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nº 56 May 2018

Document issued by LaSBA´s Permanent

Research Program

Economy:1. Spain’s GDP continues to grow above the European Union’s average (28 countries),

though the difference is getting shorter. In the fourth Quarter of 2017 it grew 3.1% year-on-year, whereas the European Union grew 2.6% year-on-year during the same period. (see Graph no. 1)

2. Unemployment has decreased to 16.55% in the fourth Quarter of 2017, opposite 7.30% for the entire European Union (28 countries), which results in a gap of 9.25% with the rest of Europe. (see Graph no. 2)

Shopping Centres in Spain:Semi-annual Activity ReportMay 2018

Graph no. 1: GDP

Source: Banco de España and Eurostat.

Graph no. 2: Unemployment

Source: Banco de España and Eurostat.

3. CPI (Harmonised Consumer Price Index) was above 1% during a large part of 2017, ending the year with a year-on-year variation of 1.1%. (see Graph no. 3)

4. The Gross Family Savings Rate has decreased considerably during the last few Quarters. In the fourth Quarter of 2017 it was 5.7%. (see Graph no. 4)

Graph no. 3: Harmonised CPI Graph no. 4: Gross Family Savings Rate

Source: INE Source: INE and LaSBA

5. Confidence indicators have had slight variations throughout 2017, ending the year slightly above the level at the end of 2016. (see Graph no. 5)

6. The Retail Index has had slightly positive variations during most of 2017. One month (October) had a negative growth rate, at constant prices (discarding service stations). (see Graph no. 6)

Source: INE and LaSBA

Graph no. 5: Confidence Indicators Graph no. 6: Retail Index

Source: INE and LaSBA

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Shopping Centre Development:

Table no. 1: Openings 2017

Table no. 2: Extensions 2017

7. During 2017 openings in Spain accounted for 246,100 sqm of Gross Leaseable Area (GLA); this amount includes 11,500 sqm of GLA corresponding to specialised medium-sized units established outside of retail complexes. This data is similar to the one registered in 2016 (248,200 sqm GLA). Furthermore, 35,000 sqm of new GLA from extensions of existing centres were registered. (see Tables no. 1 and 2)

Source: LaSBANote: Stand-Alone Medium-Sized Units and Department Stores with more than 5,000 sqm are included.

8. In total, 9 openings were registered, 8 shopping centres or retail parks and one specialised medium-sized unit established outside of retail complexes. Furthermore, there were 3 extensions of existing shopping centres.

9. By geographical regions, the highlights are Madrid and Canary Islands as the regions with the most GLA inaugurated. (see Table no. 3)

Table no. 3: Openings and Extensions by ‘Comunidad Autónoma’ (Regions) 2017

10. According to LaSBA’s Data Base, by the end of 2017, Spain’s GLA was above 20.9 million sqm of GLA. This data is different than the one managed by the Spanish Association of Shopping Centres and Retail Parks (AECC), because LaSBA includes department stores and some centres and retail parks that the AECC does not consider. Taking into account current population data, the estimated retail density is around 450 sqm/1,000 inhab., slightly above the 445 sqm/1,000 inhab. of 2016.449 sqm/1,000 inhab., slightly above the 445 sqm/1,000 inhab. of 2016.

Source: LaSBA

Source: LaSBA

Terrassa Plaza Terrassa

Plaza Río 2 Madrid

Parque Melilla Melilla

La Dehesa Alcalá de Henares

El Copo El Ejido

Shopping Centre Location Developer GLA (sqm) OpeningSambil Outlet Madrid Leganés Grupo Sambil 42.000 24/marAlfafar Parc (1st stage - Bauhaus) Alfafar Inter Ikea Group 13.500 31-marPlaza Río 2 Madrid SCC 40.000 20-octTerrassa Plaza Terrassa City Grove 30.500 3-novPizarro Vigo Mascato 6.000 9-novAlisios Tamaraceite, Las Palmas Yudaya 60.000 23-novParque Melilla Melilla Drago Capital 34.600 30-novP.C. Ensanche Sur Alcorcón Corpfin Capital Retail Parks 8.000 5-decTotal Shopping Centres 8 234.600Bricomart Jinámar Bricomart 11.500 15-marTotal Medium-Sized Units 1 11.500Total Openings 9 246.100

Extended Initial TotalLa Dehesa Alcalá de Henares Immochan 13.000 9.500 22.500El Copo El Ejido Comerciantes de Poniente 16.000 20.000 36.000Intu Asturias Oviedo Intu Properties 6.000 74.000 80.000Total Extensions 3 35.000 103.500 138.500

Shopping Centre Location Developer GLA (sqm)

No. GLA (sqm) No. GLA (sqm) No. GLA (sqm)Andalusia 1 16.000 1 16.000Asturias 1 6.000 1 6.000Canary Islands 2 71.500 2 71.500Catalonia 1 30.500 1 30.500Comunidad de Madrid 3 90.000 1 13.000 4 103.000Comunidad Valenciana 1 13.500 1 13.500Galicia 1 6.000 1 6.000Melilla 1 34.600 1 34.600Total 2017 9 246.100 3 35.000 12 281.100

Comunidad Openings Extensions Total

Graph no. 7: Evolution Number of Openings

Source: LaSBA Source: LaSBA

Graph no. 8: Evolution inaugurated GLA

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Shopping Centres in Operation:

11. For the current year of 2018 twelve new shopping centres and retail parks are estimated to open in Spain.

12. The inaugurated GLA should be above the amount registered in 2017, and it could reach 400,000 sqm. This does not include stand-alone specialised medium-sized units. (see Table no. 4)

13. With respect to extensions of existing centres, the estimated openings dates are more unpredictable. During the next three years (2018 to 2020) six shopping centres and retail parks extensions are planned in Spain, adding up to around 158,000 sqm of new GLA. (see Table no. 5)

Este Park Castellón

Jaén Plaza Jaén

Torrecárdenas Almería

AireSur Sevilla

Garbera San Sebastián

Table no. 4: Planned Openings 2018

Shopping Centre Location Developer GLA (sqm) OpeningAlfafar Parc (2nd stage) Alfafar Inter Ikea Group 10.000 2018Este Park Castellón Fyrtarn Family Office 32.000 1-sep 2018Finestrelles Shopping Center Esplugues de Llobregat Equilis 25.700 late 2018Jaén Plaza (1st stage) Jaén Grupo Alvores 29.000 Fall 2018Mazarrón Park Murcia Activ Group 10.000 2nd sem 2018Nou Centre El Masnou Barcelona Corp Promotores 7.000 late 2018Open Sky Torrejon de Ardoz Compagnie de Phalsbourg 85.000 Christmas 2018P.C. Finestrat Finestrat Activ Group 5.300 15-mar 2018Torre Sevilla Sevilla CaixaBank 25.000 2018Torrecárdenas Almería Bogaris 60.000 fall 2018TorreVillage Zaragoza Iberebro 70.000 late 2018Vidanova Park Sagunto, Valencia Lar España Real Estate 44.000 september 2018Total Planned Openings 12 403.000Source: LaSBA

Table no. 5: Planned Extensions 2018-2020

Extended Initial TotalAireSur Sevilla CBRE Global Investors 1.000 42.300 43.300Camino Real San Fernando Henares Chelverton Properties 95.000 25.000 120.000Garbera San Sebastián Unibail-Rodamco 25.000 36.000 61.000P.C. Ciudad de la Imagen Sevilla Bogaris Retail 17.600 21.000 38.600Pinatar Park S. Pedro del Pinatar, Murcia Activ Group 2.000 10.500 12.500Plaza Mayor Málaga Sonae Sierra / McArthurGlenn 18.000 53.150 71.150Total Planned Extensions 6 158.600 187.950 346.550

Shopping Centre Location Developer GLA (sqm)

Source: LaSBA

14. According to data by the Spanish Association of Shopping Centres and Retail Parks (AECC), shopping centres in Spain have had similar numbers of visitors during 2017. The estimated affluence was around 1.9 billion visits.

15. In the beginning of 2018, average shopping centre affluences remain stable. According to the FootFall Index, affluences decreased 0.3% year-on-year in January of 2018 and grew 1.0% in February.

16. Year-on-year sales in shopping centres in Spain have risen again in 2017. According to the AECC, they grew 3.5%, reaching 43.590 billion Euro. With this growth in sales the market share has increased slightly to 17.9%.

17. The International Council of Shopping Centres (ICSC) will celebrate its annual European Conference on April 25 and 26 of 2018 at the Fairmont Rey Juan Carlos I of Barcelona. This congress will coincide with the European Outlet Conference, offering participants the opportunity to attend both conferences and to network with people from all over the world.

18. Former leisure centre Opción, in Alcorcón, will become X-Madrid, a new retail and leisure centre developed by Merlin Properties. The centre will open Christmas of 2018, will have more than 39,000 sqm and 120 units, as well as areas for outdoor sports, like beach volleyball or parkour; and indoor, with crossfit areas or a diving centre.

19. Throughout 2018 Xanadú Madrid will offer its visitors more than 10,000 additional sqm of leisure including the largest aquarium of Madrid and also the first one to open inside a shopping centre, as well as the first Family Leisure Centre by Nickelodeon.

20. This spring, the new leisure and restoration area of Grancasa, in Zaragoza, will be finalised. The goal is to refurbish the shopping centre’s second floor and have it become a reference for food and leisure in Zaragoza.

21. Islazul has finalised the first stage of the refurbishment that had been developed throughout 2017. The acquisition by TH Real Estate of the unit formerly occupied by the hypermarket E. Leclerc, offered the strategic opportunity for the shopping centre to reaffirm its leadership position.

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22. Other shopping centres are currently undergoing refurbishments. They include: Montigalà (Badalona), Carrefour Tarragona, Los Patios (Málaga), Málaga Plaza, Valladolid 2, Itaroa (Huarte), Diagonal Mar (Barcelona) and Splau (Cornellà de Llobregat), among others.

Armani CC Plaza Río 2

Mango C/ Preciados, Madrid

H&M CC Los Alisios

Thomas Sabo CC L’Illa Diagonal

Maisons Du Monde CC Parc Vallés

Information regarding Retailers:I. The Spanish Market23. Groceries retailers continue with their expansion: Mercadona, Carrefour, Eroski, Dia,

Lidl, Unide, Covirán, Dinosol, Miquel, Primaprix, among others, are chains that continue to open new supermarkets in Spain.

24. Italian Luxury firm Armani has opened a new store in Madrid. The new establishment is not located in high street areas like Serrano or Ortega Gasset, prime locations for the city’s Luxury brands, but in a shopping centre: Plaza Río 2.

25. Mango opens a new store at no. 10 of calle Preciados in Madrid, the second most expensive retail artery in Spain, only behind Portal del Àngel, in Barcelona. The Catalonian company, which already had a unit in this street, will double its size. The new unit has more than 1,700 sqm of GLA.

26. Pull & Bear, from Inditex Group, has opened its largest store worldwide. The Youth Fashion firm has also chosen calle Preciados in Madrid to open a new establishment, which has more than 1,000 sqm of GLA.

27. RSV Clothes, the Polish giant expert in Low Cost Fashion, has opened its first store in Spain, specifically at the Ribera del Xúquer S.C., in Carcaixent. Next they will open at Málaga Outlet, integrated in the Málaga Nostrum retail park, with their first store in Andalusia.

28. The Swedish chain H&M strengthens its presence in Spain with the opening of a new store at the Los Alisios S.C., in Las Palmas (Canary), which includes the H&M Home collection. The new store has a GLA of 2,400 sqm.

29. Uniqlo, Japanese Fashion firm, also known as the Japanese Zara, have opened their first store in Spain in Barcelona and have also signed an agreement to open their first store in Madrid, at the El Jardín de Serrano shopping centre.

30. Jewellery firm Aristocrazy strengthened its presence in Spain with the opening of three new stores, allowing them to finish 2017 with over 80 stores. Specifically, the brand has opened new stores in Sabadell and Castellón through the hand of El Corte Inglés, whereas the last one was located at the shopping centre La Vaguada in Madrid.

31. Jewellery German firm Thomas Sabo has opened a new store in Barcelona, reaching 25 in all of Spain. The new establishment is located at the shopping centre L’Illa Diagonal, where the brand offers a large range of jewellery, watches and accessories for men and women.

32. Leroy Merlin and Aki have announced the merger of both DIY companies in Spain. They will operate under a single business structure with the goal of being closer to the consumer.

33. Conforama opens its first store in Murcia, at the shopping centre Nueva Condomina. The unit has a GLA of 4,000 sqm, where the brand will offer its furniture, decoration products and household appliances.

34. BriCor has opened a new store inside Hipercor at the Itaroa Shopping Centre of Huarte. This new retail unit is the fifty fifth opening under this format, and adds to the eight large DIY stores by the chain.

35. Maisons du Monde, French Furniture and Decoration firm, has opened a new store at the shopping centre Parc Vallès, in Terrassa. With more than 300 establishments in France, Italy, Spain, Belgium, Germany, Switzerland and Luxembourg, Maisons du Monde opens its 20th store in Spain.

36. Toys‘R’Us Iberia Real Estate, owner of 26 units in Spain and Portugal, has entered na insolvency procedure with the goal of preserving its assets and going through with a possible selling process.

37. Yelmo Cines, owned by Mexican giant Cinépolis, has opened its first Luxury Cinema in Spain. Equipped with reclinable seats, tables and food service, these new cinema screens are ground-breaking in Spain and in Europe. The cinema is located at the Plaza Norte 2 Shopping Centre, in San Sebastián de los Reyes.

38. The first Indoor Entertainment Centre Nickelodeon Adventure in Europe has opened, located at the Thader Shopping Centre of Murcia, owned by Merlin Properties.

39. Parques Reunidos and Lionsgate have announced the future opening of the first Indoor Entertainment Center by Lionsgate in Europe located at the iconic Príncipe Pío Station in Madrid. This new centre will open in 2020.

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Investment Market:

Graph no. 8: Comparative Yield / Financial Cost / Debt

Source: Banco de España, Euribor-Rates.eu and LaSBA.

40. Mango has opened in Delhi its first physical store in India through the hand of its partner Myntra – the second one by the Catalonian chain in the country but the first one with this partner – and plans to open 25 stores in the country within the next five years. Also, Mango has opened its first large store in Chile.

41. Grupo Cortefiel has strengthened its expansion in Latin America, the Middle East and Northern Africa with the opening of eleven stores and several “corners” (located in large shopping centres) during the second semester of its fiscal year.

42. Inditex opened a total of 183 stores throughout 2017 and entered Belarus for the first time. Turkey was the engine of the group’s openings, with 35 new stores last year. The top three is completed by Mexico and Italy. Spain remains the market where they have a larger presence, followed by China and Russia.

43. Aromas has inaugurated a store at the shopping centre Mar Shopping Algarve, becoming the first Spanish Perfume chain to establish itself in Portugal. The unit, at the town of Loulé, has 350 sqm.

44. Restalia, which has the brands 100 Montaditos, Cervecería La Sureña and The Good Burger (TGB), closed 2017 surpassing its goal of reaching 700 operating units worldwide, with an increase in sales of 13%. In 2018 they plan to open 130 restaurants globally.

45. Smöoy lands in The Netherlands. It is the fourth European country where the Spanish company begins to operate, after the UK, Portugal and Italy, besides its ample presence in Spain. Smöoy also operates in Africa (Morocco, Algeria, Ivory Coast, Guinea Conakry, Angola and Reunion Island), Latin America (Peru, Ecuador, Panama), and Asia (Singapore).

46. German Bonds have reached positive rates starting from the last Quarter of 2016 and stabilised during 2017, whereas Euribor remained at negative levels during 2017. Prime Yields have stabilised from the second Quarter of 2017. (see Graph no. 8)

Yelmo Cines CC Plaza Norte 2

Nickelodeon CC Thader

Mango CC Citywalk, Delhi

Aromas CC Mar Shopping Algarve

Smöoy The Markthal, Rotterdam

II. Spanish brands in other markets

47. Yields for prime shopping centres reached 4.25% in the second Quarter of 2017 and have thus remained until the end of the year, whereas yields for retail parks continued to decrease and ended the year between 5% and 5.5%.

48. Property investment in shopping centres remains very dynamic. During 2017, there were shopping centre transactions by an amount which is above 2.5 billion Euros, higher with respect to the same period of the previous year.

49. There were 37 shopping centres and retail parks acquired with an aggregate GLA of around 1,185,000 sqm. (see Table no. 6)

Disclaimer LaSBA 2018The information contained in this document is for the sole use of LaSBA clients. Any information contained in the document does not represent the current performance of the market, not that of its future performance. This includes projections, estimates and opinions. LaSBA does not take any responsibility for the information contained in this document and cannot provide representation, warranty or guarantee for its accurateness. Although the sources used for the information contained in this document are believed by the authors to be reliable, independent verification is necessary for confirmation of its correctness and comprehensiveness. Reproduction of the document is strictly forbidden without written permission from LaSBA itself.

European Retail Consulting AllianceLondon, París, Milano, Madrid, Lisboa, Москва

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www.lasba.com

Document issued by LaSBA´s Permanente

Research Program

Paseo Castellana, 143 6ºC28946 Madrid, Spain

Tel. +34 914 178 100

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Tel. +351 213 136 060

Calle 93 A # 19-50 Dep.30801424-000 Bogotá,Colombia

Tel: +57 316 446 5733

Source: LaSBA.* The amount corresponds to half of the entire Canalejas complex, not just the shopping centre under development.

Table no. 6: Main Investment Operations 2017Shopping Centre Location Province Seller Buyer GLA (sqm)Price (Mln€)

3 shopping centres several several Incus Capital Eurofund / Patron Capital 69.100 n.d.9 retail parks several several Redevco Iberian Ventures Castellana Properties Socimi 117.650 193ABC Serrano Madrid Madrid CBRE Global Investors Banca March 19.650 80Alameda Park Granada Granada Grupo Alvores Castellana Properties Socimi 25.500 55Alcalá Magna Alcalá de Henares Madrid Incus Capital Trajano Iberia 34.100 100Aqua Multiespacio (50%) Valencia Valencia Iberdrola Blanal Inversores / Invesmon3 / Azzofinanz 35.000 62Área Sur Jerez de la Frontera Cádiz Union Investment Real Estate AXA IM / Sonae Sierra 46.800 110Barnasud Gavá Barcelona Unibail-Rodamco Meridia Capital 43.600 35El Manar Massalfasar Valencia Harbert Management Corp. Aberdeen / Catella 23.600 40El Tormes Santa Marta del Tormes Salamanca CBRE Global Investors Aviva Investors / LaSalle IM 22.600 70Espacio Coruña La Coruña La Coruña Eneas Real Estate Inbisa 42.600 n.d.Espacio Torrelodones Torrelodones Madrid 33.700Sexta Avenida Madrid Madrid 16.000Gran Vía Alicante Alicante Rreef Europa Capital 37.000 52H2O (70%) Rivas Vaciamadrid Madrid Alpha Real Trust Limited CBRE Global Investors 52.000 n.d.La Galería de Canalejas (50%)* Madrid Madrid Grupo Villar Mir / OHL Desarrollos Mohari Limited 16.000 225*La Vega Alcobendas Madrid Värde Partners Heraclès Investissement 30.000 n.d.Las Rosas Madrid Madrid Hispania Retail Properties UBS Asset Management 29.400 57Málaga Plaza Málaga Málaga Inversiones Igueldo New Winds Group 6.600 n.d.Metromar Mairena del Aljarafe Sevilla UBS Asset Management Schroder / Inmobilien Europa Direkt 23.400 53Modoo Oviedo Asturias Alpha Real Estate Estabona Management 40.000 n.d.Nueva Condomina Murcia Murcia BNP Paribas Klépierre 118.100 233Parque Abadía (65%) Toledo Toledo Rockspring Lar Socimi 43.200 63Parque Almenara Lorca Murcia Carrefour Property Murias / Oak Hill 67.000 n.d.Pinatar Park Murcia Murcia Activ Group Castellana Properties Socimi 10.500 11Terrassa Plaza Terrassa Barcelona City Grove Real I.S. 30.500 n.d.Xanadú Arroyomolinos Madrid Ivanhoe Cambridge Intu Properties 152.300 530Xanadú (50%) Arroyomolinos Madrid Intu Properties TH Real Estate 152.300 264

Klépierre ActivumSG n.d.

50. Foreign investors have demonstrated during 2017 that they are very active in the Spanish market and that a big portion of the shopping centre investment is heading towards foreign capital.

51. The Madrid Province was the province with the highest number of transactions, as ten operations corresponded to nine assets located there.

52. The largest operation was the acquisition of Xanadú (Madrid) by Intu Properties to Ivanhoe Cambridge for 530 million Euros, which led to the highest shopping centre operation in the history of the Spanish market, surpassing 495 million paid by Deutsche Bank for Diagonal Mar (Barcelona) in 2016.

53. Intu Properties, after having concluded this transaction, then sold 50% of Xanadú to TH Real Estate for 264 million Euros, thus creating a joint venture to share ownership of the shopping centre located in Madrid.

54. Some other of the most significant operations were the sale of Nueva Condomina (Murcia) to Klépierre, for 233 million Euros, the sale of Área Sur to AXA IM and Sonae Sierra for 110 million Euros and the sale of Alcalá Magna to Trajano Iberia for 100 million Euros.

55. One of the transactions included the sale of nine retail parks, sold by Redevco to Castellana Properties Socimi for 193 million Euros. The acquired portfolio includes retail parks and medium-sized units integrated in other centres and leisure complexes. It includes retail areas from Parque Oeste, in Alcorcón, and from Parque Principado (now Intu Asturias), close to Oviedo. The GLA from both adds up to 30,000 sqm.

56. The remaining near 90,000 sqm of GLA are divided between the following retail parks: Mejostilla, in Cáceres; La Heredad, in Mérida; La Serena, in Villanueva de la Serena; Motril, in the town from Granada with the same name; Kinépolis, in Granada; Ciudad del Transporte, in Castellón, and Marismas del Polvorín, in Huelva.

57. Another joint operation was the acquisition of three shopping centres by Eurofund Capital Partners and Patron Capital. The shopping centres included in the operation were El Mirador, in Cuenca; Los Alcores, in Alcalá de Guadaira (close to Seville); and Alzamora, in Alcoy (Alicante).

58. In the beginning of 2018, Redevco Iberian Ventures acquired 70% of Parque Corredor, in Torredón de Ardoz, for 140 million Euros, and Berceo, the shopping centre located in Logroño, was acquired by Barings Real Estate in a 100 million Euros operation.