Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial — H1 2016 Earnings Presentation
43 slides from Colonial Sfl Socimi Sa's earnings presentation, Jul 27, 2016
Slide 1: Regulatory announcement (Hecho Relevante)
According to article 228 of the Legislative Royal Decree 4/2015 of October 23 approving the revised text of the Securities Market Act, Inmobiliaria Colonial, S.A. (“Colonial” or the "Company") hereby reports the following: REGULATORY ANNOUNCEMENT (“HECHO RELEVANTE”) Following the Significant Event p
Slide 2: First Half Results 2016
First Half Results 2016 July 2016
Slide 3: 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 4: Agenda
Agenda 01 Highlights 02_ Office markets 03 Operating performance 04 Financial review 05 Growth drivers 06 Conclusion 3
Slide 5: Management team
Management team PRESENTING MANAGEMENT TEAM Pere Viñolas Carmina Ganyet Carlos Krohmer CEO Corporate Managing Director Chief Corporate Development Officer 4
Slide 6: Highlights
01 Highlights
Slide 7: Another strong set of results
01 Highlights 1H 2016 Another strong set of results ANOTHER STRONG SET OF RESULTS > EPRA NAV of 6.8€/share: +25% year on year (+10% in 6 months) > Gross Rental Income, +10% like for like > Recurring Net Income, +183% > Net Profit of €230m, +13% PERFORMANCE & OPERATIONS > Letting volume of more than
Slide 8: Another strong set of results
01 Highlights 1H 2016 Another strong set of results Successful delivery of growth strategy > Double digit growth in NAV per share, +25% year on year > Strong growth in Gross Rental Income: +23% (+10% like for like) > Significant increase of Recurring Net Profit: +183% > Strong credit profile: LTV be
Slide 9: Office markets
02 Office markets om
Slide 10: Macroeconomic context
02 Office markets Macroeconomic context Macro outlook remains solid > Fundamentals remain attractive despite increased volatility in capital markets > Still early to assess long term impacts of Brexit vote MARKET TRENDS GDP GROWTH WORLD & EU Global growth remains stable: +3.2% in 2016 Eurozone r
Slide 11: Rental Market
02 Office markets Rental Market CBD market fundamentals remain solid > More than three quarters with decreasing vacancy rates in every market > Sustained momentum in take-up faces scarcity of Grade A product in CBD BARCELONA MADRID PARIS CBD TAKE UP (‘000 sq m) TAKE UP (‘000 sq m) TAKE UP (‘000 sq m
Slide 12: Rental Market
02 Office markets Rental Market Prime Product in City Center as key driver to capture selective demand and rental growth > Growth potential in prime rents underpinned by strong fundamentals in every market > Prime rents with positive momentum in the three markets TAKE UP ANALISIS 1Q 16 PRIME RENTS Y
Slide 13: Investment Market
02 Office markets Investment Market Investment markets 2016 remain strong, but below 2015 due to the lack of product > General market volatility increases “flight to quality” > Increasing importance of rental growth for further capital value growth > Spread vs reference rates remain at very attracti
Slide 14: Operating performance
03 Operating performance
Slide 15: Letting activity with strong momentum
03 Operating performance 1H 16 Letting activity with strong momentum Ongoing strong momentum in letting activity > Barcelona with record volume, more than 36,800 sq m signed > Madrid remains strong, close to 8,400 sq m let in 13 transactions > Paris with high activity: 20 transactions with more than
Slide 16: High quality tenant portfolio
03 Operating performance 1H 16 High quality tenant portfolio High quality premises attract and retain top tier tenants > A well diversified tenant base with long-standing clients > Capturing high quality clients on the back of top assets A WELL DIVERSIFIED TENANT BASE OF TOP QUALITY CLIENTES DIVERSI
Slide 17: EPRA Occupancy accelerating
03 Operating performance 1H 16 EPRA Occupancy accelerating Prime positioning with top quality product ensures successful letting-up > EPRA Office Occupancy at 96%, +999 bps in 12 months > Strong performance of Colonial in every market EPRA FINANCIAL OFFICE OCCUPANCY VAR. 12 MONTHS EPRA OCCUPANCY 88%
Slide 18: Colonial sets the benchmark in offices
03 Operating performance 1H 16 Colonial sets the benchmark in offices Colonial as leading market indicator for rental price recovery > Strong momentum in occupancy enhances bargaining power > Prime positioning enables rental price increases – especially in CBD assets EPRA FINANCIAL OFFICE OCCUPANCY
Slide 19: Colonial sets the benchmark in offices
03 Operating performance 1H 16 Colonial sets the benchmark in offices Colonial as leading market indicator for rental price recovery > Colonial’s asset clearly positioned to achieve rental price increases > Prime assets are first movers in rental recovery Barcelona Madrid Paris Av. Diagonal, 609-615
Slide 20: Successful delivery of growth strategy
03 Operating performance 1H 16 Successful delivery of growth strategy Sustained strong delivery of GRI growth 1. Strong first half momentum in passing GRI 2. Delivery of GRI through occupancy improvements and rental price increases 3. Project Alpha adds close to €13m of annual GRI 4. Solid base to e
Slide 21: Unlocking value through ongoing repositioning
03 Operating performance 1H 16 Unlocking value through ongoing repositioning Ongoing progress on repositioning and value added strategies > Continuous improvement of energy efficiency standards and asset quality > Source for further value creation through rental uplifts & “created” yield compression
Slide 22: Financial review
04 Financial review a = a =i 7 oe ae ae ae _hamitl ee eer = r ee te ath pS a (ee ae TCCUmreté‘(<i’:;!”.tCUCtCt eee
Slide 23: Successful execution of growth strategy
04 Financial review 1H 16 Successful execution of growth strategy Successful execution of growth strategy as base for double digit GRI increase > Strong underlying like for like growth: +10% > Additional rental growth from value added strategies & acquisitions: +13% GROSS RENTAL INCOME - €M Like for
Slide 24: Strong underlying GRI growth in every market
04 Financial review 1H 16 Strong underlying GRI growth in every market Strong underlying growth in gross rental income > Barcelona with outstanding like for like growth – catching up versus previous years > Madrid remains strong at 5% like for like increase > Paris with double digit like for like gr
Slide 25: Strong underlying growth in Gross Asset Values
04 Financial review 1H 16 Strong underlying growth in Gross Asset Values Gross Asset Value of €7,556m (€7,949m including transfer costs) > +13% like for like growth in year (+5% like for like in 6 months) > Acquisitions add another 7% in annual asset value growth (+4% in 6 months) GAV - 6 MONTHS VAR
Slide 26: Strong underlying growth in Gross Asset Values
04 Financial review 1H 16 Strong underlying growth in Gross Asset Values Above average value creation through solid real estate approach > Value added strategies enable rental uplifts and “created” yield compression > Scarcity play through the creation of prime product TILOS, 2-6 – Barcelona CBD JOS
Slide 27: Strong underlying growth in Gross Asset Values
04 Financial review 1H 16 Strong underlying growth in Gross Asset Values Above average value creation through solid real estate approach > Value added strategies enable rental uplifts and “created” yield compression > Scarcity play through the creation of prime product Av. Diagonal, 609-615 - CBD Jo
Slide 28: Solid Capital Structure with substantial firepower
04 Financial review 1H 16 Solid Capital Structure with substantial firepower Solid Capital Structure with optimal financing to implement growth strategy > Competitive financing cost in Spain & France > First class long term financing structure with important fire power capacity COMPETITIVE FINANCE C
Slide 29: Positive momentum in earnings
04 Financial review 1H 16 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 Recurring Income - €m - Variance Analysis STRONG TOP & BO
Slide 30: Positive momentum in earnings
04 Financial review 1H 16 Positive momentum in earnings Net Profit 13% above previous year > Strong momentum in recurring earnings > Superior value creation in asset portfolio STRONG TOP & BOTTOM LINE PERFORMANCE PROFIT & LOSS ACCOUNT GROSS RENTAL INCOME €m Results analysis - €m 2Q 2016 2Q 2015 +10%
Slide 31: Double Digit Growth Total Shareholder Return
04 Financial review 1H 16 Double Digit Growth Total Shareholder Return Superior Total Shareholder Return > +25% year-on-year NAV growth > +10% NAV growth in 6 months STRONG MOMENTUM IN NAV GROWTH* TOTAL SHAREHOLDER RETURN NAV growth EPRA €/share* NAV Colonial Total return shareholder (2) €1,966m €2,
Slide 32: Growth drivers
05 Growth drivers
Slide 33: Project Alpha
05 Growth drivers Project Alpha Delivery on acquisition targets > Acceleration of growth strategy in accretive terms > Attractive growth profile maintaining investment discipline Successful execution of Project Alpha 1. 20/10/2015 Investments Targets – Investor Day 2. 13/05/2016 Acquisition Pipeli
Slide 34: Project Alpha: investment projects of more than €400m
05 Growth drivers Project Alpha Implementation of investment projects for a total volume of more than €400m > Acquisition of 4 prime office assets in Spain and a 4.4% stake in SFL > High quality products with unique positioning sourced through off market transactions > Interesting balance of Core in
Slide 35: Project Alpha
05 Growth drivers Project Alpha Assets located in city center with unique positioning in every segment > Attractive entry prices at optimal market timing > Market segments with interesting growth perspectives > Value creation potential through value added strategies (Prime Factory Investments) and s
Slide 36: Attractive growth profile
05 Growth drivers Attractive growth profile Portfolio with significant cash flow and value to be unlocked > Significant increase of passing rents in 6 months > Significant increase of reversionary potential from current portfolio > Additional future growth potential through rental cycle, value added
Slide 37: Colonial's positioning in rental cycle looks good
05 Growth drivers Colonial’s positioning in rental cycle looks good Colonial well positioned to capture rental growth > Madrid & Barcelona remain most attractive European markets in rental growth > Paris CBD gaining important momentum in rental price acceleration EUROPEAN PROPERTY CLOCK – JLLS(1) MA
Slide 38: Strong share price performance
05 Growth drivers Strong share Price performance Resilient share price performance in volatile capital markets > Ongoing positive momentum in analyst coverage and share price performance > Colonial shares offer a “flight to quality” play with attractive returns and good liquidity HIGH QUALITY SHAREH
Slide 39: Conclusion
06 Conclusién —
Slide 40: Conclusion
06 Conclusion COLONIAL SETS THE BENCHMARK IN OFFICES > Ongoing strong momentum in letting activity > High occupancy levels enhance negotiation power > Prime positioning enables rental price increases > Colonial as leading market indicator for rental recovery > Successful delivery of Project Alpha en
Slide 41: Q&A
Q&A
Slide 42: Gross Asset Values – main 6/2016 valuation KPIs
Appendices Gross Asset Values – main 6/2016 valuation KPIs > Colonial valuation yields still above market levels > Prudent capital values ratio offer very attractive entry price levels VALUATION YIELDS 1 CAPITAL VALUE 06/2016 - €/sqm BARCELONA BARCELONA 5.28% 3,797 Colonial Colonial Prime CBD Market
Slide 43: www.inmocolonial.com
www.inmocolonial.com © 2016 Colonial
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