Hello, everyone, and thank you for joining the CTP Q3 2026 results webcast. My name is Lucy and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two to remove yourself from the question queue. If you have joined via the webcast, you can ask a text question via the Q&A tab. It is now my pleasure to hand over to Remon Vos, CEO, to begin. Please go ahead when you are ready.
Good morning, everyone. It is me speaking from our Prague office at CTP here. Happy to report good, strong first nine months of the year. We have seen lots of leasing compared to same period 2025, approximately 23% up year-on-year. That has been good with different clients taking space in different locations. Poland has done quite good with take-up from existing clients, but also from some of the Asian companies we work with.
We have seen bigger deals of 100,000 sq m in our projects along the German border. We have seen in Hungary, Lenovo. We have also seen in the Czech Republic along the Prague-Plzeň corridor, where we have been able to do deals with companies involved in the pharmaceutical industry, but also other logistics, 3PL, and other industries. Romania, Bucharest, have seen significant take-up and deals done, which is good so far. Spread around the region.
So far, the different changes and things happening have been good for the region, good for CTP. We have been able to benefit from this, as we can see in the amount of take-up on a year-by-year basis. The drivers what this company do, many involved in manufacturing, and then CEE is a good place. It is cost-effective, business-smart. Other is related to consumer spending. We also see supply chain move to the region, as we have seen before. We also see that companies professionalize.
They become more maybe lean and mean or different mindset. Some companies still move away manufacturing or activity from Western Europe to Central Europe. The same happens with companies moving in from Asia. All kind of different industries. We spoke about it before, free time, fashion, pet, but also semiconductor industry. Others are the new car industry. The Tesla factory in Berlin doing quite well.
We have companies supplied to that. Of course, also we have a lot of automotive industry in the region. The new automotive I mean, so the EV, electric vehicles, which BMW Debrecen, but also some of the Asian companies who have been active. The Koreans in the region, but also other car makers, which is also part of our business and the clients we work for are involved in somehow. So very much a mix of locals, but also multinationals involved in a variety of different industries. As you remember from our rent roll, we are not overexposed to any company in particular. I think our biggest tenant is good for 2% of our total rent roll. Talking about our existing clients, that is also where most of the business comes from.
Approximately two-thirds of all the leases we do, we have done with existing clients, and we are actively hunting for new clients, for companies to connect to and actively chasing and doing lead generation, which is quite successful so far. In numbers, 90% of our clients we have been able to agree renewals or retention, if you like. Our clients are good, healthy, strong companies. 99.3% pay their rent mostly on time, and together is more than 1,700 different companies who we work with. The integrated business models, our CTPark concept, has worked well over the past decades, and we continue to extend our parks. We also continue to improve and provide different facilities and amenities on-site. Energy has been important and remains a focus point to make sure that we do have the right amount of energy on-site.
With regards to the energy business, we do not only make sure that we have enough energy on-site, but also we look after distribution of energy within the business parks. We store energy in our parks with BESS, but also we create energy sometimes with the rooftop solar plants, and that is good. I wanted to talk to you about the different businesses and activities we have at CTP as we do talk about operator/developer, whereby obviously the operator looks after the income-producing developer is the in-house construction company. With regards to the operator, that means around EUR 450 million of free cash on a 95% occupancy. We are working on increasing occupancy. With regards to developer, we have around 1.7 million square meters of buildings under construction. So far delivered this year 561,000 sq m.
The 561,000 sq m is around 10% yield on cost, and we will continue to complete more properties during the course of this year. Once we have the 1.7 million square meters complete, that will produce an additional income of approximately EUR 130 million. With regards to the growth engine, I can maybe sometimes we refer to it as a third activity, the expansion growing with tenants in other markets, which we have done successfully over the past decades. One example is Poland, where we entered in 2022, where we have a portfolio of approximately 1.3 million square meters now income producing and growing. Other examples are Italy, where we recently entered, and we have been able to complete this year 166,000 sq m, and that is located south of Milan. There is a lot of pipeline in Italy.
Also south of Italy, between Rome and Naples, where we have opportunities, but also in Padova in the north where we have started construction with a new project. Also, happy to report that we are making good progress in Vietnam. In Asia, we see opportunities there to work for existing clients, and we have two sites secured, and we are working on growing more and doing more. I mentioned energy in our parks, and there is definitely opportunity to grow that business. As we learn from the pilot projects we have done in Germany so far, in Wuppertal, for example, which we agreed to allocate another EUR 20 million, and we will also continue with the projects we have in Mülheim and Düsseldorf to make sure that the energy concept will also be implemented in those new developments.
What else I can report on is the progress we are making here at CTP to become a better company as the focus has been on bigger very much, for us, having reached now this level and getting prepared for the next growth. We want to make sure that we become a better, stronger, more efficient, more effective company, so we can do the same amount of work with less people. That was what we are working on hard. That includes leadership change. That includes also getting new software, new systems, new processes in place, which will make it more competitive and will then support our future and growth plans. I will hand over to Maarten, and I am available to answer any of your questions later on. Thank you.
Turning to the financial highlights. Portfolio like-for-like rental growth came in at 4.8% for the first nine months, driven by continued rent reversion capture and indexation, illustrating our capability to grow our top line consistently. Occupancy remains stable at 93%, with the WALT up at 6.3 years and client retention at 93%. The target is to increase our occupancy level. Gross rental income increased by 12.5% year-on-year to EUR 632 million. Net rental income increased by 12.8% to EUR 619 million, maintaining an NRI margin of 98%. Annualized rental income reached EUR 871 million, and together with EUR 130 million of potential annual rent from the 1.7 million square meters we have under construction today, we have a clear visibility of our target of over EUR 1 billion rental income in 2027.
This rental income generates a strong free cash flow of over EUR 54 million to reinvest in our business and is the basis for our self-funded growth. Our company's specific adjusted EPRA earnings increased by 9.8% year-on-year to EUR 365 million. This translates into EUR 0.75 per share, an increase of 7.4% year-on-year. We remain on track to deliver our full- year 2026 company specific adjusted EPRA earnings per share guidance of EUR 1.01-EUR 1.03 per share. Now looking at the valuation results. For the Q1 and Q3 results, only the investment properties under development are revalued. In the third quarter, our revaluation result was EUR 139 million, bringing the nine-month net valuation result to EUR 56 million.
Year- to- date, we have a positive revaluation of EUR 250 million coming from our developments, with leasing and construction progress, more than offsetting the negative revaluation of EUR 150 million in the standing portfolio in the first half. For the year-end, we expect stable yields and stable ERVs. Gross asset value reached EUR 19.4 billion, up 9.8% year-on-year. EPRA NTA per share increased to EUR 20.78, up 4% year-on-year. In terms of capital allocation, our focus is to complete the pipeline we have under construction with limited landbank acquisitions, which are mainly in our growth markets, as in the core markets, we have sufficient land. We also announced a share buyback program of up to EUR 100 million over a 12-month period. At the current level of discount to EPRA NTA, we see repurchasing our own shares as an attractive capital allocation opportunity.
Execution will be gradual and disciplined, with limited impact on leverage. We continue to execute on our strategy with disciplined tenant-led expansion, leveraging our existing international client relationship, and applying the build-to-own model that has been so successful in Europe, growing our recurring cash flow, delivering sector-leading profitable developments, and compounding long-term shareholder value. Now I hand over to Richard.
Turning to our balance sheet and liquidity. In the first nine months, we have raised and refinanced EUR 2.2 billion of debt, demonstrating our continued exceptional access to capital markets and disciplined liability management. In August, we issued a new EUR 500 million, three-year green bond at a spread of just 65 basis points and a coupon of 3.625%. The order book reached EUR 2 billion, four times oversubscribed. This was very attractive funding, particularly in the current interest rate environment. The shorter tenor was a deliberate choice, supported by the extension of our EUR 500 million syndicated term loan earlier this year from 2029- 2032. Our liquidity remains strong at EUR 2.1 billion, comprising EUR 400 million of cash and EUR 1.7 billion of available committed revolving credit facilities. We continue to rebalance our capital structure towards unsecured funding. We are currently at 72%.
We have a medium-term target of around 80%. We have no remaining maturities in 2026. Our next bond maturity of EUR 500 million is in February of 2027. This is our last bond maturity until June 2029. This conservative liquidity structure provides substantial flexibility and a comfortable position in a higher for longer interest rate environment. Importantly, 99% of our debt is fixed or hedged, with an average maturity of four and a half years. Our average cost of debt is 3.3%, and most of the repricing of our historic low coupon debt is now behind us, as bonds issued before March 2022 represent only 16% of our total debt stack. We therefore expect only a limited increase in our average cost of debt, even if market rates remain elevated.
Turning to our key credit metrics, our loan to value stood at 46.6%, slightly above our 40%-45% target range. Our normalized net debt to EBITDA decreased to 9.5x , and our interest coverage ratio remained at two and a half times, comfortably above covenant levels. Over time, our growing recurring cash flow and profitable development, combined with disciplined capital allocation, will bring leverage back within our target range.
We do not rely on asset disposals or additional equity to fund our current development pipeline. As completed projects start generating rent, they support both interest coverage and the de-leveraging of our balance sheet. Our growth remains underpinned by the growing cash flow from our standing portfolio and our healthy development pipeline, where we target a 10% yield on cost. We remain focused on growing income, improving our credit metrics, and delivering long-term shareholder value. Thank you for your attention. We now welcome your questions.
Thank you. If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad now. If you change your mind, please press star followed by two to remove yourself from the question queue. If you have joined via the webcast, you can ask a text question via the Q&A tab. When preparing to ask your question, please [audio distortion].
Hi. Good morning. Thank you for taking my questions. On the share buyback, I appreciate that your view is driven by the wide gap to intrinsic value. At the same time, leverage is still a discussed topic and you already said that LTV is going to move back towards your target over time. I think at the CMD, you also mentioned that you are open to selling a couple of standing assets where there is little value creation left for you. This, I suppose, would also help addressing leverage while supporting the share buyback. I am curious, how far are you in identifying these assets?
Hi, John. It is Maarten speaking.
You want to take it?
Mute.
I have mute. Sorry for the echo. On the question regarding the assets, we have a clear view, of course, on our assets because we are reviewing them, and our accounting and management teams are reviewing them on a yearly basis. We are now also working, for example, on our budget for next year. We are going through the assets that we are having. Where is the value creation potential in terms of development? Where are the leases coming up for expiry and can we basically get that reversion potential? That is a normal process which we do on a yearly basis actually, or even more frequently as we are looking to the assets. But that does not mean that we, of course, we are open to the idea of selling some of the drier assets.
But at this stage, we have nothing planned, as we are basically using also the cash flow to reinvest in our business, and we are comfortable with where the leverage is today. We will go at it as we go. But we know, of course, what our assets are and where is the opportunity. We also get the inbound, of course, from some parties on some of our assets. That shows that there is liquidity in the market. That shows there is value. We will execute them when we think the time is right.
Okay. That is fair. On the quarterly leasing numbers, I suppose it suggests a bit of a softening in the month, which you already mentioned before, I think. I appreciate that quarterly numbers can be quite volatile, but looking forward at your leasing pipeline, should we expect an acceleration in leasing momentum already in the, say, the next three to six months, or is this something more for next year?
Hey, John, it's Remon. We have done so far good Q1, Q2, you saw that, and if you add everything together, we are still +22% . It's not bad. It's better than it was last year. Typically, yes, indeed, Q3 is a bit slower, in terms of take-up and getting things signed.
Maybe also because of holiday season. Normally Q4 is more active when it comes to closing and signing leases, and we are optimistic for when it comes to closing leases. We continue to see increasing demand. If you look at the amount of proposals we do, that's much more than a year ago. Also in Germany, by the way, there also we see more demand. We believe that these requirements will turn into deals indeed. Yes. We believe the trend will continue, and maybe it's a +30% by year-end, let's see, compared to previous period last year.
Yeah. John, I would say if you look at the comparison 2025- 2024, we were 8% up this time on a year ago, this time last year. This year, we are 23% up. We do think that we see strong leasing, as Remon said. One quarter can be a little weaker, but overall, there is ongoing strong leasing demand.
Yeah, that's fair. Given that you said that 30% up by year-end could be possible, it just sounds like Q4 could be another quite a strong quarter, if I understand it correctly.
What is it? EUR 56 million versus EUR 28 million in H1, while the development pipeline came down. Can you explain whether you changed the accounting approach here or what happened? My first question.
Yeah. There's no change in the accounting approach. What you see is that as projects approach completion, which is what was happening in Q3, and then as we do more of the construction, the amount of interest that we're capitalizing goes up because the amount of money that we've invested in the IPuD increases.
Okay. That is clear. Then, on the yield on cost that came down, could you please elaborate why that is, and provide the yield on cost for your most important countries and how that changed?
That's to do with the country mix. We target to get above 10% or 10% across the whole portfolio. We were a little bit higher in the first half of the year based on the countries where the deliveries came. In Q3, two of the larger deliveries were in Italy where we know we don't get the 10%. We're happy that we did 561,000 sq m at 10% yield on cost so far this year. We expect to be at the 10% across all of the deliveries for the year. Yeah. Overall, markets haven't really changed. We can't get 10% in Germany, we can't get 10% in Italy, we can't get 10% in Poland. We can get 10% or better in most of our other markets.
Okay, clear. To be clear, for your biggest countries, for your delivery pipeline, yield on cost have been flat?
Yeah. We don't see those really increasing, but we don't see them declining either.
You also see that even in the yield on cost, if you look to the pipeline, that one remains stable. It's country mix and which quarter you deliver which assets. If you look to the pipeline, that one remained also at 10%. The 1.7 million square meters remaining we have.
Okay. Clear there. Last one, the EUR 150 million devaluations on standing assets. Could you please break that down in ERV and yields, and also the changes of the key countries there and what we can expect in Q4? You basically already said that should be broadly flat, right?
If you look to the valuation of the standing, that's the H1 figures you are referring to. Because in the Q3, we only do the revaluation of the IPuD. What you see is that we are now getting to positive revaluation result of EUR 56 million in year- to- date Q3, which is driven by the positive revaluation we took in the third quarter of nearly EUR 150 million on the IPuD. The standing revaluations happened at the H1, where we, of course, discussed among others, Romania.
Yeah. Oh, yeah. Clear. Sorry for that. Clear. For H2, you already guided flat ERVs, flat yields broadly.
Correct.
For H2. Okay. That is it for me. Very clear. Thank you.
Thank you. The next question comes from Marios Pastou of Bernstein. Your line is now open. Please go ahead.
Hi. Good morning. Thank you for taking my question. Just one from my side. You have been targeting a return to double-digit EPS growth. If you think of the pace of the growth we see in this year and the fact that some of that is being supported by capitalized interest, does that double-digit pace return next year, given you have some refinancing to consider, or does that get pushed further down the line? Thank you.
No, I think we said in the press statement that we expect to get back to double digit, going forward. I think, if you look at what drives that on the revenue side is the growth in the portfolio, is the indexation of rents, also improvement in occupancy, which is something that we want to get, over the next 12, 18, 24 months. Regarding the funding cost, we showed you at the Capital Markets Day that we've basically taken all of the hit in terms of higher interest costs. There's only a very marginal change in the average cost of our funding. The one bond that we have to repay, in February of next year. We then don't have another bond to repay until the middle of 2029. So, compared to the peer group, we're in a uniquely positive position there.
Okay. Thank you. That also factors in a slightly lower pace of that development that you're now targeting for this year and potentially for next year as well. If you can comment on that.
Yeah. Look, if we deliver at the lower end of our target, we'll come in just under 10% growth year-on-year. We're doing that at 10% yield on cost. So that's going to increase our rental income next year very nicely.
Okay. Very clear. Thank you very much.
You have to figure that there is always a delay, Marios, between when we deliver. So all our deliveries this year will produce nothing, in 2026 effectively, and they will only start producing in 2027.
Okay. Makes sense. Thank you.
Thank you. The next question comes from Lynn Hautekeete of KBC Securities. Your line is now open. Please go ahead.
Hi. Good morning, everyone. I have a question on your pre-let level. So you were at 55% in Q3. Usually, you are a bit higher by Q3, more in the 65% region. From the earlier question, you are already quite bullish on Q4, and I think you should already have also the figures of October. Just to be sure, do you already see the actual acceleration in the October figures of the take-up?
Yeah, I think-
I think-
Go on, go ahead.
No, go ahead. I can also take it. When Richard said 30% average per year, I thought maybe 30% of Q4 compared to Q4 last year. Anyway, let's see what we can do. We are cooking deals, yes, and we are hopeful that we get things signed. I will obviously not now go into details with regards to I cannot, and I will not with regards to October. So far it looks positive and good. This is in line, as you know. We are building buildings. That's what we do. We adjust to demand and supply, and we react to that. We have been very enthusiastic over the past couple of years. We tripled in terms of lettable areas since the listing. Now sometimes we think, wow, we have a lot of stuff on the construction.
We accelerate if we see demand, we slow down, and that all has to do also with finding the right balance on the occupancy. We have been around 93%. It would be nice to be 95%, maybe north of 95%. That is what we are doing. That is mostly for, obviously, if you have a custom build or a pre-let, there is a bit of difference. But leasing is on the way. As I said, the numbers do not lie, right? We do 22% more. I think indeed we are going to do more Q4 this year than we did last. That is what I think from looking at the different negotiations we are having. That should result in a higher occupancy going forward, into next year and during next year, 2027. I think that is a fair statement.
Okay.
Richard?
Yeah.
Okay.
No, I was just going to say that overall, we continue to see strong leasing demands, just what you said that.
Yes.
Yeah.
Okay so the 55% that you are reporting right now does not necessarily mean that Q4 deliveries will be at the lower edge of the 80%-90% pre-let range.
No. We're always going to target higher if we can.
Okay. That makes sense. Thank you so much.
Thank you. The next question comes from Jonathan Kownator of Goldman Sachs. Your line is now open. Please go ahead.
Good morning. Thank you for taking my questions. Just, follow up on some of these questions and the point that you just made, Remon, about you reacting to demand out there and occupancy.
It's really the first time you're seeing the pipeline coming down, the construction from EUR 2 million-EUR 1.7 million. Why is that ultimately a sign of lower confidence in the market going forward? Or is it just a strategy to increase your occupancy towards this higher level, and perhaps slightly pausing on the development process or just slowing down the pace for a moment?
Yeah, I think like that. It's like any company. You react to the market, you adjust to the market as good as you can. We have been super enthusiastic over the past years with building a lot of space, and we've delivered a lot of space. Then also you need to consider your yield on cost targets. If there is a lot of space out there, we are market leaders in most of the markets where we operate. I think it's important to balance. It's not good that there's too much space on the market, and that because of that brings prices down. If that happens, then we cannot hit our yield on cost. We like to see a bit more rental growth. There's also reasons why less supply is not necessarily a bad thing or maybe slow down a little bit.
Focus on becoming a better company. Don't rush into new projects too much. Be a bit cautious and careful. That's what at the leadership here at CTP International, but also in the different countries, is a bit of how we look at it at the moment. That's one. I think the other point is as you know, the German portfolio, in Mülheim, we are going full speed. Other locations like Düsseldorf, even if we would want to build, we can't because we are waiting for zoning and permitting. Similar thing goes for Brno where we have been able to acquire more land. But there also we are in the pre-construction, so in a development design and permitting phase. That is a bit of indeed, as you said, that's how we read the market, how we think about the market.
You've seen on the Capital Markets Day event, when we had also some of our clients come over also to give you guys a bit of a flavor and feel for what are drivers, where does demand come from. Good. But it's easy to accelerate, let's put it that way. If we feel tomorrow, like, okay, let's go for EUR 2 million, it's a lot of work and headache and stuff, but I think the organization is also capable of doing that. We can always do that.
And it is also timing. For example, in October, we bought a new site in Serbia, just north of Belgrade. Very good location in the city, which we directly started. You might have seen the press release as well.
Yeah.
So it is always those timing movements over the quarter. In Q3, we had the nice deliveries in Italy. In Q4, we start a new project in Italy. But that is not yet in the 1.7.
Okay. Yeah, no, that is fair. Perhaps one other question. I think you highlighted there is some good results in Germany from leasing perspective. How is occupancy progressing in Germany? Are you able to increase that level closer to the rest of the group?
Yeah, good question. If we speak about Germany, we talk about two different business lines, right? We have the Deutsche Industrie, the portfolio we acquired, and then we have the new build. Maybe to start with Deutsche Industrie, there is some good take-up. We have spent money on refurbishment. We had a budget of EUR 12 million for this year. We have not been able to spend all of that. I think we are now around EUR 6 million, and by year-end, we will probably be around EUR 8 million. That is important because the Deutsche Industrie portfolio will perform better if we invest in refurbishment. That is one thing. We are positive. In the meantime, we know the portfolio inside out, and we continue to lease it out. But in order to get rental growth, we will have to invest in some modernization and other things.
Other projects within the Deutsche Industrie portfolio have been demolished. One is in Wolfratshausen in the south of Germany. A good location where we are going to do a new development. That maybe brings me to the next activity within Germany. There is a new pipeline, and those are the sites in Krefeld with the SBUs, the small business units, but Mülheim as well as Wuppertal and Rostock. That is now coming to the market. For example, Krefeld, also Rostock as well as Wuppertal, there we see some take-up. So far that is positive, and in line with our expectations. More will come to the market. It will be complete next year in 2027. That also includes, obviously, the Mülheim project, which we talked about.
In the meantime, there are some other companies, which will be part of the Mülheim project, and we were able to sign some leases for Wuppertal and for the new build, what we call Highlands. Yeah, overall, good progress. If we talk about demand, definitely in Germany, we have seen more demand over the past months compared to the same period a year ago.
Okay, thanks. Very clear.
Thank you. The next question comes from Vivien Maquet of Degroof Petercam. Your line is now open. Please go ahead.
Yes. Good morning. Maybe a quick follow-up question on the capitalized interest element. We confirm the EPRA EPS guidance, including this. Just wonder now that there is only one quarter left, could you maybe quantify it on an earning per share, the impact of capitalized interest? You initially guided for EUR 0.0 9 per share. I think that is going the pace that we have seen of booking, which would more end up around EUR 0.12 . Any chance you can quantify that so we can fix that and just see what the underlying is moving?
Yeah, I think we will. Go, Maarten.
Yeah. It might be slightly on the higher end, but let me confirm the exact figure to you, and I will drop you an email.
Okay. Thank you. I understand that from the comments of Remon, you cannot comment on the leasing negotiation. But, if I am looking into what needs to be signed in order to reach the lower end of the delivery guidance while keeping the pre-let around 80%-90%, it means roughly 200,000 sq m of lease to be signed, in product to be delivered by year-end. Just wondering, in that volume, how much are related to especially large space, like, I do not know, 30,000 or 40,000+ . Just wanting to understand to what extent the meeting that target depends on a few re-signing or not. I do not know if you can comment on that, it would be great. Thanks.
Yeah, it always does. There are always a few bigger leases in there. That is normal. Average leasing size is somewhere between 10,000 and 15,000 sq m. But there are always a few big ones, and we need to work hard to get those. But that is normal. That sits in every quarter. Some of the big ones we do not get, some of the big ones we get, and that, overall gives us the confidence on what Remon earlier referred to.
All right. [audio distortion] .
Yeah.
Great. Thank you.
Thank you. The next question comes from Paul May of Barclays. Your line is now open. Please go ahead.
Hi, guys. Thanks for questions. Just, I guess three from me. Just on the first one, capitalized interest. Just wondering if you could just remind me. Apologies, I am relatively new to the name. What is the policy on capitalized interest in terms of the rate? Do you capitalize that and, what it is you capitalize on? Is it land or is it just work in progress in terms of these things under development? Then we can move to my other questions.
It is the average cost of debt that we are having. So the 3.3% at the moment. I would say that is conservative method. The marginal cost of debt, as you know, is slightly higher. Where do we capitalize on? It is a work in progress, and the land where we have the planning permit and we start with the infrastructure.
Okay. Perfect. And then similarly, again, just definitional thing. On the normalized net debt to EBITDA, because obviously your standard net debt to EBITDA is significantly higher. Just wondering what the calculation is on the normalized, and what is the target for reducing that? You have mentioned obviously LTV, but net debt to EBITDA is a greater focus of investors these days. Just wondering if you have a target on reducing that as well.
Yeah. The adjustments in the net debt to EBITDA, basically, we annualize the rent on the completions for the past 12 months. Then we add the rent for the completions that we expect within the next 12 months on the income side. Then on the debt side, if we need to borrow more money to complete the buildings, we add that to the amount of debt. In terms of how do we improve that, we improve that euro by euro every time we invest at 10% yield on cost, because investing at 10% yield on cost is investing at net debt on to EBITDA somewhere around 6.5x, versus our current ratio of 9.5x. That would reduce. As we grow, with investing in a 10% yield on cost, we are improving our cash flow credit metrics, both the net debt to EBITDA and the ICR.
Well, on that future net debt to EBITDA on developments, just obviously in terms of the yield on cost of its debt funding is 10x net debt to EBITDA, roughly. Just wondered what it is the assumption on the equity side of things. Is that free cash pre-dividend, or is it free cash post-dividend on the equity side? Just to understand how you're calculating that 6.5x.
I think, yeah, we can share with you the calculation. We've had it in most of the presentations. We had it in the last one for the Capital Markets Day, so we can share that with you directly.
Oh, yeah. Apologies for the ignorance on my side. Then just kind of on the
No, no. Don't worry. But, we had a presentation. It's easier if we just share it with you. Yeah.
Yeah. No, perfect. Then just on the operational side, just we've been seeing some pre-letting going down and down and down sort of each of the reporting periods and pre-let at completion also slightly ticking down. Appreciate it's still within the target.
At what point does that become a concern? Is this something that is likely to continue going down, or is it you're going to cut back materially on development in order to support those numbers? Just wonder what the thought process is from your side. Are you happy at the current levels where they are or not?
Yeah. They are not wildly out. We have been at similar levels. Sorry, Remon. Go on. You want to go?
Yeah, we can go. I can go. I am not going to build anything if I am not comfortable with leasing it. So yeah, that is it.
Oh, okay.
So-
Cool. Thanks very much.
Yeah. We have grown beyond the. [inaudible] was saying today, we have grown beyond any other what we ever presented in the prospectus back in 2021, we tripled. We see zero recognition or appreciation for that in the share price. No, we are not growing. If we do not want to grow, we do not grow, and we do not see a need to grow. We have a lot of land. We sit on it. It costs money. Yeah, clear. There will be one day when we develop it, or we sell it off, or we do something else with it. That is we do. We will come back to the numbers of what we have been able to achieve.
Perfect. Thank you very much.
Thank you. The next question comes from Pierre Clouard of Jefferies. Your line is now open. Please go ahead.
Yes, thank you. Good morning. Two quick follow-ups on my side. Just coming back on expected deliveries for this year. Just a clarification. So you are aiming for the low end of the range, and you gave a target around 1.5 million square meter during the CMD. Is this 1.5 million already obsolete, do you think? Should we have in mind a figure closer to 1.4 million for this year? Remon, you mentioned during the CMD that there are risks obviously on the market as always. Do you see a greater risk now than a month ago?
Yeah. So in terms of the delivery, the 1.4 is the right orientation.
Okay. All right. Understood. Clear. The second one is for 2027. How should we view again delivery target given the drop of square meter under construction since this quarter? Do you expect the pipeline to rebuild materially over the coming quarters? Or consequently, should we expect a decline of capitalized interest next year?
We give guidance at the full- year. We always do. When we have the full-year figures, and we show you how much we have delivered, we will give guidance for next year, both in terms of deliveries and where we are coming in terms of earnings. You know what our priorities are, increasing the occupancy, and with that, of course, what we said before, we will try to grow as much as possible given the supply and demand.
Okay. Just for me to understand, how much time does it take you to rebuild the square meter under construction? Because I imagine that if you are basically pushing towards the end of the year to deliver more square meters, then we should expect also square under construction to not materially improve. Consequently, we should also expect potentially capitalized interest to decline next year, right?
If there is less under construction, yes, capitalized interest will be lower. Clear. But like I said, we will give guidance at the full- year where we stand, and then we take it from there.
Okay.
Listen-
Thank you.
As Remon said earlier, we can accelerate quite quickly. So we have a lot of projects that we could start if we wanted to.
Can you quantify that? You can give us a broad range, but just in terms of quantification.
Yeah. We can take the pipeline back up significantly above 2 million tomorrow if we want to, but we don't, because we don't think that it is consistent with what we've said earlier in the call. Yeah.
Okay. Understood.
We have the ability to go a lot quicker, very fast if we want to.
Okay.
Thank you. The next question comes from Edoardo Gili of Green Street. Your line is now open. Please go ahead.
Good morning. One quick question on my side on potential disposals, which I am glad to hear that you are potentially exploring. How do you think about prioritizing your book values versus the potential urgency to selling assets considering where your share price is? So how attached are you to your book values, considering also that it could impact your LTV if you were to dispose of assets? Thank you.
There is no urgency. We will do like always, we carefully execute on our strategy.
Okay. Thank you.
Thank you. The next question comes from Greg Simpson of BNP Paribas. Your line is now open. Please go ahead.
Yeah, morning. Firstly, one technical one, sorry. The release this morning says you delivered 561,000 sq m at adding EUR 23 million of contracted annual rental income. The H1 release said 245,000 at EUR 21 million rental income. It just looks like the deliveries this quarter only adds EUR 2 million of contracted rent. Just want to check if I'm missing anything. Secondly, just wanted to check in on the latest in Vietnam, how client conversations and progress on the sites are going and so on. Thank you.
Yeah. Let me come back to you on the rental. I think there's a mistake there. On Vietnam, since the Capital Markets Day event and also since the announcement last year, September of 2025, we are making good progress in Vietnam, when it comes to preparing the sites with design and permitting. We plan to start construction works either later in Q4 or early in Q1 of 2027. Those will be pilot projects, right? So, where we want to go with some of our existing clients, it's demand-driven as we talked about, some pre-leases. That's what we are working on. There may be opportunities to accelerate. Let's see.
We are looking at the market as we've done when looking at other markets previously, how to best enter and become part of the logistics or industrial property market in Vietnam or in Asia. Also, as you know, I guess, well, as you know, doesn't matter, but we also see demand coming from China, for our European portfolio being active in Asia with our acquisition and our land acquisitions in Vietnam. That brings obviously closer to Asian and Chinese clients. So that being here, being more active here, helps us also to get connected to Chinese, Asian companies who are planning to set up business in Europe for Europe. That's part of where growth comes from. You remember one of our clients at the panel discussion the other day in Warsaw. So that's happening and so far so good.
It's not just being in Vietnam for our existing clients to develop, but also side effect of being in Vietnam, in Asia, closer to Chinese or other Asian companies who think of going to Europe, and that we now connect to them and extend our ecosystem and client base. In fact, so overall positive, and I'm happy that we've in the progress we've made so far.
Makes sense. Thanks.
Thank you. The next question comes from Neeraj Kumar of Barclays. Your line is now open. Please go ahead.
Morning, everyone. A quick one from my side. You have a EUR 500 million bond maturing in February next year. Just wanted to get thoughts on how you plan to refinance it. Is it going to be through the bond market or bank market? I appreciate you have credit facilities, but I guess you are not going to use that to repay the bond.
We have not decided yet, Neeraj. We will see where we are later on. But we have access to both markets, so we will see which one we think is more attractive. As of now, we would need to go to the markets to raise money in advance of them.
Got it. Let me rephrase it the other way around. The margins I am seeing on the screen is around 150 handle for five, six-year bond. Is that something you are seeing in the bank debt market as well, or that is materially different?
No, bank market will be cheaper than that.
Got it. Thank you.
Thank you. Moving on to the next questions. The first is from George Velikov of ICM Investment Management, who asks, Maarten mentioned that you expect both ERVs and valuation yields to stay relatively stable until the end of the year. Have you observed any movement in cap rates in your key CEE countries and the Czech Republic more specifically since Q1 this year?
No, we haven't. Actually, if you look to the yields that are published by the brokers, you saw they lowered the yield in the Czech Republic. I don't expect that to happen in our portfolio. We don't want to push valuations. That's also where our belief comes from, stable yields, in the second half.
Thank you. The second from George: Y ou have continued to be very active in terms of leasing activity in Romania since Q2 with several large deals since. Have they validated your revised estimate of ERVs for the Romanian market, and should we expect no further downgrades to the ERVs for your Romanian portfolio?
That's fair. Yes. I would honestly think that we would adjust a little bit upwards the ERVs. Anyway, let's see how we can close. We came down with some of the target rental prices because we wanted also to hit occupancy. We felt that maybe a bit lower, we could fill up buildings sooner and quicker and secure some business. I think maybe a bit of oversupply vacancy will go away over time.
Then, I mean, one or two quarters, maybe a bit, yeah, into mid next year. Anyway, then I can see that we can maybe think of increasing. If also not so smaller units can get maybe a higher price than the big box, maybe it is a bit more under pressure when it comes to rental prices. Yes, do not expect to come down further. I would rather believe that we would be able, over the next, say, six months to go up, maybe sooner.
Thank you. The next is from [inaudible] , who asks, would you be open to increasing the buyback and proceeding faster with the existing program should the share price discount to EPRA NTA remain at this historic greater than 35% level for Q4 2026/Q1 2027?
Yeah, we think at this share price level, it's an attractive opportunity. We are, of course, bound by the liquidity in the share. We act under the safe harbor rules of the MAR. There is a limit to what we can buy on a daily basis. At this level, it's clearly attractive.
Thank you. At this time, we have another question from Peter Čerešník, who asks, do you think to come to other markets like Denmark, Croatia or France?
No. We are always monitoring different opportunities in markets, but the focus is on, for sure in Europe, on what we have in terms of locations and countries and land and projects. I think there's not now an urgency or a need or an opportunity to go elsewhere at this moment.
Thank you. This concludes our Q&A session, so I would like to hand back to the management team for final remarks.
We would like to thank everyone for their attention and their questions today. Wish you all a good day. Thank you very much.