GECINA - REFERENCE DOCUMENT 2017

PRESENTATION OF THE GROUP

Trends and market

A solid investment market The improving economic outlook for France (GDP growth estimates revised upward, lower unemployment, particularly for skilled workers, improved business climate and more start-ups) has increased investor confidence in the office market in the Paris Region in a context of increased availability of investment liquidity, low rates and a continuing high risk premium. 2017 experienced low volume given the number of properties put up for sale and compared to the liquidity looking to invest in the sector. This year again, the liquidity came from insurers, real estate mutual funds (OPCI), real estate investment trusts (SCPI) and from the return, and arrival, of new foreign funds, notably sovereign funds, but also global funds. This confirmed that Paris had once again become a strategic investment location for non-domestic investors in 2017. Asian investors in particular entered the market and accounted for 9.2% of the volume invested in 2017 (source: CBRE). They were probably motivated by the need to reposition the capital they invested in Europe in the Eurozone given the situation with Brexit. The share of domestic investors fell back somewhat over a year, but was still preponderant (62% in 2017 vs. 64% in 2016, source: Cushman & Wakefield). This share could fall further in 2018. The total volume of commercial investment reached nearly €26 billion in 2017 (source: Cushman & Wakefield), 39% above the decade average. It remained stable for offices at €18.8 billion in 2017 (vs. €19.0 billion in 2016). This high-level stability has been in place since 2014 and had not

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previously been reached since 2007. As in preceding years, performance was particularly strong in the fourth quarter which saw €11 billion in investment finalized. Investor appetite for office real estate in the Paris Region remained strong this year again and may not slacken in 2018. Investors continue to prefer core assets, of which there are fewer for sale now. This resulted in a compression of prime yields over the financial year (source: CBRE) at 3% in Paris CBD, 3.35% in the Western Crescent and 4% in La Défense, leading to historically high risk premiums (vs. 10-year OATs and the Euribor 3-month). Residential portfolio Following a series of divestments, Gecina’s residential portfolio is almost exclusively concentrated on Paris and the adjacent department of Hauts-de-Seine, markets where the decisive factors, especially in terms of scarcity of supply, appear very specific compared to the rest of the country. Traditional residential assets in operation are broken

down as follows in value: 78% in the City of Paris; ■ 22% in the Paris Region; ■ 0% in the provinces. ■

RESIDENTIAL MARKETS IN ÎLE-DE-FRANCE: PRICES ON THE UPSWING, ESPECIALLY IN THE CORE OF PARIS

Economic conditions remained very favorable for housing sales in 2017, exceptionally so in that sales easily surpassed the levels of the "high period" of 1999-2007. Prices are still trending upward in the Paris Region, even though a pause is expected by the Chamber of Notaries of Île-de-France in the First Rim and, especially, in the Second Rim. Paris itself remains a market of its own, marked by the scarcity of available assets. Although volumes are high, they are struggling to expand, and unmet demand continues to push prices up. At the end of September 2017, sales in the Paris Region had grown by 21% compared to the same period in 2016, continuing to be driven by interest rates, which remain very

low, and the always strong desire to buy. The volume attained is now 30% above the average of the last 10 years. At the end of September 2017 all markets had registered a price increase over a year, but the uptrend was stronger in the core of Paris than in surrounding areas. The average price per sq.m for older apartments rose to €5,740/sq.m, an average increase of 5.8% in the Paris Region, while in Paris itself, it rose 7.8% to €8,940. In the opinion of the Chamber of Notaries, prices in Paris should show an increase over the financial year of approximately 10% in the Paris core, thus extending the trends observed in recent years and reflecting the out-performance in the most central and urban areas of the Paris Region and, in particular, in Paris City.

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GECINA - REFERENCE DOCUMENT 2017