MERLIN Properties Annual Report 2018 / English

ı 46 ı Gross rents (€ 499,708 thousand) less incentives and collection loss (€ 24,486 thousand) equals to gross rents net of incentives and collection loss of € 475,222 thousand. After deducting portfolio operating expenses not rechargeable to tenants (€ 41,748 thousand) the resulting amount is € 433,474 thousand of net rents. The total amount of operating expenses of the Company in the period is € 88,042 thousand, with the following breakdown: i. € 30,408 thousand correspond to personnel expenses. ii. € 9,181 of general expenses. iii. € 43,435 thousand corresponding to the long-term incentive plan (LTIP) accrued: (i) 25% of the 2016 incentive awarded in 2016 (€ 15,738 thousand), and (ii) a total provision of € 27,697 thousand for the 2017-2019 incentive plan. This amount as per the Spanish GAAP is booked under personnel expenses too. iv. € 5,018 thousand of non-overheads operating expenses. They correspond mainly to expenses for bonds, expenses for the acquisition of Portuguese companies and Tree branches disposals ancillary expenses. The sum of the personnel expenses (excluding the amount accrued for the LTIP) and the operating expenses of the Company (excluding non-overheads) are within the threshold of overheads of the Company, prevailing this period the 0.575% of the EPRA NAV of the Company. Extraordinary net gain arising from the early cancellation of Testa Residencial service level agreement (€ 53,027 thousand) is the result of a penalty of € 89,721 thousand partially offset by the impairment of the equity value in Testa (€ 36,694 thousand). Aedas service fee correspond to a one-off fee received for the services rendered for the setup and assistance to the company prior to its IPO (€ 22,242 thousand). The reconciliation between gross rents of the period and FFO is as follows: NOTES TO THE CONSOLIDATED INCOME STATEMENT Gross rents Gross rents net of incentives and collection loss Net rents Other operating income Personnel expenses Opex Net financial results & net recurring costs FFO EBITDA 499.7 475.2 433.5 286.9 403.7 9.8 (30.4) (9.2) (116.8) Incentives and collection loss (24.5) Propex non rechargeable (41.7) (€ m)