Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial — FY2016 Earnings Presentation
53 slides from Colonial Sfl Socimi Sa's earnings presentation, March 2017
Slide 1: Annual Results 2016
Annual Results 2016 March 2017
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 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: Highlights
01 Highlights
Slide 6: An excellent set of results
01 Highlights 2016 An excellent set of results AN EXCELLENT SET OF RESULTS > Total Shareholder Return 2016: +20% > EPRA NAV of 7.25€/share: +18% year on year > Gross Rental Income, +7% like for like > Net Rental Income, +10% like for like > Recurring Net Income, +83% > Gross Asset Value, +9% like fo
Slide 7: Successful delivery of growth strategy
01 Highlights 2016 Successful delivery of growth strategy A year with excellent financial results > Total Shareholder Return + 20% > EPRA NAV of 7.25€/share: +18% y-o-y growth > Strong Like for Like growth in rental income : +7% GRI and +10% NRI > Significant increase of Recurring Earnings: +83% Ret
Slide 8: Successful delivery of growth strategy
01 Highlights 2016 Successful delivery of growth strategy A year of outstanding operational performance > High volume of letting transactions > Strong occupancy ratio, clearly above market > Solid delivery on rental price increases > Delivery on acquisitions maintaining investment discipline OPERATI
Slide 9: Market
02 Market j om
Slide 10: Macroeconomic context
02 Market Macroeconomic context Macro outlook remains solid > Fundamentals remain attractive despite increased uncertainty > Still early to assess long term impacts of Brexit vote MARKET TRENDS GDP GROWTH WORLD & EU Global growth remains stable: +3.1% in 2016 Euro area consolidating growth at mo
Slide 11: Rental Market
02 Market Rental Market Stable take-up faces scarcity of Grade A product in CBD > Vacancy in CBD far below total market ratio > Paris CBD at historical lows > Grade A product in CBD almost inexistent BARCELONA MADRID PARIS CBD VACANCY % VACANCY % VACANCY % TAKE UP TAKE UP TAKE UP # Transac. 442 411
Slide 12: Rental Market
02 Market Rental Market Prime Product in City Center as key driver to capture selective demand and rental growth > Growth potential in prime rents underpinned by solid fundamentals > Prime rents with positive momentum in the three markets > Barcelona with strongest growth YTD TAKE UP ANALYSIS 2016 P
Slide 13: Colonial – Unparalleled leadership in the city center
02 Market Colonial – Unparalleled leadership in the city center Colonial as largest property owner in offices in the city center of Madrid, Barcelona and Paris > Strong market share increases negotiation power > Colonial best positioned to capture the rental cycle in its markets Madrid City Center (
Slide 14: Investment Market
02 Market Investment Market Investment markets 2016 remain strong, but below 2015 due to the lack of product > General market volatility increases “flight to quality” > Spread vs reference rates remain at very attractive levels > Increasing importance of rental growth for further capital value growt
Slide 15: Investment Market
02 Market Investment Market Investor interest for prime product remains strong > Significant price increases in Q4 2016 and at the beginning of 2017 > CBD assets most sought after Madrid City Center (inside M30) Barcelona City Center Paris CBD 23 H O N B M L C 22 F 21 K J 20 DE A G I Latest investme
Slide 16: Operational performance
03 Operational performance
Slide 17: Letting activity with strong momentum
03 Operational performance Letting activity with strong momentum Prime positioning ensures strong letting performance > More than 116,000 sq 96% m signed in 93 transactions €40m of annual gross rents secured TOTAL > Close to93% > Solid occupancy level across all segments 3Q 2015 3Q 2016 96% # CONTRA
Slide 18: Letting activity with strong momentum
03 Operational performance Letting activity with strong momentum Prime positioning captures top tier clients paying maximum rents > High quality premises96%attract and retain top tier tenants TOTAL > Colonial93% captures rental 96% prices at the top of the market TOTAL 93% 96% 3Q 2015 3Q 2016 BARCEL
Slide 19: Outstanding occupancy levels beating the markets
03 Operational performance Outstanding Occupancy levels beating the markets Prime positioning with top quality product ensures successful letting-up > EPRA vacancy at 3% (272 bps) YoY > Colonial’s vacancy clearly beats the market EPRA VACANCY VACANCY COLONIAL VS. MARKET Total Market BARCELONA CBD Ma
Slide 20: Outstanding occupancy levels drive rental growth
03 Operational performance Outstanding Occupancy levels drive rental growth Colonial as leading market indicator for rental price recovery > Prime positioning with low occupancy enhances negotiation power > Solid rental price increases across the full portfolio > Significant acceleration of rental p
Slide 21: Strong delivery on rental price increases
03 Operational performance Strong delivery on rental price increases Colonial as leading market indicator for rental price recovery > Solid 2016 rental price increases enhance reversion in renewals > Acceleration of positive momentum in renewals, especially in 4Q 2016 SOLID INCREASE IN RENTAL PRICES
Slide 22: Strong delivery on rental price increases
03 Operational performance Strong delivery on rental price increases Colonial as a leading indicator for rental price recovery > Strong rental price increases across the portfolio > Rents signed at high end levels Barcelona, Madrid & Paris – 2H 2016 Letting Perfomance Av. Diagonal, 682 - CBD Recolet
Slide 23: Strong delivery on rental price increases
03 Operational performance Strong delivery on rental price increases Colonial as a leading indicator for rental price recovery > Strong rental price increases across the portfolio > Rents signed at high end levels Barcelona, Madrid & Paris – 2H 2016 Letting Performance Berlín / Numancia - BD Serrano
Slide 24: Successful execution of value added strategies
03 Operational performance Successful execution of value added strategies Real estate transformation as base for value creation > Strong delivery on value added initiatives > Created ERV uplifts & yield compression > New initiatives underway - more than 20,000 sq m VALUE ADDED INITIATIVES Delivery o
Slide 25: Sustainability and energy efficiency: a must for prime product
03 Operational performance Successful execution of value added strategies Sustainability and energy efficiency: a “must” for prime product > Clear leadership in Spain and France > Relevant competitive advantage in a selective market LEADER IN SUSTAINABILITY SIGNIFICANT YoY PROGRESS PORTFOLIO WITH LE
Slide 26: Financial performance
04 Financial performance a = a =i 7 oe ae ae ae _hamitl ee eer = r ee te ath pS a (ee ae TCCUmreté‘(<i’:;!”.tCUCtCt eee
Slide 27: Strong underlying rental growth
04 Financial performance Strong underlying rental growth Successful execution of growth strategy as base for double digit GRI increase > Strong underlying like for like growth: +7% > Additional rental growth from value added strategies & acquisitions: +11% GROSS RENTAL INCOME - €M 1 Like for like Pr
Slide 28: Strong underlying rental growth
04 Financial performance Strong underlying rental growth Strong underlying growth in every market > Gross Rental Income +7% like for like > Net Rental Income + 10% like for like LIKE FOR LIKE VARIANCE1 – GRI & NRI OUTSTANDING LIKE-FOR-LIKE GROWTH GRI NRI Strong positioning in the market with top B
Slide 29: Strong underlying growth in Gross Asset Values
04 Financial performance Strong underlying growth in Gross Asset Values Gross Asset Value of €8,069m (€8,478m including transfer costs) > +9% like for like growth > Solid growth rates in every segment > Significant value growth through real estate transformation GAV 2016 YoY GROWTH GAV VARIANCE 1H 2
Slide 30: Active balance sheet management
04 Financial performance Active balance sheet management Value creation through active balance sheet management > Successful liability management improving financial structure > Share buy back programme on track ACTIVE BALANCE SHEET MANAGEMENT LIABILITY MANAGEMENT 12/15 12/16 1. Set up of an €3,000m
Slide 31: A solid capital structure
04 Financial performance A solid capital structure A high quality collateral underpinned with a solid financial structure > An unparalleled high quality collateral diversified in three cities > A solid finance structure with competitive financing costs A FIRST CLASS COLATERAL A SOLID FINANCIAL STRUC
Slide 32: Positive momentum in earnings
04 Financial performance Positive momentum in earnings Significant increase in Recurring Net Profit through > Delivery of strong Gross Rental Income increase based on successful growth strategy > Savings in financing costs due to active liability management STRONG TOP & BOTTOM LINE PERFORMANCE PROFI
Slide 33: Superior Total Shareholder Return
04 Financial performance Superior Total Shareholder Return 20% Total Shareholder Return in 2016 > +18% year-on-year NAV per share growth > Return among the highest in the sector > Value creation with strong “Alpha component” through real estate transformation STRONG MOMENTUM IN NAV GROWTH TOTAL SHAR
Slide 34: Growth drivers
05 Growth drivers
Slide 35: Sources of future growth
05 Growth drivers SOURCES OF FUTURE GROWTH 1. 1 Capturing reversion in current portfolio 2 Delivery on value added & prime factory projects 2. 3 Implementation of selective acquisition programme 3. 35
Slide 36: A portfolio with growth potential
05 Growth drivers A portfolio with growth potential More tan 370,000 sq m of GLA with growth potential > Capturing rental increases with top products > Executing value added repositioning projects > Delivering the project development pipeline GLA ABOVE GROUND MAIN ASSETS 42% A Capture Reversion B Va
Slide 37: Capturing reversion of current portfolio
05 Growth drivers 1 Capturing reversion of current portfolio Colonial well positioned to capture rental growth > Attractive rent roll profile – 74% of the Spanish contract portfolio due in 36 months > Contract portfolio currently underrented in every market > Strong positioning in attractive Europea
Slide 38: Delivery on value added & prime factory projects
05 Growth drivers 2 Delivery on value added & prime factory projects A very attractive Project pipeline > Significant amount of additional rental income for the coming years > Additional value creation through created yield compression > Top product at optional market timing PROJECTS AND REFURBISHME
Slide 39: Solid progress on execution of project pipeline
05 Growth drivers 2 Delivery on value added & prime factory projects Solid progress on execution of project pipeline > Project works on track > Strong interest in the rental market Initial Acquisition Current Status Final Project Capital Value1 GLA: 10,152 sq m 4,130 €/sq m DISCOVERY BUILDING Yield
Slide 40: Delivery on value added & prime factory projects
05 Growth drivers 2 Delivery on value added & prime factory projects Real Estate transformation as ongoing principle > Repositioning of Serrano 73 to enhance asset value > 100% pre-let to top tier client Initial Acquisition SERRANO 73 From Core product to Value-Add and back to Core … > 0% occupancy
Slide 41: Delivery on value added & prime factory projects
05 Growth drivers 2 Delivery on value added & prime factory projects Looking for the better site > Finding the right market segment to capture growth with the best product > Strong positioning as guarantee for commercial success PARC GLORIES CASTELLANA 163 Capital Value1: GLA: 24,551 sq m 2,991 €/sq
Slide 42: Delivery on value added & prime factory projects
05 Growth drivers 2 Delivery on value added & prime factory projects Capturing solid growth in the centre of Paris > Developing prime products with unique positioning > Identifying market segments with solid fundamentals LOUVRE DES ANTIQUAIRES 112-122 AVENUE ÉMILE ZOLA Potential GLA:16,000 sq m Modi
Slide 43: Implementation of selective acquisition programme
05 Growth drivers 3 Implementation of selective acquisition programme Firm delivery of growth plan > Sourcing prime sites with unique market positioning > Unlocking value through real estate transformation > Strong commitment to investment discipline INVESTMENTS SINCE 2015 OFF MARKET CITY CENTER VAL
Slide 44: Superior risk adjusted returns
05 Growth drivers Superior risk adjusted returns A solid base for high quality growth > Capturing reversion with the best positioned office platform > Unlocking value through real estate transformation > Delivery on acquisition programme with investment discipline Passing GRI 1 – Uplift Potential (€
Slide 45: Superior risk adjusted returns
05 Growth drivers Superior risk adjusted returns Resilient share price performance in volatile capital markets > Ongoing positive momentum in analyst coverage and share price performance in 2017 > Colonial shares offer a “flight to quality” play with attractive risk adjusted returns COLONIAL VERSUS
Slide 46: Conclusion
06 Conclusion —
Slide 47: Conclusion
06 Conclusion ABOVE AVERAGE DELIVERY IN OPERATIONS > Strong letting momentum capturing top tier clients > High occupancy levels, outperforming the market > Capturing maximum rental prices in every market > Solid delivery of rental price increases > Successful delivery of value added strategies > Sup
Slide 48: Q&A
Q&A
Slide 49: Total Shareholder Return since June 2014
APPENDICES Total Shareholder Return since June 2014 49
Slide 50: Positive momentum in earnings
APPENDICES Positive momentum in earnings Significant increase in Recurring Net Profit through > Delivery of strong GRI increase based on successful growth strategy > Savings in financing costs due to active liability management STRONG TOP & BOTTOM LINE PERFORMANCE PROFIT & LOSS ACCOUNT GROSS RENTAL
Slide 51: Strong underlying growth in Gross Asset Values
APPENDICES Strong underlying growth in Gross Asset Values Strong like for like growth > Significant value growth through real estate transformation > Combination of yield compression and rental growth > Full impact of 2016 rental growth still to come through GAV 2016 YoY LFL VARIANCE VALUATION YIELD
Slide 52: Attractive valuation levels of current portfolio
APPENDICES Attractive valuation levels of current portfolio Important value potential through Re-Rating to current market > Colonial valuation yields still above market levels > Colonial capital values significantly below recent transactions evidence > Full impact of 2016 rental growth still to come
Slide 53: www.inmocolonial.com
www.inmocolonial.com © 2016 Colonial