Stay Underweight: Paris Office Property | Europe

Research evidence excerpt

Stay Underweight: Paris Office Property | Europe

Update

July 31, 2026 05:56 AM GMT

Morgan Stanley & Co. International plc+MParis Office Property | Europe Ana Escalante

Equity Analyst

Stay Underweight Ana.Escalante@morganstanley.comBart Gysens, CFA +44 20 7425-3271

Bart.Gysens@morganstanley.com +44 20 7425-5862

We update our estimates for the French office stocks following Paula Bayer

half year results. Stock valuations look cheap on many metrics, ResearchPaula.Bayer@morganstanley.comAssociate +44 20 7425-3053

but we remain net Underweight the subsector given challenging

Property

fundamentals and the absence of catalysts near term. Europe

Industry View Attractive

Key results highlights. Total NAV-based return in the half averaged 2%. Recurring What’s Changed

EPS growth was flat on average, albeit with a wide range, EPRA EPS excluding

Icade (ICAD.PA) From To

capitalised interest declined 3% year on year. Asset valuations were flat to down. Price Target €25.00 €23.00

Like for like rental growth decelerated for all, with Colonial standing out at above Gecina (GFCP.PA) From To

4% vs the rest sub 2%. Vacancy rate at end June stood at 7% on average, slightly Price Target €80.00 €78.00

down in the half. All companies reiterated their 2026 recurring EPS guidance. See Exhibits 10-13 for changes to forecasts

What we learned from earnings calls. Companies commented that (prospective)

tenants' leasing decisions are taking longer, while investment markets remain

illiquid. They attributed this to geopolitical risks, macro uncertainty and the political

environment in France. Management teams emphasised the deepening bifurcation

between prime, centrally located assets and secondary/peripheral stock, evidenced