MERLIN Properties Annual Report 2018 / English

ı 12 ı area on the top floor creating new terraces... The centre also boasts almost full occupancy and following the most recent renovations we have been able to raise rental income by 9%. The new Primark store will be the largest in Spain located in a shopping centre. The return on investment initially planned when we the reform was devised stood at 6.5% and this will most likely be exceeded. In 2018, major tasks were performed on the licences and permits of the other Flagship assets, an arduous task that is finally beginning to bear fruit. X-Madrid is already in full construction, with an expected delivery date for the fourth quarter of this year. It is a concept, as you know, that is both innovative and daring, a centre offering experiences that does not exist on the market today and that places us one step ahead of the rest. The next year in this same forum accounts will be rendered following a few months of operation, but I would like to point out that the pre-commercialisation is surprising us very positively, with 88% reserved as of today and an estimated occupation rate upon opening of 95%. In logistics this year we have delivered more than 115,000 sqm of developed lands, all of them rented before finishing the works. From the Best II plan, another 100,000 sqm will be delivered in 2019, with more than 80% already pre-reserved. The irruption of online commerce and the arrival of 3PL operators has revolutionised this market, which is constantly growing. And MERLIN enjoys its absolute leadership in this regard, with more than 2.5 million sqm managed today, which make us the baseline owner for any operator. So much so, that in this Meeting the launch of a new plan will be unveiled, Best III, which will be implemented under the Best II ethos currently underway and that aims to cover the demand of our customers, which is expanding throughout the Iberian Peninsula, who request we provide solutions that go beyond Madrid and Barcelona. They ask for our presence, with the quality that only MERLIN offers, in Valencia, Bilbao, Seville, Lisbon or Saragossa. Again, and in a quiet way, we have been identifying and securing the land for these projects during 2018 and today they form the next stage of our future. As will be seen later, Best III entails the development of another half million metres, with an expected investment of more than 300 million euros, and a return on investment of 7.8%. We look to the future with optimism, highly aware of the new trends to obtain a swift response from the perfectly greased machinery that is MERLIN today. It is our belief, for example, that the world of flexible spaces or co-working is here to stay, thus LOOM has just been integrated into our product range, our brand of flexible spaces, to lend greater swiftness to its deployment. We think that shopping centres are moving towards experience and digitisation. Advancement has been made the implementation of apps, smart Wi-Fi and tenants’ loyalty programmes such as “We are MERLIN” in almost all our centres. With regard to logistics, we are working on a series of pilot experiences with our operators to invent last mile logistics solutions that only MERLIN could offer. An exciting future that we look towards with confidence. I would like to finish by stressing another value that moves mountains: enthusiasm and drive. If there is a quality that distinguishes all the MERLIN professional team, it is the enthusiasm and drive with which our tasks are performed. Our shareholders enjoy an admirable workforce, with the highest productivity in the sector in Europe, characterised by its accuracy, thoroughness and professionalism. Yet all these qualities are drawn from our enthusiasm: in what we do, in our assets, in our ability to adapt to change, in working with pride every day and in feeling a very high level of commitment and within the reach of very few companies throughout the world. Thanks to this major professional team you can rest assured that you are in good hands.