FINANCIAL STATEMENTS CONDENSED CONSOLIDATED. for the period 4 January to 31 December

Transcription

1 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period 4 January to 31 December 2016 Echo Polska Properties N.V.(Incorporated in The Netherlands) (Company number ) JSE share code: EPP ISIN: NL ( EPP or the Company or the Group )

2 Disclaimer This document has been prepared and issued by and is the sole responsibility of the management of Echo Polska Properties N.V. (the Company or EPP ) and its subsidiaries. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract commitment or investment decision in relation thereto nor does it constitute a recommendation regarding the securities of the Company. Investors and prospective investors in securities of the Company are required to make their own independent investigation and appraisal of the business and financial condition of the Company and the nature of the securities. This presentation and any materials distributed in connection with this presentation may include certain forward-looking statements, beliefs or opinions, including statements with respect to the Company s business, financial condition and results of operations. These statements, which contain the words anticipate, believe, intend, estimate, expect, forecast and words of similar meaning, reflect the Directors beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these statements and forecasts. Past performance of the Company cannot be relied on as a guide to future performance. Forward-looking statements speak only as at the date of this presentation and the Company expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation. No statement in this presentation is intended to be a profit forecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. The information on which these statements has been based has not been reviewed or reported by EPP s auditors. This document speaks as of the date hereof. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness, accuracy or fairness. The Company, its advisers and each of their respective members, directors, officers and employees are under no obligation to update or keep current the information contained in this presentation, to correct any inaccuracies which may become apparent, or to publicly announce the result of any revision to the statements made herein except where they would be required to do so under applicable law, and any opinions expressed in them are subject to change without notice. No representation or warranty, express or implied, is given by the Company, or any of its subsidiary undertakings or affiliates or directors, officers, Java Capital or any of its directors or employees or any other person as to the fairness, accuracy or completeness of the information or opinions contained in this presentation and no liability whatsoever for any loss howsoever arising from any use of this presentation or its contents otherwise arising in connection therewith is accepted by any such person in relation to such information. 2

3 Contents 1. Strategy & Investment case 2. Financial review Polish macroeconomics 4. Portfolio overview 4.1 Retail 4.2 Office 4.3 Developments 5. Prospects 3

4 1. Strategy & Investment Case

5 EPP at a glance DUAL LISTINGS ON LuxSE AND JSE MAIN BOARD YIELDING PORTFOLIO AT IPO 1.2 billion 10 Retail (78% by value) 6 Office projects - 14 buildings (22% by value) CURRENT & ANNOUNCED ACQUISITIONS YIELDING PORTFOLIO 1.6 billion 15 Retail (74% by value) 9 Office projects - 18 buildings (26% by value) WARSAW DEVELOPMENT PROJECT 70% INTEREST IN PLANNED: m² Towarowa Dominant mixed use scheme Targeted completion in 2021 NET ASSET VALUE 683 milion 12% increase in NAV per share post IPO 1.16 per share, NAV excludes deferred tax LTV OF 52.7% (56.7% post IPO) Target of 50% DISTRIBUTABLE INCOME 71 million ( 64 million forecast at IPO) Distributable income for 12 months to 31 Dec 2017 FORWARD YIELD OF 8.0%* *Forward yield to 12 months ended 31 Dec Assuming a price of R18.50 and an EUR/ZAR rate of R

6 EPP Team Management HADLEY DEAN CHIEF EXECUTIVE OFFICER MACIEJ DROZD OUTGOING CHIEF FINANCIAL OFFICER JACEK BAGIŃSKI CHIEF FINANCIAL OFFICER RAFAŁ KWIATKOWSKI CHIEF OPERATING OFFICER WOJCIECH KNAWA EXECUTIVE DIRECTOR Property Management MICHAŁ ŚWIERCZYŃSKI EXECUTIVE DIRECTOR Asset Management 6

7 EPP Team Structure MANAGEMENT BOARD FINANCE & ACCOUNTING TRANSACTION & LEGAL PROPERTY MANAGEMENT ASSET MANAGEMENT COMMUNICATIONS/IR Controlling Acquisitions Retail Operations Retail Leasing Marketing & PR Planning Compliance Office Operations Office Leasing Administration Treasury Legal Integration Team Innovations HR Reporting Corporate Facility Management EPP University Budgeting Governance Analysis & Reporting Transactions IT >100 employees Strategic partnership with Echo Investment SA, Griffin RE and Redefine 7

8 Highlights post listing OVERSUBSCRIBED CAPITAL RAISE OF 100 million AT 7.5% FORWARD YIELD SUCCESSFULLY EXECUTED OR SECURED ACQUISITIONS TO DATE 418 million SINCE LISTING INCREASED PORTFOLIO BY 35% IN VALUE AND 42% IN GLA WINNER OF BEST SHOPPING CENTRE OF THE YEAR Galeria Echo RETAIL PROPERTY MANAGER OF THE YEAR Grzegorz Czekaj EUROBUILD AWARDS 2016 RESPONSE TO CHANGES IN TAX LEGISLATION PROPERTY MANAGEMENT COMPANY OF THE YEAR 2017 ANNUAL CEE RETAIL AWARDS COMPLETION OF INTERNAL RESTRUCTURE PREPARATION FOR REIT REGIME VACANCY (GLA): RETAIL 1.7% (as of Dec 2016) OFFICES 4.3% (as of Dec 2016) Footfall increase (yoy) 3.4 % Portfolio value increase 3.3% ( 41million) ON TRACK TO DELIVER FY17 DPS FORECAST: cents10.8 8

9 EPP vision Creating a Polish national champion that leverages its scale and relationships to provide a leading and largest cash-generating property group that will deliver consistently high returns to our shareholders. Asset Management Development & Extensions Acquisitions 9

10 EPP Investment Case 4Ps (Pure Polish Property Play) 1.6 billion quality portfolio of modern buildings throughout Poland High growth, stable Polish economy, strong credit metrics Retail bias complemented by offices Targeting strong compounded growth in NAV and dividend per share Attractive and secure yields Strong proprietary pipeline Experienced management team Strategic partners (Echo Investment SA, Griffin RE and Redefine Properties) 10

11 2. Financial review

12 Financials at a glance DPS (for the 4 month period to 31 Dec 2016) cents 3.14 Distributable Earnings (for the 4 month period to 31 Dec 2016) Total NAV million 683 million NAV per share 1.16 Total assets Market capitalisation million 797 million Cost of debt 1.85% LTV 52.7% 2 1 NAV excluding deferred tax 2 Value includes the investment in joint venture Towarowa and unrestricted cash 12

13 Summary statement of comprehensive income Actual for the year ended PLS for the year ended EUR million 31 Dec Dec 2016 Variance to PLS Rental income and recoveries Property expenses (29.2) (29.9) 0.7 Net property income Other income / (expenses) (0.4) (0.2) (0.2) Administrative expenses and corporate costs (12.5) (9.6) (2.9) Profit from operations (1.1) Finance income / (expenses) (18.0) (19.4) 1.4 Amortisation of debt structuring fee (0.3) Tax (0.9) (0.8) (0.1) Prepaid rental income (0.3) (0.2) (0.1) Distributable income attributable to shareholders (0.3) Distributable earnings for the period 1 Sept to 31 Dec % Dividend for the period to 31 Aug 2016 (cents) % Dividend for the period 1 Sept to 31 Dec 2016 (cents) % 13

14 Summary statement of comprehensive income Actual for the period ended Actual for the 6 month period ended PLS for the year ended EUR million 30 Jun Dec Dec 2016 Rental income and recoveries Property expenses (12.3) (17.0) (29.9) Net property income Other income / (expenses) (0.9) 0.5 (0.2) Administrative expenses and corporate costs (5.7) (6.8) (9.6) Profit from operations Finance income / (expenses) (9.9) (8.1) (19.4) Amortisation of debt structuring fee Tax (0.6) (0.3) (0.8) Prepaid rental income (0.1) (0.2) (0.2) Distributable income attributable to shareholders

15 Headline earnings and distributable earnings reconciliation Actual for the period ended EUR million 31 Dec 2016 Earnings attributable to shareholders 76.8 Fair value adjustments (net of tax and minorities) (44.7) Headline earnings 32.0 Debt amortisation fee (net of taxation) 4.4 Straight-line and prepaid rental income accrual (net of taxation) (1.5) Deferred tax 18.5 Foreign exchange gains losses (2.2) Fair value gain in JV (12.5) Goodwill impairment 0.5 Capital gains (5.3) Distributable earnings

16 Summary statement of financial position EUR million 31 Dec Jun 2016 ASSETS Investment properties Investment in JV 54 - Other financial assets Trade, VAT and other receivables 33 7 Cash and restricted cash Total assets EQUITY AND LIABILITIES Share capital and premium Accumulated profit /(loss) Deferred tax liability 59 - Bank borrowings VAT borrowings 26 - Trade and other liabilities Total equity and liabilities Number of shares in issue Net asset value per share Loan to value (LTV) 52.7% NAV excluding deferred tax 2 Value includes the investment in joint venture Towarowa and unrestricted cash

17 NAV Bridge million Number of shares NAV per share ( ) Pro forma NAV as at 30 Jun 2016 (post IPO) Profit from operations 35.1 Fair value gain on investment portfolio excluding Towarowa (2.6% uplift in value) 30.9 Fair value gain on Towarowa (30% uplift in value) 12.5 Finance income/(expenses) (2.6) Current tax (0.2) NAV per share increase 12% 1 NAV as at 31 Dec NAV excluding deferred tax 2 Movement calculated using number of shares post IPO

18 Investment portfolio movement million Investment Property Investment in JV (Towarowa) Profit participation in ROFO and other financial assets Investment portfolio as at 30 Jun Fair value gain and capital expenditures Acquisitions (3 ROFO) Profit realised on ROFO transactions - - (10) (10) Investment in JV (Towarowa) Pre-payment for Zakopianka Investment portfolio as at 31 Dec Total Increase in Investment Portfolio 17% 18

19 Debt summary Current: Targeted: Net LTV 52.7% 50% Average maturity 5.1 years Hedging level 1 90% Average cost of debt 1.85% 1 100% of the debt is assumed to be hedged for the purpose of the forecast in line with EPP policy; the remaining portion of unhedged debt is ROFO bank debt to be hedged from the end of Q

20 Debt diversification maturity and source SOURCES OF DEBT 1 BZ WBK SA (Santander Group) / Erste Bank 38% Helaba 23% HSBC Bank plc 21% Berlin HYP/ING 15% Other 3% EUR million DEBT MATURITY PROFILE > Excluding short term VAT financing maturing before Sep

21 3. Polish macroeconomics

22 Poland macroeconomic update Poland is the 8 th largest European economy Between 2007 and 2015 Poland experienced 45% growth in GDP based on purchasing-power-parity (PPP) per capita Poland is expected to be the fastest growing large economy in European Union by 2050 Labour productivity in the ICT sector rose by 116% between 1996 and 2015 Unemployment rate in Poland stood at 6.3% on average in 2016 Over 1.4 million students across the country EY s European Attractiveness Survey 2016 ranks Poland as the most attractive FDI destination in CEE (and 5th most attractive in Europe) Total FDI inflow in 2015 reached EUR 12,138 million (13% higher than in 2014) POLISH MACROECONOMICS (f) 2018 (f) 2019 (f) GDP growth (%, yoy) 2.8% 3.6% 3.3% 2.9% Retail sales growth (%, yoy) Consumer spending (%, yoy) 6.4% 5.7% 3.9% 3.0% 3.5% 3.7% 3.2% 2.9% Inflation (0.6%) 1.6% 1.7% 1.9% Unemployment 6.3% 5.3% 4.8% 4.4% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Poland GDP GROWTH IN SELECTED EU COUNTRIES Czech Republic Source: Oxford Economics, NBP Germany France UK EU Average (f) 2018 (f) 2019 (f) Source: Oxford Economics, NBP 22

23 Poland s Investment Case Poland benefiting post Brexit: Poland will attract an estimated jobs from Britain s financial sector in 2017 according to Polish Deputy PM Selected recent significant investments or planned investments in Poland: Polish government reportedly received information on plans of numerous large investments into the region Brexit decision discouraged the outflow of skilled professionals to the UK from Poland, aiding positive demographic change (Mercedes Benz) 500m engine factory 326m Lithium-Ion battery plant 60m Supplier of components to Boeing, Airbus and Rolls Royce EPP experienced a 5% increase in demand for its office space e.g. McKinsey, Philips and BA The probability of yield compression in line with convergence with developed Europe will provide an opportunity to increase asset values 800m commercial vehicle factory Announced expansion of Warsaw office Launched operations centre in Warsaw Extended facilities to create world s largest Global Shared Services Centre Centre for excellence European Excellence Hub 23

24 Top 50 Polish Cities Rank City 1 Warsaw 2 Cracow 3 Lodz 4 Wrocław 5 Poznań 6 Gdańsk 7 Szczecin 8 Bydgoszcz 9 Lublin 10 Katowice 11 Białystok 12 Gdynia 13 Częstochowa 14 Radom 15 Sosnowiec 16 Toruń 17 Kielce 18 Gliwice 19 Zabrze 20 Bytom Rank City 21 Olsztyn 22 Bielsko-Biała 23 Rzeszów 24 Ruda Śląska 25 Rybnik 26 Tychy 27 Dąbrowa Górnicza 28 Płock 29 Opole 30 Elbląg 31 Gorzów Wielkopolski 32 Wałbrzych 33 Włocławek 34 Zielona Góra 35 Tarnów 36 Chorzów 37 Kalisz 38 Koszalin 39 Legnica 40 Grudziądz Rank City 41 Słupsk 42 Jaworzno 43 Jastrzębie Zdrój 44 Jelenia Góra 45 Nowy Sącz 46 Konin 47 Piotrków Trybunalski 48 Siedlce 49 Lubin 50 Inowrocław 24 Ranked by population in 2016; Source: Central Statistical Office of Poland EPP presence in city

25 Poland real estate investment activity Investment demand for real estate remained strong in 2016 Investment volumes increased 13% from 2015 to 4.5 billion - second highest volume of investment transactions, close to the record year (2006) The acquisition of EPP by Redefine and subsequent listing of EPP was the largest transaction of the year INVESTMENT VOLUME BY SECTOR (EUR MILLION) EUR millions 5,000 4,000 3,000 2,000 1,000 0 Offices Retail Logistics Other TOP INVESTORS ,400 Volume (EUR milion) 1,200 1, Volume Source: Savills

26 Poland real estate investment activity CEE INVESTMENT VOLUMES: Volume in EUR billion, % of CEE total 2016 REAL ESTATE INVESTMENT VOLUME BY REGION OF ORIGIN Romania; % SEE markets, 0.99, 8% 5,000 Slovakia, 0.85, 7% Hungary, 1.70, 13% Poland; % EUR million 4,000 3,000 2,000 1, Domestic EU US AsiaPac Middle East South Africa Other Czech Republic; 3.62; 29% 26

27 Regulatory update tax and REIT regime In late December 2016, the Polish Government amended tax legislation effective 1 January 2017 which removed the corporate income tax exemptions applicable to Polish investment funds of the nature utilised within the EPP Group structure It is anticipated that the adverse fiscal effects of the tax changes will be substantially reversed once Polish REIT legislation comes into effect The EPP Group has reorganised its holdings to allow for the transfer of its assets in anticipation of the proposed REIT regime. The corporate reorganisation implemented within the EPP Group will result in a reduction in effective tax cost The group reorganisation together with various asset management initiatives and taking into account the accretive benefits of recently announced acquisitions (concluded post the September 2016 listing) result in EPP remaining on track to achieve its forecast distributable earnings and DPS for the financial period ended 31 December 2017 (as published in the 31 August 2016 Pre-Listing Statement) This forecast is the responsibility of the board and has not been reported on by the company s auditors

28 4. Portfolio overview

29 Portfolio overview At 31 Dec 2016 Acquired post year end Total Yielding portfolio Office Retail Office Retail Number of projects * 5 24 Number of buildings Value/consideration (EUR) million million 27.6 million (ROFO) Vacancy % c. 3 Market value (% split) 28% 72% 11% 89% million million Office c. 4.0%, Retail c. 2.0% GLA (m 2 ) WAULT (rent) 3.7 years 5.9 years n/a 3.7 years Annualized NOI (EUR) 85 million 21 million 106 million Development + Warsaw development project* Towarowa (expected completion 2020/21) m² including ROFO buildings 3 buildings acquired in Dec 2016 and 1 building in the pipeline for 2017

30 Portfolio structure overview (31 Dec 2016) 10.0% Vacancy by GLA* % PORTFOLIO STRUCTURE by Fair Value Office 28.3% Retail 71.7% 9.0% 8.0% 7.0% 6.0% 5.0% 4,3% 4.0% 3.0% PORTFOLIO STRUCTURE by GLA (m 2 ) Office 36.7% Retail 63.3% 2.0% 1.0% 1.7% 0.0% Retail Office 30 * Vacancy profile of Retail assets not including extensions under development (Galaxy and Outlet Park)

31 Portfolio value driven by active management* No Retail Property Retail GLA (m 2 ) Fair Value Fair Value Fair Value at IPO (EUR m) 31 Dec 16 (EUR m) 31 Dec 17 (EUR m) 1 Pasaz Grunwaldzki (FC/Recom) Galaxy (extension completed in 2017) Galeria Echo (Recom) Amber Kalisz (leasing) Veneda (turnover rent) Outlet Park* (extension completed in 2017) Galeria Sudecka (leasing) Olimpia Echo Centrum Belchatow Echo Centrum Przemysl Zakopianka Retail Park Twierdza Zamość Twierdza Kłodzko Wzorcownia Włocławek Tęcza Kalisz Sub Total Office Property Office GLA (m 2 ) Fair Value Fair Value Fair Value at IPO (EUR m) 31 Dec 16 (EUR m) 31 Dec 17 (EUR m) 1 Malta Office Park (recom) Park Rozwoju (recom) A4 Business Park Phase (ROFO) West Gate Astra Kielce Oxygen (recom) Tryton Gdańsk (ROFO) Symetris Phase I (ROFO) O3 Business Campus Phase I (ROFO) Sub Total Total *existing or secured by PSPA (Preliminary Share Purchase Agreements), areas according to 31 Dec 2016 valuations

32 Portfolio location weighted by Fair Value (31 Dec 2016) (17) Gdańsk Retail Fair Value Annualized NOI No Property GLA (m 2 ) 31 Dec 16 (EUR m) 31 Dec 16 (EUR m) 1 Pasaz Grunwaldzki 48, ,6 Office 2 Galaxy * 41, ,3 12,7 8.7% 3 Galeria Echo 71, ,3 12,0 4 Amber Kalisz 33,599 78,5 5,2 5 Veneda 15,026 37,1 2,4 6 Outlet Park * 24,571 74,8 4,7 7 Galeria Sudecka 31,243 52,8 3,9 Retail 91.3% (5) Łomża 8 Olimpia 21,274 41,4 2,8 9 Echo Centrum Belchatow 11,426 10,2 0.8 (2, 6, 16) Szczecin 10 Echo Centrum Przemysl 5,759 4,7 0.4 Total 303, ,9 57,5 (11) Poznań (12) Warszawa Galaxy extension 15,147 Outlet Park extension 3,812 (4) Kalisz Total after extensions 322,805 Average retail GLA 39,631 Office Fair Value Annualized NOI No Property GLA (m 2 ) 31 Dec 16 (EUR m) 31 Dec 16 (EUR m) 28,270 63,3 5,1 11 Malta Office Park 12 Park Rozwoju 33,126 72,1 4,0 A4 Business Park Phase I & 13 18,059 37,9 2,8 II** 14 West Gate 16,532 39,4 2,9 15 Astra Kielce 14,269 31,3 2,6 Retail Office (1, 14) Wrocław Office 14.0% Retail 86.0% (6) Jelenia Góra (13) Katowice (18) Łódź (8,9) Bełchatów Office 12.9% Retail 87.1% (3, 15) Kielce 16 Oxygen 13,902 28,5 2,4 Fair Value diagram scale: 17 Tryton Gdańsk 23,364 48,7 3,7 18 Symetris Phase I 9,652 20,4 1,7 19 O3 Business Campus Phase I 18,766 45,4 3,2 (19) Kraków (10) Przemyśl Total 175, ,0 28,4 * GLA and Annualized NOI excluding planned extensions 32 **Excluding phase III to be acquired in Q EUR m 80 EUR m

33 New projects locations weighted by fair value No Project name Type City GLA (m 2 ) Fair % share of Value FV (EUR m) A4 Business 1 Office Katowice % Park III 2 Wzorcownia Retail Włocławek % 3 Twierdza Retail Zamość % 4 Twierdza Retail Kłodzko % 5 Tęcza Retail Kalisz % 6 Zakopianka Retail Kraków % Total % Szczecin Poznań Gdańsk (2) Włocławek (7) Warsaw Łomża 7 Towarowa Retail Warsaw Dev Warszawa Jelenia Góra Wrocław (5) Kalisz Bełchatów (3) Zamość Existing projects (4) Kłodzko (1) Katowice Kielce New Project - retail New Project - office GLA diagram scale: Przemyśl Development Projects - retail 33 10,000 m2 25,000 m2 (6) Kraków

34 4.1 Retail

35 Polish Retail Dynamics Strong consumer sentiment expected to drive the retail turnovers supported by program (see next slide) Traditional Shopping Centre (TSC) prime headline in-line rents show healthy dynamics with Warsaw showing 2 year growth of 23% 15.00% 10.00% 5.00% 0.00% -5.00% % % Source: Polish Council of Shopping Centers TURNOVER INDEX (y-o-y change) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Poland is in the top 10 countries adding most new retail space relative to existing space at 1.3 % c.46% relates to extensions of existing projects Poland retail sales continue to show strong growth with 6.4% growth in December % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% NEW RETAIL SUPPLY 2014 Q New schemes Extensions Q1-Q Source: Knight Frank 35

36 Polish Retail Dynamics 500+ programme opportunity Jun-Dec 2015 to Jun-Dec 2016 changes Projects Sales density increase POLISH ZLOTY/m² Footfall increase Galaxy 0.9% 4.1% Galeria Amber 13.5% 8.8% Galeria Echo 8.6% 0.4% Galeria Olimpia 5.3% 0.7% Galeria Sudecka 5.0% 0.0% Galeria Veneda 9.9% 0.0% Outlet Park 7.3% 18.9% Pasaż Grunwaldzki 3.6% 0.9% Total 5.9% 3.4% The 500+ social programme supporting families with more than one child with a monthly contribution of PLN500 ( 125) per child Disproportional increase in percentage disposable income in regional cities. 60% increase in disposable income in comparison to the larger regional cities Most of the large retail chains have increased their turnover Food, fashion, consumer electronics, entertainment sectors are benefiting 36

37 EPP retail strategy Create the dominant and sustainable Polish retail portfolio to leverage our scale and influence Warsaw: m² retail footprint into Warsaw through Towarowa (city centre) Opportunistic purchaser in major cities in which EPP does not have a presence eg. Zakopianka Small regional cities: (within top 75 cities) with a dominant catchment area ranging from people within a 30 minute drive 37

38 Retail portfolio overview (31 Dec 2016) CONTRIBUTION TO GLA BY CATEGORY COMPOSITION OF FAIR VALUE Echo Centrum Belchatow 1.0% Echo Centrum Przemysl 0.5% 38 *Included assets as at 31 Dec 2016

39 Retail portfolio overview (31 Dec 2016) Top 10 retail tenants corresponds to ca. 31% of portfolio s total retail rental income Pasaz Grunwaldzki 5 leases currently under negotiation when signed vacancy will drop to 0.5%: 927 m 2 - LPP Group (Sinsey), Eurofirany, fashion 961 m 2 - relocation: Inditex Group (Pull & Bear, Oysho), Pepco, T-mobile 15 new retailers; U.S. Polo Assn., forever 21 and Steve Madden entered market TOP 10 RETAIL TENANTS IN TERMS OF RENTAL INCOME No Tenant name % share in total rental income 1 8.0% 2 5.9% 3 2.8% 4 2.6% 5 2.3% 6 2.3% 7 2.0% 8 1.9% 9 1.7% % Total 31.1% VACANCY PROFILE 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Echo Centrum Przemysl 0.0% Echo Centrum Belchatow 0.0% Olimpia 0.0% Galeria Sudecka 0.0% Galaxy 0.1% Veneda 1.7% Outlet Park 1.1% Amber Kalisz 2.5% Galeria Echo 4,1% Pasaz Grunwaldzki 3.9% ,000 1,500 2,000 Vacancy (m 2 )

40 Retail porfolio WAULT outline (31 Dec 2016) LEASE EXPIRY PROFIE 900, , ,000 Renatl Income (EUR) 700, , , , , , , , , , , , , , , , =< 2026 WAULT WAULT (years) Galaxy Echo Centrum Przemysl Outlet Park Amber Kalisz Galeria Sudecka Galeria Echo Pasaz Grunwaldzki Echo Centrum Belchatow Veneda Average Retail WAULT (5.86) 4.41 Olimpia 40 * WAULT exluding signed Lease Agreements concerning planned extensions (Galaxy and Outlet Park)

41 4.2 Office

42 Polish Office Dynamics Warsaw and other office destinations continue to enjoy strong growth potential with an influx of shared services companies, which are likely to become the market s key growth driver Millions m² SUPPLY: WARSAW VS. REGIONAL CITIES 100% 75% 50% 25% 0% In 2016 significant office projects in Poland completed including Q22 (Echo) and Warsaw Spire Regional cities are catching up with Warsaw both in terms of supply and demand for office space During 2016, developers completed over m² of office space. Warsaw is the largest office market in Poland with 46% of 2016 new supply Regional business centres outside of Warsaw are expanding rapidly with vacancies showing stability or even some signs of decrease Warsaw Regional cities Regional cities vs. Warsaw VACANCY RATE: WARSAW VS. REGIONAL CITIES 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Warsaw Kraków Wrocław Poznań Łódź Tricity TAKE-UP: WARSAW VS. REGIONAL CITIES 2,000, % 1,500,000 75% m² 1,000, , % 25% 0% 42 Warsaw Regional cities Regional cities vs. Warsaw

43 EPP office strategy EPP will continue to: Focus on leading Polish cities and high quality modern properties Diversify its tenant base of primarily blue chip companies Carefully manage its office assets and, where appropriate, recycle assets Pro-actively trade assets to ensure its portfolio remains balanced and competitive in the long term while maintaining a weighted average unexpired lease term in excess of 4 years 43

44 Office portfolio overview (31 Dec 2016) COMPOSITION OF FAIR VALUE O3 Business Campus Phase I 12% Malta Office Park 17% Tryton Gdańsk 12% Park Rozwoju 19% Oxygen 7% Astra Kielce 8% West Gate 10% A4 Business Park 10% 44

45 Office portfolio overview (31 Dec 2016) Top 10 office tenants corresponds to ca. 46 % of portfolio s total office income TOP 10 OFFICE TENANTS IN TERMS OF RENTAL INCOME No Tenant name % share in total Office rental income VACANCY PROFILE IN OFFICE ASSETS Vacancy level (%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% ROFO office projects have signed Master Lease, which provides guarantee of monthly payments amount to the Headline Rent for each square metre of free space % % % O3 Business Campus Phase I Symetris Phase I Tryton Gdańsk 0.0% 0.0% 0.0% 17% vacancy without Master Lease 24% vacancy without Master Lease 28% vacancy without Master Lease ROFO projects with 3 years fully let guarantee (Master Lease) Park Rozwoju - 5 leases currently under negotiations exepected to sign by June when signed vacancy will drop to 5,2% % % % Astra Kielce West Gate A4 Business Park 0.0% 0.0% 0.0% % Malta Office Park 0.6% % % Oxygen Park Rozwoju 3.4% Space under 20,6% LOI (75%) 20.6% % Total 46,27% 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Vacancy (m2) Vacancy (m 2 ) 45

46 Office portfolio WAULT outline (31 Dec 2016) 22.3% of total Rental income generated by office assets fall vacant in the 4th year * Astra Park lease with Echo Investment SA (as a tenant) to be prolonged by end of March 2017 currently under negotiations (project without master lease) ** Malta Park m2 GLA (40%) lease with McKinsey currently under negotiation extention planned for next 5 years; expected to signed by the end of March 2017 Renatl Income (EUR) WAULT (years) 450, , , , , , , , , ,238 * 221, , , LEASE EXPIRY PROFIE 275,543 WAULT Portfolio average WAULT Rent 4,10 (years) , ,361 ROFO projects with 3 years fully let guarantee (Master Lease) , , =< , Astra Kielce A4 Business Park West Gate Park Rozwoju Oxygen Malta Office Park Tryton Gdańsk Symetris Phase I O3 Business Campus Phase I 46

47 4.3 Developments

48 Development portfolio overview Towarowa 70% interest in planned m 2 dominant mixeduse scheme Targeted completion on track for 2020/2021 Estimated development yield on cost 8% Extensions m² in extensions of existing retail centres in development Galaxy and Outlet Park Szczecin Galaxy s extension 70% leased OPS s extension 75% leased 48

49 Towarowa One of the most spectacular urban retail projects in Europe and the biggest in Poland Will be a diverse urban complex encompassing the first modern multifunctional and the biggest shopping centre in Warsaw, new attractive public areas, art and cultural space and high quality apartments Located in the fast growing Wola district new city centre of Warsaw and next to arterial roads passing through Warsaw During rush hour the property is passed by approx. 6,000 vehicles per hour Acquisition of land completed for 78 million Project under development scheduled for completion 2020/2021 Strong interest from all anchor tenants active in Poland Estimated cost at development ( million; land acquisition included) 420 Estimated NOI on completion ( million) 33.8 Estimated yield on cost c. 8% Estimated valuation yield on completion c. 5% EPP capital uplift ( milion) c.180 CATCHMENT AREA Drive time Population (000s) 3,000 2,000 1, , minutes 1, minutes minutes Total 49

50 Development portfolio overview Extensions m² in extensions of existing retail centres in development Galaxy and Outlet Park Szczecin Galaxy s extension 70% leased OPS s extension phase I 100% leased; phase II 100%, phase III 24% and ph. IV 100% 3.1 million NOI uplift 15 million capital uplift 50

51 5. Prospects

52 Income producing acquisitions and use of capital million Project name Cost NOI Debt Interest rate (%) Equity Acquisitions contracted for year to date Cash on cash yield Zakopianka % Blackstone (93) 2.2% % A4 phase III (13) 2.2% % Total (106) Estimated LTV of 43% 2 Cost is not presented net of profit share 52

53 Growth and prospects Acquisitions through STRATEGIC RELATIONSHIPS and EXPERIENCED MANAGEMENT TEAM Combination of: ORGANIC GROWTH ACQUISITIVE GROWTH LEVERAGE PORTFOLIO and platform with retail tenants Focus on acquiring retail assets in STRATEGIC LOCATIONS STRONG COMPOUNDED GROWTH IN DPS OVER THE MEDIUM TERM Acquire further HIGH QUALITY, WELL LOCATED OFFICE ASSETS with STRONG TENANTS SIGNIFICANT STRATEGIC DEVELOPMENT IN PROGRESS Towarowa ORGANIC GROWTH from retail extensions, filling up of vacancies and ACTIVE ASSET MANAGEMENT PRO-ACTIVELY TRADE ASSETS to ensure balanced portfolio (maintain WAULT of >4 years) 53

54 Questions & answers 54

55 Contacts CEO Hadley Dean MARKETING DIRECTOR Magda Cieliczko INVESTOR RELATIONS Singular Systems IR Jacques de Bie Michèle Mackey CORPORATE ADVISOR Java Capital Kevin Joselowitz +27(0) Carl Esterhuysen +27(0)