Covivio (COV) Earnings Call Transcript & Summary

Welcome. Welcome, everyone, in our Capital Markets Day in Paris, and also on the webcast. So we titled this event "Opening A New Phase" for 3 reasons, I would say. The first one is that we achieved on the plan that we gave to you 2 years ago in our Capital Markets Day in Berlin. The second one is that values are troughing. We'll come to it. And the third one is that we will show you that we have an ambition to continue to transform this portfolio and to extract the value growth from our portfolio later on. So the agenda of the day. This morning, we'll talk about the strategy. We'll go through also an update on each of our business lines. We will have with us JLL and KG to speak about the office market and the hotel market. And during the afternoon, we will visit some hotels and some offices that we have in Paris. Covivio, you know well the company. It's a diversified player, diversified in terms of products, in terms of geography. I think this is something which is key, even more today, key also to have strong platforms. We are also the specialist in hotel, in residential and in office. And when you look at the right part of the slide, the 3 pillars that we have in our DNA are even more important. Centrality, of course; hospitality, moving up the real estate value chain to the operating side, we'll come to it later on today; and the sustainability. We are in Paris. So a few words about Paris. It's the second city for us in terms of portfolio right after Berlin. It's a EUR 2.5 billion portfolio. It's also probably the #1 city for us in terms of growth capacity, either for office with redevelopment with relating growth potential, but also for hotels, especially with the deal we are doing with AccorInvest and the CapEx program that we'll put in on those hotels. We've put here several examples. We'll visit some of those assets today. I won't go through each of those assets. And just to kick off now on strategic update with Christophe. Thank you.

Thank you, Paul, and welcome, everybody. I'm also very happy to welcome you in our European headquarter here in L'Atelier, which is clearly for us the showcase of what we imagine is the office of tomorrow, and you will have the chance to also, during the day, just after lunch, for those who have not visited it before, to have a look at this building. So well, what we will share first in terms of strategy? First of all, as Paul said, 2 years ago, it was in Berlin, and we had the last Capital Markets Day of Covivio. As to say, the mood was not very nice. And we said that we want to adapt the company to this new environment where we imagine will be the next 2 years. To do that, the main topic was to maintain a strong balance sheet. For doing that, we announced the idea to have a disposal plan of EUR 1.5 billion through a different asset class during the next 2 years. And we will also, despite the situation, to capitalize on growth acceleration. What are we able to deliver 2 years after? We achieved the EUR 1.5 billion disposal plan as today. We will go more into detail just after. We will be at year-end at LTV below 40%. That is the target that we gave also to the market. And we have strong operational results with roughly 14% cumulated like-for-like rental growth during this period. Just first in terms of disposal, EUR 1.5 billion of disposal achieved, 75% growth in the Offices sector, EUR 1 billion. And just we signed yesterday, the disposal of one big asset in Milan, and Alexei will give more detail on that. That's a development that we are currently doing in the south part of Symbiosis for roughly EUR 200 million. We also continue to streamline our portfolio in Resi with EUR 240 million disposal during this time, block sales, mainly through a partnership with CDC that we put in place this year, but also privatization that we continue to put in place with a really nice margin on average, 44% margin on this privatization. In the Hotels sector, also we sell some nonstrategic hotels during this time. Balance sheet. Key question on this time. So we really are at the target to be below 40% LTV. At the same time, we keep the same maturity of debt close to 5 years. We reduced net debt-to-EBITDA was 12.1x in June, and it will continue to be reduced in the future quarters. The cost of debt will remain low longer, at below 2.5% until now '28, until '26, 2 years ago, thanks to interesting hedging policy that we put in place. And at the same time, we doubled the liquidity position of Covivio to EUR 2.5 billion compared to EUR 1.2 billion 2 years ago. And that all of that enabled us to keep our BBB+ rating at S&P with a stable outlook. In terms of growth potential, during the last 2 years, we had this 13.6% like-for-like on average annual revenue. It's compared to an inflation that was 8%. So really stronger than inflation like-for-like rental growth despite the environment that all of us now see. And that allows us to have an EPRA earnings that grows to a guidance of EUR 460 million for this year compared to EUR 430 million in '22. During this time, we also prepared for the future. One of our goal was to continue to recalibrate the portfolio between the asset class, so we reinforced our exposure in the Hotels sector mainly this year with the transaction we made with one of the shareholders of Covivio Hotels exchanging Covivio Hotel shares in Covivio shares. But also, we worked, in our portfolio, with AccorInvest, and we will sign by the end of this week, I hope so, to do that. We will confirm that the deal that was announced 1 year ago with AccorInvest that will change also the profitability of our portfolio and our capacity to create value in the future. Where do we stand in terms of real estate market? That's a big topic, big question, I imagine, for all of you and also for us. But what we could say? First of all, remaining a lot of political and economic uncertainties around us. We will not give more detail on that, but all of you are aware of that. And I have to say that's continuing. But looking into the data, the figures, inflation is really decelerating strongly in Europe. Today, Europe with inflation at 2%, and it could be below in the coming months. The interest rates are going down. The long-term interest rates, the short-term interest rates, and looking to last day's figures, continue to go down and it is positive. And there is also first positive signal in the European real estate investment market just when looking to what occurred since the beginning of the year. In the Hotels sector, compared to last year, plus 55% in the European market. In the German Resi sector, plus 50% when I'm looking to information of the first half compared to last year. In the Offices sector, it remains a weak market. But as we announced this morning, this EUR 200 million transaction, we see the beginning of big transaction coming back in the market. There is also the rumors of this large transaction in La Défense that is today in the market. That means really that we see that the market starts also in the Office to change. What does that mean, all of that, in terms of appraisal value? So the figures that just I put there as not the last one, where the campaign of appraisal is not finished, but that's first indication of what will be the appraisal value at year-end on a like-for-like basis for the different asset class we have into Covivio. So what we imagine today with the discussion we had with the appraiser is plus 1% in the second half, both in Hotels and in German Resi, and minus 1% in the Offices sector. This minus 1% in the Offices sector is driven by a little plus in the City Center location, a little minus in the Business Hubs location and a stronger minus in the Non-core location. That leads to roughly, for us, a 0% evolution on the valuation in the second half and that confirms that the net asset value was in force at the end of June. So for the future, what is clearly what we are? So we say a powerful diversification. We said that before, we are a diversified company in terms of business profile, in terms of geography, in terms of products. And so I will just go through these 3 topics now. First, in terms of expertise. We changed a little bit the profile of portfolio during the last years. You see that Hotels was 15%; today, it's 20%. Offices was 60% of portfolio; today, it's 50%. So we started to change the mix of the portfolio during the last years. And as you will see after, we want to continue to go in this direction. When I'm looking to the evolution of products, we increased exposure in Hotels. We also developed our own operating expertise during the last years and now with a dedicated brand, which is WiZiU. In the Resi, we want to continue to push on Berlin. We really consider that, that's the city where we want to be more in the future. Today, it's 55% -- 57% of our portfolio. And also in Berlin, but also perhaps in other cities in the future, we want to continue to do privatization with really nice margin. In the Offices sector, we want to continue to push on centrality of the portfolio. Today, we have 69% of our portfolio which is located in the City Center versus 59% 4 years ago, and we want to continue to go in this direction, and we also continue to improve the quality of the portfolio. And we will continue to push or offer on service like we will see in this building, which is really for us, key for the development of the Offices sector in the future. In terms of operating performance, this strategy, what we have done in the past, leads us to keep a really high occupancy rate despite the cycle, despite the evolution of the environment. You see that during the last 10 years, on average, the occupancy rate of the portfolio was close to 97%, and it was 97.3% at the end of September. And we have a revenue growth during the last 10 years, which was roughly 30%, that's above inflation during this period. In terms of positioning, I will not go too much into detail because after, you will have a session for each asset class, but in the Hotels today, what is key for us in this area, our hotels are located 90% in major touristic destinations. And what is expected for the next years in Europe is an increase by 5% per year of the tourist arrival coming from all around the world. In German Resi, we continue to benefit from positive democratic strength in the asset in the location where we are, especially in Berlin. And you see that year-on-year, the evolution of the market rent in Berlin was plus 10% another time. In the Offices sector, we will continue to work to increase our exposure into the City Center location. And you see the same, the evolution of prime rents in Paris and in Milan during the last 12 months is plus 7%. So some words on the future. We said several times that we want to continue to have a more balanced portfolio between asset class. So we confirm the long-term target we have in terms of exposure to go to roughly the same exposure in the 3 asset classes we have between Offices, Hotels and Resi. How to do that, it will take time. That means that we'll continue to have rotation of the portfolio. We will seize new acquisition opportunities, mainly in the Offices, in the Hotels sector. We'll work on conversion of offices into hotels, we have some programs that will start. In Resi, we want to reinforce our exposure in Berlin in the future. Pursue privatization, but also in the sector to deploy progressively a hospitality approach, as we have done in the Hotels sector and in the Offices sector. In the Offices sector, as I said, more quality, more centrality, and we want to fully exit from the non-core part of our portfolio. In terms of hospitality approach, as Paul said initially, it's really a key pillar of our strategy, and we want to do that in each of our asset class. In the Hotels sector, we have our own hospitality brand today with WiZiU that manages directly hotels and we'll double the size of the hotels managed after fulfill of the transaction with AccorInvest. In the Offices sector, with Wellio first, but not only Wellio, what we are putting now in all of our large office we have, we put more service to our clients and want to deploy this quality of products in France, in Italy, but also in Germany. And in Resi, there is really also, in this sector, a demand for new form of housing and urban services and we want to start to develop operated resi project. We have already 1 project ongoing in Alexanderplatz in Berlin, and we have 2 office conversions in Paris that will be also in operated office in the future -- in operated resi in the future, sorry. In terms of ESG, that's the third pillar of the strategy of Covivio, we really built, during the last years, a leadership position over the long term. So we don't go through each data that are there. But in 2018, we established our first 2030 carbon trajectory that was approved by the SBTi. And since then, we increased significantly all the KPIs that are indicated there. And this year, we have decided to bring together the carbon and biodiversity strategy in nature plan that will be presented just after by Yves. Just last point is also to extract value in your portfolio. How to do that? Some figures that I know that some of you like figures. So that's why we are giving to you some of them. Three aspects. The first one is the full effect of what we have done in '24 in the Hotels sector that will lead to roughly EUR 17 million of more revenues next year. Second one is the pipeline. We have today the committed pipeline that will deliver roughly EUR 70 million of future rents. And for that, we need to spend EUR 450 million of remaining CapEx. And we have, on top of that, the managed pipeline that will lead to more than EUR 55 million of future rents. And for that, we need to spend roughly EUR 700 million of CapEx in the future. And lastly, asset management. We have really -- first one is linked to office reversion. So we imagine that we have, until '28, EUR 14 million of positive reversion in the City Center in the Offices sector that will lead to the future renewal of the current lease. We have strong reversion in German Resi. We put that more than EUR 50 million, but it will take time, because that will take time during the future. In the Hotels sector, during the next 3 years, we imagine to spend EUR 170 million of CapEx that will allow us to generate more than EUR 22 million of future revenues. And on top of that, there is also this big privatization margin that we have in German Resi that represent a total amount of more than EUR 1 billion that will take time also to arrive. And these figures exclude completely indexation and variable hotel revenue effect. And last point is opportunities in a world when we could consider that we are at the trough of the market. We are starting to look at new opportunities also in terms of investment. Just to remember our strength. We have a really strong track record in terms of asset rotation. During the last 10 years, we were able to manage EUR 8 billion of disposals. Another strength of Covivio is the fact that we are able to put in place long-term financial partnerships, as we've done this year with CDC in German Resi, who were always keen to have a long-term partnership with us, and that's a way also for us to pursue our development. And we have a balance sheet structure which is healthy today with LTV below 40%. That means that all this topic will lead us to seize new opportunities in terms of hotels, in terms of Berlin residential also in the future, and to do development in our portfolio that we have today in Paris, Milan and Berlin. Just to summarize the key takeaways of this overview. After that, we will go more into detail. First, we delivered our plan that was announced 2 years ago. Second, we consider that the real estate market is at the trough today in terms of valuation. And third, we put in place these strategic priorities; rebalance the portfolio, increase centrality, deploy our hospitality offer, and extract growth potential in our portfolio. So it will be a Q&A session at the end of all the presentation. So don't worry, if you have a question, we will answer to them at the end. So now I will let the floor to Yves to speak about ESG.

Thank you, Christophe. Good morning, everybody. I'm very pleased to update you this morning with our ESG strategy and performance. The backbone of our ESG strategy relies on 4 pillars. The first one, obviously, is about our real estate operational activity, and we will focus on it this morning. The second one is about our stakeholders and especially our clients. We commit to ensure them well-being. We measure it. And as you can see on this slide, our hospitality approach is quite efficient. The third pillar is about our teams. We are convinced at Covivio that at the end of the day, the human capital makes the difference. So we train our teams. We measure the satisfaction and we ensure that they are diversified. And you see also on this slide that it works. Last but not least, governance. Our governance relies on a right balance of powers with a Nonexecutive Chairman of the Board and CEO. The Board is mostly independent, international, diversified also, and has created an ESG committee a few years ago. And this ESG committee commits to increase -- has increased the share of ESG criteria in the remuneration of the management team. It's overall more than 20%. So back to pillar #1 and a small update about our carbon trajectory. As Christophe mentioned, it's SBTi confirmed and our ambition is to reduce by 40% our carbon emissions between 2010 and 2030. You can see that we are well on track. How do we do that? We have 4 main levers. The first one is our CapEx plan. We still have roughly EUR 230 million to invest in our portfolio with green CapEx by 2030. We are way on track. Second one is, of course, by delivering state-of-the-art new building. Third one is about our usage of energy and green energy. And the fourth one, we don't control it, but we also rely on the improvement of the energy mix in the countries where we operate. 10 years ago, we announced, we made public the ambition of reaching 100% of our portfolio with environmental certifications. By that time, as far as I remember, we were around 30%. So it was quite ambitious. We are getting close to the end of 2025. And as you can see, we are well on track also on this target. And so our challenge now is to improve the level of those certifications. And as you can see, for example, in Offices, we are -- now more than 2/3 of those certifications are at least at a very good level. All this makes us a leader in terms of taxonomy also. When we compared with our peers, the real estate, the REIT activity, which is the one we can really compare with our peers, as you can see with those numbers, we outperformed our peers, both in terms of alignment of revenues, but also with alignment of CapEx. Today, as Christophe mentioned, we wanted to announce to you also that we worked and we delivered both a strategy and an action plan about biodiversity. The real estate industry has a huge impact on biodiversity. And as we intend to remain a leader in ESG, we obviously wanted to tackle this challenge. And today, we are happy to make public our strategy and action plan. It's all about 3 pillars, 21 targets. I won't go into details with those 21 targets, but I can briefly give you an idea of this action plan. First pillar is about avoiding the new deterioration of natural habitats. And for this, for example, we commit to have 0% net artificialization impact on our committed pipeline. We will do more and more refurbishment and building elevation instead of constructing a new building, obviously. We will measure -- on each of our development, we will measure the impact of artificialization. And we will, with our suppliers, put in place a process to trace all the materials we use, and use less and less materials that have bad impact on biodiversity. Second pillar is about reducing our resources consumption. So on top of the ambition, the target we have in terms of energy, we also commit to lower our water intensity, for example. We will shortly use only green electricity on the buildings we directly manage. We will double our solar energy production. And we will obviously use more and more materials from circular economy by reusing the material we will destroy, even though we will do less and less of that, and we will track the new material we will use in order to ensure that more and more come from circular economy. The third and last pillar is about improving biodiversity in cities. And here also, we will commit to measure the impact and to improve impact on almost all our development projects and to have a net gain in biodiversity on the 20 largest assets we manage currently in our portfolio. We are also today very proud to announce the first nature report that we make it public today. As Christophe mentioned, we decided to bring along our carbon ambitions and targets with our biodiversity strategy and action plan. All this makes a Nature Plan, and we are happy to share it with you with the details of all our targets in terms of biodiversity in this Nature Report that is online today on our website. Finally, you see on this slide that all this strategy and all those achievements have allowed us to stay at the top of the rating of agencies. We are 2 years since we spoke in Berlin 2 years ago. Since that moment, we either improved or stayed at a top level for all those agencies, as you can see on this slide. Thank you very much, and I'm pleased now to leave the floor to Olivier that will give you an introduction on the office strategy. It's not you, Olivier? Okay. I thought it was you. Okay. Welcome. She is there. Welcome.

Thank you. So thank you all. Good morning. I'm Marie-Laure de Sousa. I'm the CEO for JLL in France, but also in BeLux and Southern Europe. So today, I will try to give you some highlights on the markets, knowing that you can have some Q&A, I think, at the end. So I'm sure that you will have some. So what's going on in markets today in offices in France and in the countries where you are located. So firstly, let's have a look on the trends and what are the factors that are today shaping the markets globally in Europe. So we have 5 major trends. If you have to leave the room before the end of the presentation, you have to keep in mind that 5 major trends are important today for the corporates who are really acting today in the French market. The first one is really making a focus on the talents, on the human resources. We've just seen you on your strategy. This is the main point today for the corporates, knowing that they are trying and still trying to attract and retain the people. So it means that they want to have the best place in their offices to have a balance between the professional life and the personal life. And the offices is becoming a new way of living. So having a good experience in the building is one of the major trends that they are all expecting. The second one is the technology. This is one of the major trend that we have. You've all heard about artificial intelligence. You've all heard about all the technologies that we are going to implement in the buildings. This is major, and it's a major trend knowing that it helps us to bring our corporates to their sustainability targets, because to have sustainability trends, you need to know what's going on in your buildings, what's going on with your people. So the technology is coming into the building. The technology is coming into the facility management. The technology is now, due to data that we are all collecting, to give facts to the people to take decision more brightly. The third one will be sustainability. Of course, we all know the taxonomy you've heard about, but we all know also that it's one of the major trends for the corporate for the next years. We are responsible for an ecosystem in real estate which is major, and the sustainability, knowing that we have the taxes, but also the will of the company to change the way that they are acting, acting in their buildings, acting in their offices. So it's a major trend that we are looking at. And we know now that some corporates, I will tell you about Barclays, for example, which is a global account of JLL. Barclays just told us that the strategy in the next 5 years will be to change completely the way they are acting in their real estate world and all their main offices in the next 5 years will be only sustainable ones. The carbon impact of their buildings will be the first motivation of move, and it will be the first objective of them changing the way that they are acting. The fourth one will be the portfolio optimization. We've seen that there's a lot of transparency now in the market and there's a lot also of ambitious real estate challenges where the portfolio optimization will be in the heart of all the strategy of the investors, but also the corporates to get some targets they have in their strategy. And the fifth one will be the return on investment. Of course, data is helping us also to take good decision and strategies knowing the fact that we are looking at. So these 5 major trends are really acting on the real estate world. Then we have major trends also in Europe and mainly in France. So you have heard about centricity. This is the main priority of the companies to attract and retain the talents today. Some companies do prefer to downsize a bit their portfolio and their square meters in offices to choose a better location, to choose a central location, which is one of the major points that will help them to attract and retain their talent. So this is major. And as you can see, it has also an impact, because in the last 2 years, we had a lot of corporates who were in the first ring of the cities or the second ring of the cities, and they did prefer to take much lower spaces, but better spaces and centricity. Now in '24, I can tell you that companies who decided to do it and to leave 20,000 square meters in the first ring to get into the CBD of the cities for 8,000 square meters are now looking for extensions. And this is one of the trend that we see in the end of the year, knowing that a lot of these companies are now struggling because they don't have enough space in their buildings. I can tell you about Technip in La Défense. They were due to stay 3 days in the office. Now the big CEO in Texas said to them in September, guys, you have to come back 5 days a week. So it means that they had to take extension very briefly and very fast to get all that people back. I can tell you also about Amazon. We are working for them in many cities in Europe, and I can tell them that a few months ago, their requirements were 35% less than what they are expecting in '25 to get, because their CEO also told them to come back in the office 5 days a week. So I can tell you about a lot of companies. This is the trend that we see even in the investor world, knowing that everyone knows now that home office is a part of hybrid world. But in the same time, we know that when you're in your home, you can work on a very dedicated task. Now having some synergies, creating new offers, creating new service, mentoring the youngest people have to be done in the office. So we don't have the same return to the office depending on the culture of the countries in Europe. More in the south you are, better you like to be in the office, because your culture is mainly due to your social environment in the office. So the comeback in the office is really a trend that we see in the fourth quarter of the year and that we are going to see an increase in '25. So what does it look like in the retail overview of France? So all the numbers that I'm going to explain you are numbers on the third quarter of the year. So the fourth quarter will be important, of course. And you have to know also that the fourth quarter in France is always the biggest one and the major ones for take-up and major trends. So the first one on the take-up. The take-up is quite low at the end of September, 1.2 million square meters. The average is a bit more for the last 10 years, because the average take-up a year is around 2 million, 2.2 million in France, but it was mainly due, and we are going to see that on trends, looking also at the economy and the cycle of the economy. So we had the downsizing due to the COVID and new ways of working, but I just told you that it's for the past, and it's going to be a bit different. We have the flex office. We took a lot of position in the last 3 years. And due to that, now they are installed and based. So they are not one of the major engine of the take-up. And the third one will be the tech world, which now has to decrease a bit maybe their impact due to the fact that they are working differently and the intelligence and the artificial intelligence is changing a bit. So what you are looking at is that all the trends are quite on all the surfaces, all the spaces, but major due to maybe the uncertainty about the French politics. Before the summer, the Olympic Games also were a bit distracting on the French market, but we do see now that a lot of big trends and transactions are currently negotiating in France and in Paris. We do hope that the take-up will be much bigger at the end of the year. Major trends on big surfaces and the coming back of the office is really an impact. So I can tell you that big transactions are currently being acted and are going to be acted in La Défense for major surfaces like 35,000 square meters at EUR 660 per square meters in La Défense is currently in negotiation, or maybe some people are telling that Arboretum could find a tenant in the next days and weeks. So it will have a big impact on the take-up. If you see the take-up quite decrease also at the end of the year, '25 will be much different, and we will see that. It has also an impact on the rental values. As I told you, the centricity and the will for the companies to be in the center of the cities has a direct impact on the rents. And as you can see, we have a major increase of the rent in Paris going up to EUR 1,400 per square meters. This is not the top rent. This is a calculated prime rent, because due to the vacancy rate in the center of Paris, we do have this vacancy rate going so low that the prices are going high, but also because the buildings are much better than they were a few years ago, taking in consideration the new services, but also the ESG environment. When you are looking at the global immediate supply in the French region and mainly in the Paris region, we have today a vacancy rate which is quite high, when you are looking only at the numbers, because we have a vacancy rate around 9.5% of the global stock. You have to look at that carefully, because on that 9.5% of vacancy rate, you have a major part of this vacancy rate which is composed by second ring Grade C buildings, which maybe will have some problems in the next years to find a new tenant, but it's not due to the quality of the building, it's mainly due to their location, and maybe also to the fact that they are not sustainable at all. So only 25% of this vacancy rate is today new or restructured. So these buildings will be the one who are going to fund their tenants at the end of, we do hope, a quite short period. So when you are looking at the history of these numbers, you do see that the 1.2 million is quite maybe a low number. But as I told you, the fourth quarter is not there anymore. We are still expecting to be at 1.7 million square meters at the end of the year, which will be rented by the companies. And in the same time, you can see that, as I told you, we have the flex office world, which is now established. We have the tech world, which is a bit going down. And also, we know that a lot of companies are looking also on the balance with the region. So maybe it will have an impact also on the take-up in the Paris market in the next years. When you are looking at where the companies are going and where they are going to take their rents, you do see that Paris still attracts 1, up to 2 deals in the Greater Paris region, which is quite major. So when you are looking at the areas, you are seeing that the centricity and the location of the buildings is really important. But it also enfaces the fact that business places are really important for the companies. And La Défense won't have a bad year this year. This is completely sure in the same time, as the CBD is going on and maybe will have, as I told you, with the impact of the 5 days coming back to the office, an impact of great sustainable buildings in the first rings of the cities. This is what we're expecting because due to the vacancy rate in the center of the cities and due to the fact that they need more premises, they need more services, you can't find buildings for everyone. And even the budget is going also to change a bit maybe the trends in the next weeks and months. So the large transactions were concentrated in the center of the region, but due also to the fact that they were decreasing the global footprint of it, knowing that everyone now is looking also for certified building. So as I told you, the first ring of the cities are going to provide this type of buildings. When you are looking at the prime rent, as I told you, the prime rent hasn't been so high in the history of the Parisian region, and it's going to stay, due mainly also to the next stock that we will find in Paris, due also to the new legislation of permits into Paris, which will enface the fact that great buildings in Paris will find tenants and the rents could completely and continue to increase a bit the rents in the next years. So in the same time, you can see that the major rents, and even in La Défense, you will have a peak in the next weeks, as I told you, with the big transaction, which is currently acting. And maybe the fact that all the companies in La Défense will decrease their footprint will continue to take some. So the prices will stay a bit higher than what we are seeing today. We can see for the moment also that the incentives given by the investors are still stable, but it depends, of course, on the location of them. A bit information on the investment context where you are more maybe expert than what I'm going to tell you today, but really shortly, some key themes that we can see in the investment markets today in France and mainly in the offices. So the overall look is better with the growth that we can expect. The inflation falls back, and we do expect immediate return on the investment market. The key interests have entered into a downward phase due to the slowing inflation, and we do see that, and we start to see it in the U.S. So we do expect it to come to Europe, to Continental Europe and to France mainly, we do hope in the year 2025. The employment remains quite healthy with less pressure than a few months ago, but still some pressure on that. And the employment levels are quite high and the wages are right. We know that we have risk. We have risk on the geopolitical context. We have risk with the escalation in the war in Ukraine. We know that the U.S. election could have a different impact that we still expected some weeks ago. But for the moment, all the investment market is still sensitive, with some new trends which are balanced by what we try to do in the ESG context and trends due, of course, to the climate events that we do see. And as I told you, the geopolitical context have a high impact on the investment market, but also in the certainty that the corporates are taking for the decision. So let's try to have some good news around that and the interest rate began to reduce. So we do hope that it will continue knowing that the forecast will be quite positive in the next months or we try to expect it. What's going on, on the investment market? So you've seen the letting market, which was quite lower than what we had in the last years, and the investment market is more marked. And as you can see on the third quarter, it was quite low in France, mainly in offices. As you can see on that trend, this is obvious that for the moment, the market is quite low. And we have a moment where everything is quite frozen. We have sellers, we have buyers, but for the moment, the good interest are not completely aligned. So we do hope that it will be with some different actions and reactions and strategy in the next months. As you can see, it was mainly impacted in offices, knowing that in retail, in logistics, and in light industrial, the numbers are a bit different. So you have a different balance than what we had before due to the trends on the market, but due also to the attraction of new asset classes. Maybe we could imagine in the next year that we will have new asset classes coming into that investment market, for example, on energy, infrastructure, education or maybe life sciences, which can maybe be the new ways of investing in the next future. We do hope also that '25 will be, we'll say, comparable, but we do hope better in Europe in '25. When you are looking at the trends, some emerging markets are a bit different, but the major traditional markets are more impacted than the new emerging ones. So we've talked about France. We've talked about the global market. Let's have a view on Germany, and let's have a view also in Italy. So Germany, Germany is not as easy to understand as France is, because France is more centralized than Germany is, knowing that Germany is mainly on 7 markets that you can see there. So we don't have 7 markets, but quite we have 7 lenders in 7 markets, which are impacting and are different on the global view and the numbers may be quite a bit different. When you are having a look on all that market, you can see that the take-up is still quite good even if it's like in France going down. So 13% less -- 13% more, sorry, than the same period last year, good news. The vacancy increased in some cities, but not everywhere, mainly due also to the lack of good supplies in the center of the location of these cities. So as you can see, the prime rent also were going quite higher due to the fact that we have a lack of stock and lack of stock also have to be balanced, because when you see a vacancy rate of 10% in Düsseldorf, as you can see, the stock is lower, so it doesn't have the same impact. But we do see exactly the same thing in Germany that we see in France. Companies are looking for central location. Companies are looking for new services for ESG buildings. So it's mainly a lack of the stock, sometimes that it's frozen the center of the market, and they are due also to the cities. And then the differences between the cities are major. You know that Frankfurt is a major financial city, whereas Berlin is more tech impacted city. So every city has its own ecosystem, and the differences are quite the same on them. When you are looking at the take-up, you can see that Berlin is impacted by the tech world, because it was mainly a city where you had a lot of backup and back offices on the major big tech companies. So this is why they are also impacted. As I told you, the artificial intelligence also is acting and impacting the number of workforce in that type of companies, knowing that we are expecting new jobs and new companies and new people coming into that companies. But for the moment, they are in a way that they are looking at what's going on and how they are going to imagine their future. Düsseldorf is going also a bit down, but not due to a special industry, but mainly due to the market itself and to the lack of good buildings into the center of the cities. Frankfurt is really impacted by the financial part, but the return to the office is less obvious than it is in France for the moment, even if the companies are trying to bring their people back. Hamburg is mainly also due to the world trade and to the slowing down on the exportation of Germany. Cologne, I won't comment particularly. Munich is going to be quite stable and like the same of '23, and Stuttgart is going also to have exactly the same trend as we had last year. So when you are looking at the supplies and where it's possible to have new buildings, the cities were organized due to their industries. So when I was talking about Berlin and about the tech companies, Berlin was also providing and is still providing completion of new brand buildings due to the impact and will of the tech companies to come back. So we do think that these new buildings will find their tenants. The question could be the Grade B, Grade C buildings for the next future. In Düsseldorf, the stock is quite low, but the completion is still going on. You have to know that in a normal year, the vacancy rate, which is the best around 7.58%, that is still a bit more important today in that cities, will find new completion. So we do think that these buildings won't be the problem in these cities in the next years. The problem will be mainly in Grade B or Grade C buildings in secondary location, where the tenants won't go due to the fact that they were not having achieved their ambitions around sustainability and around new services. As you can see also the city where we will have the more completion will be Munich. And then we have to make a lot of words and pedagogy to explain the new markets going on for these companies. When you are looking at this vacancy and the prime rents, the vacancy, as you can see, is quite high. The average vacancy rate is mainly due, as I told you, to the new completion coming and to the will of the companies to stabilize their own strategy before finding new buildings. So the uncertainty that we had before is impacting also this vacancy rate and the prime rents. Italy, let's go to the south. The situation is a bit different. So in Milano, the office market is quite stable or is quite good for the moment due to the fact that we have a very low Grade A vacancy rate of around 2.8%. As you can see, it could look like the CBD vacancy rate in France. The investment is going higher than what we are expecting. The prime rent also is quite good around 4.5% in the context that we know. And the take-up is quite stable, knowing that we still have, as you've seen, a lack of good and great premises in the center of the cities where we do have this type of buildings. The completion will be quite high, but are still missing. They are mainly located, we will see that in the map, in some places of the cities and mainly on new brand markets like Quinta Nova, which is still going on. This is quite funny because in JLL, we are currently looking at our own location in Milano, and I can tell you that it's not easy to find the great building in the great location due to the fact that, well, there's a real lack of the supplies. And it's quite high, the rents are quite high also. So the office take-up, as you can see, is quite going down for the moment, but the fourth quarter is going to be better. It looks like the market of '21, which was good globally. So we do hope that in number of deals, but also in the global take-up will have quite not a bad year. And the take-up is a bit different from what we expected. What you can see is that there, you have a decrease on the rents due mainly to the fact that these buildings are not existing at all. As you can see on this map, we'll find exactly the same map that we could have seen in all the global location and cities that I've just talked about, knowing that the center is still quite high. You have some new refurbishments, which are going to be major in the center of the cities. And Milano is still a 20-minute walking city, which looks like also what is going to be expected by the companies in the next years and what is expected also by the talents of these companies. So when we've seen Germany, we've seen Italy and we had a look in France, what are the key trends for offices in France and in Europe for '25, but also for the next years. So you have 7 points to keep in mind. The first one is, as I told you at the beginning of the presentation, a return to the office employee experience. So meaning that now everyone knows that the hybrid work is a way of working, that the flex way of working in the offices is something that we know that is completely convinced and in the center of the strategy of the corporates. In the same time, we want our people to stay in the office, and we find new ways of doing it, depending on the culture of the cities. And for example, in France, giving free lunches on Friday could help you to have your people at the office at this time. It's not the way -- and it's not the same in the Northern Europe, but the culture of the cities and the culture of the countries are mainly impacted also the return to the office. But we know that it will be a global and major trend that we see in Europe, but also in the U.S. in the next years. The flight to quality. This is something very important. All the companies know now that they want to attract their people, but also they want to increase their brand and the quality of their reputation due to the best places to work. The pandemic transformed a bit the way that we are working. But what is sure is that we know that now the office is important, that the office is a way to live differently from before. And we know that we need to have a high quality of places and experience to give back to our people due to the way that they want to come back to the office. So the flight to quality is something that we have seen, and this is why I'm more stressed about the Grade C buildings in the second rings of these major cities than I am on the first ring in La Défense or in Parisian side. So the flight to quality is important. As we talked about the location, when we are talking about commercial real estate, when I started something like 30 years ago, even if I'm less than 20 today, of course, what we've seen is that the location, location, location was what I've heard 30 years ago. It comes back. In fact, we come back to the basis. We come back to what is important for the companies and the location is important for the brand, for the way to access to the building, and the transport and the common transport are major in that strategy. The fourth one will be, of course, as I told you, the impact of artificial intelligence, of the new IoT tools, of the new bus, of the new ways of working in the offices. So future trend will be to have buildings where you can have data, when you can collect them, maintain them and take decision around them. So all the artificial intelligence is going to change a bit the way that we are working, but I'm deeply convinced that even if we'll have a shock at the beginning, knowing that some non-added value work will be challenged, new offices and new ways of working will increase and will be much more present in these markets in the next months and years. The fifth one, as you can see and as we've seen just before is the lack of quality of good stock in the center of the places and the location where we are looking at them. And they are the major trend on the ESG and the sustainability for the development approach and the way that the people are going to choose their new locations. The last one will be, of course, the supply constraints of the good buildings, the good places, with the good services, and the good new way of working. So I think that I tried to give you as quick as possible the big trends that we are seeing in Europe and in France in the moment. So maybe you have some questions or maybe I will give you back the mic and the scene. Two questions. Thank you. Please.

I'm Valerie Jacob. I just have a question on your presentation on the French office market. I don't know if you can go back to the slide when you were showing the take-up?

Sorry for that. I'm coming back. You want to see this one?

Yes, that one. When you talked about that slide, you said there are lots of deals in making in the Paris region La Défense and everything. And then you said that your forecast for the year-end is 1.7 million square meters, which basically means that the last quarter is going to be the same as last year and not that big compared to historical level. So I was wondering how you reconcile these 2 things, the fact that your forecast is only 1.7 million square meters, and that you think there are lots of deals in the making. Is it because we will see Q1 '25 which is going to be larger or...

So in fact, what impacted a lot the companies were all the changes in the same time. You can change one parameter. When you are changing so many parameters, it blocks and it's freezing sometimes the decisions. So we know that -- you see, we say we have 1.3 million square meters that have already been taken. We do expect to be quite at the same level at all the last quarters of the first part of the year, because people are still expecting at the last moment in France to take the decision. So it took more time. So this is why we do think that the year was quite calm from now. But we are acting this moment where 500,000 square meters, it's a [indiscernible] 4,000 square meters, it's quite a lot. We know them. We know that they are currently in, but it will go to 1.7 million square meters. So we'll have a good 1 quarter in '25. I can't tell you about all the deals one by one even if -- for the moment, they are quite confidential, but it's quite a normal comeback to what we have expected before knowing that the last part of the year is a moment where everyone has to take the decision. So we'll have both balance between a good fourth quarter and quite a good first quarter of '25.

I'm Veronique. I wanted to ask a little bit maybe about value. So you mentioned, obviously, transaction volumes are still low. You mentioned, I think that sellers and buyers still haven't found each other. Do you feel that we could see still some value write-downs in Offices in general, but also in Paris? Or is it more the uncertainty that's prohibiting any transactions?

So firstly, the increase of the prime rents in the center of Paris is mainly due to the new quality of this building, which are better than the one which were provided before and completed. So it's, in fact, the quality of this building, which increased, of course, the rents, but also the lack of the supply which increased the rents. So we'll still be stable on that. I think that the first -- the EUR 1,000 per square meters in Paris will be the new trend that we will see, and it will be the new value that we are expecting. In some places where the supply is bigger, when you have some competition between the buildings, between very good Grade A buildings, then we can expect, in fact, the rents to be quite stable. But we do imagine that for some strategic reason of some investors, due to the vacancy in their portfolio, they will have some reaction, which won't be the one that were expected. And the major trend will be mainly on incentives or on net rent more than on the rent that we can see as the average that we see today.

And in terms of property values, do you see this increasing rent more translating in higher yields? Or do you expect yields to remain stable and, therefore, values going...

I would like to answer you properly to that question. It's not easy to do so today. We do imagine that the quality of the stock and the quality of what we've done in the last months will have a large impact on the values in the next years, but we'll have to change a lot of parameters before coming back to that new normal.

You have Jonathan Kownator. You mentioned a couple of times, or probably more, La Défense, both in the investment market, also in the rental market. In your latest conversations with potential tenants, are you seeing more appetite for the area given Paris is full? And are you also seeing, in light of some of the discussions on the investment market for Trinity, for instance, you're just seeing more appetite there? Or is it just a very burgeoning beginning?

So we have 3 major trends in La Défense. The first one is that it's a business district which is really attractive for the companies, because it has an impact on their brand, it has an impact on their environment. So La Défense has been, for the last 20 years, market where we have big take-up, lower take-up. So the cycle is quite different. So La Défense will still be La Défense and in a good business district. This is sure. And when we are talking about corporates and tenants, 2 other things are coming. The first one is that the major buildings of La Défense are divided, which was not the case 5 or 10 years ago. So it has an impact of new coming into La Défense and smaller companies, but very high-value companies. So this is a major trend that we see that was not existing before. And the second one is that we are bringing to La Défense companies which were in the first or second ring, which can afford today with a global economic net rent that you can have. It has an impact of new arrivals that we didn't know before and new industries and new segments of industries that were not in La Défense. So I'm still positive in La Défense. For brand-new buildings, I'm still positive. For buildings which are taking in consideration the services, the sustainability, and what we've seen at major trends, this building will find new tenants. Where I'm a bit more stressed about will be the Grade C buildings in La Défense which didn't embrace the new trends that are looking for, the corporate. But La Défense will be still La Défense. And when we see the prime rents that are coming, we do imagine that it means that it has a big impact. And the quality also of the supply in La Défense is much better than what we've known before on some buildings. So I'm not completely stressed, and it will, of course, have an impact on the global investment rates also that for the moment are quite nonexisting, so not easy to have majors.

I mean, of course, net effective rents have dropped quite substantially. Do you see them stabilizing or going up even? Or are they still going to stay at that kind of level of incentives, which can be, I don't know, up to 35%, I guess?

In fact, the global market that we see in the Parisian region is mainly different speeds. So as I told you, when you are looking at the center of Paris, you see very low vacancy rate and prime rents. This is one speed. The second speed will be the first ring, and it will be completely different. So we do think that in the other places of Paris, maybe it's going to be stable. In La Défense, what we can see is that we'll have these 2 speeds in the same market. The good brand new buildings, we could imagine quite higher prime rents, but quite a lot of incentives just to follow the companies and to help them for the next years. But in the same time, we will see maybe still increasing rents for great buildings, and we could imagine decreasing rents for buildings which really struggle to find new tenants or will be transformed.

Thank you very much, Marie-Laure.

Thank you.

Sorry to interrupt the Q&A, but the timing is the timing. A few words about what we have done on our portfolio in terms of repositioning. First, focus on what we did the last decade regarding portfolio transformation. And with this idea of flight to quality mentioned by Marie-Laure, we have first increased the average asset size, which allows us also to implement more significant asset management action on an asset-by-asset basis. We have increased our exposure to City Center, reduced the non-core bucket, and streamlined our portfolio in major businesses, but we will come to that in detail later. One of the driver of this transformation is, for sure, the disposal activity. You can read that we have done EUR 2.1 billion from '21, close to appraisal value, despite the hit of [ 2023 ]. Of course, this disposal activity is a selective activity. You have, on one hand, mature assets with no further value creation, such as, for example, Riverside, Toulouse, or Majoria, Montpellier, or Symbiosis School -- ICS Symbiosis School in Milan. On the other hand, you find the non-core bucket with Telecom assets, both in France and Italy, and also Liberté, Charenton, which was an old office building in a market where there is no more to come for the office and which was sold to be transformed in other products. But I will leave the floor to Alexei to give you more color about the main achievement of last day.

Thank you, Olivier, and good morning, everybody. I'm really happy to share this new agreement that we have reached with The Valesco Group for the disposal of 55% stake of the SPV that owns the future headquarter of Moncler. And by the way, as Covivio, we have a put option to dispose the residual part of the stake by end '27. As you see in the picture, this is really a state-of-the-art building that banks in line with the strategy that we have just described. 38,000 square meter building that, as you see from the map on the left, it's really in the southest part of Symbiosis, our district that we are developing. To us, this is really an important transaction, let's say, from 2 angles. First of all, it banks in line, as I said, with our strategy to have financial discipline and to achieve our targets of disposal. But we have completed, with this disposal, the exit from the southest part of the Symbiosis area that we have started, I would say, in 2021 in terms of strategy, because I'm sure you remember, last year, we disposed the school, as you see in the map. Then the SNAM Headquarter is a build to sell with already in place an agreement to dispose. And now with this last transaction for a value of EUR 200 million, in line with the appraisal, we have completed the refocus of our investment in the northest part that is more close to the City Center, more close to the transportation and, by the way, strictly connected and linked with the Scalo Porta Romana development that I will describe later, that will be a brand-new neighborhood scale development that we believe will be a reference in the city in Milan, but a reference in Europe, in our idea. Going ahead, Olivier spoke about sale, but we try to be, as Christophe said, as dynamic as we can. We have done also significant reinvestment in our development portfolio in terms of CapEx, and you can see here some selected pictures regarding the 20 deliveries that we had from 2020 until now, all buildings mostly in the CBD that can really provide a user experience so flexible with services, comfort totally in line with the new demand of offices as of today. We are talking about roughly 300,000 square meters that we have delivered at 5.5% yield on cost, almost all fully occupied at delivery. And all this dynamism in terms of management allowed also to have a more diversified tenant base. Back in 2015, our 5 top clients represented more than 50% of our revenue base. Of course, it was an heritage from our sale and leaseback approach that we had at that time. Now you see the figures are totally different. The first top clients represent less than 30%. The first 10 clients represent 41%, and we have really a very nice diversification across industries. Back to Olivier.

Thank you, Alexei. Just after having streamlined our portfolio, let's share what we have done at the product level, I would say, to tackle change caused by COVID and work-from-home trends. Okay. First, in a world where probably cap rates are stabilizing, the value will come from mainly your capacity to generate revenue and to extract revenue for your assets. Really, Asset-as-a-Service, as you have heard from Marie-Laure is, for sure, the new motto. And we come from a pure lease strategy. We were in a B2B relationship with our corporate clients. And now we have really a commercial strategy, a B2B2C strategy to our client to deliver tailor-made offer to them. But let's go to the 3 components of our offer. First, with Wellio, our operated office offer, our approach in design and user experience, and a few words about smart building. First, regarding Wellio. So you have there 3 examples of what we have delivered. The first one is a full building totally operated by Wellio for one client. It's a tailor-made offer, and Expertise France has been working there for more than 5 years, and they are very happy to be there. Silex, Lyon, a mixed asset offering flexible area. And you have in this building leases, but also 450 workstations proposed to the clients and a lot of amenities. We host there also the regional Microsoft Labs, which make a lot of people come in that building using the amenities such as auditorium, event space, meeting rooms, and so on. And Via Dante in Milan, another example of Wellio, fully operated by Wellio, 30 clients, and almost 100 occupancy rate. What is the common point of those 3 assets is in those assets, Covivio is taking care directly of the people who are living and working in the building. And that's why we have this idea of lab, because, of course, doing that, we are able to understand people's expectation. We are able to implement innovation, both on technology and usage and to test it, and also improve Covivio team's service orientation. At the end, it helps us to build this tailor-made offer, which makes the difference. Let's move to our, yes, designing user experience approach. The idea there is when we think about a project, about a refurbishment, we will visit L'Atelier this afternoon. We start from a design thinking process with the idea to put around the table all the stakeholders, clients, cities, Covivio team, architects, everybody around the table to think about the concept and what we could do in this building. And it's leading to a singular concept, a singular identity for each building, depending on the building itself, the history, the location, of course, but also the family of clients we are targeting and we come to that. Of course, the concept is also focused, as you know now, with the JLL intervention, that we are focused on services, of course, and also on health and green, especially maximizing outdoor space. The smart building is something which has come recently, I would say, in our world. And it's probably one of the main knowledge we have from the Wellio experience. Regarding the growing importance of IT and technology, we felt very early the necessity to build up a smart building team to be able to define the right level of building embedded technology and also to deliver to our clients tailor-made solutions. And those solutions are, of course, to first improve energy consumption, but also maximize the user experience. So it's mainly the connectivity, the way you access your building and all the service you can have, you can make a ticket if there is something wrong in the building, and that's it. And also, it's about the data issue. It's to collect data to secure the building data, but also to use the data to optimize the usage of the space. To sum up, what is the Covivio building now? Covivio building is the idea to create a unique experience for the people in the building and to support our clients to attract talent, which is the main goal for them, to foster community, to increase productivity and to optimize the cost through intensity of usage. Here, it's the example of Christopher mentioned the showcase L'Atelier you will visit it this afternoon. So I don't be too long on that. But nevertheless, there is something on L'Atelier. It's, of course, a question of hospitality, care, well-being. And I don't know how you feel there, but as you enter in the L'Atelier, you feel this atmosphere of hospitality inspired by residential or hotel code. It's also a matter of efficiency with a really diversity of workspace and solution for you when you want to work in this building. And it's a matter of intensity. A few words about that. The building is hosting Covivio. It's the main occupier of the building, of course, but also for other clients who are there as Lipton or [indiscernible]. And we welcome 10 external clients per week, who are coming there for meetings, seminar. They are using this room where we stand, but also meeting rooms. They can use the rooftop for a party or an event or whatever. And it's the idea to generate revenue of the building. And is this question is the more you use the building, the more you optimize the cost. And I would stress the point that for corporate now, the question mark is not anymore only the value per square meter or the rent per square meter, but it's how much you pay for one person you put in the building. And as long as you are able to create to generate additional revenue, you are able to pay the services, you are able to pay the better location for an affordable cost and exactly the trend, we feel it is the future, and that's why we are well positioned with our portfolio. I leave now the floor to Marielle -- no, sorry. I have one more for you. It's Maslo. Maslo, the example there is that we make a big work to define who are the clients we target. And especially, there was one point we highlighted that the fact that there are more women working in Levallois than men. So we put the stress on the quality of the building, I would say, a spar lounge atmosphere, a very safe place to work, very cool place to work. And it has been a great success because despite the bad timing to go to market, we have been able to reach very quickly 100% occupancy rates. Now Marielle, I'm sorry.

Okay. Thank you, Olivier. So I will just step back and give you just the overall figures, yes, on the office portfolio. So we're just stepping back a little bit and looking at the key figures on the European office portfolio. So the global valuation is EUR 7.7 billion. The occupancy rate is 95.6%. And in terms of sustainability performance, the certification ratio and the performance is 94.2%. I think what is very important is the segmentation of this portfolio. 69% of our office portfolio on a European basis is what we call core asset in city center. So really central portfolio. Key words on this one, both assets are attractive, high-quality assets located in major European capitals. And also most importantly, in fact, on that, and I will revert back to that, the potential revenue embedded, the growth potential from rental income is extremely high. Then in fact, we have the 25% core asset in major hubs. What does that mean? High-yield asset, high-quality asset with prime tenants. And then the last bucket is in the noncore. Noncore has been significantly decreased and we're only speaking now from 6% of our portfolio and we [indiscernible] strategy on that front is very clear, is to exit that bucket. Obviously, no big surprise. The goal is to go up on the core asset in city center and to streamline the core asset in major business hub and exit the noncore. So just in fact, if I deep diving a little bit on each of the segments, starting with the core asset in the city center. Key figures to keep in mind. We have a portfolio of 92 assets, occupancy extremely high, 98% yield 5%, but with strong reversal -- rental reversion potential. Certification performance 95%. We put some example on the screen. Just in fact, to illustrate, I will just pick up a few of them. [indiscernible] has been just resecured [indiscernible] we are speaking here on 8,000 square meter, and we are resecuring in fact, Covivio that front until 2031 and capturing 14% rental reversion doing that. L'Atelier, you know it, it's where we are. And then if I go to Milan, Torre Garibaldi, the main tenant which is occupying more than 50%. We know that lease end in 2028, we have a strong reversion on the rent front. Goujon, Paris, 12 years lease with LVMH at EUR 1,100 per square meter average rent on the building. And then back in Italy, Corte Italia, that building will be delivered next year. It's already pretty full pre-let on a techno financial company and a top rent for the market. If I move to the major businesses hub, key indicators on that segment, the yield. So we are speaking here about 7% yield here. Occupancy as well, pretty high, 94% with a high quality, in fact, in terms of tenancy, but also very interesting to look at is the quality of the asset as we are on the sustainability front, 97% certification rate. But on top of that, 81% with certification, which is at least at very good level. A few examples on the screen again, Dassault campus that you may know is the south of Paris. We have a lease until 2033 with them. If I go back, in fact, in the Berlin, Beagle, 25 years with a lease with Deutsche Bank. Thales is also south of Paris, 2038 lease, in fact, on the Thales on this one, going up on that asset, you may know it is right in the terminal, right it very connected to the terminal. So you have no better location right to the airport here. And then in fact, few other examples, top up, we have a pleasure to host the headquarter of Samsung in that building. If I go in the noncore. Noncore, we are only speaking here a bucket which is below EUR 500 million in terms of value. So it's less than 3% of the portfolio from. There is clear strategy on that front. Iro, there is an opportunity to make a transformation into residential. We estimate that, in fact, we can do that apply that strategy for EUR 160 million of that bucket. We have already been doing that very successfully because we already delivered close to 900 units with a presold ratio of 96% and an average margin of 8%. When we can't do that, then the strategy is very clear, is to make a straight disposal on those assets. So we have a bucket of close to EUR 300 million. And the good news on this bucket is, in fact, we increased the occupancy rate over the past few months, going up from 83% to 88%, which will obviously help us in terms of the exit strategy. In terms of key numbers, I won't go through everything, but what keep in mind, centrality, we went from 46% to 69%. And as I said, the goal is to continue to improve that significantly. On the sustainability performance, everything is in green and with strong improvement of the performance over the last 9 years. And then if you translate that into operational performance, what this is very interesting, we put here long term in terms of occupancy rate. If you look at the 15 years performance on the occupancy rate, we are 95.4% and then the last -- at the last -- the end of last quarter, we are close, in fact, to 95.6%. So very strong performance on the long-term basis in terms of occupancy. I was speaking about the strong reversion. Just looking back at 2023 and 2024, we captured 8% on the core bucket and 14% on the city center. So it's very something which is strong. And obviously, when we translate that into the like-for-like performance, since the beginning of the year, we are speaking about something over 8% and more than 5% in 2023.

Okay. So thank you, Marielle. So how to continue, I would say, this impressive performance in the future. And what are the future growth driver in our portfolio. Clearly, when we look at the growth driver, it's a question of location, reversion, of course, occupancy and development to capture, I would say, rental growth and secure future cash flow. When we look at the city center exposure, our target is by '28 to be at 80% of exposed to the city center. How we will do that? First, we concentrate our investment in our committed and managed pipeline in the city center, and we will come back more in detail to that. We will continue to do straight sale as Marielle said, but straight sale and also by joint venture to streamline our major business hubs and exit from noncore area. And in this case, you have 2 situations, the one where we go to a conversion into residential. It could be also hotel. It's not only residential or straight sale again after having done the asset management work and especially increased occupancy rates, what is the case. On the reversion, what we have achieved, you gave some figure, Marielle, but we have done on average the last 2 years plus 14%. Two examples there. The first one is plus 22%. We have signed a new lease with a top financial company in Del Case in close to here in the 8 district, and it's a 12-year lease with, I would say, pretty decent level of incentive. And we have renewed the lease of top luxury company, in fact, [indiscernible] Percier. And here also, we achieved a significant reversion with now a new headline rent with EUR 920, I would say, without CapEx for the asset in the condition where it was before the reletting -- the renewal, sorry. Also, we have potential, maybe it's a kind of forecast. So here, it's a mix of development opportunities, and it's the first part on the site. We have identified some assets in the inner city. You have some example there, Louvre, Maillot. Maillot, for example, now as you for the Parisian after a mess during several years, now it's a stabilized business district with very good connection to the public transport. We have there an opportunity to refurbish this building in the future and to reach probably rent above EUR 950 per square meter. Here, we are dealing with 13% of additional revenue and plus 70% reversion after CapEx, of course. And the other part is a question of reversion and reversion here. We are dealing with, for example, EUR 14 million additional revenue potential, 15% of reversion. One of the example is Torre Garibaldi, where we have already achieved on the last reletting we have made more than 20% reversion under the control of Alexei. The occupancy rate here is, of course, our day-to-day business is the job of the asset management team, commercialization. All the people are taking care of the clients in the building and to keep your clients is the first thing you have to do regarding occupancy. And probably here, the main challenge we have is to cope with the departure of Suez in CB21. So Marielle has stolen a large part of my argumentation on La Defense, but what I have to say, it's first that it's sure that and it was not high I'm saying that, but it's a stabilized business district and it is still the first business district in Europe. When you look at the CB21 itself is the most Parisian tower. It's really in front of La Defense, very visible. Each 14 July when there is on the TV show with the French Army, you have the plane arriving above La Defense and you see on the TV, the CB21 tower. So it's a really, really attractive location just on the metro line. And -- but we are today encouraging discussion with potential tenants already. So it illustrates also what Marielle was saying about a beginning of the recovery in this market. But the point I want to stress the more is the fact that today, the combo in terms of price and quality and location is unbeatable. The gap between CBD, as you have seen, is more than EUR 500 per square meter. So we are addressing, of course, the domestic market because it's important to stress that Suez, they didn't leave La Defense and they are staying in La Defense. So we are addressing this market in La Defense, but also other markets. And for a corporate or a company who is looking for affordable centrality with no bargain on quality, La Defense is probably the best option. So here, moving to the rental growth for redevelopment, you can see that we have a mix of city center, but a large focus on city center, 85% of our portfolio. I will not go through the different example. You mentioned Corte Italia, which are close to be delivered. We have Maslo also. And we have also Alexanderplatz, just to stress on that point that it's not only offices, it's a mixed-use project, half office and half high street retail and residential. On the major business hub, it's mainly the extension now of the Thales campus in Velizy. And this site will become the largest worldwide site for Thales with more than 5,500 employees there, 12 years at delivery. What can I say of the lease? High yield, high-quality building, high-quality tenants and long-term lease. So I think it's not so bad. Also in Paris, we have identified already some opportunities and potentially EUR 30 million potential rents and more than EUR 13 million rent in addition. You have an example there is Louvre. It's the first in the pipeline, in fact, because [indiscernible] will vacate the building by the end of '25, beginning of '26. Here, we have really a landmark building, very attractive. It's close to the La Poste Du or in the center of Paris. And what we can say is that we have already attraction on the building, and we have already contact with especially luxury brand because we could do there a very nice concept building. Now I leave the floor to Alexei to give you more color, sorry, on what could happen in Milan regarding development?

Yes. In this context of capturing rental growth, I think it's worth to spend a few words additional on Symbiosis, the district in the south of the city center that we are developing and on which we spent really a lot of effort. And now it's really visible the evolution of a dynamic and well-established business district. Everything started in terms of these new dynamics back in 2017 when the Prada Foundation was opened there. And of course, this is a big catalyst of attraction for the overall area. Then we contributed to the evolution right after in 2018 with delivering the new headquarter of Fastweb that as you can see in the map is right there after a nice square that we have delivered. And then, of course, we did the building D, we did the school. And we come to today sharing, let's say, a new strategy for us that is focusing more on the north part, going out from the Southest part. That just to be clear, it is roughly 1.4 kilometers from the metro. That is, of course, a point. And we want really to continue even further with the Scalo Porta Romana, this good success story. By the way, on Symbiosis, we have also another potential building to be developed. It's the C+E, right next from Prada area really in the heart and the most attractive part of the development. I just want to call your attention on the evolution also on the rent. The figures that we have there is really what we have in place. I remember at the time of the first negotiation with Fastweb, it was not easy to achieve a rent slightly above EUR 300 per square meter, EUR 320. And now as also we have seen from the presentation of JLL, we are way above EUR 400 per square meter. We have several transactions that testify these numbers, and there is really an upward trend on rents. And I'm sure that also with the development of Scalo of Porta Romana, this will further increase. Talking about Scalo Porta Romana, this is the map. This is an area that we acquired together with two partners being Coima and Prada back in 2020. As you may see, it will be a neighborhood scale development. We are talking of roughly 200,000 square meter of land that as you see, is divided in two because that line that you see in the middle, it is a train. There is one track for the train that will be covered with the park. In the center of the development, you see there is a huge park that will be a public park. And all around, there is the development of a mixed-use neighborhood that is residential, hotel, retail services and offices. We have highlighted in red our portion in the agreement with our partners. It is, of course, already defined the portion of each one of us. We will split the land at the completion of the approval of the master plan that is expected next year. It was quite a discussion when we acquired the area, but I think we really have one of the nicest spot of the overall development because as you see, it's right in the metro station, and it is right on the main street that goes to the city center. Just to give you an idea, from that corner that is [indiscernible] is roughly 20 minutes. We are talking about 2 kilometers. That's the distance. Our portion, as you can see, it is divided in two because of this, let's say, line that we have in the middle. Of course, as of now, we are very much focused in the north part, the one closer to the metro. This is the time line. This year, we have really worked strongly in order to organize an international architecture contest in order to have a project for the area to be available. We are still in the selection phase that will be completed by year-end or very beginning '25. In '25, we target the final approvement of the master plan. By the way, the city is quite involved, and we expect really to stick on this timing because the area hosts also the Olympic village that, by the way, it's already there. I go back on one slide. What you see in the bottom left corner is the Olympic village that will be delivered to the, let's say, the Olympic Foundation by July '25 next year. It's already fully built. We are totally in time. And after the Olympics, it will be converted into student housing. So also this will contribute to make the area more vibrant and it will host up to 1,700 students. You can see also from the slide some sketches idea to give you the quality of the development that we are doing on the north part. The figures that you see in this slide are referred to the overall Covivio portion. Of course, we are now, as I said, focused in the north part that represent roughly 60% of these figures. But all in all, for us, the development is roughly EUR 0.5 billion, and we target we are really an interesting yield in the area of 7%. So after all these have been said, just a quick summary before a break. So we have really transformed our office portfolio being more central, better quality, more certified. We have, of course, an eye always in increasing operating performance. We have shared a good track record in terms of occupancy rate and like-for-like growth. And we have also set up new targets by, let's say, 2028, we want to increase our exposure to city center in the office part to 80%. And we strive to capture the reversionary potential inside the portfolio existing that is in the area of 15% with potential revenues that we can achieve from our development pipeline that is EUR 125 million. So this is all for the office part. Now we have 10 minutes break and then we come back here. Thank you.

This very nice F&B experience that you had in the cafeteria. Let's go into detail on the hospitality part of the Covivio portfolio, and let me introduce for this reason, Vanguelis Panayotis, who is leading MKG which is a consulting firm specialized in hospitality that will introduce the market and the trends for Europe before going more into detail into the portfolio and the strategy.

Thank you. Thank you, Tug. I have a few slides, a few figures. As it is still the morning, I think we can go through some figures. So we're going to talk about the hospitality industry in Europe. I think 20 years ago, the hotel asset class was more seen as exotic. And I think that was this time where the early adopters or pioneer enter to the market like Covivio. Then it has turned to be quite intriguing, what is this asset. During the COVID was almost toxic. Everyone was saying, what's that asset, what we're going to do with. And now it's probably the most desirable asset in the room. What can we do with the hospitality industry and what are the perspective. The idea is to go first through the demand then the supply because I think they are both well correlated if you want to look forward and see what are the prospective and we will finish with the perspective. So this is a graph starting from June '21. Of course, you saw all the bad figures, which is related to the COVID period. But during that time, if we compare the top line performance of the hospitality industry in what we have called the first bucket being U.K. and France. We have 2-digit recovery. And now we are well above the performances of 2019 when Europe was around 20% increase if we compare point-to-point from 2019 because we thought it was the last high point on the performance on the market. We had a quite strong recovery and rebound for those 2 markets. Then the second bucket, which is the south of Europe. I'm sure most of you went some time to time during summertime in one of those countries or at least I hope for you. But when we look at the figures, it has been very strong, very powerful in terms of rebound because of different segment dynamic. Of course, until 2019, the corporate segment was very strong. And now the leisure has really led the rebound on this type of activity. And then the third bucket, which is more Northern Europe and Eastern Europe, including Germany, that has started its rebound with some latency compared to the other 2 buckets I've shown you, and they were just in the phases of the rebound. So they are still positive if we compare the performance '24 with 2019. So we're still back to positive figures. No, it's classy, back to basic or back to normal. If we look now at the figures year-to-date, so from January this year until October this year, we are back to normal. It's a normalization effect after the COVID, the rebound. And now all across Europe, we are still in what we used to call normal figure, except for a few markets like Spain, which was booming quite a lot, but I think there will be some balance in the coming months and years. So looking to supply, and we start with a focus on France. Don't worry I will explain the graph, but I think it was very interesting to put 2 dynamics, one side to the other. On the top, you have the demand, which is reflected by the occupancy rate and the ADR, which is the price of the hotel. And below, you have the supply. And I think this -- the data set is from 1983. So we have quite a long path in the cycle. You see that since almost 1995, the supply has been very flat, which has pushed clearly the performances of the demand because supply is under constraint for a very long period of time. And we can clearly see that there is no effect of oversupply on the market, clearly not. Even though during that time, it's not that the big guys out there, those who are the structurated guys like the chain operators, like the investors and the asset owners, they have been restructuring the market. So the small independent hotel, those who are not anymore aligned with the expectation of the market has been [indiscernible] by the player who are more [indiscernible]. What is the perspective in terms of supply? We have -- we took an analysis on the building permit in France to see if there is a lot of hotels coming -- a lot of supply coming on the market. Unfortunately, if you see there is still room to grow, '24, there was a clear decline in the number of building permits. So both we are in an undersupply situation on the market, and there is no really prospective for that much supply that is coming anytime soon. So this is structurally speaking, something that is more defensive on the value of the asset. Then again, still in France because it's a good example, one of the most mature markets across Europe. Here, we have put the other type of commercial accommodations, i.e., the camping side, the extended stay, classified rental, the village and clubs around there. And since 2005, it's flat. There is 2 million units from 2005 to 2023. So then again, we see that clearly, supply has been under constraint. Still, there is a new guy who has entered the market, which is a private rental, most known as AirBnB guys around and the others that has brought almost 1 million units on the market from 2014 to 2023. But in the meantime, the performance, the top line performance of the hotel asset has been almost 40% increase of RevPAR. So definitely, there were a lot of supply coming on the market, but still the performance was more than resilient. They were still increasing. What is interesting in that graph, it first shows that it's clearly flat, clearly undersupply and that all the new regulation, I think a few days -- a few weeks ago, there was a new regulation that has been voted in France to limit the impact of the AirBnB [indiscernible] like. So probably, this will reduce the competitive effect on this commercial accommodations market. And probably this will be extended across Europe. I'm almost sure that those regulations will be more and more trendy on the political side. If we look at the situation, we have some very detailed France. So if we look at the situations across Europe, almost the same things. So with two points. One, 2012, 2013, the change in supply and the other one '22, '23. So clearly, we see that all the market from kind of booming supply in 2013, 2012. Now it's very limited in terms of growth, almost 2% increase, while in the same time, because the cycle was not exactly the same. Australia and Germany, that was their time for booming in terms of supply for many reasons that you all know in real estate, there were like quite a good trend for growing assets in Germany. But the rest of Europe was clearly in the same situation. If we look in details about how this supply is structurated market by market, what you see it's all the blues, it's the independent supply, meaning independently owned, not branded. And all the red part is what we can call the structured players or the branded players usually back with an asset owners. So there is still a lot of rooms to come to the same level as we can see in the U.S. market, which is almost 75% of penetration rate in the market with those structured players and chain players. And it's the same in Asia. I won't mention anything about Middle East because it's very small, but if you look at Dubai, there is no much independent hotel in those kind of markets. So there is still place and path for restructuring the market from independently owned to more structured players and small units getting out of the market being replaced by midsized or big-sized units on those markets. So the perspective now, what we can expect, which is the best exercise, and I love that is recorded every year, so we can look at the video and see if we were accurate or not, happen frequently, sometimes not, but happens. Now it's the cycle on demand. If we take 2007 because that was [indiscernible] and a big cycle. So we see that during the previous cycle, the increase of the top line for the hotel, what we call the RevPAR, the revenue per available room has been almost 26% with an average year growth of 2.1%. And now COVID included. So from 2019 to 2024, we are at 20%. Good news. Probably there is still place to growth because there is a bit of inflation, but still we didn't went to what we went in the previous cycle. And we are in a more dynamic growth rate on average per year, which is almost 4%. Of course, there will be probably normalization effect on the market, but still, it shows that there is a pace to grow. Looking again in details for this year for France. The beginning of the year, I mean, the question we were asking ourself is that is there any slowdown which is behind us because the beginning of the year was minus 2.3% until mid of July or until the opening ceremony of the Olympic Games for many reasons, economic reasons, political environment reason. You remember in France, we had no government. We have new elections and everyone was staying to vote with the political instability until the 7th of July. Then the Olympic Games came. So it give a boost to the performance. And then we will ending the year with 1.1% in terms of increase or at least until October. But we have to keep in mind that last year, at the same period, it was the Rugby World Cup. So then we have a base effect to compare that is rather positive, and still we can achieve growth above that. If we look at the -- on the book, so what are already booked for the coming months and the coming weeks, we see clearly that Province, which was a big delay on the performance is showing very strong. On the same side, Paris has a very exciting end of the year because there is a reopening of Notre Dame. There is the halo effect of the Olympic Games. Many people want to be there for the celebration -- the end of the year celebrations. And still, there is last minute booking, which is more and more a trend. And I'm sure that Paris will still achieve good performance for 2025. Now if we look at what happened in the last downturn on the cycle, what we saw for the Lehman Brothers in case anything happened, but we never know. But the recovery time has been from 18 months, which was quite quick. This industry has shown to be very, very resilient. We believe that probably if there is any, probably one day it will happen that the recovery time will be even slower because if I go back until the first Gulf war, we showed that it was much longer. Now due to the yield management to the new IT systems and to have more dynamic and structured players, they have the ability to deploy very quickly and to correct very quickly the market. So probably, if it happens, it's going to be more like 9 months with a limited impact. The forecast is based on key economic indicators, GDP inflation and employment rate across Europe because it gives a good idea about the domestic demand, but also the international demand. And most of the travelers across Europe are European guys. So it's interesting to see what are the perspective. And we have shown an improvement on all those metrics in the last month. So let's say, that the dynamic remain rather positive on that. And now if we look at the perspective, then again, we are back to our 3 buckets, let's say, north of Europe where in Germany, there have been a big rebound for two reasons. First, the European Football Championship, and also they were late in the recovery. So it's normal that base effect, we compare something which is less dynamic. France is back to normalization and hopefully, will be supported by the halo effect of the Olympic Games. And then we have, again, the Southern Europe that are still booming, but probably they will be at some time in the 18 coming months back to this normalization effect. So in conclusions, the fundamental tailwinds, it's good so far. It's good on the supply side. There is no oversupply that will probably create some fragility on the market that shows so far how resilient this industry has been. There is a middle class from India, maybe one day back from China and so on. So there is still space in the demand side in terms of tourists and visitors. Strong resilience, as I have mentioned, clearly, in the last 3 decades, this is what this industry has showcased so far. There is no reason that it's going to change. And -- but it's a specific industry because you have an operator generating a cash flow and an asset and backing the yield for the owners. So it requires different skills and knowledge and expertise and experience to really manage and get the right yield. So we have some so far on the market, a good player. Covivio is clearly one of them -- being one of the first who have tackled this externalization of wall was back 2005 -- 2007, 2005. So one of the first players to do that. And nowadays, in a market that has continued to get restructured, to get the right yield, you have to go with the right partners on that because there is still a small player that is going to be structured, and you have to know which are the good guys out there in terms of operators, in terms of models to really get the most of these good fundamentals and good demand and a good situations in terms of supply on the market. That's all about, I think it is your turn guys. Questions may be? I don't have good advice for your next holiday. I can talk. Okay. Thank you. Thank you very much.

Okay, then diving a bit more in the portfolio and what we -- how we want to address this market in the future, considering these good fundamentals that has been described by Vanguelis. So a lot have been said. I would be quick on the reason why we started to invest in hospitality 20 years ago. Clearly, years after years, cycles after cycle, the intrition that we have at the beginning on this asset class is confirming and it's even overpacing. A few comments on that. The three main reasons why we like and we want to reinforce in this asset class, is clearly difference between offer and demand. I will comment a bit more just after on top of what Vanguelis has said. High yielding assets, which has passed a number of tests demonstrating that the industry is resilient and the macro trend is very strong. And third, a very flexible ownership model, and it is very unique in this asset class and very important to deliver growth and value creation. We will have a lot of examples on that. Those three reasons, we are more and more to share this reason why we want to invest in this asset class. So more and more, there are new players coming in this market and the investment market, as it has been described before, is more and more dynamic. Growing in demand, very supportive. Two kind of customer, the domestic customer, 4% average growth in the next 5 years due to what -- due to the fact that more and more people are investing more money in experience and leisure and also aging population that has more, I would say, power or money to spend in traveling. The even more important, I would say, driver for growth is coming from international customers. Historically, it was mostly from the U.S., an important part of our customer there in Paris is coming from the U.S. But now more and more with the development of Latin America, from China, India. There is a huge amount of middle class starting to come to travel. And obviously, when you want to travel and discover the world, Europe is on top of the agenda, which explains the reason why the figures that has been present there is quite predictive. It has been this kind of rhythm in the last few years and will continue to do so. It has been largely commented on the supply side. First, less appetite for investors to develop greenfield project. So more and more investors and also brand operators are focusing on transforming, transforming all hotels, transforming independent hotel rather than building. So an impact on the supply. And second, the graph was self-explaining on the impact of AirBnB. It has been a huge driver to cap a bit the performance because there's been a lot of new supply, alternative supply. But now, this is the peak. And we know that from the regulation side, this peak will start decreasing because there's lower acceptance from politics and will limit the additional competition on that. Another thing that is interesting, sometimes a lot of people believe that hospitality is linked to GDP growth and inflation. It's not at all the case. Just because the main driver is the evolution of demand globally and the international demand is the most important driver obviously in competition with GDP and inflation. But when you see during the last 10 to 15 years, the impact of development of new customers coming to Europe and mostly in the gate away cities, has explained the reason why when you see the RevPAR evolution, it has nothing to do with both GDP growth and CPI in Europe. On top of that, what is interesting is also the yield that we have been able to achieve investing in hospitality, which is first, quite high. Today, we are at 6% and second has been quite resilient because this difference in terms of 50 bps between today and before is obviously explained by the evolution of the real estate market, but it's also explained by the reason why the reason, which is the evolution of revenue that has absorbed the most important part of the yield expansion that we have seen in all the different asset classes. So that's why it's quite resilient. And when we see this kind of yield, we strongly believe that the risk premium historically paid for hospitality, given the long track record that we have seen is no longer deserve as it is, and we expect the yield premium to start decreasing starting this year. Another interesting thing that is quite unique is the ownership model. When you invest in hospitality, you can decide both ways, either the, I would say, traditional way, and this is the way we enter in this market was through lease. You have predictability, you have resiliency, low CapEx exposure, obviously, no operational exposure. And you can live with that for 20, 30 years. It has been one of the huge success of Covivio. But you can also decide to keep the full profitability of the real estate by owning the OpCo and the PropCo. And doing that, you obviously have the capacity to increase the yield. You gain the full control on the hotel and you can act more intensively on the performance and then on the value creation. And this is the story that we will explain just after in terms of next step for us. Finally, the figures here demonstrate the appetite for hospitality. When you have more and more players coming in this market, obviously, there would be long term a pressure on the price. And that's why I was speaking about impact on yield. The yield that we have seen in the last 10 years won't be the yield that we will see in hospitality for the next 10 years. Then moving to our portfolio. Some words about the description. Today, we own more than 300 hotels all over Europe, worth seeing EUR 6.4 billion. We are very diversified. That was a play historically, diversified in terms of counterparts, in terms of geography, in terms of segments, which give us a quite comprehensive knowledge on the market, the different trends of the countries and also of the hotel operators. Today, when we look at the different player in this market, we are ranking #1 in terms of number of rooms when we compare with the pure player in terms of real estate hospitality. Historically, this market has been divided in 2 parts: institutional investors, so guys like us, like Condox, like the German guys. And also, it has been also predominantly dominated by private equity that was mostly chasing for operating properties rather than the institutional shareholder investor focusing on real estate. Today, there is an evolution. There is more mix. This is the trend that we are following. And this, I would say, Panorama will for sure, evolve in the next few years. In terms of geography, we have a European exposure. We are exposed to different markets. Obviously, France, Germany has historical market, then developing in the U.K., in Southern Europe. What is important for us by choosing this diversification is that each market has its feasibilities in terms of customer base, in terms of trends. For instance, the German market is much more domestic. It helped a lot during bad times like COVID. Spanish market is much more leisure, which explains the reason why the dynamic is very positive. France and the U.K. are quite diversified. So we deliberately, we have chosen to be exposed to these different trends in order to build a model that is fairly resilient during long-term period. When it comes to invest in hospitality, obviously, we need to know and to work with the big players. We have this capacity to develop strong partnership with the main hotel operator. What that gives to us today? I would say three things. The first, credibility and bargaining power. Obviously, when you discuss with Accor and B&B and you own 50, 100, 150 hotels, you don't have access to the same kind of terms and condition that a usual investor. It's very, very efficient. Second, it gives us a perfect knowledge of the strength and the weakness of the different player. We know which kind of brands is efficient in terms of distribution. We know which kind of brands are efficient in terms of operational performance, capacity to, I would say, be straight on the cost and choosing the right operator when it comes to decide to invest in a hotel is really a strong advantage in this situation. And finally, those hotel players, they want to develop and having a partner that they know well that is credible, is very helpful also to when it comes to develop the portfolio. Today, our portfolio is divided in 2 kind of investment thesis. The first one is lease property, historical part of our business, long-term performance, positive and steady. So we work today with the main players that you see here is 62% of our portfolio. But the part that is really transforming and when we see the most of opportunities is today the operating properties, it's close to 40% of our portfolio before it was 20%. So we really believe that on screening the right asset in the right location can deliver much higher, I would say, return and yield. So that's why also when it comes to invest in this part of the portfolio, we have also recently decided to create our internal management platform. Historically, we were giving the management of the hotel on a day-to-day basis to a third-party operator. You see on the left part of the slide. Now, we have equipped ourselves to be able to directly do so and to be much more agile and proactive in the way that we manage the portfolio. Going more into detail on the first part of the portfolio, the leased is the historical part, as I said, very nice asset. I won't go that much into detail. The picture is self-explaining, working with a big hotel operator, Accor, IHG, B&B, Spanish guys, low effort rate, 57% long lease duration and excellent location. Booking location is 8.8%. So I would say, only opportunities on this portfolio, a bit of variable revenue coming from that. And the way that we are extracting value generally on this portfolio is when it comes to reposition the hotel. You have 2 ways of increasing the revenue and the return at the end of the lease. So this is the example number two. At the end of the lease, we discuss with the tenant, normally wants to stay if we correctly choose the hotel. And then if the effort rate is quite low, which is the case on average on the portfolio, we have the capacity to immediately increase the rent without any CapEx just for them to stay and to keep the business in the hotel. Or the second example, if when the hotel operator want to renew, reposition the hotel, normally, he want us to invest a bit because the cash for hotel operator is quite -- there is scarcity, I would say. And we have the capacity to invest together with him with a quite high yield on CapEx on average between 8% to 10%. It was on this example, 10%, which enabled us to have a quite nice value creation. Then on operating properties, I lead the floor to Sebastien.

So on the other side of the portfolio, the operating property that account for 38%, as mentioned by Tugdual. As he was saying, it's very well located. The average grading on booking is 9.2%. And we also have top-performing hotels at an average EBITDA 30%. We have with this operating portfolio, full exposure, as explained by either Vanguelis or Tugdual to the market growth, giving us the flexibility to choose the best operators and work with them on different assets. We will see in the coming slide, a few repositioning opportunities that we have led through the year and one to come, where we have a strong yield on CapEx above 20%. The picture is also self-explanatory and very nice asset. If I take one of the good example of the successful repositioning of the operating asset Le Meridien, Nice for those of you that know Nice, is the best location is Promenade des Anglais, so unique location. One of the best grade we have in our asset, 9.6% on tenant booking. We had an hotel of 318 rooms that we have fully renovated in 2019 and '20, and we have also expanded this renovation. We bought an office in the same building, and we created 6 family suites in the building. So total of 324 rooms and a total investment of EUR 13 million, including the F&B. We still have potential to develop something on the rooftop that will come in the coming years. But you will see the numbers here. Whilst we did that, we were under Meridian brand. So Marriott brand. We had a management contract discussing with Marriott, we switched the management contract to franchise contract, giving us a lot more opportunities in terms of sales and revenue management, so allowing us to deliver more revenue. We have also switching this management to franchise given the operational management to review our operating platform, allowing a lot of more flexibility in the operation and giving us at the end, if you see the figure on the right side of the screen, an increase in RevPAR by 95%, mainly driven by the ADR, and we have multiplied the EBITDA by more than 5, arriving at EUR 11.6 million at the end of the year. So a very successful repositioning for this asset. We are not only able to do asset management within our portfolio, we can also look at the different ownership mode, and when we have different issues, looking at specific action. A good example is when we have an underperforming hotel with a low EBITDA margin, this can happen, and it will happen. We have several opportunities and action to take. We can either change brand and operator. We can finance the CapEx to get a better return as explained by Tugdual. What we did in '22, it was a portfolio managed by Accor. We switched the portfolio to B&B, why? Because we have this expertise as explained to select the best operator and the most performing one. B&B today is having an operating model, which is top performing versus Accor in certain typology of assets, and that was the case, economic assets in secondary cities with a small-sized asset, a little bit medium size, but they are top performing. So we had the ability to invest at a 9% yield on CapEx and creating more than 15% value just by switching from the Accor managed to a lease contract. On the other side, if we have an enterprise hotel with a good revenue potential and RevPAR potential, same thing, several opportunities. We can select the best owners because the best operator, sorry, because we have this expertise, and we know exactly all the brands that are currently operating in the market to finance some of the CapEx to reposition the asset, and we can either stay with the same operator, but with a different brand or the flag. This is -- will be explained by Tugdual in the coming slide on the current operation we have with Accorinvest, where we're going to switch from a lease contract to managed contract, giving us a franchise, giving us more opportunity, as we say, to extract the value from the hotel. We will finance the repositioning. We will select the best brand within Accor or some of them will be out of the Accor world. And we are expecting a 20% -- over 20% yield on CapEx and a more than 30% value creation. So we're not only doing asset management, but we're also looking at the type of ownership model that we want to have to deliver the best growth.

Then moving to the next phase. As it has been explained, we started invested 20 years ago and we progressively understood and discovered this very nice asset class. And we have now, I feel all the knowledge to be able to, I would say, accelerate both growth and also value creation. When you see those 3 phases, there's been the first one, which is discovering the industry, discovering the hotel operator. So that is when we invested together with Accor when we start discussing and investing with B&B. And then the second phase came with the European expansion and with also the will to discover other hotel operator and other ways of investing in hospitality within this phase also the first, I would say, move in the operating properties with the belief that we can gain access to higher yield, higher potential if we control the full value chain. So now that we have done all those things, and we have been successful in building a EUR 6.4 billion portfolio with multiple of opportunities, that comes a new phase for us, a new phase of growth and expansion with the priorities that we will -- I will describe just after of increasing the size of the portfolio, increasing the exposure of Covivio to hospitality and increasing also our capacity to extract the value from the portfolio. Historically, it's what we have done. So as I said, European expansion grows with multiple of hotel operator is the main driver of the growth of the portfolio from EUR 1.4 billion to EUR 6.4 billion. Then historically, also Covivio progressively took more and more exposure to the hotel subsidiary, Covivio Hotel. We started with 23% share in Covivio Hotel, and we are now at 52.5%, and that could continue to increase. And finally, historically, that was -- hotel for Covivio was a small baby, 12% of the portfolio. Now it's 20% of the portfolio with the clear objective has been described at the beginning of having around 1/3 of the portfolio that would be hotel. If I start with extracting the value from the portfolio -- from the existing portfolio, obviously, one of the key -- a trigger event would be the closing of the deal that we have negotiated for 2 years with AccorInvest that will occur tomorrow. And as a reminder, that's a really transforming operation as we will transform from lease to management and franchise contract. So we came to the conclusion after a few years of discussion on this portfolio that those hotel where probably we'll have a lot more value if we own the OpCo and the PropCo that with this current situation with Accor, AccorInvest and Covivio. So we decided to merge that and this will give us a lot of opportunities that would be just explained after by Sebastian.

So if we look at the road map post tomorrow after the closing, we have a clear road map to come. Number one, is set up the new management of the different hotels. We are taking over good numbers of hotels. And we will be working, as Tugdual said, with other third-party operators or with our own operating platform, allowing us once again to really capture the value creation. And some of them will stay also on the Accor management, the key asset in Paris. Number two is to continue delivering the disposal plan that we had to work with on a co-investment noncore hotels, where we already have disposal secured EUR 100 million appraisal value. And number three, last but not least, we'll be executing the repositioning CapEx that will allow us to deliver the value creation that we're expecting for this asset, merging the PropCo and the OpCo. So we have identified a plan of around EUR 100 million CapEx. And as I said earlier, we are expecting over 20% in yield on CapEx and 30% value creation. One good example of this road map to come for those of you that will join the asset 2 today, you will visit the hotel is the Mercure Tour, central location in Paris by the Eiffel Tower. It's a 405 rooms property, very well located that you see by the grade, but you can see also the overall satisfaction from the customer, 7.5 because it is an updated hotel that was not renovated for years but that has a very high potential. Our objective is clearly to reposition the asset to do a full renovation of the product, rooms, F&B, optimize all the space that we have. We have a wonderful garden today that is not utilized and develop the offer. We are planning a EUR 20 million investment. And we are currently discussing with Accor. This hotel, we stay under the management of Accor, the specific brands that we will have in this property in order to be able to get the most out of the renovation, we are expecting clearly a growth in EBITDA, driven to the gross -- sorry, the gross in EBITDA driven through ADR by 40%. You will see this afternoon that you have an hotel next stop, which is the Pullman Eiffel Tower, 4 star, 400 rooms property. The RevPAR of this hotel is EUR 270. The current RevPAR of our property is below EUR 200. So you see the potential of the renovation in this particular area. That's what we're expecting on the right side, increasing the EBITDA by more than 60%, 30% here on CapEx. And of course, value creation that will be above 35%. This renovation will also include all of the technical features and our carbon trajectory in order to make sure that we follow the strategy of Covivio in this specific area.

So asset management and also acquisition. Clearly, in the acquisition agenda, our focus is to increase our Southern Europe exposure. Today, Southern Europe is around 15% of our portfolio. France is 33%. So this is where we believe we need to increase our exposure. And this is also where we have seen the best performance in our portfolio and the strong belief also is that this performance will continue to deliver higher return. In terms of offer and demand, always the same things when we look at opportunities. Southern Europe still have a lot of room to grow. Spain is more mature market, but Italy has a lot to do for new investment, for new hotel chain to come and to develop the market. It's only the starting point that we have seen during the last 2 years. So we want to increase our exposure to Southern Europe, and that would be a key area of focus. I hope that by the end of the year, we will have the opportunity to announce first acquisition there, but this is clearly the priority for the next few years. The second thing is, when it comes to, let's say, develop is also development. As I said at the beginning, obviously, development is much more constraints. But we have a historical good track record with a lot of hotel chain operator. We still have a nice pipeline. Next year, we will deliver 2 B&B hotels, one in Porto and one in Brussels, and we have a lot of other discussion with &B to continue to develop their hotel chain all over in Europe. We have also the opportunity, and we are working more and more on a regular basis with the office team to convert office into hotel. We have today 3 products that we are working together, and we are working also with some brands, 2 in Paris and 1 in Bologna, Italy. And finally, also Italy, on the nice development project of Porta Romana that has been described by Alexei. There is a potential for probably 10,000 square meter development that could be a mix of 3 or 4 towers with different kind of opportunities. Obviously, hotel chain are really starving for growth in Italy. And I'm sure that in this area, there would be a very nice project coming in the future. To conclude on this part, clearly, I hope that we have been able to share with you the attractiveness of this asset class in terms of yield, in terms of positioning and also in terms of potential. So obviously, it's a key priority for us. We benefit for a nice portfolio, very strong knowledge of the market, 20 years' experience working with all the hotel operator in all the geography. So all these ingredients are key for us to start this new phase of development, increase our exposure to hospitality and at the end, deliver growth, obviously, with the idea to achieve this target, long-term target of 1/3 of the portfolio invested in hospitality in Europe. Then I leave the floor to Katja and Daniel.

Thank you, Tugdual. So I think now we need a time machine to match the time line. Short slide with German residential, our -- one of our key asset class to 30% rate in the group. Prime portfolio, of course, needs prime fundamentals, which we can show here. So you see on the left-hand side, the trend to urbanization like more or less in all countries coming up to 84% urbanization. This is the trend in Germany and also in our regions, you see population growth, which was not the case in the forecast 10 years ago, where everybody was thinking that Germany is starving out, but now we have a strong increase expectation in Berlin with 10% on the top. Nobody knows where the people would like to live. Second topic is the offer, which is important to us. We are mainly in the big cities. You see the evolution since 2014, minus 28% in the big cities in Berlin, minus 50% decrease in offer of rental apartments and no supply inside. We are still, even in the good times with low interest yields, 100,000 new apartments lacking every year. Trend is going down and no improvement. It will even get worse. You see on the left-hand side on the bottom. The decrease of building permits, minus 30% compared to the peak, cutting by half compared to 2016, which then explains the increase of close to 10% in asking rents in Berlin, for example, 3% overall Germany and for new flats, also 7%. Strong increase in asking rents, which is a clear proof of the shortage of offer. What about private investment market, mainly own users investing in their apartments. So now good news. Interest rates are going down, stabilizing, which immediately takes to a pickup in individual mortgage lending. You see a strong pickup since a few months. And on the other hand, you have the stabilization in the prices of all class of apartments even taking up now increasing prices and new build construction was even not seeing a decrease in value. What message is this sending to private investors? So don't wait to buy because prices will not decrease anymore. And it's a proof even in a big crisis when we had a war in Europe, prices were not losing so much value. So it's a stable and good investment in your own future. Residential is a B2C business, of course, and those fundamentals drive then also the interest as in the investment class residential. We had a depressive '23, but on a year-to-year basis, now 50% increase in the last 2 quarters, and it should stay on this level. We have seen some transactions announced to the market and handing over to Katja.

Thank you. So after the macroeconomic perspective, let's have close up on to our portfolio in Germany. The residential portfolio in Germany has a value of EUR 7.5 (sic) [ 7.1] billion, which is EUR 4.5 billion in group share and consists of around 40,000 apartments. The rental yield is 4.2%, and we have made a huge shift from 2015 until now to the city of Berlin, which is now 57% of our portfolio value. So what makes Covivio different to other residential companies? First of all, 100% of our portfolio is located in metropolitan areas with more than 1 million inhabitants and 90% in cities with more 50 -- 500,000 inhabitants. We do have a unique positioning in Berlin, which is EUR 2.6 billion of our portfolio value, so 57%, like I said, and 70% of that in prime and in good locations. We do have a high reversionary potential, 45% in Berlin and 25% in average, and our portfolio is already prepared for privatization, which means EUR 2.3 billion are already divided into condominiums, EUR 1.9 million of that in the great market of Berlin with a potential step-up of 40%. Let's have a closer look on to Berlin. So Berlin has a share of EUR 4.1 billion, EUR 2.6 billion in group share. We see a like-for-like rental growth of 4.5% and the yield of 3.7%. The average rent is EUR 9.10 per square meter and per month, 45% reversionary potential. And we also see a great potential in the replacement value. As of today, the value is around EUR 3,000 per square meter. The replacement value means when you buy the same asset in the same location, you place it is EUR 5,600 per square meter. You can see 16,600 units around that, almost 1,200 commercial units already -- only small ones in the buildings and an occupancy rate that is almost 100% to 98.4%. Second big location in Germany is North Rhine-Westphalia. We have made a shift also in North Rhine-Westphalia to only the best performing locations in North Rhine-Westphalia. So meaning we do have huge parts in Duisburg, Mulheim and also in Essen and Dusseldorf. We are almost fully let. So the vacancy rate is almost nothing with 0.5% and the like-for-like rental growth of 3.5% and also here a strong reversionary potential with 20% upside and the replacement value is 100% more than what we see as of today in our book values. Aside from the hard facts, actually, let's come also to the soft side and the tenant side. We do have high client centricity and top-level services. We have been awarded 6 times in a row with the Fairest Landlord Award, 23 service center, taking care of our tenants on site and also 24/7 emergency management, which makes us very close to the tenants. And we do have strong partnerships with nonprofit organizations in Germany. So that was it from our side, but where do we stand compared to our peers? Actually, with EUR 8.4 average rent per square meter, we're 20% above the top and well-known listed peers. We do have the highest like-for-like rental growth was 4.2% compared to 3.3% in average. Net rent margin is really high with 90% and also the occupancy rate, if you say it in vacancy, it's 1%, so it's half of what the others have. So what do we have? We do have a high-quality residential portfolio. We do have experienced local teams on site taking care of the tenants, and we do see a significant revenue and growth and privatization potential. And actually, this has been also signed this year by a great contract with a joint venture partner, a French investor sharing at EUR 274 million portfolio with us in Berlin with 861 units. And we have sold it in line with our appraisal values. So that was the status as of today. What lies ahead of us? For me, it's 2 strategic -- or 4 strategic priorities, reinforce Berlin exposure to asset rotation, extract values through privatization, but also deliver a sustained plus 4% like-for-like rental growth and extend the operated real estate to residential. When it comes to the reinforcement of Berlin exposure, actually, Berlin is a quite great market. We do see young population. We do see a higher economic growth than everywhere else in Germany and a higher population growth. So our goal is to reinforce exposure to the most attractive city in Berlin. We benefit from underpriced assets in an improving environment, and we have the manage-to-green know-how, and we managed to capitalize partnerships in Germany and get some economics of scale. How do we do that? We do that through asset rotation. So the idea is to do some block sales, mostly in North Rhine-Westphalia, but also to capitalize on privatization due to our highly divided portfolio. So we do have EUR 2.3 billion of portfolios already divided, EUR 1.4 billion of that is free from any regulation, 68% of that in Berlin. So if we see the past history was EUR 300 million almost of privatization volume with an average margin of impressively 48% compared to the book value and an average square meter price of EUR 4,900. Keep in mind, the average price -- I showed you on the first slide was like EUR 2,600. And we do see a significant growth reserve in each city. Berlin has a significant growth reserve as well as Hamburg and also Dresden and Leipzig. So in total, we feel that we can extract EUR 1 billion out of the existing portfolio by privatization. So for the last 2 priorities, back to Daniel.

So #3 priority, sustainable growth of 4% over the coming years, 3 drivers: indexation. This is German regulation, evolution of [indiscernible] , we see from the past that high inflation periods are then turning out in higher indexation too, but with a certain delay and spread over time. We have the reletting and the modernization with special slides just behind. So looking on our reletting potential. So reversion achieved. So this is a comparison between old rent and new rent per apartment. You see the trend strongly increasing since '22 in Berlin, now having a new record level at 35%, which we are achieving in average for each reletting. If you turn this compared to the average portfolio rent because in the long run, we are all dead we know. So everybody has to move out one day. Then you see we have in Berlin, the potential of 47% of rent increase overall and double-digit potential in the other regions, 32% in average for Germany. So this gives a EUR 50 million rent potential to be realized over the coming years. Number three is our strong sustainability investment focus in CapEx. So a big part of this EUR 50 million group share CapEx is green CapEx. The good thing in German residential is you have an immediate yield of 5% due to regulation, midterm because of the better shape of the buildings of 10%. And combining this economic performance increase with environmental performance increase, we have a strong decrease in our CO2 emissions when we do these investments. Only a quick look on 2 examples. You see double-digit midterm yield on these 2 investments and 66% or 46% reduction of CO2 emissions achieved. Leaving sustainability. We are talking all about centrality. What is maybe lacking is hospitality in residential. So here we are on the bridge between hotels and residential operated residential apartments, service apartments. We have -- we see a clear trend, a shift in demand. People not staying for 10 years but only for 2 years, moving to some -- to city. It has to be a central location, then they need services. They don't want to take care of all these nasty things which are having to do with managing its own apartment. You need a good quality building, a benchmark building will be Alexanderplatz, downtown Berlin, 308 units to be managed by us starting in '27 and as Christophe said in the beginning, we have other operating activities to come, transformation of maybe hotels, but mainly business -- office buildings into operated residential. Before we are leaving for the Q&A session, don't miss these 3 takeaways, prime residential portfolio, strong operational performance and our key priorities: reinforce Berlin, deliver sustainable 4% growth and value extracting by privatization and hospitality approach for residential in-service apartments. Thank you, Christophe.

So conclusion. So -- well, I think a lot of things were shared during this morning. So we have what I said at the end of my presentation. So just to remind, this is main priorities we shared this morning to continue the balancing of the portfolio, this 1/3, 1/3, 1/3 is really a long-term trend. The question is not to be there tomorrow. It's just the idea that we want to increase our exposure in the long term in the hotel sector and to reduce a little bit our exposure in the office sector. That doesn't mean that office actor is a bad sector. It's just the idea to rebalance in the long term our exposure in these 3 asset class that each asset class we like in total of Covivio, more centrality, that's key in each of asset class, and that's something we want to continue. Hospitality offer. That's also what we want to do each asset class and growth potential, I have to say, in each asset class we also share. So now with Paul and with all the team, we are available for a Q&A session. So I don't know how long it will last, but we are there. Okay. First one.

Aakanksha Anand from Citi. I have 3 questions for you. I guess we can go one by one. The first one is the disposal in offices, the noncore disposals that you are aiming at, who would be the typical buyers for those noncore assets? And is there a level of discount that you have in your mind that is acceptable to you why you're looking to dispose those properties?

Okay. Just come back perhaps to valuation and question linked to that. What because that's a question also that you raised with GLL and so on, where do we stand in terms of valuation? What is your feeling today is that really in the city center? We are starting to see small increase in valuation, and we expect that will continue. In the business situation, we see continued decreasing value, but small decrease in value. We hope that next year, it will be stable value. On the peripherical asset, what is noncore for us, nobody knows exactly where all the value. So that means that to answer your question, in this part of the portfolio, we could accept another decrease in value because really, each asset is a specific case. And so we cannot give a roughly amount of discounts that you could accept. In each asset, we need to decide at a time. If we have an offer, if we want to accept it or not, but like we have done in -- I have to say, in Charenton, for example, we accept at the end, 50% decrease on the values compared to what was a value just 2 years ago. But we -- I think it was the time to do that because we consider that this value was in terms of office, we're not able to do that. And in terms of internal way to do that into resi, we are not able to have such a value. So in each case, we are looking what we can do. But the idea is really to exit for the noncore asset, I imagine in the next 2 years and the price will be the price that will have. So I will not have a clear answer on this topic.

And what kind of buyers do you think are interested in these assets?

Most of the buyers are developers, I have to say, the developers that have better ideas than us and have better hope and they consider they could do something different than us. We don't see long-term investor for that because they are really assets that need -- most of them need to be transformed in something else than office.

The second question is just on the overall office stock in Paris. What percentage of the current office stock is Grade B or C? And probably you could split it in CBD in L’Atelier Paris.

Somebody wants to answer? Olivier? I let Olivier.

There is no figure. What we can say the overall stock is 55 depending on the source, 55 to 60 million square meter. We know that the occupancy rate is reaching now 10%, probably half -- yes, probably the half of it is totally obsolete today or regarding the building quality, but moreover, the location, but that's what we can say. We don't have a specific -- we don't have yet classification guide A,B,C detailed by the broker or the surveyor who are looking at the market.

And the last one. The hotels obviously seem like quite an attractive case as you have presented. What is the risk to the hotel's case apart from the obvious COVID, war, et cetera?

I think you see it's a volatile asset class, more volatile class than the other asset class, thanks to the fact that you don't have a long lease with a fixed rent everywhere. But we have a lot of long lease in fact, also in your portfolio that Tugdual explained before. So you have 2/3 of the portfolio, which is really, in fact, secure when you have just upside mostly on the variable part of the rent. So that's something which is really important. And on the operating asset, you need to manage assets, you have all the operating risk that you can have an operating activity. But as is today and what is for me really interesting when you are looking to the long-term trends. The long-term trends during the last 30 years, I have to say, you have a growth which is above inflation in terms of RevPAR on average. So after that, yes, we have some volatile -- you could have more volatility. But what -- now it's 20 years that you are working this hospitality sector. We faced several [indiscernible] COVID was really the deepest one. But at the end, when we are looking to the rents we have on this part, on the fixed part, it was really there. So the tenants were able to pay the rent. And that's for me the most important topic. So that's why we want also to keep an important part of fixed rent in the split of the hole in the future. We are able to manage hotel. That's what Sabesitan and Tugdual were explaining before. But we want to keep an important part of stability in terms of results. That's part of the story of Covivio, but with the capacity to extract value in the future and to increase the rent at renewal. So that's what I can just share in terms of main risk, what I see is this asset class. Next one.

So we have went through a lot this morning. And I'm just curious, how would you actually fund all this? And I appreciate, obviously, you're going to sell a lot of the noncore office assets. And you'll sell a lot of the units as well. Well, I'm just curious in terms of numbers, if you could add a few on the sources and then also, where is all that going?

We give the target -- long-term target. It's not a short term, it's not '25, '26, just to be clear. During the last 10 years, as it was explained, we disposed EUR 8 billion of asset in our portfolio in total. So we will continue to do disposals. We will continue to do rotation of the portfolio. We will also continue to try to find equity when it's possible, like this year with Generali that contribute the stake of Covivio Hotel into Covivio. So there are several ways to do that, mainly through disposals, that sure, that will be the main way to do that. But we will see -- when you are looking to the equity raise of Covivio during the last 20 years, the wholesale opportunity to raise equity. So we will see how to do that. But really, it's not -- we will do that only just in terms of equity raise. If it's accretive in terms of cash flow, just to be clear also. So that's why this is the point. It's not growth for growth, really that not. But we will continue to dispose office asset, not only the noncore, we will also want to reduce the part of the businesses. That means that -- and as we will invest a lot in the city center, but we will also continue to dispose some part of the assets that are in the business. So that's the way we imagine to do that. But today, there is not a clear plan, which is written how to do that, it's more in the direction we will want to share today, a long-term direction. That's just to be clear. That means that this speed. And at the end, it is 30, 30, 30. It's good also for us. It's just the idea to have in the long term, more hotels and less office.

Okay. Yes. And I guess just coming back on that in terms of equity. I might be mistaken, but I believe your GAV discount is probably high teens, maybe mid-teens at the moment, I expect around 16% maybe. I'm just curious, sure if it's good on the cash flow side, but I'm just curious if you could tell me for what kind of assets you would do that for? Maybe on the hotel side as well. You're obviously now up to 52.5%, and you said that you wouldn't push out everyone else. And of course, that kind of makes sense because a lot of the people in that vehicle are also in calls as well. So it would kind of make sense that you don't push too much. But I'm just curious, first of all, on the Covivio level when you would do that and maybe for type of assets? And then also, yes, on the hotel side, what are the next steps there, please?

Today, as I said before, nothing is written. The direction is to increase the exposure, we will see the opportunities. So today, you see this year, we have this discussion with one shareholder that want to exchange its share in Covivio. We have done that. Today, we don't have any open discussion with any shareholders, just to be clear on that. So it's nothing on the table today. But we see that -- and we know that in the timing, things can change. We are open to that to work with other Covivio Hotel shareholders. And on Covivio today really with such discount on the GAV or on the NAV, we'll not raise equity, just to be clear.

Sure. Next question is on the flex office. I'm just curious if you see the growth there on a desk-by-desk basis or on a floor-by-floor basis with extra services.

Just to be clear, on the flex office for us, it's a way to increase the value of the building. What we call all in all an one offer for us is more important than the value offer. The idea is to put easy office building more services that add value on the rent that helps us to find tenants. So what we see today, just to give you one example, the [ Gobelins ] story that was -- Olivier was mentioning before, that one value. We just renewed a contract with a talent with plus 20% -- 27% compared to the previous one. On one example, on one contract, but it will also imagine the case if you have rent in Paris during this period. So that's one example. Just in later year, we just also changed one first client to another and is plus 20%. So that -- just some example of what we see today. As of today, really, for us, is more of, as I said, a way to increase and improve our offer. We don't want to have value everywhere. It's not the target of Covivio. The Target is to have the capacity in each of our building to give service to the client and to be able to share that on top of the end of -- in a dedicated contract.

Okay. Sure. And then in the balance of the portfolio, do you see the GAV growing as you change it to what's on the screen now? Because I guess, in some cases, if you're going to sell offices, that's obviously going to help you there. But so I'm just curious if you see the GAV as a total, that will grow as well, do you feel because you just said that you're going to buy more hotels and more German resi? Or is it just a -- the assets you don't want and the ratio will kind of sort itself out?

What is key for us is to keep our target LTV below 40%. After that, that will depend or we'll go where Google values where we will be able to dispose. So as of today, we are not planning to increase the GAV just to increase the GAV. We have really driven now -- we managed during this 2 years of crisis. We don't say that, but we have done 2 dividend shares that was something important for us to manage this period. So it was -- I think today, we are happy to have done that because that helped us a lot to stabilize the company, to stabilize the balance sheet and so on. So -- but now, the question is really for us to keep this LTV below 40% to try to reduce the net debt-to-EBITDA ratio and to increase the results per share. After that, the GAV, it will be the result of what we can do. It's not -- we don't have a target to increase the GAV to EUR 20 billion. So that's really the target we have. It is the case that means it will be through equity somewhere, but not directly I imagine with what we are today.

Okay. Sure. And the final question is on Southern Europe. You intend to buy more hotels there. And I'm just curious in terms of how competitive it is down there. If you could comment on the ability to get assets at a good price because it seems like a lot of capital is chasing assets down there. So I'm just curious in terms of timing, pricing and also, I guess, in terms of the IRR that you're going to target? And also just to get a sense if you know when the price has gone a bit too high that you will stop or -- yes.

So obviously, we are not a first buyer. So we would always have a clear look at the return, I would say, we've always been sensitive to achieve something above 10% IRR when it comes to invest in those kind of destination. It's not a secret. Spain and Italy are really out in terms of investment appetite from a lot of investors. So what makes the difference is obviously the local knowledge and the people that are on the ground. So we are lucky to have 2 people based in Madrid that know perfectly the market for more than 20 years. Historically, the leader is a former girl from a big hotel operator in Spain. And also in Italy, we also rely on the network and the [ ledge ] that we have on offices, all the network that we have with local investors. And also what is quite important is that we have more and more incoming calls from brands that are quite active in the Italian market with which we have a lot of discussion and they call us to help them site opportunity that they also source. So this is the kind of situation that we are facing. So local people being quite obviously prudent on the situation today. But probably coming back to what has been shown in terms of performance. You can obviously say, look, are you coming a bit too late after this incredible recovery in Spain. My personal feeling is that there's been in Spain, it was a cheap market, in fact, for hospitality historically. And probably when you look more into detail in Madrid, for instance, Madrid was really ranking much below Paris in terms of attractiveness. Today, Madrid and Paris are quite the same. And it's normal that the RevPAR also increased at the same kind of level in terms of attractiveness. So there's been a catch-up effect. It's for sure a more mature market, the Spanish market, and probably where we could have a lot more to do because Italy, today, in hospitality is only 5% of our portfolio, it's probably there. And I hope that we will have some good success in the next few months and years.

Thank you, Tugdual. Last one, because I think other people ask questions. So -- okay..

Marc Mozzi, Bank of America. I'm going to stick to 3 questions, despite having 15 of them. Number one, can you discuss a bit about your geographical split? Any target in mind? Because it looks like Germany will still be above 50%. Is that something you feel comfortable with?

Germany today is 40%, not 50%, so it's a group share...

I mean when you do the math on this 1/3, 1/3, 1/3, then you will end up at easily 50%.

No, that really depends where you invest. Today, we are at 40%. The target is not to increase Germany. The target is really to increase South Europe, where we like to invest today. Also, I have to say, when I'm looking to Italy in terms of office, we have this pipeline, which is really important to develop in Porta Romana and in the Symbiosis that will arrive. If we have opportunities there, we will push that. In Spain is really something where we want to go. So in total, we want really not to increase Germany. Today, 40%, I imagine the max we'll have, but we could reduce a little bit in the future. We have France, which is today 35%, we imagine to stay like that. And the rest of Europe could be also at 1/3. So this evolution could be also for the future, but it's something that really, that will also depend on opportunities as you imagine. But in the resi, we want to invest in Berlin, but we want to finance that to also disposals. So no change in terms of allocation in German resi in total. And in the hotels, as I explained, we want to invest more in Southern Europe. So that's the evolution of the mix in the coming years.

Okay, clear. And I should have started by you've got plenty of good objectives here, long-term and so on. Why not providing any financial guidance? What's prevented you to do that?

We never do that in the past. We consider that really today, we have a lot of drivers. After that, it will also depend on the evolution of the [ environment ] on a lot of topics. We really will comment on the results in February, the guidance for '25. But as you imagine, taking into account all the good news we have in the pocket today, we are really confident on the results for '24, but also the future results for '25.

Okay. And the final one is just you want to deploy your hospitality offer to residential. Can we have a bit of background on how many people are currently involved in that business? And how does that compare to 5 years ago in 2020? And what is the cost of that hospitality business? And what will be the adding cost if you move to residential?

Thank you. First of all, it's a small story for us. And now it's something that you just want to start. As Daniel said, it's something -- it's a trend -- a strong trend that we see in the resi sector to have also this co-living stuff or something like that, which is there. We have this operation in Alexanderplatz, and we have the choice to operate it directly or to find an operator. As of today, we consider that we need to study that. We have also informed some operations that are to the office that will be converted into resi, but into more operated resi. And that's the idea to have -- for example, what we call an internal startup to try to work on that. It's really very few people today, only 2, just to be clear, that are working on this side. And the -- and we will see by the end of next year, at the end of '26, if it's something that we want to develop or not, that will really depend on the first results we will have on this part. But the idea for us is to say that the hospitality is also important in resi. It seems to be -- and there is really, as also Daniel said, it's really in the corner between resi and hotels. And the question is how to manage that. We will see in the future. As of today, it's really something very, very small.

Celine Huynh from Barclays. I just have a question on hotels. So for me, one quick way to increase your exposure to hotels would be to increase your stake into Covivio Hotels. But you always said in the past that you would only do it in shares as opposed to cash. But now that things are stabilizing and rather than buying assets, you don't know, could we consider a cash offer on Covivio Hotels?

The question today is what wants to do [ look ] Covivio Hotel, it's a partnership at the end. It's a listed company, but it's a partnership between long-term investors. And what I can share with you today is that all the long-term investors that are with Covivio today are really happy as a shareholder of Covivio Hotel. And I don't see them moving either in cash or in shares in the coming year -- in the coming months. After that, it could change, but it could change. But today, that's the feeling I have because as you imagine, we have discussion with them and as of today, it's something that they -- I don't think they will change quickly. Perhaps it could change, but we -- if it's the case, we could imagine, but really, it's not something that we imagine in the short term.

Pierre from Jefferies. Two questions on my side. Sorry to stick with figures that...

Paul wants to answer something. So good news for Paul.

Can you remind us the total level of trends for CB 21? And what could be the impact on your guidance on the FFO next year? And maybe do you think that it could be relet anytime soon on the vacancy in La Défense is so high that it's complicated today to have a bet on that?

Hi Paul.

So I think it's nice question. Total level of rents for CB 21 group share for us, at lease Suez because Suez is leaving. It's EUR 20 million. Then they are leaving mid next year. We also have termination fees. So we consider that's why -- as we said in previous calls, we consider the impact for '25 should be limited on the departure of Suez, which give u's 1 year, I would say, to find tenants. And yes.

Great. The second one on German resi. What is the expected envelope of CapEx to -- that you need to spend every year in order to achieve the plus 30% reversionary potential today?

We put the graph in the presentation, basically EUR 50 million of modernization CapEx, then it's 2/3 of the CapEx of the German residential. But specifically to get this rent catch up, it's EUR 50 million per year at 5% to 10% yield.

Okay. And last one, maybe I understand that the split 1/3, 1/3, 1/3 is in terms of values. Can you give us a broad guidance on the rental breakdown because I imagine that German resi is lower yielding than offices today?

No, we don't -- it's really not what the idea of today. The idea of today is really just to give a long-term view of the split of the portfolio. So after that, you know that the yields are not the same side, you can do your calculation by yourself. But really, it's -- the idea is not to say in 2016, we will be there. It's a long-term view, as I explained. And after that, yes, we will have less rent in the resi part than in the office and the hotel, yes. You will not, but after that, we'll have a short lunch. Okay.

I will break the question on the figures, will come back on ESG. I appreciate that you started this morning's presentation with your ESG ambition. I just wanted to know, given your ambition to increase our exposure to hotels in Southern Europe, we have seen, unfortunately, recently, how climate change is affecting this region of Europe. How can you manage these conflicting targets to be more exposed to hotels in Southern Europe and also to limit your impact in the environment?

Hi, Tugdual.

Thank you for this question. Our objective is clearly to, let's say, to be in line with CRREM trajectory per country. So basically, it's very simple the way we look at new investment in, for instance, in Spain because I have in mind a very precise example. We look at the current carbon emission of the building, and we try to figure out or estimate the CapEx that is needed to align this building emission with the CRREM trajectory of Spain. So this is the way we contribute to this objective. After depending on the countries, obviously, the emissions are not the same, but this is really probably when we start looking at investment, we ask the expected price. We ask for the lease and then we ask for the consumption and the split of the consumption. This is the 3 things that we ask and obviously, this is on top of the priorities.

The climate impact is also part of the criteria when you...

Yes, yes, sure.

Today, in the investment committee, we have a specific part on the climate impact.

Vanessa from JPMorgan. Maybe a follow-up to the financing question that you got asked earlier. If -- I know you've given a 5-year strategic plan. But if we think about probably the next year, the next 2 years, how should we think about your capacity versus your capital constraints and the evolution? I know you want to be below 40%, but if you could give some color on that, that would be great.

Yes. Well, we have -- just to have in mind, we have to finance the pipeline, which is today, mostly office pipeline, which is there that we imagine we have between EUR 250 million to EUR 400 million of CapEx to spend per year in terms of pipeline in '25 and '26 in total and not on new office but also resi and hotels, what it. That's the first part of which we have. So that means that we have to imagine to have almost at minimum the same amount of disposals. That's really what we imagine to do. That means that we will continue this rotation policy that we implemented in the past. And after that, if we are able to have some more disposals, we could do more investment. But really, it's just like that, that's like we're monitoring the balance sheet today. So we have this pipeline. We want to deliver it as of today. Some assets of the pipeline are exiting the pipeline. The [ Moncler ] story was in the pipeline before, now it will be not anymore in the pipeline. It's also a way to finance it, I have to say. So that's something that we will continue to monitor. But with really the target to be below 40% LTV, we will be at the year-end. That's really for us a great achievement, thanks to the -- all what we have been able to deliver. So that is a way. That's why this evolution of the split of the portfolio will take time because we cannot do that quickly without equity or without debt. So that's something which is clear.

I have 2 questions, please. The first one is on the disposal of your Symbiosis building in Italy. If I understood it correctly, I believe that your latest guidance for the total cost of that project was very in line with the value you got for it. Is this due to the recent weakness of the office market there? And do you expect to get better margins on your rest of the projects in the pipeline from now on?

Alexei will answer.

First of all, I start from an introduction, I was not long in this description. This asset is currently development, as Christophe said, works are expected to be completed by mid-'25 and Moncler then will enter the building, start the lease and so on. As we said, the transaction has been secured at value in line with our appraisal in line with just what you said. And let's say, the main driver for the decision of the disposal is really to focus as much as possible. Our investment in the area that is quite sizable, in the northeast part, as I said, closer to the city center to the CBD. By the way, as we said, we still have one significant building to develop there that is [indiscernible] 22,000 square meter that is already authorized. But of course, we will launch as soon as we have a significant preletting. And then we have all the Scalo Porta Romana story. So this disposal, my view should it be read as, say, lack of confidence and so we really like the area. We continue to invest to develop the disposal in terms of value. It's totally aligned to our valuation, support all the cost that we have done, and we will continue to this story at the end.

And the second one is on hotels. We've had a relative weak trading update from one of the U.K. operators. I mean, I know you guys like a very specific region, and RevPAR numbers in Q4 are not great but also that weak trading update came on the back of higher costs. So given that now you are going to turn more operational in the hotel business, how are you seeing those costs evolving in your other regions? Do you think that the expected RevPAR growth in '25 will be offset by cost rises? Or do you think that you can improve your EBITDA next year?

Trading is softening all over Europe. It has been demonstrated just after. I have to say, after those 3 incredible years, it's quite normal to take a break, breathe and stabilize to start again after with regular growth due to the fundamental that we described. Discussing a bit about the cost, obviously, it has been a big challenge during this huge inflation time, the increase of cost and also the increase specifically of labor cost. Obviously, hospitality is relying a lot on, let's say, low wages. And this is where the state and the regulation has been the more requiring in terms of wage increase for low salary. So there has been specifically the case first in France, then in the U.K. and also in Germany. And for 2025, we have in our forecast some important increase in terms of wages in Germany, in the U.K. also. But as we said, the level of idea is -- has been able to absorb this increasing cost. So it's -- as you suggest, it's a point of attention for us when we -- when it comes to, let's say, to move a bit more in the operational side. But we consider we are paid for that. So that means the yield is higher. The flexibility to be, let's say, more on the ground to optimize the way the hotel is working should enable us to be able to address those kind of things.

[ Thierry Cherel, Natixis. ] Just one question on my side, maybe more for you, Paul. It's about the long-term view on the LTV. Have you discussed with S&P and other credit rating agencies about your desire to increase LTL, which they don't really like because of volatility in the same way as you are increasing the, I would say, active management with WiZiU and [indiscernible]? Could you give us some more color on that?

Yes, sure. we had discussions with them when we announced this acquisition of Generali stake and also the deal with AccorInvest, which is the way they look at it, and there is a broad report on it, saying that they expect no impact on the rating of Covivio based on the fact that actually the Accor deal is transforming variable leases into management contracts. And we -- as Christophe said, we have 2/3 of fixed leases in the hotel part. So for them, as they also accumulate the stronger, let's say, growth profile of this activity. So no impact. It's, I would say, already included in their last report.

And just to add, S&P decided to improve the stand-alone rating of Covivio Hotel during this year. So that was probably a good signal that the perception of the rating agency of the risk of this asset class is improving. So equally, it was BBB minus before, now it's BBB and with the support of Covivio, it's BBB+, but it did not change. But I think for me, the fact that S&P improve the stand-alone rating of Covivio Hotel is a very good news of the fact that they now consider this asset class less risky than other asset classes in the long term. Okay, there is a volatility in terms of results. That's sure. But thanks to the long trend, the positive long term they imagine in this asset class, I imagine that was the reason of the fact that they improved the rating despite the fact that we have more hotel under management than before with the operation with AccorInvest. So I think we are done in terms of timing of questions. We will continue the Q&A but -- directly during the lunch. Thanks a lot for attending this part of the Capital Market Day, and we'll meet after. Thanks a lot.