Merlin Properties Aktie

Good afternoon, everyone. Thank you for joining MERLIN's 3M '26 trading update. As we always do on quarterly results, our CEO, Ismael Clemente, will briefly walk you through the main highlights of the period, and we will then open the line for Q&A.

Without further delay, I pass the word on to Ismael.

Thank you, Teresa. Well, MERLIN is off to a very good start of the year with total revenues up 11.2%, owing to basically a 3.5% increase in gross rents like-for-like and the additional revenue brought by data centers as compared to the same period last year.

The FFO, however, is only up 3.9%, still better than what we predicted. It was slightly lower than last year, but it's only 3.9%. And as warned already at the full year results, it's a combination of more financial expense, a 10% increase, and much less financial income because in the same period last year, we were still enjoying a significant amount of cash in our bank, so 40% less income, financial income. That puts the company at 8.8% total shareholder return per share year-on-year comparing the same periods. We have seen a very strong activity in all of our divisions, but particularly in traditional asset classes.

Of course, Spain continues enjoying good macro, but I would not take out importance to the asset management effort carried out by my colleagues. The -- occupancy remains very high at 95% and quite stable despite the fact that in the first quarter, about 60% of renewals come due, and this is Spanish idiosyncratic. Everything is done either in January or February. So most of our renewals come due in the first 2 months of the year. But the erosion in occupancy of close to 60 bps, I believe, is quite acceptable. We will discuss the guidance for next year probably in the next quarter. But what we said at the end of the financial year 2025 remains true.

In offices, we said between 93% and 94% and our models are giving us now midpoint in that range in shopping centers, full stability, so between 90 -- around 96.5%, something like that. Remember, in shopping centers, we are starting to yield manage a little bit the portfolio. You have seen it in the release spread. So we are starting to fight in a good way, the occupancy cost ratio, which now stands at the lowest I have ever seen in my professional life at 10.8%.

And in logistics and some of you, I know, are worried about logistics because you are kind of assuming that there is some sort of underperformance in the portfolio. The truth is that simply is the GXO share, which is a big one, it's 48,000 square meters, and it will take time to lease it up. I mean, because it's a relatively big deal to swallow for the taker, we are in negotiations with more than one party. So we are negotiating with multiple parties. And that will basically move the needle of occupancy as of year-end. I mean, if we cannot sign that share before year-end, occupancy will be more in the region of 96%. And if we are able to sign it, it will be 99%. Anyway, I already warned you that 99% is abnormal. So please do not bang on our head every time we go down from 99% because 99%, of course, is not reasonable.

More importantly, we continue executing the mega plan in a very satisfactory manner. I think it's -- all the assets under construction are on track to meet the delivery date. And the ones in which we were requesting licenses are now little by little achieving very interesting milestones in terms of construction licenses, et cetera. I will go in further detail in a minute.

Noncore sales, meaningless for the quarter, EUR 6.8 million at premium to GAV. But more importantly, we have been signing EUR 123 million for execution in '26 and '27, giving us optionality for receiving the cash flow. As you know, while we continue building data centers, it is critical for the company to keep cash flow. And as such, every time we sell an asset, we try to do it in a type of contract in which we keep a lot of optionality as to what is the moment of execution and what is the moment of loss of cash flow and receipt of the money.

At present, we don't need money. I mean we are overfunded. We have too much cash at banks. So what we are trying to do is drag a little bit our feet in terms of sales. And that EUR 122.9 million, it's also a premium to GAV. And I know some of you are not worried of making that question. It's at a premium to GAV. The NTA per share, it's EUR 15.32 with no valuation or no appraisal during the quarter. Another thing that has raised the eyebrows is we have said that we expect substantial revaluation of DCs in 1H. This is no nuclear science. It's simply that up to now, the scope of valuation of our appraisers has been a total potential of 240 megawatts of data centers.

And just with Lisbon, we moved into 340. So it's a very significant jump ahead, much more scope, and I'm sure this is going to have an effect in the valuation of the portfolio, together with the fact that there's been a near elimination of any leasing risk in Phase I and increasingly in Phase II. And as a consequence, I'm sure that the valuers will reflect that in the discount rates and also bringing the cash flows closer to present. So this is why we expect some jump in values in the first half.

As you all know, in March, we executed a capital increase and ABO to fund Phase III. It was a very good transaction, reflecting particularly your support to the company. It was heavily oversubscribed and executed at strike. Thanks for that. At the end, 100% of the paper was placed with existing shareholders. Of course, begging pardon to the super minority shareholders that, of course, cannot participate in ABOs because of their non-institutional nature. Even from a legal standpoint, you cannot address them.

The final distribution after the general approval of the General Shareholders' Meeting of 2022 will be paid on May 25.

Some of you have asked us about why the FFO goes down by 5.6%. As you know, we used the absolute number of shares of the company at the moment of reporting, which now includes the capital increase. We don't, we don't use the average. If we were to use the average, the FFO will have grown by 3.1% and the adjusted FFO by 3.5%. So, that we prefer to report what we see. And what we see is that now we have 620 million shares. And as such, if we have to divide the FFO by those -- by these number of shares, it's minus 5.6%, which anyway is already below the 10% theoretical dilution created by the capital increase. So with some probability maybe during the year, we will continue taking event eroding that dilution created by the capital increase.

In terms of behavior of the different asset classes, offices, as you know, ended up the period at 93.6% occupancy, down close more or less 60% compared to the 94.2% at which we closed the year. The like-for-like was 3.1% with a very interesting release spread of 2.8%. So offices continue to show some strength despite the fact that we have a problem in Barcelona, a problem that will aggravate in the second quarter because in the second quarter, as you know, we have a scheduled exit of the Meta fake news control center in Torre Glòries. So, that will further diminish the occupancy in Barcelona.

First, Barcelona has a relatively minimal weight in our portfolio. So no big thing. But Barcelona is, of course, a complicated city at present because of the relative oversupply that we are experiencing in the area of 22@. It will take some time to recover. We have commented on a number of occasions. Barcelona is a strong market. So sooner or later, it will recover, but it's -- we need a little bit of patience there.

In fact, even in rents, now Madrid is about to overtake Barcelona in average rents in the portfolio despite being more concentrated in prime CBD, the one in Barcelona. So very interesting in the performance we have observed in Madrid in recent times. Logistics, down about 60 basis points to 95.8% from the 96.4% we were at the end of the year. The like-for-like is weak, 0.6%, but this is mainly due to the net variation in occupancy because much to our surprise, the release spread has been super strong at 6.2%. We still need to see what happens in the second, third and fourth quarters to check whether this is a reflection of something or it simply -- it has happened a little bit randomly. I mean we need to check the consistency of this figure in the coming quarters.

Shopping centers is a rocket. I mean, 6.1% rent like-for-like and a lease spread of 7.4%. We told you that we would start managing yield and we are doing exactly that. Despite this, the sales have gone up so widely that at the end, the occupancy cost ratio continues going down. But anyway, we will continue pushing a little bit in rents and trying to normalize more the performance of the portfolio.

If we go very quickly through the different asset classes, and I will only stop in data centers because of its importance. In offices, what is -- what strikes the eye is basically the very good performance of Madrid, now reaching 94.6% with more than 1% change in the period and Barcelona, which has gone further down by about 3 percentage points. Lisbon has gone down by 4 percentage points, but don't take that as a reflection of anything. It's simply that we have suffered the conjunction of the exit of BNP Paribas in the Arts Tower and some of the consequences -- delayed consequence of the exit of Galp in Torre A. But at the pace we are reletting space there, this will be somehow normalized towards year-end.

I think the local team there is doing an excellent work in rebalancing the portfolio. In terms of as a curiosity, the once demeaned A1 corridor in Madrid is now doubling. I mean, it has moved from Cinderella into princess. So now it is occupied above the average occupancy of the portfolio, owing to the fact that part of the infrastructure problems that were endemic to that area, particularly the traffic jams because all the residential around have been built, but no changes have been made to the infrastructure.

Finally, the municipality of Madrid has carried out some changes in the North traffic hub, and this has reduced very significantly the traffic jams in the area. And the proximity of Operación Chamartín is also enticing more and more real estate managers in companies to find a slot there because at the end, it's going to be very close to where the music will play in Madrid for the coming 25 or 30 years.

In logistics, well, as commented, very good lease spread and pedestrian growth in like-for-like terms owing to GXO, is commented, as a big shed. We are now negotiating with three, four counterparties, but it will take time. I mean bear with us because it's a big shed and the market is not also -- is not in its best moment. So we need to make sure that we sign that back and go back to a super high occupancy, if at all possible.

Good news, however, is that we continue leasing well our work in progress. I mean we are 178,320 pre-let or ahead of terms. It is important to make the breakdown. It's 174 pre-let and 4 head of terms. So it's basically all pre-let, which is interesting. And even in the noncommitted, we are working on reducing the total number of 182 by about 60 because we are in conversation with the tenant and reduce the noncommitted to only 120, always with the idea that has been conveyed on many occasions to you of finishing our land bank in logistics and waiting for the next cycle comfortably full and cash flowing. This is what we want to do.

At the same time, in ZAL Port, we were able to get two additional plots there and one has been pre-let to Lidl and the other one, which is in the airport of Barcelona has been pre-let to Logista. So that will add capacity in the super prime location of ZAL Port in Barcelona.

In shopping centers, Spain is between the increase in population, the marginal propension to spend and the macro, it's really performing as like a rocket. The sales -- the increase in sales of 10.3%, which will strike some of you as too high. It's -- part of it is owing to the fact that Marineda, the extension of Marineda has been in operation in the period, and that has added about 4 points to the figure. If you want to do it like similar to like-for-like, it will be in the region of 6.2%, much more in line with the market statistics and what some of our peers are reporting in Spain.

Footfall, however, is only plus 1.5%, and this is owing to very small things, difficult to explain like, for example, in Barcelona, we have works in Plaça d'Espanya which are complicating the access to the shopping center. In Larios, the Spanish high-speed train got suspended for a long period. And therefore, access to Malaga was completely complicated by the public authorities. And I mean, we have a number of other situations in the portfolio. But we continue to see a very interesting footfall flow in our shopping centers.

Data centers. Well, for Phase I, Madrid Getafe 01, Barcelona Zona Franca, and Bilbao Arasur 03, the first buildings are now fully equipped and fully let, and they will reach EUR 97 million gross rental income in the year of stabilization, which is '27 as anticipated to you a long time ago.

Going into the details, Barcelona Zona Franca has been repowered or is being repowered. All the machinery has been received, and we are doing now fit out. There's been a change in layout of the client, and it's -- the fit-out is going like 15 days delay that's not relevant for cash flow, and we will start receiving cash flow in the third quarter of '26 this year.

Regarding Madrid Getafe 01, well, it's now fully let to 1 NeoCloud and two 2 Hyperscalers, which basically host in the data center POPs, I mean, cloud points of presence and are occupying an interesting part of the data center. There, we are finalizing the power connection works. I mean we are -- at present, we are big in trenches, I mean, in very plain language terms. And we expect to be ready in October '26. So by fourth quarter '26, the main client, the AI client of the center will start paying full rent. A repowering opportunity has arisen that will -- should allow us to go back to the 70 megawatts of Phase I that we told you in April 2022 in our Capital Markets Day. So if we have the opportunity to acquire 10 megawatts of electricity that will give us 6 megawatts extra in IT terms.

I know it's a small number, but it's symbolically important for us. If we can pinch it, the repowering should be ready by fourth quarter '27. And that means that in terms of gross rental income, this year, it's set. I mean, we will receive around EUR 66 million in rents. Next year should be EUR 97 million. But then in 2028, there will be a significant jump. If the repowering happens, we will go to circa EUR 110 million, including the fixed step-ups of the existing contracts. So very, very interesting for the company.

Then for Phase II, construction is progressing as commented, as planned. And the flow of pre-lets, it's promising. So in Arasur 2, it's fully let. The first batch, 20 megawatts should be producing money by beginning of '27. The second batch, 28 by mid-2027. Very cool machinery, I mean, really state-of-the-art, liquid cooled and what is more important, fully back to back by the client. So they have now final clients for all that power. I mean they are already sold in that.

For Arasur 01, construction is underway. Pre-leasing is in advanced negotiations. What this means, basically, that we have done something special in this occasion. We have signed a reservation agreement, which has as an exhibit all the technical documentation and the full form legal documentation, the lease contract. However, the lease contract contains bracketed terms for the delivery date.

So three things can happen. If nothing happens at a certain point next year, which I will keep for me, okay? The contract will become fully binding for both parties, and it will be let. If we have to change the delivery dates, and I will explain why, and the counterparty accepts, again, it will become fully binding on both -- for both parties.

And if we can find a language which is sufficiently flexible for delivery dates, which will need the collaboration of the final client of our power taker and NVIDIA for the delivery of the chips, if we can find something which is amenable for the four parties, then eventually, we will move into full, let's say, full form contract signing. So it's pretty much done, okay? So that is the situation there, and we are working.

Why are we worried? We are worried for a very simple reason because we have our own working morale. We have our own sense of fulfillment of contractual obligations. But when you are dealing with our public administration or other counterparties, when you depend on third parties, of course, you are exposed. And what we don't want to do is screw up. We don't want to screw up not only because we are going to be imposed a significant penalty.

Penalty at the end, you pay and that's it. The problem is that we are a relatively small company, and we are just starting in the world of data centers. We do not have the goodwill of the big American incumbents and screwing up on the delivery of one of our facilities is not going to be good for us.

So -- and particularly if it is owing to a third-party intervention, it will be a pity. So what we are doing is trying to make sure that we are pretty firm on the delivery dates. Remember that in this case, the electric line comes through a photovoltaic plant that needs to be built -- is being built or will start soon to be built by Iberdrola, by the utility provider, really next door to the data center. But the plant needs to be built and the line will come through the plant through the data center.

So two things need to be executed, the generation assets, the solar panels and the line. And this requires lots of authorizations from the Basque Country authorities, from the central government authorities, et cetera, plus the execution of the works itself. So this is why we have been a little bit very prudent in the way we have approached this potential pre-let.

Regarding Lisbon 01 and 02, well, basically, construction is advancing significantly. If any of you fly often to Lisbon, you will see that the two buildings are now with columns erected. They will start closing walls in the second half of the year and roofing. So works are advancing pretty well. after finishing all the preparation of the ground, which, as you know, is a complicated ground in Lisbon. So very happy with the way it is going.

For the IT capacity, the primary plan continues to be the adherence to the Portuguese gigafactory. However, this is now being delayed again. The RFP by the European Union might be sent to the different parties at the end of June or maybe July, and they expect to take a decision by year-end. Taking into account that we started in all this process in February 2025 with the intention to have everything decided by April, maybe May, maybe June, it's a 1.5- years delay and which is sometimes not compatible with private activities.

I mean we cannot do things in that way. So we are advancing in some alternative conversations pretty similar to what we did with Arasur that you will need to bear with us for long while because those happen to be hyperscalers, and that means basically very, very long conversations, very slow processes. It will take a lot of time to really get to a happy end. But statistics are in our favor. We are talking to multiple counterparties and sooner or later, one of them will end up concluding negotiations. So we are happy with the way it goes.

Plus, if at all possible, if we can enter a full lease of the whole campus, it's paradise for us. So if we can really lease the whole campus and accelerate the construction of 03, 04 and 05, that will be perfect. So this is why we are taking relatively long in Lisbon that the demand is very satisfactory.

In Madrid Getafe 02, the demolition works are underway, should be finished by year-end. Very happy with the way they are going. And the construction license has been submitted the request to the municipality, and we expect to have it or to get it immediately after demolition works are finished. So maybe with a little bit of luck, early next year. We want to rush in this case again because this data center enjoys a couple of bookings and highly credible.

So we believe it will go very well. The current finalization target, which is first 1H '29, it's about one half in advance of the one we told you about it's like 2 quarters ago when we feared that this will go to end of '29 with full cash flow in '30. With a little bit of luck, it should go to more like first half '29 and full cash flow -- well, again, for '30, full cash flow for '30, that partial cash flow already in '29.

And regarding Madrid Tres Cantos, it is a small data center, but planning has been completed. We got urbanization permit, and we are now moving around. And that's it because we expect to have this ready in the first half of 2029. And we haven't started commercialization conversations because first it's very small.

Second it is in Madrid. So I think it will lease relatively well. And then for Phase III, we are just starting in Bilbao 4 and 5. Well, we are waiting for the execution of the power infrastructure by our electricity provider, which, as you know, is Solaria. We have requested the construction license to the municipality, which in turn, will put in motion the different favorable reports that need to be received from the Basque government.

But we are already readying the project in case we need to accelerate it. I mean, in our presentation of Phase III, we said first half '30, first half '31. This is simply an estimate. If we need to accelerate, of course, eventually, we want to be ready in case for some reason, the client or one client wants to get this slightly earlier, I mean, we want to be ready.

Regarding Lisbon 3, 4, and 5, the construction license has been granted by the municipality. And we have started doing the groundworks very quickly. I mean we are piloting already, and we will go fast here. So again, we have delivery dates of 1H '29, 1H '30,1H '31. If we get a client, that can be significantly accelerated, but we prefer to keep the existing dates. I mean the guidance provided to you in our Investor Day in Arasur because we still -- we don't know what the future might hold.

And if we end up selling or leasing 01 and 02 to different clients on a retail basis or wholesale colocation, then eventually, we will not rush in starting 3, 4 and 5. But if we do just one single lease, campus lease, then yes. And then Zaragoza Wind, well, we have submitted already the DIGA, the Declaration of General Interest for the Community of Aragon. And we are now moving into the PIGA, the Project of General Interest of Community of Aragon. It might sound like Chinese to you, but the interesting thing about the PIGA is that it moves the land from rural status into full construction license in as short as between 9 and 12 months in theory, unless something happens or you find skeletons from the Stone Age in there.

But the idea is to continue progressing hand-in-hand with the local Aragon authorities, which are highly collaborative and have the PIGA submitted before summer for readiness of the project in 4Q '29 and the second building 2H '31. But again, it depends on whether we can find a client. And we have a lead for this one, so which is the -- because Bilbao and Lisbon probably have the same client that we have a lead, and we are working on the technical design specific to that lead. Outside the Phase I, II and III, we got the declaration of a project of regional interest for our Navalmoral project in Extremadura for Building 1 only.

And we have obtained a little bit of power in there, around 30 megawatts utility, which are good for about 20 megawatts IT. Remember, for those of you who attended the Capital Markets Day in Arasur, that was called Phase IV, okay? Interestingly enough, we got some electricity, not a lot. But given that civil construction is not the lion's share of the budget of a data center, we might perfectly start the construction of Building 1 being ready to equip 20 megawatts IT on it once finished because it's the only way to have an earlier ready for service date in case we get clients. And this Extremadura project is raising a lot of interest in the market because of the sheer size it has.

Of course, during the civil construction period, we might get the real electricity, the one that we have requested from the local authorities from the central source, central government authorities. We requested 2.0 gigawatts and good for around 1.4 IT. Whatever they give to us is going to be good. So we -- if we can electrify the first building and if we can electrify the second, because they are twins from a technical standpoint, we might start also the second if we get the electricity from the central government. And that's basically it. LTV, bond maturities, and this is all relatively plain vanilla stuff.

So let's move into Q&A. And I'm sure it's going to be much more interesting. I mean I'm sure you will have interesting questions.

[Operator Instructions] We have the first question coming from the line of Marios Pastou from Bernstein.

So just firstly, just on the broader FFO growth of...

Marios, you are breaking off, your voice is metallic. Can you check your line or eventually, if you want, if you send us in writing the questions, I will read in loud voice your question and reply to it. Do you agree with that method?

That's perfect. Apologies, my line is funny.

Okay. So questions. FFO growth, circa 4% in the first quarter. I appreciate that it is early days, but is there upside potential to the flat guidance?

Yes. Yes. Yes, there is upside potential. But I don't do this to me every year. I mean, the EUR 0.58 pre-capital increase are EUR 0.53 post capital increase. Let's stay with the EUR 0.53 for the moment. We will review the guidance in the second quarter. And in case we see that we are fine, yes, we will change it. But for the moment, let's keep the 53 because it is not easy. I mean this year from an interest rate perspective has been roller coaster, but it's a roller coaster that only goes up. I mean the 10-year swap rate is going up significantly, and let's see.

I mean, financial expenses might give us a headache. The good thing, however, is that however quick, however fast financial expenses grow in the coming years, the top line is going to run much, much faster. So we are -- that puts us in a very good situation. I mean it's compared to what I see around me, I think it's a very good situation. The company -- I mean, it's been fantastic, it's been a big luck to find this vector of growth of the data centers because it will simply send our top line to the roof, and this is going to go much faster than any potential increase in the financial costs.

Then an update on Portugal, how the dual track discussions are ongoing with tenants versus gigafactory project. I have already referred to that. I mean we are holding like a dual track through, and we might perfectly end up going through a private solution. The third building in Bilbao under advanced negotiation rather than booking able to provide details, yes, well, I have already given you the details. I will not be specific on who is the client, although it's relatively easy to guess.

And then Navalmoral, what this means for Phase III? Well, Navalmoral is Phase IV, as we commented in Arasur in the Capital Markets Day, Phase III, it's a little bit flexible at this time around, could be increased by some things coming from Phase IV, some things coming from Tier 1 pipeline or eventually, if we see that, for example, in Tres Cantos, if we see that it's going to be impossible to meet the deadlines given to market for Phase III, we will move it to Phase IV.

We need to get accustomed a little bit to the fact that having so many balls in the air, have so many things in execution, some things will happen. So you need to be prepared for that. Let's be adult in that respect. I mean if something happens, I will clearly inform all of you that we sometimes might need to do some adjustments.

So the next question comes from the line of Celine from Barclays.

Can I ask you two questions, please, on data centers? The first one is, can you give us an update on where you stand with the EU on your Portuguese scheme? And then secondly, what does that mean that Navalmoral has been declared project of regional interest? What does that mean effectively for you in your day-to-day?

Okay. Well, regarding the EU, as commented, Celine, the problem is permanent delays. I mean, as you know, the program was launched by the European Union. They called it gigafactories because they were trying to replicate the Stargate Program in the U.S., trying to find 1 gigawatt project across Europe. Then somebody raised their hand and said it's impossible, then they reduced to 200 megawatts, then to 100 megawatts.

So finally, it's a 100-megawatt program. Locations moved from 4 to 5 in order to please more countries within the European Union. Now they have moved from 5 to 7. So little by little, it's starting to look like the lottery of the parish in which I go to mass on Sundays. So the boys do a run. And then the one that ends up last still gets a medal because it's super sympathetic and has a very good smile.

So sooner or later, this program is going to be launched. Apparently, it's going to be launched around June, July for decision-making before year-end. Okay. We can no longer be super faithful on that. So in Spain, we are completely out of this. I mean, we were told that we were not needed. So we found our way in the private market. And in Portugal, we have remained loyal to the agreements, verbal agreements reached with the Portuguese government.

We remain there to provide them with digital infrastructure in case they need it. If they tell us they don't need it or the situation continues being delayed, we might move perfectly into a private execution because at the end, we have to manage frugally, your money. I mean -- and we cannot play with that.

Then regarding Extremadura, the declaration of regional interest basically means technically that all periods for licenses are reduced to half. And therefore, everything gets some sort of like a fast track, and it moves significantly quicker. But in practical terms, more importantly is that the Junta de Extremadura is now clearly trying to help the project, and they have allowed us to get some power, which is testimonial is not significant on 45 kVs. So it's not super high-quality power, but it's okay. And will give us the possibility to illuminate 1 block out of the 5, if we do a B100, if we do a W96, the blocks are 24, so partially 1 block, 4 blocks or 5 blocks.

I mean, depending on the type of building we finally build there. But we will have some electricity. And as such, we can start serving clients there, which is important because clients normally deploy system engineers in the site, et cetera. And once they are building -- they are working with you in a building, which is occupied only by 1/5, then the second fifth, third fifth, fourth fifth and five fifth is normally much easier to place with the same client. And Extremadura is raising a lot of interest among the clientele.

The next question comes from the line of Florent Laroche from ODDO.

I would have three questions, if I may. Maybe the first one, you mentioned the valuation of data centers, think that maybe we can expect some substantial revaluation. I understand this is maybe because of changing in the scope with the one. But maybe can you give us maybe more color on how we can anticipate that impact on the valuation for your data centers in Achuana? (sic) [ Arasur ]

Let me wait for 1 quarter. I mean, as you know, I mean we were carrying that land at cost in Lisbon was as close as you can get to 0. So yes, it will be a significant impact. It is not for me now to evaluate the impact. It will be the appraisers. The appraisers will do their job. They will tell us how much they believe.

But yes, there is -- clearly, it's going to be an improvement compared to current situation because current situation is 0. So very, very interestingly. And I believe also there will be some revaluations in existing assets because of certainty. I mean, clearly, the certainty now is full. And as such, I'm sure the discount rates, et cetera, might be modified in our favor. Regarding other asset classes, it remains to be seen because the performance is very good, which is -- should move valuations up.

However, interest rates are going up. So I don't know which of the 2 will prevail. I mean, only God knows, we will wait. But as commented with you on some occasions, whatever for the next 7 years, whatever happens to the traditional portfolio is going to pale in comparison to the value creation that you are about to witness in data centers. So don't be too worried about the traditional asset classes.

Okay. And -- so maybe my second question would be on Phase II and Phase III about the speed on how you spend the CapEx today. So you have provided us a very detailed review on all the assets. But in terms of CapEx spending, so how is it are you spending this faster? Or in line with your initial plans?

At present, faster. I mean last year, '25, I think we executed like EUR 900 and change million compared to EUR 800 million we had in our budget. So we were slightly faster. And in '20 -- talking -- very importantly, talking about committed, which, again, we have explained in some occasions, we consider committed CapEx like already spent because we don't want to run into the risk of insufficient funding.

We don't want to make an equipment request from Vertiv and then discover that we don't have the money at the time it arrives to pay for it. So we kind of block the money of every equipment request we make. And hence, why we have a relatively significant amount of cash. What we expect for '26 is a little bit of the same. I mean we expect '26 to be also fast in terms of CapEx deployment.

The cash at banks we have at present, which is like EUR 1.75 billion. If you take out the bond repayment, EUR 850 million change or less. And the speed of deployment of CapEx in data centers, we are going to finish the year -- if you talk about committed, more or less at 0. If you talk about real money at the banks, we will have money at the banks because part of it will be committed, but not yet spent, okay?

But yes, we are spending pretty fast. And in that respect, the arrival of David Martinez, it's helping us a lot because he's making a significant effort of industrialization of the construction processes, which is important in many aspects. One of them is, of course, speed of execution. But the other one is to combat potential cost inflation episodes we might see in the future.

At present, Europe is relatively tranquil for the moment because there is a lot of bulls***, a lot of noise, but very few people is really building things. But sooner or later, that situation will change, and that might strain a little bit the commitment queues with the main suppliers. So you need to be mindful of that and try to make sure you slot your things in the right moment and you get your equipment and you might need to equip part of your things in advance for which we are prepared. And we have lots of sheds everywhere in Spain. So we have a lot of storage capacity for equipment that we might receive.

The next question comes from the line of Veronique from Kempen.

Maybe first, I was hoping you could give any color on your stance towards the balcony portfolio. You mentioned you're not mentioned anymore in the last four bidders, but you were quite vocal on the past on your interest. So happy to hear if you can give any color on it.

Well, in principle, we couldn't agree on pricing. So we are technically out. And that's it. I mean they are running an investment banking process with long list, short list and et cetera, and we are not participating.

Okay. That's very clear. And then maybe second question, just curious, given what's currently happening in the Middle East, have you identified any new potential risk or already encountered delays or cost inflation for the data center pipeline?

Not for the moment, as I was commenting. The fact that most -- virtually all our supplies come from OECD countries. And the only thing that comes really from a far supplier is Japan, but it's made in Spain, in Zaragoza, the transformers. It's going well so far. Things -- I mean, collateral effects we are seeing from the Gulf crisis is more interest in Europe by hyperscalers because a number of data centers in the area have been hit.

Data centers are, of course, centered in many crisis because they host data, which are vital for today's society. So one, two, like three data centers have been hit. So nothing serious has happened, but that has sparked even more interest now in European locations. And that's basically it. I mean I think we are okay for the moment. Of course, we are not okay. I mean I hope the situation there is resolved sooner rather than later, and we can go back to a normal life.

Okay. And one last question. So you now received the 30 megawatts of power for Extremadura. Is it somehow linked? Or does that give you any view on when you can obtain the remainder that you requested? Or is it something completely separate?

It's completely separate. It's completely separate, Veronique. It's a pity, but it's completely separate. This is electricity obtained through the distribution network through Iberdrola, who is the electricity supplier there. And the one we have requested in Arañuelo 400 kV is electricity requested to the transport system to the national grid authority, to Redeia. So, two different sources of electricity, and one thing has nothing to do with the other. We hope the power contest is called sooner rather than later. We provoked it.

I mean we are ranking first. There is enough electricity in the substation. So we are hopeful that we are going to get a very significant chunk of electricity there. But the truth is that we deposited the bank guarantees on February 25, and we are still waiting. And hopefully, during the year, we should know more or the power contest should be called upon because it will be paradoxical that we end up receiving a lot of electricity earlier in Portugal than we are receiving in Spain. In, as a Spaniard, it kills me, but it is probably it's the situation.

The next question comes from the line of Ana Escalante from Morgan Stanley.

I'd like to ask a question specifically on construction cost inflation. I know that you said that so far, there's nothing especially that you should -- that you are seeing or that you think you should mention, but just thinking maybe a bit more long term. I was wondering if we were to see that inflation in oil prices feeling into construction costs, how does that impact your CapEx plans?

Would you rather increase of CapEx because probably you would be able to transfer that to higher rent for data centers, meaning -- or would you rather just do less megawatts and keep to your original CapEx commitments?

Well, it depends on the relative impact. I mean, so far, first, Phase I is completed. Phase II, I would say, 80% to 85% is ordered at fixed price and being received as we speak. And in Phase III, of course, yes, it will have an impact. That impact in our opinion, for the moment is confined to steel, but not significantly concrete.

And then the oil cost, I mean, our fuel costs for groundworks, et cetera. But as you know, the civil construction is around 25% of the total budget of a data center. So unless the movements are gigantic and we move into a 20% deviation, it shouldn't impact that much our total figures. And rents continue playing in our favor. I mean we are seeing our rents in the market above what we have underwritten for Phase II. So rents might give us a hand if that happens.

That's super clear. And maybe also on kind of supply chain bottlenecks. Based on the conversations that you're having with your prospective tenants, would you say that they are a little bit worried about not receiving their equipment in time or maybe the market just not being able to supply to all the demand for equipment that all these companies are placing in?

Not for the moment. In fact, NVIDIA, if any, they have normalized a little bit the delivery times that at some point were really, really long, particularly with the initial deliveries of GB200, there was a significant bottleneck. But now they are little by little normalizing. They have increased their production capacity. So this is good. What the clients are not getting is IT.

I mean, IT power, data center capacity. So we are seeing now that in some cases, they are trying to push for longer-term contracts, which is a clear sign that they are under certain stress to secure IT capacity. I don't surrender. I believe at some point in the future, we will be able to charge back some of the common expenses.

At present, as you know, the system is they pay you a lump sum and they forget. So there is a gross to net conversion, which is significant and much higher than in other asset classes. I believe this is -- eventually, this is one of the things that could change in the future because unless the rent inflation continues going up and up and up at some point, maybe the rent inflation stops, but they start accepting some chargeback of part of the expenses, which is the same.

I mean the net effect is an increase in NOI, which will be good for all parties. But the -- I mean, from what we see, there are no signs of abatement of the demand. In fact, up to now, everyone was saying, what do you have ready for '26? Because '27 and '28, I still need to see whether I get clients or not. Now people are starting to ask what do you have ready for '27, '28 because they already have visibility on back-to-back clientele up to '28. And I'm sure next year, that benchmark is going to move to '30 and eventually '32 because particularly in Europe, we are not building capacity at enough pace to cope with the current demand.

The next question comes from the line of Stéphanie from Jefferies.

I would have a couple of questions actually. The first one would be a follow-up question on shopping centers. We clearly see that there are great spots currently in Spain. I was wondering about your strategy for this segment going forward, looking at acquisitions. Do you contemplate more acquisitions, so more opportunities outside of the balcony portfolio there? And what about disposal in front of that? Do you have disposal budget?

Okay. Look, one thing in reality is pretty much tied to the other. In terms of shopping center, our strategy is very simple, is to try to manage our yield through rents. We are trying to push a little bit of rents in order to send back the occupancy cost ratios to, let's say, more normalized levels.

So we are trying to basically extract a little bit more cash flow from that portfolio, benefiting from the current federal situation in constructions. Regarding acquisitions, very difficult. I mean it's very difficult to find portfolios that really makes sense for us. Balcony, there were 2, 3, 4 assets that were really interesting for us.

But this is just one opportunity that we looked at on an opportunistic basis. It's -- I'm not sure there will be many more like this in the immediate foreseeable future. which again brings the question some of you make to me sometimes that why didn't you buy Unibail leftovers, et cetera, because we run a listed company. And in a listed company, you can be contrarian, but only this much contrarian -- because if you are super contrarian, people will kill you in a public place because you are shopping centers, they are about to disappear in the U.S.

And sometimes you need to take decisions a little bit delayed in time because you need to be cleaner than the cleanest. So -- but yes, I mean, we will -- if there is an acquisition opportunity in the market, we will have a look at it. If not, we will simply enjoy our portfolio. And there will be many more cycles in the future. There will be other situations in the future.

10 years from now, the online sales will start going up again. Now they are completely stalled at single-digit growth figures that maybe in 2035, online sales skyrocket again and people start being afraid of shopping centers disappearing, then maybe we venture into some acquisitions. And I will remind you of what you told me about buying more shopping centers because that would have been a good idea had we executed it like 3 years ago.

Anyway. And then disposals, we will continue disposing of around 1% of our portfolio per year. I mean the budget for this year is, say there is like 130 or something like that. We will try to comply with our internal disposal budget. And we will have accelerated a little bit in case we have bought the balcony portfolio. If we don't buy the Balcony portfolio, then why selling income?

I mean we will keep it. I know some of you say, why don't you sell all the traditional assets and become a mono-asset class pure-play data center company. That will be super cool. We will be the coolest managers in Europe for the next 10 years. But then one day, when data centers hit the wall because at some point, there will be maturity and there could even be oversupply, then what do we do? You get out of our shareholding list and our share price plummets, it will be a pity because the company at present is pretty well balanced, and we will endeavor to continue keeping that sort of balance in our income streams.

Okay. And my second question relates to logistics. So clearly, we can see that one departure can weigh much on operating KPIs. So I was wondering if you have any other tenants like GXO that will leave in the coming quarters. And actually, I will have the same question on offices. What are your main leasing challenges in the coming quarters in terms of tenant departures?

Okay. One very important point in this respect, Stéphanie, is that we calculate occupancy based on GLA square meterage. So as a consequence, any departure in logistics, of course, is meaningful for the total occupancy of the company.

However, from a rent perspective, it's like leasing 1,000 square meters of offices, okay? So don't be carried away by what happens in logistics in square meterage terms. We do not expect to have any further departures, particularly this year. But at some point, of course, the portfolio is a moving portfolio, and there could be in the future departures in logistics that we will try to replace.

When the cycle is helping us, it's easier to replace. When the cycle doesn't help you, it's more difficult to replace. But remember, always, we calculate occupancy it's not economical occupancy. It's not financial occupancy. It is space occupancy. We calculate based on the space. In fact, as of year-end, we will start reporting the occupancy in data centers.

And believe it or not, it will not move the needle that much because in the square meterage terms, the data centers are relatively minimal. So even though we bring into the equation at the end of the year, Barcelona 1, Arasur 3 and Madrid Getafe 1, that is like 60,000 square meters, 100% occupied. They will make up for the GXO share, but that's it. However, financially speaking, it is super important, okay?

So likewise with offices, I think in offices, -- the team did a wonderful preemptive work in the past years, securing extensions of the biggest leases we have in the portfolio because we still have like 70% of our portfolio is multi-tenant. -- about 30% of our portfolio in offices is headquarter leases. And of course, they can mean a lot in case you lose the client. But most of that job has been already done. I mean we renewed Pricewaterhouse.

We renewed Técnicas Reunidas. We renewed Técnicas Reunidas -- we renewed in due time Endesa. So we are in a relatively comfortable position. And we are pretty mindful of the fact that for some of those headquarter leases, there's a bilateral relationship with clients. So we highly value the bread and butter nature of their cash flow. So if at all possible, our first idea is always to renew unless we want to vacate the building for conversion into residential or things like that.

We normally -- our first intention, our first idea is always to renew. But we don't expect any exits this year in offices in our portfolio. For next year, we'll need to check the forward office report, but not for this year. I have been checking everything recently on the occasion of our Board yesterday, and there is nothing significant going out this year, neither in offices nor in logistics nor in shopping centers.

I think the year, as commented on the full year results should be a year of relative continuation of the performance of 2025, in which you will see a significant hike in top line that will not be matched by a significant hike in cash flow owing to the financial expenses line. But other than that, it's okay. Then next year, you will see a much more significant jump in the top line that will be accompanied by some cash flow growth.

Thank you very much. There are no more questions. We thank you all very much for being here with us in this 3M '26 trading update. You know where we are at your disposal if you have any additional questions. Thank you very much.

Good afternoon, ladies and gentlemen. Thank you for joining MERLIN's Full Year '25 results presentation. You can find all the materials that will be presented in today's call on our website. I will please ask you to abide by the disclaimer contained in it. Our CEO, Ismael Clemente, along with our two directors Ines Arellano and Francisco Rivas will walk you through the main highlights of 2025. We'll then open the line for Q&A [Operator Instructions]. With no further delay, I pass on the floor to Ismael.

Thank you, Teresa. Good afternoon, everyone. We are in front of a very interesting set of results, certainly, the best I have seen since we have been leading this company. It's been almost perfect year because the fantastic performance of the data center division has been accompanied by very, very solid performance also on the traditional asset classes. And all that has been reinforced by an excellent behavior of the share.

So frankly speaking, what can I say? I mean the operating momentum is super strong. We are enjoying satisfactory rental growth in all asset classes, traditional and nontraditional, because in data centers, we are also achieving better rents than underwritten. We have a high occupancy, 95.6%, and continue solidly generating FFO with a plus 5.1% print in the year. In offices, we have a very remarkable like-for-like of 3.5%. But more importantly, an interesting release spread of 4.8%, which is probably the reflection of what we commented in past calls that the Madrid market particularly is now under a certain like short squeeze.

I mean, there is distraction on the offer side, which is causing, of course, an effect on the pricing of the demand. The occupancy stays at all-times high, 94.2%, and this is particularly noteworthy in a year in which Barcelona has been a relatively softer market than it was in the past, and has lost occupancy. So Madrid has been able to compensate Barcelona, which will continue for the coming years to be one of our weak spots that we will continue working because sooner or later, the market will digest the current situation of oversupply and will come back to normality.

In logistics, we have been positively surprised by the release spread, particularly because, as commented on a number of past calls, this is a market where we were seeing a little bit of less strength than we have been seeing in the past years. But this year has been extremely strong, particularly on the release spread. The reason why the like-for-like is low is simply because we have lost 3 points of occupancy, which is normal, because we were occupied at 99%. And we told you that there was only one way to go from there, which was down. And -- but we ended the year with a very good printing occupancy of 96.4%.

Shopping centers, another super strong year, surprising us on the upside with a very good like-for-like of 4.7% and still with very affordable rental levels for our clients at 11.0% in occupancy cost ratio. So very, very strong year in shopping centers.

On data centers, well, basically, we have achieved a full derisking of Phase 1. So Phase 1 is now water under the bridge. I mean, we will report it as assets in operation from now on in order to try also to simplify your lives, because if we continue reporting Phase 1, Phase 2 and soon Phase 3 is going to be -- is going to be a rubik cube. So that will convert into assets in operation with an occupancy of 100%. We have also achieved a very interesting derisking of Phase 2 with the lease-up of our Arasur 2 asset 48 megawatts, which is around 20% of the total capacity of Phase 2, but more importantly, it was the next Indian trying to attack the fort. I mean it was ready for service December 2026. And as such, now is done. The next ready for services are end of '27. So we have now plenty of time to work on those -- on the leads in which we are already working and starting exchanging technical documentation, and then we will need to come to terms in the economic side of the business and then move into documentation, which, in some cases, particularly with hyperscalers, can be a painful process.

In terms of financial performance, the value uplift has been very strong, but this has been mainly boosted by data centers who have contributed close to EUR 360 million increase to the total revaluation of the portfolio. 4.7% GAV increase in the year. The total shareholder return, 10.2% is fantastic. But more importantly, we believe it's relatively sustainable, because we know what is coming, and we think unless the world goes upside down, which is another possibility, if 2026 is a relatively simply flat year in terms of performance of traditional asset classes, we believe we can achieve very similar figures at the end of December.

Our financial situation remains very strong. The loan-to-value is low at 28.9%, 100% fixed rate. And we don't have maturities till November 2026, maturity which is already tackled. I mean with the existing cash at banks and a number of bond taps and bank lines that we are signing in the coming days, that maturity will be already tackled without affecting the CapEx needs of the data center department.

And we have been able to maintain our rating, both with S&P and Moody's, which is always interesting because at the end, that cost is one of our raw materials. And we need to continue keeping our competitiveness in terms of rating.

In terms of value creation, EUR 129 million in noncore divestments, as already disclosed to market, you were perfectly aware that we had this almost done. And then probably the most interesting thing is that we have another close to EUR 130 million already signed and to be executed in '26 and '27, which is very interesting because basically almost half of our targets for '26 and '27 are already covered in the absence of any accidents.

It's important to pay homage to the activity of our different business divisions. The year has been excellent in terms of pre-lets. In offices, we have signed more than 56,000 square meters beyond the daily trading, I mean, the ins and outs that happen every day in the portfolio. In logistics, 73,000 plus and Head of Terms, which we believe is going to become a reality of another 55,000. So significant progress also in logistics. And in shopping centers, to me, the most salient activity in the year has been the inauguration with an almost full pre-let of the Marineda extension, 26,000 square meters, which has made the Marineda concept in La Coruna even more dominant than ever. I mean it's a center, which is really rock solid and is one of the jewels in our little crown.

And in data centers, well, we are now at 112 megawatts IT versus 45 latest reporting. And therefore, when 66 new megawatts have been lit and the prospects for the derisking of the rest of the Phase 2 remain brilliant.

So in terms of main financial magnitudes, the GRI print was EUR 541.9 million, plus 3.5% like-for-like in the year. The FFO, what we broke our own record is better than the one of year 2019, EUR 326.7 million plus 5.1% year-on-year. But it is important to note that in 2019, we had EUR 84 million of BBVA rents in our belly. So with a little bit of help from data centers, around EUR 30 million, we have been able to overcome the sale of the BBVA portfolio, which, with hindsight, I believe, was an excellent decision because we delevered the company in anticipation of high interest rate cycle. And that gave us also a sufficient financial muscle to be able to develop Phase 1 of our data center deployment program, which was absolutely necessary because have we tapped the market to develop data centers starting from scratch and the market will have been a little bit incredulous about our capacity to do. So we had to do it with our own money, and BBVA was instrumental for that.

The EUR 0.58 achieved are plus 7% versus the initial guidance, although we updated to EUR 0.56 in -- I think it was in 3Q, we updated to EUR 0.56. In reality, we expected EUR 0.56, but in dataset, we have had little income from -- particularly from better margin in our data center operation and well, some income also from NRCs from the installation of machinery on behalf of our clients through remote hands agreements in our data center division.

The LTV stands at 28.9%, which is pretty low, but more interestingly, net debt-to-EBITDA stands at 9.0x. Of course, it is growing, but it is growing as we are spending in the construction of new units in our Data Center division. The NTA per share is EUR 15.36. And for the first time, we are very, very close in our share price to our NTA, which is incredible to see.

I mean, I'm really, really enjoying to see that when I shut on my computer, and I see the share price evolution, I am really humbled. The GAV like-for-like has gone up by 4.7%. But very importantly, with an EPRA net income yield of 4.6%, which is sound, because these days, improving NTA or improving GAV through asset revaluations is easy, but we have taken exactly the contrary way. I mean we have completely recalculated our prospects for particularly logistic pre-lets and part of the logistics division and we have decided to expand a little bit our yields in order to make sure that we repair the roof now that the sun is shining rather than doing it when the things start to get rough.

TSR, as commented, and leads us to propose dividend per share of EUR 0.44 for the year, which is slightly above the 80% threshold, but I think we have to share a little bit with our shareholders the good operating momentum of the company. In terms of EPS, we have, after careful reflection for the moment, we have taken the decision to continue to not capitalize interest expenses. We believe it is cleaner. We believe it reflects better the real operation of the company. And therefore, as a consequence of that, we are indicating for 2026, a relatively flat figure in terms of EPS and DPS. But we will, of course, endeavor to bid it if we can. It won't be easy because it is mainly attributable -- the reason why it's flat is mainly attributable to the fact that all the growth in top line is absorbed by more financial expenses as we continue basically building.

We continue building our inventory. And as a consequence, we continue employing our debt capacity. And this is, of course, raising the bar of our financial expenses. And for the moment, it is hitting in our top line growth. 2027 will be a different thing. I mean, in 2027, will be a year in which we will start seeing the first hints of what the DC division will bring in the future to this company and '28, '29 and '30 as commented on many other occasions, at least on the model, of course, you never know, but they look like a big party.

That is it. I mean I pass the floor to Ines Arellano who is going to comment on the different asset classes and Francisco Rivas will comment specifically on the Data Center Division.

Thank you, Ismael. So moving to what today represent 55% of our portfolio, offices. We've generated EUR 292 million of rents, and that is a 3.5% increase in like-for-like as commented by Ismael, very, very sound, with a very high release spread up 4.8%. It is true that if we were to take into account this one lease that we mentioned last year, it would have been 0.4%, but at least it's in the positive arena. The occupancy at 94.2% all-time high. Again, we'll watch very carefully how the evolution in Barcelona keeps ongoing, but we are confident that eventually this will be digested.

It's been a very healthy leasing activity market with more than 275,000 square meters contracted. And in terms of valuation, we see a 1.2% like-for-like increase with an implied gross yield of 4.9%, not reaching 5 yet, which as you know, it's always been the number that we thought should be the right one for office.

5.25%.

Okay. And a net initial yield of 4.2%, and this implies a 2 basis points yield expansion. And as said, the little momentum continues, as demonstrated in Slide 8 with five very good examples of standout leasing deals spread across not just CBD, but also key peripheral corridors, and they all have secured very high-profile tenants. You have three assets here that are still in the work-in-progress portfolio, meaning these are not in operations yet. But you also have two like Castellana 278 and Las Tablas where we've secured very high tenants, very high-quality tenants like a university and a bank.

Moving to Slide 9. We continue, again, to see a strong trend of reconversions. And we wanted to lay down what is the current stock of Madrid. You see a little bit of everything. So this number may seem a little bit big to you, depending on the source that you used to consider. We've taken the Belbex number -- this is not only made by pure office buildings. It's also taking into account the offices associated to industrial users, some residential buildings that are being used as offices as well and also administrative buildings.

What we see is that there's more than 1 million square meters expected to go back to their original residential use, because right now, as we stand, the highest and best use for a lot of these space is actually beds, beds, because this is both living, resi, hotels. And there is an additional 1.5 million square meters that could be reconverted again to these other uses out of the pure office building.

What are we doing? We have identified 7% of our stock in Madrid office, okay, not the whole stock, but just in Madrid whereby this doesn't mean that we're going to be selling the whole 7%. But we've identified 33,000 square meters that will be sold so that somebody else reconvert it plus another 27,000 square meters that we are going to suddenly refurbish or reconvert them for educational uses.

Moving to Slide 10. What we see is that -- well, we still believe that unique assets deserve to remain as offices. And this is a perfect example, Alfonso XI. There's a clear scarcity of good space, 10,000 square meter size buildings in prime CBD, and we are fortunate of having owning these unique assets, is right in the middle of Madrid, and we know that there are best-in-class tenants looking for space like this one. So we are going to refurbish this asset. We are actually refurbishing this asset, and the expected yield on CapEx will be around 9.6%.

So there's another example in Page 11. Again, super prime office building, Liberdade. As you know, this one we bought it on purpose to be converted into what it will soon be probably the best office building in the Lisbon market. And as of today, even if we have not started commercialization, we have fully let to a top luxury group, all the retail, the high street retail space.

Then we have Adequa. This is to show you that there's no only demand for pure prime CBD assets. Adequa is one of those examples where a tenant of ours that was willing to expand to grow in a campus, very, very close to Castellana has actually signed an agreement with us, a turnkey project. And so again, the yield on CapEx around this one is around 10%, 10.4%. And we will soon in '28 and '30, we will have these two buildings built up and completing what today is Campus Adequa.

And then finally, this is a jewel. This is a very small building, but a true jewel. and it's going to be even more valuable once Renazca project gets executed. As you know, it has been approved. And once it is executed, we know very well that a lot of tenants will be willing to pay very high rent for these unique assets, which for those who have visited Plaza Ruiz Picasso building is just next to it, you can actually monitor the works from that one.

Moving to logistics in Slide 15. GRI like-for-like has been positive despite the loss of a tenant in 48,000 square meter warehouse in [indiscernible] that had an impact of 3% in occupancy. The sound 5.8% Release Spread, together with an average CPI of around 2.5%, has helped to increase rents by 2.5 reaching EUR 86 million. Gross yield at 5.7%, slightly higher than the average yield of the portfolio 5.3%, and net initial yield at 5. The leasing activity has been strong with more than 440,000 square meters contracted compared to only 100,000 square meters in '24, while valuation uplift has been moderate being only 1.2% on a like-for-like basis.

This has been mainly driven by the increase in CapEx. Certainly more on future development, but a little bit as well on existing assets due to, for example, fire safety measures. In '25, we finished construction and delivered 21,000 square meters fully led to [indiscernible]. And we've also sold 73,000 square meters warehouse that was under refurbishment in Vitoria and have added a couple of projects to the committed pipeline, now amounting to 279,000 square meters.

Yield on CapEx for all these projects remain quite appealing at 13.2%. The noncommitted land bank has therefore reduced by 61,000 square meters outstanding at 183,000 square meters located mainly in Madrid and Barcelona.

If we move to shopping centers, well, this has been said already by Ismael. it's great performance in every KPI that you can look at, the GRI of EUR 133 million, it's an uplift of 4.7% like-for-like. It's a great combination of a very high Release Spread plus CPI. In terms of valuation, this EUR 2.1 billion portfolio has gone up by 2.9% with an implied gross yield of 6.4 and net initial yield of 5.7. And this portfolio, shopping center portfolio is shifting to adapt to market trends and customer needs, and we are seeing retailers demanding new formats, so fewer, but bigger and certainly better located. The synergies with logistics, they continue to be a reality, and this is value also for the largest storage spaces that they required and experience of our customers keep on being the main and main focus of everything that we do.

And in Slide 21, you have a few examples of new retailers leasing space in our assets, mainly focused on health and beauty and leisure/home entertainment.

And with no further delay, I pass the floor to Francisco who will explain where the future is coming from, the data centers.

Many thanks, Ines. Moving into the Data Center section, I would like to start by congratulating, Ismael did, our data center team and the vision for a fantastic 2025 year, which had a very strong workload and proved the excellent execution. Part of this effort, as you have seen, has been crystallized at the beginning of this year, 2026, with the signing of very significant contracts across our assets.

Turning now to the presentation on Page 24, we provide as always an overview of the two phases under operation and/or construction with updated figures. On the one hand, we present the results of Phase 1, which we will now refer as Ismael said, as assets in operation, where the 64 meg have been fully contracted. The originally 14.5% gross yield on cost shared with you 12 months ago has now increased to 15.8% with a stabilized GRI of EUR 97 million above the previous EUR 88 million reported 12 months ago.

Regarding Phase 2, which we will refer as work in progress WIP, we have been able to redensify the first two buildings in Lisbon moving from 36 meg to now 40 meg increasing the total size of Phase 2 from 246 meg to 254 meg as you have here in the presentation. And this has led as well to an update of both the total investment amount and expected stabilized GRI now at EUR 397 million, delivering a very attractive 14.4% gross yield on cost.

And in terms of commercialization, moving now to Page 25, we have successfully completed the letting of the three assets of this Phase I, following the signing of an 18-meg contract with a very well-known new cloud operating [indiscernible] and first time in our portfolio reaching the full occupancy of our assets in operation. And for those of you who are more curious about the technical aspects, 34 meg out of the 64 are air cooled while 30 meg are liquid cool. And by the type of specification we have it means that these 30 meg liquid cool are targeting above 70 KV per rack. On our experience right now, they are more in the 120 KV per rack, which shows that the type of technology they are using is the last of one of [ NVIDIA ].

On Page 26, we show how the rental income will ramp up on a yearly basis with EUR 31 million already received in terms of rents in 2025 and a forecast of EUR 66 million for 2026, resulting in a stabilized GRI as we mentioned before, of EUR 97 million in 2027. From a value creation perspective, Page 27 shows the breakdown of total costs incurred. The valuation already captured, although it's a little bit more limited in [indiscernible] in the signing of this new contract that the appraisal was not aware of and the expected additional value to be accrued if the value assumptions remain unchanged as we are disclosing in the footnote. So this EUR 291 million estimated value, we expect to be captured in the next valuations if those are retained.

Moving to Phase 2. On Page 28, we include a brief reminder of the commercialization status of our data center assets that we divided, as you know, in bookings, advanced negotiations and let or prelet. And with this in mind, in Page 29, we summarize the status of the different projects of Phase 2 with now a total capacity of 254 meg IT.

Going one by one, in Bilbao 2, what we call ARA II, the construction is progressing on schedule. After 14 months of execution, we have gained sufficient certainty to enter into prelet agreement as the ready-for-service dates that we show in the presentation, December 2026 are very, very certain. This is a highly complex deployment because we will coexist the deployment of the equipment that we have as landlords, but also the client equipment, which are largely based on a liquid cooling solution.

The kind is -- was already in our portfolio is very well, no new cloud operator focused on AI and the level of densities that the client is requesting allows us to know that they are using a state-of-the-art technology, as all of you know. The connection to the substation of this building 2 has been already completed with our first building, what we call ARA III and right now, we are just progressing with cabling of that -- of those that were created for our first asset there.

Regarding Bilbao ARA I, as we will show in the following slides, the construction has started at the end of last year, beginning with piling works, and we have maintained our estimated ready for service by the end of 2027.

Moving now to the center part of the page, in Lisbon Compos. At the end of 2025, we started the construction of the first two buildings following, believe it or not, 1.5 years of piling works. And please consider the Lisbon region is both flood-prone, as unfortunately, we have experienced some few weeks ago, but also is located in a seismic zone and which has required a significant soil preparation, reason why of this 1.5 years of previous works. And as an example, the piling works have reached approximately 35 meters in depth, just to avoid situations as recommended.

And thanks to this preparation, none of the works were affected by the heavy rains experienced in the region earlier this month. From a construction point of view, we have once again redensified the buildings, increasing capacity to 40 mg per building IP, benefiting from the insights gained from client discussions that we have held over the last months. In parallel, substation works have also started with a ready for service in all these first two buildings by December 2027.

In terms of leasing, we are in very good progress regarding the initiative that we will comment on the following slides, while keeping the buildings ready for the latest computing technologies in case the first option does not ultimately materialize.

Moving into the 2 Madrid projects. In [indiscernible] approval, what we call [Foreign Language] in Spain of the land, and we are in the final stage of securing the organization permits to begin on-site works, which will run simultaneously with the building construction. The ready-for-service is currently planned for the first half of 2029. Regarding [indiscernible] located, as you know, on the same street as [indiscernible] we obtained environmental assessment approval at the end of last year and right after demolition works are started and are going and the construction permit has been already requested just to make sure that when we finalize the demolition works, we can immediately start.

Given the previous timing experiences, we are still maintaining ready- for-service in the second half of 2029 although knowing that we have already power on site what in our naming we call power ready supplied, we have already entered in negotiations with several clients interested in this site precisely for the reason that power is already there.

Regarding CapEx commitment planning for Phase II and now I'm moving into Page 30. 2025 has been a record year for the company in terms of CapEx commitments. And this is significant because you need to know that a significant portion of this CapEx relates to equipment, which typically has shorter execution timelines once we commission it on site.

Commitments have reached EUR 987 million versus the previously reported EUR 836 million, but also the next two years looks very strong in terms of CapEx commitments. So in the absence of any capital event, the company expects to tap the debt market, as Ismael was mentioning before, again, mainly during the second half of the year, once the equity that we raised in 2024 is fully deployed and at work.

The target stabilized GRI is planned for 2030 as mentioned in the last quarter presentation, at EUR 387 million, delivering a 14.4% stabilized gross yield on cost. All these figures are reflected in Page 31, 32 and 33, which includes images showing construction progress in both Bilbao, Arasur and Lisbon campuses. And for those attending to our Capital Markets Day in the 9th and 10th of March, you will have the opportunity to see these projects at a human scale, which I think I can tell you that is pretty impressive.

Finally, on Page 34, we would like to share the status of our EU Gigafactory initiative. As previously mentioned in the last year call, timelines of this initiative have experienced significant delays and based upon our latest information, the work resolution is now expected before year-end 2026. As we have stated several times, our Phase 2 projects were not conditional upon obtaining the EU Gigafactory award. In fact, this initiative was not even under consideration when we launched Phase 2 and we have always maintained discussions with traditional clients, both hyperscalers and new class operators in line with our original business plan. Nevertheless, as we always say, we've tried to be constructive shareholders -- stakeholders and good citizens, and we remain prepared for initiatives that could benefit the regions where we operate, particularly the Iberian Peninsula and we strong believe we continue believing that bringing the EU Gigafactory status to our region will create a lot of value, whether we are -- whether or not we are directly involved.

As you may recall, we have set most of our capacity in Arasur, Capacity 1, and the full capacity of [indiscernible] for this initiative in Spain and the first two buildings for our Lisbon campuses of the Portuguese initiative. And we were always betting an Iberian consortium, so both Spain and Portugal, something that looks like were well received because most of the countries are doing exactly the same in other parts of Europe and offering several locations per country to allow synchronized computing and across the campuses.

Situation as of today is that the Spanish government has shown a preference for another Spanish project. And thereby, they have released the capacity that we have reserved for that initiative in ARA II and [indiscernible] I, which, as you have seen, are both now fully let as following the -- what we have always commented to have one option and the other.

With regards to ARA I, we are in advance negotiation with a particular client, and those negotiations, of course, will be more intensified and documented once the ready-for-service dates are becoming more and more and more closer. Regarding our Lisbon Campos, we remain committed to this EU initiative, which is now why we are moving forward with the first two buildings in connection with the Portuguese proposal. And once again, as we approach ready-for-service dates, the number of clients inquiring about availability continues to grow. For this reason, we will welcome clarity from the EU in terms of the timing because as soon as we are approaching and approaching delivery times, normally more clients are interested and we would want to have to take a decision there.

And now Ismael will close this presentation with the closing remarks and outlook before we enter into Q&A.

Okay. Francisco, thank you. Well, on Page 36, closing remarks and outlook. Everything which is written here is pretty evident. So I'm not going to torture you with any more bulls***. The only thing that I will say is that the idea is to move in terms of lets and pre-lets from the current 112 to as close as possible to 100 megawatts in data centers. And this could be achieved through one of several combinations of facts.

I mean, more normally, it will be through the documentation of the Lisbon lease which could come in the form of formalization of the EU Gigafactory program or otherwise, through an alternative route. I mean we have been lately adapting our -- the design of our campus there to the specific requirements of a certain client. You must have noticed that the total capacity has increased by 8 megawatts.

Well, this came at the cost of 12 additional million in construction cost that I believe makes sense. And now the white rooms conform to the specifications of concrete SOQ of a concrete client. But more importantly, are perfectly flexible to adapt to the requirements of either other neo hyperscalers or neo cloud clients. So with that, I believe the 2026 should be the year of Lisbon. We will work -- we will endeavor to achieve that target.

And that's it, dividend and FFO, we have already commented on it. And I believe the best thing we can do is move into Q&A so that you can make your questions in the line. And we will do our best to be able to reply to your questions.

[Operator Instructions] The first question comes from the line of Marios from Bernstein.

I've got a couple of questions from my side. So firstly, on the lease-up and the pre-letting of your data center pipeline. I think you mentioned that Bilbao building 2 was pre-let to existing neo cloud tenant and that Madrid say, was to a new neo cloud operator. So can you comment on the occupier type you're having discussions with across Phase 2 and whether we should anticipate a diversification of your tenant base across that phase?

Okay. Look, Marios, basically the leasing of Bilbao 02 has been closed with an existing client of ours. The one in Madrid, however, was a different one. At present, the diversification of our tenant roster is perfectly distributable. You can imagine with only 112 megawatts let, that I will beg you all to wait till we are 1 gigawatt in operation in order to calculate the real diversification of our portfolio, because have you calculated our diversification in logistics in 2014, you will have come to the -- this main conclusion that it was 72% DHL. But now no client -- individual client represents more than 10% of our rent.

So we need to continue building if we want to continue leasing. What I can tell you, talking about Phase 2 and preliminary conversations for Phase 3 is that we are talking to every kind of clients you can imagine. You love hyperscalers. We are talking to all the hyperscalers except one, which is a self-builder. But the other three, we are talking to them. And we are talking to no less than 5 Tier 1 neo clouds alike. So sooner or later, we will end up closing an agreement with a big hyperscalers and you all will breathe with tranquility. But I need to remind you that closing deals with hyperscalers is not an easy thing. It comes at a cost, because they are the fastest cowboy in town. And as such, they have a big pistol. And you have to be very, very careful because that pistol can kill you.

So it's big organizations, complicated organizations, you can engage in very fruitful and healthy conversations with the infrastructure guys, with the cable guys, with the first-line guys, but when you move into middle office and back office, it can be complicated. And at times, it is as frustrating as reaching contractual status and then stopping conversations because the conditions can turn abusive very quickly. So we will end up closing deals or reaching agreements with hyperscalers, but probably already in Phase 2 and more surely in Phase 3, but you need to bear with us for a second because we also need to defend our financials, which are your financials.

So let's not be childish on this, and let's not -- let's be careful about what we wish for because closing an agreement with one of these is very easy. However, the fact that this agreement is good is a very different thing, okay? So we have to continue working in that respect. What I can tell you is that we are now technically qualified with 3 out of the 4 hyperscalers, so at least we know that our facilities conform to their technical specifications. And sooner or later, we will end up closing.

The next question comes from the line of [ Veronique from Kampen ].

Maybe first on just the other business lines. I was hoping could you give some additional color on what you expect in terms of occupancy rate, any big departure planned in '26, especially for offices and logistics? So your view towards '26 for those business lines?

Okay. Well, in offices, the idea is to remain relatively flat. So we have finished this year at 94.2%. The idea is to finish this year between 93% and 94%, which is already a significant effort because you have to take into account that in April, we are losing 11,000 square meters from Meta in Barcelona in the middle of '22 at.

Yes, in a building, which is a winner, clearly winner in the market, but replacing 11,000 square meters in today's market in Barcelona is not an easy task. So we have to be prudent, taking into account the situation of the market there. In logistics, our idea is to improve a little bit the occupancy or compared to the 96.4% we have. It's quite binary because it depends a lot on whether we are able to lease one big shed in the Henares corridor or not. If we lease it up, then it's going to be very close to 100% again.

But let's not plan for that, at least for the moment, we will inform in due time. And then in shopping centers, we are going to remain relatively flat, because it's almost impossible to go higher. I mean, yes, I mean, you can go 20 basis points higher or that it is complicated to go significantly higher. In shopping centers, in fact, what we are trying to do now is to yield manage a little bit our portfolio, because we are the cheapest shopping center owner in Iberia in terms of OCR. And that is always a very interesting position to start from, and we will yield manage a little bit our shopping centers, although the behavior is impeccable for the moment.

Okay. That's clear. And then one question around data centers. So your gross yield on costs went up again. And you also mentioned that the margins actually were better than expected, but I see that's a number that you haven't changed in the slides. So could you give some color on the movements on those numbers and why you still report a 70% margin if it was actually better so far?

Because Veronique, this is Ines. What has been better is the today's margin. While we are on ramp-up, we do not achieve the 70%. So 70% margin is on stabilization. And so we were expecting lower than what we have achieved margin during the ramp-up. 70% remains as the stabilization margin.

Okay. And regarding the growth yield on cost, it is simply a reflection of the fact that the market is helping us. I mean, yes, of course, I mean, there are -- the teams are doing a fantastic job, but we are operating in a market which is quite favorable at present. So this is why we are improving -- if you look at our forecast in data centers, both in terms of cost per megawatt and delivery times, we have been absolutely bang on compared to the numbers we gave you.

So our construction cost has been exactly the one we forecasted. Even though you might notice that in Phase 2 is higher than in Phase 1, the only reason is that in Phase 2, we had to buy 2 of the 6 plots of our data centers. And also Phase 2 is fully liquid, while in Phase 1, we had some air, okay? So that is the reason why we have a higher cost.

Also Lisbon, as commented by Frank, is a slightly more costly construction to make because of the strict seismic regulations similar to Japan or California. We expect -- I mean, the -- we have already raised by 20 basis points the expected yield on cost on Phase 2. let's see how the leases come up. We might be able to bid it or not. I mean, that we better say than sorry. I mean we prefer to underestimate a little bit rather than being absolutely bullish, particularly when there is so much to be done before inaugurating those assets. I mean the RFSs other than Bilbao, Arasur 2 are expected for the end of '27. And between now and the end of '27, there is a lot to see. So let's continue -- let's remain prudent.

Okay. Clear. Sorry, one small follow-up on Lisbon. I just wanted to double check. It says now advanced negotiations on the slide for the Lisbon asset. Is that referring to the EU effect? Or is that concerning something a different tenant?

That one is concerning the EU Gigafactory. Then with different tenants, it cannot be -- it is not advanced negotiations. It's simply leads, bookings. The Portuguese government is conscious of that. They are honest people, and they are also trying to find a way to firm up part of the commitment rather than leave everything conditional upon obtaining the EU program. They are looking at ways to firm up part of their commitment so that we can close an agreement and we don't need to go through an alternative route.

So the next question comes from the line of Florent Laroche from ODDO.

So actually, I would have just one question on data centers. So we can see that -- so you have made a lot of progress on Phase II. So congratulations, but we can see that you have also a lot of work to do before completing Phase II. Why is it today the right timing to present us the Phase III in 2 or 3 weeks? And why it is the right timing maybe to start to launch this Phase III in terms of risk?

Well, the reason is twofold. On one side, we have a number of internal definitions, and we report as we reach the milestones of those specific definitions. But in my mind, I see Phase 2 significantly derisked. Let's leave it that way. Second, power land is a scarce asset in Europe. I mean everyone is dying to get powered land. We are lucky enough to have a lot of power land in our ownership, because we started asking for power in 2021 and '22 when nobody else was asking for that.

So I think it is in the best interest of all of our shareholders that we make full use of that powered land. And then the future only God knows, but at least make use of everything we currently have because we continue enjoying very interesting yields on cost. And what is more important, we continue commercializing in clear market. At the beginning, when we explained this new venture of data centers to all of you, our prediction is that we will commercialize maybe Phase 1 in clear market, there will be no competition.

But certainly, we were expecting competition for Phase 2. The truth is that the market is full of noise, full of bull****, but in reality, very few people are really building or building to the exact specifications of AI, and therefore, very few can really meet the requirements of AI clients. And to our surprise, we are commercializing Phase 2 almost on a clear market basis. The next reasoning is that if we go fast with Phase 3, we could achieve a very similar result. So basically, I believe it will be extremely unfair to our shareholders not to move. We know it's a lot of complication. We know it's a lot of construction yards. We have recently incorporated one executive just for the control of our works.

But I think the best thing we can do if we want to be responsible managers is to move on and continue developing capacity because we are in a situation in the market which is as favorable as you can probably think.

The next question comes from the line of Celine from Barclays.

I just have two questions, please. The first one is on the beat on the FFO this year. It was driven by better gross to net margin in DCs. Can you explain how you achieved that and whether we could expect the same in 2026? And secondly, it's about retail. Your name popped up in the news regarding a large Spanish shopping center portfolio. Can you provide any comments if you can? And if you can't comment, we've seen the expansion into DCs, but there wasn't much mention about retail. So can you clarify your appetite for shopping centers going forward?

Okay. Well, starting by the easiest, which is the FFO gross to net. Well, as commented by Ines, we have basically improved compared to our projections, because we had a better margin. And talking about margin, the margin we expected for this year, that was not the stabilized margin, okay? It was not 70%. It was well below 70%. That was the margin we expected for this year that we have beaten that margin a little bit because we have been able to operate more efficiently our data centers. And then we have, as commented before, we have also benefited from a number of little tweaks and things that we have been doing on behalf of our clients.

Many of our clients do not have a super big established presence in Europe. And as such, they rely on our own engineers in order to install equipment or make offices fit-outs, do improvements to their equipment once installed. I mean we are helping them to do that, and they are paying us for that service. And as a consequence, we have improved a little bit the gross to net margin in our data centers, but not to a point in which we are in a position to reforecast the 70% stabilized, which we are -- we will very soon reach. But we cannot reforecast that because, first, 70% is already a very good gross to net margin, particularly compared to what our peers in the U.S. are getting. And second, because we still do not have all the information in order to be able to reforecast that. And then retail...

Celine, just to be clear, can you please repeat the question that you made?

There was just a news that you were about to bid on a Spanish portfolio, retail portfolio. So could you comment on that?

Well, basically, we are very happy with the performance of our retail. We have in a number of occasions commented with you that being a listed company, sometimes you cannot be too contrarian to the market because if we had, we would have loved to bid for 1 or 2 assets in the past 3, 4 years, but we have been being -- we would have been slaughtered in a public place, I mean had we done it.

So now there is a retail portfolio available in the market that we have analyzed in depth in a number of occasions already. It was very difficult to reach an agreement with the sellers because it was a relatively convoluted situation. But now it's out there. What I can tell you is that the assets are high quality. They will make a perfect fit with ours. But I can also tell you that this will be a capital recycling exercise. So if you are afraid about us using one penny out of our data center spending capacity, this is not the case.

I mean if we are to bid for this portfolio, which we will only do if we can achieve a positive capital recycling figure, I mean if the capital recycling disappears, we will not bid. And we are not going to participate in an investment banking auction. So we will do our best. We have a number of pros and cons. Our main con is that, of course, we don't control the French connection. Our main pro is that the Spanish staff, we know them very well. They are colleagues in the market and they will be probably very happy to join the family.

So we will see what comes out of that process. But if one day, we end up bidding for that and we are successful, what I can assure you is that we will rotate internal capital, try to sharpen the pencil a little bit in terms of ROA, I mean, try to obtain a positive print, positive arbitrage in ROA and make sure that the data center effort is not even disturbed by this acquisition.

Remember, there is a big hype in the market about resi transformation, et cetera. We have a number of levers that we could action in order to make sure that we can rotate capital in an efficient way, okay?

Okay. Ismael, just to be sure, we're talking about a portfolio that is worth more than EUR 1 billion, right? So you would have to sell more than EUR 1 billion. Is that correct?

Yes. That is...

Okay, that is a big amount.

Yes.

The next question comes from the line of Fernando Abril from Alantra.

I have 3, please. First on the recent [indiscernible] rent. So it was clearly above your expectations. I think correct me if I'm wrong, but it was around EUR 140,000 more or less per megawatt month. So I know it is Madrid, but how should we interpret your embedded 130 assumption for the entire Phase 2 because it seems a bit prudent probably to me. Also on the contract terms of the Bilbao 2 and Hefata, I don't know if there were any material changes to duration or escalator structures compared to previous agreements. And then last, you know that the Spanish grid operator, and also several Spanish utilities have recently announced increased CapEx plans for the power network. So I would like to know your view on this and whether you believe or not that these investment plans will meaningfully alleviate grid congestion and improve the power availability in Spain or not?

Thank you, Fernando. Well, first, on the price of Hefata 2, we are not going to be very specific because it's our client, and of course, the terms of engagement of our contracts have to remain secret. But it is true that in the global underwriting of Phase 2, we were relatively conservative at 118.5% on average, and we are beating those figures.

But it's always good to remain prudent because there could be deviations in course. There could be many things, equipment that could vary. So we have to be -- we have to remain prudent, but it's true that in that particular contract, it's been better than expected.

And then in terms of contract, basically the same that we have been doing up to now in the region of 10 years and with fixed escalators, which are now slightly higher because the 10-year inflation swap is also higher. So we are happy with the contract to all terms. Remember that one of the reasons among many that why we moved into data centers is because they were able to improve our WAULT once we sold the 3 portfolio. That, of course, was a secret weapon. I mean it was clearly improving our average WAULT across the portfolio.

One of the reasons why we moved into data centers was because the WAULT were pretty attractive. They remain so. And in fact, not only that remain, so the clients are now wanting longer terms if they can, in exchange for rent because they are trying to lock up IT capacity in a market which is starved of IT capacity.

There is very few, very few places where you can land 20, 30 megawatts of AI capable equipment. It's -- there are not so many places in the world. Colocation is a different thing. But AI is very special, and there are not so many places in the world where you can do it. And one thing also that the clients like a lot and why they are ready to compromise for longer terms is expansion capacity. I think it was a good vision in our side to bet from the very beginning on super large plots with a lot of energy in which we could grow with the client doing one building, another building, a third building and a fourth building.

That has been probably a very good decision and clients like it because once they send their experts, their engineers to a certain location, they achieve significant synergies if they can operate a more significant capacity than simply just one data center and move to another place within the country. So this is the situation.

And regarding [indiscernible] and the increased CapEx, it's a much welcome piece of news. Of course, our stance with the regulator has always been that they need to improve the grid. The Spanish grid is, believe it or not, because all of you are affected by the 28th of April blackout last year, but that was a different thing and happened for different reasons.

That the Spanish grid is super high quality. It is very well designed, very well duplicated and wet and is very robust. Of course, it will need investment in order to adapt to the new demand because at present, we are coming from a world in which the consumption was going down year after year because many households were incorporating self-generation. And as such, the consumption was going down and down and down.

But we are in front of an era in which consumption contrary to some of the official estimates that were made a long time ago and probably wrong with the new circumstances, consumption will go up and will go up very significantly, if only because of the effect of the data center industry. As a consequence, the country has to make an effort in terms of bringing together generation and consumption.

So that means investing in distribution and transport. And any news in that respect are very much welcome. The alternative is to allow and probably could be a very interesting complement, the alternative will be to allow private grids. But that is always complicated in Europe. As you know, it's the world -- the word private is not very much allowed in Europe. And private grids are only a reality for very small distances. I mean when you are bringing a certain generation mainly from renewable sources into a certain point that bigger grids are not that common in Europe.

So very happy to see that they are starting to move. The only problem is the speed of movement, which, as you know, is a problem always with the public sector. For the moment, the only entry door we have found to the grid is through agreements with renewable producers. And this is what we are doing. I mean we are engaged in a number of negotiations with a number of renewable generators and you will be keeping abreast of our evolution over the coming months/years because it is the only practical way to access the grid as of today.

I mean one day, there will be a bigger grid and electricity eventually will be widely available. But if you want to continue honoring your demand request from your clients, the only way is through agreements with renewable generators.

The next question comes from the line of Stephanie Dossmann from Jefferies.

I would have two questions. The first one regarding data centers and the appraisal values. I understand that appraisers recognize the value creation closer to the time of the lease signing. But could you say how much of Phase 2 is currently factored into the appraisal values?

So what the appraisers are doing is they're just incorporating into their valuation the assets that are under construction. So once we start construction, then those assets come into the perimeter. You have seen June 2025 that we have incorporated several assets, mainly ARA II and Lisbon 1 because they have already started construction. And then in December 2025, we have incorporated -- we started construction as disclosed before in ARA I and Lisbon 2, which means that the appraisal takes that into the appraisal.

The rest of the power land that we have is not being -- so it's hold at cost. And only when we start construction, then is when we -- when the appraisal enters into that valuation. From a valuation point of view, then you need to differentiate between the assets which are under operation and the assets that are considered as WIP. In the cases of assets in operation is exactly what like an office building or shopping center or logistics that we have.

So they do normally a DSF of 10 years. And that's the reason why they arrive at this value. And regarding WIP, as you may remember in logistics, appraisers tend to wait until the very last moment when the asset is completed and you have a tenant to reappraise the asset and then we're holding at cost the different development. But also, you need to be aware that those type of exercises normally were carried out over a period of between 9 months and 15 months only because the construction of logistics is much, much quicker. In the case of a data center, it's different. First one is, first, the land that you hold at cost already just because you are starting a construction there. It means that this power land all of a sudden becomes more -- becomes a reality first. And second, you are incurring a lot of cost and approaching pre-lets over the period of the 2 years that normally 2.5 years that takes us to build this type of assets. So I would say that the value is little by little absorbed until delivery times. Of course, the fact that we have pre-lets or not pre-lets of course, give more certainty to the projects, but this is how they are normally approaching it.

Stephanie, just to add to what Francisco commented, it is very important for you to know that the 4 land plots that are -- that have been included in the scope of work for the appraisers, they were on land that belong to us. So just by putting the market value, which is powered land and not raw land, they were sitting in our balance sheet at almost nothing, just by consider them as powered land that it's a significant uplift on a relative basis, of course, right? So Phase 2, as Frank said, the first thing to know is or the first thing to bear in mind is how that land -- the market value of that land stands.

In our case for what we had before, is certainly an uplift, not -- it is not the same for the land that we buy, of course, because that's the market value. And then as the different milestones of CapEx keep on going and as you approach the cash flow, you will get more value crystallized. But for this 4 particular projects, there's obviously been an uplift because they're sitting in our balance sheet for long at almost 0.

All right. And my second question relates to more traditional business. The office market in Barcelona. You said it is softer, of course. I was wondering what you expect on the midterm. I mean I understand you expect no oversupply shortly, but will the demand be strong enough to see higher Release Spread going forward? And what's your view generally speaking on the Barcelona office market?

Okay. Look, the Barcelona office market is in a digestion crisis. 320,000 square meters without client joined the market at the end of '24 and that hit is still being felt across the market. So this is taking a hit on the tension, the demand tension in the 22 ARA, more noticeable in occupancy than for the movement in rents but clearly noticeable.

Our expectation in a normal world is that we had positive Release Spread overall in Barcelona this year, not brilliant, 1.7%, but still positive. So rents are holding for the moment. The market has corrected itself, as you can expect. So no new construction starts have happened since 2024. And in normal circumstances, unless the Afghanistan, Pakistan war expands to Iran, Israel and U.S., Russia, normally, within 18 to 24 months, Barcelona should be able to absorb the excess offer and come back to a certain normality.

That would be what we would normally expect. Could be a little bit more, could be a little bit less, but Barcelona remains a strong small city, I mean, very specialized in certain submarkets within offices. A little bit of pharma, a little bit of gaming and tech. And as a consequence, we expect the city to continue performing robustly once they have been able to absorb this little blip caused by a situation of oversupply and touristification of the office development.

And the final question comes from the line of [indiscernible].

I have a couple of questions, if I may. One is in relation to your guidance for 2026. I'm trying to understand what assumptions are going in there in terms of additional debt funding. I think you said that in the second half, you're going to raise some more debt. In terms of share count, if you assume any change in that? And also in terms of the logistics, whether you assume that, that big asset that has been vacated by the client is going to be lifted up at any point during the year. So that's my first question.

Okay, Daniela. Look, regarding the guidance, the guidance stems out of our modeling of the year. We believe that the top line, the income could go up by around EUR 40 million easily, but it's going to be eaten by bigger financial expenses mainly. Why is that? Because there will be two events during the year. Money is fungible, so EUR 800 million will disappear when we have to repay our bond.

And second, the speed at which we are spending or investing money in CapEx because of our Phase 2 deployment is significant. Already in 2025, we exceeded our original budget. I say ever, I believe the original budget was like EUR 830 million and we ended up spending like EUR 980 million. So we have spent more money in CapEx commitments, okay, in the year than -- commitment, meaning when we commission a certain equipment, we pay between 20% and 40% upfront, and then we pay the rest upon the reception of the equipment.

However, that money for us becomes untouchable because we need to phase that payment if and when the equipment is received. So in our models, this is what we are seeing. Whether that could be achieved, I mean if we are quick in leasing up some logistic gaps, we should be able to improve it. They wouldn't move that much the needle because if you take into account that logistics account for around EUR 84 million of our rents and the rents expected for this year are going to be in the region of EUR 600 million, it's not going to move the needle that much.

What share count considered for the guidance, same share count. And that is, of course, a very tricky question, I know, because you are already assuming that there is going to be capital issuance at some point. But this is -- I mean, we are talking apples-to-apples. The 58 is with the same share count we have at present.

Second question, if I may. And that's on Phase 3. I wonder whether there's been any investment, even minimal infrastructure preparation in Lisbon. If I'm correct, Lisbon is Part 1 of your Phase 3. And given what you mentioned about the earthquake risk and all that kind of stuff. I wonder whether there's already been a little bit of investment in infrastructure into that and related to also Phase 3, what would be the earliest date that you would like to start ordering equipment or start properly deploying into Phase 3?

Okay. Regarding the commissioning of equipment for Phase 3, et cetera, we will inform in detail about Phase 3 on the Capital Markets Day. But you will see what is basically the cash flow schedule in -- for Phase 3, and you will see it significantly overlaps with Phase 2.

Regarding whether we have already advanced infra investments for Phase 3, yes. I mean, in Lisbon, we have been preparing the ground for plots 3, 4, 5, and we might start precharging land for plots 6 and 7. But we are talking about relatively humble investments. I mean we are not talking about significant things. Likewise, we have spent money in the licensing of a number of projects, including, for example, the one in [indiscernible] where we are already requested construction license, and we have already applied for specific planning status by the autonomous region.

We are building up electric capacity in anticipation of Phase 3. For example, the whole purpose of the Solaria agreement in November was that, was to illuminate plots 5 -- 4 and 5 of Arasur and some of the other agreements that we might be reaching in or have reached in as we speak, are also related one way or another to Phase 3 or pipeline. But we will inform about all that in the Capital Markets Day.

The only thing that is important for you to keep in mind is that Phase 3 will be defined with everything that is being licensed and has power. So it will not include any pie in the sky or talking about things in which we could get the electricity, et cetera. We will be very specific about that on the Capital Markets Day.

Thank you very much. There are no further questions. Just a quick reminder, many of you already know, but we'll be hosting our Capital Markets Day in Bilbao the following 9th and 10th of March. It won't be broadcasted. It will be recorded and then uploaded into our website. But all of our material will be published on our website that morning, the 10th of March. So hopefully, all of you can make it so you get to enjoy a nice wine. And you know where we are in case you have any other questions and have an excellent weekend.

Good evening, everyone. Thank you for joining MERLIN's 9M25 trading update. As we always do on quarterly results, our CEO, Ismael Clemente, will briefly walk you through the main highlights of the period, and we will then open the line for Q&A.

[Operator Instructions] With no further delay, I pass the floor to Ismael. Thank you.

Thank you, Ines. Welcome to the 9 months 2025 results presentation by MERLIN Properties. The quarter from 30th of June to 30th of September has been pretty productive for the company. Company has performed like a Swiss clock, particularly in the traditional asset classes.

The evolution of gross rents like-for-like has been plus 3.4% with relatively neutral variation in occupancy. In fact, we have lost approximately 10 basis points. 6.4% FFO per share year-on-year as a result of a better contribution to the margins of the data center division and a 5.7% increase in the NTA per share year-on-year, which together with the dividend takes the theoretical TSR to plus 8.4% in the period.

The activity in Offices, Logistics and Shopping Centers has been strong, as commented, with more than 700,000 square meters transactions during the first 9 months of the year. The FFO increased 6.4%. This is despite higher financial expenses. Please take into account that the bond issuance in our budget was forecast for the end of October, and we ended up doing it in the last week of August. That means an excess of cash, not so well remunerated in cash at banks, but slightly higher financial costs, which, of course, erode part of our margins.

The occupancy remains very, very high, 95.5%, and what is important, remarkably stable. I mean there are ups and downs, of course. Now Logistics is going a little bit down, but Shopping Centers are going a little bit up. But the end result is that the overall occupancy of the company is very, very stable.

In terms of Data Centers, the Mega Plan continue deploying very successfully. The European Union is playing its usual role. So the firm-up submission that was originally earmarked for the end of October has been postponed to December. And the decision-making, which initially was end of December, is now going to be end of April.

So the European Union is approximately 4 months delayed for now. And that has wiped out part of the competitive advantage of participating in the EU Gigafactory program that was basically to bring forward approximately 1 year the execution of Phase 3.

I mean we have wasted a little bit of time. I mean we have netted off 4 months out of the 12 that we had in mind that would eventually benefit the company in terms of bringing forward Phase 3.

The good thing, I mean, the positive of the Gigafactory program is that, if selected, 180 megawatts of Phase 2 will be let at once. That is, of course, super important for the company because it will significantly derisk Phase 2. Out of 246, 180 will be gone in 1 second. However, with the delays, we have decided to start sounding the market for firm-ups.

I mean we don't want to depend on the EU Gigafactory program because it's a little bit too complicated. It's not probably our ecosystem. I mean we are a private company, and it's complicated to swim in that ocean full of sharks.

And so we are targeting only 48 megawatts by end of April pre-commercialized for Phase 2, which is more than we anticipated. 20 of those are now already in an advanced phase of documentation.

And the other 28 for the moment is on ROFO that we will try to document between now and April that will correspond to the full capacity of the Bilbao-Arasur building #2. And then we will move into Bilbao-Arasur building #1. And we have just started also due diligencing the lease loan facilities for just another client.

The pros and cons of the European Union program is that, as a clear con, we have restricted commercialization to only European names. So the final, let's say, client of computing has to be European. And as you can imagine, this is narrowing a little bit the scope of our commercialization efforts.

So the good thing is that if everything goes well, part of the offtake will be done by the European Union. However, we are starting to feel that if we simply lift the restriction, we will be able to commercialize without the help of the European Union. It's probably too complicated for us.

The very important because I know some of you believe that the CapEx plan for this year was stringent. The CapEx commitments for 2025 are not only well on track, will probably be exceeded.

I mean, depending on just one thing that we need to do during the month of December, we believe we will exceed the CapEx commitments that were scheduled for 2025. So the deployment of the Phase 2 of Data Centers is well on track. We haven't valued the assets in the period. So the NTA per share is virtually the same we used to have with the generation of cash in the period.

And in terms of business performance, Offices have achieved a like-for-like year-on-year of 3.8%, which is very, very interesting. The release spread cosmetically looks like 0.2% owing to the Tecnicas Reunidas deal we did at the beginning of the year. But in the absence of that deal, it is 5.0%.

So the thesis that we have commented with all of you in some occasions about the acceleration of rents in Madrid as a consequence of the restructuring of stock owing to the resi reconversion, let's say, wave, it's clearly proving to be right. In logistics, the like-for-like is only 1.7%, but you might notice that the release spread is 5.7%.

So the only reason why the like-for-like is lower is because we have lost 200 bps of occupancy. But if and when we start recovering occupancy, the like-for-like will start recovering because the prospective increase of rents, which is evidenced on the release spread is -- continues to be very, very sound.

And Shopping Centers, it's been a surprising quarter with a very interesting evolution of sales and footfall figures. The like-for-like is 3.5%, but the lease spread is 4.2%, which is remarkable, given also that we have recently increased a little bit the stock as a consequence of the inauguration of the extension of Marineda in La Coruna.

So overall occupancy is 95.5%, slightly worse than 30th of June, but better than the same period last year. And basically, the performance in all asset classes is immaculate. I mean the company is really, really doing a very good job in all the asset classes.

And without further extension of the explanation, I will open the floor for Q&A because I'm sure given what has happened today in the market, you will have lots of questions regarding many aspects of the life of the company, including very probably Data Centers, which, by the way, is one of the things in which the company is not having any problems.

But okay, let's open the floor for Q&A and happy to take your questions. And Ines and Fran will be today a little bit more active than in other calls because I am not physically with them in the Madrid office. I am at my hometown, at my little village, but we -- I have had a personal circumstance, sad one, that keeps me here. So I am attending the call on a remote basis.

So eventually, Ines and Fran will take today a little bit more protagonism on the answer to your questions, but I will be here, and you can also address questions, particularly to me if you so wish.

Thank you very much, Ismael. So we have the first question coming from the line of Callum Marley from Kolytics.

I've got a few. Just to begin with, can you clarify that the comments you made now on Phase 3 being delayed for 4 months and stating that it's time wasted, what's the strategy here going forward? Are you going to try and pre-lease those 180 megawatts of the 426 in the upsizing pipeline? Just to get better clarity there.

Okay. Look, the waste of time is a little bit that we have devoted too much time to the European Union Gigafactory program. We are now still trying to build consensus around the creation of a single Iberian consortium, which basically will be the result of us plus another private consortium in Spain plus the public consortium of Spain plus the public consortium of Portugal.

So we are trying to put together four consortiums in one. And this is proving to be extremely stressful, very complicated, strong interest, lots of politics, and we are not very good at that. So we are a little bit losing our patience, because at the end, if we lift the restriction on European Union commercialization, eventually, we can achieve the same result with much less stress.

So this is simply what I meant when I said wasting our time, no more than that. Because if you look at the CapEx execution, we are not delayed. We are well on track.

The only other delay that we are commenting in this call today is the prospective delay we are fearing in two of the Madrid projects, Tres Cantos and Getafe, as a consequence of the fact that we have been requested a double environmental assessment in Getafe, one for demolition, one for construction, however stupid it looks. And in Tres Cantos, one for urbanization works, one for construction.

So that duplicity of environmental assessments creates a time lag that results in a time delay in the execution of the project, which is between 6 months and 1 year. And that means it moves the tail end of the cash flows of Phase 2, 1 year further, from 2029 to 2030 to attain 100% of the cash flow of Phase 2.

However, you might notice that we have been doing some preparation works for Phase 3. We will proceed to a definition of the scope of Phase 3 that will be communicated to market in the February conference call pertaining to full year 2025 results, okay?

And in that definition of Phase 3, you will see that some of the most immediate projects of Phase 3 will eventually overlap with the tail end of Phase 2. So paradoxically enough, some of the early projects of Phase 3 will start kicking in terms of cash flow before we finish with the last tail end of projects of Phase 2.

It's part of life. I mean we are developing and developing is always complex, particularly in Western European societies, which are full of administrative rules and bulls***. So it's complicated. You have to understand that it is complicated sometimes to deal with the public administration, okay? So this is what I meant, okay?

That's clear. Can I just confirm if there's any more environmental reviews for the other data centers under construction in Phase 2? Or is it just those two Madrid sites?

In Phase 2, we are clear on all environmental studies, including the latest one we have received is Arasur building #1. So we are clear in Portugal in full. We are clear in the Basque Country for Arasur 2 and Arasur 1, which is the next two buildings we are doing.

So it's only in Getafe and Tres Cantos where we are clear in the first environmental assessment, but we need to do a second because it's like that in the legislation. It's however stupid it might look to you because you are a private person and you try to do things in life with common sense that however stupid it might look, it is how it is. So we need to abide by the rules and do everything by the book, okay? So that is for Phase 2.

And what we are doing regarding, let's say, the nonmoney-related activities of Phase 3, what we are trying to do now is advancing some of the red tape -- administrative red tape of Phase 3, things which do not require cash flow or do not require a lot of cash flow. We are already advancing that trying to anticipate the possibility of further delays when we start executing Phase 3. So it's part of life, okay?

That's clear. Two more questions. One on the Gigafactory and one big picture. On the initiative, there doesn't seem to be anything concrete from the EU about how the public partnerships might work.

Just hypothetically, could you clarify if you were to be successful on your submission, how the partnership might work? So let's say, the partnership covers the 180 megawatts that you submit. And if we assume that costs, I don't know, EUR 1.8 billion to build, how much would the EU contribute to this?

Very good question. Look, the modality that we have chosen in the EU submission, I mean, after talking to the EU, there are two ways of obtaining the help of the European Union. One is via CapEx and the other is via offtaking, and we have chosen via offtaking. That means that 35% of the offtaking is guaranteed by the European Union in JV with the local government.

So what this means basically is that out of the 180, okay, 60 megawatts will be offtaken by the European Union and the local government, be it Spain, be it Portugal, depending on which data center we are talking about. And the rest, it is our responsibility to commercialize with final clients, for which we have already lined up two GPU operators together with their corresponding end clients, which in all cases are European.

So if the EU Gigafactory program goes forward or if we are selected, the 180 megawatts are commercialized, 60 as a consequence of the intervention of the EU, the other 120 as a consequence of our own bilateral agreements with our own clients, okay?

The only nuance is that this is subject to being selected. What we are trying to do now is obtaining the same back-to-back agreements with the same clients irrespective of EU, okay? And in that regard, we expect to have 48 megawatts at least committed for April. So out of the 120 that we are doing on our side, a little less than 50% of that.

And we will continue working. Remember, we are in the initial phases of construction. So our perspective of having pre-lets at this moment in construction was zero, okay?

So we are trying to celebrate, to enter into pre-lets to cover that capacity irrespective of the outcome of the EU Gigafactory program because it might well be that the EU Gigafactory program is delayed again to the summer or to end of the year or it might also happen that the EU Gigafactory program ends up modified.

For example, moving 1 year further the termination of the facilities, which is at present our main competitive advantage. It is very clear that we are not the poster child of any member state, but our competitive advantage is that we do have the IT capacity, which no one else has at present.

So if the contest rules are modified by European Union, we might all of a sudden lose that competitive advantage because if instead of deciding that the gigafactories have to be ready by '27, '28, they decide that they can be ready by '29, '30, eventually, many other people will be able to, let's say, comply with that prerequisite.

And as a consequence, we will lose our main competitive advantage because clearly, our competitive advantage is not lobby capacity, is not, let's say, soft influence capacity in -- with political powers.

That's clear. And just one more big picture and to get your thoughts. In the U.S., we see Sam Altman and his big tech peers investing trillions of dollars into data centers and AI on the basis that maybe in 10 years' time, there's a significantly more demand for compute than there is today.

Just be interesting to hear what your thoughts are on this strategy, whether European countries should be potentially following suit at a faster rate than what we are or whether you think that there's potentially an excess supply risk there later on down the road?

Well, the U.S. and Europe are completely different realities. Despite all the noise, in Spain at present, as we speak, there are 70, 12 and 48 megawatts being built at present to which we will add 60 of Arasur #1. So less than 200 at present and less than 250 in 1 year time. This is what is being built in Spain, which is virtually nothing.

However, the U.S. wave is already reaching Europe in the sense that we are seeing a lot of interest from a lot of very significant accounts to commit into very large projects. Hence why we are trying to secure power for all the remainder of Arasur, okay?

Remember in Arasur, we have one building, #3, which is already operating; building #2, which is built that we are starting equipment and will be ready for service at the end of '26; and building #1, which we should start building at the end of this year, should be ready by end of '27. But we have land reserved for another 3 buildings, building 4, 5 and 6.

And we are now fighting to get the electrification for those three plots so that we can take the total capacity of the Arasur campus to something between 300 and 350 megawatts. This is what we want to achieve. And why we want that kind of scale because scale matters. We are seeing that some of the clients really want big scale. They want to have what they call power visibility.

So we need to be able to give them power visibility because Spain and Portugal, for argument's sake, is one of the few corners in Europe where you can do that. I mean, in many other countries in Europe, you have either generation problems in many, distribution problems in some, or generation and distribution in many others.

In Spain, we have a distribution problem because nobody has put one penny on the distribution network for many years, on the grid. But we have no problem of generation. We have a clear excess generation as compared to consumption. And as a consequence, in theory, there are pockets of electricity, of power that you can find still if you are local and you can dig deep into the current grid organization.

There are places where you can find abundant electricity. So this is what we are trying to do at present. Likewise, in Portugal, where we have received 250 megawatts from both EDP and the National Grid Authority, REN. And those 250 megawatts correspond to 180 megawatts of IT power, which is building #1 and 2, which are the ones we are already building.

And this is the reason we have -- why we have started preparing the ground for building 3, 4 and 5. because, first, we cannot do it later because we cannot do micro-piloting when two data centers are already working on the site because we will create vibrations that will not be good for the machinery of those two data centers.

As a consequence, we have started preparing the compaction and the micro-piloting of that land in order to be able to host the three next phases of that campus, which are already electrified.

But on top of that, we have also started moving with the Portuguese authorities, which are smarter, and they are offering you electricity rather than denying electricity to you. And we are -- we have started moving to obtain electricity for buildings 6 and 7, okay, for which we will have the next year to -- in order to try to close some sort of agreement with that.

And then regarding our star project, which is Navalmoral de la Mata, in that one, of course, having 1 gigawatt today in Europe is a luxury. So we have now very, very strong interest that we are trying to document in the corresponding HOTs.

And if we can get the electricity from the Spanish authorities, the electricity is there, we know, that if we can get the electricity from the Spanish authorities with a very high degree of probability, that is a project that will be born already, let's say, committed, booked or pre-let eventually as you, like all investors, probably wish, okay?

So this is what we are doing in terms of preparation of Phase 3. But as aforesaid, we will -- I mean, it's been a very fast movement in the last months. We are a little bit digesting our own success. Sometimes we feel like sitting a little bit, taking a rest and enjoying. But of course, this is not a real possibility.

And between now and February, we will prepare a definition of what we consider Phase 3, including a funding plan, okay, which in this occasion might entail particular agreements in some mammoth projects with external partners in order to develop because otherwise, they are a little bit too big for the size of our company at present.

Okay. Thank you, Callum. So the next question comes from the line of Thomas Rothaeusler from Deutsche Bank.

Yes, also I have a question on Data Centers. I mean you say your competitive advantage is that you have ready-to-use product while there is hardly any competitive product available in the market currently. By when do you expect this situation to change? So by when do you expect more product from competitors? So it sounds like well beyond 2028. And how could that impact your Phase 3?

Very good question, Thomas. I mean, I believe not earlier than 2030 because at present, there is a lot of noise, but very few people really putting a shovel in the ground. You only have a construction yard in Alcala with ACS. There is some construction in the site of Iron Mountain in San Fernando de Henares.

And then it's us in Barcelona, at the end, in Cerdanyola del Valles, they haven't put a shovel in the ground and Goodman has not put a shovel in the ground in Parc Logistic de La Zona Franca. So in reality, this is what we have -- I mean Aragon, despite all the noise, nothing which basically is 0.0 new construction at present. okay?

Although we believe that the QTS project, for example, is for real, and it will be done that probably ready for service 2030 with luck. So as commented in some occasions, we have commercialized Phase 1 on a clear market basis. Phase 2, we were pointing or thinking that we will also be in clear market basis. It's probably now confirmed we are going to be in clear market.

And it looks like the vast majority of Phase 3 will also be commercialized on a clear market basis because the first ready for services of Phase 3 could start not later than 2028 and will expand to 2030, '31 maybe for stabilization in '33 -- end of '32. So this is what we are expecting for Phase 3. And as a consequence, the market will not be very, very active.

And this is Spain. But also, if you look at the rest of the European panorama, leaving aside what is built as a consequence of the EU Gigafactory program, very little activity is observable in the rest of the core European markets. I mean it's very hard to get power in Europe these days, and there is not a lot of activity.

And contrary to the stance of the U.S. government, except for the Nordics, which have abundant generation capacity at very small grids, very, very small grids, the most significant competitors for the future, I believe, are going to be the U.K. and France because their governments are smarter.

And they will -- they are already moving into extra nuclear generation capacity, and they are already entering into grid reinforcement regulations. They are now trying to reinforce and make better their existing grids. So I believe long term, they are going to be competitors, but it will take many years because Europe is very complicated from a red tape standpoint.

We have shot our foot in terms of environmental regulations. Many of our regulations have probably been designed in China. And we have -- as a consequence, we have curtailed completely our economic activity. And as a consequence, it takes many, many years to do or to convert in real a project which entails some sort of construction or, let's say, CapEx activity. So this is the competitive panorama we see for the coming years.

Thank you, Thomas. So the next question comes from the line of Florent Laroche-Joubert from ODDO.

I would have a first question. So you seem that you have taken into account significantly the program from European Union in your plans. I would like to understand so why European Union should select an operator, a player operating in Spain and Portugal. So why do you think that you can be selected with a high probability?

Yes. Thank you for the question. What we are hearing first is that the number of people presenting options to the European Union has been massive, about 75 options possible over the European countries. So what they are appreciating is that if there are certain regions that they can offer a combined projects, of course, there need to be some linked to the two options.

In our case, not only from a connectivity point of view, not only from a client perspective point of view, not only about -- from an ownership of infrastructure point of view, but also on the energy side, as you know, basically both Spain and Portugal, they have a unique grid system, although, of course, managed by different entities, but it's the same structure.

All of that is basically helping us to propose a combined option with more capacity, with more size, with more companies that could use our facilities, and this is something that European Commission appreciates and sees a positive advantage as compared to isolated request or isolated offers from other countries.

This trend that we presented at the very beginning is being followed. So we are not the only ones that are putting together different consortiums, different countries to get a more powerful offer.

And as you know, the objective for European Union with this project is to incentivize that there is capacity available out there and also with this offtaking, offer companies, not big large model companies and software companies that normally take that space anyway, but also all the institutions, governments and finally European entities and in the U.S. that can work with capacity within the European region.

So that's basically what we see. As Ismael was commenting before, and commission has been very clear about that, there is two ingredients to be considered from the assignments.

One is from a technical point of view. So in a way, like 50% of the decision is based on technical reasons, technical reasons meaning, as Ismael explained before, ready for service dates, capacity from a technical point of view, how efficient you are, renewable sources from the power, et cetera.

And the other 50%, let's call it, is not right percent, but you understand what I mean is from a political decision, which means that what they also try to do is to incentivize penetration of this AI, not only in the region, but also in certain areas within the European Union. So this is, as Ismael was pointing out before, out of our control.

So we know that we -- our grade from a technical point of view is pretty high, if not the best, mainly because not only all the assets are new, but also because our ready for service is '26, '27, which is pretty immediate, and this basically are our advantage.

So far -- if, of course, the project is being delayed or the rules are changed, of course, then we are losing a bit of grip there. But right now, from a technical point of view, we can say we are top in the list.

But then this is a political decision, not only from the local government, but also from the commission to decide whether they want to implement this type of services and offering in which regions they want to help there.

And that is basically what explains why from a technical point of view, we are pretty confident we can get it, but there are elements which are out of our control and it's complex how we can influence on them.

Okay. And maybe a second question. So we understand that you work a lot on this program for the European Union. So do you consider it as a central scenario? And do you work also maybe on an alternative scenario where you're not selected at the end?

Yes, Florent, this is clearly something that we planned from the very beginning. Probably it's not even the plan B, it's the plan A. So this is why now we are concentrating in obtaining firm-ups from the clients irrespective of the European Union because European Union is like a Monte Carlo option, is binary, is 0, 1, and there are elements beyond our control.

I mean, we are a relatively young company. We are a very operational, very active company. We are not the typical public contractor. So we have zero experience in dealing with public authorities. Lobbying them, influencing them is not our cup of tea.

So technically speaking, we were ranked the first out of the five options that existed in Spain. But that is only part of the equation, as Fran was commenting. So from the very beginning, we prepared for a life without European Union because it is beyond our control. And eventually, imagine they say, well, it's no longer December. It's going to be now -- the firm-up submission is going to be May.

And then final decision moved from April to December next year. So by the time the whole thing unfolds, we might be completely commercialized on Phase 2. So if that is the case, why continue spending or wasting more time with the European Union if we can do our things on a completely autonomous basis.

The next question comes from the line of Celine from Barclays.

I just have one question on the EU project. So we've heard you mentioning how frustrating the whole process is, which I can understand. So what is the cutoff date for you to move on from the project and the consortium? Are you willing to wait until end of April?

It is a very good question, Celine. And to be absolutely frank, we haven't yet made an internal decision. Probably we are going to wait till April. But if in April, we see that the submission is delayed to December or if we see that there is even more administrative red tape or more lobbying capacity or more bulls*** that we cannot control, eventually, we will pull out. But Fran may have different thoughts on that.

Yes. It's -- I mean, for us as well, it's a little bit commitment to the country in the sense that we believe that in addition to the fact that we could have some offtaking from that project, yes, we are pushing this because we believe that this decision, if it comes to vis-a-vis the construction will create -- will basically push ecosystem from an NII perspective. And we believe this is good.

As Ismael said, any delay that we are suffering is in a way reducing the value of that option because if we are fully commercialized, if we don't need money for the CapEx, if we are -- if there is any help that could, let's say, accelerate our implementation because we are -- we'll be done. In that case, of course, it's losing how attractive the program is.

And by the way, the Europe Union has already achieved the objectives without even putting a dollar on us, which is good. But also it's interesting for us to continue trying to bring that ecosystem into Spain and Portugal. And that's the reason why we will continue pushing.

As said, there are other decisions that are not on our control and if it is decided that the offer is not selected and they decide another country or another alternative, then we have done from a Spanish/Portuguese point of view, wherever we can, what was in our hand, trying to bring that capacity and that help and ecosystem into our region.

I have a second question on Phase 3. So you're going to talk about it more in February, but are you going to mention how you are planning to finance it as well?

Yes. This is objective #1 for February. We will present the definition, the scope of Phase 3 together with the funding plan because the Phase 3 might be significant in terms of size.

And particularly, it might signal the start of one of our really, really big projects, which is Navalmoral de la Mata. And that project alone eventually warrants a separate analysis on how are we going to fund that because it's a very, very big project.

And eventually, we will need to check how we can do that, whether we continue simply running through the mother company from MERLIN or eventually for this particular case, we take a partner, which brings some other value eventually in the form of offtaking and/or financial capacity, which helps us in reaching an end in that very, very important project for the company. So you will have all the details in February.

Okay. So there are no more questions. We thank you all for being with us during this 9-month '25 trading update call. And as always, we remain at your disposal for any questions that may arise. Have a nice weekend. Thank you very much for being here. Bye-bye.

Good afternoon, ladies and gentlemen. Welcome to MERLIN Properties Half Year Results Presentation. As usually, Ismael Clemente, our CEO; and Fran Rivas and Inés Arellano, both Directors of the Company, will walk you through the presentation that you are seeing on the screen, and it will be followed by a Q&A session.

So without further delay, let's start. Ismael, the floor is yours.

Thank you, [ Fernando ]. Welcome to MERLIN Properties' first half financial results presentation. It's been a very solid quarter of performance for the company that follows also a very good first quarter. So the whole semester has been excellent from an operating standpoint. I mean, beyond the print in net results, which at the end is asset revaluation, which is paper money. The reality is that from a cash flow standpoint, we have improved margins and we have gone one extra inch in every asset class of the company. And we are starting to see a little bit merit behind the debt on the data centers.

From an operating standpoint, the rental growth came at 3.4% like for like and the occupancy was also very high at 95.4%. You might argue that in the first quarter it was 96.7%, but I told you that from the 99% we were in logistics, you can only go down. So it was impossible to repeat the same print in logistics in offices.

We have reached 94.2%, which is our all-time high. The rental growth is quite compelling at 3.9%. In fact as commented in previous calls, we are witnessing an acceleration of the rent negotiations with significant interest in take-up. Part of it is explained, of course, by a resilient economic performance of Spain that also part of it is the destruction of stock that I commented many times with you owing to the resi reconversion projects which are starting to be felt in the Madrid stock of offices, not so much in Barcelona because Barcelona is for residential is a disaster. And they have a disaster of regulation and it is impossible to convert an office building into resi in Barcelona. So it's more difficult to correct excesses of a stock. So the Madrid is working fine.

In logistics, we went down in occupancy to 96.2%, but we still delivered good organic growth of 2.2% like-for-like. And we have continued pre-letting significantly our WIP. I mean, with a big transaction in the north of Spain, and one head of terms, very good one for the Generis Corridor here in Madrid.

In shopping centers, very good like-for-like at 3.2% and what is more important we have reached an all-time low in occupancy cost ratio at 11.0% which is incredible, thanks mainly to a very strong sales evolution that keeps us absolutely amazed of 5.8% versus the same period in 2024. With all these, the FFO generation came at plus 12.8% compared to year-on-year with a very significant strong value creation as a consequence of asset appreciation, 3.2% gross asset value like-for-like growth, mainly is a data center thing, although it is important to remark that the deterioration seen in past quarters in the value of the traditional asset classes has not only stopped but also reversed a little bit.

The appraisers seem to be flatishly that they seem to be compressing a little bit again the cap rate. You know my opinion about that. I would prefer to stay where we were because I believe there were healthy cap rates, but it seems that we are entering a small cap rate compression Phase 1n valuation.

What is important is that with all these, the total shareholders return in the first half has amounted to 6.6% which, you know, it's clearly a good indication for the whole year, I believe is going to be a good, very interesting year from a shareholders return standpoint, this 2025.

Our financial situation remains very healthy at 28.6% LTV under 9 net debt to EBITDA, 100% fixed rate with no debt maturity till November 2026, and we have EUR 1.6 billion of liquidity position. Standard & Poor's has reiterated the BBB+ with stable outlook, which is, of course, very, very good because, you know, towards the end of the year we will need to tap the market for debt and it's important to do it on a very good double rating by Standard & Poor's and Moody's.

Regarding value creation initiatives, we have been very active in the sale of a number of assets that we now call noncore, but I mean it's -- we are talking now always about occupied buildings, mainly for resi reconversion. EUR 36.4 million (sic) [ EUR 37.4 million ] have been executed in that period, that we have also signed and in some cases received advance payments for another EUR 145.9 million, which basically means that we expect to comply with the 2025 budget in terms of disposals. As you know, part of the data center deployment program is financed with the capital increase that we carried out last year, but we also depend on a number of disposals that we have budgeted for 2025, '26, '27, '28 and '29 and we are very well on track to comply with those internal numbers.

More importantly, it's been a very good period in terms of pre-let or leasings, so big leasings in data centers. Well, you all know that we finally placed a block of 15 megawatts in Barcelona with a big neocloud hyperscaler and then a block of another 18 megawatts in the Bilbao-Arasur data center. I won't do spoiler, so Fran Rivas will comment in a moment about the evolution of conversations with clients for the risking of Phase 2 and the rest of Phase 1.

In offices, we signed 2 very large headquarter leases, one with an existing client, Tecnicas Reunidas, who significantly enlarged their position with us in the A1 corridor. And the other one with a very big energy company, Spanish Ibex-35 for a headquarter in the A2 corridor.

In logistics, signed with Mercedes-Benz in Vitoria, 73,000 square meters and half signed also ahead of terms for a turnkey project in the Henares Corridor for another 55,000 square meters which is very, very interesting.

In shopping centers, what is more notable is that the extension to the already big Marineda Shopping Center, it's going very well from a pre-commercialization standpoint. The opening is in principle penciled in for some around November or beginning of December and yet we are 92.9% pre-let which is a very remarkable achievement by our colleagues of retail and logistics.

Regarding financial results, if we move into Page 6, where revenues have grown by 8.5% of which rent EUR 264.7 million by 6.7% compared to the same period last year. What is important is that we have improved EBITDA margin. So moving from EUR 188 million to EUR 205 million with an increase of 9% above the increase in top-line. So very good conversion.

Most notable the FFO has increased from EUR 147.8 million to EUR 166.6 million which is an increase of 12.8% also very interesting exercise in terms of cost containment by the company and well -- as commented before the EPRA NTA has gone up very, very significantly, first, as a consequence of the capital increase carried out last year, which of course contributed a lot of cash to the company, but also as a consequence of the asset revaluation that we commented before.

With all that, the dilution in FFO that was expectable following the capital increase that diluted naturally the FFO of shareholders by around 16.7% is now -- has been now moderated to only 6% and we will try to continue [ evolving ] between now and year-end. So in plain language, with only the traditional asset classes for the moment working in favor of offsetting the dilution, we are managing to significantly offset the capital increase carried out last year, I mean, which in theory or when in theory in practice was penciled in for the development of data centers. So without data centers yet contributing to the company on a meaningful basis, we are little by little closing the dilution caused by the capital increase, which is, I believe, a remarkable achievement.

And in terms of NTA, the strong revaluation has meant that we have almost flattened the dilution caused by the capital increase and we are more or less where we were last year in the same period with minus 0.5%.

On Page 7, where you have the like-for-like divided by offices, logistics and shopping centers and you see what is like-for-like growth and change of perimeter.

On Page 8, you see the occupancies, 94.2% in offices, 96.2% in logistics, 96.5% in shopping centers. Later during the presentation I will give you what our estimated figures for year-end look like, which you know offices is going to be relatively flat, a little down from the 94.2%, logistics will go significantly up, I mean we know depending on a couple of contracts that we are negotiating and shopping centers will remain relatively stable because it's impossible to move it from there.

And without further delay, I will let my colleague Ines Arellano explain the details of the different asset classes for your benefit.

Thank you, Ismael. So moving to offices in Slide 10, which they still represent 58% of our portfolio in terms of value. The momentum is quite positive, demonstrated by all-time high occupancy levels, both in Madrid and Lisbon. Barcelona is still suffering from a temporary oversupply situation, and it will take some time to be digested. The drop in occupancy, however, has mainly happened in June, and that's the reason why we still see a solid like-for-like rental growth of plus 3.4% despite the impact.

On Slide 11, you may have noticed that we reached an agreement with a reputed and large tenant of ours, Tecnicas Reunidas that implies a mark-to-market on the existing space in first Q and that we've now signed an additional 21,000 square meters expansion with them in a turnkey projects to be developed in the same campus in Avenida. Excluding this impact, however, the overall lease spread would have been plus 5.1% overall and more importantly, plus 3.3% up versus the minus 3.7% in Madrid. We have contracted 165,000 square meters in the first half of the year, which is a wide enough example or sample I'd say to provide us with reliable information on what is happening in the market.

And this is shown in Slide 12. As already flagged in February, Madrid office market is experiencing a very interesting trend. There is a clear need for residential amongst all our users, and there's no land available in Madrid City Center, which is driving the reconversion of certain office buildings at above current book value.

Coupled with no new supply in offices, the overall office stock is shrinking, and this is benefiting the good quality assets, not just with occupancy gains, but also with sanctioning rents. In our portfolio, we have identified 13% of our Madrid stock suitable for reconversion, but please do not think that we're going to be selling off everything, it also means that there are certain users, like universities, that are compatible with the type of buildings that we have, and we can extract more value and cash flow. And a good example of it is within our portfolio, we have [ UNIE ], one of the most reputed universities in Madrid that trusted us with its 18,000 square meter campus in [ indiscernible ].

We move to logistics and what we can say is that the performance continues to be robust with a plus 2.2% like-for-like rental growth. And the overall drop in occupancy is only due, as Ismael commented, to be expected exit of the tenant in the 47,000 square meter warehouse in Cabanillas, Madrid area. And the asset, as you may imagine, this is ordinary course of business is under commercialization, and we have several visits. Hopefully, it will be occupied, if not by year-end, by the beginning of next. So the cutoff date of December should be either going up to 99% again or staying in the range of a 96% occupancy ratio. But we've also experienced a significant increase in occupancy in Barcelona, which obviously does not impact as much as Madrid does.

Release spread plus 7.2% in the first 6 months with higher leasing volumes in the second Q, reaching 260,000 square meters contracted.

Moving to Slide 16. This is a minority stake in ZAL Port, Barcelona, which also showed a plus 3.2% release spread with around 157,000 square meters contracted and a temporary decline in occupancy, which cannot be considered a trend, except that our Barcelona portfolio in logistics has shown more than 500 bps increase in occupancy.

Shopping centers, as Ismael like to call it, our Cinderella became a princess long ago and is still showing its strength. All KPIs reported are positive, plus 3.2% like-for-like rental growth, 96.5% occupancy versus 96.1% last quarter. Sales evolution outstanding at 5.8%, footfall at plus 2.4%, record low OCR at 11% and release spread at 4.1% coming from 3% last quarter.

And then let's go to valuations on Slide 21. All this good operating performance translates into valuation. GAV has increased by EUR 518 million, standing at EUR 12.1 billion as a result of a 3.2% valuation uplift, mainly driven by development gain in data centers, which have shown a 38.2% like-for-like growth.

Valuations have resulted in a 5.2% passing gross yield, which implies a 4.3% net initial yield, slightly lower from the one shown in December because data centers are still not yet stabilized.

The revaluation impact on P&L has totaled EUR 361 million, of which around 58%, EUR 208 million comes from data centers. Operating data centers have crystallized part of the expected value creation, and Fran will walk you through in a minute in Slide 36. And appraisers have decided to also value the assets that we started its construction after obtaining construction license, therefore, anticipating value recognition. Now it is very important to say that all the landbank remains at cost. So it's only be either operating or already into construction on a portfolio that has been given a value by the appraisers.

Methodology is as follows: Appraisers assess values with a 10-year DCF, where they apply cap rates, you can see in our results that it ranges from 5.5% to 8% on the exit value and discount rate, 9% to 11%, which today still looks high for derisk assets. For the first time for a while, now we see an overall slight yield compression in average 7 bps, flat exit yields, so in all 3 traditional asset classes, obviously, being not meaningful in data centers as the assets are not yet stabilized and we'll see the ramp-up in the years to come.

In Slide 23, we can show you the sound financial structure that we have. This is moving from the asset side of the balance sheet to the liability side of the balance sheet. We finished this semester with a gross debt of EUR 4.4 billion, down from EUR 4.9 billion in December after repaying the EUR 600 million bond in May. We have net debt of EUR 3.6 billion, implying a 28.6% LTV. Cash flow generation and value creation have almost offset dividend payment and CapEx efforts, and this is shown in this 28.6% LTV.

As said by Ismael, net debt to EBITDA stands below 10x, 8.8x and the average cost is slightly higher than the one in December, 2.6 coming from 2.5. It obviously will increase slightly as we refinance our cheapest bonds, but all our debt is fixed with average maturity of 4.4 years. Liquidity also commented by Ismael are still high because we still have some of the proceeds obtained on capital increase. And S&P, we confirm our BBB+ rating with stable outlook, together with Moody's on the basis of sustained lower leverage and expanding cash flow.

In Slide 24, very little else to add. 84% of our debt is corporate. So 75% of [ active ] bonds and 25% is unsecured bank loans and only 16% of our debt is mortgage space. Our next maturity to be faced in 2nd November 2026 -- and although we do have time to tackle it, we prefer to be prudent here as we've always been when it comes to debt and take advantage if and when we see a window of opportunity.

So with no further delay, I'll pass the floor again to Ismael, who will comment on the value creation part of the business. Thank you.

Thank you, Ines. Well, regarding capital recycling, the investments in the first semester were very few. We acquired one coworking space that we operated, but didn't own around 2,000 square meters in Barrio Salamanca in Madrid. And we bought a landbank for 2 data centers, one in the North of Madrid, Tres Cantos, with 30 megawatts of IT capacity confirmed. And then a potential expansion of up to 130 in the future, which is requested but not obtained yet.

And in the case of Madrid-Getafe, we bought a former industrial manufacturing facility in which we have 48 megawatts of existing, I mean, confirmed IT capacity given the electric power that we enjoy in the export.

Regarding divestments, we are at EUR 183.2 million of, which EUR 37.4 million executed and EUR 145.8 million signed all above GAV. There are some adjustments still pending in some of the cases, and we execute later in the year and in 2026 as you can imagine. The reason why we operate this way is, because we want to keep cash flow as long as possible. I mean at present we are a company, which is excessively financed. I mean, we have a lot of -- or we have had a lot of cash. We are running out of cash very quickly, but we have had a lot of cash, and of course what we need to keep now is rent rather than cash. So when we sell assets we don't rush. We prefer to keep them in the balance sheets for longer and enjoy the cash flow.

Those sales are mainly concentrated in offices in the resi reconversion play that we have commented with you on a number of occasions. And those assets sold contributed EUR 8.9 million -- or will contribute EUR 8.9 million gross rental income in 2025. Hence, the average disposition yield is 4.9% gross, which is interesting from a capital recycling perspective if reinvesting in data centers.

Regarding the Marineda extension, the size of the shopping center has significantly increased by about 25%. I mean, total size at present is 126,500 square meters, which is a lot. It was already the third largest in Spain and now it's the second. But what is more important, despite the diversity and quality of the existing tenants, we have been able to find further tenants for the extension. We are almost 93% pre-let and with a CapEx of EUR 41 million, which in part was defensive because what we wanted to do is protect the shopping center upon the exit of El Corte Ingles in the area. We didn't want any undesirable neighbor to come near our shopping center, which is of course one of the big cash flow producers in our portfolio. So what was once a defensive movement, has turned into a decent offensive movement, because we are obtaining a yield on cost of 6.5%, which is not great, but is not bad.

Regarding Adequa 4, this is a large pre-let, one of the largest signed in Spain since the great financial crisis. We have signed 10 years contract with more than EUR 70 million backlog added to our office division, and 21,000 square meters with delivery at the beginning of 2028. CapEx is close to EUR 53 million. The yield on cost is 6.2% on historic cost of land, including historic cost of land. So if you do just the yield on CapEx is 10.4%, which at the end explains why we are doing this, because in reality what we are doing is moving idle office land that we have in the A1 corridor in Madrid, which is now performing very, very well in terms of occupancy. We are moving, that let's say, landbank into WIP and that WIP into product in operation, hence bringing more cylinders to fire together in favor of the performance of the company.

Together with this building, we will assess the convenience of building the remaining buildability in the complex, which is a little tower, it's a low-rise tower of around 100 meters with circa 25,000 square meters of total GLA in order to optimize first construction signages and also capitalize the momentum in the market, we believe that if we add that capacity in A1 corridor, we believe, I know it's a bold movement or may look like a bold movement, but we believe we will fill it up in due time because I know the corridor now with the proximity of Operacion Chamartin starting to perform very, very well. And it's our opinion that we will be able to make good use of our money by bringing the tower together with pre-let, fully pre-let building.

In logistics, we are building, or we are building or adding project or will build in the short- to medium-term, 291,000 square meters. The last modules will be delivered in Lisbon in the first half of 2027, but the rest is mainly 2026 business. Total investment will be around EUR 156 million and the expected gross rental income is EUR 17.2 million. That will move our logistics -- our visible logistic income beyond the EUR 100 million mark, which is important, although as you know, there is invisible income in logistics that comes from the Sal Barcelona, which is accounted for as equity method. And you don't see the cash flow, but cash flow, of course, is there.

The yield on cost is 7.5% and the yield on CapEx is 11.1%, so I believe it's an interesting move to put that also into production. We need cash flow in order to continue feeding our little base of the data centers.

And with that, the noncommitted pipeline will be only 190,000 square meters mainly in Madrid, Valencia and a little bit in Sevilla with a pending CapEx of EUR 101 million and stabilized GRI of EUR 11.5 million. So a yield on cost in the region of 8% and a yield on CapEx in the region of 11.4%. So looking forward to mobilize also this pocket of value in the coming future so that we do not keeping our balance sheet any assets, which are noncash flowing other than the land of Operacion Chamartin, which of course will take more time to become productive.

And Fran will comment on the digital infrastructure plan.

Many thanks, Ismael, and good afternoon to everyone. I'm glad to cover now the update on our project MEGA and the main achievements completed over the first half of 2025.

So as you can see in Page 32 and 33, we have summarized the current positions of our data center division that we internally call the MERLIN Edged within the Iberian Peninsula.

Precisely in Page 33, you can find a table with an overview of different phases. Phase 1, which comprises our 3 assets in operation; Phase 2, which includes our working progress, our WIP; Phase 3 or the upsizing of the former 3 locations; and finally, the pipeline which represents the future growth of our data center division.

Starting with Phase 1 and as a snapshot. After we complete letting of all Barcelona including the 6 megawatt of repowering in Arasur, depending capacity of Madrid and the fact that the advanced conversations we are holding with one specific client has given us to update the stabilized GRI from the former EUR 88 million to the current expected EUR 92 million, which also improve as well the gross yield steel on cost up to 15.1%.

In our WIP category, Phase 2, the total IT capacity has grown from the former 210 megawatts to the current 246 after the inclusion of a second building in Lisbon. Consequently, the stabilized GRI that we are estimating in 2029 achieves EUR 379 million with a gross yield on cost of 14.2%.

The reason of including now a second building in Lisbon and as compared to former calls we have had is due to 2 reasons. The first one is the fact that the U.S. government has finally decided to do not implement their Artificial Intelligence Diffusion Rule, which classified at the time Portugal as among other countries as Tier 2. And that rule basically was impeding the Portugal to import the latest technology in terms of chips.

Secondly, the fact that in light of the performance and also the revaluation seen in Phase 1, we have considered that we can stretch a little bit more the funds raised last year in our capital increase and the debt attached to it. Of course, without affecting our target LTV and the net debt to EBITDA that we have agreed with our rating agencies.

In the upsizing category, we have included now a new repowering of building 1 in Bilbao-Arasur, power that has been already been requested and we will be answered in the following months. Same applies to building 6 in Arasur within our pipeline category with 30 meg potential additional capacity.

Entering now in more detail in Page 34, we can see the current status of our operating assets. In Barcelona, within the 22 meg of maximum IT capacity, we have already equipped, as you know, 16 meg which are currently in operation and additional 6 meg of the repowering will be commissioned during the first months of 2026 with ready for service set for first half of 2026. As a curiosity, this additional 6 meg of repowering will be with liquid cooling systems while the first 15 meg are air cooled equipment.

In Bilbao-Arasur, what we call building 3, which was the first one we have built, the 22 meg already equipped. 10 of those, 10 meg will be air-cooled and 20 -- sorry, 10 meg will be liquid-cooled and the 12 originally is air-cooled. We are now working on the fit-out of the client, which from now in June, we have already given the first rooms and there are different branches until they are in fully operation by the end of Q4 2025.

Finally, in Getafe 1, as of 6 months, as of 30th of June 2025, as we described here in the slide, we have 4 meg equipped. Right now, this figure has jumped to 6 meg, is what we have equipped right now, with the remaining 14 meg to be commissioned by the end of this year.

In terms of commercialization of Madrid-Getafe I, we are in well-advanced conversation, as I was commenting before with one client. This is what we define booking, considering the level of both technical and commercial involvement that we have already achieved with this client. For the available capacity that we have of this original 6 meg, which in this case is 5 meg of lease, and regarding the second phase of power, the initial 14 that we will get next year, we have also booked for them another 5, and you know that will increase basically that letting with the client up to 10 meg in Madrid-Getafe I.

And then finally, also we give them basically the option that if when or when the repowering of 6 meg that we are foreseeing in this asset, once we get it, they have also booked that capacity as future growth in the next years.

As you know, we have been holding this capacity in Madrid-Getafe I, until we have some visibility on the power delivery but now we are seeing a bit more clarity on the timing to get the power in the recent week. So we have included this in the negotiations of current availability.

Now moving to Page 35, we are showing you on a year-by-year the expected GRI generation of our operating assets until 2027, whereas mentioned before, we forecast EUR 92 million of GRI. Out of this EUR 92 million, EUR 66 million have been already contracted so far. And with Madrid-Getafe, once it's fully let, we will jump to this magnitude.

In terms of value creation of Phase 1, which is in Page 36, the total investment remains at EUR 608 million, valued as of June at EUR 719 million implying basically for the capital already invested another EUR 255 million of value capture as of June and considering the expected value of the assets after our appraisals, there will be another EUR 293 million of estimated value to be captured, which if you add also the rent that is being generated all over the period, this will convert this Phase 1 investment in a very profitable project for our shareholders.

Moving into the update of our WIP, Phase 2 in Page 37, both the Bilbao-Arasur building 2 and Lisbon data center campus, buildings 1 and 2 are already under developing. In the case of Lisbon, we will see this again at an early stage. In the case of Bilbao-Arasur, we will -- see in the following slide the progress in construction, which is evident because the building is already almost raised. All equipment regarding this building has been already ordered, to guarantee that each delivery date by Q4, 2026.

And regarding building 1, which is the third building that we are constructing in Bilbao-Arasur, which is the largest one once the pre-powering is obtained, we expect it to start construction by the end of the year and also equipment orders are well on progress to guarantee as well the delivery date by the end of 2027.

The particularity of this building is its connection to an on-site photovoltaic type project that we will feed renewable energy into the site, which also include even more the sustainability character of this development.

In terms of commercialization we have 2 initiatives launch, one with a client interested in taking most or with different ramp-ups even all of this capacity of building 2 and another one, another initiative that I will give you more details at the end of this section, which could comprise both building 2 and 1.

In Lisbon, although its construction started last September, right after the capital increase, the conditions of the Lisbon area of light us as commented several times in several calls, to carry out soil compaction and special piloting works, as we will see later on the presentation.

News in this project is now inclusion of building 2 in the same first phase of construction for the 2 Lisbon sites commented before, also taking advantage of the power availability we have on site, which covers the first 180 meg of IT in one of the feeds. And then we have also secured the second step to reach, maximum capacity of the first phase without the upsizing.

In addition to this power availability we have also signed an agreement with [ EDP ], to provide in the same case like Arasur another on-site photovoltaic plant of 200 meg, which will be physically connected to the data center campus and also will generate a significant part of the energy consumption of this building.

In terms of commercialization, it's still a bit too early to enter conversation with future customers, as the target completion date is the end of Q4 2027. But we have included this capacity as well in the European initiative that we will cover at the end of this section.

Regarding Madrid-Getafe II, we are awaiting to have green light from the administration to start the demolition works on the site. Those works will be carried out by the seller of the land, and we are finishing our design project to submit it to the municipality in the following months.

Finally, on Madrid Tres Cantos, the licensing process is advancing and urbanization of the land should start within the first half of 2026.

Regarding the CapEx of this WIP on page, I'm just jumping to Page 38. We are showing you the updated figure of the total CapEx expected for this Phase 2, which has increased from our former EUR 2.1 billion to the current EUR 2.5 billion, due to the incorporation of building 2 in this new campus.

We highlight here that the CapEx in our data center, as we have several times commented, is around 20% to 25% on civil construction, where payments usually are more linearized, while the remaining 75% is equivalent, where payments are more back-ended. That's the reason why we always present CapEx commitments, because when the timing of payments is a little bit different from what we show here. The pace, as you can see basically, is that we expect to commit EUR 836 million in 2025, out of which 49%, EUR 411 million, has been already signed, committed as of 30th of June, 2026.

In Page 39, you can see some pictures of the construction works in Bilbao-Arasur, building 2, and also basically on the top right photo, you can see in the background the building we have in operation, which is our building 3.

In Page 40, we are showing different photos, where you can see the soil compaction and piling process at different stages. And the final one is on the right, on the bottom one on the right side of the slide. And as I said, basically construction above ground will start right after the summer break.

Regarding Phase 3 or upsizing projects in Page 41, the news there are the update of the remaining capacity in Lisbon campus, as they're -- including building 2 in the first phase of construction. And in Bilbao-Arasur, we have included the potential repowering of 12 meg IT in building 1 that I was commenting before, and also in Getafe we have maintained the 6 meg of repowering and upsizing until we confirm timings of this power upgrade.

And then going back to one of these initiatives in terms of commercialization for Bilbao-Arasur and Lisbon campus, is the possibility of being selected as one of the giga-factories that the European Union have launched in April 2025.

As you can see in Page 42, the European Union aims to become an AI continent with large-scale AI data and compute infrastructure across Europe, by setting up at least 13 AI factories. There are some existing ones like the supercomputing center in Barcelona, but also establishing 5 AI giga-factories to which the European Union want to devote EUR 20 billion through different loans and grants.

With this objective in April 2025, the EU published its call for expression of interest of AI giga-factories and MERLIN Edged submitted to this EU a consortium capable of delivering what we believe is a unique AI gigafactory and the reasons why we believe this is unique is for different reasons.

Now the first one is that we have not only permitted land with power access, but that land is currently under construction and it fits with [ EU ] objectives of having capacity ready for service in years '26 and '27 and to achieve these timings unless you have already started is almost impossible that you can meet those deadlines.

And as you have seen before both of our Arasur -- Bilbao-Arasur and Lisbon campuses meet these deadlines and will provide 180 meg of IT capacity. Also they are looking for projects with capacity of expansion within the same sites and again both Bilbao-Arasur and Lisbon offers additional 358 meg of fighting capacity to go there.

And finally, they are seeking for technical capacity of buildings to support the levels of densities, make sure as KW per rack that the artificial intelligence type of computing is requiring. And this need to, of course, maintain sustainable parameters. In our case, as you know, we don't use water consumption and we have a very low PV, which basically matches to what they are looking for.

After this expression of interest, the different consortia across Europe, because I said this is a European competition, will need to submit binding proposals by October, and the European Commission expects to decide the final locations of their gigafactories by the end of December 2025.

As said before, this is an initiative from a commercialization point of view, and of course we're competing with other countries and with other projects. But after seeing that the timing that the EU is looking for and we're ready for service capacity and the resources I mentioned before we decide to apply to it.

Unfortunately, I'm not allowed to provide you with much more details of the natural order structure or members of the consortium, first because due to confidentiality reasons, but also because we are in a competitive process. And so of course, if there is news regarding this potential initiative, we will keep you posted.

And yes, that's all from my side. Ismael closing remarks.

Thank you, Fran. Well, just closing our part of the conversation today, I mean, opening the Q&A simply to stress what I commented at the beginning. We are seeing strong organic rental growth at the company. We are seeing a strong momentum in offices in Madrid, a little bit of weakness in Barcelona, and good performance continued in Lisbon. We are generating significant FFO in the company. I mean, the company continues to be a highly cash flowing one with very healthy margins, which is always a nice thing to see from a managerial perspective that we don't lose attention and we don't become gigantic and sporadic like happens in many -- all the companies. We continue stressing our teams to work towards high occupancy levels and also well, we are enjoying a certain tailwind because Southern European economies seem to be having a good momentum and Spain is clearly not an exception.

Regarding value creation, what is, to me, particularly satisfactory is that we are generating a lot of alpha basically by moving projects into WIP and WIP into assets in operation, and we are meeting that with a very significant success in commercialization. In data centers, well, you know what we have been doing with CoreWeave. In offices, we led 2 big headquarter leases to Tecnicas Reunidas and another big energy, Spanish energy company.

In logistics, we delivered 33,000 square meters just 2 weeks ago to Wharton and Naotum in Lisbon Park B. And we let almost 73,000 square meters to Mercedes Benz in Vitori Jundiz. And what is important, the long-term noncommitted CapEx GLA is only 190,000 square meters. So we keep reducing the landbank that we acquired in '16, '17, '18 at very good prices. We keep reducing that landbank and adding cash flowing assets to our inventory.

And in shopping centers, I believe the Marineda extension is a remarkable achievement. I mean the leasing teams have done a fantastic job and by pre-letting in record time, close to 93% of the very significant GLA addition, which is close to 27,000 square meters is a lot.

So as a very quick outlook, we see an improving investment market. We see also an improving underlying market in leases, particularly in offices. In shopping centers, a little bit business as usual for the moment. The evolution of private consumption in Spain keeps us absolutely amazed. I believe it's a mix of very low household indebtedness, a little bit of doping from fiscal deficit. But clearly, spending capacity of people continues to surprise us.

As a consequence well, we have decided to raise a little bit the FFO guidance for 2025 to EUR 0.56. Many of you will take the EUR 0.30 of the first semester and multiply by 2. Please don't do that because we will have less 700 and change million working in cash at banks for 7, 8 months of the year because we repaid the bond on the 26th of May. So that will subtract about EUR 0.02 of that theoretical calculation of EUR 0.60.

And then we are also counting on tapping the bond market between end of August and October. I mean, we will, of course, be quick and benefit from the very good momentum we are seeing in pricing in the market and in volumes and also in maturities. And that additional cash will, of course, drag FFO because the remuneration we will obtain in cash at banks will be 1.5 points lower than the cost of that money to us. So that will subtract another EUR 0.02 easily of cash flow to the theoretical calculation of EUR 0.60. So I mean EUR 0.56 is okay. I know some of you are now expecting EUR 0.57. Please, bear with us. I mean I don't believe it's super important that sense that we will, of course, do whatever is in our hands to excel the guidance that we are giving to you, but it's pretty much accurate at this point is what we see.

And regarding translation into dividend, well, as you know, we were a little bit below the 80% payout ratio. So going back to 80%, that increase of EUR 0.02 in cash flow per share allows us to recommend to the Board another EUR 0.02 of extra dividend per share. So we will propose to the Board raising the dividend from EUR 0.40. That was our initial estimate at the beginning of the year to EUR 0.42. And that is basically it.

So we can move into Q&A. We are here to answer your questions.

[Operator Instructions] So the first question comes from the line of Marios Pastou.

I've got 3 questions from my side. Preference to ask them one by one or all in one go.

If you make one by one, as you wish, I mean, we are simply -- I mean, we will take note.

Okay. But they're all related to data centers. So I think maybe we'll do them in one go. But maybe we start with Slide 35, where you've now provided the GRI buildup of Phase 1. Can I just check how you're including Madrid-Getafe in there and how this has been included in the buildup of, say, 2026 and into 2027 based on the discussions you're having?

And then secondly, on the data center values, I think you've mentioned that you're now revaluing both operational assets and those under construction. So can I just check, has there been upside taken across Phase 2? And if not, when will this likely start?

And then finally, on the timing of the value creation of Phase 1 that you provide in Slide 36, how should we think about it in terms of the remaining EUR 293 million to be captured split, say, between the second half of this year and into 2026?

Okay. Well, regarding the timing of value creation, in principle, we should be running at full cash flow around 2027, end of '27, if you multiply December by 12, probably we will already be at, let's say, cruise speed. So starting from that point, I believe the appraisers will start, let's say, normalizing the appraisals of those data centers in Phase 1. And I believe they will start lowering significantly the discount rates because at present between 9% and 11% looks to me a little high. I mean, if you can buy data centers in the market at between 9% and 11%, give them all to me. Because we wouldn't take the risk of building if we were able to buy data centers in the open market at those rates.

I mean, I believe that if you calculate the gross rental income, which is EUR 92 million and you multiply by NOI margin of, say, 70%, 70 change percent you will be at an NOI of between 60% and 65%. And it looks very clear to me that, that warrants a valuation in the region of EUR 1.2 billion to EUR 1.25 billion, even EUR 1.3 billion given the hype in the market and the fixed escalations, which, of course, play a role, particularly on very, very long contracts like the ones we are signing.

So I believe, let's say, starting end of '27, being prudent, starting end of '27, probably in the valuation of end '27 or in '28, we will probably be able to reap the benefits of most of those EUR 300 million that we believe are still pending to be recognized in Phase 1.

Then regarding the value of Phase 2, at present, the only thing that has been recognized is a little bit of value in Bilbao 2 because it's already with construction license and being built. And the 2 buildings -- first building because we have not yet taken the decision to start the second building. The first building in Lisbon. So this is the only thing that has been appraised and has captured a very little value because the discount rates, which are applied by the appraisers are very high and also the cash flow projections are also very high.

So the PV, as you can imagine, suffers as a consequence of that and very little value is recognized. But we have a doctrinal discussion with the auditor. And their stance is that it's good to be prudent. But if you are too prudent, sometimes you are not transmitting to the market the fair image of value of your company. So we came at kind of a middle ground, which is, okay, we are not going to reappraise our landbank as such, even though we might have obtained power, we will only start appraising when we start building.

So upon obtention of the license of construction, when we start building, when we start erecting columns, we start appraising or reappraising that building, which up to then is carried out in our books at cost, including land cost plus whatever CapEx we have incurred as a consequence of land compaction or foundations or similar.

Okay. And then regarding the data center in Madrid-Getafe?

Yes. As commented, basically, we are in discussion with a client for taking in different steps capacity within the building. Right now, what we have available is 5 meg of capacity. As we commented several times, the clients when they were coming, they want to see growth. So 5 meg used to be a very decent amount. Now normally, type of clients want to have capacity to expand within the same asset. So we were waiting and holding a little bit those conversations until we have more clarity on the additional jump in power up to the maximum capacity of the 20 IT that we designed originally.

So out of that additional capacity that we expect to receive in the first half of 2026, if you add several months of the fit-out for the client until this is ready for service. So probably we will be by the end of '26, beginning of '27 ready for service for the client. So that's exactly what we were mentioning, so, like 5 meg would be like '26, 5 meg will be beginning of '27.

And then they are also reserving the option to take the capacity in case of repowering that, of course, at the time that comes, we need to equip that, that we are not equipping in advance. So once it comes, there will be other option as well to complete that. So that's basically the current status of Madrid-Getafe 1.

The client is a cloud operator, which is bringing not only pure IT capacity, but also telecommunications or interconnection equipment. So that is, of course, important because that normally drives further expansion of capacities in the future. So it's very, very important to make the initial movement. And then normally, you are blessed with additional extensions of capacity. So this is what we are negotiating at present.

Next question comes from the line of Florent Laroche.

I would have 2 questions. Maybe the first one, a follow-up question on data centers and maybe the Slide 35. So you have provided an expectation in terms of revenue for the next 3 years. So in which way this is very accurate or in which way maybe you could be able to improve the expected revenues in the coming months. So that would be my first question.

And my second question would be on logistics. So we can see that your occupancy rate can be very high, sometimes at 99% and come back lower at 96% today. So have you any major lease that would come to end shortly and for which you could expect departure of tenants?

Okay. Well, regarding the question about logistics, the reason why we went down from 99% to 96% was due to the departure of a big client, GXO, former XPO in Cabanillas at 47,000 square meters, which is, of course, it is a big shed. It's a very significant shed. So of course, now what we are doing is, first, waiting for the effective exit of the client, which will still take some time to clear up completely the shed. Then we will take possession. Then, of course, we will repair in case there are little damages or things that need to be looked after, and then we will start the commercialization.

So for the moment, it's business as usual. I mean some big leases that can depart in the coming months, we have 1 or 2 negotiations identified, but it's part of our, let's say, portfolio -- the usual portfolio management. I mean we don't see anything which is noteworthy that requires calling your attention.

If we can replace the GXO departure before year-end, which is not super likely that we are working on it, but it's not easy. Then the occupancy, as commented by Ines will go to the region of 98%. But if we cannot replace, the occupancy will stay flat at around 96% as of year-end. But probably next year, we will replace the tenant and life goes on.

And on improvement cash flow of Phase 1.

Of Phase 1? I mean, considering that we have building of Barcelona repowering already let and we have Arasur already let. The only capacity we have in order to improve that is Madrid. The only thing basically that if you want to have some hope basically of improvement is the fact that part of this capacity in Madrid will come as well not only air cooled, but also liquid cooled. And normally when liquid cool is entering into normally -- we normally charge a little bit of a high rent. But I mean, it would be pretty accurate. I mean there's no little range of movement to improve that.

And then as I said, either because of liquid cool or the part that we are not discussing this capacity we are not discussing with this client, which would be basically 9 meg of this jump of additional until the 20, on that line, of course, we are more or less forecasting that we will obtain similar rents to the one we are obtaining in the building. If somebody comes, of course, at last minute, then we have probably some sort of negotiation capacity, but we'll be pretty in line with the numbers we have shown you.

Next question comes from the line of Adam Shapton.

Just one from me, just thinking about development pipeline and funding. So you obviously raised equity a good way below where the share price is today. How are you thinking about funding the remaining data center CapEx over time in terms of the mix between equity and debt, let's say? And also just wondering if you've taken any lessons from what Equinix has experienced with the public market in its own funding of its pipeline.

Okay. Well, look, for the moment, our preoccupation is basically concentrated in debt. Because we need to raise a significant amount of debt over the coming 24 months to continue funding our CapEx effort. And we have, in principle, no need for equity. I mean being completely frank and open, I believe we are -- we'll have our tank full until at least second semester end of '27. So we shouldn't be needing equity until then.

There are -- the recent things that we have seen with Equinix, there is very little similarity between Equinix, which is a very big company and a very serious company. And us, we are an absolute beginners. A little nuance, a little difference is also the business in which they are, which is they are more colocation. We are more hyperscale and that being hyperscale allows us to reduce a little bit the lag between spending the CapEx and obtaining some returns and an impact on our earnings.

More notably, we are now working from a research and development standpoint in a new technology that could come to market at the end of '27, beginning of '28 that will allow us to be even more modular in the way we construct our data centers in order to fine-tune even better the time lag between spending and obtaining returns because with traditional construction, of course, we build, we equip and there is always relatively reduced or more significant, I mean, compared to the new construction technique time lag between spending and obtaining the returns. We with the help of endeavor, we are working on a new way to construct that will allow us to obtain a little cost efficiency, which is very much welcome, plus particularly more accuracy in the way we spend.

What can I say? I mean, of course, in retrospective terms, I feel sorry for having raised money at [ 10 ], that what could I do? I mean, at the time, that was my only option was basically raise money in a market exercise at the prevailing -- at the then prevailing market price because some of -- we had CapEx commitments that were about to be ordered. And our main 2 shareholders were not very much in favor of incorporating a big shareholder or a new big shareholder into the company in one shot. They prefer to do a market exercise.

So we raised the equity at the price we could. Through performance -- underlying performance of the company, now we have closed a little bit further the gap between our stock price and our NTA per share. As you can imagine, I feel only half happy that our NTA is running so fast because although, of course, I love the value recognition that this implies and the fact that we are working in your favor as shareholders that, that increases again a little bit our -- the gap between stock price and NTA per share.

So our endeavor now, our obsession is to try to continue closing the gap between stock price and NTA per share because that opens -- that would open a brand-new world in terms of options to finance our continued CapEx like, for example, convertibles. Convertibles these days are couponing very, very low and are paying very significant premiums upon conversion that paradoxically enough, the premium and the coupon do not vary a lot between being trading at minus 30% to NTA and being trading at minus 10% or at NTA spot. So of course, the closer we can come to NTA, the more options we will have in terms of raising additional equity if and when the situation comes.

One important piece of information is that we have been now advised by our 2 main shareholders that they will support capital raising or further capital raising exercise in their pro rata share. So that is always very, very important because that gives you a very significant support when you go to market. When you go to open market, if you have 33%, 34% of your placement already secured that gives, of course, a lot of confidence to the market.

And if you look in retrospective to the capital raising exercise we did last year, at the end of the day, we placed 84.5% of the capital increase with existing shareholders. So that, of course, allay the fears a lot of dilution, more dilution, less dilution because at the end, the same -- the people who is buying your stock are the same that are already your shareholders. I mean the new shareholders that you bring into the book are very, very minimal, and in fact, in many cases, people that were already shareholders a number of months ago, et cetera.

So this is what I can tell you. I mean, of course, I know what has happened with Equinix. I take note of it. Anyway, I wish I was Equinix. I mean, Equinix is a monster company. We are no fucking body in the world, and we are just starting. And despite the -- what has happened, I would exchange my position for their position any day of the year because they are an incredible company that can fund as much CapEx as they want.

Next question comes from the line of [ Veronique Meertens ].

Maybe first one question on Phase 2. You mentioned that you upped Portugal on the back of probably leaving less funds due to the higher valuation gain. What's holding you back on not fully restoring the full megawatts? Is that purely funding?

And a follow-up question on that is that what kind of development gains do you now still take into account for Phase 2?

That's a very interesting question. And the very simple explanation, Veronique, is that we didn't dare. We didn't dare. I mean we have construction license for the 5 buildings, and we could develop the 180 megawatts in one go. But we only raised 36 megawatts because otherwise, we will be stretching too much our financial capacity.

So if we were rich, if we were Equinix, we could do the 180 megawatts in Lisbon in one go, which, of course, would bring to the surface very significant value because that land was acquired many, many years ago. All the value was attributed to the logistic land plots. So the residual value for that land in our books is very close to 0. So if we were to reappraise all that land now with power, of course, we would obtain a very interesting value appreciation in that project. But we want to be prudent.

I mean, we are new kids in the block. We have to be very, very prudent in what we do. This is why we decided to do all Phase 1 with our own self-funding capacities. We only dare to raise money in the market when we saw that we were meeting commercial success in the market, sufficient commercial success to predict a successful commercialization of Phase 2. But we have always tried to reduce the number of construction sites. I mean it will be very cool on our side to tell you that we are opening 20 data centers in Spain in every possible province or region and another 20 across Europe, that will be very cool, but not very realistic because then you need to send construction managers, procurement managers, a lot of staffing to all those data centers is not easy. So we have decided to be relatively concentrated in very few construction sites. And we want to keep that relatively prudent stance.

If by any chance, imagine we are awarded the European Union gigafactory status, then it's a different thing because with the advancements and the grants awarded by the European Union, we can realistically think about building the whole ship because that extra money, of course, is a very welcome help to our financial stance. But this is what I can tell you. We did it out of prudency.

Maybe one question. Did I understand correctly that you get clarity on that EU part before the end of the year?

In principle, yes, although with the public clerks, you never know. I mean, in principle, by the end of October, we should firm up the proposal from the consortia. And then the decision should be taken towards year-end. End of December, in principle is the date in which the European Union has decided to meet and take the decisions regarding the location of the 5 gigafactories.

And then one question on logistics. You're also working obviously on your pipeline. There's still some pre-letting to do. Can you elaborate a bit on how your discussions in terms of pre-lets are going and how the appetite is in the market for these logistics assets at the moment?

Well, the part which is what keeps us more occupied at present is Valencia. In Valencia, conversations are going well. I mean it's a city and it's a region which is now experiencing very significant strength and industrial activity. So we are happy with what we see there. Then in San Fernando III and Azuqueca, we are significantly pre-let and its mainly Lisbon Park fully pre-let. Sevilla ZAL is 8,000 speculative that there is only 2 little modules. I mean, we believe that we will be okay. And then at the end is Cabanillas Park II, which is, we are entertaining conversations for a 25,000 square meter shed in there out of the 58,000.

So, for the moment, business as usual. I mean, I know the reason for your question because elsewhere in Europe, logistics is starting to cool off a little bit. For the moment, we don't see that in the market. And if that happens, of course, we will be happy to report that this is why we are pretty much concentrated in killing of our landbank before the tide turns. So this is what keeps us busy at present.

Next and last question comes from the line of Stephanie Dossmann.

Actually, I have a couple of them. Maybe the first one is a follow-up on the valuation of data centers. It's a bit tricky to understand how it's -- how the appraisers approach it. So just to clarify, could you maybe give a bit of breakdown of how much is the value taking into account in the -- so on the GAV currently related to the land and construction and how much is equipment? As I understand that you start to revalue the land when you start the work and so on. But could you give a bit more of what pace they recognize the value of a typical development and -- and what is included currently in the 780 -- sorry EUR 720 million?

And the second one would be, you mentioned disposal program all over the plan. So how much would you target to sell in total and maybe next year, for instance, please?

So I'll take the valuation one. Again, just to remind you how methodology operators use for data centers, it's a 10-year DCF. So basically, what they take into account is the cash flow, the estimated cash flow before now for Phase 1 is the contract, okay? So that has moved, obviously, those cash flows to a sooner time, which derives in a higher valuation. So they take this 10-year DCF. They use to calculate an exit value, they use a cap rate.

Again, the ranges that we provided you with are also in the accounts. It's still a range. They don't value yet Madrid the same as they are valuing Barcelona or Bilbao. Remember, we are in a ramp-up mode in Phase 1. And so for that exit value, they discount all those cash flows with a discount rate again, they use a range.

And as Ismael was mentioning, for the operating ones, so the 3 data centers that we already have in operations, one providing rents from January 1, which is Barcelona. The one in Bilbao that will be providing rents at the 4Q of this year and then Madrid, which is the latter. The values are different. They're using different discount rates, but that's exactly what they're doing.

So for the operating data centers, still value to be captured, as Fran mentioned before. Obviously, as the commercialization stage in Madrid comes, they will be using different discount rates, we hope because obviously, once you've derisked completely an operating asset, it makes no sense to be using discount rates that are not market prevailing rents, let's put it that way. So that's for the operating side.

And then for the work in progress side, which, again, before it was not valued, we've always maintained a very, very prudent approach to valuing work in progress. So for anything that is already under construction, and obviously, your -- something is in under construction because it has a license. Otherwise, you cannot start building. So whenever anything is already under construction, then the appraisers come and do give a value for that particular site.

Now they don't do a valuation as if this was already fully done and then they did fund the CapEx, so on and so forth. They just say in this land that before was at cost, it has a higher value because it has power, it has license and you're already starting with all of this. So they do provide you with a value. Now is it a big value that they provide you with? No. It has a longer lease -- longer time period. In the DCF, the cash flows are much -- they're delayed within the cash flow statement, if you wish, like the line.

And so, again, Fran mentioned about this, the exit value is one thing, but even the cash flow that you will be receiving once you finished with this development is not expected for the near-term. And so all that cash flow put it in the future, discounted at a higher discount rate, much higher discount rate to today brings you obviously higher value than what you have in books, but still negligible, I would say, compared to what you are generating in an operating asset, okay?

So this is a bifurcation of valuation, and that's why we are providing you, and this is in the executive summary, the valuation table, you have the value for the operating one, EUR 719 million, and then you have the value for what we call data center with a land, again, land at cost with an appraised value.

Regarding disposals, Stephanie, in 2025, we had an internal objective of reaching around EUR 110 million to EUR 120 million more or less, and it will be done. And then for 2026, our objective was a little higher, I mean, EUR 120 million plus, and we believe we are also going to be there comfortably. I mean, because of the -- what we have already signed and what now is in PV or in advanced negotiations, I believe we will be there.

I don't have yet a lot of visibility on 2027. But I mean you can rest assured, I mean, we are no longer selling low-value kind of things or empty buildings. We are now selling things which are a good one. And we will make sure that we obtain the funding needed in order to comply with our capital increase plus internal capital recycling objectives towards funding the data center expansion and delaying as much as possible capital raising exercises.

There is an additional question coming from the line of Eleanor Frew.

A quick one from me. Thinking about next year's FFO per share, you previously said you thought that 2026 will be positive compared to '25, but relatively flattish. Is that still true? Or is the strong performance so far this year giving you more confidence next year will bring good growth too?

I think that guidance we provided in February, right?

The guidance for this year and next.

So the guidance for this year has been revised [indiscernible] for next year, we --

A little bit, but it, I mean --

We will provide guidance in February.

We will provide guidance in due course next year. But Eleanor for -- in all frankness, next year is going to be relatively flattish. I mean, we will do whatever we can in order to improve it, but it's going to be relatively flattish because the reality is that we don't start seeing a jump in the income from data centers Phase 1 until 2027 because in 2027, we will have 2 tailwinds that will be absolutely differential, which is full year of the new logistics development, which is another -- will add another EUR 17 million, EUR 18 million to the cash flow of the company. And then full cash flow from data centers that will jump from 60 million to 90 million, so another EUR 30 million and no significant increases in cost.

So that will be the beginning of the good thing because some of Phase 2 will also be kicking in. Particularly if we are lucky with the commercialization of Bilbao 2, we could also kick in a little bit of cash flow in '27. And then, of course, the party starts in '28, '29 when we start reaping the benefits of Phase 2, which is the really game changer, the real game changer for the company. The volume that Phase 2 will bring of additional rent to the company that will, of course, make a big difference in terms of cash flow per share and DPS.

Thank you, everyone. So the IR team will remain at your disposal for any further clarifications that you may need. And in the meantime, enjoy the summertime. Thank you.