INVESTOR PRESENTATION October 2019 RENDERING. SILK DISTRICT, IASI, - - PowerPoint PPT Presentation

INVESTOR PRESENTATION

October 2019

• RENDERING. SILK DISTRICT, IASI, ROMANIA

History of Prime Kapital and MAS relationship

4

Prime Kapital business model

5

Prime Kapital team

6

Prime Kapital business tools

7

Development JV structure

8

Development JV – MAS' participation in profjts

9

Development JV pipeline and MAS' estimated future participation

10

Investment JV structure

11

Investment JV results

13

IJV contribution to MAS' combined net rental income and corporate cost savings per share

14

IJV contribution to MAS' NAV per share after expected revaluation gains

15

MAS redeployment strategy — Assets

16

MAS redeployment strategy — Equity & Liabilities

17

Prime Kapital perspective

18

TABLE OF CONTENTS

History of Prime Kapital and MAS relationship

4

⊲ Prime Kapital capitalised and founded by Martin Slabbert and Victor Semionov to focus on developments ⊲ Approached by various investors: » Advantage: more scale » Disadvantage: additional work and disproportional higher risk required for better returns ⊲ February » DJV with MAS » €30m/€20m ordinary share participation » €200m preference share commitment ⊲ April: €38m cap raising ⊲ July: €32m cap raising ⊲ October: joint MAS - Prime Kapital strategy roadshow ⊲ November: » IJV with MAS » Acquisition of Nova Park (Poland) for €88m ⊲ March: €128m cap raising ⊲ May » Acquisition of Galleria Portfolio (Bulgaria) for €62m ⊲ June » Lukas Nakos announces intention to resign as CEO ⊲ July » Additional €100m commitment to DJV and extension of exclusivity until 2021 ⊲ September: €127m cap raising ⊲ November: €159m cap raising ⊲ January » Morne Wilken appointed as CEO » MAS shifts strategy to two pillars: WE German retail investment alongside CEE Prime Kapital partnership ⊲ July » Acquisition of Militari Shopping (Romania) for €95m ⊲ October » Morne Wilken resigns as CEO » Paul Osbourn appointed as CFO » Malcolm Levy appointed interim CEO ⊲ December » Acquisition of Atrium Mall (Romania) for €40m ⊲ February » Acquisition of the value centres portfolio developed in the DJV (Romania) for €108m ⊲ April » Werner Behrens appointed as CEO ⊲ May » MAS change in strategy to WE divestment in favour of CEE » Additional €120m commitment to DJV and extension of exclusivity until 2025 » Option MOU on Prime Kapital AMP ⊲ August » Option agreement fails ⊲ September » Sale of AMP to MAS subject to shareholder approval

2015 2016 2017 2018 2019

Prime Kapital business model

5

Vertically integrated developer with a team of over 200 professionals covering the entire value-creation chain from permitting, project design and construction to leasing, sales, property and asset management.

Close control over the entire development process

♦

Cost optimisation

♦

Consistency across all projects in design, standards, execution and operation

♦

Synergies from integrated multidisciplinary approach

♦

Swift response to changes in market

• r project / property specifjc

circumstances DESIGN COST CONTROL PROCUREMENT CONSTRUCTION SALES PROPERTY MANAGEMENT AFTER-SALES SERVICE FLEXASSIST ASSET MANAGEMENT LEASING

Prime Kapital team

6

CONSTRUCTION MANAGEMENT 83 Project managers 7 Site managers (construction managers, quality & quantity surveyors, health & safety specialists, tenant coordinators) 30 Design managers (architectural, structural, mechanical, electrical engineers) 25 Cost managers (cost controllers, procurement, contract management specialists) 15 Construction assistants (document controllers & support) 6 RESIDENTIAL 9 Director 1 Sales specialists 5 Marketing specialists 1 Residential assistants 2 ASSET & PROPERTY MANAGEMENT PLATFORM (AMP) ASSET & PROPERTY MANAGEMENT 101 Asset managers 5 Centre managers 10 Facility managers 15 Property accountants (bookkeeping, collection, controlling, HR specialists) 33 Property assistants 6 Marketing specialists 11 Leasing specialists (including leasing lawyers) 12 Maintenance personnel 9 CORPORATE 22 Operational managers (company secretary, capital markets & debt fjnance specialists) 3 Corporate lawyers (acquisition, debt fjnance & property specialists) 5 Analysts 3 Financial managers (reporting, treasury, tax, budgeting & internal audit specialists) 6 Administrative personnel (IT specialists & support personnel) 5

Prime Kapital business tools

7

Prime Kapital employs a team of Business Intelligence (BI) specialists that has developed and maintains proprietary business tools supporting development and asset management.

Malls database

Multi-point analytical tool enabling in-depth synchronised assessment of multiple acquisition and development targets, by employing: ⊲ Detailed data on shopping centres in the region (over 3 million m2 of GLA); ⊲ Exhaustive data points on development costs of existing/planned assets in the region (over 20 individual assets); ⊲ Proprietary analytical tools and assessment methods to enable in-depth understanding of potential targets including, but not limited to, tenant performance analysis, cross-country lease analysis, construction budget benchmarking.

Macroeconomic analysis tool

Proprietary tool pack designed for cross-analysis of complex macroeconomic datasets to aid identifjcation and selection of target development/acquisition locations, by way of: ⊲ Extensive analysis of the target catchment area and comparable stock in the region (upwards of 70 difgerent locations across the region); ⊲ Detailed historical macroeconomic information on inhabitants of individual targets and regions, population trends and fmuctuations in purchasing power; ⊲ Monitoring of indicators of the local economy.

Macroeconomic prediction tool

⊲ Tool embedded into the forecast process of owned assets and potential acquisitions used to determine expected tenant turnovers across assets; ⊲ The analysis provides detailed information on tenant sales forecast across the existing portfolio as well as potential acquisition targets; ⊲ Extensive knowledge about the trading patterns of the assets is determined by employing a broad range of historical data on individual consumption, combined with analysis of consumer basket evolution; ⊲ The growth rates generated above are back-tested using historical data, as well as benchmarked across the extensive database.

Development JV

€420m 7.5% coupon preference shares commitment, of which €170m drawn to date MAS invested equity, provides preference share capital and makes no further contribution to the JV Prime Kapital invested equity, identifjes development

• pportunities and provides all of the construction, development

and management services on an exclusive basis to the JV 40% EQUITY

€20m

60% EQUITY

€30m

Development JV structure

8

Development JV – MAS' participation in profjts

9

Based on the current pipeline and feasibilities, the combination of preference share capital and a 40% equity stake in the JV projects should result in a 26% profjt

• n cost in respect of commercial projects and 24% in respect of residential projects for MAS.

MAS realised a 30% profjt on project cost to date on completed projects.

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% MAS' share of total development profjt (including preference share dividends) MAS' profjt on project cost excluding preference share dividends Net preference share dividends MAS' returns on completed pipeline (profit on project cost 30%; average YoC 11.7%) MAS' expected returns on current commercial pipeline (profit on project cost 26%; average YoC 10%) MAS' expected returns on current residential pipeline (profit on project cost 24%) 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% 10.5% 11.0% 11.5% 12.0% 12.5% 13.0%

Project yield on cost Note: Profit on project cost means MAS' share of the development profit divided by total project costs and is calculated assuming an average exit yield of 6.75% for commercial projects and an average project time to completion 1.25 years.

€250m €200m €150m €100m €50m

Development JV pipeline and MAS' estimated future participation

10

To date €69.2m was developed (at cost), which delivered €20m in development profjts to MAS. The remaining pipeline of €781.7 (at cost) is estimated to deliver €192m in development profjts to MAS over the next ~5 years.

Preference share dividends MAS' share of development profjt (net of preference share dividends)

Development profjt (including preference share dividends) Inception 28 February 2019 (sale of completed pipeline) ~2024 €7m €13m €82m €130m

Investment JV structure

11

Investment JV

80% Participation loan * * Interest on participation loan is determined as the weighted average interest paid by the Group on all third-party fjnancings. 20%

Investment JV structure

12

⊲ Prime Kapital identifjes, proposes to MAS and manages retail investment opportunities in CEE on a non-exclusive basis, including: » Acquisition and disposals; » Asset and property management services; » Financial reporting; » Debt raising, cash management and treasury services (including fjnancial hedging). ⊲ Investment decision is MAS’. ⊲ Prime Kapital borrows from MAS, on a full recourse basis, 20% of the investment amount and co-invests and participates in upside and downside. ⊲ Services are rendered at cost (and substantially recovered from tenants). No property brokerage or management fees are payable. ⊲ The return on the assets therefore fmows as follows: » 80% directly to MAS, and 20% to Prime Kapital; » From the 20% received by Prime Kapital, interest is paid to MAS on the participation loan; » Accordingly MAS will receive 80% of the return, plus the interest on the participation loan, and Prime Kapital will receive 20% of the return, less the interest on the participation loan. ⊲ The margin resulting between net rental income and interest on loan does not represent a “free carry” as some have suggested as in ordinary circumstances MAS would either have to set up a platform or outsource asset management – this rather aligns interest as the carry is directly aligned to revenue generated at asset level. ⊲ There are numerous benefjts to this structure, but the most important is alignment of interest – this setup leaves Prime Kapital strongly aligned with MAS with regard to driving value from the assets. ⊲ The arrangement is non-exclusive, although to date Prime Kapital have not leveraged the platform outside of MAS, due to the historic relationship.

Investment JV results

13

⊲ The opportunities have generated exceptional returns to date for MAS net of Prime Kapital’s participation. ⊲ Substantial growth introduced to MAS still to be materialised, partly due to €168m redevelopment and extension pipeline. ⊲ None of the opportunities would have been accessible, identifjed or executable by MAS; they are entirely Prime Kapital's initiatives and MAS participated therein on an individual basis by invitation. ⊲ IJV assets have returns equivalent to development opportunities and were proposed by Prime Kapital with a view to long-term co-operation.

€300m €60m €250m €50m €200m €40m €150m €30m €100m €20m €50m €10m Inception 30 June 2019 ~2024 €61.5m €50.4m €30.8m NRI + savings Capital gains NRI + savings (100%) NRI (MAS' 80%) Capital gains (100%) Capital gains (MAS' 80%)

MAS+PK (100% of IJV) MAS (80% of IJV) Δ MAS (pro forma) (100% of IJV) MAS (80% of IJV) Δ MAS (100% of IJV) MAS (80% of IJV) Δ Net rental income (NRI) 29.8 26.4 3.4 35.1 30.8 4.3 57.5 50.4 7.1 Corporate cost savings – – – 1.5 – 1.5 4.0 – 4.0 NRI + savings 29.8 26.4 3.4 36.6 30.8 5.8 61.5 50.4 11.1 Valuation 394.0 394.0 – 437.4 428.8 8.7 851.5 793.7 57.9 Cost of properties (394.0) (394.0) – (394.0) (394.0) – (562.1) (578.8) 16.7 Property cost (394.0) (315.2) (78.8) (394.0) (315.2) (78.8) (578.8) (463.0) (115.8) Participation funding incl. external debt – (78.8) 78.8 – (78.8) 78.8 – (115.8) 115.8 Estimated general contractor saving 16.7 – 16.7 Capital gains 43.4 34.7 8.7 289.5 214.9 74.6 Yield on cost 7.55% 6.69% 8.90% 7.82% 10.22% 8.71% Implied valuation yield 7.55% 8.01% 6.75%

€34.7m €8.7m €74.6m €36.6m €26.4m €214.9m

IJV contribution to MAS' combined net rental income and corporate cost savings per share

14

The transaction is expected to be earnings per share accretive from completion date.

¢9 ¢8 ¢7 ¢6 ¢5 ¢4 ¢3 Inception Note: 637,493,798 number of shares in issue assumed prior to 30 June 2019 and 704,493,798 thereafter 30 June 2019 2024 NRI / share (MAS' 80%) NRI + savings / share (100%) Potential efgect of further acquisitions ¢8.3 ¢? ¢7.9 ¢4.8 ¢4.8 ¢4.1 NRI + savings / share

¢40 ¢30 ¢20 ¢10 ¢0 (¢10) Note: 637,493,798 number of shares in issue assumed prior to 30 June 2019 and 704,493,798 thereafter

IJV contribution to MAS' tangible NAV per share after expected revaluation gains

15

The initial tangible NAV per share dilution is expected to be recovered from the improved capital gains profjle.

Inception 30 June 2019 Tangible NAV / share (MAS' 80%) Tangible NAV / share (100%) Potential efgect of further acquisitions 2024 ¢5.4 ¢29.6 ¢33.7 ¢? (¢5.3) Δ tangible NAV / share

€2.0b €1.8b €1.6b €1.4b €1.2b €1.0b €0.8b €0.6b €0.4b €0.2b

€748m €394m €168m €289m €400m €130m €394m €250m €170m €170m €20m €20m €15m €43m DJV initial equity investment CEE investment property at cost DJV preference shares DJV development profjts net of dividends on preference shares* CEE extensions budget DJV further committed preference shares draw downs CEE investment property capital gains CEE further investment property acquisitions Western European assets

30 June 2019 ~2024

MAS redeployment strategy — Assets

16 *on development completion ignoring potential NOI gains from trading and asset management.

€2.0b €1.8b €1.6b €1.4b €1.2b €1.0b €0.8b €0.6b €0.4b €0.2b

€109m €130m €289m €491m €802m €802m €421m €43m €15m €109m Equity less undistributed profjts from IJV and DJV CEE loans at 30 June 2019 DJV development profjts net of dividends on preference shares* CEE investment property capital gains CEE additional loans Western European liabilities

30 June 2019 ~2024

MAS redeployment strategy — Equity & Liabilities

17 *on development completion ignoring potential NOI gains from trading and asset management.

Prime Kapital perspective

18

⊲ Financial: Prime Kapital swapping future value creation for lower current valuation in MAS shares. ⊲ Risk: reliance on 3rd party for asset and property management services in DJV. ⊲ Opportunity cost: » Loss of opportunity to leverage the AMP with other investors; » Additional workload emanating from MAS WE portfolio: » Divest €748m of assets; » Re-leverage €491m; » Reinvest €400m in CEE. ⊲ If transaction fails, Prime Kapital: » Continues to manage the redevelopments and extensions in the IJV portfolio leading to a similar fjnancial

• utcome within 5 years and a higher growth rate in investment return thereafter;

» Adds additional investors to the AMP; » Retains control of asset and property management in respect to DJV; » Has more time to focus on value creation.

www.primekapital.com