2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING › ... › EGM-September-2016-Presen… · 2016...
Transcript of 2016 EXTRAORDINARY GENERAL SHAREHOLDERS MEETING › ... › EGM-September-2016-Presen… · 2016...
LARGER BROADER
STRONGER
2016 EXTRAORDINARY GENERAL
SHAREHOLDERS MEETINGMadrid, 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 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 employees, officers, directors, advisors, agents or affiliates 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 or otherwise arising in connection with this presentation. 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 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 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 Metrovacesa 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 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 of 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 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.
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
INTEGRATION OF METROVACESA
2 ı 4Agenda items
ı 5 ı
TRANSACTION HIGHLIGHTS
ı 6 ı
Transaction highlights
INTEGRATION OF METROVACESA: COMPELLING STRATEGIC RATIONALE
Unparalleled footprint
• Consolidation of the #1 office portfolio
• Dramatic scale-up in shopping centers, becoming the #2 player in Spain
Leadership and European scale
• Undisputed Spanish leader
• One of the largest diversified commercial REIT in Continental Europe
Enhanced options 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
ı 7 ı
Transaction highlights
STRUCTURE & TERMS1 2 3 4
Transaction structure
1. Pre-transaction “status quo” 2. Full spin-off of MVC in 3 business lines
MVCcommercial
land
MVCcommercialreal estate
MVCrented
residential
Contributed to:
Excluded from transaction scope
MVC Shareholders
MERLINcommercialreal estate
MERLINrented
residential
JV Residential Company
ı 8 ı
STRUCTURE & TERMS1 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
MERLINcommercialreal estate
MVCcommercialreal 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 & TERMS1 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
MERLINrented
residential
MVCrented
residential
65.76%
ı 10 ı
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 & TERMS1 2 3 4
Transaction highlights
Governance and Management
• Enlargement of MERLIN BoD to reflect new shareholding structure: 15 members (60% independent) • MERLIN management team to remain unchanged
• JV Residential Company: internally managed by the Testa 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
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 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).
• Office: €3,192/sqm(5)
• Shopping centers: €2,735/sqm(5)
• Hotels: €115k/room(5)
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 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 fulfill MERLIN’s current overhead policy
• Reconfirmed commitment to distribution policy of 80% of FFO
Sound capital structure preserved
• Enhancement of MERLIN’s credit profile
• Decrease in LTV from 50.6% to 49.0% post transaction (2)
• Maintenance of healthy financing 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
METROVACESA OVERVIEW
ı 14 ı
Key figures(1)
Metrovacesa overview
SUPERB PORTFOLIO FIT WITH MERLIN…1 2
GLA1,277,373 sqm
GRI(2)
€152 m NRI(2)
€124 m
GAV€3,190 m
OCCUPANCY81.4%
NET DEBT(3)
€1,539 m
WAULT2.4 years
GROSS YIELD4.8%
NAV€1,673 m
Other
Rented residential
Hotels
High Street Retail
Logistics
Shopping centers
O�ce
50% 2%
10%
38% BREAKDOWN
BY GRI
Other
Rented residential
Hotels
High Street Retail
Logistics
Shopping centers
O�ce
BREAKDOWN
BY GAV
58%3%
8%
31%
Office 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
Office and shopping centers: ~90% of MVC(4)
ı 15 ı
Metrovacesa overview
1 2
SUPERB 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 2015
1,835
Office
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
Diversified 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 repositioning
Significant upside in rental levels
GRI(2) • Passing rent(2) (€/sqm/m)
ERV yield
Gross yield
€15m
Hotels
5.9%
4.1%
€76m
Office
€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)
2.4AVERAGE WAULT(2)
1.8
Office
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 BARCELONA1 2
Metrovacesa overview Office portfolio
Located in MERLIN’s core markets
Madrid Barcelona
11% 89%
BREAKDOWN BY MARKET
(BY GAV)
MVC office KPIs(1)
CBD NBA Periphery
48%
18% 34%
BREAKDOWN BY LOCATION
(BY GAV)
(1) As of 31 December 2015
Broad offer spectrum
# ASSETS37
GAV€1,835 m
GRI €76 m
ERV YIELD5.9%
WAULT1.8 years
GLA574,781 sqm
CAPITAL VALUE PSM €3,192 / sqm
GROSS YIELD4.1%
PHYSICAL OCCUPANCY78%
ı 20 ı
Metrovacesa overview Office 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
ı 21 ı
UNIQUE PORTFOLIO IN STRATEGIC LOCATIONS WITH UPSIDE POTENTIAL1 2
Metrovacesa overview Shopping centers
Footprint in high GDP / capita regions
GRI €58 m
GROSS YIELD5.8%
GAV€1,004 m
CAPITAL VALUE PSM €2,735 / sqm
# ASSETS14
GLA367,090 sqm
ERV YIELD6.8%
PHYSICAL OCCUPANCY76% / 84%(2)
WAULT2.9 years
2015 FOOTFALL49 m
MVC Shopping centers KPIs(1)
(1) As of 31 December 2015(2) Excluding a shopping center currently under repositioning
ı 22 ı
Metrovacesa overview Shopping centers
Dominant malls in prime urban locations
Top-tier tenants
1 2
UNIQUE PORTFOLIO IN STRATEGIC LOCATIONS WITH UPSIDE POTENTIAL
MERLIN POST-TRANSACTION
ı 24 ı
CONTINENTAL EUROPE’S LARGEST DIVERSIFIED COMMERCIAL REIT AND UNDISPUTED SPANISH LEADER1 2
MERLIN post-transaction
(1) Only including commercial real estate players(2) MERLIN figures as of 31 March 2016 and MVC as of 31 December 2015
37.8
22.1 18.7 18.512.3 11.6 11.0 9.3 9.2 9.1
UK players Continental European players
Europe’s largest diversified pure commercial REIT(1)
37.8
22.1 18.7 18.512.3 11.6 11.0 9.3 9.2 9.1
UK players Continental European players
By GAV(2) (€ billion)
Commercial diversified
Shopping centers
Office pure play
Office pure play
Commercial and residential
Shopping centers
Player type:
Shopping centers
Shopping centers
UK diversified
UK diversified
ı 25 ı
1 2
(1) MERLIN figures 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)
Spanish Non-Spanish
9.3(2)
2.11.5 1.0 0.9
6.9
483(4)
62105
46 40
2319.3(3)
2.1 1.5 1.0 0.9
6.9483(5)
62 10546 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 figures 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 LogisticsHotels 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
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
Office High street retail
Shopping centers
Logistics Hotels
4.7% 5.1%5.8%
6.9%5.8%
Occupancy (%)WAULT (years)
(1) MERLIN figures 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, STRONGER4
MERLIN post-transaction
ı 28 ı
1 2 3
Pro-forma Occupancy and WAULT(1) per asset type• #1 irreplicable office
portfolio with shorter WAULTS
• Dramatic scale-up in shopping centers to benefit 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
Office High street retail
Shopping centers
Logistics Hotels
4.7% 5.1%5.8%
6.9%5.8%
Occupancy (%)WAULT (years)
89.7%AVERAGE OCCUPANCY
7.1AVERAGE WAULT
(1) MERLIN figures as of 31 March 2016 and MVC as of 31 December 2015
LARGER, BROADER, STRONGER4
Pro-forma Occupancy and WAULT(1) per asset type
(years)
MERLIN post-transaction
ı 29 ı
LARGER, BROADER, STRONGER
Pro-forma combined financial 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 fulfill MERLIN’s current overhead policy
and (ii) current MVC cost of financing(6) Includes revenues from residential Service Level Agreement and attributable FFO from JV
Residential Company
€ mMERLIN(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
ı 30 ı
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
ı 31 ı
1 2
Combined debt maturity profile(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
1,01391464
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 efficiently
(€1,500m approved in AGM 2016 +€1,200m to account for MVC)4
MERLIN post-transaction
ı 32 ı
Significant 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
overheads 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
MERLIN FFO MVC FFO(€ million)
Pro-forma transaction FFO(1)
267
85
182 182
146
Commitment to tighter
overheads 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
MERLIN FFO MVC FFO(€ million)
Pro-forma transaction FFO(1)
267
85
182 182
146
Commitment to tighter
overheads 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
MERLIN FFO MVC FFO(€ million)
Pro-forma transaction FFO(1)
267
85
182 182
146
• 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…
ı 33 ı
Management commitment to tighten overheads cap and adjust stock plan
(1) Total shareholders return
STOCKMANAGEMENT PLAN
OVERHEADSCAP
POST-TRANSACTION
OF GRI6%
OF GRI5.75%
OF GRI5.5%
OF TSR(1)
10%OF TSR6%
OF TSR15%
OF TSR9%
OF NAV0.6%
OF NAV0.575%
OF NAV0.55%
HURDLE 8%ABOVE
HURDLE12%ABOVE
GREATER OF
PRE-TRANSACTION2018-2019 2020 ONWARDS
MERLIN post-transaction
OVERHEAD TIGHTENED AND REDUCED STOCK PLAN
ı 34 ı
Enlarged presence in Madrid and Barcelona CBD(2)
MERLINpre-transaction
MERLINpost-transaction
2021.7x
340
161
277
Madrid CBD Barcelona CBD
63
41
(1) MERLIN figures 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 office KPIs(1)
OFFICE LEADERSHIP REINFORCED BY INCREASED CBD PRESENCE AND DIVERSIFICATION1 2
GRI €193 m
GROSS YIELD4.7%
GAV€4,104 m
CAPITAL VALUE PSM €3,539/sqm
# ASSETS84
GLA1,159,750 sqm
PHYSICAL OCCUPANCY
84%WAULT3.3 years
GLA Evolution (‘000 sqm)
MERLIN post-transaction
ı 35 ı
Portfolio breakdown
(1) Only includes assets located in Madrid and Barcelona
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
BY CITY (GAV)
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
BY LOCATION(1)
(GAV)
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
83%13%4%
Madrid Barcelona Other
42%47%11%
CBD New business areas Periphery
71%29%
Multi-tenant Single-tenant
BY PRODUCT
(GLA)
1 2
OFFICE LEADERSHIP REINFORCED BY INCREASED CBD PRESENCE AND DIVERSIFICATION
MERLIN post-transaction
ı 36 ı(1) MERLIN figures as of 31 March 2016 and MVC as of 31 December 2015
GLA Evolution (‘000 sqm)
164
3.2x531
MERLINpre-transaction
MERLINpost-transaction
#assets
6
20
Significant upgrade in scale…MERLIN post-transaction shopping centers KPIs(1)
DRAMATIC SCALE-UP IN SHOPPING CENTERS, BECOMING #2 PLAYER IN SPAIN1 2
GRI €96 m
# ASSETS20
GLA531,165 sqm
GAV€1,677 m
CAPITAL VALUE PSM
€3,138/sqm
GROSS YIELD5.8%
PHYSICAL OCCUPANCY81%/87%(3)
WAULT2.9 years
FOOTFALL (2015)98 m
MERLIN post-transaction
ı 37 ı
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
ı 38 ı
4
Transaction rationale
Pro-forma Rented residential KPIs(1)
(1) MERLIN figures as of 31 March 2016 and MVC as of 31 December 2015
Geographical split
63%
12%
5%
4%
16% Madrid
Pamplona
Mallorca
Other
San Sebastian
63%
12%
5%
4%
16% Madrid
Pamplona
Mallorca
Other
San Sebastian
• JV Residential Company to adopt SOCIMI status immediately and list within the next 2 years
# UNITS4,706
GRI€35 m
# ASSETS47
GROSS YIELD3.5%
GAV€980 m
OCCUPANCY 92%
NET DEBT€361 m
LTV37%
NAV€619 m
ENHANCED OPTIONS FOR NON-CORE BUSINESSES1 2
ı 39 ı
Pro-forma Hotels KPIs(1)
(1) MERLIN figures as of 31 March 2016 and MVC as of 31 December 2015
# ROOMS4,495
GRI€38 m
GAV€654 m
# ASSETS24
WAULT3.8 years
GROSS YIELD5.8%
ERV YIELD6.0%
GAV PER ROOM€154k
OCCUPANCY 100%
Hotels GAV evolution
MERLINpre-transaction
3981.6x
12
MERLINpost-transaction
65424
GLA Evolution (€ million)
#assets
MERLIN post-transaction
ENHANCED OPTIONS FOR NON-CORE BUSINESSES1 2
ı 40 ı
BOARD OF DIRECTORSCOMPOSITION
3Agenda items
ı 41 ı
15 reputed and committed membersBoD 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 MármolVice-secretary
ı 42 ı
1Agenda items
DISTRIBUTION TO SHAREHOLDERS
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.
€ 66m € 140m
Interim
September 2016Total
Subject to EGM Sep 2016
approval
(€ 0.157 p.s.)€ 74m
Final 2017
Subject to AGM 2017 approval
Subject to BoD
approval
ı 44 ı
TIMETABLE AND CONCLUSIONS
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 profile
Sound capital structure preserved
Appealing financial terms
Irreplicable, diversified and balanced resulting portfolio
Optionality for MERLIN’s non-core assets
Tangible embedded upside in Metrovacesa
A perfect industrial fit
ı 47 ı
LARGER BROADER
STRONGER
2016 EXTRAORDINARY GENERAL
SHAREHOLDERS MEETING
2016 EXTRAORDINARY GENERAL
SHAREHOLDERS MEETINGMadrid, 15 September 2016