Gecina : 2020 earnings

Press release

February 18, 2021

Earnings at December 31, 2020

Empowering shared human experiences at the heart of our sustainable spaces

• o Like-for-like rental income growth: +3.0% for offices (+2.3% overall)

  • o Recurrent net income per share: €5.72

• o EPRA Net Tangible Assets (NTA) of €170.1 per share (-1.7% year-on-year)

  • o Ongoing portfolio rationalization, with €539m of sales secured

    • o LTV of 33.6% (including duties), -40bp year-on-year

    • o Mobilization to support customers and societal commitments

Resilient model withstanding the health shock

• o Gecina's markets and operational resilience

  • - Close to 99% of rent collected in 2020, normalized collection for the first quarter of 2021

  • - Rents signed up in 2020: +2% higher than pre-crisis market rents (market rental values)

  • - Reversion potential still positive (+6%), particularly at the heart of Paris (+20%)

  • - Lettings down, but significant upturn in commercial expressions of interest since September 2020

  • - Lease signed in the last few days for 11,600 sq.m of Carré Michelet in La Défense

  • - Portfolio value stable over the year (-0.1% like-for-like)

  Strategic choices confirmed faced with the uncertainty

• o Centrality continuing to outperform

  - Outperformance in terms of rent and capital growth in the most central areas of scarcity

• o Healthy and flexible financial structure further optimized

  - LTV including duties down -40bp to 33.6%, average debt maturity of 7.1 years

-

Average cost of debt down to 1.3% (1.0% for the cost of drawn debt)

• o Residential strategy continuing to deliver performance, while preparing for the future - +7.2% reversion achieved on tenant rotations in 2020

  - Subsidiarization of the portfolio in H1 and partnership with Nexity to accelerate the portfolio's development

• o Polarization of investment markets in Gecina's strategic areas

  - Value growth for central Paris offices (+2.7% over 12 months) and for residential (+6.7% over 12 months)

-

Value adjustment for offices in more peripheral sectors (-7.6% outside of Paris City)

Proactive anticipation and transformation strategy

• o 162,000 sq.m of rental transactions with a "bespoke" approach depending on the areas

  - Reversion potential captured in Paris City (+25% in the CBD 5,6,7, +12% for the rest of Paris)

  -

  Firm maturity of leases extended outside of Paris and Neuilly (to 5.3 years vs 4.6 years at end-2019)

• o Acceleration underway with the digitalization of our activities and the deployment of our client-centric brand YouFirst

- Client portals / web app, operational CRM, virtual visits, brokers portal, etc. to improve our competitive positioning, help build loyalty among our clients, strengthen commercial performance, differentiate our rental offering and optimize our buildings' operating expenditure and energy bills

• o Ongoing portfolio rationalization

  - €539m of sales secured and €474m completed with an average premium versus the latest free appraisal values of +4.7%

-

Our Office portfolio in central sectors further strengthened (66% in Paris City at end-2020)

• o Pipeline of 23 projects to be delivered by 2024

  • - Concentrated in the Paris Region's most central sectors, with 82% in Paris City or Neuilly-sur-Seine

  • - Expected yield on cost of around 5.3%, supporting future value creation

  • - €120m to €130m of additional IFRS rental income to come from the pipeline that is already committed or to be committed shortly, as well as work underway to market space still to be let for the 2019 and 2020 deliveries

CSR commitments reflected in concrete results

• - For our assets: office CO² emissions reduced by -50% over the last 12 years (i.e. 13.9 tons/sq.m/year), exceeding the 2020 targets

• - For our liabilities: 44% responsible bank lines

• - Environmental performance criterion incorporated into long-term incentive plans

• - Performance recognized with leading sustainability ratings, positioning Gecina as one of the top-performing companies in its industry (GRESB 92/100, MSCI AAA, Sustainalytics 8,8, ISS B- and CDP A list)

Mobilization to support customers and societal commitments

• o Mobilization to support tenants, suppliers and people affected by the crisis

  • - Rent waived in the second and fourth quarters for very small businesses and certain SMEs operating in sectors that were ordered to shut down, rent deferrals and monthly instalments offered for nearly 5% of the annual rental base for offices

  • - Payment schedules maintained for suppliers

  • - Vacant student residences made available to healthcare workers and women victims of domestic violence

  Stable 2020 dividend proposed at the General Meeting

• o €5.30 per share for 2020 to be paid in cash

  - Dividend yield on the share price1 of around 4.5%

  - Payment of an interim dividend of €2.65 per share at early March and payment of the €2.65 per share balance in

  July

  2021: a transition year

• o Following the impact of the sales completed in 2020 and the assets with strong value creation potential freed up for redevelopment, a slowdown in indexation in 2021 and extended letting timeframes, recurrent net income (Group share) per share is expected to contract in 2021 to around €5.3 per share2.

• o Over the longer term, the projects from the "committed" and "to be committed" (controlled and certain) pipeline and the normalization of the lettings rate for the assets delivered in 2019 and 2020 are expected to generate €120m to €130m of additional annualized rental income (IFRS), thanks exclusively to these internal dynamics developed by the

  Group

  Key figures

Recurrent net income (Group share)3	438	421	-4.0%
Per share (€)	5.95	5.72	-3.9%

LTV (excluding duties)	36.0%	35.6%
LTV (including duties)	34.0%	33.6%

EPRA Net Tangible Assets (NTA) per share

173.1 170.1

-1.7%

In million euros	Dec 2019	Dec 2020	Change (%)	Like-for-like
Offices	548	534	-2.7%	+3.0%
Traditional residential	106	106	+0.3%	+0.9%
Student residences (Campus)	20	18	-6.3%	-6.0%
Gross rental income	673	658	-2.3%	+2.3%
Portfolio value (€m)	20,051	19,738	-1.6%	-0.1%
EPRA Net Reinstatement Value (NRV) per share	190.0	187.1	-1.5%
EPRA Net Disposal Value (NDV) per share	167.8	163.0	-2.9%
Diluted EPRA NAV per share - previous format	175.8	172.8	-1.7%
1 February 16, 2021 closing price

2 This estimate could be revised down or up depending on potential acquisitions and sales in 2021

3 EBITDA including provisions recorded in connection with the health crisis, after deduction of net financial expenses, recurrent tax, minority interests, income from associates and restated for certain non-recurring items (notably costs relating to the subsidiarization of the residential business and the tax reimbursement)

Resilient performance faced with the uncertainty linked to the effects of Covid-19

c.99% of rent for 2020 already collected, with a normalized collection rate for the first quarter of 2021

For offices, 98.5% of rents (including ground-floor retail units) have been collected.

Nearly 0.1% were cancelled as part of the measures put in place by the Group to support very small business tenants operating in sectors that were shut down during the second and fourth quarters.

For the remaining 1.4% of rent not collected to date (representing c.€10m including taxes and charges), with part corresponding to deferred payments granted to tenants, while the rest of the amounts are subject to rent recovery proceedings. The volume of rent still to be collected was significantly reduced during the second half of the year, down from almost €20m at end-June 2020.

Part of these receivables that have not been collected to date justifies the provisions recorded in the accounts at end-December 2020, impacting the Group's rental margin for €5.5m.

The rent collection rate for the first quarter of 2021 is to date in line with the usual rate observed.

Gecina has also used Dunn & Bradstreet ratings to assess its tenants' risk profiles. 83% of the Group's rental base comes from tenants in the top two categories (very low risk or low risk). Although

this rate is down slightly since June 30, when it was 86%, logically reflecting the deterioration in the economic environment, this is still high, confirming the Group's solid rental base.

Rental income up +2.3% like-for-like

Gross rental income for 2020 came to €658m, up +2.3% like-for-like and down -2.3% on a current basis, primarily reflecting the impact of disposals and several projects launched for redevelopment.

The like-for-like performance represents +2.3% (+€12m), outperforming indexation (1.6%) by +0.7pts. This outperformance factors in positive rental reversion across all asset classes, as well as a lower vacancy level.

On a current basis, the -2.3% decrease primarily reflects the impact of sales carried out in 2019 and 2020 (-€32m) and the assets transferred to the pipeline for redevelopment (-€22m), partially offset by like-for-like growth (+€12m), the delivery of nine buildings (+€18m) and the recent acquisitions in Paris and Neuilly (+€8m).

Gross rental income	2019	2020	Change (%)
In million euros	Current basis	Like-for-like
Offices	548.2	533.6	-2.7%	+3.0%
Traditional residential	105.7	106.0	+0.3%	+0.9%
Student residences (Campus)	19.7	18.4	-6.3%	-6.0%
Total gross rental income	673.5	658.0	-2.3%	+2.3%
Annualized rental income

Annualized rental income (IFRS) came to €627m, down €38m from December 31, 2019. This contraction reflects the impact of the sales completed in 2020 (-€17m) and tenant departures from buildings with strong value creation potential transferred to the pipeline (-€11m), as well as buildings that will not be operational for at least one year due to lighter refurbishment work (-€11m). These departures are partially offset by the impact of new acquisitions and building deliveries (+€9m). The rest of the change

is linked to like-for-like growth and the slowdown in activity for student residences.

Note that this annualized rental income includes €18m from assets intended to be vacated shortly for redevelopment (controlled and certain pipeline) and €3m from buildings covered by preliminary sales agreements at end-2020.

At end-2020, the office portfolio's occupancy rate (spot) was 91.1%, taking into account the slower lettings rate (vs. a "normalized" average financial occupancy rate of 93.8% in 2019).

Annualized rental income (IFRS) In million euros

Dec-19 Dec-20

Offices	539	502
Traditional residential	106	106
Student residences (Campus)	20	19
Total	665	627
Offices: trends still positive in the most central sectors
Like-for-like, office rental income is up +3.0%.

This increase reflects an improvement in indexation (+1.7%), as well as the positive reversion effects (+0.4%), particularly in Paris' Central Business District, and a reduction in the vacancy rate, primarily in the Western Crescent, with further space let in the Be Issy and Octant-Sextant buildings. Restated for the rent waivers granted to very small businesses and SMEs in the second and fourth quarters, the like-for-like growth rate is +3.3%.

Management of the lease expiry schedule in 2020: capturing positive reversion in Paris City, anticipating end dates and extending the term of leases in peripheral areas where reversion is negative

The leases signed4 in 2020 show a headline reversion rate of around +25% for the CBD and Paris 5/6/7, and +12% for the rest of Paris, compared with a negative rate outside of Paris, with -6% for the Western Crescent/La Défense and -15% for the rest of the Paris Region.

Gecina has managed its lease expiry schedule with a proactive approach in the Paris Region's less central sectors with a focus on extending the firm maturity of leases in peripheral areas. As a result, the slightly negative reversion recorded in 2020 (-2%) is linked primarily to the relative weighting of the renegotiations carried out in secondary sectors, which were higher than usual in 2020, but does not reflect a deterioration in rental conditions.

On a current basis, rental income from offices is down -2.7%.

This change reflects the impact of the non-strategic assets sold in 2019 and 2020 (-€31m), including the sale of the Park Azur building in Montrouge, PM2 in Gennevilliers and Le Valmy in Montreuil, partially offset by the impact of the six buildings delivered in 2019 and two in 2020, with 81% let, located primarily in Paris City, as well as La Défense.

Gross rental income - Offices Dec 31, 2019 Dec 31, 2020 Change (%)

In million euros Current basis Like-for-like

Offices 548.2 533.6 -2.7% +3.0%

Other French regions / International

YouFirst Residence (traditional residential): resilience confirmed

Paris City	-0.3%	+1.9%
- Paris CBD & 5-6-7	+0.2%	+1.6%
- Paris CBD & 5-6-7 - Offices	+1.8%	+2.5%
- Paris CBD & 5-6-7 - Retail	-5.6%	-1.7%
- Paris - Other	-1.1%	+2.5%
Western Crescent - La Défense	-0.4%	+5.4%
Paris Region - Other	-20.1%	+4.6%
-11.1%	+0.0%

290.6

289.8

177.8 141.0 36.9 112.8 182.7 53.7 21.1

178.2 143.4 34.8 111.6 182.1 42.9 18.8

Like-for-like, rental income from traditional residential properties is up +0.9%.

This performance takes into account indexation of +1.1%, as well as a positive reversion effect (+0.4%) on the apartments relet. The rents for new tenants are around +7.2% higher than the previous tenant's rent on average since the start of the year. The change in the occupancy rate is not particularly significant, but represents a negative contribution of -0.4%.

On a current basis, rental income shows a slight increase, up +0.3% to €106.0m, with organic trends offsetting the impacts of the ongoing vacant unit-based sales program.

4 Excluding non-standard situations