Morning, everyone. Olivier Wigniolle, CEO of Icade speaking. Thanks for joining this call. I will present our Q3 results with Victoire Aubry, our CFO, and Anne-Sophie Lanaute, our Investor Relation. The presentation will be followed by a Q&A session. If you go to slide four of our presentation, I would like to highlight some key takeaways or key points of our figure at the end of September. Four different elements I would like to highlight. The first one is for the investment portfolio. You could notice that our gross rental income amounts at the end of September to EUR 506 million, which is an increase of 6.9% compared to the end of last September 2019. The like-for-like growth of the gross rental income stand at 1.9%, which is, under the current circumstances, quite satisfying in our view.
Second element that I would like to highlight is the level of rent collection. We are now back to most of the level of pre-COVID situation, with a 97% of collection for Q2 and 92% for offices and 96% for the healthcare portfolio for Q3. These figures are including the different agreement that we have signed with our tenant. As you know, we have helped, we have supported some of our tenants with monthly or deferred payment. When you see the figure for rent collection, we really do think that it was the right thing to do, again, to help our tenants to cross the crisis. Third element that I would like to highlight is that we have an increase of our gross rental income, but it's for both portfolio.
Healthcare for sure, but also for office and business park that have performed quite well during the nine first month of the year. For offices, it's a growth of revenue of 4.5% and a like-for-like growth of 2.1%. It's not only healthcare which is supporting the growth, but it's healthcare and also the office portfolio. Fourth element that we like to highlight is for Icade Promotion, our development subsidiary. Sales and revenues amount to EUR 467 million, which is a decline of -15.6%. As mentioned in July when we presented our half year result, the decrease of the turnover of Icade Promotion is mainly due to the IFRS Percentage of Completion method for the development. With the shutdown, all our construction sites were closed and stopped during more than two months and a half.
If you restate the figure of our revenue for Icade Promotion of the COVID impact, in fact, the revenue should have been up by +21% compared to last year. I would like also to mention that, compared to the figure given in July, now our view is that the recurring cash flow for Icade Promotion, our development subsidiary, will be positive in 2020, which is a good news for us. Regarding our revenue with a total amount of EUR 978 million, we do consider that, again, taking into account the current circumstances and the COVID crisis, they are quite well oriented. On the liability side, two elements to mention, but already released. The first one is that our rating, BBB+, has been confirmed by S&P, both for Icade and Icade Santé. The rating was confirmed after their annual review.
Stronger quality of credit for Icade. Also to remind you, that Icade Santé has issued at the beginning of September, a social bond, and it was really a great success. EUR 600 million, more than expected at the beginning. 10 years and a coupon at 1.375%, which is, I think, very attractive in terms of cost of debt, of cost of financing of our activities. I think that this kind of coupon reflect quite well the strong quality of the credit of Icade. Now a brief update, and Victoire will come back later to that, on the impact of the COVID crisis on our result. Just to remind you that regarding the net current cash flow, our estimation in July was around EUR 50 million.
At the end of September, we have now a much clearer view on the impact of the crisis. Our best estimate as of today is much lower than the figure given in July. We are only, if I may say so, at around EUR 30 million. EUR 20 million less compared to our estimate in July. Again, Victoire will elaborate further on the reason why the amount is lower. On top, we are not providing at the end of September a full P&L, but the other impact on the net result of the company stand at the same level compared to July, around EUR 50 million. We have now, at the end of September, again, a much clearer view of the impact of the crisis and what will be the end of the year for Icade.
I know that some of you were a bit surprised that in July we have maintained our guidance suspended. Clearly, the reason for that was the very low visibility at that time. Also I do recognize that our DNA is probably to be cautious, not to say conservative, on our forecast. We have now a clear idea of what will be our recurring cash flow per share for this year. Our new guidance for this year is EUR 4.80 per share, compared to EUR 5.26 in 2019. It's a decline of -8.75%. You will have your own view on that. Given the current circumstances, we do think that it's a quite positive element, having said also that most of the impact is coming from Icade Promotion.
As Victoire will comment, most of the impact of the crisis, in terms of cash flow, will be postponed and recovered in 2021. A new guidance, again, at EUR 4.80 per share. If you restate that figure, that number, by neutralizing the impact of the COVID crisis, the EUR 30 million I was mentioning earlier, we are fully in line with the guidance that we had given in February before the crisis. Final element that I would like to highlight in our press release, it's the dividend for 2020. We have asked the board to confirm the level of the dividend for this year. Subject to the AGM approval, the board has confirmed a dividend at EUR 4 per share for this year, which means that dividend will remain stable compared to this year.
Even if we have a small decline in the recurring cash flow, we have the capacity to pay a dividend at EUR 4 per share. The board will propose that to the AGM, which means that we will have a little bit more conservative payout ratio this year compared to previous year. We do think that is the right thing to do under the current circumstances. This is an overall introduction of the key facts of our press release. Now, I would ask Victoire to go more into the details.
Thank you, Olivier. Good morning, everybody. First, I will comment more precisely the revenues end of September that you can see on page five. First, as Olivier told you, a quite solid growth coming from property investment divisions, both healthcare and offices, with EUR 500 million or six of gross rental income, merely +7% on a current basis and +1.9% on a like-for-like basis. Healthcare momentum continued, as you can see, with a total of revenues representing merely EUR 225 million end of September, merely +15% of growth compared Q3 2019. On a current basis, it is around +2% on a like-for-like basis. On the second hand, the office division remained quite positive with a +4.5% growth of revenues during the period and +2% on a like-for-like basis. I will elaborate a little bit more in a few minutes. It represents EUR 268 million gross rental income at the end of September.
For third division, property development revenue, we had a total of EUR 467.5 million, representing a decrease of 15.6%, quite less than the end of June, -23%, illustrating the progressive rebound of this division after the shutdown we had in the Q2. Back to the key highlight of the office property investment on page six, if you want, with four main topics to share with you. The first one, we confirm the resilient and diversified tenant portfolio profile, illustrated by the strong level of rent collection end of Q3, above 92% so far, quite in line with the historical level at this stage. We confirm also a low level of credit default rate at around 1.5% of the gross rental income. We continue, of course, actively to support our tenants by managing proactively their demand.
20 leases were renewed, 11 of them COVID-related negotiation, which allow us to increase term leases by 2.6 years, specifically for those negotiation, of course, with stable headline rents. In counterpart, we offer limited free rent period in 2020. So far, we can say that 60% of the leases having break in 2021 are secured. It is quite a positive news. At least, interesting to notice that the 40,000 sq m signed in Q2 and Q3 have been done without any substantial drop in rents compared to the previous level. You have some concrete example in the press release. Since the beginning of the year, we have already renewed or signed 111 leases, for an amount of 132,000 sq m, representing EUR 30 million headline rent income, with an average maturity of 8.9 years.
Regarding the investment done in the pipeline, EUR 130 million already invested on the 1st of January, only EUR 133 million out of EUR 860 million to be invested for the projects in the pipeline, which have to be delivered by the end of 2021. Just remember, 64% are already prelet. A quite dynamic third quarter for the office division, renewed on new leases done with resilient condition, +4.5% on the gross rental income, merely stable occupancy rate at 92.1% and WAULT at 4.3, stable. Regarding those results, the update of the COVID impact of the 2020 FY earnings of the office division should be limited at around EUR 6 million. Going forward, on page seven, focus on healthcare assets. We confirm a business line in line with the pre-crisis trend. Limited financial impact on healthcare providers, therefore limited impact for Icade net current cash flow, around minus EUR 2 million.
Indeed, exceptional measures granted by the government at least until the end of the year. Rent collection remains at historical level, 100% for Q2 and 96% for Q3 so far. The investment market momentum remains strong. We continue to be active. We have already invested EUR 99 million during the period. In addition, we signed preliminary agreements for EUR 120 million. The pipeline at the end of September represents EUR 300 million to be invested until 2024. Until the beginning of 2020, it represents EUR 26 million already invested. Quite strong Q3 figures for healthcare, +15% for the gross rental income. I remind you, 100% occupancy rate. Average maturity of the leases, 7.3 years. Few comments regarding our property development division on page eight. We have a back-to-normal situation and sustained demand for residential. 100% of the construction projects are fully resumed. Demand for housing remains structurally strong.
The market should benefit from the extension of tax incentives like Pinel law or interest-free loans. On the top of that, the institutional investors are back in the residential segment. Our four walls KPI are well-oriented. Backlog at EUR 1.3 billion, +1%. Focus on residential segment, it's +5%. To conclude this slide, the economic revenues at EUR 502 million, down by 15%, a smaller drop compared to end of June, one more time, - 23%, mainly due to the POC method, as Olivier explained it to you at the beginning of the presentation. In this context, we can revise downward our forecast for the impact of the COVID on the net current cash flow of this division at minus EUR 22 million versus -EUR 31 million to EUR 36 million in July.
It's very important to underline the fact that 95% of this shortfall will be recovered in 2021 and beyond. We are comfortable to say the net current cash flow of the division will be slightly positive on a full-year basis, I mean, at the end of 2020. To sum up, we gave you on page nine a global overview of the COVID-19 impact on your net current cash flow on a full-year basis. Office investment division impact is expected around - EUR 6 million to be compared with the EUR 12 million at the end of July. It represents less than 3% of the full FY earnings of the division. Healthcare investment division, the impact is limited at EUR 2 million. On the development division, we revised the COVID impact downwards at EUR 22 million for 2020, mainly due to a lower impact of the construction site shutdown.
New estimate at 2.5 months compared a cautious 3.5 in July. The fact that the market so far hasn't shown any sign of price drop compared in July cautious forecast with a price drop of EUR 6 million. Also, 95% of the net cash flow shortfall is expected to be recovered in 2021 and beyond. Subject to the health crisis not worsening, the total impact of the 2020 net cash flow has now been estimated at around EUR 30 million, in a lower amount compared to the late estimate, around EUR 50 million.
Thank you, Victoire. Going to page 10. I won't comment again on guidance and dividend, just to confirm, respectively, at EUR 4.8 per share for the recurring cash flow and EUR 4 per share for the dividend. Again, it's a decrease of -8% for the recurring cash flow per share. Our view is that in the current crisis environment, it's quite satisfying figure. Also like to highlight that, if you restate again the figure of the COVID impact, we are fully in line with the guidance we had given in February. I would like, as a conclusion, maybe three comments. The first one is a general comment. For sure, the crisis is there, and we have been impacted, as probably everyone in the real estate sector.
Our view is that the impact that we are, on the day-to-day basis, seeing on the ground, is really much more limited than what we can read in some surveys or reports. Just to give you an example, if you look at the percentage of tenants that are back in our office building, in terms of number of companies, it's probably close to 90% that are back in their premises. In terms of occupancy, we are probably a little bit above 60%. It's not exactly the situation that we had before the crisis, but even with a momentum where work from home is pushed by the French government, the occupancy of our office building is at a quite high level, which is, I think, a quite different situation compared to London or the U.S.
Our view is that, again, we have an impact for sure, but less limited compared to the view of some report or survey. Second comment is that I can confirm that the teams of Icade, we are really, I think, committed and focused to cope with the COVID crisis. I think it's a real plus on top of the diversified business model, the quality of the rent roll, the quality of our two portfolios. All the agreements that we were able to sign with our tenants, all the block sales that we were able to close with institutional investors for residential. All those elements have allowed Icade, I think, to limit the impact of the crisis. The crisis is not handled, but we got so far, the pricing, let's say, I think at the best we could.
Third, and final comment, for sure, key question for us, for the board, for investors, the key question, okay, what will be the midterm or long-term impact of the crisis on our business model? Will we be able to deliver in the future the same kind of growth, the same kind of return compared to the last four years? Those questions are fully relevant, for sure. That's why we have confirmed the organization of our Investor Day at the end of November, the 23rd, to be precise. We will answer to that question during the Investor Day, and we'll be more than welcome you that day, physically or by video, depending on where you are located. Thank you for your attention. Now, Victoire, Anne- Sophie, and myself, we are ready to answer your question.
As a reminder, if you would like to ask a question or make a contribution, please press star one on your telephone keypad. To withdraw your question, please press star two. Please ensure your line remains unmuted locally. I will then speak to you individually, take your full name, and introduce you to the call. Our first question is coming from Florent Laroche-Joubert from ODDO BHF. Mr. Florent, you can ask your question now.
Yes. Hello. Thank you very much for the presentation. I may have three questions, if I may. My first question is on offices. Is it possible to have a view on incentive, and also your view on the investment market in the areas in which you operate? How do you think the investment market today can support the valuation of your asset at the end of the year? That will be my first question. On Icade Santé, what can we expect in the short term in terms of acceleration of the development of your portfolio? My third question will be on the sustainability of the dividend. How can you tell us that the dividend can be sustainable for next year, that means 2021 and after? Thank you very much.
Thank you for your question, Florent. Our view on incentive, I will split my answer in two. We have, as it is said, and we have discussed, we have negotiated some agreements with some of our tenants that were asking for support in 2020 regarding the environment. Our typical or usual negotiation was, let's say, to accept grant one month of free rent in 2020 against one year of extension of the lease length. That's the typical kind of discussion that we have. We have given, I think, the average figure for the number of leases that we have negotiated, and we did focus our negotiation on tenants that had a break option in 2021, 2022 in order to enhance the average lease break in our portfolio. That was a typical discussion.
For new lettings, maybe you will be surprised, but if you look at reports by the real estate broker, for the time being, the new letting that we have been able to sign this year, it's really close to values and incentive that were implemented before the crisis. Good question if that will be the situation in 2021, 2022. As of today, we are signing probably less new lettings compared to last year due to the lockdown and so on. For the time being, on our portfolio, we didn't see any major evolution in terms of rental values or level of incentive. Again, probably the discussion with our tenants in our building when they were asking for support for 2020, probably negotiation were, let's say like this, easier or smoother because our tenant, they wanted to sign, let's say quite quickly an agreement.
I think, the deal, one month of free rent period against one month of extension of the break option, it's really a fair deal. We are trying to sign some other on more or less the same level. Investment market, I think my view is that for core asset, and we have especially some time with you, Florent, but we have always a discussion what is a core asset? What is a core asset in our view, it's an asset which is brand new or fully refurbished, fully let, and with a midterm cash flow between five to eight years. For those assets, and there are several buildings in the market, I think the market will continue to perform quite well. Means that capitalization rate will be probably, and let's see what will be the transaction that will occur before year-end.
I think that external experts will have comparable transaction to have a fair valuation of core asset. Where you could, let's say, challenge, everything which is value add or opportunistic because, there is, for the time being, no appetite for risk in the market. I don't know if it's a question of value, but if you want to sell, let's say a vacant building, which is not the kind of disposal that we want to make, and our job is to make the job. If you want to sell a vacant building to be refurbished, which is sometimes the case of institutional investors or insurance companies because they don't want to do that kind of job. For this kind of asset, I think the market is not there. No appetite for risk.
Probably, and it has been the same in July, external experts will have probably a clause saying that they are doing, let's say, their best to give a fair value of value add or opportunistic asset, but that the level of comparable transaction is limited, and you have to take that into account. Again, core asset liquidity, you have seen the transaction announced by Unibail recently on their building in Issy-les-Moulineaux, quite close to our headquarter. There are some other in the pipeline in the market, I think that capitalization rate will be, let's say, quite interesting. Second question, the pipeline, for Icade Santé.
I don't want to say that I will answer to your question at the end of November in our Investor Day. It is, I think, reasonable to think and to say that we will try to push probably more our investment plan in healthcare. Just to remind you that for our plan, our overall investment plan for period 2019-2022, it's a volume of EUR 2.5 billion. At the end of June, we have already invested or committed half of that, so we are a little bit in advance. We are considering or seeing, is it possible to do more or to do quicker? The coalition team is on the ground, not only in France but also in Italy, in Germany, and also in Spain now.
Limit to that is that your question on valuation was for office, not for healthcare, but there are a lot of liquidity around for healthcare. We do anticipate probably an increase in terms of valuation for healthcare assets due to the liquidity around and the transaction that will occur before the end of the year. Okay, healthcare is attractive in terms of cash flow, very long-term leases, and so on. We have also a limit in terms of capitalization rate that we can or could accept. Look, it's always the same play for us. We are trying to sell something else that our capacity to put money on the table, which is long-term relationships, capacity to provide business development opportunities for the operating companies and so on, because markets would be competitive, because probably with logistics.
Healthcare is one of the two asset class, which is attracting a lot of money in the current market environment. It's fair to say that we are considering how we could do, let's say, more or quicker regarding our investment plan. The deal that we have signed in July, with ORPEA is quite promising for us. Just to remind you, EUR 145 million. It's average size, nine different properties, one in France and the others in Germany. We have some kind of agreement for ORPEA to, let's say, like this, to do more. It's another leading operating company, which is now a partner for Icade Santé. Your question on dividend. Our view is that, it is sustainable, for sure. It is sustainable for 2022. It's a payout ratio of 83%, so it's less compared to the previous year.
I think it's reasonable to be a little bit more conservative on that. B. It's not written in the press release. Our view is maybe we will consider to have maybe for part of the dividend, a scrip dividend. It could be, I think, an interesting option both for the company and for our shareholders. When you combine that a little bit more conservative payout ratio, and maybe an option for scrip dividend, I really do think that dividend is sustainable over the next few years.
Okay. Thank you very much.
Next question is coming from Álvaro Soriano of Bank of America. Álvaro, you can now ask your question.
Yes. Thank you. Few questions from my side. The first one on the LTV, given the levels that Icade is running, has the company made any analysis of how much should be divested in order to be safe on the loan-to-value side? Now following up your recent answer on the scrip dividend, do you think a scrip dividend at current stock price levels, it is the right way of shoring up your balance sheet? That would be the first question. The second one is, in some of your previous calls, Icade anticipated a potential office rental decline of between 5% and 10%. We can feel now a bit message for offices, at least for the midterm. Do you still see a drop of that magnitude in office rents?
If yes, it is a matter of vacancy or other factors might impact that potential decline of between 5% and 10%? The last question is about Icade Santé. Entering into Spain and Italy, less mature markets is easy. Can operators like ORPEA open doors on those markets? That would be all for me.
Okay. I will answer your first question regarding the LTV ratio. Just to tell you that the level of LTV ratio, including taxes at the end of June, was at 39.3%, so quite a comfortable level in line with our financial policy, of course. We also are looking precisely the ratio debt net on EBITDA, which is around 10 for Icade, one of the more comfortable level in our market.
Of course, the covenants for Icade are quite far away, and to be more precise, we are managing our first level of covenants at 52%, representing only 70% of the gross debt. We are managing it to upgrade this level at around 60%-65% as the other line. The third point I would like to answer is that, of course, we will take into account the potential trend of the valuation of the portfolio, because we could have not the same trend, the same dynamic than the previous year, of course. Doing that, we are paying a greater attention of the investment we are doing. I mean by that, the volume on the investment in the pipeline. I'm sure you have noticed at the end of Q3, the strong decrease of the volume of investment.
We are managing also, in the meantime, this volume of investment, the volume, of course, of this forward plan. In the meantime, we are taking into account the evolution of the valuation of the portfolio. Having said that, we are quite, so far today, confident to say that we will manage our LTV ratio. One more time, we are not only looking at the LTV ratio, we are also following cautiously the ratio net debt on EBITDA, which is quite also important and not linked to directly valuation of the portfolio. That's the first part of your question. One comment about the scrip of dividend. In my point of view, for the LTV ratio point of view, it's, of course, a good, positive thing. It's a positive thing to use scrip dividend.
Hopefully, to be more precise on your question, is that hopefully, and that's why the decision is not made, but just considering that, we have also to take into account what will be the share price in March. Hopefully, it won't be the same compared to today. Let's see. If you look at all the other different listed real estate company, they will, for sure, probably include that in their dividend policy this year due to market circumstance. Rental decline, I think it's really difficult, and again, to make forecast.
Our view, compared to comment that we made in July, is that although we are not at the end of the crisis, but what we are seeing, especially in June, July, September, beginning of the rest, for the time being, situation is better than we expected at the end of the lockdown. How will the French economic situation evolve at the beginning of 2021? What will be the impact of the relaunching plan implemented by the French government? If you look at market survey released by real estate brokers, they are depending also on the sub-market, but they are probably between -0% to -10%, depending. You have each sub-market. You have your different position.
Our view is that, as I was saying, we have done the best we can to secure the rent forward for tenants that have a break option in 2021, 2022. For those tenants, I think no decline in rental value. After that, we have to have what we do have to market. A project launch on a speculative basis. It's limited. It's not zero, but just one project in Issy-les-Moulineaux, but probably the best project of this sub-market. A little bit more than 20,000 sq m. The project that we have in Lyon, the project or the remaining part of the Origine project. Maybe we will have, at the end of the day, a lease signed at a little bit lower rent compared to expected one year ago.
Especially for this kind of project and the quality of the project, unfortunately, during our Investor Day, it's not possible to organize the visit of the first project that we have in Issy-les-Moulineaux for sanitary reason. It's clearly a trophy asset for the sub-market. Origine, it's the same. If you have any opportunity to come to Lyon, I will be more than happy to organize a visit of Part-Dieu , which is the asset of the Lyon market. We are, let's say like this, confident in a difficult environment that those projects should perform quite well. After that, final question on the LTV. Do we think that the amount of disposal should be necessary to keep the control of the LTV? We are seeing a disposal the other way around, if I may. We are thinking in terms of asset management.
Is it the right timing to sell such a building? Are we able to get interesting offers? We don't have any necessity to dispose assets to keep our rating or whatever. It's more a question of opportunity. If the market, as I was saying to Florent, is there for core assets, maybe it makes sense to dispose some of them. For sure, it doesn't make any sense for a company like Icade to dispose value add or opportunistic opportunity in the current market. Believe me, we have unsolicited offers on the core part of our portfolio, on some of our assets of our portfolio. Let's see. I think one fair question on that, or fair answer, is about the disposal of the second part of the Tour EQHO .
For sure, Korean investor have been impacted by the crisis, so they have an option till the end of the year that they can exercise to acquire the remaining part. Our view today that they won't. We are discussing with them because they don't want to, probably, to stay a minority partner, let's say forever. We are discussing with them to see what will be the future, but they won't exercise the option. Again, as I told you, our rating was confirmed by Standard & Poor's after the annual review. We are.
With a stable outlook.
Stable outlook. They have maybe a little bit more details of what's going on for the reason that you could understand. It's maybe to be, again, on disposal, we will dispose asset if we have interesting offer. Otherwise, we do think that we do not need to do so. As Victoire was saying, it is also probably fair to say that we won't launch any new development on a speculative basis in the current market. Just to remind you that our, let's say, business model like this is to recycle the capital and to sell core asset in order to reinvest in our development pipeline. More detail at the end of November, for sure, we will need less capital to invest in our pipeline. Therefore, we need less disposal.
We currently have no questions coming through. If you would like to ask a question, please press star one. Next question is coming from Madame Marie Dormeuil from Green Street. Madame, you can now ask your question.
Hello, good morning. Maybe just to follow up, Olivier, on what you said, and you give a little bit of a hint of this in your press release. You say that potentially, you could convert a number of development projects into housing. Can you maybe give us a little bit more details on this?
Yes. This comment refers to especially the two large sites that we have, one in the south of Paris, in Orly, Rungis, and the other one in the north of Paris, in Paris, Aubervilliers, Saint-Denis. Situations are different, but political changes after the local election in Saint-Denis and Aubervilliers, and probably much more appetite of the mayors of two city to have private residential scheme. We have already started to consider with them to transform. As you know, let's say, the land bank in the north of Paris is quite significant. At more than 450,000 potential sq m, to convert some office project into residential project. I think they will support that.
The question for us after that will be, and again, answer to your question, probably more detail at the end of November, but we will consider to do so first, and B, after that, the question for us will be, do we want to sell those residential scheme unit by unit to private buyers? For sure, we won't sell that to institutional investor. Do we want to keep some residential on our balance sheet? It's a bit too soon to say, but clearly, and I think the good thing for us, is that we will have this option or opportunity. In the south of Paris, in Orly, it has already started. We have launched two schemes on what used to be a business park, a residential scheme, developed by our subsidiary. We will launch another one.
In a world where I think it's fair to say that office demand will be probably more limited compared to 2019, 2018. I think one of the advantage that we have in our portfolio is the fact that we will have this option, not just to say, okay, we will do less offices because market is not there, but we will have the option to transform part of this pipeline into residential schemes. That was the reason behind the comment.
Thank you.
We have no further questions in the queue. As a final reminder, if you would like to ask a question, please press star one on your telephone keypad. There are no further questions, I will hand you back to your host.
It seems no further question. Thank you very much all of you for joining this call. If you have any additional question, do not hesitate to send that to Anne-Sophie, Victoire, or myself. We will be more than happy to answer as quickly as possible. Thank you very much. Goodbye.
Goodbye. Thank you very much.
Thank you for joining today's call. You may now disconnect.