Icade Sa · EURONEXT:ICAD
Icade Sa — Icade Santé — Debt Investor Presentation (October 2019)
42 slides from Icade Sa's debt investor presentation, October 2019
Slide 1: Icade Santé Investor Presentation Credit Roadshow
COURLANCY POLYCLINIC (Reims, 51) ICADE SANTÉ INVESTOR PRESENTATION CREDIT ROADSHOW October 2019
Slide 2: Agenda
AGENDA Today’s speakers 1. Icade Santé at a glance 2. Compelling market fundamentals 3. Icade Santé’s strategy 4. Financial performances and credit highlights Appendices ICADE SANTE INVESTOR PRESENTATION I 2
Slide 3: Disclaimer
DISCLAIMER IMPORTANT: You must read the following before continuing and, in accessing such information, you agree to be bound by the following restrictions. This document was prepared by Icade Santé (the “Company”) for the sole purpose of the presentations in relation to a contemplated issue of note
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 Victoire Aubry is a graduate from Dauphine University and HEC Xavier Cheval, 36 years
Slide 5: Icade Santé at a Glance
Courlancy Polyclinic (Reims-Bezannes, 51) 1. ICADE SANTÉ AT A GLANCE ICADE SANTE INVESTOR PRESENTATION I 5
Slide 6: Icade Santé at a Glance
ICADE SANTÉ AT A GLANCE International Expansion(1) Projected liquidity event Creation of Icade Santé Capital opening Diversification into (100%-owned by Icade) the nursing home sector 2018 2020/2022 2007 2012 2017 THE LARGEST FRENCH HEALTHCARE REIT A STRONG OWNERSHIP STRUCTURE(3) Controlling shareho
Slide 7: 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 Strong In depth market knowledge & understanding of operators needs Fundamentals Very sound financial performance Robust Comprehensive in-house platform to source, develop, acquire & manage assets business Track-record
Slide 8: A Diversified €4.5bn Portfolio with Critical Size and Scarcity Value
A DIVERSIFIED €4.5BN PORTFOLIO WITH CRITICAL SIZE AND SCARCITY VALUE Domont Stains LARGEST PLAYER IN THE FRENCH MARKET (€bn as of Dec. 2018) Drancy Paris Dunkerque Ermont Le Bourget 4.5 Villeneuve-d’Ascq Poissy Bry-sur-Marne Saint-Omer Le Chesnay Montévrain Arras Le Perreux Trappes Charenton Le Havr
Slide 9: Compelling Market Fundamentals
Résidalya – Valmy (Dijon, 21) 2. COMPELLING MARKET FUNDAMENTALS ICADE SANTE INVESTOR PRESENTATION I 9
Slide 10: Supporting Trends for Icade Santé Activities
SUPPORTING TRENDS FOR ICADE SANTE 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
Slide 11: 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
Slide 12: 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
Slide 13: 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
Slide 14: Icade Santé's Strategy
Villeneuve d’Ascq Private Hospital (59) – Ramsay Santé 3. ICADE SANTÉ’S STRATEGY ICADE SANTE INVESTOR PRESENTATION I 14
Slide 15: A Disciplined Investment Policy
A DISCIPLINED INVESTMENT POLICY Focus on healthcare assets only Attractive asset base leveraging on leading position, tenant fueled by a 12 years growth story relationship & market trends offering an undisputed market leadership Initial target: Ongoing diversification Mostly operating 100% let portf
Slide 16: Product Mix Evolution
PRODUCT MIX EVOLUTION Product mix by segment as of June 30, 2019 Product mix by segment as of December 31, 2022 (as a % of portfolio value) (as a % of portfolio value) 6.0% 4.4% Medium term care ~10.0% Long term care Long term care ~90.0% Short and medium term care 89.6% Short term care €4.5 BN €5.5
Slide 17: 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 1 : Lease agreement with each facility Breakdown by operator • Level 2 : Irrevocable corporate guarantee of the parent company of each facil
Slide 18: 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 CSR performance and integrating social innovations Social CSR and Innovation Committees
Slide 19: Financial Performances and Credit Highlights
PARIS WEST PRIVATE HOSPITAL - RS (Trappes, 78) 4. FINANCIAL PERFORMANCES AND CREDIT HIGHLIGHTS ICADE SANTE INVESTOR PRESENTATION I 19
Slide 20: Sound Financials, Supported by Stable Committed Cash-Flows
SOUND FINANCIALS, SUPPORTED BY STABLE COMMITTED CASH-FLOWS LARGE & SOUND SOLID CASH FLOW STRONG PORTFOLIO GENERATION BALANCE SHEET As of H1 2019 As of H1 2019 €4.5bn €236m €129m H1 2019 (+12.3% YoY) 2.10% CAGR 2007-H1 2019: +39% vs. 2.33% as of 30/06/2018 PORTFOLIO GAV FY 2018 NET RENTAL INCOME AVER
Slide 21: Financial Highlights: Strong Cash-Flow Generation
FINANCIAL HIGHLIGHTS: STRONG CASH-FLOW GENERATION Net Rental Income: 7.6% CAGR over the past 3 years Margin rate (Net rental income / Gross rental income) close to 100% (11% CAGR over the past 5 years1) 240 €236m 100 98.4% 98.3% 97.9% 230 220 €211m 90 210 €204m 80 200 190 70 180 2016 2017 2018 60 50
Slide 22: 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 06/30/2019 €1,755.7m 567 260 808 47 316 200 189 195 147 191 50 108 79 10 19 42 36 38 16 186 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Slide 23: A Strong Debt Structure (2/2)
A STRONG DEBT STRUCTURE (2/2) Average debt maturity above 5 years Interest cover ratio (1) 7 10 6 9 8 5 7 4 5.1 5.1 6 7.6 8.2 3 5.0 5 7.1 4 2 3 2 1 BANKING COVENANTS 1 0 0 2017 2018 H1 2019 2017 2018 H1 2019 LTV ratio at 30.8% 40% MATURITIES HAVE BEEN LENGTHENED ABOVE 5 YEARS 35% WHILE COST OF DEB
Slide 24: Financial Policy
FINANCIAL POLICY Liquidity and hedging Optimizing financing LTV and ICR policies structure • Opportunity to access the disintermediate • LTV ratio: aiming at c.40% end of the plan • Hedging ratio: minimum 80% debt market and increase the average • Maintain robust ICR level • RCF line already in plac
Slide 25: Standard & Poor's Inaugural Rating
STANDARD & POOR’S INAUGURAL RATING On the 17th of October, Icade Santé was assigned a BBB+ (Stable outlook): https://www.standardandpoors.com/en_EU/web/guest/article/-/view/type/HTML/id/2321065 ICADE SANTE INVESTOR PRESENTATION I 25
Slide 26: Indicative Terms and Condition of the Inaugural Issue
INDICATIVE TERMS AND CONDITION OF THE INAUGURAL ISSUE Issuer Icade Santé Issuer’s rating BBB+ Notes rating BBB+ expected Notional amount EUR 350 – 500m Type Fixed Status of the Notes Senior Unsecured Maturity 10 years expected Joint Bookrunners BNP Paribas, CACIB, HSBC, Natixis, SG CIB Documentation
Slide 27: A Top-Notch Healthcare REIT in Europe
A TOP-NOTCH HEALTHCARE REIT IN EUROPE A new credit signature on the French market : ICADE SANTÉ PORTFOLIO MARKET UNIQUE Supportive trends in the French Diversified and qualitative healthcare market portfolio of assets A robust and stable investment SUPPORT MODEL property business model with high A s
Slide 28: Appendices
Résidalya – Valmy (Dijon, 21) APPENDICES ICADE SANTE INVESTOR PRESENTATION I 28
Slide 29: Icade Santé at a Glance: A Strong Ownership Structure
ICADE SANTÉ AT A GLANCE: A STRONG OWNERSHIP STRUCTURE 38.8% A-/Stable Controlling shareholder 16.5% AA/Stable 18.9% ICADE SANTÉ 5.2% 56.8% Future Fund CURRENT Controlling RATING shareholder Concert PERIMETER BBB+/Stable BBB+/Stable 37.1%(1) Free Float 59.4%(2) 16.5% 8.9% 10.1% 5.2% 2.5% Icade Health
Slide 30: 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
Slide 31: 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
Slide 32: 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 1
Slide 33: 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
Slide 34: 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
Slide 35: 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
Slide 36: 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
Slide 37: 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
Slide 38: 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
Slide 39: 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
Slide 40: 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 SANTE INVESTOR PRES
Slide 41: Innovation and CSR at the Core of Our Projects
INNOVATION AND CSR AT THE CORE OF OUR PROJECTS Environmental impact Social Impact Adapting real estate solutions to help healthcare Impact on Climate Assisting at least 75% of healthcare facility operators in Territorial operators improve the quality of patient care Change optimizing their energ
Slide 42: 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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