INTERIM FINANCIAL STATEMENT 1H 2018 Helgi S. Gunnarsson 16 th August - PowerPoint PPT Presentation

INTERIM FINANCIAL STATEMENT 1H 2018 Helgi S. Gunnarsson 16 th August 2018

OPERATIONS AND RESULTS - 1H 2018 OPERATIONAL INCOME OPERATIONAL RESULTS OPERATIONAL RESULTS 3,788 m.ISK. BEFORE ASSESSMENT CHANGE BEFORE ASSESSMENT LEASING INCOME 2,387 m.ISK. CHANGE / LEASING INCOME 3,509 m.ISK. ⇧ 14% ⇧ 15% 68% 2.000.000 1.800.000 Amounts in th. ISK. 1.600.000 1.400.000 1.200.000 1.000.000 800.000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 2018 Leigutekjur Rekstrarhagnaður af reglulegri starfsemi YIELD OF INVESTMENT REAL RETURN ON PROFIT AFTER TAX PROPERTIES EQUITY 1,492 m.ISK. ⇩ 1% 4,8% 8,5%

OPERATIONS AND RESULTS - 1H 2018 Cont. • Calculated ASSESSMENT CHANGES of investment properties for the period were 1,277 m.ISK. Assessment change in Q2 was negative as of higher property taxation. • INVESTMENT PROPERTIES at the end of the period were assessed at 101,936 m.ISK. and the equity ratio was 34% . INTEREST BEARING DEBTS were 61,396 m.ISK. at the end of the period • compared to 57,515 m.ISK. at end of the year 2017 . Leverage as a percentage of investment properties is 60% . INTEREST EXPENCES in the period were 1,205 m.ISK. compared to 1,033 • m.ISK. for the same period 2017. Total financial expenses were 1,816 m.ISK. compared to 1,435 m.ISK. for the same period 2017. NET CASH from operations amounted to 1,334 m .ISK. in the period. Net Cash • at the end of the period was 2,566 m.ISK.

DEVELOPEMENT OF OPERATIONAL COSTS (420.000) 25,0% 24,0% (380.000) OPERATING COSTS OF INVESTMENT PROPERTIES Amounths in th. ISK. 23,0% (340.000) Costs in line with plans. Good progress in expense Percentage of leasing income. 22,0% management. (300.000) 21,0% Sharp rise in public property valuation in recent years, which (260.000) directly increases property taxation. 20,0% (220.000) 19,0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (180.000) 18,0% 2015 2016 2017 2018 Rekstrark. fjárfestingareigna Hlutfall rekstrarkostnaðar (100.000) 10,00% (95.000) 9,00% ADMINISTRATIVE EXPENSES (90.000) Amounths in th. ISK. 8,00% (85.000) The company's management units are well prepared to Percentage of leasing income. 7,00% (80.000) receive the extensive and challenging property portfolio that 6,00% (75.000) accompanies FAST-2 ehf. and HTO ehf. 5,00% (70.000) Management costs are fully in line with the company's plans 4,00% (65.000) and objectives. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (60.000) 3,00% 2015 2016 2017 2018 Stjórnunarkostnaður Stjórnunark. hlutfall OBJECTIVES: 20% 5,5% PROPERTIES OPERATIONAL COSTS ADMINISTRATIVE COSTS

OPERATIONS AND PROSPECTS • Operation of the company is successful and in line with plans. The operating environment is Quarterly Overwiev 2Q 2018 1Q 2018 favourable for the company, and all operational units are successful. There is an extensive Leasing Revenues 1.776 1.733 increase in the number of guests in the Smáralind and Egilshöll Revenues, Operations in properties 141 138 • Management and operation of support services of the company’s „Property Operations" is flourishing and acquisition of the services is completed. Total Revenues 1.917 1.871 • Demand for leasing of commercial properties is good. Good work in progress to increase income and profitability. Emphasis is placed on leasing to public entities and strong occupants. Operational costs of investement -392 -390 properties • Rental spaces in Smáralind are now almost all leased. Leasing contracts were completed this Operational costs in properties -219 -211 summer for large leasing spaces that had been reserved for four international brands. Administrative expenses -92 -97 • Revenues increase in most units of the company is good. • Management of expenditure is in line with plans. Gross profit before assessment 1.214 1.173 changes • Restructuring in Smáralind is in the final phase and has been successful. The results can be visualised in increased number of guests and the occupants reactions. Assessment changes of investem. -232 1.509 • Taking into account the existing new contracts in Smáralind, the leasing ratio of the portfolio is properties now 97% . It should be pointed out that the increases in revenues will be fully effective in the Results from operations 982 2.682 coming months.

INVESTMENT PROPERTIES The Book Value of properties was 101,936 m.ISK. at the end of June 2018. • Investment in the company’s properties amounted to 3,910 m.ISK. in the period. • Most ASSETS ALLOCATION (m 2 ) extensive are the investments in Hafnartorg as investments in Smáralind, Egilshöll and Vesturvör 29. Verslunar- og þjónustuhúsnæði 14% Skrifstofu- og 30% 5% atvinnuhúsnæði Reginn purchased in the year Garðatorg 6 in the new town centre of Garðabær. Previously • Iðnaðar- og Reginn had Garðatorg 1,3 og 4. geymsluhúsnæði 19% Hótel During the year seven properties have been sold. These properties do neither meet future • Íþrótta-, mennta-og afþreyingarhúsnæði 32% plans nor the requirements for the nature and composition of the portfolio, and are profitable to sell. PURCHASE AGREEMENT for shares in FAST-1 slhf. subsidiaries was signed on May 18 th • 2018. The largest properties of the companies are Katrínartún 2 and Borgartún 8-16. In total, the property portfolio is 44.000 m 2 including sub level car parking with over 600 parking spaces. The properties are 98% leased. Due diligence is completed and the project funding has been arranged. Expecting now the review and conclusion of the Competition Authority. 325.366 m 2 116 Reginn‘s Property portfolio NUMBER OF PROPERTIES

SMÁRALIND - LEASING • Final phase of resturcturing of Smáralind this summer was LEVEL 2 to conclude leasing agreements with four international brand names. These brand names are strong and the stores will be • operated by the brand owners. The brands will be introduced this autumn in connection with marketing of these brands. Spaces in question are shown on the diagrams to the side. • In total 4.000 m 2 . LEVEL 1 Opening of the new stores are planned in Oct. 2018 to • March 2019. • Smáralind has entered into an agreement with the owners of Smárativolí on the restructuring of the area. This will be done in cooperation with the owners of the Smárabíó cinema. OPENING OF NEW BRANDS

HAFNARTORG - LEASING STATUS AGREEMENTS are completed for two strong international • brands, in addition to H & M. More than 60% of retail spaces are included in these three agreements. AGREEMENTS with solid and strong Icelandic Operators • completed for about 20% of the total space. NEGOTATIONS with three other international brands in • progress for about 10% of the total. Remaining are only 10% of spaces for other occupants • „fitting“ the concept.

PROPERTY´S OPERATIONS OPERATIONAL COSTS INVESTMENT PROPERTIES OF • Owners and lessors of properties pay for 4 main expences. REGINN 2017 Property taxes and other public fees LESSOR – 5% – Mandatory fire insurance LESSOR Property maintenance LESSOR / LESSEE – 20% – Dayly operation of properties LESSEE 75% PROPERTY TAXATION Fasteignagjöld Viðhalds og rekstrarkostnaður fjárfestingareigna Tryggingar • Property taxation as a percentage of leasing revenues had remained fairly stable over 15% of Reginn's leasing income until 2016 when they began to PROPERTY TAXES AS A PERCENTAGE OF REVENUES grow sharply. Property taxation as a percentage of leasing income was almost 17% in 2017. 18,0% Reginn's property portfolio will increase by 13% in 2019. It is foreseeable • 17,0% that the increased taxation will affect leasing rates. 16,0% Reginn has not utilized contracts provisions to present date, to increase the • 15,0% leasing rate to compensate for tax increases in commercial properties. It is the company's decision to activate these provisions. 14,0% 13,0% 2013 2014 2015 2016 2017

OPERATIONS IN PROPERTIES • In addition to the general property operations, Reginn is COVERAGE responsible for comprehensive operations and services to occupants in three units within the Reginn´s portfolio: 6,5 m. Guests annually Smáralind – – Egilshöll Guest per day, mean. 18.000 Schools at Hafnarfjörður (FM-hús) – 103.000 m 2 Size This service and operations is diversified as needed due • to the nature of the building operations, and includes; 80 Occupants – Janitors – Security 20 Staff – Information and service desks – Cleaning and garbage removal Energy and energy management – – Comprehensive maintenance and operations – Marketing * Auk leikskólanna Tjarnarás og Hörðuvellir í Hafnarfirði