Icade (ICAD) Earnings Call Transcript & Summary

Hello, everyone. I'm particularly happy to be here with you at Icade's Half-Year Results presentation. The results are good, and even, very good. Given the current environment, it is a very strong performance. Before getting started this morning, I would like to recognize the hard work of our teams over the very busy first quarter for this year. The Board of Directors and I would like to thank them. Thanks to everyone's involvement, business was especially strong in each 1 of our 3 divisions in half 1 2021. Icade's business mix and the adaptable risk profile of our Office Property Investment, Healthcare Property Investment and Property Development business lines have once again demonstrated their ability to promote resilient synergies and growth in these challenging times. Olivier and Victoire will come back to this in a moment, but I would like to emphasize the Office Property Investment division's strong leasing activity and several major disposals, the Healthcare Property Investment division's continued expansion with its pre-IPO preparation process underway, the Property Development division's residential business which is trending up. As a result, our business are adapting to new markets' needs even though we are still gradually recovering from the crisis. For example, we remain committed to setting higher low-carbon goals by implementing the strategy that was presented to you last February. Our medium-term outlook remains unchanged, in line with the strategic plan approved at the end of 2020 and wholly consistent with our Purpose, which is now included in the preamble of Icade's Articles of Association. This Purpose has been an asset for us. It has helped us stay on course. Our teams have been able to adapt themselves to the unprecedented COVID-19 crisis, as evidenced by our half year results. As you will see, they are better first half 2019. I thank you for your attention, and I will now turn it over to Olivier who will present our results.

Thank you, Frederic. So good morning, everyone. So we are meeting this morning one more time through video. Hopefully, next time, we will be able to welcome you here at Open, the Icade headquarter. So I am also with Victoire Aubry, our CFO. And after our presentation, we'll have a Q&A session with the entire Executive Committee of Icade. So please don't hesitate to send a question to us by e-mail or by phone. So let's start right now with the result, figures and KPIs. I'm now on Slide 7. While self-evaluation is not my favorite exercise, but I think it's fair to say, as Frederic has highlighted, that Icade has been very active, not to say, successful during the first 6 months of 2021. And our 3 business lines have performed very well this first half of the year, showing, if necessary, the solidity of our business model. Let me remind you that we're still in a sanitary crisis most of this period. We had a third lockdown in France that started in April. And even if it was a smooth lockdown in comparison to the 2021 lockdown, when we had to fully stop our construction [ style ], It is still quite difficult to organize visits for office or health care premises, still difficult to welcome our residential clients in marketing suites. As you know, the sanitary situation is not entirely stabilized. But our half year result prove that Icade is really able to cope with COVID-19 crisis. so let's look at our KPIs. And let's start with the Property Investment activity, Offices and Healthcare. In terms of gross rental income, we have an increase of 3.5%; like-for-like, plus 0.5%. Total rent amount to EUR 348 million. And we have a very dynamic EPRA earnings, EUR 2.43 per share, which is a significant growth of plus 5.9% per share. Regarding the portfolio valuation, it's almost stable and stands at EUR 11.8 billion. Our financial occupancy rate for the Office portfolio stand at 90.2%, a slight decline on a like-for-like basis. We will come back to that. In our view, these metrics illustrate the more than strong resiliency of our Property Investment activities. Let's move now to Property Development with Icade Promotion. The very good news of this first part of the year is that we didn't have, as we had last year, shutdown on our construction sites. Therefore, we were able to book our entire revenues. Sales are up at EUR 536.3 million, which is an increase of plus 79% compared to 2020, and maybe more important, plus 38% compared to the first half of 2019. The cash flow of Icade Promotion is now back in positive territory at EUR 10.9 million. Last KPI that shows the positive trend of the business is the backlog that stands at EUR 1.5 billion, plus 2.1% compared to the end of last year. On the liability side, we have also very good news. The cost of debt keep decreasing at 1.35%, and it's a record low level ever for Icade. Now the average debt maturity exceeds 6 years at 6.4 years exactly. And our loan-to-value ratio has started to decline at 39.8%. So at group level, our EPRA NDV per share stands at EUR 86.7 per share, slightly up by plus 0.8%. And our net current cash flow per share is at EUR 2.57 per share. So it represents a double-digit growth at almost plus 18% compared to 2020 and also plus 9% compared to 2019. With all these figures, again, we really do think that it is fair to say that 2021, first 6 month, have been more than satisfying for Icade. I'm now on Slide 8. Here, I would like to highlight some of the key achievements of Icade for this first part of the year, which has been a very dynamic period. Regarding our Office Property division, I would like to focus on the very dynamic portfolio rotation. We have completed 3 significant disposal for a total of EUR 462 million, and it is significantly above NAV, at the end of December 2020, plus 9.8%, and also slightly above valuation at the end of December 2019. In terms of acquisition, we are and will remain opportunistic. We have closed 2 value-add acquisitions for a total EUR 243 million, 1 is announced this morning, and I will come back to it in a few minutes. Even more important, we also had a very strong leasing activity during this period. And we announced this morning also 2 significant letting transaction on 2 project of our pipeline. I will come back to this transaction. Regarding our Healthcare Property division, it is a still-growing portfolio, more than EUR 200 million of new investment during the first part of the year. And we have also announced, the 7th of June, that subject to market condition, we will go for an IPO of Icade Santé by the end of this year. Xavier Cheval will give you more detail about that in a few minutes. For Icade Promotion, our development subsidiary. Thanks to a very strong demand for residential, as already said, a revenue growth of plus 79% compared to 2020 and plus 38% versus the first part of 2019. Important for the future, new orders are up by plus 20% at 2,613 units, an increase which is significantly higher than the market level. Finally, on the liability side, let me remind you, the successful bond issue in January, a 10-year EUR 600 million bond with an annual coupon of 0.625%. So assuming we are close to the end of the COVID-19 crisis, we do confirm that Icade is accelerating to deliver our strategic midterm road map. So some more details now on the performance of each of our business line. So let's start with the Office Investment division, and I am now On Slide 11. The top 3 figures are reflecting the solidity of our rental office portfolio. 72% of our tenants are large corporates, listed companies or government agencies. Rent collection rate is still very high, nearly 97%; and cost of default is still very low, below 1.2%. In terms of gross rental income, it's an increase of plus 1.8% with a total amount of rent that represents EUR 190 million, and it's a like-for-like growth of plus 0.9%. And with a total of 82,000 square meters signed or renewed since January, which represent more than EUR 15 million of net rental income, our asset management team has been, again, one of the most active on the market. And if our occupancy rate that stands at 90.2% slightly decline, let me highlight that the balance between new tenants and departure is positive. In terms of headline rent, it's plus EUR 5.3 million. And we will also benefit from longer leases with a weighted average lease break at 4.2 years. Those figures do not take into account the 2 major letting transactions, totaling more than 30,000 square meters that we are announcing this morning. Let's go to Slide 12 to we say a few more words on these 2 significant pre-letting transaction. First one, it's on the first building, our ongoing project in Issy-les-Moulineaux, not far from Open, our headquarter. We have signed 8-year lease on 14,000 square meters with a public tenant, PariSanté Campus. And we have also signed a 9-year lease for 16,000 square meters, again, a pre-let transaction on our EDENN project, a state-of-the-art building located in Nanterre close to La Défense. It's a location that we know very well, and we have several office building there, including Origine and West Park 4 that we have completed this year. The tenant for EDENN will be Schneider Electric for the French headquarter of the group. To pre-let a large office scheme is clearly the DNA of Icade. And our office building meet perfectly the requirement of large corporates for their premises. I'm now moving to Slide 13. A few word now on our office development pipeline. Still a very strong driver for value creation. And look what we have achieved in 2021. We have completed 3 office schemes, representing more than 90,000 square meters and EUR 36 million in annual rental income. This includes Technip Energies' new headquarter, Origine, nearly 65,000 square meters of office space in Nanterre, a very attractive and dynamic location. Another example is the new Latécoère headquarter, a 13,000 square meter office building in Toulouse and fully pre-let. And let's finish with West Park 4, also located in Nanterre and also pre-let. So the 3 major projects represent a total investment of EUR 565 million for Icade and your value creation at completion of EUR 192 million which means a development margin of nearly 34%. And our current pipeline represents still EUR 1 billion as of the end of June, and it's already pre-let at the level of 46%. I'm now on Slide 14. As I said earlier, asset [ rotation ] within our portfolio has more than actively resumed. We have announced during our Q1 result, 2 transactions in Villejuif and Millénaire 1 in Paris. And we announced this morning another transaction on the Silky Way building located in Lyon for EUR 138 million. Total disposal since the beginning of the year represent more than EUR 462 million. And we have completed the transaction with a premium of plus 9.8% to 2020 NAV, and maybe more interesting, plus 3% compared to valuation at the end of 2019. In terms of acquisition, we have also completed opportunistic investment for a total amount of EUR 243 million, 2 transaction. This includes the acquisition of a building called Prairial in Nanterre for EUR 60 million, right next to a La Défense in an area, again, that we know very well. And the other one is the acquisition of Équinove. And I'll give you further detail on the coming slide. And these 2 projects having comment that they have first-class tenant and a significant value creation potential through redevelopment in the medium term. Slide 15 now. Here, we have some detail about the Équinove project. So those 2 large office buildings represent a total of 64,000 square meters, and they are fully let to Renault. And we have an appealing cash-on-cash yield of 8% since inception. And the potential of value creation will be unlocked through a future redevelopment into a residential scheme when Renault will leave the building. And it's a good example of synergy and strong complementarity between 2 of our business line. On slide 16, now you have the main KPIs of our office portfolio. And these key metrics are quite stable compared to the end of last year, and they are reflecting our operational solidity. Let's move now to slide 18, the second business unit, which is the Healthcare division. As we said earlier this year and the year before, the impact of the COViD-19 crisis has been very limited on this asset class. The figure confirm the very positive trend and a steadily growing business for Icade Santé. Our gross rental income amounted to EUR 157.6 million, up by plus 5.6%, and it's 0.6% like-for-like growth. We continue to benefit also from a very solid portfolio of tenants that are long-term committed. The average lease break is 7.2 years, and the occupancy rate is 100%. Slide 19 now. So growing in France and abroad is, as you know, 1 of our key objectives for Icade Santé. And our total investment on the first half amount to EUR 217 million, including 40% of that abroad. In Europe, Icade Santé has completed its first acquisition in Spain with a preliminary agreement with the Amavir Group to acquire 2 nursing home in Spain for EUR 22 million. So this is a new milestone in the Icade Santé international expansion strategy. The total amount invested outside of France since the end of 2018 is now close to EUR 740 million. So the facts and figures that you have on this slide illustrate the very favorable outlook for Icade Santé. Icade Santé delivers in a very disciplined way its very ambition growth road map. And Xavier Cheval will come back to that in a few minutes when he will present the project of IPO for Icade Santé. On Slide 20, you have on this slide, all the metrics for Icade Santé portfolio. And this growing portfolio is by far the largest, close to EUR 6 billion; and the most financially appealing. With a cash-on-cash yield at 5.1%, it's the most appealing health care real estate portfolio in Europe. And again, Xavier will come back to that. Now on slide 22 for our third business line, Property Development with Icade Promotion. Some figures that I have already mentioned. So the growth for the revenue for the first part of the year, it's an increase by plus 79%, up to EUR 536 million, and this is also a growth of plus 38% compared to 2019. It is clearly driven by the residential segment with 2,600 new orders for residential apartment, a figure up plus 20% compared to the same period last year and plus 16.5% compared to 2019. Again, the very good news of the first part of the year is the fact that we had no shutdown for our construction site this year. Now looking at page 23. I would like to emphasize 2 key messages that illustrate the strong dynamic for our Property Development business. On one hand, I want to underline Icade's capability to meet the new market need, and we are also able to increase and to renew our offer by re-spending to new urban practices and lifestyle. To illustrate this, let me mention the launch of our subsidiary, Urbain des Bois. Urbain des Bois will develop real estate schemes that are both participative and very low carbon. Let me highlight also the fact that we put on the market more than 3,000 apartments during the first 6 months of the year. which is plus 48% compared to last year and plus 36% compared to 2019. On the other hand, on the right part of the slide, you have our main KPIs illustrating the fact that this activity has still a growth potential that remains unchanged. We have a growing housing stock, plus 7.1%, at more than 4,400 units; a backlog that stands at EUR 1.5 billion; and a potential total revenue coming from the residential portfolio of close to EUR 3 billion. And our medium-term revenue potential is close to EUR 7 billion for Icade Promotion. So all the indicators are well oriented, and we are very confident that we will deliver our 2025 ambition which are EUR 1.5 billion in terms of revenue with a margin of 7%. So I'm now handing over to Victoire for the detailed financial results. Victoire, the floor is yours.

Thank you, Olivier, and hello, everyone. By way of introduction and in echo with Olivier's words, I would really like to emphasize the very good financial performances of all our businesses in this first part of the year. We may see it by getting into details of the income statement of our different divisions. Let's start on Slide 26 with a focus on our Property Investment business lines. We are talking here about Office division and Healthcare's one. The key message to have in mind is that EPRA earnings for those divisions, which is EUR 2.43 per share, it is an increase of 5.9%, a very robust and reflecting the dynamic growth of these activities. Our net rental income goes up by plus 4% on a year-on-year basis at EUR 333.8 million. Another important indicator is the improvement of our net gross rental income ratio reaching 95.9%. We clearly improved on that during the first half. I also want to underline our attractive EPRA cost ratio. It stood at 14.5%, including vacancy costs. A quite low-level ratio that reflect the good management of our operational and structural costs. The ratio only increased by 2 points even though the turnover increases significantly. These figures are clearly reflecting the good performance of our Property Investment business lines. In addition, also including the improvement of financial costs over the period, Our EPRA earnings reached a level at EUR 2.43 per share, as I said before, plus 5.9% compared to June 2020 and already back to the level of 2019, taking into account the increase of shares during the period. While the Office division is very resilient and solid, I will come to that in detail shortly. The part of the Healthcare division continued to grow during this period and has provide for 42 [ up ] points. Let's jump on Page 27. On this slide, I want to draw your attention on the strong performance of both business lines, Office and Healthcare. First, the financials results of the Office Property division remains sound and healthy. The main figures illustrate the resilient performance and the very dynamic commitments of our asset management team. Gross rental income grew by 2.4%, supported by significant deliveries during the half year, including Origine, Fontanot and Latécoère, as Olivier said earlier. On a like-for-like basis, gross rental income is up 0.9% with a plus 4.6% growth. For our business parks subdivision, the net rental income grew by 1.5%, a more limited growth, mainly due to the sale of fully leased assets. As I've explained before, and taking into account a good control of operational cost and improvement in financial cost, the adjusted EPRA earnings increased at EUR 105.5 million, up 2.7% compared to 2020. Now in terms of Healthcare Investment division, all the indicators are well positioned and reflect the continuum -- continued momentum. We have a double-digit growth in EPRA earnings, plus 12.1%, to EUR 75.5 million. In terms of gross rental income, it grew by 5.6%, stimulated by our expansion in France and abroad, with net rental income, EUR 156.2 million, reflecting a high net gross rental income ratio at 99.1%. To recap, our investment activities have remained dynamic, thanks to a very resilient activity of our Office Investment division and growing performance of our Healthcare investment one. We can now just switch to the results of our Property Development activity, the third business line of the group. I'm on Slide 28. As Olivier previously said, the business rebounded here as we expected and in line with our Q1 results. Economic revenues for the first half grew by 78.6% year-to-year to EUR 536 million, a 30% -- 38% growth versus 2019. This valuation includes, of course, a catch-up effect but also a strong commercial dynamic over the last few months which is bearing fruit. Revenue from the residential segment rose by 81%, EUR 458 million, that represents 85% of the total activity. This segment is also driven by a strong demand coming from both individuals and institutional investors clearly back in the residential market since mid-2020. I also want to highlight that we improve our operating margin at 5% on average, even 5.2% in the residential segment. And last but not least, our net current cash flow is back in positive territory at almost EUR 11 million. I remind you, it stood at minus EUR 11.9 million in the first half 2020 due to the construction shutdown. To conclude on that activity, and on the back of a demand that remains structurally high, we are fully ready to address the challenges and are in line with our 2025 ambition roadmap. What are now the key point regarding the group net current cash flow? I'm on Slide 29. We are actually seeing a sharp rebound of the net current cash flow and share, up 18% year-on-year at EUR 2.57 per share and up nearly 9% compared to the first semester 2019. We can say that this is a strong performance on a half year basis. This growth is obviously driven by the performance of our 3 business lines as we saw before, and perhaps even more, the positive effect of the recovery of the Promotion, whose result, I repeat, have rebounded sharply after the crisis. The level of the net current cash flow clearly reflects our solid business model. This slide, I will have a word on the scrip dividend option, a success with an 85% subscription rate, and therefore, a demonstration of Icade's attract-ivity that had a marginal impact on the indicator per share, allowing at the same time to reinforce equity capital. Let's jump on page 31. On this slide, I would like to share a few comments regarding valuations, a key topic in the current period. We have read a lot of things, but nothing is better than concrete figures. Let me first remind you the valuation process at Icade, unchanged since 5 years. We conduct double external expertises on main assets, around 60% of the portfolio, with expert rotation. Last one occurred in 2019. And finally, as Olivier said, disposal program in the best -- is the best illustration of the soundness of the valuation of the portfolio. Having said that, a few comments regarding this slide. On the left side, on the Office Investment activity, it's a minus 2.4% change on a reported basis due to the effect of disposal, minus 0.7% on a like-for-like basis. This slight decrease mainly reflects cautious expert assumption on existing assets, longer time for commercialization and lower level of indexation. Notice that those figures also include value creation of the asset delivered during the period. Now concerning Healthcare division in the right side. The valuation of the portfolio had a progression of plus 5.9% on a reported basis and up 3.4% on a like-for-like basis benefiting from a yield compression at an average of 20 bps. This compression concerns both short and long stay, MSO and senior housing. It also highlights, it's necessary to recall, the very positive outlook as well as growing appeal of the sector. Let's go right now on Page 32. This slide is good summary of what I presented to you before, the evolution of NAV -- actually, the NAD -- NDV, net disposal value. What should we receive from these figures? First of all, these metrics refer -- reflects our strong operational performance. The net disposal value, NAV, is at EUR 86.7 per share after this dividend distribution, to be compared with EUR 86.1 at December 2020. It is a progression of plus 5.4%, excluding the dividend. Notice that the property valuation, including development, hold up very well with plus EUR 1.9 per share contribution. I'm now on Page 33. We have included here a new slide in order to better formalize the whole portfolio managed by Icade, first, and to reflect how important the Healthcare part is for Icade, and as a direct consequence, how important our IPO project is for Icade in term of value creation beyond the significant contribution of the business line in the P&L of the group. On the left side, you have the total valuation of our investment portfolio on a 100% basis at nearly EUR 15 billion end of June. As of June 2021, Healthcare portfolio was valued at EUR 6 billion, including duties, reflecting a EUR 1.5 billion expansion since 2018 and a 40% contribution. In the meantime, our Office Investment portfolio remained stable, including a net [ investment ] position over the past 4 years. Teams are focused on asset rotation and slowdown in speculative projects since 2020. This is a good illustration of the adaptability of our business model, taking into account the economic cycles and thus adapting our risk profile. On the right side, you have a concrete consequence on the NAV side. You find the breakdown of the NAV, NDV on a group share basis. I was just saying on the previous page that our NAV is at EUR 86.7 per share compared to December 2020. You have here a visible illustration of our exposure to the Healthcare business. On this occasion, we specify at the bottom of the slide, the NAV of the Healthcare division on a 100% basis at EUR 4.1 billion at end of June. Turning now to the question of liability. I'm on Page 35. It goes without saying that our financial structure is still very robust. As we have repeated before, we have a very active and dynamic 2021 first half that onward to keep optimizing the management of our balance sheet. Let me insist on a few points. Icade has successfully issued in January a 10-year EUR 600 million bond with an annual coupon of 0.625%, a lower coupon ever for Icade. Those fund were mainly used to optimize the funding structure with early redemption of 2 bonds maturating in 2021 and 2022. Our continued and proactive management allowed us to maintain very attractive cost of debt that continue to decline at 1.35% and longer average debt maturity at 6.4 years. We still benefit from a solid liquidity position that merely covers 5 years of principal and interest payments. I will finish on this liability part with 4 metrics that show how sound our financial structure is. I'm on Page 36. As I said, our average debt maturity is above 6 years, and we reached an all-time low point in terms of cost of debt at 1.35%. Our ICR did 6 multiples once again. And our net debt-to-EBITDA is under 10 multiples at 9.8x. And finally, you can notice that our LTV ratio had begun to decline and stand below 40% at 39.8%. Finally, I'm happy to share with you we received last Thursday from S&P, the confirmation of our rating, BBB+ stable outlook. I have finished with the presentation of the financial result. We had given an appointment at the beginning of June to give you more detail on the IPO of Icade Santé. So I will leave the floor to Xavier, who will give you more details. Thank you for your attention.

Thank you, Victoire, and good morning, all. We want to take advantage of the presentation of Icade's semiannual results to give you more color on Icade Santé on the eve of the IPO of the company. So I'm now on slide 38. And first, I would like to underline a key message. Icade Santé contemplated IPO is designed to confirm Icade Santé as a leading pan-European platform for health care real estate. That's Icade Santé's strategy, and that is Icade's ambition for its subsidiary. Therefore, we have revised upwards our growth ambitions with a new EUR 3 billion investment target by 2025. I will detail that in the next slide. To support our objective and fund these investments in the short and midterm, the terms and conditions of the IPO as of the date of this presentation are based on a primary offering of EUR 800 million. There might also be a limited offering with secondary shares to obtain a free float of around 15% to 16%, in line with set regime constraints. These features of the offering will obviously give us a strong investment capacity in the next 5 years. They will enable Icade Santé to reduce leverage and strengthen our balance sheet, and they will provide capital for new projects or cash acquisition. In a word, the IPO will greatly increase our financial flexibility. On the governance side, it is important to make clear that Icade intends to remain the controlling shareholder of Icade Santé post-IPO with a long-term commitment to its subsidiary's growth plan. As such, Icade Santé will remain a major contributor to the group's performance, far above 30% of the group net current cash flow and net asset value based on June figures. At the end of the day, I truly believe that the IPO is an opportunity for Icade Santé and obviously for Icade as well. To dig further into this topic, I will specify the 2021 guidance and 2025 outlook for Icade Santé. So let's start on Slide 39, with strong medium-term growth outlook in the perspective of the IPO. We think it is timely to revise upward our ambition of investments with a new target of EUR 3 billion by end of 2025. This represents an average annual volume of around EUR 600 million. An indicative allocation is shown on the top right-hand corner with approximately 60% international and 40% France, but also 70% long-term care and 30% acute care. That results from our proactive diversification policy outside of France. And indeed, we are very active, as you can see on this slide. As of today, our pipeline of projects launched or yet to be committed stands at close to EUR 500 million. And acquisitions subject to an exclusivity or framework agreement stands at currently around EUR 350 million. But on top of that, we have, on a rolling basis, a further volume of opportunities under review for an amount ranging from EUR 600 million to EUR 1 billion. On Slide 40, we provide you with detailed guidance for the 2021 full year period as well as KPIs for Icade Santé for the post-IPO period. So here, we consider a combined version of Icade Santé as it will be structured by the day of IPO. At that point, Icade Santé will then encompass all Healthcare Property Investment activities, so for France, Italy, Spain and Germany. For 2021, the gross rental income will stand at EUR 380 million, up 5.5%. And EPRA earnings is expected up 6% at EUR 251 million. For the period post IPO, so by 2025, we are aiming at an average volume of investments reaching EUR 600 million. And for the current year, we expect to land between EUR 450 million and EUR 500 million, but more is better. The CAGR for EPRA earnings is expected at plus 6%. And EPRA cost ratio will be around 9% to 10%, so a level that is very efficient compared to our peers. The target LTV ratio is set at 40-plus percent, so 40% to 42%. And finally, the envisaged dividend policy corresponds to a minimum payout ratio of 85% based on EPRA earnings. So you can see that we count on delivering growing and reliable cash flows with a listed Icade Santé. I'm now handing over to Olivier for the conclusion. Thank you.

Thanks, Xavier. So let's now go back finally at the level of Icade Group. We, as we usually do, give you an update on our priorities for the current year. So I'm now on slide 42. And those priority remain the same compared to those announced in February 2021. And we do think they are well underway. I'll remind you them briefly. With respect to the Office Investment division, the priorities are the asset rotation and the value creation deriving from the office development pipeline. For Icade Santé, the priority is further growth and international expansion and the preparation of the IPO. The priority for Icade Promotion, our Property Development business is still to increase revenues and to achieve a higher margin. On CSR, it's the acceleration of our low carbon strategy with notably the launch of our subsidiary, Urbain des Bois, at the beginning of 2021. And finally, the last priority, the operational implementation of our Purpose. In all of our activities, it is a clear priorities for 2021. So now I'm on Slide 43, and let's conclude this presentation with the financial outlook for 2021. So given the good and strong performance of the first half of the year and the transaction already announced or secured, we are in a position to raise the 2021 guidance as follow. 2021 net current cash flow per share is now expected up at plus 6%, excluding the impact of 2021 disposal as well as the impact of the dilution deriving from the scrip dividend; which means a plus 3%, including the impact of the significant disposal of the year. So this guidance is still subject to the health and economic situation not worsening significantly, which is not the case for the time being. And the 2021 dividend will follow the same trend. It will be up by plus 3%. So this level of dividend reflects a payout ratio of 83%, which is more or less the same level compared to 2020. So thank you for your attention. and we are now ready with the Executive Committee to answer your question. Thank you.

Florent Laroche-Joubert from ODDO BHF.

Congratulations for your strong results. So I will ask 3 questions. So if I may. So maybe the first question on the offices and the leasing activity on your offices. So would it be possible to [ transmit ] more color on the reduction on the rent you have signed? And maybe also to have an update on the percentage of break options that should still need to be secured by the end of the year? So -- and the second question, could you please tell us if you contemplate to do more disposal in offices by the end of the year? And maybe my third question will be linked to the IPO of Icade Santé. So just to confirm, so what will change for shareholders of Icade with the IPO in terms of waste profile between your 3 business lines? Thank you very much.

Thank you for your -- we have some -- thank you very much for your questions. So Xavier will answer the third one; Emmanuel, the first one; and I will answer the second one about more disposal by the end of this year. As we announced at the beginning of the year, we have in mind a volume between EUR 500 million to EUR 600 million. As you could have seen, we have already closed EUR 462 million, which means that we will do probably a little bit more. We want to remain flexible on disposal, no pressure on the disposal plan, for sure. And -- but maybe more important with your question, it's the future disposal that we may close by the end of this year are already included in our guidance. Xavier, do you want to answer the question on Icade Santé. And after, Emmanuel, on break option and reversion?

Yes. So about the impact for Icade of the IPO of Icade Santé. Overall, Icade Santé will remain consolidated -- fully consolidated into the -- Icade's financials. So it should remain a risk profile for the mix of activities for Icade, from Icade's perspective, very close to what it is today. But you get the valuation of -- the full valuation of Icade Santé within Icade.

Maybe an additional comment on the answer given by Xavier. In terms of risk profile, we don't see any major shift or change in the risk profile of Icade after IPO because for sure, will be a little bit diluted, but the company will be larger and bigger. So therefore, we will be able to utilize this to capture the same amount of the cash flow in terms of group share even after the IPO. So -- and we have a strong -- as Xavier described, a stronger acquisition plan over the next 5 years. So therefore, we do not see any major change in the risk profile of Icade even after the IPO. Emmanuel?

So about the leasing activity and the break, we signed and renewed all of the leases at the same level in line -- in perfect line with ERV. And we didn't see any reversion for the moment in any sectors of our portfolio.

Okay. And maybe a comment on the break option?

[Foreign Language]

So we have 25% of break option, and we already discussed with all the tenants to renew the leases in the next month.

[Operator Instructions] The next question comes from the line of Véronique Meertens calling from Kempen.

A couple of questions from my side. You mentioned the dividend guidance, so the 3% growth is expected. But you also mentioned that the payout ratio is in line, plus there's distributions part of the gains from disposal. So I was wondering if you're also guiding for plus 3% impact on NCCF dividend than higher than 3%. That was the first one. And maybe the second question is, do you see or expect any difference in terms of leasing activity and discussions now that the delta variant of COVID is causing new restrictions? And lastly, at the full year results, you say that the EPRA NTA issued primary indicator for NAV while in this presentation and also the results, there was a large focus on NDV. So I was wondering if there was a specific reason for that.

So thank you for your question. The first part, it was really difficult to hear you. So if somebody could repeat and Victoire will answer the second part of the question about LTV.

So you mentioned a dividend increase of 2%, and you mentioned a payout increase as well. Will you be able to maintain the level to 3% as you have indicated?

The dividend policy? Yes. Yes, of course. It's fully relevant to confirm our guidance on the dividend side after the [ reducement ] of the guidance on the net current cash flow. So it's fully in line. Perhaps a few comments regarding the -- I believe I understand your question regarding the difference between NAV, [ NTE ]; and NAV and NDV. So we focus, end of June, on NAV and NDV. But also, we always give you all the figures in each of our presentations. So you have in the slide, we can say the NDV, if you want to catch up the level of NDV, it's a slight decrease, 0.8, on the NTE as we disclose it end of 2020. And on the NDV, as we said on page -- it's always -- sorry, I will give you the exact -- 32, 32 on NDV. It's a slight increase because it includes the valuation of the debt. So that's why we disclosed sometimes NDV, sometimes NTE, but you always add all the figures in the presentation.

Okay. Maybe to repeat my first question because I don't think it was completely clear. So you mentioned a 3% increase in dividend coming from the same payout ratio, but also distribution as a part of the gains. But since the NCCF is over this guidance with a 3% increase, if you top that up with the distribution as part of gains on disposals, wouldn't the dividend be up more than 3%?

No, I think that as of today, that's our dividend policy to have. And it's the same dividend policy since now years. We have a dividend, which follow more or less the same trend as the net current cash flow per share. Last year was a bit specific as we were requested by the French government [indiscernible] like this, to reduce dividend. It was the case for all companies and corporate. So over time, we will follow the growth of the net cash flow per share. Our guidance for cash flow per share for this year is now, including the impact of major disposal, plus [ 3 ]. And this also takes into account the small dilution deriving from the scrip dividend that we have made this year. So I think we're very consistent. And the comment -- the technical comment or the tax comment that we've said is that payout ratio will be more or less 83%. And we will distribute a part of the capital gain deriving from major disposal. It's a request from the -- with the SIIC regime, which is a specific tax regime for REITs in France. We have to distribute 70% of the capital gains within a period of 2 years. So it means that we are -- really the capacity to distribute such a dividend, and that will be the dividend for 2021. And part of the capital gain for sure, won't be distributed this year. Let's see in 2022, how we will manage the dividend policy, but the policy for 2021 is really is really clear. Question by phone? Okay.

Who's next?

I think it's from Barclays. We have a question by e-mail.

Three questions from [indiscernible]...

Bank is down 20% like-for-like this half year?

Okay. First question, Antoine, do you want to answer -- or Emmanuel?

Now this contraction is, in fact, is a 20% contraction that is a reflection of the caution...

[Foreign Language]

Which are concentrated, these reserves. And in partnership with the territorial collectivities that are concerned, we have projects that are ready to be instructed for some of those who are ready to be launched starting next year or the following year with a proportion of residential operations, which will enable to have a certain diversity and answer to the needs and demands in terms of buildings, housing buildings. So we have a lot of housing in our reserves.

EUR 129 million, and the total portfolio represents EUR 8 billion. So this evolution is a very small part of the portfolio.

Second question from Pierre-Manuel?

[Foreign Language] Do you have...

Second question, in fact...

Orders for this year? Are you expecting a recovery of building permits before the end of the year?

Emmanuel Desmaizières from Icade Promotion will answer the question.

[Foreign Language]

So we started off for the first half of the year, we had more than 40 starts cited an increase in 2020 and 2019. And we expect a second half that should be dynamic for the sales launches even though we expect like all the industry, a certain degree of caution by the authorities in issuing building permits. Insofar as this happens, we have acted. When we look at this market sequence and looking, in fact, at the development aspects, we have more than 5,000 accommodation units equivalents. When we look at compared to 2019 in the first half of the year, which means we should have more building permits and offset the delays in deliveries or the reductions of -- by our native representatives, for example. So we're expecting a dynamic second half as a result of a strong solvent demand.

No, there is no short question. So we have another one on the line...

We have no further questions coming through on the phone line.

No question? I will be more than happy to answer if there are some more. By e-mail or by phone -- one question by phone.

I was just wondering if you could reconcile the positive 0.9% like-for-like rental growth in offices and business park and the declining like-for-like occupancy rate?

Thank you, Emmanuel, could you answer like-for-like growth, business park and offices?

Occupancy rate?

And occupancy rate. Antoine de Chabannes, responsible for portfolio management, will answer the question.

Regarding the like-for-like growth in rent, it's mainly due to -- is positive plus 0.5% and on the Office Investment division, and it's mainly due to the business park division impacted by the Pulse location last year. And regarding the occupancy rate, it's stable if you compare it to the last quarter, but a slight decrease -- there is a slight decrease for the beginning of this year due to the departure of [indiscernible], which will be a new project in our pipeline soon.

Thank you, Antoine. For the time being, I think we have no more questions. Final call? No, thank you very much for attending this presentation. And probably, we will have another meeting in end of September, beginning of October for the IPO of Icade Santé with Xavier. Thank you very much for your attention.