ReShapE, our strategic plan 2024-2028

Plan for 2024–2028

In response to the profound changes in the way we live and work in our buildings and neighbourhoods as well as the major climate-related challenges facing society, we have set the following four strategic priorities to 2028:

• Further adapting the office portfolio to changes in demand

  We have a high-quality office portfolio (1), 86% of which meets customer expectations in terms of centrality, flexibility, services and amenities, and environmental performance. We have confidence in the long-term relevance of these well-positioned offices. 

  We also provide a wide range of services to improve how buildings are used and reduce their carbon footprint while making the needs of our customers our primary concern. Despite cyclical pressure on rent prices (difference between estimated rental values and current rents assessed at -8.7% (2)), the resilience of the well-positioned office portfolio is reflected in: 

  • The historically high financial occupancy rate of over 90%; 
  • High and rising levels of customer satisfaction, as shown by the improved Net Promoter Score (+14 points in 2023 vs. +6 points in 2022); and 
  • Long-term relationships forged with customers who have been tenants on average for almost 9 years.
     

  We believe that only 14% of our office assets are no longer in line with current expectations and as such need to be converted. The conversion of these assets is presently under consideration, with projects identified for about half of them. Among the most advanced projects: 

  • The Helsinki and Iéna buildings will be converted into a hotel and an apartment hotel designed to provide the Paris Orly-Rungis business park with additional services and amenities; 
  • Nearly 24,000 sq.m of office space in the Inner Ring of Paris in Le Plessis-Robinson will be converted into 649 housing units by the Property Development Division.
     

  We have significantly reduced our office pipeline and is highly selective when it comes to our new investments (location, target YoC (3), percentage pre-let). In H2 2023, only the flagship 29-33 Champs-Élysées project representing 12,000 sq.m of office and retail space was added to the pipeline after the building permit was obtained.

   

  (1)Office properties were worth a total of €5.3bn on a proportionate consolidation basis, i.e. 82% of the Group’s total portfolio as of December 31, 2023

  (2)As of December 31, 2023 for the well-positioned office portfolio

  (3)Yield on Cost 

• Accelerating portfolio diversification in line with the growing need for mixed uses

  Over the period covered by the Plan, we aim to further diversify its portfolio into segments with solid fundamentals and in which the Group already has expertise. Priority will be given to developing these value-creating projects on the Group’s land bank in its two long-standing business parks, namely Portes de Paris and Paris Orly-Rungis. 

  Light industrial (4)

  • We own a portfolio of various light industrial properties (workshops, TV studios, warehouses, etc.) worth a total of €703m on a proportionate consolidation basis as of December 31, 2023. These assets are located in the business parks that the Group has enhanced by providing services, amenities and events for users as well as through concrete measures to promote low-carbon transition and biodiversity. This asset class attracts world-renowned tenants such as Pierre Hermé, Lenôtre, LVMH, Schindler, etc. Operating indicators are solid (financial occupancy rates between 91% and 94% over the past three years, estimated rental values up +16% on average since 2020) and show potential for growth (potential positive reversion of +4.3%).
  • Five development projects have been identified in the Paris Orly-Rungis business park to date, representing roughly €150m in investments and €14m in annual rental income. 
     

  Student housing

  • In this structurally undersupplied market, our Property Development Division has real expertise in building next-generation student residences, developed for well-known operators such as Uxco Group, The Boost Society, etc. Since 2015, our Property Development Division has built 16 student residences with over 4,000 beds and has a pipeline of 9 other residences to be completed by 2028 with around an additional 2,300 beds.
  • One project has been identified in the Portes de Paris business park to date, representing around €75m in investments and €4.3m in annual rental income. 
     

  Data centers

  • To meet the growing need for data centers, we have a number of competitive advantages that will allow it to step up its growth in this segment (5). Our close relationships with local authorities, welllocated land and track record with major market operators allow us to envisage projects on a larger scale.
  • Two projects have been identified in the Portes de Paris business park to date, representing around €76m in investments and €5.2m in annual rental income, as well as a 130 MW hyperscale project in the Paris Orly-Rungis business park, totalling €280m in investments and around €20m in annual rental income by 2030.
     

  (4) This asset class accounts for 11% of the portfolio and includes data centres

  (5) As of December 31, 2023, five operating data centres with a capacity of 18 MW of IT load and one data centre being developed with a capacity of 10 MW of IT load

• Building the 2050 city to be diverse, innovative and sustainable

  The need to improve the mix of uses and tackle climate change are making it necessary to rethink the real estate business even beyond the end of the Plan period. As a responsible property investor and developer, we have been successful in building, managing and transforming property assets to create mixed-use neighbourhoods and sustainable cities. 

  Firstly, thanks to our expertise in the residential sector, we are able, alongside local authorities, to redevelop and add value over the long term to neighborhoods historically dominated by commercial and service-sector uses. The two-pronged project—involving both the renovation and new construction of commercial spaces and approximately 600 housing units within the Paris Orly-Rungis Park—illustrates this new mix of uses as well as the complementary nature of the roles of investor and developer (Esterel project).

  Secondly, we are an innovative player, committed to the low-carbon transition and biodiversity. Our transition plan is based on a low-carbon trajectory defined according to the SBTi’s new real estate standard (“Buildings Sector Science-Based Target-Setting Criteria”), with 2030 targets aligned with a +1.5°C trajectory across all three scopes. We are therefore committed to:

  • Reduce the carbon intensity of our two business segments and Corporate:
    • Real Estate: 61% reduction in carbon intensity between 2019 and 2030 (in kgCO2/m²);
    • Development: 48% reduction in carbon intensity between 2019 and 2030 (in kgCO2/m²);
    • Corporate: 46% reduction in carbon intensity per employee between 2019 and 2030 (in kgCO2/employee).
  • Maintain our Net-Zero ambition by 2050, resulting in a reduction of more than 90% in Icade’s greenhouse gas emissions (in absolute terms) between 2019 and 2050, and the offsetting of residual emissions.
  • No longer install new fossil fuel heating systems starting in 2030.
     

  In 2026, we will finalize our transition plan by defining the CSR commitments we will apply to the data centers we develop and lease.

  To achieve these objectives, we have decided to allocate €145 million in investment toward sustainable development projects across our portfolio over the 2024–2028 period. By 2030, our goal is for 95% of our well-positioned office portfolio to be in line with our SBTi trajectory or the tertiary eco-energy program. At the same time, we will help accelerate the decarbonization of the real estate sector by completing one-third of our renovations by 2030 and by contributing to the development of low-carbon material production chains (particularly wood and bio-based materials).

  As pioneers in biodiversity, in 2023 we established an advanced method for measuring biodiversity, developed in collaboration with ecologists based on recognized standards. This methodology has been used to set ambitious goals and will enable us to track and quantify progress made toward preserving biodiversity:

  • Renature 100% of its business parks by 2026, with an even more ambitious target for 2030;
  • Integrate nature-friendly solutions into 90% of its managed buildings located outside our business parks;
  • Renature 75% of new construction by 2026 and 100% by 2030.
     

  The redevelopment of La Jallère in Bordeaux Lac is a showcase project for these ambitions: it involves the conversion of a 35-hectare commercial district (specifically, approximately 50,000 m² of obsolete office space) and the construction—exclusively on land that has already been developed—of a mixed-use program comprising housing and various buildings (offices, student housing). This innovative and ambitious project, which will meet the objectives of carbon neutrality and zero net land take, was designated on February 14, 2024, as one of 22 projects supported by the French government as a “Territory Committed to Housing.”

   

  Note : for more information about our transition plan and our biodiversity objectives, you can read our climate and biodiversity reports avalaible in the CSR section.

• Maintaining a strong financial structure

  We confirm that the Group will pay rigorous attention to the health of its financial structure. For example, We intend to maintain very strong debt ratios (LTV ratio including duties between 30% and 35%, ICR > c. 4x, net-debt-toEBITDA < c. 9x (7)), a solid level of liquidity and a prudent hedging policy (minimum of 85% of fixed rate or hedged debt). 

  Our resource allocation plan over the 2024–2028 period, estimated at €4.2bn (8) (including €1.3bn (9) in future proceeds from stages 2 and 3 of the sale of the Healthcare business), aims to strike the right balance between making new investments and reducing the Group’s debt. This amount is expected to finance: 

  • Investments totalling c. €1.8bn (10), expected to generate c. €120m in additional rental income by 2028;
  • Debt repayments for c. €1.7bn;
  • Dividends from the disposal of the Healthcare business (11) estimated at c. €0.7bn (including c. €0.4bn from the completed first stage of this sale).
     

  (7) Average financial ratios over 2024-2028 period, for indicative purposes only 

  (8) Simplified sources and uses of funds statement, excluding current cash flow and recurring dividends 

  (9) Amount estimated as of December 31, 2023 assuming stages 2 and 3 of the sale of the Healthcare business go ahead as planned 

  (10) With €0.3bn allocated to the existing pipeline, €0.4bn for diversification projects, €0.2bn for assets to be repositioned, €0.5bn for potential acquisitions and €0.4bn for other capex. The estimated target yield for these capex is [4-7]% 

  (11) Mandatory dividends estimated based on the proceeds from the sale of the entire Healthcare business