NEPI Rockcastle N.V. (NRP) Earnings Call Transcript & Summary

Good morning, and welcome to the presentation of NEPI Rockcastle results for the first half of 2026. I'm here with my dear colleagues, Eliza and Marius, and we will be the hosts of the day to take you through what was a very successful first half of the year. I'm here for the first time as CEO. So I'm privileged to report as CEO for the first time, and I think the results are to your satisfaction, and we will be here today to unpack where they come from. But more importantly, we would like to tell you what is the future of NEPI Rockcastle. As you might have noticed, there were quite a few pivotal moves in the portfolio management of NEPI. So let us unpack it a bit for you. When I read the name NEPI Rockcastle, which stands for New Europe Property Investments, we should go back almost 20 years ago. This was the time where NEPI was founded first in Romania with the intention to create a retail platform in the region which was very much underdeveloped in terms of new shopping centers. And that region was very rightfully identified as a region of high potential. And then we are 19 years later, managing over EUR 8 billion worth of assets and total assets of over EUR 9 billion becoming the biggest and most relevant player in the market. So now when I read the same name in that context, New Europe, it still reads very well. I mean New Europe means new territories for the very well-established and very successful platform in CEE. And I would like to pause a bit here to tell you a bit why Spain, why now and why not a few years ago. So given the size of balance sheet of NEPI, and given our ambitions to grow, CEE started to become a bit too little a growth story for us. It is like climbing a mountain almost. Beginnings are always easy and you go fast, very quick, but the higher you get, the more difficult it is, the air becomes thinner and each step is becoming a bit harder. The same in real estate world. For us to match the ambition of the group and to deliver the results that we are there to deliver, we need more properties, but the provision of those which we like is getting less and less available for us. What I want to say by that is there is a list of properties we very much like to add to portfolio. But as in life, you need two to tango, right? We are happy buyers. But unfortunately, those opportunities do not come as often as we would want to. And we believe the growth potential is there, but not similar to what we have been historically proven. And then we asked ourselves questions, okay, what do we do next? Do we stay in CEE and go beyond retail? Or do we stay with retail, but go beyond CEE. Going beyond the retail would mean for the group to consider offices, maybe warehousing or data centers. But then we said, what is so unique about retail? Well, what we love so much and what it makes retail different from any other asset classes is the fact that we build relation with our tenants, and we can move them across the border because tenants like us because we are nice, but as well, they are making turnovers in our shopping centers. They are there for profit, try removing Zara from Bonarka to neighboring shopping center. That's not going to happen. But try moving office tenants downtown Warsaw with so much development coming in pipeline. We do control this very last mile of operation of our tenants, and that is the most important difference to any asset classes, and we believe we are good at that. Therefore, we said, let's go out of our comfort zone and let's see what Europe has to offer. And let me give you a high-level overview of our thinking of Europe and why we ended up with Spain kind of matching our investment criteria. Let's look at north of Europe. Let's look at Scandinavia, where there are fewer opportunities. The pricing is much more competitive and scaling up is quite difficult given the size of the market and opportunities there, plus quite bureaucratic markets. So we said not really us. Then we looked at France, Germany combined, where the growth is very limited. I'm talking about GDP, which -- of which function is success of portfolio management. Add to that, the very bureaucratic market may be overregulated even in some cases where the relation between landlords and the tenants are very much regulated by law, which enables us to manage properties to the extent active management the way we used to. And we said, okay, let's not get into that problem because the returns offered for the risk we would have to take really does not justify the case. Then we looked a bit in U.K., non-EU country to start with. Yes, yields are higher over 7%, but at the same time, the interest rates are higher. There is still existing the whole rent reversion business. It's not very much OCRs driven like in Continental Europe. Therefore, for us going there to have this hurdle of adjusting our model to more British made really no sense. Then we took flight south. We zoomed in on Iberia, which is double the size of economy of Poland, which already is EUR 1 trillion. So that's a huge market, which offers a lot of opportunities. But at the same time, the yields are where they are and still, we believe we can expand at accretive yields in the market, and we can scale up the business to be between maybe EUR 1 billion to EUR 2 billion in a few years' time. So we said if all those investment criteria are there, why don't we zoom in Spain? Maybe Italy will follow, maybe Greece, I don't know. But what I wanted to say out of all those retail proposals, South Europe seems to be most competitive on a relative basis in Western Europe. And now if we translate that into numbers, you are used to us showing you how GDP in CEE is faster. I mean, look at that, it's almost double each year, double the pace of average for euro area. It's doubling in '26, double the pace '27 annual growth in purchasing power, all the very solid numbers. We are used to that in the past that will be in the future. But at the same time, when you zoom in Spain, this is a very solid case. The growth there is fueled by many factors, but just European funds that will be proposed to Spain are around EUR 90 billion. This will have an effect. We see that effect in CEE. Spain is very efficient in spending those funds, and we want to be part of what we hope is to be the growth story of the whole Iberia. It does not exclude NEPI investing in CEE. Of course, we are interested. We are big believers that there are more opportunities to come. But as I discussed with somebody, NEPI buys EUR 0.25 billion worth of assets, and in your earnings, it's hardly visible. I mean we need to do more. We have bigger appetite. And most importantly, we have a big balance sheet to support that growth. Hence, Spain seems to be a very credible area for growth for NEPI. And let me look at that again, what we always say we have 4 pillars of growth. I know there will be questions about strategy, I'm sure. And this hasn't changed and that won't change. There are 4 well-equipped with funding pillars of the growth. First and foremost, we always very much are focused on delivering value out of existing portfolio. This is where Marius and Justyna every day are working to make the properties being more efficient. And they did a great job with NOI growth of 3.8%, which was supported by tenants like-for-like sales of 2.7%. I think you need to look at those numbers in a relative term and take a bit historical view. It is another half year presentation where NOI increase outpaces inflation. This was continuously -- that was the story of the past, but that will continue in the future, looking how the performance of our tenants was for the first half of the year, of which Marius will tell you more. But I'm super proud that we did manage to again beat the benchmark of indexation. Strategic development, this is what, it's like putting the seed today to see the results in a few years, as much as 8% of new GLA is being under construction or permitting as we speak. This is the effort you don't see today. It keeps us very busy in the back of house, but you will see that very soon, and I will speak a bit more about new developments soon. It accounts to around EUR 800 million worth of pipeline to be delivered until 2028. We are quite a busy investor, I dare to say. All of those investments are accretive yield at accretive yield to our earnings because I know the questions will be asked about the yields on development. So there we are. M&A, obviously, this is a very important engine for us. Unfortunately, it is very difficult to model M&A because those opportunities come and go, and you may see years like last 4 years where NEPI invested over EUR 1 billion, but I wouldn't be surprised if for a few years, we don't transact for whatever reason. And there's nothing wrong with that. Sometimes the best deals are those that you miss let somebody else do the transaction for a good reason. But when they happen, they do matter a lot, and I'm proud to report that Anca and her team did manage to sign a first acquisition in Spain. I will speak more about it, we have a separate session on MegaPark and on Bilbao case with the initial yield of 6.8%, but we have plan by which very soon this yield will get way over 7% and 6.8% is already accretive to our earnings. So I believe this project being the first step is a good one, and the next will follow. And last but not least, new business streams, and that is renewable energy. In nominal terms, it may seem low to deliver EUR 5.7 million for the first half of the year, but the growth, Marius will tell you more, is quite amazing, and that will continue to be the case as there is over 200 megawatts under development, while 100 is already commissioned, and I will get you some more details of our energy strategy soon in the presentation as well. None of those engines would be able to run fast if it wasn't for Eliza, who is always prudently managing our balance sheet. And it is very important to keep LTV low. I mean, all the problems of any property company start with too much gearing. This is one of the most important metrics we look every half year, which is LTV. And I'm happy to say this is as low as 33% because that gives us a strong foundation for further growth. The fair valuation gain, Eliza will touch more, but I want to say that EUR 126 million uplift comes purely for -- from NOI growth, which is a result of operations of everyday effort of every NEPI Rockcastle employee. The net initial yield stayed quite flat. So put it differently, should I get reported that we have fair valuation gain, which comes purely for cap rates decrease, but NOI is flat, I wouldn't be that happy now, because we do control NOIs, but we don't control the yields. This is the market. So I think this is EUR 126 million put in that context sounds much better to me. And those results, as you can see, wouldn't be possible if our tenants were not trading well with us. To start with, we are happy to report 3.5% DPS growth compared to the first half of 2025 to EUR 0.3214. NOI grew to EUR 318 million, which is almost 4% up, while turnovers are at record high level, almost EUR 3,000 per square meter. It wasn't that long time ago where we were about EUR 2,300. It is really growing nicely, and we believe that will continue to be the case. The strong tenants performance translates obviously into collection rate. I know it's boring. We always show 99-point whatever, and we will keep you bored because this is the number we aim to get at each reporting period. EPRA vacancy (sic) [ occupancy ], 98.2%, you might see it's peaked a bit. This is seasonal, no pressure to Marius and Justyna, but I do see the pipeline of leasing that will take EPRA occupancy ratio to way over 99%. All that combined with OCR at a very stable level over historical periods, 13.2% gives us ammunition to talk to our tenants and continuously increase base rentals way above indexation. Marius will tell you more details about what we did manage to achieve in terms of rental reversion for the first half of the year. With that being said, I would like to ask Marius to the stage. And important notice, this is his first appearance, and I'm sure he will do great, but Marius, welcome to the stage. This is your first time. Enjoy it, man.

Thank you, man. Yes. Nice to see from all of you from up here. So most of you know me, but just for the sake of the presentation, I'm Marius. I'm the new COO of NEPI Rockcastle from 1st of April. But as you know, I've been behind these figures for a while. So it's my pleasure to unpack and present to you the operational results for the first 6 months of 2026. And if there is something for you to remember from my presentation, it's 2 things. We leverage the market, and we are trying to keep our agility to capture the consumer trends. So this is our focus. So going further, Marek told you already the 3.8% NOI growth. That's a very strong increase. It's a very strong increase, and it's made up of 3.3% increase of our asset base, and that's being done in a very fluid macroeconomic and political environment, as you know, in which our assets managed to outperform every market where they operate in sales and NOI growth. So that's -- this gives us the hope and the credibility to grow and enter in new markets. How we did that? Simple. We have a strong asset base, flagship assets, dominant assets in their catchments in which we continuously invest and upgrade. These are the -- it's not a very complicated secret sauce, but this is our secret sauce. Flagship assets keep upgrading them. Now if we look at the countries, our engine of growth for the first 6 months was Poland, very stable economic environment, very good performance of our flagship assets. This creates a very good story. Then we have Romania. Romania's growth was a bit tempered by the economical environment in which we are there. After years of consistent and very strong growth, we have this year a bit of a cool down, I would say. But we are ready to capture the next growth cycle that we hope will be next year. So Romania contributed 1.7% to the NOI increase, while the other countries that you see here, especially Bulgaria and Croatia were pushed by our continuous investments on our flagship assets. So these assets there were continuously upgraded and you see the results. So in a nutshell, our large footprint in CEE and not only since a couple of months ago, helps us capture the momentum in any of our countries of operations and protects us from any single slowdowns that we have. So this is -- this puts us in a very, very stable and solid position to go forward. The second contributor to this NOI growth is the energy growth. Marek mentioned a bit. It's accelerated its growth. Now it's 37%, almost 38%. It's on the back of the extension of the rooftop PV plants. So we continue the rollout of installing rooftop PV plants on our shopping centers will be done with this end of this year, middle of next year. And the operation -- start of operation of our off-site -- first off-site PV plant in Romania, 54 megawatts hour installed capacity that started in the beginning of June. In Chisineu-Cris, very strange name, but this is in somewhere in Romania. And we are looking forward to start our second one towards the end of the year. So all this brought this big increase and helps our operations day-to-day with providing the energy. So all in all, this -- the asset base and the energy put us in the position to report 3.8% of the NOI growth. Going forward, I want to unpack a bit how -- what drives our growth and now it's the top line growth and then how our costs are going -- are evolving. The top line growth is driven by, first and foremost, tenant sales. We have a strong -- we had a strong H1 6 months, 2.7% in average, but that means that our sales in each of geographies were above the market trends and the retail sales in those geographies. So we outperformed every geography, every catchment that we operate in. These higher tenant sales, which are above the indexation, okay. Coupled with a very stable and solid footfall made out a very good conversion and increased sales per visit, this higher basket of 3.3%. This helps us to extract more value from our visits. This puts us in a position that we extract more value from our visitors. With this, going forward, this allowed us more headroom to improve our base rents. And we communicate all then this base rental uplift that for H1 was 3%. It's above the indexation of 2%. And if you exclude even incentives, it's almost 4% above the indexation. Very strong, gives us -- this headroom allows us to make a good reversion of this -- of the lease agreements. And this cycle, it's something that we always look at. Sales, conversion, uplifts. Just to unpack a bit then going forward, how we achieve this base rental uplift going forward. It's easier to say BRU. So how we achieve this BRU going forward. In H1, we had the opportunity to re-lease and renew 7% of our GLA. I say it's an opportunity because this is where we make our agility, our adaptiveness in action. This is how we allocate and we decide which tenant we extend, which concept we support and which tenant we change. And together with Justyna's team, we managed to sign 160,000 GLA of leases in H1. I mean that's a big number. It's 7% of our GLA, but that's a big number. These are 2 flagship assets, the size of Paradise Center of Mega Mall, re-leased and renew in only 6 months. Where we directed our efforts is to renew, as I said, our successful concepts. So we are looking at the data to see how they are performing and what their plans and 61% of these leases were directed on this new -- prolonging the existing successful concepts and 39%, let's call it, 40% was directed at new tenants. So we brought new tenants in 40% of the GLA, which helps us to keep up with the consumer trends. This is where we -- this is our strategy. This is how we want to keep up with the markets. And it's very important to keep this in mind. So these changes in tenants and renewals made us have an increase in turnovers. This 2.7% above the indexation has -- and I want to show you what it is made of based on the retail segments. We have a strong increase in fashion, which represents 41% of our sales of 1.6% and then the key growing segments, Health & Beauty, I would mention, fashion complement, service. These are the -- where consumers want to spend their money on in our shopping centers. You see also 3 segments that are decreasing, but there is something to unpack here. This total segments, these total sales are made out of sales per square meter plus the GLA, the square meters that are allocated to the segments. We control basically the GLA, where we allocate our segments. So when we do re-leasing and renewing, it's important to see which GLA allocate to which segment in such a way that we maintain our growth. So behind the decrease, for example, in electronics and DIY, it's only the GLA change from one period to another. We decided to reduce the GLA allocated to these 2 segments and allocated to Health & Beauty and fashion complements because these are the growing categories. So although the sales per square meter of these 2 segments is not decreasing. It shows up in total sales like that. This is where we focus and try to extract more value from our tenants and protect our long-term results. So it's very important to keep in mind that we are always looking and adapting our tenant mix to what we want. Of course, electronics and DIY will not disappear. We don't plan to do that. They are -- what we try to change is the big boxes that sell price-driven products. It's better for them maybe to work in retail parks or in other retail schemes than in our dominant assets. And we prefer to move to the categories that are more consumer experience driven. Health & Beauty, Leisure, Services. One thing to mention, for example, it's entertainment. This entertainment, it's very important for us because it shows how people behave in our shopping centers, and it's very important because this is driven by the cinemas. The cinemas were, as you know, long history of being under pressure because of the Netflix and online streaming channels, but they reinvented themselves and they show growth now. And this is showing to be happening also for the next quarters and years. So in a nutshell, this is how our tenants have performed based on the segments. And I will show you how we did it in action, and I'll give you some examples just to picture what we've done with the segments. We opened in the first 6 months, our fashion key anchors like HalfPrice, Mango, and others, but these are the 2 ones here. Plus, we invested in new Health & Beauty chains. So we have Rituals and Ksisters, 2 very cool and trendy brands in this segment. And we are expanding fashion tenants that are performing well in one of our geographies. For example, Medicine, it's a very successful fashion brand from Poland that we are expanding and extending throughout our portfolio. Then going forward, we still have a strong pipeline of signed leases, and they will turn out into successful openings in the next quarters. And also, we focused on the main fashion anchors, HalfPrice, Primark, but also to up to bring new tenants in the growing categories like Health & Beauty, and I want to mention here, Normal, a very cool new chain, first opening with us. It's always almost uncommon, there is a new tenant in CEE that is not first with us. So usually, all of them, they are opening with us, first market entry and then they move into the other operators, Normal being one example. Also, we focus and we signed a very big lease for a gym, almost 4,000 square meters with World Class. And I hope in our -- for those of you that will come in our investor tour next year, you'll be able to -- you'll have the pleasure to see it in the Promenada extension. They will have swimming pool, all kinds of new therapy, spa, whatever, things that are -- I don't even know what it means, most of them, but apparently, they really work. So this continuous stream of new signings will brings us to an openness, brings us, as Marek was saying, to a very, very low EPRA vacancy. Consumer demand and agility in execution. This is how we maintain this very low vacancy. Of course, this is a bit higher than H2 2025, and it's very important to know why is that? Because it's a seasonal -- it's a normal seasonal and organic change of this vacancy as all the changes, all the changes or the majority of the changes in tenants happen between Easter and beginning of autumn. So this is the moment when you try to reshuffle most of our tenants because it's more quiet and they want to get prepared for the high season in H2. So that's why it's an uptick there, but it's the same level as last year. So in a way, you'll see that towards the end of the year, our plan is to go back around 1% vacancy, maybe even lower than that. Let's see. So very good operational indicator, high occupancy driven by our partnership with top tenants. I show you some names, but our top tenants are these ones here. They are all leaders in their markets, in their segments. They all show growth there. And with all of them, we are trying to work and to extend their successful concepts. Top 10 tenants make out about 26% of our GRI. And as I said, we are working with them to extend their concepts. To give some examples, with LPP, we are busy extending Sinsay concept, very successful. With Inditex, we are refocusing their GLA mostly to Zara flagship stores. This is the concept that is really, really working, plus now Zara Home, very, very good. With CCC, we are busy extending HalfPrice. You've seen it on the previous slides and so on and so forth. So -- these are the top tenants, very solid, very indicating that we are -- we don't have any problems, and we have a very solid base of tenants. Worth mentioning is this 1.8% that was at the end of June. This was still to be re-leased, very low percentage. In the meantime, it's even lower. That indicates the fact that we have high certainty of delivering the results this year and the next ones. Okay. Going forward, everything that we discussed relies on these efficient operations. On the efficient operations. We managed to keep OCR, a very important indicator that shows how much of our tenant sales are given to the operational cost, the occupying cost in our shopping centers, and we managed to keep it at a very stable level of 13.2%, which is really well below, let's say, our self-imposed 15% that we think is still healthy and gives us the potential of future reversions or revisions higher of the base rents. This good costs management was driven mainly by the hedging of our suppliers. We tried as much as possible to fix our costs for a longer period of time. Our scale because this gives us leverage in the negotiations with our suppliers and gradual implementation of new technologies, automations, digitalization, and this helps us to reduce the labor-intensive costs. Keeping a low cost base plus increasing the tenant sales per square meter helped us to recover 96% of our costs and kept this very high collection rate of 99.2% for H1. Everything else, as Marek was saying, it's good, but we need to take the money. So this is why we're very focused on collection. This concludes my first COO presentation. I hope I unpacked and gave you more details about my -- about the H1 results of our company. I want to say that I'm not alone on this stage. I represent almost 400 people that are working daily in our asset management, leasing, center management assets throughout the portfolio. And I want to -- as I said at the beginning, just keep in mind 2 things. We leverage the potential of the market by increasing the BRUs and reversions. We have -- we focus on the consumer. We try to be consumer-driven in all the decisions that we do. Keeping a very low vacancy, bringing new tenants that work and all based on these operations that deliver the cash and keep our asset healthy and working. Thank you. And without further ado, Eliza.

Thank you, Marek, Marius. I'm also emotional. Thank you. So good morning, everyone. And I would start also by congratulating once again Marek and Marius for their first investor presentation in their roles of CEO and COO. Although this makes me be the oldest in my role in this executive team. I used to be the new kid on the block. But yes, so be it. I'm embracing my oldest-ness here. Those of you that are familiar with the finance presentation, you know that I have one moment of reflection before going to the numbers. And I will tell you what meant the first part of the year for us beyond the numbers for us as a company and for us as a team. As also my colleagues were saying, the first part of the year was somehow defined by 3 words: change, exploration, and agility. Change because we just transitioned to a new leadership chapter. Exploration because we explore new geographies, and we took NEPI Rockcastle beyond the traditional footprint. On the finance side, we made some new partnerships with financial institution, continuing to further diversify our access to capital. Agility because the environment in which we are operating is ever changing and is not becoming simpler. The consumers are changing, the markets are changing, the geopolitical challenges are changing. And in this context, we proved to be agile to navigate it and strong to take advantage of it. And on this note, my finance presentation was somehow built around 4 questions. There are 2 hows and 2 whats. So I will try to unpack how did we build the growth in this first part of the year. What do we return to you as shareholders? How do we fund the business and what is the growing value of the portfolio? And I allow myself to have a short introduction here because our -- while we focus in general on the top figures, which is what we distribute to the investors and what are the distributable earnings, we have an entire ecosystem and the top line does not stand up if the other ones won't stand up. So bottom line and the foundational layer is a strong balance sheet. We have a very good and prudent loan-to-value at 33%. We have EUR 1.2 billion in liquidity. We are BBB+ rated by both of the rating agencies, Fitch and S&P. S&P took them a bit longer, but finally, they recognize the value in our company. And 80% of the debt has the interest rate hedged. So this is the foundational step. Based on that, we have the assets that are working. There are 60 assets with vacancy, which has always been below 2% with very good collection rate, as Marius was saying, delivering 3.3% in NOI growth like-for-like and spread across 8 geographies. Now we added the ninth one. And then we have the earnings which are growing and then we made the distribution. But I will unpack now the distributable earnings per share. So this key number for this year is EUR 0.3214, which is a growth of 3.5% relative to the previous year. And this number has a few contributors. The first of them and the largest of them as it should be, is the portfolio out of which we are extracting more value. This comes from indexation, from reletting, from the vacancy -- from management of the vacancy from the cost recoveries. On top of that, our energy business scaled up. And I'm very happy to see that now we have EUR 0.22. So it's not only a rounding number, it brings up and it tops up the distributable earnings per share. Then we have also 2 offsetting elements. One of them is the finance cost because we renewed maturities and we brought more funds in the business. And yes, in the current context, the money are more expensive. On top of that, we have the administrative and compliance side of the business because we run this business properly. We have a BBB+ rating. We are listed on 2 stock exchanges. We have a strong governance. And for that, we need to incur some costs. And I will also remind you that every time when we have some one-off events, we are going to manage them properly. So last year, we won a tax litigation, which led us to reversing a historical provision, and we distributed that to you. So this is all in all the way in which we are doing our business. I know that you are preoccupied about taxes, and I am as well. It's normal to be like that. From 2025, we became subject to the Pillar Two directives, which says that we will need to pay at least 15% out of our profits in each jurisdiction in which we operate. And there are jurisdictions which tax rates above this 15%, but there are some others which are below the 15%. And when you look at us at NEPI Rockcastle, you are always benchmarking us with peers that are already becoming a REIT. And then we realize that while we behave as a REIT, we don't have the same rights and obligations in terms of taxes as REIT have. Because being a REIT means to be excluded from Pillar Two directive. And this is one of the reasons for which from 1st of January 2027, we are going to apply the REIT regime for our operations. And this is going to help us preserve a current tax rate relative to the distributable earnings before taxation in the range of 8% to 10%, which is the actual rate that we are going to show also for this year. Now we are at 7%, but most probably in the second part of the year is going to be rather close to 8%. My favorite slide, actually, what do we return to you as shareholders? The answer is very simple, 90% every year, twice a year. So this time, open the wallet, EUR 0.2893 are going to flow in, in your accounts at the beginning of October. And this is -- this 90% payout has been there since the foundation of the company. It has been there during the pandemic. It has been there during the interest rate cycles and whatnot. And it has been there while still continuing to invest in our property, develop our projects, enlarge our energy platform and having a good loan-to-value ratio. As CFO, I take a particular pride in that. I think it's very important. And we are going to settle this dividend in cash as a repayment of capital, which is the default option, not subject to withholding tax or based on your election as dividend out of profits bearing a 15% withholding tax. How do we fund the business? We always have a plan and the funding follows that plan. These first 6 months of the year have been quite intensive because we managed to bring in the business close to EUR 550 million. And while the number is important, I think what is even more important is that we diversify our sources and our pools of capital. This EUR 550 million came from 3 transactions. One of them, EUR 225 million, it's an unsecured term loan with 3 financial institutions, ING, Intesa, and SMBC. And we did that at the beginning of the year. Then we topped up a secured loan in Romania, EUR 74 million, Erste and Raiffeisen, regional partners that are believing in our business. Then EUR 250 million unsecured green loan with EBRD, an institutional -- and international financial institution. And this is our first unsecured loan with them. Thank you to the finance team for working on this loan throughout the summer holidays, but it's very nice to report on this number. On top of that, we have EUR 250 million down the line maturing in October for which, obviously, we have a plan. We either go for issuing a bond in September or October in the next months or we are going to use out of our RCF capacity, and then we are going to replenish it. I will remind you, we have EUR 1.2 billion liquidity, out of which EUR 740 million are in revolving credit facilities. I would also like to have a point on the cost of debt, which is still below 4%, is at 3.8%. And speaking also about this maturity in October, to have a strong balance sheet, it's also a matter of having choices. So we are not a forced issuer in any way. And this is one of the reasons for which we are so prudent when it comes about gearing and liquidity. Last but not least, our portfolio, as it was mentioned earlier, reached EUR 8.4 billion. We gained in this first half of the year, EUR 126 million. Looking at how the market behaved in terms of valuation yield, this is flat. December to June, 6.98%. If I'm looking backwards to the valuation yield in the last 3 years, it's in the range of 6.98% to 7%. So the market does not necessarily contribute to the valuation uplift. What contributes, it's our operations. We own the right assets, we are taking care of them, we operate them, and then we extract the income. And this is the controllable part under the hands of management when it comes about valuation. And this is something that we are going to continue to do. But keep in mind that we have a pool of gross assets, which is over EUR 9 billion. I hope I will be here to report also when we will reach EUR 10 billion. And with this in mind, if I'm to have three key messages for you as shareholders and stakeholders, then first, we deliver. So we have growing operations, growing earnings. And out of that, 90% goes to your pockets. Second, we are ambitious. We are growing our operations. We are exploring new territories, and we have the right access to capital and the right balance sheet. I strongly believe that in finance, we are taking care of this balance sheet to protect us when it's necessary and to enable us when the opportunity arises. And last but not least, we have a long-term view. We have a team that is focused on delivering value. We have the right quality of the portfolio, and we have a prudent financial strategy. And with this in mind, I would like to thank you. I will take questions at the end, and I will invite Marek to the floor.

Thank you, Eliza. Congratulations on those numbers and continuously impressive. But the way you present each time you are better, you are just amazing. I really enjoy it. Super, super good. Thank you. So now let's look at a bit of the future. My favorite part, and I will tell you why what we have reported so far was historical. I mean the results of H1 2026 are results of our efforts many quarters before. So that's how it goes. So if anybody asks me what keeps me awake at night is what do we do in '28, '29. So let me unpack a bit what we are doing today that will help us to grow a few years from now because end of '26, beginning of '27, we are more or less sure what we will get. But our thinking goes beyond that, and that's how NEPI was always managed, and we will continue to do so. So let's quickly have a quick look on our development pipeline. Over EUR 800 million under permitting and on construction side. I think we are the most -- the busiest investor and development definitely in CEE, if not in the whole of Europe. But that's fine. Of that, over EUR 650 million goes to our backbone, our core business, which is retail, and that translates into 2 greenfield developments, name one company that would do in CEE greenfield developments, that's NEPI. But there are 4 extensions in 4 countries, overall, almost 190,000 GLA that we are busy working every day. On top of that, our new stream of income, which is photovoltaics or the whole energy production facility, and we are busy spending EUR 127 million on photovoltaics. That means EUR 70 million to what Marius said, the photovoltaics greenfields in Romania that will be equipped with battery energy storage systems that the value of which is close to EUR 50 million. You might ask why? Well, energy storage system is key to make the efficiency -- the financial efficiency of our ecosystem even better, and that's the future of energy overall architecture for where we operate, but probably for Europe as well, and we want to be part of it. And last but not least, EUR 10 million goes into 22 projects or put differently out of Romania on top of rooftops photovoltaics. You may say why it takes so long, we should deliver by the end of the year. But unlike in leasing market, energy market is very different in various countries. It is very quick and efficient to get commissions in Romania. It takes a bit longer in Poland. But we are patient. We get there, we'll deliver. We should be able to report by the end of the year, all of those facilities are operating. Last but not least, the residential projects. The questions have been asked many times, is that a new strategy for NEPI? No. It is nothing else than making the highest and best use of excess of land that we already possess. It would be a pity not to monetize those. Now would they happen or not? It's a bit function of our REIT structure because there are some limitations why your REIT residential for sale are not that obvious. But should we not build and sell those, it is immaterial in our balance sheet and in our earnings. You would remember Vulcan, how successful the development was, but the proceeds did not go into our distribution because they are not recurring. So please don't take our resi projects as a new strategy. It's just monetizing and making the best use of what we already possess. Let's zoom in on those developments. When you look at Promenada today and some of you have been visiting that property, where we are about to complete the project that has been there for so many years. It will reshape not only the landscape of Bucharest, but I dare to say this will be the most exciting mixed-use development in whole of Romania, if not that part of Europe. We are super excited to open the retail part of it in second quarter of next year. We are already 95% leased. And if we could add more GLA, we would lease it. There is such so much demand for the project. Office element is leasing up quickly. It will be delivered a bit later. So there is no immediate rush to pre-let, but the amount and the head of terms we signed puts us in comfort zone on delivering of what we promised. And in parallel, we are negotiating final, I hope now wording for the hotel that will occupy a few floors. So that is the exciting news for 2027. Galati and Karolinka, we have received building permits for both. And given that the pre-leasing is so successful, just think about 88% in Galati and 67% in Karolinka before even hitting the ground, already committed by tenants, and it is confirming our initial feasibility study, coupled with tendering the projects to confirm that the costing part of it is met as for what we budgeted puts us in a very comfortable position that those developments in no way should be considered and speculative. They are almost fully let before we even start the construction. So congratulations to the teams for delivering. And there is more to come, obviously, that we are busy designing. Let's then move and talk a bit about Spain. I spoke quite a lot about overall relative competitive advantages of Spain compared to the rest of Europe. So let's assume that is unpacked. But let's zoom a bit what actually Spain means in relation to CEE where we operate. Well, first of all, it actually has half of the population that we are serving already. That is quite amazing. If you consider a function of that would be a number of potential opportunities for NEPI to acquire, then you -- or grow, then you will see that there is huge potential. But at the same time, look at the purchasing power, it's 50% higher than average for CEE, while the density of modern retail properties is quite similar. That's quite amazing how much value we can extract applying our know-how and efforts in such an amazing market. And then when you look at GDP growth, I think this is very important for us to not only enter the market for, let's say, high yields, but it has to be good investment proposal. And that investment proposal is good if the fundamentals of economy we are entering are there. And I believe Spain has proven to be a very big success story, and it will continue in the future. Now the questions I'm sure will be asked, "Marek, why not few years ago? The yields were higher." Yes, they're way higher, but NEPI has spent the last 4 years buying over EUR 1.2 billion worth of assets -- and I can tell you a bit zooming on of those, not only we bought them, but we managed them up. The 3 of them, I can say, Eliza, on the valuation. I'm super happy to see the latest valuation. The 3 of those since we bought them, which is Forum Gdansk, Magnolia, Silesia, the uplift in valuation of those 2 is EUR 200 million. Forum Gdansk only is half of it. What I wanted to say that -- by that, we -- yes, Spain was there on our radar, but I don't think we were wasting time in CEE. That's what I want to say, okay? And I still believe there are opportunities and the market is at the -- in the cycle where we can still make and make a difference for our shareholders. Add on top of that high rating of Spain, I mean, I would be super happy to challenge further our credit agencies. Now they have given us the highest rating, super cool congrats to the team. But I am more than happy to meet them, and we are meeting them soon to report that the more and more income stream would be coming from higher credit rated countries. That's nice meetings to have. So I think that there are some non-direct financial benefits of entering the market that already is so highly regarded in the investment world. Add to that the fact, and I can tell you a bit more maybe of the kitchen now as we put our foot in Spain, talking to funding partners that the funding -- bank funding is already what we hear and what we talk in nonbinding discussions, but it is much cheaper than what we can deliver -- can get in CEE for obvious reasons. What I want to say by that, one should expect that the more exposure to country like Spain, the lower the weighted average cost of capital. And so the story should begin. And I am true -- big believer that would be the case for NEPI. But if you add to that, the synergies between the regions, I mean, it's amazing, and we did this analysis with Marius and the team how many tenants are in Western Europe and Spain and how many of them are in CEE, but how many actually in CEE have intention to move to Spain. Think about Modivo Group, the big Polish group with their HalfPrice, and they are heavily investing in Spain, and they want more, and they already speak to Justyna. They want to meet because they know if we do one property, probably more will follow. And I think there is a lot of amazing deals we can do just moving tenants between the regions. CEE is considered the most seeked by tenants region. So we are now opening the road for those tenants to move between the regions. And by the way, we already have great relations with so many in Spain-born fashion brands, some of the most exciting and most successful in the world to say about Inditex or Mango. So I'm super excited. I think Justyna and the team, you will have time of your life, enjoy it. And that is our Spanish kind of value-add story going further. Let's zoom in at MegaPark Barakaldo. I think -- I don't know if this pointer works, not really. I'm not sure you can see the red dots, so I can give you some more zoom in. So the whole project -- this is the whole project. That's altogether 120,000 square meters of GLA. Now of that, NEPI will control subject to closing, Anca, I know you're working hard on that every day, 80,000 of it, which is, sorry, wrong button too quickly for Q&A. This is the outlet and supermarket. This is cinema. This is neighboring IKEA. This is sports store that subject of transaction. This is the retail park. And at the end, you can see Leroy Merlin. This is by all means the biggest retail destination in north of Spain. It has all the tenants that we call category killers, look at Media Markt, one of the most successful in Spain. Decathlon, same story. TK Maxx is opening in October. Cinema is refitting the store almost as we speak to open what Marius was referring to. They reinvent themselves totally. It will be totally new cinema with the reclinings, et cetera. Everything us as customers in cinemas will love to experience. And I still believe there is much more we can do. We've already looked at re-leasing. We already considered OCRs, and we already have experienced since signing the re-leasing cycle showing that there is a potential for further organic growth faster than average. So we are super excited. Somebody will say, for sure, this is not typical NEPI Rockcastle product. Yes, but you would be surprised how many actually retail parks we do manage, and we are super happy with them. And I think that one should reverse that question saying, why not more retail parks? Very good questions. I think the retail parks in CEE are very complementary to our dominant shopping center, and there will be a point in time where we should look at that very seriously, and that will open another avenue for us to grow. This is how we look at it. It's not that it's something new for us. Now that opens our minds. We go out of our comfort zone. This is how NEPI was born, and this is how NEPI will continue to operate. So we don't find that operationally difficult to unpack these questions, which I'm sure there would be. But just look at the numbers, almost 13 million people annually, and that has been increasing since let's say, in post-COVID era and is much higher than in 2019, which is pre-COVID era. So this product, the dominance has proven to be very resilient. But look at as well spending. Those 13 million people spend as much as EUR 180 million turnover. People come there and they shop a lot. I mean this is pure shopping destination, and we love it. 81,000 speak for itself. That's a dominance. This is what you want. If you want to get into those products, be big or go home. That's how it works. And we are happy to be there. 1.1 million people in the catchment, but just look at this whole district, amazingly very densely populated. The geography of Bilbao is such that it's actually in the valley. On one hand side, you have ocean on the other, it's quite hilly. It is very difficult, if possible at all, to develop anything, any other retail scheme that will be competitive to that one. So that kind of ring-fences the future of our property. So this is a Spanish story. And -- next step will continue. I'm sure there will be questions about pipeline. And yes, we already have our view of what we like and where we could go. We do know there will be projects coming to the market in September. Market was a bit slow due to the other transaction that we are all aware of, a portfolio transaction of EUR 1.5 billion. And we do know other players were waiting for the transaction to materialize before they would go to the market for obvious reasons. That was very huge ticket. So why competing with that. We do know more will come. And I hope Anca will book a lot of planes to Madrid and Barcelona and whatnot to search for more. So this is MegaPark Barakaldo and Basque story. I'm sure there will be questions. We are very happy to take them, because now the line will open for questions and those of you who are online are more than welcome to send your questions. The team is there to pick them up. And looking to the future, I want to say it again, and I know I said it before, but the new executive team does not mean new strategy. All 3 of us, we have been there over 2 years ago, where 4-pillar strategy was designed under Rudy's leadership. We were there, we co-designed and we stick to that. So again, it is organic growth. It is developments, M&As and new income streams. That won't change. What might change is the tactics of getting each of those running fast as we must adjust to the reality outside to the financial markets to the politics, et cetera. But we are in the midst of better if good is delivering because good is delivering, just looking at the revised guidance for the year from 3%, we are now happy to inform that we will deliver between 3.5% to 4%, which was fueled by operational excellence and M&A activity. Now before we get to Q&A, I would like to leave you with a few main takeaways. First of all, NEPI operation, again, shows to be excellent. We NOI growing faster than indexation and with the pipeline of leasing and developments, we have, I'm happy with that. Number two, the financial products and S&P finally, recognizing NEPI is highly graded, super great result. We are happy to hear that REIT, this is very important. You don't maybe see it yet, but just to put into perspective, 6.5% in coming year from Spain, given that we have a REIT structure already there in Spain, and we'll have it from the 1st of January, make it from the EPS perspective much more accretive than investing 6.8% -- at 6.8% in Poland due to taxation. So in real terms, the impact of 6.8% in Spain is much higher than in the regions where there is no REIT. So I think that is important to remember because we will benefit from the REIT structure going into the future. So those are 3. I missed the fourth one. I will remind myself, I'm sure. Anyways, with that, I wanted to thank you so much for coming and paying attention. I'm sure there will be questions. I'm sure 90 of them -- 90% of them will be Spain related. We are happy to take all of them. Thank you so much.

A few questions from me. Just to double check, right? Your update to your guidance, does that include the acquisition from Spain as well as the changes in finance costs for the second half of the year?

Absolutely.

Yes, exactly.

Okay. Then can you just touch on the consumer spend changes that you guys are expecting maybe from the war? It seems as though maybe there's a bit more robustness than maybe some of us have expected.

You want to speak up?

We -- if I can -- you said about the consumer trend spending?

Yes.

What we see is that the picture is mixed in our geographies, but in principle, the consumer healthiness and willingness to buy still is solid. In Romania, specifically, albeit the increased taxation and the increased VAT rate put some pressure on the consumers. What we can see is that the rate of savings is still -- is going up. So we feel that people are having the money and just they keep it a bit up until this turbulent moment will end, which is, I think, in sight. So we -- they will come back to the market. This is how we feel. The rest of the markets are quite strong. The consumer spending, it is really going up. And 2 things that we passed through and quite successfully was that euro conversion in Bulgaria that came in 1st of January, and we are really curious to see how it affect the consumers and it turned out to be very productive. I mean consumers still are in the market, and you saw the turnovers, they are growing and the NOI as well. And also Croatia, a very good example of another growing market. So overall, including Poland, we feel that the -- we see actually the consumers are really continuing the spending. Now no real pressures except the one that I mentioned in Romania.

And are the governments providing any support to the consumers right now? And is that likely to maybe change at some point?

There are schemes of support throughout the region, and they are based on European funds and local funds. So there is a lot of money flowing up from European Union to our geographies, both for infrastructure development and also for some other developments in terms of military, for example, and other key projects, energy, for example. And this transforms into the -- or translates into the consumer being able to having more available funds to spend. So we actually -- and there are -- part of it, there are local support schemes in a every of the regions. There are social schemes in place. But we don't see it as a necessary critical element for consumers to keep spending. The fundamentals are still there. So nothing changed. It's just, I would say, a rebased, but in case of Romania. The other countries are performing very, very well.

Okay. And then Eliza, just to confirm, is there any risk on your conversion to a Dutch REIT for next year? Or is this completely set in stone?

There are -- there is still one pending point to be discussed, as Marek was pointing about the residential developments. But other than that, we have been ready to apply the REIT regime since our incorporation in Netherlands. It was just the fact that we wanted to be crystal clear that our business model is taken into account and that there are not any kind of loopholes that we may, let's say, unwillingly neglect and then to be in the breach of the REIT regime. So no, we are not in any kind of clauses under the breach of REIT regime. And our discussion with the Dutch tax authorities is scheduled to end in the last quarter of 2026 on this residential point, which is as we said, not material for us, but it's an additional competitive advantage and competence that we would like to keep in the company.

So you're talking about being able to develop to sell as opposed to...

Yes. We -- the provision in that REIT regime is that we should have, let's say, recurrent properties kept on our balance sheet for at least 3 years. So we may, let's say, adjust the strategy for residential rather than develop to sell. It's for us to be taken into account, but EUR 47 million over, let's say, 2 to 3 years, it's not something material.

Getting the REIT status is more important for us than resi developments for those immateriality reason. It's good to have, but if we need to hold or build to lease or partner with somebody, we will do so. So REIT comes first and as a function of that, our strategy for resi will be adapted, and that's how we look at it.

My question is about Spain. Are you looking at greenfield developments as well or mostly just existing assets? And then just linked to that, how competitive is the acquisition market there? We know we've got Vukile and Castellana that's also very aggressively in that market, Lighthouse, et cetera. Maybe you can just expand a bit on that.

Sure. I was waiting for that question. Well, let me start maybe with the greenfields. I mean we have developed in Novi Sad greenfield development. We don't mind doing greenfield developments beyond our comfort zone because normally, they bring extra return, which -- the premium which is worth it. And I think we have all the capabilities to do so. So we wouldn't exclude that. Would those opportunities come too early to say, would the potential returns justify the risk. We need to measure that. That's very financial decision to be made, so to say. Now on competitiveness, I need to share with you a bit of my personal experience. So I joined at that time Rockcastle in Poland 2016. And I was approached by at that time, executive team, totally anonymous to the market. I mean nobody knew Rockcastle. And then it was the time where the competitive -- the competitiveness of the market was so high that all the German funds were buying any retail that there was available. And I was like, should I join them? How can they compete with German funds whose cost of capital is so low, but I said, well, no risk, no gain. And look where we are in Poland today. What I wanted to say by that, I'm not saying the same story will happen in Spain, but what I wanted to say, we are long term there. And of course, there is competition, but even in Poland, there is competition. I mean look at all the Czech funds, which are buying properties at very competitive pricing. So I'm not saying that we will be able to grow very fast, but we are there for long term. That's number one. Number two, I believe that given the strength of our balance sheet, there are some competitive advantages that we can offer. I mean, we are cash buyers at those level of volumes. We don't make our offer subject to debt financing, et cetera. I think that sellers who have certain exit strategy and are looking for a partner with whom they can, for example, build the longer exit strategy, we can maybe partner with them and offer what others will not be available -- not be able to. So it's already competitive where we operate, and there is a reason why Spain is competitive. But as I said, we are very humble. It's a long-term game. We look for value, and I'm sure it will pay off. We like to take a little risk in longer term. That is our strategy now.

Congratulations on the result. Question for me is, as you look at Romania, given the concerns that are happening from a macro perspective, is that a market that -- or opportunities opening up there for more acquisitions? Or is that a market that you'll kind of gradually shrink out of as you expand into Spain and elsewhere?

No. I mean, if there were opportunities in Bucharest that fit our investment criteria, and we know exactly what we want, not only Bucharest, outside. But no, the current macro situation hasn't triggered any transaction in the area of what's our interest. And by the way, when COVID hit and we had all the liquidity, we said now, now we're going to buy. Nothing happened. And COVID that was a difficult story. Now what we see now in Romania is slowdown in the economy, okay, these things happen. You cannot grow too fast for too long. But I really honestly do not expect that there will be a distressed sale in the -- of the product that we like.

And one thing, we don't want to move out of -- you said to shrink, I think you mentioned this word.