GECINA - REFERENCE DOCUMENT 2017

02

COMMENTS ON THE FISCAL YEAR Appraisal of property holdings

APPRAISAL OF PROPERTY HOLDINGS 2.3 All of the Gecina group’s real estate assets are assessed each year on June 30 and December 31 by a panel of independent experts: CBRE Valuation, Cushman & Wakefield and Crédit Foncier Expertise on the Gecina property portfolio before the integration of the Eurosic portfolio, CBRE Valuation, Cushman & Wakefield, BNPP Real Estate, Catella Valuation Advisors, Euroflemming Expertise and Christie & Co, on the Eurosic portfolio as at December 31. Regarding the historic Gecina portfolio, the property appraisers were selected in January 2016 under the supervision of the Group Audit and Risk Committee and on the basis of specifications. The selected contracts have six-year terms for a firm period of three years. For the formerly Eurosic real estate assets, the agreements resulting from the selection of experts were signed on June 30, 2017 for an expected duration of three years. The appraisers’ fees are based on the number of assets appraised and not on the value of those assets. The values presented in this chapter were obtained from the appraisals made by the property appraisers appointed by Gecina for this purpose. The Group’s property portfolio is made up of tertiary assets (offices and shops), residential buildings, hotels, and other assets (business premises, restaurants, etc.). For the purposes of its consolidated financial statements, the Group opted for the fair value model of appraisal for its properties in accordance with IAS 40, with the fair value being measured by the independent appraisers twice a year. In accordance with this standard, changes in fair value of the properties (after factoring in capitalized work) in each accounting period are posted to the income statement. Each asset that is appraised is valued by an appraiser from the Board, and each appraiser receives a portfolio of properties to appraise. The appraisers determine the fair value of the properties based on two approaches: the individual assignment of the lots constituting the buildings (appraised unit value) and the disposal of entire buildings (appraised block value). The method used by the appraisers is described in Note 3.5.3.1.1 to the Consolidated financial

statements. The appraisers produce a detailed report for each building valued. The appraisals were carried out in accordance with standard procedures that remain consistent from year to year on the basis of net sales prices, i.e. , exclusive of costs and duties. Gecina does not disclose values inclusive of duties, given that they do not add value for the shareholders. Gecina deems that disclosures including such costs that artificially increase the value of the assets are not appropriate. Information on the sensitivity of the property portfolio valuation to changes in the economic situation is indicated in the Consolidated financial statements section, in Note 3.5.6.8. During a real estate valuation, the appraiser performs the appraisal on the basis of the rental statement that he receives from the company. If this statement includes vacant surface areas, the appraiser uses the market rental value to measure the rents of vacant surface areas. For measuring the market rental value, the appraiser takes account of the market situation in question on the date on which the appraisal is performed. Potential rent is then obtained by the combination of rents for ongoing leases and the rental values of vacant surface areas. The appraiser uses this overall rent as the basis for pricing the building’s value by applying the yield linked to the type of asset under review in the case of income-based methods. The gross or net capitalization rates are determined as the ratio of gross or net potential rents respectively over the appraisal values excluding transfer duties. In the case of the Discounted Cash Flow method, the appraiser values vacant premises in the same way based on the market rental value. In the case of a 10-year Discounted Cash Flow (DCF), the appraiser will use, at the end of each lease under consideration, the market rental value of the surface areas that have been released.

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