Merlin Pptys Socimi Ord

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Good afternoon, ladies and gentlemen. Thank you for joining Merlin's 6M26 results presentation. You can find all the materials that will be presented in today's call on our website. I will please ask you to be advised by the disclaimer contained in it. Our CEO, Ismael Clemente, along with our two directors, Inés Arellano and Francisco Rivas, will walk you through the main highlights of the first six months of 2026. We'll then open the line for Q&A, where you'll have to press star five. With no further delay, I pass the floor to Ismael.

Thank you, Teresa. Thank you for attending Merlin Properties' first house 2026 results. I will be following the presentation that we have prepared for the occasion. So regarding the main highlights in operating performance, financial performance, and value creation for the period, I would like to remark that we continued enjoying strong operation in all of our traditional asset classes with a 3.3% like-for-like rental growth. We continue to enjoy a very high overall occupancy with a 94.7% pending the incorporation of data centers as of In the three traditional asset classes, the one that showed the strongest performance was, once again, shopping centers with a 6.4% like-for-like growth. Because in logistics, we had a relatively good risk spread, but we lost occupancy. And in offices, we had a good occupancy performance, but we had a relatively low C. Thank you very much. Thank you. Very close to recover the dilution caused by the capital increase, which is, I think, a remarkable achievement. In terms of value creation, we increased GAF by 3.7%, with most of that growth coming from data centers, because actually in traditional asset classes, there was a very slight yield expansion, which probably will follow. In coming months and years owing to the interest rate environment that we are going through. We strengthened our balance sheet with 768 million capital increase that you all know, and we reduced the loan-to-value to 24.5%. With a liquidity of 2.6 billion that basically takes care of the most immediate maturities together with the bank syndicate refinancing that we are preparing for the second half of the year. We maintained our investment grade rating both with S&P and Moody's. And most importantly, because it brings a little bit more color to the table in terms of value creation, the most salient feature of the quarter or half of the year was the good execution in Megaplan. In the past quarter, we were at 112 megawatts commercialized. We have now reached 160 because we converted The Arasur One situation that in the first quarter was in advanced negotiations. We had signed ahead of terms and we had attached technical and financial documentation. That was now, it is now signed and as a consequence we are 160 megawatts late. We provided to you an indication on the full year results presentation of We believe that we are in a position to far exceed that mark because we have three different avenues that we can explore. The most immediate, I believe, is the conversion into a full-format lease of the head of terms and exchange of documentation taking place in Lisbon, where we had Significant Demand, we have like four different tracks open, two of them very well advanced and we believe that with one of the two we are going to finish soon documentation and therefore end up having a full format list that we can report. but beyond that we have 48 megawatts in Getafe which are booked that eventually we can also work between now and end of the year to convert and we are recently working on a combined pack of 30 and 20 interest cantos and naval moral that eventually could result also in a significant Although I believe that we'll probably extend more into 2027 because we are just starting to entertain those conversations. As commented, Bilbao Arasur 1 and Bilbao Arasur 2 fully let, which is very important because for many years all of you have been asking whether we were able to sign through pre-lets and now We are clearly in that situation. My colleague Fran will comment later on that we are reaching a situation now in which, in reality, we are going after commercialization. So we are finishing a product behind our commercialization pace, which is a very nice place to be because we are enlarging and strengthening our dominance in the Iberian Peninsula while You know, we gain a lot of visibility on future cash flow through very advanced pre-leases. If the lease is to be converted, the interesting summary is that 100% of phase one will be let, 70% of phase two, and yet 25% of phase three. Three, which I believe will be a remarkable achievement, particularly for those of you who attended our Capital Markets Day in Arasur in March because, you know, clearly this is exceeding the projections that we internally had and that we conveyed to you on that occasion. And all that while maintaining a disciplined capital recycling. We have sold 75 million as of July and we still have 90 million of divestments signed that we will be converting between end of this year and beginning of next. Those that are reinforcing our internal capital recycling and helping the funding of particularly phase three as we speak. The NTA stands at 15.99 euro per share, which is very interesting. That puts our shares at a 4% to 5% NAV discount, which eventually I hope will be overcome during the week, because for some reason today our trading has been weak. But frankly speaking, I don't know why. This is important because that Mónica Eloisa Martín de Vidales Godino Shareholders. In terms of key financial and operating metrics, the growth rental income stood at 292 million plus 10% like for like. The total income has been like 307. So this year for the first time in our history, we are likely to exceed the 600 million mark in terms of total income, the top line of the company. FFO wise, we converted 180 million plus 8% year on year. We cannot simply multiply this by two because there are a number of things that are different in first and second half, but that gives us confidence to send or to rephrase our guidance in terms of total cash flow for the year from the previous 327 to 340. Mónica Eloisa Martín de Vidales Godino Total shares outstanding of 620 million, which we believe is the correct way to do it, because if we were to pay a dividend today, it would need to be calculated on the basis of that number of shares. But if we were to use the weighted metric, as many of our rivals do, the increase would have been 2.6% and the per share metric 0.30. Our loan-to-value continues to be very low, 24.5%. and the increasing GAF like for like 3.7 that basically together with the operating FFO brings our total shareholder return year on year to plus 9%, 9.1% which is I believe a very interesting mark. And that's it basically for the key financial and operating remarks. I will pass the floor to my colleague Inés Arellano that will discuss the traditional asset classes and then Fran will talk about data centers.

Thank you, Ismael. So moving to offices, a portfolio worth 6.7 billion that generates 4.8% gross passing yield and 4.1% net initial yield, still represents 53% of our portfolio. The momentum is quite positive, demonstrated by all times higher occupancy level in Madrid. Barcelona is still suffering, reaching our lowest occupancy level at 84.4%. Due to the exit of a big tenant in Paraglorias that you are all aware of, while Lisbon continues to be a very solid market. Demand is very healthy, although clearly concentrated on the very best buildings, which is exactly where Merlin is invested. And Alfonso's answer perfectly illustrates this opportunity. Finding more than 10,000 square meters of refurbished office space inside Madrid's M30 has become almost impossible. New supply is extremely limited and there are quite a large number of occupiers looking for flagship headquarters. That explains why leasing is progressing so well. 70% of the space is under advanced negotiations with the leading financial institutions, well ahead of completion, while the remaining 30% is already leased to looms. For us, this is value creation in its purest form, transforming an existing asset into one of the most desirable office buildings in Madrid, while substantially reducing leasing risk before delivery. And Libertade 201 follows exactly the same logic, but in Lisbon. Avenida Libertade has become one of the most prestigious business locations in Southern Europe, attracting financial institutions, technology companies, and multinational occupiers. Supply is extremely limited, which explains why the retail component is already fully pre-let to a leading luxury operator. while around half of the office space is already pre-lit or under heard of terms. By delivery, we expect this to become one of the benchmark office buildings in the Lisbon market. And AVECUA represents another very different but equally very attractive opportunity. As you all know, the Northern Corridor of Madrid will increasingly become one of the city's main business hubs as Madrid-Nova Norte develops. It is a turnkey for Técnica Remidas, who is the main occupier of the current business park. That validates both the location and the quality of the product, while allowing us to achieve an expected yield on cost above 12%. We'll continue to apply the same discipline to future phases, including some other Quart 7, where we'll only proceed if returns remain attractive. Moving into Plaza Ruiz Picasso 11, this project is slightly different because it's not only about the building itself. It's about participating in complete transformation of ASCA through the RENASCA project, creating a much greener, more open, and more attractive financial district. Today's occupiers increasingly value the experience around the office as much as the office itself, and projects like this one helps reinforce ASCA's position as Madrid's premier DVD. For us, that translates into stronger long-term rental growth and better asset quality. So overall, The office portfolio continues to deliver exactly what we'd expect. Resilient operating performance today, combined with the development pipeline that's already attracting significant tenant interest well ahead of completion. Moving to logistics, which is $1.4 billion in a portfolio generating 5.7% gross taxing rent and 4.9% net initial yield, I would describe the market as being normalizing rather than slowing. Occupancy stands at 95%, releases spread as commented by Ismael reached almost 4%, and we signed around 39,000 square meters during the semester. Rental growth remains positive, while valuations also continue to edge towards. What's particularly encouraging is that living activity remains growth-based. Barcelona delivered particularly strong rental growth, While all diversified portfolios across the main Spanish Lodese corridors continue to provide resilience. The appendix also shows a healthy mix of tenants and positive release spread across virtually every geography. Performance in South Port is not an exception. It continues to be very robust with 97.3% occupancy with more than 200,000 square meters contracted. So overall logistics has become a mature income generating business for Merlin with consistent cash flow today and an attractive development pipeline for tomorrow. Looking at the ore commitment pipeline, this is where future growth becomes very visible. We already have 275,000 square meters under development, representing only 96% million remaining investment that will generate approximately 17 million of a stabilized gross rent. And importantly, these are not speculative ambitions overall. These projects have already been committed because they have sufficiently commercial visibility and attracted expected returns around 7% yield on cost. Delivery will take place over the next 18 months, meaning that the pipeline should progressively contribute to rental income from late to 2026 onwards. And the next stage of growth is within our land bank. This represents another 184,000 square meters of future development capacity require around Mónica Eloisa Martín de Vidales Godino continues to provide exactly what we want from this asset class, stable operating performance today, together with a very attractive embedded growth pipeline. The true growth is going to come from data centers, so I'll leave to my colleague Fran to explain a little bit more about data centers. Oh, sorry, that's shopping centers. I thought it was going to be after data centers. I think the shopping centers business continues to surprise many investors. Is the 2.2 billion portfolio generating 6.6% passing yield and 5.9% net initial yield? For several years, there's been a perception that physical retail would struggle structurally because of e-commerce. What we're seeing actually is something quite different. Best shopping centers have become destinations rather than simply places to shop. Mónica Eloisa Martín de Vidales Godino All our traditional asset classes. As Ismael said, the strongest asset class of the traditional portfolio. At the same time, occupancy remains exceptionally high, 96.9%. Revenue squared exceeded 5.5%. And perhaps most importantly, occupancy costs remain extremely affordable at only 10.8%. That last figure is critical. It means retailers continue to enjoy healthy profitability within our centers. giving us confidence that rental growth remains sustainable rather than being driven by excessive rent pressure. It also gives us comfort to carry on on our yield management strategy. So overall, shopping centres remain one of the strongest contributors to Merlin's recurring earnings. And now, yes, I do pass the floor to Fran. Thank you.

Thanks Inés and everyone. I'm pleased to provide an update on our data centre business and the key achievements delivered in the first half of 2026 across all the three phases of our platform. First of all, I would like to congratulate our data center team once again for an outstanding first half of the year. Thanks to their excellent execution and the very strong level of activity across the platform, we have been able to secure several significant contracts across our portfolio, which I will cover in more detail in a moment. As in previous presentations, let me begin by summarizing the current position of our data center portfolio across the Bering Peninsula, as shown on the map on page 19 and in the table on page 20. Precisely on page 20, we provide additional details of our 724 MB portfolio, where we include both operational and development assets, and show the progress achieved across each of the three phases. The perimeter of the three phases remain unchanged, as you can see, with the only adjustment being a reduction of 4 MB in Zaragoza Wind 1, from the previous 150 Mbps to 144 Mbps in exchange of significantly advancing our ready-for-service dates that we'll see in a moment. Anyway, we expect as well to recover that capacity through the planned repowery of Madrid Getafe 01 in the following months. Moving to page 21, let me review each phase individually. Phase 1. 64 megawatts are comprising three assets, Matrix HF1, Barcelona PLZF1 and VOR03, all of them now fully fitted out and fully led. Barcelona PLZF1 and VOR03 are fully operational and generating cash flow, including in Barcelona the RepairWin project that has been delivered to the client in this month of July. In Madrid Getafe 1, which is also fully led, is expected to generate full cash flow once final power connection works are completed during the fourth quarter of 2026, where we have right now great visibility. At the same time, we continue to advance discussions regarding a potential repair opportunity that will add approximately 6 megawatts of IT capacity in this building. In total, Phase 1 GRI is estimated at 68 million for 2026. From an evaluation perspective, I'm now in page 22, the successful commercialization of these three assets, particularly in Madrid, and following the Barcelona repowering, has reinforced the significant value creation achieved to date. Rental levels have exceeded, as Ismael was commenting before, our initial projections, resulting those in higher expected valuations based on the latest independent appraisals. From an accounting perspective, we have also recognized the promote accrued to date, reflecting the value created during this period in 101 million. And for those who you have previously asked about the promote mechanism, as we have explained before, it is linked to the profitability of each phase over a 10-year investment period. In this case, in phase 1, from 2021 to a potential exit in 2031. However, the accrual is calculated in each quarter assuming What will be the valuation at the moment in time, in this case June 2026, and consider this at the hypothetical exit date. As a result, the amount will continue to evolve until the final liquidation in 2031, depending, of course, the impact that, you know, based on the IRR calculation moving towards the final 2031 implies on the number. It's also worth noting that part of this promote is paid in advance in year 5 and 7, as it has been the case in March 2026, where we have resulted in a payment close to 20 million euros. Moving now into phase 2, which comprises 254 megawatts of IT, the construction across our work in progress portfolio continue to progress according to plan. More importantly, leasing activity is significantly ahead of our original expectations, reflecting the transition from the mainly speculative development approach that we have in Phase 1 to a predominantly pre-led, near-target development model in Phase 2 and subsequently in Phase 3. Looking at each project individually, in BOR-02, it was fully led at the beginning of the year, with its full 48 MW IT contracted, implying approximately 12 months ahead of the delivery date, scheduled for this December 2026. Out of those, the first 20 megs are expected to begin generating cash flow in January 2027, with the remaining 28 megawatts following in June 2027. And thus, those different dates refer to the client deploying their feed-out. In VOR App 01, which has been also fully led during this second quarter. We have secured its entire 48 megawatts, again, approximately 18 months before its expected delivery in December, 2027. Construction at Lisbon Building 1 and Building 2 representing 80 meg of IT capacity is progressing very well. At the same time, work is advancing on the campus substations, generator buildings, and an administrative building, all of which are being developed simultaneously, saving time for phase three less-worn assets. As we have consistently stated, commercialization is now driving construction. Accordingly, we are already in advanced negotiations regarding the IT capacity of the entire Lisbon campus, including not only Building 1 and 2 that we reported in last quarter, but also the three assets of Phase 3, Building 3, 4 and 5. Madrid Getafe 2 is progressing well, with demolition works expected to be completed by year-end 2026, and the construction license anticipated during the first quarter of 2027. Importantly, capacity has been already reserved ahead of the start of the construction. Finally, at Madrid Tres Cantos 01, following completion of the planning process, urbanization works are now underway, and we expect to obtain construction licenses by the end of the year, allowing construction to begin during the first quarter of 2027. Pages 24, 25, and 26 illustrate a significant progress achieved in BioAra Many of you will recognize the difference compared to the site visit during our Capital Markets Day in March, as well as the progress in Lisbon, Vilafranca-Rixira, 01 and 02. Moving now into Phase 3, where we have 406 MECs under development. At BORF 4 and 5, In Lisbon buildings 3, 4 and 5, construction has commenced simultaneously across all three buildings. following the granting of the construction license and this decision reflects the advanced stage of our commercialization negotiations for the full campus. As a result, the expected ready-for-service date of these three assets has significantly accelerated. Instead of deliveries originally scheduled for the first half of 2029, Building 3, first half of 2030 for Building 4, and first half of Building 5 in 2031, All three buildings are now expected to be ready for service during the first half of 2029. Just making a quick number under, you know, the rents disclosed during the capital markets day, we are talking that we are advancing probably 150 million forward just of this accelerating this construction. Finally, at Zaragoza Wind 01, where the power capacity again has been already secured, We obtained the declaration of regional interest called PIGA approval in July. The next milestone will be the imminent submission of the PIGA, which is the declaration of regional interest for this specific project, and it will be an imminent submission or obtain construction license expected in the first half of 2027, so we can start construction in the third quarter of 2027. The change as well that we have executed in this project is to move from the original two buildings into one single building of 144 megawatts IT that we expect to have that it's ready for service during the second half of 2029. Again, the fact that we have a span on that The project is moving our initial second Ready for Service for the first building in the fourth quarter of 2029 and the second building in 2031. So right now we have set a significant timing during that project. Finally, as a result of the progress achieved in both phases two and three, we have updated the profile of our capital expenditure commitments. is now reflect higher CAPEX deployment during 2026, 2027, and 2028, while at the same time bringing forward the associated rental income and cash flow generation. And now Ismael will close this presentation with a closing remarks and outlook before entering into Q&A.

Thank you, Fran. Well, once again, just to stress that we saw a relatively strong semester in terms of operations. with double-digit revenue growth, good FFO growth despite higher financial expenses that we have been anticipating to the market for months or years now and probably will continue in the future. That means basically that the portfolio quality that has been significantly refined over the course of the past two or three years is now clearly supporting the Brazilian performance of the traditional asset classes. We continue creating value through development pipeline, even in the traditional portfolio in offices. We have two, three very interesting redevelopments now going up, and we think we are going to obtain very interesting and Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Ismael Clemente Orrego, Ismael Clemente Second, the increase in urban charges by the municipalities. And third, the increase in construction costs. It is now relatively difficult to justify doing a development of logistics from scratch. Likewise, it starts to happen also in offices. I mean, except in cases where the building is clearly ours and there is a big delta between the passing rent The market rent, which is achievable. However, data centers continue to be our main growth factor. Thanks God, the cycle of data centers seems to be completely dissociated from the consumption GDP cycle that affects offices, logistics, and shopping centers. We seem to be affected more by the Thank you very much. Thank you very much. Our own commercialization efforts. I mean, we are commercializing much quicker than we can deliver product to market because there is now a very significant sample of potential clients. All of them are now looking actively for IT capacity across the world, and particularly in the Iberian Peninsula. So at least we know that we are in a sector which Where the demand at present seems to be endless. At some point it will probably stall, but I believe this is still relatively far in time. And the continued worries about the cap expenditure of the hyperscalers, I believe, you know my theory, I believe that eventually will end up helping us because at some point the market is clearly not rewarding high ROE firms like the technology firms in the U.S., Pérez López-González Pérez López-González In terms of the different phases, the phase one is clearly fully de-risk and cash flowing. The phase two, well, depending on how you measure, it could be between 20% and 70% de-risk, or 30% and 70% de-risk. And we have started now entertaining conversations for a number of assets on phase three. Regarding performance for the year, which is the most immediate Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal Mónica Eloisa Martín de Vidales Godino The salient message for today is that we are very much on track to far exceed the full year 2026 200 megawatts IT leasing guidance. We could perfectly end the year at 340, which would be a very significant achievement. And with our current low LTV, high liquidity, and noted maturities on site, Thank you Ismael.

The first question comes from the line of Jonathan from Goldman Sachs. Jonathan, the line is yours.

Good afternoon. Thank you for taking my question. Great progress on the data centers. Not to push you further even, can you highlight what your progress is on phase four in terms of getting the elixir to tips between Elan Moral? So that would be the first question. And more generally, I think you've given already quite a lot of color, but The second one is, can you give us a bit more color in terms of the discussions with the potential tenants and what is competition doing currently? Is it being pushed back? Last question, just construction costs, are you seeing any increase? Thank you.

Okay. Well, regarding construction costs, we continue to keep them more or less under control, although it is clear that particularly in equipment, We are starting to see a number of bottlenecks in terms of delivery times that might eventually end up also pushing up the cost lines. In that respect, what we are doing now is everything that we have announced to you, everything that we have now under construction, we have already done all the procurement of all the equipment for those buildings. and we are seriously considering also anticipating a little bit the unspecific equipment, you know, a little bit particularly transformers, although this is a little bit specific to every design and gensets, we are considering about the possibility of anticipating also some purchases and storing them in preparation of the most immediate future pipeline that we are handling. Regarding Phase 4 and Navalmoral electricity, well, in Navalmoral, as you know, we have been granted 29 megawatts of electricity, which are good for around 20 megawatts of IT capacity. Our intention is to start construction of a W96 building as soon as we receive the construction license. And the reason why we haven't mentioned it specifically today is simply because we are finishing the environmental impact assessment phase. We have received a number of comments to the dossier by mainly eco-activists and we need to basically reply or the authority needs to reply to those questions. and only when this phase is duly cleared, we will be in a position to receive a clean environmental impact assessment and therefore that will be communicated to the municipality so that they can issue the construction license. So all that in normal world should happen before end of September, but you never know when you are dealing with administrative procedures. It may take a little bit longer, but in principle we should start, you know, constructing at the end of September there. But again, stressing the concept is a big box with just a partial equipment because we are anticipating RFS in case during the two-year construction period we get The significant power that has been requested in that substation, which, by the way, has it. So this is a little bit repeating what we did in phase one, because we are very conscious that our biggest, not problem, that our biggest challenge at present is to be able to cope with demand. So this is why, I mean, Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal In Spain regarding greed is always complicated, not so much in Portugal that we can discuss. And then regarding tenants, what I can say is that we have discussed always in the past about two sources of tenants, hyperscalers and neoclouds. I think at present we are starting to see a third type of tenants, which is and then a fourth type of tenant which is big model companies. Some of them now in the middle of IPO processes trying to secure IT capacity so that they can make good their own IT operation forecasts to the market and they are trying to get I.T. Capacity Straight, I mean, without depending on neoclouds or hyperscalers alike. So I believe now there is a significant depth in the market compared to the past when we started doing data centers, the depth of the market was limited. Now it's starting to be much deeper. And I think this is all.

Super interesting. Can you follow up on the new demand, like the Chinese demand and for model companies it's fine, but also like, are you seeing corporate demand? Like some of these Chinese models that are appearing, they'll need to be run on data centers too, no?

Yes, I mean, Chinese demand that we have seen in recent months, we have seen, you know, Alibaba, we have seen Cloud, mainly cloud at present, not so much Chinese model makers. We have seen TikTok. I think that Tencent Weibo, I think this is the Chinese demand that we have recently seen in the market.

Okay, that's all super interesting. Thank you so much.

You're welcome.

The next question comes from the line of Marios. Marios, the line is yours.

Great. Thank you for taking my questions. Hopefully you can hear me okay.

Yep. Perfect.

Fantastic. Great. So I have three questions from my side, so maybe hit them one by one. So the first is on Bill Bauer. I saw one. I think at the Q1 you commented there were some hesitations around you signing a full lease. I think there was some uncertainty around the fulfillment of contractual obligations. So what has changed there for this to result in a full pre-let versus the advanced negotiations?

Okay. So on that one, Marius, thank you for the question. What we commented is that, you know, we have always, you know, this debate, whether how advanced we can sign a contract, what is the visibility we have on the, you know, construction, how it evolves on the procurement of equipment, et cetera, on the permitting of different, you know, lines of stations, et cetera. That's one topic on our side. And the other one is as well, How the client is seen to secure capacity in advance while they try to match reservation of capacity, acquisition of equipment, and final client that will take that computing capacity in the future. So that debate was agreed at the very beginning in first quarter with a book reservation agreement, which meant that we agreed that we have a contract not yet signed, and then we will look for the right moment to sign it. So both parties, we have enough visibility, as I said, on the different topics, you know, moving forward. We have agreed that we have reached that visibility by 34 June this year. If you see in the pictures, we are advancing pretty significantly on the building. All capacity, all, as Ismael said, all the different equipment from our side is already procured. And in terms of connectivity with the utility as well, this is all the different main transformers and lines and equipment has been already ordered. And so the level of risk is more and more limited on our side. And from the client perspective, it's exactly the same. So they have seen more visibility probably signing already the final client. and therefore basically we agreed to transform that booking agreement into a you know real pre-let asset still 18 months ahead of uh ready for service date but uh without the more more visibility as we have uh you know at the beginning of the year this is a trend that you know as Ismael was saying you know in this one's another example we are seeing more and more that you know commercialization is commercialization is moving forward and moving quicker Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Ismael Clemente Orrego, Ismael Clemente Orrego,

Okay, very clear. Thank you. And then just secondly on Lisbon, with now all the phases classified as under negotiation, is this part of the Gigafactory project or are these separate negotiations that you're doing on your own? And if you could provide any color on the types of tenants that are looking at this space, it would be helpful.

Okay. Well, it's... We are trying to make it compatible with the Portuguese Gigafactory project. I mean, we remain committed to providing the Portuguese Gigafactory a home, and we are exploring the possibility of making both situations compatible through a direct dialogue between the potential client and the Portuguese government. But I believe Eventually, it might be the same and one single thing. So, very interesting.

Okay, so similar to what we've seen in the past, if maybe this project doesn't go ahead, you've then got your own agreements in place to then push forward with a lease without this project going ahead. Is that the case?

Yes. I mean, it's exactly as you said. Basically, we have a private deal with a private client, a private counterparty We are trying to make it compatible with, you know, including the public side in the equation, you know, assigning to the public side part of the capacity to be recovered in the future through an increase in power in that same campus that we are, of course, you know, requesting power from the National Grid Authority in Portugal. There are a number of ways in which that can be achieved, and this is what we are trying to get.

Okay, thank you. And then just finally, apologies, going back to slide 22, I know we've discussed the promote fee a few times, but can I just make absolutely certain that the 101 that has been accrued to date is based on the total exit value. So you're not expecting another similar 100 million or so to be accrued based on the estimated value capture to come, for example. What are your expectations around that total today on phase one?

Yeah, so the promote what covers is the value created over this 10 year period, which means it's not only an exit value itself, it's also basically the rents we are considering all over the years. So, as I explained before, right now we are in the, let's say, more suited spot of that calculation because we have all the phase one already completed, 100% lead, and that is basically capture, as you have seen significantly by the appraisals because, you know, right now what we have is an asset up and running and with a huge market that could be after it. So, right now is, let's say, we are achieving the highest level of return and therefore, you know, the sharing of value is higher. Going forward, because this calculation will be made on a 10-year basis, meaning that, you know, we're in year five right now, so we need to move until year 10, what will happen is that we expect to consolidate that value. We also expect that the market will appreciate and convert this as a category more amateur market, which means that We will have basically some uplift there in the exit value in 2031. This is of course our expectation. And in the meantime, we will receive rents over the period, which apart from delivering more margin to our projects, at the same time is of course reducing IRR from this calculation perspective, because we are moving forward from a five-year calculation to a 10-year calculation. So I think the number right now is Always accounted from an auditor perspective on the most conservative way, which is assuming that we have a sale, so we have this effective year 10 in every quarter that we are making public our results. So our expectation is, if you compare, for example, June 2025, December 2025, there was no significant reprise because there were no commercial decisions at that moment in time, and they, you know, promote decline slightly because of the more timing on that calculation. Same could happen from now till 2031, you know, because of the elapsing of timing, okay? So that is the way how we are calculating it and what we will expect going forward.

Okay, thank you very much. You're welcome.

Thank you. The next question comes from the line of Florent Laroche from Odo. Just as a reminder, in order to be added to the queue, you need to press star five. Florent, the floor is yours.

Yes, good afternoon. Thank you for this presentation. So we have two questions, and I can ask one by one. So the first one is linked to the data centers and the capital increase. We can see that you are quite optimistic to continue to sign further leases in data centers. And maybe at the end, in which way the fact that you are funded at this stage only partially the development of data centers with capital increase can be maybe a blocking point to sign further leases for Phase III, yes. OK.

We are perfectly conscious, Logan, that we are partially funded for the development of Phase 3. And we can assure you that we are trying to explore any potential avenues to continue completing our funding. We will be active in the market. We will make sure that we have our Phase 3 completely funded, or at least two-thirds funded for the moment. Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino

UKPI are very good again this quarter. So how is sustainable for you the operational performance of your shopping centers at this level?

I am the first to be surprised sometimes about the robustness of the shopping center performance. We have been in the business for many, many years and we thought that the numbers we had achieved in 2019 were more or less irrepeatable, that we exceeded 2003 probably already in 2023, and then we beat 23 and 24, and then we beat 24 and 25, and this year again we are beating 25. So is this sustainable? Thank you very much. Thank you very much. Pérez Pérez Pérez Pérez Pérez The average salaries are going up as a consequence of inflation, although so are going taxes, etc. This is just a factor. The average indebtedness of Spanish households is very low, about 41% of GDP. In reality, we are not in a position like in the US where you have Your card debt, card debts piling up, student debt, credit card, you know, many different types of debt in Spain is mainly mortgage. And mortgage is going down, the total stock of mortgages is going down. Time lapses because the average Spanish mortgage is calculated on a French payment system. So normally the monthly payment is equal and at the beginning it pays mainly interest that, you know, starting, I mean, reaching approximately half of the life of the mortgage you start paying significant amount of capital. As a consequence, you know, the mortgage stock in Spanish banks has been going down for a number of years. Now it's a little bit more stable. And then there is always the factor of informal economy. I mean household services have now completely moved into informal. You know, even residential rents, residential leases have moved into informal. Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal Cash in the system that of course is appearing in shopping centers. How sustainable is that? I don't really know. The good thing in our case is that the increase in per square meter sales of our tenants has not resulted in us elevating or increasing our rents On a commensurated basis, so this is why the OCR is going down, which means basically we have an ample room for maneuver where the shopping center industry hit the wall at some point and it wouldn't find us with OCRs at 16, 18%, in which case we would clearly have a problem.

Okay, thank you. The next question comes from the line of Ana Escalante from Morgan Stanley.

Ana, the floor is yours.

Hello. So my first question is on the type of tenants. Ismael, I think you've mentioned earlier during the call that you are seeing demand arising from other type of tenants, not just neoclouds and hyperscalers. But based on your pre-lets, I know that there is some information that you cannot disclose, of course, but I wonder how are you looking at that split at the moment in terms of the pre-lets and the bookings that you are signing right now? To what extent you are prioritizing whoever is early or ready to move in, or whether you have already started to try to diversify a little bit away from some of the new clouds into other companies to minimize counterparty risk?

Thank you, Anna. So, as Ismael said, we are seeing, for the type of assets we are developing, three different types of potential clients. First ones are the traditional hyperscalers, clearly moving from a more cloud type of request to AI. Still, they are in that process, sometimes securing capacity a little bit ahead of what they will need in the future. But considering the type of client they are, they tend to standardize all the different equipment, all the different assets they have or they will let. And therefore, their time to market is not as quick as probably others. But still, they are in the market and they continue representing still a small amount of our client base. I'm counting, as you said, on pre-lets. and bookings as well, but they're becoming more actively and we are seeing this because the amounts of capacity requested is a little bit increasing and the deadline and the ramp up that they were considering is clearly moving forward. The second type of clients that we mentioned several times are the new clouds, companies were created in the last years, seeing, you know, a lack of product of computing capacity between what happens is normally contracted and the users, final users of that computing capacity. So what they have taken basically is the opportunity of jumping into the sector. More difficulties, of course, because of the capital, you know, barrier. But little by little, we are seeing, you know, different categories between New clouds are becoming little by little hyperscalers in terms of size with very good access to capital and debt and more importantly normally taking capacity as quick as they secure final contracts. So hyperscalers can in a way take more risk of securing capacity ahead of what they would expect to have in the future. But these new clouds normally, because of their financing requirements, equity requirements, they normally take capacity completely, you know, simultaneously to the final client acquiring that competing capacity. So this is something good to know that, you know, the risk is more limited. I said there are two categories. There are, you know, some of the clients listed companies, Colweave or Nebius are examples of those listed on the American Stock Exchange. and there are others that they are trying to jump into that list and we are pretty sure that in the near term they will be there as well increasing the amount of potential clients in this classification. And then the third one, as Ismael was approaching, is those that are technically clients of these new clouds slash hyperscalers but seeing or in light of the different of the scarcity of capacity that they're foreseeing in the future what they're trying to do is to move a little bit outward in the chain trying to secure that capacity and so they can guarantee their computing services in the future and then whether they operate themselves or they were subsequently you know contract somebody to operate that stack for them is a different question but they want they want to secure All of this reminds a little bit what we have seen in logistics years ago where some of the company's operators they were seeing no capacity available so they first secured that capacity and then later on whether they operate themselves or they contract other service providers but at the end they are securing those type of locations and we have several examples in our portfolio where we have you know final clients taking capacity despite the fact that when you go to the warehouse you see the name of an operator instead of the final client. How this is moving what initially in a market represented you know almost everything is hyperscalers and some you know raising a force from from new clouds in our case because we are more brand new uh new clouds have represented a significant amount of our of our capacity far above the one requested by hyperscalers and what we're seeing right now is precisely that you know these AI models specialists are trying to catch up with this new cloud so what we are foreseeing is that Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Ismael Clemente Orrego, Ismael Clemente Orrego, These massive hyperscalers will probably try to jump and, you know, in a way diversify a little bit more our portfolio. Also, another trend we're seeing, and I finalize with that, is that originally we have, you know, several clients within the same building. As you have seen, you know, the blocks of capacity that has been contracted by clients is increasing very, very significantly, and we have moved from, you know, modules to buildings and from buildings to campuses. and that is moving us in order to diversify that clientele to add more buildings into our portfolio. So what we are doing with the different phases is to bring more buildings and with that diversify the type of clientele and the type of tenants that we will have.

Another interesting thing is that the NEO clouds at the beginning they used to compute mainly for other hyperscalers For large language model companies. And now more and more we are seeing direct computing for final corporate clients. I mean, big industrial, European industrial companies computing, inferencing, basically inferencing the models they have already trained. And, you know, they are using the services of the neoclouds for that kind of inference. So it's Very, very interesting because that gives also a new layer of reality to the market, which is very much welcome.

Thank you. Very clear. And then my second question is again on the promote. I know that cash flows matter a lot, but as Ismael said once, Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino

The technology brought and the capacity brought in a way is not improving what we could have found in the sector. And there is some profitability within the 10 years that deserves to share that profit with our partner. So the exit value, of course, in a 10 year discount cash flow has an impact. And having an exit value, whether it's much higher or higher Or on average, of course, has an impact, but also does the rent over the period. And, you know, you can, you know, more or less, you know, determine that if we are getting to net, you know, G loan cost roughly on the range of, you know, 11% out of this 15%, if you apply more or less, you know, a gross to net, then it means that every year, you know, what you're getting in reality, Knowing that the uplift in valuation is at the very end in year 10 is more or less an 11% that will be updated. So that is more or less what you should consider. There will be the range of appropriation, which will be more in line to the rents than to the exit value. Of course, if we are seeing a market that all of a sudden matures very significantly, and then after 10 years of investment and management, Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales If you know, for whatever reason, the market is not appreciating the assets and the conversation we are doing all over the period and will be on the upper end in the case that the market asset matures, it stabilizes and then all of a sudden these capital markets that are out there that will price the assets higher than they are right now. So that's more or less the range. I don't know if with that I have properly answered your question.

Thank you. Thank you. The next question comes from the line of Paul May from Barclays. Paul, the line is yours.

Hi, everyone. Thanks for taking my questions. Apologies if they're simple, given I'm new to this. I just wondered, firstly, what is the lowest level of ICR on a quarterly basis that you're willing to go to as you accelerate the DC rollout?

Lowest level of ICR?

Yeah, on a quarterly basis, just as you roll out the DC development, just wonder what you're willing to go to in terms of how low.

Let us check. Right now, we are at 3.7 times, if I'm not mistaken, which basically drives as well the 25% roughly of loan-to-value that we have right now. As we commented, and we have been very openly on that, we are not willing to exceed, you know, above the 32, maximum 35% loan-to-value. And on that sense, you know, even if rents is or even interests are raising and cost of debt is going pretty, pretty high, With this low leverage, we have a covenant of 2.5 times ICR, and I think we haven't been ever below three times. So that's a little bit the spirit of the company. It's more linked to the low loan-to-value target we have than to the interest rates. We are less affected by interest volatility as compared to probably other companies we highly leverage.

We also take a look at NADEP to EBITDA. So both things, LTV. The idea is to be below 10. Exactly. Way below that.

LTV below 35. I mean, our model, our initial model was giving us, you know, temporary Thank you very much. So the model is now giving 34 max, which is good. And in terms of net debt to EBITDA, in the original versions of the model, we were going as high as 11.7, close to 12 times. But now it's also coming down, and it's going to be more between 10 and 11-ish during a certain peak. But then it will go down to as low as the model is giving us, like 7%. Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal Mónica Eloisa Martín de Vidales Godino

No, no, no, it's purely on the equity side, but it's just one of those things that as you obviously increase capex ahead of revenue recognition, then there could be an impact that comes through. So it'd be great if you get back to me on where that ICR goes on those molds that you mentioned, noting the LTV and the net debt would be great.

We'll check with the model and go back to you, Bert. One thing is important. I mean, in current times, debt is not so much accretive. I mean, with the current costs of issuing debt, particularly if you follow a real benchmark, which is the 10-year unsecured bond of your company, if you take that as a benchmark, I mean, there are two things that I think Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Mónica Eloisa Martín de Vidales Godino Mónica Eloisa Martín de Vidales Godino Mónica Eloisa Martín de Vidales Godino

Just a few questions on the Neoclouds, if you wouldn't mind. Apologies, what proportion of the DC revenue at the moment is exposed to Neoclouds, including the prelets? Is it 100% or do you have a spread of tenants? And then how do you feel about the quality or the credit quality of the Neoclouds? Obviously, debt's been increasing in those businesses and their credit spreads have been widening. I just wonder what your thoughts are and probably plays into the comments earlier on the spread of tenants. And then just wondering if you'd give any details on the contract terms. I think they're 10-year duration. I just wonder what extension and termination terms there are within those. It'd be great. Thank you.

Okay.

Go.

So considering basically what we have on our books right now, 45% are represented by new clouds. 5% are represented by hyperscalers and growing, and roughly another 45-50% are represented by other.

That considering 340 commercialization, we are taking the poetical license. Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino

I said this as soon as we are opening new campuses of big size in certain areas, this can change because I mean, if one of the other full campus is taken by hyperscalers, then all the mix changes dramatically. So I mean, as soon as we are having a larger portfolio, then you can extract a little bit more conclusions from our tenant base. In terms of conditions, we normally tend to sign On a 10-year basis, mandatory, clients normally reserve significant amount of expansions, extensions, or renewal options for them, mandatory for us. And that is more or less across all different type of clients. Technically or initially, hyperscales tend to be a little bit more longer. We have some of them, but more, you know, Based on previous times, and then little by little, more or less, they are more convenient to be more on the 10-year time of WALT. This is what we are seeing right now, whether one category or the other. As I said, it depends a little bit as well whether they want to make sure that the capacity is blocked for a certain period of time, if they have a special infrastructure there, or they're bringing some very well-advanced, or they're foreseen to come to bring very well-advanced NVIDIA type of equipment. Sometimes they go a bit further, but 10, I would say, is a well-established role in the market right now.

Okay, and then just on the credit quality, just recently, obviously, slight deterioration there in the spread widening. If you've got any issues on the neocloud side, or would you still be comfortable signing some new contracts with them?

I think they are now set in different categories, these new cloud operators, and we are in a way ranking them, and the market is ranking them, linked to the access they have to equity and debt markets. So in the ones that they have listed companies, an equity market is available for them, normally now trading with higher levels as compared to IPO times. Or if they have very good access to bond markets in different formats, that is basically, in a way, rating for us that capacity. If there are debt involved, in 100% of the cases, there is a final client signed. This is what the requirements that both bondholders and financiers are requesting from this type of client. So you know that that capacity is sold and at the time that they're signing with you and the way we can in a way check that is on the power consumption that these clients are having as soon as they take possession of the of the different rooms and it's what we are experiencing um right now why they are not rated sometimes they're rated on the different issues they're doing but not rated on a corporate level because you know the rating agents of course are not so happy Pptys Socimi Ord, Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal So they are more in safe harbor on that basis, but they are still in a growth mood and reinvesting significant amount of free cash flow into new capex. And this is what prevents them to get a rating right now. But if you see the margins, which is important thing from the top line to the ABDA, what are the margins that they are doing? All of them are extremely healthy. And this is what normally we look at Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino

Yeah, so,

The figure that you are now calculating, as said before, instead of calculating over a 10-year period of time, you are calculating only over a 5-year period of time, and just only applying this to the valuation itself, so that's the reason why you get these percentages. But as soon as you are expanding this over a 10-year period of time, where the rent will be more significant, and with a significant amount of it, Then that percentage will decline because I said that promote is calculated on an IRR basis. And the longest you calculate, the smaller the IRR is, of course, over a higher margin. So they will get a lower percentage over a higher amount. And that's one thing compensates the others. Reason why we believe for phase one, we are more or less in the level that should be at the very end. Regarding other phases, the way that we are structuring it is pretty similar to that. We are always having a look at what is the percentage representing the total profit and the value that is being created and to be commensurate with the size and the value added brought into the table. So I would say that as soon as you're seeing more evolving, you will basically Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Greg, I mean, we have, you know, in the regional number, because we have no, you know, generate any promote yet, we were reported on a gross basis, and now little by little we are, you know, you will need to make a calculation separately. Perfect. Thank you very much.

Thank you. The next question comes from the line from Thomas from Deutsche Bank. Thomas, the line is yours.

All right. Good afternoon. Two or three questions. The first is on the new Arasur lease. I'm wondering if you could comment on the lease terms, just roughly. I mean, it would be very helpful. Do we see any deviation or do you see any deviations to your initial expectations?

No, I mean, as I said, the numbers I think we provide for this second phase Mónica Eloisa Martín de Vidales Godino There's no sensitivity to pricing on the counterparty and you are competing not only within potential capacity in Spain, we're competing from a European and even sometimes worldwide type of competition. So we need to know that we have sometimes competitive advantages, sometimes we need to be more conservative. Talking about the sizes that we're talking about is food building, one single list. Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino The second one is in the Zaragoza Wind. I mean, you plan a single large-scale building ready for service in the second half of 2019.

Maybe you could provide some color on current lease negotiations. Seems like given the size, this is something for a hyperscaler. Is this correct, this assumption?

Well, the assumption is correct. We are adapting to a certain set of technical requirements which are good for a number of hyperscalers. So we are, let's say, hyperscaler ready. And we have decided to go for one single building because we believe there is a demand for that specific type of facility. I think more and more people is conscious about internal communication within the DC. I mean, not simply having the silicone, but having the silicone connected through Infiniband, et cetera, and being able to synchronize the computing of all the different GPUs in one single, let's say, imaginary machine, which that gives you a J curve in terms of performance. So under those requirements, we have decided to go forward with that building. But we know we are still pending license. We hope we can be in a position to start building by around next summer in 2027, but only God knows because when you deal with public administration, you never know, but we will try to be good around summer next year. And then about two years construction, which gives us second half, end of first half, second half 29. which is a good delivery date and shortens significantly the two-building structure that we used to have on the basis of increased amount of demand we are seeing in the market. I mean, what we are trying to do is ready more demand quicker because we see, I mean, without sacrificing quality, of course, because we are operators, but we are trying to ready as much demand as we can The last question is actually coming back on the data center property values again.

Just wondering, to keep it simple, wondering if you could provide a rough idea about what you expect regarding revaluations by the end of the year. I mean, should we expect a similar magnitude roughly as in the first half?

So the evaluations are coming normally through, or the revaluations are coming through two main impacts. The first one is when we are adding more capacity to be appraised, and as we have commented in previous calls, as soon as we get a construction license, then that asset moves into our current WIP, and then the appraisal basically values that property. We have other lands with power, because we are waiting to receive You know, construction license, and we have not started yet on that construction, that capacity is, you know, kept at cost. So there is no appraised. That is what, for example, has happened now in June, where the three assets in Lisbon, building three, four and five, because we are building as we speak, those have entered into the scope of values. And that also provoked, you know, that as compared to the regional valuation that this land had at the time, which was very low, now basically is properly appraised by the appraisal. This is one on the impacts. The second one is when once we are within construction or we are already with a building starting construction and we reduce the risk of that development by pre-letting the asset. So we have several examples as well during this first half Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Ismael Clemente Orrego, Ismael Clemente on whether we are, you know, when we are converting, you know, these bookings, advanced negotiations into leasing and this will move forward to have a higher or lower amount of revaluation.

Thank you.

Thank you, Thomas. The next question comes from the line of Veronique from Campen. Veronique, the line is yours.

Hi, good afternoon all. Thanks for taking questions. I'll keep it very short. Two quick follow-ups. First on Lisbon, where you mentioned that you're an advanced negotiation. Should I interpret it that if this closes, it's a proper pre-let or is this more sort of like a booked way to look at it?

No, it is a pre-let. I mean, at present, it's already advanced negotiations because we have a head of terms and this is accompanied by an exchange of... technical sheets and basic legal documentation. So what we need to do now is move into full-format lease agreement. And if we can move into full-format lease agreement unsigned, it will become a pre-let, technically a pre-let.

Okay, that's good. Thank you. And sorry, one last follow-up on the promote fee. How much have you provisioned so far and what's the strategy regarding that going forward?

Well, we are provisioning every year what the auditor tells us to provision, which is basically a function of modeling the cash flows of the different projects affected by the promote structure on a 10-year basis, but then calculating an equivalent exit on the year in which we are. So this is the amount that we provision every year, and then that amount goes Hi, higher or lower, depending on the year. As Fran commented, as time lapses, normally the effect, it, you know, smoothens a little bit the IR and therefore promotes, goes slightly down, although multiple goes up and there is more money on the table. Okay, so it's a function of both things. I mean, for our partner, they get probably less appropriation But less appropriation on more money, on a bigger pie. It's the way it works. I mean, we are happy with it. I mean, we are loyal people. We have been working with them for a long period. We like to work with them. Of course, we need to be prepared for the future, and we will be. But for the moment, we like this way of working because it helps us to get an external research and development department and not simply use off-the-shelf products available in the market. Although it is true that sooner or later, the technology will end up commoditizing a little bit and the value brought to the table by such research and development department will be slightly lower.

Okay, let's hear it, thank you.

The next question comes from the line, Stephanie, from Jeffrey. Stephanie, the line is yours. Hello, can you hear me?

Yep.

Yes.

Hi, hello everyone. So, most of my questions have been answered, so maybe the last one, a follow-up on the funding. I was wondering, of course, you said your shares were down today, and I suspect that investors are Ildefonso Polo Del Mármol, Mónica Eloisa Martín de Vidales Godino Getting it closer to the cash flow generation or how do you approach that?

Well, I think we have commented on a number of occasions that probably the funding method will be a combination of plain vanilla capital increases and convertible bonds. The first one was a capital increase. Most likely, the second batch will come under the form of a convertible bond because a convertible bond delays the dilution and the dilution happens under much better share price terms. So then, of course, All right, thank you.

Thank you. The next question comes from the line of Michael Finn from Green Street. Michael, the line is yours.

Thank you very much. I'll be pretty quick. I have two questions, please. The first one is, as you progress through the phase three planning, I'm just curious if you're seeing a major shift in the M&E needs over time. Obviously, that is something that has changed quite a lot, and I suspect it will probably change more. And my second question is on the plan for tour The name of which is escaping me now, but the tower in... You mean in Barcelona? Barcelona, yeah, yeah, after Meta leaving, yes.

Okay, okay, okay.

Flores.

Flores, yeah. Well, look, Torre Glorias, I mean, I wouldn't be that worried because Torre Glorias is a, I would say, iconic asset in its market. So clearly, it is a price maker rather than a price taker. Of course, the departure of Meta is a big hit, particularly because at present, the 22 ad area in which that tower is located is very weak. There is being a significant oversupply coming to market in recent years, and it's been really bad luck to have Meta banned from keeping fake news control centers in place. Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino You know, Comanche area, but not with Torre Glorias because Torre Glorias is a very, very, very special asset. So sooner or later, we will start recovering that occupancy. Hopefully within the year, we will already give you some pieces of good news. And then over 2027, we will continue relating and eventually reaching close to full occupancy on that asset. And then on phase three, you were commenting on On what, on MEP, on the types of equipment for data centers?

Yes, exactly, yeah. And how that has changed over time, because obviously the standard of the asset has obviously changed and the tenant base has changed a bit as well. So I'm just curious, how has that changed over time and what are you seeing going forward?

Actually, this is a very good question and one that motivates some internal discussions. I mean, if you pay attention to what particularly American clients tell you, you will be building lower quality assets. And that includes lower quality MEP fixtures. However, we are long-term operators and we don't want to do that. So first, we are building assets with white rooms which are larger than actually needed with the current densities of rack. That means basically that we are concentrating, I mean, very visibly, we are concentrating racks in one corner of the room and leaving the rest of the room empty. So you could play paddle in that side of the room. But this is good because concrete and steel, although growing in cost, you know, are just a little portion of the total cost of a data center. And we want to have data centers which are sufficiently flexible in case we need to go from higher density to lower density or, more importantly, in case higher density compute in the future ends up Consuming less electricity and we can not repower, redensify or refill part of our white rooms with extra equipment in case one day someone discovers something which makes the existing state-of-the-art racks a little bit less hard in terms of consumption. The second thing which, you know, sometimes particularly large language model trainers tell you to do is not to fit gen sets on an N plus one basis mimicking the total IT capacity of the data center. And they tell you to only fit like 20% of gen sets needed. Equally, we don't want to do that. Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino We remain faithful to our original designs. We are fitting good quality genset, although this is becoming now a real bottleneck in terms of purchasing. We are fitting, you know, dry transformers which are, you know, really high quality rather than oil ones in terms of batteries. We are faithful to the zinc nickel batteries because, you know, they have More happenings but less grave. Ion, lithium, you have less happenings or less incidents, but if you have one, you better pray. So we do, I mean, we try to do things as best as we can in order to make sure that our facilities are adaptable to whatever comes in the future. We are ahead of the future in the way we build. But of course, we are always awake Mónica Eloisa Martín de Vidales Godino Mónica Eloisa Martín de Vidales Godino and many more Europeans and or Spanish Portuguese suppliers because having your suppliers close to you is very important in terms of after sales support in case you encounter any future problems in the way your machinery works. And then there are also some radical changes coming in the future. For example, our partners of Endeavor are developing A very interesting machinery called TurboZell, which is already available. I mean, Align Data Centers has a similar thing working in the U.S., already in operation. And it's very interesting, but it's very much U.S.-centric because it's good, particularly with gas. But gas in Europe is an expensive thing. So we have to be careful with that. But it's very interesting, particularly if you need to fuel data centers which are located in relatively remote areas where it takes time to bring aerial lines with electricity and things like that. You might leave on turbos cells for a while Very interesting, intellectually very encouraging debate with the engineers for the future designs and the future data centers that we are going to build. But for the moment we remain relatively orthodox in the way we build. Sounds good.

Thank you, Michael. The last question comes from the line of Mark Motzi from Bank of America. Mark, the line is yours.

Yeah, thank you. Good afternoon, everyone. So the first question is, can you have just a follow-up on the breakdown of your existing type of tenant in data center, not on the 340 megawatt you mentioned, but just on the 180 megawatt you have pre-let so far? What is the proportion of NeoCloud here? Any perscalers?

Okay. 130 megawatt. Neocloud 15% Hyperscaler Thank you very much. More updated numbers because batteries depend also on the technology, zinc, nickel versus lithium ion.

Frank can give you more accurate numbers. All items we have, you have first, as you know, 25%, 30% is the construction itself. So that is, you know, the process over time, like a normal building over 30 years. Then you have all the big equipments, Transformers, skids, cable generators, etc. that normally last for between 15 and 20 years. So this is basically long term. And then you have other components which are more exigent. And that one I will include mainly the batteries. Why is that? Because the batteries, as you know, what they do in a data center is to offset A shortage of power antigenerators are up and running, but at the same time they are also very active right now with different peaks of the computing that AI is doing. So this is the system that the infrastructure uses to offset or harmonize part of these peaks. So therefore the usage of a battery right now in the data center of AI Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino Ildefonso Polo Del Mármol, Ismael Clemente Orrego, Jon Ander Navarro Mendizabal, Mónica Eloisa Martín de Vidales Godino

Just as a coupon, just to assume what sort of refinancing costs you're going to face. Are you going to go for a zero-coupon convertible bond like we've seen with Vonovia? Hello?

Hello.

Hello. Mark. Yeah, OK. Sorry, I mean, the line went off probably because, you know, there was an alarm of confidential information. Look, we are not in a position yet to decide how we will structure. But you know the principles, I think, because we have openly commented with you on some occasions. We prefer a shorter term rather than a longer term because we want to do it more equity-like. We are not simply trying to lower our passing cost of debt by issuing very cheap financing. What we want to do is issue something that with the premium will resemble very much where we believe our NAV will land in three years from now and in a way make sure it converts. That will be the idea and the principle under which we are considering the convertible exercise. Excellent.

Thank you very much. I'm sorry for... I just wanted to help everyone to be capable to improve their forecast on the basis of a new CAPEX plan and so on. Thank you. Okay.

Thank you, Marc. Thank you very much. There are no further questions. We appreciate it's been a long call. But if you have any other questions, you know where we are. Hopefully you enjoyed a good summer break, for sure we will. Thank you very much and goodbye for all.