Icade (ICAD.PA): Subdued macro coupled with higher vacancy risk; maintain Sell

Research evidence excerpt

Icade (ICAD.PA): Subdued macro coupled with higher vacancy risk; maintain Sell

Goldman Sachs Icade (ICAD.PA)

Key risks/what would make us more positive

Stronger underlying markets than we expect, resulting in high rental growth: Should

the macro environment and demand in underlying markets be stronger than expected,

this could lead to higher rental growth relative to our expectations.

Stronger pricing power: Should reversionary potential or pricing power be stronger

than we expect in the portfolio, this would drive stronger rental growth assumptions

than we currently expect.

Stronger pass-through of inflation: Any stronger pass-through of inflation would

positively impact our view on the amount of ERV and GRI growth we assume in our

forecasts.

Lower vacancy than we currently forecast: Given weak supply/demand dynamics in

Icade’s market, we forecast vacancy increasing to c.22-25% in the portfolio. Should the

company see better demand than we expect and additional leasing successes, this

would drive better rents than we currently forecast.

Third-party development: Better revenue and margins than expected in third-party

development could drive stronger EBITDA assumptions than we currently forecast.

Lower interest rates than we currently expect: Should interest rates be lower than we

expect, this would have a positive impact on interest costs and on our cost of capital

assumption.

Disposal of Healthcare: Icade sold a 63% stake in its Icade Sante healthcare business

(renamed Praemia Healthcare) in July 2023 and is looking to sell the rest of the business.

We assume a progressive disposal by end 2026; we note that an earlier sale at more

favourable conditions than we expect could result in the company being able to return

capital faster to shareholders.

Other disclosure: