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Entra

Quarterly Report Apr 28, 2016

3596_rns_2016-04-28_75e2ab5c-31cb-4aaf-92a4-4515856cde20.pdf

Quarterly Report

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Central, flexible and environment friendly office properties

Financial highlights

  • Rental income of 454 million (440 million) in the quarter
  • Net income from property management of 278 million (210 million)
  • Positive portfolio value changes of 182 million (716 million)
  • Profit before tax of 284 million (1,016 million)
  • Net letting of approximately 25 million in the quarter
  • Two new projects started, one renovation project completed

0 100 200 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16

210 111 258 219 100 200 300

Q1 15 Q2 15 Q3 15 Q4 15 Q1 16

0

81 81 75 80 85

Q1 15 Q2 15 Q3 15 Q4 15 Q1 16

Key figures

All figures in NOK millions Q1-16 Q1-15 2015 2014 2013
Rental income 454 440 1 760 1 772 1 632
Change period-on-period 3% 2% (1%) 9% 3%
Net operating income 429 406 1 574 1 624 1 475
Change period-on-period 6% 2% (3%) 10% 3%
Net income from property management 278 210 799 774 525
Change period-on-period 32% 5% 3% 47% na
Profit before tax 284 1 016 3 075 1 377 458
Change period-on-period (72%) 1015% 123% 201% (43%)
Profit after tax 221 948 2 721 1 026 466
Change period-on-period (77%) 1247% 165% 120% (35%)
Market value of the property portfolio* 29 862 27 689 29 598 28 358 24 963
Net nominal interest-bearing debt 14 515 12 271 14 640 13 890 14 350
Loan to value* 45.2% 43.7% 46.1% 48.4% 56.6%
Interest coverage ratio* 2.8 2.3 2.5 2.0 1.8
Number of shares 183.7 183.7 183.7 183.7 0.1
All figures in NOK per share* Q1-16 Q1-15 2015 2014 2013
EPRA Earnings 1.1 0.8 3.2 3.0 3 158
Change period-on-period 40% na 8% na na
EPRA NAV 90 81 89 76 76 998
Change period-on-period 11% na 16% na na
EPRA NNNAV 82 74 81 68 69 253
Change period-on-period 12% na 20% na na
Cash earnings/* 1.5 1.1 5.0 4.1 3 833.3
Change period-on-period 32% na 21% na na
Dividend per share na na 3.0 2.5 na
Change period-on-period na na 0.2 na na

Reference

* See section "Calculation of key figures and definitions"

** Cash earnings in 2015 has been adjusted by 115 million due to termination of swap contracts in Q2-2015.

The termination fee was defined as a one-off item and did not reduce cash earnings as a basis for dividend for 2015.

*** Cash earnings definition changed in Q1-16 to also include net income from property management for JVs excluding Oslo S Utvikling. See definitions.

Several of the numbers are marked as not applicable ("na") as the figures are not comparable either due to historical changes in the P&L or due to changes in the outstanding shares of Entra ASA.

Financial developments

Results in the quarter

Rental income

The Group's rental income was up by 3 per cent from 440 million to 454 million quarter on quarter which can be explained by the factors in the below income bridge.

All figures in NOK millions

Rental income as of Q1 2015 440
Development projects 16
Acquistitions 0
Disposals -23
Other -3
Like-for-like growth 24
Rental income as of Q1 2016 454

On a like-for-like basis the rental growth was 6.7 per cent compared to the same quarter last year, of which the annual indexation of the lease contracts constituted 2.8 per cent. The remaining is mainly driven by high letting activity in Biskop Gunnerus gate 14 which is now fully let. Average 12 months rolling rent per square meter was 1,773 (1,697) as of 31.03.16. Near all of Entra´s lease contracts are 100 per cent linked to positive changes in CPI. The annual adjustment is mostly made on a November to November basis.

RENT PER SQM AND EPRA OCCUPANCY

The occupancy rate increased to 94.7 per cent (94.6 per cent). The rental value of vacant space as of 31.03.16 was approximately 93 million (91 million) on an annualised basis. Gross letting including re-negotiated contracts was 78 million in the quarter of which 29 million is attributable to letting in the project portfolio. Lease contracts with a total value of 10 million were terminated in the quarter. Net letting defined as new lease contracts plus lease-up on renegotiated contracts less terminated contracts came in at 25 million (33 million). The time difference between the net letting in the management portfolio in the quarter and its effect on the financial results is normally 6-12 months. Effects from letting in the project portfolio can be found in the project table under the section Investments and Divestments

QUARTERLY NET LETTING

Property costs

Total property costs amounted to 24 million (34 million) in the quarter and is split as follows:

All figures in NOK millions Q1-16 Q1-15
Maintenance -2 -8
Tax, leasehold fees and insurance -6 -8
Letting and property management -6 -6
Direct property costs -10 -12
Total operating costs -22 -26
Total property costs -24 -34

Net operating income

As a consequence of the effects explained above, net operating income from property management came in at 429 million (406 million) in the quarter.

Other revenues and other costs

Other revenue were 58 million (166 million). 38 million is related to Youngskvartalet in Oslo which is classfied as a construction contract. Until the project is delivered to the buyer, the Group will recognise other income and other costs based on the completion level. Other costs associated with the project amounted to 38 million.

During the first quarter of 2016 the Group delivered 3 (22) apartments at Ringstabekk to the buyers, and thus recognised 8 million (148 million) in income and 8 million (148 million) in costs. The remaining part of the Ringstabekk project including 5 apartments and commercial premises was sold in the quarter. Closing took place in the beginning of April 2016.

Other revenue also consists of income from services provided to tenants of 12 million and additional other property costs are mainly related to depreciation and rental expenses.

Administrative costs

Administrative costs amounted to 44 million (54 million). The reduction is mainly a result of streamlining of the cost base.

Result from associates and JVs

Entra`s share of profit from associates and JVs were 8 million (10 million) and is composed as follows:

All figures in NOK millions Q1 16 Q1 15
Income from property management 22 -1
Changes in market value -7 2
Other income and costs -3 2
Tax -4 7
Results from associates and JVs 8 10

For a more detailed breakdown of the results from associates and JVs see the section on Partly owned companies.

Net realised financials

Net realised financials amounted to 133 million (149 million) and is composed as follows:

Net realised financials -133 -149
Interest and other finance expense -135 -151
Interest and other finance income 2 3
All figures in NOK millions Q1 16 Q1 15

Net realised financials is reduced due to lower market interest rates on floating rate debt and the expiry and termination of high interest rate hedging agreements. The average interest

rate was 3.6 per cent (4.7 per cent) as at 31.03.16. The net interest-bearing debt has increased by approximately 2 billion compared to the same quarter last year mainly due to acquisitions.

Net income and net income from property management

Net income came in at 265 million (221 million). When including only the income from property management in the results from JVs the actual net income from property management were 278 million (210 million), representing a y-o-y increase of 32 per cent.

Net income from property management 278 210
Profit from Oslo S Utvikling -3 2
Tax from associates and JVs -4 7
Value changes in associates and JVs -7 2
Less:
Net income 265 221
All figures in NOK millions Q1 16 Q1 15

NET INCOME FROM PROPERTY MANAGEMENT PER SHARE

(Annualised, rolling 4 quarters)

* Q215 adjusted for 115 million swap termination fee.

Value changes

The valuation of the property portfolio resulted in a net positive value change of 182 million (716 million). 127 million is attributable to yield compression. 30 million relates to the current project portfolio and 53 million is the result of new contracts signed in the quarter. The remaining changes are related to terminations of contracts, transactions in the quarter and other property related changes.

Net changes in value of financial instruments was -162 million (79 million) in the quarter. The negative development is mainly explained by decreased market interest which affects the value on the Group's fixed rate loans and financial derivatives.

Tax

The Group is currently not in a tax payable position due to tax loss carry forward. At year-end 2015 the tax loss carry forward for the Group was 1,272 million. The change in deferred tax was 63 million (68 million) in the quarter. The current tax rate is 25 per cent. However, the effective tax rate is less than 25 per cent mainly due to sales of property without tax effect.

Profit

Profit before tax was 284 million (1,016 million) in the quarter, while profit after tax was 221 million (948 million) which also equals the comprehensive income for the period.

Balance sheet

The Group's assets amounted to 34,063 million (29,986 million) as at 31.03.16. Of this, investment property amounted to 29,070 million (27,406 million) and investment property held for sale to 148 million (299 million). Three properties were classified as held for sale as at 31.03.16. Intangible assets were 161 million (187 million) at the end of the quarter of which 146 million is goodwill related to Hinna Park.

Investments in associates and jointly controlled entities were 2,877 million (1,122 million). The increase is mainly related to the purchase of 33.3 per cent of Oslo City Kjøpesenter AS, of which Steen & Strøm owns the remaining part. The property was sectioned and demerged into three separate companies in the beginning of April 2016. From, and including, the second quarter 2016, Entra will fully consolidate the office section of the property. In addition, Entra own 50 per cent of the parking section that will continue to be treated as a jointly controlled entity in our accounts.

Property and housing-units for sale amounted to 645 million (51 million) at the end of the quarter mainly impacted by the reclassification of the property "Gullfaks" at Hinna Park following the forward sale of the property with expected delivery to the buyer in Q3 2016. At the end of first quarter 2015 the amount comprised the housing-unit project at Ringstabekk of which the major part of the apartments was sold during 2015.

Other receivables was 238 million (77 million) at the end of the first quarter 2016. The increase was affected by capitalised construction costs of 140 million related to the property in Youngskvartalet that will be delivered to the buyer in the fourth quarter of 2017. The Group held 136 million (127 million) in cash and cash equivalents at 31.03.16. In addition the Group has 3,631 million ( 4,652 million) in unutilised credit facilities.

The Group had interest bearing debt of 15,096 million (12,943 million) as of 31.03.16. The increase is mainly explained by the acquisition of Oslo City Kjøpesenter AS for approximately 1.6 billion and the development project "Trondheimsporten" for 132 million in Q4 2015.

Book equity totaled 13,575 million (12,012 million), representing an equity ratio of 40 per cent (40 per cent). Book equity per share was 74 (65). Equity per share was 90 (81) based on the EPRA NAV standard and 82 (74) based on EPRA NNNAV. Outstanding shares at 31.03.16 totalled 183.7 million (183.7 million)

Cash flow statement

Net cash flow from operating activities came to 277 million (194 million) for the first quarter of 2016. The change mainly relates to higher net income from property management compared to the same quarter last year.

The net cash flow from investments was -147 million (1,426 million). Proceeds from property transactons of 162 million (1,598 million) was mainly related to the sale of Strandveien 13 in Tromsø of 158 million and three apartments at Ringstabekk in the quarter. In the first quarter of 2015 the amount mainly related to the sale of the six properties in Østfold and Lillestrøm.

The cash effect from upgrades of investment properties amounted to 132 million (166 million) in the quarter. Investment in property and housing-units for sale of 100 million (2 million) is mainly related to investments in the property "Gullfaks" in Stavanger.

Net payment of loans to associates and jointly controlled entities of - 80 million (-37 million) mainly relates to capital increase of 79 million in Entra OPF.

Net cash flow from financing acitivites was -206 million (-1,690 million) and was mainly related to net repayment of 201 million in bank debt. In the first quarter of 2015 the net cash flow from financing activities was related to repayment of bank debt following the sale of the six properties in Østfold and Lillestrøm.

The net change cash and cash equivalents was -76 million (-71 million) in the quarter.

Financing

During the first quarter, Entra has refinanced commercial paper loans for a total of 1,3 billion. Entra´s total bank debt was reduced by 201 million, mainly due to divestment of noncore real estate assets.

Interest bearing debt and maturity structure

As at 31.03.16 net interest-bearing nominal debt after deduction of liquid assets of 136 million was 14,515 million. The average remaining term of the Group's debt portfolio was 4.3 years at 31.03.16 (5.3 years as at 31.03.15). The calculation takes into account that available long-term credit facilities can replace short-term debt.

Entra's financing is mainly based on negative pledge of the Group´s assets, which enables a broad and flexible financing mix. Entra's financing structure includes bank, bonds and commercial paper. At the end of the period 57 per cent of the Group's financing was from the capital market.

Maturity profile and composition interest bearing debt

Maturity profile 0-1 yrs 1-2 yrs 2-3 yrs 3-4 yrs 4+ yrs Total
Commercial paper (NOKm) 1 900 - - - - 1 900
Bonds (NOKm) - 1 600 1 200 1 000 2 700 6 500
Bank loans (NOKm) 1 200 820 1 186 1 490 1 555 6 250
Total (NOKm) 3 100 2 420 2 386 2 490 4 255 14 650
Commercial paper (%) 61 0 0 0 0 13
Bonds (%) 0 66 50 40 63 44
Bank loans (%) 39 34 50 60 37 43
Total (%) 100
Unutilised credit facilities (NOKm) 1 000 1 030 14 10 1 577 3 631
Unutilised credit facilities (%) 28 28 0 0 43 100
Sources of financing NOKm %
Bonds listed at OSE 5 400 37
Secured bond 2030 Entra 1 100 8
Bank loans Entra 4 190 29
Total 14 650 100
Commercial paper 1 900 13
Bank loans subsidiaries 2 060 14

Financing policy and status

All figures in NOK millions 31.03.2016 Target
Loan-to-value (LTV) 45.2 Approx. 50%
Interest coverage ratio (ICR) 2.8 Min. 1.65x
Debt maturities <12 months 21% Max 30%
Maturity of hedges <12 months 45% Max 50%
Average time to maturity (hedges) 3.6 2-6 years
Financing commitments next 12m 118% Min. 100%
Average time to maturity (debt) 4.3 Min. 3 years

Interest rates and maturity structure

The average interest rate of the debt portfolio was 3.6 per cent as at 31.03.16, down from 3.7 per cent as at 31.12.15. 55 per cent of the Group's financing was hedged at a fixed interest rate as at 31.03.16 with a weighted maturity of 3.6 years.

The Group's interest-bearing debt is subject to variable interest rate, including fixed rate bonds, which are swapped to variable

The Group's average interest rate
NIBOR on debt 1.03
Swap interest rate (net) 1.59
Credit margin on debt 0.98
Total 3.60

rate. The Group manages interest rate risk by entering into floating-to-fixed interest rate swaps. The table below shows the maturity profile and contribution from floating-to-fixed interest rate swaps used for hedging purposes, as well as maturity profile for credit margins on debt.

Pay fixed / receive floating swaps¹ Forward starting swaps² Average credit margin
Amount
(NOKm)
Interest rate
(%)
Amount Interest rate
(%)
Tenor
(years)
Amount
(NOKm)
Credit
margin (%)
<1 year 170 3.13 500 2.83 8 6 650 0.92
1-2 years 642 4.69 - - 2 350 1.18
2-3 years 2 050 3.86 1800 2.25 7 1 950 1.12
3-4 years 900 3.79 200 1.71 7 1 000 0.92
4-5 years 1 800 4.14 700 1.24
5-6 years 550 4.47 - -
6-7 years 550 3.71 900 1.17
7-8 years 150 5.36 - -
8-9 years 400 2.56 - -
9-10 years - - - -
>10 years 510 5.36 1 100 0.39
Total 7 722 4.06 2 500 2.33 14 650 0.98

¹Excluding forward starting swaps.

Swap interest rate

²The table displays future starting point, notional principle amount, average fixed rate and tenor for forward starting swaps.

³Hedge ratio = outstanding notional principal amount (swaps) / nominal interest bearing debt.

Pay fixed 7 722 4.06 Receive float -7 722 1.05

(net) 3.01

Hedge ratio adjusted rate³ 1.59

The property portfolio

Entra owns and manages 96 buildings with a total area of approximately 1.2 million square metres. As of 31.03.16 the property portfolio had a market value of around 30 billion. The occupancy rate was 94.7 per cent (94.6 per cent). The weighted average unexpired terms for the Group's leases was 7.5 years (7.4) for the management portfolio and 7.8 years (7.6) when the project portfolio is included. The public sector represents approximately 73 per cent of the total customer portfolio. Entra's strategic areas of concentration are Oslo and the surrounding region, Bergen, Stavanger and Trondheim. Entra has its head office in Oslo.

Entra´s properties are valued by two external appraisers (Akershus Eiendom and DTZ) on a quarterly basis. The market value of the portfolio in Entra´s balance sheet is based on the average of the two external appraiser's valuation of each individual property. Valuation of the management portfolio is performed on property basis, using individual DCF models and taking into account the property's current characteristics

combined with the external valuer's estimated return requirements and expectations on future market development. The market value is defined as the external valuer's estimated transaction value of the individual properties on valuation date. The project portfolio is valued based on the same principles, but with deduction for remaining investments and risk on valuation date. The land and development portfolio is valued based on actually zoned land.

As of 31.03.16 the portfolio was valued at 29.9 billion (27.7 billion).

Year-on-year the portfolio net yield is reduced from 6.1 per cent to 5.8 per cent. 12 months rolling rent has increased from 1,697 to 1,773 per square meter whereas the market rent has increased from 1,725 to 1,772 per square meter.

Number Area Occupancy Wault Market value 12 months rolling rent Net yield Market rent
(#) (sqm) (%) (year) (NOKm) (NOK/sqm) (NOKm) (NOK/sqm) (%) (NOKm) (NOK/sqm)
Oslo 38 518 625 94.8 6.9 17 874 34 465 1 079 2 081 5.6 1 080 2 082
Trondheim 9 117 187 98.2 6.5 2 435 20 780 175 1 490 6.5 165 1 410
Sandvika 10 100 047 90.6 10.5 2 193 21 920 127 1 268 5.3 134 1 335
Stavanger 6 79 194 93.7 10.0 2 057 25 976 136 1 718 6.1 135 1 711
Drammen 8 71 506 92.3 8.8 1 713 23 952 109 1 531 6.0 105 1 470
Bergen 6 57 119 98.8 5.5 1 217 21 298 84 1 477 6.2 92 1 617
Kristiansand 7 45 158 95.6 8.6 616 13 645 53 1 171 7.6 49 1 086
Other 2 9 823 84.6 4.2 74 7 487 7 752 8.0 9 906
Management
portfolio
86 998 659 94.7 7.5 28 179 28 216 1 771 1 773 5.8 1 770 1 772
Project portfolio 6 104 834 16.4 1 277 12 183
Development sites 4 120 911 0.9 407 3 364
Property portfolio 96 1 224 404 7.8 29 862 24 389

Ringstabekk housing project is included in market value of management portfolio at cost price of 11 million. Youngsgt. 7-9 is included in market value of the management portfolio at sales price of 60 million. The calculation of net yield is based on the valuers' assumption of ownership costs, which at 31.03 corresponds to 8.2 per cent of market rent.

Reconciliation of investment properties to property market value

The below table reconciles the individual balance sheet items to the property market value presented above.

All figures in NOK millions Q1 16 Q1 15 2015
Investment property 29 070 27 406 28 823
Investment properties held for sale 148 299 165
Properties and housing-units held for sale 653 51 617
Other -9 -67 -7
Property market value 29 862 27 689 29 599

Letting activity in the quarter

During the fourth quarter Entra signed new and renegotiated leases with an annual rent totalling 78 million (38,000 square metres) and received notices of termination on leases with an annual rent of 10 million (3,700 square metres). The increase in rent from the total amount of renegotiated contracts signed within the quarter was about 3.1 per cent. Net letting was 25 million in the quarter. Net letting is calculated as the annualised rent of new lease contracts plus lease-up on renegotiated contracts less terminated contracts.

Large contracts signed in the quarter (> 20 mill in total value):

  • New lease contract for 20 years and 8,300 sqm. in Brattørkaia 16 in Trondheim with BI Norwegian Business School
  • New lease contract for 10 years and 4,800 sqm. in Cort Adelersgate 30 in Oslo with the Oslo Municipality Education Authority
  • Renegotiated contract for 4.5 years and 7,700 sqm at Kjørbo in Sandvika with Norconsult
  • Renegotiated contract for 7 years and 3,000 sqm in Akersgata 51 with SATS Norge AS

Maturity profile of the management portfolio:

Investments and divestments

Entra has invested 208 million in the portfolio of investment properties in the quarter. In addition, Entra has invested 130 million through its non-consolidated jointly controlled entities (260 million on a 100 per cent basis).

Project development

The portfolio of ongoing project with a total investment exceeding 50 million is presented below. The below description includes projects in jointly controlled entities not consolidated in the financial accounts except projects in Oslo S Utvikling.

Ownership
(%)
Location Expected
completion
Project area
('000 sqm)
Occupancy
(%)
Estimated
total project
cost*
(NOKm)
Of which
accrued*
(NOKm)
Yield on
cost**
Group:
Strømsveien 96 100 Oslo Dec-16 18 100 46 433 215 6.6
Cort Adlersgate 30 100 Oslo Dec-16 4 700 100 162 97 6.3
Trondheimsporten 100 Trondheim Nov-17 28 600 77 680 220 6.4
Total Group 51 400 1 275 532
Jointly controlled companies:
Sundtkvartalet 50 Oslo Dec-16 31 300 45 1 055 710 6.7
MediaCity Bergen 50 Bergen Aug-17 45 000 69 1 677 1 086 6.1
Total Jointly controlled companies 76 300 2 733 1 797
Forward sold property projects:
Gullfaks *** 50 Stavanger Aug-16 17 900 100 539 505 6.7
Total Forward sold projects 17 900 539 505

* Total project cost (Including book value at date of investment decision/cost of land)

** Estimated net rent (fully let) at completion/total project cost (including cost of land)

*** Gullfaks; Occupancy is reported as 100 per cent let due to a rental guarantee included in the purchase transaction of Hinna Park AS

Status ongoing project

At Strømsveien 96 in Oslo the refurbishment of 18,100 square metres (12,500 sqm offices) is ongoing. Assembling of the façade is still ongoing and internal work has begun. The Norwegian Medicines Agency will be one of the tenants, letting approximately 6,500 square metres. The project aims to obtain a BREEAM Very Good classification and will obtain energy class B. The refurbishment will be completed in December 2016.

Cort Adlersgate 30 in Oslo will be refurbished during 2016. Entra has signed a 10 year lease contract with the Oslo

Municipality Education Authority for 4,750 sqm and the building is now fully let.

In December 2015 Entra purchased the development project "Trondheimsporten", a new-build project centrally located in Holtermanns veg 70 in Trondheim. When finalised, the property will be a 15-floor building of approx. 28,600 sqm. office/education and parking. The property is 77 per cent prelet to Trondheim municipality and the Norwegian Labour and Welfare Administration on 10-year contracts. The tenants have options to let the remaining areas in the building. Construction started in January 2016. The building is expected to be finalised during the third quarter of 2017 with a BREEAM Very Good classification.

In Sundtkvartalet in Oslo, a new, environmentally leading office building of approximately 31,300 square metres is under construction. Construction of the facade and internal works is currently ongoing. The ambition is to obtain a BREEAM Excellent classification, a passive house with energy class A. The project is organised through a joint venture where Skanska and Entra own 50 per cent each. Skanska is the building contractor and has also signed a lease for approximately 8,000 square metres in the new property.

In Lars Hilles gate 30 in Bergen (Media City Bergen), Internal demolition has been completed and internal work is the main ongoing activity in the first and the middle block. Construction of the façade has started. The project includes total renovation of approximately 35,000 square metres and an extension of approximately 10,000 square metres. The vision behind the concept is to create an environment for innovation and knowledge development within the media industry, through establishing a cluster of media companies, technology, education and research. The largest media companies such as

TV2, NRK, Bergensavisen, Bergens Tidene, the Media Faculty of Bergen University, and Vizrt have signed lease contracts. The property is 50 per cent owned by Entra through Entra OPF.

In July 2015 Wintershall exercised its option to acquire the property project Gullfaks in Stavanger when finalised in August 2016. Gullfaks is a 17,900 sqm office building under construction at Hinna Park in Stavanger. The transaction also includes part of an underground car park. The property is 50 per cent owned by Entra through Hinna Park Eiendom AS.

Entra has started a project in Youngskvartalet in Oslo, involving both a new building and refurbishment of an existing building. The project consists of 9,400 square metres and will be finalised in Q4 2017. The project is forward sold to Industri Energi as part of a larger transaction that took place in 2012 where Entra booked a total value gain of 134 million. When finalised, Entra will deliver the project at cost plus a project management fee. Total project cost (incl. land) is approximately 340 million.

Completion of remaining interior works on 7,400 sqm in one of the blocks in Fredrik Selmersvei 4 of was finalised in January 2016. 3,700 sqm is let to the Norwegian Tax Administration and the project was thus 52 per cent let at completion.

Transactions

Entra actively seeks to improve the quality of its property portfolio through a disciplined strategy of acquisitions and divestments. Entra focuses on acquisition of large properties and projects in specific areas within its four core markets; Oslo, Bergen, Trondheim and Stavanger. Target areas include both areas in the city centers and selected clusters and communication hubs outside the city centers, allowing Entra to offer rental opportunities at a price range that fits its customer

base. Entra's experience, financial strength and knowledge of its tenants makes the company well positioned to make acquisitions that meets these acquisition criterias. At the same time, Entra actively divests smaller properties and properties outside its core markets. The acquisition and divestment strategy is flexible, allowing Entra to adapt to feedback from customers and market changes, and to respond to market opportunities as they arise.

Transactions in 2015 and YTD 2016

Purchased properties Area Location No of sqm Transaction
value
Closing
date
Office part of Oslo City* Oslo Q4 2015 33 300 1 650 31.12.2015
Trondheimsporten Trondheim Q4 2015 28 600 163 18.12.2015
Sum 61 900 1 813
Transaction Transaction Closing
Sold properties quarter No of sqm value date
Ringstabekk AS** Bærum Q1 2016 5 570 114 06.04.2016
Strandveien 13, Tromsø Tromsø Q4 2015 11 560 158 28.01.2016
Tollbugata 2, Bodø Bodø Q4 2015 940 14 01.12.2015
Hans Kiersgate 1 b and c Drammen Q4 2015 2 230 11 30.10.2015
Kirkegata 2 B Arendal Q3 2015 5 800 33 30.09.2015
Gullfaks, Hinna Park (forward sale) Stavanger Q3 2015 17 900 Est. 700 Q3 2016
Keysersgate 15 Oslo Q1 2015 315 16 01.03.2015
Grønnegaten 122 Tromsø Q4 2014 6 600 72 07.04.2015
Skansegaten 2 Stavanger Q4 2014 4 379 110 09.01.2015
Portfolio of six properties Moss, Skien, Lillestrøm Q1 2015 62 918 1 375 24.02.2015
Sum 118 212 2 602

* Include 50 % of parking basement

** Commercial areas included in number of sqm (residential not included)

Partly owned companies

Entra selectively gains access to development projects through its shareholding in subsidiaries with non-controlling interests and jointly controlled entities. Entra's interests currently include the following companies:

Papirbredden Eiendom AS (60 %)

Entra and Drammen Municipality own Papirbredden Eiendom AS. The company owns six office properties and development potential for one new office property of around 39,000 sqm in Drammen.

Hinna Park Eiendom AS (50 %)

Entra and Camar Eiendom AS own Hinna Park Eiendom AS. The company owns three office properties and development potential for two new office properties totalling around 29,300 sqm. The company also owns the ongoing development project Gullfaks which has been forward sold to Wintershall.

Entra OPF Utvikling AS (50 %)

Entra and Oslo Pensjonsforsikring (OPF) own Entra OPF Utvikling AS. The company owns two properties in Bergen of which one is the project property MediaCity Bergen in Lars Hilles gate 30. According to the agreement between Entra and Oslo Pensjonsforsikring, Entra OPF Utvikling AS is not to be financed with debt, any capital requirements are thus to be financed with equity contributions from the owners.

Sundtkvartalet Holding AS (50 %)

Entra and Skanska Commercial Development Norway Holding AS own Sundtkvartalet Holding AS. The company will build a

new office building of approximately 31,000 square meters as described under the project development section above.

Oslo S Utvikling AS "OSU" (33.33 %)

OSU is a property development company that is undertaking the development of parts of the city district Bjørvika in Oslo. Entra's share of the market value of the properties and projects in OSU is estimated at approximately 1.3 billion as of 31.03.16. The estimate is based on valuations from two external appraisers. Entra's share of the net asset value as at 31.03.16 was 0.6 billion after taking into account estimated latent deferred tax of 10 per cent.

Oslo City Kjøpesenter (33.3 %)

Oslo City Kjøpesenter AS was acquired 31.12.2015 and owns the property Oslo City. Steen & Strøm AS owns the remaining 66.6 per cent.

The property was sectioned and demerged into three separate companies in the beginning of April 2016. From the second quarter 2016 Entra will accordingly fully consolidate the office section of the property. In addition, Entra owns 50 per cent of the parking section that will continue to be treated as a jointly controlled entity in the accounts.

All figures in NOK millions Papirbredden
Eiendom AS
Hinna Park
Eiendom AS
Sum
consolidated
companies
Entra OPF
Utvikling AS
Sundtkvartalet
Holding AS
Oslo S
Utvikling
Oslo City
Kjøpesenter
AS
Other Sum
associated
companies &
JVs
Share of ownership (%) 60 50 50 50 33 33
Rental income 23 19 42 5 0 22 66 92
Net operating income 23 15 38 3 0 22 65 89
Net income 14 7 21 2 -1 -15 63 49
Changes in value of
investment properties
11 -25 -14 12 -25 0 0 -14
Changes in value of financial
instruments
-4 -4 -8 0 0 4 0 4
Profit for period/year 16 -16 0 10 -20 -9 47 29
Non-controlling interests 6 -8 -2
Entras share of profit 5 -10 -3 16 0 8
Book value 577 147 537 1 608 7 2 877
Market value properties 1 485 1 695 3 180 1 221 853 3 914 4 830 10 818
Entras share of market value
properties
891 847 1 738 610 426 1 305 1 608 3 950

Financial figures for partly owned entities and JVs (based on 100 % ownership)

Market development

The transaction volume in the Norwegian market was record high in 2015 and totalled around 120 bn according to Entra's consensus report. The high volumes were driven by low interest rates, demand from foreign investors and several large portfolios being offered in the market.

Q1 2016 saw transaction volumes of around 1/3 of the volume seen in Q1 2015. The participants contributing to the consensus report expect transaction volumes at around 60 bn for 2016 which is a high level historically but significantly lower than in 2015. The interest from international investors is expected to continue in 2016. Prime yield is expected to remain at current historically low levels in the years to come according to the consensus report.

Source: Entra Consensus report

Market data Oslo

Office vacancy in Oslo has peaked at 8.3 per cent and is expected to drop to around 8.0 per cent by the end of the year according to Entra's consensus report. The reduction is explained by an expected increase in employment and continued conversion of office buildings to residential, school and refugee homes. Rent levels in Oslo and Bærum has on an overall basis decreased by some 2 per cent this quarter compared to Q1 2015. However, rents for modern offices in the city centre is remaining stable at around 3,000 per square meter. A positive trend is expected going forward, driven by lower vacancy.

In Bergen, Stavanger and Trondheim the office vacancy has reached about 10 per cent. In Bergen, rents in the city centre has remained relatively stable. Centrally located office premises may even see an increase in rent. The vacancy in Stavanger is concentrated to the oil & gas intensive Forus area outside the Stavanger city centre where the rent levels are experiencing significant downward pressure. In Stavanger city centre and at Hinna Park, the vacancy is still below 5 per cent and rent levels remain more stable. In Trondheim modern offices located in or near by city centre are attractive and rents are stable. Outside the city centre rent levels are experiencing downward pressure and the office vacancy is increasing due to high new building activity.

In general, sub markets situated outside city centres with a high level of oil sector exposure are still experiencing increasing vacancies and pressure on rents. Entra, however, is in a relatively good position having long lease contracts with solid tenants and a low exposure towards the oil sector. Modern offices located near public transportation are attractive and obtain solid rents compared to premises located in less central areas.

2013 2014 2015 2016e 2017e 2018e
Vacancy Oslo and Bærum (%) 7.4 7.8 8.3 8.0 7.7 7.3
Rent per sqm, high standard Oslo office 2 907 3 025 2 930 2 926 3 015 3 135
Prime yield (%) 5.2 4.7 4.1 4.1 4.1 na

Source: Entra Consensus report

Other information

Organisation and HSE

At 31.03.16 the Group had 166 employees, of whom 14 are employed in Hinna Park AS. During the quarter there were one injury that caused absence from work. Entra has a continuous HSE focus both in on-going projects and in the operations and works continually to avoid injuries. The Group had an LTIF rate (number of accidents with lost time per million hours worked in last 12 months) on ongoing projects of 4.0 (5.8) at the end of the period.

Risk and risk management

The Group is exposed to financial risk through its debt financing, and changes in interest rate levels on loans at floating rates will affect the Group's cash flow. The risks associated with the development in market rates are managed through active use of interest rate hedging instruments. Liquidity/ refinancing risk is reduced by entering into long-term loan agreements, as well as through establishing a diversified maturity structure and the use of various credit markets and counterparties.

The Group's equity is affected by value changes on properties and financial instruments that are due to changes in, among other things, interest and rent levels, yields and other market conditions. Entra is exposed to the letting market, which is affected by macroeconomic changes in, among other things, GDP, the CPI rate and employment. Vacancy in the portfolio and rent changes on renegotiation of existing contracts affect the ongoing cash flow. Efforts are made to reduce the letting risk by systematic customer service, following up contract expiries and plans for letting work, as well as by adapting properties to customers' requirements. By entering into long leases with a diversified maturity structure, the Group achieves a stable and predictable cash flow. Due to recent political changes in the city council in Oslo, Entra will be exposed to property tax on all its properties in Oslo, effective from 2017. Entra carries out major upgrading and development projects involving risks in relation to deadlines and costs.

Events after the balance sheet date

The property Oslo City was sectioned and demerged into three separate companies in the beginning of April 2016. From, and including, the second quarter 2016 Entra will accordingly fully consolidate the office section of the property. In addition, Entra own 50 per cent of the parking section that will continue to be treated as a jointly controlled entity in the financial accounts.

Share and shareholder information

Entra's share capital is NOK 183,732,461 divided into 183,732,461 shares, with each with a par value of NOK 1 per share. Entra has one class of shares and all shares provide equal rights, including the right to any dividends.

As of 20 April 2016, Entra had 5,586 shareholders. Norwegian investors held 69 per cent of the share capital and foreign investors 31 per cent. The 10 largest shareholders as of 20 April 2016 were:

Shareholder % holding
Norwegian Ministry of Trade, Industry and
Fisheries
49.7
Geveran Trading 7.7
Folketrygdfondet 6.8
Danske Invest Norske 2.1
State Street Bank (Nominee) 2.0
JP Morgan Bank Luxemburg (Nominee) 1.9
The Bank of New York (Nominee) 1.4
Danske Invest Norske 1.1
State Street Bank (Nominee) 1.0
The Bank of New York (Nominee) 1.0
SUM 10 LARGEST SHAREHOLDERS
(VPS 20.04.16)
74.5

Outlook

The Norwegian economy is influenced by a weaker macroeconomic development and general uncertainty. Office vacancies have increased slightly despite the relatively low volume of new buildings being completed. Sub markets with a high level of oil sector exposure are experiencing increasing vacancies and pressure on rents. Entra is in a relatively good position having long lease contracts with solid tenants and a low exposure towards the oil sector.

Particularly in Oslo, that constitutes some 60 per cent of Entra's revenues, we now expect vacancy levels to have peaked and to see a falling trend going forward as net new office space coming into the market during 2016 and 2017 is marginal due to low new building activity and high conversion from commercial to residential buildings. Market rent levels decreased slightly in 2015 but according to Entra's consensus report, they are now expected to level out and see a positive trend from 2017.

Modern offices located near public transportation are attractive and obtain solid rents compared to premises located in less central areas.

The good credit availability and historically low market interest rates for all maturities has continued. During recent weeks, we have also experienced that credit margins have contracted, albeit margins are still at higher levels than what we experienced during early last year.

Property investors seek quality properties with good locations and long and secure cash flows.

The yield compression in the Norwegian market is expected to level out. However, Entra's portfolio with a healthy mix of attractive properties and value enhancing development projects should provide a continued positive value development, albeit at a significantly slower pace.

With its flexible properties in attractive locations, strong tenant base with long lease contracts, exciting project pipeline and solid financial position, the Board believe that Entra is well positioned for the future.

Oslo, 27 April 2016

The Board of Entra ASA

Financial statements

Statement of comprehensive income

All figures in NOK millions Q1 16 Q1 15 2015
Rental income 454 440 1 760
Repairs & maintenance -2 -8 -56
Operating costs -22 -26 -129
Net operating income 429 406 1 574
Other revenue 58 166 240
Other costs -54 -159 -224
Administrative costs -44 -54 -168
Share of profit from associates and JVs 8 10 44
Net realised financials -133 -149 -625
Net income 265 221 840
- of which net income from property management 278 210 799
Changes in value of investment properties 182 716 1 818
Changes in value of financial instruments -162 79 417
Profit before tax 284 1 016 3 075
Tax payable 0 0 0
Change in deferred tax -63 -68 -354
Profit for period/year 221 948 2 721
Actuarial gains and losses, net of tax 0 0 39
Change in deferred tax on comprehensive income 0 0 -10
Total comprehensive income for the period/year 221 948 2 750
Profit attributable to:
Equity holders of the Company 223 936 2 648
Non-controlling interest -2 12 73
Total comprehensive income attributable to:
Equity holders of the Company 223 936 2 677
Non-controlling interest -2 12 73

Balance sheet

All figures in NOK millions 31.03.2016 31.03.2015 31.12.2015
Intangible assets 161 187 161
Investment property 29 070 27 406 28 823
Other operating assets 28 37 35
Investments in associates and JVs 2 877 1 122 2 789
Financial derivatives 634 537 530
Long-term receivables 66 65 53
Total non-current assets 32 835 29 354 32 391
Property and housing-units for sale 645 51 589
Investment property held for sale 148 299 165
Trade receivables 61 79 56
Other receivables 238 77 206
Cash and bank deposits 136 127 212
Total current assets 1 227 633 1 227
Total assets 34 063 29 986 33 619
Shareholders equity 13 218 11 714 12 995
Non-controlling interests 357 298 359
Total equity 13 575 12 012 13 354
Interest-bearing debt 11 973 10 393 12 083
Deferred tax liability 3 380 3 025 3 324
Financial derivatives 1 295 1 274 1 121
Other non-current liabilities 230 202 237
Total non-current liabilities 16 878 14 893 16 764
Interest-bearing debt 3 123 2 550 3 123
Trade payables 221 248 142
Other current liabilities 266 283 236
Total current liabilities 3 609 3 081 3 501
Total liabilities 20 488 17 974 20 265
Total equity and liabilities 34 063 29 986 33 619

Consolidated statement of changes in equity

All figures in NOK millions Share
capital
Other paid
in capital
Retained
earnings
Non
controlling
interest
Total
equity
Equity 31.12.2014 184 3 556 7 039 286 11 064
Profit for the year 2 648 73 2 721
Other comprehensive income 28 28
Dividend paid -459 -459
Acquired own shares - employee saving scheme 0 -6 -1 -7
Sold own shares - employee saving scheme 0 6 0 6
Equity 31.12.2015 184 3 556 9 255 359 13 354
Profit for period 223 -2 221
Equity 31.03.2016 184 3 556 9 478 357 13 575

Consolidated statement of cash flows

All figures in NOK millions Q1 16 Q1 15 2015
Profit before tax 284 1 016 3 075
Income tax paid 0 0 0
Net expensed interest and fees on loans 132 145 645
Net interest and fees paid on loans -126 -159 -584
Share of profit from associates and jointly controlled entities -8 -10 -44
Depreciation and amortisation 3 10 18
Changes in value of investment properties -182 -716 -1 818
Changes in value of financial instruments 162 -79 -417
Change in working capital 11 -14 -26
Net cash flow from operating activities 277 194 850
Proceeds from property transactions 162 1 598 1 792
Purchase of business net of cash 0 0 0
Purchase of investment properties 0 0 -132
Upgrades of investment properties -132 -166 -911
Investment in property and housing-units for sale -100 -2 -82
Purchase of intangible and other operating assets -2 -14 -41
Net payment financial assets 5 -16 -30
Net repayment of loans to associates and JVs 0 62 62
Net payments in associates and JVs -80 -37 -1 720
Dividends from associates and JVs 0 0 51
Net cash flow from investment activities -147 1 426 -1 010
Proceeds interest-bearing debt 3 517 850 19 126
Repayment interest-bearing debt -3 723 -2 540 -18 492
Proceeds from/repayment of equity 0 0 -1
Dividends paid 0 0 -459
Net cash flow from financing activities -206 -1 690 174
Change in cash and cash equivalents -76 -71 14
Cash and cash equivalents at beginning of period 212 198 198
Cash and cash equivalents at end of period 136 127 212

NOTE 1 – ACCOUNTING PRINCIPLES

The results for the period have been prepared in accordance with IAS 34 Interim Financial Reporting.

The accounting principles that have been used in the preparation of the interim financial statements are in conformity with the principles used in preparation of the annual financial statements for 2015.

The financial reporting covers Entra ASA, subsidiaries, associated companies and jointly controlled entities. The interim financial statements have not been audited.

In the first quarter of 2016 the Group has done some changes to how the profit and loss statement is presented in order to better reflect the underlying operational results and to a greater extent be harmonised with how peer companies and equity analysts present their figures. The major changes are:

  • Stating a Net operating income (from property management)
  • Including Net realised financials in Net Income /Net income from property management
  • Including profit from associated and JVs in Net income
  • Establishing Net income from property management as Net income minus values changes and tax from associates and JVs and profit from the jointly controlled entity Oslo S Utvikling.

In addition, some changes in the balance sheet have been done in order to improve the presentation.

NOTE 2 – SEGMENT INFORMATION

The Group is organised into two geographic units: Oslo and Regional Cities. These units are supported by a Letting and Business Development division and a Development and Technology division. In addition, Entra has group and support functions within accounting and finance, legal, procurement, communication and HR.

Each of the geographic units are organised and monitored by management teams in seven geographic areas: Oslo, Trondheim, Sandvika, Stavanger, Drammen, Bergen and Kristiansand.

The geographic units do not have their own profit responsibility. The geographical units are instead followed up on economical and non-economical key figures ("key performance indicators"). These key performance indicators are reported and analysed by geographic area to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. Hence, the Group report their segment information based upon these seven geographic areas.

Number Area Occupancy Wault Market value 12 months rolling rent Net yield Market rent
(#) (sqm) (%) (year) (NOKm) (NOK/sqm) (NOKm) (NOK/sqm) (%) (NOKm) (NOK/sqm)
Oslo 38 518 625 94.8 6.9 17 874 34 465 1 079 2 081 5.6 1 080 2 082
Trondheim 9 117 187 98.2 6.5 2 435 20 780 175 1 490 6.5 165 1 410
Sandvika 10 100 047 90.6 10.5 2 193 21 920 127 1 268 5.3 134 1 335
Stavanger 6 79 194 93.7 10.0 2 057 25 976 136 1 718 6.1 135 1 711
Drammen 8 71 506 92.3 8.8 1 713 23 952 109 1 531 6.0 105 1 470
Bergen 6 57 119 98.8 5.5 1 217 21 298 84 1 477 6.2 92 1 617
Kristiansand 7 45 158 95.6 8.6 616 13 645 53 1 171 7.6 49 1 086
Other 2 9 823 84.6 4.2 74 7 487 7 752 8.0 9 906
Management 86 998 659 94.7 7.5 28 179 28 216 1 771 1 773 5.8 1 770 1 772
portfolio
Project portfolio 6 104 834 16.4 1 277 12 183
Development sites 4 120 911 0.9 407 3 364
Property portfolio 96 1 224 404 7.8 29 862 24 389

Operating segments Q1–16:

Ringstabekk housing project is included in market value of management portfolio at cost price of 11 million. Youngsgt. 7-9 is included in market value of the management portfolio at sales price of 60 million. The calculation of net yield is based on the valuers' assumption of ownership costs,

which at 31.03 corresponds to 8.2 per cent of market rent.

Operating segments Q1–15:

Number Area Occupancy Wault Market value 12 months rolling rent Net yield Market rent
(#) (sqm) (%) (year) (NOKm) (NOK/sqm) (NOKm) (NOK/sqm) (%) (NOKm) (NOK/sqm)
Oslo 36 492 502 93.9 7.0 15 618 31 711 976 1 982 5.8 1 014 2 058
Sandvika 10 101 032 96.1 9.9 2 080 20 592 133 1 316 5.9 132 1 310
Drammen 8 61 757 98.9 9.2 1 353 21 901 92 1 486 6.3 83 1 342
Bergen 6 57 084 97.2 5.3 1 124 19 690 82 1 432 6.4 89 1 564
Trondheim 9 117 186 97.0 7.0 2 306 19 679 171 1 458 6.6 163 1 395
Stavanger 6 79 103 92.3 8.8 2 052 25 938 150 1 901 6.9 137 1 730
Kristiansand 8 46 034 91.6 9.3 589 12 800 47 1 021 6.9 48 1 043
Other 6 34 799 95.6 4.6 374 10 749 29 824 6.3 40 1 150
Management
portfolio
89 989 497 94.6 7.4 25 496 25 766 1 680 1 697 6.1 1 707 1 725
Project portfolio 4 86 621 11.8 1 735 20 029
Development
sites
6 137 143 0.5 458 3 339
Property
portfolio
99 1 213 261 7.8 27 689 22 822

Ringstabekk housing project is included in market value of management portfolio at cost price of 51 million. Youngsgt. 7-9 is included in market value of the management portfolio at sales price of 60 million. The calculation of net yield is based on the valuers' assumption of ownership costs,

which at 31.03 corresponds to 7.6 per cent of market rent.

NOTE 3 – INVESTMENT PROPERTIES

All figures in NOK millions Q1 16 Q1 15 2015
Closing balance previous period 28 989 28 230 28 230
Purchase of investment property 0 0 213
Investment in the property portfolio 208 162 807
Capitalised borrowing costs 1 9 22
Sale of investment property -161 -1 412 -1 548
Reclassified to property and housing-units for sale 0 0 -493
Reclassified to construction contracts 0 0 -60
Changes in value of operational lease 17 1 -59
Changes in value of investment properties 165 715 1 877
Closing balance 29 218 27 705 28 989
Investment property held for sale 148 299 165
Investment property 29 070 27 406 28 823

Investment properties held for sale include the properties Telemarksgata 11/Lundegata 4 in Skien, Ringstabekkveien 105 in Sandvika and Fritzners gate 12 in Oslo.

Sale of property in Q1-16 relates to the sale of the property Strandveien 13 in Tromsø.

The value change on operational lease agreements relates to the property Langkaia 1, which is owned under a lease that expires on 31 December 2030. The property will then revert without consideration to the Oslo Harbour Authority. The property is classified as an investment property under IAS 40 and is valued at 668 million (705 million) as at the end of the first quarter of 2016. The Group records quarterly a negative value change on the property as the maturity date of the lease approaches.

NOTE 4 – CONTINGENCIES

Entra is currently involved in legal arbitration proceedings or disputes with Norwegian Datasenter Group AS/ Greenfield Property AS and Evry ASA.

The hearing of the dispute with Norwegian Datasenter Group AS and Greenfield Property AS took place in Oslo District Court in January 2015 and Entra prevailed on all counts. The judgment has been appealed by the counterparty and the hearing of the dispute will take place in February 2017.

The hearing of the dispute with Evry ASA AS took place in Oslo District Court in February 2015 and Evry ASA prevailed. Entra disagree with the verdict and the ruling has been appealed. The hearing of the dispute will take place in June 2016.

Entra has not made any provision for the claims as thse Group considers it not probable that an outflow of resources involving economic benefits will be required to settle the obligation.

NOTE 5 – INFORMATION ON THE FAIR VALUE OF ASSETS AND LIABILITIES

The valuation methods and principles are unchanged in the quarter. See the annual financial statements for 2015 for further information. Set out below is a summary of assets and liabilities measured at fair value divided between the different valuation hierarchies set out in IFRS 7.

With the exception of equity capital instruments of 0.6 million (level 3) all assets and liabilities are level 2. Investment properties of 29,070 million are classified at level 3.

All figures in NOK millions 31.03.2016 31.03.2015 31.12.2015
Assets measured at fair value:
Assets measured at fair value with change over the result
- Investment property 29 070 27 406 28 823
- Investment property held for sale 148 299 165
- Derivatives 634 537 530
Financial assets held for sale
- Equity instruments 1 1 1
Total 29 853 28 243 29 520
Liabilities measured at fair value:
Financial liabilitites measured at fair value with change over the result
- Derivatives 1 295 1 274 1 121
- Bonds 4 146 3 845 4 054
- Commercial paper 1 900 1 350 1 900
Total 7 341 6 469 7 075

CALCULATION OF KEY FIGURES AND DEFINITIONS

DEBT RATIO (LTV)
All figures in NOK millions Q1 16 Q1 15 2015
Net nominal interest-bearing debt 14 515 12 271 14 640
Total market value of the property portfolio 32 127 28 087 31 777
Market value of the property portfolio 29 862 27 689 29 598
Share of Entra OPF Utvikling (50%) 610 398 525
Share of Oslo City Kjøpesenter AS (33,3%) 1 654 0 1 654
Debt ratio (LTV) % 45.2 43.7 46.1
INTEREST COVERAGE RATIO (ICR)
All figures in NOK millions Q1 16 Q1 15 2015
Net income 265 221 840
Depreciation 3 10 18
Results from associates and joint ventures -8 -10 -44
Net realised financials 133 149 625
EBITDA adjusted 393 369 1 440
Share of EBITDA Entra OPF Utvikling 1 1 5
EBITDA adjusted for share of Entra OPF Utvikling 394 371 1 444
Interest cost 136 151 548
Other finance expense 4 8 24
Applicable net interest cost 140 159 572
Interest Coverage Ratio (ICR) 2.8 2.3 2.5
NET ASSET VALUE – EPRA NAV AND EPRA NNNAV
All figures in NOK millions Q1 16 YTD Q1 15 2015
Total equity 13 575 12 012 13 354
Less: Non-controlling interests 357 298 359
NAV per financial statement 13 218 11 714 12 995
Add: Adjustment to property portfolio 9 1 89
Add: Revaluation of investments made in the JV 125 211 118
Add: Net market value on financial derivatives 661 736 591
Add: Deferred tax arising on revaluation moments 2 578 2 289 2 550
EPRA NAV 16 591 14 951 16 342
Market value on property portfolio 29 862 27 689 29 598
Tax value on property portfolio 12 277 12 739 12 476
Basis for calculation of tax on gain on sale 17 586 14 950 17 122
Less: Market value of tax on gain on sale (5% tax rate) 879 748 856
EPRA NNNAV 15 105 13 519 14 954
Less: Market value of tax on realisation* 111 147 89
Basis for calculation of tax on realisation of interest-bearing debt 445 545 354
Nominal value of interest bearing debt 14 650 12 398 14 851
Book value of interest bearing debt 15 096 12 943 15 205
Less: Net result from realisation of financial derivatives 496 538 443
Tax expense on realised financial derivatives* 165 199 148
Net market value on financial derivatives 661 736 591

* 25 per cent from Q4 2015, 27 per cent previous periods

EPRA EARNINGS

All figures in NOK millions Q1 16 Q1 15 2015
Profit for period/year - Earnings per IFRS income statement 221 948 2 721
Add:
Changes in value of investment properties -182 -716 -1 818
Tax on changes in value of investment properties* 45 193 491
Reversal of deferred tax arising from sales of properties (tax excempted) -7 -208 -218
Changes in value of financial instruments 162 -79 -417
Tax on changes in value of financial instruments* -41 21 112
Profit or losses on disposal of inventory in Oslo S Utvikling -1 -6 -25
Share of profit jointly controlled entities – fair value adjustments 5 -7 -34
Non-controlling interests of subsidiaries -7 -6 -25
Significant one-off items 0 0 62
Change in tax rate 0 0 -252
EPRA earnings 197 140 597

* 25 per cent from Q1 2016, 27 per cent previous periods

Definitions

12 months rolling rent -
The contractual rent of the management properties of the Group for the next 12 months as of a certain date,
adjusted for (i) signed new contracts and contracts expiring during such period, (ii) contract based CPI adjustments
based on Independent Appraisers' CPI estimates and (iii) the Independent Appraisers' estimates of letting of
current and future vacant areas.
Cash Earnings -
Net income from property management less tax payable
Contractual rent -
Annual cash rental income being received as of relevant date
EPRA Earnings -
Net income after tax excluding value changes on investment properties, unrealised changes in the market value of
financial derivatives and gains/losses on the sale of properties and their associated tax effects. All adjustments are
also made for jointly controlled entities. EPRA earnings are intended to give an indication of the underlying
development in the property portfolio
EPRA NAV -
Net asset value adjusted to include market value of all properties in the portfolio and interest-bearing debt, and to
exclude certain items not expected to crystallise in a long-term investment property business model such as e.g.
financial derivatives and deferred tax on the market value of investment properties. The objective with EPRA NAV
is to demonstrate the fair value of net assets given a long-term investment horizon
EPRA NNNAV -
EPRA NNNAV is EPRA NAV adjusted to reflect the fair value of debt and derivatives and in order to include deferred
tax on value changes. The objective with EPRA NNNAV is to report the fair value of net assets in the Group on the
basis that these are immediately realised
Gross yield -
12 months rolling rent divided by the market value of the management portfolio
Independent Appraisers -
Akershus Eiendom and DTZ
Land and dev. properties -
Property / plots of land with planning permission for development
Like-for-like -
The percentage change in rental income from one period to another given the same income generating property
portfolio in the portfolio. The figure is thus adjusted for purchases and sales of properties and active projects
Loan-to-value ("LTV") -
Net nominal value of interest-bearing liabilities divided by the market value of the property portfolio and the
market value of the jointly controlled entities Entra OPF Utvikling and Oslo City Kjøpesenter AS
Management properties -
Properties that are actively managed by the company
Market rent -
The annualised market rent of the management properties, fully let as of the relevant date, expressed as the
average of market rents estimated by the Independent Appraisers
Market value of portfolio -
12 months rolling rent less the Independent Appraisers' estimate of ownership costs of the management
properties of the Group
Net rent -
12 months rolling rent less the Independent Appraisers' estimate of ownership costs of the management
properties of the Group
Net letting -
Net letting is calculated as the annualised rent of new lease contracts plus lease-up on renegotiated contracts less
terminated contracts.
Net yield -
Net rent divided by the market value of the management properties of the Group
Occupancy (EPRA) -
Estimated market rent of occupied space of the management properties, divided by the market rent of the total
space of the management portfolio. Based on EPRA standard
Period-on-period -
Comparison between one period and the equivalent period the previous year
Property portfolio -
Properties owned by the parent company and subsidiaries, regardless of their classification for accounting
purposes. Does not include the market value of properties in associates and jointly controlled entities
Project properties -
Properties where it has been decided to start construction of a new building and/or renovation
Interest Coverage Ratio ("ICR") -
Net income from property management excluding depreciation and amortisation for the Group including Entra
OPF, divided by net interest on interest-bearing nominal debt and fees and commitment fees related to
investment activities
Total area -
Total area including the area of management properties, project properties and land / development properties
WAULT -
Weighted Average Unexpired Lease Term measured as the remaining contractual rent amounts of the current
lease contracts of the management properties of the Group, including areas that have been re-let and signed new
contracts, adjusted for termination rights and excluding any renewal options, divided by Contractual Rent,
including renewed and signed new contracts

Other information

Contact info

Arve Regland CEO Phone: + 47 47907700 [email protected]

Anders Olstad CFO Phone: + 47 90022559 [email protected]

Tone K. Omsted Head of IR Phone: + 47 98228510 [email protected]

Entra ASA Post box 52 Økern 0508 Oslo, Norway

Phone: + 47 21605100 [email protected]

Financial calendar

Second quarter 2016 14.07.2016
Third quarter 2016 01.11.2016
Fourth quarter 2016 14.02.2017

Head office Biskop Gunnerus gate 14b 0185 Oslo

Postal address Postboks 52, Økern 0508 Oslo

Tel: (+47) 21 60 51 00 Fax: (+47) 21 60 51 01 E-mail: [email protected]

Customer service centre E-mail: [email protected] Tel: (+47) 800 36 872

www.entra.no

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