2 nd quarter 2012 Oslo 16 July 2012
ANNOUNCEMENT 16 JULY 2012 New agreements confirms good market activity Lysaker torg 35 Finnestadveien 44, Stavanger Uno-X Energi enters new lease at Lysaker for Letter of intent signed with Total E&P Norge approx. 2 700 square meters The parties are committed to find a solution Five year lease at market terms where the existing building is extended by approx. 3 500 square meters About one third of total office space let, when existing lease expires in 2013 The extended space will have a lease duration of 15 years Current lease with Total runs until 31.12.2021 1
2Q 2012 PRESENTATION Agenda Highlights Olav Line Financial update Svein Hov Skjelle Markets and operations Olav Line Closing remarks Olav Line Q&A session
HIGHLIGHTS 2Q 2012 Letting and good project execution are key priorities Stable operations, although influenced by portfolio investment program Aker Brygge quality improvement underway Improved market outlook New leases signed at good terms • Average rental uplift of 7.0 per cent for new leases :: MASKINVEIEN 32, STAVANGER : NEW LEASE CONTRACT IN PLACE WITH 35 PER CENT UPLIFT FROM CURRENT RENT LEVEL :: Letting and good project execution are key priorities 3
2Q 2012 PRESENTATION Agenda Highlights Olav Line Financial update Svein Hov Skjelle Markets and operations Olav Line Closing remarks Olav Line Q&A session
FINANCIAL UPDATE Financial highlights 2 66 13 100 90 64 12 1.5 80 62 11 70 1 NOK per share 60 NOK million 60 10 % 50 % 0.5 58 9 40 56 0 30 8 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 54 20 -0.5 7 52 10 6 0 -1 50 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 -1.5 Net LTV Profit before tax and value adj. Value adjustments EPRA NAV excl. one-off effects Net LTV incl. vendor financing Net asset value (NAV) Profit before tax and value adj. 5
FINANCIAL UPDATE Income statement NOK million 2Q 2012 2Q 2011 1H 2012 1H 2011 2011 Gross rental income 228.5 252.5 475.6 506.2 1 020.7 Maintenance and property related cost -14.7 -16.7 -28.8 -31.2 -65.1 Other property costs -13.4 -8.3 -26.7 -16.3 -33.9 Administrative and group expenses -15.0 -16.9 -32.5 -33.7 -67.4 Operating result before value adjustments 185.3 210.6 387.6 425.0 854.3 Net gain/loss on value adjustments of investment properties 0.7 146.3 0.9 474.0 281.9 Net gain on disposals - 1.0 2.4 1.0 1.0 Operating result 186.0 357.9 390.9 900.0 1 137.1 Net financial items excluding derivatives -114.7 -134.1 -241.5 -258.3 -518.2 Termination financial instruments and currency gain/loss -26.8 - -45.0 - 0.7 Change in market value of financial derivatives -93.4 -104.8 -46.8 36.4 -336.1 Net financial items including derivatives -234.9 -238.9 -333.3 -221.9 -853.6 Profit before income tax for continued operations -48.8 119.0 57.5 678.1 283.6 Income tax for continued operations (not payable) 13.9 7.6 -15.2 -57.1 -59.7 Profit for the period for continued operations -35.0 126.7 42.3 620.9 223.8 Profit for discontinued operations - - - - 4.8 Profit for the period -35.0 126.7 42.3 620.9 228.6 Earnings per share (NOK) -0.07 0.25 0.08 1.25 0.46 Profit before tax and value adjustments excl. one-off effects 70.6 89.5 146.1 179.7 349.9 6
FINANCIAL UPDATE Portfolio valuation by area Net yield for total portfolio is 6.0 per cent based on current payable rent External valuation conducted by DTZ RealKapital and Akershus Eiendom • New lease contracts have a positive influence on value adjustments, while reduced remaining duration for some properties on long-term contracts and minor yield expansion on a few less attractive properties have a slightly negative effect • Positive fair value adjustment of NOK 0.7 million (0.0 per cent) Market rent estimated to be 7.9 per cent higher than current payable rents (1Q: 5.5 per cent) Valuation Gross rent per year EPRA 1) Space Net Gross Total Duration yield 2) Area vacancy vacancy market rent space(m²) (years) fully let 3) (%) (%) (%) NOK mill. NOK/m² NOK mill. NOK/m² CBD 88 637 1.5 6.8 4.0 4 209.8 47 495 264.7 2 986 5.9 305.8 Skøyen 86 356 3.0 1.7 5.7 2 394.5 27 728 168.2 1 947 6.6 157.0 Oslo Nydalen 109 155 16.0 19.3 6.5 1 842.9 16 883 113.4 1 039 5.8 148.4 Other 102 188 0.0 0.0 5.6 2 081.3 20 367 154.7 1 514 7.0 148.2 Stavanger 114 764 1.7 1.7 3.8 2 024.1 17 637 152.5 1 329 7.1 171.2 Running operations 501 099 4.7 6.1 4.9 12 552.5 25 050 853.4 1 703 6.4 930.5 Development projects 54 456 45.4 43.4 7.4 1 931.6 35 471 70.0 2 796 3.4 213.9 Land development - - - - 103.7 - - - - - Total office portfolio 555 555 8.9 12.9 5.1 14 587.8 26 258 923.5 1 662 6.0 1 144.4 1) Market rent of vacant space divided by market rent of the whole portfolio 2) Based on gross rent and estimated operating expenses of 6 % 3) Estimated fully let gross market rent, average of Akershus Eiendom and DTZ RealKapital 7
FINANCIAL UPDATE Financial position Interest bearing debt and hedging 30.06.2012 31.03.2012 Total interest bearing debt NOK million 9 860.4 9 869.4 Property value (gross of deferred tax at acquisition) NOK million 14 621.8 14 522.8 Loan to value Per cent 67.4 68.0 Net Loan to value 1) Per cent 62.8 61.5 Net Loan to value including vendor financing 2) Per cent 58.7 57.4 Cash and cash equivalents NOK million 681.8 934.4 Vendor financing NOK million 600.0 600.0 Unused committed credit facilities (short and long term) NOK million 1 216.0 1 216.0 Average remaining duration, hedging Years 5.8 5.5 Average interest rate (including margin) Per cent 5.02 4.97 Average margin Per cent 1.22 1.22 Average remaining duration, borrowing Years 4.3 4.6 Hedging ratio (including vendor financing) Per cent 74.0 74.9 1) Gross interest bearing debt less cash divided by gross property value 2) Gross interest bearing debt less cash and vendor financing divided by gross property value 8
FINANCIAL UPDATE Loan to value within target range Net loan to value 1) Average interest rate 2) 85 5.8 80 5.6 75 5.4 70 % 5.2 65 5 Long-term target range for LTV ratio 60 4.8 55 50 4.6 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Net LTV incl. vendor financing Net LTV Interest rate 1) Gross interest bearing debt less cash divided by gross property value. Net LTV including vendor financing is also shown for 2012, 2011 and 4Q 2010 2) Comparable figures, excluding financing of Norgani Hotels AS historically 9
FINANCIAL UPDATE Balance sheet NOK million 30.06.2012 30.06.2011 31.12.2011 Investment properties 1) 14 412.6 15 414.9 13 561.3 Property, plant and equipment 44.2 33.2 40.1 Receivables 736.4 685.5 705.2 Deferred tax asset - 14.6 12.8 Cash and cash equivalents 681.8 88.6 15.6 Assets held for sale - - 1 873.4 Equity 5 105.5 5 556.0 5 164.1 Deferred tax 2.7 - - Long term interest bearing debt 9 815.5 8 844.2 8 798.6 Short term interest bearing debt 44.9 1 396.7 1 366.2 Market value financial derivatives (net) 693.5 269.3 645.2 Net other debt 212.6 170.5 234.3 Equity ratio (%) 32.2 34.2 31.8 Net asset value per share (NOK) 2) 10.24 11.14 10.36 Net asset value per share (NOK), EPRA 2) 11.61 11.92 11.67 1) Net of deferred tax at acquisition 2) Number of outstanding shares : 498 575 596 (30.06.2012), 489 596 832 (30.06.2011 and 31.12.2011) 10
FINANCIAL UPDATE Cash flow NOK million 2Q 2012 2Q 2011 1H 2012 1H 2011 2011 Cash flow from operating activities -38.7 -98.9 45.2 18.2 245.4 Cash received from sale of assets - 1.0 1 905.1 1.0 33.1 Purchase of tangible assets and subsidiaries -102.6 -67.7 -875.2 -105.3 -353.2 Cash flow from investment activities -102.6 -66.7 1 029.9 -104.3 -320.2 Net change in interest bearing debt -11.3 62.1 -308.9 -23.9 -108.2 Paid dividend -99.7 -49.9 -99.7 -49.9 -49.9 Other financing activities -0.3 - -0.3 - - Net cash flow from financing activities -111.3 12.3 -408.9 -73.7 -158.0 Net change in cash -252.6 -153.3 666.2 -159.8 -232.8 Net cash at end of period 681.8 88.6 681.8 88.6 15.6 300 200 NOK million Cash flow from operating 100 activities 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q -100 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 1) Figures for 2010 include the hotel business, -200 Norgani Hotels, which was sold in 4Q 2010 11
2Q 2012 PRESENTATION Agenda Highlights Olav Line Financial update Svein Hov Skjelle Markets and operations Olav Line Closing remarks Olav Line Q&A session
MARKETS AND OPERATIONS Operational highlights Start-up of portfolio investment program at Aker Brygge in 2Q 2012 Total space vacancy of 8.9 per cent, up from 8.4 per cent at the end of 1Q 2012 • Strategic vacancy pending upcoming renovation accounts for about 4.2 per cent, up from 3.7 per cent at 31.03.2012 High leasing activity in the second quarter • Healthy demand for centrally located properties of high quality with good access to public transportation :: STORTINGSGATEN 6, OSLO : 14 new contracts, renewals or extensions RECENT LETTINGS SECURE FULL UTILIZATION AT ATTRACTIVE TERMS :: with total annual value of NOK 45.9 million • Estimated rental uplift of 7.0 per cent for new leases 13
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