Technopolis Interim Report Q3 Presentation 2014

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Technopolis provides the best addresses for companies to operate and succeed in five countries in the Nordic-Baltic region. The company develops, owns and operates a chain of 21 smart business parks that combine services with flexible and modern office space. The companys core value is to continuously exceed customer expectations by providing outstanding solutions to 1,700 companies and their 40,000 employees in Finland, Norway, Estonia, Russia and Lithuania. The Technopolis Plc share (TPS1V) is listed on NASDAQ OMX Helsinki.

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  • 1. Interim Report Q3/2014October 30, 2014

2. Q3 HighlightsNet sales up 31.3%EBITDA up 38.3%, costs up 20.9%*EPRA Direct result rose 33.5%Occupancy solid at 93.5%Equity ratio 40.6% and LTV 58.1%Divesture of 22,000 m in Oulu at fair value* Includes a non-recurring cost of EUR 0.5 million30.10.2014 2 3. Net Changes of Fair ValuesEUR million MarketYieldRelatedOccupancyAssumptionIn 1-9/2014 fair values were negative 0f EUR 16.1 millionIn Q3/2014 fair values negative of EUR 6.1 million30.10.2014 3CustomerRenovationPlanned InfraModernizationProjects inProgressFinland -3.3 -10.1 -10.4 -7.8 +0.3Baltic Rim +1.4 - +1.7 -1.6 +10.1Scandinavia +4.8 -3.5 - +2.3 -Total +2.9 -13.6 -8.7 -7.1 +10.4 4. FinancingQ3/2014 Q2/2014 Q1/2014 Q4/2013 Q3/2013Interest bearing debt, EUR million 851.3 840.0 850.1 861.9 658.3Floating rate, % 51.2 48.2 49.7 50.3 60.8Fixed rate, % 48.8 51.8 50.3 49.7 39.2Hedging ratio, % 46.1 49.0 46.5 46.5 34.8Average interest rate, % 2.47 2.50 2.52 2.46 2.08Capital weighted loan maturity, years 6.3 6.7 6.8 7.0 8.1Fixing period, years 2.2 2.1 2.2 2.2 1.9Interest cover ratio, % 4.8 4.6 4.6 5.3 5.6Loan to value, % 58.1 57.9 58.5 59.5 57.2Maturing loans, next 12 mo, EUR million 177.7 146.1 166.4 145.6 130.2Untapped credit lines, EUR million 110.8 97.5 112.1 87.5 116.730.10.2014 4 5. CustomersSegments in September 30, 201411%25%11%10% 7%11%8%7%3% 7%ProfessionalServices ICTPublicSector RealEstateEducation FoodServicesFinancialServices ManufacturingWholesaleandRetail Other30.10.2014 5Customer HighlightsTwo new large customers in Oslo:2,100 m and 1,000 mCustomer satisfaction increasedfrom 3.74 (Q1/14) to 3.82 (Q3/14)Increase in customer activity inOulu e.g. MediaTek 1,300 mThree new restaurants opened:Tallinn, Jyvskyl and VilniusPulkovo 2 occupancy at 80.5%Tallinn triple tower now full 6. Markets Occupancy Rates87,9%Technopolis 92.5%90,6%89,5%90,5%30.10.2014 691,8%Technopolis 96.9%92,5% 92,8%91,8%97%95%93%91%89%87%HMA Tampere Oulu Jyvskyl Oslo Tallinn Pulkovo,St. PeteOzas,VilniusTechnopolis 95.9%Sources: Q3/2014 Technopolis Interim Report and Q2/reports fromCatella (Finland), DTZ (Oslo),Jones Lang LaSalle (St. Petersburg), Colliers (Tallinn) and Newsec (Vilnius). Technopolis figuresare financial occupancy rates 7. 30.10.2014 7Financial Occupancy75%80%85%90%95%100%Q3-2004Q4-2004Q1-2005Q2-2005Q3-2005Q4-2005Q1-2006Q2-2006Q3-2006Q4-2006Q1-2007Q2-2007Q3-2007Q4-2007Q1-2008Q2-2008Q3-2008Q4-2008Q1-2009Q2-2009Q3-2009Q4-2009Q1-2010Q2-2010Q3-2010Q4-2010Q1-2011Q2-2011Q3-2011Q4-2011Q1-2012Q2-2012Q3-2012Q4-2012Q1-2013Q2-2013Q3-2013Q4-2013Q1-2014Q2-2014Q3-2014Quarterly Financial Occupancy, % and 10 Year Average10 Yr. Avg.94.9%Q3/1493.5% 8. EBITDA, Net SalesRentable Space1801601401201008060402030.10.2014 81.000.000900.000800.000700.000600.000500.000400.000300.000200.000100.000001999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014eRentable spaceNet SalesEBITDAEUR Million mNet SalesEBITDA 2014 are analysts consensus estimatesRentable space at the end of 2014 is based on estimations 9. Market Segments by Fair ValueSeptember 30, 201418%19%8% 13%4%7%6%1%16%8%Oulu HMA TampereKuopio Jyvskyl LappeenrantaSt. Petersburg Tallinn VilniusOslo30.10.2014 9 10. Looking Ahead2014 growth guidance y/y unchanged:Net sales 27%-32%EBITDA 35%-40%Focus on integration and business basicsSale of Lentokentntie campus in Oulu will have a positiveimpact on financial occupancySolid solvency and liquidity30.10.2014 10 11. Appendices: Additional Data 12. Key FiguresFinancials 1-9/2014 1-9/2013 , % 2013Net sales, EUR million 120.3 91.6 31.3 126.3EBITDA, EUR million 65.3 47.2 38.3 64.1Operating profit, EUR million 46.4 32.3 43.7 43.9Direct result (EPRA), EUR million 39.2 29.3 33.5 40.5Direct result/share (EPRA), EUR 0.37 0.35 5.7 0.47Real Estate OperationsFinancial occupancy rate, % 93.5 92.0 +1.5pp 93.6Net rental yield, % 7.3 7.6 -0.3pp 7.6Market yield, % 7.8 8.2 -0.2pp 7.8Rentable space, 1 000 m 758,200 697,500 8.7 746,80030.10.2014 12 13. Lease AgreementsLease stock, % of spaceMaturity in yearsQ3/2014 Q2/2014 Q1/2014 Q4/20131 17 14 17 221-3 25 24 21 223-5 12 9 12 135 21 24 22 26Open-end leases 25 28 28 17Av. Maturities in Mo 40 40 31 35Lease stock, EUR million 463.5 468.2 478.6 470.520 largest customers leased approximately 27.9% of the companys leased spaceon September 30, 201430.10.2014 13 14. Finland1-9/2014 1-9/2013 , % 2013Rentable space, m 560,200 525,700 6.6 555,900Rent, /m/mo avg. 16.31 15.92 2.5 16.21Financial occupancy rate, % 92.1 91.0 +1.1pp 92.9Net rental revenue, EUR million 77.1 70.4 9.6 94.9Net sales, EUR million 88.1 81.0 8.8 109.4EBITDA, EUR million 47.6 42.2 12.9 56,1Market yield requirement, % 7.9 8.0 -0.1pp 7.9Fair value of investment957.2 870.0 10.0 981.0properties, EUR million30.10.2014 14 15. Baltic Rim1-9/2014 1-9/2013 , % 2013Rentable space, m 134,600 92,100 46.1 119,500Rent, /m/mo avg. 15.33 14.42 6.3 15.04Financial occupancy rate, % 98.3 98.5 -0.2pp 99.1Net rental revenue, EUR million 17.6 10.2 73.0 15.3Net sales, EUR million 18.5 10.6 74.2 15.9EBITDA, EUR million 10.1 5.1 100.2 7.6Market yield requirement, % 9.0 9.4 -0.4pp 9.0Fair value of investment247.6 168.1 47.3 212.4properties, EUR million30.10.2014 15 16. Scandinavia1-9/2014 1-9/2013 , % 2013 *)Rentable space, m 63,400 - - 71,400Rent, /m/mo avg. 25.46 - - 21.16Financial occupancy rate, % 94.9 - - 89.5Net rental revenue, EUR million 13.4 - - 0.9Net sales, EUR million 13.7 - - 1.0EBITDA, EUR million 9.0 - - 0.6Market yield requirement, % 6.4 - - 6.5Fair value of investment224.9 - - 217.0properties, EUR million*) December 11-31, 201330.10.2014 16 17. Strategic Financial Targets 2015 - 2017Companys goal is to grow in the Nordics and Baltic Rim and inservice businessNet sales and EBITDA growth 15% on average per annumEPRA-based annual ROCE *) of at least 6%Equity ratio at or above 35% over the cycle*) Calculated by EPRA-based operating profitDividend policy: distribute on average one third of its EPRA-baseddirect result annually30.10.2014 17 18. Growth Path 2017New International Real Estate Net Sales Investments into Scandinavia and BalticsTechnopolis 2014e Net sales EUR 162.4 million EBITDA 88.0 MEUR30.10.2014 18Technopolis 2017e Net sales EUR 247 million EBITDA EUR 134 millionService Revenue Current services developedhigher penetration Organic and MA campus growth New conceptsmarketsDomestic Divestments Some domestic campuses or individual buildings Domestic business still to grow moderately Divestments and organic investments will reshape thedomestic portfolio, making it less riskyGrowth figures 2014e analysts estimates. 2017e is assuming 15% annual growthOrganic Growth Inflation effect Organic investments 19. Investment CriteriaGood quality, flexible buildings in good shapeExcellent location with good transportation linksCritical mass, at least in the 50,000 m rangeAdditional building rights to allow expansionGood customer mix or the potential to create itGenerates good cash flowReasonable yield generating positive EPS impact30.10.2014 19 20. InvestmentsArea Name m EUR30.10.2014 20millionStabilizedyield,%CompletionOulu Peltola 37,600 31.7 11.2 2/2013Kuopio Viestikatu 7BC 9,300 18.2 9.2 2/2013Tallinn Ltsa 8 BC 14,900 21.1 9.1 3/2013Vilnius Ozas 42,200 62.2 9.3 5/2013Jyvskyl Innova 4 8,900 23.7 8.1 10/2013HMA Innopoli 3 26,300 77.5 7.8 12/2013Oslo IT Fornebu 70,500 217.0 7.7 12/2013Tallinn Ltsa 8A 7,500 11.8 9.1 9/2014St. Petersburg Pulkovo 2 18,700 42.0 12.6 9/2014UnderPre-let rateconstruction29 Oct 14Tallinn Ltsa 5 8.6 9,200 17.0 8.8 9/2015HMA Building,G 32.6 5,300 18.3 8.0 9/2015Tampere Yliopist. 34 28.9 11,900 39.0 7.2 3/2016 21. Technopolis Value ChainPorter adaptation30.10.2014 21 22. Chain of Smart Campuses30.10.2014 22 23. Shareholders September 30, 201430.10.2014 23# of shares % of sharesVarma Mutual Pension 25,448,192 23.9Ilmarinen Mutual Pension 11,089,647 10.4City of Oulu 3,511,211 3.3OP-Pohjola Group 1,736,182 1.6Jyrki Hallikainen/KickoffOy 1,233,236 1.2Laakkonen Mikko 1,226,184 1.2The Finnish Cultural Foundation 1,188,042 1.1Odin Finland 1,119,944 1.1City of Tampere 960,577 0.9Mutual Fund Evli Finnish Equity 932,294 0.910 largest shareholders, total 47,445,512 44.5Foreign shareholders, total 34,660,048 32.5Others, total 24,794,072 23.0Total amount of shares 106,511,632 100