Eurocommercial Properties N.V. (ECMPA) Earnings Call Transcript & Summary

Good morning. My name is Ilaria Vitaloni, Investor Relations Officer, and I'm happy to be on this call with Evert Jan van Garderen, our CEO; and Roberto Fraticelli, our CFO, to present Eurocommercial's results for the year 2025. Evert Jan will talk about the acquisition of Avion Shopping in Sweden announced on Wednesday and about the operational results of the company followed by Roberto, who will discuss in more detail the financial results. We will then open the call for any questions and comments you may have.

Good morning, everyone. Thank you for joining us today. I will start with the acquisition of Avion Shopping in Umea, Sweden, and then move to our operational results for 2025. Let me start with Avion Shopping, a highly strategic acquisition for Eurocommercial. On Wednesday, we announced the acquisition of Avion Shopping in Umea for a total investment of around EUR 110 million. We expect to complete this acquisition on 31st of March 2026. The map shows where Umea is, fairly easy to reach from Stockholm by airplane, actually easier to reach than some of our other shopping centers in Sweden. Avion Shopping comprises approximately 45,000 square meters of gross lettable area, around 80 shops and restaurants, and 7 newly built large format retail boxes. Most importantly, the center benefits from a direct internal link to IKEA, which significantly enhances Avion's destination character and regional pool. It has a catchment of around 270,000 inhabitants and the city is around 130,000 inhabitants, but with a growing population. Believe it or not, Avion Shopping even attracts customers from Finland who can reach Umea by ferry. Umea is one of the Swedish fastest-growing cities. It has a young and highly educated population, driven by Umea University which has more than 40,000 students. This creates a structurally stable and recurring footfall base. The city has a dynamic and diversified economy, strong public sector employment and continued population growth. Demographic growth in Sweden has been concentrated in regional hubs like Umea and Avion is positioned directly at the heart of this growth. Within 30 minutes, the center serves approximately 50% of the catchment population. That is a very strong accessibility profile, particularly for a regional shopping destination and Avion is a dominant region of shopping destination. It is anchored by IKEA with direct internal access, which is critical. IKEA is not just a tenant, it's a structural traffic driver -- from a local retail scheme into a true regional destination. The presence of IKEA drives high, stable and recurring footfall, which in turn supports tenant sales productivity and leasing dynamics. By the way, the nearest other IKEA store is almost 400 kilometers away. Beyond IKEA, the tenant mix is attractive and diversified combining fashion, sports, lifestyle services and food and beverage. The 7 newly built retail boxes provide flexibility and adaptability to evolving retail formats, which we consider strategically important in today's retail landscape. The gallery was built in 2016 and is BREEAM Excellent certified. The retail boxes are brand new. The total asset is modern, well configured and fully aligned with our ESG strategy. In short, this is not a turnaround project. It is a high-quality, modern, dominant center with embedded growth potential. Here, you will find a map of the shopping center showing the gallery and the adjoining retail boxes and the IKEA store connected to the mall. There are 2,600 parking spaces, which we jointly own with Ingka Centers, the owner of the IKEA store of 30,000 square meters. You can see where the major brands are located. The pie chart shows a well-balanced tenant mix with the usual mostly Nordic brands and a good restaurants offer. You should not forget that this offer includes the very popular IKEA restaurant with its famous meatballs and fish dishes, which, although not part of our property improves the dwelling time of the visitors of the center. From a capital allocation perspective, this acquisition is highly disciplined. In July 2025, we disposed of the EKO megastore, part of our shopping center Samarkand in Sweden, a non-core single-tenant asset. That disposal released capital at an attractive point in the cycle. With Avion, we redeploy that capital with some additional fresh capital, of course, into a multi-anchor dominant regional center with significantly stronger long-term growth characteristics. This is asset rotation in action. We reduced single-tenant exposure and increase exposure to diversified destination-led retail. We improve portfolio quality. We enhance geographic balance and we create additional income with growth potential. With the acquisition of Avion Shopping, the country ratings will change, increasing our exposure to Sweden to 23%, reducing our exposure to France to 20%, and with the ratings to Italy and Belgium relatively stable. This transaction represents a clear step forward in strengthening and upgrading our Swedish portfolio. With this acquisition, Sweden becomes our second largest market, reinforcing our long-standing conviction in the resilience and structural attractiveness of the Nordic retail market. We operate exclusively in established resilient European economies, Italy, Sweden, France and Belgium. Across these markets, consumer recovery is underway when we look at the retail sales figures. Importantly, since 2023, online penetration has stabilized at approximately 12%. In addition, Sweden remains one of the most transparent and institutionally stable real estate markets in Europe. There is GDP growth, there is an improving household purchasing power recently boosted further with the tax incentives provided by the government, and there are also dominant centers, which continue to consolidate market share. Our portfolio consists of dominant retail destinations in resilient [indiscernible]. We operated 2 complementary formats, 5 flagship regional centers, experiential and destination-led, attracting visitors from a wide demographic area and 20 hypermarket anchor centers, essential, convenience-driven and deeply embedded in local communities. These 20 centers are the first choice retail destinations in their catchments. They benefit from strong footfall, diversified tenant mixes and high sales productivity. Avion Shopping fits perfectly in this last category. For us, it is plug-and-play. Let me now turn to our broader results review. 2025 was operationally strong. Like-for-like rental growth reached 3.4%. Rental uplift on renewals and relettings was 4.8% across 297 lease transactions. Retail sales increased by 3.4%. Spectacular key performance indicators are the reduced OCR for the portfolio down to 9.4% and the reduced vacancy down to 1%, showing a healthy property portfolio. Our collection rate stands at 99%. Footfall increased by 6.2% in flagship centers and 2.8% across the portfolio despite temporary disruption from ongoing remerchandising in some of our shopping centers. Woluwe Shopping showed an outstanding increase in footfall of 10%. Last year, retail sales in our shopping centers increased by 3.4% compared to 2024, with all 4 markets producing positive growth. Belgium performed particularly well as a result of the remerchandising at Woluwe, a process we internally refer to as the musical chairs. If we look at the various sectors, we see that most sectors performed well last year with some clear winners, which were health and beauty and hyper and supermarkets. January 2026 showed that the positive trend continues with a 6.5% retail sales growth for our portfolio. This time, Italy produced a remarkable 9.5% growth. Like-for-like rental growth was 3.4%. The growth was driven by a material portion of organic growth and by indexation, although the indexation -- in 2024 due to much lower inflation. The right-hand table shows the rental growth per country with Italy's contribution being the highest. The company has always been known for its low occupancy cost ratios, and we are, therefore, pleased to report at 9.4% occupancy cost ratio for our portfolio as per the end of December 2025. This is lower than the OCRs we reported during 2025 and is clearly the result of growing retail sales, whereas rents increased modestly. This percentage is still one of the lowest in the industry and implies that the rents are affordable and sustainable as is also confirmed by the full rent collection figures that we have again reported. Healthy OCRs will in due course, enable us to negotiate higher rents when renewals or relettings come up. Low vacancy is usually a good indicator of the quality of the properties. Over the last 5 years, we have reported vacancy rates in our property portfolio ranging between 1.2% to 1.8% and with an average of 1.5%. We are proud to report that at December 2025, we were at 1%, the lowest number reported since December 2020. We are pleased to be able to report that on 297 renewals and relettings, an average rental uplift of 4.8% was achieved on top of indexation. These lease transactions represent 40% of the minimum guaranteed rent of the portfolio. And we were able to attract new tenants with our 101 relettings, achieving a much higher uplift of 8.8% and confirm the continued strong demand from retailers to open new stores in our centers. The highest uplifts were achieved in Belgium and Italy. Over the last 12 months, the Italian leasing team signed 92 new deals, resulting in an overall rental uplift of 7.9%. 48 of these transactions were new lettings, producing an overall increased rent of 13.1%, with the highest uplift achieved in I Gigli being 16.4%. In Belgium, at Woluwe Shopping, the leasing team successfully concluded 15 lease renewals and relettings, resulting in an overall rental uplift of 5.8%. And these figures demonstrate that our prime portfolio continues to be well positioned for leasing retail space to expanding tenant base under sustainable conditions and at affordable rent levels. This slide provides an interesting overview of the sectors where we signed deals. The majority of the deals we concluded last year were in the sectors health and beauty, fashion and food and beverage, i.e., restaurants. Our merchandising mix remains balanced. The main sectors are hypermarkets, which are our anchors, recurring daily traffic. Fashion provides strong destination appeal, whereas services and food and beverage enhance dwell time and customer experience. The diversification over a number of sectors obviously limits concentration risk. This slide provides the increase in gross lettable area of the various brands in our portfolio during 2025. Strong fashion brands like Zara took 51%, whereas in the health and beauty sector, brands like Rituals and Normal and Medi-Market took 32%. We continue to attract powerful brands such as Inditex, Rituals and Primark, reinforcing the dominance of our centers. Three more Primark stores are planned, whereas Rituals is present in all our centers, except for one. We welcomed the Inditex Group last year again with a number of stores, and the group is now represented at 35 stores in our portfolio. Remerchandising has been and is a very important driver of internal growth. We completed remerchandising projects in Woluwe Shopping and Carosello. Work for 3 centers in Italy and our French center, Val Thoiry, the remerchandising projects are ongoing. Remerchandising remains a key value driver. Look at the results. At Woluwe and Carosello, the completed project delivered higher footfall, double-digit turnover growth, occupancy close to or at 100%, and a strong rental uplift. I Gigli in Florence is a prime example of proactive asset management. We are reducing the hypermarket footprint and introducing new international formats. A new full format Zara store has opened, a new Pull&Bear store has been added and the opening of Lefties, the answer of the Inditex Group to the Primark formula is scheduled for the fourth quarter of 2026. The project strengthens I Gigli's dominant position in Tuscany, enhances the customer journey it offers and expands its catchment. You can see the highlights on this slide. ESG is embedded in our strategy. What have we achieved in 2025? Scope 1 and 2 carbon emissions reduced by 40%. Scope 1, 2 and 3 carbon emissions reduced by 23%. Renewable energy reached 93% in landlord controlled areas, whereas waste to landfill declined by 7%. More importantly, we have nearly removed all gas installations in our portfolio. All assets are BREEAM certified. 83% of our assets have an EPC label A, B or C. Green financing reached almost EUR 1 billion. We continue to future-proof the core property portfolio while enhancing sustainable financing. We make a significant effort to engage with our customers in our shopping centers, hence, our good score on customer satisfaction. Obviously, we are participating in a number of independent ESG assessments, resulting in scores and awards as posted on this slide. This is not just ESG reporting, it is a competitive edge. More and more retailers and consumers demand sustainable environments and Eurocommercial is delivering. And now is the moment to hand over to Roberto to discuss our financial results.

Thank you very much, Evert Jan. Thank you, everybody. You are quite numerous today. So good. We'll see it. We'll go first to the core messages that we want to give, and that's the financial highlights. So as you see, the property investments raised with 3.8%, which is above the EUR 4 million. That's very good because that means that the investments as we will see shortly that we have done the remerchandising and the improvement of our centers actually delivered the good results. And you see that also in the increase in valuations. We also have a debt net, which is very stable, and that led to a net loan-to-value ratio of 39.8%. That's a very good improvement because it's 1.5% less compared to last year. As a consequence, of course, then the EPRA NTA also went up to EUR 42.81. You will see a slide on this, which will go much more in detail. The same is for the direct investment results. It went up to EUR 131.8 million. We'll have a slide on that with a nice bridge as you all like. That led to an increase in dividend to EUR 1.83, which is great. And I think one of the things we wanted to highlight was that actually in 2025, we basically had no increase in interest expenses. So we thought that was a very nice message for you to see. As said, if we look at the valuations, you see the increase to over EUR 4 billion. You see the valuation changes compared to last year. What's very important to highlight is that the net initial yield and the top-up yield are actually the same as last year. So that means the increase in value actually came from the increase in rental income and the ERVs. So that's very, very positive. If we go to the key metrics, you see the net debt has been stable over 2025 to EUR 1.6 billion. Interest rate hedging level is at 87%. You know that we like it when it's around the 80% and the direct investment result per share went up, as you saw with EUR 0.05. Key financial metrics, they improved. Average cost of debt stayed the same. Interest coverage improved. Net debt-to-EBITDA improved. EPRA LTV improved. The average loan maturity we'll have a special attention to that went to almost 5 years. So that's a big improvement compared to last year. The average interest rate maturity went down, but it's going to go up because, of course, we are very busy with our hedging policy. Let's see what we did this year in 2025. We were quite busy. It was almost EUR 1 billion of refinancing that we did long term. And what we basically did, we transferred all the debt into long term. So we basically paid out all the short-term debt, which gave us then a lot of space for the acquisition as we see. What we did was we started with Sweden. We did a [ EUR 555 million ] loan in Valbo, then we attacked with Nordea, another EUR 220 million was done in June. And then we went over to Italy. So we started with Fiordaliso, EUR 205 million, I Gigli and Carosello in December, EUR 270 million for I Gigli and EUR 200 million for Carosello. And we finished with Sweden where we extended the loan for an amount of SEK 600 million. So altogether, it's the almost EUR 1 billion that you see. The effect on that is on the long-term borrowings. You see how the shift has happened in the expiration dates of the loans. Basically, the main refinancing there in 2029. And we have a small refinancing in 2027, that's with ING. We love them a lot. So we think there will be no problem. I think what these 2 slides actually show the one before and this one is the strong relationship that we have with our banks. So I would really love to thank them for that because they are numerous. They are very, very cooperative, and they enabled us to do all these extensions, which we have planned. So thank you to all of them. Then if we go and see what we do with the money, that's always a very important question that you have. So as you can see, we had EUR 190 million from cash flow operating activities. Then the disposal that [ David de Jong ] mentioned, EUR 14 million. And then we had a net increase in loan of EUR 8 million. Where did this all go? It went to dividends, EUR 71 million paid. It went to capital expenditures, which as [ David de Jong ] said, we used to increase the value and the importance of our shopping centers. And little bit went to other and then it all went EUR 31 million to cash. So that's also part of the reserves that we are using to acquire Avion, as you heard. If we go then to the net loan-to-value ratio and the hedging ratio, they are where we like them to be. So hovering around the 40%. We mentioned that we expect the contribution, the net increase value related to Avion to be more or less 1.5%. The hedging ratio, as you can see also for the coming years is expected to be around 80%. So very, very stable picture. Let's go to the bridges that you like a lot. There you see the increase in EPRA NTA for the year. We started from EUR 41.79. Then, of course, we add back the direct result and the indirect result. We take away the adjustment for the deferred tax and the derivatives. Then we look at the dividend distribution and the euros that you got as dividend. And of course, there is a component for those of you who choose to take shares. We also have a nice foreign exchange movement that's related to the increase in the Swedish krona with the exchange rate with the euro. So that led at the end to the EUR 42.81. If we then go to the direct investment result, then you see you started from the EUR 127.9 million. We added the rental income. We were a bit cautious, more cautious on bad debt. You see then repair, maintenance, property expenses and service charges, there is an increase there. That's due also, of course, to remerchandising projects that we are doing and also for a little bit to a one-off positive variance that we had in France last year. The company expenses went down EUR 1.3 million, which we thought you might appreciate. The corporate income tax is negative for EUR 1.7 million, but that's also related to a one-off positive we had in Sweden in 2024, and that leads to the EUR 131.8 million that we have today. Positive there is -- what's the story? I mean, positive increase in earnings per share, positive increase in dividend. And I think the core message that we want to give with this slide is that we are extremely, extremely thankful to all employees because they've done a fantastic job. They really put a lot of effort in this. So thank you for that. Then we go to the guidance. The guidance, we said it will range between EUR 245 million and EUR 250 million. We know it's cautious, but we also look at the current situation today with on several scenarios. So we do think it's a good guidance for now. And then last but not least, the financial calendar. That's where we hope to see you again. We have the publication of the annual report on the 17th of April, then first quarter results, Annual General Meeting, H1 and then the third quarter results. And on that note, let's hand back to the operator.

[Operator Instructions] The first question comes from Steven Boumans, ABN AMRO. Steven, go ahead.

So I have 2 parts of questions, one on the acquisition and one on the possibilities for further M&A. To start with the first, some questions on the acquisition. So one, what is the annualized EPS accretion that you derive from the deal? 2, what is the current occupancy? 3, can you discuss the competitive landscape in Umea, if I pronounced it correctly. And last, can you -- do you consider selling the big boxes given you disposed some big boxes elsewhere before?

Thank you, Steven. Let's say, on the acquisition, obviously, we are not the owner yet. We hope to close the deal the end of March. And in terms of the annualized accretiveness, I mean, there is certainly an accretiveness there. And we also published a yield we would try to achieve. But for 2026, there's only a partial contribution. So in that respect, I cannot give you a figure, but obviously, it's accretive. In terms of the occupancy, there is some vacancy in the shopping center, but that's around just close to 5%, which we think is an opportunity. So that's actually also why we have to focus on in particularly with our teams, and we have already quite some good ideas of what we can do to advance the return on this investment. But obviously, that's something we will report further on later in the year once we are the owner. And of course, once we also can really talk to potential tenants, et cetera, et cetera, this has been just been announced. So it's still early stage. Indeed, there are boxes in Sweden, which we have sold -- sorry, 1 box in Samarkand. We have the possibility to sell boxes, actually 4 in a shopping center in Kristianstad. That has been -- that process has started, but we have not yet finished it, but there is sufficient demand. We'll see how we how we proceed with that later in the year. And of course, technically, you could take a similar view here with Avion Shopping where we also have boxes which are separate from the mall, the gallery. In that respect, slightly different from the other situations because these boxes are actually, as you saw on one of the maps that are connected to the gallery, not that you can walk through the gallery and then achieve or get into the boxes, you need to go outside. But in technically, we could also have a look there to maybe dispose these. But for now, I think these boxes really add to the strength of the center. So that's probably more remote idea. Roberto, do you have anything to add to it?

No, no, I think he also spoke competitiveness...

The competitiveness. Yes, yes. Let's say, this is the only shopping center in Umea. There is a city center, which also has some nice retail, but that's high street. And then there are basically, you could say, 2 zones where there's also retail. One is a box zone where there's an ICA hypermarket. And then further out, there is another zone where you have a [indiscernible]. So do-it-yourself stores and some car dealers, so there's also some retail there. And that is a quite poor zone in another part of the city. But this is really the only shopping center. And you will not be surprised to hear that, obviously, Umea, in wintertime is -- can be quite cold there. So people prefer to shop in a covered and nice environment and mall. So that's one of the big attractions of course. Does that cover your questions, Steven?

Absolutely, absolutely. Very clear. And if I may, one other set of questions on the potential of more M&A. So can we expect more deals like this in '26? Maybe to provide more color, are you today in any other due diligence processes? And how does that number compare to, let's say, a year ago? Maybe also what's the maximum LTV that you are comfortable with? And would you also consider similar deals to do that in shares, so with an equity raise? So maybe some color on those questions, please.

Yes. No, no. Thank you, Steven. Well, would we be in due diligence then I would probably not be allowed to say anything about that. But no, I think this is clearly for us a very important step because we have been quite active in terms of monitoring the markets. We looked at basically all the transactions, which you have seen in our for four markets. We looked at [Technical Difficulty] and this was actually -- this transaction was not on the market at all. It's an off-market deal. So we're very pleased that we could enter into a transaction with a very important and major group like Ingka who obviously is a well-known property owner themselves around the world so that was very nice that we could do this deal and it really fits to our plans. But we will not stop here, Steven. Obviously we'll go on with seeing what is available in the market. We have some possibility, as we just discussed earlier on the boxes to sell and maybe we can do some more rotation -- and yes, which market that will be a question mark because I think in general, you could say that all our markets are opening up, particularly also Belgium. We have seen a number of transactions in Italy and Sweden. I think there we see also much more activity. So that's the plan. But in terms of where we will then be raising equity or doing it just with our existing resources. Obviously, it depends on the size of transactions. But for now, I think we're very happy and trying to first get Avion Shopping on both end of March and then start with all the works and the plans we have.

And Steven, of course, next week there will be meeting. So we'll come back with 73 proposals of merger and 84,000 acquisitions and sales. So that's going to be very interesting.

Maybe only on the LTV, to which level are you willing to go?

Yes. Well, let's say, acquisition, if we then arrive at April and close the deal Obviously, it is an estimate because it depends a bit on an exchange rate for Swedish krona, et cetera, where we are exactly with our collection in rent and so on, but we expect this to be 1.5%, 1.6% uplift in LTV ratio [Foreign Language]. So that's, of course, still very acceptable because we then stay below 42%. We, of course, still have 40% as a sort of a long-term target, but are not getting nervous if that's a little bit higher. But we will cautiously follow, of course, the debt levels. And again, in June, we'll see more about valuations. But we feel comfortable with this acquisition the way we it's funded.

And also, Steven if we look at the net, then EPRA yields, we see they haven't moved in our case, but the market, of course, has more -- is more in a positive tone. So there could be some nice valuation coming up in this year, for example.

The next question comes from Stephane Afonso from Jefferies.

I will have them one by one. So first, I understand that you refinanced nearly 60% of your debt this year, with no impact on your cost of debt. So should we assume that your cost of debt will remain broadly stable this year and going forward? So in other words, is the 3.2% your marginal cost of debt?

Well, that's a very good question, Stephane. Let's say the reality is of course we did these transactions. The last ones are the [ EUR 525 million]. We did them in December and we draw down the facilities in January. So, we will see, of course, the effect of these drawdowns in 2026. What you will see is, of course, a change from short-term line into long-term line. So there will be an increase, let's say, in the -- because we will hedge them with interest rate swaps. You will see a slight increase in the interest expenses. What's very nice to say is that the margins are clearly in line with the margins that we had before. So on that side, we are looking at a stable picture. Looking ahead for the year, we are also taking a good look at the curve. There is a lot of flexibility in this financing. So we have a lot of time when we can fix the interest rate for the amounts and the length that we like. So we are monitoring the interest rate curve. So far, it looks okay. It's been a little bit of a hike as you've seen in the past weak due to certain circumstances in Iran. So but we're monitoring. So we do expect a little bit increase, but not that, not too much, but we will see.

Okay. And one question on indexation. So given that we are already in March, you should have a pretty good visibility on indexation. So what level should we expect for this year?

I think, Stephane, we all know that the indexation will be lower again than last year. If we look at France, it's basically 0. And for Italy, we have 1.1 indexation, and it was 0.9 for Sweden. Belgium, let's say, that's a monthly indexation, and we have in our budget sort of an assumption 1.5% to 2%. So the indexation for '26, I think that's probably the case for all our peers will be quite modest. And these are the numbers which we have to apply, and we are applying or we have already used the percentages in the billing for the first quarter, and Italy will use that for the second quarter, that percentage.

Okay. That's clear. And just maybe one clarification on the acquisition yield of the Avion. I think it's 8%. Are we talking about gross yield, net yield?

Let's say this is obviously a yield, which, I mean, the text hopefully was clear -- after we have done some further work on the tenancy mix and so on, but it's a principal unleveraged yield. It is unlevered, it's a net.

Okay. And just to be clear, does the guidance includes the acquisition?

Well, let's say, the guidance we published yesterday evening, the day before we did the acquisition announcement, and we have included some. Obviously, we did a bit of scenario analysis effect of the acquisition in our guidance. But I repeat also given what happened over the last let's say, 10 days or we may even less, 7 days. Obviously, that puts us a bit, let's say, conservative cautious mode. So what -- let's say, for example, I mean, energy prices rises up and so on, that will not so much affect us in the business because we no longer have or hardly have any gas anymore in our centers, our service charges, where energy is a component, most of the energy we produce ourselves or we do. For example, Sweden, we have a number of also in Avion geothermatical way of getting energy. But it is probably more -- what will it do to consumers and so on. So therefore, we have been cautious.

Yes, I understand the cautiousness, but the beauty of the business model is that you have a strong inertia in your -- thanks to the lease duration. So my question is just simple. Is the acquisition is embedded in the guidance?

Yes, let's say, but it is, of course, it's only kicking in, hopefully, when we close in April. And then, of course, in order to achieve the 8%, we need to do some work as well. So we have to finance it. I mean we were financed with short-term lines, we charge a cheaper than long term. So we've just taken a cautious stance and maybe we can improve the guidance already later in the year. But yes, I mean, I think that's probably where we are today, which is still a guidance up against the actuals we reported. But we understand some comments that maybe said it's a bit shy. I saw the word shy. Okay, let's be shy then.

Okay. Okay. And maybe one last question. Could you elaborate a bit more on your acquisition strategy going forward? So when I look at the Swedish deal, it appears that you had to push further north to secure an acquisition. So should we read that as a sign that assets available at similar pricing and quality are to find at the moment? Or if not, in your view, roughly how many assets that are currently in active sales process in Europe could potentially fit your investment criteria?

No. I mean, let's say Umea, it's not that -- Umea is not on the map or it's so north. This is a very nice [Technical Difficulty] center. And as I said in my speech, it's -- for us, it's also plug-and-play. Ingka has a number of shopping centers in Sweden and this is a strong one, and it happens to be a bit further north, but it's still technically, you could say, in the middle of Sweden. So no, there's not sort of that you say, oh, you bought something in there, there was a discount because of the location. I mean we believe in the location. And it has its merits. It has also a proven track record. I mean it's been there for 10 years. And now with the boxes added to it, it will even grow further. I mean the highest footfall here in Swedish portfolio, well over [ 4 million ]. So I think that's certainly not something to ignore. In terms of the other centers I think in Sweden, there could be any city. There are more cities of this size where there are still nice shopping centers. So I would not read anything into the location of Umea in this case.

Actually, Stephane, I mean, the amount of centers which could come on the market is -- that could be of interest to us is larger, because we've seen the yields going down in several countries. So that means that people were once we're not even thinking of putting their assets on the market, they now see that the prices have increased. So there -- it's a nicer market to start looking at options. And the transactions that we do, they're usually off market. So there's plenty of opportunities. We know the assets that we want. And sometimes you need to be patient and wait for the right moment to be able to strike.

The next question comes from Valerie Jacob from Bernstein. Valerie, go ahead.

I just have a follow-up question on the Avion acquisition. I mean you say in the press release and you've said that in order to get to 8%, you're going to have to do some work and spend some money. If I look at recent acquisitions by your peers in your market in France or in Italy, it seems that there was some acquisition that were already yielding 8% or both as a sort of net initial yield. So I'm just curious to understand why you think that this acquisition, which seems to have a lower yield is better suited to your portfolio than other potential acquisition at above 8% in some other countries? Is it the choice because you prefer Sweden as a market? Or is there another reason? If you could elaborate on that.

Yes. Thank you, Valerie. Thank you for your question. No, a very good question. In one word, is quality. With the transactions we've seen in our other markets, I think you're still looking at slightly different type of assets with also another risk profile, and in some cases, also with things and we always say, if there is a possibility to acquire maybe at a higher yield than there's probably something you need to fix. Otherwise, there is not this high yield. And then the question we ask ourselves is, are we the party to be able to fix it. And in a number of cases, we said that's not for us and maybe others can do that, but not for us. And I think the fundamentals here are for us very good. We like Sweden. I mean the macro at the moment is also quite good compared to maybe some of our other countries we're active in. And overall, that brought us to the decision to proceed. And again, this property was not on the market, it's really -- and we are quite proud that we could do this deal with Ingka Centers because, basically, they asked themselves a question, who can be a good neighbor for us in Umea? And your commercial with our reputation and expertise, they said, let's go ahead because, obviously, we are neighbors and the IKEA store is owned by Ingka Centers. And it's therefore a long-term partnership, which we are very excited about.

And it's a nice asset at 10 years. The amount of CapEx that we proceed is not even related to the amount of CapEx that you know for the other transactions.

Okay. And just maybe a clarification on your guidance because I mean you've said that the acquisition is included in the guidance. The guidance is at midpoint sort of 1% growth. So if we exclude the acquisition, then that will mean that without the acquisition, your cash flow will have gone down, this year? I mean, is it the right way to see it? Or am I missing something?

No, let's say, it's not going down, but we just discussed the indexation, which obviously is hardly existing in 2026. We're not alone there. That's for all our peers, I think the case. We do have also to take into account that our interest expenses will tick up a bit because of the long-term financing instead of short term. And so we've just built in a buffer, I would say, in order to get to this guidance. And let's say, every -- once the Avion Shopping is on board, and we can really that we need some time maybe to work on the tenancy mix and so on. So, it's really that conservative approach, which we have taken and maybe in 3 months' time or 6 months we can improve and say, we can really enjoy the maximum from this acquisition. But for now, this is where we came up with and feel comfortable with, but look what happened in the world. I mean it's -- we're sailing a little bit in the mist, I must say.

The next question comes from Alex Kolsteren from Van Lanschot Kempen. Alex, go ahead.

I have a question on your guidance, I think I'll leave aside has been discussed plenty. On the remerchandising projects that's going on, what's the rent loss in 2026?

Roberto, maybe...

Yes, let's say it's a very good question. The reality is it really depends on how you calculate it because, of course, you have the loss, let's say, that you have realized on the previous rent. You also have the loss that you realized, let's say, if you consider the new rent. Let's say, more or less, we will be around EUR 1.5 million. That's a bit of an estimation. The thing is that, of course, when you do the calculations, you do not know exactly when the units are going to be relet. So there's a lot of uncertainty related also to the works that the tenants perform. So that's a bit more or less the amount that we can think of. Does that give you a fair idea or?

Yes. Yes, that's perfect. And then, yes, so the fact that you bought in Sweden last year was a bit of a lesser performing markets versus Italy or Belgium. Is this sort of a vote of confidence from your side also that the operations should improve further in that country?

Sorry, you were fading slightly away. Alex, could you repeat your question?

Yes, yes, that's no problem. Yes. So the fact that you bought in Sweden over the last year or so, it's been more a bit of a weaker performing market if you compare it to Italy or Belgium. So the fact that you buy here, should I see that as a vote of confidence from your side that you expect operations to improve there?

Yes, yes, yes. No, sure, Alex. We are -- now we're quite optimistic about Sweden at the moment. If you look back, certainly in the first quarter, second quarter, Sweden was okay, but not so spectacular, but we have seen now that the sales and then also footfall, et cetera, is all developing quite positively. I think particularly the macro environment helped a lot. As I said in my speech, the government is at the moment actually doing a lot to be nice to the population because there are elections coming up in Sweden. So there are some tax breaks which have been already granted to individuals, whether that's savings tax or income tax. And as from the 1st of April, the VAT on groceries, which is 12% at the moment, will go down to 6%. So there's a lot of stimulus for consumption, which obviously is something we like. And last but not least, interest rates in Sweden have come down even more rapidly and actually the official rate at 1.75% at the moment of the Riksbank is helping, of course, again, the spending is still many Swedish families, they have mortgage loans at a floating rate. So that helps them in their wallet. And there's even -- I don't know, but maybe even talk about the Riksbank making another move downwards. So let's see how that develops. But -- and next to that, obviously, in terms of the country as a whole, I mean, they are exporting country. They have quite a strong defensive sector as well, which currently is quite a lot of focus on. So no, we like Sweden where it is today. And yes, also more local elements in this case. We're talking here about a city with a growing population. The low competition we have, the density is low in the area in Umea. So no, it all ticks many boxes, Alex.

All right, good to hear. Then just one final one to confirm. So the 8% yield that you wrote down, that's a net yield? And is it in line with EPRA practices?

Yes. Let's say, it's -- well, it is basically -- so it's unleveraged and it's a net yield, which we will achieve if we do a few more steps, but it is, let's say, the initial yield of this investment is obviously not far away from this 8%, but we need to do some more work on the tenancy mix, which we think we can achieve. But that will take some time.

The next question comes from Benjamin Legrand from Kepler Cheuvreux.

I just have a question again regarding the acquisition and actually bouncing back on the yield you are mentioning. The current portfolio is yielding at a much lower EPRA Net initial yield, around 5.7%. I was just wondering what was the difference with this property? Obviously, it's more north, but you seem to be very confident about the location, and it's been built very, very recently. So I was expecting -- I mean, I'm just wondering why there is such a difference. And also the second question related to this is, do you expect some positive and immediate revaluation coming from it in H1 2026?

Thank you, Benjamin. Yes, let's say, we reported for Sweden, EPRA net initial yield of 5.7% and a top-up yield of 5.9%. Let's say, that's lower than what we have reported here. But again, there are some things to be done in this shopping center. I don't think that this transaction will, as such lead to any changes really in the valuation of our other [indiscernible]. Maybe in due course, actually, as Roberto said, our impression is that [ failures ] also in Sweden are actually maybe thinking about some compression. But no, let's say, it's not that there is something wrong with the center. To the contrary, it has very good fundamentals. But there's also a little bit of vacancy, which I talked about, which is there. And obviously, if we improve the occupancy, then we can create further value.

And there's also, of course, there are numbers, Benjamin. There's also the feeling when you had a little bit of spice and salt, it makes it nicer. And so we think that's what -- those are the ingredients that we think we can put in. So if you look at the different yields, then because we saw the potential. So you correctly said if the average in Sweden is 5.7%, should we expect Avion to hover around those things with those values. We do believe that in the medium run, after we've done our things that should be -- make a good expectation.

The next question comes from Lynn Hautekeete from KBC. Lynn, go ahead.

I have a question remaining on the acquisition in Sweden. Just wondering how long it took you to finalize this deal? And also if there is any possibility of an extension on this asset further down the line to create more value?

The possibility of extending, there is a bit of, let's say, if you look at the map, obviously, the boxes have just been built. And actually, the last one is being finalized and then also the tenant will fit out there. There's still a little bit of land left where there can also be maybe another restaurant offer or so on. So there can be put some more real estate only, but overall, I think it's pretty well served and the building itself also allows us to be creative and improve maybe the tenancy mix further. So let's say, it's not that we can build a lot of more boxes on the site, Lynn. But I think overall, what it offers in terms of space, it's good stuff. And of course, within the gallery, which is also it's -- okay, it's 10 years old, but you could say still very modern, let alone the brand-new buildings. It gives us a good opportunity to do some further value creation. In terms of the timing, have we talked a lot. Yes, we have, of course, been talking a lot over quite some time to get to where we are today. As I said before, Ingka centers is a very reputable organization with real estate all around the world, of course, IKEA is a huge group. So they know exactly what they're doing. And so also yes, as I said before, we're very proud that we enter into a transaction with them. But that obviously needs also just trust and you have to obviously get step by step for them, it's part of their strategy, but they also have to take into account the interest of IKEA as a retail group. There are many, many IKEA colleagues involved. So yes, that means that the process needs time. But no, we're very happy with the end result and again, that both parties could do it in this good spirit with a lot of trust because I said before, we are in partnership with neighbors, and that's for the long term.

Okay, clear. And then last question is actually on your rent collection. So I noticed it improved versus the third quarter. Third quarter was 97%, actually, now it went 99%. And the driver behind that is France. So just wondering what happened there, if you can give some color.

Rent collection in France, let's say, was hovering between the 96%, 97%. And so that's a bit where we are. Of course, as you know, Lynn the contracts in France are quite rigid. So there's not a lot that you can do. But we think the rent collection is actually progressing quite well. I mean it is in line with the rent collection that we also showed in the past. What we do just to be extra sure, let's say, we took some extra bad debt that's just in case. But from the information that we have from our French colleagues, let's say, the rent collection should be to proceed a little bit as normal. We have some of the old tenants, which are difficult cases, but we've known them all along. So those are -- this is a bit the situation.

Yes. And Lynn, there is always also an effect typically for France that when there is a tenant who is in financial trouble or even insolvent, then what we can do in France, you can still send your invoice, bill them and you don't lose the VAT which in other countries where you send an invoice, you already have to pay the VAT. And then if the tenant is not paying, then to recover the VAT it takes quite some time. So therefore, the collection because what is it really, you compare what you have invoiced against what you have collected. So if you are free to with invoicing even if a tenant is financially in trouble, then you create your own gap. You see what I mean?

I see what you mean, that makes a lot of sense on the VAT.

[Operator Instructions] And with that, I will now turn the call back to Evert Jan van Garderen, for any closing remarks.

Okay. Well, thank you so much, everybody asking questions, but certainly also everybody listening to the call. Hopefully, it gave some further color on Eurocommercial, its results and where we are today. I would like to thank everybody, including also all the colleagues who have prepared this presentation and all the material behind it. And hopefully, we see some of you who were in the call, particularly analysts in the near future, but also investors when we're on the road to talk further about the results. For now, I wish everybody a nice afternoon. We're just behind 12:00 and a wonderful weekend. Thank you so much.

Thank you.