(News Bulletin 247) – Icade has renewed its outlook for the current year while Covivio has raised its target for its reference indicator for 2024, on the strength of its increased exposure to the hotel sector.

In a real estate development market still reeling from an unprecedented crisis, the publications of players exposed to this sector are closely monitored. On July 12, the half-year results of Kaufman & Broad had given complete satisfaction, the real estate developer had then revealed a dynamic commercial activity, with an increase in its reservations over the period.

This Monday, it is Icade’s turn to announce its results for the first six months of the year. And the group, which is both a developer and an office real estate company, confirmed its 2024 objectives, after having resisted a first half still marked by a deterioration in the new real estate market.

Reduced net loss for Icade

The group has revealed a “current net cash flow” (CFNC) from strategic activities (i.e., adjusted for the ongoing sale of the healthcare business), its reference indicator, which comes to 111.1 million euros, a slight decrease of 0.1% over one year. On a per share basis, this key indicator is stable over one year at 1.47 euros per share.

In detail, its manager, Nicolas Joly, underlines that the land activity had shown itself to be resilient with gross rental income up 3.7% to 187.8 million euros.

As for the development activity, it still bore the scars of a difficult new property market. Reservations experienced a limited decline of 1% in volume to 2,110 units and 7.6% in value to 538 million euros. According to Invest Securities, the leading indicators revealed by Icade are announcing “probable declines in revenues and margins”. In total, the decline in revenues for this division is limited to -0.1% over one year, to 582.9 million euros.

Also, the net loss attributable to the group as of June 30 was significantly reduced to 180.5 million euros compared to 475.4 million euros in the first half of 2023.

For the rest of the financial year, Icade remains optimistic after this first half deemed “without surprises” by Invest Securities. The group is still counting on a “current net cash flow” per share of between 3.55 euros and 3.70 euros, including a CFNC from strategic activities of between 2.75 euros and 2.90 euros. Invest Securities expects at this stage that Icade will achieve CFNC of 3.70 euros and 2.90 euros respectively.

The maintenance of the objectives is welcomed by the market, the share of the subsidiary of the Caisse des Dépôts et Consignations (which holds nearly 39% of the round table) gaining 5% to 21.92 euros to take the lead of the SBF 120 this Monday morning. But since January 1, the share has fallen another 38%.

An increase in target for Covivio

Icade is not the only real estate company to have revealed its half-yearly accounts, Covivio has also taken part in the exercise. In the first half, the former Foncière des Régions revealed revenues up 1.8% (and 6.5% at constant scope) to 326.8 million euros.

As of June 30, 2024, the recurring net income (following the standards of EPRA, the European federation of the sector) of the listed real estate investment company reached 230.8 million euros (group share), an increase of 3.3%.

“The operating data is very satisfactory,” says Invest Securities, which is pushing Covivio to revise upwards its recurring net income target. The property company therefore expects its reference indicator to be around 460 million euros, compared to 440 million euros in a previous projection.

Per share, this amount would correspond to a recurring net result of 4.34 euros, which is higher than Invest Securities’ expectations (4.24 euros per share).

The group explains this increase in its annual targets by increased exposure to the hotel industry, a sector which according to Covivio has “demonstrated its ability to outperform inflation and GDP growth over a long period, and which offers promising growth prospects”.

The property company recalled that it had increased its capital in its subsidiary Covivio Hotels and signed a memorandum of understanding with the real estate division of the Accor group at the end of June, with a view to increasing its exposure to the hotel industry.

On the Paris Stock Exchange, Covivio shares rose 1.3% to 46.38 euros after this publication, reducing their decline to 4.3% since January 1.