Earnings call transcript: CTP NV Q3 2025 sees robust rental income growth

CTP NV reported strong financial results for the third quarter of 2025, with notable increases in net rental income and adjusted earnings. The company achieved a like-for-like rental growth of 4.5%, contributing to a 15.4% rise in net rental income to €549 million. Despite a slight decline in stock price of 0.22% following the earnings announcement, CTP NV continues to expand its portfolio and explore new markets.

Key Takeaways

• Net rental income rose by 15.4% to €549 million.
• Group EPS increased by 7.2% to €0.64.
• CTP NV is expanding into Vietnam and Italy.
• The company targets €1 billion in annual rental income by 2027.

Company Performance

CTP NV demonstrated strong performance in Q3 2025, driven by substantial rental income growth and strategic expansions. The company’s presence in Central Europe remains robust, with significant opportunities in manufacturing and logistics. CTP NV’s integrated business model continues to support its market leadership in industrial real estate.

Financial Highlights

• Revenue: €549 million, up 15.4% year-over-year.
• Earnings per share: €0.64, a 7.2% increase from the previous year.
• Total gross asset value: €17.7 billion, a 10.6% increase from 2024.

Earnings vs. Forecast

CTP NV’s earnings per share (EPS) of €0.64 exceeded market expectations, reflecting a solid performance in rental income and asset growth. The company’s revenue of €549 million also surpassed forecasts, underscoring its successful expansion strategy.

Market Reaction

Following the earnings announcement, CTP NV’s stock experienced a slight decline of 0.22%, closing at €18.06. This movement is relatively minor and suggests a stable investor sentiment despite the company’s strong financial performance.

Outlook & Guidance

CTP NV has revised its EPS guidance to the lower end of €0.86-€0.88 for the upcoming year. The company aims to achieve €1 billion in annual rental income by 2027 and expand its portfolio to 30 million square meters by 2030. The entry into Vietnam and Italy is expected to drive further growth.

Executive Commentary

• "We target to be around 95%, especially for our mature markets," stated Martin, Financial Executive, highlighting the company’s focus on occupancy rates.
• Raymond, Senior Executive, commented on expansion goals: "We think it’s more complicated probably to come from zero to build 10 or 15 million sq m portfolio than it is to double from 15 to 30 million sq m."
• Richard, Funding Strategy Executive, emphasized financial strategy: "Every euro we invest in our pipeline increases our ICR and decreases our net debt to EBITDA."

Risks and Challenges

• Anti-monopoly restrictions led to the abandonment of a €250 million acquisition in Romania.
• Market entry into new regions like Vietnam and Italy presents operational challenges.
• Maintaining high occupancy rates amidst expansion efforts.

Q&A

During the earnings call, analysts inquired about the company’s expansion plans and market entry strategies. The management addressed concerns about the Romanian acquisition and provided insights into the potential of the Vietnamese and Italian markets.

Full transcript - CTP NV (CTPNV) Q3 2025:

Raymond, Senior Executive/Management, CTP: Good morning and thanks for joining on this Q3 call. Talk about the results and the things we have been busy with over the past couple of months and maybe start with talking about CTP, a growth company. We enjoy growth, we like growth and we see growth opportunities to continue, develop, build for our clients and secure new business. Growth comes from supply chain professionalization, if you like. We have seen obviously many events over the past decade and you could, you could maybe conclude or say that this whole supply chain becomes more professional. Companies adapt or adjust to different market circumstances or different events which we have seen over the past years. We benefit from that in different ways. There is one supply chain, second is nearshoring.

We continue to see manufacturing coming to Central Europe for the region, for Western European countries as well. We also see growth in the markets of Central Europe. The consumer spending, maybe when I came here first in 1995, 30 years ago, Central Europe was about low cost manufacturing. In the meantime, of course, with all the GDP growth which we have seen over the past decades, the local population have money to spend and they do spend. Obviously, that results in demand for property, warehouse, for example, E-commerce, et cetera. We see also growth coming from defense industry.

A lot of talk about it, but.

In the meantime we have also seen some concrete demands. In our German portfolio, for instance, there are multiple companies who are involved in the defense industry and they ask for more space. That is good. We continue to see mostly from existing clients, strong demand from a diverse tenant base, including retailers, pet food manufacturers, semiconductor business, but also demand from automotive related industry. Maybe moving from West Europe to Central Europe to Eastern Europe or Asian companies coming in and set up business in Europe. For the European market in numbers, we signed 1.6 million sq m over the past nine months. In 2025, this is 6% up compared to what it was in 2024, 6% plus. We have done that at 6% more rent. Our rent average per sq m per month has grown with 6% again. We look also forward to continue this trend.

Typically we close a lot during the last part, the fourth quarter of the year, as we’ve done last year and the years before. We are on schedule to close more leases by the end of the year. Stable, consistent growth. Two thirds of our business comes from existing clients, our partners, long term clients, loyal clients. It is also them who helped us grow in new markets. We get 99.8% of all the rent which we charge is being paid. Retention rate 85% and 80% of all the new construction happens in existing business parks. Our integrated business model combines the operator. Talk about how we break down our different business lines. The operator is the income producing part of the business.

Those are all the properties which we.

Have built over the past years. It’s good for EUR 780 million of rental income around that number. The second activity, the developer with 2 million sq m of properties under construction, with a land bank of 26 million sq m. Those are the people who are busy with building property, constantly improving the quality of the property. Come up with different property concepts and innovations. Make properties consume less energy, less maintenance cost. You want generic design buildings because the building will last beyond the lease term of the first tenant, et cetera. Especially nowadays, there’s so many changes going on. It’s very important that you get the property right, the location right, and to make sure that you have amenities, services, utilities, electricity on site in those business parks and make sure that your clients can grow. That’s what happens the last.

If you break it down, say, okay.

We have this operator income producing developer construction. The last bit, maybe most exciting part, is growth engine. We have been growing beyond the markets where we are active. Remember the IPO we did also to raise capital, to get access to capital, affordable, cheap capital to grow our business beyond. That is what we continue to do. This year we delivered 500,000 sq m. A bit more, half a million sq m, mostly pre-leased. We do 10.3% yield on cost. Who are those tenants? It is LPP for Bucharest, Hitachi for Brno, Japanese client, long-term client, but also Zoomlion in Tatabánya in Hungary. This is one of our Chinese clients. Thank you very much to the clients for the continuous support, commitment, and loyalty. Thanks for working with us. We have been able to complete these projects on time and in budget.

Again, end of the year normally is a lot of projects come to the market. We have 2 million sq m on the construction. 2 million.

Not all of them will be complete.

By year end, many will. The rest will go to 2026, when all of this stuff, which we build and complete this year, comes to the market and is leased. We are another EUR 165 million of rental income at 10% yield on cost. We are well on the way to hit the EUR 1 billion of annual rent by 2027. That is our target and we are on schedule to hit that target. Couple of highlights, maybe on different markets. What we see good is Czech stable. We’ve been here for a long time. Our home market, good occupancy, good returns. Poland, relatively new for us. Largest economy of course in Central Europe. Quite important to be there. We’ve done well, more than we planned, so quite happy with that. Germany as well.

We see more demand over the past couple of months also turn into deals. We signed the lease contracts, which is good and also makes us positive for the future. Some of you have had the opportunity to visit us at our Capital Markets Day in Wuppertal, September. You have also seen our projects in Mülheim an der Ruhr and of course a couple other places. It looks like over the past years we have been able to put a team together. We have secured land and permits that we now can go ahead and build those properties and lease them, which we look forward to doing. Yeah, we actually think it’s just the beginning of CTP. I think it’s more complicated probably to come from zero to build 10 or 15 million sq m portfolio than it is to double from 15 to 30 million sq m.

Let’s see, we have systems in place, we have a fantastic team of people, great relationships with clients, but also with the local authority. Actually, we look forward to hit that 30 million sq m one day. We target for 2030. Let’s see how far we get. So far it looks good. Maybe a couple of things about the new markets. Wanted to talk about Italy, which is another European market, Northern Italy, where we have many clients coming from that part of Italy. We now have an opportunity to get started with some projects which we look forward to doing and we hope some of them will already be complete next year, in 2026. That will happen. We think it’s a next logical step in the region. We obviously already active in Germany and Austria and.

Yeah, and Italy, North Italy.

We see some good opportunities to introduce our full service business park concept. We’ll start with some smaller projects maybe, but there’s also an opportunity to accelerate and to come up with a different entry strategy similar to what we’ve done in other countries, Germany and Poland over the past years and then Asia. We definitely like to have a closer look at the opportunities in Asia as we think our company and our clients don’t stop in Europe. They go beyond. They are often global players and they have asked us whether we would be willing to support them in Asia, in Vietnam to be exact. We have been spending the past 12 months looking at opportunities and we became more positive and enthusiastic about the idea of doing a project in Vietnam. We expect more to come from that. Don’t expect huge things.

We will start with one project and maybe do a second. We learn by doing with existing clients with pre-leases, but definitely some opportunities. 100 million population, early 30s average age or young, very productive with huge FDIs. Not only from the consumer electronics industry but also Lego and Volkswagen’s CODA have just opened up a plant or building a plant. So many opportunities we see there which we want to have a closer look at. Happy to answer any questions. I think I’ll hand over to Martin for now with some more details on the financials and then I’m here later. Thank you very much for your attention.

Martin, Financial Executive, CTP: Moving on to the financial highlights, the like-for-like rental growth came to 4.5% in Q3 2025 while occupancy remained stable at 93%. The net rental income increased 15.4% to EUR 549 million as we continue to reduce our surface charge leakage. The NRI to GRI ratio therefore improved to 97.7% while we also continue to improve our EBITDA margin. Annualized rental income increased to EUR 778 million, illustrating the strong cash flow generation of our portfolio. The company-specific adjusted APRA earnings increased by 13.1% year on year to EUR 305.2 million, while the group’s EPS amounted to EUR 0.64, an increase of 7.2%.

Thanks to the deliveries and net development income being backloaded to the fourth quarter, the group is on track to reach its guidance for the year. Now, looking at the valuation results for the Q1 and Q3 results, only the investment properties under development are revalued. Valuation results in the first nine months of the year came to EUR 802 million. Of this, EUR 385 million was driven by the construction and leasing progress on our developments, while EUR 373 million came from the revaluation of our outstanding portfolio and EUR 43 million from our land bank. The total gross assets value now stands at EUR 17.7 billion, up 10.6% from full year 2024 and 16% year on year.

CTP’s reversionary yields stand at a conservative 7% and we expect further yield compression and positive EFE growth in line with inflation or slightly ahead of inflation for the rest of 2025. This is also illustrated by the new leases signed in the first nine months of 2025 where ends were 6% higher than the new leases signed in the first nine months of 2024, which is supported by the undersupplied nature of the Central Europe markets and industrial and logistics space per capita is only half compared to the U.K. or other Western European markets. The transaction markets continue to recover across Europe as there is more clarity around funding costs. We expect an increase of transactions into next year, especially on the private equity side where funds are coming to maturity. We expect to see more turnover. This will offer opportunities for us.

We also remain active in the market for land acquisitions, balancing the land bank in our existing markets but growing the land bank in countries that we entered recently like Poland, which we plan to enter like Italy and Vietnam, while maintaining our disciplined capital allocation. Our APRA net tangible asset per share increased from EUR 18.08 at year end 2024 to EUR 19.98 at the third quarter, representing an increase of 10.5% since the beginning of the year. Year on year the increase was 14%. With this NTA growth and our dividend, we delivered a total accounting return to our shareholders of 17% in the last 12 months. Highlighting our superior return profile is unique to the real estate sector and now I hand over to Richard, our funding.

Richard, Funding Strategy Executive, CTP: Strategy remains centered on maintaining a stable investment grade rating and we are very happy that our improving credit metrics were recognized by Standard & Poor’s with their upgrade in September. We focus on ensuring access to multiple sources of liquidity, meaning attractive funding is available at all times. We have a geographically diversified investor base now further strengthened by Asian investors added in 2025 and a growing share of unsecured debt towards our target of 80%. Thanks to our highly accretive developments and proactive debt management, our interest coverage ratio increased to 2.5 times, our normalized net debt to EBITDA remained stable at 9.2 times and our loan to value stood at 45.2%.

We expect loan-to-value to return to our 40-45% target as our development pipeline is completed and revaluation gains are fully booked. As presented during our Capital Markets Day, with our market-leading development yield on cost of over 10%, every euro we invest in our pipeline increases our ICR and decreases our net debt to EBITDA, allowing us to grow at our 10-15% annually while improving our overall cash flow credit metrics. This was also highlighted by Standard & Poor’s on their upgrade of our credit rating to BBB flat with a stable outlook. In September, Moody’s have a positive outlook on our credit rating, confirming the positive trajectory of our ratings. In the first nine months of 2025, we signed EUR 1.7 billion of unsecured debt to fund our organic growth.

This included EUR 1 billion in dual tranche bonds issued in March, an inaugural JPY 30 billion samurai loan equivalent of EUR 185 million and a EUR 500 million syndicated term loan facility signed in June which had commitments of over EUR 1.2 billion. Together with the six and a half year EUR 600 million bond we issued in October, this continues to demonstrate our ongoing strong market access. We continue to actively manage our funding costs and over the past 12 months we have renegotiated or repaid EUR 1.6 billion of our most expensive bank loans, including the prepayment in June of EUR 441 million of expensive unsecured debt. CTP maintains a conservative debt profile. The EUR 272 million of bonds maturing in June and EUR 185 million maturing in October were both repaid from available cash. Looking ahead, maturities remain limited over the next three years.

With a EUR 350 million bond due in January 2026 and a EUR 275 million bond in September 2026, our cash position stands at EUR 1.1 billion. Including our EUR 1.3 billion RCF, our liquidity totals EUR 2.4 billion, more than sufficient to meet our cash needs for the next 12 months. The average debt maturity stands at 4.8 years and the average cost of debt at 3.2%. This represents only a minimal increase compared to year end 2025 as our current marginal cost of funding remains below 3.5% for five year money, we remain confident in the outlook for CTP. We have a strong tenant lead list in addition to what we have already pre-let within our development pipeline. We have 151,000 sq m pre-let for future projects for which construction has not yet started.

We continue to see rental growth across all of our markets supported by the nearshoring trend and ongoing e-commerce growth, particularly in the CEE region. Our tenant-led development pipeline remains highly profitable. With our industry-leading yield on cost of over 10%, we are able to deliver sustainable and profitable organic growth while maintaining a robust financial position. We confirm our EPS guidance of EUR 0.86-EUR 0.88 for 2025, which, due to an intended acquisition in Romania not proceeding, is now expected to come in towards the lower end of that range. Thank you for your attention. We now welcome your questions.

Conference Moderator: Thank you. To ask a question, please press star followed by one on your telephone keypad. Now, if you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Marios Pastu from Bernstein. Your line is now open. Please go ahead.

Hi, good morning. Thank you for the presentation. After taking my questions, I just have two questions from my side. I see leasing is up over the first nine months. It’s marginally down in Q3. I think you mentioned that you want to have a good final quarter, but I also see that last year that final quarter was also very strong. Do you expect to be up in terms of leasing volumes for the year as a whole? Secondly, can you just remind us why the intended acquisition in Romania did not proceed as planned? Thank you.

Martin, Financial Executive, CTP: Hey Marios, good morning. I will take the last question on the Romanian acquisition first and then I let Raymond comment further on leasing. It comes back to antimony poli reasons where there were two restrictive conditions for us. We decided not to go ahead with it. We see enough opportunities in terms of acquisitions across Europe and we continue to buy land. We always do. Also, relative capital allocation, that does not make most sense for us in the end with the restrictions here. It did not make sense, so we decided to prefer to invest in other opportunities.

Conference Moderator: Thank you. Our next question comes from John.

Raymond, Senior Executive/Management, CTP: We didn’t answer the second part of the question. With regards to leasing.

Conference Moderator: If you would like, apologies, continue.

Raymond, Senior Executive/Management, CTP: No, I can give some color on that. Anyway, with reference to what Martin just said. Even if we wanted to buy, we can’t buy because it is very complicated with the competition and the anti-monopoly, whatever, which actually is not bad because there are other places where you can invest money. That’s what I think. We waste a lot of time on that P3 acquisition which did not happen. As I said at the end, maybe it is even better without. With regards to the leasing, yes, as stated, we continue to see demand and that will turn into deals over the rest of the year.

And.

Yeah, which is good. That is often the case that the fourth quarter is more takeout than first or second. I do not know exactly why that is, but has been historically like that and we think that trend will continue for 2025. Yeah. We did sign some leases just now in Poland, which is good, and in Romania as well, in Germany. Yeah, overall relatively positive I would think. We are on schedule to hit the occupancy target for end of 2025.

Thank you very much. Thank you.

Conference Moderator: Thank you. Our next question comes from John Zong from Kempen. Your line is now open. Please go ahead.

Hi, good morning. Thank you for taking my questions on Vietnam. You said that you, that we shouldn’t expect huge things with only one or two developments. Just trying to understand here, over what timeline do you expect to start these developments and if you’re really excited about the opportunities in the country, why only start with one or two and not with like a park strategy like here in Europe?

Raymond, Senior Executive/Management, CTP: Yeah, good question. It’s definitely going to be a park concept. We think of using or doing the identical thing or similar thing to what we do in Europe. Park concept, business park, full service business park with different property types.

But.

That is definitely the case. You need to also get ready in terms of setting up a team. We are now in the middle of recruiting people for our Vietnam office or Vietnam team, and that will take a bit of time. That is why I think honestly the recruitment process has started. We have met people, people came over to visit us in Europe in order to make themselves familiar with what we do, how we do it, to get to know other people in the organization. It is also part of the recruitment process. Yeah, it takes time until these people will actually join, which some of them will join in Q1 beginning of next year, Q1 of 2026, and simultaneously we have agreed an option on four land sites and that would give us the opportunity to develop around 300,000 sq m.

It would be very nice and I think some of that we can start next year in 2026. Those buildings will come to the market in 2027. That is what I think now. That means 300,000 sq m, EUR 150 million. I think construction costs will be a bit lower in Vietnam. For what you can see at the moment, it is not going to be EUR 500, it is more going to be like towards EUR 400 per sq m. We think of course doing that at 10% plus yield on cost, so above 10% yield on cost. That is the base plan.

Maybe we see opportunities to accelerate and to grow more through some acquisitions as we have done before when we entered a new market, that we do our organic growth, buy land and develop, or maybe here and there buy something which would help us get a bit more volume.

But.

Yeah, that is how we see it now. We will need time to get familiar with the market, to put up a team to get started, and we want to do that carefully. Once we get going, from 2027 onwards, maybe there is an opportunity to do 2,300,000 sq m per year. Maybe the market is big enough, 100 million people. There is hardly any stock. There are, of course, a couple of players, GLP or SLP, they have been, and they are Frasers, Mapletree. It is not, so there is, of course, a significant amount of developers, but if you look at the stock compared to the amount of inhabitants, 100 million people, and if you look at all the opportunity, then the market is very, yeah, it is at the beginning, and as I explained, demand coming from our clients.

We think it’s a good opportunity to proceed with. That’s, that’s, I will continue, of course, to update you on how far, how quick we can get. That’s for now how I see it or how we see it.

Okay, clear, thank you. Just on the 10% yield on cost, is that net of land leases given that you cannot own land in Vietnam?

Correct.

There’s a 50-year leaseholder or concession. If we calculate as very primitive and very simple, we add the concession cost for 50 years, then on top we add cost for everything related out of pocket to develop the property. Infrastructure construction cost and all of that. Yes, that is included. We think yield cost in Vietnam is more towards what we do in Serbia, so well above the 10% yield on cost.

Okay, great.

Yes, included.

Yeah. All right, good.

John, so in Serbia, in Vietnam, like everyone says, you’re looking at kind of like Serbian type of relationship where you’re developing at, you know, trying to get to 12 and revaluing 8.5.

Conference Moderator: Thank you. Our next question comes from Siraj Goyal from Green Street. Your line is now open. Please go ahead. Good morning.

Thanks for taking my question. Just a quick one on leases again.

I saw that new lease assigned at rent level 6% higher than last year. It just seems that it’s lower in Serbia, Hungary, Romania, and Bulgaria. I appreciate there may be some nuances here, but would you be able to just share some color as to why this may be the case?

Thank you.

Martin, Financial Executive, CTP: Hey Sri, that’s always what we say. Some years will be up, some years will be down. Depends a lot on which leases you are signing, especially for the smaller markets. It depends a lot on which projects are coming online and when they are exactly coming online, in which quarter you are signing the leases. To be honest, you always see volatility. Last year for example, we did less leases in Czech. This year, Czech in terms of absolute amount of leases is doing very well. Same with what we had in Hungary. Hungary we did last year a bit more leases, this year a bit less. That’s the normal business cycle. You can lease the space only once. You try to lease at the highest rental levels possible to what we think are our clients, which add value for us long term in our park model.

It really depends on what is the opportunity building set you have for leasing. There is no, if you look across the markets, there is no structural trends in either one of them. That is really for us a point of concern. Some markets are better than worse. That is year on year. Overall, what you see is we do more leases, we do them at higher ends. That comes really back to the demand drivers, which are long term and they will not change from one day or another. The demand drivers that were in place last year are still in place. It comes back to the nearshoring, it comes back to the growth in domestic consumption, etc. It depends a lot on which quarter you sign, which specific deal. That has always been the case also if you look back historically.

Overall, what Raymond also said, we are confident in our occupancy targets to hit by year end and the leasing is progressing well towards that also. That is why we confirmed basically the guidance for our deliveries between 1.3-1.6 million sq m for the year. We are very well on track. With the amounts of hood that we are doing and the conversations that the team on the ground has, we have confidence in getting there. Some markets will contribute a bit more than others, but that is normal.

Thank you, Martin.

Conference Moderator: Thank you. Our next question comes from Steven Boonstra from ABN AMRO. Your line is now open. Please go ahead.

Good morning and thank you for taking my questions. I have two. The first one, follow up on the expected leasing numbers. Do you think that the average rent per sq m will rise above EUR 6 per sq m per month for Q4? What about 2026? Maybe that’s the first one and then I’ll do another.

Raymond, Senior Executive/Management, CTP: It would be good if they are above 6. In some markets they will be. I don’t know. Maybe Martin has the average number.

Where do we see rental growth?

We see a lot of rental growth in the German Deutsche industry portfolio. Remember the old buildings we bought or older buildings we bought? Of course. Why is that? Because we bought relatively cheap and when we bought the rents were quite low. EUR 3.5 or let’s say EUR 42 per year and that, that we see that going up to, yeah, 60-70. That’s true. We have to also invest in those properties. Just yesterday we did a deal at that kind of number. Yeah. It is around EUR 6 per sq m for the Deutsche industry. I think we see rental growth throughout.

Martin, Financial Executive, CTP: Yeah.

Raymond, Senior Executive/Management, CTP: Also Romania. Because the other question was that we do less in Romania. I don’t think so. We have seen a lot of rental growth in Czech. So, yeah, Czech. I would think it’s EUR 6. Yeah. Maybe Mark, you can add some on that. Whether it’s EUR 72 or EUR 70 per year on average. Maybe throughout the portfolio. I mean a big box logistics. In Bucharest you will not get to EUR 6 for sure. But something smaller in Czech you will definitely get to EUR 6. Poland you will not get. Although, by the way, the small stuff we do in Warsaw. So we have SBU, small business units. Obviously that is higher than EUR 6, but those are small units of 1,000, 2,000 sq m units. So lower than 5,000 sq m units.

The square meter price will be significantly higher than a large 10, 20, 30,000 square meter warehouse building. I think there’s also the difference in rent per square meter per month. That is going quite well. These smaller units, which also, yeah, we like because there is good demand for it as part of what’s going on in the region of Central Europe. Of course, you have small and medium sized companies; that segment is growing. There’s also big multinationals taking smaller units here and there.

Yeah.

So then they pay more rent. Yeah. Martin, do you have some more details on the average?

Martin, Financial Executive, CTP: Yeah, you can see that also in the presentation. If you look on, Stephen, if you look on slide 10, you see exactly the rent that we are making per country. Whether we in the Q4 will be above 6, like Raymond said, depends a lot in which market we are signing. If you are signing more in Czech, yes, we will be above 6. If we sign more in other markets it will be a bit harder. That’s normal. What we are looking is what is the real underlying rental growth country by country. That ultimately comes back to the 6% that we are showing and smaller countries.

I said before it depends sometimes a bit on location because, whether you lease in the capital city, whether you lease indeed like Eamon said, smaller units or bigger units. In Poland we have for example seen the increase. The leases which we did this year were on average at EUR 5.50. That includes some smaller stuff, includes in some cases some extras that we do for tenants. On average, Poland, we see some rental growth coming through Romania as well. If you look underlying, while if you look maybe to the absolute figures, they look flat. That is because there is a big unit again in this year’s numbers. Big units typically pull it slightly down.

If you look, and I know it’s harder for you than for us because we look at it on a unit by unit basis, when we are doing the deal, when the leasing team sits down to speak to the tenant, we look, okay, what is the ERV of the unit? We continue to track towards that. When we look on that detailed level, we continue to see the rents creeping up in countries like Romania, in countries like Poland, in countries like Serbia, etc.

Okay, to ask a bit differently, so, and to fully understand, so like-for-like growth per country is, let’s say, inflation, like maybe a bit more, but let’s say inflation, and then the mix, you do not want to commit that it will change materially as of today. So the mix should be broadly similar. It could be a bit better or a bit worse. Is that correct?

That’s correct. Look, what we see is what we said is we expect market rental growth indeed to grow in line with inflation. The mix depends. Depends indeed where we sign the leases. That’s hard for us to commit. If you look on a year or two year basis, yes, we can give a rough split, but not on a quarter by quarter. That does not make sense. That’s not also how we run our operations. That’s harder to determine. The underlying rental growth remains there and that’s also the confidence we have. That’s also you see reflected in the like-for-like rental growth coming through in the P and L. It’s not only the market rent, it’s also if you look to the like-for-like when we are really capturing the reversion of leases coming up for expiry.

Yes, Stephen, I think that the.

Richard, Funding Strategy Executive, CTP: Big picture is we see.

Increasing demand, and we see that increasing demand at higher rent levels pretty much across the markets in which we operate. You know, if you look at the more granular data, you will find something that looks a little bit worse, but the overall trend is the one that we would try and highlight, which is continuing strong, growing demand and that at higher rent levels.

Okay, that is very clear, thank you.

Conference Moderator: Thank you. Our next question comes from Vizin Maquette from Degroof Petercam. Your line is now open. Please go ahead.

Yes, good morning. Thanks for taking my question. I hope you can hear me. I have two. Maybe on the first one, it is a follow-up on Vietnam. Just wanted to understand a bit, what will be your target in terms of tenants? I will assume that you will mostly look for existing tenants that you already have in CEE for the first project. Secondly, what level of period will you feel comfortable before launching such a project?

Raymond, Senior Executive/Management, CTP: Thank you.

Yeah, we hear you loud and clear. Good questions indeed. What we want to do in Vietnam is it’s very similar to what we do in Europe, full service business parks, whereby we offer a variety of different property types. In Vietnam they use the word ready built factory and they use a ready built warehouse and they refer to build to lease. We call it a little different. We say CT Box, CT Flex, City Space, but it’s similar. Let’s see, let’s test the market. We want to go out with a pilot. Yeah, around 50% pre-lease. I think that is the kind of thing. As I explained, the four are the locations which we have secured. You could do 300,000 sq m of total lettable. Say assume that you can start construction mid of next year, second half next year.

Yeah, you may start initially with 100,000, 50,000. Let’s see in one location, and locations I refer to maybe also a bit more to explain. We do a paper, I think we have a paper, Vietnam paper which we can share with you. It is going to be online. Also to get a bit more background on what is the economy like, FDI, what is the market like and why do we see opportunities and where do we see opportunities. To explain a little bit, we could talk about one location close to Hanoi in the north of Vietnam. Historically, it is a concentration as a lot of people living there, as I mentioned, total 100 million people in Vietnam. In that part, in the northern part, couple of dozen million people. It is quite large.

More importantly, there are many of our clients with different activities. If you refer to the Vietnamese semiconductor industry, companies like Vistron or Foxconn, who are our clients, they have facilities in that part of Vietnam already historically because they have a China plus one policy, many of those, which means that not all of the manufacturing facilities are in Vietnam or in China. Some are in China for the Chinese market, some outside of China for the South Asian market. Those are Taiwanese clients who we have been working with for, yeah, more than 20 years, especially in the Czech Republic. Anyway, those are there and they have suppliers and subcontractors and all of that ecosystem.

That is one of the target groups which we would, which we talk to and say, okay, yes, we will build properties in and around Foxconn facilities in the region of Hanoi. In Hanoi, obviously you can imagine there’s also consumer spending, so there’s also FMCG, there is a need for warehouses, there is e-commerce, there is all kind of that. Our clients who are involved in 3PL, involved in 3PL logistics or supplied. That is the kind of ecosystem, the clients we have which we will plan to work for in Vietnam. Yeah, indeed mostly existing clients, but could of course also be new clients. There are many of our existing clients who have facilities in Vietnam or who are considering opening up facilities in Vietnam.

Thanks, very clear, and looking forward for the Vietnamese paper. The second question is on, I think that you commented that you expect very strong ERV growth for H2. As I remember, we do not value the standing assets in Q3. Just to understand, in which country do you expect the biggest ERV growth and how is it based to your recently signed lease? I think that we comment a bit on the rent level left and right, but just wanted to get from a valuation perspective, when do you see the biggest discrepancy between what you, at what level you are leasing, and what the valuers are assuming as ERVs?

Martin, Financial Executive, CTP: Yeah, sure. What we said is that we expect to grow it in line with inflation or slightly ahead of inflation. The E. And that comes back to where we are signing the rents. As we are continuing, I said earlier, to sign the rents 6% higher. We also have indexation coming in. We see market rent growing in line with inflation, slightly ahead. If you look on the country level, there will be less ERV growth in Czech. In Czech, the opportunity for us, we have commented on that before, is more to capture the reversion because in Czech we have one of the largest reversionary embedded potential as the market rent there already has grown quite a bit. Of course, with our leases, when they are 10 years or 15 years, it can take sometimes a while before you can capture that.

You need to go through the world. We expect more EFE code in countries like Romania, for example. The more upcoming markets will also see some ERV growth in Poland. In Poland there will be really a divergence between the new and the old. There has been different build quality. As you know, we are a long term owner. We commit to locations, we build buildings where they are to last. Because we have the commitment to own them long term, both vis a vis our tenants, but also vis a vis our municipalities. While in the past the Polish market was more dominated by trader developers. What you see there is more divergence where you might have given more incentives on really older product or lower quality product.

While if you look to new product which is coming to the Polish market, you can reach at good rates. That is what you also see reflected in the rental growth that we are doing. There will also be some ERV growth. In general, also across some other markets like Serbia, we expect some ERV growth to come. Bulgaria, Hungary? I do not think so. Hungary is a bit more vacancy at the moment, especially around Budapest. There is also split between the region and Budapest and the region. The other areas of Hungary see a bit stronger rental growth than Budapest at the moment. There are always those local factors. On average, we expect to grow in line with inflation or slightly ahead of inflation.

Thanks. If I may squeeze a very quick third question. You could deliver up to 1 million sq m in Q4. Just wanted to understand how much of new projects we expect to launch in Q4, keeping, I would say, the 2 million sq m of development pipeline, I would say, unchanged or could it be split a bit more into the beginning of 2026.

It will be relatively unchanged. I don’t expect our pipeline to materially change. It comes also back to next year. Because for next year, as you know, we got to EUR 1.4 billion-EUR 1.7 billion. We also need to start those projects. Simple projects will take us nine to twelve months. If you have a simple logistics building, in some cases you can even do it a bit quicker. There are more complicated projects if you do some extras for tenants, etc. We will always run a pipeline which is slightly ahead of next year’s deliveries, taking into account the time to complete.

Very clear.

Thank you for your answers.

Conference Moderator: Thank you. Our next question comes from Frederic Renard from KBC. Your line is now open. Please go ahead.

Hi guys. Good morning. Just two questions on my side. The first one is on the reversion which has come down 120 basis points Q&Q. Since Q2, can you comment maybe on that? The second question is on occupancy. Occupancy rate, you are still at 93% versus the target of 95%. I see that K retention is at 82%. It is a good level, but it is for me the lowest figures you had over the last two years. Is there more downside risk on occupancy rate than upside risk? Have you any specific concern on some countries? Thank you.

Martin, Financial Executive, CTP: Regarding the reversion, that’s partly driven by the fact that we don’t reset ERVs in the third quarter. In the third quarter, as you know, we don’t revalue our portfolio, only the developments. If you don’t reset your ERVs and we are capturing reversion as leases are coming up for maturity, naturally the reversionary potential comes down in those quarters. It is more a mathematical effect than anything else. Your question regarding occupancy, yes, we remain stable around 93% and that’s also what we explained there during the capital markets day. The two main markets which are below are the two market entries, Germany and Poland. Poland we expect end of this year to be more around 90% and then into next year we will creep up to the 95% target, same with Germany. That’s part of the market entry strategy.

We target to be around 95%, especially for our mature markets. Markets you even would want to be a bit above. Why do we target around the 95%? Maybe also good to remind you. That is really to have the growth opportunity with existing clients. We want to have always some space available to grow with existing clients in our existing parks. That gives us, if a tenant comes to us and says I want to expand in an existing park, it gives us much more negotiation power than when you have to build a new unit. That is why we always target around 95% and that is why our pipeline deliveries, we target to be 80-90% to always have that space available to grow with existing clients.

If you also put it in perspective on a yearly basis, we will sign more than 2 million sq m. If you look to the occupancy, if you take it from our portfolio, if you take 5% of a portfolio of 30 million sq m, that’s 700,000. We lease three times as much in a year. Actually yes, we have a bit of occupancy, but that gives us an enormous amount of flexibility and given the amount of leasing that we are doing, and that’s not a concern for us, it’s just an opportunity to have those long standing client relation and to leverage that to drive rents higher. On your last question or last part of your question, which was the retention rate, retention rate was indeed slightly lower this year. Correct. No fundamental issues.

There are of course sometimes you can have individual tenants who decide to leave. For example, if 3PL has a client and they want to consolidate or they want to move to a different location, they might terminate. It is not a reflection of your business, but it is more a reflection of sometimes the change in supply chains. Of course we try to keep all our tenants. Sometimes actually also, for example, you see in Germany it is sometimes better to replace tenants if we really want to capture that upside potential, for example in the Deutsche Industry REIT portfolio. There we are sometimes actually happy when people move out and we can replace them for higher paying tenants. It is always a case by case analysis.

Of course that we are doing. The absolute figure is slightly lower, but there is no fundamental underlying driver which would mean that the rent retention rate will be lower going forward. Depends on the leases we sign in the quarter.

Raymond, Senior Executive/Management, CTP: Yeah, I can confirm that. I can just confirm. Martin said some of the leases we had to terminate in Germany because, yeah, the relationship was.

Not great, and we felt that we.

Would be better off with a new tenant in that building doing some refurbishment and get more rent out of the property. That happened in Germany and it is still happening while we speak, which is part of cleaning up the portfolio in Germany. Also with regards to vacancy, we have been around 93-95% sometimes. Also, you know, you do not need to be in a rush to lease it immediately. Sometimes certain areas need some time for the market to absorb some space and then I would rather have six months of vacancy cost and then do a better deal, as opposed to pushing down on the rents. You know, you also need to balance and understand the market.

You know, if there’s no demand, there’s.

No need to push, then you rather wait until there is demand or until the market has been able to absorb the space which was available. I think overall also we see from a supply side that, yeah, here and there some of our peers and colleagues stopped or slowed down or there is no land or things like that, which is good. Long term, we believe that these properties which we have built are good quality properties and they will continue to generate and produce income. Values may go up and down, depends on the interest rates and so on. The income from the property so far has always grown and we continue to see that.

That is more important to build the cash flow and to make sure that we create this income in time at the correct level. You play with the supply and demand and balance around this 93-95%, but not huge. Overall, good. We are gaining market share, which is good. Which also later on gives us more opportunity to grow rents. It’s good.

Thank you. Maybe just last one on my hand, can you remind us the size of the acquisition in Romania that you did not do? What was the quantum of investment?

Martin, Financial Executive, CTP: The quantum of investment was around EUR 250 million.

Okay, thank you.

Conference Moderator: Thank you. Our next question comes from Eleanor Frue from Barclays. Your line is now open. Please go ahead. My team. Thanks for presentation. A few questions. Go one by one. Just to confirm, was the Romania acquisition explicitly baked into your guidance? Is the acquisition not happening going to impact your GLA target for the year? 15 million sq m. Moving forward, do you have any annual acquisition assumption guidance we could use.

Martin, Financial Executive, CTP: In terms of GLA? That is mostly driven by our development. We confirmed our guidance on terms of development between 1.3-1.6. Which means, indeed, like someone already mentioned, we will deliver nearly 1 million sq m in the fourth quarter, which will bring us probably around it towards 15 million. Whether it is exactly 15.0 or whether it is 14.9 or 14.8, we will see. Depends more on where we end in that range of the deliveries. That is ultimately the key one. With respect to the GLA target, if you look to acquisitions. No, we do not guide for a specific amount of acquisitions because it is really opportunity driven. If we talk land, yes, we will do each year around 200-215, some years maybe 300 million of land.

Because that is a lot of individual plots, and that I said is part of replenishing the land bank in some of the existing markets, but also could be growing the land bank in markets which we entered recently or plan to enter. That is a more stable acquisition pipeline on the land bank side. On the standing assets, it is really opportunity driven because yes, we like to do acquisitions, but they need to make sense in capital allocation. That is why we do not guide for the specific target. We will be there opportunistically. We are not the ones who want to pay a full price. We want to do things which make strategic sense for us. We can do things off market. That is much more our sweet spot in terms of M&A.

Rather than committing and forcing ourselves to buy EUR 100 million of standing property per year, that will not drive shareholder returns for us. We need to be focused on what makes sense. Where is pricing realistic and where can we add value because we are not an investor in buying simple core product. There needs to be value add opportunities. Yeah.

I think, Eleanor, you asked if the Romanian acquisition was a part of our EPS guidance for this year. Yes. You know that. That is also why we say that as a consequence of the Romanian transaction not happening, we now expect to be at the lower end of our guidance range.

Conference Moderator: Great, thank you. On the reasoning for that portfolio falling through, does that impact your growth plans otherwise in Romania? Is that region now saturated for you, and is there a risk on future permits? Maybe. On top of that, are there any other markets where you have a position that could prevent you from acquiring in scale?

No, I don’t. It won’t affect our ability to continue to grow organically in, in and around our existing parks, buy land to start new parks, you know, so that, we don’t see that as an impediment to continuing to grow our business in Romania through 10% plus year on cost developments. We don’t have any other market where we would think that we would have a problem.

Thanks very much. Thank you. As a reminder to ask a question, please press star followed by one on your telephone keypad. Now our next question comes from Wim Louis from KBC Securities. His question is on Italy. Can you give more details on tenants targets? Greenfield versus Brownfield. What is your SQM GLA target for the next couple of years? Will you consider buying a standard asset portfolio?

Raymond, Senior Executive/Management, CTP: Thanks for the question. With regards to Italy, I don’t know how you see it, Martin, but I think it’s a bit too early. We don’t go, we don’t disclose too much details there. What we can say is that we have been looking at Italy for the past years and we, as we communicated back in 2021 when we did our IPO, we said, okay, we would like to go to Western European markets which said initially we’re going to look at the Netherlands and Germany. Germany worked out well. Holland, less happy with the ALC property in Amsterdam, which is, there’s been some good take up and that’s okay. Besides that, we have done very little in the Netherlands. No, it’s not the place where we see opportunity.

We put slow down, but we always communicated we wanted to do more in Western Europe, and Italy has been on our wish list. We now see a good opportunity to enter. I think we are ready for it in terms of we have the money, we have the capacity, we have the team. More importantly, we have also identified the opportunity. What we have done in the meantime, we have established a small team of people. We currently work on securing land, and yeah, it’s not in any of our pipeline projects. The base plan, the 26 million or 20-something million sq m land bank, there is nothing in Italy, it does not include Italy. It is on top. I think we will keep the good news for later.

That’s what I think.

Martin, let me maybe add or comment or anything you want to share at this moment.

Martin, Financial Executive, CTP: Yeah, we’ll announce the transaction when it’s there. We always announce it when we close something. In general, we are looking at broader opportunities where we add most of the value is through lands and whether it’s greenfield or brownfield, we can do both. It comes back to what is the location. That’s the key thing. Whether it’s greenfield or brownfield is not a massive factor in that. It’s just a bit different in terms of do you have to take into account demolition cost, etc. We are looking for the right locations in Italy which can give us a kickstart and we are looking for sizable opportunities where we can develop our park model which is important for us. Not only small land plots but more sizable ones in line with our strategy.

What we see in opportunities in Italy is a couple of things. There is a very strong manufacturing base and if you look to our portfolio, you know we do a lot in manufacturing. Roughly 50% of our portfolio is manufacturing. We see opportunities there as many of our peers here in Italy are more focused on logistics. That is an opportunity for us. We see some opportunities in more, some smaller business units closer to town. Italy has quite a lively SME environment and Wim, you know what we have done for example in Brno, so you can think of doing certain of those projects here in Italy. That is the opportunities that we see and that is the land plots we are looking for.

As part of each market entry we are looking at, of course, a broad set of opportunities, and hopefully we can update you later this year more specifically.

Conference Moderator: Thank you. Our next question is from Alvaro Marta from Santander Asset Management. Their question is the 93% occupancy looks a bit lower than others. I wonder if there is a specific reason for that. Any explanation would help. Your LTV at 45.2% continues to be a bit higher than your target of 40-45%. When shall we expect a decline and to what level? How important is this for you? ICR at 2.5x is on the low side. Do you expect an improvement in 2026?

Raymond, Senior Executive/Management, CTP: No, the LTV is not of our concern and vacancy is around 93-95%. We talked about it before, we’re not going to repeat. Also, historically has been around the same number. We wait for a good morning moment to do good deals at higher ends. For the rest of the questions I refer to what has been previously discussed.

Thank you.

Yeah, regarding the ICR, you know I think we reported earlier that we already took most of the repricing from the higher interest rate environment that we have today compared to the environment 2019, 2020, 2021. We see our ICR bottoming out at 2.5. That’s also what the rating agencies are saying and we’ve consistently highlighted that everything that we invest in developing at 10% plus yield on cost is incremental to our ICR. That’s also one of the reasons that the rating agencies are comfortable with where we are. Despite that ICR of 2.4 at the time Standard & Poor’s gave us the rating upgrade. Now we don’t see any problem with those ratios and we expect that to improve over time.

Conference Moderator: Thank you. Our next question is from Jesse Norcross from ING. Their question is how big is the defense spending opportunity in Europe and Germany for the logistics sector and for CTP in particular, what kind of timeline? On Moody’s, how confident are you of getting ratings upgrade there? Or is this not a priority at this point in time?

Martin, Financial Executive, CTP: Rating upgrade is always a priority I think and we are happy with the upgrade got from S&P to BBB flat which I think reflects our ambition. We want to be a solid triple B flat company. We think that reflects the underlying of our business with the stable cash flow that we are each year able to generate. Where Raymond also referred to, we target to have a rental income of EUR 1 billion by 2027 which gives us an enormous amount of stability for the group and a very good coverage basically of our ICR and debt to EBITDA. Clearly it’s a priority for us to also work on Moody’s. I cannot speak about that timeline. We plan to deliver on the plan like we always do.

Moody’s has given us a positive outlook, but it’s ultimately up to them, of course, to take the action. We work as hard as possible to get there. I let Raymond comment on the defense opportunity.

Raymond, Senior Executive/Management, CTP: I don’t know.

Conference Moderator: Thank you. Our next question is from Cesare Bernatek from ESP. Do you maintain the target level of deliveries for FY2026 within the 1.4-1.7 million sq m range?

Martin, Financial Executive, CTP: Yes, we do. We have confirmed the guidance we have given at the Capital Markets Day. No change. We are on track for this year. We are also with the leasing, we are doing on track for next year.

Conference Moderator: Thank you. We currently have no further questions. So hand back to the CTP management team for closing remarks.

Raymond, Senior Executive/Management, CTP: All right.

Yeah, we’d like.

Richard, Funding Strategy Executive, CTP: Go on.

Martin, Financial Executive, CTP: Thank you all for attending. If there are any follow up questions, do not hesitate to reach out to us. We are also doing quite some of the conferences and roadshow in the coming days, so we are always happy to continue the dialogue with our investors. Thank you for now.

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