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Covivio Hotels Sca — Covivio Hotels — Debt Investor Presentation (September 2018)
57 slides from Covivio Hotels Sca's debt investor presentation, September 2018
Slide 1: Covivio Hotels Debt Investor Presentation
COVIVIO HOTELS DEBT INVESTOR PRESENTATION SEPTEMBRE 2018
Slide 2: Contents
CONTENTS 1. COVIVIO HOTELS: A EUROPEAN LEADER 03 2. A WELL-ORIENTED HOTEL MARKET 13 3. ILLUSTRATIVE CASE STUDIES 19 4. A STRONG OPERATIONAL & FINANCIAL PROFILE 25 5. CREDIT HIGHLIGHTS 34 APPENDIX 37 2
Slide 3: 1. Covivio Hotels: A European Leader
1. COVIVIO HOTELS: A EUROPEAN LEADER
Slide 4: A Stable and Experienced Management Team
A STABLE AND EXPERIENCED MANAGEMENT TEAM SPEAKERS INTRODUCTION Dominique Ozanne (40) Gaël Le Lay (45) Tugdual Millet (41) CEO of Covivio Hotels and Deputy CEO of Covivio Deputy CEO CFO Covivio 13 years in Hotel investments through Covivio Hotels 18 years in Hotel investments 16 years at Covivio, of
Slide 5: A Solid and Longstanding Shareholding Structure
A SOLID AND LONGSTANDING SHAREHOLDING STRUCTURE Strong links with Covivio Hotels Covivo Hotels is the #1 Pan European Hotel REIT €3.1 billion market capitalization 1 Covivio involvement in Covivio Hotels: 1. Founded Covivio Hotels in 2005 Covivio 2. French SCA regime (limited partnership) with €7.5
Slide 6: The European Hotel REIT Leader
THE EUROPEAN HOTEL REIT LEADER Westin - Berlin Grand Central - Glasgow Motel One - Paris 1 2 3 Focus on major Target the most profitable Client centric: be the preferred European cities hotels partner of main operators Cities > 2 million overnight stays Mid to Upscale hotels 18 partners across 31 br
Slide 7: 13 Years of a Successful Strategy
13 YEARS OF A SUCCESSFUL STRATEGY +13% OF GROSS ASSET VALUE PER YEAR ON AVERAGE Support operators with Acceleration of European development Sale and leaseback strategic evolutions Strengthen our hotel expertise Accor rent 2005 2010 2015 H1 20182 (% hotel annualised rent, Group Share) 100% 58% 42% 24
Slide 8: Leading Player in Each of the Major European Markets
LEADING PLAYER IN EACH OF THE MAJOR EUROPEAN MARKETS Belgium & Netherlands Germany l €0.5 Bn GAV A €5.9 bn hotel portfolio at end-June 20181 €5.4 bn in Covivio Hotels Group share1 United Kingdom l €1.5 Bn GAV l €1.0 Bn GAV 388 hotels 46,777 rooms France l €2.2 Bn GAV Critical size on each of our mar
Slide 9: A Well-Diversified European Footprint Focus on Major Cities
A WELL-DIVERSIFIED EUROPEAN FOOTPRINT FOCUS ON MAJOR CITIES 80% major European cities (cities with more than 2 million overnight stays annually) Germany main cities Germany UK major cities Berlin, Dresde & Leipzig, Frankfurt, Munich, etc. 28% London, Edinburgh, Glasgow, Oxford, etc. UK 16% % in turn
Slide 10: An Optimised Mix Between Type of Revenues
AN OPTIMISED MIX BETWEEN TYPE OF REVENUES Covivio Hotels owns all the assets it rents or operates : Real Estate owner Revenue from operators1 53% 21% 26% Fixed lease Revenue based on Revenue based on turnover2 Net Operating Income mostly with Accor, based on a mostly trophy assets in core location (
Slide 11: Long Term Partnership with the Leading Operators
LONG TERM PARTNERSHIP WITH THE LEADING OPERATORS Long-term partnerships with the best operators in each countries throughout a diversified tenant base #1 #x Ranking as European Operators #8 In terms of rooms, 2017 (Hospitality On) Leader in France & historical partner Subsidiary of Jin Jiang (#5 glo
Slide 12: Strong Quality of the Portfolio
STRONG QUALITY OF THE PORTFOLIO Focus on major European Higher quality of hotels cities1 80%2 73%2 % of assets in major European cities % of upscale and midscale 65% (mainly 4* and 5*) 53% 54% 58% 2015 2016 H1 2018 2015 2016 H1 2018 Target 100% by 2022 Target 75% by 2022 George street - Edinburgh 1
Slide 13: 2. A Well-Oriented Hotel Market
2. A WELL-ORIENTED HOTEL MARKET
Slide 14: Hotels in Europe Benefiting from Robust Fundamentals
HOTELS IN EUROPE BENEFITING FROM ROBUST FUNDAMENTALS European travel & tourism industry is growing Investments in travel & tourism 1 2 arrivals and spending 3 are accelerating €bn European GDP from Travel & Tourism industry €bn International arrivals & tourism spending €bn European Travel & Tourism
Slide 15: Hotel Market: Strong Fundamentals Supporting Sustainable Growth
HOTEL MARKET: STRONG FUNDAMENTALS SUPPORTING SUSTAINABLE GROWTH Chain peneration (rooms), 2018 Demand & supply evolution since 2009 average France, Germany, Spain & UK (rebased 100) 47% (Million) Average yearly growth 34% 135 130 +3.3% 125 120 49% +2.1% 115 110 Since 2013 105 Tourist arrivals: +14%
Slide 16: Focus on Collaborative Economy: Airbnb
FOCUS ON COLLABORATIVE ECONOMY: AIRBNB Airbnb is a new player in the hotel sector… …focused on specific segments… …and limited by strict regulation Importance of collaborative A polarized offer Short term lease Regulation in economy Europe Airbnb was launched in 2007 in the US Airbnb offers are main
Slide 17: The Hotel Investment Market Is Highly Liquid
THE HOTEL INVESTMENT MARKET IS HIGLY LIQUID AND OFFERS SOLID VISIBILITY The Hotel Industry is seeing a strong and sustained investment momentum Fuelled by institutional and Private Equity investors European investments in Hotel Real Estate x2.6 since 2012 > Institutional investors: 33% 33% of H1 201
Slide 18: A Well-Oriented Hotel Market Offering Leverage for Real Estate Owner
A WELL-ORIENTED HOTEL MARKET OFFERING LEVERAGE FOR REAL ESTATE OWNER As the leading European Hotel Real Estate owner, 1 The Travel & Tourism industry is experiencing momentum and growing at an unprecedented appears pivotal for most of the chain operators offering it high bargaining power to: operato
Slide 19: 3. Illustrative Case Studies
3. ILLUSTRATIVE CASE STUDIES
Slide 20: AccorHotels: Highlights on a Successful Long-Term Partnership
ACCORHOTELS: HIGHLIGHTS ON A SUCCESSFUL LONG- TERM PARTNERSHIP A €1.1 bn lease portfolio 74 hotels in France (89%) & Belgium (11%) Variable rents indexed on hotel revenues 2005 Acquisition of 123 assets with 12-year leases 2015 Lease extension with AccorHotels: +12 years firm at passing rents Dispos
Slide 21: Germany: An Iconic Operating Properties Portfolio
GERMANY: AN ICONIC OPERATING PROPERTIES PORTFOLIO 60% of total Hotel portfolio in ~€880 million mainly in Berlin1 Germany Revenue based on Net Operating Income 9 hotels 4-5* | City center locations Park Inn – Berlin Westin - Berlin 60% Berlin ; 40% Dresden & Leipzig Average Daily Rate per room: <90
Slide 22: A Critical Size Lease Portfolio in Spain
A CRITICAL SIZE LEASE PORTFOLIO IN SPAIN Successful entry in Spain: December 2016 17 hotels 4-5* | City center locations €559 million acquisition price €168 thousands / room AC Forum – Barcelona Eurostars Gran Marina - Barcelona 80% Barcelona & Madrid Average Daily Rate per room: <100€ in Barcelona
Slide 23: 2018 – Acquisition in the UK: Partnership with IHG (1/2)
2018 – ACQUISITION IN THE UK: START OF A LONG TERM PARTNERSHIP WITH IHG (1/2) €976 million1 14 hotels in lease in the major 4* and 5* hotels Funding sources: UK cities Prime locations in city-centers Closing Q2 2018 - Capital increase: €300 million 2,638 rooms - Mortgage Debt: €454 million - Cash: €
Slide 24: 2018 – Acquisition in the UK: Partnership with IHG (2/2)
2018 – ACQUISITION IN THE UK: START OF A LONG TERM PARTNERSHIP WITH IHG (2/2) A highly secured transaction… …offering value creation levers RevPar1 +5.6% in 2017 despite Brexit The 4th most popular New partnership √ Dynamic destination in Europe with a major hotel operator market √ Secured The 1st i
Slide 25: 4. A Strong Operational and Financial Profile
4. A STRONG OPERATIONAL AND FINANCIAL PROFILE
Slide 26: Strong Visibility on Revenue
STRONG VISIBILITY ON REVENUE Strong long-term visibility… … coupled with accelerating operating results Lease properties (owned and leased to 3rd parties) > Lease maturity since 2015 >10 years Rents - like-for-like Year-on-Year growth +3.2% +3.3% > Occupancy rate since the beginning 100% +5.5% from
Slide 27: Resilience of Accor Revenues
RESILIENCE OF ACCOR REVENUES ranks 6th in the global hotel industry and #1 in Europe1 Most of Covivio Hotels variable rents today come from AccorHotels revenues, representing 24% of total hotel revenue2, strongly decreasing from 62% in 2014 Evolution of the Accor rents on a like-for-like basis (100
Slide 28: Benefits from Geographical Diversification
BENEFITS FROM GEOGRAPHICAL DIVERSIFICATION Geographic diversification offers the best strategy to rip-off the benefits of overall long-term dynamics, while protecting against the specific volatility of each country When applying the historical performance (RevPar since 2010) of Covivio Hotels’ main
Slide 29: Hotels, an Attractive Asset Class (1/2)
HOTELS, AN ATTRACTIVE ASSET CLASS (1/2) 1 A higher rental yield compared to other asset classes… Covivio Net IFRS rental yield 2017 EBITDA margin vs peers1 5.8% 5.7% 92% 5.3% 5.5% 5.3% 5.2% 5.0% 80% 4.7% 4.8% 4.6% 4.5% 78% 74% 4.2% 2015 2016 2017 France offices Italy offices German Residential Hotel
Slide 30: Hotels, an Attractive Asset Class (2/2)
HOTELS, AN ATTRACTIVE ASSET CLASS (2/2) 3 Stronger anchoring of operators to real estate compared to other asset classes: > Hotel real estate is central to the operating activity of operators > Valuation of the business is tied to real estate Low tenant risk and high reliance to Real Estate owner Su
Slide 31: Conservative Credit Metric and Resilient Cash Flow
CONSERVATIVE CREDIT METRIC AND RESILIENT CASH FLOW COVIVIO HOTELS Disciplined debt ratios Lower cost of debt LTV target of 40% 3.32% 2.73% Debt maturities under control: 2015 5.8 years on average1 Group share LTV including duties Maturities in €million Group share1 2016 2.52% 937 2017 619 2.07% 40.9
Slide 32: Very Strong Commitment of Shareholders to Support Covivio Hotels Development
VERY STRONG COMMITTMENT OF SHAREHOLDERS TO SUPPORT & FINANCE COVIVIO HOTELS DEVELOPMENT UK portfolio €976 million Spanish portfolio €559 million 19 hotels (France, Germany, Belgium) €988 million Creation of FDM Management B&B portfolio acquisition €300 m €513 million €3 204 m €200 m €2 422 m €200 m
Slide 33: A Diversified Debt Structure with Robust Hedging Rate
A DIVERSIFIED DEBT STRUCTURE WITH ROBUST HEDGING RATE Breakdown of the debt Secured debt1 by nature as % of total portfolio H1 20181 End 2018, expected Expected following H1 2018 contemplated bond Illustrative impact with a €300 m bond, Illustrative impact with a €300 m bond, the UK portfolio acquis
Slide 34: 5. Credit Highlights
5. CREDIT HIGHLIGHTS
Slide 35: Key Credit Highlights
KEY CREDIT HIGHLIGHTS Business profile Financial profile 1. Top 1 position in major European cities 2. Well diversified geographical footprint & operators base 3. Positioning on well-oriented market supported by mega trends 1. A supportive shareholder base 4. Long-term partnership with leading opera
Slide 36: Appendix
APPENDIX
Slide 37: A) Covivio Group
A) COVIVIO GROUP
Slide 38: Covivio Group Overview
COVIVIO GROUP OVERVIEW A €23 bn portfolio, with a European footprint1 Geographical split1 (Group Share) Others Spain 4% 1 2% Offices France & Italy Germany 27% France €15.3 bn 44% Group Share 42.1% 61.7% Italy 23% Wohnen Asset type split1 (Group Share) Hotels Résidential Non strategic Germany 5% Hot
Slide 39: Covivio Hotels: A Limited Partnership, with Covivio at the Helm
COVIVIO HOTELS: A LIMITED PARTNERSHIP, WITH COVIVIO AT THE HELM The société en commandite par actions (SCA) is a limited partnership structure. – Shareholders: The particularity of the SCA compared to other types of limited partnership is that it has two separate and distinct kind of shareholders. G
Slide 40: Covivio: A Secured and Solid Debt Profile H1 2018
COVIVIO: A SECURED AND SOLID DEBT PROFILE H1 2018 LTV including duties Cost of debt S&P rating 42.4% 1.55% BBB, positive outlook Strong diversification in financing Debt maturities under control Full compliance with the 6.0 years maturity covenants (in million, Group share) (in million, Group share)
Slide 41: B) Main Assets
B) MAIN ASSETS
Slide 42: Top 10 Assets – Russel Square, London
TOP 10 ASSETS – RUSSEL SQUARE, LONDON 334 rooms - 5* 1 restaurant 4 bars 9 meeting rooms 42
Slide 43: Top 10 Assets – Park Inn Alexanderplatz, Berlin
TOP 10 ASSETS – PARK INN ALEXANDERPLATZ, BERLIN 1 012 rooms - 4* 2 restaurants 1 bar 12 meeting rooms 43
Slide 44: Top 10 Assets – The Westin Grand Berlin
TOP 10 ASSETS – THE WESTIN GRAND BERLIN 400 rooms - 5* 2 restaurants 1 bar 11 meeting rooms 44
Slide 45: Top 10 Assets – Charlotte Square, Edinburgh
TOP 10 ASSETS – CHARLOTTE SQUARE, EDINBURGH 199 rooms - 5* 1 restaurant 1 bars 6 meeting rooms 45
Slide 46: Top 10 Assets – Mercure Tour Eiffel
TOP 10 ASSETS – MERCURE TOUR EIFFEL 405 rooms - 4* 1 restaurant 1 bar 11 meeting rooms 46
Slide 47: Top 10 Assets – Eurostars Grand Marina
TOP 10 ASSETS – EUROSTARS GRAND MARINA 291 rooms - 5* 1 restaurant 1 bar 1 outside pool 24 meeting rooms 47
Slide 48: Top 10 Assets – George Street, Edinburgh
TOP 10 ASSETS – GEORGE STREET, EDINBURGH 240 rooms - 5* 1 restaurant 1 bar 8 meeting rooms 48
Slide 49: Top 10 Assets – AC Forum, Barcelona
TOP 10 ASSETS – AC FORUM, BARCELONA 364 rooms - 4* 1 restaurant 1 bar 1 outside pool 18 meeting rooms 49
Slide 50: Top 10 Assets – Ibis Cambronne, Paris
TOP 10 ASSETS – IBIS CAMBRONNE, PARIS 523 rooms - 3* 1 restaurant 1 bar 6 meeting rooms 50
Slide 51: Top 10 Assets – Novotel Gare de Lyon, Paris
TOP 10 ASSETS – NOVOTEL GARE DE LYON, PARIS 253 rooms - 4* 1 restaurant 1 bar 6 meeting rooms 51
Slide 52: C) Main Trends
C) MAIN TRENDS
Slide 53: Four Trends Reshaping the Hotel Industry
FOUR TRENDS RESHAPING THE HOTEL INDUSTRY 1 Demand is changing 2 Hotels are adapting Strong emphasis on services… Focus on consumer experience and price Guest kitchen F&B Highlight optimization Collaborative fooding Friendly, gourmant & locavore restaurant Key attributes and drivers of consumers are
Slide 54: Four Trends Reshaping the Hotel Industry
FOUR TRENDS RESHAPING THE HOTEL INDUSTRY 3 New concepts and products 4 Location is key The Westin and the Park Inn, two highly profitable New operators are emerging hotels in Berlin Targeting young and urban travelers Existing ones are adapting A key value for Meininger: AccorHotels new lifestyle IH
Slide 55: Disclaimer
DISCLAIMER This document comprises the written materials for an investors’ presentation relating to Covivio Hotels (Ex Foncière des Murs) (the Company) and its group in the context of a proposed offering of securities (the Notes) (the Offering). This document also comprises information on Covivio an
Slide 56: Disclaimer
DISCLAIMER The Company may be unable: •to anticipate all the risks, uncertainties or other factors likely to affect its business and to appraise their potential consequences; •to evaluate precisely the extent to which the occurrence of a risk or a combination of risks could cause actual results to d
Slide 57: Contact
CONTACT PAUL ARKWRIGHT PARIS PAUL.ARKWRIGHT@COVIVIO.FR 10. AVENUE KLÉBER T +33 1 58 97 51 85 75116 PARIS TEL.: +33 1 58 97 50 00 M +33 6 77 33 93 58 Covivio-hotels.fr
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