Slide 1: FY 2017 Results Presentation
FY 2017 RESULTS PRESENTATION 28 FEBRUARY 2018
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
CONTENTS Introduction FY 17 Financial Results ISMAEL CLEMENTE CEO Portfolio performance Offices Shopping centers Logistics MIGUEL OLLERO GM / COO Valuation and debt position Value creation Outlook 2018 Closing remarks DAVID BRUSH CIO
Slide 4: Key highlights
Key highlights | • +2.0% FFO per share YoY, equivalent to 11.9% LfL growth after overcoming net € 0.05 per share due to the balance of 2016 disposals and 2017 acquisitions Financial • +18.0% EPRA NAV YoY, capturing the value created across the portfolio performance • Capital structure: reduced lever
Slide 5: Total Shareholders Return +21.6%
Total Shareholders Return | COMPELLING RETURN TO SHAREHOLDERS ACHIEVED IN FY 2017 (€ per share) TSR + 21.6% 2.02 13.25 0.40 13.65 11.23 EPRA NAV NAV growth EPRA NAV DPS EPRA NAV+DPS Dec-16 2017 Dec-17 2017 Source: Company ı5ı
Slide 6: Shareholders remuneration: FY 2017 dividend €216M
Shareholders remuneration | FY 2017 DIVIDEND TO REACH €216 M, AHEAD OF GUIDANCE (€ 207M) INTERIM(1) COMPLEMENTARY(1) TOTAL (Paid) (Subject to AGM) MERLIN FY 17 DIVIDEND € 0.20 € 0.26€ 0.20 € 216M € 0.46 € 0.40€ 0.40 € 0.20€ 0.20€ 0.20 SeptemberSeptember 2016(1) October 2016(1) 2017(1) AGM 2017(2) Ma
Slide 7: FY 17 Financial Results
FY 17 FINANCIAL RESULTS
Slide 8: Consolidated profit and loss
FY 17 Financial Results | Consolidated profit and loss +18% INCREASE IN EPRA NAV PER SHARE AND +47% IN IFRS EPS (€ million) 31/12/17 31/12/16 YoY Gross rents 469.4 351.0 +33.7% Net rents 415.2 323.5 +28.4% EBITDA(1) 392.6 303.6 +29.3% FFO(2) 289.2 221.0 +30.9% AFFO 270.9 n.a. n.a. IFRS net profit 1,1
Slide 9: Bridge gross rents
FY 17 Financial Results | Bridge gross rents OFFICE AND SHOPPING CENTERS SHOWING ROBUST UPWARDS TREND, ACCELERATED GROWTH IN LOGISTICS Primarily (€m) Metrovacesa LfL(1) Office +2.9% and Adequa +2.7% Shopping centers +3.6% Logistics +8.4% +112.7 469.4 H. Street retail +0.9% Other +7.2% 351.0 +7.0 (1.
Slide 10: Bridge FFO
FY 17 Financial Results | Bridge FFO MEANINGFUL FFO GROWTH OVERCOMING CASH FLOW LOST DUE TO 2016 DISPOSALS +11.9% (€ per share) 0.60 0.07 0.62 0.01 0.55 (0.06) FY 2016 Disposals Acquisitions FY 2016 net 2017 FY 2017 2016 2017 of disposals Growth and acquisitions ı 10 ı
Slide 11: Portfolio Performance
PORTFOLIO PERFORMANCE
Slide 12: Asset categories evolution (by GRI)
Portfolio performance | Asset categories evolution (by GRI) LOGISTICS, THE FASTEST GROWING ASSET CATEGORY SINCE 2015 2014 2015 2016 FY 2017 PF(2) (1) (1) 5% 6% 3% 3% 12% (1) 7% 13% 12 Hoteles % Hoteles Hoteles Residencial en alquiler Residencial en alquiler Residencial en alquiler 14% 69% 13 Otros%
Slide 13: Occupancy and WAULT
Portfolio performance | Occupancy and WAULT +132 BPS OCCUPANCY IMPROVEMENT IN FY 17 Occupancy and WAULT per asset type(1) 99.4% 98.5% 88.2% 89.4% 19.3 92.6% VS 91.3% Average FY 2016 76.7% MERLIN 6.7 years Average 3.7 MERLIN 3.1 2.7 1.4 Offices Shopping centers High street retail Logistics Other Sour
Slide 14: Offices
OFFICES
Slide 15: Offices: Rent bridge and breakdown
Offices | Rent bridge and breakdown (€m) 2.1% Growth +129.6 217.5 LfL(1) +2.9% 0.8% Indexation 85.9 +2.9 (0.9) FY 2016 Like-for-Like 2 old leases(2) Balance acquisitions FY 2017 growth FY2016 and disposals Lfl growth by area Occupancy by area Madrid +3.2% Madrid 87.8% Barcelona +2.5% Barcelona 89.0%
Slide 16: Offices: Leasing activity
Offices | Leasing activity GOOD PERFORMANCE IN OUR 3 CORE MARKETS, WITH +3.4% RELEASE SPREAD Contracted Release # Tenants sqm spread contracts Madrid 390,438 +3.3% 169 Barcelona 63,121 +4.5% 64 Lisbon 3,362 +5.1%. 4 TOTAL(1) 456,921(2) +3.4% 237 (1) Excluding other (2) Including 65,115 sqm of roll-o
Slide 17: Shopping Centers
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Slide 18: Shopping Centers: Rent bridge and breakdown
Shopping Centers | Rent bridge and breakdown A DOMINANT AND URBAN PORTFOLIO SHOWING STRENGTH, IMPACTED BY THE SITUATION IN CATALONIA (€m) 2.7% Growth LfL(1) +63.4 92.8 +3.6% 0.9% Indexation 27.9 +1.4 FY 2016 Like-for-Like Balance acquisitions FY 2017 growth and disposals Visitors(2) (million) Tenant
Slide 19: Shopping Centers: Leasing activity and occupancy
Shopping Centers | Leasing activity and occupancy UPWARDS TREND IN PERFORMANCE WITH A RELEASE SPREAD OF +4.7% Release spread #contracts Main tenants All portfolio +4.7% 166 Contracted Net Occupancy Change vs sqm Absorption 31/12/17 31/12/16 (bps) All portfolio 108,411 +3,703 89.4% +78 ı 19 ı
Slide 20: Logistics
LOGISTICS
Slide 21: Logistics: Rents bridge and breakdown
Logistics | Rents bridge and breakdown (€m) 7.6% Growth +25.8 41.3 LfL(1) +8.4% 0.8% Indexation 14.6 +1.3 (0.4) FY 2016 Like-for-Like 2 old leases(2) Balance acquisitions FY 2017 growth FY 2016 and disposals LfL growth by tenant type Occupancy by area 3PL +9.8% Madrid 100% End-user +3.0% Barcelona 9
Slide 22: Logistics: Leasing activity
Logistics | Leasing activity STRONG MARKET DINAMICS DRIVING A VERY POSITIVE RELEASE SPREAD Contracted Release # Tenants sqm spread contracts Madrid 208,974 +3.1% 8 Barcelona 43,571 +22.0% 4 Other 32,121 - 1 TOTAL 284,667 +13.4% 13 ı 22 ı
Slide 23: Valuation and Debt Position
VALUATION AND DEBT POSITION
Slide 24: GAV summary
Valuation and debt position | GAV summary Passing 4.1% 5.3% 4.4% 6.6% - 4.6% Gross yield 11,254 10,833 5,219 GAV TOTAL with minority stakes (€ million) 2,348 1,753 Shopping centers High Street Retail Minority stakes 648 Logistics 866 421 Offices TOTAL Other(1) €/sqm AG 4,118 3,589 5,104 674 2,508 So
Slide 25: GAV bridge
Valuation and debt position | GAV bridge STRONG ASSET REVALUATION IN THE PERIOD (+€ 959M) (€m) +14.6% 959 11,254.0 9,823.6 325.4 (25.3) 171.3 GAV Acquisitions Disposals Capex & WIP Revaluation GAV Dec-16 2017 2017 2017 2017 Dec-17 Source: Company ı 25 ı
Slide 26: GAV drivers
Valuation and debt position | GAV drivers APRAISSALS PROGRESSIVELY REFLECTING MARKET YIELDS, WITH A NUMBER OF RECENT TRANSACTIONS PROVIDING EXCELLENT BENCHMARKS 9.7% +17.5% 8.1% +13.2% 7.2% GAV 6.2% 10.5% like-for-like 4.6% +7.3% +6.4% MERLIN MERLIN(1) average evolution(1) average(1) Office Offices
Slide 27: Debt position
Valuation and debt position | Debt position FURTHER LEVERAGE REDUCTION AND LIMITED EXPOSURE TO INTEREST RATE MOVEMENTS 1,110 10 Unsecured loans 856 869 81 19 838 41 Unsecured bonds 16 719 758 10 Secured bank loans 19 19 158 158 Leasing 6.1 yrs 840 850 838 1,100 average 840 850 839 maturity 800 700 7
Slide 28: Value Creation
VALUE CREATION
Slide 29: Delivered in 2017: valuation increase in refurbished assets
Portfolio performance | Delivered in 2017 VALUATION INCREASE IN ASSETS REFURBISHED OR DEVELOPED IN 2017 Office Shopping centers Logistics Minority stakes Puerta de las Cabanillas Testa Thader Naciones 3 Park I Residencial +18% +44% +33% +18% Eucalipto 33 Madrid-Pinto Zal Port +15% +27% +42% Juan Esp
Slide 30: Developments and refurbishments
Value creation | Developments and refurbishments 2018 2019 2020 2021 Marqués Torre Chamartín Torre Glòries Monumental Adequa Castellana 83-85 Alcalá 40 Office de Pombal 3 Plaza Ruiz Diagonal 605 Picasso Shopping centers Arturo Soria Larios El Saler Tres Aguas Porto Pi Artea Plaza X-Madrid Pending Ca
Slide 31: Logistics WIP
Value creation | Logistics WIP 2018 2019 2020 2021 Madrid Madrid Madrid- Guadalajara Madrid-Meco II Madrid-Pinto II B San Fernando II Azuqueca II Azuqueca III Cabanillas Park II Madrid Madrid-Getafe Guadalajara Zaragoza San Fernando I (Gavilanes) Cabanillas Park I F Plaza Logistics Sevilla Zal WIP I
Slide 32: Investment and divestment activity
Value creation | Investment & divestment activity • Compelling, return-enhancing pipeline Investment of ca. € 500m +€ 28m activity • Seeking to expand in logistics and add expected rents footprint in Portugal • + € 550m non-core disposal program: Divestment - Testa Residencial IPO -€ 19m activity -
Slide 33: Potential rental growth
Value creation | Potential rental growth Not considering market rental growth nor inflation (€m) +31% 41.1 24.6 9.1 613.7 Gross rents 69.5 469.4 0.84(2) +37% FFO € per share 0.62 31/12/17 Reversionary Development(1) Logistics Net acquisitions Potential potential & refurbishments WIP & disposals bala
Slide 34: Outlook 2018
OUTLOOK 2018
Slide 35: Outlook 2018
Outlook 2018 | • Employment growth driving positive trend in occupancy and rents Office • Incentives substracting cash flow due to commercialization of vacancy but well below peers • Capex program intensifying • Private consumption growth driving footfall and retail sales increase Shopping • Better
Slide 36: Shareholders remuneration guidance
Outlook 2018 | Shareholders remuneration guidance DPS GUIDANCE REPRESENTS +9% GROWTH YOY 2018 VS 2017 MERLIN DIVIDEND GUIDANCE CALCULATED MANAGEMENT GUIDANCE ON THE BASIS OF FOR DISTRIBUTION FY 2018: 80% OF AFFO + MINIMUM OF € 235M € 0.46 from AFFO PROCEEDS (€ 0.50 PER SHARE) FROM SALES € 0.04 from
Slide 37: Closing Remarks
CLOSING REMARKS
Slide 38: Closing remarks
Closing remarks | • +18% EPRA NAV per share YoY Value • DPS of € 0.46 exceeding Feb-17 guidance (€ 0.44) creation • Very high TSR of 21.6% • Leverage reduced to 43.6% with 99% of interest rate fixed • Offices. Increase in rents (+3.4% release spread). Progressive portfolio clean-up in advance of ren
Slide 39: Paseo de la Castellana, 257 28046 Madrid info@merlinprop.com
Paseo de la Castellana, 257 28046 Madrid +34 91 769 19 00 info@merlinprop.com www.merlinproperties.com