GCY Project Update

Q3 2019 GCY Project Update Q3 2019

Greater Yards (Vibeholm Business Park,) is in the last phase of the construction tendering process.

The project is still very attractive in the Copenhagen office market. Where we see a stabile demand for new offices with similar specification and location.

Value adding

Further there is a steady increase in lease prices per sqm. This has enabled us to go from DKK 1.100,- to DKK 1.200,- per sqm as base lease price.

When the rental price increases by DKK 100 per sqm it actually increases the exit value dramatically. Calculated at a conservative yield of 5,5% the exit value increases by more than DKK 40m. Please observe that comparables have been traded at actual yields of 4,75% recently.

Accordingly the value of building rights increases as well.

Focus

The Q3 2019 GCY Project Update focuses on the following specific areas:

• Building permit application

• Letting

• Contracting / Construction / Exit

• Timeplan, adjusted Building Permits Q3 2019

The process of reaching building permit status is still moving forward. The local is working very well with us, for the key part of the approvals. The main issues in terms of getting the permit is outlined below:

1. The §8 (Environmental approval) has taken far longer than initially expected – mainly due to new regulation. The municipality has confirmed that the §8 is in place for the Phase 1 part of the plot. Next step is to carry out a detailed classification of the soil which need to be removed. This will be done as part of the construction contract. §8 for the remaining phase 2 and 3 will also be applied for at the same time. In brief the above means the excavation work can start immediately after having the construction contract signed.

2. The traffic analysis has also proved to much more time consuming than expected. The project seems to have been caught in a political game between two – allegedly due to new regulation. A new analysis has been presented to both Brøndby and neighboring municipality. The consequences of the increased traffic on the main road and junction are currently being looked into. A plan to improve the traffic situation has been worked out by our consultant and is in process of being approved by the municipalities.

(cont. on following page) Building Permits (cont.) Q3 2019

3. The last part of the lease contract with the Danish Road Directorate is being finalized.

4. A solution for the construction principles, parking and maximum lease area has been found, and is in line with the guidelines and input received from the municipality. Further this adjustment will enable a 3 stages construction of the buildings, and at a better pace than first anticipated.

The main construction contract is expected to be in place before the end of the year – maybe even before the end of November. The initial land / excavation work will start immediately after, plus adjustments of drawings will be made to match the chosen building system.

For this type of large project the municipality is working with giving the permits on a continuous basis, in order that they minimize the risk of causing delays. Letting Q3 2019

We have contract negotiations awaiting construction start prior to signing, with eight national and international tenants equivalent to 15.000 sqm. All have accepted the lease level of DKK 1.200,- per sqm, and our general conditions.

This autumn negotiations were started with a large Scandinavian IT company, looking for 8-9.000 sqm of office space. GCY is one of two candidates still in the process and stand a good chance to secure this contract. This would mean that Stage 2 will be occupied by this tenant alone.

The total pipeline is still above 100,000 sqm. We have chosen to work with more estate agents than just one and have no longer allocated Newsec as sole agent for the project. We can see there is a better effect with working with more agents when making project lease agreements. Contracting / Construction / Exit Q3 2019

In addition to ongoing negotiations with two of the most acknowledged and strongest contractors in the Danish industry, we have been contacted by a couple of very interesting contractors – one of them is a big international company. This means that we haven’t yet concluded any agreements but this is expected to be in place before the end of the year – maybe even before the end of November.

As part of the contracting negotiations we are also negotiating for construction finance which could actually come through the contractor.

Further we are in advanced exit negotiations with two investors. One of them is an international private equity fund with deep knowledge of the office market, with a strategy that suits our project very well. Timeplan, adjusted Q3 2019

Project timeline 2018 2019 2020 2021 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Purchse of land: Closing: Architect project: Building permit: Construction: Phase 1 Phase 2 Phase 3