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

Good afternoon, everyone. Welcome to Carmila's 2021 Annual Results Presentation. In December, Carmila gave an update on the 2026 road map: Building sustainable growth. Today, we are going to focus on performance in 2021 and the outlook for 2022. Let's get started with the key takeaways from 2021 for Carmila. As you know, the beginning of the year was affected by the health crisis. Stores in Carmila centers were closed for 2.2 months on average and for even longer in France. Customers came back to Carmila centers after the lockdown. They also spend more per visit. In H2, retailer sales were almost back at the level of the same period in 2019. It was also a record year for leasing activity. Well-known retailers and innovative concepts launched new projects in Carmila centers. It was a much better year than 2020, of course. But at Carmila, the number of new leases was much higher than in 2019. It was a great operational performance. It was also because Carmila has an attractive portfolio of assets. The hypermarket in Carrefour [ anchor ] local leaders in medium-sized cities, low vacancy, affordable rents. Our appraiser shares its positive view. This is why the appraisal value of Carmila's asset has increased by 0.7% on a like-for-like annual basis. Finally, on recurring earnings per share, COVID had an effect on rent collection and net rental income, especially in the first half of the year. In the second half of the year, rent collection improved significantly. In fact, it was slightly better than we initially expected. That is why recurring earnings per share was slightly above our guidance of flat versus 2020 at EUR 1.24. We have also made 3 important announcements with 2021 results. So 2021 dividend that will be proposed to shareholders at the annual meeting is EUR 1 per cash per share in cash, that represents a payout of 81% of recurring earnings. It is in line with Carmila's dividend policy which is a minimum of EUR 1 per share and a target payout of 75% of recurring earnings. On top of the dividend, we are launching a new EUR 20 million share buyback program. And on outlook, rent collection is expected to normalize further. As a result, recurring EPS is expected to increase by 10% per year in 2022 and 2023. Pierre-Yves Thirion, Carmila's CFO, will go into more detail later. Carmila's new strategy is focused on growth and investment in promising new businesses. Partnership with retailers and a complete toolkit of omnichannel shared services will bring new concepts to Carmila centers and create new sources of revenue. Carmila aims to be a leader in the transition to lower carbon emissions and a more sustainable form of retail. Carmila also has an important role to play in the transformation of towns and cities. Finally, Carmila is scaling 2 new business lines, investment in digital infrastructure with Next Tower and minority ventures in new retail concepts through Carmila Retail Development. The growth initiatives of the strategic plan will generate an additional EUR 30 million of recurring earnings by 2026. Let's look first at the incubator and omnichannel platform. We want all of our centers to be fully omnichannel. To get closer to that goal, 2021 was another year of innovation. Carmila has incubated new concepts, including digitally native vertical brands. Carmila's DNVBs Ready competition was a great success. One of the winners was actually the French equivalent of Dragons' Den, Qui Veut Mon Associé. They are called Flotte and they sell waterproof raincoats. There have been several pilot projects on new omnichannel solutions. A personal shopper for WhatsApp, a new omnichannel partnership in Spain with Glovo, Carmila's first live shopping events with the French startup MADEINLIVE. On data, Carmila has an opt-in database of 4.1 million customers used for targeted marketing. Social media strategy is focused on a growing network of influencers to make customers more aware of the retailers in Carmila centers. And finally, on services to retailers, we have developed new services such as a partnership with the French start-up [indiscernible] to make sure that Carmila retailers are reference on Google My Business and Google Maps. 2021 has also been a year of progress and sustainability. Carmila is on track to meet its goal of net-zero Scope 1 and Scope 2 emissions by 2030. On BREEAM certification, 93% of assets are certified, of which 57% very good or better. Finally, retail is a people business and customers and staff. Keeping customers happy is key to the long-term trust of Carmila centers. That is why we track customer satisfaction and the Net Promoter Score. Both have improved this year. Carmila is also a responsible employer. Diversity is a key priority. 20% of Carmila employees are young people on work placements. And in 2021, we partnered with Chemins d'Avenir which is a charity that mentors young people in rural areas and small towns. Carmila centers are an important part of these local communities. It is important to also mention the health crisis which had, of course, a very significant effect on the business again this year and required a lot of effort from Carmila staff. A local presence at over 200 locations meant that Carmila could contribute to an anti-COVID effort. That meant setting up testing centers and vaccination centers. But 2021 was not only about the COVID crisis. At Carmila Investor event last year, I said that the health crisis has pushed Carmila to pivot. This is reflected in 2021 results. Another major part of Carmila sustainability and value creation strategy is its development pipeline. Here again, 2021 was a year of progress. The Montesson project was approved by the CNSC. Work is scheduled to start in 2023. It is 1 of 5 major extension plans for a total of EUR 550 million and a yield on cost of 6.6%. In the longer term, Carmila will contribute to the sustainable transformation of towns and cities. With mixed-use development projects in partnership with Carrefour and Altarea, Carmila will completely transform the sites of its shopping centers. The preparation phase of the first mixed-use project is underway in Nantes and Sartrouville. I'd also like to talk about Carmila's investment in 2 promising new business lines. The first is Next Tower. It is a mobile tower company that will have EUR 180 million of assets by 2026. Digital infrastructure is a very promising investment market. Carmila has a real estate expertise and the technical expertise from a successful test phase. Structural growth in data usage means that it is a tremendous growth opportunity for Carmila. 2021 was a successful year, 71 towers are now in operation. And by the end of 2022, 160 towers will be in operation or under construction. That is the equivalent of around EUR 2 million of annualized EBITDA. That figure is based on the current pipeline, but there is scope to ramp up further. This is just the beginning for the Next Tower business line. Finally, on Carmila Retail Development, 2021 was also a successful year. 5 new partnerships were signed with dynamic entrepreneurs. They are all aligned with Carmila's strategic goals. For example, Meilleur Audio distributes hearing aids and is, therefore, a part of Carmila's focus on health care. Carmila's existing partners also continued to accelerate their development. Cigusto, the vaping retailer aims to have 700 stores in both Carmila and non-Carmila centers by 2026. Vertuo and DentalStar opened 9 new dentists in Carmila center last year. 2022 will be another year of growth for Carmila retail development with existing partners and new concepts. As with Next Tower, the financial performance of the Carmila Retail Development business line will be reported at the end of the year. That was another view of some of the achievements in 2021. 2022 should be a very positive year for Carmila. There should be a progressive return to pre-COVID financial performance as rent collection improves. It will also be the first year of the new strategic plan with the contribution of new growth initiatives. I now leave the floor to Sebastien to go into more detail on activity in Carmila centers.

Thank you, Marie. Hello, everyone. Let's look back on activity in 2021. It seems like a long time ago now, but at the start of 2021, the situation was very different. We haven't yet been vaccinated. In France, there was a national lockdown. It lasted until the second half of May. In Spain and Italy, there were only regional measures, but still store closures and restrictions. Today, the situation is very different. There are still restrictions. Health passes in restaurants and for some leisure activities. But all of our centers and stores are open for business. If you look in more detail at H2 when all stores could open, you can see a few trends. First, customers came back. Footfall was at 91% of the 2019 level in France in H2. Footfall was a little lower in Spain in that period at 81%. There is still an effect from travel restrictions. There is less tourism, but we still are at full opening. Finally, what you can clearly also see on the chart is that retailer sales have been consistently higher than footfall relative to the 2019 level. That means that clients are spending more per visit, that gray line that is above the red line. I will talk about retailer sales in more detail in a moment. Turning to the next slide. In H2, all stores in Carmila centers could open. I just gave the figures for footfall. It was at a greater impact -- economic impact. And there is still less tourism, of course, but the situation is better than in 2020. I have already mentioned the higher average sales per visit that continued rise through to the end of the year. We had a very encouraging Christmas period in Carmila centers despite the Omicron variant. On top of good retailer sales, it was also a good end of year period for Carmila specialty leasing and pop-up store business. Now turning to commercial activity. The figures speak for themselves. It has been an amazing year, a record number of new leases, an increase of more 31% versus 2019 and of more 67% versus 2020. So many retailers are launching new projects and opening stores in Carmila centers. We have continued to see positive reversion on renewals and have been renting vacant space at above its estimated rental value. I would like to highlight that these new leases are long term. These are the figures for typical long-term leases only. There is no change to the term of the leases, and there is no change in incentive for tenants such as rent-free periods or fit-out costs. This strong commercial activity has also helped us to reduce the level of vacancy. The financial occupancy rate is at 96.3%, which is back at the level at year end 2019, so before the COVID crisis. That is very encouraging. We saw less of an impact than peers on vacancy during the COVID crisis and we are now back to the pre-COVID level. These excellent figures show that retailers are interested in opening stores in Carmila centers. And they show the level of partnership we have been able to create with retailing during the COVID crisis. The strong commercial performance isn't just about volume. The Carmila team is always looking to sign the right retailers for its centers. We work hard to refresh the mix in centers and meet the expectations of customers. Part of that is opening stores with large retailers. They are often historic partners of Carmila, household names like Primark, Kiabi and Cultura. There are tenants that attract all the retailers and customers. We also try to find new retailers for Carmila centers such as Miniso or Starbucks. Health care is a critical part of the retailer mix. It accounts for almost 10% of rents as of today, and we aim to increase that to 15% by 2026. We are also signing innovative new restaurant concept with names like Holly's Diner, Big Ferner and Five Guys. Carmila centers in Spain have also been a testing ground for new concepts. I'm going to talk about 3 of them today. The first is Carmila first co-working space. It has a retail twist because it is in partnership with a leading Spanish furniture retailer, Kave Home. All of the furniture has a QR code that allows you to buy the products online. Another interesting concept in Carmila centers is Samplia. What is unique about Samplia is that the products are free. They run 3 simple campaigns for leading consumer good companies in partnership with Carrefour. We have 2 Samplia pop-up stores in Carmila center that have now become long-term leases. Finally, we are launching a partnership with Glovo in 5 centers in Spain to provide 30 minutes delivery of products from stores in Carmila centers. The customers come by products on the Glovo app which are picked up from the stores in the Carmila centers and delivered to their home. We are very excited about this partnership, which is a great example of what Carmila is doing to make its centers more omnichannel and to shape the latest trends in quick commerce. Turning to Slide 19. In 2021, we also delivered 2 major extension and restructuring projects. And 19 May, the day of the reopening of shopping centers in France, Carmila opens the Nice Lingostiere extension. It has been a great success. In Q4 2021, footfall was 22 points higher than for shopping centers in France when compared to 2019. Carmila also completed the restructuring of Cité Europe and Calais Coquelles. In January, Primark opened a major store after significant renovation work. And we also opened a new food court with 15 restaurants and leisure avenues. The project has enabled Cité Europe to once again become the shopping destination that it should be and was when it first opened. To give you an idea of the success of the project, footfall in Q4 was 14 points higher than peers when compared to 2019. At the Capital Markets Day in December, we mentioned that Carmila had a strong track record of small transformation projects. Carmila delivered many of these small agile projects in 2021. There are several examples on the slide. Scaling back the hypermarket or the shopping centers to accommodate a major new store. In 2021, we did this with FNAC in Bourges in and in several locations with Action. These midsized stores complement the hypermarket and bring significant footfall to Carmila centers. Using part of the car park to create new restaurants and outdoor food court with household names like Burger King, KFC and Five Guys. Renovation work to make vacant lots more attractive and to adapt spaces for new types of retailers, such as dentists with our Carmila Retail Development partner, Vertuo, our new leisure concept such as trampoline parks in Spain. In 2021, Carmila delivered 20 significant projects representing EUR 3 million of net retail income, with a yield on cost of more than 10%. These projects create a lot of value, and we will continue to work on them. That wraps up my presentation of a successful year for Carmila. It's easy to forget that it was also a year of COVID with administrative closures. Today, 100% of stores in Carmila centers are open, and we are working on many new and exciting projects for 2022. I now leave the floor to Pierre for the 2021 financial performance.

Thank you, Sebastien. Hello, everyone. I would like to start this part of the presentation by saying that Carmila has met all the guidance for end 2021. It has been a strong operating performance. Carmila's financial structure is solid. Of course, 2021 was affected by the COVID crisis, but there are also many positive signs for the future. First, on the valuation of the portfolio. We said in December that we expected a small increase at end 2021. The valuation of the portfolio is up plus 0.7% on a like-for-like annual basis and plus 1.1%, including expansion projects completed this year for a gross asset value of EUR 6.2 billion. Turning to Slide 23 and looking in a bit more detail at why we and Carmila's appraisers are confident in the valuation of the portfolio. Firstly, it is a confidence on rents. They are affordable for retailers. Reversion has been positive. The rental base is slightly up since end 2020. The strong commercial performance in 2021 has meant that the vacancy is back at the precrisis level. The increase in valuation is almost entirely explained by the increase in the rent forecast by appraisers. These forecasts are based on reasonable assumptions. Carmila has also a strong track record on asset management and renovation. As Sebastien mentioned, 2021 has been another year of successful restructuring projects. Looking specifically at net potential yield or cap rates, they stabilized in H1 2021 and have now even come down slightly. With an average net potential yield above 6%, that is a significant premium versus 10-year government bond yields. Now turning to rent collection and the impact of the COVID crises. Closure periods in H1 and retailers waiting for state aid in France affected rent collection in the first half of the year. In H2, we saw a gradual return to normal with rent collection as of today of 94% of total billed rents. French government support was confirmed in Q4, and rent collection should continue to improve in the coming quarters. The impact of the COVID crisis on 2021 rent collection is fully provisioned in 2021 accounts. Turning now to Slide 25, net rental income. You can see on the chart that lower net rental income in both 2020 and 2021 was almost entirely driven by the effect of the COVID crisis. There was a smaller COVID effect this year, which means that the net rental income increased by plus 7%. The COVID effect is a one-off, so it will reverse. That means that we expect net rental income to return to pre-COVID level. We have prudently assumed a progressive improvement this year and next year. On the next slide, you have the P&L line by line. I won't go through all of the details. You have the change in net rental income that I have just described. The cost base is stable. Financial expenses increased because of refinancing in 2021. Short-term bank debt was replaced by the long-term fixed rate bond and there are fees relating to the new EUR 810 million sustainability-linked RCF. The main message is that the change in recurring earnings of plus 6% matches the change in net rental income. On IFRS 16, a large part of the 2020 COVID effects was spread over the life of the extended leases. Excluding IFRS 16, the picture is quite different with recurring earnings increasing by 23% versus 2020, again, almost entirely driven by the COVID impact. Now on Slide 27, recurring earnings per share. You can see the same situation with and without IFRS 16. Including IFRS 16, recurring earnings per share increased by plus 3%. It is less than the increase in recurring earnings because of the scrip option in 2021. Excluding IFRS 16, recurring EPS is up plus 20%. These changes are driven by the COVID crisis. But as I mentioned, net rental income is expected to bounce back to the pre-COVID level. In 2022, there will be a positive indexation effect on rents. Rent collection is expected to continue to return to normal. We have made the prudent assumption that the return-to-normal will be progressive over 2 years. That is why we are guiding to an increase in recurring earnings per share at constant scope of plus 10% in 2022 and plus 10% again in 2023. So we are maintaining the 10% CAGR from the Capital Market Day despite recurring EPS being slightly higher than our guidance in 2021. And we have a bit more visibility on 2022, the situation looks more positive. Now on the balance sheet and starting with the net disposal value per share. It stands at EUR 22.99 and it's up plus 3% versus end 2020. There is a small positive impact from the increase in the appraisal value of assets, recurring earnings of EUR 1.24 per share. There is dilution from the scrip, which was slightly offset by the small EUR 8 million share buyback program. Finally, there was a positive effect from the mark-to-market of swaps and debt instruments with the increase in long-term interest rates. The mark-to-market effect is not included in EPRA net tangible assets, which means that the EPRA NTA per share is down 0.7% versus end 2020, and stands at EUR 24.54 per share at end 2021. Another positive from 2021 is the LTV ratio is almost unchanged this year. It has come down to 37.4% after reaching 39.4% at the end of June. There are 2 reasons for that: One is better rent collection in H2, and those are -- is the increase of the gross asset value of the portfolio. We say at the Capital Markets Day that we are targeting an LTV of 40% for the length of the plan. That means that we have some flexibility to invest and to support shareholder return. But we also want to be prudent in the current environment. On liquidity and funding, there are also many positives. Carmila has a strong track record and can raise long-term debt funding in the bond market at competitive levels. In March, Carmila issued a EUR 300 million bond maturing in 2029 with a coupon of 1.625%. The proceeds were used to refinance bank debt maturing in 2024 and part of the bond maturing in H2 2023. The remaining amount of the outstanding 2023 bond can now be comfortably refinanced by a single benchmark bond. The BBB rating by Standard & Poor's was confirmed in September, and the outlook is now stable. Carmila's liquidity position is also very strong with EUR 238 million in cash and an additional EUR 810 million from the sustainability-linked revolving credit facility signed in 2021. There is significant headroom versus bank covenants and the bonds have no covenants. On interest rate risk, that is almost all fixed rate bonds, swaps and other derivatives are used to prehedge upcoming refinancing and to reduce sensitivity to short-term rates. Now turning to asset rotation. We announced a major change in Capital Market Day in December, a more dynamic approach to capital allocation through an asset rotation program. 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. Over the next 2 years, Carmila is targeting an aggregate amount of EUR 200 million of disposal. With an LTV at 37.4%, there is no need to deliver and strengthen the balance sheet. Carmila's shares are currently trading below their net asset value with the expected rebound in recurring EPS, buyback offer and attractive return close to 10% that make it an attractive use of cash on that basis. And given Carmila's comfortable cash position, we have decided to launch a new share buyback program for EUR 20 million. Now on Slide 32 and the dividend. As mentioned by Marie, a dividend of EUR 1 per share in cash for 2021 will be proposed to shareholders at the annual meeting. This is in line with Carmila's dividend policy of at least EUR 1 per share and a target payout ratio of 75% of recurring earnings. EUR 1 per share is a payout of 81% of recurring earnings. With a 10% growth in recurring earnings expected for 2022, the 75% payout means that we should start to see dividend growth from next year. To wrap up the financial part of today's presentation, there are a few points I would like you to keep in mind. The first is that Carmila delivered on its guidance for 2021. The valuation of the portfolio is up on the year. Recurring EPS of EUR 1.24 is above the 2020 level. LTV is down at 37.4%. Net disposal value per share is up plus 3% at EUR 22.99. The second message is that the targets of the new financial plans are confirmed. There is an upward adjustment to recurring EPS growth targets to reflect higher 2021 EPS. And now it's plus 10% growth in 2022 and the same in 2023 rather than plus 10% on average for the period. 2022 will be an important year for Carmila as it is the first year of the new strategic plan. At the end of the year, we will provide an update on the growth initiatives that will deliver EUR 30 million of incremental recurring earnings by end 2026. We are fully confident that Carmila can deliver financially at this first milestone of the plan. I will now leave the floor to Marie for the conclusion.

Thank you very much, Pierre-Yves. Just a few words to conclude today's presentation. The performance in 2021 has shown that Carmila has attractive assets. There are many reasons to be very confident for 2022. In the core business, there is a great momentum and Carmila should continue to outperform. There is a strong dynamic on leasing activity. Vacancy is back to precrisis level and Carmila has a strong track record in asset management and renovation. This year is also the first year of the new strategic plan. That plan is based on growth. This year will be the first opportunity for Carmila to show that it can deliver on its new growth ambition. We are now available to answer your questions. Let's start the Q&A session.

Bruno Duclos of Invest Securities. I have a few questions on my side. The first question is regarding the reversion in 2021. Could you give us an average level of reversion for renewals and relating and not only on renewals so that we can have a view based on the waiting of the lease signed? In your guidance, given the high CPIs and indices, what is your assumption for the indexation in 2022? And do you expect some negotiation with the tenants? And maybe a third question, regarding your reversion and vacancy rate. Some of your peers have been assuming positive reversion for 2022. Is it the same for you?

Okay. Thank you, Bruno, for the question. So the average reversion for renewals and relatings is 4.1%. So as you have seen, we are communicating on both for the relatings, it was a plus 6.3% and for the renewals 1.9%. On average, it's 4.1. About indexation, as you know, most of our rental base is indexed with ELC in France and same kind of index in Spain and Italy. On average, for 2022, it should represent more than 3% on the global rental base. It has already been invoiced to our tenants on the invoice -- on the billing that we made in January and in February. And just to give you a good signal so far, the rent collection of January is good. So I think it will be well accepted by our tenants. And the reason is our average rent, which is moderated. And then your last question is about an outlook on the financial occupancy rate and the positive reversion. So as you know, all the contracts that we have signed so far haven't been accounted in our rental base. So there will -- there should be a positive momentum on that side.

Just maybe a follow-up question on the indexation. Could you give us an idea of the average anniversary date for the leases? Or are they more in the Q1, the Q2 or...

Okay. 50% of our bases in France is indexed on the ELC index of the Q2 and the last 50% is on the Q3. On Spain, it has been almost entirely indexed as the 1st of January. And in Italy, the same situation as in Spain.

Pierre-Emmanuel from Kepler Cheuvreux. Just a quick follow-up on the indexation especially in Spain. So the inflation is close to 7%. When we see that the countries lagging the rest remaining countries, France and Italy. So is there any debate in Spain on the indexation? So this is my first question. The second one is on the potential acquisition. One pillar of the IPO was the acquisitions of new assets incurred by Carrefour hypermarkets. Is this coming back to the table now? And if yes, for what extent? How many millions could be allocated to this strategy. In line with that, what is the maximum LTV that you are considering today? And the last one on the dividend. Can we consider a stable payout ratio going forward? Or are you willing to keep more room of maneuver for acquisitions?

Pierre-Yves, I will answer on acquisition, I will let you on the indexation in Spain. On acquisition, clearly, Carmila is a very efficient platform. We launched the rotation platform at the Capital Markets Day. And rotation means clearly disposal to finance new dopant projects and acquisitions. So we will look at acquisition in the coming months, and we will keep you posted. On LTV, clearly, our objective is 40% LTV. So it will remain the same.

About indexation in Spain, you are right. It was higher than 5%. The same answer than for Carmila Group. It has been already invoiced and collection rate in January are encouraging. So there should be some negotiation, but not so much. And your question was about -- last question was about the dividend. So, yes, we have guided a payout ratio of 75%. But as you have seen this year, for example, we have proposed a new share buyback program of EUR 20 million which is a part of shareholder return too. So we are still guiding on 75% plus some share buybacks.

Florent Laroche-Joubert from ODDO BHF. So I would have one question. So you have stated that you have taken a prudent assumption that when collection will go back to normal in 2 years.,, And that's the reason why you expect plus 10% of -- your net recurring cash flow by 10% this year and another -- plus 10% next year. So what could be the driver to say that your assumption is too prudent? And maybe we can have normalization that could be faster than expected?

Yes. So that's something we are monitoring. So far, the collection rate of the second semester stands at 94%. That guidance is made of a collection rate of 93% over the next year. So that could be more. And if it's higher, then we could have a faster recovery.

And in '22, we will also have the first impact of the growth initiative. It can be better than the scheduled.

Three small questions. You talked about 5 major expansion plan. What are they? Mixed use, what is the step of the mixed use development project with Altarea and Carrefour? And what can you do for the -- to moderate maybe the ELC boom?

Okay. Thank you for those questions. So 5 major projects are Montesson, Orléans Place d’Arc, Labège in Toulouse, Terrassa in Spain and Antibes. Concerning the mixed use projects, so 2 are in pre-project phase in Nantes and Sartrouville. We've a partnership with Carrefour and Altarea. Next step for those 2 projects will be to gain planning authorization from the Planning Commission, and we expect construction work to start in 2025. So it's a very long-term project, but it's going very well. And the discussion with local authorities are very positive. And concerning ELC, it's not our responsibility to fix ELC. You know that there is some kind of discussion. So we will wait for the discussion on the composition of ELC. But I -- as Pierre-Yves told you, the indexation for this year has already been invoiced for tenants.

Regarding -- maybe a technical question on appraisals. As the indexation already being taken into account the -- 2022 indexation already taken into account in the appraisals. And what is the view on the -- of the appraisers given that we have a relatively strong indexation this year? It's likely to be quite high also in 2023. What do they do about the minimum guaranteed rent at the end of the lease? Do they into account that this minimum guaranteed rent is also increasing in line with indexation? Do they assume that -- yes, you understand you see what I mean.

So about appraisals method, appraisers are using 2 kind of method. First one is DCF. And of course, in the DCF, part of the indexation is taken into account. The global indication -- the global growth that they take is 1.7%, and it takes part of the indexation of 2022 and 2023. So that's for the DCF method. After that, for the capitalization method, it's not taken so far into account. So I should say it's taken partly if you make the sum of the 2 methods, but not all the indexation is taken into account. And our appraisers are reviewing the estimated rental value of each of our [indiscernible] each year. So -- they are adapting it to the variation of indexation. And as we have an average moderate rent value of EUR 257 per square meter, I think we share the same view then our appraisers that we can absorb that indexation without any problem.

Okay. Maybe one last question on my side. Regarding your FFO guidance, could you share your assumption regarding acquisition, investments in -- well, investment in pipeline to some extent and disposals?

Yes. It's a guidance at constant scope. So we haven't integrated the effect of acquisition, neither any effect of disposals.

It's Allison from Bank of America. Three questions from my side, if I may. So first is on the leasing activities. It's a very, very good number, record volumes, so congrats. But in terms of the rent level you achieved on the new leases, can I ask what's the spread between the new leases -- the rent of the new leases versus the old rent basis? That's question number one. Number 2 is a little bit more on the disposal. So I know you have like EUR 200 million target in this year and next year. But can I ask what the standard you are looking for to dispose? Like what type of assets you're looking for to dispose? Do you have like a quantitative number saying if, let's say, the IRR of the shopping center is not good enough, then you will be looking to dispose that. And last question is more big picture on the tower business. So if I don't remember wrong, I think Carmila kind of entered this business in maybe 2019, 2020, and you started to gain momentum in the past 2 years. But my understanding is tower business is still quite different from retail business. So -- why do you think you have the right expertise or experience in developing this side business?

On leasing activity, just I think there are 3 reasons why we have very good reserves is, first, we have a very powerful asset, the hypermarket and core leadership, medium-sized cities. Second, we have very excellent teams with a G&A of retail team, on the ground in [indiscernible], in Toulouse. We're very agile, and we are ready to go beyond boundaries and to test new concepts such as CBD, for example. And finally, affordable rents and these affordable rents allowed us a positive reversion.

Yes. And I think that number answer your question, Allison, it's plus 6.3% of reversion versus ERV for new leasing or -- yes, for new leases. So when you compare the LMG of the new contracts versus the estimated rental value of the appraisals, it's plus 6%.

Compared with your previous -- Sorry. But was that a new -- I mean, I understand it's a new rent versus ERV, but what's the new rent versus the [ old Carmila's rent? ]

Right? Yes. Okay. Okay. So that was to answer the question of Bruno. Plus 6% new rent versus ERV, plus 1.9% just renewals and you sum up the renewals, plus the other things, it's plus 4.1%.

Compared to '21 or to ...

To previous rents. Yes.

On disposal, well, we'll provide details when they are signed. We -- what we are trying to do is to sell assets on which all values has been extracted from Carmila. So it's more core business assets. But we will give you details when it will be signed. And on tower business, when tower business varies -- 2 expertise in tower business, a real estate business, but at the end is you need to use a square meter in order to build a tower and there is a digital infrastructure business -- we acquired this expertise from the [indiscernible]. It lasted 18 months. We have the good relationship and content relationship with [indiscernible] telecommunication operators. And so now we are -- the next -- this year will be a year to build up and to ramp up with an objective on 160 towers at the end of the year in operation or under construction. So I think we have all the legitimity and the competency to succeed in this very exciting business.

So if there are no further questions in the room, I will just read out a few of the questions that we have online. So we have a question from Alvaro -- sorry, [indiscernible] BNP Paribas. He says, on the investment market, you plan to dispose of EUR 200 million of noncore assets over the coming years. Have you already seen stronger appetite for the type of assets that are owned by Carmila? And more importantly, who is interested in buying Carmila shopping centers? And do they have the expertise to manage them?

I think it's difficult to give more details now. Clearly, we are targeting EUR 200 million of disposal, and we are confident that this target can be met given the state of the market. We have some appetite from the market and the quality of Carmila's asset.

So another question online. If you are convinced that share buybacks are accretive for net asset value per share, why don't you increase the size of the share buyback program and decrease the dividend?

I think both are part of shareholder return. It's important for shareholders to have the view on the dividend. So it was really positive we think to give that guidance over the plan for the dividend. And when we see some additional opportunity to create value, we can use the share buyback tool. So it's more capital optimization, and that's our strategy regarding shareholder return.

Do we have any final questions in the room?

Again the disposals, you can either dispose 100% of the asset, but you can also dispose a minority stake, which is a solution for some potential buyers, which are not able to manage the asset. What is your view? You contemplate selling 100% of the assets, I think -- or could you sell minority stakes?

We could sell -- we can do both. So I think we will provide details when they are signed.

So if we have no further questions, I leave the floor for the Carmila team for concluding remarks.

Thank you for attending this meeting. As we say, we are very, very confident in the 2022 for Carmila. And so -- and we will keep you posted. Thank you.