Acceleration of Development Pipeline 3-months 2018 Rents Milan, 12 April 2018
3M 2018 CONFERENCE CALL SPEAKERS Alexei Dal Pastro General Manager Barbara Pivetta CFO 2
AGENDA > MARKET UPDATE PAGE 4 >3M 2018 ACTIVITY PAGE 6 > STRATEGY AND OUTLOOK PAGE 14 >ANNEX PAGE 18 3
Market update 4
CONFIRMED SUPPORTIVE ENVIRONMENT Milan office market: improving positive trend 570/sqm prime rent Milan office take-up evolution by building grade 400 350 10.3% vacancy rate >75% non Grade-A +10% YoY 3.5% office prime yield Stable Yield Sqm '000 300 250 200 150 100 50 0 2012 2013 2014 2015 2016 2017 2018 90,000 sqm 1Q2018 78% Grade A Grade B+C Prime Office Rent( /sqm/yr) Significant increase of prime rent Good level of take-up focused on Grade A offices Stable stock of offices including developments Robust investment volume trend continues SUBMARKET /sqm/yr Q/Q Y/Y CBD 570 Centre 420 Semi Centre 320 Periphery 240 Hinterland 220 Source: C&W Q1 2018 5
3M 2018 Activity 6
3M2018: POSITIVE ACHIEVEMENTS ALONG STRATEGIC TARGETS Continuous upgrade both in business and financial profile Successful letting activity Overall, ~18,000 sqm of letting activity for 4.5m annualized rents YTD Major pre-let in Milan, Via Schievano The Sign, to AON (~ 9,500 sqm) Increase of committed Development Pipeline to 384m (vs 317m as at 31/12/2017) Commitment of Building B and C of The Sign project for further ~ 16,800 sqm GLA Capital rotation increasing focus on Milan offices Closing of 9% stake disposal of Central SICAF in February 2018, equivalent to ~ 140m asset disposal at appraisal value Reinforcement of debt profile Dynamic financial activity for the extension of debt maturity and the reduction of cost of debt New 300m 10-yrs rated bond placed in mid-february at 2.375% coupon 7
3M2018: SUCCESSFUL DELIVERY OF LETTING RESULTS Occupancy and leasing activity 96% 95% 94% 93% 92% 91% 90% 89% 91.5% Office Non-TI 95.1% 1Q 2017 YE 2017 1Q 2018 1 95.3% 1 2 PRELETTING 2 FOR 2.8m ANNUALIZED RENTS ON 11,085 SQM New contracts and renewals 5 NEW CONTRACTS FOR 0.5m ANNUALIZED RENTS ON1,700 SQM 6 RENEWALS FOR 1.2m ANNUALIZED RENTS ON5,200 SQM 97% 96% 95% 94% 93% 92% 91% 90% 95.6% Total portfolio in group share 96.6% 96.3% 1 1Q 2017 YE 2017 1Q 2018 1 1Q 2018 WALB(group share) 6.8 years (1) Including the effect of preliminary agreements (2) Included Head of Terms with AON ( 2.6m top up Rent ~ 9,500sqm on Schievano,The Sign Building A). 8
3M2018: RENTAL INCOME +2.2% L-f-L growth in Milan offices Non-TI m 3M 2017 3M 2018 3M 2018 100% Group Share Change (%) Like-for-Like Group Share Occupancy rate Office TI 24.6 24.6 14.8 +1.1% 100.0% Office Non - TI 21.5 23.2 23.2 +1.8% 95.3% Total Office 46.1 47.8 38.0 +1.5% 96.9% +2.2% L-f-L growth in Milan offices +2.2% L-f-L growth in Milan offices Non-TI Retail & Others 4.8 4.0 4.0 (7.0%) 91.7% Development 0.0 0.2 0.2 0.0% n.a Total portfolio 50.9 52.0 42.2 +0.6% 96.3% Minorityrelatedto sale of TI Sicaf stake: - 9.9m Development Assets:+ 0.8m(1) Acquisitions:+ 2.1m(1) Indexation: +0.8% Occupancy rate: +0.6% Renewals: -0.8%, mainly related to a renegotiation on a shopping center (1) Not included in L-f-L calculation 9
THE SIGN: PRE-LET OF THE FIRST BUILDING Pre-letting of ~ 9,500sqmGLA -Building A leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services ~ 9,500 sqm, 98%pre-let Top-up rents: 2.6m Lease term: 12+6 years Option to pre-let additional 1,500 sqm in The Sign Building A: 9,700 sqm GLA 9 floors for offices use Retail and car parking Green roof withlarge green areas and use of reflecting materials LEED Platinum, A Energy Class 10
THE SIGN: COMMITMENT OF THE WHOLE PROJECT Committed additional two buildings (B C) for 16,800 sqm 26,500sqm Total GLA ~ 16,800sqm Building B-C Committed Semicentre Porta Nuova CBD ~ 105m Total budget ~ 67m Building B-C Committed Centre M2 Romolo Periphery Excellent Connection > 7% Total Yield on cost 3 minute walk to Metro Romolo& FS 15 minute subway to Duomo 20 minute car to Linate Airport Business district development in the south-west area of Milan Three building complex Highest grade of energy efficiency and green certifications LEED Platinum, A Energy Class Works expected to start 2Q 2018 supported by significant pre-let already on building A 11
ACCELERATION OF DEVELOPMENT PIPELINE Premium projects with significant pre-letting achieved MILAN, Symbiosis AB GLA: 20,500 sqm Delivery: 4Q 2018 Tenant: Fastweb, CIR Food Certification: LEED Platinum, A class 88% pre-let TURIN, Corso Ferrucci GLA: 45,600 sqm First delivery: 3Q 2017 (further deliveries to follow pre-letting status) 40% pre-let +4% (1) MILAN, Principe Amedeo GLA: 7,000 sqm 57% pre-let MILAN, Via Colonna GLA: 3,500 sqm fully pre-let Status: work in progress Delivery: 2Q 2018 Certification: LEED Gold, A class Certification: LEED Gold, A class Delivery: End 2018 MILAN, The Sign A GLA: 9,700 sqm Delivery: End 2019 Certification: LEED Platinum, A class 98% (2) pre-let +98% (1) MILAN, Monte Titano GLA: 6,000 sqm Delivery: 1H 2018 Tenant: Meininger Hotel fully pre-let Certification: LEED Gold, B class MILAN, The Sign B,C GLA: 16,800 sqm Delivery: End 2020 Certification: LEED Platinum, A class TOTAL GLA THE SIGN : 26,500 sqm Building B,C committed (1) vs. December 2017 (2) Pre-let refers to Building A 384m committed projects (+67m vs Dec 17 ) 59% pre-let 6.4% target yield 317M 779m development END 2017 pipeline -~200,000 sqm-ca. 90% in Milan 12
DYNAMIC FINANCIAL ACTIVITY FOR A STRONGER DEBT PROFILE Increased debt maturity and reduction of cost of debt 300m BBB- Stable outlook Successful issue of 300m 2.375% 10-yrs senior unsecured rated bond - February 2018 Exercise of early redemption option make whole of 250m 3.50% bond due 2019 -duly repaid in March 2018 volume 2.375% coupon high quality demand 133bps spread 10 yrs maturity 13
Strategy and Outlook 14
A PROVEN SUCCESSFUL STRATEGY Targets 2022 1 Focus on MILAN WEIGHT OF MILAN 90% DIVERSIFY tenant base WEIGHT OF TELECOM ITALIA 20% Increase GREEN WEIGHT OF GREEN PROPERTIES 80% LTV 40-45% 2018 EPRA Earnings target: ~ 0.04 / share 15
CALENDAR 1H 2018 results July 18 2018 16
Q&A 17
Annex 18
3M2018 RENTAL REVENUES 100% Group Share m 3M 2017 3M 2018 Δ (%) 3M 2017 3M 2018 Δ (%) Δ (%) Like-for- Like % of Rent Office TI 24.6 24.6 0.2% 24.6 14.8 (39.9%) +1.1% 35.1% Office Non - TI 21.5 23.2 +7.9% 21.5 23.2 +7.9% +1.8% +55.0% Total Office 46.1 47.8 +3.8% 46.1 38.0 (17.6%) +1.5% 90.0% Retail & Others 4.8 4.0 (16.5%) 4.8 4.0 (16.5%) (7.0%) +9.6% Development 0.0 0.2 +643.2% 0.0 0.2 +643.2% 0.0% +0.4% Total portfolio 50.9 52.0 +2.1% 50.9 42.2 (17.2%) +0.6% +100.0% 1 1 19
3M2018: REAL ESTATE PORTFOLIO DETAILS N of GLA Gross Topped-up Financial properties ( 000 sqm) yield (%) yield (%) occupancy (%) WALB Office Telecom Italia 142 539 6.4% 6.4% 100.0% 12.7 Office, Excl. Telecom Italia 73 517 4.7% 5.0% 95.3% 4.2 Retail & Others 31 97 5.4% 5.9% 91.7% 4.3 Total portfolio excl. Development Group Share 246 1,153 5.2% 5.5% 96.3% 6.8 Development portfolio 6 226 Total portfolio Group Share 252 1,379 Total portfolio excl. Development Consolidated 246 1,671 1 1 Total portfolio Consolidated 252 1,897 20
3M2018: AVERAGE LEASE MATURITY Weighted average lease maturity 6.8 years (group share) m 80 70 69.1 60 50 40 30 20 15.8 25.2 1 1 10.9 Italian government 20.8 14.8 10 6.0 4.9 0 2018 2019 2020 2021 2022 2023 2024 > 2024 21
3M2018: DEVELOPMENT PIPELINE Committed projects Location Project type Area Expected delivery % pre-let Capex to be spent 1 % completion Target yield Total budget2 (sqm) (%) ( m) (%) (%) ( m) Ferrucci Turin Refurbishment 45,600 2017-2019 40% 6.8 80.0% 5.7% 87 Colonna Milan Refurbishment 3,500 2018 100% 0.5 92.5% 5.1% 18 Monte Titano Milan Refurbishment 6,000 2018 100% 1.0 90.0% 5.0% 22 Symbiosis A+B Milan Construction 20,500 2018 88% 13.4 80.0% 7.2% 94 The Sign A Milan Construction 9,700 2019 98% 24.8 2.5% 7.0% 38 The Sign B & C Milan Construction 16,800 2020-44.4 2.5% 7.2% 67 Principe Amedeo Milan Refurbishment 7,000 2018 57% 9.4 37.5% 5.2% 57 TOTAL 109,100 59% 100.3 50.0% 6.4% 384 Managed projects 3 Location Project type Area Expected delivery Total budget 2 (sqm) ( m) Symbiosis (other blocks) Milan Construction 90,000 2019-2022 c. 395 TOTAL 90,000 c.395 (1) Includes construction costs, technical costs, urbanization fees, financial costs, home technical costs and various fees (2) Including land cost and financial costs (3) Figures subject to changes as project analysis progresses 22
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IR contacts Barbara Pivetta Tel.: +39 36664630 Barbara.pivetta@benistabili.it Barbara Ciocca Tel.: +39 36664695 Barbara.ciocca@benistabili.it Milan Via Carlo Ottavio Cornaggia 10 20123 Milano Tel.: +39 (0)2 36664100 Rome Via Piemonte 38 00187 Roma Tel.: +39 (0)6362221