Merlin Properties Socimi, S.a. · BME:MRL
Merlin Properties Socimi — H1 2020 Earnings Presentation
38 slides from Merlin Properties Socimi's earnings presentation, Jul 30, 2020
Slide 1: 6M 2020 Results Presentation
6M 2020 RESULTS PRESENTATION 30 July 2020
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by Certain statements in this document presentation in other jurisdictions may RELIED ON IN CONNECTION WITH ANY MERLÍN Properties, SOCIMI, S.A. (the regarding the market and competitive also be restricted by law and persons CONTRACT OR COMMITMENT TO SEL
Slide 3: Contents
ISMAEL CLEMENTE CEO Contents A resilient company Key highlights 6M20 Financial results Offices MIGUEL OLLERO Shopping centers GM / COO Logistics Valuation and debt position Value creation Covid-19 update Closing remarks DAVID BRUSH CIO
Slide 4: Diversified business model
A resilient company | 51% 31% Diversified OFFICES(1) LOGISTICS + NET LEASES + OTHER(1) business model 18% >1,900 RETAIL(1) TENANTS(2) 91% OFFICES IN PRIME CBD AND NEW BUSINESS AREAS High quality 90% portfolio E-COMMERCE LOGISTICS 96% URBAN AND DOMINANT MALLS By GAV (1) (2) Excluding minority stakes
Slide 5: Stable and predictable cash flow
A resilient company | ontracted rents exceed € 3bn(1) C to first break and € 5bn to maturity Stable and Only 15% of rents maturing before end of 2021 predictable ovid-19 incentives fully booked in 2020 C cash flow (€ 66 million estimated, no change from April disclosure) stream ecuring a minimum of
Slide 6: Key highlights
Key highlights | FINANCIAL PERFORMANCE • Positive LfL rental growth of +2.7% YoY, evidencing the strength of our portfolio • FFO per share of € 0.29, affected by Covid -19 incentives (€ 0.06 per share) and assets sold (€ 0.02 per share), otherwise it would show growth when compared to 6M19 • Valuati
Slide 7: 6M20 Financial results
6M20 Financial results
Slide 8: Top-line ahead of 2020 expectations. FFO impact of Covid-19 incentives
6M20 Financial results | Top-line ahead of 2020 expectations. FFO impact of Covid-19 incentives (€ million) 6M20 6M19 YoY Gross rents 256.6 262.7 (2.3%) Gross rents after incentives 221.2 253.0 (12.6%) Net rents 198.7 228.2 (13.0%) EBITDA(1) 184.1 210.4 (12.5%) FFO(2) 134.3 157.2 (14.6%) AFFO 125.4
Slide 9: Bridge gross rents: positive LfL growth in all asset categories
6M20 Financial results | Bridge gross rents Positive LfL growth in all asset categories despite the challenging environment (€m) Offices +4.0% Shopping centers +2.8% LfL(1) +2.7% Net leases +1.2% Logistics +2.9% 262.7 +6.4 256.6 (12.5) 6M19 Like-for-Like Balance acquisitions, 6M20 growth disposals a
Slide 10: Offices
Offices
Slide 11: Offices continue performing well in our 3 markets
Offices | Rent bridge and breakdown Offices continue performing well in our 3 markets (€m) LfL(1) +4.0% 122.1 +4.4 118.0 (8.5) 6M19 Like-for-Like Balance acquisitions, 6M20 growth disposals and other Lfl growth by area Occupancy by area 3M20 6M20 Madrid +2.8% Madrid 89.3% 89.3% +2 bps Barcelona +9.2
Slide 12: Offices leasing activity: rental growth continues robust
Offices | Leasing activity Rental growth continues robust (+2.7% release spread) Contracted sqm Release spread #contracts Tenants Madrid 113,709 (1.9%)(1) 122 Barcelona 21,011 +27.8% 26 Lisbon 2,546 +14.6% 8 TOTAL 137,265 +2.7% 156 Endesa extension (1) ı 12 ı
Slide 13: Offices leasing activity during Covid-19
Offices | Leasing activity during Covid-19 1Q20 2Q20 Beatriz de Ribera del Loira Ribera del Loira PE Sanchinarro Diagonal 514 Sant Cugat II Bobadilla 14 60 36-50 New contracts signed(1) 11,927 sqm 50,078 sqm Premium to ERV +5.8% +11.6% Contracts renewed 27,494 sqm 97,831 sqm Renewal rate(2) 75% 92%
Slide 14: Shopping centers
Shopping centers
Slide 15: Shopping centers: LfL rental growth positive
Shopping Centers | Rent bridge and breakdown LfL rental growth positive (€m) LfL(1) +2.8% 64.1 +1.6 60.6 (5.1) 6M19 Like-for-Like Balance acquisitions, 6M20 growth disposals and other Footfall (million) Tenant sales (million) 2019 LTM 101.2 2019 LTM 1,074.9 (19.9%) (18.2%) 2020 LTM 81.1 2020 LTM 879
Slide 16: Shopping centers leasing activity and occupancy
Shopping Centers | Leasing activity and occupancy Occupancy secured by Covid-19 Commercial Policy Release spread #contracts Tenants All portfolio 4.0% 100 Contracted Net Occupancy Change vs sqm Absorption 30/06/20 31/03/20 (bps) All portfolio 18,112 (1,007) 94.1% (9) ı 16 ı
Slide 17: Footfall and tenant sales evolution
Shopping Centers | Footfall and tenant sales evolution Since reopening, footfall and tenant sales are affected by Covid-19 Vs same period last year June 01-15 June 15-30 July 01-15 Footfall Shopping centers (42%) (35%) (33%) evolution Shopping centers YoY (excl. assets under (41%) (32%) (29%) reform
Slide 18: Logistics
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Slide 19: Logistics: rental growth in a strong market
Logistics | Rents bridge and breakdown Rental growth in a strong market (€m) LfL(1) +2.9% 26.2 +0.7 +1.9 28.8 6M19 Like-for-Like growth Balance acquisitions, 6M20 disposals and other LfL growth by location Occupancy by area 3M20 6M20 Madrid +7.7% Madrid 97.2% 97.3% +8 bps Barcelona (10.1%) Barcelona
Slide 20: Logistics leasing activity
Logistics | Leasing activity Excellent release spread in all markets Contracted sqm Release spread #contracts Tenants Madrid 30,284 +4.5% 2 Barcelona 10,390 +14.5% 4 Other 20,211 +12.2% 1 TOTAL 60,885 +6.7% 7 ı 20 ı
Slide 21: Logistics | ZAL Port
Logistics | ZAL Port Stock 155,345 sqm 624,716 delivered in 2020 WIP GRI 102,965 € 13.4m Stock incl. WIP 727,681 Third parties stock 183,252 Stock under management 910,933 Contracted sqm Release spread #contracts Tenants 280,944 (0.8%) 36 Occupancy by area FY19 98.9% (-210 bps) 6M20 96.8% €m 6M20 6M
Slide 22: Valuation and debt position
Valuation and debt position
Slide 23: GAV summary
Valuation and debt position | GAV summary Valuation remains flat (+0.2%) as compared to December 2019 Reversionary 4.9% 5.6% 4.7% 6.4% yield Passing 4.0% 4.9% 4.7% 5.8% - 4.4% yield 12,755 12,193 6,334 GAV TOTAL with minority stakes (€ million) Shopping centers 2,274 Minority stakes 1,849 Net Leases
Slide 24: GAV drivers
Valuation and debt position | GAV drivers Offices and logistics showing positive LfL growth, net leases flat and shopping centers down by 4.7%, mainly due to yield expansion AV G Like-for-Like evolution(1)(1) +2.1% +2.0% +2.1% +0.0% 0.2% +2.0% MERLIN +0.0% 0.2% average (1) MERLIN (45 bps) average(1)
Slide 25: Debt maturity profile
Valuation and debt position | Debt maturity profile Recent debt management initiatives to extend maturity profile Total Debt amount: €5,735m (€ million) 2,036 No debt maturities until May 2022 1,400 (€ million) 862 888 754 560 619 560 23 548 743 850 600 800 613 6 1 10 754 5 10 12 12 12 19 88 2020 20
Slide 26: Debt position
Valuation and debt position | Debt position Average maturity now at 6.5 years, with no floating rate risk 30/06/2020 PF(1) 30/06/2020 31/12/2019 Net debt € 5,167m € 5,153 m € 5,182 m LTV 40.5% 40.4%(2) 40.6% Average interest rate 2.07% 1.97% 2.09% Average maturity (years) 6.5 6.0 6.4 Unsecured debt/
Slide 27: Debt covenants
Valuation and debt position | Debt covenants Ample headroom to safely comply with all financial covenants Covenant Required MERLIN Today LTV <60% 40.4% ICR >2.5x 3.7x Unencumbered >125% 190.8% ı 27 ı
Slide 28: Value creation
Value creation
Slide 29: Landmark I: Castellana 85 and Monumental
Value creation | Landmark I Castellana 85 Monumental • Full refurbishment of the asset, located in the heart • Full refurbishment of the building, located in Duque de of Azca, the best business area in Madrid Prime CBD Saldanha, one of the most emblematic squares in the city • 12,789sqm signed post
Slide 30: Flagship: Saler and Porto Pi
Value creation | Flagship Saler Porto Pi • The refurbishment will consolidate Saler, facing the City of • Full refurbishment of the shopping center Arts and Sciences, as the leading urban mall in Valencia • The asset will contain outstanding exterior terraces nchor tenants upsizing and upscaling uni
Slide 31: Best II & III
Value creation | Best II & III Madrid San Fernando II Zaragoza Plaza II Sevilla ZAL WIP • The project, currently under construction, • Turn key project in the most dynamic • Phased project located in Seville’s will be delivered by 3Q20 hub of Zaragoza Port area 7% pre-let to Grupo Damm •6 • 100% let
Slide 32: Covid-19 update
Covid-19 update
Slide 33: Commercial policy for retail tenants
Covid-19 update | Commercial policy MERLIN Properties conceived a commercial policy in 2 phases to help its retail tenants Phase I Phase II Enacted Since March 15th until the reopening Since the reopening until December 31st Tenants affected by the compulsory shutdown set Tenants affected by the com
Slide 34: Collection rate post-Covid
Covid-19 update | Collection rate A high quality tenant base leads to high collection rates post-Covid (as a % of total invoices due) 2Q 2020 Offices Shopping centers Net leases Logistics Commercial policy 0%(1) 59.7% 0% 0% Collected 99.2% 37.7% 100% 96.4% In process 0% 0% 0% 2.7% Uncollected 0.8% 2
Slide 35: Covid-19 impact on business
Covid-19 update | Impact on business No change in Covid-19 impact for 2020 previously quantified. 2021 impact mitigated by low level of maturities and delivery of new rents secured by Landmark and Best II & III € 66m € 29m INCENTIVES BOOKED IN 1H € 250m 2020 (€ 0.53 per share) € 4m € 41m NEW FFO GUI
Slide 36: Closing remarks
Closing remarks
Slide 37: Closing remarks
Closing remarks | • Covid-19 impact on 2020 net rents of € 70m and € 60m on FFO. FFO guidance for 2020 of € 250m (€ 0.53 per share) • Valuations flat, with retail taking the biggest hit, a 4.7% decrease, mainly due to yield Financial expansion (8 bps) • Strong balance sheet, € 1.2bn in liquidity, no
Slide 38: Contact
Paseo de la Castellana, 257 28046 Madrid +34 91 769 19 00 info@merlinprop.com www.merlinproperties.com
MERLIN Properties SOCIMI — H1 2020 Earnings Presentation on 6ix