Icade anticipates its profitability to reach the upper end of initial forecasts, reporting consolidated revenues of €1.015 billion for the first nine months of 2024, a slight year-on-year decline. The company noted growth in its rental activity in the tertiary sector and signs of a recovery in residential development, with bookings for new properties increasing. Despite positive indicators, concerns persist regarding future revenue declines and market volatility, leading to a neutral recommendation from analysts.
(BFM Bourse) – Icade is optimistic about its profitability, expecting to land at the higher end of its earlier projections following the announcement of its revenues for the first nine months. The company anticipates a rebound in new property bookings.
Amidst a property development sector still grappling with a significant crisis, the financial disclosures of involved companies have become a focal point. Notably, Nexity’s report is anticipated this week alongside several others.
Icade has taken the lead in sharing its financial results this Monday. As a developer and office property firm, Icade has managed to mitigate the decline in its business against a backdrop of a weakened new-build market during the first nine months of the 2024 financial year.
From January to September, Icade reported consolidated revenues of €1.015 billion, marking a slight drop of 0.2% compared to the same period last year.
‘This trend reflects strong rental activity in the tertiary real estate sector, coupled with a noticeable uptick in property development bookings, even in a still-volatile market,’ highlights Oddo BHF.
Positive Trends in Property Development
Breaking it down further, the gross rental income from the tertiary division, contributing nearly 28% to total sales, reached €280 million by the end of September. This shows a year-on-year increase of 3.1% on a reported basis and 3.6% on a like-for-like basis.
Performance varies across segments, with growth exceeding the indexation effect in “well-positioned” offices—those meeting new customer expectations—along with business premises, growing by 6.3% and 6.5% respectively on a like-for-like basis. In contrast, “repositioning” offices, comprising 4% of Icade’s office portfolio, dropped by 10.9%.
The real estate firm has identified encouraging signs within residential development, as bookings have slightly increased, according to Invest Securities.
During the same nine-month span, property development—which constitutes over 71% of Icade’s total revenue—generated economic sales of €829.2 million, witnessing a 1.7% year-on-year decrease.
Icade reported 2,818 reservations worth €761.5 million over this period, translating to a 9.6% rise in volume and a 2.3% increase in value. This growth was driven mainly by block sales to institutional investors, despite them facing harsher conditions than the previous year. Oddo BHF notes that Icade had to implement price reductions ranging from 10% to 15%.
‘A recent decline in interest rates is sparking a modest resurgence in reservations from individual buyers, although the market remains cautious and selective,’ claims Icade.
In summary, the figures released by Icade this morning do not indicate any significant surprises upon first evaluation, according to Invest Securities.
Refined Financial Targets for Profitability
Looking ahead, Icade is fine-tuning its profitability projections. The company anticipates a “net current cash flow” (NCFC) per share at the upper boundary of its forecast, estimated between €3.55 and €3.70. This aligns with consensus estimates from Oddo BHF (3.69 euros) and Invest Securities (3.64 euros).
This projection includes the CFNC from strategic activities at the upper end of a range between €2.75 and €2.90 per share, also matching Invest Securities’ forecast of €2.84 per share.
Icade expects a CFNC from discontinued operations of €0.80 per share, stemming from the sale of 63% of its stake in Icade Santé to Primonial REIM.
Despite these positive indicators, Oddo BHF expresses skepticism about the upcoming year. “The nine-month reports suggest we should prepare for a revenue downturn in 2025, compounded by lower indexation, a projected decrease in the financial occupancy rate (with an expected loss of €25 million in annualized revenues this fourth quarter), likely reduced financial income from declining interest rates, and a 32% reduction in residential development starts over the past nine months due to the current market landscape,” the research firm warns.
This report offers ‘good news for offices and initial signs of recovery in residential development,’ yet the stock suffers from a lack of clarity regarding future performance, concludes Oddo BHF, maintaining its ‘neutral’ stance and a price target of €30.50.
On the Paris Bourse, Icade’s stock is experiencing some volatility following this announcement. The shares have decreased by 1.