Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Icade (CDMGF, Financial) posted a solid net current cash flow of EUR169 million for the first half of 2024.
- Gross rental income for the property investment business increased by 4.1% on a like-for-like basis, driven by indexation.
- The company maintained a strong liquidity position of EUR2.4 billion, covering debt maturities until mid-2028.
- Icade (CDMGF) demonstrated resilience in the investment division with revenue growth supported by well-positioned office and light industrial segments.
- The company successfully signed agreements to sell two core assets in Marseille for approximately EUR45 million, demonstrating its ability to sell well-positioned assets in line with appraisal values.
Negative Points
- The property development division faced a challenging environment, with a 1% decrease in order volume and an 8% decrease in order value.
- Net debt to EBITDA ratio increased to 11.4 times at the end of June 2024, impacted by one-off impairment charges.
- The LTV ratio rose to 35.9% from 33.5% at the end of 2023, reflecting the absence of asset disposals in the first half of the year.
- The NAV NTA decreased by around 7% to EUR62.6 per share due to a contained fall in asset valuation.
- The property development division recorded significant impairment losses totaling EUR85 million before tax, impacting net current cash flow.
Q & A Highlights
Q: Regarding offices, would it be possible to share the reduction rate captured in H1 for well-positioned assets? And in terms of disposals, what proportion of non-core offices do you intend to sell to Icade Promotion? Finally, could you give us more color on the progress of discussions about the next steps of the healthcare disposals?
A: The reversion for well-positioned assets was in line with ERV, with incentives matching market practices. No specific target for disposals to Icade Promotion; it depends on the project. For healthcare disposals, the strategy remains unchanged, with ongoing discussions and some concrete steps taken to facilitate new investor entry.
Q: Could you share the like-for-like growth of Icade values in H1?
A: We don't disclose like-for-like growth in Icade values, but we estimate an average decrease of around 2% versus IHE and Praemia healthcare.
Q: You mentioned a stabilization in the property development business for H2. Could you clarify what that means?
A: The significant impairment losses in H1 were one-off impacts. We do not expect further deterioration in net current cash flow in H2, leading to a mechanical increase in the margin rate by year-end.
Q: You had a lot of tenants exercising their lease break options this year. Do you expect similar levels of departures in 2025?
A: Most break options and expiries concern H2 2024, with expected rent losses above EUR30 million. While there are challenges ahead in 2025, the major part of expiries was in 2024.
Q: On the project in Clichy, could you share some profitability numbers for repositioning these assets from office to residential?
A: We do not usually share specific figures, but the profitability for Icade Promotion on this operation is in line with market practices.
Q: If we annualize the H1 net current cash flow, it seems to be running slightly ahead of guidance. Is there a chance of a beat at full year?
A: We were cautious in defining the guidance due to the uncertain context. Positive results in H1 helped offset significant losses, and we now have stronger visibility for H2. However, we remain cautious given the global uncertainties.
Q: The land portfolio value was written down by 9% in H1. What kind of profit margin would you expect going forward?
A: The impairments were a result of an exhaustive portfolio review. If the current environment continues, we do not expect further deterioration in net current cash flow in H2, leading to an increase in the margin rate by year-end.
Q: Are you getting any signals from the new government in France on subsidies to help housebuilders?
A: It's too early to have signals or a proper view of what to expect. The political agenda in France is still uncertain, and we remain cautious.
Q: Can you provide more color on the occupancy rate in well-positioned offices and light industrial segments?
A: The occupancy rate remains above 90% for these segments. However, it will be impacted by the departure of the Olympic Committee from the Pulse building.
Q: How do you see the next evolution in terms of asset valuation for H2?
A: The main part of the adjustment is behind us, with a significant slowdown in value adjustments in H1. However, we remain cautious as some value adjustments are still possible in H2.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
