KMC Properties ASA

Investor Presentation • Aug 16, 2022

KMC Properties ASA

Q2 2022

16 August 2022

The preferred partner for logistics and industrial properties

Liv Malvik CEO

Kristoffer Holmen CFO

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Disclaimer

This presentation, prepared by KMC Properties ASA (the "Company"), may contain statements about future events and expectations that are forward-looking statements. Any statement in this presentation that is not a statement of historical fact including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements.

The Company assumes no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. This presentation contains alternative performance measures, or non-IFRS financial measures. Definitions and calculations are presented in our quarterly report.

Second quarter 2022

KMC Properties at glance

• Real estate company focused on owning high yielding industrial and logistics properties
• Portfolio of 46 assets, primarily in the Nordics, constitution approx. ~377,000 sqm on 30 June 2022
• Long-term lease agreements with solid counterparties
• 95% of rental income is 100% CPI adjusted, 1% of rental income is 80% CPI adjusted, and 4% of rental income has no CPI adjustment
• Low operational expenses due to mainly triple net bare-house lease contracts

• Completed and committed investments in current portfolio (capex) of NOK ~48 million in 2022, at yieldon-cost of ~7.5%
• Completed and committed investments in greenfield projects of NOK ~180 million in 2022, at yield on cost of ~7.1%
• Completed acquisitions of NOK ~190 million in H1 2022 with gross yield of ~7.6%
• Contemplated acquisitions of NOK ~1,365 million in H2 2022, with weighted average gross yield of ~6.6%, of which the BEWI transaction amounts to NOK 970 million in 2022²

We are KMC Properties … we deliver accretive growth ² …and have strong growth ambitions ²

• Strategic target of NOK 8bn by year end 2024, one year ahead of previous growth plan
• Committed and completed investments in 2022 at NOK ~1,783 million year to date
• For 2023 and 2024, committed pipeline amount to NOK ~1,410 million and NOK ~360 million respectively
• Continued focus on assets we know well: foodstuff facilities, light industry – infrastructure for our lessees

• 1) Does not include the company's office building in Moscow which is held for sale (valued at NOK 135.8 million as of 30 June 2022)
• 2) Current company estimates, based on current transaction pipeline and market visibility and outlook. No assurances can however be given that any such acquisitions will be concluded, or at what terms. Further information will be provided in due course, as and when relevant or appropriate.

Solid customer base of market leading companies with long track records and exposure to an attractive industry

Company overview

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Key customers / brands

Source: Company Information 1) Remaining 17% of operating income from properties leased to other tenants including Ventistål AS, FiiZK, companies owned by BEWI Invest, and PTG Frionordica

Highlights for the second quarter

Key events for the quarter Key figures

• Agreement with BEWI for a transformative acquisition of a property portfolio consisting of up to 24 properties and a land plot for approximately NOK 2 billion
• Invested ~NOK 30.7 million in development of existing properties
• Ongoing process for sales of office building in Moscow

NOK million	Q222	Q221	1H22	1H21
Gross rental income	64.7	49.0	127.4	97.2
Net Income from property management	28.2	12.7	51.1	14.8
Net asset value adjusted (NAV)	2 157	1 404	2 157	1 404
WAULT (years)	10.0	10.6	10.0	10.6
Occupancy rate (%)	100.0%	98.8%	100.0%	98.8%

Key developments and subsequent events

▪ Acquisition of two industrial properties in Denmark for DKK ~151 million

BEWI property portfolio: Step-change acquisition for KMC Properties

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High-quality asset	✓ High-quality property portfolio of 24 industrial facilities (and one land plot) strategically located
End-market diversification	✓ Significant geographical diversification – adding new countries to the portfolio (Germany, Belgium and Poland)
Growing with tenants	✓ Following BEWI into new locations solidifying industrial knowledge and extending property type experience
Well-known industry	✓ Expansion within KMC Properties core sector focus of light industrial properties
Continuous buy-and-build	✓ Another milestone transaction with significant value contribution – Flexibility to acquire portfolio in parts (e.g. acquire Norwegian and Swedish properties first)

Sound strategic rationale Key metrics (for total portfolio)

Acquisitions: Delivering on growth strategy by acquiring three single assets with accretive project economics

In line with communicated growth strategy acquiring properties with solid and accretive project economics

Executing on growth strategy

Company strategy and growth targets Growth initiatives in 2022

• ✓ Contract renewal and expansions for existing customers
• ✓ Greenfield development of new facilities for new and existing clients
• ✓ Acquisitions in collaboration with current & new tenants, and other parties

Growth target of NOK 1bn in GAV per year, hitting GAV of NOK 8bn 2024

Type	Tenant	Completion (estimated)	Value (NOKm)1)	Investments in 2022	Yield	WAULT	Country
CAPEX	BEWI/ Insula	2022	48	48	7.5%	11.0
Greenfield	Oppdal Spekemat	Q3 2022	85	55	7.5%	15.0
Greenfield	BEWI (Jøsnøya, Hitra)	Q4 2023	180	40	7.5%	15.0
Greenfield	Slakteriet Holding	H1 2024	682	85	6.8%	20.0
Acquisition	Kuraas	Completed	100	100	7.7%	6.5
Acquisition	Klädesholmen Seafood	Completed	90	90	7.5%	15.0
Acquisition pipeline	BEWI	2022/ 2023	2,000	970	6.3%	16.6	Europe
Acquisition pipeline	N/A	2022	395	395	7.2%	14.0	NO/DKK
			3,580	1,783	6.7%	16.4

New platform set for accelerated value creation

Financials

Property value and yield

Key reported P&L metrics

P&L (NOK million) Comments

	Q2 2022	Q2 2021	H1 2022	H1 2021	2021
Gross rental income	64.7	49.0	127.4	97.2	205,0
Direct property related expenses	-0.3	0.1	-1.3	-2.2	-2.5
Net operating income	64.4	49.0	126.1	95.0	202.4
Other operational expenses and depreciation	-9.1	-16.4	-22.5	-40.6	-64.0
Net fair value Adjustments on Investment Property	8.3	37.0	5.4	102.0	317.3
Total operating profit (loss) (EBIT)	63.6	69.6	109.0	156.5	455.7
Net financial income (expenses)	32.8	-27.8	70.6	-40.7	-75.9
Tax	-23.5	-12.6	-43.0	-28.4	-76.9
Net income from continuing operations	72.8	29.2	136.6	87.3	302.9

• Rental income and costs in Russia is not included in the figures.
• Rental income increased by 32.0% from Q2 2021 to Q2 2022, mainly explained by income from new investments and CPI adjustment.
• Transaction costs of NOK 0.1 million in Q2 2022.
• Net realised financials of NOK ~27.1 million in Q2 2022.
• Tax expense was NOK 23.5 million in Q2 2022, of which NOK 9.0 million is tax payable and the remaining NOK 14.5 million is change in deferred tax.

Development in adjusted annualised run-rate

Annualised run-rate (NOK million) Comments

	Q2 2022	Q1 2022	Q4 2021	Q3 2021	Q2 2021	Q1 2021
Gross rental income	268.4	258.9	284.0	247.0	246.3	212.8
Property related expenses	-4.1	-4.1	-13.0	-11.0	-12.7	-12.5
Net operating income	264.3	254.8	271.0	236.0	233.6	200.3
SG&A expenses	-33.9	-33.6	-28.0	-26.0	-25.0	-24.2
EBITDA	230.4	220.7	243.0	210.0	208.6	176.1
Realised financial expenses	-117.4	-111.3	-110.0	-99.5	-93.1	-79.5
Net income from property management	113.0	109.4	133.0	110.5	115.5	96.6

• Q2 2022 is based on final agreements as of 30 June 2022 and does not include income and costs from the Moscow property. The figures from periods before Q1 2022 includes income and costs from the Moscow property.
• Relatively stable costs despite high rental income growth due to new investments

Current run-rate

Run-rate bridge from GRI to IFPM Comments

• Property cost at NOK 4.1 million after reclassification of costs in Russia (c. 1.5% of GRI). Expected to remain low due to mainly triple net bear house contracts in the portfolio.
• SG&A related to overhead costs of running the operations including salaries and administrative expenses.
• Fair value adjustments and transaction costs not included in run-rate EBITDA
• Financing cost driven by the interest-bearing debt and swap agreements at 30 June 2022.

Run-rate figures: Key metrics

Existing contracts provide solid cash flow

Contractual gross rental income for the period 2022-2023 Comments ¹less estimated interests expenses²

• Long-term lease agreements with solid counterparties
• 95% of rental income is 100% CPI adjusted, 1% of rental income is 80% CPI adjusted, and 4% of rental income has no CPI adjustment
• Low operational expenses due to mainly triple net bare-house lease contracts
• Cash flow provide strong debt capacity and flexibility for further growth

1) Based on contracts as of 30 June 2022, excluding rental income from the office building in Moscow. CPI adjustments in 2023 is set to 2.0%.

2) Based on interest-bearing debt, swap agreements and interest rates at period end. Does not include interests on the revolving credit facility

Balance sheet at 30.06.2022

Balance sheet build-up Comments

• Portfolio valued by Cushman & Wakefield quarterly
• In Q2 2022, value of property portfolio increased by NOK 101.2 million to a total value of NOK 4 129.3 million
• Assets consists of interest rate and currency rate swap agreements (NOK 162.1 million), other long-term assets (NOK 5.0 million), trade receivables (NOK 8.0 million), prepaid expenses, VAT receivables, tax receivables, other current receivables (NOK 7.8 million), assets held for sale (NOK 151.2 million) and NOK 136.3 million in cash
• Total current liabilities of NOK 85.1 million, mainly including short-term interest bearing debt (NOK 28.6 million), trade payables (NOK 23.5 million), taxes (NOK 3.6 million), other current liabilities (NOK 18.0 million) and liabilities held for sale (NOK 11.5 million)
• Total non-current liabilities of NOK 2 523.3 million, mainly including interest bearing debt (NOK 2 336.2 million), deferred tax liabilities (NOK 165.9 million) and land lease liabilities (NOK 18.0 million)
• Total equity was NOK 1 991.2 million, representing an equity ratio of 43.3%

Interest bearing debt

Financing activity in the quarter

• New construction loans of NOK 28.6 million at 3m NIBOR + 300bps
• No utilization of the revolving credit facility in Q2 2022

Source of funds

Term loan Construction loan RCF Bond

Maturity profile and composition of interest-bearing debt
-----------------------------------------------------------	--

All amounts in NOK million	0-1 yrs	1-2 yrs	2-3 yrs	>3yrs
Revolving credit facility (RCF)	0	0	0	0
Construction loan	28.6	0	0	0
Bank loan	0	0	0	494.9
Bonds	0	0	1 850.0	0
Total	28.6	0	1 850.0	494.9

Outlook and summary

KMC Properties at glance

• Real estate company focused on owning high yielding industrial and logistics properties
• Portfolio of 46 assets, primarily in the Nordics, constitution approx. ~377,000 sqm on 30 June 2022
• Long-term lease agreements with solid counterparties
• 95% of rental income is 100% CPI adjusted, 1% of rental income is 80% CPI adjusted, and 4% of rental income has no CPI adjustment
• Low operational expenses due to mainly triple net bare-house lease contracts

• Completed and committed investments in current portfolio (capex) of NOK ~48 million in 2022, at yieldon-cost of ~7.5%
• Completed and committed investments in greenfield projects of NOK ~180 million in 2022, at yield on cost of ~7.1%
• Completed acquisitions of NOK ~190 million in H1 2022 with gross yield of ~7.6%
• Contemplated acquisitions of NOK ~1,365 million in H2 2022, with weighted average gross yield of ~6.6%, of which the BEWI transaction amounts to NOK 970 million in 2022²

We are KMC Properties … we deliver accretive growth ² …and have strong growth ambitions ²

• Strategic target of NOK 8bn by year end 2024, one year ahead of previous growth plan
• Committed and completed investments in 2022 at NOK ~1,783 million year to date
• For 2023 and 2024, committed pipeline amount to NOK ~1,410 million and NOK ~360 million respectively
• Continued focus on assets we know well: foodstuff facilities, light industry – infrastructure for our lessees

• 1) Does not include the company's office building in Moscow which is held for sale (valued at NOK 135.8 million as of 30 June 2022)
• 2) Current company estimates, based on current transaction pipeline and market visibility and outlook. No assurances can however be given that any such acquisitions will be concluded, or at what terms. Further information will be provided in due course, as and when relevant or appropriate.