Merlin Properties Socimi, S.a. · BME:MRL
Merlin Properties Socimi — Debt Investor Presentation (March 2020)
43 slides from Merlin Properties Socimi's debt investor presentation, March 2020
Slide 1: Fixed Income Presentation
FIXED INCOME PRESENTATION March 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
Contents Strategy Positioning Value Creation Capital Structure Sustainability
Slide 4: Six intense years to position Merlin as the leading Spanish REIT
History | SIX INTENSE YEARS TO POSITION MERLIN AS THE LEADING SPANISH REIT AND AMONG THE TOP 10 EUROPEAN REITS 2014 2015 2016 2017 2018 2019 2020 Acquisition Sale Sale of 26 of Tree of hotel non-core portfolio Acquisition Acquisition portfolio Investment in Acquisition office Contribution (888 BBVA
Slide 5: Largest and most diversified Spanish REIT
MERLIN today | Overview LARGEST AND MOST DIVERSIFIED SPANISH REIT Fast facts Portfolio breakdown Capital structure 932 6% > € 6.0bn ASSETS (1) 10% MARKET CAP € 12.8bn € 7.3bn / € 15.60 15% 50% GAV by GAV (2) EPRA NAV PER SHARE € 509m 40.6% GRI 19% LTV 4.3m sqm 3% 6.4 years GLA OWNED (1) 11% AV. MATU
Slide 6: Strategy
' Strategy
Slide 7: A clearly defined strategy inspired by the best REIT practices
Strategy | Strategy pillars A CLEARLY DEFINED STRATEGY INSPIRED BY THE BEST REIT PRACTICES Office Shopping Centers 45 % Breadth of prime space Core & Core Plus 20 % Urban or Dominant Madrid, Barcelona and Lisbon Spain & Portugal National scale Best Investment governance grade practices capital struc
Slide 8: Logistics, the fastest growing asset category since 2014
Strategy | Asset categories evolution (by GRI)(1) LOGISTICS, THE FASTEST GROWING ASSET CATEGORY SINCE 2014 2014 2018 2019 PF(2) (1) 5 % 3 % 2 % 12% Hoteles 10% Hoteles 17% Residencial en alquiler Residencial en alquiler 14% 69% Otros 17% 46% Otros 15% 45% Logístico Logístico Oficinas High Street Ret
Slide 9: Portugal has gained relative weight in Merlin's portfolio
Strategy | Exposure to Portugal PORTUGAL HAS GAINED RELATIVE WEIGHT IN MERLIN’S PORTFOLIO Offices Shopping centers Logistics NT ME ISH RB FU RE R DE UN Monumental Marqués Pombal 3 Lisboa Expo Torre Lisboa Nestlé HQ Almada Lisbon Park 22,387 sqm 12,460 sqm 6,740 sqm 13,715 sqm 12,260 sqm 60,098 sqm 2
Slide 10: Positioning
Positioning
Slide 11: #1 REIT across all asset categories where Merlin operates
Positioning | Fast facts #1 REIT ACROSS ALL ASSET CATEGORIES WHERE MERLIN OPERATES FULLY CONSOLIDATED(1) 124 ASSETS(2) #1 • Flexibility to offer multitenant or headquarter buildings 1,319 K SQM • Capacity to adapt to the needs Offices of the tenant € 6.2 BN GAV € 237 M GRI MINORITY STAKES(3) TRES AG
Slide 12: Offices overview
Positioning | Offices overview PRIME SPACES IN BOTH CBD AND NBA OFFERING A WIDE VARIETY OF SOLUTIONS TO CLIENTS Fast facts Breakdown Reversion in MVC assets By geography By location By product Otros # ASSETS 124 Lisbon Barcelona GLA (sqm) 1,319 k By GAV Madrid By GAV By GAV GAV (€ M) 6,161(1) GRI (€
Slide 13: Shopping Centers overview
Positioning | Shopping Centers overview URBAN AND DOMINANT ASSETS OFFERING NATIONAL SCALE IN HIGH GDP/CAPITA AREAS Fast facts Breakdown(5) Reversion in MVC assets Fully Tres Consol. Aguas (1) By geography By type By size(2) # ASSETS 14 1 Other 461 k 68 k Andalusia GLA (sqm) Valencia GRI (€ M) 116 9
Slide 14: Logistics overview
Positioning | Logistics overview NATIONAL FOOTPRINT IN MAIN LOGISTICS HUBS Fast facts Breakdown Reversion in MVC assets Existing WIP By reach By OtherOther Spain tenant type Spain Consolidated ZAL Port(1) Consolidated ZAL Port(1) OtherBasque country Spain Basque Other Spain country BasqueSeville cou
Slide 15: GAV summary PF FY19
Positioning | GAV summary PF FY19(1) Gross yield 4.1% 4.9% 4.9% 5.8% - 4.5% 12,751 12,094 6,161 GAV TOTAL with minority stakes (€ million) Shopping centers 2,367 1,873 Minority stakes Net leases Logistics Other(2) Offices TOTAL 939 754 657 €/sqm AG 4,846 5,198 5,167 809 2,599 Source: Company (1) PF
Slide 16: Occupancy and WAULT PF FY19
Positioning | Occupancy and WAULT PF FY19(1) 100% 95% 98% 93% 95% AVERAGE OCCUPANCY 18.4 5.6 years 3.0 4.0 AVERAGE WAULT 2.4 Offices Shopping centers Logistics Net leases (1) PF post desconsolidation of 3 secondary retail assets ı 16 ı
Slide 17: Very good performance and prospects across the board
Positioning | Trading update FY19 Reported VERY GOOD PERFORMANCE AND PROSPECTS ACROSS THE BOARD Rent LfL sqm Release #contracts YoY(1) contracted spread(3) Office +7.3% 346,548 +7.2% 180 Shopping Centres +3.1% 78,306(2) +4.2% 139 Net leases +1.2% - - - Logistics +3.6% 258,638 +7.6% 6 Other (1.8%) -
Slide 18: Value creation
Value creation
Slide 19: Growth Plans 2018-2022
Value creation | Growth Plans 2018-2022 Offices Shopping Centers LANDMARK I PLAN FLAGSHIP PLAN Upscaling refurbishments Converting our shopping centers to create “prime within the prime” Organic in the flagship store of online retail growth SELECTED € 536m € 220m DEVELOPMENT OF “X” DEVELOPMENTS A BR
Slide 20: Landmark I - Update
Value creation | Landmark I - Update 0% % % ED ED % 95 82 0% 28 10 ER ER T T 10 T T LE LE IV IV LE LE T EL E- E- EL LE E- E- PR PR D D PR PR Torre Torre Marqués de Castellana Diagonal Plaza Ruiz Adequa Adequa Monumental Charmartín Glòries Pombal 3 85 605 Picasso 4 7 GLA (sqm) 18,295 37,614 12,460 15
Slide 21: Landmark I - 2019 Deliveries
Value creation | Landmark I - 2019 Deliveries Torre Glòries Torre Chamartín Returns Tenants Returns Tenants • Acquisition € 142.0m • 100% Let • Acquisition € 31.2m • 100% Let • Capex € 26.7m • Capex € 38.0m • Total investment € 168.7m • Total investment € 69.2m • ERV € 11.8m • ERV € 4.3m • Yield on
Slide 22: Madrid Nuevo Norte
Value creation | Madrid Nuevo Norte ACQUISITION OF A STRATEGIC STAKE IN DISTRITO CASTELLANA NORTE, THE FUTURE OF MADRID PRIME CBD Phase I Phase II Phase IV a Phase IV b Phase III Central Business Fuencarral Tres Olivos Las Tablas Station District Malmea Madrid Nuevo Norte (MNN) Offices 1,220k sqm Of
Slide 23: The most ambitious real estate scheme in Europe
Value creation | Madrid Nuevo Norte THE MOST AMBITIOUS REAL ESTATE SCHEME IN EUROPE ı 23 ı
Slide 24: Flagship - update
Value creation | Flagship - update ED ED ED ED ER ER ER ER IV IV IV IV EL EL EL EL D D D D Arturo Soria Larios X-Madrid Tres Aguas(1) El Saler Porto Pi Callao 5 Plaza GLA (sqm) 41,460 7,054 47,170 67,690 47,471 58,779 11,629 GLA MERLIN (sqm) 37,957 6,069 47,170 33,845 28,861 32,963 11,629 Works: 27.
Slide 25: X-Madrid achieving high pre-leasing rate
Value creation | Flagship value creation: X-Madrid achieving high pre-leasing rate X-MADRID: A NEW CONCEPT RECENTLY LAUNCHED Comercialization status We have turned the mix upside down: 70% experience / 30% retail 95% commercialized as of February Climbing Harley Bowling Spanish > 1,500 Spanish cup g
Slide 26: Flagship - Larios and Tres Aguas
Shopping Centers | Flagship - Larios and Tres Aguas Larios Tres Aguas • Total investment 47.3m(1) • Top-of-mind mall for • Total investment € 12.1m(2) • Occupancy gain of + 900 • ERV € 3.1m retailers in Malaga • ERV € 1.4m(3) bps after the refurbishment • Yield on cost 6.6% • Full occupancy • Yield
Slide 27: Best II - Update
Value creation | Best II - Update 0% % % 42 67 0% 0% 10 T T 10 10 T LE LE LE T T E- E- LE LE E- PR PR PR Guadalajara Guadalajara Madrid Guadalajara Toledo Guadalajara Madrid Guadalajara Guadalajara Cabanillas Cabanillas Pinto II B(1) Cabanillas III Seseña Cabanillas F San Fernando II Azuqueca III Az
Slide 28: Best II
Value creation | Best II BEST II FOCUSED ON THE 2 MAIN LOGISTICS CORRIDORS OF MADRID +588K sqm € 26m GLA ERV Madrid € 328m 7.9% Investment Yield on Cost ı 28 ı
Slide 29: Best III
Value creation | Best III LAUNCH OF BEST III TO EXPAND FOOTPRINT TO OTHER AREAS OF THE IBERIAN PENINSULA 0% 0% 0% 10 10 10 ET ET T L L LE E- E- PR PR Valencia Zaragoza Sevilla(2) Lisbon Madrid Valencia Ribarroja Plaza II ZAL WIP Park San Fernando III GLA (sqm) 34,992 11,421 42,632 224,864 98,942 96,
Slide 30: Best III
Value creation | Best III LAUNCH OF BEST III TO EXPAND FOOTPRINT TO OTHER AREAS OF THE IBERIAN PENINSULA +509K sqm € 24m GLA Basque Country ERV Zaragoza Madrid Valencia Lisbon € 317m(1) 7.7% Investment Yield on Cost Seville (1) € 163m until 2022 ı 30 ı
Slide 31: Self-funding capex program
Value creation | Sources & uses SELF-FUNDING CAPEX PROGRAM Cash from further non-core disposals to be used mainly for DCN and debt repayment 1,401 645 (€m) 220 (685) 536 191 receivable (secondary retail and Tree) (328) 206 +€ 191m (182) until completion 49 of infrastructure and urbanization Landmark
Slide 32: Attractive growth profile with high degree of lets and pre-lets
Value creation | Potential rental growth (2019-2022) ATTRACTIVE GROWTH PROFILE WITH HIGH DEGREE OF LETS AND PRE-LETS (€m) +24% 23.5 667.9 651.8 24.7 12.3 (16.0) 37.2 44.3 525.9 499.7 469.4 GRI GRI GRI Rev. Landmark Flagship Best II Best III Potential Non-core GRI FY17 FY18 FY19 potential GRI FY22 di
Slide 33: Capital structure
Capital structure
Slide 34: Capital structure policy
Capital structure | Policy INVESTMENT GRADE BBB RATING BY S&P WITH POSITIVE OUTLOOK AND Baa2 RATING BY MOODY’S Maturity Leverage schedule • LTV below 50% • Target to reach • 5-10 years LTV<40% • Staggered Fixed Unsecured • Unsecured debt above vs floating 50% of total debt • Below 40% floating • Une
Slide 35: Debt position
Capital structure | Debt position 3,750 5,567 385 5,182 (€ million) 852 965 Secured Non-mortage Bonds Total Gross Cash Total Net bank loans debt Debt Debt % Gross financial debt 17.3% 15.3% 67.4% 100.0% Average cost (%) 2.60% 1.65% 2.07% 2.09% % interest rate hedged 98.6% 98.6% 100.0% 99.5% ı 35 ı
Slide 36: Debt maturity profile
Capital structure | Debt maturity profile INTENSE DEBT MANAGEMENT FURTHER SOFTENING THE MATURITY PROFILE € 1,617m € 500m +€ 100m ESG-linked financing 15-year bond add-on 15-year post closing 1,057 866 867 889 16 17 776 89 716 16 176 500 850 850 800 700 323 600 23 557 300 15 13 14 22 23 2 14 22 23 20
Slide 37: Ample covenant headroom and strong debt metrics
Capital structure | Key metrics AMPLE COVENANT HEADROOM AND STRONG DEBT METRICS Unsecured senior notes covenants MRL EMTN Program FY 2019 LTV <60% 40.6% ICR(1) >2.5x 4.2x Unsec. Assets to Unsec. Debt >125% 224.0% Other key metrics Unsecured debt 82.7% Unencumbered assets (by GAV) 80.8% Undrawn facil
Slide 38: Sustainability
Sustainability
Slide 39: ESG achievements
Sustainability | ESG achievements REMARKABLE PROGRESS IN ESG ESG Benchmarks Certifications MERLIN has obtained Accesibility Efficiency an excellent mark in the 2019 edition 82% 71% 72% 62% 100%(1) Target 99% 100% 97% Actual 75% 77% 66% MERLIN European Global Our Gold since 2017 average average peers
Slide 40: Technology
Sustainability | Technology MERLIN is focusing its technology efforts through 3 pillars Deployment in our portfolio Mentoring Sponsoring Sensorization Proptech challenge MERLIN has invested in Fifth Wall, MERLIN teamed up a venture capital proptech fund with ISDI and Impact accelerator The program a
Slide 41: ESG Indexed Loan
Sustainability | ESG Indexed Loan # Largest in the European KPI’s Real Estate sector to date 1 2 Continuous xternal LEED/ E investment # Second largest in energy BREEAM energy ever in Spain across all industries certifications efficiency achieved in improvement office, logistics across the and retai
Slide 42: European Investment Bank funding
Sustainability | European Investment Bank funding Projects funded € 115m logistics loan funded by the AZUQUECA II AZUQUECA III European Investment Bank € 51m € 64m Tranch I Tranch II SESEÑA CABANILLAS PARK II Advantageous terms 10 years loan Assets exceeding 400,000 sqm Fixed or variable rates Europ
Slide 43: Contact
Paseo de la Castellana, 257 28046 Madrid +34 91 769 19 00 info@merlinprop.com www.merlinproperties.com
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