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KMC Properties ASA Investor Presentation 2016

Nov 11, 2016

3645_rns_2016-11-11_d53a3fc0-4f6c-4873-8b72-880e461fc6ea.pdf

Investor Presentation

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3rd quarter 2016 FINANCIAL RESULTS PRESENTATION11 November 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 0.0m in Q3.

3. Post closing date, anchor tenant given notice to vacate the Gasfield building towards the end of Q1 2017. The company is in a process to source new tenants.

STRATEGY

As presented in the previous presentations in May and August.

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.

P&L – MAJOR ITEMS

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9M 2016 – ILLUSTRATIVE EBT

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ORDINARY OPERATIONS NON-RECURRING + FX / DERIVATIVES SUM

TK Provision Valuations FX / derivatives9M 2016 9M 2016

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BALANCE SHEET – MAJOR ITEMS

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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

Source: Storm Capital Management Ltd. (1) As per 30 September 2016.

STORM REAL ESTATE SHARE PRICE PERFORMANCE

Source: Oslo Stock Exchange, Bloomberg

(1) SRE and OSEBX adjusted for dividends. As per 10 November 2016.

OIL PRICE vs PROPERTY VALUES vs ROUBLE vs SHARE PRICE

RUSSIA – INFLATION

RUSSIA – INDUSTRIAL PRODUCTION

RUSSIA – INVESTMENT VOLUME BY SOURCE OF CAPITAL

  • Investment volume reached c. US\$ 3.97 billion YTD 2016.
  • For reference the investment volume in the whole of 2015 was US\$ 2.8 billion.
  • Domestic capital constituted 97% of total investment volume
  • 55% US\$ 1.89 bn spent by banks (Sberbank, VTB) and state companies / government (Transneft, Moscow authorities)

Investment volumes high YTD 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 Q3 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 – Q3 2016

KEY TAKE AWAYS

Total Comprehensive Income of USD 0.0m in Q3.

3. Post closing date, anchor tenant given notice to vacate the Gasfield building towards the end of Q1 2017. The company is in a process to source new tenants.

APPENDIX

GASFIELD BUILDING, MOSCOW & GRIFON HOUSE, ST. PETERSBURG

Estimated IRR in the ownership period = 8.3%

Gross Area c. 6,250 m²

Sold in December 2015.

21

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 11.7% YTD 2016 (1),
  • The Index is near its 8-year high (May 2008)

Source: Bloomberg .

(1) As per 8 November 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\$)

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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