Financial results H1 2018 EPP Interim Results 2018 1
Agenda 1 EPP at a glance and H1 2018 highlights 2 Polish macro update and EPP strategy 3 Financial highlights H1 2018 4 Operational highlights H1 2018 5 Acquisitions and developments 6 Office disposal update 7 Outlook EPP Interim Results 2018 2
1 EPP at a glance EPP Interim Results 2018 3
2018 Szczecin Lomza • One of the most Inowroclaw dominant retail Wloclawek landlords in Poland Poznan with nearly 700 000 m 2 Warsaw GLA Kalisz Lodz Bełchatow Jelenia Gora Wrocław Kielce Zamosc Czeladz Klodzko Krakow Zabrze Retail assets (19) Przemysl Retail development projects (2) EPP Interim Results 2018 4
2020 Power Park Olsztyn Szczecin Lomza • 1 million m 2 GLA Inowroclaw • 28 shopping centres Wloclawek Poznan • 40% of the population Warsaw within a 30 min drive Kalisz M1 Poznan Lodz M1 Radom Bełchatow Jelenia Gora Wrocław Kielce M1 Czestochowa Zamosc Power Park Opole Czeladz Klodzko Power Park Kielce M1 centres tranche 2 and 3 Krakow Zabrze Retail assets (20) M1 Bytom Przemysl M1 Tychy Retail development projects (1) EPP Interim Results 2018 5
EPP at a glance Portfolio growth and strategy executed IPO- Aug 2016 H1 2017 H1 2018 Total portfolio value ( EUR’m ) 1 210 1 623 2 067 Share of retail in portfolio 76% 74% 85% Number of shopping centres 9 13 18 Retail portfolio GLA (m 2 ) 303 338 402 637 638 815 1.04 1.23 1.37 Net asset value per share (EUR) 5.19 5.82 Distribution per share (EUR cents) LTV 56.4% 50.6% 50.9% EPP Interim Results 2018 6
H1 2018 Retail performance review GLA m 2 RTS OCR LFL NRI growth* g 444 360 15.1% +4.1% 11.3% Footfall Sales/m 2 Vacancy Walt by NOI 0.9% +1%^ 0%^ 4.64 *LFL NRI growth excludes, Galaxy and Outlet extensions ^Includes the impact of the Sunday trading ban that commenced in March 2018 EPP Interim Results 2018 7
H1 2018 Financial highlights Income statement H1 2017 vs H1 2018 Net property income p p y Distributable earnings Distributable earnings DPS per share S p € 48m € 5.82c € 66m + 45% + 32% + 12% ON TRACK TO DELIVER Balance sheet FY 2017 vs H1 2018 FULL YEAR DIVIDEND NAV 1 per share Total assets Total assets NAV per share LTV net LTV net GUIDANCE OF BETWEEN 50.9% € 2 320m € 1.37 11.6 – 11.8 EURO CENTS + 19% + 3.8% + 3.5% 1 Excluding deferred tax EPP Interim Results 2018 8
2 Poland’s macro update and EPP strategy EPP Interim Results 2018 9
Great potential for consumption and retail sales growth Average salary growth (PLN) Unemployment rate 12,0% 5 000 Average monthly salary in Poland 4 500 10,0% 4 000 3 500 8,0% Growth (y-o-y) 3 000 (PLN) 6,0% 2 500 2 000 4,0% 1 500 1 000 2,0% 500 2013 2014 2015 2016 2017 2018 (f) 2019 (f) 2020 (f) 0 Poland Germany EU28 2012 2013 2014 2015 2016 2017 Average monthly salary (PLN) Significant boost from consumer spending Average monthly salary (EUR) Consumer spending in Poland (EUR bn) Consumer confidence index in Poland (100=long-term average) 4 000 21,00% 20,90% Average monthly salary (EUR) 3 500 101,80 18,00% 350 102 293 284 274 3 000 300 263 15,00% 251 243 236 2 500 229 229 101 250 12,00% 11,21% 2 000 200 9,00% 100 1 500 150 6,00% 1 000 100 99 3,00% 500 50 0 0,00% 0 98 Poland Germany 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F Average monthly salary 2012-2017 growth #REF! Source: Oxford Economics, National Bank of Poland EPP Interim Results 2018 10
Why focus on retail in Poland? Limited new supply New supply of shopping centre stock (000s m 2 ) 743 • Exposure to nearly 40 million people 615 612 607 475 452 459 • Lack of high streets 443 425 399 Over 71% of retail spend occurs in shopping 253 250 • centres 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018F 2019F 2020F Decreasing prime yields • Shopping centres seen as destinations Prime retail yields in major regional Polish cities (%) Omni channel enhances in-store sales • 8,00% 7,50% 7,50% 7,00% 7,00% EPP yield 6,50% 6,00% 6,00% 6,00% 6.4% 6,00% 6,00% 5,60% 5,50% 5,25% 5,20% 5,00% 5,50% 5,00% 4,70% 4,70% 4,70% 4,60% 4,60% 5,00% 4,50% 4,60% 4,00% 2009 2010 2011 2012 2013 2014 2015 2016 2017 Poland Germany (Berlin) SOURCE: Savills EPP Interim Results 2018 11
3 Financial highlights EPP Interim Results 2018 12
Profit & loss EUR million HY 2018 HY 2017 Variance Net property income 66,2 45,5 20,7 45% 42% Other income / (expenses) (0,2) 0,4 (0,7) Administrative & selling expenses (6,7) (4,2) (2,6) EBITDA 59,2 41,8 17,4 NPI GROWTH EBITDA GROWTH Fair value gain on investment property 28,8 15,6 13,2 Share in fair value gain & profit of JVs 25,3 2,7 22,6 Finance income / (expenses) (15,5) (8,0) (7,5) 12 % Foreign exchange gains / (losses) 5,9 (2,7) 8,5 32% Current taxation (4,9) (1,5) (3,4) Deferred taxation (19,5) (8,4) (11,1) Net profit after taxes 79,4 39,6 39,8 DISTRIBUTABLE DPS EARNINGS GROWTH GROWTH Earnings adjustments (33,2) (6,6) (26,6) Antecendent dividend 2,1 3,7 (1,6) Distributable earnings 48,3 36,6 11,7 DPS (€ cents) 5,82 5,19 0,63 EPP Interim Results 2018 13
Balance sheet EUR million 30 Jun 2018 31 Dec 2017 Variance Investment property 2 067 1 656 411 50.9% 3.8% Investment in JVs 138 116 22 Financial assets 22 30 (8) Deferred tax asset 1 - 1 LTV NAV PER SHARE GROWTH Other assets 21 28 (6) Cash 70 123 (53) Total assets 2 320 1 952 368 2.38 % 4.3 years Equity 976 834 142 Borrowings 1 195 968 227 DEBT MATURITY Deferred tax liability 110 94 16 AVERAGE COST AUGUST 2018 OF DEBT Other liabilities 39 56 (18) (3.6 YEARS 30 JUNE 2018) Total equity and liabilities 2 320 1 952 368 NAV per share € 1,37 € 1,32 € 0,05 LTV (net) 50,9% 47,4% 3,5% EPP Interim Results 2018 14
Capital structure – liquidity secured Debt maturity profile as at 30 June 2018 Debt maturity profile as at 31 August 2018 (€m) (€m) 672 672 Average maturity: 3.6 years Average maturity: 4.3 years 425 195 185 150 100 80 11 11 0 0 2018 2019 2020 2021 2022 >2022 2018 2019 2020 2021 2022 >2022 EPP successfully refinanced the following loans in the last two months: • EUR 100m bridge to equity loan with EUR 102m (program up to EUR 200m) bonds issued to Polish financing institutions • EUR 150m senior loans for Galeria Echo and Opolska offices by the largest Polish bank PKO BP EPP Interim Results 2018 15
Capital structure - focus on LTV • LTV increased due to the acquisition of Tranche 1 of the M1 Reducing LTV portfolio • Factors driving LTV reduction LTV (%) 56,4% 55,4% • Active asset management continues to drive valuat ��� 50,9% of our properties 47,4% 45% • Portion of office sales proceeds will ��� utilised to reduce � LTV • Exploring releasing some equity from retail assets IPO FY FY H1 ������ -term 2016 2017 2018 target 16 EPP Interim Results 2018
4 Retail operational highlights EPP Interim Results 2018 17
H1 2018 Retail performance review GLA m 2 OCR RTS LFL NRI growth* g 444 360 +4.1% 11.3 % 15.1 % Sales/m 2^ Vacancy Footfall Walt by NOI 0.9% +1%^ 0%^ 4.64 *LFL NRI growth excludes Galaxy and Outlet extensions ^Includes the impact of the Sunday trading ban that commenced in March 2018 EPP Interim Results 2018 18
Sunday trading Average footfall change Consumer shift already seen from Sundays to Saturdays, Mondays and Fridays 300 000 • Saturdays – up to 12% increase + 12% + 20% • Mondays – up to 12% increase + 8% 250 000 + 0% + + 4% • Fridays – up to 8% increase + 12% + 3% 7% 200 000 - 20% 150 000 - 40% - 48% 100 000 - 60% 50 000 - 80% 0 - 100% Mon Tue Wed Thu Fri Sat Sun Mar-Jun 2017 Mar-Jun 2018 EPP Interim Results 2018 19
Featured project – Pasaz Grunwaldzki WROC ŁAW • Project highlights • Top LPP brands opened flagship stores • Currently in negotiations with another large brand • Rossman flagship store opened • Concept design of architectural changes completed and refurbishments of common areas in progress 48 352 GLA (m 2 ) 14.5% Rent to sales 4.8 years WAULT 99.1% Occupancy -2.4% Footfall growth 5.1 million Footfall H1 2018 -9.6% Turnover growth 5.7% Valuation yield EPP Interim Results 2018 20
Galaxy SZCZECIN Largest shopping & entertainment centre in Northwest Poland • 16% growth in footfall with the new extension • Extended area generated over EUR 14m of turnover, 53% increase not LFL • Postive like for like turnover • Multikino opened VR Multikino, only third of its kind in Poland • New food court designs completed GLA (m 2 ) 56 630 13.4% Rent to sales 7.1 years WAULT 99.6% Occupancy 16.1% Footfall growth 6.1 million Footfall H1 2018 +1% Turnover growth 5.9% Valuation yield EPP Interim Results 2018 21
Galeria Echo KIELCE • Largest fashion and entertainment offering in the region • Extension of the Food & Beverage offering • New fitness operator 71 830 GLA (m 2 ) 10.4% Rent to sales 4.2 years WAULT 97% Occupancy -3.9% Footfall growth 4.5 million Footfall H1 2018 +2.4% Turnover growth 5.9% Valuation yield EPP Interim Results 2018 22
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