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

Good morning, everyone, and welcome to Eurocommercial Properties Half Year Results Conference Call. My name is Ilaria Vitaloni, and I am Investor Relations Officer at Eurocommercial. I'm joined today by our CEO, Evert Jan van Garderen; and our CFO, Roberto Fraticelli, who will take you through the key highlights of our half year results and provide an update on the business. With that, I'm very pleased to hand over to Evert Jan to start the presentation. Evert Jan, over to you.

Thank you, Ilaria. Good morning, everyone, and welcome to Eurocommercial Properties Half Year Results for 2026, and thank you for joining us. On the slide, we posted our 35 years anniversary because we were founded in 1991. And that's a useful moment to reflect on what has created over time, but also to focus, of course, on what we hope and will create in terms of value. During the first half year of 2026, our centers continued to attract more visitors, our retailers delivered good sales and occupancy remained exceptionally high. And that was all, of course, also a result of our active leasing and asset management initiatives. Today, Roberto and I will explain how these operational and financial developments fit together and why we believe they provide a sound platform for continued growth. I will begin with the operational review, and Roberto will then take you through the financial review. Of course, after our presentations, we will open the line for questions. I'll start with a brief reminder of who we are, where we operate and the long-term consistency of our approach. Eurocommercial was founded and listed in Amsterdam in 1991. And actually, we will celebrate that soon with ringing the gong or the bell, as we say in Amsterdam, later in -- at the end of October because it was the 1st of November when we were listed. And from the outset, the company has pursued a selective long-term investment approach, with our first shopping center acquisition in France, Les Atlantes, followed by Curno in Italy in 1994, which, by the way, we still own, a nice shopping center, in Bergamo. But we then also entered in Sweden with Burlov Centre near Malmö, followed by Belgium in 2018 with Woluwe Shopping. And in April this year, Avion Shopping in Umea became our latest acquisition. Today the portfolio comprises 25 shopping centers across Belgium, France, Italy and Sweden, with a value of approximately EUR 4.2 billion. Although the markets and consumer preferences have changed considerably over 35 years, the core of the model has not. Own high-quality retail destinations, stay close to retailers, and customers invest where the return is attractive, and manage the assets actively for income growth. Our portfolio spans 2 complementary formats. At the one end, we have the convenience-led suburban assets anchored by grocery stores and essential services. These centers obviously benefit from frequent visits and serve the everyday needs of our local communities. But on the other hand, we have the destination flagship assets where fresh and premium and international brands, leisure, entertainment create a broader day-out experience. And between those 2 ends of the spectrum, there are the categories you would expect like health and beauty, personal care, food and beverage, services and social experiences. These categories are important because they support the recurring visit and make the centers relevant for more than a single purchase. Our strategy connects investment selection, operational execution, financial discipline and value creation. First, the investment strategy. We focus on prime shopping centers in strong European markets with dominant catchments, solid economic fundamentals and long-term growth potential. Selectivity is essential. We do not seek growth for the sake of growth. We look for assets where the quality is really important and where we can see an opportunity to improve the operations. Secondly, our operational strategy. We actively manage the centers through leasing data-driven insight and targeted asset management. This is where our local teams create value, improving the tenant mix, reconfiguring space, introducing new brands and ensuring that each center remains relevant to its customers. Third, our financial strategy, which is a solid and robust strategy. Now Roberto will talk about it more in his presentation. And then finally, that's probably where it is all about, it's value creation. The first 3 pillars must translate into outcomes for shareholders. Rental and earnings growth, attractive returns from capital expenditure, better portfolio quality and disciplined capital recycling. Yes, Italy, we can't escape from Italy because it's currently our star. And not only because it is a star, it also represents 44% of the portfolio and continues to deliver strong operational performance. Importantly, 75% of the portfolio is rated A by analysts from Green Street, reflecting the quality and competitive position of these assets. The figures on this slide show how our remerchandising programs have supported performance at the 3 Italian flagships: Fiordaliso, Carosello and I Gigli, evidenced by the important KPIs uplift on renewals and relettings, rental growth above indexation, and retail sales. These results demonstrate that remerchandising is not a cosmetic exercise. It is a disciplined operating tool. By improving the offer, creating the right space, introducing retailers that customers want, we can strengthen trading, improve rental [ tension ] and enhance the long-term quality of the asset. The remerchandising pipeline, which is shown here, is moving from construction and temporary disruption into income generation. And we see here the examples of CremonaPo with a new Primark store. But also at Collestrada, a new Primark store. And in I Gigli, we will have Lefties and Lidl will opening in October, bringing the present program in that shopping center also close to completion. In France, at Val Thoiry, we're also remerchandising and redevelopment that will take some more years, but it also includes the opening of a Primark store. And during these projects, affected units can be temporary non-income-producing. That has a limitation in terms of rental growth in 2025 and 2026. But as these stores open and the areas return to full income operation, we expect the income contribution to become increasingly visible, with the full effect of the current major projects expected in 2027. If we look at completed projects like Woluwe Shopping and Carosello, we have put here on this slide some amounts, and they speak for themselves because after completion, we can really measure the returns, which are nice double-digit figures. If we look at nearly completed initiatives, which are shown here, they also deliver the projected presented results. You can see what we have invested in I Gigli Collestrada and CremonaPo and what the expected rental uplifts are. Obviously, the amounts and, therefore, returns, they vary. But it's also important to stress that over the next years, it'll become even more clear what the returns will be. The spin-off of the remerchandising project will also be noted in the medium and long term. The important point is not simply that each project is attractive in isolation. Together, they demonstrate a repeatable model. We identify an opportunity in the merchandising mix, design a practical reconfiguration, secure the right retailers, manage the temporary disruption, and then capture the benefit through higher productivity and rental income. As these projects become fully operational, we expect stronger trading and income contribution during 2027. And we're also assessing further remerchandising opportunities across the portfolio. But we will remain selective and we'll communicate them once the relevant agreements are sufficiently advanced. Avion Shopping in Umea is our latest acquisition and a good example of the type of opportunity we seek. We completed the acquisition in April for approximately EUR 111 million, adding a modern dominant regional shopping center with around 80 shops and restaurants and a strong mix of national and international brands. As you can see, the turnover growth and the footfall growth of the first 6 months of 2026 are very encouraging, and the property is currently yielding 8%. We have agreed terms to acquire Mood, a leisure destination adjacent to our shopping center, Fiordaliso, for an amount of EUR 7.5 million. The investment offers an attractive yield of approximately 14%, providing immediate income generation. But the strategic value goes beyond the initial yield. Fiordaliso, the adjacent retail park, and Mood can operate as a more integrated destination. The 3 components offer complementary reasons to visit: shopping, services, food, entertainment and leisure. This is a relatively modest capital commitment with both immediate income and redevelopment potential, but it is also consistent with the direction of customer demand. Leisure and food and beverage offer increases dwell time, support evening activity and strengthening the relevance of our destination beyond traditional retail hours. Then we go to the operational results. Here, we see the half year results across the key operating indicators, with rental growth, rental uplift 4.7%, retail sales at 4.6% and still a very low vacancy figure of 1%. A nice OCR stable at 9.2%. And then, of course, footfall, quite encouraging over the 6 months at 3.2%. And without footfall, the rest of the KPIs will never be achieved. So very nice to see that. If we actually look at the footfall momentum, it was broad-based across the portfolio because we have visitor numbers overall increasing 3.2%. But we can see that the flagship centers performed particularly well. The rounded average figure of the flagships is approximately 4%. But I have to say that I Gigli is excluded from this comparison because of all the works in the shopping center. By country, footfall increased by 3.2%, as I said before. And that's a healthy pattern. It's not dependent on one center or one market. And it has continued despite construction-related disruption in parts of our portfolio. When we look at the retail sales growth, the 4.6% I already mentioned, and here you can see the split over the countries. Italy, again, very strong with 7.3%, but also Belgium had a nice uplift of 3.8%. And the other countries still also have a plus. In the sector mix, it was also encouraging, outstanding performance by services, food and restaurants and health and beauty, but all the other sectors also really a plus. You could say that basically only sports was the only category to decline with a minus 0.9%. The spread of the growth matters. It shows that performance is not being driven by a single category. You need all those categories to have a nice result overall. Again, I cannot, of course, repeat again that Italy's strong performance with 7.3% reflects the strength of the assets and the benefits of the merchandising work already delivered. If we look at the rental growth, like-for-like rental growth overall over 12 months, that's how we measure it under our models, was 2.5%, approximately 190 basis points above indexation. Because we all know that 2026 was certainly not a year of indexation. It was very small, in some cases, almost 0. Italy was the strongest contributor at 5.4%, supported by active leasing, relettings and remerchandising. And Belgium delivered 3.5%, which we think is reflecting really the good performance at Woluwe Shopping. The overall result demonstrate that even with low indexation in most markets, the portfolio can generate organic growth through leasing and active management. When we look at the [ EPRA ] vacancy, again, very stable and low at 1%, really unchanged from the year-end and actually a bit lower than last year June. Italy, of course, with an extremely low vacancy of only 0.2%, but also Belgium below 1%. France and Sweden improved, France to 1.4% and Sweden went from 3.4% at the end of the first quarter to 2.6% now as new lettings were secured. The brand names on this slide represent a mix of established international retailers and relevant newer concepts. They include fashion, beauty, sports, jewelry, value-led formats. These are brands consumers want, and we offer them in our centers. The common theme is relevance to the local customer. We use group relationship to engage with leading brands, but the final mix is tailored center by center. The right tenant is the one that strengthens the destination, complements the existing offer and can trade sustainability in that catchment. Over the 12 months to 30 June, we completed 308 lease transactions, compared with 269 in the previous period and a lower figure for '23. And out of these 308 transactions, 207 were renewals with existing tenants, whereas 101 were relettings, with retailers taking new units. Across all those renewals, relettings, we see an average rental uplift of 4.7%. And the additional detail you can also find in the press release. Particularly, of course, it's interesting that new lettings achieved 7.9% overall in our centers. And to tell you a little bit more about the last 6 months, we completed 160 transactions at an average uplift of 3.5%. And most of that was actually concentrated in food and restaurants, health and beauty and gift and jewelry. There were strong country-level performance as well, as you can see on this slide, with, in Italy, renewals producing 5.2%. So that was a strong figure for renewals. And of course, relettings with Swedish -- which was in Sweden achieved double digit, is again a nice figure to look at. If we then look at the lease expiry profile, it's, we think, well spread. A large share of rental income is secured beyond 6 years. And as this chart shows, the expiries in each of the first 6 annual bands are manageable. Approximately 35% of rental income or more than EUR 81 million has a lease end date beyond 6 years. And this profile provides useful income visibility and reduces concentration of risk. It means we're not dependent on renegotiating an unusually large portion of the portfolio in a single year. We cannot escape from saying something about artificial intelligence, AI, and where does it create value for your commercial. We have identified 4 practical areas where AI can create value for us. The first is tenant and visitor engagement. We're using AI to improve marketing, events and leasing effectiveness and to understand the drivers of footfall and sales more clearly. The second is intelligent data and reporting. We're building data platforms to automate reporting and enable conversational analytics. The aim is to give our teams faster access to consistent information and allow them to spend more time interpreting and acting on it. The third is process automation. We're targeting repetitive internal workflows such as turnover reporting, invoice processing and contract-related task. And the fourth is workplace intelligence. Enterprise large language models and licenses are available across the organization, and we have today 96% of our total staff using it every day. And that's, of course, nice to see. We are approaching AI pragmatically. The objective is not technology for its own sake. It's better decisions, more efficient processes, stronger engagement, supported by appropriate governance and human oversight. During the first half, we completed our advanced several major decarbonization and resilience projects. Across the group, 85% of our shopping centers now carry the EPC rating A, B or C. Renewable electricity represents 97% of landlord control consumption and 64% of tenant control consumption. And we have also integrated asset-level climate risk assessment into our business plans. These measures reduce carbon intensity, improve the energy performance and strengthen long-term resilience. They also protect the competitiveness and value of the assets as regulation, energy markets and customer expectations evolve. Our priorities fall into 4 connected areas. First, value creation. We will drive rental growth through active leasing and positive rental reversion, completing the current remerchandising projects and do all the other things I talked about: strengthening tenant mixes, remain alert to accretive acquisitions, of course, because that could be an external growth opportunity. Second, important, cost control. We actively manage our interest rate hedging, optimize property operation costs while maintaining asset quality, and preserve a lean and disciplined overhead. Third is digitalization. I talked about AI and all the other tools we're using. And therefore, it can improve our overall digital engagement with tenants and customers. And last but not least, ESG. We will continue with the decarbonization road map and do all the other steps as we have discussed and presented in our detailed half year report. The common thread of all of this is, of course, disciplined execution. And with this, I would like to hand over to Roberto to take us through the financial performance and capital positions in detail.

Thank you, Evert Jan. Welcome, everybody. I mean this is a fantastic opportunity to go through the financials. We first focus on what we do. So our focuses are on the strategic capital allocation, so the remerchandising projects. And you heard Evert Jan saying all about the work that has been done, and that's also thanks to our fantastic leasing teams, the technical teams. There's plenty of work which has been done. And we look at accretive acquisitions. We've done Woluwe. We've done Avion. We've done Mood. That's great. Second focus is earnings growth. So what we do is increase, of course, the income, but also focus on the cost discipline. One of the highest costs that we all have is, of course, the interest expenses. So our 3.2% average cost of debt, the 80% hedging and the refinancing being done as much as possible. We then go to the resilient balance sheet. So LTV is around 40%, net debt/EBITDA at around 8%. Those are targets that we have. We like to be around those numbers. And then increasing returns, that you see in the strategic CapEx and what they do, what kind of returns they can deliver. So we're very happy with that. If you look at the financial results, just to give you the usual highlights, you see that the direct investment result is plus 2.6%, to EUR 68.7 million. The LTV, the net loan-to-value, went up a little bit. That was, of course, due to the acquisition of Avion. The portfolio valuation is -- went up a bit to EUR 4.2 billion. And as you see, the average cost of debt is stable, and we reiterated the guidance at EUR 2.45 to EUR 2.50. Let's have a look quickly at the investment results. What are the main components? As you see, there is a nice increase in rental income. There's an increase in property expenses that mainly related to Avion. There's also an increase in bad debt. There's some more provision that we took [ upfront ]. Then there is a positive EUR 1.2 billion in the net service charges. That's also related to a one-off that we had in Belgium. The company expenses also improved. And then you see the [ 1.8 ] higher net interest expenses, and that's partly, of course, due to Avion. We acquired the company, we're financing it with loans, but also partly due to the increase in the Euribor and the STIBOR. You might remember that we aim at having 80% hedged. So 20% of our loans is unhedged. And then you got a little bit of positive news on corporate income tax and others. If you look at the valuations, valuations increased a little bit. And that's nice because this is a good growth because it depends on the NOI and on the increase in earnings per share and in the estimated rental values of the assets. And the net initial yields are stable. So this is good growth because it's a growth which is based on the increase on net operating income and ERV. If you go to the EPRA NTA, we are trying to show you just the main impact on the changes of the EPRA NTA for this year. So EPRA NTA, we add the indirect and direct investment results. Then of course, we do the adjustments which are needed for the EPRA. And then you see that the biggest impact is the dividend distribution, the EUR 183 million, which we distributed. There is a little bit of dividend up because, of course, we issued at a premium compared to the share price. And then you see the other main impact is the EUR 20 million negative, which is related to the fact that the exchange rate with the SEK with the krona and krone was lower compared to the Euribor. If we then go and look at the sources and use of funds, you've seen we acquired Avion Shopping Center for EUR 111 million. Then, of course, there is a part, which is your dividend, which has been paid. Then there is a little bit which is dedicated to the CapEx, the accretive CapEx that we've mentioned. There is a bit of increase in cash. Where does it came from? EUR 40 million came from the operating cash flow and the other EUR 22 million came from increase in borrowings. So you can see the parallel between the increase in borrowings and the acquisition of Avion Shopping Center. Now let's look at our priorities as well. What do we want to do? We still look at prudent leverage. So the target of net loan-to-value is around 40%, net debt to EBITDA at 8. Diversified funding, we are still very happy with our banks and that provide us with fantastic funding and a very easy to contract and very reasonable negotiating. So we're very happy with that. We still keep an aim of 80% of hedging. So that gives also a little bit of flexibility of acting into the interest rate market, at the moment that we see that the curve can be more favorable to us than in other times. And we also want to keep the long-term visibility. So the debt maturity profile, you will see in another slide, is really kept at more in the long term. If we go to a snapshot of what we've done in H1 2026, say the main thing is that, of course, the cost of debt remained unchanged at 3.2%. We increased the leverage modestly, thanks to the fact that we acquired Avion. And we give you, of course, the overview of the key financial metrics, which is more or less in line with some improvements here and there compared to December 2025. Now this slide, we show you what we've done in 2026. So we concluded the financing that we had signed in 2025, and that's for around EUR 588.5 million. There you also see the new loan on Avion Shopping Center, which was done with debt. We're very thankful to our banks. And we're also a bit showing off with this slide because there is not a lot to do than in '27 and '28, which we will see in the other slide. If you look at the maturity profile of our loans, you see that 2027 and 2028, basically a little bit of amortization on the existing loans. The refinancing will come in 2029, '30 and '31. So we still have a lot of time in front of us to look at the renegotiations and the refinancing of our assets. Now a little note also from an accounting perspective, so at 35 years. You see in 1991, we began with a portfolio of, let's call it, 330 million Dutch guilders, which we translated roughly into the EUR 150 million. So we went from there to the actual portfolio size, which is EUR 4.2 billion. The portfolio there was diversified. We had some residentials, we had some offices. And now we clearly show our focus on the shopping center. We had no leverage at that time, and now we have a leverage of, let's say, 40.9%, which is also helping in increasing the results that we then provide to you. What's really interesting is, of course, since inception, since the beginning of this EUR 150 million, we actually gave a total return of EUR 6.42 per annum, which we hope you are satisfied with. And that's really thanks to all the employees that we have, past, present, all the hard work that they did. So thank you to all of them for all of this. Let's look at [indiscernible] Eurocommercial, if we look at this year, so the first 7 months of 2026, we actually also then delivered around 15.1% of total return, which is also nice. Here in the table, you can see the increase in the direct investment result, up to EUR 2.44 and the increase in the dividend, up to EUR 1.83. And if you do -- if you could, the direct investment result that we produced in 2025, which is EUR 2.44, and divided by the share price that was there at the end of December, which was EUR 26.05, then you get a nice investment of around 9.4%, which is not bad. We are too cheap. Then we go to the guidance. Direct investment result reaffirmed, EUR 2.45 to EUR 2.50 per share, with further growth expected in 2027. What we want to stress out is that, of course, you've seen all these remerchandising programs that we have or these merchandising projects, they are fantastic, but of course, they take a toll on 2026. And they will fully contribute in 2027. Because all the remerchandising that we have done, that we're doing, they are still running, for part of them, in H2 2026. Some of them will open for Christmas 2026, which is also the aim that we and the retailers have. We want to be there for Christmas, do the entire season and all be happy and merry with the result. 2027 is the year where you actually see the full contribution of Avion, you see the full contribution of all these remerchandising projects. And with that, we go back to the operator. Thank you very much, and we are ready for your Q&A.

The first question comes from Lynn Hautekeete from KBC.

I have some questions on your development pipeline. So in your report, you mentioned that you are in the planning phase of an extension project in both Carosello and [ ETG ]. Do you have any further details, maybe the investment size or the return metrics in return of those extensions?

Yes, we are very hopeful, Lynn, as you know, in Italy, they're very quick with permits, providing them and everything. So we've been doing this for some years. I'd say the hope is that we get a proper approval for these planning in the coming 2 years maybe. What we would like to do is, of course, come up with the final project once we are sure of what kind of permits we get. So how many square meters, how many licenses, where about, so that we can actually then finalize all the mix. But for now, let's say, we are asking, we've been asking, we continue asking. We have positive vibes. But with politics, you never know. So that's why we're a bit careful on that.

Okay. But 2 years notice. And then secondly, on Val Thoiry, that we are doing on the [ Legrand Marlin ] sites, just there, I think you mentioned that it will take a bit longer than initially expected. And I was wondering if you could give some time line there and maybe some color on the redevelopment.

Yes, Lynn, let's say, Val Thoiry, it's not so much that it is taking longer than expected. It's just a very long remerchandising project, and it involves indeed also '27 and '28, as I said. And that has all to do with indeed Legrand Marlin. Currently, they have, outside the gallery, they have a stand-alone, let's say, unit box, which they rent. But they're now building their own unit, their own store on the other side of the road where they bought the land. And those building works are currently happening. It's still on schedule, but it takes quite some time to really build it. And then they have to move out. And then we need to refurbish that entire unit to make it ready for the retailers we have signed up, including Primark. So by the time you finish, it will be end of '28, maybe early ' 29 even when these tenants are opening. And particularly one of them is important as well to move there is Decathlon. And then they will leave the gallery, so giving us nice space back for -- which is good space in the middle of the center, to lease to attractive tenants within Val Thoiry. So Val Thoiry isn't -- is a little bit slower. I would not say it's an [indiscernible] but we will get there. And this is a nice project because Val Thoiry is, of course, one of our centers in France, which still performed very well, so close to the border with location near Geneva. So that's the plan over there.

Okay. That makes perfect sense. And then maybe a last one, if I may, on remerchandising. So indeed your top line has an impact on the strategic vacancy coming from the remerchandising projects. And I think the impact will be slowly phased out in the second half. But could you maybe quantify how much you would expect to gain in total as of the second half when the remerchandisings are ending, in terms of top line?

Yes. Well, I think the second half is not yet the period where we see the full return kicking in. As we said, there are a few important openings scheduled for Q4, typically also Primark, but some others as well, ready for Christmas. As Roberto said, we are always on the same page with our retailers that these openings must happen before really the most important season of the year starts. So I'm afraid that we really see those benefits appearing in '27, Lynn. So that's why we also -- we reaffirmed our guidance, no problem with that. But the real benefits will follow in '27. Roberto, any comment?

Yes. Some of them are opening end of October, some of them are opening in November. That's really focused on the Christmas. And we're giving them -- we ask them to put their brand-new store, so something very nice and flashy. So we're giving them also the time to build it. But yes, the impact will not be a lot.

The following question comes from Steven Boumans from ABN AMRO ODDO BHF.

I have a couple, let's start with first. So for the new remerchandising projects that you see in your portfolio that you haven't started, what kind of sites are we talking about? It's like EUR 10 million or EUR 50 million or even more in the next 3 years? And do you also expect solid double-digit returns similar to what you disclosed today for that?

Yes. Steven, let's say, the message we wanted to give very clear is, listen, the remerchandising projects, which we have started and are now in nearly completion or have been completed, but that doesn't mean that we will stop or have no further possibilities. As a matter of fact, you will not be surprised to hear that we see more and further potential in Italy. I think, Roberto, you can maybe give some more detail. But also Carosello, these are really big shopping centers where we can do more. And of course, that's the potential we will certainly try to unlock.

Yes. Absolutely right. I mean you've seen the amount of CapEx that we foresee for the current one, so [indiscernible]. There are many more that we are, of course, planning. What we try and do is to select the moment. You might remember the trigger moment. So when we finally achieve an agreement with one of the major retailers to start the remerchandising program. What we do is, of course, we are in negotiations so there's also confidentiality. But once we have agreed the terms, then we can come up also with the project that we would like to do, how much we think we're going to invest. And we do not want to do that in advance because, of course, we have nothing agreed yet. If that makes sense, Steve.

Okay. That make sense. And we'll wait for more hopefully one of the next reporting days.

Compared to the past.

Maybe a different question then, on M&A opportunities in a broader sense. You talked about joint venture of Woluwe. Is that something to expect in the next 12 months? And maybe also the other way around, do you see -- are you currently in acquisition processes? And maybe is it more like the Swedish acquisition or maybe more like Mood acquisition? Can we expect something from that, let's say, in the next 12 months? Any color is welcome there.

Thank you, Steven. Always a good question to ask, of course. Let's say, to start with your first one on joint ventures. As we have always said, we're open to look into joint ventures. We have to. We could do more, particularly probably on our flagships. So that's always on the table. But currently, I do not expect that we will see there immediately changes. The problem is always, you've seen it with these remerchandising projects, that it's nice that we can put so much effort in it, but it's also nice to, in the end, also have the fruit, the results from it 100% rather than in sharing it 50-50. So there's always a little bit of this dilemma. But no, I'm not ruling it out. I think it also is linked a little bit to the overall appetite for retail property and probably more and more also for shopping centers, which is being evidenced by more transactions over the last couple of months, year than before, that institutional money is back in shopping centers. So that obviously is important because a long-term investor into one of our centers where we obviously take the lead and do all the management could certainly be helpful and unlock for us funds to reinvest. And on your other question, we're always monitoring our markets. And indeed, Mood is a result of, okay, you can say it's very close by because it's next to our mall in Fiordaliso. But no, we were always looking at where we can do accretive things. I think Avion is a clear example with an asset where it's yielding at a nice level. We're very active with the leasing there. As you may recall, we have some higher vacancy in that shopping center than we're used to in our other centers, but that was actually the potential. And we've done already a first nice letting to a toy retailer, [ Alekia ]. And there's more to come. Hopefully, we can announce it at some point. It always takes a bit of time to reshuffle here and there. But no, we're absolutely looking into what is possible. Yes.

Okay. Clear. And then my last one, you mentioned a positive investment market, institution money is back [indiscernible]. Does that [indiscernible] actual revaluations could be higher than [indiscernible]?

Well, let's say, the valuations, what we saw really is that we got uplift in value because we had a higher NOI. So no yield shifts or changes. Obviously, depending on what we will see further maybe this quarter, next quarter in the markets, that there could be some change in yields. If yields don't change, then I think what we will see is just a reflection of further increase in rental income, which obviously suits us because we will have more rental income due to the remerchandising. But yes, I think it's encouraging to see typically also more in Southern Europe, all those transactions and how active this market is, obviously, Spain, but now also Italy. So that's certainly, I think, a positive signal. Roberto, any...

Yes. No. True. I mean we look at the [ ERVs ] positively because, of course, the remerchandising. We also monitor the Euribor because you never know when the interest curve is and that, of course, has an impact on perceptions. But we might see some improvement of yields in some -- particularly in some countries. But it's -- the valuers will then at the end decide whether they are happy with these evidences or not.

The following question comes from Kai Klose from Berenberg.

I've got 3 questions, if I may. The first one, you mentioned a slight increase in bad debt and provisions in the first half. Could you give more details for which region and a certain group of tenants that side? Second question is on Page 33 of the release, where the ERV of the portfolio compared to December was slightly lower. Is this because you captured some of the rent reversion? Or is there any other reason for? And the third question is on Avion in Sweden. Is there any potential -- could you have some details, is there potential for any future remerchandising or no?

Yes. Well, thank you, Kai, for your questions. For the bad debt, I'll hand over to Roberto to talk about that.

Yes. Let's say we highlighted some tenants in particularly in France. And we said, well, maybe let's take an extra provision for them just to be on the safe side because we've seen some tenants where their financial statements and where their balance sheet was deteriorating a bit. So we decided to take some extra provision just in case. For concerns the Page 33, the lower -- what was your question?

The ERV.

That's maybe related to France, from memory.

Yes. And I think, obviously, we follow the EPRA definitions carefully. So we have to put the analyzed net rents in. And in the case of France, the heavy amount you see in the table is a bit lower than at the end of December, reflecting also some of the deals we had to do, we've done in France in terms of getting nice good brands. And in some cases, we then not did achieve the passing rent. But that is the effect. I mean, other countries is different. But in France, you can see that. And then Kai, on Avion remerchandising, yes, indeed, I mean, the remerchandising, if we can use it a little bit more as a, let's say, a container for all sorts of leasing activities, major leasing activities to improve the occupancy to improve the tenant mix, then Avion as an example typically where the vacancy, which is there higher than in our other centers, that's exactly the opportunity. So we are quite excited about reducing that vacancy. We see a lot of potential. We are in a lot of discussions at the moment. Hopefully, we can be more vocal on this later in the year because that is then a big plus if we reduce the vacancy in Avion, particularly on the first floor of the gallery. Ground floor is fully occupied, but the first floor, that is where the potential is. So that's certainly one element. The other element for Avion is that we also have a possibility to increase the food and beverage offer outside on the parking. There is currently now a McDonald's, but we can do more food offer there on a plot of land, which is included in the deal. So I think those are the 2 special features of Avion where we can create value.

Perfect. And the very last one, if I may. The appointment of a new Group Leasing Director is a reflection that more international tenants ask for different type of contracts? Or is it more for the evolution of the group going forward?