Q RESULTS. WARSAW, 15th of NOVEMBER 2017

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1 Q RESULTS WARSAW, 15th of NOVEMBER

2 AGENDA Q1-Q OVERVIEW Review of Real Estate Portfolio Financial results for Q Strategy review 2

3 Q1-Q OVERVIEW Issue of bonds in total amount of 23.3 m EUR (97 m PLN, including 5.7 m EUR in Q3) of which 35 have been repaid in Q2 and 74 m PLN in Q3, Refinance of Royal Wilanów bank loan credit 62.5 m EUR utilised on 13 Jul 2017, Sale of 85% of REIA II certificates for total amount of 44.9 m PLN (including 12.4 m PLN raised in Q4), Purchase of the remaining 47% shares in Oberhausen full control over the company, Purchase of Belgradzka in Warsaw for 24 m PLN & Alior financing in Q3 (investment tranche 4.8 meur, VAT tranche 5.5 m PLN), Start of construction of Vis à Vis Pałacowa in Warsaw in Q3 (current prelease: 35%). 302 k sqm total portfolio GLA 169 k sqm GLA of completed investment projects 44.9 m PLN Revenues from sale of 85% of REIA II FIZAN +13% Increase in rental income in comparison to 9M 2016 due to completed projects -19% decrease in interest expense in comparison to 9M bn PLN current value of the property portfolio 3

4 INCREASE IN AREA LEASED 95% Royal Wilanów +9% 92% 95% EC Beta & Gamma +12% 92% 90% 85% 83% 90% 85% 80% 80% 89% Occupancy in completed investment projects 80% 75% 75% 95% 85% 31/12/ /11/2017 EC Alfa 92% -17% 70% 100% 80% 31/12/ /11/2017 EC Delta +39% 83% 20,804 m 2 new area leased in 2017* 75% 65% 55% 75% 60% 40% 20% 44% 7,405 m 2 lease extension In 2017* 45% 31/12/ /11/2017 0% 31/12/ /11/2017 * Reffers to Eurocentrum (Alfa, Beta&Gamma, Delta), Royal Wilanów 4

5 COMPLETED INVESTMENT PROJECTS EUROCENTRUM ALFA EUROCENTRUM BETA, GAMMA EUROCENTRUM DELTA GLA: 14 tys. m 2 Acquisition date March 2007 (Completion date 2002) Yield: 8% Book value: 117 m PLN Occupancy: 75% WAULT: 2.75 Top tenants: Provident Polska, IPF Polska, PM Group GLA: 43 tys. m 2 Completion date June 2014 Yield : 6.66% Book value: 483 m PLN Occupancy: 92% WAULT: 4.35 Top tenants: Unilever, Randstad, Coty, Comarch, Pelion GLA: 27 tys. m 2 Completion date February 2016 Yield : 6.66% Book value: 271 m PLN Occupancy: 83% WAULT: 6.76 Top tenants: Polskie Sieci Elektroenergetyczne, Centralny Ośrodek Informatyki, SAGE 5

6 COMPLETED PROJECTS ROYAL WILANÓW GALERIA ZASPA VIS À VIS ŁÓDŹ GLA: 36 tys. m 2 Completion date August 2015 Yield: 7.0% Book value: 429 m PLN Occupancy: 92% WAULT: 5.31 Top tenants: Sygnity S.A., ERBUD, Boehringer Ingelheim, Artis, Medicover GLA: 9 tys. m 2 Completion date April 2016 Yield: 7.50% Book value: 64 m PLN Occupancy: 90% WAULT: 6.04 Top tenants: Intermarche, Rossmann, EURO RTV AGD, Calypso, Pepco, KIK GLA: 6 tys. m 2 Completion date December 2014 Yield: 8.0% Book value: 38 m PLN Occupancy: 99% WAULT: 5.77 Top tenants: Intermarche, Fit Fabric, Rossmann, Pepco 6

7 PROJECTS IN PROGRESS ARTN HAMPTON BY HILTON GDAŃSK CROWNE GLA: 64,000 sqm Completion date 4Q 2020 Yield: 5.60% Planned capex: 735 Book value: 300 Current prelease : 22% of retail space Top tenants: BioBazar, Piotr i Paweł GLA: 7,000 sqm (174 hotel rooms) Completion date IQ 2018 Yield: 7.25% Planned capex: 29 Book value: 50 Current prelease: 81% Top tenants: VHM (hotel operator Hampton by Hilton), Kos Delicatessen GLA: 30,000 sqm (217 hotel rooms and 390 apartments) Planned start of construction 3Q 2018 Yield: 4.60% Planned capex 190 Book value: 44 Current prelease: 30% Top tenants: VHM (hotel operator - Holiday Inn) 7

8 JOINT VENTURE PROJECTS ETC SWARZĘDZ VIS À VIS PRZYCZÓŁKOWA REZYDENCJE PAŁACOWA II GLA: 20 tys. m 2 Completion date October 2017 Yield: 7.50% Book value: 125 m PLN Occupancy: 78% WAULT: 5.43 Top tenants: Intermarche, Reserved, EURO RTV AGD, CCC, Deichmann, KIK, Empik, Smyk, Martes Sport GLA: 4 tys. m 2 Completion date 3Q 2018 Yield: 7.50% Book value: 13.8 m PLN Current prelease: 35% Top tenants: Villa Nova Dental Clinic, RTV EURO AGD, COSMEDICA GLA: 6 tys. m 2 Completion date 3Q 2018 Book value: 17.7 m PLN 24 homes Sold: 5, booked: 1 8

9 REIA FIZ AN REIA FIZ AN I REIA FIZ AN II GLA: 15k sq.m. Book value: 186 m PLN Current occupancy rate: 89 % NAV: 77 m PLN Ownership interest of Capital Park: 16% (12 m PLN) GLA: 16k sq.m. Book value: 142 m PLN Current occupancy rate: 92% NAV: 61 m PLN Ownership interest of Capital Park: 15% (9 m PLN) 1. Values shown represent the fund totals. As at 30 th June 2017 Capital Park owned 45% of this fund. We expect ownership to reduce to 15% by 31 st December

10 FINANCIAL HIGHLIGHTS Q Rental income Interest expense on bank borrowings and notes FFO +13% 93, % 28,1 +14% 23,3 82,7 20,5 9M M M M M M

11 P&L - NOI/FX RENTAL INCOME FX CHANGES IMPACT ON P&L % % 81% % 77% 75% 75% 74% 74% 73% 71% 69% 67% 2017Q1 2017Q2 2017Q3 Rental income Net operating income ROS unrealized fx - property revaluation unrealized fx (bank loans) unrealized fx (financial instruments & deffered tax) Total Fx impact on P&L +13% rental income in PLN in comparison to 9M non-cash revaluation of property value resulting mainly from exchange rate differences (-51 ) -21 total net fx change impact on P&L 11

12 P&L - INTEREST -19% decrease in interest expense on bank borrowing and notes in comparison to 9M 2016 despite +16% increase in bank loan balance -3 mln PLN yearly savings planned due to change of currency structure of bonds from PLN to EUR -1,5 yearly savings on Royal Wilanów loan interest despite the increase in loan balance by +29 Average cost of debt 9M M 2017 Credits 4.30% 2.80% Bonds 6.40% 4.90% Cost of debt 4.30% 3.00% After conversion of remaining PLN bonds to EUR, the average cost of bonds will decrease to 4.08%. This will allow to decrease the cost of debt below 3.0%. 12

13 PROFIT AND LOSS ACCOUNT Consolidated statement of profit or loss and other comprehensive income () Q Q Q M M 2016 Rental income Direct property operating expenses (7.8) (8.0) (8.4) (24.2) (20.0) Net operating profit Income from property management Gain/(loss) on disposal of investment property (4.3) Other revenue Cost of SPV operations (1.8) (1.4) (2.2) (5.4) (3.0) Administrative expenses (2.4) (3.4) (3.0) (8.8) (6.4) Renovation and repair of property (0.1) (0.1) (0.0) (0.3) (0.2) Cost of incentive scheme measurement (0.0) (1.4) (0.5) (1.9) (2.2) Gain/(loss) on property revaluation (100.0) (44.5) 6.6 Impairment losses (1.5) (0.8) (0.7) (3.0) (1.2) Share in net profit/(loss) of equity-accounted entities (1.0) 3.2 (0.9) 1.3 (2.2) Gain/(loss) on sale of subsidiaries Operating profit/(loss) (84.8) Interest income Interest expense (10.2) (9.5) (10.4) (30.1) (35.3) Loss on measurement of financial liabilities 49.3 (12.1) (26.2) 11.0 (17.6) Profit/(loss) before tax (44.9) (9.0) (0.2) Corporate income tax (7.6) 13.7 (2.0) Net profit/(loss) (52.5) (4.9) 1.3 Exchange differences on translating foreign operations (0.1) Total comprehensive income (52.6) The observed increase in rental income (+13% y/y) resulting from new lease agreements Non-cash revaluation of property value resulting mainly from exchange rate differences Receivables write offs Including decrease in interest on bank borrowings and notes (-19% y/y) due to refinance of bank loans Mainly the effect of exchange rate differences on revaluation of liabilities in euros (investment loans) and change in revaluation of derivatives securing construction loans. 13

14 BS - REAL ESTATE INVESTMENT PROPERTY MOVEMENT CAPEX EC Delta 10,8 Royal Wilanów 9,4 ArtN 2,2 Other 3, EC Beta&Gamma 10, Dec 2016 Acquisition Capex FX difference Sale of property 30 Sep 2017 Neptun House 21, Non-cash revaluation of property value resulting mainly from exchange rate differences (-51 ) Sale of properties: Bydgoszcz Gdańska and Grudziądz Tivoli at book value PROFIT AND LOSS ACCOUNT GAIN/LOSS ON PROPERTY REVALUATION 9 months 2017 exchange gains -51 other revaluation 9 Total gain/loss on property revaluation

15 BALANCE SHEET Balance Sheet () 30/09/ /12/ /09/2016 Long-Term Assets 2, , ,064.1 Real estate properties 2, , ,005.8 Deferred tax assets Other non-current investments Other financial assets Other assets Current Assets Other receivables Tarde receivables Other current investments Cash Balance Sheet () 30/09/ /12/ /09/2016 Capital and Reserves, including: 1, , ,031.9 Share Capital Receivable equity contribution Profit (loss) of the year (1.9) 29.9 (1.5) Non-controlling interests Long-Term Liabilities 1, , ,059.2 Bank borrowings and other financial liabilities 1, , Bonds liabilities Other long term liabilities Provision for deferred tax Current Liabilities Bank borrowings and other financial liabilities Bonds liabilities Other liabilities and provisions Total equity 2, , ,211.2 Net debt 1, , ,041.0 Net debt/(capital and reserves) Net debt/total assets 48% 46% 47% Purchase of remaining 47% of Oberhausen (full control over the company) plus capex minus revaluation Investments in jointly controlled entities (ETC Swarzędz, two projects in Warsaw, Pałacowa St.) Issuance of 99 of bonds (23,3 meur), 109 of bonds redeemed The owners of 85% of REIA FIZAN, 62% in REIA II FIZAN The increase is mainly due to an increase in the balance of loans on Eurocentrum and Royal Wilanów investment The increase attributable to the increase in share in completed projects (income-generating) 15

16 BS - Debt maturity & NAV DEBT MATURITY NAV/SHARE [EUR] meur ,14 2,15 2,11 31/12/ /12/ /09/2017 2,25 2,2 2,15 2,1 2,05 2 1,95 1,9 NAV (meur) NAV/share (EUR) Kredyty Obligacje NAV/SHARE [PLN] % Net debt/total assets , ,31 9,28 10,5 10 9,5 9 8,5 8 7,5 NAV () NAV/share (PLN) /12/ /12/ /09/

17 STRATEGY REVIEW IPO milestones have been achieved successfully Development and first growth phase Stabilization of investment assets and second growth phase Growing dividend capacity Crowne ArtN completion DIVIDEND COMPANY/REIT 17

18 CAPITAL PARK FINANCIAL TARGETS On existing portfolio TARGETS NOI 23 m (+30%) 30 m (+74%) 52.2 m NAV 226 m (+0%) 226 m (+20%) 272 m FFO 7.4 m 15 m (+103%) (+98%) 29.7 m Dividend Payout Growing dividend capacity 18

19 STRATEGIC GOALS FINANCIAL TARGETS: Lease-up of remaining 12% of vacant space, stabilise income and refinance projects to maximize dividend capacity in portfolio of standing assets Complete remaining development projects (ArtN, Crowne and Vis-a-Vis) by 2020 and lease-up to achieve targeted NOI and generate targeted development profit Adjust structure to become dividend company (REIT status?) by % combined occupancy by m NOI by m FFO by 2018 NOI Incremental m FFO incremental m Value added (margin) - 46m Targeted FFO at 29.7m level Targeted FFO yield at 11% to BV 4 Attract new capital to help grow the company beyond existing portfolio 19

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