Ladies and gentlemen, welcome to Colonial SFL 2025 third quarter results. 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, Senior CEO of Inmobiliaria Colonial SFL. Please sir, go ahead.
Thank you. Good afternoon, good evening to everyone and thank you very much for joining us today in this presentation of our results for the third quarter of 2025. I'm going to start with some introductory remarks and then I ask as usual for Carmina Ganyet, Chief Corporate Officer, and Carlos Krohmer, Chief Corporate Development Officer, to step in with additional comments and insights. The introductory remarks. I think that we are presenting again a good set of results. As you will see, the operational performance remains strong. Many different KPIs show very strong numbers associated to them. This in the end shows that our strategic positioning in prime is set to deliver earnings and value growth. Our strategic positioning, as you know, is based in the prime asset class segment.
I think that it's now a few years where we have been proving pricing power, pricing power coming from high demand, from best-in-class clients where we are able to capture above average rental growth. As a consequence of this strong earning growth as a result of our activity, there are two things that we can share that you will see. One is that we are proving superior growth capabilities. It's a 9% CAGR for the last three years that has been delivered. It's not only looking at ourselves and our history, it's that regularly you could see how our GRI like-for-like growth, it's relevant but moreover it's higher than those of our peers in the sector. This positioning, unique positioning of Colonial, creates a difference. I'm going to start by looking at the main KPIs for this quarter.
We could talk about cash flow, we could talk about operational performance, we could talk about capital structure. Just let me share a few numbers. This quarter gross rental income ends at EUR 296 million. The relevant number here, it's a 5% like-for-like, well above inflation, showing strong rental growth. The EPRA earnings, 6% year- on-year, EUR 156 million. The EPRA EPS, EUR 0.25, in line with the guidance for full year. Second layer, operational performance, rental growth 6% measured as our growth in terms of signed rents compared to December 2024 ERV, 6%, maybe highlighting 9% in Paris, which again is pretty strong and pretty ahead of inflation. Release spread 9%, 17% in Paris, and occupancy 91%. As you know, we are just delivering some assets that create a difference. Without Magnum and Haussmann, our occupancy, which were just delivered this year, our occupancy would be 95%.
Finally, from a capital structure point of view, we keep our strong credit rating plus S&P, Baa1 Moody's, the rating confirmed in that particular case September this year. Loan to value 38%, financial cost 1.9% for the whole of our debt. In page six, an overview that in my view speaks for itself about our core markets. Where are we in terms of individual occupancy? You can see how high it is. You can see also the number for rental growth. 9% Paris, 6% Madrid, 3% Barcelona. And these are result of beautiful signatures. EUR 1,200 per square meter maximum rent sign in Paris, EUR 43 per square meter per month in Madrid maximum rent signed, EUR 30 in the case of Barcelona. So fantastic KPIs. Now as usual we will enter into details. First the financial performance, later on portfolio management that provides more insights about the future.
Finally, some remarks from myself on future growth. Let's skip into section number two, financial performance. Carmina, welcome.
Thank you, Peter. The first main KPI is rental income, which as you can see here, it's growing through the core portfolio and the project deliveries. These two drivers, the core portfolio shows a like-for-like growth of 5% and project deliveries of 2%. These two main drivers have been overcompensated by the fact that Condoxe and Haussmann have entered into refurbishment. If we look at the different components of this strong gross rental income, in page nine mainly, you can see out of this 5%, 2% comes from the indexation impact. As you know, inflation in Spain and index in France. In our Paris portfolio, another 2% comes from the rental growth premium. This primary pricing power from all our operational portfolio and an additional 1% from additional occupancy. This 5%, as mentioned previously, is outperforming our main peers in the European zone as usual.
This is another quarter that we are delivering a solid rental growth like-for-like above our peers in the European zone. If we look at the last bottom line in the EPRA Earnings in page 10, you can see how a strong operation is impacting positively in the EPRA Earnings growth. 6% growing on a yearly basis. Basically, I would like to highlight this 18% coming from the operational portfolio. Additional EUR 5 million coming from the project deliveries that we have been able to do in the last year and additional positive EUR 9 million. Basically, the fact that we have converted into the SIIC status the remaining subsidiaries that we have in France thanks to the merger. This means that we are saving tax this year and for the future.
This would be a structural positive EPS coming from this new conversion of the last subsidiaries that we had in Paris thanks to the merger. All this positive impact has been, as you can see here, overcompensating the negative impact coming from the Condoxian Haussmann that has been entering into refurbishment. In terms of EPRA EPS, we deliver almost EUR 0.25 per share considering the new shares in place after the capital increase that we did in July 2024. If we go to the balance sheet on page 11, as you can see here. We continue to deliver very strong liquidity. Our loan to value is in this quarter 38.1%. I would like to highlight again this level of loan to value is temporary. We are making progress in some disposals and capital recycling that has not been impacted yet.
In this loan-to-value ratio at the end of September 2025, in terms of liquidity between cash and androlines, we have a very strong position, EUR 2.8 billion, which is almost two times covering the debt maturities for the following three years. As you see, our cost of debt remains at a very competitive level. We are taking advantage of the accurate hedge policy that we did in 2021 when the rates were very low. In the appendix, you would see in more detail the hedge and the hedge. The existing hedge as of today, 93% of our existing debt are hedged with a fixed cost. In the future, the profile of the future hedge, thanks to these pre-hedged positions, remained in a very solid position with above 50% of our future debt.
Consequently, thanks to this strong position and thanks to these robust liquidity management and operational performance and forward looking hedge strategy, Moody's has been confirmed our rating with Baa1 with a stable outlook. As you know, this year we have been tapping the market two times. One in January, EUR 500 million, eight times oversubscribed with a very competitive yield, 3.25, but resulting in an effective yield of 2.75. After the hedging that we took previously, and recently in September 25th, we have been gone again to the market with a placement of EUR 800 million. Six year green bond, all of them has been green bond issuance with 3.12 coupon, but again, thanks to the effective, the hedging attached to this debt, our effective yield are at the levels of 2.73%. Very strong liquidity position, very strong or competitive cost of debt.
Confirming the rating by S&P and recently by Moody's. Again, Carlos.
Thank you very much, Amina. Now we're going to step to page 14 on portfolio performance. First of all, we've signed year to date 125,000 sq m that are equivalent to EUR 54 million of annualized grants. We are signing a lot and we are signing with high prices. This EUR 54 million, an increase of 26% in total contracts secured in economic value compared with the same period of nine months of a year ago. We go a little bit into the breakdown. Out of this EUR 54 million, EUR 20 million, close to 40%, has been signed in Paris. And this EUR 20 million are equivalent to 14,000 sq m at the end. This means that we've signed on average at the rent of EUR 1,400 per sq m per year. Absolutely at the high end.
If we go further analyzing the breakdown, we've seen that the Spanish markets, also our portfolio in Spain, is progressing very, very well. Close to 60,000 sq m signed in Madrid and more than 50,000 sq m signed in Barcelona. We go a little bit more into detail on page 15. Here you can see out of the EUR 20 million, EUR 13 million have been in three super prime premises on Champs Elysees. We signed a contract at a retail rent of in excess of EUR 3,700 per sq m year. This is 11% increase of rental growth increase versus the year re option December 2024 and the 16% release spread on Louvre Saint Honoré office or the part that is the upper part on the Cartier premise. We've signed at levels well above 1,000, 1,100, 1,200, 18% of growth versus the ERV office ERV of this asset as of December 24th.
Quite a lot of rents, EUR 3 million in two contracts. We are progressing also on Haussmann, signing above 10-11% ERV growth, 60% release rate. In terms of what the rents were of the previous tenant pre the refurbishment, we now step on page 16 to Spain. 57,000 sq m signed in Madrid, more than 20,000 signed in Magnum in one of the most relevant urban prime campuses in the city of Madrid. In Barcelona, 54,000, interesting highlight, 40,000 sq m 22@. Momentum in 22@ is getting better. We are positive on Barcelona. We see this as a big opportunity. If we then go on page 17, you can see one of the main flagship projects and assets that have been recently released or fully delivered. That is Magnum. It's a large asset, close to 60,000 sq m.
As of today we have already close to 40,000 sq m signed with top tier tenants. Most relevant recent news just some weeks ago is one global leading telecommunication firm letting up 13,000 sq m for 1,800 employees. We have remaining space to be let of roughly 19,000 sq m as of today. We have already visibility for close to 40%. 3,500 sq m already signed in October. After these results cut off, but already today at home secured and conversations for additional 5,000 sq m. This asset, just to remind you, has a yield on cost of 8%. We are signing rents at levels of EUR 27. This is well above the initial underwriting of EUR 23. For this asset it was around levels of EUR 23.
If we go further here, we see that the very important point of our recurring earnings and revenue growth is the pricing power that our prime asset class portfolio has. We have signed at a release spread of 9%. Strongly driven by Paris with + 7% and Madrid + 4%. Barcelona is slightly negative, but this is basically due to a secondary activity in the Q2. If we would look isolated only at the Q3 numbers, the last three months release spread has been positive of 1%. It is a cumulative effect from previous quarters. We are seeing there also a change in the trend on the ERV growth. We have signed on average 6% growth versus the December ERV. In nine months 6% growth. This is beating the average indexation that we had in the portfolio in more than 300 basis points.
Really our prime asset class is delivering an extra chunk of growth due to the benefit and the polarization impact of prime asset class assets. Again, strongest market. Paris and Madrid very strong and Barcelona getting slowly but steady. Back to momentum on occupancy. You can see it on the next page. Basically, we are the portfolio is a stable level of 95%. We had the entry into operation in terms of like-for-like comparison. We had the entry into operation of the full projects of Mendel, Albert, and Haussmann. This has put down temporarily the total occupancy at 91% in these assets. As I told you, 4.4% is concentrated in these assets. With the contract signed already today in Magnum, this 4.4% is already down to 3.2%.
If we look at the rest of the breakdown, as you see our prime portfolio Madrid, Barcelona, and Paris, the super prime assets have almost no vacancy. Barcelona 22@ 81.7 and then we have a small, very small residual part of secondary exposure that accounts for 1.1%. Last word on sustainability. We had recently just rankings on GRESB and Sustainalytics. We are really absolutely at the high end, Sustainalytics for the third year in a row, the best company rating, a total eBAX. We are the best globally across every sector, among the best 22 among 14,000 companies at the end. This is also a proxy of the high quality assets that we have. Only if you have a high quality asset with the best amenities, you really have an efficient energy consumption and therefore low carbon, low carbon emissions.
Sustainability is a good proxy for high quality assets in terms of features.
Thank you, Carlos. I think that if I had to summarize what we've heard from Carlos and from Carmina. First of all, this last point about ESG, I think that it's impressive leadership the one that we have been showing regularly and again now in this quarter. If I had to summarize the presentation up to now, I will say two things. It's an outstanding letting volume activity, number one, which means that despite any news on Paris market, not in our case, but then moreover, when you think about our volume in Barcelona and in Madrid, it's been impressive. In the case of Madrid, this year was the year of the test of Magnum and we are approaching the end of the year and the homework is done with very high standards of rents. Number one in emphasis is on volume.
Number two is on rental growth. Again you see these numbers on like-for-like. We beat inflation, we beat our peers, we beat obviously the year before. In terms of rental level, I think it is an outstanding number, the one of rental growth. I would summarize basically these two main features and now let me enter into some thoughts about the future. On page 22 we are reminding that our focus is on earnings growth that we have been delivering already. This earnings growth at the path of a 9% CAGR in the last three years. This is coming from several sources, from rental growth itself, from prime factory projects, from capital recycling. This is the main focus of our strategy.
The conviction that I would like to share with you is that we are very well prepared to deliver additional EPS growth with double-digit IRRs in the next few years coming as we see on page 23 from four different sources: from urban transformation projects, which have a significant impact in the EPS going forward; from the prime asset reversion that adds cash flow growth on top of the previous one; from third-party capital initiatives that we started this year; and finally from capital recycling. Let me be more specific about each one of them. Page 24, driver number one, urban transformation. We expect EUR 100 million of rents coming up from these projects, year 2025, year 2028. The first column, which is the one regarding 2025, you can see that we already are delivering mainly in Magnum, which was the most relevant challenge for this year.
Let me show you again that throughout 2026 to 2028 we expect additional rents. That would mean that compared to 2024 EPRA EPS, 11% would be EUR 0.11 would be added. That is a 33% on our EPRA EPS expected. I think that certainly when anyone is looking at us, is looking at Colonial, this has to be a headline. No, it's not so much about the current EPS, but what is expecting, what we are expecting, what is waiting for us out there in the next few years. We have also very good potential coming from the second driver, the reversion that we expect for a number of selected assets. If we add what we could expect from prime Paris to what we would expect from Madrid and Barcelona, we see EUR 47 million.
That would come simply for the fact that we put a sign contracts that come to maturity at today's ERVs. That is another source of cash flow growth. The third one is on our third party capital initiative on science and innovation here. The comment that we'd like to share is that this is going on track. First of all, the seed portfolio is going through the expected milestones of occupancy and growth. We are today above 80% occupancy as expected. On top of that we are looking at additional pipeline and additional fundraising progress. Our assessment today would be that we have short term visibility, high short term visibility to grow the assets under management from EUR 400 million to more than EUR 600 million at the same time that we have very interesting conversations for more than EUR 200 million.
In a way this confirms a little bit the path that we were expecting for this particular track. That would mean if we deliver what we expect, it would mean 2-3 additional cents of EPRA EPS in the midterm. Finally, another source of value is through active capital recycling. Maybe here the message that I would like to share is in the first half of the year we put the focus on the available opportunistic investment opportunities, mainly the one that we saw just a moment ago, the science innovation portfolio. We would like to enhance and go further in the direction of capturing opportunities in the European real estate cycle. At this time what I would like to share is more the visibility and the focus that we are putting on the capital recycling in terms of disposals.
We have a view that the disposals to navigate this capital recycling process with sound fundamentals today could mean EUR 500 billion of disposals to come in the next 18-24 months. Maybe I would like to highlight that almost two-thirds of this would be based more on the short term with high visibility. Our view on capital recycling is that interesting opportunities may come. First half was about investment, second half is more about divestment and initial of next year. We follow up with opportunistic capture of activities in the market. Everything put together in terms of strategy and outlook. As I said, Colonial is focused in EPRA earnings growth 9% CAGR in the last three years. We remain, by the way, with a full year guidance on track. We are a little bit more specific.
We expect a range of EUR 0.33-EUR 0.34 for this year. We remain on a strong business model that is generating a 5% like-for-like growth so far. Most of all, we have additional cash flow and value coming on the back of project deliveries and pricing power on the existing portfolio. This means a growth profile that can generate more than EUR 150 million of future rents through this new pipeline and reversion. All of this is focused in a strategy of relying on our fantastic positioning in our core markets, together with enhanced dual learning transformation growth strategy, with an example in the science and innovation field and based on the support of third-party capital. This is the message for today. We think that is a good set of results. Now we are available for any question. Thank you.
Ladies and gentlemen, the Q and A session starts now. If you wish to ask a question, please press star five on your telephone keypad. Thank you. We shall start with the first question by Ignacio Romero from Banco Sabadell. Please go ahead.
Yes, hello. Thank you for the presentation. I have a question regarding loan to value at 47% on an EPRA basis. You're now near the same level that you had when you announced Criteria half a year ago. How would you see loan to value evolving in the future? Do you expect to lower it by this capital rotation that you have just mentioned or do you expect asset revaluation to lower the ratio? Maybe even a new equity capital injection? I was, and I'd like to know your thoughts on that i ssue, please.
Okay. Carmina speaking. Thanks Ignacio for the question. As you know, we look at the leverage in a very holistic approach which means that different KPIs which are included in the rating. Our commitment is to maintain the rating, the investment grade. It means solid ICR, it means that solid EBITDA, the EBITDA, it means liquidity and it means of course loan to value. These levels as we said are temporary because we are making progress on the capital recycling. It is not a way of settle exactly a percentage of loan to value. It is a more, I would say, approach in the rating agency methodology. It is true that after the capital recycling strategies and of course still this is based on the last price evaluation which was in June and in the end will be updated.
We believe that the levels would remain as they were in the previous year. As I repeat, after the capital recycling, we believe that there are these levels. This is why the rating agencies have kept and maintained the rating.
Okay, thank you.
Next question comes from Valerie Jacob from Bernstein. Please go ahead.
Hi, good afternoon. Thank you for the presentation. I've got a couple of questions. The first one is maybe a follow up on the question that's been asked on the LTV. I mean you mentioned that you got EUR 0.11 coming from the project. Can you remind us how much you need to spend to deliver these EUR 0.11 and how is it going to be funded or what is the impact going to be on your LTV? That's my first question. My second question is just looking at your earnings. I think in H1 it was EUR 0.17 and it's EUR 0.25 for nine months. There is a slowdown in your earnings growth and I was wondering if there is any reason for that and what does that mean for the guidance?
Because I think at H1 you said you are likely to be toward the top of the guidance. Are you still there or are we more sort of, you know, in the middle or lower part of the guidance now? Thank you.
Okay, so on the CapEx related to these 200,000 sq m in page 24, you know, you can see the details of the pending CapEx attached to this project pipeline which would add this EUR 0.11 per share. This is funded through disposals and through maintaining as well the ratings and the levels of the metrics for the rating that we have in place in the investment grade BBB by S&P and Baa1 by Moody's. Considering that the valuation on the pipeline, it's not factor full value today, it will be factor the full value after completion. When you consider this IRR expense expecting for this CapEx plus the pending CapEx plus the capital recycling, this is the reason why, as I said before, the rating agencies maintaining with a stable outlook our rating, our credit metrics and our rating.
Okay, thank you.
On the second part of your question. No, look, I think that we are more or less in line of what we, with the vision we've delivered throughout the year. We started with a wider spread because of the logical uncertainty on a business that just sometimes, just for timing issues, you can go a little bit after or a little bit ahead of what you would expect. Where we see the earnings today, it's more focused on the 33-34 range, maybe still more biased toward the high end of the lower end. This is too precise, not for us to give visibility at this moment. That's the number we can share today.
Okay, thank you. Is there any reason why it was lower in Q3?
That's just timing issues. I mean, in the end, you don't have a stable perimeter throughout the year and we cannot be mathematically equivalent in all quarters. Just normal timing issues. On the ordinary course of business, nothing exceptional happening.
Okay, thank you. May I ask a question, though?
Yes.
Looking at the supply coming in Paris, if I look at, you know, what the brokers are expecting, they're expecting, you know, the vacancy rate in central Paris to go up. I was just wondering what is your view on what effect it's going to have on rents? Do you think that, you know, prime rents can continue to grow in central Paris, or do you think that will put, you know, halt to the growth? Thank you.
Yes, good question. No, we insist on the increasing polarization in the market. We are happy to be in a particular segment where there's so limited supply that is not enhanced with additional assets that come to the market. In our market, the fundamentals of supply and demand remain the same. We understand that the rest of areas may be more cyclical, subject to the specific situation of each year in terms of supply and demand, but this is not affecting us. I think that the results that we are presenting today try to support this view. This vision that you're saying about the market is something that it's been around for a while. Look at our numbers. We believe that no relevant difference should be happening in the markets that we are relying on.
Okay, thank you very much. Thank you.
Thank you.
Next question comes from Ana Escalante, from Morgan Stanley. Please go ahead.
Hello, good evening. I have two questions please. The first one is on occupancy. I understand that this might be a Pere, you said some temporary thing, but looking to your previous reporting and even going back to 2015, I think this is the quarter with the highest occupancy rate you've ever reported. This comes at the time when the indexation impact is slowing down, particularly in France. Looking into 2026, are you expecting to sustain this strong like-for-like rental growth or how are you expecting, given both the lower impacts on indexation and the temporary, maybe significant, occupancy decline, to impact the like-for-like in 2026?
Look, obviously there is a general theme of indexation that is a general playing field for everybody and it is what it is and it's basically factual. Then the contracts that go through indexation have their indexation level that is done in the market. However, having said this, and I think these results show it very clearly, we've signed super strong retail contract at super high levels, office contract at super high levels, progressing very well, a lot of square meters and moreover economic value. Tying this to what Pere said, when you look today, the grade A availability in Paris is below 1%, is 0.9%. The segment where we are, there is really no product available.
For this type of segment, at least what we are seeing in our daily operations, the take up is healthy and we are signing with very strong release spread and very strong rental growth. This is a very high component in our like-for-like growth. We have more than close to 500 basis points of extra chunk of growth in the Paris portfolio that have been signed now and that are not part of the profit and loss accounts today because things that we sign today will flow into future quarters' profit. We have part of the future like-for-like for the Paris side secured. Paris is strong and Madrid is having quite significant acceleration and also in CPI a little bit higher than expected, as you know.
We think we can, nobody knows the future, but we have the feeling that we can maintain these strong levels of like-for-like growth and we have then also some occupancy spare capacity to be filled that also creates additional like-for-like. We are positive. We do not know the future, but we are positive. We think our product really can achieve and maintain these levels.
Very helpful, thank you. Another question. Maybe on disposals and any other assets that you expect that will go under refurbishment in the next year, how dilutive you think that could be into EPS. Because when I look at consensus, we are anticipating, as you guided, strong EPS growth in 2026 and 2027. How dilutive these disposals are expected to be into that guidance and to what extent that strong EPS CAGR for the next years is something that we will start to see maybe a bit later than we are expecting?
I think. Thank you. You need as well to consider the future pipeline that will come into operation in the following year. The 87,000 sq m from Magnum, Diagonal 197, and Haussmann that has been delivered this year will be impacted, of course, in the Q course after the letting activity during 2026 and 2027, and then Scope, which is going to be delivered next year at 20,000 sq m, again will be impacting partially 2026 and 2027. All in, it is what you can see, the potential disposals which we are disposing and valuation yields will be compensated, and of course in the P and L with a positive impact coming from the program, the pipeline program, that the yield on cost is much higher.
This is the beauty of our business, this trade-off on yields and maintaining and keeping the EPS growth.
Maybe just a last comment. We do not expect any major projects coming up in our own portfolio. Everything that we had to reposition and that has really value creation perspective is what we have today on the page where we show the EUR 100 million of rents on page 24. The rest of the portfolio is basically a stabilized portfolio here and there. Sometimes a little bit of a flaw to be repositioned, but nothing really big. I understand your question because many people have asked me this also in one on ones because there are some other people in the markets that have quite relevant things coming up. We have nothing. We have just to deliver what we have. It is EUR 100 million and the other business as usual managing the stabilized front of.
Okay, thank you very much.
Next question. Michael Finn from Green Street, please go ahead with your question.
Hi there. My first question if I may is on slide 27, and I'm just curious.
If you could tell me please.
Bit more about the right hand side of the slide in terms of what you actually plan to do to capture the recovery. Do you plan for example to stay in the same cities or are you looking at other cities and if so where, and then also maybe kind of connected to that. Also, I am curious on the $500,000,000 that you plan to sell, how do you balance the other uses of that cash in terms of the current debt level that you have and other things. That is my first question.
Yes, Michael, I think that what we are trying to do with this particular slide is to be a little bit illustrative, but maybe it is difficult not to pass the message in a very strict way. My view is, look on the disposal side.
We know that we want to do this level of disposal because we know the kind of assets that we're talking about, that we know how dry they may be and the opportunities that maybe are there. So there's a level of certainty attached to that. At the other side, we acknowledge that the market is offering opportunities because the supply and demand of money, no, it's a little bit disrupted everywhere, but particularly in France or in Germany, not so much in Spain. You do not see many people capable of coming not only with money but with know-how to be involved in opportunistic investment opportunities that may come with very interesting IRRs associated to this. On top of that, we believe that not only the alpha but the beta in certain markets may help.
What we are just trying to say is that our goal as a listed company is to recycle capital, to divest, to keep the KPIs at the balance level strong, and then to invest. This will be based more opportunistically on the back of the beta opportunities that the market may give us plus the alpha that we see. That is what we are trying to illustrate here, that we believe this is an interesting moment of the market if you are investing on a five-year horizon. That is what we just wanted to illustrate with this kind of chart.
Okay, yeah. Maybe just in terms of t he type of asset that you plan to buy, do you think you would p refer to buy an asset that needs quite a lot of work or a s tanding asset that would yield from the y ou know, from the first day?
Yeah, the ones we like the most is the ones that with a little bit of creativity you extract extra rents with very limited or non-existing CapEx. In other words, we do not see ourselves investing in heavy CapEx in pipeline of things that have to be developed from the scratch, totally refurbished. I think that the opportunity cost of capital is not exciting. On the other hand, when you are more a kind of professional player and you go out there, you see sometimes assets that you believe that just with a little bit of creativity, with your goodwill in the know-how that you have with your clients, you could improve. You simply, you see something that has a rent of 30 and you see, with a little bit of ideas, I would put these on 35.
It is more this kind of real estate expertise oriented investment. The one that we would favor, of course, leveraging a little bit on the fact that there is not a lot of, let's say, plain vanilla money out there in the market. That would be more our focus in terms of investment.
Okay o kay. Yeah.
A final question if I may, on Scope. I'm just curious, over the course of the year if your view on the effective rent there has h as changed.
That's the rent after all of t he i n rent free that you'll have to give to the tenant. I'm just curious if that has changed?
Yes, no, I think it's early stages. Yeah, yeah, I understand. It's in the same way that Magnum for us was a great adventure and challenge for this year and we are super happy about the outcome. We see this more. 26.
No.
Kind of focused. Yes, I am also curious about the answer as you. I totally share, but too much early stages. We do not have visibility. We remain with the same kind of underwriting node that we had on this asset by now.
Interesting. Yeah. Sorry, maybe just to clarify on that, do you think at the moment rent about EUR 720 and incentives probably in the high teens? Would you say that is there?
We did not follow you completely. The quality of the sound. Can you repeat please, Michael?
Yeah, yeah, sure.
I just said is it fair that the rent at the moment will be a bout 720 and incentives will be in the probably upper teens.
Is that fair in the current market?
I don't have enough visibility to provide with an answer that doesn't sound illogical to me what you're. I wouldn't like to come now with a specific assessment that I cannot provide right now.
Of course, of course. Thank you. Thank you very much for your time.
Thank you.
Next question. Céline Soo-huynh from Barclays, please go ahead.
Hi Pere. My first question is on the guidance, please. Like Valerie, we also noticed a slowdown in earnings growth in Q3. Can you elaborate what led you to narrow that guidance? Because initially you were guiding to the upper end on previous goal. My second question is on the disposal. You just announced you sounding quite confident to achieve those EUR 500 million. Can you tell us in which country you're planning to sell, what kind of assets? Offices, residential. What kind of yield? My third question is on the opportunity you're seeing currently in the market. We've heard you mention Brussels, Germany, Italy before. Is that still the case? Are they still markets that you're looking at for acquisitions? Thank you.
Yes. On the EPS, I think it's just as year goes by and we are approaching the final land, we can be more precise and in narrowing this from 32-35 to 33-74, what we see is just that we can be more precise and we don't see anything similar to a slowdown in. You've seen all of the KPIs, so if anything, some timing issues in certain specific things, but nothing specifically in terms of slowdown. In terms of the disposals? Yes. No. Normally if we say high visibility is because we are working on specific assets with specific bidders, we always take some risk in saying this because high visibility means that you cannot announce certain transaction but you have good grounds. You know in this sector that you cannot say that something is done till it's done.
Basically, as I said in two-thirds out of what I said, maybe between half and two-thirds, there is specific names of assets and names of bidders will give us that kind of confidence in delivering this. I cannot provide more visibility, maybe, except that we are maybe taking advantage of interest that the residential sector is having and showing in Spain. One of the components of these may be residential. Besides this, I would not exclude anything, Spain, France, any kind of assets. We cannot be more specific as of today based on where we are. I think you said a third thing or yes, opportunities.
No, what we always say is that the main point, main focus about our approach is to be opportunistic and we do not work in a way of, let's say, preempting or having views about where we want to be or where we do not want to be to a level that we would be so specific. We will be here, we will not be there. We see opportunities a little bit everywhere. We see opportunities in France, we are looking at other countries. Maybe Germany is the one with a higher visibility as of today. We cannot be more specific than this as of today because as I said before, short term focus, it is mainly on the capital recycling on the divestment side more than on the acquisition side.
Okay, thank you. Can I ask you one last question, please?
Sure.
I mean, you've heard a lot of the questions on the call being about LTV too high. You're saying that you've got EUR 500 million of disposals very likely to come through. Why is deleveraging not an option for you?
Why?
Sorry?
Deleveraging? Reducing your debt.
No, I think that we have been, let's say, confident traditionally that the level of our debt is a good one and based on several grounds. One is the kind of support we have been having on the debt markets. You've seen how we have placed the bonds in the past. You can see how the bonds are trading, you can see the level of support of rating agencies. We have been traditionally confident on the level of debt that we've had. We are also committed to keep this. That means that if there is a temporary increase in LTV, we take the necessary measures to keep it in the safe zone, in the zone where we want it to be. As of today, we see this more as a time issue.
You cannot choose to invest and divest precisely everything at the same time, all of the time. Sometimes when you see that you've been able to divest and then you put the focus in the investing, sometimes it's the opposite. Not like now. No, and that's where we are. Coming back to the original point, if we are strong regarding debt markets, then the other question is what's the concern on the equity side, that LTV. The concern can be because you think that you have a risk of insolvency, let me put it this way. I think that would be very far away of anyone's concern. The other thing is, from the point of view of providing the nicest returns to shareholders, are you.
There is common sense, there is really grounds to think that deleveraging, you are working for your shareholders when at the same time you do not need to work for debt markets based on the kind of support they are showing. What I want to say with all of this is that we are confident with our level of debt. We are also engaged in rebalancing the situation to remain strong and we are confident in the fact that we will remain in this strong level as we have been in the past.
Thank you.
Thank you.
Next question comes from Jonathan Kownator from Goldman Sachs. Please go ahead.
Good evening. Two questions on my end, please. The first question, I'm going to come back to that topic, I'm not entirely clear still. So the disposals that you're introducing now, is it the aim of disposing to reinvest the same volume or is it new disposals? What is the impact you expect, positive or negative, obviously on the sort of EPS trajectory that you had announced earlier? That's the first question, please. The second question was on the science and innovation portfolio, you're now highlighting 80% occupancy. Can you help us understand a bit how this portfolio is going? Do you have more assets to be delivered or is that the full portfolio? You just have to, what are the prospects from tenants? I mean it's a space where we have seen in some areas and respect better letting from the innovation space.
The science area has been perhaps a bit tougher at the European level. If you can help us understand this, that would be great. Thank you.
Yes, thanks.
On the first question, we are, let's say, certain about the goal on disposals because we want to have the deleveraging effects coming from this on the second half of the year after the leveraging company. On the first half, we do not have the same degree of being specific regarding acquisitions. This is more opportunity driven. When an opportunity comes, we balance everything. One is the return coming from the investment, the other is the risk. Adjust the risk associated to this, including spillover kind of exit effects on our balance sheet. We have a much more restrictive view. I understand that this is not an answer that is a yes or a no. What are we doing with the money? Do we want to spend it? All of them we want to spend it, not nothing of them. There is no specific answer for this.
What we are focusing is a high priority on the divestment side and then being very opportunistic on the investment side. On the second question on, see Carmina, I want to step in.
Yes, on the seat today we have 80% occupancy, but we have a small refurbishment that has been already pre-let. Jonathan, the kind of tenants we have here, as you know, there are some kind of buyer, one of the big ones we have as well, innovation divisions from certain hospitals, innovation divisions from certain pharma companies and the world. As of today, it is almost nine years. We are recycling some tenants in a more, I would say, corporate tenants with more long-term contract. The expected stabilized yields are at the range of 6.5% in stabilized as of today. We are now in this recycling tenants, enhancing rents, increasing material. The profile of these two big campus are the ones that are more very exposed in the innovation and life science fields attached to the big pharma names.
Okay, thank you.
If I can just, sorry, re-summarize the first question. If I understand correctly, the EUR 500 million disposals is now incremental to what you had previously said in terms of earnings growth trajectory, and obviously your aim at some point is potentially to compensate for that, but there's a bit less visibility and more the capacity to remain flexible. Is that a fair summary?
Yeah, I think that yes, in a way there's more certainty attached to the investments. There's more opportunistic approach to future investments, which means that any scenario is likely to happen, but the probability is more with the profile that you just mentioned.
Okay, thank you.
Thanks, Jonathan
Now there are no further questions. I then give back the floor to Mr. Pere Viñolas.
Thank you. It has been a very interesting session, not only because of the results that we shared that I think were very interesting, as I said, also because of your interest, support, and interesting questions. Thank you very much for your time and looking forward to seeing you soon again. Thank you and have a good day. Thank you. Bye bye.