Merlin Properties Socimi, S.a. · BME:MRL
Merlin Properties Socimi — Investor Day (April 2022)
65 slides from Merlin Properties Socimi's investor day presentation, Apr 21, 2022
Slide 1: From High Street to High Speed
From High Street to High Speed C apital Market s Day April 21 st , 2022
Slide 2: Contents
Contents • Where are we now? • Future growth: history to be made • Data centers: an exciting asset class • Logistics: the sweet spot • Offices: Landmark & DCN • Rental growth path • Shopping centers: well set for recovery • Unveiling our Pathway to Net Zero • Closing remarks
Slide 3: Where are we now?
WAS A“ Se. 5 ENT ' My \ tae RMAXiWWQA iQ Where are we now?
Slide 4: Where are we now? | TREE disposal
Where are we now? | TREE disposal Disposal price € 1,987m Gross proceeds from Transaction 100% TREE € 1,987m € 699m Cancellation of mortgage loan and derivatives Implicit GAV of Tree(1), and transaction costs 662 assets 17.1% € 2,077m € 315m • 50% of the accounting capital gains(1) in Premium over M
Slide 5: Where are we now? | Sound financial structure
Where are we now? | Sound financial structure FINANCIAL DISCIPLINE: LONG MATURITIES AND FULLY HEDGED DEBT 31.2%(1) 1.94% 5.9 97.9% 100% € 3,610m € 537m LTV Average Years Non-mortgage debt Fixed Net financial cash Interest Rate Maturity(2) /total debt rate debt debt position(3) 872 745 602 600 502 53
Slide 6: A snapshot of MERLIN post transaction
Where are we now? | A snapshot of MERLIN post transaction 7% 16% % Gross asset value PF(1) Post-Transaction 57% (31/12/2021) 20% Offices Shopping Centers Logistics Other 6 (1) Includes proportionate CILSA (ZAL Port) and excludes Tree
Slide 7: Reconvening our strategy
Where are we now? | Reconvening our strategy A CLEARLY DEFINED STRATEGY INSPIRED BY THE BEST REIT PRACTICES Offices Logistics 50 % Core & Core Plus 20 % • Breadth of prime space Spain & Portugal • National footprint Madrid, Barcelona in Lisbon • “One-stop shop” solution for 3PL Best Investment gover
Slide 8: Future growth: history to be made
Future growth: history to be made
Slide 9: History to be made | Pillars
History to be made | Pillars History to be made | Main assumptions 1 2 3 DATA LOGISTICS OFFICES CENTERS • An exciting asset class rominent leader in the Iberian Peninsula •P • Torre Glòries: a fully integrated building • Market overview evelopment of Best II & III land bank •D • Update on Plaza Ruiz
Slide 10: Data centers: an exciting asset class
Data centers: an exciting asset class
Slide 11: MERLIN investment strategy in DCs
An exciting asset class | MERLIN investment strategy in DCs • 100% ownership of the assets • Design & Construction management • 100% of lease agreements cash-flows • Technological expertise • Local know-how • Staff training Spain • Local staff for the development 50% 50% and project management • Loc
Slide 12: Data centers overview
An exciting asset class | Data centers overview A strong market Excellent entry point The compelling returns 1 boosted by lack of with exponential demand of this asset class is THE product, subsea cables growth expected while attracting more and MARKET arrivals and exponential supply is scarce more
Slide 13: A trendy market
An exciting asset class | A trendy market 1 INVESTMENT SALE VOLUME IN EUROPE WAS € 1.2BN – 5X HIGHER THAN THE 5-YR AVERAGE • Yield compression drove liquidity • Landsec to Blackstone @ 3.99% NIY • EMEA edge growth 2022 set to eclipse all previous • New investors have entered years combined the DC se
Slide 14: Main players in Spain
An exciting asset class | Main players in Spain 1 EXCELLENT ENTRY POINT FOR MERLIN WITH NO RELEVANT PLAYERS IN THE MARKET MAIN DC OPERATORS Current market size Under construction Future market size # Operator (MW) (MW) (MW) 1 MERLIN - 3 70 2 Equinix 12 24 36 3 Interxion 11 23 34 4 Nabiax 17 9 26 5 D
Slide 15: Best-in-class technology
An exciting asset class | Best-in-class technology 2 Triple Net zero Net Zero Carbon footprint with 1.15 PUE(1) Each data center cuts overhead 1 Net zero water cooling Edged uses a modular closed-loop cooling system that supports high 2 100% renewable energy 3 Supplying tenants with photovoltaic sol
Slide 16: The Iberian Peninsula is a strategic enclave
An exciting asset class | The Iberian Peninsula is a strategic enclave 2 THE IBERIAN PENINSULA IS SET TO BECOME THE HUB FOR DATA CENTERS FOR CONTINENTAL EUROPE AND AFRICA, THANKS TO THE SUBMARINE INFRASTRUCTURE THAT CONNECTS THE IBERIAN PENINSULA WITH NORTH AMERICA, EUROPE, SOUTH AMERICA AND AFRICA
Slide 17: Portfolio overview
An exciting asset class | Portfolio overview 2 4 STRATEGIC LOCATIONS IN THE IBERIAN PENINSULA TO DEVELOP STATE-OF-THE-ART DATA CENTERS Hyperscale Wholesale colocation Bilbao - Arasur Barcelona - PLZF Total GLA 17,600 – 102,466 sqm Total GLA 22,131 ı Capacity 16 MW Capacity 22 – 100 MW License receiv
Slide 18: Bilbao - Arasur
An exciting asset class | Bilbao - Arasur 2 LAUNCHING OF THE DATA CENTER PROGRAM Location Render 100 MW critical power 17,600 sqm 2-4 hour battery storage 2Q 2023 First Delivery 3MW Layout EV Charging Station License granted 18
Slide 19: Bilbao - Arasur: contract signed with hyperscaler
An exciting asset class | Bilbao - Arasur 2 A BEST-IN-CLASS TENANT TAKING UP 66% OF THE FIRST MODULE AND ADVANCING TO SCALE IT TO OUR OTHER LOCATIONS Contract signed with Possibility to roll-out Long-term lease hyperscaler for 2 MW in Madrid and Barcelona of 45 years(1) (1) Break option at year 15th
Slide 20: Portfolio overview Phase I & II (70 MW)
An exciting asset class | Portfolio overview Phase I & II (70 MW) 2 Total Phase I & II MW Annual CAPEX installed GRI €m €m 70 MW € 596m € 75.2m 31% contracted (€ 183m) 20
Slide 21: Development timeline
An exciting asset class | Development timeline 2 DIVESTING FROM ANALOGICAL TO INVEST IN DIGITAL AT A VERY ATTRACTIVE YIELD-ON-COST GRI (€m) - 7.2 29.3 47.0 65.5 75.2 167 CAPEX (€m) 148 11.2% YoC 103 stabilized(1) 83 63 32 2022 2023 2024 2025 2026 >2027 (1) Including land cost 21
Slide 22: Logistics: the sweet spot
Logistics: the sweet spot
Slide 23: MERLIN's scale is second to none
The sweet spot | MERLIN’s scale is second to none THE LARGEST PLAYER IN THE IBERIAN PENINSULA Logistics footprint under management (million sqm) 2.8 1.6x 1.7 1.4 1.0 0.9 0.8 0.6 23
Slide 24: MERLIN anticipated the logistics boom
The sweet spot | MERLIN anticipated the logistics boom MERLIN HAS SECURED THE BEST LOCATIONS AT A COMPELLING YoC THANKS TO AN EXCELLENT ENTRY POINT Prime Yields evolution Transacted volume (€m) 2,611 1,562 1,658 1,585 789 854 854 4.8% 604 4.3% 4.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2
Slide 25: A unique footprint
The sweet spot | A unique footprint Basque Country 99k sqm A-6 Barcelona Zaragoza A-1 A-2 868k sqm 695k sqm 42k sqm 431k sqm Madrid 177k sqm Lisbon A-5 A-3 Valencia 45k sqm 62k sqm 180k sqm A-4 97k sqm Seville STOCK 139k sqm WIP 15k sqm 25
Slide 26: Update Best II & III programs
The sweet spot | Update Best II & III programs STABILIZED GRI WILL EXCEED € 35M GRI (€m) 1.6 7.2 17.5 26.6 31.3 35.1 Sqm delivered 117,891 130,318 256,385 116,355 87,064 - % in progress 100% 11.6% - - - - CAPEX (€m) 7.8% YoC stabilized(1) 110 80 81 46 29 0 2022 2023 2024 2025 2026 >2027 26 (1) Inclu
Slide 27: Update Best II & III programs
The sweet spot | Update Best II & III programs 722K SQM OF PRIME LOGISTICS DEVELOPMENTS TO CONTINUE FUELING GROWTH In progress Landbank 69% € 43m € 363m € 304m 133k sqm pre-let pending 589k sqm total pending capex investment capex 27
Slide 28: Offices: Landmark & DCN
Offices: Landmark & DCN
Slide 29: An iconic asset: Torre Glòries
Landmark | An iconic asset: Torre Glòries (RE) DESIGNED TO WELCOME BARCELONA’S BUSINESS FUTURE The Busines Plan Flex space Creation of 5 businesses in 1 asset: 4 floors of Flex Space of the highest • Offices (reconversion into multitenancy) quality operated by LOOM. These serve both external users a
Slide 30: Torre Glòries | Art & Deco
Landmark | An iconic asset: Torre Glòries | Art & Deco 30
Slide 31: Torre Glòries | Lobby
Landmark | An iconic asset: Torre Glòries | Lobby 31
Slide 32: Torre Glòries | Restaurant
Landmark | An iconic asset: Torre Glòries | Restaurant 32
Slide 33: Torre Glòries | Wellness
Landmark | An iconic asset: Torre Glòries | Wellness 33
Slide 34: Torre Glòries | Auditorium
Landmark | An iconic asset: Torre Glòries | Auditorium 34
Slide 35: Torre Glòries | Mirador
Landmark | An iconic asset: Torre Glòries | Mirador 35
Slide 36: Torre Glòries | Flex space: LOOM
Landmark | An iconic asset: Torre Glòries | Flex space: LOOM 36
Slide 37: Torre Glòries | Lighting
Landmark | An iconic asset: Torre Glòries | Lighting 37
Slide 38: Torre Glòries: a clear example of value creation
Landmark | An iconic asset: Torre Glóries A CLEAR EXAMPLE OF VALUE CREATION 100% € 12m € 115m 6.8% occupied total income(1) value created YoC 38 (1) Including LOOM, Mirador and Auditorium
Slide 39: Plaza Ruiz Picasso
Landmark | Plaza Ruiz Picasso THE MOST TECHNOLOGICAL AND SUSTAINABLE ASSET IN THE IBERIAN PENINSULA GLA Capex Incremental rents Delivery Yield on cost 36,899 sqm € 63.2m € 6.0m 2023 9.2% After Refurbishment 39 5,323 sqm created
Slide 40: Plaza Ruiz Picasso
Landmark | Plaza Ruiz Picasso SOLE ASSET IN AZCA TO COUNT WITH TERRACES (+2,300 SQM) 40
Slide 41: Plaza Ruiz Picasso
Landmark | Plaza Ruiz Picasso LARGEST FLOORPLANTS IN MADRID PRIME CBD (UP TO 6,500 SQM) 41
Slide 42: DCN: The next Prime CBD in Madrid
DCN | DCN: The next Prime CBD in Madrid THE MOST EXCITING RE-GENERATION PROGRAM IN EUROPE TIMELINE Urbanisation Delivery of the infrastructures first building Jul-2020 Jul-2021 Final approval Signing of Tender for full refurbishment of modification framework project of the Chamartín Station of PGM M
Slide 43: Rental growth path
Rental growth path
Slide 44: Development Capex
Rental growth path | Development Capex SELF-FUNDED CAPEX PROGRAM… (€m) 346 942 596 9.8% YoC stabilized Data Centers Logistics Total Capex 44
Slide 45: Development GRI
Rental growth path | Development GRI … WILL GENERATE € 110M OF ADDITIONAL GRI ONCE STABILIZED REPLACING NET LEASES GRI (€m) 110 84 35 75 Tree Data Centers + Logistics 45
Slide 46: Shopping centers: well set for recovery
Shopping centers: well set for recovery
Slide 47: Resiliency of the portfolio
Well set for recovery | Resiliency of the portfolio FY19 FY19 FY21 FY21 FY19 FY21 OCCUPANCY FULLY RECOVERED. SALES LESS FY19IMPACTED THAN ASSET VALUATION FY21 FY19 FY19 FY21 FY21 Occupancy Occupancy Occupancy FY19 94.2% FY21 94.2% 93.3% 93.3% 94.2% 93.3% FY19 FY21 Occupancy Occupancy 94.2% 94.2% 93.
Slide 48: After consolidation, retailers talk about expansion
Well set for recovery | After consolidation, retailers talk about expansion MAIN FASHION RETAILERS’ STRATEGY: BIGGER AND/OR URBAN SPAIN, AS A NEW LAND OF OPPORTUNITIES FOR FOREIGN RETAILERS: LOW COST OR SPORTS ORIENTATED 48
Slide 49: Lifestyle and experience retail
Well set for recovery | Lifestyle and experience retail EXPERIENTIAL RETAIL AND EMERGING CONCEPTS: RETAILERS EMBRACING TECHNOLOGY ZARA Flagship Store, WOW, Gran Via 18, Madrid Lanzadera, Saler Plaza España, Madrid SHOPPING CENTERS NEED TO ENTERTAIN CUSTOMERS: ENTERTAINMENT AS A PIECE NOT AS AN END-A
Slide 50: Unveiling our Pathway to Net Zero
Unveiling our Pathway to Net Zero
Slide 51: Sustainability Policy
Pathway to Net Zero | Sustainability Policy Principles Goals SDG Actions undertaken evelop and operate D Installation of energy efficient sustainable assets systems and equipments Active management itigate the carbon footprint M Photovoltaic plan (Project Sun) of climate of the whole value chain cha
Slide 52: MERLIN's journey
Pathway to Net Zero | MERLIN’s journey Distinct track record on ESG since inception, which poises MERLIN to successfully implement our pathway to net zero 2015 2016 2018 Baseline 2020 • Launch of the certification • Obtained first LEED v4 • Procurement of renewable electricity programs with LEED and
Slide 53: Our pathway to net zero at a glance
Pathway to Net Zero | Our pathway to net zero at a glance 1 2 3 4 5 Reducing Reducing Offsetting Reducing Renewable operational embodied residual tenant energy carbon carbon emissions emissions 85% reduction in Embodied Carbon neutrality Assessment as rocurement of P operational carbon carbon footpr
Slide 54: Reducing operational carbon
Pathway to Net Zero | Reducing operational carbon Baseline (2018) Target (2028) Carbon footprint (scope 1 + 2) 22,753 Tn Co2 3,000 Tn Co2 Carbon intensity (scope 1 + 2) 27.4 kg/sqm 3.2 kg/sqm Strategy 100% On site solar Renewal of heating Energy Energy saving renewable energy energy generation and c
Slide 55: Reducing embodied carbon
Pathway to Net Zero | Reducing embodied carbon Target Carbon footprint to be assessed Assessment in all new developments and refurbishments Reduction To be disclosed in 2023 as part of the Pathway to net zero update Strategy Calculation of carbon footprint Bidding process for construction Use of low
Slide 56: Offsetting unavoidable emissions
Pathway to Net Zero | Offsetting unavoidable emissions Own initiatives undertaken and implemented by MERLIN’s sustainability team Certified by science-based experts MERLIN will offset unavoidable carbon emissions Focus on nature-based with the following solutions strategy Positive impact on local an
Slide 57: Reducing the whole value chain emissions
Pathway to Net Zero | Reducing the whole value chain emissions OUR PATHWAY BROADENS ITS SCOPE TO INCLUDE TARGETS COVERING TENANT-CONTROLLED SPACE AS WELL AS MOBILITY EMISSIONS (SCOPE 3) Target Report scope 3 estimate 2022 Engagement with top tenants to share real data 2022 Green clauses 100% new con
Slide 58: Renewable energy
Pathway to Net Zero | Renewable energy Project Sun – Phase I 1 A Coruña 33 assets 1 Vitora across all asset categories 1 5 Barcelona 2 Total Investment 1 Madrid Valencia € 30.4m 10 1 2 1 Palma Capacity de Mallorca installed Seville 1 Malaga • Offices 39.8 Mwp 1 • Logistics • Shopping centers Procure
Slide 59: The net zero perimeter
Pathway to Net Zero | The net zero perimeter Operational control MERLIN has the operational control on 85 assets (63% of GLA), which means that it has the ability to introduce and implement operating and/or environmental policies and measures GLA total % Asset category 2020 #Assets (sqm) GLA total 6
Slide 60: Accountability
Pathway to Net Zero | Accountability Our pathway External Sustainability aims at being verification of goals in validated by SBTi ESG annual compensation report plan (15%) EPRA sBPR compliance Disclosing climate-related risks as per TCFD recommendations 60
Slide 61: Recognition
Pathway to Net Zero | Recognition Real Estate Climate change General Scorings MERLIN score Average performance 81% B C C C 58% Financial Europe Global Global average 73% Services Average Peers 76% 87 Industry percentile Sustainability Quality Accessibility Certifications +91% +83% +61% >2.8m sqm >1.
Slide 62: Closing remarks
Closing remarks
Slide 63: New guidance
Closing remarks | New guidance FFO DPS guidance guidance(1) € 1.07 p.s 2022 2026 +0.67 € 0.58 p.s > € 0.80 p.s Extraordinary(2) (€ 0.64 p.s pre Tree transaction) +0.40 Ordinary 2022 (1) Interim/Final and payment dates to be decided and approved by the BoD 63 (2) Extraordinary amount will depend on t
Slide 64: Closing remarks | Highlights
Closing remarks | Highlights • Excellent value • MERLIN shifts •R ents from data created from the from analogical to centers and logistics disposal of Tree digital, with future (€ 110m) replacing at 4.0% and a 17.1% growth coming rents from net leases premium from new paradigm: (€ 84m) e-commerce an
Slide 65: Paseo de la Castellana, 257, Madrid
Paseo de la Castellana, 257 28046 Madrid +34 91 769 19 00 info@merlinprop.com www.merlinproperties.com