Recreate ASA — Investor Presentation 2022

May 6, 2022

Q1 2022

Recreate (R8 Property ASA) presentation Q1 2022 2022.05.06

1

Q1 2022 Presentation

Agenda

Agenda Highlights & key figures

• 1
• Development in the quarter 2
• Meeting new consumer preferences 3
• Project and development portfolio 4
• Financial statement 5
• 6 Q&A

Highlights in the quarter Subsequent events

• Positive value changes of NOK 74.4 million (NOK 24.3 million), including value changes from owner-occupied property
• Best quarterly result in history with a profit before tax of NOK 145.9 million (NOK 38.5 million), including profit from owner-occupied property, mainly driven by positive portfolio changes
• A record number of signed new and renegotiated contracts in a quarter, with in sum 19 contracts totaling NOK 11.5 million in annual rent
• Acquisition of the remaining 25 per cent of Evolve, increasing ownership to 100 per cent from 1 January 2022
• Agreement with Skanska to acquire Parallell a sustainable and modern 19,000 square meters office property located in Oslo, for NOK 750 million
• Proposal made to change the company's name from R8 Property ASA to Recreate ASA

Recreate (R8 Property ASA) presentation Q1 2022 2022.05.06 Highlights & key figures

Key figures Q1 2022

Finance

Rental income	32.0
Property portfolio value changes*	74.4
Market value on property portfolio	2,767	2 750 2 700 2 650
Profit before tax*	145.9	2 600 2 550
Fair value per share*	55.8	2 500 2 450

Market value of the property portfolio (MNOK) +27.8

Fair value per share (NOK) +8.9

*Including owner-occupied property

** Including fair value of subsidiaries and investments in jointly controlled entities, associates and shares. Fair values are based on third party transactions and valuations performed in Q4-21 and Q1-22

Agenda

Agenda Highlights & key figures

• 1
• Development in the quarter 2
• Meeting new consumer preferences 3
• Project and development portfolio 4
• Financial statement 5
• 6 Q&A

Letting & occupancy Q1 2022

• Net letting in the quarter of NOK 4.6 million
• 9 new leases of NOK 4.9 million
• ¹⁰ renewed leases of NOK 6.6 million
• 17 terminated contracts of NOK 6.9 million

Management Portfolio (ownership ≥ 50%)

* Net letting management & project portfolio = new signed contracts + renegotiated contracts – terminated contracts

** Terminated contracts = contracts that have been terminated in the actual quarter prior to actual expiration date on contract + contracts that have ended in the quarter according to expiration date in contract

New lease contracts

Tentant	Property	Contract	Duration	Sqm
Comfort Hotel Skien Brygge AS	Skien Brygge	New	20	6,300
TSG Holdco AS	Versvikveien 6B	Renegotiated	3+3+3	2,273
Trainor Elsikkerhet AS	Kjelleveien 21	New	4	2,201
Asplan Viak AS	Kjelleveien 21	Renegotiated	1	1,229
Sterner AS	Vipeveien 51	Renegotiated	10	1,181
RTC Offshore AS	Torggata 8	Renegotiated	3	520
Aplia AS	Torggata 8	Renegotiated	6	519
Sikkerhetsmakulering AS	Dokkvegen 8 & 10	New	3	304
Other		New/renegotiated	1-15	1,092
Total				15,619

Skien Brygge, Skien Vinkelbygget, Tønsberg

MNOK

Development in the quarter

Rental income development & market rent potential

The graph above shows the estimated development in contractual rental income and market rent potential on vacant space for the next six quarters. The figures are based on all reported events, including adjustments from signed new, renewed and terminated contracts, as well as acquisitions and divestments which will be completed within the next 18 months. Future CPI adjustments are not included. Market rent is based on market rent set by Newsec.

*Consolidation of Inkognitogaten 33A (Inkognito Park) in Q2-22, with significant rental income from Q4-22

** Depending of the completion of the notified transaction of Lørenveien 73 (Parallell) in Q4-22, with significant rental income effect from Q1-23

Financial development

• Rental income of NOK 32.0 million in Q1-22 compared with NOK 30.1 million in Q1-21. The 6.3 per cent reduction is related to changes in the property portfolio and CPI adjustment
• Positive unrealized change in fair value of investment properties of NOK 74.4 million mainly related to the ongoing development project on Fornebuveien 1-3 and centrally located sustainable properties as Powerhouse Telemark and Kammerherreløkka (Comfort Hotell Porsgrunn)
• Positive change in unrealised fair value of financial derivates of NOK 57.0 million is related to a positive contribution of NOK 31.8 million from interest rate swaps. Our investment in Inkognitogaten 33 and the ongoing development project, gave a positive contribution of NOK 25.2 million (through value changes of forward contract, put option and shares).
• Share of profit (loss) from associates and joint ventures affected Net financials with a negative contribution of NOK -1.6 million from the investment in Orbit Technology

The property portfolio

31.03.2022	Area (sqm)	sqm Occupancy	రికి Occupancy	No. of properties	Market value (tNOK)	Market value (NOK/sqm)	Wault 1) (yrs)	Annual rent (tNOK)	Annual rent (NOK/sqm)	Wault 2) (yrs)	Net direct yield (%)	Net yield (valuation) (%)	Market rent 3) (tNOK)	Market rent 3) (NOK/sqm)
Green Office	37 248	34 868	93,6	6	1 165 450	31 289	7,8	68 564	1 966	6,4	5,2	5,4	74 301	1995
City Office	32 680	29 856	91,4	11	682 750	20 892	4,1	37 415	1 253	3,9	3,6	5,4	48 026	1 470
Commercial Prop.	11 199	10 103	90,2	6	325 200	29 038	13,3	20 869	2 066	13,1	5,3	6,1	22 363	1997
Total management portfolio	81 127	74 827	92,2	23	2 173 400	26 790	7,5	126 848	1 695	6,8			4,7 5,5 144 690	1784
Project Office	21 817	16 097	73,8	5	583 650	26 752	6,4
Total project portfolio	21 817	16 097	73.8	5	583 650	26 752	6,4
Total property portfolio	102 944	90 924	88,3	28	2 757 050	26 782	7,2

2) Wault weighted on annual rent

3) includes market rent from available areas

The calculation of net yield is based on the valuers' assumption of ownership costs, which on 31 March 2022 corresponds to 8.9 per cent of market rent. Parking areas (sqm) are not included in this overview.

Corporate segments in the first table follow the corporate structure of the group. Several of the properties are combined buildings and the actual rental conditions measured in rental income (in the management portfolio) are presented in the figure above.

Update on investments

Evolve (Subsidiary - 100 per cent) Orbit Technology (Joint venture - 29.9 per cent)

Evolve offers flexible workplaces with access to 27 locations. To meet the office users changed behavior and needs after Covid-19, Recreate has launched a hybrid solution. Hybrid is a combination of an ordinary, permanent lease and a membership in Evolve.

The Group owns 100 per cent of Evolve from 1 January 2022. An external valuation was performed in Q4-21, estimating a company value of NOK 195 million (100 per cent basis).

Orbit Technology offers a two-sided technology platform forsupply and demand of office space. The subscription-based platform matches free office space with market needs in in real time. The technology also ensures that the buildings are smarter through simpler access control and user administration. The Group's investment in Orbit Technology is considered a joint venture with a book value of NOK 9.6 million per 31.03.22. Latest transaction in Q4-21 implied a total fair value of Orbit Technology at NOK 150 million.

Update on investments

Skien Brygge (Associate - 25 per cent)

Skien Brygge is a long-term project which involves the development of both residential and commercial properties. The development project is structured in three phases. The project is currently postponed due to high building costs and commencement of phase one is under review. The development of phase two and three is estimated in the period from 2025 to 2033.

Recreate (R8 Property ASA) owns 25 per cent of Skien Brygge Utvikling AS which currently involves phase one of the project. The Group has also signed a letter of intent for phase two and three of the project with the same ownership as phase one.

Skien Brygge is considered as an investment in an associate. As of 31.03.22 the investment had a book value of NOK 3 million. Newsec has valued phase one of the project at NOK 75 million (100 per cent basis).

Agenda

Agenda Highlights & key figures

• 1
• Development in the quarter 2
• Meeting new consumer preferences 3
• Project and development portfolio 4
• Financial statement 5
• 6 Q&A

To meet the office users' changed behavior and needs after Covid-19, Recreate (R8 Property ASA) had launched a hybrid solution

• Combining ordinary office rental and co-working provides both flexibility and predictability
• Tenants get access to a network of office spaces, meeting rooms and other facilities
• Corporate agreements for existing tenants
• Utilizes the capacity of the buildings in a better way

The hybrid solution is a combination of an ordinary, permanent lease and a membership in Evolve, with access to their 27 locations with flexible workplaces.

The benefits are many: The employer keeps their environment, meeting points and predictability that comes with a traditional office; the employees get flexibility to work efficiently where they want, and reduced commuting time. In addition, users get access to video conferencing and beautiful meeting rooms, all closer to where people live.

For Recreate, this is a unique tool and competitive advantage, that adapts to the "new normal" in working life, post-Covid. Many companies can manage with fewer fixed square meters, when a possible shortage of space in "peak hours" can be covered through access to available capacity in Evolve. 24 SevenOffice

Tenants signed on the hybrid solution:

• Inkognitogaten 33
• 1,274 sqm
• 80 users

Schlumberger Information Solutions

• Fornebuveien 1-3
• 2,393 sqm
• 200 users

Net ARR Q1: 93.9 NOK

Key highlights in Q1

• Strong focus on digitaliztion to ensure efficient operation, scaling and good customer experience
• New recruitments to strenghten competence and capacity for further growth
• High market activity and continued ARR growth

Key performance indicators

• Total sqm: 27,154
• Total workstations: 1,962
• Total users: 1,268
• Occupancy: 64,63%
• RevPOW: 4,540 (pr month)

New centre's to open next 12 months

Fornebuveien 1-3	Oslo	Q2-22	2,300 sqm
Storgata 42	Lillestrøm	Q2-22	1,516 sqm
Kime	Oslo	Q3-22	2,265 sqm
Inkognitogaten 33	Oslo	Q3-22	1,989 sqm
Lørenveien 73	Oslo	Q4-22	6,735 sqm
Arkaden	Skien	Q2-23	584 sqm
Kjelleveien 21	Tønsberg	Q2-23	1,860 sqm

Key Milestones reaches – Pre 3 months

• Implemented tracking plan and data collection
• Launched automated billing
• Phase one of new admin dashboard for desktop
• Signed deals with consultant network (Folq) and real estate broker CBRE in Oslo
• 4 new started PbO installations in process (Lillestrøm, Frogner, Fornebu, Fredrikstad)
• 30-40 new desks avaliable for booking in the greater Oslo region
• One new external location (Share Oslo)
• Successfully cohosted breakfast conference with Union, Flexspace and Epicenter. 60 attendees from the coworking communities

Key Milestones ahead – Next 3 months

• Launch admin dashboard for desktop
• Referral program
• Improved image viewer
• Location sharing
• 5 new PbO locations
• Expand network with locations needed to meet demand from subscribers make first move into Stockholm
• Successfully raise 50 MNOK in new share issue

General metric

Employees	18 (consultants)
# Customers	14
# Users	2,404
Runway	●
Revenue forecast (current year)	●
ARR	●

Company specific metrics (∆ last 3 months)

# of PBO locations	17
# of satellites locations	19
# of booking	6,162
# of subscribers	92
# of access requests	79,831

Agenda

Agenda Highlights & key figures

• 1
• Development in the quarter 2
• Meeting new consumer preferences 3
• Project and development portfolio 4
• Financial statement 5
• 6 Q&A

Portfolio & development portfolio

Project Portfolio – under construction
Project	Ownership	Location	Type	Area	Expected completion	Occupancy	Project Cost (NOK million)	Of which accrued (NOK million)
Fornebuveien 1-3	50%	Bærum	Office	6,976	Q2 2022	95%	88.6	67.1
Inkognitogaten 33 1	8.3%	Oslo	Office	3,263	Q3 2022	100%	105.9	75.4
Sum Project Portfolio - under construction				10,239			194.5	142.5

Project Portfolio - zoned
Project	Ownership	Location	Type	Area	Zoning	Building permit
Skien Brygge - Phase 1	25%	Skien	Residential / Commercial	14,825	•	•
Skien Brygge - Phase 2	25%	Skien	Residential / Commercial	23,925	•
Skien Brygge - Phase 3	25%	Skien	Residential / Commercial	19,525	•
Utsikten	100%	Skien	Residential	1,496	•	•
Vestsiden Terrasse	50%	Porsgrunn	Residential	4,257	•
Arkaden - Phase 3	100%	Skien	Office / Parking / Retail	7,151	•
Sum Project Portfolio - zoned				71,179

Development Portfolio
Project	Ownership	Location	Type	Area
Slottsfjell Park	100%	Tønsberg	Office	17,000
Powerhouse Tønsberg	100%	Tønsberg	Office	11,000
Porsgrunn Næringspark	100%	Porsgrunn	Office	18,400
Kammerherreløkka	50%	Porsgrunn	Office	2,800
Sum Development Portfolio				49,200

Fornebuveien 1-3

• Redevelopment office
• Ownership: 50%
• Location: Bærum
• Expected completion: Q2 22
• Size: 6,976 sqm
• Occupancy: 95%
• Estimated project cost: NOK 88.6 million

Inkognito Park

• Redevelopment office
• Ownership: 8.3%
• Location: Oslo
• Expected completion: Q3 22
• Size: 3,263 sqm
• Occupancy: 100%
• Estimated project cost: NOK 105.9 million
• BREEAM-NOR: Very Good
• Energy rating: D

Slottsfjell Park + Powerhouse Tønsberg

• A new planning initiative will be sent when Tønsberg Kommune has concluded the planning area
• Newbuild and redevelopment office and hotel
• Ownership: 100%
• Location: Tønsberg
• Est. Size: 28,000 sqm

Skien Brygge

• Newbuild office, hotel, residential, city floor & parking
• Ownership: 25%
• Location: Skien
• Size: 58,275 sqm

KEY FIGURES (PHASE 1) Project highlights

Total size	18,419 sqm
Office	3,468 sqm
Hotel	6,199 sqm
Residential	4,756 sqm
Indoor parking	3,396 sqm
Culture	600 sqm
OWNERSHIP
Recreate (R8 Property ASA)	25%
Bane NOR Eiendom	50%
SBBL	25%

• BREEAM certified office building 100% with ambition of energy class A
• BREEAM certified hotel building with ambition of energy class A, Comfort Hotel Skien Brygge (20y contract)
• West-faced, high quality apartments by the waterfront

Agenda

Agenda Highlights & key figures

• 1
• Development in the quarter 2
• Meeting new consumer preferences 3
• Project and development portfolio 4
• Financial statement 5
• 6 Q&A

Key figures

NOK All amounts in million	Q1-22	Q1-21	2021	2020
Rental income	32 027	30 067	120 576	114 153
Change period-on-period	7 %	5 %	6 %	14 %
Net income from property management	4 503	11 192	42 586	46 457
Change period-on-period	-60 %	-14 %	-8 %	11 %
Profit before tax*	145 897	38 501	111 858	-45 109
Change period-on-period	279 %	-143 %	-348 %	-159 %
Profit after tax*	125 392	32 397	79 271	-26 771
Change period-on-period	287 %	-141 %	-396 %	-145 %
Market value of the property portfolio	2 767 784	2 740 242	2 703 434	2 445 360
Fair value of the property portfolio and other investments**	2 963 645
Net nominal interest-bearing debt	1 799 173		1 994 354 1 785 287 1 724 414
Loan to value of property portfolio	65,0 %	72,8 %	66,0 %	70,5 %
Loan to fair value of property portfolio and other investments**	60,7 %
Interest coverage ratio	0,3	1,3	0,6	0,6
Number of shares	21 694	19 720	21 694	19 720
NOK All amounts in per share	Q1-22	Q1-21	2021	2020
Fair value per share (EPRA NRV incl. fair value adjustment)**	55,8	46,9	52,1	43,8
***Change period-on-period	19 %	N/ A	19 %	N/ A
EPRA NRV	48,8	44,2	45,1	43,8
***Change period-on-period	10 %	N/ A	3 %	N/ A
EPRA NTA****	39,2	41,3	42,3	41,0
***Change period-on-period	-5 %	N/ A	3 %	N/ A
EPRA NDV****	35,1	36,8	37,4	35,6
***Change period-on-period	-5 %	N/ A	5 %	N/ A
EPRA Earnings	1,0	-0,4	0,5	-0,8
***Change period-on-period	350 %	N/ A	169 %	N/ A

* Including profit from owner-occupied property ** Including fair value of subsidiaries and investments in jointly controlled entities, associates and shares. Fair values are based on third party transactions and valuations performed in Q4-21 and Q1-22 *** From Q2-21 EPRA key figures have been prepared according to the EPRA BPR of 2019. Former reporting was in accordance with 2016 EPRA BPR. Change in period-on-period is therefore not calculated for Q1-21 and 2020 **** Negative change period-on-period due to adjustments for goodwill related to Evolve

***** Evolve is consolidated in the financial statements from 1 January 2022

Financial statement

Statement of total comprehensive income

All amounts in NOK thousand

	Note	Q1-22	Q1-21	2021
Rental income	2	32 027	30 067	120 576
Other operating revenue	2	26 952	6 065	16 619
Total operating income		58 979	36 132	137 195
Maintenance and other operating expenses		32 079	15 937	70 181
Other property-related expenses		2 564	727	3 808
Administrative expenses		19 832	8 275	20 620
Total operating costs		54 475	24 939	94 609
Net income from property management		4 503	11 192	42 586
Changes fair from in value investment properties	4,5	14 640	24 282	147 024
Operating profit		19 143	35 474	189 610
Gains from investment in shares		33 919	15 479	22 137
Interest and other finance income		427	322	2 339
Share of profit (loss) from associates and joint ventures		-1 596	-4 099	-30 645
Interest and other finance expense		-22 710	-20 887	-73 712
Changes in fair value of financial instruments	4	56 991	12 213	2 130
Net financial items		67 032	3 027	-77 752
Profit before tax*		86 175	38 501	111 858
Tax payable		-	-	-
Tax expense		-5 959	-6 103	-32 587
Profit for the period/year		80 216	32 397	79 271
Changes in fair value from ow ner-occupied investment property*	4, 5	59 722	-	-
Change in deferred on comprehensive income tax	4	-14 546	-	-
Total comprehensive income for the period/year that will not	125 392	32 397	79 271

*Profit before tax + changes in fair value from owner-occupied investment property = Profit before tax including owner-occupied property

Financial statement

Statement of total comprehensive income for the operating segments: Commercial properties and Residential properties (Excl. coworking (Evolve))

As basis for comparison to previours reported TCI without consolidation of Evolve

All amounts in NOK thousand

	Q1-22	Q1-21	2021
Rental income	33 704	30 067	120 576
Other operating revenue	5 473	6 065	16 619
Total operating income	39 176	36 132	137 195
Maintenance and other operating expenses	12 152	15 937	70 181
Other property-related expenses	1 406	727	3 808
Administrative expenses	16 904	8 275	20 620
Total operating costs	30 462	24 939	94 609
Net income from property management	8 714	11 192	42 586
Changes in fair value from investment properties	74 362	24 282	147 024
Operating profit	83 076	35 474	189 610
Gains from investment in shares	579	15 479	22 137
Interest and other finance income	590	322	2 339
Share of profit (loss) from associates and joint ventures	-7 170	-4 099	-30 645
Interest and other finance expense	-19 950	-20 887	-73 712
Changes in fair value of financial instruments	56 991	12 213	2 130
financial items Net	31 040	3 027	-77 752
Profit before tax	114 116	38 501	111 858
Tax payable		-	-
Tax expense	-22 064	-6 103	-32 587
Profit for year	92 052	32 397	79 271

Balance sheet

All amounts in NOK thousand

	Note	31.03.2022	31.03.2021	31.12.2021
NON-CURRENT ASSETS
Deferred tax asset		71	10 244	2 603
Other intangible assets		154 185	7 566	7 589
Total intangible assets		154 257	17 810	10 191
Investment property	4,5	1 982 550	2 730 680	2 692 700
Owner-occupied property	4,5	774 500	-	-
Other operating assets		7 629	874	1 301
Right-of-use assets		232 735	92	36
Total non-current tangible assets		2 997 414	2 731 646	2 694 037
Investment in jointly controlled entities, associates and shares	4	44 789	118 310	73 754
Loans to related parties		23 069	-	54 097
Financial derivatives	4	84 479	43 415	21 118
Other long-term receivables		15 228	12 472	12 562
Total financial assets		565 167	174 196	531 161
NON-CURRENT ASSETS TOTAL		3 319 235	2 923 652	2 865 759
CURRENT ASSETS
Inventory property		10 734	9 562	10 734
Trade receivables		16 851	15 663	12 729
Other receivables		40 106	14 130	11 270
Other receivables to related parties		-	26 278	10 928
Total current receivables		67 691	65 634	45 662
Cash and bank deposits		19 294	31 029	24 855
TOTAL CURRENT ASSETS		86 985	96 663	70 517
ASSETS TOTAL		3 406 221	3 020 315	2 936 276

Financial statement

Balance sheet

All amounts in NOK thousand

	Note	31.03.2022	31.03.2021	31.12.2021
EQUITY
Shareholders equity		917 176	731 339	820 345
Non-controlling interest		160 040	62 754	131 331
EQUITY TOTAL		1 077 216	794 093	951 676
LIABILITIES
Interest-bearing debt		1 499 994	1 518 409	1 477 278
Deferred tax liability		90 398	82 092	90 139
Financial derivatives	4	31 487	20 068	21 086
Lease liabilities, non-current portion		202 017	3 224	2 352
Other non-current liabilities		7 415	-	5 684
Total non-current liabilities		1 831 311	1 623 793	1 596 540
Trade payables		81 415	34 314	23 968
Interest-bearing debt		299 179	475 945	308 009
Debt to related parties		68	6 905	3 026
Lease liabilities, current portion		43 866	1 216	1 179
Other current liabilities		73 165	84 050	51 879
Total current liabilities		497 693	602 429	388 060
LIABILITIES TOTAL		2 329 004	2 226 222	1 984 600
TOTAL EQUITY AND LIABILITIES		3 406 221	3 020 315	2 936 276

Recreate (R8 Property ASA) presentation Q1 2022 2022.05.06 Financial statement

Value development*

*Investments in subsidiaries, jointly controlled entities, associates and shares.

Agenda

Agenda Highlights & key figures

• 1
• Development in the quarter 2
• Meeting new consumer preferences 3
• Project and development portfolio 4
• Financial statement 5
• 6 Q&A

Recreate (R8 Property ASA) presentation Q1 2022 2022.05.06

31