Roadshow presentation. June 2015

Transcription

1 Roadshow presentation June 05

2 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 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 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 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 observe any such restrictions. 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3 Table of contents Transaction highlights Testa: a unique, best-in-class real estate platform 3 Combined strengths: the largest Spanish real estate player 4 Transaction timeline & conclusions 3

4 Section Transaction highlights

5 Key transaction terms Transaction description Investment agreement with SACYR to acquire up to 99.6% (post money) including (i) a 43m capital increase at Testa fully subscribed by Merlin in exchange of a 5% stake (post money); and (ii) acquisition of Sacyr s remaining stake in Testa in two steps for,555m Weighted average price agreed with Sacyr is 3.54 per share of Testa of 0.0 par value (ie. post capital reduction of 5.80 per share and extraordinary dividend of 4.57 per share) Acquisition of Sacyr s stake in Testa subject to (i) approval of MERLIN EGM and (ii) release of pledge on Testa shares A transformational deal for MERLIN Creation of the largest property company in Spain with a total GAV of over 5.5bn Acquisition of a sizeable, best-in-class real estate platform, allowing to expand footprint, build critical mass in office, logistics and retail and become the reference player in Spain Opportunity to further capture growth prospects of the Spanish property sector Long term strategic approach based on two complementary portfolios and management teams Enhanced corporate and capital markets profile post integration Attractive financial terms All cash consideration to Sacyr of,794m representing a blended 5.7% premium to NAV Transaction expected to deliver returns in excess of MERLIN s cost of capital Financing Financing required to undertake the entire transaction already secured Target LTV of approximately 50% by 05 year-end Net of 86m cash to remain at Testa post capital increase Post capital increase 5

6 A three step transaction Restructuring pre-deal at Testa Subscription of a 43m capital increase at Testa for a 5% stake (post money) 3 Direct acquisition of a 74.6% stake (post money) from Sacyr for,555m Completed Completed Jul-05 (step ) / end of Jun-06 (step 3) Elimination of the 953m loan granted to Sacyr by Testa through a c.,97m capital reduction and an extraordinary dividend at Testa, allowing Sacyr to repay the loan in full 43m capital increase at Testa without rights fully subscribed by Merlin in return for a 5% stake in the company post-money 86m of incremental cash to remain at Testa post capital increase Step : Direct acquisition of a 5.% stake (post money) from Sacyr following completion of all condition precedents Triggers launch of mandatory tender offer for 0.4% (post money) Step 3: Acquisition of the remainder 49.5% of Sacyr s stake in Testa SACYR Minority Sh. Merlin SACYR Merlin 99.5% 0.5% 5.0% 74.6% 99.6% Loan repayment 953m Capital reduction and extraordinary dividend,97m Capital increase of 43m Acquisition of a 74.6% stake in Testa (,555m) Mandatory tender offer Testa Testa 0.4% Minority Sh. Testa 0.4% Minority Sh. Testa GAV 3,0m 3,0m 3,0m Testa NAV,93m,73m,73m As of 3-Mar-05 As of 3-Mar-05, including 86m of incremental cash to remain at Testa post capital increase 6

7 Transaction price breakdown Bridge to implied equity value and premium to NAV,555m² 86m³,986m 86m³,994m,73m 86m³ 43m¹,800m 4,808m,537m Premium to NAV: 5.7% Capital increase at Testa for a 5.0% stake Direct acquisition of a 74.6% stake from Sacyr Total purchase price paid by MERLIN for 99.6% stake Bridge to implied enterprise value and premium to GAV Implied 00% equity value Testa NAV March 05,480-,666m 3,473m 3,0m 86m³,994m 86m³,480m Premium to GAV: 8.5%,808m Implied 00% equity value Testa net debt Implied enterprise value Testa GAV March 05 Note: all % stakes are post money 86m of cash to remain at Testa, 39m dividend to Sacyr and 6m dividend to minorities Through two steps: direct acquisition of a 5.% stake by July 05 and acquisition of the remainder 49.5% of Sacyr s stake in Testa by end of June 06 3 Incremental cash at Testa post capital increase relative to cash position pre-transaction 4 Includes 6m dividend paid to minorities 7

8 Section Testa: a unique, best-in-class real estate platform

9 Testa at a glance Key Figures 3.bn Gross portfolio value,043,90sqm GLA 98% Economic occupancy rate.7bn 59m NAV (Post capital increase) Gross rental income 4.7 years WAULT 4 9% Physical occupancy rate Portfolio Breakdown by GAV By Asset Class By Market Logistics 4% 4% Other 5 Land 8% Rest of Spain 7% Rented residential 8% Barcelona % Retail % Hotels % 53% Offices 7% Madrid As of 3 December 04, unless otherwise stated As of 3 March 05 3 The 04 rate does not include Partenón, which is currently vacant and under refurbishment following the exit of a long-term tenant in September 04 4 Weighted by GRI of offices, retail, hotels and logistics 5 Includes financial assets, elderly homes and other 9

10 Testa at a glance (cont d) GAV GRI GAV and GRI,3 by asset type,70 Office Shopping Centres GAV ( m) Hotels Logistics Rented Residential Office Shopping Centres Hotels Logistics Rented Residential GRI ( m) Monthly GRI ( / sqm / m) Occupancy 4 and WAULT by asset type 98% %. 00% %.7 95% n.m. 98% Avg. economic occupancy Average WAULT 6 9% Avg. physical occupancy Office Shopping Centres Hotels Logistics Rented Residential WAULT (years) Occupancy rate (%) As of 3 March 05 As of 3 December 04 3 Total GRI calculated as GRI / sqm / month multiplied by rental surface times 4 Economic occupancy rate except for rented residential, which is physical occupancy 5 The 04 rate does not include Partenón, which is currently vacant and under refurbishment following the exit of a long-term tenant in September 04 6 Weighted by GRI of offices, retail, hotels and logistics 0

11 Truly unique prime office portfolio in Madrid and Barcelona Key metrics Madrid office (top assets by size) # assets 36 GLA 475,3 sqm GAV (Mar-5),70m Torre PwC PwC HQ,390 sqm Castellana 83 Sacyr HQ 5,54 sqm Alcala, 45 Madrid City Hall 8,655 sqm C. de las Naciones Endesa HQ 54,960 sqm GRI 96.4m Economic occupancy 97.7% Josefa Valcarcel L Oreal HQ 9,893 sqm C. de las Naciones Multitenant 37,63 sqm Avenida de Bruselas Indra HQ 33,78 sqm Avenida de Bruselas P&G HQ 8,058 sqm WAULT 4.7 years Key highlights Princesa, 3 Madrid Courts 33,668sqm P. De Vergara Uría HQ 0,73 sqm Barcelona office (top 6 assets by size) Juan Esplandiú Multitenant 8,008 sqm Atica Multitenant 3,406 sqm Irreplicable prime office portfolio Direct exposure to Madrid s prime office market recovery Significant presence of HQ quality single tenant buildings Top quality, international tenants Recurrent high occupancy rates throughout the cycle Diagonal 54 Uria HQ 9,664 sqm Diagonal 605 Everis HQ 4,795 sqm San Cugat II Ricoh HQ 0,0 sqm San Cugat I Multitenant 5,379 sqm Vilanova Endesa Regional HQ 6,494 sqm Muntadas I Multitenant 4,380 sqm Key tenants 3 years 3 years 5 years 7 years 8 years years years years 3 years 6 years 0 years As of 3 December 04 unless otherwise stated Above ground rental surface 3 The years figure shows years as tenant in the corresponding asset

12 High quality, strategically located retail and logistic assets Shopping Centres Logistics Key metrics Key metrics # assets 5 GLA 7,04 sqm # units 30 # assets 6 GLA 09,66 sqm GAV (Mar-5) 349m GRI Economic occupancy WAULT Annual footfall 0.9m 98.8%. years 4m SC Porto Pi (Mallorca) 6,559sqm SC Larios (Málaga),504 sqm GAV (Mar-5) 4m GRI Economic occupancy WAULT 8.0m 97.5%.7 years Coslada I III Multitenant 8,506 sqm Azuqueca Azkar 7,995 sqm Key highlights Key highlights Urban shopping centres at the best commercial locations with established, affluent catchment areas Wide range of first-rate retail offering, with reputable and financially-strong international and local tenants Plaza de los Cubos (Madrid) 3,0 sqm Well-located in modern logistics parks, with easy access to major highways Very sizeable assets providing a strong competitive advantage Focused on a key logistic corridor, the A motorway connecting Madrid with Barcelona Cabanillas Logista 70,34 sqm SC Oeste (Madrid) 0,839 sqm Alovera FCC Logística 38,763 sqm Key tenants 0 years years 4 years Key tenants 8 years 0 years 4 years year 0 years 9 years As of 3 December 04 unless otherwise stated The years figure shows years as tenant in the corresponding asset

13 Exposure to other asset classes Hotels Rented residential Key metrics Key metrics # assets # assets # rooms,55 GLA 0,843 sqm GAV (Mar-5) 388m GRI Economic occupancy WAULT 0.6m 00% 8.6 years Eurostars Madrid Tower 5 stars Madrid, since Rooms Eurostars Grand Marina 5 stars Barcelona, since Rooms # units,59 GLA 4,330 sqm GAV (Mar-5) 3 75m GRI 3 Physical occupancy 0.7m 94.6% Pza Castilla 30 units Bentaberri 55 units Key highlights Puerta de Castilla 4 stars Madrid, since Rooms Key highlights Alcorcón 59 units Stable and resilient during downturn Urban hotels in Madrid and Barcelona, leased to leading hotel operators Variable rent component expected to capture market recovery NH Sanvy 4 stars Madrid, since Rooms Tryp Aeropuerto 4 stars Barcelona, since Rooms Residential complexes located in Madrid (78%), San Sebastian (4%) and Toledo (8%) Focus on areas with high population density Built with high quality standards, facilitating maintenance and increasing the life of the assets Pavones 04 units Benquerencia 03 units Key tenants 4 8 years 3 years 7 years Tryp Oceanic 4 stars Valencia, since Rooms Alameda Osuna 95 units As of 3 December 04 unless otherwise stated 3 Includes commercial units within residential assets 3 Includes only fully owned hotels 4 The years figure shows years as tenant in the corresponding asset

14 Testa brings a complementary team with strong in-house capabilities focused in asset management and refurbishment /development Highly experienced management team Vertically integrated platform In-house Real Estate Capabilities More than 50 years of combined real estate experience Leasing Sourcing Full capabilities to source and negotiate with new high profile tenants More than 40 leases signed since 009 More than 00k sqm developed in the last decade c.,000,000 sqm refurbished in the last decade Leasing Management Property Management Internal team to manage existing tenants and leasing renewals All contract management and renovations are internalized Total of 94 highly qualified professionals Asset Management Management platform benefits from scale achieved Excludes leasing agreements from residential portfolio Composed of 6 managers, 50 technicians and 38 administrative staff 4

15 Section 3 Combined strengths: creating the largest Spanish real estate player

16 Creation of the leading Spanish property company A transformational acquisition in terms of scale, footprint and portfolio diversification A unique opportunity to capture growth in the Spanish real estate market 3 A transaction fully in line with MERLIN s strategic and financial objectives 4 Creating a leader in office and logistics and a reference player in retail 5 Strategic plan for Testa based on long term approach and complementarity 6 Attractive deal economics relative to the market 7 Enhanced corporate and capital markets profile post integration 6

17 DRAFT Transaction creates the leading Spanish real estate player by far GRI : Spanish players benchmarking GAV : Spanish players benchmarking ( m) 93 ( bn) Spain France New MERLIN Comp Comp Comp 3 Comp 4 New MERLIN Comp Comp Comp 3 Comp 4 Post transaction, MERLIN becomes the undisputed largest player in terms of Spanish GRI and GAV Latest reported GRI (3 December 04 for Testa and Comp, 3 March 05 annualized for MERLIN and Comp, Comp 3 and Comp 4) Latest reported GAV (3 December 04 GAV plus 05 acquisitions at cost), except for Testa (as of 3 March 05). MERLIN excludes Lisbon- Expo acquisition 7

18 DRAFT providing diversification and significantly increasing exposure to the recovery of the Spanish real estate market Pre-Transaction Post-Transaction By GAV Logistics Offices % Retail % 5% 7% High street retail By GAV Rented residential Hotels Retail 5% 7% % Logistics 4% % Other 36% Offices High street retail 30% Total GAV =,33m Total GAV = 5,55m By GRI 3 By GRI 4 Rented residential Logistics 7% Logistics 6% 4% % Other Offices 3% Hotels 7% Retail 4% 66% High street retail Retail 3% 39% Offices High street 30% retail Total GRI = 34m Total GRI = 93m Increased exposure to the Spanish real estate cycle Latest reported GAV (3 December 04 GAV plus 05 acquisitions at cost, excluding Lisbon Expo) Latest reported GAV: For MERLIN, 3 December 04 GAV plus 05 acquisitions at cost excluding Lisbon Expo and for Testa, 3 March 05 GAV 3 Latest reported GRI (calculated as passing monthly gross rent at 3 March 05 multiplied by ) 8 4 Latest reported GRI: For MERLIN, 3 March 05 annualized GRI and for Testa, 3 December 04 GRI

19 Dublin Madrid Barcelona London City London WE Paris Milan Brussels Berlin Lisbon Rome Amsterdam Frankfurt Unique opportunity to capture growth in the Spanish real estate market Change in prime office rents (%) Nominal GDP growth (%) 90 Trough to Current Peak to Trough 0% 8% 60 6% 30 4% % 0 0% (30) -% -4% (60) -6% Spain France Germany Italy Portugal Source: CBRE Source: Rental levels are significantly below peak Ample room for rental uplift driven by strong recovery in GDP growth OECD 9

20 And benefit from historically high difference between yields and cost of funding The spread between the Madrid prime office yield and the Spanish Government 0 year bond reaching historically high levels.8%.3%.3%.6%.5%.4% 0.% 0.3% 0.4% June 05¹ Source: CBRE and Factset as of June 05 Calculated based on the difference between the December 04 prime office yield in Madrid of 5.0% and the yield of the Spanish Government 0 year bond as of 05 June 05 of.% 0

21 3 An ideal fit with MERLIN s investment mandate MERLIN s strategic pillars Commercial assets in the Core / Core+ segments Prime office properties located in Madrid and Barcelona Dominant and urban shopping centres with good catchment area Logistic properties located in close proximity to the key transport hubs Urban hospitality assets located in prime areas in key Spanish cities High quality assets in good secondary locations with strong leases Robust cash flows and conservative financial structure Testa s fit with MERLIN The acquisition of Testa ticks all the boxes of MERLIN s strategic and financial objectives

22 4 The transaction creates a market referent in Spain with critical mass across the most attractive asset classes Offices Shopping Centres ( m),965, Largest prime office player in Spain 3 Stronger presence in those areas that will experience first the rental growth recovery ( m) Becomes a reference for key tenants with six strategically located, dominant and urban retail assets GAV GRI GLA (sqm) GAV GRI GLA (sqm) Logistics High Street Retail - Tree ( m) MERLIN becomes the third largest Spanish platform by GLA 3 40, Largest player in the A- corridor Expanded footprint over main Madrid GAV GRI GLA (sqm) corridors GAV GRI ( m) 373 GLA (sqm) MERLIN Testa Latest reported GAV: For MERLIN, 3 December 04 GAV plus 05 acquisitions at cost except Lisbon Expo and for Testa, 3 March 05 GAV GRI as of 3 December 04 for Testa and 3 March 05 for MERLIN (calculated as passing monthly rent as of 3 March 05 multiplied by ) 3 Source: CBRE Spain

23 5 Strategic long term plan for Testa based on complementarity Corporate strategy Initially integrated as a subsidiary of MERLIN Group Conversion of Testa into SOCIMI Envisaged merger of MERLIN and Testa Long-term focused industrial approach No anticipated core asset disposals in the short to medium term given high quality of the portfolio, absence of overlap and point in cycle Opportunistic approach in relation to recycling capital from non-core assets (land, rented residential) Capitalise on strong portfolio complementarities and gradually capture growth in rental levels Maximise profitability through active management and strategic capex 3 Optimise financing structure Full refinancing of Testa s debt in the medium term Objective to achieve investment grade rating in the short-medium term 4 Integration of management team Two complementary and highly experienced teams facilitating integration and know-how exchange Leverage upon Testa s strong in-house capabilities and track record in asset management and refurbishment / development 3

24 6 Acquisition done at an attractive entry valuation Acquisition implied capital values by asset class vs. recent market transactions # of deals Selected Market Transactions 04-5 YTD /sqm Range Market /Room: k 4,000-7,350 5,000-5,357,78 3, ,000 Acq. Implied /Room: 5k 4,088 5,738, Offices Hotels Shopping Centres Rented Residential Logistics Acquisition implied yields per asset class vs. Q 05 market yields 3 Average implied yields 4 Passing yield: 4.9% Full ERV yield: 5.5% 5.0% 5.4% % 5.3% 5.0% 5.3% % 4.4% % 5.4% Offices Hotels Shopping Centres Rented Residential Logistics Passing yield Full ERV yield CBRE - Spain property investment yields (prime) Premium paid allocated by MERLIN Source CBRE (selected market transactions comparable to Testa s assets in each asset class, mostly completed within the last twelve months) 3 Calculated on a gross basis 4 Calculated based on the valuation assigned by MERLIN to the commercial assets without considering the rented residential portfolio. Taking into account rented residential, the passing yield would be 4.8% and the ERV yield 5.4% 4

25 7 Enhanced corporate and capital markets profile Number of assets 903 New MERLIN 990 The largest real estate company in Spain by size Total GAV o/w Tree o/w Offices o/w Retail o/w Logistics.3bn.7bn (7%) 0.3bn 0.3bn 0.bn 5.5bn.7bn (30%).0bn 0.6bn 0.bn Leader player in offices, third player in logistics and a reference player in retail Diversified portfolio allowing to capture growth upsides of real estate market recovery in Spain Total GRI LTV 34m 3 93m 3 4% 4 Target LTV <50% by year-end 05 Sound credit profile favoring access to debt capital markets Highly visible profile in the context of listed real estate peers in Spain Source: MERLIN Properties, Testa company information, Capital IQ as of 4 June 05 For Testa, considering 8 commercial assets + 5 land plots and assets under development For MERLIN, based on Savills appraisal as of 3 December 04 for the 04 acquisitions and on the acquisition price for the 05 acquisitions (excludes Lisbon-Expo acquisition). For Testa, based on 3-Mar-05 valuations 3 For MERLIN, annualized gross rents have been calculated as passing monthly gross rent at March 3, 05. For Testa, 04A gross rents 4 Q 05 net debt figure adjusted for the rights issue completed in May 05 net of fees and divided by total GAV 5

26 Section 4 Transaction timeline & conclusions

27 Key dates Key milestones Signature of the Investment Agreement with Sacyr 8 June 05 Completion of pre-deal restructuring at Testa and subscription of a capital increase in Testa for a 5.0% stake June 05 Merlin to call for Shareholders Meeting to approve the acquisition of Sacyr s stake in Testa 3-4 July 05 Merlin Shareholders Meeting By 9 July 05 Acquisition of a 5.% stake from Sacyr No later than 9 August 05 Filing of mandatory tender offer 30 September 05 to 30 June 06 Acquisition of the remainder of Sacyr s stake in Testa 7

28 Conclusion: creation of the leading real estate company in Spain MERLIN becomes the undisputable leading real estate company in Spain Best-in-class player across our three core segments (Office, Retail and Logistics) with critical mass and high quality, strategically located assets 3 Well-diversified portfolio exposure allowing to capture full upside from the cycle 4 Proven ability to deploy proceeds from capital raisings in attractive and large deals creating value for shareholders 5 Highly visible corporate profile facilitating access to capital markets 8

29 PASEO DE LA CASTELLANA, MADRID info@merlinprop.com