MERLIN Properties Annual Report 2018 / English

ı 99 ı Annual Report 20 18 basis in the real estate sector, and performed by an independent external appraisal. The reconciliation with the financial statements appears in Section 6 of this report (Notes to the consolidated balance sheet). Gross yield It represents the return of an asset or category of assets. It is calculated by dividing the annualized gross rent between the latest available GAV. Wault Weighted average unexpired lease term, calculated as the number of years of unexpired lease term, as from the date balance sheet, until the lease contract first break weighted by the gross rent of each individual contract. We consider the Wault a relevant metric as it provides the investor with the average term of secured leases and gives a sense of risk or opportunity to renegotiate the prevailing lease contracts. Given the nature of the metric, it is not possible to reconcile it with the Group financial statements. Revenues Is the addtion of the total gross rent income (€ 499.7m), note 9.2 of the consolidated financial statements, and the other operating income excluding extraordinaries (€ 9.8m). The reconciliation with IFRS appears in the table thereafter. Accounting EBITDA The accounting EBITDA is calculated as the net operating income before net revaluations, amortizations, provisions, interest and taxes. The accounting EBITDA is a performance metric widely used by investors to value companies, as well as the rating agencies and creditors to evaluate the level of indebtedness. The reconciliation with IFRS metrics appears in the table hereafter. EBITDA The EBITDA is calculated as the Accounting EBITDA deducting the “non-overheads” costs and the LTIP Provision. The EBITDA is a very useful metric as it excludes the impact of atypical costs incurred in the period. The atypical costs or “non-overheads” costs are the ones related to the acquisition and disposal of assets and indemnities among others (as described in the IPO prospectus). The reconciliation with IFRS metrics appears in the table hereafter. Accounting FFO and FFO Accounting FFO or Accounting Funds From Operations is calculated as EBITDA less debt interest expenses and recurring taxes (excluding taxes from disposals or other extraordinary events). FFO is calculated deducting the non- overheads costs of the company from the Accounting FFO. It is a relevant performance and liquidity metric recognized on a global basis in the real estate sector. MERLIN Properties, as a member of EPRA (European Public Real Estate Association), follows EPRA’s best practices reporting standards which enables the investor to better compare certain performance metrics that are specific to the real estate sector. This metrics are released on a semi-annual basis and detailed in the management report. EPRA costs It is calculated as total operating costs of the company divided by the gross rents net of incentives. This performance metric shows the operating efficiency on a recurring basis. The reconciliation with the Financial Statements appears in the Appendix of this report and relates to the notes 19b, 19c and 9.2 of the consolidated financial statements.