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On Tuesday, Goldman Sachs made a notable adjustment to its outlook on Gecina (EPA:GFCP) SA (GFC:FP) (OTC:GECFF), downgrading the real estate investment company’s stock from Buy to Neutral. The firm also revised its price target for Gecina to €101.30, a decrease from the previous target of €109.70.
The downgrade by Goldman Sachs was driven by several factors affecting the French market, where Gecina operates. The firm’s analysts pointed to the recent reduction in real GDP growth forecasts for France, now one of the lowest among major Eurozone countries for the period of 2025-2027, averaging at 0.8%. Additionally, the risk of early parliamentary elections after July 2025 presents further potential for uncertainty.
Another concern affecting the downgrade is the increasing market vacancy rates. The first quarter of 2025 saw an approximate 13% year-over-year increase in new immediate supply in Greater Paris. This, combined with a 6% decrease in demand, has led to an overall vacancy increase of over 10%. The situation is exacerbated by further unlet supply, notably in Paris itself, where vacancy rates have risen to 6.3% in the first quarter of 2025.
Goldman Sachs also highlighted the lease expiry profile of Gecina as a risk. Approximately 31% of Gecina’s commercial leases are set to expire by 2027, with nearly 47% having 3-year break options by the same year. The departure of Engie, Gecina’s top tenant accounting for 7% of fiscal year 2024 rents, from the T1&B towers in La Defense when its lease expires in 2027, has led the analysts to increase their vacancy forecasts for the company.
As a result of these factors, Goldman Sachs has adjusted its earnings per share (EPS) estimates for Gecina for the years 2025-2029, which now range from a decrease of 8% to no change, positioning them 4% below the Visible Alpha Consensus for Gecina’s fiscal year 2027 EPS. The combined effect of a challenging French macroeconomic environment, increased supply leading to higher vacancy rates, and a significant portion of leases expiring in the near future has contributed to a more cautious stance on Gecina’s rental outlook.
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