KMC Properties ASA

Investor Presentation • Aug 10, 2023

The preferred real estate partner for logistics and industrial companies

KMC Properties ASA Q2 2023 results presentation | 10 August 2023

Q2 2023 Highlights

Continued value accretive growth, reduced overall interest margin and CPI adjustments reducing high inflation impact

• +60% increase in rental income to NOK 103.6 million vs. Q2'22 (weighted average CPI adjustment of 7.5% on 1 January 2023)
• +42% increase net income from property management to NOK 42 million vs Q2'22
• Maintained Net debt/run-rate EBITDA level, at 9.1x
• Invested NOK 64 million in Greenfield and CAPEX projects, of which NOK 50 million with an accretive yield-on-cost of 7.6%
• Maintained stable OPEX at NOK 10 million expecting limited additions going forward
• Reduced overall net interest rate by 0.43% in successful NOK ~2bn refinancing, increasing yield gap to 0.88%

1) KMC Property ASA portfolio is valued by third party Cushman & Wakefield quarterly (WAULT = Weighted average unexpired lease term)

2) The EPRA Best Practices Recommendations Guidelines focus on making the financial statements of public real estate companies clearer and more comparable across Europe (www.epra.com). See Alternative Performance Measure (APM) description in KMC Properties financial report for calculations of the EPRA performance measures.

Value accretive growth diversifying across industries and regions

0.0 0.1

In 2020, the two companies merge forming a real estate specialist that was listed on Oslo Stock Exchange in December 2020

2023 2030 2035 2040

WAULT: 11yrs

3

Building on +40 years of industrial knowhow

Focus on four key areas

Accretive acquisition of five properties H1 2023

	Logistics property in Narvik	Danish light industry property	3x Finnish light industry properties
Property value	NOK 90.0 million	DKK 52.8 million	EUR 20.3 million
Rental income	NOK 8.0 million (2024)	DKK 3.5 million	EUR 1.6 million
WAULT	12 years	17 years	17 years
Annual CPI Adjustments	100%, 1 January	100%, 1 January	100%, 1 January
Contract type	Triple net bare house	Triple net bare house	Triple net bare house
Close to natural resources Close to key customers	✓
In industrial cluster	✓	✓ ✓	✓

Contract structure reducing inflation impact

Triple net bare house contract structure with CPI adjustments

	Gross	Single-net	Double-net	Triple-net
Rent	Tenant	Tenant	Tenant	Tenant
Taxes	Owner	Tenant	Tenant	Tenant
Insurance	Owner	Owner	Tenant	Tenant
Maintenance	Owner	Owner	Owner	Tenant
+ 99% of contracts are 100% CPI adjusted, 1% of contracts 80% CPI adjusted

• 7.5 % CPI-adjustment on 1 January 2023 on 99% of annual contractual rent
• Low run rate property related costs (1.2% of rental income) due to triple net bare house contracts

Reduced overall interest margin in major refinancing

Improved debt structure at reduced interest margin Long term debt % of total and interest margin

• New debt refinancing NOK 1,850 million senior secured bond and fully drawn RCF
• Reducing KMC Properties overall interest margin from 3.47% to 3.32%
• Improved debt structure with bank loans representing 69% of overall long term company debt
• All transactions related to the new financing structure completed in July 2023

Financial and operational visibility on current assets

12 months run rate

Financial review

Gross rental increase on a stable cost base

Profit and loss¹

NOK million

	Q2 2023	Q2 2022	YTD 2023	YTD 2022
Rental income	104	65	199	127
Property expenses	-1	0	-2	-1
Net operating income	103	64	197	126
Administration expenses	-9	-9	-21	-19
Transaction expenses	-1	-0	-3	-3
EBITDA2	93	55	173	104
Net realised financials	-51	-27	-95	-52
Net income from property management	42	28	78	52
Net unrealised financials	-1	57	63	28
Change in value of financial instruments	17	3	-47	94
Changes in value of investment properties	-52	8	-46	5
Profit before tax	6	96	48	180
Profit from continued operations	6	73	31	129
ICR	1.8x	2.1x	1.8x	2.1x

1) Excluding discontinued operations

2) See Alternative Performance Measure (APM) description in KMC Properties financial report

3) The valuation of the properties on 30 June 2023 has been performed by the independent expert valuer, Cushman & Wakefield.

• +60% rental income increase Q2'23 vs Q2'22
  • Weighted average CPI adjustment of 7.5% on 1 January 2023
• +69% EBITDA increase Q2'23 vs Q2'22 showcasing KMCP's strong operational leverage
  • Low property expenses due to contract structures
  • Stable and low administration expenses
  • Limited transaction expenses
• Realized financial expenses increase due to increased interest-bearing debt and increased interest
• Increased value of financial instruments reflecting Swap agreements
• Negative change in value of investment properties reflecting third party³ market outlook

Earnings driven income from property management

Financial and operational visibility

Annualised run-rate¹

NOK million, 12 months forward

	Q2'23	Q1'23	Q4'22	Q3'22	Q2'22
Rental income	424	412	371	284	268
Property expenses	-5	-5	-5	-4	-4
Net operating income	419	407	366	280	264
Administration expenses2	-44	-44	-41	-34	-34
EBITDA	375	364	325	246	230
Net realised financials3	-210	-205	-181	-137	-117
Net income from property management	165	159	144	109	113

1) Based on completed agreements at period end.

2) Does not include transaction costs and variable remuneration to employees

3) Based on interest rates and swap agreements after closed refinancing in July. Does not include amortisation of capitalised borrowing cost.

• Additional rental income vs Q1'23 from NOK 50 million in yielding CAPEX and Greenfield investments
• Property related expenses flat due to triple net bare house contract structure
• No expected increase in administrative expenses
• Financing cost increase driven by increase in interest-bearing debt and increased floating interests
• Interest margin reduced from 3.49% at the end of Q1'23 to 3.32% post refinancing in July 2023

EBITDA to interest gap maintained through refinancing and swaps

Refinanced at improved terms – effective from July'23

		NOK million Current terms
	30 June 2023	July 2023	30 June 2023	July 2023	Improve ment
Bond loan	1 850	900	8.63 %	9.38 %
Bank loan	1 324	2 402	6.80 %	6.90 %
Construction loan	82	82	7.13 %	7.13 %
Revolving Credit Facility	200	0	6.32 %	-
Shareholder loan	0	100	-	8.63 %
Total	3 456	3 484	7.78 %	7.59 %	0.19 %
Swap agreements			-1.33 %	-1.57 %	0.24 %
Total including swap agreements			6.45 %	6.02 %	0.43 %

Note: 3 months Nibor is set to 4.38% in line with the latest interest rate determination on the new bond loan. 6 months Nibor is set to 4.08% in line with the latest interest rate determination on the bank loan.

EBITDA to interest gap maintained

Annualized run-rate 12 months forward, NOK million

Reduced refi risk with limited increase in LTV

LTV per quarter end and post refinancing

Comfortable headroom to ICR covenants

Robust platform for continued value accretive growth

6.9% Net yield on NOK 6 billion assets

17

Continued value accretive growth

Year end 2024 gross asset value target NOK billion

• 100% CPI adjustments on 99% of contracts,
• with reduced overall interest margin, and a
• growing asset base with robust tenants

Continuing EBITDA accretive growth towards 2024 goal of a GAV of NOK 8 billion

Appendix pipeline

Pipeline investments

Type1	Tenant	Completion (estimated)	Value (NOKm)	Remaining investments	Gross Yield	WAULT	Country
CAPEX	BEWI (Thorsø)	Q2 2024	39	36	8.5 %	15.0	NO
CAPEX	Sentrallageret (Kuraas)	Q3 2023	10	4	7.9 %	15.0	NO
Greenfield	BEWI (Jøsnøya, Hitra)	H2 2023	200	84	7.5 %	15.0	NO
Greenfield	Slakteriet Holding	H1 2025	682	682	TBD	20.0	NO
Acquisitions	BEWI	H2 2023	2,000	TBD	TBD	16.6	DE, BE, PL

1) Pipeline per 30.06.2023