Residential projects - Vantage Development

Vantage Development S.A.
2Q15 results presentation
11 September 2015
CONFIDENTIAL
Record sale of 110 apartments in 2Q15 (+150% YoY)
Apartments sold at quarterly rate, 1Q13 – 2Q15

Commissioning of 20 apartments in 2Q15, mainly from the
Promenady Wrocławskie project.
255
2015
2014
2013
51
2Q15
44
1Q15
53
4Q14
37
107 92 110
51
3Q14
36
57
2Q14
Planned increase in apartment sales to 450 in 2015 (+76%
YoY), without taking into account the sales of the
Dąbrowskiego 40 project to the Apartment Lease Segment
Fund.
255
1Q14

+57%
4Q13
536 apartments from 3 projects planned to be put on sale
in 2H15.
450
3Q13

450
400
350
300
250
200
150
100
50
0
2Q13
A 150% YoY increase in apartment sales to 110 in 2Q15.
1Q13

Apartments commissioned at quarterly rate, 1Q13 – 2Q15
249
250
210
205
200

As of end of 2Q15, the company had sold 274 apartments
that are still to be commissioned.
150
102
102
27
18
25
20
2Q15
1
1Q15
2
3Q14
2
3Q13
50
2Q13
CONFIDENTIAL
2
2014
2013
4Q14
1Q14
0
4Q13
An expected increase in the number of apartments
commissioned in 2H15 due to planned finalisation of the
Promenady Wrocławskie III (205 apartments) and Centauris
(103 apartments).
1Q13

2Q14
100
Increase in value of commercial properties portfolio

Finalisation of 2 retail projects in 2Q15: Galaktyka
(5,174 m2) and Grona Park (3,932 m2).

As of end of 2Q15, additional 812 m2 at Grona Park
have been put to business use (increase in lease level
to 52%).
Finalisation of the Zita C office project (lease area of
6,340 m2) planned for 4Q15.





Recognition of profit from revaluation of value of
working investment properties in 2Q15 at PLN 1.2m.
Increase in value of working properties portfolio to
PLN 172m as of end of 2Q15 against PLN 119 m in
4Q14.
Maintaining gross profitability at 72%.
Lease segment revenues growth potential due to
finishing of subsequent stages of the Zita office
building (stage C and D+A).
Lease area
(m2)
Lease level
(%)
Carrying value as of
end of 2Q15 (PLN m)
Promenady Epsilon
7,132
100%
53.3
Delta 44
4 213
88%
26.1
Zita B
5,690
81%
39.9
Grona Park
3,932
31%
20.9
Galaktyka
5,174
65%
32.2
Project
3,5
100%
3,0
80%
2,5
2,0
60%
1,5
40%
1,0
20%
0,5
0,0
0%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Revenues zfrom
leasing
(PLN
M, oś)
left axis)
Przychody
najmu
(PLNm,
lewa
Lease segment
profitability
axis)oś)
Rentowność
segmentu
najmu(%,
(%,right
prawa
CONFIDENTIAL
3
Results due to low number of commissions in 2Q15
(PLNm)
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
2013
2014
YoY, %
53
44
51
107
92
110
181
255
41%
Apartments commissioned
102
27
18
102
25
20
210
249
19%
Revenues
22.9
5.5
4.8
28.6
10.4
10.1
44.8
61.8
38%
20.4
3.1
1.9
25.3
6.9
6.4
35.4
50.7
43%
1.9
1.9
1.9
2.6
3.0
3.0
6.0
8.2
37%
4.5
1.2
2.3
6.0
2.7
3.0
7.2
14.0
95%
sales gross margin (%)
19.8%
21.9%
48.3%
20.8%
25.8%
30.2%
16.1%
22.7%
-
Development activity
16.7%
0.9%
24.4%
17.8%
14.9%
13.7%
9.0%
16.6%
-
Commercial activity
67.7%
75.1%
78.8%
78.1%
72.1%
71.9%
66.4%
75.2%
-
Revaluation profit
0.1
-1.1
0.0
8.1
-0.4
1.2
4.5
7.1
58%
Operating
profit
Source: The Issuer
2.6
-2.3
0.3
10.8
-0.5
1.5
3.7
11.3
208%
Net profit
1.4
-2.6
-0.7
11.8
-1.7
0.1
4.7
10.0
114%
6.3%
-47.6%
-13.8%
41.1%
-16.1%
0.7%
10.4%
16.1%
-
Apartments sold
Development activity
Commercial activity
Sales gross profit
Net profit margin (%)

In 2Q15 the company has reported revenues of PLN 10.1m (against PLN 5.5m in 2Q14).

Smaller number of commissions attributable to the apartment projects' realisation schedule assuming a cumulation of sales by
means of notarial deeds for 2H15.

Increase in revenues from commercial activities as a result of commissioning of the ZITA B office building and the Grona Park and
the Galaktyka retail properties.

Profit from revaluation of pricing of investment properties was PLN 1.2m (against loss of PLN 1.1m in 2Q14).

Net profit totalled PLN 0.1m, compared to net loss of PLN 2.6m in 1Q14.
CONFIDENTIAL
4
Residential market in Wrocław
Average apartment offer price on the Wrocław
residential market in 2012-2014 (PLN)*
Apartment sales volume in Wrocław in 2012-2014 (pcs.)*
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
5 600
4Q13
5 700
3Q13
5 800
2Q13
5 900
1Q13
6 000
4Q12
6 100
3Q12
6 200
2Q12
6 300
1Q12
2 000
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
6 400

A 21% YoY increase in number of apartments sold in 2Q15 to 1800.

A stabilisation of average apartment asking prices at PLN/m2 6,000-6,100.

Current residential offer at almost 7,444 apartments (including ca. 1,539 in finished investments).

Average period of selling off offer at ca. 16 months.

We expect that in the coming calendar quarters the apartment sales volume will stabilise itself along with equally stable average
asking price level.
* Data based on Emmerson reports
CONFIDENTIAL
5
Residential market in Mokotów
Average apartment offer price on the Mokotów
residential market in 2012-2Q15 (PLN)*
Apartment sales volume in Mokotów in 2012-2014
(pcs.)*
10 500
600
500
10 000
400
300
9 500
200
9 000
100
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
1Q12
0
8 500

A 86% YoY increase in number of apartments sold in 2Q15 to 552.

A drop in asking prices by 8% to PLN/m2 8,750.

Current residential offer of ca. 2,475 apartments, including almost 400 apartments available in already finalised investments.

Average period of selling off offer at less than 5 calendar quarters.

We expect that in the coming calendar quarters the apartment sales volume will grow and the average asking price level will stabilise
itself at PLN/m2 8,500-9,000.
* Data based on Emmerson reports
CONFIDENTIAL
6
Further increase in residential offer

The residential offer of the end of 2Q15 was 313
apartments (compared to 380 at the end of 4Q14).
Remainingoferta
offer
Pozostała
500

About 20% of the offer is located in finalised projects.
400

By the end of 2015, the company plans on launching
300



Currently, the company owns land holdings allowing
realisation of ca. 68k m2 UFA and ca. 70k m2 of lease
area.
In 2Q15, the company has bought a land in Wrocław
at Żegiestowska street for PLN 14.5m, with plans to
build ca. 270 apartments there (average land price at
PLN 940/m2UFA).
Additionally, the company is currently looking for land
for new investments in, among others, Warsaw and
Wrocław.
Centauris IV-V
Patio House
100
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
0
1Q12
(Promenady Wrocławskie IV, WUWA 2 and Living Point
Mokotów I).
Centauris III
200
2Q12
another 3 investments of ca. 540 apartments
Promenady II+III
Potential apartment UFA possible on land holdings (k m2, as of
end 2Q15)
15.3
34.0
15.5
Promenady Wrocławskie (cz.
mieszkaniowa)
residential part
Promenady Wrocławskie (cz.
office part
biurowa)
3.0
WUWA 2
Żegiestowska
Konstruktorska
70.0
CONFIDENTIAL
7
Residential projects
Promenady Wrocławskie
UFA m2
Number of
apartments
Number of
apartments sold
Utility system service
area m2
Date of
finalisation
Date of
settlement
II
11,380
222
159
157
4Q 2014
1Q 2016
III
9,200
205
141
1,918
3Q 2015
2Q 2016
IV
15,400
307
0
-
4Q 2016
2Q 2017
Centauris
UFA m2
Number of
apartments
Number of
apartments sold
Utility system service
area m2
Date of
finalisation
Date of
settlement
III
5,944
103
69
0
4Q 2015
2Q 2016
IV-V
7,725
134
38
0
2Q 2016
1Q 2017
UFA m2
Number of
apartments
Number of
apartments sold
Utility system service
area m2
Date of
finalisation
Date of
settlement
2,980
60
0
-
2016
2017
UFA m2
Number of
apartments
Number of
apartments sold
Utility system service
area m2
Date of
finalisation
Date of
settlement
3,385
65
9
-
1Q 2016
3Q 2016
UFA m2
Number of
apartments
Number of
apartments sold
Utility system service
area m2
Date of
finalisation
Date of
settlement
7,560
169
0
-
4Q 2016
2Q 2017
WUWA 2
I
Patio House
I
Living Point Mokotów
I
CONFIDENTIAL
8
Residential project realisation agreement for BGK
- 40 Dąbrowskiego St

In May 2015 the Company has signed a preliminary
agreement with a special purpose vehicle of a fund
run by the BGK TFI regarding realisation and sale of
a residential project located in Wrocław at 40
Dąbrowskiego St.

The investment will include 133 apartments with a
total usable floor area of 6,550 m2.

The transaction value has been set down to no less
than PLN 41.6m.

Realisation date: not later than 30 November 2016.
Value
UFA (k m2)

The realisation of the project for BGK will allow for
reduction of financial costs and increase in project
profitability.
6,550
Planned number of apartments (pcs.)
133
Average apartment area (m2)
48.2
Transaction value (PLN m.)
41.6
Transaction value/apartment UFA (PLN/m2)
CONFIDENTIAL
6,351
9
Land purchase at Żegiestowska street in Wrocław
Jesionowa 40

In 2Q15, the company has entered into a
preliminary agreement on purchasing of land
located at 13 Żegiestowska street in Wrocław.
Projected
investment
Innova/Modern
o
Zakątek Piękna
Oaza
Centauris

The price of transaction was PLN 14.5m (land
value at PLN 935m2 UFA).
Di Trevi


Plans for construction of 15,500
apartments) in two stages.
Projected
PLN 6,500/m2.
average
m2
UFA (ca. 270
Puszczykowska 3
price
Cichy Gaj
at
Value

Acquiring
construction
permit
and
commencement of realisation of the first stage
planned of 4Q15.
UFA (k m2)
15,500
Planned number of apartments (pcs.)
270
Average apartment area (m2)
57.4
Land purchase value (PLN m)
14.5
Land value/UFA (PLN/m2)
935
Expected average price (PLN/m2)
6,500
CONFIDENTIAL
10
Key Wrocław project: Promenady Wrocławskie

Land area:

developed 3,62 ha (675 apartments and 12,822 m2 retail UFA)

under development 3,27 ha (781 apartments and 16,540 m2
retail UFA)

to be developed 8.14 ha (715 apartments and ca. 70k m2
retail UFA).

Accounting valuation of the non-developed land: PLN 105.9m
as of end of 2Q15.

Valuation of reserves at PLN 117.3m as of end of 2Q15.

Planned finalisation of the projects in stages by 2020.

Stage III — start of commissions planned for 3Q15,

Stage IV — start of construction planned for 3Q15,

Zita B — commission planned for 4Q15,

Zita D+A — start of construction planned for 4Q16.

Average gross apartment prices: PLN 5,800 – 6,000/m2.

Average rent for office projects: EUR 12/m2.
CONFIDENTIAL
11
Office projects
Promenady Epsilon
UFA
m2
UFA m2
leased
Number of
parking places
Date of
finalisation
Date of
settlement
Carrying value
(PLN m,
30.06.2015)
Debt (PLN
m,
30.06.2015)
LTV
(%)
7,132
7,132
114
finalised
settled
53.3
40.6
76%
Promenady Zita
UFA
m2
UFA m2
leased
Date of
finalisation
Date of
settlement
Carrying value
(PLN m,
30.06.2015)
Debt (PLN m,
30.06.2015)
LTV
(%)
I
5,690
4,628
finalised
~2Q 2015
39.9
25.1
63%
II
6,340
-
~4Q 2015
~2Q 2016
26.0
9.8
38%
III
10,200
-
~4Q 2016
~2Q 2017
14.1
0.0
0%
Delta 44
UFA
m2
UFA m2
leased
Number of
parking places
Date of
finalisation
Date of
settlement
Carrying value
(PLN m,
30.06.2015)
Debt (PLN m,
30.06.2015)
LTV
(%)
4,213
3,708
34
finalised
settled
26.1
20.0
77%
CONFIDENTIAL
12
Retail projects
Grona Park
retail UFA
[m2]
office
UFA [m2]
leased
UFA [m2]
Date of
finalisation
Date of
settlement
Carrying value
(PLN m,
30.06.2015)
Debt (PLN m,
30.06.2015)
LTV
(%)
2.932
1,000
1,220*
2Q 2015
2Q 2015
20.9
6.0
29%
As of end of 2Q15, additional 812 m2 have been put to business use (current lease level at 52%).
Galaktyka Park
retail UFA
[m2]
office
UFA [m2]
leased
UFA [m2]
Date of
finalisation
Date of
settlement
Carrying value
(PLN m,
30.06.2015)
Debt (PLN m,
30.06.2015)
LTV
(%)
5,174
-
3,351
2Q 2015
2Q 2015
32.2
15.3
48%
CONFIDENTIAL
13
Growth potential for 2015-16

Introduction of additional 3 projects with ca. 520 apartments to the retail offer planned by the end 2015.

Commencement of commissions within the scope of the 2 residential projects planned for 2H15 (total of 308 apartments for commission).

Expansion of the commercial real estate holdings portfolio with subsequent stages of the Zita office building and further commercialisation of
retail projects.
Number
of
premises
1Q 2015
2Q 2015
3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2016
4Q 2016
start of
commissions
Centauris III
103
Centauris IV + V
134
Promenady III
205
Promenady IV
307
Promenady V
190
Patio House
65
WUWA 2
60
40 Dąbrowskiego st
133
startof
construction
start of
commissions
Living Point I
169
start of
construction
start of
commissions
Living Point II
175
start of
construction
Żegiestowska I
135
start of
construction
start of
construction
start of
commissions
start of
commissions
start of
construction
start of
commissions
start of
construction
start of
commissions
start of
construction
finalisation of
realisation
Zita C
finalisation of
realisation
Zita D+A
Galaktyka
finalisation of
realisation
Grona Park
finalisation of
realisation
CONFIDENTIAL
14
Interest bearing debt
Debt structure as of end of 2Q15 (PLN m)
Debt settlement schedule (as of end of 2Q15, PLN m)
Leasing;
PLN 40.8m
70
Long-term
loans;
PLN 77.1m
Short-term
bonds;
PLN 0.8m
60
50
40
30
20
10
0
Long-term
bonds;
PLN 99.8m
Doto1 1roku
Up
year
Short-term
loans;
PLN 23.2m
Over 2
Over 5
Over 1 1 Powyżej
Over 3 3 Powyżej
Over 4 4 Powyżej
Powyżej
2 Powyżej
5
years up
years
year
up
years
up
years
up
roku do 2 lat do 3 lat lat do 4 lat lat do 5 lat
lat
to 3
to lat
2
to 4
to 5
years
years
years
years
Kredyty
Loans
Value as of
end of 2Q15
(PLN m)
(PLNm)
Interest rate
(%)
Issue date
Series D
19.9
WIBOR3M+5.5%
09.08.2013
09.08.2016
Series E
13.1
WIBOR3M+4.95%
10.06.2014
16.06.2018
Series F
23.2
WIBOR3M +4.3%
10.06.2014
16.06.2017
Series G
10.1
N/D
03.02.2015
03.02.2018
Series H
24.5
N/D
02.04.2015
02.04.2018
9.8
N/D
12/05/2015
12/05/2018
Financial
bonds
Seria I
Redemption
date
Obligacje
Bonds
Credit indicators (PLN m)
2012
2013
2014
2Q15
Gross debt
64.4
101.3
191.6
241.7
Net debt
52.8
49.9
156.4
183.5
Net debt/EBITDA (x)
-7.0
12.9
13.6
14.9
Net debt/assets (x)
0.14
0.11
0.28
0.29
Net debt/equities (x)
0.18
0.16
0.48
0.57
Equities/assets (x)
0.76
0.67
0.59
0.51
Interest cover ratio (x)
-2.3
1.2
3.2
2.8
CONFIDENTIAL
15
2Q15 — another calendar quarter of high apartment sales
2Q15 financial results

Revenues at PLN 10.1m (compared to PLN 5.5m in 2Q14).

Sales gross margin improvement from 21.9% in 2Q14 to 30.2% in 2Q15.

Profit due to reevaluation of working investment properties to fair value at PLN 1.2m.

Increase in sales costs and overhead costs by 52% YoY to PLN 3.4m resulting from the increase in the scope of activities.

Net profit in the amount of PLN 0.1m resulting from low number of commissioned apartments.
Residential segment

110 apartments sold (against 44 in 2Q14).

20 apartments commissioned (against 27 in 2Q14), mainly from the Promenady Wrocławskie project.

May 2015 — signing a preliminary agreement with a special purpose vehicle FIZ of the Apartment for Lease Sector Fund
concerning realisation and sale of a residential property located at 40 Dąbrowskiego street in Wrocław (133 apartments), for a
price not lower than PLN 41.6m.

313 apartments on offer for the end of 2Q15.
Lease segment

Increase in working investment properties portfolio to PLN 172m for 2Q15 from PLN 119m for the end of 4Q14 as a result of
commissioning of the Galaktyka and the Grona Park shopping centres.

Increase in revenues from commercial space leasing by 62% YoY to PLN 3.0m in 2Q15.

Maintaining QoQ gross profitability from lease segment sales at 72%.
CONFIDENTIAL
16
APPENDIXES
CONFIDENTIAL
17
Appendix 1: Financial data
(PLN m)
Profit and loss account
Revenues
Sales gross profit
sales gross margin
EBITDA
Amortisation
EBIT
Financial revenues
including interest
Financial costs
including interest
Net profit
net margin
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
22.9
4.5
19.8%
2.7
0.0
2.6
0.2
0.2
1.5
0.8
1.4
6.3%
5.5
1.2
21.9%
-2.3
0.0
-2.3
0.2
0.2
1.1
0.7
-2.6
-47.6%
4.8
2.3
48.3%
0.3
0.0
0.3
0.2
0.2
1.0
0.6
-0.7
-13.8%
28.6
6.0
20.8%
10.9
0.1
10.8
0.0
0.1
1.9
1.3
11.8
41.1%
10.4
2.7
25.8%
-0.4
0.1
-0.5
0.2
0.1
1.4
1.0
-1.7
-16.1%
10.1
3.0
30.2%
1.6
0.1
1.5
0.4
0.4
1.9
1.4
0.1
0.7%
Balance
Working investment properties
Non-working investment properties
Reserves
Cash
Total assets
Equity
Long-Term debt
Short-Term debt
Total liabilities
127.7
180.6
60.3
36.8
442.8
317.4
83.0
10.7
442.8
136.1
180.6
75.6
63.2
493.6
314.0
115.9
19.7
493.6
151.5
181.0
85.3
23.2
483.0
313.1
115.7
13.2
483.0
180.8
182.0
101.0
35.2
549.2
323.4
176.4
15.1
549.2
192.2
175.8
113.8
33.4
560.7
324.7
183.6
16.0
560.7
212.4
135.3
173.9
58.1
627.7
323.2
215.9
25.7
627.7
-2.6
-2.8
-9.1
-8.3
-5.2
22.5
-21.0
-10.6
-8.4
-24.4
-22.5
59.0
-2.2
-7.7
8.1
0.5
-12.8
37.0
Cash flow statement
Cash flow from operational activity
Cash flow from investment activity
Cash flow from financial activity
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Appendix 2: Structure of assets
Valuation for
2Q15 (PLN m)
% of assets
Working investment properties
Promenady Epsilon
53.3
8.5%
Delta 44
26.1
4.2%
Zita B
39.9
6.4%
Grona Park
20.9
3.3%
Galaktyka Park
32.2
5.1%
Zita C
26.0
4.1%
Zita D+A
14.1
2.2%

Working investment properties
consist of the realised
commercial properties that
generate revenues from lease

Predicted investment expenses
for realisation of commercial
projects in 2015 at ca. PLN 41m.

Land allotted for realisation of
subsequent stages of the
Promenady Wrocławskie project,
remains the company's key asset
(PLN 147 m, almost 17% of
assets).
Working investment properties under construction
Non-working investment properties
Promenady Wrocławskie
105.9
16.9%
Property Serock near Warsaw
1.5
0.2%
Gamma Office
9.6
1.5%
Słoneczne Sady
11.6
1.8%
6.3
1.0%
16.6
2.6%
Reserves
173.9
27.7%
TOTAL
627.7
100.0%
Investment plot, 116/2 Ślężna St
Valuation of Centauris shares
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Reservations
The above document is intended to serve only as an information and should not be considered an attempt at persuading to buy or sell any
financial instruments. This document is not a advertisement, offer or proposition to buy financial instruments. Vantage Development S.A.
considers the information sources used herein to be credible and precise, however, no guarantee exists that they are comprehensive and
represent the actual status in full. This document can contain statements about the future that should be considered an investment risk and
source of uncertainty and that can differ substantially from the actual results. Vantage Development S.A. is not responsible for results of
decisions that were made based on this document. This document should not be considered a source of knowledge sufficient enough to
make a decision about investment. The person using this document shall be solely responsible for the method of use of the information
contained herein. This document is protected by the Copyright and Related Rights Act. It's duplication, publication and distribution requires a
written consent by Vantage Development S.A.
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Contact

Iwona Kowalska
[email protected]
phone. (71) 786 00 70

Dariusz Pawlukowicz
[email protected]
Dąbrowskiego 44 street
50-457 Wrocław
www.vantage-sa.pl
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