Last year we profiled French REIT Covivio, detailing how the company was continuing to buy and sell assets as it looked to take advantage of the current high interest rate environment. As we wrote back then, it has been in the game a long time:
The business was a conspicuous early mover in hotel investment, in its former guise as Foncière des Régions, a French REIT structured to take advantage of France’s new SIIC regime in 2003.
Foncière des Régions entered the French hotel market in 2005 through a sale-and-leaseback deal with Accor for 128 hotels, and rapidly expanded in the sector through its listed subsidiary, Foncière des Murs, which became Accor’s preferred leasing partner. Key deals with French chain B&B hotels boosted its business. In 2012, the firm acquired 165 two-star hotels in France from B&B Hotels for €508 million, adding another 22 B&B properties in 2015 for €128 million.
While REIT’s tend to be fairly risk averse, preferring to keep things reliable and simple, Covivo has made moves in recent years to diversify its hotel portfolio with a move into the leisure space.
Covivio’s evolving strategy shows that every investor, no matter how conservative, needs to be aware changing trends and adapt accordingly.
We recently caught up with Covivio’s southern Europe director, Cristina Fernández Hoyo to discuss the firm’s strategy.
On the evolution of Covivio’s strategy
CFH: The shareholders are very, I will say conservative, so, they are used to buying in capital cities, big cities. And they always believed in the past, that leisure was kind of risky.
For our company, we want to diversify, getting more into the leisure sector.
On ESG
CFH: [At] the moment, we are working very hard. And it's true that for new acquisitions, this is going to be one of the ticks to either buy, or … make the capex there.
On untapped markets
CFH: All the Mediterranean area, we find it's a great destination. And we are proud to say that is where we already have a few assets. But in our strategy, our intention will be to increase that portfolio.
Hospitality Investor Take
The real estate eco system needs players like Covivio to move into the leisure sector to provide liquidity to the market. All those private equity owners that have flooded into resorts and beach hotels, hoping to ride the post-pandemic wave need to offload their properties to someone after all.