Gecina S.A.

[Foreign Language] Good morning, ladies and gentlemen. I'm very pleased to host some of you here in our auditorium in Paris, and of course, many of you on the line, and thank you for taking the time for joining us and listening to us.

We have a lot to share with you with the H1 2020 earnings, which is for us, an opportunity to continue to perform sustainability. As you probably saw, Gecina revealed its raison d'être, Gecina's purpose, following the new law, which has been voted 2 years ago.

And it is time to share with you our values, our commitments and talking about our future. Gecina's purpose is empowering shared human experiences at the heart of our sustainable living spaces.

We consider that our job and our duty is to give people a chance to share human experiences, whether it is with us as a landlord and through YouFirst, which is our service brand, or in a direction between different clients and different people in our buildings. And we consider that this relationship is sustainable, of course, we hope, on an environmental stance, but also because it takes long.

And our relationship is always for a long duration within our sustainable living spaces, whether they are offices, multi-res and/or student housing. This is sustained by our beliefs, our commitments and our future.

You remember that we launched by the end of '18 our service brand, YouFirst, and completed with the label UtilesEnsemble last year. We consider that sound operational and financial performance can go along with sustainable commitments for people, environment and cities through ecological transition, client-centric, sustainable performance, well-being, quality of life and long-term views.

And as you see in the scheme, with the circle in this graph surrounded by the square, that financial and operational performance cannot exist without environment commitment, without quality of life in the city and without commitment for people. Now what's going on in the context of COVID-19?

Business has operated at 100%. All our sites remained open in Q2, with safety measures which have been implemented.

By -- at some extent, we anticipated the crisis as early as February, when everybody was talking about China, and nobody was expecting what has happened since by creating a sort of crisis group. And that enabled us to be capable to go on lockdown very easily and as soon as has been announced by the government.

Working from home for all our administrative staff has been possible because of all the measures taken and because of the -- all the equipment and especially the IT equipments we deployed 2 years ago which gives us the possibility to work from home very easily. Of course, our doormen were in charge in our multi-res building, and they did an absolutely great job, which has been rewarded by exceptional bonus of EUR 100 net as soon as in April.

And we continued ongoing corporate projects like shareholders' and bondholders' general meeting, which have been held in March and April; residential subsidiarization, which we are very proud of and which has been achieved at this AGM; and returning to HQ since early June for all employees, subject to the respect of the safety measures. We strengthened our relationships with our clients.

Rental payment deferral or monthly installments for 14% of our clients have been implemented during Q2 group office rents, and it represent, on an annual basis, something like 3%. Q2 rent cancellation for SME's tenants in shut-down sectors represent less than 0.5% of Q2 office rents, which is 0.1% of annual office rents.

And also, we mobilized -- our colleagues have been mobilized to support national solidarity efforts. Of course, I suggested, and the Board accepted, my compensation to be moderated during this period.

And Board remuneration has been canceled for those meetings, Board meetings, which have been held during this period for COVID for -- by the way, for those Board members who [ perceive ] a remuneration, many of them they do not receive -- many of us do not receive. We moderated our dividend payment regarding our obligation because of the REIT regime, that was important.

We respected our suppliers' payment calendar. Student accommodation, which have been emptied because of the shutdown of the universities, have been made available for women victims of domestic violence and medical and nursing staff.

And we didn't use any French government economic support measures because we consider that we didn't need it and we can handle it by ourselves. And I would like to especially thank all the collaborators of Gecina for their commitments and their capacity to both do the business and to show national solidarity and to contribute to national solidarity efforts.

Just to remind that our risk profile is very -- is well-tailored to face uncertainties. Our portfolio is located -- our office portfolio is located in central areas and resilient for -- and is resilient for our multi-res portfolio.

64% of our offices are located in Paris City, where market trends remain supportive in rents, and capital value continues, by the way, on this way. 18% of the group's portfolio made of resilient multi-res assets.

We have a robust and flexible balance sheet. LTV continued to reduce.

By the end of this H1, we are at 33.2%, including duties. ICR is 5.5x, EUR 4.4 billion of undrawn credit lines exist and EUR 0.5 billion of cash, enabling to cover all our financing needs until the end of 2023.

And we kept, and congratulations to the team, our sound financial ratings, which we cherish: S&P, A-; and Moody's, A3. And also, we have a moderate and well-controlled tenants risk.

More than 80% of our Gecina's tenants are large corporates. 84% of our rental basis is related to tenants which are classified in the 2 best credit risk categories by Dun & Bradstreet.

And we have a diversified tenants mix over all sectors of economy with no dominant sector amongst our tenant base. And of course, low rental exposure to prime high street retail.

This enabled us to book, in H1, a very solid operating performance. Rent collection represent more than 95%, still to move up.

By the way, Valérie Britay and her team never give up to bring the money in the company. Thank you very much.

94% on the office side. 1/3 of the 6% remaining benefited from payment delays.

The rest is under recovery procedures. Q2 (sic) [ Q3 ] rental collection is already far ahead of the Q2 path by 15 basis points.

And I must say we are not absolutely at the same levels of last year same period, but not too far from that. We are close to that period -- to that level.

Portfolio rotation and pipeline is ongoing. EUR 352 million of disposition achieved at the end of June, representing a premium of plus 4% versus appraisal value.

EUR 56 million of acquisition, and of which, for the first time, a multi-res building acquired for more than a decade, actually, I would say, almost 20 years, revealing Gecina's renewed ambitions in the multi-res sector in the 8th district of Paris. Franck Lirzin and his team have a lot to do in the coming period.

We have created EUR 115 million of value creation in the pipeline in H1, and it represent, only for this 6 months, EUR 1.6 a share value creation. Rental markets are still alive in central location.

The reversion represents 16%, which has been achieved on offices transaction in H1, 27% only in CBD and Paris 5/6/7. For the multi-res portfolio, the value creation represent 7.4% on the rental market.

And positive revaluation of the properties in H1 has been driven by multi-res, plus 5% in 6 months, plus 7% year-on-year; and Paris City offices, plus 2% in 6 months and plus 7% in 1 year. This leads us to be cautious -- we always are cautious -- but be confident for the future.

Markets reaction -- actually, real estate markets, so far, so good in the main central areas, with new leases which have been signed in Paris and new acquisition, one has been reported even this morning at EUR 28,000 in the best central areas in Paris, EUR 28,000 per square meter. This reversion represent plus 8% potential on office leases by the end of Q2 to be materialized along with tenants' rotation ahead.

Vacancy rates still very low in Paris, below 3% in the best location. Long-term interest rates, according to us, will remain low, and therefore, will support safe property values, and of course, asset acquisitions.

That's the reason why we have decided to give a guidance to the market. Even though we have adjusted the guidance, remember that we have suspended our guidance at the beginning of the shutdown.

And we decided to adapt and adjust our guidance because the visibility has improved. Thanks to Gecina's resilience facing health crisis, the RNI per share in 2020 should be comprised in the range of EUR 5.5 to EUR 5.7 a share, depending assumption related to direct or indirect impacts of the COVID-19 crisis, a moderate adjustment compared to the initial pre-COVID guidance of 5.8% (sic) [ EUR 5.80 per share ] last February, which have been suspended in March.

And also, in the long run, we consider that digitization will drive to the loss of administrative jobs to the benefits of highly qualified job needed in -- needing for central locations. Tenants should therefore be even more selective when considering their headquarters' offices.

Probably smaller, more adaptable, more welcoming and better will be required. Long-term market trends are going along with qualitative places to meet, collaborate, create, think, and interact and produce together.

A future fully aligned with our YouFirst deployment and Gecina's purpose, raison d'être. And positive driver are still observed for central location and multi-certified client-centric buildings which are respecting environment, connectivity, digitization and well-being.

Now maybe I will hand over to Nicolas to talk about the resilience of the market and maybe give a chance to -- you want me to continue? Okay.

Can I have a little bit of water, please? Sorry for the interruption.

We observed a resilient rental fundamentals for Gecina. Solid tenant base, as I mentioned already.

Defensive lease structure, we have -- until the next break, we have 4 years average remain and 5.4 until the lease termination, plus 8% average uplift potential, 2/3 of the break options are -- breakup options are in 2022, are in Paris. We have a solid rental collection in H1, I already mentioned that, and diversified rental base.

This gives us the possibility to harness value creation through centrality and scarcity, as you see in the map where all our office and multi-res buildings are mentioned. Offices portfolio value represents EUR 16.3 billion by the end of June, 64% in Paris, 93% including Western Crescent.

Residential, EUR 3.2 billion, 78% in Paris and 22% in Paris Region; 352% (sic) [ EUR 352 million ] of student housing. And the total value of our portfolio remain at EUR 20 billion, 82% of offices and 18% of multi-res.

Centrality, of course, outperformed by far the periphery. Paris City, land of scarcity and centrality, where we own 64% of our office building.

Low vacancy rate, resilient take-up, low future supply. As you can see in the chart below, starting by the far left, with the Paris vacancy rate in the CBD, 2.1%; a little bit above 3% for the rest of Paris, 4.5% in Neuilly-Levallois; 5.7% in La Défense, above the 5%, which is the breaking point -- the turning point in La Défense but below what we have seen in the past.

It doesn't mean that there is no risk here. There is a little bit of risk and we should be very -- we observe that and should be very careful about and cautious on that area.

6.5%, Inner Rim; and 5.3%, Outer Rim. Limited future supply in different areas.

Paris represent 15%; La Défense, 25%; and Western Crescent, 20%. And supporting favorable rental trends in core locations, plus 5% in Paris CBD, extended to 5/6/7; plus 2% for the rest of Paris; quite even for La Défense and Western Crescent; minus 1%, Inner Rim; and of course, minus 5%, Outer Rim, where we do not own assets, just 1 actually in Cergy-Pontoise.

A still significant potential to be captured ahead on central location. Reversionary potential by the end of 2019 were at plus 23% in Paris CBD and 5/6/7 remain at the same level here.

Paris excluding CBD and 5/6/7 is at plus 11%. We observed today plus 12%.

Western Crescent and La Défense were at 0 by the end of '19, and we observed a decrease at minus 6%, where we have to be very cautious and observe what's going on in the market and reactive. And other Paris Region was at minus 9%.

It's going to minus 11%; and minus -- plus 3% in other regions and minus 1% today. Where we have our potential of reversion is in Paris CBD and 5/6/7, we have still plus 10% on 93% of Gecina's portfolio which are located in Paris and Western Crescent.

The total represent still plus 8.3% of reversionary potential in total, supported by ERV growth in Paris, whilst under pressure in other location. Dynamic rental activity in the most central areas.

We continue to lease despite the COVID. 56,000 square meters have been let, relet or pre-let or renewed since January and more to come potentially in the second half, representing circa EUR 35 million of annualized rent, and uplift materialized in H1 represent plus 27% in Paris CBD, plus 16% globally.

Real estate markets still attractive in a post-COVID world. Historically high-risk premium, which is still appealing for investors, if we compare to prime rent -- prime yield in Paris of 2.8%.

The differential between the French 10-year bond, government bond, and the prime yield is almost 300 basis points. And if you compare to what is the average yield in Gecina portfolio, we have almost 400 bps differentiation, a positive differentiation, risk premium between the 2 which continue -- for us, we consider that the real estate assets remain attractive.

Investment market is still dynamic. The volume in H1 represented plus 15% above the 10-year average and large liquidity because of a lot of fundraising and collect are still available in the market in that area.

I'm not going to comment more the next slide, which is about the investment market suggesting resilience for the most central area. This is what you see in the slide of Page 19.

But what we can say is core markets are relatively protected in H1. Capital values in Outer Rim, of course, are decreasing, and prime yield, end of June, are unchanged versus Q1.

Just a reminder that since 2014 and the change of strategy from dividend-yielding to total return, we acquired EUR 8.3 billion of assets, including Eurosic for EUR 6 billion. We disposed EUR 5.5 billion.

Globally, we have created EUR 0.6 billion of value creation, which represents EUR 7.7 a share. We have demonstrated during this period and accelerated our know-hows regarding acquisition and disposition.

We have a long-term contribution to value creation through this discipline of acquisition and disposition and not falling in love with our assets. And we contributed also to increase the centrality.

Today, we own 64% of our assets owned or the office portfolio are based in Paris versus 55% by the end of '14. We continued the disposition, as you can see in Page 21.

Again, I'm not going to comment that except for mentioning that the disposition of 4% above latest appraisals. But one thing which is important to underline is LTV going down by 210 bps and -- compared to the same period last year, and continuously improving our centrality.

You have the details of this acquisitions and swap and the first, of course, multi-res acquisition in the 8th district in this semester. Now we will continue the value creation through our pipeline.

We have already achieved, during the last period of time and end of 2014 -- since end of 2014, we have delivered 27 assets. The total investment cost represented EUR 2.8 billion and the CapEx injected, EUR 1.3 billion.

We have created EUR 1.1 billion of value, almost one-for-one, and of which EUR 115 million are related to this H1, and altogether, it represent almost EUR 15 a share since 2014, EUR 1.6 for these last 6 months. This significantly contribute to outperformance of capital return over market trend, and through our capacity to develop very environmental assets, we are continuously decreasing our carbon and energy consumptions by using renewable energy of the portfolio through all the sustainable redevelopment schemes.

More to come ahead on offices. Committed pipeline represent 10 projects to be delivered before end of 2023.

You have the list below. A couple of them, especially in La Défense, Being is suffering from leasing, but we keep -- we are confident to be capable to lease these assets by adapting our rents, but to be completely flexible and agile.

But the rest, except for the 7 Madrid, which is 100% leased to WeWork and going to be delivered by the end of this month. And they have already pre-let large corporate.

We have nothing specifically to be delivered in -- any time soon, but a lot of projects. These 2 (sic) [ 10 ] deliveries represent a total investment cost of EUR 1.8 billion.

The average yield on cost is 5.4%, whereas the theoretical prime yield -- exit yield is 3.1%. And it represent 83,000 square meters, and the committed total investment costs for the remaining -- sorry, not the existing project, but the other project which has to come and increase the pipeline in the future would represent less than EUR 1 billion, out of which, EUR 353 million CapEx is going to be injected.

Offices pipeline dedicated to areas driven by scarcity and centrality. As you can say, it is weighted -- compared to the weighted average vacancy per area, we are in very defensive areas.

67% of the pipeline is in the CBD, 70% in Paris CBD (sic) [ Paris City ], with an average weighted vacancy of circa 2%. Very limited future supply in Paris City, while future supply may raise locally questions in secondary areas.

And more than 75% of the pipeline in areas where vacancy rates are below 5%. More to come ahead also on the multi-res side.

Of course, the projects are smaller, but it doesn't mean that they are less important. 7 projects to be delivered before the end of 2023.

Total investment costs represent EUR 180 million. Average yield on cost is 4.6%, whereas the theoretical prime yield is 3.4%, much more resilient, though.

And more to come with 15,000 square meters to be committed. EUR 79 million total investment costs to be committed, out of which, half represent the CapEx, the extra CapEx to be injected.

Residential pipeline, you can see in Page 28, represent the growing multi-res pipeline underlying Gecina's renewed ambition in this asset class, a pipeline dedicated to areas facing shortfall in housing and answering growing needs for central and quality residential assets. Gecina's pipeline refueled with promising assets.

As I already mentioned, almost EUR 3 billion committed or to be committed in projects, including EUR 1 billion of projects to be launched in short run at Gecina's hand if conditions are supportive and when and if the tenants are leaving. You have the bar chart which gives you the -- how we go from the EUR 1.7 billion committed by the end of 2019 to where we are today.

The yield on costs represent 5.5% defensive location, and value creation is expected, based on the yield on cost of 5.5%, EUR 303 million (sic) [ EUR 330 million ] are booked already, EUR 115 million related to H1. A visible driver for recurring earnings growth.

You remember that we were expecting EUR 130 million to EUR 140 million extra rents by the end of 2025. So we are continuing to consider that this might be achievable in the coming period.

Residential. It's -- the launch of subsidiarization of the residential portfolio is a big step for us.

It has been finalized at our AGM, April 23. We consider that it gives visibility to that sector.

We're going to be in a position to capture potential value-creation investment opportunities in this residential segment. The group will retain control of the newly vehicle, but keeping the group's capital allocation roughly unchanged, as of today, 80-20.

But we can also open up the capital to third parties because one of the main issues for multi-res to be attractive in the coming period is the fact that they are not operational companies like us available in the market. You have many companies who are capable to operate in the social housing sector and you have also condos built by individuals to put in the leasing sector with a lot of subsidies of the government, which represents EUR 4 billion a year for us as taxpayers.

But you don't have sound private operational people like us, and we believe that it will be a way to attract third-party investors. This will enable us to reach a critical mass, and size matters for a residential property because we are going to develop a real set of services through YouFirst residents and therefore, grow and maximize operational and financial performances.

And this will enable us also to move outside of the Paris Region and to consider other main cities in France. If -- of course, we are never a forced buyer, so we will, one by one, consider what are the terms of conditions of any single acquisition.

This lead us to a proven track record with tangible contribution from the renewed strategy on multi-res. As you see, the like-for-like valuation grew by 4.9% year-on-year in the H1, 6.9% year-on-year.

Uplift materialized on new leasing by 7.4% in H1. First residential acquisition, we already talked about, 27,000 square meters of committed projects to be delivered in the next 3 years, 15,000 more to come, and 97.6% occupancy rate in H1.

Now it's your turn, Nicolas, to talk about solid financial performance in H1 and how all these news are represented in our balance sheet.

Thank you, Méka. Good morning, everyone.

So yes, now we are going to go through the financial part of this presentation. As usual, I will focus on 4 items, first one being our net rental income.

Then we'll talk about the NAV with a new EPRA NAV, then balance sheet and, of course, a few word on our updated guidance for 2020. And so I will not comment specifically the numbers of the Page 34 as I will come back on these figures later.

But what I just wanted to highlight is that these figures are, I think, the best illustration of the resilience of the business model of Gecina in absolute term and in relative terms, as Méka said, thanks to the quality of our offices, of our buildings, our location, the quality of our tenant base, the work that we have done on our balance sheet, and of course, the work done on the transformation of the company during this last year are very positive impact on the numbers today. So if we start with the net rental income.

So our net rental income is down 0.8% for the first half of this year compared to the first half of 2019. And as you can see on the bridge of Page 35, all the engines of the total return strategy are contributing to these figures.

Of course, the like-for-like, and I will come back to that on the next page, but also all the benefits coming from the deliveries of our pipeline, which has contributed for plus EUR 10 million of rents with the deliveries of -- in 2019, mainly of Carré Michelet; of MAP building, let to Lacoste; and Pyramide. We are also impacted, of course, by our disposals, minus EUR 13 million compared to last year.

But of course, with all the benefits of the disposals that we have to take in balance in term of deleveraging of the company, in term of capital gain that we are generating, and of course, in term of refocusing the portfolio on prime locations. And this refocusing, as we said, is clearly one of the clear advantage of Gecina.

We are also, of course, impacted by the COVID crisis. And as you can see, we have provisioned a part of receivables.

As Méka said, we have around EUR 20 million of rent still to collect for the Q2 rent. This represents so 5% of the H1 rents to be collected.

And among this EUR 20 million, we have provisioned EUR 7 million of this amount. The remaining part is due to some provisions that we had on the financing lease business coming from [ the hotels ].

And maybe what I would like to highlight is that these provisions are included in our FFO, which is, I think, not the case for all our peers. What's also important to mention is that, of course, the work we have done on the financing structure, and we will come back to that, of course, later, also positively impacted our net rental income, with a decrease of forecast of debt, and so a decrease in our financial expenses by almost EUR 10 million on a gross amount and EUR 6 million if we include the decrease in the capitalized interest.

Maybe one last point on this page, which is that if you look at the dynamic for H2, the dynamic will be a little bit different because most of the deliveries we had and which has contributed positively to rents for H1 has been done end of H1 2019, beginning of H2 2020, meaning that the positive impact will be diluted for the full year, and we will have some other building that will be contributed to the pipeline, like the Boétie building, so we will have a negative impact of the pipeline for the full year, which explains why we had, even before COVID, guidance which was lower than the figures we have here for the full year. So regarding the rent and the like-for-like, we are at plus 2.9% globally speaking.

If we focus on offices, plus 3.6%. That's the best figure that we never had during this last year, as you can see on the bottom left chart.

And what's interesting is that a large part of this like-for-like is coming driven by reversionary potential, mainly in prime location. So that's the crystallization -- part of the crystallization of the reversionary potential that Méka was referring to.

And we have, of course, and that also another impact of the COVID crisis, a negative like-for-like for student residences because a part of tenants left us at the beginning of the lockdown period, mainly the foreign students outside of the Schengen Area. And so we did not collected any rents at the end of the H1 on these tenants.

So second point is NAV. So first time that we are disclosing the new EPRA NAVs.

So we will have to familiarize ourselves with these numbers. 3 NAVs: reconstitution, continuation and dissolution.

If we focus on continuation, EUR 175 per share. It's an increase of more than 5% over the last 12 months.

And here again, you can see all the benefits of our total return strategy, with a strong contribution, of course, of the like-for-like growth valuation of our assets, thanks to the prime location. But also -- and that's something that is very important for us, contribution of the development pipeline.

You know that each time that we are moving forward on development, getting building authorization for construction, doing pre-leasing or deliveries, we are generating additional value, and so you can see the impact of this value in our NAV. Regarding our valuation.

So on the like-for-like basis, globally speaking, for the group, we are at plus 1%, with very strong differences between asset classes and between geographies, of course, because a large part of this 1% is coming from our residential portfolio, plus 4%. And we are clearly benefiting from the very positive market trends that we have seen during the last month on the resi market, of course, from the work done by our resi teams, but also by the transaction made by in'li during the first half of this year, which has given to the appraisers a new benchmark in term of valuations for block portfolios.

And office evaluation is flattish, around 0.3%, but with huge discrepancies between areas. And here again, you can see all the benefits of having a large part of our portfolio in prime location.

As you can see that for Paris City, valuations are increasing by more than 2%. And regarding the pipeline, as I said, on Page 39, so it's one of the contributor of -- for NAV growth, and it will continue to be in the future.

If we look at the first half of 2020, it's around EUR 115 million of value creation, so a little bit less than EUR 2 per share. We have in our pipeline already -- NAV already accounted a part of the value creation.

But as I was saying, of course, still a huge part is to be generated and crystallized in the future, coming from all the next steps that we will have on our very nice projects. If we move now on the liability side of our balance sheet.

So a very, very positive aspect with S&P and Moody's who have confirmed our rating, A- and A3, respectively, with LTV which is decreasing, continue to decrease our LTV, more than 20 bps (sic) [ more than 200 bps ] below where we were 12 months ago since the disposal program, thanks to the value we are generating on the pipeline. And so it's also one of the driver of our rating.

What is also interesting is that we have continued to develop our responsible loans, and I would like to thank Societe Generale. We have signed earlier this week a EUR 240 million new credit facility, which is a green loan for a 7-year maturity, which help us to continue with other banks to increase the size of our responsible lines loans.

And we have, today, more than 25% of our loans which are responsible loans, meaning that, you remember, we have the spread of our credit, which is moving, not only on financial criteria but also on ESG criteria. And last but not least, the decrease of the cost of debt.

As I was saying, it's minus 10 bps compared to H1 last year. And it's due to the work we have done on our bond structure.

As you remember, we have issued a bond first half of last year. We have do some bond back -- some buyback of bonds also.

And we have also continued to optimize our financing structure during the last months. Maybe one quick one, even if I'm sure that it's not a worry for you, on our financial covenant, and you will see that we have a huge headroom compared with our financial covenants, both on LTV and ICR.

And we have a very good visibility on our debt repayment schedule because thanks to our -- the liquidity we have today on our balance sheet for undrawn bank facilities, we are able to secure refinancing for the next 3 years, so a very good visibility on this side. Maybe to conclude, one word on the guidance.

So as Méka said, that we had suspended our guidance at the beginning of the crisis. I think that thanks to the business model of Gecina, we have now a good visibility on where we should be for 2020, even if there is a little bit more uncertainty that what we can -- have usually because of this crisis, we are able to disclose the guidance, which will be a range.

So we are now expecting a net return income per share for 2020 between EUR 5.55 per share to EUR 5.75 per share -- EUR 5.70 per share, sorry, which is close to the number we had disclosed early this year because, you will remember, we were expecting a EUR 5.8 per share, meaning that at the top of the range, we should be at minus 2.5%, and at the bottom part of the range, we should be at minus 5%, which is clearly the impact of the COVID crisis on our business. So thank you for listening.

And now Méka and myself and the rest of the team are ready to answer to the question you may have.

Thank you, Nicolas. And now we can open the questions.

Is there any question in the room? Need to wait a little bit before -- I do not see who's -- okay.

So the questions are not -- these are written questions, right? It's a new way?

Okay. Good.

We have a -- the first question is for Florent Laroche-Joubert. I don't know if you are on the line, Florent.

Are you? Okay.

So I'm going to read the question. According to a recent survey in France published by Ipsos, Perils, 55% of workers have no longer access to home working and number of days worked at home has dropped by half since end of the lockdown period.

All in, all these surveys suggest that the strong and quick change in way of working home versus office is not for tomorrow in France. Could you please share your views on this?

I don't know if this is the right question. I don't know if -- nobody is on the line, right?

Yes. No, we will have also questions on the line.

This is a question from the webcast.

Okay. This is -- okay.

Thank you. So I'm going to answer this question or not?

Okay. Thank you, Florent, for your question.

I think this is a very important question. And probably, you noticed that since the beginning, when the government decided to reopen, most of the people and corporates would say, we are not going back to the office since -- until September or maybe end of the year, et cetera.

And this is becoming absolutely the opposite today. Many different reasons for that.

I would just underline that I think that all these surveys are not really relevant today because it's too soon to have a real view one way or another. But the 3 trends we have observed and we have underlined for the last 3 years, which were urbanization and centrality around transportation hub with mixed-use areas, with digitizations, which is going to suppress admin drop for the benefits of value-added and service jobs.

And by the way, during the shutdown, the only people who were really actually working were the servicing people. And the third one, which is the climate change emergency.

These 3 trends hasn't been created by the -- no crisis create a trend. But probably, it accelerates the trends.

And the consequence of that is that we believe that centrality will become even more important. The quality of the assets will become absolutely relevant and important for both collaborators, employees and the corporates and the managers.

And it becomes much more important to have places to share, to come in, to team up to work on projects, et cetera. And the quality of the assets will become more key than before.

And I consider that people will come back to the office. Actually, one of the reason people are not really moving back to the offices, not only in France, but everywhere throughout the world, is the concerns about public transportation.

And I think that the public transportation sector should completely go through a revolution in terms of health measures and security, safety measures on that side. But definitely, I do think that people will go back to the office.

Now the main issue is the amount of jobs which are going to be suppressed because of digitization, which is going to be accelerated, and how we can also, as a society, as people, continue to give a chance to people, to reassess themselves, to find a new way of working, to give them a chance to have new skills, new jobs and being much more useful for the organization. I think that this is something which we will see more and more in the coming period.

One question -- if there is no question in the room, one question coming from Alvaro Soriano from Bank of America. Alvaro, you hear me?

Hear me well? Yes, I guess you can hear me well.

So 3 questions on my side, very quickly. The first one, on your leases expiring in 2021.

They amount to EUR 167 million more or less. Do you have any number or any percentage you could provide in terms of how much of that income is secure?

What is the percentage of tenants saying we will estate on your portfolio? The second question is about your disposals.

Any target for full year? And do you see the margin to improve from the current 4% given the strength you are describing in the office market?

And last one, on your revaluation of offices. Do they include developments?

The 0.3% reflect the value creation of the pipeline?

Thank you for these questions. I'm going to answer -- very good questions.

Thank you very much. And I'm going to start by the disposition side.

We do -- never have target for dispositions. But as you remember, we have a total return strategy, which means that we do asset reviews.

And as soon as we consider whether an asset is no more strategic or mature, we decide to dispose. So this is a recurrent review we are doing each year, actually in November, somewhere.

And people are already working on that. And most of the dispositions are not in the best location actually.

We dispose assets which are not in the best location and that we consider that they are strategically no more accurate with our strategy, and this is the reason we are disposing. Actually, the percentage above last appraisals, it's just fact.

But this is not the only reason. Sometimes, it's better to dispose when we consider it is time.

And it is good to notice that we still have room compared to what the appetite of the market is about. Do you want to take the question about the valuation, Nicolas?

Sure. So if you go on Page 38 of the presentation, the set of figure you have is regarding the like-for-like growth in our portfolio, so meaning the assets that we had during the first half of -- under operations during the first half of 2019 and first half of 2020, so a comparable basis.

So that's the first set of figures that valuers are looking at. But they are also looking at the valuations of the development pipeline, so not included on this page, but they are doing the job and visiting the assets, looking at the work done, where we are in terms of pre-leasing also.

And so we have exactly the same type of report for assets under development. And this is -- these valuations which are included in our NAV, and so are also part of increase in NAV that we are disclosing today.

And if we look at the number, I would say that half of the value creation we had -- a little bit less than the half is coming from the pipeline and the remaining part is coming from the like-for-like.

Yes. And your question about leases termination or breakup in 2021, I don't -- the EUR 160 million, I don't know if, Samuel, you have any specific answer about that.

That's right. Just a few comments.

If you go on Page 54, the appendix of the document you may have in your hands, you have some elements regarding the breakup option coming in the years ahead, so for H2 2020 but also for 2021. Your question was referring to 2021.

So -- and we have indicated as well what we believe is at risk, meaning that at risk is that we believe that the tenants may leave, which is from time to time a good news for us because that's -- as said, that we intend to redevelop. And that's mostly the case for some of the spaces which are considered at risk for H2 2020.

Then you have on this slide also the breakdown of location where these spaces are. And you see that very large majority of these offices facing breakup option in 2020 and 2021 are inside the city of Paris.

So you may have seen that we have 2% to 3% vacancy rate there and no real supply to come in years ahead. So that's really something that brings us some confidence.

But you have also the details of some spaces which are in secondary areas where we know that it's not as easy than what it can be in the city.

Pretty clear, all the answers. Just one follow-up, if I may.

Some of your peers are commenting on the impact of indexation. We've seen that indexation in your portfolio has been great.

Any view on this topic going forward? If you could share with us.

So you know that -- so we have 2 type of indexation, one on the resi side and one on the office side. On the resi side, the indexation is linked to CPI, so it should be slightly positive for the future.

For the office side, it's a mixed index, where 50% coming from CPI, 25% coming from GDP growth and 25% from cost of construction. So we know that, of course, all the forecasts for the GDP growth will be negative and even strongly negative for end of this year, beginning of next year.

That's, of course, something that we have forecasted in the guidance that we are giving for 2020. Having said that, when we look at the other component of the index, we consider that this should attenuate, compensate, dilute a little bit the decrease of GDP.

Yes. Just on this specific point of indexation.

Today, we have already -- by July 1, we have already sent the invoices for the third quarter. So we know exactly what is the amount of rents which we have to be collected, including indexation for the third quarter.

So the question mark is only for the fourth quarter of the year, and that's why you have a guidance where we have a sort of range of guidance because we have considered among other question mark, maybe it's going to be a -- be an impact on the fourth quarter in terms of indexation, but this is a very small impact compared to what has been done on a full year basis. If there is no other question in the room, there is another question by Laura Gomez of Kempen.

Laura, are you on the phone?

I am. First of all, congratulations on a really great set of results.

I have a couple of questions for you. So let me just read them out.

The first is if you could give an idea of the level of actual occupancy on your -- of your offices, i.e., like how many -- the percentage of people actually back in the office. The second one is your outlook on La Défense and rents at which you aspire now to sign the projects that you currently have there, given the amount of supply coming to La Défense and whether you expect vacancy to hit 2012, 2013 double-digit levels there.

And then third question, regarding resi, whether you've seen already any expressed interest from potential investors. That's it.

Thank you for these 2 question. The first question is for the occupancy of our offices leased to external people, right?

Correct. Yes.

Not yours, not where you are now, yes.

You know what? They are under the control of Valérie Britay.

Depending -- we do not have statistics on that side. We didn't ask people to tell us exactly what is the percentage.

What I can tell you though, and related to your questions about La Défense, people don't want to go back to the office, et cetera, is much more related to the policy of the company of the corporate. For instance, I take 2 examples.

Total, everybody is back to the office. Of course, they are respecting the safety measures.

They need to be very cautious. They need to wear masks, whatever.

But the top management has considered that people have to go back to the work and people are back to the work. Other corporates do not have exactly the same policy.

So it's very different from one sector to another one, from one management to the other management, from one company to the other. I think we need to wait until the end of August, September, when we will see what's going to really happen.

And people today are a little bit concerned about maybe a new hit on the COVID pandemic, which is back potentially to -- in France. We don't know exactly.

So I think it's a little bit too soon. Probably, we're going to ask our tenants, but we do not have real statistics.

One thing you should also have in mind is that not everybody was capable to work from home. And it need us an infrastructure.

It need us to be equipped. It need us to have the same type of facilities, the digitization.

And not everybody was capable to work from home, and it has -- it may complicate it, and that's why I believe that digitization is going to accelerate even compared to before because not everybody was capable. So people were partially in a furlough, partially going back to the office, partially working from home, mostly on a local basis.

So I think that this is something we need to consider in a much more detail back to September. And as soon as we have a better view, definitely, we're going to share with you and with the community in general.

The second questions -- I think I [ asked ] the 2 first questions at the same time. So in La Défense, you have different type of strategy depending on the companies.

What I can tell you, as I mentioned already, is that, at the beginning, most corporates would -- and management would say, well, don't go -- come back before September or end year, et cetera. And now they consider that -- I'm sorry, that the productivity is not the same.

And by the way, the productivity we consider during the lockdown was much more related to doing what was already committed. Not that much new projects, new ideas, new commitments, new vision has been launched during these 2 months.

So going back to the office becomes absolutely necessary to exchange, to create, to redesign, et cetera. But definitely, this is a question we're going to follow in the coming period.

I don't remember the third question. Could you please repeat it, please?

I'm sorry. Both Nicolas and I, we...

No worries. It's fine.

Go ahead. Oh, residential.

Yes, it's regarding residential. I mean -- and just to go back on the La Défense question really quickly.

What I meant more is with the outlook, whether just -- there's a lot of supply coming. And I was just wondering whether you already see the weaknesses in -- like in terms of negotiating rents for the projects that you have there and whether you expect just in terms of the supply, so not related specifically to COVID, but in terms of the actual supply coming, do you expect vacancy to creep up to -- back to like 2012, 2013 levels?

And yes, and indeed, the third question was whether you have seen already some expressed interest from potential investors in the residential subsidiary.

Yes, in La Défense and everywhere else, again, we have done that always when we consider that we have to readjust rents and all kind of rent-free and whatever and all kind of packages, we have always done that. Of course, in La Défense, there is a repricing.

And compared to what I have been through after the GFC crisis in 2008, '09, '10, '12, '10, '11, '12, '13, it took a very long. People, investors and the markets are reacting very fast.

And of course, there's a supply coming to the market. But we need to readapt ourselves, and the needs are here.

And we are adjusting our rents and see how we can also fuel building. And we have good connection with people.

Again, from the beginning, we have always done that. We have been very flexible and reactive to our tenants' needs, and this is what we are doing today and readjusting.

As far as the multi-res is concerned, there is a real attraction for investors for the multi-res sector. Again, the only question is that -- and I'm sorry to say that, except us, as a sound and organized level, there are no operating company capable to fulfill the needs of the market.

And it's very hard to penetrate the local market like the multi-res market in France. By the way, it's the same in Germany.

And the reason is that there is so much rules and governance and limitation and whatever that making money out of it needs a lot of competencies, needs a lot of expertise, needs a lot of capacity, and also size matters. And the bigger we are, the better it is.

So I think being a sound, organized today and capable to deliver the good and operating company on that sector and also owning the assets and not operating only for third parties, this is a real attraction. People have already approached us and are interested by our vehicle, but we wanted to make sure that the vehicle is created and take time.

And the COVID a little bit postponed some of our projects, but it's going to be launched once back to the office after vacation. We are expecting vacation, by the way, in August, and then look at it in the fourth quarter and early next year.

Thank you. A question from -- can we -- can you show us one of the written questions?

Yes. A second one is would you please be able to provide some color on Rive Gauche, specifically, the WeWork, please?

This comes from Varun Venkatraman from CFRA Research. Well, we are -- WeWork paid their rents in Q2.

Actually, they...

And Q3.

And in Q3. So so far, so good.

They tried to renegotiate and we didn't renegotiate. It is a very good location.

They have good subtenants, and we didn't see any reason for that. And so there is no renegotiation.

And so far, so good, they paid their rent. So nothing specific about them in -- among our different issues we may have at some point.

And the last question, I don't want to put it -- let it aside. Are there any intention to carry out buybacks as the share are trading at such large discount to EPRA NTA?

Same question coming from Varun. Very good question.

I think it's complicated to launch a share buyback. And the reason is that there is no stability and no -- we do not see what are the main reasons that leads to those kind of discounts.

And I'm not sure, by the way, that the least -- that the share buyback will be in any significant help to improve the share price. I think that the solidity of our results and the fact that we definitely believe -- look, at the share price as of yesterday, you -- this means that you are buying the best offices in the CBD of Paris at EUR 11,000 per square meter.

A transaction has been reported this morning in the same areas at EUR 28,000 a square meter. Just give you a vision of what the gap is and our average values is at EUR 22,000 a square meter?

Yes. Including retail.

So it's -- how -- including retail, including retail in some good areas. So you see the discrepancy we have and how the -- how nonreasonable it is.

And I think it's better to buy, this is a recommendation, Gecina shares which is liquid in the market and you can sell whatever you want, a percentage of a building than buying a building and having to manage it. We have good people who know how to manage it and how to make it profitable.

So this is my recommendation. Celine Huynh from Barclays, you have a question.

Go ahead.

I was just wondering one question. How confident are you on your development pipeline?

And also, can you provide any color on the letting activity you're seeing at the moment in terms of incentives and whether the tenants are more demanding on final costs, for example?

Yes. Good questions also.

We are quite confident on our pipeline. Again, look at the location, look where they are.

And related to your question on what is the activity in the market in terms of intensity of the leasing activities. Actually, it has been stopped during the course of the 2 long months of shutdown.

And since early June, since we are reopening, it is back and quite, quite active at the end of this month of July, which I wouldn't expect to be active. Of course, you need to reorganize and nothing will happen significant except what has been already in the pipeline in the past.

I'm not only talking about Gecina, but globally in the market. But globally speaking, the activity is quite intense.

You have the impression that people were -- they had projects and now they are back. Now what is important in the pipeline, and that's why we believe that the quality of our design make a lot of difference between us and the rest of the market and the quality of the services, design and environmental assessment we are running in our projects is that people are reconsidering the quality of our offices.

And quite strangely, [ distanciation ] creates more spaces. But they are impacted differently.

They are reassessed differently. And they -- and we are also advising our potential tenants in the way they are organizing themselves and they are organizing their spaces.

So we'll see in September. But today, it's not as low as we would be concerned about maybe a couple of months ago.

Of course, depend [ when ] the assets are located. When you are in much more secondary area is another question.

And that's why we have these asset reviews, regular asset reviews where -- which leads us to take the decision whether to keep, relet or sell, to reposition or sell. Yes?

Do you have a target for pre-letting by the end of the year?

So we have 3 questions coming from Pierre-Emmanuel Clouard from Kepler Cheuvreux. So first one, can we give us details on asset valuation change in the Western Crescent - La Défense?

Is it focused on one specific asset? So as you've seen on Western Crescent - La Défense, valuations on the like-for-like portfolio are decreasing by 3%, mainly coming from cap rate expansion.

On this portfolio, on average, cap rates are going up by 20 bps. So of course, there can be some differences between buildings due to locations, due to quality of tenants, due to duration of the lease, due to CapEx we have to inject.

But globally speaking, I think that the 20 bps is what we see in average and there's no specific assets which are driving this decrease. Second question, how can you explain the strong positive value change in the residential portfolio when the market has been rather quiet during the semester?

I would say that the market has not been quiet, to be honest.

No, absolutely not.

It has never been so active. We've seen during this first half of the year the largest deal, I think, ever done on a resi portfolio on block with the in'li transaction, which has given to appraisers clearly a...

Reference.

A reference on where are -- when we are doing -- they're doing the valuation, sorry, of the resi, they are considering values of unit and empty buildings and then applying a discount because we are owning full or let apartments on block valuations. And both on the 2 sides of the parameters, they have been positive during this first half.

When you look at the value by square foot, mainly in Paris, but also in the first rim, they have increased during this first half. So first driver.

And second driver, the new transaction has shown a strong decrease in the discount for block valuations. So no, no, the first half has been very active.

And by the way, the price per square meter on individual -- on retail sale in residential is also increasing in Paris and in the best areas in the Paris Region. It's not going down even despite the crisis, because people couldn't use it -- visit the apartments, but it's still moving up.

So it hasn't been a quiet period that much.

Last question. No news -- no new disposal have been achieved during Q2.

Can we expect new disposal in H2 target for the LTV ratio? So I think that one of the reason why we did not add any new disposal in Q2 is because of the lockdown.

I think it's quite complicated to visit, to organize disposals during the lockdown. Does not mean that we will not continue our strategy of taking advantage of opportunities and appetite of institutional investors to continue to dispose some assets, maybe in location which are less strategic for us than they are for them.

So we will continue, of course, to look at opportunities. We are not a forced seller with a 33% LTV.

But as we have said, when we are looking at our NAV bridge or LTV bridge, clearly, this asset rotation is one of the driver for value creation of the refocusing of the portfolio, the delevering of the company. So if there is opportunities to continue to do so, we will continue to do so.

Yes. A question from Pierre Paren, BMO.

On your retail units, values went up by 8% on a 6-month basis, which is quite strong. What were the drivers?

The drivers are mainly negotiation we had with some of our tenants, sometimes even taking advantage of the crisis to have discussion with these guys. And on some specific situation, we can add some lease extension.

Some other, we can have on very good location maybe a possibility in the future to generate some increase in rents or to crystallize some reversionary potential. So that's this type of benefits that are driving this kind of asset.

It's not coming from the market or a little bit by the market. It's mainly coming from specific situations.

Okay. And how come the yield, which is already quite tight, went down by another 10 basis points?

Should I assume that in the current context, yield would have stayed stable? So how do you explain it went down?

Like what was the rationale of valuers to do that?

That's, as you said, the rationale of the valuer. Having said that, when you look at the -- first, the location of these buildings -- of this retail, we are here talking of ultra-prime locations.

We are talking of Place Vendôme or Champs Elysées, Place de la Madeleine mainly. So I think we should not compare this yield with the one we can have on maybe more...

Street retails, regular street retails, yes. Groceries or whatever.

Street retail or shopping mall. And when you look at the market interest rates, they have decreased during this first half.

So the risk premium has, despite this cap rate compression, has increased during the first half. Okay.

Thank you very much.

And we -- yes. A question from [ Ickshwan ] -- I hope that I pronounced it correctly, [ Ickshwan Day ].

A question concerning your student residential portfolio, what the percentage of international -- what is the percentage of international student? What is the occupancy rate now?

And how will it evolve? Well, actually, starting by the occupancy rate.

During the course of the lockdown, of course, in the -- universities were shut down, so students mainly went back home, and it has dropped from -- I don't remember, sharply by 70%? 50%.

Yes. Yes.

And the percentage of domestic and international students is 50-50. And we are reassessing and redirecting the occupancy.

And by the way, when we are talking about foreign students, we are talking also about European, non-French. So it's not just about people traveling from abroad and having to catch up a plane.

So this is something that we are redirecting and we are in the middle of -- you know that student housing is a regular remarketing during summertime. And it is -- and the remarketing is -- we are in the middle of remarketing.

And so far, under Franck Lirzin's control, so far, so good in terms of marketing and leasing of these areas. So we'll see, but definitely, it will evolve with the way that the global policy and travel ban, et cetera, will evolve in the coming period.

As a reminder, the student housing represent EUR 300 million-ish of our portfolio, EUR 350 million value. So it's not that relevant in terms of size and impact over the EUR 20 billion.

Is there any other question online or in the room? No?

Many thanks to everybody. Thank you for your attendance.

Of course, we remain, Nicolas, Samuel and myself and the rest of the team, 100% available if you have any other question. I wish you to be well, and enjoy your vacation, and take some time off, and take time for friends and families.

Thank you very much, and see you soon.