GECINA - REFERENCE DOCUMENT 2017

01

PRESENTATION OF THE GROUP Trends and market

TRENDS AND MARKET 1.3

Breakdown of assets in operation by size (in value): properties with floor space of more than 10,000 sq.m ■ representing 50% of the portfolio; 27% of the portfolio comprises properties between ■ 5,000 and 10,000 sq.m; properties with less than 5,000 sq.m of floor space now ■ account for only 23% of the property portfolio.

Office portfolio At the end of 2017, Gecina managed a portfolio of office and retail assets of over 2,000,000 sq.m including around 1,700,000 sq.m in operation, broken down (in value) as follows: 51% in the City of Paris; ■

40% in the rest of the Paris Region; ■ 9% in the other regions and foreign. ■

“Real estate will not, for the years to come, rise in value due merely to lower capitalization rates. Trying to outperform the market will require people to be much more selective in seeking the best locations. They will also have to take into account the fundamental phenomenon of urban concentration, i.e. the exponential growth in the concentration of capital, employees and the most dynamic companies within the densest urban cores." Christian de Kerangal, Managing Director of IEIF (Business Immo, January 26, 2018)

THE OFFICE MARKET IN THE PARIS REGION: AN EXCELLENT DYNAMIC IN AREAS DRIVEN BY CENTRALITY AND SCARCITY

Property trends in the office and investment market and in the rental market in the Paris Region were again very favorable in 2017. There are no indications that the trends will slow in 2018, especially given the support provided by good economic growth and the reforms initiated by the government which will help sustain the business environment. During the third quarter of 2017, the virtuous effect of the increase in company start-ups, particularly in the Paris Region (+7.1% over 1 year) combined with a drop in the number of company failures (-7.3% over 1 year) has led to increased hiring of skilled workers. A very dynamic rental market, particularly in Paris In 2017, trends in the Paris Region office market were impacted by a very strong rental dynamic in the most central markets: a strong performance for rental transactions, with an ■ increase in take-up of 8% and over 2.6 million sq.m – the most in over ten years, primarily driven by the strong appetite of renters for the most central areas, especially Paris, where vacancy is now at a historical low. It should also be noted that large-scale transactions (+27%) were also a significant lever for the 2017 performance; as a result, the vacancy rate continued to fall and was ■ 6.2% at the end of 2017 (compared to 6.5% at the end of

2016). This was especially true for Paris where it fell below 3% (to 2.9% compared to 3.2%), revealing a shortage situation in the city, the biggest since 2001. The contraction in vacancy was, however, primarily driven by Paris and La Défense. It was less apparent in the rest of the Paris Region; the shortage in Paris is palpable since the city accounts ■ for 42% of take-up, but only 14% of the immediately available supply. This ratio is reversed in the other areas of the Paris Region. In Paris, the immediately available supply fell by 9% over a year (compared to 4% for the Paris Region overall) to reach a historically low level, notably in the Paris Central Business District (CBD). This shortage in the heart of Paris does not, however, appear to have dampened rental transactions, given that companies are increasingly positioning themselves upstream on transactions which are still under development; the shortage of immediately available supply in Paris ■ encourages more advance sales upstream of deliveries. The expected volume of deliveries in the CBD in 2018 has, therefore, already mostly been sold; the result is an increase in headline rents in the most ■ central locations, primarily in the CBD. Cushman & Wakefield estimates that this trend could continue through 2018 due to a shortage of quality properties.

18 GECINA - REFERENCE DOCUMENT 2017

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