(News Bulletin 247) – The company announced on Tuesday that it had launched a multi-step process to withdraw from this activity which it had previously considered going public. It will define a new strategy this year.

Icade had warned at the end of February that it was conducting discussions to crystallize the value of its health subsidiary. The property company had, in 2021, wanted to list this division on the stock market but had to suspend the operation, citing unsatisfactory market conditions, before giving up.

Icade will therefore use a more direct means to externalize the value of its 58.4% stakes in Icade Santé and 59.39% in Icade Healthcare Europe (IHE), which operates the group’s healthcare activities internationally. , i.e. a sale in several stages.

The resident of the SBF 120 thus announced Monday evening that he had signed an exclusive agreement with the real estate asset manager Primonial REIM to buy back his stake in Icade Santé and manage the sale of the IHE asset portfolio. All based on a value of 2.6 billion euros for its two holdings, 2.3 billion for Icade Santé and 300 million for IHE.

Sale of the IHE portfolio

Icade will initially sell 64% of its stake in its health subsidiary for 1.4 billion euros, with 1.1 billion euros sold to Primonial REIM, 100 million euros to Société Générale Assurance while Icade Santé will reduce and cancel 200 million euros of its own capital for the benefit of its future former parent company.

The transaction should be finalized by next June. Icade will then stop consolidating the results of Icade Santé in its own accounts.

The balance of its stake in Icade Santé will then have to be sold by the end of 2025, “mainly to funds managed by Primonial REIM or investors identified by Primonial REIM”, explains the property company in a press release.

Regarding Icade Healthcare Europe, the portfolio of assets of this company, valued at around 850 million euros at the end of December 2022, will be put up for sale. “A mandate has been given to Primonial REIM, which will be responsible for selling the portfolio according to terms and a schedule to optimize its valuation,” the company explained. According to a presentation by Icade to analysts, these disposal operations should be completed by the end of 2024.

The proceeds from the sale of IHE sales would be used primarily to reimburse Icade’s shareholder current account – a form of shareholder loan granted by Icade to IHE – for an amount of 327 million euros. The balance will then be redistributed to IHE shareholders, which would represent 336 million euros for Icade.

750 million euros in exceptional dividends

Icade estimates that all of these operations will generate cash flows of up to 3 billion euros, which will allow it to reduce debt in a “significant” way, he explains.

At the end of December 2022, Icade’s net debt represented 6.57 billion euros. Its loan-to-value ratio (net financial debt compared to the value of its assets), a leading indicator of the level of indebtedness among real estate companies, stood at 39.3% at the end of December. By way of comparison, this ratio is 35.7% at Gecina, 41.2% at Unibail-Rodamco-Westfield and 37.7% at Klépierre.

As the company points out in its presentation to investors, the rise in interest rates and the pressure on real estate values ​​have led the market to be very observant of these debt ratios.

Icade also intends to use the cash from these operations to seize “growth opportunities that the current market context should generate”. The company is thus giving itself leeway to implement its future strategy, which it must unveil by the end of the year.

Last but not least, Icade explains that all the operations would bring out unrealized capital gains of approximately 1.2 billion euros which will generate “an obligation to distribute exceptional dividends of approximately 710 million euros, distributable in the two years following their achievements”.

Strategic shift

On the Paris Stock Exchange, the market appreciates these announcements. The Icade share rose 7.5% around 11 a.m. and marked the strongest rise in the SBF 120.

Degroof Petercam considers “positive” the reference valuation of this operation which will allow “the company to set the course for future growth”. The financial intermediary recalls that Icade’s health activities had contributed 38.5% to its current net cash flow in 2022. Consequently, the transactions announced will “fundamentally change the activity” of Icade, underlines the Belgian investment bank.

Invest Securities also considers that this “complex operation” is “positive on the stock market in the short term” but considers it “questionable” in the medium term because it would leave Icade “at the head of a less diversified and clearly less attractive portfolio”.

It should be noted that on Monday, before this announcement, the Oddo design office had precisely bet on the possibility of a sale of the Icade Santé subsidiary. Oddo BHF had thus increased its advice to “overperformance” against “underperformance” previously on the file, while raising its target price to 61 euros against 46.5 euros.