French listed property giant Covivio is being forced to review its guidance for the full-year as the Coronavirus epidemic takes its toll on the company’s portfolio.
Covivio, which invests largely in European offices but also owns a sizable hotel portfolio, said the RevPar performance of the operating hotel properties has decreased by around 11% since the beginning of the year.
‘The Coronavirus epidemic has now grown significantly in Europe. During these last weeks, our priority has been to take the necessary measures to ensure the health and security of our teams and the continuity of our activities and services for our clients,’ the company said on Wednesday.
It added: ‘Considering this environment and the uncertainty weighing on our hotel revenues, we will provide an adjusted guidance for our results when we will publish our half-year results.’ The company had previously indicated that it would target an EPRA earnings per share greater than €5.40 in 2020.
Hotels represented around 18% of Covivio’s revenues in 2019. The company is due to close the purchase by the end of the first quarter of the Dedica Anthology portfolio of eight hotels from global investment firm Värde Partners for €573 mln.
Covivio has also confirmed it will go ahead with the voluntary takeover of German office landlord Godewind for a maximum amount of €718 mln. To date, Covivio has acquired 44% of the share capital of the €1.2 bn office landlord for €316 mln.
Covivio offered €6.40 in cash per Godewind share representing a 14.9% premium to the firm's last closing price of €5.57 or 18.5% to the last reported EPRA NAV of €5.40.
The public tender offer, which has the full support of both the management board and the supervisory board of Godewind, will be running from March 25 to April 22. It is entirely financed by the existing resources of Covivio, which to date has €900 mln of available cash and €1.7 bn of bank credit lines, including €500 mln set up early March.
Godewind, which went public in 2018, is the owner of a €1.2 bn portfolio consisting of 10 assets or a total of 290,000 m2 in Frankfurt (40% of the portfolio), Düsseldorf (28%), Hamburg (24%) and Munich (8%).
Operating in Germany since 2005 with a local team of 570 people, Covivio has been historically active in the country in the residential and hotel sectors. It started investing in German offices in 2018, with a focus on Berlin. The deal would lift the company's German portfolio to €2.1 bn, including a €600 mln development pipeline.
Covivio plans to actively manage the Godewind assets thanks to its local asset management team, with a focus on reducing vacancy rate and increasing rents. The company said that it expects an investment yield of 4.7% from the deal after reducing the portfolio's current vacancy rate of 8% (immediate gross yield of 4.3%). The deal will be financed with a mix of equity and existing debt, the company added.