Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial, SOCIMI — Q3 2020 Earnings Presentation
64 slides from Colonial Sfl Socimi Sa's earnings presentation, November 2020
Slide 1: Third Quarter Results 2020
Third Quarter Results 2020 November 2020 2020 09/20
Slide 2: Disclaimer
Disclaimer By attending this presentation and receiving this document, you are agreeing to be bound by the following limitations. Any failure to comply with these restrictions may constitute a violation of applicable securities laws and/or may result in civil, administrative or criminal liabilities.
Slide 3: Agenda
Agenda 01 Highlights 02_ Covid-19 Impacts 03 Market Update 04 Operational performance 05 Financial performance 06 Non Financial Highlights - ESG 07 Strong Resilience through Core CBD 08 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: Solid results with resilient Q3
01 Highlights Solid results with resilient Q3
Slide 6: Solid results with resilient Q3
01 Highlights Solid results with resilient Q3 STRONG FINANCIAL RESULTS > Gross Rental Income of €260m, +0.4% like-for-like > Net Rental Income +3% like-for-like > Net Rental Income Offices. +4% like for like > Recurring earnings of €112m, +8% YoY > Recurring EPS of €22.10cts. per share, +8% YoY SOLI
Slide 7: Solid fundamentals driving profitability
01 Highlights Solid fundamentals driving profitability > Recurring EPS growth of +8% > NRI like for Like growth of +3% > Offices NRI like for like of +4% Profit & Loss - €m 09/20 YoY Var Unparalleled Prime Positioning Recurring Net Profit €112m +8% CBD Breeam Recurring EPS 22.10 €Cts/share +8% Paris
Slide 8: Solid fundamentals driving operational performance
01 Highlights Solid fundamentals driving operational performance > Healthy Vacancy levels with high collection rate > Double digit Release Spread & Ongoing Rental Growth > Strong CBD positioning with high Paris exposure Solid Fundamentals 09/20 Unparalleled Prime Positioning EPRA Vacancy 4% CBD Bree
Slide 9: Limited Covid-19 impact YTD
02 Covid-19 Impacts Limited Covid-19 impact YTD
Slide 10: COVID response
02 Covid-19 Impacts COVID 19 response Proactive management in key areas of the company MARCH APRIL MAY JUNE JULY SEPTEMBER OCT / NOV Implementation of Increased liquidity Rating agencies Pre-letting of Solid Q2 20 Sale of 2 noncore €500m Bond covid-19 protocol through the S&P and Moody’s Marceau Gol
Slide 11: COVID – Collection rates Q3
02 Covid-19 Impacts COVID 19 – Collection rates Q3 > 100% Paris Offices > 98% Group Offices > 96% Group All Products COLLECTION RATES DURING COVID-19 Q2 2020 Q3 2020 Group Group Paris Barcelona Madrid Offices 93% 98% 100% 95% 95% All uses 87% 96% 99% 94% 90% 11
Slide 12: COVID – Agreements & discounts
02 Covid-19 Impacts COVID 19 – Agreements & discounts > Agreements almost finalized – Only 1 file in France left > Discounts in very limited cases: 3% impact YTD on annual GRI > Early for visibility of impacts of second wave STATUS OF CLIENT CONVERSATION NEGOTIATION RESULTS YTD Q2 & Q3 with high lev
Slide 13: Scarcity in Prime Product
03 Market Scarcity in Prime Product
Slide 14: Macroeconomic update
03 Market Macroeconomic update > The International Monetary Fund (“IMF”) updated its GDP projections per country on October 16, 2020 > Forecasts for most countries (including France) have improved for 2020, but with slightly weaker recovery in 2021 > Spain remains with sharp contraction in 2020, but
Slide 15: Rental Markets - Scarcity of High Quality Product
03 Market Rental Markets - Scarcity of High Quality Product > Grade A stock in CBD very low in every city > Grade A availability in Barcelona and Paris below 1% > Grade A availability in Barcelona at 8,000 sqm and in Paris and Madrid at 60,00 sqm each Stock CBD Vacancy CBD 0.9M sqm 1,9% > 17,260 sqm
Slide 16: Rental Markets
03 Market Rental Markets > Release of lockdowns in Q3 with immediate impact on economic activity > Q3 CBD take-up with more than 60% increase Quarter on Quarter in Spain > Paris CBD with close to 300.000 sqm of quarterly take-up Letting activity recovering in Q3 Stable Prime Rents RENTAL TRANSACTION
Slide 17: Investment Markets – prime remains resilient
03 Market Investment Markets – prime remains resilient PRIME YIELDS (1) SPREAD VS 10Y BOND HIGHLIGHTS > Prime yield at 3.60%, with very healthy spread BARCELONA of 335bp vs reference rate > International interest focused on grade A assets > No supply of Core CBD assets for buyers > Healthy spread of
Slide 18: Unparalleled exposure to CBD
04 Operational performance Unparalleled exposure to CBD
Slide 19: Letting activity remains solid in 2020YTD
04 Operational performance Letting activity remains solid in 2020YTD LETTING VOLUME SQM KPS 9/20 YTD Pre Covid Post Covid TOTAL YTD RELEASE SPREAD4 MATURITY (years)2 EPRA VACANCY3 Q1 20 Q2 20 Q3 20 BARCELONA 7,024 13,720 4,124 24,868 +51% 5 4.4% years MADRID 5,374 466 20,450 26,289 +20% 8 2.9% years
Slide 20: Letting activity remains solid in Covid Period (Q2 20 & Q3 20)
04 Operational performance Letting activity remains solid in Covid Period (Q2 20 & Q3 20) > More than 26,000 sqm signed in Q3 2020 > Covid19 (Q2 & Q3) quarters with higher letting activity higher than Q1 2020 (PreCovid) > Solid rental levels with healthy maturities SQM SIGNED 2020 YTD LETTING COVID1
Slide 21: Rental Price levels remain solid in 2Q & 3Q 20
04 Operational performance Rental Price levels remain solid in 2Q & 3Q 20 GROWTH ON SIGNED RENTS1 RELEASE SPREAD2 Diagonal 609 Marceau Via Augusta Diagonal 609-615 +9% +++ +38% +58% Sant Cugat Torre BCN Washington Plaza Lopez de Hoyos +18% +13% +14% +58% Castellana 163 Washington Plaza Almagro 9 Tra
Slide 22: Rental Price levels remain solid
04 Operational performance Rental Price levels remain solid > Price levels remain solid in every segment > Releases Spreads double digit > Signed Prices vs ERVs remain with positive momentum SOLID INCREASE IN RENTAL PRICES RELEASE SPREAD1 GROWTH ON SIGNED RENTS Pre Covid Post Covid Pre Covid Post Co
Slide 23: Vacancy at very healthy levels in every segment
04 Operational performance Vacancy at very healthy levels in every segment > Group & Office portfolio vacancy at a healthy 4% > Significant quarter on quarter improvement in Madrid with a vacancy below 3% > Paris at 2.5% excluding 103 Grenelle entry into operation EPRA VACANCY BARCELONA1 Total 4% 3%
Slide 24: Vacancy at very healthy levels in every segment
04 Operational performance Vacancy at very healthy levels in every segment > Strong decrease of Madrid vacancy, standing below 3% > Current available space located in secondary areas > Group Vacancy stable between 3-4% EPRA VACANCY MADRID OFFICES PORTFOLIO1 (720bp) YoY ENTRY IN OPERATION OF RENOVATI
Slide 25: Solid financials underpinned by high quality assets
05 Financial performance Solid financials underpinned by high quality assets
Slide 26: Strong top line growth
05 Financial performance Strong top line growth > Gross Rental Income (0.9%) and +0.4% like for like > Office portfolio GRI +4% and +2% like for like > Madrid and Barcelona with outstanding GRI growth GROSS RENTAL INCOME - €M Projects, EPRA TOTAL Acquisitions & Disposals like-for-like1 others 4 Offi
Slide 27: Like-for-like rental growth price driven
05 Financial performance Like-for-like rental growth price driven > Like-for-like growth largely driven by rental price increases > Barcelona fully price driven > Madrid growth driven by a combination of price and volume GROSS RENTAL INCOME - €M STRONG EPRA LIKE-FOR-LIKE GROWTH EPRA like- GRI LIKE-F
Slide 28: NRI offices at +4% like for like
05 Financial performance NRI offices at +4% like for like > Net Rental Income, +3% like for like > Net Rental Income Offices +4% like for like > Barcelona and Madrid with double digit NRI like for like growth LIKE-FOR-LIKE VARIANCE1 – NRI LFL IN NET RENTAL INCOME FURTHER STRENGTHENED NRI GROWTH GRI
Slide 29: Logistics disposal – Execution of Call Option confirmed
05 Financial performance Logistics disposal – Execution of Call Option confirmed > Settlement of Call Option signed in 2019 > €100m cash proceeds in July > €64m cash proceeds in Q4 2020 LOGISTICS PORTFOLIO DISPOSAL LOGISTICS PORTFOLIO DISPOSAL – SECOND PHASE In August 2019 Colonial signed the dispos
Slide 30: Disposal of secondary assets in Barcelona
05 Financial performance Disposal of secondary assets in Barcelona > Disposal of 2 secondary assets in Barcelona > 2 assets amounting a total of 18,150 sqm with environmental certifications > Real Estate value creation 1.7x on acquisition price Colonial continuing with its industrial strategy Flight
Slide 31: Profitable growth with enhanced quality
05 Financial performance Profitable growth with enhanced quality > High recurring EPS growth, +8% YoY > NRI growth the main profit driver > Non-Core Disposals enhancing the quality of returns STRONG EPS GROWTH RECURRING EARNINGS – VARIANCE ANALYSIS Offloading Secondary Assets RECURRING RESULT €m Cri
Slide 32: Profitable growth with enhanced quality
05 Financial performance Profitable growth with enhanced quality > Recurring Earnings of +8% YoY > Recurring EBITDA, +2% > Stable dividend based on solid cash flow generation PROFIT & LOSS ACCOUNT STRONG DPS GROWTH DIVIDEND €m +0.4% LFL Stable + 2019 2020 + DIVIDEND PER SHARE Cts€/share Stable Recur
Slide 33: Ongoing access to debt markets and liquidity
05 Financial performance Ongoing access to debt markets and liquidity > Confirmed BBB+ Rating by S&P facilitating good access to debt markees > €1.000m successful bond issuances in France and Spain > €1,000m new revolving credit facility Bond issuance in France Bond issuance in Spain New Credit Faci
Slide 34: A solid capital structure
05 Financial performance A solid capital structure > Long-term financing profile with extended debt maturities > €2.4Bn of liquidity covering debt maturities until 2024 > A solid financial structure with competitive financing costs Extension of Debt Maturities A Solid Financial Structure 31/12/2019
Slide 35: Strong Commitment on ESG & Decarbonization
06 Non-Financial Highlights - ESG Strong Commitment on ESG & Decarbonization
Slide 36: Strong Commitment to ESG & Decarbonization
06 Non Financial Highlights - ESG Strong Commitment to ESG & Decarbonization COLONIAL ALIGNED WITH PARIS AGREEMENT > Objective of carbon neutral portfolio in 2050 > Objective of a 75% carbon reduction until 20301 CARBON EMISSIONS – PORTFOLIO LIKE FOR LIKE 2015 – 2019 2018 – 2019 (KgCo2e/sqm) (KgCo2e
Slide 37: Strong Commitment to ESG & Decarbonization
06 Non Financial Highlights - ESG Strong Commitment to ESG & Decarbonization SIGNIFICANT REDUCTION OF THE CARBON FOOTPRINT SCOPE 1, 2 & 3 – ABSOLUTE FIGURES- (tCO2e) SCOPE 1 & 2 – FIGURES LIKE FOR LIKE 2019 2018 Var. CARBON EMISSIONS - (tCO2e) BARCELONA 5,767 9,756 (41%) LFL (40%) (59%) MADRID 9,198
Slide 38: ESG strategy enhancing Green loans
06 Non Financial Highlights - ESG ESG strategy enhancing Green loans GREEN FINANCING MAXIMUM ENERGY EFFICENY STANDARDS New sustainable credit line amounting €1bn Portfolio with Leed/Breeam1 – value Portfolio with Leed / Breeam1 2019 > The sustainable nature of the loan acknowledges the positive impa
Slide 39: Long term sustainable cash flow through prime positioning
07 Strong Resilience through Core CBD Long term sustainable cash flow through prime positioning
Slide 40: Resilience through prime positioning
07 Strong resilience through Core CBD RESILIENCE THROUGH PRIME POSITIONING 1✓ A super Core CBD Portfolio 2✓ AAA Clients with strong solvency 3✓ Flagship Projects in the CBD 4✓ Excellence on ESG & Decarbonization 5✓ Ongoing Flight to quality 40
Slide 41: A Super Core CBD Portfolio
07 Strong resilience through Core CBD 1A A Super Core CBD Portfolio > Colonial as largest office owner in the City Centre of Madrid, Barcelona and Paris > Strong market share in CBD > Prime positioning enhances resilience BARCELONA MADRID PARIS Colonial Portfolio - max rent signed Colonial Portfolio
Slide 42: A Super Core CBD Portfolio in Paris
07 Strong resilience through Core CBD 1 A Super Core CBD Portfolio in Paris > CBD portfolio focused on large assets with efficient floor plates > Diversified multitenant exposure > CBD exposure with maximum energy efficiency standards PORTFOLIO STRATEGY EFFICIENT LARGE-SCALE PORTFOLIO Average floor
Slide 43: A Super Core CBD Portfolio with solid valuation levels
07 Defensive Prime Positioning 1A A Super Core CBD Portfolio with solid valuationn levels > Prime Yields at very attractive spreads compared to reference rates > Colonial portfolio at prudent valuation levels > Prime product with defensive metrics VALUATION YIELDS (1) BARCELONA MADRID PARIS Colonial
Slide 44: A Super Core CBD Portfolio with solid valuation levels
07 Defensive Prime Positioning 1A A Super Core CBD Portfolio with solid valuationn levels > Investor interest for Core CBD assets remains strong > No supply of CBD product in the investment market > Colonial’s assets with prudent appraisal values Madrid City Center (inside M30) Barcelona City Center
Slide 45: AAA Clients with strong solvency
07 Strong resilience through Core CBD 2 AAA Clients with strong solvency > Strong solvent tenant base with rated and listed companies along with other multinationals > Portfolio attracting international clients > Defensive client sector diversification Solvent tenant base 1 International clients 1 D
Slide 46: AAA Clients with strong solvency
07 Strong resilience through Core CBD 2 AAA Clients with strong solvency > Reversion as solid cash flow “buffer” > Contract Portfolio under-rented > Ongoing delivery of high release spreads YTD > Renovation programs as rental growth accelerator ENHANCED THROUGH REVERSION AS SOLID “BUFFER” REVERSION
Slide 47: A defensive project pipeline
07 Strong resilience through Core CBD 3 A defensive project pipeline > 74% of project pipeline concentrated in 4 big projects1 > Adequate progress of pre-lettings > Super core locations in Paris and Madrid Development Pipeline – “Big 4” Super core locations in Paris and Madrid 74% of project pipelin
Slide 48: A defensive project pipeline - Resilient project attracting Top tenants
07 Strong resilience through Core CBD 3 A defensive project pipeline - Resilient project attracting Top tenants > Ongoing pre-letting momentum for CBD assets > Significant Pre-let level with AAA tenants > Top Product in unique locations PRIME ASSET IN PRIME POSITION RESILIENT PRODUCT ATTRACTING TOP
Slide 49: A defensive project pipeline
07 Strong resilience through Core CBD 3 A defensive project pipeline > Significant Pre-let level with AAA tenants (34% of total pipeline) > Yield on cost confirmed and enhanced > Tactical management of calendar GRI – Path to reversion 87% Pre-let 100% Pre-let 55 54 57 436 449 86% Pre-let 29 382 381
Slide 50: Excellence on ESG & Decarbonization
07 Strong resilience through Core CBD 4 Excellence on ESG & Decarbonization > ESG at the Core of Colonial’s Strategy > Strong Commitment to ESG & Decarbonization > More than €1.2bn of green financing A STRONG STARTING POINT 2020 ONWARDS POSITIVE MOMENTUM EXPECTED 1 Aligned with Paris Agreement > 4th
Slide 51: Flight to quality through active asset management
07 Strong resilience through Core CBD 5 Flight to quality through active asset management > Ongoing flight to quality through disciplined capital allocation > Disposal of more than €240m of non-core assest in Q2 & Q3 > Further asset rotation ongoing INVESTMENTS & DIPOSALS SINCE 2015 - €m 2015 Alpha
Slide 52: Conclusion
08 Conclusion
Slide 53: Conclusion
08 Conclusion STRONG FINANCIAL RESULTS > Gross Rental Income of €260m, +0.4% like-for-like > Net Rental Income +3% like-for-like > Net Rental Income Offices. +4% like for like > Recurring earnings of €112m, +8% YoY > Recurring EPS of €22.10cts. per share, +8% YoY SOLID FUNDAMENTALS - RESILIENT PRIME
Slide 54: Q&A – Save the date
Q&A “SAVE THE DATE” Don´t miss our next events > Dec 9: Capital Markets Day
Slide 55: Collection Rates Q2 & Q3
APPENDICES Collection Rates Q2 & Q3 96% ANNUALIZED Collected 96% P/L IMPACT OF DISCOUNTS Offices Deferrals 2% 1% Discounts 2% on GRI 92% Collected 92% ANNUALIZED P/L IMPACT OF All uses Under Negotiation 1% DISCOUNTS Deferrals 2% 3% Discounts 5% on GRI 55
Slide 56: COVID – Agreements & deferrals
APPENDICES COVID 19 – Agreements & deferrals > Agreements almost finalized - Spain with agreements on all files > Deferrals in exchange of longer-term maturities > Secured future GRI of €40m YTD through longer maturities STATUS OF CLIENT CONVERSATION NEGOTIATION RESULTS YTD Short term deferrals in e
Slide 57: MSCI European Property Investment Award
APPENDICES MSCI European Property Investment Award > Colonial awarded for the 4th year in a row by MSCI as best performing portfolio in Spain > Colonial outperformed the Benchmark in 2019 and over last 3 and 5 years > Spanish index benchmark made of 51 portfolios and 490 assets worth €19Bn MSCI Euro
Slide 58: Paris office investment market transactions
APPENDICES Office investment markets across Europe are starting to gain pace. > 3Q 2020 starting with high activity across all markets, specially in Paris > High volume transacted not only in CBD 7 rue Blanche CBD Prime €75m 3,716 sqm <2.50% Yield (3Q 2020) 6/12 Faubourg Saint Honoré CBD Prime €290m
Slide 59: Madrid and Barcelona office investment transactions
APPENDICES Office investment markets across Europe are starting to gain pace. > 3Q 2020 starting with high activity across all markets, specially in Paris > High volume transacted not only in CBD Alcala 544/546 - Project Madrid Secondary n.a. 30,000 sqm Acquired by (3Q 2020) Amundi MADRID Velázquez
Slide 60: Flight to quality through active asset management
APPENDICES Flight to quality through active asset management > Solid intrinsic growth profile of CBD portfolio > Colonial well-positioned to capture reversion > Significant future value creation through CBD Project pipeline Current Uplift Potential Passing GRI 1 – (€m) PRIME POSITIONING 4 CBD4 76% P
Slide 61: A solid capital structure
APPENDICES A solid capital structure > An unparalleled high-quality collateral diversified in three cities > A solid financial structure with competitive financing costs > A strong credit profile FIRST CLASS COLATERAL A SOLID FINANCIAL STRUCTURE Capital Structure 31/12/2019 30/09/2020 More than €12b
Slide 62: Creation of Hybrid products – Fix, Flexible & Additional Services
APPENDICES Creation of Hybrid products – Fix, Flexible & Additional Services > Delivery of two new hybrid office buildings within Colonial’s portfolio during 1H > Enhancement of user experience through the combination of flexible product and new contents > Prime locations and customer centric conten
Slide 63: 2021 Maturities management on track
APPENDICES 2021 Maturities management on track 2021 MATURITIES % on annualized Group GRI Selected Main Files CBD CBD Campo de las Naciones 15.9% 29 1 7 Multitenant Monotenant Multitenant Paris Louvre-Saint-Honoré Poeta Joan Maragall, 53 EGEO 21 CBD Periphery 3.2% CBD Madrid & Barcelona 1,9 Multitena
Slide 64: www.inmocolonial.com
www.inmocolonial.com © Colonial
Inmobiliaria Colonial, SOCIMI — Q3 2020 Earnings Presentation on 6ix