Inmobiliaria Colonial : Project Alpha-III

Madrid, 18 January 2018

Colonial started 2018 with the execution of the Alpha-III Project, which includes the acquisition of five assets (four in Madrid and one in Barcelona), with an expected total investment of €480 million. Colonial will develop more than 110,000 sq m of office space in the south of Madrid and has acquired in addition two Grade A assets in new business areas of the capital. Additionally, the company has acquired an asset located in the CBD of Barcelona, where a total refurbishment will be carried out in order to boost co-working initiatives.

MADRID - City CenterMADRIDBARCELONA

Méndez Álvaro

Colonial has bet on the south of Madrid with the acquisition of more than 110,000 sq m of office space aboveground. The two acquired plots of land are located in the Méndez Álvaro market, just south of the Madrid CBD, very close to Atocha station and are ready for urban development.

The area counts on excellent communication links for public as well as private transport, with easy access on foot from the centre of Madrid. There are also various train and bus lines as well as quick access from the M-30. The Méndez Álvaro market has grown exponentially in the last years, with the establishment of various multinationals such as Repsol, Amazon, Ericsson and Mahou, among others.

Colonial plans to develop two office complexes in Méndez Álvaro:

1. Mendez Álvaro Campus

This plot of 90,000 sq m of surface area aboveground for office and/or residential use will enable the development of a new unique campus in the centre of the capital, incorporating the latest trends in the real estate market in the areas of energy efficiency, space distribution, use combinations and Proptech initiatives. Construction is supposed to start at the end of 2019 and the total cost of the project, once completed, will be in a range between €3,000 and €3,200/sq m (including the acquisition cost of the land).

2. Méndez Álvaro - 2

This plot of 20,000 sq m of surface area aboveground for office use will allow for the development of a unique high quality office building just a few metres from Atocha station. The start of construction is expected in the next months and the total cost of the project, once completed, will be around €3,375/sq m (including the acquisition cost of the land).

Mendez Álvaro Campus - first draft, project in analysis phase

3. EGEO

Building of 18,254 sq m aboveground placed in phase 1 of Campo de las Naciones, Madrid. The asset has an unbeatable location, with easy access to public transport to the CBD and airport. The acquisition will enable Colonial to incorporate a high quality building to its portfolio, with floors of 3,000 sq m divisible into up to 8 modules, allowing for higher flexibility for renting. Currently, it is 97% occupied by various tenants and has high reversionary potential. The acquisition cost is €4,300/sq m.

4. Arturo Soria

Colonial has incorporated a high quality 8,663 sq m asset in Madrid, located in the Arturo Soria area in the

North of Madrid. The asset stands out due to its location with excellent communication links, positioning the building in an optimum location to capture tenants who want to be located in the North of Madrid. It also counts on easy accesses of public transport to the city centre and airport. It is currently 98% occupied by various tenants and it has high reversionary potential. The acquisition cost is €3,300/sq m, a very attractive entry price that enables high potential for value generation for the Company's shareholders.

5. Gala Placidia

This building has an unbeatable location in the Barcelona CBD, just in front of the Gracia metro station and a few meters away from Colonial's headquarters. The asset has 4,312 sq m of surface area above ground with floors of up to 1,600 sq m and large terraces, a unique characteristics in the centre of Barcelona. Colonial will carry out a complete refurbishment of the building with the objective to boost co-working initiatives and increase the cash flow generation as well as the value creation potential. Accordingly, the building will be fully rented to

Utopic_US, a benchmark in the management of flexible spaces and co-working contents in Spain, recently acquired by Colonial. The total price of the project once completed will be below €4,000/sq m.

Gala Placidia building in the centre of Barcelona

The Alpha III project is within the framework of the organic acquisitions program of the Colonial Group with an annual volume of €300-400 million in property investments. All of the assets acquired offer substantial potential for real estate value creation based on (1) the property transformation of the buildings into high quality products and (2) the location in market segments with solid fundamentals that capture the high end of the rental prices.

"All of the acquisitions were carried out off-market, and consequently under very attractive terms, proving the Colonial Group's capacity to identify and capture opportunities for real estate value creation", said Pere

Viñolas, Colonial's CEO.

The purchaser has been advised by Jones Lang Lasalle (JLL) in the Mendez Alvaro transaction and Cushman & Wakefield in the acquisition of Gala Placidia. Besides, Colonial has been advised on legal side by Roca Junyent and Ramón y Cajal.

About Colonial

The Colonial Group is a SOCIMI specialized in prime offices, and which is listed on the Spanish stock exchange's benchmark index, the IBEX 35. It is present in the main business areas of Barcelona, Madrid and Paris with a property portfolio of more than one million square meters, and assets under management of more than €8,600 million.

For more information: Román y Asociados 93 4142340 Xavier Ribó -x.ribo@romanyasociados.es+34 669 486 003 Víctor Palacio -v.palacio@romanyasociados.es+34 677 782 370 María Martínez -maria.martínez@romanyasociados.es