Gmp ANNUAL REPORT PROPERTY FOCUSED ANNUAL REPORT

Transcription

1 Gmp ANNUAL REPORT PROPERTY FOCUSED ANNUAL REPORT

2 Gmp AT A GLANCE Key operating data 27 Number of office buildings 360,368 sq m Gross leasable area above ground 4,878 Parking spaces 97% (1) Occupancy at end of Number of clients 77,731 sq m buildable area for future developments (1) Occupancy rate calculated on the space available (excludes space under renovation: Castellana 81 and Castellana 77). Key financial data 93.6m Total revenues 51.8m EBITDA 1,903m GAV 804m Net debt 42% LTV 1,070m EPRA NAV

3 Number of buildings by areas of Madrid N CBD / City Centre M30 North Madrid East Madrid 6 buildings A1 M40 11 buildings M30 8 buildings A2 2 buildings A5 A3 A4

4 p. 8 KEY ASPECTS OF 2016 p. 14 THE COMPANY p. 32 BUSINESS EVOLUTION OVER FINANCIAL YEAR p. 46 COMPANY PORTFOLIO

5 INDEX 0 MESSAGE FROM THE CHAIRMAN 6 p ESTRUCTURA COMPANY STRUCTURE ACCIONARIAL Y GOBIERNO CORPORATIVO p RESPONSABILIDAD CORPORATE SOCIAL SOCIAL CORPORATIVA RESPONSIBILITY 1 KEY ASPECTS OF Milestones 1.2. Key data 2 THE COMPANY 2.1. Mission, vision and strategic values 2.2. Business areas: strategy and business model Core business: property-owning business Other businesses: residential tourism development 2.3. Management team 2.4. Company structure 2.5. Financial structure 3 BUSINESS EVOLUTION OVER FINANCIAL YEAR 3.1. Consolidated figures Income statement Valuation of portfolio 3.2. Core business: property-owning business Description of client portfolio Occupancy Average rental revenue Projects/Investments EPRA ratios 3.3. Other businesses: residential tourism development 4 COMPANY PORTFOLIO 4.1. Description 4.2. Office buildings 4.3. Land portfolio 4.4. Las Colinas Golf & Country Club COMPANY STRUCTURE 5.1. Shareholders 5.2. Corporate government p INFORME AUDIT REPORT DE AUDITORÍA Y ESTADOS AND FINANCIAL FINANCIEROS STATEMENTS 6 CORPORATE SOCIAL RESPONSIBILITY 6.1. Human capital management 6.2. Innovation and sustainability as strategic values 6.3. Integrated management of quality, the environment and health and safety in the workplace 6.4. Gmp Foundation 7 AUDIT REPORT AND FINANCIAL STATEMENTS

6 6 0 MESSAGE FROM THE CHAIRMAN MESSAGE FROM THE CHAIRMAN Francisco Montoro Alemán Chairman - CEO Dear shareholders, clients, collaborators and employees, I am pleased to share with you our Annual Report for 2016, where we present our key data and results. Allow me to start by highlighting and expressing my appreciation for the magnificent contribution made by our former Chairwoman, Gloria Alemán Picatoste, over a period of almost five years in this role. The generosity, strategic vision, common sense and sense of responsibility she has demonstrated are values that serve as an example to future generations that share this Company s mission. Over 2016 the Business Plan we developed three years ago has been consolidated. The refinancing of large part of our debt, flotation on the Alternative Equity Market (Mercado Alternativo Bursátil - MaB) and increase in value of our assets up to nearly 2 billion euros, place Gmp in a very robust position following the acquisition process implemented during In 2016, the Spanish economy has performed positively, with a GDP increase of 3.2%, which is similar to the figure for 2015 and much higher than 1.8% in the Eurozone. Gmp has obtained satisfactory results with an operating income and EBITDA of 93.6 and 51.8 million euros respectively, both rising year on year by 11.8% and 4.4% respectively. After 2015, the year in which the Company met the fixed investment objective for the period , our investment activity during 2016 has concentrated on renovating two strategic buildings, namely Castellana 81 and 77, as well as on building a new office project and carrying out improvement work on our operating portfolio. Regarding the ambitious renovation of the iconic building Castellana 81, at the end of 2016 work was completed on the interior of the 23 office floors vacated by BBVA a year previously. Upon completion, it has become the first building on the Paseo de la Castellana to hold Platinum LEED certification and is positioned as one of the most unique and sustainable buildings on the office market in Madrid. The full renovation of Castellana 77 includes a complete transformation of the interior and exterior of the building, enhancing its visibility and emblematic status in the financial heart of Madrid. Work is expected to be completed over the second quarter of Undoubtedly, after these two actions have been completed, one of Gmp s main challenges will be to successfully commercialise both properties. In this respect, lease contracts for Teka and HAYS have been signed in 2016, covering more than 2,600 m 2 of office space at Castellana 81. In addition to investment in renovations, work on an office development project called Oxxeo began at the end of 2016, on one of the plots of land owned by Gmp in Las Tablas. This new building will offer over 14,000 m 2 of office space, designed by the prestigious Rafael de La-Hoz architecture studio, and construction work is expected to continue until Further to its investment activity, Gmp sold two nonstrategic assets in 2016: a shopping centre in Valencia and residential land in Valdebebas. From the point of view of management, this financial year has shown successful commercial activity in our operating office portfolio, which enabled us to close the year with an occupancy level of above 97% and which translated into the signing of new contracts for more than 36,000 m 2 and the renovation of a further 30,000 m 2. It is worth highlighting the lease of over 21,000 m 2 to Huawei at the business park Castellana Norte, the biggest operation in the office rental market in Madrid during 2016.

7 Gmp ANNUAL REPORT Allow me to make a special mention of sustainability, as a strategic pillar of the Company. As I mentioned a year ago now, one of the challenges of the Strategic Plan was to obtain LEED certification for eleven buildings from Gmp s portfolio currently under management. Over 2016 we achieved this goal and added Gold LEED pre-certification at Castellana 77 and Platinum LEED pre-certification at Oxxeo. While the office property-owning business is the Company s core business and accounted for over 92% of our EBITDA in 2016, Gmp also operates in the residential tourism segment through a 330-hectare development to the south of Alicante, Las Colinas Golf & Country Club. This business line has performed very positively over this financial year, achieving an EBITDA of 4.1 million euros. Winning international recognition for the second year running, by being named Spain s Best Golf Course in the World Golf Awards and Spain s Leading Villa Resort at the World Travel Awards, was a particular cause for satisfaction. In 2016 two corporate milestones were reached. First, in the month of June, Gmp refinanced its Company debt worth 755 million euros, which will expire in 2023 and with a reduction in the cost of the debt from 3.79% to 1.98%. At the close of the financial year, our LTV stood at 42%, as opposed to 49% at the end of The second milestone was Gmp joining the Alternative Equity Market (Mercado Alternativo Bursátil - MaB) in July, a year and 10 months after the Company adopted the legal structure of a REIT and GIC, Singapore Government Sovereign Wealth Fund, became a shareholder of the Company. I would not like to end my message without mentioning the Gmp Foundation, which, for another year running, has worked hard on social action, aimed at groups supporting people with Intellectual Disability and Acquired Brain Injury. The Foundation received five accolades during 2016, including the Corresponsables Award in the SME category and the Trébol Prize for Solidarity, from Down España. Gmp faces the future with optimism. The outlook for Spain during 2017, according to a consensus of analysts, remains positive as it is one of the fastest growing economies in Europe. This factor, coupled with our solid financial and business structures, will enable us to leverage market opportunities to create value for our shareholders and deliver high levels of customer satisfaction. The main challenges that Gmp faces for the upcoming year lie in reaching a high level of occupancy in the two buildings where renovations are being completed, continuing to move forward in the sustainable and technological differentiation of our portfolio of assets and maintaining sustained growth via selective investment in value-added assets and new developments. I would like to end my message by expressing my sincere thanks to you all, on behalf of the Board of Directors and from me personally. The achievements and advances made by Gmp today would not be possible without the support of our shareholders, the trust of our clients and the contribution from our outstanding team. Francisco Montoro Alemán Chairman - CEO (1) (1) On 29 th March 2017, he was appointed Chairman of the Board of Directors. He will combine this new role with the functions he has been performing as CEO.

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9 Gmp ANNUAL REPORT KEY ASPECTS OF Milestones 1.2. Key data Hermosilla 3

10 10 1 KEY ASPECTS OF MILESTONES JANUARY FEBRUARY Sale of Mercado de Campanar shopping centre, non-strategic asset for Gmp, located in Valencia. Successful completion of AENOR Auditing of Integrated Management System for Quality, Environment and Health and Safety in the Workplace. Gold LEED certification for the building Hermosilla 3 in the category Existing Building. AUGUST Gmp named Best Real Estate Developer in Spain in the office and business category by the magazine Euromoney. SEPTEMBER Sale of residential land plot in Valdebebas. Signing of first rental contracts for Castellana 81 with the companies Teka and HAYS. Work starts to build Oxxeo, a new office project by Gmp on one of the land plots in Las Tablas, located in calle Quintanadueñas. Recognition for Las Colinas Golf & Country Club as Spain s Leading Villa Resort in the World Travel Awards for the second year running. DECEMBER Completion of the renovation work on the office floors of Castellana 81. Recognition for the building Eloy Gonzalo 10 as Best Renovation from the Spanish Offices Association - Asociación Española de Oficinas (AEO).

11 Gmp ANNUAL REPORT MARCH Renewal of rental contract with ADIF in the building Titán 4. Start of commercialisation of Castellana 77 and launch of immersive 3D visit with Oculus Rift technology, a pioneering tool in the real estate sector. Gold LEED certification for the Iberia Mart I and II business complex in the category of Existing Building. JULY JUNE Flotation on the Alternative Equity Market (Mercado Alternativo Bursátil - MaB) in the REIT segment. Signing of new syndicated finance contract worth 755m. OCTOBER Completion of improvement work at the buildings Luchana 23 and Génova 27. Gold LEED certification for the buildings Álamo, Abedul, Olmo, Roble and Encina at the Parque Norte Business Centre in the category of Existing Building. NOVEMBER Signing of lease contract for 21,086 m 2 of office space with Huawei in Castellana Norte, the biggest rental operation in the office market in Madrid in Recognition for Gmp as Best Specialised Fund in Spain in the MSCI European Property Investment Awards for the second year running. Recognition for Las Colinas Golf & Country Club as Spain s Best Golf Course in the World Golf Awards for the second year running. Recognition for Las Colinas Golf & Country Club for Best Customer Service at the Mediterráneo Excelente Awards.

12 12 Eloy Gonzalo 10

13 Gmp ANNUAL REPORT KEY DATA m Operating Occupancy rate at year end (1) 94.0% 97.2% Average rental ( /m 2 ) Income Statement items Total revenues EBITDA Net profit Balance sheet statement items GAV 1,694 1,903 Net debt Cost of debt at year end 3.79% 1.98% LTV 49.2% 42.3% EPRA Ratios (2) EPRA Earnings EPRA NAV - 1,070 EPRA NNNAV EPRA Net Initial Yield (NIY) - 5.4% EPRA topped-up NIY - 5.5% EPRA vacancy rate - 2.6% EPRA cost ratio (including vacancy costs) % EPRA cost ratio (excluding vacancy costs) % (1) Calculated on space available (excludes space under renovation: Castellana 81 and Castellana 77) (2) Gmp has been an associate member of EPRA since 2016

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15 Gmp ANNUAL REPORT THE COMPANY Mission, vision and core values 2.2. Business areas: strategy and business model Core business: property-owning business Other businesses: development of residential tourism 2.3. Management team 2.4. Company structure 2.5. Financial structure Castellana 81

16 16 2 THE COMPANY 2.1. MISSION, VISION AND CORE VALUES Gmp s mission, vision and core values focus on meeting the Company s strategic objectives and consolidating its position as a leader in the property market. Mission: Property-owning developer and investor in premium offices in Spain, which delivers high levels of satisfaction to clients and partners through sustainable business management. Vision: To be the benchmark office property-owning developer and investor in Spain through the ability to attract and retain clients, anticipate market trends, optimise value and provide liquidity. Strategic values: Quality. Client-led. Responsibility in all its human, social, environmental and corporate dimensions. Innovation. Commitment.

17 Gmp ANNUAL REPORT Oxxeo

18 18 2 THE COMPANY 2.2. BUSINESS AREAS: STRATEGY AND BUSINESS MODEL Gmp s business model concentrates on the following: Clear property-owning focus. Specialisation in the high-end office and business park segment in Madrid. This means Gmp s core business centres on the offices and business parks it owns in Madrid. In addition, and on an occasional basis, it operates in the residential tourism sector through the resort it owns. Active management of its assets CORE BUSINESS: PROPERTY-OWNING BUSINESS Gmp stands out for the vertical integration of its property-owning business model with a 360 focus. This is possible thanks to its strong track record in terms of investment, technical and management capabilities. Investment Capability 01 Acquisition 02 Rotation 03 Land Management Asset Management Commercialisation Management Capability Property-owning Business Model specialised in Offices and Business Parks Technical Capability Renovation Development

19 Gmp ANNUAL REPORT Castellana Norte Investment capability: acquisition, rotation and land management Gmp s investment activity includes land and existing buildings. Over the years, Gmp has known how to identify and position itself in advance in the business expansion areas in Madrid that have the greatest potential. From the 1980s, it gradually began to acquire strategic land plots for future third-party developments in north Madrid, which the Company has managed from the outset and where three business parks have been developed, covering a total area of 183,188 m². As outlined in the following section, Gmp plans to start development on a new office building, Oxxeo, on one of its plots in Las Tablas. It currently holds and manages its own land portfolio in Valdebebas, Las Rozas and Las Tablas, with buildable area for new office projects of 77,731 m². Moreover, its experience and in-depth knowledge of the segment it operates in enables it to identify and leverage investment opportunities that complement its portfolio of owned assets, offer suitable profit margins, are future proof and deliver added value through specialised management. Gmp s investment activity is combined with rotating mature or non-strategic assets in order to improve efficiency and quality in its portfolio through new investments or developments. In 2016, the Company disposed of the Mercado de Campanar Shopping Centre, located in Valencia, and residential land in Valdebebas, in Madrid. Both of which are non-strategic assets, outside the Company s core office business.

20 20 2 THE COMPANY Technical capability: renovation and development Gmp is one of the pioneering and most experienced developer groups in Spain in office and business park development and renovation. Its technical capability enables it to play an active role in each of the projects it undertakes right from the start, enabling it to ensure the highest quality standards are applied, minimise any risks associated with costs and deadlines, guarantee the optimisation of the end product in order to meet market demands and therefore secure commercial success. Gmp has experience in promoting both turnkey projects for new company headquarters and setting up multi-client business parks. The group s development activity includes new developments on land acquired and managed by Gmp specifically for such purpose, as well as the full renovation of existing buildings, mostly in consolidated prime areas. After a year of intense investment during 2015 in office buildings, which increased the office space in its portfolio by 38%, adding 100,000 m² above ground level, 2016 has been characterised by investment in two ambitious renovation projects: Castellana 77, a building acquired at the start of 2015 and which is expected to be completed in May 2017, and the emblematic building Castellana 81, after BBVA partially moved out from 23 floors. Refurbishment of these office floors was completed by the end of As regards new developments, Gmp has commenced work on Oxxeo, an office building designed by the prestigious architecture studio Rafael de La-Hoz on one of its plots of land in Las Tablas. Covering a space of 14,299 m² distributed over five floors above ground and with 450 underground parking spaces, the building will have a sustainable and avant-garde design. Castellana 77

21 Gmp ANNUAL REPORT Management capability: property commercialisation and management The asset management of all buildings owned by Gmp is carried out by a highly committed and customer-led team of professionals. The commercial team focuses on fostering customer loyalty, both by renewing rental contracts and promoting vacant space. In 2016 Gmp renewed contracts for 30,027 m² and signed new leases for 36,206 m² of office space. The Head of Client Management acts as the direct contact between the client and the property. The Head, together with his team, play a key role in solving any incidents efficiently and anticipating client needs. All buildings managed by Gmp feature an on-site Facility Manager in the building. As part of its management and aligned with its customer-led focus, Gmp provides a full design service to fit out office spaces for tenants through IN-PLANIA. This service prioritises optimisation of space, the comfort of occupants and environmental sustainability. Gmp conducts annual satisfaction surveys on all its clients. The overall results obtained have displayed a high level of satisfaction year after year, from tenants who see Gmp as a company that is serious, professional, responsible and committed to continuous improvement. Gmp adopts a clear customer-driven approach to management, positioning it as one of the propertyowning real estate groups with the highest levels of customer retention, occupancy and satisfaction in the market. Gmp is the only property owning real estate group in Spain with an integrated management system for Quality, the Environment and Health and Safety in the Workplace certified by International Standards ISO 9001, and OSHAS % (1) 36,206 sq m 30,027 sq m % of occupancy at the end of 2016 Rented office space in 2016 Renewed office space in 2016 (1) Occupancy rate based on the available office space (excludes space under renovation: Castellana 81 and Castellana 77)

22 22 2 THE COMPANY OTHER BUSINESSES: DEVELOPMENT OF RESIDENTIAL TOURISM Apart from its core property-owning business in office space, Gmp owns and manages a 330-hectare residential tourist development near the coast, south of Alicante: Las Colinas Golf & Country Club. It comprises bespoke villas, apartments and plots of land for sale, as well as an extensive sports and leisure amenities and a range of accommodation and restaurants. It features an 18-hole championship golf course, a private beach club on the seafront and the International School of Falconry Las Colinas, which provides a unique falconry experience in Spain. It belongs to three companies owned by Gmp: Las Colinas Golf Residencial SL, Las Colinas Green Golf SL and Campoamor Sun & Beach SL. Las Colinas Golf Residencial SL owns the residential land at the Golf & Country Club. Following the development of the first commercial phase for 120 homes in 2010 and sale thereof, since 2013 the business model adopted has been one in which the Company pre-eminently plays the role of Master Developer. Its core activity is the sale of land. In addition, it acts as developer of some singular developments or turnkey villas, for private individuals, in privileged locations. In 2016, in response to the growing demand from European clients, it intensified its development activity through a joint venture to develop a community of 56 apartments. In order to ensure that the various residential projects comply with the resort s strict quality and design standards, a rigorous approval procedure is applied before commencing building work. Residencial SL and other developers, amounted to 37 villas and 55 apartments. Out of the total of 1,564 homes planned, 238 had been delivered by the end of the financial year, 96 were sold at different stages of completion and 146 were under development and commercialisation. Las Colinas Golf & Country Club s master plan includes three plots of land for commercial use in different locations. These plots are also owned by Las Colinas Golf Residencial SL. Las Colinas Green Golf SL is the company that owns the golf course, as well as the club house and the amenities in the immediate surroundings. The course, designed by Cabell B. Robinson, is one of the best in Continental Europe according to the reputed British magazine Your Golf Travel. In 2016 it won for the second year running the title of Spain s Best Golf Course at the World Golf Awards. It is managed by the world leader Troon Golf. It operates a pay & play system, with a limited number of renewable annual memberships available. In 2011, a year after opening, the golf course achieved its target figure of more than 41,000 rounds. In 2016, it surpassed 45,000 rounds, with much higher green fees than the average in the surrounding area. Finally, Campoamor Sun & Beach SL owns the hotel plot of the Golf & Country Club, which is not developed yet, and the beach club on the seafront. Moreover, it manages the existing accommodation offer Las Colinas Residences, which consists of a selection of exclusive two and three-bedroom apartments and villas. Homes are fully equipped and clients can benefit from a broad range of services and mixed accommodation and golf packages. The total number of properties sold at Las Colinas Golf & Country Club over 2016, by Las Colinas Golf

23 Gmp ANNUAL REPORT Las Colinas Golf & Country Club

24 24 2 THE COMPANY Las Colinas Golf & Country Golf Masterplan Natural Park Mediterranean woodland International School of Falconry Las Colinas Meeting Center San Miguel de Salinas Driving Range Mini Market Clubhouse Sports area Canyon entrance to Las Colinas CV-941 Sea at 4,5 km Campoamor (10 minutes to Las Colinas Beach Club) Nature trail Mediterranean river bed Natural park Natural protected area 18-hole championship golf course Residential use Land sold Built and delivered Under development Land at Las Colinas Golf & Country Club Built and delivered Under development Future development Hotel use Commercial use

25 Gmp ANNUAL REPORT Plots and uses OWNER COMPANY USE PLOT SURFACE sq m BUILDABLE AREA sq m UNITS THIRD PARTIES RESIDENTIAL 315,808 69, COLINAS GOLF RESIDENCIAL S.L. RESIDENTIAL 700, ,740 1,094 COMMERCIAL 12,167 3,250 3 different commercial locations 713, ,990 1,094 CAMPOAMOR SUN & BEACH S.L. HOTEL 50,401 25, rooms approximately COLINAS GREEN GOLF S.L. GOLF 1,012,057 6,000 PUBLIC PROPERTY LAND CEDED PUBLIC USAGE 26,915 2,000 TOTAL URBAN DEVELOPMENT PLAN 2,118, ,620 1,564 (1) (1) Residential units. Las Colinas Golf & Country Club. Villas in the Enebro Community

26 26 Castellana 81

27 Gmp ANNUAL REPORT MANAGEMENT TEAM Gmp has a management team comprising specialised professionals with extensive experience and in-depth knowledge of the property market. The Company is managed by this group of experts through the Executive Committee and Steering Committee. Both bodies aim to project Gmp towards the future by taking decisions that are feasible and sustainable in the short, medium and long term. EXECUTIVE COMMITTEE Francisco Montoro Vice President and CEO (1) Antonio Montoro Vice president Ricardo Montoro Vice president Xabier Barrondo Business Managing Director José Luis García de la Calle Corporate Managing Director STEERING COMMITTEE Xabier Barrondo Business Managing Director José Luis García de la Calle Corporate Managing Director Diego Valiente Property Assets Director Juan García Technical Property Director and IN-PLANIA Silvia Llanes Director of Marketing, Communication, Quality and Innovation Jorge Calvo Financial and Technology Director Antonio Gil Legal Director José Luis García de la Calle HR Director Cristóbal Guerrero Director of Las Colinas Golf & Country Club (1) On 29 th March 2017, he was appointed Chairman of the Board of Directors. He will combine this new role with the functions he has been performing as CEO.

28 28 2 THE COMPANY 2.4. COMPANY STRUCTURE Gmp Property SOCIMI S.A. Castellana 81 Iberia Mart I y II Alcalá 16 Hermosilla 3 Génova 27 Goya 14 Puerto Somport 8 Luchana 23 Eloy Gonzalo 10 Parque Norte Castellana Norte Land bank Campoamor (Two parking spaces) PROPERTY-OWNING BUSINESS SUBSIDIARIES SUBSIDIARIES FOR OTHER BUSINESS 100% Engage Inversiones 2014 S.L. Castellana 77 RESIDENTIAL TOURISM DEVELOPMENT Gmp Nueva Residencial S.A. 100% Land El Ejido OTHERS IN-PLANIA Espacios Eficientes S.L. 100% 100% Renta Apartamentos S.L. Condesa de Venadito 1 Renta Gestión Fuencarral S.L. 100% Colinas Green Golf S.L. Golf course (Las Colinas Golf & Country Club) Espai Campanar S.L. (no activity) 100% 100% Llano Castellano 51 Barajas 1 100% Campoamor Sun & Beach S.L. Beach Club Hotel plot of land Ociópolis S.L. (no activity) 100% 100% Inmoaccess S.L. Titán 4 100% (Las Colinas Golf & Country Club) Colinas Golf Residencial S.L. Land for residential and commercial use 100% Edificio Velázquez 164 S.L. Parking space (Las Colinas Golf & Country Club) Com. Naranjo Apartamentos S.L. Joint venture development 50%

29 Gmp ANNUAL REPORT FINANCIAL STRUCTURE On 22 June 2016 Gmp signed a new syndicated loan for 755m with a pool of 13 banks. This loan replaced in advance the previous one for 740m, signed on July 2007 which terminated in July This new loan comprises 3 tranches: Tranche A: 525m, with mortgage guarantee for some of Gmp s real estate assets and bullet repayment in 7 years. Tranche B: 200m, with mortgage guarantee, with annual amortization -except the first 2 years of grace period- and repayment in 5 years with 55% amortization due that year. This tranche is extendable annually with prior approval from the banks for up to 2 further years. Tranche C: Credit line of 30m, without mortgage guarantee and bullet repayment in 5 years. This tranche is extendable annually, with prior approval from the banks for up to 2 further years and is undrawn at the current time. In the context of refinancing: i) several bilateral loans worth 25m were cancelled, ii) the shareholder GIC has made a payment of 88m corresponding to the last amount pending in the framework of its investment agreement with Gmp and iii) hedging portfolio was cancelled, resulting in a non-recurring financial cost of 55m. Refinancing has reduced financial costs considerably, given that the previous syndicated loan had been linked to a hedging portfolio that was cancelled. The financing cost of the Group at the end of the financial year decreased from 3.79% in 2015 to 1.98% in It is worth noting that the full impact of this cut will be felt in 2017, as refinancing was carried out in mid 2016 and represents a cut of almost 50% with regard to In addition, the average repayment period for the debt has been extended, rising from 2.4 to 6.4 years. In 2016, net debt dropped from 842m to 804m, decreasing by 38m, out of which 21m are due to the refinancing process. Apart from the syndicated loan of 725m drawn, the Group has bilateral loans drawn amounting to 149m. Luchana 23

30 30 2 THE COMPANY Key financial data m 2015A 2016A Amounts Gross debt Syndicated loan Bilateral loans Cash and equivalents (66) (70) Net debt Undrawn balance 9 33 Cost Cost of debt at closing (%) 3.79% 1.98% % debt at fixed or covered rate 81% 70% Recurring cost Repayment period Average debt repayment period (years) Indebtedness ratio LTV 49.2% 42.3% Financial breakdown 908 m 874 m Gross debt 2015 Gross debt % Syndicated loan 19% Bilateral loans 83% Syndicated loan 17% Bilateral loans

31 Gmp ANNUAL REPORT Debt amortization schedule 2016 ( m) >2022 Others Syndicated loan Luchana 23 - Gmp Headquarters

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33 Gmp ANNUAL REPORT BUSINESS EVOLUTION OVER THE FINANCIAL YEAR Consolidated figures Income statement Valuation of portfolio 3.2. Core business: property-owning business Description of client portfolio Occupancy Average rental revenue Projects/ investments EPRA ratios 3.3. Other businesses: residential tourism development Castellana 81

34 34 Luchana 23 - Gmp Headquarters 3.1. CONSOLIDATED FIGURES INCOME STATEMENT Over 2016, the Company revenues stood at 93.6m, which is 11.8% up on that of the previous year when it obtained 83.7 m euros. The EBITDA over the financial year was 51.8m, 4.4% above that of 2015, when it reached 49.7m. In the property-owning office business, turnover rose 6.4% and the EBITDA dropped by 2.0%. The decrease in revenue due to BBVA moving out of 23 floors at Castellana 81 was more than offset by new income streams from assets acquired in The fall in the EBITDA is due to an increase in operating costs, principally because in 2016 Gmp was not able to offset costs at Castellana 81 as the building was under renovation. Non-recurring costs related to refinancing of the syndicated loan and flotation on the Alternative Equity Market (Mercado Alternativo Bursátil - MaB) also had an impact. As regards the other activities that complement the property portfolio: The residential business of Las Colinas Golf & Country Club generated total revenues, including real estate development, the golf course, accommodation business and other of 16m, which is 60.3% up on the previous year s turnover of 10 m. As far as the EBITDA is concerned it increased substantially rising from 547k to 4,108k. As regards the office fit-out business -IN-PLANIA-, as there was a change in the strategic focus of this business last year, because it decided to concentrate on delivering internal improvement and refurbishment services to Gmp s portfolio and implementing fit-out work for Company tenants, rather than on service provision to third parties, revenue does not reflect the intragroup s turnover, which is not very significant.

35 Gmp ANNUAL REPORT Evolution of revenue and EBITDA by business area ` A 2016A %var. Total revenue 83,723 93, % Property-owning business 72,735 77, % Offices 58,613 59,688 1,8% Car parks 4,820 5, % Other revenue 9,303 12, % Other businesses 10,988 16, % Las Colinas Golf & Country Club 9,973 15, % IN-PLANIA 1, (79.1)% (-) Total operating costs (34,052) (41,768) 22.7% EBITDA 49,672 51, % Property-owning business 48,870 47,890 (2.0)% Other businesses 802 3, % Las Colinas Golf & Country Club 547 4, % IN-PLANIA 254 (159) (162.5)%

36 36 3 BUSINESS EVOLUTION OVER THE FINANCIAL YEAR VALUATION OF THE PORTFOLIO The valuation of the portfolio as at 31 December 2016, carried out by an independent property valuer, amounted to 1,903m. The table below shows a breakdown of the valuation by type of asset in 2016 compared with Evolution of the GAV: breakdown by type of asset m 2015A 2016A %var. %var. like-for-like Office portfolio 1,518 1, % 14.3% Land bank % 19.9% (1) Shopping centres 5 N/A N/A Las Colinas and others (4.4)% 2.8% (2) Total 1,694 1, % 13.7% (3) Note: The drop in value at Las Colinas is due to sale of land. (1) Excluding the residential plot at Valdebebas and the Oxxeo development. (2) Variation in valuation in /m 2 t. (3) Excluding the Mercado de Campanar Shopping Centre and residential plot of land at Valdebebas. The figures for 2015 included valuations for assets sold during the financial year: the Mercado de Campanar shopping centre and the plot of land for residential development in Valdebebas -included in the land bank-. For this reason, a like-for-like comparison has been drawn, which shows growth of 13.7%. valuation of plot M.1-1 has increased hence the figure is not comparable to that of last year, because investment is being carried out -capex-, consisting of developing the Oxxeo building. On the other, at Las Colinas Golf & Country Club absolute value has dropped as plots of land were sold in 2015; the comparable valuation in /m 2 t has increased by 2.8%. In addition, it is worth explaining two other aspects. On the one hand, as concerns the land bank, the The graph below shows the evolution of the valuation in greater detail.

37 Gmp ANNUAL REPORT Evolution of the comparable GAV ( m) ,903 (20) (4) 209 Total variation (increase) 1,694 GAV 2015A Office Portfolio Divestments Land bank Land plot M.1-1 (Oxxeo Development) Las Colinas and others GAV 2016A Oxxeo

38 38 3 BUSINESS EVOLUTION OVER THE FINANCIAL YEAR 3.2. CORE BUSINESS: PROPERTY-OWNING DESCRIPTION OF CLIENT PORTFOLIO Gmp develops a property-owning business model based on long-term leasing contracts with companies that have a strong track record of financial solvency and operate in a broad range of sectors. Moreover, historically it achieves high renewal figures as a result of client satisfaction with the quality, services and management of buildings leased. In general, Gmp s aim is to sign contracts for the longest possible time period. As of 31 December 2016, more than half the existing rental contracts had an end date of above five years. Gmp s top 20 tenants

39 Gmp ANNUAL REPORT Breakdown of tenants by business sector (rental revenue) 11% Legal 12% Industry and energy 27% Telecom, ICT and Consulting 13% Public Administration 15% Finance and Insurance 22% Other services Termination dates for rental contracts by year (% sq m expired) Average expiry Compulsory period: 4.4 years Contracts: 5.7 years 52% 19% 12% 12% 5%

40 40 3 BUSINESS EVOLUTION OVER THE FINANCIAL YEAR OCCUPANCY 2016 was a year of intense commercial activity, as contracts for office space of 36,206 m² were signed. Outgoing tenants occupied a space of approximately 3,600 m², giving a positive net absorption of 32,606 m². In addition, contracts for 30,027 m² were renewed. Occupancy rose from 82% in 2015 to 85% in If office space under development is excluded -Castellana 81 and 77- the occupancy percentage for both 2015 and 2016 would be 94% and 97% respectively. The chart below shows the evolution of Gmp s portfolio in 2016 in detail. Evolution of occupancy for Gmp s office portfolio in 2016 (000 sq m) Occupancy rate Total: 82% Out of total area available: 94% Occupancy rate Total: 85% Out of total area vailable: 97% December 2015 Right to leave Renewals (1) New contracts (2) December 2016 Occupied Vacant (1) Include tacit renewals. (2) In 2016, 21,086 m 2 at Castellana Norte are not included in new contracts as it is space leased by Vodafone.

41 Gmp ANNUAL REPORT Condesa de Venadito 1 The largest tenant movements include the following: Incoming tenants: Novartis at Parque Norte. H&M and Vivus Finance at Génova 27. HAYS and Teka at Castellana 81. Euromadi at Condesa de Venadito 1. Although it does not appear in the chart, in 2016, the Company also signed a lease contract with Huawei for 21,086 m² office space at Castellana Norte. As this contract applies to a property 100% rented by Vodafone, Huawei replaces Vodafone in this office space, and, for this reason, there are no new square metres added. Including the Huawei contract, new arrivals over the financial year amounted to 36,206 m². Renewals: ADIF at Titán 4. GFK and Comunidad de Madrid at Luchana 23. ING at Génova 27. Outgoing tenants: SGS reduced its office space leased at Barajas 1. El Corte Inglés vacated the commercial premises at Castellana 77 due to the renovation work.

42 42 3 BUSINESS EVOLUTION OVER THE FINANCIAL YEAR A breakdown of the evolution of occupancy is given below according to the location of the property. The occupancy rates are calculated on the available area (excluding space under renovation, specifically Castellana 81 and Castellana 77). Evolution of the occupancy rate by location Inside M-30 Outside M-30 94,5% 97,7% 93,6% 96,8% 2015A 2016A 2015A 2016A AVERAGE RENTAL REVENUE FOR OFFICES The average rental revenue over 2016 was 17.6 /m 2, which is similar to the previous financial year. A breakdown of the evolution of average rental income is given below, depending on the location of the property. Evolution of average revenue by location Inside M-30 Outside M /m /m /m /m A 2016A 2015A 2016A

43 Gmp ANNUAL REPORT PROJECTS / INVESTMENTS CASTELLANA 81 On 31 December 2016, as planned, the work on office floors under refurbishment was completed and the corresponding certifications on the completion of renovation work had been received and an operating licence obtained. At the time of writing this report, work is being carried out to fit the building with an exclusive service floor. This will include an auditorium seating 188 people, equipped with the latest technology, and an annexed area for event organisation, a meeting centre with eight rooms, physiotherapy service, shows and changing rooms. This refurbishment is expected to be completed by May In March 2017, Castellana 81 became the first and only office building on the Paseo de la Castellana to hold Platinum LEED certification in the Core & Shell category. CASTELLANA 77 On 31 December 2016, on schedule, the work on the office floors under refurbishment and the car park was almost finished. At the time of writing this report, the slats on the façade are being installed and the installations on the roof and the access floor to the building are being renovated. Renovation work is expected to be completed by May The building has obtained Gold LEED pre-certification for Core & Shell and further measures have been added to the initial plan, aiming to reach Platinum standard, the highest distinction awarded by the US Green Building Council (USGBC). OXXEO In August 2016, Gmp started work on this new office development located in the northern district of Madrid, Las Tablas, one of the fastest growing business areas in the capital, with a high concentration of high-profile national and international companies. On 31 December 2016, the structure up to level -1 had been completed. At the time of writing this report, the structure of the building up to level +1 is under construction. The building work is expected to be completed by September 2018.

44 44 3 BUSINESS EVOLUTION OVER THE FINANCIAL YEAR EPRA RATIOS Gmp has been an associate member of EPRA since 2016, when it adopted the association s recommendations on best practices in reporting. A breakdown of EPRA Performance Measures is shown below. EPRA 2016 Performance Measures 2016A Indicator Brief description m /% /share EPRA Earnings Earnings from operational activities EPRA NAV Net Asset Value adjusted to include properties and other investment interests at fair value and to exclude certain items not expected to crystallise in a long-term investment property business model 1, EPRA NNNAV EPRA Net Initial Yield (NIY) EPRA NAV adjusted to include the fair values of (i) financial instruments, (ii) debt and (iii) deferred taxes Annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of the property, increased with (estimated) purchasers costs % EPRA topped-up NIY This measure incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free periods (or other unexpired lease incentives such as discounted rent periods and step rents) 5.5% EPRA vacancy rate Percentage that reflects Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio 2.6% EPRA cost ratio (including vacancy costs) Percentage that reflects administrative & operating costs divided by gross rental income 20.0% EPRA cost ratio (excluding vacancy costs) EPRA cost ratio excluding administrative and operating costs associated with unleased properties 19.4%

45 Gmp ANNUAL REPORT OTHER BUSINESSES: DEVOLOPMENT OF RESIDENTIAL TOURISM Las Colinas Golf & Country Club has performed very well over the year. For the second year running, this business line generated a positive EBITDA, rising from 547k in 2015 to 4.1m in while the income statement shown at the beginning of this section follows accounting principles. Growth is in the order of 1.0% in sales revenues amounting to 13.8m and 9.9% in terms of sales margins, rising to 7.2m. Residential property development is the main business, which includes the sale of land and homes under development. It is worth noting that the evolution outlined below is presented from the point of view of sales and commercial margins, As regards operations, this includes golf, restaurants and accommodation, 14.6% growth in turnover was recorded, reaching 4.6m. As far as EBITDA is concerned, there was a 34.6% increase, rising to 348k. Key financial data on Las Colinas Golf & Country Club Residential development Sales revenues ( k) Gross margin ( k) 13,694 13,827 6,565 7, A 2016A 2015A 2016A Operations Revenues ( k) 3,984 4,677 EBITDA ( k) A 2016A 2015A 2016A

46 46

47 Gmp ANNUAL REPORT COMPANY PORTFOLIO 4.1. Description 4.2. Office buildings 4.3. Land portfolio 4.4. Las Colinas Golf & Country Club Castellana 77

48 48 Luchana 23 - Gmp Headquarters 4.1. DESCRIPTION As indicated above, the valuation of the Company s portfolio as of 31 December 2016, carried out by an independent property valuer, amounted to 1,903m. It principally comprises office properties for lease, worth 1,735 billion, accounting for 91% of total. The value of land bank for future office developments stands at 82m, 4% of total. Finally, the valuation of the residential portfolio, mainly comprising the residential tourism development Las Colinas Golf & Country Club, is 86m, 5% of the total value of the Company s assets. Breakdown of the total GAV by type of asset 1,903m Total GAV 91% Offices 4% Land bank 5% Residential and other

49 Gmp ANNUAL REPORT OFFICE BUILDINGS Gmp has a diversified portfolio of office buildings and business parks, comprising both single tenant and multi-tenant properties. The weight of the assets located inside the M-30 is very significant, which accounts for 52% of the total surface area of the portfolio and 72% of the valuation. Most properties enjoy prime locations in Madrid s Business Centre. During the period , Gmp invested intensely in properties, which significantly increased the area of its portfolio dedicated to office buildings. At the end of financial year 2016, the value of new properties acquired over the last two years accounted for 21% of the GAV and 31% of the total surface area. Due to the major renovation work the Company started at the end of 2015 at Castellana 81 -one of the assets from its historical portfolio- and at Castellana 77 -acquired the same year-, a substantial percentage of its portfolio was in development phase at the close of This involves buildings with a high value per m 2 which therefore accounts for a large proportion of its GAV, that is, 26%. Gross Leasable Area (GLA): 360,368 sq m Type Location Incorporation Status 59% Multi-tenant 41% Single tenant 52% Inside M-30 48% Outside M-30 69% Historical portfolio 31% Acquisitions % In operation 15% Under development Value (GAV): 1,735m Type Location Incorporation Status 62% Multi-tenant 38% Single tenant 72% Inside M-30 28% Outside M-30 79% Historical portfolio 21% Acquisitions % In operation 26% Under development

50 50 N Location of portfolio of offices for lease in Madrid. CBD / City Centre M30 North Madrid East Madrid A1 13 M40 12 M A A5 1 A3 A4

51 Gmp ANNUAL REPORT Titán 4 2 Alcalá 16 3 Goya 14 4 Hermosilla 3 5 Génova 27 6 Luchana 23 7 Eloy Gonzalo 10 8 Castellana 81 9 Castellana Orense Condesa de Venadito 1 12 Serrano Galvache 56 Iberia Mart I and II Parque Norte 13 Llano Castellano Isabel Colbrand Quintanadueñas s/n 16 Trespaderne 29 Castellana Norte OXXEO Barajas 1

52 52

53 Gmp ANNUAL REPORT TITÁN 4 Property acquired by Gmp in August Located in the Méndez Álvaro area, the building enjoys excellent visibility from the M30. It is a freestanding building, surrounded by a private garden area, with natural light on all four façades and fitted with a modern and innovative building access system. The building holds BREEAM ES In-Use certification, with a rating of Very good and Excellent for management. Year of construction 2008 Area 10,722 sq m Parking spaces 218 Tenant Occupancy Adif 100% 31 st December 2016 BREEAM ES In-Use Integrated Management System: ISO 9001, ISO and OHSAS 18001

54 54

55 Gmp ANNUAL REPORT ALCALÁ 16 A listed building by the architect Ricardo Bastida, in the monument category, considered to be of special interest by the Madrid Regional Ministry of Education and Culture. It was originally the headquarters of the Banco de Bilbao. It stands out for its impressive façade, with sculptures by Quintín de la Torre, as well as for the master craftsmanship of the stained-glass windows and murals in its central rotunda, created by Aurelio Arteta. The two monumental quadrigas that crown the towers were sculpted in bronze by Higinio de Basterra. Between 1975 y 1981, the architect Pedro Bidagor Lasarte extended the building into calle de Sevilla, respecting the architectural design of the original building and its main façade. It was fully renovated in Year of construction Year of refurbishment Architect Area Ricardo Bastida 20,827 sq m Parking spaces 155 Tenants Occupancy Comunidad de Madrid BBVA 100% 31 st December 2016 Integrated Management System: ISO 9001, ISO and OHSAS 18001

56 56

57 Gmp ANNUAL REPORT GOYA 14 A building with a distinctive glass front. The street where the building is located was planned in the 19th century when the Marquis of Salamanca, who owned 100 hectares in the area, promoted developments to the north, east and west of the capital, creating the Salamanca district. It is one of the most distinguished, central districts of Madrid, which boasts architectural unity through the building façades and a high concentration of designer boutiques. In 2011, Gmp fully refurbished the seven floors of this building to enhance the natural light and functionality of the space. Since 2012, it has housed the headquarters of the National Court (Audiencia Nacional), encompassing the Court, Administrative Courts and the Labour Chamber. Year of construction Year of refurbishment Area Parking spaces 100 9,138 sq m Tenants Occupancy Audiencia Nacional BBVA 100% 31 st December 2016

58 58

59 Gmp ANNUAL REPORT HERMOSILLA 3 The only business campus in Madrid s prime district. It comprises two buildings and was designed by the Rafael de La-Hoz architecture studio, its design prioritises the optimisation of energy consumption, exploitation of natural light, work rationalization, innovation and environmental protection. Notable for its glass façade and the central atrium with skylight, as well as its interior garden linking the two buildings on campus. It is the head offices of the legal services firm Garrigues. The business campus holds Gold LEED certification in the Existing Building category, awarded by the US Green Building Council (USGBC). Year of refurbishment 2006 Architect Rafael de La-Hoz Area 16,663 sq m Parking spaces 121 Tenant Garrigues Occupancy 100% 31 st December 2016 LEED Gold Existing Building Integrated Management System: ISO 9001, ISO and OHSAS 18001

60 60

61 Gmp ANNUAL REPORT GÉNOVA 27 Since it was erected in 1973, the building has become a landmark in an area where nineteenth-century or novecentista buildings predominate. It is the living expression of a contemporary reality that opened up in one of the most elegant districts in twentiethcentury Madrid. The thorough refurbishment of Génova 27, undertaken by Gmp in 2005, was conceived by the Lamela studio, the same architectural practice that originally designed the building. This studio reinterpreted the building, giving the exterior greater transparency, leveraging natural light and reducing acoustic transmission. The building received a special mention in the third edition of the Gaceta de los Negocios Real Estate Awards in the category of property refurbishment. In 2016 an improvement plan was implemented to modernise the common areas and deliver higher levels of comfort to occupants and visitors. Such actions included the renovation of the main and floor lobbies and toilets. It holds Gold LEED certification in the Existing Building category, awarded by the US Green Building Council (USGBC). Year of construction Year of refurbishment Architect Area Parking spaces 188 Main tenants Occupancy Estudio Lamela 11,436 sq m Engel & Völkers H&M ING VIPS Vivus Finance 90% 31 st December 2016 LEED Gold Existing Building Integrated Management System: ISO 9001, ISO and OHSAS 18001

62 62

63 Gmp ANNUAL REPORT LUCHANA 23 This was the first office building developed by Gmp and has housed the Company headquarters since its inception. It laid the foundations of Gmp s business strategy as a specialised property-owning real estate group in the premium office segment in Madrid. The building has straight lines and is entirely freestanding hence most rooms are exterior and receive plenty of natural light. During the period an improvement plan has been implemented to modernise the common areas and provide greater levels of comfort for occupants and visitors. The actions developed include refurbishing the lobbies on the different floors, as well as the toilets. In addition, in 2016, the building was equipped with a new space that can be rented out for meetings in order to provide clients with a function room where they can hold events such as company meetings, courses, seminars, presentations or press conferences. It holds Gold LEED certification in the Existing Building category, awarded by the US Green Building Council (USGBC). In addition, Gmp s headquarters on the seventh floor is one of only three offices in Madrid to have obtained Platinum LEED certification in the Commercial Interiors category. Year of construction 1979 Area Parking spaces 124 Main tenants Occupancy 13,859 sq m Comunidad de Madrid Gfk Gmp HDI Seguros Interbrand Ketchum 100% 31 st December 2016 LEED Gold Existing Building Integrated Management System: ISO 9001, ISO and OHSAS 18001

64 64

65 Gmp ANNUAL REPORT ELOY GONZALO 10 Gmp acquired the property In July 2014 and started a comprehensive renovation programme immediately. The building was fully pre-leased nine months before the completion of the renovation work. The architecture studio selected to carry out the renovations is the reputed international firm luis vidal + architects (LVA) and the project enhances the functionality of the floors and adds an open façade featuring large panes of glass from floor to ceiling, leveraging natural light to the full and reducing acoustic transmission. It holds Gold LEED certification in the Core & Shell category, awarded by the US Green Building Council (USGBC). The building won the accolade for Best Renovation awarded by the Spanish Association of Offices (AEO). The AEO represents the various professionals, companies and institutions linked to corporate property asset management, and more specifically, to everything related to offices and work centres in Spain. Year of refurbishment 2015 Architect Area Parking spaces 136 Tenants luis vidal + arquitectos 13,040 sq m Grupo Havas Perrachica restaurant Occupancy 100% 31 st December 2016 LEED Gold Core & Shell Integrated Management System: ISO 9001, ISO and OHSAS 18001

66 66

67 Gmp ANNUAL REPORT CASTELLANA 81 The building, one of the masterpieces of Sáenz de Oiza and of Spanish architecture of the 20th century, is located in the most privileged area of Madrid s financial hub and, following an ambitious renovation plan, it looks to the future as a symbol of sustainability, accessibility and technology. Gmp selected the prestigious practice Ruiz Barbarin Arquitectos ARQUIMANIA to undertake the renovation of the building. At the end of 2016 the work on the interior of the 23 office floors that BBVA had left vacant a year before was completed. The renovation plan includes a full service floor, work on which is expected to be completed by the first half of This will include an auditorium with a capacity for 188 people equipped with stateof-the-art technology and an ad-hoc area to hold events, 8 meeting rooms fitted out with cuttingedge technology, physiotherapy service, showers and changing rooms. In March 2017, Castellana 81 was awarded Platinum LEED certification in the category Core & Shell, the highest distinction awarded by the US Green Building Council (USGBC). This makes it the first and only office building to hold Platinum LEED certification on the Paseo de la Castellana. In addition to the above, at the time of writing this report, the building had started the WELL Building Standard certification process and aims to be the first building in Madrid to obtain this in the category Core & Shell. WELL is the first international certification for buildings focusing solely on human health and wellbeing. Year of construction Year of refurbishment Architect Area Parking spaces 407 Tenants Occupancy Francisco J. Sáenz de Oiza Winner of the Spanish Architecture Prize. Gold Medal for Merit in the Fine Arts Prince of Asturias Award for the Arts ,584 sq m BBVA HAYS Teka Renovation and comercialisation LEED Platinum Core & Shell Integrated Management System: ISO 9001, ISO and OHSAS 18001

68 68

69 Gmp ANNUAL REPORT CASTELLANA 77 Located in AZCA, the financial centre of Madrid, the building was acquired by Gmp in February 2015 and full renovations on the building began in October of the same year. The acclaimed international practice, luis vidal + arquitectos, is in charge of the renovation project, which will completely transform the original building; giving it a highly distinctive aesthetic and placing it at the cutting edge of sustainability. The architectural approach to the façade is worth highlighting as not only does it represent an aesthetic achievement but also enhances the efficiency and sustainability of the building through adding slats that protect against direct sunlight. The option of these distinctive slats being lit up at night, gives Castellana 77 greater visibility, making it stand out from its surroundings. The building holds Gold LEED Pre-certification in the Core & Shell category, awarded by the US Green Building Council (USGBC). Moreover, the renovation work at Castellana 77 includes cognitive, sensorial and mobility accessibility improvements making it an accessible building for disabled people, senior citizens and pregnant women. After completion of this work, the building will hold the prestigious accessibility certification DIGA (Hallmark of Level of Accessibility) created and awarded by the Shangri-La Foundation. At the time of writing this report, it had also initiated the WELL Building Standard certification process. Year of refurbishment Architect Area luis vidal + arquitectos 16,222 sq m Parking spaces More than 200 Occupancy Renovation and comercialisation Pre-certification LEED Gold Core & Shell Integrated Management System: ISO 9001, ISO and OHSAS Renovation work is expected to be completed during the first half of 2017.

70 70

71 Gmp ANNUAL REPORT ORENSE 34 IBERIA MART I AND II COMPLEX It was the first World Trade Center in Madrid and the first business complex with a Paddle Tennis Club. It comprises two buildings and the robustness of its finishes and spacious common areas are worth highlighting. It includes a meeting centre accommodating 100 people. During the period , a comprehensive renovation plan was implemented in order to modernise the common areas and deliver higher levels of comfort to occupants and visitors. This included refurbishing the main lobby areas, as well as the lobby on each floor, the toilets, car park and meeting rooms. Both buildings hold Gold LEED certification in the Existing Building category, awarded by the US Green Building Council (USGBC). Year of construction 1975 Area 37,607 sq m Parking spaces 469 Tenants Occupancy Altia Consultores FECYT Fox Lego Mantequerías Arias 94% 31 st December 2016 LEED Gold Existing Building Integrated Management System: ISO 9001, ISO and OHSAS 18001

72 72

73 Gmp ANNUAL REPORT CONDESA DE VENADITO 1 Building acquired by Gmp in March It is a freestanding building, surrounded by a private garden area. It houses large office spaces that are full of natural light. Its straight and sober architectural lines, as well as its solid structure, stand out in its location, next to the M30 and Barcelona A2 highway, in an established business area with many representative buildings that serve as company headquarters. Between a comprehensive renovation plan has been implemented to enhance the block s functionality, distinctive aesthetic and the levels of comfort it delivers to occupants and visitors. Such improvements have included refurbishing the main lobby and floor lobbies and modernising the outside areas and full renovation of the façade that included replacing the windows. Year of construction 1975 Area Parking spaces 440 Tenants 20,789 sq m Basic Fit El Economista FeuVert Just Eat 20 Minutos Occupancy 93% 31 st December 2016 Undergoing LEED certification Integrated Management System: ISO 9001, ISO and OHSAS 18001

74 74

75 Gmp ANNUAL REPORT SERRANO GALVACHE 56 PARQUE NORTE BUSINESS CENTER Built at the end of the 2000s, it was the biggest urban business park in Madrid and the first business city project that united technology with a privileged location. The architectural concept, designed by Rafael de La-Hoz, focuses on a spirit of unity. The six buildings are situated on the perimeter around a central area that serves as the heart of the complex. It includes a meeting centre accommodating 100 people which has been refurbished in Between , improvement work was implemented on the main lobbies including the installation of a LED luminary skylight, new HVAC systems and revolving doors. The toilets were also fully refurbished. Year of construction 2001 Architect Rafael de La-Hoz The business park holds Gold LEED certification in the Existing Building category, awarded by the US Green Building Council (USGBC). Area 45,895 sq m Parking spaces 812 Tenants Occupancy AstraZeneca EDP Renováveis Lenovo Novartis Thales Vestas 100% 31 st December 2016 LEED Gold Existing Building Integrated Management System: ISO 9001, ISO and OHSAS 18001

76 76

77 Gmp ANNUAL REPORT LLANO CASTELLANO 51 The entire building is occupied by Cortefiel Group, leading company in its sector. It has straight lines and is located in north Madrid in the district of Fuencarral, situated in one of the main avenues that connects to the Paseo de la Castellana. Year of construction 1990 Area 23,108 sq m Parking spaces 145 Tenant Grupo Cortefiel Occupancy 100% 31 st December 2016

78 78

79 ISABEL COLBRAND 22 CASTELLANA NORTE BUSINESS CENTRE Gmp ANNUAL REPORT This is the first business park on the prolongation of Paseo de la Castellana. Designed for the company Airtel, now Vodafone, it was and continues to be Madrid s biggest pre-lease of a business park to a single customer. The park comprises four buildings, two linked by a large lobby on the ground floor, while the other two are detached. The large capacity, spacious interiors have an open plan design and are full of natural light. Year of construction 2002 Architect Rafael de La-Hoz Area 43,842 sq m Parking spaces 799 Tenants Occupancy Banco Sabadell Huawei Vodafone 100% 31 st December 2016 Integrated Management System: ISO 9001, ISO and OHSAS 18001

80 80

81 Gmp ANNUAL REPORT QUINTANADUEÑAS s/n OXXEO In 2016 Gmp started development on a new office building on one of the plots of land it owns in Las Tablas: Oxxeo. Work is expected to be completed in The project, following a sustainable and avant-garde design, has been created by the prestigious international architecture practice Rafael de La-Hoz. It is a freestanding building, with a triangular floor plan, following an innovative architectural concept that takes the load-bearing structure to the outside of the building forming a latticework, which in turn protects the façade from direct sunlight. This design maximises space on the office floors and leverages natural light. Oxxeo aims to be a leader in sustainability and comfort in the office market in Madrid. The building has already obtained prestigious Platinum LEED precertification, the highest distinction awarded by the US Green Building Council (USGBC). This makes it the first office project in the Las Tablas area to achieve this pre-certification. Moreover, it has set in motion the WELL certification process, which guarantees a design model and construction that integrates human health and wellbeing. It has also initiated the process of obtaining DIGA certification (Level of Accessibility Hallmark), created and awarded by the Shangri-La Foundation, which certifies high levels of accessibility for disabled people, senior citizens and pregnant women. Year of construction Architect Rafael de La-Hoz Area 14,299 sq m Parking spaces 450 Occupancy In development Pre-certification LEED Platinum Core & Shell

82 82

83 Gmp ANNUAL REPORT TRESPADERNE 29 - BARAJAS 1 Comprising two interconnected buildings, with a modern design, it stands out for the curved façade, giving the building a unique geometry. It is located in a well-established office district close to Adolfo Suárez Madrid-Barajas Airport and Campo de las Naciones Convention and Congress Centre and 15 minutes from the city centre. Year of construction 1995 Area 29,357 sq m Parking spaces 204 Tenents Occupancy Carlson Wagonlit SGS Vodafone 87% 31 st December 2016 Integrated Management System: ISO 9001, ISO and OHSAS 18001

84 84 Land available in Valdebebas

85 Gmp ANNUAL REPORT LAND PORTFOLIO The Gmp Group owns a land bank for office projects covering a buildable area of 77,731 m². This portfolio is located in strategic areas of north Madrid that have developed the most in recent years: Las Tablas, Valdebebas and Las Rozas, three new business districts carefully planned with the objective of creating quality spaces. Distribution of land portfolio per area and sq m of buildable area Area of Madrid Buildable area sq m Las Tablas 33,459 Valdebebas 31,284 Las Rozas 12,988 Land available in Las Tablas

86 86 4 COMPANY PORTFOLIO 4.4. LAS COLINAS GOLF & COUNTRY CLUB Las Colinas Golf & Country Club is an exclusive residential community with low density housing, built around an 18-hole championship golf course. Out of the 6,000 units permitted by the Local Planning Schedule, development of less than 1,600 is planned. The development spreads across 330 hectares of beautiful countryside, near the coast and south of Alicante; nestling in a valley surrounded by hills that form a natural barrier. This ensures the privacy of the resort, enhanced by a single access road with 24-hour security service. It is surrounded by a nature reserve covering over 10,000 hectares where no residential development is permitted. Las Colinas Golf & Country Club enjoys an exceptional climate; it is well connected by road, rail and air and is an environmentally friendly resort. It complies with a comprehensive plan of environmental protection and sustainable development measures drawn up by the Polytechnic University of Valencia and the homes, golf course and other facilities all blend carefully into the surroundings. Moreover, it boasts a 200,000 m² nature preserve, with scenic trails and indigenous vegetation. It offers comprehensive sports, leisure, accommodation and restaurant facilities, including the golf course, a private Beach Club on the seafront and the International School of Falconry Las Colinas, which is a pioneering initiative in Spain delivering a new, unique falconry experience. There are over 20 golf courses and many sailing clubs and marinas less than half an hour s drive away. In 2016, Las Colinas Golf & Country Club was the winner for the second year running in the World Travel Awards and the World Golf Awards in the categories Spain s Leading Villa Resort and Spain s Best Golf Course respectively. It is rated 58th and 78th respectively in the latest rankings of the best golf resorts in Europe and the best golf courses in Continental Europe published by Golf World. Key data on Las Colinas Golf & Country Club Area Residential buildable area Hotel buildable area Commercial buildable area Golf buildable area 330 hectares 232,304 sq m 25,000 sq m 3,250 sq m 6,000 sq m Homes planned 1,564 Homes built and delivered by end of Homes sold by end of Managed tourist homes 2016* 24 *Las Colinas Residences: accommodation offer including villas and apartments.

87 Gmp ANNUAL REPORT Aerial view at Las Colinas Golf & Country Club The golf course Holes 18 Par Designer Management 71, with par 3,4 and 5 holes Cabell B. Robinson Troon Golf Rounds ,500 Amenities Golf academy, practice area, Clubhouse with restaurants UNiK CAFÉ and enso sushibar, a golf shop and changing rooms. Customer rating 4.6 out of Spain's Leading Villa Resort Spain's Best Golf Course

88 88

89 Gmp ANNUAL REPORT Shareholders COMPANY STRUCTURE 5.2. Corporate government Parque Norte

90 90 5 COMPANY STRUCTURE 5.1. SHAREHOLDERS The share capital of Gmp Property SOCIMI S.A. amounts to 19,124,270 shares, with a nominal value of 0.492, fully subscribed and paid. As of 31 December 2016, the shareholding structure is as follows: 66.9% Montoro Alemán Family 32.9% GIC 0.2% Others The company s shares started listing on the Alternative Equity Market (Mercado Alternativo Bursátil - MaB) in the REIT segment as of July shareholder GIC made the final payment pending - 88m- pursuant to the investment agreement signed on 1 October In 2016, within the framework of the refinancing process for the Company s syndicated loan, the 5.2. CORPORATE GOVERNANCE Gmp has adhered to the highest standards in Corporate Governance throughout its history as a Company. The Board of Directors of the Company comprise four representatives from the Montoro Alemán family and two representatives from GIC Singapore Sovereign Wealth Fund. The Board of Directors of Gmp has set up an Auditing Committee and Remuneration Committee, which meet at least twice a year. These consultative bodies are led by independent professionals.

91 Gmp ANNUAL REPORT BOARD OF DIRECTORS Gloria Alemán Chairwoman Francisco Montoro Vice President and CEO (1) Antonio Montoro Vice President Ricardo Montoro Vice President Christopher Morrish Director Sebastién Abascal Director Rafael Nebreda Secretary - Non Director AUDIT COMMITTEE Rafael Nebreda President (external) Ignacio Odogherty Member (external) Julio Díaz-Freijo Member (external) Sebastién Abascal Director EXECUTIVE COMMITTEE Francisco Montoro Vice President and CEO (1) Antonio Montoro Vice president Ricardo Montoro Vice president Xabier Barrondo Business Managing Director José Luis García de la Calle Corporate Managing Director APPOINTMENTS AND REMUNERATION COMMITTEE Fernando Vara President (external) Christopher Morrish Director Marta Montoro Member Rafael Nebreda Member (external) STEERING COMMITTEE Xabier Barrondo Business Managing Director José Luis García de la Calle Corporate Managing Director Diego Valiente Property Assets Director Juan García Technical Property Director and IN-PLANIA Silvia Llanes Director of Marketing, Communication, Quality and Innovation Jorge Calvo Financial and Technology Director Antonio Gil Legal Director José Luis García de la Calle HR Director Cristóbal Guerrero Director of Las Colinas Golf & Country Club (1) On 29 th March 2017, he was appointed Chairman of the Board of Directors. He will combine this new role with the functions he has been performing as CEO.

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93 Gmp ANNUAL REPORT CORPORATE SOCIAL RESPONSABILITY 6.1. Human capital management 6.2. Innovation and sustainability as strategic values 6.3. Integrated management of quality, the environment and health and safety in the workplace 6.4. Gmp Foundation Las Colinas Golf & Country Club

94 94 6 CORPORATE SOCIAL RESPONSABILITY 6.1. HUMAN CAPITAL MANAGEMENT Human capital is the key competitive advantage that organisations can leverage in order to create added value within a global market. Gmp is fully aware of the importance of attracting and retaining the best professionals and having motivated and committed employees. Ongoing improvement is only possible through employee engagement, as everyone working at the Company needs to feel and understand that their actions can help create and change reality. The Human Resources department at Gmp focuses its efforts on optimising information management and internal communications, clearly defining the role, responsibilities and objectives of each member of staff, as well as fostering professional development and a work-life balance among employees. Information and Internal Communication Management Improving the management of information and internal communication is one the main challenges at Gmp. Our management teams and HR department work on fostering and enhancing communication among all the members of the Company. Examples of initiatives that have been consolidated in 2016 are as follows: Fortnightly Company breakfasts, at which a group of six employees from different departments enjoy an informal breakfast with the Business and Corporate Managing Directors in order to strengthen the relationship between participants and share initiatives, action plans, concerns and proposals for improvements. Barometer briefings, at which the Business Managing Director and Managers of Assets, Marketing, Communication, Quality and Innovation, IN-PLANIA and Las Colinas Golf & Country Club gauge monthly progress towards attaining objectives and share this information with their teams by representing the advances made graphically on charts or barometers designed for this purpose. In addition, the reasons for any deviations from targets are analysed and improvement initiatives and action plans are proposed. Presentations to all members of the organisation about the main projects being rolled out, successes achieved, acquisitions carried out, results of the operations and future projects. These presentations improve interdepartmental communication and help ensure that all employees are informed about the Company s strategy and are actively involved in meeting its objectives. Gmp conducts a three-year internal insight survey to find out the interests, concerns and ratings of the members of the organisation with regard to aspects relating to different areas in the Company. The findings for 2015 showed an overall satisfaction level of 80 out of 100 and the levels of motivation, employee engagement and identification with the strategic values and principles of Gmp were particularly high.

95 Gmp ANNUAL REPORT Training and professional development For Gmp it is essential to identify and retain talent. In this respect, training is a key pillar in talent management. Seeking to support change and reinforce the Company s strategy, every year Gmp draws up a training plan with the aim of delivering value to the Company through professional development of staff members. The training plan aims to enhance employee skills, optimise efficiency and leverage knowledge acquired at the conferences and courses programmed. During 2016, over 20 training actions have been implemented to improve social skills, IT, languages and the technical aspects pertaining to each post. In addition, in coordination with Gmp INnova, the Creativity in Business Project, a creative review of innovative products and services, has been developed. During this initiative, two groups of employees from different departments learnt and put into practice techniques in order to empower creative thought, aiming to generate innovation understood as the creation of new products, services or procedures that deliver added value. Both groups worked on practical cases with specific objectives set by the Company Management, with very positive results. The Human Resources department updates job descriptions annually, adapting them to the changes that take place over each financial year. It works on identifying opportunities, analysing areas for improvement and developing skills that encourage personal and professional growth. The Annual Training Plan 2016, continued implementing the talent development programme started in 2014 and targeted at the key Company profiles. This will be rolled out over 2-3 years and is based on employee training, development and retention via specific training actions that help improve staff skills and provide the necessary tools to address the new challenges Gmp faces. Equal opportunities and non-discrimination Human capital management at Gmp is based strictly on professional criteria and ensures that no employee is discriminated against for reasons of race, religion or creed, political and trades union beliefs, nationality, language, sex, marital status, age or disability. In this area, Gmp holds an agreement with the PRODIS Foundation to promote the inclusion of young people with intellectual disability in society and in the workplace and foster the development of social and work skills. Gmp has three employees with different abilities on its staff. For years Gmp has strived to promote the inclusion of disabled people in the workplace. The good will and awareness of our staff help ensure that the integration of disabled workers is a success in 100% of cases.

96 96 6 CORPORATE SOCIAL RESPONSABILITY 6.2. INNOVATION AND SUSTAINABILITY AS STRATEGIC VALUES Innovation Innovation, as a strategic value aimed at anticipating market trends, has been part of Gmp s DNA since its inception. A real estate pioneer in Spain in developing Business Parks since the 1990s, the Company stood out for its promotion of turnkey projects at the beginning of the 2000s. In fact, at the time Parque Norte was the largest urban business park in Madrid and the first business city project to combine state-of-the-art technology with a prime location. In 2009, Gmp was the first property-owning real estate group in Spain to be awarded triple AENOR certification for its Integrated Management System for Quality, the Environment and Health and Safety in the Workplace. In the first quarter of 2015, it has renewed said certification up to Today, it continues to maintain its position as the only property group in the Spanish market to hold this distinction. Since 2011 the Company has implemented an initiative to promote innovation among its employees: Gmp INnova. This tool drives innovation at all professional levels; encouraging the creation of practical new ideas to improve products, services, processes or business approaches. Gmp INnova maintains fluid communication channels with all employees by inviting them to design and propose results driven innovation projects. It sets out an action framework whereby each innovator has to supply proof of the practical benefits of applying the idea in question. By the end of 2016, Gmp INnova had received more than 180 projects since its launch, out of which 48% were approved and 64% implemented, leading to quantifiable improvements. In this respect, over 2016 it is worth highlighting the technological innovation introduced at Las Colinas Golf & Country Club which has received a high rating from customers. This entails an innovative communication system with players on the golf course who use a buggy to go around the course, via the introduction of technological advances in Buggies on the golf course at Las Colinas Golf & Country Club

97 Gmp ANNUAL REPORT the digital scorecards. This permits monitoring to improve response in the event of an incident during the round, such as changing buggy if the battery runs low, even before the customer notices, as well as maintaining direct communication with players and golf staff via messages on the buggy screen. This innovation has significantly improved the play times and enhanced enjoyment for players. In addition, Gmp was a pioneer at the end of 2015 in the production and use of Oculus Rift technology for commercial purposes at the buildings Castellana 81 and 77. In 2016 it created a new virtual reality solution for its Oxxeo project, including the latest advances of this technology. As regards innovation applied to buildings, it is worth highlighting the innovative design of the new facade of the building Castellana 77, where full renovation work will be completed by May 2017 and which will become a landmark in the urban landscape of Madrid. Apart from the aesthetic achievement of the architectural design of the facade, the building also enhances efficiency and sustainability by incorporating slats that protect it from direct sunlight. The option of these distinctive slats being lit up at night, gives Castellana 77 greater visibility, making it stand out aesthetically from its surroundings. Finally, at the end of 2016 Gmp set in motion the WELL certification process for its project Oxxeo in Las Tablas, making it the first to register for this certification in Madrid in the category Core & Shell. At the end of 2016 Gmp created the role of Head of Digital Transformation in a clear strategic bid to incorporate the latest advances in digital technology in our portfolio and identify the cutting-edge trends that enable us to maximise the comfort and wellbeing of our clients.

98 98 6 CORPORATE SOCIAL RESPONSABILITY Sustainability In its Business Plan, Gmp set down the objective of maximising the sustainability of its office buildings. Here the term sustainability is understood in a broad sense, encompassing respect for the environment, the economic viability of buildings and comfort of its occupants. This includes the specific goal of achieving LEED certification for office buildings managed in the Company s historical portfolio, as well as for buildings being renovated that are already part of our portfolio or new acquisitions. Awarded by the US Green Building Council (USGBC), LEED certification is one of the most prestigious building sustainability rating systems at an international level. This ambitious project was set in motion at the end of 2013 and has led to a multitude of actions at buildings, such as implementing water and energy saving measures, the optimisation of the office environment, creating parking spaces for efficient vehicles, carpool vehicles and bicycles, as well as adopting specific measures regarding the materials used and waste management for all the improvement and renovation work at our properties. In 2016, five buildings and a business park from Gmp s portfolio -Génova 27, Iberia Mart I and II, Luchana 23, Hermosilla 3 and Parque Nortewere awarded Gold LEED certification in the Existing Building category. The building Eloy Gonzalo 10, acquired in 2014 and on which renovation work finished in September 2015, completed the Gold LEED certification process for Core & Shell in the first third of Moreover, the building Condesa de Venadito 1 started LEED certification in the category Existing Building, aiming to obtain it in the fourth quarter of As regards the properties undergoing renovation, Castellana 77 holds Gold LEED pre-certification for Core & Shell and Oxxeo, the new office building development in Las Tablas has been awarded Platinum LEED pre-certification for Core & Shell. At the time of writing this report, the building Castellana 81 had obtained Platinum LEED certification. It is the first and only office building on the Paseo de la Castellana to be awarded the highest level of sustainable building LEED certification In addition, aligned with Gmp s commitment to reach the maximum levels of comfort for users of its buildings, the Company has initiated DIGA (Hallmark of Accessibility Level) and WELL certification processes at the buildings Castellana 81, Castellana 77 and Oxxeo. The former is awarded by the Shangri La Foundation and guarantees full accessibility to the buildings for disabled people, senior citizens and pregnant women. In this regard, in the second half of 2017, Castellana 81 will become the first office building in Spain to hold the highest level of DIGA certification. WELL certification is the first international process to focus solely on human health and wellbeing at buildings.

99 Gmp ANNUAL REPORT INTEGRATED MANAGEMENT SYSTEM FOR QUALITY, THE ENVIRONMENT AND HEALTH AND SAFETY INTHE WORKPLACE The Integrated Management System for Quality, the Environment, Health and Safety in the Workplace certified every year by AENOR, pursuant to Standards UNE-EN-ISO 9001:2008 Quality Management Systems, UNE-EN-ISO 14001:2004 Environment Management Systems and OHSAS 18001:2007 Health and Safety in the Workplace, demonstrates Gmp s commitment to ongoing improvement as a strategic value and management approach by providing both the human and material resources needed and ensuring: Compliance with the legal requirements and standards, as well as those required by the client, measuring satisfaction levels in this area periodically. Taking the right measures to prevent damage to or the deterioration of the health of employees and clients by managing a department specialising in Risk Prevention in the Workplace, which integrates staff health and safety management pursuant to all applicable legal requirements and to any other standards that help avoid health and safety risks for all those in contact with Gmp. Promoting the development and wellbeing of the human team. Improving productivity and competitiveness. Fostering and promoting sustainable environmental management among employees, clients and suppliers. Preventing pollution and promoting the positive impact of the Company s activities on the environment. Gmp is the only Spanish real estate company to hold triple AENOR certification for an Integrated Management System for Quality, the Environment and Health and Safety in the Workplace. In 2016, Gmp initiated the process of adapting the Management System for Quality and the Environment to the new versions of the Standards ISO 9001:2015 and ISO 14001:2015. This is expected to be completed in 2017, with a view to renewing certification in early 2018, in compliance with the new regulations. Gmp s integrated policy, a pillar of the Integrated System, establishes that Environmental Management, Quality and Risk Prevention in the Workplace are the responsibility of each and every person in the Company, and should be included in any activity that employees carry out or order and in all decisions they take. Our integrated policy can be consulted on the Company s website at The Integrated Management System for Quality, the Environment and Health and Safety in the Workplace, provides the right channels and information and communication processes so that all Gmp employees are aware of, share and comply with the system, integrated policy and the Company s objectives. ER-0313/2009 UNE-EN-ISO 9001:2008 Quality Management Systems SST-0083/2009 OHSAS 18001:2007 Management Systems for Health and Safety at Work. GA-2009/0184 UNE-EN-ISO 14001:2004 Environmental Management Systems

100 100 6 CORPORATE SOCIAL RESPONSABILITY Quality management Gmp s office buildings are managed daily by a team of highly committed and customer-driven Gmp professionals: The Client Manager liaises directly between clients and Gmp. The Facility Manager at each building or business park serves as a direct and personalised communication channel in order to provide effective solutions to requests made by companies located on site. This role is in charge of managing all the work teams at the office block: surveillance and security, hostesses, maintenance staff and cleaning staff. In line with its quality policy, Gmp conducts client satisfaction surveys every year. The overall rating awarded over the years indicates a high level of satisfaction. The average score over the last 5 years is 4.1. Our clients see Gmp as a serious, professional, responsible Company, committed to ongoing improvement. Our Facility Managers receive a particularly high rating, scoring 4.6 out of 5 in 2016; based on their availability, efficiency in resolving incidents, communication skills and agreeableness; making everyday life better for our clients. Installing a new emergency staircase at Génova 27. Full refurbishment of the toilets at Parque Norte. The renovation of the façade and car park plus replacing the windows at Condesa de Venadito 1. Full refurbishment of the main lobby at 23. Renovation of the facade and access ramps to the car park at Luchana 23. Replacing conventional lighting with LED lighting and installing presence detectors on the staircases at Iberia Mart I and II. Installing new access turnstiles at Iberia Mart I and II. Replacing cold water pipes for sanitary use at Barajas 1. Extending the range of added value services delivered to clients such as the physiotherapy service at Parque Norte, rental of meeting rooms at Luchana 23 and ecological vehicle wash at Iberia Mart I and II. In compliance with Gmp s quality standards, we implement conservation, maintenance and improvement plans and actions yearly. The investment required is met by the Company in full. The quality improvements implemented in 2016 include the following: Completing the process to replace windows at Iberia Mart I and II which began in Full renovation of the main and floor lobbies and toilets at Génova 27.

101 Gmp ANNUAL REPORT Environmental management Gmp, mindful of its responsibility to protect the environment and rational use of natural resources has applied, since 2009, an Environmental Management System compliant with standard UNE- EN-ISO 14001:2004 at its office buildings and business parks. This system focuses on: Fostering and promoting sustainable environmental management among workers, clients and providers. Preventing pollution and minimising the impact of the Company s activities on the environment. Maximising the wellbeing of occupants of its buildings. All buildings are subjected to stringent monitoring of energy use and gas emissions. In 2016 energy consumption savings of 4.8% in electricity, 1.2% in gas natural and 6.1% have been achieved, in comparison to the previous year. All buildings are equipped with a management system for waste generated by clients -paper, packaging and organic waste- as well as for waste generated by day-to-day activity in the building; WEEE, fluorescent tubes, oil, etc Moreover, properties are equipped with management systems to monitor gas emissions, waste, noise pollution and optimise the use of natural resources and raw materials. Evolution of energy consumption at Gmp buildings 5,501 KWh -4.8% 5,236 KWh 3,975 KWh -1.2% 3,929 KWh 94 m 3-6.1% 86 m Evolution of electricity consumption (Thousands of kwh) Evolution national gas consumption (Thousands of kwh) Evolution of water consumption (Thousands m3)

102 102 6 CORPORATE SOCIAL RESPONSABILITY Every year, environmental improvement strategies and actions are planned, prioritised and implemented at the buildings owned by Gmp. In 2016 the actions implemented include: Renewing the facade at Condesa de Venadito 1 by replacing all the windows. This improves the comfort of occupants in the building, as well as optimizing the HVAC system by lowering electricity and natural gas consumption. Installing LED lighting at the properties refurbished during This helps minimize the tenant s electricity consumption generating the corresponding savings, reducing CO2 emissions and decreasing dangerous waste by using mercury-free elements. Replacing conventional halogen lighting for LED lighting at the toilets in Barajas 1 and on the emergency staircases at Iberia Mart I and II. This lighting system, which uses mercury-free technology, generates savings in electricity consumption, reduces CO 2 emissions and avoids the emission of infra-red or ultra-violet radiation. Installing more efficient water flushing systems for the toilets in Génova 27 and Parque Norte, with automatic flush and lower consumption urinal systems and automatic taps. Condesa de Venadito 1

103 Gmp ANNUAL REPORT Risk prevention and Health and Safety in the Workplace Gmp strives to guarantee the right conditions for health and safety in the workplace. This commitment is demonstrated by applying a management system for risk prevention in the workplace certified pursuant to Standard OHSAS 18001:2007 Management Systems for Health and Safety in the Workplace. Over the last financial year Gmp set in motion a range of actions in this field to benefit clients, providers and employees including the following: Reviewing the Self-Protection Plans for buildings that are not legally obliged to have them, based on their specific features. Training course on the use of defibrillators for all Facility Managers at our properties. Training course on road safety for Gmp employees who travel by car between the different work centres under development as part of their daily routine. Practical fire protection training course for new staff at the Company. Maintaining evacuation times for occupants of buildings in emergency drills within the recommended limits. Renewing and improving the general protection measures for several buildings such as life lines, handrails Evolution of evacuation and drill times at Gmp buildings Evacuation time (min) Drill times (min)

104 104 Moment at the Special Music Recital sponsored by the Gmp Foundation 6.4. Gmp Foundation One of the main objectives of the Gmp Foundation is to develop actions focused on direct support, through economic or in-kind donations, to nonprofit institutions that need resources to improve the lives of people with Cognitive Disabilities and/ or Acquired Brain Injury (ABI) in Spain. In this respect, during 2016 a number of milestones that position the organization as a leader in accomplishing social goals have been reached. Over these twelve months, for instance, it supported around a hundred social bodies, benefiting in a direct way more than 5,400 people through 15 projects. Moreover, in 2016, the Gmp Foundation received five awards, some of special importance, such as the Corresponsables Award in the SMEs category or the Trébol Prize for Solidary from Down España.

105 Gmp ANNUAL REPORT Key actions implemented by the Gmp Foundation in 2016: Financial support for the project Genetic Study of People with Intellectual Disability and Epilepsy: Impact on their Treatment and Quality of Life, signed by the INCE Foundation, Neuroscience Initiative. Director by An-tonio Gil-Nagel, neurologist and director the epilepsy programme at the Hospital Ruber Internacional. Sponsorship of the Music Recital for the Prodis Foundation, for the eighth year running, supporting projects focused on social and labour market integration of people with intellectual disability. Running the 7th edition of the training course Planning, Fundraising and Communications for non-profit organisations in professionals from 46 intellectual disability or acquired brain injury associations from across Spain took part. The course was organised by the Gmp Foundation, in collaboration with Plena Inclusion Madrid and the Spanish Fundraising Association. It aimed to strengthen the skills of members of nonprofit organisations to make them more efficient and effective in fulfilling their mission. Sponsorship for the fifth year running of the 6th Down Syndrome Foundation Race in Madrid, in which around 5,000 people took part to support the Leisure and Sport programme for over 500 people with intellectual disability. Moreover, in 2016 too, the Gmp Foundation sponsored the 1st Down Solidary Duathlon in Madrid, in which around 1,000 people participated. Renewal of free lease of office space at Gmp s building, Iberia Mart, for the headquarters of the Spanish Brain Injury Federation -FEDACE-. Participation in events to mark National ABI Day. In the framework of the Spanish Platform for Acquired Brain Injury, National ABI Day was commemorated on 26 October. On this occasion, in collaboration with the Atlético de Madrid Foundation, a communication strategy was rolled out on social media, with the help of the Atlético de Madrid players Koke and Saúl, to transmit the reality of people living with ABI to a large number of users. The day also included a visit by Carlos Izquierdo, Regional Minister for Social and Family Policy for Madrid, to one of the centres involved in the Platform, where he was received by the director of the Gmp Foundation among others. I Down Fundraising Duathlon sponsored by the Gmp Foundation

106 106 6 CORPORATE SOCIAL RESPONSABILITY Holding the 7 th Fundraising Magic Festival in Murcia, Grandes Ilusiones. This year the festival managed to raise the highest figure in its history, 52,100 euros. These funds were invested in creating the first open classroom following ABA methodology (the only method recognised by the World Health Organisation) for children with autism in a grant-maintained school linked to the ABAMUR association. Moreover, this year, all the galas were sold out for the first time ever, which demonstrates the popularity the festival has garnered in Murcia. Extending the framework agreement between the Gmp Foundation and Plena Inclusión Madrid for a year to strengthen collaboration, with the aim of providing early treatment for children aged 0 to 6 with intellectual disability or at risk of developing such disability in families with low economic resources. Leasing meeting rooms in Gmp buildings free of charge to 32 social organisations in order to organise 150 events, training days or work meetings, attended by a total of around 4,000 people. Support for families with low income in the town of San Miguel de Salinas with a family member with intellectual disability through donations. The Gmp Foundation, Las Colinas Golf & Country Club and the Town Hall of San Miguel de Salinas, Alicante all collaborated on this initiative. Sponsorship of 2017 Solidarity Calendar for AS- SIDO Murcia. This calendar, featuring persons with intellectual disability of all ages, aims to show the day-to-day life of this group of people and their families. The Spanish National Ballet Company, directed by Antonio Najarro, offered a one-off performance at the Teatros del Canal de Madrid of the show Alento, as part of the fundraising gala organized by the Gmp Foundation, which dedicated 100% of ticket sales to DOWN ESPAÑA and its initiative Emociones, focused on working on controlling and leveraging the feelings of people with Down syndrome. Artists, volunteers and members of the organizing committee for the 7th International Fundraising Magic Festival in Murcia which raised 52,100

107 Gmp ANNUAL REPORT Joint rehearsal of young people with Down syndrome and the Spanish National Ballet, before the Charity Gala Performance Alento Holding the 16th Gmp Foundation Company Paddle Tennis Tournament. The event raised over 44,500 to fund the #ElProyectoDeMiVida, run by the Polibea Foundation, a revolutionary rehabilitation programme for people with ABI where users decide their own road map for their recovery. 200 players from 40 companies from different sectors took part in the tournament. The independent living and social and labour market integration app for people with intellectual disability SOY CAPPAZ developed by the Gmp Foundation and Mapfre Foundation became available from 2016 in America, Europe and Asia, driving exponential growth in terms of use and leverage. During 2016, the Gmp Foundation was awarded five accolades: Autelsi Prize for Best Social Engagement Project for the app SOY CAPPAZ; Assido Award for Integration; Supercuidadores Prize in the category of Foundations, Associations and Third-Party Sector; also for SOY CAPPAZ, the Corresponsables Award in the SMEs category and, finally, the Trébol Prize for Solidarity from DOWN ESPAÑA.

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109 Gmp ANNUAL REPORT AUDIT REPORT AND FINANCIAL STATEMENTS Titán 4

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111 Note: Audit report taken from the annual accounts for 2016.