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KMC Properties ASA

Investor Presentation • Aug 12, 2016

3645_rns_2016-08-12_3a543630-1272-4b58-9724-c4dd36f64708.pdf

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2nd quarter 2016 FINANCIAL RESULTS PRESENTATION12 August 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

Total Comprehensive Income of USD -2.3m in Q2

Sold TK Development in Q2, proceeds distributed to shareholders

3. Pure-play Russia strategy

NAV per share at NOK 3.98, after dividend of NOK 3.80.

STRATEGY

As presented in the Q1 presentation in May.

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.

TK DEVELOPMENT – INVESTMENT SOLD IN Q2

In line with new strategy, the Board resolved to sell Storm's stake in TK Development A/S

15% of the proceeds were retained to improve the company's working capital 85% of the proceeds were distributed to shareholders as dividends

3. After the sale, the business consists of direct ownership of investment property in Russia.

P&L – MAJOR ITEMS

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H1 2016 – ILLUSTRATIVE EBT

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BALANCE SHEET – MAJOR ITEMS

\$
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o		 3
7,
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%		 2
1,
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(1) Unaudited.

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

CASH & INVESTMENTS

STORM REAL ESTATE SHARE PRICE PERFORMANCE

Source: Oslo Stock Exchange, Bloomberg (1) SRE and OSEBX adjusted for dividends. As per 1 August 2016.

OIL PRICE vs PROPERTY VALUES vs ROUBLE vs SHARE PRICE

RUSSIA – INFLATION

RUSSIA – INDUSTRIAL PRODUCTION

Economic activity (as measured by industrial production) trending up

RUSSIA – INVESTMENT VOLUME BY SOURCE OF CAPITAL

  • Investment volume reached c. US\$ 2.5 billion in H1 2016.
  • For reference the investment volume in the whole of 2015 was US\$ 2.8 billion.
  • Russia Domestic capital constituted 95% of total investment volume

Investment volumes high in H1 2016 compared with 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 Q2 2016:

Class B lower vacancy rate than class A buildings

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

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

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 Q2 2010 – Q2 2016

KEY TAKE AWAYS

Total Comprehensive Income of USD -2.3m in Q2

Sold TK Development in Q2, proceeds distributed to shareholders

3. Pure-play Russia strategy

NAV per share at NOK 3.98, after dividend of NOK 3.80.

APPENDIX

GASFIELD BUILDING, MOSCOW & GRIFON HOUSE, ST. PETERSBURG

Gross Area c. 6,250 m²

Sold in December 2015.Estimated IRR in the ownership period = 8.3%

PERFORMANCE OF THE RUSSIAN MICEX INDEX

  • The Russian stock market has shown positive movements
  • The MICEX index was up 26,1% in 2015
  • The index is up 11.1% YTD 2016 (1),
  • The Index is at an 8 year high (May 2008)

Source: Bloomberg .

(1) As per 1 August 2016. 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\$)

Source: Bloomberg, as per 1 August 2016

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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