Helios Re Socimi, S.a. · BME:SCHLR
Helios Re Socimi — Lar España Real Estate SOCIMI — Investor Day (October 2018)
141 slides from Helios Re Socimi's investor day presentation, Oct 9, 2018
Slide 1: The Time is Now: Customer-Centric & Next Generation Retail
The Time is Now: Customer-Centric & Next Generation Retail MADRID LONDON October 9th, 2018 October 10th, 2018
Slide 2: Welcome
WELCOME Hernán San Pedro Head of Investor Relations
Slide 3: Today's Agenda
TODAY’S AGENDA 01 LAR ESPAÑA NOW José Luis del Valle / Chairman Lar España 06 ENGAGEMENT Sergio García / Asset Management Director Grupo Lar 02 LAR ESPAÑA & GRUPO LAR Luis Pereda / Chairman Grupo Lar 07 SUSTAINABILITY (ESG) Jon Armentia/ Corporate Director Lar España 03 WHERE THE WORLD, CUSTOMERS &
Slide 4: Presenting Team
Presenting Team José Luis del Valle Luis Pereda Miguel Pereda Jose Manuel Llovet Chairman Chairman Board Member Lar España Commercial RE Managing Lar España Grupo Lar CEO Grupo Lar Director Grupo Lar Jon Armentia Sergio García Pablo Rozadillas Hernán San Pedro Corporate Director Asset Management Sen
Slide 5: Management Team with us today
Management Team with us today Roger Cooke Sergio Criado Susana Guerrero Independent CFO Legal Manager & Vice-secretary Board Member Lar España Non Member of the Board Lar España Lar España 5
Slide 6: Special Guests
Special Guests Jorge Herrero Carlos Tercero Calderón Jose Luis Blasco Ignacio de la Torre Head of Innovation and Founder & CEO Global Head of Partner and Head Business development STIGA CX Sustainability KPMG Economist Arcano Southern Europe EBAY 6
Slide 7: Some news…
a Cp... Investor Day 2018 Some areal News... NEW APP NEW WEB RETAIL . Boe Bo
Slide 8: Lar España Now
LAR ESPAÑA NOW José Luis del Valle Chairman Lar España
Slide 9: A journey to become leaders in retail
A journey to become leaders in retail “To build the Spanish REIT INVESTMENT INITIAL PHASE leader in retail” CONSOLIDATION SPECIALIZATION VALUE CREATION 2014 2015 2016 2017 2018 9
Slide 10: What have we built?
What have we built? Albacenter Marcelo Spínola Anecblau Alovera II Alovera I P. de la Marina Gran Vía de Vigo 2019 2015 2017 Villaverde Egeo Vistahermosa Arturo Soria Nuevo Alisal Palmas Altas Las Huertas Albacenter Hyper P. Marina (rest) Rivas Futura Txingudi Eloy Gonzalo Galería Abadía As Termas E
Slide 11: Non-core divestments to focus on retail
Non-core divestments to focus on retail Egeo Alovera III Villaverde Alovera IV 2015 2017 2019 Nuevo Alisal Almussafes Alovera I Cheste Alovera II Galaria Arturo Soria Remaining office portfolio divestment and residential project 2014 2016 2018 delivery 11
Slide 12: Pure Retail Player
PURE RETAIL PLAYER Present in most regions of Spain 12
Slide 13: Retail Leaders in Spain
RETAIL LEADERS IN SPAIN SQM GLA1 ASSET STAKES OWNED RETAIL PARKS #1 IN SPAIN #1 IN SPAIN #1 OWNER IN SPAIN 1. Considering opening date of assets under development until 2020. Source: CBRE & Lar figures at September 9th, 2018. 13
Slide 14: Lar España one of the large retail players in Europe
Lar España one of the large retail players in Europe 2017 Investment (€ Mn) 0 500 Peer 1 Peer 2 Peer 3 Peer 4 Lar España Peer 5 Source: CBRE. Excluding High Street investments. 14
Slide 15: Our way to add value
Our way to add value Undeniable Value Now Additional rent increase potential Ready to face from new the tech developments challenge coming Cherry picked asset portfolio Attractive Rent increase of dominant 55% of dividend potential from the assets revaluation due policy existing retail to strong act
Slide 16: A retail focused strategy
A retail focused strategy Investment Criteria 100% ownership Target levered Value-Creation Potential Dominant Core+ tenants Soundness Protected IRR>12% Creation of unique Using technological solutions that shopping experiences differentiate us from the competition Customer journey Optimum size for O
Slide 17: Outperforming the retail market benchmark
Outperforming the retail market benchmark1 % TOTAL RETURN PERFORMANCE % CAPITAL GROWTH % INCOME GROWTH 13.4% 7.3% 5.7% Shopping Shopping Shopping Centres Centres Centres 11.9% 6.3% 5.3% 15.0% 7.8% 6.7% Retail Retail Retail Parks Parks Parks 9.1% 3.4% 5.5% Lar España Benchmark 1 Lar España Benchmark
Slide 18: Looking ahead to the new retail world
Looking ahead to the new retail world The conversion of Retail at the shopping centres heart of the into communities consumer’s leisure that engage activities millennials SOCIO DEMOGRAPHICS ENGAGING LIFESTYLE EXPERIENCES Shoppers move Emerging seamlessly technologies that between the have the potent
Slide 19: Value is our demonstrated DNA
Value is our demonstrated DNA RIGHT 01 TIMING Cycle Opportunity Experienced Strong manager Corporate Governance 02 RIGHT RESOURCES Sustainable Operational Continuous Financial Retail focused investment innovation and Know-how portfolio Strategy & digitalisation Dividends RIGHT PLATFORM Size Synergie
Slide 20: A new retail company, for a new retail world
A new retail company, for a new retail world VISION MISION VALUES To offer unique shopping Corporate Focus To create unique shopping experiences through the experiences through the RESPONSIBILITY combination of retail and profitable management of entertainment, linking the our new-generation retail
Slide 21: A new retail company, focused on all that matters to our clients & investors
A new retail company, focused on all that matters to our clients & investors 14 EPRA Gold Award In October 2017, ILUNION ASSETS CERTIFIED in Financial Reporting (BPR) formally acknowledged Lar Eloy Gonzalo office for 4th year running España’s efforts to enhance building: 8 In-Use “Very Good” univers
Slide 22: An attractive retail company
AN ATTRACTIVE RETAIL COMPANY 10 1 Momentum of real estate in Attractive dividend policy Spain yield compression Optimal debt management 9 2 Proven asset management skills/ strong op. Results 8 3 Innovation Acquisition pipeline aimed at strategy increasing retail platform 7 4 Value creation from Upsi
Slide 23: Lar España & Grupo Lar
LAR ESPAÑA & GRUPO LAR Luis Pereda Chairman Grupo Lar
Slide 24: Grupo Lar as the best possible external manager
Grupo Lar as the best possible external manager Stability in ownership Solid management Geographical Product Trusted manager and corporate team diversification diversification and partner governance Pereda family 100% 321 people in Presence in Europe and Developers, investors & Co-investor & industr
Slide 25: Partnerships and joint ventures with top-tier investors and corporate clients
Partnerships and joint ventures with top-tier investors and corporate clients Joint Ventures Partnerships and Joint Ventures with long and successful track record to invest in different assets and geographies 25
Slide 26: External management by Grupo Lar the optimal strategy for Lar España
External management by Grupo Lar the optimal strategy for Lar España Retail property requires skilled, hands-on management… …which Grupo Lar is uniquely qualified to provide ▪ Lar España can draw upon the expertise of Grupo Lar’s ▪ Granular unit configuration and diverse tenant base Operationally in
Slide 27: A new Investment Management Agreement
A new Investment Management Agreement with best-in-class practices across European REITs 7 1 Alignment with current Enhanced Corporate Business Plan Governance Removal of promote 6 equalisation 2 Provides continuity and certainty Performance fee 5 capped 3 Fee partially linked to 4 Lower management
Slide 28: Grupo Lar fully committed to the company
Grupo Lar fully committed to the company 9.99% 2nd largest Largest Stake shareholder stake of an external manager COMMITMENT ALIGNMENT 28
Slide 29: Intensive active management in the biggest retail portfolio in Spain
Intensive active management in the biggest retail portfolio in Spain Owned GLA (est.) Nbr. Assets Lar España 552,415 14 Peer 1 452,738 77 Peer 2 442,518 15 SQM GLA1 #1 IN SPAIN Peer 3 439,094 10 Peer 4 371,518 12 Peer 5 369,766 4 Peer 6 294,930 14 Peer 7 279,702 6 RETAIL PARKS #1 OWNER IN Peer 8 247
Slide 30: Retail density in Spain
Retail density in Spain The retail density of shopping centre GLA in Spain is below the (*) average of Western Europe GLA/1,000 inhabitants Density 340 sqm / 1,000 inhabitants More than 500 Very high 400 - 499 High 300 - 399 Medium 200 - 299 Low 100 - 199 Very low Less than 100 Opportunity Source: J
Slide 31: Developments are gradually reactivating
Developments are gradually reactivating after of a long period of inactivity EUROPEAN DEVELOPMENTS COMPARISION Sqm weight of planned openings in 2018-2019 over the existing stock 0.3% 1.6% 1.9% 2.4% 3.2% 5.4% 7.7% HUNGARY PORTUGAL ITALY SPAIN GERMANY HOLAND POLAND Source: CBRE, Does not include leis
Slide 32: Using Grupo Lar's experience and capacity of development
Using Grupo Lar’s experience and capacity of development SAGUNTO In operation 45,136 sqm GLA Q2 2019 Estimated Opening 100,000 sqm Retail and family leisure area SEVILLE 32
Slide 33: Solid H1 2018 performance
Solid H1 2018 performance +20.9% 33.8% 10 quarters in Property operating result Portfolio revaluation outperforming the market Operating since acquisition in retailers declared sales (+2.0%) Results +12.4% Recurring EBITDA (before invested capex) & footfall (+1.1%) VidaNova Parc Palmas Altas Lagasca
Slide 34: Lar España - Grupo Lar a successful future together
Lar España - Grupo Lar a successful future together alignment commitment expertise 34
Slide 35: Moving Forward
MOVING FORWARD Miguel Pereda Board Member Lar España CEO Grupo Lar
Slide 36: E-commerce has an important role to play in the new retail world
E-commerce has an important role to play in the new retail world E-COMMERCE EVOLUTION IN SPAIN WEIGHT OF E-COMMERCE IN TOTAL RETAIL SALES % of retail sales in Spain €Mn 4.2% 30% 35000 26% 26% 25% 30000 25% 22% 21% E-COMMERCE OVER 20% 25000 TOTAL RETAIL SALES 20000 15% 15000 10% 10000 5% 5000 0% 0 0.
Slide 37: The need for coexisting in our times
The need for coexisting in our times A new hybrid form of commerce is emerging NEED PHYSICAL ONLINE Customers will soon shop seamlessly online and offline RESEARCH MAKE SHOPPING CENTRES PRODUCTS PURCHASES Investing in digital interfaces with customers PHYSICAL RETAILERS Investments in online e- “WEB
Slide 38: The first time in history, the consumer market includes 6 generations
The first time in history, the consumer market includes 6 generations Mn 11.2 11.6 10.2 7.1 4.4 2.1 1928-1945 1946-1964 1965-1980 1981-1997 1998-2016 2017-? Silent Gen Baby Boomers Gen X Millennials Gen Z Alpha Gen Source: INE, Spanish population 38
Slide 39: The opportunity of living in our times
The opportunity of living in our times The use of technology and big data Customer-oriented innovation CUSTOMER DIGITALISATION Omnichannel shopping platform, enhancing customers’ shopping experience KNOWLEDGE OMNICHANNEL Shopping centres become destinations, that know more about our Next generation
Slide 40: Understanding customers' journeys
Understanding customers’ journeys Why customers visit shopping centres? SERVICE VALUE CONVENIENCE EXPERIENCE SOCIALIZATION CENTRE Looking for “value for Shopping as a leisure Immediateness Meeting point Product support money” activity In-store brand Click & Collect Product returns connection F&B and
Slide 41: Experiences become the new anchors
Experiences become the new anchors Shopping centres increasingly need to be destinations New tech F&B Leisure & entertainment personalises the experience experience experiences Personalised Become part of Places of social promotions and our interaction new services lifestyle Smart fitting rooms Envi
Slide 42: Investor Day 2018
Investor Day 2018 SZ, PROJECT RETAIL _. / Le ACTON, 42
Slide 43: Leading the transformation TES Project
Leading the transformation TES Project Lar España is leading the digital transformation in the Spanish retail sector DIGITALISATION EXPERIENCE ESG by TECHNOLOGY ENGAGEMENT SUSTAINABILITY (ESG) 43
Slide 44: Shopping centre managed by data analytics
Shopping centre managed by data analytics TECHNOLOGY by NOODLES STORE FOOTFALL E-COMMERCE WIFI SOCIAL MEDIA WEB APP SEEKETING BIG DATA Selective marketing campaign manager 44
Slide 45: Shopping centres become consumer engagement spaces
Shopping centres become consumer engagement spaces ENGAGEMENT by Shopping centres are evolving to shopping, dining and entertainment centres that provide customers with unique experiences OPTIMAL Addition of new and CREATING Where customers CUSTOMER Personalised COMMERCIAL more attractive SHOPPING c
Slide 46: Strong commitment towards sustainability
Strong commitment towards sustainability SUSTAINABILITY by Continuous improvement in the Incorporation of environmental management, awareness and criteria in new acquisitions & minimization of environmental developments impacts The promotion of the The positioning of the customer construction and bu
Slide 47: The necessity of the three
The necessity of the three by DIGITALISATION EXPERIENCE ESG Evaluate the visitor offer a unique and Strategic positioning experience at our standout value of each one of our shopping centres proposal and properties transform the centres into destinations TECHNOLOGY ENGAGEMENT SUSTAINABILITY (ESG) 47
Slide 48: Greater knowledge to increase customer overall satisfaction
Greater knowledge to increase customer overall satisfaction by UNDERSTAND CUSTOMER TRENDS Map out the route Identify How they spend their time & they take customer profiles money during their visit CREATE A UNIQUE AND INCREASE CUSTOMER STAND-OUT OFFERING OVERALL SATISFACTION Avg. dwell Avg. sales1 t
Slide 49: From quality to customer-centric
From quality to customer-centric by The Time is Now: Customer Centric & Next Generation Retail TECHNOLOGY SUSTAINABILITY (ESG) ENGAGEMENT 49
Slide 50: Technology
TECHNOLOGY Pablo Rozadillas Senior Asset Manager Grupo Lar
Slide 51: Technology: What for?
TECHNOLOGY What for? 51
Slide 52: Technology under the scope of TES project
Technology under the scope of TES project Some facts*… by By the end of 2017, more than 60% of 1/3 of top management of Legacy IT systems are considered companies consider “digital multinational companies consider the biggest obstacle for the viability transformation” as a core process of digital tr
Slide 53: How can technology helps us?
How can technology helps us? by Gather more information Deliver a better service in our SCs Analyse information more Improve customer experience efficiently Internal Business Organization and and Increase traffic and sales Increase our productivity human resources clients Improve sustainability in o
Slide 54: Our focus
Our focus by WHERE TO APPLY TECHNOLOGY? PROCESSES ANALYSIS CAPACITY CLIENTS’ EXPERIENCE Project management Environmental Shopping channels Accessibility Customer Amenities Internal communication Facilities Convenience Mobility Digital footprint Entertainment 54
Slide 55: What initiatives have Lar España already implemented?
What initiatives have LAR ESPAÑA already implemented? 55
Slide 56: How technology helps us to improve our processes
How technology helps us to improve our processes: 4 examples What is it? What for? Benefits Status Project ▪ Coordination Project management ▪ New dev. and ref. works Implemented ▪ Team management management tool project management ▪ Resource allocation -Jan 2018- ▪ Anytime access Data cloud storage
Slide 57: Case Study: Processes
CASE STUDY PROCCESES Easy to set deadlines due dates and reminders Organized and listed tasks Task assignment to team members Asana for Technical Project Management “Asana is the perfect tool to organize tasks, resources and workload among all the teams involved in every project, it has saved us vas
Slide 58: How technology helps us improve our analysis capacity
How technology helps us improve our analysis capacity: 4 examples What is it? What for? Benefits Status Location intelligence ▪ Analysis of new investments ▪ More accurate strategies Implemented Environment tool to get ▪ Customer profile analysis ▪ Help on decision making -March 2017- Social and eco
Slide 59: Case Study: Analysis Capacity
CASE STUDY ANALYSIS CAPACITY Geoblink for SC Marketing management “Thanks to Geoblink we have access to the most accurate socio-demographic and economic data that we ever dreamed of. Now we have deeper knowledge of our areas of influence, and our marketing campaigns are perfectly focused, based on f
Slide 60: Case Study: Analysis Capacity
CASE STUDY ANALYSIS CAPACITY Visibility analysis on search engines SC webpage traffic analysis and evolution Social Media analysis by platform Portfolio analysis, aggregated results and situation against competition 60
Slide 61: Lar Digital Reporting Gran Vía de Vigo dashboards
LAR DIGITAL REPORTING Gran Vía de Vigo dashboards Visibility index by source vs main competitor (keywords and search) Web traffic analysis dashboard Social media evolution by platform vs main competition 61
Slide 62: Lar Digital Reporting
Engagement Rate analysis Total traffic portfolio evolution Portfolio dashboards LAR DIGITAL REPORTING Social Networks qualitative analysis Visibility index vs Top Spanish centres 62
Slide 63: How technology help us improve our clients experience
How technology help us improve our clients experience: 4 examples What is it? What for? Benefits Status E-commerce platform ▪ Additional sale channel for Shopping for our SC and ▪ Sell our retailers’ products both retailers & customers Implemented channels e commerce shop online ▪ Improve tenants’ -
Slide 64: Case Study: Clients' Experience
CASE STUDY CLIENTS’ EXPERIENCE TUCENTRO.COM ebay Rating 64
Slide 65: How technology help us improve our clients' experience
How technology help us improve our clients’ experience Virtual reality experience in El Rosal Shopping Centre Hype station in partnership with Sony Playstation Tesla EV charges in Gran Via de Vigo Amazon Locker in Parque Abadia 65
Slide 66: Other initiatives related to technology
Other initiatives related to technology: Executive education & summits 66
Slide 67: Technology should be a tool, accelerator, facilitator
All in all, keep in mind that technology should be by A A business A tool accelerator facilitator SHOULD BE AT PEOPLE´S SERVICE STAKEHOLDERS CLIENTS EMPLOYEES 67
Slide 68: Engagement
ENGAGEMENT Sergio García Asset Management Director Grupo Lar
Slide 69: The retail sector is emerging from crisis and facing deep changes
The retail sector is emerging from crisis and facing deep changes that occur very quickly Changes in the retail sector From Upswing of the Reinventing of New customer The smartphone as product to service e-commerce brick & mortar profile mean of interaction Introduction of new Online sale is More an
Slide 70: The big challenges of the retail sector
The 4 big challenges of the retail sector % of references in web articles Omnichannel retailing Optimization of CX Improving GTM Relation Model Different communication Experience that a consumer Strategic plan that reflects the The manner in which a channels, all of them obtains throughout the entir
Slide 71: Some examples of the disruption in the retail sector
Some examples of the disruption in the retail sector 71
Slide 72: Our Customers
OUR PRIORITIES OUR CUSTOMERS CUSTOMERS INTEGRATED MODEL INNOVATION FOR AN INMEDIATE MULTI- AT THE CENTRE OF STORES & ONLINE IMPROVED SHOPPING CHANNEL RESPONSE EXPERIENCE Source: Inditex Annual Report 2017. Our Customers 72
Slide 73: Customers are at the centre of our business
“Customer are at the centre of our business” “Inditex has developed an integrated model of stores and online that seeks to maintain a continuous dialogue with customers” “To understand the demands of our customers and offer the products they want in a fast and comfortable way” “Improve the customer
Slide 74: A new shopping concept
“A new shopping concept” “New shopping concept with a novel shopping experience in Stratford (London, UK)” “Placing and collecting online orders” “Was operating until the opening of the new Zara flagship store in the city’s Westfield Stratford” “Another milestone in our strategy of integrating our s
Slide 75: A shopping experience that meets the highest standards
“A shopping experience that meets the highest standards” “Better service while advancing to integrate our stores and online” “Radio frequency identification (RFID) programme for garments is a basic pillar” “In addition, stock management can be conducted 80% faster, which allows us to allocate more t
Slide 76: New ways of payment
New ways of payment “Eliminate unnecessary waiting during the entire purchasing process” ▪ Self-checkout ▪ Mobile payment ▪ New app for the Group (InWallet) Source: Inditex Annual Report 2017. Our Customers 76
Slide 77: Collecting online orders in seconds
Collecting online orders in seconds “We launched our first Automated Collection Point for Zara.com orders” Marineda shopping centre Zara store in A Coruña (Spain) “Easily collect online purchase, scanning the QR or entering the PIN code included on the electronic receipt” Source: Inditex Annual Repo
Slide 78: What do we do to get to know our customers?
What do we do to get to know our customers? 78
Slide 79: Customer Experience
Customer Experience Extraction of qualitative conclusions Preliminary Shadowing and Safari Investigation Online questionnaire Experience mapping interviews Centre challenge Defined UNDERSTAND OBSERVE archetypes Study model Documentation Interview with the In-depth interviews Focus groups analysis ma
Slide 80: Understanding Phase
Understanding Phase STUDY MODEL CUSTOMER SEGMENTS SPACE CUSTOMER RELATIONS BRAND AND VALUES OF THE CENTRE PRODUCTS AND LEISURE AND SERVICES ENTERTAINMENT OFFER OFFER 80
Slide 81: Observation phase: Hypothesis validation
Observation phase Hypothesis validation STUDY MODEL CUSTOMER SEGMENTS CUSTOMER’S SEGMENT REASON OF THE VISIT DEMOGRAPHIC QUALITATIVE VARIABLES INSIGHTS WITH WITH WITH A ALONE NEED PLEASURE FAMILY FRIENDS PARTNER PERSON ARCHETYPE HYPOTHESIS 8 HYPOTHESIS OF VISIT ARCHETYPES First-time Hard- Modern Spo
Slide 82: Observation phase: Activities
Observation phase Activities Extract knowledge of each moment of the Map the full Identify the differences visit and validate experience of each among defined MAPPING specific IN-DEPTH type of customer archetypes INTERVIEWS characteristics of each INTERVIEWS 20 FOCUS GROUPS 600 CUSTOMERS hypothetica
Slide 83: Lucía
42% CUSTOMERS VISIT DATA LUCÍA WHEN DOES SHE VISIT: She goes to the mall whenever she is not working Time Money M T W T F S S 1. Socializing 1. Fashion 2. Digital 2. Socializing Lucía is 42 years old and lives in a residential area near environment 3. Travelling 3. Gastronomy Ondara with her husband
Slide 84: Lucía
"I would like to be 42% able to leave my CUSTOMERS children at the kids’ club longer” "The restaurants are in a high transit area, which is very ""Play Station and uncomfortable“ childcare operating LUCÍA hours are very short “ AREAS OF OPPORTUNITY: ▪ Kids’ club with greater capacity ▪ Entertainment
Slide 85: Gran Vía's People…
Gran Vía’s People… 22% customers 8% customers 7% customers 4% customers 27% customers 85
Slide 86: Definition Phase: Selection of priority archetypes
Definition Phase Selection of priority archetypes CUSTOMER’S LIFE what he/she does and what he/she expects before, during and after the visit. CUSTOMER’S EMOTIONS Caused by the difference between expectations and the real experience at each moment We show what the client thinks and expresses at each
Slide 87: Definition Phase: Customer Journey
Definition Phase Customer Journey 87
Slide 88: Sustainability (ESG)
SUSTAINABILITY (ESG) Jon Armentia Corporate Director Lar España
Slide 89: What does CSR mean at Lar España?
What does CSR mean at Lar España? Value creation via Corporate Social Responsibility is one of Lar España’s defining attributes, through the responsible management of its assets, the creation of wealth in the communities it operates in and the active listening to its Stakeholders. 89
Slide 90: Lar España's approach to CSR
Lar España´s approach to CSR Lar España´s CSR principles to build Shared Value: Creating shared value for our Doing Environment shareholders and Corporate Governance investors as well business as the better environment we operate in Social Capital Assets properties Lar España is currently in the pro
Slide 91: Innovation to create shared value
Innovation to create shared value E S G Responsible Active listening management Lar España promotes Lar España’s portfolio Lar España continues sustainability assets generate social to make great strides certification measures impacts that transform forward in terms of and adopts new and build share
Slide 92: Scopes
Environmental Lar España is taking action to preserve the environment Setting strategic targets INWARDS Issuing corporate policies & Tenants of action Scopes Environmental initiatives Educating society about its values Searching tirelessly for smarter and more efficient ways to develop and operate i
Slide 93: Environmental Innovation
Environmental Innovation Energy efficiency Water management Air quality Lighting Presence detector Complex control systems for ventilation Climate control Watering systems Air purifier systems Building systems Cooling towers Solar power Other lines of initiative Alternative energy sources Tri-genera
Slide 94: Environmental performance
Environmental performance Energy Consumption Waste Management Variation in energy consumption Electricity consumption Gas consumption in kWh/sqm in kWh in kWh -3.5% -1.5% -18% +40% 53% VS 2016 VS 2016 VS 2016 Vs 2016 electricity Recycled consumption waste generated from renewable sources GHG Emissio
Slide 95: Environmental BREEAM Certifications
Environmental BREEAM® Certifications Retail assets BREEAM® In-Use “Very Good” Certificated (8) BREEAM® In-Use “Good” Certificated (2) Shopping Our retail developments Centres 100% are designed and developed in line with the specifications required to obtain the prestigious BREEAM® quality and sustai
Slide 96: Social
Social CUSTOMER RELATIONS Customers Suppliers SUPPLIER RELATIONS ▪ Improving communication channels and active listening Tenant Review of Evaluation ▪ Adding value by means of product mi Accessibility Society polices and and and process innovation enhancing guidelines monitoring ▪ Building health an
Slide 97: Social: Society-based initiatives
Social Society-based initiatives Business Citizen Social climate Health and oportunities participation & values well-being + 225 days + 28 NGOs +€212,000 + 25,500 Kg + 25,000 Kg of environmental and charities earmarked to of clothing donated of food collected in initiatives at our collaborated with
Slide 98: Social: Accessibility
Social Accesibility Commitment to promoting social integration Working to achieve and maintain high accessibility standards via a design that is conceived by and for people A diagnosis is being undertaken in collaboration with ILUNION, ONCE and AENOR (the 87% Spanish Association for Standardization
Slide 99: Governance
Governance ✓ Experienced and mostly independent Board of Directors (5 of 7 members): Complying with the best 19 meetings in 2017 practices in the corporate governance field ✓ Action Plan main objectives: Strong governance TRANSPARENCY Transparency, business ethics, corporate social responsibility an
Slide 100: ESG International recognitions and initiatives
ESG International recognitions and initiatives Financial and non-financial information included in the Annual Report follow GRI standards and EPRA recommendations International ESG information has been reviewed by an external third party (EY) standards Lar España collaborates with the main associati
Slide 101: Closing Remarks
Closing Remarks Environmental Social Governance Responsible management Active listening Ethics and Integrity Sustainability certifications Social initiatives Independent Board Environmental awareness Accessibility Risk Management Innovation Wealth creation Transparency 100% shopping centres Energy e
Slide 102: Shopping Centres Performance
SHOPPING CENTRES PERFORMANCE Jose Manuel Llovet Commercial RE Managing Director Grupo Lar
Slide 103: Vision and Results
Vision and Results Outstanding Consolidation of Enhancement of Transformation High performance Market results the platform the portfolio team understanding Beating the market First owner of Dominant prime Selective high return We work closely with Off-market and the main shopping centres & shopping
Slide 104: Market size: Total Market
Market size Other Very Large Factory 13% Outlets 15% Total Market 2% 15.8 M sqm / 555 centres & parks Retail Park 12% SC’s fitting LRE’s Strategy by size Large Small 26% 10% Top 20 Investors own 207 shopping centres Medium 22% Source: AECC 2017. Very Large: (>79,999 sqm / 19 centres) / Large: (40,00
Slide 105: Market stock
Market stock Evolution of Shopping Centre Stock +500,000 sqm of new GLA is expected to be opened by the end of 2018, with the opening 1,400,000 Annual GLA Extension / II Fase Nº S.C 50 of 15 new shopping centres 1,200,000 45 40 Forecast 1,000,000 35 Nº CS 800,000 30 sqm 25 600,000 Stock GLA Density
Slide 106: Market size: Lar España Target market
Market size Lar España Main market players by owned GLA, including GLA under development 1 Owned GLA (est.) Nbr. Assets Avg ownership per asset Lar España 552,415 14 39,458 Peer 1 452,738 77 5,880 Target market Peer 2 442,518 15 29,501 Peer 3 439,094 10 43,909 Peer 4 371,518 12 30,960 size Peer 5 36
Slide 107: Market size: Investment
Market size Investment Investment Market remains strong. Retail leads Investment per Sector 14,000 Retail Offices Bank Branches Industrial Hotel 12,000 Hotel 10.8 bn 9.9 bn 17% EUR Mn Investment Volumes 10,000 (ex-Corporate & Tenant Transactions) 8.1 bn 8,000 Retail Industrial 53% 6,000 5.3 bn 11% 4
Slide 108: Market size: Lar España criteria
Market size Lar España criteria Lar España has built a high quality Core+ portfolio, acquiring asset by asset Investment Criteria: Dominant in its area, Size, Footfall and Quality Tenants and all with Value Creation potential +250,000 Best retailers Catchment area leader BIG S.C. 40k to 100k sqm +5
Slide 109: Performance: Market sales
Performance Market sales Retail Sales Index % YoY Growth 1 4.5 4 3.5 Retail Sales Index Analysts’ consensus is 2.4% 3 sales growth in 2018 2.5 Affluence to shopping 2 centres is stable after 2 years 1.5 of growth 1 0.5 0 2014M11 2015M11 2016M11 2017M11 2014M01 2014M03 2014M05 2014M07 2014M09 2015M01
Slide 110: KPI's: Consumer confidence & footfall
KPI’s Consumer confidence & footfall Consumer Confidence Index 2 Footfall AECC Consumer Confidence Index Actual situation 2015 2016 2017 2018 Prospects for future Lineal (Consumer Confidence Index) 115 110 6.2 5.8 6 5.3 105 100 3.6 4.2 95 3.2 90 2 85 0.9 0.4 80 MAR JUN SEP DIC Sep-16 May-17 Jul-17 S
Slide 111: KPI's Lar España
KPI’s Lar España Social network Rent Uplift Fans & NOI Engagement excl. new Growth lettings 280,000 +5% +10% +7% Time per GLA Operations Discounts Bad debt Footfall visit Leased (sqm) signed Reduction Improvement +7.6% 88 min 94,030 238 41% 95% +7.7% prev. year 20% total sqm Occupancy Sales Growth +
Slide 112: Yields Moment
Yields Moment Spanish headline yields 1 10% According to ECB Monetary Policy, it 8% is not expected to maintain the ultra- 6% 10Y Spanish Bond Corporate Debt Spain low interest rates for a long period of 4% Yields time… 2% ECB or BoS Rate Deposit Rate Spain 0% We estimate a stabilization of Yields i
Slide 113: Yields Lar España
Yields Lar España EPRA NIY vs Reversionary NIY1 Yield Compression Path2 8.5% 8.09% 8.5% 8.0% Potential spread 8.0% 7.36% -71 bps 7.5% 7.35% 7.5% 7.20% -25 bps 7.0% 6.81% -8 bps 7.20% 7.0% 6.56% 6.42% 6.44% 6.48% 6.5% -11 bps 6.5% 6.14% -2 bps 8 bps -1 bps 6.48% 6.49% 6.0% 5.80% 5.77% 5.70% 6.14% 6.0
Slide 114: Our Value Proposal
Our Value Proposal Lar España There is still a long way for Value-creation through Asset Management, our main pillar TRANSFORMATION OPERATION INCOME ✓ Improving layout, carrying out ✓ Increasing Footfall ✓ Letting extensions or transformations Beating the market quarter by Occupancy of c.95% .There
Slide 115: Projects. Assets in motion
PROJECTS. Assets in motion 115
Slide 116: Megapark is being transformed into an alluring urban space
Megapark is being transformed into an alluring urban space with comfortable areas to enjoy a relaxing break and a pleasant promenade so our customers can enjoy their shopping experience Super Big retail area. Fifth biggest retail area in Europe. €6.5 Mn Dominant scheme, market reference Total Capex
Slide 117: Megapark
Megapark Variation Since Acquisition (Oct 2015 & Leisure Area Oct 2017) Tenants Revaluation Footfall Sales1 NOI Occupancy 11,500 sqm Main Achievement 22% +7.7% +27.1% +2.8% 95.5% 17.4% total GLA Acquisition of Leisure area. Global Refurbishment. Tenant’s image renovation 35 leases 117 1. Sales exclu
Slide 118: Portal de la Marina opens to the outside
Portal de la Marina opens to the outside with a new portico that offers customers a warm welcome and improves the food court to create a more hospitable atmosphere Dominant scheme, market reference on Alicante Coast, one of the main €3.0 Mn tourist destinations in Spain. Total Capex The new opening
Slide 119: Portal de la Marina
Portal de la Marina Variation Since Acquisition (Oct 2014, Jun 2015 & Mar 2016) Tenants Revaluation Footfall Sales NOI Occupancy 15,600 sqm Main Achievement 37.36% +12.2% +29% +21.3% 97.5% 39% total GLA Opening of Carrefour Hypermarket, Expansion of Lefties, Global renovation project. 39 leases 119
Slide 120: As Termas exudes local spirit
As Termas exudes local spirit and is adapting by improving the centre’s interior and the services offered to meet the pubic’s needs As Termas is the market reference in the province of Lugo. Main retailers: Mediamarkt, Inditex group €1.4 Mn (image updated). Total Capex Growing potential once the onl
Slide 121: As Termas
As Termas Variation Since Acquisition (April 2015) Tenants Revaluation Footfall Sales NOI Occupancy 11,000 sqm Main Achievement 24.4% +3.5% +13% +19% 95.8% 31% total GLA Operational Stretch. Inditex brands new image. Global refurbishment. 43 leases 121
Slide 122: Ànecblau Planning Objectives
Planning Starting Q4 2018 – Ending Q4 2019 Preletting strategy already launched Objectives ▪ Exploite commercial value in leisure and dining areas. ▪ Create an innovative ambience in outdoor areas. ▪ Lifestyle SC and commercial Ànecblau is an exclusive life style reference in Baix Llobregat. shoppin
Slide 123: Ànecblau
Ànecblau Variation Since Acquisition (Jul 2014) Occupancy Revaluation Footfall Sales NOI Main Achievement 82.8% 19.9% +27.5% +24.3% +2.8% (92% exc. Zara & Mercadona Extension. Repositioning and massive transformation into Trophy Asset New lay out project) 123
Slide 124: Gran Vía de Vigo: Full renewal project
Full renewal project ▪ Completely image uplift ▪ Improving commercial mix, dining area and parking ▪ Meeting point between the sea and the urban centre €5.2 Mn Refur. Project + 0.5 Mn Elevators Gran Via is the leading shopping centre in Vigo, the economic capital Total Capex of Galicia. Best brands
Slide 125: Gran Vía de Vigo
Gran Vía de Vigo Variation Since Acquisition (Sep 2016) Tenants Revaluation Footfall Sales NOI Occupancy 8,700 sqm Main Achievement 17.04% +1.6% +5% +13.6% 96.8% 20.72% total GLA New vertical transportation. Renovation project. Leasing plan 31 leases 125
Slide 126: Financials Business Plan
FINANCIALS BUSINESS PLAN Miguel Pereda Board Member Lar España CEO Grupo Lar
Slide 127: Where will growth come from?
Where will growth come from? ORGANIC GROWTH CAPITAL ALLOCATION POSITIVE MACRO ACTIVE MANAGEMENT NON-CORE ASSETS GDP GROWTH DIVESTMENTS RE-TENANTING, RELETTINGS NEW LETTINGS, RENEWALS CONSUMER SPENDING DEVELOPMENTS IMPROVEMENT RENTAL REVERSION ACQUISITIONS UNEMPLOYMENT REDUCTION VACANCY REDUCTION 127
Slide 128: Where will retail growth come from?
WHERE WILL RETAIL GROWTH COME FROM? +c.60% +5.8% +c.8% >6% Estimated Rental Increase Retail Expected Expected Potential Topped-Up NIY NIY NIY Future Investments Ongoing Fully Operative and Development 15 c.110 opened 15 95 Existing Income Generating Assets 5 4 2 75 69 Annualised Topped Up Reversiona
Slide 129: €276.2 Mn in asset disposals since IPO
€276.2 Mn in asset disposals since IPO Arturo Soria Sale Villaverde & Alisal Sale Galaria Sale Office Building Retail Parks Retail Park 34.5% 27.1% 36.9% 2018 2018 JAN 2021 JUL over acq. price over acq. price over acq. price 2017 2018 AUG 2018 MAR SEP Egeo Sale Logistics Portfolio & Office Building
Slide 130: Developments, an important source of value
Developments, an important source of value VIDANOVA PARC LAGOH LAGASCA99 Fully opened and Extraordinary 5 Mn operative in Q2 2019 c.11,300 €/sqm c.15 Mn Opening dividend Exp. Annual Rent Sep 2018 Exp. Annual Rent Avg. Price announced 100% €35.8 Mn1 73%3 €88.5 Mn1 86% €188 Mn2 GLA signed Valuation GL
Slide 131: Solid financial pillars
Solid financial pillars Debt Structure and Amortization Profile As at H1 2018 €140 Mn €474.3 Mn Senior Bank Secured Bond Debt Gross Financial Debt € Mn €614.3 Mn 258.6 210.4 Net LTV Avg. Cost of Debt 140.0 36% 2.19% 100.7 118.6 Fixed Interest Cover 28.0 Rate Ratio1 (ICR) 14.1 2.5 87% 4.5x 2018 2019
Slide 132: New flexible debt structure for capex, developments and acquisitions
New flexible debt structure for capex, developments and acquisitions €614.3 Mn €48.2 Mn €566.1 Mn €131.2 Mn €434.9 Mn €130 .1 Mn DEBT AS OF CASH & NET DEBT AS OF LOGISTICS PORTFOLIO NET DEBT UNDRAWN 30 JUN 2018 CASH EQUIVALENTS 30 JUN 2018 DISPOSAL PRO-FORMA AVAILABLE FUNDS mainly for capex 30 Jun 2
Slide 133: Main BP Assumptions
Main BP Assumptions Period 2018-2021 Divestments Capex + development €522 Mn Investment 1 47% realized €265 Mn New Capital Investments Increase No capital €250 Mn increases 30% realized considered 1.In existing investment properties and development projects 133
Slide 134: Main BP Assumptions: Divestments
Main BP Assumptions DIVESTMENTS 90% SOLD Office Lagasca 99 Other Mature Portfolio delivery Assets €191 Mn €115 Mn €216 Mn 41% realized To be realized before YE 76% realized 134
Slide 135: Development and Renovation Capex
Development and Renovation Capex Drivers of share price accretion Extension/ Renovation Capex 75% Expected Yield on c.8% Development Capex ✓ Development % Capex € 265 Mn1 5.8% Expected Yield 7.5% on Renovation 25% Capex Retail Topped-Up NIY ✓ Extension/ Development as of H1 2018 Renovation Capex Cap
Slide 136: Business Plan targets
Business Plan targets Target Returns ▪ 12% Target Annual Return on investments ▪ €403 Mn of divestments From Office, residential and non-core retail assets 31% realized Divestments ▪ >€119 Mn of divestments From all logistics portfolio (100% realized) 100% realized ▪ Finance all existing capex commi
Slide 137: KPI's 2018-2021
KPI’s 2018 - 2021 Expected Expected Average End 2018 Growth per annum GAV c.€1,462 Mn c.8% Annualized GRI1 €91 Mn 8% Annualized NOI1 €84 Mn c.9% Non recoverable/ GRI expenses 9% c.-8% (till 7% target) Occupancy1 97% till 99% target Net LTV 27% c. 38%2 1. In accordance with EPRA BPR 2. Estimated as a
Slide 138: KPI's 2018-2021
KPI’s 2018 - 2021 Expected Expected Average End 2018 Growth per annum Total Annual Return >12% >12% NAV c.€1,072 Mn c.6%1 Dividend Yield on NAV > 5% over NAV2 ≥ 5% over NAV 6.3% Dividend Yield considering current Market Cap3 1. In accordance with EPRA BPR 2. This percentage does not include extraord
Slide 139: Investor Day 2018
Investor Day 2018 RETAIL
Slide 140: Disclaimer
DISCLAIMER This document has been prepared by Lar España Real Estate SOCIMI, S.A. (the “Company”) for information purposes only and it is not a regulated information or information which has been subject to prior registration or control by the Spanish Securities Market Commission. This document neit
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Lar España Real Estate SOCIMI — Investor Day (October 2018) on 6ix