ICADE – Q1 2019 Performance : a strong Q1 for the property investment divisions

PRESS RELEASE

Issy-les-Moulineaux, April 25, 2019, 7:15 a.m.

ICADE - Q1 2019 PERFORMANCE

A STRONG Q1 FOR THE PROPERTY INVESTMENT DIVISIONS

∙Office Property Investment: rental income up 2.7% on a like-for-like basis

o48 leases were signed or renewed during the quarter for nearly 82,946 sq.m

oA financial occupancy rate of 91.4%

oInvestments accelerated to €108 million, primarily in the development pipeline

∙Healthcare Property Investment: rental income soars by +14.2%

oSignificant increase in rental income due to 2018 completions and acquisitions (+2.7% on a like-for-like

basis)

o7 leases secured1 during the quarter for a WAULT of 10.6 years, resulting in a portfolio WAULT of 7.7 years

oExpansion continues with the signing of a preliminary agreement for the acquisition2 of 12 medium- and long-term care assets for €191 million

∙Property Development: lower revenue and residential backlog up nearly 5%3

oConsolidated revenue drops 28.5% to €148.5 million; residential segment: -14.7%

oGrowth in the backlog (€1,195 million, up +2.8%3) and land portfolio (€2.5 billion in potential revenue at the end of March 2019)

oIcade continues to perform well in competitive selection processes: contract for the "Inventing Bruneseau" project which features a buildable area of 100,000 sq.m awarded in February 2019

∙Executive Committee appointments and changes in governance

∙2019 guidance confirmed:

oStable Group net current cash flow per share, excluding the impact of any opportunistic disposals in 2019

o2019 dividend: c.+4.5%

			Change	Like-for-like
(in millions of euros)	03/31/2019	03/31/2018	(%)	change (%)
Gross rental income from Office Property Investment	92.0	99.0	(7.0)%	2.7%
Gross rental income from Healthcare Property Investment	64.7	56.7	14.2%	2.7%
Gross rental income from Property Investment	156.7	155.7	0.8%	2.7%
Property Development revenue	148.5	207.8	(28.5)%	(28.5)%
Other revenue (*)	(3.1)	(1.3)	N/A	N/A
CONSOLIDATED REVENUE	302.1	362.1	(16.6)%	(17.0)%

(*) "Other revenue" mainly includes intra-group revenue eliminations

1Lease renewal or extension

2See dedicated press release from April 11, 2019

3vs. December 31, 2018

1.PROPERTY INVESTMENT DIVISIONS

1.1Office Property Investment

Gross rental income:

				Leasing
		Completions/		activity and
		Developments/		rent			Like-for-like
(in millions of euros)	03/31/2018	Refurbishments	Disposals	escalation	03/31/2019	Change (%)	change (%)
Offices (*)	62.5	(1.3)	(1.4)	1.7	61.6	(1.4)%	2.9%
Business parks (*)	29.7	(0.6)	(6.6)	0.8	23.3	(21.7)%	2.7%
OFFICE AND BUSINESS PARK ASSETS	92.3	(1.9)	(8.0)	2.5	84.9	(8.0)%	2.8%
Other assets (*)	7.9	0.1	(0.7)	0.0	7.4	(6.3)%	(0.1)%
Intra-group transactions from Office Property	(1.3)		1.0	0.0	(0.3)	(74.7)%	N/A
Investment
GROSS RENTAL INCOME FROM OFFICE	99.0	(1.7)	(7.7)	2.6	92.0	(7.0)%	2.7%
PROPERTY INVESTMENT

(*)Since September 30, 2018, the assets from the Millénaire business park (excluding the shopping centre) and the assets from the Pont de Flandre business park have been included in the Office segment, and the Fresnes business park and public-private partnerships have been included in "Other assets". All comparative information has been restated for these reclassifications (pro forma data for 2018).

Analysis of leasing activity in Q1 2019:

The Office Property Investment Division reported gross rental income of €92 million.

∙On a like-for-likebasis, the Office Property Investment Division recorded a +2.7% increase in income, including +2.9% for offices and +2.7% for business parks, buoyed by vibrant leasing activity and a rent escalation rate of 2.0%;

∙On a reported basis, rental income dipped €7.0 million (-7.0%) due to asset disposals carried out in H2 2018 (it is recalled that rental income related to assets sold in 2018 represented €37 million on an annual basis).

48 leases were signed or renewed for nearly 82,946 sq.m as leasing activity remained strong:

∙17 leases were renewed during the quarter ended, representing a total area of 54,652 sq.m, total annual headline rental income of €12.3 million and a weighted average unexpired lease term of 7.1 years.

∙New leases signed during the quarter ended totalled 28,294 sq.m, with annualised headline rental income of €5.7 million and a weighted average unexpired lease term of 6.4 years.

Tenant departures during the period stood at 69,941 sq.m (including 31,353 sq.m on a like-for-like basis).

As of March 31, 2019, the financial occupancy rate stood at 91.4%, a 0.7 pp decrease on a like-for-like basis (2.0 pps on a reported basis) compared to December 31, 2018. This drop is primarily due to completion of an asset currently being offered for lease.

The average unexpired lease term stood at 5.0 years, an increase of 0.3 years compared to December 31, 2018, due in part to leases renewed during the quarter.

	Financial occupancy rate					Weighted average unexpired lease term
		(in %) (**)				(in years) (**)
			Like-for-like
Asset classes	03/31/2019	12/31/2018	change*	03/31/2019				12/31/2018
Offices	95.2%	95.1%	(0.8) pp			5.6		5.2
Business parks	82.2%	89.1%	(0.8) pp			3.2		2.9
OFFICE AND BUSINESS PARK ASSETS	91.3%	93.5%	(0.8) pp			4.9		4.6
Other assets	93.2%	92.9%	+0.3 pp			6.5		6.7
OFFICE PROPERTY INVESTMENT	91.4%	93.4%	(0.7) pp			5.0		4.7

(*)Change between December 31, 2018 and March 31, 2019, excluding completions, acquisitions and disposals for the period. (**) On a full consolidation basis, except for equity-accounted assets which are included on a proportionate consolidation basis.

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Q1 2019 investments:

	Off-plan	Projects under
(in millions of euros)	acquisitions	development	Other capex	Other	Total
Offices	42.5	38.7	8.9	5.0	95.1
Business parks		8.1	4.3	0.1	12.5
OFFICES & BUSINESS PARKS	42.5	46.8	13.2	5.1	107.6
Other assets			0.7		0.7
OFFICE PROPERTY INVESTMENT	42.5	46.8	13.9	5.1	108.3

As of March 31, 2019, investments amounted to €108.3 million (vs. €95.8 million as of March 31, 2018), including:

∙Off-planschemes for €42.5 million, including €15.7 million and €14.5 million invested in the Spring A (Rueil-Malmaison) and Gambetta (Paris, 20th district) projects, respectively. Both assets were completed in Q1 and have a nearly 100% occupancy rate.

∙Development projects for €46.8 million, mainly allocated to Origine (€22.4 million) and Pulse (€5.6 million).

Other investments, encompassing "Other Capex" and "Other" for €19.0 million, have been earmarked for building maintenance work and tenant improvements.

Asset disposals:

Asset disposals completed in the quarter ended March 31, 2019 were not significant, amounting to €5.8 million (a €3.0 million gain).

1.2Healthcare Property Investment4

Gross rental income:

					Leasing
			Completions/		activity and
			Developments/		rent		Change Like-for-like
(in millions of euros)	03/31/2018	Acquisitions	Refurbishments	Disposals	escalation	03/31/2019	(%)	change (%)
GROSS RENTAL INCOME FROM
HEALTHCARE PROPERTY	56.7	2.5	4.1	(0.0)	1.5	64.7	14.2%	2.7%
INVESTMENT

Analysis of leasing activity in Q1:

Rental income from Healthcare Property Investment jumped 14.2% to €64.7 million.

∙On a like-for-likebasis, income rose by + 2.7%, fuelled by rent escalation of around 2.0%.

∙On a reported basis, this strong income growth is attributable to asset completions (+€4.1 million) and acquisitions (+€2.5 million) recorded in 2018.

	Financial occupancy rate				Weighted average unexpired lease term
		(in %)**			(in years)
Asset classes	03/31/2019	12/31/2018	Like-for-like change*	03/31/2019			12/31/2018
HEALTHCARE PROPERTY	100.0%	100.0%	0.0 pp		7.7		7.4
INVESTMENT

(*)Change between December 31, 2018 and March 31, 2019, excluding completions, acquisitions and disposals for the period.

(**)On a full consolidation basis.

The Healthcare Property Investment Division increased its weighted average unexpired lease term to 7.7 years (+0.3 years) as of March 31, 2019 after renewing or extending 7 leases during the quarter for a WAULT of 10.6 years.

4Icade Santé on a full consolidation basis

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Q1 2019 investments:

		Projects under
(in millions of euros)	Asset acquisitions	development	Other capex	Other	Total
HEALTHCARE PROPERTY INVESTMENT	12.3	11.4	9.1	0.4	33.2

As of March 31, 2019, the Healthcare Property Investment Division's investments amounted to €33.2 million (vs. €26.8 million as of March 31, 2018), including:

∙The acquisition of a new facility (Jesolo) for €12.1 million which will start generating cash flows immediately, in line with the memorandum of understanding signed at the end of 2018 with respect to the development of 7 nursing homes in northern Italy;

∙Development projects for €11.4 million, including the Greater Narbonne private hospital (€3.0 million) and the Clinique de l'Atlantique private hospital in Puilboreau (€1.6 million).

2.PROPERTY DEVELOPMENT DIVISION

			03/31/2019					03/31/2018
				Reclassification of				Reclassification of
(in millions of euros)	IFRS			joint ventures		Total	IFRS	joint ventures	Total	Change
Residential Property	115.6			10.2		125.7	135.6	9.4	145.0	(13.3%)
Development
Office Property Development	33.0			0.8		33.7	72.3	9.7	81.9	(58.8%)
REVENUE	148.5			11.0		159.5	207.8	19.1	226.9	(29.7%)

	03/31/2019	03/31/2018	Change (%)	12/31/2018
Orders for new housing units
and building plots
Housing orders (in units) (*)	847	1,242	(31.8)%	4,938
Housing orders (in millions of euros including taxes)	197.3	236.3	(16.5)%	1,041.3
Housing order cancellation rate (in %)	23%	14%	+9.0 pps	16%
Average sale price and average floor area
based on housing orders
Average price including taxes per habitable sq.m (in €/sq.m)	3,858	4,080	(5.4)%	3,851
Average budget including taxes per housing unit (in €k)	233.4	190.3	22.6%	211.2
Average floor area per housing unit (in sq.m)	60.5	46.6	29.8%	54.8
Breakdown of housing orders by type of customer (in %)
Home buyers	36.3%	23.4%	+12.8 pps	29.2%
Private investors	40.0%	29.7%	+10.3 pps	36.8%
Institutional investors	23.8%	46.9%	(23.1) pps	34.0%

(*) "Units" means the number of residential units or equivalent residential units (for mixed-use developments) of any given development.
(in millions of euros)	03/31/2019	12/31/2018		Change (%)
Property Development backlog	1,195.0	1,162.8		+ 2.8%
Residential Property Development	972.4	927.4		+ 4.9%
Office, Public Amenities and Healthcare Property Development	192.3	203.0		(5.3)%
Project Management Support service order book	30.2	32.4		(6.7)%

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2.1Residential Property Development

Following a record-breaking 2018 in terms of sales and construction starts, Residential Property Development revenue amounted to €125.7 million for the quarter, down 13.3% compared to March 31, 2018. This decrease, in line with forecasts, is due to the time lag between the moment sales are signed and revenue is recognised (percentage of completion method).

Net new housing orders were down by 31.8% in volume terms, bringing the total to 847 units. This fall is attributable to a lower absorption rate (7.8% in Q1 2019 vs. 9.0% in Q1 2018) and fewer properties put on the market than in Q1 2018 (645 units in Q1 2019 vs. 1,397 units in Q1 2018). The period required to obtain government permits has also increased in the run-up to elections.

In value terms, the decrease in potential revenue from housing orders was less pronounced (16.5%) due to a favourable price effect (average budget per housing unit of €233.4k in Q1 2019 vs. €190.3k in Q1 2018).

The Residential Property Development backlog was up 4.9% compared to December 31, 2018 and the land portfolio continued to grow: as of March 31, 2019, the land portfolio amounted to 11,762 units compared to 11,638 units at December 31, 2018, representing potential revenue including tax of €2.5 billion.

The outlook for Residential Property Development is therefore positive over the time horizon of Icade's medium-term plan.

2.2Office Property Development

At the end of March 2019, the Property Development Division completed the Sky-LineII project in Toulouse. This 4,692-sq.m building was sold to the City of Toulouse and is fully leased by some of the City's departments.

The revenue of the Office Property Development business reached €33.7 million, sharply down compared to Q1 2018 (€81.9 million) but in line with our forecasts.

At the end of March 2019, the backlog of the Office, Public Amenities and Healthcare Development business amounted to €192.3 million, down by 5.3% compared to December 31, 2018. This drop results from the progress of ongoing projects (especially an office building in the Carré de Soie district of Vaulx-en-Velin, the Latécoère building in Toulouse and an office building in Villejuif).

The lower revenue recorded in Q1 2019 is due to the completion of numerous projects in 2018 (over 150,000 sq.m including 9 major completions in 2018). The major contracts won in 2018 (and Q1 2019) will translate into significant revenue generation starting in 2020.

2.3Contracts awarded in 2019: new attractive opportunities

∙"Inventing Bruneseau - Nouvel R Project", France's first low-carbon neighbourhood

In March 2019, a consortium of developers made up of AG Real Estate, Icade, Les Nouveaux Constructeurs and Nexity, was selected as the winner of the "Inventing Bruneseau" call for projects organised by the City of Paris and SEMAPA.

"Nouvel R" involves carrying out a project covering close to 100,000 sq.m (25,000 sq.m offices, 50,000 sq.m housing and 20,000 sq.m shops and business premises) designed to create a real link between Paris and Ivry-sur-Seine.

The carbon footprint of this ambitious project is expected to be five times lower than the average in Paris, making Bruneseau France's first low- carbon neighbourhood.

∙Îlot K in Bordeaux

Icade Promotion was selected by the urban planner Bordeaux-Euratlantique to carry out a mixed-use project near the Saint-Jean train station.

The project will include a 450-spacemulti-storey car park (around 10,000 sq.m), 64 residential units (5,000 sq.m) and 350 sq.m of shops. The project's distinctive features include a mainly wood-based structure and a car park that can be partly converted into offices. An application for a building permit will be lodged in the spring with the aim of starting construction work in early 2020.

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