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Good day and welcome to the business at March 31, 2019, conference call of Gecina.Today's conference is being recorded.At this time, I would like to turn the conference over to Nicolas Dutreuil. Please go ahead.
Yes, good morning. Hello to everyone. And thank you for being online with us for this conference call related to our business activity for Q1 2019.I'm Samuel Henry-Diesbach. And I'm here with Méka Brunel, our CEO; and Nicolas Dutreuil, our deputy CEO in charge of finance. After a quick introduction by Nicolas regarding our performance and figures for this first quarter, Méka, Nicolas and I will be happy to answer all question you may have.And I now hand the floor to Nicolas.
Yes. Thank you, Samuel. Good morning to everyone, and thank you for being with us this morning.Before discussing our business performance at end of March 2019, I would like to give you a quick update on the realistic market trends in the Paris Region.The first quarter of 2019 followed on from the trends observed this past quarters for the Paris Region's office market, with most central areas and Paris City mainly being well ahead of the favorable trends observed. While take-up in the Paris Region is down by 23% from the first quarter of 2018, it is still very high, slightly ahead of the long-term average. And this volume was never recorded for a first quarter between 2012 and 2016, while the level of immediate supply is at an all-time low, revealing a solid performance on the rental market despite a shortage of immediate supply. Immediate supply levels showed further contraction, minus 7% year-on-year, especially in Paris City.This market is still very positive for the most central sectors, as shown by the theoretical time frame for immediate supply to be consumed based on the current take-up rate per area, which is close to just 5 months for Paris City, 16 to 17 months for the Western Crescent and Inner Rim and over 4 years for the Outer Rim. As a result, rents on new leases are up by 7.5% year-on-year, plus 1.3% over the 3 months, with a clear outperformance by the Paris City, plus 9% for the CBD and plus 14% for the other part of Paris City.Positive trends can also be seen in the Western Crescent and La Défense, while they are negative from the rest of the Paris Region's Inner and Outer Rims.So once again, this context bring us even more confidence regarding our strategy to increase further our presence in the location, driven by scarcity and centrality towards a portfolio rotation but also to enhance the quality of our portfolio for our pipeline of projects in these core locations.Then I would like to share with you a few elements regarding our business activity for the first quarter.So in a nutshell, rental incomes are in line with the group's targets. Rental income is down by 2.6% on a current basis due to disposal achieved in 2019. Remember that we have sold for EUR 1.5 billion of assets in the 2018, among them all the region portfolio coming from Eurosic. Please also note for this first quarter that nearly EUR 70 million of rents from like-for-like growth and asset delivered in 2018 in Paris, the Western Crescent and Lyon, offset the loss of rents linked to the sales.Gross rental income, up by 2 plus 3% (sic) [ 2.3% ] like for like in total and plus 2.5% for offices, outperforming indexation which is around 1.7%. And the like-for-like rental growth factoring in the impact of assets delivered following redevelopment climbs to 13.2% for offices.So in detail; office rental income is up by 2.5%, benefiting from higher indexation, 1.9%; and rental reversion, reflecting the good level of Gecina core markets, secured through renewal, renegotiations and re-leasings. Over the quarter, the vacancy effects remained positive but very limited, plus 0.1%.On the top of this decent performance for office portfolio, I would like also to highlight the results obtained on the residential side, with the rental income is up by 2.5% on a like-for-like basis. This performance in the residential portfolio reflect, as it was the case end of last year, the impact of the strategy we rolled out aiming to capture reversion potential and reduce the effect of rental vacancy by accelerating turnaround times for lettings. Over the quarter, the rent differential secured between new and old tenants came to 7.4%, so reflecting in the 0.2% contribution on the like-for-like growth. Alongside this, the reduction in the vacancy rate contributed to 0.8% to this performance.We have also been very active on the disposal side during this first quarter of the year, as we have carried out or secured EUR 149 million of sales, of which EUR 74 million is completed. Alongside this, a further EUR 75 million of sales were covered by preliminary agreement during the first quarter of the year. Overall, these sales completed over the first 3 months of the years are covered by preliminary sales agreement, and March showed a premium of around plus 7% compared to the latest appraisals.Maybe a word on our share buyback program. So by end of March, we have acquired nearly 335,000 shares with an average share price of EUR 129.8 per share, which is representing a discount to last year NAV of around 20%. This volume of buyback is representing 29% of the total program we have launched end of February for a total amount of EUR 43 million.Maybe to conclude, I would say that in this context, we are very confident and we are reiterating our guidance for 2019, meaning that excluding the effect of the disposals of nonstrategic assets made last year, we consider that we will have an increase in our FFO per share of plus 2% in 2019. And I would say, more important, on a midterm basis we are targeting on an increase of rents coming from the deliveries of the projects which are today's in pipeline of EUR 130 million to EUR 140 million by 2024. And this is, of course, net of sales we have achieved in 2018 and what is -- was secured at the beginning of this year.We're now available to answer to the question you may have. Thank you.
[Operator Instructions] We will now take our first question from Celine Huynh from Barclays.
Two questions, if I may, please. The first one is on the guidance. You reiterated a net recurring income per share of EUR 5.70 -- EUR 6.70, sorry, to EUR 5.75 (sic) [ EUR 5.70 to EUR 5.75 ], and this guidance is excluding disposal not committed as of end of 2018. And you have announced yesterday EUR 149 million disposals in Q1 '19, so can you please clarify if those were committed as of end '18? And my second question is somehow linked to the first one. If I remember correctly, one of the reasons why you provided a range for your net recurring income per share guidance was the uncertainty around the renewal of some leases in the periphery of Paris. And while reading your press release, it looks like you're less confident on your ability to keep those tenants, so should we expect you to hit the lower range of the guidance rather than the top range? And if we add up the disposals made in Q1, if they're not taken into account into the guidance, plus the tenants' one-off, does that mean that you need to revise your guidance down?
Yes, thank you, Celine, for your question. Beginning with first question, so the guidance between EUR 5.70 and EUR 5.75 per share. It was already including the assumption of the disposal which were on the preliminary agreements as of end 2018, which we say that was around, let's say, EUR 200 million, if I'm correct. So saying that differently, it means that all these disposals which have been achieved in Q1 can be considered as being part of the guidance already, okay? So -- and for the second question you have, we always say that there is some few question mark we have on some assets regarding the potential departure of tenants and secondary areas, where we can have like temporary vacancy. Let's say this is -- this assumption is already part of the guidance that we have disclosed, so we see no reason why we should change the guidance and not -- don't to want at all at this stage. The only thing which is not included in the guidance is what hasn't happened yet in terms of acquisitions or further disposals, but you understand that's not something that we give visibility. Don't forget neither that this guidance doesn't monitor the impact of the share buyback. So it means that for your model, if you assume that we have some more disposals to be offset by a share buyback, it works and we should still be in the guidance that is written in this press release. So no reason to question at this stage the guidance that we have for the year, and we don't expect to do so.
[Operator Instructions] As there are no further questions, I would like to turn the conference back to the speakers for any additional or closing remarks.
[Audio Gap] figures this morning. Of course, feel free to call us if you have any questions following in the coming days. Next time you have to put in your schedule is -- next date you have to put in your schedule is 18th of July, for the H1 earnings publication.Have a good day, and see you soon. Bye.
This concludes today's call. Thank you for your participation, ladies and gentlemen. You may now disconnect.