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<strong>ANNUAL</strong> <strong>REPORT</strong><br />

EXERCISE 09


Summary<br />

Letter from the Chairman 4<br />

Management Bodies 6<br />

The REALIA Group 9<br />

Economic Parameters 15<br />

Financial Situation 21<br />

Asset valuation 25<br />

Property 33<br />

Offices in Spain 37<br />

Offices in France 40<br />

Retail Centres 44<br />

Development 51<br />

Development in Spain 52<br />

International Development 57<br />

Land Management 60<br />

Shareholders and Investors 63


Letter from the Chairman<br />

Dear Shareholders:<br />

It is no surprise to anyone that 2009 has been one of the toughest years for the economy<br />

of the last decades. The effects of the crisis on unemployment, reduction of consumption,<br />

increased public deficit and financial difficulties have been and continue to be, very serious.<br />

But if corporations can adjust to the new market needs, we will enjoy again years of<br />

prosperity and good business prospects, and the crisis will have been a tough but necessary<br />

lesson learned.<br />

It is obvious that in such a serious situation, all the players in the system, including public<br />

powers, the financial system and the companies themselves, must strive to find solutions.<br />

From the point of view of the administration, this is the right time to provide support in<br />

the form of aid to the most efficient segments of the mass markets (the results achieved by<br />

some consumer durable goods in the last months are very eloquent). The financial system<br />

must introduce flexibility into the conditions for access to the real estate business, obviously<br />

demanding good governance guarantees, but not reducing the development potential<br />

of the companies that must generate funds to repay their loans. And companies have to<br />

apply rational formulae for cost cutting, investment control and indebtedness, quality<br />

and pricing adjustment to continue to be operational.<br />

REALIA is no exception to the global economic situation; in fact, our 2009 figures have<br />

not been positive. However, we believe that the right measures have been adopted to<br />

establish an efficient working platform immediately:<br />

- The debt that serves to support the Development activity has been refinanced, thus<br />

complementing the agreements signed in 2007 for the Property area.<br />

- Operational costs of the company have been adjusted by 26%.<br />

- Selling prices of housing has been reduced, in order to reduce stock and obtain cash -flow.<br />

4<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


- Strong provisions have been implemented for asset valuation, which was the reason<br />

for the accounting losses in the year; however, this loss is not a treasury loss, but an<br />

accounting loss, and therefore can be recovered in the medium term.<br />

- The policy of turnover of mature assets has been maintained, for this type of assets<br />

generate interesting capital gains. According to this policy, the Nervión Shopping<br />

Mall of Seville has been sold.<br />

- With the purpose of capitalizing the company, new properties have that will generate<br />

income as of 2010 have joined the portfolio, such as the Torre REALIA BCN, or the<br />

Plaza Nueva Shopping Mall in Leganés.<br />

The good behaviour of the French office market, in which REALIA is present through SIIC<br />

de Paris, is also good news for the company.<br />

In difficult times it is more necessary than ever to have strong shareholders that believe<br />

in the Project of the company and support it; in that line, the behaviour of FCC and CAJA<br />

MADRID has been faultless. Also, at times like this it is important to acknowledge the<br />

importance of the expert and committed human team, to whom we thank for their daily<br />

efforts.<br />

With our business structure, the support of the shareholders and the financial institutions,<br />

and the work of our team, we must be capable of facing the immediate future to<br />

strengthen our company and for the market to recognize its value for the benefit of our<br />

shareholders.<br />

Ignacio Bayón Mariné<br />

Chairman


M a n a g e m e n t B o d i e s<br />

Board of Directors<br />

Chairman<br />

Mr. Ignacio Bayón Mariné (1) (4)<br />

Board Members<br />

Mrs. Carmen Iglesias Cano. (2) (3) (4)<br />

Cartera Deva, S.A. (D. José Aguinaga Cárdenas) (1)<br />

EAC Inversiones Corporativas, S.L. (Dª. Esther Alcocer Koplowitz) (1) (2)<br />

Mr. Fernando Falcó Fernández de Córdova (3)<br />

Inmogestión y Patrimonios, S.A. (D. Matías Amat Roca) (1) (2) (3)<br />

Mr. Íñigo Aldaz Barrera (1) (4)<br />

Mr. José María Mas Millet. (2) (4)<br />

Mr. José Eugenio Trueba Gutiérrez (3)<br />

Mrs. Maria Antonia Linares Liébana. (3) (4)<br />

Mediación y Diagnosticos, S.A. (D. Mariano Pérez Claver) (1) (2) (3)<br />

Participaciones y Cartera de Inversión, S.L. (D. Antonio Romero Lázaro) (1)<br />

Mr. Rafael Montes Sánchez (1) (2)<br />

Valoración y Control, S.L. (D. Jesús Rodrigo Fernández )<br />

Secretary (Non Board Member)<br />

Mr. Jesús Rodrigo Fernandez<br />

General Secretary (Non Board Member)<br />

Mr. José María Richi Alberti<br />

Management Committee<br />

Chairman & CEO<br />

Mr. Ignacio Bayón Mariné<br />

Managing Director<br />

Mr. Íñigo Aldaz Barrera<br />

Deputy Managing Director, Chief Financial Officer<br />

Mr. Juan Antonio Franco Díez<br />

Deputy Managing Director, Corporate Strategy and Investor Relations Director<br />

Mr. Jaime Lloréns Coello<br />

Deputy Managing Director, Commercial Property Director<br />

Mr. Agustín González Sánchez<br />

Deputy Managing Director, Housing Development Director<br />

Mr. Tomás Marín Zarza<br />

(1) Members of the Executive Committee<br />

(2) Members of the Appointment and Remuneration Committee<br />

(3) Members of the Audit Committee<br />

(4) Members of the Related Party Transactions Committee<br />

6<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Function Directors<br />

Legal Affairs Director and Secretary to The Management Board<br />

Mr. José María Richi Alberti<br />

Commercial, Marketing and Communications Director<br />

Mrs. María Prieto Peña<br />

Technical Director<br />

Mr. Santiago Sancho Ruiz<br />

Urban Development and Project Director<br />

Mr. Antonio Perpiñá Carrera<br />

Property Area<br />

Offices and Retail Centre Director<br />

Mr. Arturo Villar Sourroulle<br />

Offices Director<br />

Mr. Ignacio Alonso Montoya<br />

SIIC De Paris<br />

Managing Director<br />

Mr. Jorge Sanz Marcelo<br />

Financial Director<br />

Mr. Lionel Riviere<br />

Housing Development Area<br />

Housing Development Assistant Director<br />

Mrs. Ana Hernández Gómez<br />

Branches<br />

Andalusia<br />

Mr. Pedro Salvador Albiñana<br />

Canary Islands<br />

Mr. Jorge Valverde Sörensen.<br />

Catalonia<br />

Mrs. Marta Miró Sierra<br />

Central<br />

Mrs. Ana Hernández Gómez<br />

Eastern Region<br />

Mr. Javier Pinilla García<br />

International<br />

International Expansion Director<br />

Mr. Fernando Rodríguez Lluesma<br />

Poland<br />

Mr. Nicolás Ramírez García


8<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


The REALIA Group<br />

The main activity of the REALIA Group is the management and rental<br />

of property assets, especially Offices and Retail Centres in Spain. In<br />

France, the property activity is conducted through its subsidiary SIIC<br />

de Paris, listed in the French Stock Exchange. The Development activity<br />

is conducted through the development of housing and land<br />

management. In 2009, REALIA has created a new area for the management<br />

of third party assets through the company Valaise.<br />

During the last four years (2006 to 2009), REALIA has successfully<br />

implemented its three main strategic lines: a marked reinforcement of<br />

the property activity in assets located in “prime” areas, international<br />

expansion and a significant reduction of its exposure to homebuilding<br />

activity in Spain.<br />

Its focus on international growth is present in two lines of activity:<br />

property investment in France, especially office buildings, through its<br />

subsidiary SIIC de Paris; and homebuilding development in Eastern<br />

Europe.<br />

REALIA keeps a strong and balanced balance sheet, with a growing<br />

weight of Property assets. On the other hand, it has a financial structure<br />

with a controlled level of indebtedness and long-term maturities. Its<br />

financial debt is 2.225 billion euros, and its indebtedness (Loan to<br />

Value) ratio is 49%.


R e s u l t s<br />

Despite the crisis and its effects on the Spanish residential sector,<br />

REALIA closed the year with a healthy balance sheet, solid operating<br />

results and growing recurring revenues from rents. During 2009,<br />

REALIA reduced its turnover by 18.4%, down to 382.6 million euros.<br />

In turn, Property assets rental revenues have increased 1.9%, up to<br />

180.2 million euros.<br />

The growth in revenues confirms the high quality and extraordinary<br />

location of its portfolio, especially singular buildings in Spain and<br />

Paris, and retail centres in Spain. All in all, these assets have maintained<br />

a level of occupancy of 94.4%, excluding Torre REALIA BCN,<br />

opened in mid-2009, with considerable improvement on margins.<br />

The strength of these revenues has absorbed the fall in Development<br />

and Land-related activities, and has allowed for the generation of an<br />

EBIDTA of 176 million euro at the end of 2009.<br />

The net result is negative - 54.2 million -, due to the impact of provisions<br />

for the depreciation of assets. This result has purely accounting<br />

effects, since it does not entail any cash outlay. Without these provisions,<br />

the net result would have been 16.2 million.<br />

On the other hand, the reduction in the theoretical asset valuation<br />

does not influence all the items in the balance, but only some of the<br />

most recent assets, since REALIA applies cautionary accounting<br />

principles and accounts property at its historical or acquisition value.<br />

For this reason, it still has unrecognized net capital gains for 674<br />

million euros.<br />

10<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


P r o p e r t y<br />

REALIA has a strong concentration of “prime” property assets. At<br />

the end of 2009, it managed 703,170 square meters (sq m). Of these,<br />

563,153 sq m are operational and 140,017 sq m correspond to ongoing<br />

projects.<br />

The Group has currently in operation 32 office buildings in Spain, 31<br />

office buildings in Paris, 8 retail and leisure centres.<br />

Offices in Spain<br />

In Spain, REALIA concentrates its offices buildings mostly in Madrid<br />

and Barcelona, especially in areas considered as “prime” and in the<br />

business districts. In July 2009, REALIA started commercial operation<br />

of the Torre REALIA BCN. This iconic building, 117 metre high, and a<br />

lettable surface of 31,959 sq m, has been designed by avant-garde<br />

Japanese architect Toyo Ito, and is located in the business district<br />

Gran Vía Sud-Plaza Europa, the Southern gateway to the city of<br />

Barcelona.<br />

SIIC of Paris<br />

In May 2006, REALIA took control over SIIC de Paris, a holding<br />

company listed in the Paris Stock Exchange. REALIA controls 84.28%<br />

of the stock of this subsidiary, according to data from December 31,<br />

2009. However, the medium-term goal is to bring this percentage<br />

below 60% to adapt to the new regulation of French real estate investment<br />

companies (SIIC).<br />

Office buildings in France are mainly located in the “prime” districts<br />

CBD – central business district – and BD of Paris, the most attractive<br />

districts for investors. At year’s end 2009, 3 office buildings are<br />

undergoing renovation or development work, and they will contribute<br />

an additional lettable surface above ground of 16,193 sq m.


Retail Centres<br />

In the area of Retail Centres, REALIA currently owns 8 operational<br />

retail and leisure centres, ideally located and excellent operator mix,<br />

including the main fashion, household, restaurants and leisure retailers.<br />

One of the projects of REALIA is the As Cancelas, Retail Centre in<br />

Santiago de Compostela, which will contribute an additional gross<br />

lettable surface of 50,812 sq m.<br />

In 2009, REALIA opened Plaza Nueva de Leganés and sold its assets in<br />

Nervión Plaza de Sevilla.<br />

This disinvestment, together with smaller operations in assets in Paris,<br />

has generated a capital gain of 52.8 million euros.<br />

H o m e b u i l d i n g<br />

In the Spanish homebuilding sector, REALIA is one of the companies<br />

that are better prepared to face the current situation due to its<br />

financial robustness. Furthermore, it has a product portfolio with more<br />

than 60% of the homes for first residences, located in the regions with<br />

higher growth, and located close to city centres.<br />

A new development was started in 2009: Jardín de Vivero, in the<br />

Madrid municipality of Fuenlabrada.<br />

At the same time, it maintains its Land Management activity to avoid<br />

losing solid growth opportunities in the future. Currently, REALIA’s<br />

portfolio of land for construction amounts to 3.4 million sq m.<br />

In the homebuilding sector abroad, REALIA has managed 155 units in<br />

2009, of which 103 correspond to Poland and the remaining 52 units to<br />

Portugal. In Poland and Rumania, the portfolio of land for construction<br />

amounts to 75,182 sq m of consolidated urban land.<br />

12<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Evolution of the market Value of Assets and their composition<br />

2004 2005 2006 2007 2008 2009<br />

Property 39% 37% 48% 53% 61% 64%<br />

Development and Land 61% 63% 52% 47% 39% 36%<br />

Gross Asset Value (GAV) (*) 3.147 3.964 6.386 6.342 5.145 4.550<br />

Notes: (*) Figures in billions of euros


14<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Economic Parameters<br />

R e s u l t s 2 0 0 9<br />

M i l l i o n E u r o s<br />

2009 2008 2007 2006 2005 2004 2003 2002 2001<br />

TURNOVER 298.5 402.3 751.6 728.8 632.8 565.1 470.3 410.4 305.9<br />

SALE OF ASSETS 52.8 25.3 33.3 43.5 30.4 16.3 35.4 1.2 5.8<br />

OTHER REVENUES 31.2 41.1 28.2 31.8 13.6 11.9 5 2.9<br />

4.6<br />

TOTAL REVENUES 382.6 468.8 813 804 676.9 593.3 510.7 414.5 316.3<br />

EBITDA 176 211.7 366.2 294.3 250.8 210.5 176 114.7 91.6<br />

DEVELOPMENTS AND LAND (14.7) 47.3 224.6 168.9 152.7 131.5 87.7 62.9 40.6<br />

RENTS 137.2 128.7 106.1 82.8 66.5 61.7 52.8 49.4 44.2<br />

SERVICES AND OTHERS 2 10.9 3 0 1.8 1.4 0.9 1.3 1.2<br />

SALE OF ASSETS 51.5 24.7 32.4 42.6 29.8 16 34.6 1.1 5.7<br />

AMORTIZATIONS AND PROVISIONS 143.4 160.2 38.7 22.8 15 18.1 19.6 8.6 11.6<br />

FINANCIAL 97.7 87.8 89.7 41.3 20.8 22.8 17 14 16.6<br />

OTHER RESULTS (2.8) (4.2) 2.3 30.4 7.8 8.4 9.3 2.3 0.8<br />

PROFITS BEFORE TAXES (67.9) (40.5) 240.1 260.6 222.9 178 148.7 94.3 64.3<br />

TAXES (14.1) (11.9) 70.4 81.9 65.5 60.1 37 32.3 21.6<br />

RESULTS (0.6) (2.8)<br />

PROFITS AFTER TAXES (53.8) (28.6) 169.1 176 157.3 118 111.7 62.1 42.7<br />

MINORITIES 0.4 17.2 28.6 15.1 20 12.2 5.6 6.7 5.6<br />

ATTRIBUTABLE NET PROFIT (54.2) (45.8) 140.4 160.9 137.3 105.7 106.2 55.4 37.1<br />

ROE 17% 20% 22% 19% 20% 13% 9%<br />

RESULTS 2006, 2007, 2008 and 2009 CRITERION STOPPED ACTIVITIES<br />

2004 and 2005 DATA CRITERIA NIIF<br />

2001, 2002 and 2003 DATA CRITERIA PGC EXCEPT SALES OF PROPERTY AND OTHER OPERATIONAL REVENUES, INCLUDED IN TOTAL REVENUES<br />

TO HARMONIZE DATA WITH 2004-2006 DATA


R e s u l t s 2 0 0 9 : P r o p e r t y A s s e t s<br />

Million euros<br />

2009 2008 2007 2006 2005 2004 2003 2002 2001<br />

RENT REVENUES 152.2 150.2 130.1 94.7 72.6 71.2 73.9 65.7 58<br />

REVENUES EXPENSE ALLOCATION 28 26.7 24.8 16.6 12.8 11.9<br />

SALE OF ASSETS 52.8 25.3 33.3 43.5 30.4 16.3 35.4 1.2 5.8<br />

OTHER REVENUES 12.8 3.6<br />

TOTAL PROPERTY REVENUES 233 215 188.1 158.4 115.7 99.4 109.3 66.9 63.8<br />

Rentals Overhead 43 61 48.7 32.1 18.8 21.4 21.1 16.3 13.7<br />

Costs of sale of assets 1.4 0.6 0.9 0.9 0.6 0.3 0.8 0 0.1<br />

EBITDA PROPERTY ASSETS 188.7 153.4 138.6 125.4 96.4 77.7 87.4 50.6 49.9<br />

Rents 137.2 128.7 106.1 82.8 66.5 61.7 52.8 49.4 44.2<br />

Sale of assets 51.5 24.7 32.4 42.6 29.8 16.0 34.6 1.1 5.7<br />

RENTS MARGIN 76 73 69 74 78 74 71 75 76<br />

M a n a g e m e n t I n f o r m a t i o n : P r o p e r t y<br />

2009 2008 2007 2006 2005 2004 2003 2002 2001<br />

LEASABLE SURFACE BY PRODUCTS 563,153 498,581 493,295 480,138 361,930 354,958 334,963 296,407 240,411<br />

OFFICES 384,064 360,369 367,737 368,117 253,961 255,583 240,736 228,014 189,954<br />

RETAIL AND LEISURE CENTERS 132,586 98,897 85,175 71,578 71,637 63,043 71,256 68,393 50,457<br />

REST 46,504 39,315 40,382 40,443 36,332 36,332 22,971<br />

PARKING SPACES 11,287 9,183 7,505 6,892 5,615 5,581 5,510 4,649 3,836<br />

PERCENTAGE OF OCCUPANCY 91 97 96 97 95 97 95 94 97<br />

AVERAGE RENT/Sq. M./Month 24.6 25.4 24.2 21.9 17.6 17.1 17.4 19.9 20.1<br />

RESULTS 2006, 2007, 2008 and 2009 CRITERION STOPPED ACTIVITIES<br />

2004 DATA and NIIF 2005<br />

LEASABLE SURFACE AREA IN RETAIL CENTRES WILL BE GLA AS OF 2004<br />

16<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


2 0 0 9 R e s u l t s : D e v e l o p m e n t<br />

Millon euros<br />

2009 2008 2007 2006 2005 2004 2003 2002 2001<br />

DEVELOPMENT REVENUES 142.0 203.6 323.4 457.9 411.5 409.5 357.4 315.2 199.3<br />

LAND REVENUES 0 48.5 294.7 187.1 137.1 74.2 34.7 23.3 45<br />

TOTAL REVENUES 142 252.1 618.1 645.0 548.6 483.8 392.1 338.6 244.2<br />

Development costs 156.7 186 266.6 350.0 319.8 304.1 285 265.9 166.3<br />

Land costs 0 18.8 126.8 126.1 76 48.1 19.4 9.8 37.4<br />

EBITDA DEVELOPMENTS AND LAND (14.7) 47.3 224.6 168.9 152.7 131.5 87.7 62.9 40.6<br />

Developments (14.7) 17.6 56.7 107.9 91.7 105.4 72.4 49.3 33<br />

Land 0 29.7 167.9 61 61 26.1 15.3 13.5 7.6<br />

DEVELOPMENT SALES MARGIN (%) (10.4) 8.7 17.5 23.6 22.3 25.7 20.3 15.6 16.5<br />

SALES 96.2 99.9 407.8 576 675.5 492.7 395.3 389.6 293.1


M a n a g e m e n t I n f o r m a t i o n : D e v e l o p m e n t<br />

2009 2008 2007 2006 2005 2004 2003 2002 2001<br />

HOMES DELIVERED (No.) 634 786 1,107 1,604 1,402 1,692 1,979 1,995 1,348<br />

Million euros 142.0 203.6 323.4 457.9 411.5 409.5 357.4 315.2 199.3<br />

Average price (euros) 224,183 259,054 292,128 285,525 293,498 242,043 180,600 158,012 144,814<br />

Sq. M. 82,876 88,522 145,356 195,964 185,457 202,796 227,272 245,661 157,403<br />

Average price/Sq. M. (euros) 1,714 2,300 2,225 2,337 2,219 2,019 1,573 1,283 1,266<br />

BREAKDOWN HOMES BY OFFICE<br />

CENTRAL 203 240 533 688 406 804 1.199 1.114 348<br />

CATALONIA 79 111 37 247 181 252 147 367 304<br />

EASTERN REGION 159 170 209 298 281 451 497 418 471<br />

ANDALUSIA 150 165 261 303 327 183 137 96 225<br />

CANARIES 24 78 20 68 208 1<br />

PORTUGAL 19 23 48 1<br />

BREAKDOWN SQ. M. BY OFFICE<br />

CENTRAL 31,100 28,637 62,658 70,562 48,559 91,728 130,166 139,326 36,353<br />

CATALONIA 11,198 10,774 5,683 25,412 23,453 31,021 16,578 44,621 39,568<br />

EASTERN REGION 17,638 18,556 26,059 33,604 35,054 52,524 60,668 49,626 52,368<br />

ANDALUSIA 18,440 22,652 37,387 55,138 49,836 27,143 19,860 12,087 29,114<br />

CANARIES 2,929 6,307 7,127 11,248 28,556 224<br />

PORTUGAL 1,570 1,597 6,441 155<br />

RESULTS 2006, 2007, 2008 and 2009 CRITERION STOPPED ACTIVITIES<br />

2004 and 2005 DATA CRITERIA NIIF<br />

LAND BANK 2004, 2005 and 2006 INCLUDES LAND OF ONGOING DEVELOPMENTS<br />

ONGOING DEVELOPMENTS 2004, 2005 and 2006 ARE OPERATIONAL DEVELOPEMENTS<br />

2008 INCLUDES THE NEW CENTRAL I AND CENTRAL II OFFICES<br />

18<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


2009 2008 2007 2006 2005 2004 2003 2002 2001<br />

DEVELOPMENTS IN PROGRESS (No.) 2 11 34 46 43 47 57 60 43<br />

No. of Homes 216 957 2,616 3,778 3,547 3,739 5,002 6,145 4,357<br />

Sq. M. 23,740 117,326 310,479 464,623 453,493 472,610 654,536 673,425 509,279<br />

BREAKDOWN HOMES BY OFFICE<br />

CENTRAL 113 458 902 1,352 1,231 1,354 2,297 2,972 2,560<br />

CATALONIA 156 533 676 592 463 867 1.021 562<br />

EASTERN REGION 12 493 511 558 695 1.022 1.399 983<br />

ANDALUSIA 123 388 862 948 838 816 753 252<br />

CANARIES 120 271 270 218 389<br />

PORTUGAL 29 107<br />

POLAND 103 88<br />

BREAKDOWN Sq. M. BY OFFICE<br />

CENTRAL 13,943 60,626 110,662 171,829 148,145 155,208 305,710 337,659 283,829<br />

CATALONIA 13,680 58,221 74,483 65,417 53,209 92,283 87,380 67,557<br />

EASTERN REGION 1,367 61,200 59,712 73,435 84,001 121,841 167,934 117,946<br />

ANDALUSIA 18,593 46,153 119,801 142,534 131,751 134,703 80,452 39,946<br />

CANARIES 13,576 27,928 27,127 23,962 48,441<br />

PORTUGAL 6,315 11,671<br />

POLAND 9,797 9,484<br />

LAND BANK 3,334,415 3,469,910 4,027,999 4,409,246 3,849,168 3,376,371 2,767,843 2,383,250 1,840,974<br />

BREAKDOWN BY OFFICE<br />

CENTRAL 1,413,730 1,473,293 1,543,688 1,729,057 1,638,450 1,029,563 1,104,347 1,050,998 690,148<br />

CATALONIA 101,409 112,807 194,039 194,561 194,545 221,347 121,976 145,268 138,477<br />

EASTERN REGION 162,196 211,247 255,322 291,014 362,698 398,044 292,145 263,358 187,980<br />

ANDALUSIA 1,563,357 1.569.357 1.766.535 1.903.611 1.552.125 1.601.695 1.163.583 923.626 824.369<br />

PORTUGAL 173.312 193.168 31.419 77.280 85.793<br />

CANARIES 18.541 18.541 36.545 32.086 53.216 48.441<br />

POLAND 50.000 59.484 58.558 65.750 16.714<br />

RUMANIA 25.182 25.182<br />

RESULTS 2006, 2007, 2008 and 2009 CRITERION STOPPED ACTIVITIES<br />

2004 and 2005 DATA CRITERIA NIIF<br />

LAND BANK 2004, 2005 and 2006 INCLUDES LAND OF ONGOING DEVELOPMENTS<br />

ONGOING DEVELOPMENTS 2004, 2005 and 2006 ARE OPERATIONAL DEVELOPEMENTS<br />

2008 INCLUDES THE NEW CENTRAL I AND CENTRAL II OFFICES


20<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Financial Situation<br />

In September 2009, REALIA concluded the process of refinancing its<br />

development activity through the underwriting of a syndicated loan<br />

with nine banks, for a maximum amount of 1.001 billion euros, maturing<br />

on December 30, 2012. At the end of the year, 707.8 million had<br />

been drawn down.<br />

This loan complements the two syndicated loans that finance the<br />

property activity of the Company.<br />

Furthermore, the two majority stockholders of the Group, FCC and Caja<br />

Madrid, expressed their support to the company through the granting<br />

and outlay of a loan for an additional 100 million euros.<br />

In April 2007, after receiving the stake in SIIC de Paris and the debt<br />

acquired in 2006 for the acquisition of that company, REALIA Patrimonio,<br />

company owned 100% by Grupo REALIA, tackled the restructuring of<br />

the financial debt. To that end, it underwrote a syndicated loan for a<br />

maximum of 1.087 billion euros with 16 banks. In 2009, this amount<br />

has been reduced to 973.5 million euros.<br />

In parallel, in April 2007, SIIC de Paris underwrote a syndicated loan<br />

with 16 banks for 545 million euros and maturing in 2017. In 2009, this<br />

amount has been reduced to 522.4 millions.<br />

S t r a t e g y<br />

REALIA’s financial strategy is based upon a reasonable level of<br />

leveraging over asset value and the Group’s shareholders’ equity, the<br />

acquisition of long-term debt and the coverage of interest rate risks.


At year’s end 2009, net financial debt amounted to 2.225 billion euros<br />

(2.4% lower than the previous year), with an indebtedness ratio “loan to<br />

value’ (LTV or net debt over gross asset value, GAV) of 49%, after the<br />

latest asset valuation. The company has 189 million euros in cash and<br />

cash equivalents, ensuring a strong liquidity to meet its commitments<br />

and upcoming debt payments.<br />

Monitoring of the business plan, prepared in 2009 to refinance the development<br />

activity, reflects a debt 166 million euros lower than forecast,<br />

due to the sales activity and the cost-cutting measures adopted.<br />

REALIA manages the financial structure of the group’s companies to<br />

ensure that they can continue to be profitable businesses and with an<br />

optimum balance between debt and equity. To that end, the financial<br />

area reviews periodically these structures and the net debt over GAV<br />

ratio.<br />

During 2009, REALIA refinanced the debt of the Development activity,<br />

and ensured financing of its 2009-2012 Business Plan. This Plan is<br />

based upon realistic revenue forecasts and does not contemplate disinvestments<br />

of land.<br />

The property area has met its financial requirements through the 1.4958<br />

billion euros syndicated loan, maturing in 2017 and pending partial<br />

amortizations to that date amounting to 19.4% of the principal.<br />

This debt is partially hedged against interest rate fluctuations. All in all,<br />

these hedgings cover 971.3 million euros, which represents 43.6 % of the<br />

total net banking debt. The goal is to reach a balanced debt structure<br />

and low P&L volatility.<br />

22<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


M a i n f i g u r e s<br />

At year’s end 2009, the gross financial debt of the Group amounted to<br />

2.414 billion euros. In 2010, 3.9% of the gross financial debt will fall<br />

due: 94.6 million euros.<br />

Financial Structure<br />

Millions of euros<br />

2009 2008<br />

Syndicated loan 2,190.9 1,387.1<br />

Credit lines 56.8 813<br />

Mortgage loans 137.3 155<br />

Loans 29 64,2<br />

Total gross financial debt 2.414 2.419,4<br />

Treasury 160.3 117.2<br />

Treasury equivalents 28.7 22.8<br />

Total net financial debt 2,225 2,279.4<br />

Gross Debt Maturity<br />

Gross Debt Structure<br />

2013-2016<br />

8,6%<br />

2010<br />

3.9%<br />

2011<br />

5,5%<br />

Variable<br />

60%<br />

2012<br />

32,8%<br />

2017<br />

49,1%<br />

Fixed<br />

40%


24<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Asset Valuation<br />

REALIA’s market value of assets, according to the appraisal by<br />

independent expert CB Richard Ellis, amounts to 4.550 billion euros.<br />

All of the assets of REALIA are valued at acquisition cost. As<br />

of December 31, 2009, accounting value of these assets amounts to<br />

3.413 billion, therefore REALIA holds unrealised and unrecognised<br />

capital gains (not accounted for in the balance) after minorities and<br />

taxes, of 674 million.<br />

Book value<br />

Market Value<br />

(according to CBRE)<br />

Market Value<br />

(excluding minorities)<br />

Total Capital<br />

Gains<br />

Capital Gains (excluding<br />

minorities)<br />

Capital Gains<br />

after taxation<br />

Assets REALIA Group 3,413 4,550 3,860 1,136 869 674<br />

Market value of assets as of December 31 2009 is 11.6% lower than in<br />

December 2008 due to the adjustments in market value of assets. 64%<br />

of the asset value of REALIA corresponds to the commercial portfolio<br />

of assets and 36% to homebuilding development.<br />

Asset valuation<br />

Million euros<br />

2009 2008 Var. (%)<br />

Commercial Property Homebuildings 2,910 3,134 (7.1)<br />

Development Assets 275 475 (41.9)<br />

Land Bank 1,364 1,537 (11.3)<br />

Total GAV 4,550 5,145 (11.6)


The 11.6% reduction in the valuation of Commercial Property, Development<br />

and Land assets is due mainly to three causes:<br />

1. Insufficient asset purchase to compensate for the sales and property<br />

delivered during 2009.<br />

2. The fall in value of the land of the Group, due to the situation of<br />

the sector.<br />

3. In the development area, increase of the profitability expected by the<br />

investors.<br />

Gross Asset Value (GAV)<br />

31 December 2005<br />

31 December 2009<br />

Land and homebuilding<br />

63%<br />

Land and homebuilding<br />

36%<br />

Commercial Property<br />

37%<br />

Commercial Property<br />

64%<br />

During the last four years, 2006-2009, REALIA has successfully<br />

implemented its three main strategic lines: strong boost to the property<br />

activity in “prime” assets, international expansion and a marked reduction<br />

of the exposure to residential activity in Spain.<br />

26<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


P r o p e r t y V a l u a t i o n<br />

Market value of assets as of December 31, 2009 amounts to 2.910<br />

billion euros, 7.1% lower than in December 2008. In comparable terms<br />

(‘like for like’), the value is 8.6% lower.<br />

The negative variation of commercial property assets is due to the<br />

recovery of the “yields” (expected profitability of assets) and the<br />

expected slow down of market revenues.<br />

Commercial Property Valuation<br />

Sq m<br />

GAV<br />

2009<br />

GAV<br />

2008<br />

Var.<br />

(%)<br />

LfL<br />

(%)<br />

(%) 1 (%) 1 (%) 2 (%) 2 € / sqm<br />

Yield<br />

2009<br />

Yield<br />

2008<br />

Yield<br />

CBRE<br />

2009<br />

Yield<br />

CBRE<br />

2008 GAV<br />

Offices 384,064 2,286.7 2,427.1 (5.8) (8.1) 6 5.4 6 5.6 5,954<br />

Spain 261,217 1,194.7 1,229.8 (2.9) (7.8) 5.9 5.4 6.1 6 4,574<br />

CBD 1 109,397 677.9 736.8 (8) (8.0) 5.6 5.2 5.8 5.8 6,197<br />

BD 1 61,304 247.3 269.3 (8.2) (8.2) 6.2 5.9 6.7 6.4 4,034<br />

Periphery/ Other 90,516 269.5 223.8 20.4 (6.2) 6.4 5.5 6.4 5.9 2,977<br />

France 122,846 1,092 1,197.2 (8.8) (8.4) 6.1 5,5 5.8 5.3 8,889<br />

CBD 4 66,640 709.2 807.1 (12.1) (12.1) 5.9 5.1 5.6 5 10,642<br />

BD 47,586 354.8 359.1 (1.2) 0.3 6.3 6.2 6 5.8 7,457<br />

Periphery/ Other 8,621 27.9 31 (10) (10.0) 7.9 7.2 7.7 7.1 3,239<br />

Retail & Leisure 132,586 320.1 373.2 (14.2) (12.2) 6.8 6 7.3 6.6 2,414<br />

Other assets 3 46,504 75.1 39.3 91.1 (11.1) 2.1 4.1 3 3.8 1,614<br />

Pipeline 140,017 228.3 294.1 (22.4) - - - - - 1,631<br />

Total 703,170 2,910.2 3,133.6 (7.1) (8.6) 6 5.5 6 5.7 4,139<br />

1<br />

Passing rents as of Dec. 2009 (assuming 100% occupacy) divided by property values (CBRE)<br />

2<br />

Market rents (CBRE) divided by property values (CBRE)<br />

3<br />

Mainly a warehouse in Logroño and a hotel in Paris


The Offices area accounts for 78% of the Property assets value, with<br />

a balanced weight between Madrid and Paris. The Shopping Centres<br />

area accounts for 11%, and ongoing projects, 8%.<br />

Asset Value by Businesses<br />

Others<br />

3%<br />

Retail and leisure<br />

11%<br />

Pipeline<br />

8%<br />

Offices Spain<br />

40%<br />

Offices France<br />

38%<br />

H o m e b u i l d i n g d e v e l o p m e n t v a l u a t i o n<br />

Residential business assets have been valued at 1.639,4 billion euros,<br />

18.5% lower than the 2008 valuation, due to adjustments in the market<br />

value of the land portfolio and the impact of homes delivered in 2009,<br />

which reduced the housing stock available.<br />

Land and homebuilding valuation<br />

Million euros<br />

2009 2008 Var. (%)<br />

Land bank 1,363.9 1,537.4 (11.3)<br />

Started project (*) 27,1 196,0 (86.2)<br />

Finish project (*) 248,4 278,5 (10.8)<br />

Total 1,639.4 2,011.9 (18.5)<br />

(*)<br />

Impact of the decrease in new development activity vs. homes delivered in 2009<br />

28<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


The reduction in weight of the residential area continued in 2009, with<br />

a very marked decrease in the volume of new developments started.<br />

The land reserved for construction, after deducting land under<br />

construction and land owned by minority stockholders, amounts to 2.8<br />

million sq m (3.3 million if included), slightly above the figure for 2008,<br />

due to the postponement of several projects, and the return of their<br />

corresponding land to land bank.<br />

Evolution of the land bank<br />

Dec. 2009 Dec. 2008<br />

(000) sq m GAV (€ Mm.) € / sq m (000) sq m GAV(€ Mm.) € / sq m<br />

Land bank 3,357 1,391 414 3,470 1,734 500<br />

Land attributed to started project 23 27 1,180 153 196 1,281<br />

Land owned by minorities 509 88 172 560 128 228<br />

Adjusted Land Bank 2,826 1,276 452 2,757 1,410 511<br />

Depending on the state of maturity of the adjusted land bank, 39%<br />

of the value it’s in the final stages of development (project and<br />

urbanization); 60% in planning and zoning, and only 0.2% is at the<br />

early stages of development.<br />

Adjusted land bank<br />

2009 2008<br />

(000) sq m GAV (€Mm) € / sq m (000) sq m GAV (€Mm) € / sq m<br />

Project 508 337 664 244 192 790<br />

Urban development 181 167 921 297 261 880<br />

Planning 1,573 700 445 1,719 819 477<br />

Zoning 552 71 128 485 135 278<br />

Other 11 2 173 14 2 170<br />

Total 2,826 1.276 452 2,757 1.410 511


N e t a s s e t v a l u e<br />

Net asset value (NNAV) of REALIA as of December 31, 2009 is 4.34<br />

euros per share, 25.6% lower than in December 2008, mainly due to the<br />

asset value adjustment resulting from the slowdown in the activity of the<br />

sector.<br />

Net Asset Value<br />

Million euros<br />

Property Residential Total<br />

2009 2008 2009 2008 2009 2008 Var. %<br />

Total (GAV) 2,910 3,134 1,639 2,012 4,550 5,145 (11.6)<br />

Minorities 586 656 104 147 690 803 (14.1)<br />

GAV of REALIA 2,324 2,478 1,536 1,865 3,860 4,343 (11.1)<br />

Book value of assets 1,841 1,788 1,150 1,286 2,991 3,074 (2.7)<br />

Latent Capital gains 483 689 386 579 869 1,268 (31.5)<br />

Taxes 79 115 116 174 195 289 (32.7)<br />

Latent Capital gains after taxes 404 574 270 405 674 979 (31.1)<br />

Adjustments 12 31 (60.5)<br />

Equity 509 566 (10.1)<br />

NAV before taxes 1,386 1,834 (24.4)<br />

NAV after taxes 1,195 1,576 (24.2)<br />

No. Of shares (millions)<br />

275.5 (1)<br />

270,6 (1)<br />

NAV before taxes per share (2) 5.03 6.78 (25.8)<br />

NNAV (after taxes) per share (2) 4.34 5.83 (25.6)<br />

1<br />

Adjusted by equity stock<br />

2<br />

In euros.<br />

30<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


32<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Property<br />

A n a l y s i s o f t h e S e c t o r<br />

A reduction of activity has taken place in the Spanish office market,<br />

demand has slowed down back to 1990’s levels, and the availability<br />

rate has increased, while some developments had to be halted as a<br />

result of financial difficulties.<br />

Companies are reducing rental spaces to cut costs and in some cases,<br />

are looking for locations in the periphery of cities. Forecasts for 2010<br />

and 2011 predict a reduction of the new construction or renovation<br />

buildings offering in Madrid and Barcelona.<br />

In Madrid, the office rental stock offered exceeds 11.9 million square<br />

meters. In Barcelona, the figure is 4.6 million sq m, of which nearly<br />

40% are located in the periphery.<br />

As to prices, a marked decline has taken place in both cities, even<br />

though the fall in rents was not so marked during the second half of<br />

the year.<br />

The Paris office market has behaved more stably than the Spanish<br />

market. Despite declines in rent values and the higher availability rate,<br />

these were moderate and signs of recovery are visible.<br />

In the Shopping Centre sector, the decline in private consumption has<br />

hit the sector hard, and it has returned to Gross Lettable Surface levels<br />

of the past decade. The negative economic situation creates greater<br />

difficulties to market new spaces and to maintain occupancy ratios,<br />

while operators try to bring rent prices down. This has created great<br />

uncertainty among operators and developers of new assets, which has<br />

resulted in the opening of retail centres with low levels of occupancy of<br />

premises, and some projects even had to be cancelled.


Even though 2008 set a historic record in the number of new retail<br />

centres opened, with a gross lettable surface of nearly 1.1 million sq m,<br />

investment activity fell during 2009 down to 1999 levels, with a mere<br />

400,000 sq m of new retail space opened.<br />

Retail centre activity has also declined, with a reduction of retail sales,<br />

especially in home furnishings – due to the construction crisis – and<br />

personal care, and the average expenditure per person has also<br />

declined.<br />

S t r a t e g y<br />

Since 2006, REALIA has followed the strategy of strengthening the<br />

Property area and increase its weight in the GAV with respect to<br />

Development.<br />

The Property area strategy for 2010 is based upon five aspects:<br />

– Reinforcement of the property position of the REALIA Group in core<br />

products, Offices and Shopping Centres, in “prime” areas and singular<br />

buildings in the Paris, Madrid and Barcelona markets.<br />

– Maximization of the asset value, ensuring long-term revenues and<br />

improving the efficiency of the buildings.<br />

– Continued development of feasible ongoing projects.<br />

– Maintaining the SIIC status in France.<br />

– Maintaining replacement policy of non-strategic assets and assets that<br />

have reached sufficient degree of maturity.<br />

34<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


In 2009, REALIA started commercial operation of the Parque Comercial<br />

Plaza Nueva de Leganés and the office building Torre REALIA BCN in<br />

Barcelona, and at the same time has sold its stake in the shopping<br />

centre Nervión Plaza de Sevilla, at prices that guarantee the maintenance<br />

of the intrinsic value of the company.<br />

As to ongoing projects, the French subsidiary SIIC de Paris continues<br />

at the end of 2009 the development and renovation of 3 new office<br />

buildings. In the Retail Centre segment, REALIA maintains its project<br />

for the development of As Cancelas, in as far as market circumstances<br />

will allow it.<br />

In order to tackle the effects of the crisis, REALIA has reinforced its<br />

commercial management with the purpose of minimizing the risks of<br />

reduction or loss of rents. For that, the goal of the company is to<br />

maximize occupancy and generate loyalty among tenants through the<br />

establishment of a quality relation with them.<br />

O p e r a t i o n a l h i g h l i g h t s<br />

At year’s end 2009, the property portfolio is made up by assets in<br />

operation and under development for a total of 703,170 sq m. Of<br />

these, 563,153 sq m are operational and 140,017 sq m correspond to<br />

ongoing projects.<br />

The operational commercial property comprises 32 office buildings in<br />

Spain, with a rental space of 261,217 sq m; 31 office buildings in Paris,<br />

for a total rental space of 122,847 sq m, 8 shopping and leisure centres<br />

with a gross lettable surface of 132,584 sq m. The property area has<br />

other assets in operation, with a total surface area of 46,504 sq m.<br />

Property activity maintains a positive evolution and high occupancy<br />

levels due to the great quality and extraordinary location of its assets.<br />

On the other hand, most of the office rental contracts in Paris and


etail centres in Spain are longer than five years, which provides great<br />

stability to recurring revenues.<br />

Average occupancy of the property portfolio has reached 94.4%; this<br />

ratio excludes Torre REALIA BCN, opened in the second half of 2009.<br />

During 2009, property rental revenues increased 1.9%, up to 180.2<br />

million, whereas the Ebitda of this activity grew 6.6%, up to 137.2<br />

million euros.<br />

The rise in rents of the last years cannot be explained only by the<br />

efficient commercial management of this activity, but by the start of<br />

commercial operation of several projects: Plaza Nueva de Leganés, in<br />

May 2009, and the Noria Outlet Shopping in Murcia, in June 2008.<br />

On the other hand, as part of its asset replacement strategy, Property<br />

has generated revenues resulting from capital gains from the sale of<br />

property for 52.8 million euros, after the sale of property in Seville and<br />

Paris for a total of 106 million euros.<br />

GLA by use<br />

Surface area, in %<br />

Retail and Leisure<br />

24%<br />

Other assets<br />

8%<br />

Offices Spain<br />

46%<br />

Offices France<br />

22%<br />

Passing rents Dec 09<br />

Revenues, in %<br />

Other assets<br />

1%<br />

Retail and leisure<br />

13%<br />

Offices Spain<br />

43%<br />

Offices France<br />

43%<br />

36<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Offices in Spain<br />

S t r a t e g y<br />

REALIA has focused its expansion on the Spanish office market on the<br />

cities of Madrid and Barcelona, especially in the areas considered as<br />

‘prime’ and business districts. In this respect, the start of commercial<br />

operation of the new building Torre REALIA BCN during 2009,is one<br />

more step toward its long-term reinforcement of high quality office<br />

building portfolio.<br />

REALIA’s offices in these markets are located in ‘prime’, areas, with<br />

the goal of offering unique, well located spaces with excellent service<br />

levels.<br />

The commercial policy followed in the office buildings seeks to secure<br />

tenant loyalty through a quality relation and offering modern office<br />

spaces.<br />

Currently, with the exception of Torre REALIA BCN, opened in the<br />

second half of last year and currently in commercial operation, the<br />

occupancy rate of Spanish offices is equivalent to 97% of the lettable<br />

surface.<br />

Despite the fact that the current crisis will continue through 2010<br />

– albeit not as acutely as in 2009 – the commercial policy will help<br />

tackling the potential risk of non occupancy of Spanish offices, since<br />

83% of the maturity of contracts over annualized rents will take place<br />

as of 2011.


H i g h l i g h t s<br />

In July 2009, REALIA has started commercial operation of Torre<br />

REALIA BCN. This iconic, 117-meter high building, has been designed<br />

by avant-garde Japanese architect Toyo Ito, and is located in the Gran<br />

Vía Sud - Plaza Europa business district, the Southern gateway to the city of<br />

Barcelona.<br />

Torre REALIA BCN has become one of the flagship buildings of Barcelona,<br />

for its design and technical quality.<br />

Torre REALIA BCN, with a total lettable area of 31,959 sq m, is 117<br />

meters high and has 24 stories, of which are dedicated to rental and<br />

the other two, to technical facilities. The building has a 1,350 sq m,<br />

open-floor plan.<br />

This building has become an icon at the Plaza Europa, the business<br />

district that is being consolidated as the new area preferred by multinational<br />

companies to settle, and as such, has been present in some of the<br />

most relevant operations carried out in the area in the last months.<br />

Torre REALIA BCN is part of the Porta Fira complex, which includes also<br />

a hotel from the Santos chain. Both buildings are connected through a<br />

common story where retail premises are located.<br />

REALIA’s offices under commercial operation in Spain account for a<br />

lettable area of 261,217 sq m and generate annual rental revenues of<br />

75.2 million euros.<br />

M a i n f i g u r e s<br />

One of the most representative buildings in commercial operation is the<br />

Torre REALIA, headquarters of the REALIA Group, a striking leaning<br />

tower office building. This building has an area above ground of 28,425<br />

sq m, distributed around 24 stories and 351 parking places, and is located<br />

at the Plaza de Castilla, one of the main hubs of the city of Madrid.<br />

38<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Main office buildings of REALIA in Spain<br />

Building<br />

Lettable surface in sq m<br />

Torre REALIA BCN. Barcelona 31,959<br />

Torre REALIA. Madrid 28,425<br />

Edificio Diagonal Sarriá. Barcelona 28,419<br />

Salvador de Madariaga. 1. Madrid (*) 24,850<br />

Albasanz, 16. Madrid (*) 19,549<br />

C.N. Eisenhower. Madrid 19,071<br />

Edificio Los Cubos. Madrid 18,324<br />

C.N. Méndez Álvaro. Madrid 13,248<br />

María de Molina, 40. Madrid (*) 9,604<br />

Av. Bruselas 36. Madrid 8,856<br />

Príncipe de Vergara, 132. Madrid (*) 8,780<br />

C.N. Kansas City. Sevilla 8,735<br />

Musgo, 1 y 3. Madrid (*) 5,382<br />

Paseo de la Castellana, 41. Madrid (*) 4,583<br />

Albasanz, 12. Madrid (*) 4,160<br />

Serrano, 21. Madrid (*) 3,864<br />

Goya, 8. Madrid (*) 3,828<br />

Alfonso XII. Madrid (*) 3,803<br />

Goya, 6. Madrid (*) 3,688<br />

Marques del Duero, 4. Madrid (*) 3,000<br />

Prim, 19. Madrid (*) 2,786<br />

Jorge Juan, 35. Madrid (*) 1,930<br />

María Tubau, s/n. Madrid 1,539<br />

(*) Through Hermanos Revilla, S.A.


Offices in France<br />

S t r a t e g y<br />

The goal of SIIC de Paris is to ensure the long-term property rental<br />

yield -term, keeping indebtedness within sustainable levels in keeping<br />

with the future development of the Group, and with a reasonable return<br />

to the shareholder. This strategy is implemented through a close<br />

monitoring of the business evolution and customers, and the replacement<br />

of non-strategic assets to obtain liquidity through capital gains. This<br />

will allow for the extension of the contracts for periods ranging from<br />

three to nine years, as it is customary in France, updating and improving<br />

occupancy levels and the profits generated.<br />

H i g h l i g h t s<br />

In June 2009, SIIC de Paris increased capital for 774,236 new shares, for<br />

a total amount of 132.6 million euros. This operation will help reinforce<br />

the company’s shareholders’ equity, reduce its debt level and improve the<br />

indebtedness (“loan to value”) ratio.<br />

REALIA Patrimonio – subsidiary 100% owned by the Grupo REALIA – has<br />

underwritten its part of the capital increase through the compensation<br />

of a prior loan for 118 million, granted on April 11, 2008, for financing<br />

the acquisition of the “Le Guynemer” building. As a result of this operation,<br />

the stake of REALIA in the capital of REALIA Patrimonio increased<br />

to 84.28%. On the other hand, the nominal value of the share was divided<br />

by 10 in November, after which the shareholders’ equity of the company is<br />

made up by 27,266,490 shares of a nominal value of 1.6 euros per share.<br />

40<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Regarding its assets, SIIC de Paris has proceeded to sell some nonstrategic<br />

property assets for a total of 12.3 million euros, generating<br />

4 million euros in capital gains. In parallel, the company has invested<br />

29.4 million euro in several new projects, and in the renovation and<br />

refurbishment of facilities in existing buildings.<br />

P r o j e c t s<br />

In 2010, REALIA started commercial operation of the new office<br />

building Trait d’Union (Montrouge), located on the street Fançois Ory,<br />

numbers 8 to 22; 47.5 million euros were invested in its development,<br />

and will increase the lettable area of the Group. Trait d’Union is rented<br />

in its entirety.<br />

On the other hand, in the Malesherbes boulevard of Paris, the Group<br />

is renovating two buildings, expected to start commercial operation in<br />

2010 and 2011, adding an additional lettable area of 1,202 and 1,2180<br />

sq m, respectively. These new developments will be financed with the<br />

equity generated by the company.


M a i n f i g u r e s<br />

Despite the difficulties in the sector, SIIC de Paris has kept an<br />

excellent quality of management and has grown its rental revenues by<br />

2.2%, has reduced considerably its structural costs and financial costs,<br />

and improved recurrent operating results by nearly 5%.<br />

Gross asset value as of December 3, 2009, amounts to 1.205 billion<br />

euros.<br />

On the other hand, the Board of Directors has contemplated a dividend<br />

for this year on 0.72 euros per share, which represents a gross return<br />

of 4.3%<br />

The operational portfolio of the Group SIIC de Paris is made up by 34<br />

buildings with a lettable area of 125,619 sq m. Most of them are located<br />

on districts CBD y BD (the most attractive for investors) of Paris.<br />

Currently, the average occupancy rate of these buildings is 94.6%.<br />

Among those, there are some unique buildings, such as the Haussmannstyle<br />

buildings, characterized by their solid plan and classical Parisian<br />

style with stone façades, and the modern buildings. The following are<br />

some of the most singular buildings: 85-89 Quai André Citroën; 61-<br />

63 rue des Belles Feuilles, headquarters of the construction material<br />

holding company Lafarge; 142 Boulevard Haussmann; 10-12 rue de<br />

Tilsitt; 2 rue du 4 Septembre or16-22 rue du Capitane Guynemer.<br />

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<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Main buildings of SIIC de Paris<br />

Building<br />

Lettable area in sq m<br />

85/89 quai André Citroën - Jade Rive du Quinzième 21,797<br />

16/22 rue du Capitane Guynemer 12,008<br />

61/63, rue des Belles Feuilles - 28 rue Emile Ménier 11,653<br />

2 rue Maurice Quentin 9,619<br />

10/12 rue de Tilsitt 6,000<br />

9, avenue Percier 5,844<br />

147 rue de Courcelles 4,838<br />

52 avenue des Champs Pierreux 4,631<br />

2 rue du 4 Septembre 4,323<br />

47 rue de Monceau 3,676<br />

8 rue Lavoisier 2,860<br />

92 avenue de Wagram 2,563<br />

191 avenue du Gal Leclerc 2,540<br />

39, avenue Pierre 1 er de Serbie 2,495<br />

124/126 rue de Provence 2,472<br />

22/24 place Vendôme - 31/33 rue Daniel Casanova 2,334<br />

191 rue d’Aubervilliers 2,275<br />

36 rue de Naples 2,252<br />

142, boulevard Haussmann 2,101<br />

30 rue Notre Dame des Victoires 1,921


Retail Centres<br />

S t r a t e g y<br />

In view of the consumption slump in the Retail Centre sector, REALIA<br />

has adopted a strategy aimed at a continued presence in the sector,<br />

while preserving the solvency of the group.<br />

This has translated into 3 basic lines of action:<br />

1. Slowdown of ongoing projects to adapt their development to the<br />

expansion plans of the retailers.<br />

2. Replacement of assets that have reached a high degree of maturation.<br />

3. Strengthening the commercial management to keep occupancy<br />

ratios and revenues from operating assets.<br />

F a c t s a n d F i g u r e s<br />

As part of its strategy to replace mature assets, REALIA has started<br />

operation of the Retail Centre Plaza Nueva de Leganés and has sold its<br />

stake in the shopping centre Nervión Plaza of Seville.<br />

Plaza Nueva Leganés opened on May 25, with a gross lettable area of<br />

51.603 sq m in its first phase.<br />

The format used is Middle-Sized Area Retail Centre – new in Leganés—<br />

which allows operators and retailers to offer a wide and attractive<br />

offering to buyers in a single, large space, where all retail formats are<br />

available. The mall recreates the architecture of a city square, where<br />

44<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


everything is close and there is no need to drive a car. This new asset<br />

will allow Group REALIA to continue growing its Property rental<br />

revenues.<br />

Many prestigious retailers can be found in this mall: Carrefour, Decathlon,<br />

Bricomart, Toyś R Us, Worten, Kiabi, Feuvert, VisonLab, Merkal,<br />

Coctel, or Prenatal in its medium-size retail store area, and Alain Afflelou,<br />

Jamaica Coffee Shop, Décimas, Oroplus, Vodafone, Orange, Marco<br />

Aldany, or Game Stop among other operators.<br />

In Seville, REALIA has sold its stake in the retail centre Nervión Plaza<br />

to Henderson Global Investors. This transaction was made at market<br />

prices, generated revenues of 94 million euros, and a capital gain of<br />

53 million.<br />

This sale is part of the strategy of investment and replacement of<br />

assets with the right degree of maturity, contemplated in the Grupo<br />

REALIA’s Business Plan.<br />

This retail complex has a gross lettable area (GLA) of more than 25,000<br />

sq m. Of these, REALIA owned 16,084 sq m, and 1,274 parking spaces.<br />

The mall opened to the public in 1998, and had its facilities renovated<br />

in 2009. It has 63 retail stores, all of them premium retailers, which<br />

occupy 100% of the rental space, through medium and long-term rental<br />

contracts.


P r o j e c t s<br />

REALIA maintains its strategic focus of the development of retail centres.<br />

Some new developments are in progress in this area, such as As<br />

Cancelas, located in Santiago de Compostela.<br />

To tackle this project, in 2007 REALIA acquired 75% of the stock of<br />

Nasozena, a company which owned retail space. The acquisition of<br />

Nasozena is part of the value-creation policy of the group, since it will<br />

allow for the development of the second shopping centre of the company<br />

and one of the biggest in Galicia, while becoming at the same time<br />

the spearhead for the investments of the group in the shopping centre<br />

sector in Galicia.<br />

This new shopping centre will have a gross lettable area (GLA) of<br />

50,812 sq m. Retail stores will occupy three of its stories, and the<br />

car park will occupy two more. It is estimated that the mall will have<br />

140 retail stores and 2,200 parking spaces.<br />

M a i n f i g u r e s<br />

All in all, retail and leisure centres of the Grupo REALIA amount to a<br />

gross lettable area of 132,584 sq m, 88% of which is occupied. During<br />

2009, rent revenues (including expenses allocated) of these malls have<br />

increased 16%, up to 32.1 million euros. Annualized income from Retail<br />

Centres represents 13% of Property revenues: 19.3 million euros.<br />

After the sale of Nervión Plaza, the commercial portfolio is made up by<br />

8 shopping and leisure centres is operation, with excellent location and<br />

good operator mix, including the main retailers in fashion, household,<br />

food service and leisure.<br />

46<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Besides the Plaza Nueva de Leganés, one of the main developments is<br />

Ferial Plaza Guadalajara, with a gross lettable area of 31,896 sq m and<br />

more than 100 retail stores of prestigious brands: Zara, Stradivarius, Pull<br />

& Bear, Mássimo Dutti, Bershka (all of them members of the Inditex<br />

Group), H&M, C&A, Toyś R Us, Miró, Cortefiel, Mango, Sfera, Blanco,<br />

Jack&Jones, Douglas, Décimas, Marco Aldany, Phone House, among<br />

others. The building is co-owned by Hipercor and Tiendas El Corte<br />

Inglés, which help attract potential customers and provide an additional<br />

boost to sales.<br />

La Noria Murcia Outlet Shopping, on the other hand, is the centre<br />

specialized as ‘outlet’ of premium brands which opened in 2008, and<br />

some of the retailers that can be found there are Carolina Herrera,<br />

Purificación García, Adolfo Domínguez, Nike and Desigual, among others.<br />

Two of the most well-known malls in Madrid are La Vaguada, with<br />

19,263 sq m, and Jardín de Serrano, with 2,115 sq m.<br />

REALIA is currently developing As Cancelas, with 50,812 sq m of gross<br />

lettable area, to become the second largest shopping centre of the<br />

group.<br />

Shopping Centre Portfolio<br />

Retail Centre<br />

GLA in sq m<br />

Plaza Nueva Parque Comercial (Leganés, Madrid) 51,603<br />

C.C. Ferial Plaza (Guadalajara) 31,896<br />

La Vaguada (Madrid) (*) 19,263<br />

La Noria Factory Outlet (Murcia) 13,807<br />

Manuel Becerra Centro Wellness (Madrid) 6,645<br />

Twin Towers Galerías (Lisboa, Portugal) (**) 4,354<br />

Espolón, 10 (Soria) (*) 2,900<br />

Goya, 6 y 8 (Madrid)(*) 2,115<br />

(*) Through Hermanos Revilla, S.A. (**) Through Setecampos Sociedade Inmobiliaria, S.A.


Development<br />

A n a l y s i s o f t h e s e c t o r<br />

The economic crisis that started in 2007 has hit the Spanish economy<br />

hard, and especially the homebuilding sector. Gross Domestic Product<br />

(GDP) fell 3.6% in 2009, unemployment rate is the highest in the<br />

European Union and consumption and consumer confidence have also<br />

declined.<br />

Construction was the sector with the strongest growth during the last<br />

phase of expansion, but the onset of the crisis and its subsequent drop<br />

in demand, coincided with a peak in homebuilding activity. This gap<br />

between supply and demand has generated a shock in the sector,<br />

resulting in the reduction of new developments, interruption of some<br />

projects, overall decline in the price of homes, insolvency proceedings<br />

and assets impoundment by banks.<br />

In 2009, the number of homes sold fell 24.9%, to 414,811 units,<br />

according to official statistics. Of these, 89.7% corresponded to unsubsidised<br />

housing, whose sales fell 26% and 10.3% to subsidised homes,<br />

which fell 13.6% in sales.<br />

The sales volume of the year proves that there is untapped demand<br />

from potential buyers; however, sales will remain low until unemployment<br />

is reduced, access to financing is re-established, confidence<br />

returns to consumers and potential home buyers, and prices remain<br />

low. In the Land sector – an activity closely linked to homebuilding<br />

development – demand has taken an interest on assets allocated for<br />

subsidised housing.<br />

48<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


S t r a t e g y<br />

In 2009, REALIA reinforced its discount strategy started in 20008, to<br />

speed up the pace of home sales and deliveries and reduce the stock of<br />

finished product offering lower prices, with its corresponding margin<br />

reductions.<br />

The goal of this strategy is to increase the liquidity of the company,<br />

saving stock-keeping costs and minimizing the gradual deterioration<br />

of the product.<br />

As to Land, despite the significant reduction in the number of<br />

transactions due to financial difficulties, land management continues<br />

to be the strategic objective to prepare for the future recovery of the<br />

sector.


M a i n f i g u r e s<br />

REALIA’s real estate business is mainly focused in Spain; however, it<br />

operates also in Portugal, Poland and Rumania. In Spain, development<br />

activity is decentralised through five branches: Central, including<br />

Madrid; Castilla-La Mancha, Castilla y León, Aragón and Asturias;<br />

Eastern Region, including Valencia, Murcia and the Balearic islands;<br />

Andalucía; Catalonia and Canary Islands.<br />

REALIA complements this activity with the provision of asset<br />

management and administration services for third parties, especially<br />

in Land-related activities.<br />

Homebuilding business (developments and land portfolio) has been<br />

valued at 1.639,4 billion euros, 18.5% lower than in 2008. This drop<br />

in the market value of these assets is mainly due to the adjustment of<br />

land value.<br />

Turnover of the Development area amounted to 142 million euros in<br />

2009. The strategy of adjusting prices to market conditions has resulted<br />

in a 104% increase of the pre-sales backlog, up to 665 units, despite<br />

the drop in gross margins, down to 0.5%; EBIDTA of this activity was<br />

negative: 14.7 million.<br />

At year’s end 2009, the portfolio of REALIA comprised 1,293 units,<br />

both in progress and finished. Of these, 1,025 were for sale, and 268<br />

were sold and pending official registration of the deed of property.<br />

In the breakdown according to the end use of the homes, approximately<br />

60% of the stock at the end of the year is allocated for first residence –<br />

the most resilient segment against the crisis – against 40% for second<br />

homes.<br />

50<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Development in Spain<br />

S t r a t e g y<br />

REALIA strengthened in 2009 the commercial strategy started in<br />

2008, consisting in adjusting pricing with a two-fold objective in mind:<br />

to attain greater liquidity and to reduce the stock of unsold finished<br />

homes. To this end, the objective of the development activity in Spain<br />

was to adapt to market circumstances, respond to new demand requirements,<br />

and sell the stock at attractive prices through the adjustment<br />

of margins in developments.<br />

For that reason, REALIA’s pricing policy is characterised by adapting<br />

to the individual needs of every customer, making pricing and forms of<br />

payment flexible, adjusting realistically to the individual situation of<br />

every buyer.<br />

On the other hand, since access to credit continued to be difficult in<br />

2009, a campaign of commercial incentives has been launched with<br />

the goal of facilitating access to housing: improvement of bank finance<br />

conditions, application of discounts in home prices, postponement of<br />

the official registration dates, special offers to some groups, etc.<br />

For 2010, the goal is to consolidate the pace of reduction of the finished<br />

home stock. For that, REALIA believes it does not need further<br />

adjustments of operational margins or major cuts in its P&L. Another<br />

objective is to revitalize the urban land portfolio and optimize costs<br />

and management.<br />

52<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


H i g h l i g h t s<br />

REALIA has concluded work on six developments and has delivered<br />

615 homes to their owners. Of the homes delivered, 203 correspond to<br />

the Central Office (Madrid, Valladolid and Asturias mainly), 159 to the<br />

eastern region (mainly Alicante, but including also Valencia, Castellón<br />

and Ibiza), 150 to Andalusia (especially Málaga, Almería and Seville),<br />

78 more to Catalonia (Gerona and Barcelona), y the other 24 to the<br />

Canaries.<br />

P r o j e c t s<br />

Since 2008, the company has made a great commercial effort to sell<br />

the stock of housing and has restricted the start of new developments<br />

to adapt its offering to current market demand.<br />

During 2009 started the development of a new residential project in<br />

the municipality of Fuenlabrada, Madrid: Jardín del Vivero. This development<br />

is ascribed to the regime of Limited-Price Subsidised Housing,<br />

whose project comprises 108 homes and five retail premises.<br />

During 2010, some developments will start or be resumed where<br />

margins will allow the company to adapt to current demand.


Units delivered 2009<br />

Delivered<br />

Total REALIA Sq. M. delivered<br />

Central 203 203 31.100<br />

CIUDAD CLARIN 4. Oviedo (Asturias) 19 19 1.701,47<br />

EL MIRADOR DE LA RIA. Avilés (Asturias)<br />

FUENTE SERENA. Fuenlabrada (Madrid)<br />

VEREDA DE LA LUZ. Arroyomolinos (Madrid) 3 3 579,21<br />

LOS ALTOS DE CAMPO REAL. Campo Real (Madrid) 23 23 4704,15<br />

VALDEPRADO Unifamiliares. Guadalajara 1 1 182,99<br />

Terminadas<br />

RONDA LUZ. Pinto (Madrid) 99 99 14.518,94<br />

JARDÍN DE LA LOMA. Arroyomolinos (Madrid) 30 30 6.814,63<br />

ARROYOVEREDA. Valladolid 28 28 2.599,01<br />

Andalusia 150 150 18.440<br />

HACIENDA DEL SOL 3. Estepona (Málaga) 2 2 285,18<br />

HACIENDA DEL SOL 4. Estepona (Málaga) 8 8 1.174,39<br />

REAL DE VALDOMINA 1. San Juan de Aznalfarache (Sevilla) 3 3 377,44<br />

REAL DE VALDOMINA 2. San Juan de Aznalfarache (Sevilla) 74 74 9.355,53<br />

EQUMAR. Mijas (Málaga) 18 18 1.036,12<br />

EL OLIVAR DEL FRAILE 1. Espartinas (Sevilla) 2 2 377,22<br />

AGUASERENA. Roquetas de Mar (Almería) 22 22 2.214,29<br />

HATO VERDE 3. Guillena (Sevilla) 12 12 2.651,95<br />

HATO VERDE 4. Guillena (Sevilla) 9 9 967,70<br />

Canaries 27 24 2.929<br />

CONJUNTO LAS AMÉRICAS. Las Palmas de Gran Canaria 1 1 371,70<br />

LA CORUJA. Agaete (Gran Canaria) 5 5 426,54<br />

LA PARDELA 1. Santa Lucía de Tirajana (Gran Canaria) 15 15 1.838,38<br />

CIUDAD JARDÍN LA MINILLA 3. Las Palmas de Gran Canaria 6 3 292,68<br />

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<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Delivered<br />

Total REALIA Sq. M. delivered<br />

Catalonia 127 82 11.198<br />

LES VIL.LES DEL GOLF 1. Sant Vicenç de Montalt (Barcelona) 6 3 543,41<br />

LES VIL.LES DEL GOLF 2. Sant Vicenç de Montalt (Barcelona) 1 0,5 90,06<br />

LES VIL.LES DEL GOLF 3 Parcelas. Sant Vicenç de Montalt (Barcelona) 7 3,5 2.904,50<br />

TURO DEL MAR 3B. Lloret de Mar (Girona) 1 0,5 37,27<br />

TURO DEL MAR 6A. Lloret de Mar (Girona) 40 20 1.720,80<br />

EL COR DE SABADELL 1. Sabadell (Barcelona) 3 3 212,32<br />

GUIXOLS MAR 1. Sant Feliú de Guixols (Girona) 26 26 3.426,18<br />

GUIXOLS MAR 2. Sant Feliú de Guixols (Girona) 8 8 815,22<br />

Terminadas<br />

TURO DEL MAR 5. Lloret de Mar (Girona) 14 7 529,24<br />

TURO DEL MAR 6B. Lloret de Mar (Girona) 21 10,5 919,30<br />

Eastern Region 159 159 17.638<br />

CALA GREEN 2. Finestrat (Alicante) 7 7 674,25<br />

CALA GREEN 3. Finestrat (Alicante) 8 8 780,14<br />

AQUAMARIS. Denia (Alicante) 31 31 2.859,20<br />

AQUAMARIS 2. Denia (Alicante)<br />

VISTA VERDE. Castellón 15 15 1.264,56<br />

ALBOR 1. Ibiza 1 1 126,66<br />

ALBOR 2. Ibiza 10 10 1.195,03<br />

ALBOR 3. Ibiza 1 1 118,07<br />

CORONA. Ibiza<br />

BOULEVARD DEL MAR. Alicante 72 72 7.782,14<br />

CASAS REALIA. Bétera (Valencia) 14 14 2.837,64<br />

YEAR 2009 666 618 81.306


Finished homes 2009<br />

Finished<br />

Total REALIA<br />

Central 384 384<br />

JARDÍN DE LA LOMA. Arroyomolinos (Madrid) 58 58<br />

RONDA LUZ. Pinto (Madrid) 226 226<br />

ARROYOVEREDA. Valladolid 100 100<br />

Catalonia 268 134<br />

TURO DEL MAR 5. Lloret de Mar (Girona) 154 77<br />

TURO DEL MAR 6B. Lloret de Mar (Girona) 114 57<br />

Eastern Region 12 12<br />

CORONA IBIZA. Ibiza<br />

12 12<br />

YEAR 2009 664 530<br />

Developments completed 6<br />

(*) Units: Homes + premises + offices<br />

56<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


International Development<br />

S t r a t e g y<br />

During the last years, REALIA has made a great effort in the area of<br />

international developments to internationalise its businesses and<br />

consolidate abroad, especially in European markets.<br />

In view of the current crisis, REALIA’s international strategy is<br />

similar to its strategy for Spain. Regarding developments in progress<br />

and finished, a discount policy has been applied to reduce stock. As to<br />

Land, all the activity is focused on concluding urban land development,<br />

obtaining the required work permits, in order to be prepared to resume<br />

development as soon as the market recovers.<br />

H i g h l i g h t s<br />

Poland was the first Eastern European country where REALIA started<br />

to operate. In the Pulawska 228 development (Warsaw), work concluded<br />

in December 2009 and delivery of homes started during the first half of<br />

2010. These are homes of a very high quality of execution.<br />

This development, started in 2008, comprises 88 homes, 15 premises,<br />

92 storage rooms and 104 parking spaces.<br />

Pulawska is located in the Mokotow district, one of the high-quality<br />

central districts of the city, which in recent years has consolidated as<br />

the alternative to the traditional business district of Srodmiescie.<br />

In Portugal, sales and registration of deeds of property of homes<br />

continued in the Infante Santo en Lisboa development.


P r o j e c t s<br />

REALIA has obtained a work permit in Wilanow, a district of Warsaw,<br />

and is currently executing connections between the plot and utilities.<br />

On the other hand, the project to obtain a work permit in Contesti has<br />

been submitted. This plot is located in one of the most distinguished<br />

districts of Bucharest, sector 5, and has an area of 8,394 sq m and<br />

25,182 sq m of area for construction, which will allow for the future<br />

development of 312 homes.<br />

REALIA entered the Romanian market in 2008 after the acquisition of<br />

the company SC Parnu Real Estate SRL, owner of the land.<br />

M a i n f i g u r e s<br />

During 2009, REALIA managed 155 units abroad: 103 in Poland and 52<br />

in Portugal. The company has delivered a total of 19 units in Portugal,<br />

located in Coimbra and Lisbon.<br />

On the other hand, in Land management owns a gross area of 43,246<br />

sq m; of which 34,852 sq m correspond to the Wilanow project in<br />

Poland, and 8,394 sq m to Contesti, in Rumania. All in all, the portfolio<br />

of these two countries accounts to a surface area for construction of<br />

75,182 sq m, all of them in consolidated urban soil.<br />

58<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Units managed abroad in 2009<br />

Total<br />

REALIA<br />

Portugal 63 52<br />

Polonia 103 103<br />

YEAR 2009 166 155<br />

Units delivered<br />

Total REALIA<br />

Portugal 30 19<br />

STUDIO CELAS. Coimbra (Portugal) 20 10<br />

CELAS PLAZA. Coimbra (Portugal) 2 1<br />

INFANTE SANTO. Lisboa (Portugal) 8 8<br />

(*) Units: Homes + premises + offices<br />

Land management abroad<br />

Country Gross area (sq m) Buildable area Const. area<br />

Polonia 34.852 50.000 50.000<br />

Rumanía 8.394 25.182 25.182


Land Management<br />

S t r a t e g y<br />

Despite the crisis and the absence of major land operations, REALIA<br />

maintains its land management activity; however, it will analyse the<br />

potential disinvestment of mature land whose development does not<br />

contemplate in the medium term, allocated for homebuilding and<br />

services.<br />

M a i n f i g u r e s<br />

The company continues to consider the management of urban soil as<br />

an strategic factor and a recurrent real estate business, which will<br />

have a beneficial impact on the P&L when the market situation<br />

improves. For this reason, in land under planning and zoning, it will<br />

continue to manage and develop this approach in order to consolidate<br />

its urban development rights.<br />

At year’s end 2009, REALIA has a land portfolio in Spain with a gross<br />

surface area of 7.6 million square meters, and 3.2 million sq m of<br />

buildable land.<br />

REALIA’s land portfolio is focused on the Central Region and Andalusia,<br />

with a buildable area of 2.9 million sq m.<br />

In 2009, REALIA has not contemplated the disinvestment of Land due<br />

to credit restrictions which have hit this market so hard.<br />

60<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


N e w m a n a g e m e n t a r e a<br />

During 2009, REALIA has implemented a new area for the management<br />

of third party assets, whose goal is to optimize the disinvestments of<br />

the assets in the portfolio through a management of high added<br />

value.<br />

Total assets managed amount to 1.46 million sq m, with a buildable area<br />

of nearly 570,000 sq m, and a total value above 500 million euros.<br />

Land portfolio in Spain<br />

Land portfolio in Spain<br />

In sq m<br />

Gross Area<br />

Buildable Area<br />

Andalusia 3,843,217 1,557,015<br />

Canaries 4,529 18,541<br />

Catalonia 152,197 101,409<br />

Central 3,435,330 1,365,979<br />

Eastern Region 208,496 162,196<br />

Total 7,643,768 3,205,139


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<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Shareholders and Investors<br />

E v o l u t i o n o f t h e s h a r e p r i c e<br />

REALIA’s shares closed the year 2009 at 1.66 euros, an improvement<br />

of 7.1% over the previous year. During the same period, the aggregate<br />

behaviour of the listed real estate companies was negative, with a fall<br />

of 28%.<br />

On the other hand, the IBEX-35 and EPRA indexes (the latter referred<br />

to main european real estate companies) have risen 29.8% and 28.9%,<br />

respectively, during the same period.<br />

T r a d i n g<br />

In 2009, the value of REALIA’s shares fluctuated between 2.34 and<br />

1.49 euros, with a volume of trading above 45 million shares. The<br />

average daily traded volume amounted to 326,410 euros, with a daily<br />

average trading volume of 177,350 shares.<br />

S t o c k h o l d e r s<br />

On February 19 2009, the Extraordinary Shareholders’ Meeting agreed<br />

the winding down without settlement of RB Business Holding, S.L., a<br />

50/50 joint venture between Fomento de Construcciones y Contratas,<br />

S.A. (FCC) and Corporación Financiera Caja Madrid.<br />

This transaction was conducted through the system of reverse merger<br />

by acquisition with REALIA Business, S.A. (acquiring company), with<br />

the winding down and extinction of the acquired company (RB Business<br />

Holding, S.L.).


This agreement, legally registered on September 10, 2009 and registered<br />

at the Mercantile Register on September 25, 2009, does not have any<br />

impact on the consolidated accounts of REALIA Business, S.A.<br />

As of December 31, 2009, the shareholders’’ equity is represented by<br />

277,376,322 bearer shares, of a nominal value of 0.24 per share, fully<br />

underwritten and outlaid.<br />

Main shareholders<br />

Noriega, S.A.<br />

5%<br />

Grupo Prasa,S.A.<br />

5%<br />

Interprovincial, S.L.<br />

5.01% Inmobiliaria Lualca, S.L.<br />

5.02%<br />

Grupo FCC<br />

30.02%<br />

‘Free Float’<br />

22.3%<br />

Corporación<br />

Financiera Caja<br />

de Madrid, S.A.<br />

27.65%<br />

Main figures<br />

2009<br />

Price at year’s end (€ per share) 1.66<br />

Stock market capitalization at year’s end (millions of €) 460.04<br />

Maximum share price during the year (€ per share) 2.34<br />

Minimum share price during the year 1.49<br />

Average daily volume traded (thousands of €) 326.4<br />

Average daily volume traded (thousands of shares) 177.3<br />

64<br />

<strong>ANNUAL</strong> <strong>REPORT</strong> EXERCISE 09


Stock Market evolution in 2009<br />

Evolution<br />

in %<br />

IBEX +30%<br />

EPRA +29%<br />

REALIA +7%<br />

Inm. Esp (28%)<br />

Dic<br />

2008<br />

Dic<br />

2009<br />

*The EPRA index reflects the evolution of the european main real estate companies.

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