ANNUAL REPORT 2018 Helgi S. Gunnarsson 13 th February 2019 - PowerPoint PPT Presentation

ANNUAL REPORT 2018 Helgi S. Gunnarsson 13 th February 2019

OPERATIONS AND RESULTS - 2018 OPERATIONAL RESULTS BEFORE OPERATIONAL INCOME OPERATIONAL RESULTS ASSESSMENT CHANGE 8,288 m.ISK. BEFORE ASSESSMENT LEASING INCOME 5,390 m.ISK . CHANGE / LEASING INCOME 7,737 m.ISK. ⇧ 19% 70% ⇧ 17% 2.300.000 Amounths in th. ISK. 2.100.000 1.900.000 1.700.000 1.500.000 1.300.000 1.100.000 900.000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2018 Leasing income Operational results before assessment change PROFIT AFTER TAX YIELD OF INVESTMENT YIELD OF INVESTMENT REAL RETURN ON PROPERTIES 2018 PROPERTIES 4Q-2018 EQUITY 3,226 m.ISK. ⇩ 15% 5,2% 4,9% 8,9%

OPERATIONS AND RESULTS - 2018 Cont. • Calculated ASSESSMENT CHANGES of investment properties for the period were 2,910 m.ISK. INVESTMENT PROPERTIES at the end of the period were assessed at • 128,748 m.ISK. and the equity ratio was 32% . • INTEREST BEARING DEBTS were 80,488 m.ISK. at the end of the period compared to 57,515 m.ISK. at end of the year 2017 . Leverage as a percentage of investment properties is 63% . INTEREST EXPENCES in the year amounted to 2,602 m.ISK. compared to • 2,017 m.ISK. for the year 2017. Total financial expenses were 4,352 m.ISK. compared to 2,750 m.ISK. for the year 2017. • NET CASH from operations amounted to 2,641 m .ISK. in the year. Net Cash at the end of the year was 2,490 m.ISK.

DEVELOPEMENT OF OPERATIONAL COSTS -470.000 25,0% -430.000 24,0% OPERATING COSTS OF INVESTMENT PROPERTIES Amounths in th. ISK 23,0% -390.000 Costs consistent with plans. Good progress in expense percentage of leasing revenues 22,0% -350.000 management. Acquisition of properties entwined to HTO 21,0% -310.000 ehf. and FAST-2 ehf. (RA 16 ehf.) reduce proportionally 20,0% the operational costs. The increase in public property -270.000 valuation in recent years influence directly the rise in 19,0% -230.000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 property taxation. Provisions in leasing agreements 18,0% 2016 2017 2018 increase rent due to property taxation was imposed at the Operating cost of investment properties Ratio of leasing income beginning of the year. Applies to about 50% of -100.000 10,00% agreements. -95.000 9,00% -90.000 Amounths in th. ISK 8,00% Percentage of leasing revenues ADMINISTRATIVE COSTS -85.000 Administrative costs are lower than plans and objectives. 7,00% -80.000 The company's management units have been very 6,00% -75.000 successful in incorporating new property portfolios. 5,00% -70.000 4,00% -65.000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -60.000 3,00% 2016 2017 2018 Administrative expenses Ratio of leasing income OBJECTIVES: PROPERTIES OPERATIONAL COSTS 20% ADMINISTRATIVE COSTS 5,0%

OPERATIONS AND PROSPECTS • Rental revenues have increased in line with plans. Operation of the company is successful and in line Quarterly Overview 4Q 2018 3Q 2018 with plans. Leasing revenues 2,306 1,922 • Management and operations of the company’s supporting functions „Operations in properties” is successful, and progressive achivement made after the takeover. By reorganisation, a better Revenues, Operations in properties 138 134 optimization and overview of operations have been achived, the company’s management considers that the quality of service has increased. Total revenues 2,444 2,056 • The company has enforced the objective to increase significantly environmental awareness in all operational aspects. Operational costs of investement -466 -452 properties • Demand for commercial properties is good. The emphasis placed on leasing to public entities and strong occupants has been very successful. Operational costs in properties -235 -155 • The leasing ration of the portfolio is now 97,5% . Administrative costs -99 -90 • Nearly all spaces in Smáralind have been leased out. Leasing agreemens for large spaces, that had been reserved for two international brands, were finalised last summer. Opening of these units will be Gross profit before assessment this coming spring. 1,644 1,359 changes • Defaults have been minimal and are not escalating. Assessment changes of investment. 978 655 properties Results from operations 2,622 2,014

INVESTMENT PROPERTIES AND FINANCING • The Book Value of property portfolio was 128,748 m.ISK. at the end year 2018. REGINN’S PROPERTIES m 2 • This year the company has invested in property management companies and properties, that in 5% Retail and service total have property portfolios valued at 30,900 m.ISK. There off investment in present 16% properties is 7,000 m.ISK. The main investment weight is at Hafnartorg as investments in 27% Office Smáralind, Egilshöll and Vesturvör 29. Office - puplic ent. 3% 369 Sport, education and • The large investments in the year, i.e. portfolios attached to FAST-1 slhf. and FM-hús th.m 2 9% entertainment - public ehf. were financed in part by increase in share capital. Sport, education and entertainment Industrial and storage 26% The company has sold properties for 2,300 m.ISK. The main weight on building rights south 14% • Hotel of Smáralind. PUBLIC ENTITIES 86 • REFINANCING. From spring 2017 the company has utilised a framework covering bond issuing of th.m 2 the company. This framework was used in the year 2018 but on September 12 th a closed tender Public entities for a new bond issue was finalised, REGINN250948, issued under the company’s bond framework. Bonds were sold for 17,180 m.ISK, bearing fixed 3.6% interest rate, indexed, to 30 years and sold at nominal value. The bonds are indexed by specially designed insurance arrangement. The bonds were listed on main marked of Nasdaq Iceland Ldt., last October. 368.903 m 2 119 REGINN’S PORPERTY PORTFOLIO NUMBER OF PROPERTIES

LEASING - SUPPLY AND DEMAND • Leasing progressing well and demand for most types of commercial properties. 5.000 4.000 • This year to date new leasing contracts completed for over 40 th. m 2. There Available m 2 3.000 off is about third in renewal of older contracts. 2.000 1.000 • Leasing rate is in line with the company’s expectations. 0 Industrial and storage Office Retail and service • Un-leased space is about 10,200 m 2 . In the next 6 months about 8,600 m 2 will become available. LEASED SQUARE METERS 57.977 60.000 Leased square meters (cumulative) SPACE TO BE ABAILABLE NEXT HALF YEAR 50.000 40.507 5.000 40.000 4.000 30.000 3.000 2.000 20.000 1.000 10.000 0 Industrial and storage Office Retail and service 0 Quarter Q1 Q2 Q3 Q4 2016 2017 2018

STRONG AND GROWING SERVICE CORES The company has proceeded by investing in strong cores in the capital region. REGINN’S COMMERCIAL PROPERTIES – In Reginn’s property portfolio are well located commercial properties in most major development and condensation cores in the capital Hafnartorg area. HAFNARTORG AND HÖFÐATORG are located within land cores according to present Höfðatorg local plans by municipalities in the capital area. SMÁRALIND OG SMÁRABYGGÐ are located Hafnartorg Egilshöll Höfðatorg within the only zone core in the capital area. Egilshöll GROWTH – Service cores have been developed and expanded extensively in recent years. They are still expanding and taking shape i.e. the Town Transportation Line will influence the expansion and strength as following factors: • Increased supply of residential housing and increased population. Smáralind og Smárabyggð • Increased supply of commercial housing and increased working population in core Garðatorg og Litlatún Smáralind / Smárabyggð zones. • Increased recreation opportunities. • Increased number of foreign tourists. • Stronger emphasis on transportation – better access. Garðatorg / Litlatún OPPORTUNITIES – The excessive growth will enhance opportunities to offer more services, from basic service as grocery stores to specialised service and recreation. Picture: Cores and municipality limits in the capital area and examples of Reginn’s commercial properties – Ref: Samtök Sveitarfélaga á höfuðborgarsvæðinu

OPPORTUNITIES IN KATRÍNARTÚN TOWER Unique properties with regard to quality, location and increased revenues. • Work begun in reconsidering several factors in location plan and increased revenues. • Ground and first levels offer extensive opportunities for ideas. • New glass building on top levels offer exciting options. • Extensive opportunities in site and surroundings. • Basement parking enhance future opportunities.