Gecina to accelerate disposals; targets 40% LTV

French SIIC Gecina has announced a major disposal programme in an effort to lower gearing to around 40% by 2012 from 44% at present. In a statement this week, the Paris-based real estate investment trust said it is planning to offload a further EUR 500 mln of residential assets in block sales by the first half of 2012 and to withdraw from the logistics and hotel sectors.

The company is also well on track to reach its EUR 1 bn disposal target by year-end 2011, with roughly EUR 650 mln of sales already secured and a further EUR 155 mln of sales under way. Looking ahead, Gecina said it will also continue to sell non-strategic assets across its entire portfolio.

'The implementation of the deleveraging strategy is being stepped up with a view to consolidating the group's fundamentals faced with the new economic climate,' commented chairman and CEO Bernard Michel.

Gecina's announcement comes amid rising funding needs for the company's development pipeline. 'We interpret the disposal programme as a way to maintain the current level of leverage, rather than decreasing it,' said an analyst who preferred not to be named. Gecina has a big development pipeline in place and short term refinancing issues, he added.

Earlier this month, the French office-focused group dismissed its CEO Christophe Clamageran as a result of differences concerning strategic priorities.

According to those who track the market, Gecina's residential portfolio includes well located, good quality assets and is expected to sell relatively well, despite the slowdown in the investment market in Paris.

The company's gross rental income was up 2.9% at EUR 476 mln in the first nine months of 2011 compared with EUR 463 mln in the year-earlier period. Earnings before interest, taxes, depreciation and amortisation rose by 3.8% to EUR 383 mln in the first three quarters of 2011.