Merlin Properties Socimi, S.a. · BME:MRL
Merlin Properties Socimi — FY2019 Earnings Presentation
53 slides from Merlin Properties Socimi's earnings presentation, Feb 28, 2020
Slide 1: FY 2019 Results Presentation
FY 2019 RESULTS PRESENTATION 28 February 2020
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by Certain statements in this document presentation in other jurisdictions may RELIED ON IN CONNECTION WITH ANY MERLÍN Properties, SOCIMI, S.A. (the regarding the market and competitive also be restricted by law and persons CONTRACT OR COMMITMENT TO SEL
Slide 3: Contents
ISMAEL CLEMENTE CEO Contents Highlights FY19 Financial results Offices Shopping centers MIGUEL OLLERO GM / COO Logistics Valuation and debt position ESG & Technology Value creation Closing remarks DAVID BRUSH CIO
Slide 4: Highlights
Highlights | FINANCIAL PERFORMANCE • Compelling growth in cash flow, with FFO per share of € 0.67, +9.2% YoY and +6.4% above guidance • EPRA NAV per share up 5.4% YoY to reach € 15.60 • Leverage reduced to 40.6%, while improving all financial ratios OPERATING PERFORMANCE • Excellent business perform
Slide 5: Asset categories evolution (by GAV)
Highlights | Asset categories evolution (by GAV) Logistics gaining weight while reducing retail exposure 2018 2019 PF(2) (1) (1) 4 % 6 % Hoteles 9% Hoteles 10 % Residencial en alquiler Residencial en alquiler 69% Otros 16% 50% Otros 15% 50% Logístico Logístico Oficinas High Street Retail Centros com
Slide 6: Total Shareholder Return
Highlights | Total Shareholder Return Compelling return to shareholders achieved in FY 2019 (€ per share) TSR + 8.8% 0.50 16.10 0.80 15.60 14.81 EPRA NAV NAV growth EPRA NAV DPS NAV + Dec - 18 2019 Dec - 19 2019 Div - 2019 Source: Company ı6ı
Slide 7: Shareholders remuneration
Highlights | Shareholders remuneration FY 2019 dividend to reach € 244m, meeting guidance Interim Complementary (paid) (subject to AGM) Total 0.52 MERLIN 0.32 FY 19 Dividend 0.20 € 244M October 2019 May 2020 Total Source: Company ı7ı
Slide 8: FY 2019 Financial results
FY 2019 Financial results
Slide 9: Excellent year in cash flow generation (+12.1% AFFO growth YoY)
FY19 Financial results | Excellent year in cash flow generation (+12.1% AFFO growth YoY) (€ million) FY 2019 FY 2018 YoY Gross rents 525.9 499.7 +5.2% Gross rents after incentives 511.5 475.6 +7.5% Net rents 463.3 433.5 +6.9% EBITDA(1) 425.5 403.6 +5.4% FFO 313.3 286.9 +9.2% AFFO 303.3 270.5 +12.1%
Slide 10: Bridge gross rents
FY19 Financial results | Bridge gross rents Robust LfL growth in all asset categories reaching historical high in offices (+7.3%) +7.3% Offices Shopping centers +3.1% LfL(1) LfL(1) +4.5% Logistics +3.6% +4.5% Net leases +1.2% (€m) +20.1 +6.1 525.9 499.7 +20.1 +6.1 525.9 499.7 FY 2018 Like-for-Like B
Slide 11: Occupancy and WAULT
FY19 Financial results | Occupancy and WAULT Outstanding occupancy growth in offices (+264 bps YoY) and retail (+204 bps YoY) OCCUPANCY AND WAULT PER ASSET TYPE(1) +140bps 100.0% 97.7% 94.8% VS 93.4% 92.8% (2) 93.3% 18.4 MERLIN 2018 72.1% Average 4.0 5.6 years MERLIN 3.2 Average 3.0 2.4 Offices Shop
Slide 12: Offices
Offices
Slide 13: Offices | Rent bridge and breakdown
Offices | Rent bridge and breakdown Steep LfL rental growth in 2019, after a very strong last quarter in Madrid and Barcelona (€m) LfL(1) +7.3% 228.1 +14.5 +0.8 243.4 FY 2018 Like-for-Like growth Balance acquisitions, FY 2019 disposals, other Lfl growth by area Occupancy by area FY18 FY19 Madrid +5.
Slide 14: Offices | Leasing activity
Offices | Leasing activity Rental growth continues to be robust (+7.2% release spread) Contracted sqm Release spread #contracts Tenants Madrid 290,017 +6.0% 142 Puerta Naciones Cristalia Beatriz Bobadilla Partenon 16-18 11,444 sqm 5,394 sqm 3,177 sqm 3,096 sqm Barcelona 44,494 +19.5% 24 Sant Cugat 1
Slide 15: Offices | Flex space
Offices | Flex space Rapid expansion of LOOM… Madrid Barcelona Operating Operating 6 spaces ı 1,474 desks ı 72% Occ. 1 space ı 160 desks ı 94% Occ. New opening New openings Torre Chamartín Cornellá Ferreteria 22@ Plaza Cataluña 9 126 desks 188 desks 293 desks 342 desks Opening 2Q20 Opening 1Q20 Open
Slide 16: Flex space: corporates represent 70% of LOOM's customer base
Offices | Flex space … while providing an integral space solution to our core clients Traditional (sqm) Flex (desks) 3,949 sqm 70 desks (Princesa) (LOOM Princesa) 10,380 sqm 40 desks (PE Alvia) (LOOM Pozuelo) 10,619 sqm 32 desks (PE Puerta de las Naciones) (LOOM Eucalipto) 5,189 sqm 156 desks (PE Ce
Slide 17: Shopping centers
Shopping centers
Slide 18: Shopping centers | Rent bridge and breakdown
Shopping centers | Rent bridge and breakdown Positive LfL rental growth, underpinned by strong growth in tenant sales (+4.0%) (€m) LfL(1) +3.1% +15.4 127.3 108.9 +3.0 FY 2018 Like-for-Like growth Balance acquisitions, FY 2019 disposals, other Tenant sales (million) Visitors (million) 2018 LTM 1,123.
Slide 19: Shopping Centers | Leasing activity and occupancy
Shopping Centers | Leasing activity and occupancy Upward trend in performance with a release spread of 4.2% and meaningful growth in occupancy to end at 93.3% (+204 bps YoY) Release spread #contracts Tenants All portfolio +4.2% 139 Contracted Net Occupancy Change vs sqm Absorption 31/12/19 31/12/18
Slide 20: Shopping centers | Active retenanting
Shopping centers | Active retenanting Transforming our centers… … and opening flagships 13 new stores 4 new stores 14 new stores 8 new stores 8,266 sqm 2,029 sqm 14 new stores 9 new stores (1) 4,251 sqm 2,959 sqm 2,380 sqm 21 new stores 27 new stores ı 20 ı
Slide 21: Logistics
Logistics
Slide 22: Logistics | Rent bridge and breakdown
Logistics | Rent bridge and breakdown A strong market and the quality of MERLIN’s portfolio translates into good LfL rental growth (€m) LfL(1) +3.6% 50.3 +1.7 +1.8 53.8 FY 2018 Like-for-Like growth Balance acquisitions, FY 2019 disposals, other Lfl growth by area Occupancy by area FY18 FY19 Madrid +
Slide 23: Logistics | Leasing activity
Logistics | Leasing activity Outstanding release spread (7.6% all portfolio) Contracted sqm Release spread #contracts Tenants Madrid 195,522 +7.3% 4 3 contracts renewed Barcelona 14,025 +9.4% 2 Other 49,091 - - TOTAL 258,638 +7.6% 6 ı 23 ı
Slide 24: Logistics | ZAL Port
Logistics | ZAL Port Stock Investment 469,370 sqm € 138m WIP(1) ERV 258,138 sqm € 22m Stock incl. WIP 727,508 sqm Third parties stock 178,433 sqm Stock under management 905,941 sqm Contracted sqm Release spread #contracts Tenants 202,857 +6.6% 34 Occupancy by area FY18 97.6% (80 bps) FY19 96.8% €m F
Slide 25: Valuation and debt position
Valuation and debt position >
Slide 26: GAV summary
Valuation and debt position | GAV summary Gross asset value exceeding € 12.75bn Passing 4.1% 5.1% 4.6% 5.8% - 4.5% Gross yield 12,751 12,267 6,161 GAV TOTAL with minority stakes (€ million) Shopping centers Minority stakes(2) 2,540 1,873 Net leases Logistics Offices TOTAL Other(1) 939 754 484 €/sqm
Slide 27: GAV bridge
Valuation and debt position | GAV bridge Solid revaluation in the year of +5.9% (+3.3% LfL) (€m) +5.9% 364.4 12,751.3 450.0 166.4 12,041.1 (270.7) GAV Acquisitions Disposals Capex & WIP(1) Revaluation(2) GAV Dec-18 2019 2019 2019 2019 Dec-19 Including acquisition of logistics assets to be developed
Slide 28: GAV drivers
Valuation and debt position | GAV drivers Appraisals reflecting income growth +9.0% GAV LIKE-FOR-LIKE EVOLUTION(1) +9.0% +4.8% +4.8% +3.3% +0.5% +3.3% MERLIN average (2) MERLIN +0.5% average(2) (0.1%) Offices Shopping centers Net Leases Logistics (0.1%) Offices Shopping centers Net Leases Logistics
Slide 29: Debt maturity profile
Valuation and debt position | Debt maturity profile Intense debt management further softening the maturity profile € 1,617m € 500m +€ 100m ESG-linked financings 15-year bond add-on 15-year post closing 1,057 866 867 889 16 17 776 89 716 16 176 500 850 850 800 700 323 600 23 557 300 15 13 14 22 23 2
Slide 30: Debt position
Valuation and debt position | Debt position Strengthening of MERLIN’s financial profile, while maintaining a low LTV 31/12/2019 31/12/2018 31/12/2017 Net debt € 5,182m(1) € 4,902m(1) € 4,904m LTV 40.6%(2) 40.7% 43.6% Average cost (spot) 2.09% (1.79%) 2.13% (1.84%) 2.23% Average maturity (years) 6.4
Slide 31: ESG & Technology
ESG & Technology
Slide 32: ESG achievements
ESG & Technology | ESG achievements Remarkable progress in ESG ESG Benchmarks Certifications MERLIN has obtained Accesibility Efficiency an excellent mark in the 2019 edition 82% 71% 72% 62% 100%(1) Target 99% 100% 97% Actual 75% 77% 66% MERLIN European Global Our Gold since 2017 average average pee
Slide 33: Technology
ESG & Technology | Technology MERLIN is focusing its technology efforts through 3 pillars Deployment in our portfolio Mentoring Sponsoring Sensorization Proptech challenge MERLIN has invested in Fifth Wall, MERLIN teamed up a venture capital proptech fund with ISDI and Impact accelerator The program
Slide 34: Value Creation
Value Creation
Slide 35: Capital recycling - Acquisitions
Value creation | Capital recycling - Acquisitions Art TFM Nestlé HQ • Located in Dom Joao II, main avenue in • Located in Dom Joao II, main avenue • Located in the highly dynamic “western Parque das Naçoes in Lisbon in Parque das Naçoes in Lisbon corridor” (A5 motorway) • 3 blocks in “U” shape • Ful
Slide 36: Capital recycling - Acquisitions
Value creation | Capital recycling - Acquisitions Cabanillas Park I ext. 22@ Ferreteria Plaza de Cataluña 9(1) • Development of 4 logistics modules, • Located in 22@ district in Barcelona • Historical asset designed by the renowned adjacent to Cabanillas Park I, with a total • The asset, formely a h
Slide 37: Madrid Nuevo Norte
Value creation | Madrid Nuevo Norte Acquisition of a strategic stake in Distrito Castellana Norte, the future of Madrid Prime CBD Phase I Phase II Phase IV a Phase IV b Phase III Central Business Fuencarral Tres Olivos Las Tablas Station District Malmea Madrid Nuevo Norte (MNN) Offices 1,220k sqm Of
Slide 38: The most ambitious real estate scheme in Europe
Value creation | Madrid Nuevo Norte The most ambitious real estate scheme in Europe ı 38 ı
Slide 39: Capital recycling - Divestments
Value creation | Capital recycling - Divestments € 281m of divestments in 2019, at an average premium of 4.3% Offices Exposure to Prime CBD + NBA • Succesful sale of a portfolio of 26 office buidings, totalling 133,218 sqm and € 11.8m of Dec Dec gross annual rents 2018 > 2019 88% 91% Shopping center
Slide 40: Landmark I - 2019 Deliveries
Value creation | Landmark I - 2019 Deliveries Torre Glòries Torre Chamartín Returns Tenants Returns Tenants • Acquisition € 142.0m • 100% Let • Acquisition € 31.2m • 100% Let • Capex € 26.7m • Capex € 38.0m • Total investment € 168.7m • Total investment € 69.2m • ERV € 11.8m • ERV € 4.3m • Yield on
Slide 41: Landmark I - Update
Value creation | Landmark I - Update 0% % % ED ED % 95 82 0% 28 10 ER ER T T 10 T T LE LE IV IV LE LE T EL E- E- EL LE E- E- PR PR D D PR PR Torre Torre Marqués de Castellana Diagonal Plaza Ruiz Adequa Adequa Monumental Charmartín Glòries Pombal 3 85 605 Picasso 4 7 GLA (sqm) 18,295 37,614 12,460 15
Slide 42: Flagship - X-Madrid
Value creation | Flagship - X-Madrid Comercialization status We have turned the mix upside down: 70% experience / 30% retail 95% commercialized as of February Climbing Harley Bowling Spanish > 1,500 Spanish cup gathering Tournament freestyle cup surfers Tenants demanding more space > 1.2 million vis
Slide 43: Flagship - Larios and Tres Aguas
Value creation | Flagship - Larios and Tres Aguas Larios Tres Aguas • Total investment 47.3m(1) • Top-of-mind mall for • Total investment € 12.1m(2) • Occupancy gain of + 900 • ERV € 3.1m retailers in Malaga • ERV € 1.4m(3) bps after the refurbishment • Yield on cost 6.6% • Full occupancy • Yield on
Slide 44: Flagship - update
Value creation | Flagship - update ED ED ED ED ER ER ER ER IV IV IV IV EL EL EL EL D D D D Arturo Soria Larios X-Madrid Tres Aguas(1) El Saler Porto Pi Callao 5 Plaza GLA (sqm) 41,460 7,054 47,170 67,690 47,471 58,779 11,629 GLA MERLIN (sqm) 37,957 6,069 47,170 33,845 28,861 32,963 11,629 Works: 27.
Slide 45: Best II - Update
Value creation | Best II - Update 0% % % 42 67 0% 0% 10 T T 10 10 T LE LE LE T T E- E- LE LE E- PR PR PR Guadalajara Guadalajara Madrid Guadalajara Toledo Guadalajara Madrid Guadalajara Guadalajara Cabanillas Cabanillas Pinto II B(1) Cabanillas III Seseña Cabanillas F San Fernando II Azuqueca III Az
Slide 46: Best III
Value creation | Best III Launch of Best III to expand footprint to other areas of the Iberian Peninsula 0% 0% 0% 10 10 10 ET ET T L L LE E- E- PR PR Valencia Zaragoza Sevilla(2) Lisbon Madrid Valencia Ribarroja Plaza II ZAL WIP Park San Fernando III GLA (sqm) 34,992 11,421 42,632 224,864 98,942 96,
Slide 47: Potential rental growth (2019-2022)
Value creation | Potential rental growth (2019-2022) Attractive growth profile with high degree of lets and pre-lets (€m) +24% 23.5 667.9 651.8 24.7 12.3 (16.0) 37.2 44.3 525.9 499.7 469.4 GRI GRI GRI Rev. Landmark Flagship Best II Best III Potential Non-core GRI FY17 FY18 FY19 potential GRI FY22 di
Slide 48: Sources & uses: capex program now self-funded
Value creation | Sources & uses Capex program now self-funded Cash from further non-core disposals to be used mainly for DCN and debt repayment 1,401 645 (€m) 220 (685) 536 191 receivable (secondary retail and Tree) (328) 206 +€ 191m (182) until completion 49 of infrastructure and urbanization Landm
Slide 49: Outlook 2020
Outlook 2020
Slide 50: Outlook | Guidance
Outlook | Guidance Execution of Capex plans translate into a net loss of FFO of approximately € 19.1m in 2020 Assets FFO increase FFO decrease • Art • TFM Acquisitions 2019 • Nestlé +€ 1.5m • Valencia Ribarroja • Juno portfolio + other Disposals 2019 • 3 secondary retail assets (€ 11.9m) • Other • C
Slide 51: Closing remarks
Closing remarks
Slide 52: Closing remarks
Closing remarks | • Remarkable year in cash flow generation, with FFO per share growing +9.2% YoY • Offices. Outstanding increase both in rents (+7.3% LfL) and occupancy (+264 bps) Performance • Shopping centers proving its resilience, with tenant sales rising and good business behaviour • Logistics
Slide 53: Contact
Paseo de la Castellana, 257 28046 Madrid +34 91 769 19 00 info@merlinprop.com www.merlinproperties.com
MERLIN Properties SOCIMI — FY2019 Earnings Presentation on 6ix