Carmila S.A. (CARM) Earnings Call Transcript & Summary

Good afternoon to everyone of you, and welcome on the occasion of these half year results for 2020. Quite a special events under the current circumstances. We have the pleasure of meeting you in person, but we are conducting this event remotely. I'd like to greet our English speaking participants who are listening in. So Carmila has gone through a first -- well, a period has been unprecedented and we have fared pretty well and has reflected in this half year results and related activities, as we posted our results this morning. So we are now going to comment the results that we posted this morning with the management team with me. By way of an introduction to this presentation, I'd like to start highlighting 3 elements which a few weeks ago were elements or factors of uncertainties and risk for Carmila. And at the end of the day, as things stand, these are risks that are under control. And first of all, the length of shop closures as a result of the lockdown resulting from the COVID-19 crisis. At some point, nobody knew how many weeks this lockdown was to last for, and now this crisis is now -- once this crisis is now behind us. And well, the shop closures lasted for a period of 8 weeks, depending -- by and large, 8 weeks, 11 weeks for Spain and 9 weeks for Italy. So a period of time that has seemed a long period of time, especially for our retailers. But at the end of the day, these fears only lasted for 8 weeks at the end of this crisis. Well, the next question was about the business recovery. And the first -- from first information, from the initial information we've said and from what we've seen, the average footfall in June 2020 versus June 2019, about 87% in France. So footfall is pretty high, let's say, far from the assumptions of going to 50% or 30% of what they were in June 2019, with alarming reports, notably from our Chinese and from China. But again, overall, the rate performance of Carmila, in view of the market, is very, very good. And footfall is, well, is at plus 8 points versus quite a few of France panels. So we are, again, tremendous leaders on their catchment areas, enabling us to achieve these positive results. And then the essential figure, a central factor is the average change in revenue of retailers. And that's down 6% in France, Spain, Italy. So between June 2020 and June 2019. So some sectors have been -- have felt and the impact of the class more so, in particular, the ready-to-wear sector. So encouraging indicators as to the nature of this recovery. So at the end of the day, this recovery is rather good, although there are still some way to go to get to full recovery. And the third element of the uncertainties which I was referring to, you see medium and long-term consequences for retail at the end of this recovery, and with everything come to a complete stop. But what we've seen and -- is that the recovery is, well, contrasted, but is definitely there. And notably with the sharp recovery in household equipment, or the service sectors with extremely significant recoveries. And so between June and July, if we compare 2020 versus 2019. So retail brands having difficulties, particularly in ready-to-wear, and this period has not helped, and some of the sectors, while it's too early to really see a recovery like the leisure and restaurant businesses. So again, insufficient visibility there. So the -- our people found the -- have they returned to our shopping malls? Yes, indeed, proximity centers. They're leaders on their shopping catchment areas and leaders managed to reopen. Yes, for almost all of them. And so some uncertainty factors which are now under control now. Finally, by way of an introduction to this meeting, I'd like to remind you of a few fundamentals for Carmila. I'd like to remind you the fact that Carmila is the third largest listed shopping center company in Continental Europe. It was created in 2014, and the shareholding of Carmila is very stable. So 1/3 Carrefour, 1/3 floating and 1/3 institutional investors. So this Carmila is the third largest in mainland Europe with EUR 6.5 million (sic) [ EUR 6.5 billion ] assets over 3 countries, across all the regions, in these countries, with a portfolio of our shopping centers, characterized by the fact that these are 88% of them are leaders or co-leaders sites. So this is really -- we are -- we have the strong belief. And I think the crisis has confirmed these quite clearly, confirming that we -- it is better to be the leader on a specific areas as opposed to lead or co-leader on a more significant or wider area. So Spain accounts for 23% of our sites, 72% of our sites are located in France and 5% for Italy, with the most prosperous or the richest part of Italy, but the northern part of Italy, where we have strong presence. So we have regional shopping centers, smaller centers, local shopping centers. So 80% of the value of our portfolio is focus on regional shopping centers and large shopping centers. And finally, in terms of sectors of our tenants. And well, we have a well spread portfolio in terms of our tenants. And again, these people -- well, this is a sector. Retail is a sector that has been bearing the brunt of the crisis again. And clothing accessories accounting for 33.2%. But by and large, it's 1 point down year-on-year. [indiscernible] was over 35% for clothing; accessories, 35.5%. It's 1 point less, so year-on-year for ready-to-wear clothing and accessories. So we're reducing our exposure to the risk of our clothing accessories whilst rebalancing our portfolio. Another way of reducing our exposures that [indiscernible] accounts for 90% of lease collected, we have the opportunity, and we have, again, this is a way of limiting our exposure to the risk of every individual tenants. So since 2014, Carmila has focused on carrying out a number of major achievements. And I'd like to flag 4 of those. I'd like to highlight 4 of those. And Carmila has, firstly, transformed its centers and turning these into proximity focus locations, so 100% of the centers have been refurbished around the concept of family space. 20% extension projects have been delivered. So 89% of customers satisfied with their visit. And for us, this is the best of rewards. Now we also want to focus on connecting and really highlighting the branch of retailers and services, so Carmila has 6,348 retailers to date. So this is a wealth for us because that allows wide diversity of retailers. In times of crisis, this reduces our exposure to risks. And we have new brands, new retailers that come to refresh their commercial offerings. So as for -- to really achieve customer satisfaction of our customers, so we've -- during the crisis, we've stayed very, very close to our tenants across the regions. This is yet again, specifically for Carmila in the sectors. We have logo teams so as to commercialize our shopping spaces and retail spaces. So we want to really focus on the franchise retail. And on top of the permanent retail activities, that allows to attract temporary activities. So third, our focus points for Carmila, we want to connect retail brands and consumers. And this is the role of our marketing teams. Over 760 marketing operations, mostly digital, have been taking place per month to help retailers so as to help them connect with their consumers. So Carmila is retail [ brand and way ] to connect retailers with their consumers. And that's between EUR 3 million to EUR 5 million per year that we invest to our -- in terms of our marketing budget that we invest in local digital marketing initiatives. Fourth, achievement, beyond franchise, pop-ups is that of the innovating and investing for tomorrow focus. We want to develop and strengthen proximity and novelty to our clients that's across our 24 centers since 2014, as 81 stores developed by Carmila retail development. It's the front of Carmila and enabling us to develop entrepreneurs to help them developing, growing in our centers. And so this is also all the new activities that we've seen and developing over the past 6 years, [indiscernible] the field of health. And -- but also in terms of antennas and relays infrastructures, which allows to -- for Carmila to diversify. So these achievements serve robust results, as we want to have this proximity. We want to make life easier for retailers, and this is our resonates really is embedded since the latest general assembly within the status of Carmila. And this has allowed to ensure strengthening of our robust yield and growth over this period. The average annual growth of FFO has been 7.9%. The growth of -- in financial occupancy rate has increased 10%, and the average organic growth has grown by plus 2.7%. These are extremely satisfactory elements -- achievements. So I'd like to insist on a strategic topic, strategic for us, and the first quarter -- and the first half of 2020 has really led us to strengthen our CSR strategy. The Board of Carmila has decided to create a CSR committee within this Board so as to steer and measure the levels at the highest level of the company. This CSR strategy is coming to -- this Board met a month ago to identify objectives and to define the Carmila CSR strategy. We'll give you more details about this in a moment, but largely, CSR program is and has been around the -- here, we take action so our physical presence in regions and our will to take action and to really take the CSR policy forward. This articulates around 3 pillars for the planet, so all our environmental-related actions. And notably, we've been committed to the certification approach, and we've decided to scale up and to really commit to, again, taking action against climate change, reducing 50% of our greenhouse gas and emissions by 2030. The second pillar is around the fact that we act for the regions from center directors committed to local partnerships. And we've now decided to step up and to offer and to develop partnerships with the voluntary sector, the reason, to offer local, sustainable and eco-responsible policies reflecting every specifics. Every one of our territories, we have a presence in each center by 2022. And for our employees, from well-being at work to workplace equality, and this is about workplace quality that we want to take actions backed by figures, so our answer to take this topic forward. And I'd like to hand it over to Sebastien Vanhoove and with report of the activity of Carmila for the first half of 2020.

Thank you, Alexandre. So activity in H1, a few figures, some of them have already been discussed by Alexandre. First of all, footfall. Let me skip to the next slide. As you can see here, footfall, where our Carmila shopping centers are doing quite well. So before the actual health crisis, footfall growth was significant, plus 3.3% in France, plus 3.8% in Spain. With France, something that was above the Quantaflow average. Post health crisis and more specifically in June, as Alexandre was saying, minus 13%, which is an encouraging footfall figure, not very different from last year. And there is a gradual recovery. And this should be also related to the fact that the sales period was postponed to July. And that, of course, was a factor because the sales only started on July 15. And if you look at footfall for the first week of the sales, it has returned to 100%. Our customers have come back to our shopping centers. You should also note that there is a difference and a fantastic performance of Carmila centers versus the national average, notably in France and Spain, plus 8% for France, plus 12% for Spain. And as you can see on the right-hand side of the slide, as Alexandre was saying, our proximity centers are performing well. Another positive aspect of this first half of the year, revenues for our tenants. Before the crisis, the momentum was good. Revenues in the 2 months were up 1.7% with a number of sectors that were doing very well, such as food and restaurants, health and beauty or household and furnishings. Post COVID, the figure is only minus 6%. So the drop has been contained, minus 4.2% for France. Of course, this needs to be tempered by the fact that the sales started much later. And household furnishings are growing and apparel and accessories have not done so well, but the sales are even more important for them. So this growth is also the result of some of our strategic pillars. First of all, our digital strategy. We have discussed this before. And our digital strategy means being present throughout the consumer path, B2C, but also to work with the retailers we are partnering with. If we look on the customer-facing side, we are there throughout the shopping journey. We are there when they're looking for information in our digital tools and our web pages, as you can see here. The number of visits to our web pages was up 22% versus H1 2019, plus 24%. And our permanent contact with our customers, we have chosen to remain in contact with all of our customers and all of our retailers throughout lockdown, plus 117%. We sent great many e-mails to our customers during lockdown to stay in touch. And then on the B2B side, we still have Le Kiosque de services, with all of the operations conducted, 4,700 in H1, including the lockdown period. So very important initiatives. And a lot of things were done with our retailers when business started to recover when they reopened. Another interesting point here. The letting dynamics. There were, of course, 3 months of total stoppage, but 233 new leases were signed in H1 with a minimum revenue of EUR 11.3 million guaranteed rent. And also good figures for renewals. So the start of the year, of course, we had something that, on average, was much higher than 2019. And then post confinement, post lock down, 37 new leases signed. Something which confirms what Alexandre was saying, in H1, a lot of signatures, a lot of new leases are in sectors such as health and beauty, culture, cultural goods, gifts, and much less in apparel. So another important point and another significant indicator is that the financial occupancy rate remains resilient and stable. Financial occupancy rate is the same as on June 30, 2019, slightly down from December 32 (sic) [ December 31 ], 2019, which can be explained by the fact that we were unable to deliver a certain number of units to retailers during the lockdown. And of course, the pop-up store business was also down. So these results also come from our strategy, number of choices we've made. And an important point here is how we work in the regions, how we work within the community, with local retailers and the fact that we were -- and also the fact that we a lot -- we work with a lot of independent retailers, franchises or local retailers. And in order to go even further, we have created a new department called Franchise and Development, which aims to create a link between the franchising companies and the local people who wish to become retailers, and independent retailers tend to be much more resilient in the face of a crisis. And then the pop-up stores, with more flexible leases, which are quite relevant in periods of crisis such as what we have just experienced, and a very momentous business where we shall be deploying in the next few weeks, if we see what was signed. We have 10 pop-up stores with Le Repaire des Sorciers, which are usually a huge success when they open. And then we have also signed leases with Patatam, a pure player, who are a secondhand retailer. And then, of course, our own advertising department considers, of course, that a lot of advertisers were not there in H1, and they will need to have a number of on-site operations with high visibility, and sometimes in connection with the supermarket. And Alexandre also discussed this earlier, the CSR program. Here, we're acting, "Here we act." A lot of things were done in H1. First of all, on the Here we act for the planet, our environmental strategy. You can see the figures here. The BREEAM in Use certification has risen from 61% to 64% in H1. And our target is for certification is, of course, 75% by the end of 2021. And in order to reach this target, we launched earlier in the half year a campaign for the certification of 27 sites in France and 21 in Spain. And to go even further in the struggle against climate change and improve our energy efficiency, we have launched a number of audits across 8 sites to try and draw up action plans and improve continuously on our energy consumption. Second pillar here, we act for the regions for the communities in which we operate. There are a few examples here that are the continuation of a number of initiatives we took during the lockdown. We, for instance, made a number of centers available for the victims of domestic violence. We worked with the authorities to do that. We adapted our historic partnership with the Secours Populaire charity. This was done physically in our shopping centers, but thanks to digital tools, we confirmed this partnership we had with them to ally that EUR 10,000 were donated to the Secours Populaire. And in various other countries, there were donations of masks, sanitizing gel and meals to the local community and carers in Spain and Italy. And then here, we act for our employees on the industrial relations side, on the social side. All of our teams worked from home as soon as the lockdown started, and this worked extremely efficiently. We have new working tools with webinars, a lot of dialogue between ourselves and with the outside world. And we can see here how efficient these tools were because we conducted an in-house survey, and you can see that the figures are extremely satisfactory because 95.5% of our coworkers consider that working remotely in the manner in which we organized it, help them to go through the lockdown. And more than 96% were happy with the internal communication. And then let's now briefly focus on Carmila's management of the health crisis. This figure you've seen before, of course, on average, shop closes lasted 2 months -- only 2 months in a sense because we feel it would be much longer. A very important point was that all of our shopping centers remained open during lockdown. That's very important because you will see in a moment that we remained open so that the supermarket could be accessed and as well as all of the so-called essential retailers. So we had to organize social distancing, the flow of customers and all of the prevention and safety routines and so on, to organize the flow of customers with the supermarket. So we also decided to postpone payments until Q2 2020 to preserve our tenants' cash flow. And all of our teams have stayed in close contact with our independent retailers with the brand names and so on. And we thought that was essential. And in fact, staying in touch with them, made it easier for a number of retailers to rebound and recover. The Carmila centers, clearly, are proximity, local players that are useful and necessary in their communities. And the fact that the centers remained open helped to reassure our customers. They returned to our centers quicker because they saw that we had remained open and that we were in a position to address all of the sanitary constraints that we are facing. That's a very important point. And during block down, footfall in our centers was much higher than that of our competitors because we were open and we knew how to manage that properly. So a lot of our customers found our shopping centers very reassuring, partly because Carrefour was there, because the partnership and synergy with Carrefour. Carrefour was, of course, an essential retailer as defined by the law, and that was confirmed. And as you would have noted, supermarkets, and notably Carrefour hypermarkets, have proven their resilience because, of course, they were there to provide value and to provide safety with social distancing and to provide a safe experience in a single location. So the fact that the anchor is the Carrefour hypermarket really helped. And then, of course, our centers were also deeply involved with the community in a constant dialogue with local players, which allowed us to reopen all of our centers in all 3 countries as soon as possible. On May 11 -- all of the centers opened on May 11, which was the first possible date. We worked very closely with the authorities, particularly for sites over 40,000 square meters, which were very much in the news at the time. So we very quickly engaged in action plans with our retail partners in terms of the rents, for instance. Rents and expenses had to be paid during lockdown, rent collections. But we decided that collection for Q2 would be delayed till September 30. And then we shall return to a normal invoicing as of Q3 2020. As for monitoring of our tenants after reopening of their stores, we communicated about that. We decided to follow governmental instructions by canceling 3 months of rent for very small businesses under 10 employees, and for all of the others to negotiate on a case-by-case basis to provide assistance with rents that are waived for 1 or 2 months with a number of counterparties that would also need to negotiate with them. So if we look at the situation across the negotiations concerning our leases, you can see that our rental base is very large. A lot of our shopping centers, 6,000 leases, 23% of these have been negotiated and the negotiations have been finalized. 44% of the base, all the negotiations are still ongoing. It's something that is taking a long time. But if we focus more closely on negotiations on specific negotiations, you can see that out of 210 leases, we have, on average, waived rent for 1.1 months, which is not that much really, but with significant counterparts because for these 210 leases, we extended the maturity of the leases. We expanded the maturity. What is important was to try and find new leases, too, on vacant lots. And you can see the 80 shops across the 3 countries. We signed leases as part of these discussions. So our target was to have win-win -- to conduct win-win negotiations to allow retailers who are still developing to sign new leases. And then a final point, in terms of our promotion pipeline, you know that there's a very large pipeline at Carmila which is secured, but which is on standby for the moment. Let's just focus on 3 projects for 2020. First of all, just before the lockdown, we delivered 3 restaurants in the Toulouse Purpan center. We have a project in Nice Lingostière, a major project where we are doubling the surface and the number of shops. Of course, construction work was stopped during lockdown, but has quickly picked up in compliance with all of the new rules, of course. 90% of the project has already been leased with a very large lease for the Cultura cultural goods on 3,000 meters. And the opening is now -- has been postponed to the end of Q1 2021. And then we have restructured our Cité Europe center in Calais, where the food court has been modified and where we also have a new Primark on 4,000 square meters that will open in early 2021. So as I was saying, this secured pipeline will be activated as soon as all conditions are met. I said already that we're going to be more selective in the projects we choose. And this very special time has allowed us to rationalize the pipeline to keep some cash to conserve quality by giving up Laval and Vitrolles, 2 projects, in order to focus on projects with the highest yield potential, projects such as Tarassa in Spain, Montesson, Antibes or Vénissieux in France. And now over to Pierre-Yves.

Now turning to financial results. This has been an atypical half year marked by the impacts of the health crisis, of direct impacts and indirect impacts, and these, in terms of the due date in terms of the rents as described by the previous speakers. So we're now going to review and compare results. So the -- first of all, the P&L has reflected the -- and as per the IFRS 9, the due dates and the extensions, as dealt with under the IFRS 16 under the set duration of the lease. So the net rental income in use are down 11.7% at EUR 147.5 million. And this reflects organic growth down 12.7% on the half year. So 12.7% in France, as I stated, down 2.7% in Spain and down 11.7% in Italy. This can be explained by specific impacts related to the health crisis, which I will give you the breakdown in the next slide. And organic growth, excluding specific health crisis impact of which indexation accounts for plus 1.5%. So extensions contributed to 0.3% of the variations of the growth in net rental income. And the other impacts accounts for down 1.9% and then include the one-off effects as well as strategic variations. So account for in the first half of the year. I will now turn to the main variations of the P&L. So between the rental income at EUR 163.6 million on H1, down 8.6%. The main adjustments that have been built into these gross rental income are as follows: First of all, the 100% abandoned gross rental income granted for the very small businesses in Q2 following the government incentives. So impact, accounting for EUR 13.2 million. The other impacts have not been taken into account on the first half because some of these have been -- have not been finalized or have not -- were not signed as of the 30th of June 2020. Furthermore, we've adjusted provisions for variable incomes with -- so EUR 4 million expected on a full year basis, down EUR 1.9 million drop in our provisions for variable rents. And the SL revenues are down EUR 1.3 million. So property expenses include the unrecoverable receivables and the impact of provisions accounted for EUR 4 million. And given the postponement of the collections used in the first half of the year, Carmila has seen a EUR 4 million impacts. In terms of operating expenses, we'll comment on these variations in the next slide. So the -- we've seen -- so the carryout -- well, we've seen the generation of savings around structure and costs, including of staff costs. So in terms of operating expenses, 100% of headcounts have been benefiting from remote work or teleworking or on-site work. And then we have EUR 2.2 million of savings during the half year as a result. So recurring earnings are in decline as a result of the health crisis at EUR 93.9 million, down 15.9% against H1 2019. So recurring earnings per share for the half year at EUR 0.69 per share, so down 15.7%. So over -- in terms of the market value, we stand at EUR 6.219 billion, so that includes 3.5% drop in France, 3% -- down 3% for Spain and plus 0.3% for Italy. So in terms of the specific impacts, we have a total at constant scope, so we're down 3.2%. So the specific impact of the health crisis accounts for 1.4%. These specifically related to health crisis. Experts have retained and rates as follows, so the impacts on rates, down 1.9%, and impact on rents, plus 0.1%. This has remained stable over the period over the first half of the year. So the average exit rate of Carmila is beyond 6% mark, 6.11% over the first half of the year, plus 21% (sic) [ 21 ] of basis points; plus 22% (sic) [ 22 ] for the average exit rate in France, 5.90%; 6.74% in Spain, plus 20 bps; and in Italy this rate remained stable at 6.16%, down 2 bps. In terms of the premium versus the 10-year OAT, this premium stands at plus 60 -- 623 bps. It's the highest historical level and the implied yields versus the share price at 9.4% compared to the 6.9% of average exit rate. I'll let you judge whether this is reasonable. So the change in NAV, so the has been reviewed. EPRA has put forward 3 indicators of [ reversement ] of the previous indicators. The net tangible assets of value of EPRA perfectly reflects the net asset value of EPRA for Carmila, and I suggest we take a look at the breakdown of this net tangible assets EPRA on the year. 31st of December 2019 is at EUR 27.79 per share, the impact of the factors I've just described. And in change in value of assets, we've got -- so we are down EUR 1.57 recurring earnings for the first half of the year, 2020, plus EUR 0.69 dividend and EUR 1 per share impacts. So -- and with the following evaluation NTA EPRA at EUR 25.82 per share. And then EPRA, we're looking 5.8 million shares issued for the payments of dividends after the capital increase of the 27th of July 2020. So we now extended the forecasting EPRA will stand at EUR 25.22 per share as a result. In terms of financial structures, Carmila has cautiously manage its cash and equity to tackle the health crisis, so we have the 2020 and 2021. And so this new -- between 2023 and 2024. So apart from the private placements of EUR 100 million to be repaid by 2029, and in terms of the debt amortization table, so figures as I've just described. Moving along to the liquidity reserves at EUR 1.136 billion and liquidity reserves, which is available at the 30th of June 2020. So the back-up line undrawn, EUR 659 million; backup line drawn, EUR 100 million; and the cash net of the back-up line drawn portion at EUR 377 million. So the average cost of debt stands at plus 1.8%. Average remaining term 4.7 years, and the LTV ratio, which is a forecast after payment of dividends, at 37%. So very interesting, a very attractive ratio for Carmila. Interest coverage ratio as -- has been set to 4.9. So a ratio of 4.9. [ Net debt/EBITDA ratio stands at 88.4 ]. Now looking at equity investments and valuing the variation of the dividend. As before they were at EUR 1.5 at the start of February, down EUR 1 as a result of the [ generous ] have been decisioned on the 20th of June, with an option to subscribed our actions, so -- shares. So when it comes to the payout obligations, these stands at 95% of net rental income, 60% of capital gains on disposals, 100% of dividends of the SIIC subsidiaries for Carmila, which is a holding company. Carmila SA does not directly own any assets. It's payout obligations for the first -- for the 2019 financial year amounted to EUR 20 million is then limited, which lends Carmila a high degree of flexibility to control its dividend policy. Now for the 2019 dividend, as announced on the -- in February at 1.5%, the payout rate as proposed with the possibilities to invest in subscription options. And leads to a share subscription at 46.5% and the impact of NTA EPRA of plus EUR 131 million. I should now hand over to Gery Robert-Ambroix with a focus on the Carmila-specific assets.

Thank you, Pierre. So against this rather incredible background of what happened in H1, Carmila demonstrated the powerful assets and specific assets it has compared to its peers, which sometimes leads us to think that we would like to be more differentiated from our peers, and we would like the markets to understand what our uniqueness is. And that's what we're going to try to demonstrate now. So not so long ago, as you may remember, people were saying that only jumbo shopping malls would survive, that smaller ones were facing trouble. And in fact, in the past few years, and particularly with this health crisis, people are rediscovering the benefits of proximity. Proximity has been our [indiscernible] for across this presentation. And it is crucial to understand that proximity is a value for the future. And Carmila's portfolio is a portfolio for the future. It is accessible. It's reachable. It's deeply connected to the community. It's easy to access. Free parking. Simple access. It's also the rediscovery through the health crisis of Carrefour of the hypermarket, which performed well, of course, during the health crisis, based on the principle of a shopping center that is food anchored, that is something, of course, that you're all familiar with, and that remains one of our crucial points. And we also have that local culture, that proximity, that community culture in us. So basically, whether you're in a small shopping center, such as Grenoble Meylan, or medium-sized, such as Rennes Cesson, which we expanded last year, just 10 to 15 minutes away from our jumbo center at [indiscernible], or whether we're in a regional shopping centers, such as Geric in Thionville in Eastern France, proximity is the -- is most likely the winning model for shopping centers. You can see that with the diversity, they're all different, but they all have a 100% financial occupancy rate, and our tenants are running a good business. So perhaps a little bit of a side note about a certain number of learnings -- of key learnings from the health crisis, something that is a great concern for the markets and has been. What about e-commerce, the difference between e-commerce and brick-and-mortar? I think the first key learning, which in fact confirms this analysis, is how omnichannel has become increasingly popular. I don't know if you saw that or read the papers or listened to commentators at the start of the crisis. People thought, okay, it's over. Digital is going to steam roll the rest, but you can see that omnichannel performed well during the health crisis. Growth in France in March and April 2020 of omnichannel, plus 67% for stores who have physical stores and plus 4% only for pure players. So I think that is a very interesting and unsurprising learning. Another point of note is that the growth of e-commerce was much slower in the first quarter as it ever was, only 1.8%. So they didn't really benefit from the health crisis in Q1. And then also remember that in the 3 countries where we operate, for cultural reasons, primarily, the rate of penetration of e-commerce is much lower. If you look at Italy and Spain, 4% and 5%, and France, 11%. And if you look at those figures, that also includes rail tickets, online betting, holidays and so on, things that shouldn't be in those figures, but which are there anyway. So it's something that one should always bear in mind. So of course, digital isn't despicable at all. We are doing a lot of digital ourselves, as Sébastien was saying, because we deeply believe in the omnichannel approach. A second interesting asset which I think you should all bear in mind, the fact the Carmila has moderate rent and OCR that provides sustainability and flexibility. Average rent in France, EUR 255 per square meter in France, EUR 217 in Spain, very reasonable and the OCR is also reasonable, 11.9% in Italy. In fact, that gives us a lot of flexibility. Retail is something very lively. And shopping centers are lively places. Dentists offices, dental practices, that's growing very fast. This is a business that's very important. But they can only pay rent of around EUR 300 to EUR 300 and per square meter because the OCR is only about 5%. So in fact, these dental practices are something that we can perfectly well house in our shopping centers. Pharmacy, the same, 2.5% to 4% OCR for them to make a living, meaning that the rent they can afford is around EUR 250 per square meter. And the same for services. Barbe de Papa, these barbers, discount stores, Action, for instance, brilliant and growing very fast, but they pay modest rents. They pay EUR 80, EUR 120 rent for about 1,000 square meters. And in fact, we can also welcome them. And then public services, this is something that we are working on. We truly believe that they belong in our centers, and that is, of course, a change in legislation will allow us to have more of them. Third asset, Carmila retail development. That's probably one of our most original assets, most powerful assets. This is far from anecdotal. This is really very much a crucial part of our strategy. For those of you who don't have that in mind, our strategy is based on Carmila entering joint ventures with partner retailers, usually early stage, but who have already proven their worth. We invest in their development with a 20% to 40% stake in these companies. And the target, of course, these are growth businesses. So they're generating rent in our shopping centers. And second, the idea is that we can support them for, say, 4, 5, 6 years and then sell our minority stake. And what we hope from this is also, of course, substantial capital gains through these disposals. So the 4 major partners, which we had already presented in our annual results, which remain our main ones are La Barbe de Papa, Centros Ideal, indémodable and Cigusto. And even in this very specific period, they have continued to grow. La Barbe de Papa is 46 shops now. They had 3 not so long ago. So a very fast growth, and you can see it on the little map here, the 3 maps. You look at the speed of deployment of La Barbe de Papa. So the strategy which was initiated about 2 years ago is really bearing fruit now. And it is far from anecdotal. It is going to account for growth for Carmila substantially in the coming years. 81 shops, 81 with our 4 main partners now are operating in our shopping centers. Plus 13 for this half of the year. EUR 2.23 million in rents for what is a pretty modest investment of EUR 8 million. And in terms of capital gains from our minority stake, it can be evaluated at around EUR 10 million. So again, far from anecdotal, and our 5-year ambition, let me remind you this, is that we'd like to have 15 to 20 retail brands at any time, any given time in our portfolio, and sell 2 to 4 of these business stakes that we have, and we think that it's going to be an original and powerful growth driver for Carmila. Fourth asset, we are betting on health care. And we have been for the past 18 months or so. And unfortunately, the current health crisis showed that it was a pretty good intuition. We've created an umbrella brand called Vertuo, you can see the logo there on the right-hand side of the slide, which is very much working on ethics, on quality. And that will be applied to our health care activities. And we're rolling out a number of bricks across our shopping center, where we're creating pharmacies. We launched Pharmalley about a year ago, which we are growing at a pace of about 5 a year. Second point, Dentalley, a company which we created. These dental clinics, we have a 35.75% stake in this. We have a fantastic team. And our ambition, our belief is that we shall be deploying over the next 5 years, 50 medical offices, medical surgeries, and this should generate more than EUR 15 million EBITDA within 5 years. So you see the -- probably the valuation of this company, that will be more than EUR 150 million, and we'll have a 35% stake in that. And then the other bricks, of course, the opticians, optometrists and blood testing facilities. And that, again, is very well adapted to Carmila centers. Fifth asset, and I shall stop there, our ability to work like entrepreneurs and create profitable businesses based on our physical assets, its geographical spread. And the example which we often quote is LOU5G, which is our telephone mast subsidiary created 18 months ago. And that, again, is far from anecdotal because LOU5G allowed framework agreements entered into with Free, SFR, Bouygues and Orange, the 4 key mobile phone operators in France, 143 masts, EUR 1.5 million per year in rent. And at the end of the deployment of Phase 1, over 6 to 9 next month, the value of the activity will be above EUR 20 million for an investment of EUR 8.2 million. So again, a fine illustration of our capacity as entrepreneurs to find growth. And now I'll let Alexandre conclude this presentation.

Good. By way of our conclusion in the next few minutes now, first, I would like to highlight two points. Number one, I'd like to -- things in my -- this first closing remarks by NATIXIS research note dated 25th of June 2020, quite a remarkable one, "Shopping centers are under threat, but quality will triumph over the crisis and e-commerce." So I could not have worded this better then NATIXIS, and the point here is that the observation is that since the crisis, the stock value of the main land operators in Europe has gone down with 70%. And so this note is focused on now looking at the underlying reasons of such an evaluation, and really questioning the fact that the -- the soundness of the underlying scenarios. So first of all, people tend to overstate the risks whilst estimating the assets. And so indeed, people have said that in physical commerce, physical trades will be swept away and replaced by e-commerce, but this is not something that is grounding, in fact. And when it comes to shopping center experience, we've seen that the reality of the growth of e-commerce has been, for the most part, in an omnichannel way. When physical retailers use an e-commerce channel, there's an average growth of 76%, with a pure digital players only grows by 20-some -- 20-odd percent. So indeed, e-commerce is a transformation of the physical opportunities so as to act as a booster to physical retailers. It is up to us to support this, so there's mutual enrichment of the 2 retail channels. And second point, the underevaluation of our assets. So Carmila is about man, women driving the company, and we're fortunate to have high-quality teams, top teams and experts in commercializing and commercial services, developing and managing on day-to-day basis shopping centers, developing -- and our pop-up stores and really driving new solutions. So we adapt and we make sure we are, and we stay the best. And it is why Carmila has exceeded indicators. We always -- the best ones seeing simply because we work on an every basis with retailers. And this has been systematically underestimated. So we've talked a lot about being a local player. This is the very raison d'être for Carmila, is really proximity is at the heart of everything we do at Carmila. And we want to be close to our clients, consumers; the way we act is key as well. And we reflect other values as well which are key to us, especially under the common circumstances. First of all, the value of usefulness where here, the nature of our commercial offerings and each of our services, we -- offering is really about -- is all around being useful to consumers and retailers. So we nurture this usefulness. What we do is relevant and has to be relevant for our day-to-day consumers and retailers, and we want to be reassuring. Being a local player is reassuring and we want to be reassuring, and being reassuring is a key. And in periods of health crisis, we were health bubbles during the crisis. And these will stay on for months and months to come, and we will make sure that the customers' experience in the Carmila center is a completely safe experience, allowing everybody to come and in a safe environment. And for us, this is a very important point to conclude with in terms of key issues identified between now and the end of the year can be summed up in around 4 -- encapsulate it around 4 words. So local, we are local and we need to deep dive in terms of customer knowledge, targeting marketing and managing centers and partners who approve local operators. So still more local, more digital as well. Carmila has developed a successful omnichannel ecosystem. We want to be present in the connection between our retailers and consumers developing omnichannel-like assistance, best-in-class digital tools to boost the appeal of retail brands. But to be more sustainable, Carmila builds its CSR strategy around the well-thought-out range of products and services, of societal initiatives and new environmental objectives are still wanting to reduce our carbon footprint. And we -- so more innovation, we -- there's a culture at Carmila of entrepreneurships within our teams, and we want to continue nurturing this going forward. So for all these reasons, and indeed this in a [ certain ] environment, we want to put forward the following guidance in terms of recurring earnings for 2020. Will be no, while subject for it, not being any new lockdown or new health crisis. So we are suggesting a negative variations for 2020 between minus 14% and minus 18% of our recurring earnings in 2020. So we are -- these are the information we wanted to share with you, and we're now at your disposal to take all of your questions. Thank you.

[Operator Instructions] We do have -- so thanks for all your presentations. We do have a couple of questions on the web relating to Spain, to the collection of rents, and to the asset valuation in Italy and some other ones. So let's start, if you don't mind. The first one is from [ Marcus Toulessant ], which is from Bank of America Merrill Lynch. Question on Spain, why were there no rent relief [indiscernible] in the Spanish negotiations? Why was like-for-like decline so much lower in Spain versus France?

Carmila is optimistic in terms of the ongoing negotiations in Spain. The situation over the centers has been healthy up until 2014. And we had an occupancy rate around 70%, 75%. And we covered 95%. So the average rents are sustainable, therefore. And plus there is a moratorium for the small businesses allowing to spread out the rents during the closing periods over a period of up to 24 months. So the context is favorable and the situation is healthy, allowing us to be optimistic in terms of -- insofar as Spain is concerned.

[ Toulessant ]. How do you explain stable assets valuation in Italy? Any company-specific or asset-specific reasons. Difficult to see assets compression in current times, no?