Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial, SOCIMI — H1 2019 Earnings Presentation
58 slides from Colonial Sfl Socimi Sa's earnings presentation, July 2019
Slide 1: First Half Results 2019
First Half Results 2019 July 2019 2019 2/19
Slide 2: Disclaimer
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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: Delivering the Business Plan
01 Highlights Delivering the Business Plan
Slide 6: Business Plan delivery on track
01 Highlights 1H 2019 Business Plan delivery on track OUTSTANDING FINANCIAL RESULTS > Total Shareholder Return 1H 2019 of 18% > EPRA NAV of €10.52€ per share: +16% YoY > Gross Asset Value of €11.8bn, +9% like-for-like YoY > Gross Rental Income of €174m, +4% like-for-like > Recurring earnings of €69m
Slide 7: Solid top line growth driving results
01 Highlights 1H 2019 Solid top line growth driving results > Total Annual Shareholder Return of 18% (7% Total Shareholder Return in 6 months) > Net Asset Value of 10.52€/share +16% (+5% NAV growth in 6 months) > Recurring EPS of 13.5 €Cts/ share, +42% Total Annual Return - € per share 06/19 1H19 Yo
Slide 8: Solid top line growth driving results
01 Highlights 1H 2019 Solid top line growth driving results > Outstanding GRI Like for Like growth of +4% > Double digit Release Spread & Superior Rental Growth > Low vacancy of 4% with strong fundamentals Solid Fundamentals 1H 2019 Unparalleled Prime Positioning EPRA Vacancy 4% CBD Energy Volume of
Slide 9: Market: Scarcity in Prime Product
02 Market Scarcity in Prime Product
Slide 10: CBD outperforming the market
02 Market CBD outperforming the market VACANCY % PRIME ERV HIGHLIGHTS €/sqm/month > Record take-up of 251,000 sqm in 1H19 +6% BARCELONA > CBD vacancy at historical lows -> 1.9% > Prime rents at €26.75/sq m /month, +6% in 2019 12/18 6/19 Vacancy CBD(%) Prime Rents CBD (€/sqm/month) €/sqm/month +4% >
Slide 11: Investment Markets remain strong
02 Market Investment Markets remain strong PRIME YIELDS (1) SPREAD VS 10Y BOND HIGHLIGHTS > Invest volume of 620 €m in 1H19 > Experts expect record investment volume for BARCELONA the full year 2019 > Prime yields stabilizing at 3.75% > Healthy spread of 336 bp > Record investment volume of 1 €bn in
Slide 12: Operational performance: Unparalleled exposure to CBD
03 Operational performance Unparalleled exposure to CBD
Slide 13: CBD focus ensures strong letting performance
03 Operational performance CBD focus ensures strong letting performance # CONTRACTS SQM SIGNED GRI SECURED1 INCENTIVES2 EPRA VACANCY3 BARCELONA 19 27,188 €7m 4% 1% MADRID 19 78,021 €17m 4% 9% PARIS 22 24,136 €19m 13% 2% LOGISTIC 2 22,449 €1m 5% 10% TOTAL 62 151,793 €44m 9% 4% (1) Annualized figures
Slide 14: Strong delivery on rental price increases
03 Operational performance Strong delivery on rental price increases > Significant rental growth in every segment > High release spreads, Barcelona outstanding > Paris portfolio with double digit rental growth on both quarters SOLID INCREASE IN RENTAL PRICES GROWTH ON SIGNED RENTS1 RELEASE SPREAD2 1
Slide 15: Strong delivery on rental price increases across the entire portfolio
03 Operational performance Strong delivery on rental price increases across the entire portfolio GROWTH ON SIGNED RENTS1 First Quarter 2019 Second Quarter 2019 Pedralbes Center Edouard VII Francisco Silvela, 42 Haussman Diagonal 525 +135% +21% +19% +13% +12% Sant Cugat Av. Diagonal, 682 Diagonal 682
Slide 16: Strong delivery on rental price increases across the entire portfolio
03 Operational performance Strong delivery on rental price increases across the entire portfolio RELEASE SPREAD 1 First Quarter 2019 Second Quarter 2019 Illacuna Tucumán Diagonal 409 Via Augusta Torre BCN +25% +24% +33% +78% +52% Sant Cugat Miguel Ángel, 11 Diagonal 609 Santa Engracia Alfonso XII +1
Slide 17: Vacancy remains at healthy levels
03 Operational performance Vacancy remains at healthy levels > Colonial Group vacancy at a healthy 4% > Barcelona at 1.4% and Paris at 1.6% > Madrid traditional portfolio at 3% EPRA VACANCY BARCELONA1 1.4% MADRID1 9.2% Axiare & COLONIAL GROUP2 delivered projects “LFL” Colonial 4.0% Axiare & delivere
Slide 18: Colonial portfolio outperforming the market on occupancy
03 Operational performance Colonial portfolio outperforming the market on occupancy > Strong progress on letting-up Madrid portfolio > Madrid pro-forma vacancy at 7% > Group pro-forma vacancy at 3.4% EPRA VACANCY Avenida (229bp) Bruselas 38 MADRID1 Castellana, 163 Ribera de Loira, 28 Francisca Delga
Slide 19: ESG Strategy and tracks
03 Operational performance ESG Strategy and tracks > 91% of portfolio with Breeam/Leed certificates > Significant quantitative and qualitative improvement in energy efficiency > €9bn of assets with Breeam and €2bn with Leed Portfolio with Leed / Breeam1 - Value Breeam Certificates - Value Leed Certi
Slide 20: ESG Strategy on track
03 Operational performance ESG Strategy on track > GRESB / BREEAM 2019 Award for Responsible Real Estate Investment > #1 Portfolio for Responsible Real Estate Investment in Europe > ESG excellence at the Core of Strategy BENCHMARK / INDEX ACHIEVEMENT / RATING > GRESB / BREEAM 2019 Award for Responsi
Slide 21: Update on CoWorking – UtopicUs
03 Operational performance Update on CoWorking – UtopicUs > Utopicus with consolidated leadership in Spain > Strong brand recognition with well positioning in key locations > Quick expansion with 14 centers and c.40,000 sq m under operation CONSOLIDATION OF A COWORKING PLATFORM IN SPAIN NEW OPENINGS
Slide 22: Update on CoWorking – UtopicUs
03 Operational performance Update on CoWorking – UtopicUs 2019 – A year of optimization and occupancy > Rump-up phase with 14 centers entering into operation > Reaching higher occupancy levels than expected > Break even reached at c.60% occupancy rate Occupancy as of June 2019 Pl. Catalunya 100% # 1
Slide 23: Update on CoWorking – UtopicUs
03 Operational performance Update on CoWorking – UtopicUs Optimization of the concept through the combination of traditional and flexible office > Traditional clients gain flexibility > Flexible space increases occupancy and reduces volatility Príncipe de Vergara / Window Benefits for traditional an
Slide 24: Financial performance: Profitable Growth improving the quality of returns
04 Financial performance Profitable Growth improving the quality of returns
Slide 25: Strong top line growth
04 Financial performance Strong top line growth > Outstanding +4% like for like > Madrid with highest LFL of +5% > Paris & Barcelona remain strong with 4% each GROSS RENTAL INCOME - €M EPRA Projects & TOTAL Acquisitions & like-for-like1 refurbishments +4% disposals (1%) LFL1 GROUP +2% +4% (1%) (1%)
Slide 26: Like-for-like rental growth price driven
04 Financial performance Like-for-like rental growth price driven > Like-for-like growth largely driven by rental price increases > Barcelona and Paris almost fully price driven > Madrid growth driven by a combination of price and volume GROSS RENTAL INCOME - €M STRONG EPRA LIKE-FOR-LIKE GROWTH EPRA
Slide 27: Strong underlying growth in Asset Values
04 Financial performance Strong underlying growth in Asset Values Gross Asset Value of €11,798m (€12,390m including transfer costs) > +9% like for like YoY growth (+4.2% in 6 months) > Solid growth rates in every segment GAV 1H 2019 GROWTH GAV VARIANCE 6 months 12 months BARCELONA +8% +19% 11,798 MA
Slide 28: Strong underlying growth in Asset Values
04 Financial performance Strong underlying growth in Asset Values > +4% like for like Capital Value Growth in 6 months > Strong Alpha: +3.3% growth out of +4% through project delivery and rental price increases > Scarcity factor of prime portfolio adding +0.8% growth trough yield compression GAV 1H
Slide 29: A strong credit profile
04 Financial performance A strong credit profile > Highest Corporate Rating in Spanish Real Estate > LTV reduction to 37.9% in line with financial policy > Attractive cost of debt of 1.6% and more than €2bn of liquidity2 ACTIVE LIABILITY MANAGEMENT … … ENHANCING THE BALANCE SHEET 1 Refinancing of €1
Slide 30: Profitable growth with enhanced quality
04 Financial performance Profitable growth with enhanced quality > High double digit EPS growth > High double digit recurring earnings growth > Non-Core Disposals enhancing the quality of returns STRONG EPS GROWTH RECURRING EARNINGS – VARIANCE ANALYSIS RECURRING EPS Offloading Secondary Assets Cts€/
Slide 31: Solid Total Shareholder Return
04 Financial performance Solid Total Shareholder Return > 18% Total Annual Shareholder Return (7% Total Shareholder Return in 6 months) > EPRA NAV of 10.52 €/share, +16% YoY (+5% in 6 months) > Goodwill fully absorbed just one year after merger with Axiare STRONG MOMENTUM IN NAV GROWTH TOTAL SHAREHO
Slide 32: “Alpha” as significant driver in value creation
04 Financial performance “Alpha” as significant driver in value creation > Total Shareholder Return relies on “Alpha” > More than half of the NAV growth per share through “Alpha” strategies > NAV growth driven by price increases and successful project deliveries TOTAL SHAREHOLDER RETURN TOTAL SHAREH
Slide 33: “Alpha” as significant driver in value creation
04 Financial performance “Alpha” as significant driver in value creation > Total Shareholder Return relies on “Alpha” > More than half of the NAV growth per share through “Alpha” strategies > NAV growth driven by price increases and successful project deliveries TOTAL SHAREHOLDER RETURN TOTAL RETURN
Slide 34: Growth drivers: A strong platform for future value creation
05 Growth drivers A strong platform for future value creation
Slide 35: Future value creation
05 Growth drivers FUTURE VALUE CREATION 1 Leadership in Prime Offices 2 €1.3bn of project pipeline 3 Capturing reversion in rents 4 Strong investment market 5 Disciplined capital allocation 35
Slide 36: Leadership in Prime Offices
05 Growth drivers 1 Leadership in Prime Offices 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 BARCELONA MADRID PARIS 36
Slide 37: €1.3bn of CBD Project Pipeline with strong visibility
05 Growth drivers 2 €1.3bn of CBD Project Pipeline with strong visibility > 4 out of 12 projects pre-let YTD > Enhanced visibility on cash flow and value creation > Important value creation to be captured 4 of 12 projects pre-let CBD 98% Total 98% Cost CBD €1.3bn & City Center1 Paris – Prime CBD Bar
Slide 38: €1.3bn of CBD Project Pipeline with strong visibility
05 Growth drivers 2 €1.3bn of CBD Project Pipeline with strong visibility > 4 out of 12 projects pre-let YTD > Enhanced visibility on cash flow and value creation > Important value creation to be captured Strong visibility on rental cash flow Solid Value Creation Potential Market Project Pipeline Pr
Slide 39: Capturing reversion - Attractive CBD contract portfolio
05 Growth drivers 3 Capturing reversion - Attractive CBD contract portfolio > Delivery of high release spreads ongoing > Solid prime positioning in growing markets > Renovation programs as rental growth accelerator STRONG DELIVERY ON REVERSION ATTRACTIVE RENT ROLL PRIME PORTFOLIO FOR STRONG REVERSIO
Slide 40: Capturing reversion – Renovation program
05 Growth drivers 3 Capturing reversion – Renovation program > Renovation programs as rental growth accelerator > Tenant rotation to improve rental levels > Solid positioning in growing markets Renovation Program Annualized GRI 1 CBD 106 Haussmann Prime T. Marenostrum Significant reversion ahead Par
Slide 41: Prime product offers attractive spreads vs reference rates
05 Growth drivers 4 Prime product offers attractive spreads vs reference rates > 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) BARCELONA MA
Slide 42: Investment Market with ongoing strong support for Prime
05 Growth drivers 4 Investment Market with ongoing strong support for Prime > Investor interest for prime product remains strong > Quarterly capital value increases ongoing > Colonial’s assets with prudent appraisal values Madrid City Center (inside M30) Barcelona City Center Paris CBD Terreis deal
Slide 43: Discipline on Capital Allocation
05 Growth drivers 5 Discipline on Capital Allocation > Ongoing flight to quality through disciplined capital allocation > Disposal of secondary assets for €0.9bn in 2017 & 2018 > Alpha Rotation 2019 enhancing business focus & prime exposure INVESTMENTS & DIPOSALS SINCE 2015 - €m Alpha 2015 Alpha I A
Slide 44: A solid platform to capture future growth
05 Growth drivers A solid platform to capture future growth > Solid intrinsic growth profile of CBD portfolio > Colonial well-positioned to capture reversion > Significant future value creation through CBD Project pipeline Current Uplift Potential Passing GRI 1 – (€m) Potential for Yield compression
Slide 45: Conclusion
06 Conclusion
Slide 46: Delivery of Business Plan on track
06 Conclusion DELIVERY OF BUSINESS PLAN ON TRACK Financials > Total Shareholder Return 1H 2019 of 18% > Gross Asset Value of €11.8bn, +9% like-for-like YoY > Gross Rental Income of €174m, +4% like-for-like > Recurring EPS of €13.5 Cts. per share, +42% YoY Operations > Very healthy vacancy levels at
Slide 47: Q&A – Save the date
Q&A “SAVE THE DATE” Don´t miss our next events > Oct 15: Capital Markets Day - Madrid
Slide 48: Delivering the Business Plan
APPENDICES Delivering the Business Plan > High double digit EPS growth delivered > High double digit recurring earnings growth > Business Plan delivery on track STRONG EPS GROWTH PROFIT & LOSS ACCOUNT RECURRING EPS Cts€/share 13.5 +42% 9.5 1H 2018 1H 2019 RECURRING RESULT €m 69 +66% 41 Recurring Ear
Slide 49: MSCI European Property Investment Award
APPENDICES MSCI European Property Investment Award > Colonial awarded again by MSCI as best performing portfolio in Spain > Colonial outperformed the Benchmark in 2018 and over last 3 and 5 years > Spanish index benchmark made of 48 participants and 432 assets worth €17Bn MSCI European Property Inve
Slide 50: Total Shareholder Return since June 2014
APPENDICES Total Shareholder Return since June 2014 Total Shareholder Return - Colonial (since june 2014) Date €/share Return per share Group LTV NAV Dividend NAV+ Div. NAV Growth Dividend Total Return 06-14 4,49 0 4,49 - - - 43% 12-14 4,77 0 4,77 6% - 6% 43% 12-15 6,16 0 6,16 29% - 29% 42% 12-16 7,
Slide 51: Solid valuation levels in healthy market
APPENDICES Solid valuation levels in healthy market > Colonial appraisal with very solid valuation yields > Colonial capital values below recent transactions evidence > Rental growth and “scarcity factor” main future growth driver VALUATION YIELDS (1) CAPITAL VALUE 06/2019 - €/sq m BARCELONA BARCELO
Slide 52: €1.3bn of CBD Project Pipeline with strong visibility
APPENDICES €1.3bn of CBD Project Pipeline with strong visibility Delivery Delivery Delivery Méndez Álvaro Delivery Delivery Castellana 163 Miguel Ángel 23 Velázquez 88 Sagasta 27 2020/21 2H 20 1H 21 Campus 2H 22 > 2022 MADRID Pedralbes Centre Delivery Gala Placidia Delivery Diagonal 525 Delivery Pla
Slide 53: Colonial portfolio outperforming the market on occupancy
APPENDICES Colonial portfolio outperforming the market on occupancy > Colonial with solid vacancy levels in every city > Colonial strongly-positioned vs market average > Project deliveries in Madrid enhance future reversion potential EPRA VACANCY VACANCY COLONIAL VS. MARKET BARCELONA Total Market Pr
Slide 54: Barcelona Letting Performance
APPENDICES Barcelona Letting Performance BARCELONA – LETTING PERFORMANCE Solid Performance Strong rental growth - Highlights 27,188 sq m let Pedralbes Center Torre BCN > Max. rent signed 28.5 €/sqm/month (1) > ERV growth +13% +52% +135% release vs ERV1 spread > Release spread2 +52% Renewals 11.823 s
Slide 55: Madrid Letting Performance
APPENDICES Madrid Letting Performance MADRID – LETTING PERFORMANCE Solid Performance Strong rental growth - Highlights 78,021 sq m let Alfonso XII Tucumán > Max. rent signed 31.9 €/sqm/month > ERV growth +4% (1) +25% +24% release release spread spread > Release spread2 +6% Renewals 56.691 sq m Franc
Slide 56: Paris Letting Performance
APPENDICES Paris Letting Performance PARIS – LETTING PERFORMANCE Solid Performance Strong rental growth - Highlights 24,136 sq m let Edouard VII Haussman > Max. rent signed > 800 €/sqm/year (1) > ERV growth +11% +21% +13% vs ERV1 vs ERV1 > Release spread2 +7% Renewals 3,623 sq m Louvre Saint-Honoré
Slide 57: A solid capital structure
APPENDICES A solid capital structure > An unparalleled high-quality collateral diversified in three cities > A solid financial structure with competitive financing costs > A strong credit profile FIRST CLASS COLATERAL A SOLID FINANCIAL STRUCTURE Capital Structure 31/12/2018 30/06/2019 More than €11b
Slide 58: www.inmocolonial.com
www.inmocolonial.com © Colonial
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