Robust and positioned for growth
- Recurrent Net Income per share above the upper guidance range, up +8.2% to €6.01 in 2023
- 100% of 2023-2024 deliveries already let or pre-let (100,000 sq.m)
- 2023 dividend to be fully paid in cash (€5.3 per share) 1
- LTV broadly stable at 34%, following €1.3bn of disposals in 2023, +8% above appraisals with a 2.5% yield
- 2024 recurrent net income per share expected to be up between €6.35 to €6.40 (+5.5% to +6.5%)
PARIS–(BUSINESS WIRE)–Regulatory News:
Gecina (Paris:GFC):
Outperforming the leasing market with 156,000 sq.m let or relet, up +60% vs. 2022
- Leasing trends confirmed in central areas
- Reversion captured on offices (+30% for Paris, +14% overall) and residential (+13%)
- Average occupancy rate up +90bp in 2023 on Offices, +80bp in total
- Weighted average firm duration of 8.4 years
- 2023-2024 pipeline fully let / prelet (> 100,000 sq.m)
- Mondo (30,000 sq.m) and 35 Capucines (6,300 sq.m) in Paris CBD fully pre-let in 2023
Driving all P&L aggregates upwards in 2023 through strong achievements
- Improvement in occupancy, indexation and rental uplifts reflected in +6.1% LfL growth
- 65,000 sq.m of projects delivered in 2022-2023 (incl. l1ve, Boétie in Paris CBD) driving the pipeline’s net rental contribution to +€22m, with gross rents climbing +6.5%
- SG&A and service charges kept under control despite inflation, with EBITDA up +7.8%
- Hedging and disposals in 2023 kept financial expenses under control (cost of drawn debt of 1.1%), with +8.2% Recurrent Net Income per share growth
- Record CSR achievements: #1 European REIT in GRESB, -20% for CO2 emissions, -10% for energy consumption
Taking decisive capital allocation decisions, ideally positioning the Group for the new reality
- €1.3bn of disposals with an average premium of +8% versus the latest appraisals and a c.2.5% yield, executed in a muted investment market, and resulting in:
- LTV of 34% (including duties), broadly stable vs. end 2022 despite a -10.6% drop in valuations
- Liquidity further strengthened, now covering bond maturities until 2028
- Debt now 92% hedged on average through to 2028
- €1.7bn of new debt opportunistically sourced to anticipate refinancings at same spread conditions thanks to strong access to all financing sources
- Proceeds from disposals to fund an accretive development pipeline over the next four years
Shaping Gecina for future growth
- Favorable operational performances (positive trends on central markets, supportive rental uplift and indexation)
- Two iconic pre-let projects to be delivered in 2024 (Mondo and 35 Capucines in Paris CBD)
- Two major new projects in central locations to be launched in 2024 (c.60,000 sq.m, deliveries 2027e)
- Disposals carried out in 2023 with an accretive impact on recurrent net income
- Anticipating new clients’ requirements with differentiating operating platforms within the office and residential portfolios, to capture incremental performance
- 2024 recurrent net Income expected to grow between €6.35 and €6.40 per share (+5.5% to 6.5%)
Beñat Ortega, Chief Executive Officer: “In a quite uncertain environment, Gecina delivered strong operational and financial achievements confirming the unique positionning of our Group. Our outperformance on our asset portfolio was further strengthened by our balance sheet, combining to offer good visibility over our cash flow growth moving forward.
The Group also successfully managed to opportunistically reinforced its strengths this year by disposing €1.3bn of mature real estate assets, above their appraisal values with an accretive impact on earnings, thanks to an average 2.5% yield. This is enabling us to further strengthen the quality of our balance sheet, in addition to financing our pipeline, concentrated primarily in Paris and driving strong value creation, while opening opportunistic financial headroom as well.
The Group is therefore well placed to achieve growth thanks to our decisive capital and asset allocation initiatives, combined with a strong CSR leadership, aligned with the new reality on the real estate markets. We are building the foundations for a Group that will be positioned to deliver sustainable outperformance as we move forward”.
| FY 2022 | FY 2023 | YoY growth | LfL growth |
Offices | 497.9 | 534.0 | +7.3% | +6.5% |
Residential | 128.0 | 132.9 | +3.8% | +4.6% |
Gross rents | 625.9 | 666.8 | +6.5% | +6.1% |
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RNI in €m | 409.9 | 444.2 | +8.4% |
|
RNI per share | 5.56 | 6.01 | +8.2% |
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LTV (excl. duties) | 35.7% | 36.5% | +0.8pt | |
LTV (incl. duties) | 33.7% | 34.4% | +0.8pt | |
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EPRA NRV in € per share | 189.5 | 158.1 | -16.6% | |
EPRA NTA in € per share | 172.2 | 143.6 | -16.6% | |
EPRA NDV in € per share | 183.8 | 150.1 | -18.3% | |
|
|
|
| |
DPS in € | 5.30 | 5.302 | – |
About Gecina
A specialist in centrality and uses, Gecina operates innovative and sustainable living spaces. The real estate investment company owns, manages and develops a unique portfolio in the heart of central areas of the Paris Region, covering more than 1.2 million sq.m of offices and more than 9,000 housing units, almost three-quarters of which are located in Paris City or in Neuilly-sur-Seine. This portfolio is valued at 17.1 billion euros at end-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 CAC 40 ESG 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
Recurrent net income : strong growth
In million euros | Dec 31, 2022 | Dec 31, 2023 | Change (%) |
Gross rental income | 625.9 | 666.8 | + 6.5% |
Net rental income | 569.4 | 609.5 | + 7.0% |
Operating margin for other business | 3.0 | 1.2 | – 59.0% |
Other income net | 3.8 | 2.1 | – 43.7% |
Overheads | (79.7) | (77.9) | – 2.3% |
EBITDA | 496.5 | 535.0 | + 7.8% |
Net financial expenses | (83.6) | (90.0) | + 7.6% |
Recurrent gross income | 412.8 | 445.1 | + 7.8% |
Recurrent net income from associates | 2.4 | 2.7 | + 11.9% |
Recurrent minority interests | (1.8) | (2.0) | + 9.2% |
Recurrent tax | (3.6) | (1.6) | – 54.1% |
Recurrent net income (Group share) (1) | 409.9 | 444.2 | + 8.4% |
Recurrent net income (Group share) per share | 5.56 | 6.01 | + 8.2% |
(1) EBITDA after deducting net financial expenses, recurrent tax, minority interests, including income from associates and restated for certain non-recurring items
Recurrent net income (Group share) is up +8.2% to €6.01 per share, showing a significant improvement compared with end-June 2023 (+7.5%), thanks to the combination of robust rental trends and the good level of rental expenses, overheads and financial expenses.
Like-for-like rental performance: +€34m
Growth driven by Gecina’s intense rental market activity, reflected in the higher occupancy rate, the rental uplift captured and the impact of indexation.
Contribution from the pipeline (deliveries and redevelopments): +€22m net in rental income
Recurrent net income (Group share) benefited from the positive impact of the pipeline, with a stronger impact of building deliveries than the temporary effects of assets vacated with the view to being redeveloped.
- +€28m of additional rents generated by the recent deliveries of “157 CDG” in Neuilly and, above all the “l1ve” building in Paris’ Central Business District in 2022, as well as “Boétie” in Paris’ CBD and a residential building in Ville d’Avray during the first half of 2023.
- Reduced rental income by -€6m, including the launch of Icône project (previously 32 Marbeuf in Paris CBD) and 27 Canal (previously Flandre in Paris City).
Asset disposals: -€15m net change in rental income
Most disposals completed since the start of the year (€1.3bn of disposals, with a loss of rental income of around 2.5%) occurred at the end of the first half of the year.
Rental margin up +40bp
Group | Offices | Residential | |
Rental margin at Dec 31, 2022 | 91.0% | 93.4% | 81.5% |
Rental margin at Dec 31, 2023 | 91.4% | 94.1% | 80.4% |
Rental margin is up +40bp over 12 months. This growth was achieved primarily thanks to an higher average occupancy rate and and a more effective service charges management, offsetting the increase in local taxes.
EBITDA margin up +90bp: overheads under control
In an inflationary context, the Group paid particularly close attention to 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 +90bp year-on-year.
Net margin up +110bp: favorable trend for financial expenses over the second half of the year
The disposals completed at the end of the first half of the year impacted financial expenses for the second half of 2023, offsetting the moderate increase in the average cost of debt. The change in financial expenses over the full year in 2023 remained under control, with an increase of only +€6m. This moderate increase compares with EBITDA growth of +€39m, has driven a strong improvement in the Group’s net margin (+110bp).
On a full year basis, the increase in interest rates was partially offset by a volume effect: as disposals occurred mainly at the end of the first half of the year, net debt was down by nearly -€950m at end-2023 (vs. end-2022), with average debt in 2023 down -€200m. Consequently, financial expenses were optimized in H2 20023 by -€5m compared with the first half of the year.
Gross rental income: strong growth both on a current basis and like-for-like
Gross rental income | Dec 31, 2022 | Dec 31, 2023 | Change (%) | |
In million euros |
|
| Current basis | Like-for-like |
Offices | 497.9 | 534.0 | +7.3% | +6.5% |
Residential | 128.0 | 132.9 | +3.8% | +4.6% |
Total gross rental income | 625.9 | 666.8 | +6.5% | +6.1% |
On a current basis, rental income is up +6.5%, benefiting from not only the robust like-for-like rental performance, but also the pipeline’s strong net rental contribution (+€22m), offsetting the impacts of the volume of disposals (-€15m).
Like-for-like, the acceleration in performance exceeded the levels reported at end-2022, with rental income growth of +6.1% overall (vs. 4.4% at end-2022) and +6.5% for offices (vs. +4.6% at end-2022).
All components contributing to like-for-like rental income growth are trending up:
– The impact of the increase in the occupancy rate contributed +0.6%
– The impacts of indexation contributed +4.7%
– The rental reversion captured contributed +0.8%
Offices: positive rental achievements
Gross rental income – Offices | Dec 31, 2022 | Dec 31, 2023 | Change (%) | |
In million euros |
|
| Current basis | Like-for-like |
Offices | 497.9 | 534.0 | +7.3% | +6.5% |
Central areas (Paris, Neuilly, Southern Loop) | 362.0 | 386.8 | +6.9% | +5.2% |
Paris City | 289.1 | 304.9 | +5.4% | +5.2% |
– Paris CBD & 5-6-7 | 179.7 | 193.3 | +7.6% | +6.1% |
– Paris – Other | 109.4 | 111.6 | +2.0% | +4.1% |
Core Western Crescent | 72.8 | 82.0 | +12.6% | +5.2% |
– Neuilly-Levallois | 28.7 | 34.2 | +19.2% | +4.0% |
– Southern Loop | 44.2 | 47.8 | +8.2% | +5.7% |
La Défense | 65.0 | 72.5 | +11.5% | +11.5% |
Other locations | 70.9 | 74.6 | +5.3% | +7.8% |
Increase in occupancy rate, positive reversion, indexation
Gecina has let, relet or renegotiated around 156,000 sq.m since the start of the year, nearly +60% more than the level of lettings activity recorded in 2022. These new leases were signed with an average firm maturity of 8.4 years.
The majority of the transactions concerned relettings or renewals.
- Overall, the average releasing spread captured came to +14%.
- This performance was driven by central locations in particular, with nearly + 30% uplift in Paris City.
The remaining 30% or so of transactions related to buildings that were delivered recently or under development.
Iconic transactions confirming the Group’s strategic positioning
During the second half of the year, Gecina notably let the Mondo building (30,000 sq.m) in Paris’ CBD to the Publicis Group, thanks to an iconic letting operation, both in terms of size and quality of the project. This building will be delivered in the second half of 2024.
Several leasing transactions at close to or over €1,000/sq.m/year in Paris’ Central Business District were also finalized this year, confirming the new rental benchmarks, including:
– 35 Capucines (6,300 sq.m): building fully pre-let to a law firm and a luxury goods group (delivery expected for the second quarter of 2024)
– 24-26 Saint-Dominique (7,900 sq.m): building fully pre-let to a private equity group and a law firm, following the BCG Group’s relocation to the l1ve building in Paris’ CBD
– For the 35 Opéra, 16 Montmartre and 32 Haussmann buildings, leases representing a total of nearly 2,000 sq.m were signed recently based on prime rents for small and mid-size units let as “serviced offices”.
As a reminder, 86% 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.
Offices gross rental income
Like-for-like office rental income growth came to +6.5% year-on-year (vs. +4.6% at end-2022), benefiting from an improvement in the occupancy rate across our buildings for +0.8%, as well as a positive indexation effect which has continued to ramp up (+5.3%), in an inflationary context, as well as the impact of the positive reversion captured in the last few years (+0.4%).
– In the most central sectors (86% of Gecina’s office portfolio) in Paris City, Neuilly-Levallois and Boulogne-Issy, like-for-like rental income growth came to +5.2%, driven primarily by the impact of indexation and rental uplifts.
– On the La Défense market (7% of the Group’s office portfolio), Gecina’s rental income is up +11.5% like-for-like, linked mainly to the impact of indexation and the improvement in occupancy, mainly during the second half of 2022.
Rental income growth on a current basis came to +7.3% for offices, reflecting the impact of the pipeline’s positive net contribution of over €20m, 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, Carreau de Neuilly and 27 Canal-Flandre in Paris and Neuilly). The loss of rent resulting from the €1.3bn of disposals completed in 2023, primarily midway through the year, represents less than €15m for the full year in 2023, including €13m for offices.
Residential: operational trends confirmed
Gross rental income | Dec 31, 2022 | Dec 31, 2023 | Change (%) | |
In million euros |
|
| Current basis | Like-for-like |
Residential | 128.0 | 132.9 | +3.8% | +4.6% |
YouFirst Residence | 107.4 | 110.3 | +2.7% | +3.8% |
YouFirst Campus | 20.6 | 22.6 | +9.8% | +8.1% |
Rental income on residential portfolio is up + 4.6% like-for-like. This performance reflects the impact, of indexation and rental reversion captured along tenants’ rotation.
YouFirst Residence: strong operational trends
Like-for-like rental income from residential properties is up +3.8%. This growth benefited from a significant favorable effect resulting from the reversion captured (+13% on average) through our tenant rotation, which has been ramping up steadily for the past two years.
YouFirst Campus: very strong rental trends
Rental income from the student housing portfolio is up +8% like-for-like and +10% on a current basis, linked primarily to the significant positive reversion captured thanks to high rotation rate in this business, as well as the possibility offered for young workers to become tenants, to grow average occupancy of our buildings.
Financial occupancy rate up +80bp year-on-year
Average financial occupancy rate | Dec 31, 2022 | Jun 30, 2023 | Dec 31, 2023 |
Offices | 92.8% | 93.8% | 93.7% |
Central areas (Paris / Neuilly / Boulogne) | 93.6% | 93.5% | 93.2% |
La Défense | 91.2% | 97.9% | 98.3% |
Other locations (Péri-Défense, Inner / Outer Rims and Other regions) | 90.5% | 91.5% | 91.9% |
Residential | 94.5% | 94.4% | 94.7% |
YouFirst Residence | 96.7% | 96.3% | 96.4% |
YouFirst Campus | 86.0% | 86.8% | 87.7% |
Group total | 93.1% | 93.9% | 93.9% |
The Group’s average financial occupancy rate reached 93.9%, up +80bp over 12 months, back to pre-Covid levels, benefiting from the strong upturn in leasing activity since 2021.
Regarding offices, the average financial occupancy rate is up +90bp to 93.7%. This rate takes into account two buildings vacated in 2023, located in Paris, which have already been relet, but are considered in financial vacancy while minor renovation works are carried out. If we consider these two buildings as occupied, the normative occupancy rate reaches 95.6%.
Financial occupancy rate came to 93.2% in the central sectors (Paris, Neuilly and Boulogne), 98.3% in La Défense and 91.9% elsewhere.
Regarding residential buildings, average financial occupancy rate for 2023 remained stable overall at 94.7% (+20bp), highlighting this segment’s rental resilience.
CSR: Gecina’s leadership confirmed for Corporate Social Responsibility
Energy performance plan already particularly effective
In 2022, Gecina launched an energy performance plan aiming to rapidly reduce energy consumption, while supporting its tenants to use their offices more efficiently.
This efficiency plan is already showing very significant progress. Average energy consumption across the commercial portfolio where Gecina directly manages the technical energy-consuming equipment has been reduced by -10%, contributing to a -20% reduction in carbon emissions in one year.
Carbon emissions across Gecina’s commercial portfolio have been reduced by nearly -74% since 2008.
Gecina’s entire operational commercial portfolio now certified
100% of the Group’s operational office portfolio is now certified (HQE or BREEAM), which represents significant progress compared with the 87% recorded at end-2022, thanks to the certification of 23 new buildings.
In this area, this performance enabled the Group to already achieve in 2023 the objective set for 2025. Gecina is again very favorably positioned compared to its benchmark sector, where only 17% to 20% of assets are certified today (sources: OID, CBRE). Moreover, 61% of this portfolio is certified with “excellent” or “exceptional” ratings.
Gecina, the GRESB’s top-ranked European real estate company, confirms its leadership
In 2023, Gecina was ranked first place out of the 100 listed real estate companies in Europe by GRESB, which assesses the ESG performance of real estate companies each year, and increased its overall score by two points to 96/100 compared with 2022. This score reflects an outstanding performance, with significant progress across the criteria covering water management, risk management and greenhouse gas emissions, thanks to a 10% reduction in emissions reported in 2022. In the “development” section, Gecina achieved the maximum rating of 100/100.
In addition, Gecina was recognized in the MSCI rankings, with its AAA rating confirmed for the sixth consecutive year, positioning the Group as one of the top 18% of the best performers worldwide.
With ISS ESG, Gecina retained its B- score, clearly setting out its position as one of its sector’s best-performing companies. It also retained its “low risk” rating for the third consecutive year with the prestigious rating agency Sustainalytics.
Finally, CDP Climate Change once again confirmed in February 2024 that Gecina is part of the select group of companies that have been awarded an “A” rating in this climate change benchmark.
Portfolio value
Breakdown by segment | Appraised values | Net capitalization rates | Like-for-like change | |
In million euros | Dec 31, 2023 | Dec 31, 2023 | Dec 31, 2022 | Dec 2023 vs. |
Offices (incl. retail units) | 13,476 | 5.2% | 4.3% | -12.1% |
Central areas | 11,548 | 4.5% | 3.7% | -10.3% |
– Paris City | 9,481 | 4.1% | 3.4% | -9.1% |
– Core Western Crescent (Neuilly/Levallois Southern Loop) | 2,067 | 5.9% | 4.8% | -14.4% |
La Défense | 966 | 8.0% | 6.0% | -21.2% |
Peripheral areas | 961 | 9.6% | 7.6% | -19.8% |
Residential | 3,565 | 3.4% | 3.1% | -4.3% |
Hotels & finance leases | 42 |
|
|
|
Group total | 17,082 | 4.8% | 4.0% | -10.6% |
Total value: unit appraisals | 17,630 |
|
| -10.1% |
The portfolio value (block) came to €17.1bn, with a like-for-like value adjustment of -10.6% over 12 months and nearly -7% over six months. This change includes contrasting trends depending on the areas, in a context of markets polarization, benefiting the most central sectors and residential assets.
Offices:
The value adjustment for the office portfolio shows a contraction of around -8% on average during the second half of 2023 and -12% over 12 months.
- The overall portfolio reflects the adjustment in yields (“yield effect”), with a negative impact across all sectors (around -18% year-on-year).
- This is combined with a “rent effect” reflecting the different features of the Paris Region’s rental markets. This rent effect is positive in Paris City (+9%) and the Core Western Crescent (Neuilly and Boulogne) with nearly +4.5%, but it is negative elsewhere (-2% to -3%).
Residential: resilient values
The residential portfolio value shows an higher level of resilience with a contraction of -4% for the full year, thanks in particular to strong rental trends.
NAV: Net Tangible Assets (NTA) of €143.6 per share
– The EPRA Net Disposal Value (NDV) came to €150.1 per share, with €157.5 based on unit values for the residential portfolio.
– The EPRA Net Tangible Assets (NTA) came to €143.6 per share, with €151.0 based on unit values for the residential portfolio.
– The EPRA Net Reinstatement Value (NRV) came to €158.1 per share, with €166 based on unit values for the residential portfolio.
The contraction in the NTA (-11% over six months and around -16.6% for the year) is linked primarily to the like-for-like adjustment in the portfolio value.
The change in EPRA Net Tangible Assets (NTA) per share came to -€29 over 12 months, with the following breakdown:
– Dividend paid in 2023: – €5.30
– 2023 recurrent income: + €6.01
– Value adjustment linked to the yield effect: – €54.6
– Value adjustment linked to the “rent” effect: + €25.6
– Other (including IFRS 16, IAS 17): – €0.4
Capital allocation: €1.3bn of disposals immediately accretive, with positive impacts across all aggregates
€1.3bn of disposals, +8% above the appraisal values, 2.5% average yield on cost
In 2023, the Group completed the following disposals:
– 10 office buildings, for over €1bn, with a loss of rental income of around +2.4% and a premium versus the latest appraisal values of around +10%
- seven office buildings in Paris City (129 Malesherbes, 142 Haussmann, 43 Friedland, 209 Université, Pyramides, 189 Vaugirard and 101 Champs Elysées), representing 21,400 sq.m
- 3 office buildings located in secondary sectors, representing around 15,000 sq.m
– three residential buildings and a number of unit sales for a total of €258m, with a +3% premium versus the appraisals and a loss of rental income of 3.1%
In addition to the 101 Champs Elysées building, the Group sold more than €500m of assets in 2023, securing a premium versus the appraisals of close to +5% and an average yield of 3.1%.
Use of proceeds from the disposals
In the short term, the proceeds from these disposals were used to repay 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 disposals had a positive impact on Gecina’s debt aggregates (LTV, ICR, net debt/EBITDA), as well as the level
Contacts
Financial communications
Samuel Henry-Diesbach
Tel : + 33 (0)1 40 40 52 22
samuelhenry-diesbach@gecina.fr
Virginie Sterling
Tel : + 33 (0)1 40 40 62 48
virginiesterling@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
