Montea Comm. VA

Good morning, ladies and gentlemen. Thank you all for joining our half-year analyst and investor call. I hope you've had a great summer because we are ready to present to you some sunny results. As always, I am joined by my two colleagues, Els Verwaake, our CFO, and Ina Maslova, our investor relations manager. Together, we will guide you through our strong results. With Els, I will start by sharing the key highlights. I will then give you an update on our growth, and then Ina will walk you through both our portfolio and our markets. Els will return with what you are probably most eager to hear, our outlook, and I will close with an update on the progress of our ESG targets. Finally, as always, we look forward to your questions. Ina will lead us through the Q&A session. Let's start with the highlights. As you see at Montea, all lights are on green. We are advancing on our growth. We now reach 3 billion euros portfolio. We have 150,000 square meters that we have either signed in new leases or renegotiated leases. And we were able to increase the rents by 6% on those leases. And we have the highest occupancy rates of all logistic players in the continent. So, Els, this great performance, what does it do to our results?

Good question, Jo. The EPRA results increased by 20% year-on-year to €54 million. The EPS increased by 6% year-on-year to €2.35 per share, despite an increase in the weighted average number of shares by 14%. The net result stands at 77.5 million and includes, beside the EPRA result, a 13.5 million positive portfolio revaluation and a 7 million deferred tax assets. The net result per share stands at 3.40 euro per share. Looking into more details into our financial figures, the net rental income increased by 23%, driven by strong rental growth and, of course, our strong portfolio expansion. The like-for-like rental growth increased by 3.7%, of which 3.3% is linked to rent indexation and 0.4% is linked to rent renegotiation. The operating margin stands at 87.6%, a slight improvement compared to last year. The financial result increased by 28% to 7.9 million euro. This reflects the expected increased interest expenses that were due to new debt taken out as part of the financing of our track 27 growth plan. All of these figures lead to a nice EPRA result of 54 million, a 20% year-on-year increase driven by organic growth, income from new acquisitions, pre-let from developments that have been delivered, as well as the disciplined cost control. More good news, Fitch affirmed the investment-grade credit rating of BBB+, with a stable outcome, which recognizes our disciplined balance sheet approach, as well as the resilience and the quality of our portfolio. In the first six months of the year, we financed and refinanced over €360 million of debt. The hedge ratio stands at 96%, and with six years average remaining debt maturity, we can talk about long-term funding. The liquidity position is strong, with €260 million of funding immediately available. The cost of debt decreased compared to last year from 2.3% to 2.1%. And we will be able to keep this low cost of debt level of 2.1% throughout 2025 and 2026. With the refinancing that has been done, there is no debt that is maturing before 2027. And the debt that is maturing in 2027 only amounts to 75 million euros. The prudence of our balance sheet is shown in the KPIs, net debt on EBITDA adjusted at 7.5 times, the interest cover of 4.5 times, and a loan-to value that stands at 38.3%. Funding is diversified and long-term, 53% are credit lines and 46% are bonds. with a maturity of financing and hedging of both six years. And as I already mentioned, we really take care of the well-spreading of the maturity days for both credit lines and bonds. Back to you Jo for the growth update.

Thank you, Els. As you know, we have the ambition on the track 27 to grow our portfolio by 1.2 billion based on our four growth pillars being in-house developments, partnerships, acquisitions and green investments. And as already mentioned, we're well on the way to do this. based on a good balance between our four growth pillars. In the first half year, you see that 30% came from in-house developments, 40% from partnerships, mainly the one with Wirtz in Liège. But overall, on the four growth pillars, we are able to achieve an investment yield of 150 to 200 base points above market yield, which you see here. 187 million has been invested in the first year half, 36 million in acquisitions, 142 in development and partnerships, and 9 million in solar panel and batteries, at an average yield, net yield of 6.7%. Let's first look at the acquisitions. We bought a building on Blue Gate Antwerp, which now enables our park, Blue Gate, where we already had three developments to connect it to the river Scheldt. We did a nice investment in Zaltbommel. I call it a real Montea product because it's a mix of yielding land bank and development potential. And after the end of the semester, we also did an acquisition in Zeewolde with a huge reversionary potential in the future. We also delivered 111,000 square meters of fully pre-led in-house projects. The biggest one we ever did is the one in Tiel that was for InterGamma. And of course, now, since it is delivered, the rent will start kicking in as of 1st of July. That's why the year-on-year EPS growth of 6% that we have shown here will grow to 8% by the end of the year because we will have these nice developments, the rent income kicking in. Smaller one is in Alstom extension we built for Movianto and in Amsterdam we also did a project for Blond. Looking at the pipeline, we have 150,000 square meters of 100% pre-led developments in the pipeline. That's, of course, 40% of the development with Weerts. It's a building in Oslo that is also under construction for Vos Logistics and two projects where we have the tenant in place, but we are now waiting for the permit, which will probably come in the first quarter of, sorry, in the last quarter of this year, and we will start the construction probably in the first quarter of 2026. And we signed another LOI for a project of roughly 30,000 square meters, more information to come there later in the year. In short, 75% of the growth plan of under track 27, the 1.2 billion growth plan is now secured. It's partly in execution, part is under negotiation. Let's look at what is in execution today. It's 31 million of acquisitions we did after the end of the semester. So it's mainly the one in Zeboldo. We have projects under development today for 65 million yielding above 6.5% and we have another 11 million of solar panel and battery energy hubs that are also under construction. Then we have under exclusive negotiation another 76 million of yielding investments, solar panels for another 52 million and then 45 million of non-yielding land bank that will also generate 6.5% after development. We've already been through these projects and these are the ones that are either delivered this year or that are still under construction. But of course, we are absolutely focused on these ones. These are the ones that are either permitted, but waiting for a tenant or where we have a tenant, but we are waiting for the permit. You know where the land plots are. They are mainly in Belgium and Holland right now. The land bank, which is really the main strategic advantage we have within Mantea, has increased to over 3 million square meters now. That gives us a future development potential of 1.5 million GLA, which is 60% of our existing portfolio, and over 70% of that is grey and brownfield. Of course, we took out teal because that is now the part that is developed for Intergamma, has been taken out of the land bank so huge potential there to continue the growth plan on the track 27 just based on the land bank we want to develop before the end of 2027 we will be able to increase our rent by 30 and then of course the rest of the rent bank will lead to another increase to even 74 of our rent roll It's not only rent increase, it's also value. We believe that we can increase, based on our land bank, the value of our developed portfolio to 4.4 billion, with the development margins up to 330 million linked to that land bank. So let's be clear, this is the first engine of our growth ambitions. Now, over to you, Ina, for a portfolio update.

Thank you, Jo. On a portfolio, we have reached an important 3 billion milestone, thanks to the investments that have been mentioned before, but also as a result of a positive portfolio revaluation that we have seen on our standing assets. We can confirm our EPRONET initial yield at 5.1%, remaining stable versus year-end. Just to provide an overview of the bridge, a clear evolution of the portfolio is coming from the CAPEX and our growth program execution. Our developments continue to book significant gains with over 110 million of development gains booked since 2022. And our portfolio has been showing a rather flat evolution in the second quarter of this year, with yields remaining stable and ERVs showing a mild positive growth. Our portfolio remains with an 8% reversionary potential unchanged versus Q1. And this, as we will show in the upcoming slides, we have been able to secure the uplifts in line with that reversionary potential, which is a clear sign of the portfolio and the value of our portfolio as being confirmed by the market and the clients themselves. Importantly, our occupancy rate remains at 99.7%. As Jo has already mentioned, we are roughly 450 basis points above the market average within our countries. And this is also secured thanks to the progress on the leases and lease negotiations that have been up for maturity or extension during 2025. The progress there now stands at 92%, so only 8% for us to go for over the course of this year. And as a result of that, we have also extended our average lease maturity to 6.2 years until break. More importantly, on the lettings momentum, given that Q2 has been a more challenging quarter, we have seen in the first half of this year, roughly 150,000 square meters of letting activity, partly linked to our existing portfolio, but also signing new leases with clients for our existing portfolio, as well as a pre-let in Halle. We have achieved an average uplift on the previous rents of 6%. And if we look specifically at the Q2, the activity has been at 60,000 square meters. And we have seen an acceleration of the rental uplift to 10% versus the first quarter. Important also to mention that the leases have been signed above the latest ERAVs on average. Our retention rate remains above 90%, which is in line with the last five-year average. And as a result of this activity, we're also able to confirm that our occupancy rate will remain at least at 99.5% throughout the remainder of the year. We see this activity recovery at the levels of 2023. So clearly it's not only about the new dynamics, which we will come back to, but also the tenants continue to go for good locations. And that's where we see the activity picking up in our existing portfolio. A brief overview of the sectors that have been active in lease signing. It has been ranging quite a diverse mix between construction, pharma, F&B, as well as 3PLs that have been active. If we look at the overall picture in the market, we see that the prime yields have been clearly showing a signs of stabilization. And in case of markets like Belgium, they're even showing a slight yield compression. Gradual prime rent evolution has been supporting this. There is a, where we noticed that there is a clear polarization between A and B grade locations with A grade locations still securing a rental increase above indexation. If we look at the take-up evolution, the Q2 has specifically been more muted in terms of recovery for the markets where we're active. And the market vacancy has been a result of this as well. But again, I would like to reiterate, there is a clear divergence between the A and B grade locations when it comes to those assets. Broad market demand is expected to gradually recover. Looking at the survey conducted across European occupiers, which represents roughly 90 million square meters of space, the survey indicates that 95% either plan to expand or retain the same footprint. As a result of this, the downsizing appears to be near the end for European logistics occupiers. There is a more cautious approach when it comes to three-year, so medium-term expansion plans, and we believe this is leading more to a normalized trend in demand that we have seen prior to COVID. Specifically on the sectors, three PLs are back and also post and parcel delivery clients are looking for additional space. And a big driver across all of this is e-commerce, where we see that European e-commerce on average is projected to grow at around 6% on average over the course of the next three years. What does this mean for us and for other logistics players? For every $1 billion of e-commerce sales implies a space demand of 93,000 square meters for new logistics space. Not unimportant to mention is also how crucial the location and increasingly so the grid power connectivity has become for future occupiers. Real estate availability, and that's also linked to labor availability, has become more critical in the past years. And occupiers no longer look at real estate costs only on a rent basis, but more as a total of their operating costs. Finally, sustainability is a clear point of focus with obsolescence still being present in the market. And we believe we as Montea are able to capture this as a result of our grey and brownfield land bank focus with over 70% of that being connected to the grid or being zoned for industrial use. And also our clear focus on reaching high sustainability standards in our investments and developments. And now, Els, over to you for the outlook.

Thank you very much, Ina. With these great results, we can reconfirm our 2025 EPS guidance of plus 8% year-on-year to €4.90 per share. And this excludes the potential one-off €0.08 from the FBI recognition for fiscal year 2024 in the Netherlands. In terms of dividend, same growth target of 8% year-on-year can be reconfirmed to a level of 3.90 euro per share and also this dividend target excludes the potential one-off of the FBI recognition in the Netherlands. Also happy to reconfirm the 2027 guidance to an EPS of 5.60 euro. The growth will be done, as always, through a disciplined financial allocation with focus on operational excellence. The leverage will remain under control, consistent with our track records. Going to an adjusted net debt on EBITDA of eight times, we will have an investment capacity available under track 27 of 500 million. The investment volume of 2025 of 300 million will be done through the growth via our four growth pillars. investments in own developments, investments via standing investments, acquisitions of yielding and non-yielding land bank, but also standing investments, partnerships with developers and also land owners, as well as green investments in solar panels and battery energy storage systems. The EPS target will be reached through a consistently high occupancy rate that won't go below 98%, an average cost of debt that won't exceed the 2.5%, and even for 2025 and 2026, we can confirm a maximum of 2.1%, and an operating margin going to 90% by the end of 2027. We have a strong EPS track record with an EPS growth on average over the last 10 years by 9% per year on average. And we promise to the market a 6% growth of the EPS in the upcoming years. And of course, we have a strong track record in the return. Total accounting return for 10-year period is on average plus 19%. Now I give back the floor to Jo for the ESG update.

Thank you, Els. I'm going to be short on the ESG update. As you know, we have an ambition there under Track 27. We delivered the first two battery energy storage systems in Belgium. We did it in Willebroek and Ghent, and we're planning to do another 45 megawatts of which 32 in Belgium and 13 in the Netherlands, with the aim to go to 100 megawatts by the end of 2027. Also on solar, we want to invest another 25 million in order to get to 135 megawatts by 2027. We continue investing in heat pumps. 50% of our buildings must be equipped by heat pumps by 2027. And where 80% of our buildings now have LED lighting, this will have to go up to 100% by 2030. In short, ladies and gentlemen, I think the results we present you today are unmatched. I think we can say that we are the only players that can say that they are involved in two out of the five largest single tenant developments in the Benelux. We have an occupancy rate that is at an all-time high compared to the market average. And last but not least, we are involved in 150,000 square meters of 100% pre-led projects in the Benelux. These results, ladies and gentlemen, give me a lot of confidence in the months and quarters to come, but we are of course open for all of your questions and I give the floor to Ina.

Thank you, Jo. We'll now open the Q&A session. You have two options to ask your questions. If you're joining us via webcast, please raise your hands. In case you're joining us through the dial-in option, please press pound key five to join the queue to ask your question. If you would like to withdraw from the queue, please press pound key six. And we have our first question coming in from John Wong at Kempen. Good morning, John.

Learn what is understood under the term under exclusive negotiation. So does, for example, the 30,000 square meters of LOI fall under this category? And what's the timeline you see for closing these investments?

Thank you, John. So indeed, the 30,000 square meter LOI has been added to deals under exclusive negotiation. The progress we have shown since we first started reporting deals under exclusive negotiation in Q1 is we had 175 roughly in terms of volume that we were able to, that we were targeting to execute on in the coming months. In the one quarter time, we were able to close on 60 million of those deals. Most of them have also been yielding. So we have now replenished the pipeline under exclusive negotiations with another 60 million worth of deals. And in terms of the timeline, again, it will be executed in the coming months. But I think given the quarter progress, it gives you roughly the idea of what we would be looking to achieve there.

Okay, clear, thank you. And then on the Seybold acquisition, could you perhaps talk a bit more about the reversion potential that you see, also what timeline you expect to capture that? Because I understood it was developed five years ago, so it screams to me that it's still a relatively new asset.

Yes, absolutely. It's a relatively new asset, John. It has a 40% upside potential that might be in the longer run because there is an existing tenant in the building. But this means that value will go up As we go longer in the lease, this is a typical example of, in my opinion, what Montea likes to do. We have a long-term commitment and we know that the closer we get to the end of the lease, the more the value will go up. So this is really a long-term, the reversion will be rather long-term, but the upside is huge. Our estimate today is at 40%.

Okay, that's clear. Thank you. And just last one on solar panels. Could you provide a bit more color on the 7 million write-down? Because it does screen like it could be a double-digit write-down if you look at the current fair value. And just to confirm that this would be fair value accounting and not cost accounting.

The 7 million ride down is linked to the negative energy prices for putting energy on the grid. This is happening since 23 or 24 with an impact on the solar panel income, as you have noted, last year and also a little bit this year. But as of this year, we have foreseen to curtail the solar panels and to stop producing energy when there are negative energy prices in the market. And the decrease of the income of the solar panels has of course also impacted the, and we had to rectify on the valuation side.

Okay, that's clear. Does that impact your decisions on solar panel investments? Because I could imagine it does impact your IRR underwriting.

It does. So the business case is still very profitable in case you can produce the energy for the tenant and the tenant takes over the energy produced. But on the other hand, if you, of course, can add battery energy systems near the solar panel systems, we can approve or confirm our 8% IRR. on these projects.

Okay, clear. Thank you.

Thank you, John.

Thank you.

Thank you, John. Our next question comes from Wim at KBC Securities.

Hello, hi. Can you hear me?

Perfect.

Hello?

Yeah, we can hear you. Ah, thanks.

Sorry. Okay. Thanks for the presentation. I've got two questions related. One on the mix between developments and acquisitions. And can you give an idea on how you look at your track 27 commitments? If you go back a couple of years, I think the mix would have been skewed a bit more to developments. Now we see that the pre-letting of the permitted pipeline is maybe taking a bit longer. Suppose that continues, would you then shift more to acquisitions or would you then maybe extend 27 to 27.5 or maybe wait until the letting or the leasing situation improves in the market?

I think two things are important. First of all, if you look at the acquisitions we have done, you see that we do them at an average yield of 6.7%. So with our boots on the ground, with our people going deep into the market, we are able to do creative deals that also gives us returns above 6.5%. So contributing to the 5.6 target we have on EPS. So we do not depend on the development of the land bank to reach the 5.6 euros EPS target. So that's a very important one. We want to do those developments, but we don't need them in order to get to the result. Now, this being said, if we look at the land bank, indeed, it takes longer. What we see is that a lot of the projects we are currently talking about are consolidation projects. This means it's, for example, a 3PL who has three, four, operations in a certain region, and he wants to consolidate them in one energy positive new building. But of course, to make that exercise to consolidate, they have to go through an entire process. It's about labor law. There's a lot of things that are involved in that. So that's taking longer. So of course, we only communicate on what is signed, on what is committed, but there is much more in the pipeline. So we absolutely believe and we reconfirm that we want to do those developments that were announced under Track 27. We want to do them, but it's also important to mention that we don't depend on them in order to reach the 5.6 EPS target.

Okay, that's a perfect bridge to my next question. It's really specifically, and maybe you were talking already about it, Tongeren, which is along the highway E313. Also in the land bank you have 160,000 square meters available. I'm a bit wondering, because you see if you go more to the north of the E313, there's the canal which has the bridges lifted. It's more multimodal, I would say. Can you give an indication on how the competition for space is specifically in that area of Tongeren? Because also I believe in the south you have competition. I think the deal from Weert also had some properties around that area. And maybe also you mentioned about labour laws. an opportunity now that labor laws have changed recently, that Tongeren, because it's close to the Dutch border, becomes more interesting. So just your view on specifically that area.

Good question. Every country has a certain area where there is more offer than others. For Belgium, that's definitely the Limburg area. I think with Genk, with Tongeren, with some other projects, there is some offer there compared especially to other markets. So even if there is demand and there is demand, there is competition. If you look, if you compare it, for example, to Antwerp, to Ghent, to Brussels, there's much more, there's much less projects available. It's a bit like the Lille-Ressel area in France. It's also a very nice area. There's a lot of demand, but there's also a lot of offering. So I would say if I talk about traction, on our land bank. It's less on Tongeren and it's more on some of the other projects. So Tongeren is indeed a bit more difficult today than it was, let's say, two years ago because of the offer that is available in the, I would say, in the larger area.

Okay, very clear. Thanks a lot. Thank you, Wim.

Our next question comes from Steven at ABN. Good morning.

Good morning. Thank you for taking my questions. I have some specific questions. First, you booked a 5 million result from joint venture. Could you please explain what that number entails and what to expect from this line item in the coming years? That's my first question.

Good question. I would have to get back to you on that one, Steven, because I don't have it by heart.

Okay. Sure. Another question. Could you provide some color on the 26 lease expiries? So more specific, are there some large sites in the 40% expiries? And what is the average in-place rent versus market rents for the 26 expiries? And maybe also some color on the discussions you're having there.

Steven, I think it's a fair question, but I think we are given the fact that we're halfway through the first year and we are completing now the discussions for 2025. In terms of 2026, again, our commercial teams are busy with it. In terms of the profile that we have there, we have a couple of breaks. We have also some maturities going on, I think at this stage it's a bit early to say on what there is specifically to be negotiated. We will provide more context on that towards the end of the year. But at this stage, the focus for us is still the remaining now four months of the year where we would like to close the 0.7% of our rent roll in terms of negotiations.

And in any case, Steven, for this year, the occupancy rate won't go below 99.5%. And for the next two years, it won't go below the 98%. So it will be, we are very confident about the re-letting of the areas that become vacant.

Also the prospects of renewals, just as you've seen in H1. positive renewals sorry I didn't catch that Stephen the renewals in yeah so so you say you're confident that occupancy won't drop below 98 but are you also confident that that entails renewals will be positive again as you've shown uh also in H1

we have a track record on 90% renewals. So we don't see big bears on the road that might be an issue next year. So no, there's no reason to think that it would be different next year than compared to this year or last year.

Steven, and maybe to add to your question as well, our target is always to secure ERV level of rents. We are 8% under on average at the moment. If we look at the country mix, specifically Belgium and France, we have a lower under rent than Germany and the Netherlands, for example. So it will also depend on where the leases are expiring. But our target is to deliver at least ERV. And of course, above ERV is a great to have. And we hope to deliver a similar result than we did in the first half of this year.

Okay, great. question if I may, on the Saltbommel site, are there any discussions with potential tenants already for that acquisition?

Of course, we cannot give, so there's roughly two-thirds of the site is a long-term lease. There's roughly five hectares of land for development. We are now assessing, we are talking with potential clients, both for a new development, but that will take them a bit longer to have a positive impact, but also for outside storage. We have a demand for outside storage, so it will be one of the two. We are open for both options. The one will, of course, be yielding much sooner than the other one, but there is definitely traction for both outside storage as redevelopment.

It's very clear. Thank you so much.

Thank you.

Thank you, Steven. Our next question comes from Thomas at Deutsche Bank. Good morning, Thomas.

all right morning everybody a couple of questions the first one is on tenant demand i'm just trying to get a better understanding about the momentum comparing q2 versus q1 i mean there was a slower letting momentum in the second quarter and actually what you expect for the second half of the year maybe considering the activity you saw in july and august

Well, I think if we talk about the new projects, as I said, some of them are either under LOI or under negotiation. It will depend on factors. out of our scope, which means it's mainly consolidation. As I said, it's not new demand. It's really bringing different facilities to one new efficient building. So when we see the energy that is put in by the potential tenants, by the prospects. They're not just making an exercise. They're really trying to get to a deal. So it's also important to mention there, Thomas, that again, as we have said in the past, it's not about rents. We are not renegotiating rents. Everybody is aligned on what market rent today is. We are not into competition for those projects. exclusive negotiations, but it really depends on procedures with the prospect that it takes a bit longer to get those things signed. I think this is a more back to normal market where people take six to 12 months in order to get a lease really approved and signed, where we have been spoiled, I would say, after the pandemic for some months, for some years, where people had to rush to get the lease signed because otherwise their competitor would take the building. There the market is normalizing, but all our teams are really working hard on those deals. So we are very confident that we will be able to sign new deals in the next half year.

The second question is on rental growth. I mean, you saw a pickup of uplift in the second quarter and see relapse basically above ERVs, what you said. Just wondering if you might have become more upbeat on rental growth outlook.

What we include at the moment in our guidance is we have the indexation of around 2% throughout the end of track 27 and the execution. We do see a positive momentum on capturing the reversion as well. So it's certainly more realistic to see that we would continue seeing growth at least at ERV levels. But of course, the result, it's rather specific side by side. And again, we clearly see that in some cases, there is a lot of demand and we are much more, let's say, in demand. in control when it comes to negotiations. And that's where we're also able to secure sizable uplifts above ERVs.

Okay. And the third and last question is actually on the TRACK27 program. You've already got 75% secured. I mean, should we expect this momentum to continue next quarter? Then could this mean that you execute the program already ahead of schedule?

Good question. In my opinion, a lot depends also on the performance of the share price. I think that given the current share price, we have to focus on the development of the land bank, which is of course yielding at 7% yield on cost. But if we are able to do it with standing acquisitions that also yield at 6.7%, 6.8%, then of course it makes sense to focus a bit more on standing investments. I think the absolute growth is for a shareholder less of a target. What he wants to see is the EPS growth. So my first target is a 5.6%. Given the fact that with more than two years to go in the program, we are already 75% committed. That means that we will probably reach that target and we might outperform, but let's face it, it's not the first target. The first target is the EPS target of 5.6 euros. Okay.

Thank you.

And maybe that the focus is on the yielding projects that provide an upside compared to the market yield of 150 to 200 base points. We really focus on the value creation. Growth for growth has never been our strategy. So that's very important, the value creation on the long term.

Okay, thank you.

Thank you.

Thank you, Thomas.

Thank you. Our next question comes from Paul May at Barclays. Good morning.

Hi, guys. I hope you can hear me. Standing in for Cunard. Apologies for the background noise. A few questions from my side. On the capitalized interest policy, just noting that it's also increased year on year despite a smaller current pipeline. It's about 10% of earnings now. Just wondering if you could explain your policy again and what we should be expecting for the remainder of this year and what's being included in the 27 plan as a proportion of earnings. That'd be great. I've got a couple of other questions. We can probably take them one by one.

The capitalized interest is done at a rate of 4.5% for this year, and for the next years it's around 4%, and it's linked and attached to the interest rate evolution, of course. So it's done at the marginal cost of that indeed, but also this marginal cost of that is taken into account when we calculate and report on the yield on cost that we announce.

Paul, and also to add to what you mentioned on the shrinking development pipeline, the capitalized interest, we delivered the project with TEAL, which is 95,000 square meters. So it represented a very big chunk of our development pipeline. We delivered it effective end of June. So we were able to continue capitalized interest up until the end of the quarter closing.

Okay, perfect. And do you capitalize on land acquisitions as well?

Yeah, you have to under IFRS as from the moment you identified your land bank as being a development and you have started permitting process, the pre-letting process, you have to and so we do for those projects.

Perfect. Second question, changing text, slightly provocative start point, but how out of touch do you think the valuers are Just looking at the market, we've got tenant take-up that's down, I think, every year since the 2021 peak, and year-to-date is down as well. We've got market rental growth that's largely ground to a halt. Marginal financing costs, if you look at the five-year and sort of 10-year swaps, are higher year-to-date. Particularly the opportunity costs, the 30-year bund and so on, are much higher than they were at the beginning of the year. Vacancy rates continue to increase, and yet prime yields have slightly compressed. I mean, it does seem a bit that there's something wrong in that scenario, and I just wondered what your thoughts were, and whether you think it's the occupancy and the tenant side will improve, or actually is there a risk that the valuers slowly realize that the market is actually weaker than they're probably hoping for, and there's an adjustment. Could we see values moving down again in the near term, or do you think it's the occupancy and the tenant side that would improve?

I absolutely don't agree on that, Paul. I think we see in every of our markets, we see market transactions at yields that are in line with the valuations that we see in the market today. I would think about the recent Wirtz portfolio deal. Market says it's around 5.3% that that would have been traded to Intervest. So no, absolutely not. The scarcity of product, and as I already mentioned, makes that rent levels are Yes, there are regions where there is a bit more competition due to the fact that there is a bit more offer. But in total, we think the market is very, very resilient. sometimes we forget what a stable market means in my opinion and i've said that in the past several times a stable market for me has an occupancy rate of 95 that's where you find the equilibrium between demand and an offer we've had in bad times in the past after the financial crisis of 2008 we went to 92 93 percent today the average is still 95 96 97 percent in different markets so Of course, we are no longer in the, I would say, euphoric times where occupancy rates were at 100%, even at very remote locations. And I would say, luckily, we're no longer there because this was leading to crazy deals with yields going towards 3%. It didn't make any sense in the long run. So a lot of those deals are now off the market and we are now back in a more normal market than we were before. So I absolutely do not agree on the fact that there would be a slowdown that is below the long year average. As Ina mentioned in the market update, I think the growth of e-commerce, let's not forget that we only have a 14% penetration of all sales, retail sales in continental Europe today are e-commerce are linked to e-commerce if you look at the uk if you look at the us you're at 30 percent as inna mentioned every billion euros of turnover will lead to 100 000 extra square meters needed and we don't have the land available to do it so i'm absolutely positive that uh logistics remains the first and most resilient asset class in the real estate environment

Perfect. Thank you very much. And then just one last one. I mean, you mentioned that there's markets and fires. I think in the answer to the last question, you mentioned that you were buying or able to buy assets at sort of high 60s, 67, 68. I just wondered, what is the sort of capital allocation thought process versus the land bank that you mentioned? I think that you're at a cost of seven and buying assets, you know, that are immediately earnings producing at sort of 6.7, 6.8. I mean, Will we see a shift from the land bank investment, so we open development and some more acquisitions? Or do you think we'd continue with the development-led model?

Pure standing asset, triple A top product just delivered. As I said, yields would be between 5 and 5.25. And on in-house projects, we can go to 7, 7.5%. I would say that's where the two reference points are. What we try to do is to... to position ourselves a bit in the middle as a developing investor, which means it's a land bank, it's value-add, it's buildings that are not the last buildings along the last standards. They are older buildings, but on great locations where we say, okay, we have a yielding yielding land bank or we have an income producing asset for the next years. But we first of all look at the redevelopment potential at the end of the lease. And that's why this is buildings that are not interesting for a pure developer, because he wants to develop tomorrow. He doesn't want his equity to be blocked for many years. And it's not interesting for a long-term investor because he doesn't want to do the redevelopment. And that's where the sweet spot for Montea is. That's why I said that Zaltbommel is such a great example for Montea strategy. You have parties yielding a part you can start developing immediately. And it's with that creativity, with that boots on the ground, that we are able to outperform the market on those acquisitions.

Excellent. Thank you very much. Thank you.

The next question we have is from Vivien at DeGroove Petercom. It's a written question. Your last two acquisitions are rather core plus acquisitions. Do you see a more attractive risk return profile in this type of investments compared to value add investments? Are you therefore targeting more acquisitions of these types of assets? on the circuit 25% of investments still to go under track 27. Could you provide a breakdown between the developments and acquisitions according to the internal target?

When we talk about the last two acquisitions, we're talking about Blue Gate and Zaltbommel, I presume. And Zeewolde. And Zeewolde. Blue Gate is indeed more standing investment. We don't have to do anything, but it's more in the monopoly game, which at the end of the day, real estate is. We are the core investor in Blue Gate. If we can buy the building that is linking us immediately to the River Scheldt, of course we have to do it. So this is more of an opportunity. Your neighbor is only sold once, so when his house is for sale, you have to buy it. Looking at Zeewolde, that's indeed a more corporate deal, but as we said, with a huge reversionary potential of 40%. So this is an easy one. And then, as already mentioned, Zaltbommel is a mix of both. part of it is immediately yielding and another part is development potential. As we said before, our financing has become more scarce with the share price being under pressure. We don't want to raise capital at every price. As Els already mentioned, we are in the game for value creation, EPS and NAV value creation. So the mix of in-house developments and acquisitions will really depend on of course the in-house developments on the traction we get on our land bank and the acquisitions will depend on the opportunities we are able to create ourselves so it's really difficult to give any view on that it would it would just be a guess what is important is that the mix of both and by adding the green investments of course but the mix of those three will lead to the 5.6 earnings per share by 2027 that is the main target it appears we have no further questions so you're over to you for the concluding remarks Thank you all for your participation. Thanks for your question. Future is bright and we look forward to realize all the commitments we made today. Looking forward to see you over the next weeks in some of the roadshows we are having on different locations. So thank you all for joining today and looking forward to see you in the near future. Thanks. Bye bye.