Merlin Properties Socimi, S.a. · BME:MRL
Merlin Properties Socimi — H1 2021 Earnings Presentation
47 slides from Merlin Properties Socimi's earnings presentation, Jul 30, 2021
Slide 1: 6M 2021 Results Presentation
6 M 2 0 2 1 R E S U L T S P R E S E N TAT I O N 30 J U LY 2021
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by Certain statements in this document presentation in other jurisdictions may RELIED ON IN CONNECTION WITH ANY MERLÍN Properties, SOCIMI, S.A. (the regarding the market and competitive also be restricted by law and persons CONTRACT OR COMMITMENT TO SEL
Slide 3: Contents
Contents ISMAEL CLEMENTE 6M21 Financial results CEO Offices Logistics Shopping centers Valuation and debt position Sustainability Value creation MIGUEL OLLERO Digital Infrastructure Plan COO Closing remarks
Slide 4: Key highlights
Key highlights | FINANCIAL PERFORMANCE • FFO per share in the period of €0.27. An improving pattern (+4.1% 2Q vs 1Q) that will continue in 3Q and 4Q. 2021 guidance reconfirmed (€0.56 per share) • Valuations flat vs Dec-20, with offices and logistics on the positive territory while retail down by 1.5
Slide 5: 6M21 Financial results
6M21 FINANCIAL R E S U LT S
Slide 6: FFO of €0.27 per share, on track to meet 2021 guidance
6M21 Financial results | FFO of € 0.27 per share, on track to meet 2021 guidance (€ 0.56 per share) (€ million) 6M21 6M20 YoY Gross rents 248.5 256.6 (3.2%) Gross rents after incentives 219.8 221.2 (0.6%) Net rents(1) 196.1 198.7 (1.3%) EBITDA(2) 179.2 184.1 (2.7%) FFO(3) 129.2 134.3 (3.8%) AFFO 124
Slide 7: GRI bridge
6M21 Financial results | GRI bridge LfL decrease (2.2%) as the positive release spread in all categories does not offset the increased vacancy and negative CPI indexation in Q1 (2.9%) Offices Logistics +1.0% LfL(1) Shopping centers (2.0%) LfL(1) (2.2%) Net leases (0.1%) (2.2%) (€m) 256.6 248.5 256.6
Slide 8: Occupancy and WAULT
6M21 Financial results | Occupancy and WAULT Occupancy now bottoming out after a challenging period of economic trouble OCCUPANCY AND WAULT TO FIRST BREAK PER ASSET TYPE(1) +56 bps 96.2% 100.0% 97.1% 93.7% VS 93.1% 93.3% MERLIN 3M21 89.1% Average 16.9 4.5 5.4 years 3.4 3.4 MERLIN 2.2 Average Offices
Slide 9: Offices
OFFICES
Slide 10: Offices | GRI bridge and breakdown
Offices | GRI bridge and breakdown Slight rental LfL decline due to buildings vacated for refurbishment (Plaza Ruiz Picasso, Atica 1 and Cerro Gamos 5) (€m) LfL(1) (2.9%) 118.0 111.5 (3.2) (3.3) 6M20 Like-for-Like growth Balance acquisitions, 6M21 disposals, other LfL growth by area Occupancy by are
Slide 11: Offices | Leasing activity
Offices | Leasing activity MERLIN continues capturing the reversionary potential in the portfolio (+6.8% release spread) Contracted sqm Release spread #Renewed contracts Tenants contracted Madrid 117,576 +4.3% 110 Barcelona 23,014 +14.7% 36 Lisbon 32,867 +24.6% 14 TOTAL 173,457 +6.8% 160 ı 11 ı
Slide 12: Offices | Flex space
Offices | Flex space Demand for flex space is surging ahead of a comeback to the office after the summer Operating New openings Madrid 7 spaces ı 12,509 sqm Atica exp. Torre Chamartín exp. Castellana 85 Pza. Ruiz Picasso 1,478 desks ı 47% Occ. 150 desks ı Opening 1Q22 115 desks ı Opening 1Q22 392 de
Slide 13: Logistics
LOGISTICS
Slide 14: Logistics | GRI bridge and breakdown
Logistics | GRI bridge and breakdown Logistics continues delivering a good performance both organic (LfL +1.0%) and inorganic (€m) LfL(1) +1.0% 28.8 +0.3 +3.1 32.2 6M20 Like-for-Like growth Balance acquisitions, 6M21 disposals, other LfL growth by location Occupancy by area 3M21 6M21 Madrid +3.6% Ma
Slide 15: Logistics | Leasing activity
Logistics | Leasing activity Good release spread (+3.3% whole portfolio) Contracted sqm Release spread #Renewed contracts Tenants contracted Madrid 151,238 +0.3% 4 Barcelona 8,900 +9.0% 2 Other 30,934 +22.7% 5 TOTAL 191,072 +3.3% 11 ı 15 ı
Slide 16: Logistics | ZAL Port
Logistics | ZAL Port Outstanding increase in FFO vs 6M20 (+26.9%) as WIP moves into operation Stock 728,163 sqm Delivered in 2021 WIP 95,987 sqm state-of-the-art 8,168 sqm warehouse to Stock incl. WIP Decathlon 736,331 sqm Third parties stock 183,252 sqm Stock under management 919,583 sqm Contracted
Slide 17: Shopping Centers
SHOPPING CENTERS
Slide 18: Shopping Centers | GRI bridge and breakdown
Shopping Centers | GRI bridge and breakdown Footfall and tenant sales recovering while maintaining the OCR at sustainable levels of 12.7% (€m) LfL(1) (2.0%) 60.6 57.2 (1.2) (2.2) 6M20 Like-for-Like growth Balance acquisitions, 6M21 disposals, other Footfall YTD(2) (million) Tenant sales YTD(2) (mill
Slide 19: Shopping Centers | 2022 maturity risk
Shopping Centers | 2022 maturity risk Half of the rents expiring in 2022 are out of risk 2022 expiries 44% dvanced negotiations for the early renewal of the lease A Advanced contracts 11% negotiations conomic impact: flat to slightly positive release spread E (GRI) and ca. 10% incremental incentives
Slide 20: Shopping Centers | Leasing activity and occupancy
Shopping Centers | Leasing activity and occupancy Occupancy already increasing on a QoQ basis. Positive release spread explained by contractual step-ups Release spread #contracts Tenants All portfolio +5.9% 67 Contracted Net Occupancy Change vs sqm Absorption 30/06/21 31/03/21 (bps) All portfolio 16
Slide 21: Valuation and debt position
VA LUAT I O N AND DEBT POSITION
Slide 22: Valuation and debt position | GAV summary
Valuation and debt position | GAV summary Overall valuation flat, with logistics up, offices and net leases flat, retail and hotels down Reversionary 4.8% 5.7% 4.6% 5.5% yield Passing 3.9% 5.1% 4.6% 5.1% 4.4% yield 12,893 12,303 6,349 GAV TOTAL with minority stakes (€ million) Shopping centers Minor
Slide 23: Valuation and debt position | GAV drivers
Valuation and debt position | GAV drivers GAV LIKE-FOR-LIKE EVOLUTION(1) +4.0% +4.0% +1.0% +0.4% +0.4% +1.0% 0.5% 0.5% MERLIN MERLIN(2) average average(2) (1.5%) (1.5%) Offices Logistics Net Leases Shopping centers Offices Logistics Net Leases Shopping centers YIELD (COMPRESSION) / EXPANSION (3) 0 b
Slide 24: Valuation and debt position | Debt position
Valuation and debt position | Debt position Strong credit metrics, reinforced by S&P reaffirming the BBB rating 30/06/2021 31/12/2020 Net debt € 5,368m € 5,268m LTV 40.5% 39.9% Average cost (spot) 2.06% (1.76%) 2.12% (1.80%) Hedged debt 100.0% 99.8% Average Maturity (years) 5.9 6.0 Liquidity(1) (€ m
Slide 25: Valuation and debt position | Debt maturity profile
Valuation and debt position | Debt maturity profile € 500m - 9yr bond issuance to repay the bond maturing in 2022 2,541 (€ million) 1,900 (€ million) 861 890 754 560 619 560 29 548 548 743 850 600 800 612 754 5 5 12 12 11 19 90 2021 2022 2023 2024 2025 2026 2027-2034 743 Mortgage debt Unsecured debt
Slide 26: Valuation and debt position | Collection rate
Valuation and debt position | Collection rate Minimum collection defaults. Therefore we will discontinue reporting Covid-19 collection rates (as a % of total invoices due) 6M21 Offices Logistics Shopping centers Net leases Collected 99.1% 99.8% 72.4% 100% Commercial policy 0% 0% 24.4% 0% In process
Slide 27: Sustainability
S U STA I N A B I L I T Y
Slide 28: Sustainability | Scoring: energy certifications
Sustainability | Scoring: energy certifications Outstanding achievement in terms of energy certifications, with more than 2.6 million sqm certified Offices Breeam Leed 89% Pass Excellent Silver Platinum 2% 26% 11% 10% > 1,090k sqm 4% Certified (2016 - 2021 YTD) Good 19% Very good 81% Gold 33% 39% 71
Slide 29: Sustainability | Scoring: quality seals
Sustainability | Scoring: quality seals First-rate quality seals in a variety of certificates 78% 69% 70% 71% MERLIN score Average performance C C C Gold since 2017 EPRA Sustainability B in the EPRA Best Practices Financial Europe Global reporting recommendations MERLIN European Global Our peers Ser
Slide 30: Value creation
VA LU E C R E AT I O N
Slide 31: Value creation | Capital recycling - Divestments
Value creation | Capital recycling - Divestments No new investments in the period. € 109m of divestments executed to fund Capex plans YTD Offices Logistics Net Leases • Sale of 1 office building in Madrid • Disposal of 3 logistics • Sale of 2 supermarkets and (NBA A-2) warehouses, 2 in Madrid and 1
Slide 32: Value creation | Landmark I
Value creation | Landmark I Castellana 85 Monumental • Full refurbishment of the asset, located in the heart • Full refurbishment of the building, located in Duque de of Azca, the best business area in Madrid Prime CBD Saldanha, one of the most emblematic squares in the city • C85 will become the HQ
Slide 33: Value creation | Landmark creation
Value creation | Landmark creation | Madrid Nuevo I Norte update % 28 T LE E- PR Torre Torre Marqués de Plaza Ruiz Diagonal 605 Castellana 85 Monumental Charmartín Glòries Pombal 3 Picasso GLA (sqm) 18,295 37,614 12,460 13,244 16,474 25,358 31,576(1) Acquisition (€m) 31.2 142.0 - - - - - Capex (€m)
Slide 34: Value creation | Best II & III
Value creation | Best II & III Zal Port WIP(1) Lisbon Park A2 Cabanillas Park I-J A2 Cabanillas Park II • XXL Turn-key project in the • Phased project located in the • Last available plot in • First warehouse in port of Barcelona north of Lisbon Cabanillas Park. Upon our Cabanillas Park II delivery
Slide 35: Value creation | Best II
Value creation | Best II % 75 0% ET 10 -L LET E PR E- PR A4 A2 A4 A2 A2 A2 A2 Cabanillas A2 Pinto II B(1) Cabanillas III Seseña Cabanillas F San Fernando II Azuqueca II Park I G, H & J Cabanillas Park II GLA (sqm) 29,473 21,879 28,731 20,723 33,592 98,757 92,994 47,403 Capex (€m) 13.7 11.8 15.5 10.8
Slide 36: Value creation | Best III
Value creation | Best III 5% % T8 00 T1 -LE -LE PRE PRE Valencia Zaragoza Lisboa Sevilla(1) Ribarroja Plaza II Park(2) ZAL WIP GLA (sqm) 34,992 11,421 44,973 42,650 Capex (€m) 26.3 7.1 29.5 29.9 ERV (€m) 1.9 0.5 2.1 3.0 ERV YoC 7.2% 7.2% 7.1% 10.2% Delivery 2019 2020 2021 2019/2020/2021/2022 GLA Tot
Slide 37: Value creation | Flagship
Value creation | Flagship Flagship Plan is now complete Saler Porto Pi • The refurbishment has consolidated Saler, facing the City of • Full refurbishment of the shopping center Arts and Sciences, as the leading urban mall in Valencia • The asset counts with outstanding exterior terraces nchor tenan
Slide 38: Value creation | Flagship plan complete
Value creation | Flagship Flagship Plan is now complete Arturo Soria Larios X-Madrid Tres Aguas(1) Saler Porto Pi Plaza GLA (sqm) 41,460 7,054 47,170 67,690 47,471 58,779 GLA MERLIN 37,957 6,069 47,170 33,845 29,286 32,963 (sqm) Works: 27.5 Works: 46.4 Works: 25.8 Works: 28.6 Capex (€m) 5.4 12.1(1)
Slide 39: Digital Infrastructure Plan (MEGA)
D I G I TA L INFRASTRUCTURE PLAN (MEGA)
Slide 40: Digital Infrastructure Plan | Investment rationale
Digital Infrastructure Plan | Investment rationale Data centers: expanding our array of client services within our logistics portfolio • The move to cloud computing by businesses, the exponential generation of streaming content and the immediate adoption of 5G lead to a worldwide increase demand for
Slide 41: Digital Infrastructure Plan | MERLIN's approach
Digital Infrastructure Plan | MERLIN’S approach Partnership with MERLIN will fund and own the real estate assets which will be built and operated through an operational Joint Venture with Edged Energy (subsidiary of Endeavour), who provides years of data center construction and operations expertise
Slide 42: Digital Infrastructure Plan | Selected projects
Digital Infrastructure Plan | Selected projects 4 strategic locations in the Iberian Peninsula to develop state-of-the-art data centers Madrid – Getafe Barcelona - PLZF Total GLA 22,508 sqm ı Capacity 20 MW Total GLA 22,131 sqm ı Capacity 16 MW Within our portfolio, we have selected 4 land plots whi
Slide 43: Digital Infrastructure Plan | Selected projects
Digital Infrastructure Plan | Selected projects Bilbao-Álava and Lisbon-VFX data centers, strategically fit for large cloud players, will be developed on demand Basque Country - Álava Lisbon - VFX Total GLA 23,153 – 102,466 sqm Total GLA 32,982 - 74,555 sqm Capacity 22 – 100 MW Capacity 24 – 100 MW
Slide 44: Digital Infrastructure Plan | Timeline & Capex
Digital Infrastructure Plan | Timeline & Capex Phase II: finalized Works begin (70 MW) 2021 2022 2023 2024 2025 2026 Phase I: First MWs enter into operation (12 MW) Investment and returns until 2025 Phase I – Deployment Phase II – Expansion Phase III – On demand • Sqm built: 44,639 • New sqm built:
Slide 45: Closing remarks
CLOSING REMARKS
Slide 46: Closing remarks
Closing remarks OPERATIONS • Covid-19 impact on business easing. In the absence of new restrictions imposed by the pandemic, incentives will continue reducing YoY helping FFO. Meaningless collection default rates • After a challenging first semester, occupancy bottoming out in offices, guiding towar
Slide 47: Paseo de la Castellana, 257 28046 Madrid info@merlinprop.com
Paseo de la Castellana, 257 28046 Madrid +34 91 769 19 00 info@merlinprop.com www.merlinproperties.com
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