Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial — H1 2017 Earnings Presentation
61 slides from Colonial Sfl Socimi Sa's earnings presentation, July 2017
Slide 1: First Half Results 2017
First Half Results 2017 July 2017 2/17
Slide 2: Disclaimer
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Slide 3: Agenda
Agenda 01 Highlights 02_ Market 03 Operational performance 04 Financial performance 05 Growth drivers 06 Conclusion 3
Slide 4: Presenting management team
Presenting management team PRESENTING MANAGEMENT TEAM Pere Viñolas Carmina Ganyet Carlos Krohmer Chief Executive Officer Corporate Managing Director Chief Corporate Development Officer 4
Slide 5: Highlights
01 Highlights
Slide 6: Highlights 1H 2017: Superior risk adjusted return for shareholders
01 Highlights 1H 2017 Superior risk adjusted return for shareholders AN EXCELLENT SET OF RESULTS > Total Shareholder Return: +21% > EPRA NAV of 8.07€/share: +11% in 6 months > Gross Rental Income, +3% like for like > Net Rental Income, +3% like for like > Recurring Net Income, +19% > Recurring EPS +
Slide 7: Ongoing consolidation of solid growth
01 Highlights 1H 2017 Ongoing consolidation of solid growth Excellent financial results with healthy growth > Total Annual Shareholder Return + 21% > EPRA NAV of 8.07€/share: +11% in 6 months > Solid GRI growth: +3% EPRA like for like > Recurring EPS: +15% Return - € per share 1H 2017 YoY Var BUSINE
Slide 8: Ongoing consolidation of solid growth
01 Highlights 1H 2017 Ongoing consolidation of solid growth Outstanding operating performance > EPRA Vacancy stabilized at low levels > Double digit rental price increases > Acquisition programme ahead of plan OPERATIONAL PERFORMANCE 1H 2017 BUSINESS MIX – GAV GROUP # Transactions signed 55 Volume o
Slide 9: Scarcity in Prime
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Slide 10: Macroeconomic context
02 Market Macroeconomic context Macro outlook remains solid > Eurozone with improving fundamentas > Spain with attractive growth profile > France with accelerating positive momentum post election MARKET TRENDS GDP GROWTH WORLD & EU World GDP improving +3.5% in 2017 & +3.6% in 2018 Euro area gain
Slide 11: Office Market
02 Market Office Market Micro outlook for Offices is very positive > Barcelona with record performance in lettings > Madrid - strong acceleration in Q2 > Prime Paris with very solid fundamentals MARKET TRENDS BARCELONA Take-up in 1H reached historical high record with 143,000 sq m High increase
Slide 12: Rental Market
02 Market Rental Market Increasing take-up faces scarcity of Grade A product in CBD > Vacancy in CBD far below total market ratio > Grade A product in CBD almost inexistent > Take up gaining substantial momentum BARCELONA MADRID PARIS CBD VACANCY % VACANCY % VACANCY % TAKE UP TAKE UP TAKE UP (‘000 s
Slide 13: Colonial – Unparalleled leadership rental price performance
02 Market Colonial – Unparalleled leadership rental price perfomance Colonial as leading market indicator for rental price growth > Colonial portfolio setting the benchmark in prime rental levels > Colonial’s growth outperforming the prime market PRIME ERVS ERV GROWTH 12 months 2016 6 months 2017 €/
Slide 14: Investment Market
02 Market Investment Market Investment markets remain strong > Interest for prime remains very strong > Spread vs reference rates healthy > Rental growth main driver for future capital value growth PRIME YIELDS (1) BARCELONA MADRID PARIS Prime yield 10 year bond 300bp 231bp 206bp 207bp Spread 200bp
Slide 15: Investment Market: Colonial's assets with prudent appraisal values
02 Market Investment Market Investor interest for prime product remains strong > Significant capital value increases in recent quarters > Colonial’s assets with prudent appraisal values Madrid City Center (inside M30) Barcelona City Center Paris CBD 23 C B D C F A 22 21 C D B 20 A E A G E F B E D La
Slide 16: Offering the better site
03 Operational performance Offering the better site
Slide 17: Operational performance: Strong letting performance
03 Operational performance STRONG LETTING PERFORMANCE 17
Slide 18: Letting activity with strong momentum
03 Operational performance Letting activity with strong momentum Prime positioning ensures strong letting performance > More than 69,000 sq 96% m signed in 55 transactions TOTAL > Incentives 93% far below market average > Solid occupancy level across all segments 3Q 2015 3Q 2016 #96% CONTRACTS SQM S
Slide 19: Letting activity with strong momentum: top tier clients
03 Operational performance Letting activity with strong momentum Prime positioning captures top tier clients paying maximum rents > High quality premises attract and retain top tier tenants > Colonial captures rental prices at the top of the market > Colonial portfolio as the reference for prime ren
Slide 20: Outstanding occupancy levels through prime positioning
03 Operational performance Outstanding Occupancy levels through prime positioning Attractive tension between low vacancy and new available space > Release of fully repositioned floors in CBD > Optimization of tenant profile through rotation > Solid occupancy levels that guarantee negotiation power E
Slide 21: Colonial portfolio outperforming the market on occupancy
03 Operational performance Outstanding Occupancy levels through prime positioning Colonial portfolio outperforming the market on occupancy > Colonial with solid vacancy levels in every city > Colonial vacancy clearly beats market average > Levels around 5% provide a solid base to capture rental grow
Slide 22: Strong delivery on rental price increases
03 Operational performance Strong delivery on rental price increases Colonial as leading market indicator for rental price recovery > Solid consolidation of rental price increases > Rents above 12/16 ERV in every city > Highly positive release spreads SOLID INCREASE IN RENTAL PRICES SIGNED RENTS VS
Slide 23: Solid performance on every contract negotiation
03 Operational performance Solid performance on every contract negotiation Barcelona & Madrid with successful transactions across the board > Capturing rental growth on ERV reference > Outstanding release spreads ASSET LETTING PERFORMANCE RENTAL PRICE INCREASES Av. Diagonal 609-615 Max signed1 Vs. E
Slide 24: Solid performance on every contract negotiation
03 Operational performance Solid performance on every contract negotiation Price portfolio with strong performance > Capturing high end rents with top tier clients > Rental prices above ERVs ASSET LETTING PERFORMANCE RENTAL PRICE INCREASES Max signed1 Vs. ERV 12/16 Release spread 103 Grenelle 2,945
Slide 25: Value creation through real estate transformation
03 Operational performance VALUE CREATION THROUGH REAL ESTATE TRANSFORMATION 25
Slide 26: Delivery on repositioning program in Spain
03 Operational Performance Delivery on repositioning program in Spain Solid delivery on current portfolio > Attractive returns through active asset management > Additional value creation through created ERV and yield compression > Current portfolio as a continuous source of value creation Occupancy1
Slide 27: Crystalizing real estate value in recent acquisitions
03 Operational Performance Crystalizing real estate value in recent acqusitions Solid real estate workout on recent acquisitions > Attractive returns through active asset management > Additional value creation through created ERV and yield compression > Crystalizing embedded fundamental value trough
Slide 28: Value added initiatives in Madrid – Génova 17
03 Operational performance Ongoing delivery of value added initiatives in Madrid – Génova 17 Proven capacity to create superior returns through active asset management > Letting up of vacant spaces up to 100% occupancy with Top Tier clients > Re-leasing of retail space at 38,5 €/sq m/month with 119%
Slide 29: Value added initiatives in Paris – 9, Percier
03 Operational performance Ongoing delivery of value added initiatives in Paris – 9, Percier ERV uplifts & value creation through real estate transformation > Creating best-in-class places for our tenants > Identifying the right positioning and strategy for every individual building 9, PERCIER ACQUI
Slide 30: Value added initiatives in Barcelona – Berlin / Numancia
03 Operational performance Ongoing delivery of value added initiatives in Barcelona – Berlin / Numancia ERV uplifts & value creation through real estate transformation > Restyling and reorganization of lobby > Created ERV uplifts & yield compression Berlin / Numancia MAIN KPIs Before New contract si
Slide 31: Superior risk adjusted returns
04 Financial performance Superior risk adjusted returns
Slide 32: Strong underlying rental growth
04 Financial performance Strong underlying rental growth GRI increase underpinned by solid like for like > Barcelona with strongest growth > Madrid temporary flat due to AlfonsoXII tenant rotation > Paris portfolio delivers like for like above market average GROSS RENTAL INCOME - €M EPRA Like TOTAL
Slide 33: Strong underlying rental growth
04 Financial performance Strong underlying rental growth Strong underlying growth in every market > Captured rental prices increases as important driver of like for like > Barcelona with outstanding price impact in like for like > Madrid with temporary impact from Alfonso XII tenant rotation LIKE FO
Slide 34: Strong underlying rental growth
04 Financial performance Strong underlying rental growth Strong underlying growth in every market > Close to +4% like for like increase in Net Rental Income > Madrid portfolio with +3% like for like (excluding the Alfonso XII tenant rotation) > France with solid +3% like for like growth LIKE FOR LIK
Slide 35: Agreement on In & Out divestment
04 Financial performance Agreement on In & Out divestment Real estate value creation through the full value chain > Capturing optimal point in specific asset life cycle > Asset rotation as source of value creation DISPOSAL OF IN&OUT AT ITS PEAK VALUE REAL ESTATE VALUE CREATION Agreement with signifi
Slide 36: Strong underlying growth in Asset Values
04 Financial performance Strong underlying growth in Asset Values Gross Asset Value of €8,666m (€9,103m including transfer costs) > +7% like for like growth in 6 months (+11% like for like in year) > Solid growth rates in every segment > Healthy combination of yield & price as value drivers GAV 2017
Slide 37: Strong underlying growth in Asset Values
04 Financial performance Strong underlying growth in Asset Values Gross Asset Value of €8,666m (€9,103m including transfer costs) > Real estate management (“Alpha”) as main driver of value creation > Real estate transformation and capturing rental prices increase important value drivers > Alpha valu
Slide 38: A solid capital structure
04 Financial performance A solid capital structure A high quality collateral underpinned with a solid financial structure > An unparalleled high quality collateral diversified in three cities > A financial structure with solid LTV levels > A strong credit profile with competitive costs A FIRST CLASS
Slide 39: Positive momentum in earnings
04 Financial performance Positive momentum in earnings Significant increase in Group Net Profit through > Delivery of strong increase in Gross Rental Income > Solid asset value growth through active real estate management > Savings in financing costs & positive Socimi impact in taxes STRONG TOP & BO
Slide 40: Superior Risk Adjusted Returns: EPRA NAV
04 Financial performance Superior Risk Adjusted Returns 21% Total Shareholder Return 2017 (year-on-year) > EPRA NAV of 8,07 €7share, + 11% in 6 months > Value creation with strong “Alpha component” through real estate transformation > Total return among the highest in the sector STRONG MOMENTUM IN N
Slide 41: Superior Risk Adjusted Returns
04 Financial performance Superior Risk Adjusted Returns Colonial with solid delivery on returns > Superior total returns outperforming the benchmark > Close to +90% total shareholder return since recap of the Spanish sector > Strategy backed by long term oriented high quality shareholder base with s
Slide 42: Superior Risk Adjusted Returns: share price performance
04 Financial performance Superior Risk Adjusted Returns Solid share price performance with attractive risk adjusted returns > Capital markets recognize solid delivery of the group > Colonial shares offer a “flight to quality play” with attractive risk adjusted returns SOLID DELIVERY…… ….. RECOGNISED
Slide 43: Value creation through real estate transformation
05 Growth drivers Value creation through real estate transformation
Slide 44: A portfolio with growth potential
05 Growth drivers A portfolio with growth potential A significant part of the portfolio under workout to unlock further value > A huge volume of contracts to capture reversion in coming years > More than 136.000 sqm GLA of an attractive project pipeline > Delivery and identification of new value add
Slide 45: Capturing reversion of current portfolio on track
05 Growth drivers Capturing reversion of current portfolio on track Colonial well positioned to capture rental growth > Portfolio with prime exposure to attractive growth markets > Attractive rent roll profile, especially in Spain > Underrented contract portfolio SOLID POSITIONING IN GROWING MARKETS
Slide 46: A solid growth profile based on an attractive project pipeline
05 Growth drivers A solid growth profile based on an attractive project pipeline A very attractive Project pipeline > Significant amount of additional rental income for the coming years > Additional value creation through created yield compression > Top product at optional market timing PROJECTS AND
Slide 47: Delivery on value added & prime factory projects – Discovery
05 Growth drivers Delivery on value added & prime factory projects Solid progress on execution Discovery Project > Project design optimizing maximum space efficiency > Ongoing façade works > Good commercialization prospects above initial expectations DISCOVERY BUILDING (ESTÉBANEZ CALDERÓN) 10,152 sq
Slide 48: Delivery on value added & prime factory projects – Principe de Vergara
05 Growth drivers Delivery on value added & prime factory projects Solid progress on execution Principe de Vergara > Highly sought after design due to its high number of terraces > Ongoing construction of building structure > Current rental price negotiations beating expectations PRINCIPE DE VERGARA
Slide 49: Castellana 163 and Plaza Europa 34 on track
05 Growth drivers Delivery on value added & prime factory projects Castellana, 163 (Madrid) and Plaza Europa, 34 ( Barcelona) on track > Designing the unique products together with the architects > Best products for solid markets CASTELLANA 163 PLAZA EUROPA 34 > Architect assigned > Architect assign
Slide 50: Solid progress on Paris projects
05 Growth drivers Delivery on value added & prime factory projects Solid progress on Paris projects > Significant value creation potential due to a deep redevelopment of the asset > Attractive value to be unlocked through +10%-15% additional GLA > City center market segment (close to EiffelTower) wi
Slide 51: Implementation of selective acquisition programme on track
05 Growth drivers Implementation of selective acquisition programme on track Acquisition programme on track > Sourcing prime sites with unique market positioning > Unlocking value through real estate transformation > Additional pipeline under analysis INVESTMENTS SINCE 2015 OFF MARKET CITY CENTER VA
Slide 52: Healthy returns through a high quality growth profile
05 Growth drivers Healthy returns through a high quality growth profile A solid base for high quality growth > Capturing reversion with the best positioned office platform > Unlocking value through real estate transformation > Delivery on acquisition programme with investment discipline Passing GRI
Slide 53: Conclusion
06 Conclusion
Slide 54: Conclusion
06 Conclusion DELIVERY IN OPERATIONS WITH SOLID RENTAL PRICE INCREASES > Strong letting momentum capturing top tier clients > Solid occupancy levels at 96% > Double digit increase on signed rental prices > Ongoing execution of value added initiatives STRONG FINANCIALS > Solid like-for-like growth in
Slide 55: Q&A
Q&A
Slide 56: Positive momentum in earnings
APPENDICES Positive momentum in earnings High double digit profit increase based on high quality growth drivers 1. Solid GRI increase 2. Optimized financing through active liability management 3. Increase in SFL stake from 53.1% to 58.5% (Alpha I) PROFIT & LOSS ACCOUNT STRONG TOP & BOTTOM LINE PERFO
Slide 57: June 2017 Gross Asset Value
APPENDICES June 2017 Gross Asset Value Gross Asset Value of €8,666m (€9,103m including transfer costs) > +7% like for like growth in 6 months (+11% like for like in year) > Solid growth rates in every segment > Significant value growth through real estate transformation GAV 2017 YoY GROWTH GAV VARIA
Slide 58: Attractive valuation levels of current portfolio
APPENDICES Attractive valuation levels of current portfolio Important value potential through Re-Rating to current market > Colonial valuation yields still above market levels > Colonial capital values significantly below recent transactions evidence > Full impact of rental growth still to come thro
Slide 59: A solid capital structure
APPENDICES A solid capital structure A high quality collateral underpinned with a solid financial structure > An unparalleled high quality collateral diversified in three cities > A solid finance structure with competitive financing costs > A strong credit profile A FIRST CLASS COLATERAL A SOLID FIN
Slide 60: Total Shareholder Return since June 2014
APPENDICES Total Shareholder Return since June 2014 60
Slide 61: www.inmocolonial.com
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