LARGER BROADER STRONGER
2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING
Madrid, 15 September 2016
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
LARGER BROADER STRONGER
2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING
Madrid, 15 September 2016
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
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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
the Company and may have not been audited
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
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
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DISCLAIMER
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
ı 4 ı
2 ı 4
Agenda items
ı 5 ı
ı 6 ı
Transaction highlights
INTEGRATION OF METROVACESA: COMPELLING STRATEGIC RATIONALE
Unparalleled footprint
Leadership and European scale
Enhanced
core assets
Tangible embedded upside
ı 7 ı
Transaction highlights
STRUCTURE & TERMS
1 2 3 4Transaction structure
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
ı 8 ı
STRUCTURE & TERMS
1 2 3 4Transaction structure
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%
ı 9 ı
STRUCTURE & TERMS
1 2 3 4Transaction 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%
ı 10 ı
Shares disposal terms
STRUCTURE & TERMS
1 2 3 4Transaction highlights
Governance and Management
esta Residencial management team under the supervision of MERLIN, through a Service Level Agreement (€7.7m annual fee)
Approvals and timing
Other
ı 11 ı
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 2NAV accretive
Highly attractive acquisition capital values
Transaction highlights
ı 12 ı
(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 2APPEALING TRANSACTION FROM A FINANCIAL PERSPECTIVE
Transaction highlights
FFO accretive since year 1
Sound capital structure preserved
ı 14 ı
Key fjgures(1)
Metrovacesa overview
SUPERB PORTFOLIO FIT WITH MERLIN…
1 2GLA
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)
ı 15 ı
Metrovacesa overview
1 2SUPERB PORTFOLIO FIT WITH MERLIN…
Irreplicable high quality portfolio
ı 16 ı
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 20151,835
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 3Diversifjed across MERLIN’s core divisions
ı 17 ı
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 repositioningSignificant upside in rental levels
GRI(2)
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
ı 18 ı
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
ı 19 ı
PRIME PORTFOLIO OF HIGH QUALITY PROPERTIES IN MADRID AND BARCELONA
1 2Metrovacesa 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%
ı 20 ı
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 2PRIME PORTFOLIO OF HIGH QUALITY PROPERTIES IN MADRID AND BARCELONA
ı 21 ı
UNIQUE PORTFOLIO IN STRATEGIC LOCATIONS WITH UPSIDE POTENTIAL
1 2Metrovacesa 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 repositioningı 22 ı
Metrovacesa overview Shopping centers
Dominant malls in prime urban locations Top-tier tenants
1 2UNIQUE PORTFOLIO IN STRATEGIC LOCATIONS WITH UPSIDE POTENTIAL
ı 24 ı
CONTINENTAL EUROPE’S LARGEST DIVERSIFIED COMMERCIAL REIT AND UNDISPUTED SPANISH LEADER
1 2MERLIN post-transaction
(1) Only including commercial real estate players (2) MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015UK 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
ı 25 ı
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 CompanyUndisputed 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
ı 26 ı
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 4MERLIN 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%
ı 27 ı
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 3LARGER, BROADER, STRONGER
4MERLIN post-transaction
ı 28 ı
1 2 3Pro-forma Occupancy and WAULT(1) per asset type
portfolio with shorter WAULTS
shopping centers to benefjt from the Spanish consumer recovery
retail to navigate the cycle
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
4Pro-forma Occupancy and WAULT(1) per asset type (years)
MERLIN post-transaction
ı 29 ı
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
NRI(3)
292
283
124
GRI/NRI ratio
94%
95%
81%
n.a.
90%
FFO(4)(5)
178
172
85
10(6)
267
1 2 3 4MERLIN post-transaction
ı 30 ı
REINFORCED INVESTMENT GRADE CREDIT (BBB / STABLE BY S&P) WITH ENHANCED BUSINESS PROFILE, LOWER LEVERAGE AND IMPROVED FINANCIAL RATIOS
1 2Key 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-16ı 31 ı
1 2Combined debt maturity profjle(1)
(1) Pro-forma to bond issuance in April-16Unsecured 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
ı 32 ı
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
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
MERLIN post-transaction
TANGIBLE EMBEDDED UPSIDE IN METROVACESA’S PORTFOLIO…
ı 33 ı
Management commitment to tighten overheads cap and adjust stock plan
(1) Total shareholders returnSTOCK 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
ı 34 ı
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 2GRI
€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
ı 35 ı
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 2OFFICE LEADERSHIP REINFORCED BY INCREASED CBD PRESENCE AND DIVERSIFICATION
MERLIN post-transaction
ı 36 ı
(1) MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015GLA 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 2GRI
€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
ı 37 ı
1 2…on par with the #1 player
(2) EstimatedDRAMATIC 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
ı 38 ı
4
Transaction rationale
Pro-forma Rented residential KPIs(1)
(1) MERLIN fjgures as of 31 March 2016 and MVC as of 31 December 2015Geographical split
Madrid Pamplona Mallorca Other San Sebastian
63% 12% 5% 4% 16%
# 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 2ı 39 ı
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 2ı 40 ı
3
Agenda items
ı 41 ı
15 reputed and committed members BoD composition
9 INDEPENDENT / 4 PROPRIETARY / 2 EXECUTIVE
Proprietary Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Proprietary Director
Proprietary Director
Non Executive Chairman
Independent Director
Executive Director
Independent Director
Executive Vice-chairman
Remuneration and nomination committee Audit and control committee Independent directors Up for election
Secretary
Vice-secretary
ı 42 ı
1
Agenda items
ı 43 ı
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.
Interim
September 2016
Total
Subject to EGM Sep 2016 approval
(€ 0.157 p.s.)
Final
2017
Subject to AGM 2017 approval Subject to BoD approval
ı 44 ı
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
ı 46 ı
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
ı 47 ı
LARGER BROADER STRONGER
2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING 2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING
Madrid, 15 September 2016