Icade Sa Ord

Hello and welcome to the CART results as of March 31, 2020 for call. My name is Laura and I will be your coordinator for today's event. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call and this can be done by pressing star 1 on your telephone keypad to register your questions. If you require assistance at any point, please press star zero and you will be connected to an operator. Today, we have Nicolas Joly, Chief Executive Officer, and Christelle de Robillard, Chief Financial Officer, as our presenters. I will now hand you over to Nicolas Joly to begin today's conference. Thank you.

Thank you. Good morning, everyone. This is Nicolas Joly speaking. Well, thank you all for being here today on this call. I'm with Christelle de Robillard, our new Chief Financial Officer, and this morning we are very pleased with Christelle to present the main figures and events for ICAD for the first quarter of 2024. This presentation will, of course, be followed by a Q&A session. So to start, the key takeaways of the first quarter were as follows. Firstly, at our investor day on the 90th of February, we announced our new strategic plan for 2024-2028 named Reshape. For the record, Reshape is based around four priorities. First, continue adapting our office portfolio to new uses by leveraging on our portfolio of well-positioned office assets, which account for 86% of our offices. Second, Accelerate diversification by focusing on three asset classes with growing markets and a solid track record for ICAD, light industrials, student housing, and data centers. Third, develop and invest building 2050 city, a mixed-use and sustainable city. Fourth, maintain a solid financial policy by adapting the pace and volume of our investments to our financial KPIs. In terms of business activity, real estate markets remained pretty calm over the first quarter, in line with 2023. Against this backdrop, the property investment business reported a 3.8% increase in revenue, driven especially by the effects of indexation. The property development business also reported a 14.4% increase in economic revenue, thanks in particular to the residential backlog built up by the end of 2023. Besides, it should be noted that the Annual General Meeting was held last Friday on the 90th of April, at which the following items were approved. The proposed dividend of 4.84 euros per share, paid in full in cash, and the SEON climate and SEON biodiversity resolutions, And we will come back to this later in the presentation. Finally, we will confirm the 2024 guidance and give you a brief update on the first reshape project announced at the Invest Today. So let's dive into the performance by business line on slide seven and start with the property investment activity. Well, the leasing market has got off to a mixed start, in line with last year, with a take-up of 450,000 square meters in the Paris region. The dynamics reflect continued polarization and the need to focus on assets that meet the highest standards in terms of location, services, flexibility, and of course ESG performance. The investment market, meanwhile, is still at a standstill with only 900 million euros invested in Paris region, which is a minus 64% compared with the same period in 2023. In this environment, the property investment teams have signed or renewed 23 leases covering more than 14,000 square meters, worth 3.8 million euros in annualized headline rental income, with a world of 6.9 years. Among the 11,000 square meters of new signature, Schneider Electric signed an additional 3,700 square meters in the Eden building, currently under development, bringing total pre-laid space in the building to 71%. The main renewal was for an office space of over 2,000 square meters in Rangis. The financial occupancy rate stood at 87.8%, as of 30 March 2024, stable compared to the end of December 2023. Q1 2024 confirmed the stronger operating momentum of well-positioned office and light industrial assets, whose occupancy rate is above 91%. These two asset classes accounted for more than 94% of revenue secured by rental activity in Q1 2024. As for the property development market, continuing the trend seen in 2023, it was marked in Q1 2024 by a further slowdown in activity, with orders from individual buyers down by around minus 30% compared with the same period in 2023. Against this backdrop, ECAD continued to outperform the market, with orders from individual buyers down by 21% in volume. These orders were supplemented by institutional orders, the proportion of which was higher than at the start of 2023, with a 50% increase in volume, although the number remains relatively small at this stage. In this context, we expect margins to be negatively affected because of two main effects. Firstly, this higher part of block sales, given that they traditionally have a lower profitability than individual sales, And secondly, the decrease in prices, as highlighted in this slide through the difference between the volume and value effects. Globally, the total volume of orders fell by a contained 6% in volume and 16% in value. As expected, the backlog is down by 6.5% to 1.7 billion euros compared with December 2023. In these conditions, As already explained during our full year results, we will remain cautious in our property development business over the coming months. Firstly, we continue to target a total order rate at 70% before launching new projects. Secondly, we are continuing to review our operations in order to confirm their economic viability, concerning certain operations if necessary, and selling some land if needed. This rigorous management of new operations is reflected in a decrease in the volume of started projects of minus 63% and a reduction in the inventory of homes for sale of minus 19% in volume compared with the same period in 2023. This quarter, ECAD once again demonstrated its ability to be a forerunner committed to climate and biodiversity issues. In the first quarter, ECAD set itself apart by having two separate resolutions, CERN climate on the one hand and CERN biodiversity on the other hand, voted on and approved by the general meeting last Friday, respectively at 99.3% and 98.7%. We are the first company in France to have two separate resolutions voted on, allowing us to commit with our shareholders and present the results of our low-carbon and biodiversity actions in relation to our objectives for 2030. In addition, ECAD has confirmed its commitment to the Energy Efficiency Program, which has enabled to reduce the energy consumption of the property investment portfolio by a further minus 5% over the winter 2023-2024, following a minus 20% reduction over the previous winter. Lastly, in the first quarter of 2024, ICAD was awarded a Coup d'Or for its I5 building in La Défense by the French Institute for the Energy Performance of Buildings, with energy savings of more than 36% achieved between October 2021 and December 2023. I-5, which offers an excellent level of services and outstanding environmental performance, will become the group's new headquarters from December 2024. I'll now hand over to Christelle for a detailed update on the development of our business revenue.

Thank you, Nicolas. Let's move directly to slide 12, in which we present the trend in consolidated revenue in Q1 2024. Despite markets remaining under pressure, total IFRS revenue rose from 286.7 million euros to 322 million euros, representing an increase of 12.3%. This 322 million euros comprises mainly 94 million euros of gross rental income from property investment activities, and €223 million of consolidated revenue from property development business. Moving now to slide 13. Gross rental income from property investment amounted to €93.7 million for the first quarter 2024, up 3.8% compared with the same period in 2023. On a like-for-like basis, Gross rental income rose by 1.7%, driven by indexation represented 5.1%. As highlighted in this slide, increase in gross rental income on a like-for-like basis was more marked in the well-positioned office and light industrial segments at 5.1% and 7.1%, respectively, illustrating the relevance of our portfolio segmentation. Let's jump directly to the next slide, presenting the results of the property development division. You can see here the economic revenues, which are made up of consolidated revenue plus the share of revenue from jointly controlled entities. Economic revenue from property development rose by 14.4%, from €227 million to €259 million. This growth was driven by the sale of €25 million of the residential backlog built up in 2023 and €8 million of land sales. This increase in land sales is a good illustration of the adjustment of our portfolio that Nicolas was just mentioning earlier. It should also be noted that the first quarter of 2023, used as a benchmark, was marked by a particularly low volume of revenue. Indeed, as you can see in this slide, sales accounted for just 17.5% of total annual sales, compared with an historical level over 20% in 2021 and 2022. Let's finally have a look at our financial structure on slide 15. As you can see, ECAD has a strong balance sheet, which was further strengthened following the completion of the first stage of the disposal of the healthcare division in July 2023, generating 1.45 billion euros of proceeds. In particular, ECAD benefits from a very strong liquidity position at 2.9 billion euros at the end of 2023, including cash and undrawn credit lines. So we do not have any short-term refinancing risk, bearing in mind that the next bond maturities are in November 2025 for 500 million euros and in 2026 for 750 million euros out of 1.1 billion euros. I'll give the floor back to Nicolas to conclude on the outlook for 2024.