Colonial Sfl Socimi Sa · BME:COL
Colonial Sfl Socimi Sa — Inmobiliaria Colonial — Q1 2017 Earnings Presentation
51 slides from Colonial Sfl Socimi Sa's earnings presentation, May 2017
Slide 1: First Quarter Results 2017
First Quarter Results 2017 May 2017 1Q/17
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: A solid start into the new year
01 Highlights 1Q 2017 A solid start into the new year AN EXCELLENT SET OF RESULTS > Gross Rental Income, +4% like for like > Net Rental Income, +4% like for like > Recurring Net Income, +27% > Recurring EPS +13% > FFO per share +13% STRONG OPERATIONAL PERFORMANCE > More than 47,000 sq m let with top
Slide 7: A solid start into the new year: excellent financial results
01 Highlights 1Q 2017 A solid start into the new year Excellent financial results with healthy growth > Strong Like for Like growth in rental income : +4% GRI and +4% NRI > Significant increase of Recurring Earnings: +27% > FFO per share: +13% Return - € per share 1Q 2017 YoY Var BUSINESS MIX – GAV
Slide 8: A year of outstanding operational performance
01 Highlights 1Q 2017 A solid start into the new year A year of outstanding operational performance > Solid occupancy ratio, clearly above market > Double digit rental price increases > Acquisition programme ahead of plan OPERATIONAL PERFORMANCE 1Q 2017 BUSINESS MIX – GAV GROUP2 # Transactions signe
Slide 9: Market
02 Market
Slide 10: Macroeconomic context
02 Market Macroeconomic context Macro outlook remains solid > Fundamentals remain attractive in Europe and particularly Spain > Still early to assess long term impacts of Brexit vote > France with improving growth profile MARKET TRENDS GDP GROWTH WORLD & EU GDP with increasing momentum: +3.4% in 2
Slide 11: Office Market
02 Market Office Market Micro outlook for Real Estate is very positive > Fundamentals in direct markets remain very strong > Barcelona office market beating expectations > Prime assets in City Center with superior performance MARKET TRENDS BARCELONA Highly dynamic market with increasing internatio
Slide 12: 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, Grade A product almost inexistent > Paris CBD remains at historical lows > Madrid with slight vacancy pick-up BARCELONA MADRID PARIS CBD VACANCY % VACANCY % VACANCY % PRIME
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: Colonial as leading market indicator for rental price recovery
02 Market Colonial – Unparalleled leadership in the city center Colonial as leading market indicator for rental price recovery > Colonial portfolio anticipating rental price increases > Colonial’s max rents signed at or above prime market references YTD ERV GROWTHS SINCE 12/15 PRIME ERVs 2016 1Q 201
Slide 15: Investment Market
02 Market Investment Market Investment markets remain strong > General market volatility increases “flight to quality” > Spread vs reference rates remain at attractive levels underpinned by solid investment volumes > Increasing importance of rental growth for further capital value growth PRIME YIELD
Slide 16: Investment Market
02 Market Investment Market Investor interest for prime product remains strong > Significant capital value increases in the last two quarters > Recent investment market acceleration not yet reflected in Colonial appraisal values Madrid City Center (inside M30) Barcelona City Center Paris CBD 23 J U
Slide 17: Operational performance
03 Operational performance
Slide 18: Letting activity with strong momentum
03 Operational performance Letting activity with strong momentum Prime positioning ensures strong letting performance > More than 47,000 sq 96%m signed in 30 transactions 93% €16m of annual gross rents secured TOTAL > More than > Incentives far below market average > Solid occupancy 3Q 2015 level ac
Slide 19: Letting activity with strong momentum: top tier clients
03 Operational performance Letting activity with strong momentum Prime positioning captures top tier clients paying maximum rents > High quality premises attract and retain top tier tenants > Colonial captures rental prices at the top of the market > Colonial portfolio as the 96% reference for prime
Slide 20: Outstanding Occupancy levels beating the markets
03 Operational performance Outstanding Occupancy levels beating the markets Attractive tension between low vacancy and new available space > Release of fully repositioned floors in CBD > Optimization of tenant profile through rotation > Solid occupancy levels that guarantee negotiation power EPRA VA
Slide 21: Outstanding Occupancy levels beating the markets
03 Operational performance Outstanding Occupancy levels beating the markets Solid occupancy levels as base for strong negotiation > Colonial with solid vacancy levels in every city > Colonial vacancy clearly beats market average > Levels around 5% provide a solid base to capture rental growth EPRA V
Slide 22: 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 1Q 2017 rental price increases enhance reversion in renewals > Solid consolidation of rental price increases > Double digit rental growth since start of cycle r
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 – 1Q 2017 Letting Performance Av. Diagonal, 609-615 - CBD Re
Slide 24: Ongoing delivery of value added initiatives
03 Operational performance Ongoing delivery of value added initiatives Real estate transformation as base for value creation > More than 6,400 sq m of repositioned spaces released in 1Q 2017 > Creation of the best product to capture high quality tenants > Created ERV uplifts & yield compression VALU
Slide 25: Value added initiatives in Spain - Santa Engracia & José Abascal 45
03 Operational performance Ongoing delivery of value added initiatives in Spain - Santa Engracia & José Abascal 45 ERV uplifts & value creation through real estate transformation > Optimizing asset layouts and offering services for tenants > Identifying the right positioning and strategy for every i
Slide 26: Value added initiatives in France - Paul Cezanne
03 Operational performance Ongoing delivery of value added initiatives in France - Paul Cezanne ERV uplifts & value creation through real estate transformation > Providing stimulating workplace environments > Getting the prime positioning right PAUL CEZANNE Focus on providing stimulating workplace e
Slide 27: Financial performance
04 Financial performance
Slide 28: Strong underlying rental growth
04 Financial performance Strong underlying rental growth Strong GRI increase underpinned by solid like for like and disciplined acquisitions > Strong underlying like for like growth: +4% > Additional rental growth from high quality acquisitions: +1% > Madrid with the strongest impact from acquisitio
Slide 29: Strong underlying rental growth
04 Financial performance Strong underlying rental growth Strong underlying growth in every market > Solid +4% EPRA like for like in Gross and Net Rental Income > Like for like income growth with healthy mix of volume and price impacts > Price increases gaining momentum as like for like growth driver
Slide 30: Strong underlying rental growth
04 Financial performance Strong underlying rental growth Strong underlying growth in every market > Solid +4% EPRA like for like in Gross and Net Rental Income > Spain with +7% EPRA like for like growth in GRI (excluding the Alfonso XII tenant rotation) > France with solid +4% EPRA like for like gro
Slide 31: Positive momentum in earnings
04 Financial performance Positive momentum in earnings High double digit profit increase based on high quality growth drivers 1. Solid GRI increase 2. Optimized financing through active liability management 3. Increase in SFL stake from 53.1% to 58.5% (Alpha I) PROFIT & LOSS ACCOUNT STRONG TOP & BOT
Slide 32: Credit Rating Upgrade
04 Financial performance Credit Rating Upgrade Upgrade of Colonial’s credit rating up to BBB with stable outlook > One of the highest credit ratings in the Spanish Real Estate sector > Highly positive assessment of operating performance > Diversified portfolio with a strong leadership in CBD S&P KEY
Slide 33: Active balance sheet management
04 Financial performance Active balance sheet management Ongoing active balance sheet management > Active liability management improving the financial structure > Successful completion of - Share buy back programme - > Maximizing flexibility in a dynamic market environment ACTIVE BALANCE SHEET MANAG
Slide 34: 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 strong credit profile A FIRST CLASS COLATER
Slide 35: Growth drivers
05 Growth drivers
Slide 36: A solid growth profile based on an attractive project pipeline
05 Growth drivers A solid growth profile based on an attractive project pipeline 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
Slide 37: Delivery on value added & prime factory projects
05 Growth drivers Delivery on value added & prime factory projects Solid progress on execution of short term project pipeline (2017 – 2019) > Projects well ahead of targets and initial underwriting > Strong pre-let interest on every product > Current rental price negotiations beating expectations 20
Slide 38: Delivery on value added & prime factory projects
05 Growth drivers Delivery on value added & prime factory projects Creation of unique landmarks through an attractive mid-term pipeline (>2019) > Creation of unparalleled references in every submarket > Attractive returns through industrial real estate projects > Planning and project schedules on tr
Slide 39: Capturing reversion of current portfolio on track
05 Growth drivers Capturing reversion of current portfolio on track Colonial well positioned to capture rental growth > Attractive rent roll profile – especially on the Spanish portfolio > Contract portfolio currently underrented in every market > Strong delivery of rental price reversion in 1Q 2017
Slide 40: Implementation of selective acquisition programme on track
05 Growth drivers Implementation of selective acquisition programme on track Acqusition programme on track > Sourcing prime sites with unique market positioning > Unlocking value through real estate transformation > Strong commitment to investment discipline INVESTMENTS SINCE 2015 OFF MARKET CITY CE
Slide 41: Superior risk adjusted returns
05 Growth drivers Superior risk adjusted returns Solid share price performance with attractive risk adjusted returns > Colonial shares offer a “flight to quality” play with attractive risk adjusted returns > Long term oriented high quality shareholder base with solid liquidity and free float COLONIA
Slide 42: Superior risk adjusted returns
05 Growth drivers Superior risk adjusted returns Solid share price performance with attractive risk adjusted returns > Ongoing positive momentum in analyst coverage and share price performance in 2017 > Superior risk adjusted total shareholder returns > Direct market valuations well ahead of latest
Slide 43: Conclusion
06 Conclusion —
Slide 44: Conclusion
06 Conclusion DELIVERY IN OPERATIONS WITH SOLID RENTAL PRICE INCREASES > Strong letting momentum capturing top tier clients > Solid occupancy levels at 95% > Double digit increase on signed rental prices > Ongoing execution of value added initiatives STRONG FINANCIALS > Solid like-for-like growth in
Slide 45: Q&A
Q&A
Slide 46: Total Shareholder Return since June 2014
APPENDICES Total Shareholder Return since June 2014 46
Slide 47: Positive momentum in earnings
APPENDICES 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 PROFIT & LOSS ACCOU
Slide 48: Portfolio in Operation
APPENDICES 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 (€m) Pote
Slide 49: 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 50: Sustainability and energy efficiency: a must for prime product
APPENDICES 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 LEED/ SIGNIFICANT
Slide 51: www.inmocolonial.com
www.inmocolonial.com © Colonial
Inmobiliaria Colonial — Q1 2017 Earnings Presentation on 6ix