Aurora Eiendom : Q2 Report

Q2 2023 REPORT

AURORA EIENDOM Q2 2023 REPORT

Table of content

HIGHLIGHTS AND SUMMARY	06
LETTER FROM THE CEO	08
KEY FIGURES	10
THE REAL ESTATE PORTFOLIO	12
DEVELOPMENT PROJECTS	13
SUSTAINABILITY IN AURORA EIENDOM	16
FINANCIAL DEVELOPMENTS	17
CONSOLIDATED STATEMENT OF PROFIT OR LOSS	21
NOTES	28
OUTLOOK	32
RESPONSIBILITY STATEMENT	34
ALTERNATIVE PERFORMANCE MEASURES & EPRA REPORTING	36
GLOSSARY	43

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HIGHLIGHTS AND SUMMARY OF THE

Second quarter of 2023

• Rental income in Q2 was NOK 142.9 million (NOK 93.5 million).
• • The increase in mainly due to expansion of our shopping center portfolio in 2022, with the acquisition of Gulskogen Senter and Arkaden Senter in July.
• The quarter's gross tenant turnover in our fully owned centers was NOK 2 137 million, which is a like-for-like growth of 3.2 % compared to Q2 2022.
• • For the first half-year,like-for-like growth in gross tenant turnover was
    4.6 % compared to 1H 2022.
• In Q2, new leases were started on a total area of 3 209 sqm, while leases for
  3 690 sqm expired. This led to a decrease in occupancy from 93.5 % to 93.3 %, compared to the previous quarter. At the end of the quarter there are signed new lease agreements for a total of 2 460 sqm, equivalent to 1.2 % of GLA.
• Aurora Eiendom's 50 % owned subsidiary Alti Forvaltning offers centers under management to become part of the Alti common market profile. Currently, a total of 30 shopping centers across Norway bear the "ALTI" branding. Among the recent additions are Alti Eikunda and Alti Flekkefjord, both rebranded in the month of June.

Gross rental income

EPRA NRV per share

(NOK million)

(NOK million)

Value of investment properties

Net Loan to value

(NOK million)

(LTV)

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LETTER FROM THE CEO

Resilience, progress and opportunities

project in Krokstadelva and the Hovlandbanen project in Larvik. Plan initiatives have been submitted for both locations. Notably, the plan initiative for Hovlandbanen received unanimous approval from Larvik Municipality's executive committee in May. This approval signifies our advancement into the next regulatory phase.

The second quarter of the year continues to build on the positive momentum from the first quarter, with a strong development in tenant turnover of

3.2 % at the shopping centers compared to the same period last year. Although high inflation and increased interest rates have a negative impact on purchasing power among consumers, we observe that sales are shifting between categories, and reduced expenditure on durable goods are freeing up additional funds for everyday products, which constitute the predominant offerings within the shopping center assortment.

As long as the tenant turnover figures remain at favorable levels, we anticipate that the interest in establishing new stores will follow suit.

Notwithstanding a marginal decline in our portfolio's occupancy rate for this quarter, we have at the end of the quarter signed lease agreements covering 2.460 square meters, equivalent to 1.2 % of or gross lettable area, with commencement scheduled for the upcoming six months.

The escalation of interest rates continues to adversely affect the company's profitability, and the fact that we have a substantial portion of the financing interest rate hedged has been crucial. Additionally it is influencing the valuation yields used in the external property valuations, which predominantly explains the property value write- downs this quarter. As counteracting factors, we have

an increased expectation of inflation and market rents compared to the previous quarter.

One area of concern revolves around the significant inflation and the weak performance of the Norwegian krone's exchange rate, and the subsequent influence on tenants' gross profits and overall profitability. While there hasn't been a noticeable adverse trend in outstanding receivables thus far, we have received indications that this concern is shared by several parties.

During the second quarter, our co-owned management company, Alti Forvaltning, has maintained its robust pace of expansion. Securing three new shopping center management contracts, with a fourth one set to commence in the upcoming quarter, brings the combined portfolio to 42 shopping centers, inclusive of the Aurora portfolio.

Our sustainability efforts are consistently progressing. In the second quarter, we took a significant step by ordering our inaugural solar panel system. The installation, underway on the roof of Alti Vinterbro, is expected to provide approximately 20 % of the shopping centers' overall electricity needs upon completion in the upcoming autumn. Simultaneously, we have initiated mapping projects to evaluate potential establishments at other centers.

Development work is continuing on the Elveparken

Reiterating our strong belief, we are dedicated to enriching our well-positioned shopping destinations by broadening our range of offerings, including healthcare facilities. Therefore, we are pleased to have announced the impending inauguration of an state-of-the-art orthopedic clinic, covering an extensive 1.100 square meters on the fourth level of Nerstranda in Tromsø. The conversion of this floor from traditional office spaces to healthcare facilities aligns with our vision since the center's acquisition. It will enable us to provide an even more comprehensive suite of services under one roof and attract an increased number of customers.

In summary, Q2 builds on Q1's momentum, marked by a 3.2 % surge in tenant turnover. Despite inflation and interest rate challenges, the centers' adapting sales patterns underscore their resilience. The potential for new stores remains promising, and the growing interest from diverse players in various offerings and services towards shopping center locations is creating fresh avenues of opportunity.

Lars Ove Løseth

CEO

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Key figures

Group Key Figures		Q2 2023	Q2 2022	YTD 2023	YTD 2022	2022
Rental Income	NOK	142 850 892	93 509 589	287 361 622	176 632 079	447 915 298
Net income from property	NOK	117 795 520	81 169 373	242 776 493	152 490 533	377 828 438
management
			Pro-forma
		30.06.2023	30.06.2022**	30.06.2023	30.06.2022	31.12.2022
Market value of property	NOK	8 681 500 000	9 025 200 000	8 681 500 000	6 575 200 000	8 813 000 000
portfolio
Net interest bearing debt*	NOK	4 614 821 220	4 737 308 912	4 615 155 001	2 395 016 428	4 681 651 166
Outstanding shares		30 962 431	30 962 431	30 962 431	30 962 431	30 962 431
Equity per share	NOK	131.4	133.2	131.4	131.3	130.5

Alternative performance
measures*		Q2 2023	Q2 2022	YTD 2023	YTD 2022	2022
Interest coverage ratio		1.9	2.4	2.0	2.5	2.2
Loan to Value (LTV)	%	53.2	36.4 / 52.5 **	53.2	36.4 / 52.5 * *	53.1
EPRA earnings per share	NOK	1.52	1.61	3.17	2.94	6.42
(EPS)
EPRA NRV per share	NOK	133	135	133	135	135
EPRA NTA per share	NOK	129	131	129	131	130
EPRA NDV per share	NOK	131	131	131	131	131
EPRA Net Initial Yield	%	5.80	5.16	5.80	5.16	5.76
EPRA Topped-Up Net Initial	%	5.90	5.32	5.90	5.32	5.85
Yield
Fully Let Net Yield	%	6.06	5.48	6.06	5.48	6.01
EPRA Vacancy Rate	%	2.3	2.8	2.3	2.8	2.2

• See Alternative Performance Measures for details.
• Pro-formabalance sheet, including Gulskogen Senter and Arkaden Senter, see financial development for details.

Leasing portfolio summary		Q2 2023	Q1 2023	Q4 2022		Q3 2022	Q2 2022	Q1 2022
Properties fully owned	#	8	8	8		8	6	6
GLA	sqm	202 161	202 055	202 323		201 905	146 558	146 152
Occupancy*	%	93.3	93.5	93.4		93.6	91.8	91.2
WAULT	year	3.1	3.3	3.3		2.6	2.6	2.7
Annualised cash passing	MNOK	571 944	573 429	576 207	**	534 427	383 197	382 670
rental income

• Occupied leasing area / GLA
• Consumer price index adjusted to rental income per 01.01.2023

Leasing activity
GLA		Q2 2023	Q1 2023
Change in GLA	sqm	106	(268)
Change in GLA	%	0.1	-0.1
Leases started / ended		Q2 2023	Q1 2023	YTD 2023	Q2 2022	Q1 2022	2022
Total area leases started	sqm	3 209	2 161	5 370	1 230	428	8 786
Total area leases expired	sqm	3 690	2 213	5 903	-	2 229	6 510
Net area leased	sqm	(481)	(52)	(533)	1 230	(1 801)	2 276
Net area leased	%	-0.2	0.0	-0.3	0.8	-1.2	1.1
Average lease term	year	4.6	5.9	5.6	4.2	3.1	6.6
Leases extended		Q2 2023	Q1 2023	YTD 2023	Q2 2022	Q1 2022	2022
Total area	sqm	3 061	8 079	11 140	1 978	4 192	24 743
Total area	%	1.5	4.0	5.5	1.3	2.9	12.3
Average extension	year	3.6	5.9	4.4	4.3	4.0	5.1
Leases signed (not started)		Q2 2023	Q1 2023		Q2 2022	Q1 2022
Total area	sqm	2 460	1 663		3 505	4 314
Total area	%	1.2	0.8		2.4	3.0
Average lease term	year	9.5	10.7		9.2	9.2

Change in GLA could be as a result of acquisition, sale or development of properties, or redefinition of areas from or to common areas or non-lettable areas.

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 or Maxi Storsenter.

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