Presentation September 2018 Disclaimer This document has been - - PowerPoint PPT Presentation

Corporate Presentation

September 2018

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Disclaimer

This document has been prepared by Testa Residencial SOCIMI, S.A. (the “Company”) and comprises slides for a presentation to the market of the

• Company. For the purposes of this disclaimer, “Presentation” means this document, its contents or any part of it. This Presentation may not be copied,

distributed, reproduced or passed on, directly or indirectly, in whole or in part, or disclosed by any recipient to any other person, for any purpose other than the above. The information contained in this Presentation does not purport to be comprehensive or to include all information that may be required to fully analyze the issues referred to therein. Accordingly, no representation or warranty, express or implied, is made as to the truth, accuracy or completeness of the information in this Presentation. Neither the Company, nor any of its subsidiaries, nor any of their respective directors, officers or employees, accepts any responsibility or liability whatsoever for any loss howsoever arising from any use of this Presentation or otherwise arising in connection therewith. The information and opinions contained in this Presentation are provided as at the date of the Presentation and are subject to verification, correction, completion and change without notice. In giving this Presentation, no obligation to amend, correct or update this Presentation or to provide the recipient with access to any additional information that may arise in connection with it is undertaken. The information contained in this Presentation has not been produced in accordance with regulation intended to promote investment report independence, does not contain objective explanations, has not been subject to independent verification, and does not express any opinions regarding the possible existence of specific prohibitions which prevent the negotiation of the financial instruments referred to herein, before their disclosure. This Presentation may, if applicable, include forward-looking statements relating to, among others, the Company’s financial position, operating results, strategy, plans, targets or goals. Forward-looking statements are subject to risks, uncertainties and factors beyond the Company’s control that may result in actual results materially differing from prospective results or the results implied in the forward-looking statements. No undue reliance should be placed in such forward-looking statements. This Presentation does not constitute or form part of, and should not be construed as, any offer to sell or issue or invitation to purchase or subscribe for, or any solicitation of any offer to purchase or subscribe for, any securities of the Company in any jurisdiction, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. This Presentation is for informational purposes only. Any purchase of or subscription for securities of the Company should be based solely on each investor’s own analysis of all public information, the assessment of risk involved and its own determination of the suitability of any such investment. No reliance should be placed and no decision should be based on this Presentation.

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Testa at a Glance Largest Internally

Managed Multi-Family Housing Platform in Spain

+18 years

• f Average Management

Team Experience in the Real Estate Industry

c.80

Employees

Source: Company Information Global note: Figures as of June 30, 2018. Figures are provided on a 100%-ownership basis with respect to Coto, in which the Company owns a 99.65% interest. References to our apartments include (i) properties in respect of which the Company has surface rights for a defined period of time; (ii) 58 townhouses located in Aranjuez (Madrid); and (iii) except as otherwise indicated, parking spaces and storage rooms rented together with apartments. ¹ Only includes residential units. ² Includes both residential and commercial units. 3 Rented GLA as of June 30, 2018 divided by GLA as of June 30, 2018, in each case including the floor area of rented apartments and their respective quota of halls, stairs and hallways but no other common areas. 4 Annualized gross rents calculated as passing gross rents per company’s lease agreements as of June 30, 2018, multiplied by 12. 5 Calculated as passing gross residential rents (€/sqm/month) as of June 30, 2018, based on the company’s lease agreements over the rented residential GLA as of June 30, 2018, in each case including the floor area of rented apartments and their respective quota of halls, stairs and hallways but no other common areas. 6 Based on Savills valuation report as of June 30, 2018. 7 LTV defined as Net financial debt divided by total GAV. 8 Company owns the unit outright, in perpetuity, as opposed to holding only a surface right for a limited period of time.

9 Buildings where Testa owns 50% or more of the properties. 10 Not subject to (i) social housing regime; or (ii) contracts under old rent regime (“renta antigua”). 11 Increase of residential rent in € between June 30, 2017 and June 30, 2018, excluding assets acquired or sold

Portfolio Highlights Key Financial Highlights Platform Leading Multi-family Housing REIT in Spain Features of the Portfolio

10,615

Apartments1

c.60% of GAV2,6

in Madrid Region

80% Apartments in

Majority-Owned Buildings1,9

84% of GRI

Free-rent2,4,10

84% of the Apartments1

<20 years old

90sqm Avg. Apt. Size1 c.€85.0m GRI2,4

(€7.63/sqm/month)1,5

91%

Occupancy Apartments1,3

24% LTV6,7

(Target <35%)

c.€2.6bn GAV2,6

(€2,636/sqm)1,6

1002k sqm

GLA2

c.93% of GAV2,6

Freehold8

c.13% l-f-l rent increase1,11

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Solid Track Record in the Spanish Market

Testa’s History at a Glance

Source: Company Information

Foundation (2000-2012) Integration of MVC Rented Residential into Testa Residencial (Sep-2016) Company and Asset Contribution by Acciona Real Estate (Sep-2017)

2000 2012 Jun-2015 Sep-2016 Mar-2017 Jun-2018 ✓ Merger of several existing traditional RE groups

creating Testa Inmuebles en Renta

✓ Years later spun-off its rented residential

business in Testa Residencial

✓ Santander and BBVA become key shareholders ✓ Merlin integrates the multifamily rented residential

portfolio of Metrovacesa (3.2k apt./ €690m GAV) into Testa Residencial (€340m GAV)

✓ 1.1k apartments (c.€400m GAV) contributed in

exchange for 21% stake in Testa Residencial becoming the company’s third largest shareholder

1 3 5

Acquisition of Testa Inmuebles en Renta by Merlin Properties (2015)

✓ Merlin’s acquisition of 100% Sacyr’s

stake in Testa Inmuebles en Renta in 2015 (including the commercial property business and Testa Residencial)

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Asset Contribution by Santander and BBVA (Mar-2017)

✓ 3.3k rented apartments contributed

worth €665m to Testa Residencial

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Recent Acquisitions (Sep-2017 – Jun-2018)

✓ Testa Residencial acquires 203 apartments from

Building Center (Caixabank) in 4Q 2018

✓ Testa acquires a portfolio of 1,450 apartments

from Caixabank in May and June 2018.

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Shareholder Structure 8.0k apt. 1.5k apt. 9.0k apt. 4.7k apt. 10.6k apt.

37% 25% 20% 17%

Sep-2017

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59% 7% 6% 5% 3% 3% 18%

Portfolio Overview

Focused on Some of Spain’s Most Attractive Regions

Note: Figures as of June 30, 2018. Source: Expected Household growth 2014-2029E from Bank of Spain and GDP per Capita figures from INE; Company Information

1 Includes both commercial and residential units. 2 Based on Savills valuation report as of June 30, 2018; 3 Annualized gross rents calculated as passing gross rents per company’s lease agreements as of June 30, 2018, multiplied by 12. 4 Expected household growth 2014-2029 based on Bank of

Spain Max Scenario, which is based on household growth projections published by the INE in October 2014 but then assumes growing headship rates (tasas de jefatura) until reaching, in 2019, the annual average growth rate of 2002-2014 or, if such growth is negative, it assumes constant growth so that the maximum headship rates reached in the 2002-2014 period are achieved in 2029 and assumes the existence of growing immigration which stabilizes from 2019 onwards at the average rate of the 2002-2014 period. 5 Values calculated at level of each Autonomous Community. 6 Median GDP per Capita of the five Autonomous Communities where Testa has a larger presence: Madrid, Basque Country, Catalonia, Canary Islands and Balearic Islands. 7 Expected average household growth in regions where Testa is present, weighted by Testa’s GAV as % of the national average, is at 124% assuming Bank of Spain 2014-2029 Max scenario and 159% assuming INE’s 2016-2031 base scenario.

c.60% of the portfolio GAV1,2 located in Madrid

GAV Breakdown by Location (%) GRI Breakdown by Location (%)

Madrid San Sebastián Barcelona Mallorca Valencia Canary Islands Others >24% 18% – 24% 12% – 18% 0% – 12%

Expected Average Household Growth in Regions where Testa is Present, Weighted by Testa’s GAV, is at c.120-160%7 of the National Average

Expected Household Growth 2014-29E Heatmap1 and % of GAV

Expected Household Growth 2014-29 (%)4

34 33 30 25

GDP per Capita by Region as of 2017A (€k)5

Catalonia Basque Country Spain

Testa’s portfolio is concentrated in regions exhibiting some of the highest GDP per capita (median of €30k6 vs €25k GDP per capita on average for Spain in 2017) La Coruña Orense Málaga Toledo 2% Valladolid 2% Alicante Barcelona 6% Lérida Zaragoza Palma de Mallorca 5% Valencia 3% Oviedo 2% Vigo Pamplona 2% San Sebastián 7% Total: c.€2.6bn1,2 Total: c.€85.0m1,3 Las Palmas de Gran Canaria 3% Madrid 59%

Madrid

57% 5% 5% 5% 3% 3% 21% Almeria Sevilla

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Portfolio Overview

High-Quality Portfolio with c.60% in Madrid

Source: Company Information

Mérida (Barcelona) Bentaberri (San Sebastián) Moncada (Palma de Mallorca) Plaza Castilla (Madrid) Coto (Madrid) Costa Brava (Madrid) Las Tablas (Madrid) Can Mates (Barcelona)

Above average building quality with amenities oriented at upper middle class

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Typology

Portfolio Features

Source: Company Information

1 Buildings where Testa Residencial owns 50% or more of the properties. 3 Residential GAV as per Savills report includes apartments, parking spaces and storage rooms rented together with the apartments. 3 Commercial GAV includes retail units

located in residential buildings, parking spaces not rented together with our apartments and an office building. 4 Includes both residential and commercial units. 5 Annualized gross rents (94% GRI residential and 6% GRI commercial) calculated as passing gross rents per company’s lease agreements as June 30, 2018, multiplied by 12. 6 Only includes residential units.

By Type of Asset By Year of Construction

% of Apartments 6

By Regime

% of GAV % of GRI 4,5 24% 20% 39% 80% 100% 100% Owned >50% Owned Majority- Owned <50% Owned Total % of Apartments by Ownership of Apartments in Building

By Degree of Ownership Over Building

Residential 95%2 Commercial 5%3

Largely free-rent apartments, built less than 20 years ago, and in majority-owned1 buildings

Social Housing Regime 15% Old Rent Regime 1% Free Rent 84% 3% 3% 9% 64% 20% 1952-1966 1967-1981 1982-1996 1997-2008 2009-2018 84% of apartm. <20 years old

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The Testa Team

Maintenance & Repairs

Source: Company Information

1 Number of outsourced professionals as of 15-Mar-2018. Includes both full-time and part-time outsourced professionals. 2 Ancillary services refers to auxiliary third party services such as handyman services,

electrician services, etc.

Finance & IT

• Accounting
• Controlling
• Tax
• Invoicing
• Cash Management
• IT

IR, M&A, Legal and HR

• Investor Relations
• Acquisitions
• Compliance
• Legal Counsel
• Human Resources

Asset Management

• Commercial Team
• Technical Team
• Operational Legal Team
• Regional Teams

Cleaning Ancillary Services2 Concierge Facility Management: +109 Outsourced Professionals1 Francisco Suárez CFO

• 20 years of industry expertise

Javier Catena COO

• 20 years of industry expertise

Leasing Real Estate Agents

• Dr. Wolfgang Beck

CEO

• 10 years of industry expertise

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Experienced Management Team with a Solid Track Record Formed by c.80 Employees

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Financial Structure

Flexible and Attractive Capital Structure Providing Firepower to Grow

Source: Company information as of June 30, 2018 ¹ Unaudited figures based on management accounts. ² Includes both residential and commercial units. ³ Based on Savills valuation report as of June 30, 2018. 4 Calculated as non-current bank borrowings plus current bank borrowings less cash and cash equivalents and other current financial assets as reported in the Company’s balance sheet. 5 LTV defined as Net financial debt divided by GAV.6 Adj. EPRA NAV calculated as EPRA NAV as of June 30, 2018 plus the expiration of Acciona’s redemption rights (upon which liabilities amounting to €376m will become equity), the revaluation of investment properties and the deferred taxes. 7 Annualized gross rents calculated as passing gross rents per company’s lease agreements as of June 30, 2018, multiplied by 12. 8 NRI Margin calculated as 1H 2018 NRI divided by 1H 2018 GRI. 9 NRI calculated as passing gross rents minus cost of rental activities. Cost of rental activities consists of the aggregate amount of a) repairs; b) property expenses; c) utilities; d) property-related expenses; other expenses and e) recoveries from tenants. 10 Adjusted rental EBITDA calculated as 1H 2018 EBITDA excluding Merlin management fee cancellation and accrued expenses (pursuant to an agreement which was terminated on January 19th, 2018) and other one-off cost. EBITDA margin calculated as 1H 2018 Adjusted rental EBITDA divided by 1H 2018 GRI. 11 Includes €36m of secured debt to mature from 2023 onwards.12 FFO1 calculated as Adjusted Rental EBITDA less net cash interest and current income taxes. Net cash interest is equal to interest on loans and borrowings. Current income taxes only include current income taxes relating to rental activities. This dividend policy applies provided that Company complies with Spanish REIT dividend distribution requirement and any other requirements applicable to the company.

Key P&L Items (€m) 30-Jun-20181

Annualized Gross Rents (GRI)2,7 €85m NRI Margin (as % of GRI)8,9 77%

• Adj. Rental EBITDA Margin (as % of GRI)10

66%

Long-dated Maturity Profile with a WAL of c.6 Years

Balance Sheet Structure (€m) 30-Jun-2018

GAV (Jun-18) 2,3 €2,637m Gross Debt €703m Cash €67m Net Financial Debt4 €636m LTV (%)5 24%

• Adj. EPRA NAV (adjusted)6

€1,982m Total Liquidity (Cash + Undrawn RCF) €167m Rating (contingent on IPO) Investment Grade (BBB- with positive outlook) Unsecured Debt 50% Secured Debt 50% Gross Debt by Security (%) Maturity Schedule (€m)11

Financial Targets

• LTV < 35%
• Average loan maturity >6 years (current: 6)
• ICR above 3x (current: 6x)
• Hedging against interest rate risks >80% (current: 80%)
• Dividend policy ~80% of FFO112
• Avg. Spot Cost of Debt as of

30-Jun-2018 1.6%

350 2 266 2018E 2019E 2020E 2021E 2022E >2023E Rental Mortgages Term Loan 81 2 2 2 Includes €220m financing of new Caixa acquisition: 7-years bullet at 1.6%

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Listing in the Alternative Stock Market (MAB) Testa’s shareholder structure

Listing of Testa shares

36,9% 25,2% 20,0% 17,0%

Others: treasury shares 0.46%; free float 0.48%

Others: 0.94% Stock Exchange: MAB (Alternative Stock Market) Market segment: Non-regulated market Ticker symbol: YTST ISIN code: ES0105210019 First day of trading: 26/07/2018 Initial reference price: Eur 13.90 per share Total number of shares: 132,270,202 Initial market capitalisation: Eur 1,839m

Testa shares are listed in the MAB market since July 26th 2018

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