Company overview August 2014

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1 Company overview August 2014

2 Contents Introduction Financial data Real estate portfolio Pipeline: office projects shopping centers residential projects summary Our business drivers 2

3 Introduction 18 years of experience Focus on Poland Company overview NAV PLN m With EUR 1.5 billion in assets the Company is one of the largest real estate developers in the CEE region 37 cities PL Warsaw Kielce UA Kiev Echo covers the entire property development process, i.e. land acquisitions, development, commercialisation and asset management 4 countries HU Budapest RO The Company is focused on three business segments, i.e. office, retail and residential Bucharest Echo is active on CEE markets 109 completed projects sqm. built Headquarters Echo offices Structure of investment plans [GLA / URS*] Fig. 1. Management and employment c.a. 80 projects in the pipeline sqm. in the pipeline Shopping centers 17% 1,0 milion GLA/URS 24% Residential projects The Company is managed by three experienced and motivated professionals, who have built its success over the years: Mr Piotr Gromniak The President of the Management Board, 16 years with the Company Mr Artur Langner Vice-President of the Management Board, 15 years with the Company, Mr Waldemar Lesiak Vice-President of the Management Board, 17 years with the Company, 59% Office projects Company employes ca. 370 people Find Echo Investment Catalogue on the App Store * URS Usable Residential Space 3

4 Introduction Residential projects Shopping centers Hotels Office projects sqm. URS units 40 completed projects sqm. GLA lease agreements 33 completed projects sqm rooms 16 completed projects sqm. GLA 800 lease agreements 20 completed projects sqm. URS in the pipeline sqm. GLA in the pipeline sqm. GLA in the pipeline 4

5 Introduction Structure of completed projects [% of sqm] Fig % 80% 60% 40% 20% 0% E 2015 E Hotels Residential projects Office projects Shopping centers Echo on Stock Exchange [PLN per share] Fig. 2. Shareholders Fig ,0 Michał Sołowow 10,0 ING OFE Aviva OFE Aviva BZ WBK 8,0 29,45% PZU Złota Jesień OFE 31,20% 6,0 4,0 2,0 5,33% Aug. 27th ,00% 9,33% 45,88% Others No dilution since IPO 6,65% 12,37% Dec. 31st ,74% 41,04% 0, Buyback in 2012 of k shares (1,74%) (redemption in 2013) NAV per share 5

6 Introduction Organizational chart Fig. 1. Echo Investment has unique competencies in the market in the form of teams of experienced professionals: Echo s Management Board Architects create guidelines for the project and supervising architectural Technical Advisors (construction, HVAC, plumbing, BMS, etc.) Development Dept. Property Management Dept. Back Office Leasing Managers (office, retail, residential) In-house Lawyers Offices Financial Engineers in all disciplines responsible for valuation and procurement Shopping Centers Legal Project Managers managing investment process Site Managers managing construction process Residential IT Property Managers of Real Estate portfolio (asset & property management, marketing, debt collection) Technical Consultancy Marketing currently Company employes ca. 370 people, 30 experienced managers over 10 years in organization Site Supervision PR Procurement & Construction Cost Valuation HR 6

7 Financial data

8 Financial data Selected items from P&L statement [PLN m] Table 1. Revenue by segments Fig EUR/PLN exchange rate (end of a period) 4,11 3,96 4,42 4,09 4,15 4,16 2 Revenue Profit on commercial property sales Sales and General Administration Q2* Residential projects [PLN m] Q2* residential revenue No. of sold residential units [pc] Fair value change EBIT (excluding fair value change) Interests FX hedging Foreign currency loans valuation [MtM] Net profit Office and hotel projects [PLN m] Q2* rents general constructor provision Shopping centers [PLN m] Fair value change Q [PLN m / %] Fig ,9 15% 103,0 24% 18,0 4% PLN m ,7 13% 138,2 32% 49,3 12% valuation of vacancy space valuation of stands yield EUR exchange rate under construction other Q2* Revenue structure [%] 100% 8% 7% 9% 26% 19% 19% 30% 20% 18% 75% 33% 40% 12% 17% 20% 16% 50% 8% 71% 71% 25% 57% 59% 49% 58% 52% 57% 0% Q2* * cumulatively shopping centers offices & hotels appartments other 8

9 Financial data Loans by currency [PLN m] Fig. 1. Assets structure [PLN m] Fig % % eur 41% 41% 42% eur eur eur 46% eur 38% 38% eur eur Q2 48% 36% 24% 12% 0% Q2 EUR PLN net interest debt / total assets - cash investment property investment property under construction inventory cash other Loans by maturity and cash/free limits [PLN m] Fig. 3. NAV [PLN m] Fig GE Kielce Pasaż Grunwaldzki, Olimpia Galaxy, Veneda, Amber, A4, Malta ,47 3,91 4, , , , , ,80 6,50 5,20 3,90 2,60 1, from Q2 0,00 project finance bonds public bonds cash free overdraft limits overdraft nav nav per share 9

10 Real estate portfolio

11 Real estate portfolio Transactions on Polish Real Estate Market [EUR m] Fig. 1. Selected 2013/Q transactions on Polish Real Estate Market Table number of transactions: H1* 2014 H1* industrial & other office retail * source: JLL Local market attractivness - European investors survey 2014 Fig. 2. How do you rate the country s overall attractiveness as a location for real estate investment in 2014? Poland 67% 33% Germany 67% 32% UK 4% 60% 36% Sweden 5% 65% 30% Austria 6% 60% 34% Russia 12% 58% 30% Spain 16% 35% 49% Luxembourg 18% 47% 35% Turkey 20% 35% 45% Switzerland 20% 45% 35% Belgium 20% 55% 25% Netherlands 33% 54% 13% Ukraine 34% 57% 9% Italy 39% 44% 17% France 40% 45% 15% Unattractive Attractive Very attractive source: European real estate assets investment trend indicator 2014 by Valid Research & EY Office projects Warsaw CBD Prime Shopping center Prime GLA MV EUR m EUR/GLA Yield Buyer Seller 1 Kraków G. Kazimierz (50%) , ,00% IREEF GTC 2 Katowice Silesia , ,00% Allianz, ECE Immofinanz 3 Wrocław G.Dominikańska , ,15% Atrium ECE 4 Poznan City Center , ,80% Resolution / ECE Best BPO cities in Poland GLA MV EUR m EUR/GLA World rank Kraków Warszawa Wrocław Yield Buyer Seller 1 Atrium 1, Jana Pawła , ,85% Deka Skanska 2 Senator, Bielańska , ,75% Union Ghelamco 3 Rondo , ,80% RREEF Blackrock Warsaw CBD Fringe 1 Feniks, Żelazna , ,15% IVG Europlan/Griffin 2 Green Corner, Chłodna , ,50% RREEF Skanska Warsaw SW 1 Lipowy Office Park , ,75% W.P. Carey CA Immo Warsaw Mokotów 1 Platinium V, Domaniewska , ,70% Allianz GTC 2 New Citi, Marynarska , ,60% Hines ECI 3 Mokotów Nova, Wołoska , ,65% Tristan Ghelamco Regional cities 1 Wrocław Aquarius I , ,30% Azora Echo 2 Wrocław Aquarius II , ,30% Azora ECHO 3 Wrocław Green Day , ,00% GLL Skanska 4 Kraków CB Lubicz I/II , ,00% Griffin Real Estate Polonia AIB PKP/Trigranit/ Europa Capital source: Tholons 11

12 Real estate portfolio completed in 2014 Park Rozwoju I Office project in Warsaw A4 Biznes Park I Office project in Katowice Galeria Amber Shopping center in Kalisz sqm. GLA k EUR NOI Feb date of completion sqm. GLA k EUR NOI Feb date of completion sqm. GLA k EUR NOI Mar date of completion 12

13 Real estate portfolio GALERIA ECHO KIELCE OUTLET PARK Projects under management GLA [sqm] Target NOI [EUR m] Kielce Galeria Echo ,6 Wrocław Pasaż Grunwaldzki ,0 Szczecin Galaxy ,2 Kalisz Amber ,1 Bełchatów Olimpia ,2 Szczecin Outlet Park ,2 Łomża Veneda ,3 Jelenia Góra Galeria Echo (extension) ,2 Przemyśl Galeria Echo ,5 Shopping centers ,2 Poznań Malta Office Park ,2 Warszawa Park Rozwoju I ,1 Szczecin Oxygen ,8 Kielce Astra Park * ,6 Warsaw Postępu 3 (50%) ,9 Katowice - A4 I ,5 Warsaw Babka Tower ,1 Office projects ,2 Total ,4 Book value of portfolio vs Knight Frank valuations [EUR m] Fig. 1. MALTA OFFICE PARK Shopping centers Office projects 0 BV - Q BV - Q Knight Frank valuation raports * GLA & NOI excluding area of Echo headquarters Sold projects (2013 & Jan 2014) GLA [sqm] Target NOI [EUR m] Piotrków Galeria Echo ,7 Radom Galeria Echo ,0 Tarnów Galeria Echo ,0 Wrocław Aquarius I ,0 Wrocław Aquarius II (Jan 2014) ,7 FCF [EUR m] Total ,

14 Office projects pipeline

15 Office projects Office market Q [thous. GLA] Fig. 1. Prime headline rents in Warsaw [EUR/sqm/month] Fig. 2. Stock Gross take-up Vacancy Rate 2013 Q H Q Warszawa ,0 258,9 8,8% 11,7% 13,4% Kraków ,5 58,8 4,9% 5,0% 4,5% Wrocław ,7 26,5 8,8% 10,8% 10,0% Trójmiasto ,4 21,8 10,8% 12,5% 14,2% Katowice ,7 35,3 10,0% 9,0% 7,5% Poznań ,8 12,3 13,6% 14,6% 11,5% Łódź ,9 17,6 13,7% 13,5% 9,2% Regions ,0 172,3 Source: JLL Q Source: JLL, Q Office completion, Future Supply and Vacancy Rate in Warsaw Fig. 3. Prime headline rents [EUR/sqm/month] Fig. 4. Wrocław Poznań Kraków Katowice Trójmiasto Szczecin Łódź Euro/sqm/month Source: JLL, Q Source: JLL, Q

16 Office projects Warsaw Park Rozwoju Warsaw Q 22 Warsaw Beethovena sqm GLA k EUR NOI I H 2015 date of completion sqm GLA k EUR NOI II H 2016 date of completion sqm. GLA k EUR NOI I H 2015 date of start 16

17 Office projects Wrocław West Gate Investment plans [k GLA ] Fig. 1. Project GLA NOI Construction [sqm] [EUR m] Start Finish Poland Completed 250 k GLA 30% In the pipeline after k GLA Warsaw, Q ,9 II H 2013 II H 2016 Warsaw, Park Rozwoju II ,8 II H 2013 I H 2015 Warsaw, Browary I - IV ,4 I H 2016 I H k GLA 48% Warsaw, Beethovena I ,5 I H 2015 II H 2016 Warsaw, Beethovena II III ,8 II H 2016 II H 2019 Wrocław Plac Grunwaldzki Under construction 137 k GLA 16% 6% Planned to launch in k GLA In the pipeline [k GLA] Fig. 2. Warsaw, Taśmowa I ,7 II H 2014 I H 2016 Warsaw, Taśmowa II IV ,1 II H 2015 I H 2020 Kraków, Opolska I ,5 I H 2014 II H 2015 Kraków, Opolska II III ,9 II H 2015 II H 2018 Wrocław, West Gate ,9 I H 2013 II H 2014 Wrocław, Plac Grunwaldzki ,0 II H 2014 II H 2015 Wrocław, Sucha I II ,0 I H 2015 I H 2017 Gdańsk, Tryton ,1 II H 2013 I H 2015 Katowice, A4 Business Park II ,6 II H 2013 II H 2014 Katowice, A4 Business Park III ,1 II H 2014 I H 2016 Poznań, Hetmańska I ,4 I H 2015 I H 2016 Poznań, Hetmańska II III ,9 I H 2016 II H 2020 Wrocław Sucha Kiev 108 Łódź, Aurus I ,6 II H 2014 II H 2015 Łódź, Aurus II ,6 II H 2015 II H 2016 Łódź Poznań Katowice Gdańsk k GLA Warsaw Total ,8 Abroad Kiev, Dehtiarivska I * ,8 Kiev, Dehtiarivska II-VI * ,3 Wrocław Kraków Total ,1 TOTAL ,9 GREEN projects under construction * start of construction depends on stabilization of the political situation in Ukraine Plot purchased in

18 Shopping centers pipeline

19 Serbia Greece Ukraine Bulgaria Turkey Russia Belgium Romania Germany Czech Rep. Hungary Slovakia Poland Italy Spain Croatia UE-27 average France United Kingdom Portugal Latvia Lithuania Denmark Austria Finland Netherlands Slovenia Ireland Estonia Sweden Shopping centers Investment plans [k GLA] Fig. 1. Projects GLA NOI Construction [sqm] [EUR m] Start Finish Completed 427 k GLA 71% 600 k GLA 26% 3% In the pipeline 154 k GLA Under construction 19 k GLA Poland Jelenia Góra, (extension) Szczecin, Galaxy (extension) (change) (target) (change) (target) Δ (31 400) Δ (56 900) Δ 3,0 (4,2) Δ 3,0 (15,2) II H 2013 I H 2015 I H 2015 II H 2016 Katowice, Kościuszki ,3 I H 2015 II H 2016 Szczecin, Outlet Park II ,8 I H 2015 II H 2015 Szczecin, Outlet Park III * Retail sales dynamics * [%] Fig. 2. Poznań, Hetmańska * ,2 Total , * source: Eurostat, = 100 except of motor vehicles, motorcycles and fuel GLA per citizens Fig. 3. Abroad Brasov (Romania), Korona * ,3 Budapest (Hungary), Mundo * ,6 Total ,9 TOTAL ,2 GREEN projects under construction * concept phase

20 Residential projects pipeline

21 Residential projects Investment plan [units] Fig. 1. Offered on the market [units] Fig. 2. In the pipeline [units] Fig. 3. Offered (completed) 140 2% 771 9% Offered (under construction) 112 1% Planned to launch in 2014 Łódź % Kielce 85 9% Warsaw % Łódź % Kielce 101 3% % Warsaw Sold % units % In the pipeline after 2014 Wrocław % Kraków 75 8% 911 units % Poznań Wrocław 195 6% Kraków % units % Poznań Units launched for sale and sold quarterly vs. the volume of the offer * Fig. 4. Statistics of residential construction in Poland * Fig. 5. Data for Warsaw, Kraków, Wrocław, Trójmiasto, Poznań and Łódź * source: REAS 21

22 Residential projects NOWY MOKOTÓW Project URS Units Revenue Construction [sqm] [pcs] [PLN m] Start Finish Warszawa Klimt House, Kazimierzowska ,0 I H 2008 I H 2011 Nowy Mokotów, Konstruktorska I ,0 II H 2012 II H 2014 Nowy Mokotów, Konstruktorska II ,5 I H 2014 I H 2016 Nowy Mokotów, Konstruktorska III-IV ,4 II H 2016 II H 2018 Princess, Puławska ,8 I H 2015 II H 2016 Browary, Grzybowska ,7 I H 2016 II H 2019 KASZTANOWA ALEJA Rezydencje Leśne, Młociny, plots ,3 II H 2010 II H 2012 Total Warszawa Plots for sale Poznań ,4 42,3 Kasztanowa Aleja II ,8 II H 2012 II H 2014 Pod Klonami (terraced houses) I-III ,2 I H 2012 I H 2016 Osiedle Jaśminowe I ,2 I H 2013 I H 2015 Osiedle Jaśminowe II-IV ,6 I H 2015 I H 2019 Sowińskiego I ,3 I H 2014 II H 2015 Sowińskiego II ,2 II H 2014 I H 2016 Sowińskiego III-IV ,4 II H2015 I H 2019 Jackowskiego ,4 I H 2015 II H 2016 HORTUS APARTMENTS Sołacz, plots ,0 I H 2015 II H 2016 Total Poznań Plots for sale Kraków ,1 11,0 Hortus Apartments ,1 II H 2012 II H 2014 Bronowicka ,0 II H 2013 II H 2015 Tyniecka / Czarodziejska ,6 II H 2014 I H 2016 Spiska I ,1 II H 2014 II H 2016 Spiska II-III ,5 II H 2016 I H 2020 Kościuszki ,8 I H 2015 II H 2016 Rydla ,8 I H 2015 I H 2017 Plots purchased in 2014 Total Kraków ,9 GREEN projects offered on the market 22

23 Residential projects PRZY SŁOWIAŃSKIM WZGÓRZU Wrocław Project URS Units Revenue Construction [sqm] [pcs] [PLN m] Start Finish Przy Słowiańskim Wzgórzu ,3 I H 2010 I H 2012 Grota 111 I ,5 II H 2013 II H 2015 Grota 111 II III ,7 II H 2015 II H 2019 Total Wrocław ,5 Łódź Osiedle Jarzębinowe I ,6 II H 2011 I H 2013 Osiedle Jarzębinowe II ,7 I H 2014 II H 2015 OSIEDLE JARZĘBINOWE Osiedle Jarzębinowe III V ,1 II H 2015 II H 2021 Wodna I II ,2 I H 2015 II H 2018 Total Łódź ,6 Kielce Osiedle Południowe, Dyminy I plots ,0 II H 2010 II H 2012 Osiedle Południowe, Dyminy II plots ,4 II H 2011 II H 2012 Osiedle Południowe, Dyminy III plots ,6 II H 2013 II H 2014 Zielone Tarasy ,3 II H 2014 II H 2015 OSIEDLE POŁUDNIOWE Występa plots ,2 I H 2016 I H 2017 Total Kielce Plots for sale ,3 44,2 Apartments in total ,8 Plots in total ,5 Other real estates Poznań, Naramowice, plots * Lublin, Poligonowa, plots * Total other real estates GREEN projects offered on the market * concept phase Plots purchased in

24 Pipeline - summary

25 Pipeline - summary GLA/URS [%] Fig. 1. Capex structure [%] Fig. 2. Market Value [%] Fig. 3. Shopping centers 17% 24% Residential projects Shopping centers 19% 17% Residential projects Shopping centers 19% 18% Residential projects 1,0 milion GLA/URS 5,3 bilion PLN 11,0 bilion PLN 59% Office projects 64% Office projects Yield 7,5% EUR = 4,15 PLN 63% Office projects Completion of projects [GLA / URS] until Total Apartments * 237,3 7,8 (2) 23,3 (3) 31,4 (7) 56,4(10) 39,3 (6) 46,5 (5) 32,7 (5) 16,1 (1) 11,6 (1) 257,3 (38) Office projects 214,6 9,3 (1) 52,3 (4) 85,9 (5) 134,0 (7) 109,3 (7) 74,4 (4) 48,0 (3) 65,7 (4) 40,4 (2) 17,9 (1) 627,9 (37) Hotels 81,3 7,3 (1) Shopping centers 378,4 15,2 (1) 33,6 (1) 18,6 (1) 81,0 (4) 36,3 (1) 33,3 (1) 202,8 (8) Total 911,6 39,6 (5) 109,2 (8) 135,9 (13) 271,4 (21) 184,9 (14) 154,2 (10) 80,7 (8) 81,8 (5) 52,0 (3) 17,9 (1) 1 088,0 (83) * residential area only, excluding plots Planned capex [PLN m] 2013 E Total Apartments Office projects Shopping centers Total

26 Our business drivers

27 Our business drivers Value drivers Economy and sector situation European economy out of the woods Economic recovery in Poland on track Growing volume on secondary market for commercial real estate in Poland Polish market on its way from emerging to developed one High risk premium expected to decrease with ongoing improvement on market Echo Investment The largest listed real estate company in Poland Solid balance sheet and strong liquidity Conservative book valuation Self sufficient, flexible organization and experienced, motivated team Strong pipeline 27

28 sqm. / 17 projects under construction Park Rozwoju II, Warsaw West Gate, Wrocław Tryton, Gdańsk A4 II, Katowice Opolska I, Kraków GLA sqm. Completion I H 2015 GLA sqm. Completion II H 2014 GLA sqm. Completion I H 2015 GLA sqm. Completion II H 2014 GLA sqm. Completion II H 2015 Q22, Warsaw GLA sqm. Completion II H 2016 Galeria Sudecka, Jelenia Góra GLA sqm. Completion I H 2015 Osiedle Południowe (plots), Kielce Plot area sqm. Completion II H 2014 Nowy Mokotów I, Warsaw URS sqm. Completion II H 2014 Nowy Mokotów II, Warsaw URS sqm. Completion I H 2016 Pod Klonami (terraced), Poznań URS sqm. Completion I H 2016 Osiedle Jaśminowe I, Poznań Park Sowińskiego I, Poznań Hortus Apartments, Kraków Bronowicka 42, Kraków Grota 111 I, Wrocław Osiedle Jarzębinowe II, Łódź URS sqm. Completion I H 2015 URS sqm. Completion II H 2015 URS sqm. Completion II H 2014 URS sqm. Completion II H 2015 URS sqm. Completion II H 2015 URS sqm. Completion II H

29 Thank you