Hello, and welcome to Gecina Business Update as of September 30, 2024. My name is Laura, and I will 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 the opportunity to ask questions at the end of the call, and this can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. Today, we have the CEO, Beñat Ortega, joined by Deputy CEO in charge of finance, Nicolas Dutreuil, as our presenters. I will now hand you over to your host, Beñat Ortega, to begin today's conference. Thank you. Good morning. Thank you for being with us today. Very happy to have the opportunity to present this business update for Q3 2024 and answer your questions, obviously. During this first nine months, gross rental income is up by 6.7% like for like, mainly driven by indexation, the effect of indexation, plus 5.4%, but also the contribution of reversion captured on new leases, a contribution of 1%. Obviously, we have continued to get a significant rental reversion from our office business, +14% overall, and even better in Paris at 28% during those three quarters. As well as on the residential portfolio with an increased reversion of 16.5%. Some deals during Q3, during a more quiet leading market, especially in Boulogne and around La Défense with a consulting firm or communication company, but also we have signed a lease with a university in Paris, seventh arrondissement. As such, occupancy is slightly up year-over-year. And more importantly, during this quarter, we have been capable, in fact, to deliver three large-scale programs, development programs on time and on budget. The first one being Mondo, around 30,000 square meters reposition office asset located in Paris CBD, fully prelet one year in advance and benefiting from the highest environmental certification standards. The second is 35 Capucines, next to our head office in Paris, a bit more than 6,000 square meters office in Paris CBD, again, fully prelet to a luxury company and a law firm. And third, we have just delivered a conversion of an office building into residential accommodation in Paris, called Dareau, on the 14th arrondissement, where 92% apartments have been delivered recently and will be let, until year-end. At the same time, during this quarter, we have the great news to have again, an excellent score at GRESB, 95%. We are the first REIT on offices within that rating. And second news on the non-financial aspect of our company, 100% of our drawn and undrawn debt is now fully green, following the greening of our latest or last credit line during Q3 2024. And as such, especially thanks to those development projects delivered on time and on budget, we are now expecting to have recurring net cash flow around EUR 6.4 per share. And also the leasing which have been rather good during these first nine months. Thank you for your attention, and obviously we are here to answer your questions. Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you, and we will now take our first question from Florent Laroche-Joubert of Oddo BHF. Your line is open, please go ahead. Hi, Beñat. So thank you for this presentation. I would have two questions. Maybe the first one on the investment market. So could you please give us maybe more colors on your view on the investment market, notably in terms of liquidity and opportunities for you? So my second question would be on the leasing side. Do you see any change of corporates that want to have maybe more their employees back at the office? So do you see any link with the leasing activity? And maybe so the leasing activity was also quite calm in Q3. Do you see any change in Q4? So thank you. Thank you, Florent. So then, three questions. On the investment market, as I commented for several quarters now, the investment activity is quiet. However, we have seen a series of deals, especially in Paris, especially Paris CBD, at pretty decent value. So again, a pretty quiet investment market, but still a decent liquidity on the central location of Paris region. On regarding the back to the office, I think we saw a series of announcements by big corporates, U.S. banks, very driven by the U.S., by the way... which have maybe gone a bit too far on working from home policies. So yes, from our conversation with tenants, that topic is back on the agenda. And yes, they are reassessing the needs of square meters. I'm not saying that the general trend is not decreasing square meters. I think that's still the case, but maybe corporates are reevaluating the quantum of decrease of square meters compared to what they used to have fifteen years ago. So yes, it's slightly changing. I couldn't say it's a major shift, but psychologically, it's starting to be a small different change. And maybe on the leasing and more quiet leasing market, obviously, the activity has been impacted by the Olympics, which have complexified site visits, especially during July. And obviously, the political uncertainties in Paris since June have not helped. So yes, we have seen a decelerating leasing activity during this quarter, but it doesn't look to change a bit the ambiance, generally speaking. Still, very few quality office assets on central location and a pretty wide offer outside Paris, so still complex to manage outside Paris. Maybe if I can add one point on the investment market and what we've seen during Q3, I would say that what's interesting is that when you look at the transaction which has taken place during this last month, you can see, and it's of course public information, that most of these deals have been made at cap rates around 4%, some of them even below, which I think will give for the appraiser for year end a couple of benchmarks, which will be interesting. Because when you look at the valuation of a portfolio on central location, we are around this year. And second point, which is also interesting, is that of course, we could consider that the liquidity of the market has been reduced because of the smaller number of deals. But what's interesting is that when you look at the buildings which have been put for sale, the demand for this asset is very strong. Meaning that you have a quite large number of potential buyers looking at these potential acquisitions. Meaning that in Paris, the lower amount of deal is not coming from a lack of demand, but much more because of a lack of supply. Okay, now thanks. Very interesting. Thank you. And we'll now take our next question from Veronika Martins of Van Lanschot Kempen. Your line is open, please go ahead. Hey, good morning, all. Thank you for the presentation. Two questions from my side. Maybe follow up on that investment market. Obviously, you currently added some new projects, probably more in the pipeline, but are you also actively scanning the market for interesting acquisitions, and are they there? Plus, secondly, on that development pipeline, any updates on the other project? Is everything going to plan? And also in terms of letting activity, or did that also slow down a little bit around the Olympics? Thank you. Yes, thank you. On investment market and acquisition, like Nicholas said, a few assets are on the market these days. So we are obviously monitoring all of them, checking if it's in line with the return on capital we want to achieve on those. So for the time being, nothing specific, but obviously, we are scanning the market. We are a big player on that market. We have somehow investment capacity, so but very, very careful on the way we allocate the capital. On development, like I said, during Q2, in July, we are working on getting the permits, and as you know, it's pretty complex to get those permits. So we're still working on it, and hopefully we'll have a good news by year end. Okay, clear. And on sort of like pre-letting rates, any updates on that side? Not material. Still working on it. We have signed one more lease, but nothing material. Okay, that's very clear. Thank you. Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. And we will now move on to our next question from Nadir Rahman of UBS. Your line is open, please go ahead. Hello, good morning. Can I confirm that you can hear me clearly? Yes. Yes, good morning. I had a quick question on the inflation and indexation, because you've said that your 6.7 like-for-like indexation is 5.4%, driven by indexation, and I wanted to confirm, given that, you know, Eurozone inflation is starting to fall and we're seeing a slowdown, where do you see the indexation and therefore the reversion potential, sorry, the like-for-like growth going from here in the next few quarters? Thank you. Thank you for the question. That will be more an answer for next quarter, annual results and next year guidance. But just to give you flavor, obviously inflation is decreasing significantly. So obviously the contribution of inflation will be probably the highest in 2024 compared to the next years. That's just mathematics. So now, as you can see, we still have reversion, so that we should flow into the cash flow in the future, and have in mind that it's a lag effect, so even if inflation has decreased this year a lot, in fact, we are more benefiting from inflation of last year. So obviously, that impact will decrease quarter after quarter in the next quarters. Thank you. Thank you. Sorry- We will now- for the guidance. Yeah. Sorry, thank you. We'll now take our next question from Jonathan Kownator of Goldman Sachs. Your line is open, please go ahead. Thank you, good morning. Just a question on credit spreads. Could you just let us know where you would stand today in terms of your credit spreads, please, for sort of five, seven-year financing? Do you see an improvement or are they rather stable? They are improving, obviously. But that's a public figure. But if you look at the seven-year bond yesterday night, it would be in the range of 3.2%. Okay. And any- That's for the two point, Jonathan? The total- Yeah. Two point, let's say. Of course, that's not the credit spread. Yes, I know that. The spread is depending on the duration, but around 80-90 basis points. Would the bond markets be more favorable than the bank market right now, or are they rather comparable? Well, no, for the time being, it's still more attractive to go on the bonds. Have in mind that, you know, following all the disposals we did last year, we have decreased a lot our commercial paper activity, so for the time being, we are more looking at, you know, probably growing that amount, which has a very limited spread. If you have in mind, it's a one basis point, two basis points spread before going on the bond market, so we still have flexibility on that for the time being. Okay. The second question on just on leasing, do you have any, you know, big leasing topic that you're watching? Any big departures or any space, you know, where you have, I don't know, strong changes happening? Sure. You have our tenancy schedule in the appendix, not on Q3, but Q2, I guess. So we'll have expiries on the outskirts of Paris over the next year, in Boulogne, La Défense, between 2025, more importantly, in 2026 and 2027. So yes, we have expiries, and we'll have to manage those situations, and in the meantime, obviously, we'll have also expiries in Paris with more reversion. So that's a balance. But yes, we will have expiries on the outskirts, and that's where it's more painful, with probably negative reversion and potential vacancy. Are you seeing... I mean, a broader question, I guess, but from that perspective, obviously, this very imbalanced market between strong demand in the center, more supply coming through in the outskirts and less demand. I mean, how is this playing out in your view? What do you see from owners of space in the outskirts, and are you seeing tenants starting to consider, you know, cheaper rent options at this stage versus being in the center, or is it still status quo? I think it's you have like three markets basically. You have still a good market inside Paris. With with adjusted rents you have like Boulogne, La Défense, which are attractive and attracting people from other geographies. And then independently so among the rents a very limited demand on the other locations inside Paris region. So that's still quite valid. So maybe what we have seen is with declining rents and increased incentives in La Défense a quite good activity in La Défense typically. So I think when it's well located good public transport and adjusted price then you find more demand. Typically this has been the case for Boulogne and La Défense but obviously it's painful in rents. How are the owners of the assets that are suffering at this stage reacting, and do you see any movements from, I don't know, funding partners, banks? You know, are you seeing more distress there and any clue as to how this is playing out right now? For the time being, not really. The situation is, as long as they have a lease in place and even with decreased rents, I think, you know, there is a kind of status quo between investors, lenders and tenants, in that. So, again, we are not really exposed there, but from what we see from our window, it doesn't look to have happened a lot of distressed situations. So it's, people are working, trying to collect cash flow, so not really a dislocation there. Okay, um- That might sound surprising when I listen to your silence, but that's what is happening. Okay, no, fair. What's the latest update on your tower in La Défense? I mean, obviously, you're on the contract until twenty twenty-seven, but are you able to move earlier than that and, you know, sort of progress your strategy for that building? ... No, you know, obviously it's two listed companies that are at stake, so I will not comment on discussions, but we are working to prepare that and look at all the options... Can you remind us when they physically move, or have they moved out already? No, they are still in the tower. Still in the tower. Okay. Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. We will now take our next question from Adam Shapton of Green Street. Your line is open. Please go ahead. Hi, guys. Just a quick one. I know it's been a quiet leasing quarter, and you mentioned a wait and see attitude with the Olympics and elections and so on. Just wondered what you're seeing, what you've seen over the last three to four months in your place serviced office rollout. So are you seeing good demand? Is sort of in terms of pricing and what you're getting in terms of premiums to sort of conventional market rents there. Any update on that side? Yes. Same like I said on Q2. It's still a pretty decent business model with, you know, good premiums. But like the rest of the market, impacted by that approach. So the leasing has been a bit more quiet, but we still see good demand, good visit activity. So nothing very different. Again, it's a pretty small portion of what we do, but still promising. I think it gives us... And the idea, it's not a new business, but it's just a way to address differently the markets, and to have more options to lease, somehow. So typically we are testing, and we test that in Boulogne, with a small surface, 2,000 square meters in Boulogne, that we deliver in November. Also, to open, in fact, our capacity to lease. So if someone needs an office for a project for one, two, three years, immediately available, immediately designed and furnished, that's an alternative to the rest of what we have vacant, which is more. It takes, like, four-six months to be in the office after furnishing, partitioning, and so on. So it just give us more options, in fact, to get some clients. Okay. That's good to hear. Thank you. Thank you. And we'll now take our next question from Paul Ridge of R&Co. Your line is open. Please go ahead. Hello, guys. Just a quick question my side. If we come back on the acquisition market, on the investment market, what will be today the minimum yield you will be looking at for any acquisition? Can you give some colors on that? No, we look at the total return. So the initial yield depends on if there is vacancy, if it's under-rented, if there are works. So it's more what we try to expect on the pipeline, somehow, as a total return. And I think the beauty... so few projects on the market, so I don't see so many deals to be done by Gecina. But the beauty of our company is that we can buy assets that we need to keep for 10 years because you have tenants to evict and so on, and then do works. Or we can buy and manage to grow the rents. We can amenitize the asset, try to capture more revenue. So I think we have different options of assets to buy. So we are not a purely value-added player, we are not a pure core player, so we can play on several grounds. But still, to buy, we need to find the right profitability and the right product and the right location. So, but we have somehow more options than most of the players. Okay. But then on total return, is there... I mean, is it more regarding, you know, cost of capital or? Yeah, it's on cost of capital, obviously. It's, but it depends on the risk we take. So I think we have a tailor-made approach. I think, you know, when we look at... We are not an investment player. Somehow, we are a REIT, so we look at how does it improve the company? So does it improve the cash flow growth of our business? Will it generate a capital gain in five, ten years? So it depends on the risk we take and the speed of that. But obviously it has to grow our KPIs, our main KPIs, which are NAV and cash flow growth. And we can play on those two grounds. Okay. Thank you. Welcome. Thank you. And we'll now take our next question from Benjamin Legrand of Kepler Cheuvreux. Your line is open. Please go ahead. Hi, good morning. Thanks for taking my question. Just maybe a more specific question. I was reading somewhere that you have tenants leaving the Tour Mirabeau in Paris, and I was just wondering if it was getting emptied, or if you had any plans for this tower to be relet? Basically, what's the plan for this asset? Thanks. Yeah, thank you for the question. That might be, but, not being specific, potentially a new project for Gecina, but, for obvious reasons, we have been silent on it. Okay. Okay. And in the... If I remember correctly, in H1 results, you were talking about some rent that like rent decrease for 2025. I don't remember exactly the number. Was that considered in that number? Yes, that might be the that situation. Okay. Okay, thank you. Thank you. There are no further questions in queue. I will now hand it back to Beñat Ortega for closing remarks. Thank you for all your questions and listening that call. See you soon. Thank you. Bye-bye. Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.