Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial, SOCIMI — FY2018 Earnings Presentation
60 slides from Colonial Sfl Socimi Sa's earnings presentation, February 2019
Slide 1: Annual Results 2018
Annual Results 2018 February 2019 4/18
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: 2018 – A Year of Transformation
01 Highlights 2018 – A Year of Transformation
Slide 6: 2018 – A year of transformation
01 Highlights 2018 2018 – A year of transformation 1. I. Axiare Acquisition & Integration in record time 2. II. Immediate capital recycling – Alpha IV ˃ Disposal of €441m non core assets with premium to GAV ˃ 100% reinvestment in Prime CBD III. 1. Creation of a €1.3bn Project Pipeline of Prime CBD I
Slide 7: Accelerating the Business Plan
01 Highlights 2018 Accelerating the Business Plan OUTSTANDING FINANCIAL RESULTS > Total Shareholder Return 2018 of 19% > EPRA NAV of €10.03€ per share: +17% YoY > Gross Asset Value of €11.3bn, +8% like-for-like > Net Rental Income of €347m, +5% like-for-like > Recurring earnings of €101m, +22% YoY >
Slide 8: Solid top line growth driving results
01 Highlights 2018 Solid top line growth driving results > Total Annual Shareholder Return 19% > Net Asset Value of 10.03€/share +17% > Recurring Earnings of €101m, +22% Total Annual Return - € per share 2018 Return Profit & Loss - €m 2018 YoY Var TOTAL SHAREHOLDER RETURN 19% Gross Rental Income €34
Slide 9: Solid top line growth driving results
01 Highlights 2018 Solid top line growth driving results > Outstanding GRI Like for Like growth of +5% > Double digit Release Spread & Superior Rental Growth > Low vacancy of 4% with strong fundamentals Solid Fundamentals 2018 Unparalleled Prime Positioning EPRA Vacancy 4% CBD Energy Volume of sq m
Slide 10: Scarcity in Grade A
02 Market Scarcity in Grade A
Slide 11: CBD outperforming the market
02 Market CBD outperforming the market VACANCY % PRIME ERV HIGHLIGHTS €/sqm/month > Full Year 2018 take-up of 366,000 sqm, + 10% YoY BARCELONA > Q4 take-up +40% above 5 year average +9% > CBD vacancy historically low levels: 2.1% > Prime rents at €25.25/sq m /month, +8.6% YoY 2017 2018 Vacancy CBD(%
Slide 12: Investment Markets remain strong
02 Market Investment Markets remain strong > Scarcity of Grade A product > Strong investor interest for CBD > Spreads vs reference rates remain attractive PRIME YIELDS (1) SPREAD VS 10Y BOND HIGHLIGHTS Prime yield > Strong Investment volume BARCELONA > Increasing investor interest faces scarce suppl
Slide 13: Unparalleled exposure to CBD
03 Operational performance Unparalleled exposure to CBD
Slide 14: CBD focus ensures strong letting performance
03 Operational performance CBD focus ensures strong letting performance # CONTRACTS SQM SIGNED GRI SECURED1 INCENTIVES2 EPRA VACANCY3 BARCELONA 30 25,635 €5m 7% 1% MADRID 43 70,541 €18m 5% 11% PARIS 27 21,072 €15m 13% 1% LOGISTIC 3 57,805 €4m 1% 14% TOTAL 103 175,054 €43m 8% 4% (1) Annualized figure
Slide 15: Strong delivery on rental price increases
03 Operational performance Strong delivery on rental price increases > 2018 with strong price increases in every segment > Double-digit release spread in every market > Outstanding rental growth in every market SOLID INCREASE IN RENTAL PRICES RELEASE SPREAD2 ANNUAL GROWTH ON SIGNED RENTS1 1H 2H FY 2
Slide 16: Strong delivery on rental price increases across the entire portfolio
03 Operational performance Strong delivery on rental price increases across the entire portfolio GROWTH ON SIGNED RENTS1 Park Cugat Torre BCN Génova, 17 IÉNA Cézanne Saint-Honoré +36% +22% +10% +36% +9% Amigó Castellana 52 Diagonal 609-615 Lopez de Hoyos, 35 Washington Plaza +26% +10% +22% +14% +14%
Slide 17: Strong delivery on rental price increases across the entire portfolio
03 Operational performance Strong delivery on rental price increases across the entire portfolio RELEASE SPREAD1 Via Augusta 21-23 Castellana, 52 Sant Cugat Egeo Cézanne Saint-Honoré +63% +40% +32% +20% +21% Castellana 52 Diagonal 682 Jose Abascal, 45 Miguel Ángel 11 Percier +49% +41% +25% +15% +17%
Slide 18: Vacancy remains at healthy levels
03 Operational performance Vacancy remains at healthy levels > Colonial vacancy at a healthy 4% > Barcelona and Paris at or below 1% > Madrid like-for-like at 2% - Discovery, Window & Axiare providing reversionary potential EPRA VACANCY BARCELONA1 MADRID1 Axiare Discovery & Window COLONIAL GROUP2 LF
Slide 19: 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 > Project deliveries in Madrid enhance future reversion potential EPRA VACANCY VACANCY COLONIAL VS. MARKET BARCELONA
Slide 20: Solid value creation through project delivery
03 Operational performance Solid value creation through project delivery > Successful delivery of projects initiated in 2015/2016 > Rents signed well above of initial underwriting > Significant capital value creation Discovery Príncipe de Vergara Parc Glories Average ERV signed 26 Average ERV signed
Slide 21: ESG Strategy and tracks
03 Operational performance ESG Strategy and tracks > 91% of portfolio with Breeam/Leed certficates, +200bp in a quarter > Significant quantitative and qualitative improvement in energy efficiency > €8bn of assets with Breeam and €2bn with Leed Portfolio with Leed / Breeam1 - Value # Breeam Certifica
Slide 22: ESG Strategy on track
03 Operational performance ESG Strategy on track > ESG excellence at the Core of Strategy > Significant improvement on several Benchmarks > Strong performance on Governance & Building Certificates BENCHMARK / INDEX ACHIEVEMENT / RATING > AA Rating (up from BBB) > One of the highest ratings in Europe
Slide 23: Digital transformation & Proptech
03 Operational performance Digital transformation & Proptech > Implementation of an internal Proptech Strategy on track > Colonial monitoring the digital transformation of the Real Estate sector > Partnerships with accelerator and digital consultants Short Term deliveries Mid Term action: Proptech /
Slide 24: UtopicUs – Strong FlexOffice Positioning in Spain
03 Operational performance UtopicUs – Strong FlexOffice Positioning in Spain > 13 centers in Madrid & Barcelona > 35,000 sq m of GLA > More than 4,200 potential users # CENTERS BARCELONA & MADRID > Leadership in Spain with WeWork and Spaces 7 6 5 4 7 1 In operation New openings 24
Slide 25: UtopicUs – Strong FlexOffice Positioning in Spain
03 Operational performance UtopicUs – Strong FlexOffice Positioning in Spain > 13 centers in Madrid & Barcelona > More than 35,000 sq m of GLA > More than 4,200 potential users # CENTERS UTOPICUS OPERATING CENTERS OPENINGS - 2019 Duque de Rivas (Madrid) Colegiata (Madrid) Clementina (Barcelona) Gran
Slide 26: Solid growth in value & cash flow
04 Financial performance Solid growth in value & cash flow
Slide 27: Double-digit top line growth
04 Financial performance Double-digit top line growth > GRI growth of +23% enhanced through Axiare > GRI like-for-like increase outstanding at +5% > High GRI like for like growth in every single market GROSS RENTAL INCOME - €M +5% EPRA like- Projects & Acquisitions & LFL1 +18% TOTAL refurbishments2
Slide 28: Like-for-like rental growth price driven
04 Financial performance Like-for-like rental growth 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 like- Pri
Slide 29: Strong underlying growth in Asset Values
04 Financial performance Strong underlying growth in Asset Values > Gross Asset Value of €11,348m (€11,915m including transfer costs) > +8% like-for-like YoY growth in every segment > Solid growth rates in every segment GAV GROWTH – YoY GAV GROWTH - YoY +8% Total Price Project Pipeline Yield +14% LF
Slide 30: Improved credit profile through active liability management
04 Financial performance Improved credit profile through active liability management > Highest Corporate Rating in Spanish Real Estate > Important liability management in 2018 > A stronger balance sheet ACTIVE LIABILITY MANAGEMENT … … ENHANCING THE BALANCE SHEET 1 €663m1 new equity issued (Axiare me
Slide 31: The best S&P Rating in Spanish Real Estate - competitive cost of debt
04 Financial performance The best S&P Rating in Spanish Real Estate - competitive cost of debt > A strong, diversified asset portfolio of more than €11bn > Unparalleled CBD exposure of 75% > Short term debt maturities at very low levels PORTFOLIO – GAV €bn CBD EXPOSURE - % S&P RATING # assets 61 65
Slide 32: Acceleration of profitable growth
04 Financial performance Acceleration of profitable growth > Strong Top Line driving bottom line > +22% increase of recurring profit > +11% of DPS1 up to €20Cts. per share PROFIT & LOSS ACCOUNT STRONG TOP & BOTTOM-LINE PERFORMANCE DIVIDEND PROPOSAL 20181 €Cts 20 +11% 18 2017 2018 GROSS RENTAL INCOME
Slide 33: “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 34: “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 RETURN
Slide 35: A stronger platform for future growth
05 Growth drivers A stronger platform for future growth
Slide 36: Future value creation
05 Growth drivers FUTURE VALUE CREATION 1 Leadership in Prime Offices through merger with Axiare 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 through merger with Axiare
05 Growth drivers 1 Leadership in Prime Offices through merger with Axiare > Successful M&A execution > Merger and integration in record time > Strong Prime leadership trough transformational deal CONSOLIDATION OF PRIME OFFICE LEADERSHIP RAPID M&A EXECUTION AND INTEGRATION > More than €347m of GRI 2
Slide 38: Leadership in Prime Offices through merger with Axiare
05 Growth drivers 1 Leadership in Prime Offices through merger with Axiare > Integration completed in record time > Synergies confirmed and executed > Financial milestones achieved INTEGRATION COMPLETED FINANCIAL MILESTONES ACHIEVED Operational Synergies exceeding guidance 1. Merger of the companies
Slide 39: €1.3bn of CBD Project Pipeline
05 Growth drivers 2 €1.3bn of CBD Project Pipeline > Successful delivery of projects initiated in 2015/2016 > Important future value creation to be crystallized > Very attractive Yield on Cost 1 1 2019 Project City % Group Delivery GLA (sqm) Total Cost €m Total Cost €/ sqm Yield on Cost 2020-21 Prim
Slide 40: €1.3bn of CBD Project Pipeline – Barcelona Projects
05 Growth drivers 2 €1.3bn of CBD Project Pipeline Barcelona Projects Total Cost - Final Product of €0.24/share Total Cost €124m (GLA of 31,245 sq m) Pedralbes Centre Gala Placidia Diagonal 525 Delivery Delivery Delivery 1H 19 1H 19 1H 21 Prime Commercial Plaza Europa FINAL PRODUCTs - KPIs MARKET RE
Slide 41: €1.3bn of CBD Project Pipeline – Madrid Projects
05 Growth drivers 2 €1.3bn of CBD Project Pipeline Madrid Projects Total Cost - Final Product of €1.06/share Total Cost €538m ( GLA of 130,537 sq m) Miguel Ángel 23 Castellana 163 Velázquez 88 Delivery Delivery Delivery 2H 20 2020/21 1H 21 Méndez Álvaro Campus Sagasta 27 FINAL PRODUCTs - KPIs MARKET
Slide 42: €1.3bn of CBD Project Pipeline – Paris Projects
05 Growth drivers 2 €1.3bn of CBD Project Pipeline Paris Projects Total Cost - Final Product of €1.02/share Total Cost €632m ( GLA of 49,800 sq m) Iéna Emile Zola Louvre St. Honoré Delivery Delivery Delivery 1H/21 2H 21 2023 Prime Commercial FINAL PRODUCTs - KPIs MARKET REFERENCE 22,000- 12,696 Iéna
Slide 43: Attractive CBD contract portfolio to capture reversion
05 Growth drivers 3 Attractive CBD contract portfolio to capture reversion > Strong delivery on reversion > Attractive rent roll profile > Solid positioning in growing markets CAPTURING REVERSION ATTRACTIVE RENT ROLL SOLID POSITIONING IN GROWING MARKETS COMMERCIAL LEASE EXPIRY DATES (12/18) Static u
Slide 44: Investment Market with strong support for Prime
05 Growth drivers 4 Investment Market with strong support for Prime > 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 €/
Slide 45: Discipline on Capital Allocation – Attractive Risk Adjusted Returns
05 Growth drivers 5 Discipline on Capital Allocation – Attractive Risk Adjusted Returns > Rapid execution on capital allocation > Disposals of close to €1bn of secondary product with premium to GAV > Redeployment of capital to CBD acquisitions at attractive pricing €0.9bn disposed of secondary €1.3b
Slide 46: Discipline on Capital Allocation - Solid track record on Return
05 Growth drivers 5 Discipline on Capital Allocation - Solid track record on Return > Solid track record with more than €2.7bn invested in 5 years > Disposal of secondary assets for €0.9bn in the last 24 months > Colonial recognized bi MSCI as investor with the highest 3 Year rolling Total Return in
Slide 47: 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 48: Conclusion
06 Conclusion
Slide 49: Conclusion
06 Conclusion OUTSTANDING FINANCIAL RESULTS > Total Shareholder Return 2018 of 19% > EPRA NAV of €10.03€ per share: +17% YoY > Gross Asset Value of €11.3bn, +8% like-for-like > Net Rental Income of €347m, +5% like-for-like > Recurring earnings of €101m, +22% YoY > Recurring EPS of €22.3 Cts. per sha
Slide 50: Q&A
Q&A
Slide 51: Strong growth profile in DPS & NAV
APPENDICES Strong growth profile in DPS & NAV Outstanding Total Shareholder Return with strong growth in NAV and DPS > Strong DPS growth 3 years in a row - Dividend yield on cost accelerating > Four years with double-digit NAV growth DPS accrued & YOY Growth Running Dividend Yield on 12/15 NAV 20 €
Slide 52: Total Shareholder Return since June 2014
APPENDICES Total Shareholder Return since June 2014 52
Slide 53: Strong underlying growth in Asset Values
APPENDICES Strong underlying growth in Asset Values > Gross Asset Value of €11,348m (€11,915m including transfer costs) > +8% like-for-like YoY growth (+4% in 6 months) > Capital Value Growth driven by Alpha IV, successful project execution and price increases GAV GROWTH – 12/2018 GAV VARIANCE +8% l
Slide 54: Solid valuation levels in healthy market
APPENDICES 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 12/2018 - €/sq m BARCELONA BARCELO
Slide 55: Barcelona Letting Performance
APPENDICES Barcelona Letting Performance BARCELONA – LETTING PERFORMANCE Solid Performance Strong rental growth - Highlights 25,635 sq m let Park Cugat Torre BCN > Max. rent signed 25.0 €/sqm/month (1) > ERV growth +10% +36% +22% vs ERV1 vs ERV1 > Release spread2 +23% New Lettings Amigó Sant Cugat 1
Slide 56: Madrid Letting Performance
APPENDICES Madrid Letting Performance MADRID – LETTING PERFORMANCE Solid Performance Strong Rental Growth - Highlights 70,541 sq m let Castellana, 52 Martinez Villergas, 49 Miguel Ángel 11 > Max. rent signed 29.9 €/sqm/month +8% (1) > ERV growth +49% +33% +15% release release release spread spread s
Slide 57: Paris Letting Performance
APPENDICES Paris Letting Performance PARIS – LETTING PERFORMANCE Solid Performance Strong Rental Growth - Highlights 21,072 sq m let Iéna Louvre Saint-Honoré > Max. rent signed 787 €/sqm/year > ERV growth +5% (1) +36% +11% vs ERV1 vs ERV1 Financial > Release spread2 +14% institution Washington Plaza
Slide 58: Acceleration of profitable growth
APPENDICES Acceleration of profitable growth > +22% increase in Recurring Earnings > Earnings driven by solid top-line growth > Axiare acquisition enhancing results PROFIT & LOSS ACCOUNT RESULTS TOP LINE DRIVEN > Solid 5% like-for-like net rental income growth (24) 51 > Results enhancement through A
Slide 59: 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 31/12/2018 More than €11b
Slide 60: www.inmocolonial.com
www.inmocolonial.com © Colonial
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