Ladies and gentlemen, welcome to the Klépierre 2018 H1 Earnings Conference Call. I now hand over to Jean-Marc Jestin and Jean-Michel Gault. Sir, please go ahead.
Good morning, everyone. It's my pleasure to be here with Jean-Michel to present Klépierre first half 2018 earnings. This morning, I will first present the highlights of the first half, which was very strong, and explain why we think we have the best of retail in our properties. Jean-Michel will walk you through the operational and financial performance of the first half, and I will conclude with our development projects and the outlook. Starting with the highlights on the first slide, four key figures summarize how strong our performance was in the first six months of the year, thanks to the efforts of all our teams all over Europe. Number one, net current cash flow per share was up by 7.8% to EUR 1.31. This is mainly due to solid like-for-like growth in net rental income of 3.2%, 200 basis points over indexation.
Our EPRA net asset value rose by 6.8% to EUR 39.50. Those very strong results exceeded our plan, and therefore, we have decided to raise our full-year cash flow guidance for 2018 to at least EUR 262 per share, which compares to our initial objective of EUR 257-EUR 262. Our leasing activity remains very dynamic. We have signed 958 leases in the first half. This is the second-best performance of our portfolio in its current size. We signed also deals with 11.1% releasing spread, and this is roughly in line with previous years. The vacancy, as you can see, is down by 20 basis points year-on-year to 3.2%. Our leasing activity is dynamic because retail, as you know, is dynamic. Whether we are talking about established players who are expanding in our malls or newcomers we are introducing in our malls, the deal flow has been very strong.
Here we see a few brands that have signed deals with us. They are quite diverse and probably names that you do not recognize. We show that retail, as it has always been the case, is constantly regenerating. Sports and sportswear retailers are continuing to grow quite impressively. Also food and beverage brands. There are some of the players we are introducing or expanding as part of the destination food strategy that we are implementing all over Europe in our malls. Turning to our development highlights of these past six months, I would like first to say a few words about Hoog Catharijne, the number one mall in the Netherlands, and we think it's a true success story. Last spring, we fully opened what we call the North Mile.
That is the new connection from the central station to the heart of the shopping center with 14,000 new sq m of retail, consolidating the mall's leading position as fashion and food destination for the whole country. The figures speak by themselves. We have increased footfall by 3 million year-on-year to 27 million, and retailer sales are up by 10% so far this year. There is more to come, and I will come later in the presentation. Prado in Marseille is our newest family member. We opened it in March. It was an immediate success and has been unwavering since then. The footfall is increasing as Zara opened its flagship store a few months ago, and the rooftop terrace is truly unique and entirely dedicated to a sophisticated dining offering.
Prado is a fantastic venue, as some of you have visited, and leading edge in terms of architecture and environmental performance. It, I think, exemplifies Klépierre's style and know-how. Another example of Klépierre know-how in the refurbishment category is Plenilunio. You all remember that we bought this asset in Madrid in 2015. It was already a great shopping center, but we thought it needed a bit of renovation to make it a world-class mall. We dedicated a limited amount of CapEx, i.e., EUR 15 million, to create maximum impact, and Klépierre share is being limited to EUR 5 million. This type of property proves that physical retail is not only still relevant but more attractive than ever. The full refurbishment was delivered in May, and already footfall sales and valuation have significantly increased.
On slide 11, you can see the new interior of the mall with a digital animated display, and I think it's quite stunning. To conclude on the highlights of the first half, let me comment on the retailer sales in our malls all over Europe. They increased by 1.4% in the first half, outperforming national indexes by 100 basis points. The overall performance was driven by Iberia, which is still brilliant, and Germany, as well as Central Europe and Turkey. Scandinavia is lagging a little bit behind because of Denmark, and Italy was negative because it suffered probably for the most important bad weather condition in Europe, and which has a significant impact on the fashion segment, and also macroeconomic situation affected by political uncertainty.
In the whole portfolio, health and beauty and food and beverage were the main contributors to the growth, and our extensive re-tenanting actions also play a large part. Which brings me to the next topic. Being able to constantly outperform the market and sustain growth in a challenging retail environment is the outcome of a very clear strategy. In our last earnings presentation, I touched on the refocus of our portfolio, which were completed in recent years, and on our capital allocation strategy. This morning, I would like to zoom in to the leading level to show you how we have transformed our retail mix over the past few years. Working on the mix takes time. It's not always visible, but it is essential.
It is the very core of our activity as I see it, looking for the right retailers at the right place, detecting the new trend, the new retail heroes, deploying them fast. This is our job, balancing the value segment within the mix. Of course, there is no cookie cutter approach. We have to adapt to each local situation. There are some fundamentals to observe, we have been doing this in depth across our portfolio, and it is bearing fruits. This is what I want to show you now. Starting with fashion. We have significantly outperformed the European market on the fashion segment in terms of retailer sales by 250 basis points since 2013 on average. The market where we are have grown by 1.7% annually on average, while our retailer sales have grown by 4.2%. There is reason for that.
We have clearly overweighted the big international retailers in all our malls, and more importantly, we have implemented their latest store formats. That's what we have called for years now, the right sizing. Thanks to our ability to accommodate them, we have today 39% of our retailer sales in the fashion segment in our malls are from top international retailers, including names among others, such as Zara, Primark, Uniqlo, and Calzedonia. This number compares to 25% in 2013 at constant scope. This illustrates a massive qualitative transformation of the fashion segment in our malls. As we have been implementing the latest store formats of those retailers, the average store size has increased by 18%, and sales per sq m have also increased accordingly by 19%.
We will continue to work on this transformation, and I'm confident that it will allow us to keep outperforming in this polarizing retail environment. Turning to health and beauty now. Again, our outperformance versus the market in terms of retailer sales is very clear. We have grown by 4.5% annually, while the market has grown by 2%. In this case, we believe it reflects our ability to size the momentum, sorry, of trendy and fast-growing brands. We can highlight retailers such as Sephora, MAC, Rituals, Lush, among others. Since 2013, we have opened 101 stores with these brands, which accounted for half of our growth since 2013. They help explain our outperformance on this segment. The last segment is food and beverage. This market is very dynamic, and we have benefited from that.
We are amplifying the trend by rolling out our destination food strategy in all our malls in Europe. In this segment, we have been capitalizing on the must-have brands that we have largely deployed in our malls with 156 stores and 27 openings since 2013. These brands include Burger King, McDonald's, or more recently, Starbucks and Nespresso. Today, these retailers represent 20% of our retailer sales in the food and beverage segment. In addition, through the ongoing deployment of our destination food concept, we have been expanding new concepts or local heroes such as Vapiano, Big Fernand, or Five Guys. We are committed to extend the food and beverage segment in our malls. To illustrate what I have just said about the three segments, I would like to showcase on the ground the exceptional retail mix transformation of Val d'Europe.
The extension and refurbishment of this mall gave Klépierre the opportunity to modernize the retail offering. As you know, we have added 14,000 sq m of new anchors such as Primark, Zara, H&M, Uniqlo, Nike in their latest formats. This has benefited not only to the fashion segment, it has also benefited to the entire mall. Sales per sq m for the health and beauty segment have increased by 20%. This segment also benefited from the implementation of new brands such as NYX, MAC, and the brand new Sephora concept store. The same goes for food and beverage, where sales per sq m in Val d'Europe are up by 24%. I would like to conclude this section by saying that Klépierre has a unique business profile in Europe for four reasons.
Number one, thanks to our leading pan-European platform, which is positioned in urban areas, which are all growing faster than others in economic and demographic terms. Number two, thanks to the unmatched retail mix I just presented. Number three, in a polarizing retail environment, these two elements allow us to generate high and growing sales per sq m. Number four, thanks to our low level of OCR, we have clear potential to sustain rental income growth going forward, especially keeping in mind the accretive impact of both acquisition and the development pipeline. With this, I'm handing the floor over to Jean-Michel now to present the operating and financial performance of the first half.
Okay. Thank you so much, and good morning, everyone. Let me walk through the operating and financial performance for the first half of 2018. As Jean-Marc told you, the first half has been once again very strong. Net current cash flow increased by 7.8% after a 7.4% increase last year. Looking at the main growth drivers, net rental income rose by 2.4%, mainly driven by a sound 3.2% like-for-like growth for shopping centers. Operating cash flow increased by 2.6%. This is slightly higher than the net rental income growth, as we managed to further reduce our operating expenses, as illustrated by the 50 basis points reduction in our EBITDA cost ratio. The net cost of debt has continued to decline to 1.6%, a 30 basis points reduction compared to the same period last year. The result is a EUR 5.5 million drop in our cost of debt.
Lastly, the reduction in the average number of shares, following our share buyback program, boosted the net current cash flow per share. Looking at the NRI like-for-like growth, we benefited over the first half of 2018 from a higher indexation at 1.2% compared to 0.7% last year. In addition, our outperformance over indexation remains at a very high level of 200 basis points. This is explained by solid leasing spread, further increase in specialty leasing revenues, and vacancy reduction. Lastly, bad debt remains at a very low 1.6%, demonstrating Klépierre leasing policy to focus on healthy international retailers. By geographical area, NRI like-for-like growth by country was quite comparable with last year, with all the geographies posting a positive performance, except for Germany, which was flat. Moving to the next slide. The leasing momentum remains buoyant.
We have let, renewed, or relet 6% of our rent roll during the first half, translating into additional annualized minimum guarantee rents of €19.1 million, slightly above last year's record, which was EUR 18.9 million. For renewed and relet leases, the reversion reached 11.1%, with strong contributions from France, plus 13.8%, benefiting from the renewal campaign at Saint-Lazare, and Spain, plus 24.1%. Reversion in Central Eastern Europe and Turkey was also maintained at a high level, plus 10.4%, sustained by the Czech Republic, notably in Nový Smíchov, with the ongoing Tesco operation, and Hungary. In Germany, the mark to market of our leases is still an ongoing process, mostly at the shopping center of Duisburg and Königsgalerie Duisburg. Through this dynamic leasing activity, vacancy rate kept declining at 3.2%, down 20 basis points year on year. This improvement comes mostly from the Netherlands, Germany, Central Europe, and Turkey.
On this next slide, regarding cost, we continue to streamline our cost base. Looking first at our operating cost, G&A have declined by 2%, which, combined with the net rental income increase, has triggered a 60 to 70 basis points reduction in our EBITDA cost ratio over the past six months or a 300 basis points drop since 2015. Meanwhile, we also reduce our net cost of debt to 1.6% at the end of the first half. The 30 basis point reduction compared with the level one year earlier was driven by recent refinancing initiatives since net debt remained stable year on year. Looking now at the capital allocation for the first half. In terms of CapEx, we invested €177 million over the first six months of the year.
It can be split between development for €115 million, mostly related to Prado, Hoog Catharijne, and Créteil Soleil, and the like-for-like portfolio for €50 million. On the like-for-like portfolio, that is to say, assuming no additional square meter, the spendings include leasing CapEx for approximately 50%, refurbishment for 20%, and technical maintenance for another 25%. These figures are before invoicing to tenants, which represent about one-third of the overall amount. On the disposal side, we sold assets for a total amount of €310 million. As a reminder, €203 million are related to the two malls in Marseille and in Madrid that we sold to Carmila in February. Other assets sold include, notably, a development plot in Germany. Lastly, we continue our share buyback program in the first half.
Since the inception of this program last year, we have repurchased shares for roughly EUR 440 million, including EUR 67 million over the first half. I would like to illustrate now how we allocate our resources. Over the past 12 months, sources and uses of cash have been quite comparable, leading to stable net debt over the period. It is worth to highlight that our net current cash flow more than covers the dividend payment, the CapEx for the existing portfolio, and most of our annual cash out dedicated to the development pipeline. This is another way to say that we do not rely on disposals to finance our current business. In the meantime, the cash proceeds from the disposals are invested in selective acquisition and the share buyback. Overall, through a disciplined financial policy, we are able to improve the quality of both our asset portfolio and our balance sheet.
On a like-for-like basis, the value of our portfolio of shopping malls has increased by 3% over the past 12 months and by 1.4% over the past six months. In a context where yield contraction has been nil, our EPRA net initial yield remains flat at 4.8%. By geographic area, France, Belgium, Italy, Iberia, and the Netherlands have been the most important gross contributors. Central Europe and Turkey decreased by 10% over six months, mostly due to rent adjustments in Turkey related to the depreciation of the Turkish lira. As Jean-Marc mentioned earlier, we are accelerating the evolution of the tenant mix in our malls. This has also boosted the valuation of some of our assets. For instance, Nueva Condomina, plus 11.4% over six months. Field's, plus 5%.
Nový Smíchov, plus 4.5%, Parque das Nações in Portugal, plus 5.4%, and Porta di Roma, plus 5.3. All these malls are benefiting from these recent re-tenanting initiatives. Debt position remains very stable. Over the past 12 months, LTV declined by 100 basis points to 37.2% at end of June, reflecting the flat net debt and the increase in our portfolio valuation. Over the last six months, LTV increased by 40 basis points due to the dividend seasonality. Restated from that impact, our LTV would have reached 36% or 80 basis points contraction. As a reminder, next year we will pay our dividend in two installments instead of one. Overall, the 30.2% loan-to-value remain right in the middle of our midterm target.
Other debt ratios also point to a very healthy financial situation, namely a broadly stable net debt to EBITDA ratio at 8.7 times and pretty high interest cover ratio at 6.8 times. Debt duration was maintained at 6.2 years. After the refinancing last December with a EUR 500 million, 15-year bond issue at a 1.6% coupon, Klépierre has repaid in January a EUR 290 million bond having a 4.625% coupon. Additionally, to continue to optimize its debt structure, Klépierre has renegotiated or contracted new credit revolving facilities as illustrated by these two charts. Overall, this transaction will generate savings for 2018 and 2019 of respectively EUR 0.7 million and EUR 1.2 million while extending the maturity by 1.8 years, 3.4 years if extension options are exercised, because most of these lines are, as you probably know, 5+1+1-year credit facilities.
The group liquidity position is at EUR 2 billion, which covers 2.6 years of debt repayment with an average maturity of 5.1 years versus 4.7 years at end December 2017. After portfolio valuation and debt evolution, let's turn to the EPRA NAV. EPRA NAV per share stood at EUR 39.50 at the end of June 2018. This represents a 6.8% increase compared to June 2017. The main drivers were the strong cash flow generation for EUR 2.6 and the asset revaluation for EUR 1.8, partly offset by 2017 dividend payment for EUR 1.96. Over six months, the EPRA NAV is broadly flat, explained by the impact of the full dividend payment. After optimized default taxes and the change in fair market value of debt and financial instrument, the EPRA triple net NAV is at EUR 37.80 per share, up 7.1% year-on-year.
I would like to share with you the evolution of our net current cash flow per share in connection with our leverage. Over the past three years, we have been able to grow our cash flow per share by 6.6% annually. All in all, that is to say, including acquisition, disposal, et cetera. Meanwhile, net debt has been stable, leading to a declining LTV, a unique performance in the sector. I hand over to Jean-Marc for the update on our development projects.
Thank you very much for this, Jean-Michel. On the development, we will just remind you that our development pipeline is about EUR 2.9 billion. As you know, it's also very focused on extension as we seen a reluctance from the retailers to go for larger greenfield project. We also consider that this is a better risk/reward strategy for our shareholders, to focus on extension. Moving to Hoog Catharijne, a very quick update. We will finish the project at the end of 2019. There is still 28,000 square meters of additional retail to be open by that time. 82% of it is already leased, and we expect the footfall to increase from EUR 27 million to EUR 34 million. Moving to Créteil, we have started the extension and the renovation of Créteil. This is a EUR 134 million investment with a 5.7% yield on cost, which includes the renovation cost.
We will add 11,000 square meters, making a straight connection to the subway, and we will add 3,000 square meters of restaurants. As we speak today, 57% is already pre-let or in advanced negotiation. We have not started the next two projects. I'm going to go through very quickly, but just to give you a sense of what extensions means for Klépierre. Going to Odysseum, this is in Montpellier. Montpellier, this scheme retail destination is more than 100,000 square meters. What you can see is in blue, we are going to do a future extension on an existing plot with large fashion retailers and more boutiques and restaurants. This is probably to be launched soon with an opening targeted for 2021. Odysseum, this is a EUR 400 million property in Klépierre. Grenoble Grand Place, same strategy.
This is a large scheme, more than 80,000 square meters, a very large retail destination in France. We are going to extend also by 16,000 square meters. The total value of the asset is EUR 370 million, and we will have a large fashion anchor, which is already leased, and the food area will be increased by 3,000 square meters. We will also refurbish the center. Now moving to the outlook. As we started with, we have decided to increase our guidance to at least EUR 2.62 cash flow per share. Now maybe we can leave time for questions, and Jean-Michel and myself are pleased to answer to them.
Okay. Ladies and gentlemen, if you wish to ask a question, please dial zero and one on your telephone keypad. We have the first question from Jonathan Kownator from Goldman Sachs. Sir, please go ahead.
Good morning. Thanks for the presentation. I have three questions please, if I may. The first one on vacancy. Do you expect that from the 3.2% that you have at this stage, do you expect this rate to go down still, or is that rate level at which you feel that this is the structural vacancy, is the remainder of the vacancy? First question. Second, interest cost, we've seen it's gone down again. Have we reached the bottom at this stage or do you still expect some opportunities to reduce that further? The third question please, on valuations. The rate has marginally come down at this stage. Obviously, the investments in shopping centers, in France and in Europe, some of the centers have come down quite a bit. How are your conversations going with the valuers about the yield? At this stage, they broadly remain flat.
Do you expect that to continue, in the near future, or do you see a bit more pressure from the valuers and more heated questions coming on that point? Thank you.
Thank you, Jonathan, for your three questions. I will start by the first one. The vacancy level, it's always a target for us to reduce it a little bit more. I always had a target to be a little bit below 3%. Vacancy, the way we see it, there is 2 type of vacancy. There is vacancy, some of it is structural and it's difficult to reduce. Some allow us to do the relevant tenanting. To a certain extent, we need to have a certain buffer of vacant premises in our best malls to accelerate tenanting. In a nutshell, I think being around 3%, that's our target. For the interest cost, maybe, Jean-Michel?
Well, for interest cost, for the end of the year, we clearly expect the cost of debt to go to 1.5%. After, we don't know because we don't have major refinancing to come next year as you have seen in our maturity schedule. That make that it will depend, of course, from interest rates in the next two years, which is not easy to predict. For the time being, it's for sure that we will go at least to 1.5 at year-end.
Okay. Valuations?
Well, on valuation, We haven't been challenged too much, I have to say, by valuers regarding yields and so on. They still view the shopping center market for the quality of assets we have in our portfolio as benefiting from, it's difficult to say a strong demand, because we have seen quite few transactions during the first half. They remain quite confident on the fact that the yields are stable, at least, for the best asset. Even if we have improved yields for the second year in a row, I have to say, in Italy, and we have collected some yields on more secondary asset in France. All in all, as you have seen, our net initial yield is flat at 4.8%. No question there.
Sure. Obviously, as you're saying, you increased the yields on a few properties. Does the lack of liquidity indicates there's a mismatch between supply and demand at this stage, and investors are no longer ready to be for these yields? Obviously, in the U.K. is a different context, but we are seeing adjustments in yields at this stage in the repricing for U.K. shopping centers. Are we just one year behind in France? Do you feel that, the investment market, for instance, will resume and we'll continue to see transactions at the current yield levels? For instance, perhaps if you could comment on your disposal program and do you see appetite in the market if you want to sell any asset?
Okay, there is a lot of questions in one. I think it's clear that the investment market is not that great. We have seen a lot of transaction, but we don't have the Q2 numbers, but we expect the investment numbers to be lower than the previous years. I think the fact that we are a pan-European actor, and that we can play on a different investment market. I would say today, to characterize, the French market is almost quiet. We don't see a lot of transaction, but we have been able to do two transaction above book value at the beginning of the year. All our transactions are made above sale. Disposals are made above or around book value. We are still confident that our disposal strategy will meet the book value.
We are selling assets a little bit everywhere, we are much more able than some other players to dispose, because we are not exposed to only one or two investment market that can close for six months or for a year and reopen after. I'm still confident that when we put assets for sale at Klépierre, we have appetite, and we don't see a risk for the values to go down.
Okay, thank you.
Okay, thank you. Next question from Charles Boissier from UBS. Sir, please go ahead.
Yes, good morning. I have two questions, if I may. The first one is, you compete with Unibail in quite a few catchments, like Paris, Madrid. I just was wondering, as they change scale with the Westfield acquisition, do you see that potentially affecting your bargaining position to attract international retailers in your malls going forward? Do you think that's totally irrelevant and neutral to your own bargaining position? Secondly, on the negative revaluation in Turkey and Poland, how much of that is Forex related? Thank you.
Okay. Your question about some of our peers, we don't comment publicly on what they are doing. I think, if I may say, yes, this is irrelevant. For Turkey, we have seen a decrease in value, maybe Jean will tell you-
I think we have to look for the figure. We will come back to you, Charles, on this, if you don't mind. Give us a few minutes.
Okay, sure. Thank you.
We will answer to that question specifically.
We'll come back on it, yeah.
We have less than EUR 500 million invested in Turkey, so even if it is 10%, that's still a very moderate number.
Yeah. In Poland as well, I was asking.
Poland, we'll give you the number in a few minutes. Maybe we can move to the next question until we find the right answer.
We have a question from Florent Laroche-Joubert. Joubert, it's over to you, sir.
Good morning, Florent Laroche-Joubert. Joubert. I have two questions. The first on Germany. We can see growth on a like-for-like basis of 0% and a negative reversion of 4.6%. I just wanted to know what we can expect. We understood that you're working on this. My second question is about the cost of debt. We've understood that it should be in the region of 1.5% at the end of the year. Have you implemented a hedging policy for rising interest rates?
Moving to Germany. We acquired Germany through the merger with Corio back in 2015. The narrative about Germany has not changed. Those properties were a little bit over-rented, we are re-tenanting to better tenants. The reversion is negative, but this is compensated by higher occupancy, saving in cost. I think we are quite fortunate to see the NRI flat, with a moderate negative reversion. We have three big assets in Germany. Duisburg, most of the releasing campaign after 10 years, have been achieved, and the next challenges would be for Dresden and Berlin, but we are well on track. I think the narrative has not changed. This is a property we are really taking care of. We are releasing. We opened two flagship stores with Zara, which is a good sign that the international retailers have appetite for those assets.
We will probably continue to see negative reversion, but more or less stable NRI.
On hedging, I think, good one. Actually, the general policy of Klépierre is to be 70% in fixed rate, but it is fair that we can adapt this general policy also in consideration of the interest rate timing. For now, one year, we have managed to raise this hedging ratio to 95%, at least for the next three years. That is to say that we have taken three years, mostly caps, in order to manage that if interest rates are going up, we can enter into the atmosphere gradually. That is to say that for the next three years, we are almost immune from an interest rate increase at that stable, obviously. If I may come back on the question of Charles, because I do have the answer, and quite rapidly.
On Turkey, most of the change actually on a like-for-like basis is related to Forex, and it makes about EUR 38 million due to the depreciation of the Turkish lira. For Poland, it is about EUR 10 million. I think we can go to the next question.
Okay. Next question from Madam Ariane Kleber from Kina. Please go ahead.
Good morning. It is Ariane Kleber, K-L-E-B-E-R. We are an independent research firm, I have three questions. First of all, what do you see in relevant demographic trends across Europe that you are using to optimize the portfolio?
For this question, as you know, the old Europe has a declining demography, but the big cities are getting bigger and more populated. That's the reason why we have targeted our strategy to be in those cities, which the vast majority of them are growing quite fast. We are very happy with that strategy because I think the retail is always, we never have to forget that, always a function of the number of people or more.
Okay. My second question is about e-commerce, and my question is how do you anticipate further increases? Do you see strong regional differences in the growth of e-commerce? Maybe also a comment about the difference in e-commerce on groceries and non-groceries.
Yes, it's not a prediction. I think this is what everybody can see clearly. E-commerce is growing in Europe at a pace of around 15% a year. Some of the countries are well-equipped or well penetrated by internet, some are less. Looking at the U.K., this is probably the highest, and then you have France, and then at the very bottom, you have Spain, Italy, due to infrastructure, and those countries are growing at a pace of where internet is growing more than double digits, starting with a two. When you look at the U.K., for example, the growth from a year to another for e-commerce is only 8%. There is a trend, I cannot predict for sure, but there is a trend that the e-commerce is growing fast to 20% in terms of retail penetration, and it has an impact on all the segments.
For our retailers, it clearly means that they need less stores, but they need more relevant stores, bigger stores where they can showcase their brands. They favor, clearly, the big shopping centers dominant in the catchment area. To the expense of high street, secondary high street. We are, to a certain extent, benefiting from the increase of internet when we see our occupancy. That's what I can say. On grocery, this is where the penetration rate is the lowest. There is a lot of debates about where it could go. I think there is a big issue about logistic and technology for the fresh food and goods to be on internet. I expect this segment also to be impacted in the future quite significantly.
Okay. Thank you. Then my final question is about your French convenience centers. Do you expect further arbitrage, or do you plan further arbitrage of that portfolio?
I think that is on the newspaper yesterday, today, and the day after, there are so many people who are forced to sell. We are not in that situation. We have a portfolio which we think is relevant in the catchment area. The shopping centers you are referring to are doing extremely well. They have high sales. They are growing in terms of retailer sales and NRI. We have a very strong portfolio, and we are a little bit confused when it comes to now segment about it. We are satisfied by it. We are clearly, over time, financing our pipeline and continuing constantly to downsize our number of assets. This we have started this year, the year before. We will continue, obviously, to sell assets a little bit everywhere.
Okay. Thank you very much.
Thank you. Next question from Celine Yoon from Barclays. Madam, please go ahead.
Good morning. Thank you very much for taking my questions. I have three questions. The first one is, can you comment on why exactly you upgraded the cash flow guidance for full year 2018? The second is a follow-up question on the disposal. Are you planning to accelerate the disposal on the secondary small assets in the second half of the year? What sort of discount or premium do you see out there for these assets? Third question, can you give us the latest on the U.K.? Have the U.K. companies' recent result made you feel more or less enthusiastic about this market?
Maybe I take the first one on the guidance. I think, well, it's quite obvious that we have delivered EUR 1.31 per share in the first half, and we don't see it going lower in the second half. That make that we are already at EUR 2.62. I think this is best and shortest answer I can give you.
When it comes to the disposal, the question comes almost every time we meet. I think the last time we discussed officially presenting our annual results, we said that we have a target for 2018 between EUR 400 million and EUR 600 million of disposals. We are almost at the bottom of the target, and we will probably be in the middle of the target or slightly higher by the end of the year. We continue to do the job. I think it's important to refer to the Jean-Michel presentation about uses and sources. Our discipline allow us to dispose assets in very good conditions when the investment market are open, and that's why we reach our book value. This discipline, I will think, will pay off short-term, medium-term, and long-term. When it comes to the U.K., we have no comment.
Okay, thank you.
Thank you. Now last question from [Jacques Koen from ING]. Sir, please go ahead.
Yeah, hi, good morning. First question on basically the setup of shops. Two of your peers have commented on larger retail units. One of them said that they have problem leasing up larger units, and that's specific to Belgium. Then a U.K. peer has commented that larger units saw a higher decrease in appraisal ERVs. Could you maybe comment on what's happening to larger units in your portfolio, and if you recognize these statements? Thanks.
I have to be honest, I don't have the answer to the question. I think there are so many different landscape when it come to retail in continental Europe that it's difficult for me to opine on Belgium and the U.K. I think the main difference between the U.K. and us, it's when it comes to department stores. The same happened to the U.S. All these big boxes, which are exceeding 20,000 sq m or even 30,000 sq m, they need to be released and sooner than later. That's a challenge we don't have. When it comes to a medium size unit, as we can see, we see the large operators in fashion With a trend to enlarge their stores. We have a great demand from all of them to expand and to increase the size.
Just as a sign, if you look at the largest fashion retailers, the Primark are taking bigger space. The H&M are taking bigger space. The Zara are taking bigger space. The Kiabi are taking bigger space. The OVS. The list can be very long. I think there is clearly the polarization of retail to the best shopping center in their catchment area, comes with an enlargement of some of the large retailers in their segment. In other segment, we can see downsizing. It comes to electronic, to culture. There are more downsizing than enlarging. Our job is to manage all of this, and I think we are doing quite pretty well.
Okay, thanks. Finally, on the sources and uses slide in your presentation, you split out the CapEx, EUR 104 million on like-for-likes. Could you just comment on the kind of return you're expecting on that like-for-like CapEx which is shown there?
I think we have received requests from analysts and shareholders to be more transparent about the CapEx. That's what we are doing here. When the like-for-like CapEx on the EUR 104, I think we should dig into more details, which probably we will not do today, but in the next release. In those numbers, we have three numbers. We have the sum of the renovation cost. We have also maintenance CapEx. Those costs, renovation and maintenance CapEx, they are mainly reinvoiced to tenants. Here we show the gross amount. We have leasing CapEx, which is a portion of it, where in fact, when re-tenanting comes, there are two items into it. The cost that we have to spend as a landlord to sometimes reunify units or doing some works to prepare the premises.
The fitting-out contribution we may have to grant to some of the junior anchor. That's something which is explained on page 35 of our-
Management report.
management report. I invite you to go on that page and to see in more details the numbers.
Okay, thank you. Would you say that the
That's a pretty low number. In fact, 104, I think for a company of our size. We are, we have been, and we will stay very disciplined when it comes to CapEx. I think the core of the business is not to spend CapEx, it's to do the right re-tenanting, okay? When you see for a company like us, the like-for-like is really strong ROIs, and the CapEx associated, which is only a portion of that amount, to releasing CapEx, is very marginal. I think the way we manage the company is to be very careful about the CapEx we spend.
Okay, great. You would say that within that number, and then obviously we'll wait for further details, but the releasing CapEx is definitely, it's a smaller part of that number?
50% of the EUR 50 million we have into this, yeah.
Okay, great. Thank you.
Yeah.
Okay, we don't have any question for the moment. Ladies and gentlemen, let me remind you that if you wish to ask a question, you have to dial zero.
Thank you very much for attending the call. We did it by phone. I hope the technology was okay. On our side, it was okay. On the agenda of the company, it's October the 15th and the 16th, we will organize investor days in Amsterdam/Utrecht to tour our Hoog Catharijne redevelopment project. October 22, we will announce the third quarter business review of 2018. Thank you very much for attending, and we wish you an excellent day.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.