Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial SOCIMI — Q3 2021 Earnings Presentation
51 slides from Colonial Sfl Socimi Sa's earnings presentation, Nov 17, 2021
Slide 1: Third Quarter Results 2021
Third Quarter Results 2021 November 2021 Q3/21
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_ Market Update 03 Operational performance 04 Financial performance 05 ESG Performance - Decarbonization 06 Reloading Growth & Value Creation 07 Conclusion & Outlook 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: Return to solid growth through Prime Positioning
01 Highlights Return to solid growth through Prime Positioning
Slide 6: Return to solid growth through Prime Positioning
01 Highlights Return to solid growth through Prime Positioning SOLID FINANCIAL RESULTS > Group Net Profit of €184m, +€179m vs. previous year > Net Rental Income of €219m, +2.5% like-for-like (Paris +5.1% like for like) > Recurring EPS of €17.91cts, below the previous year due to Disposals & Renovati
Slide 7: Solid results – back to growth through prime positioning
01 Highlights Solid results – back to growth through prime positioning > Net Rental Income with +2.5% like for like growth, Paris portfolio +5% > EPS decrease due to disposals & renovation program acceleration > Comparable EPS +9% vs previous year Profit & Loss - €m 09/21 YoY Unparalleled Prime Posi
Slide 8: Solid operating performance underpinned by polarization trends
01 Highlights Solid operating performance underpinned by polarization trends > Letting volume of 117,680 sqm, +71% Year on Year > Exceptional letting volume in the third quarter, ongoing polarization towards prime > Rental prices with solid ERV growth, Paris with +7% Solid Fundamentals 09/21 Unparal
Slide 9: Scarcity in Prime Product
02 Market Scarcity in Prime Product
Slide 10: Rental Markets - Scarcity of High Quality Product in CBD
02 Market Rental Markets - Scarcity of High Quality Product in CBD > Grade A product in CBD with limited vacancy across markets > Increased polarization in take-up: preference for grade A assets in central locations > Paris CBD with take-up back at pre-covid levels Stock CBD as of Q3 2021 Vacancy CB
Slide 11: Investment market - Prime Product in the CBD with strong valuation levels
02 Market Investment market - Prime Product in the CBD with strong valuation levels PRIME YIELDS (1) SPREAD VS 10Y BOND HIGHLIGHTS > Record Investment volume: €1,415m 2021 YTD BARCELONA > 60% of transactions concentrated in 22@ area > Prime yield at 3.60%, with very healthy spread of 314bp vs refere
Slide 12: Strong operating performance underpinned by polarization trends
03 Operational performance Strong operating performance underpinned by polarization trends
Slide 13: Outstanding leasing activity in Q3 2021
03 Operational performance Outstanding leasing activity in Q3 2021 LETTING VOLUME SQM KPIS 3Q 2021 1Q21 2Q21 3Q21 TOTAL YoY MAX. RENT RELEASE SPREAD1 ERV GROWTH2 PARIS 2,080 15,234 19,437 36,750 +108% 930 +2% +7% €/sqm/y Excl. 1 large contract in Madrid MADRID 35 +2% (1%) +2% 10,890 6,934 32.657 50,
Slide 14: Letting activity with outstanding volume in Q3 2021
03 Operational performance Letting activity with outstanding volume in Q3 2021 > Colonial with strong letting activity, +71% on previous year (+117% in economic terms) > Acceleration in Q3 doubling the letting volume of the two previous quarters > Letting activity focused on CBD assets with high Eco
Slide 15: Grade A CBD capturing market take-up due to polarization trend
03 Operational performance Grade A CBD capturing market take-up due to polarization trend PARIS MADRID BARCELONA Letting volume - sqm Letting volume - sqm Letting volume - sqm Total 36,750 Total 50,482 Total 30,448 Thereof CBD & 7ieme 36,750 Thereof CBD 34,689 Thereof CBD & 22@ 25,296 Place de l’Éto
Slide 16: Rental growth remains solid
03 Operational performance Rental growth remains solid > ERV growths of +4%, Paris outstanding with +7% > Releases Spreads at 7%, Barcelona outstanding with +24% > Contract portfolio best positioned to capture momentum in indexation & ERV Growth SOLID INCREASE IN RENTAL PRICES GROWTH ON SIGNED RENTS
Slide 17: Resilient occupancy profile
03 Operational performance Resilient occupancy profile > Office portfolio occupancy at resilient 93.4% level > 97% occupancy in comparable terms (excluding entry into operation of renovation program) > Paris strongest market with 95% occupancy (98% in comparable terms) EPRA OCCUPANCY 96% 98% 95% Gre
Slide 18: Solid occupancy profile: Reversion potential from renovation & scarcity in CBD
03 Operational performance Solid occupancy profile: Reversion potential from renovation & scarcity in CBD > Total vacancy remains at levels of 6.6% > 3.3% due to entries into operation and 1.4% residual secondary exposure > Vacancy of like for like CBD portfolio below 2% EPRA VACANCY Epra SECONDARY
Slide 19: Solid financials enhanced by recovery in Paris CBD
04 Financial performance Solid financials enhanced by recovery in Paris CBD
Slide 20: Gross Rental Income +2% like for like
04 Financial performance Gross Rental Income +2% like for like > Gross Rental Income +2% like for like > GRI increase fully rental price driven (Madrid outstanding with +3%) > Contract portfolio best positioned to capture momentum in indexation & ERV Growth GROSS RENTAL INCOME - €m +2% SOLID EPRA LI
Slide 21: Net Rental Income at +2.5% like for like
04 Financial performance Net Rental Income at +2.5% like for like > Net Rental Income +2.5% like for like > Paris with +5% Net Rental Income > Strong Paris performance offsetting temporary correction in Barcelona LIKE-FOR-LIKE VARIANCE1 – NRI LFL IN NET RENTAL INCOME FURTHER STRENGTHENED Gross Net R
Slide 22: Comparable EPS stable – flight to quality & reloading growth
04 Financial performance Comparable EPS stable – flight to quality & reloading growth > EPS decrease mainly due to disposals, acceleration of renovation program and indemnities in previous year > Comparable Recurring EPS of 23.99 €cts/share, +9% vs. previous year level > Disposals of non-core - relo
Slide 23: Solid profitability with enhanced quality
04 Financial performance Solid profitability with enhanced quality > Group Net Profit of €184m, +€179m > Recurring Profit impacted by disposals & renovation program acceleration > Comparable Recurring EPS of 23.99 €cts/share, +9% vs previous year level PROFIT & LOSS ACCOUNT GROUP NET PROFIT €m Value
Slide 24: Improving Group's debt positioning
02 Third Quarter Results 2021 Improving Group’s debt positioning > Improved debt profile through successful liability management > Issuance of more than €1,125m bonds in Spain and France with high oversubscription > Issuances at 0.75% and 0.50% coupon, the lowest coupons in the history of the Coloni
Slide 25: Solid Capital Structure
04 Financial performance Solid Capital Structure > Improved debt profile through successful liability management > Significant Cost of Debt reduction reaching 1.4% > Solid capital structure with LTV of 36.6% STREGNHTHENED BALANCE SHEET IMPROVED FUNDING OF THE GROUP Solid Capital Structure 1. Debt re
Slide 26: Acceleration of the decarbonization strategy
05 ESG Performance - Decarbonization Acceleration of the decarbonization strategy
Slide 27: Continuous Improvement on GRESB Performance – Standing Investments Benchmark
05 Non Financial Highlights - ESG Continuous Improvement on GRESB Performance – Standing Investments Benchmark 90 94 +56% 77 60 61 34pts 2017 2018 2019 2020 2021 27
Slide 28: High End Rating on Development Benchmark
05 Non Financial Highlights - ESG High End Rating on Development Benchmark 28
Slide 29: Sustainalytics Rating 2021 Results
05 Non Financial Highlights - ESG Sustainalytics Rating 2021 Results > Sustainalytics 2021 Rating at high end, Top 4% in Real Estate > Colonial among top international peers, maintaining its high scoring > Colonial with strong management of ESG issues Low Risk assessment for 2021 Sustainalytics Rati
Slide 30: Superior growth & returns through prime positioning
06 Reloading Growth & Value Creation Superior growth & returns through prime positioning
Slide 31: Strong growth potential in rents & value
06 Reloading Growth & Value Creation STRONG GROWTH POTENTIAL IN RENTS & VALUE 1✓ Project Pipeline with significant cash flow & value growth potential 2✓ Renovation Program with strong reversion in rents & value 3✓ Prime Contract Portfolio to capture ERV growth & indexation momentum 4✓ Capital Recycl
Slide 32: Project Pipeline with significant cash flow & value growth potential
06 Reloading Growth & Value Creation 1 Project Pipeline with significant cash flow & value growth potential > Around €80m of additional rents to flow into the recurring P/L > YTD more than €28m of secured rents through solid pre-let performance > Prime Project pipeline delivery on track 1 GLA Total
Slide 33: Renovation Program with strong reversion in rents & value
06 Reloading Growth & Value Creation 2– Renovation Program with strong reversion in rents & value > Cash Flow & Value upside through created ERV uplifts % created yield compression > Solid delivery with €22m of annualized rents secured YTD > Additional passing GRI of €34-36m going forward up to €44-
Slide 34: Prime Contract Portfolio to capture rental growth & indexation momentum
06 Reloading Growth & Value Creation 3 Prime Contract Portfolio to capture rental growth & indexation momentum > Ongoing delivery of solid release spreads > Contract portfolio with strong reversionary potential: passing rents below ERVs > Contract portfolio best positioned to capture momentum in ind
Slide 35: Capital Recycling & Acquisitions to enhance growth profile
06 Reloading Growth & Value Creation 4 Capital Recycling & Acquisitions to enhance growth profile > Transaction successfully completed. Colonial’s stake on SFL increased up to 98.3% > Acquisition of circa €1bn1 additional exposure in Prime Assets in Paris at NDV > Increased exposure to value-accreti
Slide 36: Ongoing flight to quality through active capital allocation
06 Reloading Growth & Value Creation 4 Capital Recycling & Acquisitions to enhance growth profile > Ongoing flight to quality through active portfolio management > Disposals of more than €1.8bn of mature and/ or non-core product > Acquisitions of more than €3.9bn of assets reloading the Prime Exposu
Slide 37: Strong Growth Profile through internal & external drivers
06 Reloading Growth & Value Creation 4 Strong Growth Profile through internal & external drivers > Prime Project Pipeline with significant value creation potential > Renovation Program with important GRI & value reversion > Colonial best positioned to capture indexation momentum & ERV growth FLIGHT
Slide 38: Investment markets with enhanced momentum for Prime
06 Reloading Growth & Value Creation 5 Investment markets with enhanced momentum for Prime > Colonial portfolio with additional potential for yield compression > Prime market yields & scarcity value as driver > Prime Yields at very attractive spreads compared to reference rates VALUATION YIELDS (1)
Slide 39: Conclusion & Outlook
07 Conclusion & Outlook
Slide 40: Colonial Platform well positioned for Growth
07 Conclusion & Outlook Colonial Platform well positioned for Growth STRONG RESULTS ENHANCED BY POLARIZTION TOWARDS PRIME > Group Net Profit of €184m, +€119m vs. previous year > Net Rental Income of €219m, +2.5% like-for-like > Significant increase in letting volume, +71% vs the previous year > Posi
Slide 41: Q&A
Q&A
Slide 42: Project pipeline – significant value creation potential going forward
APPENDICES Project pipeline – significant value creation potential going forward > Prime Project pipeline delivery on track > 2 out of 9 projects already delivered in 2021 > Significant capital value creation potential to be crystalized 1 GLA Total Yield Project City % Group Delivery (sqm) Cost €m o
Slide 43: Renovation Program with strong reversion
APPENDICES Renovation Program with strong reversion > Solid delivery YTD with €22 m of annualized GRI secured YTD > Renovation Program with additional rent reversion of €34-36m > 110,000 sqm of GLA with €1.0bn of GAV with strong value creation upside RENOVATION PROGRAM SIGNIFICANT GRI REVERSION WITH
Slide 44: Rental Price levels remain solid
APPENDICES Rental Price levels remain solid during RELEASE SPREAD1 GROWTH ON SIGNED RENTS2 Washington Plaza Diagonal 682 Diagonal 409 Washington Plaza Génova, 17 103 Grenelle +3% +40% +48% +15% +11% +6% Diagonal, 609 Illacuna Génova 17 José Abascal 45 Recoletos 27 Via Augusta +47% +25% +34% +12% +12
Slide 45: Investment markets for prime product remain active - Paris
APPENDICES Investment markets for prime product remain active > Paris CBD an attractive target for International Investors > Pricing above appraisals for Core product in CBD 1, François 1er CBD €84m 3,400 sqm 2.20% Yield (3Q 2021) Théodore CBD €80m 3,400 sqm 2.48% Yield (2Q 2021) 59 Haussmann CBD €2
Slide 46: Investment markets for prime product remain active - Barcelona 22@
APPENDICES Investment markets for prime product remain active > Barcelona leading the investment market in Spain – specially in the 22@ district Tanger, 36 22@ €280m 8,415sqm €7,976/sqm (3Q 2021) Project Sea 22@ €180m 27,000 sqm €6,667/sqm (2Q 2021) *Includes 2 buildings BARCELONA 22@ Glories Centre
Slide 47: Investment markets for prime product remain active - Madrid
APPENDICES Investment markets for prime product remain active > Investor appetite with increased momentum for Prime in Madrid Goya, 1 CBD €35m 1,850m €18,919/sqm 3Q 2021 *Commercial component Castellana 42 CBD €54m 4,500m €12,000/sqm 3Q 2021 MADRID Francisco Gervás, 10 CBD €70m 8,000 sqm €8,750/sqm
Slide 48: AAA Clients with strong solvency
APPENDICES AAA Clients with strong solvency CONTRACT PORTFOLIO 2021 MATURITIES – DELIVERY YTD ON TRACK 2021 MATURITIES – MIX 2021 MATURITIES BREAKDOWN % on annualized Group GRI Madrid 8.0% 3.4% 2.9% 1.7% 0.4% 55% 29 Paris 12 30% Barcelona Paris 16% 11 Madrid 6 1,4 Barcelona Group Signed & Not Stays
Slide 49: A solid capital structure
APPENDICES A solid capital structure > Long-term financing profile with extended debt maturities > €2.0bn of liquidity covering debt maturities until 2025 > A solid financial structure with competitive financing costs Extension of Debt Maturities A Solid Financial Structure 31/12/2020 30/06/2021 30/
Slide 50: Top line stable in like for like terms
APPENDICES Top line stable in like for like terms > Gross Rental Income +2.5% like for like > Paris and Madrid Offices rental price like for like variance at +1% > Barcelona portfolio flat GROSS RENTAL INCOME - €m +2% EPRA Projects Disposals TOTAL like-for-like1 & renovations & Others MADRID PARIS E
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