ICADE (EPA:ICAD) - Icade - Half-year results and 2019-2022 Plan
Transparency directive : regulatory news
23/07/2018 07:30
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PRESS RELEASE
Issy-les-Moulineaux, July 23, 2018
Icade - Half-year results and 2019-2022 Plan
- H1 results on the rise, driven by all three business lines
- FY 2018 guidance raised: NCCF (EUR per share) expected to grow by over 7%
- New 2019-2022 plan: focus on development and growth
* Group NCCF: EUR167.4 million, EUR2.26 per share, i.e. +6,6%(1)
* Portfolio value: EUR11.4 billion(2), i.e. +5.3% vs. December 2017
* EPRA triple net asset value per share at EUR86.6, +2.1% vs. December 2017,
+10.2% yoy
* Commercial Property Investment: EPRA earnings up +6.4%(3) to EUR104.8
million
* Healthcare Property Investment: EPRA earnings up +7.9%(3) to EUR51.1
million
* Property Development: NCCF at EUR16.2 million (+117%(4)), ROE(5) at 15.6%
* 2018 outlook: guidance revised upward, NCCF (EUR per share) up by over 6%
compared to 2017 reported NCCF (over 7% compared to 2017 restated)
* 2019-2022 Plan unanimously approved by the Board of Directors
Key figures 06/30/2018 06/30/2017 Change (%)
reported
EPRA earnings from Property Investment
(in millions of euros) 155.9 145.8 +6.9%
EPRA earnings from Property Investment
per share EUR2.11 EUR1.97 +6.8%
Group net current cash flow
(in millions of euros) 167.4 157.0 +6.6%
Group net current cash flow per share(1) EUR2.26 EUR2.12 +6.6%
06/30/2018 12/31/2017 Change (%)
reported
EPRA triple net asset value per share EUR86.6 EUR84.8 +2.1%
Average cost of debt 1.56% 1.59% -3 bps
LTV ratio 41.8% 41.0% +80 bps
Property Development ROE 15.6% 12.5% +310 bps
(1) Based on Group NCCF per share as of June 30, 2017 restated for new
accounting standards applicable from January 1, 2018 (mainly IFRS 15), growth
stands at +8.0%
(2) Value of the Commercial and Healthcare Property Investment divisions'
portfolios (Group share: 56.77% of Icade Santé)
(3) vs. EPRA earnings as of June 30, 2017 on a reported basis
(4) vs. Property Development NCCF as of June 30, 2017 restated for IFRS 15
(5) Return on equity (Net profit/(loss) attributable to the Group from Property
Development calculated over a 12-month rolling period / Weighted average value
over the period of equity attributable to the Group)
1. Growth across Icade's three business lines in H1 2018
1.1 Commercial Property Investment: favourable dynamic
Strong leasing activity
As of June 30, 2018, the Commercial Property Investment Division's financial
occupancy rate stood at 92.5%, stable compared to December 31, 2017. On a
like-for-like basis, financial occupancy was up +0.2 pp in the office segment
and +1.4 pp in the business park segment. The weighted average unexpired lease
term rose from 4.8 to 4.9 years, with a significant improvement for business
parks (+0.4 year).
In H1, the Commercial Property Investment Division renewed 30 leases across its
whole portfolio. They cover a total floor area of 100,940 sq.m, with a weighted
average unexpired lease term of 6.2 years and EUR22.7 million of annualised
headline rental income. These leases were renewed with rents in line with the
market rental value.
New leases signed in H1 represented a total floor area of 45,602 sq.m and
EUR10.9 million in annualised headline rental income.
Like-for-like exits resulting from tenant departures totalled 36,995 sq.m and
EUR8.4 million of annualised headline rental income.
On a reported basis, gross rental income from the Commercial Property
Investment Division was up +7.3% to EUR200.2 million, mainly due to the
acquisition of ANF Immobilier.
On a like-for-like basis, the change was +1.2%, reflecting a positive momentum
both in the office and business park segments (+1.5% and +0.8%, respectively).
The margin rate for office and business park assets grew sharply to 88.3% from
85.7% as of June 30, 2017.
Significant leases(6) have been signed with first-class tenants since the
beginning of the year (leases starting in H1 or later), including among
others:
* Crystal Park in Neuilly: 6,100 sq.m which will make it possible to reach
ultimately 100% occupancy,
* Gambetta building in the 20th district of Paris: 16,000 sq.m, resulting in
over 97% of this 20,000-sq.m project being pre-let,
* The Pont de Flandre business park: the 8,400-sq.m Brabant building is already
100% pre-let, one year before its completion, which is scheduled for the
summer of 2019,
* The Roissy Paris Nord 2 business park: Française des Jeux for 4,000 sq.m,
* The Orly-Rungis business park: ESI Group for 5,600 sq.m,
* The Portes de Paris business park: Atalian for 3,800 sq.m and BNP for 2,100
sq.m,
* Orianz project in Bordeaux with Erasmus France for 2,200 sq.m.
In addition, a number of significant leases renewed with first-class tenants
including Pierre & Vacances (18,900 sq.m) and Club Méditerranée (12,500 sq.m)
in the Pont de Flandre business park made it possible to secure leases and
maintain a high financial occupancy rate for this business park.
(6) Leases on Crystal Park, Gambetta and Brabant were signed after June 30,
2018
Strong investment dynamic
In H1, investments amounted to EUR266.7 million, including among others:
* Off-plan acquisitions for a total of EUR116.4 million
* Developments (new builds/extensions/refurbishments) for EUR112.1 million,
* Renovation or restoration costs for EUR32.3 million.
Asset disposals carried out in H1 totalled EUR14.2 million.
As of June 30, 2018, portfolio value for the Commercial Property Investment
Division reached EUR8,997 million (group share), a +1.6% increase compared to
December 31, 2017 on a like-for-like basis (+5.5% on a reported basis):
* The value of the office portfolio stood at EUR5,074 million, an improvement
of +1.7% on a like-for-like basis (+7.4% on a reported basis),
* The value of the business park portfolio was EUR3,741 million, up +1.7% on a
like-for-like basis (+3.2% on a reported basis).
These increases in portfolio value reflect, on the one hand, the positive
impact of leasing activity and indexation and, on the other hand, the decrease
in capitalisation rates for the most secure assets.
The pipeline of projects under development represented over 413,000 sq.m and
EUR2.1 billion in investments, a EUR300 million rise compared to December 31,
2017. The average yield on cost for this pipeline is 6.4% and the expected
value creation is about EUR0.6 billion, of which only one-third is reflected in
the NAV as of June 30, 2018. A total of 85% of these projects are located in
major commercial hubs of the Greater Paris area and 15% in major French cities
other than Paris (Lyon, Bordeaux, Toulouse and Marseille). Projects started
represent an investment of EUR1.4 billion and are already 53% pre-let.
1.2 Healthcare Property Investment: further growth and new prospects
In H1, the Healthcare Property Investment Division posted growing gross rental
income (compared to H1 2017), at EUR115.1 million, i.e. +8.6% on a reported
basis, mainly due to the acquisitions carried out in 2017 and completions in
the half year of 2 assets from the pipeline: the Reims-Bezannes polyclinic
(30,000 sq.m, 12-year off-plan lease with no break option with Courlancy
Santé) and Bromélia (16,000 sq.m, 12-year off-plan lease with no break option
with Elsan).
The financial occupancy rate of the portfolio is 100%. The weighted average
unexpired lease term stands at 7.4 years.
Investments carried out in H1 2018 in the Healthcare Property Investment
Division amounted to EUR59.6 million, relating mainly to:
* Developments for EUR28.9 million (mostly for the La Croix du Sud, Bromélia
and Clinique de l'Atlantique projects),
* Works on healthcare facilities in operation for EUR16.3 million which will
generate additional rental income
Icade Santé continued to invest with the acquisition on July 18 of a
post-acute care establishment operated by Ramsay Générale de Santé (EUR17,6
million), bringing the portfolio to 115 assets.
In addition, Icade Santé made its first investment in the nursing home sector
on July 4 by acquiring 14 such facilities (EUR189 million) from the Residalya
group, which will remain the tenant and operator of these nursing homes under
new 12-year leases with no break options. Through this transaction, Icade
Santé has implemented its strategy to diversify into long-term facilities.
Finally, the value of Icade Santé's portfolio stood at EUR2.4 billion (on a
proportionate consolidation basis), up +2.6% on a like-for-like basis (compared
to December 31, 2017), mainly due to a decrease in capitalisation rate for
prime assets and significant additional revenues. On a reported basis, the
increase was +4.5% as a result of further acquisition-led growth and 2
completions from the pipeline in H1.
1.3 Property Development: business and earnings indicators improve sharply
The economic revenue was stable (vs. restated for IFRS 15) in H1 at EUR523
million with:
* Residential revenue at EUR360.4 million: the increase in sales and
construction starts expected for H2 2018, should significantly boost the
revenue to be recorded by the Residential Property Development business in
2018 compared to 2017.
Net new housing orders grew by +11.8% year-on-year in value terms, reaching
2,751 units. In late June 2018, orders from institutional investors
represented 40.1% (up compared to the end of June 2017 (30.4%)) and the
proportion of investors using the Pinel tax incentive scheme remained high
(25.9% of total orders).
As of June 30, 2018, the land portfolio represented 10,840 units and
potential revenues of EUR2.3 billion including taxes, up +4.3% from
June 30, 2017.
* Commercial revenue rising by +1.4% (EUR162.6 million): driven in particular
by the off-plan sale of the office building located in Villejuif (18,000 sq.m
for EUR95 million).
Furthermore, two major project contracts have been won by Icade Promotion since
the start of the year:
- Construction of the new "Terres de Versailles" neighbourhood, scheduled from
2019 to 2026,
- "Inventing the Greater Paris Metropolis" project on the Bercy-Charenton site,
a mixed-use scheme with Sogaris and Poste Immo, including offices and a
hotel, scheduled to be carried out from 2020 to 2023.
The current economic operating margin(7) grew by +60 bps compared to June 30,
2017 to 6.2%(8), primarily driven by higher margins from Commercial Property
Development (8.8% vs. 6.2% as of June 30, 2017).
Property Development NCCF increased by a substantial +117%(9) year-on-year to
EUR16.2 million.
As of June 30, ROE stood at 15.6% (vs. 9.2% as of June 30, 2017), a 640-bp
increase explained by improved net profit attributable to the Group and
continued optimisation of allocated capital (EUR235.8 million of average
allocated capital as of June 30, 2018 vs. EUR284.9 million as of June 30,
2017).
The Property Development backlog as of the end of June 2018 amounted to
EUR1,504 million (stable vs. December 2017):
* The backlog for the Residential segment was equivalent to EUR1,122.2 million,
a +11.1% change (vs. December 2017), resulting from higher housing orders in
H1(+11.8%). These indicators were boosted by the positive impact of the
"Pinel" tax incentive scheme combined with housing loans at still low
interest rates.
* The backlog for the Commercial, Public and Healthcare segment was worth
EUR347.1 million, a 24.1% drop resulting from the progress of ongoing
projects (especially the Villejuif scheme and a large number of projects
completed at the beginning of the year).
(7) Current economic operating margin = Current economic operating
profit/(loss) (IFRS current operating profit/(loss) adjusted from IFRS 11 and
for trademark royalties and holding company costs) / economic revenue (IFRS
revenue adjusted from IFRS 11)
(8) Current economic operating margin calculated based on data as of June 30,
2017 restated for IFRS 15
(9) vs. Property Development NCCF as of June 30, 2017 restated for IFRS 15
2. H1 2018 results on the rise
EPRA earnings from Property Investment rose by +6.9% (vs. reported) to EUR155.9
million, including EUR104.8 million for the Commercial segment (+6.4%) and
EUR51.1 million for the Healthcare segment (+7.9%).
Group net current cash flow was boosted by positive performance across all
business lines and reached EUR167.4 million, up +6.6% compared to NCCF reported
as of June 30, 2017 (and +8.1% compared to NCCF as of June 30, 2017 restated
for IFRS 15 and IFRS 2).
As of June 30, 2018, the portfolio was worth EUR11.4 billion (on a
proportionate consolidation basis), up +5.3% compared to the end of 2017 (+1.8%
on a like-for-like basis). Portfolio value is EUR13.3 billion on a full
consolidation basis.
EPRA triple net asset value reached EUR6,435.7 million, i.e. EUR86.6 per share,
implying an increase of +2.1% (+7.2% excluding the impact of the dividend
payment). It was driven by the increase in NCCF and property values.
Net profit attributable to the Group totalled EUR27.1 million.
The cost of debt continued to decrease while debt maturity increased (6.7 years
as of June 30, 2018 vs. 6.5 years as of December 31, 2017).
H1 was highlighted by continued liability optimisation, with the successful
issue of a EUR600 million bond in February (10-year, 1.625% bond). In line with
this issue, Icade successfully completed a bond tender offer for three
outstanding issues (for an aggregate amount of EUR200 million with a maturity
of less than 3 years).
This new transaction makes it possible for Icade to improve its average debt
maturity and hedging policy while maintaining a very attractive average cost of
debt (1.56% as of June 30, 2018 vs. 1.59% in 2017 (-3 bps)).
The LTV ratio stood at 41.8% as of June 30, 2018.
3. Shareholding structure and governance
The General Meeting held on June 29, 2018 approved the appointment of Mr
Guillaume Poitrinal(10) as independent director. The Board of Directors is now
composed of 14 members including 5 independent directors and 50% of women.
Independent directors account for 35.71% of the Board in compliance with the
recommendations set out in the AFEP- MEDEF Corporate Governance Code.
Guillaume Poitrinal, who formerly headed Unibail-Rodamco (2005-2013), is the
founding partner, head and member of the Management Board of ICAMAP S.àr.l.,
an independent company specialised in managing funds investing in listed and
unlisted real estate in Europe. He is also co-founder and 50% shareholder of
the Woodeum company, a low carbon real estate developer.
ICAMAP Investments S.àr.l. owns a 1.83% equity interest in Icade and stated
that it is acting in concert with the funds GIC Pte Ltd and Future Fund Board
of Guardians. These three entities together have a 5.00% shareholding in
Icade(11).
(10) See the press release dated June 29, 2018 available on our website
(11) As last notified to the company on July 5, 2018
4. ANF Immobilier/Icade merger
The General Meetings of ANF Immobilier and Icade held on June 28 and 29,
2018(12) approved the merger of ANF Immobilier into Icade. In consideration for
the transfer value, Icade increased its capital by creating 420,242 new shares.
This capital increase, totalling a net amount of EUR21.1 million, represents a
dilution of only 0.57% to Icade's shareholders.
5. 2018 outlook: Guidance raised
Given the company's outlook, the guidance for 2018 Group net current cash flow
(EUR per share) has been revised upward: it is now expected to "grow by more
than 6% compared to 2017 reported Group net current cash flow", i.e. an
increase of over 7% compared to 2017 Group net current cash flow restated for
IFRS 15 and IFRS 2.
6. 2019-2022 Plan
Icade maintains its value-creating business model for the period 2019-2022 and
announces its new medium-term plan. This plan is definitely growth-oriented and
is based on four pillars:
1- Leader in office real estate in the Greater Paris region & major cities
outside Paris - Focus on development & asset rotation
2- Icade Santé: listed European leader in healthcare real estate in 2 to 3
years' time
3- Icade Promotion: key player in property development
4- Best-in-class player in terms of CSR & Innovation and new real estate
services
This plan was unanimously approved by the Board of Directors.
The 2019-2022 plan includes the following operational priorities:
Commercial Property Investment:
* Market leader in commercial real estate in prime Grand Paris locations and
major cities outside Paris
* Focus on development and the realisation of the embedded value creation
potential
* Faster development and/or extraction of value from the land bank
* Opportunistic asset rotation
* Increased selectivity of portfolio assets
* Acceleration of the growth
Healthcare Property Investment:
* Continued growth of Icade Santé in France and diversification into the
nursing home sector
* Launch of international expansion by investing in Continental Europe (30% of
Icade Santé's portfolio)
* Ambition to create a leading European platform dedicated to healthcare real
estate
* Liquidity of Icade Santé by 2020/2022
(12) A separate press release issued on June 29, 2018 is available on our
website
Property Development:
* Exposure maintained below 10% of Icade's equity and a target ROE of around
15%
* More significant development in the Commercial segment
* Contribution to Group NCCF above 10% over the course of the plan
* A sector undergoing significant change: potential opportunities
In addition, Icade will continue its CSR and innovation-related investments and
initiatives in order to remain among the real estate companies with the highest
ESG ratings.
The 2019-2022 plan includes the following financial objectives:
- LTV ratio at around 40% and over 90% of debt hedged against interest rate
risk
- Target CAGR for Group NCCF of around 4.5% over the course of the plan
- Dividend policy unchanged
7. Financial calendar 2018
Q3 financial information: October 19, after the market closes
Investor day: November 26
The Statutory Auditors issued their review report on the interim financial
information on July 20, 2018, after conducting:
- A limited review of the condensed interim consolidated financial statements
of the company Icade SA for the period from January 1, 2018 to June 30, 2018,
which were prepared under the responsibility of the Board of Directors'
meeting held on July 20,
- A verification of the information contained in the interim management
report.
The Half-Year Financial Report as of June 30, 2018 can be viewed or downloaded
from the website (www.icade.fr), in the section:
In French:
http://www.icade.fr/finance/resultats-publications/rapport-annuel-document-
reference-rapport-financier-semestriel
In English:
http://www.icade.fr/en/finance/results-and-publications/annual-report-reference
-document-interim-financial-report
André Martinez, Chairman of the Board, Olivier Wigniolle, CEO of Icade, and
Victoire Aubry, member of the Executive Committee in charge of Finance will
present the 2018 half-year results to the analysts on July 23, 2018, at 10:00
am.
The presentation will be available on the following website:
In French:
http://www.icade.fr/finance/resultats-publications/presentations-financieres
In English:
http://www.icade.fr/en/finance/results-and-publications/financial-presentations
Live webcast with synchronised slides will be accessible from 9:30 am (Paris
time) on the website, via the following link:
In French: https://edge.media-server.com/m6/go/icadeHY2018
In English: https://edge.media-server.com/m6/go/icadeHY2018/lan/en
Conference ID: SFAF Icade French: 2865120
Conference ID: SFAF Icade English: 6220562
For an audio-only telephone conference, dial any of the following numbers:
Belgium +32 (0)2 403 7216
France +33 (0)1 76 77 28 19
Germany +49 (0)69 2222 3900
Italy +39 02 36026 032
Luxembourg +352 2787 0185
Netherlands +31 (0)20 703 8179
Spain +34 91,419 4436
Switzerland (Geneva) +41 (0)43 547 8048
Switzerland (Zurich) +41 (0)44 580 7270
UK +44 (0)330 336 9407
US +1 323-994-2078
This press release does not constitute an offer, or an invitation to sell or
exchange securities, or a recommendation to subscribe, purchase or sell Icade
securities. Distribution of this press release may be restricted by legislation
or regulations in certain countries. As a result, any person who comes into
possession of this press release should be aware of and comply with such
restrictions. To the extent permitted by applicable law, Icade excludes all
liability and makes no representation regarding the violation of any such
restrictions by any person.
ABOUT ICADE
Building for every future
As an investor and a developer, Icade is an integrated real estate player which
designs innovative real estate products and services adapted to new urban
lifestyles and habits. By placing corporate social responsibility and
innovation at the core of its strategy, Icade is closely involved with
stakeholders and users in the cities-local authorities and communities,
companies and employees, institutions and associations... As a commercial and
healthcare property investor (portfolio value of EUR11.4bn as of 06/30/18 on a
proportionate consolidation basis) and as a property developer (2017 economic
revenues of EUR1,209m), Icade has been able to reinvent the real estate
business and foster the emergence of tomorrow's greener, smarter and more
responsible cities. Icade is a significant player in the Greater Paris area and
major French cities. Icade is listed on Euronext Paris as a French Listed Real
Estate Investment Company (SIIC). Its leading shareholder is the Caisse des
dépôts Group.
The text of this press release is available on the Icade website: www.icade.fr.
CONTACTS
Guillaume Tessler,
Head of financial communication
and investor relations
+33 (0)1 41 57 71 61
guillaume.tessler@icade.fr
Charlotte Pajaud-Blanchard,
Press relations manager
+33 (0)1 41 57 71 19
charlotte.pajaud-blanchard@icade.fr