Cofinimmo SA (COFB) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for holding, and welcome to the Cofinimmo event call regarding 2021 half year results. [Operator Instructions] I would now like to hand over the conference to Mr. Jean-Pierre Hanin, CEO. Please go ahead, sir.

Good morning, ladies and gentlemen. Thank you for dialing into this conference call and for being with us for the presentation of Cofinimmo's 2021 half year's financial report. In the room with me today, my colleagues are Francoise Roels, Chief Corporate Affairs and Secretary General; Yeliz Bicici, Chief Operating Officer, Offices and Real Estate Development; Sebastien Berden, Chief Operating Officer, Healthcare; Jean Kotarakos, Chief Financial Officer; as well as our Head of Control, Jonathan Hubert; Head of ESG, Hanna De Groote; and our Head of External Communications and Investor Relations, Jochem Binst; together with Lynn Nachtergaele, our Investor Relations Manager. Cofinimmo results proved to be solid and higher than the outlook. The net result from core activities group share stands at EUR 103 million, a 17% growth compared to end of June of last year. Our new estimate for the net result from core activities group share stand at above EUR 7 per share. The expected gross dividend payable in 2022 can be confirmed at EUR 6 per share. With EUR 698 million invested, the investment activity in health care real estate was high over the first 6 months of this year. Investment included entering into new geographies, Italy and Ireland. In fact, earlier this week, we added with the U.K. a third new country to a geographic spread. On 27th of July of this year, we had invested a total amount of EUR 784 million per year to date. Ongoing development projects represent an envelope of more than EUR 530 million to be achieved by 2023. With our current investment, our health care assets represent now EUR 3.5 billion, which accounts for 64% of the group consolidated portfolio. Moreover, we continue to rebalance our offices segment. Early February, the group announced the launch of the contribution project of its office portfolio into a subsidiary, giving the option to open a share of the capital of its subsidiary to future investors. And May, the group also announced the future disposal of 17 office buildings located in the periphery of Antwerp and in the decentralized area and in the periphery of Brussels for a total amount exceeding EUR 80 million. In terms of financing, Cofinimmo carried out capital increase totaling approximately EUR 350 million through contribution in kind, accelerated book building and the optional dividend. On the ESG front, we obtained BREEAM very good and BREEAM excellent certifications for 2 nursing and care home projects in Spain. Our company profile and strategy are well known by all of you, we will therefore skip Slides 5 to 7 and go directly to Slide #8. The chart on this slide shows the dynamic of the change in the breakdown of our global portfolio per segment and the rapidly growing share of our healthcare segment. At the end of the second quarter, we were present in 8 European countries. As said before, we added a ninth country to our geographic footprint earlier this week with the U.K. With EUR 698 million, our investment in healthcare was strong during the first half year of this 2021 as shown on Slide #10. This volume represents more than 6x the average amount invested in the financial years prior to 2018. And you know that we continued the investment momentum during the month of July. As you know, Cofinimmo has a long and deep experience in ESG, illustrated on Slide 11. Cofinimmo received its first ISO 14001 certification as soon as 2008. Since then, we have developed many initiatives to be a front runner with a high level of transparency. Please bear in mind that Cofinimmo is one of the 20 leading listed company in Belgium, and that's what we do sets the tone in Belgium. We also issued our first sustainable benchmark bond in November 2020, and started implementing the project called 30³ in 2020. This project aimed at reducing the energy intensity of our portfolio by 30% by 2030 to reach 130-kilowatt hour per square meter. Our ESG strategy is also based on the United Nations Sustainable Development Goals, and you will recognize the logos, some of them on Slide 12. On Slide 13, you see our implementation action of Project 30³ in more details as well as tangible targets set for different segments. The energy intensity of the portfolio has already been reduced by 14%, going from 190-kilowatt hour per square meter in 2017 to 163-kilowatt hour per square meter in 2020 and 78-kilowatt hour per square meter in 2019. Slide 14 shows our impressive list of ESG benchmark and awards. Slide 15 provides information on the effect of the pandemic for Cofinimmo. At M&A level, despite the health crisis, the deal flow did not dry up. As explained before, our investment momentum was, and is, strong. Healthcare tenants in our geographies have benefited from ad hoc government support since they are in the first line in the fight against the pandemic. Vaccination campaigns in Nursing Care Home and beyond are well advanced in all the countries where we are active. So there is certainly a positive evolution in this field. Cofinimmo market cap was EUR 3.9 billion at the end of June and EUR 4.1 billion today. Daily liquidity remains sound. The total shareholder return since end of December '19 amount to 13%, which is substantially higher than the EPRA index. Please also consider that the share price shows a long-lasting premium compared to the IFRS net asset value per share. In the following slide, we'll take a closer look at our property portfolio. As shown on Slide 18, the occupancy rate at the end of this first half year reached 97.9% compared to 97.4% at the end of 2020. In healthcare, the occupancy rate remains very close to 100%. In the office segment, the rate reached 93.4%, coming from 92.8%, is mainly on the back of new rental and the future disposal of 17 office building in the decentralized area and periphery of Antwerp. The weighted average of residual lease term is 12 years as shown on Slide 19 and remains unchanged compared with the end of 2020. I would like to highlight here the figure for healthcare, which stands at 16 years. Compared to 2020, yields are marginally declining on the back of recent investment and the future disposal of 17 office buildings. I will now invite Sebastien Berden, our CEO of Healthcare, to take you through the highlights of the healthcare segment.

Thank you, Jean-Pierre. As already mentioned, our investment activity in health care has been very strong in the first half of 2021. Despite the current health crisis, the group invested EUR 698 million in high quality health care real estate in the first 6 months of this year. Thanks to a series of acquisitions, the fair value of healthcare segment now amounts to EUR 3.5 billion. Our continued investment clearly illustrates our mission to consolidate our leadership in healthcare real estate in Europe. As you see on Slide 22, we are now active in 9 countries and strengthens our diversification in health care asset segments. On Slide 23, you can see that the segment now represents a surface area of almost 1.5 million square meters, spread over 255 assets. The following slides records all the acquisitions that were made throughout the first half year of 2021, in our acquisitions in the third quarter until today. We briefly comment them. So on this and the next slide, we see that the first half year of 2021 brought us no less than 15 healthcare deals in 8 countries. The array of projects prove our diversification strategy in healthcare, both in geographic sense as in asset type. So you can see we did 4 transactions in Belgium, 1 in France, 1 in Netherlands, 2 in Germany, 2 in Spain, 2 in Finland, 1 in Ireland and 1 in Italy. Project descriptions include the construction extension and acquisition of nursing and care homes. We did also development and acquisition of care sites, and the acquisition of rehab clinics and care clinics. Allow me to highlight one deal in particular. On the 6th of May, we invested in 2 funds, owning respectively 6 nursing homes in Northern Italy and 18 nursing homes in Spain. The conventional value of both portfolios was approximately EUR 190 million for Italy and EUR 150 million for Spain, resulting in a total investment of approximately EUR 340 million with a gross rental yield of 5%. The Italian sites are fully leased to 4 operators, being KOS, Korian, Codess Sociale, NephroCare. While all the Spanish sites are fully leased to DomusVi. On Slide 25, my colleague, Yeliz, will comment on the recent developments in segments.

Thank you, Sebastien, and good morning to everyone. In April, we signed an agreement to acquire, under certain conditions, the companies that will develop 2 nursing and care homes in Finland. The conventional value of the assets for the calculation of the share price for these transactions will amount to approximately EUR 12 million. Delivery of the project is planned in Q3 2022. In addition, Cofinimmo signed an exclusivity agreement in order to potentially acquire in 2021, the companies that will develop 2 additional nursing and care homes. The first nursing and care home will be built in Turku, a city on the southwest coast of Finland. The region of Turku is the third largest urban area with 330,000 inhabitants. The site will offer 43 beds, spread over a surface area of approximately 2,200 square meters. The delivery of the project is planned, as stated before, for Q3 2022. The buildings -- the building aims for an A-level energy performance. The second nursing and care home will be built in Ylojarvi, a city in the Pirkanmaa region close to Tampere, the second urban region in Finland. The town has a population of about 33,000. The site will have a surface area of approximately 1,500 square meters and offer 35 beds. The delivery of this project, again, as stated before, is planned for the third quarter of 2022. This building aims for B-level energy performance. I will now give the floor back to Sebastien.

Thank you, Yeliz. You see on this slide that the third quarter has been quite busy as well. We can already announce that we have done 4 transactions in 3 different countries. And by the way, not only nursing homes as we have bought in Bergen, an asset strategy located on hospital campus. Allow me to highlight our most recent deal, the deal in the U.K. So this portfolio consists of 3 recent nursing homes of prime quality for approximately GBP 57 million. They are located in the East and Southeast England, and they are all situated in a radius of 100 kilometers north of London. Together, they represent 196 beds and a total surface of approximately 9,500 square meters. The sites are all fully leased to Country Court Group Care. Country Court is a family company that has been active for 30 years, and they grow the company from 1 nursing home 30 years ago to 35 sites spread over the U.K., and running a total bed of 1,750. They are hereby also a top 50 U.K. operator. They are well established and enjoy an excellent reputation. We are very proud to be a long-term partner of this group. I'll now give the floor back to Yeliz.

Thank you again, Sebastien. Moving on to Slide 28 for the breakdown of our distribution networks. On Slide 28, you see that our 2 portfolios, Pubstone and Cofinimur I, will represent on end June 2021 a fair value of EUR 0.5 billion. Both networks together cover 373 square meters and count almost 1,200 assets. Let's now talk about the office segment as of Slide 30. The fair value of the office segment represents EUR 1.45 billion at 30th of June 2021 and count 77 sites for 551 square meters. The map on Slide 31 helps you visualize the strong trends in progress with the divestments concluded in the decentralized area of Brussels or its periphery, and the recentering of our office portfolio in the Brussels CBD, which now accounts for 63% compared to 46% at end June 2018. Slide 32 highlights the fact that Cofinimmo announced the launch of the contribution of its office portfolio into a subsidiary. This would allow future investors in due time to participate in the capital of the subsidiary, of which the control would be maintained while benefiting from Cofinimmo's very experienced management and investment platform. Meanwhile, the group will be able to recycle a part of the capital that has been invested in this portfolio. The contribution is currently scheduled to be completed during the last quarter of 2021 at the earliest. This operation will have no effect on the consolidated accounts nor the dividends. On Slide 33, you see the future disposal of 17 office buildings in the decentralized area and periphery of Brussels and Antwerp for an amount of over EUR 80 million. This action is fully in line with our office strategy as explained on the previous slides. I will now give the floor to Jean Kotarakos, our CFO.

Thank you, Yeliz. I will start on Page 35. So you see that at Cofinimmo's like-for-like rental growth in H1 2021 was positive. For the overall portfolio, we can see that the gross rental revenue grew by 15.4% year-on-year. This represents a like-for-like rental growth of 0.8%. Bottom line, the core EPS shown on Slide 36 is above the outlook. The core EPS amounts to EUR 3.62 per share, 6% above the prior year. The rents, which means the gross rental income, amount to EUR 145 million compared to EUR 126 million as at the end of June last year, up 15.4%. Thanks to the acquisitions made between these 2 dates. On a like-for-like basis, gross rental income increased by 0.8% between end of June last year and end of June this year, as said earlier. Rental income after gratuities, concessions and termination indemnities amount to EUR 142 million compared to EUR 121 million at the end of June last year. Net write-downs on trade receivables were neglectable compared to net write-downs of EUR 2 million in 2020. After taking this into account, rental income, net of rental charges amount to EUR 142 million compared to EUR 121 million, up 17%, and above the outlook. The operating charges are slightly higher than last year. The financial income are up at EUR 6 million. Last year's figures included net nonrecurring items for EUR 1 million, whereas the 2021 financial income includes nonrecurring items for less than EUR 2 million booked in the first half, and linked to the contribution in kind of the 8th of April 2021. The net interest charges are stable compared with last year, despite the increase of the average debt. And thanks to the average cost of debt, which decreased to 1.1% compared to 1.3% at end of December last year. The net interest charges are in line with the outlook. Hence, the net result from productivities stands at EUR 103 million, which represents EUR 3.62 per share as highlighted before. After having commented, the net result on co-activities, let's have a look at the other items that bring us to the IFRS net result on Slide 37. The financial instruments net income of EUR 18 million, is mainly due to the fair valuation of the hedging instruments, in line with the change of future interest rates on the financial markets over the period. These are noncash items. The result on the portfolio amounts to minus EUR 25 million versus minus EUR 10 million 1 year earlier. This includes several items. First item, the gain of losses on disposals of investment properties is established at EUR 2 million compared to EUR 3 million at the end of June last year. Second item, the line changes in the fair value of investment properties is at minus EUR 11 million at end of June 2018 in Q1 mainly due to the changes in the scope. And this is mainly due to the difference between the price paid including transfer taxes and ancillary costs and the fair value determined by the independent real estate values, excluding transfer taxes and the numerous acquisitions made in the first half. Without the initial effect from the changes in the scope, the changes in the fair value of investment properties is positive at plus 0.2%. And third item, other technical items amounting to minus EUR 14 million. And those include mainly the effect of changes in the consolidation scope related to the entities acquired in the first half. Therefore, the net result group share stands at EUR 95 million versus EUR 60 million 1 year earlier. Regarding our balance sheet structure on Slide 38, there are no surprises. The growth of the last 6 months can easily be seen in the investment properties and in equity, the red boxes in the chart. The total assets reached approximately EUR 6 billion and 92% of it are investment properties at fair value, financed by EUR 2.85 billion of equity and EUR 2.87 billion of financial debt and nonfinancial debts. On Slide 39, we analyze the change of the debt-to-asset ratio between December 2020, 46.1%, and June 2021, 48.2%. The higher ratio year-on-year comes primarily from strong investment activity, plus 6.2%, partially offset by the effect of the ABB of March, minus 3%. And the contribution in kind of April minus 1.8%. The effect of the dividend 2020 -- in 2021, plus 2.9% was offset by the result of coactivity generated during the first half, minus 1.8%, and the part of the dividend that was paid in shares, minus 1.1%. On Slide 40, you can see the NAV in somewhere -- sorry, you can see that the NAV is somewhere between EUR 94.9. That's the IFRS NAV. And EUR 108.24 per share. That's the EPRA NRV, depending on the concept, you find the most relevant. I can comment here on the evolution of the IFRS NAV since the end of December 2020, where it stood at EUR 95.3 per share versus EUR 94.90 per share today, meaning, in fact, that it remained quite stable. There are 3 main drivers behind this stability. Firstly, the reduction of the 2020 dividend in Q2 for more than EUR 6, bearing in mind that the actual impact of the reduction is higher than the actual coupon of EUR 5.80. Since we issued in 2021, new shares [ coupon ] at the time of the ABB in March and the contribution in kind of April. Secondly, the net relative impact of the 3 capital increases of the period being the ABB of March, the contribution in kind of April and the optional dividend of June. All this for less than EUR 3 per share. If you work in another framework than the IFRS 1, for example, the EPRA framework, please pay attention to the following side effects. The dilution in Europe per share can be quite different depending on the level of equity in Euro, I mean underlying the NAV per share. The dilution in the EPRA framework goes from EUR 1.2 per share for the NRV to EUR 2.6 per share for the NDV. The impact on NTA being at about 1.2 -- sorry, EUR 2.1 per share. And thirdly and finally, we need to account for the accumulation of the results for the period, which generated a positive impact of slightly more than EUR 3 per share. Hence, if we summarize -- because we need a summary at this level. We had an IFRS NAV of about EUR 90 per share at year end, less EUR 6 for the dividend plus EUR 3 for the evolution and EUR 3 for the combination of results which means EUR 95 again at the end of the period. Let's have a look now at what we did on the financing side, on Slide 42. With EUR 348 million raised year-to-date through ABB contribution in kind and optional dividend, 2021 was already a very active year for Cofinimmo on the equity market. The last [indiscernible] transaction dates back from end of 2020 with the issue of the EUR 500 million sustainable bond. Our financing activity in the first half of the year was high as you can see here on Slide 44. All in all, we have now EUR 660 million in sustainable financing, as shown on Page 45. The Slide 46 gives a detailed analysis of all debt instruments we use, highlighting our ability to access diversified funding sources. Please note that the convertible bond, which is currently in the money, will mature on September 15. The average debt maturity, shown on Slide 47, decreased to 4 years. At the same time, the average cost of debt has improved to 1.1% compared to 1.3% in the full year '19. As shown on Slide 48, the debt maturities are well spread. At the end of June, the headroom on the committed credit line is about EUR 1.6 billion. After deducting the credit lines kept as backup for the commercial paper program, the headroom reached EUR 793 million at end of June 2021. On the hedging side, approximately 81% of the group's current debt is at a fixed average as shown on Slide 49. And I will now give the floor back to Jean-Pierre, who will take you through the outlook and the investment budget.

Thank you, Jean. We are on Slide 51. You will find the breakdown of our initial 2021 investment budget as published on the 25th of February of this year. We're all aware of these figures. So I suggest that we move to Slide #52. Today, we announced an updated investment estimate for the full year 2021. On the 27th of July, we have done investment for EUR 784 million, and our investment estimate for the full year are at EUR 930 million including EUR 916 million in healthcare. The portfolio outlook approached to EUR 6 billion as shown on Slide 53. Let's now have a look at the outlook for 2021 on Slide 54. Taking into account the investment estimate just described, our new outlook stands at over EUR 7 per share at the level of the net current result from core activities group share for the year 2021. For your convenience, we also added a line showing the expected denominator for the computation of the 2021 EPS, assuming that the convertible bond will be converted into equity. Please bear in mind that the expected denominator takes into account the share issues on a pro rata temporary basis, which means that the denominator for the 2022 EPS is even higher. In any case, the footnote also provides the expected denominator in case the convertible bonds are reimbursed in cash. Those figures allow us to confirm the target for the gross dividend at EUR 6 per share, up compared to 2020. Thank you for your attendance. We are here now to answer your questions.

[Operator Instructions] The first question is coming from Vanessa Guy, JPMorgan.

I have a couple of questions, if I may. The first one is, can you explain what the main drivers were for the portfolio value increase of 0.2%? And can you provide some color on how you see the development of health care yields going forward in your main markets? In which markets do you expect to see more potential for yield compression? And my second question is, if you can provide more details on the like-for-like rental progression this first half, both on a segment and transaction basis. And my third, final question is, if you could provide some more details on the carve-out of the office portfolio, and just to see how it's going? And if there's any likelihood that it will start in the fourth quarter of this year?

Okay. Thank you, Vanessa. So you have several questions. I will pick up 2 and give the 2 other one to Jean. Regarding the level of activity on the health care market is always very difficult to predict which market will be more active compared to another. But as you know, we are very deep in all of the network -- the healthcare network in all of our geographies, including the new one where we were already present before, of course, making acquisition. In terms of yield compression, which was the second part of your questions, well, there has been already, since a while, some yield compression in particular for prime, and very good assets in Germany, in the south of Europe. And of course, with the current financing condition, it has fueled a bit this yield compression. And I think you see some illustration in the most recent transaction, at least for good and prime assets that has been closed on this market and of course, not only by Cofinimmo. Regarding the question on the carve-out of the offices. As you know, we are working hard on it, still obtaining a lot of papers from various administration. We are still shooting for Q4 to basically close the -- this new code that will be owned by Cofinimmo, and it is our priority right now. We have not engaged in a discussion with potential investors because we need to have something ready to discuss. And as long as we don't have all the agreement and the certificate in place that would be a bit -- very difficult. But as you could appreciate, from our financial results. We still are working on the execution of our strategy, which is the rebalancing of the portfolio toward CBD. And you see that occupancy rate despite all the noise about the environment for offices, you see that the quality of our portfolio is basically acknowledged by tenant who basically continue to stay and renew the contract with us. For the 2 other questions, Jean, I give you the word.

Thank you, Jean-Pierre. So regarding the drivers for the portfolio evolution on a like-for-like basis of plus 0.2%. So you will see in the press release that there is a table with all the segments and the subsegments providing the figures, which, in average, is plus 0.2%. But I can provide you some color. So if you break that down per segment, you will see that it is slightly positive for the healthcare, slightly positive for the offices and slightly negative for the distribution property networks. Where does that negative change in fair value come from the DPN. It comes from [ other parts ]. And also -- and mainly the portfolio Cofinimur, which is the portfolio of agencies -- of insurance agencies in France based on market evolution for those kinds of small assets. Now if we look at the offices, we see a strong yield compression in Brussels for the CBD. Not so clearly on the market, and it's commented in all the broker notes that you can find in the documentation, which is publicly available. And then you have other punctual impact, sometimes positive, sometimes negative, depending on future void or future evolution building-by-building. So it's not linked to market evolution. It's mostly linked to the buildings. And then the healthcare, plus 0.3%. You see the yield compression phenomenon in Germany and a strong one in the Netherlands. And we -- I would like also to mention the fact that when we do development projects, we also see when we arrive at the end of the project, the fact that the independent experts provide more value to the goods, to the assets than what was paid. And for example, you see -- you will see that in Finland, there is a significant change in terms of percentage, of course, in terms of Euro it's less significant because it's still in the beginning. And also in Spain, where we have the same kind of phenomenon. In Belgium, it's quite flat, in line with Q1. And in France, we still have a negative revaluation based on the end of leases that are well known, on which we work. And I think that with that, I provided some color for your first question. The second question was about the like-for-like, I think, of the top line. So this is in the slide -- on page -- let me just check. Yes, it's 35. And you can see there that the like-for-like is 0.8% for the group, and it was plus 0.9% in Q1. So the evolution is completely consistent. And there, if you break down by segment. You see that in the healthcare, it's slightly positive as it was in Q1. In the offices, it's the same. And in the property distribution networks, you have a small decrease in line with the small decrease of the occupancy rate since 1 year. And I think that we replied all your questions.

The next question is coming from Frederic Renard, Kepler Cheuvreux.

I have a few questions on my side. Just to start with, can you maybe comment on your entry in the U.K., how the deal was sourced? Then the second question I would have is, can you indicate what is the percentage of investment that you realize versus what you are looking for, basically, the success percentage of your investment? And the third question I have is that, I went through the ESG metric that you provided on your website, and I see that you forecast to refurbish 8.8% of your portfolio from 2021 to 2025. I would like to have a bit more color on that? Is it defensive CapEx? Have you already identified your assets? And maybe a final question would be on the IPO of Icade Sante that was announced at the beginning of the week. What is your view on that?

Sorry. Can you repeat the last question, please?

The last question would be on the IPO of Icade Sante, which was announced at the -- early of this week and your opinion on that and the potential, I would say, reinforcement of the competitive landscape for acquisition.

Okay. So let me comment on most of your questions. So on the entry into the U.K., well, Cofinimmo was looking at the U.K. already before I joined the company 3 years ago. We have looked at many transactions. But you have to combine in the U.K., which is, as you know, is a very specific market because of the private pay and the quality of the assets, and many operators being already, before the pandemic, in challenging situation. We had to combine all these elements for us to basically find the right portfolio to start with. And finally, we were quite happy that -- which is small, but it's only the beginning, we were able to check the box of all the different criteria have just announced. And we are quite happy to able to succeed with this first high-quality transaction including, of course, in terms of location. Which brings me to your second question, your success rate. To be honest, we never measure our success rate. But the way we work for us is basically -- is to be able to identify at the very early stage, whether a portfolio is for us or not. And what I mean being for us, whether indeed we can check the box and we consider based on the information we have and the intelligence that Cofinimmo is collecting on all the markets since 2005. We consider that this should be a portfolio which indeed -- which fits with all our investment criteria for basically joining our global portfolio. And the discipline is to make sure that we don't enter into due diligence and finding the later stage when we spend a lot of money that basically a portfolio is not matching our criteria. We, of course, are still trying to do a lot of off-market transactions, and we are quite happy that we continue to succeed. So we look at more than what we are actually entering into due diligence. And indeed, I think we are looking at almost 99.9% of the transaction you see on the market in Europe. But many of them are abandoned well before the stage of issuing a letter of intent. And I think this is the strength of Cofinimmo, thanks to knowledge of the market and of the assets of the operators and so on is to be able to concentrate on the promising deals and not the one that basically are not fitting with our investment strategy. The refurbishment percentage you mentioned. I will pass on the word to Yeliz, who will give you a bit more color referring to also report. Yes, Yeliz.

Yes. Thank you, Jean-Pierre. Well, yes, as stated in the question, we aim to reduce 8.8% of the energy consumption of our existing portfolio. So this is excluding new acquisitions. As Jean-Pierre said, not only do we look at the quality in our acquisitions, but we constantly work on improving the sustainability of the existing portfolio. We do this with a dedicated ESG team within Cofinimmo, working together with the property and the project teams. I can give you more color. But in a nutshell, it's overall our segments based on real measures and based on outlook that we believe in.

Maybe just do you have an amount of CapEx -- a lump of CapEx, which would be planned for that?

Well, usually, it is a part of the CapEx amount that we already had in our budgets. What we do is, really, dig into the kind of CapEx that we need to do, instead of just doing what is only necessary. So in terms of major CapEx impact, my answer would be no because we already always foresee to improve our portfolio.

Thank you, Yeliz. For the last question on the IPO of Icade Sante, well, frankly speaking, it's more an event for the shareholders than for the health care market. It doesn't change the strategy of Icade Sante. It's something which was already announced earlier. So for us, it's a purely capitalistic move, which basically offer, I guess, some liquidity to shareholders. But in terms of business for us, it has no impact. So that's, I think, what I can say on this aspect. So I hope, Frederic, that we have answered to your questions.

Yes.

And the next question is coming from Herman Van Der Loos, Degroof Petercam.

Yes. This is Herman. I have at this stage, still 2 questions left. The first on distribution networks, the like-for-like minus 0.5%. Is it occupancy down? Or is it also rents down? And more generally, is there other still negotiations going on with [ other invest ] on a possible spreading of the pain? Lockdown was very big in [ Horeca ] in Belgium, very large in Holland too. So do you still expect an impact of the pandemic? Or can we say that you are starting to edge with a clean sheet. And then on the U.K., are you managing these 3 assets from Brussels? Or are you already starting to create a platform -- a local platform? Or are you relying on an external manager?

So thank you, Herman. Jean will take your first question.

Herman, yes. Regarding the negative like-for-like for the top line of the distribution for property networks is just linked to the occupancy rate. So you see that it's slightly below the level of the previous periods and especially end of December. And that's it. In terms of euro, it's really small.

Thank you, Jean. Regarding with AB InBev, well, despite the stock performance of today, you saw that the top line is going up, which means that [ beer ] is floating again. And you can see with all the tracts being open and so on. So basically, I think the tough period for them is behind, and we are all looking forward to the future. Of course, it doesn't mean that there are no discussions. Because, as you know, they are a partner with us in this joint venture. They still have 10%, which means that we take care of this portfolio together, and there are still plenty of subject to discuss. Regarding the last topic, the way we manage these 3 assets in the U.K., well, I will just remind you that we are talking about triple net, which means that in terms of having a platform right now, there is no question about it because there is no need. And indeed, most of the aspects are coordinated from Brussels. But with triple net, you know that the day-to-day is much more reduced than in other circumstances.

May I just add one last question, Jean-Pierre?

Yes.

Your guidance of at least EUR 7 per share. It's on the low side, you are modest.

Well, don't forget that there has been several equity raises, and there is still the convertible. That is a big question mark, of course, because it's kind of photo finish where we have to wait on the 15th of September. So no, I would not -- and I think we had already the occasion to talk to you earlier this year to give you the mechanics about this EPS. So no, it's not -- frankly speaking, it's not on trying to be overly conservative, I think it's more a realistic view.

And the next question is coming from Ferragina Francesca, ING.

I have few questions. The first one on the new investment guidance that implies a slowdown in the remaining part of the year compared to the investment in [ the 2 ] that we have seen so far. Is there any reason why we should expect that deceleration? Or is just you being cautious at this regard? The second question is regarding the tenant occupancy. Is that fully normalized at this time? And is the Delta variant having any impact on the occupancy, but also on the family attitude to work care center? So what are you experiencing in this regards? And third question is on the newly entered market, so especially Ireland and Italy. Could you give us some more color on where are these markets compared to mature region as Belgium, for example?

Okay. Well, thank you. On the -- what you call the M&A slowdown, and I fully understand why you are saying this, looking at the figures of the first semester and comparison with the second. Well, first, summertime is never a moment where basically a lot of due diligence are ongoing. And I think this year will not be an exception on this. And the second, you heard me repeating and over repeating that the visibility we have on the market is 3, 4 months max. So I think based on what we know today, have issued this guidance in terms of investment, which is, again, not necessarily conservative, but more realistic. There might be after the holidays, new deals that will come up. But if they are large, they probably will be consummated next year because the time of the launching of the process and the due diligence and so on. So I think it's just -- it's a fact that this year, there were more deals that probably were a bit delayed last year because of the lockdown, and [indiscernible] have shifted for '20 to '21. There will be less of this, this year. And you will see some years with the second semester more busy than the first and other one with the first semester, and it's -- there is no rationale to explain this. Regarding the tenant occupancy, I'm not sure that -- are you talking about healthcare or other segments?

Healthcare, yes.

Yes. Well, on healthcare, given the vaccination, which was a priority in all countries, basically, the occupancy within the various houses is going up. And of course, with some difference from one house to the other. But the fact that the vaccination has been a priority, give trust again to family to basically move their relative into the nursing home. And this is basically what you can hear also from the operators, whether they say publicly because they are listed -- or because the other one. And there has been, of course, a certain acceleration of the -- basically void in certain houses because of the pandemic, because of the admission stop that was imposed in certain regions. But since January of this year, things are going progressively up, and it's very difficult to predict because it really depends on a house-by-house basis when the various nursing home will be again at the pre-pandemic level. Regarding your last question on Ireland and Italy, I will give the word to Sebastien to give you very briefly the key elements which are relevant for these 2 countries.

Yes. Thank you, Jean-Pierre. So Ireland and Italy are usually considered as being less mature markets, meaning that they opened to international investments more recently. This means usually that the operators are usually smaller. Also, the type of the quality of the real estate that can be found is also more varying. So we are more picky on the quality of the assets we can fund. However, those 2 countries are picking up rapidly. So international operators are clearly present now in Ireland and Italy, are starting to consolidate the market, and so are real estate investors.

And the next question is coming from Niko Levikari, ABN AMRO - ODDO.

Just on the back of all the other questions. A couple of follow-ups from me. It was obviously positive to see the net rental income coming in from the distribution networks as well. But I just wanted to follow up on that, let's say, given that the market is improving again and you see that the leisure segment is also seeing a rebound. Could you consider perhaps later this year or next year, opportunistically perhaps that you could divest perhaps some of the sale and leaseback portfolios that you have in the distribution networks portfolio in order to accelerate the expansion of the Care segment?

My answer will be very straightforward. We could if we have compelling offers. So of course, we have no taboo. And we always said that in this segment, we are opportunistic, but we're also very happy with the cash flow that we're generating. So for us to divest, it needs to make sense not only to say that the percentage will go from 10% to 6% to say something. I think these are a quality portfolio. They also represent cash flow generation for us. But of course, we always look if there are compelling offers on the table.

Okay. That's much appreciated. Maybe just as a second question. Regarding the office leasing market, obviously, seen some green shoots happening in the market, and you see a bit more interest again. But what's your view, or let's say, the view of Cofinimmo, regarding the second half of the view -- second half of the year? I mean, do you expect that the leasing market would pick up as well? Have you seen some indication that you're seeing more requests. Yes, if you can comment on that.

Yes. So you are talking about offices, right?

Yes, correct.

Yes. Well, of course, I think 2021 will still be a typical year in terms of letting activity, and this is something we had foreseen, and we have been working on this already for a while. So I think globally speaking, you probably have to wait until the end of this year to see basically the level of activity going back to the pre-COVID time, which is, I think, not something which is unique to Brussels. But you can see also in other capital and offices market. There are, of course, today, a clear acknowledgment by many corporate that homeworking 2 days per week is the new norm. The question is to what extent does it have really an impact on the footprint and so on. I think there were a lot of papers on the subject. But at the end of the day, you see that basically office are clearly still needed, sometimes with a different layout, but things will go progressively back to a level of activity that will be used differently, but that will still be there. So I don't have a crystal ball, but we are more shooting for the end of the year, I would say.

The next question is coming from Steven Boumans, ABN AMRO - ODDO.

I've got 2 questions on the investments going forward. First, could you please provide some color on expected investments in H2, and possibly further out, especially regarding the focus of the country subsegment and maybe the split green fields or yielding assets? Second question is, you entered, of course, several new countries. Do you target a minimum size for these new countries? And what would that size be?

Okay. Well, we don't have, when we enter into a country, a deadline to reach a certain size. When you look at Spain, we entered in Spain at the end of '19. And you see that today, I think we have a nice size in terms of investment there. The most important for us entering into a market is to make sure that the market is deep enough and has a real need of infrastructure, including new ones to justify, basically, the investment there. So it's not something that we manage of. We have to reach by 3 years, a couple of hundreds of million or something like that because we don't want to privilege volume versus quality. It's the fundamentals of the market that are relevant for us, and timing, of course, we don't want to miss opportunities, but we don't want to force into buying low-quality assets just to answer to the volume. And the temptation sometimes is big because it's clear that average of low-quality assets except for people like us that are really in the market, very difficult for observer to understand. Regarding the investment for H2, I can give you some flavors. I will give you a bit more details It's, of course, really the granulometry is smaller as we will appreciate that we have already accomplished a lot in the total investment that we announced for this year for the reason I've just explained a bit before regarding the lack of visibility we have on the market. Jean?

Yes. Thank you, Jean-Pierre. So the new full year estimate is EUR 930 million, knowing that we have done EUR 705 million at the end of June. So there is still to do of slightly more than EUR 200 million, of which we already invested EUR 86 million today, including the transaction in the U.K. That was commented by Sebastien. So these are outstanding assets. So I would say, half of the EUR 200 million is about outstanding assets and the other half is about the execution of the current development projects and new development projects that are currently under new deal.

And the next question is coming from Steven -- sorry, Edoardo Gili, Green Street.

Three questions for me. The first one would be, I think to have a gauge of the Brussels market, the office market, I think there's a couple of assets which are on the market now, including the [ AXA ] Tower and the Galaxy Tower. I'd like to get a better understanding of the investor appetite for Brussels office currently, and if it's slowing down or not.

Well, clearly, it depends on the assets, of course, and I will not comment on the one you have specifically referred to for obvious reasons. But you know that the Brussels market needs, basically, new A1 offices. And the most recent that have been put on the market at a very high price. So there is still a yield compression on the market for, basically, what is considered really green and A assets. I think it's really what the market needs and investors are clearly there for this type of assets.

Very clear. The second question I have is on the recent U.K. acquisition. If you could give us a little bit more color on the economics, I mean the yields achieved and perhaps also the EBITDAR coverage. Because I was working the economics based on the price you paid, and I was having some trouble reconciling everything.

You're talking for the U.K.?

The U.K. recent GBP 57 million transaction.

Well, the EBITDA coverage is something that most of the operators do not want us to disclose. But of course, we have a policy and something extremely important. But as you know, contrary to the U.S., for example, this kind of information cannot be disclosed to, basically, the market. But let me put it this way that it is at a level that, basically, we feel comfortable with the rental cover of in between 1.7 to 2. Let me put it this way. Regarding the yield, we said that basically, it's market condition, which is basically more than 5%. And we appreciate to be able to make this transaction of assets that are good quality, well located. So -- and what we consider a price, which is good for this type of assets.

Perfect. On country, courts average fee for the residents. Do you have data on that?

You mean average fee per day for all their houses?

Yes, all the assets you acquired.

Yes, of course, it's around GBP 1,200 per week.

Perfect. That's very clear. And the last question I had was on the French healthcare portfolio, which has a short maturity. I was wondering if we should be expecting a large CapEx program in order to relet some of those some of those assets to the current tenants, or perhaps finding new tenants.

No. The answer is no. something, of course, which relate to the history and the fact that Cofinimmo been the first REIT entering into the international scene. And as you know, that by law in France, rents are maximum 12 years. And since we entered in 2008 and after, it's just the lapse of time. And there is a program -- basically, we have seen already a couple of years busy with the renewal of the rents there, but there is no major CapEx program to be expected on the global portfolio because of the effect of lack of time.

And the next question is coming from Celine Huynh from Barclays.

One question for me, please. Icade was able to report a strong property valuation in H1 on their healthcare portfolio as [ business ] in the market is actually quite competitive and the yields are compressing. So we're not seeing this just yet on your portfolio. I do understand that it's not in your hands, but I was wondering if that does not make you want to challenge your values a bit more.

Okay. Jean?

Yes. Icade they do what they need or what they want to do, maybe especially in preparation of some events that are coming in our level. We should look -- and we look at -- we have bottom-up process where we look at each site individually every time, every quarter, and that is done by independent valuers. I think that we have more or less 15 independent valuers now because they are specialized by country and by type of assets. So it's just the aggregation of all the opinions of all those valuers. As I explained earlier, replying to another question, we have -- we can see some yield compression, which are clearly seeable in our press release. And I mean in Germany, in the Netherlands and in the CBD in Brussels..

And I think that Icade is, as you know, mostly present on the French market. So it's very difficult for us without any insight on their process, how they do it. So I'm afraid it's a bit difficult for us to give you some light on a comparison with them.

There are no further questions. Please continue.

Okay. I think we have covered many different topics. And unless there is a last-minute question, I would suggest to close this session. And I would like to thank to all of you for the interesting question you have asked. And you know that our Investor Relations team is always happy to answer to a question you may have. So if there's anything which would surface after this session, feel free to contact them. And in the meantime, I wish to those of you who still have holidays in front of them to enjoy them. And for those who are less lucky and have behind them, go back to your office [Audio Gap]