september 2020 · 2020. 9. 3. · net rents 22.7 22.5 +0.7% ebitda 21.8 21.5 +1.3% ffo(1) 12.2 12.6...

September 2020

COMPANY PRESENTATION

ı 2 ı

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 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

Strategy

Positioning

Value Creation

Capital Structure

ESG & Technology

Covid-19

Appendix

Contents

ı 4 ı

History |

SIX INTENSE YEARS TO POSITION MERLIN AS THE LEADING SPANISH REIT AND AMONG THE TOP 10 EUROPEAN REITS

2014 2015 2016 2017 2018 2019 2020

May & July2015

€ 1.7bn Capitalincrease

Dec.2014

Refinancingof Tree debt€ 940M

Acquisition of Tree

portfolio (888 BBVAbranches)

€ 740M

July 2014

Contribution of 3 non-core retail assets€ 173m

Feb2020

Acquisitionof 12 assets€ 544M

2014

Acquisition ofMetrovacesa€ 1.7bn

June2016

Feb.2016

BBBS&Prating

Oct.2016

Baa 2Moody’srating

Feb.2018

BBBpositive outlook S&Prating

Dec.2018

Refinancing of Tree debt€ 717m

Dec.2016

Sale of hotelportfolio and 10 assets € 761M

Acquisition of 40 assets

€ 812M

2016

€ 1.3bnIPO

June2014

2017


2018


2019

Acquisitionof 3 assets in Portugal€ 125M

2017

Investment in refurbishment & development€ 109M

2018

Sale of Testa & non-core€ 594M

2 bondissuances€ 900M

2017

Acquisitionof 47 assetsand ZAL Port€ 331M

2015

Dec.2015

Inclusionin IBEX 35Index

Dec.2015

Refinancingof Testadebt€ 1.7bn

2 bondissuances€ 1.7bn

2016 Apr.2019

ESG Indexed financing€ 1.55bn

Jan. 2020

Listing in Euronext Lisbon

Jul. 2020

1 bond issuance€ 0.5bn

Nov.2019

1 bond issuance€ 0.5bn

Nov.2019

Sale of 26 non-core office building & other€ 281M

ı 5 ı

MERLIN today | Overview

Company 6M20 (1) Fully consolidated excluding assets where MERLIN holds a minority stake. (2) GAV of land under development and NAV of equity method included in its respective category (offices, shopping centers and logistics). Excluding DCN loan(3) Passing rent(4) Includes 3 hotels, non-core land and miscellaneous(5) Pro-forma post bond issuance and repurchase

LARGEST AND MOST DIVERSIFIED SPANISH REIT

Fast facts

ASSETS(1)

920

OCCUPANCY RATE94%

GAV€ 12.8bn

GRI€ 496m

GROSS YIELD4.4%

GLA OWNED(1)

4.3m sqm

WAULT5.7 years

Portfolio breakdown

51%

18%

10% 6%

47% 18%

11%

2%

by GRI(3)

by GAV(2)15%

22%

Logistics Other(4)

Capital structure

EPRA NAV PER SHARE€ 7.4bn / € 15.68

LTV40.1%

AV. MATURITY6.5 years(5)

STANDARD & POOR’SBBB

AV. INTEREST RATE2.07%(5)

MOODY’SBaa2

Offices Shopping Centers Net leases

Strategy

ı 7 ı

Strategy | Strategy pillars

A CLEARLY DEFINED STRATEGY INSPIRED BY THE BEST REIT PRACTICES

Core & Core Plus Spain & Portugal

Investment grade capital structure

Dividend policy: 80% of AFFO

One of the world’s

most cost efficient

REIT’s

Best governance

practices

Breadth of prime space Madrid, Barcelona and Lisbon

Urban or Dominant National scale

Offices

50%Shopping Centers

15%

National footprint “One-stop shop” solution for 3PL

Logistics

20%High triple net cash flow

Inflation multiplier

Net leases

15%

ı 8 ı

Strategy | Asset categories evolution (by GAV)(1)

LOGISTICS, THE FASTEST GROWING ASSET CATEGORY SINCE 2014

2014 2018 2020

Otros

Residencial en alquiler

Hoteles

High Street Retail

Logístico

Centros comerciales

O�cinas

69%14%

12%5%

51%

18%

15%

6%

(1)

50%16%

9%4%

21%

Otros

Residencial en alquiler

Hoteles

High Street Retail

Logístico

Centros comerciales

O�cinas

(1)

10%

Offices Net leases Shopping centers Logistics Other

(1) Other includes hotels, non core land, minority stakes and miscellaneous

ı 9 ı

Key metrics

GRI (€m) 20.8(1) 24.0

% GRI / MERLIN asset class portfolio 9.0% 21.7%

GLA (sqm) 118,067 60,098

% GLA / MRL asset class portfolio 9.3% 11.4%

Occupancy rate (operating) 100% 99.3%

Strategy | Exposure to Portugal

Almada60,098 sqm

Offices

Monumental22,387 sqm

Lisboa Expo6,740 sqm

Marqués Pombal 312,461 sqm

Torre Lisboa13,715 sqm

Nestlé HQ12,260 sqm

Central Office10,310 sqm

Art22,150 sqm

Torre Zen10,207 sqm

TFM7,837 sqm

Logistics

Lisbon Park224,864 sqm

Shopping centers

Exposure to Portugal

GRI (€m)

44.8% GRI / MERLIN portfolio

9.0%Occupancy rate

100%

PORTUGAL HAS GAINED RELATIVE WEIGHT IN MERLIN’S PORTFOLIO

(1) Monumental has been vacated for the refurbishment

Positioning

ı 11 ı

Positioning | Fast facts

#1 REIT IN OFFICES, LOGISTICS AND NET LEASES

(1) 6M20(2) Data for Minority Stakes is reported for 100% of the subsidiary(3) Pre canon. GRI based on passing rent

MINORITY STAKES(2)

#1 Offices

• Flexibility to offer multitenant or headquarter buildings

• Capacity to adapt to the needs of the tenant

124 ASSETS

1,323 K SQM

€ 6.3 BN GAV

€ 231 M GRI

FULLY CONSOLIDATED(1)

#1 Net leases

• Excellent conditions of BBVA lease agreement: triple net lease with 1.5x HICP annual uplift

697 ASSETS

351 K SQM

€ 1.8 BN GAV

€ 87 M GRII

• “One-stop-shop” solution for logistics operators wishing to operate across Spain

• Big footprint to match the rapid development of 3PL activity

ZAL PORT 48.5%51 ASSETS

625 K SQM

(+103K SQM WIP)

€ 60 M GRI(3)

(+€ 8 M GRI WIP)(3)

50 ASSETS

1,181 K SQM

€ 1.0 BN GAV

€ 56 M GRI

Existing WIP

11 PROJECTS

977 K SQM

€ 0.6 BN GAV

€ 45 M GRI

#1 Logistics

#4 Shopping

Centers

• Mainly urban footprint in high GDP/capita areas in Spain

• Reference landlord for top retailers

• Critical mass with retail brands

TRES AGUAS 50%1 ASSET

68 K SQM

€ 9 M GRI

14 ASSETS

461 K SQM

€ 2.3 BN GAV

€ 111 M GRI

ı 12 ı

Positioning | Offices overview

• Barcelona 16%

• Lisbon 8%

• Other Spain 1%

• Madrid 75% • Prime + CBD 53%

• NBA 38%

• Periphery 9%

• Multi tenant 68%

• Single tenant 32%

Otros

Lisbon

Barcelona

�Madrid

Reversion in MVC assetsBreakdown

PRIME SPACES IN BOTH CBD AND NBA OFFERING A WIDE VARIETY OF SOLUTIONS TO CLIENTS

Top 10 tenants

Fast facts

# ASSETS 124

GLA (sqm) 1,323 k

GAV (€ M)

231

GROSS YIELD 4.0%

OCCUPANCY 91%

6,334(1)

GRI (€ M)

971K MAD212K BCN118K LISBON

By geography

By GAV

By location

By GAV

By product

By GAV

(1) Excluding office land for development

ı 13 ı

Positioning | Shopping Centers overview

• Extra-large 33%

• Large 32%

• Medium 21%

• Small 14%

• Madrid 25%

• Lisbon 20%

• Galicia 13%

• Catalonia 10%

• Valencia 10%

• Andalusia 7%

• Other Spain 15%

• Urban 59%

• Dominant 37%

• Secondary 4%

Other

Andalusia

Valencia

Galicia

Catalonia

Madrid

Lisbon

(1) 100% of Tres Aguas of which MERLIN owns 50%(2) As per the definition of AECC (Spanish Shopping Center Association)(3) Before Covid-19 outbreak

Reversion in MVC assetsFast facts Breakdown

Top 10 tenants

URBAN AND DOMINANT ASSETS OFFERING NATIONAL SCALE IN HIGH GDP/CAPITA AREAS

# ASSETS 14 1

GLA (sqm) 461 k 68 k

GAV (€ M) 2,274

GROSS YIELD 4.7%

Fully Consol.

Tres Aguas (1)

OCCUPANCY 94%

ANNUAL FOOTFALL 103 m pax(3)

GRI (€ M) 113 9

By geography

By GAV

By type

By GAV

By size(2)

By GAV

ı 14 ı

Positioning | Logistics overview

• 3PL mono-client 43%

• 3PL multi-client 37%

• End user 20%

• Madrid 58%

• Catalonia 26%

• Sevilla 5%

• Basque Country 5%

• Other Spain 6%

• National 40%

• Ports 30%

• Regional 27%

• Production related 3%

Other Spain

Basque country

Seville

Barcelona

�Madrid

Reversion in MVC assetsFast facts Breakdown

Top 10 tenants

(1) Figures reported for 100% of ZAL Port(2) Passing rent as of 30/06/20, pre ground lease expenses(3) Total expected gross rents. GAV includes acquisition cost plus estimated Capex

NATIONAL FOOTPRINT IN MAIN LOGISTICS HUBS

Existing WIP

# ASSETS 50 49 11

GLA (Sqm) 1,181 k 625 k 977 k

GAV (€ m) 972 560

GRI (€ m) 56 60(2) 45(3)

GROSS YIELD 5.8%

ZAL Port(1)

OCCUPANCY 97% n.a.

By reach By tenant type

By geography

By GAV

Consolidated ZAL Port(1)Consolidated

2

103 k

8

100%97%

7.8%

+2.9m sqm under management+2.9m sqm under management



• End user 20%

• Madrid 58%

• Catalonia 26%

• Sevilla 5%


• Other Spain 6%

• National 40%

• Ports 30%

• Regional 27%


Other Spain

Basque country

Seville

Barcelona

�Madrid



• End user 20%

• Madrid 58%

• Catalonia 26%

• Sevilla 5%


• Other Spain 6%

• National 40%

• Ports 30%

• Regional 27%


Other Spain

Basque country

Seville

Barcelona

�Madrid



• End user 20%

• Madrid 58%

• Catalonia 26%

• Sevilla 5%


• Other Spain 6%

• National 40%

• Ports 30%

• Regional 27%


Other Spain

Basque country

Seville

Barcelona

�Madrid

By GAV



• End user 20%

• Madrid 58%

• Catalonia 26%

• Sevilla 5%


• Other Spain 6%

• National 40%

• Ports 30%

• Regional 27%


Other Spain

Basque country

Seville

Barcelona

�Madrid



• End user 20%

• Madrid 58%

• Catalonia 26%

• Sevilla 5%


• Other Spain 6%

• National 40%

• Ports 30%

• Regional 27%


Other Spain

Basque country

Seville

Barcelona

�Madrid

By GAV

ı 15 ı

Positioning | GAV summary 6M20

Passingyield

Reversionary yield

Offi

ces

4.9%

6,334

4.0%S

ho

pp

ing

cen

ters

5.6%

2,274

4.9%

Oth

er(1

)

763

-

TO

TA

L

12,193

4.4%

Min

ori

ty s

takes

562

TO

TA

L w

ith

min

ori

ty s

takes

12,755

GAV(€ million)

Net

Lease

s

4.7%

1,849

4.7%

Lo

gis

tics

5.8%

6.4%

972

Source: Company(1) Other includes WIP, hotels, non-core land and miscellaneous

VALUATION REMAINS FLAT (+0.2%) AS COMPARED TO DECEMBER 2019

ı 16 ı

Positioning | Occupancy and WAULT 6M20

3.2

91%

Offices

17.9

100%

Net leases

2.7

94%

Shopping centers

3.8

97%

Logistics

95% AVERAGE

OCCUPANCY

5.7 years AVERAGEWAULT

ONLY 12% OF RENTS EXPIRE IN 2021

ı 17 ı

Positioning | Trading update 6M20

VERY GOOD PERFORMANCE ACROSS THE BOARD

(1) Portfolio in operation for the 6M20 (€ 246.7m of GRI) and for the 6M19 (€ 240.3m of GRI)(2) LTM Change in rent in renewals and relets(3) LTM

Rent LfL YoY(1)

sqm contracted

Release spread(2) #contracts(3)

Office +4.0% 137,266 +2.7% 156

Shopping Centres +2.8% 18,112 +4.0% 100

Net leases +1.2% - - -

Logistics +2.9% 60,885 +6.7% 7

Other (12.5%) - - -

TOTAL +2.7% 216,263 263

Value creation

ı 19 ı

Value creation | Potential rental growth (2019-2022)

417.265.5 23.8108.6 34.8Pending Capex as of 6M20

€ 232.7m priority 1

525.9

GRIFY19

(26.3)

Non-core disposals

499.7

GRI FY19Post sales

25.2

Landmark

8.6

Flagship

13.2

Best II

5.6

Best III

552.3

FY22

45.2

Value creation plans

post FY22

Reversionary potential pre-Covid

59.0€ 39.2m priority 1

Prudent approach:

• No value creation plans postponed due to Covid-19 (priorities 2-5)

• No market rental growth assumed

• No CPI or indexation

(€m)

ı 20 ı

PRE-LET 10

0%

PRE-LET 9

5%

PRE-LET 8

2%

PRE-LET 2

8%

TorreCharmartín

Torre Glòries

Marqués de Pombal 3

Diagonal 605

Castellana 85

MonumentalPlaza Ruiz

PicassoAdequa

4Adequa

7

GLA (sqm) 18,295 37,614 12,460 13,244 15,254 22,387 31,576 15,793 32,109

Acquisition (€m) 31.2 142.0 - - - - - 28.2 64.5

Capex (€m) 38.0 26.7 1.6 8.7 32.1 34.8 50.3 16.8 61.5

Rent (€m) 4.3 11.8 0.2 1.3 2.6 3.3 6.3 3.6 8.3

Yield on Cost 6.2% 7.0% 9.4% 15.5% 8.1% 9.4% 12.6% 7.9% 6.6%

Delivery 2019 2019 2020 2020 2021 2021 2022 - -

Value creation | Landmark I - Update

Total Acquisition

€ 266.0mTotal Capex

€ 270.5mYield on Cost

7.8%Total investment

€ 536.4m

LET 10

0%

Total Additional Rents

€ 41.7m

DELI

VERED

DELI

VERED

ı 21 ı

Value creation | Landmark I

GLA 16,471 sqm(1)

Total Capex € 33.0mYield on cost 8.3%Delivery 1Q21

GLA 25,385 sqm(1)

Total Capex € 34.8mYield on cost 9.4%Delivery 1Q21

• Full refurbishment of the asset, located in the heart of Azca, the best business area in Madrid Prime CBD

• 12,789 sqm signed post Covid-19 outbreak (+ 1,842 sqm optioned)

• C85 will become the HQ of both a top-tier consulting firm and a construction company

Castellana 85 Monumental

• Full refurbishment of the building, located in Duque de Saldanha, one of the most emblematic squares in the city and the core of Lisbon’s Prime CBD area

• 10-year term lease agreement with BPI comprising 19,425 sqm, to become their main HQ in Lisbon

CONFIDENTIAL

(1) Post refurbishment

ı 22 ı

Value creation | Flagship - update

(1) Only including MRL 50%

LariosArturo Soria

PlazaX-Madrid Tres Aguas(1) Saler Porto Pi Callao 5

GLA (sqm) 41,460 7,054 47,170 67,690 47,471 58,779 11,629

GLA MERLIN (sqm)

37,957 6,069 47,170 33,845 28,861 32,963 11,629

Capex (€m) Works: 27.5

Ad. GLA: 19.95.4

Works: 46.4 Investment: 10.5

12.1(1) Works: 24.0 Ad. GLA: 12.0

Works: 26.6 Ad. GLA: 15.2

20.5

Rent (€m) 3.1 0.6 5.2 1.4(1) 1.9 1.7 3.9

Yield on Cost 6.6% 11.3% 9.1% 11.2% 5.2% 4.2% 18.9%

Delivery 2019 2019 2019 2019 2021 2021 -

DELI

VERED

DELI

VERED

DELI

VERED

DELI

VERED

∆ GLA + X-Mad inv.

€ 57.5mTotal Capex

€ 162.6m Total Additional Rents

€ 17.7m Yield on Cost

8.1% Total investment

€ 220.1m

ı 23 ı

Value creation | Flagship

GLA 28,834 sqm (inc. additional GLA)Cost € 36.0m (inc. units acquired)Yield on cost 5.2%

GLA 32,732 sqm (inc. additional GLA)Cost € 41.8m (inc. units acquired)Yield on cost 4.2%

• The refurbishment will consolidate Saler, facing the City of Arts and Sciences, as the leading urban mall in Valencia

• Anchor tenants upsizing and upscaling units

• Full refurbishment of the shopping center

• The asset will contain outstanding exterior terraces overlooking the Mediterranean sea

• The future additional space (2,400 sqm) is fully let

Saler Porto Pi

ı 24 ı

Value creation | Best II - Update

Madrid Pinto II B(1)

Guadalajara Cabanillas III

Toledo Seseña

Guadalajara Cabanillas F

Madrid San Fernando II

Guadalajara Cabanillas

Park I extension

Guadalajara Azuqueca II

Guadalajara Cabanillas

Park II

Guadalajara Azuqueca III

GLA (sqm) 29,473 21,879 28,731 20,723 34,224 92,994 98,757 210,678 51,000

Capex (€m) 13.7 11.8 15.5 10.8 21.7 56.0 54.7 114.2 30.1

ERV (€m) 1.2 0.9 1.2 0.9 1.9 3.8 4.4 9.2 2.3

ERV YoC 8.6% 7.8% 7.7% 7.9% 8.9% 6.8% 8.1% 8.1% 7.7%

Delivery 2019 2019 2019 2019 2020 2020/- 2021 2021/- -

PRE-LET 6

7%

PRE-LET 10

0%

LET 7

5%

LET 10

0%(1)

LET 10

0%

LET 10

0%

Total investment

€ 328.4m GLA

588k sqm Total Additional Rents

€ 25.9m

(1) To cover the increase in demand as a result of Covid-19

Yield on Cost

7.9%

ı 25 ı

Value creation | Best IIIValue creation | Best III - Update

Valencia Ribarroja

Zaragoza Plaza II

Sevilla(1) ZAL WIP

Lisbon Park

Madrid San Fernando III

Valencia

GLA (sqm) 34,992 11,421 42,632 224,864 98,942 96,572

Capex (€m) 26.3 7.1 24.4 147.6 54.9 56.2

ERV (€m) 1.9 0.5 2.0 10.5 5.1 4.4

ERV YoC 7.2% 7.2% 8.4% 7.1% 9.3% 7.8%

Delivery 2019 2020 2019/2020 2020/- - -

PRE-LET 10

0%

PRE-LET 10

0%

LET 100%

(1) 8,798 sqm already delivered to Amazon

Total investment

€ 317m GLA

509k sqm Total Additional Rents

€ 24.5m Yield on Cost

7.7%

ı 26 ı

Value creation | Best II & III

• Phased project located in Seville’s Port area

• 3 warehouses totalling 27,248 sqm have already been delivered

Sevilla ZAL WIP

• Turn key project in the most dynamic hub of Zaragoza

• 100% let to Dachser upon delivery (September 2020)

• The project, currently under construction, will be delivered by 3Q20

• 67% pre-let to Grupo Damm

GLA 42,632 sqmCost € 2.0mYield on cost 8.4%



Zaragoza Plaza II Madrid San Fernando II

ı 27 ı

Value creation | ZAL Port

280,944

FY19 98.9%

(0.8%)

6M20 96.8%

36

Stock 624,716

WIP 102,965

Stock incl. WIP 727,681

Third parties stock 183,252

Stock under management 910,933

Contracted sqm

Occupancy by area

Release spread #contracts Tenants

(-210 bps)

€m 6M20 6M19 YoY

Gross rents 26.7 22.9 +16.4%

Net rents 22.7 22.5 +0.7%

EBITDA 21.8 21.5 +1.3%

FFO(1) 12.2 12.6 (2.6%)

(1) After deducting leasehold concession charge FFO. Affected by free rent attached to the recently delivered units

155,345 sqm delivered in 2020

GRI € 13.4m

Capital structure

ı 29 ı

Value creation | Policy

INVESTMENT GRADE BBB RATING BY S&P AND Baa2 RATING BY MOODY’S

Maturity schedule

• 5-10 years

• Staggered

Leverage• LTV below 50%

• Target to reach LTV<40%

Unsecured• Unsecured debt above

50% of total debt

• Unencumbered assets/unencumbered debt above 125%

Fixed vs floating

• Below 40% floating

ı 30 ı(1) PF after the €500m - 7yr bond issue, which includes the partial Bond repayment, the RCF repayment and the repayment of Retail mortgage debt(2) Excluding transfer costs. If included, LTV would amount to 39.2%

Value creation | Debt position

AVERAGE MATURITY NOW AT 6.5 YEARS, WITH NO FLOATING RATE RISK

30/06/2020 PF(1) 30/06/2020 31/12/2019

Net debt € 5,167m € 5,153 m € 5,182 m

LTV 40.5% 40.4%(2) 40.6%

Average interest rate 2.07% 1.97% 2.09%

Average maturity (years) 6.5 6.0 6.4

Unsecured debt/Total debt 86.6% 85.2% 82.7%

Fixed rate debt 99.8% 88.9% 99.5%

Rating

BBBBaa2

Outlook

StableNegative

ı 31 ı

Capital structure | Debt position(€

mill

ion

)

% Gross financial debt

Average cost (%)

% interest rate hedged

13.4%

2.54%

Secured bank loans

100.1%

770

5,167

Total Net Debt

(569)

Cash

15.2%

1.57%

98.8%

Unsecured loans

874

71.3%

2.08%

100.0%

Unsecured bonds

4,091

100.0%

2.07%

99.8%

5,735

Total Gross Debt

Figures pro-forma post the liability management actions carried out in July 2020 (€500m bond issuance, €259m bond repurchase, early repay of mortgage loans expiring in 2025 and €700m RCF repayment)

ı 32 ı

Capital structure | Debt maturity profile

RECENT DEBT MANAGEMENT INITIATIVES TO EXTEND MATURITY PROFILE(€

mill

ion

)

12 19 88

23

2020

6

548

2022

560

743

2023

754

600

2025

619

800

2026

888

2021

10

1,400

2027-2034

2,036

613

12121051

850

2024

862

Total Debt amount: €5,735m

Unsecured debt (incl. RCF) Bonds Mortgage debt

(€ million)

1219

88

23

20

20

6

54

8

20

22

56

0

74

3

20

23

75

4

60

0

20

25

619

80

0

20

26

88

8

20

21

10

1,40

0

20

27-2

03

4

2,0

36

613

1212

105 1

85

0

20

24

86

2

Tota

l Deb

tam

ou

nt:

€5

,73

5m

Unse

cure

d d

eb

t (incl. R

CF

) B

ond

s M

ortg

age d

eb

t

No debt maturities until May 2022

ı 33 ı

Capital structure | Debt covenants

AMPLE HEADROOM TO SAFELY COMPLY WITH ALL FINANCIAL COVENANTS

Covenant Required MERLIN Today

LTV <60% 40.4%

ICR >2.5x 3.7x

Unencumbered >125% 190.8%

ESG & Technology

ı 35 ı

REMARKABLE PROGRESS IN ESG

ESG & Technology | ESG achievements

(1) Excluding WIPs and Portugal

CertificationsESG Benchmarks

Wiredscore kicks-off in Europe with MERLIN

Efficiency

ConnectivityQuality

>850k sqm certified

Accesibility

Shopping centers

100%(1)

Logistics

Target

Actual

Shopping centers

100%

Offices

99% 97%

78% 77% 86%

European average

71%

MERLIN

82%

Global average

72%

Our peers

62%

MERLIN has obtained an excellent mark in the 2019 edition

Gold since 2017

ı 36 ı

ESG & Technology | Foundations and NGOs collaboration

Program

2019 development

0.1% of the yearly GRI to support our program

Promotion of the affordable education

€ 265,64319 foundations

€ 148,03047 foundations

Direct contribution• Employee contribution

• Volunteering hours2x

ı 37 ı

ESG & Technology | Covid-19 Robots

MERLIN, ITS EMPLOYEES AND MANAGEMENT TEAM HAVE FUNDED THE ACQUISITION OF 8 ROBOTS (~ € 800,000)

• Opensource robots compatibles with kit tests of any provider and adaptable to any protocol

• Each robot is capable of processing up to 2,400 tests per day (~70,000 weekly)

• Reprogrammable to realize antibodies tests

Furniture Logistics Spain

Collaborating companies

Other sponsors

Logistics and freight Qualified personnelComputer equipment

ı 38 ı

ESG & Technology | Technology

MERLIN IS FOCUSING ITS TECHNOLOGY EFFORTS THROUGH 3 PILLARS

Mentoring Sponsoring

MERLIN teamed up with ISDI and Impact accelerator

The program allowed us to identify Proptech opportunities

Prized proptechs Portfolio companies

MERLIN has invested in Fifth Wall, a venture capital proptech fund

Tenant engagement App

User experience

Deployment in our portfolio

Sensorization Proptech challenge

Proptech Ecosystem

Digitalization

+

Covid-19

ı 40 ı

MERLIN CONCEIVED A COMMERCIAL POLICY IN 2 PHASES TO HELP ITS RETAIL TENANTS

Covid-19 | Commercial policy

Phase I Phase II

Enacted Since March 15th until the reopening Since the reopening until December 31st

Eligibility Tenants affected by the compulsory shutdown set forth in the state of alarm regulations which were up-to-date in their contractual obligations

Tenants affected by the compulsory shutdown or a severe operations limitation who were up-to-date in their contractual obligations

Policy

• 100% rent relief since March 15th (state of alarm) and up until the earliest of (i) end of compulsory shutdown, and (ii) July 31st

• Common service charges continue to be paid by tenants

• Tenants waive rights to take any future actions against MERLIN as a consequence of Covid-19

• Partial rent relief until year end (progressive from 60% in June to 10% in December)

• Tenants extend their contracts until 2022

• Tenants continue paying common service charges and waive any future actions against MERLIN

Implementation

Offices Shopping centers Offices Shopping centers

Eligible universe(1) 3% 89% Eligible universe(1) 4% 94%

Tenants that have accepted

100% >85%Tenants that have accepted

93% >92%

(1) As a % of annual gross rents of each category

ı 41 ı

Offices Shopping centers Logistics

• Urban 59%

• Dominant 37%

• Secondary 4%

Urban shopping centers

• Online commerce (3PLs) 90%

• Industry-related 10%

Online commerce exposure

• Big corporations 95%

• SMEs 5%• Headquarters 70%

• Delegations 30%

Delegations

Headquarters

SMEs

Big corporations

less

• Less vulnerable 89%

• Retail 5%

• Transportation 3%

• Leisure 1%

• Automotive 1%

• Tourism 1%

• 3rd party flex space operators <1%

HQ premises



• Delegations 30%

Delegations

Headquarters

SMEs

Big corporations

less


• Retail 5%


• Leisure 1%

• Automotive 1%

• Tourism 1%


Big corporations

Covid-19 | Tenant quality

MERLIN’S PORTFOLIO STANDS OUT BY ITS RESILIENCE THANKS TO THE TENANT PROFILE STRENGTH

• Listed public corporations 41%

• Larte private corporations 32%

• Other 27%

Resilient tenants



• Delegations 30%

Delegations

Headquarters

SMEs

Big corporations

less


• Retail 5%


• Leisure 1%

• Automotive 1%

• Tourism 1%


Less vulnerable industries

ı 42 ı

Covid-19 | Collection rate

A HIGH QUALITY TENANT BASE LEADS TO HIGH COLLECTION RATES POST-COVID

(1) We have excluded the retail component of offices which is residual for the asset category (~3%)

(as a % of total invoices due)

2Q 2020 Offices Shopping centers Net leases Logistics

Commercial policy 0%(1) 59.7% 0% 0%

Collected 99.2% 37.7% 100% 96.4%

In process 0% 0% 0% 2.7%

Uncollected 0.8% 2.6% 0% 0.9%

ı 43 ı

Covid-19 | Impact on business

NO CHANGE IN COVID-19 IMPACT FOR 2020 PREVIOUSLY QUANTIFIED. 2021 IMPACT MITIGATED BY LOW LEVEL OF MATURITIES AND DELIVERY OF NEW RENTS SECURED BY LANDMARK AND BEST II & III

Only 12% of rents mature in 2021

2020 incentives expensed, not straight-lined (no impact on 2021 P&L)

€ 20 million of incremental rents secured by new contracts already signed

Retail occupancy supported by commercial policy(1)

13% reversionary potential in offices as a buffer against market declines

Net leases as a “safe harbour”

Logistics to continue its growth pace

€ 66m

€ 4m

INCENTIVES

COLLECTION LOSS

€ 29m

€ 41mBOOKED IN 1H

€ 250m (€ 0.53 per share)NEW FFO GUIDANCE

EXPECTED FOR 2H

2020

2021

(1) Maturities extended beyond December 2021

Appendix

ı 45 ı

Offices | Madrid

ı 46 ı

Offices | Madrid (I)

City: Madrid

Location: Prime+CBD

GLA: 11,650 sqm

4. Castellana, 93 (Cadagua)

City: Madrid

Location: Prime+CBD

GLA: 16,918 sqm

2. Castellana, 280

City: Madrid

Location: Prime+CBD

GLA: 14,468 sqm

3. Castellana, 278

City: Madrid

Location: Prime+CBD

GLA: 21,390 sqm

1. Torre Castellana, 259

City: Madrid

Location: Prime+CBD

GLA: 31,576 sqm

6. Plaza Pablo Ruíz Picasso (Sollube)

City: Madrid

Location: Prime+CBD

GLA: 9,945 sqm

9. Alfonso XI, 6

City: Madrid

Location: Prime+CBD

GLA: 9,315 sqm

7. Alcalá, 40

City: Madrid

Location: Prime+CBD

GLA: 6,721 sqm

10. Pedro de Valdivia, 10

City: Madrid

Location: Prime+CBD

GLA: 10,732 sqm

8. Príncipe de Vergara, 187

City: Madrid

Location: Prime+CBD

GLA: 17,055 sqm

11. Beatriz de Bobadilla, 14

City: Madrid

Location: Prime+CBD

GLA: 17,810 sqm (office) + 13,528 sqm (retail)

12. Princesa, 3

City: Madrid

Location: Prime+CBD

GLA: 15,254 sqm

5. Castellana, 85

ı 47 ı

Offices | Madrid (II)

City: Madrid

Location: Prime+CBD

GLA: 5,693 sqm

13. Princesa, 5

City: Madrid

Location: Prime+CBD

GLA: 28,008 sqm

15. Juan Esplandiú, 11-13

City: Madrid

Location: NBA

GLA: 9,576 sqm

19. Ulises, 16-18

City: Madrid

Location: Prime+CBD

GLA: 10,071 sqm

14. Ventura Rodríguez, 7

City: Madrid

Location: Prime+CBD

GLA: 7,301 sqm

16. Eucalipto, 33

City: Madrid

Location: NBA

GLA: 19,893 sqm

20. Josefa Valcárcel, 48

City: Madrid

Location: Prime+CBD

GLA: 7,368 sqm

17. Eucalipto, 25

City: Madrid

Location: NBA

GLA: 13,130 sqm

18. Santiago de Compostela, 94

City: Madrid

Location: NBA

GLA: 32,928 sqm

21. Alvento

City: Madrid

Location: NBA

GLA: 11,712 sqm

22. Cristalia

City: Madrid

Location: NBA

GLA: 18,400 sqm

23. Trianón

City: Madrid

Location: NBA

GLA: 39,150 sqm

24. Ribera del Loira, 36-50

ı 48 ı

Offices | Madrid (III)

City: Madrid

Location: NBA

GLA: 54,960 sqm

25. Ribera del Loira, 60

City: Madrid

Location: NBA

GLA: 19,609 sqm

26. Partenón, 12-14

City: Madrid

Location: NBA

GLA: 18,343 sqm

27. Partenón, 16-18

City: Madrid

Location: NBA

GLA: 3,226 sqm

28. Arturo Soria, 128

City: Madrid

Location: NBA

GLA: 18,925 sqm

29. Torre Chamartin

City: Madrid

Location: NBA

GLA: 6,615 sqm

30. Arturo Soria, 343

City: Madrid

Location: NBA

GLA: 7,515 sqm

31. Manoteras, 18

City: Madrid

Location: NBA

GLA: 122,526 sqm(1)

33. Adequa

City: Madrid

Location: NBA

GLA: 4,482 sqm

32. Fuente de la Mora, 9

City: Madrid

Location: NBA

GLA: 10,685 sqm

34. Aquamarina

City: Madrid

Location: NBA

GLA: 37,224 sqm

35. Vía Norte

City: Madrid

Location: NBA

GLA: 17,191 sqm

36. María de Portugal, 9-13

(1) GLA includes WIP projects in Adequa complex. If excluded, GLA would be 74,624 sqm

ı 49 ı

Offices | Madrid (IV)

City: Madrid

Location: NBA

GLA: 33,718 sqm

41. Av. de Bruselas, 33

City: Madrid

Location: NBA

GLA: 25,211 sqm

44. Av. de Europa, 1

City: Madrid

Location: Periphery

GLA: 10,896 sqm

45. Francisca Delgado, 9

City: Madrid

Location: NBA

GLA: 27,073 sqm

37. Las Tablas

City: Madrid

Location: NBA

GLA: 6,176 sqm

39. Av. de Burgos, 210

City: Madrid

Location: NBA

GLA: 3,623 sqm

40. Manuel Pombo Angulo, 20

City: Madrid

Location: NBA

GLA: 17,139 sqm

38. María de Portugal I

City: Madrid

Location: NBA

GLA: 9,163 sqm


City: Madrid

Location: NBA

GLA: 8,895 sqm


City: Madrid

Location: Periphery

GLA: 36,105 sqm

46. Cerro Gamos, 1

City: Madrid

Location: Periphery

GLA: 36,365 sqm

47. Ática, 1-6

City: Madrid

Location: Periphery

GLA: 15,411 sqm

48. Ática XIX

ı 50 ı

Offices | Madrid (V)

City: Madrid

Location: Periphery

GLA: 23,567 sqm

49. Alvia

ı 51 ı

Offices | Barcelona

ı 52 ı

Offices | Barcelona (I)

City: Barcelona

Location: Prime+CBD

GLA: 13,773 sqm

5. Diagonal, 605

City: Barcelona

Location: Prime+CBD

GLA: 9,664 sqm

4. Diagonal, 514

City: Barcelona

Location: Prime+CBD

GLA: 6,187 sqm

10. Balmes, 236-238

City: Barcelona

Location: Prime+CBD

GLA: 4,174 sqm

3. Diagonal, 458

City: Barcelona

Location: Prime+CBD

GLA: 16,494 sqm

8. Vilanova, 12-14

City: Barcelona

Location: NBA

GLA: 14,461 sqm

12. WTC 6

City: Barcelona

Location: Prime+CBD

GLA: 5,934 sqm

2. Diagonal, 199

City: Barcelona

Location: Prime+CBD

GLA: 37,614 sqm

1. Diagonal, 211 (Torre Glòries)

City: Barcelona

Location: Prime+CBD

GLA: 31,337 sqm

6. Llull, 283 (Poblenou 22@)

City: Barcelona

Location: Prime+CBD

GLA: 5,190 sqm

11. Gran Vía Cortes Catalanas, 385

City: Barcelona

Location: Prime+CBD

GLA: 12,018 sqm

7. Pere IV

City: Barcelona

Location: Prime+CBD

GLA: 3,048 sqm

9. Plaza Cataluña 9

ı 53 ı

Offices | Barcelona (II)

City: Barcelona

Location: NBA

GLA: 10,652 sqm

15. Av. Parc Logistic, 22-26 (PLZFB)

City: Barcelona

Location: NBA

GLA: 14,597 sqm

13. WTC 8

City: Barcelona

Location: NBA

GLA: 11,411 sqm

14. Av. Parc Logistic, 12-20 (PLZFA)

City: Barcelona

Location: Periphery

GLA: 10,008 sqm

17. Sant Cugat II

City: Barcelona

Location: Periphery

GLA: 15,377 sqm

16. Sant Cugat I

ı 54 ı

Offices | Lisbon

ı 55 ı

Offices | Lisbon

City: Lisbon

Location: Prime+CBD

GLA: 6,740 sqm

3. Lisboa Expo

City: Lisbon

Location: Prime+CBD

GLA: 16,892 sqm

1. Monumental

City: Lisbon

Location: Prime+CBD

GLA: 7,837 sqm

7. TFM

City: Lisbon

Location: NBA

GLA: 12,260 sqm

9. Nestlé HQ

City: Lisbon

Location: Prime+CBD

GLA: 12,460 sqm

2. Marqués de Pombal, 3

City: Lisbon

Location: Prime+CBD

GLA: 13,715 sqm

8. Torre Lisboa

City: Lisbon

Location: Prime+CBD

GLA: 22,150 sqm

6. Art

City: Lisbon

Location: Prime+CBD

GLA: 10,207 sqm

5. Torre Zen

City: Lisbon

Location: Prime+CBD

GLA: 10,310 sqm

4. Central Office

ı 56 ı

Shopping Centers | Spain & Portugal

ı 57 ı

Shopping Centers | Spain & Portugal (I)

City: A Coruña

GLA: 176,000 sqm

MRL GLA: 100,242 sqm

1. Marineda

(1) MERLIN owns 50%

City: Madrid

GLA: 7,054 sqm

MRL GLA: 6,069 sqm

5. Arturo Soria

City: Madrid

GLA: 33,000 sqm

MRL GLA: 10,876 sqm

6. Centro Oeste

City: Bilbao

GLA: 43,705 sqm

MRL GLA: 25,922 sqm

12. Artea

City: Mallorca

GLA: 58,779 sqm

MRL GLA: 32,963 sqm

11. Porto Pi

City: Barcelona

GLA: 31,905 sqm

8. Arenas

Location: Madrid

GLA: 11,629 sqm

4. Callao, 5

City: Lisbon

GLA: 78,864 sqm

MRL GLA: 60,098 sqm

2. Almada

City: Madrid

GLA: 67,690 sqm(1)

3. Tres Aguas

City: Madrid

GLA: 47,105 sqm

7. X-Madrid

citywave®

iadr dM

City: Malaga

GLA: 41,595 sqm

MRL GLA: 37,957 sqm

9. Larios

City: Valencia

GLA: 47,853 sqm

MRL GLA: 28,861 sqm

10. El Saler

ı 58 ı

Shopping Centers | Spain & Portugal (II)

City: Gandía

GLA: 23,383 sqm

MRL GLA: 20,878 sqm

13. La Vital

City: Barcelona

GLA: 32,191 sqm

14. Vilamarina

City: Valencia

GLA: 14,455 sqm

15. Factory Bonaire

ı 59 ı

Net leases |

Branches

Supermarkets

ı 60 ı

Net leases |

Location: Spain

GLA: 286,433 sqm

UNITS: 664

Branches

Location: Cataluña

GLA: 64,252 sqm

UNITS: 33

Supermarkets

ı 61 ı

Logistics | Location of main hubs (Madrid)

Name GLA (sqm)

1 Madrid - Coslada 28,491

2 Madrid - Coslada Complex 36,234

3 Madrid - San Fernando II 33,423

4 Madrid - San Fernando I 11,179

5 Madrid - Meco I 35,285

6 Madrid - Meco II 59,814

7 Guadalajara - Azuqueca I 27,995

8 Guadalajara - Azuqueca III 51,000

9 Guadalajara - Azuqueca II 98,757

10 Guadalajara - Alovera 38,763

11Guadalajara - Cabanillas Park II

210,678

12 Guadalajara -Cabanillas I 70,134

13Guadalajara - Cabanillas Park I

315,841

14 Guadalajara - Cabanillas III 21,879

15 Guadalajara - Cabanillas II 15,078

16 Madrid - Getafe 16,100

17 Madrid - Getafe (Los Olivos) 11,488

18Madrid - Getafe (Gavilanes)

39,588

19 Madrid - Pinto I & II 70,089

20 Toledo - Seseña 28,731

ı 62 ı

Logistics | Madrid (I)

City: Guadalajara

GLA: 27,995 sqm

7. Guadalajara – Azuqueca I

City: Madrid

GLA: 28,491 sqm

1. Madrid – Coslada

City: Madrid

GLA: 36,234 sqm

2. Madrid – Coslada Complex

City: Madrid

GLA: 35,285 sqm

5. Madrid – Meco I

City: Madrid

GLA: 59,814 sqm

6. Madrid – Meco II

City: Madrid

GLA: 11,179 sqm

4. Madrid-San Fernando I

City: Madrid

GLA: 33,423 sqm

3. Madrid-San Fernando II*

City: Guadalajara

GLA: 38,763 sqm

10. Guadalajara – Alovera

City: Guadalajara

GLA: 51,000 sqm

8. Guadalajara – Azuqueca III*

City: Guadalajara

GLA: 98,757 sqm

Madrid

Barcelona

Azuqueca Plot

9. Guadalajara – Azuqueca II*

City: Guadalajara

GLA: 210,678 sqm

11. Guadalajara – Cabanillas Park II*

City: Guadalajara

GLA: 70,134 sqm

12. Guadalajara – Cabanillas I

*Project under development or extension

ı 63 ı

Logistics | Madrid (II)

City: Guadalajara

GLA: 315,841 sqm

13. Guadalajara – Cabanillas Park I*

City: Guadalajara

GLA: 21,879 sqm

14. Guadalajara – Cabanillas III

City: Toledo

GLA: 28,731 sqm

20. Toledo - Seseña

City: Guadalajara

GLA: 15,078 sqm

15. Guadalajara – Cabanillas II

City: Madrid

GLA: 16,100 sqm

16. Madrid-Getafe

City: Madrid

GLA: 11,488 sqm

17. Madrid - Getafe (Los Olivos)

City: Madrid

GLA: 70,089 sqm

19. Madrid – Pinto I & II

City: Madrid

GLA: 39,588 sqm

18. Madrid – Getafe (Gavilanes)


ı 64 ı

Logistics | Location and access in main hubs (Barcelona)

Stock Name GLA (sqm)

1 Barcelona - ZAL Port 727,508

2 Barcelona - Sant Esteve 16,811

3 Barcelona - PLZF 132,796

ı 65 ı

Logistics | Barcelona

City: Barcelona

GLA: 727,681 sqm

1. Barcelona - ZAL Port*

City: Barcelona

GLA: 16,811 sqm

2. Barcelona – Sant Esteve

City: Barcelona

GLA: 131,399 sqm

3. Barcelona – PLZF


ı 66 ı

Logistics | Rest of Spain

City: Valencia

GLA: 34,992 sqm

5. Valencia-Ribarroja

City: Vitoria

GLA: 72,717 sqm

7. Vitoria - Jundiz

City: Sevilla

GLA: 153,899 sqm

9. Sevilla - ZAL*

City: Valencia

GLA: 26,613 sqm

4. Valencia – Almussafes

City: Zaragoza

GLA: 20,764 sqm

2. Zaragoza – Plaza

City: Zaragoza

GLA: 21,579 sqm

1. Zaragoza – Pedrola

City: Zaragoza

GLA:11,421 sqm

3. Zaragoza - Plaza II*

City: Vitoria

GLA:26,774 sqm

8. Vitoria - Jundiz II

City: Valencia

GLA:96,572 sqm

6. Valencia*

City: Lisbon

GLA: 224,864 sqm

10. Lisbon - Lisbon Park*


Paseo de la Castellana, 257

28046 Madrid

+34 91 769 19 00

[email protected]

www.merlinproperties.com

september 2020 · 2020. 9. 3. · net rents 22.7 22.5 +0.7% ebitda 21.8 21.5 +1.3% ffo(1) 12.2 12.6...

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