While it is diversifying its activity, Covivio continues to concentrate on assets and destinations that it is perfectly familiar with. One of the keys to its success is incontestably its ability to extract maximum value from well-targeted assets. The investor may then sell assets to free cash and reinvest it elsewhere, which is the essence of the trade.

At the close of the first semester, the hotel division represents 15% of Covivio's activities at the end of this semester 2019. In its semestrial report Covivio shows an OR of 100% for its hotel assets and, unsurprisingly, the best WALT set at 13.9 for an average across all activities (office in France and Italy and residential in Germany) of 7.2 years.

What levers to grow profitability?

100% OR? Mixed-use and value-added combined for a maximum of exploited m². Where the hotel used to live from 6pm to 9am it can now be operated within a maximum time frame. Results: the sale of 30 B&B Hotel properties in secondary locations for €113 million, signed with a 12% margin above end-2018 appraisal value and a 5.4% yield. 

On another scale, the Westin Bellevue Dresden with 340 rooms in a management contract, was sold for 48.5 M€. But the real estate was optimized prior to sale thanks to the release of the 8,000m² adjacent plot to develop housing on the banks of the Elbe. The property, which required renovations, made it possible to achieve EBITDA of 7.4% (before CAPEX).

It is by questioning itself that Covivio is able to find new sources of value with its partners.