Ctp N V

Good morning everyone from CDP here in Prague, Czech Republic. Excited and thanks for dialing in. It's good to have you on the call. We are going to talk about the 2025 results, which are good. But before we start, I'd also like to look back at 2025. You could say it has been 25 years of growth. We have completed our first building in 2000 here in Czech Republic in Humpolets where we did our first city park model. The city park Humpolets was the first site we acquired initially 10 hectares and later on we had the opportunity to grow that park. So that's where we first started with a clubhouse where we looked for people and did establish a small team and did then develop a number of properties and those buildings are still fully leased and many of the tenants which we initially had, actually they're still there and they've been able to grow their business. So, 25 years of continuous growth which started with nothing, with a piece of land and then one building and second, et cetera, et cetera. So, thank you very much to all the very loyal clients, all those companies who we have been working with. the companies who gave us the opportunity to work for them outside of the Czech Republic later on. And, of course, thank you very much to all people we've been working with a lot over the past 25 years. And thank you to all other partners and, of course, the fantastic team here at CTP, which in the meantime is 1,000 people, more than 1,000 actually. nowadays so that has been 25 years of continuous growth good times bad times with all kind of different opportunities along the way for 25 has been a strong year has been a good year with good results and which illustrates also the the growth engine the thing we like to do we like to grow and the largest growth engine in the business here in in europe so Last year has been also an important year for us because we added another country and we opened up places in Italy. In the meantime, we have more than 200,000 square meters of projects under construction in Italy, mostly pre-leased, 70%. We do that in the south of Milan, close to Piacenza, Castel San Giovanni, but also in Padova and we have other projects underway. At the same time, we set up a team of people in Italy and we have a land bank to build an average of, we think, 200,000 square meter of properties over the next years, and we hope within five years to hit the 1 million square meter lettable area target in Italy as well. We see good opportunities in Italy. Overall, we see opportunity in Europe over the next year, so we're quite happy with the entry so far, and we're making good progress. The land bank, they're mostly north Italy, but also strategic sites. in the region of Rome, so there's also other places where we believe we will be successful in the development of our industrial properties. Again, mostly for existing clients, so the companies who are already renting from us in other markets. For those clients, we plan to develop properties in Italy and the amount of business we do for existing clients is approximately 70% of the total amount of business we do. When we look at drivers, yeah, for Europe, it's definitely nearshoring. Asian companies come here, set up shop in Europe, for Europe. I mentioned defense, but also technology, the semiconductor industry, consumer goods. People have more free time, so they go out biking, running, pets, you know, pets, you know, massive industry. We do multiple things. facilities for pet food producers, pharmaceuticals, so there's a whole, yeah, consumer spending means people have more money to spend than they had 25 years ago when we started here. And we see that in other markets in Serbia and Slovakia, in Romania, where we came initially maybe for low-cost manufacturing and later turned into manufacturing for domestic market. And nowadays, Central Europe is the engine of Europe. Here is where you go for manufacturing. And that is all positive. So that is a good outlook. And we have a number of growth drivers. We are not in it for the short term, we're in it for long. So we have plans for the next 25 years. And those plans are definitely to make CDP a global player and to grow with our clients and to use all the experience we have building business parts. Last year, we signed 2.3 million square meters of new leases, 2.3, which is a bit more than we did the year before. In 24, we did some 10% less. Rental rates were a bit higher last year in 25 compared to 24, approximately almost 5% higher rents than same building in a year earlier in 2024. So with rental growth, 10% more deals and still at around 10% yield and cost. Target, mid-term ambition to continue to grow with existing clients, which we have a lot of them, good companies, they pay on time. The 99.7% is debt collections of money which we charge to tenants which is paid. And as I said, most of them on time, good companies. 70% of all new business we do with existing clients have 80% retention rate. And this is also important to mention. 75% of all the projects we do are being built within existing business parks. So we don't do standalone boxes, we really create an address, a park, an environment, an ecosystem with sufficient infrastructure, amenities, facilities for people to work, develop themselves, to create business together, to work together, to grow stronger and to have a stable business park, also not overexposed to one specific industry, you want to mix it up with different industries, it's also good for labor market. You see a lot of automatization within among our tenants, so they continue to invest in their facilities, in their production lines, in their technologies, which is good as well. We break it down at CTP, as you know, we talk about three things, we have the operator, This is the income producing part, so the part of the company who look after the buildings which we have built over the past 25 years. It's 840 million euro of rental income on the way to hit 1 billion euro rental income next year. So as the operator with good occupancy level, always above 90%, between 93, 95, depends a little bit on the market and the location where you are. It depends also on how much property we actually build to enter a market and you need time for the market to absorb all those buildings, but remain at the target around the 93, 95%. That's the operator. Then we have the developer. Those are the people at CDP who develop properties or who build business parks and properties. Quite active now also with inventing new type of properties, adjustments, constantly working on making these buildings better, both the existing refurbishment upgrades but also new properties and better means flexibility so we have genetic designs buildings for multiple generation energy consumption maintenance those things are important when you design a property that's where these guys are busy with some highlights as well that we've done in in terms of completions last year 1.3 million square meters, 180,000 square meters in Bucharest, 65,000 square meters in the city of Budapest in Hungary, but also, of course, in Brno, Czech Republic, the home of CTP, where we have built millions of square meters. Last year we did a deal with FedEx, for example, just to mention one. Part of our 30-30 plan, right, to grow to 30 million square meters. Two million square meters on the construction this year, which is good for 150 million euros of rental income. I'll highlight maybe if you talk about those 2 million, we do a lot in Poland, the largest economy, the largest country in Central Europe, very dynamic, can do, a lot of support from the government, very good locations I think we have secured, good team on the ground. So there we invest a significant amount of money now building properties, mostly in East, in and around Warsaw, but also Upper Silesia, Katowice, Zabrze, as well as along the German border on the west side of Poland. So we see that good opportunity, as well as in Gdansk, by the way. Another highlight I would... Yeah, Bucharest, Romania has been good. It's still strong. Serbia is strong. Germany this year is important to get things going in Mülheim. Some of you have been on the Capital Markets Day event last year. We looked at Mülheim. Good energy park with Aon, Siemens and more to come. So that's happening, making good progress in Dusseldorf as well as in Wuppertal. So overall, quite positive about Germany as well. I think, yeah, well established and in good position.

Last but not least, the growth engine, the third activity. We look globally at opportunities in different countries.

And how does this work? Well, it comes from clients. Clients tell us, okay, we are going to that market because we see growth. We need properties. Are you there? Sometimes we are, sometimes we are not. If we are not, then we have a closer look at such a market. We think, shall we go there? It doesn't make sense. No. which is in Vietnam, and strong demand from existing clients. So we continue to have a closer look. We announced it last September, and so far we've been making some good progress. We're having a closer look at the market and the opportunity. We have a few people in the meantime on board. So we have a CTP Vietnam, and we have their small team of experienced clients. industrial property people vietnam obviously strategically located 100 million people very productive work workforce but also quite young people around 30 years of age so in the future also you will see consumer spending yeah well connected to the rest of the world and that would also give an opportunity to get us feeling the ground in asia and also closer to other asian companies who look at coming to europe and that will keep you up to date on developments we are making Yes, not only about getting bigger, need to also get a better company. So we are obviously constantly working on getting a better company with maybe doing more buildings with less people, more efficient, more effective, different processes and procedures, to optimize. For example, when it comes to property management, when it comes to energy consumption, we know exactly how much energy tenants consume in their buildings. We can help them, again, with energy management. with clear understanding of the condition of the building and when there are issues property management related then we can fix that we have a clear system for that in place in the meantime to monitor all the the maintenance and repairs which potentially are needed so both energy consumption as well as maintenance and repairs to make sure buildings are in good condition and remain in good condition that's one example and there's many other things we've done whereby we introduce new processes better and software and optimize standardized digitalize the company and that makes us feel better and quicker and more efficient to to continue grow our business yeah so we're looking forward very much to the next 25 years thank you for your attention i will hand over to rob some of you know rob he's not really new to cdp but as as an ir um we are happy to have him on board and um

Look forward to answering your questions. Turning to the financial highlights. Net rental income increased by an impressive 14.1% to €738 million, driven by record leasing of 2.1 million square metres, excluding Italy. Like-for-like rental growth came in at 4.5% in FY25, accelerating from the 4% we delivered in FY24, and this was driven by indexation and positive rent reversion capture. We also delivered record development completions of over 1.3 million square metres, with occupancy at the year end still remaining stable at 93%. Annualised rental income increased by 13% to €840 million, illustrating the strong cash flow generation of our portfolio and locked-in growth profile of our business for 2026. Company-specific adjusted EPRA earnings increased double-digit by 11.3% year-on-year to €405 million. CTP's company-specific adjusted earnings per share amounted to €0.85, an increase of 6.3% year-on-year, as we also made positive progress on our debt refinancing during the period. This EPS figure was just one cent variance to guidance, driven by the timing of development completions in Q4-25, with some moving to Q1-26. As we look forward, the important message here is that our medium-term double-digit annualised growth trajectory is unchanged, as Richard will highlight shortly. Now, looking at the valuation results. The revaluation of the portfolio for 2025 came to over €1.1bn, a key contributor to our leading total accounting return for the period. Of this positive portfolio performance, €422 million was driven by the construction and leasing progress on our developments, while €649 million came from the revaluation of our standing portfolio with the balance from our land bank. As at the year end, the total portfolio gross asset value now stands at €18.5 billion, up 15.6% from FY24. CTP's reversionary yield stood at a conservative 6.9% at full year 25. For 26, we expect further selective yield compression and positive ERV growth in line with inflation. This is also illustrated by the new leases that we signed in 25, where rents were a solid 4% higher than 2024, adjusting for country mix. The supportive demand drivers of our business remain present, whether that be nearshoring, manufacturing in Europe for Europe, businesses upgrading their supply chains or reacting to the changing global landscape alongside increasing de-globalisation of political agendas. Our core CEE markets, where industrial and logistics space per capita is half of that of many of other Western European markets, continues to benefit from these supportive trends, alongside our own Western European markets and our opportunities being assessed outside of Europe. We are not short of opportunity, nor are we short of capital, with that opportunity driven primarily by the embedded value to be unlocked from CTP's existing land bank of more than 33 million square metres, with the majority next to our existing city parks. This land bank that we have on our balance sheet allows us to facilitate our tenants' growth as a solution provider for their real estate needs. We remain active in the market for the acquisition of land, especially in Poland and Germany, and we replenish and in a number of cases grow the land bank in existing markets where returns are the most attractive. Now, as Raymond mentioned, we also continue to look to enter markets such as Vietnam, following on from our successful CTP Italy market entry at the back end of last year. Our EPRA NTA per share increased from €18.08 at year-end 24 up to €20.39 at FY25, and this represents a strong increase of 12.8% during the period. With this NTA growth, in conjunction with our dividend distributions, we delivered a total accounting return to our shareholders of 16.1% over the past 12 months, highlighting our superior total return profile which is underappreciated by the equity market within the real estate sector. I now hand over to Richard.

2025 was another year of solid growth for CTP as we continue on our journey to 30 million square meters of GLA. Business units, the operator, the developer and the growth engine are all supported by our strong access to debt capital markets diversified funding structure, and multiple sources of liquidity provided from across the globe. 2025 saw us receive an investment-grade credit rating upgrade to BBB flat from Standard & Poor's. Moody's also have a positive outlook on our credit rating, confirming the growth trajectory of our business. This January, we again evidenced the high institutional demand for our debt, issuing a 4.5-year bond at a spread of only 92 basis points, with a peak order book of over €4 billion. Looking forward, we will continue to diversify our sources of debt funding, as well as managing our liquidity to ensure we do not hold material excess cash. We also target growing our share of unsecured debt towards 80% of total outstanding debt. Turning to the key credit metrics, Our interest coverage ratio was unchanged quarter-on-quarter at 2.5 times, and we expect this level to be the bottom. Our normalized net debt to EBITDA remained broadly stable at 9.3 times, and our loan-to-value stood at 46.1%. This LTV is marginally higher than our 40% to 45% target due to our seizing the acquisition opportunity in Italy at the end of 2025. In Italy, we will deliver 200,000 square metres of GLA in 2026, more than 10% of our annual target. And with a land bank of over 8 million square metres, we have a long runway for growth in Italy, a country with a significant undersupply of modern A-class industrial and logistics space. As our development pipeline is completed, at over 10% yield on cost and revaluation gains are fully booked, We expect loan to value to move back towards our target range. To complete our development pipeline of 1.4 to 1.7 million square meters in 2026, we do not need additional equity capital. Due to our sector-leading yield on cost, around 10% from projects to be delivered in 2026. Every euro we invest in our pipeline increases our ICR and decreases our net debt to EBITDA as our leasing income comes on stream. This allows us to grow group rental income at double-digit rates while simultaneously improving the most important credit metrics. In 2025, we signed €1.7 billion of unsecured debt to fund our development business. debt refinancing and our growth engine we continue to demonstrate our ongoing strong market access whilst actively managing our funding costs during the year we renegotiated or repaid 1.6 billion euros of our most expensive bank loans looking through 2026 and beyond ctp maintains a conservative debt maturity profile we repaid 350 million euros of bonds maturing in january and our only remaining bond maturity in 2026 is €275 million maturing at the end of September. Looking further ahead, maturities remain limited over 2027 and 2028, with less than €1 billion in total outstanding. Our liquidity at the end of 2025 stood at €2 billion, comprised of €700 million of cash and our €1.3 billion RCF, more than sufficient to meet our cash needs for the next 12 months. The average debt maturity stands at 4.8 years, and the weighted average cost of debt was 3.3%, which represents only a marginal increase compared to year-end 2024. We do not expect a material increase in our average cost of debt, as our marginal cost of funding is currently below 3.5% for the five-year mid-term period. Regarding the mid-term outlook, a key message here is that the medium-term growth outlook for CTP remains unaltered. At our 2025 Capital Markets Day, we introduced our ambition to double the size of our portfolio to 30 million square metres. We expect to grow top-line income around 15% per annum. driven by rental growth in our operator business alongside double-digit organic GLA growth from our developer business as we build on our unrivaled land bank at 10% yield on cost. Supported by our growth engine as it seeks attractive global investment and growth opportunities. Digging deeper into those attractive return drivers. Firstly, we have the operator. over 1,500 supportive tenants who pay on time, stay with us and grow with us. Secondly, we have our development business, led by the strategic land bank of more than 33 million square metres, either on balance sheet or under option, located mainly around our existing parks. This is the key component of our portfolio growth ambition. And thirdly, we have the growth engine, the global identifier of shareholder value accretive land-led acquisition opportunities to continue to deliver high returns well above our cost of capital. We also continue to see above inflationary rental growth across our markets, supported by income reversion capture, positive nearshoring trend, production in Europe for Europe, and ongoing e-commerce growth driven by rising disposable incomes across our strong Central Eastern European region and our Western European markets. Previously, unlike the rest of the sector, we did not capitalise interest on development activities, which made comparability between companies for investors more difficult and made CTP appear more expensive on a simple earnings multiple basis. Going forward, we now capitalise interest to provide reporting harmonisation with all other European real estate companies. Following this change, we now set our company-specific adjusted EPRA earnings per share guidance for 2026 at €1.01 to €1.03. This implies year-on-year growth of 9% at the lower end of the range rising to 11% at the top end of the range when compared to the 2025 result. In summary, CTP delivers leading shareholder returns as a growth business with income and cash flow growth, development profit growth, and the growth engine lever through expanding our global exposure. Thank you for your attention. We now welcome your questions.

Thank you will now start today's Q&A session. If you would like to ask a question during today's call, please press start followed by one on your telephone keypad and to withdraw your question, it starts followed by two. With that, we'll take our first question from Marios Pastel from Bernstein. Your line is now open. Please go ahead.

Hi, good morning and thank you for taking my questions. I've got two questions from my side, one on the development pace and then one on capitalised interests. Just firstly on development. You have some delays from 2025. You also then added Italy. I'm just questioning why there isn't any upgrade really to the guidance range for the development targets for 2026 and whether there's any room to beat on this going forward. And then secondly, on capitalizing interest, I suppose another question really on why you've decided to implement this change now. Some model companies do this and whether you'll continue to headline both numbers going forward. Thank you.

Yeah, thanks Marius. I'll take the interest capitalization question first. Look, as we've been on the market now for five years, if someone wants to look at the real estate sector, they fire up their Bloomberg and they sort companies by earnings multiples. If everyone else is capitalizing interest and we're not, we screen expensive compared to the market. So basically what we're doing is we're just aligning ourselves with the standard market practice of all the logistics players. And the timing, we think that we've increasingly... heard from investors that when they look at us first they think you screen expensive and then when we dig in we understand better why that first look isn't always helpful. We understand investors are a time poor so we want to try and make it easy for them to have a simpler comparison going forward. And on that basis, we will publish the EPS targets and results, including the capitalization, not excluding it. Regarding the development pace, maybe I start and then Raymond maybe comes in. Regarding the guidance for 2020 – for 2026, we're coming out with something that we're very confident that we can – we can deliver. We think the 1.4 to 1.7 is something that is very achievable with us. The lower end of that range would be a new record for deliveries for us, but we're confident that we can reach that. We know we missed on the EPS guidance for last year and we don't want to disappoint the market in any way going forward.

Thank you. Our next question comes from John Vung from Kempton. Your line is now open. Please go ahead.

All right. Good morning. Thank you for taking my questions. Just on the pre-lab for 2026, could you elaborate a bit more on the mix of developments in existing and new locations on how that compares to last year? And have you started relatively more developments in existing locations essentially? or did leasing start a bit slower than last year's pipeline, given the 30% pre-let rate?

Yeah, hi. Thanks for the question, John. Regarding the overall pre-let, we stand at 30% at the start of the year, which is in line with our 30% to 35% range that we've been doing over the last years. In terms of the new existing parks of pre-let is 23%, in new parks of pre-let is 62%, so consistent with what we've been doing over the last years and what we've been reporting that in in parks where we know the demand, where we understand the tenant requirements coming up, we're willing to start with a lower pre-let ratio. And finally, would also highlight that we have another 175,000 square meters of pre-let projects that we have not started yet. So that you don't see those in the pre-let ratio.

I think, John, this is Rob Jones. The other thing to add is we're still very comfortable on our 80% to 90% target for pre-letting out delivery for 26. We obviously delivered 88% in 2025, so very much towards the top end of that range, and are happy to guide for that 80% to 90% again for 2026. So, yeah, we're pretty comfortable there.

Our next question comes from Jonathan from Goldman Sachs. Your line is now open. Please proceed.

Good morning. Thank you for taking my question. Just coming back to the guidance, please. So two questions really. The first one, I think your guidance previously excluded Italy. Now it does include Italy for 200,000. So overall, the entire amount has not changed, meaning that it's probably a bit lower for the rest of the business. Is it just risk management? Ultimately, that's the amount of space you're comfortable having to let or deliver as a package, or are there differences that you've noticed in terms of appetite for different countries? That's the first question. The second question, please, the growth implied by your guidance from the top line seems to be a bit stronger than the growth at the bottom line, and yet you highlighted that you're marginal cost of the debt is pretty close to the in place. So is there something that we're missing here or are you expecting some additional costs that we need to be aware of? Thank you.

Yeah. Hi, Jonathan. I can touch on both of those and I'll pass over to Richard for part of the second half of the second question. So on the guidance for deliveries for 26, you're absolutely right, 1.4 to 1.7 million square metres. We initially announced that 26 guidance, obviously, towards the second half of last year prior to the Italy transaction. But it's important to understand that we obviously had a a high degree of probability internally that we were going to complete on that Italy transaction. So when we gave that raised guidance, and as Richard touched on earlier, even at the bottom end of the range, it's still a record in terms of what we've delivered in previous years. That included our expectations for the Italy deliveries of 200,000 square metres, which, of course, is already substantially pre-left for 26th. And when you think about Italy going forward in your model, we are guiding to 250,000 to 300,000 square metres of deliveries from 2027 looking forward. So an increase thereafter. So I think I guess the takeaway from that is, you know, Do we think that there's further upside in terms of 1.4 to 1.7? No, we're very comfortable with the range and it includes Italy. Just on the top line growth versus bottom line, So you're right in your assessment, but I think one important point to make is, yes, our weighted average cost of debt today, which is about 3.3, is very similar to our marginal. We did debt issuance at the start of the year where we issued four and a half year money at 3.375, so very, very close to our weighted average cost of debt. But don't forget, we do have a debt instrument bond that matures in September this year. I think, remember, the coupon on that is 0.625. If we refinance that with, say, five-year money today, that would probably cost 3.5% all in. So it's important to be aware of that. But obviously then looking thereafter from 27 onwards, we're then in a position where we've got no refinancing upcoming that has a notably different coupons to our marginal cost of debt. Rich, I don't know if you want to add anything to that.

No, I mean, unfortunately, we never see the top line flowing. one-to-one through to the bottom line, of course, we would love to see that. I think, you know, one of the things that please bear in mind in this year is also we'll be building up the team in Italy, and there's some costs associated with that. And although we have the pre-late deliveries to come, they're coming – in Q4. So there's not going to be a lot of income to offset the ramp up in the costs. Secondly, we've continued to investigate the opportunities in the Vietnamese market and are looking to build up a team there over time as well.

And of course, as you say, despite those points that Richard makes, we're still in a position where at the midpoint of our earnings guidance for 26, it still represents double-digit EPS growth year-on-year.

The cost of debt is also the annualized impact from 25. So you can not only look at 26, because yes, as Rob explained, We had, of course, the bonds in January and then in September, but it's also the annualized impact of 25, which is, of course, reflected already in the average cost of debt, but still has an impact on our 26 EPS. So if you do the math, and you can do it relatively easily also, if you look to the refinancing we have done in 25, you see that the impact is still a few cents on the overall EPS.

Okay, so if I understand correctly, cost of debt and admin cost you're building as opposed to being a bit less confident on the top line, right?

Right. Yeah, absolutely correct.

Okay, thank you.

If you want, I can add something on the supply. Okay. Because it keeps coming back this question. So first of all, we look after the income producing part of the portfolio. We make sure that we are happy with the occupancy rate. And then we will continue to build if we can lease. So we are going to not build buildings if we are not confident we can lease those buildings. So we balance between supply and demand. And while doing that, we do gain market share. So if there's an opportunity to develop and to lease properties, we do. And that's what Rob explained in his presentation. That's what we've been doing over the past years. We do gain market share. So we build as soon as we believe we can lease.

Our next question comes from Frederick Renard from Kepler Chevro. Your line is now open. Please go ahead with your question.

Good morning. First of all, let me flag that your line is not really great, so I'm not so sure it's just me, so just flagging. Then I would like to comment on two elements. First, on the long-term guidance of 30 million square meter. Even with Italy today, the pace of growth is important, but far from the level which would bring you to a portfolio of 30 million square meters by 2030. So it seems basically that your existing market is not absorbing what you are delivering at the moment from an external point of view. Can you comment on that first? And then maybe on a second question, if I compute your vacancy in terms of square meters, it looks like your portfolio is at one million square meters of vacancy, which is quite sizable. What is structural here in the mix? And finally, on the pre-letting, you mentioned 88%, but actually if you compute the pre-letting in Q4, it came close or slightly below 80%. So can we conclude that there is some kind of a software demand in the market at the moment versus what you had in mind one year ago? Thank you.

Yeah, so in terms of our mid-term ambition, I mean, we said we would like to achieve, you know, it's not a target, it's an ambition. We want to get to 30 million square meters by 2030. If you compound our portfolio by 12.5% for a year, for the next five years, you're going to get to somewhere around 26, 26.5 million square meters. And there's a small gap there, but we think that there may be opportunities or there will be opportunities to find one or the other. attractive acquisition over the next five years. We talk about a relatively mid-term perspective there, Fred. So I think we're comfortable with that level of ambition and our ability to realize that. If we can do 15% a year, which would be the top of our organic growth rate, then we get almost to the 30 million square meters. But it's our ambition and we're comfortable with that at the moment. In terms of the... The vacancy, as Raymond just said, we're always balancing supply and demand in our parks and in and around our parks. Our business model is to run a vacancy we target 95%, around 95% occupancy going forward. And as the portfolio grows, that means the absolute square meters of vacancy increases. So yeah, at some stage, Now that gets to a million square meters. That's simple math, but that's part of our business model that we live with. We accept that vacancy rate because we feel that gives us a competitive advantage when tenants are looking for space in the short term, because not everyone is planning years in advance. Sometimes people need space quickly and then the ability to act quickly and grab a tenant and meet their demand puts you in a better position to retain and grow with them then also going forward. Regarding the pre-let for Q4, look, we, across the year, We delivered 88% towards the top end of our 80% to 90%. Guidance, we try not to get too hung up on the... The volatility of any one quarter short-term trend is not our target. As Raymond said in his presentation, we're in it for the long term. That's why we have the that the land bank that we have mostly in existing parks or with the potential to build a new park of more than 100 000 square meters for each park that's the real value driver for us and

Since we have lost audio with our speakers, please stand by whilst we're getting them reconnected.

Yeah, let me continue.

Hi, Dean, can I confirm, are you still there?

Yes, let me continue. I think Richard dropped out.

Okay, let me transfer you. Yeah, I'll just transfer you back over because I've moved you out of the main room. I'll transfer you back over now.

Okay, I'm still here as well.

Thank you. We'll now continue.

Sorry, sorry for the connection drop. I think Richard dropped out, but let me continue where he stopped. So if you look to the pre-letting, that's always there. So I think last year, when you look to the Q3 of 24, we had a 95%. At the end of the year, we came also within the range. So there is always a bit quarter by quarter movements, and that comes indeed back to our business, where we are mostly developing in our existing business parts. If you also look to the quantum of leasing that we are doing, Yes, one million of vacancy might seem a lot, but we sign 2.3 million square meter of leases each year. So if you look to the overall amount of leasing that we are doing, one million square meter is less than half a year for us. So yes, of course with the scale of the portfolio, that becomes a larger number, but in our overall leasing capacity, And that's ultimately important for us because it all comes back to tenant demand. That is ultimately the key thing when we are looking for, are we starting the next development? Where are we starting the next development? And where do we seek growth?

We'll now take our next question from Vivian McKay from DeGroote Petercam. Your line is now open. Please go ahead with your question.

Hi, good morning. I think your line drops again, but I hope you will hear me. A couple of follow-up questions for me. Maybe when it comes to the deliveries, can you quantify the volume of deliveries that was moved to Q1 2026? And if possible, what kind of level of pre-lab do you have on this project? and maybe ask my other question afterwards if you can hear me.

Yeah, sure. So if you look to the deliveries, we came out on the lower end, of course, of the 1.3 to 1.6 that we guided for. We were planning to be more in the middle or the higher end of the range, but that's business. So if you look to what is shifted, that's basically, say, 100,000, 150,000 square meters or so to the next year. So that's also reflected in the overall pre-letting, of course, for this year, the 30%. But like Richard mentioned, actually the 30% might look a bit low compared to previous years, but on top we have the 175,000 square meters of projects leased that haven't started yet. Some of that also will be delivered in 26. So it's always a mixer of those elements. So that is basically the impact on the shift of deliveries and that will help a bit in 26 and that's why we are so comfortable with the 1.4 to 1.7 for this year.

And let me add to that, maybe an important one, is structural vacancy. There is nothing like that. There is not buildings which are empty for years and years and years. So it's just adding supply to the market, and then you need the market, you need some time for the market to absorb all that space, and that's what we are doing. So when it comes to buildings which have been vacant for a longer term, then I can think of properties in Germany. As you remember, we entered the German market through an acquisition of buying Deutsche Industrie. which is a mix of some fantastic locations, redevelopment opportunity, but all the buildings are there. There are some vacancies and we need time to refurbish those buildings which have started, but that takes a bit of time. It's all part of the budget and it makes a lot of commercial sense, but then you have buildings which will not produce income for a while because you're doing some refurbishments now. There's a vacancy in the German portfolio, you can say, but our core portfolio, all the stuff we build, there's no structural vacancies. There are some vacancies here and there because of the supply. But again, this goes down to CDP's business model, so I suggest you have a good look and listen to all the nice videos we have done to understand the way we run it. It took us more time to get to 15 million square meters. It took us 25 years to get to 15 million square meters. It's going to not take us 25 years to add another 15 million square meters to grow to 30, you know, because we know the game of how to develop and with whom and with all of the clients we have. That gives us great opportunities to continue to do what we do. But, yeah, 5% from 30 million is 1.5 million square meters.

The growth engine.

You're pissed.

Our next question comes from Eleanor Frew from Barclays. Your line is now open. Please go ahead.

Hi, morning. Thank you for the presentation. One question, please, on the reconciliation between your company-specific EPRA EPS and EPRA EPS. The adjustment this year was a lot larger than last year. Can you talk us through the reasons for that? And also, what should we expect on that adjustment moving forward? Is this the new run rate?

Hey, Eleanor. There were some one-offs in that adjustment. And I think we already discussed that in the H1 and Q3. I think on the tax side, you saw a positive, especially in the first half of the year. So the tax adjustment for 26 will be lower. That's one. There are also some in the other expenses where there were some one-off adjustments. For example, related to some transaction that in the end did not take place, which is booked in the other expenses and therefore adjusted, of course, in the recurring elements. So there are some of the one-offs. In 25, it's slightly higher than I would expect on a run rate basis, so that should be less in 26.

Thank you. Our next question comes from Steven Bowman from ABN AMRO BHS. Your line's now open. Please go ahead.

Hi, good morning. Thank you for taking my questions. Some technical questions for me. What's the assumptions on the capitalized interest? So what's the interest rate that you use and what loan and cost do you assume? Second, what's the impact on the average yield on cost for the change to have due to the capitalized interest? Can I assume that will increase the cost of developments? And last one, do you assume a similar number of shares year-end 26 as year-end 25?

Yeah, Steven, so in terms of... Go on, Martin, you want to go? We had a problem with our line. Yeah, so apologies for that, and I hope that you can hear us properly because Fred was saying that you couldn't hear us, and then we dropped. So apologies for that technical lapse. In terms of the capitalized interest, what level do we use? We use the actual cost in the balance sheet, so the average cost of debt. So for this year, it's 3.3%. In terms of the yield on cost impact, that would be somewhere around 30 basis points. And there was a third question as well, but I lost the connection on that one.

So the last one, the number of shares you assume in your full year 26 outlook, is that the same as in 25?

Yeah, it's slightly higher because it incorporates the dividends that we're paying. As you know, we proposed a final dividend of 32 cents for the full year. We'll also have an interim dividend. Later in the year, based on past behavior of the shareholders and expected behavior, we would expect the majority of that to be taken up in Scripps. So there will be an increase in the number of shares as a consequence of the Scripps dividend. But otherwise, we're not planning on an increase in the share capital. As I said in the presentation, we don't need... to raise equity to fund the development pipeline, the 1.4 to 1.7 million that we're very confident to deliver.

Yeah. Okay. Very clear. Thank you.

Our next question comes from Shiraz Goyal from Green Street. Your line is now open. Please go ahead.

Good morning. I hope you can hear me. Thanks for taking questions. The rent levels for new leases in 2025 were around 4% higher compared to 2024, but I noticed it was lower in Bulgaria, Serbia, Hungary, and also flat in Romania. I wanted to find out what the reason for this is and if this is reflective of some of the softness or normalization in operating fundamentals across Eastern Europe. And then, are you able to give any color on the market split of the 3.8% ERV growth that you quote? Thank you.

Yeah, so maybe I'll deal with the technical part maybe when we pick up on the overall tenant demand and how we see rent going overall. Yeah, I mean, it depends a little bit country by country as to where we're leasing within that country. So certain parks have higher rent levels than others. You know, if you're very close in town, you're going to get a higher, in the capital, you're going to get a higher rent than if you're leasing in one of the regional cities. So the mix there across the countries is generally to do with where we're doing the leasing in that specific quarter or in that year. So generally speaking, if we look at our ERVs, the ERVs across the portfolio are increasing. you know, location for location, like for like, we're seeing across the portfolio a general increase in the rent levels. But we don't expect that to, you know, that's different location for location. Depends on the supply, on the demand, in the individual location at the time. Overall, you will see Rents continuing, we think, to grow inflation plus over time. There will be markets where it's going quicker at a point in time, markets where it's going slower. But overall, we're very happy with the rent level development that we're seeing across the whole region.

Thank you. Our next question comes from Vivian McKett from DeGroote Petercamp. Your line is now open. Please go ahead.

Hi. Sorry. I had two other questions that were skipped. The first is on the retention rate. Just trying to understand the decline to roughly 81, I recall, and how do you see a normalized retention rate going forward?

Yeah.

I think our retention rate historically has been 80 to 85. There have been times where it's been a bit higher. There have been times where it's been a bit lower. We would think that generally if we look, you know, 70 to 75% of our new leasing last year was 71 is done with existing tenants. So, you know, so we would think that, you know, 80 to 85 is a reasonable, to expect in terms of tenant retention. So you're retaining the vast majority of your tenants, but, you know, you won't ever keep everyone.

All right. And then one last question on the goodwill impairment. Can you comment on that one?

Yeah, sure. That goes to our German acquisition back in 2022. And what we see last year is we saw a nice uptick in the valuations of our portfolio in Germany. And as the valuations increased, then the goodwill that we recognized at the time of the acquisition decreases.

Thank you.

Thank you. Our next question comes from Bart Geissens from Morgan Stanley. Your line is now open. Please proceed.

Yeah, hi, good morning. Quick question on the dividend payout ratio. So you're saying that for 26, the dividend payout ratio remains unchanged. But of course, the accounting policy of starting to capitalize interest increases your reported EPS by 10%. So will you now start paying a higher percentage of this previously more cash EPS, or will you gravitate towards the lower end of that range to reflect this accounting policy change. Thank you.

Yeah, hi, Bart. Good question. Yeah, I think that we'll end up gravitating towards more 70, 72, 73, rather than historically we've been 75, 76, 77, something like that.

But that would still mean a higher percentage payout, right, on the previous? No.

If you're 70, you're almost the same as if you're 75. Okay. Thank you. There shouldn't be a material increase in cash out as a consequence of the capitalization of the interest.

Thank you.

Thank you. We'll now take some questions from the webcast. Our next question comes from Laurence St. Aubin from . Can you please comment on the decline in your client retention rate to 81%? Yeah, hi.

So, yeah, we already answered that question.

So, yeah, look, like I said, we're targeting generally expecting to be between 80 and 85% in our tenant retention. In 24, we were 84. In 25, we're 81.

So, very comfortable with that.

Thank you. And then our next question is from Wim Lewis from KBC Securities. What is expected impact of the capitalization of interest costs on your yield on cost expectations?

Yeah, again, that's another question I answered earlier. It's around 30 basis points.

Thank you. And then our next question from Kristen Royal Davies from Naveen. Are you going to keep the same payout ratio against the new definition of earnings or adjust this downwards to keep cash payout ratio the same?

Yeah, so payout ratio stay within total, move towards the bottom end of the 70% to 80% payout range. Cash outflow to the business remaining relatively unchanged, given the majority of our divvy is taking script.

Thank you. With that, we have no further questions in the queue at this time, so I'll hand back over to the management team for some closing comments.

Yeah, so thank you very much, everyone, for your questions and your Your interest, I would just like to underline that we continue to see really attractive mid-term growth potential, primarily in and around our existing city parks, but also with the addition of Italy and hopefully an addition in Vietnam. We think that we have everything in place for that. the next leg of growth, and we wish you all a good day. Thank you very much for your attention.

And you're invited for the capital markets in September, right, in Warsaw.

Yes, of course. Sorry.

Thanks very much. Thank you very much, everybody.

Thank you all for joining. That concludes today's call. You may now disconnect your lines.