HSBC ups Gecina to 'buy' as central Paris continues to outperform

Covivio SA

07/06/2023 13:37

** HSBC upgrades Gecina  GFCP.PA  to "buy" from "hold",
saying the French REIT, largely exposed to Paris city, continues
to capture the rent reversion trend in addition to 5% rent
indexation
   ** Paris office demand is highest in central business
district (CBD) locations, and prime location rents continue to
rise, even though overall demand for space and investment
dynamics are slowing significantly - brokerage 
   ** Adds rent indexation accelerated again in first quarter
but it should peak in the second half of 2023; however, it
estimates a further decline of around 10% in asset values to the
end of 2024 for the major Paris office landlords
    ** "Incentive rates are signalling a much more challenging
leasing market environment in suburban areas and La Défense,
while Paris CBD remains attractive" - HSBC 
    ** Divestments in a slower market remains a challenge, the
brokerage warns, pointing to the plans of French groups Covivio
 CVO.PA  ("hold") and Icade  ICAD.PA  ("buy") to shed assets
    

 (Reporting by Diana Mandiá)
 ((diana.mandiaalvarez@thomsonreuters.com))