Nordic Real Estate Update - Webinar - Pangea ...
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Webinar
Nordic Real
Estate Update
MAY 2021
Today’s speakers
AGENDA
Bård Bjølgerud
CEO & PARTNER Economic Overview
Pangea Property Partners
mob: +47 48 40 80 80 Nordic Transaction Market
bb@pangeapartners.no
Property Segments
Mikael Söderlundh Listed Property Sector
HEAD OF RESEARCH & PARTNER
Pangea Property Partners
Summary
mob: +46 73 770 77 90
ms@pangeapartners.se
Q&A and Live Poll
2
Webinar Pangea Property Partners
Economic Overview
Covid-19 Positive development driven by rapid vaccinations before the summer
NO. OF DEATHS, PER MILLION VACCINATED IN EUROPE (1 SHOT), % OF POPULATION
14
12 >35%
10 30-35%
8
20-29%
6
4
Table shows changed mobility
Changed mobility Nordic mobility closer to normal compared to rest of Europe between pre-covid (Jan 2020)
and today (May 2021)
POPULATION SHOPPING GROCERY STATIONS WORK RESIDENTIAL AVERAGE
-9% 0% -41% -57% 12% -19%
10.4m
10% 24% -35% -51% 9% -9%
5.5m
-2% 14% -39% -39% 6% -12%
5.6m
11% 6% -35% -60% 11% -13%
5.9m
3% 11% -38% -52% 10% -13%
27.3m
-28% 17% -37% -49% 15% -16%
84.0m
-27% 6% -37% -30% 10% -16%
68.2m
Restaurants and Grocery stores Subway, train Various Various Changed mobility
shopping malls and pharmacies and bus stations workplaces housing by country
Source: Google Mobility reports
5
Webinar Pangea Property Partners
Nordic economy Interest rates picking up and gradually strengthening local currencies
-2 bps - 1.6 %
NORDIC 10Y SWAP RATES NORDIC CURRENCIES V S EUR
2,50 vs. pre-covid 9,0 vs. pre-covid
(Nordic avg.) (EUR/NOK)
9,5
2,00
SEK
10,0
1,50
Norway 10,5
EUR, x
1,00 NOK
%
11,0
0,50 Sweden Denmark
11,5
0,00 12,0
Finland
-0,50 12,5
Jan-20 May-20 Sep-20 Jan-21 May-21 Jan-20 May-20 Sep-20 Jan-21 May-21
NORDIC ALL-SHARE INDICES
+ 25% OIL PRICE INDICES
+4%
vs. pre-covid
vs. pre-covid
(Nordic avg.) (Brent)
40% 80
30%
60
Sweden Brent crude
20%
Denmark 40
10%
USD/bbl
West Texas Intermediate
0% 20
Norway
-10% Europe 0
-20%
Finland
-20
-30%
-40% -40
Jan-20 May-20 Sep-20 Jan-21 May-21 Jan-20 May-20 Sep-20 Jan-21 May-21
Source: Thomson Reuters, OMX. Figures as of 14 May 2021.
6
Webinar Pangea Property Partners
GDP and population Nordic GDP growth in 2021-2025F expected to exceed pre-covid levels
GDP GROWTH POPULATION GROWTH
3,5% 1,4%
3,0% 1,2%
2,5% 1,0%
2,0% 0,8%
1,5% 0,6%
1,0% 0,4%
0,5% 0,2%
0,0% 0,0%
Sweden Norway Finland Denmark Nordics Europe Sweden Norway Finland Denmark Nordics Europe
5Y forecast (2021-2025F) 5Y avg. pre-covid (2015-2019) 5Y forecast (2021-2025F) 5Y avg. pre-covid (2015-2019)
Source: IMF (April 2021)
7
Webinar Pangea Property Partners
Financing market Credit margins in Sweden vs Norway for selected companies
SWEDISH 5Y BONDS CREDIT MARGINS NORWEGIAN 5Y BONDS CREDIT MARGINS
500 500
Citycon
400 400
SBB
Margin over 3M STIBOR, bps
300 300
Balder
Margin over 3M NIBOR, bps
Castellum
+20 bps
200 200
Eiendomsspar
+0 bps
-8 bps NPRO (1st)
100 -5 bps 100 +5 bps
Hufvudstaden Entra -5 bps
+4 bps
+1 bps
Bane NOR
-10 bps -5 bps
Vasakronan
0 0
Jan-20 May-20 Sep-20 Jan-21 May-21 Jan-20 May-20 Sep-20 Jan-21 May-21
Source: Thomson Reuters, DNB Markets
8
Webinar Pangea Property Partners
Borrowing cost (NOR) Notable reduction in “all-in” borrowing costs since January 2020
ALL-IN RATE (JAN 2020) ALL-IN RATE (MAY 2021)
5,00% 5,00%
5Y swap Creditmargin 5Y swap Creditmargin
All-in
All-in
4,00% 3.85 % 4,00% 3.59 %
Δ -0.26 %
All-in All-in
2.85 % 2.80 %
3,00% 3,00%
All-in All-in 1,95% All-in All-in
2.55 % 2.57 % 2.34 % 2.39 %
All-in
All-in Δ -0.51 % Δ -0.41 %
2.12 % 2,15%
0,95% 0,90% 2.04 %
0,65% 0,67% Δ -0.45 %
Δ -0.51 %
2,00% 2,00%
0,90% 0,95%
0,60% 0,68%
1,00% 1,00%
1,90% 1,90% 1,90% 1,90% 1,90%
1,44% 1,44% 1,44% 1,44% 1,44%
0,00% 0,00%
Bane NOR Entra Norwegian Eiendomsspar Citycon Bane NOR Entra Norwegian Eiendomsspar Citycon
Eiendom Property Eiendom Property
Source: Thomson Reuters, DNB Markets
9
Webinar Pangea Property Partners
Borrowing cost (SWE) Borrowings costs recovered to pre-covid levels
ALL-IN RATE (JAN 2020) ALL-IN RATE (MAY 2021)
3,00% 3,00%
5Y swap Creditmargin 5Y swap Creditmargin
All-in
2,00% 2,00%
1.71 %
All-in
All-in All-in 1.59% Δ +0.05 %
All-in 1.66 % 1.48 %
All-in Δ +0.08 %
1.48 % 1.51 % Δ0%
All-in
1.20 %
All-in Δ +0.09 % All-in
1.11 % All-in 0.96 %
1.01 % Δ -0.05 %
1,30%
1,00% 1,30% 1,00% 1,18%
1,12% 1,15% 1,07%
0,79%
0,75%
0,65% 0,55%
0,36% 0,36% 0,36% 0,36% 0,36% 0,41% 0,41% 0,41% 0,41% 0,41%
0,00% 0,00%
Castellum Balder Hufvudstaden SBB i Norden Vasakronan Castellum Balder Hufvudstaden SBB i Norden Vasakronan
Source: Thomson Reuters, DNB Markets
10
Webinar Pangea Property PartnersGreen financing High share of green bonds on the Nordic market (especially in SEK and DKK)
SHARE OF GREEN BONDS (2013-2020), % GREEN BONDS (2020), %
30% 27 %
Some drivers for green bonds:
25% • EU’s taxonomy 13 %
• Premium pricing and access to
larger financing volumes
20%
• More specialized investors/funds 4%
• Avoid future risks, e.g. higher
capital requirements
15%
• Green buildings/certifications
common in the real estate sector 5%
10%
2%
5%
1%
0%
2013 2014 2015 2016 2017 2018 2019 2020
1%
SEK DKK EUR CNY NOK USD GBP
Source: Pangea Research, Dealogic
11
Webinar Pangea Property PartnersGreen financing Pricing on selected Swedish green bond issues 2020/2021
Listed property companies
SELECTED BONDS, MARGIN V S MATURITY
Institutional property companies
400
Klövern (SEK 2.0bn) Klövern (SEK 2.5bn)
General premium pricing on
350 green bonds (0-25 bps cheaper)…
Nyfosa (SEK 1.0bn)
… but also associated with
some extra administration
300
… and supply is increasing
Margin (bps over 3M STIBOR)
250
Offentliga Hus (SEK 550m) Kungsleden (SEK 400m)*
200
Kungsleden (SEK 300m)
Bonnier Fastigheter (SEK 1.0bn)
150
Vasakronan (SEK 1.0bn)*
Jernhusen (SEK 400m)* Heba (SEK 200m)
100 Akademiska Hus (SEK 1.5bn)*
Vasakronan (SEK 300m)
Wallenstam (SEK 300m)* Rikshem (SEK 500m)* Heba (SEK 550m)
50
Hemsö (SEK 600m)
Heba (SEK 550m) Rikshem (SEK 400m)
Hemsö (SEK 400m) Akademiska Hus (SEK 1.0bn)*
0
2,0 3,0 4,0 5,0 6,0 7,0 8,0
Maturity (years)
*Fixed coupon rate
Source: Pangea Research, Thomson Reuters
12
Webinar Pangea Property PartnersNordic Transaction Market
Transaction volumes Strong start of 2021 on the Nordic transaction market
NORDIC TRANSACTION VOLUME (2020 vs 2021 YTD) NORDIC NO. OF DEALS (2020 vs 2021 YTD)
12 250
2021 YTD: 2021 YTD:
10 EUR 16.3bn 407 deals
+38% 200 +27%
8
150
No. of deals
EURbn
6
100
4
50
2
0 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2020 2021 2020 2021
Source: Pangea Research, based on deals above EUR 5m
Figures as of 17 May 2021
14
Webinar Pangea Property PartnersTransaction volumes Nordic transaction volume of EUR 16.3bn in 2021 YTD (+38% from last year)
NORDIC TRANSACTION V OLUME (2010-2021F) NORDIC TRANSACTION MARKET (2021 YTD)
50
Sweden
45 Norway EUR 7.5bn
+68% YoY
Finland
40
Denmark
35 Forecast
EUR 3.4bn
30
+64% YoY
EURbn
25 Finland
20 Norway
Sweden
15
10 Denmark EUR 1.5bn
-42% YoY
5
EUR 3.8bn
0
+37% YoY
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
YTD
Source: Pangea Research, based on deals above EUR 5m
2021 YTD numbers as of 17 May 2021
15
Webinar Pangea Property PartnersTransaction volumes Increasing volumes and deal count across the Nordics (except Finland)
TRANSACTION VOLUME (ROLLING 12M), EURbn NO. OF DEALS (ROLLING 12M), #
25 600
Hembla & Hemfosa
More deals in
Norrporten all countries
500
20
Sweden
Sweden
400
15 Sektor
Sponda ABP 300
Norway
Norway
10
Finland
200
HD Ejendomme
Denmark Denmark
5
100
Finland
0 0
2015 2016 2017 2018 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021
Source: Pangea Research, based on deals above EUR 5m
16
Webinar Pangea Property PartnersTop-10 deals 2021 YTD Several major deals in different segments
# Date Buyer Seller Target Country Est. value Area (sqm) Cross-border
1 May-21 Balder HitecVision Asset Buyout Partners NO NOK 9.0bn1 264,000 √
2 Apr-21 SBB i Norden Several Offentliga hus SE SEK 9.3bn2 600,000
3 Mar-21 Hemvist SBB & Kåpan Residential portfolio SE SEK ~5.4bn 135,000
4 Feb-21 Blackstone Group Castellum Logistics portfolio SE SEK 5.0bn 350,000 √
62 Rema 1000-stores
5 Jan-21 Savills IM, Reitan Rema Butiksudvikling
& Rema central warehouse
DE DKK 3.0bn n/a √
6 Apr-21 FAM Vectura Fastigheter Grand Hotel SE SEK ~3.6bn 30,000
7 Apr-21 Randviken Several Mixed portfolio SE SEK 2.8bn 157,000
8 May-21 Heimstaden Stångåstaden Residential portfolio SE SEK 2.5bn 78,000
9 Apr-21 Niam Birch Ejendomme Residential portfolio DE DKK 1.5bn 69,000 √
10 Feb-21 Intea Fastigheter Akademiska hus Two school properties SE SEK 1.6bn 55,000
Top-10 deals 2021 YTD – EUR 4.5bn (28% of total volume) EUR ~4.5bn
1Post deduction of deferred tax 2Part of the shares acquired in 2020
Source: Pangea Research, figures as of 17 May 2021
17
Webinar Pangea Property PartnersForeign investors Continued net inflow of foreign capital, despite travel restrictions
CAPITAL INFLOW TO SWEDEN CAPITAL INFLOW TO NORWAY
60 40
24% 32 %
Foreign buyers Foreign buyers
2021 YTD 30 2021 YTD
40
20
NOKbn
SEKbn
20
10
0
0
-20 -10
2014 2015 2016 2017 2018 2019 2020 2021 YTD 2014 2015 2016 2017 2018 2019 2020 2021 YTD
CAPITAL INFLOW TO FINLAND CAPITAL INFLOW TO DENMARK
6
48 % 25
63 %
Foreign buyers Foreign buyers
2021 YTD 2021 YTD
5 20
4 15
DKKbn
EURbn
3 10
2 5
1 0
0 -5
2014 2015 2016 2017 2018 2019 2020 2021 YTD 2014 2015 2016 2017 2018 2019 2020 2021 YTD
Source: Pangea Research, based on transactions above EUR 5m
Figures as of 17 May 2021. including Pan-Nordic capital flows
18
Webinar Pangea Property PartnersProperty Segments
Sector split Upswing for residentials and industrial/logistics, while office losing ground
TRANSACTION VOLUME SPLIT FOR SELECTED COUNTRIES
Residentials Industrial/logistics Office Retail Other
100 %
90 %
80 %
70 %
60 %
50 %
40 %
30 %
20 %
10 %
0%
2007 2015 COVID 2007 2015 COVID 2007 2015 COVID 2007 2015 COVID 2007 2015 COVID
UK Germany France Netherlands Sweden
European Transaction Volumes by Sector and Country. Transactions €5m+. Covid is Q2’20-Q1’21 Source: RCA Europe Capital Trends, Q1’21
20
Webinar Pangea Property PartnersSector split Clear division between hot and cold sectors as a result of Covid-19
CHANGE IN EUROPEAN DEAL COUNT AND VOLUME (APRIL-MAY 2021 vs APRIL-MAY 2020)
20 %
Student Housing Other Industrial
10 % Apartment
0%
-10 %
Change in deal volume
Grocery
-20 %
Shopping Centre Logistics Seniors Housing
-30 %
Dev Site
-40 %
Other Retail
-50 %
Hotel
CBD Office
-60 %
R&D
-70 %
Suburban Office
-80 %
-80 % -70 % -60 % -50 % -40 % -30 % -20 % -10 % 0% 10% 20%
Change in deal count
% Change in Transaction Volume and Count by Sector - Apr’20-Mar’21 vs. Apr’19-Mar’20. Bubble Size is Investment Volume For Same Period. Transactions €5m+. Source: RCA Europe Capital Trends, Q1’21
21
Webinar Pangea Property PartnersOffice Reduced transaction activity, despite (surprisingly?) stable rental markets
STATUS
NORDIC OFFICE TRANSACTION V OLUME (2013 -2021 YTD)
Home office with limited net impact on office rents and
16 80%
demand for office assets
Office
% of total
Increased focus on collaborative space and tech friendly
environments 12 60%
Slight increase in vacancy rates, partly explained by an
increased supply
EURbn
8 40%
Reduced transaction volumes in 2020/2021
OUTLOOK 4 20%
New configuration of offices and a higher degree of tailored
space suited for tenant’s exact needs
0 0%
2013 2014 2015 2016 2017 2018 2019 2020 2021
Home office will be part of the offering post-covid YTD
TOP 3 OFFICE DEALS (2021 YTD)
Stabilizing office yields due to higher interest levels vs 2020 # Buyer Seller Target Value
and looming key policy rate hikes
1 City Finansiering SBB Gullhaug Torg 4 n/a
2 Clarksons (Syndicate) Oslo Areal Strandveien 4-8 & 10 NOK 1.2bn
3 AEW Several Sydmarken 5, etc DKK 0.8bn
Source: Pangea Research, based on transactions above EUR 5m
22
Webinar Pangea Property PartnersNordic capitals Rental markets slowing down post-covid, but differences between the countries
NORDIC OFFICE PRIME YIELDS (2008-2021F) NORDIC OFFICE PRIME RENTS (2008-2021F)
7,0% 900
6,5% 800
Stockholm
6,0% 700
5,5% 600
EUR/sqm
Oslo
5,0% 500
Helsinki
4,5% 400 Helsinki
4,0% Oslo 300
Copenhagen
Copenhagen
3,5% 200
Stockholm
3,0% 100
Source: Pangea Research
23
Webinar Pangea Property PartnersOslo office market Has followed the business cycle closely the last 24 years
DEVELOPMENT IN OSLO PRIME OFFICE
Strong office market Strong office market Strong office market Strong office market
6 000 180
Yield: 7.50% Yield: 6.50% Yield: 6.20%
Rent/sqm: NOK 2,500 Rent/sqm: NOK 2,025 Rent/sqm: NOK 2,700
Value/sqm: NOK 31,000 Value/sqm: NOK 29,000 Value/sqm: NOK 40,000
5 000 150
4 000 120
Value (NOK ‘000/sqm)
Gross rent (NOK/sqm)
3 000 90
2 000 60
1 000 Yield: 5.50% Yield: 4.50% Yield: 3.60%
30
Rent/sqm: NOK 3,600 Rent/sqm: NOK 3,800 Rent/sqm: NOK 4,800
Value/sqm: NOK 60,000 Value/sqm: NOK 78,000 Value/sqm: NOK 127,000
0 0
'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21F
Gross rent (l.a.) Value (r.a.)
Source: Pangea Research, Arealstatistikk
24
Webinar Pangea Property PartnersHome office Absolutely not a new phenomenon!
PEOPLE WORKING FROM HOME BEFORE CORONA IN EUROPE (2019 vs 2010)
40%
2019 2010
35%
30%
25%
20%
15%
10%
5%
0%
Sweden Finland Denmark UK France Germany Norway Greece Nordic European
avg. avg.
Source: Eurostat
25
Webinar Pangea Property PartnersHome office On the job vs. work from home
PROS CONS
Decreased productivity (complex)
- JP Morgen study CONSEQUENCES FOR OFFICE MARKET
Increased productivity (simple) Widening productivity gap
- Pew research Center - Harvard Business Review Office demand: Change has been
accelerated, but not been limited
Less motivation & engagement
- Pew Research Center
Increased flexibility Office rents: Limited impact on prime
- Pew research Center Strangling innovation
rent in main cities
- Stanford (SIEPR) study
More distractions / interruptions More flexibility and content: More
Improved work life balance
- Pew Research Center
- Pew research Center focus on collaborative space and
tech-friendly environments
Security concerns
Digital tools good substitutes Home office: Will be part of the
- Pew Research Center
Less social interaction & culture offering post-covid
…the jury is still out!
Easing urbanization trend Additional costs for employers
- Stanford (SIEPR) study
Less disciplined employees
26
Webinar Pangea Property PartnersLogistics Red-hot investor market fueled by international investors
STATUS
NORDIC LOGISTICS TRANSACTION V OLUME (2013 -2021 YTD)
Increased usage of online retail channels and a surge in 5,0 12%
demand for logistics has made the segment a crowded space Logistics
% of total
10%
Converging yields on prime logistics vs prime offices 4,0
8%
Record high P / NAV’s for publicly traded real estate
3,0
companies with logistics heavy portfolios (~2.47x)
EURbn
6%
OUTLOOK 2,0
4%
Increasing focus on strategic hubs and last miles logistics in
1,0
close vicinity to city centers 2%
Large new supply coming to the market with focus on 0,0 0%
e-commerce distribution 2013 2014 2015 2016 2017 2018 2019 2020 2021
YTD
TOP 3 LOGISTICS DEALS (2021 YTD)
More and more seen as a critical infrastructure investment
# Buyer Seller Target Value
1 Blackstone Castellum Logistics portfolio SEK 5.0bn
2 Reitan Rema Logistics center DKK 1.0bn
Ellos HQ and
3 Vatne Real Estate Bosjö Fastigheter SEK 0.9bn
central warehouse
Source: Pangea Research, based on transactions above EUR 5m
27
Webinar Pangea Property PartnersLogistics Urban logistics yields close the gap to CBD office yields in Europe
URBAN LOGISTIC YIELDS VS CBD OFFICE YIELDS (EUROPE)
8.0 %
7.5 %
7.0 %
6.5 %
6.0 %
5.5 %
5.0 %
4.5 %
4.0 %
3.5 %
3.0 %
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 20 '21
Urban Logistics - Selected Markets CBD Offices - Selected Markets
Hedonic Yields. Transactions €5m+. Urban Logistics includes: London, Paris, Berlin, Milan, Madrid, Amsterdam/Randstad, Stockholm, Frankfurt, Vienna, Hamburg, Barcelona Source: RCA Europe Capital Trends, Q1’21
28
Webinar Pangea Property PartnersIndustrial Previously overlooked segment now gaining investor focus
STATUS
NORDIC INDUSTRIAL/STORAGE V OLUME (2013 -2021 YTD)
Industrial assets and mission critical infrastructure receiving 3,5 14%
Industrial/warehouse
more attention among investors
% of total
3,0 12%
Several large transactions in 2020 and 2021 YTD proves strong
investor demand 2,5 10%
2,0 8%
Still fragmented segment with many owner-occupiers
EURbn
1,5 6%
OUTLOOK
1,0 4%
Higher yields relative to other segments and value-add
opportunities will continue to attract opportunistic investors 0,5 2%
Opportunities for large professional investors to build 0,0 0%
2013 2014 2015 2016 2017 2018 2019 2020 2021
portfolios and consolidate the market YTD
TOP 3 INDUSTRIAL DEALS (2021 YTD)
# Buyer Seller Target Value
1 Balder HitecVision Asset Buyout Partners NOK 9.0bn1
Industrial and
2 Stenhus Private investors SEK 0.5bn
warehouse portfolio
3 Ikano Private owner Telegrafvej, Ballerup DKK 0.3bn
1Post deduction of deferred tax
Source: Pangea Research, based on transactions above EUR 5m
29
Webinar Pangea Property PartnersRetail Fragmented sector with both winners and losers
STATUS
NORDIC RETAIL TRANSACTION V OLUME (2013 -2021 YTD)
Significant structural changes has been accelerated, creating
10 50%
winners and losers
Retail
% of total
Accelerated closures among retailers who were poor
8 40%
performers pre-covid
Signs of awakening transaction market with e.g. Niam
6 30%
acquiring multiple shopping centers in Stockholm
EURbn
Strong interest for grocery stores (non-cyclical) illustrated by
4 20%
recent bidding war on Tre Kronor in the listed sector
OUTLOOK 2 10%
Permanent change in distribution channels, including increased
usage of home delivery, click & collect and pick-up-points 0 0%
2013 2014 2015 2016 2017 2018 2019 2020 2021
YTD
Opportunistic investors positioning themselves for
opportunities post-covid TOP 3 RETAIL DEALS (2021 YTD)
# Buyer Seller Target Value
1 Savills IM, Reitan Rema 62 Rema 1000-stores DKK 2.0bn
Three regional malls
2 Niam Citycon SEK 1.5bn
in Stockholm
3 Niam Grosvenor Haninge Centrum SEK ~1.0bn
Source: Pangea Research, based on transactions above EUR 5m
30
Webinar Pangea Property PartnersRetail Accelerated change in consumer patterns caused by Covid-19
From producer to end-customer
Goods Customer
Warehouse / Physical store / Pick-up-point Home delivery
logistic hub shopping center
31
Webinar Pangea Property PartnersShopping centre yields (NOR) Accelerated change in consumer patterns caused by Covid-19
10,0 % 1. Sektor Gruppen
Company Portfolio Asset
transaction transaction transaction 2. Buskerud, Down Town, etc.
9,0 %
3. AMFI Moss, Mosseporten, etc.
Bekkestua Senter → Sentiment turning?
8,0 % Broad marketing process (Feb-21) 4. Hvaltorvet
High interest and approximately 10 bids
7,0 % 5. Halden, Markedet, Stovner, etc.
6.3%
6.0% 6.0% 6. Sektor Gruppen
6,0 % 5.8% 5.8% 14
2 3 5
4 5.3% 13 7. Oslo City
5.6% 1 5.2% 5.1%
6 8
5,0 % 11
9 10 8. Åsane Storsenter
5.0% Prime yield
7
4,0 % 9. Lillestrøm Torv
4.5%
12
10. Horisont (50%)
4.0%
3,0 %
11. Øyrane Torg
2,0 %
12. ALNA Senter
1,0 % 13. Harebakken Senter
10Y SWAP
14. Jærhagen Kjøpesenter
0,0 %
Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21
The Covid-19 pandemic and fear of e-commerce has paved the way for opportunistic acquisitions of
high-quality shopping centres at yields far above yesterday’s levels
Source: Pangea Research, Thomson Reuters
32
Webinar Pangea Property PartnersThe US and European stock markets indicate strengthened belief in the future of shopping centres...
TOTAL RETURN – PREX SHOPPING CENTRE INDICES (US / EUROPE)
10%
Covid-19
Outbreak
0%
PREX SHOPPING CENTRE (US) 1
MCAP: USD 77bn
-10%
1m +10 %
3m +22 %
-20% 6m +57 %
12m +113 %
-30%
PREX SHOPPING CENTRE (EU) 2
-40% MCAP: EUR 23bn
1m +10 %
3m +19 %
-50%
6m +38 %
Europe lagging slightly 12m +49 %
-60% behind the US market
-70%
-80%
Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21
Source: Pangea Research, Thomson Reuters
1) Constituents: Tanger Outlets, Retail Properties of America, Simon Property Group, Brixmor Property Group, Kimco Realty, Kite Realty, Regency Centers and Federal Realty
2) Constituents: Mercialys, Eurocommercial, Carmila, Wereldhave, Unibail-Rodamco-Westfield, Klépierre, Deutsche Euroshop and Citycon
33
Webinar Pangea Property PartnersHotel Small sector severely hit in 2020, but gradual recovery over the next years
STATUS
NORDIC HOTEL TRANSACTION V OLUME (2013 -2021 YTD)
Equity markets have priced in a strong rebound in the
hospitality sector, however the jury is still out 2,0 8%
Hotel
Hotels available for purchase might be acquired at a % of total
5 – 15 % discount versus 2019 values
1,5 6%
Increased risk and larger spread in hotel valuations,
incentivizing opportunistic investors
EURbn
1,0 4%
Higher transaction volume 2021 YTD, mainly driven by
FAM’s acquisition of Grand Hotel in Stockholm (SEK 3.6bn)
OUTLOOK 0,5 2%
New configuration of hotels for better interaction with other
real estate segments and meet future market demands
0,0 0%
2013 2014 2015 2016 2017 2018 2019 2020 2021
Hotel recovery in 2023 / 2024, led by the recovery of the YTD
domestic tourism segment TOP 3 HOTEL DEALS (2021 YTD)
International business travel might not recover to pre-covid # Buyer Seller Target Value
levels in upcoming years, however jury is still out
1 FAM AB Vectura Grand Hotel SEK 3.6bn
2 Starwood Strawberry Properties Hotel Skt. Petri DKK 1.1bn
3 Store Norske Hurtigruten Group Svalbard portfolio NOK 0.7bn
Source: Pangea Research, based on transactions above EUR 5m
34
Webinar Pangea Property PartnersThe hotel cycle Attractive segment for investors that can position themselves to exploit the cycles
~8 – 10-year cycles ~8 – 10-year cycles ~8 – 10-year cycles
110
Strong hotel market Strong hotel market
100
NPRO/EQT bought: Scandic bought:
90
80 Listing:
Normalized
70
level
Consolidation: Asset Purchase:
Established:
Listing:
60 <
50
Refinancing
40
Consolidation:
Consolidation: Portfolio adjustment:
30 Asset Purchase:
20
12000
2 3 4 5 6 2004
7 8 9 10 11 2008
12 13 14 15 16 2012 2012
17 18 19 20 21 22 2016
23 24 25 26 27 28 29 30 31 322020
33 34 35 36 37 2024
38 39 40 41 42 43
Source: Pangea Research
35
Webinar Pangea Property PartnersWhat’s next? Road to recovery in the Norwegian hotel market
RECOV ERY SCENARIOS
HOTEL MARKET RECOVERY
120%
2019 level Positive Base case forecast suggests demand
100%
Base recovery in late 2023
Negative
80%
Potential structural change in demand
60% drivers anticipate a negative scenario not
recovering to 2019 level
40%
20%
Domestic market expected to recover
first driven by domestic tourism, followed
0% by other Nordics countries
IH20 2H20
2H20 IH21
1H21 2H21
2H21 IH22
1H22 2H222H22 IH23 1H23 2H23 2H23 IH24 1H24 2H24 2H24
Recovery of international segment not
120%
expected in the foreseeable future, due
to strict traveling policies
2019 level
100%
Domestic Leisure travel expected to recover to 2019
80%
levels, but question marks around the
recovery of the business segments with
60%
Other Nordics the proven use and efficiency of technology
40%
Travel for seminars and conferences
International
20% expected to be permanently reduced
0%
IH20 2H20
2H20 IH21
1H21 2H21
2H21 IH22
1H22 2H22
2H22 IH23
1H23 2H23
2H23 IH24
1H24 2H242H24
Source: Pangea Research
36
Webinar Pangea Property PartnersResidential & public properties Rush to stable ‘core assets’ in the current market
STATUS
NORDIC RESI & PUBLIC PROPERTY V OLUME (2013-2021 YTD)
Strong demand for typical core assets such as rentals and
25 50%
public properties in the current market Residential
Public sector
Representing almost half of the Nordic transaction market % of total
20 40%
Increasing interest among international buyers, historically
looking more at other segments 15 30%
EURbn
Favourable long-term demographics with increasing and aging
populations in the Nordics 10 20%
OUTLOOK
5 10%
Solid outlook with both buyers and debt providers competing
for ‘defensive assets’
0 0%
2013 2014 2015 2016 2017 2018 2019 2020 2021
More money spent on housing post-covid YTD
TOP 3 RESI & PUBLIC PROPERTY DEALS (2021 YTD)
Increasing demand for residentials built with state investment
# Buyer Seller Target Value
support in Sweden (capped rents)
1 SBB i Norden Several Offentliga Hus SEK 9.3bn1
2 Hemvist SBB & Kåpan Residential portfolio SEK 5.4bn
3 Heimstaden Stångåstaden Residential portfolio SEK 2.5bn
1Part of the shares acquired in 2020
Source: Pangea Research, based on transactions above EUR 5m
37
Webinar Pangea Property PartnersResidentials Sale in Swedish regional city – Market rents vs Investment support
Presumption rent Investment support
(SEK/sqm)
(“market rent”) (“regulated rent”)
Base rent (“normhyra”) 1,850 1,450 Capped rents to create incentives
for developing cheap housing
Effective rent* 2,300 1,800
Costs 350 325
Net operating income 1,950 1,475 Investors willing to pay lower yields
due to reduced vacancy risk and
future rent potential
Yield 3.75% 3.5%
Sales price 52,000 42,200 Government investment support
and full energy bonus
Investment support - 10,100
Often better financing terms
Total 52,000 52,300 with investment support due to
lower risk and sustainability/
* Calculated for one room apartment with kitchen (35 sqm) energy requirements
Similar total proceeds for the developer/seller
38
Webinar Pangea Property PartnersNordic Listed Sector
Overview The Nordic listed sector keeps growing… 12 new companies in 2020/2021
NORDIC MAIN LISTS
44 COMPANIES / EUR ~80bn
New companies
NORDIC ALTERNATIVE LISTS
12
companies Main lists
34 COMPANIES / EUR ~6bn
in 2020/2021
44
companies
EUR ~80bn (mcap)
Alternative lists
34
companies
EUR ~6bn (mcap)
Source: Pangea Research, Thomson Reuters
40
Webinar Pangea Property PartnersPerformance Nordic property shares (PREX Property) climbing 43% from the bottom in March 2020
NORDIC EQUITY MARKETS (2020-) REAL ESTATE SECTORS (2020-)
40% 40%
PREX
Nordic Warehouse
30%
30% all-share
PREX
23% 20% Residential
20%
PREX PREX
Development Mixed
10%
10% 53%
PREX
Property 0% PREX
Office
0%
-10%
-10%
-20% PREX
Retail
-20%
-30%
-30% -40%
-40% -50%
Jan-20 May-20 Sep-20 Jan-21 May-21 Jan-20 May-20 Sep-20 Jan-21 May-21
Comment: Pangea Real Estate Index (PREX) is an index family including all listed real estate
companies in the Nordics. Numbers as of 17 May 2021
Source: Pangea Research, Thomson Reuters
41
Webinar Pangea Property PartnersValuation Main list valued 27% above NAV, while alternative lists close to par
MAIN LIST (PRICE / NAV) ALTERNATIVE LISTS (PRICE / NAV)
K-Fastigheter 3.09 Cibus
Sagax Sweden
2.95 Kallebäck
K2A Norway 2.57
Stenhus
NP3
Finland Amasten
Genova
Catena Logistri
Wallenstam Real Holding
Brinova
Offentliga Hus
Heba
Nyfosa Tre kronor
Stendörren Fortinova
Balder Signatur
Wihlborgs
Fleming Properties
Platzer
SBB Bonäsudden
Diös Mälaråsen
John Mattson Sydsvenska Hem
FastPartner Halmslätten
Kojamo
MaxFastigheter
Kungsleden
Entra Bosjö Fastigheter
Castellum Mofast
Pandox Solnaberg
Annehem
Fastator
Atrium Ljungberg
Fabege Västsvenk Logistik
Klövern Torslanda
Corem Tingsvalvet
Hufvudstaden
Link Prop
Norwegian Property
Citycon Main list avg: 1.27x Amhult 2 Alternative list avg: 1.02x
Olav Thon Slottsviken
0,5 0,7 0,9 1,1 1,3 1,5 1,7 1,9 0,5 0,7 0,9 1,1 1,3 1,5
Source: Q1 EPRA NRV NAVs vs share prices as of 14 May 2021
42
Webinar Pangea Property PartnersValuation Signficant differences between segments… partly created by a couple of companies
V ALUATION BY COUNTRY V ALUATION BY SEGMENT
(PRICE / NAV ) (PRICE / NAV )
2,47
2,5 2,5
2,0 2,0
Excluding
Sagax
Excluding Sagax, Excluding Sagax, Excluding K2A Excluding Sagax,
K-Fastigheter and K2A K-Fastigheter and K2A and K-Fastigheter K-Fastigheter and K2A
1,5 1,5 1,41
1,34
1,27 1.28 1,27
1,17
1.18 1,07
1.09
1.05 1.05
1,0 0,93 1,0 0,92
0,89
0,81
0,59
0,5 0,5
0,0 0,0
Sweden Norway Finland Nordics Office Retail Residential Warehouse Mixed Hotel Public sector Average
Source: Q1 EPRA NRV NAVs vs share prices as of 14 May 2021
43
Webinar Pangea Property PartnersM&A activity Very high activity with both takeovers and IPOs in 2020/2021… likely to continue
SECTOR V ALUATION AND M&A ACTIV ITY (2016 –2021 YTD)
Reversed IPOs:
Odd Molly
2,0x Randviken
Annehem (SE)
SEK 1.7bn Doxa
K-Fastigheter (SE)
LISTINGS Trianon (SE)
SEK 4.0bn
SEK 5.2bn
1,8x SBB (SE)
Wästbygg (SE)
Listings First North
Kojamo (FI) SEK (Q4 2020)
Solon Eiendom (NO) SEK 4.9bn 14.0bn SEK 3.0bn
NOK 1.5bn Magnolia (SE) Genova (SE)
Hoivatilat (FI) K2A (SE) Offentliga Hus (SE), Oct
1,6x SEK 2.5bn
EUR 0.2bn SEK 3.2bn
SEK 3.3bn SEK 3.7bn
Brinova (SE) John Mattson (SE)
PRICE / BOOK
SEK 3.4bn SEK 6.1bn Nyttobostäder (SE), Nov
SEK 6.4bn
1,4x Stendörren (SE)
SEK 6.7bn Nyfosa (SWE)
Stenhus (SE), Nov
SEK 15.4bn
SEK 1.3bn
1,2x Hoivatilat (FI) Fortinova (SE), Nov
SSM (SE)
EUR 0.5bn SEK 2.1bn
SEK 0.4bn
Hembla (SE)
SEK 34bn
1,0x Offentliga Hus (SE)
Hembla (SE) – 50% Hemfosa (SE) SEK 9.7bn
Sponda (FI) Technopolis (FI) SEK 40bn Storm Real Estate (NO) (First North)
SEK 9.4bn
EUR 3.8bn EUR 1.6bn NOK 1.7bn
,8x Stendörren (SE) – 41%
Victoria Park (SE) – 81% SEK 3.3bn
SEK 12.5bn
TAKEOVERS
,6x
2016 2017 2018 2019 2020 2021
Comment: Values reflect underlying property value for the acquired/listed shares
Source: Pangea Research, Company reports
Numbers as of 17 May 2021
44
Webinar Pangea Property PartnersCross-ownership A handful of Swedish owners behind many companies
Ultimate owner
Listed property company (Main list)
Listed property company (First North)
OWNERSHIP IN SWEDISH LISTED REAL ESTATE COMPANIES (Q1 2021), % OF VOTES
Unlisted property company
100% 63%
Skandrenting ERIK SELIN Skistar FAM PAULSSON Backahill FAM LUNDBERG
90% 56%
Kunskapsporten 39% 93%
Erik Selin
Fastigheter K-Fastigheter Annehem 58% 16% Fastighets AB L E Lundbergs- FAM LJUNGBERG
Fortinova
7% Fabege Lundberg företagen
49% 50%
50% Balder Skåne
50% Peab 11% 88% Tagehus
Trenum Balder Wihlborgs Hufvudstaden
18% Stenhus
20% 100% Asset Buyout
SHH Bostad 15% Fastigheter 11% 13% 92%
Partner (NO) Diös Skanska Credentia
33% 33%
50% Anthon B Tornet
Arvid Svensson 24% Runö 30%
FAM SVENSSON Nilsen (NO) 30%
Invest 50% 50% Catena 24% Fastigheter
49% Centur Industrivärden
SVEN-OLOF 5% Sinoma Catena 13%
OP 33% 41%
John Mattson
JOHANSSON 50% 7%
Tulia
Brinova
16%
Compactor Offentliga Hus 54%
33% 10% 24% K2A
Sato (FI)
Entra (NO) Castellum RUTGER ARNHULT
31%
72% 97%
19%
56% SLP
Serena (FI) Stenhus Fastigheter Atrium Ljungb.
FastPartner
8% M2 Asset
DAVID MINDUS
27% Odd Molly Management
10% 16%
ILJA BATLJAN 25%
FAM DRAGICEVIC 13% 50%
13% Ess-Sierra
12% 15% 54% Sagax
33% Klövern Corem
SBB ERNSTRÖMGRUPPEN 50%
100% 100% 15% 22%
17% Tobin
39%
Properties
M2 Gruppen Hemsö NP3
7% 100%
Amasten Kungsleden Platzer 59% 50% 20%
26% Agora Wästbygg Söderport
100% 15% 8% Emilshus
9% 50%
15%
SSM GÖSTA WELANDSON ICA HANDLARNAS LÄNSFÖRSÄKRINGAR Nyfosa
35% 9% 8% 6% 6%
Source: Pangea Research, key holdings with +5% ownership
45
Webinar Pangea Property PartnersOutlook How will the listed property sector perform going forward?
ARGUMENTS FOR STRONG SECTOR + ARGUMENTS FOR WEAK SECTOR −
• Large positive yield gap • Gradually increasing interest rates
• Good access to financing (bank and capital market) • Some sectors severely hit by Covid-19 (retail, hotel)
• Stable rental income, despite Covid-19 • Risk for long-term structural changes?
• Plenty of capital targeting real estate
OUTLOOK ?
• Safe asset class... but very split sector performance post-covid
• Aggressive premium valuation… but some extreme outliers (Sagax, etc.), bulk of the market valued closer to par
• Limited growth opportunities (many buyers on every seller) opens for broader geographical focus, new niches, and corporate deals
• Favourable IPO climate, especially for companies with reliable growth stories
Property sector slightly underperforming 2020/2021, driven by certain sectors, but strong long -term fundamentals
46
Webinar Pangea Property PartnersSummary
Summary
Positive momentum in the economy, partly driven by a rapid vaccination pace
Gradually increasing interest rates, but still low all-in financing costs compared to pre-covid
(especially Norway)
Explosion of green/sustainable bonds… SEK being the fourth largest currency globally,
and DKK coming strongly
High Nordic transaction volume of EUR 16.3bn in 2021 YTD, 38% higher than same period
last year. Highest activity in Sweden and Norway, while Finland lagging behind.
Continued strong demand for core assets, but signs of broadening investor market
Net inflow of foreign capital in all Nordic countries, in total EUR 3.8bn in 2021 YTD
Continued high M&A activity in the listed sector with 12 new companies in 2020/2021
Nordic main list valued at 27% premium, while alternative lists valued close to par
Pangea Property PartnersQ&A – all questions welcome!
Bård Bjølgerud Mikael Söderlundh
CEO & PARTNER HEAD OF RESEARCH & PARTNER
Pangea Property Partners Pangea Property Partners
mob: +47 48 40 80 80 mob: +46 73 770 77 90
bb@pangeapartners.no ms@pangeapartners.se
49
Webinar Pangea Property PartnersPoll Questions during Webinar
HOW DO YOU PERCEIVE THE OUTLOOK OF THE NORDIC
PROPERTY MARKETS IN THE SECOND HALF OF 2021?
Low activity due to e.g.
higher interest rates;
Lower activity 2%
than the first half;
7%
Increased activity Continued high activity;
to record-highs; 81%
10%
Based on about 150 responses (Webinar, May 19th, 2021)
82 % responded that they believe in continued high activity in the second half of 2021
Source: Pangea Research
50
Webinar Pangea Property PartnersPoll Questions during Webinar
WHICH PROPERTY SEGMENT WILL BE THE BEST PERFORMING
OVER THE NEXT 12 MONTHS IN THE NORDICS?
Office;
10% Hotel/Retail;
Hotel/Retail; 13% Office;
27% 18%
Residential;
24%
Public properties; Residential;
18% 19%
Public properties;
11%
Logistics/Industrial; Logistics/Industrial;
28% 32%
Based on about 150 responses (Webinar, May 19th, 2021) Based on about 200 responses (Webinar, January 10th, 2021)
Logistics/Industrial most attractive segment with 28 % closely followed by Hotel/Retail with 27 %
Source: Pangea Research
51
Webinar Pangea Property PartnersAppendix
Pangea Property Partners A selection of executed transactions in 2020/2021
Sale of Asset Buyout Partner with Sale of several portfolios to new Sale of residential project Sale of Karlastaden (50%)
106 assets across Norway listed property company (S:t Eriks Hospital) in central Stockholm in Gothenburg
NOK SEK SEK SEK
1)
9.0bn n/a ~1.5bn ~6.4bn
Buyer: Buyer: Buyer: Buyer:
Sale of Masmästaren with Acquisition of logistics property Sale of Coop’s main distribution Sale of residential portfolio
69 mixed-use properties in central Sweden in Gothenburg center at Oslo Airport (Morö Backe) in Skellefteå
SEK SEK NOK SEK
~5bn ~265m ~3.0bn 1.3bn
Buyer: Seller: Buyer: Buyer:
Sale of office complex
Tjuvholmen Allè 1-5 in central Oslo
Acquisition of Eidos (45%),
project Fjordbyen in Drammen
Acquisition of office property Sale of Clarion Hotel Amaranten
(461 rooms) in central Stockholm
We have advised
in Björvika, Oslo CBD
NOK NOK NOK SEK
on +70 deals with
~2.0bn ~1.1bn 340m ~1.5bn a value of SEK 47bn
in 2020/2021
Buyer: Seller: Buyer: Buyer:
1) Post deduction of deferred tax
53
Webinar Pangea Property PartnersPangea Research The #1 Nordic property research offering a broad array of reports
LEADING NORDIC PROPERTY RESEARCH PANGEA RESEARCH – REGULAR REPORTS
Voted ‘best research in Sweden’
(Euromoney 2020) Weekly Updates Monthly Updates Property Outlooks
Voted ‘best research in Norway’
(Euromoney 2020)
Prestige clients including
central banks and other institutions
Property and capital market
research, fully Pan-Nordic
Comparable proprietary data
#1 – Sweden
#1 – Norway
PREX / Listed Sector Institutional Outlooks Pangeapodden
SELECTED RESEARCH PARTNERS & CLIENTS
4 episodes available
SEPREF
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54
Webinar Pangea Property PartnersDisclaimer
This presentation has been prepared by Pangea Property Partners KB and Pangea Property This presentation has been prepared solely for informational purposes and is not to be All information, statements and references (the Information) contained in this presentation is
Partners AS (”Pangea”) for the exclusive use of the party to whom Pangea delivers this construed as a solicitation or an offer to buy or sell any securities or related financial obtained by Pangea mainly from public available sources, at the best assessment of Pangea.
presentation (together with its subsidiaries and affiliates, the ”Company”) using information instruments. The Company should not construe the contents of this presentation as legal, tax, Pangea disclaims any and all liability in respect of the presentation, and shall under no
provided by publicly available information. The valuations, forecasts, estimates, opinions and accounting or investment advice or a recommendation. The Company should consult its own circumstances be held responsible for any claim, liability, damages, costs or losses due to
projections contained herein involve elements of subjective judgment and analysis. Pangea has counsel, tax and financial advisors as to legal and related matters concerning any transaction Information which may be misleading, incorrect or incomplete. The Norwegian Estate Agency
not independently verified the information contained herein, nor does Pangea make any described herein. This presentation does not purport to be all-inclusive or to contain all of the Act (Nw.: eiendomsmeglingsloven) section 6-7 will not apply. In addition, please note that the
representation or warranty, either express or implied, as to the accuracy, completeness or information that the Company may require. No investment, divestment or other financial Information in this IM / information memo is not intended to be exhaustive and complete.
reliability of the information contained in this presentation. It should not be regarded by the decisions or actions should be based solely on the information in this presentation.
recipients as a substitute for the exercise of their own judgment. This presentation may © 2021 Pangea Property Partners KB and Pangea Property Partners AS. All rights
contain forward-looking statements. Pangea undertakes no obligation to update these This presentation has been prepared on a confidential basis solely for the use and benefit of reserved. Pangea specifically prohibits the redistribution of this material and accepts no
forward-looking statements for events or circumstances that occur subsequent to such dates. the Company; provided that the Company and any of its employees, representatives, or other liability whatsoever for the actions of third parties in this respect.
Any information or opinion expressed herein is subject to change without notice. Any agents may disclose to any and all persons, without limitation of any kind, the tax treatment
estimates or projections as to events that may occur in the future (including projections of and tax structure of the transaction and all materials of any kind (including opinions or other
revenue, expense, net income and stock performance) are based upon the best judgment of tax analyses) that are provided to the Company relating to such tax treatment and tax
Pangea from the information provided by publicly available information as of the date of this structure. Distribution of this presentation to any person other than the Company and those
presentation. There is no guarantee that any of these estimates or projections will be persons retained to advise the Company, who agree to maintain the confidentiality of this
achieved. Actual results will vary from the projections and such variations may be material. material and be bound by the limitations outlined herein, is unauthorized. This material must
Nothing contained herein is, or shall be relied upon as, a promise or representation as to the not be copied, reproduced, distributed or passed to others at any time, in whole or in part,
past or future. Pangea, its affiliates, directors, officers, employees and/or agents expressly without the prior written consent of Pangea.
disclaim any and all liability relating or resulting from the use of all or any part of this
presentation.
55
Webinar Pangea Property PartnersSTO C K H OLM O SL O H E L SI NK I Norrlandsgatan 15, 7th floor Tjuvholmen Allé 3, 8th floor C/o Mrec Oy, Mikonkatu 4 B 00100 Box 7740, 103 95 Stockholm, Sweden N-0250 Oslo, Norway Helsinki, Finland Pangeapartners.se Pangeapartners.no Pangeapartners.co.uk
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