Q3 2024 Covivio SA Activities Report Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Valerie Jacob - Bernstein - Analyst : Hi, good evening. So I've just got a few questions. My first question is, it's been a strong quarter, especially on the hotel side. And I was just wondering if, given that you feel confident that you can beat your guidance at the end of the year, that's my first question. And my second question is on disposals. It's been a slow quarter, as you mentioned, in Q3. So I was just wondering if there is any specific reason -- I mean, I know it's the holiday, the election. But I just wanted to see if you could make any comment on that. And maybe a last one linked to that. At H1, you said that you were relatively confident that your asset values were bottoming, I mean, maybe apart from German offices. And I just wanted to see if you have any update on that comment. Thank you.

Question: Valerie Jacob - Bernstein - Analyst : Thank you, Paul.

Question: Florent Laroche-Joubert - Oddo BHF - Analyst : Hi, Paul. I would have two questions for my part. So my first question would be to know how sustainable can we consider the increase of valuable revenues in Oddo for this quarter, or should we consider some of them as a one-off? My second question would be to know if you could give us maybe some more colors on your leasing activity in Q4 and your ability to increase again your capacity rate in the quarter in offices, for example.

Question: Florent Laroche-Joubert - Oddo BHF - Analyst : Okay. Thank you very much.

Question: Veronique Meertens - Van Lanschot Kempen N.V. - Analyst : Hi, good evening, all. Thank you for the presentation. Maybe, first, a follow-up on the hotel business. I saw also the press release about the new platform, the WiZiU. Just wondering, do you expect any sort of margin improvement on the back of that or maybe initially some additional cost for the rebranding and the new platform? And then secondly, you're getting close to the end of your disposal program, probably more comfortable in terms of leverage and also values. Are you already scanning the market for new opportunities? And if so, is that particularly in hotels? Or do you also see interesting office opportunities, perhaps developments? Happy to hear your thoughts there.

Question: Veronique Meertens - Van Lanschot Kempen N.V. - Analyst : (multiple speakers) Yeah.

Question: Veronique Meertens - Van Lanschot Kempen N.V. - Analyst : Okay, very clear. Maybe one follow-up, a bit on both questions, I guess. Obviously, you're now increasing your exposure with variable revenues there, making also a bit of a different risk profile, I'd say. Is there maybe an internal cap or maximum on where you want that exposure to go for hotels?

Question: Veronique Meertens - Van Lanschot Kempen N.V. - Analyst : Okay, that's very clear. Thank you.

Question: Yurjee Kumar - Barclays - Analyst : Hello, everyone, just a quick one from my side. Can you please help us understand the drivers behind acceleration in the privatization in German resi? And do you expect this material pickup in privatization going forward as well?

Question: Yurjee Kumar - Barclays - Analyst : Got it. Thank you.

Question: Celine Soo-Huynh - Barclays - Analyst : Hi, Paul. Two questions, please. The first one is on values. You're making a point on the return to the cash dividend after years of credit dividend, which kind of implies to me that you're not afraid anymore of any impacts of major drops on property values on your LTV. I know you don't want to comment on valuation as you're going through the valuation process right now with the valuers. But would it be fair to say that you're expecting fairly stable to increase in values in December? That would be my first question. And my second question is on the hotel portfolio yield currently at 6%. We've seen a strong pickup in hotel transactions this year. Some transactions are going below that 6% mark. So how do you feel about hotel values for December? Thank you.

Question: Celine Soo-Huynh - Barclays - Analyst : Thank you, Paul.

Question: Adam Shapton - Green Street - Analyst : Good evening. Hi, can you hear me?

Question: Adam Shapton - Green Street - Analyst : Sorry about that. Some of my questions have been asked. Just one on margins, on your cost-to-revenue ratio, which has, obviously, been progressing nicely in the last few years. Can it come much lower than the 10 in office and the kind of 8.5 overall as you continue to improve occupancy? Can you give us some guidance on where that cost-to-revenue ratio could end up either for the full year and beyond, in general?

Question: Adam Shapton - Green Street - Analyst : Okay, understood. Thank you.

Question: Aakanksha Anand - Citi Investment Research - Analyst : Hey, Paul. Two questions from my side. The first one, has there been an emergence of opportunities to buy that might look attractive in offices? And can we expect the share of offices to kind of go back to the historical levels of about 60%, or do you think it's going to stay at the about 50% mark it is at the moment?

Question: Aakanksha Anand - Citi Investment Research - Analyst : Yeah. So I think the question, essentially, is have you seen an emergence of opportunities that just kind of look attractive in offices? And would you be willing to increase the share of offices in the overall portfolio from the 50% that you currently have?

Question: Aakanksha Anand - Citi Investment Research - Analyst : So just a quick follow-up. So we can expect the office's share to actually go even below the 50% it is at currently?

Question: Aakanksha Anand - Citi Investment Research - Analyst : Understood. Thank you.

Question: Christian Auzanneau - AlphaValue - Analyst : Yeah, hello. A quick question about German residential. Could you confirm organic growth in Berlin alone in Q3 '24 alone? And do you believe such a base is sustainable through 2025 and beyond, please?

Question: Christian Auzanneau - AlphaValue - Analyst : Thank you.

Question: Benjamin Legrand - Kepler Cheuvreux - Analyst : Hi, thanks for taking my question. Just a quick one back on the valuation again, especially on hotels. I'm just wondering if valuers were expecting the performance to be that high for variable rent in 2024, when they did the valuation in the half-year result, or not.

Question: Benjamin Legrand - Kepler Cheuvreux - Analyst : Thank you.

Question: Stephanie Dossmann - Jefferies - Analyst : Hello, Paul and Vladimir. Maybe two questions from my side. The first one is on German offices. If I'm correct, the peak-to-trough value decline was close to 27%? Correct?

Question: Stephanie Dossmann - Jefferies - Analyst : Okay. And my question would be, what is the plan there? Because due to subdued economic growth and -- so strong valuation decline already, do you have interest on your assets? I mean, do you struggle still to dispose those assets, or what's the plan there? And the second question would be on CB21. What is the plan currently, please?

Question: Stephanie Dossmann - Jefferies - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 4:30PM, CVO.PA - Q3 2024 Covivio SA Activities Report Call