Covivio Sa · EURONEXT:COV
Covivio Sa — FY2020 Earnings Presentation
67 slides from Covivio Sa's earnings presentation, Feb 17, 2021
Slide 1: FY2020 Results
FY2020 RESULTS 17 FEBRUARY 2021
Slide 2: Summary
SUMMARY I. 2020: MANY SUCCESSES IN A CHALLENGING ENVIRONMENT II. A HIGH-QUALITY PORTFOLIO ABLE TO ADAPT Offices: more prime locations, pipeline & services as key drivers Residential: promising fundamentals & continuous growth Hotels: positioned for recovery III. FINANCIAL RESULTS IV. OUTLOOK & GUIDA
Slide 3: 2020: Many successes in a challenging environment
I. 2020: MANY SUCCESSES IN A CHALLENGING ENVIRONMENT Lyon CBD, Silex 2
Slide 4: Reinforcement in Germany in 2020: a European portfolio
REINFORCEMENT IN GERMANY IN 2020 Notably with the acquisition in German offices for €1.1 bn Group share A EUROPEAN PORTFOLIO GROUP SHARE Geographic breakdown (Group share, change vs 31/12/2019) 60 % OFFICES €10.2 bn 40% -3 pts 37% +6 pts €17.1 bn 25 % €4.3 bn (€25.7 bn RESIDENTIAL at 100%) 15 % €2.5
Slide 5: Success of disposals: €0.9 bn Group share
SUCCESS OF DISPOSALS: €0.9 BN GROUP SHARE New disposals 2020 Group Gross Margin (realized & secured) share Yield (Group (Group share) DISPOSALS WELL ABOVE share) TARGET OF > €600 M France offices €424 m 5.3% 7% Italy offices €280 m 4.7% 7% SIGNIFICANT MARGIN OF +8% ABOVE APPRAISAL VALUE Germany €129
Slide 6: Disposal of two mature assets in France in Q4 2020
DISPOSAL OF TWO MATURE ASSETS IN FRANCE IN Q4 2020 €176 million Group share secured In-house Transformation of a value-add asset development into a high-quality headquarters 100% occupancy / 5.5 years WALT 2011: Acquisition at 8% yield 2015-2017: Departure of the tenant + & redevelopment with a 45%
Slide 7: 2020 results / positive trends since July
2020 RESULTS / POSITIVE TRENDS SINCE JULY EPRA EARNINGS LTV EPRA NTA Above guidance Close to <40% policy despite second lockdown €385 m / €4.21 40.9% €100.1 per share vs guidance of €380 m announced in July vs 41.1% at end-June 2020 per share vs 98.4€ at end-June 2020 Strong offices & residential Re
Slide 8: More progress on an ambitious ESG strategy
MORE PROGRESS ON AN AMBITIOUS ESG STRATEGY Carbon reduction efforts Positive impact on communities Supporting gender equality 88% Fairest 36% of the portfolio Landlord of women on the is certified green award exec. committee in German Resi. +4 pts vs 2019 +9 pts vs 2019 COVIVIO IS RANKED AMONG THE W
Slide 9: II. High quality portfolio able to adapt
II. HIGH QUALITY PORTFOLIO ABLE TO ADAPT II-A. OFFICES: more prime locations, pipeline & services as key drivers II-B. RESIDENTIAL: unbroken fundamentals & continuous growth Milan, Via Cornaggia II-C. HOTELS: positioned for recovery
Slide 10: II.A. Offices
II.A. OFFICES MORE PRIME LOCATIONS, PIPELINE & SERVICES AS KEY DRIVERS Chatillon, IRO
Slide 11: New office environment: polarization of take-up
NEW OFFICE ENVIRONMENT: POLARIZATION OF TAKE-UP Conjunctural impact of the economic crisis 1 Decrease in office absorption on the overall market Structural impact from WFH adoption 2 Increasing competition will benefit best assets in connected locations COVIVIO ROADMAP TO OUTPERFORM Concentrate deve
Slide 12: Reinforcing prime locations
REINFORCING PRIME LOCATIONS Paris CBD, Jean Goujon
Slide 13: Office portfolio / reinforcement in prime locations
OFFICE PORTFOLIO / REINFORCEMENT IN PRIME LOCATIONS TOP EUROPEAN CITIES TOP BUSINESS DISTRICTS NON-CORE ASSETS 63% 28% 9% €6.3 bn / 100 assets €2.8 bn / 50 assets €0.9 bn PARIS INNER- MOSTLY TELECOM CITY / MILAN / +21 pts GREATER PARIS BEST DISTRICTS TOP 5 FRENCH CITIES ITALIA WITH 100% TOP 5 GERMAN
Slide 14: Pipeline, a driver to transform the portfolio
PIPELINE, A DRIVER TO TRANSFORM THE PORTFOLIO Paris CBD, Anjou
Slide 15: Adapting our pipeline in a changing environment
ADAPTING OUR PIPELINE IN A CHANGING ENVIRONMENT ACTIONS PIPELINE AT END-2021 + 5 projects to be MORE CBDs committed in 2021 in Paris CBD, Milan 96% of committed projects in city-centre of Paris, Milan, Berlin CBD, Berlin CBD CONTINUE TO DO Accompanying Extension for Dassault our tenants Systèmes in
Slide 16: New development projects: 100% prime offices in CBDs
NEW DEVELOPMENT PROJECTS: 100% PRIME OFFICES IN CBDS €0.9 bn Group share development cost, including €0.4 bn of capex MILAN CBD BERLIN CBD PARIS CBD Corso Italia / Alexanderplatz / Anjou, Carnot, Laborde / 11,600 m² 60,000 m² mixed-use 26,300 m² To be committed in 2021 To be committed in 2021 To be
Slide 17: Office pipeline at end-2021: €1.7 bn Group share
OFFICE PIPELINE AT END-2021: €1.7 BN GROUP SHARE PARIS BERLIN MILAN & Levallois 60,000 M² 102,000 M² Mixed-use 26,100 M² 96% City-centre NEW NEW NEW Incl 70% CBD Paris CBD – Goujon Paris CBD - Laborde Paris CBD - Anjou CBD – Alexanderplatz1 CBD – Unione 4.8% 8,550 m² / 2022 6,200 m² / 2023 9,300 m²
Slide 18: Transforming obsolete offices into residential in France
TRANSFORMING OBSOLETE OFFICES INTO RESIDENTIAL IN FRANCE THE STRENGTH OF DIVERSIFICATION: SYNERGIES BETWEEN ASSET CLASSES 3 PROJECTS Meudon Bellevue - 1,800 m² COMMITTED 100% sold EXTRACT TO BE ADDITIONAL DELIVERED VALUE IN 2021-2022 NEUTRALISE FROM LONG- + LEASED THE RISK ON OBSOLETE ASSETS OFFICES
Slide 19: More to come / the example of Bordeaux Lac
MORE TO COME / THE EXAMPLE OF BORDEAUX LAC 46,500 m² of residential potential Attractive residential Leading to location & obsolescence residential of the building conversion Former IBM building… 2004 Sell & leaseback with IBM Area around the asset moving 2004-2018 from an office destination BORDEAU
Slide 20: Client approach & services a differentiating strength
CLIENT APPROACH & SERVICES A DIFFERENTIATING STRENGTH TO ATTRACT MORE CLIENTS Paris 5th, Gobelins
Slide 21: A relevant & differentiating offer in the making: All-in-one
A RELEVANT & DIFFERENTIATING OFFER IN THE MAKING: ALL-IN-ONE Since 2017 Since 2018 Since 2019 Since 2020 ALL-IN-ONE CONCEPT Being built on Expertise of our INITIATION + SERVICES + FLEXIBILITY + ADVISORY = teams developed Services & Flexibility Acceleration Acceleration Accompanying over the last yea
Slide 22: Office 2020 operational results
OFFICE 2020 OPERATIONAL RESULTS Paris CBD, Percier
Slide 23: Resilient office operational results
RESILIENT OFFICE OPERATIONAL RESULTS FRANCE ITALY GERMANY1 PURSUIT OF RENTAL GROWTH +0.4% +0.7% -0.3% of which Milan offices +0.8% +2.9% like-for-like RESILIENT VALUE +0.8% -1.4% +4.8% GROWTH +1.7% Excl. Godewind portfolio like-for-like of which Milan offices +0.4% in line with acquisitionon price O
Slide 24: II.B. Residential
II.B. RESIDENTIAL PROMISING FUNDAMENTALS & CONTINUOUS GROWTH Berlin Residential
Slide 25: German residential market: unbroken fundamentals
GERMAN RESIDENTIAL MARKET: UNBROKEN FUNDAMENTALS… STRONG POPULATION GROWTH IN ATTRACTIVE CITIES COMBINED WITH INSUFFICIENT OFFER… …especially in Berlin with the effect of the new regulation % EXPECTED POPULATION GROWTH NUMBER OF APARTMENTS ON OFFER FROM 2012 TO 2030 TO RENT IN BERLIN, IN THOUSAND 14
Slide 26: Leading to continuous value increase
…LEADING TO CONTINUOUS VALUE INCREASE APARTMENTS PRICES CONTINUE TO RISE IN GERMANY… …INCLUDING IN BERLIN REACHING >€5,000 M² ON AVERAGE HOUSING PRICE INDEX FOR APARTMENTS CHANGE IN MEDIAN IN GERMANY (BASIS 100 IN 2005) ASKING PRICE IN €/M² +11% €5 070 +7% 200 in 2020 /m² in 2020 180 €4 220 /m² 160
Slide 27: Reinforcement in German residential
REINFORCEMENT IN GERMAN RESIDENTIAL SINCE 2012 SINCE 2015 SINCE 2018 SINCE 2020 REINFORCEMENT ACQUISITIONS LAUNCHING PIPELINE DELIVERIES ON THE IN GERMAN RESIDENTIAL + IN FAST-GROWING CITIES + & ACQUIRING LAND BANKS + DEVELOPMENT PIPELINE 5 25% 5 25% +24% INCREASE PER YEAR SINCE 2012 4 20% 4 3 15% 3
Slide 28: Investment dynamic continues
INVESTMENT DYNAMIC CONTINUES CONTINUING TO ACQUIRE ACCELERATION OF EXISTING ASSETS DEVELOPMENT PIPELINE IN BERLIN €119 m in 2020 (€79 m Group share) First deliveries of €29 m in 2020 (123 units) 3.7% yield 534 units in Berlin at €2,750 /m² €244 m of committed projects at end-2020 Atlbau-style apartm
Slide 29: Maintaining excellent relations with tenants
MAINTAINING EXCELLENT RELATIONS WITH TENANTS “Fairest Landlord” award Best possible in the Focus Money survey 2020 score on all criteria Independent survey updated every year among 26 German Improvement for the third year running residential companies, including ~1,400 tenants surveyed • Tenant rela
Slide 30: 2020 performance: rental growth & value increase
2020 PERFORMANCE: RENTAL GROWTH & VALUE INCREASE NRW, HAMBURG, BERLIN DRESDEN & LEIPZIG 56% of the portfolio 44% of the portfolio PURSUIT OF RENTAL GROWTH +2.3% +1.2% +3.4% Like-for-like STRONG VALUE GROWTH +8.2% +5.7% +11.6% Like-for-like VERY HIGH OCCUPANCY 99% 30
Slide 31: II.C. Hotels
II.C. HOTELS POSITIONED FOR THE RECOVERY Paris, Motel One
Slide 32: 2020: a challenging year
2020: A CHALLENGING YEAR A STEEP CONJUNCTURAL IMPACTING COVIVIO CRISIS FOR THE HOTEL INDUSTRY HOTEL PORTFOLIO Up to 90% of hotels forced to close in 2020 -67% -55% like-for-like revenue RevPar in Europe % of hotel % LfL portfolio change -71% -74% Revpar FIXED AGREEMENTS performance -73% -64% LEASES
Slide 33: Europe: good fundamentals for recovery
EUROPE: GOOD FUNDAMENTALS FOR RECOVERY EUROPEAN 3 KEY DRIVERS HOTELS FOR EARLY RECOVERERS CLIENTELE: 90% of overnight stays in EU DOMESTIC-focused markets & destinations HIGHLY are from EU residents 1 relying on LAND-BASED TRANSPORT France (~70% domestic) Germany (~85%) EUROPEAN UK (~85%) including
Slide 34: Hotel portfolio positioned to capitalize on early recovery
COVIVIO HOTEL PORTFOLIO / POSITIONED TO CAPITALIZE ON EARLY MARKET RECOVERY FRANCE & GERMANY UNITED KINGDOM OTHERS CONTRACT FULLY VARIABLE LEASE FIXED LEASE STRUCTURE with MAC clause % OF HOTEL REVENUES (based on 2019) 42% 13% 44% KEY DRIVERS Mostly Mostly Major European individual regional clients
Slide 35: III. Financial results
III. FINANCIAL RESULTS Solid portfolio value & balance sheet Rental activity & 2020 revenues Paris CBD, Jean Goujon EPRA Earnings, EPRA NTA & Dividend
Slide 36: Office letting activity / 72,500 m² of new contracts in 2020
OFFICE LETTING ACTIVITY / 72,500 M² OF NEW CONTRACTS IN 2020 Attracting new clients 23,000 m² let 35% Working with Paris – Carré Suffren of the total our partners Paris - Gobelins 4,360 m² Greater Paris - IRO 3,800 m² 7,600 m² let & relet Orange Orange/ /62,800 Details 62,800m² Detailsslide slide37
Slide 37: Office asset management / example with Orange
OFFICE ASSET MANAGEMENT / ONE EXAMPLE WITH AN HISTORIC PARTNER, ORANGE ACCOMPANYING ORANGE …BENEFITS COVIVIO’S ON THEIR REAL ESTATE STRATEGY… PORTFOLIO Securing Orange in their regional offices Liquidity / exit from secondary cities 1 Lease extension in Q3 2020 from 3 to 9 years on 46,000 m² of whic
Slide 38: 2020 revenues / +1.0% LfL excluding hotels
2020 REVENUES / +1.0% LFL EXCLUDING HOTELS Revenues Revenues % change Average Occupancy rate 2020, €million 2019 2020 like-for-like lease term Collection rate % Group share Group share Group share firm, in years France Offices 226.4 207.1 +0.7% 93.1% 4.6 99% Italy Offices 147.0 126.8 -0.3% 96.8% 7.4
Slide 39: Office letting challenges addressed with clear measures
OFFICE LETTING CHALLENGES ADDRESSED WITH CLEAR MEASURES VACANCY FOCUSED ON A HANDFUL LIMITED SHORT-TERM OF QUALITY BUILDINGS, ACTIVELY MANAGED LEASE EXPIRIES TO MANAGE 6 assets accounting for 5 pts of Office vacancy of Covivio revenues in 2021 <10% (€62 m of lease expiries) Paris – Carré Suffren Cha
Slide 40: EPRA earnings 2020 / €385 million
EPRA EARNINGS 2020 / €385 MILLION Strong Offices Impact of crisis on Decrease in financial & Residential activity hotels & retail costs & other stable -€79 m +€12 m €452.2 €5.31 / share €385.0 m -15% €4.21 / share -21% -€38 m +€35 m +€3 m -€68 m -€11 m +€12 m France & Italy German German Hotels Othe
Slide 41: Portfolio like-for-like value growth: +1.3%
PORTFOLIO LIKE-FOR-LIKE VALUE GROWTH: +1.3% % of Covivio portfolio 9% Value creation on development pipeline +8% 41% Value creation or stability on quality assets in dynamic locations +1% OFFICES +0.8% Paris, Milan & dynamic business districts in France 60% of the portfolio like-for-like Godewind po
Slide 42: Solid key credit metrics
SOLID KEY CREDIT METRICS LTV 40.9% Close to <40% Strong liquidity of €2.5 bn policy €1.2 bn available + €1.3 bn of undrawn cash credit lines 1.29% LOW COST OF DEBT 81% hedged & HIGH ICR 6.1x limited short-term debt maturities Debt maturities (in €million, Group share) LONG DEBT MATURITY 5.7 years 1
Slide 43: EPRA Net Tangible Assets / €9.5 bn at end-2020
EPRA NET TANGIBLE ASSETS / €9.5 BN AT END-2020, +4% VS END-2019 €9,122 €9,482 m m €104.2 EPRA NRV €110.3 /share €104.3 /share €10,452 m /share €100.1 /share + €4.2 - €0.6 /share - €4.8 + €1.8 /share - €0.5 /share /share /share EPRA Debt Earnings Dividend Property management Other value increase - €4
Slide 44: Dividend 2020: €3.6 per share
DIVIDEND 2020: €3.6 PER SHARE €3.6 DIVIDEND CALENDAR PER 86% 26/04/2021 28/04/2021 SHARE1 PAYOUT detachment Payment in cash of coupon RATIO 44 1 Dividend subject to the approval of the General Assembly to be held on April 20 th, 2021
Slide 45: IV. Outlook & guidance
IV. OUTLOOK & GUIDANCE Milan CBD, Corso Italia
Slide 46: Outlook & guidance
OUTLOOK & GUIDANCE SHORT-TERM MEDIUM-TERM Pursuit of active OFFICE asset rotation >€500 m & client-oriented value creation remaining to be captured on projects committed and to be committed in 2021 strategy RESIDENTIAL Continuous growth of rents & value Uncertainty on the Long-term fundamentals HOTE
Slide 47: Key upcoming events
KEY UPCOMING EVENTS SHAREHOLDERS’ MEETING: 20 April 2021 Q1 2021 ACTIVITY: 20 April 2021 H1 2021 RESULTS: 21 July 2021 47
Slide 48: Appendix contents
APPENDIX CONTENTS 1. COVIVIO’S ESG STRATEGY 2. DEVELOPMENT PIPELINE 3. COVIVIO OFFICE PORTFOLIO 4. P&L EPRA EARNINGS 48
Slide 49: Covivio ESG strategy
COVIVIO ESG STRATEGY For more details on Covivio ESG strategy, see dedicated presentation on the website link Symbiosis project / 125,000 m² Transforming a former industrial area 49 into a new green business district
Slide 50: Development pipeline
DEVELOPMENT PIPELINE COVIVIO
Slide 51: Committed pipeline / offices delivery schedule
COMMITTED PIPELINE / OFFICES DELIVERY SCHEDULE Committed Pipeline at end-2020 €1.2 bn 5.6% 43% >30% cost Group share yield on cost pre-let Target margin €392 m €348 m 90% €294 m 0% 0% Delivery schedule €113 m Cost in Group share €x €92 m % pre-let x% 47% 71% H1 2021 H2 2021 H1 2022 H2 2022 H1 2023 N
Slide 52: Committed pipeline / €1.2 bn of offices at end-2020
COMMITTED PIPELINE / €1.2 BN OF OFFICES AT END-2020 Total Total Surface¹ Target rent Pre-leased Committed projects Location Project Delivery Budget² Budget ² Target Yield³ (m²) (€/m²/year) (%) (€M, 100%) (€M, Group share) Flow Montrouge Construction 23,600 m² 2021 327 100% 115 115 6.6% Gobelins Pari
Slide 53: Accompanying tenants: the example of Gobelins
ACCOMPANYING TENANTS: THE EXAMPLE OF GOBELINS 4,360 m² full plug & play contract signed in 2020 for 5 years with an existing partner • Traditional lease DEFINING THE NEED • Mix of lease & flex OF THE CLIENT • All-in-one offer 5.0% EBIT yield • Workshops with management & employees PROPOSING TAILORED
Slide 54: Committed pipeline / German residential delivery schedule
COMMITTED PIPELINE / GERMAN RESIDENTIAL DELIVERY SCHEDULE Committed Pipeline at end-2020 €244 m total cost 4.9% >40% €157 m group share yield on cost on units to be let target margin on units to be sold 430 units to be delivered €132 m cost (€85 m Group Share) 413 units to be delivered €111 m cost (
Slide 55: Managed office pipeline
MANAGED OFFICE PIPELINE In the short-term / 2021 5 CBD projects to be committed in 2021 4 in Orange buildings in Paris (22,000 m²) In the medium-term 2022/2023 6 buildings to be potentially vacated for redevelopment 2 buildings in Greater Paris (46,000 m²) In Greater Paris (60,000 m²) & major French
Slide 56: Portfolio
PORTFOLIO COVIVIO
Slide 57: Paris portfolio: high-quality & high-potential
PARIS PORTFOLIO: HIGH-QUALITY & HIGH-POTENTIAL €2.8 bn Group share 29 assets In Paris (89%) & Neuilly/Levallois (11%) 74,000 110,000 155,000 m² m² m² Pereire So Pop Cap18 Alis Thais N2 Montmartre Maillot Carnot Jemmapes Laborde Percier Provence The Line Ménilmontant Anjou Voltaire Goujon New / Proje
Slide 58: Greater Paris / best locations of top districts
GREATER PARIS / BE IN THE BEST LOCATIONS OF TOP DISTRICTS €2.1 bn Group share1 21 ASSETS IN TOP BUSINESS OFFERING BEST LOCATIONS DISTRICTS OF GREATER PARIS & BUILDINGS INSIDE EACH DISTRICT Business districts (size of office area in m²) / UNCOMPROMISING QUALITY OF REAL ESTATE % of Covivio office port
Slide 59: Top assets in France: 84% of the France office portfolio
TOP ASSETS IN FRANCE: 84% OF THE FRANCE OFFICE PORTFOLIO Greater Paris & Major cities / 34% of the portfolio Paris & Neuilly/Levallois La Défense Rueil Montrouge-Malakoff-Chatillon district Vélizy campuses CB21 tower 50% Flow & IRO Delivered in 2020/2021 HQ of Edvance Delivered between 2008-2016 HQ
Slide 60: Milan office portfolio: highly central locations
MILAN OFFICE PORTFOLIO: HIGHLY CENTRAL LOCATIONS €2.0 bn Group share existing assets 41 assets in Milan 340,000 52,000 133,000 Bicocca m² m² m² Certosa Maciachini Porta Nuova City Life Semi-centre Lambrate / Forlanini CBD Existing Projects Land banks Lorenteggio Navigli Centre Corso Italia Linate Ai
Slide 61: Top assets in Italy: 83% of the Italian office portfolio
TOP ASSETS IN ITALY: 83% OF THE ITALIAN OFFICE PORTFOLIO Milan Milan Milan Milan Milan Torre Garibaldi Via Dante Corso Italia San Fedele Symbiosis Prime asset renovated in 2011 on top of Prime asset in the CBD delivered in 2020 Prime redevelopment project in the CBD Prime asset in the CBD 2 building
Slide 62: Germany offices portfolio
GERMANY OFFICES PORTFOLIO Berlin - Alexanderplatz €1.5 bn Group share in top 5 cities Frankfurt – Airport Centre Frankfurt – City Gate Frankfurt – Comcom Hamburg 18% Berlin Frankfurt – Y2 Düsseldorf – Herzog T. Düsseldorf – Airport Centre Dusseldorf 22% 21% Frankfurt 31% Hamburg – Zeughaus Hamburg –
Slide 63: German residential portfolio
GERMAN RESIDENTIAL PORTFOLIO Berlin: a €3.7 billion portfolio (€3.0 bn Group share) focused on the best locations Prime locations Average locations PORTFOLIO 100% 72% of the portfolio 5% of the portfolio €6.6 BN Covivio Assets 8% Good locations Basic locations 9% Hamburg 23% of the portfolio Dresden
Slide 64: Hotels / a prime portfolio in top European touristic destinations
HOTELS / A PRIME PORTFOLIO IN TOP EUROPEAN TOURISTIC DESTINATIONS …WITH SOUND 88% IN MAJOR EUROPEAN CITIES1… PROFITABILTY PROFILE PORTFOLIO €2.5 BN Edinburgh ~35% Group share Germany Amsterdam 24% EBITDAR Margin UK Dublin 13% Warsaw in 2019 London Berlin Lille Brussels Prague % Spain value 11% Paris
Slide 65: P&L EPRA earnings
P&L EPRA EARNINGS COVIVIO
Slide 66: P&L EPRA earnings 2020 / €385 million
P&L EPRA EARNINGS 2020 / €385 MILLION €million – Group share 2019 2020 Change €m Change % Net rental income 591.5 539.0 -52.5 -9% EBITDA from hotel operating activities & coworking 34.3 9.0 -25.3 -74% Income from other activities (incl. property development) 25.0 31.5 +6.5 +26% NET REVENUE 650.7 579
Slide 67: Contact
CONTACT Paul Arkwright Tel.: +33 1 58 97 51 85 Mobile: +33 6 77 33 93 58 paul.arkwright@covivio.fr Paris 30, avenue Kléber 75116 Paris Tel.: +33 1 58 97 50 00 www.covivio.eu