A warm welcome to all of you listening in on the update on the occasion of our 2025 full year figures. My name is Patrick Couttenier, I'm the CEO of the company, and I'm accompanied by Filip Van Zeebroeck, who is the CFO of our company.
Yeah.
Let us take you through the agenda of what we plan to present. First of all, we will talk a little bit about the key components of our story. We'll dive into the portfolio. We'll talk about our strategic focus. Of course, we will zoom in on the financial information and also zoom in on the key interests of share and shareholders to conclude with some key investment highlights and main messages. First of all, let me remind you that 2025 was quite an exciting year for us. We celebrated our 30 years of Care Property Invest, and we finished the year with a major transaction that was very important to us, a major increase in our portfolio, and actually first major transaction illustrating our ambition to grow for the coming years.
It was a year of hard work, but a lot of excitement and fun as well. Let me take you through the rest of the presentation and maybe start with some key takeaways. Well, actually in that respect, not much of a change. We still are purely healthcare Belgian REIT included in the EPRA Index. We still focus on the four core countries where we are present. Actually, the portfolio is quite diversified. We have built quite an expertise and track record in the public and the private market. We still believe in the build-up of an energy-efficient portfolio. Of course, as you all know, our income is inflation-linked. Our portfolio is an inflation hedge, if you want.
We still are a lean, mean, and agile organization as we organize everything out of our head office in Schoten. We see growth potential in all the markets where we are present. To finance that, we are convinced we have access to funding to realize these growth ambitions. We really believe in sustainable relationships on a long-term basis, not only with our operators, but also with our investors and shareholders. As you know, since 2025, we have also changed our remuneration policy in a way that the management team has more skin in the game than before. The interests of management and shareholders are well aligned. We strive for a profitability in line with the risk profile of our company. We are convinced that the risk profile is quite conservative.
We have a long-term view on stable cash flows based on long-term lease contracts as well in the public as in the private portfolio. The public portfolio still represents 23% of our income. We have a sound financial discipline and also cost control. Maybe a very important thing, we have a sustained dividend policy, and the good news is that there is still only 15% of withholding tax to be applied to our dividend. I would like to zoom in on... I'm sorry. On the project we realized in 2025. Let me just see. I'm flipping through the... Yes, I activated the wrong slide. Excuse me. Excuse me. I'm struggling with the... Yeah. Sorry, Filip. First of all, I give you the word to highlight some key figures before we delve into this.
Good morning.
Section of 2025.
Good morning also from my side. Going through the key financials. Our the fair value of our portfolio was close to EUR 1.4 billion. Financial leases decreased a little bit in fair value due to the expiry of or the nearing of the expiry of the contracts and higher market interest rates at the end of the year. We had a stable value for our investment properties at EUR 1.17 billion. If you look at the in rental income and EPS, we are very close on the guidance that we gave for 2025, being EUR 73.9 million in rental income and EUR 1.60 EPS. As Patrick said, our dividend will be EUR 1.
In terms of risk, the LTV is at the end of the year, 2025, stands at 47.14%. We have an increased headroom on financing due to the cheap bank loans that were in the Welfare portfolio. That's why our headroom went up to EUR 91 million and a decreased average cost of debt of 3.11%. I think we can go to the next slide.
Next slide.
Okay. Here you can see our portfolio. Indeed, the difference between 2024 and 2025 and the growth of portfolio by the acquisition of the Welfare Estates, portfolio, the nine assets in Belgium.
Maybe to zoom in a little bit on the, on the acquisitions in 2025. Actually, we bought a very significant portfolio in Belgium consisting of nine locations. The good news is that these locations are really prime or no high occupancy rates, have a very good energy efficiency, and so on. It's a real positive addition to our portfolio. We also concluded an acquisition in the Netherlands, in Bloemendaal, and we engaged on a acquisition in Alicante, new project in Alicante, late 2025. We also illustrated that we actively manage our portfolio, although we have a strategy, of course, to build up an asset base of interesting buildings.
We also look opportunistically whether sometimes we need to dispose of some assets because it's a better solution for the company, for ourselves, but also for people operating the premises. In 2025, we disposed the site in Deinze . We also realized new completions in Almelo, the Netherlands, and also in Elche in 2026. Actually, the completion that was planned late 2025, but ultimately was realized in 2026 due to some minor technical elements. If you look at the composition of our portfolio, it's actually spread over four countries. As a result of the acquisition in 2025 of the big portfolio in Belgium, there's a somewhat increased concentration on Belgium.
The strategy is still to diversify over the existing four countries. There is actually very nice growth potential in all of the countries as the aging of the population is pretty much the same in all countries. There is a huge need for new and future-proof buildings in all the countries. To zoom in a little bit on the Belgium situation, we actually see in all countries, but certainly on in general that the occupancy rates continue to improve, which means that actually in terms of operations, the post-COVID difficult period is coming to an end for the operators in terms of occupancy.
We were at the slide of the, of the Belgian market, and I was just illustrating the increased occupancy rates in Belgium and, actually in all other countries. Also in Belgium, the demand remains very high for additional buildings and additional services through nursing homes. I will flip through the other markets to gain somewhat time in meantime. You see that occupancy rates in the Dutch market are somewhat lower. This is also a given. The buildings we have are smaller, so we have somewhat higher frictional unoccupancy if you want. Also, there the demand remains very strong.
Certainly also in the Spanish market, which has known a very high occupancy rate in our buildings in 2025, as well as Ireland, very high occupancy rate, 95.9%, and a very high increase in elderly people, 85+. A certainty of increasing demand for the coming years. To continue with the geographical distribution of our of our projects and our residential units. It's a slide that you're used to see if you are a regular follower of our presentations. It actually indicates that there is still in terms of number of projects, but also in terms of residential units, a high concentration on Belgium. Let's say in the Netherlands, the buildings are slightly smaller than compared to other countries, which gives a difference in these slides.
Very interesting slide is the distribution of our projects by the age of our buildings. This illustrates, in fact, that we have a very young portfolio, especially in the countries that we recently joined to the portfolio, Spain and the Netherlands. Also in Belgium, compared to peers, our portfolio is quite young and quite qualitative in terms of energy efficiency and so on. In terms of lease maturity, well, one of the aspects that underpin our conservative risk profile is, of course, the view on the leases, the long-term leases we have. You see in Belgium, the Netherlands as well as Ireland, we have an average lease of 18 years plus. Only in Spain, there's a somewhat smaller lease maturity, but still a very high visibility on future cash flows.
Of course, again, illustration of the young portfolio. Well, a word on the legacy portfolio of the finance leases as there is quite some attention over the last quarters on that portfolio. As you all know, it's the legacy of the initial setup of the company as Serviceflats Invest. It's a portfolio of financial leases that are on a number of local government authorities, communities in Belgium, and for a total of almost 2,000 assisted living rooms. The initial structure and based on the building right we have for 30 years, we structured the leasehold with the communities for 27 years. Actually, as of 2025, the first leasehold periods came to an end in the portfolio of initial public market contracts.
Which means that we have a slight decline of our income on these contracts as of 2025. Actually, the next slide is an interesting slide, giving you in full transparency an impact on the annual rental income of that portfolio, but also the impact of the acquisition we realized in late 2025 of the Welfare portfolio that actually compensates to a large extent the top-line impact of the build down of the legacy portfolio for the coming close to 13 years. Actually, it was a very important transaction for us in a way that we can compensate top line the income loss for the coming years in the legacy portfolio.
As you know, there is a difference in yield, that's one of the reasons why there is an impact in our earnings per share going forward. That's why Filip will illustrate in a minute the EPS bridge between 2025 and 2026. There's a good diversification in our operators. Actually the result of Welfare was an increased concentration going forward on the Korian group. We explained that very clearly when we realized the transaction. We feel comfortable with that increased concentration risk because we consider Korian as a very qualitative operator in the market. Well, you will certainly have thoughts or concerns or questions on the impact of the topics on the Belgian operators that were already covered in the newspapers.
Well, what we can say about that is that for the knowns, the files that we know and that have been in the meantime remedied and renegotiated, we can say that the impact for 2025 and 2026 is fully integrated in our figures and in our guidance for the market next years. For the unknowns, what we call, we took a slightly conservative position going forward, but given the fact that it's unknowns and it's, let's say, sensitive information to talk about files that have not yet really, let's say, come to the surface in all its details, we will not comment on that.
The only thing we can say is that, yes, as we have communicated in the past, when issues would arise, we will handle, we will take care of them, we will integrate them in our financial forecasts. The thing is that it's very often, a quite multifactor renegotiation. It's not only giving in on things, it's also renegotiating, other parameters which make that all in all, the impact on our business, today for the known files is quite limited. It's actually very limited. It is so. Well, I wanted to confirm that and maybe we can, we can dive into that somewhat more when we talk about the EPS bridge. Ultimately, the strategic focus of Care Property is still the same. We want to grow within strategic boundaries, huh?
We continue to focus on the four main markets where we are active in because of the growth prospects. We have a multi-solution approach towards the legacy portfolio of service flats, which means that the base case is that we think that the amounts will be paid back. We stay interested to renew contracts with the local governments. It is fair to say with the experience of the contracts during 2025 with the municipalities of which the contracts become due in the next five years, we have the sentiment that the probability of renewal is quite low.
We actually took a conservative position in a way that we consider, we take into account that the initial amount, investment amount will be paid back to us, and we will reinvest them in new projects in the public market or new projects in the private market. That's the base scenario we took into consideration in our prospects. The strategic focus remains to be a dividend stock. We are planning a consistent dividend and ultimately a growing dividend. The payout ratio of 2025 probably comes very close to what we would consider a healthy strategic payout ratio for the future. Excuse me, in the meantime, we still plan for a nominal dividend of EUR 1, and when it is sustainably defendable, we will increase our dividend.
Finally, as we have illustrated with the sale of the premises in Deinze , we manage our portfolio in a dynamic way, we also try to increase value on the existing locations by trying to realize extensions or increase the income potential on existing sites. Finally, although the reporting requirements on sustainability have come down to a large extent, we still believe in the value, the defensive strategy that sustainability is key to remain and keep the value in our portfolio in the long term. Sustainability of our buildings, long-term relationships remains key for us. Now I will give the word to Filip to dive into the financial information and the guidance going forward.
Yes. Operationally everything is under control. If you look at rent collection rate, it's kind all points, but the operators do still at 98%, at a stable level compared to previous quarters. Average indexation was at 3.08% and occupancy rate and 100%. The real occupancy rate increased to 94%. Being a proof that the demographic evolution is in our favor. In terms of solvency, like I said, EPRA LTV 47.14%. We have limited cash outs. We have the project in Elche, which was completed in January, and the project we acquired in December in Alicante, which has to start. It will be a gradual cash out over 2026 and 2027.
We have a stable valuation of the portfolio and like for like, we see a small growth of 0.21% in 2025. We, like I said, we slightly increased the capacity on our credit lines, which amounts to EUR 91 million at the end of the year. If you see the EUR 1 DPS and the EUR 1.16 EPS for 2025, we get at a healthy payout ratio of 86%. I will go to the next slide, which gives you more information on the evolution and from the EPS 2025 being 1.16 to the guidance we gave for 2026 being 1.07.
The first block, it's a positive impact in turnover, which is a combination of different factors. The first one is of course the acquisition of the Welfare Estates portfolio. We have an increase in rental income of EUR 8.2 million. Of course, we have an indexation of our rental income, a large part also already in January 1st. Of course, we also have a negative impact from the Cierco portfolio. As Patrick showed on slide 26, for the year 2026, it is a growth impact. Without indexation of the remaining lease portfolio of EUR 1.1 million.
We had the operators. We included the known impact, the limited impact of the renegotiations with Armonea and Ricusa. There is also an unknown for potential other parties like Orelia. However, we didn't make any concessions so far. Like you all know, we issued shares, so you have the share dilution due to the rights issue. We have increased interest expenses mainly due to the additional debt that was in the Welfare Estates' legal entity and higher general expenses. You know that in 2025 we had a one-off positive impact of EUR 960 million due to a bonus of previous CEO.
We also have that of course is no longer in place in 2026. We also have we are also implementing a new ERP system, which is also part of the EUR 0.04 negative impact in higher general expenses. That's how we get to the EUR 1.07, which is to be considered as a minimum. It's like I said, there are some unknowns because it's only March. We have included that in our EPS guidance.
Okay.
On the next slide, you can see the P&L. I think no real surprises there. So the net rental income, EUR 73.9 million. General expenses well under control, and we're above the target of 85% as an operating margin. There is this one-off effect, like I said, of EUR 960, which you see on the left-hand part. Of course, we also have the negative impact in corporate income taxes and about EUR 800,000 because of the abolishment of the FBI regime in the Netherlands. That's how we get to the EUR 1.60 exactly the guidance we gave on EPS.
That's 1.6025 into more details for the financial year 2025. Here you can see on the next slide, the like for like change in each of the four countries we are active in. On the next slide, the growth of the portfolio. Of course, going forward with the acquisition of the Welfare Estates portfolio, a further dilution to just above 20% of the historical portfolio into our total rental income. If we look at our balance sheet, we can see the investment properties, and like I said, with a stable valuation. Our, yeah, IFRS LTV is close to 49%. Here you have more detail on valuation.
So a slight increase in Q4 and then also a slight increase overall over financial year 2025, leading to a valuation yield of 5.63% at the end of the year. Here you can see an overview of the different countries, the four countries and the average of 5.63%. That slightly increased over the year, and with about 50 basis points due to the acquisition of the Welfare Estates portfolio. There you can see the different headrooms and like I said, the limited cash out due to the committed developments. If you look at the maturity wall, there is no refinancing that has to be done in 2026. We are currently working on 2027.
We are making some progress there. There is not an issue. However, these are our bank loans that still have favorable conditions. So we will see how we deal with that. But there's no issue there. Okay. Here you can see the weighted average interest rate and which came slightly down to 3.11% in 2025. We are well hedged for the future, and we're almost done until 2028. There might be some decrease in the hedge ratio over this year for the year 2028. We are now focusing on 2029 and beyond.
In terms of cost of debt, it will be stable, and it will be about 3% for the next years. Debt structure. We are, bank loans have taken important parts, 83%. Commercial paper was kind of stable over the year. About EUR 90 million, EUR 89 million at the end of the year. We have a smaller part of bonds outstanding. If you look at net debt to EBITDA and the ICR, we see an improvement in both ratios in 2025 compared to 2024. I hand over to Patrick.
Okay. Just some information on the long-term performance of our stock, which is maybe less relevant the past. Let's look at the future. Just to give you an indication of the total return, despite the, let's say, volatility of the stock in a certain period, of cheap money and then afterwards the correction for that, with the total return of Care Property is 7.10%, including reinvestment of dividends. Actually, it's an indication of, in my opinion, also of the future potential of what Care Property could generate for shareholders reinvesting their dividends every year. Actually, given the current discount, this is probably a low estimation.
It illustrates that there is a nice additional return in the total return beyond inflation. Actually, it's almost 5% additional on top of inflation that was generated by the share. This is an overview of our dividend per share. We already illustrated that. In terms of dividend policy, we continue to stress our dividend policy. We are a dividend stock. Ultimately in increasing the portfolio and the revenue going forward, we target an increase of the dividend, but we will only do so when it is sustainable for the future. Let's say, ultimately, I think the dividend policy would result in a payout anywhere between 80 and 85 as of the moment that the earnings per share allow for that with an increased dividend.
This is an evolution of our stock price versus the EPRA NDV. Actually, the stock price evolved quite nicely after the Welfare transaction. I think in general, the market for real estate and REITs recovered. Additionally, I think there was a small re-rating already of the risk of Care Property Invest. In terms of our shareholder base, well, that's an overview. Still predominantly a Belgian shareholder base, but as a result of the EPRA inclusion, additionally international. Which brings us to the end of the presentation. Actually just summarizing the key investment highlights as they are mentioned here, but maybe some closing messages on our future strategy.
Actually, I think we are convinced that the priority we should aim at is trying to reduce the discount on our stock versus the intrinsic value of the stock. The risk the market allocates to our company today is quite high. It's maybe too high. Which results in a high cost of equity and WACC that is used by market participants. The reasons for that are multiple. First of all, it's the result of sector dynamics, operator concerns. It has to do with the size and liquidity of the company, and it has also to do, that's at least what I read in the analyst reports, with a perceived too high leverage. Let me comment on that.
First of all, the sector dynamics and the operator concerns, we have the impression that actually it's predominantly a Belgian phenomenon and that actually the files are coming to the surface and that we are in the phase of probably having seen most of the issues. It's a temporary effect. I think the sector has good prospects in a way that the demand is increasing. We are convinced that landlords and operators will find a win-win for the next years. That concern will gradually evolve and probably disappear. The second element, size and liquidity, well, we are convinced that we have to grow. We have to grow. Actually, the target would be to double in size. We will not pin a deadline on that.
You will agree with me that current geopolitical and market circumstances are highly unpredictable and very difficult to navigate. We are convinced that if we double the size of the company, we will reduce the issue of size and liquidity. By the way, the acquisition of the Welfare Estates portfolio was an important first step, and we already see that the market responds to that by reducing the discount on our stock and also increasing the liquidity. There's a notable increase in liquidity in our stock as a result of that transaction. We will look at all opportunities going forward actively and looking for ways to realize them and finance them in a way that adds value and creates a value for the shareholder.
The third, maybe element why the risk on Care Property is perceived somewhat higher is our leverage. Well, I can confirm that actually as a management team, we are not too worried about the leverage as it is today. The reason is the existence of the public portfolio in our on our balance sheet, which is actually a risk-free series of cash flows that comes our way for the next 14 years. Yeah? If you would separate that portfolio from the new portfolio that we built since 2012, and you would attribute a more normal market-conformed leverage to that public portfolio of secure cash flows, you would actually see that the leverage on the new portfolio is much lower, and actually in the reality is quite conservative.
That is not one of our concerns. We understand and we try to explain to you how things are in reality and hope that the risk perception will reduce over time. Having said that, we see the legacy portfolio also as an opportunity to maybe unlock value at a certain point in time when it makes sense for Care Property and its shareholders. We also are looking to increase value-creating capacity in our existing portfolio. We are looking for extensions into our new build portfolio, but also our legacy portfolio. We are looking for ways to increase the return on invested capital, and at the same time, we try to work on our weighted average cost of capital.
By doing both and increasing our asset base, we are convinced that for the next years we can create value. Finally, I would say we try to improve the operational efficiency of the company. We have decided to invest in new ICT systems, ERP systems. We will improve our document and data management. We are reviewing our processes, and we are also embracing AI solutions to further increase our operational efficiency going forward. Growth should indeed also lead to improving operating margins. To conclude, I think we also continue to believe in sustainability, not only in the buildings, but in long-term relationships with operators and investors. We are convinced that actually Care Property Invest is a sound investment with a conservative risk profile, offering interesting total return perspectives for long-term patient capital. That's really our conviction.
The reason why we are conservative is Care Property is very much what you see is what you get. There's a value backed by a diversified real estate portfolio. We have Triple Net contracts with our operators. We have long weighted average lease terms. We have, in our opinion, a low leverage. Yet we have efficient operations, and yet we have a clear dividend policy towards the shareholders. Maybe finally, we still have the benefit of the 15% withholding tax. There is no reason why this should disappear in the near future. I think this is maybe the concluding message from the CEO in this earnings call. I would like to thank you for your attention on behalf of Filip and myself. Apologies once again for the technical issue we faced. It was really Murphy's Law.
We had an energy breakdown temporarily, but we managed to resolve that. Thank you very much for your attention. I hand over to Filip to see if there are questions raised, if we need to answer questions. Filip?
No, there are no questions so far.
Okay. Everything must have been very clear. Yeah. Thanks again for your attention, and I look forward to the next earnings calls in 2026.