Earnings call transcript: MONTEA Q4 2024 shows strong growth, cautious outlook

MONTEA (MONT), a leading player in the logistics real estate sector with a market capitalization of $3.87 million, reported a robust financial performance for Q4 2024. The company achieved a 10% year-over-year increase in its EPRA result, reaching €99.3 million. The net result stood at €171.5 million, while the earnings per share (EPS) from recurring activities rose by 2% to €4.55. According to InvestingPro analysis, MONTEA is currently undervalued based on its Fair Value assessment. Despite these gains, MONTEA remains cautious about future investments due to current market conditions. The company has set ambitious targets for 2025, aiming for an 8% increase in EPS.

Key Takeaways

• MONTEA reported a 10% YoY increase in EPRA results.
• Net rental results increased by 8%, reaching €115 million.
• The company received its first investment-grade rating (BBB+ from Fitch).
• MONTEA plans to deliver 120,000 square meters in 2025.
• The company aims for a 6% annual EPS growth.

Company Performance

MONTEA's strong performance in Q4 2024 was driven by robust rental income and strategic portfolio growth. The company delivered 100,000 square meters last year and plans to deliver 120,000 square meters in 2025. Despite challenges in the logistics markets of Belgium, the Netherlands, France, and Germany, MONTEA maintained a high occupancy rate of 99.9%, with a renewal rate of 96%.

Financial Highlights

• EPRA result: €99.3 million (+10% YoY)
• Net result: €171.5 million
• EPS from recurring activities: €4.55 per share (+2% YoY)
• Total (EPA:TTEF) dividend proposed: €3.74 per share (+7% YoY)
• Net rental results: €115 million (+8%)
• Operating margin: 88.5% (stable)

Outlook & Guidance

MONTEA has set a 2025 EPS target of €4.90 per share, representing an 8% increase. The company also aims to achieve a 90% operating margin by 2027 and a 6% annual EPS growth. Despite a cautious approach to standing investments, MONTEA is focusing on pre-letting and development opportunities to drive future growth.

Executive Commentary

Jo, CEO of MONTEA, emphasized the company's dual role as both a developer and investor, stating, "We delivered 100,000 last year. We will deliver this year 120,000 that is now already in execution." Else, CFO, highlighted the company's history of consistent growth, noting, "We have a track record of a 9% EPS growth per year on average."

Risks and Challenges

• Market conditions: Cautious about standing investments due to current market dynamics.
• Rental growth: Below the European average, posing a challenge for revenue expansion.
• Speculative development: Reduced activity in key markets may impact future growth opportunities.
• Supply chain issues: Potential disruptions could affect project timelines and costs.
• Macroeconomic pressures: Economic uncertainties in Europe may influence demand for logistics space.

Q&A

During the earnings call, analysts inquired about MONTEA's strategy in the current market environment. The company expressed confidence in the sustainability of the rental market and highlighted its focus on pre-letting and development opportunities. Questions also touched on warehouse utilization, which is back to 80-90% levels, reflecting strong demand.

Full transcript - Montage Tec (MONT) Q4 2024:

Jo, CEO, MONTEA: good morning everyone. Warm welcome from Brussels to everyone. It's a pleasure to have you here in beautiful Veranda for our presentation of our 2024 results. This year has been truly exceptional and we will remember 2024 for the immense growth we've realized close to 500,000,000, the launch of our new Trek 27 program and of course the first investment grade rating that we received. I'm delighted to present these outstanding results alongside with these two remarkable ladies that have been crucial in those successes, Elsverbakia, our CFO and Ina Maslova, our Investor Relations Manager.

Thank you for being here. Thanks for joining the call and let's dive to the results of this incredible year. EPS guidance has been achieved with a result of EUR 4.73 including the one of FBI for 2023, portfolio growth of 500,000,000 and sound financials with debt under control at roughly 35% and a net debt on EBITDA of 6.9%. For the agenda of today, Else will start with the highlights of the year. I will update you on the growth of the portfolio.

Ina will give a portfolio update. I will give you a market update. Else will give you an outlook. And I will end wrap up with an ESG update that will be followed by, Ina who will manage the Q and A session. So thank you all for joining.

Else, the floor is yours.

Else, CFO, MONTEA: Thank you, Jo, for this nice introduction. So for 2024, we end the year with an EPRA result of €99,300,000, an increase of 10% year on year and a net result of EUR 171,500,000.0, which includes EUR 85,000,000 of positive portfolio revaluation or EUR 8.17 per share as a net result. The EPS from recurring activities stands at EUR 4.55 per share, which represents a 2% growth year on year, despite an increase by 14% in the weighted average number of shares. MONTHIA received the FBI recognition in The Netherlands for fiscal year '20 '20 '3, which leads to a positive one off of 18¢ per share. And this, brings the total EPS of $20.24 to €4.73 per share.

The dividend from recurring activities increased by 7% year on year to €3.6 per share If we add the FBI related dividend top up of 14¢ per share, we get to a proposed dividend of €3.74 per share for 2024. The top line increased by 8% to €115,000,000 of net rental results, driven by first of all the new acquisitions and the new developments that we have done throughout 2024, and also by the like for like rental growth of 3.4%, of which 3.1% is linked to rent indexation and 0.3% to rent renegotiation. The total property results only increased by 6% to 123,000,000, due to a decline in the total income from the solar panels of €2,800,000 and this decline is mainly due to the one off of green certificates for provision that we reversed in 2023 for a total amount of €1,300,000 and the lower energy prices of last year. All of this leads to an operating margin of 88.5%, stable compared to 2023. The decline in the financial charges reflects the capitalized interest increase, which is due to the transfer of Thiel, Walling, Sven and Born into the development pipeline.

The tax result is positive as you can see and this is because of the including of the FBI related provision reversal for 2023 and 2024. This brings us to a total EPRA result of €99,300,000. Based on a weighted average number of shares, we get to a EPS from recurring activities of €4.55 and a one off of EUR 0.18, which totals up to EUR 4.73 per share for 2024. Strong fundamentals will enable the future growth of MONTEA with a low EPRA LTV of 34.8% and adjusted net debt on EBITDA of 6.9 times and an interest cover ratio of 4.5 times. For 2024, the EPRA NTA rose by 4% to a level of €77.6 per share.

The debt profile remains solid with long term funding, both debt and hedging with an average maturity of around six years. The hedge ratio stands at 98% at year end and liquidity position at year end is NOK $2.00 4,000,000 immediately available funding. Throughout 2024, we were able to remain our cost of debt stable at a level of 2.3%. Furthermore, as already mentioned by Jo, we have received our first credit rating by Fitch, which was a solid investment grade credit rating of BBB plus with a stable outlook. 59% of the funding is coming from the private placement market, 40% are bilateral credit lines, with an average remaining term of five point seven years.

And on the right hand side, you see that the maturities of those credit lines and bonds is well spread over time. Back to you, Joel.

Jo, CEO, MONTEA: Thank you very much, Els, for this update. As already mentioned, 2024 has been the year with the largest growth in our portfolio in our history. I remember when I joined, MONTEA, we had a portfolio of $250,000,000 So basically over the last year, we did two times the size of the company in one year, which is quite significant. We invested $440,000,000 in total and we have another $57,000,000 in execution projects in execution. So basically 40% of the Track 27 program of 1,200,000,000.0 has been realized in 2024.

This is a new slide, but I think it's a very interesting slide. I like it a lot. It's about how we grew over the last six years. And basically what you see is the blue color is standing investments. Just buildings we bought in the market.

All the green colors are linked to what we call value creation. It's either in house developments, it's developments with partners, it's energy projects and it's the land bank. So basically, what you see that apart from the crazy six months in 2022, the first six months of 2022, over this period of six years, there's roughly on average 20% or less that came from buying standing investments. So, 80% of the growth comes from value creation, from things we do, business we try to make that is not linked to just buying buildings in the market, but it is linked to us trying to create value. Some deals we did over the last year, most of them you already know, of course.

The Reverso deal, which was the largest deal we did in the year Hamburg, which was a great deal in the Port Of Hamburg at 6.5% with nice, rent reversion potential. Geant Kortemater is still a run back with TML. And Zelleck is a project where we signed a lease for a new project and we were waiting for the permit. We did some land bank in Holland and in the Port Of Antwerp. 1 Hundred Thousand square meter was delivered over the last year in Antwerp, in Holland, in Tongeren, in Vosst, in Brussels.

And another 120,000 square meter is still in execution, so that's also in Holland and in Belgium. All these projects either delivered or in execution will lead to development margins of roughly four forty eight sorry, $8,448,000,000 euros 1 hundred percent of them are pre let and the average duration, let's not forget that of those in execution on first break is fourteen years. So it's really creating value for the long term for our portfolio. Then next to that, of course, we have this nice portfolio of another 480,000 to 300,000 square meters that are either have their permit and are waiting for a tenant or have a tenant and are waiting for their permit. Some of them are, in advanced stage.

I know I would love to tell you more about it, but we don't communicate on it unless it's 100% sure. So, things are happening, but I can't go into detail on that. But as you see, we keep on having the ambition to have an average yield on those of yield on cost of 7%. So there's a lot of value creation that will come from that pipeline that is taking indeed a bit longer as we had dissipated two years ago, but we believe that the value is there given the strong rental market, the rent levels, we believe that the 7% yield on cost is still attainable for us. These are the projects we are currently doing in Belgium.

These are the projects we are currently doing in Holland. And next to that, we were able to increase the land bank to 2,700,000 square meters now. Of course, in 2024, that was mainly driven by the Reverso deal. 2,700,000.0 that means roughly development potential of 1,400,000 square meters over the next years, which is more than 50% of the current portfolio. And let's not forget, more than 80% of this land is on gray and and brown fields.

45% of this is yielding today at an average yield of 5.8%. Here you get an overview of these land plots. And so I will hand over the floor to Ina now for the portfolio update.

Ina, Investor Relations Manager, MONTEA: Thank you, Jo. To start off with, we've achieved a positive portfolio value valuation of 72,000,000 over the course of 2024. This has accelerated in Q4 and both components are linked first and foremost to development gains where most of the value creation has been achieved, but also our standing portfolio has seen a positive value, positive value creation over the course of 2024. It's an increase of 3% year on year and we do see that the upper net initial yield on our portfolio has stabilized at 5.1%. Our portfolio has now reached a size of 2,800,000,000.0 so we remain firmly on track to get to our size of 3,500,000,000.0 which we target by 2027 end.

Just to provide a bit more, split and color, we have invested $441,000,000 in capex. So we are roughly 10% above our, targeted investment volume under track '27 over the course of last year. And indeed the portfolio evaluation has topped up to that. We continue to focus on both pillars of growth and certainly the value creation for us has been predominantly coming from our development pipeline since 2022. In the overview, you will see that 2024, we have booked close to 50,000,000 of development gains alone.

And I think that is again a testament to our value creation through developments and long term focus on our growth ambition. If we look at the ERV growth on our standing portfolio, it stands at 4.3%, nearly accelerating in Q4. This has predominantly been linked to the acceleration we've been seeing in The Netherlands given the fact that the market has been quite active and certainly the letting activity is also gradually starting to pick up. And on the standing portfolio, it does reconfirm the resilience of our portfolio with yield effects on the valuations now stabilizing and ERV growth is the one that has been the driver for the revaluation of our standing assets. Looking at where we capture and where our portfolio currently stands versus the market, our reversionary potential on the portfolio has reached 12% now.

It's up two percentage points versus Q3 and our net reversionary yield stands at 5.3%. So that's roughly a 20 basis point yield spread versus where we're currently valued. And that has indeed again been driven by the fact that the valuers are seeing growth in rental levels in the markets where we operate. Touching upon an important topic of our standing portfolio on the lease maturities, so for today, we have of the 9.5% of the leases that we have maturing over the course of 2025, we have already renewed or extended leases or 58%. One point that's important to mention is that the remaining 42 are predominantly skewed towards the second half of the year, so we will see a gradual evolution of the 58% figure over the coming quarters.

If we look back at 2024, we have achieved a renewal rate of 96% on the same level of leases that we have maturing this year And on the 2% of the rent roll that we renegotiated last year, we have achieved an average rental uplift of 12%. So that is broadly in line with where we see the reversionary potential on our portfolio. Looking forward, certainly on the occupancy rate, we stand again at 99.9%. What we expect over the course of 2025 is even looking at a lower retention rate. Historically, we've been at 85%.

Out of prudence, if we take into account 80%, we would still come out at an occupancy rate above 98% over the course of 2025. So that again reconfirms the quality of our assets and the strong positioning in terms of location. Jo, back to you on the market update.

Jo, CEO, MONTEA: Thank you very much, Ina. Indeed, I would like to go a bit deeper on those market dynamics looking at the four markets we're in. If you look at Belgium, we tried to put in dark blue the, main corridors of the country. Obviously, this has always been the Golden Triangle. Ghent, Antwerp, Brussels, where we are mainly active on that X, Ghent, Antwerp.

But also, the spillover from Holland going on the X Antwerp towards Liege. And you see that, in Belgium, apart from Charleroi, that is 12.3%, and that is really having an impact on the average. You see that, in Flanders, occupancy rates are still roughly between vacancy rates are still roughly between 03%. So, a very good market. And as you can see, close to every building is on those main axis.

Same goes for Holland where we focus indeed on Amsterdam, Rotterdam, Thiele, Northern Brabant and Limburg markets that are doing very well today. And in France, we see, of course, with the reversal portfolio, we now added the next to the French backbone, we also added the Atlantic Arc to our portfolio apart from the Northern Part of France, which everybody knows where there's more land available. These markets are performing quite well. And in Germany, where we are still kind of a start up, markets where we're active around Frankfurt to Leverkusen are also performing very well. There's not a figure for Hamburg.

Why? Because there's zero vacancy in the Port Of Hamburg, so that's an easy figure, but also performing very well. And this is an interesting slide in my opinion. It shows on the left hand side, it shows the take up. So I take Belgium as an example, which was in the top year 2023, '1 million square meters that came down to roughly 650,000 square meters in 2024.

So take up is indeed down in every market if we compare '24 to '23. But what is interesting to see is if you look at the right hand axis that shows you the speculative development compared to the total take up. You also see that in every country, speculative development has come down also. So basically, the development is following the trend in the market. There is no risk, I can't repeat it enough, There is no risk in our sector for oversupply.

A, the land is not there and B, there is no premium you get from speculative development. So only 13% in Belgium, Five Percent in France, only 7% speculative development in Germany. Holland is an outlier with 37%, but that is mainly linked to the take up that came down significantly. And what we see is if we look at where the speculative development is, this is mainly on B and C grade locations, so not really in competition with the locations we are looking at. Another very interesting, in my opinion, market figure is the rental growth in the countries we're active in.

What you see is the rental growth over the last ten years. And of course, if you compare Europe to The U. K, it's really an outlier. But if you look at the countries we're in, we see that Benelux, France are below the average of European rental growth. So we are actually although we had rental growth of 25% to 30% over the last three to four years, you see that they are going up, but they are still below the average in Europe.

So we feel really confident in our markets that the rental levels we are currently at will be sustainable over the coming years. With this positive message, I go to my CFO, who will give us an outlook.

Else, CFO, MONTEA: Thank you, Jo. For 2025, we reconfirm our guidance of €4.9 per share of EPRA results. That's the target for 2025, which represents a 8% year on year growth, excluding the potential 9¢ 1 off from the MBI recognition for fiscal year '20 '20 '4. We announced a target of €3.9 dividend per share, also 8% year on year increase, excluding the potential $0.07.01 off linked to the FBI recognition. For 2027, we reconfirm the EPS target of EUR 5.6 per share.

Track '27, the growth plan that we announced will be done through disciplined financial allocation with a focus on operational excellence. The leverage will remain under control, in line with our track record, and an adjusted net debt on EBITDA of around eight times, giving us an investment capacity of more than EUR 600,000,000 available to grow under track twenty seven With an average cost of debt that won't exceed 2.5% and a consistently high occupancy that won't decline below 98%, we are guiding towards an operating margin of 90% by the end of twenty twenty seven. The $300,000,000 of investment volume that we want to achieve for 2025 will be done through a healthy mix of in house developments, acquisitions of standing investments, including land bank positions, and green investments in solar panels and battery energy systems. Next (LON:NXT) to that, we have of course our partnerships with the developers like we have with Cordele. We have a track record of a 9% EPS growth per year on average.

And for the next years, under Track 27, we guide for a 6% increase in EPS per year on average, going to EUR 5.6 per share for 2027. Over the last ten years, we delivered a total accounting return of 12% on average, which highlights a strong return track record and the resilience throughout the market cycle. We were able to achieve a solid EPRA NTA growth also in times where the repricing of the logistic real estate happened. And I'm referring to the years after 2022, you see that the EPRA NTA continued to increase despite the repricing that was seen in the market. And this is linked to the fact that we have, of course, a very qualitative portfolio and the value creation that was done through value creation with in house developments.

For the future, for the next years, we will, of course, also focus on the value creation for the shareholders. Back to Juju for the ESG update.

Jo, CEO, MONTEA: Thank you very much, Halsen. It will be a very short update. Basically, we are on track. Also there, you remember that we have some very exciting KPIs for the Track '27 growth plan. We have now 84 megawatts of solar capacity on our roofs.

45% of our buildings are heated with heat pumps and close to 80% of our buildings have LED lighting today. So this is totally on track with the program which is also recognized by Sustainalytics, who improved our score to 11.2, which gives us again a seat in the top 20% of most sustainable REITs globally. And this should position us to get us back in the Bell ESG index as we hope. So everything is well on track according to that program. This brings me to the end of our presentation.

Thank you very much for your attention and I would like to give the floor to Ina for a Q and A session.

Ina, Investor Relations Manager, MONTEA: Thank you, Joak. We will start with the questions in the room before moving to the ones that are online. So Jessica, I think you were the first one. Please go ahead.

Jessica, Analyst: Hello and many congratulations for the great results. First question is about investments. For 2025, do you think it's fair to expect some more acquisition in standing investments? Or would you push the accelerator on developments? We saw the market reopening over the latest months with nice acquisition from yourself and also peers.

So what is realistic to expect going forward? The second question is on the operating margin. You said you target a nine the operating margin tool. Yes? Can we see something already in 2025?

And the last question is about reletting. You did already a lot from the beginning of the year. How are renegotiation and discussion with tenants going on? So anything to flag?

Jo, CEO, MONTEA: Yeah. I will take the first one, if that's okay. Else, you take the one on the operating margin and you take the one on the relayting. Is that okay? So 2025, of course, we have the 300,000,000 target.

As I said, on average 20% comes from standing investments. We think that given the current share price and the current cost of debt, doing business below 6%, standing investments is difficult for us. It has to be a very exceptional product for us to go below that hurdle rate. And we see in the market and you read that also that for exceptional buildings, in the yields today are between 4.55%. So, apart from the first six months of 2022, we are not able based on or not willing, it would be dilutive for us, although we like those assets, it would be dilutive for us if we have no role to play.

So frankly, on today's status, I think we will have to be very creative. We will have to really use the business development skills that is in every four of our countries to grow. And so we have to have some added value in order to do it. So I'm very reluctant on standing investments today given the dynamics of the market. But that's a good thing because that's of course the best proof of the value of our portfolio is the fact that there are still deals between 4.55%.

And I have percent. And I absolutely understand those deals given our share price that would be difficult. So we will have to focus on pre letting the land bank where we have 300,000,000 to unlock the potential. Again, the rent levels are there, the construction cost is under control, everything is under control. We just need somebody to sign those leases because we only built them with a 100% realt.

Else, CFO, MONTEA: And to continue, the team is also there, so that's why we had a drop in our operating margin for 2025. I, I assume it will be rather stable and will slightly go up towards 2027, where we target indeed an operating margin above 90%. But with the fact that, of course, new people were hired throughout the last year as well, this has an impact because those people the run rate of those people will also have an impact on the 2025 figures. So the increase will be slight and feasible really towards 2027.

Jo, CEO, MONTEA: To make it very, very simple, we need those in house developments in order to get the operational margin back to 90%. So the full focus on the organization is on realizing those in house developments.

Ina, Investor Relations Manager, MONTEA: Yeah, and on your last question about the reletting and renewals we achieved in 2025 so far, So if we look at the split of 58%, it's roughly 50% of breaks, so the tenants simply did not exercise that break option, and the other 50% was renewals. Renewals we have actually signed, not with new tenants but existing tenants. So it was basically a new contract that was set up in place, at generally the same conditions with indexation in place. So that's at the moment where, where we stand.

Else, CFO, MONTEA: Thank

Ina, Investor Relations Manager, MONTEA: you. Vivian, I think you are next.

Vivian, Analyst: Can you hear me now? I hope. Thanks for the presentation. A few questions on me. Maybe just coming up on the first question.

You mentioned the selling assets are not really in your, I would say, price tag for the quality that you look at. Does it also apply to the yield in Land Bank? Or there you still see a lot of opportunities? Then secondly, into,

Frederic, Analyst: I think

Vivian, Analyst: that you mentioned the partnerships as a way to maybe look like you did with Cordele. Maybe a bit of a view on where in which country you believe it's applicable and what type of agreement are you looking at and what will be your criteria in such partnership because, of course, the profit sharing agreement is the key to get your good share of the development profit, but where are your limits or your willingness there? And then the last one will be on the CapEx. So you did better than expected. Congrats.

Does it mean that they will be lower around the next two years or just a €40,000,000 top up to your target? Thanks.

Jo, CEO, MONTEA: Thank you, Vian, for your questions. I will take them. Now on the yielding land bank, that's definitely where we see opportunities. I think Reverso has been a very good example. For many years now, we position ourselves as a developer and investor.

Now the developer is always cash oriented. When he buys a land he wants to develop it as soon as possible, so get the money back. An investor is looking at long term returns. We believe that the positioning of Montea is somewhere in between. We can live with residual income for the next four, five, six years and then see the potential of redevelopment.

So a lot of deals we've done, for example, Demon, for example, Maastricht, it's even a nine year lease, but it's a triple net, so we are not involved in any works that would need to be done in those nine years. So for us, we see it as a yielding land bank. So if we can unlock the potential in nine years, that's fine by us. So for us the yielding land bank, the positioning between the pure developer and the pure investor, that's the sweet spot for Montea. So I absolutely believe that a lot of the growth will come from that branch.

On your second question, partnerships, that's of course the reason we put this now really clearly in our communication is because for the first time, the fact of having that 600,000,000 shooting capacity, what else was talking about, is valued again. Let's go back to 2022. If I was talking to a developer at that time and I would say we can team up and we can finance part of your development and then we share the margin, he would say why would I work with you? My bank will finance it at 1% and at the delivery date you can take a ticket like 80 others investors and just give me a yield below 4% and you might have a chance to be in the second round. That has changed.

And it took some time for some parties to understand that the market they were used to is not coming back very soon. So the fact of having that shooting capacity today is valued again. And we have talks in every country today with potential partners where we can team up and we can say okay, alone you go faster or you might have a bigger margin, but together we can go further. We can do more. We can do more projects and we can unlock the potential of your pipeline.

So that's really teaming up. And to answer on that question also and be very clear, the hurdle rate of 6% will be also the hurdle rate in these kind of partnerships. We need to have a return of course if we step into a project one year, two years before delivery obviously and the same criteria as for our in house developments which means free letting are also applicable to that branch. So very clear on those two. On your third question, to say if that 40,000,000 means that now it's 1,240,000,000.00 instead of 1,200,000,000.0, let's say that it will be above 1,200,000,000.0.

Else, CFO, MONTEA: We haven't changed the target for

Jo, CEO, MONTEA: '25

Else, CFO, MONTEA: or '26 and '27 either.

Jo, CEO, MONTEA: Yeah. Thank you.

Ina, Investor Relations Manager, MONTEA: Thank you, Go ahead, Fred.

Frederic, Analyst: Hi. It's Felix from Kepler. Just a few questions, maybe I will address one by one. It could be easier. Just on your remaining EUR $760,000,000 you need to invest, so EUR $270,000,000 still come from the pipeline and EUR 500,000,000 will come from other project.

What will be the percentage of in our development out of two EUR five hundred million?

Jo, CEO, MONTEA: We said that 1,200,000,000.0 would be 50% in house development and 50% standing investments. So we're ahead of that scheme, if we talk about in house developments. But as I said, standing investments, if we split that up into yielding land bank and just buying mature assets or a delivery date, I think it will be more in favor in today's conditions towards the yielding land bank than towards just standing assets for the reasons I gave to the question of Francesca.

Wim, Analyst: Okay.

Ina, Investor Relations Manager, MONTEA: Perhaps Frederic, also to add, we have the green investments program as well, which is SEK 75,000,000 in total and SEK 50,000,000 of that is allocated to the battery energy storage. And that is really going to start kicking in from 2025 on.

Frederic, Analyst: Thank you. Maybe a question on your portfolio value. You showed that ERV growth was actually 4.3%, which is ahead of the figure that you show for the market for Germany, Benelux and France. And you mentioned an acceleration in Q4, but actually the life for life valuation of the portfolio was relatively in line with Q3. So I'm just willing to understand what was the driving element of the appraisal not fully reflecting the year over year growth of your portfolio.

Thank you, Paul.

Ina, Investor Relations Manager, MONTEA: I think a part of it was linked to the ERV revisions in The Netherlands. And there was also, in terms of the step up, it was gradual. And The Netherlands has been the largest part in that regard.

Frederic, Analyst: Okay. And just also, so you mentioned a total of EUR 70,000,000, EUR 70 2 million evaluation gain in the P and L under the line, evaluation with I see EUR 85,000,000. What's the difference? Is it

Else, CFO, MONTEA: It's the solar panel valuation.

Frederic, Analyst: Okay.

Else, CFO, MONTEA: And the part is going through equity directly.

Frederic, Analyst: Okay. Okay. And final comment just on the Slide 41 that you showed, I think on the total return, I'm not so sure the above chart is correct, but can look at it. For instance, in 2024, you show 4% total return. But actually, your dividend is already at 7%.

So it should be probably double digit growth this year.

Ina, Investor Relations Manager, MONTEA: With the relative impact, I think, was a bit smaller.

Frederic, Analyst: Sorry?

Ina, Investor Relations Manager, MONTEA: Relative impact.

Jo, CEO, MONTEA: Speak a bit louder.

Ina, Investor Relations Manager, MONTEA: Relative impact is a bit smaller, but we can Well, we

Frederic, Analyst: can take it off line after that. Thanks.

Jo, CEO, MONTEA: You have to speak up a bit for people in the audience.

Wim, Analyst: I will. Okay.

Jo, CEO, MONTEA: Thanks for taking my question.

Vivian, Analyst: I want

Wim, Analyst: to drill down maybe a little bit on the partnership and you explained for a deal. This Incordell, I think announcing your CEO, so the results. Is Cordell kind of the preferred partner and could that also extend into Fendri or other sales of these technical partnerships? And then maybe follow on to that, we, and I think also Adrian asked the question. Is there any potential for JVs in France?

Look, for instance, Afghan selling down the portfolio that we sold our data center, bring our LTV down. Is that something that you can talk to me in supply side of that makes sense if you want to grow there, you want to build scale with somebody selling assets that that could lead to maybe some kind of partnership?

Jo, CEO, MONTEA: Well, I think partnerships have always been in the heart of our growth. Remember, for those who have been with us for quite some time, they remember we had a great partnership with MG Real Estate at the time where we did a lot of nice developments in the airport of Brussels. We did nice developments in Willerbrook on the ax Brussels Antwerp. We've done great partnerships in Holland with parties like Build two Build. Cordele is indeed a good example of an ongoing partnership.

There is no exclusivity from their side nor from our side. We work together on the battery project, but there also there is no exclusivity. So it's really we are open for business. That's the message we want to bring in the market. Yes, France is a very interesting market on that, so we're talking to a lot of people today.

But of course, if somebody wants to go to a GV and has the same profile as we have, again that would be for me a standing investment deal. So it would be rather difficult because we will not we value our portfolio at 5.1%. They will probably be in the same, league in the same figures. So it would be difficult to do a deal that is both lucrative for them and accretive for us. So I think that is a difficult one.

So I think when we talk about partnerships, it's more towards developers than towards investors.

Wim, Analyst: Okay. Just last on that, because being inside of France, also because of the red tape, but also being something else, understanding assets, more like skills and negotiating as with the portfolio just noted that there is a lot of potential to develop that you also have to get these things done?

Jo, CEO, MONTEA: Well, when we talk about the operational margin that is under pressure or that is at 88.5% and would like to go to 90. That's because of the R and D department we have built in France and Germany. We have now in France a team of 12 people or portfolio of 500,000,000. So we really need to step up there, but we have all the skills in house both on business development, on asset management, property management. So we really need to do it ourselves.

So we don't need to team up in order to get skills in. No, we have them on our payroll today.

Wim, Analyst: A follow on is a bit of a technical question. We noticed that the capitalized interest, and you explained that that is a bit of change in the calculation. Yes. But also you referred to the portfolio where there was quite a lot of pipeline in there, which then obviously increases the capitalized interest now that the development pipeline is shrinking. I wonder how do you account for the reversal portfolio?

Because in fact, you also describe it partly as a yielding land bank is part of, let's say, the debt that is against that project. Can you also capitalize that so that you could capitalize that for maybe eight, ten years until the whole is developed?

Jo, CEO, MONTEA: No. We don't do it today. We see it as a yielding land bank, so we don't, if there's an income stream from it, we don't,

Else, CFO, MONTEA: It would be doubling up. And furthermore, we just start the interest capitalization as from the moment you have determined development projects. But those the Reverso portfolio isn't yet a project. There might be some extensions in the next nine years, but the real redevelopment to qualify for capitalized interest will only start after nine years. That's the first option.

Wim, Analyst: That makes sense. So that means that as the development pipeline is shrinking compared to last year, then also the pipeline's interest percentage could come down, let's say, from above 40% to maybe mid thirties or any guidance.

Else, CFO, MONTEA: Yes, but it won't go to the level that we have seen in 2023 and before. Yes, not because of the calculation, also because of the amount of developments that are in execution.

Wim, Analyst: All right. Thanks.

Jo, CEO, MONTEA: Thank you, Wim.

Ina, Investor Relations Manager, MONTEA: Thank you, Wim.

Jo, CEO, MONTEA: Gerd?

Gerd, Analyst: Yes, you.

Jo, CEO, MONTEA: A number

Gerd, Analyst: of things. First on the slide that is missing in the presentation. So it's on the you're a finalist of the, on the Reming van Atjar. I don't know why you did Entrepreneur

Jo, CEO, MONTEA: of the year, yes.

Gerd, Analyst: Nick did not forget it, but no. And then, another point, I saw on LinkedIn that this evening you will be in a panel on data centers. Maybe you can say now what you intend to say this evening?

Jo, CEO, MONTEA: I'm on a panel. I'm not a keynote. So basically I will answer some

Gerd, Analyst: Tell (WA:OEXP) something.

Jo, CEO, MONTEA: I will answer some questions on what the data center market is and might become in Belgium. So that's what I'm going to say. As I told you before, we did an analysis on our portfolio on where the potential for data centers might be in our portfolio. What we see today is if we just look at the standing portfolio, it would be difficult in France and in Holland for us. Some of our sites in Belgium might be potentially interesting for data center development in the future.

Of course we have one disadvantage that is that everything is let. We have a 100% occupancy. So it's not something where you will see a huge development in the next quarters, but it's definitely a market we are looking at. There is a huge development in Brussels and around Brussels and around the airport. So, yes, it's definitely becoming a market that is growing in Belgium.

Gerd, Analyst: Yeah. Evolve with them, they are not interested

Jo, CEO, MONTEA: in an

Gerd, Analyst: opportunity. Now, on the night work, so we are just doing the new government effects, so there was some regulation or something. We are superling to say it in Dutch. Okay. It's too early to maybe it's too late, too early to say something on that?

Jo, CEO, MONTEA: It's never too late because e commerce is only at the start of this huge development. You remember here that I've always been very vocal on that. We've seen the impact it has had in the past. There's been major players that all moved to Holland Ten Years ago. It was dramatic for Belgium.

If you look at the figures today, for every inhabitant in Holland, there is 2.5 square meter of logistics. In Belgium, it's one square meter. So there is more than double of surface per square meter in Holland. It's not that they spend more because we both spend roughly 14% of our purchases we do on on internet. So basically the Dutch have the same behavior as we as Belgians have.

We just outsourced that business to the Southern part of Holland. That's the reason why they all developed in Tilburg and Walweg and Breda is just because there was this night regime which we didn't have in Belgium. If we look at The UK, the purchase there via internet, via e commerce is 28%. If I compare that to the 14 in Belgium and Holland, I think the market will double over the next year. So it's a great thing that we finally get a change there.

It will be very important for the sector. It will have huge potential, especially in regions where there is still unemployment. And I think the Walloon area, I think of certain regions there where there is really potential to do something. So I think this is a very, very positive evolution for Belgium.

Gerd, Analyst: Okay. Then on the average age of the portfolio, so it's relatively low. But when from which year do you start to have some more redevelopment, refurbishment to do is that, do you have some projects in the near term or is that only a problem with 02/1930 or?

Jo, CEO, MONTEA: Let's say that the sustainability targets have advanced some of those investments we want to make because we have ambitions on CO2 reductions in the portfolio. Roughly the life cycle of a building is thirty to forty years. So no renovation CapEx is rather low in our portfolio due to as you mentioned the average age of the portfolio. We also in our new developments and I can't stress that enough, all our buildings today are energy positive. So they use less energy than they create on their roofs.

And we are able now on our new buildings to get an average consumption of 17 to 18 kilowatts per square meter per year, where the average in the market is roughly around 40. So also all the more recent developments have been developed in a way that they will be within the criteria of the market even beyond 02/1950 today. So that is rather limited in the total case. I will

Gerd, Analyst: ask a good question again in 02/1930, so no problem. And then on M and A or acquisitions, okay, you have done a small deal in Germany. It's still a small market. In Germany, some guys need to sell. They don't want to sell because they're afraid of, yes, lower prices than pressure on valuations.

When they did some strategic deal in Germany at a lower yield, but you did a strategic deal in France. What is your thought? Because you talked about the cost of capital, but at some time, maybe you will have to jump, with a number of with with a deal at the the lower yield because we talked a lot in departments on on the two text euro books and the the sea grows and all these guys. We're not saying buying anything that came on the market, but, yeah, what can you say about it? Or maybe do you need to go to other countries apart from Germany?

Okay. France, you wouldn't have some somewhere to do. But when you see, SCGP, it's Central Eastern Europe. Maybe some customer some of your customers are moving over there. Can you join them?

Or is I don't know. What can you say about it? Thank you.

Jo, CEO, MONTEA: Germany is a tough market to enter. We had some we needed some time to realize that, basically, it's not like France or Belgium or Holland where you have one central center of decision, but it's a very decentralized market with all local heroes in eight different markets. So that's been a difficult one. I think we will have to focus on some sub markets. I will tell you more about that later on, but we think we have to focus on some sub markets in order to be successful, in order to become local heroes instead of trying to cover the entire country.

That's an important one. If we look at the yields, if there are transactions today, it remains very difficult for us as in every market to do standing investments. Why were we able to do the Hamburg transaction? Because we were it's a land lease and German investors don't like land leases, they want freehold. So the land lease makes you apart from a lot of German local investors.

And next to that we were able to renegotiate the lend lease with the port authority of Hamburg, and that really made the deal attractive for us. It took over a year to do the deal because we had long negotiations with the port authority, but that made the deal interesting for us. Now this being said, if you want to go into a market on our model, where you say it will probably not be standing investments, it will be lend lease, it will be developments, it will be partnerships, then you need those boots on the ground. You need those local teams, and as I said, it's 12 people in France now, it's seven people in Germany. I don't feel the need to add a fifth or sixth country today on that model because it would mean that you would immediately have to hire five, six, seven people.

Let's now focus on those two markets. Let's focus on France. Let's focus on Germany. Let's get some results there and then we'll see where the wind brings us. But today, it's full focus on France and Germany.

Koen, Analyst: Koen. Thank you for the presentation.

Analyst: Two small questions. First is on the loan to value. It's still below 35%. Is this a target? And how do you see it in the future?

Is there a possibility maybe to go to a little higher level? And then you have an official BBB plus rating now. What do you think that if there will be an impact on, for example, spreads in the future? Or do you think it's just a confirmation of the quality of your balance sheet?

Else, CFO, MONTEA: For the EPRA LTV target, we don't have a real target, but 35% is not a target. Let's say it like that. But internally, of course, to prepare our budget, we take into account a certain threshold, which is around 40% indeed. And in terms of spreads linked to the BBB plus Fitch rating, it will have a really marginal impact because today, the banks, they already take into account the fact that we were BBB or BBB plus solid investment rate. So I don't think that will change very, very fast.

Jo, CEO, MONTEA: So you don't have to have mission to build the market to do a bigger deal and maybe you lost cut?

Else, CFO, MONTEA: I think we will first stick to the bank, the bank facilities. 40% is coming from the bank, so there is still margin to go and get the cheaper financing the funding. And then secondly, of course, there is a private placement market next to the commercial paper market in which we are not active yet, which might be an option for 100 to 150,000,000 of new funding at, of course, lower spreads, but that will have an impact on the average remaining term. So there, we will have to do the trade off. But the public, bolt issuance won't happen in the near future.

I think we are too small to get 300,000,000 or 500,000,000 at once with one maturity date.

Jo, CEO, MONTEA: Francesca?

Jessica, Analyst: Maybe just a follow-up question on his questions. How do you see the cost of debt evolving for 2025 and what you consider for the guidance?

Else, CFO, MONTEA: We think it will continue or remain stable at 2.3%. That was the percentage of 2024. And we target for a maximum cost of debt on average of 2.5% till the end of twenty twenty seven. And this is linked to the combination of bank funding, commercial paper and private placement market where the law the the letter is the most expensive one.

Ina, Investor Relations Manager, MONTEA: I don't think there are any questions remaining around the room. No questions in the room. Then we will move to the ones online. Our first question comes from Colum Marley from Colytics. Colum, please unmute yourself and go ahead.

Hello. Hello.

Else, CFO, MONTEA0: Can you hear me? Sorry. It wasn't unlocking. Just two questions, please. First one, there's a lot of good slides in the slide deck on the supply side.

Can you just comment on what you're seeing on the demand side of things, particularly in each of the submarkets given the very different political and macro environments? And then just secondly, you might have already touched on this, but just looking at where your share prices today, obviously, you did the rights issue a few months ago. Your net debt to EBITDA is kind of close to maybe that self imposed threshold. How are you thinking about capital recycling or capital raising as of today to get you to that track 2017 target?

Jo, CEO, MONTEA: Thanks for your question. I think on the demand side, we see there is still traction. There is still possibilities mostly linked to sectors like e commerce of course is a very important one. We think that, of course, Amazon (NASDAQ:AMZN) is back in the market, very important one. We see them in every country today.

They are looking back at opportunities. Next to that, food pharma are of course very interesting in the market. And of course, Germany is struggling with the automotive sector. That's not a secret. But in short, I think it is very important to look and that's what we try to do in this presentation it's very important to look at the micro markets and there can be huge differences within one country.

I showed you the example of Belgium between 012%. So it's really a submarket play that is very important now. On your second question, I will ask else to elaborate on that.

Else, CFO, MONTEA: Yes. So the indeed we are today at an adjusted net debt of EBITDA of 6.9. And there we have an investment capacity of more than €600 available to grow to that eight times. Of course, under track 27 will mean that we will do the 600 the first six hundred million only by by by debt. But for the investment volume that we target for 2025, we see that this can be done through debt.

Frederic, Analyst: That's clear. Thank you.

Jo, CEO, MONTEA: Thank you.

Else, CFO, MONTEA: And of course, we leave the options open for contributions in kind and, other capital increases next to public capital increase or an ABB (ST:ABB) transaction.

Ina, Investor Relations Manager, MONTEA: Thank you, Colm. Next question is from Thomas Rothauser from Deutsche. Thomas, good morning. Please go ahead.

Koen, Analyst: Couple of questions. The first one actually is on the pre lab activity. I mean, it's impossible to get any more color on what what we can expect for this year. I know you are you are cautious to comment, but would you say you feel more confident now than three or six months ago? And then the second one is overall on on on dynamics, of demand, given the weak economic outlook on Western European countries.

What would you say at what point of the cycle would you say we stand currently? I mean, do you think we are already through the trough? I mean, one of your peers has recently switched to a more positive tone here? And also here more specifically, is it correct you you basically stick to the more cautious view on the retention rate. So you expect it a bit lower, I think, than than historically.

And then thirdly, on the ERV momentum and and render version, just wondering if you can more color on that. It has been a driver. I think you mentioned Netherlands. Yes, I think I think that's it.

Jo, CEO, MONTEA: Thanks for your questions. It's not a problem of confidence. I think we absolutely believe we have the right product on the right location. We have the candidates in place, but there has been a so there is basically on the fundamentals, there are no questions. And it's also shown by the, as you mentioned, the rent reversion.

So there is no question. It's just about parties having the courage again to take decisions, companies being able to take decisions again. And there has been an absolute standstill in 2024. I wouldn't want to talk about confidence. We are confident about the quality of the product.

But when we talk about getting those deals signed, I would like to prove it. I would like to be here back with you guys in six months and really be able to tell of the 300,000 we're having 100,000 to 150,000 in development. So let's wait for that signal. My personal target, as I mentioned in the presentation, we delivered new projects, 100,000 last year. We will deliver this year 120,000 that is now already in execution.

Well, then we should be able to add at least 100,000 this year. But it really depends on, on those parties taking the decision. And it's always it's about two and two or three deals. That's what we're talking about. So, yes, I feel confident due to the quality of the product.

But it will it will be a tough market because it's decisions to take and because it's about new buildings. Of course, the reversion is that you see that the currency rate in our existing portfolio remains very high at 99.9%, as Hina mentioned. Even if we would take 20% of those that are not committed yet, would leave us, would still be above 98%. So the resilience of the existing portfolio because of the clear focus on the core locations and core quality is now really showing off. So that's where we believe in and retention.

As Zena mentioned, 96% in 2024 is really high or retention and re letting. So that's very good. And of course, rent reversion. Yes, it was mentioned last year. I don't think we will see major step ups over the next year.

It's about getting that gap. It's about closing that gap between our current trend and our ERV and the famous 12%. And it's good to see that over the last year on average we were able to close that gap. So we have to continue working on that. But we don't see, as I already mentioned, any pressure on the rents.

And I think looking at it as we did in the presentation on a larger scale, if you compare it to The UK, if you compare it to the European leverage, let's not forget we are in the four markets with the highest scarcity. The four markets where take up has always been higher than what can be brought to the market. The amount is higher than what can be brought to the market. So, there is absolutely confidence that the rent levels will be sustainable.

Koen, Analyst: Thank you.

Ina, Investor Relations Manager, MONTEA: Thank you, Thomas. Our next question comes from John Wong from Kempen. John, please go ahead.

Else, CFO, MONTEA1: Hi, good afternoon.

Jo, CEO, MONTEA: Can you

Else, CFO, MONTEA1: hear me?

Jo, CEO, MONTEA: Hi, John. Hi.

Else, CFO, MONTEA1: Just on the reversion of potential, it continued to increase in Q4. Just to confirm, is this fully driven by the ERV revision in The Netherlands?

Ina, Investor Relations Manager, MONTEA: It's not entirely just the Dutch revision, but it has played the largest part. And indeed, if you look at the split of our reversions of 12%, big part of it on a if you look at the entire portfolio, it's actually linked to our German acquisition in Hamburg as well. Is it significantly under rented compared to where it currently stands on the market?

Else, CFO, MONTEA1: Okay. Clear. And just a follow-up on that, how much of that do you expect to capture in 2025?

Ina, Investor Relations Manager, MONTEA: It's I think if you look at the fact that we already did 58% of our leases that were coming to break or expiry, that has already been done. What's coming up? So the remaining 42%, you could roughly say about half of that would be linked to purely breaks. So there, we don't have any flexibility. It's just our it's in tenant's hands to basically continue to tell us that they would like to leave.

To mention on that, we have a six month notice period. So we know well ahead if the tenant is willing to leave. And on the remaining part, I think we remain quite cautious because we do see that the market is more challenging. I think generally speaking, it's not only, speaking about all a specific sector. There have been more bankruptcies, so I think we take a more cautious stance on that, In case you're looking for more guidance on where like for like would go for 2025, we are predominantly basing ourselves on an average inflation rate of about 2%.

Else, CFO, MONTEA1: Okay. Clear. Thank you. And just on the demands, I think, you mentioned that occupiers need courage to make decisions. What's in your view necessary to bring back that courage?

Jo, CEO, MONTEA: A bit of stability in the market, but that would be idle hope, I think. I sometimes compare it to an household that's having a bit of a cash issue, that has lost his job and mom is in between jobs and there's a bit of a cash issue and they decide not to buy new shoes for the kids, they can postpone that for one month, they can postpone it for two months, but one day they will have to buy new shoes for all the kids at the same time. And that's what we see in a lot of sectors. People are reluctant and they're all reluctant at the same moment. Then at a certain moment, they feel the confidence again and they see with their competitors that they're confident again.

And then all of a sudden, they all want to move again. So that's a bit of the, yeah, the cyclicality that's in every market, I think. But we come out of a market where there's been kind of a standstill or a significant slowdown. But there are obviously signs that there is recovery. But let's see for the signed deals before we open up the champagne.

Wim, Analyst: All

Else, CFO, MONTEA1: right. Very clear. Thank you.

Jo, CEO, MONTEA: Thanks, John.

Ina, Investor Relations Manager, MONTEA: Thank you, John. Our next question comes from Stephen Baumann from ABN HODO. Stephen, good afternoon. Go ahead.

Else, CFO, MONTEA2: Sorry. So I have two questions. First, if I'm correct, it seems that one of the French prelads, but not permitted projects fell out of the pipeline. Why is that?

Jo, CEO, MONTEA: That's that's correct. There are two, projects that were, leased, but, waiting for a tenant. The first one has gone up to execution. Waiting for permit. Sorry, waiting for permit.

Excuse me. Least waiting for permit. One, in Holland went up to in execution that the when we're building for, Voss Logistics in Os and one dropped out because the tenant told us that, basically he doesn't need the extension right away. So, it will probably be something for '26 or '27. So, we took that one out indeed.

Else, CFO, MONTEA2: Okay. Clear. Thank you. Different question on energy and solar. It's a couple of questions.

So first, what's a reasonable range for your energy income? And how much energy income is in your 25%? And the second, maybe some color on what percentage is more or less fixed due to contracts or certificates? And which part is more variable to short term energy prices? And the third, is could you remind us how the revaluations of solar assets work?

And why the value is down like 60,000,000 quarter on quarter?

Ina, Investor Relations Manager, MONTEA: I will I will take that one. I will start with your last question statement. So on the valuation, indeed, we have booked a negative revaluation on solar panels of 16,000,000 in the course of 2024. The main reason is, as you know, the solar or the energy prices, especially the intraday energy prices, have been very volatile over the course of the year, and effectively what this means in some cases they even went negative. So what is now included in our valuation assumptions was the adjustment of where, we originally, where the original estimates on the energy prices have been.

I think going forward, what we are looking to do also to mitigate the impact of the fluctuating energy prices, First and foremost, it's to, utilize our battery storage system, so in this case we can also smoothen out any, any pressure that there is on the energy grid, and at the same time, we we will also have curtailment measures, in which cases we can effectively, in where there are no solar, let's say, battery storage systems available, we can effectively, shut down the generation in case the energy prices are negative during the day. But the idea is to really, if we look at the actual utilization rates of the energy we produce on our warehouses, Currently it's at around 35%, so what is really being used by our tenants. And the idea for us is with the introduction of our battery storage systems that we would really utilize as much as possible and also have a third party management system for us that would be able to help us, let's say, play on the energy markets to optimize the revenue. And on the points regarding our income for 2025, if it's okay for you we will take that one offline and we'll provide you with the exact breakdown.

Jo, CEO, MONTEA: It's roughly seven to 8% of our top line income is coming from solar panels. Seven to 8%. Okay.

Gerd, Analyst: Thank you.

Ina, Investor Relations Manager, MONTEA: Thank you. And our next question comes from Kannad Mitra from Barclays (LON:BARC). Kannad, good afternoon. Please go ahead.

Else, CFO, MONTEA3: Hello. Thank you for taking my question. So a couple of questions. How do you see your yield on cost trending? I think the last we spoke in Q3, it was slightly above 7%.

So are you seeing in your pre letting discussions rents tick up? That's one and if, the other one is, in terms of occupational markets, how do you see, warehouse utilization going? Because there was a point that came up in the, in, in our last conference call. I think it was, we saw a slow down to more normalized levels of 8090%. And how are the generally, how are pre letting discussions, going on in in in so, I mean, how much can you move online in execution over the next few months?

Jo, CEO, MONTEA: I didn't catch the first question on the 7%. Could you repeat that question, Konstant? You said something about 7% in your first question. Was it rent repair? Yes, yield on cost.

Cost. Yeah. The yield on cost, excuse me. Yeah. So the yield on cost of 7% for in house development for the pipeline we already communicated that's still 7%.

Why? Because this is of course land we bought time ago. So if we see the increase in the rental levels and we compare that to the construction cost, we are still able to get that 7%. For new land bank, for new opportunities, it will probably be around 6.5%, roughly between 6.256.75%. But based on a pre led basis, so zero risk on the development itself.

So, yes, the 7% for new developments we add to that land bank will be challenging, yes? So, roughly around 6.5%, but the 7% on the one we already earmarked in 2023 now, that is still very valid. As said on the reversion, as Ina mentioned, 12% last year, that should be the target again this year on those where we have the opportunity to renegotiate. Because let's be very clear, more than half of the leases that are included in that 9% are breaks only for the tenants. So we cannot renegotiate, the rent there.

It's just a break option from their side. So it's only in a limited part where we are able to renegotiate, but that 12% on that part should be the target again given the fact that current trend is 12% below ERV today.

Else, CFO, MONTEA3: Sorry. I was asking about, warehouse utilization. I think you last in the last conference call, I think you said, they were down to pre COVID levels, or a more normalized level of eighty, ninety percent. Do you see anything back at that?

Jo, CEO, MONTEA: The occupancy

Ina, Investor Relations Manager, MONTEA: rate? Yeah. Utilization rate of the houses.

Jo, CEO, MONTEA: The utilization rates within the building. Yeah. Yes, they are back at normal levels between 8090%. This is indeed, still the case. Absolutely.

Yeah.

Else, CFO, MONTEA3: And also, just on, Elam costs, just one follow-up. So you see, construction costs kind of, offsetting the rent increases that you are getting in, if if if you were to have a prelate today. I think at some point, it was slightly above 7% if I recall correctly, based on a kind of a spot level, what you saw then.

Jo, CEO, MONTEA: Well, what is important in the construction of, of a logistics warehouse is that basically the, part that is linked to wages is lower than in other sectors. Roughly 40% of the total construction cost is linked to wages, 60% is material cost. So we are less impacted by the indexation of wages And that makes construction cost of course much less impacted in total for us than in some other asset classes. This being said, we also see that some of the order books of the construction companies are under pressure, which gives us some more leverage to negotiate. So construction cost is absolutely under control in all four of our countries today.

Else, CFO, MONTEA3: Thank you. Thank you for taking my questions.

Jo, CEO, MONTEA: Thank you, Kerhard.

Ina, Investor Relations Manager, MONTEA: Thank you, Kerhard. I don't think we have any additional questions online. Last check around the room. Yes. Please go ahead.

Gerd, Analyst: Yes. On taxation, maybe when we discuss that we'll be not hungry anymore, but okay. On The Netherlands, so we also have a suggestion for acquisitions. They will first look to Belgium and to Luxembourg. What is your position?

Do you will you use a higher yield requirement to compensate for that? Or don't you bother

Jo, CEO, MONTEA: or You mean the you mean the embellishment of the FBI status. The embellishment of the FBI status also gives us some opportunities. It was a very strict, recommendation. We were not allowed to sell services. We were not allowed to sell energy.

So it also had its limitations. So it will also give us some opportunities to do more business than what we did in Holland before. And I think the effective tax rate on the total portfolio.

Else, CFO, MONTEA: If you look at the new developments for The Netherlands, the effective tax rates of those new developments, if they are green, BREEAM outstanding or excellent, then that would mean that the effective tax rate is 0% for the first five to nine years. So if we add that on top of the fact that a normal, the normal effective tax rate of assets that were FBI previously, that is around 7%. The average new effective tax rate for the coming years is below 4%.

Gerd, Analyst: Okay. And then there was talk about the change in the tax treaty with France, which would have an impact on on the dividends receiving from France. Can you say something? And then at the same time of, you know, maybe first you can answer that, I'm sorry.

Else, CFO, MONTEA: Yeah. With the because of the fact that there is, there there was no government and we have some issues to to get something in place with five governments, that, we don't know when it will be applicable. But indeed, there is there is, there are thoughts to increase the branch tax from 5% to 25%. The dividend upstream coming from France is very limited. So today, looking at absolute figures, the the taxation that we pay in France is less than €200,000.

Gerd, Analyst: That yeah. Indeed on that dividend upstreaming because if you pay dividend on if you pay tax on dividend from The Netherlands or Germany or France, it's not showing up in the consolidated results for this norm. Can you say something about you have some effects of cash leakage? If if only you pay 5% on on the dividends coming from Germany, that's limited. There is there is some impact.

So how do you deal with that? So I've been discussing this with the two or three REITs recently, so very complicated. And, that's Yeah.

Else, CFO, MONTEA: But for for Germany, there is no dividend upstream because there, we have we pay taxes, so we don't apply for the REIT regime. And then for The Netherlands and, France, there is an upstreaming that or at least for The Netherlands, there is an upstreaming that has been done. But for France, there is just a taxation. There is no obligation to do the upstream.

Koen, Analyst: Okay. Thank you.

Jo, CEO, MONTEA: Frederic, here's the last question.

Frederic, Analyst: Last one. Just, so we have been discussing your loan cost of project. I was just willing to know if you are also thinking about the IRR of some project. Because for instance, if I look at Lumen, I think the project in Lumen has been discussed for, I don't know, four or five years now. Is it the first time you bought the land?

So I'm just wondering if at some point in time you're like, okay, I know I have to boost my IRR, which is actually the return I will be making on my equity. And I will be giving maybe more incentive to attract someone in order to meet that IRR, even if it means a yield cost below 7%?

Jo, CEO, MONTEA: I couldn't agree more. I always say and I mentioned it already in this meeting also we are a developer and an investor, But that means we also have to have the DNA of the developer, which means although we don't immediately need the cash of that land, there is some debt capital there. Luckily I have a CFO who was trained by a developer, so she mentions it a lot that indeed the land bank, you have the yielding land bank, that's fine, that's 5.8%, that's great, But the non yielding so you have the yielding land bank, then you have the part where we have land under option that's fine too. But it's of course the part where we bought the land and we don't have a project. I would say the internal target is we need to deploy it in the next two to three years.

And Lumen is of course the example in the portfolio where we would have and Lumen is of course the the example in the portfolio where we would have thought in 2019 that it would have been long developed by now. We have been in exclusive negotiation with several parties over those years, but we were not able to close the deal. And of course, it's part of the assessment we do on a six month basis. Do we want to keep this? Now what I can tell you specifically on that case is that if we look at the price we bought it and the interest, capitalized interest that we have had on it, if we capitalize them, we are still well below the current market value.

So for us, it's not a bleeder and we will do we will take all measures not to let it become a bleeder. So we are still perfect in line there with our ambitions, but you're absolutely right. This is an assessment we need to do on a yearly basis. We cannot have that capital in the company. We have this obligation to where the shareholders on EPS growth and we will not allow to have that capital in the portfolio.

I fully agree.

Vivian, Analyst: Yes, please. I'm gonna be sorry, guys. Sorry, last one. Just a bit of a view on your yield in land bank. How much is potentially coming to an end?

And how do you react in the current market? Are you rather looking to extend it further with existing tenants? Let's wait one year to year at lower rent, but at least I'm more flexible on redevelop when the demand will be stronger? Or are you saying, yes, let's go for it, demand is going to get back? We can maybe add it back

Else, CFO, MONTEA3: to

Vivian, Analyst: the pipeline? Can you quantify a bit what is coming back

Jo, CEO, MONTEA: to you recently? So for us, the definition of the yielding land bank is actually its assets. We have an acceptable income today and the 5.8 that's acceptable. It's not great. It's just below our hurdle rate of 6%, but it's good.

But we see that there is more potential once the tenant, current tenant would leave. So we have to see an upside, otherwise it's not a yielding landmaker. If something happens to the tenant and you have a problem, then it's not a yielding land bank. So all of them have an upside once the tenant would leave. So, to say now, oh, let's hope they're not leaving this year because it might be better in two years, that's not the case.

It's all on strategic land and strategic locations. So for us, all of them are absolutely we're looking forward to redeveloping them. Of course, they are well spread over time. As I said, there are, there's land that will become available in 2026, but there is also land that will become available in 02/1936. So basically, it's well spread over time.

And that's why we remember when we had the same discussion two years ago, everybody was saying, yes, but you're going to use that land bank and you will not be able to replenish it. I think we have proven now that we are able to find opportunities in the market in all of our markets. So, yeah, and they all I want to be very clear on that they all have upside once they would become available. Thank you very much. Thank you for joining.

Thanks for all your very interesting questions. Thanks for joining. And for people on the call, thanks and hope to see you soon in person on one of our roadshows. Thank you very much.

Ina, Investor Relations Manager, MONTEA: Thank you.

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