Earnings call transcript: Inmobiliaria Colonial reports solid Q1 2025 growth

Inmobiliaria Colonial (COL) reported strong financial performance for the first quarter of 2025, driven by significant growth in rental income and strategic investments. The company’s stock, currently trading at $14.30, has demonstrated impressive momentum with a 41.67% return over the past year and a 20.25% gain year-to-date. According to InvestingPro analysis, the company’s current valuation implies a strong free cash flow yield, though it trades at high EBITDA and revenue multiples. With a market capitalization of $19.1 billion and a Fair Value assessment from InvestingPro suggesting the stock is fairly valued, the company has demonstrated robust operational and financial metrics that could influence future market sentiment.

Key Takeaways

• Gross rental income increased by 4% like-for-like, reaching €97 million.
• Net rental income saw a 5% like-for-like growth, totaling €89 million.
• The company reduced its debt by €500 million, maintaining a cost of debt at 1.77%.
• Occupancy rate stood at a high 95%, with a like-for-like rate of 97%.

Company Performance

Inmobiliaria Colonial showcased strong performance in Q1 2025, with notable increases in rental income and strategic investments in science and innovation. The company’s focus on prime assets and efficient portfolio management contributed to its robust financial results. The real estate market in key cities such as Paris, Madrid, and Barcelona remains favorable, supporting the company’s growth trajectory.

Financial Highlights

• Gross Rental Income: €97 million (4% like-for-like growth)
• Net Rental Income: €89 million (5% like-for-like growth)
• EPRA Earnings: €55 million (16% year-on-year growth)
• Occupancy Rate: 95% (97% like-for-like)

Outlook & Guidance

Looking ahead, Inmobiliaria Colonial has projected an EPS guidance of 32-35 cents per share for 2025, aligning with analyst forecasts of $0.53 per share. The company anticipates potential EPS growth of €0.11 from urban transformation initiatives between 2025 and 2028. Analyst consensus shows mixed sentiment with a mean target price suggesting limited near-term upside, though targets range from $9.94 to $15.33 per share. Additionally, the science and innovation platform is expected to contribute an additional €0.2-0.3 to EPS. The company plans to distribute a dividend of €0.30 per share, reflecting an 11% year-on-year growth.

Executive Commentary

Pedro Vignolas, CEO, emphasized the company’s strategic focus, stating, "Colonial is expected to be a company with a core pricing power element at the heart of its strategy." Carlos Coma, Chief Corporate Development Officer, highlighted leasing activity, noting, "We are seeing strong activity... 60% year-on-year growth in letting activity." Coma also pointed out the limited availability of Grade A products in key markets, underscoring the company’s competitive position.

Risks and Challenges

• Economic Uncertainty: Potential macroeconomic pressures could impact real estate demand.
• Interest Rate Fluctuations: Changes in interest rates may affect financing costs.
• Market Competition: Intense competition for prime assets could pressure pricing.
• Regulatory Changes: New regulations in key markets might affect operations.

In conclusion, Inmobiliaria Colonial’s Q1 2025 results reflect a solid foundation for continued growth, driven by strategic investments and strong market positioning. The company’s focus on prime assets and innovation positions it well for future opportunities, despite potential risks in the broader economic landscape. For deeper insights into Colonial’s financial health, valuation metrics, and growth potential, explore the comprehensive Pro Research Report available exclusively on InvestingPro, which provides detailed analysis of this and 1,400+ other top stocks.

Full transcript - Inmobiliaria Colonial SA (COL) Q1 2025:

Moderator: Welcome to the First Quarter twenty twenty five Results I would now like to introduce Mr. Pedro Vignolas, CEO of Inmobilaria Colonial. Please sir, go ahead.

Pedro Vignolas, CEO, Inmobilaria Colonial: Thank you. Good afternoon. This is Perabinho speaking together with Carmina Gagnet, Chief Corporate Officer and Carlos Coma, Chief Corporate Development Officer. It is a pleasure for us to share with you our results for the first quarter of this year. Before we get into the actual numbers that we would like to share with you, first a comment on the framework for these numbers, a reference to our strategic positioning, which is the basis for Corneal to deliver earnings and value growth.

As you may know, Corneal strategy is based on prime asset class, which delivers stronger growth. This is delivering pricing power as we have improving in recent years. This is attracting the best clients, which is the way to capture above average rental growth. And as a consequence of this, this is about strong earning growth. That’s why we’ve been able to deliver superior double digit EPS growth in the last three years, fifteen percent CAGR.

This is why today we can announce that we are again showing this kind of earning growth, 16%, the RPS of this year compared to the earnings of last year. The second angle, it’s remembering that COLONIAL, it’s also about a platform, is also about a platform that allows for human adaptation to human transformation, adapt our buildings to the needs of the cities, adapt the buildings to the needs of top clients. I always want like to remember that everything Colonial owns, it’s a super quality, but a vast majority of this has been the result of our transformation efforts, almost 80% of what we own is in subject to alpha intervention. So these two drivers are prime positioning and our platform skills are the, I think, the framework to explain our results that I show you I share with you immediately. Page five, the main KPIs about the results for the first quarter of this year.

We have finished our first quarter with a gross rental income of 97,000,000. That is a 4% growth like for like, 5% like for like if we talk about net rental income, which is now BRL89 million for the first quarter. Release spread for the group 11%. It is relevant to emphasize the case of Paris, Twenty Percent release spread, very strong. And maybe it’s a good thing to highlight this in the current market environment.

Rental growth, again, very strong, 7% rental growth measured as more signed rents versus December 24 ERB, maybe highlighting again the case of Madrid, percent rental growth in the case of Madrid. And finally, as I was saying, EPRA earnings jumping 16% to EUR 55,000,000. Having said that, if you go to the EPS reference, this is almost EUR $0.09. That is basically flat compared to last year, but basically on track with the guidance that we’ve been providing to the market. This is in line with our expectations in order to achieve this EPS that we expect by the end of the year.

On Page six, highlighting the performance for the different markets we are in. You can see here that it’s quite robust across the board. Paris, Seven Percent rental growth in three months with a net rental income like for like 4%. Madrid rental growth 9% with a net rental income growth like for like of 7%. Barcelona rental growth 6% with a net rental income like for like of 2%.

This slide, by the way, our locations and our occupancies. As usual, the map speaks for itself. Well, this is the introduction. I will come back at the end of the presentation with some additional comments. Now let’s jump into the details.

Next section is about financial performance. Armina, when you wish. Thank you.

Carmina Gagnet, Chief Corporate Officer, Inmobilaria Colonial: Thank you, Pera. I will go in more details into the numbers. In Page eight, you can see the growth rental income growing basically on the back of the core portfolio and the project delivers. 4% like for like core portfolio, thanks to the year with growth across the market in new lettings and the case, as Perra mentioned, the outstanding release spread, especially in Paris. Additionally, 4000004%, thanks to the project that we have been delivering, especially Manu and the criteria portfolio entering into our portfolio, into our operational after since July 2024.

So compared to the previous quarter from the quarter last year, this is a delta from this quarter in 2025. This both positive impact has been offsetting the negative impact of EUR 5,000,000 due to the fact of Condorce going or entering into the project pipeline and a houseman that is going to be delivered during twenty twenty five second half of twenty twenty five. If we go into the net rental income, next page, you can see here the details of the positive trend or the positive like for like growth in across the markets. And especially in the net rental income, increasing efficiency. We work every day to increase efficiency in our portfolio across all our contracts.

And basically, this active management inefficiency, you can see in numbers, 5% net rental income and in the both in the three markets where we are operating, all of them with a positive like for like growth in net rental income. By concepts, in the right hand side of the page, you can see the net rental income by concept, how it’s growing concept by concept. First, two point four percent due to the indexation. All our contracts are linked to the CPI or to the ELAD in France. So it adds a positive 2.4% in the growth.

Additional 2.3%, this is a demonstration of pricing power across the market and a slightly positive impact from occupancy as you will see later on. In next Page 10, this strong operational performance gives us the strong recurring profit growth, 16%. As we explained before, so $4,000,000 core portfolio, very positive rental growth in the new leases, very positive release spread, especially in Paris, and of course, inflation across the contracts. Additional EUR 2,000,000, thanks to the Mannum and Criteria portfolio entering in the income producing assets. On top, you can see here 4,000,000 in the overheads and other income.

This means basically savings in overheads, some economics in overheads and on top CapEx reinforcement to our tenants, especially when the contracts matures, we are able in some contracts to reimburse and to get the CapEx back into these contracts. And very important impact positive impact of €5,000,000 on financial cost, Basically, a reduction an important reduction compared to the previous quarter, 500,000,000 debt has been reduced. That means that additional income from cash remuneration and on top additional active asset active liability management in the capital structure. All these positive important impacts has been overcompensated the EUR 7,000,000 less results or less income from Condorcet now in the project pipeline and Hausmann is still in the project pipeline that will come into operation in the during this year at second half of the year. So basically, EPRA earnings increasing double digit, 16%.

EPRA EPS remaining flat, but importantly, considering the new shares outstanding after the capital increase executed in last year. So we are confident to maintain the guidance that has been on track, thanks to these outstanding results. In the capital structure, in the next page, both investors and both the rating agency confirms their robust capital structure. We have shared with you in the previous communication the successfully bond green bond issuance of €500,000,000 But recently, we have confirmed by S and P the BBB plus with a stable outlook rating, basically confirming the strong performance, the cash flow resilience and the strong liquidity position and the limited interest rate volatility for the coming year. And this mainly, you could see in the following page, in Page 12.

So the debt at the end of the quarter, it’s $4,400,000,000 but when we compare this debt with the previous quarter in the beginning of last the first quarter of twenty twenty four, The debt has been reduced €500,000,000 In the liquidity, we are, as you know, always in the safe position. We have €3,000,000 liquidity between ties and credit facilities, which covers more than one time, 1.3 times the debt maturities for the following three years. And thanks, as you know, from thanks to the pre hedge that we have in place and all the cost all the debt being 100% hedge or pre hedge. We have we can maintain this very interesting cost of debt, 1.77%. And our estimation for the forecast for the following years would remain in a very interesting levels to between 22.5%.

Carlos?

Carlos Coma, Chief Corporate Development Officer, Inmobilaria Colonial: So let’s step into the operational section. I will start on Page 14. You see how the letting performance has been for the first quarter. We’ve signed more than 30,000 square meters, so a significant acceleration in letting activity on a year on year comparison, 61% more. These 32,000 are equally split in renewals 17,000 square meters and letting up of new available space, 15,000 square meters and annualized rents of CHF 13,000,000.

Interesting particular case studies to look at the Paris market. In Paris, the rents we have signed is CHF 6,400,000.0 in annual terms, and this corresponds to 6,400 square meters. So CHF 6,400,000.0 divided by CHF 6,400 we are signing at an average year an average rent of EUR 1,000 per square meter for the total portfolio of Kadis. This is a clear reference, a clear view of the prime nature of our portfolio. You see here examples of specific contracts that we have signed here on the right hand side.

And what you can see, we are capturing really the top brand in the market, the highest trends. We are really setting the benchmark, and we are delivering extremely strong rental growth. With this, I go to the next page. Here on the next page, you can see the rental growth. So just in three months as important element to take into account, rents we have signed on all of these 32,000 square meters are 7% higher than the market rent at the yearly of our appraisals as of December.

So just in three months, seven percent more. We want to put this into another comparison, another reference when we look throughout our contract portfolio, how all of the contracts with an indexation window have been updated in terms of indexation, we have 3.4% applicable indexation in the first quarters of the year. So our high quality product is delivering, as we always were stating, a significant premium in rental growth vis a vis the standard indexation. As you can see, 7% year over year growth versus 3.4% indexation applicable to our portfolio. So close to 400 basis points of growth premium because of being in the prime end of the market with our assets.

So we are really benefiting from a further polarization trend in demand and from an office supply that is shrinking in all of the markets and strong underlying fundamentals. This also is reflected in release spread, double digit, 11%, driven in particular by Paris, One of the strongest markets in rental growth. And all of these KPIs are well at the top of the sector. There are not so many companies that can show these levels of rental growth. This also has to do with a very strong occupancy profile of our company, of our portfolio.

We’re at 95% as of today. What is important to take into account this 95% when we compare it with previous years is that 2% of this is surfaces that have been delivered recently of top quality spaces that have to be let up. So in comparable terms, in terms of like for like occupancy, we are remaining at levels of twenty twenty three, 90 seven percent. So we have a structural vacancy of 3%. And when we go into the details of this, you see that in the prime end, this is almost testimonial, 0.3% prime Paris, Zero Point Seven Percent prime Madrid and Barcelona.

And then we have the remaining of the 3% is 1%, the 22% in Barcelona, where we are now getting more momentum. We are currently negotiating contracts that will bring down this 1% to 0.7%, and then the remaining 0.9 is a residual part of secondary spaces that we have that is really an absolutely tiny part of these type of locations that we have in our portfolio. So very strong occupancy year on year and again in the first quarter. And we go a little bit more into the operations of the upcoming new spaces and the different markets in the project that we delivered recently and that will has the potential to give us an additional annual rental volume of €20,000,000 We are today already at a level of above 20,000 square meters of contracts signed or in a final phase to be signed shortly, so strongly committed. And we are signing these spaces with a 7% higher rents that our initial underwriting that is behind the 8% yield on cost of this project.

As you know, we have then also the renovation program. Carmina mentioned it, Osman, San Agustin. It’s going to be delivered towards the end of the year, during the second half of the year. As of today, we have already signed 2,000 square meters with a top notch rent above €1,000 per square meter, so already €2,000,000 secured out of the total potential of this asset. And then another element is interesting.

The 22 add is gaining momentum in top assets. We have assets with high quality features in very good micro locations. We have signed close to 8,000 square meters in Ijakuna with a tech company, and we are about to sign a lot of square meters with a digital company that is already our tenant, but there was a rental renewal window. And they are not just signing and signing at a higher price. They are moreover increasing the space by more than 20%.

So when there, you can see the ’22 ad, that is a market that is still has to recover a little bit, the good product is already showing a strong momentum. So we are really having an accelerating activity in all of our products.

Pedro Vignolas, CEO, Inmobilaria Colonial: Thank you. So let me start with the last section. The summary of what we have seen in the presentation is a good first quarter. In the end, good letting activity, good increase compared to last year, nice kind of news in Barcelona, in particular, good occupancy, good rental growth, very strong rental growth and a nice performance on the financial side, rating confirmed, very low cost of debt for long term. So everything means in the end, very strong profile in terms of cash flow growth.

As I said at the beginning, I think this is based in the end on the strategic positioning of Colonial in its prime asset positioning in the fact that we are a platform for human transformation. In the end, we are sitting on several layers that allow for earning growth. And what we are today presenting is 55,000,000 of earnings. This in the end, is showing a 15% CAGR for the last three years. This is looking backwards.

So looking forward, I think that it’s important to see what is lying ahead. In the end, today, Coronial is sitting on close to 200,000 square meters in urban transformation initiatives with EUR 100,000,000 of potential rental income, out of which 64,000,000 have to do with the new Alpha 10 pipeline. And if we consider the potential that this means in terms of EPS, that means that in the midterm from 2025 to date, 2028, we see the potential for an additional EPRA EPS of more than $0.11 that is a 33% growth on 2024 EPRA EPS. All of these projects, by the way, go as expected. So this is the first obvious layer of additional EPS growth for the near future.

On top of that, as you know, as a third layer in the field of urban transformation, in the field of additional value added initiatives that we may consider. We’ve announced recently 200,000,000 investment to create the European leading operator in the science and innovation. Just a reminder of what we announced just a few days ago. We are the main investor in an existing portfolio of close to EUR 400,000,000 with expectation of a stabilized yield on cost between 67%. But this is most of all about an additional buildup strategy that would allow for a short term pipeline with attractive value add returns that would mean EUR700 million of assets under management with a stabilized yield on cost of 7% to 8% and a long term ambition to accelerate these two third party capital.

Here, Colonial trying to invest number one in the strategy of a slightly different asset class number two, in an asset class with a different kind of returns or number three, also putting up stake our value as a platform through our role of co asset manager with the returns attached to these and all three layers together, meaning an expectation of geared IRR of around 15%. That’s kind of example of a third layer of drivers for future EPS earning growth, which started more or less year already with the Alpha X project. Maybe a comment here, again, as we did when we were presenting this initiative, this initiative is not to revisit the strategy of COLONIAL, is it about confirming our strategic view of COLONIAL, which is COLONIAL is expected to be a company with a core pricing power element at the heart of its strategy. As I said in previous meetings, we believe a lot in the potential of our basic positioning. This is proven in recent years and more to come as we have shown, but we also believe in the value add component through euro transformation of our platform.

Traditionally, we’ve devoted around 10% of our assets under management to this. These initiatives of deep labs fall within this category. Therefore, there is no lack of consistency. It’s the other way around. It’s super consistent, this last investment with our long term view of Colonial.

All in all, Page 23, a vision of our company with very strong EPS growth profile with double digit IRRs expected for the next few years. As we have seen existing urban transformation projects underway with an expected impact of $0.11 midterm. And then now adding this additional layer of science and innovation platform with third party capital that could be adding $02 to $03 additional of EPS in the midterm. Not to forget the prime asset diversion superior cash flow growth that could have a GRI impact of EUR 47,000,000. And obviously, with the additional potential that may fall from opportunistic capital recycling in addition to all of these layers.

In the end, what we shared today with you is a good set of results for the first quarter. The EPRA earnings growth 16% year on year growth. Our EPRA EPS full year guidance on track. Good fundamentals in terms of net rental income, 5% like for like growth, good fundamentals in terms of rental growth, more than pricing power and further growth secured through project deliveries. That’s been the reality of this quarter.

And again, I just highlighted with a strong growth profile for coming years, more than 150,000,000 of future rents through the new pipeline and reversions. The enhanced urban transformation growth strategy through the science and innovation and third party capital component and the opportunistic capital allocation that should benefit from European real estate cycle recovery. All in all, good EPS CAGR expected for the next years. Confirmation of our guidance for 2025, which remains in the range of 32 to 35. And let’s not forget about the dividend of 30 percent $0.30 per share with an 11% year on year growth to be delivered shortly.

This has been the presentation of our results. Thank you very much for your attention. And now as usual, we will gladly answer any questions you may have. Thank you.

Moderator: Ladies and gentlemen, the Q and A session starts And the first question comes from Jonathan Kownator from Goldman Sachs. Please go ahead.

Jonathan Kownator, Analyst, Goldman Sachs: Good evening. Thank you for taking my questions. I have a few, if I may. First, on Slide 10, on your earnings bridge, you have a positive impact both on SG and A and financial costs and others? Two questions there.

First of all, I think, Camilla, you mentioned some CapEx expense to tenants. I assume these are are these break lease break incentives or and how much was that? Like is it an indemnity for departure and how much was the amount? And also, was a positive tax contribution instead of negative. And I was just wondering what that was.

So that’s the first question, please.

Carmina Gagnet, Chief Corporate Officer, Inmobilaria Colonial: Yes. Thank you, Jonathan, for the question. So on the CapEx reimbursement, mainly when Tenem is leaving, I mean, under the agreement we have in our contracts, all the, let’s say, floor plans needs to be delivered with the same condition as they were when they signed the contract. And this means, in this case, I think it’s EUR 3,000,000 basically coming from especially Condorcet, which is gas defense when they deliver the space and the building before we start the project and all the analysis on the project. It’s a negotiation about the CapEx reimbursement and the commitment from this site to reimburse this CapEx to the company, to the vendor.

Jonathan Kownator, Analyst, Goldman Sachs: Of course.

Carmina Gagnet, Chief Corporate Officer, Inmobilaria Colonial: So this is a this is a normal practice in our business. Yeah. In this case, especially because of the size of the building, it’s more material. And on the income, you mean in the tax rate?

Jonathan Kownator, Analyst, Goldman Sachs: Yes, the line tax and others and I think the contribution is plus EUR 2,000,000 in your P and L.

Carmina Gagnet, Chief Corporate Officer, Inmobilaria Colonial: Yes. This is a reversion of provision of the income that was estimated in 2024 that has been a different amount after being checked by the tax administration, and this is the impact you have in the P and L in 2025.

Jonathan Kownator, Analyst, Goldman Sachs: Okay. So provision reversion on timing.

Carmina Gagnet, Chief Corporate Officer, Inmobilaria Colonial: The timing, correct. It’s not ordinary, yes.

Jonathan Kownator, Analyst, Goldman Sachs: Yes, yes, yes. Second question, just wanted to come back on your new investment in science and innovation. Two questions here. First of all, you’re obviously investing €200,000,000 for €400,000 of assets. Just wanted to understand if that’s going to flow as a consolidated investment into your P and L?

Or is that going to be separate given also that the LTV is higher than your existing portfolio? And second, I just wanted to understand, you talk about stabilized yield of 7% to 8%, I think, which is quite attractive, obviously. But just wanted to understand what’s the current yield when you buy the assets? And what’s the path to get to that stabilized yield, please?

Carmina Gagnet, Chief Corporate Officer, Inmobilaria Colonial: Jonathan, in the first question, this is vehicle with third capital harmonic capital or third capital, sorry. So the way that has been structured and will be structured will be accounted in our books into equity methods. So this is we are going to be diluted with this capital money. This is a co GP, a co control. And this means in accounting perspective, you need to consider it as an equity method.

So the debt is not consolidated in our books, but it will be impacted through equity method. And every year, you will see the impact on the revaluation of the NPA in this investment in our balance sheet. The yield on cost, yes, when it’s stabilized, you need to forecast the stabilized yields in its 400,000,000 assets in design and innovation today, not in the pipeline, but the seed portfolio today is €400,000,000 and the stabilized yield because of the some repositioning assets, some releases spread that we had in place, you need to consider 6%, seven % yield on cost on €400,000,000 This is the estimation well, this is the forecast and our estimation and the numbers that we are seeing in one year, one point years.

Jonathan Kownator, Analyst, Goldman Sachs: So that’s going to come in one, one point five years. Okay, Very clear. And so what’s the current yield? Is there yield currently? Or is there do you have to I don’t know.

I mean, what’s the precise situation? Do you have are the buildings empty and you need to do CapEx and then you’re going to relet? Is that what we need to understand?

Carmina Gagnet, Chief Corporate Officer, Inmobilaria Colonial: No. Yes. Today, it’s more than 80% occupancy rate, but there are some spaces that they split it up 20% and the something percent of the total surface are lapsed attached to the corporates that are inside as a tenant, inside of this portfolio. And mainly, there are some additional minor CapEx, 20,000,000, which has been reduced to the price to complete this space and to release the rents attached to this space.

Jonathan Kownator, Analyst, Goldman Sachs: Okay. So the in place yield would be what, 5%, six %, five % maybe or is it lower than that?

Carmina Gagnet, Chief Corporate Officer, Inmobilaria Colonial: Sorry, today?

Pedro Vignolas, CEO, Inmobilaria Colonial: Yes.

Carmina Gagnet, Chief Corporate Officer, Inmobilaria Colonial: Yes. Yes, in line of 5%. Okay. Thank you. Thank you.

Moderator: The next question comes from Florent La Roche from Hubert from ODDO BHF. Please sir, go ahead.

Florent La Roche, Analyst, ODDO BHF: Yes, good evening. Thank you for the presentation. I would have maybe three questions. My first question would be on the 2% of vacancies that comes from a project that has been delivered recently. So will it be possible to have more colors on how many times you need maybe to let these buildings?

I don’t know if you have any current discussions in the other side. So do we need to take into account any departure in short term? So that’s my first question. My second question, so coming back to the rental growth in Madrid of plus 9%, but we see that we have a flat revision. So would it be possible maybe to have an update on your revision potential in Madrid and Barcelona?

And my third question, this would be on the appetite on the investment market today in Paris and Spain. So what do you think about that? So since maybe the events with The U. S. Tariffs.

And so maybe any color at this stage on the valuation of the asset for at Media? So that would be very useful. Thank you.

Pedro Vignolas, CEO, Inmobilaria Colonial: Yes. Sorry, on the first question, exactly which asset you were referring to about the vacancy? The

Florent La Roche, Analyst, ODDO BHF: asset that you delivered recently, so you have Magnum.

Pedro Vignolas, CEO, Inmobilaria Colonial: Okay, okay, okay. So maybe Carlos, can you cover maybe these questions?

Carlos Coma, Chief Corporate Development Officer, Inmobilaria Colonial: Yes. On the current delivered projects, as I explained, we are progressing quite strongly on Mendel Alvaro. On the other two assets on the other assets, especially at Diagonal one hundred ninety seven, we are seeing a lot of market interest. But as you know, we are prudent in guiding. So we until we have something more strong or more closer to assigning, we are not really giving specific guidance on it.

But what I can tell you, and I think I explained it with the other examples of the 22 Ed with the Technology Building, our Glorious Building, that we are seeing pickup in momentum in the 22 Ed, especially for top notch buildings. The Argonaal 197 is in the first in the best metro location of the 22 Ed. It’s a renovation program. This has been fully repositioned just recently. We are positive on it.

So we’re going to have the good performance. We are working on it. But we today, we have a lot of interest, but not nothing that we could give a specific guidance, but we will come soon with very good news. On the release spread and the ERV growth, maybe technical things, you cannot fully compare the two figures in terms of that it’s not totally the same universe. The ERV applies to all of the contracts signed, to 32,000 square meters.

The release that you can only apply to the things where there is a tenant, the market rental review, so to the renewals. As you have seen, the renewals is approximately half of it. And then it depends a little bit on the mix. In this first quarter, close to 90% of the renewals corresponds to an asset in the 2012 that at the moment is still a market that needs a little bit stronger momentum. And another one corresponds to an asset in Campo Las Nafiones.

So we are not talking about an asset in the pure Castellana. So this is why in that locations that are not as similar strong as the Castellana, we have had a flat release spread. When you then look at the broader picture and the total 32,000 square meters and the prices of everything, we have had, especially on the new lettings, a lot of assets that are really in the pure CBD. And therefore, you see the strong rental growth. To give a conclusion going forward, Spain, as you know, picked up in the past very quickly indexation.

So they’re more so from a general point of view, the markets are more or less at the ERV level. So going forward for the prime, we should see progressively ERV spreads that are similar to a release spreads that are similar to the ERV. In France, contracts are more longer terms. You are coming when you are doing a renewal from moments later in the past. So there is for this reason, a higher release.

But and then the market is today the strongest market in Europe in terms of macro performance. This also explains basically you see it also in the year.

Moderator: We have another question, and it comes from Alex Kolsteren from Val Landschaub Kemper. Please sir, go ahead.

Alex Kolsteren, Analyst, Val Landschaub Kemper: Hi, good evening team. Thank you for the presentation. Two questions at this point from my side. One, we’ve discussed the solar mapping numbers. And I was wondering if in this leasing, the incentives have moved, they remain stable or gone up or down?

And then secondly, after the reporting period, so April more or less, obviously a tariff escalation, do you see a slowdown in tenant decisions already?

Carlos Coma, Chief Corporate Development Officer, Inmobilaria Colonial: On the release spreads, as you may know, in Spain, this especially the CVD plays a minor role. So it’s irrelevant and they remain tight and stable. In Paris, our product has the lowest level of incentives. Typically, in the CVD, you can see levels of incentives between 1416%. We are at levels of 12%, so extremely low levels.

So we are beating the market in terms of rental performance on every floor of the rental price revenue stage on the top line, that is the year we and on the incentives that is below the year. In terms of momentum in general, for our product, we’re seeing strong momentum. Why? Because it’s scarce. When you look at how much is the availability of Grade A product in the three cities where we are, it’s below 1%.

So there is no supply and there is strong demand for this product. So we are seeing strong activity. I think it’s also that I must speak for itself, 60% year on year growth in letting activity. I think it’s really pretty outstanding and not at all is signaling for our products. I’m talking about our top notch product, any hesitant on decisions is the other way around.

Alex Kolsteren, Analyst, Val Landschaub Kemper: Alright. Thank you very much.

Moderator: So it seems that there are no further questions. So now we’ll hand the floor to the CEO of Colonial, Mr. Perabinolas, to close the meeting.

Pedro Vignolas, CEO, Inmobilaria Colonial: Thank you. Well, just to finalize, we have been very pleased to share these results with you. It’s a part of a long term trend. It’s now a few years that we are showing now this very strong performance in fundamentals. It’s also good to see these across the board in our different geographies.

We remain confident now about our expectations for year end. So it will be a pleasure to confirm that in the next future meetings. Thank you and have a good day. Thank you.

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