KMC Properties ASA

Investor Presentation • Apr 25, 2024

The preferred real estate partner for logistics and industrial companies

KMC Properties ASA Q1 2024 results presentation | 25 April 2024

First quarter 2024 highlights

Progressing towards NOK 8 billion GAV target by end-2024

• Executed one of five property acquisitions announced in 2023
• Subsequent: Agreement to acquire Danish property for NOK 200 million

Positioning to act on attractive market opportunities

• Cash inflow of NOK 100 million through resetting of interest swaps
• Started positioning for NOK 900 million bond refinancing in 2025
• Development project with Slakteriet on hold due to unfavorable construction market conditions

Strong financial performance showcasing operational leverage

• 20% rental income increase vs. Q1 2023 to NOK 115 million
• Constant year-over-year operating expenses of NOK 14.4 million
• 22% net operating income from property management increase vs. Q1 2023 to NOK 44 million

Announced transactions progressing as planned

Executed one of five property acquisitions announced in 2023

Q1'24: Herrenhöfer Landstrasse 6, Ohrdruf, Germany

Q2'24 Hulshoutsesteenweg 33, Heist-op-den-berg, Belgium

Q2'24 4 Olszewskiego Street/15 Legnicka Street, Chorzów, Poland

Q2'24 11 Kluczborska Street, Chorzów, Poland

Q2'24 15 Narutowicza Street, Chorzów, Poland

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Four remaining property transactions expected to be closed in Q2 2024

Acquisition of Danish property with Velux A/S as long-term tenant

Velux is a European leader in manufacturing and development of roof windows

▪DKK 21.7 billion revenue in 2023 ▪Operations in 37 countries ▪Approximately 11 700 employees ▪Strong sustainability commitment

Transaction value	NOK 200 million
Gross yield	7.5 %
WAULT	11.5 years
Closing	June 2024

Executing on growth strategy launched in 2020

Portfolio development and year-end target

Gross asset value (NOKbn) and Net yield (%)

Our strategic focus areas

Acquisitions

Continuous expansion of and execution on M&A pipeline based on a defined set of investment criteria

Capital optimization

Continuously pursuing minimised cost of capital within prudent longterm financial structures

CAPEX

Investments in existing properties and client relations to yield higher rent and contract extensions

Greenfield

Development of new facilities with current or new tenants at mutually attractive terms

Pursuing opportunities in changing market conditions

Debt structure with attractive terms compared to observed acquisition yields

Acquisitions

Focusing on opportunities with highest value creation potential in the current market conditions

Capital optimization

Positioning for NOK 900 million bond refinancing in 2025

Industriparkveien 35, Jøsnøya, Hitra Norway

Financial review

Increasing income on larger asset base and flat operational expenses

Profit and loss¹

NOK million	Q1 2024	Q1 2023	%Change
Rental income	115	96	20 %
Property expenses	-1	-1
Net operating income	113	94	20 %
Administrative costs	13	13
Transaction cost	1	2
EBITDA 2	99	80	24 %
Net realised financials	-55	-44	25 %
Net income from property management	44	36	22 %
Net unrealised financials	24	62
Changes in value of financial instruments	-3	-64
Changes in value of investment properties 3	2	6
Profit before tax	67	41	64 %
Profit from continued operations	81	23	250 %
Interest coverage ratio (ICR)	1.7 x	1.8 x

+20% rental income increase

• Mainly driven by property acquisitions and investments
• 4.0 % related to CPI adjustments

Stabile operational expenses

• Flat administrative costs at NOK 13 million
• One transaction completed in Q1 2024

High operational leverage

▪ +24% EBITDA increase and +22% increase in net income from property management due to increased financial expenses

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3) The valuation of the properties on 31 March 2024 has been performed by the independent expert valuers

Continued growth materialising in the second quarter 2024

Annualized run-rate¹

NOK million, 12 months forward

	Q1 2024 pro forma	Q1 2024	Q4 2023
Rental income	521	481	460
Property expenses	-5	-5	-5
Net operating income	516	476	455
Administration expenses2	-46	-46	-46
EBITDA	470	430	409
Net realised financials3	-257	-255	-224
Net income from property management	213	175	185

Projected quarterly rental income (NOK million)

1) Based on completed agreements at period end.

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2) Does not include transaction costs and variable remuneration to employees

3) Based on interest rates and swap agreements at period end. Does not include amortisation of capitalised borrowing cost.

Earnings driven by income from property management

Earnings per share (EPS) last twelve months

NOK per share

Accretive growth supported by favorable debt financing terms

Debt structure and -terms

	31 Dec 2023				31 Mar 2024				Q1'24Pf
	Volume	Margin	Floating	All-in	Volume	Margin	Floating	All-in		All-in
Bond loan	900	5.00 %	4.72%	9.72%	900	5.00 %	4.73%	9.73%		9.73%
Bank loan	2 453	2.58%	4.57%	7.15%	2 718	2.49%	4.49%	6.98%		6.87%
Construction loan	121	2.75%	4.72%	7.47%	-	-	-	-		-
Revolving Credit Facility	108	3.25%	4.72%	7.97%	108	3.75%	4.73%	8.48%		8.48%
Shareholder loan	-	-	-	-	-	-	-	-		-
Total	3 582	3.21%	4.62%	7.83%	3 725	3.13%	4.55%	7.69%		7.59%
Swap agreements			-1.54 %				-0.86%		-0.83%
Total including swap agreements				6.29 %				6.83%		6.76%
Net yield				7.3%				7.4%		7.5%
Yield GAP				1.01%				0.57%		0.74%
1 Earnings per share				0.47				0.42		0.51

11 1) Earnings per share = NIFPM per share

Interest margin reduction of 8 bps since year end 2023

• Construction loan taken out with long-term bank loan
• Accretive additional bank loans financing one acquisition in Q1 2024 and four acquisitions in Q2 2024
• RCF-margin increase of 50 bps in accordance with initial term sheet

Resetting of swap agreements increasing overall interest rate but increasing long-term earnings per share

▪ Reallocating capital to higher yielding cash flows

Total interest including swap agreements up 54 bps compared to year end 2023

• 0.74% gap to net yield of 7.4%
• Expected reduction post financing of the five announced pro forma transactions due to favorable debt financing terms

Maintaining a conservative leverage ratio

LTV per quarter end and pro forma

Debt maturity profile (NOKm)

31 Mar 2024

Capital reallocation to pursue attractive growth opportunities

• Resetting of seven interest rate swaps on 22 March 2024 generating cash inflow of NOK 100 million
• IRR of 5.9% on swap agreements to maturities in 2027, 2028 and 2030
• Opportunities expected to yield higher IRR at substantially longer

1) Assumed 2% annual CPI adjustment and Cushman & Wakefield residual value in valuation.

13 2) Other growth opportunities assumed to be completed at similar metrics as Stålvej

Comfortable headroom to ICR covenants

ICR forecast

3M EURIBOR 3M CIBOR

14 1) Per 4 April 2023

NAV¹ per share / Run rate earnings² per share

Per share improvement post pro-forma acquisitions

• Increase in shares outstanding from listing in 2020 on to support expansion strategy
• No increase in shares outstanding from Q1 2024 to Q2 2024 with five already financed acquisitions (pro forma) to be completed
• Expecting an EPS-uplift to NOK 0.51/sh, from NOK 0.47/sh at year-end and NOK 0.42/sh in Q1 2024
• All-in interest increased 54 bps since Q4 2023, expected to decrease with attractive debt financing of the five announced transactions

15 Note: Pretax returns. 1) NAV = equity plus def tax. 2) Earnings per share = NIFPM per share 3) Interest rate held at Q1 2024 level for illustrative purposes

Value accretive growth diversifying across industries and regions

Strenghtened and diversified North European foothold

Pro-forma Q1 2024

Broadened access to capital New strategic investor Wider range of banks

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Robust platform for continued growth

Next 12 months run-rate NOK million

Q&A