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Icade Sa — Icade Santé — Debt Investor Presentation (September 2020)

59 slides from Icade Sa's debt investor presentation, September 2020

  1. Slide 1: Icade Santé Investor Presentation – Social Bond Roadshow

    COURLANCY POLYCLINIC (Reims, 51) ICADE SANTÉ INVESTOR PRESENTATION SOCIAL BOND ROADSHOW September 2020

  2. Slide 2: Agenda

    AGENDA Today’s speakers 1. Icade Santé at a glance 2. Icade Santé’s strategy 3. Icade Santé: an embedded social impact 4. Icade Santé’s inaugural Social Bond 5. Examples of eligible projects 6. Financial performances and credit highlights Appendices ICADE SANTÉ INVESTOR PRESENTATION I 2

  3. Slide 3: Disclaimer

    DISCLAIMER Certain information included in this presentation and other statements or materials published by Icade Santé (the “Company”) are not historical facts but are forward-looking statements. These forward-looking statements are based on current beliefs, expectations and assumptions, including,

  4. Slide 4: Speakers

    SPEAKERS TEAM A TEAM B Victoire AUBRY Xavier CHEVAL Executive committee member in charge of Finance and IT – CFO Executive committee member in charge of Healthcare Investment of Icade division – CEO of Icade Santé Etienne MAURER Jean-Philippe CARRASCOSA Financial Director of Icade Santé Head of Corp

  5. Slide 5: Icade Santé at a glance

    Courlancy Polyclinic (Reims-Bezannes, 51) 1. ICADE SANTÉ AT A GLANCE ICADE SANTÉ INVESTOR PRESENTATION I 5

  6. Slide 6: Icade Santé, Icade's subsidiary dedicated to healthcare property in France

    ICADE SANTÉ, ICADE’S SUBSIDIARY DEDICATED TO HEALTHCARE PROPERTY IN FRANCE LEADER IN INVESTMENTS IN PRIVATE CLINIC FACILITIES IN FRANCE, ICADE SANTÉ IS 58,3% OWNED BY ICADE AND 41,7% OWNED BY INSTITUTIONAL INVESTORS. A STRONG OWNERSHIP STRUCTURE Controlling shareholder AA/Stable A-/Stable 38.8% 18.9

  7. Slide 7: Icade Santé, the largest French healthcare REIT

    ICADE SANTÉ, THE LARGEST FRENCH HEALTHCARE REIT Start of Possible liquidity event Creation of Icade Santé Capital opening Diversification into International Expansion(1) (100%-owned by Icade) the nursing home sector 2018 2020/2022 2007 2012 2017 A diversified €5,0bn portfolio with critical size and

  8. Slide 8: A strong business model with long-term cash flows and positive social impact

    A STRONG BUSINESS MODEL WITH LONG-TERM CASH FLOWS AND POSITIVE SOCIAL IMPACT  In depth market knowledge & understanding of operators needs Strong  Very sound financial performance Fundamentals  Tax-efficient ‘SIIC’ Regime Robust Comprehensive in-house platform to source, develop, acquire & manage

  9. Slide 9: Strong financial structure

    STRONG FINANCIAL STRUCTURE Important milestone’s in Icade Santé’s debt management Rating A BBB+ rating by S&P since 2019, anchored in the Group’s rating A first step in financial markets An inaugural €500m bond issued in October 2019, largely oversubscribed A « best in class » Loan to Value ratio :

  10. Slide 10: Icade Santé's strategy

    Résidalya – Valmy (Dijon, 21) 2. ICADE SANTÉ’S STRATEGY ICADE SANTÉ INVESTOR PRESENTATION I 10

  11. Slide 11: A disciplined investment policy

    A DISCIPLINED INVESTMENT POLICY Focus on healthcare assets Attractive asset base leveraging on leading position, tenant fueled by a 12 years growth story relationship & market trends offering an undisputed market leadership Continued Product diversification (long-term care) while keeping growth in e

  12. Slide 12: A strong and low risk tenants' base

    A STRONG AND LOW RISK TENANTS’ BASE TENANTS’ CREDITWORTHINESS: INDUSTRY-LEADING OPERATORS AS TENANTS A SECURED & UNIQUE THREE-LEVEL UNDERWRITING SCHEME Level 3 Enforceable claims on tenants’ 12,5 % Regional Entities receivables from the french social security 5,7 % Vivalto 3,3 % Korian Level 2 PRIVA

  13. Slide 13: Lessons from the Covid-19 outbreak

    LESSONS FROM THE COVID-19 OUTBREAK MSO dedicated to  Both public and private hospitals mobilized to address the COVID-19, under the the sanitary crisis ministry of health supervision NH highly Nursing homes quarantined from as early as February in some cases responsive Over mortality reported estim

  14. Slide 14: Icade Santé: an embedded social impact

    Villeneuve d’Ascq Private Hospital (59) – Ramsay Santé 3. ICADE SANTÉ: AN EMBEDDED SOCIAL IMPACT Ligament du genou ICADE SANTÉ INVESTOR PRESENTATION I 14

  15. Slide 15: Icade Santé is a key player in the French hospital care landscape

    ICADE SANTÉ IS A KEY PLAYER IN THE FRENCH HOSPITAL CARE LANDSCAPE Even for private hospitals, the bulk of the revenue is publicly financed  Historical co-existence of private and public hospitals in the French healthcare system (33% of procedures performed in the private sector) Hospital expenditur

  16. Slide 16: Meeting growing demand for elderly care facilities

    ICADE SANTÉ MEETING GROWING DEMAND FOR ELDERLY CARE FACILITIES  Final users (residents) categorized based on their dependency levels French EHPAD capacity is shifting towards the private sector (GIR), ranking from 1 (total/severe dependency) to 6 (total autonomy) in % Permanent beds in EHPADs in Fr

  17. Slide 17: Social impact at the core of our projects

    SOCIAL IMPACT AT THE CORE OF OUR PROJECTS 2019-2022 Icade Santé’s social commitments 2019 results  Adapting real estate solutions to help healthcare  Audit process to assess the quality of patient care. Territorial operators improve the quality of patient care. cohesion and  Icade’s Charter final

  18. Slide 18: Additional measures to improve environmental impact

    ADDITIONNAL MEASURES TO IMPROVE ENVIRONMENTAL IMPACT 2019-2022 Icade Santé’s environmental commitments 2019 results  Monitor the energy performance of at least 75% of  76% of healthcare facility operators covered in 2019. healthcare facility operators starting in 2019. Impact on  Objective met in

  19. Slide 19: Icade Santé's inaugural Social Bond

    Villeneuve d’Ascq Private Hospital (59) – Ramsay Santé 4. ICADE SANTÉ’S INAUGURAL SOCIAL BOND ICADE SANTÉ INVESTOR PRESENTATION I 19

  20. Slide 20: Social Bond key takeaways

    ICADE SANTÉ’S SOCIAL BOND KEYS TAKEWAYS A social issuer  Focus on healthcare assets by nature  Key player in the French healthcare system, where the private sector holds a significant role  Social impact on the entire population of France Embedded positive social impact: Activity oriented by itse

  21. Slide 21: Use of proceeds

    USE OF PROCEEDS Eligible Asset Categories Contribution to Eligible Asset Category Target Populations Social Goals the UN SDG Hospital Care Real Estate - MSO clinics (Medicine, Surgery & Obstetrics) - People in need of - Improve the availability of medical care - MHE facilities (Mental Health Establi

  22. Slide 22: Management of proceeds and process for project selection

    MANAGEMENT OF PROCEEDS AND PROCESS FOR PROJECT SELECTION Icade Santé has established a Social An amount equal to the net proceeds of the Social Bonds issue will be credited to Bond Committee (SBC) comprising: Icade Santé’s Treasury liquidity portfolio and earmarked to the (re)financing of • the CEO

  23. Slide 23: Reporting & impact indicators

    REPORTING & IMPACT INDICATORS Impact Report Annual report until full allocation Eligible Asset Category Examples of potential indicators Publication of an external third-party assurance on Beneficiaries  Number of beds and places the satisfactory allocation of the net proceeds Hospital Care Real Es

  24. Slide 24: External review

    EXTERNAL REVIEW Pre-issuance Sustainalytics was commissioned as Second Party Opinion Provider to evaluate Icade Santé Social Bond Framework and its alignment with the Social Bond Principles (2020), as published by ICMA. “Sustainalytics is of the opinion that the Icade Santé Social Bond Framework is

  25. Slide 25: Examples of eligible projects

    CONFLUENT PRIVATE HOSPITAL Nantes – Loire-Atlantique 5. EXAMPLES OF ELIGIBLE PROJECTS ICADE SANTÉ INVESTOR PRESENTATION I 25

  26. Slide 26: Example 1 – Expansion / renovation: Clinique Santé Atlantique

    EXAMPLE 1 – EXPANSION / RENOVATION : CLINIQUE SANTÉ ATLANTIQUE  Operator : Elsan  Location : Saint-Herblain (Loire-Atlantique)  Activity / specialty : MSO Clinic  Acquisition by Icade Santé in 2008 - extension and refurbishment works in 2017-2019  Surface area: 40 597 sqm including 8 000 sq.m o

  27. Slide 27: Example 2 – Development / extension: Clinique de Domont

    EXAMPLE 2 – DEVELOPMENT / EXTENSION : CLINIQUE DE DOMONT  Operator : Ramsay Santé  Location : Domont (Val-d’Oise)  Activity / Specialty : MSO Clinic - 100 % ambulatory clinic  Completion in 2018, extended in 2019 by Icade Santé  Surface area : 3 521 sq.m  Bed and places : 34  Number of places

  28. Slide 28: Example 3 – Acquisition: EHPAD Reflet de Loire

    EXAMPLE 3 – ACQUISITION : EHPAD REFLET DE LOIRE  Operator : Korian  Location : La Chapelle Saint-Mesmin (Loiret)  Activity / Speciality: EHPAD  Construction in 2013  Acquired by Icade Santé in 2019  Surface : 4 293 sq.m  Beds and number of places : 88 including one UVP (protected living unit)

  29. Slide 29: Financial performances and credit highlights

    PARIS WEST PRIVATE HOSPITAL - RS (Trappes, 78) 6. FINANCIAL PERFORMANCES AND CREDIT HIGHLIGHTS ICADE SANTÉ INVESTOR PRESENTATION I 29

  30. Slide 30: Covid-19: Icade Santé's resilience proven despite the health crisis

    COVID-19 : ICADE SANTÉ’S RESILIENCE PROVEN DESPITE THE HEALTH CRISIS Robust rental income driven in part by 2019 acquisitions 1 • H1 2020 Gross rental income at €141.5m : +9,5% on a reported basis • +1.8% like-for-like Assets 100% leased on long-term contracts Impact of COVID-19 • Very limited impac

  31. Slide 31: Sound financials, supported by dynamic cash-flows

    SOUND FINANCIALS, SUPPORTED BY DYNAMIC CASH-FLOWS LARGE & SOUND SOLID CASH FLOW STRONG PORTFOLIO GENERATION BALANCE SHEET As of H1 2020 As of H1 2020 €5.0bn €263m €236m FY 2018 (+11,4% YoY) 1,65% CAGR vs H1 2019: +11% vs. 2.10% as of 30/06/2019 PORTFOLIO GAV FY 2019 NET RENTAL INCOME AVERAGE COST OF

  32. Slide 32: Financial highlights: strong cash-flow generation

    FINANCIAL HIGHLIGHTS: STRONG CASH-FLOW GENERATION Net Rental Income: 8,9% CAGR over the past 4 years Margin rate (Net rental income / Gross rental income) close to 100% €263m 100 98.4% 98.3% 97.9% 99,5% 300 250 €204m €211m €236m 90 200 150 80 100 50 70 0 2016 2017 2018 2019 60 50 2016 2017 2018 2019

  33. Slide 33: A strong debt structure (1/2)

    A STRONG DEBT STRUCTURE (1/2) Maturity schedule of drawn debt Diversification of funding sources (in €m) (in €m ; excluding accrued interest) GROSS DEBT AS OF 06/30/2020 €1,959.0m 447 648 189 512 150 316 200 175 195 50 147 108 47 21 49 36 38 16 21 53 500 S2 2020 2021 2022 2023 2024 2025 2026 2027 20

  34. Slide 34: A strong debt structure (2/2)

    A STRONG DEBT STRUCTURE (2/2) Average debt maturity above 5 years Robust interest cover ratio (1) 7 10 6 9 8 5 6.1 5.7 7 6 8.1 4 5.0 5.1 5 7.1 7.5 7.7 3 4 2 3 2 1 BANKING COVENANTS 1 0 0 2017 2018 2019 H1 2020 2017 2018 2019 H1 2020 LTV ratio at 36.1% Lower cost of debt 40% 2,5% 35% 2.47% 36,1% 2,0%

  35. Slide 35: Financial policy

    FINANCIAL POLICY Liquidity and hedging Optimizing financing LTV and ICR policies structure • Opportunity to access the bond market • LTV ratio: aiming at c.40% end of the plan • Hedging ratio: minimum 80% and increase the average debt maturity • Maintain robust ICR level • RCF line already in place

  36. Slide 36: Indicative terms and conditions of the Social Bond issue

    INDICATIVE TERMS AND CONDITION OF THE SOCIAL BOND ISSUE Issuer Icade Santé Issuer’s rating BBB+ by S&P (Stable) Notes rating BBB+ expected Notional amount EUR Benchmark Type Fixed Status of the Notes Senior Unsecured Maturity 10 to 12 years Global Coordinators & Structuring Advisors BNP Paribas, Nat

  37. Slide 37: A top-notch healthcare REIT in Europe

    A TOP-NOTCH HEALTHCARE REIT IN EUROPE A unique credit signature on the French healthcare real estate market BBB+ rating confirmed by S&P in July 2020 PORTFOLIO MARKET UNIQUE Supportive trends in the French Diversified and qualitative healthcare market portfolio of real assets A robust and stable inv

  38. Slide 38: Appendices

    Résidalya – Valmy (Dijon, 21) APPENDICES ICADE SANTÉ INVESTOR PRESENTATION I 38

  39. Slide 39: Speakers

    SPEAKERS TEAM A TEAM B Victoire AUBRY Xavier CHEVAL Executive committee member in charge of Finance and IT – CFO Executive committee member in charge of Healthcare Investment of Icade division – CEO of Icade Santé Victoire Aubry is a graduate from Dauphine University and HEC Xavier Cheval, 36 years

  40. Slide 40: Speakers

    SPEAKERS TEAM A TEAM B Daphné MILLET Elsa COUTEAUD CSR Director – Icade Development Officer / CSR Manager of Icade Santé Daphné Millet graduated from the Dauphine University. She Elsa Couteaud graduated from the Sorbonne University in urban started her career in 2006 as an SRI analyst within Groupam

  41. Slide 41: A strongly experienced and dedicated management team

    A STRONGLY EXPERIENCED AND DEDICATED MANAGEMENT TEAM Icade S.A. XAVIER CHEVAL represented by Olivier Wigniolle, CEO OF ICADE SANTÉ Chairman OPERATIONS INVESTMENTS 11 professionals 5 professionals Philippe Ingouf Guillaume Tessler Head of Operations Head of Int. Development Benoit Fosse Etienne Maure

  42. Slide 42: Icade Santé at a glance: focus on relationship with Icade S.A.

    ICADE SANTÉ AT A GLANCE: FOCUS ON RELATIONSHIP WITH ICADE S.A. SUPPORTED BY ICADE • Non-Listed company with SIIC Status (favorable fiscal regime) SUPPORTED BY ICADE PROPERTY DEVELOPMENT ARM • Oversight committee chaired by Icade SA CORPORATE FUNCTIONS (1) • Shareholders’ agreement in place (until 3r

  43. Slide 43: Supporting trends for Icade Santé activities

    SUPPORTING TRENDS FOR ICADE SANTÉ ACTIVITIES … in France, … in all EU’s countries … in PRIVATE HOSPITAL current core market CARE Sizable Public Funding Favorable Demographics • Even private care largely covered MSO: Medicine, Surgery & Obstetrics • Rising life expectancy by public insurance PSY: Psy

  44. Slide 44: Embedded positive social impact

    EMBEDDED POSITIVE SOCIAL IMPACT • Activity oriented by itself toward improving social benefits • Invest to deliver modern and cost-efficient care in line with CSR objectives Assisting operators in improving their social performance 25,165 Social CSR and Innovation “Quality of life” Charter Audit pro

  45. Slide 45: Healthcare expenditures: a sound level of public coverage

    HEALTHCARE EXPENDITURES : A SOUND LEVEL OF PUBLIC COVERAGE Very low Households’ participation in healthcare financing Icade Santé’s tenants and their source of revenue Consumption of medical care and goods (CSBM) Elderly Care 14 2% 12% 2% 13% 16% 5% 4% 21% 13% 38% Hospital Source: DREES 92% 93% Care

  46. Slide 46: French market: strong momentum and high barriers to entry

    FRENCH MARKET: STRONG MOMENTUM AND HIGH BARRIERS TO ENTRY • Public hospitals and non for-profit organisation account for 76% of the beds vs. 24% for private hospitals • Number of beds defined by ARS1 with very few authorizations granted and no new facilities allowed HOSPITAL CARE • Market prices set

  47. Slide 47: Low risk, long-term, non-cyclical asset class with infra-like characteristics

    LOW RISK, LONG-TERM, NON-CYCLICAL ASSET CLASS WITH INFRA-LIKE CHARACTERISTICS • Triple net leases An attractive risk premium in France • Lower volatility compare to other real estate classes LOW RISK • Attractive risk-adjusted return  Stable prime yields in H1 2019 in healthcare • Increasingly stru

  48. Slide 48: Process for project selection (governance)

    PROCESS FOR PROJECT SELECTION (GOVERNANCE) The Social Bond Committee is in charge of the governance of the Social Bond Icade Santé has established a Framework, will meet at least once year and will be responsible of the following: Social Bond Committee (SBC) comprising: o Allocation of the proceeds

  49. Slide 49: France is Europe's 2nd largest healthcare market

    FRANCE IS EUROPE’S 2ND LARGEST HEALTHCARE MARKET France allocates a significant share of its GDP to health expenditures... …and is Europe 2nd largest healthcare market Current health expenditure (% of GDP, 2016) Current healthcare expenditure across the EU (€ bn) 352 12% 12% 11% 11% 10% 10% 10% 265

  50. Slide 50: Leadership in sourcing, developing, acquiring & managing healthcare assets

    APPDEZNX? ICADE SANTÉ - LEADERSHIP IN SOURCING, DEVELOPING, ACQUIRING & MANAGING HEALTHCARE ASSETS CASE STUDIES OF 2018 ACHIEVEMENTS Croix du Sud – Ramsay Santé Nursing Homes - Résidalya Quint-Fonsegrives (Haute-Garonne) Le Grand Jardin (Le Lavandou, Var)  Demonstrated capacity to grow to >100 asse

  51. Slide 51: Attractive lease characteristics for the French market

    ATTRACTIVE LEASE CHARACTERISTICS FOR THE FRENCH MARKET STRONG COMMON FEATURES • Very attractive lease profiles which have favored the rise of this 12 years 9-12 years Triple Net Leases Art. 606 alternative market for real estate Usual lease term 100% of charges (excl. maintenance) States that the la

  52. Slide 52: Private hospital market: fundamentals and trends

    PRIVATE HOSPITAL MARKET: FUNDAMENTALS AND TRENDS Private (for-profit) hospitals on a positive trend 2004 reform - “Tarification à l’Activité” (T2A) Hospital beds by hospital ownership Before 2004 After 2004 2016 24% 21% • Public and private non-for-profit: A global 2008 • Reimbursement rate of each

  53. Slide 53: Elderly care market: fundamentals & trends

    ELDERLY CARE MARKET: FUNDAMENTALS & TRENDS French EHPAD capacity is shifting towards the private sector Elderly care encompasses a broad range of services Permanent beds in EHPADs in France Low High dependency dependency 2015 22% 18% 2007 55% 50% 27% Source: DREES 28% Assisted living and Home Care S

  54. Slide 54: Sector consolidation led by operating efficiencies and economies of scale

    SECTOR CONSOLIDATION LED BY OPERATING EFFICIENCIES AND ECONOMIES OF SCALE HOSPITAL CARE (France) ELDERLY CARE (France) Revenue (€m) Number of beds Acquired by Merger with Korian Elsan in 2017 Acquired by in 2014 Source: Mensuel des maisons de retraite 1,711 Acquired by Merger with GDS Elsan in 2015

  55. Slide 55: Product mix evolution

    PRODUCT MIX EVOLUTION Product mix by segment as of June 30, 2020 Product mix by segment as of December 31, 2022 (as a % of portfolio value) (as a % of portfolio value) 8.2% 5.7% Medium term care ~10.0% Long term care Long term care ~90.0% Short and medium term care 86.1% Short term care €5.0 BN €5.5

  56. Slide 56: Continued diversification into long-term care facilities in H1 2019 (1/2)

    CONTINUED DIVERSIFICATION INTO LONG-TERM CARE FACILITIES IN H1 2019 (1/2) Performance in H1 2019 buoyed by acquisition-led growth and completions in 2018: Rental income up +12.3% at €129.3m Renewal (1) of 8 leases helping to extend WAULT to break to 7.6 years Continued diversification into long-term

  57. Slide 57: Continued diversification into long-term care facilities in H1 2019 (2/2)

    CONTINUED DIVERSIFICATION INTO LONG-TERM CARE FACILITIES IN H1 2019 (2/2) Continued diversification into long-term care facilities  7 nursing homes  4 PAC facilities  1 psychiatric facility Le Diamant nursing home (Korian) – Alençon (Marne) Leading operators: Korian, Ramsay Santé, INICEA and SGMR

  58. Slide 58: Icade Santé is able to build long-term partnerships

    ICADE SANTÉ IS ABLE TO BUILD LONG-TERM PARTNERSHIPS Parc Clinic (Hérault) Private hospital de l’Ouest Parisien (Yvelines) Le Mont des Landes nursing home (Gironde) Claude Bernard Clinic (Val-d’Oise) Porte Océane Clinic (Vendée) Esquirol Saint-Hilaire Clinic (Lot-et-Garonne) ICADE SANTÉ INVESTOR PRES

  59. Slide 59: Shift to externalization: supporting operators to focus on core growth

    SHIFT TO EXTERNALIZATION: SUPPORTING OPERATORS TO FOCUS ON CORE GROWTH Externalization drivers Operators highlight their focus on operating facilities • Source of financing for core operations: Selling (1) “LNA Santé is not meant to own its buildings as the final objective is to assets provides cash

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