INTERIM FINANCIAL STATEMENT 1H 2018 Helgi S. Gunnarsson 16 th August - - PowerPoint PPT Presentation

INTERIM FINANCIAL STATEMENT 1H 2018

Helgi S. Gunnarsson 16th August 2018

OPERATIONAL INCOME 3,788 m.ISK. LEASING INCOME 3,509 m.ISK.

⇧ 14%

OPERATIONAL RESULTS BEFORE ASSESSMENT CHANGE 2,387 m.ISK.

⇧ 15%

OPERATIONAL RESULTS BEFORE ASSESSMENT CHANGE / LEASING INCOME

68%

PROFIT AFTER TAX 1,492 m.ISK.

⇩ 1%

YIELD OF INVESTMENT PROPERTIES

4,8%

REAL RETURN ON EQUITY

8,5%

OPERATIONS AND RESULTS - 1H 2018

800.000 1.000.000 1.200.000 1.400.000 1.600.000 1.800.000 2.000.000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Amounts in th. ISK.

Leigutekjur Rekstrarhagnaður af reglulegri starfsemi

2015 2016 2017 2018

OPERATIONS AND RESULTS - 1H 2018 Cont.

• Calculated ASSESSMENT CHANGES of investment properties for the period

were 1,277 m.ISK. Assessment change in Q2 was negative as of higher property taxation.

• INVESTMENT PROPERTIES at the end of the period were assessed at

101,936 m.ISK. and the equity ratio was 34%.

• INTEREST BEARING DEBTS were 61,396 m.ISK. at the end of the period

compared to 57,515 m.ISK. at end of the year 2017 . Leverage as a percentage

• f investment properties is 60%.
• INTEREST EXPENCES in the period were 1,205 m.ISK. compared to 1,033

m.ISK. for the same period 2017. Total financial expenses were 1,816 m.ISK. compared to 1,435 m.ISK. for the same period 2017.

• NET CASH from operations amounted to 1,334 m.ISK. in the period. Net Cash

at the end of the period was 2,566 m.ISK.

OBJECTIVES:

PROPERTIES OPERATIONAL COSTS

20%

ADMINISTRATIVE COSTS

5,5%

DEVELOPEMENT OF OPERATIONAL COSTS

OPERATING COSTS OF INVESTMENT PROPERTIES Costs in line with plans. Good progress in expense management. Sharp rise in public property valuation in recent years, which directly increases property taxation. ADMINISTRATIVE EXPENSES The company's management units are well prepared to receive the extensive and challenging property portfolio that accompanies FAST-2 ehf. and HTO ehf. Management costs are fully in line with the company's plans and objectives.

18,0% 19,0% 20,0% 21,0% 22,0% 23,0% 24,0% 25,0% (420.000) (380.000) (340.000) (300.000) (260.000) (220.000) (180.000) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Percentage of leasing income. Amounths in th. ISK.

• Rekstrark. fjárfestingareigna

Hlutfall rekstrarkostnaðar 2015 2016 2017 2018 3,00% 4,00% 5,00% 6,00% 7,00% 8,00% 9,00% 10,00% (100.000) (95.000) (90.000) (85.000) (80.000) (75.000) (70.000) (65.000) (60.000) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Percentage of leasing income. Amounths in th. ISK. Stjórnunarkostnaður Stjórnunark. hlutfall 2015 2016 2017 2018

OPERATIONS AND PROSPECTS

Quarterly Overwiev 2Q 2018 1Q 2018 Leasing Revenues 1.776 1.733 Revenues, Operations in properties 141 138 Total Revenues 1.917 1.871 Operational costs of investement properties

• 392
• 390

Operational costs in properties

• 219
• 211

Administrative expenses

• 92
• 97

Gross profit before assessment changes 1.214 1.173 Assessment changes of investem. properties

• 232

1.509 Results from operations 982 2.682

• Operation of the company is successful and in line with plans. The operating environment is

favourable for the company, and all operational units are successful. There is an extensive increase in the number of guests in the Smáralind and Egilshöll

• Management and operation of support services of the company’s „Property Operations" is

flourishing and acquisition of the services is completed.

• Demand for leasing of commercial properties is good.

Good work in progress to increase income and profitability. Emphasis is placed on leasing to public entities and strong

• ccupants.
• Rental spaces in Smáralind are now almost all leased. Leasing contracts were completed this

summer for large leasing spaces that had been reserved for four international brands.

• Revenues increase in most units of the company is good.
• Management of expenditure is in line with plans.
• Restructuring in Smáralind is in the final phase and has been successful. The results can be

visualised in increased number of guests and the occupants reactions.

• Taking into account the existing new contracts in Smáralind, the leasing ratio of the portfolio is

now 97%. It should be pointed out that the increases in revenues will be fully effective in the coming months.

INVESTMENT PROPERTIES

• The Book Value of properties was 101,936 m.ISK. at the end of June 2018.
• Investment in the company’s properties amounted to 3,910 m.ISK. in the period.

Most extensive are the investments in Hafnartorg as investments in Smáralind, Egilshöll and Vesturvör 29.

• Reginn purchased in the year Garðatorg 6 in the new town centre of Garðabær. Previously

Reginn had Garðatorg 1,3 og 4.

• During the year seven properties have been sold. These properties do neither meet future

plans nor the requirements for the nature and composition of the portfolio, and are profitable to sell.

• PURCHASE AGREEMENT for shares in FAST-1 slhf. subsidiaries was signed on May 18th
• 2018. The largest properties of the companies are Katrínartún 2 and Borgartún 8-16. In total,

the property portfolio is 44.000 m2 including sub level car parking with over 600 parking

• spaces. The properties are 98% leased. Due diligence is completed and the project funding

has been arranged. Expecting now the review and conclusion of the Competition Authority.

NUMBER OF PROPERTIES

116

Reginn‘s Property portfolio

325.366 m2

30% 32% 19% 5% 14%

ASSETS ALLOCATION (m2)

Verslunar- og þjónustuhúsnæði Skrifstofu- og atvinnuhúsnæði Iðnaðar- og geymsluhúsnæði Hótel Íþrótta-, mennta-og afþreyingarhúsnæði

SMÁRALIND - LEASING

• Final phase of resturcturing of Smáralind this summer was

to conclude leasing agreements with four international brand names.

• These brand names are strong and the stores will be
• perated by the brand owners.

The brands will be introduced this autumn in connection with marketing of these brands.

• Spaces in question are shown on the diagrams to the side.

In total 4.000 m2.

• Opening of the new stores are planned in Oct. 2018 to

March 2019.

• Smáralind has entered into an agreement with the owners
• f Smárativolí on the restructuring of the area. This will be

done in cooperation with the owners of the Smárabíó cinema.

LEVEL 2 LEVEL 1

OPENING OF NEW BRANDS

HAFNARTORG - LEASING STATUS

• AGREEMENTS are completed for two strong international

brands, in addition to H & M. More than 60% of retail spaces are included in these three agreements.

• AGREEMENTS with solid and strong Icelandic Operators

completed for about 20% of the total space.

• NEGOTATIONS with three other international brands in

progress for about 10% of the total.

• Remaining are only 10% of spaces for other occupants

„fitting“ the concept.

PROPERTY´S OPERATIONS

• Owners and lessors of properties pay for 4 main expences.

– Property taxes and other public fees LESSOR – Mandatory fire insurance LESSOR – Property maintenance LESSOR / LESSEE – Dayly operation of properties LESSEE

PROPERTY TAXATION

• Property taxation as a percentage of leasing revenues had remained fairly

stable over 15% of Reginn's leasing income until 2016 when they began to grow sharply. Property taxation as a percentage of leasing income was almost 17% in 2017.

• Reginn's property portfolio will increase by 13% in 2019. It is foreseeable

that the increased taxation will affect leasing rates.

• Reginn has not utilized contracts provisions to present date, to increase the

leasing rate to compensate for tax increases in commercial properties. It is the company's decision to activate these provisions.

75% 20% 5%

OPERATIONAL COSTS INVESTMENT PROPERTIES OF REGINN 2017

Fasteignagjöld Viðhalds og rekstrarkostnaður fjárfestingareigna Tryggingar 13,0% 14,0% 15,0% 16,0% 17,0% 18,0% 2013 2014 2015 2016 2017 PROPERTY TAXES AS A PERCENTAGE OF REVENUES

OPERATIONS IN PROPERTIES

• In addition to the general property operations, Reginn is

responsible for comprehensive operations and services to occupants in three units within the Reginn´s portfolio:

– Smáralind – Egilshöll – Schools at Hafnarfjörður (FM-hús)

• This service and operations is diversified as needed due

to the nature of the building operations, and includes;

– Janitors – Security – Information and service desks – Cleaning and garbage removal – Energy and energy management – Comprehensive maintenance and operations – Marketing

COVERAGE

Guests annually

6,5 m.

Guest per day, mean. 18.000 Size

103.000 m2

Occupants

80

Staff

20

* Auk leikskólanna Tjarnarás og Hörðuvellir í Hafnarfirði

OPERATIONS IN PROPERTIES, Cont.

• Quality of this service is important for guest experiences. High quality levels also reduce maintenance costs and

increases the life of building parts.

• Within Reginn, there is a long and extensive experience in property operations, especially in buildings that are highly

utilized.

• In May 2018, Reginn took over these services after it had been temporarily outsourced. About 20 employees take

care of all operations as well as managers.

• The staff consists of technical staff, craftsmen and specialised staff.
• The most time consuming operations are outsourced, as cleaning.
• Reginn’s new project call for increased services in this field, as Höfðatorg, Hafnatorg and Austurhöfn.

FUTURE PROSPECTS

• Strengthen and reinforce the unit as a specialised service unit.
• Use acquired knowledge to improve quality and increase the life of building parts.
• Comprehensive management and optimisation. Coordinated quality.
• Knowledge and services that can be sold and / or used to add value to operations.

OPERATIONS IN PROPERTIES, Cont.

MARKETING AT SMÁRALIND

• The cost of marketing activities in Smáralind is booked within „Property Operations". The marketing management is entirely carried
• ut by Smáralind.
• The main objectives to ensure that the shopping centre is in the first choice as an option for customers and operators in commerce

and services.

• One of the objectives is to maximize the number of visitors and ensure the correct image and quality of the stores and services.
• Management and coordination of marketing and promotion in Smáralind and interaction with the occupants.
• Create revenues by selling advertisements, events and other opportunities that are created.
• Participate in promotional and marketing efforts for new and prospective occupants.

OPPORTUNITIES CONNECTED TO „PROPERTY OPERATIONS“

• Influence the extensive number of visitors coming to the houses.
• Create revenues with messages and advertisements.
• Create special revenues with limited and seasonal leasing.
• Services and revenues related to transport and parking spaces.

OPPORTUNITIES AND DEVELOPEMENT POSSIBILITIES

In Reginn´s portfolio are massive opportunities in regard to unused building rights as development projects

DEVELOPEMENT OPPORTUNITIES: SMÁRABYGGÐ

SMÁRABYGGÐ: SITES 03 AND 04

• All conditions of purchase agreement met, settlement

pending.

• Reginn

will

• wn

a 1,850 m2 commercial property at Silfursmári.

• Structure and construction in the hands of Smárabyggð Ltd.

SMÁRABYGGÐ: LÓÐIR 05, 06 AND 07

• Building rights for apartments and commercial space, about

14,000 m2.

• The value of building rights is booked at 270 m.ISK. or about

19,000 kr. / m2.

• The sites have already a local plan, but the utilization and

layout are being explored.

• Construction estimated in the next 2 - 5 years.

DEVELOPEMENT OPPORTUNITIES : EGILSHÖLL

• The Egilshöll sports, health and entertainment centre is located on the

site Fossaleynir 1.

• The total area of the site is 95,000 m2, but the existing building

volume is just over 36,000 m2.

• Used building volume on the site is about 16.000 m2.
• Several ideas are being worked out in cooperation with stakeholders.
• Building rights can not be booked even though it is on a local plan.

• Present properties about 12.000 m2
• Unused building volume based on local plan up to

15.000 m2

Tjarnarvellir 9

• Empty commercial site in í Hafnarfjörður.
• Minimum planned building volume 4.800 m2

DEVELOPEMENT OPPORTUNITIES : VARIOUS

Fellsmúli 26

• Reginn owns around 60% in Fellsmúli 26 and is an

associate of the landscaping company Fellsmúli 24-30.

• Reginn´s share of the site is 18%.
• Possible building volume in the total area is extensive.
• Very exciting location, etc. due to the proposed City

Line.

• Development time 4 - 8 years.

Suðurhraun 1-3

# Owner / company Shares % 1 The Pension Fund of Commerce

204.388.362,00 12,73%

2 Gildi - pension fund

114.180.738,00 7,11%

3 Sigla ehf. (an investment company)

100.000.000,00 6,23%

4 Birta pension fund

81.939.516,00 5,10%

5 The pension fund for state employees, A - dep.

73.300.000,00 4,56%

6 Stapi pension fund

72.135.266,00 4,49%

7 Landsbankinn hf.

62.558.971,00 3,90%

8 Global Macro Absolute Return A

59.562.638,00 3,71%

9 Brimgarðar ehf. (an investment company)

52.200.000,00 3,25%

10 Lífsverk pension fund

50.032.308,00 3,12%

11 Söfnunarsjóður lífeyrisréttinda pension fund

49.744.122,00 3,10%

12 Frjálsi lífeyrissjóðurinn pension fund

46.013.992,00 2,87%

13 Sjóvá-Almennar tryggingar hf. (an insurance company)

33.437.221,00 2,08%

14 Stefnir - Samval (an investment fund)

31.718.539,00 1,98%

15 Arion banki hf.

31.138.333,00 1,94%

16 Global Macro Portfolio

29.010.300,00 1,81%

17 The pension fund for state employees, B - dep.

25.379.500,00 1,58%

18 Benedikt Rúnar Steingrímsson

25.205.818,00 1,57%

19 Vátryggingafélag Íslands hf. (an insurance company)

21.642.346,00 1,35%

20 Magnús Jóhannsson

20.623.961,00 1,28% Total 20 largest 1.184.211.931 73,75

20 LARGEST STOCKHOLDERS 9th AUGUST 2018

THANK YOU