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KMC Properties ASA

Investor Presentation • Feb 14, 2017

3645_rns_2017-02-14_93b27c2c-72f5-40d4-8acd-d4ea522a3760.pdf

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4th quarter 2016 FINANCIAL RESULTS PRESENTATION14 February 2016

DISCLAIMER

This document is being furnished for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase any security, future or other financial instrument or product. It is not intended to form the basis of an investment decision and has not been verified. Storm Capital Management Ltd. ("Storm") makes no recommendation or representation as to, and accepts no responsibility or liability for, the accuracy or completeness of the information contained herein or any other information, whether written or oral, made available and any liability therefore is expressly disclaimed. Such information is presented as of the date and, if applicable, time indicated and Storm does not accept any responsibility for updating any such information.

Any simulations, projections, valuations and statistical analyses contained herein have been provided to assist the recipient in the evaluation of the matters described herein; such simulations, projections, valuations and analyses may be based on subjective assessments and assumptions and may utilise one among alternative methodologies that produce differing results; accordingly, such simulations, projections, valuations and statistical analyses are not to be viewed as facts and should not be relied upon as an accurate representation of future events. No representation or warranty is given as to any of the simulations or analyses, or as to the achievement or reasonableness of any future projections or estimates, contained in this document.

This document has been prepared by Storm Capital Management Ltd. and should not be considered impartial research under FCA Rules. The views expressed may not be supported by independent analysis. The author of this document may be remunerated as a result of transactions generated by this information.

Storm Capital Management Ltd. is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Its registered office is at Berger House, 36-38 Berkeley Square, London W1J 5AE, United Kingdom.

KEY TAKE AWAYS

NAV per share at NOK 5.15.

3. Gasfield valuation at 30.5 million USD

STRATEGY

As presented in the previous presentations in 2016.

The Board decided to narrow down the strategy to bring out underlying values.

Multi-asset class strategy and wide geographical spread seen as a hindrance for some strategic alternatives (mergers, acquisitions, takeovers etc).

To enable potential strategic alternatives, the company has reverted to a single-strategy Russia platform.

OPERATIONS

The anchor tenant Gazprom Tsentrremont gave notice to vacate the building in October 2016.

Original termination date 11 January 2017. The parties agreed an extension to 31 March 2017. In February the tenant has requested another extension, this time to 31 May 2017.

3.

Storm is actively in the market for re-letting the space becoming vacant from 1 June 2017. Future cash flow and ability to meet future liabilities is dependent on sourcing new tenants and / or refinancing or restructuring of borrowing terms. The company is working on various solutions to address future liquidity constraints.

P&L – MAJOR ITEMS

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12M 2016 – ILLUSTRATIVE EBT

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ORDINARY OPERATIONS NON-RECURRING + FX / DERIVATIVES SUM

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BALANCE SHEET – MAJOR ITEMS

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(1) Unaudited.

(2) 2015 includes cash invested in liquid securities for cash management purposes.

DEVELOPMENT OF ASSET VALUE 2009 – 2016

(1) Grifon sold. Value of Gasfield building as per valuation from independent valuer.

(2) Implied yield = NOI / asset value at closing date. 2015 yield is calculated on the 2015 NOI / Asset value at year end of the remaining asset (Gasfield)

STORM REAL ESTATE SHARE PRICE PERFORMANCE

The Storm Real Estate share was listed on Oslo main exchange on 6 July 2010

Source: Oslo Stock Exchange, Bloomberg

(1) SRE and OSEBX adjusted for dividends. As per 13 February 2017.

OIL PRICE vs PROPERTY VALUES vs ROUBLE

RUSSIA – INFLATION

RUSSIA – INDUSTRIAL PRODUCTION

Economic activity (as measured by industrial production) showing a positive trend

RUSSIA – INVESTMENT VOLUME BY SOURCE OF CAPITAL

  • Investment volume reached c. US\$ 5.11 billion in 2016.
  • For reference the investment volume in 2015 was US\$ 2.8 billion.
  • Domestic capital constituted 98% of total investment volume
  • 55% US\$ 2.1 bn spent by banks (Sberbank, VTB) and state companies / government (Transneft, Moscow authorities)

Investment volumes higher in 2016 than 2014 and 2015

MOSCOW OFFICE MARKET – VACANCY RATE

  • Drop in vacancy rates in new class A business centres.
  • Class B continues to show lower vacancy rates than class A
  • Low new delivery in class A contributes to reduced vacancy rates Q4 2016:

Class B lower vacancy rate than class A buildings

MOSCOW OFFICE MARKET - AVERAGE RENTAL RATES IN RUB (1)

Relative stability in RUB rents

Source: Cushman & Wakefield

(1) Average rental rates is a weighted average rental rate of asking rents of deals closed within the period, RUB / m²/ annum/ triple net (net of op.ex and VAT)

MOSCOW OFFICE MARKET – NEW CONSTRUCTION AND ABSORPTION

New construction at low levels, but absorbtion positive again after a period of negative absorbtion

EUROPEAN OFFICE CLOCK 2010 –2016

KEY TAKE AWAYS

NAV per share at NOK 5.15.

3. Gasfield valuation at 30.5 million USD

APPENDIX

GASFIELD BUILDING

Gasfield Building

Class BGross Area c. 15,200 m² Occupancy Rate c. 98% Major Tenant Gazprom Tsentrremont

PERFORMANCE OF THE RUSSIAN MICEX INDEX

Source: Bloomberg .

(1) As per close 10 February 2017. The MICEX Index is denominated in rubles, the RTS Index is denominated in dollar.

RUSSIA – US\$/RUB AND NOK/RUB EXCHANGE RATE MOVEMENTS AND CBR KEY RATE

BRENT OIL PRICE AND OIL PRICE FUTURES

Brent Oil Price (US\$)

CONTACTCONTACT

Berger House 36-38 Berkeley Square London W1J 5AEUnited Kingdom

E-mail: [email protected] Tel: +44 (0)207 409 3378 Web: www.stormcapital.co.uk

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