Bloomberg News

Gecina Earnings Fall as the Company’s Borrowing Costs Mount

July 27, 2011

(Updates with borrowing costs in fifth paragraph.)

July 27 (Bloomberg) -- Gecina SA, France’s second-largest publicly traded property company, said profit fell 7.8 percent in the first half because of higher borrowing costs.

Pretax earnings excluding changes in asset values and other items, known as recurrent income, declined to 162.8 million euros ($236 million), or 2.67 euros a share, from 176.5 million euros, or 2.90 euros, a year earlier, Paris-based Gecina said in a statement today.

Recurrent income will drop 7 percent his year due to rising interest payments, the company reiterated today. Chief Executive Officer Christophe Clamageran is part way through a 1 billion- euro disposal program as he focuses Gecina on offices, apartment buildings and properties related to health care in France.

Gecina was little changed at 94 euros at 9:02 a.m. in Paris trading, giving it a market value of 5.89 billion euros. The shares have gained 9 percent in the past six months, lagging behind the average 13 percent gain for an index of French real estate investment trusts compiled by Amsterdam-based Global Property Research.

Gecina’s average cost of borrowing rose by 87 basis points to 4.16 percent, lifting its financial expenses by 36 percent to 95.1 million euros. A basis point is 0.01 percentage point.

Net rental income rose 4.4 percent to 294.6 million euros. Excluding a one-time lease surrender payment, acquisitions and disposals, rental income was little changed, the company said. The average vacancy rate fell to 3.6 percent from 5.7 percent six months earlier.

Property Disposals

Gecina sold 559 million euros of property during the first half, trimming net rental income by 14.4 million euros. Since June 30 it agreed to the sale of an additional 78 million euros of real estate.

Clamageran, who joined Gecina in November 2009, aims to increase Paris-region office projects and developments by 80 percent to 9 billion euros by 2014.

Appraisers estimated that Gecina’s real estate appreciated by 2.6 percent to 11.8 billion euros. Net asset value rose to 102.16 euros a share from 99.67 euros six months earlier.

Gains in Gecina’s property values added 192.4 million euros to profit, boosting net income to 402.9 million euros. The company reported a profit of 200.9 million euros a year earlier.

Net debt fell to 43.9 percent of the value of its assets from a loan to value ratio of 44.3 percent at the end of 2010.

--Editor: Andrew Blackman, Ross Larsen.

To contact the reporter on this story: Simon Packard in London at

To contact the editor responsible for this story: Andrew Blackman at

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