Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial, SOCIMI — H1 2018 Earnings Presentation
66 slides from Colonial Sfl Socimi Sa's earnings presentation, July 2018
Slide 1: First-Half Results 2018
First-Half Results 2018 July 2018 2/18
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: Accelerating the Business Plan
01 Highlights Accelerating the Business Plan
Slide 6: First-Half 2018 with excellent achievements
01 Key Aspects 2018 First-Half 2018 with excellent achievements Financial Results Operational Acquisitions M&A Performance 1 Merger & +15% TSR 97,000 sqm let €517m Integration Alpha III Strong Rental Growth & Diagonal 525 New Equity Debt Optimization First opening in Appointment of Chief Barcelona H
Slide 7: Accelerating the Business Plan
01 Highlights 1H 2018 Accelerating the Business Plan OUTSTANDING FINANCIAL RESULTS > Total Shareholder Return: +15% YoY > EPRA NAV of 9.11€/share: +13% YoY > Gross Asset Value, +10% like-for-like > Net Rental Income, +7% like-for-like > Recurring earnings, +12% > Net Profit of €254m STRONG OPERATION
Slide 8: Solid top line growth driving results
01 Highlights 1H 2018 Solid top line growth driving results > Total Shareholder Return of +15% YoY > Outstanding NRI & GAV like-for-like growth > Top & Bottom-line performance driven by rental price increases Return - € per share 1H 2018 YoY Var BUSINESS MIX – GAV GROUP TOTAL SHAREHOLDER RETURN +15%
Slide 9: Capturing rental growth in every market
01 Highlights 1H 2018 Capturing rental growth in every market > High double-digit release spreads > Strong increase vs market rents > Low vacancy with strong fundamentals Operational Performance 1H 2018 BUSINESS MIX – GAV GROUP # Transactions signed 55 Volume of sq m signed 97,038 EPRA Vacancy 5% Do
Slide 10: Axiare transaction completed ahead of guidance
01 Highlights 1H 2018 Axiare transaction completed ahead of guidance > Synergies confirmed > Integration process on track > Portfolio optimization underway 1 2017 Nov 13 > Launch of transaction/ take-over bid Deal execution completed 2018 Feb 18 > Take-over outcome reaching 87% stake 2018 May 24 & 2
Slide 11: Market: Scarcity in Grade A
02 Market Scarcity in Grade A
Slide 12: Macro Outlook remains strong
02 Market Macro Outlook remains strong > Eurozone above 2% GDP growth > Spain with growth above EU average > France with robust GDP growth at 2% MARKET TRENDS GDP GROWTH WORLD & EU World GDP improving +3.8% in 2017 & +3.9% in 2018 Euro area with GDP growth well above +2% Solid base post-French
Slide 13: Office Markets remain strong
02 Market Office Markets remain strong > Barcelona consolidating as a digital hub > Madrid with accelerating rental growth > Paris, a World Champion in football too MARKET TRENDS BARCELONA > 4th best city to work (BCG study) > Second European Digital Hub after Paris > More than 20 companies establis
Slide 14: Barcelona with accelerating rental activity
02 Office Market Barcelona with accelerating rental activity > Strong momentum in demand driven by technological hubs in 22@ > More than 20 companies establishing digital centers in Barcelona in the last 6 months > Ranked 4th most attractive city to work in a BCG study BARCELONA 4th BEST CITY TO WOR
Slide 15: Fundamentals remain solid in every market
02 Market Fundamentals remain solid in every market VACANCY % PRIME ERV HIGHLIGHTS €/sqm/month > +42% Take-up QoQ, max since 2014 24.3 BARCELONA > City Center & 22@ with highest take-up +8% 22.5 > CBD vacancy at historical lows: < 4% > Diagonal/PGracia area with 2.4% vacancy 1H 17 1H 18 €/sqm/month
Slide 16: Colonial as leading market indicator for rental growth
02 Market Colonial as leading market indicator for rental growth > On-going strong rental growth in Colonial portfolio > Colonial outperforming the market > Colonial setting the benchmark for prime ERV GROWTH – COLONIAL VS MARKET PRIME ERVs 12 months 2017 6 months 2018 €/sqm/month Colonial Max BARCE
Slide 17: Investment Markets remain strong
02 Market Investment Markets remain strong > Scarcity of Grade A product > Rental growth main driver for future capital value growth > Spreads vs reference rates remain attractive PRIME YIELDS (1) SPREAD VS 10Y BOND HIGHLIGHTS 8% Prime yield 400bp 6% 268bp 4.00% > Investors willing to increase expos
Slide 18: Investment Market
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 €/sqm €/sqm €/sqm Market 8,671 Market 5,688 Mark
Slide 19: Operational performance: Offering the better site
03 Operational performance Offering the better site
Slide 20: Grade A product ensures strong letting performance
03 Operational performance Grade A product ensures strong letting performance # CONTRACTS SQM SIGNED GRI SECURED1 INCENTIVES2 EPRA VACANCY3 BARCELONA 18 12,643 €2m 7% 1% MADRID 23 30,492 €8m 4% 12% PARIS 11 8,511 €6m 12% 3% LOGISTIC 3 45,392 €2m 3% 3% TOTAL 55 97,038 €19m 8% 5% (1) Annualized figure
Slide 21: Prime positioning captures top-tier clients paying maximum rents
03 Operational performance Prime positioning captures top-tier clients paying maximum rents > High-quality premises attract top-tier tenants > Colonial captures rental prices at the top of the market > Colonial the reference for Grade A product MAX. RENT SIGNED PRIME RENTS # CONTRACTS CAPTURING & RE
Slide 22: Strong delivery on rental price increases
03 Operational performance Strong delivery on rental price increases > Outstanding rental growth in every city > Double-digit release spreads > No renewals in Paris SOLID INCREASE IN RENTAL PRICES GROWTH ON SIGNED RENTS1 RELEASE SPREAD2 1Q 2018 2Q 2018 1Q 2018 2Q 2018 BARCELONA +3% +24% +16% +9% MAD
Slide 23: A highly-resilient tenant portfolio
03 Operational performance A highly-resilient tenant portfolio > Strong diversification across sectors > Long-term relationships with top tier clients > Strong tenant loyalty High-quality tenants F A Law firms & Consultancy B Finance & Insurance C Digital & Information Technology E A Diversification
Slide 24: Barcelona Letting Performance
03 Operational performance Barcelona Letting Performance BARCELONA – LETTING PERFORMANCE Solid Performance Strong rental growth - Highlights 12,643 sq m let Park Cugat Sant Cugat > Max. rent signed 24.0 €/sqm/month > ERV growth +14% (1) +28% +19% vs ERV1 vs ERV1 > Release spread2 +14% Renewals Amigó
Slide 25: Madrid Letting Performance
03 Operational performance Madrid Letting Performance MADRID – LETTING PERFORMANCE Solid Performance Strong Rental Growth - Highlights 30,492 sq m let De La Vega Business Park Miguel Ángel 11 Génova 17 > Max. rent signed 29.9 €/sqm/month +7% (1) > ERV growth +21% +15% +10% release release vs ERV1 sp
Slide 26: Paris Letting Performance
03 Operational performance Paris Letting Performance PARIS – LETTING PERFORMANCE Solid Performance Strong Rental Growth - Highlights 8,511 sq m let Louvre Saint-Honoré Cézanne Saint-Honoré > Max. rent signed 787 €/sqm/year > ERV growth +6% (1) +11% +10% vs ERV1 vs ERV1 > EPRA Vacancy 3% Washington P
Slide 27: Vacancy remains at healthy levels
03 Operational performance Vacancy remains at healthy levels > Colonial vacancy at a healthy 5% > Barcelona and Paris below 3% > Madrid like-for-like at 1% - Discovery & Axiare providing reversionary potential EPRA VACANCY BARCELONA1 LFL Colonial MADRID1 Axiare COLONIAL GROUP2 Discovery LFL Colonial
Slide 28: Colonial portfolio outperforming the market on occupancy
03 Operational performance Colonial portfolio outperforming the market on occupancy > Colonial with solid vacancy levels in every city > Colonial strongly-positioned vs market average > A solid base to capture rental growth EPRA VACANCY VACANCY COLONIAL VS. MARKET BARCELONA Total Market Prime CBD Ma
Slide 29: Madrid portfolio with additional Grade A Product
03 Operational performance Madrid portfolio with additional Grade A Product > Discovery & Axiare providing reversionary potential > Grade A space to attract new clients > Best product in every market segment EPRA VACANCY AVAILABILITY OF GRADE A SPACE IN SOLID MARKETS Luca de Tena 6 Ribera del Loira
Slide 30: Corporate Social Responsibility (CSR) at the core of strategy
03 Operating Performance Corporate Social Responsibility (CSR) at the core of strategy > Colonial with strong commitment on CSR > Providing added value to clients through efficient buildings > CSR guarantees long-term sustainable returns STRONG CORPORATE RATINGS ON ESG HIGH-ENERGY EFFICIENCY STANDAR
Slide 31: Financial performance: Solid top line driving profitability
04 Financial performance Solid top line driving profitability
Slide 32: Double-digit top line growth
04 Financial performance Double-digit top line growth > GRI growth of +21% enhanced through Axiare acquisition > GRI like-for-like increase strong at +5% > Madrid like-for-like outstanding with +8% GROSS RENTAL INCOME - €M +5% EPRA Acquisitions In&Out like-for- Axiare TOTAL EPRA like-for-like1 & Pro
Slide 33: Like-for-like rental growth mainly price driven
04 Financial performance Like-for-like rental growth mainly price driven > Like-for-like growth driven by rental price increases > Barcelona and Madrid with strong price effect > Paris with +5% like-for-like increase, well above peers GROSS RENTAL INCOME - €M STRONG EPRA LIKE-FOR-LIKE GROWTH EPRA Pr
Slide 34: Strong NRI like for like growth
04 Financial performance Strong NRI like for like growth > Net Rental Income like-for-like increase at +7% > Madrid with outstanding +10% like-for-like in Net Rental Income > Like-for-like growth in 1H18 accelerating by 238 bp LIKE-FOR-LIKE VARIANCE1 – NRI LFL IN NET RENTAL INCOME FURTHER STRENGTHEN
Slide 35: Strong underlying growth in Asset Values
04 Financial performance Strong underlying growth in Asset Values > Gross Asset Value of €11,190m (€11,730m including transfer costs) > +10% like-for-like YoY growth in every segment (+4% in 6 months) > Capital Value Growth driven by price increases and successful project execution GAV GROWTH – 1H 2
Slide 36: Strong underlying growth in Asset Values
04 Financial performance Strong underlying growth in Asset Values > Gross Asset Value of €11,190m (€11,730m including transfer costs) > +10% like-for-like YoY growth in every segment (+4% in 6 months) > Capital Value Growth driven by price increases and successful project execution GAV GROWTH – 1H 2
Slide 37: Solid valuation levels in healthy market
04 Financial performance Solid valuation levels in healthy market > Colonial appraisal with very solid valuation yields > Colonial capital values below recent transactions evidence > Rental growth and “scarcity factor” main future growth driver VALUATION YIELDS (1) CAPITAL VALUE 06/2018 - €/sq m BAR
Slide 38: Acceleration of profitable growth
04 Financial performance Acceleration of profitable growth > +21% Gross Rental Income growth > +12% Increase in recurring profit > +13% Adjusted FFO per share STRONG TOP & BOTTOM-LINE PERFORMANCE PROFIT & LOSS ACCOUNT RECURRING RESULT €m +12% + EPS RECURRING ADJUSTED1 €/share +7% + FFO RECURRING ADJ
Slide 39: Successful tapping of bond market
04 Financial performance Successful tapping of bond market > Successful Issuance of €1,150m bonds completed by the Colonial Group > Colonial tapped the market with a €650m 8Y senior unsecured bond with a coupon of 2.0% > SFL tapped the market with a €500m 7Y senior unsecured bond with a coupon of 1.
Slide 40: Active Liability Management
04 Financial performance Active Liability Management > Repurchase of bonds maturing in 2019 > Improving debt maturity a attractive financial costs > Immediate positive impact on recurring earnings LIABILITY MANAGEMENT ENHANCEMENT OF MATURITY WITH LOW COST OF DEBT Group debt maturity - years Repurcha
Slide 41: Strong credit profile
04 Financial performance Strong credit profile > Unparalleled high-quality collateral diversified in three cities > A strong maturity profile with heathy liquidity > A solid capital structure with competitive costs FIRST CLASS COLATERAL WITH… … A SOLID CAPITAL STRUCTURE €11bn well-diversified high-q
Slide 42: Solid Total Shareholder Return
04 Financial performance Solid Total Shareholder Return > +15% YoY Total Shareholder Return (+8% in 6 months) > EPRA NAV of 9,11 €/share, +13% YoY (+6% in 6 months) > NAV growth driven by price increases and successful project deliveries STRONG MOMENTUM IN NAV GROWTH TOTAL SHAREHOLDER RETURN €/share
Slide 43: "Alpha" as significant driver in value creation
04 Financial performance “Alpha” as significant driver in value creation > Total Shareholder Return relies on “Alpha” > More than half of the NAV growth per share through “Alpha” strategies > NAV growth driven by price increases and successful project deliveries TOTAL SHAREHOLDER RETURN TOTAL SHAREH
Slide 44: Share price driven by solid delivery of fundamentals
04 Financial performance Share price driven by solid delivery of fundamentals > +17% Share Price increase 2018 YTD > Capital markets recognize execution of Business Plan > Analyst updates with upwards revisions SHARE PRICE PERFORMANCE 2018 YTD1 COVERAGE EVOLUTION DURING 1H 2018 > 4 new analysts cove
Slide 45: Share price driven by solid delivery of fundamentals
04 Financial performance Share price driven by solid delivery of fundamentals > Unparalleled share price performance YTD > Strong outperformance of peers in Spain & Europe > Well above reference indices – IBEX & EPRA SHARE PRICE PERFORMANCE 2018 YTD1 VS PEERS Spain Europe (1) Share price YTD as of 1
Slide 46: Growth drivers: A solid base for future growth
05 Growth drivers A solid base for future growth
Slide 47: A solid base for growth
05 Growth drivers A solid base for growth 1> A strong footprint in offices enhancing the competitive positioning 2> A well-positioned portfolio to capture market rental growth 3> An unparalleled pipeline of high quality projects GROWTH DRIVER KPIs PASSING GRI1 ATTRACTIVE TIMING Colonial Axiare Combi
Slide 48: A Strong Footprint in Offices
05 Growth drivers 1 A Strong Footprint in Offices > Consolidation of strong footprint in offices > Reinforcing Madrid exposure – 1st landlord in city center > Outstanding CBD positioning GAV €bn PASSING GRI €m POTENTIAL GRI €m +21% +21% +29% GAV Group Top Landlord inside M30 33 Assets 445,298 sqm Sp
Slide 49: A Strong Footprint in Offices
05 Growth drivers 1 A Strong Footprint in Offices > Consolidation of strong footprint in offices > More than €1.3bn of value in 15 Spanish assets > Unparalleled owner of trophy assets Almagro, 9 Miguel Ángel, 11 Miguel Ángel, 23 Serrano, 73 Castellana, 43 Sagasta 31-33 Diagonal 197 Recoletos, 37 Gen
Slide 50: A Strong Footprint in Offices
05 Growth drivers 1 A Strong Footprint in Offices > Unlocking revenue synergies > Completion of letting-up with good terms > Accelerating project schedule Velázquez Discovery 2,968 sq m American multinational company Miguel Ángel 66% let YTD 991 sq m Acceleration of Project Start Acceleration of let
Slide 51: Colonial well-positioned to capture reversion
05 Growth drivers 2 Colonial well-positioned to capture reversion > Strong delivery on reversion in 1H 2018 > Attractive rent roll profile > Solid positioning in growing markets CAPTURING REVERSION ATTRACTIVE RENT ROLL SOLID POSITIONING IN GROWING MARKETS COMMERCIAL LEASE EXPIRY DATES First potentia
Slide 52: Value creation potential through project pipeline
05 Growth drivers 3 Value creation potential through project pipeline > Project pipeline with substantial capital gain potential > Progressive phasing-in of initiatives > Short-term projects with strong visibility on pre-lets Discovery Príncipe de Vergara Sagasta 27 M Álvaro Office Scheme Plaza Eu
Slide 53: Short-term projects on track to crystalize value
05 Growth drivers 3 Short-term projects on track to crystalize value > Successful delivery of projects initiated in 2015/2016 > Rents signed ahead of initial underwriting > Full value creation still to be crystallized in NAV Discovery Príncipe de Vergara Parc Glories 66% let 80% 88% YTD pre- let pre
Slide 54: Flexible office space
05 Growth drivers 4 Flexible office space > Creation of a leading flexible office platform in Spain through Utopicus > Strong brand positioning within the co-working space > 10 new centers to be operating soon in Barcelona and Madrid MAIN TAKEAWAYS CENTERS IN OPERATION OPENING 2H2018 OPENING 1H2019
Slide 55: Flexible office space – New opening in Plaça Catalunya
05 Growth drivers 4 Flexible office space – New opening in Plaça Catalunya OPENED IN 1H 2018 60% OCCUPIED AS OF 7/18 55
Slide 56: Smart Capital Recycling – solid track record with €2bn acquisitions
05 Growth drivers A5 Smart Capital Recycling – solid track record with €2bn acquisitions in 4 years > Mainly off-market transactions > High value-added components > City Center locations with strong fundamentals INVESTMENTS SINCE 2015 - €m 579 499 Close to €2.0bn 477 389 of organic acquisitions I. A
Slide 57: Prime CBD Acquisition in Barcelona - D525
05 Growth drivers A5 Prime CBD Acquisition in Barcelona - D525 > Creation of an emblematic premise at the heart of Barcelona’s CBD > Market segment with the strongest fundamentals > Product with high “Scarcity Factor” Diagonal 525 – Prime CBD CORE WITH VALUE ADDED POTENTIAL Creation of a unique prem
Slide 58: Prime CBD Acquisition in Barcelona - D525
05 Growth drivers A5 Prime CBD Acquisition in Barcelona - D525 > Creation of an emblematic premise at the heart of Barcelona’s CBD > Market segment with the strongest fundamentals > Product with high “Scarcity Factor” SOURCES OF VALUE CREATION D525- MAIN KPIS º > Purchase price well below recent com
Slide 59: A solid platform to capture future growth
05 Growth drivers A solid platform to capture future growth > Well-positioned to capture reversion > Significant future value creation through Project pipeline > Combination of complementary – Grade A – office portfolios Current Uplift Potential Passing GRI 1 – (€m) Solid platform for future growth
Slide 60: Conclusion
06 Conclusion
Slide 61: Conclusion: Delivery of business plan on track
06 Conclusion DELIVERY OF BUSINESS PLAN ON TRACK > Axiare transaction completed ahead of guidance > Strong operational performance Very healthy vacancy levels Strong growth in rental prices in every city GRI & Capital Value growth price driven > Solid top line driving bottom-line results Out
Slide 62: Q&A
Q&A
Slide 63: Acceleration of profitable growth
APPENDICES Acceleration of profitable growth > +12% increase in Recurring Earnings > Earnings driven by solid top-line growth > Axiare acquisition enhancing results PROFIT & LOSS ACCOUNT RESULTS TOP LINE DRIVEN > Solid 7% like-for-like net rental income growth > Results enhancement through Axiare +€
Slide 64: 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 31/12/2017 30/06/2018 More than €11b
Slide 65: Total Shareholder Return since June 2014
APPENDICES Total Shareholder Return since June 2014 Total Shareholder Return - Colonial (since june 2014) Date €/share Return per share Group LTV NAV Dividend NAV+ Div. NAV Growth Dividend Total Return 06-14 4,49 0 4,49 - - - 43% 12-14 4,77 0 4,77 6% - 6% 43% 12-15 6,16 0 6,16 29% - 29% 42% 12-16 7,
Slide 66: www.inmocolonial.com
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Inmobiliaria Colonial, SOCIMI — H1 2018 Earnings Presentation on 6ix