Interim report 1 Jan -30 June 2007 Kari Inkinen CEO 1
2 Market review
GDP growth % Finland Euro Area United States Japan 7 6 5 4 3 2 1 0-1 -2-3 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006* 2007** 2008** ** Estimated growth 3 Source: Statistics Finland, Ministry of Finance, KTI
Finnish economy 2007, estimates GDP change 3.2 % (2008: 2.8 %) Inflation estimate 2.5 % (2008: 2.4 %) Unemployment rate in June 2007: 7.4 % (2007: 6.7 % and 2008: 6.4 %) Employment rate in June 2007: 73.5 % Private consumption 3 % (2008: 2.8 %) 4 Source: Statistics Finland, Tapiola
Transaction volume 2001-2007 6,0 5,0 1000MEUR 4,0 3,0 2,0 1,0 0,0 2001 2002 2003 2004 2005 2006 2007/ H1 5 Source: KTI
6 Prime property yields in Helsinki CBD residential office retail 7,5 % 7,0 % 6,5 % 6,0 % 5,5 % 5,0 % 4,5 % 05-2007 05-1995 09-1995 05-1996 09-1996 05-1997 09-1997 05-1998 09-1998 05-1999 09-1999 05-2000 09-2000 05-2001 09-2001 05-2002 09-2002 05-2003 09-2003 05-2004 09-2004 05-2005 09-2005 05-2006 09-2006 Source: KTI s barometre survey
Sponda Varma Ilmarinen Tapiola-yhtiöt Kuntien Eläkevakuutus VVO** Citycon YH-Suomi** Sato RBS Nordisk Renting** Northern European Properties Etera Eläke-Fennia OP-ryhmä (eläke- ja henkiyhtiöt) Wereldhave Finland Nordea Henkivakuutus Veritas (Eläke- ja Henkivakuutus) Suomi-yhtiö Aberdeen s funds' investments in Finland**** Boultbee* Doughty Hanson & Co Bronda Properties**** Technopolis Genesta Property Nordic** NIAM I/S EjendomsInvest Curzon / IXIS AEW Europe*** Norgani Hotels* IVG Polar Fennia ja Henki-Fennia* 7 Source: KTI Largest property investors in Finland (by fair value) Institutional investors Unlisted property companies Listed property companies International investors * Based on transaction values *** Q3/2006 ** Book value **** January 2007 0 0,5 1 1,5 2 2,5 3
Average gross rental levels in CBD offices eur/m 2 / month 30 Helsinki Espoo Turku Tampere 25 20 15 10 5 (05-2008) 05-1995 09-1995 05-1996 09-1996 05-1997 09-1997 05-1998 09-1998 05-1999 09-1999 05-2000 09-2000 05-2001 09-2001 05-2002 09-2002 05-2003 09-2003 05-2004 09-2004 05-2005 09-2005 05-2006 09-2006 05-2007 8 Source: KTI
Office construction in HMA 450 000 400 000 350 000 300 000 250 000 200 000 150 000 100 000 50 000 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Q1/2007 9 kem 2 Approved Started Completed Source: KTI, Statistics Finland
Office projects in HMA PROJECT LOCATION GROSS M² ESTIMATED COMPLETION VARMA HEAD OFFICE HELSINKI, SALMISAARI 66 000 06 / 2008 VISIO BUSINESS CENTER HELSINKI, PASILA 32 000 syksy 2008 KARA MID POINT ESPOO, KARAMALMI 28 600 06 / 2008 PANORAMA TOWER ESPOO, LEPPÄVAARA 20 500 12 / 2007 IF INSURANCE, new building and renovation of old premises ESPOO, NIITTYKUMPU 15 000 09 / 2007 HTC KEILANIEMI, I phase ESPOO, KEILANIEMI 14 000 summer 2008 SWING LIFE SCIENCE CENTER, phase 5 ESPOO, KEILANIEMI 8 500 12 / 2007 BUSINESS PARK MANKKAA, II phase ESPOO, MANKKAA 8 000 11 / 2007 OPUS BUSINESS PARK, III phase HELSINKI, HERTTONIEMI 7 700 06 / 2008 AIRPORT PLAZA 2, VIVACE VANTAA, AVIAPOLIS 7 400 02 / 2008 NCC HOUSES, III phase HELSINKI, RUSKEASUO 6 500 05 / 2007 FALCON BUSINESS PARK, I phase ESPOO, OTANIEMI 6 000 06 / 2007 10 Source: KTI, Reed Business Information
Shopping Centre Retail development projects, HMA 2005 Attendance M Shopping centres and retail parks Existing Under construction Planned 2005 Sales M Itäkeskus 22,0 427 Jumbo 6,2 250 Iso Omena 8,7 195 Sello 11,0 188 Forum 14,0 160 Myyrmanni 7,1 158 Ruoholahti 3,3 ESPOO 129 Malmin Nova 7,3 77 Columbus 7,0 65 Lommila Retail Park Kämp Galleria 3,3 57 Lippulaiva 3,3 53 Arabia 2,0 36 Espoontori 3,3 31 Tikkuri 2,8 31 Heikintori 2,4 29 Isomyyri 2,2 29 Kluuvi 3,7 23 11 Myyrmanni Myyrmanni, extension Kannelmäki Bauhaus Plantagen Jumbo Retail, Tammisto Malmintori Koivukylä Tikkuri Retail Park Porttipuisto Malmin Nova Hakunila Grandis Glomson Retail Park Galleria Ogeli Grani Sello Pitäjänmäki Viikki Espoon keskus Entresse Arabia Lanterna Lanterna, Espoontori Retail Park HELSINKI Itäkeskus extension Laajalahti Columbus Heikintori Megahertsi Heikintori, extension Kalasatama City Center Kaisa Merituuli Kampin keskus Martinsilta Kluuvi Forum Kämp Galleria Iso Omena Plantagen Bauhaus Ruoholahti Lippulaiva Lippulaiva, extension Petas Retail Park Petikko Retail Park Marja-Vantaa Isomyyri VANTAA Retail Park Vantaanportti Itäsalmi
12 Results
in brief 4-6/2007 4-6/2006 1-6/2007 1-6/2006 1-12/2006 Total revenue, meur Net operating income, meur Operating profit, meur Profit for the period, meur 48.4 36.4 43.1 22.0 26.5 20.1 23.1 11.1 107.5 76.8 146.5 79.7 53.3 40.6 46.3 23.6 117.4 87.6 103.9 48.3 Earnings / share, eur Operating cash flow / share, eur 0.20 0.17 0.14 0.13 0.76 0.45 0.30 0.27 0.61 0.56 Fair value of properties, meur NAV / share, eur 2 305.4 7.94* 1 339.5 7.12 2 686.2 7.45 Economic occupancy rate, % 89.8 88.0 88.8 13 * Includes deferred tax liability of 1,8 euros/share
Profit & loss statement 4-6/2007 meur 4-6/2006 meur 1-6/2007 meur 1-6/2006 meur 1-12/2006 Meur Total revenue 48,4 26,5 107,5 53,3 117,4 Maintenance expenses -12,0-6,4-30,7-12,7-29,8 Net operating income 36,4 20,1 76,8 40,6 87,6 Profit on sale of inv. properties -0,2-1,1 - - Valuation gain / loss 9,4 5,0 56,4 10,2 26,2 Profit on sale of trading properties 5,2-26,8-1,6 SGA expenses -8,1-2,3-15,4-4,8-11,9 Other operating income/expenses 0,4 0,3 0,8 0,3 0,4 Operating profit 43,1 23,1 146,5 46,3 103,9 Financial income and expenses -13,4-7,7-38,7-14,4-38,5 Profit before taxes 29,7 15,4 107,8 31,9 65,4 Taxes from previous and current fin. years - -0,4 - -0,4-0,4 Deferred taxes -7,7-3,9-28,1-7,9-16,7 Net income for the period 22,0 11,1 79,7 23,6 48,3 14
Balance sheet ASSETS 30.6.2007 31.12.2006 30.6.2006 meur meur meur Long-term assets 2 475,6 2 645,1 1 354,9 Short-term assets 79,6 294,3 5,9 Assets total 2 555,2 2 939,4 1 360,8 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity total 882,7 592,8 564,3 Long-term liabilities Interest-bearing debt 1 100,6 658,2 479,1 Liabilities 14,5 22,7 0,8 Deferred tax liabilities 199,2 218,7 71,2 Long-term liabilities total 1 314,3 899,6 551,1 Short-term liabilities 358,2 1 447,0 245,4 Liabilities total 1 672,5 2 346,6 796,5 Shareholders equity and liabilities 2 555,2 2 939,4 1 360,8 15
Economic vacancy rate 2003- Sponda (figures 2003-2006 withouth the Kapiteeli portfolio) 16,01 14,0 1 12,0 1 10,0 1 8,0 6,0 4,0 2,0 0,0 Office & retail Logistics Total property portfolio Russia and the Baltic Ctries 10.3 % 10.5 % 10.2 % 0 % 2003 2004 2005 2006 /2007 16
Lease contracts 30.6.2007 25,0 % 20,0 % 15,0 % 10,0 % Future cash flows 755 meur Average length of contracts 4.3 years O&R 4,7 years Log 2,6 years 5,0 % 0,0 % 1 yr 2 yrs 3 yrs 4 yrs 5 yrs 6 yrs over 6 yrs Openended 17
Yield requirements in property valuation 30 Jun 2007, % Sponda CBD Helsinki/Vantaa Espoo Turku Tampere Oulu Office and retail 5,4-6,5 5,5-7,6 6,8-7,75 7,0-8,0 Logistics 7,5-8,25 7,5-8,25 18
Cash yield for fair value 10,0 % 8,0 % 6,0 % 4,0 % 2,0 % 0,0 % Office & retail Logistics Russia Total 6.1 % 8.2 % 10.5 % 6.4 % 19
Financing /2007 Q1/2007 2006 Equity ratio 35 % 36 % 20 % Average interest rate 4.5 % 4.6 % 4.6 % Hedging 87 % 88 % 74 % Average loan maturity 3.1 yrs 1.8 yrs 1.7 yrs Average interest-bearing period 3.5 yrs 3.3 yrs 1.7 yrs Interest cover 2.0 1.9 2.5 20
Loan maturity 30.6.2007 7 % 21 % 25 % Total amount of interestbearing debt EUR 1 409,6 million 14 % 1 % 25 % 7 % 2007 2008 2009 2010 2011 2012 2013 21
Sponda Plc Operational review 22
Property portfolio Properties divided by fair value, EUR 2 305.4 million Office and retail properties divided by leasable area, altogether 860 000 m² 8 % 1 % 25 % 12 % Office & Retail Logistics Property Development Office Retail 79 % Russia & the Baltic Countries 75 % 23
Office & retail and logistics properties by geographical area Office & retail and logistics properties divided by leasable area, 1,3 milj. m². Office & retail and logistics properties (EUR 2 101,2 million) divided by fair value, 5 % 3 % 2 % 6 % 3 % 2 % HMA Tampere Turku Oulu HMA Tampere Turku Oulu 90 % 89 % 24
25 Events for the period Acquisitions in Russia for EUR 20 million In April Sponda issued EUR 150 million bond Private Placement floating-rate bond to domestic institutional investors Maturity 4 years Coupon confirmed as three-month Euribor plus 0.40 %-points Sponda signed EUR 350 million syndicate credit facility in June 2007 Maturity 5 years Loan carries a margin at the beginning of the loan period of Euribor plus 0.375-0.425 %- points. City-Center, Helsinki
Events for the period 26 Three property development projects started Vuosaari harbour Logistics centre constuction started Ground works for office buidling and passenger terminal on-going Noste, Porkkalankatu 22 Office building in Ruoholahti Estimated investment EUR 29 million 70 % pre-let Vanhanlinnantie 3 Retail building near Itäkeskus shopping centre Total investment approximately EUR 56 million Fully pre-let
Office and Retail properties Leasable area of properties 860 000 m² in total Fair value of properties on 30 June 2007 was EUR 1 820.4 million, value change Jan- June EUR 41.7 million Acquisition of Museokatu 8 for EUR 6.8 million (of which Sponda now owns 100 %) 4-6/2007 4-6/2006 1-6/2007 1-6/2006 1-12/2006 Total revenue, meur Net operating income, meur Operating profit, meur 36.5 27.8 34.3 18.5 13.9 9.4 80.9 58.8 115.6 37.6 28.1 34.8 84.7 63.1 78.0 Economic occupancy rate, % 89.7 88.0 88.8 8 % Geographical division of office and retail properties by fair value 25 % 42 % CBD Ruoholahti HMA Others 28 25 %
Logistics properties Leasable area of properties 400 000 m² in total Fair value of properties on 30 June 2007 was EUR 280.8 million, fair value change during Jan-June was EUR 14.8 million Acquisition of Ruosilantie 18 for EUR 4.6 million Divestment of Matinpurontie for EUR 3.6 million of which Sponda booked a profit of EUR 1.8 million 4-6/2007 4-6/2006 1-6/2007 1-6/2006 1-12/2006 Total revenue, meur Net operating income, meur Operating profit, meur 7.1 5.1 8.1 7.4 5.9 5.9 14.9 10.8 25.9 15.1 12.0 11.2 28.7 22.2 24.9 Economic occupancy rate, % 89.5 92.5 88.6 29
Active property development PROJECT PROGRESS LEASABLE M² INVESTMENTS TO DATE City-Center Second phase Additional 15 000 m² Vuosaari harbour Retail building, Itäkeskus Office building, Porkkalankatu Office building, Sörnäinen Logistics building, Vantaa Ratina, Tampere Started Logistics 70 000 m² (1st phase), in total 130 000 m² Office + passenger terminal 15 000 m² TOTAL INVESTMENT 35 meur 110 meur 2011 7 meur 95 meur (First phase), in total 140 meur Started 21 500 m² 0,7 meur 56 meur 2008 Started 13 500 m² 0,2 meur 29 meur 2008 Starting 2007 9 200 m² N/A 22 meur 2008 Starting 2007 5 000 m² N/A 5 meur 2008 N/A 48 000 m² N/A 200 meur N/A COMPLETIO N 2008 (First phase) 31
Some of Sponda s future projects in the development pipeline PROJECT Office building, Pasila (in co-operation with Yle Pension Fund) ~ 2009 Office building, Salmisaari, Ruoholahti (renovation) PLANNED START OF THE PROJECT TOTAL INVESTMENT 95 meur (Sponda s share 60 %, 57 meur) ~ 2009 20 meur Office building, Ruoholahti ~ 2009 25 meur Retail, Turku (Kauneenkulma) ~ 2009 5 meur Office building, Ruoholahti ~ 2010 12 meur Office building, Vantaa (Aviapolis), I phase ~ 2011 30 meur - The requirements for any of the projects listed are to have at least 50 % pre-let and all planning processes approved by authorities - The listed pipeline, together with the active property development projects, will amount to annual investments of approx. EUR 100-150 million Logistics building, Vantaa (Honkatalo) 10 meur Office building, Ring I, Helsinki ~ 2010 17 meur Office building, Naulakatu, Tampere ~ 2011 12 meur 32
Real Estate Funds Sponda manages assets in three different funds, two of which it also is an equity investor Currently assets under management total EUR 625 million 1. An office and retail fund where co-ownership is with JE Roberts Sponda holds 20 % stake Fund invests in mid-sized cities outside Sponda s core market On 30 June 2007 the fair value of properties in the fund was EUR 103.9 million Target size EUR 150-400 million Fund maturity 5 years 34
Real Estate Funds 2. Sponda Real Estate Fund I Ky where partners are 7 Finnish institutional investors Sponda holds 46 % stake Fund invests in logistics properties in mid-sized cities outside Sponda s core market On 30 June 2007 the fair value of properties in the fund totalled EUR 121.2 million Target size EUR 200 million, fund maturity 10 years 3. Sponda manages a real estate portfolio for EUR 400 million to Whitehall Street Real Estate Funds and Niam Nordic Investment Fund III Sponda sold the portfolio in March 2007 as part of the Kapiteeli acquisition financing Portfolio included 43 investment properties and over 500 trading properties and land sites 35
Russia and the Baltic Countries Acquisitions during second quarter A 46 hectare site in Leningrad province for EUR 9.5 million Future development site 160 000 m² of logistics facility planned A 20 hectar site in Moscow region for EUR 6 million Site has zoning plan for the construction of an industrial park Sponda plans to develop an A-class logistics park of 75 000 m² in stages Planning in progress, construction estimated to start in 2008 Office building in St Petersburg for EUR 4 million 36
Sponda s office Logistics site Office building, Tambovskaja Street Logistics building
Inform Future - location Fully let for domestic and international tenants Total leasable area 2690 m² 38
IR contacts: Kari Inkinen President and CEO Tel: +358-20-431 3311 Robert Öhman CFO Tel: +358-20-431 3320 Pia Arrhenius Manager, Corporate Communications and IR Tel: +358-20-431 3454
Appendix
Rental levels 1990-2006, HMA Gross rent /m2/month (excl. VAT), New agreements /m 2 /month 35 30 25 20 15 10 5 0 89 89 90 90 91 91 92 92 93 93 94 94 95 95 96 96 97 97 98 Helsinki, ydinkeskusta, Prime Helsinki, ydinkeskusta Tapiola Tikkurila Keilaniemi, Prime Ruoholahti, Prime Aviapolis, Prime 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 i Source: Catella Property Group
Vacancy rate 1990-2006, HMA 14 % 12 10 8 7,9 % 6 4,8 % 4 2 2,5 % 1,7 % 0 90 90 91 91 92 92 93 93 94 94 95 95 96 96 97 97 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 Retail Office Warehouse&industrial All premises together ii Source: Catella Property Group
HMA Office Market HELSINKI METROPOLITAN AREA, OFFICE STOCK, VACANCY RATE UPPER RENTAL LEVEL* PRIME YIELD ** OFFICE MARKET NET FLOOR AREA 06-06 06 % - yksikköä Helsinki City Centre - Helsinki CBD 312 m2/year 4,9-5,4% 300.000 m2 6,3 % 0,1% - Helsinki Centre (incl. CBD) n.a. n.a. 1.540.000 m2 5,4 % 1,2% Inner City 180 m2/year 6,2-6,7% 2.350.000 m2 7,9 % 1,7% Ruoholahti 246 m2/year 5,9-6,3% 270.000 m2 6,7 % 1,9% Keilaniemi 258 m2/year 5,9-6,3% 250.000 m2 12,0 % 1,9% Espoo West, (modern space) 216 m2/year 6,4-7,0% 250.000 m2 10,8 % 0,5% Leppävaara Business Park area 222 m2/year 6,3-6,7% 120.000 m2 7,8 % 1,4% Herttoniemi, (modern space) 204 m2/year 6,8-7,2% 100.000 m2 n.a. n.a. Aviapolis Airport Area 222 m2/year 6,4-6,8% 110.000 m2 5,4 % 4,2% Helsinki Metropolitan Area n.a. n.a. 7.900.000 m2 7,9 % 0,6% Aviapolis Vantaa Ring III Hämeenlinna Highway Tuusula Highway Espoo Ring I Leppävaara Lahti Highway Ring II Turku Highway Helsinki Inner City Herttoniemi Source: Catella Property Group iii Espoo West Western Highway Keilaniemi Ruoholahti CBD Centre Eastern Highway
Building stock m² RETAIL OFFICE WAREHOUSE&INDUSTR. COMMERCIAL, TOTAL m 2 m 2 m 2 m 2 Helsinki MPA 2 756 600 7 884 600 7 159 600 17 800 800 Tampere 794 900 829 200 1 952 400 3 576 500 Turku 676 300 648 800 2 018 500 3 343 500 Oulu 556 600 448 900 1 115 100 2 120 600 Lahti 493 900 242 800 1 577 900 2 314 500 Jyväskylä 542 000 337 500 773 000 1 625 500 Kuopio 436 100 281 500 619 600 1 337 100 Vaasa 360 200 214 600 754 800 1 329 600 Rovaniemi 273 400 140 800 153 600 567 800 Joensuu 356 900 136 000 449 300 942 100 Lappeenranta 353 900 135 000 734 000 1 222 900 Seinäjoki 233 900 111 000 379 800 724 700 Total 7 834 700 11 410 700 17 687 600 36 932 600 Finland 20 900 800 15 499 500 55 548 700 91 949 100 iv Source: Catella Property Group
Major shareholders Shareholder No of shares % of total shares 1. The Finnish State 38 065 498 34,3 2. The State Pension Fund 700 000 0,63 3. Etera Mutual Pension Insurance Company 422 898 0,38 4. Yleisradion Eläkesäätiö S.r. 340 000 0,31 5. Support Fund for commercial and technical sciences 267 800 0,24 6. Livränteanstalten Hereditas 234 000 0,21 7. Åbo Akademi University Foundation 167 000 0,15 8. Bnp Arbitrage 153 558 0,14 9. Medicinska Understödsföreningen Liv och Hälsa 125 000 0,11 10. OP-Finland Value Fund 106 000 0,1 v Nominee registered shareholders: 61 804 211 pcs, 55.7 %