Icade Sa Ord

Hello and welcome to the ICAID results as of September 30, 2024. My name is Caroline and I'll 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 mode. However, you'll have an opportunity to ask questions at the end of the call. 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 0 and you'll be connected to an operator. I will now hand over the call to your host, Nicolas Joly, the CEO, to begin today's conference. Thank you.

Good morning. Nicolas Joly speaking. Thank you all for being here today on this call. I am with our CFO, Christelle de Robillard. This morning, we are pleased to present ECAD results as of September 30th, 2024. This presentation will be, of course, followed by the usual Q&A session. So let's start with slide five for an overview of the main messages for the third quarter of the year. The investment division reported a solid rental activity with almost 51,000 square meter signed or renewed during the quarter. Property rental income continued to grow, rising by 3.6% like for like, driven by indexation. Property development indicators showed a slight improvement with orders up 9.6% compared to the same period last year against the backdrop of falling interest rates. Nevertheless, we remain cautious in a market still uncertain over the coming months. During the third quarter, we also demonstrated the appeal of our asset portfolio through the disposal of four well-positioned offices located outside the Paris region and in Neuilly, above the latest appraised value. Given the resilience of our business and very high finance income expected this year, we are aiming for a 2024 group net current cash flow towards the top of the guidance. We will, of course, come back to this at the end of the presentation. Let's look now at performance by business division, starting with commercial investments. The rental market in the Paris region continued to slow, with take-up down for the third consecutive quarter. Over nine months, take-up in Île-de-France is down 9% compared with last year. Against this backdrop, ECAD's team posted a very good performance, with almost 51,000 square meters signed or renewed in the third quarter, bringing the total volume over the first nine months of the year to 107,000 square meters. These signatures and renewals represent an annual rental income of 12.4 million euros and a world of 6.7 years. The good rental momentum was firstly driven by the well-positioned offices, which accounted for 84% of the 12 million euros of additional income. In particular, we are pleased to announce the signing of a pre-let agreement for 24,000 square meters of office in Toulouse on an annual basis, counting for an annual headline rent of 5.6 million euros. This new project, scheduled for completion in 2027, represents circa 70 million euros of capex. In addition, We signed two new leases that, in my view, illustrate our ability to build special, dedicated relationships with our major institutional tenants. The first one is with Schneider Electric for a 3,800 square meter additional space in Eden, increasing the pre-let rate of this asset to 85%. The second one is with Veolia for more than 5,000 square meters in Aubervilliers, in addition to the existing 45,000 square meters already let for its head office. The financial occupancy rate stood at 86.6% as of September 30, 2024, down minus 1.3 points compared with the end of last year. This decline mainly concerns offices to be repositioned, with the financial occupancy rate in the well-positioned office segment remaining above 90%. Let's now move on to page 8, related to the asset rotation. The investment market is, as you know, still very calm, with an investment volume of less than 7.5 billion euros, down almost 19% year-on-year. Outside the Paris region, the investment market is even down by 26% compared with the same period last year. Nevertheless, We managed to complete this quarter the sale of two assets in Marseille for €45 million and to sign additional sale agreements on two other assets in Lyon and Neuilly for €37 million. These disposals to first-class users and investors were carried out above the appraised value at the end of June 2024 at prime rates, and they testify to the quality and attractiveness of our assets. Let's turn to slide nine. This quarter, ECAP delivered two office assets representing a total of 5.8 million euros annualized headline rents. The first asset, named Cologne, is a 2,900 square meter office building in the Paris Orly Rangis Park, led to FIBOR, Avanci Energy subsidiary. The refurbishment of this building is a showcase of our expertise in adapting assets to climate change and to the risk of vulnerability to heat waves by 2050. The second, called NEXT, is a state-of-the-art 15,800 square meter office asset in the heart of Lyon-Pardieu, which has been completely refurbished to meet client needs and highest environmental standards. The building was 100% pre-lit more than two years before delivery. Let's now move on to the operational performance of the development business line. Supported by the fall in interest rates, we recorded a slight positive upturn in orders this quarter. At the end of September, the Property Development Division booked more than 2,800 orders, up plus 9.6% in volume and plus 2.3% in value compared with the same period last year. the improvement has been particularly noticeable in sales to individuals, while the momentum on block sales has remained relatively in line with what we've observed in the first half of the year. Despite these positive signs, we remain cautious about the months ahead in a market context that is still fraught with uncertainty linked to the pace of interest rate cuts the end of favorable penal tax regime, and the political environment in France. In this context, the group has been still highly selective, as shown by the figures. Firstly, the housing permits filing were 50% down versus last year. Secondly, the sales launches declined by 32%. And thirdly, the pre-sold rate on operations launched has been maintained at 80% year-to-date. And I will now hand over to Christiane for an update on the financial results.

Thank you, Nicolas. Let's move to slide 12, in which we present the trend in consolidated revenue as of September 30, 2024. The total IFRS revenue amounted to 1 billion euros, stable compared with last year. Over the past nine months of the year, The stability of revenues is explained by the good performance of the property division with rental income up by 8.5 million euros. The consolidated revenue from property development division is slightly down, driven by the reduction in the backlog. Let's jump directly to next slide for details on property investment division. Gross rental income amounted to 280 million euros as of September 30, 2024, up plus 3.1% compared with the same period in 2023. Growth was mainly driven by indexation, plus 5.5%, partly offset by the effect of Sinan departures, minus 2.2%, and negative reversions on renewals, minus 0.2%. Performance varied according to asset class and is particularly supported by like-for-like growth in the well-positioned office and light industrial segments at plus 6.3% and plus 6.5% respectively. Economic revenue from the property development business stood at 829 million euros at the end of September, down minus 1.7% compared with the same period last year, with the various business segments following different trends. Firstly, revenue from the residential segment was up plus 35 million euros compared to the end of September 2023, driven by the reduction in the backlog built up at the end of 2023. Secondly, revenue from the commercial segment was down minus 56 million euros compared to the same period in 2023. As a reminder, the first nine months of 2023 were positively impacted by the opportunistic sale of an office building on Rue Tedbou in Paris for 40 million euros. Let's move on to slide 15, related to balance sheet management. The group continues to manage its balance sheet proactively. Firstly, we maintain a very strong liquidity position at 2.4 billion euros at the end of June 2024, covering the group debt maturities until mid-2028. Secondly, over the first nine months, we proactively manage our debt maturity schedule. In the first half 2024, we successfully bought back €350 million of bonds, enabling us to reduce the next 2025 and 2026 bond maturities. In July 2024, we issued €150 million of new bonds as attractive terms maturing in 2030 and 2031. Thirdly, we have maintained a robust hedging policy. In particular, we strengthen our long-term edging profile in June and July with 200 million euros of forward swaps starting in 2026 and 2027. To be noted also that our 2024 debt is still fully edged. I'll hand over to Nicolas for the conclusion and details on the guidance.