PRE- CLOSE 2020
PRE-CLOSE Presenters 2020 Tomasz Trzósło Michał Świerczyński Jacek Bagiński Chief Executive Member of the Board Chief Financial Officer Asset Management Officer Pre-close 2020 | Presenters | (2)
Agenda Pre-close 2020 Business and COVID-19 update Operational update Financial update Acquisitions update Outlook & guidance Pre-close 2020 | Agenda | (3)
Business and COVID-19 update TOMASZ TRZÓSŁO CEO Pre-close 2020 | Business and COVID-19 update | (4)
Business actions taken Limiting the impact of COVID-19 and taking a proactive approach Short term / immediate actions: • Liquidity focus • Cost saving programme (completed) • Heavy tenant renegotiations programme (mostly completed) • Use of available governmental support programmes • Significant involvement in government discussions & new retail landlord organisations (Group 305 and Polish Council of Shopping Centres) Pre-close 2020 | Business and COVID-19 update | (5)
Europe – COVID-19 map Poland one of the lowest number of cases in Europe 58.9 12.6 25.3 305 49.6 32.5 192.1 60.8 10.5 Poland case numbers are falling in line with 1.5 rest of the Europe 17.4 31.3 160.7 4.1 24.2 238.7 39.3 246.7 As of 23 June 2020 Reported in thousands Pre-close 2020 | Business and COVID-19 update | (6)
Defrosting the Polish economy Swift return to normal Stage 2 Lockdown Stage 1 Stage 3 Stage 4 From 4 May 14 March From 20 April From 18 May From 30 May Malls open POLAND Food courts Entertainment & fitness opened on 6 June Malls open Lockdown 20 April From 22 March GERMANY Lockdown Malls open from 16 March 15 June ROMANIA Malls open Lockdown 28 May from 14 March SPAIN Pre-close 2020 | Business and COVID-19 update | (7)
COVID-19 Quick economic response UPDATE Anti-crises shield – 31 March 2020 Financial support programme amounting to € 47 billion and consisting of 5 pillars I. Employee job protection II. Business support Key objectives of the Nearly € 70 billion of III. Health care support programmes stimulus IV. Financial system support I. Support jobs V. Public investments II. Ensure business liquidity Stimulus amounted to Financial shield – 8 April 2020 III. Promote economic approximately 15% of Aimed primarily at companies amounting activity Polish GDP to € 22 billion I. Micro companies II. SMEs III. Large companies Pre-close 2020 | Business and COVID-19 update | (8)
-1.3 European and UK macro outlook GDP growth forecast 2020 – 2021 (%) -0.9 -0.4 -0.7% - 0,6 - 0,9 -0.9 -0.1 EU15 average -0.3 -0.3 0.2 -0.6 -0.1 -0.3 -0.4 -0.5 -0.9 -0.8 -0.6 -1.5 Source: European Commission forecasts -1.2 -0.5 -0.9 & Focus Economics Pre-close 2020 | Business and COVID-19 update | (9)
-1.3 European and UK macro outlook GDP growth forecast 2020 – 2021 (%) -0.9 -0.4 -0.1% - 0,6 - 0,9 -0.9 -0.1 Poland expected to be -0.3 -0.3 one of the least 0.2 -0.6 impacted economies in -0.1 the next 18 months -0.3 -0.4 -0.5 -0.9 -0.8 -0.6 -1.5 Source: European Commission forecasts -1.2 -0.5 -0.9 & Focus Economics Pre-close 2020 | Business and COVID-19 update | (10)
Shopping centre stock per Average density (GLA per 1000 residents): All countries 221 m² 1,000 inhabitants Western Europe 279 m² Eastern Europe 159 m² Poland 265 m² 700 35 Purchasing power per capita Density (m²/1000 residents) 600 30 (EUR/year × 1000) 500 25 400 20 Western Europe 279 m² 300 15 200 10 100 5 0 0 Density Purchasing power Source: Pre-close 2020 | Business and COVID-19 update | (11) JLL, Q4 2018; MBR, 2017
Easing of lockdown measures supports recovery of footfall Recovery phase COVID-19 Google Mobility Trends for Retail and Leisure Mobility compared to baseline pre-COVID-19 0 -10 -20 -30 -40 -50 -60 -70 -80 -90 -100 Weekly avarage: 30 March to 05 April Weekly avarage: 01 June to 07 June Source: Pre-close 2020 | Business and COVID-19 update | (12) Google COVID-19 Community Mobility Report
E-commerce in Poland – share of online trade decreased in May Share of e-commerce in total retail sales (%) 14 12 11,9 10 9,1 8 8,1 6 5,6 5,6 4 2 0 I 2020 II 2020 III 2020 IV 2020 V 2020 TOTAL retail sales 3.5% 7.3% - 9.0% -22.9% -7.7% (y-o-y , % ) fixed prices Source: Statistics Poland, June 2020 Pre-close 2020 | Business and COVID-19 update | (13)
Macro and retail environment summary Poland expected to remain resilient in recovery Poland avoided the worst by efficient early stage • restrictions implemented Poland now prepared to cope with COVID-19 • Poland expected to continue above average growth in • Europe However: Polish shopping centres will go through a period of • materially reduced revenues (lockdown and subsequent concessions) EPP strategy accordingly adjusted to support tenants in • 2020 and potentially beyond as necessary and build longer term relations with tenants in return Pre-close 2020 | Business and COVID-19 update | (14)
Operational update MICHAŁ SWIERCZYŃSKI Member of the Board Asset Management Pre-close 2020 | Operational update | (15)
EPP retail portfolio 2020 LITHUANIA Largest retail landlord in Poland by GLA Gdansk Hamburg SZCZECIN BELARUS LOMZA INOWROCLAW 25 1 WLOCLAWEK Berlin POZNAN POZNAN WARSAW DEVELOPMENT RETAIL ASSETS LODZ PROJECT GERMANY KALISZ RADOM BELCHATOW 900 000 WROCLAW Dresden JELENIA KIELCE CZESTOCHOWA ZAMOSC M 2 GLA GORA BYTOM KLODZKO ZABRZE CZELADZ KRAKOW Lviv Prague PRZEMYSL UKRAINE CZECH REPUBLIC Brno Pre-close 2020 | Operational update | (16) Munich
Footfall update 70% Weekly footfall since reopening of shopping centres on 4 May 2020 of pre-pandemic levels at June 2020 comparing to 2019 80% 70% 70% 64% 60% 60% 53% 53% 46% 50% 40% 30% 20% 10% 0% Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Footfall percentage 2020 vs 2019 Source: Pre-close 2020 | Operational update | (17) Company data
Tenant negotiations • Assessed on a case by case basis and update taking the following into consideration • Financial position • Government aid received • Historical performance • Discounts or deferrals considered with an aim of extending leases and reduced tenant incentives • No turnover only rentals and no new lease contracts will be considered, only annexes to existing agreements 93% GLA currently operational Pre-close 2020 | Operational update | (18)
Retail portfolio Operations nearing normality: summary June 2020 93% 4.2 WALE by GLA (years) GLA currently operational Expected to grow in the coming months with new leases signed 70% 96% Of pre-pandemic footfall Occupancy levels in June 2020 Pre-close 2020 | Operational update | (19)
Financial update JACEK BAGIŃSKI CFO Pre-close 2020 | Financial update | (20)
Operational costs reduction Limiting the impact of COVID-19 • Operational costs in properties reduced • Non-essential capital expenditures deferred • Temporary 20% reduction in payroll costs across the company since May 2020 • Looking for additional ways to optimise liquidity through the utilisation of government support programmes Pre-close 2020 | Financial update | (21)
Liquidity position Well capitalised Net LTV 56.7% • Cash on hand of € 170 million 55.0% 51.9% 50.0% 47.4% • Liquidity secured with retention of € 53 million dividend (H2 2019) and drawing of € 95 million corporate facilities IPO 2016 2017 2018 2019 • Limited debt maturities over the next 12 months Debt maturity profile € million • Strong support from a diversified group of 1000 as of 31 May 2020 lenders comprising of local, European and international financial institutions 800 • Received waivers regarding the majority of the 600 principal payments and testing of covenants 400 until December 2020 200 • Average LTV covenant levels of 67% and average DSCR was 1.4x 0 2020 2021 2022 2023 2024 2024> Pre-close 2020 | Financial update | (22)
Acquisitions update Pre-close 2020 | Acquisitions update | (23)
Metro Tranche 3 update Power Parks acquisition • Metro Tranche 3 will not close by end of June 2020 as originally expected • EPP signed an extension agreement with Chariot • EPP negotiating the revised transaction terms with Chariot and willing to close on the transaction in the next weeks • We will advise further on the deal once all details agreed with Chariot and the senior lenders consortium Pre-close 2020 | Acquisitions update | (24)
Outlook & guidance Pre-close 2020 | Outlook & guidance | (25)
2020 Outlook Successfully concluding remaining tenant agreements • Lay out the foundations to better position the company in a • post COVID-19 environment Conducting analysis and recommendations on asset • purchase and sales Further cost optimisation • Longer term strategy under preparation: Plan for 3–5 years under preparation • Focus on capital structure, existing asset base, and growth • of the company in post-COVID times Pre-close 2020 | Outlook & guidance | (26)
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