Icade (ICAD) Earnings Call Transcript & Summary

Good day, and welcome to Icade 2024 half year results presentation hosted by Nicolas Joly, CEO; and Christelle De Robillard, CFO. [Operator Instructions]. And now I'd like to hand the call over to Mr. Nicolas Joly, CEO. Please go ahead, sir.

Thank you. Hi, everyone. Good morning. Nicolas Joly speaking. Thank you all for being today around the call. I am with our CFO, Christelle De Robillard. So this one morning, we are pleased to present Icade's results for the first half 2024. This presentation will be, of course, followed by a Q&A session. So let's move to Slide 4 for an overview of the main messages for the first half of the year. The investment division showed resilience with revenue growth supported by indexation and by the well-positioned office and light industrial segments. In addition, the fall in asset valuation was contained this half year. On the property development side, the operational performance reflected an environment that remained challenging. The volume of orders stabilized in H1 2024 compared to the same period last year, but the pressure on prices remained high, in particular, on bulk sales. This has led us to be even more cautious in launching new projects, and to carry out an exhaustive review of our operations portfolio. The group's balance sheet remains solid, particularly in terms of liquidity, even though it reflected a lack of disposal in the first half of the year. Against this backdrop, Icade confirms its guidance announced in the 19th of February 2024. We will come back to this later. Finally, we will take advantage of this presentation to give an update on the progress made in the implementation of the ReShapE strategic plan by sharing with you the first concrete steps that has been taken. On Page 5, you will find the key figures for the first half of the year. At group level, Icade posted a solid net current cash flow equal to EUR 169 million. Cash flow from strategic activities, i.e., property investment and property development, was stable at EUR 111 million. NAV NTA decreased by around 7% to EUR 62.6 per share against the backdrop of a contained fall in valuation in H1 2024. In terms of liabilities, the LTV ratio reached 35.9% at the end of June compared with 33.5% at the end of 2023, given the absence of disposal during the first semester. Net debt to EBITDA stood at 11.4x at the end of June 2024. This ratio was impacted by the one-off impairment charges booked on the property development business, following the portfolio review. In the Property Investment business, gross rental income came to EUR 188 million, up 4.1% on a like-for-like basis, driven in particular by the effect of indexation. The gross asset value of the portfolio came to EUR 6.6 billion, which is a limited 3.8% decline on a like-for-like basis. The EPRA net initial yield was 5.2%. In the Property Development business, economic revenues were stable at EUR 583 million, supported by the consumption of the backlog built at the end of last year, while the margin was negatively impacted by impairments, which we will detail later. So let's move on to Page 6. During the first half year, we have again demonstrated our ability to pioneer climate issues and commit to reflection and concrete action, particularly in relation to energy consumption management. At the 2024 General Meeting, Icade set itself apart by being the first listed company in Europe to submit 2 separate resolutions on Climate and Biodiversity to the vote of its shareholders. These 2 resolutions were approved by a very wide margin over 98%. Our commitment has been highlighted and rewarded during last month. For the third consecutive year, the financial term indeed recognized Icade's commitment to combating climate change, ranking the group in first place among French real estate companies. Icade also obtained the Cube Flex award, an initiative sponsored by the French Energy Regulatory Commission, attesting the quality and adaptability of its energy management policy. Let's look now at performance by business division, starting with commercial investment. The commercial investment division continued to operate in H1 2024 in a sluggish leasing and investment environment. The rental market in the Paris region slightly decreasing compared with last year, with a 5% fall year-on-year, but an expected volume of around 1.8 million, 1.9 million square meter for 2024, in line with last year. Transaction above 5,000 square meter were slightly up compared with H1 2023. The polarization of the market has continued, although demand has been shifting away from Paris CBD. Indeed, take-up in Paris, excluding CBD, was up 81% year-on-year and La Défense 7.4%. The vacancy and incentives have continued to grow in recent months. Outside the Paris region, rental activity was down by 21% according to the Q1 2024 latest published data, with prime rents and vacancy up as well. The investment market is still sluggish with an investment volume of less than EUR 6 billion, down almost 30% year-on-year. Transactions focused mainly on prime assets for deals below EUR 100 million. Given the improvement in the risk premium, we are seeing some early signs of prime yield stabilization primarily in more central districts. So let's turn to Slide 10 to see how Icade has performed in this environment. Against the backdrop I just described, Icade recorded a good level of leasing activity, with around 56,000 square meters signed or renewed in the first half of the year. These signatures and renewals represent an annual rental income of EUR 16 million and a WALB of 6.3 years. The good rental momentum was driven by the 2 main asset classes, namely well-positioned office and light industrial assets, which accounted for 87% of the EUR 16 million of additional income. In addition, the occupancy rate remains above 90% for these 2 asset classes. The dynamic rental activity also illustrated the good level of demand for our business part, with almost 12,000 square meters let in the Rungis Business Park and 7,000 square meters let in the Portes de Paris Business Park. On Page 11, we thought it was important to provide you with an update on 2024 lease maturities compared with the situation at the end of December 2023 since we now have good visibility until the end of the year. In H1 2024, we managed to defer EUR 25 million of lease maturities beyond the present year. As of the 30th of June 2024, we expect to lose more than EUR 30 million in annual revenues out of the EUR 37 million of maturities, sorry, expiring in H2, most of which will relate as we've already said, to the Pulse building and to assets to be repositioned. Let's move on to Page 12 related to the current pipeline. It represents additional revenues of EUR 45 million on an annual basis, including EUR 21 million by the end of 2025. We have good visibility over these revenues, as 82% of which are secured following the continued marketing of the Edenn building to Schneider Electric during the first semester. The pipeline represents relatively limited CapEx of EUR 288 million by 2027. The diversified project in the pipeline are also consistent with the ReShapE strategic plan, and include well-positioned offices in central location as well as data centers and a project to convert offices into a hotel. All these projects will comply, of course, with the highest environmental standards. And to illustrate the further future diversification of our portfolio, Slide 13 shows the progress we made up to now own data centers project. Firstly, the data center to be let to Equinix located in the Portes de Paris Business Park has progressed according to plan. Work is due to start next October, with delivery scheduled for Q3 2025. Secondly, we've reached an important milestone in the hyperscale data center project located in the Paris Orly-Rungis business park. We have indeed secured access to energy from [ ERT ] for the requested 130 megawatt power by 2031. In line with the pillars of ReShapE strategic plan, we have also made progress in analyzing the office portfolio to be repositioned and in carrying out conversion projects for certain assets. In particular, in H1 2024, the investment division sold the Arcade asset to the Property Development division with a view to converting it into housing schemes. Located in Plessis-Robinson, this program is co-developed with SEMPRO, the local urban planning agency, and this asset was sold in line with the NAV as of December 2023, with a view to developing a mixed-use district comprising shops and 650 homes and aiming for the top environmental certifications. As of June 2024, the portfolio of assets to be repositioned represents a gross asset value of roughly EUR 700 million or 12% of the total portfolio compared with 14% at the end of December 2023. Future projects have already been identified for 63% of this value. Let's move on to Slide 15. In July 2024, Icade successfully signed agreements to sell 2 core assets located in Marseille for a total of approximately EUR 45 million. This transaction will conclude on an average yield of 6%, in line with the prime rate observed in the region and demonstrate the group's ability to sell its well-positioned assets in line with the latest appraisal value. Let's now move on to the operational performance of the development business line. So the property development market was once again very challenging in H1 2024. In addition to a persistently high interest rate environment and to an unfavorable tax scheme, there were also political uncertainties in France with legislative election in July and forthcoming changes in government. Furthermore, support for activity from social and intermediate housing institutional investors should be lower this year after a strong contribution in 2023 in supporting activity. As an example, CDC Habitat should continue to support the housing market in 2024, but with a 30% to 35% reduction in orders. Let's turn now to Slide 18 to see how Icade has performed in this environment. The Property Development division recorded 2,110 orders, down by 1% in volume terms and 8% in value terms. Orders for homes sold individually dropped by 6% in volume, nevertheless outperforming the market, which was down 21% year-on-year. Volume on bulk orders continue to grow by 5% but nowhere near the levels seen last year. In terms of value, there was a clear downward pressure on bulk sales with orders down 5% in value despite this increase in volume. In this context, the group has been even more selective with a presold rate on operations launched in H1 over 80% compared with 59% for the same period last year. Sales launches were down 40% year-on-year compared with minus 30% in H1 2023. In Slide 19, we are happy to present a new project, illustrating the complementary nature of our 2 business line. The development division indeed completed in July the acquisition of another to-be-repositioned asset from the investment division. Located in the center of Lyon, this office tower will be converted into roughly 100 high-end housing units by the end of 2026. 47 social housing units have already been sold in bulk in July 2024 to the social landlord Lyon Métropole Habitat. In H1 2024, the development division demonstrated again its expertise in mixed-use project, which is a key component of the 2050 city. In June 2024, we inaugurated a large-scale campus dedicated to soft industries, technologies and services, comprising 7 assets built on a site of almost 7 hectares. The PIOM campus is a genuine demonstration of our expertise in large-scale mixed-use projects with a positive impact on nature. In addition, in H1 2024, Icade Promotion began work to build a digital and emerging technology campus in the south of France. These works are part of a property development contract representing EUR 53 million signed in June 2023. The delivery is expected in September 2026. It's worth noting that this is the first milestone in a wider project that could potentially include also student housing. I'll now turn the floor over to Christelle to present the financial results.

Thank you, Nicolas. Now, let's move on to the presentation of our H1 2024 financial results. Net year-end cash flow from strategic operations remained stable at EUR 111 million compared to June 30, 2023. This is a result of differences in performance between the business lines. The Property Investment division net current cash flow increased strongly by EUR 35 million compared with H1 2023, especially thanks to higher rental income and lower finance expenses. The Property Development business net current cash flow decreased by EUR 34.5 million compared with H1 2023 due to one-off impairment losses on projects in the portfolio. I will come back to this later in detail. Overall, the group's net current cash flow stood at EUR 169 million, reflecting the impact of the disposal of the health care business current cash flow. Let's move on to Slide 23. As of June 30, 2024, EPRA NAV per share was EUR 62.6, declining roughly by 7%. This year-on-year change is due in particular to the evolution in the value of the property investment portfolio, representing EUR 3.3 per share and the interim dividend paid in March 2024 of EUR 2.4 per share. Let's dive into the financial performance of Property Investment division in Slide 25. There are 3 messages to take away from this slide. Firstly, the Property Investment division revenues came to EUR 188 million in H1 2024, up EUR 7 million on a year-on-year basis. Secondly, the like-for-like growth was solid at plus 4.1%, supported by the positive impact of indexation plus 5.5%. This positive effect was partly offset by the effect of tenant departures, minus 1.2% and negative reversion on renewals, minus 0.2%. Lastly, growth was driven by the performance of the well-positioned offices and light industrial segments, which saw revenues rise respectively by 6.4% and 7.8% on a like-for-like basis. As previously mentioned, the net current cash flow of Property Investment division was sharply plus 35% year-on-year. This is a result of higher revenue, lower cost, thanks in particular to a decrease in energy costs and some positive one-off effects and of the improvement in the financial results, driven by the combined effect of a lower cost of debt and higher finance income and cash invested. Slide 27 for the duties and changes in the value of the investment portfolio. As Nicolas mentioned, the value adjustment was contained at minus 3.8% on a like-for-like basis. Disposals and investment did not have a significant impact. The EPRA net initial yield was 5.2%, marginally lower than in December 2023, reflecting the one-off impact of one franchise as the calculation of this indicator is now based on invoiced rents rather than IFRS rents in accordance with EPRA recommendation. The EPRA topped-up net initial yield is 6.3%, up 0.2% on December 31, 2023. Slide 28 illustrates the slowdown in value adjustments in our portfolio. In H1 2024, we saw a slight increase of 0.7% in the valuation of light industrial assets, an asset class that has shown its resilience over the past 24 months. For offices, the adjustment over the first half of the year were less pronounced than over the previous 3 half years with a 3.6% decline in well-positioned offices and a 7.3% decrease in to-be-repositioned offices. Overall, both asset classes are currently valued at 26% and 46% less than they were 24 months ago. Let's jump on the property development results on Slide 30. Given the market context previously described by Nicolas, Icade team conducted a comprehensive and in-depth review of the project portfolio. This review led to the recognition of significant impairment losses totaling EUR 85 million before tax, i.e., EUR 63 million after tax. The impact on net current cash flow amounted to minus EUR 34 million and is linked to the adjustment of price grids on ongoing projects. The impact on net current cash flow was minus EUR 29 million and related to the write-down of study costs and the depreciation of land prices for reconfigured or discontinued projects. As a result, the net current cash flow from profit development is at minus EUR 21 million at the end of June compared with EUR 14 million in H1 2023. It should be noted that excluding the effect of impairments, the division net current cash flow would be relatively stable, thanks in particular to rigorous operational cost management, which had a positive impact of nearly plus EUR 6 million compared with the same period last year. Let's move on to debt management. The H1 2024 performance was marked by a very good financial results. Apart from income coming from the [ already owned ] stake in the health care business composed of interest on the loan to IHE Healthcare Europe and dividend received from this entity, the increase in the financial results reflects the rigorous management of cost of debt and an optimization of cash management. On the one hand, the cost of debt remains very low and has even improved in H1 2024 to 1.52% compared with 1.60% at December 31, 2023, thanks to additional hedging. The projected 2024 debt is also fully hedged. On the other hand, the group recorded substantial income this half year, up by EUR 19 million compared with the same period in 2023, with an average cash volume of EUR 1.2 billion invested at around 4%. Let's move on to Slide 34. Icade maintained a very strong liquidity position of EUR 2.4 billion, covering its debt maturities until mid-2028. In addition, in the first half 2024, we successfully bought back EUR 350 million of bonds, enabling us to proactively manage the debt maturity schedule and reduce the next 2025 and 2026 bond maturities. Page 35 presents our key balance sheet ratio as of June 30, 2024. LTV was up 2.4 points at 35.9%, reflecting the change in the value of the property portfolio and the absence of asset disposals in H1 2024. At 11.4x, the net debt-to-EBITDA ratio as of June 30, 2024, resulted from the impact on EBITDA of the impairment losses booked on the Property Development business. This impact accounted for 2.7 points of the increase in the ratio. Let's move on to Slide 36 for an update on the disposal of the Healthcare business. During the first half of the year, discussions on Stages 2 and 3 continues, but no new milestones have been reached so far. Nevertheless, we confirm the disposal strategy of health care activities remain the same, and the terms and condition of stages 2 and 3 are unchanged. As for Stage 3, the marketing of the Italian asset portfolio has started to generate interest from prospective investors. It should be noted that the value of the health care portfolio remained stable at minus 2% over the semester, given the resilience of these assets and the solidity of the P&L. I'll hand over to Nicolas for the conclusion and details on the guidance.

Many thanks, Christelle. Based on the group's results as of the 30th of June 2024 and expectations for H2, Icade reaffirms its guidance of a total net current cash flow between EUR 3.55 and EUR 3.70 per share for the full year 2024. This is made up of, firstly, the net current cash flow from strategic activities between EUR 2.75 and EUR 2.90 per share, and secondly, from net current cash flows from discontinued activities of circa EUR 0.80 per share. In Property Investment division, we showed good resiliency in the first half of 2024 and benefited from strong income on invested cash. For H2, we anticipate a lower growth in cash flow for this business line compared to H1, given the departures of some tenants and the decrease in investment income. In the Property Development business, we expect a stabilization following a major adjustment in H1 2024. On the net current cash flow to be expected from discontinued activities, we have now a good visibility as it is secured at the end of June at 95%. Well, to wrap up, I would say that Icade navigated through an environment that remained quite challenging in the first half of 2024, with a number of indicators showing resilience. Our financial and operational performance reflects our ability to adjust to changing market condition without losing sight of our long-term goals. We achieved indeed some meaningful first steps in the deployment of our 2024-2028 ReShapE road map and I look forward to updating you on our progress. Thank you very much. And with that, let's start the question-and-answer session.

[Operator Instructions] We will now take our first question from Stéphane Afonso from Invest Securities.

I have 2 questions if I may. The first one regarding offices, would it be possible to share the reduction rate captured in H1 for well-positioned assets? And secondly, in terms of disposals, what proportion of noncore offices we intend to sell to Icade Promotion? And finally, could you give us more color on the progress of discussions about the next steps of Icade Sante disposals? What can we expect by the end of the year?

Okay. Thank you, Stéphane. Well, as for the reversion for the well-positioned asset, well, the signatures and renewals were as always in line with the ERVs, so did the incentives in line with the market practice. Globally, we stick to the global figures shared during the first semester. And at this point, there is no updated figure to disclose regarding the global reversionary potential on well-positioned assets. Maybe you can consider, let's say, in the midterm, a slight decrease because as indexation continues to impact positively and strongly the rent, as you saw in H1, of course, the ERVs are going up, but not at the same pace. But globally, we were in line with what we've already shared. For your second question about disposal to be sold to Icade Promotion, well, there's no specific target, but I mean it really depends on the project. Honestly, you know that on the one asset to be repositioned, at the end of the day, the strategic view on that is to sell those assets, but we need to have a proper reconversion plan. Sometimes Icade Promotion is the best partner to do so because we are fortunate enough to have the toolbox in-house. That's what we did in the Plessis-Robinson. That's what we did in Lyon, Lafayette. But I mean, we can also do that with other partners, so no specific target in mind. And as for the health care disposal, well, as Christelle said, you know that there's absolutely no change in our strategy. And I mean, executing Stages 2 and 3 are one of our top priorities. And as already shared, in our view, it's not a matter of execution. It's more a matter of timing. And to be more specific, on Stage 2, where we have regular discussions with Praemia REIM, the former Praemia REIM and other third-party investors, some concrete step has been taken during the first semester to renegotiate the liquidity conditions offered to shareholders since the investment thesis is not necessarily the same from new investors than the existing minority shareholders. This, in addition to the quite stabilization of the value, in our view, should facilitate the entry of new investors. As for Stage 3, as Christelle said, while the marketing of the Italian portfolio is ongoing, it's an attractive portfolio. The Praemia REIM team and the shareholders have selected a bank to structure the proper process, and we've already received some unsolicited first expression of interest on some assets of the portfolio. So that's where we stand today. Well, bear in mind that globally, this is definitely a resilient asset class that delivers strong predictable cash flow, steady cash flow, delivering steady dividend, as you saw because it enables us to have secured more than 95% of the cash flow coming from the discontinued activities during the first semester.

I have just one last question if I may. Would it be possible to share the like-for-like growth of Icade Sante appraisal value in H1, please?

Sorry, the like-for-like...

Growth of Icade Sante appraisal value in H1?

We don't disclose the like-for-like growth in Icade Sante, but what we disclosed in an estimation of a decrease of an average 2%, both on IHE and the Praemia Healthcare.

We will now take our next question from Valerie Jacob from Bernstein.

So I've got 3 questions. My first question is about the Property Development business. You said you expect a stabilization in H2. And I just wanted to clarify what that means because you took a EUR 34 million write-down in H1. Does that mean that we can expect to come back to around EUR 15 million? Or does that mean something else for H2 in the future? My second question is about your tenant departure. You had a lot of tenants exercising their lease -- their bulk options, sorry, in this year. You've got 16% of leases potentially expiring in 2025. And I was wondering if you expect such high amount of departure as well or if you already have some visibility. And my last question is about your projects in Lyon and Plessis. I was wondering if you could share some profitability number, so we can understand the sort of math behind repositioning this asset from office to residential.

Okay. Thank you, Valerie. Well, maybe to start with the Property Development, well, as you saw, so due to the uncertainty of the global environment and what we've observed through our discussion with institutionals on bulk sale, we indeed run this comprehensive review of the portfolio. That led to the significant impairment loss we just shared. This is a one-off impact, so therefore, we do not expect additional deterioration of the net current cash flow in H2. So to answer your question, this should lead to a mechanical increase of the margin rate at the end of the year compared to the figures shared for the first semester. Globally, I would say that even if there can be some positive sign in development activities with individual, we think that those signs need to be confirmed first; secondly, that we are going through the complex environment from political tax and economic point of view. And in our view, uncertainties shall lead to greater selectivity in our projects. So that's what we do. That's what we did with the operational launches in the H1, as you saw, and that's what we intend to do for the months to come. Maybe to keep on talking about property development coming to your third question, on the to-be-repositioned asset that has been bought from Icade Promotion, we do not usually share the specific figures, but the idea, especially because we also have some third party involved, for example, in Plessis-Robinson, is to do so at market practice. So there's profitability for Icade Promotion on this operation in line with the usual on the market. And it's indeed worth pointing out that we were able to do so by selling the asset at the NAV. And as for your second question, let's say, related to the expiry schedule, on the investment division, well, it was important for us to share with you from the start as much visibility as we had on the leasing expiry schedule. Already EUR 16 million of rent losses has been indeed crystallized over the H1. As we've always said, most of the break option and expiries rather concerned the H2 indeed. That's the reason why we expect the total amount on this semester above EUR 30 million of land losses out of the EUR 37 million. Due to the fact that those losses are mostly due to, to-be-repositioned assets and the one specific asset of Pulse building hosting the Olympic Committee, well, of course, there are some challenges still ahead in 2025. But the major part was on 2024 on the expiry schedule. But have in mind once again that due to the fact -- talking about the earnings, due to the fact that most of the departures are in H2 2024, of course, it will slightly weigh on the earnings in 2024, but also have a full year impact on the earnings in 2025.

We will now take our next question from Celine Soo-Huynh from Barclays.

Nicolas, I got 2 questions for you. The first one is that if we analyze the H1 net current cash flow, it seems to be running slightly ahead of the guidance. And you also said that the net current cash flow in H2 should not be lower than in H1. So is there a chance of a beat here at full year? Or why are you being extra cautious? And the second question is on Icade Promotion. The land profit value was written down by 9% in H1. If pricing remains the same as today, what kind of profit margin would you expect going forward? In other words, did you write down that land profit enough to be able to generate a profit going forward?

Yes. Celine, thank you for your question. Well, regarding the guidance, I'd say that from the start, and I think we were pretty clear with Christelle on that, we were really cautious in defining the guidance given the uncertainty on the context, especially on the property development operations. So that was the reason why we were able to offset that and reaffirm the guidance. There were also some positive results helping to offset those significant losses in H1 coming from the efforts made on the operational cost management. Also, as you saw better performance on the investment division and the financial product, from where we stand today, we now have stronger visibility on the H2, of course. We've also secured most of the net current cash flow coming from the discontinued activity. So that's the reason why we are able to confirm the guidance. Nevertheless, as I said earlier talking about the property development, we really think that we are facing some uncertainty globally, politically speaking, on the tax and economic point of view. So that's the reason why we are still thinking to -- we need to be cautious, but we are confident in the guidance being maintained as of today.

Regarding your second question in terms of Icade Promotion depreciation and the impact on the margin, so as you understood during our presentation, those impairments are the result of an exhaustive and in-depth portfolio review to take into account the current environment and particularly regarding bulk sales. We -- it conducted us to make an impairment on more than 200 projects out of 500 total projects. So that is to say nearly 40% of our portfolio. If the current macroeconomic, political environment doesn't change, that is to say under ISO condition, we can consider that all provision has been accounted during this first half semester. As Nicolas explained, we don't expect further deterioration of net current cash flow in H2. So mechanically, it will lead to an increase of the margin rate at the end of 2024, even is once again as we are evolving in -- cautious in a political environment, which is still uncertain, we remain cautious for the following months.

Sorry. Can I follow up with another one regarding your government in France? Do you -- are you getting any signal from the new government on some kind of return of subsidies to help France builders that are not doing great at the moment?

No, honestly, we don't -- it's really too early to have some signal even more globally, frankly. What we've observed during the past week is that it didn't have a strong impact on the activity even if it was a really short period of time. But on the Property Development business, there was no major change on individual's behavior. And as for the Property Investment division, as you saw, we managed to sign as planned on the timing plan the 2 presale agreements we had in mind. So no major change in the short term, but it's really too early to tell to have some signals and to have a proper view of what to expect in the months to come.

Right. So Nicolas, but you're kind of saying as well that we've gone through the worst for retail commercial and the only way is up, right?

Well, I really prefer to be cautious. We'll be more and more selective. We'll be focusing, as you saw, on new operations, taking in account the new environment criteria, focusing on the project with the good margin, high level of pre-commercialization. But have in mind that the political agenda in France is still uncertain. Soon, it will also be the municipal election in the town, so all this uncertainty definitely is not favorable to business in our view. So that's the reason why we keep paying attention on our cost and everything and the selection of the operations. So in my view, too early to tell the worst is behind us.

We will now take our next question from Florent Laroche-Joubert from ODDO BHF.

Yes. Can you hear me?

Yes. Very good.

Nicolas, Christelle, can you hear me?

Yes, sure, sure.

Okay. Yes, I would have 2 questions. My first question will be on the occupancy rate in the office is well positioned and on the light industrial. So you have had good leasing activity in the semester. But however, the occupancy rates for these 2 segments has decreased. And so I would like to know if we could have maybe more color on that. And my second question would be on the valuation of the assets, maybe for H2. How do you see the next evolution for H2 in terms of valuation of these assets?

Yes. Florent, thanks for your questions. Well, about the occupancy rate, well, globally on the 2 main asset class, well positioned in light industrial, it maintained itself above 90%. So I mean, it's all the usual, I would say. But have in mind that it will be also impacted, especially the well-positioned offices by the departures of the Olympic Committee on the Pulse building. We have a deep conviction in this asset. That's the reason why it's on well positioned. But of course, it will impact the occupancy ratio at the end of the year, so just to give you some perspective on that. And as for the valuation of the asset, maybe, first of all, a reminder from where we come from over the -- since the peak in June 2022 over those 2 years. So the global adjustment for Icade was minus 26%, so quite significant. Of course, it varies from one asset class to another. I think the to-be-repositioned asset has been almost cut by half. The exact figure is minus 46%, so close now to EUR 2,000 per square meter on this asset class, so quite significant. We saw that the adjustment is really slowing down in H1 compared to the last period. So definitely main part of the adjustment is behind us. I think the valuators did great job restoring the risk premium. And have in mind also, I really think that's one of Icade's specificities, that 2/3 of our portfolio is going through a double check expertise process. So this gave some comfort also to us on the figures. From what is ahead of us, I'd say that the first point, we're still depending, of course, on Central Bank's decision and inflation data, but would appear hopefully that the rate cut is underway, hopefully. Nevertheless, we remain also cautious as, of course, some of the value adjustment's still possible from one asset class to another on the second semester. But clearly, the main part is behind us now. And you see that what we've been able to achieve in Marseille that we are finding some liquidity on some well-positioned assets, too.

We will now move to our next question from...

So that means that now you see some appetite of investors.

Well, yes, Florent.

Can you still hear me?

Yes, yes, we hear you well. Do you hear me?

Yes, yes. I'm here.

Okay. So to answer your question, yes, we saw some appetite, for example, on the...

My follow-up question -- yes, I can hear you.

Okay. So we saw some appetite from investors on the Marseille assets marketing, for example. We had, for each asset, 4 to 5 offers. So there's some appetite back. But still, bear in mind the global figures we've shared on the investment market, still remaining very sluggish in a whole, so slightly better, but definitely, we are still facing headwinds.