Earnings call transcript: CTP NV reports strong Q2 2025 growth and stock uptick

CTP NV reported a robust financial performance for the second quarter of 2025, with key metrics showing significant growth. The company’s gross rental income increased by 14.4% year-over-year to 367 million euros, while adjusted EPRA earnings rose 12.2% to 199.3 million euros. Meanwhile, the stock price rose by 1.17%, reflecting investor confidence. According to InvestingPro data, the company maintains an impressive gross profit margin of 78.42% and has demonstrated strong revenue growth of 27.51% over the last twelve months. The company’s focus on nearshoring and expansion in Central and Eastern Europe appears to be driving positive market sentiment.

Key Takeaways

• Gross rental income increased 14.4% year-over-year.
• EPRA earnings per share rose 6.2% to 0.42 euros.
• Stock price increased by 1.17% post-earnings announcement.
• Strong occupancy rate of 93% and high tenant retention of 85%.
• Continued focus on expansion in Central and Eastern Europe.

Company Performance

CTP NV demonstrated strong performance in Q2 2025, with growth across several financial metrics. The company’s strategic focus on nearshoring and expansion within Central and Eastern Europe has bolstered its competitive position. The occupancy rate remained high at 93%, with a tenant retention rate of 85%, indicating stable and recurring revenue streams.

Financial Highlights

• Gross rental income: 367 million euros, up 14.4% YoY
• Annualized rental income: 757 million euros
• Adjusted EPRA earnings: 199.3 million euros, up 12.2% YoY
• EPRA earnings per share: 0.42 euros, up 6.2% YoY
• Total cross asset value: 17.1 billion euros, up 7.2% from 2024

Market Reaction

Following the earnings announcement, CTP NV’s stock price increased by 1.17%, reflecting positive investor sentiment. The stock is trading near its 52-week high of 19.18 euros, indicating strong market confidence in the company’s growth trajectory and strategic initiatives.

Outlook & Guidance

CTP NV is targeting an annualized rental income of 1 billion euros by 2027. The company expects EPS guidance of 86-88 cents for 2025 and anticipates double-digit EPS growth from 2026. Future expansion plans include a focus on the German market and potential new market entries, alongside exploring data center development opportunities.

Executive Commentary

CEO Raymond Schotting emphasized the importance of opportunity in change, stating, "Change is opportunity." He also highlighted the company’s proactive approach to expansion, saying, "We are constantly looking at opportunities of where shall we go." Finance Director Richard Wilkinson noted the resilience of nearshoring trends, asserting, "Nearshoring is going to remain intact."

Risks and Challenges

• Macroeconomic pressures, including inflation, could impact rental income.
• Potential supply chain disruptions affecting construction timelines.
• Market saturation in certain regions could limit growth opportunities.
• Competitive pressures in Central and Eastern Europe.

Q&A

During the earnings call, analysts inquired about the company’s delivery pipeline and pre-letting expectations, which management confirmed as strong. Discussions also covered geographic rental growth variations and the expansion strategy in Germany. The company highlighted its opportunistic approach to mergers and acquisitions, focusing on strategic alignment with growth objectives.

Full transcript - CTP NV (CTPNV) Q2 2025:

Raymond Schotting, CEO, CTP: And good morning from Prague here at CTB. We have update on the 2025, which has been so far a very good six months. We at CTP say change is opportunity, and we have seen many different changes over the past years, and that has been good for our clients and our business. Yeah, we see trends of deglobalization to continue, which triggers nearshoring in Europe for Europe, and then in Europe for Europe, it’s often Central Europe where companies land, those are companies from all over the world, but also Asian companies, which is now good for more than 20% of our new business. Most of the new business we continue to do for existing clients, long term loyal partners who we have built facilities for over the past decades in different countries throughout the CEE region of Central Europe, and we continue to do so, so we get still more than 70% of all the business we do from our existing clients.

But it’s very good to have new companies come in as well, many Asian in particular, Chinese companies who have found their ways to Europe in order for them to grow their business and supply their European clients. So that has been good in numbers, so we have seen 1,000,000 square meter of new leases which we signed first half this year, 1,000,000 square meter is 11% more than we did during the 2024, 11% up, and we have also been able to sign those leases at higher square meter prices, around 5% more compared to prices of 2024. And looking forward, we continue to see strong leasing activity. It is often the case that we close more deals in the second half of a year, so we are positive about the the rest of 2025. Clients are happy.

Tenants are happy. Retention rates continue to be 85%, collection rates, that means the the money we collect from the tenants, close to a 100%, 99.7% of all the rents we charge, we get paid from our tenants, so they are very strong financially healthy companies who grow. City park model, so our unique business park concept continues to grow and is very successful, mostly grow with existing clients and the companies who have been here who continue to grow their business, and often, in some cases, started as low cost manufacturing, turned into a full scope facility with R and D in house and logistics facilities, so it became real big. We break it down at CTP, we talk about operator. Operator is our portfolio of income producing.

We are at 93% occupancy, similar same to what we were before. We’ve been historically around 95, 93 at 6.2 years of old, that’s the current figure. We have a portfolio now of around 13,500,000 square meter. 13,500,000 square meter is good for €757,000,000 of rental income per year, that’s the 13,500,000 square meter portfolio which we have built mostly, I think 80% of that is constructed by ourselves, and we have then also acquired some portfolios here and there as part of an entry strategy in a new market or in order for us to grow our market share, which we continue to do. We have around 1,500 different tenants in all those buildings, so that’s good.

And these buildings are well maintained, they’re all BRIM certified, and we look after those properties as if they were ours, which is the case. So we continue to invest to make sure that parks and buildings remain in excellent condition, that means we continue to invest in infrastructure access to our parks, in green areas, adding amenities and facilities to those parks to make sure that parks remain attractive, and often, I must say, become more attractive over the years because you’re adding more companies and facilities and amenities, and then these parks grow and then become a center of activity and business for local communities. Obviously, also we team up with schools and other stakeholders, which is good, so you provide education as well as workforce to those clients in parks, and we add incubators, smaller units, as I think there’s more opportunities to build these SBUs, small business units, in different markets, especially in Germany, but also in Czech Republic and other markets. Often as a part of a business park, could also be standalone sites where we develop, I don’t know, 30,000 square meter of SBUs in one location. That’s what we’re looking into.

And maybe that’s also the the jump to the developer, our second activity, yeah, that’s the Inhouse Construction Company. We build a lot of stuff.

Raymond Schotting, CEO, CTP: We have on the

Raymond Schotting, CEO, CTP: way more than 2,000,000 square meter of projects. Currently, some of that will be complete this year. So far this year, first half, we’ve completed and handed over around 224,000 square meter of space to our clients, fully leased. And, yeah, the other properties, most of the 2,000,000 will be completed during the second half and handed over to the ’25, and some projects will go into ’26. Interesting, I think important to mention is that almost 80% of those projects and developments are within existing business parks, so those are parks which we started, we bought land, built infrastructure, and we are continuing to add buildings and build buildings in those parks.

Why is that so important? Well, it confirms the success of a park, you already own that land, you have done your infrastructure, so it’s very nice to continue add and grow those business parks, to become full size business parks, and that’s what a park is about, you continue to add companies and different industries to diversify also. When this 2,000,000 is fully let, it will do another under €60,000,000 of rental income, and we will be around 10% yield on cost as we typically do. The people at the construction teams do value engineering and procurement of course, but also make sure that we build the right quality for the right price, which then helps us to get to a 10% yield on cost. Upon completion, we think these buildings will be 90% leased.

We start, and then we continue to build, and most of them we start, have a pre lease for part of the building or for all of the building, and we build a bit of speculative here to also have an opportunity for companies who need something soon, that we can we have something on stock, as we say, but, yeah, typically we then get to over 90% once buildings are complete.

Raymond Schotting, CEO, CTP: Czech Republic, our home market,

Raymond Schotting, CEO, CTP: and very strong, I must congratulate the the team here in Czech Republic.

Raymond Schotting, CEO, CTP: They do a fantastic job. Jakob Kotter is at

Raymond Schotting, CEO, CTP: the helm of CDP Czech. He’s done a great job, and he’s been with us for a couple of years now. He started as a leasing guy and turned into proper country head here, so congratulations to Jakob and his team for the fantastic achievement so far we have seen in The Czech Republic. Multiple projects on the way throughout The Czech Republic, in particular in Brno, CDP’s home market, could say, where also we do things for Hitachi, we’re doing some things for Get It, for Honeywell, for other long term clients, and at the city park, Brno, which is a flagship business park where we also now have more engaged the city, but also the university and the high school, is good. It’s I think next level business park.

It’s also a little bit of a kitchen maybe, but in a way we develop and invent new property types and new things, which is nice to see that the Czech team is continuing to do that. That’s good, Poland is good, strong, good demands. Jov Fluego and his team started obviously much later in Poland compared to Czech, Czech we’ve been since ever, since the launch of CTP in February, and Poland also only came a couple of years ago with an acquisition of 7R, a friendly local developer which we knew, we bought most of their land bank with some projects they had underway, and Piotr Flugl and his team turned it into a development machine, and they continued to do one after the other side, so they’re currently with more than 100 people in Poland, in Warsaw, with offices in Poznan, in Katowice, and in Gdansk as well. That’s good. And the Germans getting there, nice team.

I seem to spend a lot of time with them. Two ways or two things we do to business lines in Deutsche industry, which is the portfolio of properties we bought a couple of years ago, 1,600,000 square meter with many, many, many tenants. That is a very different business to our normal new build stuff, and we do both at the moment, so we have a couple of sites which are magnificent, they’re really nice, beautiful opportunities which we’ve able to buy because we felt that the market was good to buy in Germany the past years, and that resulted in us buying a site in Muhlenheim, in Dusseldorf, but also in places like Aachen, Krefeld, etcetera, for our new developments, and we have been able to start. So we’re under construction in multiple sites, more than 20 locations throughout Germany where we actually are either constructing or about to start construction, which is a mix of SBUs, small units, 1,000 square meter with a loading dock and a door, a showroom, a little bit of a workshop or warehouse in strategic locations, but also custom built and warehouses all together. We’ve done some announcements on Mulheim, and we’ll continue to do other announcements, so that’s good, and that is also our core business going forward.

At the same time, we look after the Deutsche industry, which we bought for cheap at that time, but also we need to do refurbishments and and rental growth, which we have been able to do and continue to do, and now also with the new government in place, you see a change going on in Germany and that resulted immediately in more demand for both Deutsche industry as well as our new developments. So quite positive about Germany. Yeah, fantastic group of people based in Wuppertal, most of them, not all of them, more than a 100, and I continue to go there every second week. We see more opportunity in Germany, also good to see that some of the tenants we have in Germany are also active in other countries in Central Europe, so there’s also a good opportunity to work with them more to build on those relationships and grow the business together. That’s for me so far.

Thanks for dialing in and for your attention. I’ll hand over to Martin, and, of course, remain available for any questions you may have later on. Thank you.

Martin Jahn, CFO, CTP: Moving on to the financial highlights. The like for like rental growth came to 4.9% in h one twenty five, driven by indexation and strong rent reversion. Occupancy at the H 1 remained stable at 93%. Our gross rental income increased by 14.4 percent year on year to €367,000,000 and we continued to reduce our service charge leakage bringing the NRI to GRI ratio to 98.1%. Annualized rental income increased to €757,000,000 illustrating the strong cash flow generation of our portfolio.

And we confirm our target to reach an annualized rental income of €1,000,000,000 by ’27. Company specific adjusted EPRA earnings increased by 12.2% year on year to €199,300,000. And CTP’s company specific adjusted EPRA earnings per share amounted to €42 cents, an increase of 6.2%. The lower year on year increase in the earnings per share is driven by the increased number of shares as a result of the equity raise in h two twenty four. But thanks to our backlog of deliveries and net development income in the second half of the year, the group is on track to reach its EPS guidance for the year, and we expect to return to double digit EPS growth from 2026 onwards.

Now looking at the valuation results. The valuation results in the first half of the year came to €598,000,000. Of this, 181,000,000 was driven by the construction and leasing progress on our developments, while €374,000,000 came from the revaluation of our outstanding portfolio and €43,000,000 from our land bank. Outstanding portfolios on average 11 bps yield compression, while the EFEs increased by 2.5%. The total cross asset value now stands at €17,100,000,000, up 7.2% from full year twenty four and fifteen point 9% year on year.

CTP’s reversionary yields stand at a conservative 7%. And we saw yield compression in the first half of the year, but we also expect both further yield compression and positive EV growth in the CE region in the ’25. In most CE markets, inflation adjusted real rents remain lower than fifteen years ago, illustrating both affordability of the region for our tenants as well as a midterm rental growth potential. This is also illustrated by the new leases that we signed in h one twenty five, where rents were 5% higher than the new leases we signed in h one twenty four. It is also supported by the undersupplied nature of the CE markets with only half of the industrial and logistics space per capita compared to UK or other Western European markets.

We also saw transaction markets reopening across Europe as there is more clarity around funding cost. And especially on the private equity side, that’s funds coming to the maturity, we expect to see more churn. This will further support our valuations, but as well offer opportunities for us. Our EPRA net tangible assets per share increased from EUR 18.8 at year end twenty four to EUR 19.36 at the half year, representing an increase of 7.1% since the beginning of the year. Year on year, the increase was 13.5%.

With this NTA growth and our dividend, we delivered a total accounting return for our shareholders of 70% in the last twelve months, highlighting our superior return profile, which is unique for the real estate sector. And now I hand over to Richard.

Richard Wilkinson, Finance Director, CTP: In the 2025, we secured 1,700,000,000 of debt to fund our organic growth. We issued €1,000,000,000 of bonds directly after our full year 2024 results, seizing the market opportunity of very attractive pricing ahead of the tariff announcements and the subsequent market turmoil. In addition, we closed our inaugural Samurai loan of 30,000,000,000 yen, the equivalent of a €185,000,000. Diversifying the sources of our funding is one of our main priorities. We transformed CTP from a purely euro senior secured financing structure in 2020 to a largely unsecured financing structure through bonds, private placements and unsecured syndicated facilities, consistent with our stable investment grade rating.

Adding the Japanese yen market to our funding mix further improves our position as the Japanese yen market, which is the world’s third largest, is competitive at different times than the euro market. Finally, we signed a new unsecured facility of €500,000,000 in June, which we drew down in July. We continued to actively manage our funding costs and negotiated margin reductions on a €159,000,000 of loans. In total, we have renegotiated or repaid over one and a half billion euros of our most expensive bank loans in recent months. This includes the prepayment of the €441,000,000 of expensive unsecured debt in 2025.

The €272,000,000 of bonds which matured in June were repaid from our available cash, and our cash position stands at €800,000,000. When including our €1,300,000,000 RCF and the new unsecured loan drawn in July, our pro form a cash position stands at €2,600,000,000, more than sufficient to meet our cash needs for the next twelve months. The average maturity of our debt stands at five point one years, with only €254,000,000 of debt maturing in 2025. At the end of the second quarter, our average cost of debt came to 3.2%, slightly up compared to year end twenty twenty four due to the new funding. Our current marginal cost of funding is close to 3.5% for five year money.

And thanks to our strong cash generating portfolio, we have a healthy interest coverage ratio of over 2.4 times, while our normalized net debt to EBITDA remained stable at 9.2 times. We expect the ICR to have bottomed out as we showed during our Capital Markets Day last year, thanks to our market leading development yield on cost of over 10%, each euro we invest in our pipeline increases our ICR and decreases our net debt to EBITDA. Our loan to value decreased to 44.9% from year end 2024, mainly thanks to the positive revaluation of our standing portfolio. We remain confident in the outlook for CTP. Leasing is strong.

We see near shoring speeding up in many industries with production in Europe for Europe continuing to drive demand. Our pipeline is highly profitable, and our growth is tenant led. Thanks to our industry leading yield on cost of over 10%, we’re able to deliver sustainable and profitable organic growth while maintaining our strong financial position. We confirm our EPS guidance of 86 to 88¢ for 2025, representing eight to 10% growth compared to 2024. We expect to deliver 1.2 to 1,700,000 square meters of developments this year, in line with our long term growth targets.

Thank you for your attention. We now welcome your questions.

Conference Moderator: Thank you. We’ll now start today’s Q and A session. Our first question today comes from Mario Pastel from Bernstein. Your line is now open. Please go ahead with your question.

Mario Pastel, Analyst, Bernstein: Good morning. Thank you for taking my questions and for the presentation. Just two questions from my side. So firstly, on the ERV growth of 2.5%, feels like it’s broadly running in line with last year’s level. So any comment you can make on which markets are driving this performance and whether you think that type of momentum could continue over the second half?

And then secondly, you now split out the pre let levels of the 2025 deliveries into both new locations and existing. I’d almost have expected the this would be the other way around with greater levels of pre letting in the existing locations where you have better visibility. Is this typical of the trends you see?

Martin Jahn, CFO, CTP: Marius, thanks for your question. Regarding the EFE growth, indeed, point 5% in the first half of the year. So we need to see what it will do in the second half of the year. But it comes back to the new leases we are signing, and we show you also the new leases that we are signing in the presentation split out by country. Because if you take into account the market share we have in the Central And Eastern European region, that’s quite a good indication of where market rents are going.

So if you look to the different regions, you see The Czech Republic, and that’s no news, sees a bit lower EFE growth or market rental growth because we have been able to increase already a lot in the last years. But we have seen some rental growth in the other markets. Like Poland, we see a bit of EFE growth coming through. Same in Romania, actually, for another, if you look to the new leases we signed there. So there is the different stages that the countries are in, in terms of market rental growth.

And it will always differ a bit year on year, country by country, but on average, and that’s also what we said. I think when we gave guidance for this year, we expect to be growth in line with inflation or inflation plus. Inflation in the countries in which we are active is still, most countries, ranging somewhere between 23%, and that you see reflected in here. We don’t see it slow down as the basically, the supplydemand balance remains very healthy. You saw the amount of leases we did, 11% more than we did in H1 of last year and a good amount of head of term signed, which is the forward leading indicator for the leasing activity we will do in the second half of the year.

So as long as leasing remains strong, we expect market rent growth to be in line with inflation or slightly ahead. In terms of the pre let, and Raymond can also comment more on it, but it comes back to the risk. Ultimately, if we start a new location, we want to have more security in terms of pre letting because it’s a new location, it’s improving. So therefore, we typically require more pre letting before we start. If we have an existing location, and that’s in line with what Raymond has been doing for the last twenty five years, we will start building the next building when the park is full, even whether we have a pre let, yes or no, because we know the location, we know there is demand, we know the tenants.

So there, we are much more comfortable to lease during the construction. And that has been our business model all along. So you need to see it from a risk perspective. This is actually not different than it was in other years. The pre let typically on the new locations is higher than it is on the existing locations where we have much more of that comfort, and we’ll always start with the next building if the park is full.

Conference Moderator: Our next question today comes from John Vang from Kempen. Your line is now open. Please proceed with your question.

John Vang, Analyst, Kempen: Hi, good morning. Thanks for taking my questions. Could you provide a bit more color on the building blocks for the 4.9% like for like? And also looking at your guidance, I suppose it’s at 4% for the full year. How would we compare this to the 4.9% as it kind of implies a deceleration in H2?

Richard Wilkinson, Finance Director, CTP: Yes. Yes. In terms of thanks for the question, Jon. In terms of the like for like composition, it’s around 2.5% of indexation, and the other 2.4%, 2.5% is from reversionary capture. So we have 14.9% reversionary potential on the portfolio.

So it’s the part of that that we’re able to capture in the last six months. So we’re running ahead of guidance, and we will do everything that we can to make sure that we stay ahead of the guidance.

Martin Jahn, CFO, CTP: There is always, of course, a bit timing. And if it’s half year or in which quarter, you capture the reversion. So in Q1, as you might remember, the like for like was a bit lower. So we’ll see. Like Richard said, of course, we target to be higher, but the 4% was based on what we saw in terms of full year impact when we gave the guidance at the beginning of this year.

John Vang, Analyst, Kempen: Okay. That’s clear. And then just on your on your geographical exposure, I think I suppose you cover quite a fair share of the land between the Black Sea and the North Sea. But there’s also quite some countries in Europe that you’re not active in. How do you look at entering new ones?

And perhaps what are your criteria for entering new ones?

Martin Jahn, CFO, CTP: Look, we are in as you know, Jon, we are very much focused on our returns. Return requirements are leading. And it comes back to the tenants. Do the tenants ask us to be active in certain countries? Because also, if you look historically, that has been one of the main drivers for us to expand into new markets, tenant led expansion.

So tenants asking us, can you also do something for us in Romania? Or tenants asking us, can you do something for us in Poland? And to take the Poland example, we were not active there for a long time, as you know, because we could not make our returns. But as soon as we saw the opportunity with the higher interest rate environment where we are in to make those returns, we enter the market. And that’s also how we look at other European markets.

There are a few large markets in which we are not active in Europe. We are not active in The U. K. We are not active in France. We are not active in Spain, in Italy.

But tenant demand and returns, that are the two main indicators. And then, of course, some markets we would consider expensive, U. K, for that matter. If we look at capital values there, it’s not likely we will go there. So all those factors are feeding in there.

But maybe Raymond also wants to comment more on that.

Raymond Schotting, CEO, CTP: Yes. Sure. Well, I agree with what you said, Martin. On top of that, you can also only do one thing at a time. And with that, I mean, we have entered some new markets in line with what we said before the IPO.

We said we would do more in Western European markets. And then we did the acquisition of that portfolio in Germany. Since then, we have been able to buy more land sites. We built a team. So now it’s very much a focus on getting permits so that we can actually start to develop on the land we have bought in in Germany and also get more rent out of that Deutsche Industry portfolio.

So I

Raymond Schotting, CEO, CTP: think also that’s what you need to do.

Raymond Schotting, CEO, CTP: You need to also give your organization the opportunity to grow and take some time to, you know, to get up to speed before you take the next step. I think that’s one thing which we would add, which I would add to what Martin said. And another thing which I would add is that we are constantly looking at opportunities of where where shall we go? Shall we go to a new market? And if so, what for?

So we constantly do active market research. So we are keeping our eyes and ears open to make sure that we don’t miss out on any opportunity, but in line with what we can do financially, in line with what we can do operationally. But yes, I think, yeah, so we will we don’t stop with operating in ten markets. That’s not the plan. The plan is clearly to continue to develop a strong platform with very strong business model and a proven concept of full service business parts with a variety of different property types and a unique system of managing the tenants and the parks as we do with all the amenities, etcetera, etcetera.

So that model is has proven to be very successful. We constantly improve and fine tune, but it’s definitely a product which we think in other countries will also be successful. So ultimately, of course, you will continue to grow and extend footprint in different markets going forward. Definitely. Yes.

That’s absolutely the plan. So more later to come. Okay.

Nadeer Raman, Analyst, UBS: That’s clear.

John Vang, Analyst, Kempen: All right. We’ll see. Thank you.

Conference Moderator: Thank you. Our next question comes from the line of Vivien Mackay from Degroof Petercam. Your line is now open. Please go ahead with your question.

Vivien Mackay, Analyst, Degroof Petercam: Presentation. Two questions on my hand. First one is on the deliveries. I think that you delivered with 100% pre let. Are you very confident about the letting looking at the head of terms?

And finally, think that you are the period at least above last year’s income per region. So are you confident about delivering, I would say, at or above the upper end of the 80%, 90% period guidance at this stage?

Richard Wilkinson, Finance Director, CTP: Yes. Thanks for the question. Look, I think we always target to do 80% to 90%. If we can achieve more, we will always try for that. First half was exceptional with 100%.

Don’t expect us to keep that going forward. In terms of the comfort for this year, Martin mentioned earlier, the increasing number of hots that we’re signing, which is basically when we’ve reached the commercial agreement with the tenant, but we’re moving forward to sign the formal lease document, which normally takes a couple of months. That we’re seeing those increasing. So yes, we remain confident in delivering the 1,200,000 to 1,700,000 square meters. We’ll see how that tenant demand continues, but we would expect to be comfortably within that and delivering comfortably within the 80% to 90% pre let range.

So that’s we’re just continuing, as Martin said earlier, continuing the long term pattern that we do, build buildings next to the ones that we already have and mostly lease them to our existing tenants. So it’s a business that can repeat organic and deliver organic growth on a very regular basis.

Vivien Mackay, Analyst, Degroof Petercam: All right. And to that extent, is it other element that will refrain you from narrowing the delivery range? I would assume that you have much more visibility into H2, which would have linked, I would say, lead you to narrow the one point zero to 1.7, which is still really quite large. Look,

Richard Wilkinson, Finance Director, CTP: I mean, I hope you can join us on our Capital Markets Day in Vuppel and the Ruike Beach in late September, and I think we’ll be looking to narrow the guidance there.

Vivien Mackay, Analyst, Degroof Petercam: Thanks. And then one final more technical question on the current income taxes. If I look at the share that is included in IBRA earnings is way down compared to last year. Could you maybe just give a bit more detail? Because I could not find it in the full report either.

Martin Jahn, CFO, CTP: Yes. It’s driven by some one offs, which we can recover. But maybe it’s better that we take it offline. I can send you some of the details because it’s indeed quite technical.

Conference Moderator: Our next question comes from Suraj Goyal from Green Street.

Raymond Schotting, CEO, CTP0: Good morning, Thanks for taking my question. We’ve been seeing the near shoring trend for a while now, benefiting from Asian occupiers relocating to Europe, serve Europe. But the leasing rate or growth for the Asian occupiers looks to have slowed somewhat in the first half twenty twenty five. Is there perhaps a ceiling that you’re approaching? Just want to hear your thoughts on that.

And then if this recent deceleration continues going forward, how would that impact your ERV growth, if at all, as well as the like for like guidance?

Richard Wilkinson, Finance Director, CTP: Yes. I wouldn’t characterize it as a slowdown, particularly. There’s always a little bit of volatility around any of the leasing numbers when you deconstruct them into ever smaller component parts. Asian tenants have been running around 20% of our new leasing for the last year and a half. They continue to to be there.

There will always be a bit of volatility on a quarter to quarter basis, but we don’t see any reduction in demand, particularly from from Asian tenants. I I I let Ramon talk to to his his recent visit to to to Asia on that. But, no, I wouldn’t particularly over interpret one one quarter or one half into a long term trend. The long term trend for nearshoring is going to remain intact. It’s very clear now that we are in a world with higher trade barriers, which will mean less global trade, more local production.

And as Europe represents 25% of the world’s GDP, manufacturers will need to produce their products in Europe to sell competitively in Europe. So we would be confident in that trend continuing for quite some time.

Raymond Schotting, CEO, CTP: Richard, I can add to that that we see more demand. Yeah. So also, as you can see, we’ve done more deals first half this year compared to last year, 2024, over the same six months period. And, yeah, with regards to the travel and the and the context with with Asian companies, as you know, we have an an Asian team. So we have a Chinese team, people who are in Europe as well as in China in order to make sure that we are close to Chinese companies, help them, support them in in in the decision making and and guide them and make sure that they, you know, they get the proper support to set up the business in Europe for the European clients.

And and and that’s happening, and there’s there’s more to come. And we’ve only seen the the beginning, I think, is gonna be much bigger. That’s what I feel. We have a number of projects under construction, as you know, and that also attracts against suppliers. It also works as a kind of confirmation, as a reference.

So I think there’s way more to come. Chinese, but also Taiwanese. We have been working for Taiwanese companies for a long time, and currently, have under construction multiple projects for Taiwanese, semiconductor business related in Germany, in Aachen, in Brno, Czech Republic, where it’s the cluster of Taiwanese semiconductor related businesses. There is another cluster in Dresden. Germany, where we have been able to buy two land sites, where we’re currently in zoning and permitting process and on a daily, weekly basis, do doing different proposals.

And I’m meeting on a weekly basis Chinese potential clients. So and no. No. That’s we we expect a lot from that. And we and then there’s different sectors.

And this is maybe if you talk about Asian companies setting up business in Europe, that’s definitely happening. And then there’s certain industries. I refer to Germany. Now there you see clearly from the defense industry, there is demand from defense industry related companies who are looking for space. That’s clearly happening.

Also energy, also for Germany. The Mulheim project, we announced E. ON as one of the first tenants. We will soon announce another tenant for Mulheim. It’s a you could call it an energy park.

It is also the second tenant for that project. Is also related to the energy sector. So energy, defense, semiconductor and then also data center supply, pharmacy is strong, pet food, we have referred to that earlier, is strong. E commerce is still in Central Europe growing. So there’s all kind of different industries, which, yeah, which there is lots of opportunity out there.

So not slow down. No. No. It’s not the that’s not the plan. The plan is to continue growing.

So that’s what we see from from the market. So good demand.

Raymond Schotting, CEO, CTP0: Thanks for that. Very clear. It’s helpful.

Conference Moderator: Our next question today comes from Frederic Renard from Kepler Cheuvreux. Your line is now open. Please proceed.

Raymond Schotting, CEO, CTP1: Hi, good morning. I just wanted to come back on ERV and what you’re showing in the presentation. Can you give us a bit some detail on geography? And I mean by that, namely, Hungary and Poland. I see, for instance, rent in Hungary going down 4%, while it is up almost 10% in Poland, where vacancy is actually quite high.

So I’m quite surprised for Poland. Is it due to different corridors that you have delivered asset, which could explain that increase. So basically, question is, can you give some comment specifically for ongoing Poland? And then the second question would be on subsector. Can you give it can you give us a bit some detail on which subsector might be more active going to H2?

Last year, if you remember, you had a lot of question on the auto industry. Can you give a bit more granularity on what happened over the last year on this subsector? Thank you.

Martin Jahn, CFO, CTP: Let me start with the EFE, and then I think Raymond can continue on the subsectors. So if you look to Poland, indeed, we have seen rental growth coming through. And that’s because if you look

John Vang, Analyst, Kempen: to

Martin Jahn, CFO, CTP: Poland, yes, vacancy went up a bit in ’twenty four as there were still a lot of deliveries coming online, which were basically started in the low interest rate environment. So you saw vacancy going up in 24%. But also, if you look to the forecasts from the brokers, whether it’s a CBRE, whether it’s a JLL, etcetera, they expect to be back in one, two years at 5%. Why is that? Because Poland continues to be economically very strong.

And also, if you look to the demand, if you look to the net absorption, Poland is a good market, and we do good leasing there. And that’s also one of the reasons why we have seen the rental growth there. And of course, there is always a bit, what Richard said earlier, the individual deal you are signing. But in general, we are quite constructive on the Polish market, both in terms of rent as well as demand. If you look for Hungary, Hungary is a bit different.

Especially around Budapest, you see some oversupply driven by a local developer who has been quite active there. Regional Hungary is better, actually. But around Budapest, there is a bit of oversupply. That has put some pressure on the rents there, the new rents that we are signing. Yeah?

Because, ultimately, if you look to the reversion, there is still reversion embedded in our Hungarian portfolio. That are sometimes the things that happen, and then you adjust your developments. So in Hungary, we will do less speculative at the moment. And that’s always have been how we have been operating. There can be local pockets of oversupply in certain cities, certain regions, then you slow down your speculative developments there because there is no point in competing head on head with one of your competitors who builds a building next door.

You need to be realistic in that. And we are, for sure, and that’s also why we value our model with the in house construction team also so much because we have the flexibility to speed up and to slow down where we want. But overall, for Hungary, as a market, I would expect indeed this year not a lot of rental growth. First, bit oversupply need to be absorbed by the market. But it’s also it’s not a huge amount, but it’s temporary, distorting probably some of the leasing we have done in the first half of the year.

And then I’ll let Raymond comment on the subsectors.

Raymond Schotting, CEO, CTP: Okay. Thank you, Martin. Yeah. Well, yeah, indeed, as you said, the markets like in Hungary or in Budapest, maybe there is a bit of oversupply in it. But I mean, long term, there is rental growth, right, not as much maybe as we’ve seen over the past years or not as much as you see in The Czech Republic.

But if you look long term, if you look three years, two years, five years, and compared to today, then there is a significant rental growth. I mean, construction costs are not coming down, land costs not, etcetera, etcetera. So the trend is that long term, there’s rental growth. And if you build proper buildings in the right locations, you maintain them well, I think you will yes, you will sooner or later see rental growth, steady rental growth. But yes, there that’s one.

If we got yes, and then also you mentioned Poland. Poland, it depends also a bit on the location, of course, because it’s a big country, the largest country in Central Europe and also work closely with or rely on whatever the German economy is. It’s still the fourth largest economy in the world and the decisive recovery. So I think that yeah. Yeah.

I’m not sure what exactly submarkets which which what would you like me to refer to, Martin? What what what do you want me to I

Martin Jahn, CFO, CTP: think the question was more on the difference between automotive, three p l’s manufacturing.

Richard Wilkinson, Finance Director, CTP: Yeah. Yeah. I mean, I I can take the automotive part. You know? So if if you look, I mean, we’ve been deconstructing the the the portfolio, and you see that also in the presentation.

You know, growth of the leasing in in different subsectors versus the overall leasing across the whole portfolio. What you can see is that in the last two years, we did 16% of our new leasing was with with with automotive versus a whole portfolio of 21%. When we first started showing this, I think, three quarters ago, that was 14% for automotive. So a slight tick up in the last couple of quarters. As I think, you know, we benefit from Central Europe being the best cost location for for manufacturing.

And I think as as Raymond said right at the very start of of the video, you know, we see changes opportunity. And the change in the dislocation in the in in the automotive industry is driving more of that towards the the lower cost manufacturing locations, and that in Europe is predominantly Central Europe. And then generally, otherwise, we see good, solid demand from multiple sectors, whether it’s retail, whether it’s logistics companies or whether it’s manufacturers, either nearsuring it from Asia or also tenants maybe moving from higher cost locations in Europe into lower cost locations in Central Europe.

Raymond Schotting, CEO, CTP: Yes. True. And it’s also maybe to add to that, when you talk about automotive, I think that also includes tire warehouses, which is aftermarket. There is still old car ownership is still they’re still growing, obviously. So there’s still you need tire warehouses or warehouses where you store tires.

That’s one. Then we have automotive, which is car parts, you know, also aftermarket for repairs of cars. Plus, what do you have? You have in The Czech Republic, you used to supply used to be a lot of automotive in Germany, in Bavaria with, I don’t know, Audi, BMW, Mercedes and so that part of the world. And one of our products, I remember, in The Czech Republic, city park Borg, was also a good location for those automotive companies to supply the manufacturing of cars in South Germany.

In the meantime, I think that turned a little bit, and Borg is now for different clients, as I refer to pet food. Well, there’s it’s huge in terms of pet food. There’s online Royal Canin, which is German, I think, part of Reve or yeah. So they do online pet food into Germany out of Bor in The Czech Republic. So there is and and maybe automotive moved a little bit to the East to Central Europe, obviously.

And also, you see and whatnot, Chinese car car part producers who supply, yeah, different car makers with car seats, for example, yeah. And car seats you need no matter if it’s an electric vehicle or hybrid or traditional vehicle. So yeah. So no, I’m not so concerned about. I think diversification was always we were always keen on that.

Yes. So the other way around, if you look at pharmacy, if you look at, as I mentioned, semiconductor, if you look at those industries, there is, yes, good opportunities out there in different sectors and industries. And yes,

Raymond Schotting, CEO, CTP2: many possibilities.

Conference Moderator: Our next question comes from the line of Elena Screw from Barclays. Your line is now open. Please go ahead.

Raymond Schotting, CEO, CTP3: Thank you for the presentation. There are rumors earlier in the year that you’re intending to acquire a Romanian portfolio. Can you give us any update on that? And then from your presentation, it looks like there are about 100,000 square meters of standing portfolio acquisitions. Can you give us more color on those?

And maybe how you’re thinking about acquisitions more generally, given your comments that the market is improving?

Martin Jahn, CFO, CTP: Yes. Regarding the portfolio in Romania, that comes back to what we also disclosed in the Q1. We are waiting for competition approval. We haven’t gotten that. The competition authority goes over their own agenda and their own time line.

So so we are waiting for that, and and we’ll update the market when we get it. If you look to the acquisitions we disclosed, it’s actually just over 50,000 square meter we bought here in The Czech Republic in Pato Bice, which were two buildings where we saw a nice value uplift as we could come in and bring some tenants in there. So we saw a nice opportunity there. As you know, in general, if you look to our M and A strategy, we are quite opportunistic there. We don’t need M and A to grow because we grow 10% to 15% through our developments.

That’s our key growth engine. But if there is interesting acquisition opportunities, we always look, see whether they can comply with our return requirements, see what is the strategic benefit, can we get some land with it, can we basically strengthen certain tenant relations, can we strengthen our market position in a certain region. So it’s always a mix of the financial and the strategic requirements that fits in into those considerations. But, yeah, it it it really depends on the opportunities that are there. So so that’s also you look historically, the acquisitions in our portfolio are always a bit volatile.

The big acquisition was, of course, Deutsche Deutsche Industry REIT. But other than that, acquisitions are actually more focused on land. We buy each year a bit more than €200,000,000 of land. Last year, it was even a bit more as we bought the big site in Dusseldorf because ultimately, that’s, of course, where we create most of our value. And acquisitions from standing buildings are just bolt ons in certain locations when they make strategic and financial sense.

Conference Moderator: Our next question today comes from Rob Jones from BNB Paribas. Your line is now open. Please proceed.

Raymond Schotting, CEO, CTP2: Great. Thank you, team. Raimo, I’ve got one on Germany and then Marcel Richard one on development pipeline. Raymond, talked to the start around Germany, so getting there, spend time every couple of weeks there. I appreciate you spend time pretty much all the portfolio every couple of weeks.

But I’d also appreciate we’ll get obviously more color on Germany and the upcoming CMD. But maybe you could give some comment on when you are in Germany, are there any specific parts of the German business or its operations that you’re focusing your time on specifically when you’re there? And then, Marcin or Richard, in terms of the pre letting of the ’25 deliveries, I think you said that was just over 50%. First part is how does that compare to last year at this stage? And the second question is remind me what that is in terms of square meters?

Thank

Raymond Schotting, CEO, CTP: Thanks for the question, Rob. With regards to Germany, and yes. So I’d like to explain how that works in order to answer your question. So we have two businesses. I start with the, I call it, easy part, which is the new development.

Okay? That’s what we always do in any other country. So we go out, buy land, and then we do a design and a project, and we go out, get permits, building permits, and then we start to build with a prelease or or in combination with some speculative development. And that activity is now starting. So in numbers, that means that I think we can complete around 150,000 square meter next year, 150,000, new builds, brand new industrial warehouses, but also some SBUs, some smaller units often combined.

So you have a business park like Mulheim. Mulheim is one of the sites we bought from Valurag. It’s close to Dusseldorf. It’s a fantastic location. We needed some time to do the demolition, cleaning up of the site and preparing the site for new development.

And that is happening while we speak, and we think we can start on-site in Q1 of next year with construction. So most of that will be complete by end of next year. That’s the site where we have some preleases signed. We have announced A. ON.

We will soon announce another well known German company. And and that’s one activity. At the same time, we are building in in Julich, for example, it’s close to Aachen. It’s a pre lease for a Taiwanese chip manufacturer. So Aachen is close to Eindhoven.

It’s all part of the the, yeah, the semiconductor kind of industry and business and ecosystem. I mean then there’s multiple sites in Aachen itself. We are doing a project. We are doing something Krefeld, and those are multiple projects. And that business, I hope, will grow beyond the 150,000 square meter of production of us building properties more than 150,000 square meter per year.

So the target is more towards between 200,300 square meter on a yearly basis. And a significant part of that will also be Dusseldorf. That’s the other side we bought, which has an 800,000 square meter more than 800,000 square meter land. So we think we can do more than 400,000 square meter of lettable area over the coming years. So that’s our core business, new developments.

And I spend time with the teams. We have micro teams, as we call them. That means we have a small team in different regions, and those teams are responsible for the entire project. So from the design, permitting, construction management, etcetera, etcetera. So we break it up, let’s say, in different regions where we have dedicated teams of people who focus on such a project.

And then we have out of Guppertal, we have a legal team. We have a procurement, etcetera, etcetera, so that we have services to support those micro teams in the various regions of the country of Germany. As I said, Germany, fourth largest economy in the world. Obviously, certain regions are stronger than other regions. We have a special focus on Northern Westphalia, so Dusseldorf area, Dusseldorf, Cologne, that part of Germany.

But also, we have an office in Stuttgart. We have a site in Frankfurt, which we acquired. We’re also active in the North, so Hanover, Bremen, that part and a bit less in the Eastern part of Germany. But we do have a team in Berlin as well. So multiple teams throughout the country to cover the country to prepare for new developments.

And I think we have been able to buy at good prices. And I think it was a good time to buy. Maybe now it’s changing a little bit as we see more demand, obviously. And yes, anyway, that’s the first business. Second is the portfolio of properties which we have acquired due to the acquisition of Deutsche Industry.

It’s around 100 different buildings throughout Germany. They are older buildings. Some need refurbishment. For some, we are looking for tenants. Others, we do redevelopment, means demolition and new build.

Overall, you could say that when we acquired it, I think the average rent was EUR 36, EUR 36, so EUR 3 per square meter average per square meter per month. And we have seen a rental growth. So we are now close to EUR 50, EUR five-zero, I think, on average. So that’s also why where the valuation came come from. But the and there, that’s a dedicated team of people, a different group of people than the group who do the new developments, but there are two different businesses.

On top, we have our solar business, which is 10 megawatts by year end. For Germany, we are working on a data center project. We we put a team together. Yeah. So it’s still relatively new.

It’s it’s only two years from the start. So we’re still in a start up phase, shaping the organization, introducing all kind of IT projects, different processes. And so I I’m involved, like, as an interim managing director, if you like, and then we have a management team of four people. And so so so that’s that’s my role. And it’s very similar to what I’ve done in The Czech Republic or Romania or Poland where, at the start phase, I’m a bit more involved than later on.

We at CTP, we have we call it Group A and Group B countries. So Group A have their own MD. They are well established. And then and the b groups are the the start up, the growth. There, initially, I’m a bit more involved during the setup, which is I could be one, two, three years or so, and then a bit more engaged, a bit more, yeah, involved.

And then until they hand over to the local teams once they are more established, I would say, and once the local teams are, yes, up to speed. And also, I think this is the way of coming to quick decisions when it comes to acquisitions of land or doing designs and, yes, getting moving forward. So that’s and also, Richard already mentioned it, we have invited you guys to come over to our Capital Markets Day, which will happen in Wuppertal. So there also, we have an opportunity to see the Wuppertal site, which we bought. And it is a combination of some existing buildings, which we will keep.

They are listed. Are older industrial properties, which we will which we are currently refurbishing, which is also mostly leased already. But also, we are going to build some new buildings there. So it’s going to be another business park with a variety of different companies and businesses, quite interesting, I think. And that also event will give you the opportunity to see Mulheim, Dusseldorf, so also get a better feel for the pipeline.

And at the same time, for the team, and we will also visit some of the Deutsche industry properties so you can actually see how those buildings look like and what we what we what we do with those buildings in order to, yeah, to create more income and more value. But very positive about the progress we are making. And, yeah, there’s a bit more detail maybe, but that’s what I that’s what I do. Yes. And I look forward to showing you around.

Yes, sure, sure. Pleasure.

Richard Wilkinson, Finance Director, CTP: And then, Rob, to answer your second question, the pre lab ratio last year was 51%. It’s 53% this year, and and that would give you a range between 650,900 square meters.

Conference Moderator: Our next question comes from Nadeer Raman from UBS.

Nadeer Raman, Analyst, UBS: Hi, good morning all. Thank you for the presentation. So my question my first question is on the delivery pipeline and the guidance for 1,200,000 to 1,700,000 square meters by year end. So if I look at the 2023 and 2024 figures, I think by this stage of the year versus the deliveries you completed for the full year in those years, you completed around 25% to 35% of your delivery pipeline, whereas this year I can see that you’ve completed if we take the midpoint of your guidance to be 1,450,000 square meters, you would have completed 15% or so. So I was just wondering what the downside risk is to the guidance that you’ve given us for the 1.2 to 1,700,000 square meters for year end.

So that’s my first question.

Martin Jahn, CFO, CTP: There is no downside risk. Otherwise, we wouldn’t have reiterated the guidance which we just did. Look, we are very comfortable. If you look to the leasing we’ve done, we have done more leases. And leasing is key.

Leasing and construction progress. We are on track, and we are very comfortable that we will get into the range of 1.2 to 1.7.

Nadeer Raman, Analyst, UBS: Okay. That’s very clear. And the second question is on a comment just made by Raymond on the data centers. Is this a project that’s just being done in Germany? Or do you have any other details at this stage on the timelines for this or what this could imply?

Raymond Schotting, CEO, CTP: Yes. We have previously also mentioned that we’re looking into the data center opportunities. We have some people at CTP who are experienced in this industry, and we have also researched and we appointed advisers to help us there. With regards to Germany, yeah, when buying the one of the sites in Germany, comes with a 100 megawatts of of power. We have an opportunity to to increase that to maybe 300 megawatts.

So that’s one of and and and that’s, experts believe, a suitable site for for data center development. So and what where are we where do we stand is that we have we are currently in in a feasibility study, I would call it like that. And and that’s that’s one, and that is two other sites with similar characteristics. Also in Germany, where currently yes, we are in order for us to understand opportunities better, So, yeah, that’s where we are. So I would call it visibility study.

I think we’ll probably know a bit more by the Capital Markets Day event in September or maybe on the next call, but it’s definitely a sector or industry where we, yeah, want to make sure that we understand the opportunity and if so, going forward, be part of that, yeah, in one way or the other. That’s all I can say at the moment, think.

Nadeer Raman, Analyst, UBS: Thank you. Very clear.

Martin Jahn, CFO, CTP: Yes.

Conference Moderator: Our next question today comes from Wim Louie from KBC Securities. On the leasing demand from Chinese tenants, can you give some color on the industries they are in? Or are they more subcontractors versus OEM? And do you see a relation to the tariff discussions between U. S.

And China that could benefit CEE investments in certain countries?

Raymond Schotting, CEO, CTP: Yes, interesting question. It’s also the question we ask ourselves, what are the targets? Where should we search? What industries? In conclusion, I think, for the moment is that it’s all over the place.

That means that all companies Chinese companies who like to sell in Europe are actually interested in being in Europe because of many reasons. So and the reasons are, for instance, when we had the COVID, upon the me, we could not get goods out of Asia to Europe, that was one. And then we had geopolitical issues and the Suez Canal was closed and decarbonization. I mean, it’s not fashionable to travel with goods all over the world, and you would rather manufacture locally for the markets for local markets, and then the tariffs came. So there’s many, many, many reasons why Asian companies or, in this case, Chinese companies come to Europe because they want to sell to European consumers.

What industries? All over. Chinese furniture makers. They do not maybe necessarily manufacture furniture in Europe, but they would ship parts of furniture from Asia, from China to Europe to assemble here in Europe and to sell it in Europe, online or in their showrooms or through their distribution channels. So that’s furniture makers or furniture sellers.

Can be any other e commerce Chinese e commerce industry. Can be we are doing a project in Hungary for a Chinese company who are they manufacture machines, vehicles, I would call for the mining industry, agriculture industry and construction industry. So construction, think of bulldozers, what do you call, and lifts for outside facade cleaning or facade mounting, these kind of things. So that’s very diverse. But also, we have, obviously, Chinese is like Lenovo.

They manufacture computers. Right? Yeah. But you know, you have that’s in Hungary, by the way, in Budapest, where we have done a factory for them, and then we extend it with a distribution center. Automotive, there is suppliers to BMW and Volkswagen, for example.

BMW, Volkswagen, they require these suppliers to be in Europe close by their factories. And BMW, for instance, they are currently investing €3,000,000,000 in a new factory. BMW is building a new factory in Debrecen in in East Hungary along the Romanian border. Anyway, so that attracts also Chinese automotive. What else?

We have a Chinese company who supply Tesla. So Tesla have a factory in Berlin. And this Chinese company, they work for Tesla in China, but they also work for Tesla in here in Europe, and they are renting a factory from us in East Slovakia, which we have recently completed. So I think there’s all kind of Chinese companies looking for space in Germany, but also in Central Europe for all type of different activities. Yeah.

So so what we try to do is to catch them through our biz dev team in China or in Europe, different business delegations. We team up with the different embassies, with the what do you have? You have these chambers of commerce. We have different presentations. We do online events for Chinese companies who are interested in learning more about the European markets, about the legislation, about everything labor, property related, etcetera, etcetera.

So yes. Again, we do most of the business for existing clients. But if you ask us about where does new business opportunity come from, well, from different sectors, but also from different parts of the world, and this would be one.

Conference Moderator: You. With that, we have no further questions in the queue at this time. So I’ll hand back over to the management team for some closing remarks.

Richard Wilkinson, Finance Director, CTP: Yes. We’d like to thank everyone for their questions. I look forward to seeing lots of you at the Capital Markets Day in September, and wish you all a great day. Thank you.

Conference Moderator: Thank you all for joining. That does conclude today’s call. You may now disconnect your line.

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