Hansa Property Group ASA

Transcription

1 Hansa Property Group ASA Company Presentation December,

2 Event calendar Spring/summer 2007: Initial plan to create a listed Norwegian property company with focus on property development in with focus on both residential and commercial properties. Cooperation with leading Norwegian property developers November 9, 2007: Hansa Property Group ASA completed its first private placement, of 1.3 billion NOK in equity, at a share-price of 45 NOK per share. In addition, Hansa Property Group ASA also raised NOK 400 mill in bond financing November 23-28, 2007: Properties with a market value of about NOK 2.4bn. was acquired and settled. Leading Norwegian developers and investors like Veidekke, Storebrand, Sjølyst Utvikling, Selvaag and Svithun Finans invested in the company November 23, 2007: Hansa Property Group ASA was listed on the Norwegian OTC-list (NOTC), with the ticker-code HPRO December 1, 2007: Hansa Property Group ASA moves in to new offices in Dronning Eufemiasgate 8, the PriceWaterhouseCoopers headquarter. PriceWaterhouseCoopers will assist management with Financials and Accounting: Interim management Reporting Corporate governance 1H2008: Planned IPO - Oslo Axess 2

3 Summary GROWTH STRATEGY: Pure development company (residential and commercial) in the Nordic and Baltic Sea region Primary exposure to the Norwegian and Baltic Sea economies high growth areas! Quality projects in the largest cities. High portion sea front or sea view The company will evaluate investment opportunities in the Baltic Sea region, but currently has a cautious approach SIZE: Currently NOK ~2.4bn in assets. Targets NOK ~4-6bn in assets by IPO. Sizeable projects. Acquired projects ~NOK 600m in average size Projects horizon (total); 5-10 years Current leverage of ~41 % MANAGEMENT: Experienced top management team (CEO, Egil Bauer-Nilsen and COO, Pål Tronstad) and project managers Current organisation: 11 people, plus approximately 18 people in management contract organizations All the project managers have been running their projects for many years RETURN: Expected pre-tax IRR on current projects of 26% - on current leverage of ~41 %! Target dividend yield of 5% (average over next five years) Disposables either reinvested, share buy backs or distributed as dividend triggered by best return COMMITMENT: Leading Norwegian developers and investors like Veidekke, Storebrand, Sjølyst Utvikling and Svithun Finans have subscribed for a total of NOK 0.8bn in shares. Lock up agreements 6-24 months LISTING: OTC-listing November 2007, Oslo Stock Exchange (Oslo Axess) listing planned during 1Q

4 Assets 100% Norway Average IRR at ~26% for the company Present value of projects given 15%/12% discount rate of 45%/ 65% above acquisition value (with current assumptions) Average size pr project NOKm 600 Average cost pr sqm NOK for the projects Project Type Location Total (sqm) Value NOKm Pre tax IRR 1. BO1 Res./Com. Stavanger % 2. Lørenskog Res./Com. Oslo/Lørenskog % 3. Kaldnes Brygge Res./Com. Tønsberg % 4. Bergen Res./Com. Bergen % Total

5 situated in regional centres 4. Bergen (Hordaland) 3. Kaldnes (Tønsberg, Vestfold) Indoor swimming facility Commercial Plot N City beach Residential Plot M Boat slip Project site (current view) Sea view of envisioned Skjoldnes project Existing property Development of yard plot Finished 230 units 93,000 sqm remaining 50/50 residential/commercial Plot F Forgery 1. BO1 (Stavanger, Rogaland) 2. Lørenskog (outside Oslo) Project in centre of Stavanger Fully regulated Project site (in progress) Fully regulated (60,000 sqm) (154,216 sqm) Flexible zoning 69% residential 31% commercial Lervig Brygge Jaasund Project at Sola (outside Stavanger) (60,000 sqm) - Residential project 5

6 with higher population growth than country average Population growth Norway (p.a ) 1,8 % 1,6 % 1,4 % 1,2 % 1,0 % 0,8 % 0,6 % Norway - average 0,4 % 0,2 % 0,0 % Rogaland Akershus Hordaland Oslo Tønsberg Norway Sources: Statistics Norway 6

7 Company Management Company Organisation Management Board of Directors CEO CEO: Egil Bauer-Nilsen (1956): Egil Bauer Nilsen was the CEO of Nydalens Compagnie between 1994 and 1998, at which time he took up the post of Deputy CEO and CEO of Linstow International AS where he for the last decade was responsible for Linstow`s growth to NOK 5bn in the Baltic countries. For the last 6 months he has been working independently on projects in Russia and the Baltic Sea region. His CV includes posts with IBM Norge AS, Anders Wilhelmsen & Co AS and McKinsey & Co. Bauer-Nilsen is educated at Warwick University, England (B.Sc. In management Science) and Kellogg Graduated School of Management, MBA. CFO COO CIO COO: Pål Tronstad (1965) Pål Tronstad has been working for 14 years for Skanska (and Selmer), most recently as CEO of Skanska Residential. Tronstad has been part of the senior managemet group of Skanska for many years. Tronstad has been responsible for many of the largest commercial and residential projects in Norway over the last decade. Tronstad has B.Sc. in Civil Engineering from California State University. Project Project Project Hansa Property Group Organisation: Hansa Property Group has recruited some of the most experienced management in the business with a proven track record over time to deliver return on investments substantially above the industry average for the leading players. Hansa Property Group currently has 11 employees with an average of years in the real estate and development business. All the project leaders have long lasting relationships with construction companies and other partners relating to the property development business. All the project organizations for the committed projects have been running for several years with its current form and will be continued in Hansa Property Group. 7 Board of Directors Chairman of the Board: Henrik A. Christensen (1962) Partner in the law firm Ro, Sommernes Advokatfirma DA. He has prior experience from Realkreditt ( ), Ro, Sommernes ( ) and Wiersholm, Mellbye & Beck ( ). Christensen is a board member in: Home Properties AB, Home Capital AB, Home Invest AS, Choice Hotels Scandinavia AS, SuperOffice AS, Norefjell Prosjektutvikling AS, Ignis AS, Habiol AS og Ferncliff AS. He holds a Cand. Jur from University of Oslo in Board member: Leif E. Johansen (1945) Leif E. Johansen joined Selmer (today Skanska) in 1968 and left in 1980 to become the CEO of Avantor Eiendom which was listed during his on Oslo Børs during this period. In 1994 Johansen joined Veidekke (Listed on Oslo Børs from 1986) as the CEO of Veidekke Eiendom. Johansen has a civil engineering degree from the Norwegian University of Science and Technology (earlier NTH) from Board member: Mimi Berdal (1959) Partner, Arntzen de Besche law firm until Acting as independent advisor since. Serving on the board of directors for among others Itera Consulting Group ASA, Gjensidige Investeringsrådgivning ASA and Gassco AS. Cand. Jur. from the University of Oslo, Board member: Hilde Barstad (1961) Real Estate Director in Forsvarsbygg responsible for real estate management and development for the Norwegian armed forces. Currently serving on the board of directors for Boligbygg KF, Oslo Harbour KF and Ullevål Stadion AS. Cand. Jur. from the University of Oslo in 1988.

8 Project Management Hansa Property Group ASA (2 employees) Lørenskog and Kaldnes Stavanger Bergen Ownership 100 % 100 % 100 % Management Mgt. agreement Purchase of entire company with management Mgt. agreement Management contract Contract until end of 2008 Contract for the entirety of the project Management partner Sjølyst Utvikling AS Milepel Forvaltning AS Employees 2 employees 7 employees 5 employees 8

9 Shareholders in Hansa Property Group ASA * Investor name Shares Selvaag Gruppen AS Sjølyst Utvikling AS Storebrand Livsforsikring AS Veidekke Eiendom AS Libra Fund LP / Libra Offshore L Sandland Holding AS Eiendomsselskapet Substansia Grant Invest AS Pareto Securities AS Pareto Private Equity AS Ventor AS SEB Enskilda ASA Opplysningsvesenets Fond DTZ Realkapital Eiendomsmegl Leif Hubert Eiendom AS Svithun Eiendom AS TS Eiendom AS Institusjonen Fritt Ord Alcides Eiendom AS MP Pensjon Masiv AS ABP Eiendom AS Lise AS Rotac AS ABP Eiendom AS Rivertown AS EBN Invest AS Tropal AS Investor name Sjølyst Utvikling Shares December 10,

10 Sensitivities attractive returns even with adverse sales and cost development* Projects Sales price D 45,0% 35,0% 25,0% 15,0% 5,0% Construction cost D Net yield D 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 9% 18% -10% -5% 0% (base case) 39% 26% Change in sales pric 33% 29% 28% -0,50% -0,25% Base case 26% 33% 5% 10% 26% 25% Change in net yield level 19% -10% -5% 0% 5% 10% Change in construction cost 40% 11% 0,25% 0,50% 23% 10 Leverage D 40% 35% 30% 25% 20% 15% 10% 23% 25% 26% 30% 35% 41% (base case) Project delay 30% 25% 20% 15% 10% 26% Leverage % 27% 29% 45% 50% 55% 18% Project delay 14% 31% *Pre-tax IRR is at corporate level

11 Risk factors Macro-economic development Norway has experienced a long period with increasing house-building activity and low interest rates. Macro-economic experts, as well as financial markets, expect an overall reduction in the total house-building activity as well as a modest increase in interest rates. A sharp increase in interest rates, and/or an adverse change in other economic variables for which the Company s end customers are sensitive to could affect Hansa Property Group s (HPG or Company) ability to sell its projects within the required time frame at the required price level. Such a scenario could therefore have a material adverse effect on HPG s operating results and financial condition. Risk associated with obtaining planning permission and other regulatory consents Changes in, or completion, of existing or new planning regulations by relevant authorities may significantly affect the development of the Company s properties. Furthermore, existing planning regulations may limit the possibility to further develop the properties in this regard. The level of utilization allowed for land subject to a development project will significantly affect the profitability of the project. There can be no assurance that the Company will obtain planning permission for utilization at the assumed levels. Planning authorities do also have the discretion to set conditions for planning permissions, including the right to require the Company to make costly investments or the right to set conditions based on environmental or other considerations, or even deny use of properties as a whole as building ground, which each and all may adversely affect a project s profitability. Parts of the properties require significant changes to existing planning regulations, and some properties and more areas of the properties are yet to yet to be regulated. There are several factors beyond the control of the Company that can adversely affect the planned utilization and regulation of the property, including projected time frame and volume for the development, and, consequently, the basis for the acquisition of the projects. Access to financial funding In addition to cash generated from operations, HGP may be dependent upon having access to loans and credit lines to fund its operations and capital expenditures. Should the Company experience weakening markets and lower cash flow, the Company may have to make substantial changes in its business plans including curtailing new development projects to adapt the business to the funds available. Changes in the rate of interest charged on the Company s borrowings will have an impact on the Company s finance cost. However, variations in the interest rate may be compensated by entering fixed interest rate contracts. Project planning There can be no assurance that the HPG in the future will manage to develop projects which are seen as sufficiently attractive by customers to achieve the prices necessary to secure the necessary project profitability for HPG. Risk associated with use of contractors construction and development costs HPG will utilize the services of external construction contractors and service providers in connection with the development and construction of new projects. The Company will endeavour to use established contractors with a long track record for its projects. However, HPG will be exposed to losses and extra costs on projects if a contractor should experience financial difficulties. HPG will also be exposed to cost overruns on projects for instance in the event of changes in plans or additional work outside the scope originally agreed should become necessary during the construction phase. The development of prospective construction costs is uncertain The construction business in Norway is currently experiencing capacity problems due to high activity. Lack of skilled manpower is a problem in some areas. Capacity constraints experienced by construction contractors can negatively affect the Company s ability to complete projects on time and on budget, and its overall ability to develop and sell a sufficient number of housing units to fulfil its business plans. Demand for office space and tenant risk The demand for office/retail space is influenced by several factors, on both a micro and macro level. Negative changes in the general economic situation, including business and private spending, may adversely affect the demand for office space. Historically, positive developments in the office property market have been followed by increased construction of office properties. This may lead to oversupply and increased vacancies. The long lead time of construction may further increase this effect, as construction that has been started in general will be finalized regardless of any market slowdown. The tenants financial status and strength, and thus their ability to service the rent etc. will always be a decisive factor when evaluating the risk of property projects. Termination of leases with subsequent vacancy of the premises, or lower rent levels, will influence the rental income negatively. Key personnel HPG is dependent upon that the management company attracts and retain key employees and management personnel, in particular within the areas of project planning and development and management and administration of property projects. Personnel with competence in these areas are attractive in the market. Competition for qualified staff and other factors could adversely affect the Company s ability to attract and retain key employees. The loss of the services of key personnel may adversely affect the Company s operating results and financial condition. The success of the company is to some extent connected to the competence and the experience of key personnel in the administration and in the board of the company. The company s growth and results are consequently dependent on these persons. Limited history as an operating company The Company has only recently been formed and acquired its assets. Further assets and projects are planned to be acquired. The Company is still in the process of recruiting employees and establishing its working routines. There can be no guarantee that the company will not experience unexpected problems in relation to individual assets that it has acquired, or that it will be able to recruit and retain the staff that it requires. 11

12 1. BO1 (Stavanger, Norway) projects around Stavanger City Centre Stavanger Jaasund Lervig Brygge Project site Stavanger Key regional facts: Population (Stavanger/Sandnes): 250,000 4th. largest city in Norway 12

13 1. BO1 Stavanger project description The project in brief Acquisition of BO1, a company owning the development rights to three different land plots in and around Stavanger An experienced organisation with a long track record The region experiences low unemployment and expected growth in private sector is 10,000 new jobs in 2007 The project consists of: Lervig Brygge (close to centre of Stavanger); 60,000 sqm residential ( 950 units) Jaasund (Sola); 60,000 sqm residential ( 650 units) Aase Gaard (Sandnes); 27,000 sqm residential ( 300 units) Other; option to buy land plot at Jaasund, two small development projects, a few small devloped commercial buildings (total estimated value: NOK 45m) Total developable area: 116, ,000 sqm residential and 0 55,000 sqm commercial Regulation and pre-sale status: Lervig Brygge fully regulated and pre-sale commenced. Deferred settlement of around NOKm 250 on Jassund and Aase gaard until plots are regulated 13

14 2. Lørenskog (Oslo area, Norway) only 10 minutes from central Oslo Lørenskog Project site Oslo Central Key regional facts: Population (Romerike/Oslo area): 240,000/ 1,000,000 Distances: Oslo (downtown) 15km, Gardermoen Airport 40km 14

15 2. Lørenskog project description The project in brief Acquisition of companies owning the development rights to projects located at Lørenskog (Romerike) Project started in 1998 build-out started in 2005; first apartments handed over in June apartments sold so far Centrally located just outside Oslo 240,000 inhabitants in Romerike 10 min drive to Oslo CBD 20 min drive to Gardermoen Airport Strong regional development New university hospital (4,000 employees of which 1,000 new) New main post terminal (3,000 employees in total) 2006 population growth of 2.1% in Romerike (Norway avg 0.9%) Total development potential of 154,000 sqm Regulation status: Fully regulated Sjølyst Utvikling is responsible for day-today operations until the end of

16 3. Kaldnes Brygge (Tønsberg, Norway) Unique location by the seaside Project site Central Tønsberg Tønsberg Oslo Tønsberg Key regional facts: Population (Tønsberg): 72,000 Distances: Oslo 100km, Torp Airport 21 km 16

17 3. Kaldnes Brygge project description The project in brief Purchase of the companies owning the development rights to Kaldnes Brygge in Tønsberg Prime sea-side location in Tønsberg. The area has a population of 72,000. The area has among the strongest GDP per capita in Norway More than 1% population growth over the last 5 years. Situated approximately 100 km from Oslo (60-70 minutes by car) Has since 2003 developed and sold 16,500 sqm ( 230 units) in the area Total remaining potential (fully regulated): Residential: 42,600 sqm ( units) Commercial: 41,500 sqm Commercial parking: 9,400 sqm boat slips Sjølyst Utvikling is responsible for day-today operations until the end of Fully regulated. Ongoing sales 17

18 4. Bergen (Norway) attractive projects in Western Norway Key regional facts: Population (Bergen): 250,000 Second largest city in Norway 18

19 4. Bergen project description The project in brief Growth in population in Hordaland region Acquisition of 7 different single purpose vehicles consisting of nine properties situated in Bergen and surrounding municipalities All projects situated in the strongest growing parts of the region (see map). More than people in the region and in Bergen centre Measured in no. of employees, 75 % of the Norwegian oil and gas sector is situated the western part of Norway Less volatile market than the Oslo region Significant land plot shortage in the Centre of Bergen. Estimated only two years commercial build out reserves. Estimated requirement of more than 2,900 residential units in Bergen pr year whereas land plots allows for only 1,000 1,200 (Opus Bergen AS) Strong growth region with focus on fish, oil and gas, technology, health and education. More than 31,000 students living in Bergen. Vast natural and technological resources Total development potential of 327,500 sqm; 250,000 sqm residential and 77,500 sqm commercial Day-to-day operations will be handled by the sellers, Milepel Management Milepel has a profit split agreement and finders fee on new projects Status: Three of the plots are fully regulated whereas the rest are under regulation. Of the total acquisition value NOKm 100 is due at time of regulation for the different land plots 19