FINANCIAL RESULTS. for the year ended 31 Dec

Transcription

1 FINANCIAL RESULTS for the year ended 31 Dec

2 Contents Highlights & Investment Case 2. Financial Review Polish Consumer Optimism Continues 4. Operations Review 5. M1 Portfolio 6. Outlook 7. Appendices 2

3 Highlights & Investment Case Olimpia, Bełchatów

4 2017 Financial highlights 334 M 7.7% 91 M ACQUISITIONS VALUE (EXCLUDING MŁOCINY) LFL RETAIL VALUE GROWTH (NET OF CAPEX) UPLIFT IN VALUE FOR INVESTMENT PROPERTIES AND JVS 47.4% LTV REDUCTION BY 5% (SINCE IPO BY 10%) 1.32 NAVPS 16% GROWTH (27% SINCE IPO) 6.6% PRE TAX DPS OF AHEAD OF PLS GUIDANCE OF EURO CENTS FULL YEAR DIVIDEND DELIVERED 4

5 2017 Retail operational highlights GLA m² Dec 2017 GLA sqm RTS (Rent-to-Sales) GLA sqm FOOTFALL GLA (LFL) sqm Dec % 3.0% 1.63% 31 Dec 2016 GLA at the end of 2016 excl. extensions 10.3% 4.6% 2016 OCR (Operational GLA sqm Costs Ratio) 13.5% SALES (LFL) GLA sqm 7.0% WALT* BY GLA 5.30 yrs 31 Dec 2017 VACANCY GLA sqm Dec Dec % NUMBER OF UNITS Dec % 14.5% 4.76 yrs Dec 2016 *Weighted average lease term 5

6 Investment case Dominant, Defensible, Sustainable We own shopping centres across Poland that are dominant in their catchment area Highly efficient and reliable operations supported by a propriety property information system Fully internalised asset management and property management function Successful track record of acquisitions Focused strategy to support future growth Supportive capital structure Strong corporate governance 6

7 2017 Achievements Acquisition of 70% stake in Galeria Młociny development, mixed use project in Warsaw; 81,900 m², for 32 million Acquisition of 3 retail properties from funds managed by Blackstone, value: 142 million 1. Completed 3 rd phase of Outlet Park Szczecin extension; 3,300 m²; 100% leased; 2. Internalised asset management and leasing team Completed Galaxy mall extension in Szczecin: 15,150 m²; 100% leased MAR APR JUN JUL SEP OCT NOV DEC 1. Equity raise on the JSE: accelerated bookbuild of 152 million 2. Acquisition of Zakopianka retail park in Krakow, value: 53 million 3. Acquisition of A4 phase III ROFO office in Katowice, value: 27 million Acquisition of Galeria Solna shopping mall in Inowrocław, value: 55 million 1. Finalised purchase agreement of M1 Portfolio consisting of 12 retail properties in Poland; value: 692 million 2. Disposal of three office assets: A4 Business Park, Tryton Business House and West Gate for 160 million; disposal above the book value 3. Acquisition of O3 Business Park phase II ROFO office in Krakow, value: 49 million 7

8 Key management HADLEY DEAN CHIEF EXECUTIVE OFFICER 20 YEARS + OF REAL ESTATE EXPERIENCE PREVIOUS COMPANIES: EMEA BOARD MEMBER COLLIERS INTERNATIONAL JACEK BAGIŃSKI WOJCIECH KNAWA MICHAŁ ŚWIERCZYŃSKI RAFAŁ KWIATKOWSKI CHIEF FINANCIAL OFFICER BOARD MEMBER PROPERTY MANAGEMENT BOARD MEMBER ASSET MANAGEMENT CHIEF OPERATING OFFICER 153 TOTAL TEAM 20 YEARS + IN LISTED COMPANIES PREVIOUS COMPANIES: EMPIK MEDIA & FASHION, PEPSICO, BP OVER 17 YEARS OF EXPERIENCE IN REAL ESTATE PREVIOUS COMPANIES: ECHO INVESTMENT OVER 21 YEARS OF REAL ESTATE EXPERIENCE PREVIOUS COMPANIES: ECE, JLL OVER 15 YEARS OF REAL ESTATE EXPERIENCE PREVIOUS COMPANIES: ECHO INVESTMENT 8

9 Our properties as at Jan 2018 RETAIL OFFICE ACQUISITIONS 9

10 Strengths and opportunities LEADING LANDLORD CATCHMENT E-COMMERCE ASSET MANAGEMENT INITIATIVES REIT LEGISLATION EPRA INDEX Scale to leverage our relationships and costs Big data Defensibility Polish consumer Strong wage growth; low unemployment Footfall growth Increased retail sales Retailers developing omnichannel Click n collect Creating destinations Foodhalls Extensions Unlocking click n collects Potential commercial REIT legislation Poland updated to developed market September

11 Challenges 11

12 Governance update Mr. Krych resigned 20 Dec from the board of directors of EPP Actions taken since the event in December 2017 Special audits Audits on selected assets including the JV development projects with Echo Investments SA were performed by Dentons, SKS (leading Polish law firm) and Deloitte. No irregularities were found Annual audit Annual audit performed by EY extended by examination of fraudulent transactions, bribery and antimoney laundering and no irregularities were found. Preparation of new, tailored polices and procedures regarding contracting intangible services, including donations, sponsoring and marketing by Loyens & Loeff Related Parties Related party policies are in place for all related party transactions In the course of the audit procedures EY verified existence, completeness, valuation and proper presentation of related party transactions. EY have not identified any issues in this respect Strengthening our compliance team 12

13 02 Financial Review WZORCOWNIA, WŁOCŁAWEK

14 Financial snapshot 31 Dec Dec 2016 Year-to-year variance DPS c c c 5.07 Distributable earnings 76.6 M 34.0 M M Total NAV M 666 M M NAV per share Total assets M M M Cost of debt 2.14% 1.85% % LTV % 52.7% - 5.3% Actual for 2017 PLS for 2017 Actual vs PLS DPS pre-tax (full year) c c c 0.72 (+ 6.6%) DPS post-tax (full year) c c c 0.03 (+ 0.3%) 1 Excluding deferred tax 2 LTV net of cash 14

15 Profit & Loss EUR million FY 2017 FY 2016 Year-to-year variance Net property income Other income / (expenses) (0.6) (0.5) (0.1) Administrative expenses 1 (15.6) (12.5) (3.1) Fair value gain on investment property Share in fair value gain and profit of JV Finance income / (expenses) (15.7) (17.1) 1.5 Foreign exchange gains / (losses) (1.8) 2.2 (4.0) Current and deferred taxation (32.6) (19.4) (13.1) Net profit after taxes Exclusions from earnings 2 (55.4) (38.3) (17.1) Antecendent dividends Distributable earnings DPS ( cents) Share based payment (LTI) 4 million provision and 1.9 million expense recognized 2 Fair value gains in investment properties and joint ventures, foreign exchange, deferred taxation and other 3 Aantecedent dividend related to the share capital increase in April

16 Balance Sheet EUR million 31 Dec Dec 2016 Year-to-Year Investment property Investment in JVs Financial assets Other assets (5) Cash Total assets Equity Borrowings Deferred tax liability Trade & other liabilities Total equity and liabilities % LTV 83% HEDGING LEVEL 3.9 yrs AVERAGE DEBT MATURITY 2.14% AVERAGE COST OF DEBT 16

17 NAV Bridge Bridge on NAV Value # of shares NAV PS (NAV excluding deferred tax) (EURm) (million) (EUR) NAV as of 30 June 2016 (post IPO) Net profit (excl. fair value gains, joint-ventures and deferred tax) 31 Fair value gains on investment properties (1.3% uplift) 31 Share in fair value gains and profits of joint-ventures 13 Restatement recognition of preferred dividend liability (17) NAV as of 31 December Net profit (excl. fair value gains, joint-ventures and deferred tax) 70 Fair value gains on properties owned at YE 2016 (5.0% uplift) 68 Fair value gains on properties acquired in 2017 (1.4% uplift) 4 Profit on sale of investment properties (offices) in Share in fair value gains and profits of joint-ventures 16 Share capital increase (net of equity issue costs) 149 Dividends paid to shareholders during the year (55) Foreign exchange translation & other items 7 75 total fair value gain 16% NAV PER SHARE GROWTH FOR THE YEAR 27% NAV PER SHARE GROWTH SINCE IPO NAV as of 31 December

18 Restatement of 2016 balance sheet A preferred dividend was granted to Echo Investment S.A. at the time when Echo sold 75% shares to Redefine and was conditional upon opening of the Galaxy and Outlet extensions, which happened in It was described in detail in the notes to the annual consolidated financial statements in The restatement results from recognition in 2016 of a 17 M liability related to the preferred dividend, which was paid in EUR million 31 Dec 2016 Change Change % 31 Dec 2016 Restated Total assets Equity (17) (3%) Borrowings Related party financial liabilities Other liabilities and deferred tax Total equity and liabilities Dec Dec 2016 Restated Variance Variance % DPS c 5.80 c LTV 52.7% 52.7% - - NAV per share 1,16 1,14 (0,02) (2%) 18

19 Proposed changes to the Polish legislation affecting real estate taxation Polish REIT Law On 26 May 2017, the Polish Ministry of Finance published a draft of the legislation introducing real estate investment trust (REIT) structures in Poland As per the latest information available from the MF, REIT structures in Poland will most likely only be available for investments in residential buildings. Corporate Income tax (CIT) As of 1 January 2018 a bill with significant changes to the CIT law entered into force. Key changes include: Implementation of a so-called minimum levy on certain commercial real estate (mainly shopping malls and office buildings) at the rate of 0.42% p.a. of the gross (initial) tax value of the building. Limitation of the deduction of financing costs to 30% of a tax-adjusted EBITDA with a safe harbour of PLN 3m (approx. 0.7m). Limitation of the deduction of expenses related to certain intangible services purchased from related parties with a safe harbor of PLN 3m (approx. 0.7m). The above changes (especially introduction of minimum levy and limitation of interest deduction) and the fact that as of 1 January 2018 companies are paying CIT according to the standard 19% CIT rate (in 2017 companies paid CIT according to 15% CIT rate which was tax privilege for newly established companies) resulted in an estimated increase of the effective tax rate in 2018 by 2 pp. 19

20 03 Polish Consumer Optimism Continues

21 Robust growth continued Poland s GDP continues robust growth Low unemployment Strong wage growth Private consumption remains robust Retail sales growth* PLN vs. EUR strenghth and stability Source: Oxford Economics * A form of sale in which goods are mainly purchased (bought) and resold to the consumer or end-user, generally in small quantities and in the state in which they were purchased by the retailer (or following minor transformations). 21

22 EUR (2016) Great potential for consumption and retail sales growth AVERAGE MONTHLY SALARY % growth since % growth since ,950 Consumer spending per capita (EUR, 2017) in Poland 10.2% Consumer spending growth % 8% 6% THE QUICKEST DROP IN EU IS IN POLAND (UNEMPLOYMENT RATE) Poland Germany 4% 4.60 STABLE EXCHANGE RATE PLN/EUR EXCHANGE RATE 2% (f) 2018 (f) 2019 (f) 2020 (f) POLAND GERMANY EU (f) 2019 (f) 2020 (f) 22

23 Changing retail environment

24 New supply (m²) Limited retail supply expected stable outlook EVOLUTION OF RETAIL SPACE IN POLAND Source: Savills New supply (m²) 24

25 Retail sales (EUR million) Growth in traditional sales expected to remain resilient RETAIL SALES IN POLAND Offline sales (EUR million) Online sales (EUR million) Source: Savills based on Oxford Economics and Statista 25

26 Retailers answer to online TRADITIONAL RETAIL E-COMMERCE OMNI-CHANNEL In-store service Shopping experience Satisfaction guaranteed Immediate availability Quick and convenient Unlimited offer Personalised 26

27 Local omni-channel trends Implementing of in-store experience zones such as video games lounge, coffee bar, mobile networking zone, live cooking and cinema lounge Polish leading bookstore, multimedia and entertainment goods retailer with 67 years history in the market; Empik has an online store that offers click n collect to its customers Virtual changing rooms, augmented reality fitting zones, personalised click n collect zones with store size increase An international chain of specialist stores with products for children. Smyk has an online store that offers click n collect The largest shoe online store in CEE opens regular stores providing the unlimited offer and immediate purchase 27

28 EPP s answer to e-commerce Enhancing the physical shopping centre experience the winning strategy to combat online attrition Click n collect profits from location, location, location Push discounts/promotions/personalized apps implemented in various marketing & PR strategies across the retail portfolio Product engagement through retailers staff trainings organised by EPP University to improve sales efficiency and product presentation enhancement Enhanced leisure and F&B offerings representing c. 15% of GLA across retail portfolio Licence plate recognition technology gradually being installed in car parks across the retail portfolio 28

29 04 Operations Review Galaxy, Szczecin

30 ECHO photos Retail Amber, Kalisz

31 2017 Retail Performance Review GLA m² Dec 2017 GLA sqm RTS (Rent GLA to Sales) sqm FOOTFALL GLA (LFL) sqm Dec % 3.0% 1.63% 31 Dec 2016 GLA at the end of 2016 excl. extensions 10.3% 4.6% 2016 OCR (Operations GLA sqm Costs Ratio) 13.5% SALES (LFL) GLA sqm 7.0% WALT* BY GLA 5.30 yrs 31 Dec 2017 VACANCY GLA sqm Dec Dec % NUMBER OF UNITS Dec % 14.5% 4.76 yrs Dec 2016 Highlights 45 % increase of GLA after new acqusitions including: Galeria Twierdza Kłodzko, Galeria Twierdza Zamość; Wzorcownia Włocławek; Zakopianka, Galeria Solna Positive growth accross the portfolio, footfall and sales trend above the market level reported by Polish Council of Shopping Centers (footfall -1,7%; sales +2,2%) *Weighted average lease term 31

32 Average monthly sales (PLN/sqm) Sales increase across the portfolio RETAIL ASSETS SALES PERFORMANCE ( ) (IN TERMS OF AVERAGE MONTHLY SALES PER SQM) % 4.1% 0.4% 1.5% % 3.3% 6.3% 7.1% 12.5% 8.9% 5.9% 7.8% 6% 10.2% 1.0% 0.5% % 0 Galeria Veneda Galaxy Outlet Park Galeria Echo Twierdza Kłodzko Pasaż Grunwaldzki Galeria Solna Galeria Amber Zakopianka Twierdza Zamość Galeria Olimpia Galeria Wzorcownia Galeria Sudecka -0.5% Source: Savills Average 2016 Average

33 Footfall increase across the portfolio % 7.1% 2.3% % -0.1% 4.8% 6.2% 2.0% -1.1% -2.5% 6.4% 3.1% 4.5% Footfall 2016 Footfall 2017 Source: Savills 33

34 Source: Polish Council of Shopping Centers EPP outperforming the national average 3.0% POLISH COUNCIL OF SC - TURNOVER INDEX (YOY CHANGE) 2.0% 1.0% 0.0% -1.0% -2.0% -2.60% 2.10% 1.80% 2.20% -3.0% TURNOVER INDEX, YOY CHANGE 8.0% EPP TURNOVER GROWTH (YOY CHANGE) 7.0% 6.0% 7% 5.0% 4.0% 3.0% 2.0% 1.0% 2.5% 2.8% 3.0% 0.0% Source: Savills

35 Fair Value (EURm) Sustainable growth in value top 5 by value % RETAIL ASSETS FAIR VALUE CHANGE ( ) 2.5% 4.3% % 2.0% % % 11.7% 1.0% % 0 Galaxy Pasaż Grunwaldzki Galeria Echo Outlet Park Amber Kalisz 0.0% FAIR VALUE 31 DEC 16 (M EUR] FAIR VALUE 31 DEC 17 (M EUR] Y-O-Y FV % CHANGE Source: Savills 35

36 Featured Project Szczecin GALAXY GLA (m 2 ) Rent to sales 11.6% WAULT (rent) 7.1 years Occupancy 98.8% Turnover growth 4,1% Annual footfall growth 7,1 % Annual footfall Valuation yield 5.95% 36

37 Featured Project PASAŻ GRUNWALDZKI Wrocław GLA (m 2 ) Rent to sales 12.6% WAULT (rent) 4.7 years Occupancy 99.3% Annual footfall growth 8.8% Footfall Turnover growth 6.3% Valuation yield 5.65% 37

38 Featured Project GALERIA ECHO Kielce GLA (m 2 ) Rent to sales 10.0% WAULT (rent) 4.6 years Occupancy 96.0% Annual footfall growth 2.3 % Annual footfall Turnover growth 9.7% Valuation yield 5.75% 38

39 Featured Project Kalisz GALERIA AMBER GLA (m 2 ) Rent to sales 9.3% WAULT (rent) 4.7 years Occupancy 100% Annual footfall growth 8.1% Annual footfall Turnover growth 12.5% Valuation yield 6.31% 39

40 Featured Project Szczecin OUTLET PARK SZCZECIN New photo GLA (m 2 ) Rent to sales 8.7% WAULT (rent) 5,3 years Occupancy 98.7% Annual footfall growth 4.8% Annual footfall Turnover growth 0.4% Valuation yield 6.28% 40

41 Featured Project Inowrocław GALERIA SOLNA New photo GLA (m 2 ) Rent to sales 8.8% WAULT (rent) 3.9 Occupancy 99.6% Annual footfall growth 4.5% Annual footfall Turnover growth 7.2% Valuation yield 7.10% 41

42 Sunday Trading Transition period Exemptions for F&B, entertainment, fitness, bakeries and others Already in place in Germany, Belgium, Holland, France, Austria, Greece and others Based on recent examples from Hungary and Poland, Radom - limited impact on turnover and footfall Consumer shift from Sunday to other weekdays EPP centres will remain open for all Sundays for F&B, entertainment and others Opening hours extended on Fridays and Saturdays 42

43 Galeria Młociny construction site Construction works Developments

44 Galeria Młociny the largest retail construction site in Poland

45 Galeria Młociny 75% of GLA leased (Zara, Intermarche, MediaMarkt, Smyk, H&M, Sephora, Douglas, Van Graaf, CCC) Advanced talks with new international brands 1.5 million people within 30 min driving distance Park n Ride 40K passengers daily; 150K cars per day On track to open in March 2019 Planned total GLA (m 2 ) Estimated cost of development (land included) 300 M Estimated fully-let NOI on completion 21 M Estimated development yield on cost c. 7.0% Estimated valuation yield on completion c. 5.75% Estimated value on completion 365 M 45

46 Galeria Młociny new F&B and entertainment destination in Warsaw Unique architecture 50 restaurants & cafes Various kids play areas Summer & Winter garden 20% GLA F&B

47 Towarowa 22 Undergoing zoning process scheduled for 2018/2019 Warsaw mixed use scheme with 110,000 m² GLA of retail Potential additional of 45,000 m² GLA of mixed-use: residential, office and hotel Strong interest from all main anchor tenants Planned total retail GLA (m 2 ) Estimated cost of retail development (land included) Estimated fully let retail NOI on completion 420 M 34 M Estimated development yield on cost c. 8% Estimated valuation retail yield on completion c. 5 % Estimated value of retail space Estimated value of the additional space TOTAL 680 M 150 M 830 M 47

48 Galaxy the largest shopping & entertainment centre in North-West of Poland 3.1 million NOI uplift 50 million uplift in value 1.1 million visitors in November best month ever 807K increase in number of visitors within 4 months 45 new stores in m² GLA

49 Outlet Park Szczecin the no. 1 Outlet strengthened 21 new stores totalling 3,800 m ² GLA 1.0 million NOI uplift 17 million uplift in value 42% sales increase since opening in % footfall increase since opening in K increase in number of visitors during 4 months

50 Malta Office Park Office

51 2017 Office Performance Review GLA m²gla sqm Dec 2017 VACANCY GLA sqm * * Dec % 31 Dec % 31 Dec 2016 NUMBER OF TENANTS Dec Dec 2016 WALT by GLA 3.82 yrs 31 Dec yrs 31 Dec 2016 *Purchase in May 2017 of the III stage A4 - GLA m² and O3 Business Campus II stage GLA m² in Dec 2017 and the sale of three projects: West Gate, Tryton and A4 (I, II, III stage) with a total GLA m² in Dec

52 Top properties by value MALTA OFFICE PARK, POZNAŃ GLA m² 586 parking spaces O3 BUSINESS CAMPUS, KRAKÓW GLA m² 822 parking spaces PARK ROZWOJU, WARSAW GLA m² 735 parking spaces 52

53 Office disposal strategy Continue with our stated disposal strategy 3 offices already sold in Dec (A4, West Gate and Tryton); sold with a profit of 3.6 million for the total of 160 million (yield 7.3%); 64 million equity recovered 3 offices in progress for sale: O3 Business Campus, Malta Office Park and Symetris Business Park and the expected equity to be recovered is over 85 million. Proceeds to be used to fund M1 tranche II 53

54 05 M1 portfolio M1 Zabrze

55 Why M1 M1 Portfolio meets the EPP investment criteria Well established retail properties with ~20 year trading histories and in great urban locations Large individual sites along the motorway or major junctions, largely irreplaceable sites Food and DIY anchored with top international brands: Auchan, OBI, MediaMarkt, TK Maxx, H&M, C&A Permitted and planned extensions will reinforce competitiveness of each property and grow NOI Potential of increasing the GLA by 8-10% and NOI by 10-15% Click n collect profits from location, location, location M1 Kraków 55

56 M1 tailor made tenant mix and simple layout TENANT MIX (GLA) EXAMPLE OF M1 KRAKÓW 56

57 Strong anchor tenant base Auchan no. 1 hypermarket operator in Poland and 5th largest worldwide; a 20 year track record in the Polish market; 7 year agreements with Auchan. OBI the leading DIY operator with over 50 stores in Poland and a 19 year track record in the Polish market; 15 existing lease agreements in place. MediaMarkt German based leading consumer electronic retailer with over 60 stores in Poland and a 19 year track record in the Polish market; opportunity to decrease space and re-rent at better rents. 57

58 The no. 1 retail partner in Poland by M² 27 PRIME LOCATIONS 40% OF POLAND WITHIN 30 MIN. DRIVE TIME 120 MILLION ANNUAL FOOTFALL COMBINED SCALE & LEVERAGE 58

59 06 Outlook Pasaż Grunwaldzki

60 2018 Focus FOCUS ON PORTFOLIO INTEGRATION ASSET MANAGEMENT & EXTENSIONS CONTINUE TO FOCUS ON LTV REDUCTION CONTINUATION OF ASSET RECYCLING GOVERNANCE EXPLORING CORPORATE BOND 60

61 Drivers of DPS growth for 2018 Indexation + rental growth through asset management initiatives Full year accretion of acquisitions and extensions Full year inclusion of tranche 1 of the M1 acquisition EURO CENTS PER SHARE 61

62 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. No information made available in connection with this presentation may be passed on, copied, reproduced, in whole or in part, or otherwise disseminated, directly or indirectly, to any other person. 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. 62

63 07 Appendices M1 Kraków

64 2017 Market Update - Office SUPPLY BY CITY ( 9.66 MILLION M²) LETTING ACTIVITY BY CITY ( 1.49 MILLION M²) UNDER CONSTRUCTION BY CITY ( 1.64 MILLION M²) Wrocław, 9% Łódź, 4% Szczecin, 2% Lublin, 2% Szczecin, 1% Lublin, 1% Wrocław, 11% Łódź, 4% Wrocław 17% Szczecin 2% Lublin 2% Tricity, 7% Poznań, 5% Warsaw, 55% Tricity, 8% Poznań, 5% Warsaw, 55% Łódź 5% Tricity 8% Warsaw 43% Kraków, 11% Kraków, 13% Poznań 6% Katowice, 5% Katowice, 2% Kraków 14% Katowice 3% VACANCY RATE BY CITY 25% WARSAW 20% KATOWICE 15% KRAKÓW POZNAŃ 10% TRICITY 5% ŁÓDŹ WROCŁAW 0% Source: Savills 64 SZCZECIN

65 2017 Market Update - Office 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 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 TAKE-UP BY TYPE IN WARSAW 11% 45% 26% 17% 1% TAKE-UP BY TYPE IN REGIONAL CITIES 2% 5% 9% 27% 27% 30% OWNER OCC EXPANSION RENEWALS PRE-LET SUB-LEASE NEW/RELOCATIONS OWNER OCCUPIER EXPANSION RENEWALS NEW/RELOCATION PRE-LEASE SUBLEASE Source: Savills 65

66 EUR millions EUR million Focus on investment INVESTMENT VOLUME BY SECTOR IN POLAND (EUR MILION) INVESTMENT VOLUME BY REGION OF ORIGIN IN POLAND OFFICES RETAIL LOGISTICS OTHER DOMESTIC EU US ASIAPAC MIDDLE EAST SOUTH AFRICA OTHER PRIME OFFICE YIELDS IN POLAND PRIME SHOPPING CENTRE YIELDS IN POLAND CEE INVESTMENT VOLUMES IN % 8% 7% 6% 5% 9% 8% 7% 6% 5% 4% 14% 8% 8% 39% 4% 4% WARSAW CITY CENTRE WARSAW NON-CENTRAL WARSAW MAJOR REGIONAL CITIES 27% LEADING REGIONAL CITIES SECONDARY CITIES POLAND CZECH HUNGARY SLOVAKIA ROMANIA SSE Source: Savills 66

67 Portfolio location weighted by fair value as at 31 Dec No Property City Retail GLA (m 2 ) * Galeria Olimpia nad Echo centrum Bełchatów considered as a single unit - Olimpia Fair Value 31 Dec 17 ( m) Gross Current Rent ( m p.a.) 1 Galaxy Szczecin 56, Pasaz Grunwaldzki Wrocław 48, Galeria Echo Kielce 71, Outlet Park Szczecin 28, Amber Kalisz Kalisz 33, Galeria Solna Inowrocław 23, Galeria Sudecka Jelenia Góra 30, Zakopianka Kraków 26, Galeria Twierdza, Zamość Zamość 23, Wzorcownia Włocławek 25, Galeria Twierdza, Kłodzko Kłodzko 23, Olimpia * Bełchatów 32, Veneda, Łomża Łomża 15, Echo Centrum Przemysl Przemyśl 5, Total 444,351 1, No Property City Office GLA (m 2 ) Fair Value 30 Dec 17 ( m) Gross Current Rent ( m p.a.) 15 Park Rozwoju Warsaw 33, Malta Office Park Poznań 28, O3 Business Campus Kraków 37, Astra Kielce Kielce 14, Oxygen Szczecin 13, Symetris Phase I Łódź 9, Total 137, No Property City Land area (m 2 ) Fair Value 30 Dec 17 ( m) 22 Towarowa 22 Warsaw 64, Galeria Młociny Site Warsaw 51, Total % 92.9% [1, 4, 20] Szczecin [7] Jelenia Góra Fair Value diagram scale: [16] Poznań [11] Kłodzko 20 EUR m 250 EUR m Source: Savills [2] Wrocław [13] Łomża [6] Inowrocław [10] Włocławek 19.9% 80.1% [15, 22, 23] Warszawa [5] Kalisz [21] Łódź [12] Bełchatów 12.4% 87.6% [9] Zamość [3, 19] Kielce 37.8% 62.2% [14] Przemyśl [8, 17, 18] Kraków RETAIL OFFICE JUPITER SITE 67

68 New acquisitions location Tranche I No Property GLA (m 2 ) 8. PP Olsztyn 1 M1 Czeladź 53,600 2 M1 Kraków 49,600 3 M1 Zabrze 52,800 Szczecin Łomża 4 M1 Łódź 38,400 Total 194, M1 Poznań Włocławek Innowrocław Tranches II and III Kalisz 4. M1 Łódź Warszawa No Property GLA (m 2 ) 5 M1 Bytom 28,200 6 M1 Częstochowa 29,900 7 M1 Radom 37,000 8 Power Park Olsztyn 32,500 9 Power Park Opole 20, Power Park Kielce 35, M1 Poznań 45, M1 Tychy 22,700 Wrocław Jelenia Góra 9. PP Opole 3. M1 Zabrze Kłodzko 5. M1 Bytom 12. M1 Tychy 7. M1 Radom Bełchatów 6. M1 Częstochowa 10. PP Kielce Zamość 1. M1 Czeladź 2. M1 Kraków Przemyśl Total 252,100 Other EPP assets Tranche I Tranche II and III 68 Source: Savills

69 Portfolio structure overview 2016 PORTFOLIO STRUCTURE BY FAIR VALUE 2017 PORTFOLIO STRUCTURE BY FAIR VALUE 21.1% 18.6% 81.4% 78.9% RETAIL OFFICE RETAIL OFFICE Source: Savills 69

70 Portfolio structure overview FAIR VALUE IN RETAIL ASSETS AND % SHARE WEIGHTED BY FAIR VALUE FAIR VALUE IN OFFICE ASSETS AND % SHARE WEIGHTED BY FAIR VALUE Fair Value (EURm) Echo Centrum Przemysl 0.3% Veneda 2.5% Olimpia 3.5% Twierdza Kłodzko 3.2% Wzorcownia 3.3% Twierdza Zamość 3.4% Zakopianka 3.7% Galeria Sudecka 3.7% Galeria Solna 3.8% Amber Kalisz 5.7% Outlet Park 6.0% Galeria Młociny 12.1% Galeria Echo 14.5% Pasaż Grunwaldzki 16.4% Galaxy 17.9% GLA (m 2 ) GLA (m2) Fair Value (EUR m) Symetris Phase I Oxygen Astra Kielce O3 Business Campus Phase II O3 Business Campus Phase I Malta Office Park Park Rozwoju Fair Value (EURm) % 9.1% 10.2% 14.1% 15.9% 20.1% 23.3% GLA (m 2 ) GLA (m2) Fair Value (EUR m) Source: Savills 70

71 Retail portfolio structure overview TOP 10 RETAIL TENANTS BY RENTAL INCOME VACANCY PROFILE IN RETAIL ASSETS No Tenant name Rental Income [EUR/month] % share in total rental income 1 542, % 2 352, % 3 154, % 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% CH Przemyśl 0.0% Galeria Olimpia 0.0% Galeria Sudecka 0.0% CH Veneda 0.0% Galeria Amber 0.0% 4 147, % Galeria Solna 0.4% 5 131, % 6 128, % 7 125, % 8 125, % 9 108, % , % Total 1,919, % Wzorcownia Włocławek 1.1% Pasaż Grunwaldzki 0.7% Twierdza Zamość 1.5% Outlet Park 1.3% Galaxy 1.2% Zakopianka 5.0% Galeria Echo 4.0% Vacancy (m 2 ) * Galeria Olimpia and Echo centrum Bełchatów considered as a single unit - Olimpia 71

72 WAULT (years) Retail portfolio structure overview Lease expire profile by NOI RETAIL ( m) WAULT by RENT IN RETAIL SECTOR (AS AT ) Galaxy Outlet Park Echo Centrum Amber Kalisz Przemysl Pasaz Grunwaldzki Galeria Echo Olimpia Veneda, Łomża Galeria Sudecka Zakopianka Echo Centrum Galeria Solna Belchatow 3.03 Galeria Twierdza, Zamość Galeria Twierdza, Kłodzko Wzorcownia 72

73 Fair Value (EURm) Sustainable growth in value - retail portfolio RETAIL ASSETS FAIR VALUE CHANGE ( ) % 4.3% 2.5% % 2.0% % % 11.7% 8.1% 0.7% 5.8% 0.4% 6.0% 6.1% 5.7% 1.0% 0.5% 3.8% 0 Galaxy Pasaż Grunwaldzki Galeria Echo Outlet Park Amber Kalisz Galeria Sudecka Zakopianka Olimpia Twierdza Zamość Wzorcownia Twierdza Kłodzko Veneda Echo Centrum Przemysl 0.0% FAIR VALUE 31 DEC 16 (M EUR] FAIR VALUE 31 DEC 17 (M EUR] Y-O-Y FV % CHANGE 73

74 Retail assets performance Low value of Rent-to-Sales (RtS) ratio indicates future perspectives of property s Landlord rents increase to the market level (depending on the unit size and tenant s operating sector), thus diagram presents ascending values or RtS ratio. RENT-TO-SALES PROFILE Twierdza Kłodzko 6.8% Outlet Park Galeria Solna Twierdza Zamość Veneda Amber Kalisz 8.7% 8.8% 9.2% 9.2% 9.3% Galeria Echo Olimpia Wzorcownia Galeria Sudecka Zakopianka Galaxy 10.0% 10.8% 11.0% 11.1% 11.4% 11.6% Pasaz Grunwaldzki 12.6% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% * Rent-to-Sales based on infromation from tenants who report sales from last full 12 rolling months RENT-TO-SALES 74

75 Office Portfolio Structure Overview VACANCY PROFILE IN OFFICE ASSETS TOP 10 OFFICE TENANTS BY RENTAL INCOME Astra Kielce 0.0% No Tenant name Rental Income [EUR/month] % share in total rental income 1 154, % 2 138, % 3 103, % 4 61, % 5 61, % 6 57, % 7 51, % Symetris Phase I Oxygen Malta Office Park Opolska Business Park 0.0% 1.5% 1.1% 1.1% 8 49, % 9 48, % 10 47, % Total 771,754 46% Park Rozwoju 13.4% Vacancy (m 2 ) Assets with Guarantee payments under the Master Lease resulting in during 3 years since date of asset purchase 75

76 WAULT (years) Office Portfolio Structure Overview Lease expire profile by NOI OFFICE ( m) WAUL by RENT IN OFFICE SECTOR (AS AT ) Astra Kielce O3 Business Campus Phase II Symetris Phase I O3 Business Campus Phase I Park Rozwoju Oxygen Malta Office Park 76

77 Office Portfolio Structure Overview OFFICE SECTOR FAIR VALUE STRUCTURE - AS AT 31 DEC 2016 OFFICE SECTOR FAIR VALUE STRUCTURE - AS AT 31 DEC % 5% 19% 9% 8% 23% 8% 10% 10% 16% 10% 14% 20% 12% 13% 16% Source: Savills PARK ROZWOJU MALTA OFFICE PARK TRYTON GDAŃSK - SOLD O3 BUSINESS CAMPUS - PHASE I WEST GATE - SOLD A4 BUSINESS PARK - SOLD ASTRA KIELCE OXYGEN SYMETRIS PHASE I PARK ROZWOJU MALTA OFFICE PARK O3 BUSINESS CAMPUS - PHASE I O3 BUSINESS CAMPUS - PHASE II ASTRA KIELCE OXYGEN 77

78 Omni-channel boost impact UK study Click n collect 5 bn Online browsed in store 8 bn Online not browsed in store 18 bn Online pure-plays 13 bn Mail & TV shopping 4 bn Physical sales 266 bn Boost +5% True Value of Stores 278 bn 89% of total sales Total sales 313 bn Total online sales Touched a store Online sales of store operators Source: Verdict & British Land whitepaper 78

79 Omni-channel boost impact UK study continued 32% TRUE VALUE OF STORES BOOST BY SECTOR (2015) 25% 20% 12% 8% 9% average boost excluding Food & Grocery 5% 5% 3% 3% Electricals Sports & Toys Department stores Clothing & Footwear Entertainment Homewears Furniture & Floorcoverings Health & Beauty DIY & Gardening True value of Sores Potential store halo effect Physical store sales Click n collect sales Online sales browsed in store Online sales not browsed in store Source: Verdict & British Land whitepaper 79

80 Industry recognition EUROBUILD AWARDS SHOPPING CENTRE OF THE YEAR GALERIA ECHO EUROBUILD AWARDS SHOPPING CENTRE MANAGER OF THE YEAR GRZEGORZ CZEKAJ EUROBUILD AWARDS THE REAL ESTATE PERSONALITY OF THE YEAR HADLEY DEAN CIJ AWARDS POLAND BEST ASSET MANAGEMENT COMPANY OF THE YEAR 7 TH CEE INVESTMENT AWARDS CORE+/VALUE ADD INVESTOR DEAL OF THE DECADE AWARDS WINNER: NEWCOMER CEE RETAIL AWARDS PROPERTY MANAGEMENT COMPANY 80