Acquisition increases future earning capacity - YEAR-END REPORT 2021 - Eastnine
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YEAR-END REPORT 2021
Acquisition increases
future earning capacity
1
Eastnine company highlights
I Baltic yields at Nordic risk levels II Solid market fundamentals
GDP per capita (2015 = 100)
• Portfolio of prime office properties in 140
• Superior growth prospects compared
Vilnius and Riga with a yield of 4.8 %1, to the Nordics
130
complemented by a strategy also Nordics • Business-friendly climate with top
encompassing logistics properties 120 & EU
rankings in ease of doing business
• Nordic & international corporates are 110
index
amongst largest tenants 100
Riga
• Poland is evaluated as an investment
Latvia Lithuania
90
2018
2015
2016
2017
2019
2020
2021E
2022E
2023E
2024E
2025E
market
Vilnius
1) Earning capacity
III Best-in-class ESG credentials IV Prudent financial risk profile
Net LTVP & Equity ratio (%)
• 81 % of Eastnine’s gross property 100 • Net LTVP of 45 % and the equity ratio
81% area is sustainability certified 90
80
of 58 %
Certified properties 70
• 26 % of financing is green 60 • First loan maturity in September 2023
50
40
30
20
10
0
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Equity ratio
Net LTVP
2
Strong Baltic economies
GDP-growth Inflation Property yield
% % %
10 8 8
8 7
7
6 6
4 5
6
2 4
0 3 5
-2 2
-4 4
1
-6 0
3
-8 -1
-10 -2 2
2018 2019 2020 2021P 2022P 2023P 2018 2019 2020 2021 2022P 2023P 2018 Q3 2019 Q3 2020 Q3 2021 Q3
Q1 Q1 Q1 Q1
Lithuania Latvia Estonia Lithuania Latvia Estonia Office Estonia Office Latvia
Euro Sweden Euro Sweden Office Lithuania Office Sweden
Industrial Estonia Industrial Latvia
1 Annual change 1 Annual change Industrial Lithuania Industrial Sweden
Source: Eurostat, Swedbank economic outlook Source: Eurostat, Swedbank economic outlook 1 Annual change
Source: Colliers, Newsec
3
Properties in Vilnius
• Total of nine office CBD-area Parliament district New town
properties and one
development project; S7-1 3Bures-1,2 Vertas-1 Uptown Park
3Bures-4.
• Fair value of EUR 389m,
83 % of Eastnine’s
property portfolio.
• More than 120,600 sq.m.
in existing buildings, on S7-2 3Bures-3 Vertas-2
average 13,400 sq.m per
property.
• Around 12,600 GLA
sq.m. to be constructed.
• High occupancy ~93 %
S7-3 Uniq
Project 3Bures-4
4
Properties in Riga
• Total of three office Krisjana Valdemara street/City centre
properties and two
development projects; Valdemara Centrs Alojas Biroji
The Pine and Kimmel.
• Fair value of EUR 81m,
17 % of Eastnine’s
property portfolio.
• Around 22,600 sq.m. Project The Pine
in existing buildings,
on average 7,500 Zala 1
sq.m. per property.
• Around 47,000 sq.m.
to be constructed.
• Low, but increasing
occupancy ~74 % Project Kimmel
5
Property investment and tenants
Vinted and
Bentley Systems
new tenants
among top ten
Portfolio of uniquely high-quality office properties in the Baltics Tenant base consisting of recognised international corporates
13 properties Type Country
Tenants % of annual contracted rent
Directly owned (Industry) (HQ)
1 26% Finance
143,200
Total lettable area
2 12% ICT
3 8% Finance
EUR 470m 4 8% ICT
Value of property portfolio
S7-2, Vilnius 3Bures-1,2, Vilnius 5 4% ICT
6 3% Finance
7 2% ICT
Eastnine Vilnius Value
1 8 2% ICT
83%
3 1 9 1% Legal
1
2 1 10 1% Finance
3
90.0% Contracted rent by tenants
Economic occupancy rate
Other tenants Top 10 tenants
EUR 179 33% 67%
Annual rent per sq.m.
Value
83%
1 Eastnine Riga
Value
17% EUR 27.3m
Rental income 1
1 Earning capacity
6
Other Investment I - Melon Fashion Group
Eastnine’s holding in 2021/ 2020/
• Eastnine holds 36 per cent of the Russian fashion MFG 2021-12-31 2020-12-31
retailer MFG.
• According to MFG’s preliminary IFRS-figures1 sales Unrealised changes in
value, EURm 42.5 12.4
grew 49 % to RUB 37,498m (25,219) during 2021.
• EBITDA grew 38 % to RUB 8,642m (6,271) and the
Dividends, EURm 3.3 -
EBITDA margin reached 23 % (25).
• E-com sales grew 42 % and amounted to 32 % (34) of
total sales. Total return, % 57.7 18.6
• The strong growth and EBITDA development for MFG Eastnine’s share of
open the way for divestment opportunities, which MFG, % 36 36
can take the form of listing and may, depending on
the state of the market, take place before the Fair value of Eastnine’s
holding, EURm 121.8 79.3
summer of 2022.
• Additional dividend of EUR 6.5m received in January Proportion of
2022. Eastnine’s assets, % 18.7 15.8
1MFG earnings for the full year 2021 have not been published at the time of
publication of Eastnine’s year-end report. For this reason, preliminary IFRS figures are
used as the basis for Eastnine’s report as relates to MFG.
7
Other investment II – EC Baltic Property fund II
Eastnine’s holding in 2021/ 2020/
• Eastnine indirectly holds 39 per cent of East Capital East Capital Baltic 2021-12-31 2020-12-31
Baltic Property Fund II (ECBPF2). Property Fund II
• The fund owns three properties in Tallinn, Estonia.
• ECBPF2 is prolonged until May 2022. Unrealised changes in
• One property was divested in December 2021. After value, EURm 1.1 1.0
redemption of fund units, Eastnine received Dividends/Realised
repayment of EUR 5.3m. change in values, EURm 1.8 0.6
• Remaining three properties have been sold, and
Eastnine expects to receive repayment of the Total return, % 13.1 7.6
investment, of which most part in the first quarter of
2022.
Eastnine’s share of fund
returns, % 39 43
Fair value of Eastnine’s
holding, EURm 19.0 22.8
Proportion of Eastnine’s
assets, % 2.9 4.5
8
Sustainability focus
GRESB Albright Green financing Certification of properties
Share of green Share of certified
financing to increase properties
92 points
Green list 26%
increase by 5 points
Eastnine is included on the Green list of
Listed European estate companies for
companies with a high degree of gender
sustainability efforts 2021 81%
equality
Top 20th percentile 3rd out of 320
Of the Global Real Estate Sustainability Eastnine’s ranking compared to other Green Not green Certified Not certified
Benchmark (GRESB) gender equal companies 2021
Eastnine’s overarching sustainability target is to reach net zero emission operations by 2030
9
Financial overview
Highlights 2021
• Acquired three office properties in top locations.
• Profit from property management affected by higher
vacancies and higher interest expenses after a bond issue.
• Large positive unrealised value changes from investments
in MFG and properties.
• Long-term NAV per share increased by 24 % to 182 SEK.
• Proposed dividend; 3.40 SEK per share paid in quarterly
instalments, +13 %.
11Financial highlights
Annual rent
Rental income Net operating income Property value
(per sq.m.)
~ EUR 24.5m1 ~ EUR 22.4m1 EUR 470m
EUR 179
Equity/asset ratio Net LTVP Property yield Occupancy rate
58 % 45 % 4.81 90 %
1 Earning capacity. Property yield excluding development properties
12Income Statement
2021 2020 Change, 2021 2020 Change, • Larger property portfolio, two properties acquired in Q2
EURk Jan-Dec Jan-Dec % Oct-Dec Oct-Dec % with full effect from Q3 and one in Q4 with full effect from
Rental income
Q1 2022.
21,530 19,166 +12 5,451 5,251 +4
Property expenses -2,293 -1,689 +36 -839 -267 +214
• Higher vacancies meant less rental income and higher
property expenses. In Q4 also higher energy costs and a
Net operating income 19,237 17,497 +10 4,612 4,983 -7 non-recurring cost.
Central administration -3,853 -3,515 +10 -1,000 -834 +20 • Bond issue increased interest expenses and other financial
Interest expenses -5,600 -3,703 +51 -1,749 -1,029 +70 expenses.
Other financial income/expenses -257 -268 -4 -122 -59 +107 • Profit from property management was negatively affected,
Profit from property but the future looks brighter.
management 9,527 10,011 -5 1,742 3,061 -43
• Large positive unrealised change in value:
Unrealised value changes
properties – Properties: lower property yield
16,306 17,383 13,957 14,997
Unrealised value changes – MFG: positive sales development
investments 43,648 13,443 31,995 21,981 • Dividend & positive realised value change:
Unrealised value changes – Dividend from MFG and EC BPF II in 2021 and also EUR
derivatives 1,349 -782 689 -109 6.5m from MFG at the beginning of 2022.
Realised value change/ – Realised value change EC BPF II during Q4 due to
Dividend from investments 5,113 640 861 640 redemption of Eastnine's shares in the fund.
Profit before tax 75,943 40,695 49,244 40,570
Deferred tax -3,609 -4,540 -1,995 -3,066
Net profit 72,334 36,155 47,249 37,504
13Statement of financial position
2021-12-31 2020-12-31 Change, % Assets
EURk
Investment properties 469,817 372,400 +26 • Increased value investment properties:
acquisitions, unrealised changes in value and
Long- and short-term securities holdings 140,858 102,152 +38 investments.
Cash 29,201 24,278 +20 • Increased value of securities holdings: MFG.
Other assets 12,642 3,395 +272
• Increased cash: bond issue
• Increased other assets: temporary VAT-effect
Total assets 652,518 502,225 +30 related acquisition of Uptown Park.
Equity and liabilities
Equity 375,994 309,942 +21 • Increased equity:
+ profit for the year
Interest-bearing liabilities 241,084 173,151 +39 - dividends
Derivatives 1,395 2,745 -49 • Increased interest-bearing liabilities: new bank
financing and bond issue.
Deferred tax liabilities 14,464 10,855 +33
• Increased other liabilities: temporary VAT-effect.
Other liabilities 19,581 5,532 +253
Total equity and liabilities 652,518 502,225 +30
14Current Earning capacity
EURk 2021-12-31 2021-09-30 Change, %
• The rental value and rental income increase as a result of the
acquisition of Uptown Park.
Rental value 27,276 24,966 +9
Less vacancy value -2,738 -2,604 +5
• Property expenses increase due to increased operating costs;
Rental income
higher energy prices and increased vacant space.
24,538 22,362 +10
Property expenses -2,700 -2,100 +29 • Interest expenses unchanged, Uptown Park financed with cash.
Net operating income 21,838 20,262 +8 • Increased other financial expenses are related to the bond issue.
Central administration -3,800 -3,800 0
Interest expenses
• Profit from property management increases more than rental
-6,870 -6,910 -1
income and net operating income as a percentage.
Other financial income & expenses -280 -52 +38
Profit property management 10,888 9,500 +15
• The prospective yield decreases due to increased property
expenses and higher property value.
Key figures 2021-12-31 2021-09-30 Change, unit
Surplus ratio, % 89 91 -2
ICR, multiples 2.6 2.4 +0.2
Debt ratio, multiples 13.4 14.7 -1.3
Average interest rate level, % 2.8 2.8 0.0
Prospective yield excl. development
properties, % 4.6 5.0 -0.4
Prospective yield, % 4.8 4.9 -0.1
Investment properties, EURk 469,817 415,531 +54,286
15Balanced capital structure & low risk
Interest bearing debt Interest duration
3% Fixed interest
• Total interest-bearing liabilities of EUR 241m term 1.5 years
• Consisting of bank loans EUR 196m and bond EUR 45m 10%
• SEB, Swedbank and OP Bank representing the banking group Floating rate
• Average interest rate of 2.8 % 2023
2024 42%
• Average capital tie-up of 2.5 years
2025 24%
• Average fixed interest term of 1.5 years
2026
25%
Maturity structure Net LTVP & Equity ratio Capital structure
Average Equity/asset ratio 58 %
capital tie-up 100% Net LTVP 45 %
EURm
2.5 years
150 80%
60% Equity
100
55%
40%
Bank loan
50
20% 33%
0 0%
2022 2023 2024 2025 2026 2019 2020 2021
Equity/asset ratio Net LTVP Other Bond 7%
Loan maturity Bond 5%
16Share development and ownership
Equity, Long-term NAV and price per share Largest shareholders 31 December 2021
2021 2D20 Share
Data per share 31 Dec 31 dec Owner Country
percentage
Equity, EUR 16.9 14.0
1 Peter Elam Håkansson1 26.6%
Long-term NAV, EUR 17.6 14.6
Bonnier Fastigheter
Share price, EUR 15.4 12.4 2 13.7%
The long-term Invest
Equity, SEK NAV rose by 24 % 174 141 3 Arbona AB 10.0%
Long-term NAV, SEK 182 147
4 Lazard Asset Mgmt 5.5%
Share price, SEK 158.4 125.0
5 Kestutis Sasnauskas1 3.8%
Share price and share discount
6 Patrik Brummer 3.7%
SEK SEK %
200 200 28
175 21 The share 7 Avanza Pension 2.0%
180
150 14 discount
160 125 0 7 decreased 8–
Other shareholders 34.7% -
100 0 to 13 % 6,749
140 75 -7
The share 50 -14 Total 100.0%
120 -13
price rose 25 -15 -21 The number of
0 -22 -20 -28 shareholders 1 Private and via companies
100 by 27 %
2017 2018 2019 2020 2021 increased by 36 %
Eastnine (adjusted for dividend) Discount, % Long-term NAV, SEK
OMX Stockholm Real Estate GI Share price, SEK
17Board of Directors
Liselotte Hjorth Christian Hermelin Ylva Sarby Westman Peter Elam Håkansson Peter Wågström
Chairwoman Board member Board member Board member Board member
• Chairman of the Board since • Board member since 2020 • Board member since 2020 • Board member since 2014 • Board member since 2018
2018
• Other assignments include • Other assignments include • Other assignments include • Other assignments include
• Other assignments include board member of Prior & board member of Ikano Chairman in East Capital and Chairman of Arlanda stad
board member of Rikshem Nilsson Fond- och Bostad. board member of Bonnier Group, board member in
and Fastighetsbolaget kapitalförvaltning AB Business Press Niam and Tredje AP fonden
Emilshus, as well as
Chairman of Brunswick Real
Estate Capital Advisory
Selected experience Selected experience Selected experience Selected experience Selected experience
(Former Deputy CEO) (Former CEO) (Former CEO)
(Current Deputy CEO and CFO) (Founder & Chairman)
18Why Eastnine?
Profit and value increase per share
Profit from property Dividend Long-term equity
EUR management per share EUR
per share EUR
per share
0,5 0,5 20
18
0,4 0,4 16
14
0,3 0,3 12
10
0,2 0,2 8
6
0,1 0,1 4
2
0 0 0
2018 2019 2020 2021 2018 2019 2020 2021* 2018 2019 2020 2021
* Proposed dividend
20Why Eastnine?
1 Unique portfolio
• High-quality office property portfolio, and intention to acquire the best
logistics properties, in the Baltics.
• Prime locations.
2 Strong cash generation
• Higher property yields than for comparable properties in the Nordics.
• Portfolio with predominantly strong, international tenants on long leases.
Leading in sustainability
3 • Unique opportunity to invest in a portfolio with the industry’s highest
environmental certification level.
• Committed to the most ambitious ESG goals in the Baltic region.
Growth journey ahead
4 • Target to increase the property portfolio to EUR 700m by the end of 2023.
• Positioned for value growth since Baltic property yields converge with
Nordic.
• Evaluates property investments in Poland.
21Baltics the new Nordics, journey has just begun
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