Colonial SFL, Socimi S. A. ($COL)

Ladies and gentlemen, welcome to Colonial SFL, First Quarter 2026 Results Presentation. [Operator Instructions]. I would now like to introduce Mr. Pere Vinolas, CEO of Colonial SFL. Please, sir, go ahead.

Thank you. Good afternoon to everyone. A pleasure to be again today here to share with you the results for the first quarter of 2026. The team, as usual, with me, Carmina Ganyet, Chief Corporate Officer; and Carlos Krohmer, Chief Corporate Development Officer. I am on Page 4 of the presentation as introductory remarks. I believe that what we are sharing with you today is an outstanding set of results for this first quarter. I would like, of course, to emphasize that this is a quarter where a number of events at the macro political -- macroeconomic and geopolitical level have happened that creates a little bit of a headwind on the dynamics of the economy as a whole, also in the real estate industry. And we have to say that the performance of our company during this quarter has remained totally resilient and with a very good performance. If I had to summarize the number you will see, Colonial, it is still about 2 things. One is pricing power. Basically, what you will see, it's like-for-like rents, rental growth ahead of inflation, healthy numbers again. And the second main characteristic is relative performance. So it's not that we are just following the general trend of what's going on in the real estate market. I think it's quite clear in the last few years that the polarization effect has come into place and there are winners and losers and companies that take advantage of this more and others than less. And this clear relative performance, I think that it's very obvious in the case of Colonial SFL again. Basically, what I'm summarizing in these introductory remarks is you will see through the presentation, first of all, a strong leasing activity, superior rental growth, 3% rental growth in the quarter, a release spread of 7%, driven by Paris portfolio, 18% and the occupancy having a positive momentum, reaching almost 200 basis points more than a year ago. The top line revenue growth is growing 7%, as you will see, above peers. The like-for-like growth is 4% again, pricing power and leading the sector. The like-for-like net rental income, 4.5%, 260 basis points above indexation. This is the performance of the P&L. Besides this, the basic outcome of this quarter in terms of balance sheet is a disposal program that is ahead of the plan and overall strengthening of the capital structure. You will see that we have executed 70% of our disposal program year-to-date. The EPRA LTV is reduced by 180 basis points. The rating has been reaffirmed by S&P. The bonds have very successfully been placed. And this is on the back of -- with the support of the strategic pillars of Colonial, which is a clear positioning in Prime CBD operations, which drives this cash flow growth, this pricing power. Second, the Alpha X projects that are adding extra layers of growth, not so much now, but more and more in the near future, particularly next year. And then the portfolio management and capital allocation decisions that are the third layer of return for shareholders. Page 5 is about the specific numbers. We are finishing the first quarter with sustained cash flow growth. Gross rental income, EUR 104 million, 7% year-on-year. Recurring EBITDA, EUR 83 million, 5% year-on-year. The EPRA EPS, EUR 0.087. That means in line with the full year guidance that we previously announced. This is supported by an excellent operational outperformance. Rental growth, 3% in 1 quarter, that is compared to December 2025. Release spread, 7%; occupancy, 93%, that is almost 200 basis points more than a year ago. And finally, capital structure, strong credit rating. Reconfirm particularly S&P, which reconfirmed just recently the BBB+ rating. Loan-to-value 36.7%, 35.2% on EPRA LTV measure. Financial costs still below 2%. These are the headlines I wanted to share with you. Now as usual, we go first through an analysis and description of the portfolio management afterwards about the financial performance of the company. So please, Carlos, step in when you want.

Thank you very much, Pedro. On Page #7, this first quarter has shown very, very strong leasing activity. We signed 37,000 square meters in this quarter that are equivalent to EUR 17 million of annual rents that we've signed in the contracts -- this is a year-on-year increase of 28% compared with the first quarter of the previous year. What is really important to highlight is that this take up, this contract signed have a very significant push from AI and tech tenants. So we have really benefited in total demand in 36% of AI and tech activity tenants that want to be really in the best places. So it's really an upside driver for our activity, 13,000 square meters signed out of this source of tenants. If we look then per business segments in terms of cities, Paris, again, that's a very strong market in the prime asset class. We have signed the EUR 7.5 million in Madrid and Barcelona, EUR 5 million of rent secured. Paris, EUR 7.5 million on 7,500 square meters. So as you see, an average rent of all of the things that we signed at levels of 1,000 that are the levels of our prime assets. If we then go to the next page, we see at what pricing levels we have signed. We see on the pricing power that our prime assets capture. First of all, release spread. So when we renegotiate contracts with the tenants that are already in our portfolio, we had a very, very strong quarter. We achieved an 18% release spread in Paris. Paris by far, the strongest city in our portfolio in terms of the release spread. What is also very important to emphasize is that in Madrid and Barcelona that a year ago, the release spread was flat because these markets have had higher inflation during the COVID times and markets -- the rents were more mark-to-market. We are now getting positive release spread 2% in Madrid and 6% in Barcelona. When we then look to the second KPI that is rental growth, where we look at all of the contract signs, not just renewals, also the new space signed. What we are seeing is that we have signed an increase of 3.3% versus the market rent of all of these contracts and assets as of December 2025. So just in 3 months, 3%. So it's quite remarkable number because you have to think about it in annualized terms at the end. So just in 3 months, we're already capturing rental growth, especially with the people that are already in our portfolio because they have no other place to go. And so we have signed very high rents. If we then go to the next page, we see on the project pipeline on the recently released projects that we are progressing quite satisfactorily. On the left-hand side, we have the biggest project we have ever done. That is the Madnum urban [indiscernible] in Madrid. We are -- as of today, we have let already 85% of the total premise that is close to 60,000 square meters. Once fully stabilized, this will generate EUR 21 million of annual rents. We have 85% secured, but we are in quite advanced conversations on additional 7,000 square meters that will push this up to 97%, so almost full occupancy. The 85% correspond to EUR 70 million of annualized rents. Q1 just has EUR 3 million. So there's a lot to come in the future. And then Hausmann is an asset that will deliver EUR 30 million of rents. As of today, we have 39% let that corresponds roughly to EUR 5 million, and we are having conversations on the remaining part or half of it in a more advanced stage. Finally, on Page 10, what you see is the progress on the occupancy, we see here the last 3 quarters. So since Q3 2025, where we were at 91%, we are already with all of the contracts that we secured today at 93.3%. This is 200 basis points in 2 quarters, so roughly 100 basis points per quarter. So our product attracts our product is having a strong letting momentum. An additional important element to remind, if we exclude Hausmann and Madnum, so look in a way to a more like-for-like portfolio, the rest of the portfolio remains at 95% of occupancy, so super high occupancy that is a healthy occupancy ratio to have really enough activity. You can see it basically on the maps on the right-hand side that almost all of the assets are at levels between 90% to 100%. So our portfolio is really a portfolio that always has high occupancy. So just to summarize, you can see, number one, great rental growth, almost 30% more than a year ago and supported by the technology sector as a consequence of a big upside in a strong letting momentum, higher occupancy, 200 basis points more than a year ago. As a consequence of higher occupancy and strong letting volume, higher rents, 3% rental growth in just a quarter with a lot of pricing power and well above inflation. Let's have a look now at financial performance. Carmina, please.

Thank you, Pere. And so let me now walk you through our financial performance in the first quarter. Starting with the gross rental income, we reached EUR 104 million, which represents 7% growth year-on-year. This growth comes from 2 complementary drivers. The first is our core portfolio, which delivers 4% like-for-like increase, well above the peer's average, as you will see shortly. And the second driver is the contribution from delivered projects, which adds an additional 3% on top. So notably, disposal had a neutral impact in the P&L. Is very in the first quarter, clean and high-quality revenue growth. In the next page, digging deeper into the like-for-like growth, I want to highlight something that probably is very outperforms. So we are not just capturing indexation, we are significantly exceeding it. So on the 4% like-for-like gross rental income growth, probably half of it, 1.9% is from indexation and the other half comes from rental growth premium and as well occupancy gains. In absolute terms, our gross rental income like-for-like 216 basis points above indexation. And when we look at the net rental income as well, this spread widens ever further, even further 244 basis points. So this is a direct reflection of the structural supply in our CBD markets, but moreover, thanks to our quality of our assets and as well of our tenant base, as you've seen previously in our contracts. Turning to the bottom line. Recurring profit came to EUR 55 million, in line with last year. However, I want to flag comparably point for a proper reading of this figure. The first quarter 2025 figure included approximately EUR 2 million, which is one-off income related to early termination contract closures. Excluding this effect, this one-off effect, the underlying recurring profit growth is close to 4% year-on-year, which is in the right comparable growth rate and fully consistent with our operational momentum. At EPS, we delivered EUR 0.087 per share, and we are on track with our full year guidance 2026. EPRA earnings on a 2-years view are up 16%, reflecting the compounding effect of our growth strategy. So I will cover the financial evolution in details in the next slide. In the balance sheet, so I am in Page 14. This means on the balance sheet, what I think particularly as mentioned, it is a very strong story this first quarter. We executed EUR 350 million disposals year-to-date, representing 70% of our total disposal program in just 6 months. These transactions were completed at or above appraisal values with a premium, especially on the residential assets. And as you know, we disclosed in Paris landmark deal was closed at a very attractive prices. The results, our loan-to-value declined by 144 bps to 76.7% and our EPRA loan-to-value decreased as well 182 basis points to 45.2%. On the cost of debt, despite of having been very active in the bond market, repositioning the maturity of the bonds during 2025 and 2026, -- our cost of debt stands at a very interesting level, 192%, essentially flat of the last 3 quarters. This is the result, as you know, from the previous conversations from our disciplined hedge strategy, which allows us to lock in a very competitive rates ahead of any issuance. So even as we have been extended our maturity profile of our debt and strengthen our balance sheet, we did so without sacrificing our cost efficiency. So this is very, I would say, outstanding in these markets. And on that note, we successfully, as you know, placed EUR 500 million green bonds in the first quarter, 3.4x oversubscribed, swapping short-term maturities in 5 years funding and further reinforcing our debt structure. And just last month, S&P reaffirmed our BBB+ rating with a stable outlook. So a strong external endorsement of our financial discipline. And finally, liquidity stands very strong, EUR 2.6 billion, giving us the full flexibility to continue executing in our strategy.

Thank you, Carmina. Final remarks on my side. I think that the set of results that we are sharing with you today are in line with previous quarters, are quite strong. And I think that it's basically linked to the 3 pillars underpinning earnings visibility and value creation. I think that the basics of Colonial is about prime CBD operations. This is what is giving us pricing power and utilization happening in Paris, Madrid and Barcelona and creating a strong reversion. That's what has created a 4.5% like-for-like net rental income number for this quarter, the highest among peers, 260 basis points spread over indexation. And if you want to see it with different numbers, 18% release spread in Paris, 5% yearly growth in renewals, 195 basis occupancy increase since quarter -- third quarter 2025. This is the very basics of what's going on in Colonial SFL. On top of that, I would like to emphasize the current and most of all future contribution coming from Alpha X. Alpha X is a number of projects that as of now are contributing EUR 4 million rents in the first quarter of this year, but most of all with potential of contribution to the EPS growth in future semesters and particularly in next year that will contribute in a very fundamental manner to the EPS growth. All of these projects are going very well as expected in terms of timing and delivery. So that will be a major source of value creation on top of Pillar 1, which are prime CBD. And the third pillar of value creation is about portfolio management and capital allocation. I think we've been consistent in the divestment plan that has been delivered. It's -- there has been a very good progress on the EUR 500 million plan that we announced in November last year. 70% of this plan is completed. Let's not forget that EUR 1 billion have been sold in the last 3 years. And I think I would not be wrong if I talk about EUR 2 billion in 5-, 6-year timing. And obviously, every, every time that we go through a disposal, meeting, if you want to call it, NTA level, if you want to call it yields or cost of capital well below implicit values in the stock price, call it whatever you want, but with very good premiums in all disposals. So this is being delivered. And finally, in this quarter, we have also completed the buyback program that we announced just a few weeks ago in very attractive terms and with an interesting accretive impact in the KPIs of this year. My last remark is the one you see in Page 18. I think that you will probably agree that the times we are living, it's super hard to emphasize the individual performance of a company when everything seems to be so much related to macro trends and mega simplistic views on certain sectors or geographies or countries. I said at the beginning of this presentation that in the end, what Colonial SFL is delivering is about pricing power, but it's also about relative performance, it's about differentiation. But I think that we've disclosed a very good number of like-for-like gross rental income. This is a very good number in absolute terms of 4%, 7% including delivered projects. But also it's very important to bear in mind that if you put it in the context of relative performance with our peers, we are clearly showing outstanding number. This has been the presentation in Page 19, the major remarks, which is mainly operational outperformance, growth visibility, market-leading rental growth, pricing power continuing to reinforce the cash flow visibility. Growing occupancy, which, of course, is the result of a sustained demand, with this particular color of demand being supported by technology and AI-related tenants. Paris portfolio outperforming peers through resilient operation and leasing performance. The pipeline in line with our expectations. So future rental growth and long-term portfolio value creation ahead of us, active capital rotation supporting deleveraging and crystallization of portfolio value. And finally, 2026 guidance on track, supported by strong operational fundamentals. This was the presentation for today. Finally, just a reminder of our Capital Markets Day expected for June 4 in Madrid in Madnum and our Annual General Shareholders Meeting expected for June 17. That's just a couple of reminders. Thank you. This has been the presentation of results for this first quarter. And now we are available for any questions you may have. Thank you.

[Operator Instructions] Now the first question comes from Valerie Jacob from Bernstein.

So I've got 2 questions. The first one is on capital allocation. You've done, as you said, already 70% of your disposal program. And I was wondering last time during the full year presentation, you were talking about looking at acquisition and also now you've done your share buyback. So I was wondering if you could sort of give us an update on the way you're thinking about capital allocation? Like for example, could you do more disposals? Or are you still looking at potentially acquisition? Or could you do more share buyback now that you've done your buyback? So if you could just share some thoughts on how you're thinking about that, that will be useful. And my second question is on your occupancy. If I look at the pro forma occupancy at year-end, it was 93% and now pro forma it's 93.3%. And so I was wondering if you think this is a good pace and if we can sort of think that your occupancy is going to grow by 30 bps every quarter? Or maybe if you're thinking differently about it? And what can we expect in terms of -- what do you expect in terms of leasing space?

Thank you, Valerie. I will go on the first question, and then I will ask maybe Carlos to step in on the second one. Look, our view on -- first of all, on capital allocation, we are pretty satisfied with what's going on and the speed and quality of the divestments that we have gone through. Looking forward, I would say a couple of things. First of all, we will look at both investment and divestment alternative. I think that by definition, our mission is about creating value through an active value creation through capital recycling, acquiring and selling. So both things may happen. But I would say that the marginal trend for the rest of the year will be increased net selling position, and we may enhance what you've seen so far with additional net disposals. That would be on the first comment. On the occupancy, Carlos, would you like to step in?

Yes. On the occupancy, basically, what you have seen that in 2 quarters, we have improved 200 basis points, so roughly 100 basis points per quarter. It's obviously difficult to say what's going to be the next quarter, but we are positive. We are having a lot of conversations on the top product that we have in the market. So we are positive. Also to remind you, in like-for-like terms, we are remaining at 95% of occupancy, but we are positive. So we had a good momentum. We have a good rhythm, and we think it can continue. So we should be quite soon at a very high occupancy level again, [indiscernible] is already high, but we're going to be high again. And as we flagged, we are having good conversations on Madnum. So we are positive. Yes.

Next question comes from Fernando Abril from Alantra.

I have a couple of follow-up on the disposals on the enhancement of the disposal program under analysis that you mentioned in the presentation. And it's a follow-up, which is basically, if you end up selling another, let's say, EUR 500 million worth of assets, how should we think about the capital ration, 1/3 to deleverage, 1/3 to shareholder returns, 1/3 to reinvestment? Or any -- I don't know, any color you can give us on this would be very helpful. Second, on the Release Spread in Paris, the plus 18%, which is very high. It was based on 8,000 meters. I'm looking at it right now. Was this a single asset? And should we expect also this huge release spreads on the upcoming renewals? And also linked to this, how should we think of release spread -- sorry, incentives right now with -- along with these release spreads? Is it coming with a higher level of incentives or similar to past quarters? And last -- sorry, those 2 questions.

Fernando. I will go through the first one and ask Carlos to step in on the second one. Look, on the follow-up of the disposal program, first of all, as a general comment, we're working on a number of things and maybe -- and probably we will be more specific at the Capital Markets Day opportunity where we'll probably be able to provide more, more color in this. as of now, I would say that we don't have a specific hurdles for the allocation of the proceeds of the disposals. On the first EUR 500 million, as you know, yes, no, there was a sort of, number one, share buyback that we have already completed. And number two, some opportunistic investments. And number three, the deleveraging on the additional disposal program we may do, there's no specific goals for this. But I would say that the overall aim is to further deleverage the capital structure of the company. And I think that more detailed color may come at the time of the Capital Markets Day. On the second part on the release spread of the dramatic 18%.

Maybe first market data that many market participants have not really taken into consideration that in the CBD market in Paris, this quarter, the incentives for the super prime assets have decreased to a level in the broad market. I'm not talking about Colonial for the prime assets from 15% to 17% a year ago. So in the prime in the prime asset class, that is the segment where we are operating, the incentives have gone down. And as you can see also the demand is strong. In our portfolio, that's really the super prime part of the plan, we are signing at the moment between 12% and 14%. This is extremely low, below the market data of today in Paris. So yes, we are signing at very good terms. We are confident our assets are strong. We have also Paris is a market with long-term contracts. This allows you to have always a little bit more release in [capital] markets with shorter-term contracts. So there's no reason to think that the coming quarter should be very much different to what we see today. So we are positive on it.

And sorry, [relies] the spread, Fernando, is not one single contract you asked for. It's across all the contracts that we have signed this quarter.

Next question comes from Celine Huynh from Barclays.

I've got 2 questions on Barcelona, please. First one, I'm struggling to understand the 11% like-for-like rental growth. Can you explain how you achieved this number because it's quite high. And I don't think occupancy has moved much as well. And then a follow-up to that, do you see some improvement in the Barcelona market? Do you think we'll get some kind of inflection point soon?

Thank you, Celine. Carlos will take care of this one, 11% like-for-like growth and the general view on the Barcelona market.

Well, on the Barcelona market, it's a combination of occupancy and also pricing, especially -- and I think we highlighted this in the year-end presentation, the pricing performance has been extremely strong in the Barcelona market. The market is really picking up at a very strong pace in rental prices. We are signing now, for instance, at our building, we are signing levels of 33 to 34, where a year ago, the prime rents were more at 27. So we have now an extreme acceleration and then also some impact of improvement in occupancy. And yes, this is basically the main effect. And as we are now starting on a little bit lower figures, we are having an extremely strong effect this quarter of 6% is volume driven and the other 5% is price driven.

And your views on Barcelona?

On Barcelona, we are seeing accelerating momentum, accelerating activity in super prime product and also recovery and starting of significant absorption in 22@ that should also help. And one of the main drivers is AI and tech demand that Barcelona is one of a good destination for this type of...

Yes. So in other words, Celine, in Barcelona, when I see the performance of the, let's say, call it [price city] location, I do not see any difference regarding Madrid or Paris in terms of outstanding performance because the drivers in terms of limited supply versus strong demand are exactly the same. And then what is unique in Barcelona is that on the 22@, I think that there was a historical case of oversupply that is disappearing and disappearing because no more supply is at and demand is taking care of it. So a stronger momentum.

And Celine, probably one data from the market perspective. So you know the size of the market, the fish market in Barcelona is 6 million -- the fish market 6 million square meters office stock. Madrid is EUR 13 million. And this first quarter, the data in Madrid has been roughly 90,000 square meters. Total market and the takeup for Barcelona 75,000 square meters. So in relative terms, to the size of each market, Barcelona has been accelerated because it's almost 50% of the market Madrid and the takeup is in line.

Yes. I guess I'm just a little bit confused because if you look at your peer on an earlier call today, they're losing a big tenant in Barcelona and they weren't as optimistic, I would say, compared to you guys. So that's why I was interested in like why the diversion seem to use?

Well, maybe the product is not exactly the same. And look, I cannot have an opinion on the views. I think that in our case, it's quite consistent with the views that we have been before, and we are supporting a little bit this with the data that we're just sharing with you like the numbers that Carmina are sharing with you.

Next question comes from Florent Laroche-Joubert from ODDO.

I will ask 2 questions, if I may. So the first one, would you be able to give us maybe more color on your strategy for the letting of scope in Paris? I think it will be delivered in 2026. And maybe my second question maybe as a follow-up on your disposals. Could you maybe precise or give more color on what you are targeting in terms of deleveraging by doing maybe more disposals?

Yes. On the first question, I think there's nothing in particular to say. Scope is actively now being marketed in the Paris market. There's a good reception by prospective tenants, but we are just at the beginning. As you know, the central case for marketing of this building would be second half of this year and first half of next year. We are quite, let's say, comfortable with the standards of quality and uniqueness of the product. I think it has the reputation that the SFL product has had always in the market, which has led always to outstanding letting performance. So we have high conviction on the reception that we will have from the market. But I think we are in the early stages to give you additional color on this. On deleveraging additional target level, Carmina, if you want to step in.

The target level, meaning the capital structure, I think we always said the same -- when we look at the metrics on the rating agencies, this is a more holistic approach in terms of EBITDA debt EBITDA, loan-to-value and ICR. And to give you some numbers, we would be in the range of 40% loan-to-value, which is in line what the rating agencies are providing us to be in the investment grade -- higher end of the investment grade range.

So 40% is for your IFRS LTVs and EPRA?

Yes, as [indiscernible].

Yes. But to be honest, as Carmina is saying, we are -- I mean, not so much about the magic of certain ratios like LTV. For us, the fundamental issue, it's the quality of our debt, which is proven several times that has the support of the debt markets. It's not only that recently, again, BBB+ by S&P just a few weeks ago. It's about the spread that we show on the debt market. It's the overall quality that we care more about than a specific number of LTV or any other KPI. But in our view, it can be simplistic and misleading many, many times. So it's true that we tend to show, let's say, more limited numbers regarding LTV than in previous quarters. But the overall goal for us is to have the highest quality of the debt in a more, let's say, holistic analysis level, such as the one that is being provided by rating agencies.

Now there are no further questions. Therefore, I give back the floor to Mr. Pere Vinolas.

Well, thank you. It's been a pleasure to share with you these results, even a higher pleasure when they are good results as one of this quarter. We hope to see you again soon for the next presentation of results for the Capital Markets Day or in any other occasion. Thank you, and have a very good day.