Gecina S.A.

Good morning, everyone, and thank you for joining the call this morning to review our activity for the first 3 quarters of 2025. Some key highlights we'd like to emphasize.

Regarding office leasing, even during this complex French political context, we secured 114,000 square meters year-to-date, already more than 1/3 of last year's total. Leasing activity spans on all our geographies generating EUR 60 million in annual rents.

Regarding residential leasing, nearly 1,300 leases have been signed year-to-date, confirming the relevance of our portfolio transformation towards service apartments to deliver efficient, collaborative and modern track. This clearly meets the growing demand from students, young professionals, families and corporates.

We are proud to continue to capture strong rental uplift and outperform indexation, plus 9% across the office portfolio, including plus 28% in the extended CBD and an impressive 14% on Parisian residential portfolio. Over the first 9 months, we recorded a plus 4% increase in rental income on recurrent basis.

This growth was driven by a solid 3.7% like-for-like performance and supported by the positive contribution from our 2024 and 2025 deliveries like Mondo, 35 Capucines, Icône. We are already seeing the effect of indexation moderation as reflected in the third quarter figures.

The performance is still very strong in the Paris/Neuilly portfolio, 78% of our portfolio across all drivers, rental uplift, occupancy gains and that's where we are very proactive and innovative to retain tenants, we find the right products, implement specific leasing initiatives. A few other key highlights for the quarter.

First, we tactically strengthened our financial structure with the successful issuance of a EUR 500 million 10-year green bond at very attractive conditions in late July. We achieved a record low 85 bps spread for a 10-year bond, thanks to our A- rating and excellent timing of execution, along with the early redemption of nearly EUR 530 million of 2027 and 2028 maturities, we now benefit from longer debt maturity, greater visibility and lower costs secured over the long term.

Second, we finalized the payment agreement with ENGIE, that was presented in July. Fundamentally, we will support our tenant's transition while actively monitoring the period to secure today's rental income until June 2027, the nominal end of the lease and minimize vacancy during the repositioning.

So that, T1 Tower should be available for leasing after renovation during H1 2028, only 7 months after ENGIE lease expiry. Lastly, we are proud to have maintained our 5-star rating and now rank first in our peer group in the GRESB Index, confirming our position as a European leader in future of real estate.

And as you can see, we continue to execute our strategy with productivity, discipline and consistency. We can confirm our guidance with a net recurring income expected between EUR 6.65 to EUR 6.70 per share.

And thank you for your attention, and we are very happy to answer your question now.

I just had a question on your occupancy in -- outside of Paris. I just wanted to understand what you expect going forward?

Do you think it's going to continue to improve? Or shall we expect more departure?

That's my question.

Thank you, Valerie, for your question. Listen, like we were quite open on that front, we have seen a series of departures, especially in Boulogne, basically 20 years after delivery of those assets.

We have already re-leased probably 2/3 of what was vacated in the last 2 years, and we are still on leasing on that. So obviously, we can't comment this before signing them, but we are clearly on it.

And elsewhere, like I said, big chunk will be a T1 Tower, but that will be more for '27/'28. So, it should fluctuate.

But medium term, we are quite confident to cope with the situation.

Okay. Sorry.

But so you're relating the currently vacant space, but you're not expecting any more meaningful departure within the next 2 years, in Boulogne?

No, those are the biggest ones. Obviously, we have a wide portfolio, so we're going to have departures, but I think those two are the most critical ones.

Okay. And I've just got a second question on the ENGIE Tower in La Defense.

In terms of the rent, that you will be targeting, how is it compared to the current trends that ENGIE is paying, because I think it is quite high?

Yes. We -- obviously, we are still defining in fact, both the product and the targets.

We will have a negative downlift compared to the existing lease. Space rent for prime towers in La Defense are pretty sticky.

So, obviously, ENGIE is paying a high rent after a year of indexation, but we don't see a huge drop, but obviously, a double-digit decrease, yes.

Hi Benat. Hi, Nicolas.

I would have two questions. The first question.

So, we've seen on your leasing activities that has been quite -- you have been quite active in leasing for the first 9 months of the year. At the same time, so today, in France, we have some political instability, if we can say like that.

So, could you maybe tell us, say, a word on how it could impact today your interactions with your tenants? And maybe I will ask after that my second question.

Yes, listen, obviously, like I said, the context is complex to read. It might delay a bit decision-making processes on the corporate side.

But as you saw, in fact, we have been capable to sign a lot of leases during those 9 months. I think, if you think on the client side, real estate decision or long-term decision, they commit for 6, 9, 10 years, most of the time and at the same time, they have corporate strategies regarding return to the office, optimization sometimes of their footprint, changing their organization, AI, digital and so on and so.

So, I think they are still delivering their strategy and their related strategy in line with their global strategy. So, at some point, it might delay some time but in the end, they commit on those new services.

So, yes, it's more complex. It will be easier to have a more stable situation.

But so far, having prime, efficient, centrally located buildings has played a role to sustain our activity.

Okay. I guess, maybe my second question, so would be on the investment side.

So, in that context, what -- how do you see this activity on the investment side? And what is your appetite?

And maybe other consequence of that, how do you anticipate the evolution of the valuation of assets in Paris for offices?

On the valuation, it's too early to say. I think, we'll have the first right by valuers in some weeks from now.

So, I will not opine on future valuation. What we see on the market is clearly a strong appetite for prime Paris/Neuilly assets.

You saw Blackstone confirming the acquisition on prime Paris Trocadero, and we have seen a series of buildings well located and quite well priced. So, the market is progressively regaining liquidity, but it's not as fluid as 5 years ago.

And in that context, obviously, we as an operator in that market, we try to be agile to taking profits out of that situation.

Perhaps just to follow-up on Florent's question on the letting market. So, I understand the activity remained, let's say, decent given the current context in France.

But do you see more discussion on the level of rent or the level of incentives that you have to give to sustain the level of activity?

Thank you for your question. No, we don't see a major shift in negotiation, both on what you saw on our uplift numbers for the first 3 quarters, but also what we see on the market.

So, obviously, there is a premium for prime and efficient and centrally-located buildings. So those, even on the competition, we have seen record high transactions in Paris CBD and in the rest of Paris, large head office like EssilorLuxottica, moving its head office from the Eastern Paris region into downtown Paris.

We have seen JPMorgan. So, a series of these pretty high and low incentives.

And obviously, on the rest of the portfolio, when vacancy is pretty high, economic rents are still facing challenges. So, I would say the trend is a bit the same, while a lower activity.

Okay. So, I can understand that the situation is even more difficult out of CBD and centrally located areas.

I would say it's quite variable from a location to another. Typically, what we saw in La Defense was pretty active leasing in La Defense and Boulogne.

So, the market is pretty free there, even if rents are not increasing, but we -- there is a take-up and strong demand, maybe a bit better than like 2 or 3 years ago. AXA just took -- AXA, BNP just took a big portion of the lease in La Defense.

So, the market is quite fragmented, I think. Some locations are still facing high difficulties.

And some others when they are well located on top of transportation are still performing okay. I think, this is where looking at the averages might not be the most efficient way to understand the situation.

I think, it's quite variable from a location to another. So overall, the market is clearly decelerating, but in some locations, it's accelerating.

Okay. Okay.

Okay. If I may just have...

[indiscernible] Yes.

Okay. On the ENGIE deal that we -- you have, just to make sure I understand correctly.

So now contractually, they are committed to pay the rent until June 2027, but they could vacate the building a bit earlier to allow you to start the renovation and modernization work a bit earlier. How would that impact the level of, let's say, rent and cash you are expecting?

Would that be half a year you could sacrifice to get the, let's say, an early delivery of the project? How do you see it happening?

Obviously, it's a confidential agreement. So, I will just give the principles of them.

We have, through that deal, secure the rent until the end of the current lease. So, there is no rental income change on our side through that transaction.

On -- they will vacate the building earlier, so we'll be able to start the renovation work earlier. It depends on when their employees are leaving definitively the building.

So, that's why, we have been saying that it will depend when the last employees are leaving the Tower. And on the ENGIE side, obviously, having the tower under works, we will save a significant amount of service charges because the assets will not be under operations.

And that's what has been the driver on their side to make that deal. So, on our side, we secured the rents, and we anticipate works.

And on their side, they do savings on the operations from the day their employees are leaving and the end of lease. That's basically the principles of the deal.

Just to clarify on the T1 Tower. If I'm correct, there are sub-letters of 20% of the space.

So, I was wondering about the reposition work you will do on the Tower? Are you able to split the works?

How does it work, I mean, in fact? And what is currently your discussions with the company subletting the 20% of the space?

Will they stay? Will they leave?

How does it work, please?

So, I will not comment on the conversation we have currently on the subletting. But the principle, in fact, ENGIE is leasing two buildings, T1 that we have talked a lot and B buildings, but they don't occupy the B buildings.

It's a sublet. So, the deal we've made was on T1, which is where ENGIE employees are, and then they leave and we will restructure.

On the B building, which is an independent building next to T1, we are obviously discussing with the existing subletting to see if they want to stay or not and on the whole building or on a portion of it. So, that's what we are positively engaging with the subletting.

Okay. My second question will be relating -- yes, can you hear me?

Yes, sure.

Okay. My second question will be related to the rent level, I would say, oin the market.

So currently, how do you see the market evolving in the CBD. We have seen market data showing increasing vacancy in the CBD?

So, how do you see the market level, I would say, for the rent evolving going forward? Do you see toppish or not?

And maybe on Boulogne, what would be the reversion on your portfolio currently?

On rent levels in the CBD, I've been -- since I came at Gecina, I'm quite positively surprised quarter-after-quarter on the rent. And obviously, typically, the acquisition we made on Solstys, in our name signature, we have not bet on future increase of ERVs on that zone.

But what we see on the ground is that for the prime, most efficient, better-located buildings, rents have been increased during these first 3 quarters of 2025. So, the last deal by JPMorgan and Datadog on two prime assets have been north of EUR 1,200, so probably EUR 1,250, EUR 1,300.

So, that's for the best assets. There is still scarcity and there is still increase in ERVs.

And on the rest, I think we have seen and we have been looking at the averages. We have more than 50% of the leases that have been signed during 2025, which are north of EUR 1,000 per square meter.

So, the whole market on top of super prime, the average of CBD has increased also in terms of market trends during 2025. There is an increase in vacancy, obviously, but still decent takeup.

So, we will monitor the situation during the next month. But it doesn't look to be -- somehow as negative as what I have shown when reading our some reports.

And on Boulogne, please?

And in Boulogne, like I said, a good portion of the buildings have been vacated in the last 2 years, and we have re-leased, let's say, 2/3 of our current market conditions. So, I would say one, there is no specific reversionary potential or downlift because most of the leases are pretty recent.

And on the rest, but then we need to lease them and they will be let at market conditions. So, no specific disclosure on reversion in Boulogne basically, because most of the current leases are at current market conditions.

Hello, can you hear me?

Yes.

I wonder if you think about diversifying your portfolio exposure out of the office and maybe out also of the residential.

Not specifically. I think, if you think about the REIT, I think we need to be fully expert of what we do.

I think the -- all the conversation we had shows that you need to have a high professionalism, understanding perfectly the markets where we are, and that's what we try to do on our two businesses. And second, I think we -- like we saw on the Solstys acquisition on our development pipeline, we still have room -- strategic room to grow and improve our company in the two asset classes where we are and the locations where we are.

So, for the time being, no specific willingness to do something that will less master than what we do today.

And my second question is, do you intend to increase your development pipeline going forward?

Not specifically. We -- as you saw, we already launched like four big projects on top of T1 Tower that will come.

So, I think, we are pretty loaded there. On the existing portfolio, we don't see a major refer to come in the next 2 or 3 years on top of what we have launched.

And then, it will depend on our investment activity. So, if -- we are always monitoring the market to buy assets on which we can create value and create alpha, but specifically on the current portfolio, not much.

Have you bid on Trocadero assets?

No. Like you saw, it was the Blackstone buying it.

Yes. Okay.

And maybe last point. Looking at the negative net absorption on the Paris office, even inner Paris office market.

I wonder when the bottom will be reached? What's your perspective about that?

I think, we are pretty close to the lowest level of take-up historically on the whole Paris region, by the way. I think, probably we are at the bottom of that leasing market.

We are interacting a lot with leasing agents. So, yes, I think we are close to the bottom.

But as I said, it very depends on location. The market is free in a series of location and more quiet on some others.

So, if you escalate a bit on the understanding of the market, what has decreased a lot in the global take-up of the Paris region is last transaction on the outskirts. And probably we'll have maybe 50 transactions above 5,000 square meters on the whole market, very concentrated on Paris and La Defense.

And probably, that's a low point. So, it should increase again following the return to the office announcement by the large corporates.

And the fact that we will have lease expiries from '15, '17, '18 that has been quite active leasing years in the past, and will probably lead to some more moves from those large corporates on the outcomes. But -- so, yes, I think we are pretty close to the low point.

Okay. So, and I could conclude that it's also your point of view about the optimization of office footprint from large corporates.

Yes. We are following one data, which is when you divide the take-up, how many companies are increasing footprint or flatting footprint or declining footprint.

Two or three years ago, the majority of tenants were decreasing footprint when signing a new lease. Now we have companies declining footprint, it's probably 15% to 20% still.

And that's sometimes because they have less employees. Most of them are flat and 30% are increasing footprint.

So, if there is one inflection point in the market, is the fact that we are -- the decreasing face more behind us than in front of us, based on the recent data from Walker.

Just one more question on new supply, please. Can you help us understand if there's still some new supply coming through and whether there is a new supply that is competing with your product in the CBD or you don't think that supply is actually competing?

And how do you think that that's going to be absorbed? And when do you see new supply tailing off?

Thank you, Jonathan. On new supply, I think we -- like I commented previously, we have, let's say, two main leasing strategies on the CBD, one which is for small services being at the highest point of the quality by giving operated offices.

So, fully furnished, fully equipped, fully serviced offices. And on that, performances are excellent because you don't see so much qualitative offer facing our offer.

So, the average small surface quality in the CBD is pretty poor. So, that's why we are reaching pretty high level of services and quick relocations and re-leasings.

On the large services, most of the portfolio have been secured over the last 2 or 3 years, like the Mondo, the Icône, that we have done also renewals recently. So, our next challenge is signature of Solstys acquisition.

And on that, we don't see much competition with large corporate service and efficient building. So, not so much competition either on that front.

So, most of the competition in small buildings, let's say, average quality, that will be less, obviously, but not perfectly competing with what we have. At least, that's a bit our intention and our play on that one.

So, okay. So, if I understand correctly, the new supply in Paris is mostly in small building.

That's what you're saying is mostly refurb of small buildings. Is that, what I understand?

Yes, not 25,000, 30,000 square meter building that we have with Signature, yes. You're going to find some, but take-up is pretty wide in Paris and Paris CBD.

But yes, we don't see so many buildings in capacity with competing with Signature. Signature being the new name of Solstys after reform.

Good morning. I have, I guess, a somewhat technical question on valuations.

How will the move in French government bond yields impact valuations? How should we think about that filtering through for year-end?

Well, it's both technical and psychological. I think, the French bond is now ranging between 3.3% to 3.5%, which is pretty in line with our current bond level.

So here, clearly, through Gecina, you can see a decorrelation between prime real estate and the French sovereign bond. So, that's why I was talking about general psychology.

On the -- and the question is around risk premium on top of French sovereign bond or 10-year swaps. So, that will be a technical discussion with the operators.

How do we factor is the fact that we have a gap between sovereign bonds and 10-year swaps. So, that will be a question for the next quarters on regarding the risk premium on which rates.

Okay. So that's a decision that will be taken by the valuers?

Obviously.

Valuers, of course, are considering what they are seeing on the market. And what Benat said earlier on the fact that clearly, we can contemplate a couple of transactions.

So, there are data points, at least inside Paris, in CBD market, where you have a couple of investors, could be a local or international investors, which are giving a good hint of where should valuer see cap rates at year-end.

Just one question from my end. Just wondering about the pre-lets' status of the new developments?

And when can we hear any news on that?

Thank you for your questions. So far, nothing to announce.

Otherwise, we would have included that into the press release. But we are actively working on it.

We have active discussions on those buildings. But so far, nothing signed yet.

I just want a clarification on the EUR 140 million CapEx that you're planning on Q1. Are you going to treat this as maintenance or investment yielding CapEx?

And a sub-question to that. If that's maintenance CapEx, of course, that's going to decrease your cash.

And we understand your EPS will be quite flattish next year. So, I was wondering if that makes you want to change your dividend policy going forward to base it more on an AFFO basis rather like some of your peers rather than FFO?

Thank you for your questions. So, decision is not made there.

But anyway, it's CapEx, so it's capitalized. So, the accounting treatment will be the same.

I think, on what we are intending to do on T1 is to have, let's say, a Tower ready for multi-tenant. So, it will be a transformation of the Tower.

So that, in fact, we don't have in the future, ideally to face those huge vacancy from a day to another. So clearly, we want to improve the Tower services, but also creating different lobbies, having a fully prepared Tower for multi-tenant, so that it can last longer and have a stickier cash flow than what we have today.

So clearly, the Tower will be improved significantly. Regarding dividend policy, we have a complete business model where I think our dividend coverage is pretty good now.

And we will be capable, in fact, to follow on that track. We have been conservative, not raising our dividend in the last years, while cash flow was increasing almost by EUR 100 million.

That was in the view also to be capable to sustain it. So, no specific change in our policy.

Sorry, can I rephrase my first question to make it simple, key one. Are you planning to make any returns on the EUR 140 million CapEx?

Yes, it depends the way you look at returns. The Tower is empty by mid-'27.

Can we re-lease as is? Yes, probably.

And we look at two options. One, re-leasing as is probably with a lower ERV and trying to be more prime, more in line with the market and re-lease it faster and with a higher rent per square meter compared to if we don't do anything.

So, if you look at those two options, obviously, there is a return. Otherwise, we will never do it.

Thank you all for listening today. Thank you for your questions, very insightful and see you soon.

Bye-bye.