2018 FIRST-HALF FINANCIAL REPORT Contents 1 4 2018 FIRST-HALF CERTIFICATION MANAGEMENT REPORT OF THE PREPARER P 01 P 125 2 DEFINITIONS, ACRONYMS CONDENSED CONSOLIDATED AND ABBREVIATIONS USED FINANCIAL STATEMENTS P 127 OF COVIVIO AS AT 30 JUNE 2018 P 63 3 STATUTORY AUDITORS’ REPORT P 123 1 2018 FIRST-HALF MANAGEMENT REPORT 1.1. BUSINESS ANALYSIS 02 1.4. FINANCIAL RESOURCES 50 1.1.1. Recognised rental income: +3.0% 1.4.1. Main debt characteristics 50 on a like-for-like scope 02 1.4.2. Debt by type 50 1.1.2. Lease expirations and occupancy 1.4.3. Debt maturity 51 rates 03 1.4.4. Main changes during the period 51 1.1.3. Breakdown of rental income – 1.4.5. Hedging profile 52 Group share 05 1.4.6. Average interest rate 1.1.4. Cost to revenue, by business 06 on the debt and sensitivity 52 1.1.5. Realised disposals: €492 million 1.4.7. Reconciliation with consolidated in Group share 06 accounts 53 1.1.6. Acquisitions: €682 million realised in Group share 07 1.5. EPRA REPORTING 55 1.1.7. Development projects: €5.1 billion (€3.7 billion Group share) 07 1.5.1. Change in net rental income 1.1.8. Portfolio 11 (Group share) 55 1.1.9. List of major assets 12 1.5.2. Investment assets – Lease data 55 1.5.3. Investment assets – Asset values 56 1.2. BUSINESS ANALYSIS BY 1.5.4. Information on leases 57 SEGMENT 13 1.5.5. EPRA topped-up yield rate 57 1.2.1. France Offices 13 1.5.6. EPRA cost ratio 58 1.2.2. Italy Offices 21 1.5.7. EPRA Earnings 58 1.2.3. German residential 27 1.5.8. EPRA NAV and EPRA NNNAV 59 1.2.4. Hotels Europe 33 1.5.9. EPRA performance indicator reference table 61 1.3. FINANCIAL INFORMATION AND 1.6. FINANCIAL INDICATORS COMMENTS 41 OF THE MAIN ACTIVITIES 62 1.3.1. Scope of consolidation 41 1.3.2. Accounting principles 41 1.3.3. Simplified income statements - Group share 42 1.3.4. Simplified consolidated income statement (at 100%) 46 1.3.5. Simplified consolidated balance sheet (Group share) 47 1.3.6. Simplified consolidated balance sheet (at 100%) 48 2018 First-half financial report — 01 2018 First-half management report 1 Business analysis 1.1. BUSINESS ANALYSIS Changes in scope Two major transactions were completed this half year, with an impact on Covivio’s percentage ownership of its subsidiaries: • as part of the potential business combination with Beni Stabili, Covivio increased its investment in its subsidiary by 7.5%, owning 59.9% at end June 2018 compared with 52.4% at the end of 2017 • the merger of Covivio Hotels and FDMM reduced Covivio’s investment in Covivio Hotels from 50% at 31 December 2017 to 42% at 30 June 2018. 1.1.1. Recognised rental income: +3.0% on a like-for-like scope 100% Group share Change Change Change (%) (€M) H1 2017 H1 2018 (%) H1 2017 H1 2018 (%) LfL(1) % of rent France Offices 135.7 137.6 1.4% 123.0 123.3 0.2% 2.4% 41% Paris 41.0 45.4 11% 38.7 43.6 13% 1.9% 14% Greater Paris 67. 3 67. 2 0% 5 7.0 55.6 -2% 2.5% 18% Other French regions 2 7. 4 24.9 -9% 2 7. 4 24.2 -12% 3.0% 8% Italy Offices 92.3 96.5 4.6% 4 7. 7 41.9 -12.2% 1.5% 14% Offices – excl. Telecom Italia 43.2 4 7. 3 10% 22.6 26.6 18% 1.7% 9% Offices – Telecom Italia 49. 1 49. 2 0% 25.1 15.3 -39% 1.1% 5% Germany Residential 112.9 118.7 5.2% 69.9 75.3 7.7% 4.6% 25% Berlin 48.8 56.6 16% 30.5 36.3 19% 5.7% 12% Dresden & Leipzig 10.2 11.1 9% 6.3 7.0 10% 2.8% 2% Hamburg 7. 2 7. 8 8% 4.6 5.2 11% 3.4% 2% North Rhine-Westphalia 46.6 43.2 -7% 28.5 26.9 -6% 4.2% 9% Hotels Europe 116.2 128.3 10.4% 42.8 48.0 12.2% 3.6% 16% Hotels – Lease properties 84.5 94.6 12% 36.5 34.4 -5.8% 3.3% 11% France 44.8 49. 5 11% 17.5 15.5 -11% 3.4% 5% Germany 10.6 13.5 28% 5.1 5.5 9% 1.6% 2% Belgium 10.6 10.6 0% 5.3 4.5 -16% 5.6% 1% Spain 14.9 17.4 N/A 6.8 7. 3 7% 3.3% 2% Others 3.7 3.7 N/A 1.8 1.6 -15% 1.6% 1% Hotels – Operating properties 31.7 33.7 6% 6.3 13.6 117.7% 4.2% 4% TOTAL STRATEGIC ACTIVITIES 4 5 7.0 481.1 5.3% 283.5 288.5 1.8% 3.0% 95% Non-strategic 34.0 25.4 -25% 1 7.9 14.2 -20.6% N/A 5% Retail Italy 9. 5 8.0 -16% 5.0 4.5 -10% -7. 8 % 1% Retail France 18.4 13.2 -28% 9. 2 5.5 -40% 1.2% 2% Other (France Residential) 6.1 4.2 -31% 3.7 4.2 12% N/A 1% Total 491.0 506.5 3.2% 301.4 302.8 0.4% 2.8% 100% (1) LfL: Like-for-Like. 02 — 2018 First-half financial report 2018 First-half management report Business analysis 1 Group share revenues increased by 0.4% year-on-year. • acquisitions (€13.9 million) in particular in German This €1.4 million increase is due primarily to the following Residential (+€7.4 million), with the acquisition of over effects: 2,000 apartments, primarily in Berlin • acceleration of like for like growth of 3.0% (+€6.0 million) • deliveries of new assets (+€7.7 million), mainly in France with: Offices, particularly Edo in Issy-les-Moulineaux, Art&Co in Paris and O’Rigin in Nancy • +2.4% in France Offices, thanks to the indexation (0.8 pt) and good rental performance (1.7 pt including • asset disposals (-€30.0 million), especially: 1.1 pt related to successful renewals) • in France Offices (-€10.8 million), including two • +1.5% in Italy Offices (excluding Retail) mainly due to mature assets (Winchester in St Germain and Victor indexation Hugo in Issy-les-Moulineaux) • +4.6% in Germany Residential, including 2.4 pts due • in Italy Offices, the syndication of 49% of the Telecom to indexation and 2.2 pts due to renewals Italy portfolio, of which 40% at end-June 2017 and 9% early 2018 • +3.3% in Hotels, of which a 5.0% growth in AccorHotels variable rents thanks to the recovery of the hotel • in German Residential (-€5.2 million) with the sale market of over 5,000 apartments, including over 60% of non-core assets in North Rhine-Westphalia • +4.2% change in EBITDA for Hotel Operating properties as a result of sound performances at the • in Hotels (-€2.9 million) with the impact of the start of the year, particularly due to a post-terrorist non-strategic asset disposals of Quick restaurants attack recovery and Jardiland stores • increase in Covivio’s interest in Beni Stabili to 59.9% (+€2.3 million). 1.1.2. Lease expirations and occupancy rates 1.1.2.1. Annualised lease expirations: 6.0 years of average lease term By lease end date (1st break) By lease end date (Years) – Group share 2017 H1 2018 2017 H1 2018 France Offices 5.0 4.5 6.0 5.4 Italy Offices 7. 6 6.8 8.1 7. 3 Hotels Europe 11.2 11.2 13.3 13.3 TOTAL STRATEGIC ACTIVITIES 6.6 6.0 7. 7 7.0 Non-strategic 6.4 5.4 7.0 6.3 Total 6.6 6.0 7. 7 7.0 The average firm residual duration of leases remained high at 6.0 years at end June, having fallen as a result of the syndication in Italy Offices of an additional 9% of the Telecom Italia portfolio. In France, the firm lease duration fell 0.5 point due to approaching maturities on assets earmarked for redevelopment in 2018. 2018 First-half financial report — 03 2018 First-half management report 1 Business analysis By lease end date By lease (€M) – Group share (1st break) % of total end date % of total 2018 33.3 6% 14.3 2% 2019 53.8 9% 30.5 5% 2020 32.5 6% 2 7. 5 5% 2021 37.4 6% 40.9 7% 2022 41.8 7% 37.8 6% 2023 41.7 7% 45.5 8% 2024 13.4 2% 22.4 4% 2025 40.6 7% 43.0 7% 2026 36.6 6% 36.7 6% 2027 19.4 3% 31.3 5% Beyond 81.0 14% 101.8 17% Germany Residential 152.7 26% 152.7 26% TOTAL 584.2 100% 584.2 100% Hotel operating properties 2 9. 1 - 2 9. 1 - Non-strategic 22.7 - 22.7 - The percentage of lease terms under three years remained stable at 7% of average annualised rental income, giving the Group excellent visibility over its cash flows, which are thus secured on the medium term. Of the €87 million in leases due to end in 2018, more than 50% are related to French Offices assets included in the managed pipeline.