Ladies and gentlemen, welcome to Colonial first half 2024 results presentation. The management of the company will run you through the presentation, that will be followed by a question and answer session. You can ask a question by phone by pressing star five on your telephone keypad. I would now like to introduce Mr. Pere Viñolas, CEO of Inmobiliaria Colonial. Please, sir, go ahead.
Thank you. Good afternoon. This is Pere Viñolas speaking. As usual, I have with me Carmina Ganyet, the Chief Corporate Officer, and Carlos Krohmer, Chief Corporate Development Officer. And it is a pleasure to have the opportunity to share with you the results, this time for the first half of 2024. Before going into the numbers, I think that it's important to give some comments on the strategic positioning of Colonial, because we believe that it has a direct relationship, no? With the results that we have, no? As you know, the office asset class, it's an asset class that is having a behavior, no, quite challenging in some in some parts of global markets.
We would like to emphasize is that, there are different markets with totally different behavior within this office market. Our strategic focus has been in the prime asset class, where we believe that there is an outperformance and due to the unique nature of the demand and supply of this, asset class. The prime asset class, product is an asset class where demand has been showing consistently since the start of COVID, an increasing momentum, characterized by very strong appetite by end users, which are looking for uniqueness of user experience, which are looking for a top product, no? So the demand, as opposed to some trends in other parts of, our universe, the trends are very strong, are very positive, no. And if we think about supply, the uniqueness of our positioning is that supply is definitely limited, no.
The first characteristic of our universe, of our prime asset office universe, is the scarcity. The scarcity means limited new supply, means limited stock. If you put these two trends, a super strong momentum on demand and super scarcity in supply, which I know it does not happen in other parts of the office world, the logical consequence is very healthy rental growth and very high occupancy level. Which again, I understand that is not the case in some other areas of the office product, but we believe that is totally different characteristic in our case. It's a totally different characteristic in our market, and this has been the case now for almost five years since the start of COVID.
The best is clearly very different than the rest, and if we go for a simplified view of the office market, it's not reflecting reality and it's not helping us. And we believe that our unique positioning is the one that explains the kind of performance that we will now share with you. Also, I think that the uniqueness of the prime positioning has two other important characteristics. The first one is that it allows for value creation through urban transformation of the office product that we own. There's a capacity through the platform that Colonial represents to provide higher value to the transformation of our office assets. And second, there's also the optionality of providing additional value through new uses through a new mixed-use approach to the properties that we own.
I think that this remark is very, is very important, no, because every now and then, when we go through the results that we present, we see a differentiated approach that deserves a differentiated view, and that it's really what explains, no, all the results that we are sharing with you on a regular basis, no. On page five of our presentations are the main highlights of the results for the first half. There are four things that we can say about the results for the first half. The first, and more important, would be the sustained cash flow growth. The gross rental income is growing 6.5% like- for- like, 7% in Paris, 9% in Barcelona. That is translated into EPRA earnings of EUR 92 million, 6%, and an EPRA earning per share of 0.17 EUR per share, 6% growth too.
What is driving this sustained cash flow growth is the outstanding operational performance. Again, a 6% rental growth, as we will see later, that means very healthy pass-through, dynamic in our properties, plus an outstanding rental growth performance. A 9% re-lease spread and an occupancy that remains very close to full occupancy, 97.3%. This is remarkable, but this is not nothing new. I mean, we've been showing this kind of performance, this kind of results, for several months and years, so far, no? And as you know, I like to emphasize that are not only very high, they're not only very good, but they are better than, better than what you can see everywhere else in the market, in the office market.
Maybe, what is different this time from the last time we shared the results with you, is regarding asset values. The other thing that is happening or has happened during the first half of the year, is that not only operational performance has remained strong, but also asset values has stabilized. In fact, they've shown slight growth. Our gross asset value now is equal to EUR 11.3 billion. That represents a growth of 0.7% like-for-like, as we will see later, this, again, is not only good, but better than. Regarding the balance sheet, in these six months, we've been delivering the disposal strategy, EUR 200 million year to date, with an average of 11% premium on appraisal.
As a result of this performance, the net tangible assets per share are now at EUR 9.66 per share. Finally, we remain with a solid capital structure. You know that there's been a relevant fact that is not part of the first half of the year, but is already existing and executed in the company. The net tangible assets are now EUR 5.8 billion post Alpha, after the new equity injection of more than EUR 600 million because of the recent transaction. The loan-to-value remains lower, 36.7% post Alpha, and the financial cost remains, again, as usual, under control. 1.74% is the average cost of our debt. So very healthy numbers, we believe.
This, of course, has a direct relationship with the kind of assets that we own, and the specific uniqueness and location of these assets that you can see on page six. The best prime property is delivering our performance in rental levels. You can see that now in Paris to have a maximum rent of above EUR 1,100, it's now something that is not extraordinary. It's starting to be ordinary course of business for us, and Paris is showing a 14% rental growth for the second quarter of this year, no? The same kind of healthy rental performance is clearly shown in Madrid and in Barcelona.
But as I said, just before, maybe what's new this time, as opposed to six months ago, is that it's not only the rental growth which is growing, is that this rental growth is offsetting the limited cap rate increase that our asset value has increased. And therefore, as a consequence, our assets are showing growth of 0.7% like-for-like, compared to December 2023. Of course, because of the disposals they executed, the absolute number shows a slight decrease, and now the GAV is EUR 11,267 million. But as I say, this figure shows an improvement compared to six months ago, and is showing a different kind of dynamics that we saw in 2023.
And finally, the last highlight that I would like to share is that in this new environment, the new projects that we are developing are important. We just announced the Alpha X project as a result of the transaction that we announced with the new shareholder Criteria joining the company. These projects are being launched and are... I think the other characteristic of the performance that we are experiencing this year is not only about ordinary growth from our existing assets, it's also new expectations of value coming from the urban transformation, from a new cycle of urban transformation, that is going to take place through these different projects that we are launching with very good expectations of return for all of them. So in a nutshell, as you will now see in details-...
Very good numbers for the first half of the year, both on the operational side, but also on the valuation side. With this introduction, let's now go more in details. Carmina, please, go ahead with the section on financial performance.
Thank you, Pedro. In this section, as usual, we are going to analyze in more details all the financial KPIs. In page 10, as you can see, we deliver another quarter with a strong growth in earnings, basically back on the property, on the prime property strategy. The gross rental income increases 6.5% like-for-like, and up to EUR 192 million for the first semester of this year. In the same line, we are delivering an EPRA earnings of EUR 92 million, 6% gain versus previous year, and 10% without considering the disposals that you see, you see that we have been facing since June 2023 up to date. In this respect, the EPRA EPS, in terms of per share, we provide...
We deliver a growth of 6% up to 17 cents per share, cents of euro per share, in this first semester. As you know, we have been updated the appraisal this semester. As Pedro was mentioning, the updated gross asset value shows an increase of a slightly + 0.7% like-for-like. And as you know very well, the settlement of the transaction of Alpha X or Alpha 10, so the capital increase and the contribution of assets, as well as the disposal of Méndez Álvaro Residential, has been settled in July 2024. So as a result of these two transactions, the gross asset value would represent EUR 11 billion, EUR 11.4 billion.
Consequently, the debt for the first semester remained stable, but we need to consider the transaction that has been instituted in the first part of July, and the first days of July. The capital increase, the contribution of cash, and as well, the disposal of Méndez Álvaro. After these transactions, the pro forma debt shows a figure of EUR 4.4 billion, which represents a reduction of EUR 500 million. Consequently, the net tangible assets, in absolute terms, post-transaction, is EUR 5.8 million. In terms of shares, we're pre-transaction, in terms of euros per share, it's EUR 9.66 per share. After being updated the appraisals, after being paid the dividend, the net asset value, it's 9.66.
In line, when you add the dividend that we have been paid, you will see later on in more details. But after the transaction, the execution of the transaction of the capital increase, the net asset value in terms of euros per share shows a figure of EUR 9.3 per share. In line, slightly better, that we have been delivered and we released, when we announced the transaction of Alpha X. Slightly better, based at that moment, December, on the figures, December 2023. Now, after being updated, the appraisal, the figures remains slightly better than we have been releasing when we announced the transaction. In the next page, we saw in more details, what are the main drivers of this strong performance.
The first part, it's a growth rental income, showing this 5% year-on-year, but in terms of like-for-like, as we said, basically, the portfolio, in terms of, like, comparable portfolio and this pricing power, are adding EUR 11 billion, 6% growth. And thanks to the project pipeline that we have been delivering in the second part of 2023, that now are impacting the full semester of 2024, we are adding additionally 6%, of, rental, income. On the opposite side, as you know, we have, these two, main positive, impacts of the like-for-like growth, of the, comparable portfolio and the project delivery are overcompensating the disposals, that we have been facing during this, period of time.
In the next page, you can see how has been behaved the three markets. All the three markets has been behaved positively. In absolute terms, Madrid, 16% decrease, it's due to the fact of the disposal that, you know, has been concentrated in the Paris—in the Madrid market. But when we go in comparab—in comparable terms, the like-for-like shows a very positive performance in the three markets. 7% in Paris, Madrid 3%, and Barcelona, 9%. Basically, behind this strong performance or the strong, the strong like-for-like growth, is mainly driven by rental growth, 2%. Again, indexation, you know that we are having this indexation impact with all our contracts, so 3.1% growth through indexation, and better occupancy, especially in Barcelona, of 1.3%.
So these are the main drivers behind this, growth rental income, highlighting the pricing power above indexation in all the three markets. When we look at the EPRA earnings, the trend is the same, so we have acceleration towards upper range of our guidance. We can confirm our guidance of the EPS for 2024, between EUR 0.30 and EUR 0.32, confirming the upper range, thanks to this strong performance of this first semester. As you can see here, portfolio continued operation, adding EUR 12 million in comparison to the recurring profit, of last year, overcompensating the other negative impacts, especially the discontinued operation during this period of time. So consequently, confirming the upper range of the EPS for 2024.
As I said, on the next page, we are going into more details about the appraisal and how the updated figures of our appraisal have been. As you can see, we have a positive impact of this rental growth, especially with this prime position of updating rents in the upper range of the rental market, adding close to 2%, EUR 213 million more in our gross asset value. This has a positive impact of 2%. On the other side, in this semester, we are experiencing slightly expanding yields, which has this rates impact of EUR 130 million, -1.16%. So consequently, the pricing power, the rental growth, are overcompensating and offsetting the negative impacts on rates.
When you see in the variation of this last semester, you see in the Paris market, a growth, a variance of the six months of 1% like-for-like in our portfolio. In Madrid, 0.6%, and Barcelona, slightly negative, 0.5%. I would like to highlight the capital value. When you look at capital values in terms of euros per sq m in every single market, you can see here that we are in the prudent levels, according the quality of the portfolio and according the recent transaction that we have seen in the markets. And also the capital values and the transactions we have been able to dispose and to settle and execute over and with a premium on the capital values from the appraisal.
I think here, it's a very illustrative levels of what we have the appraisal being updated. If you look at the yields, we are in the range between 4.3%-5% yields. These are the yields according the rates that has been hopefully being stabilized, which represents an expansion yields from the peak since the first semester of 2022, between 80 basis points up to 130 basis points in different markets. Consequently, after being analyzed what has been represented in the first semester and the appraisal, in the next page you see how this performance has been translated into the NTA. The NTA remains stable. You can see here how has been the main impacts on the NTA evolution.
A positive impact on the basically on the rental growth, as I say, as I explained, before in the variance on the gross asset value. A positive, of course, impact on the EPS for the first semester, and a negative impact, these two impacts compensates the NTA impact, the negative impact on the NTA due to the rates and other impacts. So basically, the NTA pre-dividend remains stable at EUR 993 per share, and after the dividend paid, EUR 0.27, the NTA in June remains at the levels of EUR 966. So 2% + impact from recurring earnings and 3% + impact through rental growth and project delivery, compensating the negative impact of the rates and other impacts. So basically, NTA remains in the stable zone.
When we look at in absolute terms, the equity value of the company, in page 16, basically, as I mentioned, remains stable in the range of EUR 5.2 billion. But considering the execution of the Alpha X, set at the beginning of July, natural terms equity value are in the EUR 5.8 billion. In terms of euros per share, as I mentioned, 9.93, considering the dividend paid, remains stable in June compared December 2023 figures. But after the transaction of Alpha X, the capital increase executed in the July 2024, the euros and the NTA plus dividend in terms of euros per share are in 9.57. This is in line, slightly positive, with the numbers that we disclosed when we announced the transaction.
At that moment, the numbers was based in the figures of December 2023, which is, I would say, positive, because after being updated, the valuation, after the six months and after, the semester, the numbers remain very positive and more positive that we released at the moment that we announced the transaction. If we go to the other part of the capital structure, the debt, I am in page 17. You can see here an improvement of the, net debt after the transaction of the capital increase and after the transaction of the execution of, Méndez Álvaro residential, during the last, days. So an improvement of EUR 500 million.
This means a secure level of liquidity, which represents 1.8 times covering the maturities from this year until 2026, which we are in the very healthy zone. In terms of loan-to-value, we remain below 40% loan-to-value, in the range of 34% loan-to-value. Considering the operating cash flow from our portfolio, we are in the debt to EBITDA in the range of below 11x. As you know, and Pere was mentioning, we are secure, or we have a cost of debt secured for during this year and the following years. We maintain a low cost of debt of 1.7%. Since 2022, we are in line with what this cost of debt.
Thanks to this pre-hedge policy, we can secure a cost of debt during the following years below 2.5%, because all the debts, all the debt are fully hedged or fully pre-hedged for the future maturities. In the last page, some comments about what we have been enhancing and strengthen the liquidity. Basically, we have been renewal EUR 1.9 billion of credit facility with updated ESG metric. This renewal has been extended with a maturity, a longer maturity of five + one + one, with a better cost of margin. So we have been also improving our margin.
Of course, with a pool of international banks of reference in institutional, financial institutions, and with a new ambition plan of ESG KPIs, based or in line with our decarbonization plan that we have been releasing and sharing with you, basically, with an ambition plan of reduction of carbon footprint, of course, with a asset certification of our portfolio and maintaining the outstanding level of GRESB rating. So thanks to this ambition plan on ESG, we have been able to improve our margin, and of course, if we succeed in our ambition ESG plan, we will have a better financial condition. Again, we have been also actively doing a liability management during this first semester.
So we have been refinancing in advance the bond maturity this year, tapping the market of EUR 200 million of reference of 2029, and highlighting that we have been confirmed by SMP our BBB+ rating from the agency, the rating agency.
Thank you, Carmina. Let's now step into the next section dedicated to portfolio management. Carlos, please step in.
Thank you very much, Pere. I'm on page 21. As Pere explained at the beginning, we are playing an asset class that is a prime segment, that is a prime property in the urban city center, and this prime asset class is delivering our performance. What does this mean? Well, let's be factual. Let's look at this page. We have signed year-to-date, 66,000 sq m , 20,000 in Q1, 46,000 in Q2. This is quite remarkable. First of all, as you, all of you know, our normalized run rate is 100,000 sq m per year. Half of the year, we've already done two-thirds of our normalized run rate, and this is even more remarkable if we start from a point where we are already at almost full occupancy at the beginning of the year. So we are letting quite a lot.
If we go a little bit more into the details, and see the velocity from one quarter to the other, we see that it's even accelerating. We have signed 46,000 in Q2. This is more than 2 times what we signed in the first quarter. And if we go into the details in terms of the different markets, we have signed, for instance, out of the EUR 28 million of annualized rents that are behind the 66,000 sq m , EUR 10 million are Paris assets for a total surface of 12,000. So EUR 10 million divided by 12,000 means that all of the contracts that we have signed are on average above EUR 1,000 per sq m , and we've signed quite a lot of them even higher.
A typical question that some of you put us in the one-on-ones, and what are the incentives attached to it? The incentives on the office lettings in Paris are 11.6%, the super low-end range on the retail premises signed in Paris, 6%, and in Spain, 6%. So low incentives, but very high rents, and as you can see here, with quite top-tier clients, and we have here some examples. So this is the first overview of what is happening and what has happened during the first half and second quarter of the year, 2024. If we turn the page, on page 22, this translates into super high occupancy, 97.3%, an increase versus the beginning of the year. And if we go into the details, our CBD exposure is close to 100%.
And it's not that some assets are, no, at super high occupancy, and we have some of them empty. It's really spread across the portfolio. So again, the prime asset class really outperforms the market, and outperforms in both terms, in absolute terms and in relative terms. What is the economic impact of what we have signed? This is on page 23. First of all, we are capturing all of the indexation. Main driver is now Paris, because we have here a lagging element of the index. And then I would like to highlight the other two metrics, that is the re-lease spread and the year-end growth. If we go to the re-lease spread, it's +9%. This is quite high. The last three years, it was well below.
In 2021, at 7%, in 2022, at 6%, in 2023, at 5%. We've signed at 9%, quite high, especially, the most prime market of Europe, our Paris portfolio, +22%, super strong re-lease spread. When we go to the year-end growth, the year-end growth is what are the rents that we've signed compared to the market rent in our appraisals as of December? So this shows, in a way, the rental growth of the first six months of the year. We have a blended rental growth of 6%. This is quite high and, in line with previous years, and we have a significant acceleration in Paris, with double-digit, year-end growth, +10% for the first half.
Again, when we go quarter-on-quarter, you see it here at the right-hand side, the bottom of the page. We see, especially in Paris and Madrid, relevant acceleration. So it's not just that we are letting up more space in Q2, we are letting it also in a more expensive way. Then we are delivering, we are finishing our previous project pipeline. Almost everything has been delivered. We are about to deliver, during the year, an urban mixed-use campus in the south of the city of Madrid, in the center of Madrid. These are very attractive mixed-use premises, 56,000 sq m office, 44,000 sq m retail. We are experiencing a lot of interest.
As of today, we have 25% of GLA with head of terms, and even before of delivering the project, there's almost no CapEx to be deployed anymore, roughly EUR 15 million. And we expect of this premise, once it is let to have EUR 19 million of annualized rents, yield on cost in excess of 8%. And finally, what's obviously also very attached to the prime asset class is to be really at the high end in terms of sustainability. As you know, that CDP Sustainability Express, we really top at the high end. Moreover, in recent weeks, we have been also recognized by Financial Times and TIME among the world's most sustainable companies in 2024. That is quite also a very important element in our strategy of positioning in the prime asset class.
Thank you, Carlos. Let's now enter into the final section, which is focused on some comments about present and future growth. I'm on slide 27. The first thing I would like to share is that maybe one of the main characteristics that are describing our recent performance is a very strong EPS growth that we are experiencing. We shared a 6% increase number. Let's not forget that this is in the framework of a period where we've been disposing of a number of assets. If we look at the number of the EPS growth under like-for-like of continued operations comparison, then the growth would be 10%. I think that this is a consequence of a multilayer growth platform.
It's because of the fact that the kind of product that we own, first of all, it's proving to be a perfect asset in terms of pricing power, of passing through inflation. Therefore, the characteristic of any real estate asset, which is an inflation hedge, is proving to be perfect in our case. It's also rental growth that is happening because of the balance between supply and demand in our product. And it's also coming from the project pipeline and the acquisitions that we've been going through in recent years, no? So very good EPS growth as starting comment, no? But if we look beyond that number, what is the main driver, the main reason?
I think that, as I said at the beginning, the fact that the best prime property is delivering the highest rental growth. I think that the main concept to retain here is prime is different. The best is not the rest. They have different performances. In this page 28, you can see the different performance, the different behavior of the office rental market for prime properties in Paris or in Madrid, as opposed to the outer M30 in Madrid or to La Défense in Paris. So, there's a very different performance in these two different markets. And as a consequence, you can see on next slide, the page 29, the outperformance that we are experiencing in terms of occupancy. We are today 100% occupancy.
We have today 100% occupancy in Paris, 96% in Madrid, 99% in prime CBD Barcelona, 86% in non-prime CBD Barcelona. So, let's say, as I say, the main characteristic of our positioning is that we are benefiting from the fact that prime is different, prime is better. And, and, therefore, is not a coincidence that the results we are showing this first half are not only good in absolute terms, but in relative terms to our peers, no? In page 30, we are comparing the gross rental income year-on-year growth, or the gross rental income like-for-like year-on-year growth and the occupancy numbers. And you can see where Colonial ranks compared to the general sector. And maybe the other thing to highlight is that this not, it is not only relevant talking about, let's say, the P&L, not...
Talking not only about rents, it is also the situation, the same situation when we talk about value. Our prime assets are leading the market in value stabilization. You can see here the gap, like-for-like evolution in the last six months, and you can see that it's closely correlated to the asset class. Either if you are prime or you are in the rest of the office market, the performance is different. So this is the starting point on where we are, no? The other comment on where we are is about the cycle, no? On page 32, we can see where are we today, no? So we've gone through a four-year period, where we experienced a price adjustment in 2023, where the rental growth, being very important, could not offset the value decline coming from increased rates, increased yields, no?
But this year, for the first half of 2024, we can see that we come back to the general rule that we already saw in 2021 and 2022, where rental growth and project delivery more than offset it, the impact that evolution of rates may have in our gross asset values. In other words, we are at a moment of the cycle that is changing compared to six months ago. So in this context, which are the strategies that we would like to favor? Let's say three things. The first thing, of course, is to benefit from the growing demand for premium space in prime locations. So we will remain focused in this strategy of flight to quality that is showing a better performance than the rest, and that would be the base case for our strategy going forward.
Number two, we will be positioned to serve evolving client needs through urban transformation. So we will be, we are already, creating value through the transformation of the assets we own or we may buy. An obvious comment, no? That I would like to make in this direction, this is not new for Colonial. I mean, we are a platform that have been doing this for years. You cannot see in this slide, for example, when we transform an office building into the Mandarin Oriental in Paris, no?
Already some years ago, but you can see more recent examples of transformation of an office building in Rue Saint-Honoré in premium commercial, which are very good returns, or more recently in Madrid, the transformation of a new development of a new urban mixed-use campus with a combination of office and residential. And if you look at the new projects that we are developing. They are either a transformation for a higher value, remaining with an office use as the main component, but more, let's say, abundant or more important, the urban transformation in the direction of new users for our office buildings. So two examples here. Santa Hortensia, that it was pure office, it will be a combination of different users.
Another one, even more evident, Sancho de Ávila, which used to be an office building, the T-Systems headquarters in Barcelona, as you can see in the picture, will be an important asset in the life science and healthcare environment. It will be a hospital that has already been pre-let, no? This will be a substantial source of value, as you can see on page 35, and with a different mix in terms of nature. As I say, more focused to urban transformation and mixed use, less dependent on office, no? On page 36, what we like to highlight is that this is not only about refilling the pipeline, which is important. As you know, in the past, we went through this, and we were quite successful through important projects, no, that take certain time to deliver returns.
It's also something that we do on the ordinary course of business with our platform, with our asset management expertise, providing rental growth and value extraction in, let's say, a more kind of ordinary activity. You can see here several examples. Some examples, by the way, are coming from the recent deal with Criteria, the office portfolio called Visionary Building that came from Criteria. It's one of the projects where we are now working in order to extract value. Another one is the leading portfolio that we are working on right now, that is also coming from Criteria, no? Or let's put maybe one additional example, no? Haussmann Saint-Augustin in Paris. Fantastic location, fantastic building. Used to be leased to WeWork.
WeWork left with no pain on our side, I have to say, because of the conditions of the leasing agreement that we had in this particular case. What are we doing here? We're just launched through SFL a renovation program with very limited CapEx, EUR 40 million. Our central expectation, and this that is, will allow rents to jump from EUR 800 per sq m to EUR 1,000 per sq m . So our expectations will be, once this is finished, we expect mid-2025, this will be producing EUR 2 million more than it used to produce. Compared to EUR 40 million of CapEx, this will be a very good return. Well, this is the kind of nice things that we like to do and we will do.
All in all, putting everything together, the overall consequence of this will be increase, increased gross rental income growing from EUR 400 million - EUR 565 million, no? This morning someone was saying it's not so long ago that we were in the EUR 300 million figure. Now we are in the EUR 400 million, and soon we'll be in excess of EUR 500 million. So this is more or less the outlook. So value creation through transformation, not only office, other users include, and this will be our future, no?
As a recap of everything I shared with you today, the last slide, slide 38, on a strategy and outlook, I think that we have shared with you today another strong set of financial results, with good numbers and superior numbers in terms of like-for-like growth and cash flow from delivered projects, no? We show today, and this is new because the previous point being the ordinary thing we share with you for the last four years so far. The second thing, which is brand new, is different moment of the cycle, prime properties showing a value stabilization. Our numbers leading the market in terms of this value stabilization is another fundamental point of our presentation today, no?
It was also evident that the group's expertise on the prime asset class has been delivering continuous outperformance on operations. The final two points is, we are now very much focused on extracting value from the new project pipeline that will generate further organic growth, organic cash flow and value growth. We will be paying a lot of attention to the real estate cycle and the current situation, which looks to be different from the one we saw six months or a year or a year ago, no? My final comment would be, in this framework of results that we shared today, number one, we confirm the EPS guidance for 2024, range of EUR 3.30-EUR 3.32.
Maybe, you know, I would add, no, an acceleration towards the upper range of that guidance, as you saw from the results. Second thing, divestments, you've seen that we are on track, and ongoing. Maybe situation is changing a little bit. Three things have happened, or are happening as we speak. Investment markets remain challenging across Europe, number one. But number two, hand in hand with a different view on valuation trends, so values are stabilizing. And number three, we just went, have gone through a significant transaction with an important equity injection. Everything together means that we'll be more fine-tuning our disposal program in the framework of the real estate cycle.
That means that, with the capacity to have, let's say, a more flexible view to selling or buying in this new environment. And finally, growth profile, as you can see, remains strong, significant reversion from prime properties, initiatives on balance remain. So this has been the presentation of results for today. Thank you very much for your attention, and now we are available for any question you may have. Thank you.
Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press star five on your telephone keypad. Thank you. Now, we have the first question coming from Markus Kuless. Please, go ahead.
Hi, good evening, everyone. Thank you very much, and, congratulations for your, for your results. I have three questions. I, I will start with the Like-for-Like rental income. I just wanted to go a little bit through it, because I saw different numbers, +6%, +6.5%, and +4% on the net basis. Can you maybe tell me what's the difference between net, the 4% net and the 6% gross, and then on the net basis by city?
Markus, you want to do the three questions first, or would you like to answer one?
Perfect. Perfect, yeah. Second question is on the disposals. I, because I, I struggle to see with the positive evaluation, how your ATV is going up, and I saw on your financial statement, actually, EUR 72 million disposals, not EUR 150 million, and I saw in front of it, EUR 56 million CapEx, so more disposals than CapEx. So maybe, you know, these numbers are just accounting, but explaining why your ATV is going up, by two percentage points before, of course, the transaction, despite positive revaluations and apparently under EUR 52 million disposals, but just to check also how much are actually effective in H2. My last question is on the, on the valuation of +0.7, this includes development revaluation, I suppose, so do you have the number without the impact of development?
And maybe a point with the fourth, so fourth, just a point on the, on your yield, economy issue yield, which is going down, and which looks a bit low, and especially this is explained, but I have 7% rent growth and 1% net asset revaluation. So, how come the, also the overall yield is stable and especially going down in Madrid and Barcelona?
Thank you, Markus. Carlos, Viñolas.
Okay, so, growth rental income like-for-like 6.5%, we have here exactly the breakdown. This first half, we have a little bit of divergence between growth rental income and net rental income because of temporary elements on the OpEx, but that will phase out during the year. You know that sometimes, some of the OpEx fall in the first part of the year and others in the second part of the year. So this is the explanation on the like-for-like. So 6.5% and 4% in terms of net rental income. On the valuation, I think there was a question regarding total portfolio and operational portfolio. Operational portfolio is quite similar to the total portfolio.
It's a 0.3%+, like- for -like, + 1% in Paris is offsetting slightly negative in Madrid and Barcelona. And then we have on top what lifts this up, up to 1%, the progress on our project pipeline, that has been quite substantial. So in total, the like- for -like is 1%. In terms of our valuation, as we always want to very much highlight-
... The most important element in terms of cost of capital and discount rate is the cap rate. So it's the valuation yield, that is the yield that we show, because the net initial yield is a spot data point at a specific date of the year and can be influenced also by temporary movements and does not give really a full, full comprehensive valuation view. In order to go more into net, into the detail of this, I would then also suggest that we can do then a separate technical call. Also to guide you, it is very technical through the movement of the debt. So this would be the answers on this.
Thank you. On the LTV,
Yeah, the LTV, we will-
I can answer.
Guide you through.
Carmina, Carmina Stubbins.
Now, on the LTV pre-transaction or pre-Alpha X, be aware that, the valuation, when you look at the gross asset value and the movement of the gross asset value, it's EUR 11.2 billion from EUR 11.3 billion. It is slightly, in terms of like-for-like, is positive, but we have the impact of the disposals impacted the gross asset value. And on the debt, we have been paying the dividend during this semester or in June, so it's EUR 150 million dividends. We have generated EPS of 80-something million EUR EPS. And on the other side, we have some CapEx, you know. So this is the movement in general terms of the debt.
This is why the debt, the loan-to-value, moves before a transaction from 39.5 to 40.5. But after the capital increase and the, and the transactions, of course, of Alpha X, it's 36.7.
Okay, thank you very much. But yeah.
Thank you, Markus.
Okay. So we move on now to the next question coming from Véronique Meertens. Please go ahead with your question.
Hello, all. Thank you very much for the presentation. For me, some questions around sort of like the disposals in the investment market, because just wanted to check if with that last comment, where you mentioned about timing the real estate cycle, that it automatically means that the EUR 500 million disposal target that you initially had for this year is not as set in stone as it was before. And also me questioning, how confident are you indeed that values are bottoming out if the investment market is still that shut down? And if it's not, isn't this the time to also sell a larger Paris office to show the investors in the market that values are in where their prices are valuing them at the moment, and to additionally improve your balance sheet a little bit?
Yes, thank you. Look, Véronique, on the disposal, it's. I think it's true that we will be maybe more selective, no? As I said, I think that three things have happened or are happening, no. The market remains very, let's say, challenging, as you're saying. This is number one. But number two, valuations are stabilizing, and I may come back to this point, no, again, no. And third, we've been going through a transaction that has meant a significant increase in the equity and a significant deleveraging.
When assessing disposing of assets, I think that we have to carefully assess, as a company, the pros and cons of the theoretical re-rating of a lower LTV, and on the one hand, on the other, the dilutive impact that this may have on the earnings per shares of the company. I remember some years ago that after selling, a year later, I would ask where the earnings were, no? So we have to carefully assess, you know, both things. And looking at the general evolution of the market, I think that we simply have to be more selective.
We remain, let's say, very much inclined, no, to disposing of assets in good terms. But, with this, let's say, a revised view on where the market is. You say, "Well, it's always good to sell and show the market that you're selling at a premium." I agree. We've been doing this in the last two years. We sold EUR 700 million at an equivalent of an AVR nine or 10 or 11. Probably it helped the market, probably didn't help us so much. It's true that it's a good thing to do, but as I said, we have to balance with other things, no? I think it remains a good thing to do.
The disposal program will remain a priority for us. But we also have to be, let's say, selective based on current market conditions.
Okay. That's, that's fair. Yeah, and I think my point is more that for me, I feel that the most... the biggest concerns for investors around Colonial are still the leverage. And I understand you also, that obviously, with the quality of the portfolio, the leverage can be higher, but it's still relative to peers, a lot higher. And the other concern is the valuations, or at least the still low yields... So I think you kind of would two birds with one stone, if you were able to, to sell a prime office Paris.
Yeah, I think, I think that I understand there is a sensitivity about that. You know, also that we are taking into consideration many other things. So you are comparing the yield of an asset, no, with cost of the debt. We look at the IRR of any existing asset with the cost of the debt. So it's dilutive, no, for the value of shareholders when you are disposing of an asset, no, which an expectation of unlevered return of 6% or 7%. So it's I understand that it's a possible, a positive signaling from the market, but it's not obvious, no, that you are creating value, you know, for the shareholder.
Most of all, in the mid to long term, I understand that in the short term, the sensitivity about that, but you have to take decisions, thinking on where the market will be two, three, four years from now. For example, if the market changes, then suddenly the view on leverage will be totally different, but the asset won't be there anymore, no? So, I think that we take a number of considerations. We believe that our leverage is quite robust, no, in terms of solvency. For example, the cost of debt that we have, no, I think it should be also factored in, in this kind of analysis, no?
So putting everything together, I would say I do not disagree with you, and we have proven that we are very much aligned with being, let's say, strict with capital structure, discipline, and take advantage of the market if the market is there. And then we are not changing fundamentally this policy, this strategy. Maybe I only changing or fine- refining or fine-tuning, maybe, how we are looking at the market now, because it's not exactly the same that a few months ago. That would be all.
Okay. That's very clear. Thank you so much.
Thank you very much.
Okay, now we move on to the next question, coming from Céline Soo-Huynh. Please go ahead with your question.
Hi, good evening. I got three question, if I may, please. The first one is on the WeWork surrender premium. Do you know how much it is, and whether that will be included into your recurring earnings for this year? My second question is on the Madrid valuation. It seems like that portfolio corrected the least from the crisis, less than Paris. How do you justify this? And my last question would be on the change in your covenants, in your bonds, whether you can explain why you've done this. Thank you.
Thank you. And I will provide maybe part of the answer and maybe Carlos or Carmina can step in. So your first question was about WeWork. In the case of WeWork, we explain, no, that both in Paris and in Madrid when we reach an agreement with WeWork for an excellent place, the conditions of the agreement that we did were very strong. So there were strong guarantees that were preserving, no, our position in case, no, that we were about to terminate the contract, no?
In the case of WeWork, France, the level of guarantees, no, and the conditions of termination of contract with WeWork, have meant no downside, no, for the cash flows of the company during 2024. The second part of the story, as I explained before, sometimes the landlord is the first one which is interested in terminating a certain agreement because we realize that there's a significant upside if we can go to the, move to the next page and go to a different project with a lot of potential in terms of upside in rent, no? That was the second part of the story. We thought that this was, this, this, those were very good news, no?
If we could, number one, terminate the contract with WeWork with no pain or no downside. And number two, and enter into a potential valuation that was relevant. Your second question that was that Madrid maybe showed less correction than Paris, no? And if there was any reason for that. I think that the main answer for that has been that the average asset value. The average size of an asset in Spain, as opposed to France, is much lower. That has meant that this market was much more appealing for a significant segment of the market that has been very active, which is transactions which have been done mainly by family offices interested in this segment.
As a consequence of that, we've seen in Madrid a huge amount of volume of transactional evidence, no? The one that I was mentioning before. We've done almost EUR 700 million of transactions in Madrid at a premium to NAV, at a significant premium to NAV. And I think that this transactional evidence, it's the one that explains the different behavior in valuations, no? Maybe I didn't mention that before. I was about to mention that, you know, when Véronique, you know, was asking, you know, this question about the absence of transactions today.
It's true that, when you evaluate the current situation, you can come to conclusions on values, depending, number one, on transactional evidence, and number two, on the fundamentals, no? On transactional evidence, it's true that in France, we have some evidence, but not as big as in Spain. But in any case, when you remain with the fundamentals, I think that as time goes by, it happens what it happens, which is a yield correction is a one-off, no? That happens one day. And then you come to the other part of the equation, which is rental growth. That is there one year and another year and another year and another year, and that has an impact in the net present value of discounted cash flows of the assets, no?
And this is that, what generates the view of the appraisal companies and market players, no? That, the most, let's say, potential. The better assessment you can have of value is the kind of values that we already have, no? Let's not forget that the capital value per sq m that we've seen in the latest market transaction, no? But coming back to your question, yeah, the different performance of Madrid versus Paris, it's the transaction evidence that is remarkably higher in the last 18 months in Madrid than in Paris. And sorry, I forgot the other question. I don't know if you remember. If you had...
The change in governance.
Ah, yeah, the change in governance on the board.
Yes, yes. You know that today, no, it was finished, the consultation request from changing the, or adapting the governance. And basically, we have been update adapted the definition of the governance in line with the revolving lines we have, as well with the financial institution, in line with the benchmark and in line with the situation we have today, which is 98% of the company, of SFL. Because in the historical definition, it was more based on a definition based on different subsidiaries, not only control of the subsidiaries. Today, with the fact that it's we have 98% of SFL, we understood that it's the definition would be more aligned in the best practice and the benchmark and according the existing situation of Colonial.
And by the way, today, we have been closed this process with a satisfactory and positive feedback from the debt investors, supporting and approving the new definition of the bonds, of the covenants. It's only for two reference. The remaining bonds are, they are not having any covenants. I mean, the, these covenants only are referring for two reference, that we have in the bond market.
Okay, thank you. Carmina, can I follow up on the WeWork question here? Am I right to assume that there is a certain premium that will be into your recurring earnings in H2, since WeWork has stopped paying at the end of June?
Well, yeah, yeah, the full impact has been booked in the first semester because it has been, as per mentioned, no offsetting the impact because of the bank guarantees. But it's true that now we don't have any additional income coming from WeWork in the second half of the year.
Oh, I see. So there is a one-off into your top line, so we can't-
Yes
... annualize your EPS. It's not gonna be above the guidance, basically.
Mm, no. It's not-
Okay
... cannot be annualized. Yeah, you're right.
Okay.
It cannot be this impact annualized for the second part of the year.
Thank you so much.
Now we have a final question from an unidentified person. I will give you the floor, but first, please state your name and also the name of your company. Please, go ahead.
Hello, it's Adam Shapton from Green Street here. Sorry, that I was unidentified. Just one quick one. Quite a few of my questions have been answered. Just on, Magnum, so you talk about good, good leasing momentum, 25% as of terms and, and lots and lots of interest. Can you sort of give us a sense of how quickly you think it will lease up in the second half? Can we expect, you know, close to 100%, by the end of the year in terms of at least the heads of terms? How speedy do you think the lease-up can be from here, given your visibility on, on the good interest that you have?
Well, we've never given... I think it's impossible to give a specific guidance of how many sq m we're gonna lease in the second half and when we're gonna get to 100% occupancy. Because at the end, it's daily business and what happens. But I think-
... A good way to extrapolate this is what you see in terms of the factual figures. You see 20,000 sq m in the first quarter, 46,000 sq m in the second quarter, top product. In terms of leasing activity, there's not so much left to be done, and then we will be delivering throughout the second half, the Méndez Álvaro urban campus. There, we will then see on how everything progresses. We are having a lot of interest. I think what you have seen is that these two quarters, especially second quarter, has been strong, has been better. The previous quarter has been better in terms of pricing than previous years, so we remain confident.
To give a specific number of sq m when there's almost no sq m to be let, and then, a very specific file that is then very singular, that is the Méndez Álvaro, that, that depends on, on very specific, no optimization of deals. It's, not really, possible, but we remain with very, with very good, momentum and with confidence because we are seeing fifth year in a row that everything is going very strong. So we think we will also come back on Q3 with good, performance on operations. But to specifically say, it's difficult.
It's we never know as 100%, because always there are things happening, specific news, up or down. I would be glad not to see for the next 15 years that we are above 95%, no, as we are today. But yes, I would like to emphasize that also the other thing is that there are new projects coming that we have to work on. The most obvious one is Madnum. Madnum will be impacting the figures of the second half. Madnum is going well. We have already had of terms of the 25% of the sq m that have been already signed.
But even if it's going well, this will impact, no, the occupancy numbers on the second half, in relative terms, or in terms of occupancy. In terms of rental growth, it will be fantastic news, of course. Okay.
Great. Okay. Very clear. Thank you.
Thank you.
Okay. So I see there are no further questions. Therefore, I give back the floor to Mr. Pere Viñolas. Please go ahead.
No, just a few words to thank all of you for the attention today, and also for the questions that we appreciate a lot. And I wish you, if some of you have not still gone through vacation, a very good rest, no, in August, and a very good end of the day for everyone. Thank you.