Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial, SOCIMI — FY2019 Earnings Presentation
65 slides from Colonial Sfl Socimi Sa's earnings presentation, February 2020
Slide 1: Annual Results 2019
Annual Results 2019 February 2020 2019 4/19
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: Delivering the Business Plan
01 Highlights Delivering the Business Plan
Slide 6: Business Plan delivery on track
01 Highlights 2019 Business Plan delivery on track OUTSTANDING FINANCIAL RESULTS > Total Shareholder Return 2019 of +16% > EPRA NAV of €11.5€ per share: +14% > Gross Asset Value of €12.2bn, +9% like-for-like > Gross Rental Income of €352m, +4% like-for-like > Recurring earnings of €139m, +38% > Recu
Slide 7: Record Net Profit of €827m, +58%
01 Highlights 2019 Record Net Profit of €827m, +58% > Total Annual Shareholder Return of +16% > Net Asset Value of 11.5€/share +14% > Recurring EPS of 27.4€Cts/ share, +23% Total Annual Return - € per share 2019 YoY Profit & Loss - €m 2019 YoY Var TOTAL SHAREHOLDER RETURN +16% Gross Rental Income €3
Slide 8: Solid fundamentals driving top line growth
01 Highlights 2019 Solid fundamentals driving top line growth > Group vacancy below 3% with strong fundamentals > Outstanding GRI Like for Like growth of +4% > Double digit Release Spread & Superior Rental Growth Solid Fundamentals 2019 Unparalleled Prime Positioning EPRA Vacancy 2.7% CBD Energy Vol
Slide 9: Market: Scarcity in Prime Product
02 Market Scarcity in Prime Product
Slide 10: CBD outperforming in the rental market
02 Market CBD outperforming in the rental market VACANCY % PRIME ERV HIGHLIGHTS 27.5 3000% 2996% 2993% 2989% 2986% 2982% 2978% 2975% 2971% 2968% 2964% 2960% 2957% 2953% 2950% 2946% 2942% 2939% 2935% 2932% 2928% 2924% 2921% 2917%€/sqm/month 2914% 2910% 2906% 2903% 2899% 2896% 2892% 2888% 2885% 2881%
Slide 11: Investment Markets with strong fundamentals
02 Market Investment Markets with strong fundamentals PRIME YIELDS (1) SPREAD VS 10Y BOND HIGHLIGHTS > Record of investment volume ▪ More than €1,8bn BARCELONA ▪ 4.5x times 2018 volume > 22@ district attracting investments focused on grade A assets > Prime yield at 3.50%, with healthy spread > High
Slide 12: Investment Markets with ongoing support for prime
02 Market Investment Markets with ongoing support for prime > Investor interest for prime product remains very strong > Very high willingness to pay for defensive assets > Low interest rates environment favouring real estate transactions BARCELONA MADRID PARIS City Prime Prime Center PLAÇA CATALUNYA
Slide 13: Operational performance: Unparalleled exposure to CBD
03 Operational performance Unparalleled exposure to CBD
Slide 14: High letting volume with 263,301 sqm signed
03 Operational performance High letting volume with 263,301 sqm signed in very good terms # CONTRACTS SQM SIGNED GRI SECURED1 EPRA VACANCY2 INCENTIVES3 MAX. RENT SIGNED BARCELONA 41 64,466 €16m 2.0% 6% 29 €/sqm/month MADRID 53 142,781 €33m 4.3% 5% 36 €/sqm/month PARIS 56,054 €43m 14% 907 41 1.6% €/s
Slide 15: Strong delivery on rental price increases
03 Operational performance Strong delivery on rental price increases > 2019 with strong price increases in every segment > Significant rental growth in every segment > High release spreads in every market SOLID INCREASE IN RENTAL PRICES RELEASE SPREAD2 GROWTH ON SIGNED RENTS1 1H 2H FY 2019 1H 2H FY
Slide 16: Strong delivery on rental price increases
03 Operational performance Strong delivery on rental price increases > Renovation program as accelerator for growth > Significant rental uplift above ERV > Strong capital value impact post execution CBD +10% Paris 106 HAUSSMANN vs. ERV Rent above 800 €/sqm/ year: +10% vs ERV > Full renovation of ent
Slide 17: Rental price increases across the entire portfolio
03 Operational performance Strong delivery on rental price increases across the entire portfolio GROWTH ON SIGNED RENTS1 Arturo Soria, 336 Ciutat de Granada Av. Bruselas 38 Lopez de Hoyos 35 L. St. Honoré Offices Berlín Numància Via Augusta +3% +7% +7% +8% +8% +10% +10% Av. Diagonal, 682 Recoletos 3
Slide 18: Release spread across the entire portfolio
03 Operational performance Strong delivery on rental price increases across the entire portfolio RELEASE SPREAD1 Louvre St Honoré Sant Cugat Santa Engracia Diagonal 197 Josefa Valcárcel Miguel Ángel, 11 Tucumán +8% +19% +20% +21% +24% +24% +24% Illacuna Alfonso XII Amigó 11-17 Diagonal 409 Diagonal
Slide 19: Strong delivery on letting-up vacancy
03 Operational performance Strong delivery on letting-up vacancy > More than 600 bp Madrid vacancy reduction YoY > Group vacancy from 4.4% down to 2.7% > Ongoing strong momentum EPRA VACANCY LETTING UP PRODUCT & OFFLOADING NON CORE MADRID OFFICES PORTFOLIO1 (619bp) Cristalia, 5-6 Luca de Tena, 6 Luc
Slide 20: Vacancy remains at healthy levels
03 Operational performance Vacancy remains at healthy levels > Colonial Group vacancy at a healthy 2.7% > Barcelona vacancy at 2.0% and Paris vacancy at 1.6% > Madrid vacancy at 4.3% EPRA VACANCY BARCELONA1 COLONIAL GROUP2 MADRID1 Portfolio Axiare Portfolio Axiare Project delivery LFL Colonial LFL C
Slide 21: Solid value creation through project delivery
03 Operational performance Solid value creation through project delivery > Successful delivery of unique projects > Capturing highest market rent in each submarket > Significant capital value creation 2019 PROJECT DELIVERY STRONG VALUE CREATION Pedralbes Centre Gala Placidia More than 31,800 sq m of
Slide 22: ESG Strategy on track
03 Operational performance ESG Strategy on track > Strong ESG momentum in 2019 on every dimension > Significant improvement on GRESB > Increased scope of portfolio with highest energy certificates STRONG MOMENTUM Portfolio with Leed / Breeam1 - Value €10.0bn 1✓ GRESB with signifcant improvement +29%
Slide 23: ESG Strategy on track
03 Operational performance ESG Strategy on track > ESG excellence at the Core of Strategy > ESG Ratings at the high end – MSCI with AA > GRESB / BREEAM 2019 Award for Responsible Real Estate Investment BENCHMARK / INDEX ACHIEVEMENT / RATING > AA Rating (up from BBB in 24 months) > One of the highest
Slide 24: Profitable Growth improving the quality of returns
04 Financial performance Profitable Growth improving the quality of returns
Slide 25: Strong top line growth
04 Financial performance Strong top line growth > Outstanding +4% like for like > Madrid with highest LFL of +6% > Paris & Barcelona LFL strong with +3% and +2.4% GROSS RENTAL INCOME - €M EPRA Projects & Disposals & TOTAL like-for-like1 renovations Acquisitions +4% LFL1 GROUP 4 (10) +1% +4% +1% (3%)
Slide 26: Like-for-like rental growth price driven
04 Financial performance Like-for-like rental growth price driven > Like-for-like growth largely driven by rental price increases > Barcelona and Paris 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-
Slide 27: Strong underlying growth in Asset Values
04 Financial performance Strong underlying growth in Asset Values > Gross Asset Value of €12,196m (€12,807m including transfer costs) > +9% like for like YoY growth > Barcelona outstanding with +16% like for like GAV 2019 GROWTH GAV VARIANCE +9% FY 2019 2H 2019 (2%) LFL BARCELONA +16% +7% 588 (147)
Slide 28: Strong underlying growth in Asset Values
04 Financial performance Strong underlying growth in Asset Values > +9% like for like Capital Value Growth in 2019 > Strong Alpha component of +5.9% (Project Delivery + Rental Growth) > Scarcity factor of prime portfolio adding +2.9% GAV 2019 GROWTH LIKE FOR LIKE VARIANCE YoY +9% FY 2019 Project del
Slide 29: Selective disposals – Value Creation with high premiums
04 Financial performance Selective disposals – Value Creation with high premiums > Selective Non-Core disposals > Double digit premiums on appraisals > Ongoing flight to quality & focus DISPOSALS 20191 VALUE CREATION THROUGH NON-CORE DISPOSALS Hotel Centro Norte Parc Central €477m of Non-Core Dispos
Slide 30: Profitable growth with enhanced quality
04 Financial performance Profitable growth with enhanced quality > Record net profit of €827m, +58% > High double digit recurring EPS growth > Non-Core Disposals enhancing the quality of returns STRONG EPS GROWTH RECURRING EARNINGS – VARIANCE ANALYSIS GROUP NET RESULT Offloading Secondary Assets €m
Slide 31: A strong credit profile
04 Financial performance A strong credit profile > Highest Corporate Rating in Spanish Real Estate > LTV reduction to 36% in line with financial policy > Attractive cost of debt of 1.6% and more than €2bn of liquidity2 ACTIVE LIABILITY MANAGEMENT … … ENHANCING THE BALANCE SHEET Solid Capital Structu
Slide 32: Solid Total Shareholder Return
04 Financial performance Solid Total Shareholder Return > +16% Total Annual Shareholder Return > EPRA NAV of 11.5 €/share, +14% YoY > Goodwill fully absorbed just one year after merger with Axiare STRONG MOMENTUM IN NAV GROWTH TOTAL SHAREHOLDER RETURN €/share FY 2019 2H 2019 0.27 (0.40) 0.78 0.20 11
Slide 33: “Alpha” as significant driver in value creation
04 Financial performance “Alpha” as significant driver in value creation > +16% 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 S
Slide 34: “Alpha” as significant driver in value creation
04 Financial performance “Alpha” as significant driver in value creation > +16% 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 R
Slide 35: A strong platform for future value creation
05 Growth drivers A strong platform for future value creation
Slide 36: Future value creation
05 Growth drivers FUTURE VALUE CREATION 1✓ Leadership in Prime Offices 2✓ €1.3bn of project pipeline 3✓ Capturing reversion in rents 4✓ Strong investment market 5✓ Disciplined capital allocation 36
Slide 37: Leadership in Prime Offices
05 Growth drivers 1 Leadership in Prime Offices > Colonial as largest office owner in the City Center of Madrid, Barcelona and Paris > Strong market share increases negotiation power > Colonial best positioned to capture the rental cycle in its markets BARCELONA MADRID PARIS Colonial Portfolio - max
Slide 38: €1.3bn of CBD Project Pipeline with high capital value upside
05 Growth drivers 2 €1.3bn of CBD Project Pipeline with high capital value upside > €1.3bn of Project Pipeline with 6.6% Yield on Cost > Growth momentum on Gross Rental Income of final product > 25% per-let YTD in very good terms 1 1 Project City % Group Delivery GLA (sqm) Total Cost €m Total Cost €
Slide 39: Mendez Alvaro Campus – A new concept of Urban Campus
05 Growth drivers 2 €1.3bn of CBD Project Pipeline with high capital value upside MENDEZ ALVARO CAMPUS – A new concept of Urban Campus 39
Slide 40: Solid progress on Mendez Alvaro Campus
05 Growth drivers 2 €1.3bn of CBD Project Pipeline with high capital value upside > Mendez Alvaro Campus will transform the south of the city centre of Madrid > Creation of an Urban Campus with hybrid use of offices and residential leasing > A new concept of offices and apartments with services and
Slide 41: €1.3bn of CBD Project Pipeline with high capital value upside
05 Growth drivers 2 €1.3bn of CBD Project Pipeline with high capital value upside PROJECT PIPELINE FINAL PRODUCT KPIS PRIME MARKET REFERENCE2 Total Cost €80m Total Cost1 4,013 Capital Value 9,500 BARCELONA €/sqm €/sqm Diagonal 525 Yield on Cost 6.1% Prime Yield 3.50% Plaza Europa 34 Total Cost €554m
Slide 42: Capturing reversion - Attractive CBD contract portfolio
05 Growth drivers 3 Capturing reversion - Attractive CBD contract portfolio > Strong short term reversionary potential - 46% of contracts in Spain & 26% in Paris > Contract Portfolio under-rented and well positioned in growing markets > Delivery of high release spreads ongoing > Renovation programs
Slide 43: Capturing reversion – Renovation program
05 Growth drivers 3 Capturing reversion – Renovation program > Renovation programs as rental growth & capital value accelerator > Tenant rotation & renovation initiatives to improve rental levels > Program reloaded with 30.000 sqm DELIVERING PROGRESSING RE-LOADING > 12,474 sqm of GLA > 53,527 sqm of
Slide 44: Capturing reversion – Renovation program
05 Growth drivers 3 Capturing reversion – Renovation program > Current Program of more than 80,000 sqm > €700m of value with upside potential > Strong reversionary potential on rents and Capital Value RENOVATION PROGRAM SIGNIFICANT VALUE CREATION POTENTIAL Barcelona Madrid Paris 82,162 sqm of GLA €7
Slide 45: Acquisition program
05 Growth drivers 4 Acquisition program > Acquisition program ongoing > Significant pipeline under analysis > €115m acquisitions executed YTD INVESTMENT PIPELINE - €M €1.0bn €1.0bn 12% €115m 100 % 100 % executed CBD Value YTD Add Parc Glories II Recoletos 27 > Off-market transactions Under > Strong
Slide 46: Selective organic investment with value added potential
05 Growth drivers 4 Selective organic investment with value added potential Value Add acquisition in Barcelona 22@ CBD Value Add acquisition in Prime Madrid Parc Glories II Barcelona – 22@ CBD Carrer Marina TMN Recoletos 27 Barcelona – 22@ CBD Madrid – Prime CBD Recoletos 27 46
Slide 47: Parc Glories II: Reversion potential in a growing market
05 Growth drivers 4 Parc Glories II: Reversion potential in a growing market - BCN 22@ > Value Add investment with high reversionary potential > Efficient lay-out as a competitive advantage > Prime asset with transformation potential REAL ESTATE RATIONALE SOURCES OF VALUE CREATION > Prime location o
Slide 48: Recoletos 27: Opportunistic acquisition in Prime CBD
05 Growth drivers 4 Recoletos 27: Opportunistic acquisition in Prime CBD > Opportunistic acquisition in Prime Madrid > Value added investment > High reversion potential through asset management REAL ESTATE RATIONALE SOURCES OF VALUE CREATION > Super prime location – perfect fit with Colonial’s CBD p
Slide 49: Investment Market with ongoing strong support for Prime
05 Growth drivers 4 Investment Market with ongoing strong support for Prime > Investor interest for prime product remains strong > Quarterly capital value increases ongoing > Colonial’s assets with prudent appraisal values Madrid City Center (inside M30) Barcelona City Center Paris CBD Terreis deal
Slide 50: Discipline on Capital Allocation
05 Growth drivers 5 Discipline on Capital Allocation > Ongoing flight to quality through disciplined capital allocation > Disposal of non-core asset for €1.4bn in the last 26 months > Acquisition program ongoing with relevant pipeline under analysis INVESTMENTS & DIPOSALS SINCE 2015 - €m CAPITAL ALL
Slide 51: A solid platform to capture future growth
05 Growth drivers A solid platform to capture future growth > 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) Potential for Yield compression
Slide 52: Conclusion & Outlook
06 Conclusion & Outlook
Slide 53: Conclusion
06 Conclusion OUTSTANDING FINANCIAL RESULTS > Total Shareholder Return 2019 of +16% > EPRA NAV of €11.5€ per share: +14% > Gross Asset Value of €12.2bn, +9% like-for-like > Gross Rental Income of €352m, +4% like-for-like > Recurring earnings of €139m, +38% > Recurring EPS of €27.4cts. per share, +23
Slide 54: Outlook & Guidance
06 Outlook OUTLOOK & GUIDANCE Operations 2020 > Madrid vacancy reduction further down > Prime Rental Prices with strong momentum ▪ Paris Portfolio above 900 €/sqm/y (recent examples signed) ▪ Barcelona prime at 30 €/sqm/m ▪ Madrid targeting 40 €/sqm/m for high end > Solid base for ongoing strong GRI
Slide 55: Q&A
Q&A
Slide 56: Delivering the Business Plan
APPENDICES Delivering the Business Plan > Record net profit of €827m, +58% > High double digit recurring EPS growth > Non-Core Disposals enhancing the quality of returns STRONG EPS GROWTH PROFIT & LOSS ACCOUNT RECURRING RESULT €m +4% LFL +38% + RECURRING EPS Cts€/share +23% + Recurring Earnings - €m
Slide 57: Total Shareholder Return since June 2014
APPENDICES Total Shareholder Return since June 2014 57
Slide 58: Solid valuation levels in healthy market
APPENDICES Solid valuation levels in healthy market > Colonial portfolio with additional potential for yield compression > Prime market yields & scarcity value as growth driver > Prime Yields at very attractive spreads compared to reference rates VALUATION YIELDS (1) BARCELONA MADRID PARIS 3.21% Col
Slide 59: Barcelona Letting Performance
APPENDICES Barcelona Letting Performance BARCELONA – LETTING PERFORMANCE Solid Performance Strong rental growth - Highlights 64,466 sq m let Dau Retail Avinguda Diagonal 409 Travesera 11 > Max. rent signed 28.5 €/sqm/month (1) > ERV growth +9% +135% +14% +16% vs ERV1 vs ERV1 vs ERV1 > Release spread
Slide 60: Madrid Letting Performance
APPENDICES Madrid Letting Performance MADRID – LETTING PERFORMANCE Solid Performance Strong rental growth - Highlights 142,781 sq m let José Abascal 45 Francisco Silvela 42 Castellana 163 > Max. rent signed 35.5 €/sqm/month (1) > ERV growth +4% +20% +14% +25% vs ERV1 vs ERV1 vs ERV1 > Release spread
Slide 61: Paris Letting Performance
APPENDICES Paris Letting Performance PARIS – LETTING PERFORMANCE Solid Performance Strong rental growth - Highlights 56,054 sq m let Washington Plaza Percier > Max. rent signed > 900 €/sqm/year (1) > ERV growth +7% +32% +21% vs ERV1 vs ERV1 > Release spread2 +7% Louvre Saint-Honoré 176 Charles de Ga
Slide 62: ESG Strategy and tracks
APPENDICES ESG Strategy and tracks > 92% of portfolio with Breeam/Leed certificates > Significant quantitative and qualitative improvement in energy efficiency > €9bn of assets with Breeam and €2bn with Leed Portfolio with Leed / Breeam1 - Value Breeam Certificates - Value Leed Certificates - Value
Slide 63: 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 31/12/2018 31/12/2019 More than €12b
Slide 64: Update on CoWorking – UtopicUs
03 APPENDICES Update on CoWorking – UtopicUs > Utopicus with consolidated leadership in Spain > Strong brand recognition with well positioning in key locations > Quick expansion with 14 centers and c.40,000 sqm under operation CONSOLIDATION OF A COWORKING PLATFORM IN SPAIN NEW CENTERS 2019 #centers
Slide 65: www.inmocolonial.com
www.inmocolonial.com © Colonial
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