Covivio (COV) CMD 2024 summary

Strategic priorities and portfolio transformation

• Achieved €1.5 billion in disposals since 2022, reducing office exposure from 60% to 50% and increasing hotels to 20% of the portfolio, with a target of 1/3 each in offices, hotels, and residential by 2030.

• Strengthened hotel sector exposure through acquisitions and asset swaps, expanding operating expertise and consolidating hotel operations, especially in Southern Europe.

• Committed to exiting non-core assets, particularly in offices, and converting some offices to hotels or residential, with a focus on centrality and asset rotation.

• Maintaining a strong balance sheet with LTV below 40%, improved Net Debt/EBITDA, and a BBB+ S&P rating.

• Expanding hospitality approach across all asset classes, including operated offices and serviced residential offerings.

Financial guidance and growth drivers

• Like-for-like rental growth of 14% over two years, outperforming inflation, with recurring net income expected to rise from €430 million (2022) to €460 million (2024).

• Committed pipeline expected to deliver €70 million in future rents with €450 million CapEx; managed pipeline could add €55 million in rents with €700 million CapEx.

• Hotel sector CapEx of €170 million over three years to generate €22 million in future revenues.

• German residential segment offers €1 billion in privatization margin and €50 million rent potential from reversion.

• Revenues up 6.8% like-for-like at end-September 2024; occupancy rate at 97.3% with 6.4 years average lease term.

Market outlook and operational performance

• European real estate markets show early signs of recovery, with hotel and German residential transactions up over 50% year-on-year and asset values stabilizing in H2 2024.

• Office market remains weak but is seeing the return of large transactions, especially in central locations.

• Portfolio occupancy rate averages 97% over 10 years, with long-term revenue growth of 30%.

• Centrality and quality are key, with 69% of office assets now in city centers, targeting 80% by 2028.

• Asset management to capture rental reversion: €14 million in offices, €50 million in German residential, €22 million in hotels via capex and conversions.