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Interim
RESULTS
2019
| INTERIM RESULTS 2019
Agenda
Interim
Results 2019
Company and market
overview
Financial overview
Retail portfolio overview
Outlook
INTERIM RESULTS 2019 | AGENDA (2)
Company and
market overview
HADLEY DEAN
CEO
INTERIM RESULTS 2019 | COMPANY AND MARKET OVERVIEW
Operational and financial objectives
2019 H1 results achieved
Financial highlights Retail operational highlights
€ 72 m € 53 m € 5.80 c 49.8%
NET OPERATING DISTRIBUTABLE
EARNINGS
DPS PER NET LTV
+2% +6% 99.1%
INCOME SHARE
FOOTFALL SALES OCCUPANCY
+9% +9% flat -2.1%
INTERIM RESULTS 2019 | COMPANY AND MARKET OVERVIEW (4)
FINLAND
Europe – Poland
6th largest economy in the EU
SWEDEN
IRELAND UNITED
NETHERLANDS
KINGDOM POLAND
GERMANY
CZECH
REPUBLIC
SLOVAKIA
AUSTRIA
FRANCE HUNGARY
ROMANIA
ITALY
SPAIN
PORTUGAL
INTERIM RESULTS 2019 | COMPANY AND MARKET OVERVIEW (5)
1.5
European macro outlook
GDP growth forecast 2019 – 2021 (%)
1.9
2.4
1.5
1.6 3.4
1.3
Poland – one of the highest 2.2
expected GDP 2.9
growth rate at 3.4% 1.8
1.5 3.4
3.1
0.3
Source: 2.0
1.4
Oxford Economics
INTERIM RESULTS 2019 | COMPANY AND MARKET OVERVIEW (6)
1.7
European retail sales outlook
Retail sales growth forecast 2019 – 2021 (%)
2.2
4.3
1.5
2.8 4.5
1.8
Poland – one of the highest 3.6
expected retail sales 2.2
growth rate at 4.5% 1.4
2.2 3.7
4.2
0.8
Source: 1.5
1.1
Oxford economics
INTERIM RESULTS 2019 | COMPANY AND MARKET OVERVIEW (7)
EPP retail portfolio 2019 LITHUANIA
Largest retail landlord in Poland by GLA Gdansk
Hamburg
SZCZECIN
LOMZA
BELARUS
INOWROCLAW
24 1
DEVELOPMENT
Berlin
POZNAN
WŁOCLAWEK
WARSAW
RETAIL ASSETS LODZ
PROJECT GERMANY KALISZ
RADOM
BELCHATOW
900 000 M2 GLA
Dresden
JELENIA
GORA
WROCLAW
CZESTOCHOWA
BYTOM
KIELCE
ZAMOSC
KLODZKO
ZABRZE CZELADZ
Prague KRAKOW Lviv
PRZEMYSL
CZECH UKRAINE
REPUBLIC
Brno
INTERIM RESULTS 2019 | COMPANY AND MARKET OVERVIEW (8)
Munich
EPP retail portfolio 2020 LITHUANIA
Attractive and diversified pipeline of assets Gdansk
OLSZTYN
Hamburg
SZCZECIN
BELARUS
28 1
LOMZA
INOWROCLAW
RETAIL ASSETS DEVELOPMENT Berlin
WŁOCLAWEK
PROJECT POZNAN
WARSAW
>1 000 000
LODZ
GERMANY KALISZ
RADOM
BELCHATOW
M2 GLA
Dresden WROCLAW
JELENIA KIELCE
>120 000 000
CZESTOCHOWA
GORA ZAMOSC
BYTOM CZELADZ
OPOLE
KLODZKO
ZABRZE
FOOTFALL TYCHY KRAKOW
Prague Lviv
40%
PRZEMYSL
CZECH UKRAINE
REPUBLIC
OF POPULATION WITHIN 30 MIN DRIVE
Brno
INTERIM RESULTS 2019 | COMPANY AND MARKET OVERVIEW (9)
Munich
Favourable macro environment
Fundamentals support Polish spending
Expected salary growth Unemployment expected to reach
2019 - 2021 – 6.9% record low of 2.8% by 2021
Average monthly salary and unemployment rate
1 000
6 12,0%
5 596
Average monthly salary (PLN)
5 259
4 915
5 000 10,0%
4 585
Unemployment rate
4 284
4 052
3 908
4 000 3 659 3 777 8,0%
3 000 6,0%
2 000 4,0%
1 000 2,0%
0 0,0%
2013 2014 2015 2016 2017 2018 2019 (f) 2020 (f) 2021 (f)
Unemployment rate in Poland Unemployment rate in EU-28 Average monthly salary (PLN)
Source:
GUS, NBP, Oxford Economics, Eurostat INTERIM RESULTS 2019 | COMPANY AND MARKET OVERVIEW (10)Retail landscape in Poland
Limited supply on the horizon
Exposure to nearly Shopping centres Lack of high streets More than 70% of retail spend
40 million people are seen as destinations occurs in shopping centres
Evolution of retail space (m2)
700 000
600 000
500 000
New supply (m2)
400 000
300 000
200 000
100 000
0
2013 2014 2015 2016 2017 2018 2019 (f) 2020 (f) 2021 (f)
Source:
Savills INTERIM RESULTS 2019 | COMPANY AND MARKET OVERVIEW (11)Key strategic objectives achieved
Strategic initiatives achieved in H1
Successful divestment of offices through
the sale of portfolio to JV Partner
Strong support from the market in an
oversubscribed equity raise of EUR 90m
Increased exposure to retail with the
successful acquisition of 4 shopping
centres and the opening
of Galeria Mlociny
Reduced gearing in the
business to below 50%
Delivered on DPS guidance
INTERIM RESULTS 2019 | COMPANY AND MARKET OVERVIEW (12)Asset recycling
strategy
INTERIM RESULTS 2019 | ASSET RECYCLING STRATEGYOffice sale
Successful office sale and JV
Successful disposal of office
portfolio to strong JV partner
Disposal in line with book
values
In-house asset and property
management retained to
enhance returns
Remain focused on
recycling assets
INTERIM RESULTS 2019 | ASSET RECYCLING STRATEGY (14)M1 tranche 1
Asset highlights
Well-established properties ŁÓDŹ
with 20 year track record
ZABRZE CZELADŹ
Strong anchors: Auchan, KRAKÓW
OBI and Media Markt
Large sites and catchments
with over 200 ha of land
GLA 194 000 m2
on sites
NOI € 25 million
Occupancy 100%
Ample parking
INTERIM RESULTS 2019 | ASSET RECYCLING STRATEGY (15)M1 tranche 2
Asset highlights
POZNAŃ
Well-established properties ŁÓDŹ
with 20 year track record RADOM
CZĘSTOCHOWA
BYTOM
CZELADŹ
z anchors: Auchan,
Strong
ZABRZE
KRAKÓW
OBI and Media Markt
Large sites and catchments
GLA
with over 200 ha of land
on sites 141 000 m2
NOI €15 million
Ample parking Occupancy 100%
INTERIM RESULTS 2019 | ASSET RECYCLING STRATEGY (16)Financial overview
JACEK
BAGIŃSKI
CFO
INTERIM RESULTS 2019 | FINANCIAL OVERVIEWSnapshot of income statement
Earnings targets achieved
EUR million H1 2019 H1 2018 Growth Growth (%)
Net operating income 71,8 66,2 5.6 +8.5%
Administration costs (7,3) (6,7) (0,6) +9.0%
% of NOI 10.2% 10.1% - 0.1%
EBITDA 64,2 59,2 5,0 +8.4%
% of NOI 89.4% 89.4% +0%
Interest expense (1)
(17,4) (14,7) (2,7) +18.1%
Cost of interest 2.4% 2.4% +0%
Current taxation (5,3) (4,9) (0,4) +8.2%
Effective tax rate 11.3% 11.0% +0.3%
Joint ventures (2)
2.2 0 2.2
Distributable earnings 52,7 48,3 4,4 +9.1%
No. of shares (‘million) 908 830 78 +9.4%
Distribution per share (€cents) 5.80 5.82 -0.02 0%
(1) Finance expenses excluding IFRS amortised cost valuations and IFRS 9 remeasurements
(2) Operating profit of joint-ventures, excluding fair value remeasurements, deferred taxes and other
INTERIM RESULTS 2019 | FINANCIAL OVERVIEW (18)Snapshot of financial position
Improved capital structure while increasing scale of operations
EUR million H1 2019 YE 2018 Movement Change (%)
Investment properties 2,294 2,202 92 +4.2%
Investment in JVs 170 139 31 +22.3%
Total assets 2,620 2,472 148 +6.0%
Bank borrowings 1,325 1,304 21 +1.6%
Net asset value excl. deferred tax 1,209 1,118 91 +8.1%
No. of shares (‘million) 908 830 78 +9.4%
NAV per share 1.33 1.35 (0.01) -1.5%
Cost of debt 2.4% 2.4% 0%
Hedging 84% 85% -1%
Loan to value (net) 49.8% 51.9% -2.1%
INTERIM RESULTS 2019 | FINANCIAL OVERVIEW (19)Strong liquidity position
Well capitalized and significant access to liquidity
Debt extended successfully Debt maturity profile (EUR’m)
until 2023> 900
814
800
Headroom in credit facilities
700 672
of EUR 95 m
600
513
Hedging at 84% and 500
3.8 years debt maturity
400
300
LTV successfully reduced 185
to below 50% and on track 200 150
100
to achieve medium term 100 80
target of 45% 0 0 11 10 0
0
2018 2019 2020 2021 2022 2023>
30 June 2018 30 June 2019
INTERIM RESULTS 2019 | FINANCIAL OVERVIEW (20)Retail portfolio
WOJCIECH
KNAWA
Head of Property
Management
INTERIM RESULTS 2019 | RETAIL PORTFOLIORetail portfolio Operations remained robust:
summary H1 2018 vs. H1 2019
+2% +6% 99.1% 4.6 11% +2.4%
FOOTFALL SALES OCCUPANCY WALT (YEARS) GLA RTS LFL NRI GROWTH
INTERIM RESULTS 2019 | RETAIL PORTFOLIO (22)EPP performance vs Polish SC council benchmark
Consistently outperfoming the competition
Tenant turnover
8%
7%
7%
6%
6%
5%
4%
3%
3%
2% 2%
2%
1% 1%
1%
0%
-1%
-1%
-2%
2016 2017 2018 2019 H1
PRCH EPP
Source:
Polish Council of Shopping Centers, Company data INTERIM RESULTS 2019 | RETAIL PORTFOLIO (23)Sunday trading
100%
Consumer habits have shifted SUNDAY FOOTFALL
TRANSFERRED
TO OTHER SHOPPING DAYS
Jan - Jun 19 vs. Jan - Jun 18
350000
300000
+ 10% +10%
SATURDAYS
+ 3%
250000 + 5% + 6% + 1% + 7%
200000
150000
- 31%
+7%
THURSDAYS
100000
50000
0
+6%
TUESDAYS
Mon Tue Wed Thu Fri Sat Sun
Jan-Jun 2018 Jan-Jun 2019
INTERIM RESULTS 2019 | RETAIL PORTFOLIO (24)Sunday initiatives
Supporting F&B and
entertainment sales
Initiatives to attract customers
on non-trading Sundays
Cultural, sport, social
and educational events
Building customer loyalty
Footfall increased by 40-140%
on the days events took place
compared to non-trading Sundays
INTERIM RESULTS 2019 | RETAIL PORTFOLIO (25)Sunday initiatives movie
click here
INTERIM RESULTS 2019 | RETAIL PORTFOLIOAsset highlights
INTERIM RESULTS 2019 | RETAIL PORTFOLIOPasaz Grunwaldzki
Asset highlights
Leading retail destination WROCLAW
in Wrocław
11 new leases signed and
5 prolonged in H1 2019
GLA
Top performing categories:
Household +21%,
48 097 m2
Health&Beauty +19%, Rent to sales 13.4%
F&B +10%
Footfall change +6.5%
Sales change +8.2%
Successful launch of new
Food Court Occupancy 98.4%
INTERIM RESULTS 2019 | RETAIL PORTFOLIO (28)Pasaz Grunwaldzki movie
click here
INTERIM RESULTS 2019 | RETAIL PORTFOLIOGalaxy
Asset highlights
SZCZECIN
#1 shopping destination
in north-western Poland
Top performing categories:
Electronics +24%,
Household +21%,
GLA
F&B +7%
56 665 m2
New Food Court Rent to sales 12.6%
to be launched in Q4
Footfall change +1.5%
Sales change +8.4%
Occupancy 99.4%
INTERIM RESULTS 2019 | RETAIL PORTFOLIO (30)Future F&B transformation,
Galaxy works completing in Q4 2019
INTERIM RESULTS 2019 | RETAIL PORTFOLIO (31)Future F&B transformation,
Galaxy works completing in Q4 2019
INTERIM RESULTS 2019 | RETAIL PORTFOLIO (32)Galeria Echo
Asset highlights
Record high footfall
of +8.4% in H1 KIELCE
Top performing
categories: F&B +17%,
Household +12%, GLA
Fashion +8%
71 896 m2
7 leases prolonged, Rent to sales 10.2%
5 new openings
Footfall change +8.4%
Sales change +6.7%
Cinema and Kids Play
enlargement Occupancy 98.9%
INTERIM RESULTS 2019 | RETAIL PORTFOLIO (33)Galeria Mlociny
grand opening
INTERIM RESULTS 2019 | RETAIL PORTFOLIOGaleria Mlociny movie
click here
INTERIM RESULTS 2019 | RETAIL PORTFOLIOGaleria Młociny
Asset highlights
Successful opening in
May with nearly 100% WARSZAWA
leased space
First Primark in Poland
Major brands:
Inditex, H&M, C&A,
GLA
Media Markt, TKMaxx
84 400 m2
Value €423 m
Occupancy 97%
INTERIM RESULTS 2019 | RETAIL PORTFOLIO (36)Developments INTERIM RESULTS 2019 | RETAIL PORTFOLIO
Towarowa 22
Developments
GLA 230 000 m2
mixed use*
Unique multi-functional project
in the heart of Warsaw
World famous architects from BIG
responsible for the urban concept
2 ha square and a lot of greenery
in the project
Undergoing zoning which is
expected in 2020
*estimate
INTERIM RESULTS 2019 | RETAIL PORTFOLIO (38)Towarowa 22 movie
click here
INTERIM RESULTS 2019 | RETAIL PORTFOLIOOutlook
HADLEY DEAN
CEO
INTERIM RESULTS 2019 | OUTLOOK2019 focus
Outlook
Asset recycling
Asset management
Portfolio integration
Capital structure
INTERIM RESULTS 2019 | OUTLOOK (41)Disclaimer
This document has been prepared and issued by and is the sole responsibility of the management of EPP N.V. (the “Company” or “EPP”) and
its subsidiaries. No information made available in connection with this presentation may be passed on, copied, reproduced, in whole or in part,
or otherwise disseminated, directly or indirectly, to any other person.
This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or
subscribe for, any securities of the Company nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in
connection with, any contract commitment or investment decision in relation thereto nor does it constitute a recommendation regarding the
securities of the Company. Investors and prospective investors in securities of the Company are required to make their own independent
investigation and appraisal of the business and financial condition of the Company and the nature of the securities.
This presentation and any materials distributed in connection with this presentation may include certain forward-looking statements, beliefs or
opinions, including statements with respect to the Company’s business, financial condition and results of operations. These statements, which
contain the words “anticipate”, “believe”, “intend”, “estimate”, “expect”, “forecast” and words of similar meaning, reflect the management
beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the
future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved.
There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these
statements and forecasts. Past performance of the Company cannot be relied on as a guide to future performance. Forward-looking
statements speak only as at the date of this presentation and the Company expressly disclaims any obligations or undertaking to release any
update of, or revisions to, any forward-looking statements in this presentation. No statement in this presentation is intended to be a profit
forecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. The information on which these
statements has been based has not been reviewed or reported by EPP’s auditors.
This document speaks as of the date hereof. No reliance may be placed for any purposes whatsoever on the information contained in this
document or on its completeness, accuracy or fairness. The Company, its advisers and each of their respective members, directors, officers
and employees are under no obligation to update or keep current the information contained in this presentation, to correct any inaccuracies
which may become apparent, or to publicly announce the result of any revision to the statements made herein except where they would be
required to do so under applicable law, and any opinions expressed in them are subject to change without notice. No representation or
warranty, express or implied, is given by the Company, or any of its subsidiary undertakings or affiliates or directors, officers, any of its
directors or employees or any other person as to the fairness, accuracy or completeness of the information or opinions contained in this
presentation and no liability whatsoever for any loss howsoever arising from any use of this presentation or its contents otherwise arising in
connection therewith is accepted by any such person in relation to such information.
INTERIM RESULTS 2019 | DISCLAIMER (42)Appendices INTERIM RESULTS 2019 | APPENDICES
Appendices
Investment market
Investment volume in CEE, H1 2019 Investment volumes in Europe, H1 2019
Slovakia
7%
Romania
6%
€3.1bn
Hungary €4.0bn
7%
Poland
€8.4bn
51%
€2.6bn
€1.8bn
€21.7bn €6.7bn €2.81bn
Czech Republic
29% €30.3bn
€2.4bn
€1.6bn
€0.4bn
€0.4bn
• In H1 2019 the CEE region recorded investment volumes of €5.5 billion €13.8bn €0.3bn
€5.0bn
• Poland’s transactional volume share amounts to 51%, followed
by the Czech Republic (29%), whilst Hungary and Slovakia accounted
for 7% of the total CEE volume each.
€1.0bn €2.9bn
Source: Savills INTERIM RESULTS 2019 | APPENDICES (44)Appendices
Poland: Economic indicators
• One of the growing investment spots in Europe, a financial
•
hub for the region;
Integration with the EU associated with large FDI inflows;
4.5% 19.0%
GDP GROWTH CORPORATE TAX RATE
• Investment significantly boosted by EU investment funds; (Q2 2019)
• GDP per capita rose from 51% of the EU-28 average to
71% by 2018, the fastest pace of convergence among the
CEE economies;
• High consumer confidence and continued increases in
2.4% 3.4%
average household income has spurred robust growth in INFLATION (Q2 2019) UNEMPLOYMENT RATE
private consumption which is expected to reach 3.8% in (Q2 2019)
2019;
• Healthy and well-capitalised, resilient banking sector;
USD
• PLN 500+ government programme (PLN 500/month for
second and each next child) introduced in April 2016 has 11 354 billion 1 172 EUR
led to a considerable growth of retail sales; FDI INFLOW (2018) AVERAGE MONTHLY
GROSS SALARY (Q2 2019)
• Since July 2019 the PLN 500+ programme is granted also
for the first child;
• Sustainable consumer-led growth, underpinned by major
productivity gains and capital accumulation.
INTERIM RESULTS 2019 | APPENDICES (45)Appendices
Economics
GDP growth Government gross debt (%GDP)
6% 120%
5% 87,8%
90% 81,0% 78,9% 83,3% 81,6%
4% 74,5%
66,5% 63,9%
59,8% 59,8%
3% 60% 53,1% 50,4% 50,6%
46,9% 48,4%
2%
30%
1%
0% 0%
2015 2016 2017 2018 2019 (f) 2020 (f) 2021 (f) 2006 2010 2014 2017 2018
Poland Germany EU-28 Poland Germany EU-28
Retail sales and CAGR
45% 4,5%
40% 4,0%
35% 3,5%
Retail sales growth
30% 3,0%
25% 2,5%
CAGR
20% 2,0%
15% 1,5%
10% 1,0%
5% 0,5%
0% 0,0%
Poland Czech Republic Romania Hungary France UK Germany
2019-2028 CAGR
Source: Oxfrod Economics, Eurostat INTERIM RESULTS 2019 | APPENDICES (46)Appendices
Investment market
Prime yields by sector • In 2018 prime yields reached levels untested earlier on the Polish
9,00% market, in all major property sectors, having significantly broken the
psychological barrier of 5% in the office and retail sectors and
8,00%
reached a low 5% in the logistics sector. This trend continued in the
7,00% first half of 2019.
6,00%
• Prime shopping centre yields are in the range of 4.75-5.25% but with
limited market evidence. The most recent transactions of prime retail
5,00% properties are Galeria Katowicka sold at 5.25% (Q1 2019) and Wars
Sawa Junior department store in Warsaw City Centre was sold at ca.
4,00%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 4.00%+ (Q4 2018), the record yield in the retail sector in Poland and
2019 the first to be considered as high street. In Q2 2019 Cinema City in
Office (CBD Warsaw) Retail (Warsaw) Retail (regional cities) Manufaktura in Łódź was sold at 5.5%.
Investment volume by sector
8 000
6 000
EUR million
4 000
2 000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019
Office Retail Industrial Other
Source: Savills INTERIM RESULTS 2019 | APPENDICES (47)Appendices
• EUR 2.81 billion of total investment volume on the commercial real estate market in
Investment market cont’d Poland in H1 2019;
Investment volume in Poland by investor’s region of origin • Close to 57% of total investment volume in H1 2019 relates to office sector, whereas
8 000 the share of retail and industrial sector was almost equal at 16% and 15.2%
respectively;
6 000 • Following dominance of retail transactions for three consecutive years (2015-2017), the
office sector was the major focus for investors in 2018 and H1 2019.
EUR million
4 000
• Total volume in the retail sector summed to slightly over EUR 450 million. In the first
2 000 few weeks of the third quarter another EUR 298 million was added to the volume as
Atrium Koszalin and Atrium Felicity in Lublin were sold ECE.
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1
2019
Domestic EU US AsiaPac Middle East South Africa Other Top 15 investors 2017-H1 2019
EPP
Chariot Top (PIMCO, Oaktree, Redefine)
Investment volume* in CEE Globalworth
CIC (China Investment Corporation)
18 000
Mapletree
16 000
Savills IM
14 000
Union Investment
12 000
REICO (Ceska Sporitelna)
EUR million
10 000
Atrium European Real Estate
8 000
Revetas / Goldman Sachs
6 000
Blackstone
4 000 LRC Group
2 000 Pradera
0 Cromwell / Goldman Sachs
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019
GLL
CE (excl. Poland) Poland Eastern Europe (excl. Russia) 0 100 200 300 400 500 600 700 800 900 1 000 1 100
EUR million
* All types of properties, based on RCA data
CE: Czechia, Hungary, Slovakia
Source: Savills
INTERIM RESULTS 2019 | APPENDICES (48)EPP IR Contact details
Curwin Rittles
Poland - Warsaw
e-mail: Curwin.Rittles@epp-poland.com
Michèle Mackey
South Africa
Singular Systems IR
e-mail: Michele@singular.co.za
www.epp-poland.com
INTERIM RESULTS 2019 | CONTACT (49)You can also read
