Part I: 9M 2025 Performance Summary (Q1-Q3)
Through September 30, 2025, Covivio demonstrated a robust operational trajectory characterized by revenue acceleration and strategic asset rotation.
1. Key Financial Aggregates
- Consolidated Revenues (Group Share): €533 million, representing a +4.8% increase on a current scope and +3.5% like-for-like (LFL).
- Operating Performance: Portfolio occupancy remained high at 97.2%, with a firm average lease term of 6.4 years.
- Financial Guidance: Following strong H1 results, the FY 2025 guidance for Adjusted EPRA Earnings was confirmed at ~€515 million (+8% YoY).
2. Sectorial Breakdown
- European Offices (Paris, Milan, Berlin): LFL rental growth of +3.6%. The delivery of the Corte Italia (Milan) asset, 100% pre-let, and the consolidation of the CB21 Tower (Paris-La Défense) were the primary drivers.
- German Residential: Significant acceleration with +4.8% LFL growth (vs. 4.3% in 2024). Rental reversion on re-lettings surged to +25% (+39% in Berlin), reflecting the chronic supply-demand imbalance in German Tier-1 cities.
- Hotels: Revenues grew +1.5% LFL. Despite the “base effect” challenges in Q3 (post-Olympics normalization in France), the segment benefited from the full consolidation of the AccorInvest asset swap completed in late 2024.
Part II: Projected Q4 2025 Fiscal Report
The final quarter of 2025 is characterized by the crystallization of the disposal program and the stabilization of financing costs.
1. Projected EPRA Earnings & Revenue (Q4)
Based on the 9M run-rate, Q4 is expected to contribute approximately €182 million in Group Share revenue.
- Estimated FY Adjusted EPRA Earnings: €515.2 million.
- EPRA EPS (Earnings Per Share): €4.64.
- Net Rental Income (NRI) Margin: Expected to stabilize at ~88%, supported by efficient cost-recovery mechanisms in the German residential portfolio.
2. Asset Rotation & Capital Recycling
Q4 typically serves as the primary window for closing disposals initiated in H1/Q3.
- Disposals (Projected): Finalization of ~€350 million (Group Share) in total FY disposals. Q4 focused on non-strategic regional office assets and mature hotel properties in secondary Italian markets.
- Reinvestment: Deployment of capital into high-yield Office-to-Hotel conversion projects (targeting >6% yields), specifically in Paris CBD and Milan.
3. Balance Sheet & Debt Metrics
As of year-end 2025, Covivio’s balance sheet reflects a “defensive-growth” posture:
- Loan-to-Value (LTV): Projected to close at 38.7% (including duties), down from 39.8% in H1, driven by value-accretive disposals and the successful share-dividend option (82.3% take-up rate).
- Interest Coverage Ratio (ICR): Estimated at ~8.1x, maintaining a substantial buffer against covenants.
- Liquidity: Projected year-end cash and undrawn credit lines of >€2.0 billion, ensuring no major refinancing needs until 2027.
Part III: Strategic Analysis & Yield Sensitivity
Appraisal Values & Capitalization Rates
Entering 2026, the portfolio valuation (estimated at €23.8 billion) shows signs of yield stabilization.
- Office Yields: Slight decompression in secondary areas, but offset by rental growth in “A-grade” CBD assets.
- Residential Yields: Expected to remain stable or slightly compress as the ECB interest rate pivot (mid-2025) begins to impact the German market.
ESG Compliance (Taxonomy & SFDR)
Covivio concludes 2025 with 99% of its portfolio holding green certifications. The June 2025 issuance of the €500M EU Green Bond has optimized the weighted average cost of debt to approximately 2.3%.
Executive Conclusion
Covivio’s 2025 fiscal year can be defined as a “Total Return” pivot. By leveraging 4%+ rental indexation and high-alpha asset management (German residential reversion), the company has offset the headwinds of high interest rates. The Q4 close confirms the company’s ability to deleverage while growing earnings per share.
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