First Property Group (LSE:FPO) — Investor Presentation

0:01 Good morning, ladies and gentlemen, and welcome to the FIRST PROPERTY GROUP PLC Investor Presentation. That's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so and these will be available via your investor meet company dashboard.

0:32 Before we begin, I would like to submit the following poll, which will just appear on your screens now. And I would now like to hand you over to the executive management team from FIRST PROPERTY GROUP PLC. Ben, good morning, sir. Good morning, Ben. Happy to be here. Thank you very much everyone for dialing into our results presentation for the six months to 09/30/2023. I'm going to assume, if I may, rhetorical question, that we're all familiar with the group. And so I won't go through the basic structure of the group, but get straight on to the results, the results and, you know, how we see the current position as well as, obviously, most importantly, the future. So the results follow through pretty much from the indications that I made when, I last presented our results back in June.

1:29 You might recall back in June and indeed reconfirmed at the AGM presentation recently that the commercial property markets have really been through what I can only describe as, undoubtedly the worst period of my my career. I I had the fort good fortune of having gone through the ninety ninety ninety one, recession. And in many ways, that also crafted my way of thinking and my approach to business. But, that was, I think, relatively mild looking at it by comparison to what we're seeing today. And the reason I say that is we've got a confluence.

2:15 We've had a confluence of a number of sort of seismic events, all of which have been bad for the commercial property market. And I'm just gonna quickly run through those, if I may, just to give you context. The first of those was, in my view, and seismically important was lockdowns, which, kicked off, as everyone knows, back in March 2020, and then we had intermittent lockdowns through until, 2021. Effectively, I wouldn't say, perhaps destroying is too strong a word, but damaging very deeply occupational markets for commercial property and indeed the financial welfare of our tenants. When we emerged from lockdown, we emerged into a world where, reasons, which are not entirely clear to me, people seem to want to work more at home than come to the office.

3:10 And we've also emerged into a world where instead of markets and economies being steady, we've had interest rates go up after thirteen years of having been close to zero, many hundreds of percent more than they were before we went into lockdown, you know, because of breaking of supply chains, fuel constraints, and so on and so forth. And then added into that, we've had this inexorable march to net zero, which has been picking up speed dramatically over the last three or four years, which requires commercial property landlords and indeed residential landlords, so that doesn't affect us so much, to upgrade their property, making sure that they comply with EPCC, energy performance certificate rating of c by 2027, with a view to getting to EPC b ratings by 2030.

4:05 So you've had a requirement, a regulatory requirement from government to invest in property at a time when actually property values were dropping because interest rates have gone up dramatically and occupational demand has been weak. And if that hasn't been bad enough, the regulatory framework has also incentivized pension schemes and insurance companies to dump property and buy government bonds. It's one of the reasons we had a meltdown, in in pension fund, in in pension funds when Liz Truss did her mini budget. You know, they were all very long into guilts. Interest rates went up. In fact, they'd leveraged their guilt positions. Interest rates went up, and you see what effect that had on pension funds. When typically, actually I'm slightly digressing, but but typically, actually, when interest rates go up, pension funds do rather well because their their liabilities are discounted at a higher rate. And even though their assets may fall in value, actually, they are in relatively better and good health when interest rates are higher than they are in more challenging times when interest rates are lower.

5:13 So we've seen a regulatory move of capital out of property. We've seen a market move out of property precipitated by interest rates going up. We've seen a reduction in occupier demand, and we've seen a requirement from government to invest more in property. Nothing could have been worse. But I think based on anecdotal evidence only that we have now come through the worst of of all of that. Interest rates look to have topped out. Inflation has come down. If you believe Rishi Sunak, he'll take all credit for it. If you blame the Bank of England, if interest rates go up, but inflation goes up. But as it comes down, of course, he takes all credit for it. But nevertheless, that's a much better place to be than we were before.

6:00 We're beginning to see some unfreezing of the markets, and tenant occupation levels seem to be getting better. I'm very pleased that we are invested in Poland. Poland remains a much better market from a trading occupational economic perspective than The United Kingdom. I'm gonna talk about Blue Tower and Gdynia, which is our two large office blocks where we've got vacancy. But to be in largely invested in Poland at this difficult time has been, you know, great for us. And the other aspect, of course, being in Poland is that our debt is in euros, and euro denominated interest rates haven't gone up as much as they have in The UK.

6:49 So we haven't been hit on the interest rate increases as much as we might otherwise have been if we'd been invested, entirely in The United Kingdom. So that's the backdrop. As I say, I see some green shoots of potential recovery showing themselves. We're looking at some interesting deals. But the results that you're seeing, of course, reflect our performance over the last six months. And sadly, that was the, you know, sadly, over the last six months, we made a loss of about £150,000, which is mostly due to the reduction in value of properties, in a fund that we own 46% of FPOP opportunities PLC. Without that markdown in in values, we would have made a profit of around 2 or £300,000.

7:44 Having said that, the properties in in FPOP, FPOP opportunities PLC, are actually performing quite well. We've got low vacancy. It's a big asset, which is a shopping center in a place called Ostrobich, is fully let. We've got tenants lining up wanting to get into that shopping center, and we can't accommodate them. And as with retail across Europe, but obviously, particularly of interest to us is Poland, rents in well let, well located shopping centers are now going up on the back of, inflation and, you know, so we should see some good rent increases on our portfolio of retail properties in Poland as we go through the New Year, which is, you know, one of the reasons I think, I'm more optimistic now than I was perhaps when we last spoke.

8:38 So with the exception of that loss, our cash position is still good, 6,700,000. We've made some sales, and we've made a few sales and some funds, which accelerated some fees, and that's bolstered cash. We're obviously keeping a very keen eye on cash as we go through the leasing of Blue Tower and the Gadinho properties. Once they're fully leased, we'll have another 2,000,000 or so of income, which will go straight to the bottom line. And we'll see a much more stable position for the group. But until we get to that position, you know, obviously, cash is king, and we need to hold on to as much of it as we possibly can.

9:23 And it is for that reason that we aren't paying a dividend now, but we will, as we've indicated at every presentation in the past, pay a dividend and increase the size of the dividend whenever profits allow us to do so.

9:42 Third party assets under management have been hit hard as well as a result of all the events that I've, mentioned to you. So third party asset management's now £300,000,000 versus £400,000,000 at 03/31/2023. But the thing for shareholders to keep in mind is that, the vast majority of of our earnings have always come from properties we've either owned ourselves or in which we've had an interest through our investment in the funds that we manage. So even though that looks like quite a substantial reduction in AUM, it doesn't feed through proportionately into our profit line. Our profits are much more determined by our own investments about which I've you know, as I mentioned, I'm getting increasingly optimistic.

10:35 So just turning through the presentation, starting at page seven at the risk of reiterating stuff I've already said. Statutory profit to thirty thirtieth September twenty twenty three, loss of £650,000, dilute versus profits last year of 2,400,000. Diluted earnings per share was a loss of a of naught 0.99p per share versus 1.83 last year. Cancel the dividend. FX didn't really play a huge part in our results. It having been quite steady over the last year. Investment in properties at book value has held up, and this, I think, is a testimony to the quality of the assets we've got, both the market value and book value. The, you know, the the the the the value of our assets has held up.

11:27 So income slightly under pressure because of the vacant properties, but the strength of our balance sheet underpinned by the value of our assets holding up and by the cash that we hold on it, which is £6,710,000 as at September 30. Gross debt, pretty much unchanged from 03/31/2023. Net debt, similarly, pretty much unchanged. Gearing ratio of 40%. A lot of that debt, I think $16,000,000 of that debt is non interest bearing. 16.9. £16,900,000 of that debt is non interest bearing. And so we're not, at least as far as debt is concerned, exposed to increases in interest rates in the way that we might otherwise have been. Of course, when interest rates go up, as I've already mentioned, property values reduce whether or not you're geared, and we're not immune to that. But, you know, we're not having to pay higher interest rates on a lot of the debt that we've got.

12:31 So as a result of our balance sheet holding up well, net asset value holding up, you know, relatively well, all things considered. Next page on 10, you've got a, you know, chart of how net asset value has performed over the last few years. And as you can see, we reached a peak pre lockdowns, you know, which is not surprising because that was the last sort of fair weather economic environment that we had. We took we've taken some hits during lockdowns and and, you know, the unlocking of the economy and surging interest rates. But actually, NAV is holding up pretty damn well even though I say so myself. On page 11, Jeremy has prepared a NAV bridge so you can see how NAV has moved, what the key elements are of the movement in NAV since we last reported. I don't intend to go through that unless someone's got questions on it later.

13:29 Page 12 is the chart on our dividend history about which I've already discussed. So looking to the future, the key for us is to I'm gonna step away from the presentation for a moment. The key for us is to lease up our vacant space in Blue Tower where we have about three and a half thousand square meters vacant at the moment. And I'm very pleased to say that there is demand for all of it and more.

14:00 We haven't agreed terms yet with a tenant for all of it, but we've agreed terms for some of it, and we're pretty confident that we should lease that up over the next six months. With that leasing up, we'll obviously come some CapEx, which will reduce our cash that we hold, but it's all profit led investment. And if we can lease up Blue Tires, I hope we will over the next few months, no deal is a deal until it's signed, but if we can do that, then the future profitability of the group becomes much clearer and easier to see a path back to, you know, paying a dividend and so on. So I'm hoping that what you're seeing is the nadir of the impact of all the adverse conditions that I've described earlier. And that as we now move forward to March 31, even though we may plateau and plane a bit until then as these new tenancies come in, assuming we sign them, you know, you'll begin to see a pickup in our earnings. And with it, you know, everything else comes, back into kilter.

15:09 And, of course, if we're lucky, we might get some reductions in interest rates. We might get some economic growth, and with that would come, you know, interest in investment properties, and you might see recovery of values as well on the back of it. So as I say, I hope this is the idea of our performance as a result of lockdowns and then the surging interest rates. I'm gonna hand over to Jeremy now just to talk about our new loans division. Shareholders might recall that because of the difficulties facing the investment property market, we decided some months ago to offer loans. It's taken a while to break into that market, you know, being a new entrant. We're obviously very familiar with the investment market, but it is slightly different trying to provide loans to what were hitherto our competitors.

16:00 So I'm just gonna let Jeremy speak a little bit about the efforts he's been making in establishing this new product. Well, we've made a regulatory announcement on the June 7 announcing our entrance into this marketplace. Since when, we have originated over £650,000,000 worth of new senior loan opportunities. We are offering loans at 65% loan to value on an interest only basis, and that is attractive to a number of borrowers, firstly, because the the bank the banks are really only offering loans up to about 50%. A 65% loan or what was a 50% loan may well now be a 65% LTV loan, but interest rates for a 65% loan are higher. But by not requiring amortization, the properties can generally support these higher interest rates because, obviously, the yield on a property is very rarely a nine or 10% yield.

17:03 But these properties that weren't offering loans on can sustain nine or 10% interest rates at a 65% loan to value if there's no debt amortization. I am very hopeful that we are close to completing or returning or agreeing terms for our first loan. And, of course, as and when and if that happens, we'll make a regulatory announcement about it, but it will take time to document and then to actually draw down and complete. And as previously reported, there's no need for us to hire new people to do this. We've got the requisite expertise in house. It's just a question of repositioning our investment team in order to underwrite and make these loans. And one of the key advantages that we have is should is our ability to step in in the event that a loan goes wrong because of our expertise in investing in property. Yeah. Essentially, we're get getting exposure to commercial property, providing debt, which is much more attractive to investors nowadays than actually investing in the underlying property itself.

18:17 We're getting an exposure to property at a 35% discount in terms of risk because effectively we're only lending 65% of its value. And because we're experts in the subject, we're pretty confident, of managing properties through in the unfortunate event that we have to foreclose on one. So, you know, that's work in progress. Nothing tangible yet from it, but we're hopeful that it will lead to deals in the near future. And I think that's pretty much it for me. Page 15 of the results is everything I've already discussed with you, and the rest of it is backup information. So I think it's time to open it up to questions, if I may. Perfect. Ben, Jeremy, Laura, thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen.

19:17 But just while the the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But Jeremy, Ben, Laura, if I may just hand back to you to read out those questions and give your responses where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. I can't actually see the questions at the moment. On the on the right hand side, so there'll be a blue button that says chat. And if you open that up, you will be able to see the q and a tab. Sorry. Bear bear with us a second.

20:19 Ladies and gentlemen, please do just, bear with us while the team, let's reconnect and access the the questions that have been submitted. Jake? Hi, guys. Hopefully hopefully, you can hear us now. We hear you. Yeah. Do you mind reading the questions, Jake, because I can't see them? Absolutely. No problem at all, sir. I I will start from the top.

21:04 The first question that we have here reads as follows. Do you have short and medium term targets for leasing the remaining space in your key buildings? I mean, we market the space as aggressively and as wide as and deeply as possible, and the aim is to lease them up as fast as possible. There's no kind of, you know, it would be that's any approach that we we could and would wish to take. So there's no kind of defined target. And we're hunting. We're not you know, this is not, a kind of shotgun approach. We're hunting elephants. You know, we need to lease up thousands of square meters. So we're hunting, medium to large corporations, government agencies. Of course, we'll take small tenancies if they come along, but they're not gonna move the dial. We need, you know, proper proper significant tenants to take the space.

21:58 Perfect. Thank you very much for that. The next question that we have here asks, has the board considered registering as a REIT? If not, why not?

22:07 To register as a REIT has a number of complications, one of which is that you have to, you have to pay a dividend of 90%, I believe, of your profits. And if you are a leveraged investor as we are, a lot of the earnings that you make, have to be used to amortize debt, and that makes it difficult to meet that central requirement of a REIT. So I think that's really the main reason we're not a REIT. Perfect. Thank you. Just turning to the next question. Could you please comment on the write down in Phoenix? What happened and why? Yeah. So Phoenix is Phoenix is seven minutes drive from the airport. It's a 50,000 square meter office park, seven minutes drive from the Krakow Airport, but out of town.

23:07 And when we bought it, the total supply of modern office space in Krakow, including its all virgins, was about 900 square meters. And during the course of, managing that property and remember, Phoenix came the exemius business park that Phoenix owns came with a lot of legacy issues, including a fraudulent previous owner who'd stolen the road, effectively, stolen the electricity supply for the place, put management contracts in place, which prohibited us from being able to get access directly to the income of tenants and etcetera, etcetera, including neglecting the infrastructure at the property. And, and so it was a repositioning exercise, and we we refinanced Phoenix and effectively took control of it in 2018.

24:03 And the first year or two was spent dealing with the legal issues, all of which have been dealt with pretty much. And, we've taken repossession of the road. We've got our own independent, electricity supply. All the, underground car parks, which were leaking water and threatened the fabric of the buildings have been fixed. The railway station terminal that's in the park has been upgraded. New, facilities have been introduced like an outdoor gym, a a creche for children, a kindergarten creche for children, new supermarket, new canteens, etcetera. So during the first couple of years, we did exactly what we said we would do. But at the same time as we were doing that, there was a massive supply of new offices in Krakow, and the supply went from eight or 900,000 square meters of modern office supply when we bought Phoenix to now 1,900,000 square meters. And, of course, superimposed on that, unknown to everyone who was building these new buildings and and and including us when we bought Phoenix, you know, we had lockdowns and all the other issues that I've described.

25:11 So Phoenix being out of town has been hit particularly hard by what's been going on. And instead of being, I thought, a repositioning of the legal and structural issues that faced it. It's now become really a much longer term play of leasing it up. And the difficulty with Phoenix is having a loan on it from a bank that seems unprepared to face up to reality. So, until the bank understands that it's gotta take a significant write down in the value of its debt, We're going to have a kind of Mexican standoff with them at Phoenix. I'm hopeful that reality will eventually set in with the bank, and then we'll be able to give effect to the original business plan and emerge with Phoenix, appropriately named, you know, with a with a good profit.

26:10 But right now, if you like, is one of the most badly affected properties from the confluence of various events that I've described already in this call. Perfect. Just turning, to the next question here, regarding Blue Tower. The question asked, what will the refurb cost be in Blue Tower, for the vacant space? Yeah. So it depends on which floor is being released. When we bought the vacant space in Blue Tower last year, there were effectively three floors, two of which needed complete new ventilation, HVAC systems, complete new fit out. One of those has been leased to DBFO, which is a government agency, new ten year lease, which should kick in, at the end of December, beginning of January, and we're well on with the fit out there.

27:00 And the cost of all of that, including all the infrastructure around it, was about €1,500,000, and we would expect the cost to be similar for the next floor. And the tenant interest we have, we got two kinds of tenant interested in in the other floor. This is about two and a half thousand square meters. The floor is about two and a half thousand square meters. We've got two tenants interested in it. One of them wants it for warehouse space. Of course, the fit out, obligation for warehouse would be much lower, much less requirement for HVAC, much less requirement for fit out. So it would be a fraction of that cost. And bizarrely, probably, we'd get a rent with on a net effective basis, which isn't dissimilar to the rent we would get if we fully fitted it out and gave it to a new tenant for office space.

27:50 And then the other tenant we've got is is another government agency. And but that would be a full fit out. So that would be another €1,500,000 if we leased it to them. But we'd expect to get a rent of about €15 a square meter on that on that space, you know, which would more than handsomely return return that investment. Perfect. Thank you very much for that. The next question that we have here asks, do you think you will, expand your loan venture if the property market starts to return yields? And if so, what will be, your geographical limits, to those future loans? So that's a really interesting question because there is a risk that the investment markets come back faster than our ability to establish the loan product.

28:41 And, you know, we're obviously just looking at that. We'll do we'll do deals where we see deals. You know, who knows is the answer to is the answer to the first bit of that question. Sorry. What was the second bit of there was a there was a second bit of that. Can you just remind me, Jake? What was the second bit? Yep. Absolutely. The second part of the question was, and if so, what would be your geographical limits to those future loans? Yeah. So the jig I mean, we want the loans really to be limited to The United Kingdom. We're happy with lending in Poland, but the repossession process in Poland is not as straightforward as The UK. The law favors the borrower much more than it favors the lender, which is great if you're an investor, not so great if you're the lender.

29:28 In The UK, you can get repossession literally at the drop of a hat. So we're really focusing on The UK where there's a much deeper market as well, than Poland. We will we are looking at some loans in Poland, but it is The UK we're focusing on. Perfect. Thank you very much for that. A follow on question that's just come in, regarding, Phoenix asks, how can Phoenix only be worth, 3.4 mil? Well, that's the NAV is the 3.4 mil. It's got a loan on it of €45,000,000. That's just the cable and electricity, essentially. It's written totally Sorry. Sorry. Forgive me. Just scrap that. So, the reason it was written down was because the loan was 45,000,000.

30:14 But the unrestricted assets, aren't compromised by the by by that bank debt, comprise the electricity cable, which I mentioned that we built and we now own, and some land which is not encumbered by the debt. And and so that's what it comes back to. So Phoenix is all about recovering the position from the bank. The the the NAV that you see there, that 3,500,000 or whatever. Or Just the market. Yeah. That's just the market value of those two assets. Perfect. Thank you. Another question that we have here asks, do the directors expect property value reductions in the next FPO accounts due to the rise in interest rates in the last twelve months? In these accounts, there is no notable reduction in property values except in associates.

31:05 Yeah. So, I'm not expecting massive reductions in values going forward. I mean, who knows what will happen, but I'm not expecting it. You know, the bulk of the interest rate rises appear now to be behind us. The impact on values, I think, has been felt pretty hard in the market. I can't rule out further reductions, but one of the things that we've always done, which benefits at least our book now is hold properties at the lower of cost or value. So we've never marked with the exception of FPOP for reasons which I won't bore you with now. You know, for with the exception of FPOP, we've always held properties and our investments at the lower of, market value or cost.

31:50 And that's, you know, that's mitigated increases in value when markets have gone up, but similarly, it protects us on the way down when markets, you know, when markets are hit hard. So I'm not expecting any, material adverse movements in value. And, of course, as we lease up Blue Tower and Gudinia, you should see those values improve, as you know, as you get income on, income coming through. Perfect. And perhaps just turning to a few final questions. There's one question here that's sort of in two parts. The question asks, the income from the fund business is around 2,000,000. What is the cost for running FPOP today? And the second part being, have you been able to lower the cost going forward? So we we don't look at divisional breakdown of cost because, effectively, the fund management side is run by the same people who do the investments and associate management, etcetera. So there's no breakdown across that. But, Laura, do you wanna just go through what our cost base is roughly? Yeah. Certainly. We do divisionals. The best place to look at it is in the segmental analysis. So you have your, essentially, your board cost, which is unallocated, and all other costs are allocated between the divisions. So the best place to look at that is within your segmental analysis.

33:11 Perfect. One of the final questions that we have here, following on from what you said earlier about SUNAC and inflation, would it also be fair to say, the FIRST PROPERTY share price has fallen by 50% in the past year solely due to market conditions, whereas if slash when it rises again, it'll be down to the skills of management? Well, I mean, we are all incapable of, bucking markets. I mean, markets will always, you know, if if if markets improve, our share price will improve, and that will have nothing to do with management, of course. But what management does is to mitigate the worst adverse consequences of downturns and try and maximize the benefits of upturns.

34:00 You know, it's the old age old debate about what kind of value management brings, but I would argue that we bring, as much value, if not more than most. If you look at our track record as a company and our NAV growth, I think as I mentioned at the AGM, we've had an internal rate of return on NAV since the company was effectively founded in 2001 of 18 and a half percent per annum every year, which is pretty damn good. I challenge anyone to attribute all of that to the markets. I'd say that is very significantly due to, management involvement. And if you look at these results, you know, we've managed to mitigate, reductions in NAV. The share price has gone down, but actually, NAV is holding up pretty well.

34:48 I can't discount the risk of NAV dropping in the future because we live in uncertain times, but we've actually held NAV up extremely well. Perfect. Thank you very much for that. Acting as a middleman, for providing loans without providing the money sounds to me like a waste of effort and probably won't produce real net profits after costs. Can the directors explain briefly why it is worth the hassle? It's a it's a it's a lot less hassle, let me tell you, than being an investment fund manager because being a being a lender doesn't require you to actually manage the property, and the fee levels we would charge are not dissimilar. Frankly, it's a much better model to grow an asset management business with than the model that we were following, which is, you know, growing asset management through the direct purchase of properties. One of the issues with developing an asset management business based on buying special opportunities is that you can't very easily scale it.

35:53 And in the pursuit of scale, there's a real risk of giving up quality investments, giving up, you know, the proper underwriting of investments and buying stuff that you, you know, wouldn't otherwise buy. And so we've always been quite judicious in what we buy as evidenced by our NAV growth over the last twenty two years. And because we've been judicious, it's been difficult to scale up our asset management business. Actually, if the loan business works out, it's very scalable because you don't have to manage the asset. You only have to manage the loan book, and that effectively is a function of collecting, collecting the, interest that you're due and making sure that the borrower produces annual valuation reports, management reports, etcetera, it becomes it's a much easier exercise.

36:43 And since the fee levels are not dissimilar, if Jeremy and the team and I can get this product moving forward, it's it's a much better place to be, I think, as a group for for from an asset management perspective. Perfect. Thank you. And just turning to the last question that we have here. How will you finance the new senior loans being granted? So we would raise all all of it through third party money. There is a there is a you know, we're considering doing, sort of leverage loans. So we're, you know, we're seeking to get a lender alongside ourselves who provides you know, we talked about providing 65% loan to value loans.

37:31 We're seeking to get a senior lender that will provide the first 30 of that 65%, so close to half the loan at a lower interest rate. And then from our high net worth individuals, family offices, and diamond funds, institutions that we deal with, we would look to get the higher, bit, the bit between 30% LTV and 65% LTV, and and therefore charge a, you know, slightly bigger margin, gain a bigger margin on that part of the debt and a higher return for our investors. But we're not looking to put any FIRST PROPERTY GROUP cash into this venture. Perfect. Thank you very much, for that. Ben, Jeremy, Laura, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the platform. But, Ben, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that would be great.

38:36 So at the risk of repeating myself, we've been through an incredibly turbulent three or four years. We've held up pretty damn well in those few years. Yes. We've taken some hits, but NAV is holding up. We've got good prospects. The properties that are vacant that we which we bought largely vacant are leasing up. Blue Tower in particular, which is in Central Warsaw, should lease up, I hope, quite soon. And with their leasing up, I would see I would hope to see a recovery both in our income and the value of the assets that we hold. And if we're lucky enough and have the same luck that Rishi Sunak had with inflation, without doing anything as a management team, we might even see recoveries, recovery in values. Ben, that's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations.

39:35 This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of FIRST PROPERTY GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.