Gecina S.A. (GECFF) Q2 2026 Earnings Call

0:00 Hello and welcome to Justina Business at September 30th, 2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Today we have Benat Ortega, CEO, and Nicolas Dutreuil, Deputy CEO in Charge of Finance, as our presenters. I will now hand you over to your host, Benat Ortega, to begin today's conference. Thank you.

0:34 Good morning, everyone. We are pleased to accept you on our activity over the first nine months of 2026. We have all seen our market conditions have evolved this year, and we have worked hard to deal positively with the situation on three fronts, future revenues, cost of capital, and energy. I would like to use my time to highlight where Justine has fit within this emerging environment. On the revenue side, we have achieved the record Q3 leading activity in our office portfolio, with 92,000 square meters of renewal and resetting, representing now 140,000 square meters since the beginning of the year. It's one of the strongest performances in a decade.

1:21 It also shows that our portfolio is not following market averages, which we then subdued. We have talked a lot about polarization recently. and it's only getting stronger. It plays on two levels when tenants decide to relocate, on the best transportation hubs and on the highest quality buildings. This is the length through which I would read our figures. I would like to draw four points from it. First, the quality of the mix of our living achievements. More than half of the volume comes from new tenants choosing our platform because they better fit their needs. and the rest from existing tenants that agreed to stay longer in our buildings. We work both on attracting new consumers and on securing our tenant base. Second, visibility.

2:11 This lease secures around €91 million of annual rent with an average maturity of 6 years. Third, la défense. As you saw on Monday, we signed two long-term leases on Building B and Adamas, ensuring full occupancy for both buildings. The best assets attract the best tenants in a selective market. This is the dynamic we want to build on for SHAPE, the former C1 tower occupied by Engie, in the near future. Fourth, we have a further 14,000 square meters in advanced discussions, including assets from our development pipeline, where the next phase of growth will come from. Our housing portfolio has even been more successful.

2:56 We signed 1,050 leases over the period, even by the new offerings you are now familiar with, furnished service apartments, with 1,250 units deployed and shared apartments. Let me turn now to our revenues. Lycola growth of 1.7% comes from both offices and residential, and it is well above indexation. occupancy is high and sustained at 94%, with a record 97.4% in Central Paris and Lille. Over the years, we have deliberately recirculated the portfolio on central areas where the reverse trend is strongly positive, at 11% on renewables and relapses, and in other areas where market trends have not followed the situation, we have accelerated resetting rent to market levels in 2016 in exchange of long-term commitment and better occupancy like we have just done in La Défense.

3:58 On indexation, the slowdown continues as expected before the recent picket inflation starts to feed through to the rent at the end of 2027 or in early 2028. Regarding our cost of capital, our cost to operate, Before the summer, we secured 1.5 billion euros of funding. First, 700 million euros of bonds at three summer market conditions, a 500 million euro benchmark in May, and 200 million euros of tax of existing bonds. Second, half a billion euros new or extended on loan credit facilities. Together, this refinanced nearly all our 2027 maturities and strengthened our liquidity.

4:50 Third, more than 330 million euros disposals at an average net dilutive impact of 2.9%. And we have done this while progressing on our high yielding accretive developments, which we are delivering on time and on budget. In a higher-end environment, this anticipation and discipline requires growth from 2028 onwards. The last message for this call is a word on sustainability. Gécina ranks first in its peer group in Grésby. These results reflect the same intensity in execution that we are applying everywhere else in the business, on three fronts. First, energy consumption, where we pay close attention to details. Building by building, we work on operations, equipment settings, and the daily performance of our assets to produce lasting savings.

5:50 Second, the energy mix. We are steadily shifting towards greener sources of energy across the portfolio and less carbonized. Third, transformation. Where it makes sense, we don't just optimize the building, we transform it so that it meets tomorrow's standards in terms of performance and carbon. At a time where energy bills become critical, occupying a Cetina building means lower energy consumption and more future-proof buildings for our tenants. For our investors, it means lower obsolescence risk and protection of asset value. And to conclude this first introduction, our 2026 guidance is confirmed with a recurring net income group share between 6.7 and 6.75, You all are fair. Thank you, and we are happy now to take your questions.

6:47 If you wish to ask a question, please dial pound key 5 on your telephone keypad. If you wish to withdraw your question, please dial pound key 6. The next question comes from Florent LaRoche-Hubert from AutoBHF. Please go ahead.

7:04 Thank you for this introduction. I have two questions, and I can ask them one by one. My first question is to come back to your leading activities, which have been strong, as we have been able to see it on the press release. And when we look at the frequency rate for your offices, it's well-oriented on the last six months, but not yet on a year-to-year basis. So what can we expect, maybe, for the period to come? with regard to your occupancy rate in offices?

7:41 Well, I think, you know, I gave a rate between 93% and 95% average occupancy for our office portfolio, which is, you know, a good target for the company. It might fluctuate from departure and arrival. Obviously, we have worked a lot during this quarter and obviously since many months. In fact, also to secure occupancy in advance. So part of the leading activity there, like you saw in La Défense, was, you know, anticipating the departure of M.G. from the B Tower in 27, mid-27, and to release that in 28 to new tenants. We have extended these, we've reduced some stuff, so it's a way to cope with these average occupancies, and so always to anticipate, engage with our clients, and at the same time catch the tenants which are looking for better space but also retain our clients.

8:39 Okay, thank you. And then my second question would be more on your investment activity. So I don't know if you can say a word on that and maybe link to this question. So how do you anticipate the exercise by our process to value your assets at the end of the year Given that we have been able to see some increase of interest rates.

9:09 I think the rise in interest rates has rather tamed the investment market, let's say, which was not super active anymore. Do we see a pretty quiet investment market since the beginning of September? and we will have to see how it plays out. I think what comes with the rising interest rates is also more inflation. That is not yet in our cash flow, obviously, as you know, because it takes time before the index applicable to maybe, you know, capture that inflation and then the full year impact. But I think what comes with interest rates rise is also inflation. So we have to see how all that plays out and that will be for the next month.

9:59 Okay.

10:00 And then as you already had some discussion with your appraisers on this.

10:08 Not yet. Not yet. Okay. Okay. Thank you very much. Thank you. The next question comes from Valerie Jacob from Bernstein. Please go ahead.

10:22 Hi. Good morning. So I've got a couple of questions. My first question is on your listings. If you could share, you know, what is the impact of all the renewal and relating you've done since the beginning of the year? What would be the impact on the rent hold overall for next year? And also, if there is any asset that was added to the pipeline where we, you know, what's going to do with rent that we should know about? That's my first question.

10:56 Hello. So, like I said, I think, you know, what we try to cover is obviously keeping the equitancy high. So, part of those have been to retain tenants. We might have some departures. You know, some of them were already known. It's in Colombe. We lose Oracle in Colombe that has moved to Paris General Assets early this year. So, I think, yeah, we'll have some departures. We have a secure new... Obviously, Engie will depart Okay, so we lose the rent of energy mid-June next year, so we lose also rent on that one, and we capture the rent from the new tenants more in 28 than in 27. So it will be a year, like we said during the different calls earlier, a year of transition before we can kick our revenues up through the development pipeline and the average occupancy of the portfolio.

11:56 Okay, so I just want to follow up on ENGIE, because I saw the termination fee was amortized over 26, and you said you will receive rent in 27 as well, is it correct?

12:09 Yeah, it's a series of different amenities that we have amortized through the PML, so let's say that the deal with ENGIE is the fact that we can take back the premises on the tower, earlier, so from April 26, but let's say in accounting and the cash collection is equivalent to the situation prior to the deal with MG. So we have collected basically in 26 the amounts that they were supposed to pay us for 26, and we will collect in 27 the amounts that they were supposed to pay us in 27. It's through incentives and not rent, but it's the same P&L and cash impact, like if the lease would have, you know, continued until the end.

13:03 Okay, that's clear. And my second question is, so you've done a lot of lead teams, but can you give us an update on, you know, lead teams on your development pipeline? What can we expect? And, you know, yeah. How do you know your talks are progressing and what are your expectations?

13:21 Thank you. Obviously, the general market is not super hectic these days in Paris. I think the country is in a weighted C mode before elections. What I would say is that you have seen in our results, we have leased almost 75,000 square meters of new space to new clients. That's in line with our annual average of the last year, while the market has gone down. So we have probably doubled our market share in terms of lettings against what was happening in the previous year. We are working hard. I think our product discussions on the pipeline are relevant.

14:10 We have good discussions. Similar to what I said, you know, late July, there's obviously a between late July and early October. There is September in France. August is rather quiet. So we are progressing well. Like we said, we have some discussions quite relevant. Hopefully we'll have good news, but it takes time. We are working hard on it and hope to satisfy all our investors as soon as possible.

14:41 Thank you very much. Thank you. Thank you.

14:44 You're welcome, Valérie. The next question comes from Thomas Rathausler from Deutsche Bank. Please go ahead.

14:53 Hi, good morning. I've got two questions. The first one is on the higher interest rate environment in general. Just wondering if you could elaborate a bit more on the potential impacts on your business, like on financing costs, property values, disposals, maybe also on your CapEx plan. and the second question actually is on pre-lets. Maybe you could provide some more call on the pre-let in progress and where you stand with regards to leading negotiations.

15:33 On the pre-let, I just refer to where we stand to Valerie. I think, yeah, we have advanced discussions and they are progressing correctly. you know interest for the project. Regarding interest rate evolution I think that you see all the potential outcomes of an interest rate increase into a risk obviously it impacts our future financial costs I think one should not take you know the immediate interest rates to calibrate, you know, what's the future of our funding costs.

16:23 You know, we try to anticipate those situations. So typically, when we issued the bond in May, in fact, we were refinancing a year and a half almost the bonds expiring in 27. And we saw a good tension on our bonds late July, early August. so that we have even, you know, that sum of bonds for 200 million euros in preparation for the 2028 expiry so that not to take the full impact of the current interest rate increase. I think, obviously, you know, markets look day-to-day, but, you know, our business is a long-term business, and each time we try to anticipate those elements. So on that, some are not in our control.

17:13 If you were referring to a presence, That's independent operations. What we have in our control, we try to anticipate, and that's typically what we have done on our funding activity earlier this year. And the last element on CARTEX, I think we have, like we referred to in our press release, we have a pipeline which is ongoing. We are close to the end of those projects. We have roughly 400 million euros to finance short term. We have started this year by selling assets and we will probably continue. It doesn't mean TV, but we will probably continue to do so. So that's the view we have on that. Obviously, new CapEx for the future, we'll be very careful based on the current circumstances.

18:08 Okay, thank you.

18:10 You're welcome. The next question comes from Stephanie Gossman from Jefferies. Please go ahead.

18:19 Hello, Benat. I have a question regarding your revolutionary potential. I mean, you give 30 different figures than the I would like to understand how they compare to previous periods. I appreciate the geographical mix and the, let's say, product mix matters, but I would like to gauge the evolution of French soil reversion on the life-provide basis. So, could you please provide us with one or two figures which could be comparable to previous periods?

18:59 Yeah, two elements. You are referring to the uplift that we generate through our leasing activity. Maybe two or three comments or call or behind it. The first one is when we look at Paris, for example, we have achieved around 1,000 euros per square meter rent in average for a CBD portfolio. So it's rather in line with what was there. So we are keeping quite high-paid and high-rent activity in the CBD. So that's first element. Second, I think the La Défense deal was a success. Signing 30,000 square meters of new clients in such a market was, I think, exceptional.

19:52 Obviously, market trends in La Défense are not following inflation. I remind that the NGV was 12 years, so it was 12 years of inflation to mark down the rent, but I think it was a play, like I said, quite rational and anticipated by the market to get duration, occupancy, and get the rent we can get on those premises. So that plays a rather flattish diversion, but with what you said, which is a geographic mix, which was different from from the previous quarter.

20:32 For the 11% rental uplift, you have achieved what you call central location. How does it compare to central location rental uplift in previous periods? Is it increasing? How do you feel the market in terms of The first half, you know, against the first half and last year, I think we are in the same range of rents.

21:06 So it depends on the maturity in which, you know, lease expires. But I would say it's rather similar. So for the bed spots, we are still significantly increasing the rents. You know, I was reviewing the list of leases we have achieved this year. and we can achieve for some deals more on, you know, service offices. Andrews, 120,140% rental at least for some locations. So it's really depending on the mix of assets, mix of situations, but we are still, you know, delivering, you know, excellent results even on the CBD. So in average, I would say similar in terms of uplifts to previous quarters. and in terms of friends, it's a bit similar but very variable from the list to another.

21:57 Okay, understood. And my second question is correlated to that. Regarding the demand and the structure of leases, you said that the average duration signed on leases was six years, if I'm correct. So can you explain what are the current lease structure? I mean, what does the six years mean? Is it the firm... Can you elaborate on that, please? For the large, I would say, LOV, large scale yields,

22:50 We are more on the range of 9 years. You saw that La Défense was more close to 12 years. And we are always, when we talk about duration, in terms of firm duration. In France, anyway, you can't find leases below 9 years. So most of the leases are between 9 to 12 years in terms of lease duration. But we communicate on firm. So, yeah, long-term leases for the large leases. And obviously... We have, for small surfaces inside the city, found better deals to go for more flexible needs, more service offices, where the average duration is more in the range of three years. So the mix of that, you know, is where you stand at six years.

23:41 Okay. Very clear. Thank you so much.

23:45 You're welcome. The next question comes from Alexandre Verri from Invest Securities. Please go ahead.

23:54 Hi, Christine. Thank you for taking my question. Just one on Wi-Fi about the dividend data that you confirmed during the high share results.

24:02 When the YP was under 4%, that you target to increase the dividend gradually until the mid-trance, but no release. is already around 5%.

24:16 Can you confirm this, Vitalien?

24:21 I didn't really get it. So what we have done this quarter is to confirm the balance for 2026 in the range that we gave earlier this year. And obviously, like I said on previous questions, we will monitor what is the outcome of the interest rates and so on. But so far, We are in line with the plan. I think leaving, like some of your colleagues asked, leaving on the pipeline sounds positive, and that would be the way for us to overcome the rising interest rates and generate sufficient revenue growth to sustain the dividend. So, so far, nothing specifically different from what we said in the previous quarter.

25:07 Especially on the dividend, the plan is a little bit...

25:12 We have talked a lot about our aging portfolio. We have durations.

25:17 The taps we have done and the new bonds and so on, we still have bonds expiring in 2035, 2036. So obviously the rising interest rates will be progressive. That doesn't mean it's good news. but we try to cope with the situation and one of the ways to cope with the situation is to work on our aging portfolio and manage the situation. So that's the environment in which we are. But again, the pipeline should generate 80 to 90 million euro friends which is significant and that's why over the next year I'm not saying it's in eternity, but at least we have the ability over the next year to own our funding costs thanks to that long-term aging profile and hopefully the ability also on the rents on the pipeline.

26:22 I don't know if you remember, but we used to have the mark-to-market of our six-bone pork soya during our H1 redistribution. which is something that you can look at for the NDD calculation, you know, the third NTA, and it was 450 million euros. So it means that, as Benat said, we are thanks to this bold market portfolio. It gives an idea of the savings we will do in the future in terms of cost of financing compared to today's market conditions. And we have not made the calculation for today, but because of the interest rate increase, it should be much higher than the $450 million.

27:17 Okay. Thanks. The next question comes from Neeraj Kumar from Barclays. Please go ahead.

27:28 Good morning, everyone. I was looking at your recent S&P report. and looks like you're super close to the downgrade threshold when it comes to debt to debt plus equity. You're at 39.9% as of H1 compared to the downgrade threshold of 40%. So I wanted to check how well prepared you are to take down any valuations on the deck of higher interest rates. Do you think your rating might be under pressure here or you are open for like other measures such as reducing equity diminution or accelerating disposals to preserve the rating if the values were to drop?

28:02 Thank you for your question. You know, we have multiple layers of capacity to manage LTV at a company like us. And good news, we have already experienced that situation in 2022 and 2023. So, yes, we are close to the threshold. So that's why, you know, on previous conversation we had with all of you, we talked a lot about Shababak that says, you know, we need to be careful. The situation is volatile. That plays out now. So we will manage the situation. I think there is a value creation in the development pipeline. That's a support. We can work on inflation, obviously, and capture inflation to our rent. Obviously, interest rates will have an impact on valuation.

28:50 We see how all that plays out. It's quite early, to be fair. So it's complex, but, you know, we have already managed that situation Two or three years ago, the rate increase was even higher. So we will try to manage the situation.

29:12 Yeah, thanks for that. I think the bandwidth back then was much higher because you had much more headroom given you're close to the bandwidth threshold now. So I just wanted to check what kind of actions you're willing to take. No, thanks for that, Alfred.

29:27 You're welcome. The next question comes from Michael Finn from Green Street. Please go ahead.

29:36 Thank you very much. I just wanted to touch on your discussion earlier about the cost of capital, which if I missed it, I think it was mainly focused on the cost of debt, which obviously overlooks the share price. So I was just curious if you could shed a bit more light on how you consider the change in the I think there are many ways which are in our control, some a bit less, typically market sentiment. That's why we first focus on our

30:30 Anticipating the market moves, issuing bonds, securing debt financing and banking debt financing at similar costs than the past. And then it's how to sustain the share price, which is rather depressed these days. And that comes to all what we have been discussing, which is what is the future of our income, what is the future of our income, How can we reassure the market on, you know, the fact that our OPCs are way more appealing than the average of the portfolio? So I think there are many steps that we need to work. That's why I said we work hard, in fact, to generate, you know, what can be reassuring for the market.

31:19 Okay, okay, yeah. And then I think in the past...

31:29 Yeah, we try to play on all levels in fact to generate the growth our investors are expecting.

31:40 Yeah, and on the triangle that you've discussed in the past, I think you mentioned the balance you could focus and the use of focus, what's your list, what's your view on those three things?

32:02 I cannot really catch your question.

32:07 In the past you've referred to a triangle of different options and the three options that you've always discussed have been the balance sheet disposals and then the use of the cash that you get from selling assets. I'm just curious if you could update me on how you currently see that because in the past you were pretty adamant on how you saw those things and obviously lots has changed over the course of the year. So I'm just curious if you could update me on how you currently see those things today, how you see those three different factors in your current plan, in your current business plan for the rest of the year and over the next year.

33:00 I think the pipeline, we have like three projects inside the city of Paris, one in the Yee, we will have T1 Tower, so we have six cafes to fund, those projects are announced. And at the same time, the investment market is not super efficient, to be fair. We see more traction on the residential side than on the office side. So that's, you know, what you have seen in the figures That would be probably the case until the end of the year. So I think we try to follow our path, which is obviously not easy to get. But, you know, I think we have the right teams and the right engagement with investors and quite a diverse investor base to continue that path.

33:56 Okay, okay, yeah, yeah, yeah, I guess that, you know, it is obviously clear that the cost of debt, you know, is something that is obviously key, but I think it probably will be better if you focus more on what's happening to your Thank you very much. Thank you. Thank you for that, Michael. The next question comes from Ibrahim Homani from

34:43 CIC. Please go ahead.

35:01 Thank you for taking my questions. I have two if I may. The first one is about the CAPEX on SHAPE. Is the project cost secured by the contractor you sign with or is there any risk of higher costs? And my second question is on your ability to outperform the market index. Do you consider that you will continue to outperform this index during the next quarter even

35:29 On the cost of shape, we are finalizing studies, you know, we took back the power in April, dismantling some facilities, making the full ODI. So we are not fully secured on the cost, but we have great visibility. I have only seen two weeks on that. The first time for my team is that we will be aligned by budget, ideally a bit lower. But I would say it's a message also for my teams who are listening. I think we will be very careful on the fact that we want to have that hour prime because that's the best way to lead it faster. And at the same time, not spend a fortune in it if it's not needed. But so far, the audits are progressing well and we should...

36:24 to finalize the discussion and fix the price of the contract probably in the next weeks. And outperforming the market, I think that's what we try to do. We are not a typical player in the market because we are an integrated platform. We have both internal asset managers, internal works managers, internal energy experts. So I think that's We have less than 2% of the Paris region market and we signed 7 or 7.5% of the market. So we have a significantly higher market share than what we own. And for those reasons, one, the location of our assets.

37:10 Second, the quality of the building we do. And also the intensity the teams can put all together. to achieve those deals. Just to give you the magnitude of the energy we can put in, for the La Défense deals, we communicated on two leases. But beyond those two leases, I think there are more than ten agreements to make it happen. With the municipality to reassure the tenants on the quality of the common space around the tower. With some existing tenants to move them from a building to another. To, you know, we achieved to cancel the lease of Engie for C1 Power, but that was not done for me, so we have to engage and so we lend it to do that. We have also agreements to make works, so it's a lot of work. And obviously, having integrated teams plays a role. The two companies you might have understood who it was is people that have huge cybersecurity, security, privacy issues, Thank you very much Eric. As a reminder, if you wish to ask a question, Thank you all for listening for your questions.

38:45 As you can see, we are

39:11 We are very active in this complex environment and hope to see you soon in the future. Bye bye.