Colonial SFL, Socimi S. A. (COL) Earnings Call Transcript & Summary

Thank you. This is Pere Vinolas speaking. Good afternoon to everyone. Joining me today, as usual, there is Carmina Ganyet, Chief Corporate Officer; and also Carlos Krohmer, Chief Corporate Development Officer. I also would like to start by mentioning Samuel Santacreu, Head of Investor Relations, who usually is taking a very active part in this kind of meetings. He's leaving Colonial because a brighter future is waiting for him, and we are so sorry about him. So we would like to thank him publicly for his great job that he has been done in all of these years in Colonial and to thank him for his contribution, as you will see later on throughout the presentation. So let's go through the presentation of the results for the first half. As usual, we like to frame, to put a framework for our results and to share with you some comments about our strategic positioning. As you know, our strategic positioning is based on 2 main pillars. The first pillar is our focus in prime asset class, which is delivering constantly superior growth in our cash flow generation due to its higher pricing power on the back of Prime CBD. And as you can see on the Slide #4, this is generating higher and higher cash flows throughout these years and also, as you will see today, in the first half of 2025. And the second pillar of our activity is to extract maximum value of our prime asset class positioning also through our abilities in urban transformation in delivering pipeline activities -- new activities in the field of asset classes next to our office positioning, which are also contributing to our growth. Page 5, where do we see current trends in our markets in 2025? First of all, office demand, which is focused on high-quality space is growing. The demand is increasing. The occupiers are expanding as confidence improve after the early 2025 trade tension. This demand remains concentrated in CBD basically, and this is because occupiers prioritize well-located Grade A space, enhanced workplace quality for job retention and attraction. So demand is increasing. Supply is not increasing. In fact, supply is shrinking. And let me mention a couple of relevant examples. In Paris, the new urban planning known as PLUb is set to convert more than 800 assets into residential in the next few years. In Madrid, in the last year, almost 300,000 square meters of office stock are being converted also in residential. So the balance between supply and demand, where we are is going in the right direction. And we would like also to add our initial thoughts on office employment and AI, which should also be benefiting from office employment for the impact of this trend in society. This is the general framework of our strategic positioning and that is translated in our results. And our results for the first half of this year are again quite satisfactory. I'm on Page 6 of our presentation, and you can see here the main KPIs. Number one, related to cash flow, you can see a sustained cash flow growth. Net rental income is growing 6% like-for-like year-on-year. The EPRA earnings are growing 17% and our EPRA EPS is EUR 0.17 for the first half, that is on track with our guidance. Second angle of our results, operational performance, outperforming, very solid. Rental growth, 6%, 9% in Madrid as a specific quote. Release spread 9% for the group, 20% in Paris. Occupancy remains at 95%. Number three, after 2022, 2023 of asset repricing, 2024 of stabilization, in this first half, we're starting to see asset values back on the growth path. Our gross asset value is growing for the first half, 4% like-for-like year-on-year. That is a new gross asset value of almost EUR 12 billion. The net tangible assets growing 15% year-on-year and our net tangible assets now at EUR 9.6. As we will explain later, this is also impacted by certain exercises of pretax optimization. Including them, we are growing 1% compared to 6 months ago. And finally, we remain, as usual, with a solid capital structure, credit rating remaining at BBB+ for S&P, Baa1 for Moody's, loan-to-value on 36.6%. Our financial costs remaining at a low level, 1.78% at the end of the first half of this year. Slide 7 is a slide that we always like to share because we believe it speaks for itself. Here, in a picture, in a map, you can see where our assets are, where the location is. And as a result, you can see both the occupancy for all of the assets. And then we are highlighting the rental growth, which is 7% in Paris in the first half, 9% in Madrid in the first half, 3% in Barcelona. And the maximum rents that we are signing now in Paris is EUR 1,125, EUR 43 per square meter per month in Madrid, EUR 30 in Barcelona. Our prime assets, as you can see, are consolidating the recovery cycle with a strong value growth. After this profile of a cycle that went through a repricing in 2022 and 2023, we are coming back on track. And transaction market is showing signs of recovery. On this Slide 8, we are sharing with you some examples of Prime CBD transactions that have been happening or are about to happen recently in Paris or in Barcelona at very, let's say, normalized yields. That would be my introduction. I will come as usual at a later stage with final comments. Now I will ask Carmina to step in to share with you our financial performance.

Thank you, Pere. In this section, section 2, as usual, we are going to cover the main financial KPIs with more detail. So the first one, gross rental income, basically growing on the back of core portfolio, EUR 8 million, 4% positive growth and as well project delivery, 4% additionally EUR 7 million. These 2 positive impact of 8% has been mainly overcompensated the negative impact from Condorcet and Haussmann, as you know, the rents that -- or the assets, the projects that are now in the project pipeline. Haussmann is going to be delivered in the second half of this year and Condorcet will take more time. So the loses of the rents has been overcompensated for this positive growth from the core assets and as well from the project that has been delivered during second half, especially of the last year. So the solid rental income, I'm in Page 11, is growing in all markets, positively in all of the 3 markets, but especially highlighting Madrid and Paris, with a 7% growth like-for-like from the last December 2024. As well in the building blocks, you can see how the pricing power has all our portfolio, so 2.2% above inflation that has been impacted in the first semester and as well a positive impact of 1.5% from occupancy. So pricing power, again, we are repeating from the last quarter. This pricing power above inflation from all our portfolio, impacting in this first semester of 2.2%, resulting in a very outstanding 6% like-for-like growth. If we go in Page 12 about EPRA earnings. As I mentioned before, these EPRA earnings are growing on the back of strong operations, strong performance from the core portfolio, EUR 10 million, a strong performance -- positive impact from the project deliveries and acquisition, EUR 4 million. And as well, as you know, outstanding growth of 17%. It thanks as well to the active debt management, cash management and debt improvement of EUR 10 million positively, all of them overcompensating the negative impact, and I explained before from Condorcet and Haussmann being now in the project pipeline. So growth outstanding of EPRA earnings, 17%, which is a very strong growth. And in terms of EPS, I would remind you that we have been, as you know, last year, increasing the equity 16%. So we did the capital increase of 16% from 540 million of shares to 627 million. As you know, to reinforce the capital structure to invest in the growth strategy in project Alpha X, but the fact that we have been increasing 16% and the fact that this growth of 17% of EPRA earnings, we could keep the cash flow per share, the EPRA EPS per share in a positive way, so remaining at the same levels, although we increased the 16% in the equity. So we keep on track, and we maintain as of today, the guidance for the year-end between EUR 0.32 and EUR 0.35 per share. In Page 13, you know that every 6 months, we update our appraisal, our assets. You can see here the appraisals being updated in June 2025 has been increased 2%, almost 2% with the rental with 2 positive impact. The first is the rental growth and the project delivery, EUR 155 million. And the second also as well impact is slightly in compression, so some improvement in rates, EUR 59 million. In the appendix, you can see -- you will see the details of the appraisal yields, the valuation yields in every market, basically flat in Barcelona and a slightly yield compression in Madrid, in Paris of [ 2, 1 ] basis points. So consequently, the like-for-like growth in the valuation has remained year-on-year very positively, 4%, outstanding Madrid 6%, Paris 3.3%; Barcelona, 4.3%. And in the second half of the year, 2% with a very outstanding levels of Madrid of 4%. I would like to remind you and to share with you that the second half -- the first half of the year 2025 in Paris has been included in the appraisal, the impact of increasing transfer tax, 50 basis points. So as a consequence of factoring in the appraisal this new transfer tax in Paris that has been included approved during the first semester, the Paris has remained positively being impacted, being absorbed this negative impact of increasing 50 basis points on the transfer tax as well. So consequently, year-on-year, 4% growth, valuation growing. So we see a very positive trend in our appraisal as well. In terms of balance sheet, again, we maintain the investment-grade credit metrics. So net debt, EUR 4.6 million due to the dividend paid and the CapEx Alpha X still not crystallized full value from this CapEx that has been invested in the first semester will come at the delivery of the project. Loan-to-value, this is why the loan-to-value comes increased from 36% to 36.6% still CapEx on Alpha X to be crystallized in valuation in the future appraisals. And we maintain the rating metrics in the investment-grade area, keeping as well a solid position of liquidity, covering 1.2x the future debt maturity in the next years. In Page 15, we have been -- we would like to highlight or to comment as well the commitment on continually optimizing the cash flow. As you know, on the debt side, we have been very actively preserving the solid and the competitive cost of debt, thanks to the preferred, so improving the cash flow from our company, from our shareholders. And we keep this low cost of debt in the range of 2%. But as well in the first semester, we have been optimizing the tax regime in the remaining 2 companies in France, 90 Champs-Élysées and Haussmann. They were the 2 subsidiaries, the only companies that still they didn't elect for the SIIC regime and the fact that we were at the bottom of the price of December 2024, we decided to elect for the SIIC regime to save the taxes for the future on the income-producing of these assets. So as you know, in Paris, for the election to the SIIC regime, needs to pay an exit tax that has been -- we have been committed to pay in 4 years because the law permits you to invest -- to pay this exit tax in the following 4 years, EUR 67 million. In exchange of that, the benefit is saving in a yearly basis between EUR 3 million and EUR 4 million per year. So this is a very accretive and interesting IRR investment. And thanks to this election and this optimization from the tax and thanks as well on the EPS optimization, now the full activity of Colonial in France and in Spain, all of them are included in the REIT regime. And in the last page -- in the following page, sorry, in Page 16, you can see here, we show probably more details than in the previous presentations, how the NTA has been moved since December 2024. So the first point I would like to highlight, this is the real estate valuation increases EUR 0.21. So from EUR [ 9.72 ] to additionally EUR 0.21. And on top, the EPRA EPS adds to the NTA, EUR 0.17. So the pre-dividend NTA valuation in terms of, I would say, real estate valuation pre-dividend results into a level of EUR 10 per share from EUR 9.62 to EUR 10 per share. Of course, we have been paid a dividend, [ EUR 29 per share ], considering the treasury share, so EUR 0.29 per share. So consequently, the NTA after the dividend paid has been increased 1% from EUR 9.62 to EUR 9.71. But the fact that I explained before about the tax optimization, which improves the future EPS and improves the NDV and the fact that we are recognizing this exit tax to be paid in the following 4 years impact in the NTA, which is for the -- the real estate NTA, it's -- thanks to this tax optimization impact up to EUR 9.60 per share. This is why we would like this presentation, we have been added additional more detail to explain how has been the real estate improvement on the valuation and the fact that this optimization that will come in the future value and the future growth, EPS remains a stable NTA. Consequently, the NDV improves from EUR 945 to EUR 954 because we don't have any more this capital -- this tax capital gain on the assets that has been elected into the SIIC regime. So in the future, this NDV will show no impact on the tax for these assets because all of them would be or are already under the REIT regime. Now Carlos Krohmer will cover the following third section.

Thank you very much, Carmina. Now let's step into portfolio management. I will start with Page 18. First half has been absolutely outstanding in activity, close to 90,000 square meters, 1/3 more than the year before. It's a clear proof that we are having the assets that is attracting the biggest share of demand in the market. If we go more granular, we cannot see it here on the page and go quarter-by-quarter, first quarter 2025 was 32,000 square meters. Second quarter has been 55,000 square meters or 22,000 square meters more. We have almost doubled the activity in Q2 of 2025, shows not just that we are signing a lot, but we are signing more. We are having an acceleration in our activity. And this means basically that as of today, during the first half of the year, we have signed a total activity volume of EUR 34 million that are just partly in our P&L because this is an annualized number, and we are feeding future growth. At what levels of pricing are we doing this at the top levels, Colonial's assets are really setting the reference in the pricing, you see prices in Paris well above EUR 1,000. Actually, we have signed EUR 11 million of annualized rent in Paris that are on a total square meter volume of 11,000 square meters. So on average, EUR 1,000 per square meter and quite some examples, well above EUR 1,000. In Madrid, regulators has been signed 43, in Barcelona 30. So we are really setting the benchmark signing at the top end of the market. Then we have another driver that is the project activity. You know we have a strong pricing power as a source of cash flow and then projects that we are delivering. So we have here one of our flagship projects in Madnum that you know quite well. It's a total square meters of 60,000 square meters that has been delivered just recently. As of today, we are having already a strong activity and secured -- close to secured 40,000 square meters, 22,000 square meters signed and 18,000 square meters in very advanced negotiation or even head of terms status. So quite strong, 70% of the total premise already with secured tenants with a huge project that just has been delivered recently. What is then also important, we are signing at rents well above our initial underwriting. Once this asset is fully stabilized, this will generate a chunk of EUR 20 million of rents per annum with a yield of cost in excess of 8%. Let me talk on Page 20 about pricing power. This is one of the most distinctive elements for prime business model. As we are in a segment where there is a very scarce supply and we are providing the best product, we have the ability to deliver on a sustainable permanent basis a significant extra growth compared to the normal CPI growth. You have seen the section of Carmina that our like-for-like growth was 6% in rents, whereas the CPI was 2%. So we have beaten by 400 basis points the growth. Here, you see what we have signed year-to-date. We have signed an ERV growth of 6% in the group. So our rents are 6% higher than the reference market rent as of December 2024, 6% just in 6 months. It's not 12 months, it's 6 months. And we -- if we compare this with the current indexation levels, the blended indexation levels of the segments where we are, we have 300 basis points in excess of the indexation that applies to the contracts in the group as of today in Madrid, even 600 basis points. So the main message here, our business model, our assets are delivering, are providing an extra growth between 300 and 400 basis points on top of inflation. Also, as a consequence, release spread has been quite strong, 9%, one of the highest in the European arena driven in particular by Paris, the 20% release spread. On the occupancy, we are remaining, I would say, at a structural very healthy level to have enough activity in order to capture this rental growth so that we have always some space available to take the upwards trend of the rents. We are at 95%, more or less at the same level of 24%. What I would like to highlight if we compare with the past is that we have things that entered into operation and that were bought last year, the Alpha X portfolio. So if we take this out, more comparable like-for-like perspective, the occupancy is even a little bit higher. It's around 97%. When we look across segments, the prime segment, where we are basically focused is strongest. And then we have secondary in Barcelona, 22@. We have always said that Barcelona, we have a positive outlook. So this will gain momentum in the coming quarters. Let me just finish this section with a little bit more forward-looking view. It's on Page 22. They already mentioned this when we look at the 2 biggest segments of our portfolio. What you can see is that there is a significant removal of office supply in the Paris market, more than -- close to 400 assets, 700,000 square meters. This further plays in our favor making a much better imbalance between strong demand and non-available supply. You can see the playing field of Colonial's high-quality assets in the city center. The availability today in Paris is 1%. And in Madrid, we have had a significant improvement of the availability in Madrid market [Technical Difficulty]. So there's nothing really available. We are today for the total CBD at an availability of 2.6%. If we look at the product, that is the high-quality product that gets the rents above 40, the availability is 0.8%. So almost nonexistent. So we have here a quite relevant business to play. In Barcelona, it's not here on the page. The availability of Grade A product in the city center is 1.2%, so also quite strong. A way to see also the high quality, the underlying high quality of our portfolio, if you want to get some operational KPI, an indirect way to see it is the sustainability level of our activities. We are at the top level. And just to share here on Page 23 that we have been, again, for the third year in a row, included in a very selected narrow group across industries of climate leaders by Financial Times. So we are part of the Climate Leaders 2025 Financial Times. And with this, I give over to Pere for the conclusive chapter #4 about future.

Thank you, Carlos. Yes, I would like to go through the last section on future growth. You know that what we are trying to accomplish as a company is the delivery of sustainable growth of cash flows based on our prime positioning in the Prime CBD arena and based also on our capabilities in urban transformation that allow for additional value add coming from our different initiatives and projects. And in Slide 25, you can see that at the end of this first half of 2025, we again are delivering this growth, which is now 12% CAGR starting first half of 2022 until first half of 2025. If we look forward in the future, how this growth behavior, how this growth profile looks like, there are several layers that should be shared or discussed. Number one, what's coming that will be coming from the urban transformation projects, where we expect an impact in EPS of around EUR 0.11. Number two, what's coming from prime asset reversion that will deliver superior cash flow growth. We are expecting, roughly speaking, EUR 47 million in the midterm. Number three, new initiatives in our particular case in the field of science and innovation with third-party capital, that should be adding an additional EUR 0.02, EUR 0.03 to the EPS. And finally, what may come from our opportunistic capital recycling. These are the pillars of our future growth in our cash flow. Going more in detail about each of them. Page 27, urban transformation. As you know, we are now developing a few projects, 4 outstanding, 2 in Madrid and 2 in Barcelona plus other ones, Madnum project and the last renovations, what we call the Alpha X initiative. You can see here that we will be delivering almost 90,000 square meters 2025, plus more than 100,000 square meters '26 to '28. And these boats that we now have out of the water, when they go back to the water, they should be contributing with, roughly speaking, EUR 100 million of rental income. That means an additional EPRA EPS of more than EUR 0.11, 33% of growth in our -- compared to 2004 EPRA EPS. As of today, these projects are going nicely as expected. So we are positive on their delivery for the next few years. Number two, on Page 28, another driver of cash flow growth will come from the prime asset reversion. You can see here a number of examples that will generate cash flow coming from renovation programs that in the case of Paris, we are talking about of more than 20,000 square meters. And here, you can see a few examples like Rue Saint-Honoré, Champs-Élysées 90 or #cloud.paris. All these could account for EUR 47 million of additional gross rental income. Number three, Page 29. You know that we started this new initiative about science and innovation. Recently, we announced the final execution of our agreements in this partnership with Stoneshield, it's going quite well. We signed a transaction that included an investment of around EUR 200 million looking at a target levered IRR of 15%, that would mean EUR 0.02, EUR 0.03 of contribution to our EPRA. On the back of investing into this vertical, we are working on a short-term pipeline of EUR 700 million of new assets under management where we could be investing in the near future. So this is another vertical of growth that is enhancing our strategy going forward. And finally, a comment on the cycle. Cycle by definition is not so easy to track or to define. But it's clear that today, we are presenting results, some results that for the first time in the last few years are showing a positive contribution from increased asset valuation after 2022 and 2023 of repricing and 2024 of bottoming and stabilization. There are increased transaction activity that are opening for deal windows. So that generates another source of value that would show up soon in the case of prime office assets and will allow for a stronger delivery of growth for Colonial, for our company. This is basically the outlook for the next few years. Finally, let me share a quick comment on our progress on the merger between Colonial and SFL. We are on the final stages for the creation of this pan-European platform. This -- the calendar has been going through the different milestones without any negative remark. As of today, at the end of the first half of 2025, the General Shareholders Meeting of both Colonial and SFL have already approved the merger. As we speak, we are going through the completion of the final regulatory stages, no pending open issue as of today. Therefore, our expectation is that the merger will be finally executed and the listing of SFL will be taking place probably at the beginning of the last quarter of this year. So the Colonial SFL as a pan-European platform will start to operate in the last quarter of this year. Final comments, just to wrap up on everything we shared with you today. Basically, we are happy with the results. As you know, we've been on a strong delivery of cash flow growth for a few years already, a double-digit year-on-year earnings growth has been with us for a number of years. This time, we also see asset revaluation coming along. So the 2 value drivers are becoming positive. And this cash flow growth is because ordinary course of business is going very well. You've seen a fantastic commercial -- leasing commercial activity, rental activity, a huge increase compared to last year. This is very important because this talks -- it says a lot not only about the past, but also and more importantly, about the future. You've seen that it's not only commercial activity, it's rental growth well above inflation with a fantastic like-for-likes. Occupancy very strong. And then a fantastic management of our debt structure, which is super reduced cost that remains with us for the last few years and for the next few years. All of this together means that we can enjoy again a fantastic first half in terms of operational activity and in other words, in terms of growth. Looking ahead, we have shared with you the different sources of growth profile that will be coming with us in the next few years, more than EUR 150 million of future rents through new pipeline and version, enhanced urban transformation growth strategy through the science and innovation initiative with third-party capital and the opportunistic capital allocation that can come further. As a final comment, we remain on track with our guidance for strong ongoing growth. The like-for-like revenue growth in line with previous years, a strong EPRA EPS CAGR growth for the next few years and short-term EPRA EPS to remain in the range of EUR 32 to EUR 35 as we've been disclosing recently. With this, I will end my presentation. Thank you for your attention. And now as usual, we are open to any questions or comments you may have. Thank you.

[Operator Instructions] We now move on to the next question -- to the first question coming from Valerie Jacob.

I've got 3 questions, if I may. The first one is on your guidance. You've had a strong first quarter and your -- the range you gave earlier this year is quite wide. So I was wondering if there was a reason why you didn't narrow the range to the top of the guidance and if there is anything specific we should know for H2 or if you're just being conservative? That's my first question. My second question is on the tax optimization that you did. I'm not sure I understand because if I look at the saving versus the EUR 67 million you spent, it's a yield of 5%. So that doesn't look very attractive compared to the other opportunity that you're showing on Page 26 or investing in your own shares. So I was just wondering if you could give us some explanation of the rationale or why you think it's the best use of this money. And my last question is on Barcelona. You've had some negative reversion and you still have some space to let. So I was wondering if you could give us an update on what's going on in Barcelona.

I will cover question number 1. Carmina will cover question number 2, and Carlos will cover question number 3. Now on the guidance, we prefer to remain prudent as of today. It's true that if you look at the results for the first half, they are pointing more at the upper end of the range of the guidance than at the lower end. But as of now, we remain with the guidance of 32% to 35%. I would say that if I had to provide a comment, would be more confident in the upper range than in the lower range. But with, let's say, 6 months ahead, we prefer to remain with this range of guidance for 2025. On the tax optimization story, Carmina?

Yes. On the tax, different angles. So the first one is that these companies had in the NDV recognized and as well in the balance sheet, tax -- capital gain, a tax liability on the implied capital gain on those assets. What are these amounts or what was this amount on the latent capital gain taxable? It was EUR 90 million. So the way that we choose now -- this is something that we're monitoring very closely. The way that we have choose now the election for the SIIC -- for those companies, for those assets, it's because the valuation based -- the election based on the appraisal of December 2024, it was at the bottom of the level of the appraisal. So it means that now we have been a positive growth on those assets, in the future will come additional value. So the fact that we choose the right -- we believe that we choose the right moment. And why we believe that this is the right application of this money or this cash because basically, the corporate income tax attached to those assets, it was EUR 90 million and paying now EUR 66 million. So we saved EUR 30 million value for our shares. So we optimize more than EUR 30 million. And on top, we have expected in a yearly basis, EUR 3 million, EUR 4 million, EUR 5 million saving tax. So it's like basically having an investment of a high, high double-digit IRR. This is why the rationale behind this election and this decision.

I will take the last question. Just to add also some point to what Carmina said. So if you take EUR 4 million of running savings or EUR 5 million of running savings on the money invested is a yield on this investment of 6% to 7%, at least without taking the rental growth that these assets could have. On the release spread, in Barcelona, it was 1.7%, slightly negative. This is basically that in the first half, there have been some contracts of residual exposure in secondary area that is Sant Cugat and 22@ is also at the moment a little bit weaker. And therefore, there has been this negative release spread. Also, the rents in Spain had gone up much quicker than in Paris. All in all, in the prime, we are performing well. And as I said, going forward, we have a positive opinion on Barcelona, and we see the future evolution of the market with our product position there as an opportunity more than a threat.

Next question, Veronique Meertens.

Maybe first on the Stoneshield transaction. And I appreciate you mentioned that there are over 250 accounts that you've done outreach to several investors already in due diligence, but could you give slightly more color on how far you are in those processes and how confident you are that you will be able to announce something before the end of the year? Because I believe in previous presentation, you did mention that you were not intending to consolidate as well. So hoping to get some additional color here.

Thank you, Veronique. Yes, we are working on several conversations with several investors. As of now, we are in advanced stages of discussions, meaning due diligence, work with lawyers, structuring and so on. I would say that our central scenario would be first closing with new investors stepping in on the last quarter of this year and also on the back of certain additional pipeline opportunities that could come for the last quarter of this year. Before that, we don't see anything in particular happening.

Okay. That's clear. And then maybe on -- you mentioned capital recycling already as one of the opportunities. Obviously, we've seen you already made some investments, but you mentioned that the market is opening up. I think there were also some market news articles on Colonial potentially being in the market. Is selling lower-yielding assets currently more top of mind? Are there more interesting opportunities at the moment and more buyers knocking at your door?

Yes. I think that what we can see across Europe in general is that if you -- if we concentrate on the Prime CBD, the market is there, meaning that investors are there. What has a question mark is if the sellers are there or the product is there. For example, as of today, in Spain, I would say that it's difficult to invest because of the lack of opportunities in Prime CBD. In our case, we may do both things. We may be selling and buying. We are going through discussions -- through a process of disposals -- of the first disposals in France. And also, we may consider disposing tactically of some of the residential in Spain. At the same time, we are looking at investment opportunities in our local markets. So I would say that by now, we don't have yet a clear positioning for the short term because it will depend on individual opportunities. But certainly, we see the market more open for Prime CBD, both in Spain, France and across Europe in general.

Okay. Maybe one follow-up because you mentioned you're exploring in local markets. I think it was last year where you mentioned a couple of times that maybe exploring in different markets was also an option, but that's now not really top of mind.

No, no, it is. It is. We remain very open to investment opportunities outside our core markets, but of course, going through the normal process of carefully assessing the investment opportunities that may be out there. So by definition, yes, we will always have a look at investment opportunities, of course, in France and Spain, but we do not exclude investment opportunities in other countries.

Next question, Ana Escalante.

I have 2 questions. The first one is on your EPRA vacancy rate for offices that has gone up slightly due to the delivery of some of the projects. I was wondering what's the state of that vacancy rate as of now in July? Is it taking into account some of the leasing that you've done in Madnum or not yet? And where do you expect that trending towards the end of the year based on your ongoing discussions with tenants? And the second question is on the agreement and the joint venture with Stoneshield. You say that you have some quite advanced discussions in terms of third-party capital. Maybe if you could share, of course, with respecting the confidentiality, but what type of investors are looking at this? And also in the context of improving real estate investment markets across Europe, to what extent do you think there will be appetite to do both or in terms of Paris offices and also the type of assets, whether the third party that's looking at this is the same or there are some differences across the investors that are looking to invest in the 2 types of assets, let's call it that way, the prime assets you own and the assets that will fall into this joint venture?

Yes. I will go through the second question, Ana, and then maybe Carlos can step in with your first question. Look, as of now, we are in advanced discussions with potential investors. But at the same time, still maybe too soon to provide additional color. What I could say as of today, first of all, high-quality names, names that anyone would be comfortable with. So that's the first comment. The second comment, these kind of investors are sharing our views on this particular adventure of our joint venture with Stoneshield. So we believe that there is an opportunity for those sectors and companies operating in those sectors that have a particular profile for growth on the back of innovation and science. And also that because of this activity, this allows for a certain relationship with the landlords that goes beyond the typical real estate relationship, provides a more kind of a long-term relationship with value-added content and a higher stickiness, let's put it this way. And all of this providing both higher returns and higher growth. And so as of today, I would say that the investors we are talking to are buying into this story. It's also the story they like. And as I said at the beginning, they're basically good names. We expect that by the end of this year, the last quarter, we will have more clarity. And by the way, the other thing that to highlight is that this is already going beyond the Spanish, let's say, borders. Spain is a fantastic place to be because it's the highest growing economy in Europe today, but a pan-European approach not only is an initiative, is also the strategic bet that these investors are taking. But this -- we are satisfied with where we are. Hopefully, by the end of the year, we will be able to be more specific. Carlos, if you could step in and comment with EPRA vacancy rates.

The EPRA vacancy rate, we had a little bit of movement in Madrid. Actually, we are talking about --- we had in March 26,600 square meters available. Now we have 27,200. So a movement of 600 square meters, a little bit more availability. It's a typical activity of a little bit of rotation. It's in good assets, sometimes people change, and we see this more as an opportunity. On the other side, all of the head of terms and advanced negotiations that we have in Madnum are contracts that will come in the coming months and that are not part today of the occupied space. So we have already today secured a very relevant chunk of current availability. But the slight movement, the slight uptick of 600 square meters that are more over located in a very good location. We see this more as an opportunity to then let this now at a very good rent.

And maybe as a follow-up to my second question, the one that they answered. Could you please remind us what's the expectation that you have from the investment in the joint venture with Stoneshield in EPS for '27, '28? I think that's the guidance that you provided earlier.

Ana, I think -- well, as we said, we have an expected EPS in the range of EUR 0.03 per share. But of course, it will be subject timing, pipeline, et cetera, and also the business plan, this is the expectation that it's included as well in the growth strategy and the growth avenues that we have.

Next question, Pierre-Emmanuel Clouard.

So I have several questions. So the first one on France. So I see that when I'm looking at the report that has been published by SFL yesterday, the GRI is up 1% year-on-year, but you are saying that it's actually down 3%. So is there anything that we should have in mind that could explain this difference? And just to fully understand the figures, so you have a 6% like-for-like growth in Paris, but your GRI is down 3%. So is it fully attributable to the rent lost due to tenant vacating and assets being put into a strategic vacancy in H1? And if we can add the amount of rents it represents, it would be useful.

Carlos, would you like to take this one?

I'm not really sure if I understand clearly the question. I think it's a very detailed technical question, and I have now not here with me the SFL presentation of yesterday. I would suggest we can just clear this in a separate technical call, I don't have figures -- specifically the figures.

The second one is on Barcelona. Just to understand, how can you explain a 2.3% like-for-like value growth when the release spread has been negative by 2% and the like-for-like growth actually is 0? And if I'm not mistaken, there's not been any yield compression in the city. So how can we explain the value increase?