2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING Madrid, 15 - - PowerPoint PPT Presentation

2016 extraordinary general shareholders meeting
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2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING Madrid, 15 - - PowerPoint PPT Presentation

2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING Madrid, 15 September 2016 LARGER BROADER STRONGER DISCLAIMER This presentation has been prepared by Certain statements in this document jurisdictions may also be restricted by law OF IT FORM


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LARGER BROADER STRONGER

2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING

Madrid, 15 September 2016

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This presentation has been prepared by MERLÍN Properties, SOCIMI, S.A. (the Company) for informational use only. The information contained in this presentation does not purport to be comprehensive or to contain all the information that a prospective purchaser of securities of the Company may desire or require in deciding whether or not to purchase such securities, and has not been verifjed by the Company or any other person. The information contained in this document is subject to change without notice. Neither the Company nor any of affjliates, advisors or agents makes any representation or warranty, express or implied, as to the accuracy or completeness of any information contained

  • r referred to in this document. Each of

the Company and its employees, offjcers, directors, advisors, agents or affjliates expressly disclaims any and all liabilities whatsoever (in negligence or otherwise, whether direct or indirect, in contract, tort or otherwise) for any loss howsoever arising from any use of this presentation, the information contained or referred to therein, any errors therein or omissions therefrom

  • r otherwise arising in connection with this
  • presentation. Neither the Company, nor any
  • f its affjliates, advisors or agents undertakes

any obligation to provide the recipients with access to additional information or to update this document or to correct any inaccuracies in the information contained or referred to therein. Certain statements in this document regarding the market and competitive position data may be based on the internal analyses of the Company, which involve certain assumptions and estimates. These internal analyses may have not been verifjed by any independent sources and there can be no assurance that the assumptions or estimates are accurate. Additionally, certain information in this presentation may be based

  • n management accounts and estimates of

the Company and may have not been audited

  • r reviewed by the Company’s auditors,

whereas the information on Metrovacesa S.A. and on certain competitors contained herein is based on publicly available information which has not been verifjed by the Company. Accordingly, recipients should not place undue reliance on this information. This information is provided to the recipients for informational purposes only and recipients must undertake their own investigation of the

  • Company. The information providing herein

is not to be relied upon in substitution for the recipient’s own exercise of independent judgment with regard to the operations, fjnancial condition and prospects of the Company. Neither this presentation nor any copy of it shall be taken, transmitted into, disclosed, diffused, send, published or distributed in the United States, Canada, Australia or Japan. The distribution of this presentation in other jurisdictions may also be restricted by law and persons into whose possession this presentation comes should inform themselves about and observe any such restrictions. In particular, any offer that might result from the transaction herein escribed will not be made, directly or indirectly, in the United States

  • f America, or by use of mails, or by any

means or instrumentality (including, without limitation, facsimile transmission, telephone and internet) of interstate or foreign commerce of, or any facilities of any national securities exchange of, the United States, Canada, Australia or Japan. The securities

  • f the Company have not been and, should

there be an offering, will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act) and, subject to certain exceptions, may not be offered or sold in the United States. The securities of the Company have not been and, should there be an offering, will not be registered under the applicable securities laws of any state or jurisdiction of Canada or Japan and, subject to certain exceptions, may not be offered or sold within Canada or Japan or to or for the benefjt of any national, resident or citizen of Canada or Japan. THIS PRESENTATION DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER FOR SALE OR SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES IN THE UNITED STATES OR IN ANY OTHER JURISDICTION, NOR SHALL IT OR ANY PART OF IT FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT OR COMMITMENT TO SELL OR PURCHASE

  • SHARES. ANY DECISION TO SELL OR

PURCHASE SHARES IN ANY OFFERING SHOULD BE MADE SOLEL Y ON THE BASIS OF PUBLICL Y AVAILABLE INFORMATION. This presentation may include forward- looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause such actual results, performance

  • r achievements, or industry results, to be

materially different from those expressed or implied by these forward-looking statements. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies

  • f the Company and the environment in

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revisions to, any forward-looking statements in this presentation, any change in their expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. In reviewing this presentation, the recipient is agreeing to, and accepting, the foregoing restrictions and limitations.

DISCLAIMER

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2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING

Madrid, 15 September 2016

Integration of Metrovacesa 2 ı 4 Board of directors 3 Distribution to shareholders 1 Timetable and conclusions

Transaction highlights Metrovacesa overview MERLIN post-transaction

Agenda items

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INTEGRATION OF METROVACESA

2 ı 4

Agenda items

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TRANSACTION HIGHLIGHTS

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Transaction highlights

INTEGRATION OF METROVACESA: COMPELLING STRATEGIC RATIONALE

Unparalleled footprint

  • Consolidation of the #1 offjce portfolio
  • Dramatic scale-up in shopping centers, becoming the #2 player in Spain

Leadership and European scale

  • Undisputed Spanish leader
  • One of the largest diversifjed commercial REIT in Continental Europe

Enhanced

  • ptions for non-

core assets

  • Leading Spanish rented residential platform, while deconsolidating from MERLIN
  • Attractiveness and liquidity of the hotel division (#1 net lease hotel operator in Spain)
  • NOL carry forwards

Tangible embedded upside

  • Company poised for compelling short-to-medium term value and FFO growth
  • Management to tighten overheads cap
  • Management to adjust stock plan by reducing participation levels(1)
(1 ) Subject to AGM approval
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Transaction highlights

STRUCTURE & TERMS

1 2 3 4

Transaction structure

  • 1. Pre-transaction “status quo”
  • 2. Full spin-off of MVC in 3 business lines

MVC commercial land MVC commercial real estate MVC rented residential

Contributed to:

Excluded from transaction scope

MVC Shareholders MERLIN commercial real estate MERLIN rented residential JV Residential Company

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STRUCTURE & TERMS

1 2 3 4

Transaction structure

  • 3. Acquisition of MVC’s commercial property in exchange for 146.7 m MERLIN shares

MERLIN Shareholders MVC Shareholders

Shareholders structure

Transaction highlights

MERLIN commercial real estate MVC commercial real estate

BBVA Santander MVC’s minorities Current MERLIN shareholders Popular

21.95% 68.76% 6.41% 2.86% 0.02% 31.24%

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STRUCTURE & TERMS

1 2 3 4

Transaction structure 4. Simultaneous merger of MVC’s rented residential platform into MERLIN’s platform

JV Residential Company MVC Shareholders

Shareholders structure

BBVA Santander MVC’s minorities MERLIN Popular

Service Level Agreement

Transaction highlights 46.21% 34.24% 13.49% 6.01% 0.05%

JV Residential Company

MERLIN rented residential MVC rented residential

65.76%

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Shares disposal terms

  • 180-day initial lock-up for MVC shareholders
  • Orderly sale mechanism
  • 90 days lock-up for future sell-downs for blocks over 1% of TSO
  • MVC shareholders are restricted from “dribbing-out” over 20% the average daily volume

STRUCTURE & TERMS

1 2 3 4

Transaction highlights

Governance and Management

  • Enlargement of MERLIN BoD to refmect new shareholding structure: 15 members (60% independent)
  • MERLIN management team to remain unchanged
  • JV Residential Company: internally managed by the T

esta Residencial management team under the supervision of MERLIN, through a Service Level Agreement (€7.7m annual fee)

Approvals and timing

  • Transaction subject to antitrust approval
  • Transaction subject to approval of MERLIN and MVC shareholders (15 September 2016)
  • Expected closing: Q4 2016

Other

  • Reciprocal €75m break-up fee if transaction not approved by either EGM
  • MERLIN and MVC will distribute to shareholders €66m and €50m, respectively, before transaction closing
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APPEALING TRANSACTION FROM A FINANCIAL PERSPECTIVE

(1)

Based on 31 December 2015 reported NAV of €9.85 per share

(2)

Based on 20 June 2016 close price €9.30 per share

(3)

L3M Volume Weighted Average Price of €9.75 per share

(4)

Selected market transactions comparable to MVC’s assets in each asset class, mostly completed within the last 18 months

(5) Not adjusted for MERLIN NAV increase from implied new shares issuance premium 1 2

NAV accretive

  • Stock for stock transaction: MERLIN new shares issued at €11.40 per share
  • 15.8% premium to NAV(1); 22.6% to unaffected share price(2) and 16.9% to L3M VWAP(3)
  • 5.7% accretive in NAV p.s.(1): combined company pro-forma NAV of €10.41 p.s (vs. €9.85 p.s)
  • MERLIN’s residential portfolio contributed at a 30.1% premium to NAV

Highly attractive acquisition capital values

  • Very attractive acquisition capital values vs. comparable market transactions(4).
  • Offjce: €3,192/sqm(5)
  • Shopping centers: €2,735/sqm(5)
  • Hotels: €115k/room(5)

Transaction highlights

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(1) MERLIN’s FFO based on 2016 market consensus DPS of €0.44 and implied FFO of €0.55 p.s. (2) Based on March 2016 GAV for MERLIN and December 2015 GAV for MVC 1 2

APPEALING TRANSACTION FROM A FINANCIAL PERSPECTIVE

Transaction highlights

FFO accretive since year 1

  • Transaction FFO accretive from day 1
  • 3.4% accretive in FFO p.s. (from €0.55 p.s. to €0.57 p.s.) (1)
  • Assumes MVC’s post-transaction overhead expenses fulfjll MERLIN’s current overhead policy
  • Reconfjrmed commitment to distribution policy of 80% of FFO

Sound capital structure preserved

  • Enhancement of MERLIN’s credit profjle
  • Decrease in LTV from 50.6% to 49.0% post transaction (2)
  • Maintenance of healthy fjnancing ratios within MERLIN’s policy and S&P guidelines
  • Transaction does not trigger an early termination event in MERLIN or MVC’s bank debt / bonds
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METROVACESA OVERVIEW

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Key fjgures(1)

Metrovacesa overview

SUPERB PORTFOLIO FIT WITH MERLIN…

1 2

GLA

1,277,373 sqm

GRI(2)

€152 m

NRI(2)

€124 m

GAV

€3,190 m

OCCUPANCY

81.4%

NET DEBT(3)

€1,539 m

WAULT

2.4 years

GROSS YIELD

4.8%

NAV

€1,673 m

50% 2% 10% 38%

BREAKDOWN BY GRI BREAKDOWN BY GAV

58% 3% 8% 31%

Offjce Shopping Centers Hotels Other(5)

(1)

As of 31 December 2015. Excludes rented residential assets to be contributed to JV Residential Company

(2)

Annualized gross rents / net rents calculated as passing gross rent / net rent as of 31 December 2015, multiplied by 12

(3)

Based on GAV

(4)

Other composed of miscellaneous including logistic assets, retail premises, senior residences, parkings and others. Land excluded from the transaction

Offjce and shopping centers: ~90% of MVC(4)

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Metrovacesa overview

1 2

SUPERB PORTFOLIO FIT WITH MERLIN…

Irreplicable high quality portfolio

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Metrovacesa overview

(1)

Refers to €/room

(2) Other composed of miscellaneous including logistic assets, retail premises, senior residences, parkings and others. Land excluded from the transaction (3) As of 31 December 2015

1,835

Offjce GAV(3) (€ m) GAV(3) (€/sqm) €3,192

1,004

Shopping centers €2,735

256

Hotels €115k(1)

95

Other(2) n.m.

…VERY WELL POSITIONED TO BENEFIT FROM THE RECOVERY CYCLE

1 2 3

Diversifjed across MERLIN’s core divisions

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Metrovacesa overview

(1) Other composed of miscellaneous including logistic assets, retail premises, senior residences, parkings and others. Land excluded from the transaction (2) Annualized gross rents calculated as pro-forma passing gross rent as of 31 December 2015, multiplied by 12. Passing rent as of 31 December 2015 (3) Excluding a shopping center currently under repositioning

Significant upside in rental levels

GRI(2)

  • Passing rent(2) (€/sqm/m)

ERV yield Gross yield

€15m

Hotels 5.9% 4.1%

€76m

Offjce

€58m

Shopping centers 17.4/20.1(3) 5.5

€3m

Other(1) n.m. n.m. 5.8% 6.1% 5.8% 6.8% 14.1

1 2 3

…VERY WELL POSITIONED TO BENEFIT FROM THE RECOVERY CYCLE

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Metrovacesa overview

(1) Other composed of miscellaneous including logistic assets, retail premises, senior residences, parkings and others. Land excluded from the transaction (2) As of 31 December 2015 (3) Excluding a shopping center currently under repositioning (4) Not adjusted for assets under repositioning. If adjusted, average occupancy would be 82.1%

Suboptimal occupancy levels and short WAULT

81.4%

AVERAGE OCCUPANCY(2)(4)

2.4

AVERAGE WAULT(2)

1.8

Offjce 78%

3.8

Hotels 100%

3.3

Other(1) 62%

2.9

Shopping centers 76%/84%(3)

1 2 3

…VERY WELL POSITIONED TO BENEFIT FROM THE RECOVERY CYCLE

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PRIME PORTFOLIO OF HIGH QUALITY PROPERTIES IN MADRID AND BARCELONA

1 2

Metrovacesa overview Offjce portfolio

Located in MERLIN’s core markets

Madrid Barcelona

11% 89%

BREAKDOWN BY MARKET (BY GAV) MVC offjce KPIs(1)

CBD NBA Periphery

48% 18% 34%

BREAKDOWN BY LOCATION (BY GAV)

(1)

As of 31 December 2015

Broad offer spectrum

# ASSETS

37

GAV

€1,835 m

GRI

€76 m

ERV YIELD

5.9%

WAULT

1.8 years

GLA

574,781 sqm

CAPITAL VALUE PSM

€3,192 / sqm

GROSS YIELD

4.1%

PHYSICAL OCCUPANCY

78%

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Metrovacesa overview Offjce portfolio

Large portfolio of prime assets Remarkable footprint in prime CBD, including trophy assets… …complemented by presence in high growth areas in the North of Madrid High quality tenants

1 2

PRIME PORTFOLIO OF HIGH QUALITY PROPERTIES IN MADRID AND BARCELONA

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UNIQUE PORTFOLIO IN STRATEGIC LOCATIONS WITH UPSIDE POTENTIAL

1 2

Metrovacesa overview Shopping centers

Footprint in high GDP / capita regions

GRI

€58 m

GROSS YIELD

5.8%

GAV

€1,004 m

CAPITAL VALUE PSM

€2,735 / sqm

# ASSETS

14

GLA

367,090 sqm

ERV YIELD

6.8%

PHYSICAL OCCUPANCY

76% / 84%(2)

WAULT

2.9 years

2015 FOOTFALL

49 m

MVC Shopping centers KPIs(1)

(1)

As of 31 December 2015

(2) Excluding a shopping center currently under repositioning
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Metrovacesa overview Shopping centers

Dominant malls in prime urban locations Top-tier tenants

1 2

UNIQUE PORTFOLIO IN STRATEGIC LOCATIONS WITH UPSIDE POTENTIAL

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MERLIN POST- TRANSACTION

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CONTINENTAL EUROPE’S LARGEST DIVERSIFIED COMMERCIAL REIT AND UNDISPUTED SPANISH LEADER

1 2

MERLIN post-transaction

(1) Only including commercial real estate players (2) MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015

UK players Continental European players

Europe’s largest diversifjed pure commercial REIT(1)

37.8 22.1 18.7 18.5 12.3 11.6 11.0 9.3 9.2 9.1 By GAV(2) (€ billion)

Commercial diversifjed Shopping centers Offjce pure play Offjce pure play Commercial and residential Shopping centers Player type: Shopping centers Shopping centers UK diversifjed UK diversifjed

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1 2 (1) MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015 (2)

Includes JV Residential Company contribution at proportional NAV. Includes non-material Paris assets from MVC

(3) Annualized gross rents calculated as passing gross rent as of March 31 2016, multiplied by 12 (4) Includes income from minority stake in JV Residential Company

Undisputed leader in the Spanish real estate market across all asset classes

By GAV(1) (€ billion) By GRI(1) (3) (€ million) 9.3(2) 2.1 1.5 1.0 0.9 6.9 483(4) 62 105 46 40 231 Spanish Non-Spanish

CONTINENTAL EUROPE’S LARGEST DIVERSIFIED COMMERCIAL REIT AND UNDISPUTED SPANISH LEADER

MERLIN post-transaction

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LARGER, BROADER, STRONGER

Breakdown by asset class(1) MERLIN pre-transaction MERLIN post-transaction MERLIN pro forma (Excluding non-core)

(1)

MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015

(2)

Other includes land and projects under development (3.6%), minority stakes (2.2%) and other miscellaneous assets

(3) Corresponds to MERLIN’s 34% minority stake in JV Residential Company NAV (4) Total portfolio GAV (Including land and development GAV) (5) Including current WIP at total expected investment value and SLP 1 2 3 4

MERLIN post-transaction

Office High street retail Shopping centers Logistics Hotels Rented residential Other

37% 31%

€6.2 Bn(4)

11% 6% 5% 4% 6%(2)

€9.3 Bn(4)

44% 21% 18% 7% 3% 2%(3) 5%(2) 22%

€8.7 Bn

19% 9%(5) 48% 2%

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Pro-forma EPRA gross yield per asset type(1)(2)

5.3%

AVERAGE GROSS YIELD

Office High street retail Shopping centers Logistics Hotels

4.7% 5.1% 5.8% 6.9% 5.8%

(1)

MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015

(2)

Gross yield is calculated dividing annualized gross monthly rents by GAV

1 2 3

LARGER, BROADER, STRONGER

4

MERLIN post-transaction

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1 2 3

Pro-forma Occupancy and WAULT(1) per asset type

  • #1 irreplicable offjce

portfolio with shorter WAULTS

  • Dramatic scale-up in

shopping centers to benefjt from the Spanish consumer recovery

  • Resilient high street

retail to navigate the cycle

  • Leading logistic

platform

3.3

84.0% Office

20.5

100.0% High street retail

2.9

81.0% Shopping centers

4.1

93.5% Logistics

3.8

100.0% Hotels

89.7%

AVERAGE OCCUPANCY

7.1

AVERAGE WAULT

(1)

MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015

LARGER, BROADER, STRONGER

4

Pro-forma Occupancy and WAULT(1) per asset type (years)

MERLIN post-transaction

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LARGER, BROADER, STRONGER

Pro-forma combined fjnancial metrics

(1)

MERLIN pre-transaction includes rented residential. MVC excluding rented residential

(2)

Including minority stakes

(3)

Annualized gross rents / net rents calculated as passing gross rent / net rent as of 31 March 2016, multiplied by 12 for MERLIN and pro-forma passing gross rent /net rent as of 31 December 2015 for MVC

(4)

For MERLIN based on 2016E broker consensus

(5)

Assumes (i) MVC’s post-transaction overhead expenses fulfjll MERLIN’s current overhead policy and (ii) current MVC cost of fjnancing

(6)

Includes revenues from residential Service Level Agreement and attributable FFO from JV Residential Company

€ m MERLIN(1) (Dec-15) MERLIN ex. residential Metrovacesa(1) Impact from JV Residential Company MERLIN Post-transaction

GAV(2)

6,053

5,764

3,190

211

9,166

NAV(2)

3,181

3,005

1,673

211

4,890

GRI(3)

310

298

152

  • 450

NRI(3)

292

283

124

  • 407

GRI/NRI ratio

94%

95%

81%

n.a.

90%

FFO(4)(5)

178

172

85

10(6)

267

1 2 3 4

MERLIN post-transaction

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REINFORCED INVESTMENT GRADE CREDIT (BBB / STABLE BY S&P) WITH ENHANCED BUSINESS PROFILE, LOWER LEVERAGE AND IMPROVED FINANCIAL RATIOS

1 2

Key metrics (as of Mar-16)

Policy MERLIN pre-transaction(1) MERLIN post-transaction

Gross debt

€3,271 m €4,730 m

Net debt

€3,138 m €4,565 m

Undrawn revolving facilities

320 420

Avg interest rate

2.3% 2.2%

LTV

<50% 50.6% 49.0%

ICR

>2.5x 3.5x 3.5x

Average maturity

7.0 years 6.2 years

Unsecured debt

>50% 59% 69%

Fixed rate debt

>60% 87% 82%

MERLIN post-transaction

(1) Pro-forma to bond issuance in April-16
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1 2

Combined debt maturity profjle(1)

(1) Pro-forma to bond issuance in April-16

Unsecured bank debt Unsecured bonds Secured loans & other

15 22

2016 2017

637 137 17 86 500

2018 2019 2020

1,303 83 721 21 1,220 700

2021 2022

1,013 914 64 850

2023 2024

Combined debt breakdown

36% 33%

24% 3% 4%

REINFORCED INVESTMENT GRADE CREDIT (BBB / SATBLE BY S&P) WITH ENHANCED BUSINESS PROFILE, LOWER LEVERAGE AND IMPROVED FINANCIAL RATIOS

Mortgage loans - bank Mortgage loans - non bank Leasings

Authorization to issue up to €2,700m of debt obligations to manage balance sheet effjciently (€1,500m approved in AGM 2016 +€1,200m to account for MVC)

4

MERLIN post-transaction

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Signifjcant upside in MVC’s recurrent FFO

(1) MERLIN’s FFO based on 2016 Bloomberg consensus of €0.55 p.s. (€178 m) adjusted for the deconsolidation of residential activity (-€6 m) and for the impact of the JV Residential Company(+€10 m)

Commitment to tighter

  • verheads cap

2

MVC reaches MERLIN's 95% occupancy

20

MVC reaches MERLIN's NRI/GRI ratio

21

MVC at ERV rents

19

328

Pro-forma FFO including MVC upsides Pro-forma transaction FFO(1)

267

85 182 182 146

(€ million)

MERLIN FFO MVC FFO

  • Succesful integration of Testa in record time
  • MERLIN Management has proved to have the experience and skills to execute a smooth integration
  • Solid track record implementing asset management plans and crystallizing synergies

MERLIN post-transaction

TANGIBLE EMBEDDED UPSIDE IN METROVACESA’S PORTFOLIO…

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Management commitment to tighten overheads cap and adjust stock plan

(1) Total shareholders return

STOCK MANAGEMENT PLAN OVERHEADS CAP POST-TRANSACTION

OF GRI

6%

OF GRI

5.75%

OF GRI

5.5%

OF TSR(1)

10%

OF TSR

6%

OF TSR

15%

OF TSR

9%

OF NAV

0.6%

OF NAV

0.575%

OF NAV

0.55%

HURDLE 8% ABOVE HURDLE 12% ABOVE GREATER OF

PRE-TRANSACTION

2018-2019 2020 ONWARDS

MERLIN post-transaction

OVERHEAD TIGHTENED AND REDUCED STOCK PLAN

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Enlarged presence in Madrid and Barcelona CBD(2)

MERLIN pre-transaction MERLIN post-transaction

202 1.7x 340

161 277

Madrid CBD Barcelona CBD

63 41

(1)

MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015

(2)

Madrid CBD includes inside M-30. Barcelona CBD includes inside Ronda de Dalt and on the east, the beginning of 22@

MERLIN post-transaction offjce KPIs(1)

OFFICE LEADERSHIP REINFORCED BY INCREASED CBD PRESENCE AND DIVERSIFICATION

1 2

GRI

€193 m

GROSS YIELD

4.7%

GAV

€4,104 m

CAPITAL VALUE PSM

€3,539/sqm

# ASSETS

84

GLA

1,159,750 sqm

PHYSICAL OCCUPANCY

84%

WAULT

3.3 years

GLA Evolution (‘000 sqm)

MERLIN post-transaction

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Portfolio breakdown

(1)

Only includes assets located in Madrid and Barcelona

Madrid Barcelona Other

83% 13% 4%

BY CITY (GAV)

CBD New business areas New business areas Periphery

42% 47% 11%

BY LOCATION(1) (GAV)

Multi-tenant tenant Single-tenant

71% 29%

BY PRODUCT (GLA)

1 2

OFFICE LEADERSHIP REINFORCED BY INCREASED CBD PRESENCE AND DIVERSIFICATION

MERLIN post-transaction

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(1) MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015

GLA Evolution (‘000 sqm)

164 3.2x 531

MERLIN pre-transaction MERLIN post-transaction #assets

6 20

Signifjcant upgrade in scale… MERLIN post-transaction shopping centers KPIs(1)

DRAMATIC SCALE-UP IN SHOPPING CENTERS, BECOMING #2 PLAYER IN SPAIN

1 2

GRI

€96 m

# ASSETS

20

GLA

531,165 sqm

GAV

€1,677 m

CAPITAL VALUE PSM

€3,138/sqm

GROSS YIELD

5.8%

PHYSICAL OCCUPANCY

81%/87%(3)

WAULT

2.9 years

FOOTFALL (2015)

98 m

MERLIN post-transaction

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1 2

…on par with the #1 player

(2) Estimated

DRAMATIC SCALE-UP IN SHOPPING CENTERS, BECOMING #2 PLAYER IN SPAIN

Player Owned GLA (sqm) 1 Unibail-Rodamco

570k sqm

2 MERLIN

531k sqm

3 Klepierre

359k sqm

4 CBRE GI

~ 325k sqm(2)

5 LAR

312k sqm

Ranking of Spanish shopping center players

MERLIN post-transaction

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4

Transaction rationale

Pro-forma Rented residential KPIs(1)

(1) MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015

Geographical split

Madrid Pamplona Mallorca Other San Sebastian

63% 12% 5% 4% 16%

  • JV Residential Company to adopt SOCIMI status immediately and list within the next 2 years

# UNITS

4,706

GRI

€35 m

# ASSETS

47

GROSS YIELD

3.5%

GAV

€980 m

OCCUPANCY

92%

NET DEBT

€361 m

LTV

37%

NAV

€619 m

ENHANCED OPTIONS FOR NON-CORE BUSINESSES

1 2
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Pro-forma Hotels KPIs(1)

(1) MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015

# ROOMS

4,495

GRI

€38 m

GAV

€654 m

# ASSETS

24

WAULT

3.8 years

GROSS YIELD

5.8%

ERV YIELD

6.0%

GAV PER ROOM

€154k

OCCUPANCY

100%

Hotels GAV evolution

MERLIN pre-transaction

398 1.6x 12

MERLIN post-transaction

654 24

GLA Evolution (€ million) #assets

MERLIN post-transaction

ENHANCED OPTIONS FOR NON-CORE BUSINESSES

1 2
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BOARD OF DIRECTORS COMPOSITION

3

Agenda items

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ı 41 ı

15 reputed and committed members BoD composition

9 INDEPENDENT / 4 PROPRIETARY / 2 EXECUTIVE

  • Ms. Francisca Ortega

Proprietary Director

  • Ms. Ana de Pro

Independent Director

  • Mr. John Gómez-Hall

Independent Director

  • Mr. Donald Johnston

Independent Director

  • Mr. Fernando Ortiz

Independent Director

  • Mr. Alfredo Fernández

Independent Director

  • Ms. Ana García Fau

Independent Director

  • Ms. María Luisa Jordá

Independent Director

  • Mr. Javier García-Carranza

Proprietary Director

  • Mr. Agustín Vidal-Aragón

Proprietary Director

  • Mr. Rodrigo Echenique

Non Executive Chairman

  • Mr. Juan María Aguirre

Independent Director

  • Mr. Miguel Ollero

Executive Director

  • Ms. Pilar Cavero

Independent Director

  • Mr. Ismael Clemente

Executive Vice-chairman

Remuneration and nomination committee Audit and control committee Independent directors Up for election

  • Ms. Mónica Martín de Vidales

Secretary

  • Mr. Ildefonso Polo del Mármol

Vice-secretary

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1

Agenda items

DISTRIBUTION TO SHAREHOLDERS

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MINIMUM OF € 140 M (€ 0.36 + PER SHARE) AGAINST FY 2016 RESULTS: ALL CASH & PAYMENT IN TWO INSTALMENTS

Distributions Shareholder Distribution guidance on 2016 results

(€ 0.205 p.s.) (€ 0.362 p.s.)

€ 0.02 p.s. € 0.185 p.s.

€ 66m € 140m

Interim

September 2016

Total

Subject to EGM Sep 2016 approval

(€ 0.157 p.s.)

€ 74m

Final

2017

Subject to AGM 2017 approval Subject to BoD approval

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ı 44 ı

TIMETABLE AND CONCLUSIONS

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ı 45 ı

Timetable and conclusions

TIMETABLE

21 June 2016 Late July 2016 Q3 2016 September 2016 Transaction announcement Independent Expert report MERLIN and Metrovacesa General Shareholders’ Meeting Closing of the transaction Antitrust approval Q4 2016

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Timetable and conclusions

LARGER, BROADER, STRONGER

Enhanced scale and capital markets profjle Sound capital structure preserved Appealing fjnancial terms Irreplicable, diversifjed and balanced resulting portfolio Optionality for MERLIN’s non-core assets Tangible embedded upside in Metrovacesa A perfect industrial fjt

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LARGER BROADER STRONGER

2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING 2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING

Madrid, 15 September 2016