NOT FOR DISTRIBUTION IN OR TO THE U.S. (OR TO U.S. PERSONS), CANADA, AUSTRALIA, ITALY OR JAPAN, OR IN ANY OTHER JURISDICTION IF SUCH DISTRIBUTION WOULD BE PROHIBITED BY APPLICABLE LAW
Investor Presentation Contemplating MNOK 100-200 Bond Issue Disclaimer
This Document has been produced by Otium AS (“Otium” or the “Company”) solely for use at the presentations to be held in connection with the proposed private placement of bonds (the “Bonds”) by Otium and may not be reproduced or redistributed, in whole or in part, to any other person.
This material has been prepared exclusively for the benefit of and the internal use of the receiver in order to evaluate the feasibility of one or more potential transactions. The Company holds all rights related to the contents of this material, and the receiver is not entitled to publish or otherwise disclose its contents to a third party without the prior written consent of the Company. This material may only be used for the purpose of evaluating the potential of one or more transactions.
In preparing this material the Company may have obtained and relied upon, without independent verification, information available from publicly available sources and registers. Even if these sources are deemed reliable, the Company cannot vouch for the accuracy and completeness of their contents. In any case, this material is incomplete if not regarded and read in conjunction with the oral briefings and/or other documentation provided by the Company. It is emphasized that opinions expressed in this material reflect the Company’s judgement at this date, all of which are accordingly subject to change. The Company holds no obligation to update this material.
Any transaction involves risk and forward-looking statements concerning future earnings, margins and returns are forecasts subject to risk, uncertainties and other factors, and the Company assume no guarantee of any forward-looking statement concerning future earnings, margin, return or others referred to in this material. In general the Company accepts no liability whatsoever arising directly or indirectly from the use of this material.
This Document contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, "expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”, and similar expressions. The forward-looking statements contained in this Document, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any of its subsidiary undertakings or any such legal person’s officers or employees provide any assurance that the assumptions underlying such forward-looking statements are free from errors nor do any of them accept any responsibility for the future accuracy of the opinions expressed in this Document or the actual occurrence of the forecasted developments. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to our actual results.
No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the Company or any of its parent or subsidiary undertakings or any such legal person’s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this Document. This Document is confidential and is being communicated in the United Kingdom to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (such persons being referred to as “investment professionals"). This Document is only directed at qualified investors and investment professionals and other persons should not rely on or act upon this Document or any of its contents.
In relation to the United States and U.S. persons, this Document is strictly confidential and is being furnished solely in reliance upon applicable exemptions from the registration reqiurements under the U.S. Securities Act of 1933, as amended. The shares of the Company have not and will not be registered under the U.S. Securities Act or any state securities laws, and may not be offered or sold within the United States, unless an exemption from the registration requirements of the U.S. Securities Act is available. Accordingly, any offer or sale of shares in the Company will only be offered or sold (i) within the United States, only to Qualified Institutional Buyers (“QIBs”) in private placement transactions not involving a public offering and (ii) outside the United States in offshore transactions in accordance with regulation S. Any purchaser of shares in the United States, will be required to make certain representations and acknowledgements, including, without limitation that the purchaser is a QIB. Prospective purchasers are hereby notified that sellers of the new shares may be relying on the exemption from the provisions of sections of the U.S. Securities Act provided by rule 144a. None of the Company’s shares have been or will be qualified for sale under the securities laws of any province or territory of Canada. The Company’s shares are not being offered and may not be offered or sold, directly or indirectly, in Canada or to or for the account of any resident of Canada in contravention of the securities laws of any province or territory thereof.
AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT; ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS PRESENTATION.
Investment in the Bonds may be subject to further risk factors. No investment in the Bonds should be made without a thorough analysis of such risk factors. Subject to the disclaimer above, the information given in this Document reflects the situation as of 15 November 2012.
2 Agenda
I. Executive Summary and Transaction Details
II. Company Overview
III. Business Areas
IV. Market Outlook
V. Financial Results and Risk Factors
VI. Appendix
3 Executive Summary
• Otium AS is one of the leading real estate developers in Norway, engaged in both residential, commercial and leisure properties in Norway and Sweden.
• Established in 1987, the company currently employs 50 persons. Total revenues of MNOK 701 in 2011. Company overview • Otium has a quality real estate portfolio with an estimated market value of NOK 3.0 bn.
• The company is strategically positioned in the Oslo, Akershus and the Stavanger region and expects to take further advantage of the high residential demand in these areas.
• The company is contemplating an unsecured bond issue of minimum MNOK 100.
• Final maturity 31 March 2015 and margin NIBOR + 500 bps.
Good downside • A tight set of covenants guarantees a balance of at least NOK 1.0 bn in value adjusted equity, a loan to value of maximum 70% and free liquidity of NOK 50 million at all times to be in compliance. protection and risk • An amount equal to 9 months interest will be blocked and pledged on a debt service retention account. adjusted return • Dividends will be restricted to maximum 50% of net profit.
• Change of control put option @ 102% if Tore Lie reduces his ownership to less than 50% of the company.
• The Norwegian labor market is still unaffected by the challenges facing Europe, with low unemployment rates. • Interest rates are expected to remain low in the coming years, due to continued low inflation, a strong Norwegian Krone and low interest rates internationally. Favourable market • Estimated annual growth in housing prices of 7 % in 2013, 2014 and 2015, driven by low interest rates, population outlook growth, real disposable income growth and limited supply of new houses. • The Oslo region was the fastest growing metropolitan area (above 750 000 inhabitants) in Europe from 2005- 2010, and is expected to continue the strong growth in the coming years, along with the Akershus and Rogaland regions.
• Strong historical revenues and EBITDA margins
Credit ratios and • LTV ratio of 55% and value adjusted equity of MNOK 1,350 per November 2012 • Post transaction LTV up to 58% (given MNOK 200 bond issue) operational • NIBD/EBITDA of 6.3 and ICR of 2.2 per 31.12.2011 performance • Solid pipeline of new projects
4 Transaction details
Issuer • Otium AS Borrowing Limit • NOK 200 million First Tranche • Minimum NOK 100 million Maturity • 31 March 2015 Coupon • 3m NIBOR + 500 bps Use of proceeds • General corporate purposes Amortization • Bullet repayment
• The Bonds shall be senior debt of the Issuer and rank at least pari passu with the claims of its other Status creditors, except for obligations which are mandatorily preferred by law.
Security • 1st priority pledge in the Debt Service Retention Account, equaling 9 months of interest on the Bonds.
• Loan to Value: max. 70% • Book Equity: min. NOK 500 million Selected covenants • Market Adjusted Equity: min. NOK 1,000 million • Free Liquidity: min. NOK 50 million
Dividend restriction • Max 50% of net profit
Change of control • Put @ 102% if Tore Lie to own less than 51%
Call options • Non-call
Trustee • Norsk Tillitsmann
Listing • An application shall be made for listing on Oslo ABM
Governing law • Norwegian law
*Please see Term Sheet for detailed terms & conditions 5 Credit rating by SpareBank 1 Markets
Otium AS
• Issuer rating: BB-
• Bond rating, unsecured: B+
• Outlook: Neutral
Summary
“We assign an issuer rating of BB- to Otium AS with a Neutral outlook. Our credit assessment is a reflection of the company's diversified exposure to the real-estate market (residential, commercial and leisure) focusing on central regions of Norway and to a lesser extent Sweden and its solid operational track-record. The large development pipeline in proportion to the company's total balance sheet is partly mitigated by a low risk (solid tenant mix) portfolio of commercial properties and a prudent risk policy in the project portfolio. Our rating opinion also takes into account the limited size and private nature of the company and its cautious shareholder distribution policy. “
Analysts Patrik Hofseth (lead analyst) +47 24 14 74 48 [email protected]
Jørgen Haug +47 24 14 74 39 jø[email protected]
6 Key credit considerations
Credit strengths Credit weaknesses Exceptional track-record on residential real Cyclical and capital intensive industry with only estate development since 1987. few barriers to entry.
Diversified business model with «3 Sizable development pipeline – mitigated by independent» divisions. required pre-sale before project starts.
Geographical diversification on property Significantly exposed to real estate development, portfolio. resulting in high cash flow volatility.
Solid tenants and properties located in growth Limited disclosure and transparency due to regions. private ownership – restricted access to public equity markets. Sound risk profile. First time issuer in the bond marked. High demand for residential properties in Oslo and Stavanger, supported by a positive macro Most long term debt secured with 1st priority outlook. pledge, potentially reducing the recovery rate.
Solid cash flow and interest coverage ability.
7 Agenda
I. Executive Summary and Transaction Details
II. Company Overview
III. Business Areas
IV. Market Outlook
V. Financial Results and Risk Factors
VI. Appendix
8 The Otium Group
Overview Strategy • Established in 1987 and owned 100 % by Tore Lie. • Identifying, pursuing and executing attractive opportunities
within the real estate sector. • The company currently employs 50 persons. • Value creation through the entire value chain within the • Total revenues of MNOK 701 in 2011. residential segment:
• Headquartered in Stavanger, Norway, with dedicated Zoning/regulation of land development/administration units in Oslo, Kristiansand Project design and Stavanger. Construction (Team Bygg AS) • A leading player in the real estate industry in Norway Sale
Development of residential real estate in Rogaland, • Yielding and value add profile within the commercial real estate Sørlandet and the Oslo area segment, but with in-house expertise to execute complete developments. Commercial properties (yielding assets) in Norway and Sweden • Strong focus on project risk with the following guidelines:
Second homes (including the brand name Presale shall minimum equal or exceed building costs «Favoritthytten») within residential projects (70-80% pre-sale requirement) Margin of 20-30 % within residental projects Binding long term lease agreement prior to development of (new) commercial space
Greenfield Completed land project
Zoning/ Planning/ Construction/ Pre-sale Hand-over
Value Chain Value regulation Design sale
9 Simplified Company Structure
Otium Group
Commercial Residential Second homes
Strategy Strategy Strategy:
Yielding properties, value-add Development, construction and sale Development, construction and sale opportunities, of residential property projects of second homes. developments/newbuilds
Areas: Areas: Area:
Norway and Sweden Stavanger, Kristiansand and Oslo Southern- Rogaland
Values: Values: Values:
Value adjusted equity: MNOK 597 Value adjusted equity: MNOK 733 Value adjusted equity: MNOK 83 Loan to value: 63.5% Loan to value: 29.6% Loan to value: 39.2% Revenues 1H 12: MNOK 55 Revenues 1H 12: MNOK 214 Revenues 1H 12: MNOK 41
Market values based on external and internal valuations
10 Located in the growth regions of Norway
The Otium Group Locations in Norway
• Strategic focus on residential development in Rogaland, Sørlandet and the Oslo region.
• Construction of residential and second home properties in Rogaland.
• Considerable portfoilo of commercial properties in Norway and Sweden (gross rental income of MNOK 124).
Business areas and location Locations in Sweden
The Oslo Rogaland Sørlandet Sweden region Residential Development
Leisure Home Development
Commerical Real Estate Sundsvall
Residential Construction (Team Bygg) Karlstad Västerås Second Home Construction (Favoritthytten) Borås Skövde Otium offices Helsingborg Malmø
11 Allocation between divisions
Market value broken down by segments Loan to value
1600 5 % VEK to 1 % 65 market 5 % 1400 value: 45% 83 168 40
1200 35 % 597 1000
54 % 800 Equity to book ratio: 1 351 20% 600
400 733 613
200 Otium Residential Otium Commercial Otium Second Homes
Otium Finance Net working capital 0 Oium Otium Otium Otium Net debt Net Value Book value ResidentialCommerial Second Finance working adjusted of equity Homes capital equity (Jun. 12) Comments (Nov. 12)
• Commercial properties account for 54% (MNOK 1,635) of the total assets. • Otium Finance consist of non-core assets in Røldal skisenter, German property portfolio (Vetro Group Gmbh) and a portfolio of securities. • The consolidated loan to value ratio is 55% (long term debt/market value).
12 Financial position and track-record
Solid historical performance Key financials
• The Otium Group has a proven track-record over the last 25 years, and holds extensive experience from a Numbers in MNOK 1H 2012 2011 number of large-scale development projects. Revenue 325 701 • The Group has a strong position within residential development in the main growth regions in Norway. EBIT 53 188
• During the last 10 years, the company has constructed Profit after tax 56 67 1,050 units, and 750 residential units are expected to Total assets be completed over the next 3 years. 3 006 2 414 (book value) • Moreover, Otium Second Homes has constructed over Long term debt 1 646 1 438 250 leisure homes since 2006, and has approx. 600 land plots available for development going forward.
• A portfolio of commercial properties, leased on long term contracts to solid counterparties, provides a steady cash flow generation.
• The Otium Group has total assets of NOK 3.0 bn and estimated Net Asset Values (NAV) of approx. NOK 1.35bn.
• Historically very good y-o-y growth in asset base and operating profit.
13 Key personnel
Board of Directors
Geir M. Aarstad – Chairman of the Board Olav Line– Board member
Mr. Aarstad serves as Chairman of the Board in Mr. Line took up the position as CEO in Otium. He has extensive experience from the Norwegian Property in 2009, after serving 6 building and construction industry as well as the years as CEO in Steen & Strøm. Mr. Line has real estate industry. Previously he has served as over 25 years of experience from the CEO both in Skanska Norge and Al Rajhi in Saudi commercial real estate market. Arabia.
Management team
Tore Lie – CEO and board member Ketil Petterson - CFO
Mr. Lie serves as CEO and owns 100 % of Mr. Petterson joined Otium as CFO in 2008, the Otium Group. Mr. Lie has 25 years of after serving as CFO in the media company experience from the real estate industry. Stavanger Aftenblad for 4 years.
14 Agenda
I. Executive Summary and Transaction Details
II. Company Overview
III. Business Areas
IV. Market Outlook
V. Financial Results and Risk Factors
VI. Appendix
15 Otium
Otium Residential Residential Second homes Commercial
• Otium Residential’s prime focus is development and sale of residential projects in Stavanger, Kristiansand and Oslo.
• The division develop both high-end projects, single housing and smaller, affordable projects.
• Long experience in identifing cases and land plots with significant development potential.
• Competent and experienced organization with local knowledge and know-how.
• Realizing value potential throughout zoning permits and entrepreneurship.
• 1 050 units has been completed the last 10 years, and over 750 units are estimated to be completed during the next 3 years.
• Market value and NAV are respectively estimated to MNOK 1 041 and MNOK 733.
• Land bank consisting of approximately 4 322 units, whereof 4 180 units are for residential purposes.
Ilahagen in Oslo Sandvedparken in Sandnes
16 Otium
Otium Residential – Milestone projects Residential Second homes Commercial
Units Sales value* Year built Units Sales value* Year built
200 320 2004 150 356 2008
Verven 2, Stavanger (100%) Eiganes, Stavanger(100%)
58 104 2006 54 153 2009
Arena Park, Arendal (100%) Forus Terrasse, Stavanger (67%)
21 125 2007 75 192 2009
Dovresvingen, Oslo (100%) Karmsund Brygge, Haugesund (50%)
46 115.5 2008 99 206 2010
Forus Dynamo, Stavanger (67%) Carl Berner, Oslo (100%)
*Numbers in MNOK 17 Otium
Otium Residential – Work in Progress Residential Second homes Commercial
Estimated Estimated Units Sales value* Completion Units Sales value* Completion
36 148 2012 96 365 2013/2014
Trymsvei, Kristiansand (100%) Sandvedparken Terrasse, Sandnes (100%)
29 167 2013 22 97.4 2013/2014
Kollstien Terrasse, Bergen (100%) Tre Taarn, Sandnes (20%)
39 160 2013 46 214.5 2014/2015
Parkkvartalet, Oslo (100%) Chokoladefabrikken,Oslo (33%)
28 104 2013 66 208 2014/2015
Ilahagene, Oslo (100%) Gamleveien, Lørenskog (33%)
*Numbers in MNOK 18 Otium
Otium Residential - Team Bygg Holding Residential Second homes Commercial
• Team Bygg has more than 20 years of construction experience within the residential market in Southern- Rogaland.
• Clear product profile, focusing on mid-range (price, standard) townhouses, single and detached units.
• Strong capacity in development of residential projects, with an annual production of approximately 100 houses.
• Construct houses in the border areas of Stavanger, Sandnes and Jæren.
• Team Bygg is one of the most profitable companies in Norway in this segment, due to effective utilization of land plots, standarized products and low overhead costs.
• Order backlog of 50 units secures a high activity in 2013.
• The company has an estimated market value of MNOK 300 and NAV of MNOK 290.
• The division is less correlated to the overall market segment, as its client base is mostly young families.
Frøylandsbakken in Kvernaland Motlandsmarka in Nærbø
19 Land plots under development
Area / Project Ownership Type Total no of units Otium share of units Status Comments Jærveien 4-10 20 % Residential/Commercial 90 18 Fully regulated 1.000 sqm commercial Tastagaten AS 100 % Residential/Commercial 35 35 Fully regulated 545 kvm commercial Øglendmagasinet 42 % Residential/Commercial 70 29 Fully regulated 6.000 sqm hotel / 5000 sqm office /6000 sqm retail Kverntorget Park AS 50 % Residential/Commercial 100 50 Fully regulated 5.400 kvm commercial Sjøfront AS, Hauskevågen 50 % Residential 100 50 Fully regulated Nord-Jæren Utvikling Sandnes AS 13 % Residential 10 000 1 250 Fully regulated Rundeskoge AS/Tre Tårn 20 % Residential 110 22 Fully regulated Sandvedparken Terrasse 100 % Residential 96 96 Fully regulated Kollstien Panorama, Bergen 100 % Residential 29 29 Fully regulated Parkkvartalet 100 % Residential 39 39 Fully regulated Ilaghagene 100 % Residential 28 28 Fully regulated Gamleveien 80 33 % Residential 200 66 Fully regulated Chokoladefabrikken 33 % Residential 140 46 Fully regulated Drangsvann 100 % Residential 1 950 1 950 Fully regulated 104.600 sqm St. Olavsvei 20 % Residential 40 8 Fully regulated Nybyen 50 % Residential/Commercial 100 50 Fully regulated Fetsund Stasjon 100 % Residential 40 40 Fully regulated Austrått Panorama 100 % Residential 9 9 Fully regulated Motlandsmarka 100 % Residential 1 1 Fully regulated Motlandsengja 100 % Residential 50 50 Fully regulated Frøylandsbakken 100 % Residential 2 2 Fully regulated Lyetoppen 100 % Residential 22 22 Fully regulated Undheim 100 % Residential 24 24 Fully regulated Tjøtta 100 % Residential 100 100 Fully regulated Åse Gård 100 % Residential 11 11 Fully regulated Hove Gård 50 % Residential 130 65 Fully regulated Randaberg 100 % Residential 10 10 Fully regulated Symreveien 100 % Residential 7 7 Fully regulated Dublandsveien 100 % Residential 4 4 Fully regulated Verdalsveien 100 % Residential 3 3 Fully regulated Klepp Sørbø 100 % Residential 112 112 Unregulated Bryne Stadion 100 % Residential 30 30 Unregulated 13 682 4 257
20 Otium
Otium Second Homes Residential Second homes Commercial
• Otium Second Homes, through the brand Favoritthytten (established in 1970), has considerable experience in the development of second homes.
• The company has completed and sold over 250 units since 2006.
• Otium Second Homes acquires land areas for development both by the sea and in the mountains of Southern- Rogaland.
• The company has an estimated market value and NAV of respectively MNOK 137 and MNOK 83.
• Land bank potential of approximately 600 units.
Bakarholmen in Skudeneshavn Suleskardtunet in Sirdal
21 Otium Second Homes – Favoritthytten Otium Recent projects Residential Second homes Commercial
Units Sales value* Year built Units Sales value* Year built
111 371.9 2006 31 66.3 2007
Ådneram Fjellgrend, Sirdal (85%) Ådneramsleite, Sirdal (85%)
6 18.9 2006 22 47.6 2008
Øksnaberget, Strand (85%) Idsalkollen, Strand (85%)
31 57.4 2007 24 52.4 2008
Storåsen , Sirdal (85%) Ådnanes, Strand (85%)
5 8.9 2007 20 47 2009
Bakarholmane, Karmøy (85%) Moltekvæven, Sirdal (85%)
*Numbers in MNOK 22 Otium
Otium Commercial Residential Second homes Commercial
About Otium Commercial Portfolio snapshot
• Otium Commercial holds a substantial portfolio of commercial properties in Norway and Sweden (~126 000 sqm GLA).
• Gross annual rent of approximately MNOK 124.
• Strong tenant base, with Nordea totaling 52.6 % Karl Södra in Helsingborg Hillevåg in Stavanger and 21.1 % of gross annual rent in respectively Sweden and Norway.
• In October 2012, NRH Bergen (part of the the NRH Norge AS portfolio*) was sold on a forward contract for MNOK 365.
• Furthermore, Otium is in negotiations for selling NRH Svolvær, NRH Porsgrunn and NRH Vadsø, all Nordea-building in Skøvde Brevik in Porsgrunn municipality three properties belong to the Norge Rundt Holding portfolio (100 % owned by Otium).
• Market value and NAV are respectively estimated to MNOK 1 635 and MNOK 597.
Esplanaden in Sundsvall Økern in Oslo
*Otium owns 46 % of the NRH Norge AS portfolio 23 Otium Commercial Otium Commercial properties in Sweden Residential Second homes Commercial
Rental income split by property Portfolio split by type Industry Fallvinden 3 7 % Stores 1 % Other 4 % Mercurius 14 7 % 18 % Oscarsgt 28 Sockerbruket 16 % 3 5 % Heimdal 17 Manfred 8 8 % 20 % Pandora 5 Karl XI 9 % Offices Sødra 18 Pan 5 82 % 10 % 13 %
Portfolio Overview
Rental income Income per sqm Weighted External Property Location Type Square meters (MNOK) (NOK)** average duration Valuation Oscarsgt 28 Malmø Offices 7 647 9.9 1 684 5.9 191 Manfred 8 Västerås Offices 8 778 11.9 1 399 5.0 142 Mercurius 14 Karlstad Offices 6 805 11.1 1 628 8.3 121 Karl XI Sødra 18 Helsingborg Offices/Industry/Other 7 634 8.2 1 069 6.8 86 Pan 5 Sundsvall Offices 5 145 6.1 1 195 10.9 50 Pandora 5 Borås Offices/Stores 5 362 5.7 1 063 3.6 58 Heimdal 17 Skövde Offices 5 052 4.7 943 4.2 49 Sockerbruket 3 Helsingborg Offices 1 926 2.9 1 523 5.6 38 Fallvinden 3 Karlstad Industry 909 0.4 391 3.0 2 Total 49 258 60.7 1 295 6.4 737
*Current value of the portfolio is estimated by the company to be MNOK 850, upward revised by approximately MNOK 110, mainly due to new long term contracts with Nordea for Mercurius 14 and Pan 5, resulting in a higher Net Operating Income (NOI) and a longer weighted lease duration. **Income per square meter based on rented areas 24 Otium Commercial Otium Commercial properties in Norway Residential Second homes Commercial
Rental income split by property Portfolio split by type
Haslevangen 28-30 12 % Other 26 % NRH Norge AS 26 % Hillevåg- Offices senteret 48 % Norge Rundt 27 % Industry Holding 9 % 11 % Breivik Stores Eiendom 17 % 24 %
Portfolio Overview
Rental income Income per sqm Weighted Valuation Property Location Type Square meters (MNOK) (NOK)** average duration (MNOK) Haslevangen 28-30 Oslo Offices/Warehouses 10 087 7.8 876 1.1 115 Hillevågsenteret Stavanger Stores/Offices 13 582 16.9 1 297 8.3 225 Breivik Eiendom Porsgrunn Offices/Warehouses 22 748 14.8 749 5.2 185 Lillehammer, Vadsø, Volda, Honningsvåg, Porsgrunn, Norge Rundt Holding Svolvær Offices/Other 12 944 7.1 959 3.1 75 NRH Norge AS* (46 % Bodø, Bergen, Halden, Hamar, ownership) Trondheim, Ålesund Office/Stores/Other 17 983 16.5 1 251 5.8 80 Properties under development 105 Total 77 344 63.1 1 014 5.4 785
* Otium’s share of the NRH Norge AS portfolio. **Income per square meter based on rented areas
25 Debt overview
Comments Debt maturity profile (MNOK)
• The company has a long term interest bearing debt of 954 MNOK 1,652 to Norwegian banks.
• Average weighted margin are currently 257 bps.
• The Swedish portfolio is hedged with an interest rate 348 swap of MSEK 725 fixed @ 4.85% until 2016. 179 171 • Otium AS holds an interest swap of MNOK 62 fixed at 4.80% until 2016. 2 013 2 014 2 015 Post 2015 • The bank loans has the following covenants: – Book equity: min. MNOK 500 – Book equity ratio: min 20% Amortisation profile (MNOK) – Minimum cash: MNOK 50 30 24 • The bank loans includes cross-default clauses. 25 22 23 23 18 18 • All dividends paid from the Brevik property and the 20 Swedish portfolio requires written consent from the 15 lender (Nordea). 10 • The Group has a revolving credit facility of NOK 25 5 million, which is currently fully drawn. 0
2 013 2 014 2 015 2 016 2 017 2 018
26 Agenda
I. Executive Summary and Transaction Details
II. Company Overview
III. Business Areas
IV. Market Outlook
V. Financial Results and Risk Factors
VI. Appendix
27 Macro indicators Norway Solid outlook for the Norwegian economy…
GDP Growth mainland Norway (%) Unemployment rate (%)
3.6 3.4 3.1 3.2 3.6 3.2 3.3 3.3 3.2 2.4 3.1 3.1 2.6 1.9 1.5
08 09 10 11 12E 13E 14E 15E 08 09 10 11 12E 13E 14E 15E
(1.6) Real disposable income growth (%) Population growth (%)
1.31 1.33 1.32 1.30 1.30 5.0 1.23 1.28 1.29 4.5 4.2 3.9 3.9 4.0 3.5 2.8
08 09 10 11 12E 13E 14E 15E 08 09 10 11 12E 13E 14E 15E
Source: SSB 28 Macro indicators Norway Low interest rate + strong outlook boost housing prices
Interest rate, housing (%) Housing price growth (%)
6.8 8.30 8.00 7.70 8.00 4.7 7.00 7.20 4.0 3.8 3.9 3.4 3.6 3.5
1.90
08 09 10 11 12E 13E 14E 15E 08 09 10 11 12E 13E 14E 15E -1.10
Comments
• The Norwegian labour market is still unaffected by the challenges facing Europe.
• Interest rates are expected to remain low in the coming years, due to continued low inflation, a strong Norwegian Krone and low interest rates internationally.
• Estimated annual growth in house prices of ~7 % in 2013, 2014 and 2015, driven by low interest rates, population growth, real disposable income growth and limited supply of new houses.
Source: SSB 29 Residential properties Oslo/Stavanger Oslo, Akershus & Rogaland-fastest growing counties in Norway
Population growth 2012-2015E (%) Housing price growth 2011-2015E (%)
8.5 32 30 6.8 6.7 27 23 5.3
11 9
Oslo Akershus Rogaland Norge Stavanger Oslo Bergen Trondheim Tromsø Kristiansand
Comments
• Oslo was the fastest growing (%)metropolitan area (above 750 000 inhabitants) in Europe from 2005-2010.
• Oslo is expected to continue its strong growth in the coming years, along with the Akershus and Rogaland regions.
• House prices are expected to increase by 30% - 32% in Oslo and Stavanger between 2011 and 2015.
Sources: SSB, Aftenposten, UN Population department and Econ Pöyry 30 Commercial properties Norway High transaction volumes and stable yields in 2012
Annual transaction volume (NOK bn) Interest rates and prime transaction yields (%)
80 68 7.5
60 53 50 6.5 44 39 40 36 5.5 28 22 4.5 20 15 15 3.5 - 2.5 03 04 05 06 07 08 09 10 11 12E 1.5
Total sales in 2012 split by location (%)
jan. 05 jan. 08 jan. jan. 03 jan. 04 jan. 06 jan. 07 jan. 09 jan. 10 jan. 11 jan. 12 jan. NOK 10Y Swap 10Y Gov. Bond 9 % Prime transactions yield Oslo 7 %
8 %
13 % 63 %
Oslo/Akershus Southern- and Western Norway Central- and Northern Norway Southeast Norway Portfolios/Other
Sources: Akershus Eiendom and Union 31 Commercial properties in Oslo and Stavanger Oil discoveries push office rents upwards in Stavanger
Year- end office rents (NOK per square meter)
2 650 2 650
2 300 2 300 2 350 2 350
1 900 1 800 1 900 1 700 1 650 1 800 1 500 1 700 1 650 1 650 1 500 1 650 1 600 1 650 1 650 1 600 1 400 1 300 1 400 1 300 1 200 1 400 1 300 1 400 1 300 1 200
2 006 2 007 2 008 2 009 2 010 2 011 2012 H1 Stavanger - CBD Stavanger - Oil (Forus) Oslo - High std CBD Oslo - High east fringe 2 006 2 007 2 008 2 009 2 010 2 011 2012 H1 Stavanger - CBD Stavanger - Oil (Forus) Oslo - High std CBD Oslo - High east fringe
Office rents pick up after the drop in 2009
• New oil discoveries in the North Sea have increased demand for office space in Stavanger, contributing to increased rents.
• Strong demand in Oslo, where approximately 300 tenants are searching for new facilities (~680 000 sqm).
• In May 2012, the vacancy rate in Stavanger was only at 3.4 %, the lowest since 2007 – 2008.
Sources: Akershus Eiendom and Union 32 Commercial properties Sweden Falling prime yield rates in Stockholm and Gothenburg
Comments STIBOR 3 months (%)
• Despite the distress in Europe, the Swedish economy 6.00 continues to grow (annual GDP up 2.3 % so far in 2012). 5.00 4.00 • Limited new supply combined with economic stability contributed to secure demand in Q2(prime yields fell 3.00 both in Stockholm and Gothenburg). 2.00
• A slowdown in the Swedish economy is expected as 1.00 demand from main markets has fallen during the year. - sep. 07 sep. 08 sep. 09 sep. 10 sep. 11 sep. 12
Prime yields and rental growth Prime office yields (September 2012)
8.00 % 10.00 % 10 year Current Last 7.00 % 5.00 % quarter quarter Last year High Low
6.00 % 0.00 % Stockholm 4.50 % 4.75 % 5.00 % 6.50 % 4.25 %
Gothenburg 5.25 % 5.50 % 5.50 % 7.00 % 5.25 % 5.00 % -5.00 % Malmö 5.50 % 5.50 % 5.50 % 7.00 % 5.50 % 4.00 % -10.00 % sep. 07 sep. 08 sep. 09 sep. 10 sep. 11 sep. 12
Average prime yields Rental growth
Sources: Cushman & Wakefield, Colliers and Sveriges Riksbank 33 Agenda
I. Executive Summary and Transaction Details
II. Company Overview
III. Business Areas
IV. Market Outlook
V. Financial Results and Risk Factors
VI. Appendix
34 Financial overview
Income Statement (USD) Year end: 2007A 2008A 2009A 2010A 2011A Net revenues (m) 1,285 824 486 445 701 Revenue growth (%) 68 % -36 % -41 % -8 % 58 % EBITDA (m) 558 121 191 123 235 EBITDA margin (%) 43 % 15 % 39 % 28 % 33 % Depreciation (m) -34 -57 -45 -38 -47 EBIT (m) 524 64 145 86 188 EBIT margin (%) 41 % 8 % 30 % 19 % 27 % Net financials (total) 38 -359 -125 -147 -77 Pre-tax profit (m) 562 -345 20 -61 108 Taxation (m) -55 17 18 29 -40 Net income (m) 507 -328 38 -32 67 Net income (adjusted) (m) 507 -328 38 -32 67 Source: SpareBank 1 Markets and Company Data
Balance Sheet (USD) Year end: 2007A 2008A 2009A 2010A 2011A Intangible assets (m) 190 49 40 48 33 Financial assets (m) 215 366 278 287 362 Property, plant and equipment (m) 1,540 2,474 1,332 1,185 1,091 Total non-current assets (m) 1,945 2,889 1,651 1,520 1,486 Trade receivables (m) 580 537 596 321 352 Other current assets (m) 761 724 552 486 484 Cash and equivalents (m) 459 177 83 179 92 Total current assets (m) 1,800 1,438 1,231 986 929 Total assets (m) 3,745 4,327 2,882 2,506 2,414 Shareholders equity (m) 804 525 500 470 537 Non-current interest bearing liabilities (m) 1,737 2,018 1,921 1,502 1,402
Total non-current liabilities (m) 1,996 3,057 1,998 1,562 1,540 Current interest bearing liabilities (m) 407 0 124 287 173 Accounts payables (m) 109 59 20 37 32 Other current liabilities (m) 428 686 239 150 133 Total current liabilities (m) 945 745 383 474 337 Total liabilities (m) 2,941 3,802 2,382 2,036 1,877 Total equity and liabilities (m) 3,745 4,327 2,882 2,506 2,414 NIBD (m) 1,686 1,840 1,962 1,610 1,483 Source: SpareBank 1 Markets and Company Data
35 Risk factors
Market risks The Group's revenues are determined by rates and prices fixed in an open and competitive market that historically have experienced volatility and supply/demand imbalances outside the Company’s control. The Company cannot predict the future level of demand for its services or future conditions in the industries it serves. Unfavourable market developments could have a negative impact on the Group's revenues, profitability, cash flows and financial condition.
Competition The market for the Group's products and services is competitive. Although the Company believes that its products are competitive with regard to standard and attractiveness in the market, no assurance can be given that the Group will be able to maintain its competitive position in relation to current and/or future competitors. The Group may face competition from other companies within the real estate industry, and many of these companies may have greater resources than the Group itself. The failure of the Group to provide attractive products to the market could have a material adverse effect on the Group’s business, operating results or financial condition.
Political risks The Company cannot predict whether governments of the countries in whose territories it operates will change the fiscal framework governing the real estate industry or enact new legislation in the future that could restrict or impair the Group’s operations in such areas which could be relevant. Any such changes of or new legislation could have material impact on the Group's business and financial condition.
Financial position In the long term, the Group may be unable to obtain sufficient funds to grow and develop its business, and any additional financing may be on terms adverse to the interests of the bondholders. If the Group does not obtain additional financing when required, the Group may be unable to fund its operations, expansion, successfully promote its business or take advantage of business or acquisition opportunities. Furthermore, no assurance can be given that the terms will be favourable and acceptable to the Group. Although the Company considers the Group's financial situation as satisfactory, new projects might lead to a need for capital. No assurances can be given that such additional capital will be available, or if it will be available at acceptable terms.
36 Risk factors cont’d
Ability to service debt and other obligations The financial leverage of the Group may have adverse consequences, including the need to manage the Group’s businesses in a way to service its debt and other financial obligations. Should the financing of the Group not be sufficient to meet its obligations, the Group may be forced to; (i) reduce or delay capital expenditures; (ii) sell assets or businesses at unanticipated times and/or at unfavourable prices or other terms; (iii) seek additional equity capital; or (iv) restructure or refinance its debt. There can be no assurance that such measures would be successful or adequate to meet debt and other obligations as they fall due, or would not result in the Company being placed in a less competitive position. Many of the Groups subsidiaries have external financing from financial institutions related to the real estate portfolio, secured by inter alia mortgages over the properties. The loan agreements for such financing contain covenants relating to inter alia the operation of the properties and the financial condition of the relevant subsidiaries and the Group. The loan agreements also contain cross default provisions. If the relevant subsidiaries and/or the Group are not able to comply with such covenants this may cause that the relevant lenders claim the entire amount outstanding under the loan repaid, and in the event of non-payment, the guaranteed amount paid by the Company. No assurance can be given that the relevant subsidiary and/or the Group will be able to obtain the required financing to repay such loans/guarantees.
Additional capital requirements The Group may require additional capital in the future due to unforeseen liabilities or in order for it to take advantage of opportunities for acquisitions, joint ventures or other business opportunities that may be presented to it. There can be no assurance that the Group will be able to obtain necessary financing in a timely manner on acceptable terms.
Interest rate fluctuations Some of the debt financing of the Group is based on floating rate interest. The Group may be exposed to risks due to fluctuations in interest rates. The Company may mitigate these risks by implementing hedging arrangements as appropriate, but no assurance can be given that this risk can or will be fully hedged.
Taxation No assurance can be given that the Company will at all times be able to obtain an optimal tax treatment.
37 Agenda
I. Executive Summary and Transaction Details
II. Company Overview
III. Business Areas
IV. Market Outlook
V. Financial Results and Risk Factors
VI. Appendix
38 The Otium Group - Value adjusted equity
Otium Groug - as pr. Nov. 2012 Project Project type Status Market- /sales value Value adjusted equity NOK NOK Otium Bolig C&L Holding AS, 33% Residential under construction 26 000 000 26 000 000 Kampengt 16-18 Residential under planning 35 000 000 2 700 000 Trymsvei 100% Residential completed 24 000 000 24 000 000 Kragerø - 49% Residential/Commerical project/plan 70 000 000 9 500 000 Benestad 100% * Land planning approved 220 000 000 186 000 000 Nybyen - 50% Residential project/plan 20 000 000 20 000 000 Karmsundet Brygge, 50% Residential completed 10 000 000 10 000 000 Kverntorget 50% Residential/Commerical project/plan 20 000 000 20 000 000 Sandveparken Terrasse, 50% Residential under construction 40 000 000 40 000 000 Kollstien Terrasse - 50% Residential under construction 15 000 000 15 000 000 Tastagaten - 100% Residential under construction 35 000 000 15 000 000 Niels Abelsgt, 100% Residential project/plan 14 000 000 4 800 000 Various apartments (Berlin, Spania, Svg, Sirdal) Residential on going 17 000 000 17 000 000 Parkkvartalet, 100% Residential under construction 135 000 000 10 000 000 Jørgen Moesgt. - Fetsund Residential project/plan 30 000 000 11 400 000 Bolig Sør Vest, 20% Residential/Commerical project/plan 10 000 000 10 000 000 Joscar Eiendom - Ilahagene - Kingosgate 22 Residential under construction 10 000 000 10 000 000 Nord Jæren Utvikling, 12% Land project/plan 10 000 000 10 000 000 Team Bygg Holding Residential under construction 300 000 000 291 600 000 Sum 1 041 000 000 733 000 000
Otium Næring Øglændhuset, 48% Shopping centre & Housing under planning 50 000 000 50 000 000 Skagen 35, tomt Building site for Real Estate under planning 8 000 000 5 600 000 Norge Rundt Holding Real Estate portfolio ongoing 75 000 000 19 000 000 NRH Norge AS - 46% Real Estate portfolio ongoing 80 000 000 80 000 000 NL Sverige Holding Real Estate portfolio ongoing 850 000 000 337 000 000 Brevik Eiendom Real Estate & Housing ongoing 185 000 000 36 000 000 Haslevangen 28-30 Real Estate ongoing 115 000 000 33 000 000 Nilsen og Wold Real Estate ongoing 24 000 000 3 000 000 Hillevågssenteret Real Estate portfolio ongoing 225 000 000 70 000 000 Gjellebekk Invest.33% Land - Commercial under planning 5 000 000 5 000 000 Bryne Industripark, 66% Real Estate ongoing 18 000 000 -41 400 000 Sum 1 635 000 000 597 200 000
Otium Fritid Sjøfront Fritidsboliger under planning 9 000 000 4 700 000 Østebøneset - 50% Fritidsboliger stand-by 15 000 000 15 000 000 Røldal Fjellandsby 2 Fritidsboliger stand-by 4 000 000 4 000 000 Røldal Fjellandsby Fritidsboliger stand-by 5 000 000 5 000 000 Hafjell Fritidsbolig ferdig 16 000 000 5 000 000 Bømlo Hyttetomter under planning 8 000 000 3 700 000 Favoritthytten konsernet, 80% ongoing 80 000 000 45 850 000 Sum 137 000 000 83 250 000
Otium Finans Otium Finans Verdipapirer ongoing 120 000 000 45 000 000 Røldal Skisenter, 50% Skisenter ongoing 15 000 000 4 700 000 Probond/Taiba Leiligheter 15 000 000 15 000 000 Sum 150 000 000 64 700 000
Otium AS - parent company Otium Netto rentebærende gjeld 0 -167 610 000 Otium, netto arbeidskapital 40 000 000 40 000 000 Sum 40 000 000 -127 610 000
SUM TOTAL 3 003 000 000 1 350 540 000
39 The Otium Group - Complete Company Structure
40 Annual report 2011
41 Annual report 2011
42 Annual report 2011
43 Annual report 2011
44 Annual report 2011
45 Annual report 2011
46 Annual report 2011
47 Annual report 2011
48 Annual report 2011
49 Annual report 2011
50 Annual report 2011
51 Annual report 2011
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