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KMC Properties ASA

Investor Presentation • Nov 14, 2014

3645_rns_2014-11-14_ecb19958-8c20-4531-a2a6-8190aaae65d9.pdf

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3rd Quarter 2014 FINANCIAL RESULTS PRESENTATION14 November 2014

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 100 New Bond Street, London W1S 1SP, United Kingdom.

KEY TAKE AWAYS

  • 1. Strong cashflow – NAV reduced due to poor visibility
  • 2.

  • Signed 10 year lease for Grifon House in St. Petersburg

    • 3. Property values decreased US\$ 9.5 million to US\$ 88.2 million during Q3 2014

NAV per share of NOK 21.15 in Q3 2014

P&L – MAJOR ITEMS

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(1) Unaudited.

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

DEVELOPMENT OF ASSET VALUE 2009 – Q3 2014

CASH & INVESTMENTS

OVERVIEW OF STORM BOND FUND

Low Duration and High Yield

STORM REAL ESTATE SHARE PRICE PERFORMANCE

  • The Storm Real Estate ASA share is listed on Oslo main exchange since 6 July 2010
  • Current share price of NOK 14.35 per share (13 November 2014)
  • Net Asset Value of 21.15 NOK per share (30 September 2014), a decrease of 14.8% in the quarter

Source: Oslo Stock Exchange, Bloomberg

(1) SRE and OSEBX adjusted for dividends. As per 13 November 2014.

RUSSIA – US\$/RUB AND NOK/RUB EXCHANGE RATE MOVEMENTS SINCE 1 JANUARY 2014

US\$/RUB Exchange Rate

Source: Bloomberg. (1) As per 13 November 2014.

RUSSIA – INFLATION

BRENT OIL PRICE

Brent Oil Price (US\$)

120

RUSSIA – INVESTMENT VOLUME BY SOURCE OF CAPITAL

  • Investment volume reached US\$ 3.7 billion in the first 9 months of 2014, of which c. US\$ 1.3 billion was invested in Q3 2014
  • Investment sentiment dampened due to Ukraine situation and political unrest
  • 55% Domestic capital continue to dominate, however Q3 saw a marked increase in foreign investment compared to Q2

2014 Forecast Remains Unchanged: US\$ 5.0 Billion by the End of the Year

Source: Cushman & Wakefield (October 2014)

RUSSIA – INVESTMENT VOLUME BREAKDOWN OFFICE SECTOR BY REGION

Investment activity continues to be concentrated around Moscow with 91% of total investment volume transacted in Moscow during the first 9 months of 2014

c. 55% of the investment volume so far in 2014 has taken place in the office sector in – a significant decrease to numbers from H1 when c. 70% of all transaction took place in the office sector

MOSCOW OFFICE MARKET – MARKET INDICATORS, STOCK AND VACANCY RATE

  • Vacancy rates increasing in both Class A and Class B buildings
  • Class B continues to show less volatility in vacancy rates than Class A
  • Vacancy rates in Class B buildings stable at c. 12% Q2 2014 to Q3 2014
  • Vacancy now stands at c. 27% and c. 12% in Class A and Class B respectively 0%

Vacancy Rate in Class B Buildings Stable at c. 12% Q2 to Q3

MOSCOW OFFICE MARKET - RENTAL RATES(1)

Source: Cushman & Wakefield (October 2014)

(1) Average rental rates is a weighted average rental rate of asking rents of deals closed within the period, US\$ / m²/ annum/ triple net

ST. PETERSBURG OFFICE MARKET – VACANCY DYNAMICS

Source: Maris, Part of the CBRE Affiliate Network, 2014. 17

ST. PETERSBURG OFFICE MARKET – DYNAMICS OF AVERAGE WEIGHTED RENTAL RATES(1)

TK DEVELOPMENT A/S – SHARE PRICE PERFORMANCE

  • Storm Real Estate ASA holds 11.1% of the voting rights in TK Development
  • Our average purchase price is DKK 8.00 per share

TK DEVELOPMENT – GENERAL MARKET THEMES

  • Rising consumer confidence across TK Developments key markets
  • Expectations for subdued financial growth, varying in strength from country to country
  • Increase in private consumption is still anticipated
  • Easing in restraints when procuring financing of projects
  • Economic growth is subject to an increased risk due to the geopolitical uncertainty in Ukraine
  • May result in more difficult market conditions in Finland and Poland, in particular
  • Diminishing uncertainty in the property markets
  • However decision-making processes remains lengthy and carefully considered
  • Historically low interest level fuelling property demand
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SITUATION UPDATE - RUSSIA

An update on the situation in Russia with our view.

APPENDIX

GASFIELD BUILDING, MOSCOW & GRIFON HOUSE, ST. PETERSBURG

PERFORMANCE OF THE RUSSIAN STOCK MARKET INDEX (RTS)

  • The Russian stock market has fallen further in the last quarter and is now c. 32% below the 5 year historical average
  • As stated during the last two quarters we still believe the stock market will stabilise back to pre-Ukraine crisis levels as the situation stabilises

EUROPEAN OFFICE CLOCK Q3 2014

RUSSIA – INDUSTRIAL PRODUCTION

Economic Activity as Measured by Industrial Production is Struggling to Gain Pace in Current Situation

RUSSIA – INVESTMENT VOLUME BREAKDOWN BY SECTOR

Full year 2014 investment volume still expected to be c. US\$ 5 billion

Source: Cushman & Wakefield (October 2014)

MOSCOW OFFICE MARKET – NEW CONSTRUCTION AND ABSORPTION

New Construction Still Higher Than Absorption – Limited Absorption so Far in 2014

TK DEVELOPMENT – INVESTMENT UPDATE

The Story Remains:

Storm Real Estate has a good entry point at DKK 8.00 compared to current share price

1.

The company has started to be profitable, albeit not yet at a satisfactory level

We reiterate that we still believe TK offers an attractive risk reward

TK DEVELOPMENT A/S – NET ASSET VALUE PER SHARE – H1 2014/15

Source: Company data. Copenhagen Stock Exchange. (1) As per 13 November 2014.

CONTACTCONTACT

100 New Bond Street London, W1S 1SP United Kingdom

E-mail: [email protected] Tel: +44 (0)207 409 3378 Fax: +44 (0)207 491 3464

Web: www.stormcapital.co.uk

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