Covivio Hotels: full-year 2022 results

PRESS RELEASE

Paris, 17 February 2023

Covivio Hotels 2022 annual results

Hotel activity returned to pre-crisis levels

European hotels benefited from a strong recovery in 2022, taking activity back to 2019 levels. The RevPAR1 levels recorded from May onwards helped make up for the impact of enduring health restrictions in the early part of the year. Overall, average RevPAR in Europe between April and December 2022 was up 9% compared to 2019, mainly bolstered by France, the United Kingdom and Spain. Only Belgium and Germany remained behind 2019 levels (by approximately 2%, due to a longer period of health restrictions). This recovery stemmed from the return of foreign leisure customers and the strength of domestic visitors, particularly in France. It was primarily driven by an average price increase.

Change in market RevPAR in Europe by country in 2022 compared to 2019 (%)

European hotels ended the year on particularly encouraging results for December, with RevPAR up 13% compared to 2019. And while this dynamic was driven by higher average prices, the occupancy rate also rose significantly. It was only 3.4 percentage points below the 2019 level, and even slightly above it in France (up 0.2 percentage points).

1 RevPAR: Revenue Per Available Room - Source MKG

The statutory auditors' report on the annual financial information is in the course of preparation.

covivio.eu	1
Follow us on Twitter @covivio_
And on social networks

COVIVIO HOTELS

PRESS RELEASE

Covivio Hotels main highlights of the year

Two new post-renovation openings: launch of the Anantara brand in France by NH Hotel Group and opening of a Radisson Red in Spain

The Anantara Plaza Nice Hotel opened in December 2022 after extensive renovation work. This 151- room hotel, located in the heart of Nice, is now a flagship for NH Hotel Group, Covivio Hotels' operating partner, and its first Anantara hotel in France.

Meanwhile, in Madrid, another Covivio Hotels property has reopened under a new brand: Radisson RED, a new lifestyle brand with a bold and avant-garde design from Radisson Hotel Group. This 260- room hotel is located on one of the city's busiest thoroughfares, in the Golden Triangle of Art, just a short distance from Madrid's biggest cultural attractions.

For both projects, Covivio Hotels implemented an active asset and brand management policy, changing operators and repositioning the properties, thereby refreshing the hotel offer and experience. As part of the process, new long-term leases have been signed with NH Hotel Group (15 years) and Radisson Hotel Group (20 years), cementing existing partnerships with these leading brands.

These two transactions, with a target yield of 6%, illustrate Covivio Hotels' strategy of creating value and moving upscale with lifestyle hotels located in the heart of Europe's most attractive and dynamic cities.

Major asset management transaction and new milestone in B&B HOTELS partnership

Covivio Hotels relet 30 French hotels to B&B HOTELS in the second quarter of 2022. These hotels (2,517 rooms) were previously operated under Accor Group brands and let to AccorInvest under variable-rent leases. Covivio Hotels and B&B HOTELS, partners since 2010, have agreed on new 12- year firm fixed-rent leases. Covivio Hotels accordingly benefits from a substantial increase in rents compared to 2019 and participates in a works programme conducted by B&B HOTELS.

These transactions allow Covivio Hotels to provide support to Europe's third-largest economy class hotel brand in a new phase of its development in Europe.

These agreements reflect the growth potential of the Covivio Hotels portfolio and the Group's ability to guarantee a hotel offer increasingly aligned with user expectations.

Signing of new leases with Melia

Covivio Hotels has signed with Melia mid-February new 15 years leases on 3 hotels located in Spain (Valencia, Malaga, and Barcelona) with an increase of €1.2 million of the minimum guaranteed rent. Covivio Hotels will finance a €14.8 million works programme that will allow repositioning of the hotels and energy savings.

Disposal of Club Med Samoëns and €54 million new preliminary sale agreements

In early March 2022, Covivio Hotels closed the sale of a Club Med located in Samoëns, in the Alps, for €125 million excluding duties, including a Group share of €63 million, for which the preliminary sale agreement was signed in late 2021. This asset was owned in partnership with Crédit Mutuel Assurances (50.1% vs 49.9%).

Covivio Hotels also signed 13 new preliminary sale agreements in 2022, including eight commercial properties in a total amount of €54 million, excluding duties (Group share and at 100%). Overall, these agreements were signed with a margin of 8.9% over 2021 appraisal values.

2

COVIVIO HOTELS

PRESS RELEASE

Increase in portfolio value in 2022: up 2.3%

At the end of December 2022, Covivio Hotels had a unique hotel portfolio in Europe, valued at €5,970 million (€6,613 million at 100%), up 2.3% on a like-for-like basis, with notable increases of 1.7% for leased assets and 4.7% for hotel operating properties.

This strategic portfolio is characterised by:

• high-qualitylocations: Booking.com location average grade of 8.8/10;
• diversified portfolio: in terms of countries (12 countries) and segments (68% economy/midscale and 32% upscale);
• long-termleases with the major hotel operators: 16 operators with an average firm residual lease term of 12.7 years.

Group Share (€ millions, excluding duties)	Value 2021	Value 2022
Hotel lease properties	4 690	4 595
Hotel Operating properties	1 190	1 375
Total Hotels	5 881	5 970
Non-Stratégic (Retail)	61	53
Total Covivio Hotels	5 942	6 022
1 LfL : Like-for-like

LfL change1

1,7%

4,7%

2,3%

-5,2%

2,3%

After a 2.8% increase in appraisal values in the first half of 2022, the second half saw a decline of 0.4% mainly due to the fall in the value of assets in the United Kingdom. The increase in capitalisation rates over the last six months was offset by the indexation of fixed rents, the good recovery of variable rents and the asset management transactions completed.

The environmental certification rate of Covivio Hotels assets was 87.5% at the end of 2022, compared to 80.4% at the end of 2021, thanks to the labelling programmes undertaken with operators.

Hotel portfolio breakdown at 31 December 2022 (Group share)

3

COVIVIO HOTELS

PRESS RELEASE

2

Hotels revenues up 64.3% like-for-like

	Incom e	Incom e	Incom e	Incom e	Change	Change
€ million	2021	2021	2022	2022	Group	Group
Share	Share LFL
	100%	Group Share	100%	Group Share	(%)	(%) (*)
Hotel Lease properties (Variable rents)	26,7	26,7	49,4	49,4	85,2%	115,5%
Hotel Lease properties (UK)	12,0	12,0	36,5	36,5	205,6%	201,5%
Hotel Lease properties (Others)	136,7	123,1	148,7	136,0	10,4%	8,6%
Hotel Operating properties (EBITDA)	21,4	21,0	62,0	60,1	186,7%	476,6%
Total Hotel Revenues	196,8	182,7	296,6	282,0	54,3%	64,3%
Non-strategic (Retail)	5,5	5,5	4,2	4,2	-23,0%	5,8%
Total revenues Covivio Hotels	202,3	188,2	300,9	286,2	52,1%	63,1%
(*) On a like for like basis

The upturn in business from March 2022 took Hotels revenues up 64.3% on a like-for-like basis in 2022.

2022 Hotels revenues: €282 million Group share

Hotel lease properties (77% of the hotel portfolio)

• Variable-renthotel real estate(20% of the portfolio): the portfolio is let mainly to AccorInvest in France and Belgium and consists of economy (Ibis) and midscale (Novotel, Mercure) hotels. In 2022, thanks to the recovery of the hotel business, rents for this portfolio, which are entirely indexed to revenues, amounted to €49.4 million, up 115.5% on a like-for-like basis compared to 2021.
• Hotels in the United Kingdom let to IHG(11% of the portfolio): following the signing of a new rental agreement with IHG3, full-year rental income amounted to €36.5 million (compared to €12.0 million in 2021).
• Other hotel lease properties(46% of the portfolio): fixed-rent hotel real estate let to B&B, NH Hotels, Motel One, Barcelo, Hotusa, etc., on long-term leases. Rents increased 8.6% like-for- like, mainly due to the switch to fixed rent for the 30 hotels now let to B&B, the indexation of rents and rental reversion for one hotel in Spain after a change in operator.

1. Others: Hungary, Portugal, Czech Republic, Ireland and Poland.
2. This agreement concerns 9 hotels operated under the IHG brand (88% of UK portfolio value), while the last 3 hotels are now managed by Covivio Hotels after the operating properties acquisition.

4

COVIVIO HOTELS

PRESS RELEASE

In light of the quality and strength of the Covivio Hotels rental base, the rent collection rate for 2022 was 100% and Covivio Hotels recovered all outstanding rent from 2021.

The hotel firm residual lease term amounted to 12.7 years at end-December 2022, while the occupancy rate remained at 100% across the portfolio.

Hotel operating properties (23% of the hotel portfolio)

• Most of these hotels are located in Germany (mainly Berlin) and France. The strong increase in EBITDA from hotel operating properties (x5.7) was mainly driven by hotels in Germany.

LTV and ICR improving

Covivio Hotels' net debt fell by €130 million year-on-year to €2,287 million (Group share) from €2,417 million as of 31 December 2021, with an average interest rate of 1.89% (down 5bp). As a result, the loan-to-value (LTV) ratio improved from 37.1% at end-December 2021 to 35.0% at end-December 2022. Benefiting from the strong rebound in operating income, the interest coverage ratio (ICR) also improved to 6.0x, from 3.1x at end-2021.

The average maturity of Covivio Hotels' debt is 4.3 years, compared to 4.9 years at end-2021.

Covivio Hotels had cash (including undrawn credit lines) of €544 million as of 31 December 2022.

Improved net financial indicators in 2022

Taking into account the fair value adjustment of interest rate hedges and fixed-rate debt, EPRA NDV (net disposal value) rose to €3,763 million from €3,167 million at 31 December 2021, a 18.8% increase standing at €25.4 per share.

EPRA NTA stood at €3,722 million, compared to €3,498 million at end-2021. This amounted to €25.1 per share, a 6.4% increase compared to 2021.

EPRA Earnings were €221 million (vs €99 million in 2021), up 123% year on year, driven by the increase in revenues fuelled by the recovery in the hotel business. EPRA Earnings per share was €1.49 in 2022, compared to €0.70 in 2021 (up 113%).

Dividend

At the 18 April General Meeting, Covivio Hotels will propose a dividend of €1.25 per share (€0.65 per share in 2021), representing a 92% increase and putting the payout ratio at 84%.

2023 outlook

The robust and faster-than-expected recovery of the hotel business has demonstrated the sector's resilience. Covivio Hotels accordingly intends to continue supporting its partners, the leading European and international operators.

5