"Companies are interested in long-term rents in the best places," he added.
The real estate sector has been under pressure since the end of last year as volatile markets and tightening financial conditions slowed property investment. However, Colonial's portfolio, including buildings located in Spain and France, achieved an 11% jump year on year in like-for-like rental income in the first quarter. Its occupancy, meanwhile, hit a record 97%, boosted by almost full rate in Paris. Colonial's first quarter results do not include an updated valuation of its assets, which is presented every six months and dropped 2% at the end of last year from the previous reading, cutting the group's full-year net profit by 98%.
Barclays analyst Celine Soo-Huynh said that the building valuations do not affect its cash performance, but any valuation writedown can trigger disposals and a loss of rental income.
Colonial, whose shares are down 8.74% year so far this year,
reaffirmed its full-year guidance from February of earnings of
between 0.28 and 0.30 euros per share.
Last week its board proposed a dividend of 0.25 euros, 4%
higher than last year and a payout of around 135 million euros.
($1 = 0.9084 euros)
(Reporting by Matteo Allievi and Jakub Olesiuk; Editing by
David Goodman and Alexander Smith)
