Entra : Q1 2022 report

Central, flexible and environment friendly office properties

Highlights

• - Rental income of 781 million (591 million)

• - Net income from property management of 433 million (370 million)

• - Net value changes of 3,146 million (880 million)

• - Profit before tax of 3,583 million (1,290 million)

• - Started one redevelopment and one refurbishment project

• - Closing of Oslo Areal acquisition and Hinna Park divestment

Rental income	Property management	EPRA NRV
+190 mill.	+ 63 mill.	+ 21 %
Rental income	Net income from PM	EPRA NRV
(NOKm)	(NOKm)	(NOK per share)

781

800 700

500

591 600

500 400

400

300

200

100

0

402

433

370

370

392

250 200

150 100

235

194

Q1 21 Q2 21 Q3 21 Q4 21 Q1 22

Q1 21 Q2 21 Q3 21 Q4 21 Q1 22

Q1 21 Q2 21 Q3 21 Q4 21 Q1 22

Key figures

All amounts in NOK million	Q1-22	Q1-21	2021	2020	2019	2018
Rental income	781	591	2 508	2 353	2 338	2 243
Change period-on-period	32 %	1 %	7 %	1 %	4 %	8 %
Net operating income	717	539	2 274	2 142	2 149	2 058
Change period-on-period	33 %	-1 %	6 %	0 %	4 %	8 %
Net income from property management1)	433	370	1 534	1 451	1 471	1 434
Change period-on-period	17 %	4 %	6 %	-1 %	3 %	14 %
Net value changes1)	3 146	880	5 264	5 705	1 955	1 486
Change period-on-period	257 %	361 %	-8 %	192 %	32 %	-58 %
Profit before tax	3 583	1 290	6 825	7 274	3 735	3 073
Change period-on-period	178 %	2 142 %	-6 %	95 %	22 %	-39 %
Profit after tax	2 814	1 022	5 373	5 696	3 225	2 735
Change period-on-period	175 %	1 856 %	-6 %	77 %	18 %	-39 %
Market value of the property portfolio1)	82 646	58 031	67 547	56 746	48 964	45 630
Net nominal interest bearing debt1)	39 269	21 053	26 594	20 930	19 585	18 941
EPRA LTV1) 2)	48.2 %	36.4 %	39.7 %	37.0 %	40.2 %	41.3 %
Interest coverage ratio1)	2.9	3.6	3.5	3.4	3.3	3.6
Average outstanding shares (million)	182.1	182.1	182.1	182.1	182.4	183.6
All amounts in NOK per share	Q1-22	Q1-21	2021	2020	2019	2018
EPRA NRV1)	235	194	218	189	154	144
Change period-on-period	21 %	25 %	15%	23 %	7 %	10 %
EPRA NTA1)	233	192	216	187	153	142
Change period-on-period	21 %	25 %	15%	23 %	8 %	10 %
EPRA Earnings1)	1.75	1.46	6.07	5.73	5.81	5.59
Change period-on-period	20 %	3 %	6 %	-1 %	4 %	7 %
Cash Earnings1)	2.35	2.01	8.32	7.83	8.01	7.74
Change period-on-period	17 %	4 %	6 %	-2 %	3 %	14 %
Dividend3)	0.00	0.00	5.10	4.90	4.70	4.50
Change period-on-period	0 %	0 %	4 %	4 %	4 %	10 %
Reference

• 1) Refer to section "Alternative performance measures" for calculation of the key figure

• 2) From Q1-22, Entra will present EPRA LTV as its Loan-to-Value key figure, replacing the previous Loan-to-Value measured by effective leverage. Refer to page 30 for further information on EPRA LTV.

• 3) Entra pays semi-annual dividends. Dividend for 2021 constitute dividend approved and paid for the first half of 2021 and proposed dividend for the second half of 2021.

Financial development

Results

Rental income

Rental income was up 32 per cent from 591 million in Q1 2021 to 781 million in Q1 2022. The changes in rental income are explained by the factors in the income bridge below.

Q1-21
All amounts in NOK million	Q1-22
Rental income previous period	591
Acquisitions	143
Divestments	-12
Finalised development projects	37
Vacated properties for redevelopment	-3
CPI growth	28
Like-for-like growth above CPI	1
Other	-5

Rental income

781

The acquisition of the Oslo Areal portfolio contributed with 109 million in the quarter, and Lagårdsveien 6 and Kanalpiren in Stavanger, Møllendalsveien 1A and Lars Hilles gate 19 in Bergen, and Fyrstikkalléen 1 and Universitetsgata 11 (Hotel Savoy) in Oslo contributed with rental income of 34 million compared to the same quarter last year. The divestment of Tollbodallmenningen 2A in Bergen and the Hinna Park portfolio in Stavanger reduced rental income in the quarter by 12 million.

Net contribution from development projects was 34 million in the quarter compared to the same quarter last year. During the last 12 months, Entra has finalised the redevelopment of Universitetsgata 7-9, Universitetsgata 2, Kristian Augusts gate 11, Kristian Augusts gate 13, Grønland 32 and the first part of Møllendalsveien 6-8, contributing a total of 37 million on rental income compared to the same quarter last year. However, Kongens gate 87 and Brattørkaia 13B in Trondheim and Vahls gate 1-3 in Oslo have been vacated in the same period forredevelopment and has thus reduced the rental income by 3 million in the quarter.

Compared to Q1 last year, rental income has been positively affected by an underlying like-for-like growth of 5.2 per cent (29 million) for the quarter, of which the underlying CPI adjustment was 5.1 per cent (28 million). Near all of Entra's lease contracts are 100 per cent linked to positive changes in CPI. The annual adjustment is mostly made on a November to November basis.

Other effects in the quarter stems from an administrative fee of 3 million per quarter during 2021, and 1 million due to the temporary relocation of a tenant to a leased property, with the effect that the lease contract has been classified as a finance lease.

Average 12 months rolling rent per square meter was 2,284 (2,180) as of 31.03.22. The increase in 12 months rolling rent over the last four quarters is mainly a result of acquisitions and finalised projects.

RENT (12M ROLLING) PER SQM AND OCCUPANCY RATE

(NOK sqm)

2 400

(%) 99.0

2 300

2 200

2 100

2 000

1 900

1 800

1 700

1 600

1 500

Q2-17

Q3-17

Q4-17

Q1-18

Q2-18

Q3-18

Q4-18

Q1-19

Q2-19

Rent per sqm (NOK)

Q3-19

98.0

97.0

96.0

95.0

94.0

93.0

Q4-19

Q1-20

Q2-20

Q3-20

Q4-20

Q1-21

Q2-21

Q3-21

Occupancy (%)

Q4-21

Q1-22

Compared to the same quarter last year, the occupancy rate went down by 50 basis points to 97.3 per cent. The market rental income of vacant space as of 31.03.22 was approximately 91 million on an annualised basis.

RENTAL INCOME DEVELOPMENT

The graph above shows the estimated development of contracted rental income based on all reported events, including income effect from acquisitions and divestments, development projects, net letting based on new and terminated contracts in the management portfolio, and other effects such as estimated CPI adjustments. It does not reflect any letting targets on the vacant areas in the portfolio or on contracts that will expire, but where the outcome of any renegotiation process is not known, i.e., not yet reported in "Net letting". The graph therefore does not constitute a forecast, but rather aims to demonstrate the rental income trend in the existing contract portfolio on the balance sheet date based on all reported events.

Operating costs

Total operating costs amounted to 64 million (51 million) in the quarter, and is split as follows:

All amounts in NOK million	Q1-22	Q1-21
Maintenance	5	8
Tax, leasehold, insurance	17	14
Letting and prop. adm.	25	17
Direct property costs	16	13

Operating costs

64

51

The acquisition of the Oslo Areal portfolio in January 2022 accounted for 7 million of the increase compared to the same quarter previous year, of which 4 million is classified as letting and property administration expenses.

Net operating income

As a consequence of the effects explained above, net operating income came in at 717 million (539 million) in the quarter.

Other revenues and other costs

Other revenues were 20 million (16 million) in the quarter and other costs were 19 million (10 million). Other revenues and other costs mainly consists of services provided to tenants and income and costs related to inventory properties (properties in the Bryn portfolio which is expected to be zoned for residential development and subsequently sold to a third party at a predetermined price). In addition, other costs in the quarter included 6 million in costs directly attributable to a leased property sublet under a finance lease.

Administrative costs

Administrative costs amounted to 65 million (49 million) in the quarter. The increase in the quarter is mainly driven by one-off effects due to the acquisition of Oslo Areal.