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

Good morning, everyone. Welcome to Carmila's 2023 Annual Results Presentation. My presentation today will be focused on where we are 2 years into the strategic plan, as well as the Galimmo acquisition. It has been another year of successful execution and of meeting financial targets. Recurring earnings per share is above guidance at EUR 1.60 per share, up 2.3% versus last year and up 8% at constant scope. The dividend to be proposed to shareholders will be EUR 1.20 per share, in line with the policy of a 75% payout of recurring earnings. Carmila announced the acquisition of Galimmo in July 2023. Closing is expected this summer. Disposals now total close to EUR 300 million since the start of the asset rotation program or around 5% of the portfolio. Carmila's balance sheet and leverage metrics are [ amongst ] the best in the sector. And finally, growth initiatives are on track, including the successful 5G tower business. Now, turning to the operating performance. Leasing activity has remained very strong, which has led to record occupancy at year end, thanks to our efforts to focus on the most dynamic retail sectors. High occupancy, agile transformation projects and indexation have led to 4.7% growth in net rental income. Footfall is up on last year and is getting closer to the 2019 level. Retailer sales are up plus 5%, driven by inflation with a very strong performance in Spain boosted by tourism. Sebastien will go into more detail on that in a moment. Finally, on appraisal values, we are down minus 2.3% on a like-for-like basis. As expected, there is an impact from higher rates, but this is partially offset by strong rental growth. It also reflects lower transaction volumes in the second half of 2023. Now on the Galimmo acquisition. Many of you will know that Carmila announced an agreement to acquire Galimmo in July. So transaction was announced at the same time as Carrefour acquisition of the food retail business of Cora France. It is really an ideal growth opportunity, a complementary footprint on which to roll out Carmila's strategy. The financial terms are very attractive, plus 5% pro forma accretion to recurring earnings and net asset value, thanks to the attractive acquisition price we were able to negotiate at a 35% discount to gross asset value. Thanks to Galimmo's low level of debt, the LTV impact is estimated at only 160 basis points, leaving plenty of margin for safety and leverage. The closing is expected this summer once the antitrust process on the Carrefour acquisition of Cora France is completed. Financing is secured. Carmila will acquire 93% of the shares of Galimmo. The deal is conditional on the Carrefour-Cora deal going ahead and will be followed by a mandatory tender offer on the remaining Galimmo shares. With the Galimmo acquisition, Carmila is adding M&A to its value creation toolkit. Turning now to trends in the retail sector. When we talk to investors, they are more positive on retail. They can see that the e-commerce growth we saw during the COVID period was exceptional and that omnichannel is the winning model. E-commerce growth has stabilized and a new normal has been reached. Carmila benefits from grocery consumer habits in France, Spain and Italy and the strength of Carrefour business, especially of the hypermarket format. The other major trend and one where Carmila is well positioned is purchasing power and cost of living. Hypermarkets are a discount format, and Carrefour is very focused on helping consumers buy affordable groceries. Many of our retailers have been very successful in Carmila centers with a discount and low-cost positioning. Action, Normal, Adopt and Basic Fit continue to open at Carmila locations. Now turning to Carmila's strategy to pivot the mix-merch. This is another topic we regularly discuss with investors. Carmila is gradually reducing the share of fashion retailers in favor of new concepts, but it is important to note that many fashion retailers are doing well. Carmila has a long-term strategy to bring healthcare tenants to centers with more pharmacy openings and extensions as well as opticians, doctors, dentists. We are on track to reach the target of 15% of the rental base from healthcare by 2026. It is more than 10% today. It is also very positive to see so many new brands signing with Carmila this year, 80 in total in France and Spain. You can see some examples on this slide, including some great food and beverage [ concepts ]. Now on Slide 10. Corporate social responsibility is at the heart of the Carmila's strategy, building sustainable growth. We are on track to meet our goal of net 0 Scope 1 and Scope 2 emissions by 2030. For the second consecutive year, Carmila was included in the CDP A-list for the quality of its climate disclosure. I will go into more detail on this in a moment. 96% of [ our ] assets are certified. Carmila centers are an important contributor to the local economy and a hub for local communities. Shopping centers are also major local employers. Finally, Carmila is also a responsible employer and focused on diversity. Carmila was in 11th place in the SBF 120 ranking on women in leadership roles. We are proud to have so many talented women at Executive Management and Board level. Now looking in more detail at Carmila strategy on net 0. In 2023, we accelerated on energy efficiency investment with EUR 10 million of Green CapEx. We installed LED lighting. We renovated heating and ventilation systems. We are rolling out new artificial intelligence Building Management tools. 93% of Carmila sites are equipped with electric vehicle charging stations. And we are starting the first solar auto generation project in Spain, and we stand to benefit from Carrefour's renewable strategy. We continued our partnership with robust offsetting projects and local firms and with local forest. As you can see on the chart, we are on track to reach net 0 by 2030. Now our new growth initiatives. 2023 was another successful year. The omnichannel incubator and services platform is delivering a meaningful financial contribution, thanks in particular to a record year in specialty leasing, pop-up stores and events as well as digital and omnichannel marketing services. Next Tower is a mobile tower company that is targeting EUR 180 million of assets by 2026. As of end 2023, EUR 2 million of annual rent has been secured, and Carmila began to develop the activity in Spain. Finally, Carmila Retail Development makes minority investments in new retail concepts. In 2023, the EBITDA of equity-accounted companies amounted to EUR 2 million, thanks to the development of the e-cigarette retailer, Cigusto. In total, Carmila Retail Development has 13 partners with over 100 stores in Carmila centers. This business helps us to accelerate the pivot to dynamic sectors such as healthcare. Our presentation today is also an opportunity to give a strategic and long-term view. There are 3 things to have in mind on Carmila's strategy: first, the pivot of the mix-merch and restructuring projects which have led to record occupancy; second, optimizing capital allocation through asset rotation and the Galimmo acquisition; and third, a long-term vision around energy transition, the partnership with Carrefour and opportunities for mixed-use development and the [ strategy ] of artificial [indiscernible]. Finally, to conclude my part of today's presentation, a brief word on the outlook for 2024. With lower interest rate, it is looking more positive for real estate. There is more interest for equity investors. The bond market has reopened and liquidity in the investment market should increase. The operating performance in retail has been a positive surprise for many people. This should continue this year with tourism boosting retailer sales in Spain and economic stability in France. The Summer Olympics in France will be a big event for the country as a whole. On earnings guidance, 2024 should be another year of growth. Recurring earnings per share are expected to be at least EUR 1.63, up 2% versus 2023. I will now leave the floor to Sebastien to go into more detail on Carmila operations.

Thank you, Marie, and hello, everyone. Time to look back on activity in 2023. But for the main point of my presentation, operating performance remains very strong. All the indicators are positive. Carmila strategy to pivot the [ merchandising ] mix is a success, and we continue to transform centers with agile projects. And finally, let's look at footfall and retailer sales. Both are up in all 3 countries. The performance is particularly good in Spain, driven by the rebound in tourism. Now turning to commercial activity. It has been another very strong year. Again, more than [ 800 ] new leases signed or more than 12% of the rental base. We have positive reversion for the full year. It is plus 2.4% on average, above the previous level of rents. That positive reversion figure is on top of indexation. Rents remain affordable with the occupancy cost ratio below 11%. Occupancy is at a record level since the creation of Carmila. It is 10 basis points higher than at the end of last year and 30 basis points higher than at the end of 2021. Turning now to the pivot strategy. On the slide, you can see a demo Carmila center. It is an illustration to show the main features. You can see what we have achieved in terms of transformation. There is a restaurant and the car park. There is another food and beverage concept in the center. You can see healthcare, discount, specialty leasing and pop-up Stores. There are leading fashion brands. And of course, there is a Carrefour hypermarket. On the car park, you can also see electric car charging stations, improved public transport access and solar panels. We have even shown a 5G mobile tower from the Next Tower business. Carmila's leasing team tries to create the right mix-merch in every center. As Marie mentioned, this year Carmila signed [ 80 ] new brands. We have reinforced the healthcare offering and helped discount retailers to develop. We have opened new restaurants with household names like McDonald's, KFC and Starbucks. We also have local and regional concepts. Lastly, sport is also a major trend with Intersport, Basic Fit, JD Sports and Courir, for example. Now turning to the incubator strategy, specialty leasing and innovation. Specialty leasing, pop-up Stores and events are about bringing novelty and footfall to centers. They also contribute to revenue growth. Revenues for the specialty leasing business are up 9% this year. The trend is towards longer leases, more food and beverage concepts, mobile [ format ] accessories, jewelry and household gadgets. Q4 and Christmas are by far the busiest time, generating around 40% of annual revenue. On top of the [ 80 ] new brands signing long-term leases, pop-up stores are also way to test new concepts. Low-cost and discount concept have been very successful this year. We have also seen attractive showcase stores for regional cost creators. Merci Handy distributes beauty products and was a winner of Carmila's DNVB's Ready competition. [indiscernible] is an innovative jewelry concept, both open pop-up store with Carmila. On innovation, we continue to make progress in many areas, customer data, local influencers, helping retailers to work on their online presence and social media campaigns with a former Miss France and start from TikTok and YouTube that appeal to Gen Z consumers. Now turning to Slide 20 and Carmila Spanish portfolio. The Spanish portfolio has more than tripled in value since the creation of Carmila. It stands at close to EUR 1.4 billion. The business has similar features to the rest of Carmila. There is a Carrefour [ and ] [ Cora ] on affordable rents. The occupancy cost ratio stands at 11%. We sold the portfolio of 4 centers in 2023, in line with appraisal values. The portfolio is now made up of 75 centers, making Carmila #1 in Spain by a number of assets. The operating performance has been even stronger in Spain than elsewhere. A lot of Carmila centers are in coastal regions, which have benefited from post-COVID [ revenge travel ]. Total spending by international tourists in Spain rose by 24% in the first 11 months of 2023. Our flagship centers have performed particularly well. They have seen 8% to 10% growth in retailer sales. On top of that, the transformation of the Rosaleda centers acquired in 2022 has already generated a lot of value for Carmila. Now turning to Carmila's project pipeline. First, on the 5 major projects, Montesson, Orleans Place d'Arc, Antibes, Toulouse Labege, and Terrassa. The first major expenditures will not begin before 2025. The budget is EUR 50 million a year for 4 years and a total of EUR 200 million. The projects have been adapted to include more mixed-use repurposing. They take into account Carmila's return targets and changing customer needs. Once again, agile restructuring projects created value in 2023. Finally, Carmila also has long-term opportunities in mixed-use. We will benefit from Carrefour's partnership with Nexity. It will boost the catchment area of 13 sites. Carmila also has its own mixed-use pipeline with repurposing projects in Nantes and Sartrouville. To sum up, first, it has been another great year in terms of operating performance. Second, occupancy is high and there is good commercial momentum and growth in retailer sales. Lastly, we continue to transform centers with agile transformation projects. That is all for my part of the presentation. I will now hand over to Pierre-Yves Thirion, Carmila's CFO. He will take you through the financial performance and outlook.

Thank you, Sebastien. Hello, everyone. It is great to see you all again. Here are my 3 key messages on financial performance. First, Carmila has delivered another strong year, record net rental income, recurring EPS above guidance and a solid balance sheet. Second, we have sold assets in line with appraisal values to reinvest in the highly accretive acquisition of Galimmo. And finally, the outlook for 2024 is positive. Indexation will continue to support rent growth and the Galimmo acquisition will contribute to recurring earnings from the closing, which is expected this summer. Now let's look in more detail at 2023. First, on net rental income. It is a new record level in 2023. There is an acceleration in organic growth, which is above indexation at 4.7%. We have been able to pass indexation to tenants. Rent collection is at a high level, in line with 2022 at 96.5%. Like-for-like growth is adjusted for asset sales, mainly the sale of a portfolio of 4 assets in Spain. Including the effect of disposal, we still have rental growth of 2.2%. On the next slide, you have the P&L line by line. I won't go through all of the details. We have managed to control costs and absorb inflation by charging more services to tenants. The cost base is up only 2%, which is well below inflation. There is a limited increase in financing costs from the refinancing completed in 2023. Recurring earnings are up 1%. Now on Slide 25, you have recurring earnings per share, up 2.3% at EUR 1.60 per share, 2% above guidance and organic growth of 8% when adjusted for exceptional income and at a constant scope. Rent collection has remained high. There is a positive indexation, and we have organic growth on top of indexation. That more than offsets the increase in operating and financing costs. Now on the dividend and earning guidance for 2024. As mentioned by Marie, Carmila's dividend policy is a payout of 75% of recurring earnings and a minimum of EUR 1.00 per share in cash. The dividend we propose to the shareholder meeting in April will be EUR 1.20, well above the floor of EUR 1.00 per share and growth of plus 3% versus the previous dividend. Looking at the outlook for 2024. There will be a positive indexation effect again, approximately 4%. We are confident that rent collection will remain at the current level. There will be an additional impact from disposals as well as a modest increase in financing costs due to refinancing and from closing the contribution of Galimmo. Overall, we expect recurring earnings per share of at least EUR 1.63, up 2% versus 2023. Now on the asset side, and starting with appraisal values on the top of the portfolio on Slide 27. Rent growth partly offset the progressive increase in yields for retail assets. Overall, we saw a like-for-like decline in the value of the portfolio of minus 2.3%. In Spain, though, the like-for-like valuation was up 0.1% as rental growth fully offset the effects of higher discount rates. Turning to Slide 28. You have a longer-term view of the average cap rates of Carmila's portfolio. The repricing in retail started long before other asset classes. For Carmila, the yield expansion has been almost entirely offset by growth in the rental base over the period. Over the past 2 years, that growth has been driven by indexation. Valuations are based on prudent rental growth assumptions of around 2%, in line with long-term indexation. Carmila has continued to sell assets in 2023, 7 in total, all in line with appraisal values for a total amount of around EUR 130 million, demonstrating the validity of appraisals. Now on net tangible asset value per share, it stands at EUR 24.17 and is down minus 4.3% versus end 2022. There is the effect of the like-for-like decrease in appraisal value of the portfolio, EUR 1.60 of recurring earnings, EUR 1.17 of dividend and a positive effect from the share buyback and other smaller effects. Turning to the next slide and leverage metrics. The LTV ratio stands at 36.6% with net debt down a further, EUR 75 million, partially offsetting the effect of the decline in the portfolio valuation. Net debt-to-EBITDA is at 7.2x, among the best-in-class in the sector. The interest coverage ratio stands at 4.7x. These ratios are well within what is required for Carmila's BBB credit rating and compare favorably to peers. Successful asset rotation has given Carmila the financial flexibility to take advantage of opportunities such as the Galimmo acquisition. On liquidity and funding, the situation is also very positive. Carmila has raised long-term funding in the bond market and the bank market with a EUR 276 million secured loan and a EUR 500 million bond issue. Carmila's current cash position is sufficient to finance the Galimmo acquisition and cover the repayment of Carmila's outstanding bond maturing in September 2024. The next bond maturity is then not before May 2027. The average maturity of Carmila's debt has increased to 4.8 years. And there has been only a small increase in the cost of net debt, which now stands at 2.7%. On top of that, Carmila has the benefits of hedging derivatives. Now turning to CapEx plans on Slide 32. There is a EUR 10 million a year of planned investment in energy transition. That includes renovation projects and investment in solar energy. It is in addition to EUR 15 million a year of maintenance CapEx. The envelope for agile restructuring projects remained the same at EUR 40 million a year. These projects offer an attractive yield on costs. Next Tower still represents on average EUR 13 million a year until 2026. As mentioned, our major projects works will not start until 2025 and the total amount of EUR 50 million per year from 2025 will be financed through asset rotation. To wrap up the financial part of today's presentation, here are the main points. First, rental growth partly offset yield expansion. Second, leverage remains at a comfortable level with an LTV ratio at 36.6%. Third, recurring EPS at EUR 1.60 per share, 8% organic growth versus 2022. Lastly, a dividend of EUR 1.20 per share, up 3% versus 2022 and in line with the dividend policy. To conclude, we are, again, confident on the outlook and can provide a clear indication for 2024. Recurring EPS is expected to be at least EUR 1.63, 2% growth versus 2023. The contribution of Galimmo should be from the second half of the year. That's it for financial performance. I will now hand over to Marie for the conclusion.

Thank you very much, Pierre-Yves. Just a few words to conclude today's presentation. 2023 was another year of successful delivery for Carmila. It showed the relevance of our strategy to pivot the mix-merch. We have a portfolio of transformed hypermarket in [ Cordoue ], leading shopping centers in mid-sized cities. Business fundamentals are strong, so is financial performance and Carmila's balance sheet. The successful execution of the strategic plan has put us in a position of strength and created opportunities. 2024 will be the 10th anniversary of Carmila. We continue to target growth and will enter a new phase with the Galimmo acquisition. That concludes today's presentation. We are now available to answer your questions. Let's start the Q&A session.

Florent Joubert from ODDO BHF. I would have 3 questions, if I may. My first question so would be for expectations in 2024. So what can we expect in terms of performance of retailer sales? Can we expect positive performance? And also -- what can we expect also in terms of leasing? Now you have a very good occupancy ratio. Can we expect positive reversion? So my second question will be on the growth initiatives. So we can see that maybe you are a little bit below -- linear to [ August ] which has a EUR 30 million of recurring results. So can we expect maybe an acceleration for the [ 3 ] coming years in that? And my third question would be on the valuation of the assets. So we can see that the adjustment in [ H2 ] is quite small. So can we expect that we are not far from a low point in terms of valuation?

Thank you very much, Florent, for this question. On 2024, clearly, we have a positive outlook on retailer sales and on leasing activity. We demonstrated last year that we have a very clear leasing policy, probably the best team in this sector, and we will continue to pivot the mix-merch, and we are very focused on that, and we're confident to continue to deliver positive reversion. On the growth initiative, we confirm the target. The ramp-up of Next Tower is on track. We have worked hard to industrialize processes, for example, of obtaining authorization to develop very good commercial relationship with mobile operators and the ramp-up will accelerate in 2024. And so we are on track to reach [ our ] target. On capital, Carmila Retail Development, we have now 13 partners. Some of them are doing very, very well, such as Cigusto, the e-cigarette business. Cigusto is a company with more than 130 shops now within Carmila and outside Carmila, and I can also mention Vertuo, the dental clinic, more than 15 dental clinic in Carmila. So we confirm the target on the growth initiative. And I'll let Pierre answer the third question.

On valuation and outlook for valuation, I think what supports Carmila valuation is our capacity to continue our asset rotation program. We have sold the EUR 300 million of assets, which represents 5% of the total portfolio. It has been in line with asset valuation. So that is positive, and that's supportive. Then on the outlook, so you have 2 parameters. You have the rental growth. Rental growth for next year will be driven by indexation. We expect overall a 4% effect of indexation in 2024. So that should support the value. And on cap rates, various things to say. The average cap rate of Carmila is prudent. There has been a repricing of 100 basis points since 2017. We have seen semester after semester that the rental growth is partly offsetting the cap rate increase. And finally, when we talk with our appraisals, they say that we have prudent assumptions in our valuations and that we are able to pivot the mix-merchandising and maintaining the rental value. So I think that should support our valuation in 2024, and that's what we have seen in 2023. That is relatively a good performance for Carmila.

Bruno Duclos, Invest Securities. My first question is regarding Galimmo. Could you provide an update on the metrics like vacancy, reversion, net rental -- like-for-like net rental growth in 2023? [Audio Gap] is your operational strategy for these assets in terms of -- I assume you will deploy the same strategy as the other. But do we have special issues concerning these assets given their positioning?

Well, concerning Galimmo, so closing is expected in the summer. I think it's not our job to comment on the results of Galimmo so far. As you understand, our objective is to roll out the Carmila's strategy on a wider portfolio. We valued what has been done by the management of Galimmo on those sites. We think there are [ rumor ] of progression, for example, our occupancy ratio or collection rate, and we will do that once it's -- when the deal is closed.

I assume you have made some due diligence or whatever on the assets. So maybe if we can have a flavor on the vacancy rate -- the last vacancy rate you have heard of and the thing you can expect?

Pierre, you can go on.

Yes. On -- the vacancy rate is a bit lower, 2% lower than the vacancy rate of Carmila. So our idea, as Marie said, is to deploy the Carmila platform and deploy our leasing momentum on that portfolio to increase the [ occupancy ] -- finance occupancy -- the financial occupancy. On the collection rates, that's pretty -- that's the [ same ] [ idea that ] collection rate is 2% lower than the one in the Carmila portfolio. So we think there is room to improve those metrics in Carmila -- in the Galimmo portfolio. So we are confident in our capacity to deploy our platform on that portfolio.

Regarding your projects, which -- what is the level of yield on cost that you are targeting for the new projects, for the agile ones and maybe other ones or maybe in average?

Yes, we have clear targets on those investments for agile projects, which are, I think, kind of a -- [ now ] of Carmila, it's EUR 40 million a year and the target yield on cost is 10%. So it's accretive and it creates value financially, but it also helped to transform the mix-merchandising and to adapt to the commercial offer of our centers. For major projects, nothing is under construction. That won't start until 2025. It's a global plan of EUR 200 million and EUR 50 million per year. And the idea is to reach a spread of 200 basis points above the net initial yield of the assets to create value.

Last question for me. Regarding the indexation. So thank you for giving us the indexation in 2024. Could we have an idea of the assumption of indexation taken in your appraisal for 2025 and 2026?

Yes, we have an idea. It's a 2% effect of indexation and rental growth that has been taken in our appraisals. What we think is indexation should be approximately at that level. And what we have proven is that we create value above that indexation and that value is not in our appraisals.

Do we have any other questions in the room?

[Foreign language]

So, as always, we have a very clear convention between Carrefour and Carmila since the creation of Carmila, called commercial [ renovation ] development, and we share the value created on this project. And to give you more color on the Antibes projects, it's one of our 5 big projects. As we already mentioned, we are still working on this project to find the best thing to do considering the new normal on retail. On the Antibes project, we were going to do 20,000 [ meter ] of retail. Now we are going to do about 1/3 of that, just to mention this, and we would share the value created with Carrefour.

Stephanie Dossmann from Jefferies. One question is on your disposal targets. Do you have any new targets on this going forward? And how do you see the investment market currently, please?

So as Pierre mentioned, in 2023, Carmila sold 7 assets in line with appraisal value for a total of EUR 130 million. As a total, since the beginning of the rotation program, it's EUR 300 million value asset that we sold. We are working on meeting the disposal target by the end of this year. We still have around EUR 60 million to reach our targets. We are working on it, and we are confident in our ability to do that. We are -- especially in connection with family office -- local family office who are very interested in our sites. As I mentioned already, [ transform site ], very resilient, local leaders in mid-sized cities of France and Spain.

If we have no further questions from the room, could we please go to questions from the conference call?

[Operator Instructions] We'll take our first line from [indiscernible] from BNP Paribas.

I've got 2 themes to my questions, one on solar and one on earnings guidance. So solar, first of all, have you done an analysis yet to look at the capacity of your portfolio in terms of solar generation, i.e., square meters of roof that is appropriate in terms of being south or near south facing, and therefore, the megawatt peak capacity that you could do for your portfolio? The reason why I ask this is because there's a lot of companies within our coverage universe today that have gone big in terms of solar investment and I just wonder what the medium or long-term CapEx opportunity, I suspect, the high single-digit yield on cost that you could deliver from a solar investment across the heart of your portfolio?

So on solar investments, we have one project in Spain which is underway in partnership with Carrefour in France. This project will be very linked to the Carrefour policy on renewables energy because, as you know, Rob, parking belongs to Carrefour. So I think I won't comment on the strategy for Carrefour. And we are also very keen to develop electric charging stations, as I mentioned. And for us, it's very important.

So the solar opportunity then in terms of on the roof of the assets, [ that ] -- where you obviously have control of this relatively limited is what you're saying?

Yes. We will invest in Spain directly. In France, Carrefour will do it, and we don't have yet a full target to communicate.

On the earnings guidance…

In Spain it's possible to put solar panel on the roof. In France it's more difficult because of different regulation and because of the kind of our building. That's why it's different. It will be a different setup between Spain and France.

On the earnings guidance, it would be great going forward, by the way, to have a bridge chart to what I'm about to talk about, which is, you obviously delivered EPS of EUR 1.60 for the year just gone and you're guiding to EUR 1.63 i.e. -- sorry, at least EUR 1.63, i.e., plus 2%. But I think about the component parts of that, we've got, call it, 4% from indexation, maybe another 50 bps from leasing ahead of the indexation figure, Galimmo contribution of maybe 1.5% to get us to 6%. You then got some disposals, which maybe knocks off [ 3% ] in a bit, and, I guess, an increase in -- potential increase in interest charge element as hedging rolls off. But ultimately, that gets me to a number notably greater than 2% increase for EPS guidance. So I guess, I wonder how confident you are on beating that EUR 1.63 -- consensus at EUR 1.67. So if you can't get to EUR 1.67, then obviously, analysts in the room and on the phone need to start cutting their numbers. Just wonder if you could comment on that?

Thanks, Rob, for this question. So the guidance is at least EUR 1.63, which means at least that we can do better. It's prudent and conservative. There is an impact of disposal of minus 2%. So if you restate it from the disposal, it's a plus 4%. It's driven by indexation with an environment of financial cost slightly up. And then you have the contribution of Galimmo. The contribution of Galimmo will be -- is forecasted to be in H2. The [ date ] is not fixed yet. And if anticipated, it could had a positive impact on the guidance. So overall, yes, it's conservative and it could be higher if the Galimmo acquisition will be anticipated.

And just to add something. I think we assume to have a prudent approach. I think the DNA of Carmila is not to be bullish, but to deliver what we said or it's at least plus 2%.

And then a very quick final one was Galimmo deal closing, you said summer. When summer for you? Are we talking June? Are we talking September? Clearly, at the moment, you have a specific date that you will be targeting. Should I think about that as a end of Q3 or at the start of Q3?

As you know, it depends on the antitrust process. So for us, it's very difficult to give a very precise date. So the date is within summer.

I look forward to summer.

Sorry for that. I cannot be more precise.

[Operator Instructions] We'll take our next question from [indiscernible].

First one on Spain. So as you mentioned, retail sales were particularly strong because of tourism. Do you expect a similar development for 2024 or is tourism now more normalizing?

So in Spain -- and I would like to welcome the new CEO of Carmila, Spain, who is in the room, Alberto. So in Spain, clearly, the Spanish business is doing very well. Spanish economy has among the best growth in the Eurozone, thanks to the rebound of tourism. Retailer sales were up plus 8% versus 2022. And so we are positive on this year again for Spain.

And then second one would be a follow-up question on guidance. So I do understand that the date is not fixed, but I suppose you have a range in mind for the contribution to earnings. So could you perhaps give that range? So let's say, if it's closed beginning of January -- July versus end of September [ and ] what contribution would be?

So it's about the closing dates of Galimmo. The overall impact of Galimmo will be 3% before synergies and 5% after synergies. Synergies will be implemented after the closing. So for each month of anticipation of Galimmo, you have [ EUR 1.12 ] on -- 3% to add to the guidance, which is positive.

And that's the annualized impact. Am I correct?

That's -- the annualized impact of Galimmo is 3% of growth of EPS before synergies and 5% after.

But we want to hold the synergies in the first month. So that's why it will take a -- there will be synergies next year also.

And then last one. Obviously, you currently have a lot of cash on the balance sheet, and I would assume that is in deposits. So could you perhaps share the yield you get on those deposits?

So we have EUR 800 million on cash on the balance sheet. It's to repay the bond maturing in 2024 and the Galimmo acquisition and the dividend for the first semester. Then after nothing -- before to reimburse before 2027. So we have a strong focus on the deposits as it creates products in financial expenses and the current rates are at 4%, approximately a bit higher.

[Operator Instructions] There are no further questions from our audio participants. So I will hand you back to your host to conclude today's conference.

So we have some written questions from the webcast, which I will read out for the management team. So the first one, on your DCF valuation, could you please disclose what are the vacancy rate assumptions?

So on the DCF assumption, the appraisals are looking to the current situation of the portfolio. The financial occupancy rate is at 96.5%, which is at a record level of Carmila. And that's the level which is [ projective ] in the assumptions. So it's approximately 3.5% of vacancy level projected.

And what is the pro forma net debt-to-EBITDA with the Galimmo acquisition?

We haven't disclosed the pro forma on the net debt-to-EBITDA, but we have communicated on the pro forma on LTV. The pro forma of the LTV is an impact of 160 basis points, but -- and that's the number we have communicated.

That is it for today's Q&A session. We have last question in the room.

It's a follow-up question on the yield on cost on your project that you mentioned that you are targeting a 200 basis point premium. Is it calculated? Is it the yield on cost of the project or the yield on cost after buying a potential share from Carrefour? Is it your -- the yield on cost of the project? Do you see what I mean?

Yes. It's the yield on cost of the project. As you know, we have option to buy the part of Carrefour. So we buy the part of Carrefour once it's delivered. So we don't assume the risk. We just assume 50% of the risk and Carrefour assumed also 50% of the risks. That's why it's the target of the project and not of the global blended yield.

Thank you, everyone, for joining today's call. That's it for the Q&A session. Please get in touch with us directly if you have any follow-up questions, and I hope you'll have a good day.