GECFF (GECFF) Q3 2026 Earnings Report, Transcript and Summary

Hello, and welcome to Gecina Business at September 30, 2026. [Operator Instructions] 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.

Good morning, everyone. We are pleased to update you on our activity over the first 9 months of 2026. We have all seen how market conditions have evolved this year and we have worked hard to deal positively with the situation on three fronts. Our future revenues, our cost of capital and energy. I would like to use my time to highlight where Gecina sits within this evolving environment. On the revenue side, we have achieved a record Q3 leasing activity in our office portfolio with 92,000 square meters of renewal and lettings, representing now 140,000 square meters since the beginning of the year. It's one of the strongest performances in a decade. It also shows that our portfolio is not following market averages, which remain subdued. We have talked a lot about polarization recently, and it's only getting stronger, it plays on 2 levels where when tenants decide to relocate on the best transportation hubs and on the highest quality buildings. This is the lens through which I would read our figures. I would like to draw 4 points from it. First, the quality of the mix of our leasing 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 -- customers and on securing our tenant base. Second, visibility. This lease secures around EUR 91 million of annual rent with an average maturity of 6 years. Third, La Défense, as you saw on Monday, we signed 2 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 T1 Tower occupied by ENGIE in the near future. Fourth, we have a further 40,000 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. We signed 1,050 leases over the period, driven by the new offerings we are now -- you are now familiar with, furnished serviced apartments with 1,250 units deployed and shared apartments. Let me turn now to our revenues. Like-for-like 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 NE. Over the years, we have deliberately refocused the portfolio on central areas where [ reversion ] is strongly positive at 11% on renewals and relettings. And in other areas where market rents have not followed indexation, we have accelerated resetting rents to market levels in '26 and '27 in exchange of long-term commitments and better occupancy like we have just done in La Défense. On indexation, the slowdown continues as expected before the recent pickup in 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 EUR 1.5 billion of funding, first, EUR 700 million of bonds at [ pre-sale ] market conditions, a EUR 500 million benchmark in May and EUR 200 million of [ taps ] of existing bonds. Second, EUR 0.5 billion of new or extended undrawn credit facilities Together, this refinanced nearly all our 2027 maturities and strengthened our liquidity. Third, more than EUR 330 million of disposals at an average net dilutive impact of 2.9%. And we have done this while progressing on our high-yielding accretive developments, which are -- which we are delivering on time and on budget. In a higher rent environment, this anticipation and discipline prepares growth from 2028 onwards. Last message for this call is a word on sustainability. Gecina ranked first in its peer group in GRESB. This result reflects the same intensity and execution that we are applying everywhere else in the business on 3 fronts. First, energy consumption, where we pay close attention to detail, building by building, we work on operations, equipment settings and the daily performance of our assets to produce lasting savings. 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 the Gecina 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 EUR 6.7 and EUR 6.75 per share. Thank you, and we are happy now to take your questions.

[Operator Instructions] The next question comes from Florent Laroche-Joubert from ODDO BHF.

I would have 2 questions, and I can ask one by one. So my first question is to come back to your leasing activity, so it has been strong as we have been able to see it on the press release. And when we look at the occupancy rate for your offices, so it's well oriented on the last 6 months basis, 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?

Well, I think I gave a range between 93% and 95% average occupancy for our office portfolio, which is a good target for the company. It might fluctuate from a departure and arrival. Obviously, what 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 leasing activity there like you saw in La Défense was anticipating the departure of ENGIE from B Tower in '27, mid-'27 and to re-lease that in '28 to new tenants. We have extended leases renewed some stuff. So it's -- the way to cope with this average occupancy is also 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.

Okay, okay. And then my second question will be more on your investment activity. So I don't know if you can say a word on that. And maybe linked to this question. So how do you anticipate the exercise by [ appraisers ] to value your assets at the end of the year, given that we have been able to see some increase of interest rate?

Well, I think the rise in interest rates rather plan the investment market, let's say, which was not super active anyway. So 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 rise in 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 leases capture that inflation and then the full year impact. But I think what comes with interest rates rise is also inflation. So we'll have to see how all that plays out. And that will be for the next months.

And have you already had some discussion with your [ appraisers ] on this?

Not yet, not yet.

The next question comes from Valerie Jacob from Bernstein.

So I've got a couple of questions. My first question is on your lettings, if you could share what is the impact of all the renewal and reletting you've done since the beginning of the year? What will be the impact on the rent roll overall for next year? And also, if there is any asset that was added to the pipeline where we were going to lose rent that we should know about? That's my first question.

Well, like I said, I think what we try to cover is obviously keeping the occupancy high. So part of those have been to retain tenants. We might have some departures. Some of them were already known typically in Colombes, we will lose Oracle in Colombes that has moved to Paris assets early this year. So I think, yes, we will have some departures. We have secured new -- obviously, ENGIE will depart at least, we will lose the rents of ENGIE mid-June next year. So we'll lose also rents on that one, and we'll capture the rent from the new tenants more in '28 than in '27. So it will be 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.

Okay. So just one follow-up on ENGIE because I thought the termination fee was amortized over '26. And you said you will receive rent in '27 as well. Is it correct? Or...

Yes, it's a series of different indemnities that we have amortized through the P&L. 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 ENGIE. So we'll collect -- we have collected basically in '26, the amount that they were supposed to pay us for '26, and we will collect in '27 the amount that they were supposed to pay us in '27. It's through indemnities and not rent, but it's the same P&L and cash impact like if the lease would have continued until the end.

Okay. That's clear. And my second question is, so you've done a lot of lettings, but can you give us an update on lettings on your development pipeline? What can we expect? And yes, how your talks are progressing? And what are your expectations?

The -- obviously, the general market is not super hectic these days in Paris. I think the country is in a wait-and-see 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 years. We are working hard. I think our products, especially on the pipeline are relevant. We have good discussions. Similar to what I said late July, but obviously, 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 well advanced, 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.

The next question comes from Thomas Rothaeusler from Deutsche Bank.

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 color on the pre-letting progress and where you stand with regards to leasing negotiations?

On the pre-lets, Thomas, I just referred to where we stand to Valerie. I think yes, we have advanced discussions and are progressing correctly. We have good visits, good interest for the project. Regarding the interest rate evolution, I think that you listed a bit all the potential outcomes of an interest rate increase into a REIT. Obviously, it impacts our future financing costs. I think one should not take the immediate interest rates to calibrate what's the future of funding cost. We try to anticipate those situations. So typically, when we issued a bond in May, in fact, we were refinancing 1.5 year almost the bonds expiring in '27. And we saw a good tension of our -- on our bonds late July, early August, so that we have even tapped some of our bonds for EUR 200 million in preparation for the 2028 expiry, so that's not to take the full impact of the current interest rate increase. I think obviously, markets look day-to-day, but 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. Typically, you were referring to appraisals. That's independent of appraisals. What we have in our control, we try to anticipate, and that's typically what we have done on our funding activity early this year. And the last element on CapEx, 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 EUR 400 million to finance short term. we have started this year by selling assets, and we will probably continue. It doesn't mean it's easy, but we'll probably continue to do so. So that's a bit the view we have on that. Obviously, new CapEx for the future will be very careful based on the current circumstances.

The next question comes from Stéphanie Dossmann from Jefferies.

I have a question regarding your reversionary potential. I mean, you give pretty different figures than previous periods. So I would like to understand how they compare to previous periods. I appreciate the geographical mix and, let's say, product mix matter. But I would like to gauge the evolution of rental reversion on a like-for-like basis. So could you please provide us with 1 or 2 figures, which could be comparable to previous periods?

Yes, two elements. You are referring to the uplift that we generate through our leasing activity. Maybe two or three comments or color behind it. The first one is when we look at Paris, for example, we have achieved around EUR 1,000 per square meter rent in average for our CBD portfolio. So it's rather in line with what was there. So we are keeping a quite high pace 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 markets. was, I think, exceptional. Obviously, market rents in La Défense have not followed inflation. I have in mind that the ENGIE lease was 12 years. So it was 12 years of inflation to had to mark down the rents, but I think it was a play, like I said, quite rational and anticipated by the market to get duration, occupancy and get the rents we can get on those premises. So that plays a rather flattish reversion. But with what you said, which is a geographical mix, which was different from the previous quarters or [ years ].

Yes. But for the 11% rental uplift you have achieved in what you call central locations. How does it compare to central location, rental uplift in previous periods? I mean, is it increasing, decreasing? How do you feel the market in terms of rental uplift on the same kind of project and location?

Again, the first half and last year, I think we are in the same range of rents. So it depends on the maturity and which lease expires. But I would say it's rather similar. So for the best parts, we are still significantly increasing the rents. I was reviewing the list of leases we have achieved this year, and we can achieve for some deals, small serviced offices, 100%, 120%, 140% rental uplift for some locations. So it's really depending on the mix of assets, mix of situation, but we are still delivering excellent results even on the CBD. So in average, I would say it's similar in terms of fleet to previous quarters. And in terms of rents, it's a bit similar, but very variable from a lease to another.

Okay. Understood. And my second question is correlated to that, I mean, regarding the demand and the structure of leases, you said that the average duration signed on leases was 6 years, if I'm correct. So can you explain what are the current lease structure? I mean what is the -- what does the 6 years mean? Is it the firm lease period? Because usually you sign like 9, 10 years lease duration and with this maybe 6 years firm period. So can you elaborate on that, please?

So for the large, I would say, head office large-scale deals, we are more in the range of 9 year. You saw that La Défense deal 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 sign leases below 9 years. So most of the deals are between 9 to 12 years in terms of lease duration, but we communicate on firm. So yes, long-term leases for the large deals. And obviously, we are for small surfaces inside the city found better deals to go for more flexible, more service offices where the average duration is more in the range of 3 years. So the mix of that is where you stand at 6 years firm.

The next question comes from [ Alexander Zeri ] from Invest Securities.

Just one on my side. about the dividend guidance that you confirmed during the half year results, when the ROTE was under 4% that you target to increase the dividend gradually until the [indiscernible]. But nowadays, with ROTE around 5%. Can you confirm this guidance?

I did not really get it. So what we have done this quarter is to confirm the guidance for 2026 in the range that we gave earlier this year. And obviously, like I said on the previous questions, we will a bit monitor what is the outcome of the interest rates and so on. But so far, we are in line with the plan. I think leasing like some of your colleagues asked leasing on the pipeline is sounds positive, and that would be the way for us to overcome the rise in interest rates and generate sufficient revenue growth to sustain the dividend. So, so far, nothing specifically different from what we said in the previous quarters.

Especially on the dividend, you do not plan is a stay at 12% to distribute less in order to...

We have talked a lot about our hedging portfolio. We have durations with the taps we have done and the new bonds and so on. We still have both expiring in 2035, 2036, so obviously, the rise in interest rates will be progressive. It doesn't mean it's a 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 hedging portfolio. and manage the situation. So that's the environment in which we are. But again, the pipeline should generate EUR 80 million to EUR 90 million rents, which is significant and that's why over the next year, I'm not saying it's an eternity, but at least we have visibility over the next years on our funding costs, thanks to that long-term hedging profile. And hopefully, visibility also on the rents on the pipeline.

I don't know if you remember, but we disclosed the mark-to-market of our fixed bond portfolio during our H1 results publication, which is something that you can look at for the [ NDV ] calculation, the third NTA, and it was EUR 450 million. So it means that, as Benat said, we have thanks to this bond mark-to-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 then -- and we have not made the calculation for today, but because of the interest rates increase, it should be much higher than the EUR 450 million.

The next question comes from Neeraj Kumar from Barclays.

I was looking at your recent S&P report, and it 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 back 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 remuneration or accelerating disposals to preserve the rating if the values were to drop?

Yes. Thank you for your question. The -- we have multiple layers of capacity to manage NTV at a company like us. And good news, we have already experienced that situation in '22 and '23. Yes, we are close to the threshold. So that's why on previous conversation we had with all of you, we talked a lot about share buybacks. I said 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 embedded in our development pipeline. That's a support we can work on inflation, obviously, and capture inflation through our rents. Obviously, interest rates will have an impact on valuation. We'll see how all that plays out. It's quite early to be fair. So it's complex, but we have already managed that situation 2 or 3 years ago. The rate increase was even higher. So we'll try to manage the situation.

I think the bandwidth back then was much higher because you had much more headroom given you're close to the downgrade threshold now. So I just wanted to check what kind of actions you're willing to take.

The next question comes from Michael Finn from Green Street.

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 share price over the year and what to actually means to your business and how are you tailoring what you're doing to the change in your price effectively.

Well, I think there are many ways which are in our control, some a bit less, typically market sentiment. That's why we first focused on our cost of debt, which is good layer of our cost of capital, anticipating the market moves, issuing bonds, securing debt financing -- banking debt financing at similar cost in 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 funding costs, what is the future of our income, how can we reassure the market on the fact that our offices are way more appealing than the average of the portfolio. So I think there are many stuff that we need to work. That's why I said we work hard, in fact, generate what can be reassuring for the market.

Okay. Okay. yes. And then I think in the past...

[indiscernible] Capital allocation, obviously, in our CapEx to disposals at low yields. Yes, we try to play on all levers, in fact to generate the growth our investors are expecting.

Yes. And on the triangle that you've discussed in the past, I think you mentioned the balance sheet at cost and the use of proceeds, what's your -- what latest, I guess, view on those 3 things.

I did not really catch your question. You are asking assets we don't own. Yes, sorry.

In the past, you referred to a triangle of different options and the 3 options that you've always discussed have been the balance sheet disposals and then the used to be 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're 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 3 different factors in your current plan, in your current business plan for the rest of the year and over the next while?

I think the pipeline, we have like 3 projects inside the city of Paris, one in the [ year ]. We will have T1 Tower so that we have still CapEx to fund those projects are launched. 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 what we have -- you have seen in the figures since the beginning of the year. That will be probably the case until the end of the year. So I think we'll try to follow our path, which is obviously not easy to get, but I think we have the right teams and the right engagement with investors and quite a diverse investor base continue that path.

Okay. Okay Yes. I guess it is obviously clear that the cost of debt is something that is obviously key. But I think as a business it probably will be better if you focus more on what's happening to your share price and not really what's going on with the cost of debt, perhaps I'm obviously totally wrong. That's my view. That would be our view, but I think in general, cost of debt is obviously key, rating is key of course. But I think if you talk more on the cost of your -- sorry, not the call on your share price and the yield that we trade make calls based on that, that will be a better framing of those things rather than just talking about the cost of debt.

The next question comes from Ebrahim Homani from CIC.

I have two, if I may. The first one is about the CapEx on Shape is the project cost secured by the contract you signed with [ Bouygues ]? 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 in an inflationary environment?

On the cost of Shape, we are finalizing studies with took back the towers in April, dismantling a bit some facilities making the full audit. So we are not fully secured on the cost, but we have great visibility. I have a meeting in 2 weeks on that. The first sign from my team is that we will be aligned with our budget ideally a bit lower. But I would say it's a message also from my teams who are listening. I think we will be very careful on the fact that we want to have that our prime because that's the best way to lease 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 finalize the discussion and fix the price of the contract probably in the next weeks. And outperforming the market, I think the -- that's what we try to do. We are a typical player in the market because we are an integrated platform. We have both teams, internal asset managers, internal works managers, internal energy experts. So I think that's a bit the way we have less than 2% of the market -- 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 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 a bit the magnitude of the energy we can put in -- for the La Défense deals, we communicate on 2 leases. But behind those 2 leases, I think we are more than 10 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 in from a building to another. So we achieved to cancel the lease of ENGIE for T1 tower, but that was not done for B. So we had to engage with ENGIE to do that. We have also agreements to make work. So it's a lot of work. And obviously, having integrated teams play a role. The two companies you might have understood who it was it's people that have huge cybersecurity, security, privacy, complex work because it's quite complex industries. And obviously, having a landlord like us with the internal teams capable to answer their questions and reassure them is a key driver for the decision-making process on the tenant side. So hopefully, we'll continue. At least we are very engaged for that.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to Benat Ortega for any closing comments.

Thank you all for listening for your questions. As you can see, we are very active in this complex environment and hope to see you soon in the future. Bye-bye.