[Company Representative] (MONTEA): MONTEA enters Italy and opens a new chapter in its Western European growth story. Together with Weerts Logistics Parks, we are expanding our reach with the same clear focus: strong logistics locations that create long-term value. Our expansion will unfold in two phases. First, by year-end, we will acquire a portfolio of more than EUR 314 million comprising 10 assets, eight in Italy, two in Germany. These assets will strengthen our platform, increase our portfolio by 10%, and generate income from day one. We are buying the portfolio from Weerts Logistics Parks, a trusted partner with whom we are already developing Belgium's largest logistics building for Skechers in Liège. As part of this deal, we will also increase our share in the Skechers project from 40% to 49%. Second, we will launch together a four-year development partnership in Italy. Weerts brings local teams and land.
[Company Representative] (MONTEA): MONTEA brings expertise and capital. Together, we aim to develop a pipeline that will double MONTEA's Italian footprint in the coming years. Well, for centuries, Italy has connected European industry with Mediterranean trade, making it a natural next step for MONTEA as we continue to focus on Europe's strongest logistics locations. The market fundamentals in Italy are strong, with high demand, limited qualitative offer, resulting in continued rental growth. We are entering the market from a position of strength, with Weerts as a strong partner offering local development expertise.
Els Vervaecke: The partnership with Weerts Logistics Parks shows a strong vote of confidence in MONTEA. We will issue new shares significantly above our current share price, at a price reflecting MONTEA's underlying net asset value. By becoming a significant shareholder, Weerts is not only partnering with us on growth, it is investing in MONTEA's long-term future. The issue price of the new shares sends an important signal. For us, growth must always go hand-in-hand with shareholder value. Pricing the new shares above the latest EPRA NTA supports that principle and provides a robust equity base for this transaction. It allows us to take a meaningful strategic step and acquire a prime portfolio with long-term cash flow visibility whilst preserving our financial strength for future growth.
[Company Representative] (MONTEA): For our shareholders, this creates long-term value. For our clients, it gives them a stronger partner across borders. For MONTEA, it adds scale and future growth. More reach, more opportunity. In short, real space for growth.
Jo De Wolf: Good morning, ladies and gentlemen, and thank you for joining us this morning for what I would like to call a transformational next step in MONTEA's growth story. We are entering Italy as our fifth core market with immediate scale while expanding our partnership with Weerts Logistics Parks to create a new platform for long-term growth. Before diving into this deal, let me first take a step back and put today's transaction into the context of MONTEA's growth story. Last week, as you know, we celebrated the 20th anniversary of our IPO on Euronext Brussels. We started in 2006 with a EUR 100 million portfolio in Belgium, and expanded already in 2007 into France, just one year later, along La Dorsale, Lille, Paris, Lyon, Marseille. Over the past decade, we have progressively extended that platform along Europe's key logistics corridors.
Jo De Wolf: We expanded along the Rhine-Alpine corridor into the Netherlands and Germany, while further strengthening our presence along the Atlantic corridor in France. Today, we take the next logical step in that journey. Our entry into Italy extends MONTEA's footprint further along the Rhine-Alpine corridor, the vital logistics backbone connecting ports and major economic centers across Europe, better known as the Blue Banana, while we also strengthen our presence in Germany. We enter Italy with scale from day one, adding income and experienced local development partner. Before diving into the deal, I would like to dive more into the fundamentals of the Italian market. We see a dynamic occupier demand, with take-up outpacing supply, healthy levels of vacancy, around 4%, supporting the fundamental strength and exactly the criteria we are looking for when deploying our capital into a new market.
Jo De Wolf: Consistent with the other markets along the Blue Banana, prime Italian logistics rents are increasing. For Italy, the prime rents remain below several of the major Western European markets while continuing to grow. For MONTEA, that means we are entering a market where both the occupier fundamentals and the longer-term structural opportunity are attractive. There is another important element. Italy has one of the lowest levels of modern logistics stock per capita in Europe, while planning, land availability, and economic constraints continue to limit new developments. At the same time, e-commerce penetration remains relatively low, at around 11% today, and it is expected to rise to 15% by 2030. This provides an additional structural driver for demand for modern logistics space. That combination of limited modern supply and further demand growth is exactly what we, as a developer and investor, are looking for.
Jo De Wolf: Our strategy has always been to build scale in the strongest logistics locations in Europe, and therefore, Italy is a natural extension of that strategy. Looking at the transaction we are announcing today, I would say that there are three pillars that constitute the backbone of this deal. First of all, we are acquiring a EUR 344 million portfolio. There are 10 assets, around 310,000 square meters, EUR 20 million of net rental income, and 100% occupancy or pre-letting. Six assets are already income-producing. Four of them are pre-let and will be delivered in 2027. With a WALT of 16 years and a 5.7% average net yield, the portfolio brings immediate earnings alongside exceptional long-term visibility. Geographically, there is roughly EUR 290 million portfolio in Italy that gives an attractive entry point, with immediate scale across a number of established logistics locations.
Jo De Wolf: Importantly, this is not a single asset entry into a new market. We are establishing a meaningful footprint from day one, particularly across Northern Italy's industrial heartland, giving us a strong platform for future growth. In Germany, the EUR 55 million acquisition further strengthens our market position, expanding our portfolio to 6 assets now. Next to a smaller asset in Hanover, we invest into a significant development on the airport of Leipzig, Europe's fourth-largest cargo hub. As you know, cargo hubs on airports, they have a special place in our heart at MONTEA. The acquisition also enhances our tenant diversification. We add a strong mix of global and European logistics and industrial customers. MVN is a subsidiary of MSC and becomes our largest tenant at 6.5% of our total rental, while our top 10 tenants together represent approximately 31% of that total rental.
Jo De Wolf: Even as the portfolio grows substantially, our rental income remains well-diversified across a high-quality tenant base. This slide, ladies and gentlemen, illustrates why we are so excited about this deal. On a pro forma basis, our net rental income will increase by 13%. We maintain an exceptional occupancy rate at 99.5% while increasing our WALT to over 8 years, providing strong future cash flow visibility. Importantly, the pre-let developments carry an income guarantee from the closing of the transaction until their respective lease commence date. Italy will represent 8% of the new portfolio alongside Belgium, the Netherlands, France, and Germany. As a second pillar of our partnership, we have the ambition to further develop Italy with Weerts as our strategic development partner.
Jo De Wolf: Where the standing assets provide immediate scale, income, and visibility, the strategic upside of this deal lies in what comes next, a significant development opportunity that allows us to build further on this platform. Together with Weerts, we are creating an exclusive Italian development platform through 2030, with the ambition to at least double the Italian portfolio. The partnership gives us immediate access to Weerts' local sourcing and execution capabilities, accelerating our ability to scale while we build MONTEA's own local team and development skills in Italy over time. Importantly, we retain control over when and where we allocate our capital. What makes this deal particularly attractive is that we generate a return on our capital from the moment we acquire the land and throughout the entire development period. At completion, we target at the minimum average net yield on cost of 7.5% for new projects.
Jo De Wolf: We share the development margin with Weerts on a 50/50 basis, which can be settled either in MONTEA shares at EPRA NTA or in cash. This gives us an attractive combination of earnings during construction and value creation upon delivery, while maintaining our disciplined return thresholds. As a third pillar of the deal with Weerts, we are increasing our JV participation from 40% to 49%, alongside an expansion of the development to 230,000 square meters, driven by Skechers' additional space requirements. This represents an additional EUR 39 million investment, while the income guarantee protects our returns until rent commences at the end of 2027. Simply put, we are putting more capital to work in a proven project on attractive terms and with strong income visibility. With that, I will hand over to Els to walk you through the transaction structure.
Els Vervaecke: Thank you very much, Jo. The transaction combines immediate scale in Italy, a bigger growth platform with local presence in every country, an increased participation in the Skechers joint venture, and a value-accretive equity funding. Together, these elements reinforce our Track27 outlook and establish a stronger platform to capture opportunities beyond 2027. The new shares issued to Weerts are priced at EUR 82.97, 1.3% above our latest EPRA NTA, and at a 28% premium to yesterday's close. These shares will be entitled to dividends from 2027 onwards. To make it more concrete, we are issuing equity above NTA to fund this step while welcoming Weerts as a significant new shareholder. This transaction adds earnings and increases our self-funding capacity while remaining leverage-neutral. Overall, a disciplined funding structure. We add growth, we protect our balance sheet, and we align existing and new shareholders around MONTEA's long-term value creation.
Els Vervaecke: Following closing, Weerts will become a 10% shareholder in MONTEA. Their shares are subject to a customary 12-month lockup. The transaction has the unanimous support of our board of directors and the De Pauw family, our reference shareholder. Subject to the shareholder approval at the EGM, we expect the new shares to be issued and the transaction to be closed on or around 15 December. Total transaction consideration is EUR 383 million, consisting of EUR 344 million portfolio acquisition and EUR 39 million additional investment in the Skechers JV. The settlement is split into two phases. The first settlement at closing amounts to EUR 309 million and consists of EUR 219 million of newly issued equity at EUR 82.97 per share, and EUR 19 million of net debt.
Els Vervaecke: The remainder will be settled primarily upon delivery of the pre-let assets, which will happen during 2027, and consists out of EUR 62 million of net debt and EUR 12 million of equity, potentially settled in MONTEA shares at the then applicable EPRA NTA, subject to the prevailing market conditions. This balanced funding structure allows us to execute a significant growth transaction while maintaining financial flexibility for what comes next. The transaction is leverage-neutral, with adjusted net debt to EBITDA remaining unchanged after the transaction at 7.6 times and an LTV of 40.3%. The debt component, roughly EUR 150 million, is funded through MONTEA's existing bank facilities. Moreover, we are adding a new market with immediate income generation while keeping our efficient cost structure intact, fully maintaining our target to increase our operating margin to 19% by the end of 2027.
Els Vervaecke: Turning briefly to our performance over the first nine months, we continue to deliver strong operational and financial results. EPRA EPS reached EUR 3.88, up 7% year-on-year, while like-for-like rental growth stands out at 3.2%. EPRA NTA increased by 4% to close to EUR 82 per share. Leasing activity remains particularly strong. We leased out 295,000 square meter in nine months to date, of which 185,000 square meter across the existing portfolio, supported by proactive asset management initiatives. The latter has achieved an average 11% rental uplift in line with ERVs, demonstrating our ability to capture the embedded rental growth within our portfolio. Overall, the first nine months demonstrate the strength of our underlying portfolio, with strong operational execution translated directly into earnings growth and value creation. Over to the outlook, Track27.
Els Vervaecke: When we launched Track27, we set an investment ambition of almost EUR 1.2 billion over a 4-year period. Following this transaction, we have now not only secured that ambition, we have exceeded it ahead of schedule. After closing of this transaction, the investment volume will reach EUR 1.4 billion. Track27 is all about delivering value, growing our earnings base, and building the platform required for our next stage of growth. That translates directly into our outlook. For 2026, we continue to guide to EUR 5.15 of underlying EPRA EPS, or EUR 5.23, including the 8 cents FBI recognition, together with at least 2.5% like-for-like rental growth. For 2027, we maintain our EUR 5.60 EPRA EPS guidance, which represents 9% underlying growth versus 2026, expecting 2.5% minimum like-for-like rental growth, and targeting an investment volume of EUR 150 million.
Els Vervaecke: The basis of this outlook is a target of at least 98% occupancy, adjusted net debt to EBITDA of around 8 times, an operating margin of 90% by 2027, and a maximum cost of debt of 2.8%. This latter increased slightly as a part of the higher-than-anticipated investment volume. Our near-term priority is very clear: execute what we have secured and unlock the full potential of our enlarged platform. There is already significant growth embedded in that platform. Italy adds a fifth growth market, together with an exclusive development partnership through 2030. Our larger earning base increases our self-financing capacity, while we retain development optionalities, both through the new partnership and through planning ambition in France. Beyond that embedded growth, we will continue to pursue organic growth and external opportunities selectively, always with disciplined capital allocation and portfolio optimization.
Els Vervaecke: We have built a platform, we have multiple growth levers available to us, and importantly, we have the flexibility to deploy capital where we see the most attractive yields. That leaves MONTEA very well positioned with discipline and agility well beyond 2027. Back to you, Jo.
Jo De Wolf: Thank you, Els. Let me leave you with four takeaways. First, immediate scale and immediate earnings. We are acquiring a high-quality, fully let or pre-let portfolio with exceptional income duration. Second, long-term growth. The exclusive development partnership with WLP gives us a scalable platform through 2030 while preserving our discretion over capital deployment. Third, strategic expansion. Italy becomes MONTEA's fifth core market, extending our European logistic platform into a market with compelling fundamentals. Fourth, financial discipline. We are executing the transaction on leverage-neutral terms while preserving our capacity for further growth. We have more scale, greater diversification, a larger earnings base, and more avenues for future growth than ever before. Importantly, we have the financial capacity and the discipline to convert those opportunities into sustainable shareholder value.
Jo De Wolf: But before handing the floor to Ina for the Q&A, I would sincerely like to thank both Weerts and MONTEA team for the efforts that have been made over the last months to close this deal. The smooth and the constructive way in which these discussions have unfolded gives us great enthusiasm to embark on the next chapter of MONTEA's international growth journey. Warm thank you to everyone who has been involved in the closing of this deal over the last six months. Thank you very much. Ina, the floor is yours.
Inna Maslova: Thank you, Jo. We will now open the floor to your questions. If you are joining us via webcast, please raise your hands. In case you are joining us through the dial-in option, please press pound key 5 to enter the queue, and pound key 6 if you would like to withdraw your question. Our first question comes from John Vuong at Van Lanschot Kempen. John, good morning. The floor is yours.
John Vuong: Hi, good morning. Thanks for taking my questions. For the development partnership in Italy, do you have a role for on the projects, and who decides what project to start? Just on the startup itself, how do you approach it in terms of pre-let ratio? Is it quite similar to what you are doing in the Netherlands and Belgium, for example?
Jo De Wolf: Well, we have a target yield on cost of 7.5% on these projects. That is first an important criterion. So basically, suppose market yield today, as I said, stands at 5.2%. Suppose it would be at 5.5% to make an easy calculation, and we attain a yield on cost of 7.5%, we would split the margin. So basically, MONTEA would pay 100 basis points, the 100 basis points margin of Weerts with new MONTEA shares that we would issue. So basically, we would step in at investment yield of 6.5%, which is in the criteria we also have in the other countries. Next to that, we discussed with Weerts what the minimum criteria of our investment committees are, and basically, they fully agree, and we were aligned on what an investment-grade product is. Shouldn't be too much difference between parties. So, we have the final call. We can decide.
Jo De Wolf: That is why we say the capital allocation is our decision, but we already have a framework of criteria, of KPIs we want to see in every project.
Els Vervaecke: To add on that, of course, they have the local expertise, they have the local team in place, and the idea is that we do the development together so that we will learn from them and that we, in the meantime, throughout this partnership, we establish our own team in Italy.
John Vuong: Okay, that is clear. Thank you. Looking at the overall deal itself, I understood that Weerts is not taking a board seat given the overlap in countries outside of Italy, which I fully respect. As I look at the shareholders, there is also a common shareholder between MONTEA and WLP. My question is, has there been discussions on a full-on merger, and if not, why not?
Jo De Wolf: No, that is not on the table today. We had a good, or we have been able to build a very solid relation over the Skechers deal in Liège. There was mutual trust and a good working relation. Basically, when we were discussing 6 months ago on future development and where MONTEA was going and where WLP was going, we talked about Italy, and it was clear from the start that we wanted to ring-fence this deal on the Italian portfolio. This was really an opportunity for us to step in and hit the ground running in the market, and for them to have one solid deal, and also to have a strong partnership for future growth. So it is not only selling the portfolio, but for them also having a partner who can follow in future growth. That is why we ring-fenced it on Italy.
Jo De Wolf: Of course, if there were opportunities in Germany, we were absolutely interested in acquiring them too. But basically, today, the deal is absolutely ring-fenced on Italy.
John Vuong: Okay, that is clear. Were there then discussions on expanding the partnership to Germany, given that you say you are also looking at opportunities in Germany if they have good ones there?
Jo De Wolf: No, but today, actually, we have our own team in Germany. We have our own land plots, we have our own land banks, so we are competitors in Germany. The two assets, given the fact that they were on the largest one was on the airport of Leipzig. We were very interested in acquiring it, but today, the partnership is not for Germany. It is really ring-fenced on Italy.
John Vuong: Okay, that is clear. Thank you.
Jo De Wolf: Thank you, John.
Inna Maslova: Thank you, John. Our next question comes from Steven Boumans at ABN AMRO. Steven, the floor is yours.
Steven Boumans: Hi, good morning. Thank you for taking my questions, and congrats on the deal, of course. I have two separate questions. The first, could you quantify the expected EPRA EPS accretion of the overall EUR 383 million transaction? Specifically, what would be the full-year contribution for the acquired portfolio and the increased Skechers stake, after taking into account, of course, the new shares, but also the incremental financing costs and additional operating costs that you look at?
Els Vervaecke: Thank you for your question, Steven, and good morning. From an operational perspective, we are expanding our pan-European reach for our customers, and for banks and investors, we are providing a more diversified footprint while having the development teams in place locally who can execute the development. This being said, we expect that the increased scale, the tenant quality mix, and the market diversification will allow us to have access to a lower cost of capital. That is from an operational perspective. From a more financial perspective, the transaction is EPS neutral for 2027, but let us not forget that the underlying EPS growth for 2027 is not less than 9%. So we should take that into account. Beyond 2027, the transaction is expected to be earnings accretive, and this through three steps.
Els Vervaecke: First of all, the existing portfolio is long-term indexed, and we capture full indexation on the existing portfolio. For the development pipeline, we are, as you already mentioned, targeting a net initial yield on cost on average of 7.5%, where there is a development margin split between Weerts and MONTEA. Last but not least, throughout the full development phase, we as MONTEA, we get an income. So, the developments are income-generating throughout the development phase.
Steven Boumans: Clear. Maybe one question to follow up on the cost of capital. How tangible is this? Can you say the debt margin banks already said could be a bit lower, or you expect a better credit rating or stuff like that? How should I look at that?
Els Vervaecke: Steven, I think one of the important elements in the deal as well is the financing of the development margin within the partnership for Italy, because there we essentially set the floor by paying the development margin in the upper MTA. So, if the market conditions are better at that point, it can be paid out higher. So, that implicitly also improves and benefits our cost of capital.
Steven Boumans: Okay. That is clear. Thank you. A different question, more on the Italian markets. It is very popular, many companies like yourself are growing there, but that also shows that the market developments are growing. Savills said 1.7 million new floor space is expected to complete by year-end 2027. Hence the question, do you see some risk of oversupply in certain regions, and which regions are more at risk and which are not?
Jo De Wolf: No. Personally, I don't believe in it. As in our other countries, it's very stringent, both in land availability as in permitting. So, we don't see a real risk for oversupply. As I said, growing rents, good demand, and not enough offer. This is really the kind of dynamics we like, and that's why we see net absorption, and that's why we see still continued raising rents. This is really the kind of dynamics we like in a market. So no, we don't see the risk there for an oversupply.
Steven Boumans: Okay, clear. Are there some sub-regions that are better or worse?
Jo De Wolf: Well, we're obviously looking at the northern part of Italy today. I would say Milan to Venice is really the area we are looking at today. You will see in the deal that we also have bought an asset in Bari, which is in the south, because as you know, it's not only about international logistic crossroads, it's also about local presence. Bari is an economical interesting region, so there's definitely sense to have a development there too.
Steven Boumans: Okay, clear. Thank you so much.
Jo De Wolf: Thank you, Steven.
Inna Maslova: Thanks, Steven. Our next question comes from Lynn Hautekeete at KBC Securities. Good morning, Lynn. The floor is yours.
Lynn Hautekeete: Hey, good morning, everyone, and congratulations on the deal. I had a question on the land bank in Italy. Maybe you could tell us if this is permissive and how fast can accelerate the developments? Do we have to look at it more linear, or will it more ramp up towards 2030?
Jo De Wolf: Yeah.
Lynn Hautekeete: If you could elaborate, that would be helpful.
Jo De Wolf: Thank you, Lynn, for your question. First of all, as you know, MONTEA already has a land bank of 4 million square meters, of which the largest part is a yielding land bank, a part is under option, and only a small part, EUR 200 million roughly, is a non-yielding land bank. This is, of course, the part that we want to avoid that it grows too fast. Basically, we have a deal with Weerts, and this is more common practice in Italy, that you only have to buy the land when it is permitted. So basically, we are not extending the non-yielding land bank with this deal. On the contrary, if we buy land in Italy, it will be permitted, first of all. Second, as soon as we invest EUR 1, it will be a yielding euro. So, that is also in the deal, as Els already mentioned.
Jo De Wolf: We will be remunerated for every euro we invest as from day one.
Lynn Hautekeete: Okay. Do you mind sharing the percentage of remuneration on each euro?
Jo De Wolf: Well above marginal cost of debt, dear Lynn.
Lynn Hautekeete: Clear. Then maybe second question. The deal is neutral on leverage and NTA, and I think even in the first settlement phase, it is slightly positive. But you also have your current development pipeline, so LTV right now around 40%. I think it will trend a little bit more upwards, taking into account your current development pipeline. Just wondering how you look at ERV evolution in your existing countries in the next 12 months, and if they will grow in line with inflation to maybe offset the increase in cap rates.
Jo De Wolf: As you have seen in the, because with this deal announcement, of course, the Q3 results were a bit less highlighted. But as you have seen, we have been able to increase the rents on our existing portfolio in the re-letting or renegotiation with 11% on average, so that is quite significant. We see that ERVs are still growing, as I also showed you in the map, both for the, I would say, the blue banana and everything below, so Southern Europe. We see still increasing rents for prime product, and I think that is a very important distinction we have to make in the market today. When the market is a bit more rough, you really see the distinction between the best products and secondary products. We believe that for prime products, ERVs, rent indexation, everything will continue to increase.
Lynn Hautekeete: Okay, clear. Then maybe last one, a quick one, is on your new reference shareholders. They do not get a board seat, but I was wondering if there was going to be maybe an explicit shareholder agreement or if you have a sense of to which percentage they are willing to go overall.
Jo De Wolf: Mm-hmm. I think it is important, Lynn, to mention that this, for Weerts, is not a financial transaction. It is more of a long-term conviction in the growing business. We have been able over the last years to increase our earnings per share on average by 6% every year, and you have to see this deal, in my opinion, more in a long-term conviction, a belief that we will be able to continue this growth path. So they have full trust in the board and the way we manage the company today, and that is why they did not require a board seat. It is indeed a trade-off between, do I want to keep my freedom to compete in other markets? Suppose they would have been in our board, we would have had conflicts on almost every other deal we did in other markets.
Jo De Wolf: That is what we want to avoid. I think both parties agreed very soon that it was better to keep our freedom and not to be represented in the board.
Lynn Hautekeete: Okay. On the stake question?
Jo De Wolf: Excuse me, your question on the stake was?
Lynn Hautekeete: Well, now they are going to 10%. Do you have a sense of how large they want that stake to become?
Jo De Wolf: No, not really. As said, it will be roughly between 10% and 11% from day one, with a lockup of 12 months, which gives also time to the market to absorb this deal. As we said, the margins will be paid in new shares or in cash, but as long as the share price is below NTA, it will be with new shares at NTA. So, no, there is not really a floor or a cap that has been put on it, no.
Lynn Hautekeete: Okay. Thanks so much, and congrats again.
Inna Maslova: Thanks.
Inna Maslova: Thanks. Thank you, Lynn. Our next question comes from Vivien Maquet at Degroof Petercam. Good morning. Please go ahead.
Vivien Maquet: Yes, good morning. Thanks for the presentation. There have been quite already a few questions, but coming back on the development agreement, just trying to understand a bit the details here. So, an agreement limited until 2030, if I understood correctly?
Jo De Wolf: Correct.
Vivien Maquet: How does it work? You have a right of refusal? Can they develop if you do not agree on the land? To what extent can you, at some point, develop on your own in Italy if you have a team in place who might source land in, like, 2028? Do you have limitation that you need to share your own margin with them? How does that work? That would be my first question. Thank you.
Els Vervaecke: There is a full exclusivity indeed, with a smaller carve-out for standing investments that we can do up till EUR 17 million. It is important to mention that for the developments, we identified some clear investment criteria that are in line, as you already mentioned, with our own investment criteria, and that it remains MONTEA's discretion to decide whether to do the deal together or not. So we have full control of, or we have control over our capital deployment. While the margin that will be calculated and that will be split between the two parties will be determined based on an average of two external appraiser valuations.
Jo De Wolf: On your question, Vivien Maquet, if we would decide not to do a certain deal, obviously if they believe in it, they can go for it, and they can find another investor for it, and that is clear. So we have, I would say, a right of first refusal, but of course, when it is within the criteria and we would still decide not to do it, they are free to develop it on their own, and we are not there to limit them. We are there to facilitate business. That is the role we have always had. Do not forget that over the last 20 years, a lot of the growth of MONTEA has always been via strong partnerships. Can be with developers, can be with landowners, can be with ports, airports. It has always been part of our business model. So we are not there to limit people in their development.
Jo De Wolf: On the contrary, we are there to facilitate business.
Vivien Maquet: Clear. Maybe just to make sure, if you are sourcing land on your own, let's say, three years down the line, then the land will be contributed to the JV. You will not develop on your own.
Els Vervaecke: No
Vivien Maquet: and gain the 100% development margin.
Els Vervaecke: Correct.
Els Vervaecke: Correct.
Vivien Maquet: All right. Thanks. My second question will be on the setup of the payment of the development margins in the development JV. I was wondering what this brought to the potential future ownership of Skechers, or do you see limitation to apply such principle in order not to get with too high stake in MONTEA? I suppose that it is a proof of concept issue with the development JV could be applied to have 100% ownership of Skechers when it is fully developed to buy the remaining 51%. That could be something that you could contribute new shares at the EPRA NTA, or was that not discussed at all?
Jo De Wolf: That was not part of the discussions now. Basically, we kept the conditions or the agreement we did in the JV is unchanged. The only thing we changed is the percentage from 40% to 49%, but we did not renegotiate any terms or conditions on the remaining 51%.
Vivien Maquet: Okay, thanks. That was it. Thank you.
Inna Maslova: Thank you.
Jo De Wolf: Thank you, Vivien.
Inna Maslova: Thank you, Vivien. Our next question comes from Edoardo Gili at Green Street. Good morning. Please go ahead.
Edoardo Gili: Hello. Morning, all. Two questions from me. The one, I also think you answered it, but just to make sure I got it. The impact on the G&A for 2027 of the deal, I think it would be good to know if you could quantify in terms of millions of euros, if any. That is my first question.
Els Vervaecke: The operating margin will go up slightly, so it will improve as the teams are already in place, and it is calculated within the transaction. We are not going to extend the local teams, and the team in Italy that is in place that is also included in the deal terms. There is no negative impact on the operating margin from this transaction, although we increase, of course, our portfolio by EUR 400 million.
Edoardo Gili: Understood. Secondly, in terms of the development pace in Italy, potentially, when you are thinking about first the 7.5% yield on cost, that is based on land value as of today, right? It is not at cost. When it comes to the pace, will you be accelerating that versus other countries, other geographies in Europe, or you will be simply looking at where do you get the most YOC across your different geographies and markets?
Jo De Wolf: No, exactly the second. I think it is very important to be well aware that over the last years, of course, we have been limited in capital allocation. We have to focus on retained earnings, potential development margins, potential optional dividends. The bucket is limited, and we have to focus on the market that gives us indeed the best return. We never give ambition to the market for separate markets. We look at all the opportunities together, indeed.
Edoardo Gili: Understood. Thank you.
Jo De Wolf: Thank you.
Inna Maslova: Thank you. Thanks, Edoardo Gili. We do not have any more questions in the queue, but we have quite a few coming in through the chat. The first one relates to the development partnership, and whether we have any capex committed. The second question, it has already been addressed about the 7.5% target yield on cost. It is before the margin split, so the effective one would be, as Jo explained, if it is a 5.5% exit yield, we would be at 6.5%.
Jo De Wolf: Very clear. I repeat it, there is no capex that is allocated to this development pipeline, not more than we have to the other countries. But when we express that we want to double the portfolio in the next years, when we express that ambition, we also want to realize it. Yes, we absolutely want to do it, and we really believe that we have the means to do it. No commitment, but the clear focus to do it.
Inna Maslova: Thank you, Jo. Vivien, I think you have a follow-up question also. We can unmute your line again. Go ahead.
Vivien Maquet: Yeah. Thank you. Given a bit of time, I will allow myself an additional one. Indeed, the Q3 was a bit overshadowed by the deal announcement, but just wondering if you could maybe provide us with an update on the negotiations with regard to new pre-let projects. I think that you were quite very optimistic at the Q3 conf call, so any update there? I know there was no new pre-let announcement, but a quick update is always welcome. Thanks.
Jo De Wolf: Well, I think we did two big new lettings over the last quarter, which was BSH in Tiel, a large development of 67,000 square meters. And the other one is DP World in the Port of Antwerp, which is, if my recollection is right, 55,000 square meters in the Port of Antwerp. So yeah, we continue to think roughly 110,000 square meters of new leasing, new projects that were finalized in the third quarter.
Vivien Maquet: The momentum continues also on, I would say, other lands and other locations.
Jo De Wolf: Absolutely. We see in the land bank continued interest on different locations. Absolutely. Absolutely. There is no slowdown there.
Vivien Maquet: Thanks for the answer, and thanks for taking my additional question.
Jo De Wolf: Thank you.
Inna Maslova: Thanks, Etienne. We will now get back to the questions through the chat. What is the motivation of Weerts to do this deal, and what is their expertise and track record in Italy?
Jo De Wolf: Well, I think there is a cultural and an entrepreneurial fit. I think they liked working with us. At least we liked working with them on the deal in Skechers in Liège. I think there is a mutual trust between parties to do this. Obviously, when they built this portfolio over the last years, that is because they were able to source land, to get the permits, to find the tenants. They have a very strong track record already built over the last years in Italy. They have the people in place in Milano, so we really believe that the potential is there to continue the development over the next years. Absolutely.
Inna Maslova: Perfect. The next question is about the property management and development team capabilities, about the size of the development team, and who will be doing the property management, at least initially.
Els Vervaecke: The property management will initially be done by the Weerts team. We, as soon as our team is in place, of course, taking into account a few months of overlap, can take over the property management and insource it. Of course, you should know that it is a newly built portfolio. The age of the portfolio is less than 1 year, so all the buildings are new. They are single-tenant buildings, so the property and the asset management fee or the services are rather limited to start off with. In terms of the development capabilities, that is mainly them, and it will probably continue for a longer term, because they have the expertise. They have been in Italy for several years now, and we will, of course, join them and learn from the Italian market, and in the meantime, put in place an own team with local representation.
Inna Maslova: Thank you, Els. The next question through the chat is about the new tenant mix. So, how many of the tenants are our existing tenants, and do we see additional opportunities to do business with those tenants in the Benelux and France?
Jo De Wolf: Well, one of the things I really appreciated in the partnership with Weerts is that they are able to follow some of their clients, their tenants, on an international scale. It is something where we also have the ambition to follow our clients internationally, one of the reasons why we opened this fifth country. They absolutely have the power to do so, but we see it rather in Italy itself, where they already today take MVN, as an example, on different locations. They are able to service MVN within Italy. So we mainly see this today in the Italian portfolio, but we absolutely see potential in the business model of Weerts to do follow-up business with the clients that now enter our portfolio. None of the clients that they currently have in this portfolio was already represented in our portfolio, so it is really an extension of our client database. Absolutely.
Inna Maslova: Thank you. The last question is about more general valuation yields and financing conditions that we observe in the markets.
Jo De Wolf: Maybe if I can start. I think, as I already mentioned, what you see in a market that is a bit more under tension is that there is this divide between prime and secondary assets, and a lot of the averages we see today, and when we talk about average occupancy rates, then it is really, you see this divergence between prime and secondary. So, I believe that for prime assets and prime locations, both rent levels will remain increasing and yields will remain very strong. So, it is always a trade-off between those two. Let us not forget that 100% of our leases is fully indexed, so we also capture that inflation through the indexation of our rents, which you also see in the rental increase we are able to give year on year.
Jo De Wolf: So yes, there might be some yield expansion in our sector, but I think it will be rather limited for the prime assets.
Els Vervaecke: And on the financials, the cost of debt, it will slightly increase. Of course, it is linked to the increasing interest rates where everybody is confronted with. But we will stick to our hedging strategy, where in the first 12 months of the year, we have a hedge ratio ambition or target between 90% and 100%. In the following 12 months afterwards, the forecasted hedge ratio remains between a level of 80% and 100%, and then it will come down gradually in the years after. So, what is important and what we will continue to do is to spread the trading of the hedges at different moments in time, so that we are not confronted with one single moment in time of trading and cost fixed interest rate.
Inna Maslova: Thank you.
Els Vervaecke: Thank you.
Inna Maslova: It appears we have no more questions, so Jo, over to you for concluding remarks.
Jo De Wolf: Okay. Stay in the hour. Great. Thank you. Thank you all for your very interesting question. I think if there is one message I would leave you with today, it is that MONTEA has delivered what it has set out to do under Track27, and we are coming out of that plan with a stronger business than the one we entered with. Our job now is to scale the new partnership into a meaningful pipeline of development opportunities, pursue asset management initiatives for our existing portfolio, and continue to allocate capital with discipline. In short, continue compounding value, but now from a significantly stronger platform. We are not only celebrating, Ina, this great deal today, we are also celebrating Els's birthday today. So, congratulations, dear Els. Thanks for all the great work, and I would say enjoy your day today. Thank you all for joining.
Jo De Wolf: There is a bit of cake and a bit of flowers. Thank you all for joining our call today.
Els Vervaecke: Thank you.
Jo De Wolf: Talk to you soon. Bye-bye.
Els Vervaecke: Thank you.
Inna Maslova: Thank you.
