ICAD.PAICAD.PAPAR
Loading
Operator: Welcome to the Icade Full Year 2025 Results Conference Call. [Operator Instructions] Now I will hand the conference over to the speakers. Nicolas Joly, CEO; and Bruno Valentin, CFO. Please go ahead.
Nicolas Joly: Good morning, Nicolas Joly speaking. Thank you all for joining us today. With Bruno Valentin, we are pleased to present Icade's 2025 full year results. After the presentation, we will, of course, open the floor for questions. I will begin with the main development of the year, both operational and strategic, Bruno will then walk you through the financial results and the balance sheet in more detail. Then I'll conclude with the 2026 outlook. Let's start by summarizing the key highlights for 2025. 2025 was a year of full progress in the execution of our ReShapE plan with strong financial discipline. Three elements stand out. First, disposals. 2025 was a record year with significant milestones in offices and in healthcare, allowing us to crystallize value in a selective investment market. Second, operations. Across both businesses, performance was solid. In Property Investments, despite declining revenues, we achieved a record year in terms of square meter leased contributing to an improved financial occupancy rate. In Property Development, we delivered solid activity with stable reservation volumes driven by a rebalanced customer portfolio and restored margins on new operations. And third, discipline. Throughout the year, we maintain tight capital allocation, controlled debt levels and strong liquidity while advancing selectively into student housing and data centers. If you turn now to Slide 6 and 7, you will find the key financial metrics for 2025. Net current cash flow amounted to EUR 3.57 per share, in line with the guidance. Cash flow from strategic activities, namely Property Investment and Property Development came in at EUR 2.89 per share compared to EUR 2.94 per share in 2024. NTA NAV declined by around 11% to EUR 53.3 per share, mainly reflecting the decrease in value of the property portfolio and the dividend payment. Loan-to-value ratio stood at 39.6% at the end of December. This does not yet include the Marignan disposal, which will have a positive effect of minus 3 percentage points. The net debt-to-EBITDA ratio improved to 9.1x, supported by the recovery in development margin in the second half. Interest coverage remains solid at 6.6x and the average cost of debt is stable at 1.7%. If we look more closely at each business on Slide 7. In Property Investment, gross rental income was EUR 347 million, down 4.2% like-for-like, mainly due to tenant departures recorded in 2024. The gross asset value of the portfolio stood at EUR 6.1 billion, reflecting a 4.5% decline on a like-for-like basis. The EPRA net initial yield increased at 5.6%. The Property Development business economic revenue declined to EUR 1.1 billion versus EUR 1.2 billion the year before. However, the operating margin turned positive again reaching 2.4%. The volume of orders was broadly stable at approximately 5,400 units outperforming the market. Before diving further into operations, let me briefly share our initial view for 2026 on Slide 8. In an uncertain environment, we expect group net current cash flow to decline in 2026 mainly due to continued pressure on property investment revenues and only gradual recovery in the development business. That said, thanks to strict selectivity in the operations we launched and continued control of our cost structure, we expect 2026 to mark the low point for net current cash flow from strategic activities. I will come back to this when we discuss guidance in more detail. But before that, let me briefly set the broader market context on Slide 10. In 2025, we continue to navigate a challenging environment marked by macroeconomic uncertainties, political instability in France and persistently high interest rates, which continue to worry on the real estate sector. In the rental market, pickup was down around 9%, while vacancy level and incentives remain significant. The investment market was slightly better oriented than in 2024 with improved liquidity and value-add assets and a return of interest in the office segment in the best locations. Against this backdrop, Icade moved forward with the disciplined execution of its ReShapE plan. Let's move on to Slide 12. With regard to the disposal, Icade recorded an exceptional year with nearly EUR 850 million disposal completed or signed. All these transactions were carried out with strict financial discipline allowing us to crystallize value creation. We will maintain this trigger going forward. In Property Investments, EUR 640 million of disposal was secured or signed. This includes EUR 240 million of mature or noncore assets sold in very good conditions with capital gain of around 5% versus end 2024 NAV. In December 2025, we signed the sale agreement for the iconic Marignan Champs-Elysees asset. This asset was acquired 20 years ago and we were able to create value through building a project, injecting tenant and obtaining the permit. We took advantage of an increased market interest for this type of value-add asset to conduct a highly competitive bidding process, which allowed us to achieve 20% premium above NAV. With these achievements, we've reached more than half of the EUR 1.3 billion disposal target set under ReShapE. Regarding healthcare, we acknowledge that the exit is taking more time. Nevertheless, in 2025, we achieved a major milestone with EUR 210 million (sic) [ EUR 240 million ] of disposal driven notably by the sale of the majority of our Italian exposure. The volumes sold in 2025 represented just under 20% of our total remaining exposure. We're targeting a full exit from healthcare over the horizon of the strategic plan meaning by the end of 2028. In the meantime, this portfolio benefits from solid fundamentals and generates significant returns which are attractive for group net current cash flow. We're, therefore, pursuing a progressive disposal not at any price with a clear focus on protecting value. Another pillar of ReShapE is to protect and enhance the value of our core businesses, both Property Investment and Development. And once again, this year, we are delivering on that objective. Protecting value starts with operational performance. And in 2025, leasing activity was particularly strong, as shown on Slide 16. We indeed signed or renewed approximately 217,000 square meters, up above 60% versus 2024. This transaction represents EUR 63 million in annual rental income with a WALB of 6.6 years. They enabled us to improve the occupancy rate by around 2 percentage points over 2025, reaching approximately 90% at year-end from well positioned and light industrial assets. As illustrated on Slide 17, Icade secured some of the largest transactions in the market including leases with the Seine-Saint-Denis departmental council with KPMG at Eqho for more than 41,000 square meters and with the Hauts-de-Seine Prefecture at Quito for a further 15,000 square meters. The tenant portfolio remains very solid, with nearly 85% of annualized revenues coming from large listed companies, public sector entity and mid-size companies. Looking ahead, Slide 18 details the lease expiries for 2026. The challenges we successfully addressed in 2025 will continue into 2026 with EUR 16 million of leases set to expire. We expect around EUR 30 million of departures during the year, notably reflecting the still significant share of assets to be repositioned. This represents the last major wave of expiries for this asset class. The impact of this departure will be reflected rapidly in both the financial occupancy rate and revenues with around 2/3 expected in the first half of the year. Reversion potential remains negative at minus 11.6% on well-positioned offices, broadly stable year-on-year. It will decrease in 2027 by circa 2 percentage points after the effective renewal of the KPMG lease. In this context, as shown on Slide 19, Icade has continued to make target investments in high-quality office assets. First, with the delivery of Edenn, an iconic asset that is fully pre-let to Schneider Electric for its new headquarters. Offering a very high level of services and strong ESG credentials, this asset achieves prime rents in the Nanterre market. Beyond Edenn, Slide 20 presents another targeted development which is Seed & Bloom in Lyon. This redevelopment project includes additional floor area, enabling further value creation on land acquired through the ANF transaction in 2017. It completes the transformation of the area following the delivery of Next in 2024. The yield on cost stands at 7.4% fully in line with the returns we target on new developments. All these asset management and refurbishment work contribute to protecting the value of our portfolio. Having reviewed this targeted project, let me now turn to Slide 21 and 22, focusing on the assets to be repositioned. Over the past 2 years, this asset has been actively managed through residential conversion, sold off plan, 2 targeted refurbishments with controlled CapEx and opportunistic long-term re-lettings. Following the asset management works around EUR 200 million of to-be-repositioned assets should move into our core bucket. At the end 2025, this segment represented a limited share of the portfolio, EUR 29 million in revenue and less than EUR 500 million in assets. From 2026 onwards, Icade will revise this segmentation to reallocate the to-be-repositioned assets into core and noncore categories. Let's move on to Slide 23. In Property Development, the team also delivered solid operational performance reflected in stable order volumes. This performance was supported by a successful diversification of the customer base with a growing share of first-time buyers and institutional investors. The development teams have also selectively resumed new projects, although overall volumes remain relatively low. This momentum is reflected in our key indicators with building permit applications up 66% year-on-year and with approval increasing by 32%. Activity has also been supported by the acquisition of projects ready to develop. As a result, the backlog remains fairly resilient at EUR 1.7 billion, while maintaining a high pre-commercialization rate of 77%. Following last year's portfolio cleanup, we are rebuilding products with restored margins. Profitability is gradually improving, although some other lower-margin projects continue to widen on overall results. In 2026, we expect to rebalance the mix between all the projects and new projects with restored margin with a more significant shift taking place from 2027 onwards. With this solid operational base in place, let me now turn to the last priority of our ReShapE strategic plan, which refers to diversification. Icade is assuring its diversification in sectors where it can leverage its long-standing expertise and development capabilities. We are moving forward with selected projects particularly in student housing and data centers, always with a strong focus on value creation. Let me lay the emphasis on student housing turning to Slide 27. In this segment, we have launched 2 projects, bringing together our property investment and development teams, representing a total investment of EUR 100 million. Located right next to Paris, this project will deliver approximately 500 beds by 2028. We're also getting value creation of around 20% with yield on cost above 5.5%. Compared with current prime yield ranging between 4.25% and 4.5%. Looking ahead, our ambition remains to deliver between 500 and 1,000 beds per year from 2028 onwards. Regarding data centers, we are evolving our business model to further enhance returns on large projects through equity partnerships aiming to reach circa 10% yield. This approach could be applied to the 130-megawatt hyperscale project in Rungis, for which we obtained a building permit at the end 2025. The JV partner selection process is currently underway with completion scheduled for 2031. Now beyond the pricing performance and strategic diversification, our ReShapE plan is also driven our ESG commitment, which is a core element of our model. As part of its ReShapE strategic plan, Icade has indeed reaffirmed its strong commitment to the low-carbon transition and biodiversity preservation detailed in Slide 30 and 31. In 2025, the group updated its low-carbon trajectory to align with the new SBTi standard for the real estate sector, confirming its ambition to remain a leading player in the fight against climate change. Icade has now set 2030 targets aligned with the 1.5 essential degree pathway across all 3 Scopes with threatened ambition across each perimeter. At the same time, we maintain our objective of achieving net zero carbon emissions by 2050. This trajectory is already translating into tangible loss. Between 2019 and 2025, Icade has significantly reduced its greenhouse gas emissions in line with new objective and total absolute emissions are down by 52%. These results demonstrate that our climate strategy is not only in wishes, but firmly embedded in our rational execution. And with that, I will now hand over to Bruno who will present the 2025 financial results in greater detail.
Bruno Valentin: Thank you, Nicolas, and good morning, everyone. Moving to Slide 34. The group's net current cash flow amounted to EUR 3.57 per share. It is between EUR 2.99 per share from strategic operations and EUR 0.69 per share from discontinued operations. Net current cash flow from strategic activity decreased slightly to EUR 2.99 per share compared with EUR 2.94 per share in 2024. Looking at net current cash flow from strategic operations, the main takeaways are a drop in net rental income from property investment of minus EUR 0.39 per share, a raise in property development margin of plus EUR 0.63 per share and a decline in finance income of minus EUR 0.44 per share. When looking in detail, starting with the property investment division on Slide 35. On a like-for-like basis, gross rental income declined by 4.2% in mainly due to tenant departures recorded since 2024 and the gradual capitalization of negative lease renewals. The perimeter effect has a negative impact of 1.9%, mainly reflecting asset disposals. This factor were partly offset by positive indexation which still contributed 3.3% as well as by early termination fees, mainly related to offices to be repositioned. It is worth noting that net rental income was affected by higher vacancy costs. Now turning to property development on Slide 36. Economic revenue reached EUR 1.2 billion in 2025, down by 7% year-on-year. This decrease mainly reflects a sharp decline in the commercial segment with revenues down by 48% year-on-year, following the completion of major projects at the end of 2024 and the low volume of new contracts signed in 2025. In fact, residential revenues increased slightly. This performance was driven by stronger sales and an acceleration in consistent start in Q4 2025, which was an exceptional active quarter. The net property margin improved mechanically in 2025 following the impairments booked in 2024. However, decline in volume and the continued margin pressure on certain project launch prior to 2024 have been negatively impacted the overall margin of the business. Turning to 2025, financial discipline remains a key priority for the group with continuous effort to control the cost base as explained on Slide 38. Over the past 2 years, we have implemented significant measures in process optimization, cost rationalization and headcount reduction generating approximately EUR 20 million in savings, including the impact of inflation. Finally, Slide 39 focuses on the financial results, another closely monitored item. Current finance income decreased by EUR 59 million but it's required carefully analyzed. On the strategic activity side, the decline mainly reflects lower investment income after a record year in 2024, which benefited from high interest rates and an average group cash position above EUR 1 billion. The cost of debt remained controlled at 1.7% as the projected debt for 2026 is fully recovered. Regarding discontinued operation, which corresponds to the Healthcare segment, dividend income declined. Approximate also decrease is due to a timing effect as Prime share did not pay dividend at the end of 2025, resulting in a shift of the payment from 2025 to 2026. Now let's move to our operational performance and financial results and turn to the balance sheet and portfolio valuations. Slide 41 focuses on the evolution, the property investment portfolio's value. At year-end, the portfolio was valued at EUR 6.1 billion, representing a 4.5% decrease on like for like basis. The EPRA net initial yield increased slightly to 5.6% compared with 5.2% in 2024, while the EPRA total net initial yield stood at 6.5%. Turning to Slide 42, at EPRA NAV. As of December 2025, EPRA NAV per share stood at EUR 53.3, down approximately 11% year-on-year. This change is mainly explained by the lower valuation of the property investment portfolio, which accounts for EUR 3.9 per share as well as the 2024 dividend paid amounted to EUR 4.3 per share. Let me now turn to debt management on Slide 43, another key pillar of our financial project. 2025 was marked by strong financial achievements. Since January 2025, we raised more than EUR 1.1 billion on financing, including notably EUR 500 million 10-year green bond issuance. Altogether, these transaction are extending the average maturity of our debt and further reinforce our liquidity position enabling us to anticipate upcoming maturities with confidence. If you look at Slide 44, you can see that our debt maturity profile remains well spread over time. At the end of December, Icade had a solid liquidity buffer with EUR 0.8 billion in net cash and EUR 1.8 billion in ongoing committed revolving facilities. This comfortably covers the group's debt maturities through 2030. Slide 45 outlines the updated direction of our Green Financing Framework published in February 2026. This new version introduced Icade's aligned with the highest market standards. The aim is to ensure full alignment with the EU taxonomy and the CRREM trajectory based on forward-looking 5-year approach. The framework was assessed by a sustainable Fitch and received an excellent rating underscoring both the robustness of the criteria and the ambition of the eligible project. With that, I will hand over back to Nicolas for the conclusion and the outlook for 2026.
Nicolas Joly: Many thanks, Bruno. So let me conclude with our 2026 outlook. Slide 47 sets out the main drivers for the year ahead. In 2026, we will continue to execute the ReShapE plan with rigor and discipline, maintaining a clear and consistent course. First, we will continue to focus on supporting office occupancy and protecting the value of our portfolio in a complex environment marked by negative reversion and lower indexation on rents. Second, we will continue to rebalance the developed portfolio towards project restored margin in a year that will nevertheless be affected by municipal deadlines in the first half. Third, we will maintain a selective allocation of capital towards targeted and profitable operations across both businesses while accelerating cost reductions through the implementation of an additional EUR 15 million in annual savings on a full year basis. Fourth, we will pursue our disposal program with pragmatism and discipline. And finally, we will maintain a strong balance sheet and controlled cost of debt expected to remain around 2% in 2025 -- 2026, sorry. In this context, we expect group net current cash flow to range between EUR 2.90 and EUR 3.10 per share in 2026. Given the discipline, we will continue to apply in the coming months, 2026 is expected to mark a low point in net current cash flow from strategic activities. The 2026 guidance includes net current cash flow from strategic operations between EUR 2.25 and EUR 2.45 per share, and net current cash flow from discontinued operations of approximately EUR 0.65 per share. Given the group's ambition to transform its activities, Icade intends to limit the distribution amount in order to preserve its deployment capabilities and finance its future growth. The group will submit for approval at the General Meeting a cash distribution of EUR 1.92 per share which will be fully paid in June 2026. In conclusion, we delivered robust operational performance in 2025 both in property investment and property development. While the environment remains complex, we are continuing our transformation with rigor, discipline and clear strategic focus. This year will still present challenges that will weigh on revenues, but we will strive to deploy what is necessary to make 2026 the low point on strategic net current cash flow. I would like to sincerely thank all Icade teams for their daily dedication and I reaffirm my full confidence in their ability to execute in the months ahead. And with that, we are now ready to take your questions. Thank you very much.
Operator: [Operator Instructions] The next question comes from Florent Laroche-Joubert from ODDO BHF.
Florent Laroche-Joubert: I would have maybe 2, 3 questions. I can ask one by one. My first question will be what does give you comfort that 2026 will be your low point for your net recurring cash flow.
Nicolas Joly: Okay. Thank you, Florent. Thanks for your question. Well, about the low point on strategic cash flows, yes, we are confident on the low points. Of course, regarding investment revenues, we are facing headwinds. There will be negative reversion, a low level of indexation, so pressure will continue and we'll keep on securing what we can. But to mitigate that, as for the development, we've reached the low point in the business, and we made the impairments needed in 2024. The trends, as you saw in the presentation, are improving through customer mix rebalancing, launching restore margin operation. So clearly, there is room for improvement. We still don't know the exact pace. And on top of development, internally, we activate all levers to secure lower fixed costs through cost reduction plan, I remind you this target of an additional EUR 15 million over full year and a cost of debt which is contained around 2%. So all in all, clearly, we do not aim to control the cycle or the broader market environment, of course, particularly in this context. But what we do control is how the group operates through this phase with a clear focus on our side on capital allocation, cost discipline, balance sheet management and investment selectivity. So that's the reason why we are confident of reaching a low point in '26 on the strategic cash flows.
Florent Laroche-Joubert: Okay. That's very clear. Maybe a question on the valuation of assets. So we have been able to see that you have still seen a negative evolution on a constant term on a like-for-like basis. So could you give us maybe more color on your discussions with appraisers maybe for the next appraising exercise?
Nicolas Joly: Well, as for the asset value, you saw that in 2025, while the value went slightly down on offices, they went up on the other side for light industrial. And well, clearly, values decrease is slowing down year after year. On top of that, we are, on a daily basis, demonstrating the resiliency of the portfolio through this year, a record year in terms of new signature. What I can say is that clearly, I think we and the appraisers are waiting for new transaction to confirm that we've reached the bottom on most of those assets.
Florent Laroche-Joubert: Okay. So that's there. And maybe last question on -- maybe on your view on your break option for 2027 and maybe also for 2026. So for 2026, how many do you think that you will be able to relate the break option. So the list that comes to end and that has to be re-let. And for your break options for 2027, have you any break option still at risk after maybe what you have been able to do at the Eqho Tower.
Nicolas Joly: Well, if we take a look back, maybe 2025, you saw that the teams were able to secure major deals, which allowed us to reach a financial occupancy rate around 90%. As usual, we are transparent about the expiries in 2026. As you can see, we are still facing some challenges ahead with EUR 60 million of potential lease expiry. As I said, we expect this EUR 30 million departure by the end of 2026, mostly driven by the last wave of the to-be-repositioned asset departure, thinking notably of [ Renault ] and Placeron, example, normalizing on the other assets. It will happen quite early in 2026 because 2/3 of the departures will take place in H1. What we can see in the market is that, of course, all the discussions take more and more time, clearly. But thanks to the close relationships we have with our major tenants and long-term relationship we have with them. We try to anticipate as much as possible, which allows, for example, the success we had with KPMG 2 years in advance on the Eqho Tower. So clearly, we are very pragmatic taking everything deal by deal, asset by asset in order to keep on achieving what we achieved on the past year.
Operator: The next question comes from Ana Escalante from Morgan Stanley. .
Ana Taborga: My question is regarding shareholder remuneration, particularly in the context of the delayed timing of the healthcare disposal because apart from reducing leverage, the planned disposal of the Healthcare business would have generated a significant special dividend distribution. And now that's delayed even further. And although as you say, the healthcare business generates significant financial returns, these are below the potential shareholder return from disposal. So in this context, I would like to understand how you think about shareholder remuneration in terms of your priorities for capital allocation.
Nicolas Joly: Yes. Maybe first, thanks for your question. Maybe firstly a word on the way we are addressing the healthcare disposal. I mean, we haven't changed our strategy for the beginning, the strategic decision has been made to the business, but not at any cost. There is no intention for us to sell under unfavorable condition with a large discount because we are committed to value creation, clearly, and we want to protect the value. Still, this is a significant pillar of ReShapE as we know, but this asset class is supported by strong fundamental, generating some attractive yields. So when we find the right opportunity, such as we did in '25 was Italy, we are happy to crystallize the value and sell at the NAV level like what we did. So our objective remains clearly a gradual exit from our minority stake over the ReShapE plan horizon. I would say that more specifically, maybe the focus currently is more on the Portuguese assets, which are really stabilized and attractive. But clearly, that's what we do. Once said that, on the capital allocation, as you saw, we are keeping a balance once again, between the protection and reinforcement of the balance sheet and being able to allocate capital in development that are accretive, like the one we've shared on the presentation regarding office or data centers or student housing to maximize the value creation in the mid long term for the shareholder. In the meantime, we are still able to propose satisfactory distribution, as you saw with this EUR 1.92 per share because we are comfortable with the overall trajectory of our financial ratios and this allows us to perfectly fit with the balance and equation we have on our capital.
Operator: [Operator Instructions] The next question comes from Stephane Afonso from Jefferies.
Stéphane Afonso: I think it's better to ask them one by one. So first, it's a follow-up question. You are calling for trust in the core cash flow this year. Could you share your main assumptions, particularly on your marginal cost of debt and also your normative occupancy rate. In particular, it would be very helpful to understand how do you take into account large renewals with Veolia and AXA. It's true that those maturities are more around 2028, 2030 but it will be useful to understand your ambitions since you expect the -- of 2026. That's my first question.
Nicolas Joly: Okay. Well, thank you, Stephane. Well, as I said regarding the low EUR 0.26 on strategic cash flows, clearly, there will still be some downward pressure on the investment revenues, as I said, through negative reversion, even if we are able to crystallize new deals, we are crystallizing lease by lease this negative reversion. The main fuel for growth is indexation and it's a very low level today. And we have this departure that will widen, of course, the cash flows and the occupancy ratio. As I said, we are facing some departures in '26 especially on the to be reposition. So clearly, this will widen the occupancy ratio. We expect that to be lowered down from the Q1 given the fact that, as I said, 2/3 of the departure are expected in H1. But after this lowering down in Q1 '26, we expect a gradual recovery after that. And if we take a bit of look ahead after '26, you were mentioning AXA and Veolia, as I said to Florence, that's the exact same thing we've done with KPMG. Those are major tenants. We have, of course, there are potential break options in sight. We have a close relationship with them and keep on having discussion to try to anticipate and secure as soon as possible those potential break expiries. On top of that, some come also with some financial penalty. So this has to be taken into account. And regarding the cost of debt, as I said, it will remain contained with a cost update to around 2% in 2026. So all in all, that's the reason why we are confident in reaching a trough in 2026 regarding the strategic ratios.
Stéphane Afonso: But just if I can say something. When I'm talking about marginal cost of debt that when you will refinance bonds at which cost of debt you assume to refinance those bonds. So it's 4%, 5% and also on Veolia and AXA on your business plan, what is your occupancy rate target on those tenants.
Nicolas Joly: Well, as for the refinancing, clearly, that's something we have in mind, but let me remind you that we have a strong liquidity at the end of December 2025. Bruno was highlighting that. Debt refinancing is not a concern, clearly, we have multiple sources to reimburse or refinance future debt. And we've demonstrated in 2025 that we have a very good access to credit liquidity. We've issued in May, the 10-year EUR 500 million green bond. And this cost was 4.5%. So that's, in our view, is a good proxy on what to expect in the coming months or years. And regarding AXA or Veolia, clearly, as for our major tenants, our intention is to secure a long-term relationship and extension of leases with them. So that's what we are assuming and the way we intend to have discussions with them like we did with KPMG.
Stéphane Afonso: Okay. And I have also a question regarding capital gains. And could you share the capital gains from the Marignan disposal that you expect to?
Nicolas Joly: Yes. Well, as for Marignan, well, this is an asset we've owned since '24. So of course, this will generate tax capital gains. But we don't disclose any figures for now because the distribution obligation, this is related to capital gain, depends on the year-end loans, as you know. Because those capital gains may be offset totally or partially against other potential transactions. So that's the reason why on our side, we don't think that makes any sense to share some figures with the market right now. But clearly, of course, there are some significant capital gains because we've been owning the asset for 20 years. And as you know, we run quite a successful open bid process with fair competition and a nice premium on the NAV at the end.
Stéphane Afonso: Okay. But maybe can we have a range? Is it about EUR 200 million, EUR 300 million because I understand the -- between their statement that it's important to have this in mind because we don't know what will be your disposal base and at what discount. So at this stage, if you were not to sell any other assets, what could be the capital base to distribute regarding Marignan disposal.
Nicolas Joly: Well, I mean, we are in February. It's a bit early to have some full visibility on that, be sure when it would be relevant, we'll be able to share some figures. So that's the reason why we don't disclose any figures today, but I'm sure you can have quite a guess about what it could be.
Stéphane Afonso: Okay. I hope I have a good guess. And maybe could you remind us the remaining distribution -- capital gain -- given that Eqho escalation continue to decline.
Nicolas Joly: The remaining capital gain. We haven't shared the proper figure. But on the nonsale asset, the assumptions that we've shared during ReShapE was remaining distribution requirement of roughly EUR 300 million related to the EUR 1 billion that is to be sold.
Stéphane Afonso: Okay. And maybe one last question regarding noncore cash flow -- regarding non-cost cash flow expected in 2026. My understanding is that the forecasts go back beyond 2026. And given this, what is the status regarding the deferred dividends of -- I understand that assurance hasn't distributed dividends for the past 2 years due to losses. But there is a statutory distribution requirements. So if I'm correct, the situation allows for 1 year deferral for distribution. So could you please clarify this?
Nicolas Joly: Well, at this stage, we haven't assumed any potential dividend for ReAssure, and there is no requirement to distribute such an amount if the results is negative, for example, or anything. So that is not systematic. And in the EUR 0.65 we've assumed in the guidance for 26, this rely only on the dividend to be paid on Praemia healthcare.
Stéphane Afonso: Okay. And do you expect the vehicle to stay on deficit this year again? .
Nicolas Joly: Well, the assumption we've made is no dividend coming from ReAssure.
Operator: The next question comes from Aboulkhouatem Amal from Degroof Petercam.
Amal Aboulkhouatem: First question would be on the new labeling of the asset to be positioned. Can you give us some color on what would be the criteria because what you would assume as core and noncore? And what will be the indication on the CapEx or disposal strategy for these assets, please?
Nicolas Joly: Yes, sure. Well, on the to be repositioned, I said that a category we flagged 2.5 years ago in order to give you more insight on the portfolio. 2 years after that, we've done most of the job. We've sold some. We've repositioned some. We've relet on a long-term lease basis some assets. So clearly, we've reached a point where the remaining noncore part is very small compared to the whole portfolio. So the idea now, as we've shown on the presentation is from 2026 onwards to communicate on some core asset categories. And when I say core, I say core to our strategy, it's not type of asset or investment is really core to Icade's key strategies. So globally, what you will expect for '26 is now in the segmentation, having some core assets mostly offices. So the actual well positioned offices plus the EUR 200 million coming from the former to be repositioned asset. Also core added from light industrial and a bunch of small bucket of non-core assets mostly coming from the remaining EUR 300 million of the to be repositioned assets that are to be repositioned and won't be core to our strategy. That's globally how we will communicate in the coming semester. I hope it is clearer now.
Amal Aboulkhouatem: Is it fair to assume that the noncore to be repositioned assets on the market for sale.
Nicolas Joly: Yes, yes, clearly. There are non strategic. So clearly, we would be happy to sell those assets. But as we said for the to be repositioned asset, globally, there is currently no liquidity because most of them are an attractive office building, former office building, I say unattractive because they are in areas that are not well connected or those assets are not filling the right criteria, ESG or standard or so. So globally, there are no investors to buy them, and I would say even whatever the price. So in order to -- we create liquidity, we have to go through a repositioning scenario and we've demonstrated that we are able to do so, and it can be in residential, can be in hotel anything office in the way. And the idea is to secure those scenario and once for example, we secured a building permit, then we create liquidity and then we will sell the asset. But clearly, we do not intend to pay some additional CapEx on this noncore and nonstrategic buckets.
Amal Aboulkhouatem: Okay. My second question would be on the partnership for the data centers. So I just wonder what has led you to change your mind? I recall when you present the ReShapE strategy 2 years ago, the strategy for data center was very clear. You just delivered the building and then you let it to an operator. What has changed your mind? And if you can just confirm that for the Equinix data center in Portes de Paris, it's still a normal investment in the building, and we are not partnering with Equinix on that will be completed in 2026.
Nicolas Joly: Yes. Thanks for the question. Well, sorry, if I haven't been clear 2 years ago, we are bang in line with what we shared in terms of our strategic priorities regarding data centers. And if I remind well, there was a dedicated slide where we were trying to explain the way of having some exposure to this business. I would say the usual way for real estate investors is exactly where we stand today on our 5 existing data centers, plus indeed, the one we'll be delivering to Equinix in a few months. This is powered shell model. So basically, we secure the power, we build the shell and we lease it through a commercial lease. So I would say pure real estate model. And that's also the reason why we are on yield around 6.5% globally. But what we were also saying during the strategic plan is that this is not suitable for very large projects. Because for data centers, the global amount of investment is very huge, as is EUR 12 million per megawatt IT globally for the power shell and the fit-out. And the power shell only represents 25%, 30% of the investment. So when we talk about projects like Transit, we are talking here about EUR 1 billion, EUR 1.5 billion investment in total, solely EUR 300 million for the power share. But in total, it's a huge investment. So operators are not keen on investing EUR 700 million or EUR 800 million for just the sake of securing a commercial lease. So once said that, you have basically 3 options, either you are a property developer and once you secure the land, the power and the building permit, you sell and you secure some capital gain. Interesting, but most of the value creation is still ahead. The other way of doing it on the opposite side is like, I would say, like what Marignan does in Spain is build a full-fledged operator. So the one building, operating, leasing to the hyperscalers, i.e., Microsoft or Amazon, the data center and be a fully fledged operator. We do not intend to do so given the fact that there's some risk coming with the operations. We don't have yet the special relationship with the farm and so, so. So we rather prefer a half way of doing that, which is the JV. We go to the operators, we structure a JV, retain a minority stake, which is roughly the same amount of investment as building a power share. But through this JV, we'll get more exposure to the business, which allows us to be more exposed also to the total value creation of the business. That's how we are able to reach like 10% yield on cost on such development. So clearly, we are not saying that we won't be doing power share anymore but we just need to have a proper strategy depending on the size of the investment. I hope it's a bit clearer now.
Amal Aboulkhouatem: Yes. Very clear. And if I may, a last question on my side, just on the dividend policy. How should we look at it going forward? I understand that given the current uncertainties, it's difficult to have an outlook. But going forward, how do you see it for 2026 and beyond.
Nicolas Joly: Well, our philosophy, once again is to secure as much cash as possible. Clearly, as I said, we are comfortable with the actual trajectory of our financial ratio, allowing us balance between balance sheet and this distribution. As you see the proposed distribution represented roughly 50% on the group net current cash flow, which is pretty in line with the payout ratio of the past 2 years. Of course, if we exclude the dividend related to the healthcare disposal. So this has been our philosophy from around 2, 3 years since the beginning of ReShapE, which is consistent with what we intend to do is accelerate the transformation of the model.
Operator: The next question comes from Veronique Meertens from Van Lancschot Kempen.
Veronique Meertens: Some questions around the development segment. So I think since half year reporting last year, you don't split out all these separate contributions to net current cash flow. So first of all, what was exactly the rationale behind that? And then secondly, can you give an indication if you are already back to positive territory in terms of net NCCF contribution from the development business? Or is it purely only a profit margin that's positive yet?
Nicolas Joly: Okay. Veronique, thanks for your question. Well, the rationale of not splitting any more of the cash flows, I mean, it's just be consistent between there are financial KPIs and our strategic positioning. I mean we are an integrated player, and you saw also in the presentation that we are focusing on this model more than having on the one side the investment and on the other side, the development. So that's the main rationale with that, we align our financial communication with who we are and who we intend to be. Regarding profits, indeed, you are highlighting the fact that through stabilization of volume and a gradual recovery of margin with this year is better than '24. Of course, it is still impacted on the margin by the fact that there's very low activity in the commercial division, which is usually the part of the business which used to have the highest margin. So this contribution is even less. I mean, the revenues from commercial division on property development was cut by half. But on the core business being the residential, it's getting better, as Bruno highlighted, driven by the fact that we have more and more operation with restored margins. Of course, this will keep on going this way. I would say that there's no major strong recovery expected before 2027. But no deterioration, as I said. I would say that we've reached the trough in property development. The main question might be the pace of improvement in the market, which still remains, of course, is uncertain.
Veronique Meertens: Okay. That's clear. So if I understand you correctly then probably in '26 and potentially even '27, we would still see a negative impact on -- or a negative contribution on your net current cash flow from the development business. So has there ever been an internal discussion if this is a business line that should be seen as noncore as well? Or is that not up to debate at all?
Nicolas Joly: No, no. We expect, clearly, as I said, recovery, so going in the positive way on property development. The main question, honestly being the pace of this improvement. So it won't be going the negative path. And to be crystal clear, once again on property development. Since my arrival at Icade, I keep on saying that it's critical for the business and it's the core of ReShapE. And as we just said before, being an integrated player between property development and investment division is a key advantage in tomorrow's market. That's my deep conviction clearly. So this business is more than core in our strategy.
Veronique Meertens: Okay. That's very clear. And then 2 small questions for Bruno. I noticed that there's a number of the net income from other activities from the property investments went up quite significantly to almost EUR 13 million. So I was wondering what's in there. And at the same time, the other financial income and expenses is only EUR 23 million despite, I think, already EUR 37 million from Praemia dividends. So could we get some color on those 2 figures, please.
Bruno Valentin: Sorry, Veronique, I didn't catch the first part of the question. We're talking about property development or finance.
Veronique Meertens: Yes, there's a net income from other activities for property investments of EUR 13 million, which was flat last year. So that's why I was wondering what's in that number. But we can also take it off-line if that's easier.
Bruno Valentin: Yes. We'll come back to you on that, yes. .
Operator: The next question comes from Celine Huynh from Barclays.
Celine Huynh: I only have one question, please. On the EUR 1.92 cash distribution, can you confirm if there is still some capital gains on disposal to be returned to shareholders next year? And following this, my understanding is that there is no dividend on recurring activities proposed this year. Otherwise, you would have called the EUR 1.92 a dividend. Can you comment whether you see it returning next year? And what will be the criteria for you to be comfortable to pay a dividend again on recurring activities? And what kind of payout do you see.
Nicolas Joly: Celine, thanks for your question. Well, maybe some opportunity to clarify that. But I mean, it's named -- technically speaking, it's named distribution because it will be taken on premiums. So technically speaking, you know that to be dividend must be paid from profits, retained earnings of or reserve account. So clearly, it's just a technical word. But if we regard the amount, the EUR 1.92, this -- the intent to pay an amount equivalent to the SIC distribution requirements. So not only 70% of capital gain on disposal, but also including 95% of the recurring income from securities and 100% of dividend from subsidiaries. And the reason we decided for such an amount, as I said previously, that we are comfortable with the trajectory of our financial ratios. And as I said, allows us to be balanced between the balance sheet and the investments we make, the remuneration -- keeping a remuneration of our shareholder at an attractive yield with this EUR 1.92.
Celine Huynh: Okay. This EUR 1.92, can you break this down, which -- what is coming from capital gain, what is coming from recurring activities so that we can calculate a payout on the back of this.
Nicolas Joly: Well, we don't communicate the split. But just to be clear, the EUR 1.92 is really equivalent to the 95% of direct income, 70% of the capital gain on disposal last year and 100% on dividend from subsidiary. And about payout, of course, we don't give payout policy, but as I said previously, you can see that this proposed cash distribution represents roughly 50% of the group net current cash flow. And if we look in the rear mirror over the past 2 years, excluding, of course, the part related to healthcare, which was the average payout ratio -- equivalent payout ratio that was observed, roughly 40% to 50%.
Celine Huynh: Okay. I'll take the other questions offline.
Nicolas Joly: Okay. Thank you very much, Celine. .
Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Nicolas Joly: Well, thank you very much for your time and your questions. Happy to have shared that with you. You saw that all the teams at Icade are really committed to deliver our strategic plan, and I thank them once again for that. So we'll leave you with that. And good day and looking forward to seeing soon some of you. Have a good day. Bye-bye.