Inmobiliaria Colonial SOCIMI S A : Quarterly Earnings Document

Return to growth - Colonial closes 2021 with solid results in all KPIs

The Group registers a net profit of €474m (+€471m)

• Value of the asset portfolio of €12,436m, +6% like-for-like
• Net Tangible Assets (NTA) of €6,496m, +13%
• Increase of Net Rental Income of +3% like-for-like (Paris +6% like-for-like)
• Net recurring profit of €128m corresponding to €24.6cts/share, +12% in comparable terms
• More than 170,000 sqm of letting volume, second highest figure in history
• Occupancy levels of 96% (98% Paris)
• New acquisitions of more than €500m of investment
• Strengthened leadership in ESG

Madrid, 28 February 2022

Colonial grows in 2021 through the consolidation of the positive evolution of all its fundamentals: the second highest commercial figure in its history (+ 170,000m2 of new contracts signed in one year), rent captures above the market (+5%), solid occupancy of its portfolio (96%), growth in the value of its assets and improvement in financing with longer terms and lower costs. The result of this progress translates into revenues that in comparable terms grew by 2% to €314m, a recurring result of €128m and a final net profit of the Group of €474m, +€471m over the previous year.

"The solidity of our fundamentals and the successful execution of the business allow us to offer significant growth to our shareholders through an improvement in all the metrics for capturing growth in the market", explains Pere Viñolas, CEO and Vice President of Colonial. "We are in the high band of growth of our forecasts, while executing a portfolio of projects that will allow us to further increase the generation of income and value of the company", adds Viñolas.

2022 begins with new acquisitions, maintaining the investment character that the company showed in 2021. To the takeover bid carried out by Colonial in 2021 to raise and stake in its French subsidiary SFL to 98.3%, and incorporating almost €1bn GAV of assets, a new investment of more than €500m is now added to its perimeter. Its destination is the acquisition of the 91 Pasteur building of about 40,000m2 in the center of Paris and the purchase, already closed in 2021, of the Danone Group headquarters in Barcelona.

"After the purchase of practically all of our French investee in 2021, we insist on our willingness to invest in prime assets at the beginning of this year, aware of the benefits of this strategy in creating a company with solid fundamentals for the present and future", explains Juan José Brugera, Chairman of Colonial.

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1. Net profit of €474m, Net Recurring profit of +€128m

The Colonial Group closed 2021 with a net profit of €474m, +€471m compared to the closing of the previous year.

The significant increase in Net Results is due to:

1. A strong increase in the value of the prime asset portfolios in the three markets, driven by a strong demand for prime Grade A buildings
2. The important degree of advances in the project portfolio and the acceleration in the renovation program, substantially improving rental levels, as well as the value of the assets.
3. The successful execution of the acquisition of 16.6% of Société Foncière Lyonnaise with very attractive terms for Colonial's shareholders.
4. A solid recurring result of more than €128m based on an asset portfolio with high occupancy levels and solid increases in rental prices, specifically in the Paris portfolio

Net recurring profit of €24.6cts/share, reaching the high end of the guidance

Colonial closed 2021 with a net recurring profit of €128m, corresponding to €24.6cts/share, achieving the high end of the guidance range of €23-25cts/share that the Company communicated to the capital markets.

It is important to highlight that the strong acceleration in the results in the fourth quarter is due to the increase in inflation captured by the indexation clauses in the Colonial Group's contract portfolio. Likewise, the recurring earnings reflect the strict management of operating and SG&A costs.

Compared to the previous year, the recurring earnings have decreased, reflecting the impact of the disposals of non-strategic assets, as well as the acceleration of the renovation program.

1. The execution of the disposals of non-strategic assets with premiums over valuation have resulted in a year-on-yearreduction of €13m in net results due to lower rents in exchange for an improved quality of the cash flow of the post-salesportfolio.
2. The start and the acceleration of the portfolio's renovation program with the aim of repositioning portfolio assets with significant value creation potential and future cash flow reversion based on a real estate transformation of the assets. This program involves temporary tenant rotation with a negative impact on EBITDA rents of €16m in the 2021 results.

The active management of these buildings has a temporary impact on income in exchange for an increase in rental levels in the portfolio once let again, as well as the potential for value creation in each asset.

Net recurring like-for-like results higher than the previous year

Excluding the effects of the active management of the portfolio, the Comparable Recurring Net Profit amounts to €158m, a figure +15% higher than the result of the previous year.

The comparable recurring3 results per share (recurring EPS) is at €30.43cts, a figure +12% higher

than the same period of the previous year.

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1. Recurring earnings per share
2. Tenant rotation renovation program
3. Recurring results excluding non-strategic disposals and the impact of the renovation program tenant rotation and other non like-for-like items

Gross rental income of €314m, +2% like-for-like

Colonial closed 2021 with €314m of Gross Rental Income, a figure 8% lower than the previous year, due to 1) the disposal of non-strategic assets in 2020 and the beginning of 2021; and 2) the acceleration of the renovation program of the Group.

In like-for-like terms, the Gross Rental Income increased by +2% compared to the same period of the previous year.

Net Rental Income (EBITDA rents) of €293m, +3.3% like-for-like

The net rental income (EBITDA rents) increased +3.3% like-for-like, driven by an increase of +6.4% in the Paris portfolio.

2. Increase in the value of the real estate portfolio of +6% like-for-like

The gross asset value of the Colonial Group at the close of 2021 amounted to €12,436m (€13,091m including transfer costs), showing an increase of +6% like-for-likecompared to the previous year.

The portfolios in the three cities show solid growth. The portfolios in Paris and Barcelona both increased +6% like-for-like and the properties in Madrid went up +7% like-for-like.

Globally, an acceleration in value growth took place in the second half of the year, with an increase of +4% like-for-like for all properties.

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The growth in asset value is based on (1) the growing demand of the market for prime Real Estate in the city centre, (2) the solid fundamentals of Colonial's portfolio with an occupancy of 96% and rents signed at the high end of the market and (3) the successful generation of Alpha real estate value through the Project Portfolio and the Renovation Program.

In 2021, €349m in non-core assets were disposed of with a premium over the appraisal value of 11%. More than €263m correspond to the signing of the two sales in Paris that comprised the Alpha V program of the previous year. Additionally, Colonial divested two non-strategic assets in Spain in the second half of 2021, optimizing the prime profile of the Group's portfolio.

At 31 December 2021, the exposure of Colonial's property portfolio to CBD areas was at 80%, +266 bps compared to the previous year and 95% of the portfolio in operation hold energy efficiency certification, an improvement of 252 bps compared to the previous year.

Including the impact of net disposals, the asset value increased +3% compared to the previous year.

3. Growth in Net Tangible Assets (NTA) up to €6,496m, +13%

Colonial closed 2021 with Net Tangible Assets (NTA) of €12.04/share, corresponding to a year-on-year increase of +7% which, together with the dividend paid per share of €0.22/share, amounts to a Total Shareholder Return of +9%.

1. Total shareholder return understood as NTA (NAV) growth per share + dividends
2. NTA growth excluding EPS and DPS paid

In absolute terms, the net value of the assets amounts to €6,496m, an annual increase of +13%, a value increase of more than €768m in a year.

This important growth in NTA has been achieved thanks to an industrial Real Estate strategy with a significant Alpha component in returns, mainly due to:

1. A strong increase in the value of the prime asset portfolios in the three markets, driven by a strong demand for prime Grade A buildings
2. Solid fundamentals of Colonial's assets with high occupancy levels and solid increases in rental prices highlighting the strength of the Paris portfolio

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1. The important degree of progress in the project portfolio, specifically the delivery and rental of the Prime Marceau in Paris and Diagonal 525 projects in Barcelona
2. The acceleration of the renovation program, substantially improving rental levels, as well as the value of the assets
3. The successful execution of the takeover bid on Société Foncière Lyonnaise with attractive terms for
   Colonial's shareholders.

Significant acceleration in operating fundamentals

1. More than 170,000 sqm of letting volume: the second highest figure in Colonial's history

At the close of 2021, the Colonial Group had signed 118 rental contracts in the office portfolio, corresponding to 170,344 sqm, exceeding the letting volume of the previous year by +75%.

This volume of signed contracts is the second highest in Colonial's history, only surpassed by 2019, a year of record results in all metrics.

In economic terms (sqm signed multiplied by signed rents), the take-up levels doubled compared to the previous year (+114% vs 2020), signing contracts for a volume of more than €77m in annualized rents.

2. Acceleration in take-up in the second half, increasing occupancy to 96%

In the second half of 2021, there was an acceleration with the signing on more than 110,000 sqm (a figure higher than the letting activity in the whole 12 months of the previous year). The third and fourth quarters exceeded more than 50,000 sqm of signed contracts, with high volumes in the Madrid and Paris portfolios.

It is important to highlight those two thirds of the contracts signed in the fourth quarter correspond to surface areas entering operation, mainly from the renovation program, improving the occupancy rate of the Group by more the 250 bps in one quarter up to 96% (highlighted is the high occupancy rate of the Paris portfolio, exceeding 98.4%).

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