Property strategy

How was 2011 for Icade?

Serge Grzybowski

The year 2011 has seen steady performance, with improved economic results and financials for Icade.

• Rising net current cash flow of 28% showing Icade’s powerful growth

All current cash flow elements are on the rise: this is the result of our asset allocation strategy (withdrawing from residential, reinvesting in office assets), commercial success achieved over the last several years (Villejuif, H²O, Millénaires 1 & 2, etc.) from business line growth and Development and Service Divisions margins, and controlling fixed and carrying costs.
 

• Numerous commercial successes cementing the future of the Icade development model
  Icade had a banner year in marketing its assets, with 105,000 m² leased or re-leased (Link, Millénaire 6, Messine, etc.), allowing us to increase the 91% financial occupancy rate at the end of 2010 to 95% at the end of 2011. We have created new anchor projects for the Parc du Millénaire with top notch partners (Veolia for around 85,000 m², the Ministry of Justice and Liberty for 34,000 m²), securing development of the business parks. The Development Division order book has increased by nearly 26%, particularly Commercial Promotion with major operations planned or completed: Pushed-Slab (Paris), MacDonald (Paris), START (Saint-Quentin-en-Yvelines), Ambre (Lyon) and Prélude (Bordeaux).
• Investment Volume of €730 million, in large part secured in 2011:
  With the acquisition of 13 clinic buildings, including 11 operated by Médi-Partenaires for €350 million (1,900 beds), renovation of the Beauvaisis (12,000 m²) and the ongoing renovation of the EQHO tower (80,000 m²). 2011 will thus have been a banner year for Icade, confirming its commercial focus pursued vigorously over the past 5 years. This was also a year which validated our developer REIT model, basing Icade in a powerful, dynamic business plan despite the economic slowdown affecting the entire market.

The combination process with Silic will create the first offices property investment company in the Greater Paris. Could you telle us more ?

 While the combination is currently in process, its completion will occur toward the start of the second-half of 2012. It was made possible thanks to good timing and the trust of our reference shareholder, the Caisse de Dépôts, providing Icade a growth opportunity unprecedented in its history.

At the end of the combination process, the new combined assets should reach more than €9 billion including approximately 80% of business and office parks.

It’s effectively a huge growth outlook...

Huge, and indisputably consistent with the path we’ve taken over the last several years because the new Icade-Silic combination, once complete, will reinforce our common business model.

In effect, behind the two parallel baselines, “developer REIT” for Icade and “owner developer” for Silic is one-and-the-same strategy for the same business plan and a giant step toward refocusing our business lines toward the heart of our enterprise.

This combination also makes sense thanks to the exceptional complementary of two assets...

In effect, this complementarity will yield a new penetration for the new unit, even greater than what we have today.

First, an expansive geographic complementarity, then once the transaction is complete, the new unit will be positioned as a leader in 4 strategic development zones in Greater Paris. in the Northeast with Roissy/Charles de Gaulle and all the Plaine Commune area, to the west with La Défense/Nanterre, and in the south with Orly/Rungis. Once united, Icade and Silic will be stakeholders in 5 of the 17 Greater Paris urban development zone contracts. (Roissy-Villepinte, Saint-Denis-Pleyel, la Défense-Nanterre, Val-de-France-Gonesse, and Orly-Val-de-Bièvre).

A brand complementarity also evident, matched from the mutualizing outlook of Icade and Silic sales offerings and their client and major account portfolios, which portend a powerful and known entity throughout the real estate market for the new unit.

As Silic and Icade have significant property assets, what benefit does that represent for you ?

It’s clearly a major advantage in a crisis period that having property assets and being thus able to fast-track or modulate developments in function of demand without being subjects to markets fluctuations.

 Through Silic’s association with business parks and Icade’s with Portes de Paris, the new unit will capitalize a potential two million square meters for long-term development.

Coincidentally, how will Icade pace itself in 2012's economic climate ?

First and foremost, it’s essential we remain vigilant. What will the situation in 2012 be for tenants regarding their renewals? What will the attitude be from banks in financing the economy and more generally in real estate? How will real estate prices and residential demand evolve? 

How will interest rates change? How will office leasing demand evolve? These are issues we must keep in mind, however, after much reflection, Icade has solutions:

-Thanks to its solid financials, its shareholders’ determination, and its special relationship with the Caisse des Dépôts, which will remain the majority shareholder of the new Icade-Silic unit.

-Thanks to the solidity of its portfolios, giving it number one investor status in Greater Paris, number one investor in health, and the third tor French developer, Icade enjoys a legitimacy and recognized status by all the real estate market players.

-Thanks finally, to the consolidation of its business lines, Icade has the capacity to manage huge projects through its integrated knowledge base.