COVIVIO (EPA:COV) - Covivio: activity at end-March 2020

Transparency directive : regulatory news

22/04/2020 22:00

Paris, 22 April 2020, 18h

                          Activity at end-March 2020

A diversified and secure model

* 84% of the portfolio made up of offices and residential
* 97.6% occupancy rate and 7-year firm average maturity of leases

A solid and strengthened balance sheet

* The General Meeting approved the scrip dividend option
* Enabling a capital increase of EUR200-EUR420 million
* EUR2.5 billion of liquidity available at end-March

Consolidation in German offices well on track

* At present, Covivio holds 59% of the Godewind Immobilien capital
* This transaction strengthens the portfolio on one of Europe's most resilient
  real estate markets

Disposal target of more than EUR600m Group share in 2020

* EUR179m (EUR102m Group share) in sales realized in the first quarter and
  EUR190m (EUR164m Group share) in new sales agreements
* Of which EUR132m completed and EUR157m signed since the start of the
  lockdown

Revenues at end-March 2020: +2.3% on a like for like basis, excluding hotels

* Healthy activity in offices (+1.8% at like for like scope) and residential
  (+3.5%)
* Impact of the pandemic on hotels: -10% at like for like scope

Coronavirus: Covivio on the move to contribute to the solidarity effort

* Covivio making several of its hotels available
* The Covivio Foundation is increasing its donation for 2020 and will focus its
  first actions on supporting the communities most affected by the economic
  impact of the crisis
* Covivio supporting struggling VSEs and SMEs

A diversified and secure model

With a portfolio of EUR25bn (EUR17bn Group share) in assets in Europe, Covivio
has built its development on diversifying in business lines where the group has
local platforms, can handle the entire real estate value chain and be a leading
player. This model provides Covivio with a diversified and secure revenue
profile:

- 60% of the portfolio is comprised of offices, let to key accounts (Orange,
  Telecom Italia, Dassault Systèmes, Thalès, etc.) in France, Italy, and
  Germany;
- The residential portfolio in Germany represents 24%;
- Hotels, located in the major European cities, weigh in at 15%.

The group's occupancy rate stood at 97.6% at end-March for an average firm
lease term of 7 years.

A solid and strengthened balance sheet

Rated BBB+, stable outlook by S&P, Covivio had a LTV ratio of 38.3% at
end-2019, in line with the <40% LTV policy, and an ICR of 5.7x. The debt's long
maturity (6.1 years) is paired with a diversification of financing sources,
between bonds (37% of debt), corporate loans (17%), and mortgages (46%).

The group had EUR2.5bn in liquidity at end-March, through EUR900m in cash and
EUR1.6bn in undrawn lines of credit.

The General Meeting held today approved the distribution of a EUR4.80 dividend
and the scrip dividend option, based on a price of EUR47.80 per share (which is
90% of the average closing prices on the 20 trading days leading up to the
General Meeting, minus the dividend).
All institutional investor shareholders currently on Covivio's Board of
Directors (representing 49% of share capital) have already committed to the
scrip dividend option. Therefore, Covivio's balance sheet will receive a
capital increase of EUR200m-EUR420m.
The dividend ex-date will be on 27 April, and the scrip dividend option period
will run from 29 April to 18 May, for payment or delivery on 22 May.

Consolidation in German offices well on track

As of the evening of 21 April, Covivio holds 59.4% of the share capital of
Godewind Immobilien AG (Godewind), a German offices property company with a
EUR1.2bn portfolio (EUR1.1bn Group share). The results of the initial public
offering and withdrawal period on all Godewind shares (which ended on 22 April)
will be known on 27 April. The subsequent offering period will open on 28 April
2020, running until 11 May 2020.

Godewind's Management and its Supervisory Board fully support the offer, and
Management has agreed to request that all Godewind shares be withdrawn from
trading on the regulated (Prime Standard) market of the Frankfurt Stock
Exchange, which will happen shortly after the expiry of the subsequent offering
period. The offer is fully funded by Covivio's existing resources.

With a presence in Germany since 2005 and a local team of 570 people, Covivio
is historically active in the residential segment and has gradually developed a
team for managing hotels and offices. In addition to its existing Office
portfolio in Germany and its development projects located primarily in Berlin,
this investment provides access to a core portfolio of 10 office buildings
(290,000 m²), located in Frankfurt (40% of the portfolio), Düsseldorf (28%),
Hamburg (24%), and Munich (8%), 92% let for an average firm term of 7 years.
With an average vacancy rate of 3%(1) in the top 7 German cities, the office
market in Germany is one of Europe's most resilient.

Other ongoing acquisitions are limited to acquisition of the portfolio of 8
hotels in Venice, Rome, Florence, Prague, Budapest, and Nice, for EUR248m Group
share. The closing is scheduled for September 2020. This portfolio is composed
of iconic hotels located in the very center of some of Europe's most attractive
cities and will be let as part of a firm lease of 15 years to NH Hotels.

Plan to dispose of more than EUR600m Group share in 2020

Since the beginning of the year, Covivio has finalized EUR179m in sales
(EUR102m Group share) with an average margin of 23% on the last appraisal
value. On 1 April, Covivio sold 11 B&B hotels located in Germany in Munich,
Hamburg, and Stuttgart and in second-tier cities, for a total of EUR115m
(EUR49.8m Group share).

In addition, new sales agreements totaling EUR190m (EUR164m Group share) have
been signed since the start of the year (of which EUR157m in preliminary
agreements signed after 31 March), with an average 7% margin on the last
appraisal value at end-2019. These agreements mainly concern two office
buildings in Nanterre and in the metropolis of Lyon, offices let to Telecom
Italia, and privatizations in Berlin.

In this way, Covivio is confirming its target of more than EUR600m Group share
in disposals in 2020.

Revenues at end-March 2020: +2.3% on a like for like basis, excluding hotels

Revenues at end-March stood at EUR158m (EUR241m at 100%), compared to EUR166m
(EUR249m at 100%) at end-March 2019. Performance at like for like scope remains
robust in offices and residential, at +2.3% on average, while Hotels are
directly suffering from the impact of the pandemic (-10% at like for like
scope).

Good performance in offices and residential (84% of the portfolio)

In offices (60% of the portfolio), rental income grew by 1.5% in France and
2.4% in Italy. Covivio signed or renewed more than 26,000 m² in leases year to
date, including 4,600 m² since the start of the lockdown.

As a historical real estate partner to large corporates, Covivio enjoys a solid
rental base, with 91% of rental income coming from key accounts like Orange,
EDF, Dassault Systèmes, Thalès, and Telecom Italia, and just 1% from very
small companies.

The occupancy rate was 96.2% in France and 98.5% in Italy, with firm average
lease terms of 4.5 years and 7.3 years. On Wellio, as our flexible offices
includes five sites for 15,200 m², the office occupancy rate was 91%, of which
97% for sites open for more than one year. Thus nearly 70% of Wellio revenues
for 2020 already secured.

(1) Source: JLL

In residential in Germany, revenue growth was +3.5% on a like for like basis,
of which +4.1% in North Rhine-Westphalia, +3.9% in Dresden and Leipzig, and
+3.2% in Berlin. Here Covivio benefits from the high resilience of this
activity, which represents 24% of the portfolio, due to the high degree of
granularity of the existing stock (with close to 40,000 units) as well as good
fundamentals, driven by a structural housing shortage. For example, in North
Rhine-Westphalia, apartments were re-let at an average rental increase of 18%.
In Berlin, the new regulation on the rental freeze was implemented at
end-February. This law, which includes provisions concerning federal policies,
and not local policies, and in contradiction with property rights, is being
challenged in front of the constitutional court and the cancellation process
could take up to 24 months.

Hotel real estate revenue affected by the crisis (15% of portfolio)

Concerning hotels, Covivio is one of the top lessors of the leading hotel
operators in their segments which are also among the most robust, such as
Accor, Intercontinental, NH Hotels, and B&B. Covivio is directly impacted by
the steep drop in activity, either through leases indexed to turnover (Accor
leases in France), or through hotels under management contracts (located mainly
in Germany). Given the scale of the crisis, a portion of the fixed leases will
also be impacted, and discussions are under way with our partner operators to
find the best ways to weather this period together. At end-March, revenues from
hotel assets declined by 10%, of which -26% on variable leases and -27% on
operating properties.

Q1 2020                          Q1 2019             Q1 2020
                                Revenues            Revenues
                               Group share            100%

                                   EURm               EURm

France Offices                     59                  61
Italy Offices                      36                  42
Germany Offices                     2                  14
Germany Residential                38                  61
Offices and Residential           135                 178
Hotels in Europe                   25                  57
Lease properties                   22                  52
Operating properties                3                   5
Total strategic                   160                 235
Total non strategic                 6                   5

Total                             166                 241

Q1 2020       Like-for-like
Revenues        variation        Occupancy       Average firm
Group Share     Group share         rate         lease term

EURm                %                %              years

53                +1.5%            96.2%              4.5
32                +2.4%            98.6%              7.3
7                  n.a.            92.0%              6.9
39                +3.5%            98.5%             n.a.
131               +2.3%            97.3%              5.6
23               -10.4%           100.0%             13.8
21                -6.5%           100.0%             13.8
2                -27.4%             n.a.             n.a.
155               +0.1%            97.6%              7.0
4                 -2.9%            97.8%              6.6

158                0.0%            97.6%              7.0

Coronavirus: Covivio on the move to contribute to the solidarity effort

Faced with the urgency of the situation, Covivio is making many of its hotels
available. One such hotel, in Barcelona, is preparing to welcome medical teams
and patients. In the coming days, other hotels will be used as emergency
accommodation in France.

In addition, in the wake of the crisis, and once its franchised hotels have
reopened, Covivio will offer hospital staff from Metz, a city especially hard
hit by the crisis and home to the company's head offices, nearly 2,000 free
overnights in its hotels.

In Italy, Covivio is is providing financial support for the initiative launched
by its partner Politecnico di Milano(2) for the production of hand sanitizer
supplied to the Lombardy region's emergency agency.

The Covivio Foundation, which will be operational in the second half of the
year, is increasing its donation for 2020 and will focus its first actions on
supporting the populations most affected by the economic impact of the
crisis.

In this unprecedented situation, Covivio is applying the recommendations issued
by the French Government as well as the French federation of real estate and
land companies (FSIF) concerning the protection and support of its VSE-SMEs
affected by the closure orders. This is taking the form of the automatic
application of the cancellation of three months' rent for VSEs. For SMEs in
difficulty, Covivio determines the best solution for each situation: monthly
payments or rent postponements are prioritized.

Outlook

Covivio, which operates on markets with solid long-term fundamentals, can rely
on a resilient model with diversified revenues, largely from office and
residential buildings, and on a sound balance sheet. While awaiting greater
visibility, particularly on hotel revenues, Covivio will release its adjusted
guidance on the results when the half-year earnings are published.

(2) Politecnico di Milano is a science and technology university for engineers,
architects, and industrial designers.

CONTACTS

Press Relations

Géraldine Lemoine
Tel : + 33 (0)1 58 97 51 00
geraldine.lemoine@covivio.fr

Laetitia Baudon
Tel : + 33 (0)1 44 50 58 79
laetitia.baudon@shan.fr

Investor Relations

Paul Arkwright
Tel : + 33 (0)1 58 97 51 85
paul.arkwright@covivio.fr

Hugo Soussan
Tel : + 33 (0)1 58 97 51 54
hugo.soussan@covivio.fr

ABOUT COVIVIO

Thanks to its partnering history, its real estate expertise and its European
culture, Covivio is inventing today's user experience and designing tomorrow's
city.
A preferred real estate player at the European level, Covivio is close to its
end users, capturing their aspirations, combining work, travel, living, and
co-inventing vibrant spaces.

A benchmark in the European real estate market with EUR25 Bn in assets, Covivio
offers support to companies, hotel brands and territories in their pursuit for
attractiveness, transformation and responsible performance.
Build sustainable relationships and well-being, is the Covivio's Purpose who
expresses its role as a responsible real estate operator to all its
stakeholders: customers, shareholders and financial partners, internal teams,
local authorities but also to future generations and the planet. Furthermore,
its living, dynamic approach opens up exciting project and career prospects for
its teams.

Covivio's shares are listed in the Euronext Paris A compartment (FR0000064578 -
COV) and on the MTA market (Mercato Telematico Azionario) of the Milan stock
exchange, are admitted to trading on the SRD, and are included in the
composition of the MSCI, SBF 120, Euronext IEIF "SIIC France" and CAC Mid100
indices, in the "EPRA" and "GPR 250" benchmark European real estate indices,
EPRA BPRs Gold Awards (financial + Sustainability), CDP (A), Green Star GRESB
and in the ESG FTSE4 Good, DJSI World & Europe, Euronext Vigeo (World 120,
Eurozone 120, Europe 120 and France 20), Euronext(r) CDP Environment France EW,
Oekom, Ethibel, Sustainalytics and Gaïa ethical indices.
Covivio is rated BBB+/Stable outlook by Standard and Poor's.

Notations solicited:

Financial part:              BBB+ / Stable outlook by Standard and Poor's
Extra-financial part:        A1+ by Vigeo-Eiris

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19/04/2024 14:30

COVIVIO (EPA:COV) - Covivio: activity at end-March 2020

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