q1 results investor presentation - eppfile,47_epp-q1-2017...q1 results investor presentation 6...

www.echo-pp.com

Q1 Results Investor

Presentation

2017.06.29

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

opinions 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


3

Agenda:

Highlights

Q1 Financial Results

Property Operations

Development Projects

Acquisitions

Growth Prospects


4

Highlights

EPP to continue its focus to

become a pure retail property fund

by 2019.

EPP successfully raised €150 M.

of new equity which was

oversubscribed.

Integration team of 10 people hired

to assist in the integration of all new

assets.

EPP has won three prestigious

awards.


5

Q1 Financial Results


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 tax2 Value includes the investment in joint venture – Towarowa and unrestricted cash3 As of 21 June 2017 with EUR/ZAR rate: 14.61

Financials at a glance


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


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 20172NAV excluding deferred tax3Value 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


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


10

Property Operations


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


12

RETAIL KEY FACTS – Q1 2017

302 818

GLA sqm

4.6%

FOOTFALLQ1 2017

7.5%

SALESQ1 2017

+ 6,6% Q1 2017 LFL

Number

of tenants

84512.7%

RTS*Q1 2017

16.8%

OCR*Q1 2017

WALT by GLA

WALT by NOI

6.13

5.42

1.26%

VACANCYQ1 2017

*Rent to Sales *Occupany Cost Ratio


13

OFFICE KEY FACTS – Q1 2017

Number

of tenants

112176 207

GLA sqm

4.17

WALTby GLA

3.91

WALTby NOI

3.0%

VACANCYQ1 2017

4.3% on 31 Dec. 2016


14

Development Projects

15


• 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 002702

0

1 000

2 000

3 000

0–20minutes

20–40 minutes

40–60 minutes

Total

Popula

tio

n (

000s)

16


• 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 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

0

1 000

2 000

3 000

0-30minutes

30–45 minutes (limited)


Total

Popula

tio

n (

000s)



17

Galeria Młociny


18

• New opening scheduled – 15 Nov 2017

• Additional 15 150 m² GLA

• €3.1 million NOI uplift

• Extension leased over 80%

Galaxy - extension


19

Galaxy – construction site


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


21

Acquisitions


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


23

PARAMETERS VALUE

Completion date October 2009



No. of units 91


(as of Q2 2017)




Title to the site Freehold/

Perpetual Usufruct

Closing date 14th June 2017

Completed - Blackstone: Wzorcownia Włocławek


24

PARAMETERS VALUE

Completion date April 2009



No. of units 60


(as of Q2 2017)




Title to the site Freehold


Completed - Blackstone: Twierdza Kłodzko


25

PARAMETERS VALUE

Completion date May 2011



No. of units 92


(as of Q2 2017)




Title to the site Freehold/

Perpetual Usufruct


Completed – Blackstone: Twierdza Zamość


26

PARAMETERS VALUE

Completion date January 2017



Master lease

(period/value)

3 years (€ 1.6 milion)

Major Tenants Rockwell Automotion,

Luxmed

WAULT by area /

income

(as of Q3 2016)



Transaction type Asset deal (100%)


Closing date 26th April 2017

Completed - A4 Business Park III


27

Completed - Galeria Młociny Warsaw

Estimated cost at development (€ million; land

development included)295

Planned total GLA (m2) 81 900


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

0

1 000

2 000

3 000

0-30minutes



Total

Po

pu

lati

on

(0

00

s)



28

PARAMETERS VALUE

Planned completion date Q3 2017


Major tenant HCL (signed)

Master lease period 3 years




Planned closing date Q4 2017

Closing pending – O3 Business Campus phase II


29

PARAMETERS VALUE

Planned completion date Q3 2017

Total GLA 9,548 m²

Major tenant Philips Polska (partially

signed)

Master lease period 3 years




Planned closing date Q4 2017

Closing pending – Symetris Business Park II


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 isestimated that the law will be in force by end of 2017


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


32

Q&A

Contacts

CEO

Hadley Dean

[email protected]

+48 22 43 00 300

MARKETING DIRECTOR

Magda Cieliczko

[email protected]

+48 22 43 00 300

INVESTOR RELATIONS

Singular Systems IR

Jacques de [email protected]

Michèle Mackey

[email protected]

+27 10 003 0700

CORPORATE ADVISOR

Java Capital

Kevin Joselowitz

[email protected]

+27(0)83 642 0112

Carl Esterhuysen

[email protected]

+27(0)83 642 0223

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