Good afternoon everyone and welcome to ARGAN 2025 results announcing the first six months results and some prospects on the medium term logistics points. Please note this conference is being recorded and for the duration of the call your lines will be in a listen only mode. You will have the opportunity to ask questions at the end of the presentation. This can be done by pressing key five on your telephone keypad to register your question. If you wish to withdraw your question, please press key six. On today's call we also have joining us Aymar de GERMAY, ARGAN's General Secretary and Member of the Executive Board, as well as Francis Albertinelli, CFO and Member of the Executive Board. After this call the replay will also be available on our website for a public re-session.
Afterwards Aymar de GERMAY and Francis Albertinelli will refer to a presentation that is available on the webcast screen and on our website argan.fr under the Financial Documentation tab as of the regulated information and then we will open a short Q and A session afterwards. In addition to this presentation a press release is available and was published earlier. You can consult it on our website argan.fr. I now hand it over to Aymar and Francis.
Good evening to all. Starting from page four of our presentation, we give some key figures at end of June 2025. First point to mention is the strong growth in our rental income of 8% to EUR 106 million that we recorded in H1 2025. This was paired with an acceleration in our recurring net income, which grew double digit at plus 16% to stand at EUR 78 million for the group share on top of income. Our portfolio grew as well in H1 with a fair value of EUR 4 billion on the back of a cap rate that has slightly edged up by five basis points compared to last December, 5.25%. As you know, our portfolio is independently appraised by CBRE every half year.
With the contribution of the recurring net income and the growth of our portfolio, our EPRA NTA went also up above EUR 87 as indicated at the start of the year. Our roadmap for 2024-2026 combines asset sale process and debt reduction. As such, we actively worked on deleveraging. As a result, our LTV ratio was down another point in H1 to 42% from 43% at the end of December 2024. Now moving to page six for a quick overview on French logistics real estate trends. Over six months, logistics take-up has decreased down 22% compared to five-year average. This is the result of a lasting wait and see approach in France, notably due to international economic and geopolitical turbulence. Page seven, as a result of the decelerating take-up, vacancy rates are nationally increasing.
As such, the vacancy rate in France stood at 6.1% based on CBRE figures at the end of the first half. This, however, hides strong disparity between different regions. Also, asset availability gives an advantage to premium warehouses as the ones in ARGAN's portfolio. On slide eight, investment remained a bit in H1 2025 with logistics assets representing 29% of all corporate real estate investments. There is notably invest appetite for assets or portfolios of small to medium size of around EUR 100 million or slightly more. Finally, on slide nine, we have been able to relet all our spaces in H1 2025 with a reversion on average of plus 13% for the period for these assets. This clearly testifies to the attraction of our warehouses and best-in-class assets and property management.
Now moving to page eleven, as you know, our strategy is to develop and rent our warehouses to blue-chip clients with strong market share and solid financials. We keep on increasing our client base with three new clients joining us in H1 2025: BSL, a French logistician in Brittany;ZyCOM , a specialist of telecommunication networks that has leased a space in the Paris area; and finally, we have recently announced that Danone will rent new spaces near Tours to be delivered in 2026. Slide 12, the distribution of our rents shows a stable picture from end of 2024. Food distribution and logistics pure players still represent a strong majority of our income, at least 61% of the total. Moving to page 13 regarding our main clients, the top 12 customers represent 70% of our rents, including Carrefour at 28% of the total.
The remaining of the client income is more fragmented, with the second one, FM Logistics, below 10%. Running quickly through slide 14, we pay particular attention to avoiding any kind of non-paid rent. This is why we secure fixed term leases upon signing new contracts. The average remaining fixed term length is just 5.3 years, a level quite stable throughout the years. Additionally, shippers still represent more than three quarters of the volume of our rents. Finally, the weight of rents fully indexed on the ILAC, the French index related to inflation, is on an ongoing increasing path with 66% of the total net. Now, overall indexation impact for 2025 stands at 3.45%, with indexation impacts being applied on January 1st from each year. Final points on tenants we want to highlight on slide 15.
The occupancy rate is still at an outstanding level at 100% at the end of June 2025. This makes ARGAN a clear frontrunner of its industry in France, with no other company matching our occupancy history. Now a few key figures on page 17 relating to our portfolio. We already discussed the fair value of EUR 4 billion end of June. Our land bank is also quite sizable, with around 550,000 square meters. This represents more than five years average development for us. Sustainable development is crucial, with 50% of our portfolio certified, notably with BREEAM Excellent level being targeted for new developments as part of the Aut0nom label for warehouses. We will get back to this standard later on slide 18. Now, the fair value of our portfolio is still on a positive momentum, with also a positive contribution from developments.
There are few additional elements on our portfolio, page 19 and 20, to which we will be able to come back during the Q and A session if you wish. For the moment, I will pass the microphone to Francis to comment the set of H1 financial results, starting with debt.
Thank you, Aymar. To begin on slide 22, a few elements. Our financial debt policy: our goal is to reduce our debt. There will be no new loans. Any investments will be financed with our cash flow and disposals. Also, we reimbursed EUR 90 million as part of our loans each year. We target by the end of this year an LTV below 400% and a net debt to EBITDA ratio of about 8 times medium term. We aim at a more balanced mix between amortizable mortgage loans and bonds. Our next refinancing milestone is, as you may know, at the end of 2026 with a EUR 500 million bond maturing in November next year. Another feature of ARGAN's policy is to have enough [SF] lines with a total today of EUR 300 million.
Finally, our sound financial model is appreciated at an investment grade rating by S&P at BBB- coming with a stable outlook. Next slide is number 23. Our debt structure has the target to minimize exposure to rate variations, with only 1% of debt having floating variable rates. As a consequence, we have strong visibility on the cost of debt. By the end of this year we should be around 2.10%, the same as end of June with an assumption of an average three months at about 2% on average for the full year. The debt maturity is also fairly long at 4.5 years. The main item to be refinanced now is, as said, our bond which represents 29% of today's debt stock. On top of our debt reduction strategy, achievements are already sizable.
As such, our LTV is approaching fast the 40% ratio we set, at already 42% at end of June, and net debt to EBITDA is also strongly decreasing at 8.6x now, close to the 8x we are targeting for this year. We are now moving to slide 25. We target rental incomes of EUR 210 million this year. This now marks nine consecutive years of growth and a yearly average growth of about +14% since 2016. On slide 26 we detail our strong sets of results. Rental income grew +8% from the first half of 2024, including 3.45% from rent indexation. The second noticeable item is of course the acceleration in our recurring net income at 16% for the group share part due to lower income.
Now on the next slide 27 the IFRS net income is growing at a very upbeat pace, close to 50%, reflecting the positive impact of the change in fair value of our portfolio. One last point for financial items on page 28 to detail our NAV EPRA NTA: it grew by EUR 1.8 per share in H1 2025. This results from the positive contribution of our net income with more than EUR 3 per share, as well as from the positive change in fair value of our assets, around EUR 2 per share. This was partly compensated by the mechanical deletion of the scrip dividend and the dividend paid in cash for a combined impact of slightly more than EUR 3. This concludes our review of our financial performance. I now hand it back to Aymar de GERMAY to give some color on our roadmap for 2025 and 2026.
Yes, thank you Francis. Now on to slide 30. A few words on our Aut0nom warehouse. This is an ARGAN proprietary asset deployed since 2022 for all developments. This warehouse is carbon neutral for the in use phase thanks to green electricity from solar panels on the roof and batteries to store it on one end. On the other hand, electric heat pumps and building management system ensure careful use of very low carbon energy. This combined results in 30%- 40% of autonomy with green energy for our tenants. Emissions are thus decreased by a factor of 10 compared to a standard warehouse and residue is compensated for by a reforestation program near Bordeaux. Turning to slide 31 to give some perspective on our investment plans.
We target just over EUR 200 million of investments for 2025-2026 with EUR 170 million already announced previously and we announced today a third acquisition for 2026 in an amount of over EUR 30 million. All of these combined generate average yield of over 6% for the EUR 2. I will not go in details on slides 32 and 33 and we can get back to them during the Q& A session. Let's give more information on the 11 projects we have for 2025 and 2026. You can, however, note that they are all in very sought after locations along the French logistics historical corridor and the Atlantic Arc with long fixed term leases. Additional points now on slide 34 on our asset sale process, we have launched the marketing of a portfolio early this year with due diligence having started. This is expected to generate about EUR 130 million of net cash.
The transaction is expected to be finalized at the end of 2025. Our last comments will be on slide 35. We give here some outlook for the end of 2025. As said, our debt ratios are expected to keep on declining provided cap rates remain fairly stable compared to today with an LTV down two additional points compared with June 2025 to 40% or slightly less by the end of December 2025. Of course, we confirm our targets for 2025 with rental income and recurring net income set to respectively grow by +6% and +11% to EUR 210 million for the rental income and EUR 151 million for the recurring net income. The dividend that will be put to shareholders at the next assembly in March 2026 should be EUR 3.45 per share, up 5% from 2025. This demonstrates a consistent shareholder return policy by ARGAN. This closes our remarks on the presentation.
We now open the floor to questions and hand it back over to Samy for the beginning of the Q& A session. Thank you for your attention.
Thank you, Aymar. As a reminder, if you would like to ask a question, please press key five on your telephone keypad. To withdraw your question, please press key six.
Just one last point, leave room.
For everyone to ask questions, we kindly request you limit yourself to one or two questions. We will notify each of you of your turn during this Q& A session. Once a question is asked, please kindly hand back your microphone on mute. Thank you very much. Now we open to the first question, handing it over to Frederic Renard. Frederic Renard, it is your turn. Thank you.
Yes, bonjour. I have two questions, if I may. Just going back on your slide 9, you mentioned a 13% reversion, but I noticed that it's not equally spread on your portfolio, with some kind of big difference between the Paris area and Lyon Marseille. Any comments you can make on those differences, and maybe an add-on to that, I think I see that the average size of the unit is rather small versus the size of your portfolio. How is the reversion diverging in function of the size of the assets? That would be the first question. Thank you.
Hello Frederic, this is Samy speaking. To answer, you don't see a reversion for the [series] and [audio distortion] sites because they were already at the prime level. We were quite at the level of the market value and even slightly above for this site. This is the first point. Indeed, the sizes are small, but they don't have an impact on the reversion itself. It's really a matter of the location and whether we were already at prime level and at market level for the rents or not.
Okay, understood. A second question. You seem in a very good place to beat your full year guidance on recurring earnings of what you just said, EUR 151 million. Indeed, you already realized EUR 79 million in H1. Why aren't you upgrading your guidance? Is it due to the fact that you will be indeed disposing the EUR 130 million portfolio you are referring to and it could be sooner than later? Is it due to the fact that in your budget you are taking into account that you are refinancing your EUR 500 million bonds actually over the next coming months?
Yes, Frederic. Samir again to reply, actually there is a seasonality in terms of costs that explains the fact that H2 generates slightly less in terms of proportion compared to rental income of recurring net income. This is the first point. The second, indeed we have the assumption of the asset sale that should happen by the end of 2025 on some parts of Q4, which explains the fact that we are still confirming our target today for both rental income and recurring net income. This is our assumption as of today and we are not upgrading as such the target.
What is the seasonality in terms of cost that you have in H2 and not in H1?
This is notably due to actually to the HR costs.
Okay.
Yes.
All right.
Thank you, Frederic. Now it is Amal Abu Hotam's turn to ask a question.
Hello, do you hear me?
Hello?
Yes, hello, Amal. Hello, we can hear you.
Hello, thank you very much for taking my question. Perhaps just more question on the environment, given that you mentioned the slowdown in the letting market, how do you see the discussions with the tenants going on, and mainly on the level of rents you are able to reach in the latest lease contract sign, and also in terms of incentives, how it is evolving in the market you are active in?
Yes, I'm also indeed, as somewhat stated in what we released, there is more of a wait and see approach by tenants, potential new tenants for the ongoing discussions. This has been lasting since 2024. In 2024 it was more due to, let's say, a French context, notably after the Parliament dissolution. In 2025 it is more of, as we said, the macroeconomic and geopolitical, that is, let's say, worldwide. It is somewhat impacting the economic context as well in France. This is a reason why there is a wait and see approach. Indeed, there might be few measures of additional rent free that could be given, but it's very marginal. It is due to the fact that indeed, with higher vacancy at a national level, we need a few additional measures to be able to attract new tenants, even for further relating the spaces.
Okay, and do you see it becoming more difficult over the year, or compared to the start of the year, how did it evolve? My point is, do you think that H2 will be the same, stabilizing, or could be worse, given what we are seeing?
We think that H2 should be quite comparable to H1. Indeed, national vacancy has increased, so discussions can take longer. However, what we can note is that we are at market value for the rents when we let spaces. Also, in today's context, we have seen that ARGAN warehouses have clearly an advantage. Having strong ESG characteristics, notably, and with the Aut0nom standard is quite favorable for us to be able to either relate spaces, if it is the case, or grant new leases.
Thank you. If I may add another question, just on the asset sale process, you are well advanced just in terms of. If you could give us some color about the level of competition and how do you see the exit yield compared to the appraisal values? Is it in line with your expectation? Can it be better? Indeed.
We are at the due diligence part at this stage. Due to confidentiality agreements, we cannot say at this stage what kind of counterparts we have. However, the last point is that we target to sell at book value, of course. These are ongoing discussions, but we will fully give a picture of what is the counterpart and what are the conditions of the asset sale. Once it is concluded at this stage, we are already in the process.
Okay, thank you very much, Samy.
Thank you very much, Amal. We now turn over to Florent Laroche-Joubert for the next question.
Hi, good evening.
Thank you for the presentation.
I would have maybe one question that can be divided into two such questions. My question would be how secured are today the arbitration plan and the acquisition which is in progress. Maybe you can say a little more, give us more colors on this acquisition in progress. Thank you very much.
So.
Hello, Florent. For the transaction, for the asset sale itself, as we said, at this stage we have engaged in the due diligence process. Of course, we are hopeful that it will be concluded in the time frame that we have announced. We will notify, as we do it regularly, about where we stand for this asset sale. As of today, the due diligence is going as it should. We are hopeful it will conclude positively. Now turning over to the second part on the third acquisition I've announced today. Here you can refer, if you want, to slide 33 of our presentation. It is the acquisition number three actually on this page that we are announcing today. What we can say at this stage is that it is in the normal derivation for an asset of around 20,000 square meters. Of course, as we always do, a fixed term.
A fixed term that is on the long term, actually 10 years for this specific case, for the lease.
Two new.
Clients and a big name.
Yes, it's a new client, big name. It's all positive for us to be able to do this acquisition and bringing also additional rents for 2026. Do you have additional points?
No, no, no.
Thank you. Thank you very much.
Thank you.
Thank you very much. Now we are handing it over to Alex Coston for [John].
Hi, [audio distortion], good evening.
Thanks for the presentation. I want to come back on Frederick's question about that 74% margin. If I look back in the last two years, there's not that much of a difference between H1 and H2, let's say FFO profit margin. What has changed then in your cost structure? Now H2 has bigger cost than H1.
Yes, Alex. Just to come back on this point, we indeed see the seasonality might not be as strong as in the past for just HR costs, but they are having an impact. There will be a seasonality for H2, and also we have one-off financial cost for an option to be raised, which somewhat explains the fact that the margin will be slightly lower in H2 and in absolute value, which was the question earlier. For the target, we will have the impact of the asset sale. All this combined, we get back to us confirming the target as stated earlier for the recurring net income for the end of 2025.
All right, clear. Thank you.
Thank you very much, Alex. Now we are handing it over to Alexandre Xeri for the next question.
Thank you for taking the question. Can you hear me?
Yes, Alexandre, we can hear you very well.
Okay, perfect. I have a question regarding the political environment and more specifically the bill which will be studied by commission during the year, which could prevent rebalance Apache tax. Can you give us some color on it and maybe what impact would it have on you?
Yes, Alexander, just a few seconds. Sorry.
Okay, thanks.
Yes, [audio distortion] . Just a few elements. This bill is not passed and there are actually differences between the text of the bill that is at the assembly and the one that is at the senate. There are major differences between the two chambers. Also, in the text it is not stated that this property tax, which should be indeed in the cost of the owner of the asset, cannot be rebilled to the tenant. This is also one point that needs to be taken into account. This item could actually be rebilled. Finally, in the last draft that we have seen, it is not clearly stated that this bill would be voted and does not appear concretely. All this taken into account, we are not worried at this stage.
All the more so that, you know, the chamber of the national assembly in France is very fragmented and you have, let's say, a political uncertainty that is lingering and that makes it very difficult to pass texts. This one more particularly, as the Senate and the National Assembly are disagreeing.
On this point t here will be a work made by a commission at the end of September. The commission is mixed, with senators and deputies, and they have to work on a text, on a consensus text. I think that this point will be rejected by the senators.
Okay, thanks.
Very clear.
Maybe a second question on my side, if I may. At the beginning of the year, on your slideshow presentation, you indicated to target [audio distoriton] at EUR 95 on this presentation and on the report. Maybe I am wrong, but I didn't notice the confirmation of this target for a specific region.
Sorry, Alexandre, you are talking about the EPRA NTA.
It was not specified on your slideshow, which one is [audio distortion].
Maybe we have disclosed very long term targets at the beginning of the year. I think maybe you are referring to this. We are just talking about the 2025 targets today.
Okay, you mentioned 2025 target 95% of the [NAV] .
Maybe we can see the point of the call with you if you want to.
Okay, perfect. Thanks. I have no other question on my side.
Thank you very much, Alexandre. At this stage, there are no other questions. If you wish to ask a question, you can press key five on your keypad. I think there are no further questions. I will hand it back to Aymar and Francis for closing remarks.
Thank you very much for taking part in our H1 2025 results presentation. We remain available to answer any questions you will have after this call. We also wish you a happy summer break for those who go on holiday in the next few weeks. Good evening to all.
Thank you very much. Thank you very much. Good afternoon everyone and welcome to ARGAN 2025 results. Announcing the first six results and some prospects on the medium term logistics points. Please note this conference is being recorded and for the duration of the call your lines will be in a listen only mode. You will have the opportunity to ask questions at the end of the presentation. This can be done by pressing key five on your telephone keypad to register your question. If you wish to withdraw your question, please press key six on today's call. We also have joining us Aymar de GERMAY, ARGAN's General Secretary and Executive Board Member, as well as Francis Albertinelli, CFO and Executive Board Member. After this call, the replay will also be available on our website for a public reassign afterwards.
Aymar de GERMAY and Francis Albertinelli will refer to a presentation that is available on the webcast screen and on our website argan.fr under the Financial documentation tab as of the regulated information and then we will open a short Q and A session afterwards. In addition to this presentation, a press release is available and was published earlier. You can consult it on our website argan.fr. I now hand it over to Aymar and Francis.
Good evening to all. Starting from page four of our presentation, we give some key figures at end of June 2025. First point to mention is a strong growth in our rental income of +8% to EUR 106 million that we recorded in H1 2025. This was paired with an acceleration in our recurring net income, which grew double digit at +16% to stand at EUR 78 million for the group share. On top of income, our portfolio grew as well in H1 with a fair value of EUR 4 billion on the back of a cap rate that has slightly edged up by +5 basis points compared to last December, 5.25%. As you know, our portfolio is independently appraised by CBRE every half year with the contribution of the recurring net income and the growth of our portfolio.
Our EPRA NTA went also up above EUR 87 as indicated at the start of the year, our roadmap for 2024, 2026 combined and debt reduction. As such, we actively worked on deleveraging. As a result, our LTV ratio was down another point in H1 to 42% from 43% at the end of December 2024. Now moving to page six for a quick overview on French logistics real estate trends. Over six months, logistics take-up has decreased down 22% compared to a five-year average. This is the result of a lasting wait-and-see approach in France, notably due to international economic and geopolitical turbulence. Page seven, as a result of the decelerating take-up, vacancy rates are nationally increasing. As such, the vacancy rate in France stood at 6.1% based on CBRE figures at the end of the first half. This, however, hides strong disparity between different regions.
Also, the set availability gives an advantage to premium warehouses as the ones in ARGAN's portfolio. On slide eight, investment remained a bit muted in H1 2025 with logistics asset class representing 29% of all corporate real estate investment. There is notably investing appetite for assets or portfolios of small to medium size of around EUR 100 million or slightly more. Finally, on slide nine, we have been able to relate all our spaces in H1 2025 with a reversion on a range of +13% for the period for these assets. This clearly testifies to the attraction of our warehouses and best-in-class assets and property management. Now moving to page eleven, as you know, our strategy is to develop and rent our warehouses to blue-chip clients with strong market share and solid financials.
We keep on increasing our client base with three new clients joining us in H1 2025: BSL, a French logistician in Brittany; ZyCOM, a specialist of telecommunication networks that has leased a space in the Paris area; and finally, we have recently announced that Danone will rent new spaces near Tours to be delivered in 2026. Slide 12, the distribution of our rents shows a stable picture from end of 2024. Food distribution and logistics pure players still represent a strong majority of our income at 61% of the total. Moving to page 13 regarding our main clients, the top 12 customers represent 70% of our rents, including Carrefour at 28% of the total. The remaining of the client income is more fragmented, with the second one FM Logistic below 10%. Running quickly through slide 14, we pay particular attention to avoiding any kind of non-paid rent.
This is why we secure fixed-term leases upon signing new contracts. The average remaining fixed-term length is just 5.3 years, a level quite stable throughout the years. Additionally, shippers still represent more than three quarters of the volume of our rents. Finally, the weight of rents fully indexed on the ILAC, the French index related to inflation, is on an ongoing increasing path with 66% of the total. Now, overall indexation impact for 2025 stands at 3.45%, with indexation impacts being applied on January 1st from each year. Final points on tenants we want to highlight on slide 15. The occupancy rate is still at an outstanding level at 100% at the end of June 2025. This makes ARGAN a clear front runner of its industry in France, with no other company matching our occupancy history. Now, a few key figures on page 17 relating to our portfolio.
We already discussed the fair value of EUR 4 billion end of June. Our land bank is also quite sizable, with around 550,000 square meters. This represents more than five years average development for us. Sustainable development is crucial, with 50% of our portfolio certified, notably with BREEAM Excellent level being targeted for new developments as part of the Aut0nom label for warehouses. We will get back to this standard later on slide 18. Now, the fair value of our portfolio is still on a positive momentum, with also a positive contribution from developments. There are few additional elements on our portfolio, page 19 and 20, to which we will be able to come back to during the Q& A session if you wish. For the moment, I will pass the microphone to Francis to comment the set of H1 financial results, starting with debt.
Thank you, Aymar. To begin on slide 22, a few elements on our financial debt policy. Our goal is to reduce our debt. There will be no new loans, and investments will be financed with our cash flow and disposals. Also, we reimbursed EUR 90 million as part of our loans each year. We target by the end of this year an LTV below 400% and a net debt to EBITDA ratio of about 8 times medium term. We aim at a more balanced mix between amortizable mortgage loans and bonds. Our next refinancing milestone is, as you may know, at the end of 2026 with a EUR 500 million bond maturing in November next year. Another feature of ARGAN's policy is to have enough [SF] lines, with a total today of EUR 300 million.
Finally, our sound financial model is appreciated at an investment grade rating by S&P, BBB- , coming with a stable outlook. Next slide is number 23. Our debt structure has the target to minimize exposure to rate variations, with only 1% of debt having floating variable rates. As a consequence, we have strong visibility on the cost of debt by the end of this year, which should be around 2.10%, the same as end of June, with an assumption of an average three months at about 2% on average for the full year. The debt maturity is also fairly long at 4.5 years. The main item to be refinanced now is, as said, our bond, which represents 29% of today's debt stock. On top of our debt reduction strategy, achievements are already sizable.
As such, our LTV is approaching fast the 40% ratio we set, at already 42% at end of June, and net debt to EBITDA is also strongly decreasing at 8.6x , now close to the 8x we are targeting for this year. We are now moving to slide 25. We target rental incomes of EUR 210 million this year. This now marks nine consecutive years of growth and a yearly average growth of about +14% since 2016. On slide 26, we detail our strong set of results. Rental income grew +8% from the first half of 2024, including 3.45% from rent indexation. The second noticeable item is, of course, the acceleration in our recurring net income at 16% for the group share part due to lower income.
Now on the next slide, 27, the IFRS net income is growing at a very upbeat pace, close to 50%, reflecting the positive impact of the change in fair value of our portfolio. One last point for financial items on page 28, to detail our NAV EPRA NTA, it grew by EUR 1.8 per share in H1 2025. This results from the positive contribution of our net income with more than EUR 3 per share as well as from the positive change in fair value of our assets, funded EUR 2 per share. This was partly compensated by the mechanical deletion of the scrip dividend and the dividend paid in cash for a combined impact of slightly more than EUR 3. This concludes our review of our financial performance. I now hand it back to Aymar de GERMAY to give some color on our roadmap for 2025, 2026.
26.
Yes, thank you Francis. Now on to slide 30, a few words on our Aut0nom warehouse. This is an ARGAN proprietary asset deployed since 2022 for all developments. This warehouse is carbon neutral for the in use phase thanks to green electricity from solar panels on the roof and batteries to store it on one end. On the other hand, electric heat pumps and building management system ensure careful use of very low carbon energy. This combined results in 30%- 40% of Aut0nomy with green energy for Aut0nom. Emissions are thus decreased by a factor of 10 compared to a standard warehouse and residue is compensated for by a reforestation program near Bordeaux. Turning to slide 31 to give some perspective on our investment plans. We target just over EUR 200 million of investment for 2025-2026 with EUR 170 million already announced previously.
We announced today a third acquisition for 2026 in an amount of over EUR 30 million. All of this combined generates average yield of over 6% for the EUR 2. I will not go in details on slides 32 and 33 and we can get back to them during the Q& A session, but let's give more information on the 11 projects we have for 2025 and 2026. You can however note that they are all in very sought after locations along the French logistics historical corridor and the Atlantic Arc with long fixed term.
Leases.
An additional point now on Slide 34 on our asset sale process, we have launched the marketing of a portfolio early this year with due diligence having started. This is expected to generate about EUR 103 million of net cash. The transaction is expected to be finalized at the end of 2025. Our last comments will be on Slide 35. We give here some outlook for the end of 2025. As said, our debt ratios are expected to keep on declining provided cap rates remain fairly stable compared to today, with an LTV down two additional points compared with June 2025 to 40% or slightly less by the end of December 2025.
Of course, we confirm our targets for 2025 with a rental income and a recurring net income set to respectively grow by +6% and +11% to EUR 210 million for the rental income and EUR 151 million for the recurring net income. The dividend that will be put to shareholders at the next assembly in March 2026 should be EUR 3.45 per share, up 5% from 2025. This demonstrates a consistent shareholder return policy by ARGAN. This closes our remarks on the presentation. We now open the floor to questions and hand it back over to Samy for the beginning of the Q&A session. Thank you for your attention.
Thank you, Aymar. As a reminder, if you'd like to ask a question, please press key five on your telephone keypad. To withdraw your question, please press key six. One last point: leave room for everyone to ask questions. We kindly request you limit yourself to one or two questions. We will notify each of you of your turn during this Q&A session. Once a question is asked, please kindly put your microphone on mute. Thank you very much. Now we open to the first question, handing it over to Frederic Renard. Frederic Renard, it is your turn. Thank you.
Yes, bonjour. I have two questions, if I may. Just going back on your slide 9, you mentioned a 13% reversion, but I noticed that it's not equally spread on your portfolio, with some kind of big difference between the Paris area and Lyon Marseille. Any comments you can make on two differences and maybe an add on to that? I see that the average size of the unit is rather small versus the size of your portfolio. How is the reversion diverging in function of the size of the assets? That would be the first question. Thank you.
Hello, Frederic, this is Samy speaking. To answer, you don't see reversion for the series and what sites, because they were already at a prime level. We were quite at the level of the market value and even slightly above for this site. This is the first point. Indeed, the sizes are small, but they don't have an impact on the, let's say, on the reversion itself. It's really a matter of the location and whether we were already at prime level and at market level for the rents or not.
Okay, understood. A second question. You seem in a very good place to build your full year guidance on recurring earnings of what you just said, EUR 151 million. Indeed, you already realized EUR 79 million in H1. Why aren't you upgrading your guidance? Is it due to the fact that you will be indeed disposing the EUR 130 million portfolio you were referring to and it could be sooner rather than later? Is it due to the fact that in your budget you are taking into account that you are refinancing your EUR 500 million bonds actually over the next coming months?
Yes, Frederic. Samy, again to reply, actually there is a seasonality in terms of cost. That explains the fact that H2 generates slightly less in terms of proportion compared to rental income of recurring net income. This is the first point, and the second, indeed we have the assumption of the asset sale process that should happen by the end of 2025, on some parts of Q4, which explains the fact that we are still confirming our target today for both rental income and recurring net income. This is our assumption as of today, and we are not upgrading as such the targets.
What is the seasonality in terms of cost that you have in H2 and not in H1?
This is notably due to pay actually to the HR costs.
Yes, all right.
Thank you, Frederic. Now it is Amal Abu Hotam's turn to ask a question.
Hello, do you hear me?
Hello?
Yes, hello, Amal. Hello, we can hear you. Hello.
Thank you very much for taking my question. Perhaps just a more question on the environment, given that you mentioned the slowdown in the letting market. How do you see the discussions with the tenants going on, mainly on the level of rents you are able to reach in the latest lease contract sign, and also in terms of incentives, how it is evolving in the market you are active in?
Yes, Amal, indeed, as somewhat stated in what we released, there is more of a wait and see approach by tenants, potential new tenants for the ongoing discussions. This has been lasting since 2024. In 2024 it was more due to, let's say, a French context, notably after the parliament dissolution. In 2025 it is more of, as we said, the macroeconomic and geopolitical turbulence that is, let's say, worldwide and is somewhat impacting the economic context as well in France. This is a reason where there is a wait and see approach. Indeed, there might be few measures of additional rent free that could be given, but it's very marginal. It is due to the fact that indeed with higher vacancy at a national level, we need a few additional measures to be able to attract new tenants, even for further relating the spaces.
Okay. Do you see it becoming more difficult over the year, or compared to the start of the year, how did it evolve? My point is, do you think that H2 will be the same, stabilizing, or could it be worse? Given what we are seeing?
We think t hat H2 should be quite comparable to H1. Indeed, in national vacancy that has increased, discussions can take longer. However, what we can note is that we are at market value for the rents when we let spaces. Also, in today's context, we have seen that ARGAN warehouses have clearly an advantage. Having stronger ESG characteristics, notably, and with the Aut0nom standard is quite favorable for us to be able to either relet spaces, if it is the case, or grant new leases.
Okay, thank you. If I may add another question, just on the asset sale process, you are well advanced just in terms of. If you could give us some color about the level of competition and how do you see the exit yield compared to the appraisal values? Is it in line with your expectation? Can it be better?
Indeed. We are at the due diligence part at this stage. Due to confidentiality agreements, we cannot say at this stage what kind of counterparts we have. However, the last point is that we target to sell at book value, of course. These are ongoing discussions, but we will fully give a picture of what is the counterpart and what are the conditions of the asset sale process once it is concluded. At this stage, we are already in the process.
Thank you very much, Samy.
Thank you very much, Amal. We now turn over to Florent Laroche-Joubert for the next question.
Hi, good evening.
Thank you for the presentation.
I would have maybe one question that can be divided into two such questions. My question would be how secured are today the arbitration plan and the acquisition which is in progress. Maybe if you can say a.
Give us more colors on this.
On this acquisition in progress, thank you very much.
So.
Hello, Florent. For the transaction, for the asset sale itself, as we said, at this stage, we have engaged in the due diligence process. Of course, we are hopeful that it could conclude in the time frame that we have announced. We will notify, as we do it regularly, about where we stand for this asset sale. As of today, the due diligence is going as it should, so we are hopeful it will conclude positively. Now turning over to the second part on the acquisition, the third acquisition I've announced today. Here you can refer if you want to Slide 33 of our presentation. It is the acquisition number three, actually on this page that we are announcing today.
What we can say at this stage is that it is in the normal derivation for an asset of around 20,000 square meters, and of course, as we always do, a fixed term that is on the long term, actually 10 years for this specific case, for the lease.
For a new client and a big name.
Yes, it's a new client, big name, and it's all positive for us to be able to do this acquisition, bringing also additional rents for 2026. Do you have additional points?
No.
Thank you. Thank you very much.
Thank you.
Thank you very much. We are handing it over to Alex Coston for [John].
Hi [audio distortion], good evening.
Thanks for the presentation. I want to come back on Frederick's question about that 74% margin. If I look back in the last two years, there's not that much of a difference between H1 and H2, let's say profit margin. What has changed then in your cost structure? Now H2 has bigger cost than H1.
Yes, Alex. Just to come back on this point, we indeed, the seasonality might not be as strong as in the past for just HR costs, but they are having an impact. There will be a seasonality for H2. Also, we have one-off financial cost for an option to be raised, which somewhat explains the fact that the margin will be slightly lower in H2 and in absolute value, which was the question earlier, for the target will have the impact of the asset sale. All this combined, we get back to us confirming the target as stated earlier for the recurring net income for the end of 2025.
All right, clear.
Thank you.
Thank you very much, Alex. Now we are handing it over to Alexandre Xeri for the next question.
Thank you for taking the question. Can you hear me?
Yes, Alexander, we can hear you very well.
Okay, perfect. I have a question regarding the political environment and more specifically the bill which will be studied by commission during the year, which could prevent rebalance. Can you give us some color on it and maybe what impacts it could have on you?
Yes, Alexander, just a few seconds. Sorry.
Okay, thanks.
Yes, [audio distortion]. Just a few elements. This bill is not passed and there are actually differences between the text of the bill that is at the assembly and the one that is at the senate. There are major differences between the two chambers. Also, in the text it is not stated that this property tax, which should be indeed in the cost of the owner of the asset, cannot be rebilled to the tenant. This is also one point that needs to be taken into account. This item could actually be rebilled. Finally, in the last draft that we have seen, it is not clearly stated that this bill would be voted and does not appear concretely. All this taken into account, we are not worried at this stage.
All the more so that, you know, the chamber of the National Assembly in France is very fragmented and you have, let's say, a political uncertainty that is lingering and that makes it very difficult to pass texts, this one more particularly as the Senate and the National Assembly are disagreeing on this point.
There will be a work made by a commission at the end of September. The commission mixes operations with senators and deputies. They have to work on a text, on a consensus text. I think that this point will be rejected by the senators.
Okay, thanks. Maybe a second question on my side, if I may. At the beginning of the year, on your slideshow presentation, you indicated to target [audio distortion] at 95 on this presentation and on the report. Maybe I am wrong, but I didn't notice the confirmation of this target specific region.
Sorry, Alexandre, you are talking about the net asset value EPRA NTA.
It was not specified on your slideshow which one is.
Only mentioned.
Maybe.
We have disclosed very long-term targets at the beginning of the year. I think maybe you are referring to this. We are just talking about the 2025 targets today.
Okay, yeah, you mentioned 2025, target 95% of the [NAV].
Maybe we can see the point of the call with you if you want to.
Okay, perfect. Thanks. I have no other question on my side.
Thank you very much, Alexandre. At this stage there are no other questions. If you wish to ask a question, you can press key five on your keypad. I think there are no further questions. I will hand it back to Aymar and Francis for closing remarks.
Thank you very much for taking part in our H1 2025 results presentation. We remain available to answer any questions you will have after this call. We also wish you a happy summer break for those who go on holiday in the next few weeks. Good evening to all.
Thank you very much. Thank you very much.