VGP NV (VGP) Earnings Call Transcript & Summary

Welcome to the review of VGP's financial results over half year 2026. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead.

Good morning, everybody, and welcome to the presentation or webcast of our performance over the first half year. I'll start with an executive summary of what has happened. So the first quarter of the year actually started very well, and the second quarter was a little bit subdued through this Operation Epic Fury, which everybody has been following with great interest. It seems now that dust is settling a little bit. The third quarter has been very well so far, and we have very nice prospects for the rest of the year, especially in newly signed lease agreements underway. We report a net profit before tax of EUR 141 million, EUR 140.9 million. That's EUR 120 million net profit after tax, earnings per share of EUR 4.26. We also report an EBITDA of EUR 186.4 million, and you will be probably pleased to hear that EUR 130.5 million from that is recurring investment segment, so recurrent income. We had EUR 128.2 million of net rental and renewable income at share, which is a growth of 17.9% year-on-year on a proportional basis. And our -- at the 30th of June, our committed annualized rent income stood at nearly EUR 0.5 billion at EUR 489 million. That has grown to EUR 496 million meanwhile. And it's 11% year-on-year growth, and we will soon break the EUR 0.5 billion barrier, which we've been always looking for. And I hope it will happen in September. I'm sure it will happen in September. We have EUR 260 million of cash-generative leases at the moment at share, which means handed over generating lease income already. We initiated 314,000 square meters of new developments and delivered 236,000 square meters in the first half, which were 86% let. We have -- our proportional LTV dropped from 50% at the year-end to 49.3%. We have a consolidated gearing of 35.5%, and we still have a BBB- with a stable outlook, both from Fitch and Standard & Poor's. Our shareholders' equity was up 10.5% year-to-date after EUR 247 million net equity raise. And -- at the moment, we have EUR 9.2 billion assets under management. If you look at our investment property at share, then that is EUR 6.1 billion. And in December, we had EUR 8.7 billion assets under management. We have multiple joint venture closings upcoming. As you know, our SAGA, our latest joint venture is momentarily 60% deployed. We foresee to do a large transaction both in the end of this year, beginning of next year and then to start a second Saga vehicle and our East Capital fund is in preparation for 2027. And then I also have some news, which I will talk a little bit about, but mostly on our Capital Markets Day, about our data center deployment. We've always been very careful in communicating about it because we wanted to be sure before we say something that we also can deliver. So I think the time has come to veil little bit, to reveal a little bit what we plan to do in the next 2 to 3 years on the data center side. I'm going to hand over the word to Piet first now for the financial performance.

Thank you, Jan. As always, I've prepared you a set of slides to walk you through the main changes over the period, albeit this time, it's in a bit of a new jacket. But as Jan mentioned, we are happy to report a profit of EUR 120 million or EUR 140 million before taxes with a strong contribution from all of our business segments, resulting also in a EUR 186 million of EBITDA. If we compare a bit year-over-year, then you will see that the EBITDA by the segments has grown from EUR 118 million to EUR 131 million in the Investment segment. That is mainly as a result of the recurring earnings and the rental and renewable -- the net rental income that has grown significantly, both in our own portfolio as in the joint ventures. I will share a bit more details on that on the next slide. In the development, we have a decrease of EUR 118 million to EUR 52 million. It's not that there is anything outspokenly negative happening in H1. It's just that H1 '25 benefited from some additional revaluations gains as well as transactions with joint ventures, which resulted in a significant realized gain, and we haven't done any joint venture transactions to date. On the other hand, the renewable energy EBITDA doubled from EUR 2.1 million to EUR 4.3 million as a result of a higher output of our solar installations and also the battery systems that are coming online. So if we break it down a bit and focus on the different contributing factors, the first and foremost is our recurring earnings, which have grown significantly organically also, which is at share up with 18% to EUR 128 million. So that's EUR 51.7 million or 26% up in our own portfolio, EUR 76 million in our share in the joint venture rental income, that's up 13%. So I think it's a testament to the quality of our rent roll. And as Jan mentioned, we have EUR 489 million of contracted annualized rental income in the entire group at 100%. Out of that, proportionally EUR 327 million is the contracted income, of which EUR 260 million is already cash generative. The rest is being handed over, of which a majority part will be in the next 12 months delivered. Solar, as I mentioned, is up 10%. It's mainly a production increase from 71 to 78 gigawatts and also a capacity increase that is exactly linked to it. Basically, it's 9%, and we have now 170 megawatts under construction. We also had a good indexation on the portfolio in the first half of this year, and we were also able to relet vacant space with an average 6% increase in the rental price that is compared to the latest rental price that was active in that building and that we now replace. And it's not just 1 contract, it's quite spread over the group. So all in all, the recurring income in the rental and renewable energy performed very well. The valuation gains, they are EUR 65.9 million on our own P&L. And on the joint ventures, there is a EUR 25 million revaluation at share. So the total revaluations at share is EUR 91 million. As you can see, the valuation gains, they are primarily driven by the constructions that have been initiated in the first half of '26. And just to give you a bit of color on that, how the development gains are coming to be. I've made the box-and-whisker graph on the left, which shows with the title development gap, which shows on the left side, the yield on cost of the developments and on the right side, the weighted average yield by the appraisers of these developments. But you should always know that these developments that have been initiated, they are at the beginning of their construction period. There might still be some vacancy in. So up until the moment you stabilize the asset and the asset becomes completed and fully rented, the weighted average yield, provided there are no real fluctuations in other movements in valuation assumptions, it will come down. But as you can see, the yield on cost, we are very enthusiastic about it. And the lowest asset that we have is at 7.2%. The highest we have is at 11.5%. And on the average, we are around 8.7% yield on cost, fully loaded, of course, with capitalized interest and development fees, et cetera, whereas you see the weighted average yield, of course, should be lower, that triggers the margin is between 5.4% and 9.6%, where the average is at the moment, 6.5%. So that looks very promising also for the future because we expect this to ramp up further by continuing to develop these assets that have initiated. You can also see this in the average yield of our portfolio on our own balance sheet. That's around 7%. And in joint ventures portfolio, it's very stable, 5.22% to 5.25%. Also the revaluation in the joint venture, we have a EUR 25 million contribution at share, but towards the size of the joint ventures, which you can see on the right side, that is quite a stable revaluation. And as Jan was mentioning, we have EUR 9.2 billion assets under management. The inner circle shows it at 100%. So the EUR 2.8 billion is on our own balance sheet. The rest is in the JVs. The outer circle shows actually in the gray bars, which are in the joint venture, which is our share. So we own EUR 3.3 billion inside of the joint ventures' IP and EUR 3.1 billion is, of course, economically owned and legally owned by our joint venture partners. So together, EUR 6.1 billion. And 74% of the assets of the EUR 9.2 billion, they are also located in Western Europe. I think I mentioned already probably most what has happened in our joint ventures. So strong increase in the net rental income with 13%, valuation gains I've just described. But I'm also very happy to show once the EPRA metrics of our joint ventures because we always consider our joint ventures sort of a REIT. They are fully stabilized portfolios, and we try to run them as efficiently as possible. We try to distribute all of the excess cash during the year and different formats. But this result that our EPRA earnings of the joint ventures have increased to its 16.4%. Cost ratios are well in check. The valuation yields, they are very stable. The vacancy rate has come down from 2% to 1.2%, very happy to see that. And then the LTV has also come down from 32% to 31.5%. There was also an excellent performance in our Rheingold joint venture, which has a track record in its 10-year existence now of above 12%. This triggered a promote of EUR 18.4 million. This was also already provisioned at year-end, has also been paid out, but the cash was received on 1st of July. So you will see that popping up in our cash flow in the second half of this year. Finally, Rheingold also needed to refinance as the term of the JV came to its maturity, such that its debt that was EUR 844 million, we have completely been able to refinance that quite easily even in the volatile market environment, and it's now replaced with a bullet facility with a small top-up of EUR 886 million, which also allowed for the payment of the promote to VGP. On the balance sheet, I think it's a pretty straightforward story. Our total assets and equity and liabilities have increased from EUR 5.2 billion to EUR 5.8 billion. The shareholders' equity is up to EUR 2.9 billion. So the investment property increased from EUR 2.4 billion to EUR 2.8 billion. It's the equation of EUR 378 million of CapEx and then the revaluation effects and our share in the joint ventures, as I showed the performance on the previous slide, that equates an equity participation in value of EUR 1.5 billion. Our consolidated gearing is stable with 35.5% and our proportional LTV at share came down to 49.4%. We have a very solid cash position with EUR 599 million and untapped RCFs of EUR 500 million. So we have a liquidity position of above EUR 1 billion. Maybe to zoom in once on our debt because we have been quite active in the last 18 months on the debt markets. Last year, we raised a bond of EUR 576 million. Beginning of January, we raised one of EUR 600 million, which was then used to repay a bond in March of EUR 190 million. And also, we bought back EUR 100 million on the January '27 bond outstanding. As you can see in the graph on the left, that bond is now EUR 220 million. It was 1.5 years ago, EUR 500 million, but we have been proactively extending the maturity on this bond and been repaying them and very happy that we did so. So the refinancing that we are looking at now until 2029 is very limited with only one bond remaining in '27 of EUR 220 million. Of course, in the current interest environment, I don't think it will come as a surprise that our interest has come up from 2.7% to 3%. But again, we are looking quite bright to the future as we don't have to do any major refinance in the next years to come. Revenue is vanity, EBITDA is sanity, but the cash is the reality. So it's always good to also look once at the cash flow and see where the money has flown through. You can see that the net cash from the operating activities went from EUR 28 million to EUR 4 million. It's not that our operating cash flow went down. On the contrary, it's mainly the movement on the working capital that has played this part. It's a bit of an unfortunate that the promote was only received on 1st of July. Otherwise, this picture would have looked already different, but it's mainly buildup in some short-term receivables, but nothing out of the ordinary, but that is a good contribution. The net cash used in the investing activities is EUR 331 million. It's up versus last year. It's mainly driven by a higher CapEx spend of EUR 376 million. We also sold 1 of our parks in Latvia, which was VGP Park Tiraines. Last year, we sold VGP Park Riga in the second half of the year that provided some cash in of EUR 26 million. We had distributions of joint ventures in the first half, up versus last year. It was EUR 19.2 million. I think we can expect a minimum EUR 80 million for the year, but the JV distributions, they usually come in the second half of the year. Some of them pay it regularly. Others, we do it in one go. So -- but we expect about EUR 80 million at least. And then in the financing activities, also a big swing versus the previous year. So we raised a bond of EUR 600 million, which raised EUR 593 million net of proceeds. We repaid EUR 190 million bond in January and EUR 100 million proactively. So that's EUR 190 million net. We raised an equity of EUR 250 million, net EUR 247 million. We paid out the dividend. We paid out the interest on our bonds. The interest that you will see in the P&L is lower than the interest paid. That is because most of our bonds have been raised in the first half of the year, and then it's when we also pay the interest. So that's actually less to be expected in the second half cash flow-wise. And I think that will conclude my slides, and I'll give it back to Jan. Thank you very much.

Yes. I will continue with the operational performance. The park you are seeing on the picture in the presentation is our VGP Park in East Midlands. And we have already leased the first building under construction now to Games Workshop. It was just signed. It will start generating income at the end of this year, and we are in active negotiations for the second building. On the leasing activity, I will start with the leasing activity. We just put in this slide on. This is our park in Vélizy, not very far away from Versailles. And as you can see, you can see also the Eiffel Tower, which is here in the back. It's really 13 kilometers away from the Eiffel Tower. We're very proud on the location. We think it's absolutely stunning. That's our VGP Park in Vélizy. Completely demolished meanwhile now. It used to be an R&D facility for Stellantis. And we have -- we're signing our first lease agreement on the building right in the corner on top in the coming week. We have a record committed rental income at the 30th of June of EUR 489 million, including the joint ventures at 100%. And our committed annualized rental income has gone up by 7.6x over the last 10 years. So we've grown considerably. It's -- we have 482 tenants, but 693 tenancy contracts, which also shows that we have a lot of repetition clients, a lot of clients who put their faith in us and come again and also over multiple countries. And if somebody talks about a real European platform, I mean, we have assets in 16 different countries. I think we are a real European player also from a shareholding perspective. The bridge of the committed annualized rental income, if you look at it. So we started with EUR 468.3 million of leases at the year-end. We signed EUR 24 million of new leases. Meanwhile, that's gone up to EUR 31 million. We have some indexations, EUR 7.6 million. We have amendments to existing lease agreements, people who want something extra, and we have amendments, EUR 2.2 million. We had EUR 11.3 million of terminations, and we sold one building, which is EUR 1.8 million, and that makes the bridge to EUR 489 million. Meanwhile, that's gone up to EUR 496 million. We signed EUR 52.7 million in total of rental income signed and renewed during the first half of 2026, roughly in line with our record year of last year. And as I already said, as Piet already said, the relettings of the vacant space achieved a 6% on average increase in the rental price, and that's over total our portfolio, and it's a lot of lease agreements. And we have an 84% retention rate at the moment of those leases, which come to an end and we need them to relet. 84% of the tenants stay. The new tenant demand is shifting back towards e-commerce. E-commerce has been very off the market over the -- since 2022 to until last year, we had virtually no e-commerce deals. Now we see them coming back and really coming back big time. At the moment, as we speak, we have a number of really very large new e-commerce players, which are going to sign up with us. So we are in final lease negotiations. And I'm very happy that I'm going to be able to show you the Zalando building on our Capital Markets Day because I think it's a reflection of what is going to happen also with robotization and automatization. You will see the building is incredible. It's fully automated, and it's really impressive. I'm very glad to be able to show you that. Logistics is the largest part. You can see in the new lease agreements by segment, it's 51% of what we have signed, but e-commerce is growing again. It will grow a lot bigger in the second half because these contracts with the e-commerce providers are really very big. We expect to sign some very large new leases. Light industrial is -- has been 21.6%. And, for example, GE is as an example here, we also see quite some demand out of the defense sector, which is really picking up. And yes, the occupancy of our standing portfolio, it's 98%. It's compared to the market where we think the average vacancy is around 5% to 6%. We are performing quite a bit better. We have now EUR 419 million of cash-generative leases. We have a land bank, as you know, I will come to the land bank later on, which is fully permitted, where we have all the permits in place, which we can develop. And we think some of them are now coming to maturity because we are demolishing inside and there are some sale and leasebacks and they are going to come to the end. And so if we develop all of that, we have a potential to grow our income-generating assets to roughly EUR 800 million per year. And Piet likes to make bridges as always. So we have -- we started the year with EUR 389.3 million of cash-generative leases. We activated EUR 30.6 million of new leases. So we handed over to the customer and it started to pay rent. So the cash-generative leases EUR 419.9 million, EUR 420 million as at the end of June 2026. We have EUR 69 million of signed leases, which are under construction, which will be delivered in the next 12 to 18 months. And then the vacancy and the pipeline ERV, so what we can still construct and what is not yet leased together, it's another EUR 310.6 million. That's future music, which we can develop and that would bring the total rental potential to roughly EUR 800 million. We have added in the first half of 2026, 8% of cash-generative rent, and we have 17% from cash generative to committed annualized rent uptake. And so the growth potential is still 67%. I'll go to the next slide. On the delivery side, the building you are seeing is in Split, and it's leased fully let to Studenac and Atlantic Grupa. Both are very active. It's in Croatia. And we delivered 12 buildings, 236,000 square meters, gross lettable area, which was completed in the first half of 2026. On the right top, you see our park in Alicante, Spain. And then underneath of it, you see once more our park in Split, Croatia. It's EUR 17.1 million of annualized rental income, which is spread over through 35 new contracts. It's 86% let at delivery. There are some smaller units, which are, remain to be leased out. And the sustainability credentials, which Martijn will talk about a little bit later, all of them are 100% BREEAM Excellent or better and 39% of the deliveries, which we did in the first half year, are even BREEAM Outstanding. The deliveries were mostly logistic activities. So we have some examples of customers, which you can see there. ID Logistics, Spain, we have a little bit everywhere around the group. And 76% of what we delivered was logistics and e-commerce is growing. I think it's going to become really a big driver again in the next years to come. You can also see in the bottom, the 2 pictures of 1 of our VGP Park in Vejle, Denmark and then of our new VGP Park Sibiu in Romania, where we are leasing out our last units. All the first half year deliveries are certified sustainable and of which 39% are BREEAM Outstanding. And then you can see for the rest of the portfolio, virtually everything is now certified. And you can see the split down BREEAM Outstanding and BREEAM Excellent together, it's almost 70% of our portfolio. Characteristics a little bit of our standing portfolio. So the average building age, we've been growing a lot, as we've shown you that we have done our leasing income 7.6x over the last 10 years. So we've built a lot over the last 10 years also. So the average building age is 5.1 years. 74% of our buildings is younger than 10 years. And it's younger than 2 years is even 20%. So it's a very young portfolio, very up to date, very well certified. 24,000 square meters is our average building size. And we have a lot of large facilities, and we think that large facilities are going to remain very much coming on, especially with automatization and robotization, we still think that it's going to be large facilities. And then we have inside the EUR 800 million, if we develop them all, then we will have a completed portfolio of 12 million square meters roughly, of which now the standing assets are 6.6 million square meters. We have 1.1 million under construction, and we have a land bank on which we can still develop quite a lot of square meters, quite still 4.3 million square meters roughly on our standing land bank, which is constantly evolving as we are looking at new opportunities. On the development side, the park you are seeing on this picture is our VGP Park in Nijmegen, where last year, we virtually let out everything. The building you're seeing down here is immediately adjacent to the highway. It's the last building in the park that's leased to Protempo. In the back, we are building a very big also with a very automated thing for a clothing retailer. I can't disclose the name, unfortunately. It's a very big park also. We have 160,000 square meters, which is, of which is now 120,000 square meters under construction, plus the already existing building. So the park is quite substantial in Nijmegen. We're very happy with it. It's performing very well. It did a nice contribution to our profit. We have 44 buildings under construction, which represents EUR 90.6 million of annual rental income once fully let and built. And I have already told you a lot of times that I'm a very big believer in that we should really try and help the reindustrialization of Europe. On the right top side, you see a very nice example of the building D in our VGP Park in Munich, where we have Isar Aerospace, our European answer to SpaceX, I hope, upcoming. They really did a lot of capital rounds and are now very much supported, and we're very proud to have them. And we are going to deliver that building now in September to them. It's virtually ready. So they are making rockets inside. And then underneath, you see the building of the very big clothing retailer, which we are constructing in Nijmegen. It's 74% pre-let, our development pipeline. We're going to remain very careful over the second half year also with our pre-let levels, not too much speculative buildings. We will remain at the same levels or a bit better. And it's very well spread across our geographical footprint. At the moment, in every country where we are active, we have constructions ongoing. So almost ongoing. There is only 2 countries where we are going to start up normally in the second half of the year. All the rest in 14 countries, we have constructions ongoing. And the largest park under construction are Nijmegen, our Rüsselsheim area, Rouen and Mulhouse. Rouen is meanwhile also fully let. It's complete. We are constructing the last 2 buildings. On our land bank, the picture you are seeing is 1 of our most iconical parks. It's in Nuremberg. Nuremberg was an office site which we bought from Siemens. They are going out later this year. And we are finalizing a very large lease agreement, which we hope to sign October, November this year with a very big e-commerce retailer. It's right adjacent to the Ring Road. It can't be a better location. And we went with them to the mayor of Nuremberg and the mayor of Nuremberg and the political side already approved, which is always an advantage if you have a backup, for which we're very grateful from the politicians, to implement this thing at our site in Nuremberg, and it's going to be a very long lease agreement. So that will be a very nice thing to develop. The land bank is now 10.4 million square meter owned and committed. We started the year with 7.1 million square meters. We acquired 1.2 million square meters. We deployed 600,000, we sold nothing. So we own at the end of June, 7.7 million square meters. And then we have committed. As you know, we always buy our land subject to receiving the permits through which we can use it for its intended purpose. So once we will obtain these permits, we will also buy the 2.7 million of committed square meters, which brings it to 10.4 million square meters of land, which we own or have a commitment on, which is binding. And then we are under option. At the moment, we are looking at another 1.4 million square meters. We are very careful in trying to locate really the top quality assets in the market at reasonable prices. Our land bank is very well spread across the countries. As I said, we are a truly pan-European group. We've been building very carefully at this. You can see the biggest country is also the biggest land bank. Of course, in square meters, the land banks can be varying. For example, Serbia has a very big land bank. But in euros, it's small because we only paid a very small price compared to the land bank and the values of land in other countries, but we are constantly looking at expanding it. And CEE is 44% of the land bank today. Western Europe is 56% of the land bank, but that varies every time again when you look at it. And maybe just a small word on some of our most iconical parks because they have now, they are now coming, some of them are now coming really to maturity. So some of them have been a sale and leaseback like the Rüsselsheim facility or the Nuremberg facility. In Rüsselsheim, we have the, we have the grEEn-campus under construction with Opel. It's a very large construction site. And the Opel facility has, it was a production site of cars since 1864. They have grown over the time, and they have a very big electrical connection. We, being a partner of Opel and making for them also the grEEn-campus, we have been able to secure quite a substantial amount of electric capacity directly from the grid and have a nice view on more capacity coming on later in a couple of years. Hence, that's also why we want to develop our first more modest data center development in Rüsselsheim, but I will disclose the details of that only on our Capital Markets Day, you have to come. Otherwise, you won't know. And then Vélizy has now been completely demolished and decontaminated, and we are starting construction activity in October this year, and it will be, the first building will be completely pre-let. We are working on our last, on the last pages of negotiation on the lease agreement. The same goes for Vila Nova de Gaia in Porto, where we also, we are in final negotiations with a very big industrial group to sign the first building. We have our park in Hagen, which is also, the same story, it's a very big paper mill. It used to be a lot of electric capacity. So we have already ordered a very large battery storage thing to be placed there. And we are in negotiations again with 2 very large tenants for the whole site. So we hope to be able to bring you at the year-end, the 2 names of the people who are going to lease out both retailers in this park in Hagen. Hagen is right next to Dortmund in the Ruhrgebiet, a really nice location. Nuremberg, I already explained. And in Reggio Emilia Gavassa, we already signed a lease agreement with Savino Del Bene and the big building at the right side, which you are looking at, that is also under lease negotiation at the moment with a very large retailer. So fingers crossed, touch wood, but we have really a lot of activity in the pipeline. I will give, I will hand over the renewable energy topics to Martijn, our specialist in that case. Martijn, go ahead.

Thank you, Jan, and good morning, everybody. On the renewable energy, the story starts to stand more and more on two legs now. We've always presented the photovoltaic leg as obviously being the most important constituent. And in terms of revenues, that is still the case. Battery starts to become more of an important growth prospect every reporting period. Starting with the photovoltaic there, we've really been able to catch up on the rollout of our existing portfolio. You see that we now have 284 projects on the, in total on the platform. If you compare that to the number of buildings that we have, which is 319, you see that we've really been able to catch up mostly on the rollout of our existing portfolio. So also in terms of growth, this will start to become more and more aligned with the growth of our overall portfolio as obviously, we will continue to build photovoltaic on our new construction projects, but there is less of a catch-up to do. If you look at the gross renewable income, Piet already touched on it. If you look at the performance of the portfolio and compare it to the portfolio of photovoltaic that was operational at the beginning of the year, which was around EUR 105 million worth of investments, the yield is very similar as what it was in 2025 and in 2024. And if you annualize that, that gets to around EUR 13.5 million for the full year because the second half is always a little bit less productive in terms of sunny hours. But yes, we will also work on adding additional platform through the second half. Then on the battery projects, we've been able to connect the first projects in the first half. These need to be approved by the local grid operators, et cetera. So it takes some time before they start generating revenues, but we anticipate that these will start in the second half to start meaningfully contribute. And if you look at the total investments, then the total CapEx that is either spent or committed is on the middle of the bullet point is EUR 170 million now. Of that, there is already over EUR 30 million that is related to BESS projects. So it is, as I said, it really starts to become a meaningful contributor to the investments, and we will expect to see that in the top and bottom line in the coming periods as well. We'll talk a little bit more about the BESS rollout at the Capital Markets Day. But with that, I think I'll hand it over to Jan for the joint ventures.

Yes. The building you are seeing on this slide is a small business unit in Ceské Budejovice, which is completely let. Also Vélizy is more of a small business units, an SBU now, which is a new business line also, we achieve higher rents, and it's a bit more volatile in the occupancy, but it's a very nice segment in the market, and it's the growth flagship. We are also trying to do more and more of them where we are very urban. So it's part of our business line now. Here is an update on the joint venture. So we have a running joint venture, which is SAGA 1, which is now already 60% deployed. It will be in 2027, it will be deployed more than 90% with what we have foreseen to transact, which is 2 years earlier than expected. And that's why we have been negotiating on a second joint venture. The memorandum of understanding is signed. The launch is foreseen in 2027. The joint venture structure is virtually a copy of the one which we had with Areim acting as manager for the other 50% stake. The focus is on Western Europe. And that's very complementary to our East Capital fund Central and Eastern European mandate, which is also running at the moment. And it targets, the new one targets at least EUR 600 million of equity. So that is at least, it's going to take us to at least EUR 1.5 billion, but we hope to do a lot more in the second SAGA joint venture. It is EUR 600 million is the minimum equity ticket, which we are focusing on. And the capital recycling because we have now so much income-generating assets on our own balance sheet, which are coming to maturity, especially in the beginning of next year and then throughout 2027, '28 and '29, we expect it to pick up in the second half of this year, but then accelerate really a lot into 2027 and the years coming. Yes. For a summary and outlook, just once more, what you see in front of you is our grEEn-campus. You will see it's the building on your left side, which is an office building, high-end office building, completely passive. It's 10 minutes away from, you will, when you come to the Capital Markets Day, you will notice it's only 10 minutes away from Frankfurt Airport. It's really very close to Frankfurt. And this is our cooperation with Opel, which is going very well. Opel is very committed to the site. Also Stellantis is very committed to the site to remain there. Big parts of the other sites around it are going to be sold separately, but that's to other users than we do. It's retail or and/or housing, which VGP doesn't want to do. We focus on the industrial part, which we have bought out. And we have an exclusivity for the whole Opel site on data center development, which we negotiated with Opel when we bought the site of ours. So the outlook, we want to develop further on towards our 12 million square meter target without putting a fixed date on it when we want to achieve it, but because we want to maintain a very disciplined approach to the development, we prioritize pre-let levels. I don't want to construct millions of square meters of vacancy that brings nothing and certainly not when money is getting a bit more expensive. We are focusing very much on our development margin. As you have seen from what Piet showed you that we have very nice development margins. The average yield on total cost is now 8.7%. So that's including also our iconic developments in Germany, in France, in the more mature markets. So we're feeling very confident that we have a nice margin. And we are very confident, and that's the message that I wanted to give mostly that we are securing very nice pre-lets on our new brownfield locations, which are now going to initiate development. The recurring income is for us very important. Its income base is expected to continue to expand, and it's accelerated by further growth in renewable energy. It looks that the battery projects which we have are very profitable, and we have some really very nice big several battery energy storage systems. And then we are going to, of course, grow the joint ventures, and that will also lead to increased recurring joint venture management fees besides our share in the rental income, which we get every year. Yes. And so the 12 million square meter equates to EUR 800 million of total rental income per year, which we want to grow to now. And then we're very focused on capital recycling. As I already said, it's expected to accelerate in 2027 with the launch of new JV initiatives and then as well as the start-up of the development platform for data centers for which we also have signed a memorandum of understanding with a very reputable company. We acknowledge that it's not easy to develop a data center, and we acknowledge that you need, we want to avoid having to go a long way to build up reputational skills and a good name in the market. And that's why we have chosen to sign a memorandum of understanding with somebody who has a very good standing reputation in the market and a very nice track record and who will bring its technical expertise and know-how to our JV. And we will do the same from our side. We will bring in our land plots, which are now already feasible, which is virtually 2, Paderno and Rüsselsheim, which we have now in the last straight line, I would call it, in order to be able to start a data center development, which is slower than you would expect. So I will tell a lot more about it, which leads to another EUR 3 billion of gross asset value, not taking into account the data center rollout of transactions, which we have at the moment under an MOU. This is the slide made by AI as it should be. When Europe needs more cloud, we keep it grounded. It's cold. It's a very heartly invitation to our Capital Markets Day. I will be there, and I will join you on September 3, 2026. Just a small word on it. The idea is that we first go to take a visit to our Giessen site, which is roughly 70 kilometer north of Frankfurt. We will foresee all the necessary transportation. We will get a guided tour through the Zalando facility by the management, by the people who manage the Zalando operations. It's a very fine example of a building in which there is an incredible amount of automatization. Actually, Zalando made a lot bigger investment inside of the building than we in the building itself. I think it's worthwhile seeing it because the future. It's how things should go. It's so much more efficient in operations than the other buildings, which were before for the same purpose. And then afterwards, we will take you to the Rüsselsheim site. It's our largest brownfield to date, which we bought in the heart of Frankfurt. It's 10 minutes away from Frankfurt Airport. We will show you the grEEn-campus, which we are developing for Opel, and we will explain you also because the grEEn-campus is only 10 hectares out of 71 hectares, what we are going to do with all the other potential, which is there, how it is phased, what is the plans, and I will lift a little bit more the veil on what we have been hiding so far because we wanted to be absolutely sure that we can deliver. So if you want to know more about it, please come to the Capital Markets Day. Don't ask me any questions today. I won't answer them. I want to keep it for that day. Thank you very much for listening to us, and we'll be happy to answer any questions which we can answer on.

Thank you, Jan. Operator, we can open the line for questions.

[Operator Instructions] The next question comes from Vivien Maquet from Degroof Petercam.

I will limit myself to one as requested. It will be on the reversion capture on the reletting. If I compare the 6% that you captured in H1 to the 14% in 2025 and even the 18.5% over the first 4 months of 2026 [indiscernible]. Did you manage to capture the entire reversion? Or did you accept some concession in the course of Q2 to secure the letting? And addition to that, can you provide the number of the reversion potential that you have on the standing portfolio?

Yes, Vivien, thank you for your question. It's a difficult 1 to answer because we have, our contracts are all, they all have renewable clauses inside through which our tenants can opt to just prolong the lease agreement. And so we can only take the uptake of a new lease agreement at the moment when a lease agreement really ends and we need to re-lease it in the market. Otherwise, we have no, except for the U.K., where this is totally standard that you have clauses inside where there is a market revision, we have no possibility only when there is a reversion moment, which is when a lease agreement stops. And the, I don't think you need to look so much at the 6.6% because it's depending very much on the mix of the buildings which we have to re-lease again. And in some of the markets, in some of the lease agreements, it's a bit more difficult to achieve a higher rent than in some of the others, older lease agreements where we have very low leases compared to the actual market lease, so it's a mix of maybe 20, no, it was, I think, yes, 20 different lease agreements which we have been reletting. And sometimes it will be more, sometimes it will be less. But we still think, and I can't quantify it today. We still think that we have a huge potential of uptake in our buildings. If you look at the average price per square meter of our buildings, it's EUR 1,250 per square meter roughly of the value, the total value. And that's compared to what we see around us, that's still very low. So it means also that the underlying rent has a potential to grow a lot. But I can't, at the spot here, quantify it. I don't know if Piet can quantify it, but I think it's difficult also because all of these leases have different running times. And you know we are on average still 7.7-year leased. And 84% is retained. So the people just, until today, so the people just prolong. So there is limited uptake when they just prolong. It's only at the moment when it is replaced. So I'm afraid it's a question which is very difficult to answer upon, except for what I just said.

Yes. I think you said everything.

The next question comes from Marios Pastou from Bernstein.

I know that's on data centers, but I'll save it for the Capital Markets Day. Could you just provide a bit of color on project deliveries and the quantum of development? So, kind of, based on the time line you're currently looking at, what completions should we be tracking to 2026? And if you then manage to get some of the various MOU-driven leases agreed over the second half, should we then expect a bit of a ramp-up in the level of development starts over the second half compared to what you reported today?

I will answer on the developments which we start. As I said, we're going to be very careful, and there is a lot of big projects in the pipeline. The, most of them, some of them are going to be started in this year and some of them are going to be started in the first half of next year because they still need some fine-tuning and some permit adaptations. So I'm not quite sure what we are going to start up in the second half year. It will depend very much on the market environment, but it will be somewhere in the line or more than what we did in the first half year, I think. We've foreseen a lot more, but I'm going to be prudent. So I'm also prudent in what I'm answering. And it will depend a little bit on how fast we are able now to secure these lease agreements, which are under negotiation, which we have, our lease negotiations, we have them lined up in 4 different categories, of which the last two categories are we call it DOI 3 and DOI 4. DOI 4 is lease agreements which we have currently under negotiation, where we have exchanged the lease with the people and DOI 3 is where we have virtually an accepted heads of terms or commercial conditions, and we are still fine-tuning the technical specification of the building. These two together, they are, they represent more than EUR 50 million of rental income, and we are convinced or we are very confident that we can sign quite a lot of them in the next 2 to 3 months. So by the next trading update, we should be able to tell you a little bit more on that. And then on the delivery side, we have 1.1 million under construction. And Piet, you know how much we are going to.

Yes, I think it will be the same or higher than it was in the first half of this year. I think between 300,000 and 400,000 square meters would be a good estimate. It depends a bit on the leasing activity and the finalizations of the building. So a bit more than in the first half. That would be my best estimate on this.

The next question comes from Suraj Goyal from Green Street.