French REIT Gecina announced earlier this week that it has received approval from the French antitrust authorities for its friendly takeover of smaller Paris-listed peer Eurosic.
Following completion of the deal, which is expected later this month, the Paris-listed company will become Europe's fourth-listed largest real estate group with €19.5 bn of assets. The deal will also make Gecina Europe's leading real estate group for offices, with €15.5 bn of assets focused on Paris and the Paris region.
Eurosic's portfolio is valued at €6.2 bn and comprises mainly prime office assets located in Paris and the Western Crescent.
The deal follows Gecina's challenge last year to Eurosic's takeover of French peer Foncière de Paris, when Eurosic saw off Gecina's bid.
In mid-July, Gecina reported a total return of 17% for the first six months of this year and a 22.2% increase year-on-year despite a fall in recurrent net income over the period due to €1.7 bn of disposals of non-strategic or mature buildings.
Gross rental income fell 19.5% to €240.6 mln, but grew 1.6% on a like-for-like basis, the company said. For the second half of the year, the company expects recurrent net income to be at least equal to the level recorded in the year-earlier period, excluding effects from the integration of Eurosic.
Commenting on the results, Gecina’s CEO Méka Brunel said the strong total return reflected the positive development of the Paris office market and good positioning in key sectors in the Paris region. ‘Through its proposed amicable business combination with Eurosic, Gecina achieved a historic first half of the year, establishing itself as Europe’s fourth-largest real estate group and the market leader for offices.’
The company is accelerating the rotation of its portfolio, with a planned sales programme totalling more than €1.2 bn. Meanwhile it plans to add nearly €2.5 bn of new assets from its project pipeline, with deliveries scheduled from 2017 to 2019. Following the disposal programme, offices will account for more than 80% of the total portfolio with an increased focus on central sectors and Paris City accounting for more than 60%. In the first six months, the office portfolio generated a 2.1% increase in rental income on a like-for-like basis.
At June 30, 2017, Gecina had a committed pipeline of €1.4 bn and had identified €2.2 bn of potential future projects in Paris for office real estate and student residences.
In May, Brunel laid the foundation stone for a student residence at the heart of the Rose de Cherbourg urban development project in the Paris La Défense business district. The 400-bed residence is due to open for the start of the 2018 academic year.
