FINANCIAL STATEMENTS for the period 4 January to 31 December 2016 - - PowerPoint PPT Presentation

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FINANCIAL STATEMENTS for the period 4 January to 31 December 2016 - - PowerPoint PPT Presentation

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period 4 January to 31 December 2016 Echo Polska Properties N.V.(Incorporated in The Netherlands) (Company number 64965945) | JSE share code: EPP | ISIN: NL0011983374 | (EPP or the


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Echo Polska Properties N.V.(Incorporated in The Netherlands) (Company number 64965945) | JSE share code: EPP | ISIN: NL0011983374 | (“EPP” or “the Company” or “the Group”)

www.echo-pp.com

for the period 4 January to 31 December 2016

CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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SLIDE 2

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

  • pinions 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.

Disclaimer

2

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SLIDE 3

Contents

3

  • 1. Strategy & Investment case
  • 2. Financial review 2016
  • 3. Polish macroeconomics
  • 4. Portfolio overview

4.1 Retail 4.2 Office 4.3 Developments

  • 5. Prospects
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SLIDE 4

www.echo-pp.com

  • 1. Strategy & Investment Case
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SLIDE 5

DUAL LISTINGS ON

LuxSE AND JSE MAIN BOARD

WARSAW DEVELOPMENT PROJECT

70% INTEREST IN PLANNED:

110 000m² Towarowa

  • Dominant mixed use scheme
  • Targeted completion in 2021

LTV OF

52.7% (56.7% post IPO)

Target of 50%

€71 million (€64 million

forecast at IPO)

Distributable income for 12 months to 31 Dec 2017

FORWARD YIELD OF

8.0%*

EPP at a glance

5

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) *Forward yield to 12 months ended 31 Dec 2017. Assuming a price of R18.50 and an EUR/ZAR rate of R13.70.

NET ASSET VALUE

€683 milion

12% increase in NAV per share post IPO

€1.16 per share, NAV excludes deferred tax

DISTRIBUTABLE INCOME

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SLIDE 6

EPP Team Management

RAFAŁ KWIATKOWSKI CHIEF OPERATING OFFICER JACEK BAGIŃSKI CHIEF FINANCIAL OFFICER WOJCIECH KNAWA EXECUTIVE DIRECTOR Property Management MICHAŁ ŚWIERCZYŃSKI EXECUTIVE DIRECTOR Asset Management

HADLEY DEAN CHIEF EXECUTIVE OFFICER

MACIEJ DROZD OUTGOING CHIEF FINANCIAL OFFICER

6

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SLIDE 7

MANAGEMENT BOARD

TRANSACTION & LEGAL Acquisitions Compliance Legal Corporate Governance COMMUNICATIONS/IR Marketing & PR Administration HR Controlling Planning Treasury Reporting Budgeting Transactions FINANCE & ACCOUNTING PROPERTY MANAGEMENT Retail Operations Office Operations Integration Team Facility Management Analysis & Reporting IT ASSET MANAGEMENT

EPP Team Structure

>100 employees

Retail Leasing Office Leasing Innovations EPP University

7

Strategic partnership with Echo Investment SA, Griffin RE and Redefine

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SLIDE 8

SUCCESSFULLY EXECUTED OR SECURED ACQUISITIONS TO DATE

€418 million

SINCE LISTING INCREASED PORTFOLIO BY

35% IN VALUE AND 42% IN GLA

PROPERTY MANAGEMENT COMPANY OF THE YEAR 2017 ANNUAL CEE RETAIL AWARDS

OVERSUBSCRIBED CAPITAL RAISE OF

€100 million

AT 7.5% FORWARD YIELD

RESPONSE TO CHANGES IN TAX LEGISLATION

  • COMPLETION OF INTERNAL

RESTRUCTURE

  • PREPARATION FOR REIT REGIME

WINNER OF

BEST SHOPPING CENTRE OF THE YEAR – Galeria Echo RETAIL PROPERTY MANAGER OF THE YEAR – Grzegorz Czekaj EUROBUILD AWARDS 2016

Highlights post listing

8

VACANCY (GLA): RETAIL 1.7% (as of Dec 2016) OFFICES 4.3% (as of Dec 2016) Footfall increase (yoy) 3.4 % Portfolio value increase3.3% (€41million) ON TRACK TO DELIVER

FY17 DPS FORECAST:

€cents10.8

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SLIDE 9

EPP vision

9

Asset Management Development & Extensions Acquisitions

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.

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SLIDE 10
  • 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)

EPP Investment Case

10

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SLIDE 11

www.echo-pp.com

  • 2. Financial review 2016
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SLIDE 12

Financials at a glance

12

DPS (for the 4 month period to 31 Dec 2016)

€cents 3.14

Distributable Earnings (for the 4 month period to 31 Dec 2016)

€18.4 million

Total NAV1

€683 million

NAV per share

€1.16

Total assets

€1 509 million

Market capitalisation

€797 million

Cost of debt

1.85%

LTV

52.7%2

1NAV excluding deferred tax 2Value includes the investment in joint venture – Towarowa and unrestricted cash

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Summary statement of comprehensive income

13 Actual for the year ended PLS for the year ended Variance to PLS EUR million

31 Dec 2016 31 Dec 2016

Rental income and recoveries

95.3 94.0 1.3

Property expenses

(29.2) (29.9) 0.7

Net property income

66.1 64.1 2.0

Other income / (expenses)

(0.4) (0.2) (0.2)

Administrative expenses and corporate costs

(12.5) (9.6) (2.9)

Profit from operations

53.1 54.2 (1.1)

Finance income / (expenses)

(18.0) (19.4) 1.4

Amortisation of debt structuring fee

0.0 0.3 (0.3)

Tax

(0.9) (0.8) (0.1)

Prepaid rental income

(0.3) (0.2) (0.1)

Distributable income attributable to shareholders

34.0 34.3 (0.3)

Distributable earnings for the period 1 Sept to 31 Dec 2016

18.4 18.0 2.2%

Dividend for the period to 31 Aug 2016 (cents)

2.44 2.43 0.5%

Dividend for the period 1 Sept to 31 Dec 2016 (cents)

3.14 3.07 2.2%

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Summary statement of comprehensive income

14 Actual for the period ended Actual for the 6 month period ended PLS for the year ended EUR million

30 Jun 2016 31 Dec 2016 31 Dec 2016

Rental income and recoveries

38.5 56.8 94.0

Property expenses

(12.3) (17.0) (29.9)

Net property income

26.2 39.8 64.1

Other income / (expenses)

(0.9) 0.5 (0.2)

Administrative expenses and corporate costs

(5.7) (6.8) (9.6)

Profit from operations

19.6 33.5 54.2

Finance income / (expenses)

(9.9) (8.1) (19.4)

Amortisation of debt structuring fee

  • 0.3

Tax

(0.6) (0.3) (0.8)

Prepaid rental income

(0.1) (0.2) (0.2)

Distributable income attributable to shareholders

9.0 25.0 34.3

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SLIDE 15

Headline earnings and distributable earnings reconciliation

15 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

34.0

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SLIDE 16

Summary statement of financial position

16

Number of shares in issue

586 051 293

Net asset value per share

€1.161

Loan to value (LTV)

52.7%2

1NAV excluding deferred tax 2Value includes the investment in joint venture – Towarowa and unrestricted cash

EUR million 31 Dec 2016 30 Jun 2016

ASSETS Investment properties

1 359 1 205

Investment in JV

54

  • Other financial assets

19 24

Trade, VAT and other receivables

33 7

Cash and restricted cash

44 24

Total assets

1 509 1 260

EQUITY AND LIABILITIES Share capital and premium

570 474

Accumulated profit /(loss)

54 50

Deferred tax liability

59

  • Bank borrowings

769 700

VAT borrowings

26

  • Trade and other liabilities

31 36

Total equity and liabilities

1 509 1 260

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SLIDE 17

NAV Bridge

17

NAV per share increase

12%1

€ million Number of shares NAV per share (€)

Pro forma NAV as at 30 Jun 2016 (post IPO)

607.6 586 051 293 1.04

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 as at 31 Dec 20161

683.3 586 051 293 1.16

1NAV excluding deferred tax 2Movement calculated using number of shares post IPO

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SLIDE 18

Investment portfolio movement

18

Increase in Investment Portfolio

17%

€ million Investment Property Investment in JV (Towarowa) Profit participation in ROFO and other financial assets Total

Investment portfolio as at 30 Jun 2016 1 205

  • 24

1 229 Fair value gain and capital expenditures 41

  • 41

Acquisitions (3 ROFO) 113

  • 113

Profit realised on ROFO transactions

  • (10)

(10) Investment in JV (Towarowa)

  • 54
  • 54

Pre-payment for Zakopianka

  • 5

5 Investment portfolio as at 31 Dec 2016 1 359 54 19 1 432

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SLIDE 19

Debt summary

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Average maturity

5.1years

Average cost of debt

1.85%

Hedging level1

90%

Net LTV

52.7%

Current:

50%

Targeted:

1100% 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 Q1 2017

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Debt diversification – maturity and source

20

SOURCES OF DEBT1

BZ WBK SA (Santander Group) / Erste Bank 38% Helaba 23% HSBC Bank plc 21% Berlin HYP/ING 15% Other 3%

50 100 150 200 250 300 350 400 450 500 2017 2018 2019 2020 2021 >2021

EUR million

DEBT MATURITY PROFILE

1Excluding short term VAT financing maturing before Sep 2017

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SLIDE 21

www.echo-pp.com

  • 3. Polish macroeconomics
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SLIDE 22
  • Poland is the 8th 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

2016 2017 (f) 2018 (f) 2019 (f) GDP growth (%, yoy)

2.8% 3.6% 3.3% 2.9%

Retail sales growth (%, yoy)

6.4% 5.7% 3.9% 3.0%

Consumer spending (%, yoy)

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%

Source: Oxford Economics, NBP Source: Oxford Economics, NBP

Poland macroeconomic update

22

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Poland Czech Republic Germany France UK EU Average GDP GROWTH IN SELECTED EU COUNTRIES 2016 2017 (f) 2018 (f) 2019 (f)

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SLIDE 23
  • Poland benefiting post Brexit:
  • Poland will attract an estimated 30 000 jobs from Britain’s financial

sector in 2017 according to Polish Deputy PM

  • 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

  • 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

  • pportunity to increase asset values
  • Selected recent significant investments or planned

investments in Poland:

(Mercedes Benz)

€500m

engine factory

€326m

Lithium-Ion battery plant

€60m

Supplier of components to Boeing, Airbus and Rolls Royce

€800m

commercial vehicle factory Announced expansion

  • f Warsaw office

Launched operations centre in Warsaw Extended facilities to create world’s largest Global Shared Services Centre Centre for excellence

Poland’s Investment Case

23

European Excellence Hub

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SLIDE 24

Top 50 Polish Cities

24

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 Ranked by population in 2016; Source: Central Statistical Office of Poland

EPP presence in city

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SLIDE 25
  • 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

TOP INVESTORS 2015 - 2016

1,000 2,000 3,000 4,000 5,000 EUR millions Offices Retail Logistics Other

Source: Savills

Poland – real estate investment activity

25

200 400 600 800 1,000 1,200 1,400 Volume (EUR milion) Volume

INVESTMENT VOLUME BY SECTOR (EUR MILLION)

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SLIDE 26

26

Poland; 4.54 36% Czech Republic; 3.62; 29% Hungary, 1.70, 13% Slovakia, 0.85, 7% Romania; 0.86 7% SEE markets, 0.99, 8%

Poland – real estate investment activity

1,000 2,000 3,000 4,000 5,000 2009 2010 2011 2012 2013 2014 2015 2016 EUR million Domestic EU US AsiaPac Middle East South Africa Other

CEE INVESTMENT VOLUMES: Volume in EUR billion, % of CEE total 2016 REAL ESTATE INVESTMENT VOLUME BY REGION OF ORIGIN

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SLIDE 27
  • 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
  • nce Polish REIT legislation comes into effect
  • The EPP Group has reorganised its holdings to allow for the transfer of its assets in anticipation
  • f 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) 1

Regulatory update – tax and REIT regime

27

1This forecast is the responsibility of the board and has not been reported on by the company’s auditors

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SLIDE 28

www.echo-pp.com

  • 4. Portfolio overview
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SLIDE 29

Portfolio overview

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At 31 Dec 2016 Acquired post year end Total

Yielding portfolio Office Retail Office Retail Number of projects 9 10 0* 5 24 Number of buildings1 17 10 1 5 33 Value/consideration (EUR) 387.0 million 977.0 million 27.6 million (ROFO) 220.6 million 1 612 million Vacancy % 4.3 1.7

  • c. 3

Office c. 4.0%, Retail c. 2.0% Market value (% split) 28% 72% 11% 89% GLA (m2) 175 941 322 633 11 975 116 234 626 783 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) 110 000m² 1

  • 1

1 including ROFO buildings – 3 buildings acquired in Dec 2016 and 1 building in the pipeline for 2017

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SLIDE 30

Portfolio structure overview (31 Dec 2016)

Retail 71.7% Office 28.3% Retail 63.3% Office 36.7% 1.7% 4,3% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

Vacancy by GLA* %

Retail Office * Vacancy profile of Retail assets not including extensions under development (Galaxy and Outlet Park)

30

PORTFOLIO STRUCTURE by GLA (m2) PORTFOLIO STRUCTURE by Fair Value

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SLIDE 31

Portfolio value driven by active management*

31

No Retail Property Retail GLA (m2) Fair Value at IPO (EUR m) Fair Value 31 Dec 16 (EUR m) Fair Value 31 Dec 17 (EUR m) 1 Pasaz Grunwaldzki (FC/Recom) 48 408 239.7 241.8 241.8 2 Galaxy (extension completed in 2017) 56 230 210.4 224.3 224.3 3 Galeria Echo (Recom) 71 457 206.0 211.3 211.3 4 Amber Kalisz (leasing) 33 599 74.7 78.5 78.5 5 Veneda (turnover rent) 15 026 35.1 37.1 37.1 6 Outlet Park* (extension completed in 2017) 28 211 69.2 74.9 74.8 7 Galeria Sudecka (leasing) 31 243 52.4 52.8 52.8 8 Olimpia 21 274 39.5 41.4 41.4 9 Echo Centrum Belchatow 11 426 10.1 10.2 10.2 10 Echo Centrum Przemysl 5 759 4.8 4.7 4.7 11 Zakopianka Retail Park 27 463 54.0 12 Twierdza Zamość 23 799 53.5 13 Twierdza Kłodzko 23 359 40.7 14 Wzorcownia Włocławek 25 611 49.2 15 Tęcza Kalisz 16 003 23.2 Sub Total 438 868 941.9 977.0 1 197.5 Office Property Office GLA (m2) Fair Value at IPO (EUR m) Fair Value 31 Dec 16 (EUR m) Fair Value 31 Dec 17 (EUR m) 1 Malta Office Park (recom) 28 270 62.4 63.3 63.3 2 Park Rozwoju (recom) 33 126 69.5 72.1 72.1 3 A4 Business Park Phase (ROFO) 30 034 37.6 37.9 65.6 4 West Gate 16 532 39.3 39.4 39.4 5 Astra Kielce 14 269 30.9 31.3 31.3 6 Oxygen (recom) 13 902 28.0 28.5 28.5 7 Tryton Gdańsk (ROFO) 23 364 48.7 48.7 8 Symetris Phase I (ROFO) 9 652 20.4 20.4 9 O3 Business Campus Phase I (ROFO) 18 766 45.4 45.4 Sub Total 187 915 267.7 387.0 414.7

Total 626 783

1 209.6 1 364.0 1 612.2

*existing or secured by PSPA (Preliminary Share Purchase Agreements), areas according to 31 Dec 2016 valuations

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SLIDE 32

Portfolio location weighted by Fair Value (31 Dec 2016)

Retail 86.0% Office 14.0% Retail 91.3% Office 8.7% Retail 87.1% Office 12.9%

(2, 6, 16) Szczecin (1, 14) Wrocław (3, 15) Kielce

(5) Łomża

(10) Przemyśl

(6) Jelenia Góra

(4) Kalisz (8,9) Bełchatów

(12) Warszawa (11) Poznań (13) Katowice (19) Kraków (17) Gdańsk

(18) Łódź

Retail Office

No Property Retail GLA (m2) Fair Value 31 Dec 16 (EUR m) Annualized NOI 31 Dec 16 (EUR m) 1 Pasaz Grunwaldzki 48,408 241.8 12,6 2 Galaxy * 41,083 224,3 12,7 3 Galeria Echo 71,457 211,3 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 8 Olimpia 21,274 41,4 2,8 9 Echo Centrum Belchatow 11,426 10,2 0.8 10 Echo Centrum Przemysl 5,759 4,7 0.4 Total 303,846 976,9 57,5 Galaxy extension 15,147 Outlet Park extension 3,812 Total after extensions 322,805 Average retail GLA 39,631 No Property Office GLA (m2) Fair Value 31 Dec 16 (EUR m) Annualized NOI 31 Dec 16 (EUR m) 11 Malta Office Park 28,270 63,3 5,1 12 Park Rozwoju 33,126 72,1 4,0 13 A4 Business Park Phase I & II** 18,059 37,9 2,8 14 West Gate 16,532 39,4 2,9 15 Astra Kielce 14,269 31,3 2,6 16 Oxygen 13,902 28,5 2,4 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 Total 175,941 387,0 28,4 20 EUR m 80 EUR m Fair Value diagram scale: * GLA and Annualized NOI excluding planned extensions

32

**Excluding phase III to be acquired in Q1 2017

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SLIDE 33

New projects locations weighted by fair value

New Project - retail

10,000 m2 25,000 m2 GLA diagram scale:

(6) Kraków (2) Włocławek (3) Zamość (4) Kłodzko (5) Kalisz

No Project name Type City GLA (m2) Fair Value (EUR m) % share of FV 1 A4 Business Park III Office Katowice 11 975 27.6 11.1% 2 Wzorcownia Retail Włocławek 25 611 49.2 19.8% 3 Twierdza Retail Zamość 23 799 53.5 21.6% 4 Twierdza Retail Kłodzko 23 359 40.7 16.4% 5 Tęcza Retail Kalisz 16 003 23.2 9.3% 6 Zakopianka Retail Kraków 27 463 54.0 21.8% Total 156 682 248.2 100.0% 7 Towarowa Retail Warsaw 110 000 Dev

(1) Katowice

New Project - office

Szczecin Gdańsk Łomża Warszawa Jelenia Góra Wrocław Przemyśl Poznań Bełchatów Kielce

Existing projects

33

Development Projects - retail

(7) Warsaw

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SLIDE 34

www.echo-pp.com

4.1 Retail

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SLIDE 35
  • Strong consumer sentiment expected to drive the

retail turnovers supported by + 500 program (see next slide)

  • Traditional Shopping Centre (TSC) prime headline

in-line rents show healthy dynamics with Warsaw showing 2 year growth of 23%

  • 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 2016

Polish Retail Dynamics

35

Source: Polish Council of Shopping Centers 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2014 2015 Q1-Q3 2016 New schemes Extensions

NEW RETAIL SUPPLY

2014 – Q3 2016 Source: Knight Frank

  • 15.00%
  • 10.00%
  • 5.00%

0.00% 5.00% 10.00% 15.00% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TURNOVER INDEX (y-o-y change) 2014 2015 2016

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SLIDE 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

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SLIDE 37
  • Create the dominant and sustainable Polish retail

portfolio to leverage our scale and influence

  • Warsaw: 110 000 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 150 000 people within a 30 minute drive

EPP retail strategy

37

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SLIDE 38

Retail portfolio overview (31 Dec 2016)

Echo Centrum Belchatow 1.0% Echo Centrum Przemysl 0.5%

38

CONTRIBUTION TO GLA BY CATEGORY COMPOSITION OF FAIR VALUE

*Included assets as at 31 Dec 2016

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SLIDE 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 m2 - LPP Group

(Sinsey), Eurofirany, fashion

  • 961 m2 - relocation:

Inditex Group (Pull & Bear, Oysho), Pepco, T-mobile

  • 15 new retailers; U.S. Polo

Assn., forever 21 and Steve Madden entered market 2016

3.9% 4,1% 2.5% 1.1% 1.7% 0.1% 0.0% 0.0% 0.0% 0.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

500 1,000 1,500 2,000 Pasaz Grunwaldzki Galeria Echo Amber Kalisz Outlet Park Veneda Galaxy Galeria Sudecka Olimpia Echo Centrum Belchatow Echo Centrum Przemysl

Vacancy (m2)

VACANCY PROFILE

39

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% 10 1.6%

Total

31.1%

slide-40
SLIDE 40

8.41 5.79 5.61 5.38 5.17 5.12 5.11 4.97 4.79 4.41

  • 1.00

2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 Galaxy Echo Centrum Przemysl Outlet Park Amber Kalisz Galeria Sudecka Galeria Echo Pasaz Grunwaldzki Echo Centrum Belchatow Veneda Olimpia

WAULT (years)

WAULT

Retail porfolio WAULT outline (31 Dec 2016)

Average Retail WAULT (5.86)

* WAULT exluding signed Lease Agreements concerning planned extensions (Galaxy and Outlet Park)

40

271,246 288,838 323,414 553,924 839,911 600,210 487,652 236,496 192,183 579,547 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 =< 2026

Renatl Income (EUR)

LEASE EXPIRY PROFIE

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SLIDE 41

www.echo-pp.com

4.2 Office

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SLIDE 42

0% 25% 50% 75% 100% 3 6 9 12 Millions m²

SUPPLY: WARSAW VS. REGIONAL CITIES

Warsaw Regional cities Regional cities vs. Warsaw 0% 25% 50% 75% 100% 500,000 1,000,000 1,500,000 2,000,000 m²

TAKE-UP: WARSAW VS. REGIONAL CITIES

Warsaw Regional cities Regional cities vs. Warsaw 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

VACANCY RATE: WARSAW VS. REGIONAL CITIES

Warsaw Kraków Wrocław Poznań Łódź Tricity

Polish Office Dynamics

42

  • 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 893 600 m²
  • f 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

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SLIDE 43

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

EPP office strategy

43

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SLIDE 44

Office portfolio overview (31 Dec 2016)

Malta Office Park 17% Park Rozwoju 19% A4 Business Park 10% West Gate 10% Astra Kielce 8% Oxygen 7% Tryton Gdańsk 12% O3 Business Campus Phase I 12%

44

COMPOSITION OF FAIR VALUE

slide-45
SLIDE 45

Office portfolio overview (31 Dec 2016)

No Tenant name % share in total Office rental income 1 10.01% 2 6.43% 3 6.07% 4 5.41% 5 3.90% 6 3.35% 7 3.01% 8 2.77% 9 2.72% 10 2.60% Total 46,27% TOP 10 OFFICE TENANTS IN TERMS OF RENTAL INCOME

20,6% 3.4% 0.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

Park Rozwoju Oxygen Malta Office Park A4 Business Park West Gate Astra Kielce Tryton Gdańsk Symetris Phase I O3 Business Campus Phase I Vacancy level (%) Vacancy (m2)

VACANCY PROFILE IN OFFICE ASSETS

Vacancy (m2)

Space under LOI (75%)

20.6%

ROFO projects with 3 years fully let guarantee (Master Lease)

45

28% vacancy without Master Lease 24% vacancy without Master Lease 17% vacancy without Master Lease

  • Top 10 office tenants

corresponds to ca. 46 % of portfolio’s total office income

  • 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

  • Park Rozwoju - 5 leases

currently under negotiations exepected to sign by June 2017

  • when signed vacancy will drop

to 5,2%

slide-46
SLIDE 46

6.36 4.45 4.25 3.88 2.91 1.92 4.22 5.12 5.81

  • 1.00

2.00 3.00 4.00 5.00 6.00 7.00 Astra Kielce A4 Business Park West Gate Park Rozwoju Oxygen Malta Office Park Tryton Gdańsk Symetris Phase I O3 Business Campus Phase I

WAULT (years)

WAULT

Office portfolio WAULT outline (31 Dec 2016)

Portfolio average WAULT Rent 4,10 (years) ROFO projects with 3 years fully let guarantee (Master Lease)

  • 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 – 11 500 m2 GLA

(40%) lease with McKinsey currently under negotiation – extention planned for next 5 years; expected to signed by the end of March 2017

140,238 * 221,679 292,908 410,923 275,543 196,283 86,361 2,458 148,859 64,110 0.00 50,000.00 100,000.00 150,000.00 200,000.00 250,000.00 300,000.00 350,000.00 400,000.00 450,000.00 2017 2018 2019 2020 2021 2022 2023 2024 2025 =< 2026 Renatl Income (EUR)

LEASE EXPIRY PROFIE

46

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SLIDE 47

www.echo-pp.com

4.3 Developments

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SLIDE 48

48

Development portfolio overview

Towarowa

  • 70% interest in planned

110 000 m2 dominant mixed- use scheme

  • Targeted completion on track

for 2020/2021

  • Estimated development yield
  • n cost 8%

Extensions

  • 18 959 m² in extensions of existing

retail centres in development – Galaxy and Outlet Park Szczecin

  • Galaxy’s extension – 70% leased
  • OPS’s extension – 75% leased
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SLIDE 49
  • 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

Towarowa

49 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

1,512 1,002 702 1,000 2,000 3,000

0–20 minutes 20–40 minutes 40–60 minutes Total

Population (000s)

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SLIDE 50

50

Development portfolio overview

Extensions 18 959 m² in extensions

  • f 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

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SLIDE 51

www.echo-pp.com

  • 5. Prospects
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SLIDE 52

€ million

Project name Cost NOI Debt Interest rate (%) Equity Cash on cash yield

Acquisitions contracted for year to date

Zakopianka 54 5.7

  • 54

10.6% Blackstone 166 12.8 (93) 2.2% 74 14.2% A4 phase III 282 2.1 (13) 2.2% 12 15.2%

Total 248 20.6 (106)1 140

1Estimated LTV of 43% 2Cost is not presented net of profit share

Income producing acquisitions and use of capital

52

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SLIDE 53

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

Growth and prospects

53

STRONG COMPOUNDED GROWTH IN DPS OVER THE MEDIUM TERM

slide-54
SLIDE 54

Questions & answers

54

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SLIDE 55

Contacts

CEO Hadley Dean

hadley.dean@echo-pp.com +48 22 43 00 300

MARKETING DIRECTOR Magda Cieliczko

magda.cieliczko@echo-pp.com +48 22 43 00 300

INVESTOR RELATIONS Singular Systems IR Jacques de Bie

jdebie@singular.co.za

Michèle Mackey

michele@singular.co.za +27 10 003 0700

CORPORATE ADVISOR Java Capital Kevin Joselowitz

kjoselowitz@javacapital.co.za +27(0)83 642 0112

Carl Esterhuysen

cesterhuysen@javacapital.co.za +27(0)83 642 0223