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Edited Transcript of GTCP.WA earnings conference call or presentation 19-Aug-20 12:00pm GMT

Half Year 2020 Globe Trade Centre SA Earnings Call

Warsaw Aug 20, 2020 (Thomson StreetEvents) -- Edited Transcript of Globe Trade Centre SA earnings conference call or presentation Wednesday, August 19, 2020 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Ariel Alejandro Ferstman

Globe Trade Centre S.A. - CFO & Member of Management Board

* Malgorzata Czaplicka

Globe Trade Centre S.A. - IR Director

* Yovav Carmi

Globe Trade Centre S.A. - COO & Member of Management Board

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Conference Call Participants

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* Cezary Bernatek

Erste Group Bank AG, Research Division - Research Analyst

* Jakub Caithaml

Wood & Company Financial Services, a.s., Research Division - Equity Analyst

* Michal Kuzawinski

JPMorgan Chase & Co, Research Division - Research Analyst

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, thank for standing by, and welcome to the GTC H1 2020 results. (Operator Instructions) I must advise you the conference is being recorded today, and that's Wednesday, the 19th of August 2020.

I'd now like to hand the conference over to your speaker today, Malgorzata Czaplicka. Please go ahead.

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Malgorzata Czaplicka, Globe Trade Centre S.A. - IR Director [2]

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Thank you very much. Good afternoon, ladies and gentlemen. It's our pleasure to welcome you to our H1 2020 results conference call. I'm joined today by the Management Board by Yovav Carmi, Robert Snow and Ariel Ferstman, and we will conduct a presentation, which will be followed by question-and-answer session.

I will hand over to Yovav Carmi to start the presentation.

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [3]

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Hello, good afternoon.

Moving to the presentation of H1 2020. The first thing is that in H1 we have an EPRA NAV of EUR 1.1 billion. This is down 3% compared to same period last year. Operating profit is still strong at EUR 32 million. It's minus 12% comparing to same period in half 1 '19. And FFO, again, also still strong, but lower than comparing to previous year at EUR 33 million, down 11%. All those are, of course, a result of the impact of the COVID outbreak during the half 1. We have a strong cash balance of EUR 142 million at the end of Q2.

Moving to the next slide. Our office portfolio, which is about 60% of our portfolio, overall portfolio is showing resilience to the COVID situation. Occupancy is very strong at 95%. We are not experiencing any collection difficulties. All collection is being handled very good.

We have under development 57,000 square meters in 3 office buildings. The development is ongoing in accordance with the plan, on time and on budget with no disruption due to the COVID. And we have one office building, Spiral, in Budapest under advanced negotiation for sale, reflecting a lift in value of around EUR 10 million.

Moving to the retail segment on the next slide. We can see how the footfall has been evolved since the end of the lockdown in May until the end of July. And we see things gradually normalizing. Average footfall is at 72% in July comparing to July 2019. And even further, we see the turnover of the shopping center almost at 90%. On average, we are 86% compared to July previous year, with the shopping centers in Poland and in Zagreb at around 90%. This means that the conversion basket is higher because you can see that the sales are higher than the footfall means that people are really coming to do their shopping, not so much hanging around the shopping center.

If we look at the overall financial impact of the COVID on the retail segment, we see loss of rental revenue, EUR 8 million in H1 2020 compared to the expected. Collection is a very high rate of 91% out of invoices in H1. So occupancy is remaining very high at 92%. And the overall devaluation of our assets is 7% compared to December '19, EUR 59 million is the figure.

There is a loan, a kind of bank loan related to Galeria Polnocna that has been reclassified to short term as a result of covenant breaches because of the devaluation. This is under advanced negotiation with the bank to resolve the matter. Ariel will expand more on that later. This is the financial impact on the retail. As I mentioned, the office segment is resilient, and we saw no impact on our valuations, on collections and so on.

Moving to the next slide. Here, you see the distribution of the portfolio into functional split, regional split and income generating versus projects under construction. This is very much the same compared to 3 weeks ago when we showed Q1 presentation. So there's no difference. And I move to the offices under development. Here, again, we showed the very same thing 3 weeks ago. As I mentioned, there is no disruption in the development. It's going on time, on schedule, on budget. The COVID did not influence here anything.

So there's not much to say at this point. And I hand over to Ariel to talk about the financials.

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Ariel Alejandro Ferstman, Globe Trade Centre S.A. - CFO & Member of Management Board [4]

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Thank you very much, Yovav. Good afternoon, ladies and gentlemen.

In spite of the COVID-19 outbreak, we ended with a, I think, a strong quarter. Our investment property has been slightly reduced by 5% to EUR 2.1 billion in comparison to December, EUR 2.2 billion. The decrease is mainly the result of the losses on the revaluation, EUR 68 million, mainly on our retail assets. In addition, we have reclassified a EUR 63 million, mainly the result of this signature of nonbinding letter of intent for the sale of Spiral office building in Budapest. And plus, the decrease was partially offset by increase of EUR 33 million on the assets under construction that Yovav mentioned before, Pillar, ABC II and Matrix II.

Regarding cash and cash equivalents, we have a decrease in cash and cash equivalents mainly related to the repayment of the bonds, EUR 58 million, plus investment in property and in construction, EUR 29 million. This was offset by the successful refinancing of Galeria Jurajska done in early quarter 1 2020 that generate a top-up of EUR 46 million.

As Yovav mentioned before, we had to reclassify the loan with Bank Pekao in Galeria Polnocna to short-term loan. This is a technical reclassification as a result that we have not obtained the waiver at the end of June 30. However, we are in very, very advanced negotiations with the bank, very positive. The total exposure for this breach of the covenant is less than 10%, around EUR 15 million. And we expect to be able to resolve this very quickly in the upcoming months and come back to you with the resolution of the breach of the covenants in order to relax the financial covenants and to be able to stabilize the loan.

Moving into the income statement. I think I would like to basically discuss a little bit the highlight of the slide in #15, which you can see basically the impact of the COVID on our margin, in gross margin of operations. As you can see, the gross margin has decreased by EUR 2.5 million. However, the impact of the COVID on a like-to-like basis is EUR 8 million. So if we detract the EUR 8 million one-off of the COVID, we would have been having a growth of 10% on a year-on-year basis due to the fact that we have added EUR 7.2 million new completions, other shopping mall, Green Heart, ABC I and Matrix I into the portfolio with that completions growth, 0.4% minus, a reduction on the sale of the assets of White House and Neptun in 2019. So overall, we are presenting a 4% decrease on gross margin. However, if we detract the COVID-19, it would have continued the growth that we have in the last few years, around 10%.

Just to mention a little bit the overview on the loss of the revaluation. On Slide 16, we have posted in this quarter, EUR 62 million losses on the revaluation. As you can see, 94% related to our retail assets, EUR 34 million in Poland, minus EUR 16 million in Belgrade, EUR 2 million in Zagreb and minus EUR 7 million in Sofia, an average minus 7% of the total portfolio. The office, as mentioned by Yovav, still receiving no major impact, EUR 4 million.

Just going back quickly on the Slide 14 income statement, we end up with loss, minus EUR 34 million. However, if we detract the revaluation losses and tax, we end up with a profit, operating profit of EUR 32 million versus EUR 37 million in the last 6 months of '19, and the result of this difference is mainly attributable to the COVID-19 outbreak.

Just moving forward to Slide 17, we still remain below our long-term target of 50% LTV. We have slight increase on the LTV at 46%. This is driven by the loss on the revaluation on the retail assets. On the debt maturity, we have here presented this technical reclassification of the EUR 187 million loan of Galeria Polnocna with Bank Pekao, which we will probably resolve this in the next few weeks, and this will be spread again back into the original maturity in the next 5 years. In addition, we are in advanced negotiations to be able to recycle that EUR 57 million loan upcoming maturity in 2021, 30 June, in order to also spread it in the next 5 years.

Overall, if you see on Slide 18, just to highlight that the cash flow from operating activities end up with EUR 26 million versus EUR 36 million for the last 6 months of '19. Again, the main impact here is as a result of the rent discounts and concessions provided due to the COVID-19 outbreak on the retail assets. And I think we end up with a very strong cash position, EUR 142 million, which will allow us to maneuver and be able to be ready for any potential issues that we might have regarding this COVID-19 outbreak.

I think we'll finish with the presentation and we are ready to take any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We'll take your first question.

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Jakub Caithaml, Wood & Company Financial Services, a.s., Research Division - Equity Analyst [2]

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This is Jakub from Wood. Just a couple of questions from my side. I was looking at the occupancy and was wondering if you could give us some more color on what kind of tenants has, I mean, presumably went out of business in your larger retail assets. There seems to be a drop in both Polnocna and Jurajska.

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [3]

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First of all, the drop in occupancy is really minor. This is almost, I would say, what you would expect an almost normal turnover in the shopping center that the some shops are not surviving and others are being replaced. I can say that we are above 90% occupancy on average in all shopping centers, which is a very high number if you look at the hard period we have been through. If you look at the really major anchors that we have, the fashion anchors, the supermarket, the cinemas, all of them we reached agreement and all of them stayed in the shopping center. We even see interest from other retailers that were not present in our shopping centers to enter where there are weaker performer and to be replaced. So all in all, I think in this asset management that we are conducting, we are able to maintain the the high occupancy and this is really the normalizing trend in the performance.

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Jakub Caithaml, Wood & Company Financial Services, a.s., Research Division - Equity Analyst [4]

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Right. Following on this, I was wondering about the charts which presented the evolution of turnovers, which are very encouraging, especially the numbers for the Polish shopping centers. And I wanted to ask whether these have been adjusted for the drop in occupancy? Because, for instance, in Jurajska, the occupancy at the end of June this year seems to have been 92%, whereas this time last year it was 99%. And this means that if the charts were not adjusted for occupancy, this would really mean that on a like-for-like basis for the tenants that are still there, the turnover would be almost the same level of last July. Is this correct even or has there been any adjustment made?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [5]

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I assume you look at the footfall, right? The footfall and the turnover slides, right? This is correct?

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Jakub Caithaml, Wood & Company Financial Services, a.s., Research Division - Equity Analyst [6]

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Yes. I'm looking at the turnover slide, in particular. And I wonder if this is for the center as a whole or is there even any adjustments made for the occupancy decline at Jurajska?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [7]

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This is actual figures of sales in the shopping center. So it's not adjusted to any occupancy. It's just in euros, the sales.

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Jakub Caithaml, Wood & Company Financial Services, a.s., Research Division - Equity Analyst [8]

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Right. So for instance, if last year we have 99% occupancy and this year it's 92% at Jurajska. And this year, we have 92% of July turnover. This means that adjusted for occupancy, we are essentially back at the same level.

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [9]

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Yes.

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Jakub Caithaml, Wood & Company Financial Services, a.s., Research Division - Equity Analyst [10]

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Right. That's very impressive. Also, last question...

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [11]

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I think you can also take into account that the cinemas that are accounted as within the occupancy. The cinemas started to be operational in mid-July, but think they are not fully up and running in terms of they are lacking content. So it's still slow. So if you account also for the last year turnover of cinemas, which are within the occupancy, you've seen a better picture.

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Jakub Caithaml, Wood & Company Financial Services, a.s., Research Division - Equity Analyst [12]

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No. That's good point. I mean, it's certainly very encouraging comparing to what kind of uncertainties we have been facing in spring. Last question on the shopping centers, the kind of differential in the valuation movement in Polnocna versus Jurajska. I mean, at Polnocna, we have seen perhaps, which was to be expected, some kind of negative movement and the degree of the negative movement at Jurajska has been much, much smaller, even though we have seen a negative trend in occupancy at both of these centers. Can you elaborate on what was kind of driving the difference between the dynamics at the 2 centers?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [13]

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I think you have to look at those 2 shopping centers with a longer perspective. Jurajska is a shopping center, a regional shopping center servicing the whole county. It's a magnet for the whole county. It has been around for a longer period of time. So it was gradually building up to be a success as it is now. As you know, shopping centers, it takes some time to become a magnet and a successful magnet for the population. And for Jurajska, we had the time before COVID. For Polnocna, the situation was a bit different. It was opened more recently. In addition, there was a competing project that was opened about a year ago within a short, relatively short distance, which was additional competition, competition impact. So it is expected that it would take longer term for such a situation to improve and to be more successful. This is why the situation in those 2 shopping centers is not the same. Even though after the opening of the Mlociny shopping center about a year ago, our performance in Polnocna continued to improve. But still, for the regions I mentioned, they are not entirely comparable 2 centers.

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Jakub Caithaml, Wood & Company Financial Services, a.s., Research Division - Equity Analyst [14]

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Right. Right. Understood. And a final question on the Spiral in Budapest. Firstly, I was wondering if you can shed some light for us on what type of buyer are you discussing with, whether it's a local fund or an international fund. And also this, if I understood correctly, it's booked now at around EUR 60 million and there is a EUR 10 million gain. It means that it was booked at around EUR 50 million, which means that there is a EUR 20 million valuation uplift relative to where it has been booked before, which is very substantial and especially considering kind of the current backdrop and the uncertainty. So could you help us understand the reasons behind the selling price being so much higher than where the building has been carried before?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [15]

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First of all, let's split the question into a couple because you asked a few questions. The first question is about the numbers. The numbers are EUR 10 million uplift compared to Q4 '19. So it's EUR 10 million, but the value is not EUR 60 million. It's a bit higher, but the previous value was a bit higher than EUR 50 million. So it's EUR 10 million. Those are the figures.

Regarding the identity as an investor, as this property is in local currency, the income is in local currency, and the whole asset is in local currency, it's expected that you would find an investor within the local investment community within Hungary. So it's a local investor. And I think it's important to note that this is an independent investor that has no relation to our majority shareholder, has no connection whatsoever to them. So hopefully, this is clarified. This is completely arm's length. It's not a related party transaction in any way or matter. I'm happy to clarify this. And the chances of this being successfully closed seem to be high in the next few weeks or sometime by the mid of October.

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Operator [16]

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We will now take our next question.

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Michal Kuzawinski, JPMorgan Chase & Co, Research Division - Research Analyst [17]

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It's Michal Kuzawinski from JPMorgan. Sorry, I wasn't sure if that was me who is able to ask question now. So I want to follow up on, generally, on the state of negotiations in retail segment, if you could shed some light on what percentage of your total retail space is still being negotiated? Was something already negotiated? And what's the outcome of these arrangements? I mean, if you could give some guidance on what we should expect for rent going forward? Are these fixed rent? Are some of these rents a percentage of the tenant's revenue? Like how long are the concessions for? I mean, anything you could give us to be able to forecast the rental rate evolution on the retail portfolio would be very helpful.

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [18]

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Sure. So first of all, the vast majority of the tenants approached us and asked for a rent discount. As I mentioned, with all the major tenants we have already agreed. On the arrangement going forward, so it's secured. As you can imagine, each shopping center is about 200 shops. So the amount of work is, the workload is high. So it takes some time to conclude all those lease amendments and so on. So this is a time-consuming exercise. But with the vast majority, this has been completed.

As regards the terms, the rent discounts that we have given are temporary. They're until the end of this year. And the range of the discount is 30% to 50% discount comparing to the previous rent, again, staying until the end of the year. And in exchange for that, we prolong the leases for the period of the discount plus the lockdown, so it's about 8 months on average. So I think this gives you a good picture of roughly what to expect.

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Michal Kuzawinski, JPMorgan Chase & Co, Research Division - Research Analyst [19]

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Okay. Okay. And then so what have you agreed happens next year? Do you then kind of sit at the table again with your key tenants and discuss the current conditions or do you just go back to the previous rental arrangements from your contracts? Because it will probably depend on the state of the sales rebound, right?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [20]

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First of all, I think nobody knows how the COVID situation will evolve. So we're not able to make predictions on that. What we see is that, as we discussed previously, we see the performance of the shopping centers normalizing gradually with July being almost 90% of the revenues compared to last year. If this trend continues and people need to go out, need to go shopping, need to consume, they don't want to stay at home, and if this trend continues, then there's no reason to expect why they will come back and renegotiate again early next year. And as I said, the discounts that we're giving are temporary against a lease prolongation so that the leases have still a long horizon. So we do not expect them to come back and renegotiate early next year given the trends that we see as normalizing.

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Michal Kuzawinski, JPMorgan Chase & Co, Research Division - Research Analyst [21]

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Okay. And just from the accounting perspective, how was this rent relief in Poland accounted for? So did you invoice the rent for the lockdown period and is a receivable on your balance sheet or did you not invoice? If you could please explain how this works, how big in cash flow?

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Ariel Alejandro Ferstman, Globe Trade Centre S.A. - CFO & Member of Management Board [22]

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I think in terms of accounting, we were not allowed, especially in Poland, we were not allowed to invoice during the lockdown period, and that was by the government regulation. So we didn't issue any invoice for that period. At a certain period of time, I think it was beginning of August, every tenant had the chance to basically sign their technical prolongation for the period of the lockdown and then enjoy this 2-month discount. Most of the tenants confirm on that basically vacation on the rent for those 2 months. As Yovav mentioned, we have on average negotiated discounts until the end of the year between 30% to 50%. And those are reflected basically on our financial statements on the income statement with the loss of income that we pointed out, EUR 8 million. And of course, with an impact on our valuations that we posted also as well on the retail assets. I hope this answered your question.

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Michal Kuzawinski, JPMorgan Chase & Co, Research Division - Research Analyst [23]

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Yes. This EUR 8 million is the H1 period, yes? Then there will be some also in the second half, yes, from the discount.

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Ariel Alejandro Ferstman, Globe Trade Centre S.A. - CFO & Member of Management Board [24]

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Yes.

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Michal Kuzawinski, JPMorgan Chase & Co, Research Division - Research Analyst [25]

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Okay. And so I think this is, I think, as clear as can be probably in this circumstances in terms of your retail space. And now in terms of office. What do you expect in office? I mean, do you have any possibility to track actually the real occupancy of your office space in terms of like the percentage of staff employed by your tenants who actually do work from the office? How has it changed over the months? Are you starting to see any inquiries from your tenants on perhaps needing less space or renegotiating existing conditions? What can you expect there? Also in terms of, if you were to give any rental outlook on this part of your portfolio in terms of your existing agreements and in terms of where is currently the market relative to what you have locked in your agreements?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [26]

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This is a very interesting question, and we ask ourselves the very same question all the time, and we read a lot of the research about this because it's something that is still in the vague and it's really hard to predict how this will evolve. I can tell you a few things. One, as I mentioned, currently, the office segment is resilient. We are keeping a very high occupancy, 95%. We have no collection issues and we indeed started to measure. I mean, office buildings are normally -- you don't measure footfall like shopping centers, but the way you can monitor somehow the physical presence of people in the building because you have those access cards that you can know how many people compared to normal traffic. This is the way we try to monitor or to measure for our own idea how many people and what is the physical presence in the building. And we do see indeed very low presence in the office buildings. In some buildings, it's 20%. Some buildings, it's 50%. It depends also on the employer and what is the policy then. I mean, the employer is the occupier of the office.

And the hope is that when the school year will start very soon, this will drive people back to the offices. We don't know how the office segment will behave. There are various trends that everybody is expecting or the employees are expecting as they are, to a certain degree, going into opposite directions. On one hand, there might be more home officing in the future as maybe people got more accustomed to that. On the other hand, we read of a lot of employers that are unhappy with the long home officing, which makes it hard to control their employees. Their productivity maybe in the beginning went up but gradually went down and they become busy with their personal lives. And what we saw also in recent years, offices having a designated area for employees to kind of hang around together and brainstorm. And this is where the ideas come. This is what's happening where everybody is isolating alone at home. And also the facility itself at home is not really suitable. Many people are sitting and working from their kitchen table, which is not really the way to work as a long term sustainable solution.

So all those trends, if you mix them together, we don't know what influences more and where this will end up. Plus another phenomena that in recent years, we saw many international employers trying to save costs and reduced their space requirement. And by doing that, really reduced working space per employee. This, I think, will change to the contrary. It will not work anymore. So all this together, it's hard to predict how this will unfold in the future. But what we see currently, we don't see any requests from tenants to give back space or to reorganize their space. We haven't seen that yet.

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Michal Kuzawinski, JPMorgan Chase & Co, Research Division - Research Analyst [27]

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Okay. So basically, I mean, no financial impact, right, and no impact on valuations as we have seen. But clearly, some uncertainty on the kind of longer term, right, is the first summary, yes, of the situation?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [28]

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Correct. Correct.

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Michal Kuzawinski, JPMorgan Chase & Co, Research Division - Research Analyst [29]

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Okay. And maybe the next question. I wanted to ask you if you are thinking about entering the logistics segment in your key countries of operations? Is that something you would consider where you could use some of your existing strengths and competencies, yes?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [30]

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I think our strengths are mainly in offices. We have experience in retail, and we're comfortable with the real estate segments that we are really have a lot of experience and track record.

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Michal Kuzawinski, JPMorgan Chase & Co, Research Division - Research Analyst [31]

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Great. And maybe just finally, you have listed the planned buildings on one of the slides with a few ones listed as projects at planning stage. Do these projects have building permits issued?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [32]

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Which slide is that?

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Michal Kuzawinski, JPMorgan Chase & Co, Research Division - Research Analyst [33]

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The slide towards the end.

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [34]

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Yes, yes. Yes. The way this page is designed that we have those, of course, under construction, which we spoke about. Those who are ready to be launched. Those are the ones that are advanced in terms of permitting, either they have permit or the building permit is just imminent, within distance of weeks. And the ones in planning stage are the ones that are longer term for us.

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Operator [35]

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We will now take your next question.

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Cezary Bernatek, Erste Group Bank AG, Research Division - Research Analyst [36]

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This is Cezary Bernatek from Erste Securities, Poland. Can you hear me?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [37]

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Yes, yes, yes.

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Cezary Bernatek, Erste Group Bank AG, Research Division - Research Analyst [38]

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Okay. Great. So just a couple of questions. First one, with regards to Spiral and potential disposal of this project. The question is, if you could just approximately estimate what could be the cash to be released from this potential deal? And if I understand you correctly, this deal has potential to close this year still if I understood correctly.

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Ariel Alejandro Ferstman, Globe Trade Centre S.A. - CFO & Member of Management Board [39]

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Yes. Like Yovav mentioned, we're expecting there's a high likelihood that this deal will be closed in the next few weeks, maybe a month, and we expect to close in early October. As of today, we calculate that this transaction will free up around EUR 40 million cash to the company.

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Cezary Bernatek, Erste Group Bank AG, Research Division - Research Analyst [40]

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EUR 40 million, 4-0?

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Ariel Alejandro Ferstman, Globe Trade Centre S.A. - CFO & Member of Management Board [41]

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4-0, yes, 4-0.

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Cezary Bernatek, Erste Group Bank AG, Research Division - Research Analyst [42]

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Okay. Great. And the second question is concerning the office sector. It's like a general question, which is how comfortable do you feel with your current valuation of the office portfolio? And you have the fact that in the first half we saw some pressure on cap rates, like ranging like 20, 40 basis points in terms of, for example, Polish prime office properties and whether you could expect another look at it at the end of the year. What's your thought about it at the current stage?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [43]

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I think the answer is twofold or threefold. One is that the Spiral deal is quite a good evidence that yields are, it kind of confirms our valuations. This is one. Two, I think the performance of the office shows high occupancy, high collection, no really issues with the office sector shows that there is no really reason to have any adjustment on valuation. What you are considering as pressure on yields is, we don't really see the evidence for that in terms of the real transactions that happened in the last 6 months. If we see some deals happening in Romania, in Hungary, in other markets, we don't really see this yield pressure. What will happen until the end of the year? I don't know, but this is what we see now.

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Cezary Bernatek, Erste Group Bank AG, Research Division - Research Analyst [44]

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Okay. Okay. Understood. And the final question from my side. Whether you plan some acceleration, potential acceleration in the exit from the standing assets versus like a couple of years and like sold opportunistically like 1, 2 properties per year? Maybe I mean there's some potential change to the strategy?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [45]

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Can you say again, I didn't really understand the question.

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Cezary Bernatek, Erste Group Bank AG, Research Division - Research Analyst [46]

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Yes. The question is whether you are planning to accelerate the process of exiting the standing assets of the company.

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [47]

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Accelerate what?

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Cezary Bernatek, Erste Group Bank AG, Research Division - Research Analyst [48]

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The sales, the exit of the standing.

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [49]

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Accelerate the sales. We don't see any, yes, as you said, traditionally, GTC sells 1 or 2 building per year. One we already mentioned, the Spiral one. Whether there would be another one? Yes or no. At the moment, it's not on the agenda. And to complement on that, as we said, we have a strong cash balance of EUR 142 million. Ariel mentioned the Spiral sale will generate another EUR 40 million. I think that puts us in a good position twofold, one, to be able to cope with any downturn related to COVID. And the second is to take advantage of opportunities that we think that will be in the market and we start to see.

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Cezary Bernatek, Erste Group Bank AG, Research Division - Research Analyst [50]

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Okay. Okay. So just concerning this, maybe a follow-up. So you're negotiating some purchases at the moment or not really, not yet, not at the moment yet?

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Yovav Carmi, Globe Trade Centre S.A. - COO & Member of Management Board [51]

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When the time comes, we will advise on the purchases.

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Operator [52]

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There are currently no further questions on the phone lines, sir.

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Malgorzata Czaplicka, Globe Trade Centre S.A. - IR Director [53]

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Okay. Thank you very much, operator. Thank you, everybody, have a very good rest of the day. Goodbye.

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Operator [54]

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Thank you. Ladies and gentlemen, this concludes our conference for today. Thank you all for participating. You may now disconnect.