Icade (ICAD) Earnings Call Transcript & Summary

[Interpreted] Hello, everyone. Ladies and gentlemen, a few words by way of introduction in this very special context of the COVID-19, where you are both participating in this meeting in person as well as online via the webcasting platform. So this morning, we'll be reviewing our earnings and performance, reviewing performance delivered by Icade in the last few month. I won't go into the full detail of the various aspects of this Icade organization in this very special context. I want to take this opportunity, however, to emphasize the general discipline showed by the company, its employees, the ExCo members, the Board to face up with this dire crisis. So we need to hail the effectiveness and efficiency of the organizational system to protect the greater number, that is employees, clients, providers. And in this general context, which may take things with a pinch of salt. I want to emphasize the fact that the company showed how capable it was to deliver a very modern, state-of-the-art digital tools and the way it worked internally and in customer-facing processes. The Board of Directors throughout the period fully supported this momentum, made decisions. As an example, to waive their director's fees for all meetings during this crisis. And especially, and you've noted this, the Board of Directors decided, knowing that it was a proposal, which was carried by the general meeting in this support for solidarity base measures to adjust the dividend payout downward. That is EUR 4.01 payout to be compared with the EUR 4.8, which was the initial payout proposal. So the general meeting was organized in very special conditions, as it was fully virtualized, which did not prevent very many of you to participate with very clear votes on all motions and proposals, tabled including. And this must be emphasized, the fact that our purpose was adopted and incorporated within our bylaws, and it was voted by 99.99% of the votes. Without preempting what Olivier Wigniolle and the ExCo members will be telling you in a few minutes, I wanted to emphasize, above and beyond the formulas, that this period has demonstrated how the Icade model is resilient, which is somewhat of a special model at Icade with its business divisions, Icade's ability to adjust, to adapt, to prepare and -- to prepare and adapt its business lines and divisions to this very special context, which is a guarantee and assurance of robustness going forward. And this true actual resilience, which gets rolled out across all facets and strategic directions of Icade, gives us a great degree of confidence in the future. So this morning, as is usual, we'll be transparent and open in disclosing our numbers and facts with objective-based, metrics-based being presented with some common areas and some specifics, of course, as it is important to recall how different we are and how our numbers show that Icade operates in a way that deserves trust from the Board of Directors and the employees fully so, and which will enable it to keep going, going forward. So I want to say that the Board of Directors already has started and will go on the next few weeks to engage in the rereading of the strategic plan for 2019-2022, this medium-term strategic plan, to assess the impact of the COVID situations and whether it would interfere with our road map to attain our key strategic goals. This exercise will be done in the next few weeks. As I said, this work has already started off by looking into and digging deeper into the special situation, and by November, we'll be able to explain our analysis. What I want to again underline in this complex period of times is above and beyond the necessary review of the strategic plan. The Board of Directors confirmed that it wanted to maintain its dividends payout policy, which is of importance to note in our situation today, as this question is very often put to us. So I will stop here in this very broad introductory remarks, and I will turn over to Olivier Wigniolle.

[Interpreted] Thank you very much, Frédéric. Hello, everyone. Without further ado, knowing that this disclosure for the first half is a special one, but before we do that, we want to show you our analyzed impact of COVID-19 for 2020. This is an estimate, year-to-date estimate, knowing that this exercise is a moving one. So it is our current view on the -- how the crisis will impact fiscal 2020, which we have broken down by divisions, between noncurrent and current items. For the Office Investment division, we've had impact on leasing activity, which is a mix of a number of factors, as we provided support to our tenants with rent waivers for a month or 2 months in counterparty for extended leases with a delayed in -- delays in completions and the number of operations, the shutdown of construction sites, meaning that the leases will start a bit later. So the impact will be some EUR 6 million to -- EUR 4 million to EUR 6 million negative for the cash flow for 2020, our guidance being in line with last year. So it's a negative GAAP year-on-year. We also will have completions and acquisitions being postponed on major projects, and we had a number of scheduled acquisitions in the pipeline. And obviously, the COVID crisis had us push them back with an additional impact in between of EUR 7 million to EUR 9 million negative. I will go over this again because all of the items in current cash flow, in fact, are not lost, and that we won't recognize them in fiscal 2020 operating results. But when you have postponements and delays, some 80% of these amounts are just delayed in time and will be recognized as starting from 2021. So they are not lost. So you have to take these numbers with a relative nuance. For the Healthcare Investment division, the impact is mainly delayed investments and completions and acquisitions, a negative impact of some EUR 4 million -- EUR 3 million to EUR 4 million. Again, delayed over time. Now for Property Development. Have in mind the accounting mechanism, that is revenue is recognized on completion, technical completion and economic completion. We believe there will be a full month of shutdown, a full shutdown, gradual restarts with construction projects and sites operating at a lower productivity. So we believe the shutdown period will be 3 to 4 months, which means a mechanical loss of some 25% to 30% of our revenues. Again, it's not lost. Projects and construction activities are just delayed in time with these revenues recognized over time, but they will not be there in the financial statements of fiscal 2020. And with respect to Property Development, 90% of the COVID crisis impact in fiscal 2020 will be recognized in the next years. Significant impact of some EUR 31 million to EUR 36 million with a volume impact on the order EUR 27 million to EUR 30 million, and we anticipated some trade discounts -- additional trade discounts in the amount of EUR 4 million to EUR 6 million. So much for the impact on noncurrent cash flows, that is EUR 45 million to EUR 55 million, a broad number with a high degree of uncertainty going both ways. In fact, uncertainties, being negative in some cases, being positive in some others, in many cases. And again, impact on cash flow, knowing that 80% will just be pushed back and to be recognized in 2021, an impact, a loss of some 20%, of course, in the amounts showed here. We have other impacts, which are noncurrent items in net profits. Waivers of rents, without any counterparties, without anything consideration, for small businesses, we communicated on this. We have so-called inefficiency costs relative to construction projects. We've extra charges and costs. We had to face up to shutdown sites, to restart sites, to implement a health-related protective gestures with the appointments of COVID officers, as an example. Cost of risk, of course, we've minimized cost of risk overrun, but it's higher than expected. We had to impair a number of debts and payables. All these amounting to some EUR 50 million, which do not affect current cash flow as such, but which impact the net profit attributable to the group. When you add both, sorry, the impact will be of some EUR 100 million, all in the aggregate. But we'll be able to absorb this. No financial issue, no cash position issue, and with respect to cash flow generation, these amounts will just be pushed back in time and we'll be recognizing them starting 2021 when we'll have a normal full year. So much for the impact of the crisis. Once again, these were current year-to-date estimates. We'll be able to refine this analysis when we disclose the third quarter revenues in mid-October. Now with respect to the key numbers in the first half. You have here the conventional presentation. We have very good resilience of the Property Investment divisions, and you'll have the Healthcare and Office Property divisions. Net rental income up a 4.7%. Adjusted EPRA earnings from property investments up 3.1% to EUR 2.3 per share. Remember, last years, we had more than EUR 1 billion in disposals, and more than we had anticipated in fiscal 2019. With respect to portfolio value on a reported basis, it's up by 0.5% to EUR 11.6 billion, and Victoire Aubry will give you the detail of our valuation. And we have an occupancy rate -- financial occupancy rate of the Property Investment divisions, which is stable at 92.5%, in line with 2019. So we show resilience and even increase in revenues of Property Investment divisions. For Property Development, of course, situation is different because we had a 2.5-month shutdown. So we can't recognize revenue on completion, so 46%. Of course, the loss or the reduction is only, only minus 22.7%, which conceals some good growth. If we hadn't had to shut down construction sites, revenues for property development would have increased by 23% year-on-year. However, we've had this mechanical impact, which prevents us from recognizing the revenues given the technical shutdown of construction sites, so cash flow became negative -- down to minus EUR 11.9 million, negative. We have a leading indicator, going forward with the backlog, which grew significantly by 11% to EUR 1.4 billion, quite a positive situation due to sales contract, which we signed, which haven't yet been recognized with respect to -- on the liability side, debts continuing to decrease by 1.49%. We didn't issue any new bonds. So debt maturity slightly decreased by 0.4 years to 6 years. We've had an increase in the LTV ratio to 39.3%, within our bracket guidance, which is due to the stable valuation of the portfolio. When you add up all these items and data, this gives you NAV. We don't call it triple net NAV, you call it net disposal value, NDV. You know that EPRA revised the definitions of the NAV notion. So EPRA NDV, up 1.2% to EUR 92.2 per share with a cash flow due to mechanical reasons. That is the fact that part of the revenues for Property Development not being recognized, down 7.8% to EUR 2.18 per share. And Victoire Aubry will give you the detail of these financial items. Now moving on to more operational aspects. Every time you've had the detailed impact of the COVID crisis for the Office Investments division. This division was proved very resilient. We provided support to our tenants. We granted monthly payments, deferrals, even repayment plans for very small businesses. We accepted to waive some rents for those businesses which had stopped business for the lockdown. We waived some 1/4 of rents, having an impact of EUR 2 billion. And we discussed and exchanged with tenants, which asked -- who asked for more support and efforts in 2020. And we provided conditional support measures versus extension of the lease period with an impact on the half year cash flow, which is quite moderate in the order of some EUR 1 million. Then there was impact, the shutdown of construction sites, some construction sites which were supposed to deliver completions. So there will be a delay of 3 to 4 months. It will be lost, but the cash flow will not be recognized in fiscal 2020. The projects, the sites, are just pushed back and the start dates for the leases are pushed back as the pipelines are very much pre-let. We won't lose out on this rental income. And late penalties were neutralized by the French government, which means there is a very low impact on the unit price of projects. So leasing activity. We might have thought it would have totally stopped given the lockdown, economic and health-related crisis. This was not the case for the Office Investment division teams who were even very active. 59 leases were signed or renewed for 58,000 square meters, turning in some EUR 15 million in headline rental income and almost all of these leases were signed since mid-March, since the moment when we had the crisis -- at the heart of the crisis with rental value being quite attractive. We have a value per square meter is stable with some 50,000 square meters in new leases starting during the period, and turning in some EUR 16 million in headline rental income with a very low delays and deferrals. So rental income, up 1.7% and like-for-like that is EUR 187 million in gross rental income versus EUR 1 billion in assets being disposed last year. So this offset the disposals for last year, and we have a stable financial occupancy rate. As I said in the current context, many of you have paid a closer attention to our tenant portfolio, which is quite diversified, quite robust. We rate this portfolio on a very regular basis, rate all our tenants, and you have here the split. We have more than 74% of our tenants with extremely satisfactory rating with a default rate for the half year, which is very low, on the order of 1%, which shows the granular level of our tenant portfolio, especially in such a crisis period. And as I said when I presented the impact of the crisis, we capitalized on this period to help and support out tenants to weather the crisis versus extended leases. Very fine successes. We communicated on them. Recall the Park View assets in Lyon, close to the Tête D'or Park. We signed 3 leases for more than 6,600 square meters with completion due by year-end. Including the delay period, we let -- pre-let a bit more than 1/4 of the program, very fine, [ benign ] asset despite the crisis you saw that we were able to fill it. We signed a very significant 5,000-square-meter lease with MEDIAPRO, which manages audiovisual rights, in the Portes de Paris business park, quite a good news. We signed the lease with a hotel, easyHotel in the Portes de Paris Business Park. It is a hotel asset to be built next to the Paris 24 head office. We'll be starting construction, for completion by late 2022. And in the Le Ponant, in the 5th district of Paris, we renewed the lease for France Television for the surface area -- the floor area they are using currently. So what we've noted is that the -- with the number -- the broad numbers and the new signatures, we had very resilient, robust rental activity, which gives us confidence for the future. With respect to asset rotation, well, in this difficult period, we've been focusing on making sure our future cash flows were secured. We didn't engage in any disposals for the first half of 2020. Again, we -- remember, we disposed more than EUR 1 billion in 2019. And the equivalent impact of cash flows, the EUR 16 million, were recognized in -- and were fully offset by the completions and the rental income. With respect to our development pipeline, very resilient and resistant to the COVID crisis. We had 2 completions in Q1. In the Parc du Pont de Flandre, we completed a pre-let building, 8,500 square meters; and in Marseille, we completed a co-working building assets, so -- which was very much pre-let. Remember, that we will be completing in 2020. 2021 is fully pre-let to 61%. And we have a very limited exposure to on-spec developments, some EUR 300 million, so -- to be compared with 8.5% portfolio value for Icade. A very moderate -- focused on 2 high-quality projects, the Park View building project and the Fresk building on the fringe of the 15th district of Paris; and the Issy-les-Moulineaux. And you have a picture of these Fresk assets. So the pipeline remains very dynamic, very high quality with a high potential for rental income in the order of EUR 54 million, with the completion being pushed back by few months. The Origine project in Nanterre for technique. But the pipeline, as I said, extremely dynamic and extremely secure. So in a nutshell, the key figures, as at the 31st of June, (sic) [ 30th of June ] for the Office Investment. And stability means resilience. For the Healthcare division, concerning health care, it is even more resilient than offices. Just to remind you that our tenants, our customers have been highly mobilized in managing the health crisis itself, of course, and they had to modify their commercial activity because of the need to take over the COVID patients and so on. And of course, it's modified their billing and so on. And so we've been supporting them in this and accepting to delay the cashing of the units, and waiting for the support coming from the government. And this was done actually very quickly. And as you've been able to see, I do really want to pay tribute to the nursing home managers who, with the very fragile patient groups that they had, have been very seriously impacted by COVID. But at the same time, for the major operators, I can assure you that they have been highly professional, and great dedication with respect to their customers. If we come back to the more financial and housing aspects and the property. Already, at the beginning of the second quarter, we've begun getting a normal intake of rent. And as for the offices, we have the impact of temporary shutdowns of the construction sites. Limited, only 3 or 4 months delay, projects that we won't have in 2020. But again, this is not lost. Now we have an asset class, which is noncyclical. It is very robust and is driven by long-term contracts as well. And this is particularly significant in the health crisis such as this with assets that behave very well. We have significant rise of 15.4%, plus a 1.8%, on a like-for-like basis, for the short and medium-term care. And yes, here, you have the short and medium term and the long term. You see that the financial occupancy rate is 100% and this is for leases, which are very significant, in particular, internationally, for the length of the leases. And I'll come back to this in a moment. And what you can see is that we have tenants who have the most robust signatures. Now despite the crisis, and the Healthcare development teams have been extremely active for developing during this first half, yes, the pipeline is slightly postponed as well, of course, and we've had somewhat longer discussions because we couldn't travel abroad to continue the negotiations and so on. So we had envisaged a number of acquisitions in 2020. And this will be somewhat delayed, but quite marginal, in fact. We had 3 acquisitions for a total of EUR 50 million with Korian, with an additional nursing home in Italy. And above all, as we communicated this morning, we have a promise signed just a few days ago with ORPEA who is the European leader of medical nursing retirement homes for elderly people. And this is a significant portfolio with 9 homes, of which 8 in Germany. And this is the first operation in a long-term partnership plan with one of the leaders in this category of assets. If you look at the portfolio, we, today, have a portfolio of somewhat exceeding EUR 5 billion in 3 countries. And as we've announced, we're continuing to diversify internationally. Just a couple of words about this acquisition with ORPEA who is the worldwide leader in terms of long-term care. And ORPEA has a significant program. And Icade Santé, Icade Healthcare has been able and has demonstrated in this operation to be in one of the foremost partners of ORPEA. What we've bought is a portfolio of 9 assets, 8 in Germany, 1 in France and 5 in Germany, which are currently under construction; 4 of which are in France; and in Germany, 2. There obviously is a slowdown in terms of the delivery of the work sites, but we are basically very satisfied with this transaction. And the amount of our investments, since we've started this international diversification in 2018, now represents close to EUR 600 million, fully in line with our road map. Key figures too, as you will see, very stable with a strong resilience there, with the portfolio for Healthcare, you see that the 2 activities have, for sure, had an impact from the crisis. But nevertheless, our rental position has made it possible for us nevertheless to be extremely resilient. Now for Icade Promotion Property Development, there are different ways of looking at the figures here. But I think it's very important for us to look at the detail at the breakdown of these figures because we had a rapid recovery, as you see, plus 23%. You see at the bottom right of the page, the impact. But we have, in terms of IFRS, with 2.5 months of close down, we have revenues that are down by 22% automatically. But this did not [ remit ] the development of Icade Promotion Property Development. And for the reasons you know, with the lockdown and maneuvers which had to slow down because of the fear of the crisis in the country of origin and so on. But these are not a lot of revenues, and the work sites are still there. There will be profit coming. But again, 2.5 months out of 6, nevertheless, is 40% of revenues that could have been recognized. And so in this respect, the revenue is down only by 23%. Now if you look at the volume, minus 23%. Some of our colleagues have been pushing figures, which is even higher. But we have -- we've been looking at the figures of Kaufman, our colleague, the commercialization has been impacted for individual clients with the lockdown period. But what is extremely important for us is as already in June, we came back to the same levels as before the crisis. Now we'll see how, of course, this is going to continue and where the dynamic is going to go in this direction, and looking at the different projects that we have. But even though there's been a downturn in terms of the rental commitments, we have a strong pickup in June for reservations -- for bookings. And then we've had also the phenomenon of bulk sales with institutional investors who have a growing appetite for the housing asset class. And so we've almost completely compensated the unit sales decline with the bulk sales, plus 26% at the end of June, in which bulk sales actually were up 121%. And again, I'll come back to this in a moment when I look at the major successes of Icade Promotion. Now we have revenues down by minus 23% and orders down by 3%. But we have advanced indicators, as you shall see in the next slide, which are very ordered with work orders and construction starts. We've been able to start work sites up 42%, even though some of them had to stop for a short time. And we also have plus 56% in terms of building permit applications, and despite also the delays incurred by the delay of French municipal elections. Now we have seen a lot of success in this first half. In offices, a building of more than 6,000 square meters, the Totem in Lyon. And in the housing asset class, we have the major student residences with 2 significant operations, 1 in Villejuif in the southern side of Paris; and the other in Ivry, also on the southern side of -- both for some -- close to -- for the first floor, EUR 80 million and EUR 109 million for the second. Now the appetite for this asset class shows that these values have not been corrected for the impact of the crisis. We've also made good use of the semester to sign promises in Le Havre or in the 13th district of Paris. And despite the crisis, we have also made the permit -- building permit application for the Athletes Village in Paris 2024, which, for the moment, is still confirmed. We also had 2 excellent tenders. One was the restructuring of the Teaching University Hospital in Rennes and for the UNESCO building. And this month, too, we've signed prior agreement, and this is not in the booking areas and not in the backlog either, but we have a letter of an understanding with the CDC Habitat for 1,000 units. This represents some 25% of our commercial stock. And I must say, we are pretty confident about the pricing of housing units as such. And so we have, nevertheless, derisked the balance sheet with this transaction. We also have advanced indicators, all on a positive trend. As we've said, the backlog, which is the first indicator here, which has not yet been accounted for. We're progressing by 13% -- by EUR 1.4 billion. And our residential going -- is representing a potential of EUR 2.2 million -- EUR 2 billion at the 30th of June, and growth of 10% compared to the last years. And total revenue potential, which includes the backlog. And the residential and office revenues represent a total of EUR 7.2 billion, slightly up compared to the 31st of December last year. So we have the slow downturn, but the indicators are generally showing very positive trends and giving us a lot of confidence in June for this business. Now a couple of words about what we've been doing also in terms of CSR because we've also tried to manage our own business. But in line with our commitments, and as Frédéric was saying, with our purpose. We've been very active in terms of solidarity to support all the stakeholders in this crisis. Just to remind you, what we've done for the rents for very small businesses and for health care institutions. And in terms of solidarity, we had a stock of masks that we donated entirely. And we've been matching contributions of the donors. And we also have a solidarity fund for some of our employees who were impacted by the crisis. And we also had to put on furlough several hundred of our employees, and we've compensated their revenue -- their income. And I think everyone will, obviously, judge this, but I think Icade has been extremely positive in the way to support its employees in this respect. And in terms of sustainable finance, too, considering the crisis, and the shutting down of certain sites, we've had to -- we've chosen to cut off some of our credit lines. And so we increased RCFs for some EUR 450 million with a Green RCF and -- or solidarity-based RCF, which are both interesting in terms of liquidity of the company, but also in terms of CSR. And despite the crisis, let's not forget that our priority for the environment remains low carbon. And you've seen that all the industry is increasingly going towards these issues. You've heard the government announce that the recovery will be green or will not be at all. And so we see this still as an essential aspect that is foundational to our ambitions, and we shall see this more during our Investor Day in November, to show that we are putting more than words. So this is a summary for the first half, and now I'll hand over to Victoire for the breakdown of our accounts.

[Interpreted] Thank you very much, Olivier, and good morning to everyone. As an introduction, let me give you the detailed results of this past quarter. And before that, let me just continue with the idea on the impact of the crisis on our quarterly results. Perhaps we could zoom in on our main indicators that you see over here. So firstly, you've got the NCCF. If you see the impact of the crisis, it is of EUR 15 million, essentially due to the slower revenue recognition, the POC method for property development, as Olivier explained to you several times, and which has a major impact on our current activity in this first quarter. Second impact would be on the noncurrent items. So the NCCF, as you can see, is at about EUR 12 million that you see over here. And particularly, the waiver offer rents that we provided for our small businesses that would shut down. And apart from that, you have the impact, which is fairly limited, less than EUR 10 million of depreciation or marginal drops, and the change in values over the quarter. So this is the right time to talk to you about our third main indicator, which is the EPRA NDV, triple net, as it was called. There's a slight increase in growth with an accounting for the changes in property values, which is fairly limited, particularly against the background of our exceptional crisis. And the fourth point, as you can see, relates it to our net debt, which is limited to EUR 6.3 billion and the LTV ratio, which is at 39.3%. So absolutely within the lines of our financial policy. So finally, impacting the first quarter, very limited of the crisis, this exceptional crisis that we have faced. Now for greater detail and more traditionally, let me talk to you about the earnings in Property Development. Good dynamics. There's a 3% increase, EUR 60 million. So once again, in these present circumstances, so very strong resilient investment divisions and net income from -- is plus 5%. You've also got the net rental income at 95.4%. And as you can see, we have continued with the Healthcare that has provided for 47%, and it was 42% last year. So as you can see that Healthcare investment contribution is great and which is helping the bottom line, to give you greater detail because the situation is not quite the same in the 2 scopes. Now for Office Investment, there's a slight drop in net rental income and in the NAV, and that is because of a great acceleration of our last year's disposal to more than EUR 1.1 billion, EUR 16 million of EPRA, which has -- with down on the financial results. And as you can see, given the fact that rentals were very dynamic during the past year from June 2019 to June 2020. With 7 completions in '19 and 2 at the beginning of this year with acquisitions as well, so the rhythm is extremely rapid in terms of our new rents. And so we have greatly limited any drop in the EPRA, which is at EUR 403 million, so there's just a small drop of 3.3%. Now as far as office investment is concerned, you can see that the investment program has left its impact. We accelerated it. The figures are extremely high. The growth is great, more than 13% for rental, plus 12% for the NAV. And so on a like-to-like, we are showing gross rental income at plus 1.8%, and that is thanks to the indexation effect. Now as far as Office Investment is concerned, we've got the rental income, which has gone up by 1.7% on a like-to-like basis, and that is essentially due to the indexation. So Office Investment, extremely healthy and not sensitive to the present crisis. Now in terms of Property Development, as you heard, the situation isn't quite the same given that the technique that we are using here is very special, and it's a ratio that combines the commercial and technical progress of the site. So 2.5 months of shutdown. So you can see what that represents over 6 months, and that's a 40% drop in revenue. But as you can see, we still maintained a depreciation. We managed to absorb it with a limited drop of 23% given the excellent operations that took place at the end of the quarter. As Olivier gave you the details of, June was a very busy month. However, it was over EUR 147 million that were not accounted for because of this slower revenue recognition effect. And therefore, it's only EUR 300 million rather than of EUR 477 million, which would have shown an increase of 23%. So the current economic operating profit is now just below 0 at EUR 8 million. And here, once again, that without counting the crisis, this technical impact which should have been positive. Also, finally, that during this period, quite obviously, there was a major effect -- effort made to improve the development costs, which we brought down. And so this is a summary of the entire quarter. NCCF is a limited reduction of less than 8%. And essentially, because of the mechanical effect of the net cash flow, which was down. So the -- it is at EUR 161 million. And might I remind you, with an ability for Office Development to absorb a major losses over this period. One more point, not counting the crisis, we would have had a net cash flow with an increase of 1%, in line with the guidance that we had given to you earlier in the year, before the crisis that hit us. A few comments now on the valuations because this is a very important item in the current context. As you can see here, all of our values in the 2 portfolios, post-progression, of plus 0.7% on a reported basis; minus 0.4% on a like-for-like basis, because of the Office Investment division. You see the figures here. So it's almost flat for all of the half year. The investments, again, as Olivier said earlier, slowed down over the period, limiting the upswing on a reported basis. And on a like-for-like basis, you see a slight dip, 0.6% down, integrating the anticipations of our experts, because the valuations are done by outside experts. And we have then the factoring in of the fact that index-linked rent review forecast tell us that we will have to revise our figures somewhat downwards on a like-for-like basis. So quite a march now, though. Regarding Healthcare investment. Well, slight progression on a reported basis slowed down because of the crisis; but on a like-for-like basis, flat values. Here, you see, again, we have shown the resilience of this asset class when one has to weather a storm such as we've just been going through. Now on the next slide, you have the changes in the EPRA metrics. You see the changes that were desired by EPRA, which will be implemented as of 1st of January of this year. So we won't be talking about a triple net and simple net NAV anymore. The main difference is the fair value. So from now on, we will, therefore, talk about the NDV, the net disposal value, which will be the triple net, usually, NAV integrating the value of the fixed rate debt of companies. The main difference is the goodwill in companies. Like Icade, it is not material. It doesn't make a huge difference. Goodwill on the balance sheet, EUR 12.5 billion. So it's not a huge difference for us. So the NDV or triple net NAV for us is basically going to boil down to the same thing. The other metric proposed by EPRA is like simple net NAV, it's the net tangible assets, NTA, neutralizing, therefore, the effects that we may have had on occasion, the opportunity to use a transfer tax optimization adjustment as a result of the asset acquisition strategy. It's very close to the simple net NAV that we had. So on a pro forma basis, we will, of course, do the calculations. And you will see, for those 2 metrics, in fact, there'll be slightly negative, minus 1%. And then the next metric is the net reinstatement value. This one is the one that takes the postulate that we keep assets for a very long period. So from now on, we'll be publishing the NRV as well. So you see here the EPRA NDV on the next slide, and it is up by 1.2% over 6 months, including the distribution of the interim dividend for the first half. So excluding that interim dividend, it's an upswing of 3.8%, given the effect of the cash flow progression in the first half, the variation in the fair value of the fixed rate debt. We talked about that when we talked about the liabilities. Now the rates have tended to go down, of course, during the crisis, but corporate credits have made quite a progression. Corporate debt rates have progressed quite well. So the valuation goes down for our debt, and that is a positive impact on our NAV. And then you have a slight impact on the trend in value versus -- as you see. So excluding dividends, plus 3.8% plus 1.2%, if we take account but over a year, compared with June of last year, the growth was 3.3% over 12 months. So the NAV at EUR 92.2 per share, which is quite robust. So if you want something with our liabilities, average debt maturity, 6 years. We, of course, didn't issue any financial instruments in the first half of the year. Regarding the cost of the debt, slightly down, 1.49%. As you see, there was a fine issuance done at the end of last year for Icade Santé Healthcare, and it was a very attractive period indeed for borrowers. Then the ICR ratio is still as robust as ever, 5.2x, as you see here. So bank covenant is greater than 2. And LTV ratio, 39.3%, including duties. So the balance sheet structure remains very sound. Financing cost remains attractive. And to round it off, I should comment, perhaps, upon the intense activity that we saw with respect to our liability management during the crisis. It was a liquidity crisis, too, of course, because we had to manage huge problems to do with postponement of monies, so we had to make sure our cash flow would still be there to support us. And I'd like to take the opportunity to say that at the end of the first half of the year, we had almost EUR 900 million worth of cash, very sound. So we can get through the next few months with, what, a certain amount of comfort. And also, we decided to bolster our revolving credit facilities, even though we didn't need to draw them down during the crisis, we did nonetheless, renew and negotiate new credit lines for an amount of EUR 750 million. The net change is EUR 370 million, up and we have EUR 2.1 billion of outstanding amounts of RCFs now in total. So it's quite comfortable for us. Among these negotiations for renewal, we were really focused on what we call sustainable financing. How can we be totally in line with our purpose and our objectives to do with CSR? So we have at the green RCF, EUR 300 million, 7 years. This facility is connected with our goal to reduce carbon intensity of the Office Investment division by 45% between 2015-2025. And if this goal is not met, the additional cost will be paid to an association, having a positive impact on the environment. That's the new feature here. And another RCF we negotiated during the period is a 5-year, EUR 150 million, solidarity-based RCF, socially responsible. So at EUR 300,000 being allocated to research on COVID-19 vaccines carried out by Institut Pasteur, so to help them to, in the near term, find a vaccine against this virus. So this shows the confidence of banks in our group's business model. They remain by our side, the banks and to -- supporting us. And also, you've just seen also our focus on sustainable finance. And at this point, I'll give the floor back to Olivier.

[Interpreted] Thank you very much, Victoire. Well, by way of conclusion, you know that we have this exercise of setting out the priority areas for 2020. We've put these priorities on hold due to the crisis. We are not forgetting them as well within the strategic plan, of course. In the Office Investment division, there's been a slowdown in these proposals. And with respect to the investments in the pipeline, we'll see how the crisis will impact the volume and momentum. Now with respect to the Healthcare Investment division, we are ensuring further growth and international expansion. We are talking about some EUR 200 million earmarked in acquisitions. And we have other plans. We'll see whether we crystallize them by year-end. Now in the Investor Day, we presented to you the growth road map for the Property Development division. Of course, if you look at the number for the first half, you may have the feeling that we are going in the wrong direction. But our business activity is up 23% for the half year. So the growth road map that Emmanuel Desmaizières put together for 2020-2024 leaves us with a high degree of confidence. We'll see with the recovery plan, and we'll see that there'll be the reverse momentum starting in 2021 of projects with technical percentage of completion revenue growing by 25%. And we'll be keeping our priority focus on the low-carbon policy and focus. We'll see what the situation will be in the fall, but yes, tomorrow, more so than yesterday, it will be a key priority for our business operations. By way of a conclusion, I'm waiting for your comments, but we consider that we've weathered this first half year in a very resilient, robust manner for the investment divisions with very low impact, as you could see. And of course, the development division was impacted by the shutdown of sites, but the backlog and the signings put us in a situation of confidence, very much like our competitor who announced their numbers. And as Victoire has said, we've done what it took to reinforce our balance sheet and our liquidity position. So it is up to us. It is not up to engage in self-assessment or self-complacency. But we believe that we've put in good performance for the half year. Of course, we have not recognized all the impact of the crisis in the numbers for the half year. This is why I give you the outlook for the year. And the estimates for the year, so you can project yourself and anticipate all of the impacts, even though, for sure, there will be more uncertainty. And one uncertainty got better during the night, whether we would have a European recovery plan, positive news from the EU member countries now. What will be the real estate part of the recovery plan to be presented by the French government in September? So there will be these contingencies, but contingencies can be both negative and positive. Of course, we have to show a degree of caution, to take stock of developments, especially with respect to the economic crisis and its impact on the Healthcare divisions. You've seen there are only 2 transactions on spec, but we'll be leading 2 other on-spec transactions. And jointly with Emmanuelle Baboulin, we'll closely monitor market developments. But you hear lots of things. We hear that the rental business operations in late 2020 will be impacted by some 20% to 30%. This is what you hear in the press. But when companies are looking for savings, these type of assets will be scrutinized with great interest by most companies. Now the growth strategy in the Healthcare division was not pre -- were predefined for the COVID. But when you look back, we can be happy that we grew this Healthcare division in the Icade business portfolio and that we went and diversified it internationally, gives us a better distribution of risk and better stability with respect to generation of cash flows, and I hope the investors will give you the same premium they granted to health care-specific companies or 100% health care players, knowing that this share of the business will grow in our accounts. As Frédéric said in his introductory remarks, we have a strategic plan. We've showed resilience, but we can't ignore the impact of the crisis. And jointly, with the management line and Board of Directors, we'll be analyzing the situation very thoroughly to look at the current impact of the crisis on our strategic plan see whether it should be revised to which proportion. And all this analysis and insights will be presented to you in our November Investment Day -- Investor Day, sorry, and we believe that our strategic plan will remain in line with the purpose of Icade, which I invite you to reread, that is build low carbon, inclusive connected places where it's as many good places to work and to live. These will be our guidelines for the next few years. So indeed, we are resolutely optimistic. We gave you lots of info and data and insights on the would-be impact of the crisis. But jointly with the Board of Directors, we found it desirable to put our guidance on hold. Some will comment this, of course. Why is that? Well, there's still a high degree of uncertainty, which can be positive uncertainty, like the magnitude of the European stimulus plan or package, the change in the indexing indicators. We -- when we prepared our scenarios, the indices or indexing references were going downward. You can see the ILAT or INSEAD indices forecasting quite low and pessimistic assumptions. Now the uncertain environment for sure, means that we -- I'd rather push back our guidance for fiscal 2020 to when we'll be announcing Q3 revenue in October. And jointly with the Board of Directors, we state, and it's important for shareholders, our dividend payout policy, which will be very stable. That is a payout of some 90% of noncurrent cash flow, which helps us face up our obligations to pay out dividend due to the [ SEC ] obligations and dividend payout for fiscal 2020 should be quite stable year-on-year. So much for what we wanted to share with you. The presentation was a bit longer than was customary as we thought it desirable to go into the detail of how the COVID crisis impacted us, which is a very exceptional, nonrecurring item. But now, jointly with Frédéric and the ExCo members, we are available to answer your questions.

[Interpreted] [Operator Instructions] Now the first question is from Florent from ODDO.

[Interpreted] Yes. I had 2 questions. First would be on Healthcare. In as much as you've been working in positioning Healthcare over Office business, to what extent could this lead to an acceleration of your Healthcare development program development of Health Icade Santé, Icade Healthcare? Second question, regarding to your building -- property development. Considering that your situation considers in the second half, could you give us an indication of your trajectory for the second half?

[Interpreted] Well, Florent, first of all, I trust that you're doing well and in good health. Concerning the trajectory for Icade Property Development and again, of course, we can hope that we will not have a further lockdown or be receiving an imposition of further health care provisions on our work sites. You have the accounts for the half year and the forecasted impact for the full year that we gave you at the beginning of our presentation. So I would say that -- we there have the plan for the second half. Now there are elements which are not purely dependent on us, and that is in part of the impact of new health measures. But of course, this depends on the latest news. But we have assumed that our work sites, we're going to be able to operate with somewhat reduced productivity, but at a normal base center, 90% to -- compared to 100% before the crisis. But of course, this depends on there being no macro development around us. The second aspect is of your question is the recovery plan. Now you probably read, a few days ago, the announcement made by the promoters federation, who made some proposals to the government concerning what might be done both to help the development of construction in France. And this could have an impact for those of you who remember the impact of the crisis, 2008, the impact could be very massive, very quick. What will the government actually do? Well, we have some ideas. And our DNA, obviously, as you know, is relatively conservative, as we've seen in Slide 7. But we could still see some good news for Healthcare. It's an asset class that has shown its tremendous resilience. Now this obviously gives ideas to everyone. And for those of you who are monitoring the construction, property development data, you've seen that a number of constructions we've been developing in the health care business, and we have a real competitive advantage here in the acquisition process. I think, too, that we're extremely disciplined in terms of the profitability conditions that we apply to our investments. So I will summarize our question. Yes, we would like, no doubt, to do -- to be able to do more, but the market must be there. And we're not willing to run beyond what is reasonable now. I wouldn't comment on other people. I've seen some transactions with -- in the Nordic countries. Obviously, this isn't a transaction that would be reasonable for Icade Santé, Icade Healthcare. And clearly, what we are trying to do mainly, and we're very pleased with the transaction with our peer, we want to be able to discuss with the operators, to put forward technical know-how and expertise and the quality of our relations over the long-term with the operators and also the portfolios that we have. That's what we prefer. We don't only do that, but what we are observing is that the pipeline of discussions that we have, be it in France or internationally, is growing. Now will we be able to do more? Well obviously, we'd like to. But certainly, the Healthcare teams at Icade are working on this with a lot of energy. Another question over the phone?

Next question comes from Alvaro Soriano from Bank of America.

Yes. Just 2 question on my side regarding your capital structure. Any target of disposals for the year and any targets on loan-to-value? And then on the announced transaction with ORPEA, any pricing comments regarding yield? And when it's expected to be close in terms of cash outflow for Icade Santé? And last question here, a third one on the agreement with CDC. I guess the sales are not yet recognized in the volumes -- in the sales volume presented this morning.

You have 2 questions. So I'll answer to the last one. I confirm the figures of the transaction with CDC Habitat. It's not with CDC. CDC Habitat is a subsidiary of CDC. It's not included in the volume of sale for the first 6 months of the year. It's not in the turnover of the first month. It will be booked. It's -- we have a 40 different scheme with them. So it will be booked each time we will sign the notary deed. So it will be done through the -- or by the end of the year. The answer to your first question, and after the Xavier will answer to your second question. The answer to your first question, we are thinking about some disposal for the second part of the year, but we don't want to have too much pressure to make sure that we will close a transaction before or by year-end because clearly, the market, probably a little bit in trouble. Clearly, liquidity for core assets is still there. And we do think that for the Paris area, the volume of transaction by the end of the year will be probably quite significant. That cap rate should remain quite stable for core asset. So we will see if we have some opportunity to make some disposal. But again, we will reduce probably the volume of new investment in our development pipeline. Therefore, we have less need to finance an additional volume of new investment. So we could, if we think it's appropriate, reduce the volume of disposal. Having said that, LTV by the end of the year will depend and will rely on the volume of disposal, for sure, but should remain quite close to the figure that we have announced today. So around 40% transfer tax included is the guideline that we have. And the management and the Board, we don't want to change the financial policy of the company, whatever is the environment. For the second question, the closing of the transaction with ORPEA, Xavier?

Yes. So 2 answers to your question about the ORPEA deal. So first, about the level of yield. So it's in line with what can be seen in the market or within our portfolio. So to give a figure, let's say, around 5% and differentiated by asset. Concerning the closing dates, so it will occur between September and the end of November, depending on the completion of certain assets in the portfolio.

[Interpreted] I think there is an Internet question. On property -- Office Development, you have 21% of leases coming to the [ interested ]. Are you already having a request for reduction of the service areas and Flex office and have you any idea of the impact on these future negotiations?

[Interpreted] Well I'll ask Emmanuelle Baboulin to answer this question.

[Interpreted] So yes, we have 21% of [indiscernible] Now there's some that are part of a negotiation underway, certain helpful measures during the confinement period. And as a result, we were able to anticipate some of these renewals. And so we were able to set aside some of the rent against a break in the contract. So it's not yet been signed. It hasn't been announced, but it's partly of -- the part of the 21% that you mentioned. The others, with whom we can't really undertaken the negotiations, let's say that in that case, we are expecting a certain flexibility, as you mentioned, of about 10% to 15% of the total surface. And apparently, they might ask for a renewal for shorter firm period, shorter fixed period than what we might have expected in normal circumstances.

[Interpreted] So second question to -- from Pierre-Emmanuel Clouard. Do you think that the purchase option on the rest of the EQHO Tower will be exercised?