Operational and strategic successes in a
changing environment 2023 guidance revised upwards
Regulatory News:
Gecina (Paris:GFC):
- Recurrent Net Income (Group share) per share growth of +7.5%
(+4.5% in 2022)
- Gross rental income up +8% on a current basis driven by
reversion (+15% for offices), occupancy (+80bp), indexation and
pipeline
- Disposals: €1bn with a +10% premium versus the end-2022
appraisal values and 2.5% loss of rental income
- Improvement in all debt metrics (LTV down to 32.2%)
- Efficiency plan generating a -17% reduction in energy
consumption over 6 months
- 2023 guidance revised upwards: 2023 recurrent net income per
share expected to be up +6% to +8%
First-half Recurrent Net Income (Group
share) up +7.5% (€2.93 per
share)
- Like-for-like rental income growth of +6.9% (+7.5% for
offices) driven by:
- Improvement in occupancy (+1.6%), with the average occupancy
rate up +80bp over six months
- Indexation that is ramping up (+4.2%)
- Rental uplifts (+1.1%)
- Pipeline’s positive net contribution (+€7m over six
months)
- Average cost of debt under control at 1.4% (1.1%
for drawn debt)
Operational performances and market
trends that confirm Gecina’s positioning
- Leaing trends confirmed in central areas
- Reversion captured on offices, with +33% for Paris and +15%
overall
- Residential reversion of +13% captured
- Market vacancy rate in Paris’ Central Business District
at an all-time low (c.2% source JLL)
- Pipeline deliveries scheduled over the next 12 months,
82% already pre-let
Significant improvement in all debt
indicators in an uncertain financial context
- €1bn of disposals with an average premium of +10% versus
the latest appraisals and a loss of rental income of 2.5%,
executed in a quiet investment market, resulting in:
- LTV down -150bp in six months to 32.2% (including
duties) despite the -4% drop in valuations like-for-like (with the
NTA down by -6%)
- Liquidity further strengthened, now covering bond
maturities until 2028
- Debt now 95% hedged on average through to
2027
Strong reduction in energy consumption
with the efficiency plan launched in 2022
- Average energy consumption reduced by around -17%
over six months for the office buildings managed by Gecina
following the efficiency action plan rolled out
- Roadmap to reduce carbon emissions per sq.m by -75% since
2008, in line with the carbon ambition “CAN0P-2030”
Recurrent net income per share growth
of +6% to +8% now expected for 2023
- Operational performances exceeding expectations
(positive trends on central markets)
- Disposals carried out with an accretive impact on
recurrent net income
- Strong control over operating expenses in an
inflationary environment
2023 recurrent net income growth
guidance upwards, with €5.9 to €6.0 per share now expected (vs.
€5.8 to €5.9 initially), up +6% to +8% compared with 2022 (vs. +4%
to +6% initially)
Beñat Ortega, Chief Executive Officer: “The first half of
this year confirms the performance achieved in 2022, reflecting
Gecina’s strong operational successes in central areas and our
proactive long-term debt management, giving us visibility over our
financial expenses. The confirmation of these trends further
strengthens our confidence, enabling us to raise our guidance in
recurrent income per share for 2023.
In an uncertain context, with a disrupted macroeconomic
environment, but favorable leasing trends for Paris City, we have
decided to optimize and accelerate the Group’s dynamic capital
allocation strategy.
During the first half of 2023, we sold €1bn of mature real
estate assets, above their appraisal values and with a loss of
rental income of only 2.5%, enabling us to further strengthen the
quality of our balance sheet, which was already particularly
robust, in addition to financing our pipeline, concentrated
primarily in Paris and driving strong value creation, and offering
us an opportunistic financial headroom.
In the context of a new reality on the real estate markets,
today we are building the foundations for a Group that will be
better positioned to deliver sustainable outperformance”.
Jun-22
Jun-23
Change
Like-for-like
Offices
244.7
266.6
+9.0%
+7.5%
Traditional residential
53.4
55.6
+4.1%
+4.6%
Student residences
10.1
10.7
+6.1%
+6.2%
Gross rental income
308.2
332.9
+8.0%
+6.9%
Recurrent net income (Group share)1
201.2
216.5
+7.6%
Per share (€)
2.73
2.93
+7.5%
Dec-22
Jun-23
Change
LTV (excluding duties)
35.7%
34.1%
-160bp
LTV (including duties)
33.7%
32.2%
-150bp
EPRA Net Reinstatement Value (NRV) per
share
189.5
176.9
-6.6%
EPRA Net Tangible Assets (NTA) per
share
172.2
161.4
-6.3%
EPRA Net Disposal Value (NDV) per
share
183.8
172.2
-6.3%
Recurrent net income: strong growth
In million euros
Jun 30, 2022
Jun 30, 2023
Change (%)
Gross rental income
308.2
332.9
+8.0%
Net rental income
277.8
301.3
+8.5%
Operating margin for other business
1.4
1.0
-28.1%
Services and other income (net)
1.3
1.9
+52.7%
Overheads
(39.1)
(39.7)
+1.6%
EBITDA - recurrent
241.4
264.6
+9.6%
Net financial expenses
(38.5)
(47.5)
+23.4%
Recurrent gross income
202.9
217.0
+7.0%
Recurrent net income from associates
0.7
1.1
+55.2%
Recurrent minority interests
(0.9)
(0.9)
+6.0%
Recurrent tax
(1.6)
(0.8)
-52.4%
Recurrent net income (Group share)
(1)
201.2
216.5
+7.6%
Recurrent net income (Group share) per
share
2.73
2.93
+7.5%
(1) EBITDA excluding IFRIC 21 after deducting net financial
expenses, recurrent tax and minority interests, including income
from associates and restated for certain non-recurring items.
Recurrent net income (Group share) came to €2.93 per share, up
+7.5%, thanks to the combination of robust leasing trends, the
increase in the rental margin and the good control of overheads and
financial expenses.
Like-for-like rental
performance: +€19m
This change takes into account the increase in the occupancy
rate, the gradual impact of indexation and the positive rental
reversion secured.
Pipeline (deliveries and
redevelopments): +€7m net change in rental income
Recurrent net income (Group share) benefited from a positive
effect of the pipeline, with the impact of building
deliveries higher than the temporary effects of the assets made
unavailable for rent with a view to being redeveloped.
- +€13m of additional rental income generated by the
recent deliveries of buildings under development: “157 CDG” in
Neuilly and “l1ve” Paris-CBD in 2022, as well as Boétie Paris-CBD
and a residential building in Ville d’Avray during the first half
of 2023.
- The buildings to be redeveloped reduced first-half rental
income by -€6m, including the launch of work to redevelop
the Icône building (previously 32 Marbeuf in Paris CBD) and 27
Canal (previously “Flandre” in Paris City).
Asset disposals: -€2m net
change in rental income
The significant volume of disposals completed since the start of
the year (€1bn of disposals, with a loss of rental income of around
2.5%) was concentrated primarily at the end of the second quarter.
The impact on rental income is therefore moderate for the first
half of the year.
Rental margin up +40bp
Group
Offices
Residential
Student
Rental margin at Jun 30, 2022
90.1%
92.1%
82.5%
82.4%
Rental margin at Jun 30, 2023
90.5%
93.2%
80.5%
75.5%
The rental margin is up +40bp over 12 months. This growth is
linked primarily to the higher average occupancy rate and costs
being charged back to tenants more effectively, offsetting the
increase in local taxes.
Overheads under control
In an inflationary context, the Group paid particularly close
attention to changes in its overheads. This focus has started to
deliver benefits across all of the Company’s cost areas. As a
result, the EBITDA margin shows a significant increase, up +110bp
year-on-year.
Financial expenses: up
+€9m
The disposals completed during the first half of the year have
not yet had any impact on financial expenses. However, the impact
on them will be immediately visible from the start of the second
half of the year.
Financial expenses are up +€9m over 12 months. This increase is
firstly due to a volume effect because the average net debt is up
+€239m between the first half of 2022 and the first half of 2023.
However, this increase also reflects a base effect compared with
the first half of 2022, before the hedging facilities (caps) were
fully activated. The average cost of debt has virtually stabilized
since the second half of 2022 following the activation of these
instruments (with an average cost of 0.2%), confirming the
effectiveness of the Group’s debt hedging and further strengthening
its visibility over the cost of its debt for the coming half-year
periods.
Gross rental income up +8% on a current basis
Gross rental income
Jun 30, 2022
Jun 30, 2023
Change (%)
In million euros
Current basis
Like-for-like
(%)
(%)
Offices
244.7
266.6
+9.0%
+7.5%
Traditional residential
53.4
55.6
+4.1%
+4.6%
Student residences
10.1
10.7
+6.1%
+6.2%
Total gross rental
income
308.2
332.9
+8.0%
+6.9%
Like-for-like, the acceleration in performance exceeded
the levels reported at end-2022, with rental income growth of +6.9%
overall (vs. +4.4% at end-2022) and +7.5% for offices (vs. +4.6% at
end-2022).
All of the components contributing to like-for-like rental
income growth during the first half of this year are trending
up.
- The impact of the increase in the occupancy rate
contributed +1.6% to like-for-like growth. - The gradual impacts
of the acceleration in indexation contributed +4.2%. -
Rental reversion was captured for both offices and
residential: the capturing of this reversion contributed +1.1% to
organic rental income growth.
With these positive trends on all Gecina’s business lines,
like-for-like rental income growth of around +6% is
expected for the full year in 2023.
On a current basis, rental income is up by nearly +8%,
benefiting from not only the robust like-for-like rental
performance, but also the pipeline’s strong net rental
contribution (+€7m), particularly following two major
deliveries of office buildings in 2022 in Paris and Neuilly and two
new deliveries in 2023 with the “Boétie” office building (Paris
CBD) and a residential building in Ville d’Avray.
Offices: positive rental trends
Gross rental income - Offices
Jun 30, 2022
Jun 30, 2023
Change (%)
In million euros
Current basis
Like-for-like
Offices
244.7
266.6
+9.0%
+7.5%
Central areas (Paris,
Neuilly, Southern Loop)
179.3
194.2
+8.3%
+5.8%
Paris City
143.3
154.7
+8.0%
+6.3%
- Paris CBD & 5-6-7
88.4
99.1
+12.1%
+6.9%
- Paris - Other
54.8
55.6
+1.3%
+5.4%
Core Western Crescent
36.0
39.5
+9.8%
+3.6%
La Défense
30.7
35.2
+14.5%
+14.5%
Other locations
34.7
37.2
+7.3%
+8.8%
Increase in occupancy rate, positive
reversion, indexation
Gecina has let, relet or renegotiated nearly 84,000 sq.m
since the start of the year, with a strong level of lettings
activity, in the context of a reduction in the vacancy rate in the
central markets where Gecina operates.
- The vast majority of the transactions carried out
during the first half of the year concerned relettings or
renewals of leases.
- Overall, the average reversion captured came to
+15%
- This performance, driven by central sectors in particular, was
further strengthened during the first half of the year, with
reversion reaching over +30% in Paris City.
- The remaining 10% of transactions mainly concerned
buildings that were delivered recently or under development:
they included the signing of a lease for the 35 Capucines building
in Paris’ Central Business District.
Iconic transactions confirming the
Group's strategic positioning
Among the latest rental transactions secured since the start of
the year, some operations highlight the very good performance by
central markets for high-quality buildings.
During the first half of the year, the Group secured
several rental transactions at close to or over €1,000/sq.m/year in
Paris’ Central Business District, confirming the widespread
adoption of a new rental benchmark, including:
- 35 Capucines (6,300 sq.m): nearly half of the building
pre-let to a law firm (delivery expected for the second quarter of
2024) - 24-26 Saint-Dominique (7,900 sq.m): half of the
building pre-let to a private equity player (from the second half
of 2024), following the BCG Group’s relocation to the l1ve building
in Paris’ CBD
These transactions add to the list of rental transactions
secured recently over the last 12 months based on these same levels
of rent, with the 3 Opéra, 16 Capucines and 44 Champs-Elysées
buildings.
The Group also let 8,700 sq.m in Boulogne-Billancourt in the
Horizons building, with rents now over €500/sq.m.
85% of the Group’s portfolio is located in Paris City,
Neuilly-sur-Seine/Levallois or the Southern Loop (primarily
Boulogne-Billancourt), concentrated in the sectors with the most
positive trends, benefiting from the polarization of the markets.
In these sectors, the theoretical timeframe to clear the stock of
vacant space is short, particularly in Paris and Neuilly (around
0.4 years), where it has been decreasing regularly in the last few
years.
Change in gross rental income for
offices
Like-for-like office rental income
growth came to +7.5% year-on-year (vs. +4.6% at
end-2022), benefiting from an improvement in the occupancy rate
across our buildings for +1.9%, as well as a positive indexation
effect which is continuing to ramp up (+4.8%), passing on the
return of an inflationary context, as well as the impact of the
positive reversion captured in the last few years (+0.8%).
- In the most central sectors
(85% of Gecina’s office portfolio) in Paris City,
Neuilly-Levallois and Boulogne-Issy, like-for-like rental income
growth came to +5.8%, benefiting from an improvement in the occupancy rate (+0.7%),
positive indexation (+4.5%) and other
effects including positive rental
reversion (+0.9%).
- On the La Défense market (8%
of the Group’s office portfolio), Gecina’s rental income is up
+14.5% like-for-like:
- Two thirds of this performance factor in a significant increase
in the occupancy rate for the Group’s
buildings, resulting from the arrival of tenants in the second half
of 2022 with the leases signed previously on buildings that were
vacant (Carré Michelet, Adamas).
- Reversion had a marginally
positive impact on this sector (+0.2%).
Rental income growth on a current
basis came to nearly +9% for offices, reflecting the
impact of the pipeline’s positive net contribution (+€7m net of
tenant departures from buildings to be redeveloped), notably taking
into account the delivery of the “l1ve” building during the second
half of 2022 and the “Boétie” building during the first half of
2023, which are both located in Paris’ Central Business District,
largely offsetting the buildings vacated and currently being
redeveloped (Icône-Marbeuf and 27 Canal-Flandre in Paris).
The impact of disposals completed during the first half of the
year is moderate at this stage (-€2m).
Residential: operational trends confirmed during the first
half of the year
Gross rental income
Jun 30, 2022
Jun 30, 2023
Change (%)
In million euros
Current basis
Like-for-like
Total residential
63.5
66.3
+4.4%
+4.9%
Traditional residential
53.4
55.6
+4.1%
+4.6%
Student residences
10.1
10.7
+6.1%
+6.2%
The residential division’s rental income is up +4.9%
like-for-like. This performance reflects the impact, on an
equivalent basis, of indexation, rental reversion and
the higher occupancy rate in our buildings (+190bp
year-on-year).
YouFirst Residence: strong
operational trends
Like-for-like, rental income from traditional residential
properties is up +4.6%.
This performance takes into account the impacts of positive
indexation (+2.5%) and the positive reversion (+1.2%)
secured on the apartments relet, with an verage uplift of
+13%.
YouFirst Campus: strong
upturn in activity
Rental income from student housing portfolio is up +6.2%
like-for-like and +6.1% on a current basis, reflecting the gradual
improvement since the third quarter of 2021.
This performance is linked primarily to the significant
reversion captured (contributing +5.5%).
Financial occupancy rate up +80bp over six months and
+160bp year-on-year
Average financial occupancy rate
Jun 30, 2022
Sep 30, 2022
Dec 31, 2022
Mar 31, 2023
Jun 30, 2023
Offices
91.8%
92.3%
92.8%
94.5%
93.8%
Traditional residential
96.8%
96.5%
96.7%
97.1%
96.3%
Student residences
86.3%
82.7%
86.0%
93.4%
86.8%
Group total
92.3%
92.5%
93.1%
94.9%
93.9%
The Group’s average financial occupancy
rate is at a high level, with 93.9%, up +160bp over
12 months and +80bp over six months, reflecting the benefits of
the strong upturn in rental transactions since the second quarter
of 2021 and the digitalization of letting processes, making it
possible to reduce transition vacancies in residential assets, as
well as the normalization of occupancy levels for student
residences.
For offices, the performance reflects the robust trend
for leasing transactions, the delivery of buildings during the last
12 months that were fully let (l1ve-Paris CBD and Boétie-Paris
CBD), the leases signed during previous quarters that came into
effect in the second half of 2022.
However, this rate decreased during the second quarter of 2023.
This decrease is temporary because it reflects the departure of
tenants from three buildings located in Paris and Neuilly, with the
majority of their space already relet, which are subject to
small-scale renovation works. The completion of these works,
expected for mid-2024, will enable the future tenants to occupy the
building, resulting in a mechanical improvment of the average
financial occupancy rate.
For traditional residential, the moderate contraction in
the occupancy rate (-50bp over one year) follows the delivery of a
residence during the first half of the year (in Ville d’Avray),
where occupancy levels are gradually ramping up.
For student housing, the occupancy rate shows a slight
increase year-on-year (+50bp) and over six months (+80bp), but
is down over three months, once again reflecting a temporary
effect, linked to the digitalization of letting processes. The
Group expects this rate to normalize over the coming quarters.
Portfolio value: positive rent effect in central sectors,
moderating the impact of an increase in capitalization rates
Breakdown by segment
Appraised values
Net capitalization
rates
Like-for-like change
In million euros
Jun 30, 2023
Jun 30, 2023
Dec 31, 2022
Jun 2023 vs. Jun 2022
Jun 2023
vs. Dec
2022
Offices (incl. retail units)
14,632
4.5%
4.2%
-7.2%
-4.5%
Central areas
12,428
3.9%
3.6%
-5.5%
-3.4%
- Paris City
10,121
3.6%
3.3%
-4.6%
-2.8%
- Core Western Crescent
2,308
5.0%
4.6%
-8.5%
-5.4%
La Défense
1,107
6.7%
6.0%
-14.1%
-9.8%
Other locations
1,097
8.3%
7.5%
-14.3%
-8.6%
Residential (block)
3,801
3.2%
3.1%
-4.5%
-2.2%
Hotels & finance leases
49
Group total
18,482
4.2%
4.0%
-6.6%
-4.0%
Total value: unit appraisals
19,035
-6.3%
-3.8%
The portfolio value (block) came to €18.5bn, with
a like-for-like value adjustment of -4% over six months
and nearly -7% over 12 months. However, this change includes very
contrasting trends depending on the areas, with a polarization of
the markets, once again benefiting the most central sectors.
Offices: adjustment of
capitalization rates partially offset by positive rent effects in
central sectors
The value of our office portfolio shows a decrease of around
-4.5% on average over six months and -7.2% over 12 months.
- Reflecting the impact of an adjustment in yields (“yield
effect”), with a negative impact across all sectors (-6%
to -8% for the first half of the year).
- Combined with a “rent effect” reflecting the different
trends of the Paris Region’s rental markets. This effect is
positive in Paris City (+5%) and the Core Western Crescent
(Neuilly and Boulogne) with nearly +3%, but it is negative
elsewhere (-3% to -6%), in the Paris Region’s less central
sectors.
The very strong weighting of Gecina’s portfolio in the most
central sectors, where rental trends are particularly positive,
made it possible to moderate the value adjustment for the first
half of the year.
Over 24 months, the trends in terms of life-for-like value
growth reflect a significant adjustment due to yield expansion,
offset by a very favorable rent effect in the central areas.
- The “yield effect” (negative macroeconomic effect
attributable to an increase in capitalization rates) negatively
affected the value of assets across all asset classes by around
-14%. - However, the “rent effect”, attributable to
rental trends in each sector, show significant differences between
locations.
- This “rent effect” is negative for more peripheral areas
(Inner and Outer Rims), where it reached -10%,
accentuating the decrease in value for the assets concerned.
- However, it is significantly positive for the central
sectors (+15% in Paris), offsetting the drop in value
resulting from the increase in rates.
Residential: resilient
values
For the residential portfolio, the valuation retained is
down slightly with -2.2% over six months (-2.2% for
traditional residential, -1.7% for student housing) and -4.5% over
12 months (-4.8% for traditional residential and -2.3% for student
housing).
NAV: Net Tangible Assets (NTA) of €161.4 per share (-6%
over six months)
Net Disposal Value (NDV) of €172.2 (-6% over six months)
- The EPRA Net Disposal Value (NDV) was €172.2 per
share (-6% over six months). It represents €179.7 per share
including the unit values for residential. - EPRA Net Tangible
Assets (NTA) came to €161.4 per share (-6% over six
months). They represent €168.8 per share including the unit
values for residential. - The EPRA Net Reinstatement Value
(NRV) came to €176.9 per share (-7% over six months).
It represents €184.9 per share including the unit values for
residential.
This change primarily reflects the like-for-like adjustment in
the portfolio value.
The scale of this contraction in the NAV was reduced by the
Group’s moderate leverage effect, with an LTV (including duties) of
32.2% today.
The change in EPRA Net Tangible Assets (NTA) per share came to
-€11 over six months, with the following breakdown:
- Dividend paid in H1 2023: - €2.65 - H1 2023
recurrent income: + €2.9 - Value adjustment linked to the yield
effect: - €17.2 - Value adjustment linked to the “rent” effect: +
€6.6 - Capital gains on sales: + €1.2 - Other (including IFRS 16):
- €1.7
Capital allocation: €1bn of disposals immediately
accretive, with positive impacts across all debt KPIs
€1bn of disposals
Since the start of the year, Gecina has completed nearly €1bn of
disposals. All of the assets sold achieved a premium versus the
latest appraisal values, with an average of +10%. For information,
this premium represents +17% compared with the end-2019
appraisals.
These sales were completed with an average loss of rental income
of 2.5%.
Specifically, the Group sold:
- three office buildings in Paris’ Central
Business District (129 Malesherbes, 142 Haussmann and 43
Friedland), representing over 5,100 sq.m. - one office building
located in Cergy-Pontoise (around 10,000 sq.m) - one residential
building in Courbevoie (16,600 sq.m) - the 101 Champs Elysées
building, occupied by LVMH (nearly 10,000 sq.m)
Use of proceeds from the
sales
In the short term, the
proceeds from these sales have been used to replace short-term
financing facilities (commercial paper) with an average cost of
around 3.5%, resulting in an accretive impact on recurrent
net income per share.
These sales had a positive impact on Gecina’s debt KPIs
(LTV, ICR, net debt/EBITDA), as well as the level of available
liquidity, now enabling it to cover all of bond maturities
through to 2028 (at constant debt levels).
These disposals are also enabling the Group to optimize its
debt hedging with a view to increasing its duration and level
over the medium term. Based on the current level of debt, the
Group’s debt is fully hedged for the second half of 2023, with its
hedging rate gradually decreasing to reach 75% in 2027. The
hedging rate is now 95% on average through to the end of
2027.
Over the medium term, these
disposals have secured all of the financing for the pipeline of
committed projects for which the return on capital employed is very
significantly higher than the loss of rental income.
Alongside this, the strengthening of Gecina’s solid balance
sheet structure opens up opportunistic financial headroom for the
coming years.
€160m of investments made, primarily on
development projects
70% of the €160m of investments spent during the first half of
2023 were focused on the development pipeline or projects delivered
during the year.
The remaining corresponds to investments to improve the
residential and commercial portfolio, helping capture the reversion
potential.
Balance sheet and financial structure: debt structure
further strengthened during the first half of the year
Ratios
Covenant
Jun 30, 2023
Loan to value (block, excl. duties)
< 60%
34.1%
EBITDA / net financial expenses
> 2.0x
5.3x
Outstanding secured debt / net asset value
of portfolio (block, excl. duties)
< 25%
-
Net asset value of portfolio (block, excl.
duties) in billion euros
> 6.0
18.5
Since the start of the year, Gecina’s debt structure has been
further strengthened, reflecting the impact of a significant volume
of disposals, contributing to the improvement in all the
characteristics of the Group’s debt.
Gecina has also aligned its financing with its CSR convictions,
setting up new responsible credit lines and requalifying all of its
outstanding bonds as Green Bonds.
€575m of new financing secured since the start of the year
Since the start of 2023, thanks to its strong financial ratings,
Gecina has proactively secured €575m of new debt under favorable
conditions.
- €325m of bank loans - including €180m of undrawn credit lines -
with a maturity of 6.1 years based on equivalent financial
conditions (margin) to the other existing credit lines.
- €250m of bond financing, with an average maturity of 8.4 years
and a margin of 91bp.
LTV down to 32% (including duties)
The reduction in the Group’s net
debt (to €6.3bn at end-June 2023 vs. €7.2bn at
end-December 2022), particularly following the disposals completed
during the first half of the year, consolidated the LTV at
around 32% (including duties), and also significantly improved
the ICR and the net debt/EBITDA ratios.
Liquidity further strengthened, making it possible to cover bond
maturities through to 2028
Alongside this, access to liquidity has
been significantly strengthened, thanks to nearly €5.3bn
of available liquidity, with €4.1bn of liquidity net of short-term
financing facilities, considerably higher than the long-term target
of €2.0bn. To date, this surplus liquidity makes it possible to
cover the bond maturities through to 2028, i.e. one more year than
the situation published at the end of 2022.
Excellent visibility over the hedged cost of debt, with over 90%
hedging maintained through to 2026
In terms of the sensitivity of the
Group’s average cost of debt, Gecina capitalized on the
opportunity offered by a high volume of sales during the first half
of the year to also optimize the hedging of its debt. Based on the
current level of debt, the Group’s debt is fully hedged for the
second half of 2023, with its hedging rate gradually decreasing to
reach 75% in 2027. The hedging rate is now 95% on average
through to the end of 2027. For comparison, Gecina’s debt at
end-2022 was 90% hedged on average through to just 2025.
The ICR represents 5.3x (vs. 5.5x one year ago). It
does not yet include the impact of the sales completed
mid-2023, which will significantly improve this indicator.
The secured debt ratio is still 0%, giving Gecina significant
headroom in relation to its bank covenants.
Project pipeline: €2.6bn of outstanding quality projects
phased over the coming years (€862m to be invested)
With a committed pipeline of around €1.4bn and a €1.2bn
controlled and certain pipeline that could be launched over the
coming years, the Group is expected to benefit from a strong
leverage effect on rental income growth between 2023 and 2027.
€1.4bn of committed projects
(deliveries for 2023-2025), €372m of investments still to be made
and €70m of potential rental income
The office projects under development are concentrated primarily
in central sectors, with 92% of the committed pipeline for
offices in Paris City, for an expected yield on cost of around
5.6%. This yield on cost is up 30bp over six months, linked
primarily to the combined impact of an increase in the rental
income expected, as well as an excellent level of control over
construction costs.
Nearly 30% of the committed pipeline is also made up of
residential assets. In total, 16 projects are currently
committed to and will be delivered between 2023 and
2025.
This pipeline includes the “Icône” redevelopment project
(previously “32 Marbeuf”, 13,300 sq.m) in Paris’ Golden Triangle,
with delivery scheduled for early 2025, and three other projects in
Paris, with “27 Canal” (previously “Flandre”, 15,300 sq.m), “Mondo”
(previously “Bancelles”, 30,100 sq.m) and “35 Capucines” (6,300
sq.m), at the heart of Paris’ Central Business District, very close
to Place de l’Opéra.
For these buildings, the letting processes have been
particularly active, and nearly 50% of the space in the 35
Capucines building was already pre-let during the first half of the
year.
Major source of growth for coming years
Over the next 12 months, and primarily during the first
half of 2024, seven projects are scheduled to be delivered:
- two office projects, with 82% pre-let (Porte
Sud–Montrouge and 35 Capucines–Paris-CBD)
- five residential projects in Paris and Rueil
At end-December, €372m were still to be invested on committed
projects, with €158m by end-2023, €198m in 2024 and €16m in
2025.
€1.2bn of “controlled” projects
and €490m of investments
that could potentially be launched over the coming half-year
periods (deliveries in 2025-2027)
The pipeline of operations “to be committed”, i.e. “controlled”,
groups together the assets held by Gecina that are currently being
vacated and for which a redevelopment project aligned with Gecina’s
investment criteria has been identified.
This pipeline includes seven projects, with four office
buildings, located exclusively in Paris or Neuilly. These
projects will be able to be committed to once the administrative
authorizations have been obtained and they have been vacated by
their current tenants.
All of these projects are subject to regular reviews in line
with market developments, and the final launch decision can be
taken by Gecina up until the effective redevelopment start
date.
€0.2bn of “likely” controlled
projects over the longer term (possible deliveries in
2027-2028)
The “likely” controlled pipeline covers the projects identified
and owned by Gecina for which tenant departures are not yet
certain.
These projects have a potential yield on cost of around
6%. These projects will be launched when decided by Gecina in
line with real estate market developments.
Energy efficiency plan: Energy consumption reduction
exceeding the Group’s expectations
Energy efficiency plan already performing
particularly well: energy consumption reduced by -17% and carbon
emissions by -21% in six months.
In 2022, Gecina launched an energy efficiency plan aiming to
rapidly and significantly reduce energy consumption for the
buildings across its portfolio, supporting its tenants to use their
offices more efficiently.
Today, the Group is able to collect real-time information on 92%
of its rental space in operation. All of the office buildings are
now equipped with connected sensors (2,400 sensors installed,
including 1,200 added during the first half of the year), while
2,400 sensors have also been installed across the residential
portfolio, enabling each building’s operating conditions to be
adjusted in real time with a view to optimizing its
performance.
- 100% of the office tenants have already
received a list of specific recommendations for their buildings to
reduce their energy consumption. - A dedicated team is gradually
being deployed for the Group’s 50 main buildings. To date, 47 of
them have already been reviewed by this task force. Following this
deployment, specific lists have been drawn up with actions to be
taken to optimize the energy consumption of these buildings, making
it possible to open discussions and look specifically at concrete
actions with the tenants in place.
At end-June, this efficiency plan was already showing very
significant progress.
- Average energy consumption across
the commercial portfolio managed by Gecina was reduced by around
-17% over six months, contributing to the reduction in
carbon emissions by -21% over this same period.
Gecina’s performance is aligned with the roadmap from its
ambition to be carbon neutral by 2030, following on from the
commitment it has set out since 2008.
Carbon emissions across Gecina’s commercial portfolio have
been reduced by -75% since 2008 (to 8.6kgCO2/sq.m/year), while
energy consumption has been reduced by -50% over this same
period (to 150 Kwhf/sq.m/year).
Guidance revised upwards: 2023 recurrent net income
growth of +6% to +8% now expected (between €5.90 and €6.00)
The results published at end-June 2023 reflect the very good
level of the rental markets in Gecina's preferred locations. This
robust operational performance is being further strengthened by the
ramping up of indexation and the pipeline’s positive contribution
to the Group’s rental income growth.
Alongside this, Gecina’s long debt maturity and active rate
hedging policy will enable it to limit the impact of interest rate
rises on the Group’s financial expenses in 2023.
During the first half of the year, the Group’s operational
performances exceeded its initial expectations, and the €1bn of
sales completed, with a loss of rental income of 2.5%, contributed
to the robust trend for recurrent net income per share growth.
As a result, Gecina is raising its guidance for 2023, with
recurrent net income (Group share) now expected to reach €5.90
to €6.00 per share (vs. €5.80 to €5.90 previously), with growth
of +6% to +8%.
About Gecina
As a specialist for centrality and uses, Gecina operates
innovative and sustainable living spaces. The Group owns, manages
and develops Europe’s leading office portfolio, with nearly 97%
located in the Paris Region, and a portfolio of residential assets
and student residences, with over 9,000 apartments. These
portfolios are valued at 18.5 billion euros at end-June 2023.
Gecina has firmly established its focus on innovation and its
human approach at the heart of its strategy to create value and
deliver on its purpose: “Empowering shared human experiences at
the heart of our sustainable spaces”. For our 100,000 clients,
this ambition is supported by our client-centric brand YouFirst. It
is also positioned at the heart of UtilesEnsemble, our program
setting out our solidarity-based commitments to the environment, to
people and to the quality of life in cities.
Gecina is a French real estate investment trust (SIIC) listed on
Euronext Paris, and is part of the SBF 120, CAC Next 20, CAC Large
60 and Euronext 100 indices. Gecina is also recognized as one of
the top-performing companies in its industry by leading
sustainability benchmarks and rankings (GRESB, Sustainalytics,
MSCI, ISS ESG and CDP).
www.gecina.fr
This document does not constitute an offer to sell or a
solicitation of an offer to buy Gecina securities and has not been
independently verified.
If you would like to obtain further information concerning
Gecina, please refer to the public documents filed with the French
Financial Markets Authority (Autorité des marchés financiers, AMF),
which are also available on our internet site.
This document may contain certain forward-looking statements.
Although the Company believes that such statements are based on
reasonable assumptions on the date on which this document was
published, they are by their very nature subject to various risks
and uncertainties which may result in differences. However, Gecina
assumes no obligation and makes no commitment to update or revise
such statements.
2023 first-half earnings
1. APPENDICES
1.1. Financial statements / Net asset value (NAV) /
Pipeline
CONDENSED INCOME STATEMENT AND RECURRENT INCOME
At the Board meeting on July 19, 2023, chaired by Jérôme Brunel,
Gecina’s Directors approved the financial statements at June 30,
2023. The audit procedures have been completed on these accounts,
and the certification reports have been issued.
In million euros
Jun 30, 2022
Jun 30, 2023
Change (%)
Gross rental income
308.2
332.9
+8.0%
Net rental income
277.8
301.3
+8.5%
Operating margin for other business
1.4
1.0
-28.1%
Services and other income (net)
1.3
1.9
+52.7%
Overheads
(39.1)
(39.7)
+1.6%
EBITDA - recurrent
241.4
264.6
+9.6%
Net financial expenses
(38.5)
(47.5)
+23.4%
Recurrent gross income
202.9
217.0
+7.0%
Recurrent net income from associates
0.7
1.1
+55.2%
Recurrent minority interests
(0.9)
(0.9)
+6.0%
Recurrent tax
(1.6)
(0.8)
-52.4%
Recurrent net income (Group share)
(1)
201.2
216.5
+7.6%
Recurrent net income (Group share) per
share
2.73
2.93
+7.5%
Gains from disposals
4.9
76.5
ns
Change in fair value of properties
362.9
(862.9)
na
Amortization
(4.8)
(5.3)
+9.8%
Net provisions and depreciation
(0.9)
(0.5)
-44.4%
Financial depreciation
0.3
0.0
na
Other non-recurring items
(3.5)
0.0
na
Change in value of financial instruments
and debt
12.1
(12.0)
na
Share in non-recurrent net income from
associates
(0.9)
(9.9)
ns
Non-recurrent minority interests
1.6
2.4
+48.2%
Consolidated net income attributable to
owners of the parent (2)
573.1
(595.1)
na
(1) EBITDA excluding IFRIC 21
after deducting net financial expenses, recurrent tax, minority
interests, including income from associates and restated for
certain non-recurring items.
(2) Excluding impact of IFRIC 21
CONSOLIDATED BALANCE SHEET
ASSETS
Dec 31, 2022
Jun 30, 2023
LIABILITIES
Dec 31, 2022
Jun 30, 2023
In million euros
In million euros
Non-current assets
20,267.3
18,654.9
Shareholders' equity
12,780.9
11,777.6
Investment properties
18,131.2
16,628.9
Share capital
574.7
574.7
Buildings under redevelopment
1,354.1
1,297.6
Additional paid-in capital
3,303.9
3,303.9
Operating properties
78.4
79.7
Consolidated reserves
8,709.1
8,485.3
Other property, plant and equipment
11.2
10.1
Consolidated net income
169.6
(607.4)
Goodwill
183.2
174.9
Intangible assets
13.5
12.4
Shareholders’ equity attributable to
owners of the parent
12,757.2
11,756.5
Financial receivables on finance
leases
48.9
39.9
Non-controlling interests
23.7
21.1
Financial fixed assets
57.3
52.6
Investments in associates
108.5
98.7
Non-current liabilities
5,591.7
5,935.2
Non-current financial instruments
279.8
258.9
Non-current financial debt
5,298.2
5,650.9
Deferred tax assets
1.2
1.2
Non-current lease obligations
50.1
49.8
Non-current financial instruments
152.2
143.2
Current assets
410.6
1,010.5
Non-current provisions
91.2
91.2
Properties for sale
207.5
171.3
Trade receivables and related
38.1
66.0
Current liabilities
2,305.2
1,952.6
Other receivables
91.0
94.9
Current financial debt
1,929.0
1,305.4
Prepaid expenses
23.4
25.4
Security deposits
87.6
94.9
Cash and cash equivalents
50.6
652.9
Trade payables and related
178.2
181.7
Current tax and employee-related
liabilities
41.8
98.6
Other current liabilities
68.6
271.8
TOTAL ASSETS
20,677.9
19,665.3
TOTAL LIABILITIES
20,677.9
19,665.3
NET ASSET VALUE
EPRA NRV (Net Reinstatement
Value)
EPRA NTA (Net Tangible Asset
Value)
EPRA NDV (Net Disposal Value)
IFRS equity attributable to
shareholders
11,756.5
11,756.5
11,756.5
Receivable from shareholders
195.7
195.7
195.7
Includes / Excludes
Impact of exercising stock options
Diluted NAV
11,952.2
11,952.2
11,952.2
Includes
Revaluation of investment property
180.5
180.5
180.5
Revaluation of investment property under
construction
-
-
-
Revaluation of other non-current
investments
-
-
-
Revaluation of tenant leases held as
finance leases
0.8
0.8
0.8
Revaluation of trading properties
-
-
-
Diluted NAV at fair value
12,133.6
12,133.6
12,133.6
Excludes
Deferred tax
-
-
x
Fair value of financial instruments
(115.7)
(115.7)
x
Goodwill as a result of deferred tax
-
-
-
Goodwill as per the IFRS balance sheet
x
(174.9)
(174.9)
Intangibles as per the IFRS balance
sheet
x
(12.4)
x
Includes
Fair value of debt (1)
x
x
792.4
Revaluation of intangibles to fair
value
-
x
x
Transfer duties
1,086.2
119.1
x
NAV
13,104.0
11,949.7
12,751.1
Fully diluted number of shares
74,057,311
74,057,311
74,057,311
NAV per share
€176.9
€161.4
€172.2
(1) Fixed-rate debt has been measured at fair value based on the
yield curve at June 30, 2023
DEVELOPMENT PIPELINE OVERVIEW
Project
Location
Delivery date
Total space (sq.m)
Total investment (€m)
Already invested (€m)
Still to invest (€m)
Yield on cost (est.)
Average prime yield (BNPPRE /
CBRE)
Pre-let
Montrouge - Porte Sud
Inner Rim
Q2-24
12,600
83
100%
Paris - 35 Capucines
Paris CBD
Q2-24
6,300
182
46%
Paris - Mondo (formerly Bancelles)
Paris CBD
Q3-24
30,100
388
0%
Paris - 27 Canal (Flandre)
Paris
Q4-24
15,300
117
0%
Paris - Icône (Marbeuf)
Paris CBD
Q1-25
13,300
210
0%
Total offices
77,600
978
761
217
5.6%
3.7%
20%
Paris - Glacière
Paris
Q4-23
800
9
Paris - Wood'up
Paris
Q1-24
8,000
97
Paris - Dareau
Paris
Q2-24
5,500
52
Rueil - Arsenal
Rueil
Q2-24
6,000
47
Rueil - Doumer
Rueil
Q2-24
5,500
46
Bordeaux - Belvédère
Bordeaux
Q3-24
8,000
39
Garenne Colombes - Madera
La Garenne Colombes
Q1-25
4,900
43
Bordeaux - Brienne
Bordeaux
Q2-25
5,500
26
Paris - Porte Brancion
Paris
Q3-24
2,100
16
Paris - Vouillé
Paris
Q1-25
2,400
24
Paris - Lourmel
Paris
Q1-25
1,600
17
Residential densification
na
500
1
Total residential
50,800
417
262
155
3.7%
3.2%
Total committed pipeline
128,400
1,395
1,023
372
5.0%
3.5%
Controlled: Offices
85,000
1,146
726
420
4.9%
3.9%
Controlled: Residential
12,400
104
33
70
3.7%
3.2%
Total controlled
97,400
1,249
759
490
4.8%
3.9%
Total committed + controlled
225,800
2,644
1,782
862
4.9%
3.7%
Total controlled and likely
41,200
212
62
150
6.0%
4.4%
TOTAL PIPELINE
267,000
2,857
1,844
1,012
5.0%
3.7%
- Committed pipeline is valued at €1,199m at H1-2023, this
suggesting already book value creation is c.€176m
- Prime rates for office at the end of June 2023 (BNPPRE)
- Prime rates for residential at the end of May 2023 (CBRE)
1.2. EPRA reporting at June 30, 2023
Gecina applies the EPRA(1) best practices recommendations
regarding the indicators listed hereafter. Gecina has been a member
of EPRA, the European Public Real Estate Association, since its
creation in 1999. The EPRA best practice recommendations include,
in particular, key performance indicators to make the financial
statements of real estate companies listed in Europe more
transparent and more comparable across Europe.
Gecina reports on all the EPRA indicators defined by the “Best
Practices Recommendations” available on the EPRA website.
Moreover, EPRA defined recommendations related to corporate
social responsibility (CSR), called “Sustainable Best Practices
Recommendations.”
(1) European Public Real Estate Association.
06/30/2023
06/30/2022
See Note
EPRA Earnings (in million euros)
199.0
185.8
1.2.1.
EPRA Earnings per share (in euros)
€2.70
€2.52
1.2.1.
EPRA Net tangible asset value (in million
euros)
11,949.7
13,394.7
1.2.2.
EPRA Net initial yield
3.5%
3.2% (1)
1.2.3.
EPRA “Topped-up” net initial yield
3.8%
3.5% (1)
1.2.3.
EPRA Vacancy rate
7.7%
7.4%
1.2.4.
EPRA Cost ratio (including direct vacancy
costs)
22.3%
23.8%
1.2.5.
EPRA Cost ratio (excluding direct vacancy
costs)
20.2%
21.5%
1.2.5.
EPRA Property related capex (in million
euros)
160
134
1.2.6.
EPRA Loan-to-Value
36.6%
35.9%
1.2.7.
(1) At December 31, 2022.
1.2.1 EPRA RECURRENT NET INCOME
The table below indicates the transition between the recurrent
net income disclosed by Gecina and the EPRA recurrent net
income:
In thousand euros
06/30/2023
06/30/2022
RECURRENT NET INCOME (GROUP
SHARE)(1)
216,532
201,195
IFRIC 21
(12,288)
(10,219)
Depreciation and amortization, net
impairment and provisions
(5,199)
(5,135)
EPRA RECURRENT NET INCOME (A)
199,045
185,841
Average number of shares excluding
treasury shares (B)
73,832,958
73,752,206
EPRA RECURRENT NET INCOME PER SHARE
(A/B)
€2.70
€2.52
(1) EBITDA excluding IFRIC 21 after
deducting net financial expenses, recurring tax, minority
interests, including income from associates and restated for
certain non-recurring items.
1.2.2 NET ASSET VALUE
The calculation for the net asset value is explained in section
“Net asset value.”
In euros per share
06/30/2023
06/30/2022
EPRA NAV NRV
€176.9
€198.9
EPRA NAV NTA
€161.4
€181.2
EPRA NAV NDV
€172.2
€187.9
1.2.3 EPRA NET INITIAL YIELD AND EPRA “TOPPED-UP” NET INITIAL
YIELD
The table below indicates the transition between the yield rate
disclosed by Gecina and the yield rates defined by EPRA:
In %
06/30/2023
12/31/2022
GECINA NET CAPITALIZATION
RATE(1)
4.2%
4.0%
Impact of estimated costs and duties
-0.2%
-0.2%
Impact of changes in scope
0.1%
0.0%
Impact of rent adjustments
-0.6%
-0.6%
EPRA NET INITIAL YIELD(2)
3.5%
3.2%
Exclusion of lease incentives
0.3%
0.3%
EPRA TOPPED-UP NET INITIAL
YIELD(3)
3.8%
3.5%
(1) Like-for-like June 2023.
(2) The EPRA net initial yield rate is
defined as the annualized contractual rent, net of property
operating expenses, excluding lease incentives, divided by the
portfolio value including duties.
(3) The EPRA topped-up net initial yield
rate is defined as the annualized contractual rent, net of property
operating expenses, excluding lease incentives, divided by the
portfolio value including duties.
� EPRA net initial yield and EPRA
“Topped-up” net initial yield
(in million euros)
Offices
Traditional residential
Student residences
Total H1 2023
Investment properties
14,632
3,402
399
18,433 (4)
Adjustment of assets under development and
land reserves
(2,325)
(204)
(37)
(2,566)
� VALUE OF THE PROPERTY PORTFOLIO IN
OPERATION EXCLUDING DUTIES
12,307
3,197
363
15,867
Transfer duties
733
218
18
969
� VALUE OF THE PROPERTY PORTFOLIO IN
OPERATION INCLUDING DUTIES
B
13,040
3,415
381
16,836
Gross annualized IFRS rents
497
108
21
626
Non recoverable property charges
(15)
(18)
(4)
(37)
� ANNUAL NET RENTS
A
482
90
18
590
Rents at the expiration of the lease
incentives or other rent discount
55
0
0
56
� “TOPPED-UP” ANNUAL NET RENTS
C
538
90
18
645
EPRA NET INITIAL YIELD(2)
A/B
3.7%
2.6%
4.6%
3.5%
EPRA “TOPPED UP” NET INITIAL
YIELD(3)
C/B
4.1%
2.6%
4.6%
3.8%
(2) The EPRA net initial yield rate is
defined as the annualized contractual rent, net of property
operating expenses, excluding lease incentives, divided by the
portfolio value including duties.
(3) The EPRA topped-up net initial yield
rate is defined as the annualized contractual rent, net of property
operating expenses, excluding lease incentives, divided by the
portfolio value including duties.
(4) Except finance lease, hotel,
headquarter and investment in Euler.
1.2.4 EPRA VACANCY RATE
In %
06/30/2023
06/30/2022
Offices
6.9%
6.8%
Traditional residential
5.8%
4.6%
Student residences
32.0%
30.4%
EPRA VACANCY RATE
7.7%
7.4%
EPRA vacancy rate corresponds to the vacancy rate “spot” at the
end of the period. It is calculated as the ratio between the
estimated market rental value of vacant spaces and potential rents
for the operating property portfolio.
The financial occupancy rate reported in other parts of this
document corresponds to the average financial occupancy rate of the
operating property portfolio.
EPRA vacancy rate does not include leases signed with a future
effect date.
Market rental value of vacant
units (in million euros)
Potential rents (in million
euros)
EPRA vacancy rate at the end of
June 2023 (in %)
Offices
39
561
6.9%
Traditional residential
7
113
5.8%
Student residences
8
26
32.0%
EPRA VACANCY RATE
54
701
7.7%
1.2.5 EPRA COST RATIOS
In thousand euros/in %
06/30/2023
06/30/2022
Property expenses(1)(2)
(135,153)
(114,733)
Overheads(1)(2)
(39,688)
(39,065)
Depreciation and amortization, net
impairment and provisions(3)
(5,199)
(5,135)
Recharges to tenants
103,527
84,351
Rental expenses charged to tenants in
gross rent
0
0
Other income/income covering overheads
1,940
1,271
Share in costs of associates
(147)
(136)
Ground rent
0
0
EPRA COSTS (INCLUDING VACANCY COSTS)
(A)
(74,720)
(73,446)
Vacancy costs
7,086
7,124
EPRA COSTS (EXCLUDING VACANCY COSTS)
(B)
(67,634)
(66,322)
Gross rental income less ground rent
332,932
308,193
Rental expenses charged to tenants in
gross rent
0
0
Share in rental income from associates
1,469
906
GROSS RENTAL INCOME (C)
334,401
309,099
EPRA COST RATIO (INCLUDING VACANCY
COSTS) (A/C)
22.3%
23.8%
EPRA COST RATIO (EXCLUDING VACANCY
COSTS) (B/C)
20.2%
21.5%
(1) Marketing costs, eviction allowances,
and time spent by the operational teams directly attributable to
marketing, development or disposal projects are capitalized or
reclassified as a result of disposals of €7.2 million in 2023 and
€5.7 million in 2022.
(2) Without IFRIC 21.
(3) Excluding impairment of assets
recognized at historical cost.
1.2.6 CAPITAL EXPENDITURE
In million euros
06/30/2023
06/30/2022
Group
Joint ventures
Total
Group
Joint ventures
Total
Acquisitions
0
n.a.
0
0
n.a.
0
Pipeline
115
n.a.
115
92
n.a.
92
Of which capitalized interests
4
n.a.
4
3
n.a.
3
Maintenance capex(1)
45
n.a.
45
42
n.a.
42
Incremental lettable space
0
n.a.
0
0
n.a.
0
No incremental lettable space
41
n.a.
41
37
n.a.
37
Tenant incentives
3
n.a.
3
5
n.a.
5
Other expenses
0
n.a.
0
0
n.a.
0
Capitalized interest
0
n.a.
0
0
n.a.
0
TOTAL CAPEX
160
n.a.
160
134
n.a.
134
Conversion from accrual to cash basis
7
n.a.
7
(11)
n.a.
(11)
TOTAL CAPEX ON CASH BASIS
166
n.a.
166
123
n.a.
123
(1) Capex corresponding to (i) renovation
work on apartments or private commercial surface areas to capture
rental reversion, (ii) work on communal areas, (iii) lessees’
work.
1.2.7 EPRA LOAN-TO-VALUE
In million euros
Group
Share of joint ventures
Share of material associates
Non-controlling Interests
Combined
Include
Borrowings from financial institutions
(1)
145
-
13
-
158
Commercial paper(1)
1,194
-
-
-
1,194
Hybrids
-
-
-
-
-
Bond loans(1)
5,587
-
-
-
5,587
Foreign currency derivatives
-
-
-
-
-
Net Payables(2)
470
-
1
(2)
469
Owner-occupied property (debt)
-
-
-
-
-
Current accounts (equity
characteristic)
16
-
-
(16)
0
Exclude
Cash and cash equivalents
(653)
-
(5)
2
(655)
NET DEBT (A)(3)
6,758
-
10
(16)
6,752
Include
Owner-occupied property(4)
247
-
-
-
247
Investment properties at fair value(4)
16,668
-
106
(36)
16,737
Properties held for sale(4)
171
-
-
-
171
Properties under development(4)
1,298
-
-
-
1,298
Intangibles
12
-
-
-
12
Net receivables
-
-
-
-
-
Financial assets
-
-
1
-
1
TOTAL PROPERTY VALUE (EXCL. RETTS)
(B)(5)
18,396
-
106
(36)
18,467
Real estate transfer taxes
1,086
-
8
(2)
1,092
TOTAL PROPERTY VALUE (INCL. RETTS)
(C)
19,483
-
114
(39)
19,558
EPRA LTV (EXCL. RETTS) (A/B)
36.7%
36.6%
EPRA LTV (INCL. RETTS) (A/C)
34.7%
34.5%
(1) See details of the group’s financial
debt in note 5.5.5.11.1 to the consolidated accounts.
(2) This item includes current liabilities
(accrued interest, security deposits, trade payables, tax and
social security liabilities, other liabilities) net of current
receivables (trade receivables, other receivables and prepaid
expenses).
(3) Adjusted for net payables excluding
accrued interest, net financial debt is €6,297 million.
(4) Block values of buildings and finance
leases, excluding real estate transfer taxes.
(5) Adjusted for intangible assets and the
book value of equity-accounted investments, the value of property
portfolio is €18,482 million.
1.3. Additional information on rental income
1.3.1 RENTAL SITUATION
Gecina’s tenants come from a wide range of sectors of activity,
reflecting various macro-economic factors.
Breakdown of tenants by sector (offices – based on annualized
headline rents)
Group
Public sector
8%
Consulting/services
19%
Industry
37%
Finance
7%
Media – television
6%
Retail
6%
Hospitality
5%
Technology
12%
Other
1%
TOTAL
100%
Weighting of the top 20 tenants (% of annualized total headline
rents)
Breakdown for office only (not significant for the Residential
and Student portfolios):
� Tenant
Group
ENGIE
7%
LAGARDÈRE
3%
WEWORK
3%
BOSTON CONSULTING GROUP
3%
SOLOCAL GROUP
2%
YVES SAINT LAURENT
2%
EDF
2%
MINISTÈRES SOCIAUX
2%
GRAS SAVOYE
1%
ARKEMA
1%
EDENRED
1%
EIGHT ADVISORY
1%
LVMH
1%
IPSEN
1%
RENAULT
1%
JACQUEMUS SAS
1%
LACOSTE OPÉRATIONS COURT 37
1%
SALESFORCE COM.FRANCE
1%
ORANGE
1%
CGI FRANCE
1%
TOP 10
25%
TOP 20
36%
1.3.2 ANNUALIZED GROSS RENTAL INCOME
Annualized rental income is down –€7 million from December 31,
2022, primarily reflecting the impact of the sales completed during
the first half of the year (–€25 million), but significantly offset
by the like-for-like rental trends (+€11 million) and the buildings
delivered during the first half of the year (+€7 million).
Note that this annualized rental income includes €22 million
from assets intended to be vacated for redevelopment.
In addition, the annualized rental income figures below do not
yet include the rental income that will be generated by committed
or controlled projects, which may represent nearly €130 million of
potential headline rents.
In million euros
06/30/2023
12/31/2022
Offices
515
520
Traditional residential
108
109
Student residences (Campus)
22
23
TOTAL
645
652
1.3.3 LIKE-FOR-LIKE RENT CHANGE FACTORS FOR THE FIRST HALF OF
2023 VS. THE FIRST HALF OF 2022
Group
� Like-for-like change
Indexes
Business effects
Vacancy
Other
6.9%
4.2%
1.1%
1.6%
0.0%
Offices
� Like-for-like change
Indexes
Business effects
Vacancy
Other
7.5%
4.8%
0.8%
1.9%
–0.1%
Total residential
� Like-for-like change
Indexes
Business effects
Vacancy
Other
4.9%
2.2%
1.9%
0.5%
0.3%
1.3.4 VOLUME OF RENTAL INCOME BY THREE-YEAR BREAK AND END OF
LEASES (in million euros)
� Commercial lease schedule
2023
2024
2025
2026
2027
2028
2029
> 2029
Total
Break-up options
34
88
81
64
102
44
35
115
562
End of leases
30
50
24
40
95
46
49
228
562
1.4. Financial resources
The first half of 2023 was marked by higher short-term interest
rates and more stable long-term rates, with inflation remaining
very high amid an economic backdrop that remained uncertain.
Amid this volatile environment, Gecina could rely on the robust
and flexible balance sheet it has built up over the last few years.
The Group was able to take advantage of favorable bond market
conditions at the end of 2022 and in the first half of 2023 to
raise a total of €400 million (average maturity 9.5 years) through
tap issues.
The Group’s already significant levels of liquidity at December
31, 2022 were further bolstered by these tap issues, by taking out
€145 million in responsible bank loans, and by the early
refinancing of undrawn credit lines resulting in €180 million of
new responsible lines of credit, with an average maturity of seven
years.
Over the past eighteen months, Gecina has raised a total of €3
billion in new long-term financing, further illustrating the
Group’s deep and liquid access to all sources of financing.
At June 30, 2023, Gecina therefore had immediate liquidity of
€5.3 billion, or €4.1 billion excluding NEU CP, which is
considerably higher than the long-term target of a minimum of €2.0
billion. This excess liquidity notably covers all bond maturities
until 2028 (and therefore in particular the 2025 and 2027
maturities).
This proactive management of the financial structure has ensured
that the Group’s main credit indicators remain at an excellent
level. The maturity of the debt was 7.6 years at the end of June
2023, the interest rate risk hedging is 89% on average until the
end of 2028, and the average maturity of this hedging is 6.7 years.
The loan-to-value (LTV) ratio (including duties) was 32.2%, and the
interest coverage ratio (ICR) stood at 5.3x. Gecina therefore has a
significant margin with respect to all of its banking
covenants.
1.4.1 DEBT STRUCTURE
Net financial debt amounted to €6,297 million at June 30, 2023,
down €872 million further the asset sales realized during the
first-half of the year.
The main characteristics of the debt are:
12/31/2022
06/30/2023
Gross financial debt (in million
euros)(1)
7,219
6,950
Cash position (in million euros)(
51
653
Net financial debt (in million
euros)(2)
7,169
6,297
Gross nominal debt (in million
euros)(1)
7,224
7,039
Unused credit lines (in million euros)
4,610
4,660
Average maturity of debt (years, restated
from available credit lines)
7.5
7.6
LTV (including duties)
33.7%
32.2%
LTV (excluding duties)
35.7%
34.1%
EPRA LTV (excluding duties)
36,8%
36,6%
ICR
5.6x
5.3x
Secured debt/Properties
0.0%
0.0%
(1) Gross financial debt (excluding fair
value related to Eurosic’s debt) = Gross nominal debt + impact of
the recognition of bonds at amortized cost + accrued interest not
yet due + miscellaneous.
(2) Excluding fair value related to
Eurosic’s debt, €6,303 million including these items.
Debt by type
Graphic omitted
Gecina uses diversified sources of financing. Long-term bonds
represent 81% of the Group’s nominal debt and 54% of the Group’s
authorized financing.
At June 30, 2023, Gecina’s gross nominal debt was €7,039 million
and comprised:
� €5,700 million in long-term Green Bonds issued under the Euro
Medium-Term Notes (EMTN) program;
� €145 million in responsible bank loans;
� €1,194 million in NEU CP covered by confirmed medium- and
long-term credit lines.
1.4.2 LIQUIDITY
The main objectives of the liquidity are to provide sufficient
flexibility to adapt the volume of debt to the pace of acquisitions
and disposals, cover the refinancing of short-term maturities,
allow refinancing under optimal conditions, meet the criteria of
the credit rating agencies, and finance the Group’s investment
projects.
Financing and refinancing transactions carried out in the first
half of 2023 amounted to €575 million and related in particular
to:
� raising €250 million of Green Bond debt via tap issues on
existing medium- and long-term issues (maturing in 2028, 2032, 2033
and 2036) placed in January and May 2023 (a similar transaction was
completed in December 2022 for €150 million). The average margin on
these new bonds was 91 basis points with an average term of 8.4
years;
� taking out €145 million in responsible bank loans, with an
average term of five years;
� setting up new responsible credit lines totaling €180 million
with an average maturity of nearly seven years, in particular
through the early renewal of the line maturing in 2024. These new
financing programs all have a margin that depends on achieving CSR
objectives, and their financial terms are consistent with those of
the lines renewed early.
At the end of June 2023, total liquidity stood at €5.3 billion,
including €4.7 billion of undrawn credit lines and €0.7 billion of
cash (€4.1 billion net of NEU CP). This level of cash is due to the
recent disposal of several assets, which will be used in the short
term to redeem financial debts.
Gecina updated its EMTN program with the AMF in June 2023 and
its Negotiable European Commercial Paper (NEU CP) program with the
Banque de France in May 2023, with caps of €8 billion and €2
billion, respectively.
In the first half of 2023, Gecina continued to use short-term
resources via the issue of NEU CPs. At June 30, 2023, the Group’s
short-term resources totaled €1,194 million, versus €1,574 million
at the end of 2022.
1.4.3 FINANCING SCHEDULE
As at June 30, 2023, the average maturity of Gecina’s debt (€7.0
billion), after allocation of unused credit lines and cash, was 7.6
years.
The following chart shows the financing schedule at June 30,
2023 (excluding commercial paper):
Graphic omitted
All of the credit maturities up to 2028, including 2025 and 2027
bond maturities in particular, were covered by unused credit lines
as at June 30, 2023 or by free cash. Furthermore, 100% of the debt
has a maturity beyond 2027.
The table below presents Gecina’s debt maturity breakdown as at
June 30, 2023:
In € billion
Total
H2 2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
> 2036
Gross debt
7.0
1.3
–
0.5
0.1
0.8
0.8
0.5
0.5
–
0.6
0.7
0.7
–
0.6
–
Financing (including undrawn credit
lines)
10.5
0.1
0.2
0.8
1.4
1.4
1.4
1.5
1.4
–
0.6
0.7
0.7
–
0.6
Net debt (after allocation of undrawn
credit lines)
6.4
–
–
–
–
–
1.1
1.5
1.3
–
0.6
0.7
0.7
–
0.6
–
1.4.4 AVERAGE COST OF DEBT
The average cost of the drawn debt amounted to 1.1% in the first
half of 2023 (and 1.4% for total cost), up compared to 2022, mainly
due to Euribor increase for the debt hedged by caps (not yet
triggered in the first half of 2022). The cost of debt benefits
from the Group’s financial structure, including its quality
financial ratings, high level of liquidity, long average maturity
and ability to anticipate short-term refinancing challenges, and
from its extensive and long hedging structure.
Graphic omitted
Capitalized interest on development projects amounted to €4.0
million in the first half of 2023 (compared with €2.6 million in
the first half of 2022).
1.4.5 CREDIT RATING
The Gecina Group is rated both by Moody’s and Standard &
Poor’s:
� Standard & Poor’s rating confirmed at A– stable outlook on
July 2023;
� Moody’s rating remained at A3 stable outlook.
1.4.6 MANAGEMENT OF INTEREST RATE RISK HEDGE
Gecina’s interest rate risk management policy is aimed at
hedging the company’s exposure to interest rate risk. To do so,
Gecina uses fixed-rate debt and derivative products (mainly caps
and swaps) in order to limit the impact of interest rate changes on
the Group’s results and to keep the cost of debt under control.
Gecina continued to adjust and optimize its hedging policy with
the aim of:
� maintaining an optimal hedging ratio;
� maintaining a high average maturity of hedges (fixed-rate debt
and derivative instruments); and
� securing favorable long-term interest rates.
At June 30, 2023, the average duration of the portfolio of firm
hedges stood at 6.7 years.
Based on the current level of debt, the debt is fully hedged in
the second half of 2023, and the hedging ratio gradually decreases
in the future, reaching 75% in 2027.The hedging ratio will average
95% until end-2027.
The chart below shows the profile of the hedge portfolio
(including hedging operations of early July 2023):
Graphic omitted
Gecina’s interest rate hedging policy is implemented mainly at
Group level and on the long-term; it is not specifically assigned
to certain loans.
Measuring interest rate risk
Gecina’s anticipated nominal net debt in the second half of 2023
is fully hedged against higher interest rates (depending on
observed Euribor rate levels, due to caps).
Based on the existing hedge portfolio, contractual conditions as
at June 30, 2023, and anticipated debt in 2023, a 50 basis point
increase in the interest rate compared to the forward rate curve of
June 30, 2023, would generate an additional expense of about +€0.1
million in 2023. A 50 basis point fall in interest rates compared
to June 30, 2023, would result in a reduction in financial expenses
in 2023 of about –€0.1 million.
1.4.7 FINANCIAL STRUCTURE AND BANKING COVENANTS
Gecina’s financial position as at June 30, 2023, meets all
requirements that could affect the compensation conditions or early
repayment clauses provided for in the various loan agreements.
The table below shows the status of the main financial ratios
outlined in the loan agreements:
Benchmark standard
Balance at 06/30/2023
LTV – Net financial debt/revalued block
value of property holding (excluding duties)
Maximum 60%
34.1%
ICR – EBITDA/net financial expenses
Minimum 2.0x
5.3x
Outstanding secured debt/revalued block
value of property portfolio (excluding duties)
Maximum 25%
0.0%
Revalued block value of property holding
(excluding duties), (in billion euros)
Minimum 6
18.5
The financial ratios shown above are the same as those used in
the covenants included in all the Group’s loan agreements.
LTV excluding duties was 34.1% at June 30, 2023, (35.7% at the
end of 2022). The ICR stood at 5.3x (5.6x in 2022).
1.4.8 GUARANTEES GIVEN
At the end of June 2023, the Group did not hold any debt
guaranteed by real sureties (i.e. mortgages, lender’s liens,
unregistered mortgages).
Thus, at June 30, 2023, there was no financing guaranteed by
mortgage-backed assets for an authorized maximum limit of 25% of
the total block value of the property portfolio in the various loan
agreements.
1.4.9 EARLY REPAYMENT IN THE EVENT OF A CHANGE OF
CONTROL
Some loan agreements to which Gecina is party and bonds issued
by Gecina provide for mandatory early repayment and/or cancellation
of loans granted and/or a mandatory early repayment liability, if
control of Gecina changes.
On the basis of a total amount of authorizations of €10.5
billion (including unused credit lines) at June 30, 2023, €4.3
billion of bank debt and €5.7 billion of bonds are concerned by
such a clause relative to a change of control of Gecina (in most
cases, this change must lead to a downgrade in the credit rating to
“Non-Investment Grade” for this clause to be activated).
In the case of bonds issued by Gecina, this clause will not be
activated if this downgrade is followed by an upgrade in the
Investment Grade category within 120 days.
1 EBITDA excluding IFRIC 21 after deducting net financial
expenses, recurrent tax, minority interests, including income from
associates and restated for certain non-recurring items.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230719995905/en/
GECINA Financial communications Samuel
Henry-Diesbach Tel: +33 (0)1 40 40 52 22
samuelhenry-diesbach@gecina.fr Sofiane El Amri Tel: +33 (0)1 40 40
52 74 sofianeelamri@gecina.fr
Press relations Glenn Domingues Tel: +33 (0)1 40 40 63 86
glenndomingues@gecina.fr Armelle Miclo Tel: +33 (0)1 40 40 51 98
armellemiclo@gecina.fr
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