(AOF) – On March 28, Icade Promotion and SEMIIC Promotion sold in a future state of completion (VEFA) to Goldman Sachs Asset Management and Hemisphere a first tranche of approximately 32,500 square meters of the Envergure property complex in Romainville distributed in two phases and developing nearly 47,600 square meters of office space.
In the continuity of the promise of sale signed on December 23, this VEFA follows the signing, last February, of a lease with the State, Directorate General of Public Finances (DGFIP), relating to more than 21,500 square meters of office space.
The signing of the deed of sale for part of the second tranche, namely the speculative development of 15,150 square meters of office space also sold to Goldman Sachs Asset Management and Hemisphere, is scheduled for fall 2022. This second tranche also includes 4,560 square meters of housing.
Provisional deliveries of the units are scheduled for the summer of 2024 and the first quarter of 2025.
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Key points
– Fifth in France and first in Europe for offices and business parks, with a real estate portfolio worth €12.2 billion;
– Integrated real estate group organized into 3 divisions: tertiary property (68% of assets, 3/4 split between offices and tertiary parks), health property (32%) and development;
– “Design, build, manage, invest” business model, based on synergies between the poles: resilience of the health real estate company supporting the development of the tertiary real estate company, valuation of the latter’s costs through development, in particular for Greater Paris and the TGV metropolises; – Offices and business parks located 95% in Ile-de-France, including nearly 20% in Paris and 1/4 in La Défense;
– Capital controlled at 39.2% by Caisse des Dépôts, ahead of Crédit Agricole with 19.1%, Frédéric Thomas heading the Board of Directors and Olivier Wigniolle being Chief Executive Officer;
– Solid financial position, the best rated in the sector with Gecina, with an LTV ratio of 40.1%.
Challenges
– 2025 strategic plan: leader in offices in Greater Paris and metropolitan areas, with €5.7 billion in revenue, 1st European health property company, through the international development of Icade Santé, 58.3% owned, with an objective investment of €3 billion, leading player in property development with €1.4 billion in turnover and 7% margin, annual growth of 4.5% in net current income;
– Innovation strategy broken down into 3 themes – housing of tomorrow, office of the future (proptech, coworking and third places) and health and well-being in the city – and based on intrapreneurship, co-innovation through start-up incubation -up, via Paris&Co, Creative Factory or H7…, and regional and industrial partnerships;
– “Low Carbon by Icade” environmental strategy aiming for carbon neutrality by 2050: impact measurement, reduction of the footprint with partners via a climate fund endowed with €2.5 million, compensation for residual emissions, investment plan 2022-26 of €150m, integration of ESG criteria in bond issues;
– Development pipeline of €1.7 billion in the service sector and 27 projects in healthcare;
– Dynamism of portfolio rotation: at the end of 2021, disposals of €507 million and, for 2022, continued disposals of buildings (Gambetta and Millénaire in Paris) and acquisitions;
– Indexation of rents on the cost of construction favorable to income growth.
Challenges
– Change in revalued net assets or ANR, of €90.6, key data for the property sector on the stock market, to be compared with the stock market price and the vacancy rate (87.5%);
– Responsiveness to rising material costs and disruption of supply chains;
– Integration of healthcare property acquisitions in Germany, Spain, Italy and Portugal;
– Postponement of the initial public offering of Icade Santé to the summer of 2022 depending on market conditions;
– 2022 target of a 4% increase in net current cash flow for the group and 5 to 6% for the health property investment company and a 3 to 4% increase in the dividend;
– 2021 dividend of €2.
Business services: road transport faced with a labor shortage
A report published by Dares (Direction de l’Animation de la recherche, des Etudes et des Statistiques) in October 2020 pointed out that truck drivers were among the thirty most stressed professions in France in 2019. This tension is not fallout and could even increase in the coming years. According to the OTRE (Organization of European Road Carriers), the needs could reach 100,000 jobs in the next five years. The phenomenon, which was lessened during successive confinements, reappeared with the resumption of activity. It is partly linked to a lack of image and unattractive remuneration. Unfortunately the recent negotiations between the social partners to revalue the minima of branch did not succeed.
Chinese real estate still in turmoil
Real estate is essential for the growth of the world’s second largest economy. However, after the setbacks of the giants Evergrande and Fantasia, other smaller promoters are having difficulty repaying their debts. The giant Evergrande is strangled by an abyssal debt of around 260 billion euros. He is fighting to pay his bond interest on time and deliver his apartments, so as to avoid a bankruptcy that would shake the entire Chinese real estate sector. The OECD believes that the risks of a sharp slowdown in China have increased with the setbacks of Evergrande. A drop of 2 points per year in Chinese domestic demand over two years would reduce global growth by 0.4 points of GDP.