It looks like the crisis hasn’t impacted Covivio that much. However, both rising vacancy and incentives in the region of Paris in Q2 21 (offices) are a persisting concern. Short-term catch-up continues.
Companies: Covivio SA
Aside both the unsurprising performances of Hotels (-46%, but RevPar down 84%) and German Residential (+3.4%), European Offices were down 1.1% lfl in Q1 21. Our estimate was a positive 0.5% in Q4 20. Revenue now embarks the rising vacancy of Q2-Q3 20 in full.
The first cracks were confirmed in peripheral locations as far French offices were concerned. Hotels were experiencing the all but surprising collapse without accounting for a strong cut in book values. German residential was supporting the big picture.
The increasing vacancy was the premise of negative organic performance as from Q4 20 in the Office segment. Some recent deliveries could mask an organic decline for a while (Offices), as far as consolidated figures are concerned.
Values were almost stable in H1 20. Neither valuers nor the transaction market itself acted in the new reality. We observed a yield compression of 10-20bp on the full portfolio despite negative macros.
Forget the insignificant (good) Q1 20 figures. The current discount of c. 40% vs. the latest NAV (December 2019) will be consumed by progressive dilution (dividend in scrip), write-off of GAV (10-15% as a minimum), and a remaining ex-post discount of 20-25% only. The safety harness looks therefore insufficient, should values be down by more than the above-mentioned 10-15% mark.
Covivio decided to buy the listed Godewind in Germany, or a fully cash €1.2bn deal. It will extend its European Offices platform (France / Italy) following its successful residential German investment and alongside its Hotels branch. The recent share price catch up, from €90 in August 2019 to €110 today, translates the global shareholders’ race for yield, pushing the market to value Offices well above NAVs. The party continues.
The share now trades far above its latest NNNAV. Even if we do not detect an emergency, we believe that some end-markets are at risk. We do not identify a buy opportunity on Covivio and stick to our negative stance.
The positive revaluations were close to zero in both French and Italian Offices, once the pipeline’s contribution is excluded. The good news was… Berlin and its 9% value growth in H1 19 vs. December 2018, thanks both healthy lfl growth and very strong additional yield compression. However, the full impact of the rent-freeze policy is not included at all. The next imprtant date being February 2020 (FY 19 figures), the market will keep in mind today’s good news for a while.
Nice quarter with positive news on the organic growth front as well as on the pre-let ratio concerning 2019 expected deliveries. Capital gains (margin) on disposals are now close to the neutral area, but we do not expect massive negative revaluations by the end of H1 19 according to Q1 figures. However, the market cannot expect significant valuation improvements on the standalone portfolio (excluding pipeline delivery). Released EPS momentum will slow from H2 19.
Covivio is an other property company to announce (slight) deleveraging. This behaviour is now spreading to all asset classes as Covivio owns offices (Grand Paris, Italy), homes (Germany), hotels (Europe). Compression yield probably stopped on H2 18 (Offices/France). Germany shows another strong year with additional 12% revaluation.
FdR released its FY17 results. Rental income increased by 3.9% yoy at €927.4m, with a portfolio valued at €21bn (+10% yoy). The company has agreed to sell €1.4bn worth of assets to reduce its exposure to Telecom Italia and the non-core offices in France. FdR also extended its Spanish exposure, with the acquisition for €559m of 17 hotels. Overall, the published numbers were above our expectations.
FdR published an H1 recurring net profit of €198.3m, up 12% yoy. Rental revenues recorded 3% growth (organic +1.9%, of which 4% from German residential). The occupation rate stood at 96.6%. LTV was around 42.9% vs. 44.6% in FY16.
With acquisitions in Berlin, Milan, Barcelona and Madrid, the portfolio value increased by 9% yoy (3% lfl), standing at €21bn. EPRA NAV was up a notable 10% to €6.6bn (€88.4 per share). The development pipeline reached €4.1bn, of which 83% in offices (Paris, Milan, Ly
We have updated our model on FDR following the €508m worth of acquisitions made in Q1 and the €400m capital increase.
Acquisitions were primarily made in Spanish Hotels (€305m at yield 5.7%) and in German Resi for €180m at a yield 3.8%, and finally €22m in Italy at a yield 6%.
We have updated our model after Fonciere des Regions’ H1 numbers. GS rent stood at €287m, up 5.9% yoy and flat on an lfl basis. By segment, French offices came in flat at -0.3%, Italian offices -0.8%, Hotels and Services -2.1% (due to the terrorism impact on AccorHotels) and German Resi gained 2.1% lfl. Net income was up 4.2% yoy to €176.6m, or €2.64 per share (decrease due to share issues). This comes slightly ahead of our expectations.
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Companies: Duke Royalty Limited
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Companies: Altus Strategies PLC
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Companies: Agronomics Limited
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Companies: M&G Plc
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Companies: Nextenergy Solar Fund
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Companies: Deltic Energy PLC
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Companies: Tatton Asset Management Plc
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Companies: Harworth Group PLC
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Companies: STM Group PLC
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