Good morning, everyone. Welcome to Carmila's first half 2024 results presentation. Today's presentation will be focused on first half performance and the Galimmo acquisition, which closed on the first of July. Carmila continues to deliver a strong operating performance with leasing activity at an excellent level. Appraisal values are unchanged at EUR 5.9 billion. Rent growth from indexation offsets yield expansion. The average net yield is 6.6% as of end June. Rent growth was +3.4% in the first half, in line with indexation and driving earnings growth. Finally, we continue to benefit from a solid balance sheet and strong leverage metrics. Now, on the Galimmo acquisition on slide five.
Carmila acquired 93% of the Galimmo shares on July 1 and granted a put option to Primonial for 7% of the shares, to be exercised by the end of July. It is a complementary portfolio in the northeast of France. It was acquired at a significant discount to book value. The deal is immediately accretive to net asset value and will drive earnings growth in H2 of this year, with the full effect next year. In compliance with market regulation, Carmila will file a simplified tender offer in the coming weeks, followed, if Primonial exercises put option, by a squeeze-out for the remaining shares. On slide six, from a strategic perspective, this acquisition is perfectly aligned with Carmila's expertise in asset management and transformation. For instance, consider one of Galimmo's centers near Strasbourg, showcased on this slide.
This asset is representative of Galimmo's shopping centers, which are strong local leaders, anchored by hypermarkets, and situated in regional cities. Carmila will implement a strategy to optimize a merchandising mix and leverage the Carrefour-Carmila ecosystem. This acquisition also expands Carmila's footprint, providing more opportunities for growth initiatives, value-creating projects, specialty leasing, and Next Tower. We are delighted to welcome the Galimmo team and are enthusiastic about embarking on new project together. On corporate social responsibility and Carmila's commitments under its Building Sustainable Growth strategy on slide seven. On the first semester, we launched our first solar auto-generation project in Spain. We are on track to meet our goal of net zero Scope 1 and Scope 2 emissions by 2030. For the second consecutive year, Carmila was included in the CDP A List for the quality of its climate disclosure. 96% of assets are BREEAM certified.
Carmila centers are an important contributor to the local economy and a hub for local communities. Shopping centers are also major local employers. Turning now to trends in retail sector on slide eight. Investors continue to be more positive on retail real estate, as omni-channel is the winning model. New leisure and restaurant concepts bring people to physical locations. As shown on the slide, Carmila is also committed to develop innovative leisure concepts. We have signed an innovative new leisure concept in Rennes. Successful discount retailers, such as Action, NORMAL, and Adopt, continue to open stores in new locations. Carmila has shown its capacity to pivot to new tenants and new concepts. This has driven low vacancy and a strong operating performance, which we expect to continue.
Finally, to conclude my part of today's presentation, these are the main messages: We have closed the acquisition of Galimmo, and it will drive earnings growth in the second half of the year. We have revised up earnings guidance, thanks to the good performance of the first semester and the Galimmo acquisition on the first of July. We now expect a recurring EPS of EUR 1.65 in 2024. Finally, we announced today another EUR 10 million share buyback, having completed a EUR 10 million share buyback in H1. I will now leave the floor to Sébastien to talk about Carmila's performance on the ground.
Thank you, Marie, and hello, everyone. There are three key messages in this part of the presentation. First, operating performance remains strong. Then, operating performance has been driven by an excellent commercial activity. Carmila continues to pivot the mixed merch to growing sectors and retailers. And finally, we continue to transform our centers with agile projects. Now, on the first semester activity. As I mentioned, leasing is very strong, with 500 new contracts signed. Carmila centers are attractive to retailers, offering sustainable and affordable rents. We continue to see positive reversion, +2.7% on top of indexation, with the occupancy cost ratio for retailers remaining below 11%. Occupancy is above 96%. Retailer sales are up by 1%, and footfall is stable across the three countries. I would like to remind you that it is compared to a dynamic 2023.
The main takeaway is excellent leasing activity and solid fundamentals. Let's dive into the mixed merch on slide 12. You can see that we are strategically pivoting towards a broader range of sectors beyond fashion. Health, gifts, leisure, and new restaurant concepts are all a larger share of rents at the end of June. In the sports segment, we have signed new leases with Decathlon and Intersport. Franchises are also a major source of leasing business. The Carmila platform has a team that supports franchise development and offers support services to retailers. Many successful retail concepts are based on franchises. Some of the most successful are chocolate and food gift concepts like Jeff de Bruges and Le Comptoir de Mathilde, or street food concepts such as O'Tacos. Focus on innovation and marketing on line on slide 13. Along with events, specialty leasing supports footfall and makes centers more attractive.
Specialty leasing revenue on pop-up store are up +16% in the semester. There have also been several significant marketing initiatives. A French kids' TV channel, Gulli, organized a tour of 10 Carmila centers. Carmila continues to run online video campaigns with Carrefour's media partner, Brut. And finally, the most recent Miss France made an appearance at Rennes Cesson. Now turning to Carmila's projects pipeline on slide 14. First, on the major projects, we are still working on the definition of five extensions. The most advanced is Orléans, which will restart in 2025. Agile restructuring project is the core of Carmila's strategy and continues to create value in 2024. For example, in Spain, we developed a retail park in Burgos with four medium-sized units, including Kiabi and MediaMarkt, thanks to our partnership with Carrefour. Finally, Carmila also has long-term opportunities in mixed use.
That is all for my part of the presentation. I will now hand over to Pierre-Yves Thirion, Carmila's CFO.
Thank you, Sébastien. Hello, everyone. It is great to be here again. Here are my top three key takeaways. First, earnings growth will continue this year, and we have revised up full year earnings guidance. Second, the portfolio value is unchanged, and we have the positive impact on net asset value of the goodwill from Galimmo. And finally, Carmila's leverage and funding position remains among the best in the sector. Now, let's look in more detail at first half net rental income. We continue to see organic growth in line with the indexation effects of +3.4%. We have been able to pass indexation to tenants. Rent collection is at a high level, in line with 2023, at 97%. On slide 17, you have the P&L line by line. I won't go through all of the details. We are strictly managing the cost base.
There is a controlled increase in financing costs. The rent growth I mentioned has more than offset higher financing costs, and the recurring earnings are up versus the first half of last year, despite asset sales. On Slide 18, the recurring earnings per share up 2.4%. It is slightly higher than the increase in recurring earnings due to share buybacks. We have revised up our earnings EPS guidance to EUR 1.65, up 3.5% versus 2023. This guidance integrates the good results of the first semester and the contribution of Galimmo, which is 3% on a full year basis, and then contributes to 1.5% for next semester. The synergies will start progressively from 2025. Moving on to the valuation of the portfolio.
Growth in the rental base from indexation has fully offset the effect of higher discount rates, and then appraisal values are unchanged versus end 2023. There is no perimeter effect in the period. By country, portfolio values were overall slightly more resilient in France than in Spain and Italy, which are a smaller share of the portfolio. This relates to specific changes in the rental base in the three countries over the period, but the underlying trends of stable high occupancy and rent growth in line with indexation are similar. Shifting to our usual slide, showing the long-term view on yield expansion on Slide 20. The increase in the net initial yield of the portfolio since 2017, is now well over 100 basis points. That increase in discount rates has been offset by growth of rental base.
In the case of Carmila valuations, assumptions are seen as reasonable. We also benefit from renovation carried out since the creation of Carmila, as well as our track record with agile projects. Next, on leverage metrics, Slide 21. Carmila remains among the best-in-class, even including the impact of the Galimmo acquisition. LTV is below 40%, even including the 170 basis points from Galimmo. Net debt to EBITDA stands at 7.5 times. It will mechanically increase with the Galimmo acquisition to around 7.9 times. These leverage metrics are compatible with the BBB rating, which was confirmed by S&P Global Ratings, following the announcement of the acquisition. There is significant headroom versus bank covenants. On funding and liquidity on Slide 22, the situation is very good, with a significant cash position and no new funding needed until 2027.
On 1 July, Carmila acquired the shares in Galimmo for cash. Carmila has refinanced Galimmo's mortgage loan facility with an intragroup bridge loan, as it was repaid under a change of control provision. A group of French banks has agreed to refinance this bridge loan in September. Let's turn to the financial impact of the Galimmo acquisition on Slide 23. There will be EUR 5 million of synergies starting from 2025. The acquisition is immediately accretive, with a +3% impact on EPS before synergies and +5% after synergies. A Badwill of approximately EUR 158 million will be accounted in the second semester. This Badwill results from the margin between the net assets of Galimmo and the consideration paid by Carmila. Galimmo integration will have a positive contribution on Carmila net disposal value of +5%.
Finally, on the LTV impact, the LTV impact is around 170 basis points. The pro forma LTV of 39.7% as of end June 2024, is in line with the target of 40%, which has been set for the plan Building Sustainable Growth. The end of June typically marks a peak in the LTV, as the dividend has just been paid. Turning to net asset value, Slide 24. On top of usual bridge, showing mainly H1 earnings and the dividend, we have presented the impact of the Galimmo transaction. As you can see, EPRA NTA is down 2.4% on a standalone basis. You have the usual seasonality from the prior year dividend, but only half a year of earnings. The pro forma NTA with Galimmo is +5.8%.
It integrates the impact of the badwill and the deferred taxes of Galimmo. To sum up the financial part of today's presentation, here are the main points I would like you to keep in mind. The valuation of the portfolio is unchanged versus end 2023. LTV is at 39.7%, including the impact of Galimmo, and 38% without. Carmila continues to deliver a predictable financial performance, with growth this year driven by the Galimmo acquisition at very attractive terms for Carmila. I will now leave the floor to Marie for the conclusion.
Thank you, Pierre-Yves. Just a few words to conclude the presentation. In the first half of this year, commercial performance has been especially strong, as Carmila's financial performance and balance sheet metrics. The successful execution of the plan put Carmila in a position of strength and has enabled us to acquire Galimmo. We are confident on the outlook for the rest of the year, including the contribution from Galimmo. Our successful strategy can now be rolled out on this larger perimeter, which will continue to see earnings growth next year. For now, we are focused on the Olympics, which should be an exciting period for France and retail. Our shopping centers are ready to celebrate with a full program of events and activities. [Foreign language]. We are now available to answer your question. Let's start the Q&A session.
A reminder, if you would like to ask a question or make a contribution to today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. We currently have no questions coming through. As a final reminder, if you would like to ask a question, please press star one now. As we don't have any questions coming through, I will hand you back to your host to close today's conference. Thank you.
Is there any question on.
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Thank you.
Now, to the phone. So the question is, I'll open your line now.
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Yes.
Yes.
Hello, everyone. Thank you for the presentation. I would have just a question to clarify the guidance, because you have raised the guidance on the back of the Galimmo consolidation and the better H1. But still, it looks a bit cautious to me. So, could you give some colors on the breakdown of it? I mean, for H2, do we need to consider any disposals impact going forward? Or what are the drivers to have quite a weaker H2, please? And the second one would be related to the first one. Could you give an update on your disposal program, please?
Okay, thank you for your question. I will take the first one about the guidance. So as you can see, performance of the first semester is good. In EPS, it's plus 2.4%, H1 2024 versus H1 2023. We will have the same trend for the second semester regarding the Carmila standalone portfolio. And then to get to the guidance, you have to sum up the Galimmo impact. So the Galimmo impact will be 3% without synergies. Just to remind you that synergies will start in 2025, and we won't have any impact on synergies in 2024.
So for the Galimmo contribution, we will just have one semester, the second semester, so the annualized contribution of 3% will be the half of it in 2024, which is, 1.5. So if you sum up the, the 2+ on the, standalone perimeter, plus the contribution of, 1.5, you get to the 3.5, and that's where we stand in the, in the guidance.
Concerning the disposal program, so, in 2023, Carmila sold three assets in France and four in Spain, all in line with preserved value for a total of EUR 130 million. Two assets in France were sold as part of the target to sell another EUR 100 million of asset by end 2024, for a total of EUR 45 million. We are working on additional disposal by the end of this year. Thanks to our reasonable average value per center, we have access to local investors as family offices, which are interested in local and resilient retail convenient assets. So we are working on additional disposals. I think there is no other question online.
But there is one question.
Thank you.
On the chat. So the question on the chat is: Could you provide details on the operational performance of Galimmo assets, and how they compare to the overall portfolio? So the performance of Galimmo asset is comparable to Carmila's portfolio. Stable valuation, good footfall and retailer sales performance. They have a small decrease in financial occupancy rates in the first semester, but we believe that thanks to Carmila's strategy of pivoting the mixed merchandising, we will be able to recover a high financial occupancy rates on the first semester. So the assets compare the quite. They are comparable to Carmila's overall performance. And I think we have other questions on the phone.
Yeah, we've got one more question from Alex Kolsteren from Kempen . We will let it open now.
Hi, good morning, team. Thank you for the presentation, and thanks for taking my question. Also on the Galimmo assets, you mentioned they are indeed comparable, but I was wondering, have you set any CapEx budget aside to get these assets up to speed, so to say?
Can you repeat? Sorry, I haven't heard the last part of the question.
Yeah, sure. I will repeat. So on the Galimmo assets, you say they are indeed comparable. I was wondering if you have set any CapEx budget aside, to maybe upgrade the assets a bit further?
What we're seeing is that Carmila has a strong track record in agile restructuring project to create value. So it will be a manageable amount for Galimmo's portfolio, similar to what we do on the current Carmila portfolio.
Okay, clear. Thank you very much.
Let's go one more question from [audio distortion].
There is a last question.
Hello, can you hear me?
Yes.
Hi, this is Florent from Oddo BHF. So, yes, I would have maybe an additional question on Galimmo. So we have understood that you have identified some synergies, mostly on cost. But could you maybe give us some more colors on what could be the additional initiative that you could implement, maybe in the next two years, two or three years, by implementing the Carmila platform at Galimmo? What could we expect, maybe in terms of creation of additional revenue or value creation?
Yes. Thank you, Florent, for this question. So on the revenue side, first, there is a lot of synergy concerning the mixed merchandising. We think that we have a very efficient team within Carmila, and a good strategy, so we will roll out the strategy on the Galimmo portfolio. Then, we probably saw in the first semester that we are very efficient also on specialty leasing, so we think there is room to improve the specialty leasing on the Galimmo portfolio. Thirdly, we are very good at developing agile project. By agile project, we mean projects that create value, especially on the parking.
We did a lot with Carrefour on the Carmila portfolio, and we want to develop those type of project on the Galimmo portfolio with the partnership with Carrefour. And then we can imagine, for example, Next Tower already is already on the point to see how they can develop a 5G tower on the Galimmo portfolio. So we have plenty of project, and we are eager to work with the Galimmo team, and the Galimmo, and the Carmila team to develop those new projects.
Okay. Thank you. That's always. Thank you.
We currently have no more questions on the phone coming through. As a final reminder, if you would like to ask a question, please press star one now. As we don't have further questions coming on the phone now.
Okay, there is a last question on the chat. Would you consider monetizing your digital infrastructure tower assets, given very large transaction multiples within this sector?
Well, for the time being, we are developing, as planned, our strategy. I think it's not the time to think about that, but it could come in some time. We are very happy to have this capacity and this expertise to develop a 5G tower. I think it's a very profitable business for Carmila. Well, if there is no more question, thank you very much for your attention, and have a nice day and a nice summer. Thank you.