So hello, I'm really happy to welcome you today to Icade Paris Orly-Rungis Business Park, and I'd like to thank all the people who are online. Well, today's agenda is quite busy. We will start with a presentation of 2023 annual results, lasting around 45 minutes, and then at 11:00 A.M., the Executive Committee and I will be pleased to present Icade's new strategic plan for 2024-2028. Finally, we'll be offering this afternoon an asset tour of our business park. As an introduction to the day, I'd like firstly to invite you to listen to a few words from the chairman of the board, Frédéric Thomas.
Hello everyone. We are delighted to welcome you to Icade's Paris Orly-Rungis Business Park today, and I'm sorry I can't be with you in person. As you will see, the Paris Orly-Rungis Business Park is a showcase for Icade's expertise and an illustration of what a new kind of development can look like. It's more and more a real neighborhood, which is being transformed to meet the expectations of our tenants and residents. It features greater accessibility, an environment that's more respectful of nature and biodiversity, and services that make everyday life more enjoyable. After 10 months as CEO, Nicolas Joly will present Icade's new roadmap today, following the sale of Icade Santé in a challenging economic and financial climate. It's a roadmap that enables Icade to set clear goals for the future in a market undergoing profound change.
Through this message, I want to assure Nicolas Joly of my full support. I would also like to assure you of the full confidence of all the members of the board of directors in the roadmap and its implementations over the coming years. For the past 70 years, Icade has been evolving weathering crises and adapting to new challenges, and this is what we intend to continue doing in the years to come. Thank you for your attention, and have a lovely day.
Well, so I therefore propose to continue with the presentation of the 2023 annual results. This presentation will, of course, be followed by a Q&A session. So let's move to slide five to give you an overview of the year 2023. Well, in a nutshell, 2023 was marked by a major shift in Icade's strategy with the disposal of the healthcare business and the group refocusing on its core businesses, commercial investment, and property development. On an operational point of view, the keyword for 2023 was resiliency, with group cash flows at EUR 4.62 per share, and the strategic activities, i.e., commercial investment and property development, represented a net current cash flow of EUR 3.07 per share above the guidance.
The commercial investment business was, as I said, resilient, with rental income of EUR 364 million, supported by a +2.2% like-for-like growth and a strong rental activity with almost 243,000 square meters signed or renewed. In a very complicated market context for the development business, our Property Development Division's sales rose slightly to EUR 1.29 billion, and the margin, as expected, decreased to 3.8%. On the balance sheet, in a high-interest rate environment, we saw an adjustment in the values of our asset at -17.5% like-for-like over the past year. This translated into a decrease in NAV and NTA to EUR 67.2 per share. Nevertheless, the group benefits from a very strong balance sheet strengthened by the disposal of the healthcare activities.
In that respect, the group's LTV stood at a very comfortable 33.5% at the end of the year, and the level of liquidity was very high at EUR 2.9 billion, covering our debt maturities until 2028. Financial expenses were under control thanks to a very robust hedging policy, enabling us to post a solid ICR of 5.6 times. In terms of dividend, we will be proposing a dividend of 4.84 EUR per share, up 11.8% on 2022, partly supported by the dividend coming from the healthcare. First of all, I'd like to come back to the sale of our healthcare activities and make a clear point on where we exactly stand today. On July 5th, 2023, Icade announced the sale of its Healthcare Division, resulting in the deconsolidation of these activities. And as you know, this sale comes into three stages.
Stage one, completed on the 5th of July, 2023, involved the sale of 63% of Icade's stake in Icade Santé to Primonial REIM and Sogécap for a total amount of EUR 1.45 billion and the transfer of both the asset management and the former Icade Santé teams to Primonial REIM. Stage two consists of the sale of Icade's 23% stake in Praemia Healthcare, which is the new name of Icade Santé, for an estimated amount of circa EUR 800 million at the 31st of December, 2023. This sale process, which we still envisage within a 2024-2025 time frame, could be carried out gradually through the acquisition of additional shares by Primonial REIM entities and/or through the purchase of residual shares by third-party institutional investors.
Regarding the conditions of stage two, Primonial REIM has made, firstly, the commitment to allocate funds raised by its Cap Santé Fund, and secondly, it is incentivized to execute this stage. Stage three will involve the sale of Icade's healthcare Europe portfolio, meaning Italy, Portugal, and Germany's assets. At the 31st of December, 2023, it represents an amount of circa EUR 500 million, of which EUR 190 million is a shareholder loan between Icade and IHE. Regarding this loan, it should be noted that it was initially carried at 100% by Icade and was refinanced between December 2023 and January 2024 by all the shareholders in proportion to their ownership in IHE, enabling Icade to receive EUR 132 million. So let's now look at performance by division, starting with commercial investment.
Well, you all know that the Commercial Investment Division evolved in a sluggish leasing and investment environment in 2023. On the leasing side, take-up in Paris region was down 17% on 2022, with a percentage of total demand outside Paris CBD of around 77%, underpinned by attractive incentive and scarcity in the CBD. We are also seeing a shift in tenants' expectations for offices that meet the highest standards in terms of centrality, environmental quality, high services level, and flexibility. Total investment volume in France was down 51% compared to 2022, and overall, the investors rather focused on small and prime transactions, waiting for yields to adjust to the new financial environment. Some recent deals were now setting new landmarks, restoring the sector's attractiveness in the medium term. Let's move on to slide 13 to see how Icade performed in this environment.
Against this backdrop, Icade posted a record rental activity with 243,000 square meters signed or renewed this year, representing an increase of +20% compared with 2022. These signatures and renewals represent annual rents of EUR 63 million and a WALT of 5.6 years, confirming the resiliency of this portfolio. Good rental momentum concerned the two main asset classes, namely office and light industrials. Offices accounted for almost 181,000 square meters. These leases were signed on terms in line with market rental values. Light industrial and other assets represented 62,000 square meters. The dynamic of rental activity also illustrates the strong demand for our business parks. The financial occupancy rate stood at 87.9% at the end of December, which is slightly up on 2022.
It is supported, in particular, by EDF Renouvelables, leased on the Origine building in Nanterre, and the ensemble lease on Fresk, bringing the occupancy rates for those two assets to 100%. As a reminder, our tenant base is a key differentiating asset for Icade, with 70% of it made up of public institutions and large corporates diversified in terms of sectors. We are able to offer this customer office or industrial premises that meet their expectations in terms of surface, area, location, quality, and price, as well as a wide range of services and turnkey solutions. In terms of investment policy, we remain cautious and selective as we've been in recent months.
In July 2023, we acquired the remaining parts of the Le Ponant, ideally located in the 15th district of Paris, giving us now full ownership of a 33,000 sq m property complex and enabling us to envisage value-enhancing transformation in the medium term. Investments in the development pipeline, as you can see, were limited to EUR 125 million for 2023. Asset disposal was managed opportunistically for almost EUR 146 million in line with the December 2022 NAV. Let's now take a more forward-looking point of view and discuss the current pipeline for our commercial investment activity. For several months now, the pipeline has been rigorously reviewed in order to limit investment to assets that meet changing usage patterns and tenant expectations and to projects with a satisfactory financial equilibrium.
At the 31st of December 2023, the investment pipeline amounted to EUR 907 million, representing EUR 334 million of future investment for circa EUR 45 million of additional rental income. So, as you can see, our pipeline is diversified with, for example, data center projects with Equinix or a hotel conversion project you will see in Rungis. In the office segment, we've adopted a very selective approach. The one and only project we've added is the retail and office project at the 29-33 Champs-Élysées. We will, of course, come back to this later with Emmanuelle while presenting our strategy plan. In addition, our pipeline is well-secured with four out of five projects to be delivered in 2024 and 2025 already fully pre-let. So let's now move on to the operational performance of the development business line.
The year 2023 was marked by a slowdown in the overall property development market as a result of a very high-interest rate environment and, to a lesser extent, the phasing out of tax incentives. This translates into a 35% drop in individual orders and commercial launches while the inventory of homes for sale increased by +2%. Now let's move on to slide 19 to see that, against this backdrop, Icade has a strong focus on block sales to institutional investors, in particular, intermediate housing providers, social landlords, and operators that partially offset the lowering demand from individuals. These block sales accounted for almost 3,600 units in 2023 and growth in value of +18%. Institutional investors, thus, accounted for 67% of the volume orders in 2023. This very strong momentum in block sales explains the resilience of our operating indicators.
That's the reason why reservation fell by only -7% in value and -13% in volume in a global market down by -26%. The backlog at EUR 1.84 billion also remains solid and stable compared with 2022, supported by a +5% increase in the residential backlog linked to orders from institutional investors. So let's move on to slide 20. See that, in this new market, the Property Development Division has adapted its strategy to further secure new projects and rebuild the margin of new operation. This means, on the one hand, increasing the minimum order rate, and the pre-commercialization rates also reached 75% by 2023.
On the other hand, conducting an in-depth review of the land portfolio to assess the economic viability of the project, adjust their financial parameters such as land prices and payment schedules, and/or cancel operations that are no longer suited to the market context. Three times more operations have been abandoned this year than in 2022. So this greater selectivity explains the minus 20% year-on-year drop in the inventory of homes for sale and the minus 16% year-on-year drop in construction starts. In the medium term, greater selectivity in terms of operations has impacted our land portfolio down by minus 13% to EUR 2.82 billion. Now let's move on to the presentation of our financial results for the full year 2023. In 2023, the group's net current cash flow amounted to EUR 350.6 million or EUR 4.62 per share.
EUR 232.6 million of this came from our strategic activities, commercial investment, and property development businesses. Cash flow from healthcare activities in 2023 represented EUR 118 million. EUR 95 million is coming from H1 cash flows before the disposal, and EUR 23 million in H2 2023 are mainly coming from an interim dividend for 2024 and the interest rate, interest income on the shareholder loan to IHE. We reported a current cash flow from our strategic activities of EUR 232.6 million, i.e., EUR 3.07 per share, above the guidance which we had communicated at EUR 2.95-EUR 3.05 per share in July. Main variations came mostly from the development business, which reported a decline in net current cash flow of EUR 24 million due to lower sale prices, depreciation on land, and higher net borrowing costs.
This decline was more than offset by the +EUR 27 million increase in finance income over the period. So let's focus for now in more details on the commercial investment business. As far as the gross rental income is concerned, it was pretty stable in 2023 versus 2022 at EUR 364 million. On a like-for-like basis, performance was positive, as you know, +2.2%, mainly carried by indexation on rents, +4.7%, and partially offset by the reversion effect. Concerning the net-to-gross rental income ratio, we were penalized by the increase in vacancy costs. Financial result improved significantly thanks to tight control of our finance expenses and also to income from cash investment made in 2023. As a result, net current cash flow from the commercial investment business rose by around 10% to EUR 228.8 million.
Moving on now to the property development activity, see that economic sales amounted to EUR 1.3 billion on the 31st of December, 2023, up +3% in 2022. This was the result of a limited decline in sales in the residential business and an increase in the contribution from the commercial segment thanks to progress on ongoing projects as well as the opportunity sales of the Taitbout Building shared in July. As already mentioned, in Q3 2023, margins came under pressure in the second half of the year, and the overall margin was down to 3.8% due to lower prices linked to block sales and land depreciation. With regard to valuations, we saw in 2023 a large increase in capitalization rates, reflecting the rise in interest rates that began two years ago.
For Icade, this meant a like-for-like decline in portfolio value of -17.5% over 12 months and -22.9% since June 2022. The average yield on our portfolio is now 7.5%, which represents an increase of +150 basis points compared with 31st December, 2022. Decreases in value vary greatly depending on the asset considered. For example, you see that offices that we consider as well-positioned, i.e., those for which we have a long-term conviction as to their tertiary use, fell by -16.8%. On the other hand, offices that need to be repositioned because they won't meet tenant demands in the long term, they were down by -33%. And the assets in the light industrial segment were down by only -3.1%.
Of course, we will come back to this segmentation and its consequences when we will present during the next hour our strategic plan. The downward trend in the value of our assets resulted in a drop in our EPRA NTA per share of around 25%. As of 31st of December, 2023, the EPRA NTA landed at 67.2 EUR per share. Now let's move on to slide 28 for a look at the group liabilities. On the balance sheet, the completion of the first stage of the healthcare disposal enabled us to significantly reduce our net debt to EUR 3 billion versus EUR 6.6 billion at the end of 2022 and to substantially improve our LTV and net debt-to-EBITDA ratios. As of 31st of December, the LTV ratio, including duties, stood at 33.5%, down 6 points on last year despite pressure on valuations.
The net debt-to-EBITDA ratio came out at 7x, a strong improvement on the previous 10.1x in 2022. In terms of liquidity, Icade has a very solid position at EUR 2.9 billion, including cash and undrawn credit line. This liquidity covers our debt maturities until 2028. As we have already indicated, we will also use part of our cash to proactively manage our upcoming debt maturities, particularly bonds. In 2023, we continued to proactively manage our financing. In particular, given our excess cash position, we reduced short-term maturities by lowering our new CP outstanding and repaying part of the 2024-2026 maturities. We also consolidated our liquidity profile by refinancing 100% of our undrawn credit lines maturing in 2024-2025 for EUR 755 million.
In 2023, Icade pursued its commitment to sustainable finance by making 100% of bank financing responsible, backed by either ESG objectives or green use of proceeds. As already mentioned, we also effectively manage our cash investment with around EUR 870 million invested at 3.4%. Finally, on page 31, we confirmed our tight control on the financial results. Indeed, thanks to our conservative hedging policy, our average cost of debt rose to 1.56% compared with 1.25% in 2022, while the ICR ratio remained very high at 5.6 times. In terms of exposure to interest rate risk, Icade strengthened its hedging position with the entry into force at the end of 2023 of EUR 125 million of forward starting swap contracted in 2021. Future estimated debt for the next three years is fully hedged.
In line with the policy given at the time of the actual result, the board of directors will propose to the annual general meeting the payment of a dividend of EUR 4.84 per share, which is up +11.8% on the 2022 dividend. This includes EUR 2.54 per share of dividend following the stage one of healthcare disposal. The dividend yield is, as you can see, 13.6% based on the share price on the 29th of December, 2023. So the dividend will be paid in two installments. Firstly, an interim dividend of 50%, i.e., EUR 2.42 per share, paid in early March. And secondly, the balance paid in early July. So let's turn to our CSR performance. As you know, we have strong ambition on CSR and are fully dedicated to define concrete operational objectives and action plans.
In 2023, our two businesses posted very solid performance in terms of carbon intensity, consistent with objectives aligned with a 1.5 degrees Celsius trajectory validated by the SBTi in October 2022. In particular, we are very proud to announce this year that Icade has joined the A List of the CDP, placing it among the sector leaders in terms of transparency and performance on climate change. So on slide 34, you see that carbon intensity in the Commercial Property Division fell by 35% between 2019 and 2023 with a target of 60% by 2030. In particular, this was due to, well, improving building efficiency and decarbonization of energy sources. Secondly, the implementation of the energy sobriety program. And thirdly, the rollout of environmental committees and climate commitment leases over 200,000 sq m, enabling tenants to be fully involved in the reduction of carbon emissions.
The carbon intensity of the property development business was down -12% over the period 2019-2023 with a target of -41% by 2030. The reduction in carbon intensity was especially explained by the use of low-carbon energy sources for 79% of projects launched in 2023 and the development of mixed timber and concrete construction for 17% of the projects. As we remain cautious in our sourcing, 100% of our wood source is sourced from responsibly managed forests. To conclude, I suggest we move on to the 2024 outlook. Well, in a new interest rate environment, the real estate market is undergoing deep changes and remains uncertain in 2024, particularly for the property development activity. As a result, Icade expects in 2024 a net current cash flow from its strategic activities between EUR 2.75 and EUR 2.90 per share in 2024.
In addition, the non-consolidated shares in healthcare activities should generate additional net current cash flow of circa EUR 0.80 per share on the basis of the current ownership. So the 2023 results demonstrate the resilience of Icade's portfolio and reflect the commitment and performance of all our teams, asset management, property development, ESG, or finance. And thanks to a solid balance sheet, I'm convinced that the group will be able to size new growth opportunities in this market-adjusting period. Thank you very much for your attention. And now let's move on to the Q&A session. Which one?
Yeah, yeah, yeah. Sure. We will answer every question.
Good morning, Nicolas. Thank you very much for this presentation. Maybe I would ask you three questions.
Oui.
So maybe the first questions, so you told us that there will be some uncertainties in 2024. But could you please tell us more about your leasing challenges for offices in 2024? So that will be my first question. Maybe a second question on Icade's Santé. So you have given maybe more details. So shall we understand that maybe you have renegotiated, rediscussed with the Primonial on the terms of the agreements? And where are you maybe with discussion with third-party investors? And maybe the last question for the valuation of the assets. So we have a significant decrease in the valuation. So shall we expect further declines in H1 2024? Thank you.
Okay. Thank you very much, Florent. Well, as for your first question regarding the guidance and the uncertainty globally, I mean, maybe just a look once again at the guidance, and then we'll focus and dive in into the expiry schedule in 2024. Well, as for the guidance, the uncertainty is both on the property development market, of course, and on our leasing challenges regarding the investment division. You know, and we've shared that in July that we had something like roughly 25% of our rents at stake in 2024 with potential break options or end-of-leases. This amount is now EUR 78 million that are concerned. Our view at this stage is that roughly EUR 40 million are certain departures. They are mostly composed of assets that need to be repositioned.
You will see that globally on this segment of our portfolio, there's a global WALB of 2.1 years. But there'll be some departures in 2024. And on the well-positioned asset, the one and main concern for us is the Pulse building. The Pulse building is located in the northern Parisian region in Saint-Denis. It's a 30,000 square meter building. It's currently let to the Olympic Committee. And structurally, of course, the Olympic Committee will vacate next November. So, well, it's a great building. I mean, meet anyone from the Olympic Committee. Those guys are the best ambassador ever of this building. But definitely, the northern Parisian region is going through hard times. So it will take time. What we are doing now is working in order to split it to secure some multi-tenants.
For example, we are also working a lot on the common parts with Saguez & Partners to develop extra meeting rooms and services and amenities. We are in an area where the global environment is evolving. I mean, we are just at the foot on the line 12. The tramway will be also there in a few years. The global environment, and you will see that during the strategic presentation, is evolving. We still have land banks that we're going to develop. There's the high proximity of the Campus Condorcet with 12,000 users on a daily basis. So in the mid-long term, I have no doubt about this building. But definitely, the short-term period will be even more defensive for this one. So that's for the leasing challenges. Maybe just one last word, last element on the guidance. That was for the challenges and uncertainty.
Have in mind also that the guidance is also impacted by the financial products, of course. We might maybe be the only actor in the sector that a slight delay in the decreasing of the interest rate could be a good news for that, at least for the cash flow. So this could mitigate a bit the guidance. But for the two first elements, that's the reason why we made a cautious guidance. As for Icade's Santé, well, my first question for you, Florent, is it clear now? Okay. Good. Thanks to her. We try our best with the team to give you any proper details. So basically, that's where we stand today. So you see then nothing much happened in the last six months due to the main fact that, of course, Primonial is penalized due to the lack of inflows. But the strategic paths remain the same.
I mean, we are still confident in achieving the phase two by the end of 2025. I mean, there are resilient assets. There's the cash flow. The dividend is coming, as you saw. And it will also impact the group cash flow at the group level. So we are confident. There's absolutely no rush for us to sell those assets just for the sake of saying, "Well, the healthcare business is behind us now." Of course, we would have the opportunity to sell with a large discount to some opportunistic investors. But I mean, that would not be, in my view, a good decision and a good signal to the market.
And as for the international part, so the IHE, you see that you saw that with slightly delayed, we think that especially on the German portfolio, there are some concerns about operators that might need some extra asset management work. So this could slightly delayed, in my view, the execution of stage three. And we put 2026 in the presentation. So we are currently not renegotiating with Primonial because there's no need to. We just need to wait a bit. And in the meantime, I mean, take our dividends. And as for valuation, well, of course, valuation, I mean, for every office actor in the sector today is one of the main questions. Maybe three elements to share on that. The first one is yield. Of course, yields have been pushed up strongly by the high rise in interest rates.
I think the valuators, they did a good job of that, helping to restore this risk premium of real estate against sovereign bonds. So that's a good thing. You saw also that the valuation and the decrease in valuation vary greatly from one asset class to another and from one asset profile to another. If you take, for example, light industrial, only -3% for us. And if you take offices, I mean, the one assets we think need to be repositioned, they were -33% during this year, which means that from the peak in June 2022, it was -40%. So this varies greatly. And of course, we remain cautious due to the global uncertainty of the market. But maybe two things about that. The first one is that we have a strong balance sheet.
I mean, you saw that we have a good LTV level due to the healthcare business. We were definitely able to endure such an adjustment. That's for the first one. The second one is the level of confidence we have in the valuation due to the fact, and I think it's quite a specificity at Icade, well, at least was something I discovered when arriving 10 months ago, is that almost two-thirds, I think the exact figure is 64% of the portfolio is covered by a double expertise process, meaning that for two-thirds of our portfolio, we have two independent valuators that are doing on their own their proper valuation. And that, at the end of the day, we take the average valuation.
I mean, in an environment such as the one we are going through now, full of uncertainty with few transactions and no transaction, especially on the large volume, I think it's particularly useful to have this kind of process. And that's the reason why we have some confidence in the figures we just shared with you. Yeah?
Good morning. Pierre-Emmanuel Clouard from Jefferies. Just coming back on your rental challenges for this year. From what I understand, it's mainly non-core offices that will be vacated, so meaning that your.
And Pulse. And Pulse.
And Pulse.
Pulse account for EUR 10 million. So it's quite significant still.
Okay. Your vacancy for this segment is already above 30%. So should we consider that the 30% will never be offices anymore and will be transformed 100% of them? Or are you confident to at least release part of those offices? And I imagine that out of the EUR 78 million that would be renegotiated, part of them will be vacated again. So the vacancy should increase once more. So maybe yet this is my first question.
Okay. Well, definitely, on the occupancy rates, the rental challenges we are facing in 2024 will put pressure on our main KPIs, definitely, our spot at the end of 2024, but also, of course, some pressure on the cash flows in 2024 and probably 2025. As for our own offices that need to be repositioned, we will share it in detail with Emmanuelle during the strategic plan review. But what we have done on those 33 buildings is conduct an in-depth asset-by-asset analysis, clearly, to find the best scenario. We think that in the mid-long term, those won't be offices anymore. It's a matter of time, basically. And it's also a matter of constraints, technical constraints, financial constraints, legal constraints. And sometimes, the issue is not just at the level of the building but at the level of the global neighborhood.
So you have to work hand in hand with the local authorities for 5 or 10 years. So what do we do there? I mean, we'll be as pragmatic as we can. I mean, we'll try to maintain as much cash flow as we can during this intermediate period on which we are working on the repositioning plan. We are maybe changing the PLU, obtaining building permit to try to preserve as much cash flow as we can above this global WALB of 2.1 year, which is already a good news. I mean, we still have an average 2 years ahead of us to work on those assets. And after that, well, we think that there won't be offices anymore in the long term. And there can be hotels such as Helsinki, and I will see in the afternoon. There can be school, can be residential, pure residential.
There can be student housing. We'll be happy to share that with Emmanuelle and Charles-Emmanuel during the strategic plan. Just one last word. The output of the analysis and the workshops we've done during the past months is that more than half of the assets have now a proper action plan, analyzed, defined, designed. We are going, and the remaining assets are still under analysis.
On your guidance, what is your main assumption in terms of out of the EUR 78 million that will be renegotiated?
As I told you, we consider that at least EUR 40 million will be certain departures. They won't impact fully the year 2024. It will impact spots at the end of the year, our occupancy KPIs, definitely. This will put pressure on the KPI regarding the one we have just right there. It will put some slight pressure on the cash flows at the end 2024 but also on a full-year basis in 2025.
But on the remaining 60%, then you are not 100% sure, obviously?
Well, I mean, those, I mean, there are no, it's not because we think they are well-positioned assets that they will be 100% fully let every time. I mean, on an ordinary basis, even the best asset, I mean, some tenants, I'll take an example. For example, in Nanterre, and you will see that during the next hour, Groupama went away of our La Défense 4, 5, 6 building, just located behind the Eden project. I mean, in 2 months, we've already relet 84% of the building. So, I mean, that's the daily life of offices. One tenant comes in, one tenant comes out. So it's never 100%. So there might be some departure. There might be some small reduction even on the well-positioned, of course.
But globally, I think the departures will come for the one asset that needs to be repositioned, and Pulse, which also has a strong impact.
Okay. Thank you. And just finishing on your guidance on the property development segment, can you give us more color on the main assumption that you took, especially in terms of delivery but also in terms of new reservations and, obviously, the operating margin that you are targeting for this year?
Well, as for property development, once again, I think 2024 will still be, sorry, full of uncertainty, definitely. We were able, thanks to Charles-Emmanuel's team, to pivot strongly into bulk sales that help us. But when you do bulk sales and sell to institutional, of course, they see an impact on the margin and the cash flows because you sell at a lower price. But we are really cautious about our balance sheet as for the property development. So 2024 will still be an issue. I still expect some pressure on the margin. That's the reason why we came with this global guidance that we think is cautious. Hopefully, we'll have more visibility to share in July. Yeah? Have you?
Thank you. Hi, Véronique from Van Lanschot Kempen. Two questions from my side. I noticed that there wasn't a guidance on your dividend for 2024. Obviously, there is still a part that needs to be paid out from the santé. But is it your ambition to keep it stable for this year, or what's your view there?
Well, honestly, it's too early to tell. I really think that give a dividend policy in February, especially in this context, is definitely too early to tell. The only a bit I took at Icade is give a policy dividend in July. So now, more seriously, I think there's uncertainty on the one side and also full visibility on the other side because you all know that we've decided to split by half the special dividend, the roughly EUR 400 million split by half this year and next year. And I mean, the principle stays the same.
On top of that, we want to keep as much cash as we can in the company, given the global uncertainty of the environment, in order to be able to seize any opportunity that might arise and in order to fuel our strategic plan, which you will see, in my view, constitute a sizable ambition for Icade. So globally, you have, I think, some clues about what it could be.
Okay. Thank you. And then maybe, sorry, also coming back to the guidance, you already mentioned that you have quite conservative guidance in terms of financial income. I think in the slide, it mentioned 3.4% on average. Can you maybe highlight what your assumption is for the guidance on what you can get on your cash deposits right now?
Yeah. Well, we think that there will be a strong impact of the financial products selling this year. We are also cautious and took an average yield, taking account the overall projection that has been made on the rates. But there'll be significant input from the financial products this year. Won't share the proper figure, but it might be the one positive leverage we had also to have said that because if the central banks take more time, I mean, to decrease the high interest rates, I think we might be one of the only ones that could benefit from that due to the high level of financial products we have.
Okay. Maybe lastly, one question. In terms of disposals, anything included in the guidance, or is that still opportunistically seeing what you can sell?
Yeah. Well, disposal will be opportunistic, definitely. I mean, there's exactly the same that for the healthcare business. I mean, we are not first seller with the balance sheet we have. That's a strong advantage in this current market. It's even an opportunity to seize some opportunities from distressed sellers. So I'm not saying that we won't sell some assets. On the contrary, we are opportunistic. So if it makes sense regarding our strategic plan, if it makes sense in terms of financial equation, we'll be happy to do so, such as what we did last year.
Okay. Very clear. Thank you.
Thank you very much.
Hi. Good morning. It's Rob Jones from BNP Paribas.
Yeah, James.
Two questions from me. One potentially might just be a yes or no answer. I do obviously understand that Primonial has a financial incentive to execute on the purchase of stage two before the end of 2025. But is there a penalty for them not executing before the end of 2025?
No. There's no penalty. It's an incentivized scheme. I would say that there might be a, it's not legal, but a strategic penalty for them because for them, repositioning on the healthcare business and fully execute their stage two is quite important in their overall strategy and exposure to real estate. But there's no such things in the agreement as a legal penalty.
Okay. That's very clear. Then the other question was I'm looking at slide 28 where you've got your LTV at the end of the year, 33.5%. Obviously, that's well within the 30%-35% guided range, which is great to see. I'm then thinking from a cash flow perspective going forward. When you include the fact that you've obviously got dividend distributions to pay in 2024 that are relatively material, I think that might take the pro forma LTV back up closer to the level that you've seen in 2021 and 2022.
If I then add the fact that you've got cash EUR 1.4 billion, if I ignore the underwriting credit lines for now because realistically, that's a short-term refinancing solution ahead of a longer-term refi, say, the 2025 and 2026 debt, how do you go about ensuring that your LTV gets down to or remains at that 30%-35% level if you're going to refi 2025, 2026s rather than redeem 2025, 2026s?
Yeah. Well, but, of course, we still think that in the healthcare business, we don't expect so much from the first semester. But as I said, we expect something to happen at the end of the year at least and in 2025. So definitely, the path is still the same, and we are in the same trajectory, as you see. So this, of course, will offset the dividend we will be paying. So we are still in phase with the global trajectory shared. It's just taking more time, definitely.
So is it therefore fair to say that if you don't get further healthcare disposals within the next 12 months, your LTV will be notably higher than it is today?
Slightly higher, yeah, of course. But once again, in our view, no worry about the execution in the midterm of the healthcare business. I mean, there's no issue about the operators apart from Germany. It's a strategic move for Primonial and the global institutionals around the table. So we remain confident. It's just a matter of time. Thank you. I think they are waiting for the mic here for quite a while. Thanks. Just over there. yeah.
Sorry. I'm at the back of the room today. Marc Mozzi from Bank of America. On this LTV thing, I think it's as clear as mud to me, meaning what is your pro forma LTV right now on the EPRA standard because I think this is what matters. Then to follow up on Rob's question, how do you think that LTV will evolve, or how do you see this LTV evolving when you're going to sell entirely the healthcare business? Starting point, EPRA economic, and then how it goes, simply if you remove entirely the healthcare business. Then we're going to discuss about the reinvestment, dividend, whatsoever. But just a starting point because this number, it's an Icade number, which is maybe relevant for credit agencies, your bankers, and so on, but it's not an economic LTV or so-called equity multiplier from an EPRA perspective. Thank you.
Okay. Yeah, Mark. Sorry, it's not so easy to answer with the mic and having you in the eye. Well, about the EPRA LTV, it should be noted that the EPRA LTV today is even lower than this LTV in terms of including rates. And of course, if the healthcare business was not deconsolidated, the LTV EPRA will be higher than that. But in our view, once again, it's still at this stage a theoretical scenario. And that's definitely not the path we are working now. Sorry, Mark. It's not really comfortable, neither for you, neither for me. So we are not doing that. Of course, the thanks. I mean, there are some shares available in the front row. Okay. So that's what I say. Of course, the EPRA LTV today is even lower than this one.
It should, of course, get higher than that if you take a theoretical exercise of reconsolidating the healthcare business. But that's definitely not, in my view, what we have to do and what we need to do because in the long term, the conviction stays the same. It takes time. We have the ability, if we want, to sell at a large discount that does not make sense for the company. I'm sorry. Maybe, Anne-Violette, just one question because those guys are waiting for a long time. And after that, with a short break, we'll get to the strategic plan and all the questions you still have. Be happy to share in the next session.
Good morning, finally, Stéphane Afonso, Invest Securities. Just one question on my side on your healthcare division. Could you give us an update on your main KPIs, in particular in terms of occupancy reversion and also in terms of asset valuation on a like-for-like basis?
Yeah. Yeah. Well, it's not our healthcare division anymore for the one point. And secondly, just to say, globally, on the occupancy ratio, the payments of the rents, I mean, there's nothing specific. I mean, those are still resilient assets, steady cash flow, so nothing to share on an operational point of view. The EBITDA margin of the operators is still high, near to 2x. And apart from Germany, we have no sign of any major issues with the operators. Have in mind that this portfolio is mainly focused on acute care, which is no long-term stay. That's for that. And the valuation, as you said, slightly decreased in H2. It was slightly positive in June, and it was -3% globally over the year, so a slight decrease in H2 as for the valuation.
Okay. I understand that your portfolio is mainly about acute care, but we know that acute care operators are also under pressure. So to what extent appraisers are taking into account those pressures in their assumptions?
I think they are taking this as they always take the global environment in order to take their valuation. I mean, so I'm sure they've taken this in account. That led to this and I think the highest interest rate rise led to this -3%-3.3% decrease in the French portfolio.
Okay. One last question on office portfolio. Could you give us the reversion rate that was captured in 2023, please?
Well, not in 2023 because I think you are more interested in the future, but we're happy to share this reversion rate.
Of course. Of course.
No. Globally, we were in line with what we see, and we will be sharing for the future. We go to rental market values every time. And as for the future, you will see that in the strategic plan. The global reversionary potential on our well-positioned offices is -8.7%. So I know it's a question keep coming and coming and copping. So I think it was the time to give a proper and precise answer to that.
Thank you.
Okay. Thank you. I think it's time for a quick coffee and happy to meet you again for the strategic plan we are all waiting for. 10 minutes. 10 minutes break. 2 coffees.
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So, joining me for the second part of the day are three members of the executive committee: Emmanuelle Baboulin, Head of Commercial Investment Division; Charles-Emmanuel Kühn, Head of Property Development Division; and Flora Jachimowicz, Head of CSR and Innovation. And we are all pleased to present today Icade's new strategic plan for 2024-2028, a plan called ReShapE. So, together with my colleagues, we will share our convictions, being as concrete and as precise as we can, so that you get a proper view of who we are today, who we intend to be tomorrow, and how we want to get there. This presentation will, of course, be followed by the Q&A session. So, let's start our presentation with slide 5. So, Icade is celebrating its 70th birthday this year.
Over the decades, the group's profiles kept evolving through the cycle, both in its core business and in its various asset classes, to successfully adapt to the challenges facing society. Historic player as a housing developer, Icade has gradually diversified to become an investor and developer in the office market and then in healthcare assets. This complementary expertise and unique know-how as a developer and investor formed the group DNA, no matter the asset classes. This is who we are. As you know, I deeply believe in the value of having those two skills under the same roof. This will be a key differentiating asset to properly address the challenges of tomorrow and to capture growth. When I arrived at Icade, I was also struck to see that our CSR commitments have deep roots.
They are 20 years old, a time when these convictions were not so unanimously shared in the sector. This put Icade in the frontline, taking leadership in the areas of low carbon and biodiversity, using innovation as a strong catalyst to adapt and transform. People also kept talking to me about Icade's portfolio. Well, after a deep review we've performed with the teams during the past months, it comes out that this is a resilient portfolio and that we believe that more than 85% of our office assets are in line with the new needs expressed by our tenants, our customers. On top of this, we also have a wealth of expertise in other asset classes and the potential to accelerate at our fingertips through uniquely located land banks.
It's on the basis of these key competencies as an experienced, responsible developer, investor with a long-term commitment to its customer that I firmly believe in the group's ability to play a key role in transforming the city towards tomorrow. Well, the fundamentals for real estate have always been to properly understand the dynamics of the society in order to provide adequate answers to the way people want to live and work. Today's challenges are numerous and need to be addressed simultaneously at different scales, both district and asset level. At both levels, needs, constraints, and challenges are evolving. At the city level, the quest for quality of life is central. It presupposes lively districts offering multiple services accessible by smart and sustainable transportation. It requires mixed-use, inclusive neighborhoods in trade rating, housing, offices, retail, industrial, and leisure assets.
In environmental terms, the stakes are huge for the real estate sector in terms of both climate change and biodiversity protection. In addition to low carbon construction and the use of renewable energies, the aim is to achieve the no net land take objective. This means urban regeneration or rebuilding the city on top of the city. This has major consequences: operational, technical, and financial. At asset level, changes in uses call for new functionalities in terms of flexibility, services, and connectivity. Environmental issues are just as important in terms of reducing greenhouse gas emissions and improving building performance, which is essential for tenants. For those reasons, we are convinced that we have to be an integrated and responsible player capable of positioning ourselves across the entire value chain. So, what does it mean? First of all, we need to be able to build expertise in different asset classes.
Icade has this, from residential to commercial, with privileged long-term access to local authorities. Icade also has a real track record in developing large, complex projects and has the land reserve in its portfolio with value-creating potential. Secondly, you have to be able to manage these assets. Icade has this know-how and is constantly innovating to provide solutions tailored to the needs of its customers. This is, in my view, how you create value on a daily basis, building long-term partnerships. Thirdly, you have to know how to transform and reconvert the city in line with what I've just said. We've just shared the main challenges we are now facing. Of course, it's not an easy task to reconvert assets to new demand and environmental challenges, but Icade has the know-how to do it.
Last but not least, rebuilding the city on the city will undoubtedly come with the need for a solid balance sheet because a mere toolbox, no matter the level of expertise, won't be sufficient anymore, in my view, when money and time now come at a cost. Icade has definitely all these skills in its unique way, and we will try with the team to illustrate this throughout the presentation. Moving on to slide eight, where do we start from? Well, today, Icade has a portfolio of assets worth EUR 6.5 billion at the 31st of December, 2023. When I arrived 10 months ago, I carried out an in-depth analysis of the asset portfolio with the teams and decided to implement a new segmentation based on UCs.
The portfolio, as you can see, is now divided into four categories: offices, industrial assets, land banks, and other assets, just in line with what we've shared with you all in July. 82% of the portfolio is made up of offices, the vast majority of which we believe meet our customers' expectations in the long term. Emmanuel will be happy to come back to this in detail. The rest of the portfolio is already diversified, with 11% in the light industrial segment. Lastly, land reserves, which represent only EUR 100 million at historical cost, offer definite value potential, which we will illustrate also later. What's more, Icade draws on its expertise as a recognized mixed-use developer, ranked fifth in France in terms of sales. Icade sells more than 5,000 housing units a year, providing a real entry point for action on a neighborhood scale.
The gap between the housing offer and demand in France is widening, and this will stay more than ever the one first issue for any major mixed-use redevelopment in France. Icade has also experience in developing large-scale, mixed-use, complex, and sustainable projects. Recently, Icade has been selected to lead emblematic urban projects such as La Jallère, which Charles-Emmanuel and Flora will be happy to explain to you in detail. So, let's finally dive into our 2024-2028 plan on slide 10. Firstly, on the office side, the aim is to consolidate the portfolio and to ensure that it fits for the future. This means continuing to manage our office portfolio with a customer-centric approach, being very selective about the pipeline, and rolling out a proper action plan for the one asset that no longer fits with demand. Secondly, we want to accelerate the diversification of our asset classes.
We will leverage on our existing portfolio and know-how to develop and invest in the light industrial, student housing, and data center segments, consistent with who we are and the needs for the city of tomorrow. Thirdly, we will illustrate in concrete terms how we intend to contribute to the construction of the 2050 city. We will be building mixed-use, low-carbon, nature-friendly neighborhoods, capitalizing on our investments in innovation. Our business parks are a real demonstrator of this, and they are paving the way for Icade's growth in the coming years. Finally, as we always did, our development will have to be achieved while maintaining a solid financial profile. This will require a balanced allocation of our financial resources over the period between debt repayments and investments. And now, I'll hand over to Emmanuelle for the first part of the presentation on our portfolio.
Thank you, Nicolas. You know, for many years, we have been striving to meet our clients' expectations. Their demands have evolved over time, and we are constantly listening to them to identify their new needs. Five priorities clearly emerge from different surveys of office users. The first priority is centrality. It means good location. In 2022, more than 70% of moving companies opted for very well-connected places close to transport hubs. But it means also being in a lively and welcoming environment. Another key concern for the tenant is the ESG level of the building. Green Lease is the top one feature expected. The flexibility inside the lease contract and flexibility inside the building are also expected by all the tenants. They are 75% to opt for flex office, and they look for shorter lease terms to be able to adapt easily the spaces to their needs.
In addition, companies are looking for turnkey solutions and comprehensive services that leave them with nothing to manage. They have many requirements, for example, for coworking, lounge spaces, soft mobility solutions like charging stations, or large bicycle storage. Finally, the price is also very important, following two years of high inflation and considering that real estate stands at the second-largest operational expense for companies. It's worth noting here that prices in the Paris CBD exhibit a significant gap compared to other central locations. For instance, there is a gap of EUR 400-EUR 600 per sq m in prime rent compared to La Défense. Let me now focus on our office portfolio. 86% of our offices are fit for future, which means they are ready for changing uses and expectations. They represent EUR 4.6 billion with a yield of 6.7%.
They already meet the new demands with good location, very high quality of facilities and equipment, a wide range of services, and best-in-class ESG criteria. They are service-oriented, and on top, they are proposed at an affordable price. I can highlight our building Origine in Nanterre Préfecture at the quarter of Technip Energies and EDF Renouvelables. This building was awarded many times for the high level of its environmental labels. Another example is the building Next, undergoing refurbishment, already led to the insurance company April one year before its delivery. As I said, location is key for companies. The accessibility and environment of their premises are also very important criteria. 88% of our well-positioned office portfolio is located in the Paris region, 30% in the Paris area, and 28% in the Nanterre area, just behind La Défense.
I remind you that the occupancy rate in Les Terrasses de Nanterre is almost 100%. 9% of this portfolio is located in La Défense, which is currently suffering from oversupply, but which offers real potential for a rebound thanks to its location and many advantages. 12% is located in central districts of many regional cities such as Lyon, Marseille, Bordeaux, and Toulouse. Let's move on to slide 15. Considering tenants are not only users of space but first and foremost customers, we have carried out a new satisfaction survey to understand their needs and improve our offer and relationship with them. According to the latest survey, 86% of our tenants are willing to benefit from tailor-made real solutions, exactly what we offer. We work to improve occupancy management for square meter performance. We strive to reduce carbon footprint and contribute to our tenants' sustainable development strategy.
We improve the quality of real estate use with hospitality management and coworking offers. The development of this comprehensive offer called Icade Solutions also explains the improvement of our Net Promoter Score to +14 points in 2023. Concrete examples are presented on slide 16. These include the use of renewable energies, such as solar panels, the Bail Engagé Climat by Icade, which is a new lease with criteria defined together with the tenants to improve the environmental performance of the building, the 1,000 charging facilities for electric vehicles, or the 6,000 sensors to be installed in 2024 to improve the use of spaces. This offer, adapted to new uses and challenges on climate change, enhances the customer experience and helps them to reduce costs. The well-positioned office portfolio presents solid operational KPIs and a limited downside on future renewables.
They provide 82% of the rents, or EUR 244 million in 2023. Their financial occupancy rate is above 90%, and their reversionary potential is -8.7%, the reason being that the current rent has been strongly indexed for several years, and when we sign a new lease, we return to the ERV. The average lease break is 4.1 years. An interesting point to note on this type of asset, the duration of Icade's relationship with the tenants is almost nine years. This is due to the significant investment of our teams to maintain a very high level of communication, trust, and satisfaction. To illustrate my point, I'd like to share an interview with Mr. Julien Renault-Péret , real estate director of the Pierre & Vacances-Center Parcs Group, which has been a tenant of Icade for over 20 years.
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So you see how happy our tenants are. Let's move on to slide 18. The attractivity of this well-positioned asset is confirmed. 132,000 sq m were signed on the well-positioned asset, including 47% of new tenants. It represents EUR 32 million of annualized rent. And thanks to these signatures, we reached an occupancy rate of 100% for three assets in 2023. The first one is Origine in Nanterre Préfecture. The second one is Em' Factory in Marseille, the new headquarters of Bourbon. And the third one being Fresque in Paris. All of the assets benefit from the best level of environmental labels. Let me give you now an example to demonstrate our ability to swiftly attract new tenants. This building, La Défense 456, is a 16,000 sq m building located in Nanterre, in the same sector as Origine and Eden, the future Schneider headquarters.
After the departure of Groupama in September 2023, we managed to relet more than 80% of the surfaces within two months for EUR 4 million of rent with two new first-ranked tenants. Another asset which illustrates our Icade's diversified tenants' needs over time is this building, which you will visit later during the asset tour. It has been fully let by U Enseigne since 2012. U Enseigne looked for new spaces with new fitting-out premises, allowing flex office, new ways of working, and a lot of services. To match these requirements, we have proposed to redesign and to adapt the building and to provide advice for transforming the premises. By doing that, we managed to renew the lease for nine years on the whole building, generating EUR 4.1 million annualized rent. Let's move on to slide 21. I would like now to talk about our pipeline.
We have reviewed our development pipeline to target the best opportunities for creating value, to match our strategy, and to build new assets totally in line with users' needs. The pipeline is focused on a creative investment on prime assets. The first one is 29-33 Champs-Élysées, a project of prime offices and retail. I'll tell you more about it in the next slide. Two projects are under study for the future pipeline, firstly Seed and Bloom, that are two assets located in Lyon Part-Dieu, which is the heart of Lyon CBD. Both will be state-of-the-art office buildings with large and pleasant outside spaces and rooftops. They are part of a larger project that also includes the conversion of an office tower into housing by our developer. Secondly, on Le Ponant, we can consider some medium-term value creation projects.
Following the latest acquisition done in 2023, Icade is now the sole owner of a property complex located in the 15th district of Paris. This property is very well located between a very large public park and the Seine River. Let me come back to our emblematic project in Paris CBD on Champs-Élysées. The building permit was obtained at the end of 2023. The floors are free. The works are expected to start at the beginning of 2025 after the Olympic Games. In the meantime, we have created value through short-term leases. To be precise, we signed 2 18-month leases for EUR 3 million. It represents more than 12,100 square meters of offices and retails. The best ESG labels are obviously targeted. This project represents an investment of EUR 95 million for the next 3 years. The delivery is expected at the end of 2027.
We are confident we can improve the previous rent by more than 160%, and we already have several prospects interested. Let's move on to slide 23 to review the share of assets non-considered as well-positioned. These assets represent only 14% of our office portfolio, with a value of around EUR 700 million. They account for 18% of our rental income and have a WALB of 2.1 years. These to-be repositioned assets are non-strategic. Over the past few months, our development and investment teams have been reviewing these assets to identify the best solution on a case-by-case basis. Conversion, disposal, or refurbishment have been studied depending on their location, their structure, and market sector. Today, we have already identified projects for around 50% of this to-be repositioned portfolio.
In the meantime, keep in mind that these assets still provide rent income, which gives us time to design the projects that could be carried out through partnerships or using in-house development. Whatever the case, we have decided to allocate a limited amount of CapEx of EUR 150 million by 2028 on these assets. One example of conversion of buildings which you'll see during the tour is the transformation of office buildings into hotels and residential hotels. We already carried out such a conversion with the Monaco Building, which has become a much-appreciated hotel with a restaurant for the Parc's tenant companies. Building on the success of this first hotel operation, we have launched a new project to create more than 10,000 square meters of hotel and residential hotels. The permit is already submitted, and the delivery is expected in 2025. This project is already fully let.
The EUR 41 million invested will benefit the whole park and will, for sure, reinforce its attractivity. As I explained before, we extensively study various scenarios for assets to be repositioned, and we opt for the one offering the best return. Regarding Étoile Park, the obsolete office building of 5,600 square meters in Nanterre should be transformed into a school. Indeed, this area is very attractive for higher education. We know many schools are looking for premises in this sector, and we already have expressions of interest. The yield-on-cost of the project is above 6%. The building permit will be submitted before June for delivery in 2027. I now give the floor to Charles-Emmanuel, who is going to talk to you about another project to convert an office building of our portfolio.
Thank you, Emmanuel. This asset is a 24,000 square meter office located in Le Plessis-Robinson, in the south of the Paris region. Given the departure of the tenant at the end of 2023, the property development is now planning to build a 649-unit residential program, with construction scheduled to start in summer 2024. This transaction shows the excellent complementarity of the group's different skills. Icade Property Investment has benefited from secure and high-yield cash flow from a quality tenant, Renault, and has been able to develop a joint operation with Icade Property Development, offering it an opportunity to carry out a residential project in a great area of the Île-de-France region. The main strengths of this project are value creation through redevelopment in a popular residential location and a residential project boasting the highest environmental standards. The Plessis-Robinson project is a real demonstration of synergies between investment and development teams.
Thank you, Charles-Emmanuel. Thank you. So let's move on into our plan to accelerate our diversification. As mentioned previously and illustrated on slide 28, the group already has strong expertise in segments other than offices, notably light industrial, student housing, and data centers. On top of this in-house expertise, the reason we want to increase our exposure to these markets is that they all rely on solid fundamentals supported by strong demand and inadequate offer. Therefore, they represent real growth opportunities for Icade, with several projects already identified leveraging our unique land reserves. So let's first focus on light industrial segments. This asset class is characterized by solid market momentum. Demand, averaging 1 million sq m per year in the Paris region, is resilient, leading to a decline in available supply between 2019 and 2022.
The average rental value for this asset is growing strongly, in particular around the A86 axis, as in Rungis. We are seeing CAGR growth of +7% over 2016-2023. The average prime rate for light industrial assets is holding up well, reaching 5.75% by the end of 2023, confirmed by a JLL study published this month. So let's move on to slide 31, and you'll see that Icade already has a diversified portfolio in this segment, representing an overall EUR 703 million in gross asset value at the end of 2023. This covers several asset types, such as workshops, TV studios, storage warehouses, and data centers, which we will come back to in a separate section. So our light industrial assets are strategically located in our two business parks, next to the north of Paris and in Rungis. In square meters, they each represent 54% and 38%, respectively.
Both benefit from excellent accessibility with direct access to major motorways. Icade has succeeded in enhancing the value of this business park and making them attractive. To achieve this, Icade has deployed a wide range of services for park users, including gyms, catering services, hotels, business centers. Icade also brings this business park to life by offering a wide range of events on a variety of subjects, such as sports, music, or focused on CSR themes. On the environmental front, the parks are representing the cutting edge of green innovation, with the deployment of numerous initiatives to promote waste management, water and animal preservation, and the use of renewable energies. This has resulted in a significant reduction in our carbon footprint over the period 2019-2023 and a positive impact on biodiversity.
So our efforts to enhance the value of our business parks, combined with our expertise in meeting customer expectations, have enabled us to attract well-known international tenants operating, as you can see, in a wide range of industries. In the Rungis area, for example, our customer portfolio includes several renowned gourmet chefs, such as Pierre Hermé, Christophe Michalak, or Alain Ducasse. To the north of Paris, our portfolio of tenants ranges from LVMH to the AMP Visual TV studios, not forgetting the Schindler workshops. And to illustrate my point, I'd like to invite you to watch an interview with Mr. Gilles Sallé, who is president and founder of AMP Visual TV, which is the leading TV service provider in France and the third in Europe, and which renewed its lease in the Porte de Paris business park for over 27,000 square meters in 2023.
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As you can see, long-term partnership with AMP, contributing to solid operating indicators for this segment in our portfolio. There's still room for improvement. Over the last 4 years, the occupancy rate has been between 91% and 94%. In 2023, almost 90% of the year's break-option have not been exercised by tenants, and average rental values for our two parks have risen from EUR 141 per sq m to EUR 163 per sq m. Latest leases have even been signed at circa EUR 170 per sq m. That's the reason why reversion potential is positive at +4.3%. So our assets also boast a high yield of 7.9% that shall improve within the coming years and represent annual rental income of EUR 49 million. Leveraging on our strengths, the group intends to accelerate its development in this segment.
In that respect, we are working on five potential projects in our Rungis business park that you can see in blue on the map. Some of them will be presented to you during the tour this afternoon. All in all, they represent additional CapEx of circa EUR 150 million for rents of EUR 14 million. So our targeted yield is around 7%. One of the main examples of development on the light industrial segment is the project Ottawa. This is a three-story industrial building, the first of its kind in the park, representing EUR 50 million CapEx and additional revenues of EUR 3.4 million. The building permit will be submitted in Q2 2024, and delivery is scheduled for late 2026. The student housing segment is the second area in which we intend to position ourselves over the next few years. Why, you might ask?
Firstly, because if housing is a major issue in France for the coming years, student housing is definitely an issue in itself with a structurally undersupplied market. In 2023, the number of beds offered by private and public student housing will be around 6.4 times lower than the number of students. As a result, this segment boasts a very solid occupancy rate above 95%. At the same time, the quality of the offer is insufficient, with very few new-generation residences meeting the expectations and needs of students. Secondly, because Icade has been developing student housing for years, we have the know-how, Charles-Emmanuel and his teams. Indeed, since 2015, we have delivered 16 student housing representing over 4,000 beds. Between now and 2028, sorry, Icade has already identified nine potential projects representing more than 2,300 beds.
We carry out these operations in partnership with leading operators such as UXCO Group by Brookfield or The Boost Society by AXA. To illustrate our expertise in this field, I would like to hand over to Charles-Emmanuel to present three projects in particular.
Thank you, Nicolas. The first project was carried out in co-development with the investor UXCO Group. We developed in Villejuif more than 100 beds spread over 5 buildings for a 23,000 square meter project. It was delivered at the end of 2022. The common areas of these residences are quite exceptional, representing more than 10% of the global area. They are entirely focused on the theme of care, taking care of oneself, with the presence of fitness rooms, silent rooms, and even sauna and projection rooms. Part of the ground floor is also used to host the Vaincre le Cancer Association as well as other associations. The next project is a student co-living residence developed for The Boost Society. It's located in Créteil on the site of a former La Poste sorting center.
It develops nearly 600 beds, totally more than 14,000 square meters in a single circular building. It's also part of a residential real estate complex that includes 140 family units. Works began in September 2023, and the project is currently undergoing structural works, with delivery scheduled for the end of 2025. The third operation takes place in Levallois-Perret, a prime municipality on the western edge of Paris. It's a major student housing development and a showcase of Icade's know-how in complex building transformations, driven by the brand AfterWork by Icade. It relies on three key items. First, it's a mixed-use program emerging from an obsolete and monolithic tertiary building of about 20,000 square meters that will be split into several buildings conceived around the theme of student life. Also, it promotes urban integration thanks to several diversified architectural sequences above a new commercial ground floor.
It includes a lot of green outdoor spaces, which better connect the project to the public of the city to the public spaces, sorry, of the city. Finally, by preserving the existing structure, we achieve a remarkably low environmental footprint, resulting in minimal carbon impact and avoiding further land artificialization.
Thank you very much, Charles-Emmanuel. On the basis of these elements, our Porte de Paris Business Park is the perfect playground for such projects. There is notably one block, ideally located at the foot of Metro Line 12, overlooking the Place du Front Populaire, near the student Campus Condorcet, a 64,000-square-meter area attracting almost 12,000 users. Initially dedicated to a tertiary program, we've decided a shift in approach, hand in hand with the local authorities, to focus on housing and specialized housing. Therefore, this block shall be developed with a mixed program, including a student residence developing 650 beds as well as a restaurant and commercial space open. These projects represent an investment of EUR 75 million and a potential income of EUR 4.3 million. Finally, let's move on to the third identified growth segment relevant for Icade: data centers.
Well, I know that you are now all familiar with the potential of this growing market, so I'll be brief on that. The fundamentals are strong, and new capacities and infrastructures rapidly absorb demand. In 2022, for example, new supply in the Paris region represented 63 MW for a take-up of 46 MW. The development of supply in this market is further constrained by, one, access to energy, for which authorization must be obtained from Enedis or RTE. Two, the necessary prior agreements with local authorities are harder and harder to get. And thirdly, the scarcity of land meeting all specifications. In that respect, Icade has a real competitive advantage in this segment due to our specificities. Firstly, the group has close and long-term relationships with local authorities. Secondly, we are able to propose data center projects that feed in a broader neighborhood development project.
What's more, we already have expertise in data center construction and work alongside major operators such as Digital Realty or Equinix. And finally, we have a unique land reserve, ideally located on the outskirts of Paris. To date, Icade has positioned itself on a relatively light CapEx business model, which consists of supplying the building shell and power supply to an operator, then equips and operates it: a pure real estate model. On this operation, we carry around 30% of the overall project cost and aim for a yield between 5%-7%. Other business models, more CapEx-intensive but generating higher yields, involve operating data centers directly, either alone or in partnership. This is not the group's historical business model, but we could consider this type of configuration, particularly in the context of JVs leveraging on our land banks.
First things first, we want to start with maximizing value creation by securing, firstly, building permits and power agreements. On page 48, you'll find a focus on our existing portfolio with six data centers mostly located in the Porte de Paris Business Park. Five are already operational, and the additional one with Equinix is in the pipeline for delivery in 2025. Today, these five assets represent an IT capacity of 18 megawatts and an annual rent of EUR 4.5 million. It's worth noting that data centers projects are no exception to our CSR policy and that we intend to ensure sustainability as much as possible. On our operating assets, we are working on solutions for recovering waste to serve neighborhood buildings, renovating air conditioning systems for greater energy efficiency, and discussing the implementation of climate leases.
On the project currently in the pipeline, see on the slide, we are aiming for HQE Excellence certification first in France, and we are working with the top of the range operator, allowing to achieve a PUE below the European average. Our loan reserves offer us new growth opportunities in this segment. I mean, in the Porte de Paris Business Park, we have two projects, including the one in the pipeline. They represent additional investments of EUR 76 million with annual rents of EUR 5.2 million. The targeted yield for this project is over 6%. In the Paris Orly-Rungis Business Park, we have a new hyperscale data center project representing EUR 280 million in CapEx and EUR 20 million in revenues. This hyperscale project represents a 130 MW power supply over approximately 65,000 square meters.
So, of course, this project is part of a long-term schedule because, as you know, access to power takes time. And currently, power supply instruction is ongoing with Enedis and RTE, and we plan a building permit application and instruction from Q2 2024. So, to that respect, construction would start in 2028 for delivery in 2029-2030. This project concludes the section on our portfolio diversification target, and now I'm happy to hand over to Charles-Emmanuel and Flora to share our vision of the city of 2050 and illustrate how Icade will concretely play a role in this transformation.
Thank you, Nicolas. We have observed a dual transformation: a shift in usage patterns and an ecological transformation. Therefore, we decide to act that our actions must have positive, proven, and measured impacts. First of all, a positive impact on the planet by integrating the urgency of the fight against global warming. Secondly, on profit, considering that economic performance and sustainable value creation go with taking into account societal and environmental issues. And finally, on real estate assets that we develop or regenerate into new locations adapted to future uses and expectations. Building a 2050 city means thinking sustainable mixed-use projects. To illustrate my point, I propose to see an interview with Raphaël Michaud, Deputy Mayor of Lyon, who comments on the Odessa project, a perfect example of how Icade is responsibly transforming the city.
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Let's move on slide 55. The Porte de Paris business park is a perfect example of the evolution we are aiming to bring from a tertiary district to a more mixed-use area. In this district, which was mainly made up of offices and light industrial premises, we have, alongside the municipalities of Saint-Denis and Aubervilliers, the ambition to introduce a significant proportion of residential, whether in residences, student or managed, or in family housing. Such a project is part of a long-term vision. On this plan, the development of the red and the green blocks will make it possible to develop housing units and student residences for a total surface area of around 100,000 square meters. Just have a look on the project time. This residential project will be developed by the property development teams on one of the group's historic land banks.
Such a project is the fruit of a long-term relationship with the local authorities, who have historically worked very closely with our commercial real estate division. The first building permit authorization will be deposited before the end of this month to develop more than 9,000 sq m with mainly 404 apartments. Let's move on to slide 57. A few words of the history of the Orly-Rungis Park. With the transfer of the old district of Paris to the Rungis Market, the Rungis Park has been developed in the '70s and became one of the largest sites in Europe offering activity buildings for rent. Since the late 1990s, several activity buildings have been converted into office spaces, leading to a mixed-use area blending light industry with office spaces. From 2017 onwards, we have been considering residential projects to further strengthen the link with the city of Rungis.
This is the start of a 182-unit housing project on the edge of the suburban district that was delivered in mid-2021. Discussions are continuing with the authorities to develop a new mixed-use district identified in red and blue on the map, the Estérel-Nord District. This project, which you will discover during the asset tour this afternoon, involves transforming and requalifying four buildings of 21,000 square meters to introduce residential and create a new mixed-use polarity. The project will develop 38,000 square meters of family units, co-living for young people co-developed with UXCO Group, and 11,000 square meters of light industrial premises for Icade tenants. It's also a virtuous project from an environmental point of view. Insofar as it's allowed, to preserve the current business buildings, to renature the area, and to optimize water resources.
This project will contribute to open up the Estérel-Nord District to further connect into the city. The beginning of works is scheduled in summer 2025. I will now hand over to Flora, who will elaborate on the challenges of the 2050 sustainable city and explain how Icade is meeting them.
Thank you. Thank you, Charles-Emmanuel. At a time when no one is ignoring the environmental challenge we face and the necessary ecological transition to achieve French and European ambition, we want to affirm once again our deep conviction on the matter. We want to go beyond and lead the way towards stronger ESG actions. As Emmanuelle and Charles-Emmanuel mentioned before, we have already implemented several action levels: improvement of building performance, low-carbon building, renovation and restructuring, and last but not least, we do innovate. For the commercial investment, our investment plan for sustainable works has grown to EUR 145 million for 2024 to 2030, with around EUR 66 million already invested between 2019 and 2023. By 2030, 95% of our well-positioned offices will be aligned with the SBTi 1.5 degrees trajectory and energy efficiency regulation.
For the property development, we took two strong commitments which will impact the majority of our carbon construction footprint. In 2030, a third of our building will use wood and bio-source materials, and a third of our operation will be from refurbishment. This will let us stay in line with our 1.5-degree trajectory on our three scopes. We will be able to produce these results thanks to our AfterWork and Ville En Vue offerings, as well as our subsidiary, Urbain des Bois. We are deeply committed to inventing concrete solutions to reduce our carbon emissions. Our work with the ecosystem and our investments in startups are already helping to respond to our carbon challenges in an operational manner and to contribute to business. A few words on slide 61 about Urban Odyssey, our startup studio specialized in our business perimeter, which allows us to find innovative solutions and scale them.
As an example, we are talking here about bio-source materials, offsite design, wood construction, or managing systems of our carbon emissions. The originality of Urban Odyssey lies precisely in this ability to be equally within a corporate logic, capable of deploying on a large scale and of being very involved on a daily basis in the creation of the startups that we need. The interest for Icade, concrete value-creating operational solutions off-the-shelf, anticipates our challenges. In order to achieve our ambitious goals, we need to put innovation at the beating heart of our strategy. This is the reason why we are investing in 16 startups focused on distributing low-carbon solutions, biodiversity and soil protection, new uses, and operational performance. Let's now move on slide 62. Our commitment is not only to reduce carbon emissions. It goes beyond that. The challenge is also to protect biodiversity.
As you know, our climate and biodiversity strategy was approved in 2022 and 2023 by more than 98% of our shareholders. The model of urban development and construction has long been based on the principle of urban sprawl, which is artificialization of land. The objectives of zero net artificialization set by the climate and resilience law adopted in July 2023 precisely rectify the situation. And obviously, this represents a major challenge for the real estate and urban planning sector, which must adapt its own development model. We established in 2023 a new method based on recognized standards in order to produce biodiversity assessment. We also have set ourselves ambitious objectives for commercial investment and property development, and the first results are already encouraging.
As an example, we rely on the innovative solution from Urban Odyssey, in particular on the management and revaluation of rainwater, on the revaluation of construction site land, and on an artificial intelligence-based solution now offering to collect all the biodiversity data available on land to then optimize its protection during a development project. Finally, I'm honored to share with you details about the Athletes Village that we recently delivered on time and within budget, which is obviously expected in a real estate project in general but rarely achieved in an Olympic project. We are therefore no longer in the intention or in the ambition. We have already carried out a large-scale operation over several hectares, meeting the best low-carbon and biodiversity standards, and making a lot of constructive innovation.
This mixed-use program is the archetype of what will be the 2050 city, all different kinds of housing units, offices, activities, shops in a full universal accessibility. We created a 3,000 square meter urban forest planted with indigenous species, and we used bioclimatic design to create 2050 climate-adapted buildings, optimizing home heating and cooling. Designed five years ago, this operation remains ahead of its time since we finally managed to build less than 740 kilos of CO2 per square meter, already reaching the environmental regulation at its 2031 level for the housing buildings. To achieve it, building at almost 40% less carbon than the common way, we monitored the carbon footprints within our daily operation exactly like the financial balance. It is therefore a state of mind to be integrated into the daily life of a project manager, and this is what we focus on at Icade.
We did not realize this project alone, and that's also a specificity of our will to connect with the best actors in the ecosystem. We surround ourselves with the right partners as early as possible, and this is essential given the scale of the climate challenge. As an example, we work here very closely with CDC Habitat, Banque des Territoires, and Solideo. Charles-Emmanuel will now present you two other projects that are emblematic of Icade's ability to position itself on major urban regeneration projects.
Thank you, Flora. The first project is the one developed by our dedicated offer called Ville En Vue. It's located in Blagnac at the heart of the economic activity of Toulouse. It's a model of tomorrow's city offering nature, urban life, and low-carbon development. The area is just near a shopping center belonging to Klépierre, with good access to public transportation as well as urban halls. CDC Habitat and Icade, represented by Urbain des Bois, Synergies Urbaines, and Icade Promotion, are planning to build a lively mixed-use neighborhood with 450 housing units and 4,000 square meters of working spaces, along with local services and shops for everyday life. The aim is to design and build a showcase low-carbon piece of the city, featuring buildings meeting RE2020 standards and placing nature at the core of urban development. Let's go in Bordeaux with the project of La Jallère.
The ambition of this project consists in developing a new urban model by converting a former business district, with, in particular, the Caisse des Dépôts, into an urban neighborhood in a natural environment. Surrounded by forest and marsh, next to the Great Lake of Bordeaux, these former business units built in the 1970s are now empty. The project consists in converting office spaces into housing by upgrading and renovating existing structures and building new programs based on wood. At the same time, the project will be preserving nature and enlarging its place by moving down from 70% to 50% the waterproof surfaces. Finally, the project will develop cycling facilities and public transportation. This new program is showing the way to the city of the future.
With altogether 2,500 housing units for families, active youth, as well as students' accommodation, but also higher education institutions and coworking, La Jallère will be an example of a new city life enjoying high-quality urban facilities in the middle of a natural environment with its full biodiversity. La Jallère is a showcase low-carbon urban project, and we are very proud to announce that this project has been designated last week as one of the 22 projects in France supported by the ministry as Territoires Engagés pour le Logement. So thank you, Flora and Charles-Emmanuel. This project perfectly illustrates, in my view, Icade's DNA and the role Icade intends to play in the long term, leveraging on what we have already achieved in mixed-use and low-carbon areas. On slide 67, I'd like to turn now onto the financial section.
Well, our balance sheet is one of our key assets, especially in this uncertain environment, and we intend to maintain a cautious financial policy over the coming years, as we have always done. Firstly, this means keeping our balance sheet ratios under control, and we aim to maintain a global trajectory based on an LTV ratio, including duties between 30%-35%, an ICR ratio above four times, and a net debt-to-EBITDA ratio below nine times. In addition, we will strive to maintain a significant level of liquidity, largely covering our debt maturity, and to maintain a healthy and diversified funding structure. In terms of interest rates, we will continue to apply a prudent hedging policy, and we are aiming for a minimum hedging rate of 85%, given the projected debt over the next three years is fully hedged.
In order to maintain this balance sheet structure and meet the target ratios, we plan to use our resources in a balanced way to finance investments and reduce our grooss debt. Many of you asked us about healthcare proceeds reallocation and, more globally, about capital allocation for the coming years. Here is a summary of proceeds and uses over the period 2024-2028, focusing on the non-recurring and, therefore, of course, excluding the effect of cash flows and recurring dividends. Over the period, we anticipate roughly proceeds of EUR 4.2 billion from the disposal of healthcare business, EUR 2.9 billion, and other disposal, EUR 1.3 billion.
We plan to use this EUR 4.2 billion as follows: EUR 1.8 billion for investment CapEx, consistent with the ambition we've just shared throughout the presentation. EUR 1.7 billion debt repayment to fit our financial policy. And EUR 700 million in special dividend following disposal of healthcare activities. So now let's move on slide 69. In order to give you more visibility about capital allocation, here is the indicative breakdown of the estimated EUR 1.8 billion investment over the 2024-2028 period and targeted yield by category. So we are estimating roughly EUR 900 million of development CapEx covering the current pipeline, the new diversification project, and the asset reconversions. In terms of diversification, the yields of projects, of course, will vary depending on the asset class and the retained business model between owner-only and owner-operator.
As you saw, there is a potential for a much larger amount in terms of development, which gives us flexibility. On average, we are aiming for a yield above 6%. For asset conversion CapEx, yield will, of course, be analyzed, but it won't be the sole criterion. Indeed, some reconversion can generate value beyond the asset itself, such as the hotel project in the Orly-Rungis Business Park you will see this afternoon. So in addition, some expenditure will be necessary to ensure the liquidity of these assets in the market. But once again, as those assets are fundamentally non-strategic, we've set a cap of EUR 150 million to be dedicated to those redevelopments. We've also retained, as you can see, a cash cushion for potential acquisition in order to be agile in sizing external growth opportunities.
This to illustrate that even if there's room for investment on our existing assets, we will still be looking, as we do today, closely at all opportunities that might arise in the current market. So overall, the EUR 1.8 billion budget will generate revenues estimated at EUR 120 million by the end of the plan, which is a sizable ambition for Icade, allowing us to ReShapE its profile with the flexibility to accelerate depending on market conditions and potential partnerships we could structure along the way to capture the numerous opportunities offered by our portfolio. So in conclusion, well, Icade today has good operating fundamentals, creative development opportunities, and a stressed-on balance sheet.
Faced with new social, economic, and climate challenges, we will roll out its new roadmap over the period 2024-2028, which aims to ReShapE the way we work, to shift from two-business line to one holistic approach, ReShapE our portfolio to further improve our offices and increase diversification, ReShapE the districts to create mixed-use and sustainable areas for the people that live in. We will leverage on our know-how, expertise, capacity for innovation, and solid balance sheet to respond as an integrated long-term operator to the changing nuances and challenges of the 2050 city. To execute this plan, we can fully rely on the dedicated and engaged teams at Icade. Their deep attachment to the group, their daily commitment, their strong awareness of social and environmental issues are essential pillars for successfully implementing our initiatives. Together, we're ready to tackle the challenges ahead and pave the way towards a sustainable future.
Thank you very much for your attention, and happy to move on now to the Q&A session with the team.
Yeah, Flora?
Thank you very much for this presentation. Florent Laroche-Joubert from Oddo BHF. I would have maybe two questions to start. Maybe my first question, so you have presented us a lot of projects with yield targets in terms of yield on cost, but what would be the value creation expected for all these projects? What are your criteria in terms of value creations for the next five years? And maybe my second question would be on the evolution of the net recurring cash flows that we can expect in the five coming years, and maybe if you can give us maybe some words on your dividend policy. Thank you.
Okay. Well, I'll take those.
Well, Forent, about the projects, so you saw the main KPI. Well, it's targeted, of course, the bases, but most of them are really already underway. As for value creation, as you saw, there's room for value creation because we are investing in projects that are accretive in terms of yield. We invest targeting 6%-7% yield on cost for asset classes that are cap rates below that. And if you take our prudent approach, we took around 5% financing cost over the period. That's reductive. And all in all, the value creation will depend on many factors, actually. Of course, indexation, but also the decrease in the interest rates. So for that, you have to make assumptions. So that's not an easy task, definitely.
But what we deeply believe in is that all the work we are doing, such as in Rungis, at the end of the day, will benefit and will reflect in the yield. So there will be a price for our asset management work. Today's Rungis must be, I think, above 8%, maybe 8.5%. So there's definitely room for improvement on a much larger scale, as you can see. And we also think that regarding the office, the deep conviction we have on a customer-centric offer will make a difference tomorrow regarding the basic average ERVs. So it's not easy to come out with a proper figure. It involves some macroeconomics, of course, but there are many things that could leverage that in our view. And as for cash flows, well, it's also quite difficult to come out with some assets in there.
Of course, we've made some, but we've not shared there due to the large uncertainty, especially on the property development division at this stage. It's quite hard to tell what will be the market in 2028, honestly. What we provide you is that our revenues in the investment division through the investment there will be able to get an additional EUR 120 million revenues, but it's not so easy to have a clear view on cash flows, definitely. And as for dividends, as already shared in July, in the coming years, the special dividend coming from the healthcare business will help and support, of course, the global dividend. Our philosophy should remain the same. The idea is that it will help for the coming years to deliver satisfactory yield.
After that, once Icade has finally ReShapE its new profile, it might be time for a new dividend policy, as it was the case in the past.
So we got next one on.
Hello. Adam Shapton from Green Street. Thank you for the presentation. I had two questions. I'll do the first one, and then come back to the second if that's okay. Just looking at slide 69, so the bridge to the EUR 120 million of revenues that you presented. So the development capex, it's roughly 6% yield on cost, and that's headline rents. Is that correct, the yield on cost that you present based on headline rents? So I guess we get to sort of EUR 55 million, something like that.
Yeah. It's a bit more like that because the started pipeline is just the remaining CapEx from the EUR 900 million pipeline already in. So basically, you get EUR 45 million of rents regarding the started pipeline already.
Yeah. Okay. So the balance to get to 120 from the acquisitions and the ESG and other CapEx, are you sort of looking for a similar yield on that?
On the ESG CapEx?
Yeah. I'm just trying to understand what's in that yellow bar. I know there's a footnote, but.
No. Yeah. Yeah. The footnote says the ESG CapEx is EUR 145 million until, well, it's part of that because the 145 is until 2030, but it's also like maintenance CapEx, you can't charge the tenant, for example, the large ones like Article 606 and so. So those won't be necessarily cash flow productive.
Okay. So as we look at this, there isn't really a material yield on that CapEx?
Nope. Nope.
Okay. Understood. And then just on CapEx more generally in the long term, you've talked about the changing nature of commercial real estate, tenants' demand, more flexibility in leases and other things, more services. How do you underwrite the change in the CapEx requirement over, say, 10-15 years versus how the world used to be? If you're going to deliver an economic return, what are you underwriting in that respect? And maybe I'll come back to my last question after that.
Well, I think it's rather a matter of expertise, actually, than full CapEx. Of course, there's a part of CapEx, but it's including in a more global negotiation with the tenant. I think the main issue for people like us would be bringing some expertise because for decades, we've been letting some square meters to some tenants, and tomorrow, the customer will choose one building due to its location and because it's high-level and meets all the criteria, but also for what he's going to find in. And for that, we'll need extra expertise, maybe coming more from hospitality, of course, on ESG and so. So it's rather, I think, a matter of expertise, maybe OpEx, more than CapEx.
Okay. So it's in your overhead and the OpEx, not in CapEx. Okay. Understood. And just the last one on capital structure and the balance sheet. You've been very clear on the targets there. Assuming you can deliver an attractive return on your cost of capital, where does equity fit into it? You're a listed company. You want to maintain an LTV in the low 30s. How do you and the board think about where equity would fit into that?
Well, the board is fully supporting, of course, this strategic plan and this global strategy, including our financial policy. As for the project develop, we are usually looking at 8%-10% higher from the project, as you can see. The best way to achieve it, in our view, is to combine those two expertises because basically, tomorrow, money will cost less than today, but much higher than it used to be in the decades. So you need to aggregate the value creation on both businesses. That's exactly what we observe on some other type of verticals. So you need to aggregate those value creation in order to address properly your IRR target.
Sure. Yeah. Okay. Thanks.
Thank you. Good morning. Thank you for the presentation. I'm Amal Aboulkhouatem , Degroof Petercam. I have one question about the other disposals, the EUR 1.3 billion. And just to make sure my understanding of the non-core offices strategy is clear. So you're investing to repurpose these assets in order to sell the entire non-core offices, or could you keep part of them? And then my second question would be, then, it's only EUR 7 million for the non-core offices. What's makeup for the rest of the up to EUR 1.3 billion of other disposals?
Yeah. So other disposal, basically, is composed of a part of the non-core assets. I'd say that as they are non-strategic, the idea is to allocate as less capex as possible. So in order to sell them, except for some of them that could benefit at a much larger scale. Explain myself. For example, the Helsinki, Iéna former office building, we're just refurbishing Iéna now. The idea, of course, is not to sell it because the most value of the Rungis Business Park is having it as one single piece. But that's an exception. For example, Étoile Park, Emmanuelle showed you the idea, at the end of the day, is to transform it into a school and then sell it. So a part of the disposal, let's say maybe roughly it's EUR 500 million, will be composed on those assets that are not cash flow productive in the mid-long term.
And that leads us to a remaining EUR 800 million. And I mean, for a REIT like us, an investment division, you need to rotate your portfolio. So, of course, the investment market is frozen there, but we are talking about a five-year trajectory. Yields have adapted. The risk premium, in my view, is now significantly restored. So hopefully, I mean, we are talking about 2028. At that time, we'll be able to sell some mature assets. And those amounts for a REIT with EUR 6.5 billion does not seem so much in our view. But nevertheless, should it take more time? I mean, what you saw is that we have all this development pipeline at our fingertips, meaning that, once again, it's like the healthcare business. If we need some extra time, I mean, there's no rush.
It's not like there's an opportunity, and we absolutely need to rush to catch it. I mean, it's just right there. So if we need to wait an extra six months and, in that time, create value by obtaining the building permit and so, we will do it. Is that a response or?
Just the type of assets.
Oh, mature assets. I mean, there's no such thing as trophy assets on a REIT where we are a value creation REIT, meaning we invest in assets, we transform the assets, we create value. At the end of the day, we monetize assets. So when there's mature assets, if there's a financial equation that works with the buyer, I mean, there's no point keeping the asset if we are able to sell them in order to invest in relative development. Okay?
Maybe Marc Mozzi, again, from Bank of America. Sorry if you can't see me.
Yeah, Marc.
Once again, I see you. I see you. Don't move. It's okay. I have a question on your slide 69. Just to follow up with the first one. If I do very basic math, it looks like you're expecting a punchy yield on cost or return from your acquisition. But maybe I'm sure I'm missing something somewhere because that would mean that you're targeting to do EUR 500 million of acquisition at a 7.8% yield, which maybe is your expectation, but sounds I'm missing something somewhere. So potentially, it could be your CapEx where you're expecting a return out of it?
No, no. No, no, no. Well, if you want the breakdown, basically, on the started pipeline is EUR 45 million. On the diversification, it's above EUR 30 million. It's EUR 0.4 billion, but it's slightly like that, 30-35. On the reconversion, we expect some cash flow coming from some development, such as the Helsinki, Léna I was talking about, something like EUR 5 million plus. And on the potential acquisition, it's around 30, 35 million euros. So it's rather, I don't know, 6.5 yield.
Yeah. Okay.
Is okay?
Yeah. But we will still be on a rather pensionable.
But if we can have some yield on the ESG CapEx and charge the tenant, we'd be happy too.
Yeah. Of course. On the asset you're planning to reposition from the office, which is 80% of your rental income of the office portfolio, which is about EUR 53 million from what I can see on your slide, which is slide 23. What is the likelihood that you're going to lose those EUR 53 million at some point, considering the very short-term lease term? And can it be?
The probability is quite high. That's our deep conviction. I mean, in the mid-long term, that won't be offices anymore. The good news is that we have at least more than two years ahead of us. Definitely, I don't think that the market is pricing that we're going to get some rent for those assets, honestly.
Fair enough. But that's part of your guidance for 2024, and.
Yeah, yeah, yeah. Yeah. That's part of that. I mean, it's factored in in the guidance. As I said, on the investment division, the main issue in 2024 is the expiry schedule, and we are expecting circa EUR 40 million of certain departures, mainly located on those assets, as I said, and the building, of course.
It means we're going to have further more to suffer from in 2025.
Yeah, yeah, exactly. I mean, the full impact on the cash flow, definitely on a full-year basis, will be in 2025. The impact will be limited in 2024 due to the fact that most of those are in H2.
Yeah. But what I mean is EUR 40 million in 2024 and then pro forma 2024, 2025, but then we're going to have another bunch of 2025, 2026. No?
Oh, slightly at the end. Yeah, yeah. That might be the case, but the main part are those expiry schedule in 2024. So the main impact will be, I think, full year 2025.
Okay. Thank you.
All right. It's Thomas from Deutsche Bank. Just two questions. The first one is on the office exposure. What should we expect regarding office exposure by 2028, roughly, just to get a rough idea? And then the second one is on your compensation scheme with regards to the execution of the ReShapE plan. Just maybe you can also provide us with a rough idea. Yeah.
Sorry, but the second question, compensation.
Compensation scheme, your incentive to reach the targets for the ReShapE.
Oh.
So, as for the office exposure, I mean, it's not an end in itself. We don't have in mind we must reach that level. I mean, what you say and what we say is that office is the core in our strategy, as you understand, because we have the know-how. We know how to build the building, and we have, in our DNA, the ability to build long-term partnership with our customers. And office is going through troubled times now, but has definitely its place in the 2050 city. So we want definitely to work on that. But still, once said that, the idea is to embrace globally the mixed-use evolution of the 2050 CC. So mechanically, this will materialize in the fact that the diversification will increase in our portfolio. So at the end of the day, mechanically, it will dilute the share of the office.
It's not an end in itself to say we must reach X% of the portfolio. As for my compensation, well, I'm fully incentivized to make Icade achieve this strategic plan. As you saw, it's definitely in my objective. It was already in my press release, on my nomination. That's the reason why I'm here, and that's how I'm incentivized.
Pierre-Emmanuel, Jefferies, maybe one question on your gearing. Did you talk to S&P following, let's say, the makeup of this plan? I understand that due to the dividend and the investment that you are planning to spend this year, you will be crossing the 35% threshold in 2024. Do you expect or are you willing to be a notch lower following this investment that you are planning to do?
Well, about that, you saw that maintaining a sound financial profile is key for us. We perfectly have in mind the ICNP guidelines, of course. The figures shared there, they are a trajectory, of course, an average trajectory on that. We think that with ReShapE, this plan enables us to match the S&P guidelines and requirements. Of course, there's a question of timing depending on the healthcare and so. But once again, as you saw, our financial policy and our profile is one of the fourth pillar of ReShapE. So that's key for us as it always has been.
There is no way to lose one notch. The goal is to maintain it. It could be frustrating.
Well, I mean, this decision is not mine, obviously. But we have a plan that enables us to match that in the trajectory, and that's a key point for us also to maintain this financial profile.
Okay. Putting it in other words, you will do whatever it takes to keep the triple B plus rating, right?
We gave you the guidelines. We fixed ourselves for the plan, maintaining a sound profile.
All right. Another question on the development segment. It's the ongoing question, but did you consider selling this activity when you arrived at Icade? And how do you see it evolving in the future?
Well, honestly, not a single moment, not even before my arrival. But you know what? You came with convictions, and you need to confront them to what you find. And I think that was one of the first key takeaways I shared with the market in July. There were two things. We are definitely much better than the market thinks if you take our ANAV, the resiliency of our portfolio, and the stock level we are trading today. And the second takeaway was that our two businesses, our double expertise, will definitely set the ground of our strategic plan. I think that was the exact term I used in July, and you saw that throughout the presentation. Definitely, I think it's key. It's key because the global environment, I mean, compels to do so.
When you're a developer now, you need to have a sound balance sheet because you need to buy the piece of land in the city, have it on your balance sheet for quite a period of time, time needed to transform it. So you can't, I don't think so, be a mere toolbox, especially tomorrow when times and money comes at a cost. And when you're a REIT, I mean, you need more than ever this toolbox to transform, such as we do now, our asset. When I arrived, the property development teams did not know the portfolio of the REIT, of the investment division. I can assure you now they know all the 33 assets by heart.
All right. Can you remind me the value in your accounts in 2023 of the property development segment?
I don't think I will remind you because that's information we've never given.
All right. Fair enough. My last one is on the data center business. There was this portfolio that had been put on the market by SFR last year. Did you have a look at it?
Well, it was, honestly, too early for us because the one and only priority I had when arriving at Icade was achieving the closing of the healthcare business. It was well on track. It was a great deal, and it was absolutely key, vital for Icade. So that was my main focus for the first three or four months, that and launching the deep analysis you saw in the portfolio. So first things first.
Is this something that you could consider if another similar portfolio is coming into the market?
Honestly, I haven't looked at the projects. I can't give you a proper answer, but definitely, we are looking at many things that are on the market. Once again, we'll remain cautious. That's what we showed in the guidance. The environment globally still is uncertain. We have the luxury of having a strong balance sheet, which is a key asset in the environment. We are looking closely at everything but won't be too bold, especially this year, of course.
Thank you.
Hi. Rob Jones, BNP Paribas again. Firstly, I just want to say, I think, in general, I and probably a lot of people in this room underappreciate the literally thousands of hours that go into producing this and thinking about this. So firstly, thank you. Secondly, I'm just going to go back to slide 69 again. I'm the third person that's looked at this, but maybe that's potentially telling in terms of its numbers. If I exclude the started pipeline, i.e., because your total incremental income associated with that's EUR 45 million, but of course, the cost to deliver that EUR 45 million is greater than the EUR 0.3 billion on this slide. Yeah. 4.9. Correct. You end up in a scenario where either I think you could say EUR 1.5 billion redevelopment plan over 2024-2028 generates EUR 75 million of incremental revenues, or perhaps the number shouldn't be 1.8 to generate 120.
It should be EUR 2.4 billion. Am I right in thinking about it like that, i.e., it's actually EUR 0.9 billion for the started pipeline plus the remainder?
Yeah, yeah. Exactly. The EUR 600 million already spent on the started pipeline. So you need to add this. Yeah. It's from the overall view.
Okay. Very clear. And then there was a slide, and I can't remember which one it was, where it talked about the data center's opportunity here, the EUR 280 million CapEx spend. So you get the building permits potentially in something like 2025, but construction doesn't start until 2028. I'm not a data center's expert yet, but tell me, what happens in those three years in between? Why does it take so long? Obviously, it's good from a yield-on-cost perspective, but obviously, from an unlevered IRR perspective, the longer the project takes, the lower the forward IRR, if that makes sense.
Yeah. Yeah. Sure. The main thing about data center, in terms of time, is access to power. In France, when you ask RTE, they have to give you the access to power, but now they are overwhelmed with demands. And even from people that don't even own the land, don't even have talked to the local authorities, such as we did with Francis Meyer. So they are overwhelmed with that, and they need to study and study and study. So that's the major part that will take time. Of course, we'd be happy to have it delivered earlier, but it won't be the case. And more globally, you saw that all the development opportunities that we've shown throughout the presentation represent a much larger volume than only the EUR 400 million in diversification. Two reasons on that, especially on the data center. Some of the CapEx are after 2028.
That's for the first thing. And the second thing is that we also have the choice. I mean, what we wanted to do is to show you concretely the possibilities of the land banks because there were basically two questions on our portfolio. What about the offices, and what are you going to do with your land banks? So we tried with all the teams to show you concretely what we can achieve with that. And that allows us to have the flexibility to choose the project with the higher yield and/or to accelerate also because, as you saw, as for data centers or even student housing, I mean, all options are on the table. We can, I mean, state where we are with a pure real estate model.
We can go on a full-fledged basis, or we can structure some JV in order to get some additional equity to accelerate the rolling out of the plan. So the main key point, once again, is flexibility.
Very clear. And then the final question for me. One of the downsides of our price target methodology, and I suspect some of the other analysts in the room as well, is our price target is done on a 12-month look-forward basis. As a result of that, we often get a lot of questions from investors asking, "What are the catalysts for stock X?" Clearly, in this case, Icade, on a 12-month forward view. I wonder to what extent you can give any granularity over your four-year detailed plan to what element is backend-loaded, i.e., 2027, 2028, after proceeds coming in, and then we can reinvest and manage our balance sheet accordingly versus that investor that's asking the analyst for a near-term catalyst within the last 12 months. I note that since the intraday highs, when you started talking at 9:00 A.M., the shares are down almost 5%.
I wonder what we can do to allay some of those near-term concerns around value creation on a shorter-term timeframe.
Well, I think we've already shared, honestly, many figures, especially considering the global uncertainty of the environment today. We'll be happy to share more and more details in July if we can. But once again, honestly, that's already many details, actually, because we wanted to be really transparent with you, to give as many elements as we can. We perfectly know that it's not easy for you to fill in the box because we are definitely not in a box now. But maybe before talking about catalyst, maybe have a look at the starting point. I mean, the valuation we have today on the stock level, we tried, and I hope we've convinced you, about the resiliency of our portfolio in terms of offices.
We have a clear view of what we're going to do with our assets and also a clear view on the potential of the business park that have always been hidden, I mean, and not understood by the market. So, I mean, of course, you'll be looking for catalyst. We gave you as much information as we can, but maybe have a look at the starting point too.
Thank you very much.
Hi. I'm Véronique Meertens from Kempen. Question about the Champs-Élysées asset. Obviously, it's currently practically non-yielding. Have you had offers for it? Because it's also looking at the rest of the portfolio, not a very common asset for you to have. Is it something that you would be willing to sell in the future?
Well, once again, we sell assets when we have created value. Of course, we had offers for the Champs-Élysées, I mean, especially given the recent benchmark. I mean, everyone is focusing on core triple-core assets and so. But once again, as an investment division, our job is to create value, and we can monetize the asset when we've created that value. Obtaining a building permit is the first step. Of course, it's the Champs-Élysées. So, of course, even with the building permit, you know timetable still is uncertain, definitely. But we have some interest. We have some interest also from tenants on the office part, but also from luxury brands on the retail part. So our job is to create value. First step, obtaining the building permit. Second step, we'll secure leases.
At the end of the day, we don't have such things such as trophy assets once the value has been created. So we'll see, but that's definitely too early.
Okay. Very clear. Thank you.
Thank you.
Telephone? Yeah.
Two questions on the phone.
We'll take our first phone question from Jonathan Kownator, analyst from Goldman Sachs. Please go ahead.
Good morning. Thank you for taking my question. I was wondering, we've talked a lot about the development and the redevelopment potential. About the existing sort of portfolio and particularly offices, what are your targets there? I mean, are you aiming for increasing occupancy or any views about like-for-like rent growth? I mean, do you have any concrete objectives for the existing portfolio and well-positioned? Thank you.
Well, as Emmanuelle showed on the existing portfolio, now that we have a clear view of what, in our view, will be fit for the future as for our offices, what we're going to focus our attention on is the customer more than ever. So Emmanuelle detailed the global offers we are structuring there. So that's how I think, in my view, you create a premium because it's not all about the building, but it's also and I think the interviews showed it really properly, how you live into this building. So we will really be focusing, as for the well-positioned asset, to enhance the quality of the partnership we have with our tenants so that they stay for a long time, and we are able to capture some premium. Of course, this will take a long time, but that's how we will structure ourselves internally too.
And so in practice, I mean, obviously, you have ESG CapEx. You have some other CapEx also, which may fall into that portfolio. But are you seeing—are you expecting occupancy improvements? Are you expecting to have to manage, obviously, the reversionary potential you're talking about? I mean, can you give us a few more concrete targets, perhaps?
We have no specific targets in terms of occupancy unless we will focus on increasing this occupancy rate. Of course, it shall be impacted by the Pulse departure this year. But it's a long way, but that's where we will be focusing our energy. But we don't have a proper target, once again. An office portfolio, even well-positioned office portfolio, is a living object. You get one tenant is getting out, one tenant is getting in. So there's no such thing as a fixed objective, but we'll be focusing on enhancing this level.
Okay. All right. Thank you.
The next question is from Céline from Barclays. Please go ahead.
Hi, Nicolas. I've got three questions, please. The first one is about the rental reversion rate. If we remove the assets to be repositioned in your office portfolio, what is the reversionary rate of the office portfolio? My second question will be on the dividend. You haven't stated anything regarding the second installment of the dividend to be paid this year, but your comments on keeping the cash within the company imply a scrip option is on the table. So can you confirm this? And my third question will be about your strategic plan. You're planning to spend EUR 500 million in your investment plan in acquisition. What are the asset classes you're targeting, and what is the minimum yield that you will be requiring for an acquisition to be interesting in your eyes? Thank you.
Yeah. Hello, Céline. Well, for the first question, the one asset that needs to be repositioned are valued at a cap rate now above 10%. So definitely, the well-positioned assets are with a 6.7% yield, if that answers your question. As for the dividend, well, scrip dividend is not on the agenda. And as for the investment, well, we will invest in any asset that might be relevant with ReShapE and the strategic plan we've shared with you in terms of asset classes and potential of value creation.
Nicolas, regarding my first question, I'm not talking about the cap rate, but I was talking about the reversionary rate. So you're saying your portfolio is over-rented by 8.7%. If we remove what you consider to be non-core, how over-rented is the rest of the portfolio?
Well, about reversion, I mean, the way we look at reversion, well, definitely, it varies from one asset class to another. If we talk about light industrial, we gave you the figure, the potential reversion is positive. It's +4.3%. And if you take the offices, I mean, among the offices, in our view, that does not really make sense to be focusing on reversionary potential as for the one asset that needs to be repositioned because, at the end of the day, those won't be offices anymore. So the one asset for which it's relevant to think about reversionary potential is the well-positioned asset. And for that, we gave you the proper figure being -8.7%.
All right. So that 8.7 is only for the core assets in your office portfolio?
Yeah. The well-positioned asset. Exactly. Exactly.
Okay. Okay. Cool. Thank you.
Thank you. Is there no further questions? I would like to hand the call back over to speakers for closing remarks.
[Foreign language]
Just a few words. Two questions, maybe on thresholds. But before talking about that, I would like to come back on flexibility, on lease. Do you have a downward threshold on the WALT, weighted average lease term, doing shorter lease? Because it could be a good way to optimize occupancy and rise rental values. But what's the threshold in terms of WALT first? It's not the way we see flexibility is just understanding the major concerns of our customer. When we go to an HR director today, he says, "Well, there's a lease, and I'm committed for three, six, nine years, maybe, but I don't even know my need on a six-month basis or 12-month basis." And the answer to that, in our view, is not necessarily short-term leases, but is also the ability to give them flexibility through our subsidiary Imagin' Office.
I think Next is a good example in Lyon. Do you?
Yes. Next is a good example of this flexibility which we offer to the tenants. For example, the old building will be occupied by April, the insurance company, but one floor is dedicated for coworkers, and they have the priority to take coworkers' coworking offices. It's why we often do in our building, we reserve one or two floors for coworking with our subsidiary Imagin' Office.
Mainly in the region, I mean, in France region. It's not in Paris.
Yes. No. It's in Lyon, in the heart of Lyon Part-Dieu. But it's the same. We can do the same in Paris, of course.
Yeah. Because we see coworking particularly struggling outside in periphery, all across the globe. So it's a matter of question, but okay. But the idea, definitely, but that is not to roll out a coworking strategy outside of our portfolio. Of course, we have one or two assets inside Paris, but the idea is really to focus on our portfolio. It's part of a much larger offer to our tenants. Very clear. About the disposals, EUR 1.3 billion, what's the assumed or the implied discount on values? Well, talking about the assets that need to be repositioned or overall? I mean, the one asset that need to be repositioned, they just endured quite a significant adjustment, but it's -40% from the peak in June 2022. The average, I mean, price per square meter is EUR 2,300 per square meter for those assets.
We are definitely far from a former office valuation. As for the well-positioned, honestly, we don't expect a discount on that. I mean, if we are opportunistic, maybe, but that's not the idea. Those disposals shall go through a usual way of doing business. We transform the asset. We create value. We monetize. So the target might be the NAV, but can be opportunistic, but still. Very good to hear. Last one is on sorry for this one. Is looking at yield, definitely, I think there's a lot of job, and it's a very exciting moment for Icade to do so. But also, the yield looks, comparing to the 7.5% on the portfolio, a bit diluted. My point is about how do you think about share buyback while paying cash dividend? Thanks.
Well, actually, the yield we are aiming at, honestly, are still creative regarding the cost of financing and regarding globally the yield. Share buyback is not fully an option on our side because we've looked at what has been done in the past on other companies and were not so convinced of the interest of doing that. We have also two main shareholders, and there's a technical issue in case of share buyback. There's an increase of more than 1%, but I'm sure we've already talked about that in the past. Thank you.
There's a question by Deniza Igan . "Hi there. Regarding the financial targets under the new business plan, will these be satisfactory for the new CFO and the rating agencies? Standard and Poor's target leverage is at above 8.5x net debt to EBITDA for the BBB-plus rating, but you stated above 9x net debt to EBITDA as a target. Wondering if you pre-discussed the targets with Standard and Poor's." Thank you.
Thank you very much. Well, I think we've quite answered to that question through the discussion with Pierre-Emmanuel. Those numbers on the slide, once again, are an average on the length of the plan, and we are more cautious, of course. But once again, what we can reiterate is that, as I said, it's the fourth pillar of our strategy, and we are committed to maintain a strong and solid balance sheet.
Another question by Marc De Clercq . "My question is about shareholder value, which should be your first priority, and I'm convinced it is. Two parts to my question. First part, recurring cash flow in the coming years will be substantially down from more than EUR 5 until very recently. What is your target for 2028? Of course, we understand and accept there are many uncertainties. Part two in my question. Shareholder value and confidence are also down dramatically, even taking into account the interest-rate-induced crisis. With half measures.
Maybe I can answer the first one in the meantime. Well, I think the question is an answer in itself. I mean, there are definitely many uncertainties today. So providing a cash flow assumption for 2028 is not an easy task. It's already not an easy task to provide you those figures. Of course, at this stage, there's full of uncertainty. We talked about the property development. And so to have a deep conviction on the level of cash flows contributing from the property development in 2028, that's not easy. And on top of that, I mean, there are lots of uncertainty. What we've shared, what we are really confident on, is the additional revenues of EUR 120 million.
Part two of the question is as follows. Shareholder value and confidence are also eroded dramatically, even taking into account the interest-rate-induced crisis. With half measures, this will not change. I think the best investment and the best way to restore shareholder value would be share buybacks, but the actual juridical structure of Solvency II does not allow that. Do you think this structure still remains appropriate today? I'm not convinced. Thank you.
Well, on share buyback, I think we've already answered this question too.
Next question by Patrick Baur. "There was a time when Icade had a building management activity. Today, the market seems to offer very little good and reliable services, and the fees have grown regularly. Would you consider a comeback in the activity?
Well, I think it's a good demonstration of the capacity of Icade to significantly evolve, to adapt, and go through the cycles over the 70 years we just passed through. But as you saw, I mean, there are quite a lot to do on our roadmap with ReShapE. I mean, there's large potential developments at our fingertips on our business park. There will be also some, in my view, creative external opportunities. So I think that's already quite a busy agenda for the next five years. Okay. I think there we are at it. So thank you very much for your attention. I mean, you well deserve a nice cocktail, taking some strength for the Rungis Tour, I think. And we meet back at? Guys?
At 2:00.
At 2:00 P.M.? Okay. You got 45 minutes. I'm happy to share some time with you.