Madrid, 7 May 2018
2018 ANNUAL GENERAL SHAREHOLDERS MEETING Madrid, 7 May 2018 - - PowerPoint PPT Presentation
2018 ANNUAL GENERAL SHAREHOLDERS MEETING Madrid, 7 May 2018 - - PowerPoint PPT Presentation
2018 ANNUAL GENERAL SHAREHOLDERS MEETING Madrid, 7 May 2018 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-
This presentation has been prepared by MERLIN 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. The information contained in this document is subject to change, verifjcation and completion 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
- f any information contained or referred to
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- auditors. Recipients should not place undue
reliance on this information. The fjnancial information included herein may have not been reviewed for accuracy or completeness and, as such, should not be relied upon. 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
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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 NOR SHALL IT OR ANY PART OF IT FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT OR COMMITMENT TO PURCHASE SHARES. ANY DECISION TO PURCHASE SHARES IN ANY OFFERING SHOULD BE MADE SOLEL Y ON THE BASIS OF PUBLICLY AVAILABLE INFORMATION ON THE COMPANY . This presentation may include forward- looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the fjnancial position, business strategy, management plans and objectives for future operations of the Company are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and
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DISCLAIMER
2
Financial results 2017 1 ı 2 ı 3 ı 4 Portfolio performance 1 ı 2 ı 3 ı 4 Board of Directors composition 5 Capital and debt events 6 ı 7 ı 8 ı 9 Remuneration report 12 Future outlook
Agenda items
2017 Highlights | Financial and business performance
- +2.0% FFO per share YoY, equivalent to +11.9% LfL growth, after overcoming
€ 0.06 per share due to the disposal of hotels in 2016
- +18.0% EPRA NAV YoY, capturing the value created across the portfolio
- DPS € 0.46, exceeding February 2017 guidance (€ 0.44)
- Outstanding 21.6% total shareholder return
- Capital structure: reduce leverage and limited exposure to future interest rate hikes
Financial performance
- Excellent performance in offjce, shopping centers and logistics, with positive
LfL growth and release spread across the board
- Occupancy growing at a steady pace in offjces and shopping centers and
accelerated in logistics
Business performance
- Substantial value creation from WIP and refurbished assets delivered in the period
- Development and refurbishment plan being executed on target
Value creation
4
13.65
EPRA NAV+DPS 2017
11.23
EPRA NAV Dec-16
0.40
DPS 2017 EPRA NAV Dec-17
13.25
NAV growth 2017
2.02
TSR + 21.6%
(€ per share)
2017 Highlights | Total shareholders return (TSR) EXCELLENT RETURN TO SHAREHOLDERS IN 2017
Source: Company and Bloomberg
Share revaluation in 2017 +9.4% Revaluation + dividend per share in 2017 +13.3%
5
€ 0.20
October 2017(1)
€ 0.26
AGM May 2018(1)
€ 0.46
Total
COMPLEMENTARY DIVIDEND PER SHARE(2) TOTAL PER SHARE
TOTAL FY 17 DIVIDEND € 216M
INTERIM DIVIDEND PER SHARE(1)
2017 Highlights | Proposed 2017 dividend TOTAL DISTRIBUTION OF € 216M FY 2017, € 29M AHEAD OF FEBRUARY GUIDANCE (+4.3%)
Source: Company
(1) Dividend holders are 469.7m shares (2) Subject to AGM approval6
1 ı 2 ı 3 ı 4
Agenda items
FINANCIAL RESULTS 2017
Financial results 2017 | Key metrics +11.9%(1) INCREASE IN FFO PER SHARE AND +18% IN NAV PER SHARE
Recurring FFO
289.2 +11.9%(1)
Recurring AFFO
0.58
Recurring AFFO(2)
270.9
EPRA NAV
13.25
EPRA NAV
6,224.7 +18.0%
Per share vs 2016 € per share € million
+47.1%
IFRS net profjt
1,100.4
IFRS net profjt
2.34
(1)Pro-forma YoY after overcoming € 0.05 net per share between 2016 sales and 2017 acquisitions
(2)Recurring FFO less recurring investments in the portfolio
Recurring FFO
0.62 +11.7%(1)
8
Financial results 2017 | Bridge gross rents OFFICE AND SHOPPING CENTERS SHOWING ROBUST UPWARDS TREND, ACCELERATED GROWTH IN LOGISTICS
(1)Portfolio in operation in 2016 (€ 257.6m GRI) and in 2017 (€ 264.7m GRI)
(2)Vestas, Endesa-Sevilla, UPS and Logista
(€m)
2016
351.0
2017
469.4
Like-for-Like growth
+7.0
LfL(1) +2.7%
Offices +2.9% Shopping centers +3.6% Logistics +8.4% High Street retail +0.9% Other +7.2%
Balance acquisitions, disposals and other
+111.4
Mainly Metrovacesa and Adequa
9
0.62
FY 2017
0.60
FY 2016
0.07
Growth 2017
0.55
Disposals 2016 Acquisitions 2017
(0.06) 0.01
+ 11.9%
(€ per share)
FY 2016 net
- f disposals
and acquisitions
MEANINGFUL FFO GROWTH OVERCOMING CASH FLOW LOST DUE TO 2016 DISPOSALS Financial results 2017 | Bridge FFO
Hotels disposal
10
Financial results 2017 | Assets valuation summary
Average MERLIN(2)
10.5%
Offices
+13.2%
Shopping centers
+7.3%
Logistics
+17.5%
High street retail
+6.4% 866 5,219 1,753 2,348 648 11,254 421
Other(1) Offices Shopping centers High street retail Logistics Total Minority stakes
Source: Company
(1) Other includes logistics WIP developments, hotels, land under development, non-core land and miscellaneous (2) Including minority stakes and other assetsGAV (€ million) Like-for-Like GAV evolution
APPRAISALS PROGRESSIVELY REFLECTING IMPROVEMENTS IN THE QUALITY AND OCCUPANCY OF OUR PORTFOLIO AS WELL AS PREVAILING MARKET YIELDS, UNDERPINNED BY RECENT TRANSACTIONS PROVIDING GOOD BENCHMARKS
11
Financial results 2017 | Financial debt breakdown
(€ million)
(509)(1)
Cash
4,904
Total net debt
% Over Gross Debt Average Cost (%)
vs 2.3% en 2016
% Hedged
874
Unsecured bank loans
16.1% 2.0% 96.7%
1,166
Secured loans
21.5% 2.7% 99.4%
3,250
Unsecured bonds
60.0% 2.1% 100.0%
124
Leasings
2.3% 3.1% 67.6% vs 88.7% en 2016
Total gross debt
5,413
100.0% 2.2% 99.6%
REDUCTION OF COST OF DEBT AND LIMITED EXPOSURE TO INTEREST RATE HIKES
Source: Company
(1) Cash balance includes cash avaliable at 31/12/2017 (€ 457.4m) and net receivables from the sale of hotels(€ 50,8m)12
Unsecured loans Secured loans Leasing Unsecured bonds
5 9 124
2018
27 14
2019
2 83
2020
840 138 41 85 856 719 869 838 758 1,110 16
2021
700 19
2022
850 19
2023
838
2024
600 158
2025
1,100 10
+2026
Average maturity
6.1 years
Financial results 2017 | Debt schedule and metrics
Source: Company
Liquidity position
€ 929m
Average maturity
6.1 years
LTV
43.6%
Unsecured debt
78.5%
FURTHER LEVERAGE REDUCTION AND MATURITY PROFILE OPTIMIZED
13
1 ı 2 ı 3 ı 4
Agenda items
PORTFOLIO PERFORMANCE
Portfolio performance | Breakdown INCREASE OF LOGISTICS WEIGHT
Source: Company 2017 includes offjces and logistics development
(1) Other includes hotels, non-core land and others47% 23% 20% 7% 3%(1) 46% 20% 18% 13% 3%(1)
Offices Logistics High street retail Shopping centers Other
GRI 2016 GRI 2017 (PRO-FORMA)
15
89.4%
Occupancy 31/12/17 WAULT(1)
3.1 2.7 1.4 88.2% 76.7%
Offices Shopping centers(2)
6.7 years
Average MERLIN
92.6%
(91.3% in 2016)
3.7 98.5%
Logistics
19.3 99.4%
High Street retail Other
Portfolio performance | Occupancy and WAULT INCREASE IN OCCUPANCY WITH STABLE LEASE MATURITY PROFILE
Source: Company
(1) WAULT weighted by the gross rent, calculated as the average period until the lease contract expiration, as from 31 December 2017 (2) Excluding Opción SC16
LfL rent growth 17vs16(1) sqm contracted Release spread(2) #contracts Occupancy 31/12/17 Occupancy YoY (bps)
Offices
+2.9% 456,921 +3.4% 237 88.2% +28
Shopping centers
+3.6% 108,411 +4.7% 166 89.4% +78
High Street retail
+0.9%
- 99.4%
(59)
Logistics
+8.4% 284,667 +13.4% 13 98.5% +315
Other
+7.2%
- 76.7%
+20
TOTAL +2.7% 849,999 416 92.6% +132
Portfolio performance | Business performance in 2017 GOOD TRADING PERFORMANCE ACROSS THE BOARD
(1)Assets in operation in 2016 as well as 2017 according to EPRA standards. Offjce portfolio comparable as being in operation in 2016 (€ 97.0m) and 2017 (€ 99.8m). Shopping centers portfolio comparable as being in operation in 2016 (€ 39.1m) and 2017 (€ 40.5m). Logistics portfolio comparable as being in operation in 2016 (€ 15.8m) and 2017 (€ 17.1m).
(2) Variation in the nominal rent in renewals and relets occurred in the entire portfolio in 201717
Portfolio performance | Projects delivered in 2017
Puerta de las Naciones 3
+18%
Eucalipto 33
+15%
- Avda. Europa
1A
+34%
Juan Esplandiu
+24%
Offjce
Thader
+44%
Shopping Centers
Zal Port
+42%
Testa Residencial
+18%
Minority stakes
Madrid-Meco II
+56%
Madrid-Pinto
+27%
Cabanillas Park I
+33%
Logistics
STRONG REVALUATION IN THE ASSETS REFURBISHED OR DEVELOPED IN 2017
18
BOARD OF DIRECTORS COMPOSITION
5
Agenda items
BoD composition | BoD / Audit &Control / Remuneration & Nomination BOARD REDUCED TO 12 MEMBERS: 8 INDEPENDENT / 2 PROPRIETARY / 2 EXECUTIVE
Mónica Martín de Vidales Secretary Ildefonso Polo del Mármol Vice-Secretary Javier García-Carranza Non-Executive Chairman Ismael Clemente CEO & Executive Vice-Chairman Miguel Ollero Francisca Ortega María Luisa Jordá Ana García Fau Fernando Ortiz Chairman A&R Committee Donald Johnston John Gómez Hall Juan María Aguirre Chairman A&C Committee Pilar Cavero Emilio Novela
Appointments and Remuneration Committee Audit and Control Committee Independent Directors Executive Director Proprietary Director
20
CAPITAL & DEBT EVENTS
6 ı 7 ı 8 ı 9
Agenda items
Capital & debt events | Proposal to shareholders STANDARD AUTORIZATIONS TO MANAGE BALANCE SHEET EFFICIENTLY
#6
Equity
Delegation to the Board (5 years) of the power to increase capital up to:
- 50% of current capital, with rights
- 20% of current capital, without rights
Delegation to the Board (5 years) to issue up to € 1bn of convertible debt
- bligations
#8
Convertibles
Delegation to the Board (5 years) of the power to issue up to € 5bn
- f bonds and € 500m of commercial paper
#9
Debt
Treasury stock up to 10% of current capital
#7
Treasuty stock
22
REMUNERATION REPORT
12
Agenda items
Comp 1 Comp 3 Comp 4 Comp 5 Comp 6 Comp 7 Comp 8 Comp 9 Comp 10
AVERAGE European peers
Comp 2
70
56 27 23 22 21 20 19 18 10
25
43
Remuneration report | Productivity HIGHEST GAV/EMPLOYEE RATIO IN EUROPE
Source: Companies reported fjnancial statements
(€ million)
24
Remuneration report | Effjciency
OVERHEADS AND LONG TERM INCENTIVES AS A % OF NAV MERLIN 2017
1.0%
0.4%
LTIP
0.6%
Overheads & salaries
European peers 2017(1)
1.5%
0.3%
LTIP
1.2%
Overheads & salaries
Source: Company
(1) Colonial, Axiare, Hispania, Lar España, Klapierre, Unibail Rodamco, British Land, Gecina, Land Securities, Foncière des Régions, Hammerson, Icade, Segro e IntuLOWEST COST BASE IN SPAIN AND ONE OF THE LOWEST IN EUROPE
25
Remuneration report | Equality
MERLIN IBEX-35 €52,405 Total Variable Fixed Total
Average compensation per employee (ex- 2 Executive Directors) Lead executive pay / Average pay
Highest average compensation in IBEX-35 Lowest salary discrimination in IBEX-35 LTIP applied to 25% of staff Variable remuneration represents 53% of compensation All employees receive a cash bonus
Source: Towers Watson (ex-LTIP) and Company
€67,866 €60,568 €128,434 19x 117x MERLIN IBEX-35
26
Remuneration report | Numerical test by ISS
Alignment between MERLIN’s performance and pay vs comparables MERLIN has achieved average score in the multiple over median analysis due to the inclusion by ISS of two non-comparable companies. If excluded the score would have been High Multiple MERLIN’s pay over median pay of comparables Score: Average
A B
Performance Pay
100% 50% 0% 0% 50% 100%
High Average Low
Score ISS multiple 2.9x 4.0x
Score: High
MERLIN MERLIN 2017
(2.7x) 3.0x
MERLIN 2016
4.3x
27
Remuneration report | Non-numerical test by ISS ISS non-numerical test is based upon a matrix with 17 items scored by ISS with a “tick the mark” approach. These items are: disclosure, individual and global caps, dilution of share plans, alignment between pay and performance, long-term orientation and a generic item called “Other” MERLIN has obtained a “Good tick” in 16 out of 17 items (11 out of 17 in 2016) ISS has recommended voting against in the “Other” chapter due to the potential maximum pay opportunity for executive directors in case of outstanding performance We think that ISS focuses their analysis on the individual compensation of executive directors but does not factor the overall compensation of a given company or its effjciency ratio ISS approach ranks better companies with executives paid below average but leading low effjcient companies instead of companies with well paid executives leading highly effjcient companies ISS misses perks in their analysis, namely personal expenses of executive directors that are accounted for as overheads instead of salaries. No perks exist in MERLIN
28
OUTLOOK 2018
Future outlook | Our forecast for 2018
Offjce
- Growth in employment drives up occupancy and rents
- Strong lease-up activity maintaining incentives at bay
- Implementation of Landmark Plan I
- Growth in private consumption underpins footfall and retail sales
- Growth in occupancy is expected
- Implementation of Flagship Plan, with the imminent delivery of Arturo Soria, start of works
in Larios and substantial progress in the works for X-Madrid
Shopping centers
- Spain expected to be one of the countries where on-line sales will grow the most
- Prices on new contracts and release spreads expected to continue increasing
- Best Plan II: rapid implementation to accommodate a rapidly growing demand
Logistics
- Future investments focused in expanding footprint in Portugal: target to become a leading
- ffjce and logistics player combined with gaining presence in prime retail
- Divestment activity will resume in 2018: Testa Residencial, Aedas Homes and non-core
- Higher critical mass will translate into lower overheads expense which will be reduced from
0.6% of NAV to 0.575% for 2018 and 2019 (0.55% from 2020 onwards)
- Prudent management of balance sheet to continue reducing leverage
Corporate
30
DIVIDEND GUIDANCE CALCULATED ON THE BASIS OF 80% OF AFFO + GAINS FROM ASSETS DISPOSALS October 2018
€ 0.20
AGM 2019
€ 0.30
INTERIM FINAL(1)
Total
€ 0.50
TOTAL
Payment in two instalments in cash
MANAGEMENT GUIDANCE FOR DISTRIBUTION FY 2018: MINIMUM OF € 235M (€ 0.50 PER SHARE) (+9% VS 2017)
Outlook 2018 | Shareholders remuneration guidance 2018
Source: Company
(1) Following approval by AGM of 2018 accounts31
Future outlook | Landmark Plan I
Investment
€ 250 million
Delivery Torre Chamartín Start of works Adequa
Plan
Upscaling refurbishments Prime locations Quick growth in rents and valuation
2018
Monumental
2020
Diagonal 605 Plaza Ruíz Picasso Marqués de Pombal 3
2019
Alcalá 40
2021
Alfonso XI
Assets
Torre Glòries Castellana 85
New developments
32
Future outlook | Landmark Plan I
Torre Glòries
One of the most iconic buildings in Barcelona Reconversion into multitenancy Creation of a unique observatory in Barcelona
33
Future outlook | Landmark Plan I
Torre Glòries
G.L.A. 37,614 sqm Investment € 15 million
34
Future outlook | Landmark Plan I
Monumental
Full reburbishment to create the best building in prime CBD Lisbon Façade | Lobby | Common areas Elevators | Installations | Retail area
35
Future outlook | Landmark Plan I
Monumental
G.L.A. 16,892 sqm Investment € 23 million
36
Future outlook | Landmark Plan I
Diagonal 605
Full reburbishment Façade | Lobby | Common areas | Installations Diagonal access | Flagship unit
37
Future outlook | Landmark Plan I
Diagonal 605
G.L.A. 14,795 sqm Investment € 8 million
38
Future outlook | Landmark Plan I
Marqués de Pombal 3
Reburbishment of lobby and common areas Creation of a new outdoor area
39
Future outlook | Landmark Plan I
Marqués de Pombal 3
G.L.A. 12,460 sqm Investment € 3 million
40
Future outlook | Landmark Plan I
Castellana 85
Full reburbishment Façade | Lobby | Common areas | Installations
41
Future outlook | Landmark Plan I
Castellana 85
G.L.A. 15,254 sqm Investment € 25 million
42
Future outlook | Landmark Plan I
Plaza Ruíz Picasso
Full reburbishment to create the building with the largest floorplants and highest specifications in Azca
43
Future outlook | Landmark Plan I
Plaza Ruíz Picasso
G.L.A. 31,576 sqm Investment € 30 million
44
Future outlook | Landmark Plan I
Alcalá 40
Full reburbishment and creation of ground floor + mezzanine area for flagship store
45
Future outlook | Landmark Plan I
Alcalá 40
G.L.A. 9,315 sqm Investment € 12 million
46
Future outlook | Landmark Plan I
Alfonso XI
Full reburbishment Façade | Lobby relocation | Common areas Installations | Outdoor garden
47
Future outlook | Landmark Plan I
Alfonso XI
G.L.A. 9,945 sqm Investment € 10 million
48
Torre Chamartín
Future outlook | Developments
Strategic location between the M-30 and M-11 Excellent vilisibility and accesses LEED Platinum building
49
Torre Chamartín
Future outlook | Developments
G.L.A. 17,733 sqm Investment € 31 million
50
Future outlook | Developments
Adequa
PHASE I PHASE II Integrated complex | Demolition of physical barriers Parking | Services building Development of tower + building
51
Future outlook | Developments
Adequa
PHASE I G.L.A. 75,928 sqm PHASE II G.L.A. 44,886 sqm Investment € 10 million Investment € 60 million
52
Future outlook | Plan Flagship
Investment
€ 120 million
Assets Plan
Refurbishment of shopping centers Convert our shopping centers in the fmagship store of online retail
- Create experience
- Implement technology
- Convergence of online
and physical sales
2018
Arturo Soria Plaza Artea
2021 2020
Porto Pi
2019
Larios El Saler Tres Aguas
Start of works X-Madrid
New developments
53
Future outlook | Flagship Plan
Arturo Soria
Deep renovation Façade | Common areas | Terraces | Parking
54
Future outlook | Flagship Plan
Arturo Soria
G.L.A. 6,959 sqm Investment € 5 million
55
Future outlook | Flagship Plan
Larios
Full refurbishment Façade | Common areas | Vertical communication Convert part of supermarket into fashion | Reconversion of cinemas into F&B
56
Future outlook | Flagship Plan
Larios
G.L.A. 45,076 sqm Investment € 21 million
57
Future outlook | Flagship Plan
El Saler
PHASE I Accesses from parking completed PHASE II Common areas PHASE III Façade + extension (2,700 sqm) Full refurbishment in 3 phases
58
Future outlook | Flagship Plan
El Saler
G.L.A. 47,013 sqm Investment € 15 million
59
Future outlook | Flagship Plan
Tres Aguas
Full refurbishment Façade | Common areas | Terraces
60
Future outlook | Flagship Plan
Tres Aguas
G.L.A. 67,009 sqm Investment € 20 million
61
Future outlook | Flagship Plan
Porto Pi
Full refurbishment Façade | Common areas Vertical communication | Terraces
62
Future outlook | Flagship Plan
Porto Pi
G.L.A. 58,779 sqm Investment € 16 million
63
Future outlook | Developments
X-Madrid
Creation of a unique and groundbreaking concept Shopping center focused on experiences and cutting edge retailers Diving | Surf | Climbing Gourmet dining | VIP cinemas
64
Future outlook | Developments
X-Madrid
G.L.A. 47,424 sqm Investment € 32 million
65
Future outlook | Best Plan II
€ 250 million
Development
- f the best
footprint in the Iberian market
- Best specifjcations
- Best locations
- Widest array of product
Investment Assets Plan
2018
Madrid Pinto II B Madrid San Fernando II Guadalajara Cabanillas Park I F Madrid Azuqueca II Zaragoza Plaza Logistics Seseña Cabanillas X
2019
Guadalajara Cabanillas Park II
2021 2020
Madrid Azuqueca III
66
Future outlook | Best Plan I
67
Madrid, 7 May 2018