MERLIN Properties Annual Report 2017 / English

ı 8 ı Mr. Ismael Clemente CEO LETTER FROM THE CEO value. We are simultaneously undaunted and motivated by this challenge: holding assets is the complicated part, developing all of their potential is merely a matter of designing action plans and executing them in a timely manner. And fulfilling those plans is our specialty. In this letter, I want to convey our enthusiasm and share with you some information about our plans for offices, shopping centres, and logistics sites that will be carried out in the coming years. The majority of refurbishments will take place prior to 2020 and will be divided into three internal projects that involve investments of more than EUR 250 million to renovate office buildings, EUR 120 million for shopping centres, and nearly EUR 250 million to develop more square metres of logistics capacity. The Landmark I Project is a plan designed to optimise the return of an initial selection of offices that—situated in the prime locations of each submarket—offer immediate potential for rental increases and value appreciation after investing in restoring them to peak condition. In 2017, we witnessed the success of this strategy with the delivery of partial renovations, like Puerta de las Naciones (100% let to Roche and Ferrovial), Eucalipto (66% let), Juan Esplandiu (98% let, with Cellnex as the primary tenant), Avenida Europa (100% let to Renault and Vass) and Balmes (100% let to Eugin) in Barcelona. This year’s deliveries will include Torre Glòries (which is progressing well, with 30% of the office space already let, plus the domed observatory, which promises to become a main attraction in Barcelona, generating income as soon as it opens, scheduled for summer 2019), and Torre Chamartín (about which we will have news soon). From 2018-2021, the Company will focus on executing this plan, with major renovations of landmark buildings, like Castellana 83-85, Castellana 93, Alfonso XI, Plaza de Pablo Ruiz Picasso, Alcalá 38-40, and Princesa 5-7 in Madrid, Diagonal 605 in Barcelona, and Dear shareholders, The intense investment activity in which MERLIN Properties engaged in from its inception until the end of 2016, culminating with the integration of Metrovacesa, was the result of a strategic vision: we were on the brink of an uptrend in the real estate cycle and a window of opportunity opened to purchase high quality assets and companies at very attractive prices. As you all know, we took full advantage of it. That quality and those prices will not be seen again until a new cycle begins. Today, thanks to that vision, many of those special assets that only appear on the market from time to time are part of our portfolio, and generated formidable returns: in 2017, shareholder returns were outstanding, at 21.6%, on the growth of net asset value per share plus the dividend. This year we will distribute EUR 216 million, 46 cents per share, which is a 15% increase from 2016. MERLIN Properties is now entering a new and exciting phase: investing in the optimisation of our excellent asset base to extract its