Hello, and welcome to the Gecina Business at September 30, 2023 conference call. My name is Caroline, and I'll be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only mode. However, you will have an opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand over the call to your host, Mr. Beñat Ortega, the CEO, and Nicolas Dutreuil, the Deputy CEO of Finance, to begin today's conference. Thank you. Yes, good morning to everyone. Thank you for being online with us this morning for this conference call related to our business activity in Q3 2023. I'm Samuel Henry-Diesbach, and I'm here with Beñat Ortega, CEO, and Nicolas Dutreuil, Deputy CEO in charge of Finance. After a quick introduction by Beñat regarding our performance since the beginning of the year, Beñat, Nicolas, and I will be happy to answer the question you may have. I now hand the floor to Mr. Ortega. Hello to everyone, and thank you for being with us this morning. Before we can answer your questions, I would like to quickly comment our performance and recent achievements. This quarter has been particularly robust again and confirms our good momentum. We've been able to post strong rental growth at the end of September, at 7.3% in total, and even 8.1% on offices. This is far stronger than what we've been posting last year at the end of 2022, when rental growth was only 2% for the group. This is the result of the combination of strong organic rental growth, reaching more than 6%, and a positive and strong contribution from the pipeline. Like-for-like growth growth has been supported not only by indexation, 4.6%, but also occupancy rates improvement by 130 bps and rental uplift along tenant rotation, 14% in average. In fact, the rental uplifts are still at high levels, reaching on offices 26% in Paris City in average and 14% in total for the office, suggesting today, again, a large outperformance from central areas over the peripheries. The residential portfolio shows a rental uplift now reaching 13%, one, three, and a strong improvement when compared to what the group were able to grab these past years. Remember, 10% last year, around 6% between 2018 and 2021, and below 2% before. On the two portfolios, offices and resi, our efforts to improve our operational performance and our products and their locations are key to deliver these re-leasing spreads. On top of this like-for-like performance, our 7.3% rental growth is also supported by a positive contribution from the pipeline, thanks to recent deliveries. Indeed, the pipeline contributes by EUR 16.4 million, taking into account the delivery of l1ve and Boétie buildings in the CBD in Paris CBD and the 157 CdG in the east. And the effect of building vacated mid-2022 to be redeveloped, with their delivery scheduled in 2025, Icône-Marbeuf, and 27 Canal-Flandre in Paris. Both are in Paris. You already know that the group was able to sell EUR 1 billion of assets in H1 this year, 10% above last appraisal values, and with a cash flow yield effect of around 2.5%. Since then, we have continued, and EUR 111 million have been secured of disposals and are today under preliminary agreements. Here again, with a yield below 3% and still above appraisal values, with an almost 8% premium. These opportunistic deals further improve the group balance sheet, obviously, in the context of significantly slower investment markets these last months. But in our view, the biggest news from this quarter is on the leasing side, with two major assets of our pipeline now fully let. The certified Capucines building in Paris CBD, a bit more than 6,000 sq m, which is scheduled for delivery during the first half of 2024, let to a luxury group and a law firm. All the office space is now fully let. But more importantly, a rare operation for Paris CBD market, named Mondo, 30,000 sq m building, now fully pre-let to one single large French corporate, member of CAC 40. Such an operation is relatively exceptional, given the size and the location, and having this asset fully let more than a year before completion, perfectly illustrates the strength of Paris City office market and the quality of the refurbishments delivered by Gecina. Today, 100% of the office space to be delivered in 2023 or 2024 is now fully let with rental levels, which are higher than initially anticipated. We are now working on the leasing of the assets that we'll deliver in 2025 in Paris CBD, Icône-Marbeuf, and 27 Canal-Flandre again. Following this good quarter, Gecina is confirming its growth forecast for 2023. Remember, we raised our guidance mid-year when publishing our half year results, initially expecting our recurring net income per share to grow by 4%-6%. We now confirm our new targets, that recurring net income, group share, is expected to reach EUR 5.9-EUR 6 per share, and thus delivering 6%-8% growth per share in 2023, in the context of good leasing markets, I just explained. Solid indexation of our rents, and the good contribution from the pipeline, and all that combined with Gecina's long-term, long debt maturities, and active hedging policy that enables to limit the impact of interest rates rise on the group's financial expenses for 2023. Nicolas, Samuel, and I are now available to answer the questions you may have. Thank you. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We'll allow for a moment for everyone to signal for questions. We will take the first question from line, Florent Laroche-Joubert from ODDO, to begin the discussion. Thank you. Hello, Beñat, hello, Nicolas, hello, Samuel. Thank you for this short presentation. Congratulations for the leasing of Mondo. So maybe first question, could you maybe come back to the conditions why this group of CAC 40 has signed at Mondo, in which conditions? This would be my first question. And my second question would be on the investment market. So have you noted on your side any changes in the behaviors between buyers and sellers in the offices market this last week? And what would be for you the right condition to start at looking at opportunities for acquisitions? Thank you very much. Thank you, Florent, for your question, questions, by the way. Why did they sign with us? I think it's a combination of several factors. Obviously, we can't communicate on the name, because they need to announce that to their employees before we communicate on who it is. So I will be not too detailed, but the idea behind signing such a lease is, one, the quality of the assets. I think we, within the marketing, we said we have built and designed Mondo after COVID, and thinking by three dimensions, which have been convincing for the clients. Obviously, the location is clear, so I will not comment on that. The first one was ultra-flex, so we have designed Mondo to allow someone that would commit for long term to be capable to use that in different ways, the assets. So large floor plates, unique in Paris, more than 3,500 sq m of floor plate, gives a lot of flexibility. We thought with external surfaces, a lot of gardens, a lot of services, restaurants, which will be extremely vibrant. So that flexibility is key for large corporate to take a long-term commitment. Second, it was ultra lively, so we have thought that asset to be extremely lively, open to the city, with a lot of new food offer, services, and so on. So being lively, being capable to attract talents, being capable to attract back employees to the office was key. And the third was ultra- green. It's a super low carbon building, and I think we have convinced also that tenant to come into our building, also through the general policy by Gecina to be excellent in operations and excellent in efficiency in terms of energy. And I think it's a combination between an excellent building in terms of design, green, but also the fact that we will operate that in a super lean manner. So those three reasons, I would say have been key. Regarding investment markets and behaviors and so on, I think the market is still quiet. There is a limited number of buyers. So for the timing, it's pretty quiet. So we have been quite active, as you saw, since the beginning of the year. It's not easier than before. So it's still pretty quiet, to be honest. There is a lot of rumors about people wanting to sell secondary assets and so on, but mind you, there is not so many players that are willing to buy, especially secondary location, secondary assets, so still pretty quiet. Okay, thank you very much. Welcome. Thank you. Thank you. We will take the next question from line, Stéphane Afonso from Invest Securities. The line is open now, please go ahead. Yes, good morning, and thank you for the, for the presentation. Two questions on my side. The first one on the Western Crescent portfolio. What could we expect in terms of renewals or departures over the next 12 months? And also, on this part of the office portfolio, could we have an idea of the reversion rate that was captured at this stage, and regarding the fact that incentives are still increasing in this area? Thank you. You know, the vast majority of the assets that we own on the Western Crescent is in Boulogne and in La Défense. As I said during a previous call, so La Défense has been secured recently for long, so we have no specific expiries over the next several years, in fact. Regarding Boulogne, we have a series of assets, but same, no major expiry over the next 12 months. Obviously, they will come later in time, in 2026, in 2020, 2027, and so on. But for the time being, no specific expiries for the next 12 months. Yeah, and you know, we own also a couple of assets in Neuilly. So theoretically, Neuilly is considered as being the Western Crescent, even in this market, is moving like a Parisian market. But it's the same in Neuilly. You've seen that we have fully let a couple of buildings during the last month. So here, again, no specific issues coming in the next 12 months. Neuilly is more an opportunity, by the way, when we have an expiry, because then clearly, that market is as tense as Paris, so. Okay, thank you. Uh- On the reversion, please. On the reversion, same. I think as we don't have so many expiries, there is no specific pressure. Obviously, the rents and the prime rents are not growing as fast as indexation, so in those markets, except Neuilly, again. So obviously, we will have to monitor that situation over time. Okay, thank you. That's useful. Thank you. We will take the next question from line, Ana Escalante from Morgan Stanley. The line is open now, please go ahead. Good morning. My question is also related with the investment market. You flagged that in the last few months, there's been a slowdown in the number of transactions. But when looking at market reports, it looks like transactional prices, transaction price decline is accelerating also in central Paris, like some market reports point to a decline of 11% year to date, 6% in the third quarter. Could you please comment on that? What do you think the likely decline in prices could be in the second half, and how that will impact your final year evaluation as of December? And, you know, also, given the different expectations in buyers and sellers, where do you see deals going to in order to, you know, find a common ground for both of them? First, I think we have proven that our portfolio was liquid, so against the general market, which is a bit quiet, you saw that we sold EUR 1.1 billion assets in with premium, so compared to last year value. So, I think what we are trying to prove this year is the fact that we are not a proxy of general markets. Our assets are not managed in the same way. The type of tenants we can attract in our buildings are not the same as the general market. So that's first. I will not comment on, obviously, on our presence at the end of the year. That will be for our call in February. Maybe on the markets, I think one needs to combine and to look at the yield effect. We have been taking a yield effect for now 12 months or 18 months. The significant one, even in Paris, 10%-15% down, even in Paris, and that was the slide that we showed, you know, in July. But then you need to look at, you know, what is the rental uplift and the rate of growth behind it. So I think it's quite complex. Again, the market is quiet, but we need to be quite specific on where the market grows. So that's obvious, that the yield effect is active, even in Paris. And that, and that you show, you see that in our appraisals, our previous appraisals. I think over the last 24 months, you know, the evolution was 14%, one four, in our appraisals, the yield effect. So it's, it's already in place. It might continue. You know, we will, we'll have, again, like reversion, assess over time. But you know, even if it continues, you've seen that we have a very strong balance sheet. And what we've done during the year in terms of disposals will be, at the end of the year, very helpful in terms of impact on our balance sheet. When you look at what we have sold, and as Beñat said, it was more than EUR 1 billion of assets, it's representing almost 15% of our debt beginning of the year, meaning that what we've done during the year is clearly a strong deleveraging of Gecina. And so, of course, having a company being able, in case of, to absorb adjustment in values, if any. Okay, thank you very much. Thank you. We will take the next question from line, Allison Tan from Bank of America. The line is open now, please go ahead. Hi, good morning. Congratulations on the very good results. I have two questions. First of all, on this Mondo building, I wonder if you could give us a ballpark as to the rental level you are leasing at right now for this building? And secondly, on your leverage. Do you feel comfortable with your current leverage, including metrics like LTV, net debt to EBITDA? And do you have any further plans to reduce it? Thank you. Yeah, on Mondo, for the timing, the transaction is still quite in the confidentiality mode. I think we are happy with the level. It's higher than what we expected, so for the timing, I will stay there, but it's pretty good, good level of rent achieved. But that's also linked to the scarcity of qualitative offer and supply that you have in Paris. On the debt metrics, I think we have proven that we can manage that situation. We are at 32% LTV. We have no JV, no debt, no secure debt. We have a long-term, very long-term hedging policy. So I think we have proven to be a pretty robust and disciplined company. Okay, thank you. If I can add one more, that's actually following Anna's question. I know you cannot really give us too many details on the full year valuation, et cetera, but what kind of conversation you are having with valuers in the past three months? Do they have any comment on the Paris office market, or how the cap rate should involve in their view? Thank you. Listen, we are still at the very beginning of the work with them. They are supposed to give us a fair view, I think, in two or three weeks from now. So, we'll have a better view by, yeah, beginning of November. But obviously, we are talking about, you know, the thirty-first of December accounts. So we and we are early October, so I think we will monitor the situation. Again, the best way, in fact, to prove the quality of our portfolio is to show what we have done. And again, this quarter, it's small volumes, okay, but we have disposed below 3%, again. So, we are not always a full proxy of the market. Okay, thank you very much. Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the next question from line Ben Richford from Societe Generale. The line is open now, please go ahead. Hi, good morning. Just two questions. Firstly, on the disposals you've made and the yield on that, how much of that was influenced by vacancy? If you apportion, say, an ERV for the vacancy, what would the yield have been? And then secondly, just any strategic thoughts you have on residential, whether you see long-term, you want to continue owning student residences, for example. Thank you. Yeah. Yeah, on disposals, yes, it was influenced by vacancy, because we sold two vacant secondary assets, offices. But even the ones that were occupied were at 3%. So... And obviously, back to Ana's question, I don't see so many reports pointing out the deals we have done this year. Look, we have been selling what? Almost 10 assets, excluding the one on Champs-Élysées that you tell me it's a bit atypical, but still. And all of them were done below 3% yield. So that's nowhere within the reports, because it has been done one by one, and most of the time without brokers. So that's one, and second, on resi, you saw that we have been raising significantly reversion over time. We still have a lot to do. It's not easy, in fact, to deliver growth on resi, so it's a very industrial business. We have been beefing up digital. We are beefing up quality of design, quality of services, somehow being a bit more proactive to raise rents, and that's paying off for the time being. So we are still working more there, but I'm quite enthusiastic about the way we have been revamping our business model on that. Thank you. Thank you. It appears no further question at this time. Yes, if there are no further question, we can close this call, but thanks a lot for attending this this call this morning. We'll meet in the coming weeks, probably some of you guys along some conferences and roadshows potentially. Please note that our next publication will be for full year 2023, the 14th of February, the market closed. Please remember, in the meantime, that we are all available if you have any follow-up questions, so feel free to to give us a call. Have a good day. Bye. Thank you for joining today's call. You may now disconnect.