Covivio looks to diversity

The group has invested in Dublin (Dublin Ireland)

Covivio said that it would continue to look to the large European cities for investment, with hotels targeted.

The investor said that the value of its hotels portfolio had risen by 5.5%, benefited from strengthening in the European cities and the high margins seen through the sales of assets.

During the year the group sold 45 B&B hotels, located in secondary locations in France and Germany, for €233m and 28% margin (4.7% yield). The group acquired €736m of hotels in major European cities, largely Paris and Dublin.

Hotels accounted for 18% of the group’s revenue in 2019.

"2019 has been again a rewarding year for Covivio, with a portfolio of €24bn, ever more focused on the large European cities, greener and more adapted to the requirements of our clients. The results bear witness to the success of our business model: up 6% for the NAV per share and 4% for recurring income per share and for the dividend. Our €8bn development pipeline, our recent acquisition of prime hotels and our major investment in German offices, are all drivers in pursuing our sustainable growth,” said Christophe Kullmann, Covivio CEO.

Hotels revenue was up 1.2% like-for-like. The Ebitda for hotels under management contracts was up 2.3%. The hotels leased to Accor were affected by the capex programmes financed by Accor and completed in 2019 and 2020 on 40% of the portfolio, leading to a decline of 0.6% in variable rental income.

The group said: “These capex increase the value of the hotels and enable greater long-term growth. As an example, the capex spent on five hotels (1,500 rooms) in 2018 enabled revenues to be 8% above 2017 level, before the start of the work.”