Gmp closed leasing contracts for 50,000 m² in 2017, which represents 9% of office rental market in Madrid, where Gmp’s portfolio accounts for 3% of the total


Dear shareholders, clients, collaborators and employees,

I am pleased to present our 2017 Annual Report, which highlights the key data and initiatives corresponding to a financial year during which the Company has obtained good results.

Over 2017, the Spanish economy grew 3.1%, 70 basis points above the European Union average, which indicates its considerable strength, chalking up three consecutive years of growth. The employment figures for Madrid showed a significant increase, up 4%, which is the highest rise across Spain, and this had a positive impact on hiring in the office market, reaching more than 560,000 m² of space, close to levels before the economic crisis and nearly 30% above the levels for 2016.

In this positive backdrop, Gmp’s operating income and EBITDA in 2017 grew by 22% and 27%, reaching 114.1 million euros and 65.6 million euros respectively.

As regards our core business, office space, revenues from leasing rose 9% and EBITDA by 12%. Successful commercial management of available space has proved decisive in achieving these results. This has enabled us to close new rental contracts covering a floor area of around 50,000 m², which represents 9% of office rental market in Madrid, in which Gmp’s portfolio accounts for 3% of the total. The Company’s occupancy rate at the close of the financial year was 90%.

The leasing operation with Banco Sabadell should be highlighted, which doubled its space at the Castellana Norte business park, up to 16,000 m². This figure, together with 21,000 m² closed with Huawei in 2016, results in an occupancy rate of 84% at the business park and places it in an excellent position to deal with the expiry of the lease contract of its longstanding tenant, Vodafone, in 2019.

Gmp identified the right moment in the cycle to intensify investment

In a market where there is a strong appetite for investment, high valuations and a major adjustment to yields over recent years, it is clear that Gmp identified the right moment in the cycle to intensify investment. As a result, the objective of the strategic investment plan 2014-2018 was reached in 2015 and the value of assets surpassed 2 billion euros in 2017, 7.5% up on the previous financial year. The Company maintains its selective focus on non-opportunistic, long-term investments, both in new developments on land it owns and in value-added assets.

In April 2017, Gmp acquired the building Manuel Cortina 2, occupied by Mapfre, covering a space of 16,383 m². This building has generated revenues since its acquisition to the end of the financial year and was pre-leased to Patrimonio del Estado before Mapfre left 15,141 m² free in December 2017. This leasing agreement was one of the biggest operations of the year in the office market in Madrid.

As regards investment in new developments, significant progress was made in 2017 on construction work on Oxxeo, the project that was started in 2016 by the prestigious architecture firm Rafael de La-Hoz in Las Tablas. This singular, avant-garde building takes the load-bearing structure to outside, thereby leveraging the interior open-plan space without columns. This new building also incorporates the highest levels of sustainability and well-being for users.

The group’s LTV stood at 40.7%, as opposed to 42.3% for the previous financial year and recurring annual financial expenditure was halved down to 1.97%

Special mention should also be made of the renovation of Gmp’s two buildings on the Paseo de la Castellana, 81 and 77. In April of the last financial year, the former, Castellana 81, became the only building on the Paseo de la Castellana to hold the highest level of sustainability, Platinum LEED certification, and it has just been awarded the prize for best renovation by the AEO. We are confident that the focus on sustainability and innovation will drive significant progress in leasing this iconic building in Madrid over 2018, the centenary of its architect, Francisco Javier Sáenz de Oiza. In fact, by the close of the financial year, major advances had already been made, with 31% of the available floor space leased.    

As regards Castellana 77, full renovations were completed in May 2017, earning it the prize for best office architecture in Spain 2017-2018 in the European Property Awards Architecture. Its complete transformation makes it stand out in the office landscape, as well as delivering high levels of sustainability and comfort for occupants. This property has proved highly successful in the market, with 11,700 m² of floor area, 72%, leased by the end of the financial year.

Further to Gmp’s office rental business, the residential tourism development, Las Colinas Golf & Country Club, made an outstanding contribution to the Company’s results over 2017.  Revenues grew 85% year-on-year up to 30 million euros and the EBITDA tripled that of 2016, surpassing 12 million euros. 2017 was a historic year for the development, not just because of these excellent results, which are the highest since it was opened 2010, but also for the many international accolades the resort has won for the third year running as Spain’s Best Golf Course in the World Golf Awards and as Spain’s Leading Villa Resort in the World Travel Awards. It also won the award for Europe’s Leading Villa Resort in the latter.

Gmp has positioned itself as a pioneering property group in Spain, committed to the health and well-being of the people that work in its buildings

The Company’s balance sheet, together with the current capital structure, places Gmp in a very solid financial position. At the close of 2017, the group’s LTV stood at 40.7%, as opposed to 42.3% for the previous financial year, and, after refinancing the company debt in 2016 until 2023, recurring annual financial expenditure was halved down to 1.97%.

Gmp’s commitment to sustainability and energy efficiency, as a strategic pillar of the Company, has been backed by the fact that LEED certification has been awarded to most of its portfolio over the last 3 years. Further to sustainability, in 2017 Gmp has also positioned itself as the pioneering property group in terms of focusing on health and well-being of the occupants of its buildings. This commitment to people is manifest in the Company’s recently renovated assets or new developments. For instance, Oxxeo is the first office building in Spain to install a dynamic lighting system adapted to people’s circadian rhythms and was also the first in Madrid to initiate the WELL Building Standard certification process at the end of 2016, followed by Castellana 81 and Castellana 77, at the end of 2017.  WELL is the first global certification focusing solely on human health and well-being and Castellana 81 aims to be the first WELL building in Spain in May 2018. In addition, both Castellana 81 and 77 achieved the top accessibility certification grade (DIGA).

I would like to make special mention of the intense work on social actions aimed at supporting Intellectual Disability and Acquired Brain Injury developed by the Gmp Foundation in 2017. The Foundation supported 42 social initiatives through 17 projects and gained a high level of recognition and awards for its initiatives and achievements.

After a highly satisfactory year, Gmp faces the future with optimism. In 2018, the Spanish economy is expected to grow around 2.6% and the outlook for the office market in Madrid is also positive. I am convinced that the Company will continue to grow in a sustainable way, creating value for shareholders, satisfaction for clients and consolidating its pre-eminent position in the office market in Madrid.

The main challenges Gmp faces next year are reaching a high level of occupancy at Castellana 81 and Oxxeo, at income levels commensurate with the high quality and comfort standards for both properties, as well as continuing to move forwards in our pioneering people-centred focus by implementing innovative initiatives and cutting-edge technological solutions in our portfolio.

I would like to end by expressing my sincere gratitude from the Board of Directors to each and every one of you, for your support and confidence, and especially to the members of the Gmp team for their dedication, professionalism and commitment to the Company.

Francisco Montoro Alemán
Chairman - CEO

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