OVERVIEW COMPANY March 2016 Disclaimer This presentation has been - - PDF document

overview company
SMART_READER_LITE
LIVE PREVIEW

OVERVIEW COMPANY March 2016 Disclaimer This presentation has been - - PDF document

OVERVIEW COMPANY March 2016 Disclaimer 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


slide-1
SLIDE 1

COMPANY OVERVIEW

March 2016

slide-2
SLIDE 2

Disclaimer

1

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, and has not been verified 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 affiliates, advisors or agents makes any representation or warranty, express or implied, as to the accuracy or completeness of any information contained or referred to in this document. Each of the Company and its affiliates, advisors or agents expressly disclaims any and all liabilities which may be based on this document, the information contained or referred to therein, any errors therein or omissions therefrom. Neither the Company, nor any of its affiliates, 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

  • r 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 verified 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 on management accounts and estimates of the Company and may have not been audited or reviewed by the Company’s auditors, whereas the information on Testa Inmuebles en Renta, S.A. and on certain competitors contained herein is based on publicly available information which has not been verified 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, financial 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

  • bserve any such restrictions. In particular, the tender offer that may result from the transaction herein escribed will not be made, directly or indirectly, in the United States of America,
  • r 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
  • f any national securities exchange of, the United States, Canada, Australia or Japan. The securities of 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 benefit 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 SOLELY ON THE BASIS OF PUBLICLY 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 or 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 of the Company and the environment in which they expect to operate in the future. Forward-looking statements speak only as of the date of this presentation and the Company expressly disclaim any obligation or undertaking to release any update of, or 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.

slide-3
SLIDE 3

INDEX

 MERLIN AT A GLANCE  FY15 RESULTS  PORTFOLIO PERFORMANCE  OUTLOOK  APPENDIX

slide-4
SLIDE 4

MERLIN AT A GLANCE

slide-5
SLIDE 5

4

A clearly defined strategy

MERLIN at a glance

Company

  • Listed REIT, member of IBEX-35, with a diversified high-

yielding asset base of €6.1bn GAV and Market Cap. in excess of €3bn

  • Operating in Spain and, to a lesser extent, in Portugal
  • Critical mass across several commercial property

asset classes

  • Governed by the best Anglo-Saxon REIT’s practices

Assets

  • Focused on high quality commercial

real estate (“Core” and “Core Plus”): mainly office assets with support from retail and logistics cash flow

  • Target portfolio by 2018: Office (40%) high-street

retail (20-30%) shopping centres (20-25%) and logistics (10-15%)

  • Selective development focused on AAA buildings

given the scarcity of this product class in the market

  • Ambitious efficiency program to achieve LEED /

BREEAM certification over 90% of the portfolio by 2018

Capital structure

  • Investment grade capital structure as confirmed by

preliminary BBB rating from S&P targeting an LTV <50%, Interest Cover >2.5x and >60% of fixed rate debt

  • Target to reach an annual levered return of 8-

10%

  • Attractive, sustainable dividend yield

Management

  • Maximizes profitability potential of the existing portfolio

and seeks to enhance quality and returns through new acquisitions

  • Additional focus on under managed properties with

upside potential

  • Limited rotation of assets focused on mature, optimized

assets

  • Retains best-in-class internal asset management

teams to optimize portfolio performance

slide-6
SLIDE 6

5

18 months of hectic activity

MERLIN at a glance

June 2014 IPO of MERLIN Properties with an initial market cap. of €1.29bn June 2015 Acquisition of Testa from SACYR for an EV

  • f €3.5bn creating the

leading Spanish RE company July 2015 €1,034m capital increase of to partially finance the Testa acquisition May 2015 €614m Capital increase

  • Dec. 2014

Refinancing of Tree debt (€940m) July 2014 – June 2015 Acquisition of 17 assets for an aggregate amount of €652m July 2014 Acquisition of Tree portfolio, consisting of 880 bank branches and 5 buildings leased to BBVA (€740m of equity) Sep 2015 – Jan 2016 Acquisition of 43 assets and ZAL port for an aggregate amount of €325m

  • Dec. 2015

Refinancing of Testa debt and repayment of the Testa acquisition bridge loan (€1,700m)

  • Dec. 2015

Inclusion in IBEX 35 Index

slide-7
SLIDE 7

#1 PLAYER IN OFFICE, HIGH STREET RETAIL AND LOGISTICS

Leading Spanish real estate company

6

MERLIN at a glance

Office

  • Capacity to relocate

tenants within MERLIN portfolio

  • Ability to

accommodate the expansionary needs

  • f tenants
  • Flexibility to offer

multitenancy or headquarters product #1

Shopping Centres

  • Reaching critical

mass in the winning niches of the market (dominant, prime urban) to attract the main retailers #7

Logistics

  • “One-stop-shop”

solution for logistics

  • perators wishing to
  • perate across Spain
  • Big footprint to

match the rapid development of 3PL activity in Spain #1

High street retail

  • Negotiation power

with tenants

  • Possibility to offer a

diversity of suitable locations that fit tenants needs #1

slide-8
SLIDE 8

FY15 RESULTS

SOLID NUMBERS IN A TRANSFORMATIONAL YEAR

slide-9
SLIDE 9

Consolidated profit and loss (Testa’s results for 2H only)

8

FY15 Results

Source: Company. (1) Annualized gross rents and net rents have been calculated as passing gross / net rent as of December 31st, multiplied by 12. (2) Gross rents net of property expenses not recharged to tenants, incentives and collection loss. (3) Recurring EBITDA equals EBITDA less non-recurrent one-off expenses (€ 25.4 m). (4) Recurring FFO equals FFO less non-recurrent one-off expenses (€ 25.4 m).

FY 2015 FY 2014

Gross rents €214.5m € 56.8 m Office € 63.3 m € 3.9 m High street retail € 91.1 m € 44.2 m Shoppingcenters € 29.3 m €7.8m Logistics € 12.7 m € 0.8 m Hotels € 11.5 m

  • Rented residential

€ 5.6 m

  • Other

€1.0m

  • Net rents(2)

€201.5m € 54.0 m EBITDA € 161.2 m € 38.0 m FFO €107.7m €19.9m Recurring EBITDA(3) €186.7m € 50.4 m RecurringFFO(4) €133.1m € 32.4 m EPRA net earnings € 99.3m € 20.4 m IFRS net profit €49.1m € 49.7m

Passing Gross rents annualised € 301.7 m(1) Passing net rents annualised € 284.3 m(1)

Recurring EBITDA € 0.58 Recurring FFO € 0.41 EPRA EPS € 0.31 IFRS EPS € 0.15

Consolidated profit and loss Per share

HEADLINE RESULTS REFLECT STRONG GROWTH IN THE PERIOD

slide-10
SLIDE 10

Valuation and balance sheet

9

Source: Company (1) GAV includes the aggregate of MERLIN + Testa appraisal as of Dec-14. (2) Includes net proceeds of 2015 capital increases. (3) Accounted for in MERLIN’s balance sheet on January 8th 2016. (4) Excluding € 316.8 m of pending payment of Sacyr 23% stake in Testa.

SIGNIFICANT GROWTH IN GAV AND NAV AFTER INTENSIVE 2015 INVESTMENT ACTIVITY AND PORTFOLIO REVALUATION PROACTIVE MANAGEMENT OF CAPITAL STRUCTURE CROWNED WITH SUCCESSFUL EXECUTION OF € 1.7 BN OF UNSECURED DEBT(3) FINANCING

Dec-15 Dec-14 Total assets € 6,916 m € 2,417 m Total equity € 2,926 m € 1,309 m Portfolio value € 6,053 m € 2,232 m Gross financial debt € 3,257 m € 1,010 m Cash(4) € 244 m € 153 m Net financial debt € 3,013 m € 857 m

Net LTV 49.8% 38.5% EPRA gross yield 5.3% 6.0% EPRA net initial yield 5.0% 5.9%

Dec-15 Adjusted Dec-14 Dec-14 GAV € 6,053 m € 5,389 m(1) € 2,232 m EPRA NAV € 3,181 m € 2,951 m(2) € 1,355 m EPRA NAV per share € 9.85 € 9.13 € 10.50 Adjusted NAV € 2,982 m € 2,751 m € 1,355 m Adjusted EPRA NAV per share € 9.23 € 8.92 € 10.50

Consolidated balance sheet Valuation

FY15 Results

slide-11
SLIDE 11

10

Asset Category (€ million) 31-Dec-2015 31-Dec-2014 LfL Change 31-Dec-15 vs 31-Dec-2014 Office € 2,189.6 m € 1,932.4 m 10.0% High Street retail € 1,883.9 m € 1,669.5 m 6.8% Shopping centers € 683.7 m € 619.6 m 10.3% Logistics € 276.5 m € 178.1 m 11.3% Hotels € 397.5 m € 391.6 m 1.5% Rented residential € 288.1 m € 284.0 m 1.5% Other € 12.2 m € 12.0 m 1.7% Land for development € 50.5 m

  • n.a.

Non-core land € 132.6 m € 259.1 m (48.8%) Minority stakes € 138.1 m € 42.5 m 0.1% TOTAL € 6,052.7 m € 5,388.9 m 5.1% TOTAL ex Non-core land 7.8%

LFL GAV INCREASE OF 5.1% INCLUDING EFFECT OF NON-CORE LAND (7.8% IF EXCLUDED)

Portfolio valuation

FY15 Results

slide-12
SLIDE 12

Valuation drivers

11

Source: Company.

31/12/14 GAV bridge to 31/12/15 Yield compression

2,232 3,180 374 164 197 (127) 16 17 6,053 2,000 4,000 6,000 GAV MERLIN Dec-14 GAV Testa Mar-15 MERLIN 2015 Acquisitions + CAPEX MERLIN valuation uplift Capex Testa 2015 Acquisitions valuation uplift GAV MERLIN Dec-15

43 bps

MERLIN AVERAGE

GAV INCREASE MOSTLY DRIVEN BY A PRUDENT YIELD COMPRESSION POTENTIAL FOR FURTHER CAPITAL VALUE GROWTH FY15 Results

TESTA valuation uplift 56 bps 49 bps 124 bps 31 bps 1 bps 14 bps 11 bps Office Shopping centres Logistics High street retail Hotels Rented residential Other

slide-13
SLIDE 13

Debt summary

12

Source: Company. (1) Net on €316.8 M to be paid to Sacyr for the 22.6% stake of Testa remaining to be purchased.

€ 1.7 BN SUCCESSFULLY REFINANCED ON AN UNSECURED BASIS COST OF DEBT DECREASES, MATURITY IS EXTENDED AND HEALTHY FINANCING RATIOS ARE ACHIEVED

(€ million) Current 31/12/2015 31/12/2014 Unsecured bank loans € 1,700 m € 350 m € 0 m Mortgage bank loans € 1,157 m € 2,479 m € 1,010 m Mortgage non-bank loans € 133 m € 133 m € 0 m Leasings € 175 m € 175 m € 0 m Non-core debt € 119 m € 119 m € 0 m Total gross debt € 3,285 m € 3,257 m € 1,010 m Cash € 244 m(1) € 153 m Total Net debt € 3,013 m € 857 m Policy Current 31/12/2015 31/12/2014 Net debt n.a. € 3,013 m € 857 m LTV <50% n.a. 49.8% 38.5% Average interest rate (spot) 2.0% 2.2% 3.1% Average maturity 6.0 years 3.8 years 9.0 years Unsecured debt / Total debt >50% 51.6% 0% 0% Interest cover >2.5x n.a. 2.8x 2.1x Fixed rate debt >60% 61.0% 43.3% 99.3%

FY15 Results PRELIMINARY BBB RATING FROM S&P

slide-14
SLIDE 14

13

FY15 Results

Rating (preliminary) THE RATING WILL SUPPORT PLANNED BOND ISSUANCE…

850 27 877 153 22 413 936 1,139 2016 2017 2018 2019 2020 2021 >2021 Bridge to bond

INVESTMENT GRADE BBB RATING FROM S&P

INVESTMENT GRADE

BBB HIGHEST RATING

EVER FOR A SPANISH REAL ESTATE COMPANY

STABLE

OUTLOOK

Bond issuance €m Planned bond issuance will further extend maturity profile

…WITH THE OBJECTIVE TO FURTHER DIVERSIFY FINANCIAL SOURCES AND EXTEND MATURITY PROFILE

slide-15
SLIDE 15

PORTFOLIO PERFORMANCE

DIVERSIFIED ASSET BASE WITH HIGH YIELD, POSITIVE TAKE-UP AND EMERGING LFL RENTAL GROWTH

slide-16
SLIDE 16

75% 13% 9% 3%

MERLIN HAS ACHIEVED BROADER DIVERSIFICATION IN THE PORTFOLIO… Portfolio performance Breakdown 31/12/2014

GAV BREAKDOWN PER ASSET TYPE RENTS BREAKDOWN PER ASSET TYPE

Source: Company

36% 31% 11% 7% 5% 5% 5%

31/12/2015

69% 14% 12% 5% 37% 32% 13% 4% 6% 7%

Office High Street Retail Shopping Center Logistics Hotels Rented residential Other

slide-17
SLIDE 17

...WHILE MAINTAINING HIGH OCCUPANCY AND WAULT

16

Portfolio performance

Yields, occupancy and WAULT

Source: Company. (1) Gross yield is calculated dividing annualized gross monthly rents by GAV (2) WAULT by Rents means the weighted average unexpired lease term, calculated as of 31 December 2015

5.1% 5.1% 5.9% 6.9% 5.6% 4.2% 7.4% Office High street retail Shopping centres Logistics Hotels Rented residential Other

EPRA GROSS YIELD PER ASSET TYPE(1)

5.3%

MERLIN AVERAGE

OCCUPANCY AND WAULT PER ASSET TYPE(2)

4.3 21.2 2.4 3.8 4.1 2.5 3.3 90.0% 100.0% 93.4% 93.5% 100.0% 97.1% 100.0% Office High street retail Shopping centres Logistics Hotels Rented residential Other

94.6%

AVERAGE OCCUPANCY

9.4 yrs

AVERAGE WAULT

slide-18
SLIDE 18

17

Portfolio performance

Leasing activity

STRONG LEASING ACTIVITY WITH 376K SQM SIGNED: 106K SQM OF NEW CONTRACTS AND 270K SQM RENEWALS

87,169 15,188 70,134 97,568 (17,250) (9,358) (35,847) (17,924) 16,653 10,772 48,375 30,210 (597) 1,414 12,528 12,285 (50,000) (30,000) (10,000) 10,000 30,000 50,000 70,000 90,000 110,000 Office Shopping centres Logistics Participated companies Renewals Out In Net

(1) Includes 38,054 sqm leased for Cabanillas II (currently under construction). (1)

% RENEWED 83%

62% 66% 84%

slide-19
SLIDE 19

MERLIN HAS ATTRACTED TOP TIER TENANTS

18

Portfolio performance

Letting highlights

In

1,877 sqm

Porto Pi

Office Shopping centres Logistics

In

1,837 sqm

Atica I Renewal

29,115 sqm

Princesa 3 Renewal

7,673 sqm

Marineda Renewal

1,209 sqm

Marineda Renewal

16,001 sqm

Costa Brava 2–4

TBWA \ ESPAÑA

In

603 sqm

Juan Esplandiu Renewal

7,171 sqm

Coslada Complex Renewal

70,134 sqm

Cabanillas I In

2,709 sqm

Coslada Complex In (Pre-let)

38,054 sqm

Cabanillas II CONFIDENTIAL In

579 sqm

Marineda

slide-20
SLIDE 20

€ 000’s LfL Rent Occupancy Total Office (373) (971) (1,344) Shopping centres 319 378 697 High Street retail 545

  • 545

Logistics (56) (737) (792) Hotels 269

  • 269

TOTAL 706 (1,330) (624)

Lfl rental growth

19

Source: Company. (1) LFL calculated at same occupancy levels.

Portfolio performance

EMERGING LFL(1) RENTAL GROWTH MAINLY CONCENTRATED IN 2H

Commercial LfL Rent Evolution (2014-2015) Office Portfolio: Detailed Analysis

(971) (517) 144 (1,344) Occupancy CPI Rent Total Impact

slide-21
SLIDE 21

INCREASING CONSUMER CONFIDENCE DRIVING GOOD SALES AND FOOTFALL GROWTH (+7% FOOTFALL / +10% SALES)

Shopping centers evolution

20

Source: Company.

2015 Footfall (million) 2015 Footfall vs 2014 2015 Sales (million) 2015 Sales vs 2014 Marineda 16.4 +8.6% 164.8 +10.5% Porto Pi 8.5 +12.0% 87.3 +14.3% Larios 10.6 +6.5% 56.8 +10.0% Centro Oeste 6.7 +4.0% 45.3 +2.1 Arturo Soria 4.6 (1.4%) 25.0 +1.3%

Portfolio performance

30 50 70 90 110 130 Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016

slide-22
SLIDE 22

BALANCED MATURITY PROFILE SUPPORTS CASH FLOW PREDICTABILITY

21

Portfolio performance

Lease maturity profile

19% 13% 7% 13% 11% 37% 25% 23% 19% 13% 8% 12% 35% 11% 9% 4% 8% 33% 1% 2% 97% 23% 33% 4% 40% 2016 2017 2018 2019 2020 >2020 Office Shopping centres Logistics High Street retail Hotels

slide-23
SLIDE 23

OUTLOOK

slide-24
SLIDE 24

OUR MARKET

slide-25
SLIDE 25

24

Outlook

OUR MARKET MACRO- ECONOMIC MOMENTUM IN IBERIA CONTINUES TO BE FAVOURABLE HEADLINE RENTS STARTING TO GROW IN OFFICE, LOGISTICS AND SHOPPING CENTERS VERY SCARCE NEW SUPPLY

3

YIELDS HAVE ALREADY COMPRESSED IN LINE WITH OTHER EUROPEAN

  • MARKETS. SOME

FURTHER YIELD COMPRESSION EXPECTED

2 1 4

slide-26
SLIDE 26

3.8% 1.1% (3.5%) 0.0% (0.6%) (2.1%) (1.2%) 1.4% 3.2% 2.7% 2.3% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E

(% real GDP growth)

192 163 191 216 224 234 240 247 264 305 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 14% 19% 20% 23% 26% 26% 24% 21% 20% 18% 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 500 550 600 650 700 750 800 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E

25

Source: INE, EIU, IHS, IMF, Bank of Spain, Banca d’Italia, Banque de France, Banco de Portugal, Bundesbank and Bloomberg as of 26 February 2016. (1) INE as of 26 February 2016.

SPAIN’S GDP GROWTH RATE IS GETTING CLOSER TO PRE-CRISIS PEAK LEVELS … SUPPORTED BY RECOVERING PRIVATE CONSUMPTION AND SOLID MOMENTUM IN EXPORTS, RESULTING IN SUSTAINED EMPLOYMENT CREATION

PRIVATE CONSUMPTION IN SPAIN (€ BN) SPANISH EXPORTS (€ BN) UNEMPLOYMENT RATE IN SPAIN (%)

CAGR 2015-2017E +4.9%

SPAIN IS CURRENTLY EXPECTED TO BE ONE OF THE FASTEST GROWING ECONOMIES IN EUROPE

(1)

Macro-economic momentum in Iberia continues to be favourable

Outlook

2.7% 1.7% 1.4% 1.8% 1.5% 2.3% 1.8% 1.6% 1.7% 1.4% 2016E average 1.8% 2017E average 1.8% 0.0% 1.0% 2.0% 3.0% Spain Portugal France Germany Italy 2016E 2017E 2016E average 2017E average

1

slide-27
SLIDE 27

26

Outlook STRONG MOMENTUM IN OFFICES TAKE UP… … AND OFFICE PRIME RENTS IN CBD GROWING AT YEAR END INCREASING CONSUMER CONFIDENCE…

Increasing take up and first signs of rental growth

265 366 365 478 199 186 282 398 2012 2013 2014 2015 Madrid Barcelona 24.3 24.5 25.5 25.5 25.8 26.5 26.5 26.8 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 17.5 17.5 17.8 17.8 18.0 19.0 19.5 19.8 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

Madrid Barcelona

70 90 110 Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016

Source: JLL, CBRE and CIS- Centro de Investigaciones Sociológicas.

80 90 100 110 120 130 Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016

… DRIVING FOOTFALL GROWTH IN SHOPPING CENTRES

2

(000’s sqm) (€/sqm/month)

slide-28
SLIDE 28

27

Outlook

Demand and supply fundamentals

REGIONAL UNEMPLOYMENT RATE OFFICE VACANCY RATES AS OF Q4 2015 REGIONAL ECONOMIC GROWTH (GDP)

Source: CBRE, Idescat, Instituto de Estadística de la Comunidad de Madrid and INE.

NEW OFFICE SUPPLY AS % OF STOCK

2 6 10 14 18 Q1 2009 Q2 2010 Q3 2011 Q4 2012 Q1 2014 Q2 2015 Barcelona Barcelona - CBD Madrid Madrid - CBD

(in %)

RISING DEMAND AND DECREASING GOOD QUALITY OFFICE SPACE PUSHING UP RENTS

2 4 6 2009 2010 2011 2012 2013 2014 2015 2016 2017 Barcelona Madrid

(in %)

12 15 18 21 24 Q1 2009 Q2 2010 Q3 2011 Q4 2012 Q1 2014 Q2 2015 Barcelona Madrid

(in %)

(5) (3) (1) 1 3 Q1 2009 Q2 2010 Q3 2011 Q4 2012 Q1 2014 Q2 2015 Catalonia Madrid

(in %)

3

slide-29
SLIDE 29

THE SPANISH AND PORTUGUESE OFFICE MARKETS HAVE ROOM FOR RECOVERY

28

2 4 6 8 Paris London WE London City Dublin Rome Berlin Milan Madrid Barcelona Frankfurt Amsterdam Brussels Lisbon Current yield Cyclical high Cyclical low (60) (30) 30 60 90 Dublin London City London WE Madrid Barcelona Rome Milan Paris Frankfurt Berlin Amsterdam Brussels Lisbon Trough to current Peak to trough

(in %) Source: CBRE. (1) Figures indicate change between the lowest rent yield recorded in or since 2009 and the current level as of Q4 2015.

(1)

Ample room for recovery

PRIME OFFICE YIELD AS OF Q4 2015 RELATIVE TO ITS PEAK IN THE CURRENT CYCLE CHANGE IN PRIME OFFICE RENT AS OF Q4 2015

KEY TRENDS

 Yields still offer some room for

improvement after having compressed in line with other European markets

 Positive outlook compared to other

key European cities that are much more advanced in the real estate cycle

 Rents have shown signs of recovery

after decreasing for the last years and are still significantly below its peak levels

 The fundamental outlook for offices

continues to be solid

Outlook

4

slide-30
SLIDE 30

DIVIDEND GUIDANCE

slide-31
SLIDE 31

Dividend guidance on 2016 results

30

SHAREHOLDER DISTRIBUTION GUIDANCE: MINIMUM OF € 140 M (€ 0.43 + PER SHARE) AGAINST FY 2016 RESULTS WITH THE FOLLOWING CHARACTERISTICS:

ALL CASH PAYMENT IN TWO INSTALMENTS

€ 0.19 € 0.43+ € 0.24+ September 2016 2017 Interim Final

(following approval by AGM of 2016 accounts)

Total

FY 2016 proposed minimum dividend

Outlook

slide-32
SLIDE 32

AGM 2016 MAIN TOPICS

slide-33
SLIDE 33

PROPOSED RESOLUTION FOR THE ANNUAL GENERAL SHAREHOLDER MEETING IN APRIL 2016

AGM 2016 Main topics

32

Outlook 2 3 5 4 1

Delegation to the Board (5 years) of the power to issue up to €600m of convertible debt obligations Delegation to the Board (5 years) of the power to issue up to €1,500m of debt

  • bligations and €500m of commercial paper

Reduction of the Extraordinary Shareholders Meeting call period: 15 days FY15 dividend distribution Delegation to the Board (5 years) of the power to increase capital up to 50% of current capital, if done with rights; if done without rights capital increase limited to 20% of current capital

slide-34
SLIDE 34

2015 Shareholder distribution background

33

Outlook

2015 Proposed shareholder distribution

(€’000s) Per share (€ cents) Interim dividend (Oct-15) 25,035 7.750 Complementary dividend (Apr-16)

1,838 0.569

Share premium distribution (Apr-16) 33,146 10.261 Total 60,019 18.580

slide-35
SLIDE 35

APPENDIX

THE ASSETS

slide-36
SLIDE 36

Location

35

Offices Madrid

Costa Brava 2-4 Ática

10

Pedro de Valdivia 10

28

Partenón 12- 14 & 16-18

2

Castellana 83-85

18

Juan Espla- ndiú 11-13

7

Princesa 3-5

9

Juan de Mariana 17

30

Castellana 259

11

Ribera del Loira 60

1

Alcalá 45

13

Eucalipto 25-33

20

Príncipe de Vergara 187

23

Josefa Valcárcel 48

12 16

Ventura Rodriguez 7

24

Alcalá 40

26

Avenida de Bruselas 33

6

Avenida de Bruselas 24-26

14

Maria de Portugal

A-1 Corridor Castellana A-2 corridor Campo de las Naciones

Arroyo de Valdebebas

4

Padres Dominicos

3 5

slide-37
SLIDE 37

Location

36

Offices Barcelona

Vilanova 12-14 Diagonal 605 Sant Cugat I and II

19 15

WTC 6

22

WTC 8

21

Muntadas II

29

Muntadas I

8

El Prat

Diagonal 514

Sant Cugat Diagonal Pº de Gracia

17 25

slide-38
SLIDE 38

37

Offices (I)

  • 1. Ribera del Loira 60
  • 2. Partenón 12-14 & 16-18

CITY: MADRID LOCATION: NBA GLA: 54,960 PARKING LOTS: 1,253 ASSETS: 1 CITY: MADRID LOCATION: NBA GLA: 37,632 PARKING LOTS: 663 ASSETS: 2

  • 6. Avenida de Bruselas 33

CITY: MADRID LOCATION: NBA GLA: 33,718 PARKING LOTS: 853 ASSETS: 1

  • 4. Arroyo de Valdebebas T7

CITY: MADRID LOCATION: NBA GLA: 10,856 PARKING LOTS: 336 ASSETS: 1

  • 3. Maria de Portugal T2

CITY: MADRID LOCATION: NBA GLA: 17,140 PARKING LOTS: 392 ASSETS: 3

  • 5. Padres Dominicos T4

CITY: MADRID LOCATION: NBA GLA: 6,176 PARKING LOTS: 130 ASSETS: 4

NBA: New Business Area; CBD: Central Business District ; SEC CBD: Secondary CBD

slide-39
SLIDE 39

38

Offices (II)

  • 9. Princesa 3-5

CITY: MADRID LOCATION: CBD GLA: 23,598 PARKING LOTS: 15 ASSETS: 2

  • 10. Atica

CITY: MADRID LOCATION: PERIPHERY GLA: 23,406 PARKING LOTS: 502 ASSETS: 4

  • 11. Torre Castellana 259

CITY: MADRID LOCATION: CBD GLA: 21,390 PARKING LOTS: 631 ASSETS: 1

  • 12. Josefa Valcárcel 48

CITY: MADRID LOCATION: NBA GLA: 19,893 PARKING LOTS: 357 ASSETS: 1

  • 7. Juan Esplandiú 11-13

CITY: MADRID LOCATION: SEC CBD GLA: 28,008 PARKING LOTS: 436 ASSETS: 1

  • 8. Muntadas I

CITY: BARCELONA LOCATION: NBA GLA: 24,380 PARKING LOTS: 640 ASSETS: 1

NBA: New Business Area; CBD: Central Business District ; SEC CBD: Secondary CBD

slide-40
SLIDE 40

39

Offices (III)

  • 15. Vilanova 12-14

CITY: BARCELONA LOCATION: CBD GLA: 16,494 PARKING LOTS: 94 ASSETS: 1

  • 16. Costa Brava 2-4

CITY: MADRID LOCATION: PERIPHERY GLA: 16,000 PARKING LOTS: 335 ASSETS: 1

  • 17. Sant Cugat I & II

CITY: BARCELONA LOCATION: NBA GLA: 15,374 + 10,102 PARKING LOTS: 219 + 251 ASSETS: 2

  • 18. Castellana 83-85

CITY: MADRID LOCATION: CBD GLA: 15,254 PARKING LOTS: 271 ASSETS: 1

  • 13. Alcalá 45

CITY: MADRID LOCATION: CBD GLA: 18,655 PARKING LOTS: 40 ASSETS: 1

  • 14. Avenida de Bruselas 24-26

CITY: MADRID LOCATION: NBA GLA: 18,058 PARKING LOTS: 457 ASSETS: 2

NBA: New Business Area; CBD: Central Business District ; SEC CBD: Secondary CBD

slide-41
SLIDE 41

40

Offices (IV)

  • 21. WTC 8

CITY: BARCELONA LOCATION: NBA GLA: 14,543 PARKING LOTS: 247 ASSETS: 1

  • 22. WTC 6

CITY: BARCELONA LOCATION: NBA GLA: 14,535 PARKING LOTS: 213 ASSETS: 1

  • 23. Príncipe de Vergara 187

CITY: MADRID LOCATION: CBD GLA: 10,732 PARKING LOTS: 165 ASSETS: 1

  • 24. Ventura Rodríguez 7

CITY: MADRID LOCATION: CBD GLA: 10,070 PARKING LOTS: 0 ASSETS: 1

  • 19. Diagonal 605

CITY: BARCELONA LOCATION: CBD GLA: 14,795 PARKING LOTS: 217 ASSETS: 1

  • 20. Eucalipto 25 & 33

CITY: MADRID LOCATION: SEC CBD GLA: 14,553 PARKING LOTS: 256 ASSETS: 2

NBA: New Business Area; CBD: Central Business District ; SEC CBD: Secondary CBD

slide-42
SLIDE 42

41

Offices (V)

  • 27. Lisbon Expo

CITY: LISBON LOCATION: CBD GLA: 6,740 PARKING LOTS: 176 ASSETS: 1

  • 28. Pedro de Valdivia 10

CITY: MADRID LOCATION: CBD GLA: 6,721 PARKING LOTS: 89 ASSETS: 1

  • 29. Muntadas II

CITY: BARCELONA LOCATION: NBA GLA: 3,783 PARKING LOTS: 82 ASSETS: 1

  • 30. Juan de Mariana 17

CITY: MADRID LOCATION: SEC CBD GLA: 3,046 PARKING LOTS: 60 ASSETS: 1

  • 25. Diagonal 514

CITY: BARCELONA LOCATION: CBD GLA: 9,664 PARKING LOTS: 76 ASSETS: 1

  • 26. Alcalá 40

CITY: MADRID LOCATION: CBD GLA: 9,315 ASSETS: 1

NBA: New Business Area; CBD: Central Business District ; SEC CBD: Secondary CBD

slide-43
SLIDE 43

42

High street retail

71

Location

31 6 96 10 10 63 161 15 40 91 24 43 93 22 109 33 12 RETAIL / BRANCHES SUPERMARKETS

slide-44
SLIDE 44

43

High street retail

Tree Caprabo

SPAIN UNITS: 888 GLA: 373,157 CATALUÑA UNITS: 33 GLA: 64,252

slide-45
SLIDE 45

44

Shopping Centers

Location

Madrid La Coruña Málaga Mallorca

  • 1. Marineda
  • 3. Larios
  • 5. Centro Oeste
  • 4. Plaza de los

Cubos

  • 6. Arturo Soria
  • 2. Porto Pi
slide-46
SLIDE 46

45

Shopping Centers

  • 1. Marineda
  • 2. Porto Pi

CITY: A CORUÑA UNITS: 150 GLA: 105,795 ANNUAL FOOTFALL: 15.1 M PHYSICAL OCCUPANCY: 89% CITY: MALLORCA UNITS: 124 GLA: 26,559 ANNUAL FOOTFALL: 7.6 M PHYSICAL OCCUPANCY: 95.2%

  • 3. Larios
  • 4. Plaza de los Cubos

CITY: MÁLAGA UNITS: 99 GLA: 21,504 ANNUAL FOOTFALL: 10.0M PHYSICAL OCCUPANCY: 99.2% CITY: MADRID UNITS: 21 GLA: 13,202 PHYSICAL OCCUPANCY: 100.0%

  • 5. Centro Oeste
  • 6. Arturo Soria

CITY: MADRID-MAJADAHONDA GLA: 10,893 ANNUAL FOOTFALL: 6.7 M PHYSICAL OCCUPANCY: 100.0% CITY: MADRID UNITS: 82 GLA: 6,965 PHYSICAL OCCUPANCY: 91.0%

slide-47
SLIDE 47

46

Logistics

Location

  • 2. Guadalajara-

Cabanillas II

  • 4. Guadalajara-

Cabanillas I

  • 7. Guadalajara-Alovera
  • 11. Guadalajara-

Azuqueca

  • 8. Madrid-

Coslada Complex

  • 10. Madrid-Coslada
  • 9. Madrid-Meco
  • 3. Vitoria-Júndiz
  • 13. Barcelona-LliÇa del

Vall

  • 15. Barcelona-

Sant Esteve

  • 16. Barcelona-

Granada del Penedés

  • 1. Barcelona-ZAL Port
  • 5. Madrid-Pinto
  • 6. Madrid-

Getafe (Gavilanes)

  • 18. Madrid-

Getafe (Olivos)

  • 17. Madrid-Getafe
  • 12. Valencia

Almussafes

A4 corridor A2 corridor

  • 14. Zaragoza-Plaza
  • 18. Zaragoza-Pedrola

Valencia logistics hub AP-7 / Barcelona logistics hub A1 / A68 corridor

  • 20. Guadalajara-

Azuqueca Miralcampo

slide-48
SLIDE 48

47

Logistics (I)

  • 1. Barcelona-ZAL Port
  • 2. Guadalajara-Cabanillas II

CITY: BARCELONA GLA: 567K GLA + 407K SQM OF LEASED LAND LOCATION: BARCELONA PORT CITY: GUADALAJARA GLA: 151,704 LOCATION: A-4 CORRIDOR

  • 3. Vitoria-Júndiz
  • 4. Guadalajara-Cabanillas I

CITY: VITORIA GLA: 72,717 LOCATION: CROSSROADS OF A68/ A1/N1 AND N240 CITY: GUADALAJARA GLA: 70,134 LOCATION: A-2 CORRIDOR

  • 5. Madrid-Pinto
  • 6. Madrid-Getafe (Gavilanes)

CITY: PINTO GLA: 70,000 LOCATION: A-4 CORRIDOR CITY: GETAFE GLA: 39,576 LOCATION: A-4 CORRIDOR

slide-49
SLIDE 49

48

Logistics (II)

  • 7. Guadalajara-Alovera
  • 8. Madrid-Coslada Complex

CITY: GUADALAJARA GLA: 38,763 LOCATION: A-2 CORRIDOR CITY: MADRID GLA: 36,234 LOCATION: A-2 CORRIDOR

  • 9. Madrid-Meco
  • 10. Madrid-Coslada

CITY: MADRID GLA: 35,285 LOCATION: A2 CORRIDOR CITY: MADRID GLA: 28,490 LOCATION: A2 CORRIDOR

  • 11. Guadalajara-Azuqueca
  • 12. Valencia-Almussafes

CITY: GUADALAJARA GLA: 27,995 LOCATION: A2-CORRIDOR CITY: VALENCIA GLA: 26,613 LOCATION: ACCESS TO AP7, A7 AND V31

slide-50
SLIDE 50

49

Logistics (III)

  • 13. Zaragoza-Pedrola

CITY: ZARAGOZA GLA: 21,579 LOCATION: A-2 CORRIDOR

  • 15. Barcelona-Sant Esteve
  • 16. Barcelona-Granada del Penedés

CITY: BARCELONA GLA: 16,812 LOCATION: A2-AP7 HIGHWAY CITY: BARCELONA GLA: 16,758 LOCATION: AP7 HIGHWAY

  • 17. Madrid-Getafe
  • 18. Barcelona-LliÇa del Vall

CITY: MADRID GLA: 16,242 LOCATION: ACCESS TO A4, M50, R4 AND A42 CITY: BARCELONA GLA: 14,911 LOCATION: GRANOLLERS

  • 14. Zaragoza-Plaza

CITY: ZARAGOZA GLA: 20,764 LOCATION: ACCESS TO AP7

slide-51
SLIDE 51

50

Logistics (IV)

  • 19. Madrid-Getafe (Olivos)

CITY: GUADALAJARA GLA: 11,488 LOCATION: A-4 CORRIDOR

  • 20. Guadalajara-Azuqueca Miralcampo

CITY: GUADALAJARA GLA: 100,000 LOCATION: A2-CORRIDOR

slide-52
SLIDE 52

51

Hotels

Location

33 Madrid Valencia Jerez Barcelona Malaga

  • 9. Eurostars AV

Vega****

  • 1. Eurostar

GL*****

  • 7. NH Sanvy****
  • 3. Puerta

Castilla****

  • 10. Tryp Jerez****
  • 6. AC Forum****
  • 2. Eurostars Gran

Marina*****

  • 4. Tryp

aeropuerto****

  • 5. Tryp Oceancic****
  • 8. Tryp Alameda****
slide-53
SLIDE 53

52

Hotels (I)

  • 1. Eurostars GL*****
  • 2. Eurostars Gran Marina****

CITY: MADRID LOCATION: CBD / URBAN GLA: 31,800 # ROOMS: 474 CITY: BARCELONA LOCATION: URBAN GLA: 20,030 # ROOMS: 274

  • 3. Puerta Castilla****
  • 4. Tryp Aeropuerto****

CITY: MADRID LOCATION: CBD / URBAN GLA: 13,180 # ROOMS: 262 CITY: BARCELONA LOCATION: URBAN GLA: 10,125 # ROOMS: 205

  • 5. Tryp Oceanic****
  • 6. AC Forum****

CITY: VALENCIA LOCATION: URBAN GLA: 9,308 # ROOMS: 197 CITY: BARCELONA LOCATION: CBD / URBAN GLA: 13,768 # ROOMS: 184

slide-54
SLIDE 54

53

Hotels (II)

  • 7. NH Sanvy****
  • 8. Tryp Alameda****

CITY: MADRID LOCATION: CBD / URBAN GLA: 12,182 # ROOMS: 149 CITY: MALAGA LOCATION: URBAN GLA: 6,000 # ROOMS: 136

  • 9. Eurostars Av Vega****
  • 10. Tryp Jerez****

CITY: MADRID LOCATION: URBAN GLA: 3,581 # ROOMS: 100 CITY: JEREZ LOCATION: URBAN GLA: 4,637 # ROOMS: 98

slide-55
SLIDE 55