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2020-Analysts-Presentation-H1.Pdf 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% -8.3% GDP forecasted in 20201 3% -0.45% 2% % GDP GROWTH EUROPEAN UNION >3 IN JULY 2020 2% 1% IN 2007-09 -2% 0% -6% -1% -10% 2007 2009 2011 2013 2015 2018 2020F 2007 2009 2011 2013 2015 2018 2020 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 …in Paris, Milan & Germany top 5 cities… with major operators… …attracting a solid tenant base … facing conjunctural downturn Resilient revenues Resilient values despite & value growth potential impact on 2020 revenues % breakdown in Group share. Non strategic = 1% of the portfolio 5 H1 2020 KEY FIGURES OPERATING PROFILE QUALITY HEALTHY PORTFOLIO DEBT PROFILE % occupancy % % 96 rate +1.0 41.1 like-for-like value growth LTV years average 7.1 firm lease length 6.1x % LfL rental growth €400 m ICR excl. hotels +1.9 new disposals Group share Rating S&P with 15% margin % LfL revenue BBB+ -51 on Hotels stable outlook 6 II. H1 2020 ACTIVITY ► Asset rotation acquisition, disposal & development ► Letting activity & rent collection ► Negotiations on hotels leases Paris 8th 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 Frankfurt – Y2 Düsseldorf – Herzog T. Düsseldorf – Airport Center since May 14th 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 FUNDAMENTALS2 360,000 m² of existing 3.1% Hamburg assets valued ~€4,100/m² vacancy rate 19% Berlin Dusseldorf % 100,000 m² of % 21 60% 21 development potential pre-let on future €0.6 bn Group share of supply development cost1 Frankfurt 31% stable including Alexanderplatz project Prime & average rents Munich 8% 1 Total estimated cost including land value 2 Source Colliers 9 REINFORCEMENT IN GERMANY OVER THE PAST YEARS 2015 H1 2020 A PREDOMINANTLY More German A EUROPEAN FRENCH PORTFOLIO Residential INTEGRATED PORTFOLIO (+€2.1 bn Group share) Portfolio geographic breakdown Building a prime portfolio Portfolio geographic breakdown (31/12/2014) Structurally resilient (evolution vs 31/12/2014) With potential through rental growth & development 36% 61% 40% +19 pts -21 pts €16.4 bn 17% Move into German €25.3 bn (€9.8 bn (€16.9 bn Group share) Offices Group share) (+€1.4 bn Group share) Relying on our existing platform 2% To build a critical size portfolio 6% 18% 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 H1 2020 share Yield (Group Q1 2020 (Group share) share) €164 m 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 0.9% 81% Residential in Q2 2020 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 Target in Group share 11 FOCUS ON OFFICES DISPOSALS Disposal agreements on mature office assets in France & Italy Mature assets developed by Covivio between % 2013 and 2017 90 Nanterre - Respiro 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 Lyon Villeurbanne - Le Patio 3,600 m² / delivered in 2017 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 Group share OFFICES IN MILAN Group share RESIDENTIAL IN BERLIN Group share Paris, Greater Paris Mainly CBD & In sought-after districts and city-center of Symbiosis area major regional cities M3 M2 Maciachini Levallois ALIS Paris 17th So Pop M1 Paris 17th N2 City Life Duca d’Aosta Paris 8th Jean Goujon M5 Lambrate / Forlanini Paris 5th Gobelins Via Dante M4 Lorenteggio Via Unione Montrouge Flow Linate Airport Chatillon IRO Meudon Ducasse Navigli The Sign Symbiosis DS campus Cœur d’Orly 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 & Germany1… … but Covivio’s letting activity remained active 30,800 m² of new leases for 8 years firm on average Paris Carré Suffren Bordeaux Cité Numérique Turin Corso Ferrucci Munich Sunsquare 1,700 m² let 2,000 m² let 6,420 m² let 5,000 m² let 83,000 m² +4.2 years lease extension renewed incl. 38,200 m² negotiated with tenants +2.2% vs previous IFRS rent 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 ACTIVE RELETTING PRIVATIZATIONS DESPITE THE LOCKDOWN OF EXISTING & NEW UNITS 1,250 units relet in H1 2020 52 existing units sold in Berlin €19 million1 at €4,400 / m² Mostly in NRW, Dresden & Leipzig +81% margin on book value with +15% increase on previous rent In Berlin, activity slowed down in Q2 70 new units pre-sold on the pipeline 2 due to the implementation of the new €29 million at €5,925 / m² regulation +50% margin on development cost 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 96.4% & 60% collection rate collection rate =€15 m =€240 m Low amount of provisions (€1.5 m) essentially linked to small tenants €5.5 m of rent provisioned 17 HOTELS CLOSED, TRIGGERING NEGOTIATIONS WITH OPERATORS NEGOTIATIONS % of Covivio FINALIZED ~80 hotels closed with operators representing 66% during the lockdown of leased hotel revenues % RevPar -65 on Covivio variable leases & management contracts Help operators Switching to monthly payment with short-term liquidity Granting rent-free period 65% of hotels Reopening opened at end-June but occupancy Against lease extensions since June rates remain low to secure cash-flows +4 years firm lease length (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 OFFICES / +1.4% LFL RENTAL GROWTH 60% OF COVIVIO’S PORTFOLIO Office portfolio in France & Italy: sound like-for-like rental growth & high occupancy 35% Covivio Driven by indexation: +1.0% % occupancy portfolio 96 Good performance in Milan1: +3.3% 17% driven by 2019 reletting % occupancy Slight increase outside Milan: +0.6% 98 Office portfolio in Germany: integration of Godewind Historical portfolio in Berlin2: +2.8% LfL Impact of Wework lease contract termination % in Düsseldorf (Herzogterrassen): 8 Occupancy of Godewind portfolio: 79% -12 pts of occupancy Financial agreement reached with WeWork 1 LfL Milan offices excl.
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