Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial, SOCIMI — Q3 2022 Earnings Presentation
45 slides from Colonial Sfl Socimi Sa's earnings presentation, Nov 16, 2022
Slide 1: Third Quarter Results 2022
Third Quarter Results 2022 16th November 2022 3/22
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_ Financials – Double digit revenue & profit growth 03 Operations – Outperformance through polarization 04 High visibility on further growth 05 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: Delivery of profitable growth on the back of polarization
01 Highlights Delivery of profitable Growth on the back of polarization
Slide 6: The Best Office Product
01 Highlights The Best Office Product COLONIAL – THE FULL BENEFIT OF POLARIZATION 1 Strong Pricing Power 1. 99%1 City Center > Indexation fully passed through €13bn GAV 78%2 CBD > Strong rental growth ongoing > Highest topline like-for-like growth 95%3 2 Alpha – Prime Factory 2. Breeam/ > Renovation
Slide 7: Strong Profit Growth Driven by Strong Operations
01 Highlights Strong Profit Growth Driven by Strong Operations Delivery of Strong profit growth… … on the back of pricing power +12% +16% Gross Rental Income €262m Letting volume 136,454 sqm YoY +7% LFL Avg. Indexation of contracts1 Group: +5% Mad/Bcn: +7% Recurring EBITDA €207m +12% Paris: +3% ERV
Slide 8: Financials – Double digit profit growth
02 Financials – Double digit profit growth Top-line driving double digit profit growth
Slide 9: Strong profitable growth on all metrics
02 Financials – Double digit profit growth Strong profitable growth on all metrics REVENUE - GROSS RENTAL INCOME GROUP EBITDA Double digit Revenue & EBITDA growth €m 262 €m > Gross Rental Income +12% YoY +12% 205 +12% 234 > Group EBITDA +12% YoY 184 09/21 09/22 09/21 9/21 9/22 09/22 RECURRING NET PR
Slide 10: +12% Gross Rental Income YoY Increase
02 Financials – Double digit profit growth +12% Gross Rental Income YoY Increase Revenue Growth excluding impact of disposals3 of +16% > +10% Revenue increase due to rental growth in Core Portfolio & Acquisitions > +6% Revenue increase through delivery on projects & renovation program GROSS RENTAL I
Slide 11: +7% like for like in Gross Rental Income on the back of polarization
02 Financials – Double digit profit growth +7% like for like in Gross Rental Income on the back of polarization > GRI of €262m +12% year on year, driven by Paris (+17%) > GRI Like-for-like increase of +7%, one of the highest in the sector > Like for like growth with strong pricing power component GR
Slide 12: +7% like for like in Gross Rental Income
02 Financials – Double digit profit growth +7% like for like in Gross Rental Income GROUP GRI LIKE-FOR-LIKE GROWTH Highest like-for-like growth in the last 5 years One of the highest LFL growth rates in the sector 7.2% Colonial +7.2% 4.7% Peer Group +5.4% 3.6% Median 1 1.6% Peer Group 0.4% +4.5% Ave
Slide 13: Profit Growth driven by solid execution of key drivers
02 Financials – Double digit profit growth Profit Growth driven by solid execution of key drivers in 2021 Solid increase in Recurring Net Profit: +30% vs Last Year > Strong growth in revenues with +24% profit impact > Improvement in financial costs due to liability management > Additional profit imp
Slide 14: Flight to quality through selective disposals
02 Financials – Double digit profit growth Flight to quality through selective disposals > €84m of secondary assets divested as of October 2022 YTD > Total premium of +9% on last reported GAV SUCCESSFUL EXECUTION ON DISPOSALS 4 ASSETS – 23,139 SQM & €84m Project Sagasta, 27 - Madrid Disposal Prices
Slide 15: Solid Capital Structure with strong Hedging Profile
02 Financials – Double digit profit growth Solid Capital Structure with strong Hedging Profile Solid liquidity & LTV levels Strong Hedging Policy – Pre-Hedge of future maturities Positive 87%2 €2.1b Fixed Cost Mark-to-Market n Debt of €268m Liquidity 2x Coverage €4.5bn 22-24 Debt Cash €200m Maturiti
Slide 16: Solid Capital Structure with strong Hedging Profile
02 Financials – Double digit profit growth Solid Capital Structure with strong Hedging Profile Proactive hedging strategy… … Strong protection from interest rates increases Interest rate pre-hedges covering €2.4bn of future bonds maturity formalized in 11/21 pre interest rate increase Market rates C
Slide 17: Superior pricing power on the back of prime positioning
03 Operations – Outperformance through polarization Superior pricing power on the back of prime positioning
Slide 18: Office Markets with strong support for CBD
03 Operations – Outperformance through polarization Office Markets with strong support for CBD > Grade A assets scarce, especially in Paris > Market Take-up with positive momentum in the 3 cities > Letting concentrated in Grade A assets in CityCenter locations Rental market – Recovering Take-up faci
Slide 19: Superior performance on the back of high-quality product
03 Operations – Outperformance through polarization Superior performance on the back of high-quality product > Colonial with strong letting activity, +16% on previous year > Letting activity focused on CBD assets with high Sustainability Credentials > Solid mix between renewals and new lettings STRO
Slide 20: Benefitting from polarization - Setting the benchmark in Prime
03 Operations – Outperformance through polarization Benefitting from polarization - Setting the benchmark in Prime PARIS MADRID BARCELONA Letting volume - sqm Letting volume - sqm Letting volume - sqm Total 35,825 Total 80,378 Total 20,251 Thereof CBD, 7ieme & 15ieme 33,933 Thereof CBD 62,517 Thereo
Slide 21: Benefitting from polarization - Setting the benchmark in Prime
03 Operations – Outperformance through polarization Benefitting from polarization - Setting the benchmark in Prime PARIS MADRID Place de l’Étoile Place de la Concorde Musée du Tour Louvre Eiffel Plaza de Colón OFFICE STOCK TAKE UP YTD OFFICE STOCK TAKE UP YTD Colonial Colonial Colonial Colonial Shar
Slide 22: Strong Occupancy Profile of Grade A Portfolio
03 Operations – Outperformance through polarization Strong Occupancy Profile of Grade A Portfolio Strong Occupancy levels on the back of strong letting performance & high client loyalty LETTING ACTIVITY - sqm EPRA OCCUPANCY New Lettings GROUP OCCUPANCY as of 09/2022 GROUP OCCUPANCY BY MARKETS 63% +2
Slide 23: Vacancy at healthy 4.2%: availability of top-quality product
03 Operations – Outperformance through polarization Vacancy at healthy 4.2%: availability of top-quality product 4.2% of available high-quality space with solid letting prospects > 1.7% renovation program assets in Madrid, Barcelona & Paris > 1.5% Grade A CBD premises in Barcelona & Madrid GROUP EPR
Slide 24: Rental growth remains solid
03 Operations – Outperformance through polarization Rental growth remains solid > Solid Market Rental Growth of +5% driven by Madrid & Paris > +7% release spread (+8% in Madrid & +6% Paris) SOLID INCREASE IN RENTAL PRICES GROWTH ON SIGNED RENTS1 RELEASE SPREAD2 ERV GROWTH ON SIGNED RENTS1 2021 09 22
Slide 25: Pricing Power & Alpha driving superior revenue growth
04 High visibility on further rental growth Pricing Power & Alpha driving superior revenue growth
Slide 26: Sustained growth on Recurring Profit
04 High visibility on further rental growth Sustained growth on Recurring Profit Recurring Group Profit as of 09/22 1 Pricing Power Pricing Alpha Power > Indexation fully passed through +21% +13% 5 (10) 12 > Rental growth 119 19 +30% 92 2 Alpha – Prime factory > Project Pipeline > Renovation Program
Slide 27: Pricing Power – Indexation fully captured securing significant P/L GRI growth
04 High visibility on further rental growth 1 Pricing Power – Indexation fully captured securing significant P/L GRI growth PRICING POWER - INDEXATION CAPTURED INDEXATION IMPACT Indexation P/L LFL 09 Secured Indexat. 09 YTD Captured 09 YTD Indexation to crystalize further - Annual GRI uplift- contri
Slide 28: Pricing Power – Strong Rental Growth through Prime Positioning
04 High visibility on further rental growth 1 Pricing Power – Strong Rental Growth through Prime Positioning Strong Pricing Power … … Solid Base for Rental Growth 1 Sustained Rental Growth > Securing future Gross Rental Income growth 2021 2022 YTD +5% +5% > Positive impact in future recurring EPS 2
Slide 29: Alpha – Prime factory – Project pipeline with immediate impact in P&L
04 High visibility on further rental growth 2– Alpha – Prime factory – Project pipeline with immediate impact in P&L PROJECT PIPELINE ALMOST DELIVERED… …SIGNIFICANT FUTURE CASH FLOW SECURED > 7/8 assets almost fully pre –let > €54m of Gross Rents secured (67% of €81m – full potential) > Yield on Cos
Slide 30: Alpha – Prime factory – Project pipeline with immediate impact in P&L
04 High visibility on further rental growth 2– Alpha – Prime factory – Project pipeline with immediate impact in P&L > 7/8 projects pre-let at market’s maximum ERVs > Contracts signed with AAA tenants Diagonal 525 Marceau / Iena 96 Velázquez 86D Miguel Ángel 23 Biome Plaza Europa, 34 Louvre-St-Honor
Slide 31: Alpha – Prime factory – Renovation program with immediate impact in P&L
04 High visibility on further rental growth 2– Alpha – Prime factory – Renovation program with immediate impact in P&L RENOVATION PROGRAM ALMOST COMPLETED… …SIGNIFICANT FUTURE CASH FLOW SECURED > 8 out of 9 projects delivered > €36m of Gross Rents secured (76% of €47m – full potential) > 6 out of 8
Slide 32: Alpha – Prime factory – Renovation program with immediate impact in P&L
04 High visibility on further rental growth 2– Alpha – Prime factory – Renovation program with immediate impact in P&L > Renovation program almost fully let > Signed rents well above market ERVs > Contracts signed with AAA tenants Washington Plaza 103 Grenelle Cézanne Saint Honoré Charles de Gaulle
Slide 33: Superior growth & returns through prime positioning
05 Conclusion Superior growth & returns through prime positioning
Slide 34: Colonial well positioned
05 Conclusion Colonial well positioned STRONG DELIVERY ON CASH FLOW > Gross Rental Income +12% (+17% Paris) > Gross Rental Income like-for-like of +7% > Recurring EPS +23% YoY > Strong operations securing additional cash flow COLONIAL WELL POSITIONED TO PLAY THE CYCLE Colonial platform with solid in
Slide 35: Appendices Q&A
Appendices Q&A
Slide 36: Solid profitability with enhanced quality
APPENDICES Solid profitability with enhanced quality > Group Net Profit of €398m, +116% YoY > Recurring Earnings of €119m, +30% YoY > EPRA EPS of €22.11/share; +23% YoY PROFIT & LOSS ACCOUNT Profit & Loss Account NET GROUP PROFIT RECURRING NET PROFIT €m €m Results analysis - €m 3Q 22 3Q 21 +116% +30
Slide 37: Superior performance on the back of high-quality prime product
APPENDICES Superior performance on the back of high-quality prime product LETTING VOLUME YTD (Sqm) KPIS 3Q 2022 3Q 2021 3Q 2022 RELEASE SPREAD1 ERV GROWTH2 MATURITY (years) EPRA VACANCY3 1st potential exit Expiry TOTAL 117,680 136,454 +7% +5% 6 8 4.2% PARIS 36,750 35,825 +6% +5% 8 11 0.2% MADRID 50,
Slide 38: Vacancy at very healthy levels in every segment
APPENDICES Vacancy at very healthy levels in every segment > Office portfolio vacancy stable at a healthy 4.2% level (2.5% excluding Torre Marenostrum & Ortega y Gasset) > 1.7% renovation program assets in Madrid, Barcelona & Paris > Outstanding Paris at 0.2% vacancy in the office portfolio EPRA1 VA
Slide 39: Rental growth remains solid
APPENDICES Rental growth remains solid > Solid ERV YTD growth of +5% driven by Madrid & Paris > +7% release spread YTD (+8% in Madrid & +6% Paris) SOLID INCREASE IN RENTAL PRICES GROWTH ON SIGNED RENTS1 RELEASE SPREAD2 TOTAL TOTAL 2021 1Q 22 2Q 22 3Q 22 YTD 22 2021 1Q 22 2Q 22 3Q 22 YTD 22 TOTAL +5%
Slide 40: Project pipeline – GRI reversionary potential going forward
APPENDICES Project pipeline – GRI reversionary potential going forward > More than €80m of additional rents to flow into the recurring P/L > €54m of secured rents through solid pre-let performance > Project pipeline delivery & pre-letting process on track GLA Total 1 Yield Project City % Group Deliv
Slide 41: Project pipeline – significant value creation potential going forward
APPENDICES Project pipeline – significant value creation potential going forward > €2.5bn of value expected > Base for significant future NTA growth > 2022 Delivery on track GLA Total 1 Yield Value creation potential - €bn Project City % Group Delivery (sqm) Cost €m on Cost 1 Diagonal 525 Barcelona
Slide 42: Investment markets for prime product remain active
APPENDICES Investment markets for prime product remain active > Paris CBD an attractive target for International Investors > Pricing above appraisals for Core product in CBD Asset Area Price GLA Cap. Value 150, Champs-Élysées CBD €600m 18,000 sqm €33,333/sqm (3Q 2022) 2 Place Rio CBD €282m 8,676 sqm
Slide 43: Investment markets for prime product remain active
APPENDICES Investment markets for prime product remain active > Barcelona with solid investment activity– specially in the 22@ district > Investor appetite with increased momentum for Prime in Madrid Asset Area Price GLA Cap. Value Castellana 51 CBD €239m 18,700m €12,750/sqm (3Q 2022) MADRID Goya 36
Slide 44: A solid capital structure
APPENDICES A solid capital structure > Long-term financing profile with extended debt maturities > LTV of 37.9% with a liquidity of €2,140m > A solid financial structure with competitive financing costs Extension of Debt Maturities A Solid Financial Structure Maturity profile of debt facilities - €b
Slide 45: www.inmocolonial.com
www.inmocolonial.com © Colonial
Inmobiliaria Colonial, SOCIMI — Q3 2022 Earnings Presentation on 6ix