INVESTOR PRESENTATION Emerging Markets Credit Conference September 26, 2019 1
First Half 2019 Highlights Robust operating performance despite challenging market conditions: 6-months NOI of € 51m (up by 3% compared to 1H18 thanks to the contribution of new openings and acquisitions). In line with the budget so far, and is expected to be slightly over it by the end of the year. Retail occupancy has slightly decreased to 94.2% at the end of period, which is close to the long term trend and above 2019 budget of 93%. Consumer activity at the malls has showed significant progress through the end of the first half, beating the inflation for two consecutive months the first time since June 2018. LfL growth in tenant sales was 14.8% while the average inflation was 18.9% in 1H19. Karşıyaka Hilltown project which is under development is scheduled to open on 18 th October 2019 . Current pre-lease rate reached 97.2% with several prime brands such as Inditex, H&M, Decathlon, Tommy Hilfiger, CGV, Victoria’s Secret, Vakko, Beymen, CarrefourSA and Brooks Brothers. Leasings in office business were active in the first half. Total of 6,400 sqm was leased in Küçükyalı Hilltown and Mecidiyeköy offices. Final payment of project finance loan of Mecidiyeköy office ( € 10m ) has been repaid and asset has been unencumbered. Şanlıurfa Piazza’s 50% shares were acquired from JV partner and asset became a wholly owned subsidiary of RGY as of September 2019. JV exposure in total GAV has fallen to 1.8% excluding JVs with GIC. 2
RGY has achieved its targets since Eurobond issuance thanks to high-quality asset portfolio and successful business execution. Net operating income figures are in line with the forecasts for Investor Investor both 2018 and 2019. Presentation Presentation Actual Nov’18 Mar’19 Average retail occupancy and tenant sales have beaten our expectations in the first eight months of 2019. NOI – 2018 € 105.4m - € 107.1m Development exposure will be zero after the opening of Karşıyaka Hilltown in October 2019 as a part of strategy. It was high at 23% at the end of 2017. Despite the economic € 108.2m slowdown, Karşıyaka Hilltown has now 97% pre-lease rate and NOI – 2019 € 107.0m € 107.9m (YE Expectation) is expected to be the most successful opening of 2019 all over Turkey. Avg. Retail 94.0% 93.0% 93.0% Unencumbrance of the properties has been an important target (First 8 months) Occupancy – 2019 since Eurobond debut. As of June-end, unencumbered properties are valued € 637m , which makes up 27% of the Growth in Tenants’ 15.3% entire portfolio. 10.0% 10.0% Sales – 2019 (First 8 months) Exposure to JVs in the portfolio has been minimized to 1.8% at 2019 year-end (expected) from 13.4% at 2017 year-end (1) . Karşıyaka Hilltown Sep’19 Oct’19 Oct’19 Currently there is not any JV holding a yielding property other Opening Date than GIC JVs. All covenants at both project finance loans and Eurobond are Karşıyaka Hilltown 97% 48% 51% satisfied without any breach thanks to ample headroom and Pre-lease (Current) flexible cure mechanisms. (1) Joint ventures with GIC are not taken into account due to being a shareholder at RGY level as well. 3
RGY has recorded an NOI of € 51m in the first half of 2019 while EPRA NAV has decreased by 6.6% due to the decrease in valuations. GAV (m) (1) EPRA NAV (m) (1) GAV by Status and Property Type (1) June 2019 1478 € 1415 € 2445 € 1374 € 2354 € 1283 € 2103 € Landbank 1788 € 8% Retail 74% Development 9% Office 8% Other Yielding 2016 2017 2018 1H19 2016 2017 2018 1H19 1% 83% LfL decrease in 1H19: 3.7% Net Operating Income (m) (1) EBITDA (m) (1) NOI Evolution (m) (1) 2019 Expected vs. Budget - m€ 108 € 107 € 102 € 102 € 108.2 107.9 51.2 2.8 3.1 64 € 62 € 51.2 51 € 50 € 48 € 45 € 1H19 NOI Annualization Cancellation of Karşıyaka 2019 Expected 2019 Budgeted of 1H19 Discounts + Hilltown NOI NOI 2017 2018 2019E 1H18 1H19 2017 2018 2019E 1H18 1H19 Inflation Impact Annualized NOI (2) : € 122m LfL decrease in 1H19: 19.6% (1) Proportionate figures for the assets fully consolidated and the ownership at share of the assets accounted for using the equity method. (2) Annualization of NOI of Karşıyaka Hilltown , that will be open by Oct’19 and Şanlıurfa Piazza, of which 50% shares were acquired in Sep’19. 4
Solid retail occupancy is maintained, tenant sales have been recovering in recent months, sustainable rental levels are kept thanks to the temporary incentives provided to the tenants. Occupancy Like-for-like Growth in Tenant Sales (1) Retail - Period End Year-on-Year 97.3% 96.6% 96.1% 95.8% 95.7% 24.5% 25.2% 24.1% 94.7% 94.4% 21.6% 20.3% 20.4% 19.7% 19.7% 19.4% 18.7% 18.6% 18.3% 17.7% 2015 2016 2017 2018 Aug'19 15.7% 16.7% w/ Maltepe Park w/o Maltepe Park 18.7% 12.0% 15.0% 14.1% OCR (2) Portfolio - Last 12 Months 10.9% 14.9% 15.0% 15.1% 15.3% 15.4% 15.3% 15.2% 15.3% 15.2% 9.5% 7.3% 6.7% 14.6% 5.4% 14.1% 14.3% Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2018 2019 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun LfL Growth Annual Inflation 2019 (1) Like-for-like is on same shopping center basis at T and T-12 months. (2) Occupancy Cost Ratio = (Base rent + turnover rent + service charges [incl. management costs] + marketing contribution) / tenants ’ sales in preceding 12 months 5
Karşıyaka Hilltown project under development is scheduled to open by October 2019 and is progressing as planned. Karşıyaka Hilltown Type Retail Location Karşıyaka / İzmir Opening October 2019 (1) Distance from 850 m Station (2) GLA (sqm) 63,000 Pre-lease 97.2% (3) Equity Need - Major T enants Shopping Center GLA Per 1000 Capita (4) Istanbul Ankara 312 295 Izmir 163 Turkey 156 (1) The latest project completion date committed as per project finance documentation is October 2020. (2) Distance from station refers to distance to metro, light or high speed train 6 (3) Contract and letter of intent signed (4) Source: Colliers
There is no bullet repayment in short term and dependency on local banking system is at a moderate level. T otal financial debt is € 1.15m as at June 2019. The earliest bullet repayment is due in May 2021 . Debt Maturity Profile (m€) (1) (2) (3) June 2019 – Proportionately Consolidated Corporate Loans & Bonds Optimum Adana Samsun & Ş.Urfa 10 years relationship Project Finance Bullet Payments - Other Assets Piazza with the same 20% LTV at the Project Finance Bullet Payments - GIC JVs project lenders maturity Project Finance Amortization Non-recourse loan 249 € Dominant assets in Prime quality asset their cities with an occupancy of 97.7% 15 € 89 € 18 € 46 € 90 € 103 € 108 € 91 € 47 € 75 € 38 € 57 € 22 € 47 € 33 € 2H19 2020 2021 2022 2023 2024 2024+ (1) Proportionate figures for the assets fully consolidated and the ownership at share of the assets accounted for using the equity method. (2) Interest accruals are excluded. Besides, swapped value of Eurobond (€ 249m) is taken into account instead of the book value ($ 300m), which brings c.€ 23m difference 7 with the audited financials. (3) There is also € 39.5 committed loan facility available for Karşıyaka project with repayment in 2023.
Financial ratios provide sufficient headroom to meet the required covenants. Unencumbered Asset Value Ratio (2) Combined LTV (1) Combined Coverage Ratio Unencumbered 3.38x GAV 60% 2.26x 2.96x Yielding € 447m 2.83x Land € 191m 46% Total € 637m 44% 2.10x 1.20x 37% 36% 1.50x 2016 2017 2018 1H19 2016 2017 2018 1H19 1H19 Combined Loan-to-Value Combined Coverage Ratio Unencumbered Asset Value Ratio Eurobond Covenant Eurobond Covenant Eurobond Covenant (1) Off balance sheet liabilities, which is a part of indebtedness as per offering circular of Eurobond, has been reduced by 20% to € 44m and is expected to decrease to c. € 15m by the end of the year. 8 (2) Previous years are not provided as there was a little amount of unsecured debt.
APPENDIX
First Half 2019 Highlights €51m €2.35bn €1.28bn €48m Net Operating Portfolio EBITDA EPRA NAV Income Valuation 6 months 6 months 93.9% 700k m 2 46 mill. 1.1% Average Retail Net Bad Debt Gross Leasable Visitors Occupancy Ratio Area 6 months 6 months 6 months 10
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