Company presentation
Baard Schumann, CEO Sverre Molvik, CFO May 2016 Selvaag Bolig is a residential developer that provides targeted housing concepts to suit aspirations of different households in and around the main cities: Oslo, Stavanger, Bergen and Trondheim
2 Norway’s leading homebuilder
Sales in Q1 2016: 280 units Sales 2015: 935 units Land bank for 10 000 Trondheim homes 200 units Focus on fast growing urban regions Housing concepts Bergen 73 units tailored to house buyer Greater-Oslo 7 890 units requirements Stavanger 1 676 units Stockholm 103 units
Note: The numbers represent the size of the land portfolio as at 31. March 2016. All numbers are adjusted for Selvaag Bolig’s share in joint ventures. 1) Greater Oslo area: Oslo, Akershus, Buskerud, Vestfold and Østfold, 2) The residential property development portfolio consists of land plots that are to be paid for when planning permission is received. These have a development potential of ~4 400 residential units, whereof the company has purchasing obligations for ~3 800 and purchasing options for ~600 units Housing for all
Housing for all
The Gullhaug House 2013
50 000 homes Pluss: Housing with completed extra service 2012 e
Modular construction 2011
Listed at Oslo Børs 2003
2000
Defind hous i ng concept s 1999 Løren district
Terraced 1988 buildings «It’s better to build 30 000 homes 1958 Industrial for 15 000 kroner than 15 000 production
1951 homes for 30 000 kroner»
Olav Selvaag 1948 Veitvet district
The Ekeberg House
4 Value creation in Selvaag Bolig
6 – 36 MONTHS 6 – 12 MONTHS 3 – 9 MONTHS 12 – 24 MONTHS
Acquire and Marketing refine land for Project design Construction and sale
development
Residential Residential development
Zoning Sales start Construction start Deliveries
Value Value creation creation
. Buy (i) options on . Plan and . Target 60% pre-sale . Fixed price contracts with unzoned land, or (ii) prepare for before start-up reputable and solid ready to build land construction (irrevocable purchase counterpart contracts) . Lever acquired land . Construction costs financed Project Project to improve ROE . Prices on remaining with construction loans
optimization optimization 40% increased . Target 100% sale at delivery gradually during sell out phase
5 Norwegian housing market
Good demand for new homes and persistent population growth in urban areas Low risk for housebuilders Advance sales: banks require that 50-70% of homes are sold before construction starts Binding offers: offer to purchase is a binding sales contract, and requires a 10% minimum cash deposit High level of home ownership 85% (one of the world’s highest) Economic benefits for home owners 26% of mortgage loan interest payments are tax-deductible Transfer stamp duty for new houses is lower than for second hand homes Strong population growth Norway’s urban areas are among the fastest growing in Europe. Good demand for new homes
Source: Source Selvaag Bolig and Eurostat 6 Selvaag Bolig – value proposition
Selvaag Bolig ASA is a Norwegian residential property developer with no in-house construction arm, which controls the entire value chain from the acquisition of land to the sale of homes.
Low risk business model 60 per cent presale before construction starts Only present in fast growing urban regions with high demand and large market depth Very competitive prices ensure a broad customer base
No in-house construction arm All construction activity put out to competitive tender Lower building costs Fixed construction price Reduced risk Smaller exposure to market fluctuations
Defined housing concepts Aimed at broad consumer categories Profit maximisation in all projects Large projects with more than 150 apartments
Large land bank Several thousand homes under development in Norway’s four fastest growing urban regions
7 Three well defined and robust concepts
. Small and affordable apartments . In and around large cities . Close to public transportation . Young people in the start-up phase
. Apartments/small houses situated in high density areas . Established housing solutions, solid quality and well planned living environment . Single people/couples in all ages, with/without children
. Apartments with attractive, central location in large cities . High quality standard coupled with a service concept . Affluent customers who value comfort and convenience
8 Market update
9 OPERATIONAL UPDATE Increased sales value in Q1
Total sales value and value per unit sold Residential units sold
NOKm Units 935 886 1 021 1 056 740 209 750 751 693
280 3.6 3.6 3.8 487 3.3 3.3 443 394
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 2013 2014 2015 2016 Q1 Q2 Q3 Q4
Note: All numbers are adjusted for Selvaag Bolig’s ownership in joint ventures. * Includes 95 student residences with an average value of NOK 0.7 million (dotted area)
10 OPERATIONAL UPDATE Construction starts at 12 month high
Construction starts per quarter
Units
284
230 All construction starts in Greater Oslo in Q1 199 204 171 230 apartments
Expected revenue NOK 891 million
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16
11 OPERATIONAL UPDATE Increased value of units under construction
Development units under construction Expected completions per quarter
Units NOK million Units
1 426 295 1 384 1 394 1 339 1 386 228 188 4 968 4 909 5 077 4 740 5 031
103 90
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Number of units under construction Sales value (NOK million)
Q1 2016: 80% of units under constructions sold by Q1 2016 Expected completions for 2016 as of Q1 16: 805 units
Q1 2016: 77% of construction volume in Greater Oslo Expected completions for 2016 as of Q4 15: 754 units
YE 2016: ~84% of construction volume in Greater Oslo 183 (Q1 16), 280 (Q2 16), 118 (Q3 16), 173 (Q4 16)
Note: All numbers are adjusted for Selvaag Bolig’s ownership share in joint ventures. 93% of 2016 completions sold by Q1 2016
12 MARKET – SELVAAG BOLIG POSITION Strong overall sales
Sales activity vs. peers last 4 quarters
Units
400 High sales reflect Selvaag Bolig’s 350 competitive prices and defined 300
housing strategy 250
All construction activity put out to competitive 200 tender 150 Large land bank in fast growing urban areas Selvaag Bolig average price in Q1 100 2016: NOK 3.8m 50 0
(Ex BWG Homes)
Housing types Selvaag Bolig: flats, semi-detached and terraced homes Q2 2015 Q3 2015 Q4 2015 Q1 2016
Source: Eiendomsverdi, Eiendom Norge and Selvaag Bolig
13 Maintaining strong market position
Units under construction vs. peers (net figures)
Units Q2 15 Q3 15 Q4 15 Q1 16
2 200 2166 2030 2 000 1830 1 800 1628 1 600 1394 1426 1386 1 400 1339 1193 1120 1 200 1070 1001 1 000
800 642 665 585 587 561 600 501 541 517 413 462 441 400 330 200 0
(Ex BWG Homes)
14 MARKET Extraordinary low supply in Oslo
Oslo, January 2007-2016
Units April 2016 Oslo sum-up
9 000 SECOND HAND – AVERAGE 8 000 Sales price: NOK 61 477 per m2 7 000 Turnover time: 15 days 6 000 5 000 Price increase April: 2.0% 4 000 Price increase last 12 months: 3 000 10.5% 2 000 Units available for sale: ~1 250 1 000 0 NEW HOMES (NOT BUILT) Jan Oct Jul Apr Jan Oct Jul Apr Jan Oct Jul Apr Jan Units available for sale: ~1 000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Inventory second-hand Units sold SELVAAG BOLIG HAS MORE THAN 300 UNITS AVAILABLE FOR SALE (~30% MARKET SHARE)
Source: Eiendomsverdi, Eiendom Norge and Selvaag Bolig
15 18-month price growth Nybyen, Økern Example: 44 m2, 1 bedroom apartment
Mar. 2016 69 778 per m2
May. 2015 NOK 63 636 per m2
Jan. 2015 NOK 59 545 per m2 Oct. 2014 26% NOK 56 591 per m2
Time from acquisition to sales start: 9 months Total: 403 units | 2-4 rooms | 41-127 m2
237 of 316 units sold per 17 May 2016 16 NOK 195m acquisition January ‘14 Sales start Oct. ‘14 Sales update as of 17 May 2016 Tiedemannsbyen (JV) – Oslo 95 of 158 units sold
Total: ~380-400 units | 2-4 rooms | ~40-100 m2 Sales start phase 1 April 2016: 158 units 17 Sales update as of 17 May 2016 Valle Hovin – Oslo 72 of 113 units sold
Total: ~375 units | 2-4 rooms | ~40-100 m2 Time from acquisition to sales start: 8 months
Sales start phase 1 October 2015: 49 units 18 Sales start phase 2 May 2016: 64 units NOK 220m acquisition in Feb. ‘15 Sales start Oct. ‘15 MARKET Sound supply/demand in Bergen
Bergen, January 2007-2016
Units April 2016 sum-up
3000 SECOND HAND – AVERAGE 2 2500 Sales price: NOK 41 174 per m Turnover time: 20 days 2000 Price increase April: 0.7% 1500 Price increase last 12 months: 3.2% 1000 Units available for sale: ~750 500 NEW HOMES (NOT BUILT) 0 Units available for sale: ~600 Jan Oct Jul Apr Jan Oct Jul Apr Jan Oct Jul Apr Jan 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Inventory second-hand Units sold
Source: Eiendomsverdi, Eiendom Norge and Selvaag Bolig
19 MARKET High supply and low demand in Stavanger
Stavanger area, January 2007-2016
Units April 2016 sum-up
3000 SECOND HAND – AVERAGE 2 2500 Sales price: NOK 35 839 per m
2000 Turnover time: 77 days Price decrease April: 0.1% 1500 Price decrease last 12 months: 1000 7.2%
500 Units available for sale: ~1 500
0 NEW HOMES (NOT BUILT) Jan Oct Jul Apr Jan Oct Jul Apr Jan Oct Jul Apr Jan Units available for sale: ~700 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Inventory second-hand Units sold
Second hand market: Stavanger, Sola, Randaberg and Sandnes New homes market: Stavanger Source: Eiendomsverdi, Eiendom Norge and Selvaag Bolig
20 MARKET Sound supply/demand in Trondheim
Trondheim, January 2007-2016
Units April 2016 sum-up
3000 SECOND HAND – AVERAGE 2 2500 Sales price: NOK 42 991 per m
2000 Turnover time: 25 days Price increase April: 1.0% 1500 Price increase last 12 months: 4.1% 1000 Units available for sale: ~400 500 NEW HOMES (NOT BUILT) 0 Units available for sale: ~650 Jan Oct Jul Apr Jan Oct Jul Apr Jan Oct Jul Apr Jan 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Inventory second-hand Units sold
Source: Eiendomsverdi, Eiendom Norge and Selvaag Bolig
21 MARKET – SELVAAG BOLIG PROJECTS Selected projects in Oslo 2016
Lørenvangen 22, (Løren) ~200 units Ballerud, Lørenporten, (Bærum) (Løren) ~300 units ~450 units Sinsenveien 45-49, (Løren) ~400 units JV Lørenskog stasjonsby, (Lørenskog) ~1 500 units Asker, Whereof ~400 sold (Asker) ~600-700 units Nybyen Økern, Skårer bolig, (Økern) (Lørenskog) ~400 units ~1 200 units Whereof 237 sold Tiedemannsbyen, (Ensjø) ~400 units JV Wherof 95 sold
22 MARKET – SALES DISTRIBUTION All core markets Stronger presence in all markets 2015 (actual) Future (indicative)
Core markets outside Greater Oslo Greater Oslo Other areas
2012-2015 (actual) 2016 (indicative) Future (indicative)
Other Rogaland Trondheim
Stockholm Rogaland Bergen Trondheim
Trondheim
Bergen
Bergen Stockholm Rogaland Stockholm
Fragmented activity in 2012-2014 Bergen and Trondheim key markets Solid positions est. in Bergen/ Trondheim Land purchases in core markets only Marginal sales in Rogaland Rogaland expected to recover
23 Financial update
24 Value creation and project cash flow
6 – 36 MONTHS 6 – 12 MONTHS 3 – 9 MONTHS 12 – 24 MONTHS
Acquire and Marketing refine land for Project design Construction and sale
development
Residential Residential development
Zoning Sales start Construction start Deliveries
Value Value creation creation
. E.g., total land cost: . App. 1% of total . 50% of land loan . No more equity required MNOK 100 (50% equity cost converted to . Profit: + 50% loans) construction loan . Development cost: MNOK 77 (14% of project
. E.g., total revenues: MNOK 5 . Total equity: turnover) example example Cash flow flow Cash MNOK 550 MNOK 55 . IFRS: Average profit at . NGAAP: Profit in P&L delivery: 14% of project through percentage of turnover completion method . NGAAP: Average commences accumulated profit: 14% of project turnover
25 Low-risk business model
Risk profile at start of a MNOK 550 project De-risking in key stages of projects
10% 1 . Purchase and payment of land takes place after = Land purchase zoning plan approval. If this is not obtained, the 14% MNOK conditional on purchase is cancelled 55 = zoning approval . SBO is in charge of the zoning process MNOK 77 2 100% Land purchase . Purchase price is decided by a land appraisal made = price based on by three external consultants at the time of zoning 76% MNOK market value at approval 60% = 550 time of zoning . The median valuation is used as purchase price = MNOK approval MNOK 418 330 . Pre-sales of minimum 60% secures the majority of 3 revenue before construction Minimum sales Minimum pre- Remaining Project margin Equity Sales price rate of 60% before . 10% of purchase price paid by the buyer at point of sale project cost investment construction sale, and proof of financing for the remaining amount is required Selvaag’s equity investment in a project and project margin bring the remaining project cost down to 74%-78% 4 . Construction contracts with solid counterparties are With minimum 60% pre-sale there is limited remaining project risk. For the Fixed price made with fixed price the remaining 40% a price reduction of 35% would recover equity construction contract . Project costs are secured before construction starts 80% of units in production are sold at end Q1’16
26 FINANCIAL UPDATE Income statement highlights Q1 2016 (IFRS)
Revenues and adjusted EBITDA margin (IFRS) Delivery of 179 units (224) NOKm Revenues NOK 624m (756) 882 Units delivered NOK 608m (730) 830 778 Other revenues NOK 15m, mainly lease income 756 Project costs NOK 501m (610) 624 Of which NOK 22m are interests Other costs NOK 58m (60) 18% 17% Salaries, sales and marketing key components 16% 15% 15% EBITDA adjusted NOK 91m (121) Adjusted for financial expenses included in project costs EBITDA NOK 69m (99)
EPS in the quarter NOK 0.45 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Operating revenues Adjusted EBITDA margin
27 FINANCIAL UPDATE Income statement highlights FY 2015 (IFRS)
Revenue and EBITDA margin (IFRS)
NOKm 3 246 2 945
Delivery of 893 units (861) 2 197 Revenues NOK 3 246m (2 945) EBITDA adjusted 539m (489) Adjusted for financial expenses included in project costs 13% 13% 13% EBITDA NOK 428m (387) Earnings per share full year NOK 3.01
2013 2014 2015
Operating revenues EBITDA margin
28 FINANCIAL UPDATE Income statement highlights Q1 2016 (NGAAP)
Revenues and EBITDA margin (NGAAP)* 12 months rolling revenues (NGAAP)*
NOKm NOKm
3 280 3 382 858 3 252 3 229 3 217 827 826 815
718
17% 16% 15% 15% 15%
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Operating revenues EBITDA margin
* Construction costs are exclusive of financial expenses in the segment reporting (NGAAP)
29 FINANCIAL UPDATE Cash flow development Q1 2016
77
(22) (3) 56 6 1
672
608
(175) (6)
Cash and cash Profit (loss) before Depreciation and Share of profits/(losses) Changes in inventories Changes in trade CF from investment Net change in Share buy back and Cash and cash equivalents at 31 income taxes amortisation from associated (property) receivables and other activities borrowings share program for equivalents at 31 March December 2015 companies working capital employees 2016
Cash flow from operating activities NOK 119m Net cash outflow due to repayment of debts Strong cash balance maintained
30 FINANCIAL UPDATE Balance sheet highlights Q1 2016
Balance sheet composition Book value NOK 27.6 per share NOKm NOK 27.1 per share at YE 2015 7 000 Equity ratio 42.5%, up from 39.8% in Q1 2015 6 000 Non-current assets Non-current assets Changes from Q4 2015: Equity 5 000 Equity Equity Inventories decreased by NOK 73m 4 000 Current assets Current assets Trade receivables decreased by NOK 16m 3 000 Current assets NonNonNon---currentcurrentcurrent liabilitiesliabilitiesliabilities Cash decreased by NOK 65m 2 000
1 000 Prepayments from customers account CurrentCurrent liabilitiesliabilities Cash for NOK 309m of other current non 0 interest-bearing liabilities Assets Equity and Liabilities
31 FINANCIAL UPDATE Inventories (property) Q1 2016
Q1’16 vs Q4’15 Inventory value development
NOKm
5 000 278 207 378 Land value down NOK 316m 359 359 4 000 Increase in construction starts 2 546 2 642 2 369 Work in progress up NOK 262m 3 000 2 359 2 630 Increased construction activity 2 000
Finished goods down NOK 19m 1 000 1 969 1 845 1 871 1 814 1 653
Fewer unsold completed units - Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016
Land (undeveloped) Work in progress Finished projects
32 FINANCIAL UPDATE Sound debt structure
Interest bearing debt as at 31 March 2016
Drawn per 31 March Interest rate Loan facility (NOKm) margin 495 NOK 500 million senior unsecured 1 500 4.75% bond loan maturing in 2018
927 NOK 150 million revolving credit NOK 2 0 2.00% facility from DNB maturing in 2016
2 449 NOK 150 million working capital 3 0 2.00% million facility from DNB maturing in 2016
Land loan facilities from a range 4 1 027 2.00% - 2.65% of Nordic credit institutions
1 027 Construction loan facilities from a 5 927 1.90% - 2.95% range of Nordic credit institutions
Total Q1 2016 net interesting bearing debt NOK 1 841 million Top-up loan Land Loan Construction loan Total Q4 2015 net interesting bearing debt NOK 1 946 million
Note: Top-up loan of NOK 500m in the table differs form the summed up top up loan in the pie chart (NOK 495m). The difference is due to NOK -5m in amortized cost which is not actual debt.
33 FINANCIAL UPDATE Dividend
Annual dividend per share
Dividend policy NOK Up to 50 percent of net profit 2.00 1.75 Dividend pay-out twice a year form H1 2015 1.5 1.50 FY’15 EPS NOK 3.01 1.25 1.2 0.8 1.00 FY’15 dividend of NOK 1.50 per share 0.75 0.5 0.50 H1 2015 dividend of NOK 0.70 per share 0.7 0.25 distributed 0.00 H2 2015 dividend of NOK 0.80 per share 2013 2014 2015 distributed Paid dividend
34 Appendix
35 Income statement IFRS
(figures in NOK million) Q1 2016 Q1 2015 2015 Total operating revenues 623.5 755.6 3 246.0 Project expenses (501.1) (609.5) (2 608.5) Other operating expenses (52.0) (54.4) (217.4) Other gains (loss) - - - Associated companies and joint ventures (1.3) 6.9 8.3 EBITDA 69.1 98.6 428.4 Depreciation and amortisation (6.2) (5.8) (24.1) EBIT 62.9 92.8 404.3 Net financial expenses (6.9) (8.0) (33.1) Profit/(loss) before taxes 56.0 84.9 371.2 Income taxes (14.2) (23.0) (91.8) Net income 41.8 61.9 279.4 Net income for the period attributable to: Non-controlling interests 0.0 (0.0) (1.8) Shareholders in Selvaag Bolig ASA 40.6 61.9 284.2
36 Cash Flow statement
(figures in NOK million) Q1 2016 Q1 2015 2015
Net cash flow from operating activities 118.6 97.7 465.9
Net cash flow from investment activities (3.0) (37.7) (15.5)
Net cash flow from financing activities (180.2) 37.4 (344.1)
Net change in cash and cash equivalents (64.5) 97.3 106.4 Cash and cash equivalents at start of period 672.3 565.9 565.9 Cash and cash equivalents at end of period 607.7 663.3 672.3
37 Balance sheet (figures in NOK million) Q1 2016 Q1 2015 2015 Intangible assets 392.6 411.0 397.2 Property, plant and equipment 19.1 17.3 20.3 Investments in associated companies and joint ventures 180.4 200.2 183.4 Other non-current assets 120.3 123.0 114.6 Total non-current assets 712.3 751.5 715.5
Inventories (property) 4 642.8 4 563.1 4 715.4 - Land 1 653.3 1 845.1 1 968.8 - Work in progress 2 630.3 2 358.8 2 368.5 - Finished goods 359.3 359.2 378.1 Other current receivables 140.8 350.3 147.9 Cash and cash equivalents 607.7 663.3 672.3 Total current assets 5 391.3 5 576.7 5 535.5
TOTAL ASSETS 6 103.7 6 328.2 6 251.1
Equity attributed to shareholders in Selvaag Bolig ASA 2 584.6 2 504.5 2 539.6 Non-controlling interests 9.6 14.7 9.6 Total equity 2 594.2 2 519.2 2 549.2
Non-current interest-bearing liabilities 1 478.3 1 685.6 1 846.7 Other non-current non interest-bearing liabilities 260.3 308.3 262.2 Total non-current liabilities 1 738.6 1 993.9 2 108.9
Current interest-bearing liabilities 970.3 1 075.4 771.3 Other current non interest-bearing liabilities 800.6 739.7 821.7 Total current liabilities 1 770.8 1 815.1 1 593.0
TOTAL EQUITY AND LIABILITIES 6 103.7 6 328.2 6 251.1
38 * Corresponding to a book value of NOK 27.6 per share Operational highlights – key operating figures
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Number of units sold 308 210 208 209 280 Number of construction starts 284 199 204 171 230 Number of units completed 208 190 172 258 183 Number of units delivered 224 232 202 235 179 Number of units under construction 1 384 1 394 1 426 1 339 1 386 Proportion of sold units under construction 81% 80% 78% 79% 80% Number of completed unsold units 40 31 25 65 58 Sales value of units under construction (NOK million) 4 968 4 909 5 077 4 740 5 031
Number of employees 99 99 99 99 100
39 In compliance with financial covenants
Sales ratio covenant (minimum 60.0%) Equity ratio covenant (minimum 25.0%)
43% 81% 40% 40% 40% 41% 80% 78% 79% 80%
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16
Sales ratio Covenant Equity ratio Covenant IFRS EBITDA Q1 2016
(figures in NOK million) Property development Other Total
IFRS EBITDA for the quarter, per segment Operating revenues 617.5 6.0 623.5 Project expenses (500.0) (1.1) (501.1) Other operating expenses (14.4) (37.7) (52.0)
Share of income (losses) from associated companies and joint ventures (1.3) - (1.3) Other gain (loss), net - - - EBITDA 101.8 (32.7) 69.1
41 Operational reporting Q1 2016
(figures in NOK million) Property development Other Total
Operating revenues 809.1 6.0 815.1
Project expenses (630.4) (1.1) (631.5) Other operating expenses (14.4) (37.7) (52.0) EBITDA (percentage of completion) 164.3 (32.7) 131.6 Note: Construction costs are exclusive of financial expenses in the segment reporting.
42 Substantial portfolio for development
Total land bank portfolio at 31 March 2016
Units
600
3 850
400 9 950
5 100
Total Land bank Option Obligation to acquire JV Land bank included in the balance sheet
43 Construction starts in the quarter
Construction starts, scheduled completion and expected revenue Quarterly, expected revenues (IFRS) in NOK million
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Lørenskog Stasjonsby 28 apartments NOK 108m (Modular) Frøyatun 22 terraced NOK 87m (Modular) Moss 33 apartments NOK 95m NOK 197m (Onsite) Kilenkollen 99 apartments NOK 399m (Onsite) Løren Stasjon 48 apartments NOK 202m (Onsite)
44 Land loan interests on the P&L
Loans recognised in profit and loss at 31.03.2016
Total land loans are NOK 1 027 million of NOKm which NOK 618 million are loans where interest cost are activated 14 24 Land loan interests activated at regulation 42 65 At 31 March interests connected to land 69 409 loans of NOK 409 million was charged on the P&L 195
45 OPERATIONAL UPDATE Independent land bank valuation from Q4 2015
Book value vs. external valuation
NOK million
881
2 747
1 866
Book value at time of valuation (Nov Gap Valuation Akershus Eiendom 2015) PROJECT PORTFOLIO AND LAND BANK Land bank - Stockholm
Location of plots in Stockholm
47 Concepts complement each other in creating new urban neighbourhoods Løren (Oslo) Lervig Brygge (Stavanger)
Løren Start Lørenpynten Løren Torg Hageby Start Sjøkvartalet Lervig Brygge Pluss
No of apartments 88 No of apartments 127 No of apartments 108 No of apartments 36 No of apartments 67 No of apartments 188
Broadens the customer base Speeds up development Complimentary use of concepts gives benefits Helps optimise the sales and income profile of each project Creates more attractive neighbourhoods
48 OPERATIONAL UPDATE Nybyen Økern – project efficiency
Sales development Nybyen Økern, stage 1
Land acquired in January 2014 Units
Sales start Sales start Sales start in October 2014 > 60% sold 66.5% sold house A (78) house B (35)
60 percent of construction stage 113 113 113 1 (house A and B) sold by
January 2015 78 7 79
Settlement 1 April 2015 18
54
Nybyen Økern, Oslo Oct ‘14 Dec '14 Jan '15 Feb '15 Total units sold (house A) (house A+B) (house A+B) per 26 Feb '15 Sold units Units for sale
49 Demand exceeds supply
Housing shortage in Norway - annualized forecast as of April 2015 Ambivalent macro environment Historically low interest rates No of units Rising unemployment Real income growth
10 600 Favourable demographic conditions Moderate population growth and immigration
37 800 More small households More young adults, more elders 27 100
Substantial housing need Supply outpaced by population growth Demand in cities especially strong Housing need Housing construction Housing shortage Strong sales in suburbs
Source: Prognosesenteret 50 Norway: A robust economy
GDP growth 2004 - 2017e Unemployment 2004 - 2017e
8% 12%
6% 10% 4% 8% 2% 6% 0% 4% -2% -4% 2% -6% 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016e 2017e 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016e 2017e
France Germany UK Sweden Norway France Germany UK Sweden Norway
Population growth 2011 - 2030e Public net debt/GDP 2004 - 2017e
100%
Norway 23.0% 50% 25,6% 0% -50% Sweden 6,9% 12.0% -100% -150% UK 10,0% 12.0% -200% -250% France 8.0%14,0% -300% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016e 2017e Germany -1,0%-5.0% France Germany UK Sweden Norway
Source: IMF, Statistics Norway, Statistics Sweden, 51 Statistics France, Statistics Germany, Statistics UK, Eurostat MARKET OUTLOOK Price increase deflated by purchasing power
Housing price development in Norway High gap between nominal and real Index price development past ten years 700
Price increase since 1985: 600 Nominal: 6.4x 500 Adjusted for CPI: 2.9x Adjusted for disposable income: 1.6x 400 The increase in purchasing power 300 explains much of the nominal growth 200 in housing prices 100
0
Nominal prices CPI adjusted prices Prices adjusted for disposable income per capita
Source: Norges Bank
52 Strong purchase power
Household interest payments after tax as a proportion of post-tax earned income 1993-2014
40% Single Young couple Established couple
35%
30%
25%
20%
15%
10%
5%
0% 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Source: 1993-2013 EFF, Pöyry. 2014 NyAnalyse 53 Housing completions and population growth
70000 1.50%
60000 1.30%
50000 1.10%
40000 0.90%
30000 0.70%
20000 0.50%
10000 0.30%
0 0.10% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Housing completions Population growth
Source: SSB 54 Population growth 2014 - 2025
1 000 000 920 000 900 000
800 000
700 000 660 000
600 000
500 000 445 000 400 000
300 000
200 000
100 000
0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Low High Medium
Source: Statistics Norway 55 Breakdown for medium population growth
700 000
600 000
500 000
400 000
300 000
200 000
100 000
0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Immigration Other growth
Source: Statistics Norway 56 Origin of current Norwegian immigrants
0 % There are 805 000 first or second 2 % 3 % generation immigrants in Norway Immigrants account for 16 per cent of the population 28 % Most represented countries are Europe Poland, Sweden and Lithuania Africa Asia 55 % Labour immigrants settle in and North Amerika around the major cities South America Oceania
12 %
Source: SSB 57