Covivio Hotels : COVH – Financial information half-year 2024

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FINANCIAL INFORMATION HALF-YEAR 2024     Half-yearly financial information for 2024 Contents                 FINANCIAL INFORMATION 1   HALF-YEARLY 2024 1   1. ACTIVITY REPORT AT 30 JUNE 2024 5   1.1. Net financial income 10   1.2. Portfolio at 30 June 2024 13   1.3. EPRA indicators 17   1.4. Related companies 17   1.5. Risks and uncertainties 18   1.6. 2024 outlook 21   1.7. Transition tables 22   2. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2024 25   2.1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2024 26   2.1.1 STATEMENT OF FINANCIAL POSITION 26   2.1.2 STATEMENT OF NET INCOME 27   2.1.3 STATEMENT OF COMPREHENSIVE INCOME 28   2.1.4 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 29   2.1.5 STATEMENT OF CASH FLOWS 30     GENERAL PRINCIPLES 31   2.2.1.1. Accounting standards 31   2.2.1.2. Estimates and judgments 31   2.2.1.3. Taking into account the effects of climate change 32   2.2.1.4. Operating segments (IFRS 8) 32   2.2.1.5. IFRS 7 - Reference table 32     FINANCIAL RISK MANAGEMENT 33   2.2.2.1. Marketing risk for properties under development 33   2.2.2.2. Liquidity risk 33   2.2.2.3. Interest rate risk 34   2.2.2.4. Financial counterparty risk 34   2.2.2.5. Lease counterparty risk 34   2.2.2.6. Risk related to changes in the value of the portfolio 34   2.2.2.7. Foreign exchange risk 35   2.2.2.8. Risk related to changes in the value of shares and bonds 35   2.2.2.9. Tax environment 35     SCOPE OF CONSOLIDATION 37                   2                         Half-yearly financial information for 2024           2.2.3.1. Accounting principles relating to the scope of consolidation 37   2.2.3.2. Change in holding rate and change in consolidation method 38   2.2.3.3. List of consolidated companies 39   2.2.3.4. Control assessment 41     SIGNIFICANT EVENTS OF THE PERIOD 42   2.2.4.1. Business update 42   2.2.4.2. Vauban protocol 42   2.2.4.3. Asset disposals 42   2.2.4.4 Sale of shares 42   2.2.4.5. Financing and reimbursement 42     NOTES TO THE STATEMENT OF FINANCIAL POSITION 43   2.2.5.1. Portfolio 43   2.2.5.2. Financial assets 48   2.2.5.3. Investments in equity affiliates and joint ventures 49   2.2.5.4. Deferred taxes at closing 50   2.2.5.5. Short-term loans 50   2.2.5.6. Inventories and work in progress 51   2.2.5.7. Trade receivables 51   2.2.5.8. Tax and other receivables 52   2.2.5.9. Prepaid expenses 53   2.2.5.10. Cash and cash equivalents 53   2.2.5.11. Shareholders' equity 53   2.2.5.12. Statement of liabilities 54   2.2.5.13. Provisions for risks and charges 59   2.2.5.14. Other liabilities 60   2.2.5.15. Recognition of financial assets and liabilities 60   2.2.5.16. Accruals 61     NOTES TO THE STATEMENT OF NET INCOME 62   2.2.6.1. Accounting principles 62   2.2.6.2. Operating income 62   2.2.6.3. Net income from disposals 64   2.2.6.4. Change in the fair value of properties 64   2.2.6.5. Cost of net financial debt 64   2.2.6.6. Net financial income 65   2.2.6.7. Current and deferred taxes 65     OTHER INFORMATION 68   2.2.7.1. Personnel expenses 68   2.2.7.2. Earnings per share and diluted earnings per share 68   2.2.7.3. Related-party transactions 69   2.2.7.4. Executive remuneration 69     SEGMENT REPORTING 70   2.2.8.1. Accounting principles relating to operating segments - IFRS 8 70   2.2.8.2. Tangible and intangible fixed assets 70   2.2.8.3. Investment properties / properties held for sale 70   2.2.8.4. Financial liabilities 71   2.2.8.5. Income statement by operating segment 72     POST-CLOSING EVENTS 74   3. STATUTORY AUDITORS' REPORT ON THE INTERIM FINANCIAL INFORMATION 75   COVIVIO HOTELS 75                   3                     Half-yearly financial information for 2024 Period from 1 January 2024 to 30 June 2024 75 Statutory Auditors' report on the interim financial information 2024 75 4. STATEMENT BY THE PERSON RESPONSIBLE 77 4 Half-yearly financial information for 2024 1. ACTIVITY REPORT AT 30 JUNE 2024 5 Half-yearly financial information for 2024 Hotel market: good first-half performance H1 2024 performance in Europe improved on 2023. At the end of May 2024, RevPAR (revenue per available room) was up 4% on average, as the European market kept up its momentum, bolstered by the increase in occupancy rates and average prices. The best performances were recorded in Southern Europe, notably Spain and Italy, which were up 15% and 8%, respectively. Germany continued to catch up, posting a 4% increase in RevPAR. Meanwhile, France posted more moderate RevPAR growth at 1%, impacted by the postponement of travel plans in the run-up to the Paris Olympics. These trends are set to continue through June, with performance boosted by Euro 2024 in Germany but declining in Paris in pre-Olympics period. Memorandum of understanding signed by Covivio Hotels and AccorInvest In June 2024, Covivio Hotels and AccorInvest signed a memorandum of understanding to consolidate the ownership of jointly owned hotel operating and property companies, in accordance with the terms defined at the start of exclusive negotiations in November 2023. The transaction is expected to be closed in the final quarter of 2024. The memorandum concerns the acquisition by Covivio Hotels of 24 hotel operating companies1 - allowing the consolidation of these hotels, which will be owned and operated by Covivio Hotels - in exchange for the transfer to AccorInvest of title to 10 other hotels, which will then be owned and operated by AccorInvest. The agreed value of the property companies transferred to AccorInvest is €208 million 2, while the value of the operating companies acquired by Covivio Hotels is €266 million 3. Based on 2023 figures, the assets transferred to AccorInvest represent annual rental income of €11 million, while the operating companies acquired by Covivio Hotels generate EBITDA of around €31 million. The deal enables Covivio Hotels to acquire operating companies in major tourist areas with considerable potential for value creation through repositioning and management optimisation. Some of these hotels will continue to operate under Accor brands (under management or franchise agreements), while others will be rebranded. Through the acquisition of shares in hotel operating companies. Excluding transfer taxes. Including transfer taxes. 6 Half-yearly financial information for 2024 The agreement also concerns the hotels held under joint ventures by Covivio Hotels, which is also the indirect owner and asset manager of another 60 hotels leased to AccorInvest and held through two joint ventures created in 2010 and 2019, respectively. One of these is 80% owned by Crédit Agricole Assurances and 20% by Covivio Hotels, and the other is owned by Caisse des Dépôts et Consignations, Société Générale Assurances, and Covivio Hotels. The memorandum provides for the acquisition by Covivio Hotels and its partners of 19 operating companies held by these two joint ventures (thereby enabling them to be consolidated as properties owned and operated by Covivio Hotels and its partners) in exchange for the transfer to AccorInvest of six other hotels, which will then be owned by AccorInvest. These consolidation transactions for Covivio Hotels and the joint ventures represent a total of €393 million 1 for the hotel property companies sold by Covivio Hotels and its partners, equivalent to that of the operating companies owned and operated by the companies whose shares will be acquired. Upon completion, Covivio Hotels and its partners will have consolidated ownership of 43 hotels and AccorInvest 16. This hotel exchange transaction will allow Covivio Hotels to reposition a large part of its portfolio and increase its ability to directly influence performance, thereby exploiting a major source of potential growth. €77 million in new disposal commitments signed Covivio Hotels signed new disposal commitments totalling €77 million Group Share (€83 million at 100%) during the first half, including four hotels in Germany (€31 million), one hotel in Spain (€17 million) and 13 assets in France (€30 million), including three Accor-branded hotels. The commitments were signed at a margin of around 11% over end-2023 appraisal values, reflecting strong investor appetite for the hotel industry. Slight increase in like-for-like values At the end of June 2024, Covivio Hotels held a portfolio worth €5,821 million (€6,432 million at 100%), characterised by: high-quality locations: the average grade given for "location" by customers on Booking.com is 8.9/10; a diversified portfolio in terms of country (12 countries, none representing more than 33% of the total portfolio) and segment (68% economy/midscale and 32% upscale); long-term leases with the major hotel operators: 16 operators with an average firm residual lease term of 11.8 years. Group Share (€ millions, excluding duties) Value 2023 Value H1 2024     Hotel lease properties 4 434 4 464 Hotel Operating properties 1 337 1 357 Total Hotels 5 771 5 821 Non-Stratégic (Retail) 51 45 Total Covivio Hotels 5 822 5 866 1 LfL : Like-for-like     2 Yield excluding duties     H1 LfL Yield Yield H1 change 1 2023 2 2024 2 0.6% 5.8% 5.9% 0.0% 6.2% 6.3%       0.5% 5.9% 6.0%       10.7% N/A N/A       0.4% 5.8% 6.0%       At like-for-like scope, the hotel portfolio was up 0.5% over six months. This change is primarily attributable to the stabilisation of capitalisation rates and continued revenue growth driven by the good performance of variable- revenue hotels and fixed-rent indexation. The hotel portfolio has a 6.0% average yield excluding transfer duties. 1 Including transfer taxes. 7 Half-yearly financial information for 2024 Hotel portfolio breakdown at 30/06/2024 Revenue growth: +5% like-for-like The good first-half performance by the hotel market resulted in hotel portfolio revenue growth of 5.2% like-for-like, with revenues totalling €153.7 million compared to €150.1 million at 30 June 2023.   Incom e Incom e Incom e Incom e Change Change € million H1 2023 H1 2023 H1 2024 H1 2024 Group Group Share Share LFL             100% Group Share 100% Group Share (%) (%) (*) Lease properties - Variable 32.3 32.3 35.6 35.6 10.0% 9.3% Lease properties - Fixed 93.5 87.1 96.2 89.5 2.7% 4.4%               Operating properties - EBITDA 31.6 30.7 29.6 28.7 -6.6% 2.9% Total revenues Hotels 157.4 150.1 161.4 153.7 2.4% 5.2% Non-strategic (Retail) 1.9 1.9 1.7 1.7 -9.5% -9.3% Total revenues Covivio Hotels 159.3 152.0 163.1 155.4 2.2% 5.0% (*) On a like for like basis             Hotel lease properties (81% of hotels revenue) Variable-rent hotels (23% of the hotels revenue): the portfolio is mainly let to AccorInvest, in France and Belgium, and also includes the variable-rent portion of the minimum guaranteed rent leased assets located in Spain, Italy, and the UK. The 9.3% like-for-likeyear-on-year increase was driven by the excellent performance from hotels in Southern Europe. Fixed-rent hotels (58% of the hotel revenue): rents up 4.4% like-for-like, mainly due to rental indexation (up 5.6% in France, 3.8% in Germany, and 3.6% in Spain). The occupancy rate remained at 100% across the hotel portfolio. Hotel operating properties (19% of hotel revenue) Most of these hotels are located in Germany (mainly Berlin) and France. Like-for-like EBITDA for operating properties rose 2.9% year-on-year, mainly driven by good hotel performances in Germany. In addition, the hotels located in Bruges are subject to a work programme. 8 Half-yearly financial information for 2024 Successful refinancing, competitive debt cost, and strengthened liquidity Two new financing arrangements totalling €729 million were secured during the first half of the year, enabling the company to refinance upcoming debt payments. In particular, in May 2024 Covivio Hotels carried out a €500 million Green Bond issue with nine-year maturity and a 4.125% coupon (148 bp spread over mid-swap rate). The fixed rate of the issue was largely swapped for a floating rate in order to leverage the Group's hedging position. Covivio Hotels net debt rose from €2,260 million Group Share at 31 December 2023 to €2,373 million. Over the same period, the average interest rate improved by 11 bps, falling from 2.43% to 2.32% at the end of June 2024, while the average maturity increased from 3.6 to 5.1 years. Covivio Hotels had a strengthened debt coverage ratio of 96% at the end of June 2024 (compared with 89% at the end of 2023), with a high hedging maturity of 6.0 years. At 30 June 2024, the loan-to-value ratio (LTV) stood at 36.1%. The interest coverage ratio (ICR) was 5.94x, a further improvement compared to the end of 2023 (5.38x). Covivio Hotels held cash (including undrawn credit lines) of €616 million at 30 June 2024. As part of its annual review, S&P Global Ratings confirmed Covivio Hotels' BBB+ stable outlook rating, in line with the overall Covivio rating. This confirmation recognises the solidity of the company's operational and financial profile. S&P also upgraded Covivio Hotels' stand-alone rating from BB+ to BBB-. Recurring net income growth of 7% in H1 2024 H1 2024 recurring net income (EPRA Earnings) came to €119.5 million, up 6.6% from €112.1 million a year earlier, boosted by revenue growth. EPRA Earnings per share amounted to €0.81, up 6.6% from €0.76 the previous year. EPRA NTA (net tangible assets) stood at €3,505 million, compared with €3,550 million at the end of 2023. This amounted to €23.7 per share, down 1.3% compared to the end of 2023, despite the impact of the dividend payment. Taking into account the fair value adjustment of interest rate hedges and fixed-rate debt, the EPRA NDV (net disposal value) was €3,472 million, from €3,512 million at end-December 2023, down 1.1%. It stands at €23.4/share. 9 Half-yearly financial information for 2024 1.1. Net financial income 1.1.1. General principles The interim condensed consolidated financial statements were prepared in compliance with international accounting standard IAS 34 Interim Financial Reporting, as adopted by the European Union. The rules and methods applied are identical at 31 December 2023. 1.1.2. Statement of interim net income Group Share revenues On a Group Share basis, Covivio Hotels Group Share revenue totalled €155.4 million for the first half-year of 2024, up by 2.2% compared to June 2023. On a like-for-like basis, hotel fixed rents were up by 4.4%, hotel variable rents by 9.3% and EBITDA from hotel operating properties increased by 2.9% compared to June 2023. This increase is linked to the momentum in Southern Europe of the activity observed during the half-year and the end of the lockdown measures in Europe.   Revenues Revenues Revenues Revenues Revenues Revenues Change Change % of (In € million) H1 2023 H1 2023 H1 2024 H1 2024 T1 2024 T2 2024 (%) COVH QP revenues   100% COVH QP 100% COVH QP COVH QP COVH QP COVH QP (%) LfL 1                     Lease properties - Variable 32,3 32,3 35,6 35,6 14,3 21,3 10,0% 9,3% 23,1% Lease properties - Fixed 93,5 87,1 96,2 89,5 44,9 44,6 2,7% 4,4% 58,2% Operating properties - EBITDA 31,6 30,7 29,6 28,7 5,2 23,5 -6,6% 2,9% 18,6% Total revenues Hotels 157,4 150,1 161,4 153,7 64,4 89,3 2,4% 5,2% 100,0% Non-strategic (Retail) 1,9 1,9 1,7 1,7 0,9 0,9 -9,5% -9,3% n.a. Total 159,3 152,0 163,1 155,4 65,3 90,2 2,2% 5,0% n.a. 1: Like for Like = like-for-like scope Operating income, Group Share Operating income, Group Share amounted to €153.1 million at 30 June 2024, compared with €90.1 million at 30 June 2023. This change is mainly due to the change in the fair value of investment properties (+€57 million). Net financial income, Group Share Financial income mainly consists of: The cost of net financial debt for -€27.6 million, down €1.8 million compared to June 2023, in line with the decrease in the cost of debt; The financial expense on lease liabilities (-€7.8 million), generated by the application of IFRS 16, which consists of restating leases in the same way as finance leases; The positive change in the fair value of financial assets and liabilities for €19 million, taking into account changes in interest rates; Foreign exchange income related to our British, Polish, Hungarian and Czech portfolios for €0.4 million compared to €0.4 million at 30 June 2023. 1.1.3. EPRA Earnings EPRA Earnings amounted to €119.5 million at 30 June 2024. It is up by 6.6% compared to 2023. Per share, the EPRA Earnings amounted to €0.81 at 30 June 2024, compared with €0.76 on the same date in 2023, i.e. an increase of 6.6%. 10

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