Merlin Properties Socimi, S.a. · BME:MRL
Merlin Properties Socimi — FY2021 Earnings Presentation
50 slides from Merlin Properties Socimi's earnings presentation, Feb 24, 2022
Slide 1: FY21 Results Presentation
FY21 Results Presentation 24 Fe b r u a r y 2 02 2
Slide 2: Contents
Contents FY21 Financial results Offices Logistics Shopping centers ISMAEL CLEMENTE CEO Valuation and debt position Sustainability Value creation Digital Infrastructure Plan MIGUEL OLLERO Outlook 2022 COO Closing remarks
Slide 3: Key highlights | Overview
Key highlights | Overview Financial performance • € 0.58 FFO per share, +4.1% increase compared to FY20, exceeding guidance (€ 0.56 ps) • GAV growth driven by logistics (+14.5% LfL) • Deleveraging continues with LTV at 39.2% (vs 39.9% FY20) • Total shareholder return +7.1% (vs 1.4% in FY20) Operatin
Slide 4: FY21 Financial results
FY21 Financial results
Slide 5: FFO of €0.58 per share, exceeding 2021 guidance
FY21 Financial results | FFO of € 0.58 per share, exceeding 2021 guidance (€ 0.56 per share) (€ million) FY21 FY20 YoY Gross rents 505.3 503.4 +0.4% Gross rents after incentives 462.5 441.1 +4.9% Net rents(1) 413.8 393.9 +5.1% EBITDA(2) 377.2 365.4 +3.2% FFO(3) 273.0 262.4 +4.1% AFFO 258.0 247.6 +4.
Slide 6: GRI bridge: +0.2% LfL growth despite difficult 1H21 in offices
FY21 Financial results | GRI bridge +0.2% LfL growth despite a difficult 1H21 in offices (1.2%) Offices Logistics +1.6% LfL(1) LfL(1) Shopping centers +2.6% +0.2% +0.2% Net leases (0.2%) (€m) 503.4 503.4 +0.7 +0.7 +1.2 +1.2 505.3 505.3 FY20 FY20 Like-for-Like Like-for-Like Balance Balance acquisitio
Slide 7: Occupancy and WAULT
FY21 Financial results | Occupancy and WAULT Overall occupancy +132 bps since its trough in 3M21 with 3 consecutive quarters up Occupancy and WAULT to first break per asset type(1) +21 bps 97.1% 100.0% 97.3% 94.2% 94.5% vs 94.2% MERLIN FY20 90.1% Average 17.5 5.4 years 3.5 4.2 MERLIN 3.3 2.1 Average
Slide 8: Offices
Offices
Slide 9: Offices | GRI bridge and breakdown
Offices | GRI bridge and breakdown LfL rental decline stabilizing (1.2%), improving vs 6M21 (2.9%) and 9M21 (2.1%) (€m) LfL(1) (1.2%) 233.2 228.6 (2.7) (1.9) FY20 Like-for-Like growth Balance acquisitions, FY21 disposals & other LfL growth by area Occupancy by area FY20 FY21 Madrid (2.4%) Madrid 89.
Slide 10: Offices | Leasing activity
Offices | Leasing activity MERLIN continues capturing the reversionary potential in the portfolio with +4.3% release spread Contracted sqm Release spread #Renewed contracts Tenants contracted Madrid 189,822 +2.8% 121 Barcelona 45,277 +9.1% 41 Lisbon 33,840 +18.1% 9 Total 268,939 +4.3% 171 ı 10 ı
Slide 11: Offices | Flex space
Offices | Flex space Sharp occupancy growth on the back of the return to the office. +52% footprint in 2022 Occupancy KPIs 70% 66% 18,000 sqm 1,877 desks 37% 70% occupancy 10 spaces Feb-20 Oct-20 Dec-21 New openings 2022 967 desks (+52% increase in footprint) Castellana 85 Castellana 93 exp. Atica e
Slide 12: Logistics
—— = a i gal i ee oe Logistics
Slide 13: Logistics | GRI bridge and breakdown
Logistics | GRI bridge and breakdown Logistics continues delivering good performance both organic (LfL +1.6%) and through developments (€m) LfL(1) +1.6% 58.8 +0.9 +6.2 65.9 FY20 Like-for-Like growth Balance acquisitions, FY21 disposals & other LfL growth by location Occupancy by area FY20 FY21 Madri
Slide 14: Logistics | Leasing activity
Logistics | Leasing activity +4.0% Release spread Contracted sqm Release spread # contracts Tenants contracted Madrid 151,238 +1.8% 5 Barcelona 36,077 +11.0% 4 Other 61,353 - 6 Total 248,668 +4.0% 15 ı 14 ı
Slide 15: Logistics | ZAL Port
Logistics | ZAL Port Double digit FFO increase (+17.5% vs FY20), after completing +100k sqm development in 2021 Stock WIP program finalised after 736,384 sqm delivering Third parties stock 301,970 sqm since 2017 183,252 sqm Stock under management 919,636 sqm Tenants Contracted sqm Release spread # c
Slide 16: Shopping centers
heel Shopping centers
Slide 17: Shopping centers | GRI bridge and breakdown
Shopping centers | GRI bridge and breakdown Footfall and tenant sales recovering, maintaining OCR at 12.1% (vs 12.9% in 2020 and 12.6% in 2019) (€m) LfL(1) +2.6% 114.4 +2.9 (2.4) 114.9 FY20 Like-for-Like growth Balance acquisitions, FY21 disposals & other Footfall evolution Tenant sales evolution 20
Slide 18: Shopping centers | Occupancy and leasing
Shopping centers | GRI bridge and breakdown Occupancy above pre-Covid levels (94.2%) due to commercial policy and Flagship plan deliveries Release spread # contracts Tenants All portfolio +5.8% 74 Contracted sqm Net absorption Occupancy 31/12/21 Change vs 31/12/20 (bps) Total 35,221 6,653 94.2% 47 ı
Slide 19: Shopping centers | 2022 maturity profile
Shopping centers | 2022 maturity profile 44.3% 33,600 sqm let in 2021, a 31.1% record-high figure for the company 23.8% Occupancy stands at 94.2%, exceeding pre-Covid levels Rolling Breaks Rolling breaks 10% 10% 10% associated to anchor tenants, with low exit risk 6M21 FY21 February 22 2022 expiries
Slide 20: Valuation and debt position
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Slide 21: Valuation and debt position | GAV summary
Valuation and debt position | GAV summary Logistics is driving the revaluation of the overall portfolio Reversionary 4.7% 5.1% 5.4% 4.4% yield Passing 4.0% 4.9% 5.2% 4.4% 4.4% yield 13,041 12,437 6,416 GAV TOTAL with minority stakes (€ million) Shopping centers Minority stakes 2,200 1,775 Net leases
Slide 22: Valuation and debt position | Asset Valuation
Valuation and debt position | Asset Valuation Book value (€ per share) 1.61 27.76 3.78 4.76 3.71 (€ 6.11) 16.11 (38%) 13.91 (11.65) 10.00 Offices Logistics Shopping Net Leases Other GAV Net liabilities EPRA Share price centers NTA ı 22 ı
Slide 23: Valuation and debt position | Asset Valuation
Valuation and debt position | Asset Valuation € 7,779 € 7,779 € 6,135 € 5,223 € 5,281 € 6,135 € 4,119 € 5,223 € 5,281 € 3,546 € 4,119 € 3,546 Offices Prime + CBD (€/sqm) @ 16.11 @10.00(1) @ 16.11 @10.00(1) @ 16.11 @10.00(1) @ 16.11Madrid @10.00(1) Barcelona @ 16.11 @10.00(1) @ 16.11Lisbon @10.00(1)
Slide 24: Valuation and debt position | GAV drivers
Valuation and debt position | GAV drivers GAV LIKE-FOR-LIKE EVOLUTION(1) +14.5% +14.5% +2.3% +0.5% +2.0% MERLIN +2.3% average(2) +0.5% (1.6%) +2.0% MERLIN Offices Logistics Net Leases Shopping centers average(2) (1.6%) Offices Logistics Net Leases Shopping centers YIELD (COMPRESSION) / EXPANSION(3)
Slide 25: Valuation and debt position | Debt position
Valuation and debt position | Debt position Strong financial profile with decreasing LTV combined with low & fix interest cost. Moody’s improving the outlook to stable 31/12/2021 31/12/2020 Net debt € 5,247m € 5,268m LTV 39.2% 39.9% Average cost (spot) 2.07% (1.76%) 2.12% (1.80%) Fixed rate debt 100
Slide 26: Sustainability
Sustainability
Slide 27: Sustainability | 2021 update
Sustainability | 2021 update Strong progress in the year Real Estate Climate change General Scorings MERLIN score Average performance 81% B C C C 58% Financial Europe Global Global average 73% Services Average Peers 76% 87 Industry percentile Sustainability Quality Accessibility Certifications +91%
Slide 28: Sustainability | Pathway to net zero
Sustainability | Pathway to net zero MERLIN will launch its Pathway to net zero in 2Q22. Throughout the year, the Company has been working on a bottom-up analysis to shape and define the Pathway The backbone of our strategy Sustainable Wellbeing Reshaping assets of people cities Pillars 1 2 3 4 Redu
Slide 29: Value creation
Value creation
Slide 30: Value creation | Capital recycling - Divestments
Value creation | Capital recycling - Divestments € 238m of divestments executed to fund Capex plans at a 5.4% premium to latest GAV Offices Logistics Net Leases Sale of 1 office building in Madrid Disposal of 4 logistics Sale of 32 supermarkets and warehouses, 2 in Madrid, 1 in 1 BBVA branch Zaragoz
Slide 31: Value creation | Landmark I 2021 deliveries
Value creation | Landmark I 2021 deliveries Castellana 85 Monumental • Full refurbishment of the asset, located in the •F ull refurbishment of the building, located in Duque heart of Azca, the best business area in Madrid de Saldanha, one of the most emblematic squares in Prime CBD the city at the c
Slide 32: Value creation | Landmark I recap
Value creation | Landmark I recap Despite Covid, Landmark I has been a clear commercial and financial success Torre Torre Marqués Diagonal Castellana Plaza Monumental Ruiz Picasso Chamartín Glóries de Pombal 3 605 85 (WIP) Main tenants • >€ 20m of incremental rents already captured(1) • € 475m of va
Slide 33: Value creation | Other projects: Offices | Future deliveries
Value creation | Other projects: Offices | Future deliveries P.E. Churruca P.E. Cerro Gamos 1 • Progressive refurbishment of the business park • Full refurbishment of the business park, located to transform it into one of the largest urban campus in Pozuelo in Spain • Long term lease with Fujitsu to
Slide 34: Value creation | Best II & III
Value creation | Best II & III Zal Port WIP(1) Lisbon Park A2 Cabanillas Park I-J A2 Cabanillas Park II • ZAL Port has completed its •P hased project located in • Last available plot in • First warehouse in development program with the north of Lisbon Cabanillas Park I. Upon our Cabanillas Park II t
Slide 35: Value creation | Best II, III and ZAL Port extension recap
Value creation | Best II, III and ZAL Port extension recap MERLIN has built a unique portfolio after securing the best locations at compelling land prices ahead of the logistics boom A4 Pinto II B A2 Cabanillas III A4 Seseña A2 Cabanillas F A2 San Fernando II A2 Azuqueca II Valencia Ribarroja Lisboa
Slide 36: Value creation | Flagship | 2021 deliveries
Value creation | Flagship | 2021 deliveries Flagship Plan is now complete Saler Porto Pi • The refurbishment has consolidated Saler, facing the • Full refurbishment of the shopping center City of Arts and Sciences, as the leading urban mall • The asset enjoys now outstanding exterior terraces in Val
Slide 37: Value creation | Flagship recap
Value creation | Flagship recap Flagship plan has provided MERLIN’s portfolio with an outstanding capacity to face market headwinds Larios Arturo Soria Plaza X-Madrid Tres Aguas Saler Porto Pi Callao • Over 230,000 sqm refurbished • Strong operating •T he historical landmark to adapt to new trends,
Slide 38: Digital Infrastructure Plan (Mega)
Digital Infrastructure Plan (Mega)
Slide 39: Digital Infrastructure Plan | Project Edged
Digital Infrastructure Plan | Project Edged Industry-leading performance at all edged data centers Zero water cooling 100% renewable Leading energy Densities to (WUE of 0 liters/kWh) energy via new efficiency with 40 kW per cabinet estimated to save 23 contracted solar 1.15 annualized PUE provide fl
Slide 40: Project Edged: modular platform adapts to local market needs
Digital Infrastructure Plan | Project Edged The modular platform adapts to local market needs over time Fully modularized systems enable Microturbine Generator sustainable edge data centers • Provides low carbon, ultra-clean on demand baseload power 24/7 • 99% lower NOx emissions • Flexible fuel sou
Slide 41: Digital Infrastructure Plan | Basque Country-Álava
Digital Infrastructure Plan | Basque Country-Álava License for Phase I (3MW) granted with advanced negotiations for leasings, representing 66% of the asset Location Render 100 MW 17,600 sqm 2-4 hour 2Q 2023 critical power battery storage First Delivery Layout EV Charging Station ı 41 ı
Slide 42: Digital Infrastructure Plan | Selected projects
Digital Infrastructure Plan | Selected projects 4 strategic locations in the Iberian Peninsula to develop state-of-the-art data centers Hyperscale Wholesale colocation Basque Country - Álava Barcelona - PLZF Total GLA 23,153 – 102,466 sqm Total GLA 22,131 Capacity 22 – 100 MW Capacity 16 MW License
Slide 43: Digital Infrastructure Plan | Updated Timeline & Capex
Digital Infrastructure Plan | Updated Timeline & Capex Basque Country-Álava license granted Phase II: finalized (70 MW) 2021 2022 2023 2024 2025 2026 Phase I: First MWs enter into operation (12 MW) Investment and returns until 2025 Phase I – Deployment Phase II – Expansion Phase III – On demand • Sq
Slide 44: Outlook 2022
Outlook 2022
Slide 45: Outlook 2022 | BBVA disposal strategy
Outlook 2022 | BBVA disposal strategy E nergy and resources 100% focused on the B BVA does In execution operation Base case not execute its mode preferential right N o guidance to be provided on price or time After the BBVA disposal, the Company will focus its efforts in executing the strategy conve
Slide 46: Outlook 2022 | January CPI impact
Outlook 2022 | January CPI impact The Company will benefit from inflation tailwinds, after having secured in January a 5.5% GRI increase % uplift +5.2% +5.7% +4.9% 6.1% +5.4% +5.5% % uplift +5.2% +5.7% +4.9% 6.1% +5.4% +5.5% 44% % annual GRI(1) 44% 100% 100% 56% 21% 56% 21% 39% 39% 78% 78% Offices L
Slide 47: Outlook 2022 | Guidance
Outlook 2022 | Guidance Offices Shopping centers Occupancy 2021 90.1% 94.2% 2022 guidance 91.5% 94.5% 2019 baseline 2020 2021 2022 € 0.67 p.s. € 0.56 p.s € 0.58 p.s € 0.64 ps FFO 100% 84% 87% 95% +0.45 +0.45 Guidance +0.40 Minimum +0.40 Minimum Minimum 0.25 M recommended0.25 subject recomm recommend
Slide 48: Closing remarks
Closing remarks
Slide 49: Closing remarks
Closing remarks | Operations • MERLIN has improved all key financial and operating metrics (occupancy, LfL rental growth and FFO generation) • Third consecutive quarter with overall occupancy increase, recovering 132 bps since trough of the Covid-19 crisis (3M21) • Inflation favoring financials: 44%
Slide 50: Paseo de la Castellana, 257 28046 Madrid info@merlinprop.com
Paseo de la Castellana, 257 28046 Madrid +34 91 769 19 00 info@merlinprop.com www.merlinproperties.com
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