Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial — Q3 2017 Earnings Presentation
48 slides from Colonial Sfl Socimi Sa's earnings presentation, November 2017
Slide 1: Third Quarter Results 2017
Third Quarter Results 2017 November 2017 3/17
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_ 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: Ongoing consolidation of solid growth
01 Highlights Ongoing consolidation of solid growth
Slide 6: Highlights 3Q 2017: Superior risk adjusted return for shareholders
01 Highlights 3Q 2017 Superior risk adjusted return for shareholders AN EXCELLENT SET OF RESULTS > Gross Rental Income, +4% like for like > Net Rental Income, +4% like for like > Recurring Net Income, +16% > FFO per share +4% > Net Profit of €454m, +€205m STRONG OPERATIONAL PERFORMANCE > More than 1
Slide 7: Ongoing consolidation of solid growth
01 Highlights 3Q 2017 Ongoing consolidation of solid growth Excellent financial results with healthy growth > Strong EPRA Like for Like growth in rental income: +4% GRI and NRI > Significant increase of Recurring Earnings: +16% > FFO per share: +4% Return - € per share 3Q 2017 YoY Var BUSINESS MIX –
Slide 8: Ongoing consolidation of solid growth: operating performance
01 Highlights 3Q 2017 Ongoing consolidation of solid growth Outstanding operating performance > EPRA Vacancy stabilized at low levels > Double digit rental price increases > Fundamentals remain strong in 3Q OPERATIONAL PERFORMANCE 3Q 2017 BUSINESS MIX – GAV GROUP # Transactions signed 76 Volume of s
Slide 9: Scarcity in Prime
| Scarcity in Prime RK ve Fatale ae YW OA, ee
Slide 10: Macroeconomic context
02 Market Macroeconomic context Macro outlook remains solid > Eurozone with improving fundamentals > Spain with attractive growth profile > France with accelerating positive momentum post election MARKET TRENDS GDP GROWTH WORLD & EU 3.7 World GDP improving +3.5% in 2017 & +3.7% in 2018 3.5 3.2 3.3
Slide 11: Office Market
02 Market Office Market Micro outlook for Offices remains very positive > Barcelona with record performance in lettings > Madrid - strong acceleration in YoY take-up > Prime Paris with very solid fundamentals MARKET TRENDS BARCELONA Cumulative take-up above 260.000 sqm: +18% yoy growth Internet
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 % CBD VACANCY % CBD Total Market Total Mark
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 2017 YTD €/sqm/m
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 8% 6% 4.00% 3.75% Prime 4% 3.00% yield Prime yield Spread 2% 1
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 > Premiums on recent disposals highlight room for mark to market catch-up Madrid City Center (inside M30) Barcelon
Slide 16: Operational performance: Offering the better site
03 Operational performance Offering the better site
Slide 17: Letting activity with strong momentum
03 Operational performance Letting activity with strong momentum Prime positioning ensures strong letting performance > More than 110,000 sq m signed in 76 transactions 96% TOTAL > Incentives 93% far below market average > Solid occupancy level across all segments 3Q 2015 3Q 2016 # CONTRACTS SQM SIG
Slide 18: Letting activity with strong momentum
03 Operational performance Letting activity with strong momentum Prime positioning ensures strong letting performance > More than 110,000 sq m signed in 76 transactions 96% TOTAL > Incentives 93% far below market average > Solid occupancy level across all segments 3Q 2015 3Q 2016 # CONTRACTS SQM SIG
Slide 19: Letting activity: capturing top tier clients paying maximum rents
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 3% 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 José Abascal, 56 - Madrid Recoletos - Madrid Max Rent Max Rent 2,820 sqm 25.5 4,465 sqm
Slide 24: Repositioning in Castellana (Madrid)
03 Operational performance Repositioning in Castellana (Madrid) Representative buildings with appealing design help companies to attract and retain talent > Designing spaces to combine functionality together with the last decorating trends > Colonial’s assets are recognisable for its quality and des
Slide 25: Repositioning in Paris
03 Operational performance Repositioning in Paris Representative buildings with appealing design help companies to attract and retain talent > Designing spaces to combine functionality together with the last decorating trends > Colonial’s assets are recognisable for its quality and design Cézanne St
Slide 26: Strong commitment to highest standards in Corporate Social Responsibility
03 Operational performance Strong commitment to highest standards in Corporate Social Responsibility Strong commitment to highest standards in Corporate Social Responsibility > Maximum standards in Financial and Sustainability Reporting > Clear leadership in the sector > Sustainability and energy ef
Slide 27: Financial performance: Superior risk adjusted returns
04 Financial performance Superior risk adjusted returns
Slide 28: 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 29: Strong underlying rental growth
04 Financial performance Strong underlying rental growth Strong underlying growth in every market > More than half of like for like driven by rental price increases > Barcelona with outstanding price impact in like for like > Madrid with temporary impact from Alfonso XII tenant rotation LIKE FOR LIK
Slide 30: Strong underlying rental growth
04 Financial performance Strong underlying rental growth Strong underlying growth in every market > Close to +5% adjusted like for like increase in Net Rental Income > Madrid portfolio with +4% like for like (excluding the Alfonso XII tenant rotation) > France with solid +3% like for like growth LIK
Slide 31: 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 32: 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 33: Active Balance Sheet Management
04 Financial performance Active Balance Sheet Management New Buy back Program > Execution on track > Average acquisition price of €7.87/share > Potential currency to structure investments SHARE BUY BACK PROGRAM RESULT YTD 1. Objective of the program: As of 8 November 2017 the current execution of th
Slide 34: Growth drivers: Value creation through real estate transformation
05 Growth drivers Value creation through real estate transformation
Slide 35: Project pipeline and value-add programme
05 Growth drivers Project pipeline and value-add programme 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 REFURBISHMENTS 2017 Y
Slide 36: Creation of unique landmarks through projects - Madrid
05 Growth drivers Project pipeline and value-add programme Creation of unique landmarks through projects - Madrid Discovery Building - Madrid Príncipe de Vergara - Madrid Castellana 163 - Madrid IRR1 IRR1 IRR1 >10% >10% >9% GLA GLA GLA 10,152 sqm 11,368 sqm 10,910 sqm Highly sought after design du
Slide 37: Creation of unique landmarks through projects - Barcelona
05 Growth drivers Project pipeline and value-add programme Creation of unique landmarks through projects - Barcelona Parc Glories - Barcelona Plaza Europa 34 - Barcelona IRR1 IRR1 >10% 9% GLA GLA 24,551 sqm 14,306 sqm More than 9,000 sq m pre let as of September 17 (38%) Creation of unparalleled
Slide 38: Creation of unique landmarks through projects - Paris
05 Growth drivers Project pipeline and value-add programme Creation of unique landmarks through projects - Paris Emile Zola Louvre Saint Honoré Iena IRR1 IRR1 IRR1 >>7% >>7% >>7% GLA GLA GLA 20,340 sqm 16,000 sqm 7,505 sqm Creation of a unique business campus in Permits & licenses obtained Ref
Slide 39: 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 with solid momentum on leasing > Double digit release spreads capturing reversion from und
Slide 40: Acquisitions & Disposals
05 Growth drivers Acquisitions & Disposals Smart capital allocation as a principle > Capturing optimal point in specific asset life cycle > Asset rotation as source of value creation > Redeploying capital on value add projects SMART CAPITAL ROTATION REAL ESTATE VALUE CREATION In & Out Capital recycl
Slide 41: Acquisition programme on track
05 Growth drivers Acquisitions & Disposals Acquisition programme on track > Sourcing prime sites with unique market positioning > Unlocking value through real estate transformation > Additional pipeline under analysis OFF MARKET CITY CENTER VALUE ADDED INVESTMENTS SINCE 2015 Off-market City Center V
Slide 42: Conclusion
06 Conclusion
Slide 43: Conclusion
06 Conclusion DELIVERY IN OPERATIONS WITH SOLID RENTAL PRICE INCREASES > Strong letting momentum capturing top tier clients > Solid occupancy levels at 97% > Double digit increase on signed rental prices > Ongoing execution of value added initiatives STRONG FINANCIALS > Solid like-for-like growth in
Slide 44: Q&A
Q&A
Slide 45: 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 58.6% (Alpha I) PROFIT & LOSS ACCOUNT STRONG TOP & BOTTOM LINE PERFO
Slide 46: 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 47: Total Shareholder Return since June 2014
APPENDICES Total Shareholder Return since June 2014 47
Slide 48: www.inmocolonial.com
www.inmocolonial.com © Colonial
Inmobiliaria Colonial — Q3 2017 Earnings Presentation on 6ix