STEEN & STRØM COMPANY PRESENTATION · PDF fileSTEEN & STRØM COMPANY PRESENTATION . 2017 Steen & Strøm / 2 Agenda points ... H&M 11 592.4 33,438 Meny 5 537.9 50,632 Vinmonopolet

STEEN & STRØM

COMPANY PRESENTATION

2 2017 Steen & Strøm /

Agenda points

Strong portfolio of tier 1 assets

Strong and supportive ownership

Conservative financial profile

A- assigned rating from S&P


The Company

Asset portolio

Investment focus

Operations

SCANDINAVIA

Stockholm

4

Denmark Norway Sweden

Shopping

centers

3 10 5

Visitors,

million

22 38 27

Shopping

center

turnover

595

million €

1.3

billion €

847

million €

Number

of stores

310 785 505

Leasable

area, sqm

130 300 275 000 231 300

2017 Steen & Strøm /

Key figures 2016

• 18 shopping centers in Denmark,

Norway and Sweden

• 90 million visitors

• 2.7 billion euro in shopping center

turnover

• 1 700 stores

• 636 000 sq.m. leasable area

Oslo

Copenhagen

Clearly defined operating and investment strategy


Ownership, development and

management of attractive shopping

centers in Scandinavia.

Assets located in densely populated

areas with strong demographics and

growth.

Target no.1 centers in catchment area

with limited options for new competitors.

Asset rotation – active divestment and

reinvestment strategy with focus on

large centers in urban areas.

Investment focus Development Management focus

Securing the right balance between

stabilized assets and development

projects.

Development risk is limited due to pre-let

requirements, normally turn-key

construction contracts and increased ROI target.

Low exposure to development projects

(<5% of assets) and low investment pace

going forward.

Active renegotiation and retenanting to

achieve high reversion at each center.

Business plans include 3-year leasing,

marketing and development plans that

act as road map.

Thorough benchmarking ahead of each re-lease to secure right tenant at right

rent level (OCR).

Active strategy to increase reinvoicing

potential.

ROI – Return on Investment

OCR – Occupancy Cost Ratio

Asset rotation strategy to continually optimize portfolio


Focus on strengthening portfolio and reducing leverage

Divestment of smaller, rural, primarily car-based centers or assets meeting increased competition.

Sales proceeds from divestments mainly used for debt redemption.

New investments focused on 3-4 largest cities in each country, public transportation connectivity and high-growth areas.

0

500

1 000

1 500

2 000

Markedet

Torvbyen

Lillestrøm

Oslo City

Turnover (million)

Åsane

Stovner

Etage

MittiCity

Torp Mirum

Sollentuna

Avg. Sweden

Avg. Norway

Halden Familia

Sweden Norway

Sale of 4

Norwegian

centers to

Citycon for

~2bn NOK

2013

Sale of 5

Swedish

centers to

Olav Thon

for ~3.2bn

SEK

2014

Acquisition

of Oslo City

for ~3.3bn

NOK

2015

Sale of

Åsane and

Torp to

Thon and

Lillestrøm to

DNB (~3bn

NOK)

2016

Økern

develop-

ment

~1.5bn

NOK

Future

Emporia,

Malmö

Galleria Boulevard,

Kristianstad

Økern Sentrum,

Oslo

Oslo City,

Oslo

Strong portfolio of major shopping centers


No. 1 retail destinations within catchment

Urban locations with good connectivity

Newer shopping centers with high standard

High occupancy rate

EPRA occupancy rate

95,1%96,4%97,2%

Sweden

Total: 96.5%

Norway Denmark

Focus on Tier 1 shopping centers

16,4%13,9%13,6% Total: 14.2%

Norway Sweden Denmark

0,0%

0,3%

0,5%

Total: 0.3%

Norway Sweden Denmark

Occupancy cost ratio

Late payments rate

Low vacancy

Sustainable OCR

Low late payments

EPRA – European Public Real Estate Association

Good operational performance: Like-for-like turnover evolution


9,29,18,9

8,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

5,5

6,0

6,5

7,0

7,5

8,0

8,5

9,0

9,5

bn NOK +8%

2016 2015 2014 2013

LFL portfolio

7,57,3

6,96,6

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

5,5

6,0

6,5

7,0

7,5

bn SEK

+14%

2016 2015 2014 2013

LFL portfolio

3,73,6

3,43,4

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

1,8

2,0

2,2

2,4

2,6

2,8

3,0

3,2

3,4

3,6

3,8

2014 2013

bn DKK +9%

2016 2015

LFL portfolio

ex Oslo City

Excludes effect of Vinterbro renovation and Kristianstad (successive development)

Good operational performance: Like-for-like NRI growth


2,0%2,5%

3,7%

1,5%

2,0%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

5,5%

6,0%

2,7%

0,2%

2015

3,5%

Avg. 4.0%

Q1 2017

5,7%

2016

Average indexation

NRI like-for-like growth above indexation

4,3%

6,4%

1,8%

1,2%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

5,5%

6,0%

6,5%

2015

6,4%

0,0%

4,4%

0,1%

Avg. 4.6%

Q1 2017

3,0%

2016

Average indexation


1,8% 1,9% 2,1%

5,2%5,7%

3,1%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

5,5%

6,0%

6,5%

7,0%

7,5%

8,0%

2015

7,6%

7,0%

Avg. 6.6%

Q1 2017

5,2%

2016

Average indexation


NRI – Net Rental Income

Main tenants are recognized brands with low credit risk


Top 10 brands in each country

~33% of total turnover

NOR top 10 # stores GTO

(MNOK)

TO sqm (NOK)

Coop 3 918.6 61,442

H&M 11 592.4 33,438

Meny 5 537.9 50,632

Vinmonopolet 4 449.9 188,489

Apotek 1 6 288.4 158,629

Cubus 9 222.4 30,102

Elkjøp 1 194.0 103,542

Clas Ohlson 5 170.4 46,935

Kappahl 8 164.9 24,446

XXL 1 160.9 43,044

Total 53 3,699.8 49,813

SWE top 10 # stores GTO

(MSEK)

TO sqm (DKK)

ICA 3 789.4 55,024

Willy’s 2 373.4 50,661

H&M 4 331.5 40,879

Stadium 6 302.1 33,356

Clas Ohlson 4 196.4 33,917

Telenor 4 148.1 298,618

Kappahl 4 136.7 29,098

Apoteket 4 131.6 116,180

Kicks 5 125.2 115,526

Jula 1 122.6 43,603

Total 37 2,657.0 48,406

DEN top 10 # stores GTO

(MDKK)

TO sqm (DKK)

H&M 4 289.9 37,044

Elgiganten 1 253.1 98,546

Kvickly 2 145.1 28,627

Magasin 1 141.1 21,448

Bahne 2 78.9 25,754

Sportmaster 3 75.9 35,261

Imerco 3 56.8 48,764

Zara 1 52.2 40,386

Sport 24 3 47.3 22,741

Toys R’ Us 1 47.1 42,464

Total 21 1,187.3 35,421

~33% of total turnover ~33% of total turnover

Total current portfolio value with SST ownership: ~37bn NOK


Portfolio valuation on 100% basis

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

5,5%

6,0%

7,0

16,0

17,0

8,0

15,0

14,0

13,0

10,0

11,0

18,0

12,0

9,0

5,0

6,0

4,0

3,0

2,0

1,0

0,0

15,1

11,2

3,9

Q4 2016 Q2 2017

12,4

10,4

3,4

2,7 2,7

10,9 11,2

17,1

13,0

Q2 2016

3,5

14,7

bn NOK

2,6

Q4 2015

9,8

Q2 2015

Divested assets

New assets

Average cap rate

Current portfolio

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

5,5%

3,0

2,0

4,0

0,0

1,0

7,0

10,0

8,0

11,0

6,0

12,0

13,0

14,0

5,0

9,0

Q2 2017

12,4

11,2

1,2

12,4

bn SEK

10,4

1,2

Q4 2016

12,0

1,3

Q4 2015

12,5

Q2 2015

11,6

13,3

Q2 2016

Average cap rate Current portfolio

Divested assets

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

5,5%

1,0

0,0

0,5

4,0

2,0

8,0

3,0

5,5

3,5

7,5

5,0

4,5

7,0

2,5

6,5

1,5

6,0

Q2 2017 Q4 2016

7,7

bn DKK

Q2 2016

7,6

Q4 2015

7,2

Q2 2015

7,0

7,8

Current portfolio Average cap rate


Ownership

Corporate structure

Integration

Support

Group structure and ownership


Group corporate structure

Klépierre APG

Steen &

Strøm AS

S&S Holding

AB

S&S Holding

A/S

Swedish

propco’s

Danish

propco’s

Norwegian

propco’s

56.1% 43.9%

100% 100%

Strong owners with real estate competence

~150 shopping centers in 57 cities in 16

countries.

22.8bn EUR property portfolio.

Simon Group largest shareholder (20.3%).

Pension fund for government and

education employees in the Netherlands.

344bn EUR under management (one of

top five pension funds in the world).

More than 27bn EUR invested in real

estate.

Propco – SPVs with ownership of individual assets

Active ownership and support


Klépierre holds 3 of 5 seats on

the Board of Directors (CEO,

CFO and COO in Klépierre).

APG holds 2 of 5 seats

(Managing Director and

Head of Listed European Real

Estate at APG).

All major company decisions

are made by the Board.

Board and management Operations Financial policy Supportive ownership

All investment / operational

decisions are made by

Klépierre management or the

Board (low threshold ~1m

EUR).

All leasing contracts are

validated by Klépierre

management.

Fully integrated IT and ERP

systems with Klépierre.

Direct operational reporting

on all levels to Klépierre.

Financial policy decided on

Board level and executed in

coordination with Klépierre.

Separate funding in SST, but

all major funding decisions

made by Klépierre or by the

Board.

Strict focus on long-term

credit targets: LTV below 40%,

Net debt to EBITDA below

8.5x and IC minimum 3x.

Klépierre and APG

contributed equity of 1.5bn

NOK to SST in 2011 and 1.3bn

NOK in 2015.

Dividend policy based on

actual capacity with strict

credit targets.

Payment to shareholders will

not conflict with upholding

rating.

Klépierre and APG are long-

term owners of Steen &

Strøm.


Funding

Financial policies

Credit metrics

General financial policies and overview


Current credit steering targets

LTV below 40%.

IC above 3x.

Net debt to EBITDA below 8.5x.

Adj. Debt-to-debt plus equity below 50%;

Adj. EBITDA interest coverage above 2.4x

(S&P definitions commensurate with A-

rating)

Shareholder distribution

Based on actual dividend capacity up

towards 70% of FFO.

Dividend adjusted to meet credit steering

targets and uphold rating (A-).

LTV: 33%

IC: 4.8x

Equity ratio: 55%

Hedging ratio: 67%

Hedging duration:

3.6 years

Debt duration: 11

years

Liquidity management

Sufficient credit lines and liquidity to cover

short-term needs.

Excess liquidity steered towards zero.

Excellent access to funding from external

sources or owners if necessary.

Funding policies

Target all new funding on unsecured basis.

Funding obtained in capital markets or

with strong credit institutions in

Scandinavia with investment grade rating.

Target maximum 20% of outstanding loans

with maturity less than one year.

Target interest rate hedging ratio of

minimum 60% with average maturity

above 3 years.

Loan covenants limited to min. 20% equity

share and change of control.

Figures as of 30.06.2017

S&S funding policies checked by group financial profile


Loan-to-value

33%

38%

Klépierre Steen & Strøm

Klépierre funding policies and link to Steen & Strøm

Group LTV target of 35% - 40% at any time

Group hedging target of >70% at any time

Limited use of secured financing (mainly Swedish / Danish mortgage loans remaining)

Maintain sufficient and qualitative liquidity – group liquidity resources of EUR 3.1bn in cash, RCFs and undrawn overdraft facilities

Interest coverage

4,8x

6,0x

Klépierre Steen & Strøm

Net debt to EBITDA

8,1x8,9x

Steen & Strøm Klépierre

Hedging ratio

67%

92%

Steen & Strøm Klépierre

Steen & Strøm makes up 17-18% of Group NRI and asset values. The financial risk profile of the company is strongly linked to

Klépierre and the official public credit rating of A- for the Group

RCF – Revolving Credit Facility

Credit metrics continue to strengthen (1/2)


12,212,4

16,1

13,9

16,616,315,715,815,5

-21%

2009 2010 2011 2012 2016 2013 2014 2015 Q2-17

Net interest bearing debt (bn NOK)

33%34%

43%46%

53%56%55%

60%62%

-47%

2012 2011 2015 2014 2013 Q2-17 2016 2010 2009

Net loan to value (%)

Strong debt reduction and improvement in LTV

Credit metrics continue to strengthen (2/2)


55%

51%

45%

41%

36%

31%32%

28%27%

2016 2013 2012 2009 Q2-17

+99%

2015 2014 2011 2010

Book equity ratio(%)

4,8x

3,9x

2,4x2,3x

2,0x1,9x2,0x1,8x

2015 2014 2016 2013 2011 2010 2009 2012

+167%

Interest cover ratio(x)

Solidity and interest cover strengthened

Diversified funding base


8,6

Currency

12,8

4,2

12,8

4,2

12,8

3,6

5,0

1,9

10,9

12,8

Security

3,4

SEK

DKK

Loan type Fixed / Floating

1,6

7,9

NOK

CDs

Bonds

Real-kredit

39%

Floating

Unsecured

Secured

28%

33%

12%

27%

61%

15%

85%

33%

67%

LTV steering target Lowest funding cost 60% min. hedging 67% unsecured -> 2020

Fixed

Total gross debt as of Q2-17 in bn NOK

53% pledged assets with expected 27% in 2020


Property values as per Q2-17, excluding projects and building rights

36 97436 974

7 797

12 372

15 101

9 893

7 797

10 068

0

100%

81%

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Property value (MNOK)

Total expected 2020 (NOK) Total current (NOK) Sweden (SEK)

19 642

0%

53%

27%

Norway (NOK)

% pledged

Denmark (DKK)

Of which property value of pledged Total property value % pledged of total assets

Situation after refinancing in

September 2017

Situation after refinancing of

Swedish realkredit loans until 2020

Commitment to new funding on unsecured basis


% of total debt that is secured

Refinancing: 620 MNOK secured bond

(Gulskogen) 600 MNOK secured Realkredit

loan (Farmandstredet)

0%

33%

57%

67%

Refinancing DKK -> future Current Refinancing NOK -> Sep 2017 Refinancing SEK -> 2020

Refinancing: 3.1bn SEK Realkredit /

Nykredit loans (Emporia, Marieberg, Allum)

Refinancing: 3.2bn DKK Realkredit /

Nykredit loans (Field’s, Bruun’s, Bryggen)

*Following the September-17 refinancing Secured Debt to Total Asset Values = 18.3%

Average debt maturity of 11 years


Annual debt maturity in bn NOK (as of Q2-17)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

26%

28%

30%

32%

34%4,0

3,5

3,0

2,5

2,0

1,5

1,0

0,5

0,0 >9yr

3,5

8-9yr

0,4

7-8yr

0,4

6-7yr

1,3

0,8

0,5

5-6yr

0,9

0,4

0,5

4-5yr

0,8

0,4

0,5

3-4yr

0,3

2-3yr

0,3

1-2yr

0,9

0,6

0,3

< 1yr

4,0

0,8

1,6

1,6

Realkredit Bonds CP % of total ex CDs

Weighted duration = 11.0 years (12.5 years excluding CPs)

CP – Commercial Paper

Current hedging ratio of 67%


Hedging ratio and fixed margin duration. Outstanding loans and hedges in bn NOK

62%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

8

13

12

11

10

9

7

6

5

4

3

2

1

0 2019

5,5

7,6

41%

43%

2018

7,5 7,9

59%

7,7

8,8

72%

60%

Q2 2017

8,5

2017

67%

0,9

5,5

9%

7%

2021

12,8

2,7

6,4

17% 21%

2020

4,3

7,2

22%

34%

2025

3,5

5%

0%

2024

3,9

5%

0%

2023

0,5

4,2

5% 4%

2022

Outstanding hedges Outstanding loans Fixed margin Interest hedge

Weighted duration of hedges and fixed loans = 3.6 years


Official rating

Rating rationale

Impact on S&S

Assigned A- rating from S&P


Attractive and robust quality of assets

Strategic locations in strong catchment areas, benefiting

from strong macroeconomic fundamentals

Well balanced portfolio between Norway, Sweden and

Denmark

High footfalls

Low vacancy

Large number of tenants (10 largest tenants represents less

than 33% of rental income) with high retention

Limited development risk (<5% of assets)

LTV less than 40% / debt to debt plus equity ratio 46%

Stand-alone rating rationale Core subsidiary of Klépierre

Integral to the group’s current identity and future strategy

17% of group’s net rental income

SST assets outperform group’s average

Sole investment vehicle for the Nordic market with strong fundamentals

Leverage and financial discipline commensurate with

Klépierre

History of support and capital injections

Change of control in loan documentation

Steen & Strøm as a public rated entity

Disciplinary effect on capital structure and funding of investments

S&P debt to debt plus equity threshold of 50%

S&P adj. EBITDA to interest coverage above 2.4x

Further alignment of funding policies with Klépierre (A-)

Access to wider range of funding sources and maturities

APPENDIX


Portfolio overview

28 2017 Steen & Strøm / Following the September-17 refinancing Net Operating Income (NOI) from encumbered assets = 48.2%

All figures in local currency

Center Country City Ownership Co-owner

Asset

value

Net leasable

area*

Gross rent

F2017

Net rent

F2017 Footfall

Financial

occupancy

Pledged assets

following Sep

refinancing

(%) (million) (sqm) (million) (million) (m people) (%)

Oslo City Norway Oslo 100 % 3 861 22 729 183,0 170,2 10,6 99,0% Unencumbered

Gulskogen Norway Drammen 100 % 2 126 38 704 106,6 103,7 3,2 98,8% Unencumbered

Farmandstredet Norway Tønsberg 100 % 2 026 32 249 108,9 100,1 4,7 99,0% Unencumbered

Metro Norway Lørenskog 50 % Storebrand 1 664 51 337 92,5 79,6 3,9 96,4% Unencumbered

Vinterbro Norway Ås 100 % 1 446 41 648 87,4 73,3 3,2 98,0% Unencumbered

Amanda Norway Haugesund 100 % 890 14 542 55,4 50,8 2,6 98,8% Unencumbered

Arkaden Norway Stavanger 100 % 784 19 818 51,1 42,6 4,6 97,3% Unencumbered

Maxi Norway Hamar 100 % 740 20 760 45,3 39,4 1,5 90,6% Unencumbered

Nordbyen Norway Larv ik 50 % KLP 659 15 955 38,9 34,5 1,4 98,4% Unencumbered

Nerstranda Norway Tromsø 100 % 589 11 701 35,2 31,2 2,1 95,8% Unencumbered

Emporia Sweden Malmö 100 % 5 390 65 585 226,4 201,8 7,0 93,6% Encumbered

Allum Sweden Gothenburg 100 % 2 458 50 288 118,8 106,9 5,5 94,8% Encumbered

Marieberg Sweden Örebro 100 % 2 221 32 008 107,0 102,4 4,6 94,1% Encumbered

Kupolen Sweden Borlange 100 % 1 673 49 042 99,8 89,2 4,3 94,3% Unencumbered

Galleria Boulevard Sweden Kristianstad 100 % 631 20 448 37,8 25,1 5,8 71,9% Unencumbered

Field's Denmark Copenhagen 100 % 4 466 74 710 227,3 202,7 8,3 91,8% Encumbered

Bruun's Denmark Aarhus 100 % 2 814 32 636 150,5 141,5 10,9 98,0% Encumbered

Bryggen Denmark Vejle 100 % 517 19 173 39,1 24,7 3,2 79,2% Encumbered

*Physical shop / office lease area. Excludes storage, common areas, parking areas etc.

Disclaimer


This document has been prepared by Steen & Strøm (“The Company”). This document is not to be reproduced or distributed, in whole or in

part, by any person other than the Company. The Company takes no responsibility for the use of these materials by any person. The

information contained in this document has not been subject to independent verification and no representation, warranty or undertaking,

express or implied, is made as to, and no reliance may be placed on, the fairness, accuracy, completeness or correctness of the information or

opinions contained herein. Neither the Company nor its shareholders, its advisors, its representatives or any other person shall be held liable for

any loss arising from any use of this document or its contents or otherwise arising in connection with this document. In the event of any

discrepancies between the information contained in this document and the public documents, the latter shall prevail. This document does not

constitute an offer to sell or an invitation or solicitation of an offer to subscribe for or purchase any securities, and this shall not form the basis for or be used for any such offer or invitation or other contract or engagement in any jurisdiction.

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STEEN & STRØM COMPANY PRESENTATION · PDF fileSTEEN & STRØM COMPANY PRESENTATION . 2017 Steen & Strøm / 2 Agenda points ... H&M 11 592.4 33,438 Meny 5 537.9 50,632 Vinmonopolet