(Boursier.com) — Covivio fell by 1.4% to 41.88 euros this Wednesday, while the group now holds assets of 23.1 billion euros (15.1 billion euros) in assets in Europe, managed according to 3 strategic pillars : the location in the heart of European capitals; an innovative and evolving ‘hospitality’ approach, inspired by hotel industry know-how; Sustainable development. The portfolio is made up of 52% (-3 points over 1 year) of offices in France, Italy and Germany, including 69% in city centers and 25% in the main business centers.
In 2023, Covivio’s rental income stood at €1.011 billion and €648 million as a Group share, up +2% over 1 year on a current basis. The drop in office revenues, linked to disposals, is more than offset by the acceleration of indexation, the rebound in hotels and solid growth in German residential. On a constant perimeter, revenues show an increase of +6.4%, driven by indexation (3.5 pts), the increase in rents during relocations and renewals (0.6 pts) and variable revenues in hotels ( +2.3 pts).
In 2023, the values of Covivio’s assets contracted by 10.2% on a like-for-like basis. At the end of 2023, assets amount to €23.1 billion at 100% and €15.1 billion Group share. At the end of 2023, the average return on Covivio’s assets stood at 5.1%, up +70 bp over one year.
Despite the disposal program and the rise in the average cost of debt, strong operational performances and the reduction in operating costs enabled recurring net income (adjusted EPRA Earnings) to increase by +1.2 % over one year, at 435.4 ME (-2.5% to 4.47 euros per share, due to the increase in the average number of shares). This result is +6% higher than the guidance announced at the start of the year (410 ME) and +4% than that revised mid-year (420 ME).
Covivio’s net profit stood at -E1.4 billion, impacted by declines in value. The adjustments to asset values are reflected in the change in continuation revalued net assets (ANR EPRA NTA), down -21% year-on-year, to 84.1 euros/share (E8.47 billion) . The liquidation NAV (EPRA NDV) fell by -23% to 83.4 euros/share (and €8.401 billion). Finally, the reconstitution NAV (EPRA NRV) comes to €9.327 billion and 92.6 euros per share.
Reinforcement dividend
Quoting…
In a context of maintaining financial discipline, the distribution of a dividend of 3.3 euros per share (3.75 euros in 2023) will be proposed to the vote of the General Meeting of April 17, accompanied by a option to pay the dividend in shares. These decisions will allow the group to maintain between 185 ME and 375 ME.
In a real estate market put to the test in 2023, Covivio has exceeded its objectives. The balance sheet was strengthened and the solid operational performance enabled the recurring result to show slight growth, validating the group’s positioning and strategy. In 2024, in a context of an expected drop in interest rates in Europe and a reconstitution of the risk premium, Covivio prepares for recovery. In this context, the group has set two central ambitions for this financial year: maintaining financial discipline and continuing to grow its recurring net profit.
Covivio has set itself the objective of selling 1.5 billion euros of assets between December 2022 and the end of 2024. The group is ending 2023 ahead of its sales plan. At the end of 2023, 920 million sales agreements have already been signed. In 2024, Covivio intends to finalize its disposal plan with a target of 580 ME, of which 250 ME are in advanced negotiations.
Since 2020, Covivio has achieved €2.1 billion in sales, 80% in offices, and invested €1.4 billion, mainly via Capex on its assets. This qualitative rotation work has enabled a strong refocusing of the assets and an adaptation to changes in the rental markets.
“Qualitative repositioning”
Thanks to this “qualitative repositioning”, Covivio displays solid rental prospects which, as in 2023, should make it possible to offset the impact of debt reduction on results. Covivio therefore sets itself the objective of continued growth in its recurring net income (adjusted EPRA Earnings) in 2024, expected around €440 million.
The Group also aims to return to payment of the dividend only in cash for 2024, with a distribution rate greater than 80%.
Among the latest broker opinions, Goldman Sachs remains a buy on Covivio and raises its target to 54.30 euros, while JP Morgan had already adjusted its target on the file to 50 euros. AlphaValue had previously gone from accumulating to ‘lightening’ with a target reduced to 38.30 euros on the real estate company.