The 2019 balance sheet reveals a strengthening in both the West and the East of the continent in 2019, a development that will be pursued in 2020, partly due to the sale of several assets.
Covivio Hotels has declared to have invested €417 million in 2019 due to its expansion in and outside the euro zone. The investment is partly funded by the sale of part of the existing portfolio which represents €437 million.
Strengthening in Western Europe
In July 2019, Covivio Hotels acquired a 32% stake for €176 million in a portfolio of 32 hotels of the Accor group, valued at €550 million, and spread between France and Belgium, or 30 hotels in France and 2 in Belgium. The portfolio is owned by Covivio's subsidiary, Caisse des Dépôts et Consignations and Société Générale. Previously, the real estate company completed a purchase initiated in 2018 of three assets in the United Kingdom for €91 million. Two of them are operated by InterContinental Hotels Group (IHG) and the last one by NH Group, for an overall return of 5.8%. In addition, Covivio Hotels is now based in a neighbouring country of the UK: Ireland. The company acquired an upscale hotel for €45.5 million, promising a return of 6.4%. The 120-room 4* Hilton Hotel will be the subject of a transformation programme to be completed by 2021.
Launch in Eastern Europe
The project to develop a first hotel in Poland follows the renewal of an agreement with B&B Hotels, an operator with which the real estate company has already worked in the past via hotels based in France, Spain and Germany. This new presence on the Polish market includes three existing hotels in Lodz, Warsaw and Krakow, acquired for €24 million, and other units to be developed over the next few years.
Partial portfolio sale
Alongside these acquisitions, the Covivio subsidiary also sold several assets based on a return of 4.9%, namely a Westin hotel in Germany (€48.5 million), 88 B&B assets in France (€378 million) and 11 B&B assets in Germany (€107 million). These sales enabled the real estate company to recover €437 million, including a 17% margin on "new commitments compared to the appraised value at the end of 2018" (press release from February 12, 2020).
Further global European development in 2020
The acquisition in early January 2020 of a 8-asset portfolio for 1,115 rooms confirms the company's commitment to strengthening its European network in dynamic urban markets such as Italy (Rome, Florence and Venice), France (Nice), the Czech Republic (Prague) and Hungary (Budapest).
The portfolio includes famous properties such as :
- Palazzo Naiadi, Rome
- Carlo IV, Prague
- Hotel Plaza, Nice
- NY Palace, Budapest
The portfolio was acquired for €573 million (including works) with a target yield of 5.8% (including a guaranteed minimum yield of 4.7%), a transaction that is to be completed in the second quarter of 2020. The operation will be entrusted to NH Hotel Group (owned by Minor International).
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