Earnings call transcript: ICAD Q4 2024 shows strategic resilience

ICAD Inc., a key player in property investment and development, reported its fourth-quarter 2024 earnings, highlighting strategic resilience amid challenging market conditions. The company's stock saw a slight dip of 0.34% in aftermarket trading, closing at $2.92. According to InvestingPro data, while the stock has experienced a 17% decline over the past week, it has delivered an impressive 68% return over the last six months. The current price aligns closely with InvestingPro's Fair Value assessment, suggesting balanced valuation.

Key Takeaways

• ICAD's net current cash flow per share exceeded guidance, reaching €3.98.
• Property Investment division revenue grew by 2.5% like-for-like.
• The company hedged 92% of its 2025 debt, reducing financial risk.
• Strategic diversification into student residences and data centers is underway.
• Cautious 2025 outlook due to complex market conditions and political uncertainties.

Company Performance

ICAD demonstrated resilience in 2024, with a focus on strategic diversification and operational efficiency. The company reported a net current cash flow of €3.98 per share, surpassing guidance. However, the EPRA NAV per share declined by 11% year-over-year, reflecting market challenges. Despite these challenges, the Property Investment division saw a 2.5% like-for-like revenue growth, showcasing robust performance in a complex commercial investment market.

Financial Highlights

• Net current cash flow per share: €3.98 (above guidance)
• Property Investment revenue: €369 million (2.5% growth)
• EPRA NAV per share: €60.1 (11% decline YoY)
• Optimized working capital: €300 million (25% of economic revenue)

Outlook & Guidance

Looking ahead, ICAD projects a cautious outlook for 2025, with net current cash flow guidance set between €3.4 and €3.6 per share. The company plans to continue its diversification strategy, focusing on student residences and data centers. However, it remains wary of complex market conditions, political uncertainties, and upcoming local municipal elections in 2026. ICAD expects its Property Development segment to return to breakeven in the coming year.

Executive Commentary

"In an always challenging environment, ICAD demonstrated in 2024 the resilience of its business model," stated CEO Nicolas Julie. He emphasized the company's strategic focus on diversification and value creation, stating, "Our priorities in terms of investments are on the pipeline and clearly on diversification." Julie also noted, "We remain cautious for 2025, but we'll be determined to take new steps across all our strategic priorities."

Risks and Challenges

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• Market Complexity: The commercial investment market remains complex, with reduced activity in the Paris region.
• Political Uncertainty: Upcoming local elections in 2026 may impact market dynamics.
• Economic Pressures: Ongoing economic challenges could affect ICAD's strategic initiatives.
• Environmental Regulations: Continued focus on reducing carbon emissions may incur additional costs.
• Competitive Landscape: Maintaining competitive leasing activity in a stable office investment market.

Q&A

During the earnings call, analysts inquired about ICAD's dividend policy, which remains limited to retain cash. Questions also focused on the company's healthcare business disposal strategy, which remains unchanged. Analysts showed interest in ICAD's investment strategy, particularly its focus on investments yielding 6.5-10%.

ICAD's strategic resilience and diversification efforts position it well for future growth, despite a cautious outlook for 2025. InvestingPro analysis shows analyst consensus remains strongly bullish, with a high price target of $9.00, suggesting significant upside potential. For deeper insights into ICAD's growth prospects and comprehensive financial analysis, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.

Full transcript - icad inc (ICAD) Q4 2024:

Call Moderator: And now I'd like to hand the call over to your host, Mr. Nicolas Julie, CEO. Please go ahead, sir.

Nicolas Julie, CEO, ICAD: Thank you. Good morning, Nicolas Julie speaking. Well, thank you all for being here today on this call. Along with Christel de Robbia, we are delighted to present this morning our 2024 earnings. This presentation will be, of course, followed by a Q and A session.

So let's start to Slide four for an overview of the main messages for the full year 2024. In 2024, the good net current cash flow amounts to EUR 3.98 per share above the guidance. This is mainly explained by the resilience of the Property Investment division, with revenue growth supported by indexation. The operational performance of Property Development is contrasted with the first half marked by an exhaustive review of our operation to adjust to market condition and the second half more positive with an upturn in individual orders. One year after the announcement of ReShape's strategic plan, we will be happy today to share with you the first concrete steps taken in 2024.

In addition, at the end of 2024, the group's balance sheet remains solid with reasonable LTV and high level of liquidity. For 2024, we will be proposing a dividend of per share at the Annual General Meeting, including per share coming from the dividend due following the completion of the first step of the sale of LSKAR business in 2023. For 2025, we remain cautious in a still complex market, which leads us to estimate a good net current cash flow between EUR 3.4 and EUR 3.6 per share. We will come back of course two days later. On Page five, you will find the key figures for the year 2024.

At group level, E Cat posted a solid net current cash flow equal to million. Cash flow from strategic activities, I. E. Property investment and property development, was slightly down at million. NAB NTA decreased by around 11% to EUR60.1 per share, reflecting in particular the falling value of the property portfolio.

In terms of liability, the LTV ratio reached 36.5% at the end of the year versus thirty three point five percent one year before. Net debt to EBITDA stood at 10 times at the December 2024. In the Property Investment business, gross rental income came to EUR $369,000,000, up 2.5% on a like for like basis, driven in particular by the effect of indexation. The gross asset value of the portfolio came to EUR 6,400,000,000.0, which reflected a minus 7.1% decline on the line for line basis. The EPRA net initial deal was roughly stable at 5.2%.

In the property development business, economic revenues were stable at EUR 1,200,000,000.0. The margin was negatively impacted by impairments accounted in H1 twenty twenty four. Let's look now at performance by business division starting with trapped investments. Let's move on to Page eight about the latest market trends. In 2024, the commercial investment division continued to operate in a complex leading environment, totaling 1,750,000 square meters less in 2024 in the Paris region.

As we reported last February, '3 criteria in the choice of ARFFISSAFE remain: location with the need to be close to a transport hub alignment with the best environmental standard quality of service offering and flexibility. We are also seeing increasing price differentials for prime assets between the central areas of Paris above EUR 1,000 per square meter and other more peripheral but well connected areas at around EUR $5.50 per square meter. These areas are comparatively enjoying a ripple of interest, which explains the greater dynamism seen in 2024 in an area such as the difference. In this context, ECEAD recorded a good level of leasing activity with around 133,000 square meters signed or renewed in 2024. These signatures and renewals represent an annual rental income of EUR 35,000,000 and a growth of six point four years.

First of all, the leading activity demonstrated the upside for ECAD's well positioned offices meeting the highest standards and quality locations. The dynamic rental activity also illustrated the good level of demand for our business products and an opportunistic approach we have on the to be repositioned assets. As expected, the financial occupancy rate was down to 84.7% as of 12/31/2024, given the departure of tenonenin twenty twenty four. On Slide ten, one of the highlights of the new year has been the relating of the entire process set in CERN for 29,000 square meters. Barely three months after the departure of the Olympic Games Committee, ICAT's team successfully re let this emblematic asset to the departmental contract of Sensoryme.

This pre let agreement at twelve years euros was signed on the basis of an economic rent in line with demand. There is to be signed in Q1 will take effect from late twenty twenty five, early '20 '20 '6. Taking into account the relating of PERS, the occupancy rates for well positioned assets is 90.7% versus 88% at the end of twenty twenty four. Let's move on to Page 11 related to the additional rents coming from deliveries and current pipeline. In 2024, we had delivered two office assets representing a total of €5,800,000 of annualized headline.

The pipeline represents additional reviews of EUR 45,000,000 on an annual basis. We have good visibility over these revenues as roughly 85 are secured following the continued marketing of the SMB into Schneider Electric (EPA:SCHN). The pipeline represents relatively limited CapEx of less than EUR 300,000,000 by 2027. We now turn to Page 12 devoted to asset rotation. The office investment market remains very calm in 2024 with an investment volume of around EUR 15,000,000,000, stable compared with last year.

Again, this backdrop, we succeeded in concluding the sale of four assets for EUR 82,000,000. These core assets located in Marseille, Lyon and Neuilly were sold above their last place value within a great deal of 5.8%. At the February, ECAD also exited early from the public private partnership with the North Sea Hospital by terminating the hospital longlist and transferring the associated debt to the hospital. This transaction enabled ICAN to sell a non strategic asset at NAV or at EUR 55,000,000. Let's now move on to the operational performance of the development business line.

2024 was a complex year with an uncertain and changing economic and political environment interest. Against this backdrop, however, the volume of orders remained stable, thanks to a good momentum in the second half of the year among individuals. The gap recorded 5,300 unit orders for EUR 1,300,000,000.0, relatively stable compared with 2023. This momentum was supported by a 17% increase in volume and a 7% rise in value in individual orders. The improvement in this segment was driven by the decrease in interest rates, the adaptation of our commercial offer and the purchase of some operation from developers.

In 2024, the contribution from social and intermediate housing, institutional investors to the activity was more limited with both volume and value decline. On Page 15, we present some emblematic project launched this year that have met with rapid success. In particular, the Kithin Rif Crawford development on the outskirts of Dijon, which achieved a presales rate of 94% in length of the nine months. Project time has already been presented in our Capital Market Day one year ago. This is a residential program developed on our land reserves in the North Of Paris in place of former office projects.

Marketing is doing very well with 68% presold in six months. Finally, our platform, which has been 100% sold, illustrates our ability to manage large scale niche use projects, a digital and emerging technology campus and a student residence. The success of these new projects has helped us to maintain our residential backlog at EUR 1,600,000,000.0 at the end of twenty twenty four, partially securing our 2025 revenues. Now let's jump to the section about ReShape plan. First of all, and in line with the pillars of ReShape's strategic plan, we made some good progress in 2024 in analyzing the office portfolio to be repositioned and in carrying out conversion project for certain assets.

During the year, the Property Investment division sold two assets in Nio (NYSE:NIO) and Placie Roberson to the Property Development division at their price value for conversion in February. As of December '20 '20 '4, the portfolio of the to be repositioned assets will present a growth asset value of roughly EUR 600,000,000 or 11% of the office portfolio compared with 14% at the December 2023. It accounts for an annualized IFRS rental income of EUR 38,000,000. To be noted that future projects have already been identified for roughly 70% of the gross asset value. In 2024, ICAD has also taken the first step towards diversifying Intacel portfolio, particularly in student residences and data centers.

On Page 18, we are happy to announce a new partnership we just signed in February with Celtina Contus. The objective is to operate our future asset portfolio under white label through management contracts. The partnership agreement is due to be signed in H1 twenty twenty five. At this stage, our ambition is to give up between 501,000 beds a year through Orgain Group. To achieve this goal, we'll be relying on our development business, which benefits from an excellent national coverage and a very good track record in the development of 7% base density.

Our portfolio of assets to be repositioned will also provide us with some development opportunities. Slide 19 shows the progress we've made up to now on data centers project during the year. Firstly, the data center to be led to Equinix (NASDAQ:EQIX) and located in Le Corbus Paris Ballet restaurant has well progressed. Works started indeed in 2024 and the delivery schedule for Q2, twenty twenty six. Secondly, we've reached new milestones in the hyperscale data center project located in the Palio Aurelanger business plan.

We have indeed requested the delivery and secured access to energy from F2 for the requested 130 megawatt power by 02/1931. Let's move on to Slide twenty and twenty one to illustrate our commitment to building the 2,050 city, which is more mixed use and more sustainable in Aude. In particular, the group confirms in white paper titled Autres d'Arcietti its intention to work on transforming the city fringes, which represents a pool of opportunities to address the challenge of housing crisis, bring this realization and the adaptation of cities to climate change. Having this in mind, ICAD signed a firm agreement with Casinos in December 2024 for the acquisition of a portfolio of 11 real estate sites for €50,000,000 This site has a development potential of approximately 3,500 housing units and over 50,000 square meters of retail space. On the SG side, ICAD posted in 2024 a very solid performance in terms of reducing carbon emissions.

Indeed, between 2019 and 2024, the Property Investment division reduced its carbon intensity by minus 43%, the Property Development division reduced its carbon intensity by minus 20% and the corporate's carbon emissions went down by minus 20%. In absolute term, the E Cat Group's greenhouse gas emission fell by minus 44%, thanks to, on the one hand, the contribution of all division and on the other hand, the impact of lower activity, of course, in the Property Development division. Given the strong results, we reaffirm our ambitious pathway for 2,030. I now turn the floor over to Kristel to present the financial results.

Christel de Robbia, CFO, ICAD: Thank you, Nicolas. Now let's move on to the presentation of our 2024 financial results. The group's net year on cash flow amounted to EUR $3.00 2,000,000 or EUR 3.98 per share above the guidance. Net churning cash flow from strategic operations fell slightly to EUR $223,000,000 compared with EUR $233,000,000 in 2023 due to differences in performance between the business lines. Net churned cash flow from property investment rose by EUR 30,000,000 compared with last year, thanks in particular to higher rent on income and lower financial expenses.

The Property Development dividend net current cash flow fell by EUR 36,000,000 compared with 2023, mainly due to one of impairment losses and projects in the portfolio. I'll come back to this in more details later. Let's move on Slide 24. As of December 2024, EPRA NAV per share was equal to EUR 60.1, declining roughly by 11%. This year on year change is due in particular to the evolution in the value of the property investment portfolio, representing EUR 5.8 per share and the dividend paid in 2024 for EUR 4.8 per share.

Let's dive into the financial performance of property investment division in Slide 26. There are three messages to take away from this slide. Firstly, the Property Investment division revenue came to EUR $369,000,000 in 2024, up EUR 5,000,000 versus last year. Evidently, the line for line growth stood at plus 2.5%. It is supported by the positive impact of indexation plus 5.1% that was partly offset by the effect of Seaman departure and negative reduction on renewals.

Lastly, growth was driven by the performance of the well positioned offices and light industrial segments, which the revenues rise respectively by plus 5.2% and plus 4.6% on a like for like basis. We have also updated the reversionary potential on well positioned assets. As anticipated, this has deteriorated slightly as a result of indexation, ranging from minus 8.7% at end twenty twenty three to minus 11.2% at end twenty twenty four. As already mentioned, net loan cash flow from the Property Investment division increased by EUR 30,000,000 compared with last year. The improvement in net loan full income is coming from the positive like for like contribution and a combined effect of increasing penalties for refurbishing, minimizing and the departure of certain tenants, reduced energy costs and certainly limiting customer risk.

The strong net financial income also contributed to the improvement of the net current cash flow over the year. Slide 28 focuses on changes in the value of the investment portfolio. As Nicolas mentioned, the decrease in value amounts to minus 7.1% on a like for like basis. The April net initial yield was 5.2%, marginally lower than in December 2023, reflecting notably the impact of the increase in vacancy and effect of franchisees. The impact of net initial yield is 6.2%.

Slide '29 shows the slowdown in value adjustment in our portfolio per asset class. For well positioned offices, the adjustment over the year correspond to minus 6.7% after almost minus 70% in 2022. The slowdown in the following values has been confirmed half year after half year. Light industrial assets are proving resilient with their value rising by 1.9% this year. Let's turn now to the results of the Property Development business on Slide 31.

In 2024, net income cash flow from Property Development fell sharply to minus EUR 13,000,000, which was mainly due to the impairment group in the first half following a complete review of the portfolio of operations. This, for example, had a negative impact of EUR 34,000,000 on net current cash flow. Excluding the impact of this impairment, the national cash flow will be relatively in line with last year at EUR 4,000,000 compared with EUR 6,000,000 in 2023, thanks to the current monitoring of operating costs and financial results. The major effort to streamline the property development portfolio has resulted in a very tight management of working capital, which was at an optimized level at the end of the year. In fact, working capital improved sharply and amounted to EUR 300,000,000 or 25% of economic revenue at the end of twenty twenty four versus 44% of revenues last year.

This improvement is a result of a rigorous management at several levels such as decrease in land holding operations, close monitoring of the collection of receivables and a selective policy in launching new operation resulting in a minus 28 year on year fall in Randstad (AS:RAND). To be noted that the commitment to sell the total debt asset for million was also signed early twenty twenty five as part of this ongoing effort to control working cash flow. Let's move now on to debt management. The 2024 performance was marked by a very good financial result. Apart from income coming from the residual stake in the Healthcare business and for the interest on the loan to IHE Healthcare Europe and dividend received from this entity, the increase in the financial results reflects the rigorous management of cost of debt and an optimization of cash management.

On the year end, the cost of debt remains very low and has even improved in 2024 to 1.52% compared with 1.6% last year, thanks to additional hedging. The projected 2025 debt is hedged at 92%. On the other end, the growth recorded substantial income this year, up by EUR 12,000,000 compared with 2023 with a managed cash volume of EUR 5,000,000,000 invested at around 3.9%. Let's move on to Slide 35. It has maintained a very strong liquidity position of EUR 2,600,000,000.0 covering its debt maturities until 2029.

In 2024, we successfully bought back EUR $350,000,000 of bonds enabling us to actively manage the debt maturity schedule and reduce the next 2025 and 2026 bond maturity. We also issued EUR 149,000,000 of newborn maturing in 02/1930 and 02/1931, allowing us to benefit from good financial condition and to extend slightly the maturity of our debt. Slide 36 presents our key balance sheet ratios as of 12/31/2024. FTV was up three times at 36.5%, reflecting the change in the value of the property portfolio in 2024. The net debt to EBITDA ratio rose to 10 times.

This deterioration is notably due to the impact on EBITDA of impairment sales recorded in the property development business. This impact accounts for 2.2.0 of the increase in the ratio. Let's move on to Slide 37 for an update on the disposal of the Healthcare business. We confirm that we've strategy of selling the Healthcare portfolio in its entirety despite the absence of any new deal concluded in 2024. In an investment market that has been prioritized in 2023, IGAL has been working on alternative solutions to continue its divestment of the healthcare business.

In January 2025, we will sign an agreement with CredICAD, a life insurance subsidiary of Credia Liquid Assurant (NYSE:AIZ) to extend shares in primary healthcare for shares in a well positioned O fit asset in Europe. The transaction would otherwise get to reduce its exposure to Primary Health Care to 21.7%. The transaction is scheduled to close in Q1 twenty twenty five, subject to satisfaction of conditions present. At IAT level, the process of saving the Italian portfolio, already announced, is still underway. Two factors are encouraging the disposal process to continue.

On the one hand, the gradual recovery of the investment market in the healthcare sector with some transaction completed in 2024. On the other end, the resilience of this asset class, which recorded a value decrease of only minus 1.7% in 2024. In this context, we are continuing discussion with Cymerm, so first investor and current shareholders of Cymerm. However, the current market environment as well as to postpone the timetable for completion. The sale of the French and international portfolio is planned to take place for the SME in 2025 and 2026.

At 12/31/2024, the value of ICAS stake in the Healthcare business was stable at EUR 1,300,000.0. I'll hand over to Nicolas for the conclusion and details on the dividend and 2025 outlook.

Nicolas Julie, CEO, ICAD: Many thanks, Kristel. The total 2024 dividend that will be submitted to general meeting approval amounts to EUR 4.31 per share. It includes per share coming from the remaining dividends due after the completion of the first step of the sales of Skel Genius in 2023. The dividend will be paid into installments in March and July. Let's move on Slide 40 for the 2025 guidance.

ETAD expects a good net current cash flow of between EUR 3.4 and EUR 3.6 per share in 2025. Property revenues are expected to decline in 2025, mainly due to a lower positive impact of indexation and the full year impact of tenants that left in 2024. On the development side, we will benefit from a positive base effect after the impairments accounted in 2024, but we remain cautious about the pace of recovery in 2025. To be noted that the net current cash flow includes $0.67 per share from non strategic operation. For the sake of clarity, this amount has been estimated without the impact of potential disposal on these activities or the repayment of ECAD loans granted to the issuer.

The guidance will be adjusted in due course as and when disposals are made during the year. To conclude, in an always challenging environment, UK demonstrated in 2024 the resilience of its business model. I'd like also to thank all UKAC's teams for their strong commitment this year, which has enabled the group to take concrete steps towards implementing Initiate strategy plan. We remain cautious for 2025, but we'll be determined to take new steps across all our strategic priorities. Moreover, I'd like to take this opportunity to officially announce the departure of Cristen, who will be taking on in Q2 a very exciting position at a former company, Perrobor Dubai.

Well, Cristen, I'd like to thank you most for everything you brought to the group over the last few months and for carrying out your role with great commitment and professionalism. It was a big pleasure for me and for all of us having you onboard the OEAN this year. And I sincerely wish you all the best in your future role.

Christel de Robbia, CFO, ICAD: Thank you very much, Nicolas, for your confidence and the opportunity you have given me to join ICAD. Even if I regret not having contributed even more to the deployment of ReShape, I am proud of the work already accomplished over the year. Yes, me, by the way, thank all my teams and my fellow ex co members. EKS confirmation is well underway, and I know that the company will be able to rely on the mobilization of all to successfully meet future challenges.

Nicolas Julie, CEO, ICAD: Thank you, Christian. And with that, let's start the question and answer session.

: Thank you, sir.

Call Moderator: And our first question is from Stephane Afonso from Jefferies. Please go ahead.

Stephane Afonso, Analyst, Jefferies: Yes. Good morning, and thank you for the presentation. Three questions on my side. Firstly, I would appreciate if you could elaborate on the guidance. What are the main assumptions behind the top range of the guidance?

And do you think that 2025 could see the trough for the core of the current cash flow? And finally, could you elaborate on the options held by Fabias but why it gets remaining states that I understand you'll require in H1. And basically, if Primodial does not complete the acquisition by then, could you consider keeping your remaining stakes in Healthcare? Thank you.

Nicolas Julie, CEO, ICAD: Yes. Thank you very much, Stefan. Well, as for the 2025 guidance, well, as you saw, we are expecting a 2025 net current cash flow between EUR 3.4 and EUR 3.6 per share. We took a cautious approach on business lines given the current environment. So as for the investment division, we plan a decrease in rental income due to the decline of positive effect of indexing rental views and the future negative effect of twenty twenty four tenant departures.

As for the Property Development business, as I said, we expect improvement in profitability after the strong impairment losses in 2024. We expect return to breakeven in 2025, but nevertheless remain cautious due to unfavorable political and tax environment outlook. And as for the remaining EUR 0.67 on Healthcare activity, as I said, we have estimated it without taking into account the future disposal of EASURE and Crenniar, even if, of course, our disposal strategy remains unchanged. And this part will burn depending on the pace of disposal. Yes, Stefan?

Stephane Afonso, Analyst, Jefferies: Yes, yes. I'm trying to understand the difference in terms of assumptions between the top range of the guidance and the low end. But just focusing on core net loan cash flow, please.

Nicolas Julie, CEO, ICAD: Well, as I said, mostly on the property development business, it's we are just at the beginning of the year. So even if we have early signs of recovery as you saw in the individuals, it's a bit too early to tell, especially with the evolution of the tax environment. So hopefully, we'll be able to give you more visibility during half year and maybe just readjust the guidance. But at this stage, we prefer to have this EUR 0 point 2 0 bracket in order to remain cautious.

Call Moderator: Okay.

Nicolas Julie, CEO, ICAD: That clear for you? Yes. Okay. And as for the cash flow, well, with 2025 will be the trough definitely, that's what we are working on. As I said, we saw some resilient activity nevertheless in the investment division, although the context is quite tough.

We have seen the impact in 2025 of the

Adam Shepton, Analyst, Green Street: full year

Nicolas Julie, CEO, ICAD: of the tenant departure in 2024. '20 '20 '5 should be better. So hopefully, 2025, yes, should be the trough from the CapEx. As for the option from Primonial, you know that Primonial benefit from coal option held by on the shares held by Intel (NASDAQ:INTC) in Primonial Care. Those call options expire mid-twenty twenty five.

Nevertheless, this does not impact our willingness to exist and this does not impact Premier Rheim interest in transferring its position in Healthcare. So this shall not have any major impact on the willingness of achieving the transaction And we still have, of course, the ability to discuss with third party investors and even the existing shareholder of the vehicle. As Christian was mentioning, you saw that we were able to structure a dedicated swap with credit card that also confirmed that the NAV remains a relevant proxy for such transaction. Nevertheless, of course, we shall be seeing opportunity depending on the in terms of volume and potential timing of any transaction. Okay.

Thank you. Thank

Call Moderator: you. We will now move to our next question from Laurent La Roche Hubert of ODDO BHF. Please go ahead. Good morning, Nicolas. Good morning, Christa.

So thank you

Laurent La Roche Hubert, Analyst, ODDO BHF: for this presentation. I would have two questions, please. So my first question would be about the evolution of your occupancy rate in offices, so excluding the effect of BOLT. So what could we expect with your leading challenges in 2025? And my second question, so would be on the dividend.

So if we exclude the exceptional contribution of of the health care business, your payout ratio appears to be quite weak. So what would be your dividend policy going forward for next year? Thank you very much.

Nicolas Julie, CEO, ICAD: Okay. Thank you, Florent. Thanks for your question. Taking the first one about the occupancy rate, the expected well, we expect stabilization in the occupancy rates on the short term. As you know, negotiations and marketing take time, even if in the case of a good transaction like that, of course, it takes time.

The decline we observed at the end of twenty twenty four in the pretension rate was in line with our expectation given the announced departure taking effect. It was driven in particular you saw that by the trends on assets to be repositioned, which are clearly emptying out. So on the wet position, the occupancy rate was at 88% and versus 91% at the end of twenty twenty three. We are close to this level including the Dutch transaction. And on the light industrial, there was a small erosion at the end of the year, but coming from standout rotation.

And then the delivery of a dedicated project, large project, 5,600 square meter, which is currently being marketed, but for which we are confident we're getting soon. And as for the dividend policy for our 2024, well, this dividend is inconsistent with what has been said to date. Clearly, we took the commitment to distribute the dividends related to the first stage of the healthcare disposal in 2023 over two years. So that's what we do today by including the remaining balance of the EUR 2.54 in the total dividend. Having said that and as for the remaining, we stick to what we've said, being we want to limit the dividends to retain cash to preserve our redeployment capacity and finance future growth until we have finalized the repositioning of the group.

That's the reason why the remaining EUR 1.77 per share corresponds to the amount calculated on the basis of the SEK obligation. So roughly, it comes with an equivalent payout ratio of 42% roughly. This is similar to what we've done during the past year because excluding the dividends coming from the first stage of the FKL, last year was equivalent payout ratio on the cash flow around 50%. So we don't guide on our dividend policy for the coming year, but we'll stick to this philosophy.

Call Moderator: Okay. Thank you very much.

Nicolas Julie, CEO, ICAD: Thank you.

Call Moderator: Thank you. We will now take our next question from John Carpenter from Goldman Sachs. Please go ahead.

John Carpenter, Analyst, Goldman Sachs: Good morning. Thank you for taking my question. So I just wanted to follow-up on sort of evolution of rental income and particularly at this stage you have 38,000,000 of annualized rents in to be repositioned assets. Can we understand how you expect that to evolve over the next one or two years, please? That would be my first question.

Nicolas Julie, CEO, ICAD: Okay. Thank you, John. Well, on this one, clearly, as I said, we are expecting those buildings to empty out clearly. And if you have a look on the expiry schedule, we put a dedicated focus on the lease expiries on the year 2025 in the appendixes of the presentation. And you will see that out of the EUR 56,000,000 of potential break option of end of leases, EUR 13,000,000 come from the to be repositioned office.

So it's part of the 38 you were mentioning. So mostly, we are expecting those to be emptying out and it shall be the case over time. Nevertheless, as you also saw in the presentation, we are really opportunistic on those transactions. So we are not looking at negative reversion, but we are eager to make some pragmatic build such as the one we've done with the SNCF on Le Monnet Building, securing for an extra few years the 15,000 square meter on this building. So it's achievable from time to time.

But once again, the strategy remains the same is recreating liquidity by free a reconversion scenario for the building. But in the meantime, we fight for every euro. And if we are in a position to make an opportunity deal and very pragmatic deal, we'll do so.

John Carpenter, Analyst, Goldman Sachs: Okay. Very clear. Second question, please. Just on the property development, obviously, your starts were, I think, down 28% for 2025% or for early this year at least. Can you help us understand the type of volumes that you expect?

Obviously, you highlighted that the backlog was still good. But how should we think about volumes for the Property Development division over the next one or two years?

Nicolas Julie, CEO, ICAD: Well, about the volume, we have some visibility quite good over the coming year due to the visibility we have on the backlog, mentioning the €1,600,000,000 backlog. As you know, maybe a world more globally on the development activity over the next month what we expect. Well, we saw some recent positive sign in the market due to the falling interest rates over the twenty four twenty twenty four year that led to some increase in individual orders and also decline in cancellation rates. That's good news for us. We also now have some visibility on some new positive measures in the law with the zero rate loan extended for one year and also some in an inheritance sorry, tax exemption measures, which are a good sign, shall not compensate fully the impact of the end of the P and L tax and census scheme, but nevertheless, they are renewed.

But having said that, the political and tax context still calls for cautions in our view, especially because we have some local municipal election on the agenda in March 2026. And it's always not so good for the global activity. And on our side, we have some historical operation with lower margin remaining in the portfolio that are still to develop. And as you saw, we are also taking some opportunistic and gradual move, taking over some new operation with the larger margin from some stronger other property developers.

John Carpenter, Analyst, Goldman Sachs: Okay. But this backlog I mean, this backlog for the fact that your volumes could be flat

: in 2025 or higher or lower? I mean, it depends a

John Carpenter, Analyst, Goldman Sachs: bit on timing that you decide to launch these projects, right, and these launches down. So that was the kind of aim of the question, right?

Nicolas Julie, CEO, ICAD: Yes. Once again, it's a bit too early to tell. We are just at the beginning of the year. And there also, we think to our philosophy and so it's very selective on what we've done. We went through the whole portfolio last June, so we want to remain really selective on what we launched.

So it's really early to tell what will be the landmark at the end of the year. But nevertheless, we have this backlog that should help strengthen the activity. Okay. Thanks, Scott. Thank you, John.

Call Moderator: Thank you. We'll now move to our next question from Markus Culeza from Bank of America. Please go ahead.

: Hi, good morning, everyone. Thank you for taking the question. I just wanted I have three questions. First one coming back to the prime year option. So just to make sure clear, we have understood that if there's no exercise, we are out of officially, there's no acquisition from then of the Phase II.

Maybe we go with first question first.

Nicolas Julie, CEO, ICAD: Okay, sure. Thank you, Markus. Well, no, on the auction, the only thing we say is that the call option, they are benefiting on our share. They expire mid-twenty twenty five. I mean, that's the contract.

That does not mean that Premier won't buy at the end the share, that E Cat at the end won't sell the share. It was just the legal framework that was signed in 2023. But I mean, if tomorrow, Krania still want to buy the shares at the NAB, we'd be happy to sell to them. And they are in their strategy, no change. It's just a matter of their inflow in the short term that don't allow them to exercise the call and to buy the shares in the short term.

That's the reason why.

: Okay. Thank you. And my next question is on your also coming back on the dividend cut of your recurring dividend. So I understand the rationale behind. Why haven't you communicated a bit ahead on this?

This is one of your of the main drivers, I think, on the share price.

Nicolas Julie, CEO, ICAD: Well, as for the dividend, once again, we've always said that we took the commitment to distribute the health care over two years. That's what we've done. And on the other part, the recurring, we've always said that our philosophy is to retain as much cash as possible. So it's of course, more difficult to give a proper guidance on that when you are not on the payout ratio on the cash flows, but we were pretty clear on the philosophy and that's where we stand today.

: Okay. So we can expect next year the same level of dividend or it's why we have to make it go? Because next year also probably given the guidance you want to preserve some cash flow if there's no big disposals.

Nicolas Julie, CEO, ICAD: Once again, we are not guiding on the dividend policy for the year scope to come. We will do so once we have finalized the repositioning of the group. But in the meantime, we stick to that. So there's no payout ratio to be guided on clearly. The one thing we can say is that where we stand today, apart from the healthcare business, it's like a payout of 42 percent on the recurring with this EUR 1.77 per share on the remaining part.

It was an equivalent payout ratio on the past year on the recurring of roughly 50%. That's one thing we can say. And on top of that, shall we make some extra disposal on the Premier Healthcare business? Of course, we should be compelled also to give some additional dividends such as what we did with the first step.

: Okay. Thank you. My last question is on your asset values and cap rates. Your asset values still went down some bit, but at 7%. At the same time, cap rates went down or your IFRS net initial yield.

So should I understand what the rental value was market rental values or what your assumption are down massively because you have a little bit of rent growth and asset values coming down, so cap rates should have gone up?

Nicolas Julie, CEO, ICAD: Well, on the asset value, so we saw that indeed they went down a bit. On the API lead, I mean, you have to look up on the net initial lead on the one hand. That was slightly down, but that's due to the way of it's calculated on the EPRA methodology. You have some free rent period, for example. We had one dedicated building on which it was a free rent period at the end of the year.

So at this time, it accounts to be zero. So that's why you have, in my view, not only to look at initially, but also on the top of the prior year, you have to look at both actually. And the top of what's flat year on this one. So that's the reason why.

: Okay. Has your rent free period or your incentives massively changed this year or beginning of twenty twenty five? So has

Nicolas Julie, CEO, ICAD: it been gone up the rent freeze you're giving? No, no. There was no massive change. Once again, when we signed a release and you saw that we signed almost 100,000 new square meters. We signed at the ARBs with the same level of incentive that was observed in the past, especially for example on the first, which was the largest transaction where the economic rent was in line with what was expected.

So no major change to answer properly your question. Okay. Thank you.

: Can you give you a number of your negative reversion? Sorry, I'm going to

Nicolas Julie, CEO, ICAD: Sure, sure. Actually, Marcus, we already did because it's in the presentation. As we said, we gave an update on the figures. Remember, we shared this figure with Reshape one year ago on the well positioned offices. It was minus 8.7% and now it's minus 11.2% on the well positioned, which is honestly minus 0.3%, sorry, on the well positioned notice, which was quite expected due to the fact that during the twenty twenty four year, the rents were still fueled by a strong indexation, up 5%, while in the same time, the RVs were pretty stable, stable plus.

That's the reason the gap widened a bit from what has been shared with Vishal.

: Okay. Thank you very much.

Nicolas Julie, CEO, ICAD: And just a word, talking about the value, I'm sure you have in mind that all of this negative reversion potential is already included in the NAB, of course, because it's directly come from the appraisal work. Yes.

Call Moderator: Thank you. We will now take our next question from Alex Holsterin from Kempen. Please go ahead.

Alex Holsterin, Analyst, Kempen: Yes. Hi, good morning. Thank you for the presentation, Just one question left from mine side, and it's on the operating margins. They made quite a big jump. And I was wondering if you could go through the drivers and highlight if it's more of a one off or if we should expect this to stabilize in the coming years.

Nicolas Julie, CEO, ICAD: Okay. And Alex?

Christel de Robbia, CFO, ICAD: Yes. Thanks a lot for this question. So indeed, our late one night on net income has increased significantly by plus 6.4%. So this is mainly due to three effects. First of all, we had a reduction in provision for trade receivables.

We recorded important provision in 2023 that were not re conducted in 2024. Second element, we had an increase in expenses we charge to tenants. So this was a positive one off impact that shouldn't be reconducted in the short term. And lastly, a more sustainable economy but more marginally linked to a decrease in energy costs. So looking forward, we should be somewhere between the performance of 2023 and 2024.

: All right. Perfect. Thank you. Thank you.

Call Moderator: Thank you. Our next question is from Adam Shepton from Green Street. Please go ahead. Good

Adam Shepton, Analyst, Green Street: morning. Just one question for me. Just thinking about the proceeds and uses slide from your Investor Day last year, so billion between healthcare and other disposals and then the dividends and then billion of capital redeployment and billion of debt repayment is what you cited a year ago. I think it's fair to say you're probably behind track on the disposal side of things. I mean only sort of million excluding healthcare in the last year.

What are your priorities on the uses side between the various billion of capital deployment and then the billion of debt repayments, let's say, in the next between now and mid twenty twenty six, but where are the priorities?

Nicolas Julie, CEO, ICAD: Okay. Thank you very much, Sadat. Well, as of the usage and proceeds shared one year ago, well, we are still in line with what we've shared about ReShape. Maybe the one question is more about the timing of execution that the confidence we have on executing the strategic plan over those five years. So it's still perfectly fit.

Our priorities in terms of investments is on the pipeline and clearly on diversification also due to the fact that what we are focusing on is value creation. Clearly, when we are investing, we want to invest at yield on cost roughly between 6.5%, ten %, aiming at value creation of 15%, twenty % globally. So that's why we'll be focusing on. But in the same time, we remember that the fourth PR of WeShape is our financial strength and rigorous policy. So we'll try to keep a good balance between those two in order to be able to redeploy capital free.

So of course, this depends on the pace of the disposal. Of course, the FCA, but all of the other type of disposal also coming from the investment division. But we could also rely on potential partnership with some third party investors with minority investment, for example, not to delay and postpone our investment. So that's what we are focusing on in order to renegotiate ReShape. Having in mind that in the short term, there's not so many CapEx to be invested because, for example, if you take the large data center development we have in Rangis, in the coming months, we'll be focusing on securing the building permit also.

So here, we are talking about EUR 100,000, not thousand or hundreds of million.

Adam Shepton, Analyst, Green Street: Okay. That makes sense. I mean, I think the debt repayment of EUR 1,700,000,000.0 that you cited a year ago, that still remains a priority ahead of, say, the billion of potential acquisitions, which is also on the slide. But if the sales proceeds are slower, then the debt repayment will remain the priority ahead of, for example, acquisitions or other CapEx that you cite. Is that can you confirm that's what you'd like to communicate?

Nicolas Julie, CEO, ICAD: Yes. Well, as you said, we are quite happy with the situation and the good balance we have between our financial policy and our ability to redeploy capital clearly. And talking about the EUR 5,000,000,000 of acquisition within the months coming and years coming, of course, we should have some more visibility on this. For example, on the student housing, that could be part of those acquisition or money to be redirected in the pipeline sold by the development pipeline. And clearly, we'll be adapting the pace of investment to the pace of disposal and for potential third party partnership we could structure.

Okay?

Adam Shepton, Analyst, Green Street: Okay. That makes sense. Thank you.

Christel de Robbia, CFO, ICAD: Thank you, Adam.

Call Moderator: Thank you. And we have a question from Sam King from BNP Paribas (OTC:BNPQY) Exane. Please go ahead.

Sam King, Analyst, BNP Paribas Exane: Hi, good morning, guys. Just two questions from me, please. The first is coming back to the lease expiry schedule and break options in FY 2025, the total $56,000,000 Appreciate you've already commented that around $60,000,000 of that is in the 2B reposition portfolio and will be lost to vacancy. But just interested on how much of the remaining balance in the well positioned portfolio do you expect to lose next year? That's the first question.

And then the second one is just a clarification question on balance sheet and leverage. Do you have any debt covenants for net debt to EBITDA? Or is it just the 11 times threshold under the S and P credit rating? Thanks.

Nicolas Julie, CEO, ICAD: Well, I'll take the one on the expiring schedule. Well, as I said, roughly, we expect there to be a repositioned offices accounting for EUR 30,000,000 out of the EUR 56,000,000 potential break option or expiry next year to be vacated. And once at that, on the remaining asset, globally, what we expect is like back to normal, I would say. And you have the information, I think, globally, two thirds of the potential break option or expiry risk, sorry, warrant exercise on average over the free past year. So globally, that's what we expect on the expiry schedule.

And I'll let Kristine answer on that. Your other question? Yes.

Christel de Robbia, CFO, ICAD: On your second question, so you have a dedicated part in our press release regarding bond covenant. So I confirm that there is no covenant regarding net debt to EBITDA. The only covenant bank covenant we have concern LTV, ICR, value of the property portfolio and security interest in assets. So as you can see in the press release, we have a comfortable room of maneuver regarding these different covenants and we remain comfortably within the limits. But indeed, you're right, the only guidelines we have in terms of net debt to EBITDA, confirm the guidelines given by S and P for our rating, for which I remind you that the threshold has been revised when our rating was downgraded at the end of last year.

And so it is now expected to be below EASI.

Nicolas Julie, CEO, ICAD: Great. Thank you.

Call Moderator: Thank you. That's all questions we had today from the audio lines. And I would like to hand back over to our speakers for any webcast questions. Thank you.

Christel de Robbia, CFO, ICAD: Okay. Thank you. So we have two written questions from Thierry Scheren. So the first one, could you please confirm that this quarter mainly come from the well positioned Otis portfolio? And the second one, what is the decrease in backlog remaining in in your fees portfolio?

Nicolas Julie, CEO, ICAD: Yes. As for the disposal, well, you saw in the results that a part was coming from the well positioned offices, of course, the one that are located in the provinces. It's typically mature asset on which we've done the work that's now core rather some small volume that can attract some investors. And that's the reason why we are going to achieve disposal at the NAB. But that does not only come from that because on top of those EUR 82,000,000, well, there was also the termination of the public private partnership with the North Sea Hospital accounting for EUR 55,000,000.

So clearly, our disposal on top of the health care activity will come from both work position of it when value creation job has been done. It's our job to crystallize and monetize that, but also from non strategic assets such as the non tea hospital or for example to be repositioned asset. And as for the depreciation, on the 2B reposition asset, well, maybe if we look in the back in the mirror, talking about the evolution of the valuation of the 2B reposition asset from the peak of the valuation in June 2022, we are now at a minus 60% decrease in the valuation on the to be repositioned asset. So clearly, we've come a long way. We are not anymore based on pure FEED valuation, really different.

And in the meantime, on the well positioned of FEED, the total adjustment on the valuation was also significant at minus 30%, but of course, nothing compared to this.

Christel de Robbia, CFO, ICAD: Yes. There is another written question from Mirage Kumar. Do you plan to come to bond market to refinance your twenty twenty five, twenty twenty six debt maturity? Okay. Thank you for your questions.

So indeed, as you know, we have some bond maturing in 2025 for EUR $350,000,000 at the end of the year after we bought back, as I mentioned earlier on, EUR 150,000,000 on this maturity. We will also have important maturities in 2026 for EUR $550,000,000 on bond and EUR 300,000,000 of mortgage loan. So clearly, we could go we could tell the market to refinance this maturity. All the more, it will enable us to extend our debt maturity, which is an important key indicator for us. Yes, we can take another one from Marc Mondelez (NASDAQ:MDLZ).

How should we assess your dividend for the coming year, excluding and including exceptional? And what are the expectations from CDC and Creditor?

Nicolas Julie, CEO, ICAD: Well, thank you, Marc, for your question. Well, the dividend policy, as I already said, we don't guide on the dividend policy for the year to come. But we'll stick to this philosophy. And of course, the dividend shares for the 2024, but also 2023 based on this philosophy was supported by our two main shareholders. And that's I mean, that's what we expect.

That's what we stick to this. That's what we said and we keep on doing what we said. Well, I think we don't have any questions anymore. Thank you very much for attending this call and thanks for your questions. Last one for the team, once again, because I'd like to thank them strongly, warmly because while facing quite a tough environment in the short term, they haven't losing sight of the Reshev strategy plan.

As you saw, we went through some first concrete sales. So thanks to the whole team for their strong commitment this year and for the year to come on certain updates. So looking forward to seeing you all in the coming days. Have a nice day and see you then. Bye bye.

Call Moderator: Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.

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