HALF-YEAR RESULTS 2020
SUMMARY I. INTRODUCTION & BUSINESS MODEL II. ACTIVITY H1 2020 III. H1 RESULTS & GUIDANCE 2020 IV. PERSPECTIVES APPENDIX 2
I. INTRODUCTION & BUSINESS MODEL Paris Carré Suffren Headquarters of AON France
AN UNPRECEDENTED CRISIS …BUT NO FINANCIAL CRISIS ECONOMIC DOWNTURN IN EUROPE… THANKS TO SUSTAINED LOW RATES LOCKDOWN AND TRAVEL RESTRICTIONS GERMANY 10-YEAR BOND YIELD 5% 4% GDP -8.3 % forecasted in 2020 1 3% -0.45 % >3 % 2% GDP GROWTH EUROPEAN UNION IN JULY 2020 IN 2007-09 2% 1% -2% 0% -6% -1% -10% 2007 2009 2011 2013 2015 2018 2020 2007 2009 2011 2013 2015 2018 2020F 1 Source: European commission 4
COVIVIO: A DIVERSIFIED MODEL ABLE TO GET THROUGH THIS CRISIS €25 bn portfolio (€17 bn group share) 60 % 24 % 15 % OFFICES RESIDENTIAL HOTELS €10.2 bn Group share €4.1 bn Group share €2.4 bn Group share (€12.4 at 100%) (€6.4 at 100%) (€6.2 at 100%) High- quality assets in strategic locations… Strategic portfolio with major operators… …in Paris, Milan & Germany top 5 cities… … facing conjunctural downturn …attracting a solid tenant base Resilient revenues Resilient values despite & value growth potential impact on 2020 revenues 5 % breakdown in Group share. Non strategic = 1% of the portfolio
H1 2020 KEY FIGURES OPERATING PROFILE QUALITY HEALTHY PORTFOLIO DEBT PROFILE 96 % +1.0 % 41.1 % occupancy rate like-for-like value growth LTV 7.1 years average 6.1x firm lease length € 400 m +1.9 % ICR LfL rental growth excl. hotels new disposals Group share Rating S&P with 15% margin BBB+ -51 % LfL revenue on Hotels stable outlook 6
II. H1 2020 ACTIVITY ► Asset rotation acquisition, disposal & development ► Letting activity & rent collection ► Negotiations on hotels leases Paris 8 th Jean Goujon
INTEGRATION OF GODEWIND COMPLETED… GODEWIND A €1.2 BN PORTFOLIO WITH 10 ASSETS Frankfurt – Airport Center Frankfurt – City Gate Frankfurt – Comcom 89 % of shares held +10 % put option granted to one shareholder Delisting effective since May 14 th Frankfurt – Y2 Düsseldorf – Herzog T. Düsseldorf – Airport Center Integration of Godewind teams completed APPRAISAL VALUE at end-June Hamburg – Zeughaus Hamburg – Pentahof Munich – Eight Dornach and Sunsquare +3% VS ACQUISITION PRICE 8
…LEADING TO A €1.7 BN PORTFOLIO IN TOP 5 GERMAN CITIES €1.4 bn group share 460,000 M² IN THE TOP 5 GERMAN CITIES... …IN A MARKET WITH SOUND FUNDAMENTALS 2 3.1% 360,000 m² of existing Hamburg assets valued ~€4,100/m² vacancy rate 19 % Berlin 60% 100,000 m² of 21 % Dusseldorf 21 % development potential pre-let on future supply €0.6 bn Group share of development cost 1 Frankfurt 31 % stable including Alexanderplatz project Prime & average rents Munich 8 % 1 Total estimated cost including land value 9 2 Source Colliers
REINFORCEMENT IN GERMANY OVER THE PAST YEARS 2015 H1 2020 More German A PREDOMINANTLY A EUROPEAN Residential FRENCH PORTFOLIO INTEGRATED PORTFOLIO (+€2.1 bn Group share) Building a prime portfolio Portfolio geographic breakdown Portfolio geographic breakdown Structurally resilient (31/12/2014) (evolution vs 31/12/2014) With potential through rental growth & development 36% 61% 40% +19 pts -21 pts €16.4 bn €25.3 bn 17% Move into German (€9.8 bn (€16.9 bn Offices Group share) Group share) (+€1.4 bn Group share) Relying on our existing platform 6% 18% 2% To build a critical size portfolio 20% With potential through asset +4 pts - 2 pts management & development 10
DISPOSALS / €400 MILLION WITH +15% MARGIN on track to >€600 million target for 2020 Disposals 100% Group Gross Margin Q1 2020 H1 2020 share Yield (Group €164 m (Group share) share) at 7% margin France offices €239 m €239 m 4.7% 11% Italy offices €127 m €111 m 3.5% 22% Disposals signed mainly Germany €19 m €12 m in Q2 2020 0.9% 81% Residential Hotels €24 m €11 m 6.5% 16% Non-strategic €59 m €26 m 6.6% -0.4% (retail) Q2 2020 €236 m TOTAL €469 m €400 m 4.4% 14.6% at 21% margin 11 Target in Group share
FOCUS ON OFFICES DISPOSALS Disposal agreements on mature office assets in France & Italy Mature assets developed by 90 % Covivio between Nanterre - Respiro 2013 and 2017 value 11,170 m² / delivered in 2015 creation since delivery Successful asset of the assets management Incl. disposal margin -Maintaining high occupancy: >99% -Securing long-leases with key partners of Covivio: >7 years WALT Nancy - Origin 3,600 m² / delivered in 2017 Lyon Villeurbanne - Le Patio 15 % 12,755 m² / delivered in 2013 margin Value creation on disposal vs potential fully end-2019 value extracted Milan - Cernaia 8,300 m² / delivered in 2017 12
DEVELOPMENTS / TIMELINE EXTENDED BUT VALUE POTENTIAL CONFIRMED… MINIMAL POSTPONEMENT OF DELIVERIES Only +3 months on average Flow with short-term impact on 2020 revenue Montrouge Close to no impact on cost 100% pre-let Maximum +1% Future HQ of Edvance, PROFITABILITY CONFIRMED subsidiary of EDF 6.0% target yield on cost >30% target value creation LETTING RISK UNDER CONTROL 51% pre-let on average incl. 75% on next 12-months deliveries See appendix page 59 for more details 13
…THANKS TO STRATEGIC LOCATIONS OF OUR PROJECTS €1.3 bn €0.3 bn €0.2 bn OFFICES IN FRANCE OFFICES IN MILAN RESIDENTIAL IN BERLIN Group share Group share Group share Paris, Greater Paris Mainly CBD & In sought-after districts and city-center of Symbiosis area major regional cities M3 M5 M1 M2 M1 Maciachini Paris 17 th So Pop Levallois ALIS Paris 17 th N2 Duca d’Aosta City Life Paris 8 th Jean Goujon M5 Lambrate / Forlanini Paris 5 th Gobelins Via Dante M4 M1 Via Unione Lorenteggio Montrouge Flow Linate M4 Airport Chatillon IRO Navigli Meudon Ducasse Symbiosis The Sign M3 M2 Cœur d’Orly DS campus Milanofiori extension Major business & Lyon CBD: districts Silex 2 Line 14 of the Grand Paris 14 Line 15
OFFICE LETTING ACTIVITY / 114,000 M² LET & RENEWED Slowdown in office market activity: -35% take-up in France, Italy & Germany 1 … … but Covivio’s letting activity remained active 30,800 m² of new leases Paris Carré Suffren Bordeaux Cité Numérique for 8 years firm on average Munich Sunsquare Turin Corso Ferrucci 1,700 m² let 2,000 m² let 5,000 m² let 6,420 m² let 83,000 m² +4.2 years lease extension renewed +2.2% vs previous IFRS rent incl. 38,200 m² negotiated with tenants in the context of the lockdown 28,190 m² Essentially in Paris and La Défense vacated 15 1 H1 2020 vs H1 2019. Source CBRE & Colliers with -39% in Greater Paris, -31% in Milan and -35% in Germany
GERMAN RESIDENTIAL / EXPLOITING OUR GROWTH DRIVERS PRIVATIZATIONS ACTIVE RELETTING DESPITE THE LOCKDOWN OF EXISTING & NEW UNITS 1,250 units relet in H1 2020 52 existing units sold in Berlin €19 million 1 at €4,400 / m² +81% margin on book value Mostly in NRW, Dresden & Leipzig with +15% increase on previous rent 70 new units pre-sold on the pipeline In Berlin, activity slowed down in Q2 €29 million 2 at €5,925 / m² due to the implementation of the new +50% margin on development cost regulation 1 €12 m Group share 16 2 €15 m Group Share
STRONG RENT COLLECTION THANKS TO A SOLID TENANT BASE EXCLUDING HOTELS QUALITY TENANTS 91 % large corporates on offices & residential tenants Offices & Residential Retail €250 m €23 gross rental income gross rental income 60 % 96.4 % & collection rate collection rate =€15 m =€240 m Low amount of provisions (€1.5 m) €5.5 m of rent provisioned essentially linked to small tenants 17
HOTELS CLOSED, TRIGGERING NEGOTIATIONS WITH OPERATORS NEGOTIATIONS ~80 % of Covivio FINALIZED hotels closed with operators representing 66% of leased hotel revenues during the lockdown -65 % RevPar on Covivio variable leases & management contracts Help operators Switching to monthly payment Granting rent-free period with short-term liquidity 65% of hotels Reopening opened at end-June but occupancy since June Against lease extensions +4 years firm lease length rates remain low to secure cash-flows (10 to 20%) 14.7 years firm lease length on average for hotels in lease 18
III. H1 2020 RESULTS & GUIDANCE 2020 ► Revenues ► Financial results Berlin residential - Kreuzberg
III. H1 2020 RESULTS & GUIDANCE 2020 ► Revenues ► Financial results Berlin residential - Kreuzberg
H1 2020 REVENUES / +1.9% LFL EXCLUDING HOTELS Revenues Revenues Revenues % change Average Occupancy rate H1 2020, €million H1 2019 H1 2020 H1 2020 like-for-like lease term % Group share 100% Group share Group share firm, in years France Offices 115.1 121.0 105.7 +1.0% 95.8% 4.5 Italy Offices 72.9 84.2 64.2 +2.0% 97.8% 7.1 Germany Offices 3.3 27.3 18.4 +2.8% 79.0% 5.1 Germany Residential 76.5 122.5 78.6 +2.9% 98.4% n.a. SUB-TOTAL OFFICES & RESIDENTIAL 267.8 355.1 266.9 +1.9% 95.5% 5.4 Hotels in Europe 59.1 73.1 28.5 -50.5% 100% 1 14.7 TOTAL STRATEGIC ACTIVITIES 326.9 428.2 295.4 -7.6% 96.1% 7.1 Non-strategic 11.9 10.4 7.0 -3.5% 97.8% 5.7 TOTAL 338.8 438.6 302.3 -7.5% 96.1% 7.1 1 On lease properties 21
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