Good morning everybody. Welcome at the half year result presentation of Aedifica. We will as usual walk you through the results and add some color to the results that we published this morning. Starting from the highlights that we identified for the first half of the year. I think what you probably have read already this morning that we are presenting solid to strong results for the first half year. Portfolio value standing at EUR 6.2 billion, generating EUR 181 million top line leading to EUR 123 million result EPRA earnings, that is which we will explain in further detail during this call. I think that one of the main events during the first half year is the fact that we exited from the Swedish market leading to seven countries in which we are doing business today.
Also important to flag is that we see that the positive trend and in terms to like-for-like valuation of the investment properties continues in the first half of 2025. When looking at the investment program as announced, we are working on refueling our pipelines. We will go into further detail also in that respect and when looking at the balance sheet, I think that we are as was already the case in previous quarters, presenting a quite sound and strong balance sheet with a 42% debt-to-asset ratio. Now this about the highlights before I pass on to Ingrid, who will dive into in more detail about results and balance sheet. Maybe just bringing your attention that as announced, we are working once again on growth in the sense that we're working on refueling our investment and development pipeline.
We have given guideline for 2025, meaning that we are expecting to increase the pipeline and order portfolio with EUR 250 million of new investments and or projects. As of today we are standing at EUR 121 million of new investments and projects added. As you can see on the map focused on three countries being Finland, where we have a combination of standing assets and new developments that are adding to the pipeline. Also in the U.K. and Ireland where we have been active looking at the existing pipeline, seven projects have been delivered which is roughly EUR 65 million. If you said that or compare that to the guidance that we have given, I think it's clear that we're well on our way on executing and delivering on the strategy that we announced for Aedifica.
Once again you can see that we're more than halfway in terms of the EUR 250 million guidance that we've given for new investments and projects. We're quite confident that we will be able to deliver on the EUR 250 million, go into that later, project completions. More than halfway and I'm fully expecting to deliver on the guidance. Then asset rotation, I think there the main thing to be flagged is that the deals that we absolutely wanted to do in 2025 have been, and I'm mainly referring to the exit in Sweden. That means that we're more than halfway. The remaining EUR 70 million, to be quite honest, is becoming for us more a nice to have than really a must have. We are still working on some transactions as we speak.
Now this being said, in terms of highlights, I think I flagged what we needed to flag and I let Ingrid Daerden dive into the details of results and the balance sheet.
Okay, good morning. My turn to guide you through our income statement and our financial strategy going forward. First of all let's have a look on the income statement. What you can see here are the EPRA earnings. As already noticed probably in our half year results, EPRA earnings are up compared to previous year with 4% leading to EUR 123 million, EUR 2.59 per share. This increase is mainly driven by the increase in rental income of more than 9% combined with a good cost control helping to increase the EBIT margin towards 86.6% for the full year. I do expect that in the second year half this EBIT margin might slightly decrease, but we do expect full year that we will still be above the 86%. Let's have a look on the financial charges. You see an increase in the financial charges compared to previous year.
Still we can report a low average cost of debt of 2.2% supported by the hedging. Hedging currently stands at 87%. Also for the two years that are coming, hedging percentage remains high above 80%. Gradually in 2028 we have some more refinancing to be done on fixed interest rate debt. The main difference this year is coming from the corporate taxes. As you are all well aware, there came an end to the regime of the fiscal installingen in the Netherlands. This has an impact in the accruals of the current taxes in the Netherlands. For the full year we are expecting that this will be an amount around EUR 5 million.
When you start comparing with 2024 I also need to bring a reminder that in 2024 we benefited from a one off refund of EUR 4.2 million, which of course is no longer the case in the numbers that you see on 2025. Moving over to the net result by including the non cash elements, first of all, the changes in fair value of the investment properties. The valuation itself was positive on the first year hub, a like-for-like change of 0.5% where we mainly see increases in the valuation of the assets in the U.K., the Netherlands, Ireland, driven by the indexation. We have the line gains and losses on disposals where you see a loss of almost EUR 12 million. As a reminder, this is a loss that is related to the disposal of the portfolio in Sweden, which we already reported at the end of Q1.
The Swedish portfolio was sold with a slight loss less than 4% compared to the fair value. There is also the impact of the currency translation, which in the past was booked under the equity, and following the disposal of the assets in Sweden, this amount is recycled in the P&L. In itself, it has no impact on the NTA because in the past it was already included in the equity. You also see that the deferred taxes went up by EUR 11 million. This is driven by the difference between the fair value and the fiscal value of the assets, mainly in the Netherlands and Finland, and the increase of the rental income. Rental income went up from EUR 165 million towards EUR 180 million. First of all, we have the impact of the acquisitions and the deliveries, a bit more than EUR 10 million, partly compensated by the disposals.
We also have what we can call the organic growth in the portfolio, driven by the indexation, + EUR 4.2 million, and the impact of the contingent rents. Contingent rents are mainly coming from the U.K. and supported by the strong performance of the U.K. operators. As we already announced in the guidance, this year we have a catch-up of historical contingent rents, which were invoiced in Q1. You can consider that an amount of EUR 4 million is non-recurring, is exceptional, and has been booked in Q1. For the remaining of the year, we are expecting that on a full-year basis, we will have what you could call normal contingent rents. That's still based on the operational performance of the operators, of around EUR 1.5 million- EUR 2 million. On this slide, you can see the same increase of the rental income, but this time presented on a by-country basis.
Like just explained, there's a strong increase in the U.K. following acquisitions and deliveries, but also supported by those contingent rents. In Finland, it's mainly coming from portfolio growth. In the like-for-like calculation itself, there's an increase of 3% that can be split between 2.5% coming from rent indexation, 0.2% rent reversion, and 0.3% coming from the currency exchanges. The historical catch-up is not included in the like-for-like, so we deducted that from the calculations. Finland is showing a somewhat lower like-for-like, 0.7%. This is driven by the fact that the inflation in Finland currently is quite low, and most of the lease agreements were indexed at the beginning of January. All other countries, I would say, show a like-for-like that is very close to the inflation in each of the countries.
Germany laying a little bit behind because in Germany you do not have the full impact of the inflation and it only is triggered when a certain threshold is reached. Moving over to our balance sheet, the debt-to-asset ratio is 42.4%. If we reduce the excess cash that we had on the bank accounts at the end of June, it's around 42%. More importantly, when we do the forecasting, we are expecting that by year end our debt-to-asset ratio will be around 41%. Traditionally, the debt-to-asset ratio is at the highest point at the end of Q2, following the payment of the dividends. Our funding, our financial resources. First of all, we have a total financial debt of EUR 2.5 billion, out of which the resources are 55% coming from bank facilities and 45% is coming out of debt capital markets with the banks.
We continue to work on the refinancing of all of the debts that are maturing. As you can see on this slide, our debt maturity schedule is well spread over time. Most of the maturities for 2025 are currently handled. We still have EUR 50 million of drawn and undrawn facilities that probably will be refinanced in the coming weeks. It also means that we have headroom available on committed credit lines of approximately EUR 600 million. This is already after deducting the backup facilities for the commercial paper program. We have enough financing in place to cover all needs until the end of 2026. Moving back to the previous slide, what you can see on this slide are our main debt KPIs. I would say, first of all, the interest cover ratio is still very solid at 6x . The covenant with the bank stands at 2x .
Also, going forward, we do expect that although the interest cover ratio will slightly decrease in the coming years following an increase in financial charges, we expect that we will remain above five times for the coming two to three years. Net debt to EBITDA also decreased compared to the previous reporting, 8.2x . We barely have any secured financing. Most of the financing is done on an unsecured basis and only 4% of the assets are encumbered. We still benefit from a BBB credit rating from S&P. As you all might have picked up, following the announcement of the transaction on Cofinimmo, there has been a positive credit rush where S&P is stating that if the transaction completes following the announced terms, this could have a positive impact on the credit rating. I can hand over back to Stefaan,
thank you.
Walking you quickly through the main portfolio features as at the 30th of June of this year, I guess not a lot of surprises here. The focus of the company still is to a large extent on elderly care and senior housing. The 88% that you see on this slide is basically 1% higher than the number that you saw at the end of the first quarter. That increase is mainly due to the exit in Sweden where we did not have any exposure to elderly care homes and senior housing. In itself, no surprises when looking at the geographical footprint of the portfolio. Once again, I think you will find something very similar to what you have seen in the recent past. The main four countries, each around 20%, still are the U.K. in first instance, followed by Belgium, Finland, and Germany.
We do see Ireland over the past couple of years growing a lot, now standing at 7%, with the Netherlands standing at a quite stable 11%, maybe also flagging that. We delivered our first project in Spain a couple of weeks ago. The -1% now is basically representing one asset in Spain. Looking then at the tenants, and I think that as usual, this is probably the more interesting topic now. First of all, what you do see here is the tenant diversification, which itself has not really changed. Our main client remains Clariane, standing at 10%. What you see here is, I think, a quite well spread tenant pool, more than 140 different groups. You will find bigger European players, you will find national heroes, local heroes, but also some not for profit players.
Also drawing your attention here to the Finnish municipalities, which are good for 4% of the total outstanding contractual rents of the whole of the portfolio. It means that when looking at the Finnish portfolio, municipalities, so public operators, are a very, very important part of our Finnish activities, and we do expect that to remain the case. Also in the future, might even be growing, though we do see private operators becoming more and more active in the Finnish market. Again, we'll talk about that later. Talking about occupancy, there's a couple of remarks I think we can add to this slide.
First of all, when looking at the coverage, what you see is that for five of the seven countries that we're doing business in, we have a very strong coverage, up to 100% in two of the countries, but well above 90% in two others, and in the Netherlands now at 82%. This coverage is increasing. Okay, Spain, we only have one asset which has recently been delivered, so it's not really relevant. The Finnish market remains the one where we are putting a lot of effort into place to try and convince operators to be more transparent and communicate about occupancy and financial KPI. It is work in progress, but we did make some progress as we reached an agreement with the first operator and are working on an agreement with a second operator.
This being said, not expecting to see a high coverage in Finland in the next one or two quarters, but at least it seems like the trend is changing. Also there for the better. As usual, you know that we refer to Attendo publications where you can get some flavor about what is really happening in the operating market in Finland. Now, this being said, when looking at the occupancy numbers themselves, first message clearly is that the average occupancy in the care homes in the five countries where we do have sufficient information remains around 90%. It's a high number. Looking at the different countries, you will see that as was the case in the previous past, in the previous quarter, some of the countries are at 90% or above 90%.
What we do see in those countries is that a certain seasonality is starting to kick in, meaning somewhat higher numbers or slightly higher numbers after the summer, slightly lower numbers after the winter. That is the type of seasonality that we also noticed before COVID. That basically means that we're getting really back to a normal pre-COVID situation in these countries. I think what to us is more striking and more important is what is happening in Germany now. We now see Germany in our portfolio coming in at 87%. If you look at the like-for-like growth, which is basically comparing mature assets at March 2024 and at March 2025, we do see almost 400 bps like-for-like growth in occupancy, which is a clear indication that also in Germany the trend has changed and occupancy is absolutely picking up.
Now, what does this mean in terms of rent covers and operating margins of the operators? As this was the case in previous quarters, we can show you the rent cover for the whole of the U.K. portfolio of Aedifica, which remains at a very, very high level above 2, very strong rent cover on the back of very strong operating margins well above 25%, flirting with 30% in the U.K . portfolio. We are working and collecting more info in some of the other countries like Finland and Belgium. I promised this already before, but it is evolving in the right direction. Hopefully in the near future we will be able to also show you rent covers for the Belgian and the Irish portfolio.
This being said, to add some flavor to what we see happening in countries, I think that first of all we can confirm that U.K. and Ireland remain very, very strong performers in terms of operator performance. We do see a lot of positive indicators and trends in countries like Finland. Once again referring to Attendo, which recently, and I think it was two weeks ago, flagged slight improvement of their margins. More importantly, for the first time, if I'm not mistaken, not just referred to increased fees they're getting from the well-being countries, but basically also referred for the first time to the positive impact of the somewhat lower staffing requirements that apply in Finland since January 1. They do start to see the first positive impact of that on their margins.
What we also see in Finland is clearly that our development pool is growing and that some of the bigger operators, private operators like for instance Attendo but also Mehiläinen, are absolutely turning back into growth modus. Quite a lot of positive trends in Finland. Looking at the Dutch market, we do see a very stable market, which recently a new study published by BDO indicating that in the, I think it was mostly talking about the intramural part of the market, but this being said, they flagged that they now see fee increases outpacing cost increases, which once again on the back of growing occupancy, seeing also revenue per resident growing, is what we want to see and it's clearly what is also happening in the Netherlands. Maybe also about the German market where we have seen some issues over the past couple of years.
I think that we can confirm that the positive trend that we saw is still continuing. We mentioned already in the past that costs in certain regions are increasing to levels which seem to be very promising. We keep hearing from the German team that also the idea of allowing more flexibility in staffing requirements is also starting to kick in in more regions, which should be helpful for the German operators. As we just flagged, we did see this quarter really the occupancy in our portfolio improving. That makes us also quite positive about what will be happening in the German market in the near future. This being said, we do see a positive trend and we confirm the positive trend that we have been talking about regarding operators over the past couple of quarters now.
As I keep repeating myself, it does not mean that there is not still a risk of certain incidents. Talking about incidents, we reflect in the press release that when looking at Colisée, we only can confirm what we said at the end of the first quarter. Rents are paid at June 30 and occupancy of the Colisée. In the case of Ithaca, this is basically the Armonea, a Belgian portfolio. Occupancy in that portfolio is absolutely in line, actually above the average of the Belgian market. There is nothing new that we can tell you at this point in time about Colisée, about Argentum, which is a German operator that at least for part of its portfolio went into insolvency. There are only two assets involved in the Aedifica portfolio.
One of these assets is an absolutely top performer and it's, by the way, in a s+elf-managed insolvency of Argentum. We do not expect any impact on that asset coming out of this insolvency procedure. The other asset is one that we were redeveloping and that will be, if everything goes well, transferred out of the insolvency to a new operator in two days from now on August 1. That is an issue that, if things go well, has been solved by now. I think that concludes what we have to tell about what we see happening with operators. We do see a positive trend that continues and we do see gradually improvement of operating performance in Europe on average. Walking you through some other features. First, the lease maturity still stands, or the weighted lease still stands at 18 years. We have a 100% occupancy rate within the portfolio.
I think that what is important to flag also is that when looking at the maturity of the leases, only 1% of leases will expire in the next five years. I think that in itself is also a quite strong feature. Looking then at the portfolio valuation, as I mentioned at the beginning of this session, the trend continues or the positive trend continues. Looking at the fair value yield as at June 30, we do see an average fair value yield, gross fair value yield of 6% for the whole of the portfolio. When looking at what happened, like-for-like, I think that now 18 months in a row, we do see stable to slightly increasing valuation, which meant for Q2 2025, an increase of 0.21%. If you look at the whole of the first half year, it's 0.5%.
Also important is to notice that it is now slightly positive for all of the countries in the portfolio. The trend is more and more confirmed. One slide that we particularly find interesting this time is an indication of the fact that we do see, gradually, a more dynamic healthcare real estate investment market in Europe. Our pipeline year -to -date—this is not the exact June 30 number because we took into account some of the deals that landed just after June 30—but year -to -date our pipeline is standing at EUR 178 million. I think that interesting is to have a look at the geographical split where historically we used to have a huge pipeline in Germany. We do still have a pipeline in Germany, but it's basically to a large extent one bigger project that is being executed right now, historically a legacy project, but that has been renegotiated.
I think it's more important to look at the other countries that are becoming more important. I guess without surprise, we're talking about the U.K., Ireland, and Finland. I can confirm that our Finnish in-house development team is building up once again a pipeline at the yield targets that we're looking for and that we're also building up a pool of potential future projects that might become committed and that we expect to become committed in the next quarters. Whereas both in the U.K., but certainly also in Ireland, we do see still a lot of potential. I think that this is reflecting the reality of operating performance in these countries, which allows us to find an interesting balance between the cost of construction, our own cost of capital, and the rent payment capacity of operators. That clearly reflects into this geographical split.
In terms of expected delivery dates, you will see that we still expect EUR 43 million of projects to be delivered this year and then roughly EUR 65 million and EUR 70 million in 2026 and 2027. Maybe reminding you that all of these projects are 100% pre-let, so there is no speculative development going on within Aedifica. I think the main feature here is now that we finally reached the 6.5% initial yield on cost, average initial yield on cost for the whole of this pipeline. You heard us talking in the past about the targets that we're setting. I think now the legacy deals are behind us. The past is behind us. We're now building a new pipeline which is clearly reflecting the yield on cost that we want to see around 6.5%. Perhaps underlining and stressing that we do expect to be able to continue refueling this pipeline.
When talking to the country teams and our investment, I can confirm that on average we do see a much larger, bigger pool of potential deals that we are analyzing continuously. That is the first indication of a more dynamic investment market. We also have more important what we call pre-approved deals or pool of deals, meaning deals that we have analyzed and have green light within the company, but that still need to become committed. We really do see a more active investment market in Europe, which gradually keeps improving. Maybe just as a quick reminder, Aedifica was founded in October 2005. We have our 20th anniversary this year that we already celebrated with the team. This puts me in a position to thank the team for the efforts that have been made over the past 20 years and over the past couple of years.
That is basically a big part of the success of Aedifica over this period in time. With some more detail on where these people are working, you see that we have a very international team with a relatively small, mean and lean HQ in Brussels and then most of the other people dedicated to one of the countries in which we are doing business, with the somewhat bigger number in Finland, clearly reflecting the fact that we have a full development in-house team in Finland. That then brings us to the outlook which I will let Ingrid Daerden.
Okay, so at the beginning of the year we have given guidance that for 2025, for the full year results, we are expecting an EPRA EPS of EUR 5.01 per share and we announced a proposed dividend of EUR 4 per share. Now, after this six months, the results that we have just shown to the market this morning, they are ahead of budget. At the same point in time we also take into consideration that we have the exchange offer on Cofinimmo that is outstanding and where certain elements are currently unknown, like the exact timing and also the number of shares that will be tendered and that will have an influence on the EPRA earnings for the full year 2025. For that reason, management decided to keep the guidance on a standalone basis, as it was announced at the beginning of the year and at EUR 5.01 per share.
Depending on the rollout of this transaction with Cofinimmo later onwards, we can provide more specific guidance on this.
Okay, and so we made the bridge towards the Cofinimmo transaction. Quick update on where we are standing in the Cofinimmo transaction. A lot has happened since May 1, of course, main milestones up till now, first of all, the fact that we were able to reach an agreement with the board of Cofinimmo regarding this transaction, which then led to an exchange ratio of 1.185 new Aedifica shares for each Cofinimmo share. A deal that is recommended. Second main milestone is the EGM of Aedifica on July 11, during which we got approval of our shareholders for the capital increase that we need to be able to execute the exchange offer. We got approval with an overwhelming 99.9% approval rate for which we like to thank our shareholders. Right now we are in the more administrative, if I am allowed to call it like this, administrative phase.
Basically, teams are working now on prospectus approval with the FSMA in Belgium and we're working also our way through the merger approvals that we need to be able to execute the deal. As you all know, the Netherlands and Germany already approved. We are in Belgium right now in an ongoing procedure with the Belgian market authority. Today we are in the pre-market notification phase of this procedure, meaning that it is the Investigation and Prosecution Service, the IPS of the BMA, which is conducting its investigation now. This is a phase which is first of all totally confidential and secondly, it is a phase without any strict deadlines. Basically, what the IPS is doing is they're talking to the market, they're sending out questions to whomever they deem interesting enough to ask questions to, including of course, Aedifica and Cofinimmo.
That phase is ongoing, as I said, confidential, without strict deadlines. That has led them to the press release that we sent out, I think, 10 days ago, flagging to the market that we expect that the indicative timeline that we had put forward previously is probably not the one that really in the end will be the final timeline. It's an ongoing process at this point in time. There's absolutely nothing more that we can tell you about this. Expecting that you probably will have a lot of questions, but I'm afraid that there are not a lot of answers that we can give at this point in time. I think that this concludes the presentation that we prepared for you and that we can switch now to the Q& A.
Looking at the people here on our side, if I'm not mistaken, you can either raise your hand and ask your question or you can use the chat room. Delphine, I let you manage the question.
Stephanie,
hello. Yeah, hello. Thank you for taking my question. This is a quite good set of results, I must say. I was a bit frustrated not to see any increase in the guidance, but I understand the rationale behind that. Cofinimmo did the same actually. Maybe in terms of financial extensions, you mentioned that you are currently discussing with banks and negotiating future refinancing, and given the guidance you gave on the synergies on financial costs with Cofinimmo, what kind of financial terms are you discussing currently? Do you see the impact from these synergies already?
I must say that the current situation, there are still a lot of unknown parameters.
I can say when part of the negotiations that we're doing with the bank, they look more at still on a standalone basis, and what we have been refinancing, especially at the beginning of the year, you can think about a credit spread, I would say close to 110 basis points for loans with a tenor between five to seven years. Most recently, I did notice in the discussions that we are currently having that they start taking into account the transaction and also the potential impact that it might have on the improvement of the credit rating. Currently, I do see credit spreads that are a little bit lower than the ones that I've just discussed. To be transparent, we have not signed on those conditions yet.
Thank you. Maybe a second question on the evolution going forward of your asset values, how do you see them evolving?
Especially on the yield impact? I appreciate it's growing from the rent impact, but on the yield impact, do you see any yield shift going forward?
First of all, I fully understand the question because it's a question that we have ourselves. I think that right now there's not really a lot of market evidence that yields are compressive. You refer to the fact that valuation moves into the right direction or at least moves upwards, but mostly on the back of rent increases indexation. We do see one or two markets today, but as I said, this is basically us talking about what we see happening, not necessarily what appraisals are already doing. We do see some markets where we start to feel some pressure on yields when we talk to developers, when we talk to operators. It could be that we might see some pressure on yields in the forthcoming quarters, but right now it's hard to tell.
Personally I'm expecting to see for the next quarter something similar as what we have seen in previous two quarters in terms of valuation.
Okay, very clear, thank you. Maybe a last one. It's a bit tricky and maybe too early to say, but regarding the combination with Cofinimmo and the potential disposal of non-core assets, did you have any approach from buyers, potential buyers, or discussions underway, or what can you share with us on that?
There's not a lot we can share at this point in time for lots of reasons. I think I told the market already before that since we announced the offer on the shares of Cofinimmo that indeed parties have been reaching out to us about non-core assets. We're not engaging in any discussions at this point in time.
Okay.
In other words, do you see more and more interest from investors for Belgium offices currently or not? Because there has been a shift, I would say in the mood from investors on the office side in France, for instance. I was wondering if it's better in Belgium currently.
I hear you, but it's absolutely not up to me to make statements about the Belgian office market at this point in time. Yes, fair enough. What I was flagging is that the fact that the transaction is out in the open created some momentum apparently towards Cofinimmo and Aedifica. That is something I can confirm. People have been reaching out, but jumping to conclusions. I think that other people are much better placed to make that comment. It's definitely not up to me to make that comment right now.
Sure, fair enough. Thank you so much.
Welcome
Frederic from Kepler.
Frederic,
hello, can you hear me?
Yes,
good morning. Just to come back on the comment, I guess the mark of interest you received on the Belgian office were more opportunistic than anything rather than a core investor. It is more like people looking for you to sell it at a big discount, I guess. You probably won't comment on that, but that would be.
You gave the answer. I'm definitely not about to comment on that. Once again, we are not soliciting anything right now in the market. When people reach out to us, it's their own initiative. The only thing I flag is that yes, people have been reaching out to us. As I said, apparently the transaction is creating a certain momentum.
There are no other conclusions I think that you can draw from that at this point in time and I will not go to speculate or make comments about who has been reaching out.
I will not ask the question I had also on the competition authority because I think you answered already and maybe
sorry about that. It is what it is.
Maybe a comment on the type of portfolio that you are seeing on the market today in the healthcare space. I was just wondering the level of yield you would be requiring for this portfolio, are they in line with your pipeline at the moment, which is around 6.5%, or would you be ready to take a lower yield because there is maybe some upside somewhere else. Can you comment a bit on that?
Yeah, absolutely.
The 6.5% you referred to, that's basically what we want to see for our development pipeline, which is a combination of in-house developments and forward deals. Maybe starting with that. We do see, as I mentioned, a lot more activity certainly in Finland and with that we're clearly reaching the targets. We also do see in countries like the U.K., Ireland, Spain that there is a lot of potential to do forward deals. I think we keep in mind yield targets that are around 6% to 6.5% depending on what type of development we're talking about. We want to see on average an average yield of the total pipeline around 6.5%. Do we see potential in that range? Yes, clearly in Finland, yes, clearly in some other countries. There are countries where yield expectations are probably more between 5.5% and slightly below 6%.
It will just depend on how well, basically how we assess what the impact of these projects will be at EPRA EPS level. It means that we're diving into more net yield, etc. Yes, there are a couple of countries where we do see growing potential, both in terms of volume but also in terms of reaching the target that we've been setting ourselves. When you're talking about standing assets, existing portfolios, I think that there the reality is more closer to what I've been telling the market before, that we would love to do deals around 6%. I think that there probably is a market now somewhere between 5.5% and 6% depending on the country, etc. So that is more a matter of negotiation, trying to find a solution so that we can meet pricing expectations, but also our own expectations.
Understood. Maybe final one, sorry.
On the contingent rent, I'm not so sure I got all the explanation for the EUR 4 million impact this year. Is it one off or not so sure. Ingrid, can you repeat a bit?
Yeah. In the formulas that we have in the disagreements regarding the contingent rents in a couple of cases for some assets, this was actually referring to a period in the past over three years. What you currently see, the EUR 4 million that I said, that was more to be considered as a one-off, that is a catch-up from those past years and that's also the reason why I excluded it from the like-for-like calculations. Beside that, we also have, and that should also be more the case going forward, contingent rent formulas that are more based on the yearly performance of the operator. There it will be calculated on a yearly basis. Of course, we do not know exactly what will be the amount and if it will be there every year because it depends on the operational performance.
There we estimate that on a yearly basis we see, I would say, EUR 1.5million -EUR 2 million of more recurring, starting of more recurring contingent rents. This is something that we already had in the numbers in the past, but the impact is growing. It is related to these operators' operational performance, that they are doing well. That also means that the amounts that are related to the contingent rents are increasing. It is something that you will see on an ongoing basis. This year there is a one-off element of approximately EUR 4 million.
OK, thank you very much.
Hi team. Thank you for taking my question, one from my side. It's positive to see that Colisée is still paying the rents. However, we understand from one of your peers that they are having arrears leading to some assets from Colisée in Belgium. Can you elaborate if there are any discussions ongoing for your assets and if you're working on a backup plan in case the situation does change within the divcast portfolio?
Okay, lots of questions. First of all, I can confirm that we are collecting rent for all of the assets within the portfolio. That's one thing. Secondly, I'm not going to comment on whether or not there are discussions ongoing with Colisée, but I think that you probably know that we have a culture of having a constant dialogue with all of our tenants and clients. Yes, of course we are in contact with them. Thirdly, remind me the third part of the question. Do we have a backup plan? Sorry, that's also part of the way that we see the asset management of our portfolio, that we always try to anticipate what might be happening in the portfolio. This is not just about Colisée, but if you want, also about Harmonie in Belgium.
We do think that we have a good understanding of the quality of the assets in the portfolio. If we think that within a certain tenant portfolio there are some weaker assets, we of course always work up a possible backup plan if need be. That is exactly the same approach that we're also applying to the Colisée Harmonie portfolio in Belgium.
Thank you. To understand, at this point there's no clear indication that at Q3 the situation could be different.
Now you're asking me to look into the immediate future. I'm not in the driver's seat of Colisée in France. I think that is where they are setting out their strategy. At this point in time, no, I don't have that clear.
Thank you.
Valerie Jacob from Bernstein.
Valerie,
good morning. Hi. I just have a couple of questions. My first one is I understand that there are many uncertainties around Cofinimmo, but if I think about Aedifica on a standalone basis, if I think about H2 versus H1, you've already mentioned the EUR 4 million of contingent rent. Is there anything else that we should know or can we just assume that it's going to be the same type of earnings?
I think you can assume same type of earnings. Of course, we had the disposals of Sweden. Sweden was also contributing to rental income in the first quarter, which will not happen in the second half of the year.
I would flag those two elements: disposal of Sweden and then the one-off regarding the catch-up in the contingent fraction as the exceptional elements that will not be repeated in the second half of the year. Besides that, there are no important elements that will have an influence on the numbers now.
Okay, thank you.
Thinking out loud on your questions a little bit on the taxes because the taxes that are coming from U.K. entities as we are a UK REIT currency. That means that withholding taxes are only booked at the moment of the timing of the payment of the dividend, which will happen in the second half of the year. There is nothing major besides those two elements that we just discussed that will have an influence on the numbers in the second half of the year.
Okay, thank you.
That's clear and my second question is about the transaction cost for the merger with Cofinimmo. Can you tell us what you've booked already and what you anticipate to book in H2?
Currently, there are no transaction costs that are booked in the income statement. The reason for that is that most of the transaction costs that we incurred so far are related to the legal workflows. That also means, as you might be aware, under IFRS, if you have a capital increase, all costs that are related to the capital increase are deducted from the capital with which you increase the equity on the balance sheet. It's an IFRS requirement.
That means that for the moment the costs are not expensed and they will be reduced from the equity at the point in time that we will issue the new shares and actually have the increase of the capital in the balance sheet.
So far you haven't booked anything.
There will also be other transaction costs that are more related to the advisory elements and those will be disclosed in the prospectus and they will be expensed in the income statements. We have not accrued them so far because they are mainly related also on a success fee basis.
Okay, thank you.
Lynn Hautekeete from KBC Securities.
Lynn, do you hear us?
Good morning, can you hear me? Yes, good morning Stefaan. Ingrid, Delphine. First question is on the reported EPRA net initial yield versus the top net initial yield. It seems like you're giving less incentives this year versus 2020. Is it fair to assume that this is coming from the recovery in the operator market? Do you expect to see more incentives in the future given the situation at Harmonea, and maybe related to that, can you give an indication of the current KPIs of Harmonea versus the average in Belgium?
Is it below?
Is it in line with here?
Maybe I can take the first part of the question on the EPRA net initial yield to the lease incentive. What I would like to flag is that in the presentation of the EPRA net initial yield, when you look at the lease incentive, it's actually based on a picture that is made at a reporting date and then that is extrapolated towards the 12 months. At the end of 2024, we reported indeed rather high lease incentives and you will see them mainly in the U.K . because we acquired four new assets in October 2024 in the U.K . and for new assets that still is still ramping up. It's logic that there is some magnitude during this ramping up phase.
You can see in the numbers that we reported now six months later that those recent incentives in the U.K . have almost completely disappeared because they were given for a period of six months. That's a little bit explaining why the numbers that we published, you see this big difference between the end of 2024 reported numbers and the June 2025 numbers.
Which is basically also implying that depending on development activity you will see more or less of these incentives popping up, as it is really market practice that with new assets that are in a ramping up phase, typically a couple of months of rent-free periods are part of the deal, which always has been market practice and market standard. Maybe about Almonea. To be quite honest, it's a bit more tricky to go into the details of one tenant because we are depending on the confidentiality of the relationship that we have with these people, all of our tenants, to collect the information that they're giving us. I just can repeat what I said before, that is that when you look at the occupancy of the Almonea assets in Aedifica's portfolio, they are in line and actually above the average that we are giving you for Belgium.
The average that we're giving for Belgium is 93%. It means that there is a high occupancy in that portfolio.
Okay, thanks, that helps a lot. My second question is on the operator occupancy in the U.K. If I compare the figures versus September 2024, it seems like you had a 2% drop in occupancy. It went from 92%- 90%, which is obviously still very high. I just want to verify. Is this because of the seasonality effect that you talk about? If I compare the other countries, it does not seem to have that seasonality effect as explicitly.
Yes, we are referring to seasonality. I should also check whether, because these are the numbers for the mature portfolio at a certain point in time and the mature portfolio evolves, meaning that as you know the definition that we apply to define whether an asset is in ramping up or mature is just two years trading. Once an asset is trading two years, it automatically shifts into the mature portfolio. I can't exclude that the mature portfolio in the U.K . is nowadays a bit bigger than the one in December and that can also have a slight impact on these numbers. There is at this point in time absolutely nothing happening in the U.K. market in terms of occupancy that we consider to be alarming in one way or another.
Okay, that's perfect.
Occupancy remains at. For the U.K., 90% is an all-time high occupancy. If you go back before COVID, on average U.K. occupancy was around 88, 89%, so always well above that number.
Yeah, I agree it's still very high. That's good to see. Thanks a lot.
Steven Boumans, ABN AMRO.
Steven,
hey, good morning. Thank you for taking my questions. I have some questions on the investment and exploitation strategy. I have three. Let's do them maybe one by one. The first comment on the potential of new forward funded developments, but do you also see opportunities to buy slightly older assets with higher yields but proper quality?
Yes, yeah, I say automatically yes, yes, because yeah, of course. Our focus is we try, but first of all, we do like development as a tool because it gives us access to the best quality assets but also the best future-proof assets, meaning assets that we are convinced will respond to the requirements of the Baby Boom generation and also will allow us to keep up with our own ESG target. That's one thing. Secondly, diving into value add type of assets is not our core strategy today.
This being said, if we do see redevelopment potential, we could look into that, but we're actually trying to focus a bit more on core assets.
Okay, that's clear. Maybe also on the disposals. What yield do you expect to dispose assets on average going forward?
That is a tough question to answer. Why? Because we have two types of buckets that we see from which we can take assets and try to sell them. One is definitely a capital recycling bucket and then we're talking low-yielding assets, and the other is much more quality driven and then we're talking high-yielding assets. In the end, what will be the result for the next six months really will depend on which assets are being sold.
When I say low-yielding assets, you definitely can interpret that as absolutely below the average yield of the portfolio or the average fair value yields of the portfolio that you've seen in the presentation. We do have assets where we do not see the redevelopment potential for the future that in some cases will be higher yielding than the average yield of the portfolio, but it will be a mix of both.
Okay, clear. My last one is, we see some large operators expanding to Eastern Europe. Can we expect you to follow in the coming years?
You said in the coming years. That allows me to say yes, at least we're definitely not excluding that that could happen. You said in the following years, not in the following quarters,
in the next 12 months.
To be quite honest, there are no concrete plans at this point in time.
Yes, we are aware of the potential in certain Eastern European markets. Yes, we are aware of the fact, and I can confirm that also some of the bigger players in Europe are starting to talk to us about future development pipelines and growth again and can we team up? These types of conversations are also starting to happen. Not saying that they're already leading to any conclusions or deals, but you do see the market. As I said, it's once again an indication that the market is becoming more dynamic and that will bring Eastern Europe on the map at a certain point in time. Whether it will be in the next 12 months, I think it's unlikely, but you never know. Okay.
Okay, very clear. Thanks so much,
Akasha.
I'm from Citi.
Akasha,
she's still on mute.
Akasha, apparently you're still on mute. Okay, otherwise we might switch.
Can you hear me now?
There you are. Thank you.
Hi. Morning. Right, three questions from my side. I'll go through them one by one. The first one is on the transactions market. I think we have noted that there has been an increased number of opportunities in the market. Could you just put some color around the drivers for that? Is the driver mainly the increasing confidence in healthcare as a sector, or is it driven by more distressed assets coming to the market?
I think totally fair answer. It's a combination of two. The one that we find the most interesting is the fact that a lot of operators are gradually switching back to the probe modus. I refer to what we see happening in Finland with some operators. Just answering one of the previous questions, I refer to the fact that we had some interesting discussions with some of the somewhat bigger players, and I mean not local heroes, but more European players that also start talking about us, whether or not we can team up in terms of development pipelines, in terms of bolt-on assets when they take over new operators. We do see operators looking back at M&A deals, meaning taking over competitors. You've seen Aloheim being active in the German market. We're definitely not back in the market that we had before 2022 or before COVID if you want.
We're definitely shifting towards a much more dynamic market compared to what we've seen in 2022, 2023, and even 2024. That is in our view a very positive indicator. On the other hand, yes, I think that there are still some portfolios out there that are or might be in the near future up for sale coming from asset manager where there is a need to sell. It's not like we're expecting fire sales, but we're basically focusing a lot more on what's happening with the operators.
Understood. Sorry, what you're saying.
That was just a noise in the room here. No.
All right, that's helpful. My second question is more on Aedifica strategy in terms of future investments. Is it reasonable to continue to expect future investments? By that I mean acquisitions plus developments. I'd say about EUR 250 million. Could we go higher than that once the valuation change picks up to maintain the 40% LTV? What can we expect as the proportional split in terms of acquisitions and developments? Can we assume 50/50 or will there be one more heavier than the other?
Okay, maybe taking first of all the last part because to be quite honest, that's the more difficult part to answer. First of all, I just mentioned before that we do like development as a tool because it gives us access to the best quality assets. You have access to the lease contracts, you talk directly to operators. That is what we prefer to do in terms of quality and forward looking quality. This being said, we of course keep an interest in standing assets because they have an immediate impact on the EPS of the portfolio. That's also obvious. I think it's more opportunity driven. When I'm looking at the market today, I do see a lot of potential in building up the development pipeline at yields which are reflecting this 6.5% average yield that we want to see when looking at standing assets.
There are even some portfolios out there that could definitely be of interest to Aedifica, but it is always more opportunistic approach. If you can strike such a deal, you probably will see the needle shifting more towards standing assets. When I'm taking a more long term view, I think that development forward deals probably will be the more important driver in the medium term future. Once again, the way I'm looking at the market today, based on the conversations that we have with operators, including bigger operators, nevertheless we do see some standing asset potential. You might have to remind me the other questions you just asked.
That was just on the volume of investments. Is the EUR 250 million still?
Of course, it will depend on the question to what extent in the future we will have access to equity. It will depend to a large extent on how stock prices will evolve in the near future. We do have headroom on the balance sheet today of roughly EUR 300 million, but you need to combine that with some of the capital recycling ideas that we have. You have seen the Swedish deal, there are some others that we're looking into that could have an impact on the firepower. It's always difficult because if you ask me now what would that impact be, it could go up to a couple of hundred million euros. Once again, it depends on whether or not and at what point in time we are able to execute on these capital recycling intentions.
That is basically what we can do in terms of the balance sheet today without having access to new equity. EUR 300 million+ capital recycling. If we get access to new equity, that could change a lot. This being said, when looking at the deal potential in the market today, it is absolutely in line with the numbers I mentioned without becoming too precise. When I talk to my Chief Investment Officer, he clearly indicates that what we call the pool of potential deals, which is not deals that we all are going to do, but that we find sufficiently interesting to have a close look at, that pool is constantly growing. It used to be almost dried up two years ago. Now we're talking several hundreds of billions of potential deals that at each point in time are on our desk.
I also refer to the fact that, and then we're talking a bit more pipeline, we have a pool of pre-approved deals, meaning deals that we analyze that have full approval that we need to turn into committed deals before it really is a deal. Also, that number is growing as we speak and more than covering our ambitions for the immediate future. In terms of potential, I'm actually quite positive about the markets.
That's very clear. The third one is just on the occupancy on the five geographies that you shared separately from the operators. Just trying to understand, given the influx of aging population that we are expecting over the coming years in the U.K. and Europe, when do you expect to see these average occupancies go beyond the 90% mark, average 90% mark.
Okay, but in lots of the countries, it depends on how you look at it. If I include the U.K., there are three that are at 90% or above, two below. What will happen with these numbers is a combination of what indeed will be the demographic pressure in the countries. We do see that pressure rising and it will become even more important, I think beyond 2027, 2028, towards the end of the decade, it really will start having huge impact. It's also being influenced by the composition of our portfolio. If we keep from a development pipeline constantly adding new assets, as I said, we consider them to be in ramping up for two years and we apply a very mathematical definition to give a very clear view of what is ramping up and what is mature. In reality, in some countries ramping up goes faster, like Ireland.
In other countries ramping up takes more time, like Germany. That also means that we keep adding some assets to the mature portfolio, which are compared to a fully ramped up asset might still be underperforming. In the numbers of Aedifica, I'm expecting to see gradually the number growing, not that all of a sudden it will shift to 95% in all of the countries. We do see the continuous pressure and we start to see and hear from operators that when I say certain regions in certain countries, if there is absolutely no new capacity being added, some of them are already close to 100% occupancy.
Right, great. That's all my questions. Thank you.
Welcome.
Vivien Maquet from De groof Petercam.
Good morning. I hope you can hear me. Just a follow-up question. Since time is running on the disposals, I think that you mentioned earlier in your comments that the remaining EUR 70 million are earmarked. Is that nice to have or must have? Just want to understand because you seem very positive on the investment. You mentioned that you have the EUR 300 million of financial headroom without additional disposals. Just want to understand why these are now just nice to have. Is there any lower interest from investors? Is it something that you need to read from that?
What I say nice to have is that we basically have priorities, of course. One of the priorities was the divestment in Sweden and that's the important one. It's around EUR 100 million. That one has been done.
The others that we have, as I said, some of them are more capital recycling oriented, others are more quality oriented. It's not like we have any pressure to do it in a specific period of time. There's no pressure coming from the balance sheet. I think that the debt-to-asset ratio is absolutely under control and when we look forward it remains absolutely under control. We are not putting ourselves in a position that we think that we absolutely need to sell before the 31st of December. That's what I meant with nice to have. We are working on these deals.
Of course.
Okay. It's purely a timing perspective rather than a product perspective. Right. Perfect. Thanks.
I do not feel any pressure to have to show to the market that before 31 the EUR 70 million are also sold. We're still absolutely planning to sell them, but it will take the time it takes. There is no pressure.
Thanks.
We have a question in the Q&A.
Okay, I see. Vivien, you had other questions or
no, everything was asked before. Thanks.
Yeah. There's one question in the chat box referring to the 0.2% rent reversion. How does this differ across markets? Was anywhere more positive or negative?
Yeah, I would say rent reversion is actually very marginal. It is a combination of small differences that we see on specific assets. It is not like you can make a trend out of it or start saying that in this market there is a trend towards having a more positive or negative impact going forward.
It's a combination of a few very specific assets where we had rent uplifts and some rent corrections. It's absolutely nothing that leads to a trend. Looking at the fin here, if there aren't any further questions, thank you a lot for attending this call and the questions. Wishing for those who still have summer holidays ahead, nice holidays, which is definitely the case for the people on this side of the screen. We will be in touch in the near future. Thank you.