Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial, SOCIMI — H1 2021 Earnings Presentation
52 slides from Colonial Sfl Socimi Sa's earnings presentation, Jul 29, 2021
Slide 1: First Half Results 2021
First Half Results 2021 July 29th, 2021 2/21
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 STRONG FIRST HALF 2021 RESULTS > Net Tangible Assets (EPRA NTA) up to 11.36 €/share (€5,774m) > Net Reinstatement Value of 12.33 €/share > NTA growth with +3% Total Return in 6 months > Group Net Profit of €162m, +€188m vs. previous year
Slide 7: Solid results – back to growth through prime positioning
01 Highlights Solid results – back to growth through prime positioning > Recurring EPS of €11.14cts/share, lower than the previous year > Solid Capital Value Growth (GAV), thereof +5% like-for-like in Paris Total Annual Return - € per share 06/21 6M YoY Profit & Loss - €m 06/21 YoY TOTAL SHAREHOLDER
Slide 8: Solid fundamentals driving top line
01 Highlights Solid fundamentals driving top line > Solid NRI Like for Like growth of +2% > Double digit Release Spread & Superior Rental Growth > Strong CBD positioning with solid Paris exposure Solid Fundamentals 06/21 Unparalleled Prime Positioning Volume of sq m signed 59,784 Breeam CBD Paris Yo
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 > Scarcity in Grade A maintains Prime rents stable > Take-up with recovery on grade A assets > Secondary markets with correction on rents and incentives Stock CBD as of Q1 2021 Vacancy CBD as of Q4 2020 and Q1&Q2 2021 Highlights CBD
Slide 11: Investment market - Prime Product in the CBD with solid valuation levels
02 Market Investment market - Prime Product in the CBD with solid valuationn levels PRIME YIELDS (1) SPREAD VS 10Y BOND HIGHLIGHTS 8% 400bp > Record Investment volume 1H YTD with €700m Prime yield 6% Including deals under negotiation, close to €1bn 3,60% 319bp BARCELONA 4% 200bp > Ongoing momentum o
Slide 12: High quality CBD portfolio with superior performance
03 Operational performance High quality CBD portfolio with superior performance
Slide 13: Outstanding leasing activity in H1 2021
03 Operational performance Outstanding leasing activity in H1 2021 LETTING VOLUME SQM KPIS H1 2021 H1 2020 H1 2021 YoY MAX. RENT RELEASE SPREAD1 ERV GROWTH2 MATURITY (years)3 EPRA VACANCY4 BARCELONA +19% 28 +25% +2% 6 20,744 24,646 7.6% €/sqm/m years MADRID 35 +9% +6% 6 5,839 17,825 +205% 5.2% €/sqm
Slide 14: Letting activity remains strong in 1H 2021
03 Operational performance Letting activity remains strong in 1H 2021 > Colonial with strong letting activity, +42% on previous year (+71% in economic terms) > Letting activity focused on CBD assets with high Energy Certificates > Solid mix between renewals and new lets LETTING ACTIVITY REMAINS SOLI
Slide 15: Rental growth remains solid
03 Operational performance Rental growth remains solid > Releases Spreads remain at double digit levels > Barcelona with +25% and Madrid with +9% release spread > Signed Prices +6% above ERVs, Paris with outstanding +8% vs ERV COLONIAL PRODUCT SIGNED RELEASE SPREAD1 GROWTH ON SIGNED RENTS2 Breakdown
Slide 16: Rental Price levels remain solid
03 Operational performance Rental Price levels remain solid during RELEASE SPREAD1 GROWTH ON SIGNED RENTS2 Washington Plaza Diagonal 682 Washington Plaza Génova, 17 +3% +40% +70% +11% Diagonal, 609 Illacuna Arturo Soria, 336 Puerto de Somport, 8 +47% +25% +37% +32% Cézanne Saint-Honoré Castellana, 5
Slide 17: Vacancy at very healthy levels in every segment
03 Operational performance Vacancy at very healthy levels in every segment > Office portfolio vacancy at a healthy 4.9% level (3% excluding Grenelle & Ortega y Gasset) > Temporary increase in Barcelona vacancy offset by Paris improvement > Paris at 1.9% excluding 103 Grenelle entry into operation EP
Slide 18: Occupancy stability in the portfolio
03 Operational performance Occupancy stability in the portfolio > Total vacancy remains at levels of 5.0% > 3.0% vacancy due to entries into operation and residual secondary exposure > Attractive offer in CBD Barcelona & Madrid EPRA VACANCY Epra SECONDARY EXPOSURE Vacancy 1.2% Le Vaisseau Sant Cugat
Slide 19: Additional reversion through projects & renovation program
03 Operational performance Additional reversion through projects & renovation program > Full refurbishment increasing efficiency and reducing carbon footprint > New AAA tenant signing passing rent doubling the rent before project > +30% of Capital Value Gain on Total Cost1 Barcelona Project Delivery
Slide 20: Solid financials underpinned by high quality assets
04 Financial performance Solid financials underpinned by high quality assets
Slide 21: Top line stable in like for like terms
04 Financial performance Top line stable in like for like terms > Gross Rental Income +2% like for like > Strong performance in Paris offsetting temporary correction in Barcelona > Barcelona with temporary volume impact GROSS RENTAL INCOME - €m +2% EPRA Acquisitions & Projects TOTAL like-for-like1 D
Slide 22: 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 > Group rental price like for like variance at +1.6% > Barcelona and Madrid Offices rental price like for like variance at +1.9% GROSS RENTAL INCOME - €m SOLID EPRA LIKE-FOR-LIKE
Slide 23: Net Rental Income at +2% like for like
04 Financial performance Net Rental Income at +2% like for like > Net Rental Income +2% 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 Rental In
Slide 24: Solid Asset Value Growth in every segment
04 Financial performance Solid Asset Value Growth in every segment > Solid +3% YoY like for like growth > Paris with outstanding +5% like for like YoY growth > Strong 1H momentum of Spanish portfolio: Barcelona +4% lfl & Madrid +3% lfl GAV 1H 2021 GROWTH – 1H 2021 GAV VARIANCE +2.3% 6 MONTHS 12 MONT
Slide 25: Solid Capital Value Performance in every segment
04 Financial performance Solid Capital Value Performance in every segment > +2.3% like for like Capital Value Growth in 6 months > Barcelona and Madrid with accelerating momentum > Strong Alpha component based on Prime Factory Delivery GAV 1H 2021 GROWTH – 1H 2021 LIKE FOR LIKE VARIANCE 1H 2021 +2.3
Slide 26: Solid profitability with enhanced quality
04 Financial performance Solid profitability with enhanced quality > Group Net Profit of €162m, +€188m > Recurring Profit impacted by disposals & renovation program acceleration > Comparable Recurring EPS of 16,3 €cts/share in line with previous year levels PROFIT & LOSS ACCOUNT GROUP NET PROFIT REC
Slide 27: 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 16,3 €cts/share in line with previous year levels > Disposals of non-core -
Slide 28: Improving Group's debt positioning
04 Financial performance Improving Group’s debt positioning > Improved debt profile through successful liability management > Issuance of €625m1 8 years bond, 3x oversubscribed by high quality accounts > Issuance at 0.75% coupon, the lowest coupon in the history of the Colonial Group LIABILITY MANAG
Slide 29: Solid Capital Structure
04 Financial performance Solid Capital Structure > Strengthened balance sheet through capital recycling > Improved debt profile through successful liability management > Solid capital structure with LTV of 34.6% STREGNHTHENED BALANCE SHEET IMPROVED FUNDING OF THE GROUP Debt reduction Solid Capital S
Slide 30: Solid Total Shareholder Return
04 Financial performance Solid Total Shareholder Return > 6/2021 NTA of €5,774m, 11.36 €/share > EPRA NTA pre-dividend & LM impact with +3.5% growth up to 11,66 €/share > Total Shareholder Return1 (including dividend) of +2.8% in 6 months EPRA NET TANGIBLE ASSETS (EPRA NTA) TOTAL SHAREHOLDER RETURN
Slide 31: Acceleration of the decarbonization strategy
05 ESG Performance - Decarbonization Acceleration of the decarbonization strategy
Slide 32: Strong Commitment to ESG & Decarbonization
05 ESG Performance - Decarbonization Strong Commitment to ESG & Decarbonization > Carbon footprint reduction (77%) vs 2015 baseline year > 2030 Group Target achieved ahead of timing > Acceleration of path towards net zero emissions ACCELERATION ON DECARBONIZATION COLONIAL FULLY ALIGNED WITH PARIS AG
Slide 33: Superior growth & returns through prime positioning
06 Reloading Growth & Value Creation Superior growth & returns through prime positioning
Slide 34: Strong growth potential in rents & value
06 Reloading Growth & Value Creation STRONG GROWTH POTENTIAL IN RENTS & VALUE 1✓ Project Pipeline with solid cash flow & value growth 2✓ Renovation Program with strong reversion 3✓ Prime Contract Portfolio to capture rental growth 4✓ Capital Recycling & Prime Acquisitions with flight to quality 5✓ I
Slide 35: Project pipeline – significant GRI reversion to come
06 Reloading Growth & Value Creation 1 Project pipeline – significant GRI reversion to come > Around €80m of additional rents to flow into the recurring P/L > YTD more than €27m of secured rents through solid pre-let performance > Prime Project pipeline delivery on track 1 GLA Total Yield Project Ci
Slide 36: Renovation Program with strong reversion
06 Reloading Growth & Value Creation 2– Renovation Program with strong reversion > Renovation Program with additional rent reversion of more than €30m > 105,000 sqm of GLA with €945m of GAV with strong value creation upside > Solid delivery YTD with €5m of annualized rents secured in 6 months beatin
Slide 37: Prime Contract Portfolio to capture rental growth
06 Reloading Growth & Value Creation 3 Prime Contract Portfolio to capture rental growth > Ongoing delivery of high release spreads > Contract Portfolio under-rented > Colonial setting the benchmark for prime rents in every market GRI GROWTH TROUGH REVERSION IN RENTAL PRICES HIGH END RENTS THROUGH P
Slide 38: Capital Recycling & Prime Acquisitions: Flagship projects Paris
06 Reloading Growth & Value Creation 4 Capital Recycling & Prime Acquisitions with Flight to Quality > Acquisition of circa €1bn1 additional exposure in Prime Assets in Paris at NDV > Increased exposure to value-accretive Paris Flagship Projects > Transaction execution on track ACQUISITION OF PRIME
Slide 39: Ongoing flight to quality through active capital allocation
06 Reloading Growth & Value Creation 4 Capital Recycling & Prime Acquisitions with Flight to Quality > 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 Exp
Slide 40: Flight to quality & capital recycling, reloading growth
06 Reloading Growth & Value Creation 4 Capital Recycling & Prime Acquisitions with Flight to Quality > Prime Project Pipeline with significant value creation potential > Renovation Program with important GRI reversion > Opportunistic acquisitions going forward FLIGHT TO QUALITY & CAPITAL RECYCLING .
Slide 41: 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 42: Conclusion & Outlook
07 Conclusion & Outlook
Slide 43: Colonial Platform well positioned for Growth
07 Conclusion & Outlook Colonial Platform well positioned for Growth STRONG FIRST HALF 2021 RESULTS > Group Net Profit of €162m, +€188m vs. previous year > NTA growth with +3% Total Return in 6 months > Gross Asset Value of €12.0bn, +3% like-for-like (Paris+5%) > Net Rental Income of €143m, +2% like
Slide 44: Q&A
Q&A
Slide 45: Project pipeline – solid value creation potential
APPENDICES Project pipeline – solid value creation potential > Prime Project pipeline delivery on track > 4 out of 9 projects to be delivered during 2021 > Significant capital value creation potential to be crystalized 1 GLA Total Yield Project City % Group Delivery (sqm) Cost €m on Cost Value creat
Slide 46: AAA Clients with strong solvency
APPENDICES AAA Clients with strong solvency CONTRACT PORTFOLIO 1H 2021 MATURITIES – DELIVERY YTD ON TRACK 1H 21 MATURITIES – HIGH LOYALTY CLIENTS 1H 21 MATURITIES MANAGEMENT ON TRACK 1H 21 clients with 9 years of loyalty, half of them in Madrid % on annualized 06/21 Topped-Up Group GRI1 Madrid 55% 8
Slide 47: Strong 1H 2021 Collection rates
APPENDICES Strong 1H 2021 Collection rates > 100% Group Offices in Q2 21 > 100% Madrid & Barcelona Offices in Q2 21 > 100% Group Offices in H1 21 COLLECTION RATES DURING COVID-19 Q2 2021 H1 2020 Group Paris Barcelona Madrid Group Offices 100% 99% >100% 100% 100% All uses 97% 96% >100% 98% 87% 98% 47
Slide 48: Solid Group Net Rental Income
APPENDICES Solid Group Net Rental Income > Net Rental Income +2% like for like > Paris with +5% Net Rental Income > Strong Paris performance offsetting temporary correction in Barcelona NET RENTAL INCOME – LIKE-FOR-LIKE OF +2% > Paris total portfolio with a significant increase of +5% like-for-like
Slide 49: 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 Théodore CBD €80m 3,400 sqm 2.48% Yield (2Q 2021) 260 Boulevard Saint Germain City center €34m 1,600 sqm €21,250/sqm (2Q 2021)
Slide 50: Investment markets for prime product remain active: Barcelona and Madrid
APPENDICES Investment markets for prime product remain active > Barcelona leading the investment market in Spain – specially in the 22@ district > Investor appetite with increased momentum for Prime in Madrid Glories Centre 22@ €120m 21,500 sqm €5,581/sqm (2Q 2021) Diagonal 123 22@ €55m 10,170 sqm €
Slide 51: A solid capital structure
APPENDICES A solid capital structure > Long-term financing profile with extended debt maturities > €2.4bn 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 Pro
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