Icade Sa Ord

Welcome to the ECOD Full Year 2025 Results Conference Call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speakers, Nicola Jolie, CEO, and Bruno Valenting, CFO. Please go ahead.

Good morning, Nicolas Joly speaking. Thank you all for joining us today. With Bruno Galantin, we are pleased to present ECAT 2025 full year results. After the presentation, we will, of course, open the floor for questions. I will begin with the main development of the year, both operational and strategic. Bruno will then walk you through the financial results and the balance sheet in more detail. Then I'll conclude with the 2026 outlook. Let's start by summarizing the key highlights for 2025. 2025 was a year of solid progress in the execution of our reshaped plan, with strong financial discipline. Three elements stand out. First, disposals. 2025 was a record year, with significant milestones in offices and in healthcare, allowing us to crystallize value in a selective investment market. Second, operations. Across both businesses, performance was solid. In property investment, despite declining revenues, we achieved a record year in terms of square meter lease, contributing to an improved financial occupancy rate. In property development, we delivered solid activity with stable reservation volumes driven by a rebalanced customer portfolio and restored margins on new operations. And third, discipline throughout the year we maintain tight capital allocation control depth levels and strong liquidity while advancing selectively into student housing and data centers if you turn now to slide six and seven you will find the key financial metrics for 2025. net current cash flow amounted to 3.57 euro per share in line with the guidance Cash flow from strategic activities, namely property investment and property development, came in at 2.89 euros per share compared to 2.94 euros per share in 2024. NTA and AV declined by around 11% to 53.3 euros per share, mainly reflecting the decrease in value of the property portfolio and the dividend payment. Loan-to-value ratio stood at 39.6% at the end of December. This does not yet include the Marignon disposal, which will have a positive effect of minus 3 percentage points. The net debt-to-ABDA ratio improved to 9.1 times, supported by the recovery in development margin in the second half. Interest coverage remained solid at 6.6 times, and the average cost of debt is stable at 1.7%. If we look more closely at each business on slide 7, in property investment, gross rental income was €347 million, down 4.2% like-for-like, mainly due to tenant departures recorded in 2024. The gross asset value of the portfolio stood at €6.1 billion, reflecting a 4.5% decline on a like-for-like basis. The EPRANET initial yield increased, At 5.6%, new property development business economic revenue declined to 1.1 billion euro versus 1.2 billion euro the year before. However, the operating margin turned positive again, reaching 2.4%. The volume of orders was broadly stable at approximately 5,400 units, outperforming the market. Before diving further into operations, Let me briefly share our initial view for 2026 on slide 8. In an uncertain environment, we expect GroupNet current cash flow to decline in 2026, mainly due to continued pressure on property investment revenues and only gradual recovery in the development business. That said, thanks to strict selectivity in the operations we launched and continued control of our cost structure, we expect 2026 to mark the low point for net current cash flow from strategic activities. I will come back to this when we discuss guidance in more detail. But before that, let me briefly set the broader market context on slide 10. In 2025, we continue to navigate a challenging environment marked by macroeconomic uncertainties, political instability in France, and persistently high interest rates, which continue to wire on the real estate sector. In the rental market, take-up was down around 9%, while vacancy level and incentives remained significant. The investment market was slightly better oriented in 2024, with improved liquidity on value-add assets and a return of interest in the office segment in the best locations. Against this backdrop, ECAD moved forward with the discipline execution of its reshape plan. Let's move on to slide 12. With regards to the disposal, ECAD recorded an exceptional year with nearly €850 million disposal completed or signed. All these transactions were carried out with strict financial discipline, allowing us to crystallize value creation. We will maintain this rigor going forward. In property investment, 640 million euros of disposal were secured or signed. This includes 240 million euros of mature or non-core assets sold in very good conditions with capital gain of around 5% versus N2024 NAV. In December 2025, we signed the sale agreement for the iconic Marignan-Saint-Élysée asset. This asset was acquired 20 years ago and we were able to create value through building a project, electing tenants, and obtaining the permit. We took advantage of an increased market interest for this type of value adder set to conduct a highly competitive binding process, which allowed us to achieve 20% premium above NAE. With these achievements, we've reached more than half of the 1.3 billion euro disposal target set under ReShape. Regarding health care, we acknowledge that the exit is taking more time. Nevertheless, in 2025, we achieved a major milestone with 210 million euros of disposal, driven notably by the sale of the majority of our Italian exposure. The volume sold in 2025 represented just under 20% of our total remaining exposure. We're targeting a full exit from health care over the horizon of the strategic plan meaning by the end of 2028. In the meantime, this portfolio benefits from solid fundamentals and generates significant returns, which are attractive for group net current cash flow. We are therefore pursuing a progressive disposal, not at any price, with a clear focus on protecting value. Another pillar of ReShape is to protect and enhance the value of our core businesses, both property investment and development. And once again, this year, we are delivering on that objective. Protecting value starts with operational performance. And in 2025, leasing activity was particularly strong, as shown on slide 16. We indeed signed or renewed approximately 217,000 square meters, up above 60% versus 2024. This transaction represents 63 million euros in annual rental income with a world of 6.6 years. They enabled us to improve the occupancy rate by around 2 percentage points over 2025, reaching approximately 90% at URN for wealth position and light industrial assets. As illustrated on slide 17, ECAD secured some of the largest transactions in the market including leases with the Seine-Saint-Denis Departmental Council at Pulse and Jump, with KPMG at ECO for more than 40,000 square meters, and with the Haute-Seine Prefecture at ECO for a third of 15,000 square meters. The tenant portfolio remains very solid, with nearly 85% of annualized revenues coming from large listed companies, public sector entities, and mid-sized companies. Looking ahead, slide 18 details the lease expiries for 2026. The challenges we successfully addressed in 2025 will continue into 2026, with €60 million of leases set to expire. We expect around €30 million of departures during the year, notably reflecting the still significant share of assets to be repositioned. This represents the last major wave of expiries for this asset class. The impact of this departure will be reflected rapidly in both the financial occupancy rate and revenues with around two-thirds expected in the first half of the year. Reversion potential remains negative at minus 11.6% on well-positioned offices, broadly stable year-on-year. It will decrease in 2027 by circa two percentage points after the effective renewal of the KPMG lease. In this context, as shown on slide 19, ECAD has continued to make targeted investments in high-quality office assets. First, with the delivery of EDEN, an iconic asset that is fully pre-led to Schneider Electric for its new headquarters. Offering a very high level of services and strong ESG credentials, This asset achieves prime rent in the Nanterre market. Beyond Eden slide 20 presents another targeted development, which is Seed and Bloom in Lyon. This redevelopment project includes additional flow area, enabling further value creation on land acquired through the ANF transaction in 2017. It completes the transformation of the area following the delivery of NEXT in 2024. The yield on cost stands at 7.4%, fully in line with the returns we target on new developments. All these asset management and refurbishment work contribute to protecting the value of our portfolio. Having reviewed this targeted project, let me now turn to slides 21 and 22, focusing on the assets to be repositioned. Over the past two years, This asset has been actively managed through residential conversion, sold-off plan, two targeted refurbishments with controlled capex, and opportunistic long-term relatings. Following the asset management works, around €200 million of 2B reposition assets should move into our core bucket. At the end 2025, this segment represented a limited share of the portfolio. €29 million in revenue and less than €500 million in assets. From 2026 onwards, ECAD will revise this segmentation to reallocate the 2B reposition assets into core and non-core categories. Let's move on to slide 23. In property development, the teams also delivered solid operational performance reflected in stable order volume. This performance was supported by a successful diversification of the customer base with a growing share of first-time buyers and institutional investors. The development team have also selectively resumed new projects, although overall volumes remain relatively low. This momentum is reflected in our key indicators, with building permit applications up 66% year-on-year and permit approval increasing by 32%. Activity has also been supported by the acquisition of projects ready to be launched. As a result, the backlog remains fairly resilient at 1.7 billion euros while maintaining a high pre-commercialization rate of 77%. Following last year's portfolio cleanup, we are rebuilding projects with restored margins. Profitability is gradually improving, although some older, lower-margin projects continue to wire on overall results. In 2026, we expect to rebalance the mix between older projects and new projects with restored margins, with a more significant shift taking place from 2027 onwards. With this solid operational base in place, let me now turn to the last priority of our reshaped strategic plan, which refers to diversification. ECAD is pursuing its diversification in sectors where it can leverage its longstanding expertise and development capabilities. We are moving forward with selected projects, particularly in student housing and data centers, always with a strong focus on value creation. Let me lay the emphasis on student housing, turning to slide 27. In this segment, we have launched two projects bringing together our property investment and development teams, representing a total investment of €100 million. Located right next to Paris, this project will deliver approximately 500 beds by 2028. We are also getting value creation of around 20%, with yield on cost above 5.5%, compared with current prime yields ranging between 4.25% and 4.5%. Looking ahead, our ambition remains to deliver between 500 and 1,000 beds per year from 2028 onwards. Regarding data centers, we are evolving our business model to further enhance returns on large projects through equity partnerships aiming to reach circa 10% yield. This approach could be applied to the 130 megawatt hyperscale project in Rangis for which we obtained a building permit at the end 2025. The JV partner selection process is currently underway with completion schedule for 2031. Now, beyond the practical performance and strategic diversification, our reshaped plan is also driven by our ESG commitment, which is a core element of our model. As part of its reshaped strategic plan, ECAD has indeed reaffirmed its strong commitment to the low-carbon transition and biodiversity preservation detail in slide 30 and 31. In 2025, the group updated its low-carbon trajectory to align with the new SBTI standard for the real estate sector, confirming its ambition to remain a leading player in the fight against climate change. ECAD has now set 2030 targets aligned with a 1.5°C pathway across all three scopes, with threat and ambition across each perimeter. At the same time, we maintain our objective of achieving net zero carbon emissions by 2050. This trajectory is already translating into tangible results. Between 2019 and 2020, 2025, ECAD has significantly reduced its greenhouse gas emissions in line with its new objective, and total absolute emissions are down by 52%. These results demonstrate that our climate strategy is not only ambitious, but firmly embedded in our operational execution. And with that, I will now hand over to Bruno, who will present the 2025 financial results in greater detail.

Thank you, Nicolas, and good morning, everyone. Moving to slide 34, the group's net current cash flow amounted to 3.57 euros per share. It is between 2.99 euros per share from strategic operations and 0.69 euros per share from discontinued operations. Net current cash flow from strategic activity decreased slightly to 2.99 euro per share compared with 2.94 euro per share in 2024. Looking at net current cash flow from strategic operations, the main takeaways are a drop in net rental income from property investment of minus 39 cents per share, a raise in property development margin of plus $0.63 per share and a decline in finance income of minus $0.44 per share. When looking in detail, starting with the property investment division on slide 35. On a like-for-like basis, gross rental income declined by 4.2%, mainly due to tenant recorded since 2024, and the gradual crystallization of the negative lead renewals. The perimeter effect has a negative impact of 1.9%, mainly reflating asset disposals. These factors were partly offset by positive indexation, which still contributed 3.3%, as well as by early termination fields, mainly related to offices to be repositioned. It is worth noting that net retail income was affected by higher vacancy costs. Now turning to property development on slide 36. Economic revenue reached 1.2 billion euros in 2025, down by 7% year on year. This decrease mainly reflects a sharp decline in the commercial segment with revenues down by 48% year-on-year following the completion of major projects at the end of 2024 and the low volume of new contracts signed in 2025. In contrast, residential revenues increased slightly. This performance was driven by strong bug sales and an acceleration in construction start in Q4 2025, which was an exceptionally active quarter. The net property margin improved mechanically in 2025 following the impairments booked in 2024. However, The decline in volume and the continued margin pressure on certain project launch prior to 2024 have seen negatively impacted the overall margin of the business. During 2025, financial discipline remained a key priority for the group with continuous efforts to control the cost base as explained on slide 38. Over the past two years, we have implemented significant measures in process optimization, cost rationalization, and income reduction, generating approximately 20 million euros in savings, including the impact of inflation. Finally, slide 39 focuses on the financial results and the closely monitored items. Current finance income decreased by 59 million euros, but it's required carefully analyzed. On the strategic activity side, the decline mainly reflects lower investment income after a record year in 2024, which benefited from high interest rates and an average group cash position above 1 billion euros. The cost of debt remained controlled at 1.7% and the projected debt for 2026 is fully covered. Regarding this continued operation, which corresponds to the health care segment, dividend income declined. Approximately, also this decrease is due to time in effect as pre-health care did not pay an interim dividend at the end of 2025, resulting in a shift of the payment from 2025 to 2026. Now let's move to our operational performance and financial results and turn to the balance sheet and portfolio valuations. Slide 41 focuses on the evolution of the property investment portfolio's value. At year end, the portfolio was valued at 6.1 billion euros, representing a 4.5% decrease on nightfall-like basis. The APRA net initial yield increased slightly to 5.6% compared with 5.2% in 2024, while the APRA total net initial yield stood at 6.5%. Turning to slide 42, as of December 2025, per share stood at 53.3 euros, done approximately 11% year-on-year. This change is mainly explained by the lower valuation of the property investment portfolio, which accounts for 3.9 euros per share, as well as the 2024 dividend paid amounted to 4.3 euros per share. Let me now turn to debt management on slide 43, another key pillar of our financial strategy. 2025 was marked by strong financial achievements Since January 2025, we raised more than 1.1 billion euros on financing, including notably a 500 million euros 10-year green bond insurance. Altogether, these transactions are extending the average maturity of our debt and further reinforce our liquidity position, enabling us to anticipate upcoming maturities with confidence. If you look at slide 44, you can see that our debt maturity profile remains widespread over time. By the end of December, ECAD had a solid liquidity buffer with 0.8 billion euros in net cash and 1.8 billion euros in hard-won committed revolving 3D facilities. This comfortably covers the group's debt maturities through 2030. Slide 45 outlines the updated version of our green financing framework, published in February 2026. This new version introduces criteria aligned with the highest market standards. The aim is to ensure full alignment with the EU taxonomy and the CRIM trajectory based on forward-looking five-year approach. The framework was assessed by Sustainable Feeds and received an excellent rating, underscoring both the robustness of the criteria and the ambition of the eligible project. With that, I will hand over back to Nicolas for the conclusion and the outlook for 2026.

Many thanks, Bruno. So let me conclude with our 2026 outlook. Slide 47 sets out the main drivers for the year ahead. In 2026, we will continue to execute the Richer Plan with rigor and discipline, maintaining a clear and consistent course. First, we will continue to focus on supporting office occupancy and protecting the value of our portfolio. in a complex environment marked by negative reversion and lower indexation on rents. Second, we will continue to rebalance the development portfolio towards projects with restored margin in a year that will nevertheless be affected by municipal deadlines in the first half. Third, we will maintain a selective allocation of capital toward targeted and profitable operations across both businesses while accelerating cost reductions through the implementation of an additional €15 million in annual savings on a full year basis. Fourth, we will pursue our disposal program with pragmatism and discipline. And finally, we will maintain a strong balance sheet and controlled cost of debt expected to remain around 2% in 2026. In this context, we expect group net current cash flow to range between 2.90 and 3.10 euros per share in 2026. Given the discipline we will continue to apply in the coming months, 2026 is expected to mark a low point in net current cash flow from strategic activities. The 2026 guidance includes net current cash flow from strategic operations between 2.25 and 2.45 euros per share, and net current cash flow from discontinued operations of approximately 65 cents per share. Given the Group's ambition to transform its activities, ECAD intends to limit the distribution amount in order to preserve its deployment capabilities and finance its future growth. We'll submit for approval at the general meeting a cash distribution of one euro per share, which will be fully paid in June 2026. In conclusion, we delivered robust operational performance in 2025, both in property investment and property development. While the environment remains complex, we are continuing our transformation with rigor, discipline, and clear strategy focus. This year will still present challenges that will wire on revenues, but we will strive to deploy what is necessary to make 2026 the low point on strategic net current cash flow. I would like to sincerely thank all ECAD teams for their daily dedication, and I reaffirm my full confidence in their ability to execute in the months ahead. And with that, we are now ready to take your questions. Thank you very much.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. If you wish to withdraw your question, please dial pound key 6. The next question comes from Florent Laroche-Hubert from Otto BHF. Please go ahead.

Good morning, Nikolai. So good morning, Bruno. So thank you for this presentation. I would have maybe two or three questions I can ask one by one. My first question would be what does give you comfort that 2026 will be your low point for your net recurring cash flow?

Okay. Thank you, Florent.

Good morning. Thanks for your question. Well, about the low points on the strategic cash flows, yes, we are confident on the low points. Of course, regarding investment revenues, we are facing headwinds. There will be negative reversion, a low level of indexation, so pressure will continue and we'll keep on securing what we can. But to mitigate that, as for the development, we've reached a low point in the business and we made the impairments needed in 2024. The trends, as you saw in the presentation, are improving. through customer mix rebalancing, launching restore margin operation. So clearly, there is room for improvement. We still don't know the exact pace. And on top of development, internally, we activate all levers to secure lower fixed costs through cost reduction plan. Remind you, this target of an additional 15 million euros over full year, and a cost of debt, which contain around 2%. So all in all, clearly, we do not claim to control the cycle or the broader market environment, of course, particularly in this context. But what we do control is how the group operates through this phase with a clear focus on our side on capital allocation, cost discipline, balance sheet management, and investment selectivity. So that's the reason why we are confident on reaching a low point in 26 on the strategic cash flows.

Okay, so that's very clear. Maybe a question on the valuation of assets. So we have been able to see that you have a negative evolution on a constant term on a like-for-like basis. So could you give us maybe more colors on your discussion with app users maybe for the next

Well, as for the asset value, you saw that in 2025, while the value went slightly down on offices, they went up on the other side for light industrial. And while clearly value decrease is slowing down year after year, on top of that, we are on a daily basis demonstrating the resiliency of the portfolio. through this year, a record year in terms of new signature. What I can say is that clearly I think we and the appraisers are waiting for new transaction to confirm that we've reached the bottom on most of those assets.

Okay, so that's there. And maybe last question on your view on your break option for 2027 and maybe also for 2026. How many times do you think that you will be able to relate the break option? So the lead that comes to end and that has to be related. And for your break option for 2027, have you any Are you still at risk after maybe what you have been able to do at the Echo Tower?

Well, if we take a look back maybe 2025, you saw that the teams were able to secure major deals, which allowed us to reach a financial occupancy rate around 90 percent. As usual, we are transparent about the expiry in 2026. As you can see, we are still facing some challenges ahead with 60 million euros of potential lease expiry. As I said, we expect this 30 million departure by the end of 2026, mostly driven by the last wave of the to-be-repositioned asset departure. thinking notably of Renault and Plessis Robinson, for example, normalizing on the other asset. It will happen quite early in 2026 because two-thirds of the departures will take place in H1. What we can see in the market is that, of course, all the discussions take more and more time, clearly, but thanks to the close relationships we have with our major tenants and long-term relationship we have with them. We try to anticipate as much as possible, which allowed, for example, the success we had with KPMG two years in advance on the Echo Tower. So clearly, we are very pragmatic, taking everything deal by deal, asset by asset, in order to keep on achieving what we achieved on the past year.

Okay, thank you very much. Thank you, Flo.

The next question comes from Anna Escalante from Morgan Stanley. Please go ahead.

Good morning. My question is regarding shareholder remuneration, particularly in the context of the delayed timing of the health care disposal. Because apart from reducing leverage, the planned disposal of the health care business would have generated a significant special dividend distribution. And now that's delayed even further. And although, as you say, the health care business generates significant financial returns, these are below the potential shareholder return from a disposal. So in this context, I would like to understand how you think about shareholder remuneration in terms of your priorities for capital allocation.

Yeah. Maybe first, thanks for your question. Maybe firstly a word on the way we are addressing the health care disposal. I mean, we haven't changed our strategy from the beginning. The strategic decision has been made to sell the business, but not at any cost. There's no intention for us to sell under unfavorable conditions with a large discount because we are committed to value creation, clearly, and we want to protect the values. This is a significant pillar of ReShape. as you know but this asset class is supported by strong fundamentals generating some attractive yield so when we find the right opportunity such as we did in 25 with italy we are happy to crystallize the value and sell at the nav level like what we did so our objective remains clearly a gradual exit from our minority stake over the reshape plan horizon I would say that more specifically, maybe the focus currently is more on the Portuguese assets, which are really stabilized and attractive. But clearly, that's what we do. Once said that, on the capital allocation, as you saw, we are keeping a balance, once again, between the protection and reinforcement of the balance sheet. and being able to allocate capital in development that are creative, like the one we shared on the presentation regarding office or data centers or student housing, in order to maximize the value creation in the mid-long term for the shareholder. In the meantime, we are still able to propose satisfactory distribution, as you saw. with this 1.92 euro per share because we are comfortable with the overall trajectory of our financial ratios and this allows us to perfectly fit with the balance and equation we have on our capital.

Okay, thank you.

Thank you, Anna.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Stéphane Ifonzo from Jefferies. Please go ahead.

Yes, good morning, Nicolas and Bruno. Thank you for the presentation and for taking my questions. I think it's better to ask them one by one. So first, it's a follow-up question. You are calling for a trust in the Cork Cash Flow this year. Could you share your main assumptions, particularly on your marginal cost of debt and also your normative occupancy rate? In particular, it would be very helpful to understand how do you take into account large renewals with Veolia and AXA. It's true that those maturities are more around 2028, 2030. But it will be useful to understand your ambitions since you expect the growth already in 2026. That's my first question.

OK. Well, thank you, Stéphane. Well, as I said, regarding the low point 26 on strategy cash flows, clearly there will still be some downward pressure on the investment revenues. As I said, through negative reversion, even if we are able to crystallize new deal, we are crystallizing least by least this negative reversion. The main fuel for growth is indexation, and it's very low level today. And we have this departure that will wire on, of course, the cash flows and the occupancy ratio. As I said, we are still facing some departures in 26, especially on the to-be reposition. So clearly, this will wire on the occupancy ratio. We expect that to be lowered down from the Q1, given the fact that As I said, two-thirds of the departure are expected in H1. But after this lowering down in Q1 26, we expect a gradual recovery after that. And if we take a little look ahead, after 26, you were mentioning AXA and Veolia. As I said to Florent, that's the exact same thing we've done with KPMG. Those are major tenants. We have, of course, there are potential break options in sight. We have a close relationship with them and keep on having discussion to try to anticipate and secure as soon as possible those potential break expiries. On top of that, some come also with some financial penalty. So this has to be taken into account. Regarding the cost of debt, as I said, it will remain contained with the cost of debt around 2% in 2026. So all in all, that's the reason why we are confident in reaching a trough in 2026 regarding the strategy cash flows.

I'd like to clarify something. When I'm talking about marginal cost of debt is that when you will refinance bonds, at which cost of debt you assume to refinance those bonds. So it's for consent, 5%, and also on your business plan, what is your occupancy rate target on those tenants?

Well, as for the refinancing, clearly that's something we have in mind. But let me remind you that we have a strong liquidity at the end of December 2025. Bruno was highlighting that. Debt refinancing is not a concern, clearly. We have multiple sources to reimburse or refinance future debt. And we've demonstrated in 2025 that we have very good access to credit liquidity. We've issued in May the 10-year 500-million-euro green bond, and this cost was 4.5%. So that, in our view, is a good proxy on what to expect in the coming months or year. And regarding Axel Veolia, clearly, as for our major tenancy, Our intention is to secure a long-term relationship and extension of leases with them. So that's what we are assuming, clearly, and the way we intend to have discussion with them, like we did with KPMG.

OK. And I have also a question regarding capital gains. Yes, thank you. And could you share the capital gains from the Marignan disposal that you expect to distribute?

Yeah.

Well, as for Marignan, well, this is an asset we've owned since 24. So of course, this will generate tax capital gain. But we don't disclose any figures for now because The distribution obligation, this is related to capital gain, depends on the year-end results, as you know, because those capital gains may be offset totally or partially against other potential transactions. So that's the reason why, on our side, we don't think that makes any sense to share some figures with the market right now. But clearly, of course, there are some significant capital gains because we've been owning the asset for 20 years, and as you know, we ran quite a successful open bid process with fair competition and a nice premium on the NAD at the end.

Okay, but maybe can we have a range? Is it about $200 million, $300 million? Because I understand the difference between the two, but it's important to have this in mind because we don't know what will be your disposal pace and at what discount. So at this stage, If you were not to sell any other asset, what could be the capital gains to be distributed regarding Marion's disposal?

Well, I mean, we are in February. It's a bit early to have some full visibility on that. Be sure, when it would be relevant, we'd be happy to share some figures. So that's the reason why we don't disclose any figures today, but I'm sure you can have quite a guess about what it could be.

Okay. I hope I have a good guess. And maybe could you also remind us... I'm sure you will. I'm sure you will. And also could you remind us the remaining distributable capital gains attached to ICAT-Quante, even that healthcare valuation continues to decline?

The remaining capital gains, we haven't shared the proper figure, but on the non-cell assets, the assumptions that we've shared during reshape was remaining distribution requirement of roughly 300 million euro related to the the 1 billion that is to be sold and maybe one last question regarding your non-core cash flow yes

Regarding non-cost cash flow expected in 2026, my understanding is that the EFT from healthcare is no pushback beyond 2026. And given this, what is the status regarding the deferred dividends of the EHE? I understand that EHE hasn't distributed dividends for the past two years due to losses, but there is a statutory distribution requirement. So if I'm correct, the SIC regime allows for one year deferral for distribution. Could you please clarify this?

Well, at this stage, we haven't assumed any potential dividend for EHE. And there are no requirements to distribute such an amount if the result is negative, for example, or anything. So it's not systematic. And in the $0.65, we've assumed In the guidance for 26, this relies only on the dividend to be paid on premium healthcare.

Okay, and do you expect the vehicle to stay on deficit this year again?

Well, the assumption we've made is no dividend coming from the Azure. Okay, that's clear. Thank you very much. Thank you.

The next question comes from Abulkuatim Amal from DeGroof Petercam. Please go ahead.

Good morning, gentlemen. Thank you for the presentation and for taking my question. First question would be on the new labeling of the asset to be repositioned. Can you give us some color on what would be the criteria because what would be with assume as core and non-core, and what would be the implication on the CAPEX or disposal strategy for these assets, please?

Yeah, sure.

Well, on the 2B reposition asset, that's a category we flagged two years and a half ago in order to give you more insight on the portfolio. Two years after that, we've done most of the job. We've sold some. We've repositioned some. We've related on the long-term lease basis some assets. So clearly, we've reached a point where the remaining non-core part is very small compared to the whole portfolio. So the idea now, as we've shown on the presentation, is from 2026 onwards to communicate on some core asset categories. And when I say core, I say core to our strategy. It's not type of asset or investment. It's really core to ECAD's key strategy. So globally, what you will expect for 26 is now in the segmentation, having some core assets, mostly offices, So the actual well-positioned offices plus the 200 million coming from the former to be repositioned asset. Also core assets from light industrial and a bunch of small bucket of non-core assets mostly coming from the remaining 300 million of the to be repositioned asset that are to be repositioned and won't be core to our strategy. That's globally how we will communicate in the coming semester. Hope it is clear now.

Is it fair to assume that the non-core to be repositioned assets are on the market for sale?

Yeah, yeah, clearly. They are non-strategic, so clearly. We would be happy to sell those assets, but as we said, to be a repositioned asset, globally there's currently no liquidity because most of them are unattractive office building, former office building. I say unattractive because they are in areas that are not well connected or those assets are not filling the right criteria, ESG or standards or so. So globally, there are no investors to buy them. And I would say even whatever the price. So in order to recreate liquidity, we have to go through a repositioning scenario. And we've demonstrated that we are able to do so. And it can be in residential, can be in hotel, anything but offices in a way. And the idea is to secure those scenarios. And once, for example, we secure the building permit, then we recreate liquidity and then we will sell the asset. But clearly we do not intend to spend some additional capex on this non-core and non-strategic buckets.

Okay, thank you. My second question would be on the partnership for the data centers. So I just wonder what has led you to change your mind I recall when you presented the reshape strategy two years ago, the strategy for data center was very clear. You just deliver the building, and then you let it to an operator. What has changed your mind? And if you can just confirm that for the Equinix data center in Port de Paris, it's still a normal investment in the building, and you are not partnering with Equinix on the one that will be completed in 2026? Yeah.

Thanks for the question. Well, sorry if I haven't been clear two years ago, but we are being in line with what we shared in terms of our strategic priorities regarding data centers. And if I remind well, there was a dedicated slide where we were trying to explain the way of having some exposure to this business. I would say the usual way for real estate investors is exactly where we stand today on our five existing data centers, plus indeed the one we'll be delivering to Equinix in a few months. This is powered shell model. So basically, we secure the power, we build the shell, and we leave it through a commercial lease. So I would say pure real estate model, and that's also the reason why we are on yield around 6.5% globally. What we were also saying during the strategic plan is that this is not suitable for very large projects. Because for data centers, the global amount of investment is very huge, like 12 million euro per megawatt IT globally for the power shell and the fit out. And the power shell only represents 25%, 30% of the investment. So when we talk about projects like Cringis, we are talking here about 1 billion, 1 billion and a half investment in total, solely 300 million for the power shelf. But in total, it's a huge investment. So operators are not keen on investing 700 or 800 million euros for just the sake of securing a commercial lease. So once at that, you have basically three options. Either you are a property developer, and once you've secured the land, the power, and the building permit, you sell, and you secure some capital gains. Interesting, but most of the value creation is still ahead. The other way of doing it on the opposite side is like, I would say, like what Merlin does in Spain, is be fully a full-fledged operator. So the one building, operating, leasing to the hyperscalers, i.e. Microsoft or Amazon, the data center, and be a fully fledged operator. We do not intend to do so given the fact that there's some risk coming with the operations. We don't have yet the special relationship with the GAFAM and so. We rather prefer a half way of doing that, which is the JV. We go to the operators, we structure a JV, retain the minority stake, which is roughly the same amount of investment as building a power shell. But through this JV, we get more exposure to the business, which allows us to be more exposed also to the total value creation of the business. That's how we are able to reach like 10% yield on cost on such development. So clearly, we are not saying that we won't be doing PowerShell anymore, but we just need to have a proper strategy depending on the size of the investment. Hope it's a bit clearer now.

Yes, very clear. Thank you very much, Nicolas. And if I may, a last question on my side, just on the dividend policy. How should we look at it going forward? I understand that given the current uncertainties, it's difficult to have an outlook, but going forward, how do you see it for 2026 and beyond?

Well, our philosophy, once again, is to secure as much cash as possible, clearly. As I said, we are comfortable with the actual trajectory of our financial ratio, allowing us balance between balance sheet and this distribution. As you see, the proposed distribution represents roughly 50% on the group net current cash flow, which is pretty in line with the payout ratio of the past two years. Of course, if we exclude the dividend related to the health care disposals. So this has been our philosophy from around two, three years since the beginning of ReShape, which is consistent with what we intend to do is accelerate the transformation of the model.

Okay, very clear. Thank you very much, Nicolas.

You're welcome. Thanks.

The next question comes from Veronique Myrtens from Van Lanchet Kempen. Please go ahead.

Hi, thank you for the presentation and for taking my questions. For me, some questions around the development segment. So I think since a half year reporting last year, you don't split out all the separate contributions to net current cash flow. So first of all, what was exactly the rationale behind that? And then secondly, can you give an indication if you are already back to positive territory in terms of net NCCF contribution from the development business, or is it purely only a profit margin that's positive yet?

Okay. Hello, Veronique. Thanks for your question. Well, the rationale of not splitting anymore the cash flows, I mean, is just be consistent between our financial KPIs and our strategic positioning. I mean we are an integrated player and you saw also in the presentation that we are focusing on this model more than having on the one side the investment, on the other side the development. So that's the main rationale with that we align our financial communication with who we are and who we intend to be. Regarding profits, indeed you are highlighting the fact that through stabilization of volume a gradual recovery of margin. This year is better than 24, of course. It is still impacted on the margin by the fact that there is very low activity in the commercial division, which is usually the part of the business which used to have the highest margin. So this contribution is even less. I mean, the revenues from commercial division on property development was cut by half. But on the core business, being the residential, it's getting better, as Bruno highlighted, driven by the fact that we have more and more operation with restored margin. Of course, this will keep on going this way. I would say that no major strong recovery expected before 2027, but no deterioration either, as I said. I would say that we've reached a trough in property development. The main question might be the pace of improvement in the market, which still remains, of course, uncertain.

Okay, that's clear. If I understand you correctly, then probably in 26 and potentially even 27, we would still see a negative impact or a negative contribution on your net current cash flow from the development business. So has there ever been an internal discussion if this is a business line that should be seen as non-core as well, or is that not up to debate at all?

No, no, we expect clearly, as I said, recovery, so going the positive way on property development. The main question, honestly, being the pace of this improvement, so it won't be going the negative path. And to be crystal clear, once again, on property development, since my arrival at ECAD, I keep on saying that it's critical for the business and it's the core of ReShape. And as we just said before, being an integrated player between property development and investment division is a key advantage in tomorrow's market. That's my deep conviction, clearly. So this business is more than core in our strategy.

OK, that's very clear. And then two small questions for Bruno. I noticed that there's a number of net income from other activities from the property investment went up quite significantly to almost 13 million. So I was wondering what's in there. And at the same time, the other financial income and expenses is only 23 million despite, I think, already 37 million from premia dividends. So can we get some color on those two figures, please?

Sorry, Veronique, I didn't catch the first part of the question. We're talking about property development or finance?

Yeah, there's a net income from other activities for property investments of 13 million, which was flat last year. So that's why I was wondering what's in that number. But we can also take it offline if that's easier.

Yeah, we'll revert to you on that. Okay, that's all good then. Thank you very much. Okay.

The next question comes from Celine Su Nguyen from Barclays. Please go ahead.

Hi, Nicolas. I only have one question, please. On the €1.92 cash distribution, can you confirm if there is still some capital gains on disposal to be returned to shareholders next year? And following this, my understanding is that there is no dividend on recurring activities proposed this year. Otherwise, you would have called the €1.92 a dividend. Can you comment whether you see it returning next year and what would be the criteria for you to be comfortable to pay a dividend again on recurring activities? And what kind of payout do you see? Thank you very much.

Hello, Céline. Thanks for your question. Well, maybe it's an opportunity to clarify that, but technically speaking, it's named distribution because it will be taken on premiums. So technically speaking, you know that typical dividend must be paid from profits, retained earnings, or reserve accounts. So clearly, just a technical word. But if we regard the amount, the 1.92 euro, the intent to pay an amount equivalent to the sick distribution requirements. So not only 70% of capital gain on disposal, but also including 95% of the recurring income from sick activities and 100% of dividend from subsidiaries. And the reason we decided to propose such an amount, as I said previously, is that we are comfortable with the trajectory of our financial ratios, and as I said, allows us to be balanced between the balance sheet and the investments we make, keeping a remuneration of our shareholder at an attractive yield with this 1.92 euro.

Okay, sorry, can you clarify that 1.92? Can you break this down? What is coming from capital gain, what is coming from recurring activities, so that we can calculate a payout on the back of this?

Well, we don't communicate the split, but just to be clear, the 1.92 is really equivalent to the whole 95% of the recurring income, 70% of the capital gain on disposal last year, and 100% on dividend from subsidiary. And about payout, of course, we don't give But as I said previously, you can see that this proposed cash distribution represents roughly 50% of the group net current cash flow. And if we took in the rear mirror over the past two years, excluding of course the parts related to health care, this was the average payout ratio, equivalent payout ratio that was observed, roughly 40 to 50%.

Okay, I'll take the other questions offline. Thank you.

Okay, thank you very much, Celine.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Well, thank you very much for your time and your question. I'm happy to have shared that with you. You saw that all the teams at ECAD are really committed to deliver our strategic plan, and I thank them once again for that. So we'll leave you with that, and I wish you a good day, and looking forward to seeing soon some of you. Have a good day.

Bye-bye.