H1 2019 RESULTS INCREASING PIPELINE, STRONGER BALANCE SHEET AND - - PowerPoint PPT Presentation
H1 2019 RESULTS INCREASING PIPELINE, STRONGER BALANCE SHEET AND GROWING OPERATING & FINANCIAL RESULTS 23 JULY 2019 FIRST HALF 2019 / KEY MILESTONES ACHIEVED ACCELERATION OF DISCIPLINED OPERATING DEVELOPMENTS FINANCIAL PROFILE
INCREASING PIPELINE, STRONGER BALANCE SHEET AND GROWING OPERATING & FINANCIAL RESULTS
23 JULY 2019
H1 2019 RESULTS
2
FIRST HALF 2019 / KEY MILESTONES ACHIEVED
ACCELERATION OF
DEVELOPMENTS
OPERATING
PERFORMANCE
DISCIPLINED
FINANCIAL PROFILE
TARGET <40% ALREADY REACHED RATING UPGRADE TO
LIKE-FOR-LIKE REVENUE
€526 MILLION GROUP SHARE
NEW COMMITTED PROJECTS
LIKE-FOR-LIKE VALUE
H1 2019 RESULTS
3
CONTENTS
I. COVIVIO’S STRATEGY
4
7 II-A. Acceleration of the development pipeline 7 II-B. Qualitative asset rotation 17 II-C. A strategy supporting ESG performance 23
25
35
APPENDIX
42
I.
H1 2019 RESULTS
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COVIVIO BUSINESS MODEL / A DIVERSIFIED SPECIALIST…
GERMAN RESIDENTIAL OFFICES
strategic1
HOTELS IN EUROPE
ONE OF THE LEADERS IN FRANCE & THE LEADER IN MILAN
ONE OF THE LEADERS WITH THE BEST QUALITY PORTFOLIO
THE LEADER WITH A UNIQUE PLATFORM
ONE OF THE LEADERS IN EACH OF OUR MARKETS WITH EXPERIENCED & HIGH-PERFORMING LOCAL TEAMS
Group share
€23 Bn
at 100%
1 Proforma of the disposal of the French residential portfolio, under disposal agreement H1 2019 RESULTS
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…REWARDED BY A SOLID STOCK PERFORMANCE
1 Source: EPRA Reporting at 30/06/2019 2 EPRA Europe developed indexCOVIVIO’S DIVERSIFICATION IS A STRENGTH…
DIVERSIFICATION IN 4 DYNAMIC MARKETS
WITH GROWING DEMAND & LACK OF SUPPLY
RESILIENT PERFORMANCE
WITH SECURED CASH-FLOWS THANKS TO EFFICIENT ASSET MANAGEMENT
…REWARDED BY A SOLID & RESILIENT STOCK PERFORMANCE
SIGNIFICANT GROWTH POTENTIAL
WITH A €6 BN DEVELOPMENT PIPELINE TO FUEL FUTURE GROWTH
20-year annualised total return 10-y 5-y 3-y 1-y
+13% +8% +10%
+8% +10% +9%
Stock annualised total return performance at end-June 20191
Covivio
0%
EPRA Europe2
II.
H1 2019 RESULTS
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DEVELOPMENT PIPELINE / A STRATEGIC PILLAR FOR OUR FUTURE GROWTH
>30% VALUE CREATION TARGET 6.0% YIELD ON COST
€2.1 bn
€1.7 BILLION GROUP SHARE
+€660 MILLION OF NEW PROJECTS
(+€526 m in Group share)
51% PRE-LET
+100,000 m² mainly on
+30% IN COMMITTED PIPELINE AT END-JUNE 2019 TOTAL PIPELINE OF €6 BN (€4.4 BN GROUP SHARE) OF WHICH €2.1 BN COMMITTED
€1.6 bn
€1.3 BILLION GROUP SHARE
End-2018 H1 2019
PARIS SO POP / 31,000 m² LEVALLOIS ALIS / 20,500 m² MILAN SYMBIOSIS / 28,600 m² BERLIN RESIDENTIAL / 15,000 m²
~€90 M ADDITIONAL RENTAL INCOME1
GROUP SHARE
1 Vs annualised revenue at end-June 2019, excluding Jean GoujonSee appendix p.47-52 for more details
H1 2019 RESULTS
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DEVELOPMENT PIPELINE / DELIVERIES MAINLY IN 2020 & 2021
2019 2020 2021 2022
91% let or pre-let 2/3 pre-let 50% pre-let 3% pre-let
Delivery schedule on committed projects
€50 M / 100% pre-let GOBELINS – 4,400 m² €182 M / 100% pre-let JEAN GOUJON – 8,460 m² €171 M BERLIN RESIDENTIAL – 45,270 m² €115 M / 100% pre-let MONTROUGE FLOW – 23,500 m² €139 M / 0% pre-let CHATILLON IRO – 25,600 m² €166 shared at 50% / 50% pre-let LYON SILEX II – 30,900 m² €57 M / 100% pre-let VIA DANTE – 4,700 m² €60 M / 100% pre-let PRINCIPE AMEDEO – 6,500 m² €47 M / 100% pre-let MEININGER PARIS – 249 rooms
€150 M
Committed
€100 M Group share
€749 M
€617 M Group share
€925 M
€694 M Group share
€257 M
€257 M Group share
€200 m delivered +
€2.1 billion committed pipeline
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PARIS SO POP / IN A GROWING AND ATTRACTIVE BUSINESS DISTRICT
New space available under construction until 2021
50,000 m² per year
Office Stock
1.2 million m²
Annual take-up
156,000 m²
69% ON NEW SPACE THE BUSINESS DISTRICT PARIS 17TH NORTH / CLICHY / ST-OUEN IS UNDER FULL URBAN REGENERATION AROUND THE LINE 14 OF THE GRAND PARIS
1 Average 2017-2018Source: Crane Survey
N2 project 15,900 m² mixed-use Committed with delivery in 2021 New Paris courthouse
H1 2019 RESULTS
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PARIS SO POP / 60% VALUE CREATION TARGET
€113 M
TOTAL COST GROUP SHARE
2012 / ACQUISITION
OF CITROËN HEADQUARTERS AT 8.1% YIELD
2018 / DEPARTURE OF CITROËN 2019 / BUILDING PERMIT
WITH A 70% EXTENSION FROM 18,500 m² TO 31,000 m²
2019 / SYNDICATION OF 49.9%
WITH CREDIT AGRICOLE ASSURANCES
INCREASING RENT & EXTRACTING VALUE CREATION THROUGH REDEVELOPMENT
6.1%
YIELD ON COST
~60% TARGET VALUE CREATION
INCLUDING MARGIN ON THE SYNDICATION
+145% TARGET RENT INCREASE VS PREVIOUS TENANT
+70% FROM EXTENSION +75% FROM INCREASED RENT IN €/m² ON THE EXTENDED SURFACE
H1 2019 RESULTS
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LEVALLOIS ALIS / A HISTORIC BUSINESS DISTRICT WITH SCARCITY OF NEW SPACE
New space available under construction until 2021
13,000 m² per year
Office Stock
~950,000 m²
Yearly take-up1
93,000 m²
35% on new space
1 Average 2017-2018Source: Crane Survey
H1 2019 RESULTS
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LEVALLOIS ALIS / 40% VALUE CREATION TARGET
2000
Acquisition of blocks A&C 13,000 m² of offices
2015
Acquisition of block B at a 6.4% yield 4,700 m²
2019
Obtain of the construction permit to build 20,500 m² +15% extension Former building Future building
2022
Expected delivery
Omega A & C Omega B
€215 m
total cost1
5.0%
yield on cost
JANUARY 2019
Departure of Lagardère
+60% TARGET RENT INCREASE
VS PREVIOUS TENANT +15% FROM EXTENSION +45% FROM INCREASED RENT IN €/m²
ON THE EXTENDED SURFACE AREA
~40% TARGET VALUE CREATION
1 Including land value of €125 million Building E Building D Building H Buildings A+B Building F Building G H1 2019 RESULTS
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MILAN / TWO NEW COMMITTED PROJECTS IN THE GROWING DISTRICT OF SYMBIOSIS
SYMBIOSIS D
18,600 m²
€84 m
total cost
6.9%
yield on cost
35%
pre-let
Delivery 2021
The Symbiosis area – 120,000 m² development potential
Committed Already delivered Delivery 2022
10,000 m²
mixed-use spaces
€42 m
total cost
6.6%
yield on cost
REINVENTING CITIES
Symbiosis D
18%
pre-let
H1 2019 RESULTS
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MILAN THE SIGN / FULLY PRE-LET 18 MONTHS AHEAD OF DELIVERY
BUILDINGS B & C
DELIVERY H2 2020
BUILDING A AON HQ
9,300 m²
Fully pre-let to AON in 2018 Delivery H1 2020
BUILDING D
11,400 m²
Land bank acquired in 2018 To be committed by end-2019 / early 2020
Full pre-let to a leading global IT and digital engineering services provider for 12 years
€106 MILLION
TOTAL COST FOR 26,200 m² ON BUILDINGS A, B & C
7.3% YIELD ON COST
>25%
TARGET VALUE CREATION Milan CBD
Duomo
Metro line 2 Suburban train S9
Bocconi University Porta Ticinese Navigli business district
THE SIGN
M2
H1 2019 RESULTS
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DELIVERIES 2019 / STRENGTHENING OUR TRACK RECORD
4 OFFICES (45,600 m²) / 5 HOTELS (790 rooms)
TOTAL COST €211 M Group share
6.2%
YIELD ON COST
~30%
value creation
90%
OCCUPANCY Cité du Numérique BORDEAUX
19,200 m² / OFFICES
Quai 8.2 BORDEAUX
10,900 m² / OFFICES
Helios LILLE
9,000 m² / OFFICES
Amedeo MILAN
6,500 m² / OFFICES
B&B HOTELS
2 HOTELS / 192 ROOMS
MEININGER HOTELS
3 HOTELS / 600 ROOMS
1 DELIVERED
Projects delivered in H1 2019
1 DELIVERED DELIVERED IN JULY
II.
Berlin Residential Montrouge Flow – 100% pre-let
H1 2019 RESULTS
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INVESTMENTS / €622 MILLION IN H1 2019 (€338 MILLION GROUP SHARE)
NEW ACQUISITIONS MAINLY IN HOTELS FOCUS ON DEVELOPMENT PIPELINE IN OFFICES & RESIDENTIAL
€315 M
€146 M GROUP SHARE
5.2% YIELD1 INCLUDING €176 MILLION FOR A 32% STAKE IN A PORTFOLIO OF 32 ACCOR HOTELS
Quality locations in Paris & major cities in France & Belgium Attractive price of €88k / room, 23% below our comparable
current Accor portfolio
link to dedicated press release
1 Potential yield on acquisitions in German residential and Hotels. Immediate yield of 4.9%€307 M CAPEX
€192 M GROUP SHARE
6.0% YIELD ON COST 57% IN PARIS, LYON, BORDEAUX 25% IN MILAN 18% IN BERLIN
Novotel – Lyon Gerland See appendix p.60 for more details
H1 2019 RESULTS
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THE DISPOSAL PLAN IS WELL ON TRACK
€732 million of disposals secured YTD (€602 million Group Share) with a 6.4% margin
ACCELERATION OF MATURE ASSET DISPOSALS WITH A 9.3% AVERAGE MARGIN
PURSUIT OF THE PORTFOLIO QUALITY ENHANCEMENT WITH DISPOSAL OF NON-CORE BUILDINGS
100%, in €M 2019 Activity Margin vs 2018 value Gross yield
French Offices
257 4.1% 4.5%
Italy Offices
267 1.0% 5.4%
German Resi
30 74.9% 1.9%
Hotels
162 11.6% 6.0%
Non-strategic
16 8.7% 5.8%
Total 100%
732 6.4% 5.1%
Total Group Share
602 4.7% 5.0%
See appendix p.61 for more details
H1 2019 RESULTS
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FRENCH OFFICES DISPOSALS / TWO MATURE ASSETS IN GREATER PARIS
€221 MILLION DISPOSALS SECURED
6% MARGIN 4.4% NET YIELD
COUPOLE – CHARENTON 11,500 m²
Acquired in 2014 at a 6.5% yield
€54 MILLION GREEN CORNER – SAINT-DENIS 20,800 m²
Development project delivered in 2015 with a 7% yield on cost
€167 MILLION
H1 2019 RESULTS
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ITALY DISPOSALS / MOVING TOWARDS STRATEGIC PRIORITIES
PRICE €281 M 1 mature asset in Milan 9 offices in secondary locations
(Rome, Bologna, North of Italy)
1 retail asset near Bologna 4.9% net yield 1.4% margin vs end-2018
Exit from offices
Accelerate disposal
Exit from non-strategic retail assets
STRATEGY
11 ASSETS
H1 2019 RESULTS
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HOTEL DISPOSALS / €162 MILLION OF NON-CORE AND MATURE ASSETS
B&B HOTELS IN FRANCE
End-2018 / Agreement on 59 B&B hotels for €272 million H1 2019 / New agreement on 30 B&B hotels for €113 million €385 MILLION (€83 million Group share)
WESTIN HOTEL IN DRESDEN
5-star hotel of 340 rooms, under management contract
€48.5 MILLION (€21 million Group share)
Disposal of the hotel while keeping the adjacent land bank for residential development
~8,000 m² potential residential development
LOCATED IN SECONDARY FRENCH CITIES
11% MARGIN / 5.4% YIELD
HOTEL WITH NECESSARY RENOVATIONS
9% MARGIN / 7.4% EBITDA YIELD BEFORE CAPEX
II.
H1 2019 RESULTS
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3 STRATEGIC PILLARS TO SERVE ESG PERFORMANCE
MAJOR EUROPEAN CITIES
Quality location Public transport proximity
93%
from a public transport (99%<10’)
DEVELOPMENT PIPELINE
Quality Performance
78%
are green
100%
green
100%
< 5’ walk
CLIENT CENTRICITY
Performance Well being Carbon weight/m²:
(2010-2018) Service offer :
100%
PERFORMANCE 2018 TARGET 2023 ESG DRIVERS Service offer :
45%
Carbon weight/m²:
(2010-2030)
1 Concierge service, restaurant, creative room, board room, wellness, Wellio offerExcluding Telecom Italia assets
Respecting the 2C° scenario of the International Paris Agreement 2015
See appendix p.45 for more details
III.
GREATER PARIS
H1 2019 RESULTS
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PARIS & MILAN OFFICE MARKET / LACK OF OFFER PUSHING-UP RENTS
RECORD LOW SUPPLY … <2.9 Million m² immediate offer 5.1% vacancy rate
Sources: C&W and BNP
MILAN
… IMPACTING TAKE-UP …
Except in 1st ring (+27%) … AND PUSHING RENTS +5% on 1st hand space in one year +6% on 2nd hand space in one year 240,000 m² of take-up (+37,000 m² year-on-year) driven by the CBD (+23,000 m² year-on-year to 66,000 m²) 2.1% vacancy rate on Grade A offices +5% increase on prime rents in one year to €600/m² ANOTHER RECORD 1ST HALF
See appendix p. 63-65 for more details
ITALY OFFICES
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OFFICES RENTAL ACTIVITY / STRONG RENTAL GROWTH
175,000 M² RENEWED IN FRANCE & ITALY
+3.9%
FRANCE OFFICES
+1.4%
+1.9 pts occupancy effect +1.5 pts & +0.5 pt Indexation & renewals +1.0 pt indexation +0.3 pt & +0.1 pt
H1 2019 RESULTS
OF WHICH MILAN +1.7%
+3.2% increase on IFRS rents +4.4 years lease extension
LIKE-FOR-LIKE RENTAL GROWTH €413 MILLION RENTAL INCOME GROUP SHARE / 57% OF COVIVIO REVENUES
H1 2019 RESULTS
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GERMAN RESIDENTIAL / STRONG FOOTPRINT IN DYNAMIC GERMAN CITIES
RENTAL YIELD
4.1%
PORTFOLIO GROUP SHARE
€4.1 BN
VALUATION
€2,147/m²
Berlin residential 39% Residential 7% Hamburg 12% Commercial1 51% Berlin 10% Dresden & Leipzig 33% NRW
1 Commercial leases on offices & ground-floor retail surfaces€163 MILLION RENTAL INCOME GROUP SHARE / 23% OF COVIVIO REVENUES
In rental income
8.8% of total Covivio revenues
H1 2019 RESULTS
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GERMAN RESIDENTIAL RENTAL ACTIVITY / DYNAMIC GROWTH OF +4.4%
31 % Indexation 25 % Reletting 14 % Modernization 30 % Reletting with modernization +4.4% LFL RENTAL GROWTH
BERLIN DRESDEN & LEIPZIG NRW HAMBURG
Average rent €/m² Like-for-like rental growth Δ vs market rent
€8.2/m² +5.3% €6.2/m² €9.5/m² €6.4/m² +3.2% +2.1% +4.1% +35% +15-20% +20-25% +15-20%
H1 2019 RESULTS
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BERLIN RESIDENTIAL / AN EVOLVING REGULATORY LANDSCAPE IN A CONTEXT OF INCREASING HOUSING SHORTAGE
> New constructions to be exempted > Rent freeze at current level for 5 years > Modernization leading to rent increase >€0.50/m² would need to be approved > Next steps: draft law to be voted on in October / effective in January 2020
BERLIN SENATE HAS VALIDATED A STRICTER REGULATION PROJECT
> Risk of exacerbating the lack of supply in Berlin > Legal uncertainties: federal state level issue; interference with the owners’ property rights
A PROJECT WITH AN UNCERTAIN OUTCOME AND WHICH WON’T SOLVE THE SHORTAGE ISSUE NEW RESIDENTS
+385,000
Sources: Berlin Statistics Office, German Construction Industry Association
+90,000
NEW APARTMENTS AN INCREASING HOUSING SHORTAGE IN BERLIN SINCE 2009
VS > Limited risk outside Berlin
H1 2019 RESULTS
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BERLIN RESIDENTIAL / A HIGH-QUALITY PORTFOLIO OFFERING GROWTH POTENTIAL
Berlin: a €3.7 billion portfolio (€2.4 bn Group share) focused on the best locations
Basic locations Average locations 5% of the portfolio Good locations 22% of the portfolio Prime locations
73% of the portfolio
Covivio Assets
A HIGH-QUALITY PORTFOLIO…
Attractive locations: 95% in Prime & Good areas Sought-after products: 60% Altbau-style buildings1 High-liquidity through small buildings of 11 units on average
…OFFERING GROWTH POTENTIAL
Current valuation2: €2,745/m²; 3.3% yield
Sources: Engel & Volkers ; BerlinHyp 2019 Housing report
1 Classic, old-style buildings built between mid-19th century and 1949 2 Residential only>75% margin on privatization realized in H1 2019 €833 million development pipeline
100 200 300 400 500 600 700 800 900 1000 France Germany UK Spain Belgium 2013 2018
H1 2019 RESULTS
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HOTELS MARKET / SOUND SUPPLY-DEMAND TRENDS
GOOD REVPAR PERFORMANCE IN EUROPE AFTER AN EXCEPTIONAL YEAR IN 2018 +2.4% YTD
Sources: MKG; end June for France & Germany
Limited increase in hotel offer
Number of rooms change since 2013 Average annual increase in %
+1.7% +1.2% +2.2% +0.9%
2013 2014 2015 2016 2017 2018 YTD 05/19
+2.2%
RevPar change since 2013
Basis 100 in 2013 & average annual increase in%
+8.2% +3.8% +3.7% +3.1%
RENTAL INCOME ON LEASES
ONGOING RENOVATIONS FINANCED BY ACCORINVEST ON 12 HOTELS (2,600 ROOMS) FUTURE BOOST TO REVPAR & RENTAL GROWTH
H1 2019 RESULTS
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HOTELS REVENUE / +2.0% LIKE-FOR-LIKE REVENUE GROWTH
LIKE-FOR-LIKE REVENUE GROWTH
EBITDA ON MANAGEMENT CONTRACTS
€120 MILLION REVENUE GROUP SHARE / 17% OF COVIVIO REVENUES
OF WHICH +1.9% ON ACCOR VARIABLE RENTS
H1 2019 RESULTS
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STRONG REVENUE GROWTH IN H1 2019
First half 2019 Revenue 100% (€m) Revenues Group share (€m) Var. % Like-for- like growth % Occupancy rate % WALT (years)
France Offices 130 115
+3.9% 97.3% 4.8 Italy Offices 94 73 +73.9% +1.4% 98.1% 7.2 German Residential 124 80 +5.9% +4.4% 98.8% n.a. Hotels in Europe 149 59 +23.1% +2.0% 100% 13.9
Total strategic activites 498 327 +13.3% +3.4% 98.2% 7.2
Non-strategic activities
(Retail in France & Italy, French residential)
16 12
95.6% 5.4 Total 513 339 +11.9% +3.3% 98.1% 7.2
+3.4%
LIKE-FOR-LIKE RENTAL GROWTH ON STRATEGIC ACTIVITIES 43%
INDEXATION & VARIABLE REVENUES
24%
OCCUPANCY
33%
RENEWALS See appendix p.56 for more detalis
IV.
photo
H1 2019 RESULTS
36
SUCCESS OF THE SCRIP DIVIDEND
€4.1 bn
51% of shares
Further increase in free float
+45%
SINCE END-2016
Capital increase
To keep investing in development pipeline while maintaining a disciplined financial policy
+€316 million
► CHOSEN BY 82.7% OF THE SHAREHOLDERS
€4.6 per share
2018 DIVIDEND with payment option in shares at a subscription price of €81.29
46.1% 45.4% 44.6% 40.4% 42.0%
39.2%
2014 2015 2016 2017 2018 H1 2019
BBB- BBB BBB
Outlook positive
BBB+
<40% : New LTV policy
H1 2019 RESULTS
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LTV TARGET ALREADY ACHIEVED
DECREASING LTV AND ENHANCING PORTFOLIO QUALITY … …LEADING TO A S&P RATING UPGRADE IN H1 2019
S&P Rating upgrade in April 2019
See appendix p.58 for more details
H1 2019 RESULTS
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PORTFOLIO / EXTRACTING VALUE FROM OUR ASSETS
+1.8%
DEVELOPMENT PIPELINE +9.7%
FRANCE OFFICES
RENTAL YIELD
5.0%
H1 2019 LIKE-FOR-LIKE VALUE
+2.8%
PORTFOLIO 100%
€23.2 BN
PORTFOLIO GROUP SHARE
€15.7 BN
Like-for-like value growth +0.2%
ITALY OFFICES
MILAN +1.0%
+7.7%
GERMAN RESIDENTIAL
HAMBURG +7.6%
+1.8%
HOTELS IN EUROPE
FRANCE +2.3% BERLIN +8.9% DRESDEN & LEIPZIG +9.0% NRW +4.6% BELGIUM +2.5% GERMANY +2.6% REST OF ITALY -2.0% UNITED KINGDOM +0%
39
EPRA NAV GROWTH OF +5.4% IN €/SHARE YEAR-ON-YEAR
EPRA NAV End-2018 EPRA NAV H1 2019
+€2.6
/share
EPRA Earnings
/share
Dividend
/share
Debt management
/share
Others
+€4.4
/share
Property value increase
/share
Capital increase
in shares
€100.6
/share
€99.7
/share
H1 2019 RESULTS
+5.4% IN €/SHARE YEAR-ON-YEAR +0.9% SINCE END-2018
due to dividend distribution
+3.1% IN €/SHARE YEAR-ON-YEAR
due to dividend distribution & impact of lower interest rates on financial instruments
EPRA NAV EPRA NNNAV
H1 2019 RESULTS
40
+2.8% GROWTH OF EPRA EARNING PER SHARE
€million – Group share H1 2018 H1 2019 Change €m Change % Net rental income
267.5 296.4 +29.0 +10.8%
EBITDA from hotel operating activities & coworking
14.2 16.2 +2.0 +14.1%
Income from other activites
1.8 8.8 +7.0 n.a
Net revenue
283.5 321.4 +37.9 +13.4%
Net operating costs
+0.3%
Depreciations & provisions
+32.7% Operating income 240.4 276.1 +35.7 +15% Cost of net financial debt
+7% Amortization of debt issue expenses & other financial charges
+56% Share in earnings of affiliates 5.8 6.0 +0.2 +4% Corporate income tax
+51% EPRA EARNINGS 191.6 219.7 +28.1 +14.6%
Average number of shares
74,842,467 83,476,180
EPRA EARNINGS (€/share) 2.56 2.63 +0.1 +2.8%
INCREASE IN NUMBER IN SHARES DELEVERAGING STRONG OPERATING PERFORMANCE MERGER WITH BENI STABILI & ACQUISTIONS IN HOTELS >+3% EPRA EARNINGS PER SHARE GUIDANCE 2019 CONFIRMED:
KEY UPCOMING EVENTS
Q3 ACTIVITY 24 October 2019 CAPITAL MARKETS DAY IN PARIS 7 November 2019
41
H1 2019 RESULTS
APPENDIX CONTENTS
H1 2019 RESULTS
43
APPENDIX
44
H1 2019 RESULTS
H1 2019 RESULTS
45
A PROACTIVE & VOLUNTARY ENVIRONMENTAL STRATEGY
1 Trajectory compatible with the 2°C scenario approved by the SBT initiative 2 As of end-2018Respecting the 2°C scenario
set forth in the international Paris Agreement of 2015
EXPLOITING GREEN ASSETS
FRANCE OFFICES 84% 2020 100% ITALY OFFICES 67% 2022 80% HOTELS 2020 66% 52%
REDUCING ENERGY CONSUMPTION
FRANCE OFFICES ITALY OFFICES HOTELS
average carbon weight per m² (Construction + refurbishment + operation) Ambitious carbon reduction target between 2010-20301
GERMAN RESIDENTIAL
ALREADY REALIZED
ALREADY REALIZED2
TARGET2
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APPENDIX
46
H1 2019 RESULTS
H1 2019 RESULTS
47
COMMITTED PIPELINE AT END-JUNE 2019 / €2.1 BILLION AT 100% (1/3)
1 Surface at 100% 2 Including land and financial costs 3 Yield on total rents including car parks, restaurants, etc.Synthesis of Committed projects Surface 1 (m²) Pre-let (%) Total Budget 2 (€M, 100%) Total Budget 2 (€M, Group share) Target Yield 3 Progress Capex to be invested (€M, Group share) France Offices 210,720 m² 43% 1,412 1,103 5.8% 20% 531 Italy Offices 94,500 m² 68% 424 424 6.4% 35% 164 German Residential 45,271 m² n.a 171 111 4.7% 11% 102 Hotels in Europe 533 rooms 100% 74 30 6.2% 86% 4 Total 51% 2,080 1,668 6.0% 24% 801
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H1 2019 RESULTS
48
COMMITTED PIPELINE AT END-JUNE 2019 / €2.1 BILLION AT 100% (2/3)
1 Surface at 100% 2 Including land and financial costs 3 Yield on total rents including car parks, restaurants, etc.Committed projects Location Project Surface¹ (m²) Delivery Target rent (€/m²/year) Pre-let (%) Total Budget² (€M, 100%) Total Budget ² (€M, Group share) Target Yield³ Progress Capex to be invested (€M, Group share) France Offices Meudon Ducasse Greater Paris Construction 5,100 m² 2020 260 100% 22 22 6.4% 28% 14 Belaïa (50% share) Orly Construction 22,600 m² 2020 198 48% 65 32 >7% 24% 24 IRO Châtillon - Greater Paris Construction 25,600 m² 2020 325 0% 139 139 6.3% 40% 89 Flow Montrouge - Greater Paris Construction 23,500 m² 2020 327 100% 115 115 6.6% 36% 67 Silex II (50% share) Lyon Regeneration-extension 30,900 m² 2020 312 50% 166 83 6.0% 60% 34 Total deliveries 2020 107,700 m² 50% 507 392 6.4% 41% 228 Gobelins Paris 5th Regeneration 4,360 m² 2021 510 100% 50 50 4.3% 12% 20 Montpellier Bâtiment de services Montpellier Construction 6,300 m² 2021 224 8% 21 21 6.7% 20% 15 Montpellier Orange Montpellier Construction 16,500 m² 2021 165 100% 49 49 6.7% 24% 34 Jean Goujon Paris 8th Regeneration 8,460 m² 2021 820 100% 182 182 n.a 7% 36 Paris So Pop (50% share) Paris 17th Regeneration 31,000 m² 2021 > 400 0% 226 113 6.1% 3% 74 N2 (50% share) Paris 17th Construction 15,900 m² 2021 575 0% 162 81 4.6% 7% 65 Levallois Alis Levallois Regeneration 20,500 m² 2022 > 500 0% 215 215 5.0% 6% 59 Total deliveries 2021 and beyond 103,020 m² 40% 905 711 5.3% 8% 303 Total France Offices 210,720 m² 43% 1,412 1,103 5.8% 20% 531 Italy Offices Principe Amedeo Milan Regeneration 6,500 m² 2019 520 99% 60 60 5.3% 97% 0.4 Total deliveries 2019 6,500 m² 99% 60 60 5.3% 97% Dante Milan Regeneration 4,700 m² 2020 560 100% 57 57 4.5% 17% 10 The Sign Milan Construction 26,200 m² 2020 285 98% 106 106 >7% 47% 41 Duca d'Aosta Milan Regeneration 2,500 m² 2020 n.a 100% 12 12 9.0% 5% 4 Symbiosis School Milan Construction 7,900 m² 2020 225 99% 21 21 >7% 17% 16 Total deliveries 2020 41,300 m² 99% 196 196 6.7% 32% 71 Symbiosis D Milan Construction 18,600 m² 2021 315 35% 84 84 6.9% 3% 47 Ferrucci Turin Regeneration 18,100 m² 2021 130 0% 42 42 5.4% 54% 7 Reinventing Cities Milan Construction 10,000 m² 2022 315 18% 42 42 6.6% 7% 39 Total 2021 deliveries and beyond 46,700 m² 22% 168 168 6.5% 17% 93 Total Italy Offices 94,500 m² 68% 424 424 6.4% 35% 164
H1 2019 RESULTS
49
COMMITTED PIPELINE AT END-JUNE 2019 / €2.1 BILLION AT 100% (3/3)
1 Surface at 100% 2 Including land and financial costs 3 Yield on total rents including car parks, restaurants, etc.Committed projects Location Project Surface¹ (m²) Delivery Target rent (€/m²/year) Pre-let (%) Total Budget² (€M, 100%) Total Budget ² (€M, Group share) Target Yield³ Progress Capex to be invested (€M, Group share) German Residential German residential - deliveries in 2019 Berlin Construction 5,145 m² 2019 n.a n.a 16 10 5.0% 52% 7 German residential - deliveries 2020 and beyond Berlin Construction 40,126 m² 2020 & beyond n.a n.a 155 101 4.6% 6% 95 Total German Residential 45,271 m² n.a 171 111 4.7% 11% 102 Hotels B&B Bagnolet (50% share) Greater Paris Construction 108 rooms 2019 n.a 100% 8 2 6.2% 50% 1 Meininger Porte de Vincennes Paris Construction 249 rooms 2019 n.a 100% 47 20 6.2% 88% 2 Meininger Lyon Zimmermann Lyon - France Construction 176 rooms 2019 n.a 100% 19 8.0 6.1% 87% 1 Total deliveries 2019 533 rooms 100% 74 30 6.2% 86% 4 Total Hotels in Europe 533 rooms 100% 74 30 6.2% 86% 4
Projects sorted by estimated total cost at 100% Location Project Surface 1 (m²) Delivery timeframe France Offices Cap 18 Paris Construction 50,000 m² >2022 Rueil Lesseps Rueil-Malmaison - Greater Paris Regeneration - Extension 43,000 m² >2022 Montpellier Pompignane Montpellier Construction 72,300 m² >2022 Opale Meudon - Greater Paris Construction 37,000 m² >2022 Anjou Paris Regeneration 11,000 m² >2022 Bordeaux Jardin de l'Ars Bordeaux Construction 19,600 m² 2022 Villeneuve d'Ascq Flers Lille Construction 25,600 m² >2023 DS Campus Extension 2 (50% share) Vélizy - Greater Paris Construction 27,500 m² 2022 Campus New Vélizy Extension (50% share) Vélizy - Greater Paris Construction 14,000 m² >2022 Italy offices Total France Offices 300,000 m² Symbiosis (other buildings) Milan Construction 66,000 m² 2020-2022 The Sign D Milan Construction 11,400 m² 2021 Mixed-use Total Italy Offices 77,400 m² Alexanderplatz - 1st tower Berlin Construction 60,000 m² 2024 Alexanderplatz - 2nd tower Berlin Construction 70,000 m² >2024 Additonal constructabilty (Hotels portfolio) France, UK, Germany Construction 100,000 m² >2022 Mixed-Use 230,000 m² German Residential Berlin Extensions & Constructions 198,000 m² >2022 Total 805,400 m²
H1 2019 RESULTS
50
MANAGED PIPELINE AT END-JUNE 2019 / €4 BILLION AT 100%
1 Surfaces at 100% Future line 15
Paris
51
IRO & FLOW / TWO SMART & ATTRACTIVE DEVELOPMENTS
IRO
MALAKOFF-MONTROUGE-CHATILLON BUSINESS DISTRICT
FLOW
8 min 8 min
Chatillon-Montrouge hub
New space available until 2020
Only 32,000 m²
2018 take-up
115,000 m²
Source: CBRE
Office sotck
~1 million m²
€139 m total cost 6.0% yield on cost €115 m total cost 6.6% yield on cost 100% pre-let to EDF
FLOW – 23,500 m² IRO – 25,600 m² MARKET
H1 2019 RESULTS
52
SILEX 2 / PRIME LOCATION IN LYON CBD
Infrastructure under renovation or construction (train station, residential, shopping mall) Office deliveries 2022 & later
Tramway 30 min to airport
Office deliveries 2020 –Silex 2
Metro & Tramway
Lyon Part-Dieu business district
New space available until 2021
Only 20,000 m²
Office Stock
>1 million m²
Source: JLL
€166 m total cost shared at 50% 6.0% yield on cost 50% pre-let
SILEX 2 – 30,900 m² MARKET
APPENDIX
53
H1 2019 RESULTS
Group share data
Historically high occupancy rates 2009 95.4% 94.8% 95.8% 2010 2011 2012 95.5% 2013 96.0% 2014
98.2%
2015 97.1% 2016 96.3% 96.7% 2017* 98.0% 2018* 2018* Rents: at like-for-like scope Change in like-for-like vs N-1 +3.3% 2010 +0.6% 2011 2012 +2.1% +1.2% 2013 2009 +2.2%
+3.4%
2014 2015 +0.2%
+0.2% +2.1% 2016 2017*
> Ability to retain the tenant > Occupancy rate track record in the development pipeline > Anticipate disposals > Stable occupancy rate > Positive outlook for rental markets > Dynamic investment market > Asset management and development pipeline value creation
Firm lease expiries as % of annualised rental income Commercial portfolio (75% of total rents Group Share)
Long average lease term 2009 5.8 6.1 6.0 2010 2011 2012 5.5 2013 5.8 2014
7.1
2015 5.8 7.3 7.2 6.6 2016 2017* 2018*
H1 2019 RESULTS
54
A STRATEGY SUPPORTED BY SOUND INDICATORS
2017* Growth in value Change in like-for-like vs N-1 2009 +5.3% +1.3% 2010 2011 2012
+0.5% 2013
2014
+4.8%
2015 +2.1% +4.4% 2016
+6.8% +2.9%
2018*
*Strategic portfolio only
> Partnership strategy > Lease maturity in Hotels: 13.9 years
98.1% H1 2019* +3.4% H1 2019*
7.2
H1 2019* H1 2019*
+4.4%
H1 2019 RESULTS
55
OFFICES / BE THE BEST OPERATOR FOR OUR END-USERS
… AND 4 PROJECTS ONGOING
IN PARIS, LYON, MILAN, BORDEAUX FOR 16,500 M²
70% large corporates >12 month average
contract length
3,300 m² → 91% occupancy
5,100 m² → 86% occupancy
1,400 m² → 100% occupancy
2,300 m² → 98% occupancy
FOLLOW THEIR WISHES
through a new FLEX-OFFICES solution
4 SITES OPEN 90% OCCUPANCY ON AVERAGE
H1 2019 RESULTS
56
RENTAL INCOME H1 2019
Back to page 34
100% Group share (€ million) H1 2018 H1 2019 Change (%) H1 2018 H1 2019 Change (%) Change (%) LfL 1 % of revenue France Offices 137.6 130.3
123.3 115.1
+3.9% 34% Paris 45.4 42.6
43.6 40.0
+6.6% 12% Greater Paris (excl. Paris) 67.2 66.2
55.6 54.4
+2.2% 16% Major regional cities 15.2 14.2
14.4 13.4
+4.9% 4% Other French Regions 9.8 7.4
9.8 7.4
2% Italy Offices 96.5 94.5
41.9 72.9 +73.9% +1.4% 22% Offices - excl. Telecom Italia 47.3 50.4 +6.6% 26.6 50.4 +89.5% +1.5% 15% Offices - Telecom Italia 49.2 44.0
15.3 22.5 +46.8% +1.2% 7% German Residential 118.7 124.3 +4.7% 75.3 79.8 +5.9% +4.4% 24% Berlin 56.6 62.7 +10.8% 36.3 40.5 +11.7% +5.3% 12% Dresden & Leipzig 11.1 12.1 +8.8% 7.0 7.7 +10.2% +3.2% 2% Hamburg 7.8 8.0 +2.4% 5.2 5.2 +0.5% +2.1% 2% North Rhine-Westphalia 43.2 41.5
26.9 26.3
+4.1% 8% Hotels in Europe 128.3 148.9 +16.1% 48.0 59.1 +23.1% +2.0% 17% Hotels - Lease Properties 94.6 117.7 +24.4% 34.4 46.1 +33.9% +1.9% 14% France 49.5 48.2
15.5 16.2 +4.4% +1.8% 5% Germany 13.5 16.8 +24.5% 5.5 7.1 +29.3% +2.3% 2% UK 0.0 22.1 n.a. 0.0 9.5 n.a. n.a. 3% Spain 10.6 17.1 +62.2% 7.3 7.4 +1.3% +0.9% 2% Belgium 17.4 7.3
4.5 3.2
+4.7% 1% Others 3.7 6.2 +68.0% 1.6 2.7 +67.9% +1.1% 1% Hotels - Operating Properties (EBITDA) 33.7 31.2
13.6 13.0
+2.4% 4% Total strategic activities 481.1 497.9 +3.5% 288.5 326.9 +13.3% +3.4% 96% Non-strategic 25.4 15.5
14.2 12.0
4% Retail Italy 8.0 5.9
4.5 5.9 +31.9%
2% Retail France 13.2 6.3
5.5 2.7
1% Other (France Residential) 4.2 3.3
4.2 3.3
n.a. 1% Total revenues 506.5 513.5 +1.4% 302.7 338.8 +11.9% +3.3% 100%
1 LfL : Like-for-Like APPENDIX
57
H1 2019 RESULTS
H1 2019 RESULTS
58
DISCIPLINED FINANCING POLICY SUITED TO DIVERSIFIED & HIGH-QUALITY PORTFOLIO
39.2% LTV New target 1.55% cost 5.8x ICR < 40% already reached 84% hedge over 5 years
74 301 472 378 712 1 327 1 274 1364 1660
2019 2020 2021 2022 2023 2024 2025 2026 >2026
Debt maturities (in €million, Group share)
6-YEAR DEBT MATURITY
WELL DIVERSIFIED DEBT S&P rating: BBB+, stable outlook
Investor mortages facilities 5% Bonds 32% Corporate credit facilities 18% Bank mortage loans 45%
52% unsecured
Back to p. 37
APPENDIX
59
H1 2019 RESULTS
60
H1 2019 INVESTMENTS / €622 MILLION (€338 MILLION GROUP SHARE)
H1 2019 RESULTS
Back to page 18 Acquisitions H1 2019 realised Development capex H1 2019 (€ million Including Duties) Acquisitions 100% Acquisitions Group share Yield Group share Capex 100% Capex Group share France Offices
198 105 Italy Offices
51 48 German Residential 48 31 4.3%1 48 35 Hotels in Europe 267 115 5.4%2 10 4 Total 315 146 5.2% 307 192
2 Yield in 2 years after reletting of vacant spaces. Immediate yield is 3.0% on acquisitions realised. 3 Including the acquisition a 32% stake in a portfolio of 32 hotels operated by Accor closed on 1st July 2019, with a potential yield of 5.3% (immediate yield of 4.8%). (€ million) Disposals (agreements as
closed) Agreements as of end
to close New disposals H1 2019 New agreements H1 2019 Total H1 2019 Margin vs H1 2019 value Yield Total Realised Disposals 1 2 3 = 2 + 3 = 1 + 2 France Offices 100 % 3 31 64 193 257 4.1% 4.5% 67 Group share 3 31 64 193 257 4.1% 4.5% 67 Italy Offices 100 %
265 267 1.0% 5.4% 3 Group share
265 266 1.0% 5.4% 1 German Residential 100% 20 9 10 21 30 74.9% 1.9% 30 Group share 13 6 6 13 20 75.1% 1.9% 19 Hotels in Europe 100 % 283
113 162 11.6% 6.0% 331 Group share 65
25 44 11.0% 6.3% 85 Non-strategic (France Resi., Logistics, Retail in France) 100 % 116 91 16 16 8.7% 5.8% 116 Group share 116 91 15 15 9.0% 5.6% 116 Total 100 % 423 132 125 608 732 6.4% 5.1% 547 Group share 198 129 91 510 602 4.7% 5.0% 289
H1 2019 RESULTS
61
H1 2019 DISPOSALS / €732 MILLION OF NEW DISPOSALS
Back to page 19
APPENDIX
62
H1 2019 RESULTS
280,000 m²
H1 2019 RESULTS
63
OFFICE MARKET / STRONG DEMAND FOR NEW BUILDINGS IN GREATER PARIS…
Sources: CBRE, Crane Survey
PARIS 1st RING WESTERN CRESCENT 156,000 m² 350,000 m² TAKE-UP OF NEW & RESTRUCTURED SPACES
(average 2017-2018)
OFFER ON NEW SPACES
(yearly average of immediate offer of new
+ available surface on constructions until 2021)
GAP BETWEEN OFFER AND DEMAND 560,000 m² for 3 years 187,000 m² per year 434,000 m² for 3 years 144,000 m² per year 491,000 m² for 3 years 163,000 m² per year
AVERAGE ECONOMIC RENT ON NEW SPACE
~160,000 m² ~120,000 m² ~12,000 m²
IN ONE YEAR
Back to p.26
H1 2019 RESULTS
64
… AS WELL AS IN MILAN
Source: C&W 100 000 200 000 300 000 400 000
2014 2015 2016 2017 2018 2019 2020 2021 (F) (F) (F)
IMMEDIATE OFFER ON NEW OR RESTRUCTURED SPACES TAKE-UP OF NEW OR RESTRUCTURED SPACES EVOLUTION OF OFFICE DEMAND VS OFFER ON NEW SPACE
m²
PRIME RENTS
+5%
IN ONE YEAR
Back to p.26
H1 2019 RESULTS
65
PARIS OFFICE MARKET / RENTAL MARKET H1 2019
Western crescent
Stock: 8,778,000 m² Take-up: 239,500 m² (-39% YoY) Vacancy rate: 8.5% Rents on 1st hand : +8% Rents on 2nd hand : +3%
Velizy-Meudon
Stock: 800,000 m² Take-up: 16,500 m² Vacancy rate: 13.7% Rents on 1st hand : +0% Rents on 2nd hand : +13%
1st ring
Rents on 1st hand : +7% Rents on 2nd hand : -8% Take-up: 229,500 m² (+27%) Vacancy rate: 5.5% Stock: 8,529,000 m²
Rest of Paris
Rents on 1st hand : +6% Rents on 2nd hand : +11% Take-up: 213,000 m² (-12.9%) Vacancy rate: 2.13% Stock: 8,648,000 m²
Paris CBD
Rents on 1st hand : +6% Rents on 2nd hand : +9% Take-up: 267,000 m² (-12%) Vacancy rate: 1.56% Stock: 8,801,000 m²
La Défense
Stock: 3,355,000 m² Take-up: 46,000 m² (-35%) Vacancy rate: 4.30% Rents on 1st hand : -4% Rents on 2nd hand : +0%
Greater Paris
Take-up: 1.1 million m² Vacancy rate: 5.1% Stock: 56 million m² Rents on 1st hand : +5% Rents on 2nd hand : +6%
Sources: C&W, ORIE
H1 2019 RESULTS
66
COVIVIO FRANCE OFFICES PORTFOLIO
A €6.8 billion portfolio at 100% (€5.7 billion in Group share) at end-June 2019 The strategic locations in Paris, the Inner Ring and the Major regional cities represent 96% of the portfolio 13% Major Regional Cities 38% Paris 25% Western Crescent and La Défense 20% 1st Ring 1% 2nd Ring 3% Regions
PARIS CENTER OUEST LA DÉFENSE REST OF PARIS WESTERN CRESCENT VÉLIZY MEUDON FIRST RING COVIVIO ASSETS (% of the portfolio in Group share)
MAJOR BUSINESS DISTRICTS
1-3 % <1 % 3-6 % 6-9 % 9-12 % 20 %
Covivio’s Greater Paris Portfolio
H1 2019 RESULTS
67
ORANGE PORTFOLIO IN PARIS / A SIGNIFICANT RESERVE OF GROWTH
SURFACE AREA
131,500 m²
17 ASSETS IN HIGH-QUALITY LOCATIONS
WITH SIGNIFICANT GROWTH POTENTIAL
VALUATION
€1.1 BN
€8,590 / m²
RENTAL INCOME
€51 M
€386 / m²
Levallois Maillot Carnot Laborde Anjou Montmartre Provence Jemmapes Ménilmontant Voltaire Philippe Auguste Gobelins Bobillot Keller Raspail Gutenberg
Boulogne
Committed project
PARIS CBD
H1 2019 RESULTS
68
MILAN OFFICE MARKET / RENTAL MARKET 2018
Linate Airport Milanofiori Navigli Lorenteggio City Life Certosa Maciachini Bicocca Lambrate / Forlanini Ripamonti
PORTA NUOVA CBD CENTER SEMI-CENTER PERIPHERY
(-2 pts) (stable) (-0.1 pt) (+7%) (-0.1 pt) (+10%) (-1.2 pts) (+4%) (-0.9 pt) (+8%)
Source: CBRE
Centre Semi-centre Periphery CBD Porta Nuova M4 M4 M2 M2 M1 M1
M1
M5 M3 M3
Linate Airport
M5
Milanofiori Navigli Lorenteggio City Life Certosa Maciachini Bicocca Lambrate / Forlanini Ripamonti
H1 2019 RESULTS
69
COVIVIO ITALY OFFICES PORTFOLIO
A €3.9 BILLION PORTFOLIO AT 100% AT END-JUNE 2019 (€3.2 billion Group share)
6% Other 74% Milan 11% Northern Italy 4% Turin 4% Rome
1 Offfices only; excluding Retail (non strategic)Milan: a €2.5 billion portfolio1 (€2.4 billion Group share) focused on the best locations
20% Periphery 24% Center & Semi-Center 56% CBD & Porta Nuova
Rental portfolio Acquisition signed in 2018 Developments
37 % Midscale 26% Economic 37% Upscale Accor 25% IHG 19% B&B 13% RHG 8% Marriott 7% NH 7% Hotusa 3% Barcelo 3% Other 14% France 32% Germany 27% United Kingdom 17% Spain 12% Belgium 7% Netherlands & Portugal 5%
H1 2019 RESULTS
70
COVIVIO HOTEL PORTFOLIO
A €5.7 billion hotel portfolio at 100% at end-June 2019 (€2.3 billion Group share)
% in revenue
% in revenue % in value
Paris 30, avenue Kléber 75116 Paris Tel.: +33 1 58 97 50 00
CONTACT
Paul Arkwright
Tel.: +33 1 58 97 51 85 Mobile: +33 6 77 33 93 58 paul.arkwright@covivio.fr
www.covivio.eu
Hugo Soussan
Tel.: +33 1 58 97 51 54 Mobile: +33 6 84 44 95 40 hugo.soussan@covivio.fr