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Operator: Hello, and welcome to Gecina 2025 Full Year Earnings Conference Call. [Operator Instructions] Today, we have Benat Ortega, CEO; and Nicolas Dutreuil, Deputy CEO in charge of Finance as our presenters. I will now hand you over to your host, Benat Ortega, to begin today's conference. Thank you.
Benat Ortega: Good morning, everyone. It's a pleasure to be with you to share our results for 2025 with a clear outperformance in terms of operational excellence and agile and proactive investment activity. I won't dive into the details just now, but the message behind these highlights is simple. In a long-term industry like real estate, we've been demonstrating our ability to grow steadily, constantly and meaningfully over time. As we may see through our results, Gecina is not a pure proxy for the Paris region office market. Our differentiation lies in the products we deliver designed for today's needs and built to anticipate tomorrow's. This is how we keep our portfolio, firmly positioned in a segment where true quality is scarce and demand remains solid. The situation regarding office attendance was stronger in Paris than other cities following COVID and current trends shows that the return to the office is even more real now. Over the past year, many more corporates have taken firm positions well beyond the early movers from 2023 and 2024. We are now converging towards a standard of roughly 4 days a week in the office. This has a positive consequence on corporate decisions. The number of companies taking the same surface of more are now a vast majority, 2/3, while it used to be only 1/3 3 years ago. And when the objective is to attract and retain talent, the equation is simple, reduce committing time by being located in the central areas and on major transportation hubs and offer a workplace experience that generally feels better than home. With insights from more than 500 companies using our spaces every day, we design products that mirror how corporates truly operate. Large organizations want destination assets for their head office. Yet supply is far more limited than people think. Offices above 3,000 square meters represented only 15% of deliveries over the past decade within Paris City. That's why we put such emphasis on delivering these large-scale projects in Paris and Neuilly on their design and adaptability also. Workforces evolve and our spaces have to evolve with them. We complement this with a full suite of services, some shared other privatized. And we bring real intensity to energy performance, building highly efficient assets and working closely with clients to ensure consumption reductions last over time. Smaller businesses often lack dedicated real estate teams internally. They want to stay focused on their core business, work in a space that feels like their own, especially protect confidentiality, better than shared offices in co-working buildings and deal with a single point of contact and a single invoice. We created a fully managed office, offer precisely to meet these needs. What sets us apart is that we own our assets, ensuring them the right quality and services on the long run. Let's now turn to our 2025 performance in figures. Hundreds of leases offers negotiation, delivering nearly 120 leases doubling 2024 pace in square meters let. It gives us real visibility on our future cash flow with EUR 86 million in annual rents secured on firm terms of over 6 years. A positive factor also is that we've been securing 75,000 square meters of leases that were due to mature in '25, '26 or '27. Yourplace, our fully managed office offering, captures exactly how the market is changing on small and mid surfaces. We are achieving rents around 40% above market levels because we deliver a truly distinctive product. The market is clearly willing to pay more for better design, better services and more flexibility. And the momentum on the residential side is also strong. Over 1,700 leases were signed, 3x what we did last year with an acceleration throughout the year, a clear signal that our diversified service-enhanced furnished housing offer meets a real and growing need. All this is driving solid rental growth, plus 3.8% like-for-like with 2.6 points from indexation and more than 1 point from pure business performance, either rental uplifts or better occupancy, particularly in CBD offices and our residential portfolio. And let me pause on the 2.6% growth on current basis, our organic growth more than offsets the impact of portfolio rotation where we have been very active to improve medium-term cash flows. On top of our leasing velocity, we have continuously activated all drivers to grow our cash flow. Revenues have grown consistently, more than EUR 100 million added since 2021. And we've kept costs tight. Lower property costs lifted rental margins and G&A is down 4% year-on-year. Since 2021, our cost ratio has improved by 270 bps, and I'll come to financial cost management later. The results, EBITDA and recurring net income are up again this year with earnings and earnings per share rising by more than 4%. Since 2021, those metrics are up nearly 25%. On valuation, our portfolio is up 2.3% since year-end 2024 on the like-for-like basis. Here again, we see market bifurcation at play. In central areas, values are rising, supported by a reopening of the investment market with transaction volumes up 54% and a stronger rental dynamics in Paris and Neuilly. As outside Paris, values continue to adjust in line with softer investment activity, while rent adjustments help secure occupancy. Let's turn to CSR. We are clearly early leaders in energy efficiency and carbon reduction, setting our first trajectory back in 2008. For us, this isn't a list of targets. It's a mindset. It's a conviction about how we run the business. Our strategy is simple, effective. First, before spending a euro of CapEx, our engineering teams and carbon managers work with clients to monitor and optimize on-site consumption. Then we switch to decarbonize energy whenever possible. And finally, we invest where it creates the most impact. This approach delivers. Since 2019, we've cut energy consumption by 33% and carbon emission by 63%. Our monitoring is fully data-driven. We track temperatures in real time and continuously fine-tune cooling and heating. And it matters. Every 1-degree adjustment delivers roughly 7% energy savings. Thanks to this unique data set on more than 100 assets, we are currently deploying new AI initiatives in dozens of buildings to sustain our targets. One example at 144 Haussmann, a classic Haussmannian building typically harder to optimize than new generation assets, this approach cuts energy consumption by 25% in just 1 year. Now let's just take a step back and look at how active we've been in capital allocation, not just in 2025, but consistently over the past 5 years. We have been disciplined and deliberate in capital allocation. Over 5 years, nearly EUR 3 billion of assets have been disposed, first to support our 2022 and 2024 deleveraging. It secured a strong loan-to-value to reopen our investment capacities. We then recycled more capital into higher-yielding acquisition and a development pipeline delivering double-digit return on invested CapEx. On disposals, our timing has been highly tactical. We've consistently crystallized value by reading market momentum early, creating competition and selling under the best conditions. Over 5 years, it's roughly again EUR 3 billion of disposals. We first benefited from a strong appetite for figuring the assets to divest properties outside Paris a few years ago. Later in the cycle, peak year compression on core assets enabled us to lock in full value on some mature office and retail assets. And then we accelerated residential disposals, capturing strong appetite demand for operated housing and living platforms with EUR 800 million of mature residential assets sold in 2025 alone, including the student housing portfolio. And we continue in that journey as I'm pleased to inform you that we have already secured EUR 200 million of additional disposals at end 2025, expected to close early 2026. In '25, part of these proceeds was swiftly reinvested in acquisitions that were very appealing, both in terms of location and return on equity. This year, we deployed EUR 600 million that should deliver double-digit IRRs above our cost of capital even at current share price and more than 2/3 of these assets are already let or under term sheet. The rent secured or potential represents the equivalent of 10% of the group's office rental income in Paris and Neuilly. And none of this happens by accident, execution is everything. And we've proven that we are credible committed buyers, leveraging in-house expertise, deal enabling solutions such as past asset swaps and our capacity to pay cash, limiting competition to get appealing deals. Over the years, we've been also very active in recycling disposal proceeds into complex redevelopment operations, nearly EUR 1.3 billion since 2021. This has allowed us to reposition 25% of our office portfolio and more than half of it over the past decade. It's been a major driver for both revenue growth and value creation. We now have 4 flagship projects underway to fund with EUR 430 million still to invest at double-digit yields on CapEx. Once fully let, these projects are expected to generate between EUR 80 million to EUR 90 million of annual rent. 2025 has also been a pivotal year in preparing the future of T1 Tower in La D�fense. Building on the tower's strong fundamentals, including high-quality, efficient floor place, high ceiling heights, our goal is to reposition T1 at the upper end of that market. That means creating a true prime asset, enhancing services, redesigning signature spaces such as the main lobby and converting it into a multi-let tower to capture today's most dynamic demand, the mid-segment. The market at La D�fense is constructive. La D�fense has shown real dynamism in recent years. Demand for prime office remains strong. And with new supply expected to tighten once the current available space are absorbed by mid-'27, the project should benefit from favorable supply-demand conditions. On the financing side, the strength of our credit profile was once again confirmed by a best-in-class A- rating. It's been the eighth consecutive year. This translates directly into better financing conditions than others. Our July 2025 bond showed it clearly, oversubscribed 7x with a tight 85 bps spread. Preparing the future is a core commitment for us and hedging is a critical part of it. A clear indicator of how strong our position is, is the mark-to-market of our fixed rate debt, simply put the gap between what we pay actually today and what we have to pay without hedging. At the end of 2025, as an equivalent, this figure stood at EUR 485 million. As an equivalent to net debt, this is more than 2x better than the average of our Continental Europe peers. It reflects both the volume of debt we hedge and the attractive levels at which it is hedged. We believe it's a significant competitive advantage against our peers and should give us visibility on future financial expenses and ensure a smoother, more manageable normalization. Let's turn now to the future. Based on the solid performance of 2025, we will propose to the General Shareholders Meeting a dividend of EUR 5.5 per share. This is exactly why we focus on rent growth and cost efficiency. On the second -- for the second year in a row, we will propose to the next general assembly to increase the dividend. I'll come back to this in a moment. This reflects a strong 7% yield on the current share price with a sustainable 82% payout ratio. In 2026, we expect indexation to be very low, no surprise there. We also expect the market bifurcation to continue, supporting rental uplifts in central locations and requiring further rent adjustment elsewhere to retain tenants. Paris CBD and Paris City, La D�fense, Boulogne will maintain the same focus in every submarket. Rents from our 2025 deliveries and acquisition will also contribute to growth and we will maintain a strict cost discipline. Consequently, we plan to continue to grow recurring net income to between EUR 6.7 and EUR 6.75 per share. Looking ahead to our next cycle of growth, I see 3 key moments. 2027, we will prepare for what comes next. The key building blocks are coming together as we work today to deliver and lease our 4 major pipeline projects. This will progressively offset the rent impact from ENGIE's departure from T1 Tower. In 2028, we will unlock growth. The pipeline will reach full speed. T1 will be progressively relet. Both indexation and occupancy are expected to normalize around that horizon. And in 2029, we accelerate. Across the entire period, future rental income provides clear visibility on medium-term growth in terms of recurring net income per share. And in this context, obviously, everything being equal, we expect the company's dividend to gradually increase over the coming years from 2026 to 2030. And finally, this growth must be sustainable, and we are raising the bar for our 2030 targets. The bar is high, but we've learned a lot in the past years, and we want to challenge ourselves while staying realistic, pragmatic and contribute to the energy transition in the city where we operate. We'll go further on carbon reduction below 5.5 kilograms of CO2 per square meter with a plan to offset residual emissions on the operating portfolio. And obviously, we'll deliver net zero assets across the development pipeline. We also aim to reduce energy consumption and meet stricter performance targets on the new developments. And we want all of this to be independently certified with continuous improvement of our certification levels over time. Thank you for your attention, and now we are happy to take your questions.
Operator: [Operator Instructions] The next question comes from Veronique Meertens from Van Lanschot Kempen.
Veronique Meertens: Three questions from my side, and I'll ask them one by one. Maybe can you elaborate a bit what's your view towards the breaks in the non-Paris office portfolio that you're seeing in '26 and '27? Are there already discussions ongoing? And what is the negative reversion that you now take into account for these sort of leases?
Benat Ortega: To be fair, no major breaks in '27, except the ENGIE that we have talked about a lot. And therefore, no significant reversion, negative reversion in those locations. We have -- like I said, we have been renewing a lot of leases from those years in '25. So nothing specific to say there.
Veronique Meertens: Okay. And maybe one question on CapEx, maintenance CapEx. So I see on your Slide 46 that the maintenance CapEx has increased every year. And I think in '25, you're even reaching almost EUR 150 million, but still you mentioned that you expect a run rate of EUR 85 million to EUR 95 million. So I was wondering, it's obviously one of the key worries for investors for offices that maintenance CapEx is going up. What's your view is towards that and why you expect it to actually come down again?
Benat Ortega: Yes. We have a specific situation on the residential side where, in fact, we have some aging buildings that we need to -- especially on energy efficiency to reshape a bit the facade. So we have like since last year, but we still have probably 2 years or 3 years of refurbishing a bit those assets. So that's why it's somehow a bit temporary to catch up with those residential assets.
Veronique Meertens: So in terms of offices, do you not foresee a trend that offices -- the maintenance CapEx is going up?
Benat Ortega: No. Specifically no, it's really a catch-up on the resi side.
Veronique Meertens: Okay. That's clear. And then maybe my last question is, so despite execution on, I think, some interesting capital recycling transactions, your share price, I guess, reveals that shareholders might not fully agree with either the strategy or the capital allocation decisions. And I appreciate that, obviously, it's a topic that's been discussed a lot, a share buyback. And historically, you've always said that as long as you can find more interesting opportunities in the market from a yield perspective, you should go for that. But taking also now your dividend yield of 7% into account, when I do the numbers, you can still sell even your higher-yielding assets, make it leverage neutral and still do a very accretive share buyback. So can you maybe take us along your line of thinking of that capital allocation decisions and how you're going to view that towards the future?
Benat Ortega: I think -- like I said, I think capital allocation is trying to make a triangle between portfolio quality, future cash flow and return on equity. And therefore, we -- like I showed on this slide, we've been quite active on disposals. If we think there is no growth and the return on equity is lower than our cost of capital, we dispose. So we have been, I think, among the only one to dispose EUR 3 billion of assets over a short period of time. And the second is us to use those proceeds. And that's where we look always at the cost of capital. And if we find alternatives and opportunities in the markets where we are, where investment money is scarce, then if we get more than 10% IRRs unlevered, then we go for them. And like I said earlier, share buybacks are a tool to allocate capital. It's one of the tools for the -- in 2025, we have been very happy to find opportunities where we could generate a lot of value and at the same time, improving the average quality of our portfolio. So that's what we have done in 2025.
Operator: The next question comes from Florent Laroche-Joubert from ODDO BHF.
Florent Laroche-Joubert: So I would have 3 questions, if I may, so -- and I can ask one by one. My first question would be on your dividend policy, your new dividend policy. So what could be the reasonable assumption that we can take into account in terms of gradual growth and maybe in terms of payout ratio for the dividend for the next years?
Benat Ortega: In fact, 2 questions within one. The first one is payout Obviously, medium term, and I've been quite clear on that, we want to be in the range of 80% to 85% medium term. That's a way to sustain through our recurring cash flow, the dividend and the maintenance CapEx, which are supposed to decline over time. So that's one. And second, obviously, the growth will depend upon the speed of leasing both our pipeline and T1. So that's why we have been shy on the rhythm of growing the dividend, but it was to show that we are pretty confident in the medium term to lease those properties and that should drive the future dividend policy.
Florent Laroche-Joubert: Maybe my second question, so in terms of capital and investment opportunities. So how do you think you are able still in 2026? And what is your appetite to find some new investment opportunities at least above your cost of equity or with the IRR very significant?
Benat Ortega: Listen, our team's investment -- we are very focused on the Parisian market. So we track and follow all transactions. For 100 transactions we look at, we strike one. So like you saw last year. So our duty is to look for those opportunities to create value. And obviously, it has to be accretive both in terms of earnings, but also in terms of capital. So that's what we do on a daily basis. That's our duty, and that's the business of anticipating what might come, it's not easy. But obviously, we are very dedicated to try to create value for our shareholders.
Florent Laroche-Joubert: Okay. And maybe my last question maybe on artificial intelligence. So have you discussed about the impact that we can have potentially on your different tenants? And have you discussed with them on how they could change the strategy for the future offices?
Benat Ortega: Sure. It's a topic we discuss with our clients. I think we have said in 2 ways to look at it. First, we saw a significant tech demand in Paris. We are lucky to train a lot of excellent engineers. France is specifically very good at math. So we have seen most of the big tech taking more square meters than hiring people inside the city of Paris. And that's obviously companies which are looking for centrality. You saw that Mistral just took a big -- it was not in our building, but just took a big building in Paris, but we have seen also Google last year and most of the big tech, Datadog has just signed a big lease next to Madeleine. So we see quite a decent appetite from tech companies growing their footprint in Paris because of the pool of talent. And the second, obviously, we might see, but it will be probably gradual an optimization of some jobs. Clearly, if you look at the newspapers and that's obvious, the view for us is that it will concentrate the demand for the best because the ones that will sustain, in fact, their growth through the AI transformation will seek for centrality.
Operator: The next question comes from Jonathan Kownator from GS.
Jonathan Kownator: Three questions, if I may, maybe one by one. Can you highlight how you expect the occupancy to change going forward? You said you've done a lot of leasing already in 2025 on some of these outside areas. And if you can focus actually specifically also on office versus residential with spot numbers? And the second question, but related is what's happening with T1B in terms of leasing at this stage, please? And I've got one more after that.
Benat Ortega: Okay. In terms of occupancy, obviously, it fluctuates depending on who leaves and who comes. We see, like you saw quite an increase in occupancy in CBD, the whole Paris, by the way. We have progressive leasing in Boulogne. So it should go up and down, but we see we have signed already 2 leases during the first weeks of 2026. So progressively, we should see a gradual improvement in Boulogne, but it's a long journey. And on the residential side, I think the average occupancy this year was like 94% and we -- and because of the active leasing during H2, the spot vacancy in '25 is like 96.4%. So we should see an improvement in the average occupancy in '26 against '25 on the residential segment. Regarding T1, ENGIE is leaving in April. We will start renovation. We already have some leads because, in fact, if you try to find 20,000 square meters, good quality brand new, there is not so many offers in La D�fense. But obviously, it's a -- the tower will be delivered probably mid-'28. So we still have time. But yes, we still have -- we already start to have some leads on T1.
Jonathan Kownator: Sorry, just to clarify, you have already some leases signed?
Benat Ortega: No, leads. Early conversations.
Jonathan Kownator: Okay. Early conversations. Okay. Okay. And the spot occupancy in office, are you able to give us that? I think you've given a meter in resi, but not in office.
Benat Ortega: Spot occupancy a bit more than 94%, I think it's pretty flattish.
Jonathan Kownator: Okay. And the next question is really on EPS growth. And ultimately, I mean, obviously, you talk about IRR, some of the projects that you're investing have a longer lead time. Do you see acquisition opportunities like one that you did last year more immediately accretive? Or are you looking at your IRR on a long-term basis, i.e., I think one of the questions around investors has been on the growth path of EPS. Ultimately, how are you expecting to drive that going forward? And do you have a target?
Benat Ortega: We try to do both, which is being accretive and short term and medium term. So like I said, we are looking at IRRs, so the cost of capital and the contribution to our cash flow. And that's what drives our investment decisions. So like you saw what we did in '25. In fact, we have bought Solstice now named Signature, which had 1 year and a bit of renovation, so pretty short in terms of delivering rents potentially. And we bought Bloom, which was immediately accretive. So yes, we try to balance both to generate long-term and value creation, but also short-term accretion.
Jonathan Kownator: Okay. And do you see more opportunities like that in the market? Or are there more long-term redevelopment that you're looking at this stage?
Benat Ortega: We are looking at a lot of situations. I won't comment on it. So far, nothing specific.
Operator: The next question comes from St�phanie Dossmann from Jefferies.
Stephanie Dossmann: I will have, yes, maybe 3 questions from my side. I will ask them one by one. To follow up on the acquisition opportunities, would you contemplate opportunities abroad, for instance? The London office market looks more attractive currently. So I was wondering a bit of what is your appetite of growing the platform abroad?
Benat Ortega: So far, not really. I think buying -- we are an operating company. So buying one asset would need to be the full team to generate, in fact, what we are capable to generate in Paris. We need the local knowledge. So we are not really looking at a single acquisition of growth.
Stephanie Dossmann: And what about not single, I mean platform?
Benat Ortega: Well, I never like to comment on M&A. I think the best way to never do M&A is to comment M&A. Same on acquisition. Our duty is to monitor situation and to see if we can find an accretive deal for our shareholders. Nothing more to comment on it.
Stephanie Dossmann: Fair enough. Second question is related to your guidance, and I was wondering what is included on top of your annualized rent roll of EUR 78 million in terms of either relettings, acquisitions and especially net financial expenses and including capitalized interest, how do you see those going forward?
Benat Ortega: We have not -- we never budget any acquisitions because it's the best way to burn the cash and not being financially savvy. So we don't budget any acquisitions in our budget nor this year, but neither the year before. And in terms of financial costs, as you might have seen, we are pretty well hedged for 2026 and capitalized interest go with the CapEx. So when we spend EUR 1 of CapEx, we capitalize the cost of debt attached to that CapEx. So it's pretty homogeneous against we did last year and the year before. There's no change there. It's really along the CapEx spending program.
Stephanie Dossmann: All right. And what -- in other words, what is the difference between the low end and the high end of the range?
Benat Ortega: It's really a series of small assumptions, but mainly, in fact, if we can deliver, like I said, a better occupancy on the resi, some leases on the office side and ideally, an even better performance and a better speed of execution on the operated offices. You know that the operated offices are delivering significant uplifts in rents, but it depends upon tenants leaving our space before we can re-lease them. So most of them is small surface. So we get the notices 3 or 6 months in advance. So if we receive a bit more, then we will have better uplifts and therefore, a better cash flow next year. So -- but it's a lot of small moving pieces.
Stephanie Dossmann: All right. And the last one, as you touched upon reversion. I was wondering why it's not declining, while the market rents are decreasing on average, let's say, something like minus 5% in the effective rents in the CBD currently. So why your reversion is still so sound, I would say?
Benat Ortega: I will do a self-promotion. I referred to it at the early stage of our presentation. Our duty as a company is to deliver distinctive products, which differentiates from the overall market. So that's why we have taken the view that we had basically in Paris 2 kind of clients that had different needs. One, which is for the large head office, they need efficient buildings with large floor plates. So that was typically the rationale for Mondo. That's typically the rationale for Signature, the former Solstice we bought in July, which is offering them efficient way to work together. Obviously, if you are large tenants, you don't want to be split in 10 floors if you can be in only floor. So delivering those large-scale programs is a way for us to address what the head office needs. And on the other side, we see a more need for flexibility, but keeping the premiumness. So we have lawyers. We have some executive teams from large corporates, which are on the outskirts. We see new tech companies, but those guys don't have any real estate teams. So we deliver them, in fact, a product where they just come with their desk, with their laptop, and they can use the space while keeping confidentiality. So they are in their own space, but they don't have the hassle to manage all the real estate expertise, taking a maintenance contract and managing coffee and taking the cleaning contract and having to buy the logo at the entrance of the office and hiring the reception needs and so on. So we take care of all that so that they can dedicate the energy on their own business and not on real estate. And by addressing those 2, we create difference against the general market. And that's a bit the way we have been capable, in fact, to generate this. But it's a lot of work, but that's our DNA.
Operator: The next question comes from Neil Green from JPMorgan.
Neil Green: Just one question, please, and a follow-up, I think, to Florent's earlier on. On the dividend growth guidance from 2026 to 2030, are you underwriting a higher payout ratio as a driver of that, please? If so, to what? And is it back to 85%, please? Just interested on any assumption around the dividend payout ratio over that period, please?
Benat Ortega: It could be 1 year or 2 if we can't sustain an increase of cash flow. But that's why we gave a medium-term guidance, which is over the long run, in fact, those assets pipeline, T1 will be let, and we will be capable, in fact, to stay in our preferred range. Also once the CapEx on the residential side are behind us. So that's a bit why, in fact, we have been providing that vision.
Operator: The next question comes from Callum Marley from Kolytics.
Callum Marley: Just 2 quick ones. First one, there seems to be quite a bit of office space coming online in Paris this year. And obviously, CBD vacancy continues to trend higher. Is it fair to assume your record high occupancy could come under pressure in 2026 and '27? And then secondly, how do you weigh up future development opportunities versus acquisitions when your current office development yields are 5.8%, but you're acquiring assets at 6.1%?
Benat Ortega: Those are 2 questions. I think on the first one, I will come back to what I said earlier, which is what we try to deliver to our clients products which are different. I referred to one thing, which was on the other stuff. Only 15% of the new deliveries in Paris have been above 3,000 square meters. So our major projects are significantly bigger with significantly more bigger floor plates and significantly more services, fitness, gym, food offer, meeting rooms, auditoriums. That's what we deliver to those people that they can't find on a small building, which is one like the other. And on the other segment, because we are an integrated company we have our own asset management team, our own design team, our own property management team, in fact, we can generate without a big pain, those operated offices that they can't really find on the market. It's only 5% of the offer in Paris, while it's more than 20% of the take-up. So -- and that's because, in fact, we are an interesting company. And like you saw, we have been capable, in fact, to generate that offer that needs a lot of work for our teams while keeping the G&A down by 4%. And that's because we were already taking care about the maintenance of the building. So why shouldn't we take care about the aircon of the tenants. If we -- anyway, we have a cleaning contract for the whole building, for the lobby, for the lift, why shouldn't we be capable, in fact, to extend that contract into the private areas. So that's -- we've been doing both, in fact, try to optimize our cost structure, but at the same time, increase the quantity of services we deliver to our clients. And that's the way we make difference. Regarding your question around acquisition development, I think we have a pretty visible development pipeline, which is underway. Those 4 projects plus T1 that will come next. So that's already a significant development pipeline. And that's why we looked at opportunities with Solstice or with Bloom that were a bit different with a different risk profile. And you're right, it was done in quite appealing conditions to generate a good IRR.
Nicolas Broband: I will now just take one written question. What is the difference between the announced plus 2.3% increase in asset value on a like-for-like basis and the EUR 23 million negative fair value change recorded in the income statement?
Nicolas Dutreuil: Yes. Thank you for this technical question. I think it's technical items that can explain the difference between the 2. Some are one-off. For example, in '25, we had an increase in the stamp duties in most of the cities in France and specifically in Paris. So it has an impact on our valuation of more than EUR 60 million. So it explains partly the difference. Other items are a little bit more technical, that's IFRS 16. You know that we are accounting leases, which are IFRS 1, meaning that we are spreading the tenant incentives over the duration of the lease. And so the difference between the cash we are getting from the tenant and the amount we are accounting is going through this IFRS 16 adjustment. Depending when we are on the lease, it could be positive or negative. But for this year, it's a negative impact.
Operator: The next question comes from Michael Finn from Green Street.
Michael Finn: Yes. I just wanted to ask, please, if you could confirm that you do not plan to add any more buildings to the pipeline. I believe it was on Page 11 of the press release yesterday that you plan to refuel the pipeline in 2029, but I just want to double check that, please.
Benat Ortega: Against the quantum we have currently, no, there is not pipeline projects which are similar to those which we are doing currently.
Michael Finn: Okay. And one more, if I may. Just on capital more generally, I'm just curious, in general, should 2026 be viewed as quite similar to '25 and that you will sell some assets and you will redeploy it into offices? And maybe linked to a question earlier, I'm just curious, in your view, at what share price or implied yield does it make more sense to just buy back the shares? I assume you probably have some kind of view on that since you said that you're going to -- that you'll be looking at every option that you have.
Benat Ortega: Yes. If you do simple math, based on our dividend, it's a 7% return. Based on our cash flow, it's 8-point-something percent return. So pure cash to cash. Our weighted cost of capital is around 7-point something because our cost of debt is low, but even at a marginal cost of debt, you are between 6.5% and 7%. So if we can find decent and with the same quality or even better than what we own, obviously, all those deals are accretive in terms of return on capital and accretion. So that was the rationale for us, in fact, to go on those 2 deals that seems appealing for us, both in terms of accretion, one immediate and the other one a year later and in terms of return on capital. So we -- obviously, the share price increased our cost of capital, the way we look at it because it's pretty low. But as long as we can find those deals that improve our portfolio, improve our cash flow medium term, improve our future, obviously, we will look at them. And if it flies, we go, and we will monitor it over the next year. I think we are somehow -- I'm quite happy with what we have done this year. Somehow in this quiet investment market, and the teams will not be happy that I say it, but it's somehow easier to buy at 6.5% net initial yield than to sell at 3%. And probably, we are not insisting enough about the quality of our investment team to have been capable to source like more than 10 buyers to buy almost EUR 1 billion around 3% cap rates. And I think it's a tribute to the teams and our dedication and our footprint where we are to have been capable, in fact, to secure EUR 1 billion below 3% or around 3%. So that's why I said before talking about acquisition, you talked about acquisition. I talked about, first, the pleasure to have been capable to secure those disposals because that's the first step before being capable to make capital moves. And I think we have shown and probably way better than most of the industry that we are an agile divestor. We sold one luxury retail building at the peak of valuation of luxury companies. We sold secondary assets at the peak of SCPI fundraising. We've been disposing office assets in '23 below 3% cap rates. So we are pragmatic, but I think we have been probably and I'm looking around the best seller of assets. And I hope that we will be happy with the returns we generate on acquisition and development pipeline. You are, welcome. But again 3% is not easy.
Operator: The next question comes from Celine Soo-Huynh from Barclays.
Celine Huynh: Benat, I've got 3 questions, please. The first one is about capitalized interest. Can you confirm the policy that you have for them? What cost of debt you're using? Is it average? Is it marginal? And also by how much is meant to increase this year? What's inside the guidance? And then my second question will be about your firepower. What's your firepower without a credit downgrade? And last question on share buyback again, sorry. Do you actually have the approval to potentially do a share buyback? Or is that something that could be included in the next AGM? Because like you said, it's a tool to allocate capital.
Benat Ortega: Welcome. On capitalized interest, we have the same way to do it. The existing value of the asset is capitalized at LTV at the current average cost of debt and the CapEx are capitalized 100% at marginal cost of debt. So that's the way we capitalize interest. So that's why...
Celine Huynh: And can you confirm it hasn't changed or it's not supposed to change this year?
Benat Ortega: No, no. No, it hasn't changed. And that's why the more we spend CapEx, the more capitalized interest we have because if we have spent EUR 1 million in a building, then we capitalize 3%. But when we start construction, we only capitalize based on EUR 10 million or EUR 20 million in our books. On SBB, you asked a technical question, which is do we have the approval? Yes, I think we have since the several years, an approval from the general assembly to make a share buyback. So it's really a Board decision to execute one.
Celine Huynh: Okay. And your firepower?
Benat Ortega: And firepower, a polite way to do it is to say that if we want to keep our A- rating, we need to be medium term below 40%. So that in terms of LTV metric. But obviously, if we sell, we have more firepower. So it's not a fixed barrier.
Celine Huynh: Okay. I have roughly like EUR 500 million in mind without new selling. I just don't know if you can confirm that.
Benat Ortega: The LTV, excluding stamp duties, is slightly above 38%. So it's probably less than that. But again, it's more medium-term objectives that we have with the rating agency. So we can marginally go above and through either our cash flow or asset valuation, be back to that threshold. So it's not a strict rule year-by-year.
Celine Huynh: Okay. And sorry, last question, a bit open this one, I'm sorry. The market is not reacting super well to your last set of results. We know the market is not great at the moment. What can you tell the market to reassure it that things are going okay?
Benat Ortega: I think the -- it's 2 things. The first one is when you invest in a REIT, because of our distribution obligations, we are there first to generate the dividend. And that's why we conveyed confidence in the future to be capable and in fact, to sustainably pay and grow our dividend over time. It's second, I think we still have a lot to do, in fact, to have great future years, especially in leasing our pipeline in T1. Just have in mind that we have been having those questions in the last 5 or 10 years, each time we had large-scale redevelopments happening. It happened when we leased to BCG Live. It happened when we leased Publicis in Mondo. It happened when we had to release the full building in La D�fense Carr� Michelet in 2020 and '21, and all those operations have been fully let pretty quickly. So I think the history of the company, the knowledge of the market, the product we build should give confidence in our capacity, in fact, to generate that growth that we all expect. And probably the last one is discipline. So we keep our balance sheet, you refer about LTV. We try to keep our balance sheet ready for the future, both in terms of LTV, also in terms of hedging long-term liquidity. I mean have in mind that we have EUR 4 billion of available credit line. So we have visibility on both liquidity and cost and same discipline on acquisitions and disposals. So we are there to, in fact, to sustainably grow our company, and we are very dedicated to it.
Operator: The next question comes from Paul Reuge from R&Co.
Paul Reuge: I mean, sorry, just a last question on your capital allocation. If I understood correctly, you say that until you have opportunities to invest or deploy capital in developing assets at a 10% IRR, you won't necessarily look at buying back shares, which basically, if you lever that, you go something between 10% and 15%. And regarding your cash flow yield today around 8%. I mean, I would suggest that you don't buy -- that you won't buy shares before another drop of something like 30% on your share price. I mean, is it something you -- can you give some color on that? Because you didn't really answer on the previous question on at which price you will buy back shares?
Benat Ortega: I think it's not the right question, if I may. Our duty is to offer the best return on capital. So it depends on how cash do we have and how can we deploy it with the best return on capital for our shareholders. So it's a combination between the cash generated and the way to allocate them. So it's a triangle. It's one, securing disposals. Like I said, we have been very active on it. Second, the share price and at the same time, the opportunities at the same time. So...
Paul Reuge: I mean, yes, you've been very active on disposal, and that's clearly, I mean, quite nice and effectively, you have a great track record on that. Frankly, at one point this money could be used to buy back shares. And I think the market is seeing that too. So that's why I'm trying to understand a bit.
Benat Ortega: So as long as it's the best capital allocation in terms of return on equity.
Paul Reuge: Okay. But so my hypothesis are correct regarding at which level you would be ready to buy back shares regarding the IRR?
Benat Ortega: Right. It has to be better than our acquisition potential and better than the disposal we make. Again, I can't opine on future acquisition. I don't have them in mind because they are not yet there. If there are none, we will look at the best way to allocate capital. I have not said no on share buybacks. I've just said it's a disciplined analysis each time quarter-by-quarter, deal-by-deal.
Operator: The next question comes from Marc Mozzi from BofA.
Marc Louis Mozzi: I just have a follow-up question on your capitalized interest. Can you give us a guidance of what we should expect for 2026 because it's a pretty hard number for an analyst to forecast. And actually, the question behind is, if we were to remove that growth in capitalized interest, what would have been the growth in EPS?
Benat Ortega: I don't have the figures now. We will provide you a bit more color on it outside the call if you want to allow it.
Marc Louis Mozzi: Yes. That would be great.
Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Benat Ortega: Thank you all for attending this meeting. Thank you for all your questions that were very insightful and see you soon. Bye-bye.