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Bane NOR Eiendom AS – Company Presentation

Norway's leading hub developer

This presentation and its appendices (collectively the "Presentation") has been produced by Bane NOR Eiendom AS (the "Company") with assistance from Danske Bank, Norwegian Branch and and Nordea

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Important information (1/2)

2

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Important information (2/2)

3

Speakers

Petter Eiken

EVP Bane NOR & CEO

Bane NOR Eiendom AS

Torkil Sletten Sven Erik Pløen

SVP, Head of Corporate

Finance, Bane NOR

Head of Funding, Corporate

Finance, Bane NOR

4

Bane NOR Eiendom - Norway's leading hub developer

▪ Introduction

▪ The Railway Reform and Bane NOR

▪ Business strategy and segments

▪ Financial overview

▪ Appendix

Agenda

5

Bane NOR Eiendom AS

▪ Well established company with new and

stronger framework conditions

▪ 100% owned subsidiary of Bane NOR SF

▪ Norway’s leading hub developer

▪ Owns, develops and manages railway

stations, stops, workshops, terminals,

operating buildings and infrastructure

properties in Norway

▪ Involved in more than 200 property

development projects

Bane NOR Eiendom AS

Bane NOR SF

100%

100%

Bane NOR Eiendom - Norway's leading hub developer6


Not just any real estate company…Strategically

important for the

Norwegian state

Large and

diversified

real estate portfolio

Norway’s leading

hub developer

Conservative

capital structure

1

2

3

4

Bane NOR Eiendom AS

Properties 964

Land area 2,810 hectares

Buildings 980

Built area 715,000 m2

Leases 3,000

Development potential* 2 million m2

Railway stations 330

Maintenance halls 12

Terminals 10

Market value** NOK 14,2 billion

Rent income 2017 NOK 733 million

EBITDA 2017 NOK 549 million

*Internal estimate based on evaluation of properties city by city (excluding development potential from

properties currently owned by Bane NOR SF)

**Average estimate as per 31.12.2017 provided by Newsec and C&W. Includes 100% owned real estate.

excludes i) JV i.e. OSU (33%) and ii) significant upside potential of "land bank“ from regulations change

7


▪ Introduction



▪ Financials overview

▪ Appendix

Agenda

8

An important position in the society

National Transport Plan outlines historically large funding of railways maintenance and

investments in Norway (NOK ~320 billion from 2018-2029)


The Railway Reform – new and stronger framework conditions

▪ The Railway sector was reformed through White

Paper no. 27 from 12 May 2015

▪ Enable competition for passenger rail services

▪ The rationale for combining real estate

responsibilities under Bane NOR was a need for

holistic and comprehensive property

development given the complexity related to

railways and hubs

▪ Real estate shall constitute one of three income

sources for the railways

▪ To ensure predictability, Bane NOR have

entered into long-term agreements with the state

(Railway Directorate)

Changes as a consequence of the Railway Reform

Jernbaneverket was phased into Bane NOR per 2017, while ROM Eiendom AS was transferred from NSB to

Bane NOR during April 2017, with a full year accounting effect

Bane NOR SFInfrastructure

Manager

Ministry of

Transportation and

Communications

Railway

Directorate

Norwegian

Railway Authority

Norske Tog ASRolling Stock

Ownership

Mantena ASRolling Stock

Maintenance

NSB ASPassenger

Operator

Entur ASSales Ticketing

Bane NOR

Eiendom AS

We create the railway of the future10

Bane NOR Group

▪ Bane NOR established as a group structure

governed by the board of directors

▪ Based on Jernbaneverket and ROM Eiendom AS

▪ Bane NOR’s main responsibility is operating,

owning, maintaining and building railway

infrastructure

▪ Bane NOR, through the real estate division, is

responsible for the management of all railway

property and also the related properties around

the stations and maintenance halls

▪ Five divisions with responsibility for each of

their business line

Board

CEO Internal Audit

Corporate

Governance

Safety and

Quality

Communications HR

Infrastructure

Management

Traffic Operations

and Customer

Services

Real Estate

Management

Digitalization and

Technology

Infrastructure

Construction


Five divisions with responsibility for each of their business line

Planning and construction of projects related to new infrastructure

450 employees

Operation, maintenance and investment projects related to improvement of the existing infrastructure

2,200 employees

Operational traffic management, operational route planning, train contractor agreements and information to travellers

850 employees

Management and development of the group’s real estate

200 employees

Development and delivery within digitalisation and technology for the whole company

600 employees

Digitalisation

and Technology

Infrastructure

ConstructionReal Estate

Infrastructure

Management

Traffic Operations

and Customer

Services


Commercial

objectives

Commercial

objectives and

domestic headquarter

Commercial and

other defined

objectives

Regulator and

political objectives

Baneservice DNB NSB Bane NOR

Entra Kongsberg Gruppen Posten Norge Avinor

Flytoget Norsk Hydro Statkraft Norske Tog

Mesta Statoil Eksportfinans Nye Veier

SAS Telenor Kommunalbanken Statnett

Government ownership and strategic importance to Norwegian infrastructure

Bane NOR is defined as a category 4 company*

1 2 3 4

Importance of “government related entity”

*A category 4 company fulfils national sectorial political objectives. The Norwegian government sets guidelines for a number of conditions, including airport structure,

emergency preparedness, aviation fees and duties imposed by society

Source: Norwegian Government (https://www.regjeringen.no/contentassets/63686604f2af43a8947448f242463208/oversikt-over-statens-direkte-eierskap.pdf)


We create the railway of the future

Bane NOR Group - Value based business

Norway on railsVISION

Europe’s safest railway

More value for money

Cost-effective resource allocation

Increased quality and predictability in our deliveries

Efficiency through enhanced productivity and modernisation

Customers first

User-friendly services for all target groups

Traffic management, infrastructure and solutions providing high punctuality and regularity

Services providing high customer satisfaction

Future-oriented

contributor to society

Leading developer of public transportation hubs

High-quality digital solutions and processes

Environmentally effective solutions

Attractive employer

VALUESOpen, engaged and professional

CULTURESecurity, accuracy, performance and cooperation culture

14


▪ Introduction




▪ Appendix

Agenda

15

Bane NOR Property's five strategic objectives

To develop hubs in order to support national targets for densification and

increased use of public transport (railways)

To provide property services that reinforce customer satisfaction and

make rail travel more attractive

To ensure access to the necessary property for efficient traffic

management and further infrastructure development

To optimize administration, operation and maintenance of all property

from a life cycle perspective (value/cost/time)

To add value by means of a stable cash flow from long-term ownership,

plus development of assets and implementation of property

Five strategic objectives


Dept. Stations and Property

▪ Two real estate environments were

combined into one with the merging of

former ROM Eiendom and the Norwegian

National Rail Administration's Stations

and Property to form Bane NOR Eiendom

▪ The rationale for the merger was a need

for holistic and comprehensive property

development given the complexity related

to railways and hubs

"More value for money""Emphasis on

customers""Forward-thinking social

stakeholder"

▪ Europe's leading

stakeholder in the

development and

administration of hubs

▪ Create densification

around hubs and rail

traffic growth

▪ Leading expertise in

property and a

knowledge of how

property adds value to

railways

▪ Staff who are committed

to and proud of their

involvement in the

community

▪ Reinforce the

attractiveness of rail

travel and create traffic

growth

▪ High customer

satisfaction levels and a

good reputation

▪ Attractive partner in the

market and for Bane

NOR

▪ Collective culture that

promotes positive

interaction

▪ Returns and development

of assets in respect of

real estate

▪ Create more value than

the market can supply

▪ Cost-effective

safeguarding

of property assets

▪ Structured processes that

promote continuous

improvement

One collective real estate business contributes to Bane NOR’s strategic targets


Bane NOR’s property portfolio opens many opportunities- Portfolio of 2 mill m2 in all major cities and new railway infrastructure

Drammen

Stavanger

Oslo S.

Sundvollen, Filipstad…


Ski

Oslo S. Utvikling (OSU) – «Barcode»

19 Bane NOR Eiendom - Norway's leading hub developer

Norway’s leading hub developer

Stations

Bus

Tram

Taxi Boat

P

P

P P

Hu

b d

eve

lop

me

nt

▪ Bane NOR has a large real estate portfolio in central locations next

to transportations hubs in several Norwegian cities with significant

value potential and opportunities over time, such as continuous

development of Oslo S, Fillipstad Brygge and Lodalen

▪ Bane NOR has a unique position as the leading player in major

public property developments due to:

• Long-term regulatory work

• Complex processes involving many stakeholders

Residential OfficesHotelsCommercial

P PTram

BoatStationBus Taxi

20

Key player amongst important stakeholders

Bane NOR

Public

Roads

Admin.

Munici-

palities

Counties

Ruter#

Ministry

Cultural

Heritage

Management

Office

Real estate

developers

Agency for

Planning and

Building

Services

Norwegian

Railway

Directorate

Harbour

Authority

Plans for Moss “Barcode”21


▪ Introduction




▪ Appendix

Agenda

22

Financing platform and strategy

▪ Following the Railway Reform, the former internal debt facility to NSB AS was refinanced in

January 2017

▪ Articles of association prohibits borrowing at SF level

▪ Bane NOR Eiendom entered into a loan agreement with five commercial banks on long-term

debt facilities NOK 6,5 bn; NOK 5 bn term loan and NOK 1,5 bn RCF, which forms the current

debt financing platform.

▪ Currently available undrawn RCF is NOK 1,0 bn.

▪ Existing financing contains change of control clause to Norwegian state and is conducted on

negative pledge basis with certain carve-outs for JV projects, similar structure is expected to

be retained for future financing

▪ Bane NOR Eiendom envisages to mainly carry out refinancing of drawn debt in the bond

market and expect to retain its low loan to value and conservative financial profile going

forward

▪ Bane NOR Eiendom AS currently report under simplified IFRS, i.e. any bond issues under

current reporting standard will be listed on Nordic ABM

▪ Capital injection into new joint development projects mainly comprise land from Bane NOR’s

existing large portfolio of land

39%Loan to

value

NOK

911million

Operating

income

NOK

549million

EBITDA

Key figures 2017


Diversified revenue base of NOK 733m (2017)

74%

6%

12%

Øst

Sør

NordVest

8%

40%

Housing

20%

Projects

Industry8%

11%

Station

Maintenance and storage

20%

Garage/ParkingOffice/Business

Property categories by rent (outer chart) and market value (inner chart)

Property geographies** by rent (outer chart) and market value (inner chart)

..And market values of NOK 14.2bn*Largest tenants (2018E)

5%33%

9%

17%

33%

9% 9%

78%

4%

Lease related to railway (2018E)

*Provided by Newsec and C&W per December 2017. includes 100% owned real estate. excludes i) JV i.e. OSU (33%) and ii) significant part of "land bank“

**Figure include 100% owned real estate, JV’s are used to a larger extent in other regions than east

of which 18% is related to

Oslo Central Station

18%27%

73% of lease income is

related to railway

73%


24%Other

14%

14%

17%

25%Railway stations(retail part)

24

Upside potential both from expansive railway sector and portfolio clean-up

▪ Bane NOR Eiendom AS generates income both through rental,

development and divestment

▪ Development comprise housing, office, hotel, retail real estate and

railway service facilities on their own or in partnership, currently ~200

active property development projects

▪ Both existing rental real estate and development projects are strongly

linked to railway infrastructure. Bane NOR Eiendom AS is, “on order”

from the Ministry of Transport and Communications, investing NOK ~1

billion in developing workshops which will further strengthen this link

▪ There group has a large land portfolio which provide future

development opportunities

▪ Most developed commercial real estate are natural divestment

candidates at the right market conditions

Development and divestment strategy Clean-up of portfolio

▪ Sale of closed railway stations

Non operative stations, stations along discontinued railways

and protected building which require substantial

maintenance and are financed by other activities

▪ Sale of lease land

Total portfolio of 1,200 land lease contracts, non strategic

land will be reviewed and considered sold

▪ Sale of closed operational properties

Sale of properties without link to railways or development

potential

▪ Leasing of closed railway stations and operational

properties

Bare-house rental to municipalities, organizations and

others

1

2

3

4


Income Statement

NOKm (Consolidated figures Bane NOR Eiendom AS) 2017 2016

Operating income 910,992 938,520

Salary and other personnel expenses (58,557) (149,849)

Activated project hours 4,835 11,059

Depreciations and write-downs (203,528) (188,385)

Other operating expenses (378,468) (263,752)

Sum operating expenses (635,718) (590,927)

Income from joint ventures 70,593 99,309

Operating profit 345,867 446,902

Net financial items (155,625) (136,014)

Ordinary result before taxes 190,242 310,888

Taxes (32,460) (25,390)

Net income 157,782 285,498

Annual estimate deviations pensions over extended

earnings (8,325)

Deferred tax on estimated deviation pensions extended

profit 2,161

Extended result (6,164)

Net profit for the year 157,782 279,335

▪ Jernbaneverket was phased into Bane NOR per 2017, while ROM Eiendom AS was

transferred from NSB to Bane NOR during April 2017, with a full year accounting

effect for 2017

▪ 2016 accounts reflect former ROM Eiendom AS, however is substantially a name

change

▪ Drop in revenue in 2017 compared with 2016 is driven by a reduction in sale of

assets, total of NOK 204 million in 2016 compared with a NOK 87 million in 2017

▪ Former Mantena AS workshops was transferred to Bane NOR Eiendom AS and

account for an increase in income of approximately NOK 60 million and an increase

operating expenses and depreciation of NOK 47 million

Operating income breakdown 2017 2016

Rental revenues 771,491 692,571

Other operating income 57,260 182,287

Sale of properties and other 82,241 63,662

Sum Operating income 910,992 938,520

EBITDA breakdown 2017 2016

Sum EBITDA 549,395 635,287

Sale of properties 82,241 192,406

EBTIDA in JV’s 70,595 99,387

Adj. EBITDA 396,559 343,494

26

Balance sheet


Share Capital 209,000 209,000

Retained earnings 530,250 467,464

Minority interest 645

Total equity 739,250 677,109

Interest-bearing long-term debt 5,545,091 2,331

Pension liabilities 69,225

Other provisions 33,269 27,332

Total long-term liabilities 5,578,360 98,888

Short-term interest bearing debt to parent 5,671,000

Trade creditors 361,076 379,023

Tax payable 25,144 36,918

Construction loan 417,439 134,919

Other liabilities 11,322

Total short-term liabilities 814,981 6,221,860

Total liabilities 6,393,341 6,320,748

TOTAL EQUITY AND LIABILITIES 7,132,591 6,997,857


Deferred tax assets 3,681 15,574

Tangible assets 138,836 151,821

Buildings and other real estate 4,613,397 4,356,644

Investments in associated companies and joint ventures 512,746 588,619

Fixed financial assets 109,536 79,576

Total fixed assets 5,378,196 5,192,234

Development properties held for sale 1,025,438 932,378

Trade receivables and other receivables 399,990 712,529

Current financial assets 2,151

Cash 328,967 158,565

Total current assets 1,754,395 1,805,623

TOTAL ASSETS 7,132,591 6,997,857

▪ Short-term interest bearing debt to parent in 2016 comprised an internal loan from

NSB AS, the debt was refinanced by bank debt following the formation of Bane

NOR and Bane NOR Eiendom

▪ Investments in associated companies and joint ventures are accounted for using

the cost method, however Bane NOR Eiendom’s share of Oslo S Utvikling (1/3) is

alone valued at NOK 1,1bn


Cash Flow and Liquidity


Cash flow from financing

Loan repayments (5,671,000)

Admission of loans 5,827,611 2,447,203

Group contribution paid (124,210) (136,495)

Dividend paid (2,714,555)

Net cash flow from financing 32,401 (403,847)

Change in cash position 274,267 146,030

Liquidity reserve at the beginning of the period 158,565 12,505

Liquidity reserve at the end of the period 432,832 158,535


Cash flow from operations 614,102 938,248

Net financial items (144,595) (156,144)

Tax payable - -

Net cash flow from operations 469,507 782,104

Cash flow form investments

Acquisition of subsidiaries (net of cash in subsidiaries) - (39,682)

Purchase of tangible fixed assets (7,468) (150,592)

Sale of investment property - 162,406

Eliminated gains sales of land to joint ventures 5,945 35,744

Acquisition investment property (403,615) (291,537)

Proceeds from disposal of tangible fixed assets,

development property and investment property114,039 15,122

Dividend received 256,000 62,500

Loans granted to associated companies (23,242) (2,402)

Investments in associated companies (169,300) (23,786)

Net cash flow from investments (227,641) (232,227)

▪ Drop in cash flow from operations mainly relate to changes in proceeds from sales of

investment- and development-property

▪ In addition to is solid cash balance, Bane NOR Eiendom currently has available and

committed undrawn debt facilities is NOK 1,0 billion


Key infrastructure provider and strategically important for the Norwegian state, categorized by the

government as the highest level of strategic ownership importance

Large and diversified portfolio heavily weighted towards infrastructure and large share of leasing income

arise from the state

Norway’s leading hub developer comprising housing, office, hotel, retail property and railway service

facilities

Upside potential from expansive railway sector, National transport plan outlines historically large funding

of railways with a budget of NOK ~320 billion from 2018-2029

Conservative financial profile with LTV of 39% per Dec 2017 (not including JV’s)

Summary - not just any real estate company

1

2

3

4

5


Thank you for listening!



▪ Introduction




▪ Appendix

Agenda

31

Bane NOR Eiendom AS Total real estate division*

Properties 964 4,469

Land area 2,810 hectares 162,350 hectares

Buildings 980 2,850

Built area 715,000 m2 1,120,000 m2

Leases 3,000 3,250

Development potential** 2 million m2 N/A

Railway stations 330 335

Maintenance halls 12 N/A

Terminals 10 N/A

Employees 0 200

Market values NOK 14,2 billion*** NOK 45,4 billion****

Rent income 2017 NOK 733 million N/A

EBITDA 2017 NOK 549 million N/A

Key figures

*Includes Bane NOR Eiendom AS and real estate owned by Bane NOR SF

** Internal estimate based on evaluation of properties city by city (excluding development potential from properties currently owned by Bane NOR SF)

** Average estimate as per 31.12.2017 provided by Newsec and C&W. Includes 100 % owned real estate. excludes i) JV i.e. OSU (33%) and ii) significant upside potential of "land bank“ from

regulations change

****Incudes estimated replacement value for all rail ground


Freight terminals Crossings Tons of ore, timber and

containers in 2015Railway bridges

Kilometers of railway Tunnels Railway stations and stops

for passenger traffic

Total journeys in

2016

Oslo Bergen Trondheim Stavanger

Departures

per day

Railways are key infrastructure in Norway

▪ Start of new railway tunnel in Oslo (completed in

2032)

▪ InterCity: Double tram to Hamar (Åkersvika),

Fredrikstad (Seut) and Tønsberg in 2024. Further to

Sarpsborg in 2026

▪ Outer InterCity: 2032 Skien and 2034: Halden and

Lillehammer

▪ Ringeriksbanen (building start 2021/2022)

▪ Double track Arna-Stanghelle

▪ Offers improvements in the Oslo area,

on Vossebanen, Jærbanen and

▪ Trønderbanen with minor

measures (route 2027)

▪ Launch of Grenlandsbanen

(Linking of Vestfoldbanen

and Sørlandsbanen)

▪ Electrification of Trønder- and

Meråker-railway

▪ Start-up municipality plan

Sandnes-Nærbø, and KVU

for Nærbø-Egersund

National transport plan outlines historically large investments in railways in Norway (NOK ~320 billion from 2018-2029)


▪ Owns and operates 330 railway stations

and stops

▪ Major diversity: From large, well-known

stations such as Oslo S, to small,

unmanned stations, protected and

preserved stations and stations of cultural

importance

▪ These stations must be attractive and

meet the needs of passengers, with

functional public areas and a relevant

service and information offering

▪ Operating and maintaining 12 train

workshops all over the country, 230,000

sq. m of buildings

▪ Leasing and developing complete

workshops set up for a modern, well-run

railway suitable for handling future

competition

▪ Developing new workshops for the

railways of the future “on order” from the

Ministry of Transport and

Communications

▪ Railway property owns and manages

980 buildings and 2,810 hectares of

land area

▪ Most of the real este portfolio is leased,

and a lot of it is used internally by Bane

NOR

▪ One of the biggest property developers

in Norway

▪ Significant development potential in the

portfolio

▪ Developing housing, offices, hotels,

commercial premises and railway

service facilities

▪ Commercial actor, creating significant

value and value for owner

Bane NOR Eiendom AS - Business segments

Station operations1 Railway property2

Maintenance halls3 Property development4


Management at Bane NOR Eiendom

Legal

Kirsti B. Ward

HR

Anette Palm Vesterkjær

Workshops

Jan-Tore Iversen

Railway Property

Morten Floberghagen

Stations

Knut Ø. R. Johansen

CEO

Petter Eiken

Concept and Planning

Marianne S. Aasen

Marketing and Communication

Kristin Paus

Jørn Seljelid

Strategy and Development

Projects

Morten Austestad

Espen Wikerholmen

Business Controlling

Corporate Finance

Torkil Sletten

Sven Erik Pløen


bane nor eiendom as - credit investor presentation · bane nor eiendom as –company presentation...

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