EurobusinessMedia (EBM): Gecina, a French Real Estate investment company which owns France’s largest portfolio of residential and commercial real estate reports earnings for 2009. Christophe Clamageran, welcome. You are the CEO of Gecina. What are your comments on the Group’s results and performance for 2009?
Christophe Clamageran (CC): In a difficult context, we delivered a very remarkable performance. We increased our like-for-like income by 3.5% and our net cash flow increased by 14.3% which is a very, very good performance.
EBM: You yourself were only just recently appointed CEO and last week a new Chairman was just appointed. So, recalling that governance was an issue for the company lately, can you give us assurance today that Gecina has returned to a normalized corporate governance?
CC: I would say yes, of course. Today there is good separation of power between executive and non-executive. I am in charge of the business. For the Board, I would say that no investor has control over the Board today and the power is very well balanced between the Directors.
EBM: Does that mean that controversial investments, such as your Spanish investments recently, are no longer possible today? And, speaking of Spain, what do you intend to do with your Spanish holdings today?
CC: Clearly, friendly transactions cannot happen any more with the separation of power. For Spain, my intention is to reduce our exposure to that country. I don't want to make any spectacular write-off of the value of the buildings in Spain, I want to save what I can by an orderly retreat from that country.
EBM: As newly appointed CEO, the market clearly expects you to present a new strategic plan for the company. What can you tell us today?
CC: Our market has two main drivers; Demographics and Economics. On the Economics side, Office is clearly the absolute core business of Gecina. I remind you that we already are very dominant in that sector and we have the best portfolio of Office in France. I intend to develop and extend that sector. The Logistics portfolio suffers from a lack of critical mass. I think that the market is going to consolidate and a lot of operators have to face the same problems we have. We contemplate to exit from that sector in the next two or three years, both by disposal and joint ventures. On the Hotels, this is not a core business for Gecina. We are too small and we want to exit from that business within the next twelve months.
EBM: And what about the other side of your business, driven by demographics as you say?
CC: On the Demographics, I want to say that the Residential business in Gecina is very core too. But we need to increase the yield of that business by boosting that sector with the Student Homes and Healthcare business, which are very good growth areas for Gecina.
EBM: Traditionally Gecina had a very generous dividend policy. As new CEO will you continue that policy?
CC: Yes, we still need to be generous, but we also intend to retain the maximum cash in the company to manage our real estate business. The board decided that this year our dividend policy would be in line with our peers.
EBM: You’ve just stated that you want to maximize cash, but we also know that you have to reimburse some debt in 2011-2012. How great is your financial flexibility today?
CC: It's good. We already managed to extend and refinance our bank lines for 2011 and we are clear of any liquidity problems for the next 18 months. Our property company needs also to make some asset disposals, because asset rotation is quite a normal activity for a property firm. And finally, I would say, we would try to go back to the capital market depending on the market conditions.
EBM: Because the intentions of your Spanish shareholders aren’t crystal clear, the market fears that there could an overhang potential on the share price whether coming from Metrovacesa or Mr. Soler or Mr. Rivero. Can you give us some more clarification on this topic today?
CC: We had some talks with the Metrovacesa representatives, and according to what they say, they intend to be shareholders of our company for the next two or three years. I cannot talk for Mr. Rivero or Mr. Soler, but according to the break-even price they have, I would say that If we work very well and the share price increases above 100 euros per share, I would say they could make a huge profit on that.
EBM: Christophe Clamageran, CEO of Gecina, thank you very much.
CC: Thank you.
