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

Hello. And welcome to Carmila's Capital Markets Day. It is a pleasure to have so many of you with us today. I want to give a special welcome to our shareholders and Board members. After 12 months as CEO, it is time to give my [ own vision ] for Carmila. The COVID crisis has been difficult, but it is also an exciting time with new ideas and projects. It is an ideal time to accelerate transformation. Today, you will hear more than generic messages on Carmila's business model. You will get a detailed view of Carmila's strategy. Carmila has already come a long way. There was a successful period of growth following its creation and incredible resilience during the crisis. Today, we are looking to the future, transforming our core business, sustainability, exciting new business lines, but before that, let's start with Carmila's view on major trends in the market. This is a time of rapid change for commercial real estate. There are 3 major trends. Medium-sized cities are gaining momentum. Consumers want sustainability and new services. Retail is finding a new balance between online and in store. Carmila is witnessing these changes on the ground. It is a unique portfolio with over 200 sites. Almost all of them are leaders in their local area. 1/3 of French and Spanish people are within 20 minutes of a Carmila center. It is a second city center for many local inhabitants. Carmila is adapting quickly to these trends. COVID has accelerated our agility. COVID has had a profound effect on people, especially those living in large urban areas. Priorities have changed, environmental awareness, work-life balance. More than ever, people are used to digital services and working from home. Every week, we see surveys saying that medium-sized cities are becoming more attractive. As a matter of fact, in Paris, the number of children registered this school year is down by 5%. It is clear that the COVID crisis will have a lasting effect on how we all live, and that is a great opportunity for Carmila. Around 90% of Carmila sites are in medium-sized cities. Carmila therefore stands to benefit from this major demographic shift. Generation Z is -- accelerated this trend, and Carmila is rising to these challenges. Their customer journey is radically different. It will be easy to say that they were born online and do everything online. It is more complex than that. It all starts with [ their first ] smartphone. They are very comfortable with omnichannel services. They write reviews and can be brand ambassadors. They demand transparency and care about the environment. They go in store to have a specific experience but still value human interaction, so shopping centers are also a social destination to hang out with friends in ways they can't find online. We know them very well. [ They are ] more and more demanding. It is a top priority of Carmila to meet the needs of Gen Z. We are both the present and the future. Above all of the trends, sustainability is at the top of the list. It deeply influences consumption habits. Here at Carmila we are fully aware of the role that we need to play in this transition. Today, we make a new commitment on climate. Following the 2021 French climate law, Carmila and its peers will no longer be able to develop new sites as they did in the past. Carmila's pipeline of new development projects has been redesigned. It is fully aligned with the spirit of this new law. New projects are focused on redeveloping and improving sites, especially through mixed use. [ Still on ] consumer expectations. Purchasing power is also a major concern. Hypermarkets remain the format that offers the lowest prices and the most choice. These explain their enduring popularity. They are, by far, the most popular grocery format. They account for almost 40% of the French market. Carrefour is a leader and has embarked on a radical transformation of its business. Carmila centers are tied to Carrefour hypermarkets. They benefit from the traffic generated in synergy with Carrefour. We saw this during the health crisis. We outperformed the market in terms of footfall. Naturally, shopping malls must be adapted to local needs. That means facilitating the everyday life of customers with a full service offer. Access to health care services has become a major issue. In many areas in France and Spain, people have to travel long distances to see a doctor. We are going to fill our centers with more doctors, dentists and pharmacists. This push to find new concept is not limited to health care. Carmila will launch new concepts in food, leisure, convenience and in many other areas. Let me show you what Carmila is like with a short video. [Presentation]

We thank our clients for their trust. Turning now to the retail sector. The move to omnichannel is the major trend. COVID has shown everyone that we do not want a fully online world. Around 70% of nonfood retail in our markets will probably remain in store in 2026, but we are shifting towards a new balance between in store and online. Some products have been heavily disrupted, such as travel, books, music and so on, but many services must be 100% in store. You can try, but you cannot have your hair cut online. Fashion is somewhere between the two. When I talk to the CEOs of fashion retailers, they talk about online penetration of around 25% to 30%. Carmila centers are structurally resistant to massive disruption. Pharmacies, opticians, dentist, hairdressers, restaurant, dry cleaners, there are a lot of examples. I have never heard of a retailer that has decided to close all of its stores. Stores remain central in an omnichannel world. Some customers want more digital. Some want stores. Customers want everything, so Carmila centers must be fully omnichannel, but omnichannel does not mean the same thing everywhere. In most places, omnichannel is not immediate fulfillment with a 15-minute delivery. It takes several days to receive an online purchase in many places. Shopping center still provides the most immediate retail experience. There has a place to touch, taste, see and smell, get advice, meet other people and leave with the products that you have bought. The real challenge is to combine online and in store. That means access for delivery drivers, click and collect and drive-through in every center. For Carmila, it also means developing innovative omnichannel services. This is why customers have come back to shopping centers after restriction were lifted. COVID has reminded us that a fully online world is not as fulfilling as real human interaction. Carmila sites are deeply woven into people's everyday lives. Customers have come back with higher expectations. They want to shop more efficiently. They want an exciting in-store experience. Carmila is meeting these higher expectations. There has been a tremendous amount of negativity about the shopping center business, but the reality is that customers have come back. The vacancy rate is almost unchanged. The rental base remains stable. Leasing activity is at a record level. Carmila's core business has clearly demonstrated its resilience. Carmila has strong fundamentals; and a DNA of agility, digital and retail. We started to pivot during the crisis. This gives us a firm base to build a sustainable growth strategy. What is this strategy? Our strategy is based on 3 pillars: an incubator and an omnichannel platform, leadership in sustainability, innovative new business lines. The first pillar is a new vision for the [ role ] of Carmila. Carmila has always been a partner for retailers, but today we are launching a new approach, a new way of working with retailers and a complete tool kit of omnichannel services. This will refresh our offer, bring us higher rents and generate new revenue streams. The second pillar is leadership in sustainability. Carmila's pipeline has been fully redesigned to meet new urban priorities and the highest environmental challenge standards. Finally, Carmila will push the boundaries of its existing core business to drive growth in earnings. We will scale 2 new business line, namely investment in digital infrastructure with the launch of an exciting new business called Next Tower and minority ventures in new retail concepts through Carmila Retail Development. These initiatives will enable Carmila to open a new chapter and to deliver growth and returns to shareholders. To implement the strategic plan, Carmila can count on the partnership with Carrefour. Carrefour is at the cutting edge in terms of retail best practices as well as innovation. Via Carrefour, Carmila has access to leading partners, especially tech leaders such as Google. Specifically on Carmila's partnership with Carrefour, Carrefour is a strategic shareholder with a 35% equity stake. The partnership generates synergies both in terms of traffic generation and operations. Sites are entirely controlled by Carrefour and Carmila. This creates opportunities to maximize value creation and to implement new projects. In short, the relationship with Carrefour ensures operational excellence and enhances Carmila's capacity to innovate and grow. As you can see, the health crisis has not reduced Carmila's ambition. On the contrary, I'm convinced that Carmila has all it takes to transform its model. I am fully confident that we will be successful. I now leave the floor to Sebastien and Sandrine to tell you about the incubator and the omnichannel platform.

Thank you very much, Marie. Hello, everyone. I am Sebastien Vanhoove, the Deputy CEO of Carmila. I am very excited to be able to talk to you about the changes Carmila is implementing. Firstly, I would like to say that Carmila is 214 sites, all most of which are leaders in their local regions in France, Spain and Italy, but Carmila is more than a traditional landlord. We have a culture of partnership with retailers and we are continuously looking to respond to new trends and customer needs. With end customers in B2C, the pace of change have accelerated. Shoppers are always looking for new concepts and products. What they used to look for in shopping center is now available elsewhere, especially online. With retailers in B2B, Carmila's tenants are facing many challenges. The closures during the health crisis had a significant impact on their business. COVID has accelerated the pressure on retailers to adapt. These are the reasons why Carmila has decided to accelerate its transformation. Carmila's response to these challenges is a new vision of its support role. We want to send a clear message to retailers. On the one hand, we are actively looking for new concepts. On the other, we will provide them with all the help that they need to be successful. That means providing a complete ecosystem of services. Carmila's role is to make sure that all of its center are fully omnichannel. We are stepping up our omnichannel services to stand out from our competitors. Before going any further, I would like to start with a short film to show you what Carmila is really about. [Presentation]

This film illustrate very well Carmila and our relation with retailers. Retail is undergoing structural changes. The mix of stores in our centers is changing. As you can see on this slide, we have already worked hard to adapt the mix in our centers. This transformation has been driven by structural trends on local needs. This is particularly true for clothing. It accounts for only 31% of Carmila stores. On average, that is 13 points lower than Carmila's peers. We will continue to adapt the mix of our centers. We are further reducing clothing; and shifting towards more services, leisure and innovative concepts. Carmila actively follow the most exciting retail trends. We seek out the most dynamic retail businesses and entrepreneurs. That is why, as Marie said earlier, commercial activity is so strong. It is also why we have been able to keep the vacancy rate low. It's amazing [ how many ] new and exciting projects we are seeing: services you might not expect to see in a shopping center, such as employment agencies or real estate agents; new trends such as [ CBD ], secondhand, digital brands that are eager to open stores. There is also health care, which is a special case. I would like to talk about health care in more detail. Carmila customers have particularly high expectations when it comes to access to services, especially when it comes to health care. That is why bringing health care to Carmila center is so important. It makes life much easier for our customers in a one-stop shop. Carmila has already started to bring health care to its centers. There are already many dentists, pharmacists and doctors. There is a lot of concern about access to health care in Western Europe. In France, recent surveys show that, just after purchasing power, health care is the second most important issue at the moment. That is why we are convinced that the growth of health care services in shopping center is an important structural trend. It is also part of Carmila's role as an actor in the transformation of local regions. By 2026, we expect to have around 15% of gross rental income coming from stores that sell health care products and services. That includes more specialized services such as medical labs, medical imagery and ophthalmologists as well as animals clinics. Finally, health care is an area where there is going to be a lot of innovation. For example, [ e-health ] could be part of the response. Carmila is looking at the installation of [ e-health ] spaces in its centers. Another kind of retailer that will benefit from the incubator program is digital-native vertical brands or DNVBs. You can see a few example of brands on the slide. They are brands that were created on the Internet on [ their design ] and sell their own products. They are becoming increasingly aware that physical stores are a key part of the customer experience. Managing a physical store is all new business for them. They know all about marketing and product, but they don't know how to set up a physical store. For example, equipment or fitting out stores are new for these brands and require specific expertise. Carmila can provide expert help in these areas. We are already very close to a large number of DNVBs, as demonstrated by the number of brands that took part in a competition we launched in 2021 called DNVB Ready. 71 brands took part in the competition. The prize was help from Carmila to set up in one shopping center. This work with DNVBs is just part of what we are doing to refresh the mix of stores. I also want to mention local brands. They are a differentiating factor for Carmila. Their situation is completely different. They know their market and their customers, but they don't know omnichannel. Carmila will help these local brands by offering a complete ecosystem of omnichannel services to make sure they are really competitive. Finally, let me talk briefly about the services platform. You can see on this slide all of the services that Carmila provides to retailers. Carmila has a unique real estate expertise, and we have a culture of partnership with retailers. With our new strategic plan, we want to go further in this partnership with retailers. We want to group together all of the support that Carmila provides to retailers in a single platform called Carmila Services Hub. These services will help retailers to be successful in Carmila centers at every stage of their development. That could mean putting franchiser in contact with franchises, helping retailers to choose the right format, construction works, commercial transactions. It could also mean helping a digital brand open a pop-up store or organizing a major sales event which can significantly boost traffic. Finally, we are also accelerating the development of omnichannel services. Our ambition is to make all Carmila retailers and center fully omnichannel. Now I leave the floor to Sandrine to go into more detail on this key part of Carmila's strategy.

Thank you, Sebastien. Hello, everyone. My name is Sandrine Mercier. I'm in charge of the commercial network, marketing, customers and digital in Carmila. As you said, Sebastien, we do a lot in omnichannel. We promote business in Carmila centers through partnership with our retailers, and we already have 100 actions by day on our different communication networks. There are several ways in which we can deliver this: A higher level of traffic, qualifying this traffic, these mean identifying the most valuable customers. Encouraging the most valuable customers to spend more per visit or to come more often. The best way to achieve this goal is to accelerate the development of Carmila omnichannel's ecosystem over the next 2 years. Of course, this is closely tied to the customer journey. Our ambition is to amplify our complete ecosystem. All the retailers in Carmila can benefit from omnichannel solution. Firstly, we will support the omnichannel efforts of retailers through our [ own ] efforts on omnichannel. As Carmila is very active on media, we are used to developing content for retailers to help them reach more customers. We also continue to act as an entry point to the Carrefour tool kit. For example, we have been successful in Spain. We have helped quite a few Spanish tenants to sell their product on Carrefour marketplace. We are also working with Glovo to improve access for [ full ] delivery drivers. In many of our centers, Carmila has created dedicated space and drive collection area for click and collect, but that's not all. Many local stores and smaller brand don't have the scale to develop the full range of omnichannel ecosystem. They need our expertise. We help these local stores create an online e-commerce presence with Shopify, which give them direct payment. We'll also provide click and collect and [ home ] delivery services. We offer an enhanced shopping experience through digital services such as live shopping, which is clearly our next step as demonstrated by our successful test in France. To achieve all these positive outcomes, we are accelerating the development of partnership with start-ups. They help us to find the most innovative solutions. It is faster and cheaper. Carmila has been putting in place the best digital services and a flawless shopping experience. That's mean working all along the customer journey. This journey is divided into 3 steps: before, during and after the visit. There is a common goal, creating a better shopping experience, more fun and more information provided to customers. These make them more active and encourage them to buy more or to come more often. We have a range of medium-term targets for many of these steps: increasing the size of Carmila customers database from 3 million up to 10 million in the next 4 years; doubling the number of influencers, going from micro influencer to macro influencer by 2022; increasing the Net Promoter Score by 5 points within the next 3 years. Before the visit. The first key part of this ambition is action before the visits. Carmila focuses on 3 things: visibility, providing information and building engagement with the community. Our website is the main tool to push commercial information. It also allow customers to contact us directly. This is why we have partners with start-ups. I will give you one example, Partoo, which mean everywhere in French. It is a leader in online visibility. They centralize information and feedback and make it available for major online platforms such as Google and [ Waze ]. With Partoo, in 2022, we will have 100% of independent retailer information on most major platform. That is more than 1,200 retailers. Another way in which customer can start their journey is through WhatsApp. Here we have a special initiative that we have [ streamed ] in Spain, which I will present to you now. WhatsApp. We have [ tested ] the WhatsApp personal shopper initiative in Spain. This successful test demonstrates how we are working to create the best of the -- both worlds between omnichannel and human interaction. The best way to describe this service is to take you through the customer journey. The customers starts to -- going on the center website. There is a list of all the retailers that participate in the initiative, and their product catalogs. The customers click of the WhatsApp link for specific retailers. They start the chats with a personal shopper allocated to that retailer. The customers can ask questions and sees a product. They can choose their product. They can receive advice. Once they're happy, they confirm their interest. The personal shopper [ send a linked ] for delivery details and payment information. They can have it delivered to their home or pick up at the center. During the visit; the first step, influencers. Influencers are somewhere between before and during the visit. They help bring customers to the center. They also create a greater level of emotional engagement during the shopping experience. [ Shopping the steps ] of an influencer create a special experience. We are the leader [ on local actions ]. It brings real emotion to customers. And we will double the number of online events on the social media by 2023. TikTok will be part of that plan to help us advertise what's going on in our center, especially dedicated for the Generation Z. Second step, services. Services are a second key part of what Carmila customer expects. [ Delt ] is a start-up that offer additional services related to products sold in store; for example, installing a new chile -- a new TV or putting together furnitures. By 2024, [ Delt ] will be available in all Carmila centers and will bring additional complementary service to our retailers. Finally, customers data collection: Free WiFi is a useful tool to acquire knowledge of customers. Over the next 2 years, we will develop a Carmila-wide initiative to increase its use. This will allow us to collect more customer data and to develop targeted marketing campaigns. Thanks to our partner Cloud4Wi, or [ cloud for wide ] in English, Cloud4Wi will push personalized marketing messages to customer based on their location and their profile. [ Some tests ] are starting early 2022. At the same time, Clear Channel will provide dynamic communication, right up to the moment of purchase, on digital screens. We'll increase the digital screen network to be more dynamic and to react of any request from brands or customers. After the visit. Digital make it possible to collect large volume of reaction from our customers. Critizr is a start-up that collect feedback and Net Promoter Score after customer visits. With their help, we measure the improvement in customer satisfaction that we deliver. We have more fans than detractors. We target a 5-point increase in the Net Promoter Score by 2026. Customer also rate their experience on Google. We are collecting better feedback in this way. Google My Business allows retailers to react to customer feedback, and this includes feedback on Carmila centers. Our rates [ performed ] our peers. Cheetah Digital is a platform we use for Carmila digital marketing. The data that Carmila collect is stored on this platform and used to push marketing offers and discount voucher to the right customer. We have an excellent opening rate up to 20%. The partnership with Carrefour is a strength for Carmila. Carrefour will become a digital retail company, and of course, Carmila will capitalize on that evolution. Carrefour has put digital and data at the heart of its operation and value creation model. Carmila is benefiting and will benefit from all aspects of its partnership with Carrefour, as we have the same ambition on digital and data. Most of our customers are Carrefour customers. To benefit fully from synergies with Carrefour, we have chosen 3 ways to increase our digital relationship: data sharing and analysis through Carrefour Links, 360 degrees actions [ on -- even with ] brand or partner such as [ meta ] and Carrefour's marketplace. Finally to sum up Carmila's approach on omnichannel. The tool are in place. We are really stepping up this ecosystem of services to the whole Carmila network with 3 priorities, engagement, experience and efficiency: engagement with Carmila's customers by increasing our strong community; experience online and in Carmila centers before, during and after the customer journey, with everyday actions; lastly, efficiency, the right level of spending and investment and are effective immediately. I will now give the floor back to Sebastien. He will talk to you about corporate social responsibility. This is a key topic [ for us ] at Carmila.

Thank you very much, Sandrine, for this zoom on omnichannel. Now I would like to talk about sustainability, which is at the core of Carmila's strategy. In 2019, Carmila launched its Here we act program. It has 3 priorities: our planet, our regions and our employees. We have already launched several initiatives to build a more sustainable business model, but today we will focus on 2 things in particular. First of all, we will provide an overview of the features of Carmila's pipeline. And secondly, we will make a new commitment on climate. Our current development pipeline was initially designed as a series of 100% retail extension projects. These projects have been totally redesigned. They remain focused on retail but have a new orientation towards mixed use and on the environmental excellence. The 5 major extension mentioned on the slide now includes housing, renewable energy, public parks and office space. They also preserve greenfield land. This is a government priority with a new law in France, [indiscernible]. Works on these 5 projects will begin with Montesson in 2023. These 5 projects represent EUR 500 million in CapEx with a yield on cost of 6.6%. Carmila will also continue to execute around 60 smaller transformation projects every year. The total CapEx will be around [ EUR 35 million ] per year, with a yield on cost of 10%. These transformation projects have also been redesigned following the health crisis. There is now much a greater focus on [ local ] sustainability and the environment. Montesson. Montesson, which is just west of Paris, is a perfect example of this transformation. Carmila will extend this emblematic site. It is a flagship hypermarket for Carrefour which has more customers that (sic) [ than ] any other Carrefour hypermarket in France. The extension is also strongly supported by current tenants and customers. The project was redesigned with a greater focus on urban redevelopment and the environment. We have worked with a leading expert in green architecture projects. You can see on the slide the 2 major housing projects, next to the site and improvement to existing infrastructure. 4 hectares of agricultural land will be preserved. Underground parking will help to gain space and preserve greenfield land. There will be a new road with an urban park for the town of Montesson. This project represent a total of EUR 150 million in CapEx with a yield on cost of 6%. We have highlighted on this slide some more of the key features of the project. As already mentioned, this will be carried out without land artificialization. This is a French terminology that means there will be no loss of greenfield land. It will benefit customers and local inhabitants, the local economy and the planet: 2,000 square meters of solar panels, 160 new homes, the creation of more than 350 jobs, 9,000 square meters of green space and several hundred trees. As you can see on the slide, smaller development and renovation projects have gone through a similar transformation. The Vitrolles project, which is near Marseille, is a good example of this. It is a smaller project than Montesson, but it has also been redesigned with a greater focus on urban planning and the environment. There is a tender process with local design schools. It includes electric charging stations and solar panels. The renovation includes more green spaces. The site will be particularly attractive with 5 new restaurants. Another example is the environmentally friendly renovation project in Laval, which is 300 kilometers west of Paris. This project includes new insulation and lighting which will reduce energy consumption. We are also making the commercial offer stronger. We will create outdoor green spaces and promote more sustainable mobility with [ cycle paths ], better access to public transport and electric charging stations. On the top of all this, Carmila intends to be even more ambitious. That is why, for the first time, we have designed a new generation of mixed-use development project, which we call big-bang projects. Because of urban sprawl, many of Carmila sites have been absorbed by urban expansion. This new generation of projects will completely transform Carmila's presence in the city. They have been designed with the support of local officials. These sites are currently 100% retail. They will become completely new neighborhoods with housing, offices and local services as well as green spaces. At this stage, we have identified around 10 big-bang projects. There will also be a step forward in terms of construction methods and energy efficiency. The retail portion of the development will be fully [ anchored ] in the city. It will be a clear departure from the traditional shopping center model. Stores will be more accessible. We have -- often have question from investors from -- on the characteristic of this mixed-use project. We want to show you a slide with an overview of a generic mixed-use project so you -- that you can see exactly how it's structured. The project begins by agreeing the term with Carrefour and a third-party real estate developer. Carmila takes a minority stake in a special purpose company. The rest is held by the developer and by Carrefour. The initial equity investment is limited. The project is mainly financed through the presale of homes. It is not on Carmila's balance sheet. Typically a large part of the project is housing. The rest is office and retail with both hypermarket and other retail spaces. A typical yield on cost will be around 8%. At the outset, the site is sold to the special purpose company at close to its gross asset value. Carmila plays an active role in the development of the retail portion of the project in particular. On completion, Carmila may acquire the retail asset. We expect to start work on the first projects in 2025 and to deliver them from 2030. Nantes Beaujoire is one of these big-bang projects. The city of Nantes is in the West of France. It is one of the most attractive and dynamic cities in France. This exceptional site with a total area of 100,000 square meters is ideal for a project of this kind. There will be homes, office space and retail. 30% of the site will be green spaces, with natural drainage, against 4% today. Building will cover only 50% of the site, and 1/3 of that area will have plants covering the rooftop. You can see from the picture that it's a complete transformation that will create an attractive city [ and neighborhood ]. Carmila has already made several strong commitments on ESG. As mentioned earlier, in 2019, Carmila launched the Here we act program. Above all, the priority has been to take action in the fight against climate change. Our planet is a focus of today's new commitment. We are aligning Carmila with the highest environmental standards in the sector. Today, new commitment is an ambitious goal to reach net 0 scope 1 and scope 2 emissions by 2030. Scope 1 and scope 2 emission means those under our direct control. That is why we are confident we can deliver this new ambition. That is not all Carmila is doing for the environment. There are several initiatives such as charging stations in every car park and solar panels. On BREEAM certification, we are already -- we already have a target to have 100% of our sites certified by 2025. Given the number of sites, this is already an ambitious objective. Here again Carmila intends to go further. We now target 100% of sites with BREEAM "very good" status by 2030. I would like to go into more detail about the new carbon emissions target. Carmila has a clear road map between now and 2030. It requires EUR 25 million of additional investment and will reduce emissions by 90%. We aim to transition to 100% renewable energy by 2030. It is impossible to eliminate completely the scope 1 and scope 2 carbon emissions [ if ] our business. This residual emission will be -- will have to be offset. On offsetting, we have adopted the approach of the Science Based Targets initiative. That means our offsetting target will be 10% or less of our total emissions. Our offsetting policy must benefit local regions. That is why we have decided to work with TerraTerre. TerraTerre is a company that helps local farm to transition to low-carbon agriculture. In the longer term, the technology does not yet exist to reach full carbon neutrality in scope 3. For example, scope 3 includes construction projects in our development pipeline. That means it will take longer to reach full carbon neutrality. We are working towards full carbon neutrality by 2040. The planet is not the only priority of Carmila Here we act program. We also promote local economic development, support local charities and help people to find jobs. Carmila centers and retailers are, of course, major actors in the local economy and employ around 30,000 people in France, Spain and Italy. I have already mentioned secondhand as one of the new concept that we are incubating in Carmila centers. We also focused on the well-being of our staff. Carmila is strongly committed to gender equality and diversity. Finally, we have the best-in-class governance with a highly experienced and diverse Board of Directors and management team. I would like to end my presentation with a short conclusion. I have spoken to you Carmila as 3 things: an incubator, an omnichannel platform and a leader in the sustainable transformation of local regions. This is a significant change in the way Carmila views its core business. The Carmila team actively looks for new concepts to generate growth and traffic. Carmila ensure that all its retailers are well prepared and fully omnichannel. Carmila's development and mixed-use pipeline will change the nature of new generation of Carmila sites. It will make Carmila a major actor in the urban redevelopment of local regions. Finally, Carmila is investing in aligning its business with the highest environmental standards. Our ambition is to reach net 0 emissions on scope 1 and scope 2 in 2030 and full carbon neutrality in 2040. Carmila's transformation does not end with the transformation of its core business. We would also like to talk to you today about Carmila's promising new business lines. These new business would not be possible without Carmila's unique regional network and expertise. They are a major part of the plan to grow the business. We'll now have a short 10-minute break. When you come back from the break, Frederic will go into more detail on Carmila's innovation projects and new business lines. [Break]

Hello, everyone, and welcome back to our Capital Market Day presentation. I'm Frederic Despres. I'm the Head of Operations and capital -- Carmila Retail Development. I'm delighted to be with you today because I'm here to talk to you about 2 innovative projects that are closely linked to Carmila's core business of owning and operating shopping centers but in many ways are completely new businesses. The first one is Next Tower. It is a mobile tower company that will have EUR 180 million in assets by 2026. Digital infrastructure is a very promising investment theme. There is global structural growth in data usage because new use cases for new technology are being implemented. Digital infrastructure is now needed in areas that do not have adequate coverage. In short, the world will need much more digital infrastructure. This is an attractive market which is also perfect for Carmila. Why? Firstly, because of Carrefour and Carmila's regional presence in France and Spain, we have the capacity to provide telecom operators with the parcels of land they need; and we can do this in both countries. Secondly, because tower projects require knowledge of real estate as well as specific technical expertise, Carmila has already developed this through its core business and a test phase of investment in mobile towers. The digital divide is a key factor in regional inequality. In practice, it starts at the very edge of every large town, and solving this problem is a government priority. In that regard, Next Tower is completely aligned with Carmila's objective to contribute to the sustainable transformation of local regions. Before focusing on Carmila's ambition, let me show you in more detail what Next Tower does. [Presentation]

Great. I hope the film has allowed you to understand and to see what Next Tower is about. Clearly it allows Carmila to extract additional value from existing assets while not using variable commercial real estate because towers are put on the roof of our shopping centers or on a piece of land that is not rented to commercial tenants. Let's focus quickly on the [ main ] characteristic of this business. Firstly, all leases are signed before the mobile tower is built, which is of course typical in real estate. Secondly, these leases last 10 years. And it's, of course, possible to have multiple telecom operator tenants to maximize the return of -- on investment. Thirdly, in the last decades, the typical life cycle for each generation of mobile technology has been 25 years. So we are at the very beginning of the 5G infrastructures which are a long way from maturity. For all these reasons, we are sure that Next Tower is a very promising business for Carmila. This project started with a test phase in 2019. This test phase enabled Carmila to develop relationships with telecom operators in order to understand their needs. In the meantime, Carmila developed the skills to manage real estate investment project of this kind, and we reached the conclusion that this is the right business for Carmila. It does require location, investment. It is capital intensive, with returns taking time to materialize. For a real estate investment company, this is standard. Of course, bigger companies do exist in the mobile tower business, but they typically buy existing towers that have been built by the telecom operators. Next Tower is a developer that extracts value from Carmila and Carrefour's regional network. It builds new multi-tenant tower, which is a fundamentally different business to investing in existing infrastructure. Our ambition with Next Tower is very strong with an expansion plan of more than 400 sites by 2026. That means 80 per year in both France and Spain, on Carrefour and other sites. By 2026, this business will deliver an annual contribution of EUR 10 million to Carmila's recurring earnings. Next Tower is also a wonderful gateway for Carmila into a whole ecosystem of digital investments. 5G and edge computing will need new data storage solutions closer to the sources of data, so Next Tower will also invest in these smaller local data centers as well as in the fiber optic infrastructure around mobile towers. As you can see, opportunities in digital infrastructure investments give Next Tower outstanding potential. This is just the beginning for this business line. For sure, it will be a great success for Carmila. As you've seen with Next Tower, Carmila is able to innovate and go very rapidly from a test phase to a new business line. And there is another example of this capacity for innovation and business growth. This is Carmila Retail Development. Carmila has always worked with innovative retail brands, but in 2018 we took this to the next level with Carmila Retail Development, which was created to partner with successful retailers and invest alongside them in their development. Today, we announce the creation of a dedicated business line with clear financial ambitions, a portfolio of EUR 40 million of minority venture capital investments in new retail concepts. Our approach with Carmila Retail Development is straightforward. Firstly, it means identifying the best [ ideas. They ] must match the trends in customer demand that we see in our centers. Every day, Carmila is experiencing the evolution of retail in its centers. We are therefore ideally positioned to judge which new concepts can be successful. Secondly and, I may say, above all, it means identifying the right entrepreneur, the best entrepreneur, with the right mindset and a strong ambition. Carmila is investing as much in an entrepreneur as in a concept. Both Carmila and the entrepreneur know about retail. And we are together on the same page when it comes to creating a brand and managing the development of a successful network of stores. Clearly, Carmila Retail Development is about making small early-stage venture capital investments to test new concepts and to scale them rapidly [ with this ] once we have established that they can be successful. Consequently, Carmila does not want to invest in mature retailers that have got into difficulty. This is what you may have seen with other companies in the sector, but this is not what we are trying to do with this initiative. In this business, Carmila aims to acquire a 30% to 40% stake and to thus become a key partner that provides both capital and expertise. We do not invest in retailers to have control over them, but we have a key role to play in helping them to set up in Carmila and non-Carmila centers by finding them the most appropriate shopping center and the right location; by supporting them in fine-tuning their concepts, their development strategy, their business model and their operations. Finally, we support them with the [ whole ] Carmila Services Hub that has been described by the team, especially in marketing and omnichannel. As you can see on the slide, several brands have already benefited from Carmila Retail Development support across several different business sectors. Our 13 current partnerships are at a different stage of development, and each 1 has a specific ambition. Some have just opened their first store in an initial test phase of their concept. Some have already begun to expand their network and might have an ambition to reach more than 50 stores in Carmila and other centers. Others have already gone beyond this stage and are continuing to accelerate their development. Out of our partnerships, let me describe 3 examples. The first one is Meilleur Audio. They distribute [ hearing aids ] and are therefore a part of Carmila's focus on health care. It is a very large potential market because of demographics and because a large part of the equipment is now subsidized by French social security. Meilleur Audio signed a partnership with Carmila in 2021 and is accelerating rapidly. They have 2 stores in Carmila centers, will have 4 additional stores by Q1 2022 and have a strong ambition within the next 5 years. The second example is MARQUETTE. You have -- saw them in the short film earlier. MARQUETTE is a concept store that provide a showcase for digital-native brands that want to sell their product in shopping centers. Carmila started working with MARQUETTE in 2019, and after a successful test phase, they deployed their concept with the first 2 stores in our shopping centers. This illustrates Carmila's strategy of partnerships with DNVBs. The last example is Cigusto, which is a vaping brand. The initial agreement was signed with Carmila in 2018. This partnership has been such a great success that, in May 2021, we strengthened it by acquiring a 30% stake in Cigusto. And I now have the pleasure to introduce you Hervé Delille, who is the Founder and the CEO of Cigusto and who has a lot to say about the partnership with Carmila.

[Foreign Language]

Cigusto is a wonderful story. And I really want to thank Hervé for his trust and the work he has put into this successful partnership. Cigusto is the perfect model of the kind of business and entrepreneur that Carmila is investing in. This is exactly what we aim to do with the partnerships created by Carmila Retail Development. We aim to industrialize this initiative. By 2026, we want to create a dynamic portfolio of 20 brands operating more than 700 stores in both Carmila and non-Carmila shopping centers. In this business line, Carmila has a 4- to 5-year investment cycle. Once partnerships have reached a certain level of maturity, we plan to sell Carmila's stake to long-term shareholders. This will free up our capacity for new early-stage venture capital investments. That means that, by the halfway stage of the plan around 2024, we will have started selling some of our stakes. By 2026, we target an annual contribution to Carmila earnings of EUR 10 million mainly coming from the contribution to EBITDA accounted via the equity method. The partners of Carmila Retail Development also create demand for spaces in Carmila shopping centers and support rental income. And this should continue even after Carmila has sold its stake in major partnerships while retailers maintain their existing stores. It will also contribute to the incubator model and to Carmila's efforts to update the mix merchandising of its shopping centers. We are very excited by the potential of this initiative because it illustrates Carmila capacity to develop innovative and fast-growing new businesses. So you see both Next Tower and Carmila Retail Development illustrates Carmila's capacity to innovate through the creation of an innovation lab where we test future businesses. They both started as smaller test-and-land projects and will now be scaled rapidly to contribute significantly to earnings by 2026. Several similar opportunities are currently being investigated internally to build the foundations for future growth such as dark kitchens, urban logistics, data monetizations in partnership with Carrefour Links, co-working and so on. Among these projects, we aim to identify those that will create the most value as part of Carmila's broader business model, first, testing, then learning and finally scaling, as with Carmila Retail Development and Next Tower. Of course, we will keep you updated of these initiatives in the future. Now I give the floor to Pierre-Yves that will explain how all this fits into the financial plan.

Thank you, Frederic. My name is Pierre-Yves Thirion, and I am Carmila's Chief Financial Officer. You have seen how our strategy will offer new opportunities for Carmila. We are pivoting to an incubator with a services hub and a strong omnichannel expertise. We have redesigned entirely our pipeline to participate in the urban redevelopment of local regions with an environmental focus. We are also accelerating on new, differentiating and profitable businesses. This strategic plan relies on our strong fundamentals. As you know, Carmila first delivered a successful phase of growth following its creation. Then the COVID crisis demonstrated our operational resilience. Looking ahead, we expect a significant improvement in financial performance in 2022 and 2023 following the resumption of activity of our retailers. More importantly, we will build a sustainable growth based on the stability of the core business, on the incubator model and the additional contribution from new businesses. We will maintain a solid balance sheet and distribute sustainable dividends over the period. I will give you granular figures so that you can better understand what will make Carmila financially successful. Before turning to the future, let me remind you a few figures that demonstrates the resilience of Carmila's core business. The challenges faced by Carmila have served to underline the strength of its shopping centers rooted in local regions, backed by the partnership with Carrefour, engaged with their retailers and popular with customers. Carmila's positioning around proximity has proven to be real assets, and we have come through the health crisis stronger. What is remarkable is that in the current environment, when you could expect commercial activity to be less dynamic, we see the opposite. Retailers have continued to launch new projects in Carmila centers, and our ties with retailers have never been stronger. We had a plus 30% increase in the number of leases signed in 2021 versus 2019 and a positive reversion. This has helped us to maintain a rental base broadly stable versus 2019. Now I would like to show you how our incubator and platform of omnichannel services will support Carmila's core business in the year to come. Why are we confident on the outlook for rent in Carmila centers? Firstly, we have a proven track record. We have kept vacancy at a low level, thanks to the dynamism of Carmila retail partners and its commercial platform. The increase in the vacancy rate during the health crisis has been very limited. Secondly, we are well positioned. Our sustainable level of rents per square meter make Carmila centers affordable for new concepts and services. This is not the case of all of our peers and this is why we can now pivot to the incubator model. As we reinforce the incubator model and the level of partnership with retailers, we are confident that we can maintain the current low level of vacancy and a broadly stable rental base in the coming years. We are not the only one who are confident. Our appraisers feel the same way. Our appraisal value were resilient over the health crisis, down only 6% from their peak. This is much less than French peers. Our cap rates have stabilized in the first half of 2021 for the first time since 2017. We are confident in the valuation assumptions used to value Carmila assets: a moderate rent growth rate and reasonable exit cap rates and discount rate. On top of that, our appraisers themselves have a positive view on Carmila on the affordability of rent in Carmila centers; on the complete renovation of the portfolio; and on Carmila's successful track record in asset management, in restructuring and in leasing. This confidence means that we expect the like-for-like valuation of assets to increase at end 2021. With a stable rental base, there was one single and temporary factor that impacted our performance during the crisis, a lower collection rate. It was linked to closure periods and tenants waiting for promised government support to be implemented. Carmila stood by its retailers during this difficult period with significant rent waivers and renegotiations of payment [ schedules ]. We are now going in the right direction. We have already seen a significant normalization in rent collection from Q3 '21 which was not affected by closure periods. The situation is expected to normalize in the coming quarters, to return to a level of rent collection close to pre-crisis level at above 96%. We are also confident in our capacity to collect additional rents for 2021. Indeed, the French government has recently published the decree confirming the support promised for retailers. Now we will talk about what we are going to deliver. When talking about the future of Carmila, it's much more than rebranding our centers or repainting the color -- the mall in a new color. It is developing major initiatives that will start immediately and deliver measurable value. As described by the team, Carmila is pivoting around 3 major initiatives: the incubator model and the omnichannel platform; Carmila Retail Development, which will be fully invested; and Next Tower, which will be operating at scale. All of these initiatives are ready to deliver. They will contribute a total of EUR 30 million to Carmila annual recurring earning by 2026, on top of the recurring earnings generated by the core business. Core business performance is expected to normalize with a stable rental base. Broadly speaking, the growth in incremental recurring earnings will be linear over the period. Compared to 2020 recurring earnings, it represents an increase of plus 18%. This is really substantial. Before we go into more detail on the financial impacts of each of these initiatives, I would like to say one thing. We are presenting to you today a fact-based assessment of the potential of 3 initiatives to deliver growth. The first lever is the change we are making in our core activity. Carmila's positioning around proximity and the agile management of its centers was essential to deliver a strong performance in the years leading up to the crisis, but given current challenges, Carmila is accelerating the development of omnichannel services platform and adapting its mix merchandising. We have 2 priorities. The first is incubating new retail concepts and accelerating their developments. Part of the additional revenue will come from the acceleration. The second is helping our retailers to accelerate their growth, thanks to our omnichannel services platform. These levers will affect the [ role ] of Carmila's core business, traffic, performance of retailers, mix merchandising. As such, it will have a significant positive impact on all Carmila's indicators. We expect an incremental contribution to recurring earnings of EUR 10 million by 2026. You have all heard about Carmila Retail Development. I will detail our financial targets and what we plan to achieve. Our investment targets are very clear, a minority participation in 20 retailers, a rate of return of over 20% and EUR 40 million of net financial investment. The most successful companies of the CRD portfolio will progressively start to deliver EUR 5 million of EBITDA by 2026. These will be booked in Carmila's accounts via the equity method. The sum of this contribution is planned to reach EUR 10 million of recurring earnings by 2026. The total contribution will be disclosed from year-end 2022. On top of this earning contribution, the stores opened, thanks to CRD, will bring new concepts to Carmila centers, supporting traffic and rents. As I have already mentioned, the affordable level of existing rents in Carmila centers is the facilitator for this new activity. By 2026, we will have started the rotation of the portfolio, disposing off our stakes in businesses that have reached a mature phase; and it will result in capital gains. Now you all know what Next Tower is. Let's see what it represents from a financial standpoint. By 2026, we expect to have EUR 180 million of assets representing EUR 50 million of value creation for Carmila. This business will deliver an annual contribution to recurring earnings of EUR 10 million by 2026. The progress of Next Tower will be communicated on a regular basis as a separate business line. The land is controlled by Carmila and Carrefour. We have signed development agreements with the major operators in France and we have developed the expertise. These position us ideally to be successful in this business. This is just the first phase of the Next Tower projects. We are always looking for more. Digital infrastructure is an extremely promising investment market. Let me remind you that this business has a very strong growth potential. There are other opportunities in data centers, in fiber optic Internet as well as the capacity to ramp up the investments in mobile towers. What do these new initiatives and our view of the -- on the outlook mean for Carmila recurring earning per share going forward? As communicated, we expect recurring earnings per share to be broadly stable in 2021. Excluding the IFRS 16 effect, these correspond to an increase of 16% versus 2020. In 2022 and 2023, we target average growth in recurring earning per share of 10% annually. We assume that there is no major COVID effect resulting in the closure of Carmila centers in 2022 and beyond. It is also at constant perimeter as regards Carmila sites. From 2024 onwards, growth will be driven by the incremental earnings contribution from these new business initiatives. We will continue to deliver growth in recurring earnings per share once activity has normalized. This growth strategy is aligned with the commitments that Carmila has made on sustainability. It includes the additional costs of the emission reduction road map that will be well underway by 2026. We have another major change with the strategic plan. It's a more dynamic approach to capital allocation through an asset rotation program. After several years of expansion and acquiring new sites, Carmila has a strategy to dispose of sites that have reached maturity. It means any center where Carmila, with its capacity to restructure assets, has developed to its full potential. This process began with the sale of one asset in 2021, the proceeds of which were used to finance an EUR 8 million share buyback program. In 2022 and 2023, Carmila is targeting an aggregate amount of disposal of EUR 200 million and intends to continue disposing mature assets beyond 2023. The proceeds of disposal will be partly reinvested in new assets and restructuring. The remainder will ensure the strength of Carmila's balance sheet and finance new program of share buybacks. I know that investor and analysts appreciate detail of CapEx, so I will briefly provide these figures for you: maintenance and restructuring CapEx of EUR 40 million a year, with an attractive yield on cost for restructuring. This includes our investments to reduce energy consumption and carbon footprint of Carmila centers. Next Tower represents an average of EUR 13 million a year from 2022 to 2026. CRD is EUR 15 million of investments in 2021, EUR 10 million in 2022 and 2023, with 0 net investments from 2024. Finally, Montesson is a total investment of EUR 150 million starting in 2023 and financed through asset rotation. This is the first of a new generation of sustainable projects with no loss of greenfield land and highest environmental standards. Now turning to Carmila's funding structure and liquidity. We have successfully refinanced a large part of the debts maturing in the next 2 years. We have a proven track record in the debt markets, having been able to raise funding in the bond market at good conditions. And we have a significant amount of liquidity. The maturity profile of Carmila's outstanding debt is more evenly spread over the coming years. There are 2 bonds to be refinanced in 2023 and 2024. At current market levels, this could generate up to EUR 8 million in -- of savings in financial costs. This effect is obviously not part of the EUR 30 million of incremental earnings included in Carmila's business plan. Interest coverage and LTV are well above the levels required to meet bond covenants, and our bonds have no covenants. Carmila is committed to sustainable financing instruments, as demonstrated by the sustainability-linked revolving credit facility put in place in October 2021. Looking specifically at loan-to-value. We are committed to maintaining a solid balance sheet with the right level of debt compatible with Carmila's current BBB rating by Standard & Poor's with a stable outlook. We are confident in the solid fundamentals of Carmila which will support rents and asset valuation going forward. For the 2022 to 2026 period, Carmila targets a loan-to-value ratio of 40%. These targets give us a comfortable headroom versus our current level and some capacity to invest. Finally, our distribution policy. Carmila intends to propose an annual dividend of at least EUR 1 per share in cash for dividends paid from 2022 to 2026. It is subject, of course, to shareholder approval. As well as a minimum of EUR 1 per share, Carmila dividend policy will target a payout ratio of 75% for the period. Given the expected growth in EPS, that means that the dividend will also increase. On share buybacks, we have said that part of the proceeds of the sale of mature assets will be returned to shareholders. Subject to the valuation of Carmila share, if they remain at a significant discount to NTA value, this will take the form of a share buyback program. In this financial part of our new plan, there are several points that I would like you to keep in mind. Let me wrap them up for you. We target average annual EPS growth of 10% in the first 2 years of the plan. Our new business lines will deliver an annual EUR 30 million of earnings by 2026, and this will support a new cycle of growth. Carmila will implement a more dynamic approach to capital allocation, with a target to dispose of EUR 200 million of assets in the next 2 years. This will finance our development pipeline and supports distribution to shareholders. We are committed to a solid balance sheet. We target an LTV of 40% over the course of the plan. Finally, we intend to propose a dividend of at least EUR 1 per share in cash throughout the new plan, with a target payout ratio of 75%. We are fully confident that Carmila can deliver. With these financial targets, we have set key medium-term milestones. By end 2022, you will be able to see EPS growth and the first contribution of new businesses. I will now leave the floor to Marie for the conclusion.

Thank you very much, Pierre-Yves. Retail is changing rapidly. This changing started long before the health crisis but have accelerated. The health crisis has pushed Carmila to find new solutions. It has pushed Carmila to put in place a new strategy that is focused on growth and investments in promising new business lines. By 2026, a lot will have changed. Carmila will be fully omnichannel. Carmila centers will offer a differentiating shopping experience. There will be a greater share of health care, less fashion and more services. Centers will have more innovative brands and new concepts. Carmila will have delivered the first projects of a more sustainable development pipeline. Carmila will be well on its way to carbon neutrality. Carmila will be an important player in digital infrastructure with Next Tower. Carmila Retail Development will have a portfolio of 20 high-growth retail concepts. That is the ambition for Carmila in 2026. The Carmila team is now ready to answer your questions. Let's start the Q&A sessions...

So Florent Joubert from ODDO BHF. So maybe I will have maybe 3 question. And so the first one will be on your new strategic initiatives. So how confident are you to reach your targets in these 3 new strategic initiative and given the fact that we are still -- sanitize situations that need to be improved or confirmed? This will be my first question. And maybe if you can maybe give a little bit more colors on how the revenues will be built in this new business [indiscernible] second question -- maybe you can answer the first one...

[indiscernible] first, on the [indiscernible] sanitary situation. The financial targets published today assume clearly a progressive normalization of financial performance, but a full return to normal is not expected until 2023, so an ongoing COVID effect is included in this medium-term trajectory. We have clearly stated that financial targets assume no major COVID effect from now. By major COVID effect, we mean administrative closure, which is clearly the key for us. So it is a 2026 plan and we are confident on our capacity to deliver the EUR 30 million growth earning that we are -- disclosed. It's a fact-based assumption on the 3 pillars, and perhaps, Pierre-Yves, you can complete...

Yes, to give a bit more detail. About Next Tower, it's something that we have already done. We have more than 80 antennas as of now. So the idea is to scale up that business, and the [ lands ] are secured. It's a development on Carmila and Carrefour land, so we have no doubt that we can deliver on the Next Tower. For CRD, it's exactly the same. We have already minority interests that are -- that we can scale. Just 2 examples: Cigusto is 1 of them, but also Vertuo, which is about dental care centers, is another 1. And so it's -- and it's fact-based because we know the business plan of each of these participation. And on the third pillar, about the incubator, we plan to generate fees from acceleration in the pop-up stores and in the events and also to generate other fees in omnichannel. And it's the same. We are ready to deliver and we are in motion to do that.

Okay. So you have answered my second question. So maybe my third question, on disposals. So you expect to dispose EUR 200 million of assets, so have you started to discuss maybe with some investors for some of the assets? And [ have you ] [indiscernible] give to us on the appetite of investors?

I think there is a local market for -- yes, for [ session ] and acquisition and various interests from local partner, but we don't want to comment any longer on our projects.

[indiscernible] from Bank of America. If you can come back to the Slide 56 with the 3-year contributions, and you answered partially. Just to make sure: That contribution from the incubator, so it's -- as these are tenants, so you have rents. You already touched you're already getting. And the EUR 10 million additional comes from pop-up stores and fees you are going to charge for access to the omnichannel services.

[ Maybe ], on the incubator and omnichannel platform. There are direct revenues and indirect revenues. As we -- as stated, it will bring us higher rent. It will bring us more attractivity for our shopping center, but it's indirect revenue, so we don't compute it in the EUR 10 million. The EUR 10 million is composed of acceleration in Specialty Leasing, pop-up store, all very short-term activity; acceleration in service. For example, we will develop a "fiber to the mall" service for the tenants. We will get some commission on it. For example, we will develop omnichannel services. And there is also data monetization. We are working on it with Carrefour, so we have a lot of expectation on it.

And the -- is there any CapEx behind this, or additional costs? Is it significant for this or...

I -- concerning our services, we invested in digital since the creation of Carmila, so I think major part of the investment has been done. There is a small CapEx, but it's not substantial.

And just to make sure, still on the CapEx, [ for the ] Next Tower: So should I take for the EUR 10 million income the EUR 13 million you invest [ of the ] EUR 180 million total...

Yes, yes, it's EUR 13 million per-year CapEx for Next Tower. And you can take the assumptions that we have detailed in the presentation.

Okay, so it gives a circa 15% yield on your investments for this tower project...

[ Okay, no ], but you have 2 other impacts. We may acquire some other sites which are not in the EUR 13 million a year, first point. And then we are assessing the fiscal situation of our tower company. We are moving from renting some lands, which was the traditional model, to building the antennas and then renting the antennas. So it's kind of a different model and we are assessing on -- the tax impact. Broadly speaking, it will create EUR 50 million of value creation and EUR 13 million of CapEx per year, plus a small part of tax and a small part of acquisitions. That's the equation.

So it's a bit new for Next Tower also. So your building isn't JV, so it's not -- Next Tower was just putting the...

No. Next Tower is 100% Carmila. It's not a JV, no, no. It's 100% Carmila, wholly owned company by Carmila...

Okay, [ I didn't know about it ].

[indiscernible] securities [indiscernible] accounted the [indiscernible] land owned by the [ Carmila-owned ] [indiscernible] now in the balance sheet of Carmila.

Sorry. The line was bad.

Sorry. [indiscernible] securities. My question was how are accounted the rights to build on your plots of land new buildings like homes and the things you do in [ north or south ] [indiscernible].

Okay, yes. So what we plan to do for our mixed-use projects is to develop them through joint venture with other partners. So there will be 2 main other partners, a property developer, Carrefour; and Carmila will own just a minority investment. So we will account it through minority participations. Requiring -- the needs of those projects, as told by Sebastien, we won't need much CapEx to -- for those participation, as the homes are presold during the projects. And the second important point is what's happening to the existing sites. It will be sold to the vehicle at a value close to gross asset value. So that's the equation, yes, about those mixed-use projects.

And how much euros are yet in the NAV of Carmila about these kind of projects?

Nothing, so far. We haven't accounted the margin included in those projects, so far.

[indiscernible] stupid question. The sale to the special purpose vehicle for the mixed-use project is not part of EUR 200 million disposal plan...

No, it's not, yes.

[ So that's questions in the room ]. If we could now have questions on the conference call, please.

Rob Jones, BNP Paribas.

Yes. So it's Rob Jones, BNP Paribas Exane. 3 from my side. One is [ pop-up ] retailers where you've invested a minority stake in, so far. What's the percentage of units that they've signed that have been outside of Carmila centers? I think I roughly [ calculate that ] it's about 250 units in total that they've signed up, but I wonder. How many of those are in your centers, and how many of them are outside? And then the other 2 questions I had: One was on the buyback or potential for buybacks going forwards. Of the EUR 200 million, how much do you think you will allocate to a buyback? I personally think buybacks are a very attractive use of your capital given where you trade at versus EPRA NTA. And then whatever the number is, why not more? I think some of the investors would like to see more buybacks. And then finally, Marie, you talked right at the start about the fact that obviously it was taking several days to get online deliveries for some customers. You said you never heard of a retailer closing all of its stores. The omnichannel world is here to stay, et cetera. Whilst I agree with that, I wonder whether there is a risk that -- if we move to a online environment where you can get your online delivery within 24 hours or even the same day, where we do see online retailer penetration rising above that 25% to 30% that some of the fashion CEOs have talked to you about, does that then pose a risk to the overall investment thesis? Or are you already building some of that into your base case? So comments on that would be useful.

Okay. So there is a first question on the part of CRD stores without Carmila shopping center, [ if I may say so ], Frederic.

Today, yes, in our current partners, half of the stores are in Carmila shopping centers; and the other half are out of Carmila shopping centers. For example, Cigusto, which is a company that developed very, very rapidly in the 2 first years in the story: Before Carmila strengthened its partnership, Cigusto stores in Carmila are only 1/3 of the total of Cigusto stores in France, but the average today is 1/2 of the total stores, around 200, today. Our partners do represent 200 stores all over the country. Half of those 200 stores are in Carmila shopping centers.

Okay. So second question was about share buyback.

So our intention is to allocate part of the disposals to a share buyback program, but so far, we don't give more -- much more details on that. We will clear that policy after the disposal program.

And your third question was about the development of e-commerce. So for sure, there will be more e-commerce in the future, but I think that France and Spain are not China. 100 (sic) [ 100% ] digital is not that what [ client ] wants. [ Client ] wants omnichannel. They want to do everything, to go in store, to go and drive, to go and click and collect, to get things delivered at home. So -- and that's why we need to provide them. We are not talking about whole retail sectors. We are talking about Carmila centers. And we think that we are structurally resistant to disruption even if e-commerce will progress, for sure. Especially in France, drive is developing very, very strongly, but it still brings customer to our shopping centers. I think another part of the debate on e-commerce is sustainability, yes. I think more and more customers are concerned about it and carbon emission, noise pollution from delivery drivers, more packaging, yes. It's 10x more packaging with delivery at home than compared to shopping centers. So I think that is something that customer and government is paying attention, and that's why our view is that we will move towards a new balance between in stored (sic) [ in store ] and online and -- but not 100% online.

Ben Richford from Societe Generale.

Just firstly, what is your like-for-like capital growth outlook given that you've got the 40% LTV target? And it looks like you're spending most of the capital receipts from the dividend saving, so sort of retained earnings plus the disposals looks to be pretty fully accounted for. So what is the LTV target assumption for like-for-like capital growth? It's the first question. And the second one, around the dividend, will you also distribute EUR 30 million additional recurring earnings where you distribute 75% of that going forward as well? And how does that sit within any [ REIT ] rules? So they're the 2 questions.

For the like-for-like growth, as we said, yes, we plan a rental base broadly stable over the course of the plan. So this is conservative and this is our hypothesis regarding the like-for-like growth. So why do we target 40%? Yes, as we -- as explained, we could make some additional investments. So we have some capacity to invest more. And its target -- and we keep in -- or we are still conservative because we are confident, but yes, there may have -- some uncertainties. For the dividend, the 75%, yes, we plan to divide -- to distribute 75%. So we'll have 25% remaining and it will strengthen balance sheet, yes. And so we think it's a good target for Carmila. And that's we have -- as you have seen, we have many projects that we plan to invest in to deliver our growth, so the -- those 25% remaining part will help us to finance those projects [ too ].

Okay. But I'll just check then the EUR 30 million contribution to recurring earnings. Will that be taxed, and at what rate, before there's a dividend payout?

No. It's EUR 30 million of recurring earning after tax. So I mean, yes, for CRD, of course, it's subject to normal regime of tax. For Next Tower, we are looking it more precisely. We hope it won't be. And for the incubator part, there are 2 sides. There are 2 parts. On the part of the acceleration of the pop-up stores, of the events, the direct part of the acceleration, it will be under the rate regime. And for the fees income, of course, it will be subject to tax. So most part of the EUR 30 million are without tax.

We'll now take our next question from Bart Gysens with Morgan Stanley.

Yes. I think a lot of people will welcome the digital infrastructure investment drive. That looks really attractive. And I think a lot of people will also welcome the asset rotation, but can I please understand the rationale of the targeted numbers? Selling about EUR 100 million a year on the size of the portfolio you have, you could argue that's not very much. And building up digital infrastructures which in 5 years will be less than 3% or so of your [ growth ] assets, that's not really transformational either for the equity story, so I just wanted to understand. If you identify some interesting opportunities here, why not do more? Is this just a first step and actually you're guiding us to what you're planning to do and this is going to grow a lot more significantly? Or do you think there is a limited capacity in this capital allocation? Just more on kind of the sizing of these initiatives and the sizing of the asset rotation, that would be -- any color there, that would be helpful.

Well, thank you for your question. Obviously, on Next Tower, and it was already stated, we think we can do more, but at this stage we would like to have a reasonable goal, so -- but we think we can do more. There is no limitation in lands; [ well, not ] on this level of antenna. And I think it's, concerning the capital, we can do more. So clearly we can do more. And that's what we said to the team of Next Tower. And the CEO of Next Tower, [ Roman Pierre ], is with us here in Paris; and he wants to do more as well.

There are currently no further questions in the queue.

So we have a few questions posted on the webcast. [ Søren Gjelstrup from REIT Advisor ] has asked, "Can you give us some details on indexation? Are tenants able to absorb the indexation of rents? Any color on what to expect would be appreciated."

So in -- we have a clear view on indexation and the impact on rents in Carmila's countries in 2022. In France, there we'll have a positive effect of indexation of around 2%. In Italy, it's more or less the same. And it will be maybe a bit higher in Spain with a level of plus 3%. So regarding to Carmila, just to remind you that we have an average rent of EUR 255 per square meter. Our OCR are sustainable, so we believe that our tenants have the capacity to absorb the indexation. So we are confident in our [ capacity ].

And then a final question on the webcast. "So apologies, as it was covered briefly earlier, but just to come back on share buybacks, can you provide some color on how the amount of share buybacks was calibrated and whether or not more could be done?"

It will be -- I think we have a graph on the slide about that. We don't give [ precise ] detailed figures on that, but part of the disposal will be allocated to share buyback. It will be a substantial part, but [indiscernible] no...

[indiscernible]. It's very clear, Pierre-Yves. Thank you.

Yes.

Great. Thank you. We have no further questions on the webcast, so that's it for the Q&A session.

Okay. Thank you very much. Thank you. [indiscernible]. Thank you.