Aurora Eiendom : Kvartalsrapport / Q2 Report 2022

Q2 2022 REPORT

AURORA EIENDOM Q2 2022 REPORT

Table of contents

06	HIGHLIGHTS AND SUMMARY
08	KEY FIGURES

10

12

14

18

ACQUISITIONS ANNOUNCED IN Q2

THE REAL ESTATE PORTFOLIO

FINANCIAL DEVELOPMENTS

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

24	PRO-FORMA BALANCE SHEET

26

34

NOTES

ALTERNATIVE PERFORMANCE MEASURES & EPRA REPORTING

AURORA SECOND QUARTER 2022 5

HIGHLIGHTS AND SUMMARY OF THE

Second quarter of 2022

• Rental income in Q2 was NOK 93.5 million, which is up NOK 10.4 million / 12.5 % from Q1. The increase mainly comes from Buskerud Storsenter, which was acquired 1st of March and contributed to its first whole quarter.
• The quarter's gross tenant turnover in our fully owned centers was 6.8 % over Q2 2021, and in the first half of 2022 gross tenant turnover was 8.4 % over the first half of 2021.
• The leasing activity in the quarter resulted in several signed new leases, and the opening of a few new stores. New leases were started on a total area of 1 230 sqm, and none expired, resulting in a positive development in occupancy. In addition, leases of a total area of 1 978 were extended, with an average extension of 4.3 years.
• Aurora announced new investments that increased the portfolio of shopping centers significantly from July 2022: Gulskogen Senter in Drammen was acquired at net yield 5.2 % (GAV NOK 2 070 million), Arkaden Senter in Stavanger at 5.7 % (GAV NOK 380 million) and
  25 % of Maxi Storsenter in Hamar at 7.1 %1 (GAV NOK 490 million).
• • The purchase was financed by net proceeds from the private placement of NOK 600 million in June 2022.
  • Furthermore, as part of the financing, a new green loan facility of NOK 1.470 million was established as well as a seller's credit of NOK 200 million.
• The shopping centers Farmandstredet Kjøpesenter (Tønsberg) and Vinterbro Senter (Ås) were rebranded to Alti Farmandstredet and Alti Vinterbro during the quarter.
• Alti Forvaltning, owned 50 % by Aurora Eiendom AS, currently manages 37 shopping centers, including Aurora's portfolio.

1 Implicit net yield calculated on GAV excluding development on Maxi Storsenter.

LETTER FROM THE CEO

Growth delivered

1st of July last year we completed our first transaction, acquiring four shopping centers with a total property value of NOK 3bn. Our hypothesis was that after several years where the investor community had been skeptical of shopping centers as an investment, and price expectations were reduced, there was a window of opportunity before interest in the segment would increase again. Based on this, we set our short-term goal to increase our shopping center portfolio to NOK 8 - 10bn within 12 to 24 months.

One year after the first transaction, we were excited to complete the acquisition of Gulskogen Senter, Arkaden Kjøpesenter and a 25 % share of Maxi Storsenter. Which takes our property portfolio up to the next level, reaching our short-term growth ambitions.

We consider Gulskogen Senter among the most attractive shopping center assets in the country, being the leading shopping destination in Drammen with more than 100 stores and located in a thriving area in rapid growth.

A high-quality addition.

Arkaden Senter is a smaller asset but has an excellent location in the city center of Stavanger. Because the competition is mainly located in the city's fringes, Arkaden has the potential to enhance its position as the preferred shopping destination in the city center, similar to the position of Nerstranda Senter in Tromsø.

Maxi Storsenter is a well-established shopping destination in Hamar that has struggled with strong competition in the region the recent years, but with a great development potential. We are glad to be a part of a team consisting of Dolphin Eiendom, Rica Eiendom, Utstillingsplassen Eiendom and Aurora Eiendom to take the center to new heights with development of both retail and residential areas.

We continue to take advantage of the economies of scale and quality of the shopping center marketing brand Alti, and

during the last months both Farmandstredet and Vinterbro have adopted the Alti brand and marketing campaigns. Both rebrandings were carried out successfully by the local center teams with several activities and happenings, high customer attendance and positive publicity.

We had in the second quarter new leases starting on a total area of 1 230 sqm, where the two main store openings were H&M Home at Amanda Storsenter, and Dollarstore at Alti Nordbyen. Both concepts enrich the tenant mix at the two shopping centers. There are also signed new leases with

a total area of 3 505 sqm, which we can look forward to in the near future. The leasing activity combined with higher expectations for short-term growth in rental income due to the expected inflation levels have resulted in an increase in the property values, despite a slight addition to the exit yields in the independent valuations.

Aurora started its operations on the eve of the pandemic, and our assumption since the beginning has been that at some point we will see a normalization of the high tenant turnover levels that we have seen the last couple of years. However, this scenario has taken longer to kick in than expected. The first half of the year delivered turnover figures above the same period in the last three years, and the second quarter an increase of 6.8 % compared to last year. We still expect the tenant turnover levels to normalize and we have seen the first tendencies this summer, with more people traveling abroad on holiday, but the turnover is still well above pre-pandemic levels. Increasing interest rates and electricity costs are factors that might affect customer spending, but at the same time there are counterweights such as low unemployment and high expected wage growth.

One of our focus areas is to enrich the food and beverage experiences for our visitors, and we were happy to recently announce not one, but two new restaurants openings

at Amanda Storsenter this fall. We continue our work to establish a greater offering of services in the shopping centers, to maintain and develop our properties' positions as leading shopping destinations.

Lars Ove Løseth

CEO

6 AURORA SECOND QUARTER 2022

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Key figures

Group Key Figures		Q2 2022	Q1 2022	YTD 2022	2021
Rental Income	NOK	93 509 589	83 122 490	176 632 079	158 043 738
Net income from property management	NOK	81 169 373	71 321 160	152 490 533	129 008 000
		30.06.2022	31.03.2022	YTD 2022	31.12.2021
Market value of property portfolio	NOK	6 575 200 000	6 487 100 000	6 575 200 000	5 222 900 000
Net interest bearing debt *	NOK	2 395 016 428	2 987 144 912	2 395 016 428	2 377 271 564
Outstanding shares		30 962 431	24 510 796	30 962 431	20 550 400
Equity per share	NOK	131.3	135.8	131.3	130.7

Alternative performance measures*		Q2 2022	Q1 2022	YTD 2022	2021
Interest coverage ratio		2.4	2.6	2.5	3.2
Loan to Value (LTV) / Pro-forma**	%	36.4 / 52.5**	46.0	36.4 / 52.5**	45.5
EPRA earnings per share (EPS)	NOK	1.61	1.74	2.94	6.37
EPRA NRV per share	NOK	135	142	135	139
EPRA NTA per share	NOK	131	137	131	135
EPRA NDV per share	NOK	131	136	131	131
EPRA Net Initial Yield	%	5.16	5.24	5.16	5.56
EPRA Topped-Up Net Initial Yield	%	5.32	5.40	5.32	5.53
Net Initial Yield Fully Let	%	5.48	5.62	5.48	5.64
EPRA Vacancy Rate	%	2.8	3.9	2.8	2.0

* See Alternative Performance Measures for details.

** Pro-forma balance sheet, including Gulskogen Senter and Arkaden Senter, see page 24 for explanation.

Leasing portfolio summary		Q2 2022	Q1 2022
Properties fully owned	#	6	6
GLA	sqm	146 558	146 152
Occupancy *	%	91.8	91.2
WAULT	year	2.6	2.7
Annualised cash passing rental income	MNOK	383 197	382 670

* Occupancy = vacant leasing area / GLA.

Leasing activity
	Q2 2022	Q1 2022	YTD 2022
Leases started / expired
Total area leases started	sqm	1 230	428	1 658
Total area leases expired	sqm	-	2 229	2 229
Net area leased	sqm	1 230	-1 801	-571
Net area leased	%	0.8	-1.2	-0.4
Average lease term	year	4.3	3.1	3.8
Leases extended
Total area	sqm	1 978	4 192	6 170
Total area	%	1.3	2.9	4.2
Average extension	year	4.3	4.0	4.1
Leases signed (not started)
Total area	sqm	3 505	4 314
Total area	%	2.4	3.0
Average lease term	year	9.2	9.2

Leases extended are defined as new or extended lease contracts with the same tenant on the same area.

All other lease contracts are defined as leases started.

Leases signed (not started) are leases that are signed, but have a later start date than the last day of the quarter. These lease contracts can be for areas that are both vacant and occupied at last day of the quarter. Lease contracts typical for the shopping center industry normally have a start date between three and nine months after the lease is signed.

Leasing portfolio summary and leasing activity key figures do not include Jærhagen Kjøpesenter.

8 AURORA SECOND QUARTER 2022

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Acquisitions announced in Q2

Gulskogen Senter 100 % OWNERSHIP

The leading center in the Drammen region and a geographical overlap with Aurora Eiendom's and Alti Forvaltning's current presence.

Arkaden Senter 100 % OWNERSHIP

The most central shopping destination in Stavanger with good upside in active asset management.

Maxi Storsenter 25 % OWNERSHIP

1. well-establishedshopping destination in Hamar, and exposure to a very attractive residential and retail development project.

Key facts		Gulskogen Senter	Arkaden Senter	Maxi Storsenter
Gross total area	sqm	81 428	21 980	33 510
Gross lettable area	sqm	40 019	13 645	20 794
Retail area	sqm	37 952	8 035	20 557
Vacant area	%	2	10	25
Parking spaces	#	1 100	70	1 050
Footfall 2021	millions	2.7	1.7	1.4
Gross turnover 2021	NOKm	1 482	304	515
Gross rental income - Run rate at 01.01.2022 2	NOKm	124.3	27.6	34.4
Net rental income - Run rate at 01.01.2022 3	NOKm	107.9	21.6	25.8
Gross asset value, excl. developement 4	NOKm	2 070	380	365
Gross asset value, incl. developement 4, 5	NOKm	2 070	380	490
Net asset value, incl. developement 4	NOKm	2 029	377	471
Gross asset value per GLA 4	NOK	51 725	27 849	17 553
Gross asset value per total gross area 4	NOK	25 421	17 288	10 279
Net yield 6	%	5.2	5.7	7.1

1. Aurora Eiendom acquires 25 % of Maxi Storsenter.
2. GRI excluded steps and discounts, added ongoing leasing operations and lease up of vacant area, less 2 % structural vacancy.
3. NRI equals GRI (run rate), less owner's costs (including owner's share of common costs) and management fee to Alti Forvaltning (5 % of GRI).
4. Gross and Net asset value before agreed deductions resulting from the technical due diligence.
5. Consideration payable (NOK 2 400m) is less than GAV due to tax discount, due diligence reduction and the equity portion in Maxi Storsenter which is only NOK 31m.
6. Implicit net yield calculated on GAV excluding developement on Maxi Storsenter.

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