Gecina S.A.

Good morning, everyone, and thank you for joining us today. The past 6 months have been both intense and exciting, and we are proud to be delivering a strong performance.

Let me begin a bit differently today, taking a step back and looking at the bigger picture. Hybrid working and now the return to the office are more than a trend.

It's a structural shift that is reshaping workspaces and redefining demand. Many companies in France, Europe and beyond are placing renewed emphasis on in-office collaboration.

Paris is definitely standing out as a leader. People here spend 3.5 days a week in the office, that is 70% of their working time, well ahead of other global cities like Singapore, New York, London or Toronto.

And recent data shows that the situation is even improving. In this context, our clients are clear.

In order to encourage the employees to be more at the office, they look for better space, more central, more premium and more sustainable. And these better square meters are, by definition, scarce, creating a clear premium for those already well positioned and capable to meet this demand.

Our office leadership is based on these client expectations. Our long-standing strategy is built around these needs to align our portfolio with what matters most to them.

It's been plus 16 points shift towards central location since 2010, with nearly 80% now in Paris, plus 30 points increase in office exposure over the same period. More than half of the portfolio has been refurbished in the last decade.

Fully serviced real estate now covers 9,000 square meters of offices and 70% of our Parisian residential assets. On the CSR front, Gecina has been ahead of the curve, minus 60% in carbon emissions and minus 31% in energy consumption since 2019.

And at the same time, we've delivered financially, plus 25% in earnings per share growth over 5 years, strong profit on cost from redevelopments while keeping a solid LTV that gives us room to accelerate. Our footprint lies in markets with the most solid fundamentals.

Paris, for example, represent less than 20% of total office supply, yet they capture nearly half of the demand. Vacancy remains low, especially for new and refurbished assets where it drops to just 0.6%.

Prime rents in the CBD have risen by 34% over the past 5 years. And recently, we were proud to set a new benchmark with an headline deal on Icon at EUR 1,200 per square meter for the whole building.

The upward momentum is such that even in our best-let assets, we have significant reversionary potential as leases will be mark-to- market. One more perspective to understand the market and our positioning.

As you can see on the left side on the slide, major deals above 5,000 square meters in Paris region signed or expected in 2024 and 2025 are concentrated around the best business locations in the very central areas where our portfolio is focused, obviously, Paris. Our assets are therefore, located where clients now want to be.

As a consequence, we can share today our strong leasing performance during H1. Nearly 95,000 square meters let, relet or renewed across all geographies, of which 2 stand out preleasing, 27 canal, 74% relet to the digital division of French -- of a leading French sports retailer ahead for its delivery later this year in a submarket where preleasing is rare.

And the 162 Faubourg Saint-Honore 3,300 square meters fully pre-let at prime CBD rents with an 87% uplift to a consulting company. In Paris CBD, we achieved a 29% rental uplift.

And in just 6 months, that's EUR 48 million of annual rent secured on 7 years in average. While market data often focused on Paris region averages, this leasing performance illustrates how the right asset in the right location where the right teams can make a difference.

Rental income remained robust at 3.8% like-for-like driven by indexation, though we are now seeing it decelerate as inflation normalizes in Europe. Beyond indexation, two quick drivers support rental growth income, strong rental uplift on plus 9% on office in average, plus 14% on housing in Paris, and occupancy improvement plus 60 bps since year-end 2024.

On a current basis, rental income growth is even stronger, plus 4.9% and thanks to the large 2024 pipeline fully prelet assets. The strong operational performance continued to drive robust cash flow growth, a key metric for us.

We applied daily discipline across the P&L from rental income, property charges, optimization to G&A and financing structure. Notably, G&A as a percentage of rental income has improved by 170 bps over 3 years.

At the same time, digital initiatives helped to streamline back-office operations and refocused teams on client services, engineering and development expertise to offer better service to our clients. As a result, we are delivering another solid plus 6.4% EPS growth.

On the valuation front, we are seeing encouraging signs in the investment market with renewed liquidity for large transactions and the return of international capital. Values are up 1.6% over the last 6 months on a like-for-like basis, and the portfolio reaches EUR 17 billion before factoring in the acquisition closed yesterday.

Taking a broader view, values have already rebounded plus 2.3% since end '23 through, confirming a clear trend of recovery. This reflects the ongoing market bifurcation with consistent gains in Paris and supported by solid rental growth, more than offsetting adjustment as well.

What's also striking is that the inflection point in the direct market is now clear, yet still not fully priced in by listed equity markets. Looking ahead on the investment front, let me come back to the key decision we made in H1 2025, totaling EUR 1.3 billion.

First, we completed over EUR 750 million disposals of mature residential assets, including our student housing portfolio. Second, we acquired a large prime office complex in Paris CBD for EUR 435 million, reinforcing our central positioning.

Third, we reinvested close to EUR 100 million in our flagship office pipeline. I return to that in a moment.

Another step toward prime office leadership after heavy disposals and investment in our accretive pipeline those last 3 years. It also showcases Gecina's inhouse expertise from sourcing and executing production reinvesting to create future value.

Importantly, even during those challenging years, we maintained a disciplined focus on asset quality and location, and we keep a strong balance sheet. One illustration of this strategy is our recent acquisition of in Paris CBD.

So what's the plan? This acquisition involves 2 buildings adjacent to our existing 7 Madrid property right in the heart of Paris CBD.

We want to transform this into a 45,000 square meter premier office destination, benefiting from a unique location 50 meters from the best transportation hub. We plan a EUR 40 million CapEx program to unlock the full potential of the asset.

The real estate fundamentals are strong, like unique large in central location since the asset was fully refurbished in 2013 and we will leverage those trends to create a rare set of amenities only possible with from rooftops with amazing views, wide range of food offer, fitness, auditorium, meeting rooms, large by park, et cetera, available in the future for the 3 assets connected to this business hub. Delivery is scheduled for end '26 and we are already actively working on the leasing so that it contributes to rental growth starting in 2027.

Once again, this is a value-driven initiative with the projected yield on cost of 6.3% and an expected profit on cost in the range of 35% to 40%. Taking a step back to look at the broader development pipeline, 4 projects are key drivers of future rental growth beyond 2027 with EUR 80 million to EUR 90 million of annual rent.

We are currently advancing on those 4 major flagship projects, just mentioned, quarter, and Mirabeau, all located in highly areas with magnificent architecture, strong service offerings and excellent connectivity with EUR 500 million to be invested by '27, targeting a 5.7% yield on costs, this projects reflects a deliberate strategy to make our portfolio more central, more prime and more sustainable. Always anticipating what's next, we are working at the same time, closely with our client, ENGIE, to prepare the future of the assets.

The current lease grants until June 2027, but should the clients seek early flexibility, an exit would be possible, subject obviously to a termination fee based on the remaining list. In parallel, we are advancing plans to reposition the tower as a prime office assets, leveraging on its strong fundamentals, large excellent CSR performance, no asbestos and a central location near the transportation hub of La Defense.

In a context where no major new or refurbished large prime office space is expected in La Defense before '27 or '28 we anticipate a more favorable supply-demand dynamics than now. While average vacancy is still high at La Defense, take up has been strong in the recent period.

La Defense is attracting a growing mix of corporates with a take-up up 60% in 2024 versus the previous year. And vacancy on new and refurbished services represent 4% of La Defense stock confirming tenant preference for upgraded space.

Once we position even if it's a challenging task, we are confident the tower will be let at the right practice value. Meanwhile, and it's important, our ESG strategy continues to deliver solid and measurable results.

Here again, our message is clear. To pursue CSR excellence on a daily basis, working closely with our clients to maximize impact.

Since 2019, we achieved a 31% reduction in energy and a 60% cut in carbon emissions. This momentum is ongoing with an estimated additional 3.7% reduction in the first half of 2025, in line with our midterm goals.

Maybe a standout example of this is 37 that we recently delivered and now backed by 18 months of operational data. What makes this asset truly exemplary is that the ambition set during the design phase, particularly around energy efficiency and CSR have been fully materialized in real life.

The teams have achieved a 63% reduction in energy consumption against the old assets, significantly outperforming market benchmarks. It's a clear demonstration that what we design we deliver.

Now moving to the balance sheet. All of this is obviously possible because we manage debt with the same discipline as the asset side.

Our strong and agile financial structure provides control with a well- managed loan-to-value at 33.6%, visibility backed by best-in-class A- and A3 credit ratings, a long-term debt maturity of 6.4 years, one of the lowest cost of debt at 1.2% and a robust hedging strategy, control visibility, but also flexibility thanks to our 100% corporate debt structure, high liquidity and access to a wide range of financing instruments. And 100% of our financing includes the CSR component.

Based on all these strong fundamentals, we raised the guidance to the upper half of the initial range. Earnings per share are now projected between EUR 6.65 to EUR 6.70.

I would like to thank all our teams and partners for their efforts to align our strategy with client expectations for central prime and sustainable real estate. And during H1 as a summary, we achieved a record high leasing performance, strong rental uplift and improved occupancy.

We delivered consistent cash flow growth. We unlocked future value creation in Gecina through our investment decisions and maintain a strong balance sheet that is ready to operate and sales growth opportunities.

Thank you for your attention, and we are now ready to answer your questions.

I would have three questions, please. The first one on the top line, The -- we calculated that the highlight should lend to something like 0.8% by year-end.

And I was wondering what is your assumption for indexation for '26. The second one would be on the CapEx for the MG Tower.

It looks a bit higher than for the Roche building per square meter, I would say. So could you please give us a bit more color on the what kind of works the difference in the works compared to Roche, for instance?

And what kind of yield on cost you expect to achieve? And maybe the last one on the announcement earlier today.

What is the rationale of launching a tender on your '26, '27 bonds and issue a new one now? I mean I feel it's a bit early.

And so do you expect interest rates to increase or maybe your spread to increase due to the situation in politics in France, economy and so on? Or what is the rationale there, please?

Stephanie, thank you for your questions. Obviously, yes, inflation is decreasing over time.

There is always a lag effect on the impact of indexation in our cash flow. So yes, the last index was 1.6%.

So we should progressively converge on that target during the year 2026. On CapEx Q1, obviously, we -- there is a bit -- we are a bit early in the process.

So we wanted to give you a bit of view on what we were planning, but we are still working on the CapEx program. What we see, like I said, is that there might be significantly lower supply for prime space in La Defense.

Most of the towers delivered between 2021 and 2022 are now fully let. And we have not seen any new major redevelopment or new sites for La Defense.

So that's what we are assessing right now, How deep we need to go for renovation to be considered as the best tower in La Defense and therefore, leading to a smoother releasing process. Have in mind that works in a tower in France are more expensive.

Fire safety regulation is a bit tougher. Lifts, obviously, you cover 35 meters of heights, so certified floor of heights, so lifts typically are more expensive than in a classical building inside the city.

So yes, there is a CapEx. The good news, like I said last time is that the facade is highly performing.

So we don't need to change the facet. So it'll be mainly decoration, improving the amenities and making an upgrade on technical installations.

Maybe the last point on the rationale of the tender, Nicolas?

Yes, sure. You're right.

In fact, when you look at our financing maturities and our level of liquidity we had, of course, no need to issue a new bond, but we saw that, as always, anticipating things is the best way to get the best conditions. So it's much more has to be seen as an opportunistic approach considering that today, the yield and the spread on the Gecina bonds is quite attractive for us for a 10- year maturity, we should be below 100 bps, which is somewhere, I think, a good signal for the market in terms of adaptivity and risk attached to the Gecina nature and so we wanted just to take a chance to secure this level of spread.

The deal with the tender offer on the '27 and '28, which were quite high level of issuance because you remember that the '27 is a EUR 700 million bond and the '28 is EUR 800 million. So it's also a way for us to start to repay and decrease these maturities.

So always with the same mood, which is anticipated things.

Two questions from my side. Maybe first on capital recycling.

Obviously, you've already been very active in the student housing and also deploying the capital. But given that first signals of the investment market in Paris opening up for larger transactions, are you actively looking to dispose some lower-yielding assets in the portfolio as well?

And then secondly, I think usually, you split your like-for-like rental growth with between indexation and reversion. I think I couldn't find it this time.

And I was just wondering you mentioned a 9%, I think, reversion on your reletting, but looking at the actual like-for-like, it doesn't really show, I believe. So if you could give some more color on that split in like-for-like rental growth.

Yes, capital recycling, you're right. The market is progressively reopening for Central Paris.

I was referring in one slide also on the embedded reversionary potential for some assets that -- which are reset and where we still have reversion. So I think we are assessing as always, the future return on capital, IRR of all of our assets.

and we are deriving our investment and disposal strategy based on the future growth and future value creation of our assets. So yes, like always, you've seen that we have been more active REIT to deploy and redeploy capital.

So we will continue, but no specific update on that on top of what we have already done. On your question on like-for-like, yes, I think we have a bit the same split like previous years.

Indexation is decreasing, obviously, and we are still above indexation based on the two aspects. Have in mind that most of the evolution of a quarter or semester is based more on the previous year than the actual.

Typically, occupancy should play a role but more later than previously but yes, it's a bit the same split like the last year.

I would have maybe one question on your leasing activity. So you have been very active in H1.

So what shall we expect in H2? Have you any view on that?

And maybe could you make maybe a more -- give us more color on the situation in, so how shall we expect the occupancy to evolve in the coming months?

Yes. Thank you.

It's always tough to project our leasing activity. We depend on client decisions somehow.

For the timing, the pipeline of leasing is not bad. But I don't want to give you more color on that, at least H1 was excellent On I think played a part in our leasing activity this first half.

We find a lease with a large car manufacturing company in -- on Horizon. We have already relaid 2/3 of our sources project, so it's progressing well.

Ahead of sources typically, we have 2 tenants pharmaceutical companies leaving the assets. They are leaving by year-end, and we have already pre-let 2/3 of it.

So when we have the right assets and the right strategy and the teams are super active, we can deliver. So first half was not bad in.

I'm just curious if you could comment on the size of the assets that you possibly have that you could acquire in the 8, similarly to the one that you just bought, that would meet your -- that would meet the cost of capital that you currently have?

You were referring about cost of capital?

Yes, yes, yes. So I'm just curious if you could comment on the opportunity set of similar assets to the one that you just bought in the 8.

Yes. In Paris, there is a reasonable number of assets which are eligible in terms of quality and location.

The challenge, and that's what we have done with that Roche acquisition with the guys to find the right spot between a seller willing to sell maybe some work that maybe our teams can do better than others. And our return on capital that we expect to be accretive for NAV, for return on capital and for cash flow growth.

So there are, but we are selective. So there is no rush on that, but we are -- like you saw, we are active on screening the market, discussing, finding.

In the past, we did some swaps when people didn't really want to sell, but wanted to swap between core assets and to be redeveloped assets. I think we have a range of ways, in fact, to try to get market share in the best part of Paris.

Just a follow-up on the investment strategy and especially the development pipeline side. You have a development pipeline that looks quite sizable at this stage.

How do you look at it going forward? When you look at new investment opportunities, do you think that you should go for perhaps more cash-yielding assets going forward?

Or do you think there is still room for perhaps noncash yielding assets that have to be refurbished immediately? How do you look at the risk profile and the cash generation -- cash flow generation that the investment target should have?

So managing it is looking at several different aspects of the company. Like you say, we try to manage both the balance sheet, the cash flow production, value creation and NAV and so on.

We -- when we looked at the acquisition, we also tried to not to have too many assets to be leased at the same time, exactly on the right same spot and the right asset quality. So typically, what we like there was -- in fact, we decreased significantly our pipeline in Paris CBD after leasing Mondo, after leasing, after leasing icon.

So we felt that we have room, in fact, to accept some risk on Paris CBD. So it's all those criteria that play a role.

So yes, we could -- it's a significant leasing challenge for us that pipeline, but should deliver over time, we are confident because there are -- assets are excellent and location are excellent also. So we look at more the returns then for the time being, more than at returns against what we said, against our general cost of debt and margin and cost of capital, more than really just is it cash flow yielding or noncash flow leasing short term.

We have demonstrated over the last 3, 4, 5 years that we were capable one, to sell prime opportunities, invest in prime location at the same time keeping cash flow growing and not leveraging the company additionally. So that's what we will try to continue to do.

Okay. That means that we shouldn't be surprised perhaps if you go into more value-add investment going forward?

You should not. Like you saw, we are opportunistic in what we buy, opportunistic in what we sell because we don't need that much, but we won't.

Just wanted to get a bit more color on the leasing and reversion and how it's evolving and this is still strong in Paris, still a little bit weaker in areas. You mentioned lease in as well.

So it would be good to get a bit of color on the reversion that you were able to capture reversion on this. And also, how do you see it evolving given, I think, good conditions that you're outlining in terms of demand?

Leasing reversion, I will say the same, like you said, obviously, it's highly positive inside the city and negative and sometimes double- digit negative as well. .

And it's a bit still the same. I think pragmatically, we mark-to-market the rent.

Good stuff is that in average is still positive at 9%. And have in mind that in the resi portfolio, we are at 14% reversion uplift in rents this quarter.

Yes, there are conditions. I think tenant demand is very focused on quality these days.

with a different base on pricing depending on the location. But clearly, they are trying to focus on the best spots, access to transportation hubs and qualitative buildings.

So we try to continue what we do and having our clients satisfied by what we do.

And can you be maybe a bit more specific, like in Paris CBD, you obviously had a right of leasing. but are you able to maintain that strong reversion?

Or is it coming down a bit and in the outskirts areas, a similar question?

The Paris CBD, I think, in average, it was 29% this first half at least. And in the rest, it was minus 10%, I would say.

For the whole Paris, I think it's in the range of 20%, at least in average. So it's quite different from a place to another.

What we see for the best time offices, like we did for assets, we are significantly north of EUR 1,000 per square meter. So we -- when we compare the underwriting that we did for that smaller innovation a year to raise our target by 25%, 30% in terms of base rents.

So for the time being, we still see a good market momentum on rent for the best spots and the best assets.

The question I had was on the comment you made on Slide 10, which is that the infection is not yet priced in by the equity markets. So what's -- I guess, which metrics are you looking at to have that statement?

Is it the price to NAV discounts? And also what level of equity metrics which you look at to, in your view, see the equity markets, therefore, pricing in that inflection?

And how long do you think that will take? .

I think how long it will take, it's more on your side to assess. We were mentioning, in fact, that point on two elements.

One is we disposed more than EUR 2 billion of assets above NAV so you see the discount to NAV and we could have seen our previous disposal based on our own capacity to dispose while the market was quiet. But obviously, now that it's not only Gecina capable to sell at excellent prices but the whole market that sustains a bit NAV even more than in the past.

And the second aspect is on cash flow and dividend yield where, in fact, we continue to post significant cash flow growth. And obviously, the multiple supplies to those very solid and growing cash flow and dividend seems a bit under-priced against what we see on the direct market where when investors are getting -- are buying assets at pretty tight yields now.

So again, so it's on both aspects of the way to evaluate a company like us.

That's well understood. And just a quick follow-up.

What catalysts do you think you'll need to achieve or what the market only needs to achieve in order to draw investors to prescribe what you think is a sensible -- like a justified value for these -- for your share price? .

Can you just rephrase your question? I'm not sure I well understood.

Of course, yes, sorry. So if you're saying that the inflection has not been yet priced in by the equity markets, what catalyst do you think investors need to see in order to see that valuation reach what you think is justified level?

I'm a steady CEO. So I think we need to continue to prove like you saw typically for shopping center evaluation in the last 18 months, I think we need to continue to deliver.

So it's back on us. I never like to comment market somehow.

I'm just saying that we will try to continue to deliver, buying right, selling extensive and growing our rents and our cash flow. So I think it's back on us to consistently delivering our strategy and reassuring the market.

just a quick one from me. If I look at your disposals and acquisitions over H1, you've -- most of your disposal were in residential.

And as a result, the share of offices has increased quite significantly. And I was wondering if we should read anything into that in terms of your future strategy in exiting residential or nonoffice segment, let's say.

Thank you, Valerie, for your question. Now what we wanted to say there is that we are now based on the market we see and the opportunities we have.

We are more focused on investing in prime office then investing in housing assets based on yields and what we see on the disposal side, having disposals, which are as low dilution as possible. And on the other side, where we can find the best yields and best IRs.

So that's what we have done this quarter. We did a bit of that also in the past.

So we are now trying to, in fact, focus on prime office because this is where we see better growth. Have in mind that in 2023, we sold some office assets, small ones at super tight yields.

So again, in fact, we try to deliver growth, delivered capital growth for our shareholders, and we adjust to market situations. For the time being we keep both activities.

We are, like you saw, transforming both with the same DNA, more services, more leasing -- dynamic leasing. We signed 700 in the first half against 800 in a normal year.

So we should have a more dynamic leasing on the resi side. So we apply the same DNA for both activities, and we are very proud of that.

And then we try to be -- to navigate to deliver better shareholder return.

Thank you for your questions and listening on this call today, and we will see you soon in different meetings. Thank you all.