The real estate company Covivio, owner of offices, housing and hotels in several European countries, generated revenues in 2023 that were better than expected and even up slightly compared to 2022.
Its benchmark indicator, recurring net profit, increased by 1.2% to 435.4 million euros, while the company was expecting 420 million. On the other hand, she experienced a net loss of 1.42 billion eurosbut this indicator is not very representative of the performance of a real estate company, whose economic model consists of renting buildings that it owns.
This loss is explained by the drop in value of its real estate assets, under the effect of rising interest rates. Covivio will offer its shareholders a dividend of 3.30 euros per share, lower than in 2023 (3.75 euros), with the group wishing to free up cash to reduce debt and finance possible acquisitions.
A refocusing on large metropolises
To this end, its disposal plan is progressing faster than expected, the company having already shed 920 million euros of assets out of the billion and a half planned by the end of 2024. This allows it to reduce its net debt, which rose to 6.93 billion euros compared to 7.58 billion at the end of 2022and to continue the refocusing of its activities on large metropolises (Paris, Berlin, Milan, etc.) and by developing its hotel activity rather than office real estate.
Offices represent half of its revenues, a share which is gradually decreasing, while that of its housing stock in Germany and especially its hotels across Europe is increasing. “Our strategy is to gradually rebalance our portfolio between our three asset classes: offices, residential and hotels,” the group’s general director, Christophe Kullmann, explained to AFP.
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Covivio is in negotiations with AccorInvest, former real estate division of Accor, to divide up a portfolio of jointly held hotels. For 2024, the company forecasts further growth in recurring net profit, to 440 million, driven by the increase in office rents in the most popular locations, that of housing in Germany, and the impact on hotels from the Paris Olympic Games and Euro football in Germany.
“There is a fundamental dynamic which is the attraction of large European metropolises on tourism, which cannot be denied,” added Christophe Kullmann.