Cofinimmo SA

XBRU:COFB

Earnings Call Transcript 2021-Q4

[Operator]

Good morning, ladies and gentlemen. Thank you for holding, and welcome to the Cofinimmo 2021 Annual Results. [Operator Instructions] I would now like to hand over the conference to Mr. Jean-Pierre Hanin. Please go ahead, sir.

[Jean-Pierre Hanin]

Thank you. Good morning, ladies and gentlemen. Thank you for dialing into this conference call and for being with us for the presentation of Cofinimmo's 2021 Full Year Financial Report. In the room around me today, my colleagues are Francoise Roels, Chief Corporate Affairs and Secretary General; Yeliz Bicici, Chief Operating Officers and Real Estate Development, Sebastien Berden, Chief Operating Officer, Healthcare; Jean Kotarakos, CFO; Jonathan Hubert, Head of Control; Hanna De Groote, Head of ESG; Maxime Goffinet, Head of Treasury; Lynn Nachtergaele, Head of Investor Relations and Philippe Etienne, Head of External Communications. Let me start on Slide 3, by saying that Cofinimmo results for 2021 are, as you noticed, substantially up with almost EUR 1 billion of investment. The net result from core activities group share stands at EUR 212 million, which is a 17% growth compared to the end of 2020. Our actual net result from core activities group shares stands at EUR 7.15 per share. The gross dividend for 2021 financial year and payable in 2022, is confirmed at EUR 6 per share, which is up compared to 2020. With almost EUR 1 billion of investment, mainly in the health care real estate, the investment activity has been unequal over 2021. And this was the case in the 9 European countries we are present, which confirms our position as one of the leading European REITs in health care. Ongoing development project represent an envelope of more than EUR 700 million to be achieved by 2024. With our current investments, our health care assets represent now EUR 3.8 billion. This accounts for 67% of the group's consolidated portfolio, which has reached EUR 5.7 billion at the end of last year. We also continue to rebalance our office segment end of October 2021, Cofinimmo announced that it has successfully carried out the contribution of its business units offices into a wholly-owned subsidiary named Cofinimmo Office SA/NV. This gives the option to open a share of the capital of the subsidiary to future investors, a process which we didn't start yet. We have made office building disposal for EUR 60 million and are now concentrated on the Brussels Central Business District. Offices represent 24% of our consolidated portfolio at what our distribution network is concerned, at the end of January 2022, we had a partial disposal of the MAAF agency in France for about EUR 55 million. In terms of financing, Cofinimmo carried out equity capital increase totally approximately EUR 565 million through a contribution in kind, optional dividend, conversion of convertible bond and accelerated book building. In January 2022, we also made use of the debt capital market by issuing a second sustainable benchmark bond of EUR 500 million. On the ESG front, we continue to be a green leader. We have been granted the Sustainable Growth Award 2021 by Euronext, rewarding the strongest sustainable growth over the last decade. We've got several new BREEAM certification for offices, but also for health care real estate. The nursing and care home in -- is the first site in the static category to receive the BREEAM excellent certification in Spain. With an energy intensity of 165-kilowatt hour per square meter, we are all well on track to achieve the reduction target on our energy intensity by 2030. Our company profile and strategy are well known by all of you, we will therefore skip -- sorry, slide 5 to 7. The chart on Slide 8 shows the dynamic of the change in the breakdown of our global portfolio per segment and a rapidly growing share of our Healthcare segment. As illustrated on Slide 9, we are now present in 9 European countries as we added 3 new geographies to our footprint in 2021. 42% of Cofinimmo's total portfolio is now located outside of Belgium. With EUR 978 million, our investment in health care, were historically high in 2021. As shown on Slide 10, we almost doubled the amount of investment compared to 2019. Since 2005, the net investment equaled more than EUR 3.7 billion, while in offices, the net divestment equal EUR 603 million. We also continue the partial disposal of our Cofinimmo 1 portfolio, which are the MAAF insurance agencies in France. On Slide 11, you can witness or accelerate portfolio growth since Q1 2018 with a compound annual growth rate of 15%, which is quite impressive. In the meantime, we kept a debt-to-asset ratio under control, around 45%, far below the legal covenant. As you know, inflation is a little bit the elephant in the room for quite some time now. I'd like to remind you that health care real estate is resilient in an inflationary environment. And this for 2 reasons. Firstly, in health care real estate, we benefit from long-term inflation lease. Secondly, the average yield of the portfolio shows a good buffer to support asset valuation in case of increase of long-term interest rates. As you know, Cofinimmo has been a pioneer in ESG since 2008. As illustrated on Slide 13 to 16, Cofinimmo received its first ISO-14001 certification as soon as 2008. Since then, we have developed many initiatives to be a front runner with a high level of transparency. Please bear in mind that Cofinimmo is one of the 20 leading listed company in Belgium, and that we do set the tone in Belgium. This was illustrated very recently in January when we received the Euronext Sustainable Growth Award 2021. This award distinguished a company that has shown the strongest sustainable growth over the last decade, is granted to the company, which has the best result in the combined ranking of their ESG score by 3 recognized independent agency on one side and their stock price performance over the last 10 years on the other side. On the ESG financing side, after our first benchmark sustainable bond of EUR 500 million in 2021, we issued our second sustainable benchmark bond of EUR 500 million again in January 2022. This shows that on the ESG side, we are seeing as a very credible player by all our stakeholders. And now on the Slide 15. In 2021, we continue to implement a project called 3Q that was launched in 2020. This project aims at reducing the energy intensity of our portfolio by 30%, by 2030 to reach 130-kilowatt hour per square meter with a level of 165-kilowatt hour at year-end 2021, we are well on track to achieve this objective. Let me end on this topic on Slide 16 by saying that we obtained several additional BREEAM certificate. At year-end 2021, we had a total of 8 sites with BREEAM Certificate excellent and 7 sites with BREEAM certificate very good. On Slide 16, you see the impressive list of benchmarks and awards. Slide 17 provides information on the effect of the COVID-19 pandemic for Cofinimmo. Fortunately, we seem to acknowledge a reduction of the virus infection and a softening of the measures everywhere in Europe, which should be beneficial for the business and also a relief for all the people active in the health care sector. Of course, the development of the geopolitic situation generate new question marks. At the M&A level, despite the health crisis -- the deal flow did not dry up in 2021 as we witness an historic investment level. As explained before, our investment momentum was and is still strong. Healthcare tenant in our geography have benefited from add-on government support since they were in the first line in the fight against the pandemic. Cofinimmo's market cap was approximately EUR 4.5 billion at the end of December and EUR 3.6 billion today. We'll come back on this in a minute. The daily liquidity remains sound. The total shareholder return in 2021 amount to 21%. Please also consider that the share price still shows a premium compared to the first -- to the IFRS net asset value per share. Even with the lower share price of -- at the end of February, this premium was at 13% on the 23rd of February. Now let's talk about the property portfolio. As shown on Slide 20, the occupancy rate at the end of 2021 improved to reach 98.1% and compared to 97.4% at the end of 2020. In healthcare, the occupancy rate remains very close to 100%. In the office segment, the rate has reached 93.7%, coming from 92.8% in 2020 and from 88% at the end of 2017. This is mainly due to new rental and the disposal of 17 office buildings in the Brussels decentralized area and periphery and in Antwerp. Some of those buildings have already been divested in 2021, and -- and this rebalancing is going on as planned, with further disposal in 2022. You also see on this slide, the top 10 list of our tenants. As you know, the publication of a book by a French journalist about investigation carried out in nursing and care home in France, prompted an investigation and inspection by the competent authorities of some operators active in the care of elderly people in France and to some extent in Belgium. Cofinimmo pleads for a rapid conclusion of this investigation and inspection, firstly in the interest of the residents concerned and their family, but also for the benefit of the entire sector dedicated to the care and support of the elderly. Cofinimmo is confident that the result of this investigation and inspection should lead to balanced measure that will strengthen the quality of life within health care facilities. The effect of these measures on the financial and nonfinancial indicators will, if necessary be reflected in our investment policy in addition to the current acquisition procedures. As a reminder, as a regulated real estate company, Cofinimmo is in no way involved in the operation of the site leased to health care operators. The occupancy rate is managed by the operator of the site and the rents are independent of the local occupancy rate or the financial performance within the framework of long-term contracts. Let's now move to Slide 21. The weighted average original lease term is 12 years and remains unchanged compared with the end of 2020. I would like to highlight here the figures for health care, which stands at 16 years. Compared to 2020, yields are indeed declining under the combined effect of yield compression on the existing portfolio and of the numerous acquisition of 2021. But overall, our average net yield stay well above 5%. I will now pass the word to Sebastien Berden, our COO, Healthcare, to take you through the highlights of the healthcare segment.

[Sébastien Berden, Chief Operating Officer of Healthcare]

Thank you, Jean-Pierre. Jean-Pierre already mentioned our investment activity in health care has been very strong in 2021 despite the current health crisis. The group invested EUR 978 million in high-quality health care assets. Thanks to a series of acquisitions, the fair value of our Healthcare segment now amounts to EUR 3.8 billion. Our continued investment clearly illustrates our mission to consolidate our leadership in healthcare real estate in Europe. And as you see on Slide 24, we are now active in 9 European countries and strengthens our diversification in health care assets subsegment, which is a clear differentiator from our peer. Moving to the next slide. On this slide, you see that the segment now represents a surface area of more than 1.5 million square meters, spread over 266 assets. The breakdown by country also shows our geographical diversification. The following slides records all the acquisitions that were made throughout 2021 and our acquisitions in the first quarter of 2022 until today. I will briefly comment on them. On this next slide, we see that 2021 brought us no less than 37 health care deals in 9 different countries. So that's on average, roughly 3 new deals per month. The variety of different projects also illustrates our diversification strategy in health care, both in geographic sense and as per asset type. Allow me to commence some deals that I will pick randomly. After our entry in Ireland with 6 nursing homes in January, our next major deal was closed in April. That's the first deal in the list. We acquired 5 assets through a contribution in kind. The sites are located in the Brussels and Liège region which are 2 of the largest urban agglomerations in Belgium. All assets are leased for 27 years to Care-Ion Group, one of the leading operators in Belgium, which runs close to 20 nursing homes. Through the contribution, Care-Ion also increased its share in Cofinimmo's capital. One month later, we closed a deal to develop a clinic of almost 7,000 square meters for Tergooi Hospital in Hilversum. That's the last one in the list on this slide. The site enjoys a fantastic locations right between Amsterdam and [indiscernible]. Tergooi is a midsized hospital offering high-quality care in the heart of one of the most densely populated regions in the Netherlands and maybe even in Europe. This facility is located on a hospital campus and will house a variety of acute care departments, treatments in the agnostic center as well as offices for Tergooi. We really enjoyed this deal, as it allows to deploy our expertise also in acute and ambulatory care. Cherry on the cake is also that thanks to the use of a range of sustainable techniques and materials, it will have at least an A+ energy label. Delivery of the work is planned in 2023. Finally, after a combined deal in Italy and Spain was EUR 300 million in May, we also entered the U.K. in July. We did our first step in the U.K. with the acquisition of 3 modern nursing homes in East and Southeast England. These are running close to 200 beds and are leased for 35 years to Country Court Group, a leading operator in the U.K. found it 40 years ago and running 35 nursing homes all over the country. These 3 new geographies are very promising and are important in the execution of our corporate strategy to build and to consolidate our leadership position in Europe. My colleague, Yeliz, will now come back on 3 of these after highlighting our presence in another geography, Finland.

[Yeliz Bicici]

Thank you, Sebastian, and hello, everyone. As you can see on Slide 28 and 29, in 2021, we signed 6 deals in Finland and completed our first local development. This shows our determination of growing in that country. Let me have a few words on the brand new Medical Center of Vaasa, a development project of approximately EUR 20 million, which has been completed end of 2021. It will just be included in the project financed by our sustainable bond of January '22. This site brings all of the local services in Vaasa under one roof, Medical Center, occupational health services, hospitals, sports center and dentistry. The building will have a B-level energy performance and is located in the city center with a walking distance of public transport. This site will employ approximately 150 people. Our tenant there, as mentioned, is founded in 1909, the largest and one of the oldest private care providers in Finland. The company operates across the whole spectrum of health care services and has more than 200 health care facilities in Finland where almost 22,000 employees and professionals take care of more than 1.3 million customers annually, making it the largest operator in Finland. On Slide 30, we can see that in 2022, Cofinimmo is already expanding its footprint in Spain with 3 new projects. First, in the Asturias region, where we'll build a nursing and care home in Oviedo. The investment budget for both the plot of land and the works amounts to approximately EUR 11 million. The double-net lease was a term of 25 years has been signed with the operator, Amavir. Modern and sustainable materials as well as the latest techniques will be used for the construction. Remotely readable meters will help reduce the energy intensity of the building, for which Cofinimmo aims for an A-level energy label as well as a brilliant BREEAM Excellent certification. The Amavir group has become a leading player in Spain and the care of dependent elderly people. Then second, in Elche, in the autonomous community of Valencia, we acquired the plot of land that will see the construction of a new nursing and care home. The total investment budget amounts to approximately EUR 8 million. A triple-net lease has been signed with Grupo Casaverde for a term of 25 years. Grupo Casa Verde is one of the leading operators in neurological rehabilitation as well as in the care and well-being of dependent elderly people in Spain. And finally, in Castellón de la Plana, also in the autonomous community of Valencia, we acquired the part of land. The site will see the construction of new nursing and care home. The investment budget for, again, both the plot of land and works amounts to approximately EUR 11 million. A triple net lease with a term of 25 years has been signed with the operator, Solimar. We can now move on to Slide 32 for the breakdown of our distribution networks. Our 2 portfolios, Pubstone and Cofinimur I represented at end December 2021, a fair value of EUR 0.5 billion. Both networks together cover 362,000 square meters and count over 1,000 assets. Let me remind you that for Pubstone, we have a long-term contract with a solid tenant, which is the Brewery AB InBev, both in Belgium and in the Netherlands. On Slide 33, an update of the other parts of the distribution network, which is Confinimur I and is composed of insurance agencies of French insurer MAAF, which will all divest in time. Still on Slide 33, you see where we stand at end of January 22, 96 assets have been effectively sold for a fair value of EUR 55 million. Let's now talk about the office segment as of Slide 35. The fair value of the office segment represents EUR 1.4 billion at end of 2021 and count 62 sites for 491,000 square meters. On Slide 36, you can see on the map and the bar chart that our strategy is to increase our presence on the Brussels Central Business District and decrease our portfolio in the decentralized or periphery regions. In total, since 2018 and up to end 2021, we sold for approximately EUR 138 million in those areas. We can skip Slide 37, as this was already explained by Jean-Pierre in the introduction. And then on Slide 38, you see the ongoing disposal of 17 office buildings in the decentralized area and periphery of Brussels and in Antwerp for an amount of over EUR 80 million. This action is, again, fully in line with our office strategy and the first closing of 13 assets, by the way, have been already done on the 10th of December '21 for EUR 16 million. On Slide 39, you see the future disposal of the Evergreen building announced recently and you in Q4 2023 for EUR 23 million. I will now hand over to Jean Kotarakos, our CFO.

[Jean Kotarakos, CFO & Executive Director]

Thank you, Yeliz, and good morning, everyone. I'm on slide -- I will start on Slide 41. So for the overall portfolio. You can see that the gross rental revenue grew by 16.2% year-on-year. This represents a like-for-like rental growth of 0.9%. On Slide 42, as already stated, the net result from core activities, which is the EPRA earnings reached EUR 212 million, up 17% compared to '22, this gives us an EPRA EPS of EUR 7.15 per share, up 4% compared to 2020. The lower percentage of increase for the EPS compared to the net results on activities in euro, is a mechanical effect of the dilution arising from the 4 capital increases of 2021. After having commented, the net result from core activities, let's have a look at the other items that bring us to the IFRS net results on Slide 43. The financial instruments net income of EUR 41 million is mainly due to the fair valuation of the hedging instruments, in line with the change of future interest rates on the financial markets over the period. These are noncash items.The result on the portfolio amounts to EUR 7 million versus minus EUR 40 million, 1 year earlier. This includes several items. First item, the gain or losses on disposals of investment properties and other nonfinancial assets, sorry for the expression, but that's the official one is established at EUR 8 million at end of December '21 compared to EUR 5 million at the end of 2020. The item changes in the fair value of investment properties is positive at end of December '21 with this EUR 35 million compared to minus EUR 40 million 1 year earlier. The value appreciation of the health care property portfolio, particularly in Germany and the Netherlands, and that of the office buildings located in the CBD of Brussels has more than compensated the value depreciation of certain buildings. These variations are also tempered by the impact of consolidations, which is mainly the difference between the price paid, including the transfer taxes and the fair value determined by the independent real estate drivers, excluding transfer taxes and the acquisitions for the period. And the second point is the increase of the rate of transfer taxes in Flanders relating to the Pubstone portfolio going from 10% to 12% as from the 1st January 2022, which represented a charge of EUR 3 million. Without the initial effects from the changes in the scope, the changes in the fair value of investment properties is up by 1.1% for the 2021 financial year. That was the second item. And third item the other result on the portfolio is minus EUR 37 million at end of December '21 compared to minus EUR 36 million at the end of December 2020, and mainly comprises the effect of changes in the scope the effect of the deferred taxes and the impairment on goodwill. Therefore, the net result group share stands at EUR 260 million or EUR 8.78 per share versus EUR 190 million 1 year earlier. Regarding our balance sheet structure, on Slide 44, there are no surprises. The growth of the last year can easily be seen in the investment properties and in equity, the red boxes in the chart. The total assets is above EUR 6 billion, EUR 6.2 billion, in fact, and 92% of it are investment properties at fair value, financed by EUR 3.2 billion of equity and EUR 2.9 billion of financial and nonfinancial debts. On Slide 45, we analyze the change of the debt to asset ratio between end of December 2020. At that time, it stands at 46.1%. And end of December 2021 at 44.2%. The lower ratio year-on-year comes primarily from capital increases, minus 9.2% and split between accelerated book building, minus 2.9%; contribution in kind, minus 1.7%, optional dividend, minus 1.1% and the conversion of convertible bonds minus 3.5%. All of these offsetting the effect of the investment in properties, which was plus 8%. The effect of the dividend 2020 paid in 2021, plus 2.8% was more than offset by the result of coactivities generated during the period, minus 3.4% on the debt-to-asset ratio. On Slide 46, you can see that the net asset value is somewhere between EUR 102 for the IFRS NAV and EUR 115 per share for the EPRA NRV, depending on the concept you find the most relevant. So I'll let you choose. I can comment here on the evolution of the IFRS math between 2020 and 2021, where it stood at EUR 95.3 per share versus EUR 102.7 per share today, meaning, in fact, that it increased by 7%. There are 3 main drivers behind this increase. First, the deduction of the 2020 dividend in Q2 for more than EUR 6 bearing in mind that the actual impact of this reduction is higher than the actual coupon of EUR 5.80 per share, since we issued in 2021, new shares on coupon at the time of the accelerated book building in March and the contribution in kind of April. Secondly, the net relative impact of the 4 capital increases of the period, being accelerated book building of March, the contribution in kind of April, the optional dividend of June and the conversion of the convertible bond in September, all this for slightly less than EUR 5 per share. If you work in another framework than the IFRS one, for example, the EPRA framework, please be attention to the following side effect. The revaluation in euro per share can be quite different depending on the level of equity in euro, I mean, underlying the NAV per share. Revaluation in the EPRA framework goes from EUR 2.6 per share for the NRV to EUR 4.6 per share for the NDV, the impact on NTA being at about EUR 3.8 per share. Third, we need to account for the accumulation of the net result for the period which generates a positive impact of slightly more than EUR 8 per share. Hence, if we summarize because I know that here we need to summarize, we had an IFRS NAV of about EUR 95 per share at year-end last year, less EUR 6 for the dividend, plus EUR 5 revaluation and EUR 8 of accumulation of results, which means again EUR 102 at the end of the period. Let's have a look now at what we did on the financing side as of Slide 48. With EUR 565 million of equity raise through contribution in kind, optional dividend, the conversion of convertible bonds and an accelerated book building, 2021 was definitely a very active year for Cofinimmo on the equity markets. The previous DCM transaction dated back from end of 2020 with the issue of the EUR 500 million sustainable bond. In Q1, there was no issuance -- but at the beginning of 2022, we issued the success, a new sustainable benchmark bond of EUR 500 million. Our S&P credit rating was confirmed in March 2021, long-term BBB outlook stable and short-term A2. When having a look at our financing activity in 2021, we can only conclude that we have been very busy, as you can see on Slide 50. All in all, we have now more than EUR 2 billion in sustainable financing under the form of several instruments, including a sustainable commercial paper program. Slide 52 gives a detailed analysis of the debt instruments we use, highlighting our ability to access diversified funding sources. The last convertible bond was 99% converted at maturity for an amount of EUR 217 million. Please note that the next maturities within our bond portfolio will be the issue of 2015, 2022 of EUR 100 million at 1.93% on the 25th of March 2022. The average debt maturity shown on Slide 53 amounts to 5 years. At the same time, the leverage cost of debt was 1.1% in 2021 compared to 1.3% in 2020. And as shown on Slide 54, the average debt maturities are well spread. The average debt maturity on the previous slide and the maturity table on this slide 54, already takes into account the bond issuing of [indiscernible] 2022. At the end of December '21, the headroom on the committed credit line is about EUR 1.6 billion. After deducting the credit lines kept as backup for the commercial paper program, the headroom reached EUR 866 million at end of December 21. On Slide 55, on the hedging side, you can see that 90% of the group's current debt is either fixed or hedged. This percentage is even at 100% in 2022. And now I will pass the word to Jean-Pierre for the highlights on our investment budget and outlook for 2022.

[Jean-Pierre Hanin]

Thank you, Jean. And now on Slide 57, where you see the breakdown of our initial 2022 investment budget as we publish it in our press release of yesterday. You see that we plan investment of EUR 600 million growth of which the lion's share will go to the health care real estate sector. The amounts for offices and distribution networks are mostly CapEx related. We also foresee EUR 140 million of divestment. On Slide 58, that give us a portfolio outlook for 2022 and beyond, well above the EUR 6 billion mark.Let's now have a closer look at the outlook for this year on Slide 59. Taking into account the investment estimate just described, our outlook for this year stands at EUR 219 million of EUR 6.9 per share at the level of the net current result from core activities for the year 2022. I -- this includes the pro rata temporary dilutive effect of the capital increases carried out in 2021 estimated at EUR 0.5 per share and the effect of the disposal carried out in 2021 and the ones budgeted in 2022, estimated at another EUR 0.35 per share. For your convenience, we also added a line showing the expected denominator for the computation of the 2022 EPS. Those figures allow us to announce the target for the gross dividend at EUR 6.2 per share, up compared to 2021. We want to thank you all for your attendance and are, of course, ready to your answer to your questions.

[Operator]

[Operator Instructions] The first question is from Mr. Frederic Renard, Kepler Cheuvreux.

[Frederic Renard, Equity Research Analyst]

Two questions on my side. What is the like-for-like do you anticipate for 2022 in your budget considering that inflation is picking up would you be able to pass inflation for your operators across Europe?

[Jean-Pierre Hanin]

So as you know, Frederic, contracts are indeed indexed with formula, which depends from one country to the other. And we do not see so far and do not expect issues to basically have this long-term contract being applied.

[Frederic Renard, Equity Research Analyst]

And just to have some color. You're expecting maybe 2%, maybe higher amount. You don't want to mention it.

[Jean-Pierre Hanin]

Yes. Yes.

[Jean Kotarakos, CFO & Executive Director]

Jean speaking, In fact, to base ourselves on the latest available information that are produced by the European Commission, so we took the economic forecast that was published on the 10th February by the European Commission. And if you look at that for our countries, the weighted average is about 4%.

[Frederic Renard, Equity Research Analyst]

But that's not something you put into account for your guidance right?

[Jean Kotarakos, CFO & Executive Director]

Yes, yes. The guidance -- yes, but this is just the indexation amount. Then you should take into account the disposals. You should take into account the changes in the occupancy rate and so on.

[Frederic Renard, Equity Research Analyst]

Okay. good. The next question would be on ORPEA. Can you comment a little bit, I know it may be premature, but can you comment a bit on what you see in France and Belgium currently on the investment market? Is it -- would you characterize the market as a standstill at the moment or not?

[Jean-Pierre Hanin]

No, the market -- well, first, France and Belgium are less busy market. I'm talking on the real estate side than other European countries because, as you know, the market are quite mature. But the level of activity is comparable -- I'm talking on the real estate part comparable to previous years. So we don't see that suddenly everything stopped or has been frozen, not at all.

[Frederic Renard, Equity Research Analyst]

Okay. And what is your view that the regulation with -- France could have some impact at some point on the profitability of operators with the risk of the last revision on the rental level?

[Jean-Pierre Hanin]

Well, Frederic, what I can say is that measures should be proportional to the shortcomings. If the shortcomings are breach that are observed by an individual company, then the merger will be target at that company. If measures or the bridge relate to a more global shortcomings in the global regulation, then the measure should be more general. What I hear from certain leader in France, health care leader, and you -- I'm sure you hear them as well, like Sophie Boissard, CEO of Korian, calling for indeed a consistent framework of qualitative, not only quantitative but qualitative measures that can indeed bring more transparency. So I think, clearly, the -- my impression, and of course, I'm talking to the CEOs of the various groups, not only in France. But in France, clearly, the sector is not in panic. I think there is the story of ORPEA and I think everybody in the sector is talking to the authorities. I don't think that we have heard that the authorities taking the initiative to start investigation in all the players. So that's basically the status. Of course, nobody knows exactly what would be the outcome of the investigation. We hope it will be fast, first for the people that the resident, but also the people that are working and who are extremely dedicated. And I think you probably read the book as well that the journalist is not condemning the entire sector, but certain practice that have been pushed at the extreme by [indiscernible] some people. So the sector is also pushing for some change that they were already, I mean, the operator were already asking to the authorities. Yesterday, it was the French [indiscernible] who basically suggest that the controls, which are today spread over different agencies being centralized. So I think this will probably clarify and simplify the framework. Now the financial impact on ORPEA and so on, well, have you seen you know the company quite well. It's very solid. We talk to them, of course. We don't feel them being panicking or in a far same mode. So what we urge is a rapid conclusion to this to avoid the certainty because nobody likes uncertainty, but we do not expect earthquake coming from the set of measures, rather a balanced package that should basically make the life of everybody including, of course, the resident, but also the people working in this easier?

[Frederic Renard, Equity Research Analyst]

And maybe just a last question on the cost of financing, 1% very low, considering the hedging in place, do you consider that the low cost of debt that you have today will continue into 2022?

[Jean Kotarakos, CFO & Executive Director]

Jean speaking again, Frederic. I always said that the last figure available that the last year of the actual is not especially the indicator for the future. So we do not expect to continue to have the 1.1% in 2022. I would say that it should be slightly higher than that.

[Jean-Pierre Hanin]

What is important for us, Frederic, is that we have, I think, compared to many of our peers, a lower rate of financing. And if the global environment make it less easy to continue to finance at this rate, it will be impacted for everybody, but we have a very -- we enjoy a very comfortable level.

[Jean Kotarakos, CFO & Executive Director]

And Frederic, just if I may, just to be sure for the like-for-like point, the 4% is weighted average which is derived from the data of the European Commission. But of course, all the indexation does not occur on the 1st January for all the contracts and do not have an effect for the full year. So you should be cautious, of course, of all the timing effects and so on.

[Operator]

The next question is from Mr. Steven Boumans, ABN.

[Steven Boumans, Analyst]

I have a question on the offshore subsidiary. Could you please update us on the appetite from potential investors as a minority in the subsidiary? Maybe more specifically, first, how many investors are proactive for the contract. Second, what is the probability in your view of announcement in H1 '22 of a potential investor? And third, I can imagine that you will not go to back at a 35% discount [indiscernible] as you as one of your peers is currently trading. But would you consider a 20% discount to gross [indiscernible]?

[Jean-Pierre Hanin]

Okay. So regarding the -- I'm not sure I understood everything, but let me know if I don't answer to your question 100%. So indeed, Cofinimmo office is ready. Regarding the opening of the equity for new investors, you may have noticed that what we said during our last call last quarter is that we are flexible regarding what should be the stake that we could make available to one or several investors, so which means not exclusively a minority. Now in terms of the timing, we are not in a corner. And of course, it's important for us to choose the best window, including the global economic environment, which, as you will acknowledge, it's not perfect today for basically starting a process because it will be probably 4 to 6 months process when it's a large portfolio, if you include the new deal negotiating a joint venture and so on. So we need to be perfectly comfortable that when we push on button or starting to talk to investors that we have, I would say, a peaceful window in front of us to bring this process to the end and not have to hold it because of several reasons. So -- to make a long story short, we have not yet started to talk to potential investors. We know that certain are talking to bankers that basically are knocking to our doors.So basically, we hope that 2022, although it's a bad start in terms of macroeconomic environment, but we hope that there will be indeed such a window, which will allow us to basically talk and find the appropriate co-investors -- we don't want to change the strategy, as you know. So we continue to upgrade. And when you look at what we have done since 2018 is consistently improving basically the quality of this portfolio. So we continue to do it. We have a bit more divestment on the list. But as you know for us and when you look at the price, we basically get so far for assets. We are not concerned. You probably have heard that many investors are basically dying for yield, especially right now and basically also looking at offices. But for us, it's the right investor, the right price and the right economic environment. And of course, we don't control fully the third element, and it's important to make sure that when we go ahead, we feel comfortable.

[Jean Kotarakos, CFO & Executive Director]

So the budget is not articulated, assuming that we would have sold 6% of Cofinimmo offices by a certain date during the year.

[Steven Boumans, Analyst]

Okay. That's completely clear. Thank you for appropriate guidance there. And last question, something else on a follow-up question on the things that we have seen in France and a ORPEA. Does that change your policy with ORPEA or the others in France. For example, are you less willing to do future business with these operators or for new investments? Or do you expect the huge that should go up to compensate for these risks?

[Jean-Pierre Hanin]

Well, the fundamental of the sector, as you know, remain unchanged and the aging and the need for quality infrastructure and so on. Having said that, of course, when you read the book, you are disturbed. So we are also waiting the official answer of ORPEA to these many allegations. Of course, we already talked to them. And we also expect -- we are impatient to see the result of the various public investigation. And we know ORPEA in France, but we know ORPEA in the other countries, and we know many people there. There are many people who have worked with ORPEA that are now working with others. So it's a lot of, of course, noise -- but at the end, and I've read the book. And I can tell you, of course, when you read this, you have a lot of question mark and you are disturbed. But still today, when you look at the global market, it's not often that you have a ORPEA house, which is in any European markets being in a blacklist by authorities. So despite everything you read and very sad story, the one to basically change the feeling when you read that. But in terms of quality ORPEA houses are not coming often in the spotlight. And you remember during the pandemic, there were some houses that have been in the headlines for also mistreatment of [indiscernible]. And I don't remember, have seen ORPEA house be named in there. So I think the book is about 80 page of mistreatment in one house, which was the flagship of ORPEA in Neuilly and 300 page about corporate practice, which the authorities will have to decide whether or not they crossed the red line. Of course, when you are a reader, you have your own opinion about it. But now there is a full investigation about it. And the French election has, of course, an impact on the timing. So already hope that already first set of, I would say, feedback from the public authorities of what they have seen and done will be published somewhere in March. Of course, the French public authorities are also quite careful because there is a lot of voice also pointing out at certain lightness in looking at certain things. So for me, if the truth can come up and light before the French election that would be, I think, a positive thing for the sector as a whole. And in terms of measures, as I said, it will depend whether it's individual breach or more a framework that needs to be adapted.

[Operator]

The next question is from Mr. Herman Van Der Loos, Degroof Petercam.

[Herman Van Der Loos, Senior Equity Analyst]

Good morning, gentlemen and ladies, thank you very much for the presentation and for taking my last little questions. The first question, very simple, the asset on Slide #30 in [indiscernible]. Is that a new asset that was not announced? Or is it part of our past portfolio acquisition? That is my first question.

[Jean-Pierre Hanin]

I would say, I don't know where you say that [indiscernible], but it's the end of portfolio -- the [indiscernible] portfolio that we bought. So it took a bit more time to close it for technical reasons, but that was indeed part of the order portfolio.

[Herman Van Der Loos, Senior Equity Analyst]

Okay. Okay. So clear. That was clear. Okay. I just wanted to be sure on that. Then my second question, the disposal of offices of EUR 140 million, just as a follow-up of a previous question. What you are seeing is that EUR 140 million has nothing to do with Cofinimmo offices. You are just fine-tuning your portfolio. Your office portfolio is not 10%, it's EUR 1.4 million?

[Jean-Pierre Hanin]

And Herman. It's not only offices and you don't forget, we are still quite busy with the MAAF. So maybe I have been not very clear on this, but the EUR 140 million, to answer to your question, yes, it has nothing to do with the opening of the equity of Cofinimmo offices. And second, it still includes a decent chunk, I would say, of the MAAF portfolio that we started to divest last year.

[Herman Van Der Loos, Senior Equity Analyst]

Okay. Super. Then a question...

[Jean Kotarakos, CFO & Executive Director]

In the EUR 140 million, you already have EUR 40 million, which are identified in the balance sheet under the line noncurrent asset held for sale.

[Herman Van Der Loos, Senior Equity Analyst]

Okay. Super. Okay. And then on -- I had a question on health care. Can we say that at Cofinimmo, you heavily vet the nursing homes you are going to acquire in financial terms. First of all, can we be sure that rent EBITDA is at a comfortable level for all the nursing homes you own, including the ORPEA 1. And then do you answer vet the company's own operations? I know you are only a tenor landlord, that you cannot mix yourself in the management of the company, but do you sometimes visit them? Or is it just a polite visit once a year by Sebastian?

[Sébastien Berden, Chief Operating Officer of Healthcare]

It's never a polite visit. It's a professional visit. And we do it on several purposes, of course. As you know, on the ESG part, we have many reasons to visit this office. And we don't do it with blind eyes, meaning that if we visit the house and we notice something which is not often, but which happens, then we immediately notify not only the local manager, but also the headquarter. So it's not because we are not basically responsible for the management of the operation that we let things unnoticed. So that's something, of course, we take the benefit. And 99% of the time, we get a thank you from basically the headquarter because basically it's also something that they take into account, so of course, looking at things, it's something we do. I can, maybe as a footnote, Herman notice that except for one case, we don't remember, and you know that this company is investing in health care for a while, having received directly a complaint from a resident. And the one we know was basically for a house that we were not owning, but still we have transmitted this to the operators, and we're asking for follow-up. So we are not only doing the -- take this and then we don't care anymore. So we ask basically what they do with this information.

[Herman Van Der Loos, Senior Equity Analyst]

Okay. Super. And then one very last question. Just to be clear, your 2022 outlook includes indeed disposals. Some of them I was not aware of. I think the guidance of the outlook for a lot of analysts was above the EUR 6.90. But just to be sure, your EUR 6.90 does not include any equity event beyond perhaps a stock dividend?

[Jean-Pierre Hanin]

No. Indeed. You're right.

[Jean Kotarakos, CFO & Executive Director]

Not even a stock dividend.

[Operator]

There are no further questions, please continue.

[Jean-Pierre Hanin]

Okay. No further questions?

[Operator]

Yes, no further questions.

[Jean-Pierre Hanin]

Okay. Anyway, you can -- you know who you can reach out and there was a large team around this call. So everybody has heard your question and very pleased to follow up. Thank you for your time. Thank you for attendance and looking forward to hopefully meeting you in presence during one of the occasion of this year. Thank you. Bye-bye.

[Operator]

Ladies and gentlemen, this concludes the event call. You may now disconnect your line. Thank you for joining, and have a very nice day.