Hello, and welcome to the Cofinimmo Full Year 2023 Results Call. My name is Laura, and I will be your coordinator for today's event. Please note this call is being recorded, and for duration of the call, your lines will be in listen only; however, you’ll have the opportunity to ask question at the end of the call. [Operator Instructions] I will now hand you over to your host, Jean-Pierre Hanin, Chief Executive Officer, to begin today's conference. Thank you.

Thank you, Laura. Good morning, ladies and gentlemen, and thank you for being with us for the presentation of Cofinimmo 2023 full year results. My fellow colleagues are with me in this conference, you know all of them, Jean Kotarakos, CFO; Yeliz Bicici, COO, Offices & Real Estate Development; Sebastien Berden, COO Healthcare; Francoise Roels, Secretary General. I propose to go rapidly through the presentation so that we have enough time to answer to your questions. Going to Slide number 3, let's start, obviously, with the highlight of the past year. As you know, Cofinimmo's portfolio is in an accelerated transformation since 2018. Today, we have reached a new milestone in this 40 years' history of Cofinimmo. Healthcare real estate now represents 75% of the group's portfolio. The 2023 results are solid. The net result from core activities - group share stands at €241 million, an increase of 8.6% compared to the previous year. The net result, Cofinimmo group share stands at minus €55 million. This is due to a noncash change in fair value and the impairment of the last part of goodwill. The gross dividend for the 2023 financial year is confirmed at €6.20 per share. In a quite volatile and challenging macroeconomic context, Cofinimmo reached last year the net zero investment objective that had been set for 2023. Let me remind you that in a market that was almost at standstill, we have divested for €303 million in line with or higher than the latest fair value. We also invested €302 million excluding contribution in kind to an extra €36 million, mainly in healthcare real estate. All of this had a neutral impact on debt-to-asset ratio. On the ESG side, we continued to be green leader. In February, we had already been included in the Bel ESG Index by Euronext. In April, Cofinimmo has been listed as the only Belgian property company in the Financial Times 500 Europe Climate Leaders. We've also got several new ESG labels, BREEAM and CO2 Neutral certification, as well as the Great Place to Work label. We've also shown resilient operational performance. Gross rental revenue are up 8.5% compared to 2022 and still 5.5% positive on a like-for-like basis. The occupancy rate stays high at 98.5%, and the residual lease length stands at 13 years. Last but not least, we managed efficiently our financial structure. This means that our interest rate risk is fully hedged at the year-end as part of the long-term interest hedging policy. Our average cost of debt stays at an impressive 1.4%. Our debt-to-asset ratio stands at 43.8%. And our headroom on committed credit line is close to €1 billion. The Company profile and strategy is well known, so I would suggest that we skip Slides 4 to 7 and I'm now going to Slide number 8, which is also well known to you. It illustrates the transformation of the portfolio towards health care. And you see that since 2018, healthcare real estate grew from 45% to 75% in our portfolio. In the same time, the office segment went from 38% to 18%. And the distribution network segment was reduced by more than half. Slide number 9, as you know, we own property in nine European countries. And at the end of last year, 50% of Cofinimmo's total portfolio is now located outside of Belgium. Coming back on Slide number 10 on the net zero investment for 2023, which we successfully realized. On the right side bar chart, you see the total of realized divestments amounting to €303 million, mostly realized in the offices segment. This shows that the piece-by-piece selling strategy was the right one. On the healthcare acquisition side, on the left bar chart, we have done for €302 million of investment and mostly in the healthcare segment over the year 2023, in line with the outlook and also contributing significantly toward the achievement of our ESG goals. Slide number 11 summarize for you the ongoing portfolio transformation since 2018. Since 2005, net divestment in offices are at €858 million. Investment in healthcare since 2005 overcomes the €4.5 billion. In '23, we have also completed the disposal of Cofinimur I in the distribution network portfolio. That means that we sold the mass insurance agency we had in France with a good end result. On Slide number 12, you can witness our accelerated portfolio growth since 2018, on average, 11% per year while in the meantime we kept the debt-to-asset ratio fairly stable. Slide number 13, you see Cofinimmo's market cap was approximately €2.3 billion end December and is now around more or less the same level. The daily liquidity remains sound. On Slide 15 to 19, you see that on sustainability, we reinforce our effort. Today Cofinimmo is seen as a very credible player by all our stakeholders. Let me give you some examples. Early 2023, Cofinimmo was included in a new Bel ESG index launched by Euronext. And on the ESG financing side, we have been added to the top SBTi 1.5-degree ESG bond issuer by Euronext. SBTi being an acronym, as you know, for Science Based Target initiatives. On top of that, Cofinimmo is part of the Financial Times list of 500 Europe Climate Leaders. And among the eight Belgium company that are part of that ranking, we are the only real estate company. Slide 17, our portfolio energy intensity was reduced to 142 kilowatt-hour per square meter in 2023. This is quite remarkable and set us well on track to reach the 130 kilowatt-hour per square meter on our project 30^3 targeting 2030. Last but not least, on Slide 18 and 19, you can see all our ESG benchmark and awards. We have also been granted several new BREEAM certificate. And in the HR field, we obtained a Great Place to Work certification for Belgium and Germany. Let's talk now about the property portfolio. As you see on Slide 21, the occupancy rates remained high at 98.5%. You also see on this slide the top 10 list of our tenants. So let's move to Slide 22 where you see the overall weighted average residual lease term remained remarkable at 13 years. It's even at 15 years for healthcare. Compared to '22, I'm on Slide number 23, yield are only slightly expanded at 5.8% gross and 5.5% net. Overall, our average net yield stayed well above 5%. I will now give the floor to Sebastien Berden, our COO Healthcare. He will guide you through the highlights of the healthcare segment.

Thank you, Jean-Pierre, and good morning to all of you. As you know, our mission is to consolidate the leadership position in the European health care space. And we do this by growing our presence geographically, but also across health care segments. I'm sure you remember Slide 25, which presents our geographical presence. As you can observe, our portfolio covers nine countries, but it also encompasses different type of health care assets. Although obviously nursing homes and care homes represent the majority of our assets, we have developed over the years a significant presence in cure and hospital care, primary care and even owned sports and wellness centers. An illustration of this strategy is our acquisition last year of an additional stake, giving us the controlling majority in the real estate vehicle of the French Red Cross. This vehicle owns six hospitals in France, which are operated by the French Cross and we, therefore, increased our presence in the two segments last year. Despite the headwinds, we maintained our investment activity in high-quality healthcare real estate for approximately €250 million. These investments arose mainly from the execution of our running development projects. The fair value of our health care portfolio amounts now to €4.7 billion and represents 3/4 of Cofinimmo's portfolio. We own 316 sites for almost 1.9 million square meters. Allow me now to present an analysis Cofinimmo is working on for months and which we hope will give you a better insight on how our operators are performing in the field. As many of you recall, Cofinimmo took care to collect data about the operations in its buildings since the very first acquisition in the health care market. Health care operators share key performance indicators with us like occupancy rates, which are then consolidated and compiled into comprehensive statistics. Moreover, we track market data when and wherever available. We have been working for months on producing a synthetic overview of these indicators, and the result is presented in the table you see on Slide 27. In this table, the first block presents the market data. This is data that reflects how the whole market is performing in each country and comes from various sources, including public authorities, sector and parastatal organization, broker reports and internal business intelligence. Bringing this data together in a harmonized and comprehensive and coherent statistic has been a hefty task. To illustrate these points, we highlight that authorities across Europe don't always use the same methods to monitor occupancy. Moreover, for Germany, for instance, Yeliz was not able to retrieve a statistic every year. And for Italy, we were not able to find any comprehensive statistic. The second block of the table, the Cofinimmo relevant portfolio, represents the occupancy rates we compound for our portfolio. Data from operators, input from specialist health care consultants and observations made by Cofinimmo on the field are compiled throughout the year. This data is then validated during the summer of the following year. Keep in mind, therefore, that the data presented for 2023 is still a preliminary estimate that will be confirmed during the summer. Last block finally gives you an insight on the quality of the figures provided. The underlying occupancy rate apply to the majority of care and cure centers, which accounted for nearly 95% of Cofinimmo's health care properties at the end of 2022. For these relevant assets -- or for the relevant assets in the countries and operators for which Cofinimmo was able to collect and use the data, you can see that the underlying occupancy rates reached 84% or more at the end of 2022. This figure represents a significant improvement compared to 2021 level, which was still partly affected by COVID-19. For 2023, Cofinimmo expects most countries to be above 90% with likely Germany still being below this level. Cofinimmo would like to take this opportunity to thank again its operators for their continued efforts over the last few years, which have been often challenging. We insist on the fact that reporting -- that are reporting efforts would be simplified if all owners harmonize their reporting requirements. Cofinimmo intends to work in this direction in order to establish an industry standard. Slide 28 and 30 present a recap of all acquisitions we've made in 2023 and some post-balance sheet events of early 2024. I suggest we don't go through all of them, but would like to highlight Slide 31 in which we also highlight the divestments that we realized in 2023. We sold for nearly -- or for more than €40 million over the course of 2023 and we did this at favorable conditions. So you see that we also keep a close eye on our existing health care portfolio and that we carry out asset rotation in this segment, too. It is now time to hand over to my colleague, Yeliz, who will highlight some other achievements.

Thank you, Sebastien, and hello, everyone. We can now move on to Slide 33 for the breakdown of our distribution networks, consisting almost only of the Pubstone portfolio. The segment represents at end of December 2023 a fair value of approximately €500 million, which covers 309,000 square meters and counts approximately 850 sites, almost exclusively from Pubstone. For this portfolio, I remind you that we have a long-term contract with AB InBev, both in Belgium as in the Netherlands. I'm on Slide 34 now. In Q4 '23, we completed the divestment of the historic portfolio, Cofinimur I, composed of the insurance agencies of French insurer, MAAF. This means that in a little bit more than two years, we sold 266 assets, representing a total fair value of approximately €110 million, quite a big achievement. Let's now talk about the office segment as of Slide 36. The fair value of the office segment represents €1.1 billion at '23, consisting of 41 sites for approximately 330,000 square meters. On Slide 37, you can see on the map and the bar chart that our aim is to create value through capital recycling. We keep the largest footprint within the CBD, which accounts for 76% of Cofinimmo offices portfolio in Brussels. On Slide 38, you see the deal summary of 2023 in chronological order. Last year, we have been speeding up the divestments in the decentralized and peripheral regions as well as in the CBD for some older buildings that we divested for ESG reasons. In Q4 '23, we closed four divestments, Stationsstraat and Mechelen, Park Hill in periphery, Herrmann-Debroux 44 and Everegreen in the decentralized area. I will now hand over to Jean Kotarakos, our CFO, to drive you through the financial results.

Thank you, Yeliz, and good morning, everyone. For the overall portfolio, we can see on Slide 40 that the gross rental revenues grew 8.5% year-on-year. This represents a like-for-like rental growth of 5.5%, mainly driven by indexation. On Slide 41, we see that the net result from core activities, the EPRA earnings, reached €241 million, higher than the outlook being the initial budget and 8% above the prior year. This gives us an EPRA EPS of €7.07 per share, higher than the outlook and also higher than the latest guidance. This is mainly due to the tax income recorded in Q4 following the confirmation of the FBI regime in the Netherlands. The EPRA EPS of €7.07 per share includes the effects of divestments and capital increases totaling €0.72 per share. Let's have a look at the other items that bring us to the IFRS net results on Slide 42. The IFRS net result amounts to minus €55 million compared to plus €483 million of last year. This change is due to the fact that the increase in the net results from core activities - group share is lower than the decrease in the fair value of investment properties and hedging instruments, sorry, which are noncash elements. Also, the net result - group share per share at end of 2023 takes into account the issues of shares in '22 and '23. Let's now have a closer look at the results of the portfolio. It amounts to minus €217 million versus plus €44 million in 2022. This includes mainly the following

firstly, the item changes in the fair value of investment properties, which is negative at end of 2023. It was minus €182 million versus plus €77 million in '22. Without the initial effect from the changes in the scope, the changes in the fair value of investment properties stand at minus 2.7% over the 2023 financial year. This comes from, firstly, minus -- sorry, minus 2.2% change in healthcare real estate, mainly due to negative revaluations in Germany, Belgium and Spain, in line with changing market conditions, tempered by positive revaluation in France resulting from the increase in the weighted average residual lease length in that country from four to eight years. We have plus 0.3% in distribution networks combined with a 5.8% decrease in value in the office segment, representing 18% of the consolidated portfolio. And this is in line with changes in market conditions in each of the subsegments in which the group is active. That was the first part. Secondly, the item other result on the portfolio is minus €25 million at end of 2023 compared to minus €40 million at the end of 2022 and comprises, in particular, the effect of changes in the scope, deferred taxes and the impairment on the last part of goodwill. So there is no goodwill anymore after the year-end '23. On page 43, you will see the balance sheet structure. The balance of divestment and investment during the year '23 is reflected in the broad stability of the total balance sheet. The total assets stand at €6.7 billion, almost 93% of it are investment properties at fair value, financed by €3.6 billion of equity and €2.9 billion of financial and non-financial debts. On Slide 44, we analyze the decrease of the debt-to-asset ratio between '22, at that time it was 45.6%; and at end of December '23, which is 43.8%. Let me explain this. On the one hand, the investments, the payment of the dividend, the mark-to-market of the properties, the consolidation of our stake in La Croix-Rouge Francais, with the French Red Cross, and other balance sheet items contributed to an increase of 7% of the debt-to-asset ratio. On the other hand, the divestment, the results from core activities, the contribution in kind, the optional dividend and the capital increase through ABB performed in October of '23 helped us to reduce our debt-to-asset ratio by almost 10%. This allowed us to end the year close to 45%, which we consider as the guide implied at Cofinimmo. On Slide 45, you can see that the EPRA NAV is somewhere between -- no, that the NAV is somewhere between €98 and €107 per share, which is somewhat lower compared to 2022. I say somewhere because, as you know, we have several kind of NAV, and so depending on the item you are interested in, the value is different. I can comment here on the evolution of the IFRS NAV between '22 and '23 where it stood at €110.74 per share versus €98.61 per share today meaning, in fact, that it decreased by approximately €12. So if we summarize, the decrease of €12 is easy. Firstly, the deduction of the dividend for minus €6 per share. Then we have the impact of the capital increases that we carried out in '23 for minus €4 per share. And then the accumulation of the result for the period, minus €2 per share rounded. And that makes the minus €12 per share. We can now have a look at the financial resources on Slide 47 that you will see that we raised the €247 million of equity as said earlier. On the debt capital markets, nothing new since January '22 when we issued with success the second sustainable benchmark bond of €500 million at conditions one can only dream of today. Important here to note that our S&P credit rating of BBB with stable outlook was confirmed in March '23 with the report released in May and then updated once again in October. As you can see on Slide 49, we concluded several important financing operations throughout the year. I can tell you that we did this at credit spreads comparable to those of the second half of '22. And as well the financing of 2024 is concerned, two loans totaling €155 million are maturing in April and December. We will hold them until maturity as they were contracted at fixed rate. On Slide 50, we see that Cofinimmo has €2.5 billion in sustainable financing under the form of several instruments, including a sustainable commercial paper program. Slide 51 gives you the highlights about our ongoing access to diversified funding sources, amongst other, relations with more than 20 leading banks. The average debt maturity amounts to four years that is shown on Page 52. At the same time, the average cost of debt has only slightly increased at 1.4% in '23 versus 1.2% at end of '22. Based on the information currently available for the budget '24, we expect our cost of debt to slightly increase to approximately 1.5% at the end of '24. You can see on Slide 53 that, as I said earlier, we still have €155 million during '24, but they will stay there until their maturity. Besides that, our debt maturities are well spread. The headroom on the committed credit lines for Cofinimmo to finance its activity is about €1 billion at year-end. On Slide 54, regarding the hedging, the group current debt is fully hedged at end of '23. Between the year '24 and '27, the hedging ratio changes from 99% to 83% with a weighted average maturity of five years, that puts us in a comfortable situation in the current interest rate environment. And I now hand over to Jean-Pierre for the highlights on our 2024 outlook.

Thank you, Jean, for this very clear explanation. So I'm on Slide 56, where you will find a breakdown of the investment budget for this year. Let's take first the divestment side on the right-hand side of the slide. Based on the achievement made in '23, we foresee again an ambitious target of €270 million of divestment. Now for the investment side, left on the slide, we estimate €320 million of investment, most of it, which is related to health care project development. This implies that the net investment based on this budget is about €50 million. It will be almost neutral on the debt-to-asset ratio based on this assumption. Now we can move directly to the Slide 58 with a brief outlook for '24. As you can see on this slide, we aim for a net result from core activities at €6.40 per share. This figure takes into account the pro rata temporary effect of the capital increase carried out in '23 for approximately €0.5 per share, but also the divestment carried out in 2023 and budgeted in '24 for approximately €0.4 per share. For your convenience, we have also added a line showing the expected denominator for the computation of the 2024 EPS. And as said earlier, we expect the debt-to-asset ratio to stay roughly at the same level, around 44%. This outlook would allow the distribution of a gross dividend for the 2024 financial year payable in '25 of €6.2 per share, subject to the net result from core activities - group share and the evolution of the debt-to-asset ratio. So in almost 30 minutes, we made it to give you enough time. Thank you for your attention, and please feel free to raise your question.

[Operator Instructions] We'll now take our first question from Frederic Renard with Kepler Cheuvreux.

Can you hear me?

Yes.

Two questions on my side. Maybe the -- well, first, thank you for the data you provided on the underlying occupancy rate and the operator. I think very interesting pieces of data. Maybe first question would be on the indexation for 2024, what are you looking at this year? And are the discussion ongoing with your operator. That's the first question.

On the indexation for 2024, Jean will refer probably to...

Yes. So as usual, Frederic, we take the latest information available. So if we look at the budget, we can say that we have an average indexation of 2% for the top line and then the figure of the top line is given in the press release, so you have the final figure.

You don't see any issue at the moment passing this inflation with your...

The indexation topic is, of course, much lower than it was a year ago because indexation, as you know, is lower. In Germany, well, you remember there is a threshold. You need to reach 10%. But once you reach it, you have again to wait that you reach it again. So I think, as you know, it took several operators by surprise. They had forgotten about this threshold, but now they know again that they can wait before the next indexation. So...

And it also includes the latest that are available, for example, the actual indexation of January, February that are known and that are quite lower than last year. So that is -- all that is included in the 2%.

Then a second question maybe on the dividend. If I look on your projected disposal for this year, €270 million, which is probably a higher yield than the average of the portfolio and for 2025 you will probably do not have any more the effect of the FBI statute, which also means we'll be paying a bit more taxes. So bottom line, I mean by -- probably in 2025, you will have to cut the dividend. So why didn't you choose to credit already now with a clean message that actually you are in a changing phase and then we reset it to more sustainable level.

Yes. Well, it's an interesting question, and you can imagine that we have given some thoughts on the DPS because of the high payout, but we have also a pipeline of projects. And based on, I would say, the consent on the market today that interest -- that central bank should start to get interest rate by, hopefully, around June this year, it means that the growth story could start again in 2025. That's at least the base case. So basically, the connection between new projects in the pipeline; divestment, which we set at €270 million, but again, if the market become more liquid, look at -- if we put together Pubstone and the offices, it represents €1.5 billion. So all of this means that the timing is still quite uncertain. And that's why looking to affirmative on one scenario versus the other, we prefer basically the communication that we have issued this morning and that the conjunction of element will enable us to continue to stabilize the Company. We see -- in the framework of our transformation, we see 2024 a year of stabilization. So we don't see a lot of opportunities coming in terms of acquisition. There are not many forced seller in the market. They are seller -- we all know that there are operators that basically would like to sell assets, but they don't have to do it specifically in 2024. Most of them have until '26 to basically do it progressively. And we have not raised dry powder, as you know, so I'm not forced to say that there are opportunities up there. I don't have to do a shift of country neither. So for us, we continue to have our tool of divestment as a priority. We have a committed pipeline that we want to manage actively. And basically, so far, I think we have walked the talk and that's the way we would like to continue. Sorry to maybe be a bit lengthy, but I think it's an important topic.

And we'll now move on to our next question from Veronique Meertens with Van Lanschot Kempen.

For me, a question on Germany. First of all, thanks for providing the data on the occupancy levels, but wondering if there are still some discussions ongoing? I saw in the press release that you mentioned that indexation for healthcare was 6.4%. And in the end, the like-for-like for healthcare was 4.8%. So I was wondering, is it coming from Germany or what explains that difference? And is there still an impact to be expected from some relettings that you had -- that had to be done in Germany?

So the first part of the question is quite easy. Yes, as it was in the previous quarter, the difference is mainly due to Germany, indeed, yes.

And the situation in Germany today and the financing part is catching up. So the main stress in Germany seems to come from staff, a serious shortage of staff, which basically also allow the Pflegeheim, as you probably know, to give instruction to limit the capacity of nursing home if all the staff is not present. And as you can imagine, with all the noise in Europe about nursing home during the last year, the regional authorities are quite vigilant. So it's -- the staff issue is still quite acute in Germany. And as I said earlier, indexation, well, once you reach 10% you have peace for a while. And since indexation right now, inflation is quite low, at least on that topic it's on the safe side.

Okay. Clear. So just to -- for your portfolio itself, there is currently no discussions ongoing or tenants that still need to be replaced?

We have no knowledge as we speak of operators that would be on imminent bankruptcies or the like.

And we'll now take our next question from Francesca Ferragina with ING.

First of all, complements for the efforts on the results obtained on disposals. I have a question on disposal, will the disposals that you target for 2024 will be mainly related to the office portfolio? Or are you hoping also to sell certain healthcare assets? And how do you feel is the mood among buyers at the moment for these assets? And the second question is still on Germany. I see overall limited write-off in the portfolio with the exception of Germany. What are your expectations going forward?

So on the disposal, Cofinimmo has a management policy of having an asset rotation in all segments. Now considering the fact that we are also transforming ourselves, the segment where we have the highest asset rotation is offices as the figure demonstrates clearly. We have already disposed some healthcare assets in '23. I know that many people are reluctant to divest assets in their core segment because they are scared to death that they would get a low price that would have a spillover effect on the rest of the portfolio. I must say we are not in that part -- in that category. Our divestment are based on different criteria, and of course, probably one very important one is the management of our debt-to-asset ratio meaning that there is no taboo in our divestment. Buying and selling is our core competence. And of course, we know what we are doing it, and we know where to do it. So there will be a mix of several segments this year and we are not saying, look, out of the €270 million, 80% should be offices and 20% should be healthcare. It's basically based on a pure management policy. We have a long-term program of acquisition and divestment, and sometimes we accelerate a bit the program. And also we are quite disciplined about what we want to get. So the most important is not being a forced seller, and we are not and I think everybody understood it on the market and that's why we were able to catch more than decent value in the disposals so far. As far as basically Germany and the outlook, well, the topic in Germany is a hot topic, not only in Germany, but I think they are well ahead. And I think something I have already gave some hints in the past, the future of Germany is for me new build and health care campus meaning a Pflegeheim, a nursing home, which is surrounded by assisted living. Why? Because assisted living are not regulated so you don't have to have a minimum number of staff during the night, during the day, per square meter, per room or a number of residents. All type of regulation exists. And basically, this is practically the only way to catch the shortage of staff, which is there. And you know the shortage of staff is not only in health care, in many other industry. So it's only by coming with innovative concepts that are coping with the staff, and I mean by that, qualified nursing home -- nurses, sorry, then you can go for it, which means that it will go progressively because, of course, we are not in a good time to build new assets because construction costs are still a bit high. There was the delay over the last year. So it will go progressively up, but not overnight.

And we will now take our next question from Steven Boumans with ABN AMRO.

I hope you can hear me now?

Not very. Sorry, if you can speak loudly in the mic because we barely hear you.

Okay. First is on yields. Could you please let me know what in your view will be attractive net yields for prime nursing home assets in your top five countries, so Belgium, Germany, France, Netherlands and Spain, if you would invest today? That's the first question.

Well, considering the level of our stock, we are not a buyer today of new nursing home. And considering also the volatility of financing and the fact that we all expect to have Central Bank decreasing the interest rates as of midyear, I don't think this is the best time to buy right now. So I cannot give you a precise answer because it's not a question that is vivid in our minds, let me put it this way.

Okay. Very clear. Then I also have a question on the balance sheet. Would you be willing to cross that 45% debt ratio temporary, let's say, to 47% in case you see more devaluations? And second to that, could you elaborate on what actions we can expect in a negative scenario if we would see more devaluations? If it would cross your favored debt ratio, what kind of actions would we see?

So our main tool is clearly, as I said, divestment to basically manage our debt-to-asset ratio. Last year, it was pretty tough because, as we said, I think, in the presentation, the market was on a standstill, so the market was dead, let me put it this way. This year, it's way -- it's still too early, but the message we get from many brokers is that they were trying last year to motivate some funds and investors to buy. And basically, those guys were even not returning the call of brokers. Since beginning of January, what we hear from brokers is that they now are speaking with investors that are winning against to review files and look at situation, which give a hint that basically the situation in terms of liquidity would be better this year than last year, which, of course, for us, would be quite interesting. In terms of -- well, a devaluation we already took and we have not hesitated to already took some devaluation last year. And let me remind also because when I open my computer in the morning and I see reports about companies, REIT companies in Germany, France, U.K., Netherlands that are announcing year-on-year devaluation of two digits, I'm thinking in my mind, gee, I hope that people remember that the Brussels market, which was always considered as a boring market in terms of yield has nothing to be compared to the market in London, Amsterdam, Hamburg or Paris where, as you will remember, yields have reached a level that were extremely low. And that's why also I think some people were not very enthusiastic about our offices portfolio because we had and we still have some assets, which were conservatively valued, meaning at high yield, and which explain also then when we sell this high-yield asset, it can also absorb the shock on some yield correction that you are seeing. So seeing -- going from 44% to 47%, for us, that's a big or long shot. Don't forget that the office scenario -- the office portfolio, sorry, amount to €1.1 billion out of the total portfolio. So not saying that healthcare will not see some -- again, some correction. But as I said, our base case is basically Central Bank move on interest rate midyear, which, of course, would mean that there should be a landing on devaluation this year. So that's why basically the divestment machine should come up as clearly the first and the preferred tool to manage it.

Okay. Clear. Maybe last follow-up, if you also consider acquisitions in kind like you did last year? Is that something relevant for '24?

Well, I think given the current level of our stock, I would say not our capacity for the time being.

And we'll now take our next question from Amal Aboulkhouatem with Degroof Petercam.

Do you hear me?

Yes.

Thank you for the presentation and thank you again for the disclosure on the occupancy in your healthcare portfolio. That's a very important step, I think, to rebuild the confidence on this asset class and I don't underestimate the amount of work it has required. So thank you. I have a few questions on the negative reversion in the portfolio. You have minus 0.4% on renegotiations. I know that offices is only a small part of your portfolio, but just can you share with us the level of negative reversion that you still hold in this portfolio?

Well, it happens that, of course, when you have some renegotiation -- but you don't have to read this negative reversion as a rule of thumb that you can use as a benchmark. It's basically a lot of very small discussions. You know that we have many, many different sites. So it's not the result of a big negotiation with one big operator. It's the accumulation of tiny adjustments here and there. And not, I would say -- we are not reading it as a benchmark, which basically announced something for the rest of the portfolio or for the future. It's more, case-by-case ad hoc adjustment.

Okay, okay. So not something structural on the portfolio...

No, no, no. There have always been some when you look at the past in certain instance, but it's purely locally to be explained and not as a horizontal trend.

Okay. And in the context of strong indexation recently, is that something that has been increasing in your portfolio? Or given the fact that you are more exposed to CBD perhaps, you managed to...

No, no, no, because we don't have a lot of renewals that are coming in this period. And no, it's -- the indexation was all over the portfolio. So it's not something you can directly linked.

Okay, okay. Very clear. Another question on the portfolio revaluation, especially on the U.K., I'm a bit puzzled because if I'm correct, the revaluation was positive as of nine months and it turned negative end of the year. Is there anything specific there or...

Then you are catching us. Let me -- can you say it again with -- so when was it positive and it become negative? In end of September was positive, is that what you were saying?

Yes. Am I correct or can I check with the...

U.K. Yes, in U.K.

U.K. But that's a mix of indexation -- the timing of indexation and the exchange rates also if you look at U.K. specifically. Sorry, but we did not hear the U.K. part of the question.

Okay. Perfect. Then the next question on the scrip dividend, perhaps it's too early. But do you intend to propose a scrip dividend for 2024?

We -- I will answer the same way I answer every year is that the opportunity to do it, of course, depends of several factors, including the level of the stock. And we decided really on a very transparent basis a few days before the announcement based on the latest information. So it's not something which is automatic, clearly not. And I don't think that it's something, which is budgeted neither. So it's always something, which has to be assessed based on all the other information that are prevailing at that time, i.e., in May.

Okay, okay. Very clear. I totally hear that you are very conservative in terms of acquisitions. But just to come back on the development pipeline, so if I recall, last call, you mentioned that there was not a lot of room for contract renegotiation with the developers. But are the rents indexed for the project ongoing?

Well, some of them -- it's really again a case by case. The start of the indexation may depend from one project to the other. So sometimes, it starts earlier than later, but it's part of the negotiation, whether it's forward funding or not. And all of this is taken -- all the economic elements including the funding -- the financing of the project are mixed together basically to decide. So it's a fixed price, which is for us, especially through the storm of last year and still a bit this year, which is the most important part. And then the rent is adjusted if costs appear to be higher and if, of course, the effort rate allow for an adjustment. So that's basically the framework we follow for our pipeline.

Okay. Then you must then conclude that the yield on cost on your development pipeline has not moved, and we are still around 5.5%?

Yes, 5%, yes.

[Operator Instructions] We'll now move on to our next question from Lynn Hautekeete with KBC Securities.

I have three questions. First of all, I'd like to get some flavor on the CBD office rental market. So I know that you've delivered the Montoyer 10 building in the first quarter. And I was wondering how the ramp-up is going of the leases and then...

The rent is going -- actually is increasing in Brussels. It's been an excellent year for that. Just a little reminder, there are not really a lot of Grade A buildings in Brussels CBD, which is maybe different compared to other capitals. And we -- actually, last year, the prime rent -- or for several years, the prime rent was around €340 per square meter in Brussels. And we have been able to sign a lease for €375 per square meter, which is quite a big increase in terms of prime rents.

Does it answer your question?

Yes, yes. I've seen that the lease was signed with JLL so I think you're referring to that one.

Yes, yes. Yes.

Okay. And then the second question is on the fair value corrections again. I saw that the fair value corrections accelerated in the fourth quarter. Again, U.K. has been answered, but I'm looking more at Spain. Spain also accelerated. Has that anything to do with the exposure to DomusVi?

No, no. Not at all. Not at all. Basically, we have been quite volunteering in Q4 not to have endless discussion and risks to basically made their adjustments where necessary. You remember that in Spain, we have also a lot of new buildings and it's clear that new buildings, new builds, in the past have been more expensive than buying all the standing assets. And of course, with the current environment, you have to do correction here and there. But there is no -- there is more market correction view on that and no specific link to an operator.

Okay. So there are no negotiations with DomusVi at the moment on rents?

No. There are always a discussion about, to answer, with all operators. What I'm saying is that we are not downgrading the valuation of our DomusVi assets across the board. That's certainly not the case.

Great. Perfect. And then the last one, regarding the outlook of €6.4, is there any one-off in that outlook related to the FBI or any other one-offs that we need to take into consideration?

So there is no one-off FBI because one-off FBI has already been taken into account. And so just in '24, we have the FBI status and that's it. So there is usually no tax in the Netherlands, and that's it.

And we'll now take our next question from Edoardo Gili with Green Street.

Few questions for me, if I may. The first one is on your North Rhine-Westphalia development project. Obviously, we know about the challenges and hiring staff in Germany. And I just wanted to get a sense of how do you see that development stabilizing over the medium term? So when do you think you're going to reach 90%, 95% occupancy in the face of low staff-to-resident ratios and cost increases.

Yes. Well, you remember that I said a few minutes ago that we see the future in Germany going for health care campuses, which is basically nursing homes with daycarecenters, assisted living around and so on. This is exactly what or -- [Tulip], this is the name we call for all of this project here, is basically -- so there is no question about are we building old-fashioned health care asset, on the contrary. And when we see the ramp-up in the project that are already being delivered, the operator, Schönes Leben [ocupacio] are telling us that they are ahead of their business plan because of this combination of assisted living and Pflegeheim. So there is less personal issue in this project. That's why we consider to be the right one. And in Rhine-Westphalia is characterized also by high subsidies. And this is the reason basically why we have picked up this project. So the project still benefits from high subsidies, which, of course, make the financing more appropriate.

Understood. That's very helpful. Second question for me is, obviously, the challenge with Clariane are well documented in the media. You have a large exposure to Clariane. How do you expect that story to unfold and potentially impact your rents? And I'm thinking specifically of France, which could be a challenged market in terms of fundamentals.

Well, Clariane has announced, on the top of my head because my information dates back when they announced it, I think a capital increase of €300 million. €200 million is backed already by Credit Agricole, if I remember correctly. My expectation is that Credit Agricole or someone else getting a call from accounts will have to do it because it's probably the most efficient way to expedite the matter. So the sale of the Belgian and Netherlands perimeter, the Dutch perimeter, is something which is -- makes sense from their standpoint. If they need liquidity, this is probably the most liquid assets they have in their portfolio based on history because basically they have acquired this perimeter as a stand-alone perimeter with, I must say, a very solid management that is used also to, I would say, changing of shareholder. The rumor on the market is that the mandate to an investment bank has just been signed so it's a process that will probably take a while. What we note is basically that if they would have to sell this two portfolio to another investor, basically, the concentration that we have today on Clariane will drop from around 15% to around 8%, which we view as, in terms of diversification of our operator base, as an interesting news, let me put it this way. So for the rent, you know that the French government is behind these operators. So I think Clariane had to make this refinancing. And I have no info on how it did and why it appeared like this, but it was on the radar screen of everybody that they had this refinancing issue in '23.

Yes. Understood. The covenant quality increases, but the margins may drop. So that's what we're seeing with [indiscernible]. It feels like this could happen with Clariane as well.

Well, we have long-term rent. So -- and Clariane, these people are responsible people. So they will not sell it to an aggressive investor. And they know that they cannot ask in the current environment a crazy price neither. So I'm -- we are more looking for long-term investors in this -- for this portfolio.

Understood. And my last question is on the office portfolio and the potential divestment. So now your portfolio is -- in Brussels is mostly CBD. It's a market we think is strong fundamentally. Do you think there could be buyers for not just piecemeal, but the entirety of it or a large chunk? Hundreds of millions in one go for Brussels office at this stage?

Well, last year, there were none. So that was at least quite clear. We see that more for the second half of '24. Again, I think the fundamentals of the market are well known and quite resilient. But you need to have for -- and I think -- I don't think it's linked to offices. But for sales above €70 million, €100 million, you need to have a clear financing environment. So to have pure equity investor that would basically buy the full chunk with mostly equity, given the size of it, I think they would need to put a charge of financing in there and then it will come. So I would say, hopefully, we could start to have this kind of discussion during the second semester, which means that it's only starting in September because nothing is happening during the summer. And you know that when you talk about CBD as far as Cofinimmo is concerned, we are talking about the area of the Leopold Square, which is, of course, the prime area of the CBD because in Brussels it might be small, but you might have a bit of mix environment even in the CBD.

Understood. And maybe just a quick follow-on, on that. Just margin for office-backed real estate, what are you seeing? Are we talking 250 basis point rise or...

You mean yield?

Yes, to get financing for an office property.

Financing for a buyer that, frankly speaking, I have no clue because most of the buyers last year where equity finance. So -- and we had basically to find these buyers. So there are not a lot who basically have put external financing. Most of them started with equity and they are maybe in the process of refinancing, which could be the case. But I have really no -- I don't have any hint on that. I'm just thinking quickly. But no, no, I don't have the answer.

And we'll now take our last question from Celine Huynh at Barclays.

I've got two questions. I'm going to take them one by one, if you don't mind. The first one is about your strategy this year. So you used to guide to a debt usual investment strategy and now you're kind of saying we're going to be net investor this year. Your leverage ratio has not changed that much from last year. So I was wondering what makes you so confident to go back to being a net investor this year.

Well, I don't know whether confident is the right word. I think we are basically relying on our track record. We are listening to basically the current status. And we are managing everything, even our pipeline quite actively. So if we could sell more in 2024 because the second half appear to be a more favorable environment, we will sell more. So don't misinterpret the fact that last year, we had €302 million versus €303 million, it's a bit -- it was not foreseen to be that precise. It has been a tough environment. And I must say, we were -- we have worked crazy until the 29th of December to have the last closing. But again, we give us a target that we consider like last year's stretch in the current state of the environment. But if we can sell more, we sell more.

Okay. That sounds great. Then my second question is about the dividend. I can't help but notice that's the first time you're giving a dividend guidance conditionally. So I'm wondering if you're implying an upside or downside to this guidance?

Well, what I just said about if we can sell more, we would sell more, I think the chance -- as we speak, on the 23 of February, the chance of selling more, we don't see it today. But again, a lot could change in June. And the question was raised by one of your colleagues, what about if you find someone that is interested in much larger package of your offices portfolio, well above €100 million -- several hundred million, shall you consider it? Yes. The answer is yes. So I think it's fair to say that nobody knows how 2024 will be. Plus -- yes.

No. I was wondering because like from what I understand, from what you're telling is that if you sell more this year, there is a possibility for you to cut that dividend guidance. Is that correct?

Yes. Because, look, there is a high payout, and clearly, I think what the market is asking us is to divest, to manage our debt-to-asset ratio but also as part of the transformation of the Company. But again, the magnitude of investment -- the reason why we have not done it last year because we had a bit more spread between the EPS and DPS. But also last year, we knew that the divestment market was dead because, remember, there was no hope that Central Bank would decrease interest and so on. The environment seems to be quite different this year, so yes, this could be the case.

Okay. Then -- sorry, following up on that. And that's going back to Frederic's question earlier, why don't you cut the dividend in the first place?

Because the magnitude of divestment is unknown. And don't forget, we have €1.5 billion of non-healthcare assets, it's a lot. And whether this basically could be monetized in one, two, three tranche in one, two, three, four, five years, it's unknown. So we need a bit more clarity. I don't expect a lot of -- this year again. So I think it's more for after this year. But we want to be -- we have always been extremely transparent and so on. And sometimes when we see the discussion we have, people seem to forget that when you sell, you're also selling rents. So it's a quick reminder, nothing more.

Okay. Sorry, can I ask the last question or is that too much?

Of course.

Yes. I'm just wondering, understand Central Bank cutting base rates, what is -- what would make you go back to some kind of growth story going forward?

Well, I think that first Central Bank will do that progressively. So we are not talking about overnight and what make will put us back on the acquisition is when we can create value again. It's very simple. Now we are protected by the financing cost, as Jean explained quite clearly, that this is for several years. For the existing portfolio, we are protected. For the new one, then we will have to see what are the financing condition once the Central Bank will start this move. But that's -- I think that's for all payers. And of course, this also is linked with the evolution of our stock price. And we see the volatility. When the inflation in the U.S. is a bit worse than the expectation, you see the swing in one day in stock price and when the opposite happen, so it's very difficult to understand.

There are no questions in queue. I will now hand it back to Jean-Pierre for closing remarks. Thank you.

Well, thank you for your attention. I appreciate that it was a lot of data to digest in a couple of hours, but I think you all know Cofinimmo very well. You know us, all the team. So we appreciate to have regular contact with you. And I hope you appreciate that, yes, indeed, we try to be as transparent as possible. The data about the underlying occupation took us, like Sebastien said and I said, us, it's a large team here headed by Sebastien and Yeliz to get those data for several months. Yes, it was leaking outside, but I think it benefits on the industry. And for the rest, I think we have an ambitious target like last year, but I hope that our track record is giving us some support basically to go ahead. Thank you, and we'll be in touch.

Thank you. This concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.