Paris, France, October 28, 2021

Business at September 30, 2021

Post-2021 visibility improving

  • Significant upturn on the rental markets (rental transactions up +32% in the Paris Region)
  • Dynamic macroeconomic context (2021 GDP expected to grow +6.3%)
  • Office rental market in Paris continuing to be driven by a polarization benefiting the most central sectors
  • Gross rental income of €461.8m at end-September, stable like-for-like
  • +20% reversion in Paris’ Central Business District since the start of the year (+4% overall)
  • €541m of sales, with an +8.1% premium versus the end-2020 values
  • CSR leadership confirmed, with outstanding GRESB (93/100) and MSCI (triple A) ratings, while maintaining first place in the ranking for the representation of women in management structures on the SBF 120 for the fifth consecutive year

Upturn in rental transactions confirmed in Gecina’s preferred sectors

  • +32% increase in take-up at end-September year-on-year for the Paris Region office market, driven by the robust development of Paris City (+47%) and especially Paris’ CBD (+76%), where the volume of transactions is already back up to its 10-year average levels
  • Prime rents up +3% over nine months at the heart of Paris (trending down in peripheral areas)
  • Vacancy rate down in Paris’ Central Business District (-40bp over three months to 4.1%)
  • Gecina has let, relet or renewed over 150,000 sq.m since the start of the year, up by more than +70% versus September 2020 and +34% versus September 2019, before the health crisis

Improvement in performance expected for 2022 and 2023

  • Progress with the spot occupancy rate for offices over three months, reflecting the upturn underway for markets in centrality sectors, following a contraction resulting from the slowdown in transactions with the health shock
  • 93.5% occupancy rate including the leases signed but yet to commence for offices excluding retail units, with 92.4% overall, 120bp higher than the average rate published at end-September, reflecting the potential impacts of the normalization that is underway
  • 91% spot occupancy rate for student residences, a significant improvement, indicating a “normalized” start to the new academic year
  • 33,000 sq.m to be delivered by mid-2022 in the Paris CBD, with 87% let, taking the pre-letting rate for the 2021-2022 pipeline up to nearly 60%
  • +20% rental reversion captured in Paris’ Central Business District, with +4% in total for offices and over +5% for residential
  • Significant improvement in visibility for 2022 an 2023 at the heart of Paris and in Neuilly-sur-Seine (73% of the portfolio), with encouraging although mixed signs for the rest of the Western Crescent (21%) and continued questions surrounding the secondary sectors (3%)

€541m of sales completed or covered by preliminary agreements at end-September 2021, achieving an 8.1% premium versus the appraisal values

  • 541m of sales finalized or under preliminary agreements at end-September, +8.1% higher than the end-December 2020 values, reflecting the good performance by the investment markets and the Group’s strong levels of expertise

Solid prospects for the short and longer term

2021 recurrent net income still expected to be €5.3 per share despite the €541m of sales secured in 2021                                       

  • The Group’s performance levels since the start of the year have been more solid than expected, particularly concerning operational aspects and specifically office lettings in central sectors, in terms of both volumes and prices, as well as financial aspects, with the reduction in the average cost of debt and the extension of its maturity. These achievements have further strengthened Gecina’s confidence concerning its expected performance for 2021
  • As a result, while the Group has secured or finalized nearly €541m of sales since the start of the year, the solid operational and financial achievements observed since the start of 2021 and the good performance by the Group’s core markets make it possible to maintain expectations for recurrent net income of €5.3 per share, while the initial forecast excluded the impact of potential sales or acquisitions
  • For reference, recurrent net income (Group share) per share, excluding the impact of sales completed during the year, would have been €5.4 to €5.45, i.e. +2% to +3% higher than the Group’s initial guidance as announced in February 2021, illustrating Gecina’s robust operational performance over the year.

Outlook for growth and value creation and visibility improving for the coming years

  • Occupancy rates currently normalizing and indexation expected to normalize, with the benefits to be gradually seen in 2022 and 2023
  • Still significant reversion potential that is continuing to be secured in Paris
  • 17 buildings to be delivered from 2021 to 2024, driving value creation and growth
  • Additional IFRS rental potential of around €120m to €130m for the committed pipeline and the controlled and certain pipeline
  • Taking into account the robust development of Gecina’s core markets and the strategy rolled out in the last few years, the Group’s recurrent net income per share will be trending up over the coming years.

See the full press release here


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