PR - 2022 half-year results: An upturn in business that is stronger than expected

PRESS RELEASE

Paris, 18 July 2022

2022 half-year results:

An upturn in business that is stronger than expected

Hotel market: 2019 performances surpassed

While the first quarter was still marked by the impact of the Omicron variant on hotel performances, recovery was confirmed in the second quarter and gathered pace following the lifting of all restrictions related to the health crisis in Europe.

The hotel sector was bolstered by a strong recovery across all European countries, reaching and even surpassing 2019 levels (RevPAR up 6% in Europe on average compared to May 2019). France, Italy and the United Kingdom, which account for 51% of the Covivio Hotels portfolio, recorded RevPAR growth of between 2% and 20%. Only Belgium and Germany, penalised by later lifting of restrictions, lagged behind at the end of May with performances still falling short of 2019 levels.

Change in hotel RevPAR in Europe1

The upturn covered all countries and hotel classes. Furthermore, boosted by robust business momentum, average prices have now surpassed 2019 levels, up 12% on average across Europe in May.

1 Source: MKG - change in RevPAR and average price in May 2022 vs May 2019

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Major asset management transaction and new milestone in B&B HOTELS partnership

Following the agreement signed in March 2022, Covivio Hotels relet 30 French hotels to B&B HOTELS. Previously, these assets (2,565 rooms) were let to AccorInvest under variable-rent leases and operated under Accor Group brands (Ibis, Novotel and Mercure). Covivio Hotels and B&B HOTELS, partners since 2010, have agreed on new 12-year firm fixed-rent leases. Covivio Hotels will accordingly benefit from a substantial increase in rents compared to 2019 and will participate in a works programme conducted by B&B HOTELS.

These transactions allow Covivio Hotels to provide support to Europe's third-largest economy class hotel brand in a new phase of its development in Europe.

These agreements reflect the growth potential held by the Covivio Hotels portfolio through its asset and brand management strategy and its ability to guarantee a hotel offer increasingly aligned with user expectations.

Disposal of Club Med Samoëns

In early March, Covivio Hotels closed the sale of a Club Med located in Samoëns for €125 million excluding duties, including a Group share of €63 million, for which the preliminary sale agreement was signed in late 2021. This asset was owned in partnership with Crédit Mutuel Assurances (50.1% vs 49.9%).

In addition, Covivio Hotels signed new preliminary sale agreements during the period, involving seven hotels and four retail assets, for a total of €33 million Group share. Overall, these disposals were achieved at an average margin of 13.3% (Group share) over the latest appraisal value.

Asset values up 2.8% like-for-like

At the end of June 2022, Covivio Hotels held an unrivalled portfolio in Europe worth €6,069 million (€6,722 million at 100%). This strategic portfolio is characterised by:

• high-qualitylocations: Booking.com location average grade of 8.8/10;
• 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-termleases with the major hotel operators: 16 operators with an average residual lease term of 12.9 years.

Group Share (€ millions, excluding duties)	Value 2021	Value H1
2022
Hotel lease properties	4 691	4 785
Hotel Operating properties	1 190	1 228
Total Hotels	5 881	6 013
Non-Stratégic (Retail)	61	56
Total Covivio Hotels	5 942	6 069
1 LfL : Like-for-like

H1 LfL

change1

2,9%

2,5%

2,8%

-0,4%

2,8%

Like-for-like, the hotel portfolio value rose 2.8% over six months, mainly driven by:

• a 2.9% increase in assets under lease related to:

1. the upturn in business on variable-rent assets (up 1.7% on AccorInvest assets in France and Belgium),

1. fixed-rentindexation,

• 1. asset management transactions carried out in particular on assets located in the United Kingdom (up 4.4%) and France (up 5.9%);
• a 2.5% increase in hotel operating properties, mainly related to French portfolio performance (6.1%).

The portfolio has a 5.2% average yield excluding duties.

Hotel portfolio breakdown at 30/06/2022

Hotel income up 100.1% like-for-like

The upturn in business was confirmed during the second quarter, reflected by a strong increase in revenues, up 100.1% like-for-like from €64.6 million in 2021 to €121.8 million.

	Incom e	Incom e	Incom e	Incom e	Change	Change
€ million	H1 2021	H1 2021	H1 2022	H1 2022	Group Share	Group Share
LFL
	100%	Group Share	100%	Group Share	(%)	(%) (*)
Hotel Lease properties (Variable rents)	7,5	7,5	21,1	21,1	181%	213,9%
Hotel Lease properties (UK)	0,0	0,0	16,4	16,4	n/a	n/a
Hotel Lease properties (Others)	68,1	60,7	72,3	65,7	8%	8,6%
Hotel Operating properties (EBITDA)	-3,8	-3,6	19,2	18,7	n/a	376,5%
Total Hotel Revenues	71,8	64,6	129,0	121,8	88%	100,1%
Non-strategic (Retail)	3,0	3,0	2,2	2,2	-27%	3,3%
Total revenues Covivio Hotels	74,8	67,6	131,2	124,0	83%	97,1%
(*) On a like for like basis

Hotel lease properties (80% of hotel portfolio)

• Variable-renthotel real estate: the portfolio is leased mainly to AccorInvest (21% of the hotel portfolio) in France and Belgium and consists of economy class (Ibis) and midscale (Novotel, Mercure) hotels.
  Rents are fully indexed to revenues. As a result, this portfolio was bolstered by the upturn in the hotel market and posted revenues of €21.1 million, up 214% like-for-like over first half 2021. May rents for this portfolio bounced back to 2019 levels and even surpassed them in Paris and the Greater Paris region (up 12%).

• Hotels in the United Kingdom let to IHG(14% of the hotel portfolio): the 12 hotels in the portfolio posted similar revenues to 2019. Following the new rental agreement with IHG2, rent totalled €16.4 million during the first half (zero rent in H1 2021).
• Other hotel lease properties(45% of the hotel portfolio): fixed-rent hotel real estate let to B&B, NH Hotels, Motel One, Barcelo, Hotusa, etc. on long leases. Rents increased 8.6% like-for-like, mainly due to the switch to fixed rent for the 31 hotels now let to B&B, the first-half indexation of rents and a rent increase for one hotel in Spain after a change in operator.

The firm residual lease term reached 12.9 years at end June 2022 while the occupancy rate remained at 100% across the portfolio.

In light of the quality and strength of the Covivio Hotels rental base, the rent collection rate for first half 2022 was 100% and Covivio Hotels recovered all outstanding rent from 2021.

Hotel operating properties (20% of the hotel portfolio)

Most of these hotels are located in Germany (mainly Berlin) and France. While performances in Germany are close to those of 2019 (RevPAR down 4% in May) after later lifting of restrictions, results recovered strongly in France, particularly in Nice, where May RevPAR levels were up 22% versus May 2019.

Globally, Group share EBITDA for hotel operating properties rose by €22.3 million year-on-year.

LTV and ICR improving

Covivio Hotels net debt Group share totalled €2,359 million, compared to €2,315 million at 31 December 2021.

At 30 June 2022, the average maturity of Covivio Hotels debt was 4.5 years and the LTV ratio (Loan To Value) fell by 179 points year-on-year to 36.8% despite the full dividend payment during the first half. The debt service cover ratio (DSCR) was 80% at the end of June, with maturity of 6.3 years.

The ICR ratio (interest cover ratio) reached 5.77 compared to 3.08 in 2021.

Strong net financial income growth in H1 2022

The EPRA NRV (net reinstatement value) came to €4,024 million, up 4.0% over six months by value per share.

Taking into account the fair value adjustment of interest rate hedges and fixed-rate debt, the EPRA NDV (net disposal value) rose to €3,552 million from €3,167 million at 31 December 2021, up 12.1% to €24.0/share.

EPRA Earnings were €102.5 million, up 293% from €26.1 million in H1 2021, boosted by income growth fuelled by the recovery in the hotel business. EPRA Earnings per share was €0.69 in H1 2022 compared to €0.19 the previous year.

2 Subject to approval by the Oxford landlords. This agreement concerns 9 hotels operated under IHG brand (89% of UK portfolio value), the last 3 hotels will now be managed by Covivio Hotels.

2022 outlook

The swift return of leisure customers, along with MICE customers (conferences, seminars, etc.) allowed the hotel business to return to 2019 levels in the first half. This strong momentum, which is continuing into the summer, once again shows the hotel industry's ability to bounce back quickly, driven by the need to travel and meet other people. In light of the asset management quality and potential provided by its portfolio, Covivio Hotels plans to leverage the recovery situation and continue to support the development of large European and international operators.

CONTACTS

Press Relations	Investor Relations
Géraldine Lemoine	Paul Arkwright
Tél : + 33 (0)1 58 97 51 00	Tél : + 33 (0)1 58 97 51 85
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Louise-Marie Guinet
Tél : + 33 (0)1 43 26 73 56
[e-mail]

ABOUT COVIVIO HOTELS

Covivio Hotels specializes in owning business premises in the hotel sector. A listed real estate investment company (SIIC), a real estate partner of the major players in the hotel industry, Covivio Hotels holds assets worth € 6.7 billion (at the end of June 2022).

Covivio Hotels is graded BBB+ / Stable outlook by Standard and Poor's.

ABOUT COVIVIO

Thanks to its partnering history, its real estate expertise and its European culture, Covivio is inventing today's user experience and designing tomorrow's city.

A preferred real estate player at the European level, Covivio is close to its end users, capturing their aspirations, combining work, travel, living, and co-inventing vibrant spaces.

A benchmark in the European real estate market with €27bn in assets, Covivio offers support to companies, hotel brands and territories in their pursuit for attractiveness, transformation and responsible performance.

Build sustainable relationships and well-being, is the Covivio's Purpose who expresses its role as a responsible real estate operator to all its stakeholders: customers, shareholders and financial partners, internal teams, local authorities but also to future generations and the planet. Furthermore, its living, dynamic approach opens up exciting project and career prospects for its teams.