Aedifica NV/SA

Good morning, everybody. Welcome to the annual results presentation of iDificath. We will start the session right now. We have more or less one hour available, and I do apologize because we really have back-to-back meetings today, so we don't have much time to really go beyond the one hour that we've scheduled. As usual, the results will be presented by Ingrid CFO and myself, and we will walk you first of all through the slide deck, a couple of selected slides from the somewhat bigger deck that you will find available on the website, and then afterwards take your questions. so not to lose any more time starting the presentation. And as a quick introduction before Ingrid will take over and walk you through the numbers, a quick view on what really happened in 2025 and how we perceived 2025. And I think the best way of explaining it is by having a quick look at this slide, looking at what we were planning to do and what we really did. I think one of the first things that in our view are quite important is that the investment market and the project development market in healthcare real estate is back up and running. We see clearly a more dynamic market, we'll go into that and the reasons why, but we also see it in our own numbers and what we have been doing. So we have been refilling development pipelines, acquiring standing assets, more than we expected, so for close to 300 million euros, and we do see clearly compared to 2024 that this number is going upwards. Looking at deliveries coming out of our development pipeline, we are more or less on top It's one or two of these projects that have been delivered just after the new year, but we're actually more or less on target. Now, compared to 2024, this is a lower number in nominal value, but it basically reflects the market. In the past couple of years, we haven't been refueling the pipeline as we were used to, but we're now back. in a phase where we are refueling the pipeline and these project completions in the future will become more contributing to the growth of the portfolio and the top line. And then asset rotation, there we did what we wanted to do, the must have to us was divest the Swedish portfolio, because as we explained it was not contributing in a similar way as other geographies to the EPS of the company, so this was a matter of capital recycling, but towards The summer of 2025 we stopped really pushing hard on divesting because we were live in the market with the Cofinimo transaction and that comes in the very near future with quite ambitious divestment and asset rotation programs. This for 2025 was no longer possible. of our top priorities, but I think the main thing that comes out of this slide is that we clearly see the changes in the healthcare real estate market that we wanted to see, a more dynamic and liquid market, which is basically quite promising for the future. Now, this being said, over to Ingrid, so she can present the financials.

Okay, good morning. So we will have a look on the income statement. First of all, the upper earnings, they are up by 4%, driven by an increase of 8% in the operating result, mainly coming following an increase of the net rate of income. We also worked on a further improvement on the EBIT margin, so we can show a strong EBIT margin at 87%. The financial charges went up compared to previous year, although we can still have a very low average cost of debt at 2.1%. The increase is mainly related to the fact that there was a slightly higher average amount of debt outstanding in the course of 2025. The low average cost of debt is related to the hedging that the company has in place. At the end of 2025, the hedge ratio still stands at 88%. Then you have the corporate taxes, that's the line where you see most of the variance. So it's mainly related to the change of the fiscal system in the Netherlands, the ending of the FDV. In 2024, there was still a long-off refund from previous years of €4.2 million, and this year we recognize in the account accruals for corporate income taxes in the Dutch entities for €4.8 million, explaining the difference in corporate taxes that you see between the two reporting years. So this leads then to the APRA earnings of €244 million, or €5.15 per share. Then we move over to the net result. So the changes that are included from going from the upper earnings towards the net result are non-cash elements, mainly related to the changes in fair value. So this year we can show changes in fair value for the investment properties of 75 million. This is the most pronounced in countries like the Netherlands, UK and Ireland, where we saw strong increases in the valuation of the investment properties. In the Netherlands, mainly driven by the indexation, UK and Ireland supported by a strong tenant cover. Then we have the gains and losses on disposal. So this is not a new element. You have been seeing this in our income statements since the end of Q1. It's related to the disposal of the portfolio in Sweden, which was sold with a small discount of 3.9% compared to the latest fair value. That the amount also includes the recycling of the historical currency translation from equity into the income statement. We will now dive a little bit more into detail on the rental income. So globally for the portfolio rental income is up with 7%. When we look on a light for light basis, we see an increase of 2.7%. This can be split in between 2.6% coming out of the rent indexation. Then we have positive rent reversion of 0.4%, mainly supported by some contingent rents in the UK. And then there's a slightly negative impact from the currency translation in the life-for-life of minus 0.3%. When we look at the individual countries, you can see that in most countries, the life-for-life is very close to the indexation that we see in each of those countries. What is standing out is the UK. related to the contingent trends. This year we also had an historical catch-up of contingent trends, representing 3.2 million sterling. This is not included in the Like for Life. So in the Like for Life, the figure of the 4.7, it's only contingent trends that are related to the previous 12 months that are included. The second country that is standing out is the Netherlands, where we still have strong indexation and we're also able to increase the rental income on some assets related to the fact that we changed the lease agreement more to a B2C model. Moving over. to the debt-to-asset ratio. So at the end of 2025, we can report a debt-to-asset ratio of 40.8%. It was slightly below our expectations related to the fact that there is an increase in the fair value of the investment properties. Our financial policy remains unchanged. So that means that we target a debt-to-asset ratio in the low 40s and we consider 45% as a maximum. The debt outstanding at the end of the year represents 2.5 billion. We still have a good balance between financial resources, debt resources coming from bank facilities and the debt capital markets. In 2025, we have mainly been focusing on refinancing with the banks and adding new financing to the debt portfolio as well for a total amount of 585 million. Dependence on those maturities are between three and seven years, and the average credit spread is around 110 basis points. We have also been working on extensions, so often credit facilities, they have extension options at the discretion of the lender, and we were able to extend those and keep the same conditions in place. And lastly, as a third point, I would like to add that we increased our treasury notes program. So there was an additional 100 million that was added to the program and that was also fully used by year end. So this allows us to have strong KPIs regarding the debt. So currently, we have a BBB rating with S&P. There is a positive credit watch related to the transaction that has been announced between IDFICA and Cofinimo, that if the transaction can be executed following expectations, there is a probability that the credit rating would improve towards a BBB+. Our interest proper ratio is strong at 6.2 times. The governance stands at two times. We have a net debt to EBITDA of 7.8 times. Very few encumbered assets. Most of the financing is still done on an unsecured basis. And 53 of our financing is related to sustainable financing. Most of the cases is sustainable filling KPIs that are integrated in the private facilities. When we have a look on the debt maturity profile, so there you can see that there's not a lot of refinancing that needs to be handled for 2026. There are some debt maturities starting to kick in in 2027 and 2028. The timing of the refinancing of those can have an impact on the average cost of debt for 2026. But we still have a lot of headroom on the committed credit facilities, so more than 740 million. This allows us to be able to be in a position where we can say that the financing needs for the company are covered until May 2027 and with a rated average debt maturity of 3.4 years. Hedge ratio, as I just mentioned, still high at 88%. It will stay at that level until the end of 2027. Then you see it gradually declining in 2028 and 2029. So what we will do is the same policy as we have been following in the past, where we will add additional swaps to the hedging portfolio based on opportunities that we see in the markets. Signing over to Stefan.

Yes, I'm tuned. I'm going to walk you quickly through portfolio slides, but focusing on what I think is probably the most interesting thing, and that is about the operator performance. But starting with the portfolio itself, quick helicopter view on a couple of things. No surprises here, this is totally in line with everything you've seen in the past. Focus of Edifica's portfolio is clearly on senior housing, seniors housing, so elderly care, senior housing. Numbers haven't really changed compared to previous year. The geographical footprint of the group, there has been some change, mainly that we divested Sweden in the first quarter of 2025, as I mentioned already, that was a matter of capital recycling, and that now for the first time I think Spain is popping up with a very small 1%, but we have been delivering a couple of the projects in Spain in 2025, and looking at the future, we are focusing a lot on being more active in the Spanish market. Otherwise, absolutely similar image to previous years, the four somewhat bigger countries, each around 20%, Belgium, Germany, the UK, and Finland, and then the Netherlands coming in at 11%, and Ireland, where we started investing in 2021, now standing at 7%. Our tenants. Now, this slide, once again, is not really showing you anything new compared to previous years. It still shows a very strong mix of the somewhat bigger European players like Clarion and Colisée in our portfolio with a lot of local heroes. If I'm not mistaken, the top 10 is exactly the same as it was in 2024. We have a big focus, as you know, for historical reasons, on the profit sector in Europe. This sector has been growing consolidating in the last 10 to 15 years, but we have exposure to not-fetched conflict and public operators up to 10%, out of which the finished municipalities, 4%, they're popping up on this slide, are within the top 10 of our operators to date. And then I think what I was referring to earlier on, and in my view the more interesting slide, so what is happening with the operators in Europe. First look, occupancy, underlying occupancy, resident occupancy, we have been showing these numbers now for Well, I think one or two years. What we do see now, end of 2025, is a very strong occupancy throughout the whole portfolio. Looking at the average for the mature care homes in our portfolio, we're above 90% now at 91%. Maybe explaining a couple of things. Mature care homes, we are applying a very simple and straightforward definition. A mature care home is a care home that is training for more than two years. And if that is the case, it enters into these numbers. Secondly, we have been working very hard on improving the coverage, and you will see the numbers at the bottom of the slide. In the five countries for which we are now showing occupancy numbers, we are reaching almost 100% coverage. So this is not a selected part of the portfolio to show you the best possible occupancy. It is really giving a true image of what is happening in the portfolio. Finland is still not on this slide, but even in Finland now we made a breakthrough in 2025. We're now starting to collect numbers from a couple of operators. As soon as we reach a statistically relevant coverage, we will start also showing new numbers for Finland. But the numbers that we have for Finland are absolutely in line with what we see for the rest of Europe today. maybe when looking at the countries themselves, as I said, strong performance throughout the portfolio, but one thing which to us Well, it came as a quite positive surprise, even though we had the signs already before, is Germany. Germany now at 90% in the portfolio. You know that we have been doing a lot of development activity in Germany pre-2022 with deliveries coming in also after 2022. We now see that the ramping up is really coming to maturity and that the German portfolio also in terms of occupancy absolutely in line with the rest of Europe. So that's quite strong and positive news also looking at the future. But then something that we now added for the first time is a bit more information about rent covers in our portfolio. You know that we in the past already mentioned the UK numbers, but now we're adding three other countries. Once again, before we dive into these numbers, on the back of a quite high coverage. So this is not a selected number of a couple of care homes to show you the best possible situation. It really is reflecting what we see happening in the portfolio. Maybe, singling out first of all the UK, you have comparable numbers in the past for the Edifica portfolio. It remains a historically high, absolutely very strong rent cover of 2.4. These are numbers on 30 September, but are LTMs for the last 12 months. It's even a bit higher than it was in the number that we mentioned at the end of 24, 2.3. So the UK operating market keeps showing an incredibly strong performance. Then looking at the other countries, Ireland, for the people that attended our Capital Market Days in Dublin, I think in early 2025. We already mentioned there that we see rent covers in Ireland around 1.7. We're now at 1.8. Once again, a very strong rent cover, knowing that we started doing business in Ireland back in 21 by acquiring a couple of standing assets, but soon after we started building the portfolio more through development. in this case, more forward purchasing deals. So this is a fairly young portfolio with mature assets, but fairly young. But what we do see in the portfolio in Ireland is that ramping up is going at... quite remarkable speed, meaning that for most of these Irish care homes, 12 months after delivery of the asset, we already see occupancy rates going above 80%, some cases even reaching 90%, whereas in the rest of Europe you probably would start to see these numbers after two years. So even when we consider them to be mature, we do see that they come in at somewhat lower numbers and keep growing afterwards. Ireland is really doing much better than the rest of Europe, and on top of that showing a very strong rent cover. And then you have Belgium and Germany, the two countries where we have been explaining in the recent past that we do see operators bottoming out. We're now in continental Europe. should not expect to see a 2.4 rent cover in the near future, because these are countries where there is a lot more public money going into the financing of the operators. But, as we mentioned, these countries were clearly bottoming out. What we do see nowadays, and once again it comes in as a quite strong message, is that on the back of the increase occupancy and lots of other signs that we had in the German market. We now also see a very good rent cover in Germany of 1.6. To put things into perspective, you probably know that over the past 10 years when asked about rent covers and underwriting criteria, We each time said that what we use as a rule of thumb is that when we are underwriting new contracts, we would like to see a rent cover of at least 1.5. Now, Germany is back above the 1.5 at 1.6, and Belgium is actually very close to the 1.5. So you do see, I think, on average, quite strong, very strong to good rent covers throughout the portfolio in Europe. Once again Finland, because we don't have the data covered comparable to what we see in the rest of Europe, so I'm not going in in too many details, but the limited numbers that we see are definitely not deviating from what you see on the slide. So I think it is really becoming a European trend. occupancy back at almost pre-covid levels and rent covers growing back to normal territory even strong territory with differences between some of the countries where in some countries it goes a bit slower than in other countries but i think that we do see a operator performance in Europe, which is totally recovering, and it is starting to show in operator activity in Europe. To add or to mention one example, recently in Germany, where we have seen Domidev taking over Vitana, so we do see a lot of signs of an absolutely improved operating climate in Europe. Then, going forward to, well, in this case, least maturity, not going to spend too much time on this. You know that we have a quite long wall, and that today is standing at 18 years with a 100% occupancy rate. We really only have a couple of buildings which are vacant today. think also result of a quite active and proactive asset management that we have been applying certainly in the 22, 23, 24 years. We're transferring buildings to other operators if and when needed, but it results in a very strong occupancy rate but also maybe pointing out that we are basically activating our asset management in countries like Finland, where on average the wealth is a bit lower, has to do with initial duration of lease contracts that are more around 15 years, but we're making a lot of efforts to make sure that we keep the wealth also in these countries at a quite high level, resulting in the fact that only 1% of our total portfolio At least 1% of the leases for the total portfolio will come to an end in the next five years. So basically I think that we've managed the portfolio quite well in that respect. And then valuation. Pretty much the same message as in the past. What we do see now is that when you look at the average fair value yield for the whole of the portfolio, we're now at 6%. So we're actually stabilizing around this 6%. If you look at what happened in 2025, you will see that we've seen a like-for-like value increases around 1.3%. If you just look at the last quarter, it's plus 0.4% to 0.5%. With a couple of countries outperforming, the Netherlands coming in with 4.9% has also to do with the fact that inflation was much higher in the Netherlands compared to, for instance, Finland where inflation was actually quite low in 2025. But also the UK, and I think that is still reflecting the exceptionally high operator performance in the UK market. But what we do see in all of the countries are clear signs of a market that has bottomed out and is basically already starting to turn to growth again, also in terms of value. Some of the countries we do see pluses and minuses, but on average a lot of signs that the market is back on its feet. And adding to that, that this is also being underpinned more and more by market evidence because we do see a more active investment market. So it's not just valuers making up their minds. I think we start to see more and more evidence in the market. And then a slide that also is very important to us because this should reflect what we think will happen in the market. It is becoming a more active investment market with lots of potential because operators are back, rent payment capacity is improving. And as we announced at the beginning of 2025, to us that means that we want to rebuild our development pipeline, and it's actually what we're doing. If I'm not mistaken, end of 2024, we were around 160, 170 million euros. We're now back at 276 million euros. You do see that we have been quite active in Ireland. I just mentioned that ramping up is going so fast, so there's a clear demand for new capacity in Ireland, and it shows in the numbers. Our pipeline in Finland, where as you know we are full developers, is growing again. So after a couple of years where we were slowing down, we're building up the pipeline again, and we're doing it on the back of the criteria that we want to see happening. So that means yield on cost of 6.5% and development margins around 15%. Based on those criteria, we're building up the pipeline in Finland. Today, we remain active in the UK, given the strong operator performance, but I flagged before, we remain cautious in the UK because we want to avoid building the portfolio on the top of the market when prices are relatively high, which is, I think, to a certain extent the case in the UK today. And maybe adding, which is not reflecting in this slide yet, but as I mentioned that we do see a lot of interesting things happening in the German market, that just after the year's end we signed a first new project in Germany. So you do see a lot of potential to build up the portfolio, and then going to the right side of the slide, it's not just about volume, it's also about getting interesting yields, so we are now at a 6.5% initial yield on costs for the whole of this pipeline, whereas I think end of 24 we were around 6%, and if you go back a bit further in time, it was more around 5.5%. So you do see the market becoming more active, more dynamic, and you do see yields and value potential which we clearly can achieve in this market already today. So basically looking back at 2025, actually quite happy with the year, not just in terms of our own results, but more specifically in terms of operators' performance clearly improving in Europe and we're reaching promising territory. And also when we look at investment and development activity, we see a lot more potential in this market. Now then, looking forward to the future, before handing over to Ingrid, I think it's quite clear that what will be Probably catching all the attention in 2026 will be the result of our exchange offer on the Cofinimo shares. I'm not going to walk you through these slides, you know it. I think that the only and the main thing right now is to flag that we are in the middle of the initial acceptance period, talking to a lot of people and coming across a lot of support in the market, so our feeling is that things are going absolutely well at this point in time. You know why we are doing it, so we explain the whole rationale behind this operation. I can only confirm and repeat what, by the way, also is in the prospectus today. But add to that that we do really believe that this operation comes at the right point in time, because we do see the European healthcare market opening up again and we do see European operators improving their performance. So I think it is absolutely the right point in time to create this platform that is operationally and financially stronger than the two companies in a standalone situation. But that then is my bridge to Ingrid so that she can explain what are potential scenarios for the future for Edifica, either standalone or combined with Trufinium.