And now I'd like to hand the call over to your host, Mr. Nicolas Joly, CEO. Please go ahead, sir.
Thank you. Good morning, Nicolas Joly speaking. Thank you all for being here today on this call. Along with Christelle de Robillard, we are delighted to present this morning our 2024 earnings. This presentation will be, of course, followed by a Q&A session. Let's start to slide four for an overview of the main messages for the full year 2024. In 2024, the group net current cash flow amounts to EUR 3.98 per share, above the guidance. This is mainly explained by the resilience of the property investment division, whose revenue growth is supported by indexation.
The operational performance of property development is contrasted with the first half, marked by an exhaustive review of our operation to adjust to market conditions, and the second half, more positive, with an upturn in individual orders. One year after the announcement of the Reshape strategic plan, we would be happy today to share with you the first concrete steps taken in 2024. In addition, at the end of 2024, the group's balance sheet remained solid, with reasonable LTV and a high level of liquidity. For 2024, we will be proposing a dividend of EUR 4.31 per share at the annual general meeting, including EUR 2.54 per share coming from the dividend due following the completion of the first step of the sale of healthcare business in 2023.
For 2025, we remain cautious in a still complex market, which leads us to estimate a group net current cash flow between EUR 3.40 and EUR 3.60 per share. We will come back, of course, to this later. On page five, you will find the key figures for the year 2024. At group level, Icade posted a solid net current cash flow equal to EUR 302 million. Cash flow from strategic activities, i.e., property investment and property development, was slightly down at EUR 223 million. NAV and NTA decreased by around 11% to EUR 60.1 per share, reflecting in particular the falling value of the property portfolio.
In terms of liabilities, the LTV reached 36.5% at the end of the year versus 33.5% one year before. Net debt to EBITDA stood at 10 times at the end of December 2024. In the property investment business, gross rental income came to EUR 369 million, up 2.5% on a like-for-like basis, driven in particular by the effect of indexation. The gross asset value of the portfolio came to EUR 6.4 billion, which reflected a minus 7.1% decline on a like-for-like basis. The EPRA net initial yield was roughly stable at 5.2%. In the property development business, economic revenues were stable at EUR 1.2 billion.
The margin was negatively impacted by impairments accounted for in H1 2024. Let's look now at performance by business division, starting with property investment. Let's move on to page eight about the latest market trends. In 2024, the commercial investment division continued to operate in a complex market environment, totaling 1.75 million sq m let in 2024 in the Paris region. As we reported last February, three criteria in the choice of office assets remained: location, with the need to be close to a transport hub. Alignment with the best environmental standards. Quality of service offering.
And flexibility. We are also seeing increasing price differentials for prime assets between the central areas of Paris, above EUR 1,000 per sq m, and other more peripheral but well-connected areas at around EUR 550 per sq m. These areas are comparatively enjoying a reasonable level of interest, which explains the greater dynamism seen in 2024 in an area such as La Défense. In this context, Icade recorded a good level of letting activity, with around 133,000 square meters signed or renewed in 2024. These signatures and renewals represent an annual rental income of EUR 35 million and a WAULT of 6.4 years.
First of all, the letting activity demonstrated the appetite for Icade's well-positioned offices, meeting the highest standards in quality location. The dynamic rental activity also illustrated the good level of demand for our business parks and an opportunistic approach we have on the to-be repositioned assets. As expected, the financial occupancy rate was down to 84.7% as of December 31, 2024, given the departure of tenants in 2024. On slide 10, one of the highlights of the new year has been the reletting of the entire Pulse asset in Saint-Denis for 29,000 square meters.
Barely three months after the departure of the Olympic Games Committee, Icade's team successfully relet this emblematic asset to the departmental council of Seine-Saint-Denis. This pre-let agreement at 12 years was signed on the basis of an economic rent in line with the market. The lease to be signed in Q1 will take effect from late 2025, early 2026. Taking into account the reletting of Pulse, the occupancy rate for well-positioned assets is 90.7% versus 88% at the end of 2024. Let's move on to page 11, related to the additional rent coming from deliveries and current pipelines. In 2024, Icade delivered two office assets representing a total of EUR 5.8 million of annualized headline rent.
The pipeline represents additional revenues of EUR 45 million on an annual basis. We have good visibility over these revenues, as roughly 85% are secured following the continued marketing of the Eden Building to Schneider Electric. The pipeline represents relatively limited CapEx of less than EUR 300 million by 2027. We now turn to page 12, devoted to asset rotation. The office investment market remains very calm in 2024, with an investment volume of around EUR 15 billion, stable compared with last year. Against this backdrop, we succeeded in concluding the sale of four assets for EUR 82 million.
These core assets, located in Marseille, Lyon, and Neuilly, were sold above their last appraised value, with an average yield of 5.8%. At the beginning of February, Icade also exited early from the public-private partnership with the Saint-Nazaire Hospital by terminating the hospital loan lease and transferring the associated debt to the hospital. This transaction enabled Icade to sell another strategic asset at NAV, or EUR 55 million. Let's now move on to the operational performance of the development business line. 2024 was a complex year, with an uncertain and changing economic and political environment in France.
Against this backdrop, however, the volume of orders remained stable, thanks to a good momentum in the second half of the year among individuals. Icade recorded 5,300 unit orders for EUR 1.3 billion, relatively stable compared with 2023. This momentum was supported by a 17% increase in volume and a 7% rise in value in individual orders. The improvement in this segment was driven by the decrease in interest rates, the adaptation of our commercial offer, and the purchase of some operations from developers. In 2024, the contribution from social and intermediate housing institutional investors to the activity was more limited, with both volume and value declining.
On page 15, we present some emblematic projects launched this year that have met with rapid success. In particular, the Quetigny-Rives-de-Cromois development on the outskirts of Dijon, which achieved a pre-sales rate of 94% in less than nine months. Project Time had already been presented in our Capital Markets Day one year ago. This is a residential program developed on our land reserves in the north of Paris, in place of former office projects. Marketing is doing very well, with 68% pre-sold in six months. Finally, a platform which has been 100% sold illustrates our ability to manage large-scale mixed-use projects, a digital and emerging technology campus, and a student residence.
The success of these new projects has helped us to maintain our residential backlog at EUR 1.6 billion at the end of 2024, partially securing our 2025 revenues. Now let's jump to the section about Reshape plan. First of all, and in line with the pillars of Reshape strategic plan, we've made some good progress in 2024 in analyzing the office portfolio to be repositioned and in carrying out conversion projects for certain assets. During the year, the property investment division sold two assets in Lyon and Le Plessis-Robinson to the property development division at their appraised value for conversion into housing.
As of December 2024, the portfolio of the to-be repositioned assets represents a gross asset value of roughly €600 million, or 11% of the office portfolio, compared with 14% at the end of December 2023. It accounts for an annualized IFRS rental income of €38 million. To be noted that future projects have already been identified for roughly 70% of the gross asset value. In 2024, Icade has also taken the first step towards diversifying its asset portfolio, particularly in student residences and data centers. On page 18, we are happy to announce a new partnership we just signed in February with Cardinal Campus.
The objective is to operate our future asset portfolio under a white-label true management contract. The partnership agreement is due to be signed in H1 2025. At this stage, our ambition is to develop between 500 and 1,000 beds a year through Orven Group. To achieve this goal, we'll be relying on our development business, which benefits from excellent national coverage and a very good track record in the development of student residences. Our portfolio of assets will be repositioned, which also provides us with some development opportunities.
Slide 19 shows the progress we've made up to now on data centers projects during the year. Firstly, the data center to be leased to Equinix and located in the Parc des Portes de Paris has well progressed. Work started indeed in 2024, and the delivery is scheduled for Q2 2026. Secondly, we've reached new milestones in the hyperscale data center project located in the Paris-Orly Rungis Business Park. We have indeed requested the building permit and secured access to energy from RTE for the requested 130 megawatts by 2031. Let's move on to slide 20 and 21 to illustrate our commitment to building the 2050 city, which is more mixed-use and more sustainable in our view.
In particular, the group confirms in a white paper titled "Entre Villes, Quartiers Vis," its intention to work on transforming the city fringes, which represents a pool of opportunities to address the challenge of the housing crisis, rain disturbances, and the adaptation of cities to climate change. Having this in mind, Icade signed a firm agreement with Casino in December 2024 for the acquisition of a portfolio of 11 real estate sites for EUR 50 million. These sites have a development potential of approximately 3,500 housing units and over 50,000 square meters of retail space.
On the SG side, Icade posted in 2024 a very solid performance in terms of reducing carbon emissions. Indeed, between 2019 and 2024, the property investment division reduced its carbon intensity by -43%. The property development division reduced its carbon intensity by -20%, and the corporate carbon emissions went down by -20%. In absolute terms, the Icade Group's greenhouse gas emissions fell by -44%, thanks to, on the one hand, the contribution of all divisions, and on the other hand, the impact of lower activity, of course, in the property development division.
Given these strong results, we reaffirm our ambitious pace for 2030. I now turn the floor over to Christelle to present the financial results.
Thank you, Nicolas. Now, let's move on to the presentation of our 2024 financial results. The group's Net Current Cash Flow amounted to EUR 302 million, or EUR 3.98 per share, above the guidance. Net Current Cash Flow from strategic operations fell slightly to EUR 223 million compared with EUR 233 million in 2023, due to differences in performance between the business lines. Net Current Cash Flow from property investment rose by EUR 30 million compared with last year, thanks in particular to higher rental income and lower financial expenses.
The Property Development Division's Net Current Cash Flow fell by EUR 36 million compared with 2023, mainly due to write-off of impairment losses on projects in the portfolio. I'll come back to this in more details later. Let's move on to slide 24. As of December 2024, EPRA NAV per share was equal to EUR 60.1, declining roughly by 11%. This year-on-year change is due in particular to the evolution in the value of the property investment portfolio, representing EUR 5.8 per share, and the dividend paid in 2024 for EUR 4.8 per share. Let's dive into the financial performance of Property Investment Division in slide 26.
There are three messages to take away from this slide. Firstly, the Property Investment Division revenues came to EUR 369 million in 2024, up EUR 5 million versus last year. Secondly, the like-for-like growth stood at plus 2.5%. It is supported by the positive impact of indexation, plus 5.1%, that was partly offset by the effect of tenant departures and negative reversion on renewals. Lastly, growth was driven by the performance of the well-positioned offices and light industrial segments, which saw revenues rise respectively by +5.3% and +4.6% on a live-for-live basis.
We have also updated the reversionary potential on well-positioned assets. As anticipated, this has deteriorated slightly as a result of indexation rising from -8.7% at end 2023 to -11.2% at end 2024. As already mentioned, net current cash flow from the property investment division increased by EUR 30 million compared with last year. The improvement in net rental income is coming from the positive live-for-live contribution and a combined effect of increasing penalties for refurbishing premises and the departure of certain tenants, reduced energy costs, and thirdly, limited customer risk.
The strong net financial income also contributed to the improvement of the net current cash flow over the year. Slide 28 focuses on changes in the value of the investment portfolio. As Nicolas mentioned, the decrease in value amounts to minus 7.1% on a like-for-like basis. The EPRA net initial yield was 5.2%, marginally lower than in December 2023, reflecting notably the impact of the increase in vacancy and effect of franchising. The EPRA total net initial yield is 6.3%. Slide 29 shows the slowdown in value adjustment in our portfolio per asset class. For well-positioned offices, the adjustment over the year corresponds to minus 6.7% after a fall of almost minus 7.0% in 2023. The slowdown in the falling values has been confirmed half year after half year.
Light industrial assets are proving resilient, with their value rising by 1.9% this year. Let's turn now to the results of the property development business on slide 31. In 2024, net current cash flow from property development fell sharply to minus EUR 30 million. This was mainly due to the impairment booked in the first half following a complete review of the portfolio of operations. This write-down had a negative impact of EUR 34 million on net current cash flow. Excluding the impact of this impairment, the net current cash flow would be relatively in line with last year at EUR 4 million compared with EUR 6 million in 2023, thanks to the close monitoring of operating costs and financial results.
The major effort to streamline the property development portfolio has resulted in a very tight management of working capital, which was at an optimized level at the end of the year. In fact, working capital improved sharply and amounted to EUR 300 million, or 25% of economic revenue at the end of 2024 versus 44% of revenues last year. This improvement is the result of a rigorous management at several levels, such as decrease in land holding operations, close monitoring of the collection of receivables, and a selective policy in nudging new operations, resulting in a minus 28% year-on-year fall in work stock.
To be noted that the commitment to sell the Tolbiac assets for EUR 19.5 million was also signed early 2025 as part of this ongoing effort to control working capital. Let's move now on to debt management. The 2024 performance was marked by a very good financial result. Apart from income coming from the residual stake in the healthcare business, composed of interest on the loan to Icade Healthcare Europe and dividend receipts received from these entities, the increase in the financial result reflects a rigorous management of cost of debt and an optimization of cash management.
On the one hand, the cost of debt remained very low and has even improved in 2024 to 1.52% compared with 1.60% last year, thanks to additional hedging. The projected 2025 debt is hedged at 92%. On the other hand, the group recorded substantial income this year, up by EUR 12 million compared with 2023, with an average cash volume of EUR 1 billion invested at around 3.90%. Let's move on to slide 35. Icade maintained a very strong liquidity position of EUR 2.6 billion, covering its debt maturities until 2029. In 2024, we successfully bought back EUR 350 million of bonds, enabling us to proactively manage the debt maturity schedule and reduce the next 2025 and 2026 bond maturities.
We also issued EUR 149 million of new bonds maturing in 2029 and 2031, allowing us to benefit from good financing conditions and to extend slightly the maturity of our debts. Slide 36 presents our key balance sheet ratios as of December 31, 2024. LTV was at three times at 36.5%, reflecting the change in the value of the property portfolio in 2024. The net debt to EBITDA ratio rose to 10 times. This deterioration is notably due to the impact on EBITDA of impairment losses recorded in the property development business. This impact accounts for 2.2% of the increase in the ratio.
Let's move on to slide 37 for an update on the disposal of the healthcare business. We confirm the group's strategy of selling the healthcare portfolio in its entirety, despite the absence of any new deals concluded in 2024. In an investment market that has deteriorated since 2023, Icade has been working on alternative solutions to continue the investment of the healthcare business. In January 2025, the group signed an agreement with Predica, a life insurance subsidiary of Crédit Agricole Assurances, to exchange shares in IHE for shares in a well-positioned office asset in Europe.
The transaction would allow Icade to reduce its exposure to IHE to 21.7%. The transaction is scheduled to close in Q1 2025, subject to satisfaction of conditions precedent. At IHE level, the process of selling the Italian portfolio, already announced, is still underway. Two factors are encouraging the disposal process to continue. On the one hand, the gradual recovery of the investment market in the healthcare sector, with some transactions completed in 2024. On the other hand, the resilience of this asset class, which recorded a value decrease of only -1.7% in 2024. In this context, we are continuing discussions with Primonial, third-party investors, and current shareholders of IHE.
However, the current market environment has led us to postpone the timetable for completion. The sale of the French and international portfolio is planned to take place progressively in 2025 and 2026. At December 31, 2024, the value of Icade's stake in the healthcare business was stable at €1.3 billion. I'll hand over to Nicolas for the conclusion and details on the dividends and 2025 outlook.
Many thanks, Christelle. The total 2024 dividends that will be submitted to general meeting approval amounts to €4.31 per share. It includes €2.54 per share coming from the remaining dividends due after the completion of the first half of the sales of healthcare business in 2023. The dividend will be paid into installments in March and July. Let's move on to slide 40 for the 2025 guidance. Icade expects a group net current cash flow of between €3.40 and €3.60 per share in 2025. Property revenues are expected to decline in 2025, mainly due to a lower positive impact of indexation and the full year impact of tenants that left in 2024.
On the development side, we will benefit from a positive base effect after the impairments accounted in 2024, but we remain cautious about the pace of recovery in 2025. To be noted that the group net current cash flow includes EUR 0.67 per share from non-strategic operations. For the sake of clarity, this amount has been estimated without the impact of potential disposal on these activities or the repayment of Icade's loan granted to Liasche. The guidance will be adjusted in due course as and when disposals are made during the year. To conclude, in an always challenging environment, Icade demonstrated in 2024 the resilience of its business model.
I'd like also to thank all Icade's teams for their strong commitment this year, which has enabled the group to take concrete steps towards implementing the initial strategy plan. We remain cautious for 2025, but we'll be determined to take new steps across all our strategic priorities. Moreover, I'd like to take this opportunity to officially announce the departure of Christelle, who will be taking on in Q2 a very exciting position at her former company, Aéroports de Paris. Christelle, I'd like to thank you most warmly for everything you've brought to the group over the last few months and for carrying out your role with great commitment and professionalism.
It was a real pleasure for me and for all of us having you on board during this year, and I sincerely wish you all the best in your future role.
Thank you very much, Nicolas, for your confidence and the opportunity you have given me to join Icade. Even if I regret not having contributed even more to the deployment of Reshape, I am proud of the work already accomplished over the year. Let me, by the way, thank all my teams and my fellow exco members. Icade's transformation is well underway, and I know that the company will be able to rely on the mobilization of all to successfully meet future challenges.
Thank you, Christelle. And with that, let's start the question and answer session.
Thank you, sir. Ladies and gentlemen, if you wish to ask a question, please signal by pressing Star 1. If you find that your question has already been answered, you may remove yourself from the queue by pressing Star 2. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. Our first question is from Stéphane Afonso from Jefferies. Please go ahead.
Yes, good morning, and thank you for the presentation. Three questions on my side. Firstly, I would appreciate if you could elaborate on the guidance. What are the main assumptions behind the top range of the guidance? And do you think that 2025 could see the trough for the core net current cash flow? And finally, could you elaborate on the options held by Primonial to acquire Icade's remaining stakes that I understand will expire in H1? And basically, if Primonial does not complete the acquisition by then, could you consider keeping your remaining stakes in healthcare? Thank you.
Yep, thank you very much, Stéphane. As for the 2025 guidance, as you saw, we are expecting a 2025 Net Current Cash Flow between EUR 340 and EUR 360 per share. We took a cautious approach on business lines given the current environment. As for the investment division, we plan a decrease in rental income due to the decline of positive effect of index-linked rental reviews and the full year negative effect of 2024 tenant departures. As for the property development business, as I said, we expect improvement in profitability after the strong impairment losses in 2024.
We expect return to breakeven in 2025, but nevertheless, remain cautious due to unfavorable political and tax environment globally. As for the remaining EUR 0.67 on healthcare activities, as I said, we have estimated it without taking into account the future disposal of Liasche and Premiere, even if, of course, our disposal strategy remains unchanged. And this part will evolve depending on the pace of disposal. As for the. Yeah, yes, Stéphane?
Yeah, yes. I'm trying to understand the difference in terms of assumptions between the top range of the guidance and the low end, but just focusing on core net current cash flow. Please.
Well, as I said, mostly on the property development business, we are just at the beginning of the year. So even if we had early signs of recovery, as you saw in the individuals, it's a bit too early to tell, especially with the evolution of the tax environment. So hopefully, we'll be able to give you more visibility during half year and maybe just readjust the guidance. But at this stage, we prefer to have this EUR 0.20 bracket in order to remain cautious.
Okay.
That's clear for you?
Yes.
Okay. As for the cash flows, well, with 2025 will be the trough, definitely, that's what we are working on. As I said, we saw some resilience activity nevertheless in the investment division, although the context is still quite tough. We have still the impact in 2025 of the full year of the tenant departure in 2024. 2025 should be better. Hopefully, 2025, yeah, should be the trough on the cash flows. As for the option from Primonial, you know that Primonial benefits from co-options held by the shares held by Icade in IHE. Those co-options expire mid-2025. Nevertheless, this does not impact our willingness to exit, and this does not impact Primonial REIM interest in strengthening its position in healthcare.
This shall not have any major impact on the willingness of achieving the transaction. And we still have, of course, the ability to discuss with third-party investors and even the existing shareholders of the vehicle. As Christelle was mentioning, you saw that we were able to structure a dedicated swap with Predica that also confirmed that the NAV remains the relevant proxy for such transactions. Nevertheless, of course, we shall be still opportunistic depending on the in terms of the volume and potential timing of any transaction.
Okay. Thank you. Thank you very much. That's clear.
Thank you. We will now move to our next question from Florent Laroche-Joubert from Oddo BHF. Please go ahead.
Good morning, Nicolas. So good morning, Christelle. So thank you for this presentation. I would have two questions, please. So my first question would be about the evolution of your occupancy rate in offices, so excluding the effect of burns. So what could we expect with your leading challenges in 2025? And my second question would be on the dividend. So if we exclude the exceptional contribution of EUR 2.54 of the healthcare business, your payout ratio happens to be quite weak. So what would be your dividend policy going forward for next year? Thank you very much.
Okay. Thank you, Florent. Thanks for your question. Taking the first one about the occupancy rate, the expected, well, we expect stabilization in the occupancy rate on the short term. As you know, negotiations and marketing take time, even if in the case of a good transaction like BNP's, of course, it takes time. The decline we observed at the end of 2024 in occupancy rate was in line with our expectation, given the announced departure taking effect. It was driven in particular. You saw that by the trends on assets to be repositioned, which are clearly emptying out. The occupancy rate on the well-positioned was at 88% versus 91% at the end of 2023.
We are close to this level including the burns transaction. On the light industrial, there was a small erosion at the end of the year, but coming from tenant rotation. There's a delivery of a dedicated project, large project, 5,600 sq m, which is currently being marketed, but for which we are confident we're letting soon. As for the dividend policy for 2024, this dividend is indeed consistent with what has been said today. We took the commitment to distribute the dividends related to the first stage of the healthcare disposal in 2023 over two years. That's what we do today by including the remaining balance of the EUR 2.54 in the total dividend.
Having said that, and as for the remaining, we stick to what we've said, being we want to limit the dividends to retain cash to preserve our redeployment capacity and finance future growth until we have finalized the repositioning of the group. That's the reason why the remaining EUR 177 per share corresponds to the amount calculated on the basis of the SIIC obligation. So roughly, it comes with an equivalent payout ratio of 42% roughly. This is similar to what we've done during the past year because excluding the dividends coming from the first stage of the healthcare, last year was equivalent payout ratio on the cash flows around 50%. So clearly. So we don't guide on our dividend policy for the coming year, but we'll stick to this philosophy.
Okay. Thank you very much.
Thank you.
Thank you. We will now take our next question from Jonathan Kownator from Goldman Sachs. Please go ahead.
Good morning. Thank you for taking my question. So I just wanted to follow up on sort of evolution of rental income, and particularly at this stage, you have EUR 38 million of annualized rents in net to be repositioned assets. Can we understand how you expect that to evolve over the next one or two years, please? That would be my first question.
Okay. Thank you, Jonathan. Well, on this one, clearly, as I said, we are expecting those buildings to empty out clearly. And if you have a look on the expiry schedule, we put a dedicated focus on the lease expiries on the year 2025 in the appendices of the presentation. You will see that out of the EUR 56 million of potential break option of end-of-leases, EUR 13 million come from the to be repositioned office. It's part of the EUR 38 you were mentioning. Mostly, we are expecting those to be emptying out, and it shall be the case over time. Nevertheless, as you also saw in the presentation, we are really opportunistic on those transactions.
We are not looking at negative reversion, but we are eager to make some pragmatic deals, such as the one we've done with SNCF on Le Monet building, securing for an extra few years the 15,000 square meters on this building. It's achievable from time to time, but once again, the strategy remains the same: recreating liquidity by creating a reconversion scenario for the building. But in the meantime, we fight for every euro, and if we are in a position to make an opportunistic deal and very pragmatic deal, we'll do so.
Okay. Darius Wheeler, second question, please. Just on the property development, obviously, your start, we're I think down 28% for 2025 or for early this year at least. Can you help us understand the type of volumes that you expect? Obviously, you highlighted that the backlog was still good, but how should we think about volumes for the property development division over the next one or two years?
About the volume, we have some visibility quite good over the coming year due to the visibility we have on the backlog, mentioning the EUR 1.6 billion backlog. As you know, maybe a word more globally on the development activity over the next month, what we expect. We saw some recent positive signs in the market due to the falling interest rates over the 2024 year. That led to some increase in individual orders and also declining consolidation rates.
That's good news for us. We also now have some visibility on some new positive measures in the law with the zero rate loan extended for one year and also some inheritance, sorry, tax exemption measures, which are a good sign, shall not compensate fully the impact of the end of the Pinel tax incentive scheme, but nevertheless, they are good news. But having said that, the political and tax context still calls for caution in our view, especially because we have some local municipal elections on the agenda in March 2026, and it's always not so good for the global activity. On our side, we have some historical operations with lower margin remaining in the portfolios that are still to develop.
As you saw, we are also taking some opportunistic and gradual move, taking over some new operations with the larger margin from other property developers.
Okay. But this backlog, I mean, this backlog. Support the fact that your volumes could be flat in 2025 or higher or lower? I mean, it depends a bit on the timing that you decide to launch these projects, right, and these launches down. So that was the sort of aim of the question, right?
Yeah. Once again, it's a bit too early to tell. We are just at the beginning of the year. There also, we stick to our philosophy and policy very selective on what we've done. We went through the whole portfolio last June, so we want to remain really selective on what we launch. So it's really early to tell what would be the landmark at the end of the year, but nevertheless, we have this backlog that should help strengthen the activity.
Okay.
Thank you, John.
Thank you. We will now move to our next question from Marc Mozzi from Bank of America. Please go ahead.
Hi. Good morning, everyone. Thank you for taking the question. I just wanted. I have three questions. The first one coming back to the primary option. So just to make sure clear we have understood that if there's no exercise, we're out of officially, there's no acquisition from them of a phase two. Maybe we go with first question first. Yeah.
Okay. Sure. Thank you, Marcus. Well, no, on the option, the only thing we say is that the call options, they are benefiting on our shares. They expire mid-2025. I mean, that's the contract. That does not mean that Primonial won't buy at the end the shares, that Icade at the end won't sell the shares. It was just the legal framework that was signed in 2023. But I mean, if tomorrow Primonial still wants to buy the shares at the NAV, we'd be happy to sell to them. And they are in their strategy, no change. It's just a matter of their inflow in the short term that don't allow them to exercise the call and tomorrow to buy the shares in the short term. That's the reason why. Okay.
Thank you. And my next question is on your also coming back on the dividend cut of your recurring dividend. So, I understand the rationale behind. Why haven't you communicated a bit ahead on this? This is one of the main drivers, I think, on the share price.
Well, as for the dividend, once again, we've always said that we took the commitment to distribute the healthcare over two years. That's what we've done. And on the other part, the recurring, we've always said that our philosophy is to retain as much cash as possible. So it's, of course, more difficult to give a proper guidance on that when you are not on a pure payout ratio on the cash flows, but we were pretty clear on the philosophy. And that's where we stand today.
Okay. So we can expect next year the same level of dividend or it's ideal to make it go because next year also probably given the guidance, you want to preserve some cash flow if there's no big disposals.
Well, once again, we are not guiding on the dividend policy for the years to come. We will do so once we have finalized the repositioning of the group. But in the meantime, we stick to that. So there's no payout ratio to be guided on clearly. The one thing we can say is that where we stand today, apart from the healthcare business, it's like a payout of 42% on the recurring with this EUR 1.77 per share on the remaining part. It was an equivalent payout ratio on the past year on the recurring of roughly 50%. That's one thing we can say. On top of that, shall we make some extra disposal on the Premier healthcare business?
Of course, we should be compelled also to give some additional dividends, such as what we did with the first step.
Okay. Thank you. My last question is on your asset values and cap rates. Your asset values still went down some bit, but at least 7%. At the same time, cap rates went down or your EPRA net initial. Should I understand that the rental value, market rental values or values assumption are down massively because you have a little bit of rent growth and asset values coming down, so cap rates should have gone up?
On the asset value, so we saw that indeed they went down a bit. On the EPRA yield, I mean, you have to look up on the net initial yield on the one hand. That was slightly down, but that's due to the way it's calculated on the EPRA methodology. You have some rent-free period, for example. We had one dedicated building on which it was a rent-free period at the end of the year. So at this time, it amounts to zero. So that's why you have, in my view, not only to look at the initial yield, but also on the top-up EPRA yield. You have to look at both, actually, and the top-up was slightly up on this one, so that's the reason why.
Okay. Has your rent-free period or your incentives massively changed this year or beginning of 2025? So has it gone up, the rent-frees you're giving?
No, no. There was no massive change. Once again, when we signed a lease, and you saw that we signed almost 100,000 new square meters. We signed at the NAV with the same level of incentive that was observed in the past, especially, for example, on the Pulse, which was the largest transaction, where the economic rent was in line with what was expected. So no major change to answer properly your question.
Okay. Thank you. Can you give you a number of your negative reversions? Sorry, I'm not sure.
Sure, sure. Actually, Marc, we already did because it's in the presentation. As we did too, we gave an update on the figures. Remember, we shared this figure with Reshape one year ago. On the well-positioned offices, it was -8.7%. Now it's minus 11.2% on the well-positioned, which is honestly minus 0.3%, sorry, on the well-positioned office, which was quite expected due to the fact that during the 2024 year, the rents were still fueled by a strong indexation, roughly 5%, while in the same time, the RVs were pretty stable, stable plus. That's the reason the gap widened a bit from what has been shared with Reshape.
Okay. Thank you very much.
Just a word, talking about the values, I'm sure you have in mind, but all of this negative reversion potential is already included in the NAV, of course, because it directly comes from the appraisal work. Yes.
Thank you. We will now take our next question from Alex Holst from Kempen. Please go ahead.
Yes. Hi. Good morning. Thank you for the presentation, Dean. Just one question left from my side, and it's on the operating margins. They made quite a big jump. I was wondering if you could go through the drivers and highlight if it's more of a one-off or if we should expect this to stabilize in the coming years.
Okay. Thanks, Alex.
Yes. Thanks a lot for this question. So indeed, our recurring net income has increased significantly by 6.4%. So this is mainly due to three effects. First of all, we had a reduction in provision for trade receivables. We recorded important provisions in 2023 that were not repeated in 2024. Second element, we had an increase in expenses recharged to tenants. So this was a positive one-off impact that shouldn't be repeated in the short term. And lastly, a more sustainable effect, but more marginally, linked to a decrease in energy costs. So looking forward, we should be somewhere between the performance of 2023 and 2024.
All right. Perfect. Thank you.
Thank you.
Thank you. As a reminder, to ask a question, please signal by pressing star one. Our next question is from Adam Shapton from Green Street. Please go ahead.
Good morning. Just one question for me. Just thinking about the proceeds and uses slide from your investor day last year, so EUR 4.2 billion between healthcare and other disposals, and then the dividends, and then EUR 1.8 billion of capital redeployment and EUR 1.7 billion of debt repayment is what you cited a year ago. I think it's fair to say you're probably behind track on the disposal side of things, only sort of EUR 80 million, excluding healthcare in the last year. What are your priorities on the uses side between the various EUR 1.8 billion of capital deployment and then the EUR 1.7 billion of debt repayment, say, in the next between now and mid-2026? Where are the priorities?
Okay. Thank you very much, Adam. Well, as for the uses and proceeds shared one year ago, well, we are still in line with what we've shared about Reshape. Maybe the one question is more about the timing of execution, that the confidence we have on executing the strategic plan over those five years. So it's still perfectly fit. Our priorities in terms of investment is on the pipeline and clearly on diversification also due to the fact that what we are focusing on is value creation. Clearly, when we are investing, we want to invest at yield on cost roughly between 6.5%-1%, aiming at value creation of 15%-20% globally.
So that's what we'll be focusing on. But at the same time, we remember that the fourth pillar of Reshape is our financial straight and rigorous policy. So we'll try to keep a good balance between those two in order to be able to redeploy capital fully. So, of course, this depends on the pace of the disposal. Of course, the healthcare, but also the other type of disposal also coming from the investment division. But we could also rely on potential partnership with some third-party investors with minority investment, for example, not to delay and postpone our investment. That's what we are focusing on in order to redeploy Reshape, having in mind that in the short term, there's not so many CapEx to be invested because, for example, if you take the large data center development we have in Rungis, in the coming months, we'll be focusing on securing the building permit also. So here, we're talking about hundreds of thousands of euros, not dozens or hundreds of millions of euros.
Okay. That makes sense. I mean, I think the debt repayment of EUR 1.7 billion that you cited a year ago, that still remains a priority ahead of, say, EUR 500 million of potential acquisitions, which was also on the slide. But if the sales proceeds are slower, then the debt repayment will remain the priority ahead of, for example, acquisitions or other CapEx that you cite. Can you confirm that's what you'd like to communicate?
Yeah. Well, at this stage, we are quite happy with the situation and the good balance we have between our financial policy and our ability to redeploy capital clearly. And talking about the €500 million of acquisition within the months coming and years coming, of course, we should have some more visibility on this. For example, on the student housing, that could be part of those acquisitions or money to be redirected in the pipeline sourced by the development deadline. And clearly, we'll be adapting the pace of investment to the pace of disposal and/or potential third-party partnership we could structure on. Okay?
Okay. That makes sense. Thank you.
Thank you, Adam.
Thank you. And we have a question from Sam King from BNP Paribas Exane. Please go ahead.
Hi. Good morning, guys. Just two questions from me, please. The first is coming back to the lease expiry schedule and break options in FY25 that total €56 million. I appreciate you've already commented that around €16 million of that is in the 2B reposition portfolio and will be lost to vacancy. But just interested on how much of the remaining balance in the well-positioned portfolio do you expect to lose next year? That's the first question, and then the second one is just a clarification question on balance sheet and leverage. Do you have any debt covenants for net debt to EBITDA, or is it just the 11 times threshold under the S&P credit rating? Thanks.
I'll take the one on the expiring schedule. As I said, roughly, we expect there to be repositioned offices accounting for €13 million out of the €56 million of potential break option or expiry next year to be vacated. And once at that, on the remaining assets, globally, what we expect is back to normal, I would say. And you have the information, I think, globally, two-thirds of the potential break option or expiry, sorry, weren't exercised on average over the three past years. So globally, that's what we expect on the expiry schedule. And I'll let Christelle answer on the other question.
Yeah. On your second question, so you have a dedicated part in our press release regarding bank covenants. So I confirm that there is no covenant regarding net debt to EBITDA. The only bank covenants we have concern LTV, ICR, value of the property portfolio, and security interest in assets. So as you can see in the press release, we have a comfortable room of maneuver regarding these different covenants, and we remain comfortably within the limits. But indeed, you're right. The only guidelines we have in terms of net debt to EBITDA compared to the guidelines given by S&P for our rating, for which I remind you that the threshold has been revised when our rating was downgraded at the end of last year. And so it is now expected to be below 11 times.
Great. Thank you.
Thank you. That's all questions we had today from the audio lines. And I would like to hand back over to our speakers for any webcast questions. Thank you.
Okay. Thank you. So we have two written questions from Thierry Cherel. So the first one, could you please confirm that disposal mainly comes from the well-positioned office portfolio? And the second one, what is the depreciation backlog remaining in the office portfolio?
Yeah. As for the disposal, well, you saw in the results that a part was coming from the well-positioned offices, of course. The ones that are located in the provinces is typically micro assets on which we've done the work that now core, rather some small volume that can attract some investors, and that's the reason why we were able to achieve disposal at the NAV, that does not only come from that because on top of those €82 million, well, there was also the termination of the public-private partnership with the Saint-Nazaire Hospital accounting for €55 million. Clearly, our disposal on top of the healthcare activities will come from both well-positioned offices where value creation jobs have been done.
It's our job to crystallize and monetize that, but also from non-strategic assets such as the Saint-Nazaire Hospital or, for example, to-be repositioned assets. As for the depreciation on the 2B repositioned asset, well, maybe if we look back in the mirror, talking about the evolution of the valuation of the 2B repositioned assets from the peak of the valuation in June 2022, we are now at a minus 60% decrease in the valuation on the 2B repositioned assets. So clearly, we've come a long way. We are not anymore based on pure office valuation. It's really different. And in the meantime, on the well-positioned office, the total adjustment on the valuation was also significant at minus 30%, but of course, nothing compared to this.
There is another written question from Neeraj Kumar. Do you plan to come to bond markets to refinance your 2025-2026 debt maturities?
Okay. Thank you for your question. So indeed, as you know, we have some bond maturing in 2025 for EUR 350 million at the end of the year after we bought back, as I mentioned earlier on, EUR 150 million on this maturity. We will also have important maturities in 2026 for EUR 550 million of bond and EUR 300 million of mortgage loan. So clearly, we could go under. We could tap the market to refinance this maturity, all the more as it will enable us to extend our debt maturity, which is an important key indicator for us. Yes. And we can take another one from Marc Mozzi.
How should we assess your dividend for the coming year, excluding and including exceptional parts? And what are the expectations from CDC and Predica?
Well, thank you, Marco, for your question. The dividend policy, as I already said, we don't guide on our dividend policy for the year to come, but we stick to this philosophy. Of course, the dividend shares for 2024, but also 2023, based on this philosophy, were supported by our two main shareholders. I mean, that's what we expect. That's what we stick to this. That's what we said, and we keep on doing what we said. I think we don't have any questions anymore. Thank you very much for attending this call, and thanks for your questions. Last word for the team, once again, because I'd like to thank them strongly, warmly, because while facing quite a tough environment in the short term, they haven't lost sight of the Reshape strategic plan. As you saw, we went through some first concrete steps.
So, thanks to the whole team for the strong commitment this year and for the year to come and certain of this. So, looking forward to seeing you all in the coming days. Have a nice day until then. Bye-bye.
Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.