will – after this holiday period will enter into further negotiations with a Swedish bank, where we have a loan which was extended until the end of the year. And we definitely have as an intention to extend that one between three to five years. We have no signs that that’s certainly more difficult also in terms of pricing. Our experience, of course, has been quite recent, okay, that’s maybe slightly different situation.
But remember, we disclosed that as well that in July, we also entered into two new loans in Italy, state guaranteed by two banks and conditions which are similar to what we’re used to for three years in this case because that’s regulated. So, so far, we haven’t seen anything that would suddenly, yes, make us nervous or that we say there is more difficulty out there. We still see a lot of support of the banks to their clients, of course, helped by central banks and also what governments are doing. So we feel comfortable and also look forward to those discussions we have. But that’s basically the only one, Niko, the one in Sweden because the rest will start only in the summer of 2021.
Okay. That’s clear. Maybe just to follow-up a little bit on the remaining rent negotiations ongoing in France and Italy. Are there any particular sectors or segments, let’s say, fashion that is standing out in the remaining group to agree on the rent concessions for the lockdown periods, if in case the…
I mean, obviously, my colleagues can comment, but people seem to forget that the reason fashion being male or female fashion has been so bad is a very simple reason that if you’re not allowed to go out anywhere, either to work or to enjoy yourself, who needs to buy new clothes. So I think to infer some sort of massive shift in human behavior is completely and utterly wrong.
But Pascal, would you like to comment on the situation in France?
Pascal Le Goueff
Yes. I would say that the two chain were under administration, Camaieu, we have five units with Camaieu, and Celio, we have eight units with Celio. So the negotiation, obviously, are longer with them. Even if Camaieu has been bought out from administration by a French investor from Bordeaux, and he has declared that he will invest €100 million in that chain to improve the quality of the offer, to renovate the shops, so that’s a very good news. But for the time being, it takes a little bit more time to get an agreement from them, obviously. But for the rest of our retailer, again, we are very close to sign an agreement.
Maybe if I can add on fashion. I mean, there’s also the problems with logistic and production. Production, of course, is switched mainly to Asia. So in some cases, we went to buy some cloths, and they were not adequate because it still where sort of winter-ish, where you were looking for something more light. So that also contributed, let’s say, to fashion selling less. And of course, as you know, Niko, the food has been especially hit because of the social distancing and the rest. So they, of course, are having more trouble coming back to the turnovers that they had because if you can lease out 1 table out of two, then that’s, of course, a problem.
I mean to be fair, there have been solutions like enabling food operator to extend, let’s say, their tables on the street, for example, or we give them more room or, for example, in I Gigli with the new terrace. They absolutely appreciated it because they can accommodate a lot of demand, which they couldn’t accommodate previously, if that answers a bit your question. And cinemas, of course, as you know, some cinemas have been closed. There was a bad discussion on blockbusters not being produced. So – yes.
Yes. No, that’s clear. Thank you very much.
Thank you. [Operator Instructions] The next question comes from line of Pierre Clouard from Kepler Cheuvreux. Please ask your question.
So I have just a quick follow-up for you guys. Maybe just to come back on CapEx. I see that the CapEx expenditures increased over the year. Maybe can you provide us a breakdown between maintenance and operational CapEx? And did you see an increase of maintenance CapEx during the year? This is my first one.
I think the answer is no to that, maintenance. I mean, obviously, we’ve had to have sufficient staff to police the lockdown measures, but that’s all really. So no, formal capital expenditure as a result of that, no.
Okay. So you don’t expect an increase of maintenance CapEx going forward?
No. I mean, the trick to any property is to have continuous planned maintenance. So you should never have these kinds of shocks, which we don’t. No, so the answer is no. But I mean, we’ve given you the breakdown of what’s left in our capital expenditure, all of which will be income producing, of course. And the properties will be valued to reflect that, but it’s pretty limited. But no, we do want to finish those projects, i.e. Valbo, in particular, and of course, [indiscernible], but that will be next year, a majority of it, because the hypermarket – I think, Roberto, the new 1 will be finished at the end of this year, I think?
Correct. It will open at the end of February, beginning of March next year.
Okay. All right. But then we – of course, we can’t then start to convert the old hypermarket into shops until they’ve moved. So it’s a way off. But hopefully, if our sales work, we’ll have sufficient funds to do those things without the cost, increased borrowings, which clearly we’d rather not or a rights issue, which we will not do one. Yes.
Okay. Thank you. Maybe on Passage du Havre, the valuation of the center did not move at all, which is a bit surprising. Why? And could this want to be on your half of it, at least? Could this 1 could be on your disposal list today?
We’ve got a very good partner there in AXA, and it is an exceptional property. Of course, a lot of its customers come from Aareal or the Gare Saint Lazare or whatever. And clearly far fewer people are commuting. But I think Pascal use the Gare Saint Lazare and coming from the pleasant towers of Paris. And the trains are now more crowded than they were I think you were saying.
Pascal Le Goueff
No. No. It’s getting more crowded.
So Passage du Havre, no, I mean, we have re-let all the empty shops we’ve had. We’ve changed the merchandising mix. And all I can say is so far, so good. No, I mean it’s so prime. The position is fantastic. Yes, we know that, obviously, the tourists on [indiscernible] and the other stores are much less than they used to be. But we hope that, that will improve of this. No, we have no immediate plans to sell that. But I mean, clearly, if we decided to and we haven’t and don’t expect to, then we have a partner seems to be very happy with their investments. So there’s an obvious person to talk to. In any case, they have an obligation if they want to sell to offer to us first and vice versa. But no, we have no plans to do that. It’s a superb investment, and we’ve done very well out of it over the years.
Okay. Okay. And maybe the last one. I just wanted to know your view for the future. And going forward, do you expect any consolidation in the sector? And is it set to accelerate at least?
You mean in property companies? No, we don’t. I don’t think that would help anybody, frankly. And I think any buyer approves that bigger doesn’t necessarily mean more success in the stock market. So no, I don’t expect. So I mean, there’s been talk in the Netherlands, of course, but we don’t think there’s any sense in the amalgamation of the three companies that have been talked about. So no, I’d be surprised. I think everybody has got enough problems of their own without wanting to merge. And I think even Mr. Simon is probably a bit more severe than he has been. So we shall see. The answer to your question is no, I don’t expect further consolidation.
Okay. Thank you. Thank you.
Thank you. There are no further questions at this time. Dear speakers, please continue.
Okay. Well, perhaps I can just close the meeting then by thanking you all for your interest. I know it’s been a difficult time for property companies, all of us, and we’ve had a pretty horrific time, but we pulled through, I think, pretty well. But of course, it’s also been a difficult time for analysts and others who try to – to try and make sense of all this and make recommendations to their clients. So we’ve all had a pretty tough time. But – and we’ve all got our fingers certainly crossed that there isn’t a resurgence of major lockdowns. There will be minor ones.
As I say, hopefully, a vaccine will arrive. But all I can say is, I think, generally, not just us, but I think all of us have coped pretty well with the lockdowns. But I think we have to accept that, unfortunately, the office sector is not going to be immune either. And whether that will affect the market as a whole, I don’t know. But certainly, as far as it’s gone, retail, I think we can be reasonably satisfied with the results so far. So there we are. So thank you all for your interest and your questions. Some of you we’ll be seeing on road shows, again, I’m sure, and I look forward to that. So again, thank you all very much for your interest.