Unibail-Rodamco-Westfield SE (URW) Earnings Call Transcript & Summary

Good morning. This is the conference operator. Welcome, and thank you for joining the Unibail-Rodamco-Westfield Half Year Results 2026 Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Vincent Rouget, Chief Executive Officer. Please go ahead, sir.

Thank you. Good morning, and a warm welcome to URW's H1 2026 webcast. Thank you for taking the time to follow our presentation on a busy reporting day. I'm pleased to take you through a short overview of our results and business highlights before Fabrice looks at our financials in more detail. We will then open the line for Q&A. Our H1 performance is once again driven by our powerful platform for growth. At the core of this platform is our ecosystem of performance built on our unparalleled network of flagship destinations, our operating expertise, advanced data and AI capabilities and the strength of the Westfield brand. All combined under one roof, this creates a clear competitive advantage. Our ecosystem helps retailers and brands grow by driving traffic conversion, visibility and sales. It also provides URW with multiple growth levers through leasing, new revenues, data and capital-light opportunities, translating into attractive business performance. Our strong H1 2026 results are a testament to the power of this growth platform and our ability to turn scale into performance and performance into sustainable growth. Moving now to the detail of our first half results, where we continue to deliver our key platform for growth business plan priorities. Strong retail operating performance was supported by sustained leasing momentum, increasing MGR uplifts and record occupancy. This is real NRI growth, not just indexation. Very strong footfall and tenant sales translate into leasing tension and occupancy gains, which allows us to be highly proactive when it comes to asset management. Westfield Rise kept on delivering growth at 7% year-on-year in a slightly muted brand activations market. With a EUR 2.2 billion disposal plan now complete, we are very happy to transition to value-accretive capital recycling, including in the U.S. already from H1. We are capturing attractive opportunities to improve portfolio quality and drive future growth while staying disciplined. We also saw another positive portfolio revaluation, up just under 1% in the first half, which contributed to a 90 basis points improvement in our LTV ratio, and we executed well on over EUR 2 billion in financing. All these elements supported Moody's upgrade of our outlook to positive during the period. Fabrice will cover the financials in detail, but this snapshot shows how we are consistently delivering in line with our business plan. Continued top-line growth with like-for-like EBITDA growth above 5%, increasing profitability with improving EBITDA margin, demonstrating the operating leverage of our platform and our ability to translate growth into earnings, disciplined cost and financial expense management even in a higher rate environment, reflecting a proactive refinancing work and strong access to debt markets. And controlled investments with net CapEx aligned with the annual envelope in our business plan. This is a business with good operating momentum, careful capital deployment and a financial profile that supports our growth ambitions. Of course, headline numbers are still impacted by the EUR 2.2 billion of disposals executed since January 2025. I'm happy to say we are getting towards the end of this phase from an accounting point of view with the completion of our disposal plan. Let's take a closer look at shopping center performance. Tenant sales and footfall once again showed healthy year-on-year growth across Europe and the U.S. This is really key for us. Group vacancy is down 80 basis points versus H1 2025 to just over 4%, the lowest level since 2017. Leasing activity was strong with EUR 200 million of MGR signed in H1 and an accelerating MGR uplift at plus 14% on long-term leases. If you recall, leasing, leasing, leasing is our #1 priority for 2026. So it's very encouraging to see this progress in H1 and the overall leasing trend across our portfolio. This is exactly the dynamic we want to create as part of our business plan, higher footfall and sales intensity, leasing tension, stronger MGR, market share gains and occupancy improvements. Let's have a quick look at the two flagship examples in Europe that show how active asset management is driving tangible out-performance, Westfield London and Westfield Centro in Germany. Both have delivered double-digit year-on-year tenant sales growth in H1. At Westfield London, occupancy has improved by more than 800 basis points since 2021. Here, we have meaningfully rebuilt leasing tension, achieving lower vacancy and higher NGR uplift at one of Europe's leading retail destinations. We have also rapidly scaled our Westfield Rise offer to reach Westfield London's massive 27 million audience with further upside expected. At Westfield Centro, we have invested meaningful leasing capital over the last 3 years, resulting in increased footfall, sales intensity and reduced OCRs. We have opened 14 flagship stores in the last 18 months, including the largest in-mall Zara store in Europe, while also upgrading this asset's leisure offer to increase its destination appeal. Tenant sales growth reached double digits, which shows our teams have conducted a very successful repositioning in a muted German consumption environment. These are two strong examples of the value creation effect our active flagship asset management can deliver even in markets with a soft macroeconomic context. A key achievement in H1 was also the signing of a conditional purchase agreement to take full ownership of one of our many trophy assets. This is the largest M&A transaction for the group since COVID with attractive pricing, no LTV impact and AREPs accretive towards the end of the plan. Westfield UTC in San Diego is a 116,000 square meter open-air shopping center with annual footfall of 14 million and $765 million in tenant sales. The center has one of the highest sales intensities in the U.S. and San Diego is one of the strongest metropolitan economies in the country, affluent, fast-growing and innovation-led. The asset has limited CapEx needs following a major upgrade over the last 10 years and the recently completed luxury extension, which has attractive brands such as Chanel, Hermes and Loro Piana. We see a clear and durable upside at this fantastic asset through higher rents, re-tenanting, parking revenues, Westfield Rise and over the long term, opportunities for additional mixed-use densification. Increasing our ownership will thus contribute to lifting a solid medium-term organic growth profile. In addition to UTC, we've been very active in unlocking opportunities within our U.S. portfolio. Macro fundamentals across our eight markets are very supportive and favor our dominant flagship assets, which benefit from attractive occupancy cost ratios, clear leasing tension and repeatable rental growth. Our H1 U.S. portfolio activity combines leverage-neutral acquisitions, smart capital recycling and capital-light development projects. All these activities are improving the quality and the concentration of our U.S. portfolio within our business plan trajectory. This investment activity was carried out at attractive conditions. In early July, we disposed of Plaza Bonita, a regional assets in Southern California at a premium to our book value, and we reinvested those proceeds to take 100% ownership of Southcenter in Seattle, an A-rated mall where we expect to generate over 10% un-levered IRR. This capital recycling results in a net $7 million cash out for the group and the takeover of 45% of a 2030 mortgage loan at low interest. In addition, CapEx light co-development of Garden State Plaza is a great example of the densification opportunities we have. Here, we are transforming 13 acres of underused parking into a walkable town center anchored with attractive multifamily residential, with no impact on the group net debt. As we enter a new phase after the completion of our disposal program, it is a good moment to focus on our capital allocation framework. In platform for growth, we committed to CapEx of EUR 600 million per year, net of capital recycling funded through organic cash flow generation and with clear principles. As you know, this figure for 2026 is around EUR 700 million, reflecting an underspent in 2025. We are now actively recycling out of lower growth non-core positions into higher quality assets with greater long-term potential. Our strategic criteria remains the same from our Investor Day, Westfield quality assets, neutral or positive impact on both LTV and AREPs and an unlevered IRR of at least 9%. As demonstrated with the Westfield UTC announcement, we can opportunistically expand our framework to include selective high-quality acquisitions when our strict parameters are met. This means we can seize opportunities when they make strategic sense, focus on quality and not compromise our 2028 leverage targets of 40% LTV and 8x net debt to EBITDA. Under those stringent parameters, we expect such incremental capital decisions to deliver attractive long-term shareholder value. Before I hand over to Fabrice, here is a quick look at where we stand versus the 2026 priorities I shared at the full year results. Our leasing momentum reflects strong execution by our teams, active management and a continued focus on bringing the right retailers and brands to the right destinations. These efforts directly support the business plan target of like-for-like NRI growth substantially above indexation. The second priority is innovation. We are scaling our data and AI capabilities, continuing the rollout of our Westfield Rise technology in Europe and launching a pilot in the U.S. We have also initiated a pilot phase around our data offer with 18 key retail partners, and we are building new use cases and analyzing the many success stories these new insights create. And in terms of simplification, we completed a de-stapling and have successfully reduced group legal entities by 20%. We are benefiting from the organization and regionalization changes we implemented over the last 2 years, and we are using AI-driven automation in leasing to improve speed, quality and productivity. Finally, we have announced that we will move our corporate headquarters to Westfield CNIT in Paris La Defense in late 2028. This will bring our corporate teams closer to the heart of our business as we bring to life an evolved company culture that fosters collaboration, curiosity and excellence focus on impact. With that, let me hand over to Fabrice, who will take you through the financial review.

Thank you, Vincent, and good morning, everyone. In H1 2026, we once again saw a strong operating dynamic with tenant sales up 5.2%, robust leasing activity and the lowest vacancy level since 2017. We completed the EUR 2.2 billion disposal program announced at the Investor Day. And as a result, IFRS net debt, including hybrid is down to EUR 20.1 billion, a EUR 0.2 billion reduction versus December 2025. This net debt reduction, together with an increase in valuations and like-for-like EBITDA growth led to a further improvement of the group's credit metrics. And with our disposal program now complete, any additional disposals can be allocated to capital recycling. Let's look at our H1 2026 figures in more detail. Our AREPS stands at EUR 4.84 per share, reflecting the EUR 2.2 billion in disposals across both retail and offices in 2025 and H1 2026. AREPS was also affected by FX and the expected increase in financial expenses, and I will come back to our financing activity later on. The performance of our shopping centers and our convention exhibition business resulted in strong organic growth with EBITDA up 5.3% on a like-for-like basis. Here, we provide a detailed bridge showing the AREPS evolution year-on-year. Disposals net of acquisitions had a minus EUR 0.36 impact on H1 2026 AREPS versus last year. As a reminder, it was minus EUR 0.26 in H1 '25. FX also had a negative impact of minus EUR 0.17 on the group's results due to the weakening of both the U.S. dollar and sterling against the euro and positive FX hedges contribution in 2025. Retail NRI growth contributed plus EUR 0.35, thanks to our positive like-for-like performance and recent deliveries. C&E activity contributed plus EUR 0.10 at 100%, reflecting strong operating performance. Financial expenses and hybrid had an overall negative contribution of minus EUR 0.15 due to a slight increase in the cost of debt and lower interest capitalization, which represented half of this increase. The other category of minus EUR 0.05 mainly comes from the increased number of shares and higher minority interest from strong retail and C&E performance. Let's look more closely at URW shopping center performance on a like-for-like basis. NRI was up 4.5%, made up of plus 3.9% for Europe and plus 6.7% for U.S. flagship assets. This corresponds to a plus 3.8% increase on top of indexation above the guidance shared at the Investor Day. Indexation accounted for just plus 0.7% at group level, reflecting a plus 0.9% increase in Europe, in line with expectations and the low inflation registered in 2025. Leasing and sales-based rents contributed plus 2.1% and plus 0.9%, respectively, on top of indexation, thanks to strong leasing activity, a vacancy reduction, higher tenant sales and positive SBR settlements. For U.S. flagships, leasing activity and sales-based rents represented growth of plus 6.2% and plus 1.4%, respectively. The other category contributed plus 0.7%, thanks to an increase in commercial partnerships and parking, partly offset by higher common area maintenance expenses in the U.S. Let's look at the operating performance driving the group's organic growth. Leasing activity was strong once again with EUR 197 million of MGR signed in H1 2026. Total rental uplift was plus 10.6% on top of indexation, made up of plus 7.7% in Europe and plus 17.1% in the U.S. This is above the 7.1% achieved in H1 2025. This performance was supported by a plus 14% uplift on long-term deals. Thanks to this strong leasing activity, the vacancy reduced to 4.1%, a 50 basis point improvement compared to December 2025 and 80 basis points compared to June last year. Vacancy in Europe was 3% compared to 3.3% in December 2025 with a noticeable reduction in Southern Europe. U.S. flagship vacancy was 5.2%, a major improvement from the 6.3% as at December 2025, reflecting the appeal of URW's high-performing assets. Overall, occupancy cost ratio remained stable at 15.7% in Europe and 12.2% for U.S. flagship assets. Convention Exhibition next. Net operating income stood at EUR 105 million, a 16.4% increase compared to last year, reflecting the strong operating performance as well as the usual seasonality between even and odd years. Compared to H1 2024, NOI was plus 18.2% on a like-for-like basis. Bookings and pre-bookings stand at 99% of the expected rental revenues planned for 2026, demonstrating the appeal of URW's convention exhibition venues. And as an illustration, Porte de Versailles is currently hosting the Esports World Cup after the event was relocated from Saudi Arabia at short notice. The successful hosting of the Paris Olympics was a key decision driver as the organizers needed a proven venue that could accommodate events watched by millions worldwide. Moving next to the evolution of our GMV and EPRA NRV, which both grew during the period. The group's GMV at June 2026 amounted to EUR 49.5 billion, a 1.2% increase compared to year-end 2025. This is mainly due to a plus 0.9% positive revaluation of the portfolio. This 6-month increase compares favorably with the 1% annual growth we referred to at our Investor Day. This GMV increase was also supported by CapEx invested and positive FX evolution, which more than offset the minus EUR 0.4 billion impact of disposals achieved in H1. As a consequence, the EPRA net reinstatement value stood at EUR 146.80 per share, up 2.1%, reflecting a contribution of circa EUR 2.60 per share from the positive asset revaluation, a positive FX impact of EUR 0.80 as well as a EUR 4.50 distribution paid to shareholders in May. Looking more closely at shopping center valuation. Like-for-like retail valuation was up 1.6% in H1 2026, driven by a positive rent impact of plus 2.3%, partly offset by a minus 0.7% yield impact. This positive rent impact reflects the strong operating performance achieved in H1 2026. This includes a 2.2% increase of the NRI next 12 months and a conservative 3.4% CAGR of the NRI over 10 years assumed by appraisers. Overall, yield impact was slightly negative with a 20 basis point increase in the discount rates in Europe. Like-for-like valuations were up 1.4% in Europe with a stable net initial yield at 5.3%. They were up 2.2% in the U.S., including plus 2.4% for flagships, exclusively coming from a rent effect. This implies a 5.1% net initial yield and a 5.7% stabilized yield based on NRI estimated by appraisers in year three. This stabilized yield is in line with December 2025 and shows the NRI growth embedded in our U.S. flagship assets. Moving now to development. The total investment cost of our committed pipeline decreased from EUR 1.2 billion in December to EUR 1 billion as at June 2026. This reflected the delivery of Westfield Hamburg offices currently 87% let, which reduced the group development pipeline by EUR 0.4 billion in H1. In parallel, the group added EUR 0.2 billion of committed projects relating to CNIT office, where the group will have its headquarters and which is now 45% pre-let as well as two new projects in the U.S. at GSP and Roseville, currently 86% pre-let. The control pipeline now amounts to EUR 0.7 billion at 100%, taking into account the transfer of projects to the committed category. And as a reminder, any decision to launch control pipeline projects will be fully consistent with the capital allocation policy and CapEx limit presented at our Investor Day. IFRS net debt, including hybrid has further reduced in H1 2026 from EUR 20.3 billion to EUR 20.1 billion. This results from the EUR 0.6 billion proceeds of the disposals completed over the period, which had a positive impact of 90 basis points on the LTV. The EUR 0.7 billion in cash flow generated in H1 were partly offset by EUR 0.3 billion in CapEx spent over the period, generating a net positive impact of 90 basis points. Net debt level also reflects the EUR 0.7 billion distribution paid in H1, which had a negative impact of 140 basis points on the LTV. Finally, portfolio valuation had a positive impact of 50 basis points on the LTV, while FX led to a net debt increase of EUR 0.1 billion and no major impact on LTV. In total, IFRS LTV, including hybrid stood at 41.9%, down from 42.8% at year-end 2025, a 90 basis points decrease despite the full payment in H1 of the yearly distribution. We are, therefore, ahead of the LTV trajectory presented at our Investor Day to reach an IFRS LTV target of 40%, including hybrid in 2021 -- in 2028, sorry. The group's other credit metrics also continued to improve in H1 2026. The IFRS net debt over EBITDA ratio, including hybrid, stood at 9.1x, below the 9.2x in H1 2025. This level is supported by a 5.3% increase in EBITDA on a like-for-like basis and is consistent with the 9x level anticipated for the full year. The interest coverage ratio improved to 4.7x as a result of this strong EBITDA performance and contained increase in financial expenses and cost of debt. Cost of debt for H1 2026 amounted to 2.3%, slightly above the 2.1% in full year 2025, which benefited from positive FX hedges contribution. This figure is in line with the 20 to 30 basis points increase per year presented at the Investor Day coming from the maturity of historical debt at low coupons, lower cash amount and decreasing cash remuneration, partly offset by the group hedges in place. And the improvement in operating and financial ratios as well as the completion of our disposal program led Moody's in H1 2026 to change the outlook of the group's Baa2 rating from stable to positive. Before I hand back to Vincent, I wanted to share some detail on our 2026 refinancings. The group has successfully executed a number of major financings in H1, illustrating its access to funding at attractive conditions. In April, we issued a EUR 750 million green bond with a 7-year maturity and 3.78% coupon corresponding to a spread of 105 basis points. This was the tightest spread achieved by the group since May 2021. The group also refinanced the GBP 750 million debt secured by Westfield Stratford City through a new bond at yield plus 90 basis points and a 5.1% coupon. This transaction has the largest order book ever achieved by a risk debt issuer in this market, leading to the second tighter spread over the last 5 years. Thanks to this activity, our average debt maturity stood at 6.7 years as at June, taking into account EUR 8.7 billion of undrawn credit facilities. And finally, we further optimized our capital structure with the repayment in April of the remaining EUR 333 million of our hybrid with a non-call date in 2026. And as a result, the group's hybrid portfolio has reduced from EUR 1.83 billion as of December 2025 to EUR 1.5 billion today. With that, let me hand back to Vincent for some closing remarks.

Thank you, Fabrice. I want to take a quick opportunity to congratulate you on being recognized as the top property sector CFO in the Extel 2026 survey. It's a fantastic and well-deserved recognition for you and your team, reflecting your very strong commitment to engage with our investor community. Before I wrap up, let's now look at our guidance update for 2026. We confirm that we expect our 2026 AREPS to be within the guidance of EUR 9.15 to EUR 9.30 we gave at our full year results. This guidance is supported by the strong H1 operating performance presented today, which we see continuing in H2. It also reflects the full year impact of the group's disposals and recent refinancings. We also confirm that we will propose a EUR 5.50 per share distribution for fiscal year 2026 as announced in February, which represents a 22% increase from the EUR 4.50 paid for fiscal year 2025. This guidance assumes no major change in the macroeconomic nor geopolitical environment. So to sum up, in H1, we will continue to deliver against our key business plan priorities, driving organic rental growth from a dominant retail portfolio, growing new revenues, including Westfield Rise and disciplined capital allocation. A big thanks to all our teams who have delivered a very strong semester. Let's now start the Q&A.

[Operator Instructions] First question is from Frederic Renard, Kepler Cheuvreux.

First question would be, to what extent did the World Cup drive the figures of growth in the U.S.? And do you expect retailers to leave some of your malls after the World Cup? So have you already noticed some departure? And on Westfield Rise, is the trajectory still on track versus what you presented last year? And maybe just a final one on the licensing fee business, any impact from the current conflict in the Middle East?

Frederic, thank you for your questions. World Cup impact in the U.S., marginal on our business and performance in H1. So obviously, we had some benefits. It happens that actually across the portfolio in Europe and in the U.S. flagship destinations have been anchors and magnet for fans to join. We broadcasted some of the games. You have plenty of examples like in Century City, in Los Angeles, in Parque Sur, in Madrid, for instance, as one of the place to be to celebrate the World Cup. We have very healthy traffic figures, but we see above anything, I would say, a continuing trend month after month, we're on par or it slightly accelerate versus the Q1 disclosure we've made. And so it's really broad-based across the board, and we don't see a meaningful impact or one-off effect from the World Cup, in our U.S. performance. Actually, the U.S. footfall has been increasing less than in Europe. Interestingly, However, the tenant sales are growing the fastest over there. So it should provide you some context on the very strong fundamentals we see in this market or at least across eight main markets in the U.S. With regards to Westfield Rise, we printed or we communicated a plus 7% growth. The growth trend continues. I mentioned in my part of the presentation that we're seeing a more muted brand activation market. And so you have to dissociate the two lines -- main line of activities of Westfield Rise. The retail media side, so the screens are performing well with strong growth, which is more or less on track with our overall baseline by 2028. It's growing more than double digits. And so the business is well oriented over there. On the brand activation side of the activity, which is the mall activation, launch of new products, I think the environment has more impact where we are not delivering the growth that we foresaw and we saw market conditions, which have been more adverse than what we anticipated in 2025. So we are tracking behind on that line of business. We believe that it's going to catch up over the next few years. So it doesn't necessarily mean that we will not be at our objective by 2028 and the end of the plan on this line of business. However, today, factually, we are tracking slightly behind the baseline we have. When we look at the overall business, it's an important growth engine of our business plan. It's a great value-add service we offer tenant partners. We believe a lot in the potential of the Rise business. Even if we track slightly behind and we don't hit absolutely our number, the reality is that we have other areas, as you can see in our portfolio, which are firing and performing very well. And so in the end, there will be some pluses, some minus. But as a management team and a management Board, we feel comfortable and very comfortable with the fact that we can deliver our guidance within the range that we had shared during the Investor Day. Last point on Rise, there's a bit of a one-off effect as well on the growth trend you see on a net income basis because the expense basis of the business is -- has seen some recalibration of some costs coming online that were not last year. And so we -- 2026 is the year where we reach, I would say, recurring margin. And so there's a bit of a one-off effect. The actual rental income and the revenues of the line of activity is north of 10%, including brand activation. So that's it for Rise. Last question on licensing and fee business. We are not seeing adverse impact on the activities of our partner and our first rebranded mall in Westfield Dammam, in Saudi Arabia. It doesn't affect our strategic approach towards this new promising market. What we see on the ground is the strong performance of the assets, the strong local consumption, the strong tenant sales performance. And I see -- we see as well the evidence of the value we bring to our partner through the positive feedbacks we have on their business on the ground on this asset that have been repositioned. So no change from that perspective, and we are on track with our expectations, projections and trajectory for this new line of business.

Next question is from Jonathan Kownator, Goldman Sachs.

Two questions, if I may. One on capital allocation. You highlighted that your LTV coming down a bit faster than you expected, which is good. Can you talk about the flexibility of the balance sheet to do additional investments? Are you contemplating perhaps more disposals? I noticed that one was, I think, pulled in La Defense. But how are you seeing that flexibility and capital opportunities? And would there be more in the U.S. or Europe? That's the first question. And on the Westfield Rise, I was wondering, you had alluded to data in your presentation and pilots. Can you expand a bit on that? And can you let us know if you're trying to find an alternative way of growth in that business given the brand activation is perhaps a bit behind?

Thank you, Jonathan. On the capital allocation, do you want to take it, Fabrice, on the balance sheet flexibility, maybe and I can follow on disposals.

So on the capital allocation, there are two important points. First is that, as we said during the Investor Day, first, we need to sell before we start reinvesting. And I think as illustrated by Vincent presented during the presentation, what we've done on Plaza Bonita and Southcenter is a good illustration of this, meaning that effectively, we have sold first Plaza Bonita, and then this put us in a position to reinvest in Southcenter, which is a center with a higher potential going forward and which is a center of higher category and better quality than Plaza Bonita. So, that's the first element. The second one is that all in all, what really matters to us is to follow the trajectory that we have mentioned during the Investor Day of a 40% loan-to-value target by 2028. And so any decision on capital allocation will be reallocating the proceeds of disposals to potential acquisitions. And again, Plaza Bonita is a good illustration of that.

Yes. And with regards to the disposals, I think we have completed the disposal program, and we're very happy about that. I think we're very happy to see the opportunities and find great opportunities to initiate this capital recycling cycle and strategy on the first half of 2026. I think our teams -- we have no obligation we regularly and constantly appraise our portfolio. We still have a number of non-core assets that we could dispose at the right conditions. And now it's really a game of kind of aligning those disposal opportunities together with reinvestment opportunities we see in the market, whether across the portfolio or on the open market to some extent. And we see a pickup generally of transaction activity on the retail sector, which is encouraging. We see the appetite. It feels the sector is the darling of investors now when I listen to the comments we receive more and more regularly. So it's interesting how things change. The fundamentals are there. And -- but we -- our business plan doesn't rely on that. So this is where it's a very comfortable position. We don't need to do anything. So we'll take only the right opportunities when they fit their baseline or trajectory. And I think we intend to be and to remain disciplined from that perspective. Capital opportunities, it happens that those U.S. transactions materialize now. We see a strong growth. You can see it in the numbers. So it's an attractive market. We are open to opportunities in Europe as well, and it's a question of comparing them. Those transactions have been in discussions for a year, 1.5 years for some of them. So I think it's the good outlook we have as well on the stock price now that allows to unlock some of these. So it happens to come at one go, but we do the work on the portfolio across our various geographies. And lastly, the data on Rise. I'm sorry, I didn't catch the full extent of your question, Jonathan. Do we see some impact, scope to revise the guidance with that?

Not necessarily that much, but just trying to -- do you have a tentative delay of growth in these areas given the valuation is perhaps a bit slower? And just also to get a bit more context about what you're highlighting in terms of new initiatives and pilots around data.

Okay. We see -- I refer to the many success stories we see across the portfolio. And so this, we see it clearly. Are we able to pin down the very strong leasing performance of H1 to part of this ongoing initiative and efforts? We cannot make the direct link. I would like to tell you, yes, but it's too soon. That's why we made it one of our priorities for 2026, and we hope to be able to share more with you by the full year results at the latest on that front. What's certain is that we see it as beneficial to our overall business. And to some extent, if we go a bit deeper into Rise, I think in our overall trajectory, we have an assumption of developing new services and new lines of revenues as well based on the data in the EUR 180 million net revenues we guided towards. We have not settled at this stage, given the many benefits we see on the data solution, whether we want to develop a new stream of extra revenues or whether this is part of the package because it helps us increasing our rental uplift across the board, across the portfolio. And I'd say from that perspective, it's still early stage, but seeing the long-term rental uplift growing from 11% in the last 3 years to 14% this semester is a good omen, and we hope and we intend with the team to keep on this strong momentum in the future. And if the data without being charged separately for it allows us to get back to 20%, 25% per annum, I think we'll be very happy without having a new lineup with you. So we're really in the middle of it in a nutshell.

Next question is from Pierre-Emmanuel Clouard, Jefferies.

So maybe to come back on the UTC transaction, it would be nice to remind us the terms attached to this transaction and maybe also the share price and the U.S. dollar price, the assumptions where you could exercise the option, looking at where we stand today. A bit of color on that would be useful. And then my second question is on the guidance. So as you mentioned, the H1 operational performance is quite decent and very strong. What are the key assumptions that prevented you to increase the guidance at this stage and especially given the euro-dollar price move since the beginning of the year?

Okay. Regarding the UTC transaction, as you have noticed, we didn't share the details on the pricing so that which the transaction could unlock. What I can say is that we are not that far. So let's say, it's a matter of a few percent in the end, but it's a combination of USD -- euro-USD exchange rate and stock price. And so we monitor. We have -- we entered into this conditional agreement that lasts until the end of the year, which gives us a lot of leeway to hit those thresholds. We can also dispose of assets beyond the EUR 2.2 billion disposal plan that we've completed and reuse the cash proceeds from those disposals to fund the transaction full cash, which means less dilution, probably slightly more accretion to the AREPS without impacting to the LTV. And that's the reason why we structured carefully this transaction to afford the maximum flexibility in an environment that can remain volatile in the next few months. So that's the element. I believe we've shared in the past some color on the broad ZIP code of net initial yields, and we remain on the same levels that have been commented around June. There's no change to that. Fabrice, on the guidance?

So to come back to the guidance. First, we confirm this guidance. And just maybe to put a bit of perspective. So the AREPS in H1 is down minus 5.2%. And if you take as an illustration, the upper case of the guidance, it would be minus 3%. So basically, you see that there's I would say, an overall improvement in the evolution of the AREPS. Still, what might impact H2 is mainly twofold or even threefold. One is the impact of potential additional disposals and the time lag between the time when we sell assets and the time when we redeploy the capital, which is one topic. The second is connected to the potential financing that we may do in H2, which could be very good in terms of conditions, in particular, as you've seen, the spread that we've been able to achieve were very attractive. They were the best ones in the last 5 years. Still the rates are somewhat higher, and therefore, there's a cost of carry associated to that. And the third element is that all in all, still the variable activity account for around 15% of our NRI, so including parking, including commercial partnerships, including sales-based rent. And just to -- we mentioned Rise before. So the net income of Rise is 2/3 in H2. So basically, depending on that, and so this has an impact just on H2. So all in all, very strong H1 performance on the operating side and confirmed guidance.

Next question is from Charles Boissier, UBS.

Two questions from my side. The first one is you've outlined the acquisition targets. And you mentioned enhancing overall portfolio quality and densification across your existing footprint. And in an answer to one of the previous questions, you mentioned that you're looking at both the U.S. and Europe. So it sounds geographically quite flexible. But if I look at your acquisition so far, it's been very tilted to the U.S. So should we view this strategy as more geographically agnostic across Europe and the U.S.? Or do you see currently the U.S. as offering more attractive opportunities for deployment and add-on acquisition?

Okay. That's your first question. No? Okay. I think generally speaking, yes, indeed, as I mentioned, those U.S. transactions have been kind of under negotiation for quite a long time, and they kind of -- it happens, they unlocked at this moment. Obviously, it was important for us to complete the EUR 2.2 billion disposal program as well. So things have lined up pretty well. We look at opportunities across the market. Being pretty basic, we like the tenant sales dynamic we see in the U.S., the trend in the business. We see substantial potential for long-term growth in our U.S. footprint. And so as a result, we like this geography probably better than others or more than others to some extent, when we look at the macroeconomic environment and the facts on the ground. So as you say, probably there could be a slight tilt towards the U.S., but it's not an objective in itself. We have many assets in JVs as well with partners who wish to find liquidity or wish to find liquidity for some time. So I think that's one of the elements where the U.S. has an importance. We -- overall, probably the trend as a management Board, we feel comfortable trending towards a 25% weight towards the U.S. in our assets where we're slightly below 22% today. So I would say it's incremental, marginal and so on. But directionally, we would feel comfortable there if we find the right opportunities.

On long-term leases, that have been a key feature of the recovery since COVID. Their contribution has risen. And I think in H1 '26, however, the long-term deals, they move slightly backward. I don't want to overread into it. I think it's 300 basis points lower than at full year '25. So I just was wondering if there is any specific reason behind the recent increase in short-term deals and if this is driven by retailer demand, leasing strategy or specific market or asset mix? And then looking forward, where do you see the long-term versus short-term mix stabilizing?

As you said in your question, you should not over interpret it. So basically, it was 80% last year, it's 79% this year. So I would say it's very limited. And usually -- and even pre-COVID, we had this same type of level of 80-20, which is usually the flexibility that we want to have between two tenants to find the possibility to fill in the spaces before having a new tenant coming in or when you do some restructuring, filling in some space. So I would say, the way we run the business usually is quite tactical. And all in all, the proportion of long-term deals is aligned with what we've seen before and what is the target of the group long term.

And I would add that indeed, it's not always a negative or a sign of lack of tension, because it can be strategic for a certain period of time, a few months, eventually a year on larger operations. And that's why we wanted to share a bit of insights on what we've done in Westfield London and Westfield Centro in Germany on one of the slides because that's typically the type of active asset management work that you do where you're going to mobilize a bit of short-term lease for you -- for us to find the time to align all the tenants because you have subsequent operations that are related to one to the other. And in the meantime, we want to maintain as well an activity presence versus being vacant even if we have signed a deal. So there's an element of strategic approach as well to some of the short term.

Next question is from Paul May, Barclays.

Just a couple from me, just one by one. Sorry to labor on the expansion phase and acquisitions. I just wondered, have you considered larger corporate deals either in Europe or in the U.S. Just given where you trade on an implied cap rate basis, they should, in most instances, be accretive on that way of thinking. I just wondered if you thought larger and bigger, you're not averse to issuing equity when taking out JV partners, but just wondered, have you thought about that on a whole corporate level?

Not really. I think we're primarily focused on deal-by-deal type of opportunities across our portfolio to that effect, and the disciplined disposal as well frees up a few hundred million here and there that we could redeploy. I think larger scale M&A would require probably more massive disposals in order to be considered. And it's not like there are many targets out there that would fit the quality criteria we have as well and on which we are pretty disciplined. So this is -- as we have always mentioned, we track all opportunities in the market anyway because we want to be very close to the market. But this could be really an exception, I think, and it's not a target or a goal in itself for us.

Okay. And then simply, you mentioned, I think, the LTV target. Just wondered, given that figure is relatively easy manipulated and a lot of marginal investors tend to focus on net debt to EBITDA as opposed to LTV. Just wonder if you can be more clear on targeting net debt-to-EBITDA reduction, probably bringing more into line with retail peers because it is somewhere where you do still stand out as some investors views being over-levered on that basis. Just wonder if that is a target for you to bring that down.

Thanks, Paul, for this question. I mean, two comments on my side. First, I'm not sure that I would qualify the LTV the way you do it being easily manipulable because, again, those valuations are done by external appraisers. And by the way, they tend to be confirmed at a time when we sell assets because we sell assets in line with the appraised value. And by the way, as you would see that we even generated positive results on disposals on the dispose that we've achieved in H1. So that's the first element. Still, as we've always said and as we've indicated during the Investor Day, we have two targets when it comes to credit metrics. One is LTV, so at 40% in 2028. The second one is net debt over EBITDA ratio. And you've seen that this is obviously an indicator that we track very closely. And by the way, as mentioned, you've seen there was an improvement in H1 of the net debt over EBITDA ratio from 9.2x in H1 '25 to 9.1x in H1 2026. And by the way, this is consistent with the 9x level that we announced and we mentioned during the Investor Day with a target in 2028 to reach 8x net debt over EBITDA.

Next question is from Florent Laroche-Joubert, ODDO.

So two questions, if I may. So the first question would be on your vacancy rate. So we have been able to see that you have been able to improve it. And so at this level, so can we consider that we have reached a target? Or do you think that you can still improve your vacancy rate? That would be my first question. And my second question would be more on the credit side. So we have been able to see the update of Moody's regarding your credit rating. But do you have any update also from S&P regarding, I don't know, maybe a potential upgrade?

With regard -- thank you, Florent. With regards to the vacancy, we can always improve. So we have a number of assets where we can improve the vacancy still, and we are putting the work to achieve that. This is why the Centro -- Westfield Centro example is encouraging. Same for Westfield London and so on. When you do the right asset management, you bring in the right concepts, we invest through leasing capital to upside those stores. It drives activity, it drives traffic, attractivity, and it allows us to solidify further the rental and the occupancy of the asset around. Interestingly, even in fully leased assets, you always tour some assets where you have slightly softer areas than the prime pitch. Even if when you reach a certain low vacancy, it's better retention, better uplift for sure. But at the same time, we can keep on working and enriching the quality of those assets in some of those areas as well. And so across the portfolio, we believe that we still have some room to go to some extent on the vacancy reduction. And the interesting part is that once you reach that, it means that usually you see the rental uplift increasing as well. And so the tightest or the lowest vacancy areas or, let's say, markets in our portfolio are the ones where we see the highest uplift. If I leave aside the U.S., which is slightly specific and outlier from that perspective because it has still a high vacancy when you compare to other markets in our portfolio, but the highest leasing spreads and uplift as well because of the very strong trend on the ground.

And so to come back to your question on rating. First, we are very happy that Moody's recognized the improvement that we've made in terms of de-leveraging and in terms of improvement of operating performance. By the way, this change in outlook took place before the release of the H1 results, where you see further improvement on those sides, be it valuation, be it net debt reduction, be it NRI like-for-like growth and EBITDA growth on a like-for-like basis. So basically, we'll continue discussing with the rating agencies, both Moody's and S&P on those topics to explain to them where we stand and to show them the progress that we keep making semester after semester. Still, I think there's one point of context to mention is that you have one rating -- you have one notch of difference between S&P and Moody's. And so that's why Moody's came up with this positive outlook because of the progress that we've made and also this difference. But again, we'll keep discussing with the rating agencies, the progress that we make on our credit metrics, which we have highlighted during this presentation. Maybe last -- one last point that I wanted to make. Despite the situation, we've been able to raise debt at a very strong -- I mean, the best spread over the last 5 years, in particular, on the bond side, which is also a sign that even without this improvement, in the ratings, finding the right market windows. And so the bond that we issued was 6.8x oversubscribed helps us also reduce our cost of debt, reduce the spread. And this is -- and I wanted to thank in this respect, Meriem and her team, the treasury team for the great work that they've been doing on these transactions that I've just mentioned, the EUR 2.1 billion that we've raised at attractive conditions in H1.