CAPITAL MARKETS DAY 2017 - BARCELONA, 24 OCTOBER - Merlin Properties
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CAPITAL MARKETS DAY 2017 BARCELONA, 24 OCTOBER
Disclaimer |
This presentation has been prepared by certain assumptions and estimates. These and, should there be an offering, will not be This presentation may include forward-
MERLIN Properties SOCIMI, S.A. (the internal analyses may have not been verified registered under the U.S. Securities Act of looking statements. All statements other
“Company”) for informational use only. by any independent sources and there can 1933, as amended (the “Securities Act”), or than statements of historical facts included
The information contained in this presentation be no assurance that the assumptions or the U.S. Investment Company Act of 1940, as in this presentation, including, without
does not purport to be comprehensive or to estimates are accurate. Accordingly, undue amended (the “Investment Company Act”). limitation, those regarding the financial
contain all the information that a prospective reliance should not be placed on any of the Such securities may not be offered or sold in position, business strategy, management
purchaser of securities of the Company may industry, market or competitive position data the United States except on a limited basis, plans and objectives for future operations of
desire or require in deciding whether or not contained in this presentation. Additionally, if at all, to Qualified Institutional Buyers (as the Company are forward-looking statements.
to purchase such securities. The information certain information contained herein may defined in Rule 144A under the Securities These forward-looking statements involve
contained in this document is subject be based on management accounts and Act) in reliance on Rule 144A or another known and unknown risks, uncertainties and
to change, verification and completion estimates of the Company and may have not exemption from, or transaction not subject to, other factors, which may cause such actual
without notice. Neither the Company nor been audited or reviewed by the Company’s the registration requirements of the Securities results, performance or achievements, or
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any representation or warranty, express or reliance on this information. The financial been and, should there be an offering, will not from those expressed or implied by these
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2
WHY DO
LOGISTICS WE LIKE
LOGISTICS?
THE
WAREHOUSES
STRATEGY
OF THE
FUTURE
A LEADING
THE SPANISH
LOGISTICS
MARKET
FOOTPRINT
FUTURE
THE TEAM GROWTH
DRIVERS
3
Why do we like logistics? | Online retail sales growth
SPAIN HAS ONE OF THE LOWEST ONLINE BUT ONLINE RETAIL PENETRATION
SHARES OF TOTAL RETAIL SALES IN EUROPE IS GROWING RAPIDLY
+17% +17%
% online retail % online share
4.10% 4.10%
share of home of total retail sales
17% 17% 3.50% 3.50%
market 2016 Spain
3.00% 3.00%
14% 14%
2.50% 2.50%
10% 10% 10% 10%
9% 9% 9% 9%
4% 4% 4% 4%
3% 3%
2013 2014 2015
2013 2016
2014 2015 2016
K
y
EU
ce
eKn
s
in
ed
ny
nndy
EaU
s
n
d
ly
nd
an
ael
nanc
ai
U
n
edU
Ita
an
laa
la
eIdt
Sp
Sp
m
oal
rla
rm
Po
Fr
FPr
Sw
Sw
er
heer
he
G
etG
et
N
N
Source: Centre for Retail Research, SG Cross Asset Research/Equity 4
Why do we like logistics? | Exports/imports & logistics outsourcing
Exports/imports Logistics outsourcing
SPANISH EXPORTS (23.3% GDP) ARE
AMONG THE STRONGEST IN THE EUROPEAN
UNION (+4.4% IN 2016)
RECOVERY IN INTERNAL CONSUMPTION
52 %
HAS INCREASED SPANISH IMPORTS, WHICH HAS of Spanish companies
STRENGTHENED DEMAND OF LOGISTICS SPACES outsource logistics
operations
Spanish exports (2007-2016) (90%+ in UK/US)
€ billion
250
of increase in outsourcing
80 %
200
among Spanish companies
150
in the last 7 years
100
50
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: JLL, Ministerio de Economía 5
Strategy | Foundations
1
National footprint to
serve 100% of clients
needs
2
State-of-the-art
facilities suitable for
3PLs and end-users
3 4
Diversified product
offering: Expand last mile
Cross docking, large solutions in the
cube, cold storage first isochrone of main
and hazard materials cities
6
The warehouses of the future | New standards on logistics
11 m
14 m
Loading Docks: 1/800 m2
Truck yard depth: > 30 m
> 30 m
7
The warehouses of the future | New standards on logistics
1st generation Logistics
Loading Docks: 1/3000 sqm
State-of-the-art Logistics
Loading Docks: 1/800 sqm
8
The warehouses of the future | New standards on logistics
State-of-the-art Logistics
• Slab without joints
• Skylights in 10% of the roof
• LED lighting
• Environmental solutions
MERLIN
74 %
State-of-the-art
9
The Spanish market | Madrid
Maximum and minimum
rents (€/sqm/month)
Availability
Logistics hubs
Local
Regional
National
Source: BNP Paribas Real State
10The Spanish market | Barcelona
Maximum and minimum
rents (€/sqm/month)
Availability
Logistics hubs
Local
Regional
National
Production related
Port
Source: BNP Paribas Real State
11A leading logistics footprint | Overview
Fast facts By tenant type By reach
Reversion in MVC assets
Existing WIP(3)
Other
Other Spain
Spain Other
Consolidated ZAL Port(1) Consolidated ZAL Port(1)
Basque
Basque country
country Basqu
# ASSETS 38 44 14 2
Seville
Seville Seville
GLA 921k 468k 595k 35k Barcelona By
Barcelona GAV By GAV Barcel
+ 2m sqm under management Madrid
GRI (POST Madrid Madr
CANON)(2) 41.2 29.5 24.6 2.2
OCCUPANCY 99% 94% 30% 100%
• Madrid
• Madrid 57%57% • National
• National 44%44% • 3PL
• Madrid
• 3PL multi-client
57%
multi-client 51%51% • National 44%
GAV • • Catalonia
590.3
Catalonia 24%24% • Regional
•294.3
Regional 28%28%
• •
• Catalonia
3PL 3PL mono-client
24%
mono-client 19%19% • Regional 28%
• • Sevilla
Sevilla 8% 8%
• • Ports
Ports 24%24% • End
• Sevilla
• End 8% user
user 30% 30% • Ports 24%
• • Basque
Basque Country
Country 5%5% •
•8.4%Production
Production related
related 4% 4% • Basque Country 5% • Production related 4%
YOC
• Other7.0%
Spain 6% • Other Spain 6%
• Other Spain 6%
(1)
Figures reported for 100% of ZAL Port
(2)
Annualized gross rental income calculated as passing gross rent as of June 30, multiplied by 12
(3)
Total expected gross rents. GAV includes acquisition cost plus estimated Capex
12A leading logistics footprint |
13A leading logistics footprint | Asset management LEED / BREEAM program
LEED 6
2017
2
2018
BREEAM 9
2017
5
2018
Obtained (sample)
uadalajara -
G uadalajara -
G uadalajara -
G
Madrid - Meco II
Cabanillas Park I A Alovera Cabanillas I
adrid -
M CN - Granada
B adrid - Coslada
M
Madrid - Meco
Coslada del Penedés Complex A
14Management capabilities |
360 ° TEAM WITH INTERNAL TECHNICAL CAPABILITIES FOR DEVELOPMENTS
PROPERTY
TECHNICAL
MGMT
ASSET MGMT
& LEASING
LEGAL
15WIP Update | High-return expansion program to increase footprint by 70%
595 k sqm
€ 237m
Pending
investments
€ 24.6m
of additional
anual rent
8.4 %
Yield on cost
16Future growth drivers | Madrid - Meco II
59,891 sqm GLA
Development delivered in 3Q 2017,
fully let to
€ 29.4m Investment and 9.1% YoC
17Future growth drivers | Madrid - Gavilanes
39,576 sqm GLA
divided in 6 modules
Turn key project with rental
guarantee during 18 months
to be delivered in 4Q 2017
€ 32.1m investment and 8.4% YoC
18Future growth drivers | Madrid - San Fernando I
11,165 sqm GLA
Cross-docking, turn key last mile
facility with rental guarantee to be
delivered in 1Q 2018
€ 9.5m Investment and 7.8% YoC
19Future growth drivers | Madrid - Pinto
Before
After
70,000 sqm GLA
divided in 3 modules
fully let to
before final delivery in 2Q 2018
€ 26.0m investment and 9.8% YoC
20Future growth drivers | Guadalajara - Cabanillas Park I (Module F)
15,000 sqm GLA
Turn-key project to be delivered
in 1Q 2019
€ 7.7m Investment and 7.6% YoC
21Future growth drivers | Guadalajara - Cabanillas Park II
210,678 sqm GLA
divided in 6 modules
(3 Phases of 70,000 sqm)
Turn key Project to be delivered in
2Q 2019, 2Q 2020 and 2Q 2021
€ 107.4m investment and 7.8% YoC
22Future growth drivers | Guadalajara - Azuqueca II
98,000 sqm GLA
Built to suit project in advanced
negotiations
€ 47.4m Investment and 9.3% YoC
23Future growth drivers | Guadalajara - Azuqueca III
51,000 sqm GLA
Turn key project to be delivered in
2Q 2019
€ 29.8m Investment and 7.6% YoC
24Future growth drivers | Sevilla ZAL I
5,400 sqm GLA
Built to suit, cross-docking facility
for
to be delivered in 1Q 2018
€ 2.7m Investment on a concession
land with an 11.3% YoC
25Future growth drivers | SPL-Portugal
+200,000 sqm
of potential GLA
Located in the primest zone
of Portugal’s main logistics axis
26Future growth drivers | ZAL Port & PLZF Barcelona
PLZF ZAL Port
27Future growth drivers | ZAL Port & PLZF Barcelona
€ 41.9m
of GRI +468k sqm
(pre canon)
ZAL Port 96% GLA
€ 29.5m Occupancy +35k sqm
of GRI GLA WIP
(post canon)
€ 8.9m
of GRI
(pre canon)
PLZF 99% 133k sqm
Occupancy GLA
€ 7.5m
of GRI
(post canon)
28Paseo de la Castellana, 257 28046 Madrid +34 91 769 19 00 info@merlinprop.com www.merlinproperties.com
CAPITAL
BARCELONA
24 OCTOBER
MARKETS
DAY 2017CO NTE NTS
RESIDENTIAL MARKET OVERVIEW
TRACK RECORD
TESTA AT A GLANCE
PORTFOLIO OVERVIEW
PRIVATE & CONFIDENTIALR ESID EN TIA L MARKET OVERVI EW
Spanish real estate recovery has been confirmed by the total capital invested in the sector 1 in 2015 (€13bn)
and 2016 (€8,7bn). However, the Spanish residential market has not experienced its full potential and still
has implicit upside in terms of: 1) Yield; 2) Capital Growth. Within the residential market, the rental business
is clearly increasing its market share.
EVOLUT ION OF AVERA GE M ONT HLY R ENTA L PR ICE
RENTAL RESID ENTIAL PRICES E VOLU TI ON I N S PAI N (€/S QM/ M) 2
(SPA IN VS GER M A NY ) 3
Spanish RE Sector has further upside than the German market in terms of rents
150
+31%
100
(-36%) 50
+5% (-30%)
PRIVATE & CONFIDENTIAL
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Spain Germany
Madrid Barcelona Spain
1) Source: Aguirre Newman and JLL
2) Source: Fotocasa
3) Source: Ministerio de Fomento
/ 3 /R ESID EN TIA L MARKET OVERVI EW
Spanish RE Sector values still very far from peak
EVOLUT ION OF AVERA GE R ESIDENT IA L PROPERT Y
VALUE O F RESIDENT IAL PROP E RTY I N S PAI N (€/S QM) 1 PR ICES (SPA IN VS GER M A NY ) 1
2,100 €
To peak
1,506 € 39%
150
+25%
100
(-39%)
50
0
2008 Today 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
PRIVATE & CONFIDENTIAL
Spain Germany
1) Source: Ministerio de Fomento
/ 4 /R ESID EN TIA L MARKET OVERVI EW
HOME OWNERSHIP RATES IN SPAI N 1 R ENTA L EXPENSE AS % OF HOUSEHOLD INCOM E 2
% of ownership EU average 75%
90%
85%
80% 30%
75%
70% 0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
PRIVATE & CONFIDENTIAL
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Spain Germany
1) Source: Bank of Spain
2) Source: Eurostat
/ 5 /R ESID E NTIA L MARKET OVERVI EW
Within Europe, only Germany counts with a large consolidated residential market (c.60% of the residential
properties being rented) and large listed residential REITs.
S PA I N GERMANY
> Fragmented market with no residential >T
he most developed residential market
reference player in Europe
> Small market in size when compared to arket undergoing consolidation, after
>M
MAR K ET other geographies. Letting market is 22% completion of IPO phase of private owned
OV ERVIEW > Investor appetite and positive market companies
fundamentals for residential real estate >D
emand for renting housing in metropolitan
listed products areas remains high driven by population
> Landlord and tenant law liberalized in 2013, growth
in order to restore the attractiveness of the ow liquidity portfolios represented by its
>L
private-sector rental market high yields
> Not well professionalized
PRIVATE & CONFIDENTIAL
>T
esta Residencial > Banks > Vonovia > Gran City Properties
> Private individuals > Certain corporates > Deustche Wohnen > TAG Immobilien
> PE firms (e.g. > Leg Inmobilien
M A I N PLAYERS Blackstone)
/6 /TESTA B EN EFI TS FRO M A SO LI D T RA C K R ECOR D IN T H E SPA NISH M A R K ET
Testa is the result of the acquisition and integration of a significant number of rented residential
portfolios owned by different RE Spanish companies created in the last decades. Testa portfolio is
internally managed by an experienced and innovative team.
Foundation of Merger of several Open-ended Integration of Asset contribution Integration of
most of the RE existing RE groups Spanish core funds MVC Residencial of € 665m. Acciona RE
Spanish companies in Spain creating managed by banks (€ 700m) into 60 buildings rented residential Analysis of new
that led the Testa Inmuebles en were the main Testa Residential, contributed by the assets in Testa opportunities for
Spanish market Renta, which years owners of large complementing its Shareholders, after Residencial, Testa Residencial
over the recent later span-off its rented residential existing residential a selection process positioning Testa (On-going)
decades. rented residential portfolios in the portfolio. Creation led by Testa’s as the largest
business in Testa country. Several of of the current management. Residential REIT
Residencial. those portfolios management team March 2017. in Spain and
were contributed as a combination enhancing the
in 2016 by its of Testa and quality of Testa’s
PRIVATE & CONFIDENTIAL
shareholders to MVC Residential portfolio.
MVC Residencial. professionals. September 2017.
September 2016.
The beginning Before the crisis The creation of a national leader
1990 - 2000 2000 - 2012 2015 - 2018
/ 7 /TESTA AT A GLANCE
Testa Residencial is the largest Spanish rented residential REIT with total assets of € 2.2 bn located in the
best areas of the Spanish cities with the highest GDP per capita
KPls
# of units 9,219
1I Pure player
Exclusively focused on
rented residential assets in
# of buildings 111
5I Conservative gearing
approach to capital
Spain
GLA (sqm) 870,000 structure with a 35%
Occupancy % 90%
target LTV
2I Best-in-class internal
management team
(56 employees) focused
GRI € 70 m on optimizing asset
4I
performance through
GAV € 2.2 bn Selective asset
rotation to enhance active management
GAV (€/sqm) € 2,560/sqm internal value
PRIVATE & CONFIDENTIAL
creation
GAV (unit)
LTV (%)
€ 242,000
18%
3I Strategic acquisitions
of new assets and/
or portfolios, providing
Target LTV (%) 35% financial and operational
synergies
/ 8 /PORTFOL IO OVERVI EW
GAV BREAKD OWN PER LOCATI ON 1 GR I BR EA KDOWN PER LOCAT ION 2
85% of the GAV is located in Madrid, San Sebastián, Barcelona, In terms of rent, the same 5 cities account for more than 80% of
Valencia and Palma de Mallorca, showing the quality of the portfolio the total revenues
Others 15% Madrid 65% Others 20% Madrid 64%
Mallorca 3%
Valencia 4% Mallorca 3%
Valencia 3%
Barcelona 5%
Barcelona 5%
San Sebastián 7%
San Sebastián 5%
PRIVATE & CONFIDENTIAL
• 85% of GAV Testa’s Portfolio is composed by free market rent units (i.e. non-protected rent)
• Out of the remaining 15%, 52% in Bentaberri (prime location in San Sebastián) and 11% in the city center of Pamplona (Navarra)
• 84.3% of the total Portfolio is aged no more than 20 years old, which limits maintenance and capex requirements
1 GAV as of 30/06/2017 plus: 1) ca. €400m of Acciona Real Estate; 2) ca. €45m Agreement for the acquisition of a residential portfolio located in Madrid.
2 Annualized gross rents calculated as passing gross rent as of 31st October 2017, multiplied by 12.
/ 9 /TESTA’ S PORTFO LI O : OVER 65% OF T H E TOTA L PORT FOLIO IS LOCAT ED IN MAD RI D
PRIVATE & CONFIDENTIAL
/ 10 /CASE STUDY: P LAZA CASTI LLA OR IG IN: FOR M ER T ESTA
• Built and managed by Testa Residencial since 1997.
• Total GLA of 20,259 sqm, situated in a privilege
location (Plaza Castilla – Castellana Norte).
- 5 minutes from Chamartin station
- 10 minutes from the airport (direct connection).
• Facilities/services: 24/7 concierge, 24 hours public
parking annexed to the building and high street retail
– mainly F&B- (both owned by Testa).
• Recent capex invested:
- New LED lighting solutions
- Furniture refurbishment implemented
# Units 302
PRIVATE & CONFIDENTIAL
Typologies 1 & 2 bedrooms Castellana 193
Sqm / unit 70
GRI (€m) 3.6
Occupancy (%) 89%
/ 11 /CASE STUDY: MANZANA CASTELLA NA OR IG IN: M ET ROVA C ESA
• Formerly owned by BBVA (Anida), the Asset was
contributed to MVC and subsequently integrated
into Testa Residencial in September 2016.
• Total GLA of 38,872 sqm, situated in one of the most
representative locations in Madrid (Cuzco).
• The asset is surrounded by some of the key locations
in the city: Financial district (Azca), Castellana 200
shopping center, Santiago Bernabéu stadium, etc.
• Facilities: the Asset includes a commercial area of
4,266 sqm, with convenience retail.
# Units 245
PRIVATE & CONFIDENTIAL
Typologies 1, 2 &3 bedrooms
Sqm / unit 158
Doctor Fleming 39
GRI (€m) 2.8
Occupancy (%) 95%
/ 12 /CASE STUDY: ARTURO S O RI A OR IG IN: A C C IONA R EA L ESTAT E
• Owned by Testa Residencial since the integration of
Acciona Real Estate in September 2017.
• The portfolio offers a total GLA of 95,500 sqm and 1,756
parking units, located in one of the most exclusive
residential neighborhoods in Madrid (Arturo Soria /
Parque Conde Orgaz).
• Additionally, the complex has a total commercial area
of 5,309 sqm, which offer a wide range of convenience
services.
• Facilities: All the buildings are equipped with swimming
pools, gyms, padel courts and multi-use rooms.
# Units 1,114
PRIVATE & CONFIDENTIAL
Typologies 1, 2 &3 bedrooms Av. Machupichu 85
Sqm / unit 90
GRI (€m) 12.3
Occupancy (%) 96%
/ 13 /PORTFOL IO OVERVI EW
Key Assets: Focused on the most economically prosperous regions in Spain
Pº Castellana 193 (Madrid) Conde Orgaz (Madrid) Diagonal (Barcelona) Plaza Europa (Barcelona) Las Tablas (Madrid) Mirasierra (Madrid)
PRIVATE & CONFIDENTIAL
Mérida (Barcelona) Sepulveda (Barcelona) Bentaberri (San Sebastián) Moncada (Palma de Mallorca) Benicalp (Valencia) Cortes (Valencia)
/ 14 /You can also read
