Regulatory News:
Gecina (Paris:GFC):
Record level of rental activity in the third
quarter 2023-2024 pipeline fully pre-let
- Gross rental income up +7.3% on a current basis and +6.1%
like-for-like
- Positive reversion on the leases signed in 2023, with +26% for
offices in Paris (+14% overall) and +13% for residential
- 2023-2024 pipeline fully pre-let, with two major projects
recently let in Paris’ Central Business District: “Mondo” (30,000
sq.m) and “35 Capucines” (6,300 sq.m)
- €111m of additional sales covered by preliminary agreements
(+7.7% higher than the end-2022 appraisals)
- Ranked 1st out of all 100 European listed real estate companies
in the GRESB
- 2023 recurrent net income per share target confirmed at €5.9 to
€6.0
Strong rental income growth over the
first nine months of the year
- Growing contribution from indexation (+4.6%)
- Occupancy rate up +130bp for offices and +110bp
overall
- Significant rental uplift captured, particularly at the
heart of Paris (+26% in Paris City and +14% overall for offices)
and +13% for residential
- Pipeline’s net rental contribution of +€16.4m,
reflecting the impact of the deliveries of the l1ve building (Paris
CBD) and 157-CdG (Neuilly) in 2022, Boétie (Paris CBD) in 2023 and
a residential building in Ville d’Avray
Major pre-lettings in Paris’ CBD
projects to be delivered in 2024
- All office space in the “Mondo” building (30,000 sq.m) now
pre-let to a CAC 40 Group
- Finalization of the letting of office space in “35 Capucines”
(6,300 sq.m)
- All building deliveries in 2023-2024 already let or
pre-let
€1.1bn of sales completed or secured
since the start of the year
- €111m of additional disposals under preliminary agreements
since the start of July, with a +7.7% premium above the end-2022
appraisals and a loss of rental income of less than 3%, with two
Parisian buildings occupied and two non-strategic assets currently
vacant in Paris and the Paris Region’s Inner Rim.
- Operations that further strengthen the Group’s balance sheet
and consolidate its long-term outlook in a significantly slower
investment market environment
2023 guidance confirmed
- Recurrent net income (Group share) is expected to reach
€5.9 to €6.0 per share in 2023, up +6% to +8%
With the letting of “Mondo”,
136,000 sq.m let since the start of the year (52,000 sq.m
since end-June 2023)
Since the start of the year, Gecina has let, relet or
renegotiated nearly 136,000 sq.m, representing around €85m of
headline rent of which 52,000 sq.m since the end of June 2023.
These transactions include iconic lettings at the heart of Paris
with prime rents in Paris’ Central Business District at around
€1,000/sq.m/year today. For instance, Gecina let the entire 35
Capucines building and the 24-26 Saint-Dominique
building, adding to the list of buildings recently let in line with
these levels of rent (3 Opéra, 16 Capucines, 44 Champs
Elysées).
In terms of retail, several transactions illustrate the good
commercial trend for central sectors, with several leases signed in
the past few months for premium locations on the Champs
Elysées or Boulevard des Capucines with Luxury and
Fashion retailers.
- Nearly two thirds of these transactions concern relettings
or renewals of leases primarily in Paris City, where
significant rental reversion has been captured (+26% in Paris, +14%
overall).
- The remaining third concern new leases signed for
buildings that were vacant, under development or delivered
recently. Specifically, these rental transactions are reflected in
a significant increase in the pre-letting rate for assets that are
currently being developed.
Since the start of July, Gecina has completed the pre-letting of
two buildings under development and scheduled for delivery in 2024,
with:
- The pre-letting of all the 30,000 sq.m office space in
“Mondo” in Paris’ CBD, under a firm lease for over 11 years
with a group from the CAC 40. “Mondo” is expected to be delivered
during the second half of 2024 and will benefit from the highest
environmental certification standards (HQE Excellent, LEED Gold,
BiodiverCity, BBCA), as well as the WELL and WiredScore labels with
a Gold rating.
- The “35 Capucines” building in Paris-CBD (6,300 sq.m),
which is scheduled for delivery during the first half of 2024, let
to a French luxury group and a law firm. All of the office space is
now fully pre-let.
To date, 100% of the office pipeline delivered in 2023 or
scheduled for delivery in 2024 is now pre-let, with rent levels
that are higher than initially expected.
The office pipeline’s main rental challenges now concern
operations that will be delivered in 2025 in Paris City
(Icône-Marbeuf and 27 Canal-Flandre).
Gross rental income up +7.3% (vs. +2% in 2022)
Strong organic trend and contribution from the pipeline
Gross rental income
Sep 30, 2022
Sep 30, 2023
Change (%)
In million euros
Current basis
Like-for-like
Offices
368.5
398.3
+8.1%
+6.5%
Traditional residential
80.1
82.7
+3.2%
+4.3%
Student residences (Campus)
14.7
15.8
+7.8%
+7.1%
Total gross rental income
463.2
496.9
+7.3%
+6.1%
On a current basis, rental income is up +7.3% (+8.1% for
offices), reflecting an acceleration compared with 2022 (+2%),
benefiting from not only the robust like-for-like rental
performance, but also the pipeline’s strong net rental
contribution, with two major deliveries of office buildings in 2022
in Paris (l1ve) and Neuilly (157 CdG), as well as the “Boétie”
building in Paris’ Central Business District and the “Ville
d’Avray” residential building in 2023.
Like-for-like, the acceleration in performance exceeded
the levels reported at end-2022, with rental income growth up +6.1%
overall (vs. +4.4% at end-2022) and +6.5% for offices (vs. +4.6% at
end-2022).
This trend follows on from the previous quarters. All of the
components contributing to like-for-like rental income growth are
trending up.
- The gradual impacts of the acceleration in indexation
contributed +4.6%
- The increase in the occupancy rate represents a
contribution of +0.7%. With the occupancy rate gradually improving
in 2022, and particularly during the second half of the year, the
base effect is naturally easing over the second part of the
year.
- Rental reversion was captured for both offices and
residential, contributing +0.8% to organic rental income
growth.
With these positive trends, like-for-like office rental income
growth of around +6% can be expected for the full year in 2023.
Guidance confirmed: 2023 recurrent net income growth of
+6% to +8% expected (between €5.90 and €6.00)
The results published at end-September 2023 reflect the very
good level of the rental markets in Gecina's preferred sectors.
This robust operational performance is being further strengthened
by the trend for indexation and the pipeline’s positive
contribution to the Group’s rental income growth.
Alongside this, Gecina’s long debt maturity and active rate
hedging policy will enable it to limit the impact of interest rate
rises on the Group’s financial expenses in 2023.
As a result, Gecina is confirming its growth forecast for 2023,
with recurrent net income (Group share) expected to reach €5.90
to €6.00 per share, delivering +6% to +8% growth.
About Gecina
As a specialist for centrality and uses, Gecina operates
innovative and sustainable living spaces. The Group owns, manages
and develops Europe’s leading office portfolio, with nearly 97%
located in the Paris Region, and a portfolio of residential assets
and student residences, with over 9,000 apartments. These
portfolios are valued at 18.5 billion euros at end-June 2023.
Gecina has firmly established its focus on innovation and its
human approach at the heart of its strategy to create value and
deliver on its purpose: “Empowering shared human experiences at
the heart of our sustainable spaces”. For our 100,000 clients,
this ambition is supported by our client-centric brand YouFirst. It
is also positioned at the heart of UtilesEnsemble, our program
setting out our solidarity-based commitments to the environment, to
people and to the quality of life in cities.
Gecina is a French real estate investment trust (SIIC) listed on
Euronext Paris, and is part of the SBF 120, CAC Next 20, CAC Large
60 and CAC 40 ESG indices. Gecina is also recognized as one of the
top-performing companies in its industry by leading sustainability
benchmarks and rankings (GRESB, Sustainalytics, MSCI, ISS-ESG and
CDP).
www.gecina.fr
Appendices
Offices: rental trends still positive
Gross rental income - Offices
Sep 30, 2022
Sep 30, 2023
Change (%)
In million euros
Current basis
Like-for-like
Offices
368.4
398.3
+8.1%
+6.5%
Central areas (Paris, Neuilly,
Southern Loop)
268.5
289.0
+7.6%
+4.7%
Paris City
214.5
228.4
+6.5%
+4.9%
- Paris CBD & 5-6-7
132.1
145.4
+10.0%
+5.9%
- Paris CBD & 5-6-7 - Offices
107.0
122.4
+14.3%
+6.0%
- Paris CBD & 5-6-7 - Retail
25.1
23.0
-8.3%
+5.2%
- Paris - Other
82.4
83.0
+0.7%
+3.5%
Core Western Crescent
54.0
60.6
+12.2%
+3.8%
- Neuilly-Levallois
20.7
25.5
+23.0%
+3.0%
- Southern Loop
33.3
35.0
+5.4%
+4.2%
La Défense
47.6
53.6
+12.7%
+12.7%
Other locations (Péri-Défense,
Inner / Outer Rims and Other regions)
52.4
55.7
+6.5%
+8.7%
Like-for-like office rental income
growth came to +6.5% year-on-year (vs. +4.6% at
end-2022), benefiting from a positive indexation effect, which
is continuing to ramp up (+5.1%), passing on the return of an
inflationary context, as well as the impact of the positive
reversion captured in the last few years (+0.5%) and the
improvement in our portfolio’s occupancy rate, primarily achieved
in 2022 and confirmed since then (+0.8%).)
- In the most central sectors
(85% of Gecina’s office portfolio), like-for-like rental income
growth continues to show a robust trend. In Paris’ Central Business
District it came to +6%. Including Neuilly-Levallois and
Boulogne-Issy, it represents +4.7%, linked mainly to the combined
impact of the indexation of rents and the positive reversion
captured at the end of leases.
- On the La Défense market (8%
of the Group’s office portfolio), Gecina’s rental income is up
by nearly +13% like-for-like.
- More than half of this performance is linked to a significant
increase in the occupancy rate for the
Group’s buildings, resulting from the major rental transactions
secured in 2021 and 2022 on buildings that were previously vacant
(Carré Michelet, Adamas) and that gradually ramped up the Group’s
rental income in this sector during 2022.
- The rest is linked mainly to indexation. Reversion
had only a marginally positive impact on this sector, since
Gecina’s portfolio in this area is fully let and therefore not
subject to tenant rotations.
Rental income growth on a current
basis came to nearly +8% for offices, reflecting
the impact of the pipeline’s positive net contribution,
which has been particularly significant this year (+€16.4m net of
tenant departures from buildings to be redeveloped), taking into
account the delivery of the l1ve and Boétie buildings in Paris’ CBD
and 157 CdG in Neuilly.
These deliveries have largely offset the buildings that were
vacated mid-2022 and are currently being redeveloped, with their
delivery scheduled for 2025 (Icône-Marbeuf and Flandre-27 Canal in
Paris).
Residential: reversion potential confirmed and excellent
level of operational activity
Gross rental income
Sep 30, 2022
Sep 30, 2023
Change (%)
In million euros
Current basis
Like-for-like
Residential
94.8
98.5
+3.9%
+4.8%
Traditional residential
80.1
82.7
+3.2%
+4.3%
Student residences (Campus)
14.7
15.8
+7.8%
+7.1%
YouFirst Residence (traditional
residential): acceleration in operational performance
levels
Like-for-like, rental income for traditional residential
properties is up +4.3%, marking an acceleration compared
with 2022 (+2.0%), under the impact of indexation that is
taking shape (+2.7%) and rental reversion that is ramping up
(+1.6%). Rents for new arrivals are around +13% higher than
levels for the previous tenants on average since the start of the
year. This performance has been achieved thanks to Gecina’s ability
to continuously adapt its rental offering to the needs of its
clients.
On a current basis, rental income is up +3.2%, slightly
lower than the like-for-like performance due to the sales completed
this year (particularly in Courbevoie).
YouFirst Campus (student
residences): strong upturn in business
Rental income from student residences shows a significant
like-for-like increase of +7.1%, linked primarily to the high level
of positive reversion captured thanks to the quick rotation of
tenants with this type of product.
Occupancy rate: progress since the start of 2022
Average financial occupancy rate (YTD)
Sep 30, 2022
2022
H1 2023
Sep 30, 2023
Offices
92.3%
92.8%
93.8%
93.6%
Traditional residential
96.5%
96.7%
96.3%
95.9%
Student residences
82.7%
86.0%
86.8%
84.2%
Group total
92.5%
93.1%
93.9%
93.6%
The average financial occupancy rate is up +110bp
year-on-year to 93.6%, primarily reflecting the +130bp increase
for offices. This improvement in the office portfolio concerns all
sectors, and particularly La Défense, where it reached 98%,
benefiting from the arrival of the final tenants in the Carré
Michelet building midway through the second half of 2022.
Alongside this, the spot occupancy rate for student residences
was 97% at end-September (up +2.5pts vs. end of September 2022)
Disposals: €111m of additional sales under preliminary
agreements
After completing nearly €1bn of sales during the first half of
this year, Gecina secured €111m of additional sales, currently
covered by preliminary agreements, achieving an average premium
versus the end-2022 appraisals of around +7.7%, with an average
rate for the loss of rental income of less than 3% for the occupied
buildings.
These latest sales concern two Parisian buildings occupied and
two non-strategic assets currently vacant in Paris and the Paris
Region’s Inner Rim.
Since the start of the year, Gecina has therefore sold or
secured sales for €1.1bn of buildings, achieving an average
premium of around +9.4% versus the end-2022 appraisal
values, with a loss of rental income of around
+2.5%.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231018593705/en/
GECINA CONTACTS Financial communications Samuel
Henry-Diesbach Tel: +33 (0)1 40 40 52 22
samuelhenry-diesbach@gecina.fr
Sofiane El Amri Tel: +33 (0)1 40 40 52 74
sofianeelamri@gecina.fr
Press relations Glenn Domingues Tel: +33 (0)1 40 40 63 86
glenndomingues@gecina.fr
Armelle Miclo Tel: +33 (0)1 40 40 51 98
armellemiclo@gecina.fr
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