Q1 Results Investor Presentation 2017.06.29 www.echo-pp.com 2 - - PowerPoint PPT Presentation

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Q1 Results Investor Presentation 2017.06.29 www.echo-pp.com 2 - - PowerPoint PPT Presentation

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Q1 Results Investor Presentation 2017.06.29 www.echo-pp.com 2 Disclaimer 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

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SLIDE 1 www.echo-pp.com

Q1 Results Investor Presentation

2017.06.29
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SLIDE 2 2 Q1 Results Investor Presentation 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. No information made available in connection with this presentation may be passed on, copied, reproduced, in whole or in part, or otherwise disseminated, directly or indirectly, to any other person. 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

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SLIDE 3 Q1 Results Investor Presentation 3

Agenda:

  • Highlights
  • Q1 Financial Results
  • Property Operations
  • Development Projects
  • Acquisitions
  • Growth Prospects
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SLIDE 4 Q1 Results Investor Presentation 4

Highlights

  • EPP to continue its focus to

become a pure retail property fund by 2019.

  • EPP successfully raised €150 M.
  • f new equity which was
  • versubscribed.
  • Integration team of 10 people hired

to assist in the integration of all new assets.

  • EPP has won three prestigious

awards.

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SLIDE 5 Q1 Results Investor Presentation 5

Q1 Financial Results

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SLIDE 6 Q1 Results Investor Presentation 6 Distributable Earnings (for the 3 month period to 31 Mar 2017) €16.0 million Total NAV1 €679 million NAV per share €1.16 Total assets €1 511 million Market capitalisation €926 million3 Cost of debt 1.87% LTV 52.5%2 1 NAV excluding deferred tax 2 Value includes the investment in joint venture – Towarowa and unrestricted cash 3 As of 21 June 2017 with EUR/ZAR rate: 14.61

Financials at a glance

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SLIDE 7 Q1 Results Investor Presentation 7 Actual for the quarter ended Budget for the quarter ended % Variance EUR million 31 Mar 2017 31 Mar 2017 Net property income 21.7 21.7 0.2% Other income / (expenses) 0.4 0.3 25.0% Administrative expenses and corporate costs (1.8) (1.7) 7.0% Profit from operations 20.3 20.3 0.0% Finance income / (expenses) (3.8) (3.9)
  • 2.6%
Current income taxes (0.7) (1.1)
  • 54.5%
Profit from JV 0.2 0.1 20.8% Distributable income attributable to shareholders 16.0 15.4 3.2% Distributable earnings for the period 1 Jan to 31 Mar 2017 16.0 15.4 3.2%

Summary statement of comprehensive income

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SLIDE 8 Q1 Results Investor Presentation 8

Number of shares in issue

586 051 2931

Net asset value per share

€1.162

Loan to value (LTV)

52.5%3

1 As of March 31 2017 2NAV excluding deferred tax 3Value includes the investment in joint venture – Towarowa and unrestricted cash EUR million 31 Mar 2017 31 Dec 2016 ASSETS Investment properties 1 367 1 359 Investment in JV 56 54 Other financial assets 19 19 Trade, VAT and other receivables 17 33 Cash and restricted cash 51 44 Total assets 1 511 1 509 EQUITY AND LIABILITIES Share capital and premium 570 570 Accumulated profit /(loss) 57 54 Deferred tax liability 52 59 Bank borrowings 779 769 VAT borrowings
  • 26
Trade and other liabilities 53 31 Total equity and liabilities 1 511 1 509

Statement of financial position

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SLIDE 9 Q1 Results Investor Presentation 9

Average maturity

4.8years

Average cost of debt

1.87%

Hedging level1

99%

Net LTV

52.5%

1 Current level of hedging with ROFO bank debt and Oxygen hedged in Q2 2017

Debt summary

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SLIDE 10 Q1 Results Investor Presentation 10

Property Operations

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SLIDE 11 Q1 Results Investor Presentation 11

Portfolio snapshot as at 31 March 2017

Retail projects

10*

Total portfolio value

€1.5 BILLION

Development JV projects

2

Total no. of projects

19

Office projects

9

Cities in Poland

14

*Two projects in Bełchatów (Olimpia and Echo) are now counted as one as they are located in direct proximity
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SLIDE 12 Q1 Results Investor Presentation 12

RETAIL KEY FACTS – Q1 2017

302 818

GLA sqm

4.6%

FOOTFALL Q1 2017

7.5%

SALES Q1 2017 + 6,6% Q1 2017 LFL Number
  • f tenants

845

12.7%

RTS* Q1 2017

16.8%

OCR* Q1 2017 WALT by GLA WALT by NOI

6.13 5.42

1.26%

VACANCY Q1 2017 *Rent to Sales *Occupany Cost Ratio
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SLIDE 13 Q1 Results Investor Presentation 13

OFFICE KEY FACTS – Q1 2017

Number
  • f tenants

112 176 207

GLA sqm

4.17

WALT by GLA

3.91

WALT by NOI

3.0%

VACANCY Q1 2017 4.3% on 31 Dec. 2016
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SLIDE 14 Q1 Results Investor Presentation 14

Development Projects

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SLIDE 15 15 Q1 Results Investor Presentation
  • 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

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 (€ million) 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 16 16 Q1 Results Investor Presentation
  • A dominant retail and leisure driven scheme with an office
element under development in Bielany district of Warsaw which has significantly lower retail supply compared to other Warsaw districts
  • Located next to the Młociny transport hub which is the main
public transport hub for residents of the northern part of the city and surrounding areas, used every day by c.40 000 people
  • Project is c.50% pre-let to strong anchor tenants including
all Inditex brands, Van Graaf, H&M
  • Acquisition of land completed €104.5 million
  • Construction process managed by Echo on track
  • Completion in mid 2019

Galeria Młociny

Estimated cost at development (€ million; land development included) 295 Planned total GLA (m2) 81 900 Estimated NOI on completion (€ million) 20.9 Estimated development yield on cost
  • c. 7.1%
Estimated valuation yield on completion
  • c. 5.25%
EPP capital uplift (€ million)
  • c. 65
1 683 64 81 1 828 1 000 2 000 3 000 0-30 minutes 30–45 minutes (limited) 45–60 minutes (limited) Total Population (000s) CATCHMENT AREA Drive time
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SLIDE 17 Q1 Results Investor Presentation 17

Galeria Młociny

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SLIDE 18 Q1 Results Investor Presentation 18
  • New opening scheduled – 15 Nov 2017
  • Additional 15 150 m² GLA
  • €3.1 million NOI uplift
  • Extension leased over 80%

Galaxy - extension

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SLIDE 19 Q1 Results Investor Presentation 19

Galaxy – construction site

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SLIDE 20 Q1 Results Investor Presentation 20
  • OPS - extension phase III fully leased 19 stores;

3800 m² GLA

  • Opening scheduled for 15 September 2017
  • Entire project to consist of 118 stores
  • €708 000 NOI uplift

Outlet Park Szczecin - extension

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SLIDE 21 Q1 Results Investor Presentation 21

Acquisitions

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SLIDE 22 Q1 Results Investor Presentation 22 PARAMETERS VALUE Completion date October 1998 Total GLA 27,463 m² Occupancy (GLA) 96% (26,239 m²)
  • No. of units
76 WAULT by area / income (as of Q2 2017) 5.10 years / 4.30 years KEY TRANSACTION PARAMETERS Transaction type Share deal (100%) Title to the site Leasehold till 2036 (potential termination risk after 2026) Closing date 25th April 2017

Completed - Zakopianka

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SLIDE 23 Q1 Results Investor Presentation 23 PARAMETERS VALUE Completion date October 2009 Total GLA 25,589 m² Occupancy (GLA) 97% (24,931 m²)
  • No. of units
91 WAULT by area / income (as of Q2 2017) 3.08 years / 2.94 years KEY TRANSACTION PARAMETERS Transaction type Share deal (100%) Title to the site Freehold/ Perpetual Usufruct Closing date 14th June 2017

Completed - Blackstone: Wzorcownia Włocławek

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SLIDE 24 Q1 Results Investor Presentation 24 PARAMETERS VALUE Completion date April 2009 Total GLA 23,359 m² Occupancy (GLA) 100% (23,359 m²)
  • No. of units
60 WAULT by area / income (as of Q2 2017) 2.83 years / 2.80 years KEY TRANSACTION PARAMETERS Transaction type Share deal (100%) Title to the site Freehold Closing date 14th June 2017

Completed - Blackstone: Twierdza Kłodzko

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SLIDE 25 Q1 Results Investor Presentation 25 PARAMETERS VALUE Completion date May 2011 Total GLA 23,796 m² Occupancy (GLA) 99% (23,664 m²)
  • No. of units
92 WAULT by area / income (as of Q2 2017) 3.86 years / 3.75 years KEY TRANSACTION PARAMETERS Transaction type Share deal (100%) Title to the site Freehold/ Perpetual Usufruct Closing date 14th June 2017

Completed – Blackstone: Twierdza Zamość

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SLIDE 26 Q1 Results Investor Presentation 26 PARAMETERS VALUE Completion date January 2017 Total GLA 11,911 m² Occupancy (GLA) 86% (10,206 m²) Master lease (period/value) 3 years (€ 1.6 milion) Major Tenants Rockwell Automotion, Luxmed WAULT by area / income (as of Q3 2016) 4.97 years / 4.92 years KEY TRANSACTION PARAMETERS Transaction type Asset deal (100%) Title to the site Freehold Closing date 26th April 2017

Completed - A4 Business Park III

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SLIDE 27 Q1 Results Investor Presentation 27

Completed - Galeria Młociny Warsaw

Estimated cost at development (€ million; land development included) 295 Planned total GLA (m2) 81 900 Estimated NOI on completion (€ million) 20.9 Estimated development yield on cost
  • c. 7.1%
Estimated valuation yield on completion
  • c. 5.25%
EPP capital uplift (€ million)
  • c. 65
1 683 64 81 1 828 1 000 2 000 3 000 0-30 minutes 30–45 minutes (limited) 45–60 minutes (limited) Total Population (000s) CATCHMENT AREA Drive time
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SLIDE 28 Q1 Results Investor Presentation 28 PARAMETERS VALUE Planned completion date Q3 2017 Total GLA 18,923 m² Major tenant HCL (signed) Master lease period 3 years KEY TRANSACTION PARAMETERS Transaction type Asset deal (100%) Title to the site Freehold Planned closing date Q4 2017

Closing pending – O3 Business Campus phase II

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SLIDE 29 Q1 Results Investor Presentation 29 PARAMETERS VALUE Planned completion date Q3 2017 Total GLA 9,548 m² Major tenant Philips Polska (partially signed) Master lease period 3 years KEY TRANSACTION PARAMETERS Transaction type Asset deal (100%) Title to the site Freehold Planned closing date Q4 2017

Closing pending – Symetris Business Park II

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SLIDE 30 Q1 Results Investor Presentation 30

Introduction of REIT structures in Poland

On 26 May 2017, the Polish Ministry of Finance announced a new draft of the legislation introducing real estate investment trust (REIT) structures in Poland. Its key features are:
  • 1. The REIT must have shares listed on the Warsaw Stock Exchange (main floor)
  • 2. At least 70% of the REIT’s assets book value must be real estate assets
  • 3. At least 90% of profit derived from lease/sale of real properties (increased by undistributed profits) must be
distributed.
  • 4. Taxation of REIT’s profits is deferred until the moment of their distribution. The tax rate is 8.5%
  • 5. Dividends paid by REITs will be exempt from withholding tax.
The Real Estate industry is in the discussion with Ministry of Finance on final shape of the law. It is estimated that the law will be in force by end of 2017
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SLIDE 31 Q1 Results Investor Presentation 31 Acquisitions through STRATEGIC RELATIONSHIPS and EXPERIENCED MANAGEMENT TEAM Combination of: ORGANIC AND ACQUISITIVE GROWTH ORGANIC GROWTH from retail extensions, filling vacancies and ACTIVE ASSET MANAGEMENT Focus on acquiring retail assets in STRATEGIC LOCATIONS TO BECOME PURE RETAIL PROPERTY FUND BY 2019 LEVERAGE PORTFOLIO and platform with retail tenants SIGNIFICANT STRATEGIC DEVELOPMENTS IN PROGRESS - Towarowa & Młociny PRO-ACTIVELY TRADE ASSETS to ensure balanced portfolio (maintain WAULT of >4 years) Execution of the disposal of our WELL LOCATED OFFICES with STRONG COVENANTS

Growth and prospects

STRONG COMPOUNDED GROWTH IN DPS OVER THE MEDIUM TERM
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SLIDE 32 Q1 Results Investor Presentation 32

Q&A

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SLIDE 33

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