Aurora Eiendom : Q3 Report

Q3 2023 REPORT

AURORA EIENDOM Q3 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
ALTERNATIVE PERFORMANCE MEASURES & EPRA REPORTING	32
GLOSSARY	39

AURORA THIRD QUARTER 2023 5

HIGHLIGHTS AND SUMMARY OF THE

Third quarter of 2023

• Rental income in Q3 was NOK 142 million (NOK 133 million), which corresponds to a like-for like growth of 7 %. The increase can mostly be attributed CPI growth.
• Net income from property management was NOK 114 million in the quarter (NOK 109 million)
• In Q3, new leases were started on a total area of 3 468 sqm, while leases for 2 161 sqm expired. This led to an increase in occupancy from 93.3% to 93.7% compared to last quarter.
• The quarter´s gross tenant turnover in our fully owned centers was NOK 2 127 million, which is a like-for-like growth of 5.9 % compared to Q3 2022.

­	­	Year to date 2023, like-for-like growth in gross tenant turnover was 5.1 %
­
­		compared to 2022.
­	Health food stores, along with coffee bars and pharmacies have had the best
­
­		development in turnover.

• Alti Forvaltning currently has 45 centers under management, an increase of 3 in the last quarter.

A total of 31 shopping centers are branded with the "ALTI" common market profile.

­ ­ Alti Nerstranda in Tromsø, owned by Aurora Eiendom, was rebranded in September.

Gross rental income	EPRA NRV per share
(NOK million)	(NOK million)

		145				135	137
		143	142	134		133
	139								130
133
Q3 - 22	Q4 - 22	Q1 - 23	Q2 - 23	Q3 - 23	Q3 - 22	Q4 - 22	Q1 - 23	Q2 - 23	Q3 - 23

Value of investment properties

Net Loan to value

		(NOK million)					(LTV)
8 875	8 813	8 844				53.1 %		53.2 %	52,9 %
		52.5 %		52.2 %
		8 682
			8 581
30.09.2022	31.12.2022	31.03.2023	30.06.2023	30.09.2023	Q3 - 22	Q4 - 22	Q1 - 23	Q2 - 23	Q3 - 23

6 AURORA THIRD QUARTER 2023

AURORA THIRD QUARTER 2023 7

LETTER FROM THE CEO

Encouraging trends amidst economic headwinds

As the third quarter of 2023 has concluded, we are inspired by the resilience of the shopping center sector, as evidenced by the increasing footfall amidst economic headwinds. This reinforces our confidence in the robust shopping center model, which continues to deliver relevant offerings and services to our customers through all economic cycles.

Our portfolio has surpassed our expectations, with

1. like-for-likegross tenant turnover growth of 5.9% in the third quarter, contributing to a year-to-date uptick of 5.1%. Health food stores, coffee bars, and pharmacies stood out as the top-performing tenant categories.

Leasing activities have contributed positively, with new agreements encompassing 3 468 square meters and the conclusion of leases for 2 161 square meters. Additionally, at the end of the quarter, we have signed lease agreements for future commencement on a combined area of 1 589 square meters.

Alti Forvaltning's management portfolio continues to expand, now encompassing 45 centers-a growth inclusive of three additions this quarter.

Our commitment to sustainable operations has been lauded by the EPRA, awarding our 2022 annual report the sBPR Gold level for exemplary ESG data disclosure and the sBPR Most Improved Award, ranking us among the top three improvers in ESG practices out of 173 assessed members. The accolade

of Norway's first dementia-friendly shopping center for Alti Vinterbro further underscores our dedication to inclusivity and social responsibility.

Overall, several of our critical performance indicators reflect encouraging trends. However, we are acutely aware of the challenges presented by the current level of refurbishment costs and climbing interest rates. These compel us to innovate continually in the optimization of our tenant mix, ensuring our centers remain preferred shopping destinations and community gathering points.

The upcoming Christmas season is a vital time for retail, and pivotal for the annual performance of some categories of offerings at our shopping centers. We enter this period with optimism, ready to capture the festive surge in activity. Our preparations are geared towards creating an inviting atmosphere

for holiday shoppers, enhancing their experience, and affirming our centers as their preferred choice. Despite consumer purchasing power being under pressure, we look forward to a season filled with high activity and are confident in our ability to deliver both joy and value to our visitors.

Lars Ove Løseth

CEO

8 AURORA THIRD QUARTER 2023

AURORA THIRD QUARTER 2023 9

Key figures

Group Key Figures		Q3 2023	Q3 2022	YTD 2023	YTD 2022	2022	2021
Rental Income	NOK	141 849 978	132 567 590	429 211 600	309 199 669	447 915 298	158 043 738
Net income from	NOK	114 293 061	109 028 571	357 069 554	261 519 103	377 828 438	129 008 000
property management
		30.09.2023	30.09.2022	YTD 2023	YTD 2022	31.12.2022	31.12.2021
Market value of	NOK 8 581 400 000	8 875 200 000	8 581 400 000	8 875 200 000	8 813 000 000	5 222 900 000
property portfolio
Net interest bearing	NOK 4 542 444 523	4 660 744 378	4 542 444 523	4 660 744 378	4 681 651 166	2 377 271 564
debt*
Outstanding shares		30 962 431	30 962 431	30 962 431	30 962 431	30 962 431	20 550 400
Equity per share	NOK	130.2	131.0	130.2	131.0	130.5	130.7

Alternative
performance
measures*		Q3 2023	Q3 2022	YTD 2023	YTD 2022	2022	2021
Interest coverage ratio		1.7	2.1	1.9	2.3	2.2	3.2
Loan to Value (LTV)	%	52.9	52.5	53.1	52.5	53.1	45.5
EPRA earnings per	NOK	1.22	1.49	4.39	4.40	6.42	6.37
share (EPS)
EPRA NRV per share	NOK	130	134	130	134	135	139
EPRA NTA per share	NOK	127	130	127	130	130	135
EPRA NDV per share	NOK	130	131	130	131	131	131
EPRA Net Initial Yield	%	5.85	5.30	5.85	5.30	5.76	5.36
EPRA Topped-Up Net	%	5.95	5.45	5.95	5.45	5.85	5.53
Initial Yield
Fully Let Net Yield	%	6.13	5.60	6.13	5.60	6.01	5.64
EPRA Vacancy Rate	%	2.5	2.3	2.5	2.3	2.2	1.8

* See Alternative Performance Measures for details.

Leasing portfolio summary		Q3 2023	Q2 2023	Q1 2023	Q4 2022		Q3 2022
Properties fully owned	#	8	8	8	8		8
GLA	sqm	201 180	202 161	202 055	202 323		201 905
Occupancy*	%	93.7	93.3	93.5	93.4		93.6
WAULT	year	3.0	3.1	3.3	3.3		2.6
Annualised cash passing rental income	MNOK	571 188	571 944	573 429	576 207	**	534 427

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

Leasing activity
GLA		Q3 2023	Q2 2023	Q1 2023
Change in GLA	sqm	(981)	106	(268)
Change in GLA	%	-0.5	0.1	-0.1
Leases started / ended		Q3 2023	Q2 2023	Q1 2023	YTD 2023	2022
Total area leases started	sqm	3 468	3 209	2 161	8 838	8 786
Total area leases expired	sqm	2 161	3 690	2 213	8 064	6 510
Net area leased	sqm	1 307	(481)	(52)	774	2 276
Net area leased	%	0.6	-0.2	0.0	0.4	1.1
Average lease term	year	5.1	4.6	5.9		6.6
Leases extended		Q3 2023	Q2 2023	Q1 2023	YTD 2023	2022
Total area	sqm	4 572	3 061	8 079	15 712	24 743
Total area	%	2.3	1.5	4.0	7.8	12.3
Average extension	year	3.8	3.6	5.9		5.1
Leases signed (not started)		Q3 2023	Q2 2023	Q1 2023
Total area	sqm	1 589	2 460	1 663
Total area	%	0.8	1.2	0.8
Average lease term	year	8.0	9.5	10.7

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.

10 AURORA THIRD QUARTER 2023

AURORA THIRD QUARTER 2023 11

AURORA EIENDOM GROUP

Real estate portfolio

Shopping center portfolio

Alti Amanda	Alti Buskerud	Alti Farmandstredet	Alti Nerstranda
Haugesund 100 %	Krokstadelva 100 %	Tønsberg 100 %	Tromsø 100 %

Alti Nordbyen	Alti Vinterbro	Arkaden Senter	Gulskogen Senter
Larvik 100 %	Ås 100 %	Stavanger 100 %	Drammen 100 %

Associated companies

Alti Forvaltning	Maxi Storsenter	Jærhagen Kjøpesenter
Surnadal 50 %	Hamar 25 %	Kleppe 10 %

Key figures

201 180	NOK
sqm	8.4bn

Gross lettable area

Tenant revenue

Development projects

Alti

Buskerud

Elveparken, Krokstadelva

At Krokstad in Drammen, we have under development approx. 550 housing units with shoreline to the Drammen river. We are developing what will become a new residential area in Drammen next to Alti Buskerud. Part of the land lot will be developed to retail. Planning initiative submitted.

NOK	NOK
571m	8.6bn

Annualised cash passing	Portfolio value
rental income

Alti

Nordbyen

Hovlandparken, Larvik

At Hovland in Larvik, we have under development approx. 800 housing units on the "old Hovland Trotting Track", combined with retail areas. This is planned to become a residential area just outside the center of Larvik, with Alti Nordbyen as one of the closest neighbours. Planning initiatives politically processed, zoning plan proposal work commenced.

12 AURORA THIRD QUARTER 2023

AURORA THIRD QUARTER 2023 13

GROSS TENANT TURNOVER PER QUARTER

		2020			2021			2022			2023
(NOK million)	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
															+5,9 %
Sum	1 478	1 818	2 032	2 587	1 495	1 901	2 112	2 667	1 705	2 071	2 008	2 652	1 813	2 137	2 127
Alti Amanda*	221	231	266	349	213	243	261	345	218	271	259	375	257	291	291
Alti Buskerud	221	284	307	398	231	268	296	403	245	285	270	377	253	289	277
Alti Farmandstredet	236	300	356	413	207	318	378	453	279	362	358	460	305	385	382
Alti Nerstranda	89	89	103	132	92	104	110	140	100	116	100	143	115	119	114
Alti Nordbyen	103	131	150	162	96	136	158	173	116	150	159	177	123	155	160
Alti Vinterbro*	329	451	465	604	358	439	437	542	362	401	402	501	350	403	417
Arkaden Senter*	58	66	78	75	55	76	83	84	63	92	85	96	72	98	89
Gulskogen Senter	221	266	305	452	245	317	389	528	323	394	374	524	339	397	398

• Gross turnover tenants Alti Amanda and Arkaden Senter includes Coop OBS! & Coop Extra which are not owned by Aurora. Gross turnover tenants Alti Vinterbro includes adjacent big-box retailers not owned by Aurora.

14 AURORA THIRD QUARTER 2023

AURORA THIRD QUARTER 2023 15

Sustainability

in Aurora Eiendom

• All shopping centers are set to have their energy efficiency assessed by a third party, with 4 out of 8 shopping centers completed by the end of Q3. The assessments will be used to implement measures to improve energy efficiency of the buildings.
• As a continuation of the work with the Transparency Act and Aurora´s general efforts within social sustainability, relevant policies and guidelines are being prepared by Alti Forvaltning, expected to be made official within the organization during Q4.
• Alti Vinterbro will have the first solar panel system of Aurora installed on its roof during the next quarter. Two additional shopping centers in our portfolio have in Q3 started a preliminary project towards the goal of establishing solar panels on the roof.
• Alti Vinterbro has been awarded a prize for being voted Norway´s first dementia-friendly shopping center.
• Our sustainability report published in the 2022 annual report has been assessed by EPRA, and awarded sBPR Gold level, meaning they consider Aurora Eiendom's disclosure of ESG-data to be at the highest level. We also received the sBPR Most Improved Award, being one of three companies among the 173 assessed members of EPRA that improved our score the most compared to 2021.

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2023

Financial developments

Rental income

Gross rental income in the quarter was NOK 141.8 million (NOK 132.6 million). This rise can be primarily attributed to the CPI-adjustment of the minimum rent for tenants. Furthermore, we observe that the level of rent in new and extended contracts, as well as the occupancy rate, remains stable in our shopping centers.

Property related operational expenses and administrative expenses

Property related operational expenses consist of owner´s share of common costs, maintenance, leasehold insurance, and other direct property cost. These amounted to NOK 19.0 million for the quarter (NOK 13.4 million), where much of the increase is attributed to maintenance costs. Please see note 5 for further information.

Administrative expenses were NOK 6.6 million (NOK 6.3 million). This represents the fee paid to Alti Forvaltning AS for managing the eight shopping centers in the Aurora portfolio. Alti Forvaltning AS provides management services to the parent company Aurora Eiendom AS, and the cost of this is included in the management fee.

Other operating income and expenses

Other operating income and expenses consists of income and expenses not related to the properties, such as provision and consultancy and auditing fees. These costs amounted to NOK 1.9 million (NOK 3.9 million). In Q2 2022, these costs included one-off costs incurred as part of the acquisition of new shopping centers.

Net income from property management

Net income from property management amounted to NOK 114.3 million (NOK 109.0 million).

Fair value adjustments of investment properties

The fair value of the investment properties was adjusted with NOK -113.4 million this quarter. The Group´s investment property portfolio consists of eight 100% owned shopping centers. Each individual property is valued by the external appraiser Cushman & Wakefield Realkapital on a quarterly basis. The value of the properties

in Aurora´s balance sheet is defined by this external valuation. From Q2 to Q3 2023 the external valuer has increased the valuation yields for the properties with 11 bps on average, which is the main cause for the write-down.

Share of results from associated companies

Aurora Eiendom AS has three associated companies:

• Alti Forvaltning AS - owned 50 %.
• 10 % indirect ownership in Jærhagen through JHG Invest AS.
• 25 % of Hamar Storsenter Holding AS.

>>	AURORA THIRD QUARTER 2023 17

The Group's share of profit in these companies amounted to NOK 16 012 in Q3. This figure includes amortisation of NOK 1.3 million of the excess book value on the shares in Alti Forvaltning.

Financial income

Financial income is mainly interests on cash.

Fair value adjustments on interest rate derivatives

Aurora Eiendom AS has twelve swap agreements and two swaptions.

Market value and position of the interest swap agreements amounted to NOK 227.3 million by the end of the quarter. The market value of the swaptions amounted to NOK -4.7 million.

Interest-swap agreements

Financial instrument	Principal amount	Remaining term in years	Swap rate	Start date	Maturity date
Interest rate swap 1	392 000 000	8.0	1.883 %	01.10.2021	01.10.2031
Interest rate swap 2	250 000 000	8.0	1.696 %	17.12.2021	01.10.2031
Interest rate swap 3	139 989 735	8.0	2.050 %	13.10.2021	01.10.2031
Interest rate swap 4	112 020 535	8.0	2.050 %	03.01.2022	01.10.2031
Interest rate swap 5	139 296 927	8.0	1.990 %	03.01.2022	01.10.2031
Interest rate swap 6	88 662 210	8.0	1.880 %	01.10.2021	01.10.2031
Interest rate swap 7	70 000 000	8.3	1.720 %	03.01.2022	02.01.2032
Interest rate swap 8	90 000 000	8.3	1.730 %	03.01.2022	02.01.2032
Interest rate swap 9	90 000 000	8.3	1.730 %	03.01.2022	02.01.2032
Interest rate swap 10	110 000 000	8.4	2.135 %	09.03.2022	09.03.2032
Interest rate swap 11	500 000 000	2.0	2.710 %	30.09.2022	30.09.2025
Interest rate swap 12	150 000 000	1.0	2.640 %	30.09.2022	30.09.2024
	2 131 969 407		2.130 %
Swaption 1	500 000 000		2.710 %	30.09.2025	30.09.2030
Swaption 2	150 000 000		2.640 %	30.09.2024	30.09.2029

Swaption 1 and 2 are based on agreement that the bank has an option, but no obligation, to prolong interest rate swap 11 and 12 for additional 5 years. The exercise of the option is based on the bank's decision alone, and must be communicated to Aurora before the maturity date of the intial interest rate swaps.

Financial expenses

Financial expenses, net of positive cash flow from swap agreements, amounted to NOK 70.0 million in the quarter (NOK 51.1 million). The expenses are mainly related to interest and fees on interest-bearing debt. Financial expenses are recognised using the amortised cost method.

Composition and repayment profile of the Group's interest-bearing debt

			Repayment profile
(NOK million)	Nominal amount 30.09.2023	2023	2024	2025	Total
Bank loan 1	3 033	0	3 033	0	3 033
Bank loan 2	266	2	264	0	266
Bank loan 3	1 415	11	44	1 360	1 415
Seller's credit	200	0	0	200	200
Total long-term debt	4 914	13	3 341	1 560	4 914

The bank loans have a weighted average credit margin of 2.14 % over 3 month NIBOR. The seller's credt has an all-in interest rate of 5 %.

Summary

Profit before income tax excluding fair value adjustments of investment properties and interest rate derivatives was NOK 48.6 million (NOK 59.2 million). The primary factor behind this lower profit is the heightened financial cost resulting from increased interest rates. In Q3 2023, financial expenses are NOK 18.9 million higher compared to the same quarter the previous year. Despite a reduction of NOK 118 million in net interest-bearing debt and Aurora's hedging of 48% of its debt, the market interest rate has surged by 271 basis points over the last 12 months, impacting the floating rate debt. This has had the most substantial impact on the result, although it has been partially offset by the favorable development in rental income, in large due to the CPI-adjustment of minimum leases.

Pre-tax profit, including fair value adjustments of investment properties and interest rate derivatives, was NOK -46.3 million (NOK -10.4 million)

Balance sheet

The Group´s assets amounted to NOK 9 396 million. Of this, investment properties amounted to NOK 8 581 million.

Interest-bearing debt was NOK 4 906 million (amortised) at the end of the quarter (NOK 4 914 million in nominal amounts). This includes a seller´s credit of NOK 200 million. The seller's credit was repaid on November 1st 2023.

Nominal value of debt hedged: 48% per 30.09.2023 (includes fixed rate of seller ́s credit). The equity totaled NOK 4 032 million (43 %).

18 AURORA THIRD QUARTER 2023

AURORA THIRD QUARTER 2023 19

Financing

The Group´s debt portfolio consists of long-term debt with Scandinavian banks, and a seller´s credit. The average remaining term for the debt portfolio is 1.1 years. The proportion of bank loans maturing within 12 months is classified as short-term.

The Group´s investment properties are pledged as security for the bank loans.

Aurora Eiendom has a total nominal debt maturity of NOK 3 297 million in 2024. The loans are planned to be refinanced through long-term bank loans, and Aurora Eiendom is in good communication with the banks involved regarding the continuation of the loan commitments.

The Group's bank loans incorporate financial covenants related to minimum liquidity, loan-to-value and interest coverage ratio. Aurora Eiendom was in compliance with conditions in the credit agreements as of 30.09.2023.

Cash flow and liquidity

Net cash flow from operating activities was NOK 91.0 million (NOK 96.2 million). Net cash flow from investments was NOK -18.3 million (NOK - 2 362 million) and net cash flow from financing activities was NOK -41.6 million (NOK 157.3 million). Cash flow in Q2 2022 from financing and investment activities is colored by the acquisition of Gulskogen and Arkaden.

The net change in cash and cash equivalents was NOK 31.0 million (NOK -2 108.0 million), and cash and cash equivalents at the end of the period were NOK 371.6 million (NOK 359.0 million).

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

	Note	Q3 2023	Q3 2022	YTD 2023	YTD 2022	2022
Aurora Eiendom
Rental income		141 849 978	132 567 590	429 211 600	309 199 669	447 915 298
Property-related	5	-19 034 781	-13 393 274	-45 202 433	-25 015 164	-36 869 249
operational expenses
Net rental income		122 815 197	119 174 316	384 009 167	284 184 505	411 046 049
Other income		15 766	4 810	33 592	36 327	182 845
Other operating expenses	5	-1 945 597	-3 887 991	-5 558 902	-6 946 535	-10 830 266
Administrative expenses	5	-6 592 305	-6 262 565	-21 414 303	-15 755 194	-22 570 190
Net income from		114 293 061	109 028 571	357 069 554	261 519 103	377 828 438
property management
Fair value adjustment,	2, 3	-113 417 493	-84 857 996	-282 665 282	170 508 440	105 770 125
investment property
Share of profit from JV and		16 012	1 164 182	5 888 753	2 673 609	19 582 471
associates
Operating profit		891 580	25 334 757	80 293 025	434 701 152	503 181 034
Financial income		4 243 289	97 740	9 969 862	176 906	8 863 984
Fair value adjustments,	2, 4	18 525 239	15 245 093	95 178 496	167 160 477	136 059 830
interest rate derivatives
Financial expenses		-70 002 159	-51 116 717	-198 698 017	-112 751 718	-178 092 948
Net financial items		-47 233 631	-35 773 884	-93 549 659	54 585 665	-33 169 134
Profit before income tax		-46 342 051	-10 439 128	-13 256 634	489 286 817	470 011 900
Change in deferred tax		15 585 970	6 217 446	22 508 694	-95 031 171	-80 404 072
Income tax payable		-5 508 517	-3 944 718	-19 592 234	-16 002 700	-26 389 317
Income tax		10 077 453	2 272 728	2 916 460	-111 033 871	-106 793 389
Profit		-36 264 599	-8 166 400	-10 340 175	378 252 946	363 218 510

>>

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