(AOF) – In 2022, Covivio recorded a 5% increase in net recurring income (EPRA Earnings adjusted), to 430 million euros. “The fall in rental income in offices, linked to the rotation of the portfolio and the vacancies of assets in the periphery, was more than offset by the strong recovery in hotels and the continued solid performance in German residential,” commented the real estate group. Revenues amounted to 968 million euros consolidated and 633 million euros group share, up 12.7% on a like-for-like basis.
According to the group, this performance is driven both by the recovery of variable income in hotels (+6.5%), and by indexation in offices and asset management work (+6.2%).
Covivio recorded a 10% increase (€107.8 per share) in net assets revalued on liquidation.
Its assets represent a value of 26 billion euros (17 billion euros group share), stable on a like-for-like basis.
The real estate group reduced its net debt by 220 million euros and posted a leverage ratio (LTV, equivalent to the debt ratio) of 39.5%.
It proposes maintaining the dividend at 3.75 euros per share, with the option of payment in shares, benefiting from the support of the main shareholders (51% of the capital), undertaking to opt for this option. This represents a minimum capital increase of 175 million euros.
This year, Covivio is aiming for recurring net income of around €410 million, stable restated for the effect of debt reduction. Covivio has set itself the objective of achieving 1.5 billion euros in sales by the end of 2024. Since November 2022, 200 million euros in disposal agreements have been signed, 3% above appraisal values at the end of 2021.
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Key points
– Fourth largest European property company, global operator from design to management, operating in offices, hotels and German residential;
– Assets of €27 billion spread 94% over 3 strategic countries: France for 38%, Germany for 41% and Italy for 16%;
– 57% in offices in France, Italy and Germany, 28% in German residential and 15% in European hotels;
– Economic model based on 4 pillars: presence in the heart of European cities, design of new or renovated real estate combining energy performance and adaptability to uses, customer culture by co-defining projects and extending the duration leases;
– Open capital with powerful shareholders – the Del Vecchio family (27.25% and 43.25% of the voting rights), ACM (7.71%), Crédit Agricole (8.2%) and Covea (7.2 %), Jean Luc Biamonti chairing the 16-member board of directors, Christophe Kullmann being managing director;
– Solid financial situation, with an LTV ratio down to 39.5% at the end of June.
Challenges
– European strategy to simplify structures, with offices being owned directly, hotels in Europe managed by the Foncière des Murs subsidiary and German residential under the Immeo brand;
– “Digital roadmap 2023” innovation strategy: 3 objectives: expand the range of customer services, build smart buildings and create value via data / partnerships with customers and start-ups / concrete research partnerships and carbon materials -Hub of prescribers, Sekoya platform, Impulse Partners- and with local authorities -Vitae project;
– Environmental strategy for a 40% reduction in CO2 emissions by 2030 vs 2010: intermediate objectives for 2025: 100% of the assets labeled or certified and 100% close to public transport / ecocircularity / participation in the 1
er
low-carbon real estate label for Europe / transformation of all debt into green bonds;
– Advances in the Wellio flexible office offer (99% occupancy rate);
– Tertiary development pipeline of €2.5 billion at the end of June, 84% located in Paris, Berlin and Milan and 61% pre-let and finalization of disposals financing the developments.
Challenges
– Change in revalued net assets or NAV, of €107.4, compared to the stock market price and the occupancy rate of office buildings (94.3%) and hotels (95%);
– Negative impact of inflation and construction delays offset by the indexation of rents;
– After a 2nd half of 11% recovery in activity, confirmed 2022 objective of earnings per share of €4.5.
Find out more about the real estate sector
A demand crisis
According to data from the Federation of Property Developers (FPI), the figures for the third quarter of 2022 continue to be alarming. Sales of new collective housing fell by 12.4% over one year, to 19,006 units. Over the first nine months of 2022, the decline reached 10.2%, to 72,670 units.
Reservations are also plummeting due to the collapse of bulk sales to social landlords and institutional investors. As interest rates rise, institutional investors renegotiate or halt operations. First-time buyers are penalized by the rise in rates and the tightening of the Pinel system puts off some private investors.
Due to the sharp rise in construction costs, the REIT estimates that one out of six authorized operations is ultimately not carried out for economic reasons.
Faced with this, prices are still rising: the sale prices of new collective housing increased by 5.9% throughout France in the third quarter of 2022. Ile-de-France is an exception, with a drop of 0, 9%.