MERLIN Properties Annual Report 2020 / English

| 7 essentially reinforced MERLIN’s reputation and the loyalty of its tenant base. Furthermore, MERLIN was able to measure the Covid-19 impact for their 2020 figures and was the first player in the market to give an updated guidance, which meant a €55 million reduction in FFO, to the revised figure of €250 million (€0.53 per share), versus the initial target of €305 million (€0.65 per share). At year end, the Company was able to beat the guidance provided to the market at the beginning of the pandemic, achieving an FFO of €262 million (€0.56 per share). As a result of the measures adopted, MERLIN has managed to keep the robustness of its balance sheet practically intact. In this context, it is worth highlighting: • Solvency. €5,268 million of net financial debt at year end, with an average maturity period of 6 years, with no maturities until May 2022. The LTV stands at 39.9% in line with FY19. • Liquidity. The Company enjoys a cash and equivalents position of €467 million and an undrawn credit facility that amounts to €700 million. • Credit rating. After the pandemic outbreak and the announcement to the market of the Covid-19 impact on the 2020 accounts, Standard & Poors and Moody’s revised their financial projections and their credit models for MERLIN. Both agencies have maintained their ratings in line with 2019. By business segments, offices has weathered well the complicated situation. Gross rents amounted to €233 million, having maintained the level of rents at the expense of a slight drop in occupancy, ending the year at 91.1%. The quality of the portfolio and the solvency of our tenants have helped withstand the year. Logistics has surpassed shopping centers, boosted by the pandemic-driven growth in online sales. MERLIN is the undisputed leader in the Iberian Peninsula, being the top-of-mind solution provider for the largest operators in the sector. With €58.9 million of gross rents in the period, the logistics portfolio has maintained a virtually full occupancy of 97.5% and an increase in rents. Net leases, our triple net portfolio, that includes the branches let to BBVA has been the safe haven of the period: €86 million in rents and full occupancy. The worst part of this crisis has been borne by shopping centers, heavily affected by lockdowns and severe restrictions all across the portfolio, impacting tenants’ sales with a 37% drop compared to the previous year. Thanks to the aforementioned commercial policy, granting rent reliefs to our tenants, we have maintained the OCR at sustainable levels of 12.9%, very similar to the one before the pandemic outbreak. Out of the €114.4 million in gross rents, €40.7 million corresponded to rent reliefs, amounting to €73.7 million of net rents. The Company has made significant progress in terms of sustainability in 2020, improving in energy efficiency measures in the portfolio as it moves forward with its LEED/ BREEAAM certification program. Moreover, in 2020 important initiatives were launched: the installation of photovoltaic solar panels on the rooftops across the portfolio, the urban regeneration plan of AZCA, called RENAZCA and in sustainable mobility, the last mile logistics project and the installation of electric vehicles chargers in our parking spaces. This effort has been recognized by GRESB, which has awarded the Company a score of 78%, above its peers, and by EPRA, which awarded the MERLIN CSR Report the Gold Award in sustainability.