Q1 2017 RESULTS...Apartamenty GO, Kraków Dom pod Wilgą I and II, Kraków Kościuszki Apartments,...
Transcript of Q1 2017 RESULTS...Apartamenty GO, Kraków Dom pod Wilgą I and II, Kraków Kościuszki Apartments,...
Q1 2017 RESULTS
AGENDA
ECHO AT A GLANCE
Q1 2017 FINANCIAL HIGHLIGHTS
RESIDENTIAL UPDATE
OFFICE UPDATE
RETAIL UPDATE
LAND BANK ACQUISITIONS
NICKLAS LINDBERGCEO
ARTUR LANGNERDeputy CEO - Construction
MARCIN MATERNY
Board Member Retail
RAFAŁ MAZURCZAK
Board Member Office
MACIEJ DROZDCFO
PIOTR GROMNIAKDeputy CEO
TEAMMANAGEMENT
FOCUSON POLANDECHO INVESTMENT
BY SECTORS
35%
31%
34%
800,000sqm of commercial
and residentialspace in pipeline*
* including 100% of Galeria Młociny
and Towarowa 22
5 RETAIL PROJECTS
16 OFFICE PROJECTS
38 RESIDENTIAL PROJECTS
retail
office
residential
FOCUSON POLAND
4%
11%
10%
7%
8%48%
10%2%
Gdańsk
Katowice
Kraków
Łódź
Poznań
Warsaw
Wrocław
Szczecin
800,000sqm of commercial
and residentialspace in pipeline*
* including Galeria Młociny
and Towarowa 22
ECHO INVESTMENT
GEOGRAPHICAL SPREAD252,000 sqm
of office, retail
and residential space
in 26 projects currently
under construction
58%
66,300 sqm
of residential space sold
38,500 sqm
of office space leased
41,500 sqm
of retail space leased
sold or leased
45%
20%
35%
38%
24%
38%
including 100% of Galeria Młociny and Towarowa 22
41%
8%
51%
Q1 2016
32%
40%
10%
UNDER CONSTRUCTION
IN PREPARATION240,000
sqm
220,000sqm
350,000sqm
450,000sqm
+59%
+88%
retail
office
residential
PIPELINE’S GROWTHQ1 2016 - Q1 2017
Q1 2017
Q1 2017Q1 2016
Dom pod Wilgą, Kraków
Jarzębinowe III, Łódź
Kościuszki Apartments, Kraków
Jaśminowe II, Poznań
Sowińskiego I and II, PoznańJarzębinowe III and IV, Łódź
Os. Perspektywa I, Poznań
Jackowskiego, Poznań
Jaśminowe III, Poznań
Pod Klonami III, Poznań
RESIDENTIAL PROJECTS
UNDER CONSTRUCTION
Park Avenue, Kraków
Jackowskiego, Poznań
Pod Klonami III, Poznań
Nowy Mokotów II, Warszawa
Grota-Roweckiego II, Wrocław
Apartamenty GO, Kraków
Dom pod Wilgą I and II, Kraków
Kościuszki Apartments, Kraków
Grota-Roweckiego II, Wrocław
Browary Warszawskie A, Warsaw
Nowy Mokotów III-IV, Warsaw
Sowińskiego II, III and IV, Poznań
Sowińskiego III, Poznań
Nowy Mokotów III, Warszawa
P
P
P
P
P
P project completed
30-35%targeteddevelopment margin on cost
62%sold
Q1 2017Q1 2016
OFFICE PROJECTS
UNDER CONSTRUCTION
Q22, Warsaw
A4 Business House, Katowice
Nobilis, Wrocław
Symetris I, Łódź
O3 Business Campus I, Kraków
Symetris II, Łódź
O3 Business Campus III, Kraków
O3 Business Campus II, Kraków
Sagittarius Business House, Wrocław
West Link, Wrocław
P
P
P
P
P sold or pre-sold
P
30-40%targeteddevelopment margin on cost
P
P
P
Q1 2017Q1 2016
RETAIL PROJECTS
UNDER CONSTRUCTION
Galaxy extension, Szczecin Galaxy extension, Szczecin
Galeria Libero, Katowice
Outlet Park III, Szczecin
30-40%targeteddevelopment margin on cost
65% leased41% leased
DEVELOPMENT
PIPELINE
2014 2015 2016 2017 2018 2019
Completion
(thous. sqm of commercial and residential area)
Retail Office Residential
90 84
166152 156
302
Q1 2017 RESULTS
PLN
3,330 mlnvalue of total assets
Investment
propertyOther
Asset
for sale
Cash
Trade
receivables
Property under
construction
EPP’s shares
Residential
(inventory)
ASSETS
STRUCTURE
COMMERCIAL PORTFOLIO
WITH EARLY EXIT DEFINITION
of commercial projectsin pipeline has pre-defined
exit routes
80%
3%
14%
7%
8%
2%
47%
20%
projects run for EPP
ROFO agreement with EPP
Forward sale to EPP
ROFO agreement with GriffinPremium REForward sale to Griffin Premium RE
JV with EPP
Exit scenario non definied
by targeted NOI
ROFO ADVANTAGE
Project IRR maximisation
Exit flexibility
Risk sharing and increasing exit certainty*
Design & planning
Construction
Leasing
Open market sale process
ROFO price negotiation
Sale closing
(open market sale)
Sale closing (ROFO)
Project lifetime decreased by ca.
9 months through ROFO
* ROFO partners co-finance projects at 25% share, increasing their motivation to exercise the option
Q1 2017 Q1 2016
Operating revenue 68 143**
Operating profit 89 168
Net profit 62 188
Total assets 3,330 8,211***
Loans and borrowings 1,123 4,044
Net debt / Total assets less cash ratio* 28% 49%
FINANCIAL
HIGHLIGHTSEcho Investment Group (PLN mln)
* cash decreased by declared dividends and VAT payable
** including revenue from standing assets
*** including yielding portfolio
OF COSTS ALLOCATIONNEW WAY
Part of overheads allocated to projects
Higher effectiveness and flexibility
of the organisation
Changes in the financial report:
since Q1 2017 – restating of costs position
DECREASE OF
OVERHEAD COSTS
Q1 2016 Q1 2017
Selling and administrative expenses
net of recharges (PLN mln)14.4 15.8
Annualised (x4) 57.6 63.2
Pipeline (000 sqm) 460 800
OH costs / sqm 125PLN / sqm
79PLN / sqm
Overheads per sqm in pipeline
-37%
PLN
300 mlnmaximal value
of public bonds program
The Prospectus approved by Polish
Financial Supervision Authority
on 26 May 2017
Bonds may be issued in PLN or EUR
In 2014 Echo Investment successfully
placed PLN 200 mln of public bonds
Bonds as an excellent and flexible
source of the financing
PROGRAM OF
PUBLIC BONDS
September 2017 – end of lock-up period for the Echo’s stake in EPP
EPP shares not included in dividend policy assumptions
Echo Investment holds 12.86% of shares in EPP
EUR ca
100 mlnbook value
of Echo’s shares in EPP
EUR ca
120 mlnmarket value
on LuxSE and JSE
OUR INTERESTS
IN ECHO POLSKA PROPERTIES
DIVIDEND POLICY
amount of dividend
for 2017
PLN 0.50per share
remaining amount
of annual profit reinvested
GROWTH
to be paid as dividend
for 2018 and later
up to 70%of annual profit base
DIVIDEND
Based on share price of PLN
5.60 and declared dividend
from 2017 profit, compared
to Bloomberg mean estimates
of dividend from 2017 profit
of selected developers
8,9% 8,6%
7,0%
5,2%4,7% 4,4%
3,6% 3,6%2,9%
Robyg Dom
Development
Vantage
Development
Atal Atenor Immobel LC Corp Marvipol
Best-in-class dividend yield
RESIDENTIAL UPDATE
FOCUSON POLAND
Q1 2016 Q1 2017 change
Projects under
construction13 17 31%
Units under construction 1,461 1,841 26%
Pre-sale (by revenue
of projects under
construction)
40% 62% 22 p.p.
Projects in preparation 19 21 11%
Units in preparation 1,958 3,355 71%
GROWTH
OF RESIDENTIAL SEGMENT
115
89
139
248
147162
194
422
259
106
70 67
157
46
129
211
65
90
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
sale delivery
SPEED
OF RESIDENTIAL SALES 1,841 units
under construction
976 units
to be completed in 2017
71%pre-sold
(units)
62%pre-sold
DIVERSIFICATION
OF RESIDENTIAL MARKETS
28%
10%
30%
25%
7%
Kraków Łódź Poznań Warsaw Wrocław
4%
18%
22%44%
12%
5most attractive
residential markets
in Poland
Presence at
underconstruction in preparation
Data presented by residential usable area
30-35%range of targeted
gross margin
1-6.5%range of Echo’s share
of local markets*
* sales in 2016 - REAS
BROWARY
WARSZAWSKIE
1st office building (15,000 sqm GLA) launched in May 2017
2 residential buildings under construction
8,000 sqm of retail space in newand historical buildings
OFFICE
RESIDENTIAL
67% of apartments sold (178 contracts)
3rd residential building to be launchedin Q3 2017
OFFICE UPDATE
FOCUSON POLAND
Q1 2016 Q1 2017 change
Projects under
construction5 5
Space under
construction110,000 86,800 -21%
Total pre-leasing 45% 44% -1 p.p.
Projects in preparation 6 11 83%
OFFICE
ACTIVITY
15,000 sqmBrowary Warszawskie Jstarted in May 2017
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
new agreements recommercialisation
OFFICE
LEASING2017
(thous. sqm)
14,6
7,2 6,8
25,1
17,2
10,1
29,7
41,1
25,3
5buildings under constructionto be delivered in 2017/2018
44%leasing of total space
33%incured budgets
As at the end of Q1 2017
86,800sqm of GLA
OFFICE PIPELINE
DIVERSIFICATION
44%
11%
45%
Gdańsk
Katowice
Kraków
Łódź
Warsaw
Wrocław
87,000sqm of GLA
underconstruction
17%
26%
8%
49%
180,000sqm of GLA
in preparation
SAGITTARIUSWROCŁAW
OFFICE
24,900 sqm GLA building in Wrocław
82% of space leased to EY and BNY Mellon
(increase from 42% at 2016 YE)
Q4 2017 – expected end of construction
part of ROFO agreement with EPP
sale agreement under negotiations
92% of space leased to NOKIA Networks
(increase from 52% at 2016 YE)
WEST LINK
1Q 2018 – expected end of construction
OFFICE
14,200 sqm GLA building in Wrocław
– one of the top destinations for BPO/SSC
Building to be sold to Griffin Premium RE
for ca. EUR 36 mln
WROCŁAW
RETAIL UPDATE
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
new agreements recommercialisation
RETAIL
LEASING2017
(thous. sqm)
19,9
16,5
19,8
5,2
20,217,7
12
29,4
21
4projects under construction
to be delivered in 2017/2018
66%leasing of total space
14%incured budgets
As at the end of Q1 2017
63,600sqm of GLA
GALERIA
LIBERO
44,700 sqm GLA
H1 2018 – planned completion
Increase of the leased area from 41% at 2016 YE to 58%
Leading retail scheme in excellent location in Katowice
Part of ROFO agreement with EPP
RETAIL
58% leased
RETAIL
EUR 104.5 mln – the total price
for project under construction
82,000 sqm GLA in a very good location
in Northern Warsaw
2Q 2019 – expected completion
Project in cooperation with EPP
(target 30/70% joint-venture)
MŁOCINYGALERIA
55% leased
RETAIL
TOWAROWA 22SHOPPING EXPERIENCE OF THE FUTURE
Working full speed with designing
and permitting
30/70% joint-venture Echo and EPP
110,000 sqm retail and residential
mixed complex to be built
Plac Kazimierza
- new meeting point for Warsaw
LAND ACQUISITIONS
39
LAND
ACQUISITIONS
Securing the pipeline of projects
for 2020 and beyond
Ability to acquire and develop
big plots for mixed–use
projects
Negotiating resonable prices:
PLN 500 – 1000 per 1 sqm
of GLA / residential area
SALEOF NON CORE ASSETS
Non-core asset sales
since the begining of 2016
PLN 150 mln UNDER PRELIMINARY AGREEMENTS
Cracovia hotel, Kraków (1.7 ha)
Kiev (4.3 ha)
Zakład Ogrodniczy
Naramowice – Pamiątkowo (535 ha)
Lublin (105 ha)
Słupsk (7 ha)
Koszalin (4 ha)
Korona Brasov, Romania (5 ha)
45%reduction of passiveland bank Q1 2016 - Q1 2017
SECURING LAND
FOR 2020+
73,000 sqm
of GLA and
residential area
▪ Katowice,
Grundmanna
▪ Poznań, Garbary
▪ Wrocław,
West Link
2016 2017 SECURED
82,000 sqm
of GLA
▪ Łódź,
Piłsudskiego
▪ Gdańsk,
Solidarności
▪ Wrocław,
Powstańców Śl.
280,000 sqm
of GLA and
residential area
▪ Warsaw
▪ Kraków
▪ Wrocław
▪ Poznań
▪ Łódź
100,000 sqm
of GLA and
residential area
▪ Kraków
▪ Poznań
NEGOTIATIONS
1-3 years - to enter the new plot to the production
WELCOMETO OUR NEW OFFICE
APPENDIXCOMMERCIAL PORTFOLIO
ProjectNOI
EndPre-defined exit
routeComments
(EUR mn)
Wrocław, Nobilis Business House 2.9 completed P ROFO – EPP*
Warszawa, Babka Tower 1.2 completed
Szczecin, Galaxy (extension) 3.3 IV Q 2017 P Extension of EPP asset
Kraków, O3 Business Campus II 3.2 III Q 2017 P Forward – EPP
Łódź, Symetris Business Park II 1.6 III Q 2017 P Forward – EPP
Wrocław, Sagittarius Business House 4.5 IV Q 2017 P ROFO – EPP (1)
Szczecin, Outlet Park III 0.6 IV Q 2017 P Extension of EPP asset
Kraków, O3 Business Campus III 3.2 IV Q 2017 P Forward – EPP
Warszawa, Browary Warszawskie J 3.1 III Q 2018 P ROFO – Griffin Premium RE
Katowice, Galeria Libero 9 I Q 2018 P ROFO – EPP
Wrocław, West Link 2.5 I Q 2018 P Forward – Griffin Premium RE
Warszawa, Beethovena II 2.9 IV Q 2019 P ROFO – Griffin Premium RE
Warszawa, Galeria Mlociny 20.4 II Q 2019 P Joint venture with EPP
Katowice, Grundmanna I 3.8 IV Q 2019
Warszawa, Beethovena I 3.1 III Q 2019 P ROFO – Griffin Premium RE
Warszawa, Browary Warszawskie K 3.4 I Q 2020
Warszawa, Browary Warszawskie G 1.8 I Q 2020
Warszawa, Browary Warszawskie H 2.5 I Q 2020
Warszawa, Towarowa 22 (two stages) 36.4 IV Q 2020** P Joint venture with EPP
Katowice, Grundmanna II 3.9 IV Q 2020
* the asset is currently being sold in an open market process
AL. SOLIDARNOŚCI 36KIELCE, POLAND
WWW.ECHO.COM.PL