Icade Sa Ord

Welcome to the ECOD Full Year 2025 Results Conference Call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speakers, Nicola Jolie, CEO, and Bruno Valenting, CFO. Please go ahead.

Good morning, Nicolas Joly speaking. Thank you all for joining us today. With Bruno Galantin, we are pleased to present ECAT 2025 full year results. After the presentation, we will, of course, open the floor for questions. I will begin with the main development of the year, both operational and strategic. Bruno will then walk you through the financial results and the balance sheet in more detail. Then I'll conclude with the 2026 outlook. Let's start by summarizing the key highlights for 2025. 2025 was a year of solid progress in the execution of our reshaped plan, with strong financial discipline. Three elements stand out. First, disposals. 2025 was a record year, with significant milestones in offices and in healthcare, allowing us to crystallize value in a selective investment market. Second, operations. Across both businesses, performance was solid. In property investment, despite declining revenues, we achieved a record year in terms of square meter lease, contributing to an improved financial occupancy rate. In property development, we delivered solid activity with stable reservation volumes driven by a rebalanced customer portfolio and restored margins on new operations. And third, discipline throughout the year we maintain tight capital allocation control depth levels and strong liquidity while advancing selectively into student housing and data centers if you turn now to slide six and seven you will find the key financial metrics for 2025. net current cash flow amounted to 3.57 euro per share in line with the guidance Cash flow from strategic activities, namely property investment and property development, came in at 2.89 euros per share compared to 2.94 euros per share in 2024. NTA and AV declined by around 11% to 53.3 euros per share, mainly reflecting the decrease in value of the property portfolio and the dividend payment. Loan-to-value ratio stood at 39.6% at the end of December. This does not yet include the Marignon disposal, which will have a positive effect of minus 3 percentage points. The net debt-to-ABDA ratio improved to 9.1 times, supported by the recovery in development margin in the second half. Interest coverage remained solid at 6.6 times, and the average cost of debt is stable at 1.7%. If we look more closely at each business on slide 7, in property investment, gross rental income was €347 million, down 4.2% like-for-like, mainly due to tenant departures recorded in 2024. The gross asset value of the portfolio stood at €6.1 billion, reflecting a 4.5% decline on a like-for-like basis. The EPRANET initial yield increased, At 5.6%, new property development business economic revenue declined to 1.1 billion euro versus 1.2 billion euro the year before. However, the operating margin turned positive again, reaching 2.4%. The volume of orders was broadly stable at approximately 5,400 units, outperforming the market. Before diving further into operations, Let me briefly share our initial view for 2026 on slide 8. In an uncertain environment, we expect GroupNet current cash flow to decline in 2026, mainly due to continued pressure on property investment revenues and only gradual recovery in the development business. That said, thanks to strict selectivity in the operations we launched and continued control of our cost structure, we expect 2026 to mark the low point for net current cash flow from strategic activities. I will come back to this when we discuss guidance in more detail. But before that, let me briefly set the broader market context on slide 10. In 2025, we continue to navigate a challenging environment marked by macroeconomic uncertainties, political instability in France, and persistently high interest rates, which continue to wire on the real estate sector. In the rental market, take-up was down around 9%, while vacancy level and incentives remained significant. The investment market was slightly better oriented in 2024, with improved liquidity on value-add assets and a return of interest in the office segment in the best locations. Against this backdrop, ECAD moved forward with the discipline execution of its reshape plan. Let's move on to slide 12. With regards to the disposal, ECAD recorded an exceptional year with nearly €850 million disposal completed or signed. All these transactions were carried out with strict financial discipline, allowing us to crystallize value creation. We will maintain this rigor going forward. In property investment, 640 million euros of disposal were secured or signed. This includes 240 million euros of mature or non-core assets sold in very good conditions with capital gain of around 5% versus N2024 NAV. In December 2025, we signed the sale agreement for the iconic Marignan-Saint-Élysée asset. This asset was acquired 20 years ago and we were able to create value through building a project, electing tenants, and obtaining the permit. We took advantage of an increased market interest for this type of value adder set to conduct a highly competitive binding process, which allowed us to achieve 20% premium above NAE. With these achievements, we've reached more than half of the 1.3 billion euro disposal target set under ReShape. Regarding health care, we acknowledge that the exit is taking more time. Nevertheless, in 2025, we achieved a major milestone with 210 million euros of disposal, driven notably by the sale of the majority of our Italian exposure. The volume sold in 2025 represented just under 20% of our total remaining exposure. We're targeting a full exit from health care over the horizon of the strategic plan meaning by the end of 2028. In the meantime, this portfolio benefits from solid fundamentals and generates significant returns, which are attractive for group net current cash flow. We are therefore pursuing a progressive disposal, not at any price, with a clear focus on protecting value. Another pillar of ReShape is to protect and enhance the value of our core businesses, both property investment and development. And once again, this year, we are delivering on that objective. Protecting value starts with operational performance. And in 2025, leasing activity was particularly strong, as shown on slide 16. We indeed signed or renewed approximately 217,000 square meters, up above 60% versus 2024. This transaction represents 63 million euros in annual rental income with a world of 6.6 years. They enabled us to improve the occupancy rate by around 2 percentage points over 2025, reaching approximately 90% at URN for wealth position and light industrial assets. As illustrated on slide 17, ECAD secured some of the largest transactions in the market including leases with the Seine-Saint-Denis Departmental Council at Pulse and Jump, with KPMG at ECO for more than 40,000 square meters, and with the Haute-Seine Prefecture at ECO for a third of 15,000 square meters. The tenant portfolio remains very solid, with nearly 85% of annualized revenues coming from large listed companies, public sector entities, and mid-sized companies. Looking ahead, slide 18 details the lease expiries for 2026. The challenges we successfully addressed in 2025 will continue into 2026, with €60 million of leases set to expire. We expect around €30 million of departures during the year, notably reflecting the still significant share of assets to be repositioned. This represents the last major wave of expiries for this asset class. The impact of this departure will be reflected rapidly in both the financial occupancy rate and revenues with around two-thirds expected in the first half of the year. Reversion potential remains negative at minus 11.6% on well-positioned offices, broadly stable year-on-year. It will decrease in 2027 by circa two percentage points after the effective renewal of the KPMG lease. In this context, as shown on slide 19, ECAD has continued to make targeted investments in high-quality office assets. First, with the delivery of EDEN, an iconic asset that is fully pre-led to Schneider Electric for its new headquarters. Offering a very high level of services and strong ESG credentials, This asset achieves prime rent in the Nanterre market. Beyond Eden slide 20 presents another targeted development, which is Seed and Bloom in Lyon. This redevelopment project includes additional flow area, enabling further value creation on land acquired through the ANF transaction in 2017. It completes the transformation of the area following the delivery of NEXT in 2024. The yield on cost stands at 7.4%, fully in line with the returns we target on new developments. All these asset management and refurbishment work contribute to protecting the value of our portfolio. Having reviewed this targeted project, let me now turn to slides 21 and 22, focusing on the assets to be repositioned. Over the past two years, This asset has been actively managed through residential conversion, sold-off plan, two targeted refurbishments with controlled capex, and opportunistic long-term relatings. Following the asset management works, around €200 million of 2B reposition assets should move into our core bucket. At the end 2025, this segment represented a limited share of the portfolio. €29 million in revenue and less than €500 million in assets. From 2026 onwards, ECAD will revise this segmentation to reallocate the 2B reposition assets into core and non-core categories. Let's move on to slide 23. In property development, the teams also delivered solid operational performance reflected in stable order volume. This performance was supported by a successful diversification of the customer base with a growing share of first-time buyers and institutional investors. The development team have also selectively resumed new projects, although overall volumes remain relatively low. This momentum is reflected in our key indicators, with building permit applications up 66% year-on-year and permit approval increasing by 32%. Activity has also been supported by the acquisition of projects ready to be launched. As a result, the backlog remains fairly resilient at 1.7 billion euros while maintaining a high pre-commercialization rate of 77%. Following last year's portfolio cleanup, we are rebuilding projects with restored margins. Profitability is gradually improving, although some older, lower-margin projects continue to wire on overall results. In 2026, we expect to rebalance the mix between older projects and new projects with restored margins, with a more significant shift taking place from 2027 onwards. With this solid operational base in place, let me now turn to the last priority of our reshaped strategic plan, which refers to diversification. ECAD is pursuing its diversification in sectors where it can leverage its longstanding expertise and development capabilities. We are moving forward with selected projects, particularly in student housing and data centers, always with a strong focus on value creation. Let me lay the emphasis on student housing, turning to slide 27. In this segment, we have launched two projects bringing together our property investment and development teams, representing a total investment of €100 million. Located right next to Paris, this project will deliver approximately 500 beds by 2028. We are also getting value creation of around 20%, with yield on cost above 5.5%, compared with current prime yields ranging between 4.25% and 4.5%. Looking ahead, our ambition remains to deliver between 500 and 1,000 beds per year from 2028 onwards. Regarding data centers, we are evolving our business model to further enhance returns on large projects through equity partnerships aiming to reach circa 10% yield. This approach could be applied to the 130 megawatt hyperscale project in Rangis for which we obtained a building permit at the end 2025. The JV partner selection process is currently underway with completion schedule for 2031. Now, beyond the practical performance and strategic diversification, our reshaped plan is also driven by our ESG commitment, which is a core element of our model. As part of its reshaped strategic plan, ECAD has indeed reaffirmed its strong commitment to the low-carbon transition and biodiversity preservation detail in slide 30 and 31. In 2025, the group updated its low-carbon trajectory to align with the new SBTI standard for the real estate sector, confirming its ambition to remain a leading player in the fight against climate change. ECAD has now set 2030 targets aligned with a 1.5°C pathway across all three scopes, with threat and ambition across each perimeter. At the same time, we maintain our objective of achieving net zero carbon emissions by 2050. This trajectory is already translating into tangible results. Between 2019 and 2020, 2025, ECAD has significantly reduced its greenhouse gas emissions in line with its new objective, and total absolute emissions are down by 52%. These results demonstrate that our climate strategy is not only ambitious, but firmly embedded in our operational execution. And with that, I will now hand over to Bruno, who will present the 2025 financial results in greater detail.

Thank you, Nicolas, and good morning, everyone. Moving to slide 34, the group's net current cash flow amounted to 3.57 euros per share. It is between 2.99 euros per share from strategic operations and 0.69 euros per share from discontinued operations. Net current cash flow from strategic activity decreased slightly to 2.99 euro per share compared with 2.94 euro per share in 2024. Looking at net current cash flow from strategic operations, the main takeaways are a drop in net rental income from property investment of minus 39 cents per share, a raise in property development margin of plus $0.63 per share and a decline in finance income of minus $0.44 per share. When looking in detail, starting with the property investment division on slide 35. On a like-for-like basis, gross rental income declined by 4.2%, mainly due to tenant recorded since 2024, and the gradual crystallization of the negative lead renewals. The perimeter effect has a negative impact of 1.9%, mainly reflating asset disposals. These factors were partly offset by positive indexation, which still contributed 3.3%, as well as by early termination fields, mainly related to offices to be repositioned. It is worth noting that net retail income was affected by higher vacancy costs. Now turning to property development on slide 36. Economic revenue reached 1.2 billion euros in 2025, down by 7% year on year. This decrease mainly reflects a sharp decline in the commercial segment with revenues down by 48% year-on-year following the completion of major projects at the end of 2024 and the low volume of new contracts signed in 2025. In contrast, residential revenues increased slightly. This performance was driven by strong bug sales and an acceleration in construction start in Q4 2025, which was an exceptionally active quarter. The net property margin improved mechanically in 2025 following the impairments booked in 2024. However, The decline in volume and the continued margin pressure on certain project launch prior to 2024 have seen negatively impacted the overall margin of the business. During 2025, financial discipline remained a key priority for the group with continuous efforts to control the cost base as explained on slide 38. Over the past two years, we have implemented significant measures in process optimization, cost rationalization, and income reduction, generating approximately 20 million euros in savings, including the impact of inflation. Finally, slide 39 focuses on the financial results and the closely monitored items. Current finance income decreased by 59 million euros, but it's required carefully analyzed. On the strategic activity side, the decline mainly reflects lower investment income after a record year in 2024, which benefited from high interest rates and an average group cash position above 1 billion euros. The cost of debt remained controlled at 1.7% and the projected debt for 2026 is fully covered. Regarding this continued operation, which corresponds to the health care segment, dividend income declined. Approximately, also this decrease is due to time in effect as pre-health care did not pay an interim dividend at the end of 2025, resulting in a shift of the payment from 2025 to 2026. Now let's move to our operational performance and financial results and turn to the balance sheet and portfolio valuations. Slide 41 focuses on the evolution of the property investment portfolio's value. At year end, the portfolio was valued at 6.1 billion euros, representing a 4.5% decrease on nightfall-like basis. The APRA net initial yield increased slightly to 5.6% compared with 5.2% in 2024, while the APRA total net initial yield stood at 6.5%. Turning to slide 42, as of December 2025, per share stood at 53.3 euros, done approximately 11% year-on-year. This change is mainly explained by the lower valuation of the property investment portfolio, which accounts for 3.9 euros per share, as well as the 2024 dividend paid amounted to 4.3 euros per share. Let me now turn to debt management on slide 43, another key pillar of our financial strategy. 2025 was marked by strong financial achievements Since January 2025, we raised more than 1.1 billion euros on financing, including notably a 500 million euros 10-year green bond insurance. Altogether, these transactions are extending the average maturity of our debt and further reinforce our liquidity position, enabling us to anticipate upcoming maturities with confidence. If you look at slide 44, you can see that our debt maturity profile remains widespread over time. By the end of December, ECAD had a solid liquidity buffer with 0.8 billion euros in net cash and 1.8 billion euros in hard-won committed revolving 3D facilities. This comfortably covers the group's debt maturities through 2030. Slide 45 outlines the updated version of our green financing framework, published in February 2026. This new version introduces criteria aligned with the highest market standards. The aim is to ensure full alignment with the EU taxonomy and the CRIM trajectory based on forward-looking five-year approach. The framework was assessed by Sustainable Feeds and received an excellent rating, underscoring both the robustness of the criteria and the ambition of the eligible project. With that, I will hand over back to Nicolas for the conclusion and the outlook for 2026.