Icade SA
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Icade SA
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Good day, and welcome to the Icade results as of September 30, 2022 conference call. Today's conference is being recorded.[Operator Instructions]
I now hand you over to Olivier Wigniolle, CEO; and Victoire Aubry, CFO. Please go ahead.
Thank you. So good morning, everyone. Olivier Wigniolle speaking. Thanks for joining this call today. So I'm going to present our Q3 2022 figures for Icade's revenues and the key facts of the third quarter of the year. So I will make this presentation with Victoire Aubry, our CFO. And as said, this presentation will be followed by a Q&A session.
But maybe to start just a few words regarding the overall macroeconomic environment. As you know, so the macroeconomics, the geopolitical and the financial environment has been very volatile over the last 9 months, leading for sure, to complexity and making our business a little bit more challenging as we have to take into account this new environment. But in this context, we do think that Icade continue to maneuver in a way that is, let's say, like this agile and reactive.
So let's go now directly to Slide 5 to start the presentation with the key figures of our revenues. I'm now on Slide 5 of the presentation. So as you could see, the total revenues on a 100% basis amounted to EUR 1.249 billion, which is an increase of plus 2% compared to the same figure last year. In Group share, revenue increased by plus 3.4%. So we do think that those figures are quite resilient. So if you look now more into the detail, if you look at the revenues from our investment portfolio, on a Group share basis, they increased by plus 3.2% up to EUR 425 million. And on a like-for-like basis, we have a difference between the Office portfolio and the Healthcare division. And Victoire and I will come back to the specific item that are behind those figures.
For the Property Development division, the good momentum continued during the third quarter with a plus 3.6% increase in revenues over the 9 months at EUR 734 million. Overall, and as I said, the Group share revenues amount to EUR 1.249 billion, a 3.4% increase.
So let's go now to Slide 6, and let me now comment on the key highlights of the period. I'm on Slide 6 of the presentation. So the figures that we are presenting this morning reflect in our view, a solid business performance and across the 3 different business lines. So Victoire will elaborate more into digital, but a few numbers. For the Office portfolio, the leasing activity remained very dynamic with more than 110,000 square meters signed and renewed over the first 9 months of 2022. And the gross rental revenues amount to EUR 268 million. I think it's quite an interesting level in our view, particularly in the context of a significant disposal as you probably have in mind over the last 2 years in 2021 and 2022.
And let me remind you, in that respect, that we managed to dispose this year close to EUR 600 million after EUR 500 million in 2021. So clearly, asset rotation within the portfolio is an ongoing topic for Icade. Victoire will also comment the like-for-like evolution. This figure is in line with our budget and expectations. And just to remind you that the like-for-like evolution improved compared to the same figure at the end of June this year.
Regarding the Healthcare division, the revenues are up plus 12%. It's a strong increase and for sure, mainly driven by the investment recorded in 2021 and in the beginning of this year in 2022. So for Icade Promotion, as I said, our development subsidiary, the sales momentum remains solid, still driven by a very strong demand for residential and economic revenues of Icade Promotion stood close to EUR 800 million, up 3% with the same period last year. And Victoire will give you more detail shortly.
So the second, I think, takeaway of this figure is the asset rotation within the Office portfolio that continued in Q3 with the disposal of a building called AXE 13 in Nanterre, a building led to AXA, bringing the total amount of disposal for 2022 close to EUR 600 million. And I think that it's interesting to notice that all transactions were achieved in line with our last valuation. So, our disposal plan for 2022 is now completed. And we will continue in 2023, as we do think that the market appetite for the kind of office building, the kind of yield that we have in our building at Icade within this portfolio.
Maybe some word about our investment policy. As I said in the introduction, as you know, the financial environment has significantly changed since the beginning of the year. And at Icade, we do think that we -- and we try to be financially disciplined. Therefore, we have to include in our acquisition model, the new financial parameters. And this means that we have to be even more selective than in the past. And as a result, the volume of investment is lower compared to our budget compared to last year. And it's true for our 2 investment division Offices and Healthcare. But we are still confident in the fact that this complex environment is a more volatile market will also generate some appealing opportunities in the near future.
On the liability side, and again, Victoire will come back to that and maybe will answer some of your questions. But important to highlight that we have what we think is a very solid financial structure at the end of September. And we have continued to improve our hedging and maturity structure during the last 3 months. And S&P has confirmed in July, our BBB+ rating with a stable outlook, both for Icade and Icade Sante.
On our low carbon goals, which is part of our DNA. So just to remind you that we have increased our ambition at the beginning of 2022. And we are now aligning our 3 business line on the plus 1.5 degree pathway. And recently, the SBTi has approved our pathway, which is a good news for us. So I will come back to the outlook and guidance in my conclusion.
And I'm now leaving the floor to Victoire. Victoire, the floor is yours.
Thank you, Olivier, and good morning, everybody. So let me share with you the operational performance of each of our business lines, starting with our Office Property division. I'm on Slide 8. Let me elaborate first on leasing activity. It remains solid with more than 110,000 square meters newly signed or renewed over the first 9 months, out of which 50%, 50,000 square meters, sorry, made in only Q3, nearly 50%, reflecting the very good dynamic in Q3 alone. Another KPI I wanted to highlight is that 2/3 of the total is related to new signatures, new tenants coming in. In total, the volume of signatures represents an additional income of more than EUR 23 million and a weighted average lease break above 6 at 6.5.
Among those figures, we remind on the slide the signature of 5,000 square meters, which is solid public tenants, the ANS, Agence du Numérique en Santé, and Fresk in July, bringing the occupancy of the building to 92%, one of our key letting issue for 2022. Interesting also to highlight the very dynamic leasing activity in our business park, Rungis. We signed in Rungis 40,000 square meters year-to-date, out of which 26,000 in Q3 alone, reflecting attractiveness of this territory, combining offices, small lab facilities, services and leading spaces. Notice although that 60% is renewal and 40% represents new tenants in this area. Another great signing with 5,000 square meters in Pont de Flandre, another key and attractive territory for Icade located in the north of Paris. The occupancy rate of this business park located in the 19 district of Paris is above 90%.
So the gross rental income, Group share amounted as of September to EUR 268 million, a decrease by 1.6% compared to the same period last year in the context of sustained asset rotation, as Olivier said previously. I remind you the combined disposal volume in 2021 and 2022 is almost EUR 1.1 billion, representing an annual rental income of approximately EUR 55 million, which means we were able to compensate mainly 100% of those disposals, in particular, thanks to activate letting transaction.
The rental income also benefited from the positive impact of 2021 acquisition, namely Equinove and Prairial, as well as the 2021 completion of Fresk and Origine representing in total an annual rental income of EUR 46 million. On a like-for-like basis, rental income was down 1.8%, an improvement of 1.7 points compared with June, fully in line with our expectation and also reflecting the dynamic leasing activity. This improvement was driven in particular by the good momentum of the business park with Rungis, up 8.2%, as well as activity continuing in Rungis, plus 3.2%.
We also had the inflation topic and its positive impact through indexation. As I remember, 100% of our Office leases are indexed on indices integrating an inflation component. 80% of the revenues are based on ILAT, 20% on ICC and ILC indices with no cap. ILAT end of Q2 represented a plus 4.3%; ICC, 8% and ILC plus [ 4.14% ]. Progressively taken into account based on the path of the anniversary date of each lease contract, the average indexation that is reflected in Q3 for Office rental income is a plus 2.5%. The impact for the whole year is still estimated at plus 3%.
A word now on the financial occupancy rate. It stood at 87.2% end of September, slightly higher compared to June. As said previously, the recent signature, Fresk, which will take effect in Q4 2022 will increase the Fresk occupancy rate, of course, to 92%. And also, we have, therefore, contribute -- will, therefore, contribute, sorry, improvement of the Group occupancy rate on a like-for-like basis with an impact estimated around plus 0.6 points at the Group level. All in all, in a market under normalization and in the context of dynamic asset rotation and significant disposals, those figures clearly reflect a very resilient operational activity.
Last topic I want to share with you on the Office division is continued asset rotation. After the finalization of the first half of -- in the first half of the disposal of 2 core assets, namely Millenaire 4 and Gambetta, for an amount exceeding EUR 400 million, Icade signed in July an agreement for the sale of AXE 13 a building in Nanterre. This new transaction, together with smaller ones, as mentioned in the footnote of the press release, bringing the total volume of disposal year-to-date to EUR 600 million. And all those transactions have been carried out slightly above gross asset value end of 2021, an average of plus 2%. Our 2022 disposal plan is already achieved end of September. However, we remain, of course, as Olivier said, open to additional sales opportunity in the coming months.
Of course, in the meantime, taking into account, in particular, the current financial environment, we reduced the volume of our investments on a year-to-date basis with only EUR 164 million invested, mainly focused on our committed development pipeline compared to EUR 389 million end of September 2021. It represents a slowdown of 58%.
Let's now move to the Healthcare division on next slide. As Olivier said, commented before, our rental income is strongly up with an increase of plus 12% to EUR 157 million Group share. This growth is mainly driven by the acquisition completed in the second part of 2021, mainly abroad. I remember you in Portugal with the acquisition of 4 private clinics but also in Italy and Germany. As I remember too, acute care and post-acute care sector remained by far the largest contributor to our rental base with 85% of the total healthcare rental income.
Another interesting KPI, the collection rate is still 100%. As for of the Office division, nearly 100% of the healthcare leases are indexed on indices integrating a significant component of inflation, mainly ILC, 55% of the healthcare revenues and [ IPC ] 21% of the total revenue of the division. As such, the indexation impact included in the 9 months rental income is a plus 2%. We still expect the effects to be roughly plus 3% for the entire year. As for Offices, I remember you that the indices are taken into account in the path of the anniversary date of each lease contract. 2 other very strong figures for the healthcare portfolio, financial occupancy rate is unchanged at 100% and the average lease break is stable at roughly 8 years.
Let's review now what we achieve in terms of investment during the 9 first months, including preliminary agreements, the volume of investments carried out by Icade Sante amounts to EUR 196 million year-to-date. This volume represents less than 40% of the investments made in the same period in 2021. As for Offices, it represents a significant slowdown. On the back of the new financial environment, share pricing -- sharp rising interest rate, while transaction value remains stable, the Healthcare Property division adapted clearly slowed its investment pace and increased selectivity as Olivier highlighted. As a result, the annual volume of investments in 2022 should be lower than initially targeted at a range of EUR 600 million.
Now, on Slide 10 for our third business line, Property Development with Icade Promotion. As Olivier previously said, sales momentum remained solid in Q3 2022, still supported by strong demand from individuals with total orders for housing units, up 5% in value, 6% in volume. This is, however, fair to say the macroeconomic and financial environment led to a more wait-and-see attitude from some institutional investors and so longer period of negotiation. All in all, total housing orders amount to EUR 850 million, roughly stable compared to the same period last year. Economic revenues grew by 3% to EUR 800 million, helped for both residential and commercial segments.
Looking at leading indicators, the midterm future for Icade Promotion is also well oriented with the medium-term revenues potential intimated at EUR 8.4 billion. It includes the backlog at EUR 1.7 billion. It also includes the potential revenue of EUR 2.9 billion deriving from the residential portfolio that we do control through options or preliminary agreements. The indicator also includes in Q3, a major project won in Roquebrune in the south of France, you have the pictures in the slide, Icade will gently develop a large and mixed project representing a total of 400 housing units representing EUR 200 million of revenues on a 100% basis.
Just before handing over to Olivier for the outlook, I would like to say a word about the liabilities. Let me just remind you, Icade issued an 8-year maturity EUR 500 million bond in January at a coupon of 1%. Combined with an early redemption of a bond maturing in 2023, the Group managed to optimize its cost of debt at 1.20% as of June 2022, and in the meantime, push back the due date of the next debt to 2024. Icade also continued optimization in Q3 with notably a EUR 100 million bond financing for Icade Sante on favorable terms, 7-year maturity with a coupon of 2.5 -- 2.4%. It stood very attractive and a swap extension to continue to improve its solid aging policy, both on Icade Sante and Icade [ side ].
On the back of a solid cash position at almost EUR 3 billion, EUR 1.9 billion credit facilities and EUR 1 billion credit -- cash position, which cover 4 years of maturity and also a robust aging policy with an average coverage around 94% for 2022 and above 55% for the next 3 years, no maturity before 2024 and an increased selectivity in the investment policy where we can confirm the robustness of our balance sheet and we are comfortable to face a new financial environment. I remind you, by the way, Standard & Poor's confirmed in July, the BBB+ rating with stable outlook for Icade and Icade Sante.
Olivier, I leave you the floor.
Thank you, Victoire. So let's go now to Slide 12 to conclude this presentation of our Q3 2022 revenues and to give you some outlook. As we stated several times during this speech, for sure, the macroeconomic and financial environment remain very volatile, not to say complex. So in this new environment, we are not saying that the different crisis have no impact on Icade, but we have good reason to be confident on our capacity to manage those impacts. And Icade, I think, is adapting very fast to include the new financial parameters in our investment policy, but also in the way we do manage our businesses.
And finally, as Victoire just highlighted, we have the robustness of our balance sheet to support the growth of the company. So in this context, we are very confident to confirm our guidance for 2022. So the net current cash flow per share is expected up plus 4%, excluding the impact of 2022 disposal. And the net current cash flow for the Healthcare division will be up by plus 5% to plus 6%. And finally, the Board has confirmed the 2022 dividend policy, for sure, subject to general meeting approval, that should be up by plus 3% to plus 4%.
So our next event will be our Investor Day and this Investor Day that will be held on November 28. We'll provide an opportunity to go more into the detail of operational activities and to give you a more detailed vision on different markets in which we were active and for sure, to give you outlook for 2023. So we are -- you have the agenda of the ID at the end of the press release. And we will -- we plan to hold this meeting in one of our appealing and very large asset, the Pont de Flandre campus in Paris to make you discover or rediscover this territory and this asset that is so important for Icade. So I hope we'll have the pleasure to welcome many of you for the Investor Day.
So thank you for your attention. And now Victoire and I are ready to answer your questions.
[Operator Instructions] We will take the first question from Stephane Afonso from Invest Securities.
So the first one on the Office division. Could we have the reversion rate on renewals? And also, do you still target an occupancy rate of 20% by the end of the year? And for the Healthcare division. So how confident are you with your current level of trends in particular regarding the fact that some nursing home operators are facing operational issues?
And finally, during your last Investor Day, you gave us the midterm guidance of your FFO. You expected an average annual growth of 4.5% by the end of 2025. So my question is, do you still think that this guidance is achievable regarding the current climate of rising interest rates?
So I will answer the second and the third question and Victoire will answer the first one. On the level of rents for nursing home operators and also acute care asset operators, we are really confident. Just to remind you that the level of rent for the healthcare sector is not a question of supply and demand. It's really based on the cost of the property, and then you apply a cap rate. And frankly, I don't think in the new financial environment that we have, I don't see how you could apply a lower cap rate, the cost of the building in a world where the financial interest rates are increasing. So if your question is about inflation, for sure, inflation is a difficult topic for everyone. It's true for us, but it's for the operating company.
So it's fair to say that if you look at the different ratio that we are following, [ EPRA ] ratio, EBITDA compared to -- rent compared to EBITDA, for sure, you could have a slight decrease of this ratio in 2022 and even in 2023, it will be depend of inflation and therefore of the indexation. But for the time being, we have a collection rate of our rents in the Healthcare division, which is at 100%. So a significant topic. After that, it's always a question of discussion and negotiation. So it is fair to say that some operating tenant could ask for cap on indexation for 2022 or for 2023. And maybe we will accept in some cases to negotiate that. But we will ask for sure for counterparties a bit during -- like during the COVID-19 crisis, where we were asked a deferred payment. We have granted some of them, but we got -- we don't see any major topic in the level of rent for the Healthcare division.
Having said, just to remind you that we are mainly exposed to acute care assets. And we are already few exposed to operators in the nursing home segment that could be in a difficult situation. So we have a very close relationship with our tenant. As you probably have in mind, we have the strongest operators in our portfolio, and it's true for the acute care segment and for the nursing home segment a well-known operator that have some difficulties. The other -- the leading players of the sector. So we don't see any major issue. And again, as of today, collection rate is at the level of 100%.
Your last question was about the guidance, if I may, our midterm plan was covering the period in 2019, 2022. So the guidance that you were reminding will end, if I may, at the end of 2022. And we will have, for sure, at the beginning of 2023 to give indication of what are the midterm perspective. If you look at the agenda of the Investor Day, it's more about short-term topics because fair to say that to have a clear view on the midterm perspective, it's a bit too soon. What will be the final level of interest rate? What will be the final of the growth of GDP in France? What would be the average level of this transaction? So we are -- again, we have confirmed the guidance for 2022. If you look backward at what was delivered in 2019, 2021 and '22, apart from 2020 for COVID-19 crisis reason, I think we have delivered the guidance that we have announced for our term plan.
For the next one, again, it's a bit too soon. As you know, the visibility on the midterm perspective, I think it's fair to say, but I think it's true for all the sectors. It's limited visibility. So let's see when we will present our result 2022 in February, what will be the forecast from the midterm perspective.
On the reversion for the Office renewal, Victoire, could you answer the question?
Yes, of course. In fact, when we are speaking about reversion, it's a case-by-case situation, to be clear. It's also depending, and it's a central point, the age of the leases. Of course, back to AXA example, AXA renewal, for example, it's interesting to have in mind that AXA was a lead all with a age of coming from 2007, meaning by that a long time ago. So, of course, we had some negative reversion on that rent. But as I said, it's depending case-by-case. And clearly, what is important to highlight is that, each renewal is done in line with the current [ ERV ] and it's also an important thing. Having saying that, for the first part of the year, the first 6 months, we estimate the reversion we have negotiated approximately minus 2% on average. But one more time, you can even have positive reversions in some specific cases, and also more significant negative reversion because it's very old leases. So clearly, it's not -- it's a case-by-case situation.
And also back to your question regarding the occupancy rate end of 2022, as you have seen at end of September, we were able to disclose slight improvement in this [ cap high ] with the first impact we could expect another additional significant improvement. But in the meantime, have in mind that we have sold this new building AXE 13, which is one and which is fully let. So it will have also a negative impact on the occupancy rate at the end of the year. So perhaps not 90%, but I hope we will be above 87%, 87.2%, which is the figure end of September.
The next question comes from Veronique Meertens from Kempen.
Perhaps first on disposals. We say you are open for potential new disposals. Obviously, there have been only very few transactions lately. So can you -- are there any discussions ongoing? And how do you see the appetite in the market?
And then secondly, could you perhaps elaborate on your talks currently with appraisers, also tying in with very few transactions in the market? How are they actually going to incorporate on the one hand, the higher indexation, but also the expectation of yields having to move up?
Yes, for sure. Thanks for the question. About disposal, it is fair to say probably that the volume that the market will deliver in the second part of 2020 will be lower than the first part. Having said that, and as I said in my introduction, we really do think that the kind of building that we have, with cap rate, just to remind you that our average cap rate for Office is 5% and business park is 7.2%, disposal is not for healthcare, but it's an average cap rate of 5% on acute care. This kind of, I would say, core office building cap rate between around 5%, good location, good tenant, I think the appetite of the market is really there. For sure, the money is now coming more from asset manager, especially sometimes retail asset manager. So we have -- as I said and Victoire said, we have completed our disposal plan for 2022. But like this, we have started to work on the 2023 disposal plan. And we have tested the market on some assets.
And for -- the link with the second part of your question, it's also to have a clear view on what is the level of value, the valuation in this new environment. Appraisers, and I will come back to that in a second, but appraisal, it's interesting. But at the end of the day, real transaction is much better and like this always a good evidence or proof of the valuation. And I think it's interesting to move a little bit more into the detail of the transaction that we have achieved on AXE 13 building in Nanterre, where we have a significant part of our portfolio just behind [indiscernible]. And the transaction was signed at the beginning of August for the pre-agreement. So the new environment was fully integrated by the buyer. And we have a cap rate, which is a little bit below 4.5%. So I think it's a good -- an interesting transaction that probably will be used by the appraiser for the valuation of the kind of -- the part of the portfolio that we have in the [ vicinity ].
So the discussion that we have with the appraiser, for sure, we have started in advance this year, the valuation campaign in order to understand what they will do in their appraisal. What we do understand that, as you said, the volume of transaction will be probably more limited. I need some geographical sector, maybe they will have no comparable. So what we do understand because it is fair also to say that in the market, you have some transaction will be -- have been postponed. It's fair -- it's true for Paris, it's true for the suburb of Paris. And I think that it is some kind of an argument that appraiser will take into account and also the increasing level of the free risk interest rate to probably increase the kind of discount rate that they are using in their valuation.
What we do understand, so I think it's difficult to give more accurate figures. But I think depending on the location, depending on the kind of the building, the opinion of the tenant, but I think they will increase their cap rate by probably plus 15 to plus 30, 35 bps at the end of last year, a little bit too soon to have a more precise range of figures, but that's what we do understand, and we will check, for sure, if we have some preliminary contacts for additional disposal, we will check that it is consistent with the kind of discussion that we have on the market. That's the kind of flavor that we have from appraiser at the end of the year.
And if you look, and I think a key point for Icade, again, if you look at the kind of cap rate that we have on our Office portfolio, let's see, but we are -- we really do think that the impact of increasing interest rates will be probably more limited on assets that have cap rate around 4.5% to 5.5% compared to asset with lower cap rate. But let's see what the market will do, and let's see what the appraiser will announce, but that's what they have in mind. So I'm not saying that we are waiting of no impact of the increasing interest rate that we have to face. But I think that based on transaction and appraisal, the impact at the end of the year should be, for sure, negative but limited.
Okay. That's very helpful. Perhaps one follow-up question. Given your LTV, probably some yield expansion and so the outgoing early expected CapEx. Isn't this a time to accelerate disposals? Or are you very comfortable with your current LTV level still?
No, I think the point is to manage the transition. For sure, the level of interest rate that we have now to face for Icade in 10 years is to go 5%. It was not the scenario that we had in our budget at the beginning of the year. But I think the good news for Icade is that, we are trying to manage the transition. I said we have more than 2 years to adapt the portfolio to adapt the financial strategy due to the structure of our liabilities and the way we could even improve the structure of our liabilities. So for the time being, we do not plan to increase disposal. For sure, we have in mind to keep the same level of disposal in 2023, so market permitted because we'll see how the market will react.
For the time being, and as Victoire said, we do reduce, for financial reasons, the volume of the investment for the Healthcare division, but we do not plan to dispose assets within the Healthcare portfolio. And what we do think that probably the market will lead to some appealing opportunities, it is fair to say that some private real estate equity firm will have some, let's say, pressure to refinance their assets and so on. So probably, we could have some interesting and appealing opportunities in the market. And if you want to be able to [ fight ] them, it means that we will need to have more rotation within the portfolio. So the way we do think the near future is the following: same volume of disposal, again, to show what our valuation and so on and so on. And if we see interesting and appealing opportunities in the market, we will have to dispose more in order to be in a position to fight them. That's the way we look at 2023.
We will now take the next question from Florent Laroche from ODDO BHF.
Florent Laroche-Joubert from ODDO BHF. So maybe I would have maybe one additional follow-up questions on Healthcare, maybe to clarify. So at this stage, you will be more selective on your investment. But what we understand is that, you can look at a very strong opportunity. In this case, you will -- you think that you will be in a position to dispose more offices. Is it correct?
No, it's not exactly that. On the investment side of the Healthcare division, you have a good news and bad news. The good news is that, valuation in the market and let's see because there are several significant portfolio in the market for the time being. And what we do see is that, valuation are remaining stable, but to say increasing, because the asset class is seen by some -- maybe by a lot of investors are really defensive with the risk return profile, which is attractive. So it means that you have, again, a stable valuation compared to the end of last year and to say increasing valuation. And that a lot of transactions showing that. So when we put in our acquisition model, the cost of financing that has been multiplied by 3 or 300 since the beginning of the year for Icade Sante, we could not -- or it's difficult to match the market pricing because we have to increase the cost of financing. We had to increase the cost of capital. And therefore, sometimes, we are not competitive.
In some other cases, when you have a special situation or more complex transaction, we could be, especially on greenfield, but difficult for us to be -- for the time being, let's see, again, our situation will evolve in 2023 with the new financial parameters for the significant volume of acquisition in the Healthcare division. When I was talking to opportunities, I was more thinking on the Office portfolio because we do think that some players could have difficulties to refinance their portfolio and maybe we look for a partner or maybe we'll try to dispose. So my view was that, we will see probably in the near future some opportunities on the Office market.
For the Healthcare division, I think we need to wait a bit to see what will be the outlook for the valuation in the Healthcare segment. But fair to say that when you have cap rate for nursing home at 4.5% or 4.25%, not to say 4% for prime nursing home in Germany or in France, difficult for Icade Sante to increase the portfolio with the cost of financing at 5-plus and the cost of capital around 7% to 8%. So that was my point.
On the Office division, probably more opportunities in the near future for Icade. I don't know if my answer is clear for you, Florent?
Yes, yes. No, no, very clear.
We will now take the next question from Ben Richford from Societe Generale.
Can you hear me? So a couple of questions. Just on Icade Promotion. You're seeing -- it seems like no slowdown in demand for residential from individuals, but you also highlight the disposal on potential block sales. How does that change things for yourselves whether sort of block sales institutions significant for you in the past? Are you able to scale them back and still achieve the good pricing from individuals? And do you expect that market to change given the higher mortgage costs today? That would be my first question more around residential sales and promotion.
And secondly, your shares are effectively pricing in an equity offering. You said in the past or indicated that you might issue equity for Healthcare, I suspect that's the 2 maybe have some relation. Are you kind of ruling out acquisition growth in Healthcare funded from new equity? That's the question. So 2 questions.
The first one on Icade Promotion, our development subsidiary. For the time being, residential demand from individual is still quite strong, even with increasing costs for mortgages in France. And maybe there is a direct link between the 2 points. I think that our individual clients, they have in mind that maybe mortgages will continue to increase and therefore, they try -- some of them they try to speed up their acquisition project. So for the time being, the demand from individual clients is really satisfying and the available stock for -- on the market and it's true for Icade Promotion, but also for other developers is really limited.
The point is, as you know, during the last 3 to 4, 3 years that institutional investors were [Technical difficulty], which was a good news, which was something quite huge for the French market over the last 10 years. But I think that now with Icade of cap rate that at which were buying residential project, 3, 3.25 in the new financial environment, fair to say, they are probably less appetite for residential bulk acquisition. Maybe in the near future, we will be able to present new projects at higher cap rate and therefore, to continue to work institutional investor. For the time being, the immediate consequence of that is that, we will have to do more individual sales and probably less our sales to institutional investors.
But really, the market, in our view, is still quite well oriented. And if you look at the new orders this year coming from individual clients, it's really well oriented. We have no major concern about that. The question is, at the end of the day, the level of mortgages. Today, they are around 2.5% to 3%, and it's really manageable. For sure, it's higher compared to 1 year or 1.5 years ago. But if you look on the midterm, long-term perspective, it's still quite low.
For your second question, it's always a question, for sure, we could raise some new equity for acquisitions. There are a lot of liquidity around the asset class. The point for us is what is the cost of capital for us, what is the cost of capital for a large insurance company? What is the cost of capital for retail asset manager and what is the cost of financing? I think at Sante for the time being, we work in the acquisition model that we do, we use financial parameters that are coming from Icade. We have a cost of capital. We have the cost of financing. If you look at our partners, large insurance company, they are probably a lower cost of capital than the one that we have at Icade and there are probably less appetite for leverage compared to our appetite. And if you look at retail asset manager, their probably cost of capital, which is even lower compared to life insurance company, and they are more or less very limited use of leverage.
So we could -- maybe we could raise some equity if we want to do something. But for sure, we don't want to lower our cost of capital to just to make acquisition. It is what it is. There are benchmarks that are listed -- healthcare real estate company and the kind of figure that we are using to make acquisitions. And if you look at what our colleagues, our [indiscernible] colleagues are doing, I think it's -- they will probably have the same moves and the one that we have, they will probably reduce their volume of acquisition.
If we do think that they are appealing or interesting portfolio in the market, which is the case for the time being, we could seem to try to set up some JVs where we could raise equity coming from other partners. But for us, we would try and I think it's fair to say that we have been -- we will remain financially disciplined, especially in a period where everything is volatile and where visibility is a little bit low. We don't want to take any financial risk just to close the acquisition.
The next question...
We can take one last question because we have a meeting at 10, so -- and if you have additional questions, do not hesitate to send them to Anne-Sophie Lanaute or myself. But let's go ahead for the last question, yes.
We'll take the last question from Marc Mozzi from Bank of America.
Just a very quick one for me. Number one, what was your leasing spread probably I joined the call later, too late, but do you have any indication of what was the leasing spread for your Office segment?
Number two, I am right to say...
Sorry, Marc, I didn't catch your question. Could you repeat?
The leasing spread of your new renewal you've done on your renewals you've done in Offices.
Slightly negative.
Okay. And the other one is about making sure I understand correctly your numbers. Is your like-for-like now proportionate? And in H1, it was Group share. Does it mean the same thing? Or I'd like to understand if Group share is not the same proportionate? So we're not comparing apples and apples between 9 months in H1 here.
Victoire, could you answer the second question? Of course, when we compare figures, it is done on the same calculation. So, of course, when we are speaking about Group share, we compare figures on Group share basis. And if we are speaking about 100% basis, it's also on the same type of calculation. So I don't -- I'm not sure to fully catch your question, Marc, but...
In one case, it's written Group share in H1. In the other case, it's written proportionately 9 months for the like-for-like rental growth. That's it. I just wanted to make sure it was the same number or the same basis.
It is, Marc.
Thank you very much, all of you who have joined this call. As I said, I hope we will have the pleasure to welcome you during our Investor Day at the end of November. And again, if you have additional questions, do not hesitate to send them to Victoire and Sophie or myself, we will revert very quickly. Thank you very much.
Thank you very much. Have a good day.
Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.