GECINA - REFERENCE DOCUMENT 2017

ANNUAL FINANCIAL STATEMENTS

Notes to the annual financial statements at December 31, 2017

Property impairment and value 4.3.3.1.3 adjustments Any impairment charge following a reduction in value of properties is determined as follows: Long-term property holdings An impairment is recognized on a line-by-line basis if there is an indication of loss of value, especially if the block appraisal value of the property valued by one of the independent appraisers (at December 31, 2017: CBRE Valuation, Cushman & Wakefield and Crédit Foncier Expertise), is more than 15% below the building’s net book value. In this case, the impairment amount recorded is then calculated in relation to the appraisal amount excluding transfer taxes. In the event of an unrealized capital loss of the total property holding, impairment is recognized for each property as an unrealized capital loss. This impairment is primarily assigned to non-depreciated assets and adjusted each year based on subsequent appraisals. Property for sale or to be sold in the short term Properties for sale or due to be sold in the short term are valued in relation to their independent block valuation or their realizable market value, and an impairment is recognized if this value is lower than the book value. Valuations are conducted in accordance with industry practices using valuation methods to establish market value for each asset, pursuant to the professional real estate valuation charter. These valuation methods are described in detail in the notes to the Consolidated financial statements. The impairment allocation of a tangible asset is booked under extraordinary items, just as any impairment write-back due to appreciation in the asset’s value. 4.3.3.2 Equity investments are stated on the balance sheet at subscription or acquisition cost, except for those held at January 1, 2003 that were revalued. The acquisition costs of investments previously recorded under deferred expenses have been recorded under expenses and not included in the acquisition cost of financial investments. This heading notably includes Gecina’s equity investment in companies with rental property holdings (including equity interests and non-capitalized advances). Treasury shares held by the company are recorded in “Other financial investments”, except for those specifically assigned to cover stock options or performance shares granted to Financial investments

employees and corporate officers, which are recorded under investment securities. Subordinated bonds redeemable in shares (OSRA), are also recorded under “Other equity investments”. Where there is a sign of long-term impairment of securities, loans, receivables and other capitalized assets, impairment, which is determined on the basis of several criteria (Net Asset Value, profitability and strategic value, in particular) is recorded under income. The net asset value of real estate companies includes the fair market value of the properties based on the independent appraisals. 4.3.3.3 Receivables are recognized at par value. Rent receivables are always written down based on the receivables’ aging and the situation of the tenants. An impairment rate is applied to the amount of the receivable, excluding tax, minus the security deposit: tenant has left the property: 100%; ■ tenant in the property: ■ receivable between 3 and 6 months: 25%, ■ receivable between 6 and 9 months: 50%, ■ receivable between 9 and 12 months: 75%, ■ over 12 months: 100%. ■ Impairment thus determined is adjusted to take account of particular situations. 4.3.3.4 Investment securities are stated on the balance sheet at cost. An impairment charge is recorded when realizable value is lower than net book value. Shares specifically assigned to cover stock options awarded to employees and corporate officers are included in this item. Where applicable, they are written down to the lower of the exercise price of the options or the average stock market price in the last month of the year. 4.3.3.5 This item mainly includes the following prepaid expenses: renovation costs for properties up for sale (in addition to ■ disposal costs). They are recognized in income when disposals have been carried out; the redemption or issue premiums of bonds as well as ■ the issue costs of loans, which are amortized over the term of the loans under the straight-line method. Operating receivables Investment securities Accrued assets and related amounts

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GECINA - REFERENCE DOCUMENT 2017