Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial, SOCIMI — H1 2023 Earnings Presentation
52 slides from Colonial Sfl Socimi Sa's earnings presentation, Jul 27, 2023
Slide 1: First Half 2023
First Half 2023 July 27th, 2023
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 - Pere Viñolas, CEO 02 Financial performance - Carmina Ganyet, CCO 03 Portfolio and Pipeline – Carlos Krohmer, CCDO 04 Future Growth & Conclusion - Pere Viñolas, CEO Pere Viñolas Carmina Ganyet Carlos Krohmer Chief Executive Officer Chief Corporate Officer Chief Corporate Develo
Slide 4: Highlights: Our Performance
01 Highlights Our Performance 1 Double Digit Growth in ▪ +18% EBITDA growth reaching €152m (vs €129m in 06/2022) EBITDA & EPS ▪ +14% growth of recurring EPS reaching €cts16 per share 2 Strong Letting Volume & ▪ Close to 100,000 sq m signed YTD equivalent to €43m annualized rents ▪ Group occupancy at
Slide 5: European office market vs US
01 Highlights European office Market vs US EUROPE AND US: FUNDAMENTAL DIFFERENCES IN THE PERFORMANCE OF EACH REGION EUROPE US Post pandemic office re-entry rate 73% Paris 85% Madrid 80% 50% 1Q 2023 net absorption vs.10- +1.4 m sqm -2.1 m sqm year average # quarters with positive net absorption since
Slide 6: Resiliency of European Office compared to USA
01 Highlights Resiliency of European Office compared to USA European offices remain attractive for employees with increasing momentum Office re-entry solid in Europe & APAC, but lags in the US More employers drive return to the office Change in office entry compared to pre-pandemic baseline (%) Thre
Slide 7: Solid tenant trends in prime European offices
01 Highlights Solid tenant trends in prime European offices Colonial’s strategy is focused on prime CBD assets outperforming the market Tenant trends are strong in European city centers Tennant demand concentrated in prime assets High activity in Paris, Madrid & Barcelona office sector 1H2023 Lettin
Slide 8: The Best Office Product delivers outperformance on occupancy levels
01 Highlights The Best Office Product delivers outperformance on occupancy levels 1. Colonial has one of the highest occupancy ratios in the sector thanks to its prime positioning 2. Colonial’s prime assets are fully benefitting from the polarization trend and scarcity of grade A in the market PARIS
Slide 9: The Best Office Product delivers outperformance on rental growth
01 Highlights The Best Office Product delivers outperformance on rental growth 1. Colonial’s portfolio is achieving outstanding rental growth, setting the benchmark for prime rents 2. High quality clients signing the maximum rents to secure low carbon destinations in the City Centre PARIS MADRID BAR
Slide 10: Prime Strategy delivers strong cash flow growth and outperformance on valuations
01 Highlights Colonial’s Prime Strategy delivers strong cash flow growth and outperformance on valuations 1. Colonial’s Gross Asset Value is resilient – Rental Growth partially offsets yield expansion impact 2. Rental Growth and Project Delivery generating +5% growth in GAV in 6 months GROSS ASSET V
Slide 11: Financial performance – Strong Cash Flow & Resilient Values
02 Financial performance – Strong Cash Flow & Resilient Values Strong top-line results driving profitable growth
Slide 12: Financial Performance – Strong Cash Flow & Resilient Values
02 Financial Performance – Strong Cash Flow & Resilient Values The Best Office Product delivering outperformance Strong Cash Flow Revenues EBITDA Recurring Net Profit Recurring EPS €183m €152m €87m €Cts 16.1/sh +23% +25% +25% +8% +10% +18% Continued +14% +14% Continued Continued LFL Operations1 Oper
Slide 13: Prime Strategy delivers double-digit profit growth with resilient valuations
02 Financial Performance – Strong Cash Flow & Resilient Values Colonial’s Prime Strategy delivers double-digit profit growth with resilient valuations STRONG CASH FLOW GROWTH … GROSS RENTAL INCOME GROUP EBITDA EARNINGS PER SHARE (EPS1) €m €m €cts/share 183 170 +10% +23% +25% Like- Continued Continue
Slide 14: Recurring EPS with high double-digit growth
02 Financial Performance – Strong Cash Flow & Resilient Values Recurring EPS with high double-digit growth 1. Recurring EPS +14% vs previous year 2. Recurring EPS of continued operations increased by +25%1 RECURRING PROFIT - €m RECURRING EARNINGS PER SHARE (EPS) €cts/share 23 (4) (8) +14% 87 +14% 16
Slide 15: Strong Revenue with a multi-layer cash flow growth
02 Financial Performance – Strong Cash Flow & Resilient Values Strong Revenue with a multi-layer cash flow growth 1. Core Portfolio contributes +8% to revenue growth on the back of a strong like for like 2. Projects & Acquisitions contributed with +12% to Gross Rental Income Growth GROSS RENTAL INCO
Slide 16: Strong Gross Rental Income increases throughout the portfolio
02 Financial Performance – Strong Cash Flow & Resilient Values Strong Gross Rental Income increases throughout the portfolio 1. Gross Rental Income increases by +8% driven by Paris portfolio with a +14% growth 2. Outstanding like-for-like increase of +10%, one of the highest growth rates in the sect
Slide 17: Net Rental Income growth of +11% (+13% like-for-like)
02 Financial Performance – Strong Cash Flow & Resilient Values Net Rental Income growth of +11% (+13% like-for-like) ACCELERATION IN LIKE-FOR-LIKE RENTAL GROWTH GROSS RENTAL INCOME Variance YoY Gross Rental Income Like-for-Like1 growth €m 183 +10% +10% 170 Like- for-like1 +7% Indexation impact in Li
Slide 18: Divesting close to €550m in line with appraisal values
02 Financial Performance – Strong Cash Flow & Resilient Values Colonial is being successful in divesting close to €550m in line with appraisal values 1. In a narrow investment market Colonial is successfully divesting a large volume of non-core assets (€548m) 2. Divestments achieved at attractive pr
Slide 19: Resilient asset values in volatile market environments
02 Financial Performance – Strong Cash Flow & Resilient Values Colonial’s Prime Strategy delivers resilient asset values in volatile market environments 1. Higher Cap Rates partially offset by Rental growth & Project Delivery 2. The prime positioning of our assets delivers a resilient valuation outp
Slide 20: Financial Cost under control with 100% at fixed rate
02 Financial Performance – Strong Cash Flow & Resilient Values Financial Cost under control with 100% at fixed rate 1. Colonial has 100% of the debt at fixed cost maintaining financial costs under control at 1.69% 1 & future cost at <2.5% 2. Standard & Poor’s BBB+ stable outlook credit rating with s
Slide 21: New Revolving Credit Facility and increased liquidity
02 Financial Performance – Strong Cash Flow & Resilient Values Financial Cost under control with 100% at fixed rate 1. The Colonial Group has signed a new €835m Sustainable Revolving Credit Facility 2. Group’s liquidity increased up to €2.9bn after disposals and new undrawn debt New Revolving Credit
Slide 22: Prime Strategy delivers a resilient NTA
02 Financial Performance – Strong Cash Flow & Resilient Values Colonial’s Prime Strategy delivers a resilient NTA 1. Higher Cap Rates partially offset by Rental growth & Project Delivery 2. Additional equity value of €347m due to pro-active hedging crystalized in 11.5 €/share Net Disposal Value Resi
Slide 23: Portfolio & Pipeline – Outperformance of Prime Product
03 Portfolio & Pipeline – Outperformance of Prime Product Our Prime buildings set the market reference in rental growth
Slide 24: Office Markets polarization: Scarcity of Grade A assets
03 Portfolio and Pipeline – Outperformance of Prime Product Office Markets polarization: Scarcity of Grade A assets in CBD driving ERV growth Office markets have a scarce supply of Grade A product in CBD that is favouring Prime rental growth PARIS - Office rental market MADRID - Office rental market
Slide 25: Colonial delivers strong letting performance
03 Portfolio and Pipeline – Outperformance of Prime Product Colonial delivers strong letting performance STRONG LETTING ACTIVITY & HIGH TENANT LOYALTY €28m €45m €43m In sq m 104,733 97,209 59,784 1H 2021 1H 2022 1H 2023 52% of contracts with 10 Years €43m Luxury Industry Contracts WALT signed1 Signe
Slide 26: Strong letting performance capturing rental growth
03 Portfolio and Pipeline – Outperformance of Prime Product Colonial delivers strong letting performance capturing rental growth 1. Our buildings have delivered strong rental growth in Q2 2023 with doubled digit increases in Paris 2. Rental growth remains solid throughout the year with acceleration
Slide 27: Prime Positioning captures cash flows from indexation
03 Portfolio and Pipeline – Outperformance of Prime Product Colonial’s Prime Positioning allows to fully capture additional cash flows from indexation Colonial Group has captured +5.7% of revenue growth through indexation (+6% France and 4% Spain) 2023 YTD INDEXATION FULLY PASSED THROUGH Indexation
Slide 28: One of the highest occupancy ratios in the sector
03 Portfolio and Pipeline – Outperformance of Prime Product Colonial has one of the highest occupancy ratios in the sector thanks to its prime positioning 1. Colonial has increased the occupancy of its buildings up to 97% 2. Our Paris portfolio has reached full occupancy, reflecting the scarcity of
Slide 29: Healthy level of 2.8% availability of top-quality product
03 Portfolio and Pipeline – Outperformance of Prime Product Colonial has a healthy level of 2.8% availability of top-quality product > Scarce availability of high-quality space in the CBD of Madrid and Barcelona > The remaining availability results mainly from entry into operation of the Barcelona r
Slide 30: Prime Factory Approach delivers additional Cash Flow & Value Creation
03 Portfolio and Pipeline – Outperformance of Prime Product Colonial’s Prime Factory Approach delivers additional Cash Flow & Value Creation Colonial delivers strong value creation through urban transformation projects PARIS CBD | Place du Palais -Royal Value Creation in Louvre Saint Honoré 100 Basi
Slide 31: Project pipeline delivery and returns
03 Portfolio and Pipeline – Outperformance of Prime Product Colonial’s Prime Factory Approach delivers additional Cash Flow & Value Creation Colonial is successfully delivering the project pipeline with one of the highest yield on costs in the sector PROJECT PIPELINE PROJECT PIPELINE RETURN GLA Proj
Slide 32: Urban transformation projects
03 Portfolio and Pipeline – Outperformance of Prime Product Colonial’s Prime Factory Approach delivers additional Cash Flow & Value Creation Colonial invests in urban transformation projects developing the best product & maximizing user experience LOUVRE SAINT HONORÉ MÉNDEZ ÁLVARO CAMPUS RIVES DE SE
Slide 33: ESG Leadership with clear priorities
03 Portfolio and Pipeline – Outperformance of Prime Product ESG Leadership with clear priorities Colonial has a strong ESG commitment creating low carbon destinations for our clients A clear ambition… …with solid delivery … creating low carbon destinations Operational decarbonization pathway CDP A-R
Slide 34: Colonial a Prime Platform with a Multi-layer Cash flow Growth
04 Future Growth & Conclusion Colonial a Prime Platform with a multi-layer Cash flow Growth
Slide 35: Strategy – Prime Platform with a Multi-layer Cash flow Growth
04 Future Growth & Conclusion Strategy – Prime Platform with a Multi-layer Cash flow Growth Colonial a Prime Platform with a Multi-layer Cash flow Growth 1 Inflation hedge EBITDA +23% €152m +18% Continued EPS GUIDANCE 2 Rental Growth Operations1 CONFIRMED Earnings Per Share TOWARDS THE 3 Projects 16
Slide 36: Portfolio offers high visibility on further revenue growth
04 Future Growth & Conclusion Strategy – Prime Platform with a Multi-layer Cash flow Growth Colonial’s Portfolio offers a high visibility on further revenue growth 1. Annualized Passing Rents of €400 m not yet fully crystalized in 2023 Profit & Loss accounts 2. Additional Revenues of more than €40 m
Slide 37: Prime assets, experience destinations, financial discipline
04 Future Growth & Conclusion Strategy - Prime assets, experience destinations, financial discipline Tenant trends are solid in European City Centres ▪ Scarcity of Grade A stock & race to quality accelerate bifurcation in Europe ▪ Low carbon destinations outperforming the market in occupancy and ren
Slide 38: Thank You
THANK YOU https://www.inmocolonial.com/en/shareholders-and-investors
Slide 39: Solid profitability with enhanced quality
APPENDICES Solid profitability with enhanced quality PROFIT & LOSS ACCOUNT Profit & Loss Account REVENUE - GROSS RENTAL INCOME GROUP RECURRING EBITDA €m €m Results analysis - €m 1H 2023 1H 2022 183.4 +8% +16% Gross Rents 183 170 169.6 155.5 Recurring EBITDA 156 134 133.7 +10% +23% Like- Continued Re
Slide 40: Resilient asset values in volatile market environments
APPENDICES Colonial’s Prime Strategy delivers resilient asset values in volatile market environments 1. Higher Cap Rates partially offset by Rental growth & Project Delivery 2. The prime positioning of our assets delivers a resilient valuation outperforming the market RESILIENT GROSS ASSET VALUES FU
Slide 41: Track record on value creation through capital recycling
APPENDICES Colonial has a strong track record on value creation through capital recycling Colonial continues with its successful flight to quality strategy through active portfolio asset allocation ONGOING FLIGHT TO QUALITY THROUGH ACTIVE CAPITAL ALLOCATION 2015 Alpha I Alpha II Alpha III Alpha IV 2
Slide 42: A solid capital structure
APPENDICES A solid capital structure Extension of Debt Maturities A Solid Financial Structure Maturity profile of debt facilities - €m 31/12/2022 30/06/2023 75%1 of debt aaaa aaaa maturing >2026 Net Debt €5,355m €5,038m LTV 38.7% 39.2% 1.390 Drawn Facilities €100m €0m 835 Unutilized Facilities €2,24
Slide 43: Office Markets show strong support for Prime CBD product
APPENDICES Office Markets show strong support for Prime CBD product Scarcity of Grade A CBD stock & race to quality vs secondary locations accelerate bifurcation in Europe PARIS - Office rental market MADRID - Office rental market 40.00 +19% 37.0 1,000 36.3 36.0 35.5 1000 33.8 +18% 35.00 930 930 31.
Slide 44: Colonial delivers strong letting performance
APPENDICES Colonial delivers strong letting performance Colonial has signed more than 97,000 sqm in the first half of the year, reducing vacancy and locking in long-term contract maturities LETTING VOLUME EPRA VACANCY1 MATURITY (years) 1st Sqm Value (€) 12/22 1H 2023 potential exit Expiry TOTAL (157
Slide 45: Vacancy at very healthy levels in every segment
APPENDICES Vacancy at very healthy levels in every segment EPRA1 VACANCY PARIS 0,2% 0,3% 0,4% 0,0% 4% 4% 3% 3% Total 6/22 12/22 3/23 06/23 Vacancy2 MADRID TOTAL 7% 4% 5% 4% 3% 3% 3% 3% 2,6% 1% 6/22 12/22 3/23 06/23 6/22 12/22 3/23 06/23 BARCELONA 20% 16% 14% 15% Sant Cugat Torre Marenostrum 5% 6/22
Slide 46: 2023 Contract Maturities
APPENDICES 2023 Contract Maturities 2023 MATURITIES – MIX 2H 2023 MATURITIES BREAKDOWN % on annualized Group GRI Madrid 52% 7.8% 0.8% 3.1% 4.0% 0.2% 33 3 13 Paris 38% Barcelona Paris 10% 17 Madrid 1 Barcelona Group Signed & Not Stays & Under Remaining 2023 Impact Executed BO Negotiation Rent Roll Re
Slide 47: Prime Factory Approach delivers solid Value Creation
APPENDICES Colonial’s Prime Factory Approach delivers solid Value Creation 1. Colonial is successfully delivering the project pipeline with one of the highest yield on costs in the sector 2. High levels of secured rents as solid source for additional revenue growth in 2023 PROJECT PIPELINE - DELIVER
Slide 48: Investment markets for prime product remain active: Paris
APPENDICES Investment markets for prime product remain active Asset Area Price GLA Cap. Value 19 François 1er CBD €150m 2,600 sqm €57,692/sqm (1Q 2023) 62 Champs Elysées CBD €100m 2,300 sqm €43,478/sqm (1Q 2023) 35 Montaigne CBD €200m 5,100 sqm €39,216/sqm (1Q 2023) PARIS 11 Hoche CBD €115m 3,300 sq
Slide 49: Investment markets for prime product remain active: Madrid
APPENDICES Investment markets for prime product remain active Asset Area Price GLA Cap. Value Castellana 51 CBD €239m 18,700 sqm €12,750/sqm (3Q 2022) Almagro 9, José Abascal 56 & €315m CBD 33,731 sqm €9,338/sqm Miguel Ángel 11 (1Q 2023) MADRID Fray Luis de León 13 City Center €32m 4,300 sqm €7,442/
Slide 50: Investment markets for prime product remain active: Barcelona
APPENDICES Investment markets for prime product remain active Asset Area Price GLA Cap. Value Portal de l’Àngel 40* City Center €105m 4,400 sqm €23,863/sqm (4Q 2022) * Includes Office & Retail Units Diagonal 662** CBD €240m 27,300 sqm €8,791/sqm Transaction not completed ** Sale price as of publishi
Slide 51: ESG performance
APPENDICES ESG performance ESG topics analyzed Score Colonial Overview > CO2 reduction in line with 1.5º Ambition > Decarbonization Plan scientifically approved 1.5Cº pathway Targets approved > Leading the way by setting science-based targets > Highly-ambitious plan towards achieving 1.5ºC goal > CO
Slide 52: www.inmocolonial.com
www.inmocolonial.com © Colonial
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