Covivio Sa · EURONEXT:COV
Covivio Sa — Investor Presentation (June 2018)
62 slides from Covivio Sa's investor presentation, June 2018
Slide 1: Corporate Presentation June 2018
CORPORATE PRESENTATION JUNE 2018
Slide 2: Contents
CONTENTS 1. STRATEGIC POSITIONING 03 2. CONTEMPLATED MERGER WITH BENI STABILI 09 3. PRIME HOTEL ACQUISITION IN THE UK 21 4. Q1 2018 INVESTMENT ACTIVITY 26 5. Q1 2018: ACCELERATION OF RENTAL GROWTH 32 6. KEY TAKEWAYS 36 7. APPENDIX 39 JUNE 2018 2
Slide 3: Strategic Positioning
1. STRATEGIC POSITIONING JUNE 2018 3
Slide 4: A European Operator with a Unique Business Model
A EUROPEAN OPERATOR WITH A UNIQUE BUSINESS MODEL 1 European player 2 Property developer 3 Client centric leader in its markets for its own account & focusing on capital cities €21 bn portfolio at 100% €5.1 bn development pipeline Enhance client direct relationship 21 % Italy Offices 21 % Milan: 64%
Slide 5: 2017: A Major Step Towards Our Strategic Targets
2017: A MAJOR STEP TOWARDS OUR STRATEGIC TARGETS 1 Focus on capital cities +€1.8 bn investments Offices: €407 million More Paris, Milan & Lyon German Residential: €573 million More Berlin Hotels: €788 million More capital cities -€1.4 bn disposals1 Offices: €519 million Telecom Italia exposure: -50%
Slide 6: 2017: A Major Step Towards Our Strategic Targets
2017: A MAJOR STEP TOWARDS OUR STRATEGIC TARGETS 2 Accelerate the development pipeline Success of the 12 deliveries in 2017 89,000 m² of offices & 683 hotel rooms Already 98% let ~50% value creation A development pipeline already renewed and increased €5.1 +28% bn €4.0 2017 bn 2016 Silex1 – Lyon JUN
Slide 7: 2017: A Major Step Towards Our Strategic Targets
2017: A MAJOR STEP TOWARDS OUR STRATEGIC TARGETS 3 Intensify client centricity Internalize hotel know-how Direct contact with the final customer Synergies with offices & residential New flex-office/coworking offer Target >70,000 m² to be opened in Europe by 2022 +30% profit vs rents New coliving off
Slide 8: A Successful Strategy Driving a Sustainable Financial Performance
A SUCCESSFUL STRATEGY DRIVING A SUSTAINABLE FINANCIAL PERFORMANCE Over the past few years, …while, at the same time, …and the financial profile… we significantly improved increasing our results the portfolio quality… EPRA NAV per share 73% €94.5 % of Green French Offices €86.8 Loan to Value 65% 61%
Slide 9: Contemplated Merger with Beni Stabili
2. CONTEMPLATED MERGER WITH BENI STABILI JUNE 2018 9
Slide 10: Beni Stabili: The Leading Italian Office Player
BENI STABILI: THE LEADING ITALIAN OFFICE PLAYER €3.5 bn portfolio1 Group Share Fuelled by a c. €800 M pipeline With an unparalleled portfolio in Milan (€4.2 bn on a 100% basis) mostly in Milan (89%) 253 assets 51 assets 8 projects (1,903,000 m²)2 (620,000 m²)2 (198,100 m²) 64% of total GAV in Milan
Slide 11: Delivering on Targets Announced in 2015
DELIVERING ON TARGETS ANNOUNCED IN 2015 PAVING THE WAY TO A STRATEGIC GROUP INTEGRATION Diversified Tenant Base & Improved Occupancy Healthier credit profile Focus on Milan Occupancy rate Loan-to-Value (Offices, excl. TI) 642% +15pp +760 95.1% Investment Milan Office bps Grade Rating (excl. TI) Focu
Slide 12: Milan Office Market Dynamic Supporting the Proposed Transaction
MILAN OFFICE MARKET DYNAMIC SUPPORTING THE PROPOSED TRANSACTION REGAINED MOMENTUM OF MILAN OFFICE MARKET, FAVOURING GRADE A ASSETS Increased ~+20% 70% Take-up: - - Preference for Grade A as % of 2017 take-up vs. Grade A total take-up 2015 2017 15.4% 13.5% Limited Vacancy Vacancy Milan: 10.3% for Gra
Slide 13: Simplification as a Growth Driver
SIMPLIFICATION AS A GROWTH DRIVER A key milestone towards the ongoing objective of simplification Improve flexibility and reactivity Intensify client centric approach Capitalize on a €21 bn Group: financing sources / cost, synergies and sharing of best practices between products & countries Gr
Slide 14: A Transaction Strengthening the Group's Strategic Pillars
A TRANSACTION STRENGTHENING THE GROUP’S STRATEGIC PILLARS 1 2 3 Focus on Full integration Strengthened European capital cities to best serve our clients property developer Know-how sharing & +€1.7 bn of assets1 mainly in Milan leveraging synergies between Full integration of ~ €800 M markets and cou
Slide 15: Focus on Development Pipeline in Milan
FOCUS ON DEVELOPMENT PIPELINE IN MILAN COMMITTED PIPELINE EVOLUTION: +26% INCREASE BY 2018-2019 2018-2019: +26%, in value Selected future committed projects >5 projects Milan, The Sign B / C New >110,300 m² c.17,000 m², ~ €70 M #6 projects Commitments Launched in Q1 2018 #6 projects €275 M €400 M 89
Slide 16: Contemplated Transaction & Estimated Impacts
CONTEMPLATED TRANSACTION & ESTIMATED IMPACTS Covivio proposed exchange ratio: 8.5 COV shares for 1,000 Beni Stabili shares (post 2017 dividend Merger distribution) > Beni Stabili Terms Shareholding Structure Covivio intends to acquire additional BS shares in the market, to reach up to 60% in Ben
Slide 17: An Enhanced Capital Market Visibility
AN ENHANCED CAPITAL MARKET VISIBILITY: INCREASED SCALE AND ENLARGED FREE FLOAT An enlarged free float, Increased market capitalization Proforma shareholding structure1 increasing liquidity €3.7 bn Post merger1 €7.3 bn Post merger1 (50.6%) Delfin 26.6% + € 0.7 bn + €0.5 bn (+ ~17%) Free Float 50.6% C
Slide 18: An Enhanced European Portfolio, Focusing on Capital Cities
AN ENHANCED EUROPEAN PORTFOLIO, FOCUSING ON CAPITAL CITIES Beni Stabili Covivio Covivio Dec-2017 Dec-2017 post-merger2 GAV €3.5 bn1 €12.8 bn ~€15 bn Group Share Others Rest of Europe Rest of Europe 9% 5% 7% Northern Italy Milan 15% 64% Germany France Germany 28% 53% 26% France 45% Rome 100% Italy 5%
Slide 19: An Attractive Value Proposition for Beni Stabili Shareholders
AN ATTRACTIVE VALUE PROPOSITION FOR BENI STABILI SHAREHOLDERS Premium to share price exchange ratio Based on 3 month VWAP basis1 … offering a unique exposure to Europe and to its most growing markets office, hotel and residential markets Access to Paris, Berlin, Milan + ~8% #4 European REIT2
Slide 20: Contemplated Merger with Beni Stabili Announced on 20 April
CONTEMPLATED MERGER WITH BENI STABILI ANNOUNCED ON 20 APRIL ► Successful completion of Beni Stabili transformation initiated in 2015 Indicative timetable ► Enhanced focus on major European cities Covivio & Beni Stabili EGM | September 2018 ► Reinforced development pipeline Regulatory approvals a
Slide 21: Prime Hotel Acquisition in the UK
3. PRIME HOTEL ACQUISITION IN THE UK JUNE 2018 21
Slide 22: Acquisition in the UK: A Prime Portfolio in the Major Cities
2018 – ACQUISITION IN THE UK: A PRIME PORTFOLIO IN THE MAJOR CITIES 14 hotels in lease in the major 4* and 5* hotels €976 million 1 UK cities Prime locations in city-centers Closing Q2 2018 2,638 rooms Hotels location by city Blythswood square - Glasgow George Street - Edinburgh Midland hotel - Manc
Slide 23: Acquisition in the UK: Start of a Long Term Partnership with IHG
2018 – ACQUISITION IN THE UK: START OF A LONG TERM PARTNERSHIP WITH IHG A highly secured transaction… …offering value creation levers RevPar +5.6% in 2017 New partnership despite Brexit with a major hotel operator The 4th most popular √ Secured √ Dynamic destination in Europe 25-year triple net leas
Slide 24: Hotel Acquisition in the UK: Further Improving the Quality of Assets
2018 – HOTEL ACQUISITION IN THE UK: FURTHER IMPROVING THE QUALITY OF ASSETS Focus on major European Higher quality of hotels cities 80% 1 73% 1 % of assets in major % of 4* and 5* hotels 65% European cities 2 53% 54% 58% 2015 2016 2017 2015 2016 2017 Target 100% by 2022 Target 75% by 2022 George str
Slide 25: Hotel Acquisition in the UK: Further Transforming the Portfolio
2018 – HOTEL ACQUISITION IN THE UK: FURTHER TRANSFORMING THE PORTFOLIO A good mix between lease & 77% 23% operating properties Lease Operating properties properties 27% Germany 18% Exposure to a new United Kingdom dynamic market 32% 12% France Spain 8% 3% Belgium Other 14% B&B 9% Carlson Rezidor 20%
Slide 26: YTD Investment Activity
4. YTD INVESTMENT ACTIVITY JUNE 2018 26
Slide 27: Q1 2018: Further Reinforcement in German Residential
Q1 2018: FURTHER REINFORCEMENT IN GERMAN RESIDENTIAL €195 million of acquisitions realized €127 million Group share Central locations mainly in Berlin, Dresden & Hamburg 1,153 units €2,330/m² on average Attractive 4.3% yield1 in 2 years post reletting of vacant space (~8% vacancy) >30% reversion pot
Slide 28: Strong Success of the Development Pipeline in Milan
STRONG SUCCESS OF THE DEVELOPMENT PIPELINE IN MILAN Launching 26,500 m² of new offices in Milan Delivery 2019 & 2020 Already 35% pre-let €105 m total cost1 to Aon for 12 years firm €285/m² target rent >7% yield on cost Client of Covivio since 2011 Attractive and well-connected France head office in
Slide 29: Asset Rotation in Paris CBD: Fueling the Development Pipeline
ASSET ROTATION IN PARIS CBD: FUELING THE DEVELOPMENT PIPELINE 10 & 30 avenue Kléber Asset swap 19/21 rue Jean Goujon 4,800 m² of renovated offices Paris CBD 8,500 m² to redevelop in Paris 16th Madeleine in Paris 8th Palais de l’Elysée €104 m 3.3% €134 m 1 year €21,600/m² Grand Concorde €15,800/m² di
Slide 30: 2018: Acceleration of Committed Pipeline in Offices
2018: ACCELERATION OF COMMITTED PIPELINE IN OFFICES 2018: Acceleration of the committed pipeline Expect to launch +~€900 million1 new projects ~€1.3 billion2 A €1.3 billion2 pipeline, up +80% +80% €861 million €710 million France ~75% France 63% France 56% Committed -€438 +€286 pipeline million mill
Slide 31: Pipeline to Be Committed in 2018 – Strong Qualitative Projects in Paris
PIPELINE TO BE COMMITTED IN 2018 – STRONG QUALITATIVE PROJECTS IN PARIS N2 – Paris 17th 16,200 m² Omega – Levallois ~€150 million 18,500 m² 2021 ~€180 million PSA – Paris St-Ouen H2 2020 30,000 m² ~€200 million H1 2021 Jean Goujon – Paris CBD 8,500 m² 2021 Paris Neuilly Batignolles – St-Ouen Levallo
Slide 32: Q1 2018: Acceleration of the Rental Growth
5. Q1 2018: ACCELERATION OF THE RENTAL GROWTH JUNE 2018 32
Slide 33: Pursuit of the Good Rental Market Trends Driving Our Performance Up
PURSUIT OF THE GOOD RENTAL MARKET TRENDS DRIVING OUR PERFORMANCE UP Offices positive rental trends especially for new/refurbished assets Like-for-like rents Take-up: 742,000 m² +13% vs 2017 Greater +2.5% on France Offices Paris Prime rents: +2% YTD +2.9% on Paris inner city +6.2% on Major Regional C
Slide 34: Pursuit of the Good Rental Market Trends Driving Our Performance Up
PURSUIT OF THE GOOD RENTAL MARKET TRENDS DRIVING OUR PERFORMANCE UP 4% Modernization German Residential +5.1% continue to benefit from LfL - total +6.2% the positive fundamentals 53% in Berlin portfolio Indexation portfolio 43% Berlin market: Reletting Average in-place rent in 2017: +9% vs 2016 (€9.
Slide 35: Q1 Revenues: Keeping on Accelerating Thanks to Our Strategic Moves
Q1 REVENUES: KEEPING ON ACCELERATING THANKS TO OUR STRATEGIC MOVES Change on Firm lease Revenue Revenue Occupancy Q1 2018 - € million Change like-for-like maturity 100% Group share rate basis (in years) France Offices 68 61 -0.2% 1 +2.5% 97.5% 4.8 Italy Offices 48 20 -17.0% +1.5% 96.9% 7.1 Offices e
Slide 36: Key Takeaways
6. KEY TAKEAWAYS JUNE 2018 36
Slide 37: Major Achievements Towards Our Strategic Goals
MAJOR ACHIEVEMENTS TOWARDS OUR STRATEGIC GOALS Principe Amedeo, Milan Flow, Montrouge The Line, Paris European leader in its market & Property developer Client Centric focusing on capital cities Grow the pipeline Launch of our Reinforce our European footprint Strong success of our projects new flex/
Slide 38: Key Upcoming Events
KEY UPCOMING EVENTS H1 2018 results: 19 July 2018 Capital Markets Day – Milan: 18 October 2018 JUNE 2018 38
Slide 39: Appendix
APPENDIX
Slide 40: Appendix Contents
APPENDIX CONTENTS ►Key performance indicators ►Q1 2018 acquisitions & disposals ►Pipeline: committed and managed projects at end-2017 ►2017 Recurring Net income & Epra Earnings ►Geographical breakdown of our activities ►Greater Paris & Milan office Markets JUNE 2018 40
Slide 41: Key Performance Indicators
Appendix Key performance indicators
Slide 42: A Strategy Supported by Sound Indicators
A STRATEGY SUPPORTED BY SOUND INDICATORS Historically high occupancy rates Record firm term of leases 7.3 7.2 6.6 6.2 97.9% 97.7% 6. 95.4% 94.8% 95.8% 95.5% 96.0% 97.1%96.3% 96.7% 5.8 1 6.0 5.8 5.8 5.5 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 43: Q1 2018 Acquisitions & Disposals
Appendix Q1 2018 acquisitions & disposals
Slide 44: Q1 2018 Acquisitions: €329 Million Realized
Q1 2018 ACQUISITIONS: €329 MILLION REALIZED Acquisitions Q1 2018 realized Acquisitions Q1 2018 secured Acquisitions Acquisitions Yield Acquisitions Acquisitions Yield (€ million including duties) 100% Group share Group share 100% Group share Group share France Offices 134 134 n.a. - - - Italy Office
Slide 45: Q1 2018 Disposals: €386 Million Realized
Q1 2018 DISPOSALS: €386 MILLION REALIZED Disposals Agreements New New Total (agreements as as of end Total Margin vs (€ million) disposals agreements Yield Realized of end of 2017 of 2017 to 2018 2017 value Q1 2018 Q1 2018 Disposals closed) close 1 2 3 =2+3 =1+2 France Offices 100% 14 98 140 9 148 1
Slide 46: Development Pipeline at End-2017
Appendix Development pipeline at end- 2017
Slide 47: Committed Pipeline at End-2017: €934 Million at 100% – 1/3
COMMITTED PIPELINE AT END-2017: €934 MILLION AT 100% - 1/3 Total Total Capex to be Surface 1 Target rent Pre-leased Budget 2 Projets in Group share Budget 2 Target Yield 3 Progress invested (m²) (€/m²/year) (%) (M€, (M€, 100%) (M€, Group Share) Group Share) Total France Offices 104,200 m² 229 44% 39
Slide 48: Committed Pipeline at End-2017: €934 Million at 100% – 2/3
COMMITTED PIPELINE AT END-2017: €934 MILLION AT 100% - 2/3 Total Capex to be Total Surface 1 Target rent Pre-leased Budget 2 Target invested Projects in Group share Location Project Budget 2 Progress (m²) (€/m²/year) (%) (M€, Group Yield 3 (M€, Group (M€, 100%) Share Share) Riverside Toulouse Constr
Slide 49: Committed Pipeline at End-2017: €934 Million at 100% – 3/3
COMMITTED PIPELINE AT END-2017: €934 MILLION AT 100% - 3/3 Total Capex to be Total Surface 1 Target rent Pre-leased Budget 2 Target invested Committed Projects Location Project Budget 2 Progress (m²) (€/m²/year) (%) (M€ Yield 3 (M€, Group (M€, 100%) Group share) share) Konstanzer Berlin Extension 40
Slide 50: Managed Pipeline at End-2017: €4.1 Billion at 100%
MANAGED PIPELINE AT END-2017: €4.1 BILLION AT 100% & €3.0 BILLION GROUP SHARE Projects Surface 1 Delivery Location Project sorted by estimated total cost at 100% (m²) timeframe Cap 18 Paris Construction 50,000 m² >2020 Rueil Lesseps Rueil-Malmaison - Greater Paris Regeneration-Extension 43,000 m² >2
Slide 51: 2017 Recurring Net Income & EPRA Earnings
Appendix 2017 Recurring Net Income & EPRA Earnings
Slide 52: Recurring Net Income: +10% in 2017
RECURRING NET INCOME: +10% IN 2017 % (€ million, Group share) 2016 2017 Change Net rental income 526,3 539,4 13,1 2,5% Growth in all our markets Net operating costs -60,3 -59,7 0,6 -1,1% Income from other activities 9,6 7,0 -2,6 -27,4% Less property development fees Cost of net financial debt -129,1
Slide 53: Net Income to EPRA Earnings
NET INCOME TO EPRA EARNINGS (€million) 2016 2017 Net income Group share (Financial data §3.3) 782,8 914,1 Change in asset values -465,2 -627,2 Income from disposal -45,8 -24,4 Acquisition costs for shares of consolidated companies 11,2 2,2 Changes in the values of financial instruments -31,4 0,5 Def
Slide 54: Geographical Breakdown of Our Activities
Appendix Geographical breakdown of our activities
Slide 55: France Offices Breakdown
FRANCE OFFICES BREAKDOWN A €6.4 billion portfolio at 100% (€5.4 billion in Group Share) at end-2017 26% Western Crescent and La Défense 18% 7% Inner Ring The strategic locations in Paris, the Inner Ring and Paris North-East 2% the Major regional cities represent 94% of the Outer Ring 12% portfolio P
Slide 56: Italy Offices Breakdown
ITALY OFFICES BREAKDOWN A €3.9 billion at 100% (€3.9 billion Group Share1) Milan: a €2.2 billion2 portfolio focused on the best locations at end-2017 7% Turin 5% Rome 64% Milan 15% North of Italy 9% Other 10% Center & Semi-Center 61% 29% CBD & Porta Nuova Periphery JUNE 2018 56 1 Proforma of the con
Slide 57: Germany Residential Breakdown
GERMANY RESIDENTIAL BREAKDOWN A €5.0 billion portfolio at 100% (€3.1 billion Group Share) at Berlin: a €2.8 billion1 portfolio focused on the best locations end-2017 9% Dresden & Leipzig 73% Prime location 6% Hamburg 6% Good Duisburg (NRW ) location 55% Berlin 10% Average 22% Essen (NRW ) location 3
Slide 58: Hotel Real Estate Portfolio Breakdown
HOTEL REAL ESTATE PORTFOLIO BREAKDOWN A €5.8 billion hotel portfolio at 100%1 (€2.2 billion Group Share) at end-2017 27% Germany 27% 18% Economic United Kingdom 36 % 12% Midscale Spain 32 % France 37% 10% Belgium Upscale 3% Others JUNE 2018 58 1Hotels only. Proforma of the merger of FDM and FDM Mana
Slide 59: Grand Paris & Milan Office Markets
Appendix Grand Paris & Milan office markets
Slide 60: Paris & Grand Paris Office Market
PARIS & GRAND PARIS OFFICE MARKET Ligne 17 RER C RER B Gennevilliers Saint-Denis Key figures in 2017 Asnières Aubervilliers Ligne 16 Nanterre Clichy La Défense > 56 million m² of offices in the Greater Paris market Neuilly Ligne 15 17 million m² in Paris Rueil-Malmaison 3.3 million m² in La Défense
Slide 61: Milan Office Market in 2017
MILAN OFFICE MARKET IN 2017 > A stock of c.12 million m² of offices 17k sqm 78k sqm 6.3% 6.8% 2.2 million m² (18%) in the CBD and Porta Nuova; 420 €/m² 540 €/m² 710,000 m² in (10%) in the Centre 2.8 million m² (19%) in the Semi-centre 3.5 million m² (19%) in the Periphery ~3 million m² outisde the P
Slide 62: Contact
Contact Paul Arkwright Paris Tel.: +33 1 58 97 51 85 30, avenue Kléber Mobile: +33 6 77 33 93 58 75116 Paris paul.arkwright@covivio.fr Tel.: +33 1 58 97 50 00 JUNE 2018