Icade (ICAD) Earnings Call Transcript

Yes. Well, nice time to start. Good morning, everyone, and welcome to this traditional meeting of disclosing our earnings. We'll have quite a dense agenda with a time for questions and answers. Now to kick off this meeting, I wanted to say just a few introductory remarks. So first, as you know well, 2019, was, for us, the first full year of our strategic plan, which was launched mid-2018, and you will see this in the upcoming presentations. We consider that the implementation of this plan is well underway and above and beyond the numbers delivered, if we look at all the projects in the pipeline and which have been completed and which have delivered its economic and financial performance. As you know, nothing new, in fact, since the AGM and the Board of Directors, which followed the AGM in 2019, we have strengthen, consolidated, whatever the term is, our governance structure by appointing a Lead Director, who will be the Vice Chair -- the Vice Chairwoman of the Board of Directors. And more generally speaking, we have maintained and strengthened the connections with the management team and the executive committee in the development and in the implementation of this strategic plan. So you will see this in a few minutes. The momentum showed in the various business divisions have been very strong. And above and beyond the numbers, there have been some key decisions made. And many projects and initiatives were launched, including in the Development business, which has revamped its strategy on a financial level. And 2019 show that, right? The general performance and earnings were apprehended by the market, and this will be one of the key features we'll be presenting today. This brief introductory remarks I will end with a traditional item, which is our purpose. And Olivier Wigniolle will tell you more about our purpose. We'll give you its exact statement, its exact description. I just want to say that, to date, this development work and thinking process is a very in-depth process. When I say in depth, it's not just a management order which came from the top down. No, it's been a long-winded, very far-ranging process, which has involved various people and organizations and teams in the company in a bottom-up, in a very collaborative manner, to substantiate this purpose, this purpose statement. This is of great importance for us as all cooperations embarking on such a process. A purpose gives you a more long-term view and visibility, giving you stability for assessing your projects and giving you some kind of a gauge to assess and possibly adjust the consistency of the key decisions of the company and the way they are implemented in line with this purpose. Now after the Board has approved it, we will submit this purpose statement to the shareholders' meeting in late April, and we will be submitting this purpose to the shareholders' meeting. And we want to include them in our Articles of Association, which shows how important this purpose is for all of us, the Board, the top management and all employees of Icade. So much for what I wanted to share with you in this brief introductory remarks, and now I want to turn over to Olivier Wigniolle.

Thank you, Frédéric, and good morning, everyone. Now let us move on to our indicators. I will talk you through the key indicators, and then Victoire Aubry will tell you about the financial results. Net rental income is up 1% to EUR 621.3 million, and you'll see how the Office and the Healthcare Investment divisions contributed to these numbers. We have earnings -- EPRA earnings, which is up 6% to EUR 4.85 per share, and Victoire will tell you that 1% more of rental income delivered an additional 6% of earnings per share. We have Property Investment portfolio, up 2.6% like-for-like to EUR 11.5 billion; and we have a financial occupancy rate for the Office Investment division, which is at 92.6%, which, on a like-for-like, is 30 basis points up. For Property Development, numbers are not so satisfactory, with revenue down 22.6% in line with the last quarter of the year before, so to 967.8% (sic) [ EUR 967.8 million ]. But we'll be discussing the future and what we did with Emmanuel Desmaizieres to develop a new road map for Property Development division. Net current cash flow, down 25.5% to 33.1% (sic) [ EUR 33.1 million ]. Return on equity, knowing that we've done a lot of investments, so 16.9%. Property Development return on equity and the backlog, which is at EUR 1.3 billion, up 8.1% over prior year 2018. Average cost of debt, slightly down, 1 basis point, at 1.54%. Average debt maturity, which remains stable at 6.4 years. And loan-to-value ratio at 38%, which is quite stable over prior year. When you combine all of these items for Property Investment, Property Development liabilities, you have net current cash flow, up 2.1%. That's EUR 5.26 per share, a bit above our guidance. And the late part -- the last part of the year delivered a better result than anticipated. We have EPRA net asset value, which stands at EUR 94.9 per share, up 5.7%. And there is a gap between EPRA NAV and EPRA NNNAV. And you have a net profit attributable to the group, which is quite significant for us as we have historical accounting method, which is strongly up, up by 93.7% to EUR 300 million. This is the result of the disposal gains we completed in 2019, and these indicators are totally in line with our plan. Now as Frédéric said, I believe it is important to know that the initiatives we took, the measures we've engaged fall within a part, which was launched mid-2018 to mid-2020. This is the first year through our plan. And a number of the items, very significant disposals, for example, have been a key highlight in fiscal 2019, but these are completed within a medium-term strategy. So the key highlights for the year, EUR 1.1 billion of disposals for the Office Investment division, Crystal Park and the 49% stake of the EQHO Tower, a fine office business asset in Paris. And we've conducted these disposals to fund our development pipeline for the Office Investment division. We had 8 completions in 2019, which created a high value on the order of EUR 155 million, and we invested close to EUR 534 million in this pipeline. So we stepped up our investments in the Healthcare Investment division, on the order of EUR 750 million this year, quite a significant amount this year. And we've opened a new country, that is Germany, with the first transaction in the early part of November. And with respect to the Healthcare division, we had an inaugural bond for Icade Santé in very favorable market terms. And it's not now a moment for self-assessment, but I believe that the 5 priorities we announced to you in 2019 were delivered, were complied with. And I will repeat this in the course of the presentation, but we have delivered really in line with our priorities. Now if we go into the -- some detail with the business divisions. For the Office Investment division, we've had very buoyant rental activity with new leases signed and some renewed. We've signed some 210,000 square meters, more than 179 leases with more than EUR 51 million in headline rental income, which makes Icade the first player in the Greater Paris area in this respect. Now the new leases are starting during 2019 amounted to 168,000 square meters with EUR 47 million in headline rental income; with 9 leases, with rent over EUR 1 million per year; with 2 significant transactions, 1 with the Pulse building with lease signed with the Paris Organising Committee for the 2024 Olympics, 28,860 square meters, 100% of the floor area. And then you have the Gambetta building with more than 16,000 square meters. Gross rental income is up 1.6% like-for-like, i.e., 3.1% increase for business parks, which is higher than the announced number in June. The main factor for that is the disposal of the Crystal Park building, which increased the rental income for the first half of the year. As this building was disposed of, it's not shown in the increase of rental income like-for-like. Now you have the financial occupancy rate standing at 92.6% in late 2019, 93.4% -- 96.4%, sorry, for offices. And if you were to reincorporate the signing of the Pulse lease, the financial occupancy rate for the Office Investment division stands at 94.7%. Asset rotation, with 2 major disposals, this, on the right-hand side, generating some EUR 1.1 billion in capital. With these 2 major disposals, capital gains of EUR 270 million and the 49% disposal of capital gains are -- directly translates into shareholders' equity. We made 1 significant acquisition, which is the Pointe Métro 1 building in Gennevilliers for an amount of EUR 123 million. Basically, we've accelerated our asset rotation in 2019 in our portfolio in line with our strategic plan to fund the development pipeline and to fund the acquisitions of the Healthcare Investment division. We had this development pipeline, which is the DNA of our Healthcare Investment division, with a total investment of EUR 509 million. We have created value from the 8 completed assets on the order of EUR 155 million. You have on the right-hand side the -- a couple of completions here: the Le Castel building completed in Marseille; you have the Factor E in Bordeaux, which has been pre-let up to 59%; and the Monaco building, which is at the bottom, which is a hotel building in the Rungis park. These completions for 2019 amounted to more than EUR 500 million in total investment, EUR 33 million in potential rental income. And these 8 assets have been completed and pre-let on the order of 94% by year-end. We also have done an early exit from our partnership with Altarea Cogedim, with an asset which was sold in Issy-les-Moulineaux to CMP. We generated some EUR 15 million in dividends for the Healthcare Investment (sic) [ Office Investment ]. So key figures for the Office Investment, sorry. So Office Investment, key figures, portfolio value of EUR 8.9 billion (sic) [ EUR 9.1 billion ], EUR 8.5 billion in group share -- 8.7 -- 8.5, sorry. You have a weighted average unexpired lease term at 4.5 years. Average net initial yield at 5.8%, quite high in the market with a financial occupancy rate, which I just mentioned. I believe it is interesting to look at the price per square meter, which increased significantly over prior year, which is due to the portfolio asset management and due to contracted yield in the market. This is a combination of these 2 factors. So basically, you have a price -- average price per square meter in the Paris region on area at EUR 7,500; offices outside of Paris Region, that's EUR 3,600; and business parks at EUR 2,350. And we are quite satisfied with this. This is basically on the back of the increase of the occupancy rate across our portfolios, be they business products and Office Investment. Now if we look at the future, in fact, we're always working hard on this pipeline. We have 8 operations delivered this year, but we've also reloaded this development pipeline. We have 17 operations in the development pipeline at the moment, amounting to an investment of EUR 2.2 billion, and we already announced we have at least 11, EUR 1.3 billion in an investment. It's important to remind you that our balance sheet also shows the effort of our investment of EUR 800 million, which don't necessarily generate cash flow, but are, of course, the reserves of value creation and rents in the years to come. In this announced pipeline, we expect EUR 86 million of additional rental income and a yield on cost of 6.4%. For the entire pipeline, we expect value creation of -- in the region of EUR 700 million, including EUR 500 million to be captured. And if we look at the completions in the years to come, in 2020 and 2021, the additional rental income will be in the region of EUR 58 million and a pre-let marketing rate of 62%. So we consider the implementation of this development pipeline is relatively well directed. In Healthcare Investment, 2019 was a very strong year for investment, EUR 750 million, EUR 400 million in France alone, with the acquisition of a private hospital called the Confluent in Nantes in partnership with Vivalto Santé, which, at the same time, is acquiring the operations part; 2 nursing homes purchased in Korian. And we could also -- could have pointed out the acquisition of the portfolio of the Epione portfolio in the middle of the year. And above all, EUR 350 million invested internationally, primarily in Germany, where the transaction in 19 nursing homes for a little under EUR 300 million and the continuation of our investment in Italy for EUR 86 million. We are, I believe, in the right -- on the right direction to continue our trajectory of becoming a leading European health care investment operator. And we have a plan for significant investment between 2019 and 2022 of practically EUR 2.5 billion, with EUR 750 million already implemented in 2019. I think we're in line with our objectives. In addition to the investments, it was a year of quite robust leasing activity in Healthcare. We don't talk about this so much because the portfolio is 100% full by nature, but we have improved rental income by 11.7% on a like-for-like basis with the completions that are very significant, in fact, in 2018, plus 2.6% on a like-for-like basis, which have also, I believe, can continue on a very good trajectory. We renewed a number of leases in France, in particular, with the Elsan Group, which made it possible to increase the residual duration of term of the leases, with an increase now of 0.6 years. For investment we've done internationally, obviously, these are operations which are more recent where they have a bit of sale and leaseback. And there, the WAULT will mean, with the international investment, leases are longer than in France, in particular, for tax reasons. And the residual aspects, we have, in fact, 17.9 years to -- and it's important to conclude this slide is that growth in 2020 in acquisitions and completions in 2019 account for, once again, a significant amount in the region of EUR 28 million in additional rental income. The highlights for the Healthcare Investment is a portfolio amounting to EUR 5.3 billion. We've already got some minority interest as well. That's significant in health care, especially in France. So the group share is EUR 3 billion, a yield that is extremely attractive. That remains so. It is contracting slightly. That's a market phenomenon at 5.7%, excluding duties. Obviously, an occupancy rate that is 100%. The WAULT is at 8. We have 156 facilities, a significant increase compared to the previous year. Now the outlook for the medical investment branch is we will continue our investments in -- internationally and in France, where we will be looking in effect as a priority for the international business. That's a very significant aspect to invest in, but the -- our teams have a pipeline that's very attractive and very interesting. We will see over the -- in the year how we will close a number of deals. Our model has always been to try not just to purchase property assets, but also to make design partnerships that are solid and over time long term. That was the case in France. It's starting to be the case in Italy, and we're looking with an operating partner with whom we have signed this preliminary operation in Germany, how we could do so. Perhaps for other developments, we have an investment pipeline, therefore, for extensions, works and operations for -- amounting to 192 -- EUR 292 million as of December 2019. We will continue, even though the duty -- the terms are very short. We do plan ahead for our leases for the major operators in France, where we're expecting over 18 to 24 months in advance where there will be some new dates. We have already had this preliminary aspect for Healthcare, and we will see how we can make the most of these very attractive financial conditions to finance our growth to be extremely accretive. Now a question that we are often getting is what about the liquidity in Healthcare, and we're working actively on this issue. But in -- what we're telling you is it hasn't changed since 2018, 2019. This event will take place between 2020 and 2022, but it's true that we are working increasingly actively on this matter. Now if we look at Property Investment development, the figures, as you've seen, are not particularly well directed. 2019 was a year -- fairly important year for Icade Promotion. We had a new Managing Director, Emmanuel Desmaizieres, with -- who has built, developed a road map for 2020, 2024 that is focused on growth. As I said, we were talking about growth in the region of 40% by 2024. And our figures, we don't think that -- notwithstanding, the figures from last year are pretty well directed and focused. We have some backlog as well. We've got over 5,000 apartments. We've got a very significant increase of 5.6%, waiting for figures for AFP and some of the promoters as well that have prevented before us. But I think that the backlog is -- and by value, we'll focus downwards, but in fact, there will be some figures there that will be quite interesting that will point upwards as well. It's quite positive. You can see this in the backlog, in fact, because the backlog has increased by 8.1%. So that's quite a dynamic approach. And as we've done also and what -- the issues of Property Investment development in France, if we exclude the impact of the municipal local elections on building permits and what have you, is the main problem for real estate companies. And what we've done is made a decision for portage that's fairly attractive. In fact, we've actually acquired quite a significant operations for nearly EUR 400 million with reserves, land reserve. Over the medium and long term, that will make it possible to prepare for the future and the competitive conditions that might be a little less lively than what we're -- we've been going through with bids that have been organized so far. This is an issue that we have looked at for Icade Promotion to be able to do these acquisitions that, I think, are particularly positive over the medium term. We will continue to win a lot of large-scale operations. That's basically the DNA, in fact, in the Icade Promotion. And we have acquired some 19 projects that are significant. Okay. We'll now go back to Bruneseau, which is the most significant, in fact, urban development program in Paris Proper. The Olympic and Paralympic Village in Paris 2 as well in the Gobelins station, the Caen Hospital University campus and something in the 19th arrondissement Paris, where, in fact, these have been extremely active and dynamic and, I would say, successful as well in 2019. Once again, we've got figures that for 2019 we consider that our traction is well focused. And to give you a very lead indicator, which is the potential revenue that we consider over the medium term, that has increased by practically EUR 1.4 billion from EUR 7.1 billion -- from EUR 5.7 billion to EUR 7.1 billion. That's work done in the large-scale operations. And this is something we've started with our land reserves over the medium term that we have acquired and which we consider that our activity is well directed for the future. 2019 will not have been an exceptional year. 2020, we'll have to expect, wait for the new teams in place at the local elections. But maybe 2020 will be a transitional year, but we remain firmly positive on our direction in this activity over the medium term, given the potential for revenue and our road map, which is firmly focused on growth. A few words about our CSR performance. I'm going to call it like that because it's just an issue on which you've been asking us much more -- far more questions, and investors make it an investment criterion that has increasing importance. We believe that it is part of our DNA, and our objectives and our stakes haven't changed. It's what we presented in our strat plan in 2018, and in effect, our objectives are medium term in terms of energy transition and energy -- and environment transition. It means an investment effort and resource effort that are earmarked for these issues, but the results that we have already obtained in the first year of the implementation of the plan are, in this field, I believe, well directed. And perhaps, the main indicator, the reduction of our carbon intensity of minus 45% between 2015 and 2025. At the end of 2018, we're at minus 27%. So our reduction rate is in line with the medium-term objective, and it's an issue that requires an awful lot of work and an awful lot of investment because reducing the CO2 intensity in our assets, which are already in use, is not an easy thing necessarily to do. Our aim was to go very quickly to have all our business parks in a positive biodiversity impact. Now it's a little easier because we have space. We have business parks of 50, 60 hectares that we can increase and introduce biodiversity more easily. This is a thing we've done. And in particular, as we -- as we're talking about low carbon issues there, there is no issues of materials performance to get there. There's also the fact that reuse what we want to get to low-carbon constructions or new carbon-neutral builds. Well, reuse will become a very important issue. And over 2/3 of our projects of over 5,000 square meters have made an effort to reuse significant materials. The aim is to get to 100% this year. And I'd like to remind you that one of the reasons why we won the bid for the Olympic and Paralympic Village is the reuse rate that we can post, which is pretty high, and we're very happy with this. We are recognized by the extra financial and nonfinancial rating agencies. I know multiple. There are several. We follow -- monitor the one we think is the reference for the property industry, the Global Real Estate Sustainability Benchmark, where we achieved a score of 88 -- 84 out of 100. And for the couple of years, we've been diversified. Icade has been a sector leader by the GRESB. And we're also monitoring Vigeo, the 2 agencies we work primarily, who awarded us a score of 65 out of 100, plus 6 points. Icade is ranked third in the 80-plus companies monitored in Europe. As in 2019, in 2020, our priorities will remain low carbon and our carbon intensity reductions. So that's a brief overview of our operating results and earnings. I'm now going to hand over to Victoire, who will give you the figures.

Thank you very much, Olivier. Good morning, everybody. Indeed, yes, I'll walk you through the financials, the income statement to start off with. And let's look, first of all, at Property Investment. As you see here, growth was quite buoyant. The earnings in the 2 investment divisions, plus 6%. And this in the context that showed some speeding up in the volume of disposals. So 2 other items that are worth noting here on this slide is, as you see, the increase in the margin ratio in respect of rental income, more than 200 basis points of an increase. And this is the case in both Property Investment divisions, but more particularly for Office Investment, with a drop in vacancies. And also the other point to be taken on board in this slide is the EPRA cost ratio going down below 14%, including the vacancies. And if we don't take account the vacancies, it's also at a good figure, reflecting efforts put in respect of our cost that we'll talk about in a minute. So the earnings for the 2 Property Investment divisions that are trending well. Let's have a closer look now at how this divides up within our portfolio because this is not necessarily the same phenomenon all over. So regarding Office Investment, you see, no surprise here. A reduction in the net rental income of 5.6%, down in the context of substantial disposals, of course. And we also mentioned here the impact in 2019, minus EUR 32 million. So it's quite a substantial amount, impact of disposals. But we tackled this issue throughout the year. So as to offset this drop, mechanical drop in our rental income by, firstly, putting in sustained efforts on rental activities. We made acquisitions, as Olivier recalled, Pointe Metro, for example, plus EUR 8 million, the rental income in respect of that activity. And then between the rental income and the earnings, we worked on 2 other indicators that are important for us. The first one is the financial results of the Office Investment division. We had an early exit from Issy Coeur de Ville, which was eventually we had so as to boost us by EUR 15 million upwards. And also, we anticipated the speeding up of the disposals, and therefore, the lesser need to incur debt by making bullet repayments at the start of the year. You may recall that we made an early redemption, and the rates were still very high. So that was done in quite conducive condition, more than EUR 200 million worth of an impact and EUR 220 million other together, so that's EUR 400 million less debt in the Office Investment division. So that has a positive impact on the earnings and trending us in the growth direction, of course. And the other item is management costs going down by EUR 8 million for the full year. So the earnings for the Office Investment division in a context of speeding up of disposal is going up, nonetheless, plus 3.7%, so to 100%, that's EUR 245 million. That's the main effect of the Tower EQHO portion we hold. We only have 51% of that now in the income statement. So the Healthcare division. Next, investment division for several years, we've had a lot of sustained growth in this part of the portfolio. The net rental income going up substantially, almost 12%. Margin ratio going up [ too ] on the earnings. So naturally, we have EUR 120 million here. As you see, growth in the full year. Now the growth of rental income, up 2.6%, mainly driven by the escalation formula that account for more than 2% of the growth here. So as you see here, the earnings of the Healthcare Investment division at 100% is EUR 211 million. Now the entire business line, you see here, was a bit of a dip in the results. As we indicated to you as of the last half year results, so you see 23% down for the revenues, but that's because of the slowdown in residential in the pre-electoral context we have at the moment in France. On the supply side, that has an impact. And also, that's a bit more marked for office -- for offices. The margin ratios are going down because of the volume going down, 113 basis points for the full year, apart from the volume effect with the impact of the upswing in construction costs borne by all of the sector, of course. And you can see that the net current cash flow of the group, EUR 33 million, representing 8% of the cash flow of the group. And then if you look at the specific business activities of ordinary development with allocation of capital of EUR 165 million, the performance put in by our development activities is quite substantial, 16.9%, as you see, ROE from ordinary activities here. And as Olivier said earlier, we're preparing for the future too by speeding up our acquisitions of land banks. So with the EUR 100 million worth at the end of the full year, consuming also some of our equity. That's the reason why we spell out the fact that the equity base is the carrying amount. So outside of the guidance, plus 2.1%. As you see here, for the group, NCCF growth in the context of a lot of speeding up of our disposals, we put in these performance nonetheless. Now a short slide on our net income group share. You see this reflects the good financial health of Icade. Net income, EUR 300 million. We freed up EUR 209 million worth of gains on disposals with Crystal Park being disposed, but you have as well the EUR 61 million freed up by the disposal of the EQHO Tower building. So that gives us a sound structure for our balance sheet. To add to this a few other facts and figures on the trend in the value of our property portfolio, Office Investment, on an ordinary basis, you see a drop of 2.6% on a reported basis, but you've got to look at the 2.9% figure here, which is like-for-like, fueled by the creation of value in our pipeline. Eight completions in 2019. For the year, 2 new projects that are also continuing to deploy positive effects on the value, the trend in the Property Investment division is also a buoyant performance out in the French regions. And on Healthcare Investment, well, good growth here, EUR 3 billion at the end of the financial year. On a like-for-like basis, it's up 1.7%. So you see that the portfolio here represents EUR 5.3 billion worth all told. On 100% basis, that is, which becomes quite substantial in importance if you look at Icade as a whole. So the 2 Property Investment portfolio is EUR 14.3 billion in total at the end of the financial year. So logically, after commenting on these cash flow items and the portfolio, we have the NAV, as you see here. Excluding the effects of the fair value of the group [ Santé ], you have the growth of 5.7% here. So single -- EPRA single net, that is NAV and the EPRA net asset value TSR is up 10.8%. If you take out the fair value of our fixed rate debt, you have accounting for 3.7% on our debt. But the drop in the rate is a good thing in the sale part. Of course, it brings down our earnings in a negative way. So the triple net figure comes out as you see here. And the EPRA NNNAV, up 1.5% for the full year. So what about the liabilities then? We've been fairly active in managing our liabilities, a couple of saving features here. Firstly, dynamic and anticipated management, firming our sales on the Office Investment division. And also, we availed of the excellent market conditions last year so as to continue enabling Icade Santé to -- after the stand-alone entity and be more fly with its own wings, let's say. And of course, there was a bond issuance and by attractive conditions, as Olivier said, EUR 500 million. The first origination, 10-year bond, the rate we achieved here was absolutely very, very attractive. So in sum, you see that our balance sheet indicators are quite sound and trending in the right direction. The average debt maturity, 6.4 years, flat compared to last year. The average cost of debt going down slightly, 1.54%. ICR, among the highest in the marketplace, reflecting the robustness of our liabilities in this company. And we also have a liquidity cushion of EUR 1.7 billion, giving us 4 years' worth of interest in capital ahead of us. So quite a good cushion, really covered liquidity very well. And the LTV ratio including duties at 38% in line with our financial policy and flat compared with last year. So on this basis, the Board of Directors would propose at the next general assembly on the 24th of April a dividend of EUR 4.81 per share, which would be an increase of 4.6%. And this fits with 4.6% of the total cash flow and of the sales that were made. As you can see that this dividend on the basis of share price on 31/12, which was 91.4%. The return is 5% on dividend yield, and dividend yield based on EPRA and NAV is 5.3%. And finally, the TSR on share price is at nearly 55% for the entire year. So the paying of dividend will be carried out in 2 phases. It's like last year. The first one will be early March and the coupon will be detached, and the forward payment will be on the sixth. And the second installment would be in the early weeks of July. So that is as far as the financial elements are concerned.

Thank you very much. Now I will tell you a few words about our purpose. But before this, we are going to be showing a short video to summarize our purpose statement. [Presentation] Right, so I wanted to show you this short video, which basically illustrates the story of Icade and the initiatives we've taken. So we took the opportunity of the French PACTE law, which was introduced last year, to undergo this process, which started mid-2018, this strategic plan which involved 100% of our employees with the purpose statement, which was approved by the Board of Directors, and Icade is part of those corporations who want to push the limits in these areas. And the Board of Directors decided that it would submit this purpose statement to the vote of the shareholders in the general meeting of 24th of April 2020, the idea being that this purpose be included in the preamble of our Articles of Association. Our prospects and outlook for fiscal 2020 are as follows: namely, our priorities. We have a strategic plan, and our priority will be to continue the execution of our strategic plan, which has the main pillars, which you know, which will span out to 2022. With respect to the Office Investment division, we'll slow down on our process of disposals, fewer disposals than we conducted this year, but we will step up our investments in the development pipeline. And for the Healthcare Investment division, the priority will be to grow further and to further expand internationally in this portfolio. For the Property Development division, our priority will be to implement the road map for 2020-2024, which was introduced in November last. And for CSR, the priority for 2020 will be to continue to focus on our low carbon strategy. And on the 24th of April, with the AGM voting on the purpose statement, we'll have this purpose with associated goals and ambitions, and we'll be basically implementing the goals within this Icade purpose statement, cascading them down all the organization. Now with respect to our financial prospects and outlook, Victoire Aubry shared with you the EUR 32 million impact of disposal. If you look at 2018, 2019, there was more than EUR 70 million are generating from disposal gains. So our cash flow position will be lower than what happened in 2019. But if we restate it from these one-off disposal gains of fiscal 2019, basically, the cash flow would be up some 5%. Now with respect to the 2020 dividend payout, payout ratio will be higher. Payout ratio of net carrying cash flow on the order of 90%. And since we distributed only part of the capital gains generated in 2019, the tax terms applicable to REITs, we'll be distributing part of the gains in order to fuel to contribute to the increased payout ratio. So much for the financial outlook, prospects for 2020. And the next general meeting will be on April 24, 2020. Now thank you for your attention, and we are available to answer your questions jointly with Frédéric and the management team.

Pierre-Emmanuel, Kepler Cheuvreux. I have several questions for you. The first is on Property Development and personnel margins. We saw a slight downgrade in your headcount as well. Can you tell us what you're going to do for 2020? And what were the assumptions made for the bookings for 2019 and future operating margin as well? The second question is the development in your values. I may be wrong, but I think there's EUR 207 million (sic) [ EUR 209 million ] in gains from disposals, but we adjust this for organic growth of 2.2% for office space. Does this mean that the remainder of your portfolio will contract by value for the rest of the year? And we also have a question on rates again in EQHO Tower, are you actually considering that this is going to change in 2020? And my last question is, Icade Santé, its liquidity. And there again, we have a question -- a window. I think that's quite exceptional. What is the blocking issue at the moment? Do you have to convince your partners that are Icade Santé? Or is it a covenants issue? Or is a leverage issue?

I'll try not to forget some of the questions there. So some of you, the trends in -- changes in values, I'll ask Antoine to answer that one. As for the margins, it's because, in fact, due to the -- Victoire, and the volume effect with -- in fact, we've also got some overheads that will impact us and erosion in our margins, plus an increase in construction costs that we can't reflect in our sale price. Now of course, we'll have a slight erosion in margins in 2021 for the same reasons -- 2020, I'm sorry. And what we're saying here is that by 2022, medium-term horizon, we'll get back, in particular, due to the improvement in revenue volumes and levels and the work we've done in our land reserves that we can purchase at a lower cost because we're working over the medium and long term to find a normative level of 7%. As for the office portfolio, I can't remember exactly the drop in the -- from the impact of the EQHO Tower. Perhaps, Antoine, you can take the microphone and answer. Antoine de Chabannes, who is Head of the Portfolio Management Division.

Yes, the portfolio -- office portfolio is increasing. And in terms of variations in -- so we can look, in fact, an increase of plus 2.9%. And this is particularly true for office space and not business parks activity. Plus, in fact, a strong effect from the development pipeline.

Disposal gains are not included in this. They are not included in the increases, and in fact, there's no impact from the EQHO Tower. To go back to your second and third question, the option available to our partner is at a given price, set price. And obviously, the value is stable. There's no variation in the EQHO Tower, unless they decided not to exercise this option. It's a purchase option. We structured the deal to be able to work with them for a long time. If they -- even if they decided not to do so, you've seen on the market -- on the Paris market a large proportion of the performance of the investment market in Paris in volume and rates relates to the activism of Korian investors who, by far, were the most dynamic this year on the office market in France with very significant transactions. These are investors that are very at ease with very large objects, very at ease with the market of La Défense, where we've got more than EUR 500 million deals. We've had budget hypotheses, but the rationale or logic would say that they would exercise this purchase option, at least that's what they told us, but they are, in a sense, required to do so. So it's an option that's, the ball's in their court, for 2020. If they decide not to exercise it in 2020, then we are free both in terms of valuation and liquidity. And as I said, we structured the deal to be able to carry on as far as 5, 7 years with this very high-quality partner, in particular, due to its intrinsic financing. Now for the other one, there's no problem. It's a fairly complex issue in terms of legal and fiscal attacks issues. But the transformation of a subsidiary side into a parent company side means an awful lot of rolling issues as well and among other things. And to ensure that liquidity, we have multiple options available to us. And that's because we're -- if you look at the history of Icade Santé in terms of developing the platform, the operating platform, in an ideal world, we'd have 1 or 2 additional deals on an international level to convince and be sure that with the concept of a pan-European platform, the idea of being a leader in the medical health care sector is a reality. So Olivier's team is working on these issues. And simply, we will -- we've always said 2020, 2022, it's true that most investors or analysts had 2020. And I believe, having looked at all our disclosures on this issue that we're working at our own pace, we've got actually a shareholder agreement that stipulates liquidity in Santé at the end of 2022. So to be completely transparent about this issue, therefore, we have discussions on a legal tax basis that are quite structural and with our partners on the feasibility of accelerating or planning ahead for that close. But the pact, the agreement is there, is stipulated end of 2022.

Florent Laroche-Joubert. I had several questions, in particular, in response to Icade Santé. We can see that your share price is going above its NAV. As you several got options for Icade Santé, can we imagine a minor liquidity issue, a capital increase for Icade so that you could consolidate even further your Icade Santé position? That's my first question. My second question is about the 2020 dividend. Should we look at the new guidance, which is still in line with the guidance you gave over the medium term in 2018, in other words, growth of over 4.5% per year? And third question, for your purpose, you've insisted on this, what is basically changing? Is this opening opportunities for you? Can this create obstacles for you? How should we understand this?

As for Icade Santé, the issue is not accretion. It's -- there's no idea of, in fact, increasing market capital to purchase, I don't know, a minority interest. These minority interests are major life insurance companies. And therefore, our aim is to deploy capital than to pay in the disposal gains, which are significant. Those are one of the issues that have to be addressed, in fact, for Icade Santé. But we've made that decision, in fact, when we presented the plan with the investment levels that are particularly significant in real estate companies to have, in fact, a constant equity plan and, therefore, rotate capital, which may have an impact on specific short-term KPIs where we have disposals to finance development. But we have no projects in mind of that kind. Of course, there will be something over the medium term, but there's nothing at the moment in our pipeline. The issue, therefore, the minority interest, I think, are pretty heavy over the period. The IRR, in fact, for Icade Santé, which began in 2012, outperforms 10% -- it's more than 10%. And if we manage to do this with the plan is, as we've developed it, it would be in the same region, more or less. So no plan for an exit of a significant minority interest over the short term. At least, it hasn't been brought to my attention. Now the purpose. Admittedly, we believe that these issues go back to CSR. We thought -- sorry, which is why we went back to our history, so to speak. It was already part of our DNA. And simply, the PACTE law has been voted. It gives companies this possibility, and I think it's useful for everyone. It's useful for staff members because it gives the direction in which they can work towards. It's useful for the Board of Directors, which is basically the broker of that approach. And I think we've done it because it's increasingly useful, I believe, and necessary or is required by investors who ask us. I can tell you the time we spend in meetings we have with you, the proportion earmarked for these issues in -- for -- in the last 4 years increases from year-to-year. We can see that there is an increased interest in these issues and they may become a discriminating criteria for investment. I believe all the blue-chip companies must have acquired a purpose in each in their own way. Why? Because investors, I believe, will look at this in greater detail. And not just a socially responsible investment operators or what have you, I'm not going to talk about the personal convictions of everybody, but we did because we believe it gives a far more detailed framework both for staff members, Board members and the -- and partners. Now does this mean opportunities? Well, I think it means we might have to give up on 1 or 2 things over the short term. When we looked at this in such a formal way, there may be some things that we'll say, "Okay. We can't do some of this because it's not in line with what -- with our values." It's a disciplined rigor. And when we look at this, it's quite logical. When you look at the wording of our purpose, if I can put it back here on the screen, it is, I believe, is a perfect continuation of what we do today, but it's also realistic. We're talking about missions, objectives. I think it would be wrong to say that 100% of what we do today equates exactly with what was written, but I think it's pretty close with the history and DNA of the company. And it's a wording that comes from the corpus of our company. We think that any gap between what we do and what's written here would be quite minor. And as I said, it's a priority for 2020 once it has been approved by the shareholder meeting in April. Again, given the composition of our capital, this expense is not so great. And once we've officially adopted this purpose, we will strive to apply it to our business divisions. And to answer your second part of the question, over the medium term, I believe that it's an opportunity because I believe that companies that -- the most virtuous in these fields, in particular, in the fields of diversity, inclusion and low-carbon emissions or footprints, and I'm talking at least in real estate, are independently of their financial [ importance ], the ones that will be preferred by investors. And I think, ultimately, when we look at how our corporate clients react, it will become a performance factor in real estate portfolios that will be far more significant than it has been in the past.

Another question. Just to go back for question number three. Just another question. We'd like to confirm that guidance for 2020 is in line with our development for the 4 years of the plan.

Yes, indeed. In fact, we're looking, in fact, the gains rate that will contract in July, depending on how the year pans out. But as we've talked about this before, we are on the same trajectory.

Henri Quadrelli, Societe Generale. Just a question about office rental income. Business parks have a like-for-like performance that is basically flat compared to office space, in the strict sense of the word. What do you see in terms of rental income growth?

It's quite strong actually in business parks at plus 3% on a like-for-like. In fact, when you look at the indexation and, in fact, rental index, where we're flatter, it's in office space. And as I said before in my introduction, it's primarily because we were penalized from that point of view by rental [ in ] events. There have been some departures as this happens, in fact, in all buildings that have been our operator. I'm thinking about Orsud also, which we've re-let since then. But over the year, there has been an impact. And the fact, in the first 6 months of the year, a large part of our growth came from Crystal Park, which when you restate the figures on a like-for-like basis, is no longer part of the portfolio -- of the office portfolio. At the same percentage, we'll be even below indexation, in fact. So that's the impact of some rental events, which means that, when we re-let these buildings, we will resume like-for-like growth more in line with market trends. Are there other questions or other questions online or via Internet? Yes, there are some questions. Can we read them out?

A question from [ Serge Person ] -- 2 questions. I share the business plan and the direction for Icade in the next 3 years. Traveling quite often, I don't understand why Icade is not focusing on investment outside Europe, in very promising questions -- countries. My second question, what is the dividend amount scheduled for 2020? Classic? In other words, and I -- increased dividend with the gains from disposals?

So a question, we got 2 answers. We've got a plan presented in 2018 that is shareholder, an initial movement internationally in the Eurozone, which is already a change in our DNA for us. Companies are what they are. I won't go in Europe or elsewhere. In fact, what other real estate territories with very strong regions, perhaps stronger than in France, which is a very mature market, but apart from the international diversification of Icade Santé, we do not have at the present any projects for extensions on an international level, neither in office space, nor in Property Development, which are very local businesses, in fact, and Promotion development. And I think at another things, we've got a huge amount to do still in France to ensure earnings growth. In terms of the dividend, I believe Victoire has answered. At present, we have not scheduled an exceptional dividend. We have growth in the dividend, which is regular. The exceptional dividend, when we look at this disposal amount, it's -- we don't do -- manage to reuse the capital quickly, all the income from disposals, because we haven't used everything because our treasury earns nothing. It doesn't cost us anything that's already -- let's be happy about that, but available treasury at the end of the year, given its disposals, is extremely significant. We're talking several hundreds of millions of euros. Also, with our total debt as well because we believe we are capable to reuse this treasury, these cash assets over the short term. That's our central hypothesis at least for our work because we cannot let these cash assets linger too long. And we have every hope, I think, at least we are reasonably sure of being able to use this over the short term and not send it back to our shareholders. A telephone question, I believe.

The first question is from Jonathan.