Icade SA / Earnings Calls / July 24, 2025

    Operator

    Good day, ladies and gentlemen, and welcome to Icade 2025 Half Year Results Presentation. Please note, this event is being recorded. [Operator Instructions] I will now turn the call over to your host for today, Nicolas Joly, CEO; and Bruno Valentin, CFO. You may begin.

    Nicolas Joly

    Thank you. Good morning, Nicolas speaking. Thank you all for being here today on this call. Along with Bruno Valentin, we are delighted to present this morning Icade 2025 half year results. This presentation will be, of course, followed by a Q&A session. Let's move on to Slide 4 for an overview of the key messages for the first half of 2025. Icade delivered strong leasing activity with nearly 80,000 square meters signed or renewed contributing to an improved occupancy rate for well-positioned office and light industrial assets. In parallel, the Property Investment Division secured over EUR 100 million in disposal of nonstrategic and core assets in line with NAV. In the first half of 2025, Icade posted a resilient net current cash flow from strategic activities compared to the same period last year. However, the contribution from the Property Investment and Development businesses differed from 2024. Indeed, while rental income declined, the profitability of the Development segment improved following a deep review of our operations in early 2024 to adapt to evolving market conditions. Against this backdrop and in a complex market environment that calls for caution, we are confirming our full year guidance for our group net current cash flow. This semester, we proactively manage our balance sheet and further strengthen our liquidity position with the successful issuance of a EUR 500 million 10-year green bond in May and the closing of EUR 290 million in backup credit terms. On the ESG front, Icade distinguished itself in 2024 as the first publicly listed company in Europe to submit 2 separate shareholder resolution on climate and biodiversity. At our general meeting held in May 2025, we once again put these resolutions to a vote presenting the group's performance in reducing carbon intensity, lowering CO2 emissions and contributing to biodiversity preservation. Both resolution received overwhelming support with approval rates above 99%. On Pages 5 and 6, you will find the key figures for the first half of 2025. At group level, Icade reported a net current cash flow of EUR 2.03 per share. Cash flow from strategic activities, namely, Property Investment and Property Development, was nearly stable at EUR 1.44 per share compared to EUR 1.47 per share in H1 2024. NTA NAV declined by around 6% to EUR 56.6 per share, mainly reflecting the decrease in the value of the property portfolio and the payment of the interim dividend. On the liability side, the loan-to-value ratio stood at 38.1% at the end of June versus 36.5% at the end of December 2024, reflecting the decline in asset values and a still limited volume of disposals. The net debt-to-EBITDA ratio improved to 8.3x, thanks to a recovery in development margin this semester. Interest coverage remains very solid at 7.4x with an average cost of debt stable at 1.6%. In the Property Investment business, gross rental income amounted to EUR 178 million, down 4.3% on a like-for-like basis, mainly due to tenant departures. The gross asset value of the portfolio stood at EUR 6.2 billion, reflecting a minus 2.8% decline on a like-for- like basis. The EPRA net initial yield remained stable at around 5.3%. In the Property Development business, economic revenue declined to EUR 501 million versus EUR 583 million in the same period last year. However, the operating margin turned positive again, reaching 2.3%. Let's look now at performance by business division, starting with Property Investment. Let's move on to Page 9, which covers the latest market trends. In the first half of the rental market remained challenging with take-up in the Greater Paris region down 12%, a persistently high vacancy rate above 10% and incentive of ranging around 28%. In an uncertain economic and political environment, tenant decision-making processes have become longer. However, the trend towards more affordable peripheral and well-connected areas continues to gain traction, particularly in locations like La Défense. On the investment side, market conditions appeared to be slightly improving with a modest increase in transaction volumes and greater investor liquidity, especially for large deals, notably in the core plus and value-add segments. That said, liquidity remains mostly concentrated in central location for now. In this context, Icade recorded solid leasing activity with approximately 79,000 square meters signed or renewed in H1 2025 compared to 133,000 square meters over the full year 2024. These leases represents annual rental income of EUR 20 million with a WALB 7.4 years. This performance highlights the strong demand for Icade's well-located office assets that meet high standards. A standout example is the full reletting of the Pulse building in Seine totaling 29,000 square meters. We also demonstrated our ability to effectively manage business parks, such as the Mauvin site in the north of Paris. Following the signing of 2 leases this semester for over 7,000 square meter of light industrial space, the 21,000 square meter park is now fully let. Thanks to the strong commercial momentum, our occupancy rate improved to 88.8% for well-positioned offices and 89.5% for light industry owned assets. It's worth noting that these figures does not yet reflect the positive impact of the Pulse reletting as tenant occupation will begin later this year. We now turn to Page 11, which focuses on asset rotation. In the first half of 2025, Icade secured over EUR 100 million in disposal of nonstrategic and mature assets including, firstly, the disposal of the Nancy Regional University Hospital, CHRU, representing a value of EUR 55 million following the early termination of the public-private partnership and the transfer of associated liabilities back to the CHRU. Secondly, the sale of a portfolio of five B&B hotels to a leading investor for EUR 36 million at an average yield of around 7%, in line with the NAV as of December 31, 2024. The third transaction is under signed promise to sell a mixed-use office and retail building in Marseille, covering 3,300 square meters and valued at EUR 14 million. This deal also aligned with NAV illustrates the continued liquidity in the market for core and small- sized assets with yields of approximately 6%. Let's move on to Page 12, which highlights our current project pipeline. We have a diversified pipeline with limited CapEx of around EUR 300 million planned over the next 3 years. This pipeline is expected to generate approximately EUR 50 million in additional annualized rental income. In the first half of 2025, we launched 3 new core office projects delivering attractive yield on cost above 7%. This includes 2 developments, Seed and Bloom, located in the heart of Lyon Part-Dieu business district as well as Centreda, an office project in Toulouse fully pre-let to [ Sopra ]. In line with the group's CSR ambition, Icade is fully committed to ensuring that all ongoing developments achieved top certifications, such as Ask HQE and BREEAM Excellent or aligned with the EU taxonomy criteria. The first half of 2025, Icade continued to advance its strategy to diversify its asset portfolio. Notably, in the student housing segment, Icade signed a partnership agreement in July 2025, with Cardinal Campus, a student residence operator who will manage the future portfolio of assets on Icade's behalf under white label arrangement. In June 2025, the Property Investment division already positioned itself to invest in a student residence in Ivry-sur-Seine, a joint development with the Philia Group. The project includes 194 units totaling approximately 3,600 square meters with construction set to begin in Q1 2026 and delivery plan for 2028. Additionally, 2 to 3 other student residence projects in the Paris region, representing around 750 beds by 2028 have already been identified in collaboration with the Property Development Division. Let's now move on to the operational performance of the Development business line. The first half of 2025 remained challenging for the industry, especially in the second quarter. The Development Division recorded a stable orders volume with 2,116 units, totaling EUR 496 million, down by 8%. Activity in the individual segment declined by 11% in volume, in line with the overall market. This decline occurred in an unfavorable tax environment marked by the end of the Pinel tax scheme, which led to a sharp contraction in individual investor activity with minus 35% compared to H1 2024. The momentum was more positive for owner-occupier orders, which increased by 10%, supported by favorable measures promoting home ownership. Bulk orders showed a 10% increase in volume, but an 8% decrease in value. This discrepancy between volume and value changes is explained by a temporary shift in the product mix. Institutional investors continued to drive business activity as they accounted for 54% of orders in volume terms in H1 2025. It is also worth noting that institutional investor activity has historically been stronger in the second half of the year with over 2/3 of bulk sales made in H2 in both 2023 and 2024. During the first half of 2025, the group demonstrated its commitment to building the city of 2050, in line with its ambitions outlined in the ReShapE strategy. Notably, Icade, together with SCET, published the first barometer on French city fringes. The study's finding highlights potential of 1.6 million housing units, 15,000 hectares of economic land and 10,000 hectares earmarked for ecological restoration. Icade aims to play a significant control in the transformation of these commercial areas. In this context, during the first half of 2025, Icade acquired a portfolio of 11 real estate sites from Casino for EUR 32 million. The portfolio consists of parking lots and develop plan building ancillary units related to stores. Two of these sites were co-invested with CDC Habitat. These sites offer a total development potential of approximately 3,500 housing units and over 50,000 square meters of retail space with an estimated potential revenue of around EUR 1 billion. These development projects will take between 10 and 15 years to be completed. They include a holding phase of the asset prior to obtaining administrative approvals and relocating tenants, followed by the launch of traditional off-plan sale development programs. I'll now turn the floor over to Bruno to present the financial results.

    Bruno Valentin

    Thank you, Nicolas. Let's move to the financial results. Please find the group's main P&L KPI on Slide 20. For the full semester, Icade's consolidated IFRS revenue was down by minus 10% to EUR 630 million, including a 5% drop in gross rental income from the Property Investment Division and a 12% fall in Property Development revenue. EBITDA stood at EUR 145 million, up on the same period in 2024, while EUR 85 million of impairment losses were booked following the review of the Property Development portfolio. The group net financing expense increased to minus EUR 22 million from minus EUR 7 million due to lower short-term investment income and lower dividends from the Healthcare business. The group's net current cash flow amounted to EUR 144 million. Net current cash flow from strategic activities remained relatively stable at EUR 109 million compared with EUR 111 million in H1 2024. The key takeaways about the net current cash flow from strategic operations are as follows

    lower retail income from the Property Investment Division for minus EUR 0.17 per share, an increase in the net profit margin of Property Development activity for EUR 0.39 per share and a decline in finance income for EUR 0.21 per share. I will come back to this in more details in the following slides. Let's dive into the financial performance of Property Investment Division in Slide 22. Gross rental income decreased by 5.1%, mainly due to tenant departure recorded in the recent months at the gradual capitalization of negative lease renewals. These effects were partially offset by the positive impact of indexation, which have gradually moderated and still contributed plus 3.4% as well as early termination fees, mainly related to the 2 repositioned offices. It's also worth noting that the net written income was negatively impacting by higher vacancy costs. On Property Development side. Economic revenue amounted to EUR 501 million as of June 30, 2025, down by 14% year-on-year. This decline mainly results from a decrease in residential book sales down by 32% in value terms and a sharp drop in commercial segment with revenues down by 39% year-on-year due to the completion of major projects at the end of 2024, coupled with a low volume of new contracts signed in 2025. The net property margin improved mechanically in H1 2025, following the impairments booked in H1 2024. However, the decline in volume and the continued margin pressure of certain projects launched prior to 2024 still negatively impacted the overall margin of the business. Let's move on Slide 25. The half year financial results is starting to normalize after 2024 year marked by a very high volume of finance income. Specifically financial income for investment declined by more than EUR 10 million due to both volume and interest rate effects. Additionally, dividends received from our Icade in healthcare activities decreased by EUR 10.5 million, reflecting the absence of dividend paid by is IHE this year. The cost of gross debt remained stable with the average cost still low at around 1.6%. The debt projected for H2 2025 is fully hedged, and the average cost of debt for the full year 2025 is expected to remain below 1.8% factoring the new bond issue completed last May. Let's turn to Icade's balance sheet, Slide 27 focuses on change in the value of the investment portfolio. As Nicolas explained, the fair value of Property Investment portfolio stood at EUR 6.2 billion given the decrease in value of minus 2.8% on a like-for-like basis. The EPRA net initial yield was from 5.3%, pretty stable versus December 2024. The EPRA topped-up net initial yield was 6.2%. Slide 28 shows a slowdown in value adjustments across our portfolio by asset class. For well-positioned offices, the adjustment over the semester stood at minus 2.7%, confirming the slowdown in the decline in values semester after semester. Light industrial assets continued to show resilience with fair value increasing by 0.4% this semester. As of June 2025, NAV per share with equal to EUR 56.6, declining roughly by 6%. This year-on-year change is mainly due to the lower value of the Property Investment portfolio, representing EUR 2.7 per share. And the interim dividend paid in March 2025 amounting to EUR 2.2 per share. Let's move on to debt management. The first half of 2025 was marked by strong achievements. Firstly, a 10-year green bond insurance of EUR 500 million. Secondly, a buyback of medium-term notes maturing in '26, '27 and '28 for a nominal amount of EUR 268 million. Finally, the signing of EUR 290 million in credit facilities included EUR 190 million in additional line. Together, this transition are to extend the average maturity of debt, reinforce our liquidity position to anticipate upcoming debt maturities and increase our share of sustainable financing. As such, we have achieved our target of having 75% of financing green or linked ESG objective more than a year ahead of plan. Slide 31 is dedicated to our debt maturity schedule and liquidity position. At the end of June, it had a strong liquidity position composed of EUR 1 billion in net cash and EUR 1.8 billion in unused committed revolving credit facilities. This liquidity covers group's debt maturity through 2029. Now I will hand over to Nicolas for the conclusion and detail on the 2025 outlook.

    Nicolas Joly

    Many thanks, Bruno. Let's move on Slide 33 for the 2025 guidance. Based on the group's half year results and expectations for H2, we remain cautious and reaffirm our 2025 guidance of the group net current cash flow of between EUR 3.40 and EUR 3.60 per share. This includes net current cash flow from nonstrategic operations of approximately EUR 0.67 per share, excluding the impact of disposals. As of June 30, 2025, the annual net current cash flow from nonstrategic activities is already secured at over 85%. Considering the income already recorded by Icade in H1, including, firstly, the dividend from Praemia Healthcare, and secondly, the finance income from the shareholder loan to IHE Healthcare Europe accounted for over 6 months. Let me remind you that the contribution from nonstrategic activities does not include the payment of a potential interim dividend from Praemia Healthcare in 2025. In conclusion, the first half of 2025 remained challenging for the real estate sector. Nonetheless, we have continued to demonstrate our resilience through good leading performance in the Property Investment Division, stabilization of the development activity and tight control of our CapEx focused on profitable projects. We're also gradually making progress in diversifying our portfolio. And I would like to thank sincerely Icade's team for their strong daily commitment. And with that, let's start the question-and-answer session.

    Operator

    [Operator Instructions] The first question comes from the line of Florent Laroche-Joubert calling from ODDO BHF.

    Florent Laroche-Joubert

    I would have 2 questions, if I may. My first question on offices. So you have -- had very strong leasing activity in H1. Could you please maybe give us your view for leasing activity in H2 and maybe any color on how the occupancy in offices can evolve in H2? So that would be my first question. And my second question would be on Healthcare activities. So we can see that you have some discussions. Have you any view of any major deals that could be completed in 2025?

    Nicolas Joly

    Thank you, Florent, for your 2 questions. Indeed, taking the first question about the leasing activity in H1, we had a very strong leasing activity with nearly 80,000 square meters final renewed. And clearly, with that, we came to the stabilization of the financial occupancy rate. And of course, we expect this occupancy rate for both well-positioned and light industrial assets clearly to move up now. You know that for the well-positioned office, this figure, the 88.8% does not include yet the positive effect of the Pulse lease that has been signed and that should go into the ratio by the end of 2025. So that's the reason why we expect an occupancy ratio above 90%. That's also our target for the light industrial asset. And as for the remaining to be repositioned assets, as already shared, you know that for us, this indicator is not really relevant because at one point, those assets are deemed to be vacated. That's the reason why we work on repositioning scenario. But in the meantime, we are having very pragmatic discussion to save every euro possible as long as possible. So that's for the occupancy. Regarding the Healthcare, well, indeed, you saw that on the presentation, there was no major news to be shared today. But clearly, you saw that we stick to our strategy to sell. That led to the slight decrease in our exposure in Praemia Healthcare on the first semester from 22.5% at the end of '24 to 21.6% at the end of June 2025. This came from 2 operations. The first one was the signing of the share swap we've already shared at the beginning of the year with Praemia. And the second operation comes from the sales by Praemia Healthcare in June of a nonstrategic nursing home assets in France. This allowed Icade to pursue EUR 6 million through a capital reduction by Praemia Healthcare. So clearly, that's what we intend to keep on doing. And in the meantime, you saw that we also work on the agreement with Praemia and the other historical shareholders to grant the extension of the coal option that was deemed to expire mid-2025. Clearly, this because Icade has reaffirmed its strategy to sell and Praemia and the existing shareholders, also we affirm their strategy to invest in this SPV. So there,clearly, was to align the legal strategic framework to the indicative time line we all have in mind. Once again, to be crystal clear, we've extended the historical agreement. So this call option as it used to be are nonbinding, clearly, that's a call option benefiting to Praemia and the other shareholders. And maybe a word on the international SPV also. Just to say that there is still an ongoing marketing of the Italian portfolio. Well, clearly, it takes a bit of time. But just to remind you the figures, we are talking here about roughly EUR 300 million portfolio, which represents roughly twice the size of the investment volume in the healthcare Italian market. So it's quite reasonable to say that it might take some time, but there are still some appetite on this portfolio. Be sure we will keep you posted as soon as we can and when there's something to be shared regarding the Healthcare progresses.

    Operator

    The next question comes from the line of Stéphane Afonso calling from Jefferies.

    Stéphane Afonso

    First on Icade Santé. So we understand that Praemia has extended its option. And my first question is whether this expansion was made under the same terms as initially agreed, in particular regarding the NAV close. And secondly, this move seems to suggest that Praemia is more confident in its ability to finance the acquisition, more likely not before 2026. Therefore, would they still try to bring third-party investors or could they now complete the deal alone now? That's my first 2 question.

    Nicolas Joly

    Yes. Thank you, Stéphane. Yes, as I've just said, indeed, we're extending the call option in the exact same terms from the previous agreement. So clearly, those call options, should they be exercised, shall be exercised at NAV, clearly. And the benefit to Praemia and also the other historical shareholders as it used to be, as for the potential third-party investors that joined the club deal, either at Praemia level or either directly, I mean, that's still an option that could make sense. That is not excluded either by Praemia , the other shareholders or us. So it's still also an option that is open.

    Stéphane Afonso

    Okay and maybe one last question regarding the [ Marion ] project. There are market remarks suggesting that you may be considering a sale of this asset. If so, what would be the rationale there?

    Nicolas Joly

    Well, I'm sure you've all seen that currently, there are some good liquidity on the investment market for core plus and value-add assets in Paris CBD. There is an increase in larger deals. More and more billers, loads of cash on the large transaction. And as for the [ Marion ] asset on our side, we've already created a lot of value through the obtention of a nonrecourse building permit that allows us to transform the former movie theaters areas into retail areas. So clearly, we've already went through a significant step in the value creation, and we are now at a crossroad clearly. We can either roll out the full redevelopment of the project and the assets with -- as you saw, quite a limited amount of CapEx because we are talking here about less than EUR 70 million or we could either take the opportunity of a potential disposal given the favorable context, I would say today. Well, the key will be the value creation. We will have, regarding these assets, a very opportunistic approach. The idea for us is how is the best way to maximize and monetize the value creation, either today, either at the end of the development.

    Operator

    The next question comes from the line of Jonathan Kownator from Goldman Sachs, please. Well, we are going to take next question then from Ana Escalante calling from Morgan Stanley.

    Ana Escalante Taborga

    I have one question. When looking at your strategic operations, things appear to be stabilizing or at least a bit less negative than before. So I know there are many moving parts here and that some are more difficult to predict than others, but maybe you could please tell us when would you expect to see the drop in earnings in this strategic operations segment? Meaning the net current cash flow, obviously.

    Nicolas Joly

    Yes. Yes, Ana. Well, I would say that, firstly, regarding the cash flows, we are focusing at this stage on the first step that we just talked about with Florent. The first step regarding the investment division is clearly focusing on the occupancy rate, first things first. And clearly, we think we've reached a trough in the occupancy rate regarding the well-positioned and light industrial assets through the recent improvements we shared. Once said that, I would say, considering more globally, the sector context, I would say that the market environment still remains challenging and uncertain, which makes it difficult, of course, at this stage, July 2025, to provide a precise outlook for 2026. I would say that more globally what we expect is a recovery more likely in 2027 for both business lines for 2 reasons. Firstly, regarding the Investment Division, we need time for the diversification strategy to pay off and start delivering some new cash flows, as you saw in the pipeline. And as for the Development side, we say that the activity, as already shared, is more expected to pick up in 2027 after both the municipal election and potentially the presidential election. So that's the reason why I think more globally on our activities and cash flow recovery more expected likely in 2027.

    Operator

    Your next question comes from the line of Valerie Jacob calling from Bernstein.

    Valerie Jacob Guezi

    I've got a question concerning your balance sheet. I mean, your LTV went up quite a lot over the past year. And I think if I look at -- you said that selling the healthcare is taking time and there is no certainty that the values won't go down further. So I was wondering if you could share some thoughts you're having with the rating agencies and how you think about your financial indicator. And what can you do to improve it in the short term, if you need to?

    Bruno Valentin

    Regarding LTV, we have no change in our financial strategy. We keep target a LTV ratio. This means below 35% including duties over the horizon of the strategic plan, thanks to the disposal. And we prove again this semester our ability to sell more than EUR 100 million at the NAV. That is the first point. And maybe related to the rating, I think, as you know, we have already downgraded in 2024. And on the pre-debt KPI, we have no issue of the net debt-to-EBITDA, and we have a comfortable ICR. Of course, LTV ratio is expected to decrease with the disposal volume anticipated in the following months.

    Operator

    For the next question comes from the line of Michael Finn calling from Green Street.

    Michael Finn

    I have a few questions. My first one is on the sale of the -- and I'm just curious if you looked at any other options other than the current one? And I'm curious where exactly is the -- where is the bid price from the other options because I suspect that it's probably quite a lot lower than the current NAV?

    Nicolas Joly

    Michael, you're talking about the option on the healthcare?

    Michael Finn

    Yes, yes.

    Nicolas Joly

    Yes. Sorry, I just said to Stéphane, that the exact same terms as before. So clearly, the option has to be exercised at NAV.

    Michael Finn

    Yes, but I'm just curious if over the last few years if you have also looked at other options other than the current plan that you have. I'm curious where would the -- where would the pricing be on that -- on those other options? Yes, that's my first question.

    Nicolas Joly

    Yes. Well, you see that we went through many different ways. We're talking about the previous 2 operations crystallized this semester. The share swap agreement with Predica was at NAV for a total amount of EUR 30 million. And as for the capital reduction that has been done consecutively to the sale of the nonstrategic asset, it has also been done at NAV, of course, at the size of the [ ICO ]. That said, if we also talk about the potential opportunity of having some third-party investors getting into the club deal, I would say that -- I mean, we'll be pragmatic. I'm not saying that we necessarily have to sell at the NAV and only the NAV. I mean, it's a matter of time and volume. If someone come with a large volume and the right timing, I mean, we can work on a satisfactory discount to be both attractive and pragmatic on our side. What we don't want to do is reach a level where the discount should be too significant because, once again, we are talking here about fully stabilized asset, 100% let that deliver predictable and sustainable cash flow with values that have stabilized globally over the past months and years in a market where there are some more positive signals on the healthcare, I would say, as you saw on both listed companies, but also some real estate asset transaction. So that's the reason why we will not do this at any cost. But clearly, we could be pragmatic and accept some discounts if someone comes with a significant volume, clearly.

    Michael Finn

    Yes. Okay. And are you able to, say over the last year or 2, how does someone come to you with an offer that perhaps the offer price is a bit too low, but at least there is an offer there. Can you -- or how has it just not happened?

    Nicolas Joly

    Well, we had some interest. But as soon as some people are coming to you in a very opportunistic and aggressive mode regarding the share, you quite quickly have to say, well, at this price, no need to write it down. But if you take, for example, the international SPV, that's exactly also what we had when we were marketing the Portuguese assets, clearly. And for those, we received some real LOI with commitment, but with very aggressive discount. That was the reason why, at that time, at the end of 2023, we decided to withdraw this portfolio from the market. So we had, and also to be fully clear, we had also some international investors, a potential mark of interest in 2024 for shares in Praemia Healthcare. But clearly, the uncertainty in the French political context at that time because it was the time where the Barnier government fold made the international investors take a small step back from France for that. That's the reason why also it took a bit some more time. But yes, on stabilized assets, we have some people that are okay to dive in, being very aggressive. But the idea is to find how we can have the a pragmatic and acceptable discount and not the oversized one.

    Michael Finn

    Okay. And I guess that's -- is that probably 5% to maybe 10% in your view?

    Nicolas Joly

    I won't give any proper figures because, once again, it really depends on the volume. I mean, if someone is coming and say, well, I'm going to buy the remaining EUR 700 million or EUR 800 million, it's quite different from someone who want to buy EUR 50 million or EUR 100 million, okay? So it's quite hard just to say a proper figure. But we won't speak necessarily euro by euro to the NAV. That's what I'm saying. We are pragmatic.

    Michael Finn

    Interesting. Okay. And then final question for me on the IHE assets that are currently in the market. I remember the portfolio in Portugal, I believe, one of the issues that you highlighted was the WAULT was quite short there.

    Nicolas Joly

    That's right.

    Michael Finn

    So I'm just curious, the WAULT was quite short there. I'm just curious if it's a similar issue in Italy? Or if all the initiatives have been fixed or...

    Nicolas Joly

    No, no, clearly. Indeed, in Portugal -- well, in Portugal, there were 2 things. Once again, we had quite a narrow market for EUR 200 million portfolio for one. And indeed, secondly, the world was around 6 years, which was quite low that why we are having the discussion where Praemia is having discussion with the tenant in order to extend because there are some potential extensions to be financed. So this should come under global agreements. But as for Italy, this is completely different. We are talking here about a portfolio where you get some MCO, but also some nursing homes. And all of that comes with a large work. I would say that the main issue for the Italian portfolio is what I explained is the matter of site. I mean, a EUR 300 million portfolio on EUR 150 million or EUR 200 million investment volume yearly on this market necessarily takes some time. But there is no WAULT issue on the Italian portfolio.

    Operator

    Next question comes from the line of Jonathan Kownator calling from Goldman Sachs.

    Jonathan Sacha Kownator

    Can you hear me now?

    Nicolas Joly

    Yes, Jonathan. Happy to add you back.

    Jonathan Sacha Kownator

    Finally. Two questions, if I may. And sorry if some have been answered already. But the first question was just on the leasing. Obviously, good volumes of deals. Can you talk about the sort of reversion that was, well, either captured or lost from the field to where we were there [ versus parting ]. And the second question, I noticed that EPRA LTV is actually increasing quite a bit, and I wasn't sure because you known LTV wasn't increasing as much. So just wanted to check there the reason.

    Nicolas Joly

    Okay. So I will take on the reversion and Bruno will answer you on the EPRA LTV. Well, on the reversion globally -- on the global figure, no may update to share on the reversion potential on well-positioned office. Just to remind you that at the end of December 2024, it was minus 11%, you have that in mind. And globally, on the leasing activity and large volume, well, the signatures and renewals are globally in line a the [ RVs ], incentive in line with the market. So I mean, nothing has changed. We are indeed gradually crystallizing signatures after signatures this negative reversion potential. That's, of course, already factored in the NAV, as you know. But no major change on the reversion, especially on the 80,000 square meters that has been signed during the semester.

    Jonathan Sacha Kownator

    And can you share perhaps a bit where these deals were signed? Were they done inclusive Paris or which business park they were?

    Nicolas Joly

    Sure. Well, it was a bit headwind where, actually. And on many other class because, of course, the main transaction that was highlighted already in the first quarter result was the Pulse transaction. So nearly 30,000 square meters in the Northern Parisian region. That might be the second largest transaction talking about leasing during the semester on the world Paris region. So that demonstrates that even in an area that is definitely struggling, when you fit the right criteria at the right price, you are able to find a tenant. But we had also some transactions on the asset -- on the light industrial asset class. We've highlighted the Mauvin. For example, we signed a lease with Alice & Bob, which is a company dedicated to a quantic computing, and also with Raboni, which is in construction development. And with that, the business park is now fully let. We are talking here about 21,000 square meter business park. And on top of that, we have some transactions in La Défense. We had some transactions in our building. So more globally, everywhere, I would say.

    Jonathan Sacha Kownator

    So are you seeing incentives widen or decrease? I mean, I know they're decreasing a bit in La Défense as well. Is that what you're experiencing or are you still seem like sort of stabilized level?

    Nicolas Joly

    So as for the incentive, no major change, I would say. Of course, in the peripheral area, I would say that the power of negotiation is definitely still in the hand of the tenants rather than in the hand of the landlord. But now we've reached a stabilization. Nonetheless, clearly, as for the incentive, we are at the highest level ever, I would say. But hopefully, within the new fundamentals and the attractiveness from areas like La Défense getting better and better, and that might be strengthening through the, I would say, the uncertainty in the macro. I mean, what we see is that companies take more time to decide, but they are clearly looking more and more at offerable prices. I mean, it has come back at their first one priority, at least the people we are discussing with. So hopefully, at one point, the level of incentive should lower down. And maybe a word from Bruno on your EPRA LTV question?

    Bruno Valentin

    Yes. Regarding the EPRA LTV at the end of June, in our calculation, you have to notice that we have 100% of our dividend paid in March, but also at the beginning of July. So it means we have a fully dividend in the net debt. That is the first point. And of course, we should improve with disposal volume anticipated in the following months that we already explained.

    Jonathan Sacha Kownator

    Okay. But your reported LTV was increasing less than the EPRA LTV, which reached, I think, 47% or something like that. Any reason why you have this shift?

    Nicolas Joly

    I'm not sure to perfectly understand your question.

    Jonathan Sacha Kownator

    I'm just saying -- no, no, just I don't have the figure in front of me, but the LTV -- your reported LTV is increasing by a certain amount and your EPRA LTV is increasing by more than that. So...

    Nicolas Joly

    Yes, that's why Bruno was explaining is that in the EPRA LTV calculation, we take 100% of the dividend while in the other ratio, we only take what has been paid during the first semester. That's the main reason for widening the gap. That should, of course, narrow in the second semester regarding this point.

    Operator

    The next question is from Aakanksha Anand calling from Citi.

    Aakanksha Anand

    Can you hear me all right?

    Nicolas Joly

    Yes, yes. Very good. Happy to have you on the call.

    Aakanksha Anand

    Okay. Two questions from my side. The first one is a continuation of the previous question on leasing actually. So the new leases that have been signed in H1, are you seeing a difference in the tenant mix? And what I mean by that, that is the incremental demand from tenants who are already in that area, where the leasing is happening? Or are you seeing an increasing spillover from the CBD because the rents in CBD are definitely -- the difference in rents between CBD and outside is definitely widening? Or is the demand more from people who were well outside of Paris and trying to move into the Ile-de-France region. And if you could just provide like an approximate proportional split between the leasing in terms of these 3 types of tenants that I mentioned. And what could be the headwinds maybe in the second half or going forward that we might not see this incremental or at least a similar level of demand for leasing.

    Nicolas Joly

    Okay. Thank you very much for your question. Well, what I would say on our assets, we haven't seen necessarily some large move from Paris CBD outside on peripheral offices. But what we've seen clearly is like people that are in La Défense don't necessarily now go out from La Défense, which was the case maybe 2 years, 18 months ago. And clearly, now there is more and more interest on peripheral offices. People move from one peripheral office to another seeking for more centrality clearly, and that's one of the major fundamentals that drive the attractiveness of La Défense, I would say. And that's the reason why for our transactions globally, it was people on peripheral offices that were already outside Paris mainly and that went from one asset to another or that were already on the existing buildings and that we were renewed or stayed in the building, clearly. That's what we saw. Talking about offices, not talking about light industrial, where the dynamics are still very good as shared regarding the Mauvin. And as for the headwinds, I would say that what we saw more globally on the Parisian region, even if it was not really the case for Icade, but on the second quarter, clearly, people took more time to decide given the macro, the uncertainty on the worldwide macro but also the French macro. We'll see in the next quarters if the companies are still in a wait-and-see mode or either they are eager to make some transaction. So I would say that could be one of the major headwinds regarding the dynamic of the leasing market even if the brokers estimate a landing point around 1.7 million, 1.8 million square meters at the end of the year. So slightly below last year, but globally still quite dynamic. And that could be also some positive sign for peripheral offices. What I was saying about the fact that on the priorities on which the companies focused for their decision, clearly, the level of brands and the fact that they are looking for affordable rents now, I mean, as a protection given the world uncertainty for the years to come could drive the demand for peripheral offices. That could be a positive catalyst.

    Aakanksha Anand

    Great. That's very clear. And my second question, could you just remind us what the portfolio mix is expected to be post the completion of the current strategic plan?

    Nicolas Joly

    Well, we don't give proper figures once again. But clearly, as you know, we intend to increase our diversification in very relative and dynamic asset class where we have some strategy, key differentiating assets and know-how, so i.e., light industrial, and you saw that we are able to create some value on assets like [indiscernible]. Of course, PBSA student housing, and we've already secured a first investment of roughly 200 beds in initial sense. And also data centers I haven't talked about data centers. We are still working on that, clearly. So all in all, that diversification should dilute the current size of the office exposure. Nonetheless, we are still convinced that there is a future for our assets. That's the reason why we are being selective, but still looking at office development when the location is AAA and when the investment is relative, that's the reason why we set up this 7% yield on cost on the 3 new office developments we've made in Lyon for 2 assets and Toulouse for 1 asset. So the part on office should be diluted, but we don't have a specific figure in mind to share.

    Operator

    And the next question is from Veronique Meertens calling from Kempen.

    Veronique Meertens

    Maybe one quick one on the development segment. I noticed that you stopped reporting the NCCF contribution from the Development segment or at least the split between the two. What is exactly the reason for that? And is it fair to assume that it is still a negative contribution, especially since I saw that your net debt increased by 42% over the half year? And if so, what's the expectation for the full year from the Development segment?

    Bruno Valentin

    Yes. As you know, now Icade is an integrated player and with Investment and development businesses. And we changed a bit the presentation because we would like to improve the analytic presentation to make it easier to understand the group's performance. And so now you have the operational indicator for each business. And related for the other part of the P&L, we have a consolidated view and mainly of debt management, of course, financial results. And for us, it's a better view to appreciate the performance of the group. And of course, we have no change versus initial expectation of the 2 business lines that we already explained.

    Nicolas Joly

    And maybe to add a word on the global trend on Property Development business. You saw that it was the -- and the Pinel scheme that had a negative impact on the orders by individual investors. Also very low activity in commercial division. Clearly, there's no major office development project to be launched. But we are back now in current economic operating margin to positive territory at plus 2.3%. This is also the mechanic impact of the deep review we've made in 2024. And so we are back on profitability after those impairments. In the meantime, apart from the P&L, we're also focused on the working capital to keep it under control, as you saw with the disposal of the [indiscernible] asset, close monitoring on the stock. And think about potential positive signals of the market. We spend a lot of time discussing with political institutional to support the sector. Maybe an example, currently, there are discussions to boost private rental investments with this private landlord statute, a statute by [indiscernible] that could, in a way, replace the Pinel as a private incentive scheme, giving individual dedicated status of private landlord and this is something that could come into force at the beginning of 2026. That's globally for the whole environment for the Property Development business.

    Operator

    Ladies and gentlemen, there are no further questions. So I will hand you back to your host to conclude today's conference. Thank you.

    Nicolas Joly

    Well, thank you all for being here on this call. Have a nice day. Looking forward to seeing you, all of you, on the road shows to come. Enjoy the summer, and looking back at you.

    Operator

    Ladies and gentlemen, thank you for joining today's call. You may now disconnect.

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