MERLIN Properties Annual Report 2017 / English

ı 6 ı Dear shareholders, 2017 marked the first full year of consolidation and returns for the outstanding asset base that MERLIN Properties compiled throughout 2014, 2015 and 2016. Of particular importance were the Testa acquisitions in 2015 and the integration of Metrovacesa’s commercial assets in the last quarter of 2016. The results reported this year support the strategy implemented by the Company. In both the generation of cash flow and portfolio value growth, the Company has experienced notable development, increasing the overall return for our shareholders to a rate of 21.6%. These results, which I would describe as outstanding, are the upshot of a series of contributing factors: the healthy momentum of the Spanish real estate sector, the leading positioning of MERLIN Properties, the active management of our asset portfolio, the quality of the team that leads this company, and lastly, the incorporation of the market’s best practices into the company’s corporate governance policy. Indeed, positive job creation data coupled with a growth in spending and industrial activity have propelled the good performance of the three sectors in which MERLIN operates. In 2017, nearly 900,000 sqm of office space was contracted, a figure unseen since 2007. In shopping centres, a record EUR 3.9 billion in investment volume was reached. In logistics, the emergence of operators associated with online retail is leading the sector to never-before-seen figures in contract volume and income. “The results reported this year support the strategy implemented by the Company.” LETTER FROM THE CHAIRMAN Mr. Javier García-Carranza Non-Executive Chairman