Covivio - Activity at end-September 2024: Very favorable momentum across all business lines and revenue growth acceleration to +6.8% like-for-like

Paris, October 22^nd, 2024, 6:00 pm

Activity at end-September 2024

Very favorable momentum across all business lines Revenue growth acceleration to +6.8% like-for-like 

A dynamic quarter across all businesses 

► Hotels: significant increase in variable revenues of +30.5% as reported (+10.4% like-for-like) and strengthening of the hotel management platform  

► Offices: 115,370 m² let or pre-let in 2024 (41,290 m² in Q3), taking occupancy to 95.6% (vs. 94.5% at end 2023)

► German residential: +23% reversion on reletting, including +35% in Berlin 

+6.8% like-for-like revenue growth

Continued progress on disposal program 

► €391 million Group share (€618 million at 100%) of new disposal agreements in 2024, with a +3.3% margin

► Nearly €300 million of additional disposals in advanced negotiations  

ESG performance: new progress in 2024 

► Covivio once again rewarded by GRESB, with a score of 88/100 and maintained "5-star" excellence status

► Three Covivio buildings awarded the BBCA label in October

► L’Atelier wins ULI Europe Awards for Excellence

2024 guidance confirmed 

► 2024 guidance for recurring net income (Adjusted EPRA Earnings) of around €460 million.

A dynamic quarter across all business lines

Hotels: strong performance of variable revenue and strengthening of the hotel management platform  

Hotels activity continued to perform well in Europe, with the third quarter benefiting from both the continuing momentum of tourism and the rebound in business activity. In France, the success of the Olympic Games offset a second quarter penalized by preparations for the Games. Covivio took full advantage of this favorable context, with +10% growth in variable revenues since the start of the year, including +14% in Germany and +3% in France. 

This organic growth acceleration is accompanied by the full effect on revenues of Covivio's increased stake in its subsidiary Covivio Hotels, up to 52.5% (vs. 43.9% at end March 2024), bringing the Group's exposure to the hotel sector to 20%. 

At the same time, Covivio is preparing the completion of the major deal with AccorInvest, to consolidate operating companies of hotels on which Covivio already owns the property companies (link to the press release). This transaction, scheduled for the end of the year, completes the evolution of Covivio's unique profile as a real estate investment company: historically an investor and real estate asset manager, Covivio has also gradually become a hotel operator. The move towards a more operational model has enabled to deepen knowledge of the sector and operators, and to enhance flexibility in contract management and in the transformation of leases into operating companies. It also enables us to target operations with greater value-creation potential, and to optimize hotel performance through changes of brand or operator, or through renovation programs.

Against this backdrop, Covivio is strengthening its hotel management platform with a unified brand name, WiZiU, and a renewed team (link to the press release). WiZiU manages hotels in France and Belgium, either unbranded or under franchise from Accor, Marriott, Hilton or IHG, and is involved in all stages of hotel management and operation. To date, WiZiU manages 10 hotels with a total of 1,150 rooms, located in Lille (x5), Le Touquet, Nice, Rouen and Bruges (x2). By the end of the year, 14 new hotels, coming from the consolidation of operating companies in the asset swap with AccorInvest, will join the WiZiU platform (the other consolidated operating companies will be operated by third party managers). WiZiU's ambition is to support the repositioning of these hotels through rebranding and an investment program. By the end of 2024, WiZiU will manage 24 hotels, with a total of 3,090 rooms, and a value of over €500 million (nearly 9% of hotel assets).

Offices: further rise in occupancy rate and strong reversion captured in city centers

The success of the Group's office offering, based on the three pillars of centrality, high ESG performance and a strong hospitality approach, was again confirmed in the 3^rd quarter. 

A total of 115,370 m² of new leases and renewals were signed in the first nine months of 2024, up +27% year-on-year.

Third-quarter lettings and renewals (41,290 m²) enabled the occupancy rate to continue rising to 95.6% at endSeptember (vs. 95.1% at end-June 2024 and 94.5% at end-2023). 

In the city-center portfolio (69% of the office portfolio and 97.7% occupied), the Group has continued to extract growth potential, with an average +13% uplift on relettings and renewals since the beginning of the year (including +19% on 4,550 m² in the Gobelins building in Paris 5^th and +14% for 8,000 m² in the Percier building in Paris CBD). 

At the same time, the Group continued to fill up its portfolio. On its Core portfolio in the major business hubs (25% of the office portfolio), the occupancy rate rose slightly over the quarter to 94.3% (vs. 94.2% at end-June 2024), mostly thanks to the letting of 1,000 m² in the Sunsquare building in Munich. 

The non-core portfolio (6% of office assets) also saw its occupancy rate rise, to 87.5% (vs. 83.1% at end-June 2024), boosted by the letting of 7,900 m² in the Xylo building in Fontenay, from the French Ministry of the Interior.

German residential: well oriented rental activity

The housing shortage is growing in Germany, where building permits continue to contract sharply (-21% year-on-year decrease at end-August 2024^[1]). As a result, market rents continue to rise, particularly in Berlin. At the end of September 2024^[2], they were up +9.7% year-on-year for existing flats, to €14.2/m²/month, and +7.4% for new flats, to €20.2/m²/year. 

On its portfolio, Covivio has achieved an average reversion of +23% on reletting, including +35% in Berlin, while the occupancy rate remains high at nearly 99%. 

Acceleration in revenue growth, up +6.8% on a like-for-like basis

* on lease properties

Over the first nine months of 2024, revenues were up +4.9% as reported (vs. +1.8% for the first half), at €509 million Group share (€779 million at 100%). The strengthening of the hotel business (for which revenue increased by +23.5% at current scope) and positive operating momentum across all three asset classes outweighed the impact of disposals, mainly of offices.

Like-for-like growth also accelerated, to +6.8% (vs. +6.5% in the first half), thanks to indexation (2.8 pts), increasing occupancy rate and reversion (3.0 pts), and variable hotel revenues (1.0 pt).

In the Hotel business, revenue growth accelerated to +7.1% on a like-for-like basis, compared with +5.2% at end-June 2024. This performance is mainly attributable to variable revenues, up +10.4%, while fixed rents increased by +4.1% on a like-for-like basis, continuing to benefit from indexation and asset management operations. 

In offices, rents fell by -1.8% at current scope due to the disposals effect since 2023 but rose strongly on a like-for-like basis, by +8.3% (vs. +8.8% in H1 2024), due to ongoing normalization of indexation (3.9 pts), the rebound in occupancy rate (3.7 pts) and positive reversion (0.6 pt).

In German residential, like-for-like rental growth also accelerated, to +4.2% (vs. +3.9% at end-June), driven by indexation (for 1.8 pt), modernization programs (for 1.4 pt) and reletting (for 1.0 pt). Berlin, the Group's main exposure (57% of residential property), outperformed with like-for-like growth of +4.9% (vs +4.5% in June 2024). 

The average occupancy rate rose by +20bp over three months to 97.3%, while the average firm lease term was 6.4 years. 

€391 million of new disposal agreements signed in 2024 

Since the beginning of the year, Covivio has signed new disposal agreements worth €391 million Group share (€618 million at 100%), with an average margin of +3.3% on appraised values at end-2023 and an average yield of 5%.

In offices, disposal agreements totaled €158 million Group share (€215 million at 100%), with an average margin of  -2%, and mainly concerned non-core assets.

In German residential, €149 million Group share (€220 million at 100%) were sold at an average premium of +9% on appraised values, including the creation of the joint venture with CDC for €93 million Group share. Privatizations accelerated in the third quarter, with €20 million Group share (€30 million at 100%) of apartments sold, at an average margin of 40% on 2023 appraisal values.

In hotels, disposal agreements totaled €83 million Group share (€184 million at 100%), with an average premium of +4% on appraised values. They mainly concerned non-strategic hotels in Germany and Spain, as well as joint disposals of operating and property companies alongside AccorInvest.

In addition, the Group is in advanced negotiations for more than €300 million disposals, in line with the completion of its €1.5 billion disposal plan between end-2022 and the end-2024.

ESG performance: new progress in the 3^rd quarter 

Covivio wins another GRESB award 

Every year, the GRESB (Global Real Estate Sustainability Benchmark) evaluates and ranks the ESG policies, action plans and performance of over 2,000 companies in the construction and real estate sector worldwide. 

In 2024, Covivio confirms its leadership by maintaining its "5-star" status. This year, Covivio is rated 88/100, while the sector average is 79/100. Covivio also scores 98/100 for its development activity. 

Covivio earns BBCA label for three buildings 

At the beginning of October, the Low Carbon Building Association (BBCA), which brings together over a hundred players in the building sector, awarded its labels for 2024. 

Three Covivio buildings won awards. L'Atelier, Covivio's new European headquarters since the beginning of the year, was awarded the BBCA Rénovation label. Thaïs (Levallois) and Silex1 (Lyon) are among the first office buildings in France to be awarded the BBCA Exploitation label.

L’Atelier wins ULI Europe Awards for Excellence 

L’Atelier, Covivio’s new European headquarters, located in Paris 8^th, was awarded the Urban Land Institute (ULI) Europe Awards for Excellence, from a shortlist of 8 projects. The award, which was presented in Barcelona at the C Change Summit, the real estate industry’s meeting place for tackling the challenges of climate change, recognizes the best practices and most outstanding projects in urban development.

2024 guidance confirmed 

Covivio confirms its guidance for 2024 recurring net income (adjusted EPRA Earnings) of around €460 million, up +6% vs. 2023.

The Group is also aiming to return to a cash-only dividend payment for 2024, with a payout ratio of over 80%.

  AGENDA

          ► Capital Markets Day 2024 (Paris):                                                          November 28, 2024

          ► Annual results 2024:                                                                                                     February 19, 2025

 CONTACTS

                                  Press Relations                                                 Investor Relations

                                Géraldine Lemoine                                                   Vladimir Minot

Tel: + 33 (0)1 58 97 51      Tel: + 33 (0)1 58 97 51 94 geraldine.lemoine@covivio.fr             vladimir.minot@covivio.fr            

Louise-Marie Guinet

Tel: + 33 (0)1 43 26 73 56 covivio@wellcom.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 €23.0 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), 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, and in the ESG FTSE4 Good, CAC SBT 1.5°C, DJSI World & Europe, Euronext Vigeo (World 120, Eurozone 120, Europe 120 and France 20), Euronext® CDP Environment France EW, ISS ESG, Ethibel and Gaïa ethical indices and also holds the following awards and ratings: CDP (A), GRESB (88/100, 5-Star), ISS-ESG (B-) and MSCI (AAA).

Solicited ratings :

Financials:                    BBB+ / Stable outlook from S&P