Q1 2018 RESULTS Warsaw, June 12th, 2018
Agenda ▪ Q1 2018 key highlights ▪ Investment portfolio ▪ Financial results for Q1 2018 ▪ ArtN ▪ Strategic objectives 2
Q1 2018 KEY HIGHLIGHTS 3
Q1 2018 KEY HIGHLIGHTS ▪ Execution of engineering and construction contract related to ArtN (flagship mixed-use 276 k m 2 project in heart of Warsaw) with Warbud S.A. for a total value of PLN 333 m. total portfolio GLA ▪ The openning of the Neptun House (Hampton By Hilton Old Town Gdańsk) scheduled for 15th of June 2018. ▪ Submission of the application for a building permit of Crowne (mixed use project 166 k m 2 comprising hotel and high-quality apartments for rent) on April 16, 2018. GLA of income generating ▪ Redemption of 11 m PLN series E bonds (Q1 2018) and 35 m PLN series F bonds (Q2 investment projects 2018). ▪ Repayment of the principal of EUR 2.5m contracted with Getin Noble Bank 2.2 bn PLN (multifunctional loan). current value of ▪ 13,090 m2 of new area leased in 2018 in three key projects of the Group. the property portfolio 1.6x q/q -4% +18% Increase in FFO decrease in interest expense in comparison to 3M 2017 due Increase in rental income on bank borrowing in to increase in rental income in comparison to 3M 2017 due comparison to 3M 2017 and decrease in interest 4 to completed projects expense
INCREASE IN AREA LEASED EC Alfa EC Beta & Gamma 100% 100% +15% 5% 95% -7% 7% 91% 90% 90% Occupancy in completed investment projects 85% 80% 95% 92% 80% 85% 70% 13.090 m 2 75% 80% New area leased 60% 70% in 2018* 31/12/2016 12/06/2018 31/12/2016 12/06/2018 Delta Royal Wilanów 100% +13% 1.045 m 2 90% +39% 90% 80% Lease extension 80% in 2018* 70% 70% 60% 60% 50% 50% 96% 83% 40% 83% 40% 30% 30% * Reffers to Eurocentrum Office 44% 20% 20% Complex , Royal Wilanów and ArtN. 10% 10% 0% 0% 5 31/12/2016 12/06/2018 31/12/2016 12/06/2018
Investment portfolio
Completed projects EURO ROCEN ENTRUM OFFIC ICE E COMPLEX, LEX, GLA: 84,636 m 2 Yield: 6.78 78% Book value: 877 m PLN (207 m EUR) Current occupancy: 90% 90% WAULT 1 : 4.5 5 7 1 WAULT as at 30th April 2018, occupancy as at 12th June 2018
Completed projects EURO ROCEN ENTRUM ALFA, , GLA: 14,319 m 2 Acquisition date – March 2007 (Completion date – 2002) Yield: 7.75% Book value: 111 m PLN (26 m EUR) Occupancy: 85% WAULT: 3.7 Top tenants: Provident Polska, IPF Polska, QUMAK, GIDT EURO ROCEN ENTRUM BETA, , GAMMA MMA, , GLA: 43,182 m 2 Completion date – June 2014 Yield : 6.30% Book value: 469 m PLN (111 m EUR) Occupancy: 95% WAULT: 3.8 Top tenants: Unilever, Randstad, Coty, Comarch, Pelion, Group One EURO ROCEN ENTRUM DELTA, , GLA: 27,135 m 2 Completion date – February 2016 Yield : 6.30% Book value: 297 m PLN (70 m EUR) Occupancy: 83% WAULT: 6.0 Top tenants: Polskie Sieci Elektroenergetyczne, Centralny Ośrodek Informatyki, SAGE 8 1 WAULT as at 30th April 2018, occupancy as at 12th June 2018
Completed projects ROYAL AL WILANÓW, GLA: 36 36,92 923 m 2 Completion date – August 2015 Yield: 6.5% Book value: 421 m PLN (100 m EUR) Occupancy: 96% WAULT: 4.9 Top tenants: Sygnity S.A., ERBUD, Boehringer Ingelheim, Artis, Medicover GALER LERIA IA ZASP SPA, GLA: 8,683 683 m 2 Completion date – April 2016 Yield: 7.50% Book value: 63 m PLN (15 m EUR) Occupancy: 93% WAULT: 5.6 Top tenants: Intermarche, Rossmann, EURO RTV AGD, Calypso, Pepco, KIK, ZooKarina, Textil Market, DOZ Pharmacy, Dominos Pizza, YES, MAC VIS A VIS ŁÓDŹ , GLA: 5,711 m 2 Completion date – December 2014 Yield: 8.0% Book value: 36 m PLN (9 m EUR) Occupancy: 99% WAULT: 5.2 Top tenants: Intermarche, Fit Fabric, Rossmann, Pepco, Blue Medica Clinic 9 1 WAULT as at 30th April 2018, occupancy as at 12th June 2018
Projects in progress ,351 m 2 (offic ,405 m 2 , ,946 m 2 ) ARTN RTN, , GLA: : 67,3 ice: : 40,4 , retail ail: : 26,9 Completion date – 4Q 2020 Yield: 5.38% Planned capex 1 : 737 m PLN (81 m PLN of own contribution) Book value: 338 m PLN (80 m EUR) Current prelease 2 : 23% (office: 5%, retail: 51%) Top tenants: OH Kino, Food Hall operator, BioBazar , Piotr i Paweł, SuperPharm, Car Spa, L'Oreal Professionel, Weranda, Etno Cafe, Soul Food, Kruk Rolex, Lambert, Paris Optique, MAC, YES, Frankie’s , TFH. ,000 m 2 (174 rooms) NEPTUN HOUSE, E, GLA: : 7,0 Completion date – June 2018 Yield: 8.50% Book value: 58 m PLN (14 m EUR) Current prelease 2 : 100% Top tenants: VHM (hotel operator – Hampton by Hilton), Kos Delicatessen, Manufaktura Nalewki, Pan Kejk ,000 m 2 (217 rooms and 370 apartme CRO ROWNE, E, GLA: : 30,0 tments ts) Planned start of construction – 1Q 2019 Yield: 6,72% Planned capex 1 – 197 m PLN (30 m PLN of own contribution) Book value: 48 m PLN (11 m EUR) Current prelease 2 : 30% 10 Top tenants: VHM (hotel operator - Holiday Inn) 1 Capex as at 31st March 2018 according to operating budgets. 2 Prelease as at 12th June 2018.
Closed-end investment funds Real Estate Incom ome Assets ts FIZAN ZAN, , GLA: : 15,0 ,010 m 2 Number of properties - 39 Established – June 2013 Yield: 7.49% Book Value: 174 m PLN (42 m EUR) Occupancy: 93% NAV: PLN 13.6 m Group’s ownership: 18% Fund Management Company: Mount TFI Real Estate Incom ome Assets ts II FIZAN ZAN, , GLA: : 15,5 ,550 m 2 Number of properties - 8 Established – December 2016 Yield: 7.36% Book Value: 144 m PLN (35 m EUR) Occupancy: 95% NAV: 9.3 m PLN Group’s ownership: 15% Fund Management Company: Mount TFI 11
Joint venture projects ETC SWARZĘDZ, GLA: 20,104 m 2 Completion date – October 2017 Yield: 7.15% Book value: 150 m PLN (36 m EUR) Occupancy 1 : 82% WAULT 1 : 4.9 Group’s interest: 60% Top tenants: Intermarche, Reserved, EURO RTV AGD, CCC, Deichmann, KIK, Empik, Smyk, Martes Sport, Kids OK, Dealz, Pepco VIS A VIS PRZYCZÓŁKOWA, GLA: 4,210 m 2 Completion date – 3Q 2018 Yield: 7.5% Book value: 20 m PLN (5 m EUR) Current prelease 1 : 75% Planned capex 2 : 16 m PLN (to be financed from construction loan) Group’s interest: 64% Top tenants: Villa Nova Dental Clinic, RTV EURO AGD, Max Burgers, HEBE, Decathlon REZYDENCJE PAŁAC OWA II, GLA: : 5,760 m 2 Completion date – 3Q 2018 Book value: 24 m PLN (6 m EUR) 24 homes Sold: 8, booked: 3 Planned capex: 10 m PLN (to be financed from construction loan) 12 1 WAULT as at 30th April 2018, prelease and occupancy as at 12th June 2018 Group’s interest: 64% 2 Capex as at 31st March 2018 in participatory budget.
FINANCIAL RESULTS FOR Q1 2018 13
FINANCIAL HIGHLIGHTS Q1 2018 RENTAL INCOME INTEREST EXPENSE FFO +57% 13.2 +18% 35.0 29.6 10.2 -4% 9.8 8.4 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 14
P&L - NOI/FX FX CHANGES IMPACT ON P&L RENTAL INCOME mPLN mPLN 40 85% 19 35 20 33 83% 32 35 16 30 property revaluation 30 81% 15 30 26 bank loans&bonds 25 24 79% 25 10 22 financial instruments 22 6 77% 20 deffered tax 5 3 75% 75% 74% 15 other 74% 73% 73% 0 74% 10 total impact on P&L 71% -1 -5 5 69% 0 67% -10 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 -11 -15 Rental income Net operating income ROS GAIN/LOSS ON PROPERTY REVALUATION (mPLN) 3 months 2018 +18% rental income in PLN 18Q1/17Q1 due to increase in ▪ exchange gains 18.9 occupancy in completed projects revenue recognition -1.0 21 mPLN - non-cash revaluation of property value resulting ▪ other 3.6 mainly from exchange rate differences (+19 mPLN) Total gain on property revaluation 21.5 +16 mPLN total net fx change impact on P&L ▪ 15
P&L - INTEREST -4% decrease in interest expense (18Q1/17Q1) despite +8% increase in EUR debt balance ▪ -3 m PLN yearly savings planned due to change of currency structure of bonds from PLN to EUR ▪ -1,5 m PLN yearly savings on Royal Wilanów loan interest ▪ Interest [mPLN]* March 31, 2018 March 31, 2017 Interest on bank loans in P&L 6,9 7,1 Interests on bank loans in Capex 0,5 0,1 Interest on bonds 2,6 2,7 Total interest 10 9,9 Average cost of debt 3,03% 3,31% Average cost of debt Forecast 2,75% Bank loans Bonds 4,09% This forecasted cost is under assumptions that all PLN bond are refinanced with EUR bonds and new GNB multifunctional loan is Cost of debt 2,97% drawn *Excluded the impact of measurement of financial liabilities at amortised cost, in accordance with IFRS 9. During 3 months of 2018, the adjustment increased interest expense by 0,3 mPLN. During 3 months of 2017, the adjustment increased interest expense by 0,4 mPLN. 16
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