Aedifica NV/SA (AED) Earnings Call Transcript

Ladies and gentlemen, welcome to the Aedifica Half year 2026 Results Conference Call. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead.

Thank you. Good morning, and welcome to this very first half year webcast for the combined and new Aedifica Group. As usual, we will walk you through a couple of highlights, financials that will be presented by the CFO. I will dive into the portfolio and hopefully tackle some of the key messages, and then we will switch to the outlook and end with a Q&A. Now this being said before Ingrid will start presenting the results for the first half year, perhaps looking at some of the highlights of the first 6 months of the year. And no surprise, of course, a lot of attention went to completing the offer on the Cofinimmo shares and having the merger done by the 1st of July. These are things that you know, may be zooming in into the integration and the synergies, which probably will be the main attention points. At this point in time, I think there, the message is very clear. We are well on track in terms of integration. So ExCom and the Board of Directors are in place. Countries have been appointed now for all of the 9 countries. Our target operating model has been updated and is being rolled out throughout the group. We will be, in September, start working on the organizational chart, meaning that the n minus 1 layer will be appointed and teams will be decided in the next coming weeks and months. We have selected all IT systems that we are using and will be using within this new combined group. So we are absolutely on track. And the positive thing here also is that it starts to translate into synergies. Based on what we see and know today, we can confirm that we will reach at least EUR 16 million of run rate synergies in 2027, but already also expecting that in the course of this year, roughly EURO 5 million or even a bit above EUR 5 million of run rate synergies will already start kicking in, in 2026. Other than that, we've not only been working on the Aedifica Cofinimmo integration. I think that the teams stayed in the market and we're also active in terms of new investments. Taking into account the summer months during which a couple of these deals have landed. We're now at almost EUR 200 million of new investments, combination of standing assets and projects that we are adding to the development pipeline, and we've seen 13 projects out of the group. The development pipeline being delivered in the first 6 months. So this gives you an idea of what we have been doing. Switching now to the financials.

Hello. Good morning. So when we have a look on the income statement, you can see that for the first 6 months, Aedifica report an EPRA earnings per share of EUR 2.71 per share, which is an increase of 5% compared to the first 6 months of 2025. So this is demonstrating that the combination of Aedifica and Cofinimmo was EPS accretive on day 1. When we look a little bit more into detail in the income statement, you can see that rental income was up at 62%, resulting in an EBIT margin of 86.6%. This EBIT margin is slightly influenced by the fact that some pretax items on the Cofinimmo side dated from the pre-change of control and were not included in the income statement. If we calculate a more normalized EBIT margin, we would come to an EBIT margin of 85.5%. Average cost of debt is still very attractive at 1.9%. Later onwards, when I talk a little bit about the financial debt, I will also give some outlook how we see this evolving in the coming 2 to 3 years. Then going from the EPRA earnings towards the net results. So the main items that are included in that calculation are the changes in fair value of the investment properties. Globally, we can say that the valuation of the portfolio is slightly positive, mainly driven by the impact of the U.K., the Netherlands and Spain based on strong operator performance, but also the indexation. Then we have the contribution of the bargain purchase price gain -- the bargain purchase gain, the so-called badwill, which was already included in the income statement at the end of Q1 and which is actually the difference between the equity value of Cofinimmo, including the PPA adjustments, minus the market price of the new issued shares. But in itself, no difference in comparison with the Q1 consolidation. Then we move over to the integration costs, which are excluded from the EPRA earnings as they are nonrecurring, and they represent after the first 6 months, approximately EUR 5 million. Now looking a little bit more into the rental income. So on a like-for-like basis, there is an increase for the portfolio as a whole of 1.7%. This can be split in 1.9% coming out of the indexation, plus 0.2% coming out of rent reversion and minus 0.4% of the FX impact. When we purely look at the health care portfolio, then the like-for-like stands also at plus 1.9%. But we do see differences between the countries, and we will go a little bit through the different countries in which Aedifica is invested. So first of all, when we have a look on Belgium, you can see that the like-for-like is slightly below what you would expect based on the indexation and it is slightly influenced by some rent renegotiations that took place in the Belgium portfolio. Then we move over to Germany. So in Germany, you will see that inflation always kick in with a delay because indexation of the rent contracts only happens when a certain threshold is reached and it is also kept. So depending on the contract between 60% and 80%. We do expect that going forward, like-for-like in Germany will continue to increase. But like I said, it will never be the full impact of the inflation and come with some delay. Then we move over to the Netherlands. So Netherlands a very high like-for-like, 5.1%. This is influenced also already mentioned at the end of Q1, there were 2 assets in the Netherlands where we changed a little bit the business plan, the business model. So we went from a B2B model towards a B2C model. This means that we are leasing directly to the residents, and that also means that the rental income goes up. There's also some additional property management costs that are included as well. But what you see here in the top line is the increase of the top line. When we would exclude those 2 assets, then the like-for-like of the Netherlands would be slightly below 3%, so more in line with what you would expect based on the inflation. Then we have the U.K. So U.K., a like-for-like of 5%. So this is a market where traditionally we will see a floor at 2% and a cap at 4%. Still, we can show a like-for-like above the level of the cap, and that is based on the profit trends and the hardwiring of some of the profit trends that we can realize in the U.K. following the strong operator performance. Then we move over to Finland. Finland, a low like-for-like 0.4% related to the fact that almost all lease agreements in Finland are indexed at the beginning of the year and January had a very low inflation in Finland. Then we have Ireland and Spain, where we follow the inflation of the country. France is also showing a somewhat lower figure related as well as Finland to the fact that in France at the beginning of the year, there was slightly negative indexation. So gradually, we do expect that in the course of the year, France will start to improve somewhat. Then you will see that we report a slightly negative like-for-like on Italy. As a reminder, there are only 8 assets in Italy, and there was a lease extension combined with some limited rent reduction that were applied retroactively since the beginning of the year on one asset in Italy. Then we have the offices, negative like-for-like of 1.3% related to some departures and renegotiations. And then finally, the distribution network, so the pubs that follow the inflation in the [indiscernible]. Moving over towards our debt-to-asset ratio. So at the end of June, Aedifica reports a debt-to-asset ratio of 42.7%. This is influenced by the fact that in Q2, there was a payment of the dividend. So the debt-to-asset ratio is a little bit at the higher end where we expect it to be. Having said that, we have a financial policy of keeping the debt-to-asset ratio around the 43%, where we consider 45% as the absolute maximum. Then we will talk a little bit about the financial debt. So in total, Aedifica has an outstanding financial debt of EUR 5.3 billion. During the first 6 months, we have been very active on the refinancing and total refinancing has been completed for more than EUR 900 million. This is including a new syndicated credit facility, sustainability-linked of more than EUR 600 million. We have also been negotiating -- renegotiating some bilateral credit facilities, and we did work on the short-term treasury notes. So anticipating the merger with Cofinimmo on the 1st of July, the CP program of Aedifica has increased in size from EUR 600 million to EUR 1.5 billion, taking into account that the program of Cofinimmo will stop after the legal merger that happened on the 1st of July. It is our internal policy to have the CP that is outstanding below 20% of the total outstanding debt and the CP paper is fully covered by committed credit facilities. When we look at the graph, you can see that the combined entity can benefit from diversified sources of funding. So bank financing is representing 44% of our sources of funding of debt funding and debt capital markets, so including the short-term treasury notes stands at 56%. When we look at our financial debt KPIs, so the main points to highlight, first of all, the credit rating. So immediately after the change of control, the credit rating has been increased towards a BBB+. And during the annual review that took place in July, S&P has reconfirmed this credit rating as a BBB+ with a stable outlook. Now when we look at the interest cover ratio, a very strong interest cover ratio, 7.6x. Net debt-to-EBITDA slightly went up following the combination with Cofinimmo, so currently at 8.3x. It is important that I mention here that this net debt to EBITDA is not adjusted for the fact that in the debt, there is already debt included for projects that are still under development, under construction, but for which CapEx has been spent and funded with debt, while the EBITDA is not adjusted for the fact that in the future, this will lead to additional rental income. 61% of all of our financial debt is linked to sustainability KPIs or linked to the sustainability financing framework. The debt is on an unsecured basis and the average cost of debt, as mentioned, stands at 1.9%. When we look at the debt maturity profile, you can see on this slide that we have currently a debt maturity profile of 3.3 years. There's not a lot of refinancing that still needs to be handled in 2026. There is plenty of headroom available on the committed credit facilities that can cover the liquidity needs in the business plan, at least up to January 2028. Having said that, we do believe that it is important that we work on the weighted average debt maturity with the intention to extend it further. So we are considering issuing a bond in the second year half. Average cost of debt currently of 1.9% without taking into account issuing a bond, average cost of debt would stay around 2% in '26 and '27 and then gradually start to increase towards 3% by the end of 2028, 2029. Now if we start to work on the average debt maturity, that process will go a little bit faster. So that means that the average cost of debt probably already in 2027 will be somewhat above the 2% and that the increase that we are anticipating towards the 3% by the end of 2028 might kick in a little bit faster. On the hedging, so there, we can say, currently, we are well protected with a hedge ratio of 90% and a weighted average hedge maturity of 3.4 years. We have a policy that we should be covered for at least 60% for the coming 2 to 3 years. You can see that we are above the 60% until the end of 2028. So also considering to work a little bit on additional hedging starting from 2029 onwards.

Thank you, Ingrid. Now walking you quickly through a couple of features of the portfolio, but also allowing me to zoom into some of the more key attention points. But maybe starting, first of all, with probably things that you know already quite well. The segment breakdown of the portfolio. As such, there is not much new information on this slide. Maybe pointing out that 75% of the focus of the company today is on elderly care, senior housing and combinations, which also in the future will remain the core of the portfolio and the percentage of 75% seems to be a quite healthy percentage. Also, as you know, pointing out that 11% is about noncore activities that will be divested, and that will open up a bit more room for diversification within the health care space, and then we're targeting amongst others, fewer centers that you also see popping up already today in the portfolio. When looking at the geographical spread of the portfolio, you see both the spread based on the total portfolio, including noncore assets on the slide, which leads to a quite high percentage for the Belgian market, 33%. But when looking only at health care, you will see that the Belgian market represents 26%. Germany, 20%, but all other countries well below 20%, which to us means that this opens really a lot of opportunities to grow in some of the countries that we think are quite promising today. And you heard me saying on quoting in the past that countries like Ireland, U.K., Spain, Southern Europe are looking quite promising to us, and we do not have a lot of exposure in most of these countries today. Then switching to what I consider to be one of the key messages of today's webcast is basically confirming that the positive trend that we've seen in Europe in terms of improving operator performance is clearly continuing and is clearly confirmed also this time. Looking at our exposure, well, no surprises there. If you look at the top 10, you will find the somewhat bigger European, very often French origin players that are also in our portfolio. You will find a lot of local heroes in the portfolio, and you will see some not-for-profit even public operators popping up like, for instance, the Finnish municipalities. All in all, I think this is a very well-diversified portfolio, not showing any overexposure on one of the specific groups. But then switching, I think, to the underlying numbers, which are even more important. First of all, occupancy. I think I should stop saying that occupancy recovered in Europe post-COVID because we're now back at levels that we've seen pre-COVID. If you look at the average for the care homes in the portfolio for which we have sufficient information, we're now at 91% occupancy. So I think that we totally normalized in that respect. We've also seen that over the period in most of the countries, occupancy kept improving and is now at a very healthy levels in all of the countries, once again, for which we have sufficient information. And even when we look at the public available numbers from the bigger players like Clariane, emeis and Attendo, we do see the similar healthy occupancy levels popping up. So I think that in that respect, the market is totally back to a normal situation and that the pressure from the aging population that will accelerate, by the way, in second half of '20s will probably keep putting pressure on -- upward pressure on these numbers. But that translates in very strong rent covers throughout the portfolio. What you see on the slide are the countries for which we have sufficient information. And I can confirm that it is and remains the ambition of the company to keep improving the quality of that information, also meaning working towards the point in time that we can offer that type of information for all of the countries that we're in. But based on what we know today, I think this shows a very good well, average of what you see happening in Europe with the very strong rent covers that we see in the U.K. and Ireland, also ramping up in countries like Ireland and for instance, Spain, which is not on the slide, going very, very quickly once new premises are being delivered. Also, the Netherlands are now showing a quite strong rent cover, even though you would have -- probably have noticed that the country has a somewhat lower occupancy rate. But nevertheless, that allows the operator to come with a very strong rent cover. And then the countries that probably suffered a bit more from the COVID experience and everything that happened in 2022, Belgium and Germany, but Germany back at 1.5x, which we consider to be a normal rent cover, Belgium at 1.4x, which we believe is a decent rent cover but should improve in the future. But all in all, I think Europe is now showing once again a quite strong operator performance throughout the portfolio. A couple of other slides now, lease maturity, no surprises to what you've seen in the first quarter update. So the average WAULT of the portfolio standing at 15 years. If you just zoom into the health care portfolio, it is 16 years. You also see on the slide what is the situation in all of the countries for the health care portfolio with typically countries close to 20 or even above 20-year WAULT, typically countries where you have quite long initial durations and then some of the countries showing a somewhat lower WAULT, typically countries where initial lease terms are somewhat shorter. Then going into the yields on fair value and then immediately switching to the like-for-like, which is probably more interesting. But looking at the whole of the health care portfolio, we are now -- actually, I should say the whole of the portfolio, we are now at 6% average yield on fair value. But as I said, switching maybe immediately to the like-for-like portfolio valuation. What you see on the slide, starting on the left side of the slide is the evolution quarter-to-quarter, knowing that since the first quarter of 2026, you also will find the impact of the Cofinimmo portfolio, including the noncore assets, offices and pubs. And you will see that in the second quarter of 2026, we've seen a 0.1% positive like-for-like valuation. If you would zoom into only the health care portfolio, these numbers become 0.27% for the first quarter and 0.15% for the second quarter. So it shows the stronger underlying performance of the health care assets. And then looking at a 6-month period, which leads to a somewhat different scope from the Q-to-Q analysis, then you will find that health care valuation increased with 0.5%, and it gives you an overview of what is happening in the countries with perhaps no surprise, the U.K. popping out based on the very strong operator performance in the country, but also the Netherlands, probably for the similar reasons as what Ingrid just explained when she zoomed into the like-for-like rental growth. If you add to the health care portfolio, the offices and distribution where we've seen some slightly negative valuation, then for the whole of the portfolio, you will find that during the first half year, like-for-like valuation increased by 0.25% but I think the message is clear. Valuation remains very stable, slightly, slightly increasing in today's market. A quick zoom on the noncore assets. I'm not going to walk you through every number on the slide. But importantly, I think for more important when looking at the offices, as you know, this is a portfolio that today is very much focused on Brussels CBD, showing a 6.3% fair value yield. And when looking at the distribution networks, this is a Belgium Dutch portfolio, where we have some asset rotation ongoing. And each time we are able to sell these assets above fair value, looking at a fair yield of 7.4%. Now I'm going to use this slide to zoom into our divestment ambitions because we're now talking about the noncore assets in portfolio. I think it's very clear that we can in terms of priorities, start with the EUR 300 million of Belgian care homes that we need to sell because of the requirements coming from the Belgian competition authorities. This is by far our first priority in terms of divestments. Situation today is quite clear. We have identified the portfolio that we will be selling. Vendor due diligence is in place. Structuring is in place. Tax rulings are being applied for. Today, we are still in an off-market phase, meaning we have very limited contacts with very selected number of interested parties, which we are talking. But if that does not give us sufficient certainty that we will be able to land the deal within the period that we want to see deal landing, we're going to that immediately, then we still can switch to a structured more public open market process. But as we speak right now, it is totally off market. The ambition of the company is very clear. We want to see land this deal in Q1 2027. Then going to the offices, which probably is our second priority in terms of divestments. There the situation today is that we are focusing within the company on building a business plan for the whole of the portfolio so that we can mark the portfolio as a whole, but based on our own assumptions and our own assumptions also about the future potential of this portfolio. We have off-market contacts, so we are being approached by parties that we think are very valid co-investors or investors in this portfolio, but it is totally off market at this point in time. No intention to start any structured process in the very near future, preferring to keep working off market at this point in time. Ambition there is also very clear. We want to see this land in 2027. Not specifying which quarter probably will be more towards the end of 2027, but we're working with that time line in mind. And then finally, talking about the pubs, but no pun intended, but that we have put on ice today. It's not our priority at this point in time to sell off the pubs. There is a lot of interest going to that part of the portfolio. But for lots of reasons, not our first priority and amongst those reasons, also the fact that it is a quite high-yielding portfolio. So we're not in a hurry to sell that portfolio today. Now having given some -- added some color to the divestment program, of course, when we start divesting and recycling capital, we will have to make sure that we are able to redeploy that capital. So looking at the portfolio growth in terms of developments and investments. Well, basically, we're working with some sort of 3-layer approach of the market. I think the first layer of the future growth of the Aedifica Healthcare portfolio is coming from the development pipeline. We are constantly refueling the pipeline. We target a pipeline on average of EUR 500 million to EUR 750 million at each point in time. So it is normally rotating relatively fast compared to the past at this point in time, and we're targeting 6.5% yield on cost when talking about refueling the development pipeline. There is a next slide that we will zoom into the pipeline as is today. But on top of that, the teams are working, and this is what we call our daily ongoing investment activities. So they're working on acquiring standing assets focusing on small to medium-sized portfolios, could be from a single asset to smaller portfolios. You probably have seen popping up some examples in the first half of this year. Of course, the advantage here is that it is immediately cash flow generating and that allows us also to make sure that the deals that we do should also immediately be EPS accretive. And then thirdly, bearing in mind that the numbers in terms of divestments become a bit bigger one once you start thinking about the office portfolio. We are also working on potential M&A deals, meaning large-scale opportunities. We have a set of targets that we keep monitoring and that we can accelerate if needed or if we see that the divestment program is also accelerating. So that's the way that we are approaching the combination of the divestments that we need to do and the investment that needs to follow to make sure that we remain accretive or limited dilution coming from timing gaps between divestments and investments. Mentioned the development pipeline. You've probably seen the numbers in the press release this morning. A couple of things to point out here. There's a lot of focus right now on the Spanish market in terms of new developments, also on Finland and the U.K. You also see Germany popping up again with a more important number. That is basically a combination of projects that we're looking at, but also typically in the German market, the standing assets for which we already have signed a commitment to purchase, but we're waiting for some of the conditions to be fulfilled, they pop up in the development pipeline. This being said, when looking at when these assets will be delivered, there's a lot that still is going to happen in 2026, but also in 2027. If you look at the amount of buildings or projects that will be delivered in the next probably maximum 18 months. We're talking above EUR 450 million. So that in itself already is compensating for the divestment of the Belgian care home portfolio. And then I think another very important feature of this pipeline is it's not speculative development. All of the projects that we're starting are 100% pre-let. So we're not taking any risk there. In terms of yield on cost, we had a minor setback because of some legacy deals in Spain, which is now bringing the yield on cost to 5.8%, knowing that we already were at 6.5%, but we're working to bring it back as soon as possible to 6.5%, knowing that we are targeting a 6.5% yield on cost on all new deals that we're adding, when I say 6.5% on average on all new deals that we are adding to the pipeline. But that is, as I already mentioned, work in progress. And then this brings us to the outlook. I will let Ingrid go into that.

Okay. So the outlook, as you have probably all seen the guidance for the full year 2026 that the company has given this morning is EUR 5.35 per share. This is slightly above the consensus in the market that stood at EUR 5.33 per share and represents an increase of 4% compared to 2025. So DPS, there, we already announced at the Q1 results publication that we are expecting a dividend of EUR 4.20 per share for the full year 2026. Well, this outlook takes into account rental income of EUR 656 million and EPRA earnings of EUR 436 million. We expect that by year-end, the debt-to-asset ratio will be close to the 42%. There's already impact from the synergy savings. So for the full run rate synergies, we expect EUR 60 million in the course of 2027. But in the second year half of '26, we expect that there will already be an impact of EUR 5.5 million. When we look at the asset rotation, so the business plan includes the, I would say, the ongoing asset rotation that is around EUR 110 million, out of which half of it has already been done at this point in time. Stefaan has commented on the strategy for the Belgian health care. So there will be no impact of the disposal of the Belgian health care assets on the rental income in 2026. Then average cost of debt in this business plan is estimated to be around 1.9%. I explained later earlier in this presentation that we might consider issuing a bond in autumn. That will lead to some additional financial charges, but would still be able to get to the EPRA EPS of EUR 5.35 earnings per share. We did not include assumptions in the business plan as usual on the portfolio valuation and GBP is estimated at EUR 1.15. We continue to repeat that we believe that the fundamentals in our sector for elderly care are still very strong. First of all, there is a demand that is driven by the demographic evolution, but there will also be a replacement of outdated stock that will drive demand for new care facilities. Secondly, this is backed by the improving operator performance that we see that is still continuing in all of the countries where we are currently present. Taking all of these elements into account, I think that we can round it up, and it's up to me to invite you to the Capital Markets Day that will be organized at the end of November and where we will give you a little bit more insight in the strategy and how we see Aedifica evolving in the coming months and years. I think we can open the Q&A at this point in time.

[Operator Instructions] The next question comes from Vivien Maquet from Degroof Petercam.

So 2 questions on my end. Maybe the first one is on the off-market, on-market comments of the health care portfolio. Just trying to understand at what point and what will be the criteria to adapt from an off-market to an on-market structure approach for the portfolio. If I understood correctly, you aim to get that done by the summer, if I heard correctly, for the health care portfolio. So what time frame do you have in mind to switch from off-market to an on-market structure?

Okay. Without going into too many details because we will start explaining in too much detail our own strategy that could, in the end, be held against us. But this being said, the main criteria will be deal certainty and timing. And the off-market process that we are running is really limited to a very small number of investors that might have an interest in this portfolio has also allowed us to structure the whole portfolio, make sure that we have the right assets in place, make sure that we have the right structure in place, also allowed us to come up with this tax ruling that we have applied for. So that is also one of the positive benefits coming from these off-market conversations. But at a certain point in time, you need to have deal certainty, meaning that this will lead to something and you're not just talking for the sake of talking. And secondly, timing, I mentioned that the ambition is to see this land somewhere in Q1 2027. So that means that if you do not have the deal certainty we want coming out of the off-market talks, we still have the opportunity to switch to a structured process. And okay, without being too specific, but that means that a structured process, if needed, could start before the end of the year.

Okay. Very clear. Then maybe just on the operator profitability. So you commented that indeed, we see improved occupancy. But if I compare rent cover versus end of the year, I see some slight decreasing left and right, very small, but just trying to get the full picture there, if you can, on what do you see from operator profitability?

Yes. But I think that we're now reaching the point I mentioned that I should stop talking about a market recovering from COVID and everything that happened in '22 and '23. It's now a market that's going into, I think, more normal business mode, which means that in some countries in terms of occupancy and rent cover, you will start to see kicking in some, for instance, seasonality, what we already saw before COVID, meaning that -- and not want to sound too cynical, but winter or very hot summers can lead to a bit of excess mortality, which then will reflect in the numbers depending on what your cutoff date is. So what we now see in the numbers is nothing that makes us believe that there is a change in the trend, far from it. It's more things that we also saw before COVID referring to, in some cases, some seasonality. Maybe also pointing out that if you look at the underlying trend in most of the countries where occupancy was a bit lower, it keeps improving a lot. So you see that the drivers, meaning that there's more demand coming from the market and a market where there hasn't been a lot of supply over the past couple of years is putting pressure on occupancy. And we do see in countries like, for instance, Spain and the U.K. that operators still are able to -- well, because of the pricing power they have to show very strong margins. So the trend remains totally intact.

The next question comes from Steven Boumans from ABN AMRO, ODDO BHF.

I have 2, ask them separately. The first is on the Netherlands. 5% like-for-like growth and positive revaluation seems very strong. Could you please provide some more color if we can see more of this going forward, especially you mentioned the contribution from changing B2B to B2C. So what proportion of the portfolio is currently B2C? And how can we see that mix evolving going forward? It's a Dutch thing or maybe more than that?

Yes. Okay, first of all, I appreciate that you appreciate the growth in the Netherlands, but this is amongst other things, the result of an experiment that we're running. We experiment is maybe the wrong choice of words. But as you very well know that in the Netherlands, a lot of the institutional investors that are looking into health care real estate, they are applying more a B2C model where they acquire buildings and go into a relationship as landlords directly with the end user, so the people living in the buildings and the operators being some third party providing care but are not becoming the tenants of these landlords. Given the fact that, that is very -- something that we see a lot in the Netherlands, we had a look at a couple of the buildings that we own that are basically also more focusing on independent living where we could apply a similar model. And having run the numbers and talk to people in the market came to the conclusion that it will -- well, if you do it well, of course, it will have a positive impact on your rental income. So basically -- and I'm talking net after costs, you get a bit more current cash flow out of it. And secondly, it has a positive impact on valuation because for lots of appraisers, you're basically showing to them that this building has a value in terms of lot for lot sales, which has a positive impact on valuation. So we started turning if I'm not mistaken, 3 buildings in [ Antoven ] from a master lease with the operator into a B2C model where we are the landlord having a relation directly to all of the people living in the building, but having also some sort of master agreement in place with the operator that will keep providing the services. It's something that we think we might be doing more if this goes well in the portfolio in the Netherlands. Whether it opens up possibilities to other countries, that remains to be seen. It really will depend on local markets.

Okay. Clear. Let's see if we see more of that in the Netherlands. Then a different question on Belgium. The EUR 300 million disposals, could you provide some color whether you expect that to be at the disposals, anything neutral, anything accretive or dilutive versus year-end '25 NAVs? And what assumptions on expected private exit yields underpin that broadly?

Yes. For one or other reason, the line is a bit less clear. So I didn't really understand everything you were asking about, but this was about the Belgium divestments. So to add some color there based on the conversations that we had and depending on the structure that you can put in place because in the end, as you all are aware of, there's always tax leakage involved and if you can limit that, that has a positive impact. But from what we know today, we can work within a structure that allows us to limit tax leakage. So that means that basically, we are not expecting that this will come at important discounts or higher discounts or discounts at all. So that's the basically the assumption under which we are working today. That's one thing. Secondly, also back on simulations is that normally, we should be able to reinvest the recycled capital coming out of this transaction into markets where we have access to similar net yields. And I'm partly also referring, which I did during the presentation to the development pipeline, which is already building up and already will lead to deliveries up to EUR 450 million in the next 18 months. So to a certain extent, already preempting the question. So all in all, maybe to summarize is that we're actually aiming for at least a neutral impact in terms of EPS and hopefully NAV, but actually have the ambition to do somewhat better than that.

Very clear.

[indiscernible] how the market evolves in the next couple of weeks and months, of course, yes.

The next question comes from Frederic Renard from Kepler.

I hope you can hear me properly. My first question would be on the outlook and the guidance. I mean, in the past, you have been guiding relatively prudently to the market. According to you, what could be a positive element of surprise going forward leading you to beat that guidance? And I mean, specifically on the EUR 60 million synergies, I remember last year, you were quite optimistic on that figure. So is it still the case? That's the first question.

So I do think that today, we clearly have a path to go to the EUR 60 million. When I look at the guidance for '26, it might be that we -- currently, we have included EUR 5.5 million. We might go a little bit faster on that. So that could be a potential for some upside that can be identified. And there is also some possibility that we might go above the EUR 60 million. So we have a clear path to get to the EUR 60 million and the fact that we already have that today in place gives us a certain comfort to say that we will have at least the EUR 60 million. Then on the outlook itself, what are the other elements that could be a little bit contribute on the positive side. That is on the costs as well, property management cost as overheads. There might be a slightly positive impact going forward, I would say. There was always the impact of GBP. So currently, like we said in the business plan, we assume EUR 1.15. Currently, GBP is trading a little bit higher. So if that continues for the coming 6 months, that will also have some slightly positive impact in our rental income. So there is some potential that we will be above the EUR 5.35 per share that we have announced for '26. But of course, there can also be incidents that occur in the second year half. So there always will be some kind of buffers in the budget as well and in the guidance.

And just to be sure, your outlook to account the bond you [indiscernible] right?

Yes. Like I said, so when we estimate the impact that a potential bond issue could have on the EPRA earnings, it can still be included and keeping the EPRA EPS at EUR 5.35. So the impact, I need to be a little bit clear on it that we estimate that it could still have in '26 would be between EUR 500,000 and EUR 1 million in the financial charges, but that would still allow us to have the EPRA EPS is EUR 5.35.

Okay. Clear. Then maybe a second question on the office portfolio. So I see it's down 0.8% year-to-date. I would love to have a bit more detail on your discussion because you're mentioning for the last year that you have been approached for that portfolio. I'm a bit surprised because I don't see would be a natural buyer for assets to be honest. So maybe can you give a bit more color on that?

Yes. As much as I would love to answer that question, I don't want to scare away the parties that we have in mind at this point in time. Maybe adding to that without dropping names because that's something I'm definitely not going to do. But what we are working on today and the assumption under which we are working today is that we had some quite interesting inbound from a limited number of parties, to be quite honest, that showed an interest in the total portfolio, but we're also very open to structure a deal that would make sense for everybody involved, meaning Aedifica and people willing to step into the equity behind this portfolio. So this is an avenue that we're working on with indeed a couple of names in mind. It's not a long list, fair enough, but it is a list of people that have at several points in time confirmed their interest in the idea of working with that assumption. So that is basically what we're preparing and doing at this point in time. So I hope this will shed a bit more light on the [indiscernible].

And maybe if I may, a last one, totally not related to that, but you are referring to some renegotiation in Belgium, which brought the like-for-like below inflation. And Italy, you have seen some renegotiation, as you mentioned, of course, limited number of assets, but still like-for-like going down. I'm just wanted to touch upon first on Belgium. Do you think it's over in terms of negative renegotiation, sorry? And then maybe for Italy, is this -- can we conclude that Italy, whenever you will have some renegotiation, you will be in a weak position to renegotiate rent at market rent?

No, I think for Italy, it was really incidental because actually, the renegotiation that took place was more than one asset, the lease extension, and there was only one where there was a rent reduction. So it's certainly not to be generalized for all those assets, all those still limited to 8 assets. So it was a very specific case there. When we look at the Belgium portfolio, I think the market is aware of the fact that Armonea has been renegotiating. And this has -- I think we also disclosed this in the half year report that we had discussions on a limited number of assets within the portfolio. Some of the operational activities have or will be transferred in the coming months. And there was also some limited rent reduction because we can still show a positive like-for-like in the Belgium market. So also there, it should not be considered that going forward, you have to take into account that there is still a lot of renegotiation that is up. There might be some cannot be excluded. Like we said, there might be incidents also in the coming months, but not expecting that the like-for-like would -- that you normally would expect based on the inflation to occur that it would completely be jeopardized by rent [indiscernible].

Yes. I might -- just to maybe add some color to this. First of all, specifically for the Belgian market, we do see rent covers now, well, as I said, not at the level where we want to see them. We would love to see them a bit higher in the Belgian market, but they're definitely in a very decent zone. So I think that the issue for the whole of the Belgian market is that it is not an issue as such for the whole Belgian market. It's more incident related. And when you look at the like-for-like growth for the whole of the portfolio, in the end, we do still have positive rent reversion on top of inflation in the portfolio. So I think that underlines what Ingrid just said. Incidents can happen, probably will happen, but it's not as such a trend that we see or expect to the whole portfolio and not even to the whole Belgian market.

The next question comes from Veronique Meertens from Van Lanschot Kempen.

Perhaps first one follow-up on that rent cover of Belgium. You mentioned indeed it should improve in the future, but occupancy is actually relatively high. So what makes you more comfortable? What should drive that improvement in the cover ratio in Belgium then?

Okay. Revenue per resident. Without going into too many details because I can talk about it quite long, but I think if you look at the situation in Belgium, it's quite similar to the rest of Europe, facing the same issues and the same challenges, meaning there's a lot of pressure now starting to kick in on the occupancy of lots of these houses. I think that what should improve in Belgium is that the pricing flexibility that operators have should improve and now it's becoming more technical, but part of the income of a Belgian operator is directly coming out from social security money. Now I'm not expecting to see a huge increase coming from that side because the country has other issues to tackle in terms of public debt, et cetera. But part of it is coming from what people living in these homes are paying themselves or their own contribution. And there is a lot of regulation in place, which makes it very difficult for an operator to increase these prices at the same pace as the real cost increases that they are facing today. But when you look at the reality of the Belgian society, people living in these houses do have the wealth or the means to pay these higher prices. So I think that what is happening in Belgium is that the day prices people are paying in care homes are artificially low because of regulation and should go up to keep track with the increase in cost. It is -- by the way, not something that I'm telling the market. I think that most of the operators, including the not-for-profit operators are very much aware of this and are signaling these matches more and more towards the authorities in the country. So in that respect, I'm absolutely not afraid of the Belgian market in the medium or long term. There is -- the means are available. It's just a matter of regulation and political will to make sure it happens. And at a certain point in time, it will happen because the pressure on the existing system will become -- when I mean -- and when I say pressure, occupancy will become an issue. And I mean an issue that people will end up on waiting list, and that will keep -- will increase even more pressure on the decision-makers in this country. So it's a matter of, in my view, time.