Good day and welcome to the Covivio Q1 2022 results conference call. Today's conference is being recorded. At this time, I'll turn the conference over to Mr. Paul Arkwright. Please go ahead. Thank you. Hello, everyone. Thanks for being in this call tonight. I'm very happy to comment on a very good first quarter of the year for Covivio. Let's focus first on the dynamic letting activity we have seen in the first quarter. On page four to start, and you see on this page, the market figures for Greater Paris, for Milan, and for Germany. All are on green. As you can see in the top part of the slide, take-up is increasing by 20%-40%, and also is now near to their 2019 levels. On the investment side, we continue to see a strong appetite from investors, and we put in this slide some illustration, some good example of what we have seen very recently in the markets. What does that mean for Covivio? On page five. This continued recovery of the letting market benefited the company. Remember, we had a weak quarter of leasing in 2021, and we start 2022 with a good dynamic. We have signed 36,000 sq m of new lettings. Half of it is related to pre-letting, and the other half directly increases the occupancy rate of our office business. At the end of March, our office occupancy stands at 92.4%, up by 20 basis points versus the end of last year. The first quarter of 2022 particularly illustrates two successes that I wanted to flag tonight. The first one that you see on page six is a good progress on our manage-to-core portfolio. Remember at the end of last year, during our capital market day, we communicated a split of our office portfolio. The manage-to-core part gathers most of our vacancy challenges in our office portfolio. It accounts for 16% of our office portfolio, and we put it on the left part of the slide. Where do we stand three months after? I would say we have reached key successes reducing the vacancy and reducing the risk of this portfolio. First, with the disposal of one asset in the periphery of Milan, and currently occupied at 85%. It has been made in line with the last appraisal value. Second, with the reletting of part of the surfaces in our buildings in La Défense CB 21, in Boulogne, and also in Orly, with the Belaïa building, which is right at the Orly Airport. The occupancy rate of those assets has increased significantly, as you can see on this slide. Thanks to that and including the term sheet signed for new lettings in CB 21, we have already secured 20% of the letting challenges of this portfolio. Another success is on the development pipeline, and we develop it on page seven. In the quarter, we have been able to fully pre-let two office projects in Paris. The first one on the left is Anjou. It's located in the CBD. It's a former Orange building vacated in 2021, and it will be fully redeveloped, and it is already fully pre-let to a luxury group three years before delivery. It's a good example of all the potential of our Paris portfolio, which can be redeveloped progressively following the departure of Orange. The second one on the right part is Stream Building, located just in front of the new Paris Court of Justice. It's a mixed-use building with 9,600 sq m of offices, 5,000 sq m of hotel, and 1,000 sq m of retail and restaurants. The office part has just been fully pre-let to a European leading cloud provider, and the office part will welcome OKKO, innovative concept of long-stay hotel. That's a good transition for our hotel activity. Moving to slide eight. The recovery, and you see the chart, is accelerating in the market since the end of the Omicron wave. We start to see RevPAR coming back to close to the 2019 level in France and in the U.K., as you can see in the market figures on this slide. Germany is lagging behind due to longer and more important restrictions that we have seen, but the recovery is also starting, and pretty fast, I would say, since a few weeks. It's interesting also to see the pricing power of this activity. You can see on the right side of the slide, hotel room prices are on average above 2019 level in Europe, especially in the U.K. This market recovery fully supports the growth in our revenues, and you can see that on page nine. We show here the performance of our hotel revenues for the variable contract and the fixed one. On the variable part, on the left part of the slide, you see an increase, which is strong during the first quarter, with an acceleration in March. Performance starts to be significantly above 2020 and 2021. Recovery is more important in the AccorInvest rents to see on the top left part of the slide, because it's mostly located in France, and as I just said before, France is outperforming the average of Europe. The EBITDA of operating properties is for hotels that are mostly located in Germany, so the recovery start a bit after. On the fixed rent, our collection rate stands at 100%, and we also recovered all of our 2021 uncollected rents. All in all, that gives us a +51% like-for-like growth in our hotel revenues. Moving to page 10, you see here another success of the quarter for our hotel business. It's an asset management deal we have made with B&B on the former AccorInvest portfolio. As you know, we own a great portfolio with AccorInvest in France. It's very well located. Booking.com rating of 9 out of 10 for the location of those hotels. This portfolio has a lot of potential, and part of those hotels need to be modernized. That could mean CapEx program, change of brands, or even change of operators. We have identified with AccorInvest a portfolio of hotels which they wanted to exit and dispose the OpCo of the hotels, whereas we keep the PropCo. We found an agreement with B&B to buy those OpCo from AccorInvest and to sign a new 12-year lease. We changed the rent contract from a variable lease to a fixed lease, and we increased significantly the rent versus the 2019 level. Covivio will also participate to a CapEx program for those assets. For confidentiality reasons to imagine having Accor and B&B in the negotiation table, we cannot give much figures, but what I can say as of today is that we expect roughly +20% value creation on this very good deal. It's also, for me, a good example of all of the asset management potential we have in our portfolio. I expect more to come in the future thanks to the fact that the hotel operators are less worried about their cash, and they are more worried about how to develop themselves and how to benefit the most from the recovery of the hotel activity. Let's move to the German residential business. You see page 11. Performance continues to be very good. Rental growth is up by 2.9% on a like-for-like basis with a good performance in all of our areas, and the vacancy level is close to zero. I wanted also to flag what we have done in the past few months. Starting with the ESG part on page 13, we've made good progress on our carbon trajectory. We have published our annual ESG report a few weeks ago, and we communicated in it on the reduction of our carbon footprint for 2021. We had a -26% reduction since 2010, and we are so well on track to reach our target of -40% by 2030. As a reminder, this target concerns all of our emission scopes including the construction phase. We also, during the first quarter, continued to deploy the Covivio Foundation on page 14. It's a foundation that has been created in 2020 with the mission to help equal opportunities and the preservation of the environment. Today, we support 12 foundations in France, in Italy and in Germany. We give financial support, but we also help directly those foundations, thanks to Covivio team through solidarity hours we have put in place. Finally, page 15, we have done progress also on governance side. We will welcome two new people who will reinforce our skills. The first one you see in this slide, Daniela Schwarzer, has been appointed this morning by the general meeting as a new Independent Board Member of Covivio. Her professional career, as you can see, is impressive, and she has a deep knowledge of Germany's economic and social environment. We also changed the team in our German Office Business, and we will welcome in the next few weeks, Friederike Auberger, as the new Head of our German Office Business Unit. You see that through her career at Commerz Real, she knows very well the German office business, and she will help us make this recent business unit as successful as we have in France and in Milan. Now let's move to figures and to the impact of this activity on our quarterly revenues. Page 17, you see the acceleration of our performance, which is continuing since several quarters in offices and in hotels on the back of an increasing occupancy rate in offices and also market recovery, which is strong in hotels. German residential business continue to be strong, even if the like-for-like growth of this quarter is lower than what we had last year due to less tenant turnover in Q1, which is quite usual in this activity. Moving to page 18, you see the revenues for Covivio, EUR 148 million group share of revenues at the end of March, with a very strong growth of +7% on a like-for-like basis, and a good performance in all of our activities. +2.9% in offices, +2.9% in German residential, and +51% in hotels. Occupancy is also slightly up by 20 basis points at 95.2%, and the average lease term is stable at seven years. I wanted also to do a follow-up on our disposal activity as we do usually. On page 19, we are well on track on this side. We have signed for EUR 183 million group share of new agreements. All this has been signed with an average + 2% margin above the last 2021 appraisal value. Most of the disposals are actually in Italy. I mentioned before the sale of Via dell'Innovazione in Milan. We also continued to streamline the Telecom Italia portfolio with the sale of 23 assets all around Italy. We have done some couple of disposals of condominiums in Berlin with a plus 35% margin, which demonstrate again the strong gap between the market value and our appraisal value for this portfolio. Before going to the Q&A, let's move to the perspectives. Page 21, you see those two charts that show that the environment has changed since the start of the year. You all have it probably in mind. Inflation is increasing sharply and interest rates are rising on the back of central bank's actions to normalize their policies. What does that means for Covivio? On page 22, it says that of course that mean more uncertainties, but we can rely on some fundamentals. First, thanks to our business model, our diversification is a strength, and our activities are solid. Office market figures that we I just commented it before demonstrate that offices are strategic for companies. Even if the way corporate use offices has changed, but by offering prime assets, central location, services, and flexibilities as we do, we are well-positioned in this office market. Residential activity continue to benefit from a structural lack of offer. Just one example, anytime we have one of our apartments vacant in Berlin, we receive more than 80 demand. Hotel recovery is starting, as I mentioned before. We also benefit from a healthy balance sheet, 39% LTV, which has decreased last year, and an 84% debt hedge in 2022, with a 6.8-year average debt maturity. Finally, you have seen that in the Q1 activity, we benefit from a good rental growth momentum. In offices, we continue to have more lettings in the following months, and the indexation will be a growth driver, I would say especially for 2023. The trend in German residential is strong, and in hotel, again, the recovery is starting, and the perspectives that we see on the books are very good for the months to come. I would say to conclude that all this make us confident for the future. Thank you very much. I now let the floor to your questions. Yes, if you'd like to ask a question on today's call, press star one on your telephone keypad. We'll go first to Florent Laroche-Joubert with ODDO BHF. Hi, Paul. Thank you very much for this presentation. I would have three questions, if I may. The first question about the recovery in the hotels. Based on these figures and what you can see maybe in April, would you say that this recovery is in line, above or below the assumptions that you have taken into account in the guidance you provided us at the beginning of the year? My second question is on the guidance. You say that you are confident for the future, but you do not mention the confirmation of the guidance for the earnings. What have we to understand? My third question, would you say that you are still confident to execute your disposal plan in 2022 due to the new context to the new macro context? Thank you. Okay, Bonsoir, Florent. Thank you for your questions. To start with the hotels. Of course, we had the Omicron crisis in January and February, but the recovery of March is strong, and what we see on the books for April is also strong. I would say, if it continues, we could be above what we said at the end of that year in the beginning of this year for the guidance. That leads me to the guidance. You know, we have only done one quarter for the year. We always update our guidance in July, so we will do the same this year. Yes, what I can say is that the very good Q1 activity is supportive for the guidance. Finally on the disposal plan, yes, I confirm the capacity to do this disposal plan. We are well on track. We have sold EUR 183 million of assets plus 2% margin. Part of it has been signed very recently. What we see in the market, I wanted also to flag it in the slide of the office market, is that we continue to see a strong interest from investors for offices, but not only. I confirm, we are on track for our disposal plan. Okay, thank you very much. We'll go next to Véronique Meertens with Kempen. Yes, thank you. Thank you for the presentation. Two questions from my side, maybe first on offices. Can you maybe say something about the reversion rate on these relettings in the offices in France? Then also maybe walk us through what you're currently seeing in the different markets in terms of leasing activity and appetite in both Italy, Germany and France. Secondly, looking at the German resi portfolio. Obviously rising inflation, but you're not able to fully pass that on because of the regulated sales segment, but also rising construction costs in terms of modernization. Do you maybe expect to increase your disposals in condominiums to offset that maybe lower like-for-like rental growth in that segment? Thank you. Thank you, Véronique, for your questions. First on offices, where we have done very few relettings, actually, one, Torre Garibaldi in Milan with a +30% reversionary on this lease. Again, it's a small size. For the new letting that we have signed in CB 21 or in Boulogne, as I said, it's on manage-to-core portfolio. Assets that have suffered from the crisis. La Défense is a good example on which we had, let's say an increase in the incentive. The letting has been done lower than the previous levels, but it was two years ago, so it's not in the last year figures. On the market, but it's basically what I commented on it in the slide 4 is that we see a good recovery in our different markets, especially in Milan and Greater Paris. It's starting a bit later for the German cities, but the trend is also here. Interestingly, we also see that more and more take-up is going into new buildings. For example, Grade A assets take more than 80% of the take-up in Milan. In Greater Paris, it's 40% of the take-up which is on new buildings. We see the polarization of the market towards central location and towards quality assets, and it's basically what we offer through our development pipeline. Then German residential. Yes, you're right, inflation cannot directly be impacted into our rents. But at the same time, we have a very strong reversionary potential, plus 20%-30% reversionary potential in our portfolio, which is a growth driver for the years to come. We are still able to catch 3% like-for-like growth. It's in the long term above what we have seen in the inflation. We don't see much impact on the modernization CapEx. Yes, it takes a bit more time, it's a bit more costly, but I would say that it does not impact materially our capacity to extract the growth through this modernization programs. Finally, you were asking about privatization. We have more than half of our portfolio in Berlin, which is divided into condominiums that could be privatized. The idea is not to do a massive privatization because we continue to see a strong interest from investors and growth potential in this business, but it's a possibility in the future. Okay, thank you very much. That's clear. Once again, that is star one for questions. We'll go next to Bruno Duclos with Invest Securities. Hi, Paul. Thank you for the presentation. Can you hear me? Yeah? Yeah. Yes. Hi, Bruno. Yeah. I can hear you, yeah. Just a question regarding the change of management for the German offices. What is the rationale behind this? What has happened with the former head of German offices? Let's say that we had difficulties to fully integrate the team. I think we lost time because of the COVID and of the restriction and the difficulty to be there. We didn't agreed on the best way to work this portfolio. That's why we have a very strong with Friederike Auberger very strong knowledge of the German office business. With the idea is to duplicate basically the success of what we have made in France and in Milan. As a reminder, it was a previous team of Godewind Immobilien. Could it imply, well, a slightly different strategy for the German offices? Maybe. You know, we shared it during the full year results. Yeah. Our strategy was first to change the team and to bring a new dynamic, and second, to put a CapEx program on the main assets that explain the vacancy level of the German office portfolio, which is at Potsdamer Platz. We are fine-tuning this program in order to launch it in the following weeks, and to relet this asset. Again, it's an asset which is in the center of the sellers. It's not a question of location, but a question of quality of this building that needs a CapEx program. With those two-action plan, I would say, the team and the CapEx program. Mm-hmm We consider that we will be on track to improve the occupancy rate of this portfolio. Okay. Well, thank you. Merci, Bruno. We'll go next to Peter Papadakos with Green Street. Hi, Paul. Just two questions, please. One on the development pipeline. Thinking through deliveries for not so much 2022 but 2023, 2024. How likely is it that, you know, in six months' time or nine months' time, you sort of have to say, "You know, guys, we need to delay deliveries based on we can't find the materials, some of the subcontractors are, you know, a little bit on the edge." What's the risk in general that you have to delay delivery dates because of supply chain issues? That's one question. I guess the other is, as rates have started to creep higher, do you get any sense in general that there are fewer buyers in bidding tents? Those are the questions. Well, hello, Peter. Thank you for the question. On the development pipeline, of course, we have this continental crisis with the COVID impact on supply chain. You are well aware of this. It could have impact on some delays. I would say, mostly, in fact, 2024 and 2025 deliveries could be delayed. We are more well on track on the deliveries for 2022 and 2023, I would say. Mm-hmm. Okay. Sorry, I didn't get your second question. What was– Yeah, just the number of buyers, you know, when sale processes are launched, either from you or some, you know, other competitors of yours that you hear, do you get a sense that there are fewer buyers than there were six months ago because of interest rate increases? You know, credit spreads have gone out as well. Just cost of borrowing higher and so fewer potential bidders for assets in general. You know, I'm not in all of the market transactions, but what we have seen and also on our disposal program is that we don't see that much difference between six months before. The deal that I mentioned, page four. Basically you see also that the yield of the transaction competition continues to be fierce on prime assets, central location. We continue to see a lot of competition. Great. That's clear. Thanks, Paul. Thank you. At this time, there are no further questions. Okay. Well, if there is no further question, thank you very much to all of you for this call. Of course, I'm fully available if you have any follow-up questions. Have a good evening. Thank you. Bye-bye. This does conclude today's conference. We thank you for your participation.