Cofinimmo SA (COFB) Earnings Call Transcript & Summary

Hello, and welcome to Cofinimmo 2024 Half Year Results. My name is Alicia, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to Jean-Pierre Hanin, CEO; and Jean Kotarakos, CFO. Thank you.

Thank you, Alicia. Good morning, everyone, and thank you for joining us today as we dive into Cofinimmo's results for the first half of 2024. I'm surrounded by my colleagues, Jean Kotarakos, CFO; Yeliz Bicici, COO; Sebastien Berden, COO; Sophie Grulois, General Counsel; and Roel Dumont, Chief Human Resources Officer. So I'm on Slide #3, many information and for the sake of convenience, let me just highlight some of them. Healthcare real estate now makes up 75% of our portfolio, earning us a spot in the EPRA Healthcare category since June of this year. In this first semester, we signed a better performance than the outlook, and we managed proactively our investment commitment. By that, I mean that today, we have an estimate of gross investment of EUR 250 million, and that means that we would finish this year as net divestors, which would have on its own a favorable effect on the debt-to-asset ratio. So far we have EUR 77 million in gross investment and EUR 31 million in divestment across all 3 sectors of activity, which means a net of EUR 46 million. In the meantime, we kept the debt-to-asset ratio fairly stable. The slight increase of this ratio in Q2 is due to the seasonal effect of the dividend payment, as you know. The excellent operational results for the first 6 months of this year are ahead of the outlook. We are also dynamically managing our financial structure, which is still very strong. Last but not least, Cofinimmo has been acknowledged as one of the most sustainable companies on the European and also on a global level. Our company profile and strategy are well known by all of you, so I suggest to go directly on Slide #8. You are familiar with this chart, which illustrate the screenshot of portfolio towards healthcare. Since 2018, the share of healthcare real estate within our portfolio has gone up from 45% to 75%. At the same time, the Office segment was reduced from 38% to 17%, and the share of the Distribution Network segment was halved. Now on Slide 9. As you know, we own property in 9 European countries and more than 50% of Cofinimmo's total portfolio is now located outside of Belgium. Slide 10. As already mentioned, we had net investment of EUR 46 million in the first semester. We invested EUR 77 million essentially linked to the execution of development project. We also had divestment for EUR 31 million in the 3 sectors of activity, in line with or higher than the latest fair value. You will remember that in February, we insisted already on the fact that the lion share of divestment would likely take place in the second half of the year, in line with the expected improvement of the market condition. As we speak, we have assets held for sale amounting to EUR 61 million as shown on balance sheet, which will come on the top of the EUR 31 million already divested. We'll come back to this later. As many files are in due diligence phase, we still maintain our divestment target of EUR 270 million for the year. We will skip Slide 11 and 12 that are well known by all of you. So Slide 13, Cofinimmo's market cap was approximately EUR 2.3 billion at the end of June and today is around the same level. The daily liquidity remains sound. On Slides 15 to 19, you will see that Cofinimmo dedication to sustainability continues to be acknowledged by various prestigious rankings and certification. Our effort has positioned us as a credible player in the industry with significant reduction in energy intensity and numerous ESG benchmark and awards. Let me give you some examples. Cofinimmo was already part of the Financial Times list of Europe Climate Leaders for 2023, and this was replicated in 2024. Among the 8 Belgian companies that are part of that ranking, we are the only real estate company. Recently, Pine Magazine has included Cofinimmo in the world's most sustainable companies, a select group of 500, of which only 2 are Belgian property companies. On Slide 17, as a reminder, our portfolio's energy identity was reduced to 142 kilowatts hour per square meter in 2023. This sets us well on track to reach 130 kilowatt hour per square meter of our project 30³ in 2030. Last but not least, on Slide 18 and 19, you can see all our ESG benchmarks and awards. We're also being granted several new brand certificates in Spain and in Germany. Now let's talk about the property portfolio as from Slide 21. As shown on this slide, our property portfolio maintains a robust occupancy rate of 98.6%. On the same slide, you see the top 10 lists of our tenants. Let's move now to Slide 22. The overall weighted average residual lease term remains quite long at 13 years and even at 15 years for healthcare. Speaking about gross yields, now on Slide 23, they are slightly expanding at 5.9%, which means 5.5% net. Overall, our average net yield stayed well above 5%. I will now give the floor to Sebastien Berden, COO, who will give you an update of our Healthcare segment.

Thank you, Jean-Pierre, and good morning to all of you. Our mission remains steady fast to consolidate the leadership position within the European Healthcare sector. We achieved this through geographic expansion and diversification across various healthcare segments. As illustrated on this slide, our comprehensive portfolio spans now over 9 countries and includes diverse healthcare assets. While nursing and care homes formed the core of our assets, we have also significantly invested in cure and hospital care, primary care, sports, and wellness domains. And let's look out to Slide 26. During H1, we maintained our investment activity in a high-quality healthcare real estate arising from the execution of our running development projects. Besides this, there was actually no M&A activity. Actually, the market is still very quiet. The fair value of our healthcare portfolio now amounts to EUR 4.6 billion and represents 3/4 of Cofinimmo's portfolio. We now own 318 sites for most 1.9 million square foot. Turning to Slide 27, where we delve into the underlying occupancy rates. You may recall our preliminary reporting of these figures during our February call. And as promised, we are now equipped to provide an updated analysis for 2023 derived from near final reports from our operators. Cofinimmo diligently gathers data on healthcare operator performance, benchmarking them against both our internal database and unfavorable market data. The underlying occupancy rate is pertinent to the majority of our care and cure centers, which represent approximately 95% of our healthcare properties as of Q2 2024. You can see on the slide that the occupancy rate for 2023 has shown continued improvement compared to previous years, averaging now at 92%. You will also note that the relevant Cofinimmo portfolio -- well, that in this relevant Cofinimmo portfolio, the occupancy rates are generally higher than the market average, and that's in all countries where our group is present. Moving to Slide 28. This slide represents the deal summary of H1 2024, most of it being the completion of development projects in 4 countries, as already explained. On Slide 29, you will see the divestments and the divestments with 2 smaller steps carried out in the third quarter. I now hand over to my colleague, Yeliz Bicici. She will highlight some additional milestones.

Thank you, Sebastien, and good day to everyone. We can move to Slide 31 for the breakdown of our distribution networks -- Pubstone portfolio. I think you all know this portfolio primarily consists of long-term contracts with AB InBev, both in Belgium and in the Netherlands. At end of June this year, the segment represents a fair value of approximately EUR 500 million, covering 305,000 square meters and 840 sites. Our asset allocation strategy within this sector has led to several divestments in the first half of the year by the Pubstone team. Let's move on to the Office segment as of Slide 33. The Office segment's fair value currently stands at EUR 1.1 billion, representing 40 properties and just under 330,000 square meters. On Slide 34, the map and the bar chart illustrate our track record in rebalancing the portfolio towards a CBD, resulting mainly from divestments. Our most substantial presence remains within the CBD, accounting for 77% of Cofinimmo Office portfolio in Brussels. Moving to Slide 35. You will recall that in Q1, we finalized the divestment of the Woluwe 62 building located outside Brussels CBD, a deal signed in May '22. Last but not least, on Slide 36, I'd like to highlight the provisional delivery of our Montoyer 10 building redevelopment. This new sustainable landmark in the heart of Brussels CBD is pre-let for approximately half of the services. For some floors, the leases were signed at unprecedented prime rents from Brussels being EUR 400 per square meter per year. The quality of the building and its excellent location have already attracted 2 esteemed tenants, each committing to 9-year leases. The redevelopment of the Montoyer 10 building was undertaken with a biophilic design philosophy. The architectural blueprint features a concrete core and foundation with all other structural components crafted from timber. The building has not only achieved an A+ energy performance rating and a BREEAM outstanding certification for its design phase, it has also been awarded to WELL Platinum and CO2 Neutral Silver Building certifications. And I will now pass the floor to Jean Kotarakos, our CFO, who will delve in through the financial specifics.

Thank you, Yeliz. Good morning to all of you. If you could advance to Slide 38. Thank you. So here, we can observe that our overall portfolio has experienced a 3% growth in gross rental revenue on a year-on-year basis. This equates to a like-for-like rental increase of 2.1%, mainly fueled by new leases indexation, which has more than offset the impact of renegotiations and departures. As we transition to Slide 39, we note that the group's dynamic performance in investment, divestment, and financing activities with an average cost of debt of 1.4%. This, in conjunction with the efficient management of our existing portfolio, has culminated in a net result from core activities or the EPRA earnings of EUR 119 million. This figure not only surpasses our budget, but also reflects a 4% improvement from the previous year. This leads us to a net earnings per share, EPS, of EUR 3.21, which also exceeds our own budget. This EPS calculation incorporates the effect of divestments and the issuance of shares in '23 and '24, resulting in a cumulative impact of minus EUR 0.56 per share for the first half of the year. On Slide 40, we present the IFRS net result, which stands at EUR 42 million or EUR 1.14 per share at the end of June. This represents a significant decrease of 55%, sorry, from the EUR 27 million recorded in the first half of 2023. This is EUR 0.82 per share -- this was EUR 0.82 per share. The uplift in the net results from core activity per share, coupled with the favorable net impact of hedging instruments value changes has more than compensated for the adverse net impact of investment property value changes between the 2 comparative half year periods. Drilling down into the net result, we see a result of the portfolio of EUR 94 million as opposed to minus EUR 75 million in the first half of '24. This comes mainly from a like-for-like change in the fair value of investment property amounting to minus 1.4% over the first half of '24. This is broken down into 2 pieces, a minus 1.2% shift in healthcare real estate values, predominantly due to downward revaluations in Belgium, France, and the Netherlands, aligning with evolving market conditions. Secondly, a 3.1% depreciation in the Office segment, which constitutes only 17% of the consolidated portfolio, mirroring market condition shifts across the various subsegments where the group operates. Turning to Slide 41. We observed a stable balance sheet since the close of '23. Our total assets are valued at approximately EUR 6.7 billion, with investment properties and assets held for sale at fair value constituting nearly 93% of this figure. These assets are backed by EUR 3.5 billion in equity and EUR 3 billion in financial and non-financial debts. Slide 42 offers an analysis of the slight uptick in the debt to asset ratio from 43.8% at the end of '23 to 45.2% by the end of '24. This increase is mainly due to the recent payment of the dividend '23, which is a recurring seasonal effect, as shown by the biggest red box on the chart. The net investments carried out in the period have only a marginal effect on this ratio as shown by the first 3 thin boxes on the chart. Based on the current projections, we would return to a debt-to-asset ratio of approximately 44% by the end of '24. This ratio takes into account a mathematical hypothesis of additional changes in the fair value of investment properties in the second half year of the same magnitude as through the first half of the year. I'm now on Slide 43, where you can see the net asset value per share, and this is somewhere between EUR 91 and EUR 100 per share, depending on the definition of NAV you like most. This is somewhat lower compared to the full year '23. I can comment here, for example, on the evolution of the IFRS NAV between '23, where it stood at EUR 98.51 per share versus EUR 92.25 per share at end of June, meaning in fact that it decreased by approximately EUR 6. There are 3 main drivers behind the decrease. Firstly, the deduction of the '23 dividend, but in Q2 '24 for EUR 6.2. Secondly, the impact of the capital increase is through the optional dividend in Q2, the net impact of this capital increase on the IFRS NAV is a reduction of EUR 1.3 per share. Thirdly, we need to account for the net results for the period, which generates a positive impact of EUR 1.1 per share. Hence, if we summarize, we had, sorry, an IFRS NAV of about EUR 98.6 per share at year-end, less EUR 6.2 from dividend. The dilution impact of the capital increase, the optional dividend of minus EUR 1.3 and plus EUR 1.1 of accumulation of result, which gives EUR 92.2 at the end of the period. Let's now turn our attention to the financial resources at our disposal on Slide 45. In the first half of '24, we successfully raised EUR 75 million of equity following the optional dividends, favorable dividend. Regarding the debt capital market, on Slide 46, there have been no new development since January '22 when we issued our second sustainable benchmark bond of EUR 500 million. It's also worth noting here that our S&P credit rating BBB with stable outlook was reaffirmed in March '24 with the report published at the end of April. As depicted on Slide 47, we have executed some significant financing operation in H1, achieving credit spreads that are lower compared to the refinancing concluded in '23. The third remaining line due for repayment in '24 is the EUR 55 million green and social bonds maturing in December. We plan to hold it until maturity considering the advantage [indiscernible]. Slide 48 illustrated Cofinimmo as a sustainable finance pioneer, has now EUR 2.6 billion in sustainable financing comprising various instruments, including the sustainable commercial paper program. Slide 49 highlights our continued success to diversify funding sources, including relationships with 25 leading banks. Moving to Slide 50, now for the debt metrics. You can see on the slide that the average debt maturity remains stable at 4 years, and the average cost of debt is also steady compared to '23, standing at a very favorable level of 1.4% as of the end of June '24. Based on the information presently available for the '24 outlook, we anticipate only a very slight uptick in our cost of debt to 1.5% by the end of this year. As illustrated on Slide 51 and as previously mentioned, we have a single maturity of EUR 55 million in '24. Debt maturities are well distributed. The headroom on the committed credit line for Cofinimmo to finance these activities currently stands at about EUR 950 million after recounting for the backup of the commercial paper program. Slide 52 shows that our interest rate risk is fully hedged at the end of H1, aligning with the group's long-term interest hedging strategy. Between '25 and '28, the hedging ratio is in the range from 75% to 100% with a weighted average maturity of 5 years. And I will now hand over to Jean-Pierre for the updates on our '24 outlook.

Thank you, Jean. Let's move to Slide 54. Here, you can see the updated breakdown of the net investment estimate for 2024. Focusing first on the divestment aspect on the right side of the slide. Based on our current assessment and as mentioned earlier, we reaffirm our target of EUR 270 million in divestment with EUR 31 million done, EUR 61 million in non-current assets held for sale, and EUR 150 million under due diligence. This means that the remainder is only EUR 28 million now, while it was still EUR 190 million at the end of Q1. As detailed in February, the bulk of the divestment is just projected to be realized in the second half of this year. Turning to the investment aspect on the left side of the slide. Through active management of our investment commitment, we are now envisaging gross investment totaling EUR 250 million compared to the initially projected EUR 320 million. The majority is allocated to committed healthcare project developments with EUR 77 million of growth investment already made by the end of June. With this revised estimate, we should be a net seller at the end of 2024 with a near neutral impact on the debt-to-asset ratio. I'm on Slide 55, showing what does that mean for the outlook for this year. As you can see, we maintain our targets being a net result from core activities or EPRA earnings that is most commonly used of EUR 6.40 per share in 2024. Thanks to the good performance of the first half of the year, we can confirm this EPS guidance even after taking into account a higher denominator following the new shares issued in June, thanks to the successful optional dividend. This EPS guidance reflect the pro rata temporis effect of the capital increase carried out in '23 and '24 of approximately EUR 0.60 per share. It also includes the divestment carried out in '23 and budgeted in '24, equating to roughly EUR 0.40 per share. For your convenience, we also added a line showing the expected denominator for the computation of the 2024 EPS. As previously stated, the current debt-to-asset ratio of 45.3% result from the seasonal effect of the dividend payment, and we expect the debt-to-asset ratio to be around 44% at the year's end. This outlook would allow the distribution of a gross dividend for the 2024 financial year payable in 2025 of EUR 60.20 per share, subject to the actual net result from core activities group share per share and the evolution of the debt-to-asset ratio. Thank you for your attention, and we are now shifting to answer to your questions.

[Operator Instructions] We'll take now the first question from Edoardo Gili from Green Street.

My first question is on the North Rhine-Westphalia development, which seems to be where you've sort of been actively canceling sort of developments there. Can you share if there's been any cost to reducing your committed pipeline on that development?

Yes, of course. So basically, you remember, this was indeed a committed pipeline and basically for 2 of the projects, we could basically benefit from a window to have the project no longer committed and which is resulting from a possible and it's not possible because it's not yet done, potential change of shareholders for one of the operators. And basically, given of this change, we were based on the contractual obligation and rights we have in this project, we had the opportunity to basically exit from this commitment. And basically, we have a jump on this opportunity, although the project is still a very nice one. But of course, as we are managing our balance sheet, we decided that it would be better to do so.

And then secondly, on the disposals front, you have a lot of assets held for sale. Could you give a little bit more color on what type of assets? I understand you can't share specifics. But are we talking 75% Offices, 25% Healthcare? I mean what is the split roughly?

Well, it's a mix of both since we have an asset rotation policy being, I would say, in both segments for already a while. And the percentage today is not yet firm because there are still many discussions. But I think you remember that last year, the vast majority was, obviously this year, I think we'll be a bit more balanced, but it's still, I would say, unclear what exactly would be the allocation between the 2.

And my last question is around the Spanish Healthcare portfolio. There's been a deal recently, DomusVi, selling a large portfolio and interesting value per bed, I think, around 65,000, which screens very cheap compared to your fair value of your Spanish portfolio, which is around 95,000. I'm just curious to know if you have any thoughts on that deal? And what could you say between the read across of that portfolio? If you have any thoughts and yours in Spain specifically?

Yes. Well, I think it's a very clear demonstration of between standing assets that are there for the while and brand new. You know that our portfolio is mostly new. Also some people deal with a cap on indexation, which is not the case of our portfolio. So it's clearly objective, I would say, criteria, which explain the difference and we are not concerned about a spillover effect coming from this transaction to the valuation of our portfolio, which I believe is probably the underlying sense of your question.

We'll take now the next question from Stephanie Dossmann from Jefferies.

Maybe coming back on the disposal target you have. So I understand that you keep your target for the DTA by year-end of 44%. But at the same time, we see asset value declines across the portfolio at a slowly pace, clearly, but it has not been adjusting as in some other segments in recent years. So I was wondering if asset values continue to decline, how confident are you to achieve EUR 270 million of disposal this year? As you said, it would be a mix between Offices and Healthcare. So on the Healthcare segment, how do you see the transaction market currently? And how confident are you on valuations? And if you are not able to reach our target disposal target, I mean, would you consider raising equity again this year? And the second question is regarding the guidance for like-for-like rental growth. You said earlier you were targeting 2% like-for-like rental growth for this year. So first, is it still valid? And what can we expect for the years beyond, please?

Yes. So Stephanie, for the divestment and linked to valuation, the valuation is based on, I would say, long-term views of the experts and divestment is more short-term transaction. So we don't see in the discussion. As you know, we have many due diligence ongoing. If you compare to Q1, you see that the hypothetical part of the target, I would say, has been shrinking from EUR 190 million to EUR 28 million, so very low. We don't see basically the discussion we have linked to the evolution of valuation and so on because, first, as you can notice, the change that basically we have been through since last year, I would say, mostly expected and not major for the market as we speak. And we don't see this adjustment as being an obstacle or making some deals collapsing because of this. So I think from that angle, I fully appreciate that when you compare these 2 last year where we had in the summer, we are more advanced than this year. But please remember already in September last year because of the announcement about the ECB cut we said very clearly, and we repeated it in February of this year that people will wait to see this happening before basically contracting their bank financing. And that's why the -- basically, the share of the divestment portfolio, so to speak, that is more important in the second half. And so we continue, and we still believe this target is possible. We know and get used to the fact that already in '22, lots of people were skeptical about our target, which we achieved last year, same sentiment, okay? We achieved it the last euro, I would say, on the eve of New Year, but we did it. And we're still considering that it's something possible for this year. Regarding your second question, I will give the opportunity to Jean to answer to the second question.

Yes. Thank you, Jean-Pierre. Regarding what you call the guidance for the like-for-like, we provided in February guidance for the top line of the company. That is one thing. So including the changes in the cost, if you look at the press release of February, you will find the figures, it's also in the slide. And you said that we spoke of 2%, but the 2% was the assumption of year-on-year indexation that we have put in the budget. And then you have to account, of course, for other items, like, for example, a renegotiation, which could eat a part of the 2%.

We'll take now the next question from Frederic Renard from Kepler.

Just to be sure, did I understand well that you expect the same magnitude of portfolio done revision for H2? Maybe a question for Jean first.

No. Frederic, we just basically drew a line. We had to take a, so to say, mathematical hypothesis, and it's not an expectation. It's just putting a hypothesis there, just drawing the line without any further result, but we have assumed that if we would put 0, people will question and blah, blah, blah. So we thought that just drawing the line would be basically the most easy way to do it.

And so we can say that even with that mathematical assumption, we land at a stable deposit ratio of 44%. So that was the idea.

Maybe just on -- I had a question on the revision of CapEx, but I think was answered. Maybe just on the Office portfolio. Would you be able to split the net initial yield of the CBD assets and the rest of the portfolio?

But the rest of the portfolio is really shrinking, and we continue to shrink in the coming months. Of course, the portfolio is much higher. But by the end of this year, and I think you will witness it in the coming weeks and months. The non-CBD part will really be reduced to a tiny portion, which, frankly speaking for the whole of Cofinimmo, is becoming extremely marginal.

So that means that the net initial yield of the portfolio, which is around -- for the Office portfolio, which is 5.8%. How much of this percentage should be attributed to the non-CBD? Is it like a…

Well, I think that CBD represents, I think we said -- let me just to make sure. Yes, the 69%, if you look at Slide 33.

So the equity, it's much higher than the average, of course. That is much high.

Yes, because most of the assets, I guess, is very high single digits?

No, outside…

I'm just trying to have a view on the yield on the core portfolio in Brussels?

Yes, but it's much higher, but it's still single digit. Yes.

They are non-CBD backed.

And do you see more downside in this area because market is very, very, very sluggish at the moment for core CBD assets?

The fact that the market is sluggish, it has more to do with the fact that some developers like in other countries have difficulties and people are more in a wait-and-see mode. But it's not new. It was already last year. So we do not anticipate this having significant consequence on the market yield.

And maybe a last one. So out of the EUR 270 million disposals, I understand that roughly 1/3 is actually secured, and I appreciate you have around EUR 150 million under due diligence.

Yes. Is it your question?

I was just wondering what you would -- no, it's not my question. The question is maybe can you describe -- I think the first question was on the percentage, which is on the balance sheet today, so on the available for sale assets. I'm just wondering what is the percentage for the EUR 150 million, which is under due diligence at the moment versus Healthcare versus Offices? And maybe a question, what gives you the confidence to achieve that target in H2?

That gives us confidence. Well, the confidence is basically the track record over the last 2 years. But you know us, we are, I would say, disciplined, but also cautious. And we appreciate that basically as long as the deal is not closed, there is no deal. And we have Plan B and Plan C that sometimes the implementation of a B or C plan can have an impact on our timing. But don't forget that we have a wide portfolio of assets. And that basically, if we see that certain assets are less demanded we still have on our asset rotation program, which would be anyhow executed, whatever the environment, we can substitute other assets. So I think this is the reason why basically we can be flexible in this. I fully admit and we said it already last year and the year before, a challenging environment.

Maybe a last one, if I may then. For instance, the Distribution Network is shrinking more and more. Why as the portfolio is higher yielding? Why don't you take maybe the opportunity to sell it to a third-party investor and therefore, streamline a bit your operation between being only active in 2 segments?

Yes. Well, in terms of management, the streamlining would clearly have zero major impacts. It's a joint venture, as you know, with AB InBev, a small dedicated team, which is specialized in this kind of business. So that, I think, would not be an upside. On the other hand, you know I already repeated that, everything is for sale within Cofinimmo as long as the price is right. So we have never ever taken a position that this portfolio could also not be considerate. But for the time being, and it's -- I think, a general comment for real estate, there are not many transactions. So I think it's not a surprise that basically there is no real appetite coming from investors, but we have certainly no taboo for this portfolio or any other portfolio. Asset rotation is the basics of our business.

We'll take the next question from Ferragina Francesca from ING.

I have a question on the dividend. I see it confirms subject to the evolution of the net results and the debt ratio. Is there any threshold of the debt ratio above which you would cut the dividend? Would you like to open a bit your thought from these arguments with us? And then another question on the investment. Besides the investments you concise so far, would you eventually have any further room to come to other investments in the pipeline? And what type of yields at the project you cancel? And some other clarification on the disposal mainly thinking at the office portfolio, I see the portfolio change a lot over the latest year because of the disposal you realize. Last year's many sales were realized changing the destination and selling to developers. Is still possible? Is this still the strategy? And also, are you negotiating asset by asset disposal or a bigger volume with any specific counterpart?

So many questions, Francesca, so I hope not to miss any sub-questions, so to say. Starting maybe with the last one, so to whom are we selling. Well, that's true that there are still developers and especially on the bus market, you have better developer that were not closed by the 290, meaning that they had sold all their stock before this crisis and/or have also a portfolio of asset management, which has better to go through. So it's basically the same type of buyers than last year. There is no significant change. Of course, it's mostly local. So no large institutional investors, but that's not a surprise. And basically, we continue. We see that basically with the change of mood, people start to ask more questions and so on. So we might see in the coming months a bit of enlargement of the potential buyers community, but it's a sign at this stage. On the dividend linked to LTV and so on, you see that basically the work of the management is basically to go through the self-help route. And I think that's what we did so far, and we remain confident that we can continue. So we don't have any major number in mind. I think it has to be considered also taking into account many other elements. So we don't have a major number as of which this might be a trigger. Regarding the German project that are no longer committed, basically, they were slightly below the average of 5%. And that's why we have taken the opportunity, which was presented.

We'll take now the next question from Alex [indiscernible].

I think most of the questions have been answered that I have, there is one remaining. Like in Q1, you again reported minus 0.8 rental effects from renegotiations. Is it possible to provide a split on Offices, Healthcare assets here?

Let me -- because that's something I don't know byheart. So we are just looking -- yes. Jean.

Mainly in the healthcare, which is the biggest segment, and that's the main point there.

We'll take now the next question from [ Eline Claudin ] from KBC.

I also have just one question left. It's regarding the Office portfolio. Do you see any interest in the large drink as a whole? Because I remember in the previous quarter, you said interest was quite low given the interest rates, but do you see interest coming back for this?

I see -- just in the direction of what just say for the last question. We see signs of in the market, and this is a message coming also from brokers and you can probably get the same that you have some people that were clearly side and even not answering to broker score, today are basically asking questions. So I think it's -- I would not call it that yet firm interest, but we see that clearly, the mood has changed compared to 6 months ago. So it's a positive sign, but still too early to, I would say, quantify this further.

And would you consider maybe a JV either for the Office portfolio, but also maybe for the Pubstone portfolio?

Well, the Pubstone is for the Office, yes, I think we always -- when we announced the creation of Cofinimmo offices, we clearly opened the door for joint ventures. For Pubstone is already a joint venture with AB InBev. And you know marriage with 2 is already a challenge, with 3 even more. So let's try to keep it simple. But on the other hand, as I said, no difference.

We'll take now the next question from Kai Klose from Berenberg.

I've got one question. A quick question is on the corporate management costs, which in the second quarter were below the levels of Q1, 12.3. We announced a little below 11. So my question is, is there a bit more to go in the second half? Or are we now at these levels? Are you going to stay more or less at this level quarterly over the next period?

We control every penny, so.

It's really an effort of using every…

It's a day-to-day effort and clearly not in the spending mood, let me put it this way.

And it was even reminded to the old team 2 days ago, so we keep on track.

It's just tight management.

We'll take now the next question from Celine Soo-Huynh from Barclays.

Just last question for me. Going back to your EPS guidance on Slide 55. The contribution of underlying activities and execution development project is now expected to be EUR 0.33 instead of EUR 0.23 in the guidance you provided at full year. Why is the EUR 0.10 increase due to? I'm guessing that's related to the timing of disposals, but I just want to make sure.

It's related to the gain that we have seen in H1, which is, for example, linked to the fact that we manage the investment commitments and the good performance of H1 and also the optional dividend, which implied a reduction of the cash out and so a reduction of the financial charges that are expected for the full year. So all those are reflected in the underlying activities.

We currently have no more questions coming through. [Operator Instructions]

No further questions?

Since we don't have further questions, so -- yes. So I will hand back to you, Jean, to conclude today's conference. Thank you.

Okay. Thank you to everybody, and I think you all know us and feel free to call us for any follow-up questions you might have, always at your disposal. Thank you for your attention. And for those of you who will take a well-deserved break, will talk to you with pleasure after the holidays period.

Thank you for joining today's call. You may now disconnect.