Icade: 23 tertiary leases signed in Q1 2023, collapse in housing reservations
No need to look far: the 1er 2023 quarter ofIcade — the property company unveiled its results this morning — was marked by the exclusivity agreement for the sale ofIcade Health To Primonial REIM (read our article). Other highlights from 1er quarter during which the real estate arm of the Deposit Fund generated consolidated revenue, group share, of €296.6 million (-12.2%), restated for healthcare real estate data: the 23 leases signed by the tertiary property company, representing nearly 60,000 m² for approximately €14 million in annualized headline rents (average firm term: six years). This volume includes in particular the signatures of two Befa: 7,500 m² over a firm term of nine years with Equinixoperator of data centerin the Portes de Paris business park, 3,000 m² over a period of nine years with a subsidiary of Vinci Energies in the Paris Orly-Rungis business park. Icade also renewed the leases of U-system in the Paris Orly-Rungis business park (21,000 m², nine years),Adecco on the New Way asset in Lyon (13,300 m², nine years) andArcelorMittal on the Cézanne asset in Saint-Denis (4,100 m², six years).
Rental income in the group share of the tertiary property company in the office and business park sector amounted to €83.3 million at March 31, 2023, down slightly by €2.4 million, in a context of significant asset disposals in 2022 with a volume of more than €600 million, representing an annual rental amount of around €21 million. Excluding the impact of disposals in 2022, revenues would show growth of 3.7% on a current basis. The financial occupancy rate was 87.5%, stable compared to December 31, 2022 (87.7%).
During Q1, Icade signed two agreements relating to the sale of offices core for more than €100 million located in Marseille (Grand Central for €53 million and Eko Active for €48 million), bringing the total volume of sales committed for 2023 to nearly €150 million. In the office segment, they were achieved at an average yield of 4%.
“In the context of the planned transaction with Primonial REIM for its Healthcare activities, Icade will maintain an opportunistic approach to continue its program of office disposals in 2023, in an investment market which has remained, such as rental activity , still wait-and-see on the 1er quarter of 2023”, notes the group.
Collapse of reservations
On the development side, economic revenue amounted to €227 million over the period, down -14% compared to March 31, 2022, broken down between residential (€165 million, compared to €205 million at March 31, 2022) and tertiary (+2.9% to €60 million). Icade notes “a fairly significant withdrawal on the part of institutional investors from the residential property development market on 1er quarter of 2023 (18% of total revenue), in a volatile financial market environment and high interest rates that persist without medium-term visibility”. “Their contribution to Icade Promotion’s turnover is nevertheless expected to increase over the next few quarters”, adds the group in a press release. Ultimately, Icade recorded 640 housing reservations over the period, compared to 1,382 a year earlier (-53.7%).
Icade Promotion claims to have activated various levers to deal with this new situation, such as in particular: increased attention to the level of hard stock, reinforced monitoring of commercial launches (price adjustments and commercial offers), a search for project adaptation and a recalibration of land values, and an analysis to identify leads in order to adjust structural costs to this situation.
Finally, on the 1er quarter of 2023, rental income from the healthcare real estate investment group amounted to €55 million, up 5% on a current basis (+€2.5 million), mainly due to the acquisitions made in 2022 and the indexing effect. On a like-for-like basis, the growth in rental income is +3%, mainly driven by the indexation of the period which amounts to +3.3%. The financial occupancy rate of the portfolio as of March 31, 2023 remains unchanged at 100%