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R8 Property first quarter 2017

Table of contents


R8 Property first quarter 2017

Financial highlights -


R8 Property first quarter 2017

Other highlights -


R8 Property first quarter 2017

Financial development


R8 Property first quarter 2017

Balance sheet

0.3 %

47 % 53 %


R8 Property first quarter 2017

# of contracts

Revenue (NOK)

The Property Portfolio

Year


R8 Property first quarter 2017

Investments and divestments


R8 Property first quarter 2017

Other information


R8 Property first quarter 2017

Financial statements Statement of total comprehensive income All amounts in NOK thousand Q1-17

2016

14 048 260 14 308

52 130 1 176 53 306

Maintenance and other operating expenses Other property-related expenses Administrative expenses Total operating costs

1 553 438 375 2 365

8 217 2 315 2 098 12 630

Net income from property management

11 943

40 675

Changes in value from investment properties Operating profit

22 476 34 419

48 446 89 121

Interest and other finance income Interest and other finance expense Net realised financials Unrealised changes in value of finacial istruments Net financial items

292 -5 314 -5 022 306 -4 715

1 812 -24 149 -22 337 4 487 -17 850

Profit before tax Tax expense Profit for period/year

29 704 -7 129 22 575

71 271 -12 512 58 759

Change in deferred tax on comprehensive income Total comprehensive income for the period/year

22 575

58 759

Profit attributable to: Equity holders of the company Non-controlling interest

22 575 -

58 759 -

Total comprehensive income attributable to: Equity holders of the company Non-controlling interest

22 575 -

58 759 -

Rental income Other operating revenue Total operating income

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R8 Property first quarter 2017

Balance sheet All amounts in NOK thousand 31.03.2017

31.12.2016

Intangible assets Investment property Other operating assets Loans to associates Total non-current assets

168 916 500 1 180 16 109 933 956

98 888 500 1 029 26 308 915 935

Trade receivables Other receivables Cash and bank deposits Total current assets TOTAL ASSETS

2 043 7 609 233 9 884 943 840

1 607 1 367 345 3 319 919 254

Shareholders equity Total equity

254 042 254 042

231 467 231 467

Interest-bearing debt Deferred tax liability Financial derivatives Debt to group companies Total non-current liabilities

293 650 46 308 19 255 865 360 079

286 650 39 224 19 561 850 346 285

Interest-bearing debt Trade payables and other payables Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES

310 529 19 191 329 720 689 799 943 840

319 961 21 541 341 502 687 787 919 254

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R8 Property first quarter 2017

Changes in equity All amounts in NOK thousand

Share capital

Share premium

Other paid-in equity

Retained earnings

Total equity

2 500 2 500 2 500

3 500 3 500 3 500

6 858 6 858 6 858

159 850 58 759 218 609 22 575 241 184

172 707 58 759 231 467 22 575 254 042

Q1-17

2016

Profit before tax Expensed interest and fees on loans from financial institutions Interest and fees paid on loans from financial institutions Depreciation and amortisation Change in market value investment properties Change in market value financial instruments Change in working capital Net cash flow from operating activities

29 704 5 314 -5 509 -22 476 -306 -1 855 4 872

71 271 24 149 -24 119 113 -48 446 -4 487 -1 234 17 248

Proceeds from sales of investment properties and companies Upgrades and construction of investment properties Purchase of intangible assets and other plant and equipment Net cash flow from investment activities

-5 524 -70 -5 593

18 392 -87 539 -147 -69 294

Proceeds interest-bearing debt Repayment interest-bearing debt Net payment of loans to associates and jointly controlled entities Net cash flow from financing activities

5 158 -7 591 3 042 609

85 781 -35 596 -1 132 49 052

-112 345 233

-2 994 3 339 345

Equity at 01.01.2016 Profit for period Equity at 31.12.2016 Profit for period Equity at 31.03.2017

Statement of cash flows All amounts in NOK thousand

Change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

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R8 Property first quarter 2017

NOTE 1 ACCOUNTING PRINCIPLES This interim report is prepared in accordance with IAS 34 Interim Financial Reporting. The interim financial statements are prepared in accordance with applicable IFRS standards and interpretations. The accounting principles that have been used in the preparation of the interim financial statements are in conformity with the principles used in preparation of the annual financial statements for 2016. The interim report presents condensed financial statements, and do not contain all the information required for full annual financial statements. The report should therefore be read in conjunction with the financial statements for 2016. There are no significant changes in accounting policies compared with those used when preparing the financial statements for 2016. The interim financial statements report of R8 Property AS was approved at a Board meeting on 15 May 2017 and have not been audited. The financial reporting covers R8 Property AS and subsidiaries.

NOTE 2 SEGMENT INFORMATION All amounts in NOK thousand The Group is organised into four geographic units: Porsgrunn, Skien, Sandefjord og Tønsberg.

CEO, which are the highest decision-making authority of the Group, for the purpose of resource allocation and assessment of segment performance. The Group reports the segment information based upon these four geographic areas.

OPERATING SEGMENTS Q1-17 31.03.2017 Porsgrunn Skien Tønsberg Sandefjord Total management portfolio Project portfolio Total property portfolio

Area Occupancy (sqm) (%)

No. Of properties (#)

Wault (yrs)

Market value (tNOK) (NOK/sqm)

12 month rolling rent (tNOK) (NOK/sqm)

Net yield (%)

Market rent (tNOK) (NOK/sqm)

14 782 8 228 16 446 2 794

98.8 91.0 90.6 94.7

4 3 3 1

4.5 3.0 4.4 7.5

275 500 125 500 418 000 60 000

18 638 15 253 25 417 21 475

19 575 8 310 26 201 3 670

1 324 1 233 1 758 1 388

6.7 6.2 5.9 5.8

19 674 10 116 29 604 4 556

1 331 1 229 1 800 1 631

42 250

93.8

11

4.8

879 000

20 805

57 757

1 479

6.2

63 950

1 514

37 500

4 348

916 500

25 153

8 625

2

50 875

13

4.8

per cent of market rent. R8 Property has in 2016 two on-going projects, one new building at Nordre Fokserød in Sandefjord and one new building (Powerhouse Telemark) in Porsgrunn.

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R8 Property first quarter 2017

NOTE 3 INVESTMENT PROPERTIES All amounts in NOK thousand Q1-17

2016

Closing balance previous period

888 500

778 853

Other movements Investment and upgrades in the property portfolio Capitalised borrowing costs Sale of investment property Change in value from investment properties Closing balance

5 524 22 476 916 500

93 148 1 553 -33 500 48 446 888 500

VALUE OF INVESTMENT PROPERTIES

Investment properties are valued at fair value based on independent external valuations. The valuation method is included at level 3 in the valuation hierarchy.

NOTE 4 INFORMATION ON THE FAIR VALUE OF ASSETS AND LIABILITIES All amounts in NOK thousand The valuation methods and principles are unchanged in the quarter. See the annual financial statements for 2016 for further information. Set out below is a summary of assets and liabilities measured at fair value divided between the different valuation hierarchies set out in IFRS 7.

Assets measured at fair value with change over the result - Investment properties (Level 3) Total Financial liabilitites measured at fair value with change over the result - Dervatives (Level 2) Total

31.03.2017

31.12.2016

916 500 916 500

888 500 888 500

19 255 19 255

19 561 19 561

Q1-17

2016

604 179 916 500 65.9

606 611 888 500 68.3

Q1-17

2016

11 943 11 943

40 675 113 40 788

5 256 32 5 288

25 334 11 25 345

2.3

1.6

KEY FIGURES All amounts in NOK thousand

DEBT RATIO (LTV) Net nominal interest-bearing debt Total market value of the property portfolio Debt ratio (LTV) %

INTEREST COVERAGE RATIO (ICR) Net income from property management Depreciation EBITDA adjusted Interest cost Other finance expense Applicable net interest cost Interest Coverage Ratio (ICR)

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R8 Property first quarter 2017

EPRA REPORTING The following performance indicators have been prepared in accordance with best practices as defined by EPRA (European Public Real Estate Association) in its Best Practices Recommendations guide.

EPRA Reporting - summary

Unit

Q1-17 / 31.03.2017

2016 / 31.12.2016

EPRA Earnings per share (EPS) EPRA NAV per share EPRA NNNAV per share

NOK NOK NOK

5.3 300.2 264.2

17.4 272.3 237.9

The details for the calculation of the key figures are shown in the following tables:

EPRA EARNINGS EPRA Earnings is a measure of the underlying development in the property portfolio and is calculated as net income after tax excluding value changes on investment properties, unrealised changes in the market value of financial derivatives and gains/losses on the sale of properties and their associated tax effects.

All amounts in NOK thousand

Profit for period/year Add: Changes in value of investment properties Tax on changes in value of investment properties 1) Changes in value of financial instruments Tax on changes in value of financial instruments 1) Change in tax rate 1) EPRA Earnings 1)

Q1-17

2016

22 575

58 759

-22 476 5 394 -306 73 5 260

-48 446 12 111 -4 487 1 122 -1 634 17 425

24 per cent from Q1 2017 and 25 per cent for 2016.

EPRA NAV AND EPRA NNNAV - NET ASSET VALUE The objective with EPRA NAV is to demonstrate the fair value of net assets given a long-term investment horizon. EPRA NAV is calculated as net asset value adjusted to include market value of all properties in the portfolio and interest-bearing debt, and to exclude certain items not expected to crystallise in a long-term investment property business model such as e.g. financial derivatives and deferred tax on the market value of investment properties. The objective with EPRA NNNAV is to report the fair value of net assets in the Group on the basis that these are immediately realised. EPRA NNNAV is EPRA NAV adjusted to reflect the fair value of debt and derivatives and in order to include deferred tax on value changes.

All amounts in NOK thousand Q1-17

2016

NAV - book value of equity Deferred property tax Fair value of financial derivative instruments EPRA NAV

254 042 31 524 14 634 300 200

231 467 26 130 14 671 272 267

Market value on property portfolio Tax value on property portfolio Basis for calculation of tax on gain on sale Less: Market value of tax on gain on sale (5 per cent tax rate)

916 500 490 162 426 338 21 317

888 500 493 899 394 601 19 730

19 255 -4 621 14 634

19 561 -4 890 14 671

Book value of interest bearing debt Nominal value of intereset bearing debt Basis for calculation of tax on realisation of intereset bearing debt Less: Market value of tax on realisation

604 179 604 179 -

606 611 606 611 -

EPRA NNNAV

264 249

237 867

Net market value on finacial derviatives Tax expense on realised financial derivatives 1) Less: net result from realisation of financial derviatives

1)

24 per cent from Q1 2017 and 25 per cent for 2016.

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Definitions 12 months rolling rent

The contractual rent of the management properties of the Group for the next 12 months as of a certain date, adjusted for signed new contracts and contracts expiring during such period.

Cash earnings

Result from property managament less payable tax.

Contractual rent

Annual cash rental income being received as of relevant date.

Interest Coverage Ratio ("ICR")

Net income from property management excluding depreciation and amortisation for the Group, divided by net interest on interest-bearing nominal debt and fees and commitment fees related to investment activities.

Loan-to-value ("LTV")

Net nominal value of interest-bearing liabilities divided by the market value of the property portfolio.

Management properties

Properties that are actively managed by the company.

Market rent

The annualised market rent of the management properties, fully let as of the relevant date, expressed as the average of market rents estimated by the independent professionally qualified valuers.

Market value of property portfolio

The market value of all the properties owned by the parent company and subsidiaries, regardless of their classification for accounting purposes.

Net yield

Net rent divided by the market value of the management properties of the Group.

Project properties

Properties where it has been decided to start construction of a new building and/or renovation.

Interest Coverage Ratio ("ICR")

Net income from property management excluding depreciation and amortisation for the Group, divided by net interest on interest-bearing nominal debt and fees and commitment fees related to investment activities.

Total area

Total area including the area of management properties, project properties and land / development properties.

WAULT

Weighted Average Unexpired Lease Term measured as the remaining contractual rent amounts of the current lease contracts of the management properties of the Group.

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Contact

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Portfolio Report R8 Property Q1 2017