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Investing.com -- S&P Global Ratings has revised its outlook on French property company Icade to negative from stable, while affirming its ’BBB/A-2’ ratings.
The rating agency cited deteriorating business risk positioning due to persistent high vacancy levels and negative rental reversion, along with ongoing stress in the company’s development arm.
According to S&P, Icade’s third-quarter results showed a 4.8% decline in gross rental income on a like-for-like basis, partly due to a 2.7% negative rental reversion on renewals. While office asset occupancy improved slightly compared to earlier in the year (83.0% versus 82.1% in the first quarter), it remains below the end-2024 level of 83.8% and significantly lower than the 10-year average of 91.8%.
The company’s current 17% vacancy rate compares unfavorably with other office players such as Gecina, which reported 93.7% occupancy as of September 30, and even Globalworth, which had 14.1% vacancy on June 30 despite exposure to markets with greater supply.
S&P noted that Icade’s lease incentives for extensions or new tenants are above typical market levels, indicating diminished asset attractiveness and increased tenant negotiating power. The development arm continues to operate at low volumes, with block sales to institutional investors up 11% year-to-date, while orders for individually sold homes have declined 11% year-on-year, resulting in lower margins.
The rating agency doesn’t expect recovery in the development segment before 2027, citing the current political landscape in France, the end of the Pinel scheme, and upcoming municipal elections.
Despite these challenges, S&P expects Icade’s credit metrics to remain within acceptable thresholds over the next 12-24 months. The company’s debt-to-debt-plus-equity metric increased to 48% from 44.6% at end-2024 due to a negative 2.8% impact on valuation in the first half of 2025, but S&P forecasts this ratio to stabilize at 46%-47% by year-end 2025.
The agency projects the ratio will further stabilize at 43%-44% in 2026-2027, supported by expected healthcare disposals of approximately €500 million in 2026 and €400 million in 2027, plus estimated annual asset disposals of €180 million.
S&P continues to assess Icade’s balance sheet as solid, with prudent financial policy and sound liquidity. The company’s debt profile is well-staggered with no maturity walls, and it demonstrated market access in May 2025 with a €500 million 10-year bond issuance. Its weighted average debt maturity stands at 4.2 years as of June 30, 2025, improved from 3.9 years at end-2024.
The negative outlook reflects the deterioration of Icade’s business fundamentals, particularly high vacancy and negative rental reversion, which might lead S&P to revise its business risk profile assessment in the coming 12-24 months.
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