Icade (ICAD) Earnings Call Transcript & Summary

Hello, everyone. Together with Icade's entire Executive Committee, I would like to thank you for being here this morning and welcome you to the Icade Hub. It's a real pleasure to see you again in person, given the ever-changing health situation we are facing once again, which make us appreciate much more the ability to meet you in person -- with you in person. We would also like to acknowledge those who were not able to be here but are attending remotely across Europe. The COVID-19 crisis may not be completely behind us. All the European countries are going into lockdown again, and we must observe necessary health measures more than ever. So that being said, despite the current COVID-19 health and economic crisis, we can recognize and celebrate the resilience of Icade's business lines and the health of its balance sheet. Once again, this year, our business mix and the expansion and adaptable risk profile of our Office Property Investment, Healthcare Property Investment and Property Development divisions have enabled Icade to stand out as the economy recovers from this earth crisis. As such, I would like to thank all of our Icade teams and 1,200 employees who worked also to stay on track and achieved great operational success this year. Olivier and the Executive Committee will come back to this later in more detail. The Board of Directors and I lend out full support to Icade's management and have confidence in their ability to continue and further efforts made in 2020 and 2021. To conclude this brief introduction, I confirm that the Board of directors will review Icade's strategy, as it regularly does, to ensure that it is in line with the latest market development. While maintaining the enhanced 2019-2023 course, we will be particularly attentive to any opportunities that may arise as the economy emerge from the crisis. We can already reaffirm that Icade is in a position to maintain its growth objective for its 3 divisions. This is particularly the case of our Healthcare Property Investment division, which has the potential liquidity event scheduled before the end of 2033. I thank for your attention. I will turn it over to Olivier.

Thank you very much, and good morning, everyone. So yes, I do confirm it's nice to see you again here at Open. And I'm very happy to return to the pre-COVID format of our Investor Day. So welcome here at Open, the headquarter of Icade. For sure, some of you are still with us through video, so welcome also to those that are behind their screen in Paris, London or Amsterdam. So the program of the day, it's a presentation of about 2 hours by some of the ExCo members with a Q&A session at the end of the presentation, then the launch and the visit of our last office development, Fresk, which has been delivered at the end of September. So as we have done since 2015, this Investor Day is, for Icade, the opportunity to provide you with an update of our strategic plan and also of the impact or not of the COVID-19 crisis on our different activities and also to elaborate on opportunity deriving from the post-crisis environment and also on our medium-term outlook. So let's start and let's move to Slide 8. So as a brief reminder, this slide is exactly the slide that was presented during the Investor Day as a conclusion last year. It is the executive summary of what we wanted to implement over the next 3 years: Resumption of asset rotation, the revised development pipeline with more pre-commitments, the significant growth of our healthcare portfolio, to working on residential development on part of our land bank and also the continued expansion in residential property development. In fact, all those actions were a way to adapt our strategy and our business mix to the current situation. I also told you last year that our 3 business lines were ready to seize the different opportunities that are deriving from the crisis. And I do think it's fair to say that it's exactly what we did in 2021 and what we will continue to do. I'm now on Slide 9. So before to talk about the future, I would like now to very quickly go over all the key 2021 achievement, starting with the Property Investment division. So regarding our office portfolio, 2021 has been definitely a record year in terms of new leased space in offices with 217,000 square meters. And this quite impressive figure includes, and Emmanuelle will elaborate shortly on this, new signature acquisition and the 4 significant 2021 deliveries. Again, it's for Icade a record year. With the volume of disposal of more than EUR 500 million of mature assets in very good financial condition as well as EUR 243 million of value-add acquisition, 2021 is clearly a year of resumption for the asset rotation within the office portfolio of Icade. And especially with the 2 acquisitions for EUR 243 million, we do prepare the future with 2 new promising and attractive future developments. And we have delivered this year 4 significant projects in 2021, exceeding 115,000 square meters, including the asset Fresk that we will visit this afternoon. I think it's important to highlight that the value creation which is associated with this project represent EUR 232 million at year-end. And clearly, development projects are still a very good way, not to say the best way, to create value in the office segment. Regarding the Healthcare division, the revenues at the end of September are up 7%, driven by acquisition and the pan-European expansion of the portfolio in 2020 and 2021. Another good news for Icade Sante is the fact that we have renewed with one of our most important tenants, Ramsay Sante, 10 leases in France for an additional 12 years. We have, therefore, secured EUR 38 million of headline rental income for the next 12 years. Growth of the portfolio has been very strong in 2021, Xavier will come back to that, with a volume of investment of EUR 600 million. With the entry into Spain at the beginning of 2021, we are now present in the 4 most important markets in Europe: France, Germany, Italy and Spain. Now moving to Slide 10. So what did we achieve in the other activities? For Icade Promotion, for sure, a very strong business momentum in 2021. Looking at revenues, new housing orders and new supply, Icade promotion did very well and clearly outperforming the market. Emmanuel Desmaizières will also detail the new offers, Urbain des Bois, After Work and Synergies Urbaianes that are new business levers for Icade Promotion. As far as our low carbon footprint is concerned, we have already started to deliver on the ramping up of the strategy that we have presented last February. And one of the KPI I would like to highlight is the reduction of the carbon footprint of Icade we have achieved, minus 18% for 2020 compared to 2019. For sure, this reduction has, of course, been facilitated by the crisis, with a lower volume of construction, let's say like this. But it also reflects our commitment and a good execution of our low carbon strategy. And for those who missed this information last week, Icade comes first in the 2021 ranking released by the newspaper Le Point for the most virtuous and responsible companies in France. Finally, on financial topic. 2021 results are expected to be back at the level of the precrisis level in terms of recurring cash flow. Victoire and I will come back to that. And we are also happy to announce today an acceleration in sustainable finance that Victoire will explain further shortly. Moving to Slide 11. So a quick reminder also of our priorities for 2021. I really do confirm that all the teams of the 3 business lines stay very focus on delivering those priorities. For sure, one of those has been postponed, the IPO of Icade Sante, and we will come back to that later. So even if the COVID-19 crisis is not over, and you have seen the recent developments unfortunately, Icade activities were fully in line in 2021 with our strategic plan and the results are, in our view, quite satisfying. I now leave the floor to my colleagues, starting with Emmanuelle Baboulin, responsible for the office Property division. And Emmanuelle will elaborate on the office market, but also and especially on our ability and capacity to continue to create value in the post-crisis environment. Thank you very much.

Thank you. Thank you, Olivier. Good morning, everybody. I'm going to give you some key points about the activity and the strategy of the Office Investment business line. First of all, some figures about the office market in Paris region. The take-up is picking up with new standards, we can notice a rebound, enhanced -- backed by enhanced macroeconomic perspective. We expect for 2021 1.7 million square meters, an increase of 20% compared to 2020 and 2 million are expected for 2022. The 10-year range of 2.3 million square meter should be recovered by 2023. Furthermore, the large transactions are back, even if they are a bit lower in areas than before the crisis. We expected 50 transactions, above 5,000 square meters this year, and 75% of this transaction are done for surfaces lower than 10,000 square meters. The vacancy is rising in all sectors, but the headline rent levels are resilient for the most qualitative assets and the most attractive locations. The market in French region remain very dynamic, especially in Lyon and Marseille, where Icade has new assets and ongoing developments. The rent in these cities are increasing and the supply is limited and the vacancy rate remains stable. Now a word about investment market: it remains solid and attractive, especially for core assets. More than EUR 26 billion are expected for this year. The investors are very selective, 76% of the investments are dedicated to core office assets. Foreign investors are back in France, they represent 43% of the all amount invested. All these indicators reflect a recovering market that will benefit to Icade. I'm now on Slide 14. Let's focus on Icade strategy. Icade had this year a very strong asset management activity, which allowed the signature of new leases and renewals for more than 140,000 square meters. These leases generate EUR 35 million in annualized headline rents. We can say that Icade is very active in major transactions. Indeed, on the 9 transactions above 10,000 square meters reported in the entire Paris region, Icade achieved 2 of them. I will come back to them later. It's also a record year in terms of new leased space over the last 5 years, a total of 217,000 square meters signed, including acquisition, fully let, completions and new leases effective over 2021, representing EUR 65 million of annualized headline rates. Let me give you 2 examples. In the Orly-Rungis Business Park, we signed almost 20,000 square meters of new leases. And another example, with the occupancy rate of Parkview in Lyon delivered at the end of last year, it is up 87%, increasing of 31% since last year. All teams are very committed for acquisitions, development, letting to leave the crisis behind us. At the same time, the asset rotation has resumed very actively and successfully. We achieved since the beginning of 2021 3 disposals, and the fourth is under preliminary agreement. These disposals represent a total of EUR 507 million with an average cap rate of 4.7%. These disposals have been achieved 10.8% above the gross asset value as of December 2020. In addition, we have signed opportunistic value-added investments, as we announced it previously: 2 assets fully let to AAA tenants and presenting potential for redevelopment after the tenant leave and potential for value creation in the future. Now Slide 16. That's a slide to remind the active portfolio rotation since 2016 with a strong 5-year track record, EUR 3 billion in cumulative disposals and EUR 3.5 billion in investments, acquisitions and developments. The disposals have been completed on an average of 12% above appraised value. Using our land bank for development of core buildings and value creation is our DNA. The proceeds of this disposal are fully reinvested in the portfolio, recycling capital is our business model. On Slide 17, I've shown we continuously refuel our pipeline up to EUR 2 billion, obviously adjusting it to new market conditions. Since Q4 2016, we completed 23 projects for a total investment amount of EUR 1.8 billion. From now on, our launched pipeline is contained below 10% of the portfolio value, and we have projects and potential opportunistic developments ready to be launched as soon as they are prelet or to offer turnkey project for EUR 1.1 billion more. Our pipeline is adapted to remain secured and you see the volume is there. On Slide 18, our pipeline ensures a significant potential for value creation. 8 projects have been already launched, representing EUR 0.8 billion, 113,000 square meters and EUR 43 million of potential rent. Six projects not yet committed represent EUR 300 million. The estimated value and delivery of the already started and the not committed projects is EUR 1.4 billion. So the pipeline has an attractive yield on cost of 5.3%. Two projects will be completed until the end of 2022 and they are already 70% pre-let. They present a double-digit equity internal rate of return. As explained, 2021 is a record year for our leasing activity but also for our developments. Indeed, this year, we delivered 4 buildings representing a total of 115,000 square meter and a total amount invested of nearly EUR 800 million. EUR 232 million of value creation are expected from these deliveries when the buildings will be fully let, but the occupancy is already of 80%, allowing an additional rent of EUR 40 million already secured. Let me give you some details. Origine in Nanterre may be visited by some of you 2 years ago, new headquarters of Technip Energies, this building with its wood structure, obtained of the best existing certification. West Park 4, also in Nanterre,fully let to Groupama, a very high-quality refurbishment. Latecoere, the new headquarter of Latecoere in Toulouse, and Fresk, that we'll visit this afternoon, 70% let before its delivery. So a strong value creation delivered in 2021 with a development margin close to 30%. On Slide 20, let me give you a focus on Fresk, we'll visit it this afternoon. And for those of you who will be -- who will not be able to attend the visit, a video will be available online, and you will see how we achieved to make this building very attractive. We bought it at the end of 2016. It was fully let to Technicolor and the departure of this tenant was expected at the end of the lease at the beginning of 2019. It then provided an annual rent of EUR 9.5 million. We prepared the refurbishment, the studies and the building permit to be able to start the works as soon as the tenant left. We will explain during the visit how we transformed the building to make it more efficient, increasing the letting area, creating extensions inside courtyard, providing internal terraces. The pictures before and after the works demonstrate our know-how. It's now a new building, bright and perfectly adapted to the new ways of working, with a lot of services, restaurants, even a wonderful rooftop with a great view over the Eiffel tower. We rented 67% of the areas before the delivery to PariSante Campus, a digital health government agency. The potential annual rent is EUR 11.2 million, in exceed of 20% compared to the former rent. The expected value creation is above EUR 30 million and the yield on cost is 5%. the equity internal rate of return is above 10%. On Slide 21, another example of our capacity to create value is Edenn, the new project at Les Terrasses de Nanterre, just next to Origine, a very attractive location behind La Defense, very close to the public transportation hub. An outdating building, as you can see on the picture, that Icade decided to demolish after the last tenants left. We started the studies on the new development in 2018 and launched an architect contest. The new project will have twice more surfaces than the existing building, more than 30,000 square meters, and it will provide the best standard, especially in terms of environmental features. We already pre-let 60% of the surfaces to Schneider Electric for its new headquarters in [indiscernible] by now. The beginning of work is expected in 2022 and the completion at the beginning of 2025. The future annual rent is EUR 12.8 million, representing 3.7x more than the former rent. The total amount investment for this project is EUR 225 million, and its yield on cost, it's 5.7%. A double-digit equity internal rate of return is expected and value creation is expected at around EUR 50 million, EUR 60 million. For sure, we will organize a visit in the next year. In the meantime, I propose you a short video about this project, and you will see how satisfied the tenant is to have found, thanks to Icade, the perfect building. Indeed, it will meet all the new needs of Schneider Electric. [Presentation]

Finally, I would like to remind the significant value creation potential deriving from our land bank in synergy with Icade Promotion, like in Epinay-sur-Seine or in Marseille, where we sold a plot of land to Icade Promotion for a development of a residential program of 129 units. We already identified the development of 3,000 housing units on our land bank, which represent more than EUR 500 million expected revenue for Icade Promotion. As of today, we still have almost 900,000 square meters of potential projects of offices, residential, of other uses in San [indiscernible]. This land bank is currently estimated at only EUR 100 million in our book, which is significantly below market value when we relaunched the projects. As a conclusion, I'm on Slide 23, let me say that office letting market is recovering and the rents are close to stable. The core buildings remain attractive, and the liquidity of these buildings is very strong and will continue to be. The developments continue to deliver high level of value creation. And with our efficient asset management activity, the active rotation within the portfolio, our attractive development pipeline and the flexibility of our land bank, Icade's office portfolio will continue to deliver attractive total return. I thank you for your attention and leave the floor to my colleague Xavier Cheval.

Thank you, Emmanuelle. Just adjusting the mic. Hi, good morning, everyone. I'm glad to see you in person or many of you. I have the opportunity to meet many of you, and I'm here to update you on Icade Sante's business. I'm here to deliver 3 key messages: first, the attractiveness of the health care real estate is undisputed. Second, Icade Sante is doing the job and retains its objectives and the targeted growth path. And third, following the IPO attempt, we are eager to reinforce further the structure and strengthen even more our business. So let's start with our market: it is compelling and still has very favorable tailwinds, both in terms of volumes and prices. So as a reminder, Icade Sante invests in hospital care assets and nursing homes across the 4 largest countries in the Eurozone: France, Germany, Italy and Spain. And in these markets, demographic trends, so the aging of the population, and higher expectations in terms of quality of care, are supporting growing expenditures in the health care space and, thus, higher needs for buildings. In France only, by 2050, around 1.4 million of elderly people are expected to suffer from heavy disabilities. And this figure compares to the current 600,000 beds installed in nursing homes. The health care expenses per capita are also about 3 to 4x above average for people more than 80. So in other words, if you consider that there are about 85 million people above 65 in our 4 core markets and 2.3 million of beds, over the coming years, there will be tremendous needs for new beds. The population of people above 70 will increase by 20% to 30% and hundreds of thousands of new beds in nursing homes will be required. And while enormous capacities in the meantime, enormous capacities in hospital will also be required either in new hospitals or in refurbished hospitals. So besides a strong prospect for nursing homes, our health care real estate demonstrates very interesting features in that space. So health care real estate is essential to the activity, it host. Health care real estate comes with strong barriers to entry. It offers strong and predictable cash flows. And it is backed by a supportive -- very supportive financing scheme, either state-funded or social security-funded. All in all, it provides very, very attractive risk-return profile. So indeed, there is no surprise that investors' appetite for these kind of assets remains very high. Only on the 4 markets, Icade Sante is mainly focusing on, EUR 4.5 billion were transacted last year and already more than EUR 3 billion were invested in the first 9 months of 2021. So here you see a few figures that only concern long-term care assets. And on top of that, you add acute care and post-acute care transaction. So for sure, this is pushing the net initial yields down. And we observe now 4.0% for prime assets in the most mature markets in Northern Europe, France and Germany, and now below the 5% mark for good quality assets in Southern Europe, so Italy and Spain. But looking at spreads compared to sovereign bonds, we are still in the high 300 basis points of premium, which remains attractive to other asset classes. So your question might be, how do we access to opportunities in these crowded days? Icade Sante builds on long-term partnerships. The market is, of course, trendy, but we do not forget that it is a long-term business per se. And it's even more relevant to be a focused specialist investor like Icade Sante. So how do we manage to deliver growth? So I'm now on Slide 29. So our setup to be an everyday real estate partner is to build on our expertise and to establish local teams on the ground. In the past months, we have accelerated in that respect and we have now representatives in each of our 4 markets: Philippe in France, Valerie in Germany, Giordano in Italy and Felipe in Spain are dealing daily with our tenants and with property developers. They are favoring business and they have a clear mandate, both to enhance the value of our existing assets and to expand our footprint. They are supported by a highly motivated team of talented investment and technical experts. Thanks to that setup, we are tremendously active in the 2021 investment market. We have carried already 25 investments, and we have added 7 new assets to our pipeline. Doing so, we are actively diversifying our portfolio. So close to half of our investments were performed outside of France, more than 2/3 were made in the nursing home space and 1/5 in brand-new buildings. So one of our objectives for 2021 was the opening of a new country, and we did open Spain this year, I will come back on that milestone later. On Slide 31. So focus on our pipeline of committed projects. So this pipeline consists of 27 assets. So 3/4 of it is international with an attractive yield on cost. Maybe just a quick reminder, our pipeline is 100% pre-let. And it consists mostly in forward deals, which means that we have about no risk when it comes to inflation of construction costs. So our pipeline, of course, evolves over time as projects are completed and delivered to our yielding portfolio, while other projects are entering in the pipeline. So still, our current yield on cost stands at 5.4%. And we'll add a potential EUR 23 million upon completion to our yielding portfolio. So now a few case studies about the investments that we have performed this year to illustrate and underline the key strengths of Icade Sante's model. So first, we do and we love to do repeat deals. So you see here, both in Germany and Italy, sale and leasebacks performed with operating tenants among the largest ones with, respectively, the tenth asset with ORPEA for EUR 46 million and the fourth transaction with KOS in Italy for EUR 51 million. And what is also interesting is that many of these assets are located in major cities in Berlin with ORPEA, in Milan area for Kos assets that are pictured here. Second case study, we are establishing new relationships with new tenants. And that is what we have done in Italy with La Villa. So La Villa is one of the top operators in elderly care in Italy. We have closed an inaugural EUR 36 million deal, about 5 assets. And doing so, we have diversified our tenant base and we are open to future opportunities with La villa. So now in Italy, where we started operations 3 years ago, we are working with the 5 leading nursing homes tenant and the market is still to be consolidated, which is very attractive. Third case study. So Icade Sante entered a third country outside of France during this year, in Spain. This was a clear objective for us as it is the fourth largest country in the Eurozone in terms of population, behind Germany, France and Italy. And it is actually one of the deepest markets for nursing homes, with close to 400,000 nursing homes beds already installed. So we are glad to have seized remarkable assets under development for EUR 32 million in the Madrid region and in the underequipped Tenerife Island with a very active operating tenant, Amavir, a subsidiary of Maisons de Famille, which is the fifth largest operator of nursing home care -- of nursing home in Spain. Sorry, back to the fourth case study. Yes. Fourth case study, we have engaged non-for-profit counterparties, and this is very new. So here, you see Grenoble. The remarkable feature of this recent transaction is that it is not only a EUR 51 million transaction, about 30,000 square meters of acute care facility with remarkable medical expertise. It is also a first landmark transaction for us in the yet-to-be-tapped French non-for-profit segment. And that is also part of our job, to diversify in that space. So now on the -- on the slide I already teased you, because I'm manipulating the telecom -- the remote. So over the year 2021, cash out related to new investments for Icade Sante will amount to EUR 0.5 billion. And this figure corresponds to new acquisitions and fulfillment of CapEx from both the development pipeline and other CapEx from the past years or from 2021. So on top of this EUR 500 million, Icade Sante has already committed to circa EUR 100 million of new projects that enhance our development pipeline. So we are already above our investment volume objectives, which were between EUR 450 million and EUR 500 million for 2021. And we are well on track to pursue our EUR 600 million objective of annual investment volume from 2022 on. Moving forward, we want to confirm our ambition to expand the portfolio. So indeed, regarding our potential investment backlog that consists in our pipeline acquisitions under exclusivity agreements and the rolling volume of investments under review, we are dealing with an amount close to EUR 1.5 billion of new opportunities, with daily new files arriving on our desk. So just to give you a sense of how active and selective we are. So far, this year, we have reviewed 160 opportunities amounting to more than EUR 7.5 billion. Our portfolio of projects is clearly tilted towards countries outside of France and is balanced in terms of nursing homes versus hospitals. So that's interesting, because we love to invest in hospitals, as these assets are essential to the global health care infrastructure that are very resilient, long term by nature, and we see now opportunities beyond France, especially in Southern Europe. So all this to confirm that our EUR 3 billion investment goal by 2025 is confirmed and is backed by a solid and lively backlog. So let's now look back at Icade Sante's IPO. So you are well aware that we launched an initial public offering last September in order to support our growth strategy. Our project was aiming at raising immediately EUR 800 million of new equity, thus giving Icade Sante the firepower to fund its investments for 4 years. This IPO will have also allowed Icade Sante to gain additional flexibility in its operations and will have provided liquidity for existing shareholders. So in the summer, we had a busy and very encouraging premarketing, and we received very positive signals about demand from the investors. However, upon launch in a market shaken by Evergrande's case and the fears about long-term inflation especially coming from the U.S., we faced less willingness from investors to engage in an IPO despite the strong interest of some investors that were ready to invest 9 figures tickets into the transaction. So at the end of the day, the market window we chose proved to be the wrong one. So despite our solid business case and our readiness to execute, Icade and Icade Sante's Board decided not to finalize hastily the process. So the order book ended weaker than expected, with EUR 700 million of allocable demand at EUR 115 per share, a price representing a 25% premium over the last reported NTA NAV. So for the time being, Icade Sante is focusing on its operations, is executing new investments, is delivering growth. Icade Sante will also further strengthen its management and internationalize its teams as it expands around the world. Doing so, Icade Sante continues to benefit from the confirmed support of its historical shareholders who intend to underwrite the required capital increases to fund the growth and further build Icade Sante's leadership. So as a conclusion, and that is our key messages. So Icade Sante stays on course to establish and strengthen its European footprint in health care real estate. We confirm today our commitment to grow the portfolio by EUR 3 billion between the start of 2021 and the end of 2025. We have the required support and mandate from our shareholders to do that. We have the team, we have the know-how and the track record. Following our initial public offering attempt, our capabilities in that respect are intact and our conviction that Icade Sante is a trophy asset is reinforced. Thank you, and I now leave the floor to Emmanuel for Property Development. Thank you.

Thank you, Xavier, and good morning, everyone. I am very pleased to have the opportunity to share with you today about the activity of the third business line of Icade. As you know, we have been pretty much impacted by the sanitary crisis in 2020 due notably to shutdown of our construction sites. I can tell you that all the teams remained mobilized, which allowed Icade Promotion to fully benefit from the very strong rebound. Let me start on the Slide 40 presentation with our vision of the French residential market. This is the largest segment and priority for Icade Promotion. I am on slide -- sorry, 40. It is fair to say the environment is challenging at the moment with notably the fact that it takes longer time to obtain permits, especially since 2020 local elections. We have also seen, as all the market, an increase in the construction costs as well as more requirements related to sales regulations. That could be, by the way, an opportunity for us. I'll come back to that later. Looking now at the demand for residential, it remains very strong, supported by solid fundamentals, such as -- sorry, I'm not in the good slide. It's okay. We are about to move to the slides. Looking now at the demand for residential, it remains very strong, supported by solid fundamentals, such as demographic trends, favorable interest rates and the continuation of government incentives. Another interesting consequence deriving from the crisis is definitely the change in customer expectations. Let me just give you a few examples, which are, by the way, totally integrated in our offer: an increased demand for individual or collective outdoor space; a need for nature, especially in a very urban environment; an increase in the appeal of medium-sized unserved by high-speed trains, particularly in the west of France, which allows people to divide their time between working remotely from home or working in an office setting in a major city, such as Paris. Let's just Slide 41 with a few figures on sale performance. 2021 has shown a rebound for Icade Promotion. That is reflected in the Q3 growth of economic revenues, nearly 55% compared to 2020 and, more important, an increase of 31% compared to 2019. This performance is clearly driven by residential representing close to 85% of total revenue. We also performed with -- very well in terms of new orders, with an increase of 17% compared to 2019, whereas the market is double-digit down. The strong commercial performance is also supported by growing demand from institutional investors with an increase in appetite for the residential market. Together with block sales to social loan loads, this represents almost half of our reservations. Icade Promotion outperformed the market in terms of sales performance. This has been made possible, thanks to our ability to renew our stock faster the market. Let's now move to Slide 42. Despite a challenging environment I mentioned in my introduction, Icade Promotion managed to increase the number of building permits being issued to us by 35% compared to 2019, whereas the market is struggling at 1.8% for the same period. This has notably been made possible, thanks to our local footprint and our capacity to adapt our offer, meeting the expectations of local authorities. They are indeed increasingly focused on protecting the environment and promoting the use of bio-sourced materials. As a consequence of our stock of properties, available for sale is increasing. That will allow us to ultimate gain an ever larger market share. Over the same period, the housing stake available for sale in the market as a whole fell by 23%, while the stock of Icade promotion increased by 26%. A word on prices change on Slide 43. The increasing number of environmental requirements on the global supply chain disruptions for building materials partly explain the increase of construction costs. Higher selling prices, which are estimated between 3% and 5% over 2 years, or even higher in certain areas where the supply is more limited, have enabled us to offset the increased material on construction costs over the same period. Higher prices have also helped us to further increase our profit. I'm now on Slide 44. To elaborate on the growth trajectory, we are fully engaged in on many drivers we have activity to reach our goals. I remind you, EUR 1.4 billion of revenue and 7% margin in 2025. Let me highlight a few of those drivers: an efficient local network with 21 regional offices; the capacity to offer new solutions adapted to change in demand; a growth strategy based on 2 pillars, low-carbon construction, on nature in the city. We can talk about our offer called naturellement chez soi, an approach promoting low carbon design and comfort of use, which has been redesigned post crisis. Examples include common areas that integrate bicycle use, shared areas on flexible housing solutions for addressing remote work and changing family structures. It also includes nature by providing a green outdoor space designed as an additional room. We also created in the first half of this year the brand Urbain des Bois. This new entity focuses on the standardization of wood construction processes and the increased customization of housing. It is also reflected in our ability to look beyond the building and be involved more widely at the neighborhood level. This is the role of our dedicated team called Synergies Urbaine. This team brings a new vision of the city by integrating a mix of products, services and local shops, with particular attention paid to the base of the buildings. The athletes village for the 2024 Olympic games in Paris is a very good example. Last focus I want to mention is about transforming the city, including, of course, carbon footprint reduction, but this is also about addressing the obsolescence of a large part of the office stock post COVID. This is the purpose of our After Work approach, which aims to ramp up in the transformation of obsolete assets into housing projects, for instance. Let me now share an example of project carried out with the After Work approach with the conversion of a hotel in Neuilly located on Victor Hugo Avenue into a high-quality residential development in harmony with its urban surroundings. This 15,000 square meters hotel that is currently poorly adapted to changing market expectations will be converted into a 164-unit residential building. It will take advantage of the highly unlandscaped environment of this renewed district of Neuilly. This project will generate more than EUR 200 million in revenue with a margin of 14%, which is significantly higher than the market average. The building permit will be filed in early 2022 and will include the best standards used for our concept in naturellement chez soi. Back to the new demand I mentioned before, the apartments will benefit from the larger private and vegetated outdoor spaces. On Slide 46, we are also involved in transforming neighborhoods in urban environments. This is the role of Synergies Urbaine. The project Equinove consists in converting 65,000 square meters of offices into housing. It's a good example of cooperation between our Office Property Investment and Icade Promotion. Through these acquisitions, Icade benefits from the rent from the tenant rent over the remaining term of the lease. And in the meantime, we will prepare the conversion of this asset into a residential project, one of the most important development scheme in the Paris region, with more than 2,000 apartments. As a conclusion, on Slide 47, we maintain our goal to grow in a market that is driven by strong demand and in which we are able to ensure that our stock can meet such demand. Our property portfolio is up by 17% compared with the end of 2020 to more than 11,000 homes, with a backlog of EUR 1.5 billion, which is also up by 3.3%. Our potential revenue over the next 5 years, estimated at EUR 7 billion. And the continued improvement in our operating margins clearly support the objectives of our road map to 2025 with revenue at EUR 1.4 billion on a net margin of 7%. I'm going to leave the floor to Flore to elaborate in the low carbon strategy.

Hello, everyone. Thank you all for being here and remotely. Climate change is the center's biggest challenge, and we think it's fair to say that Icade is one of the low carbon pioneers in our industry. So as you know, we ramped up our low carbon strategy in February 2021 in order to remain at the forefront. So our low carbon strategy is structured around 4 strong commitments: selling objectives specific to each one of our business line, which are improving our low carbon emission, we will detail it in a minute; creating a EUR 2.5 million fund, internal fund, to finance and support our low-carbon initiative and innovation. Sorry. Better? Sorry. Launching Urbain Des Bois, Icade Promotion new subsidiary, specializing in 2 innovative areas, as Emmanuel already told you so, low carbon timber construction and customization; and not least, developing an ambitious and responsible offsetting policy used at last resort after our carbon reduction effort has been exhausted. You will find some detail about it in the appendix. So what our new and more ambitious goals in the nutshell. Icade Promotion aims to extend its energy and environmental performance requirements to a greater share of its development projects. The objective for the office development is to reduce the carbon intensity of our assets by 45% between 2015 and 2025, which is 5.8% per year. Icade Healthcare Investment division aims to define an energy and carbon reduction pathway for the facilities in the portfolio by 2021 in France and 2022 in Europe. We are working on a well below 2 degrees plan. As you can see on Slide 50, Icade business activities emitted a total of 212,644 tonnes of CO2 in 2020, which is an 18% decrease compared to last year -- to 2019, sorry. In 2020, carbon intensity decreased of 5% for Healthcare Investment with more covered square meters. Emissions decreased for Office Investment by 12% and for Property Development by 14%. This decrease is due to our efforts in low-carbon construction and energy efficiency. We have led the field on this subject for many years. It's also due to the COVID crisis, thanks to empty buildings and also rescheduled operation. But as you will see on the next slide, the trends have gone down for years. You can see on Slide 51 that this is a 5-year trend between 2015 and 2020, intensity of carbon emission, which is kilo of CO2 per square meter per year, fell in our 3 businesses. This is a decrease of 40% for the Office Investment activity, a decrease of 27% for the health investment activity and a decrease of 14% for the Property Development. So we are well on track toward a 1.5 pathway for the Office Investment division and the corporate. And we will see details on this result by business in the following slide. As we stated beforehand, the Office Investment division achieved its goal of being aligned with a 1.5 degrees pathway in 2020. We have already reduced by 14% our carbon emission in 2020, thanks to the COVID crisis, but we were already well oriented in 2019 with a 27% decrease. All the measures we put into place and financed in former years allow the reduction of our carbon intensity, thanks to a dedicated EUR 55 million work plan the last 4 years and significant investment in renovation and energy efficiency, but also with point of attention during our development schemes with CSR criteria. We can do even better, and we intend to continue our efforts, as you can see, with around EUR 100 million planning to be invested between 2022 and 2025 in the sustainable work plan. The Office Investment division will accelerate, with a ramp-up of the work plan, renovation, energy-efficient equipment and energy switches; the launch of new innovative services to help our tenants; leases that include climate criteria based on commitment, partnership, adaptability and monitoring. This is the climate committed lease. You will find some detail about it in the appendix. And we will also help our tenants to reduce energy use by organizing energy supplies for them in order to keep energy costs down and renewable energy. Our new developments such as Origine and Edenn, which Emmanuel spoke about earlier, is representative of Icade efforts and ambition in this office investment activity. This investment dedicated to carbon performance and better energy use planned for 2022 to 2025 have doubled and we will be -- and they will be agreed upon with our tenants. We are now on Slide 53. For Icade Sante, the reduction in our carbon emission is already by 27% between 2015 and 2020. On Slide 53, so you will see that the decrease of 27% is due in part to the energy efficiency measures deployed, such as improving the energy performance of existing buildings and improved performance of new construction. On new developments, we certify HQE all our building, over 4,000 square meters. And several operations are currently in the process of obtaining E+C- labeling, as you can see with the case study Bellerive-Sur-Allier. Finally, we are actively working to support operators by carrying out studies to monitor the carbon performance of buildings. We discussed with them in CSR Innovation Committee and we carry out studies to identify energy efficiency levels in order to enlighten operators on the solution to be implemented with the EcoEnergy decree. For Healthcare Investment, our responsibility does not include the operation of buildings. However, we want to adopt a leadership strategy. Thus, we are working to define a commitment in terms of reducing carbon emission with investment estimated around EUR 40 million to EUR 50 million between 2022 and 2025. All those efforts get results. V.E awarded Icade Sante with a score of 63 out of 100 and an A1 rating, placing Icade Sante among the top 5% of the highest-ranking companies in the financial services, real estate Europe sector. Regarding the Property Development, we have seen tangible results, on the Slide 54, as 475,000 square meters of timber construction projects completed or under development in 2021, which is an increase of more than 30%. Our efforts are significant on the construction, with an anticipation of the regulation and increased use of biosource materials but also more stringent requirements in terms of energetic efficiency. We achieved a significant 14% decrease of carbon emission, thanks to our E2C1 commitment and an industrialization of best practices for low carbon construction. Our objective today is to reduce carbon emission in construction as we already work on the energy-efficient equipment. So we manage a start-up studio, Urbain Odyssey, which launched low-carbon start-ups on the property development value chain, and you will find some details about it in the appendix. We have created a subsidiary specializing in personalized wood housing construction, Urbaine des Bois, and this is a huge lever. To give you an idea of the CO2 reduction allowed by low carbon buildings in a building reaching at the highest level of the E+C- level, it's 30% lower than the building reaching regulatory level on a life cycle basis. And we are also launching a restructuring offer to work on the transformation of offices into housing, named After Work, as Emmanuel told you so. The impacts for refurbished assets versus new one is estimated around minus 30% to 40% of carbon emission. Our policy is recognized by ESG rating agency on Slide 56, reflecting all the action rolled out, notably with an increasing MSCI AA score and Icade classified sector leader by GRESB. Last week, we also had the pleasure to be ranked by the news magazine les plus and the German organization Statista the most responsible firm first out of 250 French firms. This ranking evaluated Icade on 3 criteria: environment, social and governance, and we are very happy to share with you this good news regarding the efforts we are deploying in every part of the responsibility policy to improve our practices. As a conclusion, our carbon intensity per square meter significantly reduced across our 3 business line. And we do anticipate the upcoming French and European regulation, including taxonomy. We have a real low-carbon investment plan, which will allow Icade to remain best-in-class in our sector. Our low-carbon CSL strategy makes innovations, as an example, with low-carbon construction solution and climate committed lease and responsible policy with our offsetting strategy. But more, as you've seen in every part of our activity, CSR is a real business opportunity. We will continue our efforts, and I'll drop the mic to Victoire.

Thank you, Flore, and good morning, everyone. I'm really happy to be able to resume face-to-face this morning presentation. Now that my colleagues have presented achievement and perspective, I would like to provide you with more color on the financial trajectory. I'm on Slide 59. I have already had the opportunity on several occasions to highlight the strength of our diversified business model and its resilience to the health crisis has reflected in the full year 2020 and half year 2021 results. I can tell you this resilience is, once again, confirmed over the whole year. Let's have a look on the left side of the slide. 2021 net current cash flow in absolute value is expected to be very close to 2019 level. Only 1 year to remove the financial impact of the crisis. And expressed on a per share basis, 2022 level is expected to be higher than 2019. Looking now at the financial structure and LTV ratio. This crisis had here also limited impact with, as you can see on this graph, a ratio standing around 40%, as we have always stayed in line with our historical financial policy. The stability of the LTE ratio reflects also our resilience is the valuation of our portfolio, even up during the period for health care. This leverage is still expected to decrease in the medium term, and this will be obviously facilitated by a liquidity event of Icade Sante. Another characteristic I would like to highlight this morning of our business model is focused on the slide -- on the Slide 60: growth and value creation and the way we finance it. Let's look at the growth of both property divisions from 2019. The office property division delivered 15 projects from the pipeline. They all represented a total investment of EUR 1.4 billion and a value creation of EUR 450 million. That is to say a strong 32% of total investments. More than 1/3 of value creation. For healthcare division, external growth is also strong and stand at EUR 1.5 billion of investment over the period, a strong track record. So how we have been financing this growth? First of all, with the proceed of disposals. I remind you, we are engaged in a very dynamic asset rotation strategy and we managed to dispose for more than EUR 1.6 billion of core assets since 2019. EUR 1.1 billion in 2019 with the disposal of Crystal Park and 49% of the ECO tower and EUR 500 million in 2021 with the disposal of 4 assets in very good conditions, by the way, as Emmanuel told you just before. On top of that, on the top of that, sorry, total financing is also carried out through capital increases at Icade Sante level, financed by both Icade and minority shareholders in proportion of their respective holding. Thus, EUR 650 million have been raised since 2019, of which EUR 210 million were contributed by minority shareholders, that is to say new equity. And this dynamic dedicated to growth and value creation also allowed Icade to deliver a strong dividend policy. The dividend yield represents an average over the period of 5.8%. On the top of that, leaving behind us the COVID-19 crisis, we will offer shareholders a regular gross dividend for the coming years as we did in the past. On Slide 61, I will now like to return for a moment the question of how to finance this growth and elaborate a bit further on the construction of the LTV ratio of Icade. Another manner to say, how do we manage our balance sheet? Indeed, when we look at the level of 40% at group level and breakdown by entity on an accounting perspective, some of you are in challenging us regarding the difference between the ratio disclosed for Icade Sante at 33% and the remaining one that you are calculating for the rest of Icade, you estimate it around and even above 43%, 44%. We have a completely different view when we look at the blinded figure. Indeed, when Icade contributes to the capital increase of Icade Sante, it impacts the level of debt of Icade. Just to give you some figures, it represents for Icade more than EUR 1 billion during the last 10 years. After allocation of this part of the debt to the healthcare business line, you get a much more relevant view of the level of LTV per activity. The economic allocation of LTV for the rest of Icade, excluding healthcare, stand below 35%, whereas LTV for healthcare is above 40%. So it clearly represents, in our point of view, a coherent and relevant split of the LTV ratio in line with the risk profile of each business line. Even though we plan to reduce the group's leverage, as I said before, shareholder LTV ratio are already adapted and adjusted by business line. Let's jump a step beyond, regarding the rigorous and the soundness of our balance sheet. I'm on Slide 62. Nothing new in reality, just a confirmation of our strong debt structure to face the future. Let me just quickly insist on a few points. End of June, average cost of debt at 1.35% while benefiting at the same time from an average debt maturity at 6.4 years, represent a quite attractive structure of debt. I take the opportunity of reminding you, Icade has successfully issued in January a 10-year EUR 600 million bond with an annual coupon of 0.625%, the lowest coupon ever for Icade. In the meantime, we pursue a conservative aging policy, with aging cover above 95% in 2021 and above 80% for the next 3 years. And of course, we continue to benefit from a strong investment-grade profile, with rating BBB+ with stable outlook. We are affirmed by Standard & Poor's in July 2021, for both company Icade and Icade Sante. This is a good transition for the next topic I want to share with you this morning, the ramping up in sustainable financing at Icade. I'm very happy to announce today we set up a new green financing framework. To be more precise, this new green financing framework has been set up with more ambitious criteria fully in line with the green bond and green loan principal. And it also already integrates taxonomy technical standards for the bar known to date, of course. Thus, we acknowledge eligibility to finance by green instruments up to EUR 2.5 billion of assets. A second-party opinion was released last week from Sustained Analytics Extra Financial Agency. This roadmap will be applied to the current green bond issued in 2017 and will also be used for the transformation into green bond of the January bond issue I just mentioned. Constant solicitation has been launched today toward all bondholders, with a general meeting to be held in December. But most important, this new framework will be used for the future issues. So having said that, how will we face the future? Let's finally jump on Page 63 to recall the main financial commitments in each of our businesses. First, for the office activity, the key KPI, pursuing a very dynamic asset rotation strategy, We committed to pursue the disposal plan with an average annual disposal level of EUR 500 million to EUR 600 million. At the same time, of course, we continue to invest either in opportunistic acquisition, as we did in 2021, and also in our development pipeline and secured, as we explained earlier. All in all, we are speaking about an investment plan for the office division from '21 to '25 comprised between EUR 1.5 billion to EUR 1.7 billion. For healthcare, we confirm the growth ambition of EUR 3 billion by 2025, representing a EUR 600 million per year on average. And finally, Icade Promotion will deliver the growth road map with a EUR 1.5 billion revenue by EUR 25 million and improved margin at 7% minimum. So finally, taking into account all of those commitments, the financial road map is clearly well on track, and I'm in a position to confirm a growth of the net grown cash flow back to the pre-COVID ambitions, plus 4.5% for the coming years on 2020, 2025 CAGR basis. As I said at the beginning, only 1 year to absorb the financial impact of the COVID-19 crisis, we are definitely confident and equipped for the future. Thank you for your attention. And now I leave the floor to Olivier for the conclusion.

Thank you, Victoire. Now moving to Slide 65. As we said, I really do think Icade has been able to cope with the COVID-19 crisis and to maneuver in this complex and very volatile environment. And this will be clearly reflected in our 2021 results. And that's why Icade is now in a position to increase the guidance for this year. And as a reminder, it will be the second guidance increase for 2021. So for 2021, group net current cash flow per share is now expected to grow by plus 8%, excluding the impact of 2021 disposal, which means a plus 5%, including the impact of 2021 disposal. And as we have said, it means that Icade will be very close, in terms of million euro, to the 2019 cash flow. The shock and the impact of the COVID-19 crisis has been already financially absorbed. Net 2021 net current cash flow for -- from the Healthcare Property division is now expected above EUR 251 million, which is in line with the guidance that we have given in July when we prepared the IPO. So regarding the dividends, no doubt that the 2021 dividend policy is confirmed. And the Board will make the final proposal to the AGM in February 2022 when our 2021 final result will be presented. So that was the conclusion now. So what are our key messages regarding 2021 and the next 3 years? We have fifth of them, I hope, it's not too many. The first one is that 2021 is very well oriented in terms of results. The second message, as you could have seen, is that each business line has a clear and ambitious road map already integrating the challenges deriving from the post-COVID-19 environment, assuming that the crisis is over. Third, our CSR and especially our low carbon strategy will contribute to the performance and will contribute to the total return that we will deliver for the coming years. Our carbon strategy is not a nice item. As Flore has give you a lot of examples showing that low carbon strategy is clearly the core of Icade strategy. The fourth message is that our balance sheet is really sound and for sure the liquidity of Icade Sante that we had to postpone at the end of September. We'll explain it furthermore when it will occur. And finally, as we all know, the post-crisis period are time of opportunities. And clearly, Icade, as Frederic said, with the support of the Board and the support of our most important shareholder, is clearly in a position to seize them. Thank you for your attention during this presentation. And now with the ComEx team, we are more than happy to answer your question. I suggest to start with a question from the room, then by telephone and then return question. I think we have a microphone for people that want to address the question. Where are the microphone?

Florent Laroche-Joubert from ODDO BHF. So I would have two questions, if I may. The first one is on offices. So you have highlighted that the vacancy in Paris market is now higher. And maybe we can see some polarization between the different markets. And so my question will be, so how can it affect your strategy in terms of developments, in terms of leasing? And how can you be affected in your leasing activity in terms of rents, et cetera? Maybe a question on the Healthcare division, on Icade Sante. So you have had to postpone the IPO. And if we look at the coming months in France, we will have some significant events with, for example, the presidential election. So does it -- can it affect your agenda for the IPO, for example? And since the IPO is postponed, how can it affect your investment policy for Icade Sante? And maybe the third question, more general. So you have a very optimistic guidance for the coming years. But I understand that it is assuming that this sanitary crisis is over. So let's say, in a less optimistic scenario, what can we -- what could we expect?

I will try to answer your three questions. About the market, for sure, it is true that vacancy rate in Paris will probably increase within the next 18 months. And for sure, I do assume it will be the same for Icade office portfolio. When you are talking about polarization, I really do think that the polarization will be between good and bad building. It's not -- in our view, it's not a question of location or area. It's clearly a question of what are your technical specification, what are your low-carbon specification. For sure, if we are able to relate some of our major schemes, it's because of technical certification. After that, it's a question of rent. For each given location, you have an appropriate level of rent. In the submarket, Nanterre, where we have a significant part of our portfolio, we really do think we will overperform the market. Why? Because we have the best buildings in terms of the technical specification. If you look at the companies such as [ Schneider ], believe me, they have organized a tender. They have compared probably 30, 35 different opportunities. And if we have won the bid that they have organized, it's clearly because we have the good location, the best technical and low-carbon specification and the appropriate level of rent. For sure, major tenant, they are looking for good value for building. A lot of the tenants, major corporate that our tenant, insurance company, banks, industrial companies, the France state, believe me, they are not looking to go back to Paris City center just because we'll have to double the level of the rent. They are looking, for sure, probably for less space. Minus 15%, minus 20%, that's for sure, is the increasing work-from-home trend in the market. That's for sure. So we are confident that the kind of building and for sure that are able to visit Fresk this afternoon, you could see that it's a trophy asset. It's not a trophy asset of the CBD, the corner of [indiscernible] for sure. But for people that are looking for rents around EUR 450, EUR 500 per square meter, they can't find a better opportunity in the market. And we -- that's what we have in our portfolio. So for sure, we do assume that vacancy rate within the portfolio will increase by the end of the year, 1% or 2% more, maybe 1% or 2% more in 2022. But our mid-term perspective, we are very able -- very confident in our capacity to deliver the growth even within the office portfolio. We will have to be also very active and flexible in terms of transaction between -- we have announced a volume of disposal and a volume of investment. But maybe we will have to do more because we do think that there will be a lot of opportunities in the market in terms of acquisitions. Some people are under, let's say, like this that may be under pressure. Some people that don't want to take development risk in the office segment. So if you are ready to do so, [indiscernible] last year were too good example at what could be available. So if we have good opportunities in the market, maybe we will sell more and acquire more. So let's see. But again, in the current market, for sure, the news at the end of last week were not the best news. But assuming a stable market, we do really think that the kind of development, the kind of building that we have in the portfolio will really fit the requirements of a large corporate. So on your second question, so we have to postpone the IPO at the end of September. For sure, it was not the good news. For sure, it was probably not the right decision to launch the IPO in a week that -- where the market was probably very, very volatile. We maybe were a little bit too confident. That's life, let's say, like this. But as you could have seen and Xavier has given the figures book of close to EUR 1 billion, allocable to EUR 700 million. So we are not able to close the transaction. Just to remind you that we have with the specific tax regime that we have for REITs in France, the [ SIC ] regime, we have the mandatory threshold of 15% of free float. So it was an amount of EUR 800 million. So we are not able to close the transaction. But at the end of the day, EUR 1 billion of order, EUR 700 million of allocable demand at pricing, which represents a premium to NAV for an IPO, 25% on the last NAV per share. If you are optimistic and positive, you can say that at the end of the day, it's not that about return. So we have to postpone. For sure, we won't come back to the market beginning of next year where we have now to work, maybe also to improve the structure of the transaction, maybe to improve some of the specific item of the transaction that we have proposed to the market. And what we have learned from the previous attempt is that we need a very stable market to come back. And for sure, we have no precise clue of when we will have such a window to come back. In the meantime, we continue to implement the growth plan. And I think it is very important back to your question to say that even if we don't have the EUR 800 million of new equity that we were looking for to finance the growth, clearly, Icade and the minority shareholders have the capacity to finance for 2022, the growth of Icade Santé. We don't want to reduce our ambition because we were not able to close the IPO. I think this is one of the important message. So you say we have an optimistic forecast for the next year. I think it's the same forecast that we had before crisis. As Victoire said, we have been able to absorb or to offset the impact in terms of cash flow of COVID-19 crisis. When we have started to return this slide, it was 2 or 3 weeks ago. So we have to have this little precision subject to sanitary condition. For sure, if you have in 2022, lockdowns comparable to the spring 2020, we will have to say, okay, sorry, but it's not exactly what we have in mind. If we have the kind of market that we had in the second part of 2021, it's not the ideal situation for sure. We are not exactly back to the same level of activity in terms of letting transaction for office, even to organize visit in the health care segment. It's still a little bit more complex than in the past because you have a sanitary restrictions and so on and so on. For the Development segment, it's maybe nothing linked to the sanitary crisis. It's more the reduction of the number of building permits that are granted in France, and I think there is nothing to see with the sanitary environment. So it's our central scenario. You do know the rule of the game when we give such figures if we are -- we have a buffer because when you are not able to reach the -- this kind of forecast, the reaction of investors and analysts is quite strong. So we have a buffer. After that, if you have a complete stop of the market due to another version of the virus, that will be another story. But for the time being, we are able to manage the sanitary situation and to announce the kind of growth for the cash flow for the -- on average for the coming year that we have presented. What will be the most pessimistic scenario? I don't know because I don't know what could be such a scenario. I don't know if we have other questions in the room, Pierre-Emmanuel.

Pierre-Emmanuel from Kepler Cheuvreux. I have several questions for you. The first one on -- it's a technical question on the office segment. On the EUR 232 million of value creation, how much of it has been already recognized in June 2021? The second one on the Property Development segment. What are your assumptions to target a 7% development margin by 2025 in terms of cost -- construction cost increase and price increases? The third one is just to come back on Icade Santé. So do you think that the postponement of the IPO was a question of pricing or timing? And from what I understand, for me, it's more a question of timing, let's say. So can we expect you to come back to the market with the same price range for the -- for Icade Santé. And the last one on Icade Santé also. Is there any great CapEx with Ramsay Santé for the leases that you renegotiated a couple of months ago?

I will answer very quickly the third question before to leave the microphone to Emmanuel and Xavier. We have no idea what could be the pricing of potential future IPO. It's clearly too soon to have. At the end of the day, I don't know if we have a question of pricing or timing or other topics. But I was just highlighting that, again, if you want to be positive on that topic, we had to be very precise, EUR 693 million of allocable demand at a pricing of EUR 115. And it was a premium of 25% to NAV. So that's just a matter of fact. What could be the future for the clue for the time being. On value creation, Emmanuel, you could enter in French or English and translate.

In English, I can try. EUR 170 million are already recognized and the other will be recognized when the buildings will be fully let. But for the moment, it's EUR 170 million.

[Interpreted] I will answer for the construction costs. We have a dual impact in 2021. First of all, on the materials because it's a worldwide market with a shortage for certain types of materials. And the second impact is that of the regulations upcoming. Regulations for the materials, the work we've done with our companies for the large working sites upstream from the orders, and on-site work has allowed us to anticipate on these issues and to maintain some margin for maneuver in spite of the potential effect. So there was no impact on the balance sheet for 2020. As for the regulations, thermal regulations, we had anticipated as early as 2020 and in 2021 across all of our projects that we should position with the corresponding each, say, label. So there will be no impact on the technical costs from this point of view. And for the next years, there will probably be a correlation between the price of property and the sales cost that will absorb the low-carbon improvements needed to get the R20 -- E20 label.

Ramsay Santé, the renewals, so about 10 sites. So we have an agreement about EUR 26 million of CapEx and out of which EUR 13 million are paid by Icade Santé and EUR 13 million are paid by Ramsay.

We have I think a question still in the room.

Can you hear me? Perfect. Yes, [ Michael ] from Degroof Petercam. Two questions. Firstly, in offices, you touched about headline rents being stable. Can you come back to mineral incentives, especially for the renewal? How this negotiation with the company has been and what kind of incentive changes you had compared to the previous one? And for health care, you mentioned your disciplined approach when it come to investments, seen quite, I would say, a significant decompression in all markets. Does it affect that you will bring forward investment to avoid overpaying late stage? Or how do you look at your overall investment and we'll say, sequential there?

Xavier, you want to answer on the second question? And after, Emmanuel?

So if I get it properly about the yield compression we observed in all our markets and how do we work with that, so for sure, we tend to have a slightly higher focus on new developments. So historically, it was 20% for investments we made in greenfield or refurbishments. And moving forward, I would say, closer to 30% and -- 30%. And doing so, we are able to get some premium because of our early commitments. So that's a way to deal with that compression. And otherwise, once again, it's a matter of repeat deals. So the flexibility that we may have because we are in, I would say, in a trustful relationship with tenants, so for instance in M&A processes when it's also about the timing of completion of the transaction, it's also a way for us to get some -- I mean, some hedge. At the end of the day, I mean we are still investing in what I think is a fair market yield because it's -- I mean, it's more and more liquid market, but toward this year.

I think that the third good news with cap rate compression is the fact that it will impact positively the value of the portfolio. That's the first news. After that, we have to manage the topic in the acquisition process. But when you have a 25 bps cap rate compression in the market, the first impact is, in fact, the eternal appraisal because, more or less, you will find this cap rate compression in the valuation at the end of the year-end. So clearly, the cap rate completion that we have will impact also positively the value of the portfolio at year-end. Emmanuelle on tenant incentive in the market and renewal.

Maybe we can go to Slide 70, where we have some figures about incentives, 70. And you're right, incentives are increasing in all sectors, of course, and obviously where the supply is high is important and especially for buildings not refurbished or not new. You can see on Slide 70, incentives are really increasing. And for our new signatures and our renewals, we went to our tenants between 15% and 20% on incentives. And we have a part of rent-free period, but also works for the tenants. So we limit it with this works, the level of rent-free period.

Thank you. There is a question on the back in the room.

Celine Huynh from Barclays. First question is on Icade Promotion. Can we talk about your 7% margin target? Correct me if this is wrong, but it looks low compared to your peers in France and Europe, especially since you own part of the land bank. So how do you explain this? And my second question would be on the dividend. If your net current cash flow is up 5%, why isn't your dividend up 5% as well?

So I will answer the second question, and Emmanuel will answer the first. On the dividend, we have announced a dividend for policy for 2021. And it was said that it was a payout ratio of 93% as part of the capital gain because, as you know, we have some mandatory requirements in terms of distribution. What we have achieved in 2021, for sure, you have a cash flow, which is higher than expected. And we have a level of capital gain, which is more or less in line with what we have forecasted at the beginning of the year. As we said, the final proposal will be made by the Board. For sure, we have also to take into account what is the current environment. But let's see, it is true to say that before crisis, the dividend policy of Icade was to have more or less the dividend linked or moving at the same pace than the recurring cash flow. For the future, let's see because the environment is what it is. But let's say like this, we have the capacity to do a little bit more. We have also the question of the dividend, due to what was the environment at the end of 2020. We did think that and even some of you have challenged us on that. But we did think that it was, let's say, appropriate to have a scrip dividend for part of the dividend, 40% of the dividend of 2020. Also on that topic, the Board will make the recommendation to the AGM at the end of February. Probably, we have, hopefully, at the end of February, a clear view of what would be the sanitary environment. That's why we have announced an increase of guidance for cash flow, but no announcement about the dividend as of today. On level of margin.

About the margin of Icade Promotion at 7%. We are in a period where the margin is increasing. We were at 4% last year. And this year, we are nearly about 5%. So we need to return the best of class at 7% or 8%. Maybe we can explain a little difference between the best of the class by the part of office building in our activity, less important than certain and other majors of the promotion under property investment, and maybe it could be the little difference.

And maybe one point I'm looking for the slide on land bank because maybe in your question, you were saying as you are using part of the land bank to launch new residential scheme, you should have a higher margin because when we -- and that's the last point of the slide. When we do -- we have, for sure, for the land bank, we have the valuation at historical value. Also, it's a topic which is discussed, but we do think that it's reasonable. It's a conservative position, for sure. But when we launch teams for offices or residential, we put the value of the land at market level. Therefore, the starting point is the same as for any competitors. And we -- at that time, we booked the profit or the capital gain. But it's only when we launch. And in the P&L of any residential scheme launched by Icade Promotion, a starting point for the value of the land, it's clearly market level. I don't know if we have questions by telephone, [ Terry ] or not?

No.

No question. We have written question, if you could read them.

Question by Jonathan Kownator of Goldman Sachs. What is the main reason for the increase of the 2021 guidance?

What is the reason? It's a mix. So the question is what is the main reason. I think we have a mix of different reasons. The first one is the better result of Icade Promotion. The second one is the lower cost of debt. And surprisingly, the third additional reason is the postponement of the IPO, because with the IPO, we should have been diluted until we have been able to invest the EUR 800 million. So we don't have the dilution. So when you combine the 3 elements, you have the reason for the increase of guidance in 2021.

Second question by Jonathan Kownator. Do you intend to convert part of your existing office portfolio into residential or other alternative views, for instance, in ranges or other outer rim areas?

No, it's one of the, I think, most interesting topic for the future, and we have started to announce that last November. We have started in the east. We are about to start in the north of Paris. For any asset when it comes to be vacant as an asset manager, you look at what is the best use for the next redevelopment and sometimes to keep the same use in the office, but it could be to convert that, sometimes into residential. And as Emmanuel Desmaizières has explained, we really do think that we have skill for that. Just to remind you, the acquisition that we have made in July, [indiscernible], 70,000 square meters of offices in a location that you will probably don't know [indiscernible], south of Paris, probably an average location for offices, sorry to say that, but it's true. But probably one of the best location in Paris region for redevelopment in residential. So we have already started the discussion with the local authorities. And [indiscernible] will be probably one of the largest residential scheme in Paris area within the next 5 years. So for each location, it's time where the building that will be vacant. We will have to compare residential between -- residential compared to offices or sometimes it could be new student housing or nursing home housing, depending on what you are allowed to do on a given location. And for some locations, so after the second ring, but we have only for the time being more or less only rises. It could be to compare a use with the data center of light storage or activity. And we choose the use that on the paper, give us the highest return. But clearly, it's increasing and increasing, and we will probably do more and more transformation of offices into something different.

There are now 3 questions from Christopher Fremantle from Morgan Stanley. How do you assess the fact when you provided a liquidity event for Icade Santé? None of the other shareholders wanted to sell their stakes. How does this affect your obligation or your willingness to provide this liquidity event in the future? And also, what are you looking for to proceed on a liquidity event? Is it simply when the other specialist health care stocks are at a higher level?

I think I don't want to speak on behalf for the minority shareholders of Icade Santé. I'm not allowed to speak on their behalf. The first thing is that when you answer a topic, we were asked by the bank's syndicate to have a lockup of our stake. It was true for the minority shareholders, and it was true for Icade. So we were asked to leave the lockup after that, after a 6-month lockup, especially for the minority shareholder. They will be free to manage their position. Just to remind you that orders invested have entered the vehicle in 2011, and it was a 10-year business plan, a classic call for such kind of vehicle investment management. And after that, disposal or something else. The fact is that those minority shareholders, they are life insurance companies. And clearly, the asset class, they have the appetite for the asset class because it's a bit defensive. You have very long-term cash flow, but at a quite attractive and appealing level. So I don't have any clue of the way they will manage their stake in the future. What I could say is that they like the asset class and they like the vehicle. We have delivered to them a double-digit IRR during the last 10 years, such a performance on such a duration. It's quite remarkable in our view. And what we have in front of us is also quite interesting in terms of total return and also because, as you mentioned, we have in a lot of countries in Europe, we do think we still have room for cap rate compression. So that's -- we have to organize the liquidity. And after that, they will manage the stake. It's probably one of the topics we'll have to maybe to improve because we were surprised people -- some investors were asking a longer lockup in order to avoid to have a lot of paper on the market. But some other, we're also saying, okay, that why you don't have a larger free float. So we have to balance the 2 demand. I'm sorry, but I don't remind the second question.

Second question by Christopher Fremantle. You are trading at a big discount to net asset value. How does this impact the chances of you offering a scrip alternative to the dividend, diluting the per share measures of funds from operations and net asset value?

That's a topic that, unfortunately, we have to take into account clearly because, for sure, for people that are able or willing to subscribe the scrip dividend, it's an interesting proposal. For the others, I do recognize that to be diluted at such a level isn't a really good news. That, for sure, it's something that we will have to discuss to the Board, but we have also to take into account some other elements. But the fact that we are trading at a discount to that is for sure for management and the Board a topic that we have to manage and especially when we have to make the decision on a scrip dividend. But again, due to what is the existing or current environment, this decision will be made by the end of February.

The third question by Christopher Fremantle. You say you are reviewing a lot of health care opportunities. In general, is this because you are being beaten on price by competitors? Or is there another principal reason that you are choosing not to proceed on most of these?

I don't want to answer on behalf of Xavier, but it's because we are disciplined. We have our own financial criteria. We have our concentration criteria. You may have seen that we have not pursued an acquisition made by an asset manager specialized in health care asset led to Elsan. That was one of the reasons. So you have both. We have our -- we do think, hopefully, that we are disciplined in terms of acquisition. We have kind of threshold of return that we don't want to cross, and we put the best offer that we can on the table. Sometime we win, sometime we lose. That's life. But as you could have seen, Christopher, with our financial criteria, we have been able to close EUR 600 million of investment and new agreements on greenfield project, which is the amount that we want to close every year. So as Xavier said, we have increased the size of the team on the ground. So we have more and more opportunities to study, which is a good news. But our financial criteria are what they are. Sorry, but we won't disclose that because for our competitors, it will be too easy in the future and we stick to them. And I think we have enough opportunities to deliver the growth plan, which is clearly an ambitious growth plan, but to deliver the plan over the next 4 years. I think it was the last question. Yes, Terry, can you confirm? So thank you very much to have attended this presentation. For those who stay with us, a lunch will be served on the ninth floor. For the others, we are really sorry, but we are not able to deliver lunch boxes at your office. For sure, Victoire next year, we will try to improve the quality of the service. Not easy, but real estate, it's all about details. For those who are with us, so we go to the ninth floor. We will have a 1-hour lunch and then we will leave for the visit of Fresk. For the others, I really do recommend a look at the video that we will put on the website for the visit of Fresk. And believe me, it's clearly a trophy asset. Thank you very much.