Interim Results - NSI · Sector split Year End 2016 ( portfolio value €1.2bn) Sector split June...

July 2017

Interim Results

Half Year 2017

A new strategy

“NSI will be the leading specialist in the Dutch office market, with a strong and

efficient platform that will drive returns through pro-active asset management, value-

add initiatives and active capital recycling.

NSI will be the partner of choice for investors looking to team up with a best-in-class

operator”

NSI Full Year results 2016 I 2

Half Year 2017

NSI interim results 2017 I 3

Revenue and Earnings

H1 2017 H1 20161 Change %

Operating margin 79.9% 74.1% +5.8pp

EPRA Vacancy 22.2% 22.9% -0.7pp

Net rents like-for-like 1.8% - -

EPRA Earnings per share (€) 1.35 1.11 21.4%

Dividend per share (€) 1.04 1.04 0.0%

Balance sheet

30 Jun 17 31 Dec 161 Change %

Portfolio revaluation 0.6% -4.5%2

EPRA NAV per share (€) 35.10 34.61 1.4%

EPRA NNNAV per share (€) 34.55 33.56 2.9%

Average cost of debt 2.8% 2.8% 0.0pp

LTV 38.1% 44.1% -6.0pp

1 2016 numbers restated for 8:1 share consolidation2 12 month period to 31 Dec 16

Progress

A new strategy – firmly on track

2011 2013 YTD 172015 2016200019981992

Corporate Highlights

Investment Highlights

NSI founded NSI Listed Dutch REIT

status

Merger with

Vastned O/I

Succesful

€300m

re-capitalisation

Refinancing of

€550m with

group of banks

and institutions

Security release

and refinancing

results in 73%

unencumbered

assets

Exit from

SwitzerlandPartial exit

Belgian IOW

stake

Acquisition of 8

high-quality

office assets

(Total €169m)

Final exit

IOW stake

Divesting

Industrials

portfolio

Acquisition of

Glass House,

Amsterdam,

subsequent

lease extension

in December

Sale portfolio of

16 retail assets

(Total €151m)

Sale portfolio of

6 Large Scale

Retail assets

(Total €74m)

Start asset rotation

Strong

start of

execution

new

strategy

In transformation since 2013

Acquisition of 4

office assets in

Amsterdam,

Leiden and

Utrecht.

(Total €117m)


Executing the new strategy


Disposals1 YTD 2017 (€m)

#

Assets

Book

value

Sales

result

Sales

Cost

Net sales

proceeds

Book

profit/(loss) GIY

Total Retail 23 219.8 229.0 -2.3 226.7 6.8 8.3%

Total Offices 5 9.4 9.6 -0.1 9.5 0.1 5.2%

Total 28 229.3 238.6 -2.4 236.2 6.9 8.2%

Acquisitions2 YTD 2017 (€m)

#

Assets

Book

value

Jun 17

Purchase

Price

Purchase

cost

Total

Purchase

cost

Book

profit/(loss) GIY

Offices 4 124.0 116.8 7.9 124.7 -0.8 7.9%

Delta - 24 -105.3 -121.8 10.3 -111.5 6.2 -0.3%

1 Includes Keizerslanden in Deventer which transfers in 2018 and Maarsen sold post-close 2 Includes Leiden bought post-close

Successful start asset rotation

Execution Sector split

Amsterdam

31%

Other G4

13%Other

Randstad

11%

Other NL

15%

HNK

14%

Retail

16%

Retail

16%

HNK

14%

Offices

69%Amsterdam

21%

Other G410%

Other Randstad

8%

Other NL15%

HNK13%

Retail27%

LSR6%

Retail33%

HNK13%

Offices53%

Sector split Year End 2016 ( portfolio value €1.2bn) Sector split June 2017 ( portfolio value €1.1bn)


Portfolio update

57% of retail assets sold

• 23 assets sold in two portfolio deals and

one single asset transaction

• Disposal proceeds retail ca. €225m

• On average ca. 3% above book value

• 2/3 of retail value in 4 assets (Rotterdam

Zuidplein, Rijswijk, Heerlen and

Ridderkerk)

• Retail 16% of total portfolio

Executing the new strategy

Retail portfolio end of June 2017

Sold


▪ Area: 12,079 sqm

▪ Tenant: Government

▪ GIY: 10.3%

▪ WAULT: 4.1 years

▪ Energy Label: C

▪ Acquisition price: €20.5m

Uniceflaan 1, Utrecht

Execution – reinvesting proceeds


▪ Area: 11,700 sqm

▪ Tenant: Government

▪ GIY: 7.2%


▪ Energy Label: B


Parnassusweg 101, Amsterdam



▪ Area: 13,300 sqm

▪ Tenant: ING

▪ GIY: 7.6%


▪ Energy Label: C


Bijlmerdreef 100, Amsterdam



▪ Area: 7,239 sqm

▪ Tenant: Janssen Vaccines

▪ GIY: 8.9%


▪ Energy Label: C

▪ Acquisition price: €17.5m (€2.417 /sqm)

Archimedesweg 6, Leiden


Train

station

City

Centre

Bio

Science

Park


Netherlands property market overview


0.0

0.5

1.0

1.5

2.0

2.5

3.0

20

09

Q1

20

09

Q3

20

10

Q1

20

10

Q3

20

11

Q1

20

11

Q3

20

12

Q1

20

12

Q3

20

13

Q1

20

13

Q3

20

14

Q1

20

14

Q3

20

15

Q1

20

15

Q3

20

16

Q1

20

16

Q3

20

17

Q1

Investment volumes Offices Netherlands (€bn)

Prime office yields Netherlands

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

2009 2011 2013 2015 2Q17*

Amsterdam Eindhoven Rotterdam The Hague Utrecht

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

2009 2010 2011 2012 2013 2014 2015 2016 2Q17

Amsterdam Rotterdam The Hague Utrecht

Prime rental growth

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

2006 2008 2010 2012 2014 2016

Vacancy rate Offices Netherlands

Operational performance

Rental growth (potential)

€m

Net rent growth

like-for-like

ERV growth

like-for-like

Reversion

Dec 16

Reversion

Jun 17

Offices -1.9% 1.3% -8.3% -3.2%

HNK 20.9% 2.1% 0.3% 2.4%

Retail 3.2% -0.6% -6.3% -9.2%

Other 4.8% 1.6% -17.3% -13.9%

Total 1.8% 1.2% -6.7% -3.5%

Offices + HNK 1.3% 1.5% -6.0% -2.1%

EPRA vacancy

Dec 16 Like-for-like

Disposals/

Acquisitions Jun 17

Offices 21.3% 2.1% -2.9% 20.5%

HNK 37.1% -3.8% 0.0% 33.3%

Retail 12.5% 2.5% 1.1% 16.1%

Other 16.5% -2.7% 0.0% 13.8%

Total 21.4% -0.8% 0.0% 22.2%

Offices + HNK 25.3% 0.6% -2.5% 23.4%

• Net rent growth like-for-like 1.8%

• ERV growth 1.2%

• Negative reversion tapering off


0.6%0.6%

3.1%

-0.8%-2.9%

-40

-30

-20

-10

0

10

20

30

40

Total Office HNK Retail Others

Positive revaluation Negative revaluation

Half Year 2017 (€m)

Revaluation result

At end of June all investment properties in operation have been

externally appraised

Big differences between segments

• Total revaluation €6.9m

• Amsterdam offices up €18m

• Retail small negative €1m

Retail valuations caused by :

• Lower ERV ‘s : -0.6%

HNK remarks

• Amsterdam and Utrecht up

• Decline mostly related to Rotterdam and Den Bosch

Office market remains polarised

• G4 like-for-like +5.2%

• Other Netherlands like-for-like -8.8%


Energy scores

ESG

Better reporting

• NSI will start with regular updates on sustainability

• All office buildings must have an energy label of C or better

• There is more to ESG than energy scores, so NSI will become a

member of GRESB

Already strong focus on ESG

• Energy consumption CO2 Neutral

• NSI installing 3,500 solar panels

Energy scores C label or better

• 78% Offices portfolio

• 87% HNK portfolio

• 79% of Offices and HNK

• Estimated €5m to upgrade remaining Offices and HNK assets

to C label or better


86%

63%

78%

87%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

G4 Other Total officeportfolio

HNK

A B C D E F G Cum A-C

Financials

EPRA Earnings

1.11

1.35

-0.01

-0.03

0.06

0.09 0.01

0.12

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.50

EP

RA

EP

S

H1

20

16

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ss

ren

tal

inco

me

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rvic

e c

osts

no

t re

ch

arg

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era

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g

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sts

Ad

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ative

co

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t fin

an

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g

resu

lt Oth

er

EP

RA

EP

S

H1

20

17

EPRA Earnings bridge per share (€)


• EPRA Earnings per share up 21.4%

• Growth driven by cost reduction

EPRA Earnings

€ '000H1 2017 H1 2016 Change %

Gross rental income 45,640 45,787 -0.3%

Service costs not recharged -1,237 -2,277 -45.7%

Operating costs -7,958 -9,601 -17.1%

Net rental income 36,446 33,910 7.5%

Administrative costs -4,425 -4,588 -3.6%

Direct investment result from participations (IOW) 565 -100.0%

Earnings before interest and taxes 32,021 29,887 7.1%

Net financing result -7,834 -10,040 -22.0%

Direct investment result before tax 24,187 19,847 21.9%

Corporate income tax -12 -5 133.3%

EPRA Earnings 24,175 19,842 21.8%


EPRA NAV

EPRA NAV bridge per share (€)


• EPRA NAV per share up 1.4%

• EPRA NNNAV per share €34.55, up 2.9% versus Dec 16 (€33.56)

34.61

35.10

-1.12

-0.28 -0.03

1.35

0.390.18

0.01

33.0

33.5

34.0

34.5

35.0

35.5

36.0

36.5

De

c 1

6

EP

RA

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gs

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Re

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lua

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le

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ap

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7

Balance sheet

(€ ‘000)Jun 2017 Dec 2016

Real estate investments 879,323 770,434

Assets held for sale 195,899 389,923

Other assets 5,603 4,038

Cash 10,093 2,067

Total assets 1,090,918 1,166,462

Total shareholders’ equity attributable to shareholders 629,441 604,254

Interest-bearing loans 413,012 510,904

Debts to credit institutions 7,257 3,429

Other liabilities 41,208 47,875

Total liabilities 461,477 562,208

Total shareholders’ equity and liabilities 1,090,918 1,166,462


43

220

4360 50

90 90

20

0

50

100

150

200

250

2017 2018 2019 2020 2021 2022 2023

Headroom

Drawn

Swaps

Unsecured syndicated bank debt

€ 220m53%

RCF unsecured bank debt

€ 86m21%

Secured EUPP€ 60m14%

Secured bank debt

€ 50m12%

Strong balance sheet

• LTV 38.1%

• Cost of debt down to 2.8%

• ICR 4.7x well above 2.0x covenant

• 74% of debt unsecured

• 71% unencumbered assets

• Debt maturity 3.6 years

• No expiries prior to November 2019

• Undrawn credit facilities €199m

Loans and swaps maturity profile (€m)


Final remarks

• Disposal of retail assets

• Further asset rotation in offices

• Continued focus on costs

• Identifying value-add opportunities for 2018/2019

• 2017 EPS guidance of 2.52-2.55

Final remarks


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