Gecina S.A.

Making yourself available in the room and online on this 23rd of July just before vacation. I'm very pleased with Nicolas Dutreuil and the team to present to you our HY 2021 earnings with which represent the quality of our portfolio and the trends we are observing in the market.

If we go to the strategic update, what we are seeing in the market is normalization and recovery through strong polarization in different sectors. Tenants requirements are moving further towards Grade A assets in core locations.

Tenants assessment criteria is now office matters, location, well-leaving, flexibility, digitized and sustainable buildings increasingly are important for tenants. And this is based on 3 major criterias: accessibility and centrality being in central and well-connected areas to public transportations, adapted to soft mobility and walkable access; flexibility and agility related to agile and digitized building to be capable to collaborate, innovate, built for social interactions and to enjoy community; and of course, sustainability and well living, responsible buildings are facing climate change targets, reducing greenhouse gas emissions and contributing to biodiversity and well-living are going to increasingly be important in the market.

I'm not going to read the 2 quotes of Tim Cook of Apple and Costa Markides, the London Business School, which, in any case, are encouraging people and considering them being gathered together in the same place is very important for collaboration and innovation. So this will create polarization of the office market as a consequence.

What we have seen in the market, in the Paris market during this H1 '21 is back to central location. The take-up is up by 24% in Paris City, almost stable in Western Crescent, including La Défense, minus 9% in Inner Rim.

The total average is plus 14% for the region. The market rents are holding well, plus 2.4% in Paris City, quite stable slightly positive in Western Crescent, including La Défense, minus 6% almost in Inner Rim.

And the average is plus 1%. If you look at the investment market, the capital value driven is upward in central locations.

And you look at the capital values in the Outer Rim, we are almost at minus 16%. Western Crescent, including La Défense plus 2.5% and the Paris CBD plus 3%.

And on residential portfolio as well, Paris region at the end of Q1 '21, plus 3% of the value creation. And over the last 5 years, it represents 27%.

This validates our strategic choices made during these past years, increasing centrality, 66 -- almost 68% at the end of the semester, 68% by now our portfolio is in Paris versus 55% by the end of 2014. Plus 5% reversionary potential at the end of June, plus 14% in Paris CBD, plus 10% in Paris City excluding CBD.

We are transforming the city. We have contributed to that by delivering 31 projects since end of 2014.

Plus EUR 1.2 billion of net value has been created that is EUR 16 per share. 17 projects are ongoing and 9 to be committed ahead.

We pushed further our CSR leadership, the road to carbon neutrality in 2030, named CAN0P-2030 is our actual credit. Residential is back in the game since 2017 and ready to scale up since 2020.

Subsidiarization and partnerships with Woodeum and Nexity are witnessing this ambition. And we're also implementing YouFirst approach by -- I remind you that YouFirst is a brand for client-centric approach.

We do that by enhancing quality of client relationships, customer lifetime value, and digitizations accelerated to improve services and performance. The map you have in front of you show what is the consequence of the macro trends and the clusters and the hubs we have created within the Paris region and in Paris itself by our -- by the dots of our properties.

The value of our office portfolio by midyear represents EUR 16.1 billion, 66% in Paris, 73% if we include Neuilly and Levallois. Our residential portfolio represents EUR 3.8 billion, EUR 3.4 billion for classical residential and almost EUR 400 million for student housing.

The total of our portfolio value is EUR 20 billion, 81% offices, 19% multi-res. Macro trends reinforce our confidence in transformation.

Digitizing our business to provide performance and responsive services has been our recurrent objectives during these last years. We have already achieved or are ongoing through YouFirst transformation by putting in place CRM and broker portal on offices, which gave us flexibility and optimization of the letting process and by improving quality and services, tenant retention, supply differentiation, competitive advantages, pricing power.

We are implementing specific tenants webapps throughout our portfolio, which is going to be enhanced by the end of the year on 5 of our assets, and push forward further next year. This will give tenants a real tool for well living and good connection with our teams.

We put in place a commercial website for YouFirst campus, fully digitized process for students to rent their accommodation and improvement of the operational process on student segment. As a consequence of that, we are leasing quicker, faster and in better conditions.

And also as another example, we put in place telemetry, which is a way to optimize operating costs and reducing energy consumption. This is an image of the website -- the commercial website for YouFirst campus.

And of course, I encourage each of you who has son or daughter studying to look at these at this website, and we'll be happy to welcome you and welcome them in our portfolio. These macro trends reinforce also our confidence in sustainability.

As a reminder, in 2008, when ahead of everybody else we have -- Gecina has started to look at our carbon footprint, we were at roughly 28 kilos of CO2 per square meter. I just want to make a point here.

Of course, this is not the same portfolio. This is not the same geography.

This is not the same base. But this gives the global trends -- I'm sorry, for the global portfolio.

And we -- if we consider as year 0, 2011, when we started to look at how we're going to create value in our portfolio, you can consider that in H1 2021, our carbon emission was divided by more than 2 and we have created a lot of value in between. Gecina has increased the capital return since 2011 by 54% and this is -- through the promising pipeline, we can continue to deliver capital return performance ahead.

At the same time, we have reduced our carbon footprint by minus 57% and this leads us to the carbon neutrality targeted in 2030 CAN0P-2030. We also outperformed the market on that sector.

If you look at the numbers of MSCI, since 2011, only 18% of capital return has been created through -- in the market, whereas the value creation in Gecina has been plus 54%. While on carbon emission, according to OID, the market has reduced its carbon emission by 15%, whereas we have reduced by 57%.

I consider this chart as a very important one. As a consequence, the portfolio has again proven its strength in this semester, 99% rental collection during this semester.

Back to the office, strong and quick, almost 80% of employees are back to the office in Paris region. We made EUR 453 million of dispositions, which are achieved -- actually almost all achieved by now, representing 7.2% premium to appraisals, year-end appraisals.

Rental visibility is 4.5 years until next breakup, 6.5 years until lease end. 83% of our rental basis is related to tenants classified in the 2 best credit risk categories using Dun & Bradstreet data.

Take-up is normalizing. We signed 115,000 square meters during this semester, twice compared to last year, largely above what we have signed in 2019.

The positive reversionary potential is still on average plus 5%, plus 14% in Paris CBD, plus 10% in other Paris City, excluding CBD. As a consequence, the value of our portfolio is increasing by -- and the EPRA NAV is improving, plus 1.4% like-for-like for residential, plus 2.1% like-for-like for Paris CBD offices in 6 months, and the NTA ended up at EUR 172.6 a share, EUR 180 if we consider unit-by-unit sale for residential.

Current stock price suggests an implicit discount of 20% on our office values, largely disconnected with current market trends on physical market. We have an accretive pipeline well located to capture potential from recovering trends.

Pre-let ratio is up from 37% by year-end to 58% on the projects which are going to be delivered in '21 and '22. More than 90% of non pre-let buildings so far are located in Paris City or Neuilly-sur-Seine.

Residential portfolio, we have already secured more than 1,000 units potentially joining our portfolio, 540 units under development, including 320 units acquired in H1 in Bordeaux, Marseille and Paris and transformation of our office into residential buildings. And we have also ongoing talks to acquire up to 570 million more in the market -- 570 more units in the market.

All these informations and these news are set to benefit ahead from ongoing recovery. French GDP is expected so far to grow by 6% this year.

Indexation is back to normalized level ahead. Take-up normalization is ongoing.

Confidence in long-term interest rates level are still in the market. Therefore, we have an accretive pipeline to RNR and net asset value of EUR 3.7 billion total pipeline, EUR 3 billion are committed or controlled and certain, with circa EUR 120 million to EUR 130 million net additional IFRS annualized rents, which are expected by the end of 2026, with an average 5.1% yield on cost, whilst at 81%, they are located in Paris City or Neuilly-sur-Seine.

17 committed projects to be delivered before end of '24, including 10 residential programs. Recovering trend on like-for-like rental growth are likely ahead.

Take-up recovery in core locations to get back vacancy back to normal. This is something we already observed and its getting stronger.

Reversionary potential still positive. We already mentioned the numbers.

As of today, 68% of our office portfolio is located in Paris City, and numerous instances on the market have reported leasing transaction signed above EUR 900 a square meter in the CBD. And the indexation is back on track after weakening during the course of the COVID crisis last year.

And also, we have a strong balance sheet, favorable market conditions, long maturity of the debt and hedging policy to support sustainable low cost of the debt ahead. Cautious leverage, LTV 2021 is expected so far at 32.3%, all tax included, offering potential capacity for opportunistic approach on the investment market.

Now if we look at the transaction and operational performance, recovering trends are building real confidence in central location. Progressive normalization of rental market in post-COVID crisis.

We already observed by the end of 2020, the recovery in business interaction, 226% more Q4 2020 versus lockdown levels, 16% Q4 2020 versus Q1 2020 pre-COVID. Q1 '21 recovery in visits, numbers of visits back in line with normal path.

Q2 progressive rebound in letting. And the numbers you see 85,000 square meters pre-let, renewed in Q2.

33,500 square meters of new leasing, 4x more compared to Q2 2020, of course, but also above the numbers we observed in 2019. To be continued, we are observing and expecting normalization by 2022.

So far, we have already signed 115,000 square meters by the end of June and still negotiations ongoing. I think this chart is very interesting to show the gradual normalization of the business activity.

You see where we were in Q1 2020, how it has slowed down during the time of the first lockdown and the Q2, Q3 actually of 2020, still very weak in the Q4 and since moving up very steadily and going back to normalization. Back to office is quicker and stronger in Paris region compared to London.

I'm not going to comment these numbers, but it seems that London, which was probably the last place in the European zone, I may say, to go back to the office is now getting to a stronger return and back to work. Central locations continue to outperform.

Actually, Gecina's portfolio dedicated to central areas is circa 68% of our portfolio is in Paris, 75%, including the Neuilly-Levallois; residential, 19%; La Défense, other Western Crescent, 17%; Inner Rim, Outer Rim and others represent 5%. You can see in the right side of the upper side of the chart that where immediate vacancy remains low, which is in Paris CBD, Paris City, Southern Loop and Neuilly-Levallois going up much higher, of course, in the suburb and market supply is constrained in that areas.

But 81% of Gecina's committed and controlled pipeline is located in Paris City and Neuilly. And of course, centrality outperforms, and you can see by the numbers representing the percentage of a lease up in prime rent changes in Paris CBD, Paris City as a whole and in rather flat Neuilly-Levallois and Southern Loop and of course, still week in La Défense, Peri Défense and Inner Rim.

This chart shows still the potential of reversion that we can expect to capture in our portfolio, which will support stable ERVs in Paris -- in areas that are under pressure to go up, and of course, in other areas that are under pressure because of the amount of supply. This direction is otherwise.

But this shows also the quality of our portfolio, 93% of Gecina's portfolio can pretend to access to that reversion. I'm not going to comment this chart.

This slide, you can see the last transaction -- main transaction we made, but we already reported that in different press release. Portfolio rotation investment markets on core locations and core assets has strengthened -- continues to perform and strengthen our long-term strategic conviction.

Just as a reminder, real estate market is still very attractive in the post-COVID world. Prime yields remain attractive.

You see where Gecina stands and where is the attractive risk premium compared to our valuation. We see on the investment market, though further polarization, growth in Paris less buoyant in suburbs.

Investments are largely above average long term but representing EUR 5.5 billion in H1 were invested in offices. Investment market in France is expected to be plus 20% above long-term average in 2021 according to BNP Paribas Real Estate.

Market value going up in central areas in the last 12 months, plus 3% in Paris, plus 4% in the Paris Central area, plus 4% in other, plus 2% in Western Crescent and minus 16% on the opposite in Outer Rim. Foreign investors are back in the game.

42% were invested by nondomestic investors, plus 5 points compared to end of 2020. Growing inflows still to be invested in properties, EUR 3.7 billion assets under management has been collected in H1 by SCPI's French open-ended funds and largely above long-term average.

I think this chart is interesting to consider. This is the number of transactions we know about, which have been signed in the office sector above EUR 20,000 of square meters.

You can see that there were a couple of few since 2014. These are not that much in many years.

There were some in '16, '18, '19. But in '20 and '21, we see more and more transaction above EUR 20,000 of square meters, which shows that in a post-COVID world, office asset values are moving upward in the most central areas, especially in Paris City, because they are offering appealing risk reward and the standard deviation increasing as investment markets are increasingly selective on qualitative criteria as well.

Gecina's portfolio now largely fit the investors' preferences, demonstrating Gecina's capital allocation relevancy. Current markets are seeking for Grade A assets, 91% of our assets -- more than 91% of our assets and portfolio is trophy, core, core plus offices and residential, less than 9% or value-add or opportunistic and, they are looking for central location, which is our case by more than 73%.

27% of Gecina's portfolio outside of Paris, Neuilly and Levallois. This slide shows the dynamic and supportive investment market in 2021.

If you look at a couple of transactions, as an example, we put in the chart in the main core cities areas and the price per square meter and compare that to our valuation, our average office portfolio valuation, all assets included, it represent EUR 11,400 per square meter, EUR 11,400 per square meter at appraisal value. If we report that to our share price, we are less than EUR 10,000 a square meter.

And if we look at the Paris CBD and 5/6/7, the valuation is below EUR 20,000 a square meter. These are for offices, excluding retail.

And if we report that to our implicit value at current stock price, we are less than EUR 16,000 per square meter. We continue the rotation, as you always said, to dispose assets which are nonstrategic or already mature.

EUR 453 million of dispositions have been achieved in this first half of the year, creating 7.2% premium above last appraisal value. And we have invested in EUR 161 million in new investments secured forward sales, 3 projects on the acquisition on multi-res.

We are expecting up to roughly 900 more units to join Gecina's portfolio. And at the same time, as we're converting, especially in the [ sport ] industry from Paris, an office building into multi-res.

A couple of examples, enhancing the quality and centrality of Gecina's portfolio by disposition of noncore assets, which, by this disposition, we increased the weight of the Paris portfolio, which is more and more nonreplicable by 4 points versus H1 '20. Residential portfolio, we are ready to go for better, faster and stronger.

If you look at our roadmap, first of all, by the end of '16, our resi portfolio was collecting rent by strengthening resilience. We identified right after drivers for value creation, densification, extension, optimization, reversionary materialization.

Then in '18, we started to look at our YouFirst brand, considering external growth and development, pipeline developments, potential acquisitions, property development, partnerships, digitization. And we, over time, captured scale effects, attracting institutional investor through the subsidirization, sorry, will see Gecina's capacity to grow further, although we do not need new investors just for deleveraging, but for having the same view in the way we are going to improve and expand this portfolio.

At the same time, we are industrializing our process to capture scale effect. On the scaling up more than 1,000 additional units to potentially join our portfolio, as we are considering external growth and developments, pipeline developments, potential acquisition, property development, partnership, digitization, YouFirst.

And this is through the partnership we put in place with Nexity up to 4,000 new units to be created over the next 4 or 5 years, Woodeum up to 1,000. We already acquired though 113 housing units in Bordeaux, Marseille -- in Bordeaux, 75 in Marseille, 132 in Paris to different acquisitions and not only be it to partnership.

We have ongoing talks with developers to acquire all included up to 900 almost units and 7 other residential projects to be committed to the pipeline. These are a couple of examples of the buildings we signed, Belvedere in Bordeaux, Art’Chipel in Marseille, and Wood’Up in Paris.

And more than 600 million of committed and controlled and certain pipeline are still underway. On student housing up to 14,000 square meters in different areas.

Development from scratch, 34,000 square meters. These are the acquisitions we made.

Transformation of office into resi around 9,000 square meters so far. Harnessing value from our own portfolio, up to 22,500 square meters ongoing.

And for all these topics, more to come. A proven track record as a consequence with tangible contribution from renewed strategy is ahead of us.

Like-for-like valuation is 1.4%. Uplift materialized with new leasing in H1 is plus 6.6%, acquisition of EUR 161 million, 52,500 square meters committed project to be delivered from '21 to '24, 28,500 square meters project to be committed over time, and the occupation rate is 96.7%.

Pushing our CSR leadership further. I'm just checking if I have to continue or leave the place, the audience to Samuel, sorry.

Gecina's sustainability performance levels are confirmed once again. One of the best performers in this sector by ISS B- ,GRESB92/100, second place for listed offices real estate companies in Western Europe.

MSCI AAA, plus 6% from 2019 thanks to corporate governance improvements and strong certification rate for operational buildings. World top listed real estate companies ranked, we are among the top 10 listed real estate companies by Sustainalytics.

And CDP, we're are on the A list. And of course, we have integrated CAC40 ESG in March this year.

I'm not going to comment in details this chart, but what we are doing is focusing on our 4 pillars we have already mentioned many, many times, and we have put in place a couple of years ago on carbon neutrality by 2030 through the program CAN0P-2030 by promoting up-cycling, recycling for circular building, by developing building and services for the well-being and well-living of our tenants, and by increasing our contribution to biodiversity, and you can see achievements and examples through this chart. These are some examples of what we are doing through these charts.

One word on CAN0P-2030, carbon neutrality on assets on operation by 2030, which is a new ambition launch this year. As a reminder, we took commitments since 2008 to reduce and we started to measure our carbon footprint since 2008.

And now these commitments are bearing fruit, minus 53% reduction in CO2 emission since 2008, minus 26% over the past 4 years acceleration and 80% of our assets are certified. As a consequence, we capitalized on our past performance and our leadership and know-how to accelerate the ongoing trend.

We are deploying and industrializing low-carbon solution on a wide scale. We are working with an ecosystem of innovative partners.

We are increasing the use of renewable energies already represent 40% as of today. We continue to reduce energy consumption by carrying out renovation work.

We are further strengthening the integration of the environmental and financial performance by continuing to set up responsible loans, and we are working in partnership hand-in-hand with our tenants to promote sustainable use of buildings. We consider by all these encouraging results that we can reach our targets of decarbonate -- decarbonizing our assets on operation by 2030, 20 years earlier than expected.

And by the way, we have no choice because all the laws and measures and regulations, which are ahead of us, including the European taxonomy, push us to accelerate and to continue to run. This chart is interesting to compare the value creation and -- or the carbon emission reduction compared to market during the last -- from 2010 to 2020.

If you look at what has been the actions in Gecina compared to OID, [indiscernible] the market has reduced the carbon footprint by 15% since 2010, when we have reduced by 57% since 2008. Of course, we have started sooner.

So we cannot compare really apples-to-apples, but the years are very close. And if you look at certification, the benchmark of OID mentions that only 11% of the buildings in the market are certified, whereas in our portfolio, 80% are certified.

So this is also another contribution to our ambitious CAN0P-2030 target, which is made possible thanks to Gecina leadership on these -- all these topics for a long while. I will now hand over the mic to Nicolas Dutreuil to talk about finance -- green financing.

Thank you, Méka. Good morning, everyone.

I'm very pleased to start this presentation by talking with CSR. It means that we've been successful in converting our financial issues with our CSR issues, thanks to the work made by the team, our CSR team, of course, but all the team of Gecina.

And I think that what we are achieving now on our balance sheet is the result of what Méka was saying regarding the way we are managing our portfolio with a long-term view. So as you know, we started to develop green finance on our balance sheet with our bank facilities.

We are now at 65% of sustainable lines. We were at 32% end of last year.

So we have made a strong acceleration in developing this type of financing, which are, for us, very important to have a margin which is moving not only linked to financial criteria, but also to CSR ones. And that's also the work we've done with our banks.

We don't sign any more facility with a bank, which is not a CSR sustainable one. It means that for the banker in the room, if you want to work with us, you have to be sustainable.

And second, of course, regarding bonds, you know -- you've seen what we've done beginning of this year in terms of transformation, transforming all of bonds into green bonds, that the results also of conviction, which is that we cannot work on the CSR issue partly. We have -- we need to have a global view.

And so issuing some bonds green, some other nongreen according to our view in terms of sustainability does not make sense. We need to have this global approach first.

So that's why we have done this transformation for full portfolio, first. And second, we know that what is green today will not be green anymore tomorrow.

Méka was talking about the reglementation, which is moving faster and faster. So it means that we cannot consider that I think in front of a green bond and asset today will make it green for the next 15 years.

So that's the reason why we have a very innovative approach in terms of green bonds, which is that we are screening or with screening every year our portfolio with criteria, which are stricter and stricter to make sure that we continue to improve the quality of our portfolio and to make sure that we are delivering to investors, bond investors, which are looking for green bonds, assets, which are in line with today's or tomorrow's CSR criteria. And of course, as a result of the conviction, but that's also we are getting some benefits on that.

You've seen that we've been able to issue a bond end of June at the best level that we have never done for Gecina. It was a 15 years maturity at 0.875% coupon, which is, for us, very important in terms of securitizing long-term financing at a very low level and giving us visibility for the future.

Talking about the future for Gecina, it's also, of course, our development pipeline. You've seen that we have delivered since 2019, 10 projects.

We are continuing to work on this project in terms of leasing. You know that 2020 has been, of course, impacted by the crisis, by the lockdowns.

So the level of leasing has been much lower than it used to be. The team at the -- of this division of course, are working hard in order to lease these buildings.

And we've made some decent progress in terms of leasing, even on the deliveries we've done last year, with Carré Michelet, with Anthos. Meaning that we continue to generate additional rents or we will because some of these rents will start in 2022.

And we continue to create value on the buildings that we have delivered during this last year or this last month. And of course, we have more projects to come ahead.

We have 7 projects that will be delivered before end of 2024, which is, for us, clearly one of the fuel of our growth engine, both in terms of NAV, of course, but also in terms of rents, and I will come back to that. What's important for us, of course, is to have more and more visibility on the rents we will generate from these buildings.

And you've seen that here again, we've done very decent improvements on our pre-leasing activity. We were at 37% 6 months ago, and we are now at 58%, which is a very high figure.

We are also very comfortable on the remaining part, which is not pre-let now because most of these buildings, which are not pre-let are located in very prime areas like Paris or Neuilly-sur-Seine. So of course, it's a no-brainer for us, and we should be able to let them in the coming months.

What's also important is the value we are generating on this project. You know that for office portfolio, for the committed pipeline, we are at a yield on cost of 5.3%, which is compared to the yield today, you can see on the market and Méka was referring to a couple of transactions.

It's a very decent number, meaning that still have a lot of value to extract from this development pipeline. We've also been very active, thanks to our investment teams on our residential portfolio.

Having access to a lot of new projects fueling our Lourmel subsidiary, which is a fully dedicated residential subsidiary. You know that we have signed partnership with Nexity and with Woodeum.

And we have also discussions with other developers in order to secure the operation for the future. And that's also a growth engine for tomorrow because the IRR of this resi development is at 6.4%.

Part of it coming from new projects that we have securitized with developers but also from work that we are doing on our own portfolio, it could be some land densification. We can increase the size of buildings, but we can also transform some resi -- some office assets, sorry, into resi.

And the front page of this presentation is a building that we have in the [indiscernible], double building, which is a transformation of office into resi. So all this operation, of course, will contribute to the growth of our resi subsidiary.

Globally speaking, what's important regarding this pipeline, of course, is that it's accretive. So we will get some accretion on our NAV.

You know that that's a EUR 3 billion pipeline. If you take into consideration the value which has already been booked in this pipeline and NTA, NAV, we are at EUR 3.3 billion, but there is still a lot of value to extract when you look at what the implied yield of our pipeline and the yield of the market.

What's also very important for us is that this pipeline will generate further rent -- additional rents in the future. it's clearly also an accretion for our FFO for the coming years.

Part of this future accretion is already secured with more half of our building being already pre-let. We continue to work, as I said, to continue to pre-let or to let the building we have recently delivered and the one which are going to be delivered in the coming years.

If you put all together, these additional rents, we will get from our development pipeline. We are talking to 100 to -- EUR 120 million to EUR 130 million of IFRS additional rents, which is a very decent number when you compare to the global rent of Gecina, which is for the office portfolio around EUR 500 million.

So clearly, we are going to change to move the needle with such additional rents in the future. Regarding our financial performance for the first half of 2021.

Of course, the numbers you have in front of you are a good illustration of what we've done with slightly positive like-for-like growth in our portfolio, which is the result, of course, of all the work which has been done with the teams in terms of securizing leases with our tenants. Keeping in mind that, of course, and we will come back to that in 1 second, we've been impacted by a lower indexation than the previous years and a lower occupancy rate than what we have usually on our portfolio.

So this is quite a decent number compared to the market today. Of course, globally speaking, our rents are decreasing, and that's the result of all the assets that we have transferred to the pipeline, so the growth we will have tomorrow and of the disposal we've done, we're refocusing some of our portfolio on prime location.

And that's the reason why also thanks to this location, and these prime locations that we are able today to show you this level of like-for-like growth, both in terms of rents and in valuations. Our FFO, of course, is decreasing that's the result of the disposal, as I said.

But also one of the benefits of this disposal is that we continue to decrease our LTV. We are at 33.4%, including duties.

And taking into consideration the disposal we've done earlier this month after the 30th of June, we will be or we are today at 32.3%. And our NTA is up to plus 1.5%.

I will come back to that in 1 second. So FFO and the move of our FFO during this first half, you will see or what we said in this presentation in terms of slightly positive like-for-like, of course, in terms of impact of innovations and transfer assets to the pipeline in terms of portfolio rotation, but also -- and that's important, all the work we have done to continue to optimize our management and financial structure.

We've continued to decrease our SG&A and our average cost of debt. So this is contribution to our FFO and future FFO.

Of course, during this first half, we are benefiting from a decrease in the provisions we've done. You know that we are now today a collection rate of around 99%, even above, and we continue to collect rent for H1, meaning that we are at a normalized level.

And so the level of provision is normalized also. So that's also the reason why we have such a gap compared to last year.

Regarding our gross rent performance, as I said, slightly positive. I think what's more important is to look forward and to imagine what could be 2022.

We've been impacted by quite a limited indexation, and we know that it will be also the case for the second half of 2021 because we will get -- and this is of Q2 2020, which, of course, has been impacted by the strong decrease in the GDP. But we will get recovery in 2022.

So this is one of the driver of the growth of our like-for-like for 2022. The other driver, of course, is the improvement in our occupancy rate.

You have an analysis for the first time on this chart -- on this page, which is the projection of what should be or could be or will be our occupancy rate for the future, considering what is secure today. As I said, we have signed a couple of leases, for example, with [indiscernible] on Carré Michelet, with [indiscernible] on Anthos, which will start next year.

So of course, these buildings are fully vacant, so they are impacting our occupancy rate. But if you look forward on the rents we will get on this building, you can see the improvement on this chart, and it's more or less 2% increase in our occupancy rate for next year on a full year basis, it will be on 2022 and 2023.

But it's a very high number, and the impact will be very positive on our figures. Regarding our NAV.

So as I said, it's up by plus 1.5%. And as you can see, all the engine of our growth are contributing to this positive impact.

The like-for-like on offices, I will come back to that in 1 second, on resi, of course, and value creation in the development pipeline. Regarding valuations, which are, of course, the explanation of the growth of our NTA.

What's interesting is that globally speaking, we are at plus 1% on a like-for-like basis. But with a strong polarization between locations, as Méka said, for investment and for the leasing market you have here a good illustration of what happened in the market with still positive valuation growth in Paris -- inside Paris and negative outside of Paris, even if we have stabilized compared to the decrease we had end of last year for Western Crescent and La Défense.

There's still very limited number of transactions, so complicated to say where are the value today in this location. But we'll see when transaction will come back.

If we move to the liability side of our balance sheet. So of course, as you can see, we have benefited from all the operations we've made during H1 also rent negotiation or the bond issuance we've done.

And thanks to that, we've been able to increase the average maturity of our debt 7.6 years and to decrease its average cost. We are now at the average cost for the drawn debt at 0.9%.

But as I said, what is also very important for us is not only the financial metrics of this debt, but also it's [ interest ] quality. So of course, it's much more green than it was.

But also in terms of maturity, you can see that our maturity schedule on Page 53 is very smooth. We are, of course, taking advantage of the appetite of bond investors for long-term maturity to secure long-term duration on our debt and not having any refinancing at a too high level in the coming years.

And if you take into consideration the bank facilities that we have, we are covering all our maturities for the next 3 years. So of course, we have a very strong balance sheet.

And the result of that is our rating as we are A- and A3. Maybe to conclude, one word on our guidance.

So as you have seen, we have a consumer guidance at EUR 5.3 for 2021. In fact, it could be seen as a flat guidance.

But it's an increase in this guidance because you have to keep in mind that when we have guided this EUR 5.3 at the beginning of the year, we were considering no disposals. And as we have secured during this year, and we have done 5 -- EUR 400 million and EUR 450 million of disposals.

Of course, we are able since the work we've done on the operational side on our financing to compensate this disposal to offset the impact of these disposal. Without this disposal, I think that we should have been at EUR 5.4 per share.

So it means that this EUR 5.3 should be seen as clearly an updated guidance. And of course, we continue to reduce the risk of the portfolio with this disposal in terms of leverage and in terms of location.

What's also very important for us is, as you've seen, the long-term view we have on our business. That's something that you have to keep in mind when you are looking at our equity story.

We have thanks to our pipeline growth, which is embedded in the company, this EUR 120 million to EUR 130 million. And I think that when you look at what happened in this market during the first half of this year, when you look where our located most of this project, I think that we can have a conviction that the choice we've made in the past are the right ones and that these assets will clearly contribute to the growth of tomorrow, both in terms of NTA and in terms of FFO.

Thank you for your attention. And Méka, myself and of course, Samuel, sorry, are ready to answer to your questions.

[Operator Instructions]

Florent Laroche-Joubert from ODDO BHF. Thank you very much for this presentation.

So I would have 3 quick questions, so if I may. So my first question, so would be -- so is it possible to have more color on your -- on the recovery of the leasing activity outside of Paris, Neuilly and Levallois.

Do you see an improvement also on this perimeter? My second question is about LTV and opportunistic approach on the investment market.

So you have today LTV ratio, which is quite low. And you have said in your presentation that this LTV offers potential for [ opportunity for total ] investment market.

So are you looking at any major opportunity today or do you want to look at any major opportunity maybe in the coming months? And my third question, it's about the growth of cash flow per share.

So we know that you have a long-term strategy and you have an interesting midterm perspective. But maybe in a more short-term perspective, so are you looking at making your cash flow per share growing, for example, I don't know for 2022, 2023?

Is it something that you are looking at?

Three very good questions. Thank you.

Well, outside of Paris, Neuilly and Levallois the markets are very polarized. So we cannot make or just summarize and put everything in the same basket.

But if we look at what you are seeing, for instance, La Défense has been very active. There was some correction in the rents and now it is flattering.

But we are observing some transactions in La Défense. Now what we have to be very, very aware of is nobody today is going to move and take new spaces if these spaces are not high quality, high standards in terms of sustainability, high standards in terms of services.

So it's not -- the quality of each building and each location becomes much more important. It's really become very granular.

For instance, Carré Michelet is very, very, very attractive. And we have been very successful, of course, thanks to Valérie Britay, and also her team for what they have achieved so far.

But the quality of the building has attracted long-term tenants, and they have considered that they can have the best tool in order to develop their business in the future. And most of the conversations we had, this is interesting, too, it's not just about cost cutting.

The cost cutting comes from working from home/digitization, which is going to reduce the overheads actually one way or another. But the quality of location in order to attract talent and to be capable to deliver the goods and deliver the business and to grow the business, which has been the permanent conversations we had with our tenants at very high level, CEO, Chairman, strategic observation is this is what they are looking for.

So make a long story short, if you have a very average building, which is not reaching the good standards, not in the good location and not delivering the good services, there is no chance to find a tenant even at a very, very low rent. And this is the transformation we are seeing with all the sustainability and the commitment in terms of improvement of our standards, not only in our buildings, but globally in the market.

This becomes the standard of future. Nobody would accept that.

So what we are developing. So the second point, what we are developing in terms of improving the quality of our assets.

6 years ago when I joined the Board of Gecina, some people -- and we were encouraging the company to consider value creation and total return strategy. A couple of people around the table very wisely would say, why would you inject that much CapEx, whereas with a little bit of lipstick type of work?

You can lease at very low levels. And maybe it's lower.

But globally speaking, you can -- you are not injecting CapEx. And we see that it doesn't work today.

It doesn't work, and we did the right thing. I still believe that we did the right thing to improve the quality of our assets because this is becoming more and more touchy, including the fact that we are going to face taxonomies and all kind of difficult issues on the environmental side.

At the same time as tenants, they will simply not accept average buildings. That's it.

So this is much more polarized. Still believe that La Défense is a good market, but it has to improve.

Not all the buildings are at the right standards. There is a lot of [ absorbency ] in different areas.

But definitely, this is an attractive pace. Now when you are moving much more further in very secondary location, et cetera, what I said in terms of consequences of digitization of the obligation for the competition between corporates to attract talents and to be the best-in-class in whatever they are doing.

And the fact that they are improving the quality of their collaborators, et cetera, and attracting these talents, this is not going to work. And this is what we are seeing, by the way, in the market, not only in Gecina, but in other places.

Having said so though, we have improved our rents in La Défense, for instance, in Carré Michelet. We are seeing good signs in Boulogne or Issy-les-Moulineaux.

We are seeing good signs in the best buildings we have and the best buildings we have developed. I don't know if it really answers very precisely to your question, but we are seeing signs of improvement because the market is booming in the city center of Paris.

There is no expansion possible that much. So it goes to good buildings in those areas.

It will come, it will come slower, but it will come, and it's on its way. And we have signed a couple of good transactions in Boulogne, in Issy-les-Moulineaux, in other places still going forward.

Actually, there are a couple of signatures, which are going, hopefully, to be concluded by next week. Now I will start by growing cash flow per share.

This is something we are working on every single day. But it doesn't mean that we should keep mature asset or nonstrategic just for the sake to keep cash flow because it's -- over time, it becomes difficult to lease them if they became vacant.

If it becomes more, we need to inject more CapEx, and we are not even sure that we can really use them. This is not the right decision to be made for our shareholders.

So we still keep working on increasing the cash flow. We are working on that.

And by the way, we are looking at a couple of investments in the market. It works.

It doesn't work. We are very strict.

We are never a forced buyer. But still, we are working hard in order to improve the cash flow.

And with our balance sheet profile, we probably are in a better position to be capable to do so compared to others. And today, we can face that.

Now on opportunities we can observe, definitely, our profile also on the balance sheet will give us more capacity to observe that. Not that many opportunities, not only M&A side where it can be also the portfolios or other kind of collaboration.

That is something which is not -- which cannot be planned. You cannot say next week I'm going to do a big merger and acquisition.

It depends on what the conditions are, where it is located, what -- how much credit is going to be for the company and how it's going to create value. So this is a permanent job you are doing, but it needs confidentiality, and it needs to be done in a proper way and not just growing for growing.

We have seen in the past that growing for growing is not good for anybody in the market. So we need to make it even more accretive for the company, even more improving strength and giving capacity to the company to move forward.

And if you look at the figures coming from the development pipeline. If you look at the committed and secured pipeline, it's more than EUR 1 billion to be invested in the pipeline with a yield on cost of above 5% potentially, if we do nothing else, that's an impact of 5% on the LTV.

So it means that we have this growth which is embedded. We have the ability to finance it.

So as Méka said, we are not at all a forced buyer. We are able to deliver growth, sorry, in the coming years.

By the way, if I just want to -- of course, you cannot always talk about comparison with the past. But remember that we sold our health care sector in '16 -- actually, early '16.

And our LTV was low, around 29% as much as I recall. And the next year, we bought Eurosic.

So it's a question of patience, capacity and working hard and still keeping the strength of our balance sheet. I think we have a question on the line, Christopher Fremantle.

Can you hear me?

Yes.

So I just -- I had 2 questions that should be relatively short. The first is just asking for a little bit more detail on the 7% overall rent decline.

You provide some reasons in the release that explain, I think, a total of EUR 10 million. The actual decline in rents is more like EUR 25 million I think.

Can you just give a little bit more detail? I suspect it's assets transferred to the pipeline the prior year that accounts for the difference.

But if you could just confirm that, please. That's my first question.

Do you want to ask your second question also? Or you want us to answer this one first?

Yes, sure. Sure.

So the second question is about, I suppose, a follow-up on growth. So in 2021, I think the impact of disposals and assets transferred to the pipeline more than offset the growth from the new rents from your development pipeline.

And I just was asking if you could give some reassurance that, that is not likely to be the case again in 2022, i.e., that you can deliver some income growth in 2022? So a little bit of a follow-up on a previous question, please.

Well, maybe, Nicolas, you start and I'll jump in.

On the rent decline of 7% and which were, of course, something which was expected because we are in line with our guidance and for us internally with our budget, both in terms of rents, in terms of EBITDA, in terms of financial expenses. It's clearly largely part from asset transfer to the pipeline or assets refurbished during 2021.

Most of them is a refueling of the pipeline and a part coming from assets, which are today under redevelopment, but should be delivered quickly, I think, in 2020 beginning -- end of 2021, beginning of 2022. I do not have the detail of the EUR 25 million on top of my head, but I think that Samuel will have all the numbers if needed.

Regarding the growth for dispositions. I think that maybe leaving the mic to Méka.

Of course, we had a decline of compensation between the disposals and the deliveries and the like-for-like in 2021. But you have also to keep in mind, if we look at the years before, all the growth in NAV that we have generated, thanks to the disposals, disposals made about above market values, and, of course, value creation coming from the pipeline.

So of course, that's important to look at the cash flow as Méka said that's a metric that we are looking at very carefully. But we have also to look at it globally speaking, with the growth that we are also delivering in NAV.

Yes. To add and complete the comments made by the answer brought by Nicolas, actually, the decline in rents was more or less expected because the guidance we gave at the beginning of this year before any disposition was 5.3% compared to last year, which was much higher.

And this is because of the dispositions we made and the assets we transferred to the pipeline. So this is the combination of the two, and it was expected.

Now the reality is that if you look at our guidance, we are much better because the 5.3% is confirmed after dispositions which means that we -- if we haven't done these dispositions, we would be EUR 0.10-ish above the 5.3% on full year, if you want to compare apple-to-apple. The growth in 2022, I think that the '21 is a low-level year.

But in '22, we should start to see growth in rents because as Nicolas said, a large part of our negotiations and the signatures we made also will start to deliver IFRS rents during the course of '22. And of course, some of our buildings, which are going to be completed, like L1ve, like others will come into operation and will deliver also rents and more to come.

So I'm -- I don't believe that it is pessimistic and we should consider that we are not going to have a growth in '22. I think that this is a low level.

We knew that we'll end up there. Of course, we have also been hit by COVID, but we have been very resilient and very strong.

And now we are preparing the next set of good news in terms of rents and revenues actually of cash flow. Thank you.

Maybe if there is another question coming from Jonathan Kownator.

Just a follow-up, obviously, to Chris' questions. Maybe if we can add more numbers to that, effectively, are you expecting to continue disposals to the tune that you have, or do you think that [ sits ] effectively with almost like EUR 500 million already this year, you're pretty much done and you got the portfolio where you wanted to in terms of quality.

So that's question number one. And then question number two, obviously, you have a number of controlled and certain projects as well.

So how much rent are you planning to lose next year from assets that you're going to put into redevelopment from -- over the next, say, 12 to 24 months?

I will start and then over to Nicolas or Samuel to answer your second question. Again, disposition for Gecina, as you probably can notice, it's not a question of deleveraging or paying back our debts or whatever.

it's just a question of considering the maturity of the assets and considering this is the right time to dispose whether the asset is no more strategic and/or no more -- or getting mature, we consider that we are done with the value creation. Now there is one thing.

I'm sure that -- and I absolutely agree with the concerns you may have in terms of increasing the revenues, and this is something we're working hard on every single day by working on each of our KPIs in each of the lines. But ultimately, some of the assets over time, whether they are not in good locations, whether they are not in the good standards, et cetera, they are becoming a nonvalue because if they cannot be the right place to track tenants, it won't work.

So the reason we are keeping to continue and by the way, most of our colleagues in the market are following our path. But not at the same speed, because probably -- and maybe we are wrong, I don't know if we are right or wrong, but we consider that we are right that the transformation and the standards and especially the environmental issues will become so important that we cannot escape that.

And this is something we have to integrate globally and continue to improve the quality of our assets. Otherwise, this is going to be discremental to our -- to the whole stakeholders and especially shareholders ultimately.

So this is not the point...

I fully agree just...

This is a question of considering -- and you know that we have no target in terms of disposition because we need to sell such an amount per year and consider whether it makes sense or not. But this is a question of improving and becoming more and more high standards in the type of assets you are delivering or not.

Of course, you should have an assessment [indiscernible]

Samuel do you want to take the...

Sorry. Just wanted to follow up.

If you want to try to have an idea of how many potential rents we can imply so to launch the controlled and certain pipeline. You have the details when you're looking at the table for annualized rents.

And we say that in the annualized rents as of end June 2021, there are EUR 21 million of rents, which are -- which have been get from assets, which are set to be delivered ahead to be restructured ahead and transferred to the pipeline. If you go maybe on the slide shown on Page 45, so that's -- we are talking about the rent box, this EUR 21 million mostly.

And that corresponds to the asset that will generate the bar that you have on the additional rents from controlled and certain pipelines, so that's deliveries that you can expect between 2023 and 2026, so roughly for the purpose of your model, you can expect the EUR 21 million from annualized base rents are likely to be unplugged, let's say, between 2022 and 2024.

Okay. If you can hear me, sorry, just 1 follow-up.

Just on the disposals, obviously. You should have an assessment of what is mature and what is noncore at this stage.

So is there more numbers to that? How much of your portfolio today is mature and noncore and you could consider still disposing, not going to pin you on the target or on the timeframe, but just an assessment on your overall portfolio?

This is not a number that we are publishing and the reason is that we are looking at each of every assets all the time and considering whether it works or not and depending what our demands on the markets are. But it's not something that is structuring the market and considering that what is that about.

So we do not follow that and consider. We do not consider that -- we have an amount that we have to dispose every year.

Again, this is maybe because we don't need that in terms of reducing our LTV over time. But probably something that -- but what you have in our pipeline is also an indication of what we consider to add to, to be considered and to be improved in the coming period.

Like if an asset in the pipeline is fairly refurbished and high standards, but we consider that once leased it is mature, and we cannot make any more value out of it. We're going to dispose.

So this is about value creation. And ultimately, this is about distribution and the distribution is also part of the capital gain that we have to do by law.

So we -- this is a combination of the two, and this is what we do over time. Next question on the line from Paul May of Barclays.

If it's a reading question. Samuel, you can maybe take this one, please.

Paul May from Barclays is asking us about the Google mobility data for Paris versus London. I think that both seems to be at minus 40% for workplace Monday to Friday with a strong recovery in the [ recurring ] levels and the weekend.

Is the Monday to Friday not a better representation of the traffic, in which case Paris and London are broadly similar for opening? Thanks for your question.

Actually, we are looking at all figures. The figures that we are using is average on the whole week.

But even if we are taking some figures from Monday to Friday, there is still a significant difference between Paris and London. And I'm not -- we're not so sure that the reason why Paris is ahead of London in terms of way back to the office, maybe it's something to do with the way the city is built.

So we are talking about urbanistic definition of the city and knowing that Paris City, for instance, is 6x more dense than London. So probably suggest that people are living close to the place they work in and probably in a smaller flat as well, which is -- which are also drivers that can bring people back to the office quicker than London maybe.

But that's only guess. The truth is that the statistics, which were disclosed by Google, even if you exclude the weekends, shows the same ranking between the cities.

The other factor, which is more technical, so maybe you can discuss it if you want, Paul, but the figures are a bit weaker in July, for instance, and that's because we are comparing the traffic compared to a fixed point over the year. It means that when you are entering into a holiday period, then it seems to be weaker than before.

But the truth is that we have seen June, a strong recovery in the past back to the office along the period of time when the constraints fade out regarding the health crisis. And that's something that's a part of way back to the office and something in line with the discussion we can have -- we had with some of our tenants and some of our users as well.

Yes. Thank you, Samuel.

And I would add to that, it, of course, today, we cannot compare that much what is going to be working from home or not because there is still restrictions everywhere. France has been reopen something around 21st of June or maybe end of June or early July.

This is not yet in London maybe this week. I think that you cannot compare if you have those kind of restrictions and those kind of discussions.

And you know that everywhere in the world, especially in our countries, we have those conversations. So we probably will see -- if we are going to normalization in that area, which is not yet the case, we'll see how we can compare so far.

Having said so, though we have already seen working from home before COVID, probably this is going to be much more organized and we're going to see what are going to be the consequences of that, at the same time, as digitization is going to move faster than ever. There is another question coming from Marie Dormeuil.

You described tenants exclusively looking at prime quality space how much of your standing portfolio would not fit in this category? And from there, how much of this arguably obsolete stock would you consider selling versus redeveloping?

Very good question. Actually, as we mentioned, when I'm talking prime quality space, I'm not talking specifically in the Paris City only.

And this is not about that. For instance, you have seen that we have signed a redevelopment, actually pre-leasing and redevelopment with Edenred in Montrouge, which is next to Paris for actually 12,000 square meters to be redeveloped for them ahead of time and with the large tenants coming forward.

So this is something depend on the -- but the standards matters, the quality of the location matters, the quality of the services matters. Actually, if you look again at our -- so 2 answers.

73%, 75%, maybe now of our portfolio is located in Paris and Neuilly-Levallois in the best areas. So it gives you an idea of what the quality of our locations are and where we consider that roughly, not on all assets because we consider every assets one by one, consider whether we redevelop or sell but definitely consider the 2 -- these assets are in markets that deserve our consideration in terms of redeveloping and repositioning.

For the rest, it's really case by case that we are considering. It doesn't mean that everything is obsolete, and it doesn't mean that everything which is obsolete cannot be fixed and get to a better market.

And it doesn't mean that if it is refurbished and the arbitrage is between refurbishing, leasing and selling or selling as is. And we definitely, all the time consider those optionality between sell and/or redevelop and consider whether it makes sense or not.

But I gave you a couple of numbers that give you a scheme of what can be considered as very solid and all the rest that which are important to consider and still contributing. We said that 93% of our portfolio has still a potential of the office portfolio potential of reversion to come around plus 5%.

So we still have capacity to go and extract those values even -- actually even more after the COVID crisis. I don't see any other questions online.

Any other questions in the audience? No.

Well, of course, we remain 100% available, and we'll have the chance to see most of you directly or through screens during the course of the next week. Do not hesitate to revert to us and especially to Samuel and his team, but also Nicolas and myself to -- if you have any questions or any comment, we will consider.

Thank you very much for your attention. Have a good day and excellent weekend and a nice vacation.

Thank you.