VGP NV (VGP) Earnings Call Transcript

Welcome to our webcast on the half year financial results of VGP. I will first go through the executive summary. And the building you are seeing here on the picture is our new plant in Pamplona, which we've constructed for Mobis. It's actually a battery-producing plant, brand new, and they are delivering from there out to many car producers in Europe. I will first go through the highlights of the first half year. So we have a pretax profit. We reported pretax profit of EUR 208.6 million, which is an increase of 35% versus the first half of 2024. And that's while the valuations remain fairly flat. We have a net asset value growth of 10.5% year-on-year, up to EUR 2.5 billion. The EPRA NTA per share increases 4.8% since December and 11.5% year-on-year. We have an EBITDA growth of 31.7% with a solid contribution from our recurring rental business activities of EUR 118.7 million from the development activities in the amount of EUR 118.1 million, so almost the same, and in the renewable energy of EUR 2.1 million. We have a historic first half record of EUR 56.1 million or 822 (sic) [ 822,000 ] square meters of new and renewed leases, and we're very upbeat on the leasing, which is ahead of us. We have a very large pipeline of lease negotiations ongoing. The annualized committed leases were EUR 441.3 million, which has grown organically 7% year-to-date and 14.7% year-on-year. Meanwhile, we are well over EUR 450 million already. We have 846,000 square meters under construction and our development pipeline is actually 76% pre-let. We have 11 projects totaling 264,000 square meters delivered. They were 96% let. There is only one small unit left in Luxembourg, in Vienna, which we are confident we will be able to lease out in the coming months. And 49% of the buildings, which we delivered were BREEAM outstanding. We also delivered the BREEAM outstanding building in Italy, which is actually the first in all asset classes in Italy, which has gone -- which has received BREEAM outstanding. Our photovoltaic capacity grew 20% year-on-year, and our operational capacity is at the moment at 177.3 megawatt peak versus 143 megawatt peak in June 2024. Our balance sheet total surpasses the EUR 5 billion marker, and we have ample liquidity availability, almost EUR 1 billion. We extended the maturity on outstanding financial indebtedness through the issuance of EUR 576 million bonds, and we did some active liquidity management. We bought back some of the outstanding bonds, and we repaid EUR 80 million of bonds, which came to maturity. And then finally, we now have 2 ratings. Many of you have said you would like to see also Standard & Poor's. So we have obtained an investment-grade BBB rating -- BBB- rating from Standard & Poor's with stable outlook. The only one missing now today a bit is Moody's. So we have 2 ratings. I'll first go through the market update. The market update is provided on slides, which we have received from Jones Lang LaSalle, and we have put some ourselves comments on what we see. The building that you are seeing here is a build-to-suit for Mutti. It's full of tomato sauce in Parma in the valley of the food in Italy, which we have just handed over to our tenant. The lease activity according to Jones Lang LaSalle in the European logistics take-up is 3% ahead on the pre-pandemic average in the first half 2025, which says a resilient logistics demand. Everybody is looking a little bit to what the Trump tariffs are going to do. We signed a record of EUR 56 million new and renewed leases. And meanwhile, we signed really a lot. We have roughly EUR 25 million of lease agreements at the moment in final contract negotiations. So we don't see a slowdown. On the contrary, there is a lot of Asian companies which want to come to Europe. It has caused a shift, and we are trying to profit from that very much so. On the occupier segment, Jones Lang says, yes, there is resilient and emerging manufacturing industries. We signed last year over -- almost 70% of our leases were manufacturing. This year, it's a bit different. But it's no thing to go on because when you take a snapshot every time, it's going to be different. We just signed the last month 3 or 4 new lease agreements, which are all manufacturing. In the first half year, it was a bit more logistics. But what is a very happy thing is that we see the e-commerce coming back, and it's already 18% of our leases signed in the first half year, which is going to be a big boost for our growth in the future if they start taking up space again. And this -- for many years or at least 3 years, we didn't have any e-commerce-related demand. The vacancy rate continues to climb, it says, and there are some markets with higher level of speculative completions over the past 2 years and/or higher vacancies. But I've looked it up myself. So the markets where we are in, in Prague, we have 0% vacancy. In Milan, we have 0% vacancy. In Bratislava, we are under 1% of vacancy. And in Budapest, which is a -- Bucharest 0% vacancy, Madrid 0% vacancy. And in Budapest, we have 3,000 square meters available on a total of 122,000 square meters under construction or completed. So I think that is, in our case, very reassuring. And we have everywhere in all those markets also demand. The supply pipeline stabilizes on lower levels. There is less speculative construction. You have also seen that our pipeline, our pre-lets have gone up significantly. And our KPI for our people is what we have longer than 6 months under construction needs to be more than 80% pre-let, which actually is the case. So we feel quite confident from our side to start up more square meters in the second half of the year. That's -- and we have signed quite some significant build-to-suits meanwhile also, which are also going to fuel our pipeline going forward in the next 6 months. The yields look stable. They -- we will see what happens, but it looks like the last valuation was fairly stable. VGP reports also in this first half 2025, a complete flat yields in its portfolio, so that's a bit our comparison to the market. And then we have our operational performance in the first half of 2025. First, I'll go through the leasing activities. The 2 buildings you are seeing is our new plant or new park in Valsamoggia right next to Bologna, which is completely let, handed over, and it's all industrial activity, which is inside. We have a record start in renewed and committed rental income, including the JVs at 100%. The group has now 631 tenant contracts or had at the 31st of June of 631 tenant contracts with 443 tenants. So many tenants have multiple facilities inside of our -- inside of the countries where we are active in. The committed annualized leases of the 30 June were EUR 441.3 million. They're meanwhile already well above EUR 450 million and growing every day. The occupancy rate was 98% for the completed portfolio. That means that is mostly 3 buildings in the Czech Republic for which we have for all 3 of them now final negotiations on the leases. So it's looking that we are going to be able to improve that a lot by the year-end. And my brother likes to make bridges, as you know. So there is a bridge. The committed annualized leases we started with EUR 412.6 million. We signed EUR 26.3 million new leases. We indexed our existing portfolio with EUR 6.2 million. We did some amendments, some extra offices, which were required or some extra space, which was required from our existing tenants. EUR 4.9 million were terminations. And so we are today at EUR 441.3 million. What is also reassuring is that what became vacant, we were able to lease out for approximately 12% higher than what was at lease before, so we still think that our portfolio is not over-rented at all. As I said, this is just a picture and a certain moment because it changes every week. When we sign a big one, it is again differently. But in the first half year, almost 70% of what we signed was logistic companies or logistics operations from retailers like Studenac is, for example, the largest retailer in Croatia, which we have signed a lease agreement with, which is under construction in Split. FDS is a Chinese e-commerce company. They've taken up a lot of space in Magdeburg. We have breweries too at the moment. We have Movianto, which is really pharmaceutical, which is going to our plant in Heidelberg. And then Rhenus Logistics has followed us in many Western European countries, and now they're also in France. So that's a little bit what has been signed in the first half year. There are many more, but this is a flavor of what we have signed. Parma is really production in Calcio in Italy. The e-commerce takes up a significant part in the first half of 2025 leasing activity. And we see a lot of demand still on the market coming from e-commerce from all over the place. The known names are very active, but there are also many new players in the market. And you can see that 18% in the first half year was already e-commerce, which is really -- we're very happy that we can say that. And then most of those tenants invest a lot in our buildings, really significant investments, whether it is production, the light industrial activity or it is e-commerce. It's also very automated and very much production-heavy. So it also means that they are committing to very long-term lease agreements and the weighted average lease term is now standing at 8 years, including 100% of our joint ventures. In our own portfolio, it's more like almost 10 years. And in the joint JV portfolio, it's 7.2 years. And you can see it's a mix of a lot of blue-chip companies. So the risk is very spread. Actually, the 10 biggest tenants are only 31% of our committed leases. And also, they are spread over 29 different lease agreements, so there is no concentration risk at all in our portfolio, I would say. This is an interesting one. It says a little bit about the possibilities of VGP in the future. We started the year or we ended last year with EUR 350 million of cash-generative rental income, meaning buildings which already generate rental income, which have been handed over to the tenant and is actually paying rent, EUR 350 million on an annualized basis or EUR 214 million at share. That increased during the first half of 2025 with 7% or EUR 26 million to EUR 376 million or EUR 238 million at share. So that's income generating. And then the signed leases, which are going to become cash generative in the next period are EUR 65.3 million. That's an increase of 17% up to EUR 441.3 million or EUR 298.1 million at share. And then we have the potential insights on our existing pipeline -- on our existing development pipeline. And I remind you that all the land that we buy, which is in our books is also a permit for its intended purpose. We don't buy land without a permit, at least the basic one, the zoning permit, and that's another 53% capacity of our total rental income, which we can still develop over the years to come. That goes to EUR 676.9 million or EUR 528.3 million at share. And then if we look at what we have now as ERV on the committed land, land, which we have already signed exclusivity on or a binding agreement that we will buy it at the moment when we receive the permit, that's another growth possibility of 7% to EUR 727 million or EUR 578.4 million share. Now these numbers are all plus/minus because we are constantly transferring inside of the JVs. So the share -- and the total will probably change a little bit. But that is the potential of development, which we still have today in the pipeline. If you look at the delivery side, and again, the building of Mobis Hyundai in Pamplona, which we are, you can tell, very proud. We have delivered 11 buildings, 264,000 square meter, actually the same as last year in the first half year, EUR 18 million rental income by 19 new contracts. It was 96% -- more than 96% let. As I said, the last unit, which is vacant is in Luxembourg, should be leased before the year-end. They are 100% rated excellent or better and 49% of the deliveries was actually certified BREEAM Outstanding. As I told you, in Italy, we have the first building BREEAM outstanding in all asset classes just achieved this week. You can see it's very well spread over all the geographies. It's also for the first time in the history of VGP this year that we will have buildings under construction in all the 18 countries where we are active in, in every single one of them. In the deliveries, in the first half of 2025, they were tending a little bit towards logistics. That's -- you can always have different views on it. But in square meters, it was logistics, 60%; and light industrial, 40%. But if you look at the names, which we have delivered to, then you see SIPLA, it's in Italy, VAT on which we are very proud because it's very comparable to the high-tech industry. It's -- they make vacuum walls for the chip industry, and it's a lot of square meters of clean rooms, plus 1,000. It's really a fantastic building in Arad. Hyundai Mobis, it's the battery plant production. But then, of course, you have also Ahold Delhaize, which we have as a customer on many places. You have Toyota Material Handling, which is actually a showroom in Vienna and then you have some other distributors. So that's been the delivery side. And then I'll have some examples. The first one is in Barcelona, Martorell, which we leased out to GDaisa, which is a production site. You have 60 [ Cuckoo ] robot inside, which are doing welding processes and everything possible. Barcelona is 100% let at the moment. You have Valsamoggia too, where we have 35,000 square meter and the main tenant is CEI, but we also have SIPLA, Dino Corsini and PROSGM, which are all productions. They're all producing over there. It's right next to Bologna. We also delivered our parking -- in our park in Brasov, the largest building which we have there to Inter Cars, which is very impressive, I have to say. I visited the building not so long time ago. And the customer, a Polish stock exchange quoted car dealer, car parts dealer, has invested an impressive amount of money in the automization in that building. So I also guess they're going to stay for a very long time. Currently, we are expanding our park in Brasov. We have signed the agreements with the neighboring land plots, and we're going to be able to extend it. We delivered our park in Luxembourg, where we have this one little last unit free in the building in front, which you see, which is only 3,500 square meters, 4,000 square meters, and the rest is all fully let. And it's really very well located immediately adjacent to the highway towards -- from Vienna to Graz and it's in the south of Vienna, a really nice location. We have the building in Pamplona, which I talked already too much about. And then we have the building in Arad for VAT. On one of our nicest realizations, which we've done. I'm very proud of our team. As you know, we split up all of our building in its components, and then we coordinate this ourselves and make sure that everything is well placed. This is really an outstanding building with 12,000 square meter of -- or 18,000 square meters of clean rooms inside, and it's really very impressive. Also, the customer was very, very happy with the building when I saw it. It's vacuum walls for the chip industry, very long time lease. We expanded the building for Continental in Bratislava, and our park in Bratislava is now also almost fully let. We are expanding the last unit with the current tenant. We just need to sign it, and then it's fully let. And then we have some developments, which are currently undergoing. The plot you are seeing on the screen is our development in Vejle, Denmark. We have been able to buy some really very iconical land plots in Denmark over the last past months, the boys in Denmark, which is a relative new team, they have a lot to do. And these 2 buildings are pre-let mostly for the biggest part. The portfolio under construction represents EUR 72.8 million of new leases as a possibility. As per today, it's 36 buildings are under construction. We started up quite some after the 30th of June already, representing 846,000 at the 30th of June. The portfolio under construction is 73%. But if we include the pre-lets on the development land, the ratio amounts to 76%. And the assets under construction, which our internal KPI longer than 6 months are more than 80% pre-let now. And we have initiated 325,000 square meters in the first half. And based on the current pre-let pipeline and the contracts under final negotiations, we expect to start up more construction in the second half than we did during the first half of 2025. It's very well spread across all of the countries. As I said, we have now constructions ongoing in every country where we are active in. We just started also back in the Netherlands, where we pre-leased 2 buildings now. So you will see right away, I'll tell you a little bit more. You see our park in Bernau at the right side and our park in Lucko, which is Zagreb, Croatia, which is also a pre-let completely for P3M. This is our park in Split, which we have pre-let completely to Studenac and Atlantic Group, a food processor. Studenac being the largest retailer in the country. We have our park in Leipzig Flughafen, where the first building of 20,000 square meters is already completely leased out. And the second building we started speculatively, and we are in final negotiations on the first half of the building. We have started our park in Brasov. We have started the last unit for Ursus Breweries, which is just under construction now. That's the last building, which we can do in the current park. And as I said, we're going to expand it. And then we started our building in Rüsselsheim. Rüsselsheim, we bought 70 hectares, a little bit more than 70 hectares 2 years ago with the sale and leaseback with Stellantis Group with Opel. We managed to get very quickly, and I want to thank the authorities for being so cooperative, a first building permit for the new headquarters of Stellantis in Germany, which is a 22,000 square meter office building, plus a very large R&D center, which is virtually a standardized building, but very much adapted on the inside. It's a 20-year lease agreement with a guarantee -- a very solid guarantee for the whole lease. And we're very excited to be able to do this. It unlocks also the rest. This is only 3% or 4% of the total land plot, which we own this building in Rüsselsheim, and we are very much looking forward to develop the rest of the site, which is going to be relatively imminent. We have really -- we are in very far advanced negotiations with the city, and we also have a lot of interested parties to come and be there. In Bernau, Berlin, we have 2 buildings under construction. We just signed this morning a lease agreement for 27,000 square meter with B&O. And so that's a really nice one, and the right building is completely leased already. to BerVaTek and [ 4Wheels ]. So that's a park under construction. Then we have finally -- not finally, but our park in Nijmegen. In Nijmegen, we have bought the land years ago for a normal price. Meanwhile, the land around us has been transacted for EUR 350 per square meter, more than the double that we bought it for. So the land valuation have gone up, but it's still sitting in our books at the original value because we don't revalue land. We only revalue it at the moment when we really unlock it and start developing it and start construction on it and then the valuation grows as we lease it out, et cetera. Now we have 2 pre-lets in Nijmegen that have been started up. One is to Dustin Group. It's a very bespoke building, not a very bespoke building. It's a standard building, but it's got a very nice facade in glass right next to the highway, which has already started construction upon, which needs to be delivered next year. And we have also started the building E, which is leased to Protempo, also at 20,000 square meter, and we have still a lot, which we can construct in Nijmegen at this land which we bought historically very well. And we are in very far negotiations with some very big tenants to be able to develop also the rest. It looks like we've been lucky to sit out this window in the Netherlands and have not been tempted to buy land too expensively, but now we can be very competitive while still realizing really very nice margins also in the Netherlands. And I wish my Dutch team a lot of success. They seem to be extra motivated now. We are in Italy. In Italy, we are growing a lot lately. We've expanded our team a lot. We just bought this land plot in Parma right next to our GLS building, and we're also buying the land plot behind it. You will see it afterwards in the land bank. We already signed a lease for this building. It's under construction now in Parma, the 14,000 square meters. And then -- but we also have signed a very nice pre-let last week also in the Reggio Emilia region, where we're going to construct a 45,000 square meter building coming on, and there is a lot of land acquisition going on, which leads me to the land bank. And then if you look at the land bank, and I'm very pleased this year, we've been very, very busy in trying to achieve -- because now we can -- we have been able to secure a land bank, which really has embedded in itself a lot of value for the future. And that's always the main driver of our future growth. It's how well you buy the land bank and how strategic well located it is and what demand you're going to generate, and it's all a question of all these vectors which need to come together. We are currently finishing some really iconical acquisitions. Some of them have been announced already by the sellers like Odense in Denmark or Køge in Denmark. But some of them we can't announce yet, but we signed exclusivity, and we will -- I'm very looking forward to announce them in the coming months. There are really some goodies inside. When if you look at the land bank, so we started in December -- we ended in December last year with 7.4 million square meters. We acquired 633,000 this year. We deployed more, 670,000 square meters. So the owned land bank in the end of June was 7,342,000 square meters. But we committed 2.3 million square meters in June '25, which brings the owned and committed in June '25 to 9.7 million square meters on which we can develop more than 4 million square meters in the future. And we have under option or precontract another 1.9 million square meters, which first -- which is now in the phase of due diligence and where we don't have a final binding agreement on, but we think that most of them will become committed by the year-end. I'll go quickly through some of the things. We did our first acquisition in the U.K. We bought a very nice land plot in the Midlands in the so-called Golden Triangle in the U.K. And we plan -- it's -- we can develop 77,000 square meters. We just contracted the general contractor for the first 2 buildings. And we plan a lot more acquisitions in the U.K. We are currently working on 2 very iconical ones also there. We have bought quite some land in Portugal for the first time in long years, and this is probably the nicest one, which we have been able to do so far because of its site. The numbers which you see in there was only the original auction plot, which we bought, but we have been able to expand the land to over 230,000 square meters now in Vila Nova de Gaia, really in Porto, and it's a very flat land plot. We bought it very well. and there is a lot of demand in Porto, so we hope that we can be -- we're going to be able to lease very well. Actually, everything which we have developed in Portugal so far in the 2 locations, it's everything fully let. We also have Loures 2, an expansion of our DPD and DHL sites. We have signed the PSPA, which is a lot bigger. And we also signed Famalicão with a pre-let. So there is a lot ongoing in Portugal. In Greve, which is a bit the same situation, we first bought a small land plot, which is a 57,000 square meter. Meanwhile, we have also bought some other 2 fantastic plots around it. And nowadays, we can develop 110,000 square meters. Greve is actually right next to Copenhagen at the exit of the highway, as you can see on this render. The location is really stunning, and there is a lot of demand for Copenhagen. So we're very much looking forward to be able to dislock the value of this land plot going forward. We also bought Odense and Køge, as I said already, and we have already a park in Vejle. In Magdeburg, we just expanded because our park is fully let. It's the biggest park we have, I think, in Germany. We just expanded with -- we bought an existing building with some land, which we can develop that just acquired. In Parma, as I already said, we acquired a land plot in the extension of the building, which you see, which is roughly the same size. And then we just signed [ Cavasa ] in the Reggio Emilia region, which is another 200,000 square meters. We are going to do some other pre-lets, which we will announce certainly soon. And before I give the word to Martijn about the renewable energy, I want to give a quote of my father who is a poet. And he said yesterday when we were sitting together, every economy needs cheap energy, who denies that rule is just a fool. So it's now up to Martijn to explain. Thank you.

Thank you very much, Jan. On the renewable energy business, here you see actually for the first time, we are showing now the renewable energy business not constituting just of the photovoltaic projects and pipeline, but we've also included the BESS, the battery energy storage systems. And you see that the combined 2 segments result in a total project pipeline, which is 30% higher compared to a year ago. If you look at the energy production, which is driven by the renewable energy photovoltaic panels, we're up 50% year-over-year to 70 gigawatt hours. That is driven by the production capacity at the beginning of the year, which has also grown 50%. If you take the December numbers from this year compared to December '23, you see that was up 50%. So production has kept up in line with the additional capacity that we were able to install. The revenues have gone up a little bit further. You see that the gross renewable energy income generated was EUR 6.5 million, so that has gone up with more than 70%, which is a result of a better revenue mix where we have less energy going directly into the grid, but also more being consumed in our buildings. And at the same time, also the margin has actually improved a little bit where last year, we saw the start-up of our full, what we call [indiscernible] in Germany. And now we're back up at a margin of above 70% for the net revenues generated EUR 4.7 million. Total investments have amounted to EUR 129 million. And there's an additional projects, which we've identified in the battery energy storage system of roughly EUR 20 million, which we are currently assessing, which you see here as part of the pipeline and hope to be able to move further to the left of the waterfall as we move along in the coming 6 to 12 months. That is it on renewable energy. I would just add -- we have removed the section on ESG for the sake of also keeping the presentation a little bit shorter. The only noteworthy point that I would like to highlight is that at the first half of the year, we were rated A by CDP. So that was the first rating to have received this year and an A rating from the Carbon Disclosure Project is, among the 2% highest of the companies that they rate globally, and that's more than 60% of global market cap. So we were quite pleased with that outcome on the CDP and also on their suppliers engagement, we received the highest score from CDP again. Second half of the year, we expect to receive more of the other ratings. And Jan already alluded to the BREEAM outstanding that we're incredibly pleased of as well. With that, no further ado, move to the joint ventures.

Thank you, Martijn. Indeed, I have an update on the joint ventures. The picture that you see is, again, our VGP Park in Munich. It's a bit of an older picture on the right, on the bottom, there is, in fact, already a building. But as it's such -- we are proud of it. So I'm happy to show that picture once more. In fact, I've shown this graph already in the previous presentations that we have made. This year, we have not done any closing yet with the joint ventures other than some settlements on which I will talk about a little bit more in the financial section. Nonetheless, we are targeting a material closing in H2 '25 with Areim. In fact, to give some perspective or some numbers on it, I think we can do within the next 12 months from EUR 500 million to EUR 1 billion sizing of transaction. And we hope to do a material part or a large part of that in the H2 '25, but it depends a bit on completions of certain assets, et cetera. It's something that we are closely now in discussion with our joint venture partners. Otherwise, the joint venture landscape as it is at June and its performance in the first half of '25 is excellent. The EPRA earnings, as you can see, they went up. This is all at share. So we have a 50% stake in the joint venture. So the numbers you see is all at share. So the EPRA earnings, they went up from EUR 27 million to EUR 30.6 million. The cost ratio went down. The valuations, as Jan said before, they are very stable with a net initial yield basically flat. Net tangible assets that went up from EUR 1.441 billion to EUR 1.497 billion. Also the vacancy went down from 1.8% to 1.2% and also the LTV went down from 31.5% to 30.2%. So there is about EUR 5.6 billion of completed assets, gross asset value inside of these joint ventures that we have together with Allianz, that is Rheingold, Aurora and Ymir. Deka, that's Red. And Saga, which is with Areim. And you can see that the largest part of the asset value is still Germany with 63%, followed by the Czech Republic historically at 14% and then some other countries. Just walking you through also the financial performance of H1. The part that you see here is the Brasov Park with in the back. The large building is the Inter Cars building, which was referred to before. So basic summary on the P&L. Again, I have a P&L and balance sheet, cash flow and some other analysis for you prepared. Starting with the P&L. The good news, of course, is that we have a significant increase of our net profit from EUR 141.5 million to EUR 180.5 million also on gross profit before tax, 35% up to EUR 209 million. And the result, in fact, is a combination of a lot of factors, but all of them have a positive evolution, whether it's our development, whether it's our recurring income, whether it's refinancing or all aspects have brought a positive contribution to the result. So maybe starting on top with the net rental and renewable energy income that you will see we have an increase of 24.3%, which is composed obviously out of the -- out of 2 elements. One is our rental income, which we have on our own balance sheet. Just to recap their ones, Jan mentioned before that we have EUR 441 million of contracted annualized rental agreements across the group. EUR 150 million of those are still on our own balance sheet and EUR 95 million of those are active. So we had EUR 39 million of gross rental income, which was a 16% or a 21% increase versus the first half of this year. And of course, it will ramp up further to the EUR 150 million, but we intend to dispose a major part again into joint ventures in H2 and in H1 next year. On the other hand, we have the renewable energy income where Martijn just actually basically gave the whole summary on it. So we had a EUR 6.5 million gross revenue, EUR 4.7 million net. We produced more, but we also had some positive revenue effects from direct contracts through tenants, amongst others. Now the net rental renewable energy amounts now to EUR 40.9 million. If you would add the share that we have in the joint ventures on top of that, then in fact, it increases from EUR 89.3 million to EUR 103.9 million. So that's the rental income that VGP economically owns, and that was also an increase of 16.4%, and that's fully driven organically. We haven't acquired any rental income. It has been developed. It has been delivered. It has been indexed. It has been replaced with higher rental income. All of those effects play in that 16.4%. Now in the next line in our P&L is the joint venture management fee income that went up with 2.6% to EUR 16.1 million. Just as a quick reminder, it's composed out of 2 elements. One is a recurring fee, which is basically related to the size of the joint ventures as the size of the joint venture has grown, especially in the last year with a lot of transactions that have been done. Our recurring fees that we charge to those joint ventures for managing them because we manage them entirely, went up from EUR 12.7 million to EUR 14.4 million, and that's recurring. So we expect to further increase also to the year-end and then by doing additional transactions, again, to increase that recurring fee. On the other hand, there is some nonrecurring fees. Sometimes there are developments done on assets in the JVs for which we charge. And that, in fact, was a bit lower this year. There were less developments ongoing in the JVs that was EUR 1.3 million lower, so it reduced to EUR 1.7 million. But the main and key element here, obviously, is the recurring income. Then the next line, which is always a very defining line in our result, obviously, is the net valuation gains on investment properties, which went up at 42.8% all the way to EUR 141.5 million. Here, basically, there are 2 elements in play. One is an unrealized revaluation of EUR 121 million and a realized gain of EUR 20 million. Now the unrealized gain of EUR 121.6 million, which significantly increased is fully related or by majority related to our ongoing developments. As at 30th of June, we had 845,000 square meters under construction, and we started up 325,000 square meters, as Jan said before, and on those 2 together, so what we have initiated and that's by majority, we have about EUR 105 million of revaluation gains. And then EUR 15 million is a revaluation on an existing completed portfolio, knowing that the total completed assets on our own balance sheet amount to EUR 1.2 million -- EUR 1 billion, sorry, EUR 1.2 billion. So it's, in fact, as you could also see on the market slides of Jones Lang before and as Jan has said, we had a relatively flat or a very flat valuation effect on the portfolio. On the other hand, we have a strong contribution from our development angle in the business. Our own portfolio on the balance sheet is -- has an average weighted yield of 7.3%, which was 7.22% as at the 31st of December '24. The realized gains, that's the second element of the net valuation gains is EUR 19.9 million. We did not transfer any assets into joint ventures, but what we did with joint ventures in the first half was some settlements to -- relating to prior closings. We usually sell or we always sell shares into the joint ventures on provisional numbers. And then after some time, 3, 6 months, 1 year, we audit this and make up the final numbers, and it turns out that our profit was larger due to the fact there were some additions with tenants. So there was more in the cash than in the company was previously provisioned. And hence, we received or we booked an additional gain on that of about EUR 20 million. Next up is the admin expenses. So the admin expenses, they increased with EUR 2.6 million. We -- the group has grown in FTEs. So in June '24, we had 372 FTEs. Now we have at June '25, 412, so roughly 40 FTEs more. It's also related to the growth of the business and we have more completed assets, more facility management, but also the new countries that have been ramping up, such as the U.K., France and Denmark, which have to hit the ground running. And the next line in the P&L is the share of results of joint ventures. Again, joint ventures had an excellent performance. We see that also in the contribution of the net result. So it went up from EUR 33.7 million to EUR 43.8 million. That's our 50% share in the net result of the JVs. If you look at the underlying factors or contributors, you can see that well on the graph below, where I make the bridge between the proportional net result of the JVs from June '24 or H1 '24 to H1 '25, you can see the net rental income that went up with EUR 9 million. Obviously, we transferred quite some rental income in '24, but nonetheless, there was also an indexation effect of EUR 2.5 million at share. The valuation was positive, but there was -- it's EUR 9 million more. It's EUR 18 million at share. But again, on the EUR 5.6 billion portfolio in the joint ventures, the valuation was relatively flat, nonetheless positively contributing. Admin expenses were roughly in line. Financial result is a bit -- we have a bit more interest expense, but that is, of course, that we did quite some sizable transactions last year, which were partly financed by debt in '24 also in second half of last year. So that increases a bit the net financial result, albeit that the LTV went down to 30.5%. And then in taxes, there is EUR 2 million more, but it's fully related to the deferred tax movement on the revaluations. That brings us actually to an operating result of EUR 211.8 million, which is 40% up. It was EUR 151.7 million in last year. The net financial result, it went down from EUR 2.9 million to EUR 3.1 million. The effects that are in play here, and I will say a little bit more about it also on the next slides, but we raised the new bond and we repaid EUR 200 million -- or we repurchased EUR 200 million of outstanding bonds, and those EUR 200 million of bonds were bought for EUR 195 million. I mean the EUR 5.2 million of profit on that. On the other hand, we have the interest due to the fact that the interest rates with the ECB are going down, which we all are very happy about. But there is a counter effect. Of course, we have quite some cash. We are cash rich and the interest that we get on the cash on hand dropped with EUR 3 million versus last year. We have a little bit less interest from JV loans. That is because we did some repayments and also Moerdijk was sold in the first half of last year, which was a big contributor there. And then our interest expense as we have -- we carry more debt than what we had in -- at the end of June or in the first half of last year, we have also EUR 2.9 million more interest expense. Also, our average interest expense went up to 2.7%, but I will show a separate slide on that. Other financial expenses are mainly some exchange rates and costs related to the issuance of bonds. That brings us to a result before taxes of EUR 208.6 million, up 35%. The taxes are -- have also increased. But in fact, our tax expense has gone down at EUR 1.6 million. It's mainly a deferred tax recognition due to the unrealized gains on the revaluations, as I mentioned before. Earnings per share, obviously also went up with 27.5%. They are now at EUR 6.6. Splitting up the P&L in the 3 segments, you have the investment, you have the development, and the renewable energy. Then the investment basically shows the EBITDA of EUR 118.7 million of all completed assets, including our share in the EBITDA of the joint ventures, excluding any revaluation effect. So this is purely the cash EBITDA that comes out of it. There, we see a solid increase. We expect to see a further increase in the future given we are constantly delivering new assets and building up our recurring rental income. This total segment, if you look at on the balance sheet total represents EUR 3.1 billion of our total assets. On the development side, we have also a nice increase on the EBITDA. We had, as I explained before, a solid contribution from our assets under construction and the assets that were initiated construction in the first half of this year. There was a total CapEx spend of EUR 257 million, and this represents a total asset base of EUR 1.4 billion. And then we have the renewable energy, where we see also an increase in EBITDA and a renewable energy income of EUR 6.5 million. Just walking once quickly through the balance sheet. On the total balance sheet, we are proud that we breached the EUR 5 billion marker on total assets and total liabilities, including the -- what is booked under held-for-sale, the EUR 240 million there. We have a completed portfolio on our own balance sheet of EUR 1.2 billion, which is up from EUR 879 million in '24. And then under construction is up with EUR 657 million or at EUR 657 million and development land, as Jan also explained before, EUR 650 million. There was a total CapEx of EUR 257 million, and it's all valued at a weighted average yield of 7.3%. Property, plant and equipment is EUR 127.1 million. It increased with roughly EUR 5 million. This is by majority related to the renewable energy installations and battery installations. It's not only PV installations anymore. They represent EUR 97 million in completed installations and EUR 20.4 million in installations under construction out of a total commitment of almost EUR 130 million. Our investments in joint ventures, they went up, but basically, it is our share in the result that makes the most of the movement, and we haven't done any transaction with the JVs, which would increase our equity stake inside of the joint ventures in the first half. This is, of course, expected to change in the second half. The same is a bit valid for the other noncurrent receivables. And then our cash position is at EUR 423.6 million. Knowing that, of course, we have EUR 5 million in several multiyear unsecured revolving -- sorry, EUR 500 million in several multiyear unsecured revolving credit facilities, which are undrawn and available and have all been prolonged either in H2, H1 or just this week even one of EUR 75 million, which expired at end of '26 has also been prolonged with 5 years as of 31st of December '26. So it's quite good. On the liability side, so our equity went up, very easy movement. We had the result of EUR 180.5 million and a dividend paid out of EUR 90 million in the first half of this year. It's an increase of 3.8% since December or 10.5% year-over-year. And then on the debt side, I already hinted towards it on the previous slides, but we raised a new bond of EUR 576 million. It was, in fact, EUR 500 million plus a top-up by the EBRD of EUR 76 million at the same conditions. With that, simultaneously, we did execute an active liquidity management exercise on which we paid back EUR 200 million on outstanding bonds. I'll show some graph on it in the next page to make it a bit more visual, on which then we, in the end, repaid or we paid them for EUR 195 million. We also paid back a bond that matured in March of EUR 80 million. And there is another bond that has now been classified as current because it is payable in March '26, and that is EUR 190 million. The average cost of debt is 2.7%, slightly up from December '24, and we still have the EUR 500 million availability. In terms of the ratios on our balance sheet, we have a gearing ratio of 37.9%, which is well below any covenant that we have on the bonds or any of our debts. And the proportional LTV, so taking into account also our share in the assets and net debt position of the joint ventures, we are at 50%. Also happy to announce that we have a new rating from Standard & Poor's just obtained. It's like Fitch, it's a BBB- with stable outlook investment grade. And if we wrap up the financial numbers once on a proportional basis, I have already hinted somewhat to it, but this is basically the proportional P&L where you see in the first column, the own P&L and then you see the lion's share of net profit from JVs and associates is 0. It's EUR 43.8 million, which is then in the second column, the JV at share shown on every line individually so that you can see in the third column, proportional income statement, what the group economically owns today with 50% of the JVs included. So then our net rental renewable energy income of EUR 40.9 million increases to EUR 108.7 million in this respect. So it's a 19% increase. We had a total valuation gain on the portfolio of EUR 159 million, of which EUR 141 million in our own balance sheet. The operating result increases to EUR 252 million. What I also would like to point out here is even if you were to take out fully the revaluation effect, our operational result increased with 21%. And then if you look at it on the investment properties, it's the 2 lines on the bottom. So we have EUR 2.5 billion on our own balance sheet. There is EUR 2.9 billion, almost EUR 3 billion that we take in at share from the joint venture. So we have EUR 5.5 billion worth of investment property economically. That is up from EUR 5 billion or an increase of 8.3%. And similarly, you can then calculate also the proportional LTV, which is 50%, as I mentioned before. The cash flow statement, it's basically a summary, I think, or a conclusion of what I've been saying before. I've sorted them starting with the liquidity position from EUR 492 million at year-end and ending them EUR 423 million at end of June. I've sorted them from the big plus to the small minuses. So -- but first off -- first and foremost, we raised EUR 576 million, which brought us net cash after costs and other deductions, EUR 565 million. You can see in the cash flow, net cash generating from operating activities, EUR 14.5 million. That, in fact, contains an operating cash flow of EUR 31 million, but then you have a change in working capital of EUR 2.9 million and interest payable or interest paid of EUR 43 million and a tax paid of EUR 2.8 million that brings it down to an operating -- or a net cash generated from operating activities of EUR 14.5 million. We had -- I will stick maybe to the graph and follow that one, JV distributions of EUR 7.6 million, so we expect about EUR 80 million of distributions from JVs in '25, of which we already received EUR 7.6 million in the first half of this year through interest payments on shareholder loans in the Deka and Areim joint venture. We had some proceeds from disposals, EUR 1.7 million based on those settlements with the JVs I mentioned before. Then we paid back EUR 275 million of loans. That's the EUR 80 million bond plus the EUR 200 million outstanding bonds, which were repurchased for EUR 195 million, so EUR 195 million plus EUR 80 million is EUR 275 million. We had a CapEx effectively spent of EUR 241 million. We paid out a dividend of EUR 90 million. We paid interest of EUR 43 million, as I mentioned before. And we also had loans to JVs for ongoing CapEx there, which -- on assets which are economically owned by us of EUR 22 million. That brings it to EUR 423.6 million of cash or a total cash flow of the period of EUR 68.9 million. Maybe a word on the average cost of debt. So it went up from 2.2% to 2.7%. The new bond that was raised EUR 576 million was at a coupon of 4.25%, and it matures in January 31. So we have a total debt position of EUR 2.3 billion on the balance sheet with cash EUR 424 million and unutilized credit facilities. And there is an expiry of EUR 190 million in '26. Maybe just to make it a bit visual, this was the financial profile at year-end '24, where you could see in '25, the EUR 80 million was what we needed to pay back, and we had a 3.7 years average debt maturity that changed then into 4.1 years as of June '25. So the EUR 80 million has been paid back. You can see in 2031, there is now the new bond of EUR 576 million included. And then, we topped off the EUR 500 million bond and EUR 600 million -- EUR 500 million bond in '27 and EUR 600 million bond in '29 with, respectively, EUR 180 million on the '27 bond and EUR 20 million on the '29 bond. And I think this was probably my last slide. Thank you. I'll give back to Jan.

Yes. So to summarize it and to give you a little bit of outlook on the second half of the year, I want to stress once more that we have a very solid year so far in terms of land acquisitions. We will be able to announce in the foreseeable future some truly iconic new land plots in most of the -- or in all of the countries we're active in. Combined with that, we have an even more solid performance on the letting side with more than EUR 50 million signed and renewed in the first half and the very filled order book in final negotiations, all over our market on new leases, which some of them have been already signed and some are really in the final stretch. So we hope to be able to sign them before the end of September, even all of them. Then, we -- as a result of that, we expect to start up more square meters than we did in the first half year. That's based on the lease evolution, and we will manage that in function of our occupancy rates going forward. As you know, we have a KPI over 6 months under construction. It should be more than 80% for our people. We feel very confident that we have our construction prices very well under control and that we can realize on the land, which we bought at economic fair terms. We can realize a really nice extra value. We have ample liquidity today and plan to transfer quite a bit of assets between EUR 0.5 billion and EUR 1 billion in the next 12 months to our JVs. And that's a bit -- the timing of that is only dependent on the pace at which we can develop some of our parks out and at the time of maturity when they are ready to transfer, but we're very confident on that. And finally, I also want to say a word of thanks. We are going to launch the second part of our marketing campaign, which many of you will have seen in September, where our customers make a testimonial to their cooperation with us. And I want to express my sincere gratitude for the enthusiasm and engagement, which we have been working together with them over all these years. And we're very grateful that they agreed to be -- to make a testimonial to us. When you travel through the airports, look around, you will see we'll be everywhere. Thank you. That's it from my side, and I think it's time for questions and answers.

Yes, operator, we can open the line for questions.

[Operator Instructions] The next question comes from Suraj Goyal from Green Street.

You mentioned that your pipeline is strong, you expect more construction in the second half of the year. We also picked up quite a few attractive land plots. How are the construction costs trending year-to-date? It'd be good to get some color from market to market. I appreciate you see Europe as one market, but if you could dig in across the various markets, that would be quite helpful.

I guess that's a question for me because I'm the CEO. And I'm involved with that every day. We see everywhere we -- over the past years, the construction price has been consistently coming down since the very high peak where it exploded in 2022 and where I stood completely on the break since last year, a testimonial to that is also that we are now constructing in literally every market where we are active in. We have seen the construction prices coming down. They are at the bottom, I would say, today, everywhere. We are back to pre-pandemic construction prices. We see still a lot of construction companies in trouble in some of the markets, and there is still some room for improvement maybe, but I'm fairly sure that we are bottoming out. We have everywhere around the same level, of course. It's a bit dependent on the cost of the local people workforce. But material wise, we tend to be able to do very big purchases all over Europe, and we combine really our volumes. We split up our buildings, and we combine volumes, and we buy directly at the producers of those volumes. So we get really very good pricing. If you look at it, I would say that the construction price is everywhere in line with our margin target. So we are everywhere able at today to achieve those targets that we want. So of course, it will be a lot cheaper to construct or cheaper to construct in a country like Romania, but then we have a higher yield, but the exit yield is also higher. So the value is different. So we aim for a higher yield versus Germany. But of course, we have a higher construction price, but that -- the exit yield is also lower. So it looks like -- everywhere, we're under budget at the moment. So we are really performing very well. We have no accidents. I think if you look at the numbers, you can see it. And I -- there is no point in going through every country separately because it's everywhere the same. It's really everywhere we have the construction price really very well under control. That's the best I can answer.

The next question comes from Wim Lewi from KBCS.

I've got a question on the cash recycling. So you mentioned EUR 0.5 billion to EUR 1 billion. You also mentioned depending on some particular completions, and you also mentioned Areim. My question is really the size. So the final size, does that depend on finding other JV partners? If so, can you say anything about the type of those partners? Would that be a similar partner to what you already have like Allianz, Areim or Deka? What is really the negotiation about if this takes longer? Because I think you've been talking about this for a while. And then maybe lastly on the JVs, as you mentioned your cost of debt goes up. But obviously, you use part of that debt to finance the JVs. Can you also then increase your interest rates that you charge these JVs so that, that kind of balances out a bit?

The closings, we are planning on a logical evolution of the commitments, which we have made with Areim over a programmatical joint venture, which we are rolling out at the moment. So that is what we have in the short term that we are working on. That's what we are going to transact today. In the second half, there is a very large transaction plan and in the first half of 2026, there's also a very large transaction plan. At the same time, we have several working teams, which we are in advanced discussions with other people to set up a new joint venture, which is normally completely in line with what we have already achieved before, where we're trying to set up the same things and which we can't disclose yet today because we are just in the middle of negotiations and have not reached principal agreement yet. On the rental level, if the debt of -- the level of debt goes up towards -- of cost of debt goes up, we are completely aligned with our other investment partners in the JVs. So we have a common interest on the interest level, which we are charging through. And the ones which we are financing where we still have the economic value of the property, and it's -- although it's already sitting in a JV, but we still have the economic value of the asset that we are free to decide whatever we want. On the interest rate, and it's left pocket, right pocket. And the rest is just a mechanism, which is set out in the JVs.

The next question comes from Vivien Maquet from Degroof Petercam.

Just coming back or maybe on the pre-let, I understand that your -- I would say, internal target is 80% for projects to be started within the last 6 months. But looking at the numerous projects we intend to add to the development pipeline, as you mentioned, sizable deal negotiations, are you confident to keep the level of the pre-let to above 75%, if you account for everything under construction by year-end?

I'm very comfortable in saying that we are going to do more in the second half year without deteriorating our current pre-let scenarios. Yes, absolutely. It's based on what we have in the pipeline. If only -- what we sign now, if we already start up that and there is a little bit of more -- how you call, speculative development, we are going to sit at exactly the same or even better rates at the year-end. And we have a very -- we are monitoring this very closely because it's one of the things which really are important to us. We don't want to start building castles in the air. We really want to grow, and cash flow is for us a very important thing, getting it back. It's always been. We've always been at the same parameter. And so my answer is straightforward and blunt, yes, I'm confident. I will make it like that.

All right. And just maybe on the deliveries, the reason you removed the 700,000 square meter expected to be delivered by the year with any specific reason or just timing effect?

No, it's just timing effect. I think what is under construction is indeed planned to be delivered to what has been said before, but there can be some tenant specificities that may interrupt, but other, no specific reason.

The next question comes from Marios Pastou from Bernstein.

Just a follow-up question on the development and the costs associated. Can you just quantify the average development margins you are targeting and achieving across your pipeline? And then just on rental growth, can you confirm what the like-for-like rental growth was across the portfolio on a year-on-year basis?

Okay. So on the margins which we are trying to achieve everywhere is there is an internal thing. It's, of course, it depends a little bit. It goes from project to project, not all projects. We don't bake breads. It's not like we have a machine at which comes every product is exactly the same, but we target a 30% margin on it. That's where we -- and we seem to be able to achieve that throughout the portfolio everywhere. So that means that the yields are different everywhere because you have -- the exit yields are different for -- I already said many times, I look at Europe as one market. And I have the idea that eventually the yields will flatten out between separate markets a little bit more than they are today. They are -- the extremes between the markets are too big and some people don't understand enough the Eastern European countries, which are evaluating and growing at a lot faster pace and modernizing at a lot faster pace in the Western European countries. So I think over time, with a little bit of faith, this will flatten out. But we try to have a stable margin. We try to keep pragmatic approach so that we can say through all of these markets, it makes sense to be there because our margin is everywhere roughly the same. In some markets, it will be a bit better than another. But on average, it will be 30%. And there is no country where we say we just planted the flag here and we want to be there. And so we are going to develop even with a negative margin. That's also why I didn't develop anything over the last 3 years in the Netherlands and only now I started because we just didn't have the inputs to make a nice margin there. Now we do have it, and that's how we really think about our countries, how we really think about the regions, I would call it more regions than countries where we look at. So it's a very big preoccupier for myself, the margin and as I said, we target to have at least 30%.

In terms of the rental growth question or the like-for-like rental growth, it was 2.4%. Some connotations to make, however, is that we do not have a lot of relettings to do. We have a relatively long WALT in the portfolio. It's 8 years on total, almost 10 years on our own balance sheet. But we had terminations of EUR 4.9 million in the first half of this year, to give you an example, EUR 4.1 million of those were replaced by EUR 4.8 million of rental income. So we had a serious uplift there. And other than that, we had the indexation on the portfolio, but the portfolio is relatively young. And the average age of our buildings is 4.5 years, and we have been delivering a lot in the last years as a result out of that. I hope that helps.

The next question comes from [ Vincy Lia ] from Kempen.

First one on the intended transaction. Just to make it clear, is it only planned transactions with Areim? Or is it also based on further JVs? And then maybe second one on project starts, you said you would likely start more than in the first half. Given the typical lead time, that would imply that next year, you would be delivering close to 700,000 square meters. Would that be the correct assumption?

Yes. No. I forgot the first part of the question. Yes. Yes. The -- and the joint venture, the EUR 0.5 billion to EUR 1 billion, which we have planned now and next year is indeed the ones which are planned already, which have been signed and which are running on and where we have a commitment to from both sides of the table to close these things, and they are only dependent on the speed at which we can finalize our buildings in the jurisdictions, which we have agreed upon. So that's minimum EUR 0.5 billion, but we are very optimistic that it will be a lot more. Separately, there are -- as I already said, there are other JV negotiations running, but I can't disclose yet what the timing nor the size will be until I've really reached an agreement. So yes, there are negotiations running, but we can't disclose yet anything on it. So that is the answer to the first question. And the second question, how much we are going to deliver next year is really dependent how much we start up in the second half of this year. So if we start up EUR 500,000 or EUR 700,000 or EUR 400,000, it's going to define really what we deliver next year. So I can't really answer on that, [ Vincy ], even if I wanted to, but I think it will be sizable, yes, as it will be sizable in the second half of this year also because there are a lot of buildings coming to the end. And I think that's the right answer to your question.

The next question comes from Paul May from Barclays.

Just a couple of questions. Just on the first one. Are you able to quantify the remaining firepower in the existing JV. So how much more can they buy before you need to get new JVs signed up to continue disposals? And then the second question, you obviously highlighted and we can see that in the market data that the market is generally weaker. We've had less take-up across the market every year. I think since 2021, there's been the less take-up, yet you're able to continue to deliver, continue to sign new leases, continue to sign new development, operating ahead of the market. Just wondering what it is that differentiates your land plots or your land values, your rental levels that you can offer versus the competition and why you're able to continue to deliver where the market is broadly struggling?