Covivio : 2020 Analysts Slideshow Q3

Q3 RESULTS

2020

SUMMARY

1. UPDATE ON COVIVIO'S MARKETS & KEY ACHIEVEMENTS

I.A. Update on Covivio's markets

I.B. Q3 2020 key achievements

1. ACTIVITY AT END-SEPTEMBER

1. II.A. Development pipeline

1. II.B. Letting activity & revenues

APPENDIX

2

I.

UPDATE ON

COVIVIO'S

MARKETS & KEY

ACHIEVEMENTS

► Update on Covivio's markets

► Q3 2020 key achievements

Milan Via Dante

3

UPDATE ON OFFICES MARKETS / FRANCE, ITALY & GERMANY

LETTING ACTIVITY

PICKING-UP SLOWLY…

In Greater Paris and top 7 German cities1

Take-up

+13%

Q3 2020 vs Q2 2020

Longer decision processes in an uncertain environment

Vacancy remains healthy

4.7% on average

€16 BN IN

FRANCE

-27% vs 2019

€2.6 BN IN ITALY

+4% vs 2019

… WHILE INVESTMENT MARKET

REMAINS ACTIVE

		€34 Bn YTD
		In France, Italy & Germany
	N u m e r o u s t r a n s a c t i o n s c o m f o r t i n g v a l u a t i o n s
		Both in Paris & the first ring
	47,200 m² Nestlé HQ			20,000 m² off-plan in Malakoff

		~3.8% yield
~3.8% yield

In Milan

4,000 m² in the CBD			83,000 m² office portfolio
		€15 BN IN
			~3.8% yield
	~3.6% yield
	TOP 7
		GERMAN
		CITIES
		-33% vs 2019	4

1 Milan Q3 data not available to date. Take-up and vacancy are the average of Greater Paris and Top 7 German cities.

Sources: CBRE, Colliers

GERMAN RESIDENTIAL MARKET / SUPPORTIVE ENVIRONMENT CONTINUES

Focus on Berlin

Severe housing	400,000	new units needed per year
in Germany
shortage…

…aggravated by	-1.8%	housing building permits
slowing construction…	in July

Rental offer is dropping

Number of apartments on offer to rent, in thousand

14.8

12.5		12.7	12.3
	11.7	11.7
11.4	11.1
		10.6

9.1

8.6

6.8 6.1 6.8 6.9 6.5

5.4

4.4

Sept-20 vs Sept 19: -64%

05-19

07-19

09-19

11-19

01-20

03-20

05-20

07-20

09-20

Apartments prices keep on increasing

Evolution of median asking price in €/m²

… driving-up prices	+6.6%	housing price increase
in Q2 year-on-year

4 590 4 610

4 550

4 640

4 770 4 770 4 780

4 730

4 670

4 810

4 840

4 870 4 890 4 890 4 900

4 490

4 430

Sept-20 vs Sept 19: +6%

05/19	07/19	09/19	11/19	01/20	03/20	05/20	07/20	09/20	5

Sources: Guthmann Real Estate, Destatis

HOTEL MARKET / SHORT-TERM UNCERTAINTY PERSISTS

THE NEED & WILL TO TRAVEL IS THERE…

Better performance than expected during July & August

thanks to easing travel restrictions

D	May	June	July	August
Occupancy rate	6.8%	17.9%	32.4%	38.9%

• BUT THE SECTOR IS FACING
  STRONG HEADWIND

Re-tightening of restrictions in September

Most business events cancelled in Europe in H2

(seminars, fairs, etc.)

-55% RevPar in Europe in August

Covivio's main hotel exposure, France & Germany

outperforming the rest of Europe in August

-71%-62%

-49%

-69%

-35%

-64%

-64%-72%

Source: MKG

6

I.

UPDATE ON

COVIVIO'S

MARKETS & KEY

ACHIEVEMENTS

► Update on our markets

► Q3 2020 key achievements

Berlin Residential, new development

7

FULL LETTING OF PARIS 5TH GOBELINS…

4,500 M² REDEVELOPMENT PROJECT OF A FORMER ORANGE BUILDING

1. TRANSFORMATION OF AN OBSOLETE ASSET INTO A NEW EFFICIENT BUILDING

End-2018	Departure of Orange & launch of redevelopment
for €50 m total cost
Q1 2021	Delivery

2. OFFERING A PLUG & PLAY SOLUTION WITH FULL SERVICES

through Covivio's flex-workspace offer

3.	STRENGTHENING THE PARTNERSHIP WITH AN EXISTING
TENANT, A LARGE PUBLIC INSTITUTION	Paris Gobelins
	5 years firm contract starting at delivery

A GOOD EXAMPLE OF OUR CAPACITY TO EXTRACT THE VALUE

OF OUR €1 BN ORANGE PORTFOLIO IN PARIS

see appendix page 24 for more details

5.0%

EBIT yield

€2.5 m EBIT

=

+15% margin vs IFRS market rent

8

…PROVING THE RELEVANCE OF COVIVIO OFFICE STRATEGY

OFFERING

QUALITY LOCATIONS

Major business districts in

Paris	Milan	Top 5
& Greater Paris	German cities

See appendix page 21

for more details on the office portfolio

OFFERING

QUALITY BUILDINGS

THROUGH THE PIPELINE

• Transforming obsolete buildings

into efficient office spaces

• Ambitious green targets

Target 100% of the portfolio by 2025

with very good or excellent levels in our developments

• Improving well-being with wide services offer
  Target 100% offices & residential buildings with a service offer by 2025

INCREASING

THE RANGE OF REAL

ESTATE SOLUTIONS

A high level of services

as a key differentiating strength

Mixed offer in the same building

Traditional lease + flexible component

4 buildings opened & 1 to come in Lyon

Full Plug & Play solutions

2 buildings & 1 to come in Paris 5th

See appendix page 27

for more details on the flexible offer

9

DISPOSALS / CLOSE TO €500 MILLION WITH +12% MARGIN

ON TRACK TO >€600 MILLION GROUP SHARE TARGET FOR 2020

Disposal agreements	€m	€m	Gross yield	Margin
End-September 2020
	100%	Group share	Group share	Group share

France offices1	€190 m	€190 m	5.6%	7%
Italy offices	€156 m	€139 m	3.9%	18%
Germany	€186 m	€121 m	3.1%	19%
Residential
Hotels	€22 m	€10 m	6.4%	17%
Non-strategic	€61 m	€30 m	7.1%	-5%
(retail)
TOTAL	€616 m	€491 m	4.6%	12%

New disposals in Q3

Mature & non-core offices in France & Italy

€44 m Group share 3% margin

German Residential

in Leipzig and Berlin

€109 m Group share 14% margin

10

1 Removal of one asset vs H1. Disposal process is delayed and removed from 2020 figures.

DELIVERING ON GERMAN RESIDENTIAL PIPELINE

2017: INITIATION	2018-2020: PIPELINE DOUBLED
	by acquiring land banks
Exploiting land banks
on our portfolio	1/3 of projects committed
	Incl. 1,600 m² land bank acquired in 2020

€800 m1

4,000 units on 285,000 m²

40% target margin

€400 m

pipeline

€256 m

committed1

2017

H1 2020

2020: FIRST DELIVERIES	2021 & BEYOND
Successful projects	Acceleration of deliveries
with 46% margin on sale

+521 units to deliver

€159 m cost

123 units delivered	+247 units to deliver
€29 m cost	€68 m cost

with 46% margin on cost

202020212022

11

1 €540 m pipeline Group share and €166 m committed

CLOSING HOTEL ACQUISITION

TOURISM WILL COME BACK IN TOP EUROPEAN DESTINATIONS

CLOSING OF THE ACQUISITION OF 8 HOTELS

In the heart of some of the most visited European cities

PALAZZO NAIADI

ROME

PALAZZO GADDI

FLORENCE

HOTEL DEI DOGI

VENICE

HOTEL BELLINI

VENICE

238 rooms / 5*

86 rooms / 4*

64 rooms / 5*

100 rooms / 4*

HOTEL PLAZA

NICE

HOTEL CARLO IV

PRAGUE

NY PALACE HOTEL BUDAPEST

NY RESIDENCE

BUDAPEST

152 rooms / 5*

152 rooms / 5*

185 rooms / 5*

138 rooms / 5*

€573 million

€248 m Group share

1,115 rooms

Closing in

September

(vs Q2 initially)

15 years firm lease duration

Triple net lease contracts1 with NH Hotels

Minimum guaranteed yield of 4.7%

12

1 Excluding Nice

ESG RATINGS / COVIVIO RANKED AMONG THE WORLD LEADERS

3 AGENCIES HAVE UPDATED THEIR RATING IN Q3

B-

Best possible rating

Prime status

Sector leader1	Top 3% worldwide	Among the sector
	leaders
Ranked 5th worldwide	out of 358 real estate companies

out of 4,823 companies (all sectors)

13

1 #1 out of 86 European Real Estate companies

II.

ACTIVITY

AT END-SEPTEMBER

► Development pipeline

► Letting activity & revenues

Milan The Sign

14

DEVELOPMENT PIPELINE / 72,000 M² DELIVERED YTD

€332 M COST IN GROUP SHARE

GREATER PARIS 25,600 M²

Châtillon - IRO

25,600 m² / €138 m / 6.4% yield

NEW

3,800 m² lease in September

now 34% pre-let

			ITALY				GERMANY
	MILAN - The Sign A		38,200 M²				7,800 M²
	MILAN - Duca D'Aosta	MILAN - Symbiosis School		BERLIN Residential
	9,260 m² / €39 m / 7.3% yield	2,600 m² / €13 m / 8.8%
	7,900 m² / €22 m / 7.6%	7,800 m² / €29 m

100% let	100% let	100% let	First deliveries
			of 123 units
	MILAN - Via Dante	TURIN - Ferrucci - phase 3
	4,700 m² / €58 m	13,730 m² / €33 m / 5.4%
Covivio first flex-workspace in Milan	Total asset of 45 600 m²

61% occupied

95% let

15

one month after opening

Q3 OFFICE ACTIVITY / LETTING ACTIVITY PICKING-UP IN SEPTEMBER

125,000 M² LET OR RENEWED IN Q3

	Activity YTD	Of which in Q3
			Mainly
New lettings, mainly on
45,400 m²	14,600 m²	Chatillon IRO
the pipeline	for 7 years	Two assets in Milan CBD
			Turin Corso Ferrucci

		23 Orange assets in France
Renewals with long-term partners	193,100 m²	in secondary locations
and on iconic assets	110,100 m²
	One asset in Turin

End-of lease & releases for redevelopment already included in the guidance

		Two buildings to be redeveloped
80,400 m²		in Paris CBD and Milan CBD
	52,200 m²
vacated
	Departures on two assets
		in Paris 15th and Hamburg
	16

GERMAN RESIDENTIAL REVENUE / +2.8% LFL RENTAL GROWTH

Berlin

49% of rents

+2.1% LfL

NRW,	+3.4%
Hamburg,	Hamburg
Dresden
	7% of rents
& Leipzig		+2.6% LfL
		Dresden & Leipzig
		10% of rents
		+3.6% LfL
		NRW
		34% of rents
		+3.5% LfL rental
Rental growth		growth
stays strong

Extracting 15-20%rent

reversion potential

Through reletting & modernization

Berlin +2.1%

Rental growth slowing due to regulation impact

Regulation effective since February 2020 4 constitutional complaints awaiting

decision

Judicial review ongoing with the ruling within 24 months

17

REVENUES AT END-SEPTEMBER / +1.5% LFL EXCLUDING HOTELS

	Revenues	Revenues	Revenues
End-September 2020, €million	9 months 2020	9 months 2019	9 months 2020
	100%	Group share	Group share
France Offices	180.8	171.9	157.8
Italy Offices	126.1	109.9	96.2
Germany Offices	47.6	4.9	37.6
Germany Residential	184.2	115.7	118.3
SUB-TOTAL OFFICES & RESIDENTIAL	538.7	402.3	410.0
Hotels in Europe	114.0	91.1	44.5
TOTAL STRATEGIC ACTIVITIES	652.7	493.3	454.5
Non-strategic (retail in France & Italy)	14.6	17.2	9.4
TOTAL	667.3	510.5	463.9

RENT COLLECTION		OFFICES		RESIDENTIAL
97%		Decrease in occupancy		Rental growth continues
collected	already included
including 92% in Hotels	in the guidance given at H1

Occupancy rate	Average
lease term
%
firm, in years
93.0%	4.5
96.5%	7.3
73.7%	4.6
98.7%	n.a.
93.4%	5.5
100%1	14.3
94.4%	7.2
97.8%	6.6
94.4%	7.2

HOTELS

97% of hotels reopened but H2 2020 is impacted by increasing restrictions

-74% LfL revenues in September

on variable leases & management contracts 18 1 On lease properties

KEY TAKEAWAYS

1. OPERATIONAL RESULTS IN LINE WITH GUIDANCE ANNOUNCED IN JULY

		In Offices: Covivio's strategy is proving relevant
2.	DELIVERING ON THE PIPELINE
In Residential: accelerating on deliveries with high-value creation

3. DISPOSAL PLAN WELL ON TRACK TO REACH TARGET OF >€600 M GROUP SHARE

19

APPENDIX

Paris 5th Gobelins

20

PORTFOLIO

21

A HIGH-QUALITY, WELL LOCATED OFFICES PORTFOLIO

€12.4 bn

€10.2 bn Group share

AT END-JUNE 2020

92% LOCATED IN1

PARIS

€2.4 bn Group share

GREATER PARIS
€2.6 bn	&	MILAN	&	TOP 5 GERMAN CITIES
	€2.2 bn	€1.4 bn

MAJOR FRENCH

CITIES

€0.8 bn

Lyon, Bordeaux, Marseille, Lille

22

1 Excluding Telecom Italia portfolio, 100% occupied and leased for 11 years

FRANCE OFFICES PORTFOLIO

A €7.1 BN PORTFOLIO

€5.9 bn in Group share

23% Western Crescent and La Défense

	20%
			1st Ring
% value
Group share	1%
40%			2nd Ring
13%
Paris			Major Regional Cities
	2%

Covivio's Greater Paris Portfolio

Rueil-sur-Seine

PARIS CENTER OUEST

Regions

LA DÉFENSE

REST OF PARIS

COVIVIO ASSETS

(% of the portfolio in Group share)

WESTERN CRESCENT	MAJOR BUSINESS DISTRICTS	20 %
VÉLIZY MEUDON		9-12 %

6-9 %

FIRST RING3-6% 1-3 %

<1 %

23

ORANGE ASSETS / VALUE CREATIVE REDEVELOPMENT POTENTIAL

520,000 M² OF PARISIAN ASSETS

WITH HIGH POTENTIAL FOR TRANSFORMATION

Pereire

N2 Batignolles Montmartre

Maillot	Laborde
	Jemmapes
Carnot
The Line	Anjou	Provence
J. Goujon	Ménilmontant
Percier
Steel		Voltaire
Gutenberg Art&Co
Carré
Suffren	Littre	P. Auguste
Keller

Gobelins

Raspail

Boulogne Molitor

Bobillot

Occupied Orange assets with potential

CARNOT	LABORDE
Paris 17th	Paris 8th
11,200 m²	6,200 m²

TOTAL COST

	ANJOU
~€480	Paris 8th
M
	10,100 m²

CURRENT

VALUE

12,850

VALUE

CREATION

TARGET

>40%

Already transformed

Committed developments

M²

To de delivered in 2021 & 2023/2024

24

ITALY OFFICES PORTFOLIO

Milan: a €2.3 bn portfolio (€2.2 billion Group share)

Focusing on Milan (excl. Telecom Italia)

Milan

focused on the best locations

PORTFOLIO 100%

89%

• value excl. Telecom Italia
  -

M3

M5

Bicocca

M1

M1	Certosa	Maciachini

M2

€3.6 BN

PORTFOLIO

GROUP SHARE

€3.0 BN

Group share	Outside Milan
	11%

Telecom Italia

11 years WALL / 100% occupancy

North of Italy	Others
27%
35%
	% value Telecom Italia
	portfolio
	-
Rome	Group share
12%

Turin

4%Milan

22%

26% Center & Semi-Center

16%

Periphery

	Porta
	Nuova
City Life
M5	Semi-centre
	CBD
M1
Lorenteggio
M4	Centre
Navigli
	Ripamonti
	Periphery
M2	Milanofiori
55%
CBD	Rental portfolio
& Porta Nuova

Developments

Lambrate /

Forlanini

M4

Linate

Airport

M3

25

GERMANY OFFICES PORTFOLIO

PORTFOLIO 100%

€1.7 BN

PORTFOLIO

GROUP SHARE

€1.4 BN

In the Top 5 German cities

Munich 8%	Other 1%

Berlin 21%

Hamburg

19%

% value

-

Group share

Düsseldorf	Frankfurt
31%
21%

+€0.6 bn of development potential

Especially in Berlin Alexanderplatz

Frankfurt - City Gate

26

COVIVIO FLEXIBLE OFFER / 21,300 M² OPENED ON 6 SITES

EUROMED MARSEILLE

GARE DE LYON - PARIS 12th

DANTE 7 - MILAN

SILEX II - LYON

Opening of the 1st site in Marseille		2nd site in Paris		Opening of the 1st site in Milan		Opening of the 1st site in Lyon
	2,300 m²		5,000 m²		4,700 m²		5,000 m²
Mixed building of 9,800 m²		Mixed building of 13,600 m²		Fully flexible site		Mixed building of 31,000 m²
with traditional lease & flexible offer		with traditional lease & flexible offer				with traditional lease & flexible offer

End-2017

March 2018

Sept. 2018

Oct. 2018

Oct.2019

Aug 2020

Q3 2021

1st site in Paris	Partnership with Orange	Partnership with Orange	4th site in Paris
3,500 m²	1,400 m²	3,000 m²	4,400 m²
Fully flexible site	Orange building of 5,900 m²	Mixed building of 18,600 m²	Fully flexible site
	with Orange using 50% of the flexible space	with traditional lease & flexible offer
MIROMESNIL - PARIS 8th	MONTMARTRE - PARIS 18th	CITE NUMERIQUE - BORDEAUX		GOBELINS - PARIS 5th

27

GERMAN RESIDENTIAL PORTFOLIO

			10%		7%
			Dresden & Leipzig
									Hamburg
PORTFOLIO 100%		9%
€6.4
BN	49%	Commercial1
								34%
		Berlin
							% revenue			NRW
			40%					in
							Group share
			Residential

PORTFOLIO

GROUP SHARE

€4.1 BN

Berlin: a €3.6 billion portfolio (€2.3 bn Group share)

focused on the best locations

Prime locations

Average locations

72% of the portfolio	5% of the portfolio
	Covivio Assets
Good locations	Basic locations
23% of the portfolio

1 Ground floor retail, car parks

Sources: Engel & Volkers

28

HOTELS / A UNIQUE PORTFOLIO ABLE TO FACE A CONJUNCTURAL CRISIS

87% IN MAJOR EUROPEAN CITIES1…

PORTFOLIO2
€2.4 BN				Edinburgh
Group share	Germany			Amsterdam
26%
					Warsaw
		UK		London	Berlin
		15%
			Lille Brussels	Krakow
	%
	value2	Spain		Paris	Munich
	France
	35%	12%
				Lyon
15		Belgium		Nice
	6%
Major hotel	Other
6%
operators			Barcelona
		Madrid

…WITH SOUND

PROFITABILTY PROFILE

~35%

EBITDAR Margin

in 2019

~1.8x

rent cover1

in 2019

CENTRAL LOCATIONS + PROFITABLE ASSETS = STRATEGIC HOTELS FOR OPERATORS

1 Cities with >2 million overnight stay per year 29 2 At-end June 2020, excl. the acquisition to be realized in Q3 2020

COVIVIO HOTEL PORTFOLIO / DIVERSIFIED BY TENANT & SEGMENT

				27%
	B&B				Economic
	11%	RHG
		11%
IHG
17%		Marriott
		7%
	% revenue1		38 %		% value
		Midscale
	in Group Share	NH Hotels			in Group Share
	7%
		Hotusa
		3%
Accor		Barcelo
27%		2%
				35%
					Upscale
	Other
	15%

1 Based on 2019 annualized revenues 30

ESG STRATEGY

31

COVIVIO CARBON TRAJECTORY: -1/3 OVER 2010-2030

Covivio carbon trajectory	-1/3 carbon weight/m² over 2010-2030
In line with the <2° trajectory of the 2015 Paris agreement

Average carbon weight per m²

▪ Over all European activities

Average carbon weight per m²

▪ Taking into account the whole life cycle of our assets

-17%	(construction + refurbishment + operation)
at end-2019	▪ On all emissions scopes (1, 2 and 3)
	▪ Without using carbon compensation or green electricity
	▪ Compliant with TCFD1 recommendations

Approved by the Science Based Targets initiative since 2018

1 Task Force on Climate-related Financial Disclosures

32

OWNING & DEVELOPING SUSTAINABLE BUILDINGS IN A SUSTAINABLE CITY…

GREENER ASSETS

84%

with in German residential

First operator to obtain 100% of assets certified "HQE in Operation" in Germany

100%

Target 2025

CLOSE TO PUBLIC	96%	100%
TRANSPORT	<5' walk from public transports	Target 2025

SUPPORTING	230,000 m²	Target
100%
BIODIVERSITY	of offices with a Biodivercity label1	of new office
		development projects
		with Green areas

1 Already labelled or aiming at the Biodivercity label or equivalent (like Eco-jardin)33

…AND GENERATING MORE WELL BEING FOR END-USERS

E

MORE	Target 100%
SERVICES	of office & residential buildings
with a service offer by 2025

Success of our flex-workspace offer

Offer a digital journey to our clients

• Deployment of our Office service app started in 2020

► Residential app available to 100% of tenants since	Covivio#home
June 2019 with already 4,650 users

MORE	Target 100%
WELL-BEING	of our new office development
projects with a well-being certification

34

CONTACT

Paul Arkwright	Hugo Soussan
Tel.: [phone]	Tel.: [phone]
Mobile: [phone]	Mobile: [phone]
[e-mail]	[e-mail]

Paris

30, avenue Kléber 75116 Paris

Tel.: [phone]

www.covivio.eu