Results presentation H1 2017

Transcription

1 Results presentation H1 2017

2 DISCLAIMER Neither this presentation (the Presentation ), nor any copy of it, nor the information contained herein is being issued or may be distributed directly or indirectly to or into the United States, Canada, Australia or Japan. This Presentation has been prepared by Echo Investment S.A. (the Company ) solely for informational purposes and does not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to subscribe for, underwrite or otherwise acquire, any securities of the Company or any member of its group (the Group ) in any jurisdiction, including Poland and the United States, nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Company or any member of its Group, or any other contract or commitment whatsoever. This Presentation does not constitute a recommendation or legal, tax, accounting or investment advice regarding any securities of the Company or its Group. In particular all information on the Group s future projects, projects under construction as at the date hereof or projects to be constructed and their details, including expected NOI, as well as information for the entire 2017 and consecutive years shall be regarded as forward-looking statements. We recommend that the recipient seek independent third party legal, regulatory, accounting and tax advice regarding the contents of this document. The information contained in the Presentation does not purport to be comprehensive and has not been independently verified. To the extent permitted by law, no representation, warranty or undertaking, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. This Presentation contains certain forward-looking statements. Forward-looking statements are generally identifiable by the use of certain words, including but not limited to: may, will, should, plan, expect, anticipate, estimate, believe, intend, project, goal or target or the negative of these words or other variations on these words or comparable terminology or refer to information relating to the current year and the future. Forward-looking statements are based on current expectations and assumptions and involve a number of known and unknown risks, uncertainties and other factors that could cause the Company s or its industry s actual financial condition, results of operations or performance to be materially different from any future financial condition, results of operations or performance expressed or implied by such forward-looking statements. You should not place undue reliance on forward-looking statements and to the extent permitted by the applicable laws, the Company does not undertake to publicly update or revise any forward-looking statements that may be made herein, whether as a result of new information, future events or otherwise. This Presentation contains certain statistical and market information. Such market information has been sourced from and/or calculated based on data provided by thirdparty sources identified herein or by the Company, if not attributed exclusively to third-party sources. Because such market information has been prepared in part based upon estimates, assessments, adjustments and judgments which are based on the Company's or third-party sources' experience and familiarity with the sector in which the Company operates and has not been verified by an independent third party, such market information is to a certain degree subjective. While it is believed that such estimates, assessments, adjustments and judgments are reasonable and that the market information prepared appropriately reflects the sector and the market in which the Company operates, there is no assurance that such estimates, assessments, adjustments and judgments are the most appropriate for making determinations relating to market information or that market information prepared by other sources will not differ materially from the market information included herein. This Presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located in, any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or applicable regulations or which would require any authorisation, registration, notification or licensing within such jurisdiction. Persons into whose possession this Presentation, any part of it or other information referred to herein comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. 2

3 AGENDA Highlights Destinations Office Residential Retail Recent acquisitions Appendix 3

4 HIGHLIGHTS

5 Successful delivery on the strategy of profitable growth Dec PROJECTS 677,000 SQM under construction and in preparation: 13 office buildings 221,000 sqm GLA 4 retail projects 175,000 sqm GLA 38 residential projects 281,000 sqm resi area mn sqm of land June PROJECTS 1,015,000 SQM under construction and in preparation: 21 office buildings 403,300 sqm GLA 5 retail projects 257,300 sqm GLA 44 residential projects 354,400 sqm resi area mn sqm of land 5

6 Strong financial results [mn PLN] Q Q H H Operating revenue * * Operating profit * * Gross profit 130 (6) Net profit * including revenue from yielding assets 6

7 Main profit drivers ACTUAL H Gross profit H (PLN mn) Hand-over of 148 apartments - mainly in Poznań Final valuation and sale of A4 Business Park III Pipeline project valuations ( in particular): - Galeria Libero, Katowice - O3 Business Campus II - Sagittarius, Wrocław - West Link, Wrocław - Symetris II, Łódź - Galeria Młociny TARGETED H Hand-over of c.a. 775 apartments - Kraków, Łódź, Poznań, Warsaw, Wrocław 12 Final valuation and sale of: (after fulfillment of ROFO sale conditions) - O3 Business Campus II - Symetris II, Łódź 155 Pipeline project valuations ( in particular): - O3 Business Campus III - Nobilis, Wrocław - Galeria Libero, Katowice - Sagittarius, Wrocław - West Link, Wrocław - Galeria Młociny Gain on EPPs shares* 88 Dividend from EPP 12 Dividend from EPP Development earn out on Szczecin Outlet Park IV * Revaluation + sale 6 Development earn out on Szczecin Galaxy and Outlet Park III (both to be completed in H2 2017) 7

8 Cost allocation to projects results in increased operation efficiency Overheads per sqm of pipeline* Selling and administrative expenses net of recharges (PLN mln)** H H Annualised (x2) Pipeline (000 sqm) 525 1,015 Costs / sqm 203 PLN / sqm 82 PLN / sqm *simulation ** recharges related to services for EPP -60% 8

9 Balance sheet - focus on development ASSETS LIABILITIES Other EPP shares Asset for sale Net debt / total assets less cash ratio: 21% as at % as at % growth of commercial +resi property under construction +17% - growth of debt Cash Trade receivables + restricted cash Residential projects Properties under construction Investment properties PLN mn PLN mn PLN mn PLN mn Other Dividend liabilities Debt Provisions Equity 9

10 Assets structure focus on liquidity Deferred income tax Others Cash JVs Towarowa 22 and Galeria Młociny Trade receivables: Q22 price increase, remaining price of EPPs shares sold in 2016 Commercial properties under construction: O3 Business Park II and III, Symetris II, Sagittarius, West Link, Galeria Libero 1107 PLN mln Restricted cash EPP s shares Plots for sale: Brasov (Romania), Słupsk, Koszalin Investment properties: Nobilis and Babka Tower 694 Residential projects under construction and finished apartments 10

11 Loans by currency % 50% % 30% 21% 25% 25% 34% % Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 EUR PLN net debt / (total assets - cash) 2% -14% -30% Loans by maturity Cash/available limits [PLN m] Q2 Q project finance bonds overdraft public bonds cash available overdraft limits 171 New issuance 03/2017, margin 2,9% Nobilis 49 11

12 Succesful placement of retail bonds Established retail bond programme of PLN 300 mn In June 2017, PLN 100 mn of bonds subscribed within few hours (reduction amounted to 60%) 20 July first day of trading on Catalyst exchange Echo bonds are one on the most liquid assets listed on Catalyst Another tranche of bonds to be issued in H

13 DIVIDEND Dividend policy PLN 0.50 per share amount of dividend for 2017 up to 70% of annual profit to be paid as dividend for 2018 and later GROWTH base remaining amount of annual profit reinvested 13

14 High dividend payments continued PLN 1.35 per share - Total dividends paid PLN 0.69 per share PLN 5.66 per share - Average share price Dec 2016-Aug 2017 PLN 0.16 per share PLN 0.5 per share Special dividend on sale of EPPs shares 24% of average share price paid to shareholders as dividend Dec Aug 2017* PLN 0.5 per share Dividend for 2017, according to the announced dividend policy, payable between December and June Dec 2016 Jan 2017 June 2017 * targeted, based on the dividend policy adopted by the Management Board on 26 April 2017 Dec 2017 June

15 Special dividend of 0.5 PLN per share PLN 88 mn H gain on EPP shares 7.19% remaining stake in EPP after the disposal Sale of 40 mn of Echo Polska Properties shares in June 2017 for EUR 49 mn Proceeds were distributed to Echo Investment s shareholders as dividend: PLN 0.5 per share PLN 275 mn Current market value of the remaining shares 15

16 Building our future Start of new projects: 2017 so far - 149,000 sqm 2 office projects 33,000 sqm GLA - Browary Warszawskie J, Warsaw - Beethovena I, Warsaw 4 residential projects 34,000 sqm PUM - Dom pod Wilgą III, Kraków - Browary Warszawskie B, Warsaw - Wodna I, Łódź - Zebra, Wrocław Galeria Młociny 82,000 sqm GLA Start of new projects: Until the end of ,000 sqm 1 office project 26,000 sqm GLA - Grundmanna I, Katowice 7 residential projects 43,000 sqm PUM - Osiedle Jarzębinowe V, Łódź - Rydla, Kraków - Osiedle Perspektywa II, Poznań - Browary Warszawskie C, Warsaw - Princess, Warsaw - Taśmowa I, Warsaw - Gdańska, Wrocław 4 projects for residential rental platform 48,000 sqm PUM 16

17 DESTINATIONS

18 Advantage of creating destinations Echo is the only Polish company that can seamlessly combine office, retail, leisure, residential and hotel functions within one project Creating urban destinations is a part of responsibility to grow the cities in a sustainable way It also gives the Company advantages of flexibility, risk diversification and optimal utilisation of own resources resulting in lower acquisition and development costs as well as shorter time to completion Our new projects are to become destinations: Browary Warszawskie, Towarowa 22, Beethovena in Warsaw, Rakowicka/Stwosza in Kraków, Tymienieckiego in Łódź 18

19 Returning Browary Warszawskie to the city Official launch of works in June residential and 1 office buildings under construction 3rd residential building to be started in few weeks Special attention to the historical space, where 8,000 sqm of restaurants and shops will be arranged Developing the idea of creating destination with JEMS architectural studio BROWARY WARSZAWSKIE Warsaw, Grzybowska 55,000 GLA office (4 buildings) 28,000 resi. area (6 buildings) Project s schedule:

20 New destinations in our pipeline WARSAW, BEETHOVENA 36,000 sqm of office and service space (2 buildings) 13,000 sqm of residential 2018 start of construction ŁÓDŹ, TYMIENIECKIEGO 40,000 sqm of office function 40,000 sqm of resi space Plot located close to historical Księży Młyn industrial area 20

21 OFFICE

22 West Link transaction Griffin Premium RE to buy the building for c.a EUR 36 mn at the 6.85% yield The transaction was effectively pre-financed in June 2017 (by the EUR 18 mn bond issue) Quality and location attracted NOKIA Networks as the main tenant Echo bought additional plot in the same location for another 70,000 sqm GLA to build on West Gate and West Link success Griffin Premium RE became the ROFO partner for 3 other office buildings in Warsaw WEST LINK Wrocław, Lotnicza 14,200 GLA office 92% leased Project s schedule: Q Q

23 Sagittarius transaction German fund Warburg HIH agreed to buy the building (transaction signed in Q3 2017) The price amounts to EUR 73 mn, based on the yield of 6.16% Reputable BPO/SSC* tenants: EY and BNY Mellon 83% of space leased Sagittarius is included to EPP ROFO, but sold to external buyer due to the low yield *Business process outsourcing / Shared service centers SAGITTARIUS Wrocław, Sucha 24,900 GLA office 83% leased Project s schedule: Q Q

24 Sale to EPP following exercise of right of first offer SYMETRIS II Łódź, Piłsudskiego 9,500 GLA office 42% leased Project s schedule: Q Q Q targeted date of sale conditions fulfilment O3 BUSINESS CAMPUS II Kraków, Opolska 18,900 GLA office 56% leased Project s schedule: Q Q Q targeted date of sale conditions fulfilment O3 BUSINESS CAMPUS III Kraków, Opolska 18,900 GLA office Project s schedule: Q Q H targeted date of sale conditions fulfilment 24

25 GDAŃSK, STOCZNIA, NOWOMIEJSKA 30,000 GLA of office space 2 phases 2017 design and permits 2018 start of construction New projects in our pipeline ŁÓDŹ, PIŁSUDSKIEGO 14,100 GLA of office space 2017 design and permits 2018 start of construction KATOWICE, FACE 2 FACE, GRUNDMANNA 46,000 GLA of office space 2 phases 2017 design and permits 2018 start of construction 25

26 RESIDENTIAL

27 Residential growth momentum Unit sale growth YoY 2017 vs % H1+H2 20% H2 Handovers growth YoY 2017 vs % H1+H2 180% H Q Q Q Q Q Q Q Q Q Q Q Q Sale Hand-overs Q3-Q planned 27

28 Residential revenue drivers Unit completions and hand-overs in units completed ,100 sqm of resi space 865 units started H H Completion Hand-overs 85% - units sold in projects to be completed in units to be completed 62,300 sqm of resi space units to be started in

29 RETAIL

30 Galeria Młociny acquisition Echo owns 30% and Echo Polska Properties 70% of the project Echo responsible for development and leasing and entitled to a development fee Perfect location in the retail desert of Warsaw 65% - targeted pre-lease at the end of 2017, high interest of potential new brands Echo smoothly took over the site and started re-modeling of the project according to the newest market trends, creating a new destination. GALERIA MŁOCINY Warsaw, Zgrupowania AK 82,000 GLA retail 56% leased Project s schedule: Q Q

31 TOWAROWA 22 Warsaw, ul. Towarowa 111,000 GLA retail + office + residential Project s schedule: Q Q Towarowa 22 creating the city 30% / 70% partnership with EPP Design works and permitting going on full speed Working on perfect balance between functions: retail, residential, office, services and leisure Letter of intent signed with City Hall on urban infrastructure development Very promising feedback from potential tenants and retailers Echo responsible for development and leasing and entitled to the development fee 31

32 Filling up Galeria Libero Leasing increased from 58% to 68% with new agreements : LPP (Reserved, Mohito, Sinsay, Cropp and House), Home&You, Guess and H&M 80% - targeted pre-lease at the end of 2017 The road infrastructure around the site is being rebuilt, as part of agreement with the city GALERIA LIBERO Katowice, ul. Kościuszki 45,200 GLA retail 68% leased Project s schedule: Q Q

33 RECENT ACQUISITIONS

34 Securing the future pipeline OFFICE PLN 838 per 1 sqm of potential GLA PLN 225 mn of invested equity RESIDENTIAL 851 PLN per 1sqm of potential space PLN 77 mn of invested equity Projects and plots acquired or secured under preliminary agreements after 30th June, ,000 RETAIL 30% of 2 Warsaw schemes of total 191,000 sqm GLA PLN 210 mn of invested equity Advantage of development fee PROJECTS UNDER PRELIMINARY AGREEMENTS 70,000 sqm of GLA/resi space 191,000* 616,000 sqm of potential GLA/resi space 297,000 Office Retail Residential PROJECTS UNDER NEGOTIATIONS 390,000 sqm 50% for residential projects * including 100% of Galeria Młociny and Towarowa 22 34

35 APPENDIX PROJECT DETAILS

36 OFFICE PROJECTS UNDER CONSTRUCTION Project GLA [sqm] Leasing [%] NOI [EUR mln] Targeted budget [PLN mln] Expenditure incurred [%] Start Targeted commissioning Comments Kraków, O3 Business % % I Q 2016 III Q 2017 preliminary sale agreement with EPP Campus II Łódź, Symetris Business % % II Q 2016 III Q 2017 preliminary sale agreement with EPP Park II Wrocław, Sagittarius % % II Q 2016 I Q 2018 ROFO agreement with EPP, preliminary sale agreement with Warburg HIH Kraków, O3 Business % IV Q 2016 IV Q 2017 preliminary sale agreement with EPP Campus III Wrocław, West Link % % III Q 2016 I Q 2018 preliminary agreement with Griffin Premium RE Warsaw, Browary J % II Q 2017 III Q 2018 ROFO agreement with Griffin Premium RE Total OFFICE PROJECTS IN PREPARATION Project GLA [sqm] NOI [EUR mln] Targeted budget [PLN mln] Expenditure incurred [%] Start Targeted commissioning Comments Warsaw, Beethovena I % III Q 2017 III Q 2019 ROFO agreement with Griffin Premium RE Katowice, Grundmanna I % IV Q 2017 IV Q 2019 Warsaw, Browary K % I Q 2018 I Q 2020 Warsaw, Browary G i H % I Q 2018 I Q 2020 Warsaw, Beethovena II % Q Q ROFO agreement with Griffin Premium RE Łódź, Piłsudskiego % I Q 2018 III Q 2019 Gdańsk, Solidarności I % I Q 2018 III Q 2019 Wrocław, Powstańców % III Q 2018 II Q 2020 Katowice, Grundmanna II % IV Q 2018 III Q 2020 Gdańsk, Solidarności II % I Q 2019 III Q 2020 Total

37 RESIDENTIAL PROJECTS UNDER CONSTRUCTION Project Kraków, Apartamenty GO (Rakowicka) PUM [sqm] Number of units Targeted revenues [PLN mln] Targeted budget [PLN mln] Expenditure incurred [%] Start Targeted commissioning % IV Q 2016 II Q 2018 Kraków, Dom pod Wilgą I % IV Q 2015 III Q 2017 Kraków, Dom pod Wilgą II % III Q 2016 II Q 2018 Kraków, Dom pod Wilgą III % II Q 2017 I Q 2019 Kraków, Kościuszki Apartments % IV Q 2015 IV Q 2017 Łódź, Osiedle Jarzębinowe III % IV Q 2015 III Q 2017 Łódź, Osiedle Jarzębinowe IV % IV Q 2016 IV Q 2018 Poznań, Jackowskiego % III Q 2015 IV Q 2017 Poznań, Osiedle Jaśminowe III % IV Q 2016 III Q 2018 Poznań, Osiedle Perspektywa I % IV Q 2016 IV Q 2018 Poznań, Park Sowińskiego III % II Q 2015 III Q 2017 Poznań, Park Sowińskiego IV % IV Q 2016 III Q 2018 Warsaw, Browary Warszawskie A % IV Q 2016 III Q 2018 Warsaw, Nowy Mokotów III % III Q 2015 III Q 2017 Warsaw, Nowy Mokotów IV % III Q 2015 IV Q 2017 Wrocław, Grota-Roweckiego II % IV Q 2015 IV Q 2017 Total

38 RESIDENTIAL PROJECTS IN PREPARATION Project PUM [sqm] Number of units Targeted revenues [PLN mln] Targeted budget [PLN mln] Expenditure incurred [%] Targeted start Targeted commissioning Łódź, Osiedle Jarzębinowe V % IV Q 2017 II Q 2019 Łódź, Wodna I % III Q 2017 I Q 2019 Kraków, Rydla % IIV Q 2017 II Q 2019 Poznań, Garbary % III Q 2018 III Q 2020 Poznań, Osiedle Jaśminowe IV % I Q 2018 IV Q 2019 Poznań, Osiedle Perspektywa II % III Q 2017 II Q 2019 Poznań, Osiedle Perspektywa III % III Q 2018 II Q 2019 Warsaw, Beethovena % I Q 2018 I Q 2020 Warsaw, Browary Warszawskie B % III Q 2017 II Q 2019 Warsaw, Browary Warszawskie C % III Q 2017 II Q 2019 Warsaw, Browary Warszawskie E % II Q 2018 I Q 2020 Warsaw, Princess % III Q 2017 II Q 2019 Warsaw, Taśmowa I % III Q 2017 II Q 2019 Warsaw, Taśmowa II % II Q 2018 I Q 2020 Wrocław, Gdańska % IV Q 2017 IV Q 2019 Wrocław, Zebra % III Q 2017 II Q 2019 Total

39 RETAIL PROJECTS UNDER CONSTRUCTION Project GLA [sqm] Leasing [%] NOI [EUR mln] Targeted budget [PLN mln] Expenditure incurred [%] Start Targeted commissioning Comments Szczecin, Galaxy (extention) Szczecin, Outlet Park III Katowice, Galeria Libero Warsaw, Galeria Młociny % 3.3 I Q 2016 IV Q 2017 project run for EPP % 0.7 IV Q 2016 III Q 2017 project run for EPP % % III Q 2016 I Q 2018 ROFO agreement with EPP % % IV 2016 II Q 2019 JV with EPP: share split 30%-70% Total RETAIL PROJECT IN PREPARATION Project GLA [sqm] NOI [EUR mln] Targeted budget [PLN mln] Expenditure incurred [%] Start Targeted commissioning Comments Warsaw, Towarowa % II Q 2018 IV Q 2020 JV with EPP: target share split 30%-70% PROJECTS IN EARLY STAGE OF PREPARATION Projekt Plot area [sqm] Potential of GLA [sqm] Comments Kraków, Wita Stwosza Plot for office and residential functions Łódź, Tymienieckiego Plot for office and residential functions Wrocław, Na Ostatnim Groszu Plot for office function Total

40 DEFINITIONS GLA global leasing area NOI net operating income based on fully leased property and market level rents Leasing status presented as at the report day Targeted budget includes value of plot, costs of design, construction, external supervisory, does not include costs of covering rent free periods, profit share, financial costs, marketing and broker s remuneration. 40

41 More information: Emil Górecki Head of IR