Good morning, everyone. I am Nicolas Joly, I'm here with Victoire Aubry, our CFO. It's a real pleasure for me to be here today. We have several subject on the agenda. We will start by giving you an update on the disposal of Icade Santé. We will follow with our half-year performance and financial results, before I give you my first perspective after the first 100 days, we will conclude with our outlook for the year. Let's start our presentation with slide five. When I joined as new CEO of Icade, I had three priorities.
First one was to deliver Icade Santé stage one disposal. The second is to perform a complete deep dive on our portfolio and assess the situation. The third will be to leverage that assessment to design the future trajectory of the group. Let me now lead you through the key takeaways of the period that I'd like to share with you. Unsurprisingly, we want to discuss first, the latest updates on the sale of Icade Santé.
The key new piece of information is that, as planned, stage one is completed as of July 5th, date by which we sold 63% of our stake in Icade Santé for an amount of EUR 1.4 billion. Stages two and three are on track with the initial schedule, and we expect an additional EUR 1.6 billion cash-in before end 2025. Second takeaway is our strengthened balance sheet and credit profile post-closing. This is a key asset for Icade going forward, especially in the current context.
Next on the list, as I just mentioned, when I joined as CEO, I had a strong conviction about the necessity for me to review thoroughly our portfolio through on-site visits and interaction with the teams. Coming in with the external perception of Icade's portfolio, I needed to see by myself and make my own opinion to better design our future trajectory, refocused on our investment and development arms. The teams and I are currently working on this to set the ground for our strategic plan for the coming years.
You may know, Icade is also strongly engaged in driving a sectoral change towards more sustainability, thanks to our clear and impactful CSR policy, with, against this year, and for the second year in a row, more than 98% of approval on say, on climate and biodiversity resolution. The group was also ranked second out of 27 in 2023 amongst Europe Climate Leaders in the property sector by Financial Times. On top of that, we disclosed resilient, operational and financial H1, 2023 indicators.
We've been able to generate a EUR 111 million net current cash flow on a pro forma basis, an EPRA NAV NTA at EUR 79.3 per share, and a LTV post-closing below 30%. Certainly, one of the best performers in the market. We will obviously provide you more details on our H1 result further in the presentation, but for now, let's focus on Icade Santé. As I just mentioned, the disposal of Icade Santé has obviously been a key focus for us over the last six months. On July 5th, we sold 63% of our share in Icade Santé and cashed in EUR 1.4 billion.
This valuation is in line with EPRA NTA as of 2022 year-end. That stage one is behind us, we can announce the resulting circa EUR 400 million special dividend that will be distributed over the next two years. As we will develop it in more details later, this deal significantly strengthened our balance sheet with net financial debt down below EUR 3 billion and an aging ratio, which provides strong visibility on the cost of debt evolution for the coming years.
This operation mechanically streamlines our business model, which is now focused on two key pillars: commercial investment and property development. Moving on to slide eight, to give you more details on what to expect in stages two and three. Between now and end of 2025, we will sell our remaining stake in Icade Santé to Primonial for an additional EUR 900 million. During stage three, we will sell a set of IHE assets, the international SPV, for an additional cash-in of circa EUR 650 million.
The disposal processes are currently being organized by geographies and within distinct timing to maximize competitive tension. First disposal are expected first half of 2024, having in mind that Primonial is incentivized to execute them swiftly. To be noted that Icade will receive dividends from its residual stake in the healthcare division until the end of the asset sale process, circa EUR 0.80 per share in 2024 on the basis of the ownership on the 5th of July.
We will, of course, continue to keep you updated as Stages 2 and 3 continue to advance. Let's now move on to our half-year performance. Let's dive into the performance by business line and start with the commercial investment activity. As far as the market is concerned, the commercial investment division has evolved in sluggish leasing and investment environment in H1, 2023.
In leasing, total take-up in Paris region decreased by 22% versus H1, 2022, with a percentage of total take-up outside of Paris CBD at circa 70%, supported by attractive incentives and scarcity in CBD, with historically low office vacancy. This trend is expected to continue with a natural market traction from prime offices outside of CBD. The total investment volume in France is down 42% compared to H1, 2022.
Overall, investors are more selective, and yields are adapting to the new financial environment, restoring medium-term attractiveness of the sector. Now the question is: How did we perform in this environment? Well, the reality is that we have a solid first half leasing activity, with circa 100,000 square meters signatures and renewals, with a 6.4 years WAULT while securing annual rental revenue of EUR 27 million.
We have also benefited from a positive impact of indexation, thanks to 100% indexed leases, with +4.7% fully passed in H1 2023, and an estimated +5% fully passed in full year 2023. All in all, it demonstrate our capacity to attract and maintain our tenants in the long term. Overall, the three assets you see on this slide put into light the diversity of our portfolio with office in Nanterre, but also within business parks.
The activities going from offices to data centers, and our willingness to tackle the environmental issues by signing climate commitment leases, like we did with Système U. It also highlights the quality of tenants, prime tenants. Moving on now to the recent disposal. The general output is that despite adverse market conditions, we have successfully continued the disposal of asset for a total amount of circa EUR 180 million.
Overall, our strategy has been to consider a disposal for mature assets with high occupancy rate, where we could benefit from an attractive yield. The main assets concerned by the disposal are Eko Active and Grand Central in Marseille, as well as Nautilus in Bordeaux. These three assets alone account for over 75% of the total EUR 180 million values of these disposals. The disposal of our remaining residential assets, which represented circa EUR 40 million, contributed to the rationalization of our portfolio.
It's worth noting that our focus on CSR, reflected in the certification granted in our Marseille asset, has been a key differentiator, enabling us to sell them at good conditions and below the average yield of 4.7%. In the context of the successful disposal of Icade Santé, we will of course, continue to remain opportunistic, but do not foresee any further disposal for the year. Let's now take a more forward-looking point of view and discuss the current pipeline with our commercial investment activity.
We reviewed the pipeline and made a conscious decision to limit commitments in this uncertain environment and while we are preparing the strategic plan. The strategy is in line with our willingness to invest in secure, sustainable, and diversified projects, remains relatively limited, with committed amounts reaching circa EUR 676 million for circa EUR 319 million of remaining CapEx.
In H1, we launched two new projects, including Helsinki, Iéna, an Orly-Rungis business park of circa 10,600 sq m, both either signed or under exclusivity agreement. For the next half, we have two new projects to be completed, which are already fully pre-let, demonstrating our ability to reposition our existing office portfolio when necessary. It's worth noting that 100% of our project are targeting HQE of BREEAM with excellent levels.
Let's now move on to the operational performance of the development business line. Today's market is under pressure, with a 32% step back in commercial launches, mainly due to rising and persistently high interest rates. This impacts credit access for first-time buyers and constrains institutional investors to adopt a more selective approach. It translated into a -40% decrease in orders. The situation is amplified by less favorable incentive tax schemes, notably with a more constraining P&L.
However, the sector still benefits from solid long terms underlying fundamental under strong demographic trends, historically low unemployment rates, and maybe more importantly, a structural need for new development with a demand-supply gap assessed at 60K units per year. Now let's move to slide 17.... In this slowing environment, Icade Promotion was proactive, focusing on three following levers.
An increased focus on block sales, with a 19% increase in volume and a +4% in value. Overall, this allowed us to show strong resilience in orders intake. Greater selectivity, which translated in an increase in minimum order rate from 30%- 40% before starting works, enabling us to adapt the volume to a tighter market, resulting in a slowdown in our construction works by almost one third. Finally, a pragmatic review of committed projects, resulting in opportunistic transactions, such as the Tête Boule transaction.
Maybe just a little bit of context on this project. Icade bought an asset to transform it, but opportunistically sold it to a third party with a real estate development contract. This decision was taken in a context where we monitor closely our working capital. This topic will be further discussed by Victoire in the financial section. To conclude this operational section, we wanted to present a more forward-looking vision and explain how we are adapting our medium-term growth trajectory in this challenged environment.
As of June 30th, 2023, our backlog reached a solid EUR 1.8 billion, slightly down 3.7% versus our backlog as of December 2022. While this level of backlog helps to secure the stability of sales expected for 2023, it also reflects the implementation of the group's adjustment policy to new market environment, which is based on a greater selectivity in the launch of new projects, with priority given to maintaining profitability and a sustainable balance sheet.
We are now a bit more prudent when it comes to 2024/2025 growth, considering the slight slowdown in our June 2023 backlog. On the back of those operational results, Victoire will now give you more details on our financial performance. Victoire, floor is yours.
Thank you, Nicolas. Good morning, everyone. Now let's move on the presentation of our financial results for this first half, 2023. The purpose of this slide is to introduce you to our pro forma net current cash flow figures, meaning by that, excluding the contribution of healthcare. We therefore need to make some comments on an accounting point of view. Indeed, the sale has been announced in March 2023, but has only been effective since fifth July, 2023.
Meaning that for H1 2023 results, first, all numbers are reported under the IFRS 5 accounting standard, and second, the healthcare activities have been reclassified as profit and loss from discontinued operations and are still included in EPRA earnings. Consequently, in our IFRS accounts and EPRA earnings, we have, in fact, six months of healthcare division. To go straight to my point, focus on the Net Current Cash Flow KPI. I'm on slide 21.
Based on the Net Current Cash Flow at EUR 2.72 per share, EUR 200 or 6 million, end of June 2023, on a reported basis, as you can see on this slide, it includes EUR 86 million directly coming from the healthcare first half Net Current Cash Flow, and also EUR 9 million from intra-group revenues, which brings the total impact coming from the healthcare business, end June 2023, to EUR 95 million. Just a comment on the intra-group revenues.
It should be noted that we are currently working on recovering this EUR 9 million impact on our group's Net Current Cash Flow through reduction cost plan in the coming months, all over the group. Back to the net current cash flow pro forma basis, excluding, one more time, all revenues linked to healthcare division, it represents, end of June, an amount of EUR 111 million, EUR 1.47 per share. Of course, the next pages will be focused on pro forma figures.
Please also note that going forward, as of today, we will report on consolidated basis versus group share when it comes to P&L figures. Let's jump right now to the slide 22. Overall, the financial performance of Icade pro forma for this first half of 2023, has been slightly up compared to H1 2022, with a slight decrease in commercial investment division in a context of significant disposal volume in 2022 and 2023. Excluding the impact of the disposal, the net current cash flow will be up by +4%.
The net current cash flow coming from the development division remain slightly up on a year-on-year basis, a good performance in the current context. We'll see that more in detail in a few minutes. Notice the positive impact of change in provisions making the difference. A stable group net current cash flow end of June, with a contribution of commercial investment at 88%, and the remaining 12% from property development. Let's focus for now in more detail on the commercial investment business.
I'm on slide 23. As far as the gross rental income is concerned, it was slightly down by 2.1% versus H1 2022, and stood at EUR 181 million, out of which minus EUR 9 million coming from the full year impact of 2022 and 2023 disposal, as mentioned in the previous slide. On a like-for-like basis, performance is positive, +2.2%, carried by indexation on rent, +4.7%, as Nicolas said just before. Partially offset by the reversion effect, mainly related to the renewal of the significant contract with Veolia, 45,000 square meters.
I already commented on this impact during Q1 2023 announcement. We also had a slight decrease in the net rental income margin. Higher vacancy costs also influenced the downside. On the cost side, we stabilize operational expenses. As I said before, further improvement come all over the group. In addition, I would like to highlight that the financial expenses have not been impacted by the rise in interest rates, thanks mainly to our efficient hedging strategy. We also generated financial interest income with EUR 450 million at +2.5%.
This is certainly one of the good surprise we have since the beginning of the year. This will have an even greater impact over the full year, with interest to be received on cash from the sale of stage one of Icade Santé.
Additional EUR 1.45 billion remunerated around 3.5%. As a conclusion for the commercial investment division, our net ground cash flows to that merely EUR 100 million, slightly below our H1 2022 performance, mechanically reflecting the decrease in rental income and slight contraction of our gross margin, fully in line with our budget forecasts. Moving on now on the property development activity.
Figures are overall very resilient, given the current market environment, with an economic revenues around EUR 583 million and a net current cash flow of EUR 13.6 million, up plus merely 5% from the last year. As mentioned in the operating comments, individual sales have slowed down, but were partially offset by block sales. It's fair to say that this evolution has mechanical impact on margins. Block sale margins are circa - 5%, lower on average.
One of our focus during this semester was to carry out the inventory of ongoing operation to monitor margin and working capital. In this context, we made an opportunistic move on Tête Boule operation, as previously mentioned by Nicolas. This disposal mechanically impacted our revenue by + EUR 40 million and the net current cash flow by + EUR 4 million. It was also supportive on the margin end of June.
Going forward, we are more cautious, both on margins and net current cash flow evolutions, as well as on working capital level, expecting longer cycles of holding period. All teams are already focused on monitoring those new challenges to maintain profitability of the division. Let's now focus on our portfolio valuation. I'm on page 25. We all know the tightening economic environment is putting pressure on real estate asset valuations.
In the context of continuing selective investment policy, with slowing down in asset rotations for both acquisition and disposals, the like-for-like adjusted values are in line with the new interest rate environment and the limited number of transactions. It's fair to say that the external appraisers show wide disparity between location, namely due to the different characteristics of some markets, between -14% and -2% like-for-like, depending on different sub-territory.
This is also where it echoes what Nicolas will describe in the next part. It is key to deeply analyze and assess our portfolio, asset by asset, to have a clear view of the potential of our businesses to guide growth and value creation in the future for Icade. Overall, as of June 2023, our total portfolio group share is valued at EUR 7.2 billion, representing a 6.4% decrease in valuation since December 2022 on a reported basis. Let's jump right now on the NAV slide, page 26. Few comments on that slide.
At the end of June, our EPRA NT stood at EUR 79.3 per share, with a breakdown by pocket of value as following: First, circa 23% of our NAV, EUR 18.5 per share, is cash equity following the completion of Icade Santé stage one. An additional EUR 15.1 per share correspond to remaining stake on healthcare to sold, to be sold before end 2025, implying a grand total of EUR 33.6 per share only on healthcare and cash component.
Finally, our commercial investment and property development businesses are valued at EUR 45.7 per share, end of June. Second set of comments on this slide. It's worth mentioning that with the merely 7% decrease in commercial investment valuation in H1 2023, representing -12 on a cumulative basis over the last 12 months, the implied blended yield was 6.6% at the end of June, an implicit risk premium of circa 350 basis points compared to French 10 years yields.
In summary, in the current environment, unsupported by a strengthened and liquid balance sheet, with an amount of cash of circa EUR 1.9 billion, our stock level is, in my view, even more difficult to rationalize. I'm now on slide 27. Overall, Icade is extremely well-equipped to face the current financial environment and to effectively limit the increase in its financial expenses. Over 95% of our debt is now aged until 2026, for an average maturity date in 2029 of the hedging instruments.
This demonstrates an even stronger hedging position, post-disposal of Icade Santé, help us to significantly slow down the impact of rising interest rates to come. Result, even if our average cost of debt has slightly increased in H1 2023, to reach 1.59%, post-healthcare disposal, this increase has been mitigated by the financial income generated through our cash position. One more time, rising interest rates has no impact on our financial results as at the end of June.
Last comment on this slide, our ICR remained high at 4.1x , end of June. A low point, in fact, it's about to come back to toward 5x by the end of the year. After, notably thanks to financial interest from Icade Santé proceeds, also the Icade Santé dividend payment in 2024, and the scheduled debt repayment. Let's jump now on slide 28. On top of that, post stage one, the group also benefits from a solid liquidity position, with extremely limited refinancing needs, ensuring solid management of the new financial environment.
With EUR 1.9 billion in cash position, plus EUR 1.3 billion in credit facilities, covering principals and interest for the next 5.6 years, and no significant maturities until 2026. We are confident to say that Icade has no issue with meeting its financial needs in the short term, and will be well-protected in the medium term. We will also benefit from interest income on the cash received through asset disposal in the coming months. We are talking about circa EUR 2 billion, benefiting from a rate at around 3.5%, I said before.
We already reimbursed mid-July, EUR 100 million on a floating rate, short-term exposure. To conclude this financial section, let's jump on slide 29. We discussed our under control yield rate risk and our strong liquidity position, but it's also important to point out that another key asset for Icade is its healthy leverage. As of June 2023, pro forma of stage one completion, our net debt was cut by more than two, and amounted to EUR 2.9 billion, representing a EUR 3.6 billion reduction versus December 2022 balance.
One more time, this reinforced a liquid balance sheet after crystallization of capital gain and significant cash to reimburse our debt, also provide us with visibility on our cost of debt. Also, this translates into a strong deleveraging of the company, with a net debt to EBITDA ratio at 6.5x , and a LTV ratio significantly down to 29.4% as of July 5th, 2023.
Overall, we are more than comfortable on this solid, liquid, and well-balanced balance sheet, and have now even more headroom to pursue further growth opportunities by taking our time and being opportunistic. Thank you for your attention, and I leave the floor to Nicolas.
Thank you, Victoire, for this presentation. Let me now walk you through the state of play that sets the field to understand where we are going in the future. Firstly, our strong balance sheet, detailed previously by Victoire, is Icade's key asset in the new challenging environment. We are facing high interest rates, leading to greater selectivity and cost saving. Office take-up level moving toward a new normal. A yield decompression, restoring risk premium and medium-term attractiveness.
A new normal ahead of us after a decade where value has been driven by cheap money. What struck me even more on my first days as Icade new CEO, was to realize that for the first time in 20 years, the office industry is facing a milestone, a revolution of uses. Hybrid work has changed the way people work and is changing the face of the office industry. This in an analogous way, e-commerce changed the way people shop and the face of the traditional retail industry in the past decade.
In this context, it was crucial to me to focus on the fundamentals that will drive the market in the future. I went to our clients and asked them what they expect from us. Centrality, sustainability, services, flexibility were the four keywords defining the shape of office uses for the future.
Those were the keywords we used to perform a deep dive review of our portfolio with the team, having also in mind the growing requirements that comes with the CSR and the impact it has on tenants' development strategy and economic performances, especially in lowering energy consumption. It's based on these observations that we decided to review our approach and move toward a use-based approach, because what can better define our portfolio than our client needs?
I wanted to introduce to you our new portfolio segmentation. Our former sectorial segmentation has been reallocated into a use-based segmentation with four categories: offices, which represent 85% of our portfolio; light industrials, accounting for 9%; land banks, for 2%; and others, including mainly retail and hotels, for 4%. Based on all the information we collected to date, the offices segment is itself subdivided to account for specificities. We will discuss in more detail this category in the next slide.
The light industrial category represents a development axis, which will be studied in detail, and which effectively represents a potential for growth. Our current assets are well diversified, with a 360,000 sq m, all located within 15 km from Paris. The land banks accounts for a total 500,000 sq m of land reserve. On a side note, we are still working on a final version of the segmentation that we expect to present to you in our full year 2023 financial report.
Our financial documents will keep using the former approach for now. Let's deep dive into offices, the main part of our portfolio. Because the initial aim was to redefine and better understand our portfolio, we pushed the analysis even further and defined subcategories for the offices section. Circa 75% of the assets fall into the well-positioned asset subdivision. These are fit for future, high quality and resilient assets, offering good centrality, best-in-class sustainability, services, and flexibility.
These are assets in which we have a long-term conviction in the office uses, with a structural average occupancy rate above 90% and more than 80% aligned with Décret Tertiaire . The category gathering, the one that, in our view, are not necessarily fitted to new market standards in long-term approach, represents 13% of our assets. For those assets, we will be considering opportunistically, and on a case-on-case basis, a potential conversion or disposal.
We have 14% of business park offices located in our former business park. In these areas, there's a well-established demand, such as, for example, the Système U building that we presented earlier, justifying the development strategy of Silic in the past. However, today, it's fair to say that these markets are quite oversupplied. That's why we are doing an analysis to assess the right dimensioning of the offer.
It will help to determine which assets will be considered as well-positioned offices, well suited to the demand, and which ones will need to be repositioned. On the property development side, Icade Promotion is a well-positioned, value-added market leader, benefiting from a strong brand that embodies values such as trust and long-term partnership. As such, Icade has a strong expertise in development projects, facilitated by our long-standing and solid relationships with local authorities.
Icade Promotion also benefits from its diversified offer, be it geographically, thanks to our national coverage, or operationally, thanks to our full services offer and large and diversified customer base. Finally, we are strongly focused on low carbon. On one hand, with over 550,000 sq m of timber-based projects completed or under development in 2022, and rewilding on the other hand, which should account for 100% of new build in property development division by 2030.
To conclude my state of play, I'd like to emphasize on the complementary of Icade businesses line, adapted, in my view, to the challenges of urban transformation. To have all the tools in the toolbox will indeed be key tomorrow to develop successfully mixed-use project at a neighborhood level. In that respect, I wanted to share with you a recent example of a site I visited in person just one month ago. Icade has been active in the transformation of the Euromed district in Marseille.
On M FACTORY, a land reserve converted into a fully let 6,000 sq m office, NM Life, an acquisition of a lot from Icade Promotion to develop a residential scheme of 129 units. As the job is never over, Icade Promotion even acquired the former headquarter of our new tenants to redevelop the building. As you can see, both financial and non-financial metrics of this project are attractive, and we aim at increasing the synergetic collaboration of our two core businesses to be a leader in urban transformation.
Moving on to our conclusion section. Now that Icade Santé stage one is behind us, we believe it's important to provide you with clarity with respect to our outlook for 2023 for our two remaining businesses. The first and most important message is that we confirm our 2023 net current cash flow guidance, and we precise dividend outlook. Indeed, we are expecting a net current cash flows per share, including disposal, in the range of EUR 2.95-EUR 3.05, versus a pro forma EUR 3.04 per share in 2022.
As we are not expecting any further disposal in 2023, we are now including the impact of disposal in our guidance, which is therefore aligned with the one announced in February. This confirmed net current cash flow guidance reflect the resilience of our businesses, as well as the higher than expected financial income, notably thanks to our stronger cash position, post stage one. This guidance on net current cash flow does not include any positive impact from healthcare business of Icade.
Neither the cash flows generated by Icade Santé in H1 2023, nor the dividends received from this equity stake. In terms of dividend, Icade will offer an attractive special dividend following healthcare disposal. Taking into account the new challenging environment, the board will propose to limit the recurring dividend to the minimum legal distribution obligation. Overall, the total 2023 dividend, recurring plus special, should be at least +10% higher than the 2022 dividend.
To conclude today's presentation, I'd like to leave you with five key takeaways. Icade has a unique profile that has been even further strengthened with the disposal of Icade Santé, as highlighted by our LTV below 30%. In addition, our H1 results are solid, demonstrating once again, resilient fundamentals. Regarding our portfolio, we have most premium asset with room for further development and repositioning opportunities on the remaining ones.
Our brand is strong, our business model streamlined with two complementary businesses, investment and development, following a common CSR leadership. Capitalizing on those strengths, we are currently defining our strategic plan to build a new successful trajectory for Icade. Now let's move to the Q&A session.
Thank you. If you would like to ask questions, please signal by pressing star one on your telephone keypad. We will take the first question from line, Stéphane Afonso from Invest Securities. The line is open now. Please go ahead.
Yes, good morning, thank you for taking my question. Maybe the best way is to go through them one by one. The first one on the net current cash flow guidance. I would like to make sure that I correctly understand what you imply by pro forma. Does it mean that there is no contribution at all of the healthcare portfolio? If so, does it mean that the recurring dividend will be based on the pro forma guidance, or will it take into account also the contribution of the healthcare portfolio at the end of the year?
Okay. Thanks for this question. There's two things. There's the guidance and net current cash flow, as we told you, there is absolutely no contribution on the healthcare business on the net current cash flow guidance. Neither the cash flow generated by Icade Santé in H1, nor the dividend received from the equity stake.
That's for the net current cash flow dividend, because the idea was to give you a new base based on Icade's tomorrow's profile. Regarding the dividend, we are driven by the minimum legal obligation, of course, regarding the recurring part of the dividend, it also includes the one coming from Icade Santé dividend.
Okay, that's clear. What payout ratio are you targeting for the recurring dividend?
As you saw, well, I know that Icade was used to give a payout ratio guidance on that. What we think now, given the global uncertainty in the environment and the fact that we are preparing the strategic plan, is to focus on keeping our strengths and cash into the company.
That's why the board will propose that the recurring dividend part will be fixed on the minimum basis. That's the reason why. We also believe that due to the special dividend links to the healthcare disposal, it offers for us the possibility to offer the shareholders some visibility in the coming years with satisfactory level of dividends.
Okay, that's clear. Maybe one question on asset valuation. Could we have the like-for-like change for the healthcare portfolio over the next six months, please?
Pardon? You are talking about the next six months?
No, just I would like to have an idea of the like-for-like change of the valuation of the healthcare portfolio over the next six months.
Slightly up.
Yeah, it was slightly up. Yeah.
+0.4.
Okay. Okay, maybe one last question on, regarding the property development activity. What could we expect in terms of, margin at year-end, in particular for residential?
As you saw on the global margin regarding the property development, this, the margin on the H1 result was supported by one specific operation, Tête Boule transaction. As for the residential, it was 4.6%.
Mm.
on H1. All in all, to the end of the year, on the average.
Right
Foresee a slight decrease compared to the 5.7% average margin on H1, to the end of the year.
Thank you. That's all for me.
Okay, thanks.
Okay, we will take the next question from line, Céline Huynh from Barclays. The line is open now. Yes, go.
Morning, I just have one question on your special dividend, please. Can you confirm in absolute amount how much you will pay in special dividend in 2024? The reason is that I can't reconcile with the 2.54 you're announcing, to me, half of 64% of EUR 710 million is EUR 227 million, that's equivalent to EUR 3 per share, not 2.54. Thank you.
Well, the special dividend linked to stage one is exactly EUR 388 million. As we will distribute half of that in 2024, the exact amount is EUR 194 million, reconciling with the EUR 2.54 per share. Thank you, Celine.
Thank you. We will take the next question from line, Florent Laroche-Joubert from ODDO. The line is open now, please go ahead.
Hi, Nicolas. Hi, Victoire. Thank you very much for the presentation. I would have maybe three question. The first one is on the net recurring cash flow. Based on the slide 21, would it be fair to say that if you have not guided for pro forma net working cash flow, but for total recurring cash flow without doing a pro forma figures, would it be fair to say that this net recurring cash flow would have been around EUR 4.20 per share in 2023?
This is my first question. My second question would be on the valuation in offices. We have today, I think, a total correction now of in 12 months of minus 12%. How do you reconcile these current valuations with the way on the investment market in the district in which you operate in offices? Maybe last question on the offices to be repositioned. What would be the timeline maybe to dispose them or to reposition them in the current portfolio? Thank you.
Okay. Maybe. ... Maybe, regarding the net current cash flow, it would be, slightly.
In fact, Florent, your question is exactly on a full year basis, or...? When you look at the slide 21. Yes, Yes, you have a half year base at EUR 206.
Yeah.
We don't give guidance, including the healthcare component. Your question is a little bit embarrassing, but it will be below, just below, under EUR 5 per share.
Yeah. Okay. Thanks. For the next questions regarding the valuations, by the appraisal. That's correct that over the past 12 months, value decreased by 12%. We think that it's consistent with the markets we're in, that we are well-positioned, mostly, in terms of assets in those sub-markets. We also think that the appraisers might have factored in a major part of the adjustment, deriving from the high interest rates environment now.
By the way, the overall, the blended rate of the portfolio is now around 6.6%, which we think is becoming more and more attractive given the current context. As for your third question, regarding the offices to be repositioned.
Mm.
Well, we'll start to see which ones can successfully be repositioned and converted. As I said, we have the expertise in-house, we have the tools in the toolbox with the expertise of the investment division and the property development division. We've already done that for some of those assets, especially in Rungis, for example, already converted a former office building into a hotel building. We'll look closely at those assets on an asset-by-asset basis, to determine which one need to be converted.
Also we could consider, indeed, some disposal about that. Regarding the timing, I'm not quite sure it's the best position to be a forced seller in the current environment. Thanks to the healthcare business disposal and our strong balance sheet, we are in no rush. I mean, the first part will be analyzing those assets to see the one that can be converted, and after that, we'll be opportunistic on the disposal. There's absolutely no rush because we are not a fast seller.
Okay. Thank you very much.
Thank you.
Thank you. We will take the next question from line, Véronique Meertens from Kempen. The line is open now, please go ahead.
Hey, good morning, all. Thank you for the presentations. Two questions from my side. Maybe first on the disposal of Santé. Already for the second time, you mentioned that we could actually see already a sale of the remaining part before the end of 2023. I was curious, are there actively discussions ongoing there, indeed, that you know of? Or what was the specific reason that you mentioned that? Or what percentage of chance of succession would you actually think that this could happen before the end of the year?
Maybe secondly, on operationally on the office segment, we've seen a bit of a drop in terms of occupancy levels and also quite a negative reversion in Q1. I was curious, how do you see it going forward? Are there some larger, lease maturities coming up where you expect some negative reversion? What are your expectations towards your occupancy level? Thank you.
Well, regarding Stages 2 and 3 of the disposal of the healthcare business, the Icade Santé stake is to be gradually acquired by both the inflows on Primonial REIM funds and new institutional investors. We mentioned that because, with negotiating a window to allow the new institutional investors to take advantage of December 2022 NAV, if they enter before year end. That's the reason why there's a window open as soon as the end of 2023.
Mm-hmm.
We are globally confident in both timing and valuation on the next step of Stages 2 and 3. As for the reversion and the next leases, as you saw, we have 2.2% like-for-like for the investment division. Victoire noted the fact that we had the specific renewal with Veolia. Maybe just to put the figures, without this renewal, the like-for-like figures would have been +3.8%.
Mm.
This is a very specific deal. The key part is that we fully passed the indexation, because we have a strong tenant basis, which prime tenants, 70%, but public state, major companies from CAC 40 and SBF 120.
Mm.
All in all, we still have this business model that allows us to pass the most part of the indexation. We do not expect, I mean, in the months to come regarding the discussion we have. We might have some different strategy regarding the sub-buckets we've put it in the office portfolio. For example, on our prime offices, as you saw, the last discussion were on track and consistent with the main figures we shared with you.
Okay, that's clear. Thank you. Maybe one follow-up question. The remaining stake in Santé, does it have to be sold in one go, or can it actually be split apart into several disposals?
It can be several disposal.
Mm.
The idea indeed, is this stake to be gradually acquired from both Primonial annual inflows and some specific.
Mm
investors that can build some, smaller stakes, of course.
Okay, thank you. That's clear. One other follow-up question on the occupancy level. If I understand correctly, you don't have a huge maturity coming up in terms of lettings, where you think that occupancy level will be impacted significantly over the remainder of the year?
Depending of the categories, the WAULT might be different. We will come up with, to you with the details. We are closely looking at the year end of our leases to anticipate such things, such as we did in the past.
We also try to look at that, through the segmentation of the portfolio, because if we think that some assets in the long term are in better shape, if they are repositioned, it might be even an opportunity, I mean, to use those next leases end or breaks to reposition the building. On the well-positioned offices, the average WAULT is a bit above four years.
Okay, thank you very much.
Thank you. We will take the next question from line, Marc Mozzi from Bank of America. The line is open now. Please go ahead.
Very good morning. Very good morning to you both. I just wanted to come back on your dividend, just to make sure that I understand what you're doing correctly here. You're telling us that you're gonna have a dividend this year, including special dividend, up by more than 10%, which, if I do basic math, should be around EUR 4.7 this year, I'm being conservative here. Which implicitly means that, as you said, that EUR 2.54 will be coming from on a special dividend.
The remaining recurring dividend is only EUR 2.2 per share, which on the basis of your guidance, means, number one, that you're gonna lower your payout ratio from 80% historically to 70%. More importantly, my understanding is, are you taking the opportunity of this special dividend to cut your dividend this year?
Because you have effectively received six months of healthcare business, which you do not plan to pay out, if I understand correctly, saying. Just to understand it, what I've been saying here is exactly what you've tried to do, basically cutting your dividend or putting nicely, taking the opportunity of this special dividend to cut your dividend, your recurring dividend. Thank you.
Thank you, Marc. Well, we are not cutting our dividend. I mean, we are able, due to the healthcare disposal, it enables us to give the shareholders a satisfactory amount, level of dividend for the next year. Once again, more than 10% up regarding 2022. We are, on the other part, we are currently working on our strategic plan. Given the amount of uncertainty in the environment, we feel, and the board, with us, that it's a good thing, you know, to keep some money in the company, until we come up with the plan.
That's the reason why. The figures you give are accurate. That's the one on the slide. Once again, we are not cutting the dividend because the global amount of the dividend will be 10% higher than 2022, and we wanna keep as much margin of maneuver as possible for the next month, given the environment and given the fact that we are working on our strategic plan. That's the reason why we propose this dividend policy today.
Perhaps in addition, if I may.
Sure.
With the healthcare transaction, Marc, we will have the opportunity to offer to our shareholders special dividend during the next four years. Meaning by that, of course, when you base the recurring dividend on the remaining part of Icade, the base is lower, of course, but taking into account the special dividends, it mean that during the next minimum four years, because of the spread of the capital gain.
We will be able to offer regular dividend and certainly with a slightly growth. I'm, and I don't fully share your view regarding the cutting dividend policy. It's not a cutting dividends policy. It's a growth dividend policy.
We really think it's an asset for us. I mean, with this special dividend, we have time to properly address the shareholders' issue by offering an attractive dividend in the coming years, while having time to clearly think out about our strategic plan, define Icade's new profile tomorrow, and maybe after this transition period, that might have some sense to come back to a payout ratio policy or so. As of today, that's, in our view, the best decision to make, to keep as much margin of maneuver as possible in order to prepare our strategic plan.
No, I'm not challenging your decision. I think it's exactly what you should do in the current environment, keeping as much equity as you can. I just want to make sure that I understand correctly what you've done, because, firstly, as sitting in Ark, the level of capital gain is lower than we all thought. That's number one. Number two, the payout ratio implicates from what you're gonna do on the recurring side is probably 10% points lower than what has been historically the policy of Icade.
It's just to make sure that we are in a position to properly forecast your dividend over the next three years. I understand where you come from, understand it's gonna grow on top. That's number one. Number two, my only remark is, we look at the real estate company as a total return company. - 12%, - 13% on your net asset value on one side.
Now your dividend yield will be below that on the other side, meaning you're gonna deliver- ... a negative total return, while we all thought you could have effectively achieved, a positive total return, thanks to your, very, high dividend, based on the special dividend. That's it, that's, but I understand where you're coming from.
Okay.
Thank you very much. There appears no further question on the phone. I'll hand it back over to your host for written questions on the web. Thank you.
First question by Ben Richford. What is the approximate pro forma LTV for full disposal of healthcare, assuming the disposals are in line with book value? Second question: How much of your non-office assets forming 15% of your portfolio do you intend to sell? Thank you.
As for the pro forma LTV, after the whole disposal of the healthcare, not so easy to give a figure, given the whole timeline. We think that two things: at the end of the year, we shall be around 31% LTV. And on top of that, what we will pay attention is to stick to the guidelines set by S&P regarding our BBB+ rating. You have that in mind, is net debt plus equity towards 35%, and a net debt EBITDA below 8.5x . That's for the LTV. As for the other buckets, the 14% buckets is about the business park offices.
This category is a temporary category that will be split at the end of the year, between the well-positioned offices and the one that need to be repositioned. We're talking about markets where there's a demand, but there's too much offer for that demand. The idea is to see exactly what is best size for the market, and after that, we'll decide. At the end of the day, there'll be only two categories: the well-positioned one and the one to be repositioned.
Next question from Thierry Cherel. Selling office outside Paris region, does it mean Icade will focus on the Paris region going forward?
Well, we are, at this stage, quite happy with the portfolio we have. Of course, Icade has something to do in all over France. We have a geographical footprint that is relevant at this stage. It's 10% of our portfolio outside Paris Region, as you saw in Lyon, in Marseille, and so. All of that will be assessed in the strategic plan. The idea at this stage is not about the location, Paris Region, Lyon, Marseille, or so. The idea is to focus on the use. Which assets are relevant for tomorrow's challenges?
That's the first thing we've done about this segmentation, is to focus on that. The question of our footprint, more globally, will be addressed through the strategic plan in the coming months.
Next question, by Thierry Cherel again. For the office assets to be repositioned, will there be partnerships, such as the one with SEGRO on Gobelins project conversion towards last mile logistics?
Well, that's an interesting question. I mean, yeah, we have expertise in-house, as I told you, with the investment division and property development division. Still, we need for such things, such project to be agile. Icade has made successful partnership in the past, as you underline, I mean, there's no decision at this stage. Everything is possible, of course, through partnerships, JV, we can imagine to reposition and convert those buildings.
Next question, by Thierry Sherrell again. What are the main explanations behind the deteriorating office occupancy rates?
Well, it's mainly due to the strong track record and successful track record of disposals over the past years. Keep in mind that Icade has disposed a bit more than EUR 2 billion of assets in the past years. There was some significant amount of disposal last year. There are still some disposal this year. All of that, it affects the occupancy rate, mostly.
There are no more questions in writing.
Okay. Okay, then-
Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. We will take the next question over the phone from line Jonathan Kownator from Goldman Sachs. The line is open now. Please go ahead.
Good morning. Thank you for taking my question. In the assets to be repositioned, and perhaps also maybe the question extends to the business park offices, the 14%. How much income are you still collecting, and what is the duration of that income, i.e., what is the income versus the level of vacancy in these two portfolios? Thank you.
Yeah. We will give you the precise details, Jonathan, it basically account for, what? 1/3 . As to give you-
1/3 of the income, you mean?
Yeah, yeah. Yeah, because the cap rate is much higher than on the well-positioned offices. The cap rate is around 8% on those assets.
Okay. Do we have the duration of that income? Is it similar to the portfolio, or is it shorter term?
You have short, shorter WAULT. Yeah.
Okay. All right. Thank you.
Thank you. Yep.
Thank you. There's no further question over the phone. I'll hand it back over to your host.
Okay. Well, thank you very much for your time and for your question. Looking forward to meeting you in person. For now, have a good day. Bye-bye. Thank you, Victor.
Bye-bye.