Good day, ladies and gentlemen, and welcome to Icade 2025 Half-Year Results Presentation. Please note this event is being recorded. At this time, all participants are in listen-only mode. We will be facilitating a Q&A session towards the end of today's prepared remarks. If you would like to ask a question, you may do so by pressing star one on your telephone keypad. I will now turn the call over to your host for today, Nicolas Joly, CEO, and Bruno Valentin, CFO. You may begin.
Thank you. Good morning, Nicolas Joly speaking. Thank you all for being here today on this call. Along with Bruno Valentin, we are delighted to present this morning Icade 2025 Half-Year Results. This presentation will be, of course, followed by a Q&A session. Let's move on to slide four for an overview of the key messages for the First Half of 2025. Icade delivered strong leasing activity with nearly 80,000 sqm signed or renewed, contributing to an improved Occupancy Rate office and Light Industrial Assets. in parallel, the Property Investment Division secured over EUR 100 million in disposal of non-strategic and core assets in line with NAV. In the First Half of 2025, Icade Net Current Cash Flow from strategic activities compared to the same period last year. However, the contributions from the Property Investment and Development Businesses differed from 2024.
Indeed, Rental Income declined, the profitability of the Development Segment improved following a deep review of our operations in early 2024 to adapt to evolving Market Conditions. Against this backdrop and in a complex market environment that calls for caution, we are confirming group Net Current Cash Flow. this semester, we proactively managed our Balance Sheet and further strengthened our Liquidity position with the successful issuance of a EUR 500 million 10-Year Green Bond in May and the closing of EUR 290 million in Backup Credit Lines. On the ESG front, Icade distinguished itself in 2024 as the first publicly listed company in Europe to submit two separate shareholder resolutions on climate and biodiversity. At our general meeting held in May 2025, we once again put these resolutions to a vote, presenting the group's performance in reducing Carbon Intensity, lowering CO2 Emissions, and contributing to Biodiversity Preservation.
Both resolutions received overwhelming support, with approval rates above 99%. On pages five and six, you will find the key figures for the First Half of 2025. At group level, Icade reported a Net Current Cash Flow of EUR 2.03 per share. Cash flow from strategic activities, namely Property Investment and Property Development, was nearly stable at EUR 1.44 per share compared to EUR 1.47 per share in H1 2024. NTA/NAV declined by around 6% to EUR 56.6 per share, mainly reflecting the decrease in the value of the Property Portfolio and the payment of the interim dividend. On the liability side, the Loan-to-Value Ratio stood at 38.1% at the end of June versus 36.5% at the end of December 2024, reflecting the decline in asset values and a still limited volume of disposals. The Net Debt-to-EBITDA Ratio improved to 8.3 times, thanks to a recovery in Development Margins this semester.
Interest Coverage remains very solid at 7.4 times, with an average Cost of Debt stable at 1.6%. In the Property Investment Division, Rental Income amounted to EUR 178 million, down 4.3% on a like-for-like basis, mainly due to tenant departures. The gross Asset Value of the Portfolio stood at EUR 6.2 billion, reflecting a -2.8% decline on a like-for-like basis. The EPRA net initial yield remained stable at around 5.3%. In the Property Development Division, Economic Revenue declined to EUR 501 million versus EUR 583 million in the same period last year. However, the Operating Margin turned positive again, reaching 2.3%. Let's look now at performance by business division, starting with Property Investment. Let's move on to page nine, which covers the latest market trends.
In the First Half of 2025, the Rental Market remained challenging with Take-Up in the greater Paris region down 12%, a persistently high Vacancy Rate above 10%, and incentives averaging around 28%. In an uncertain economic and political environment, Tenant Decision-Making Processes have become longer. However, the trend toward more Affordable, Peripheral, and Well-Connected Areas continues to gain traction, particularly in locations like Clair de France. On the Investment Side, Market Conditions appear to be slightly improving, with a modest increase in Transaction Volumes and greater Investor Liquidity , especially for Large Deals, notably in the core plus and value-add segments. That said, Liquidity remains mostly concentrated in Central Locations for now. In this context, Icade recorded solid Leasing Activity with approximately 79,000 sqm signed or renewed in H1 2025, compared to 133,000 sqm over the full year 2024.
These leases represent Rental Income of EUR 20 million, with a Hold of 7.4 years. This performance highlights the strong demand for Icade's well-located office assets that meet high standards. A standout example is the full reletting of the Pulse building in Saint-Denis, totaling 29,000 sqm. We also demonstrated our ability to effectively manage business parks, such as the Mauvin Site in the north of Paris. Following the signing of two leases this semester for over 7,000 sqm of Light Industrial Space, the 21,000 sqm park is now fully let. Thanks to this strong commercial momentum, our Occupancy Rate improved to 88.8% for well-positioned offices and 89.5% for Light Industrial Assets. It's worth noting that these figures do not yet reflect the positive impact of the Pulse relating as tenant occupation will begin later this year. We now turn to page 11, which focuses on Asset Rotation.
In the First Half of 2025, Icade secured over EUR 100 million in disposal of non-strategic and mature assets, including, firstly, the disposal of the Nancy Regional University Hospital, CHRU, representing a value of EUR 55 million, following the early termination of the public-private partnership and the transfer of associated liabilities back to the CHRU. Secondly, the sale of a portfolio of five B&B Hotels to a leading investor for EUR 36 million, at an average yield of around 7%, in line with the NAV as of December 31, 2024. A third transaction is under a signed promise to sell a Mixed-Use Office and Retail Building in Marseille, covering 3,300 sqm and valued at EUR 14 million. This deal, also aligned with NAV, illustrates the continued Liquidity in the market for Core and Smaller-Sized Assets, with yields of approximately 6%. Let's move on to page 12, which highlights our current Project Pipeline.
We have a diversified pipeline with a limited CapEx of around EUR 300 million planned over the next three years. This pipeline is expected to generate approximately EUR 50 million in additional Rental Income. in the First Half of 2025, we'll launch three new core office projects, delivering attractive yields on cost above 7%. These include two developments, Seed and Bloom, located in the heart of Lyon-Part-Dieu business district, as well as Centre d'Arts, an office project in Toulouse, fully prelet to Sopra. In line with the group's CSR Ambition, Icade is fully committed to ensuring that all ongoing developments achieve top certifications, such as HQE and BREEAM Excellence, all aligned with the EU Taxonomy criteria. In the First Half of 2025, Icade continued to advance its strategy to diversify its Asset Portfolio.
Notably, in the student housing segment, Icade signed a partnership agreement in July 2025 with Cardinal Campus, a student residence operator who will manage a future portfolio of assets on Icade's behalf under a white-label arrangement. In June 2025, the Property Investment Division already positioned itself to invest in a student residence in Ivry-sur-Seine, a joint development with the Filia Group. The project includes 194 units, totaling approximately 3,600 sqm, with construction set to begin in Q1 2026 and delivery planned for 2028. Additionally, two to three other student residence projects in the Paris region, representing around 750 beds by 2028, have already been identified in collaboration with the Property Development Division. Let's now move on to the operational performance of the development business line. The First Half of 2025 remained challenging for the industry, especially in the second quarter.
The Development Division recorded a stable Orders Volume with 2,116 units, totaling EUR 496 million, down by 8%. Activity in the Individual Segment declined by 11% in volume, in line with the overall market. This decline occurred in an unfavorable tax environment marked by the end of the PNEL tax scheme, which led to a sharp contraction in individual investor activity, with a minus 35% compared to H1 2024. The momentum was more positive for Honor Accompanyer orders, which increased by 10%, supported by favorable measures promoting homeownership. Bulk orders showed a 10% increase in volume but an 8% decrease in value. This discrepancy between volume and value changes is explained by a temporary shift in the portfolio mix. Institutional investors continue to drive Business Activity, as they accounted for 54% of orders in volume terms in H1 2025.
It is also worth noting that Institutional Investor Activity has historically been stronger in the second half of the year, with over two thirds of Bulk Sales made in H2 in both 2023 and 2024. During the First Half of 2025, the group demonstrated its commitment to building the city of 2050, in line with its ambitions outlined in the reshaped strategy plan. Notably, Icade, together with SET, published the first Barometer on French City Fringes. The study's findings highlight a potential of 1.6 million housing units, 15,000 Hectares of Economic Land, and 10,000 Hectares earmarked for Ecological Restoration. Icade aims to play a significant role in the transformation of these commercial areas. In this context, during the First Half of 2025, Icade acquired a portfolio of 11 real estate sites from Casino for EUR 32 million.
The portfolio consists of Parking Lots and Developed Land, Buildings, and Ancillary Units related to stores. Two of these sites were co-invested with CDC Habitat. These sites offer a total development potential of approximately 3,500 Housing Units and over 50,000 sqm of Retail Space, with an estimated potential revenue of around EUR 1 billion. These development projects will take between 10 and 15 years to be completed. They include a Holding Phase of the assets prior to obtaining administrative approvals and relocating tenants, followed by the launch of traditional Off-Plan Sales Development Programs. I now turn the floor over to Bruno to present the Financial esults.
Thank you, Nicolas. Let's move to the financial results. Please find the group's main Pinel KPI on slide 20. For the first semester, Icade consolidated IFRS revenue was down by -10% to EUR 630 million, including a 5% drop in Rental Income from the Property Investment Division and a 12% fall in Property Development revenue. EBITDA stood at EUR 145 million, up on the same period in 2024, when EUR 85 million of impairment losses were booked following the review of the Property Development portfolio. The group net finance expense increased to -EUR 22 million from -EUR 7 million due to lower short-term investment income and lower dividends from the healthcare business. The group's Net Current Cash Flow amounted Net Current Cash Flow from strategic activities remained relatively stable at EUR 109 million, compared with EUR 111 million in H1 2024.
The key takeaways about the Net Current Cash Flow from Strategic Operations are as follows: Rental Income from the Property Investment Division for -EUR 0.17 per share, an increase in the net property margin of Property Development activity for EUR 0.39 per share, and a decline in finance income for EUR 0.21 per share. I will come back to this in more detail in the following slides. Let's dive into the financial performance of the Property Investment Division in slide 22. Rental Income decreased by 5.1%, mainly due to tenant departure recorded in recent months and the gradual capitalization of negative lease renewals. These effects were partially offset by the positive impact of indexation, which has gradually moderated and still contributed +3.4%, as well as early termination fees, mainly related to the To-Be-Repositioned Offices. It's also worth noting that the Rental Income was negatively impacted by higher vacancy costs.
On the Property Development side, Economic Revenue amounted to EUR 501 million as of June 30, 2025, down by 14% year on year. This decline mainly resulted from a decrease in Residential Book Sales down by 32% in value terms and a sharp drop in Commercial Segments, with revenues down by 39% year on year due to the completion of major projects at the end of 2024, coupled with the low volume of new contracts signed in 2025. The net property margin improved mechanically in H1 2025, following the impairments booked in H1 2024. However, the declining volume and the continued Margin Pressure of certain projects launched prior to 2024 have still negatively impacted the overall margin of the business. Let's move on to slide 25. The Half-Year Financial Results extend to normalize after a 2024 year marked by a very high volume of finance income.
Specifically, financial income from investments declined by more than EUR 10 million due to both volume and interest rate effects. Additionally, dividends received from our stake in healthcare activities decreased by EUR 10.5 million, reflecting the absence of dividends paid by IHE this year. The cost of gross debt remained stable, with the average cost still low at around 1.6%. The debt projected for H2 2025 is to the edge, and the average cost of debt for the full year 2025 is expected to remain below 1.8%, factoring in the new bond issue completed last May. Let's turn to Icade's Balance Sheet. Slide 27 focuses on change in the value of the investment portfolio. As Nicolas explained, the fair value of the property investment portfolio stood at EUR 6.2 billion, given the decrease in value of minus 2.8% on a like-for-like basis.
The EPRA net initial yield was 5.3%, pretty stable versus December 2024. The EPRA CapEx net initial yield was 6.2%. Slide 28 shows the slowdown in value adjustments across our portfolio by asset class. For well-positioned offices, the adjustment over the semester stood at minus 2.7%, confirming the slowdown in the declining values semester after semester. Light Industrial Assets continue to show resilience, with the fair value increasing by 0.4% this semester. As of June 2025, EPRA/NAV per share was equal to EUR 56.6, declining roughly by 6%. This year-on-year change is mainly due to the lower value of the property investment portfolio, representing EUR 2.7 per share, and the upstream dividends paid in March 2025 amounting to EUR 2.2 per share. Let's move on to debt management. The First Half of 2025 was marked by strong achievements. Firstly, a 10-Year Green Bond issuance of EUR 500 million.
Secondly, a bond buyback of medium-term notes maturing in 2026, 2027, and 2028 for a nominal amount of EUR 268 million. Finally, the signing of EUR 290 million in credit facilities included EUR 190 million in additional lines. Together, these transactions are planned for us to extend the average maturity of debt, reinforce our Liquidity position to anticipate upcoming debt maturities, and increase our share of sustainable financing. As such, we have achieved our target of having 75% of our financing green or linked to ESG objectives more than a year ahead of plan. Slide 31 is dedicated to our debt maturity schedule and Liquidity position. As of June, Icade has a strong Liquidity position composed of EUR 1 billion in net cash and EUR 1.8 billion in unused committed revolving credit facilities. This Liquidity covers the group's debt maturity to 2029.
Now, I will hand over to Nicolas for the conclusion and detail on the 2025 outlook.
Many thanks, Bruno. Let's move on to slide 33 for the 2025 guidance. Based on the group's half-year results and expectations for H2, we remain cautious and reaffirm our 2025 group Net Current Cash Flow of between eur 3.40 and EUR 3.60 per share. This includes Net Current Cash Flow from non-strategic operations of approximately EUR 0.67 per share, excluding the impact of disposals. As of June 30, 2025, the annual Net Current Cash Flow from non-strategic activities is already secured at over 85%, considering the income already recorded by Icade in H1, including firstly the dividend from Premier Healthcare, and secondly the finance income from the shareholder loan to IHE Healthcare Europe, accounted for over six months. Let me remind you that the contribution from non-strategic activities does not include the payment of a potential interim dividend from Premier Healthcare in 2025.
In conclusion, the First Half of 2025 remained challenging for the real estate sector. Nonetheless, we have continued to demonstrate our resilience through good leading performance in the Property Investment Division, stabilization of the development activity, and tight control of our CapEx focused on profitable projects. We are also gradually making progress in diversifying our portfolio. I would like to thank sincerely Icade's team for their strong daily commitment. With that, let's start the question and answer session.
Thank you, ladies and gentlemen. We will start the Q&A session now. If you would like to ask a question, you might do so by pressing star one on your telephone keypad. To withdraw your question, it's star two. The first question comes from the line of Florent Laroche-Joubert calling from ODDO BHF . Please go ahead.
Good morning, Nicolas. Good morning, Bruno. Thank you for this presentation. I would have two questions, if I may. My first question is on offices. You have had a very strong leasing activity in H1. Could you please maybe give us your view for leasing activity in H2 and maybe any color on how the occupancy in offices can evolve in H2? That would be my first question. My second question would be on the healthcare activity. We can see that you have some discussions. Have you any view of any major deals that could be completed in 2025? Thank you very much.
Thank you, Florent, for your two questions. Yeah, indeed. Taking the first question about the leasing activity in H1, we had a very strong leasing activity with nearly 80,000 sqm final renewed. Clearly, with that, we came to the stabilization of the financial Occupancy Rate. Of course, we expect this Occupancy Rate for both well-positioned and Light Industrial Assets clearly to move up now. You know that for the well-positioned office, this figure, the 88.8%, does not include yet the positive effect of the Pulse lease that has been signed, and that should go into the ratio by the end of 2025. That's the reason why we expect an occupancy ratio above 90%. That's also our target for the light industrial asset.
As for the remaining to-be-repositioned assets, as already shared, you know that for us, this indicator is not really relevant because at one point, those assets are deemed to be vacated. That's the reason why we work on a repositioning scenario. In the meantime, we are having very pragmatic discussions to save every euro possible as long as possible. That's for the occupancy. Regarding the healthcare, indeed, you saw that on the presentation, there was no major news to be shared today, but clearly, you saw that we stick to our strategy to sell. That led to the slight decrease in our exposure in Premier Healthcare on the first semester from 22.5% at the end of 2024 to 21.6% at the end of June 2025. This came from two operations.
The first one was the signing of the share swap we've already shared at the beginning of the year with Premier. The second operation comes from the sale by Premier Healthcare in June of a non-strategic nursing home asset in France. This allowed Icade to perceive EUR 6 million through a capital reduction by Premier Healthcare. Clearly, that's what we intend to keep on doing. In the meantime, you saw that we also work on the agreement with Premier and the other historical shareholders to grant the extension of the call option that was deemed to expire mid-2025. Clearly, this is because Icade has reaffirmed its strategy to sell, and Premier and the existing shareholders also reaffirmed their strategy to invest in this SPV. Their idea clearly was to align the legal strategic framework to the indicative timeline we all have in mind.
Once again, to be crystal clear, we've extended the historical agreement. This call option, as it used to be, is non-binding, clearly. That's a call option benefiting Premier and the other shareholders. Maybe a word on the international SPV also, just to say that there's still an ongoing marketing of the Italian portfolio. Clearly, it takes a bit of time. Just to remind you, the figures we are talking here are about roughly EUR 300 million portfolio, which represents roughly twice the size of the investment volume in the healthcare Italian market. It's quite reasonable to say that it might take some time, but there's still some appetite on this portfolio. Be sure we will keep you posted as soon as we can and when there's something to be shared regarding the healthcare progresses.
Okay, thank you very much.
Thank you, Florent.
The next question comes from the line of Stéphane Afonso calling from Jefferies. Please go ahead.
Yes. Good morning, and thank you for taking my question. First, on Icade France. We understand that Premier has extended its option. My first question is whether this extension was made under the same terms as initially agreed, in particular regarding the NAV clause. Secondly, this move seems to suggest that Primonial is more confident in the ability to finance the acquisition, more likely not before 2026. Therefore, would they still try to bring third-party investors, or could they now complete the deal alone? That's my first question.
Thank you. Thank you, Stéphane. As I just said, indeed, we've extended the call option in the exact same terms from the previous agreement. Clearly, those call options, should they be exercised, shall be exercised at NAV, clearly. The benefit to Premier and also the other historical shareholders, as it used to be. As for the potential third-party investor that could join the club deal, either at Premier level or either directly, that's still an option that could make sense. That is not excluded either by Premier, the other shareholder, or us. It's still also an option that is open.
Thank you. Maybe one last question regarding the Marignan project. There are market rumors suggesting that you may be considering a sale of this asset. If so, what would be the rationale there?
I'm sure you've all seen that currently, there's some good Liquidity on the investment market for corporates and value-add assets in Paris CBD. There's an increase in Large Deals, more and more bidders, loads of cash on the last transaction. As for the Marignan asset on our side, we've already created a lot of value through the obtention of a non-recourse building permit that allows us to transform the former movie theater areas into retail areas. Clearly, we've already gone through a significant step in the value creation, and we are now at a crossroads. We can either roll out the full redevelopment of the project and the assets with, as you saw, quite a limited amount of CapEx because we are talking here about less than EUR 70 million, or we could take the opportunity of a potential disposal, given the favorable context, I would say, today.
The key will be the value creation. We will have, regarding these assets, a very opportunistic approach. The idea for us is how is the best way to maximize and monetize the value creation, either today or at the end of the development.
Okay, thank you.
Thank you, Stéphane.
The next question comes from the line of Jonathan Kownator calling from Goldman Sachs . Please go ahead.
Jonathan?
We are going to take the next question from Ana Escalante calling from Morgan Stanley. Please go ahead.
Morning. I have one question. When looking at your strategic operations, things appear to be stabilizing or at least a bit less negative than before. I know there are many moving parts here and that some are more difficult to predict than others. Maybe you could please tell us when would you expect to see the drop in earnings in this strategic operations segment, meaning the Net Current Cash Flow, obviously?
Yeah. Yeah, Ana. Firstly, regarding the cash flows, we are focusing at this stage on the first step that we just talked about with Florent. The first step regarding the Property Investment Division is clearly focusing on the Occupancy Rate, first thing first. Clearly, we think we've reached a drop in the Occupancy Rate regarding the well-positioned and Light Industrial Assets through the recent improvements we've shared. Once said that, considering more globally the sector context, the market environment still remains challenging and uncertain, which makes it difficult, of course, at this stage, July 2025, to provide a precise outlook for 2026. More globally, what we expect is a recovery more likely in 2027 for both business lines for two reasons. Firstly, regarding the Property Investment Division, we need time for the diversification strategy to pay off and start delivering some new cash flows, as you saw in the pipeline.
As for the development side, the activity, as already shared, is more expected to pick up in 2027 after both the municipal election and potentially the presidential election. That's the reason why I think more globally on our activities and cash flow recovery, more expected likely in 2027.
Thank you. Very clear.
Thank you, Ana.
The next question comes from the line of Valerie Jacob calling from Bernstein . Please go ahead.
Hello. Good morning. I've got a question concerning your Balance Sheets. I mean, your LTV went up quite a lot over the past year. I think if I look at, you know, you said that selling the healthcare is taking time, and there is no certainty that the values won't go down further. I was wondering if you could share some thoughts you're having with the rating agencies and how you think about your financial indicator and what you can do to improve it in the short term if you need to. Thank you.
Regarding LTV, we have no change in our financial strategy. We keep target LTV ratio. It's been below 35%, including duties, over the horizon of the strategic plan, thanks to the disposal. We proved again this semester our ability to sell more than EUR 100 million at the NAV. That is the first point. Maybe related to the rating, I think, as you know, we have already downgraded in November 2024. On the pre-debt CapEx, we have no issue about the net Debt to EBITDA, and we have a compatible ICR. Of course, LTV ratio is expected to decrease with the disposal volume anticipated in the following months.
The next question comes from the line of Michael Finn calling from Green Street. Please go ahead.
Oh, yes. I have a few questions. My first one is on the sale of the, and I'm just curious if you actually looked at any other options other than the current one. I'm curious where exactly is the bid price from the other options because I suspect that it's probably quite a lot lower than the current NAV.
You're talking, Michael, you're talking about the options on the healthcare?
Yes, yes.
Yeah. Sorry. I just said to Stéphane that the exact same terms as before. Clearly, the option has to be exercised at NAV.
Yes, I'm just curious if over the last few years, if you have also looked at other options other than the current plan that you have.
Oh, yeah, sure.
I'm curious where would the pricing be on that, you know, on those other options. That's my.
As you see, we went through many different ways. We're talking about the previous two operations crystallized this semester. The share swap agreement with Predica was at NAV for a total amount of EUR 30 million. As for the capital reduction that has been done consecutively to the sale of the non-strategic asset, it has also been done at NAV, of course, at the size of the VI Corp. That said, if we also talk about the potential opportunity of having some third-party investors getting into the club deal, I would say that we'll be pragmatic. I'm not saying that we necessarily have to sell at the NAV and only the NAV. It's a matter of time and volume. If someone comes with a large volume and the right timing, we can work on a satisfactory discount to be both attractive and pragmatic on our side.
What we don't want to do is reach a level where the discount should be too significant because, once again, we are talking here about fully stabilized assets, 100% let, that deliver predictable and sustainable cash flow with values that have stabilized globally over the past months and years in a market where there are some more positive signals on the healthcare, as you saw on both listed companies, but also some real estate asset transactions. That's the reason why we will not do this at any cost. Clearly, we could be pragmatic and accept some discounts if someone comes with a significant volume, clearly.
Okay. Are you able to say over the last year or two, has someone come to you with an offer that perhaps the offer price was a bit too low, but at least there is an offer there? Can you, or has it just not happened?
You know we had some interest, but as soon as some people are coming to you in a very opportunistic and aggressive mode regarding the shares, you quite quickly have to say, at this price, no need to write it down. I mean, if you take, for example, the international SPV, that's exactly also what we had when we were marketing the Portuguese assets, clearly. For those, we received some real LOI with commitment, but with very aggressive discounts. That was the reason why, at that time, at the end of 2023, we decided to withdraw this portfolio from the market. We had, and also to be fully clear, we had also some international investors, a potential market of interest in 2024 for shares in Premier Healthcare.
Clearly, the uncertainty in the French political context at that time, because it was the time where the Barnier government falls, made the international investors take a small step back from France for a while. That's the reason why also it took a bit more time. On stabilized assets, we have some people that are okay to dive in, being very aggressive. The idea is to find how we can have a pragmatic and acceptable discount and not to oversize the one.
Okay. I guess that's, is that probably 5% to maybe 10% in your view?
I won't give any proper figures because, once again, it really depends on the volume. I mean, if someone is coming and says, "I'm going to buy the remaining EUR 700 million or EUR 800 million," it's quite different from someone who wants to buy EUR 50 million or EUR 100 million.
Yes, yes. Yeah, of course. Okay. Yeah, that makes sense.
It's quite hard just to say a proper figure, right. We won't stick necessarily euro by euro to the NAV. That's what I'm saying. We are pragmatic.
Interesting. Okay. Yeah. Final question, if I may, on the Icade assets that are currently in the market. I remember the portfolio in Portugal, I believe one of the issues that you highlighted was the WALT was quite short there.
That's right.
I'm just curious. The WALT was quite short there. I'm just curious if it's a similar issue in Italy or if all those issues have been fixed or obviously not.
No, no, clearly. Indeed, in Portugal, there were two things. Once again, we have quite a narrow market for a EUR 200 million portfolio for once. Indeed, secondly, the WALT was around six years, which was quite low. That is why we are having the discussion. Premier is having discussions with the tenants in order to extend because there are some potential extensions to be financed. This should come under a global agreement. As for Italy, this is completely different. We are talking here about a portfolio where you get some MCO, but also some nursing homes. All of that comes with a large WALT. I would say that the main issue for the Italian portfolio is what I explained, is the matter of size. I mean, a EUR 300 million portfolio on a EUR 150 or EUR 200 million investment volume yearly on this market necessarily takes some time.
There is no WALT issue on the Italian portfolio.
Okay, great.
Thank you very much for your question.
Thank you.
Yeah.
Next question comes from the line of Jonathan Kownator calling from Goldman Sachs . Please go ahead. Please ensure your line remains unmuted locally.
Can you hear me now?
Yeah, Jonathan. Happy to have you back.
Thank you. Two questions, if I may, and sorry if some have been answered already. The first question was just on the leasing, obviously, good volumes of deals. Can you talk about the sort of reversion that was, either captured or lost from the field to where we were versus passing? The second question, noticed that EPRA LTV was actually increasing quite a bit, and I wasn't sure because your normal LTV wasn't increasing as much. I just wanted to check there the reason. Thank you.
Okay. I will take on the reversion, and Bruno will answer you on the EPRA LTV. On the reversion globally, on the global figure, no major update to share on the reversion potential on the well-positioned office. Just to remind you that at the end of December 2024, it was -11%. You have that in mind. Globally, on the leasing activity and large volume, the signatures and renewals are globally in line with the RVs, with incentives in line with the market. Nothing has changed. We are indeed gradually crystallizing signatures after signature. There's negative reversion potential. That is, of course, already factored in in the NAV, as you know. No major change on the reversion, especially on the 80,000 sqm that have been signed during the semester.
Can you share perhaps a bit where these deals were signed, were they done closer to Paris, or which business part they were?
Yeah, sure. You saw, it was a bit everywhere, actually, and on many asset classes because, of course, the main transaction that was highlighted already in the first quarter result was the Pulse transaction. Nearly 30,000 sqm in the northern Parisian region. That might be the second largest transaction talking about leasing during the semester in the whole Parisian region. That demonstrates that even in an area that is definitely struggling, when you fit the right criteria at the right price, you are able to find the tenant. We had also some transactions on the light industrial asset class. We've highlighted Zomoda, for example. We signed a lease with Alice & Bob, which is a company dedicated to quantum computing, and also with Raboni, which is in construction development. With that, the business park is now fully let. We are talking here about a 21,000 sqm business park.
On top of that, we had some transactions in La Défense. We had some transactions in our other buildings. More globally, everywhere, I would say.
Okay.
Okay.
Are you seeing incentives widen or decrease? I know they're decreasing a bit in La Défense as well. Is that what you're experiencing, or are you still seeing like sort of stabilized levels of incentives?
As for the incentive, no major change, I would say. Of course, in the peripheral areas, I would say that the power of negotiation is definitely still in the hands of the tenants rather than in the hands of the landlord. Now we've reached a stabilization. Nonetheless, clearly, as for the incentive, we are at the highest level ever, I would say. Hopefully, within the new fundamentals and the attractiveness from areas like La Défense getting better and better, that might be strengthening through the uncertainty in the macro. What we see is that companies take more time to decide, but they are clearly looking more and more at affordable prices. It has come back at their first one priority, at least the people we are discussing with. Hopefully, at one point, the level of incentives should lower down.
Okay. Clear.
Maybe a word from Bruno on your EPRA LTV question.
Yeah. Regarding EPRA LTV at the end of June, in our calculation, you have to note that we have 100% of our dividend pay in March, but also at the beginning of July. It means we have a fully dividend in the net debt. That is the first point. Of course, we should improve with disposal volume anticipated in the following months that we already explained.
Okay. Your reported LTV was increasing less than the EPRA LTV, which reached, I think, 47% or something like that. Any reason why you have this shift?
I'm not sure to have perfectly understood your question.
I'm just saying that.
Sorry, Mike, repeat.
No, I don't have the figures in front of me, but the reported LTV is increasing by a certain amount, and your EPRA LTV is increasing by more than that.
Yeah, that's what Bruno was explaining is that in the EPRA LTV calculation, we take 100% of the dividend, while in the other LTV ratio, we only take what has been paid during the first semester.
Okay, very clear. Sorry.
That's the main reason for widening the gap.
Very clear. Thank you.
That should, of course, narrow in the second semester regarding this point. Thank you very much.
Okay. The next question is from Aakanksha Anand calling from Citi . Please go ahead.
Hi. Morning, guys. Can you hear me all right?
Yeah, very good. Happy to have you on the phone.
Awesome. Okay. Two questions from my side. The first one is a continuation of the previous question on leasing, actually. The new leases that have been signed in H1, are you seeing a difference in, you know, the tenant mix? What I mean by that is the incremental demand from tenants who are already in that area where the leasing is happening, or are you seeing an increasing spillover from the CBD? The rents in CBD are definitely the gap, the difference in rents between CBD and outside is definitely widening. Is the demand more from, you know, people who were outside of Paris and trying to move into the Île-de-France region? If you could just provide like an approximate proportional split between the leasing in terms of these three types of tenants that I mentioned.
What could be the headwinds, maybe in the second half or going forward, that we might not see this incremental or at least a similar level of demand for leasing?
Thank you very much for your question. On our assets, we haven't seen necessarily some large move from Paris CBD outside on peripheral offices. What we've seen clearly is people that are in La Défense don't necessarily now go out from La Défense, which was the case maybe two years, 18 months ago. Clearly, now there's more and more interest on peripheral offices. People move from one peripheral office to another, seeking for more centrality, clearly. That's one of the major fundamentals that drives the attractiveness of La Défense, I would say. That's the reason why for our transaction globally, it was people on peripheral offices that were already outside Paris mainly, and that went from one asset to another, or that were already on the existing buildings and that we renewed or stayed in the building. Clearly, that's what we saw.
Talking about offices, not talking about light industrial where the dynamics are still very good, as you shared regarding Zomoda. As for the headwinds, I would say that what we saw more globally on the Paris region, even if it was not really the case for Icade, but in the second quarter, clearly, people took more time to decide, given the macro, the uncertainty on the worldwide macro, but also the French macro. We'll see in the next quarters if the companies are still in a wait-and-see mode or either they are eager to make some transactions. I would say that could be one of the major headwinds regarding the dynamic of the leasing market, even if the brokers estimate a landing point around 1.7, 1.8 million sqm at the end of the year. Slightly below last year, but globally still quite dynamic.
That could be also some positive signs for peripheral offices. What I was saying about the fact that on the priorities on which the companies focus for their decision, clearly, the level of rents and the fact that they are looking for affordable rents now, as a protection given the world uncertainty for the years to come, could drive the demand for peripheral offices. That could be a positive catalyst.
Great. That's very clear. My second question, could you just remind us what the portfolio mix is expected to be post the completion of the current strategic plan?
We don't give proper figures, once again, but clearly, as you know, we intend to increase our diversification in very relative and dynamic asset classes where we have some strategy, key differentiating assets, and know-how. It's light industrial, and you saw that we are able to create some value on assets like Zomoda. Of course, PBSA, student housing, and we've already secured the first investment of roughly 200 beds in Ivry-sur-Seine, and also data centers. I haven't talked about data centers, but we are still working on that, clearly. All in all, that diversification should dilute the current size of the office exposure. Nonetheless, we are still convinced that there's a future for office. That's the reason why we are being selective, but still looking at office development when the location is triple A and when the investment is reductive.
That's the reason why we've set up this 7% yield on COR on the three new office developments we've made in Lyon for two assets and Toulouse for one asset. The part on office should be diluted, but we don't have a specific figure in mind to share.
Okay, that's understood. Thank you.
Thank you very much.
The next question is from Véronique Meertens calling from Kempen. Please go ahead.
Thank you for taking my question and for the presentation. Maybe one quick one on the Development Segment. I noticed that you stopped reporting the NCCF contribution from the Development Segment, or at least the split between the two. What's exactly the reason for that? Is it fair to assume that it is still a negative contribution, especially since I saw that your net debt increased by 43% over the half year? If so, what's the expectation for the full year from the Development Segment? Thank you.
Yes. As you know, now Icade is an integrated player in investment and development businesses. We changed a little bit the presentation because we would like to improve the analytical presentation to make it easier to understand the group's performance. Now we have an operation in the theater for this business. Related to the other part of the Pinel, we have a consolidated view, mainly on the debt management, of course, financial results. For us, it's a better view to appreciate the performance of the group. Of course, we have no change versus the initial expectation of the two business lines that we already explained.
Okay. Maybe to add a word on the global trend on the Property Development business, you saw that it was the end of the Pinel scheme that had a negative impact on the orders by individual investors. Also, very low activity in the commercial division. Clearly, there's no major office development project to be launched. We are back now in current economic Operating Margin to positive territory at +2.3%. This is also the mechanic impact of the deep review we've made in 2024. We are back on profitability after those impairments. In the meantime, apart from the Pinel, we also focus on the working capital to keep it under control, as you saw with the disposal of the Tobiag Building asset, close monitoring on the stock, and talking about potential positive signals for the market. We spent a lot of time discussing with political institutions to support the sector.
Maybe an example currently in our discussion is to boost Private Rental Investments with this Private Landlord Status, a Statute du Bailleur Privé, that could, in a way, replace the Pinel as a Private Incentive scheme, giving individuals a dedicated status of private landlord. Hopefully, this is something that could come into force at the beginning of 2026. That's globally for the whole environment for the Property Development business.
Okay. Thank you. Thank you very much.
Thank you very much, Veronique.
Ladies and gentlemen, there are no further questions, so I will hand you back to your host to conclude today's conference. Thank you.
Thank you all for being here on this call. Have a nice day. Looking forward to seeing you, all of you, on the roadshows to come. Enjoy the summer and looking back at you.
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