Kempen conference Amsterdam 30 May 2013 Company snapshot Portfolio - PowerPoint PPT Presentation

Kempen conference Amsterdam 30 May 2013

Company snapshot Portfolio Description  Dutch REIT : Geographic breakdown NSI is a real estate asset management company and qualifies (market value 2 ) as fiscal investment institution under Dutch law (REIT) Switzerland  Full service in house management 1.7% Belgium The company is engaged in asset management, letting, 28.9% marketing, development, business development and technical building management Netherlands  High Yield Real Estate portfolio with Benelux focus : 69.4% Offices - Offices and Retail investments in the Netherlands Retail - Majority interest (54.8%) in Intervest Offices & Warehouses Logistics (listed on Euronext Brussels)  NSI, founded in 1993, is publicly listed on Euronext Amsterdam since 1998 and has 66 employees at year-end 2012  In 2011, NSI and VastNed Offices (VNOI) completed a merger  NSI divested the majority of its Swiss portfolio in April 2013 Key financials Gross initial yield (EUR million 1 ) 2012 Netherlands 2012 Asset classes Netherlands Asset classes Belgium (market value 2 ) (market value 2 ) 161 10.7% Gross rental income Offices Other 3 63 7.7% Direct investment result Retail 6.4% Indirect investment result (167) Logistics Retail 39.5% Offices Real estate investments 2,106 Offices 38.6% 55.0% 60.5% Occupancy rate (year-end) 81.1% Loan to Value (year-end) 58.2% Belgium Direct investment result per 0.99 Offices 9.5% share (EUR) Dividend per share (EUR) 0.86 Logistics 8.4% 1. Unless stated otherwise; 2. Based on Q1 2013; 3 Consists of Industrial and Residential 2

Strategy 1. Portfolio optimisation focusing on high-yielding Office and Retail assets  Balanced mixture of Offices & Retail, consistent with development of the asset cycle in both markets - Offices focus: high-yield locations - Retail focus: local shopping centres  Aim to be one of the leading players in each asset class 2. Increase value through active management  Full spectrum of in house capabilities created excellent letting platform  Use local knowledge and integrated teams to quickly respond to clients’ needs  Redevelopment and rebranding of existing assets  Introducing new concepts to improve occupancy and rental income  Unique combination of integral management and tenant focus to increase both portfolio value and cash flow generation 3. Solid balance sheet  Highly committed to loan-to-value (LtV) < 55% ion the short term, <50% on the long term  Diversification of funding  Interest fixing of at least 80% 3

Highlights Q1 2013  Occupancy total portfolio improved to 81.3% as per 31 March 2013 from 81.1% as per year end 2012  Direct investment result of € 13.4 million in Q1 2013, € 0.20 per share  Total investment result amounted to - € 21.2 million in Q1 2013, consisting of € 13.4million direct investment result and - € 34.6 million indirect investment result.  Revaluations of the real estate portfolio amounted to - € 42.4 million. 1Q ’13 EUR million  LtV slightly decreased to 58.0% on 31 March 2013 from 37.1 Gross rental income 58.2% as per year end 2012 Direct investment result 13.4 Indirect investment result (34.6)  Swiss retail center HertiZentrum sold at book value, Real estate investments 2,040 industrial Belgian asset Kortenberg 15% above book value Occupancy rate (end Q1) 81.3% (transfer both assets end May) Loan to Value (end Q1) 58.0% Direct investment result per  0.20 New dividend policy adopted by AGM, aimed at retaining share (EUR) cash to fund regular capex Interim dividend per share 0.10 (EUR) 4

Highlights Q1  Occupancy rate at a solid 92.0% , a decrease from 92.5% (year-end Retail NL 2012), partly due to the sale of two of (nearly) fully let shopping centres 27% of portfolio  Strong retail mix with a approx. 22% share of supermarkets  Stable retention rate at 76%.  2 nd consecutive quarter of occupancy improvemen t in Dutch offices portfolio from 71.3% as per year-end 2012 to 72.1% as per 31 March 2013. Improving trend is expected to continue over 2013. Offices NL  38% of portfolio NSI realised 3% of the total take up in the Dutch offices market, while NSI's portfolio represents 1.3% of the total Dutch offices market  NSI ranked fourth in the Dutch market in total leasing transaction volume in 2012  Transformation of HNK Hoofddorp and Utrecht commenced and expected to be finalised in the autumn of 2013  The retention rate (78%) increased significantly compared with 2012 (47%)  Occupancy decreased to 85% due to sale of semi-industrial asset  Belgium Sale of semi-industrial asset in Kortenberg 15% above book value 29% of portfolio  Increase in leasing transactions in first quarter compared with first quarter of 2012 5

Our key priorities  Reducing LtV – NSI is highly committed to reduce LtV to below 55% – Continue disposal strategy • In 2012 € 100.9 million of assets sold, another € 75 million announced (and partly yet delivered) in 2013 • Approx. € 100 million used to redeem debt in 2012, € 46 million in Q1 2013  Operational – Building on operational strength – Increasing occupancy levels – Roll out HNK concept – Further improving effectiveness and efficiency – Continued cost control and driving efficiencies – Optimise value per property and sell 6

Changed dividend policy  Pay out ratio is geared at funding regular capital requirements – Average capital expenditure requirements in general 10-15% of direct result  Financial prudency to secure future investments – Aligning dividend policy with exceptional market circumstances by linking dividend policy to LtV performance  Possibility to offer stock dividend in case the circumstances are supportive  Meeting REIT criteria for profit distribution LtV Pay out of direct result < 55% 85-100% 55%> LtV < 60% 50% in cash > 60% 50% in stock 7

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HNK – servicing a growing market with higher earnings potential  HNK anticipates – a growing demand for full service and flexible leasing in Dutch market; – changing housing needs of corporates due to changes in way of working  Positioning perfectly fits the growing SME segment and growing number of freelancers  Lower risk due to spread of contract expiries  Utilizing office spaces that are difficult to rent out in traditional leases  Results in higher rental fees per sqm compared to traditional model, while tenant is able to optimize their costs

HNK- distinctive strength  A place to be - inspiring meeting place to work and to meet – Highly accessible; • Free entrance ‘social heart’ • Memberships • Managed offices • Traditional offices – Offering exactly what tenant needs • Services • Space • Flexibility – Translates into a well priced solution, benefiting both tenant and NSI • Lower total costs for tenants • Higher rent per sqm for NSI  HNK Rotterdam – Occupancy 30% (total property; 18,000 sqm) – Investments in HNK € 2.8 million – Average rent level ‘managed offices' at € 287 per sqm 10

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Expiration of Leases  We actively manage and anticipate expiration calendar; smoothening the future expiration levels  In both the office and retail portfolio; the 2013 expiration calendar is below average. The office portfolio is significantly below 2012 level (23%)  Expirations in 2013 involve a smaller number large single tenant contracts compared with 2012: (number of contract expiries) 2012 2013 > 10,000 1 0 5,000-10,000 5 0 3,000-5,000 3 3 1,000-3,000 9 6 Representing total m2: 64,269 25,024 21% 19% Retail 11% Offices 13% Industrial 7% 14 rental income x € 1,000

Vacancy development  Occupancy expected to improve further improvement in 2013  Expiration calendar in 2013 and 2014 below average with limited expiries of large single tenant contracts  Increase in vacancy Retail portfolio, for a large part due to disposal of 2 (nearly) fully let shopping centers Date of merger VNOI 15

Portfolio Rent Development Average effective rent/sqm (NL)  Effective rent levels are adjusted for incentives remains in line with benchmark Dutch market  NSI delivered in 2012 on target to stay above € 120/sqm effective rent  Alternative strategies in place to increase income per sqm *) The rent level of new leases in Q1 2013 was impacted by relatively large leases in outer regions 16

Property values  NSI wrote down € 270 million since 2008 in Dutch office portfolio, € 377 including pro forma VNOI revaluations over that period (approx. 38%)  Revaluations primarily driven by yield shifts  Lack of reference due to lackluster market; increased influence of assumptions  Development activity and pipeline all time low  Valuation level below replacement costs 17

Active acquisition & disposal strategy Portfolio Philips Pensioenfonds and Swiss assets Excluding acquisition VNOI ( € 971 million)  € 415 million  € 250 million 18