Welcome to Inmobiliaria Colonial third quarter 2022 conference call. The management will run you through the presentation, which will be followed by a Q&A session. You can request to ask a question at any point during the presentation by dialing zero one on your telephone keypad. I'm now pleased to introduce Mr. Pere Viñolas, CEO of Inmobiliaria Colonial. Thank you. Good afternoon. This is Pere Viñolas speaking. I'm here attending the conference as usual, together with Carmina Ganyet, Corporate Managing Director, and Carlos Krohmer, Chief Corporate Development Officer. We are happy to share with you the results for the third quarter of 2022. As you will see, these are an excellent set of results. They are better than expected. As you will see, they are guiding us to a positive view of our results expected for this year. As an introduction, I would remind what already everybody is familiar with, which is the fact that Colonial has been insisting for a number of years in a strategy of flight to quality in our strategic approach to the market. We believe that this strategy is even more valuable in the context of current polarization of the market. It is also an answer to the new world that we live in, which is a world where pricing power remains one of the fundamental questions to the expected performance of any company. We already see a little bit, you know, the outcome of this strategy as we approach the end of this first year, you know, of this new cycle. What you will see in these results is that, first of all, the pricing power challenge is having a very strong answer from Colonial. As you will see, indexation is fully passed through at this time of the year. That leads us to a strong rental growth ongoing. We will see this also translated in a very high numbers of top line like-for-like growth. In fact, very good numbers in absolute terms and very good numbers in relative terms to the sector. The main first driver, which is strong pricing power, is behaving very well at this time of the year. The second driver that is also a result of our strategy of flight to quality is the alpha factor. The fact that the relatively good positioning of our assets allow us to expect from them particularly a strong outcome in terms of letting activity that apply both to our pipeline and renovation program. You will see in this presentation that so far we are already experiencing very good results at this time of the year. More importantly, we are sourcing the drivers for additional cash flow in the near term, in the future, as a result of this letting activity. These two strong value drivers, which is pricing power and alpha value coming from the prime factory, are already having an impact in 2022, which means that our recurring EPS, we expect that it will be beating the upper range of the guidance that we have been communicating to the market. To be more specific, I'm on page seven already. The data, you know, about these results. Gross rental income is EUR 2,062 million at the end of September. This is 12% more than the equivalent period of last year and 7% like-for-like. This figure of 7%, I would like to insist that, of course, this is very good in absolute terms, but as you can see, it's at this moment the highest in the office sector in Europe at this time of the year. The recurring EBITDA is EUR 207 million, 12% more than last year. The bottom line, recurring net profit is EUR 119 million, which is 30% more than last year. This is leading us to a recurring EPS number at this time of the year of EUR 0.221 per share, 23% more than this time of last year. Finally, I will be giving also some additional light on this. At this time of the year, we've been disposing of close to EUR 100 million, EUR 84 million to be specific. We've been doing so far this at a 9% premium on the most recent appraisal values. These are the numbers. What is there behind those numbers, you can see it on the right side of this slide. First of all, a letting volume that at this time of the year remains super strong. 136,000 sq m have been signed, which is 16% more year-on-year, which is a record volume also for Colonial. That's obviously driver number one of cash flow that is being delivered in 2022. As we will see future cash flow that we will see lending into o ur P&L 2023 and additional further future years. This letting volume, which is strong, is also hand-in-hand with a healthy performance in terms of rental growth. First of all, the average indexation of our contracts is 5%. We will be very specific about what does this figure mean. Just to highlight the main takeaways, you will see that of course, we are passing through full indexation to our clients currently, but this means very high expected rental growth rates by year-end as a result of indexation plus additional rental growth. We will see the details on this in the next few minutes. The ERV growth for the group is 5%. By the way, the same applies to indexation, quite healthy across our markets, meaning same performance in or similar performance in Spain and France. Using other numbers, re-leasing spread is 7% for the group, 8% in Paris, 6% in Madrid. O f course, as a result of this, the EPRA occupancy as of today is 96%, 3% more than a year ago at this time of the year. So we are at the very high end of occupancy. Just as a small, very significant example, Paris is fully occupied. It's 99.8%. We believe it's a number that speaks for itself. Well, now we will enter into the details of our financial performance and operational performance. We'll go back to, again, a discussion on what's going on in the end in Colonial and which are the drivers that are behind this excellent performance, and so what can we expect for the near future. After this introduction, I will ask Carmina to step in to talk about the financials of the company. Thank you, Pere Viñolas. In page nine, well, just a reminder that what Pere Viñolas has already mentioned, with the relevant metrics of these third quarter results. The gross rental income increases 12% year-over-year, up to EUR 262 million. Consequently, the group EBITDA also increases 12%. If we look at the recurring net profit, also very outstanding results with a growth of 30% up to close to EUR 190 million. Consequently, the recurring EPS increases 23% up to EUR 0.2211 per share. If we look at in more details what are behind this growth, I am in page ten. The main message is, well, the revenue, the rental growth increases 12%. Moreover, the operational portfolio, without considering the disposals that we did last year and also the beginning of this year, the rental growth or the revenues increases 16%. Without considering the renovation program and the project pipeline coming into the operation, the revenues increases 10%. If we look at it in more detail what does it mean this 12% rental growth, I am on page 11. You can see here that this level of growth of 12% is consistently positive in all the markets with outstanding level in Paris of 17%. When we look at the like-for-like growth in comparable terms, the same portfolio from the previous year, the like-for-like growth is 7%. 8% in Paris, 5% in Madrid, and 10% of Barcelona. What are the main driving forces behind this like-for-like 7% growth? You can see here in the right-hand side of the slide, the main impact of this like-for-like growth. 1/3 is occupancy, so 2.18% is occupancy, and 2/3 is pricing power. Inside pricing power, probably let's explain a little bit more in details what does it mean indexation. You can see here that the price impact is 4.4%. Out of this impact, 2.1, less than 50%, is due to the indexation impact. More details about this indexation impact. The first comment I would like to share is that all the contracts, the majority of the contracts, except the government modules, which is by law not in the, not linked to the indexation, all the contracts in Spain and in France are linked to inflation. In Spain, it's CPI, which the average for these 22 years has been, as of today, 5%. We started the year of 5%, and we finish at 10%. The average is 7% in Spain, the CPI. In France, all the contracts are linked to the ILAT, which during the year, the ILAT has performed from 3% - 5%. The fact that in France, the ILAT is disclosed with a delay of between 3- 6 months, the average ILAT in 2022 has been 3%. The average of inflation of all our portfolio between France and Spain is 5%. 7% in Spain and 3% in France. We have been past 100% of the index of indexation in all our contracts. At the moment, in the month that is due, the indexation. It's not all the contracts are due in the beginning of the year. It's on a semi-annual basis, on a monthly basis that the contracts are due for the new indexation as a consequence of the updated levels. One message, one important message is that we have updated all the contracts to the inflation, CPI in Spain and ILAT in France. In average terms, 7% in Spain, 3% in France. The fact that the contracts are not signed at the beginning of the year, are not due the indexation at the beginning of the year. The effect of the passing indexation like- for- like in the last quarter or during up until September 2022 has been 2.1%. If we could imagine that all the contracts, the indexation data would be or would have been at the beginning of this year, at January 1st, the impact of the indexation of all the contracts would have been 5%. What does it mean in reality is that if all the contracts have been impacted since January 1st, the like-for-like growth, instead of being 7%, would have been 10%. The fact that we have this indexation delay during all the months, this is the reason why you could see the impact of 2.1%. What does it mean in reality? That in 2023, the annual impact of the indexation that has been updated on all the contracts during 2022 would be or will be 5% annual basis. That would have been will be full impact in 2023. I hope it has been explained, I would say, clearly. The fact that this is a time effect because all the contracts, the indexation is in a monthly basis. The impact of this three quarters is 2.1%. This year, in annual basis, 5%. Very important message about this like-for-like, very strong, 7%. Again, if we would have been indexed since beginning January, this like-for-like would be 10%. If we go in the next page, you can see the level of this like-for-like. Also considering this time effect of indexation, it's outstanding. It's the highest level in our company during the last five years. Moreover, if we compare this like-for-like growth with our peers, as you can see here, it's well above the average like-for-like that our peers have already been disclosed during these days. Consequently, as a result of this important rental growth, you can see in page 13 an EPS growing of 30% and passing positively the revenues I already explained, and also impacting positively the financial results thanks to the liability management we did during 2021. Also the additional impact thanks to the additional stake that we have during this year in SFL. You know that the increase in SFL stake was done in August 2021. We have a positive impact of this additional minorities that today are in at home are at Colonial. This is the reason why you can see this building blocks positively increasing the EPS 30%. As Pere Viñolas mentioned before, we have been also continuing disposing some selective and non-strategic assets. During the year, we have been selling EUR 84 million in secondary assets. The last one has been Sagasta, a small asset of less than 5,000 sq m which is not consistent with the strategy we have in our portfolio. Very important, all these assets have been selling at 9% premium to the last reported Gross Asset Value. More important, all these disposals will be and has been EPS accretive, basically because all of them are vacant or were vacant at the moment that have been disposed. If we go to the capital structure in the following pages. Why we can say that we believe that we have a solid capital structure. The first comment or the first reason is because of the profile of maturities of our debt. As you can see here in the right-hand side of the page, more than 80% of our debt matures after 2025. The first message is we don't have huge maturities coming in the following two years because 80% matures, expires after 2025. Second comment, why we believe that we have a solid capital structure is we have a very healthy liquidity position with more than EUR 2 billion in terms of undrawn facilities and cash available, which means 2x the coverage ratio of the debt maturity in the following 48 months. We believe that also it provides a lot of comfort in our company. The third comment would be that we have today a very competitive cost of debt with 1.4% cost of debt spot. This holistic approach of this capital structure at the end is providing us the rating by S&P with a BBB+ stable and Moody's with a positive outlook. This is how they approach. It's not a specific metric or a specific KPI that they, as you know, they analyze. It's moreover what are the different, I would say, quality of the cash flow, the predictable cash flow, the quality of the clients, the liquidity position, and also the maturities and the profile of debt maturities for our company. This is why they confirm the rating as of today. Why we believe that also we have a competitive cost of debt. I am on page 16. Basically, we confirm, and we can affirm that we have a good level of fixed rates because today we have almost close to 90% of the current net debt at fixed rates. At non-fixed costs, today at 1.4% spot. We know what is the level of the cost of debt that Colonial has because basically close to 90% it's already fixed and closed. Moreover, as I think we released in the previous webcast, we have a pre-hedge position, a very interesting pre-hedge position, which today the mark-to-market of this pre-hedge it's close to EUR 300 million. W hat does it mean is this pre-hedge levels of interest rates that it will recover. It's covering 50% of the bonds that will mature in the future. EUR 2.4 billion are already pre-hedged at the level of 0.6% strike, 0.6% interest rate for the following 5.4 years. What does it mean in reality? That at any maturity of bond in the future, 50% of these maturities are already pre-hedged at 0.6% for the following five years. This is very important because today we have 90%, close to 90% cost of debt fixed, but we have a very secure level of interest rates and consequently a very secure and healthy level of interest cost of debt for the following years. What does it mean in practical terms? You can see here in the right-hand side what the impact of this hedge policy of the cost of debt to Colonial at the increasing market rates that has been happening recently. In June, we expect that the Euribor three months from the remaining part of the year at 0.37%. It has been increasing 188 basis points up to 2.25. This is the average Euribor three months for the remaining part of the year. With this huge impact of close to 190 basis points, our cost of debt only would have been increased 12 basis points. We have very, I would say, healthy hedge, spot and in the future, which means that we can confirm that if the forward rates continue at the level as of today, the average cost of debt for Colonial for the following years would be in the range of 2%, which we believe that we are very healthy protected. We have a very predictable cost of debt in the future. Not only spot or also in the future, which doesn't mean also in practical terms that this level of fixed cost of debt it's also above our peers, not only today, also looking forward in the following years thanks to this pre-hedge policy or this pre-hedge position that we closed last year and a very interesting levels of interest rates. I will step into chapter three, operations, that will show our strong outperformance through our polarization and prime positioning strategy. Let me start with page 18. Looking at the moment at the market where it stands as of September 2022. What you can see is in the markets where we are present, that the availability of high quality product like our Colonial portfolio in the three markets is very, very scarce. The availability of Grade A product in the CBD of Paris is 0.4%, so nonexistent. In Madrid and Barcelona, it's around 2%. This, we have to put it in contrast with or compare it with what is happening on the demand side. What you can see here, the gross take-up in the three markets has been increasing in the first nine months of the year, via these versus the previous year that already had a comeback from the pre-COVID situation. We are really positioned in a slice of the market where the availability is scarce. This explains our operational performance. When we look at page number 19, we have signed 136,000 sq m, +16% versus the previous year. I would like to remind that the previous year was the second highest letting activity year in our history, was already a record year. Compared with this record year, as of September, we are 16% above the levels of the previous year. Important to highlight that close to 90,000 of these 136,000 sq m is lettings of new spaces. Either vacant spaces or pre-let of projects. The quality of what we are signing in terms of risk profile is very good. The average maturity of the contract is eight years until contract expiry and six years until the first break option, that typically our clients do not exercise. This sustains the profile that we have clients with a high loyalty, that they want to be in the best assets. Here you have some examples of the client names that have been signed during the year. If we go to the next page, you see the three maps of the city, and you see basically with the blue signs where the contracts have been signed. Basically everything published in Intramuros, so CBD and our beyond and Grenelle assets, and in Madrid and Barcelona, all around the Paseo de la Castellana and the Avenida Diagonal. Really being at the prime end pays off. We have reached maximum rents of EUR 940 per sq m month and 28, really setting the benchmark in the market. This is an effect of the polarization trend that we see in the market and that is clearly benefiting our strategy. We can see it here on this page 21. What we show you here is the Colonial share on the total stock in Paris and on the total stock in Madrid. It's 7% of Colonial's assets, or 7% of the total stock in Paris and Madrid. However, we have captured out of the gross take-up of the first nine months of the year, 10% of the take-up in the Paris market and 11% of the take-up in the Madrid market. What does this mean? That we are capturing more than our market share. Why? Because the clients want to be in the best assets, and there is a clearly proof of the polarization trend. If we go then to the occupancy profile, thanks to this strong letting activity, and as I said, 63% is letting of new surfaces. We have improved our occupancy profile year on year. September last year, it was 93. Now it's close to 300 basis points higher, 96. As far as Pere Viñolas mentioned, Paris, almost fully let. What is still to be let on page 23, it's just 4.2%. You see here the breakdown, or roughly half of it, 1.7% is assets of our renovation program. At this moment, as we speak, in Ortega y Gasset and the Diagonal 530, we are having ongoing conversations to have them soon fully let. The Diagonal 530 is one of the best assets in the Barcelona market. The rest is 4.6%, very good space in the CBD of Madrid, where we have already some pre-lets on Recoletos, and 0.9% of CBD space in Barcelona. Then a residual secondary asset in Barcelona, the Sant Cugat, that explains 4.9% of the current vacancy. So just 4% vacancy. Asset, all of these surfaces with good prospects. What is the price performance behind this? I'm on page 24. We are maintaining high rental growth. If we look at the first two columns, this is the price performance of the full letting activity, so renewals and new lettings. When we compare the prices that we have signed vis-à-vis the market rental price of our assets at the beginning of the year, we are signing 5% ahead of the market rent attached to our assets. Clearly we are capturing rental growth. If we look just at the renewal side and make another type of comparison so that we compare how much are we capturing the reversionary potential of the current contracts, we can see that we are signing 7% above the previous rents pre-negotiation. We are maintaining the quite strong growth levels that we had already last year in 2021. In 2022, we are having ongoing strong rental growth. Thank you, Carlos. I think that we've gone through the financial performance of the company. We have gone through the operational performance of the company, and maybe now I would like to add some comments about the visibility of our future rental growth, which we believe it's key. It's one of our fundamental questions to be answered, no? First of all, how we see this current situation of the market, no? I think that current situation it's that we've lived in 2022, it's a situation where interest rates have obviously gone up because inflation has gone up. Market has already taken the hit that comes from incremental interest rates, but has remained in a wait-and-see mode regarding the visibility of cash flows. The answer to the question of if these cash flows can offset or even beat, no, the hit that can happen because of interest rates remains with low visibility. I think that our goal as a company is to deliver incremental cash flows and to show as much visibility as we can on those incremental cash flows, so the final view on valuation can be more accurate regarding our assets. This is a game that has started this year in 2022, and these results as, you know, for September, we already have some provisional answers, no? The provisional answers can be seen in this page 26, which is, as of today, our cash flows in terms of recurring profit are growing by 30%. They are growing because of two reasons. First of all, because the incremental cash flow that's coming from indexation and rental growth, and then what's coming because of the outcome of our investments in a prime factory in our alpha strategy, both in our project pipeline and our renovation program. What is more in detail our positioning in terms of cash flow profile? Page 27. So far, at the end of third quarter, we have already gone through the indexation of 70%-73% of our cash flow. As we've seen before, everything has gone through indexation a nd we capture a 5% annual equivalent indexation. But what's happening is that in the P&L, we only see 2% because of the breakdown of the different contracts and which moment of the year are we capturing this indexation. As Carmina explained, if we had started all of our contracts going through indexation in first of January, sorry, as of now our expected cash flow will be increasing by 10%. That's what would happen. That's the result of the part of indexation that still we have not been able to capture because we're still not there at this time of the year. On top of the like-for-like that we have already been experiencing. From the point of view of rental growth, coming from pricing power, coming from just the real rental growth beyond inflation, at this time of the year, we can say that in this new game, we are delivering substantial additional cash flow that should provide visibility on to how extent can we offset any negative impact of higher interest rates with higher cash flow coming from our rents. In page 28, you can see more specifically the message. In 2022, we have already experienced sustained rental growth of 5%. In terms of contract reversion, we are at 7% real strength. This is only the first, let's say, layer of visibility that we can provide on future cash flows. As you can see, if we were to forecast inflation for a number of years, already in year one, the performance is quite impressive. We have a second source of value in our future for our future cash flow to grow, which is what's coming from our alpha strategy, which as you know, those of you who are familiar with, has two levels, our pipeline and our renovation program. Our pipeline is what you can see on page 29. On page 29, we can just confirm that in this healthy environment for our assets, we keep on providing additional good news on the performance of this pipeline. The pipeline of Colonial consists of nine different projects where we have been disclosing progress in the last few months and years. What we can share with you today is that we have already pre-let the vast majority, not to say all of it, of eight out of nine projects. The remaining one that we just, you know, started marketing just a couple of weeks ago is Méndez Álvaro. Looking at these eight projects, many of them had previous visibility in previous communications with you. Maybe today the additional news that we can confirm is that for number seven, which is Plaza Europa 34, we are in quite advanced conversations. Let's call it high interest for 100% of this building. That's why we are putting a tick also on this building that will be also producing cash flows starting 2023. In other words, in on the chart on the right-hand of this page, if you look at the cash flow that is coming from all of these pipelines, we have secured gross rental income to come, either secured or with high visibility, for a total amount of EUR 54 million, which compared to the 10 million that can only be seen in the P&L at the end of the third quarter. If we would be successful with remaining one and the remaining things to be done, that will lead us to EUR 81 million of future cash flow to be added to our P&L. Page 30. Some examples. Maybe that's what we'd like to highlight of these examples is that you know that for us, quality means the best assets, but also means the best clients, which you can see here, and also means the best contracts. By the way, when we say that we are delivering indexation, a big part of this, if you may allow me the expression, it's easy. It's just because we have a substantial number of long-term contracts with super high-quality assets. There's nothing particular that we have to do just to capture this rental growth. It's just, you know, to collect the harvest of what we did a few years ago, you know, when we started with all of these clients and all of these assets. The second level of alpha value is what we call the renovation program, which mainly has to do with existing assets where we are going through investments that are related to the renovation of the assets. Here we also have nine different initiatives that amount to more than 100,000 sq m. Basically, again, here the message is high level of progress. eight out of nine projects are being delivered. Six out of eight assets are almost fully let. There's only one project which is left to start in 2023. Well, if everything goes well, this should provide EUR 36 million of actual which are already secure, plus an additional EUR 11 million if everything goes well with the remaining project. A total amount of 47. These figures compared to EUR 17 million only included in the P&L. Again, you can see a little bit of color of what's behind these renovation programs in terms of assets, in terms of clients, in terms of what kind of contract levels are we signing, what kind of rents are we signing compared to ERV. This is the second source of value. Basically, if we say the game now is to deliver incremental cash flows at the end of the third quarter of this year, I think that we are providing high visibility on this. Which is the part of the equation where we can deliver. This is basically what we wanted to share with you today. On page 34, basically the conclusions. We are delivering incremental rental income 12% more than a year ago. We highlight as a particularly interesting figure a 7% like-for-like, which is number one in the European sector. + 23% regarding EPS year-on-year. All of these based in strong operations, as we have seen, strong letting volume, a strong market, strong rents. We basically rely on a strategy of prime positioning that for us means good assets, good clients, good contracts that can help us to deliver incremental rents and incremental cash flow. Basically, with this incremental cash flow coming number one from indexation plus rental growth, that is pricing power. Number two, from additional value coming from our pipeline and coming from our renovation programs. So far, this has been translated at this time of the year in very, very positive numbers. Maybe as a conclusion, we were giving a guidance of EUR 0.28-EUR 0.29 for the EPRA EPS for the end of the year, 2022. As of now, we believe that we will be beating the upper range of this guidance. In the same way that we believe that this pan-European prime city asset positioning of the company is outperforming the market, as you can see with these results, and this will help us going forward in the near future. These are the results for the third quarter of 2022. Now we will be very happy to go through any questions you may have. Thank you. Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press zero one on your telephone keypad. Please be informed that there can be a short silence while questions are being registered. Thank you. The first question comes from Véronique Meertens from Kempen. Please go ahead. Good evening all. Thank you for the presentation. A few questions from my side. Perhaps first, on valuations. Just curious, what kind of discussions are you currently having with appraisers? How are they looking at potential yield expansion versus indeed revenue growth? Is there a key difference between Spain and France? I noticed that in your presentation you mentioned yields for France stand at 3% but stood at 3.25% for Spain. Therefore, I was wondering if there was difference? Thank you. Look, as you may understand, we cannot disclose not too many things about these discussions with appraisers. Mainly to be honest, because we don't have either a lot of visibility yet. Maybe what I could say is that we don't have any evidence of distinctive performance of different performance of Spain versus French assets. If I had to say something, it's more about individual characteristics of each asset. Prime versus secondary plays a bigger role than any geographical, let's say, angle of the discussion. Of course, I think that current situation that may happen, we can all agree that appraisers are based on evidence, spot evidence of what we see in the market. What we see in the market is not a lot yet. The other thing they do is that they look at the discounted cash flows that we have for any asset or discounted cash flows that themselves may have. Maybe related to what I was saying before. Number one, they may come with a different vision on discount rate or cost of capital or whatever they mean they may do. We don't have a view on this. Number two, of course, they have to let's say, acknowledge what's going on with the cash flows. The joint effect of both things as of these days is unclear. You know as this is, the more strong you are, the more you offset, or can even beat any, let's say, thing that may happen from yields being revisited. Last but not least, I didn't say anything, maybe because we have to focus more on cash flows recently about other non-financial angle of our positioning, which is the ESG positioning. Our strong position in green buildings. The other thing that starts to have a little bit of visibility is the difference between green and brown buildings. This is something that as of now remains a qualitative talk. No? But at some point will have some translation into numbers. Having said that, just to give you a view on this. Well, we don't have still any visibility on where the appraisals can go by the end of the year. Okay, thank you. That's very clear. I have one more question from my side. You still have relatively high net debt to EBITDA, I'll say, due to completions and with letting results we can expect some increase in EBITDA. Are you also planning on doing more disposals in the future? Is that one of the key targets for coming year? Well, regarding this, we all like to be very prudent, and we are not very specific in terms of targets of disposals. What we obviously can say is that our investment mood is negative or let's say is the one an investment strategy based on net disposals. So far you can see what is done through at the end of the year, so close to EUR 100 million. This trend will remain even I cannot be specific at this moment. What we would like to highlight is that we want to be, let's say, more specific about individual assets than to be, let's say, brutal and generic about the analysis of our portfolio. We have to remind the specific characteristics of our debt, as Carmina has been showing, what exactly the current debt that we are facing, to what extent we are protected or not protected, what is the maturity. How many years we remain in this position. Then compare this with our levered return of each asset. Of course, the yield will be whatever it has to be, but then on top of that, what is the effect of incremental cash flows that lead you to an unleveraged return? What's the comparison between this and debt and the cost of debt? These are an analysis that maybe force us to be more, let's say, sophisticated in the individual characteristics of each asset, no? Maybe coming back to the beginning, without being specific, or without providing a specific target, we will remain in this mode of, let's say, net divestment mode. Sorry, Pere, can I add something on this ratio? You need to look at this net EBITDA, considering also the future income or future rents that are already secured. As of today, the impact on the EBITDA is very insignificant. As Pere was mentioning, you know, the project pipeline, we have already high visibility on EUR 54 million. On the P&L, on the EBITDA, only ten. The same happens in the renovation program. This, the ratio needs to be analyzed in a dynamic basis. First, considering the secure rents already locked, and also the potential rent in the future because the CapEx is very immaterial, no? The ratio today, I think it's not the level that the company would be in one, two years after completion of all these projects already secured today, no? This is the approach by the rating agencies, no. How is the level of this company about their EBITDA, considering the future cash flow that we have today already secured, and considering also the quality of this cash flow. Yeah. Okay, for instance, in my estimates, net EBITDA will go to roughly 13x, and that is a level that you are comfortable with? If you consider all these, yes, I mean, the net debt to EBITDA go up, including the rent, are in the range of 13x, yes. 13, between 12x and 14x. For a company with the risk, which is low, we have in our cash flows. Yes. Okay. That's clear. Thank you. Thank you. Thank you. The next question comes from Fernando Abril-Martorell from Alantra. Please go ahead. Hello. Thank you very much for the presentation and congratulations for the results. I have three questions, please. First is on margins. I would like to better understand your year-to-date EBITDA margin evolution, particularly in Barcelona. Then second question is with regard to your hedging strategy. I don't know if you would be considering selling down part of your hedges to crystallize that value that you've mentioned, Carmina, and also probably to increase cash and lower the amount of variable debt of your capital structure. Then third question is on the long-term guidance. A couple of quarters, you pointed to a +60% EPS growth until 2024. A lot of things have changed since then. Higher inflation, also higher interest rates, the small changes in your perimeter. I don't know if this is, you know, this is still in place or would you be pointing to the upper end or to the lower end? Thank you. If you wanna, I start with the last one. Just to say that I think that at this time of the year, we are still not in a position of providing an update on the guidance. Probably in next quarter, we can come with additional visibility and what we can see more or less, you know, which are the visions of the fundamentals. Nothing else that can be added at this moment, at this point. On the first question, maybe Carlos, and the second maybe Carmina. On the efficiency and the NRI efficiency. It's a temporary time lag. As you have seen, we have just released renovation programs in the Barcelona market. These assets are already in operation, but not yet at the full occupancy pre-let level. What does this mean? That the OpEx of these assets that are in operation, that typically is almost 100% fully passed through to the tenant. At the moment, they are fully, you know, accounting as a cost in the P&L of Colonial. As I have said, and we have highlighted, we have very advanced conversations to let these spaces up. As soon as we have the letting up of the space, we have a double effect. We have an increase in rents and a much higher increase even in profit because we just not only get the additional rents, we also fully or almost fully reinvoice the OpEx that we have today in the P&L. As soon as we succeed and we close the conversations, and this is leased up, we will have a very significant impact, a positive impact on this. Yes. On the hedging, Fernando, yes, it could be liquidated. It's a position that tomorrow can be sold. This kind of hedging is to cover and to protect and to manage the risk of the interest rates of the company. No, it's not a speculative position. It's to protect the company, to perform, or to provide a high visibility on the future cash flow, on the future EPS, without any volatility in the interest rates. This is the reason why we did this hedge, and this is the reason why, well, we have the benefit now, aside from any volatility on the rates that Colonial would be in the range for the following years of 2%. This is to protect our shareholders, our investors, our EPS expectation, and to provide this growth, you know, not affecting any volatility on the rates. It's not a speculative position. It's to manage the risk, the balance sheet. If I may add something. If you allow me, sometimes it's a temptation, because it would help on the short term window dressing, you know? You suddenly, one of the KPIs that people is more sensitive to, then suddenly you change the number easily, you know. The way we see our business is, look, you are working on a long-term business plan. What we are saying is if you look in the details in our debt and how our cost of debt will evolve in the next five, six, seven years, you know, as a result of all of these hedging policies. What is the actual, not mark-to-market, interest rate that we will pay? How this compare to what everybody else will pay, you know? I think we are better off, and we can then rely on managing our portfolio without too much, let's say, risk coming from interest rates and manage our portfolio in order to generate, let's say, the right levels of returns on the asset. I think that we prefer this second approach, you know? We know that for the next five, six, seven years, what the actual interest rate will be. It's under our control. We prefer this to what? You're absolutely right, you know. If we dispose of this from a speculation point of view, we have, let's say, a window dressing effect, but this is not what we like to do at this point. Okay. Thank you very much. Thank you, Fernando. Thank you. The next question comes from Celine Huynh from Barclays. Please go ahead. Hello. I have two questions, please. The first one is about indexation. Why isn't indexation roughly the same in Madrid and Barcelona? It looks like it was a lot stronger in Barcelona, and I was wondering if you could provide any explanation. The second question is about Méndez Álvaro. You know, your LTV has gone up slightly quarter-over-quarter. Why would you not cancel Méndez Álvaro to preserve the balance sheet a nd under what conditions would you halt it? How much CapEx would you save if you were to cancel it? A lso, what kind of yield on cost are you seeing for this scheme? Thank you very much. Well, about indexation. You cannot compare the index between Madrid and Barcelona because it's subject to contracts that have been updated into CPI, you know. If one contract in Barcelona, the data that should be the indexation to be done, it's first January, and the contracts in Madrid are in March or in June, the impact on the P&L of this level of indexation would be much higher from the Barcelona contract rather than Madrid contract, you know? Okay. It's about timing. Yes. Yes. Yes. It's not the level of indexation, it's how the impact on the P&L. The second question, sorry, we could not hear very well. If you don't mind repeating it again. It was about Méndez Álvaro. Yeah, yeah. It's about Méndez Álvaro. Your LTV is going up slightly quarter-over-quarter. You are 38%. Why would you not cancel Méndez Álvaro to preserve your balance sheet? Under what condition would you cancel it? How much CapEx would you save if you were to cancel it? What kind of yield on cost are you seeing for Méndez Álvaro? Yes. Okay. Now I think I understood. I think that we're basically quite advanced, you know, in Méndez Álvaro. Regarding the residential part, this is to be finished during 2023. The office part is to be finished first half of 2024. Now we will go through the details of the remaining CapEx on both. I think that if we were to stop it would be quite detrimental in terms of value. If now we have a specific valuation and we have to take two decisions, I think that any, let's say, marginal benefit on LTV would be much less, you know, than the value destruction, you know, that you would provoke in a project that is being canceled when it's almost finished. I take your point. If it were at the very beginning, that would make sense, b ut we are, we believe, quite close to the end. As you saw, market performance in terms of letting activity is quite good. Yes, we have to cross the river for this year and a half. We believe that at the end, so two years from now maximum, let's say we are much better off in terms of valuation and even LTV than canceling this today. By the way, if you would like to provide some numbers about Carlos, about the remaining CapEx on both residential and the office project. Yeah. The remaining CapEx is all together for Méndez Álvaro roughly EUR 120 million, EUR 90 million for the office part and around EUR 28 million for the residential part. I would also like to remind, as Pere said, that the cash flow capacity of this project once delivered is around about EUR 25 million of rents per annum. It's a very significant yield on costs. Also it will be now during 2023, it will be almost everything delivered, so we will see the first cash flows during 2024. Thank you very much. Thank you. Thank you. The next question comes from Florent Laroche-Joubert from Oddo BHF. Yes. Good evening. I would have two questions, if I may. The first one is on the EPS that we can expect from Q4. Can we say that Q4 can be viewed as a replication of at least Q3? That would be my first question. Maybe my second question would be on the investment market. Would you be able to give us your view on the investment market in the different CBD core cities? What appetite do you see from investors today for prime offices in CBD, for example, in Paris, Madrid and Barcelona, and at which kind of prices? Thank you. Okay. Look, the first question, I think that what could I say now is that we are at November 16th, so exactly just half of the last quarter. What I can confirm is that our daily operations have not changed. When we have our management committees, the kind of dynamics, the kind of individual situations that we go through do not change substantially with what we have seen so far during the year. That's all I can say. What I can confirm is that we have not seen any change in the dynamics so far. Regarding the second question on investment markets, I think my view is that the institutional market right now remains particularly cautious no matter what kind of the asset we are talking about. I think that people need a little bit more visibility on the underwriting assumptions that they have to do to invest. On discount rates, interest rates, yields, inflation, incremental cash flows. People is not ready, you know, to underwrite a discounted cash flow for any asset, I would say. I would say that institutional investment now remains quite passive for any kind of asset, you know. Maybe my view would be that as of now the market that is remaining more positive. It's a market for a smaller kind of assets, mainly because there the players are different. We see a substantial presence of institutions like family offices or similar that are not, let's say, dependent so much on these underwriting assumptions, don't have too many constraints regarding capital structure. These kind of people, I think that they are, if you look at the profile, you probably will agree easily. These kind of people, they do make a difference between a higher quality in the asset and let's say a secondary kind of asset. It's not a coincidence that if you look at the transactions we've done so far this year, all of them are regarding this average size. Number one. Number two, the buyer is mainly family offices in our case. Number three, and this may be surprising, no, but so far they are paying appraisal values, no, o r in our case, a premium, no? A 9% blended, no? This sweet spot is the one that is working well right now, and where you can be active and perform in very excellent terms. While, let's say, a bigger picture, I think requires today more patience for the market to become, let's say, more active again. As of now remains very passive. That's my view. Finally, no particular difference between geographical markets. Again, the big difference is about high-quality assets versus secondary assets. Looking at the profile of investors that is quite obvious. That would be my view of where investment markets are today. Okay. Thank you very much. Thank you. There are no further questions. Dear speakers, back to you. Okay, just to thank you for your patience and attention in this presentation of Q3. It's been a pleasure to share these results that we believe that are very good. We are quite pleased at this time of the year. Hopefully we will be able to meet again in the future, coming with the same kind of performance. Thank you very much, and have a good day. Thank you.