Research Update: Icade Outlook Revised To Negative On Residential Market Correction, Pressure On Office Valuation; Affirmed At 'BBB+'

Because of the severe and continued downturn in the French residential property development market, as well as material valuation haircut on its office asset portfolio over the past 18 months with some residual impact expected in 2024, we anticipate Icade's credit metrics to remain temporarily not commensurate with the rating. We therefore revised our outlook on Icade to negative from stable and affirmed our 'BBB+' long-term issuer credit and issue ratings on the group and its unsecured debt, as well as our 'A-2' short-term issuer credit rating. The negative outlook indicates that we could lower the ratings if Icade does not recover from the deteriorating operating performance of its property development arm and if valuations do not stabilize, which would

...- Because of the severe and continued downturn in the French residential property development market, as well as material valuation haircut on its office asset portfolio over the past 18 months with some residual impact expected in 2024, we anticipate Icade's credit metrics to remain temporarily not commensurate with the rating. - We therefore revised our outlook on Icade to negative from stable and affirmed our '###+' long-term issuer credit and issue ratings on the group and its unsecured debt, as well as our 'A-2' short-term issuer credit rating. - The negative outlook indicates that we could lower the ratings if Icade does not recover from the deteriorating operating performance of its property development arm and if valuations do not stabilize, which would prevent Icade from restoring credit metrics commensurate with our '###+' rating, with debt to EBITDA moving below 8.5x, EBITDA interest coverage above 3.8x, and debt to debt plus equity below 40% over the next 12-24 months....

Research Update