Efforts have been focused on streamlining portfolio management, identifying ESG-initiatives and serving tenants and suppliers. Great attention has also been allocated to developing current properties, in line with the long-term value creation plan for the company.

The company has a sound financial operation, and a clear strategy for achieving the vision of being a market leader in the owner of essential and socially beneficial property in Norway.

PPI entered 2022 with 41 properties and emerged with 48 after completing the last phase, phase 4. The company has grown rapidly and has, in Norwegian context, become relatively large. We have now reached a size that generates market attention from tenants and partners as well as a wider community. Reaching a critical mass in both property value and number of properties allows us, as an important real estate owner and operator, to exploit economies of scale and further develop the company in line with the strategy.

After an active first half of the year for commercial real estate transactions, the market then stalled after the summer. We had been expecting to make good and profitable acquisitions in the period leading up to Christmas, however, the investment climate has changed significantly since completion of phase 4. Despite constantly considering new investment opportunities with public tenants in the second half of the year, the valuation-differences amid buyer and seller remained wide throughout the year.

As a result, no acquisitions nor divestments was completed in the second half of 2022. The commercial real estate market and the credit market remain challenging well into 2023, however, challenging market environment may provide attractive opportunities for further growth.

As part of the acquisition process that was completed in the first half of 2022, , we established a bank syndicate led by Nordea. Said facility is NOK 2.7bn with a margin of 181bps above the 3m NIBOR. The company’s strategy is to expand the facility hand-in-hand with maturing bonds. Furthermore, in December 2022, PPI repaid the junior bond of NOK 290 million with cash at hand, after extending the bond loan by six months from June 2022. This helped reduce financial risk in a situation with volatile interest rates and an overall challenging credit market.

As a rather newly established real estate company, PPI are still in the early stages. We are eager to develop and improve for the benefit of our tenants, based on the company's core values of presence, quality and value creation.

Morten Kjeldby | CEO

New properties
in 2022

In the summer of 2022, the company acquired seven properties priced at NOK ~2bn. All properties have public tenants with important societal missions, in line with the company's strategy. The acquisitions increased gross rental income of approximately NOK 105 million, weighted CPI-adjustment and the proportion of public tenants in the portfolio.

Video from Bernt Ankers gate 17, Moss
#1 Kunnskapsveien 55
Lillestrøm

This acquisition represents the first educational building in the company’s port-folio, with OsloMet as tenant. The university rents 25,255 sqm gross, and the building is specially adapted for educational purposes.
#2 Vogts Gate 17
Moss

An office building in downtown Moss with 10 619 sqm gross, where the County Governor of Oslo and Viken is the largest tenant. The Civil Clearance Authority, the Police, and Viken County Municipality are the other tenants.
#3 Rambergveien 5
Tønsberg

Formerly an administrative building for Kaldnes Mekaniske Verksted, this property dates back to the time when there was a shipyard on the site. The building with approximately 1 000 sqm gross is strategically located next to Rambergveien 9. This development property currently has a private company as tenant.
#4 Rambergveien 9
Tønsberg

The property is beautifully located by the wharf in Tønsberg, with The Norwegian Directorate for Civil Protection (DSB), the Norwegian Directorate of Elections, and the Norwegian Church are tenants. The building has an area of 11 475 sqm gross.
#5 Jærveien 12
Sandnes

The building with 2 922 sqm gross is centrally located in Sandnes. The Norwegian Food Safety Authority is the largest tenant.
#6 Askveien 4
Hønefoss

This custom-built property is tailored to accommodate Hønefoss police station.The building has an area of 3 531 sqm gross and is centrally located in downtown Hønefoss.
#7 Jul Pettersens gate 2
Lillehammer

The property is a well-known landmark in the city. Lillehammer Courthouse is the tenant in this building and occupy 2 500 sqm gross.

Tenants

The company’s strategy is to own, operate and develop commercial real estate in Norway with public tenants. 90% of the rental income stems from public tenants while the remaining 10% comes from the private sector.

The public tenants cover a range of important societal missions. Through our properties, PPI contribute to help our tenants fulfill their missions. This requires us, as a part of the governmental value chain, to meet the requirements and needs of our tenants, making our properties one of several strategic tools for achieving the societal missions of the Norwegian state and Norway’s municipalities. Through close dialogue with tenants and systematic ESG work, the company aims to offer tailored and efficient properties.

Some of the company's multi-tenant buildings house tenants from the private sector, but with the majority of the rental income coming from public tenants. While facilitating tenants from the private sector is not the company's main strategy, we are committed to ensuring that they also thrive in our buildings. Private tenants make up 10 % of the rental income, which contributes to the buildings' high occupancy rates and is an important financial contribution to the company.

90%

Public Tenants

10%

Private Tenants
Achieved an increased net leasing rate in 2022

Extended lease holds in 2022

6.7 years

Average lease term

~19 MNOK

Recurring annualized rent

100%

Tenant Split

New lease holds in 2022

7.4 years

Average lease term

~10 MNOK

Recurring annualized rent

100%

Tenant Split
Tenant meetings and surveys

The company is focused on building long and good relationships with its tenants. Therefore, the company’s operations team and managers have close dialogue with the tenants throughout the year.

The purpose of the tenant meetings, which are scheduled twice a year with all tenants, is to clarify any changing requirements and needs in the lease, and to further clarify the tenants’ expectations of the landlord. This provides valuable insight into how the company ensures both satisfied tenants and that the company develops in line with tenant expectations. The goal is to increase the likelihood that tenants will renegotiate their lease agreement upon contract expiration.

The company is focused on building long and good relationships with its tenants. Therefore, the company’s operations team and managers have close dialogue with the tenants throughout the year.

The purpose of the tenant meetings, which are scheduled twice a year with all tenants, is to clarify any changing requirements and needs in the lease, and to further clarify the tenants’ expectations of the landlord. This provides valuable insight into how the company ensures both satisfied tenants and that the company develops in line with tenant expectations. The goal is to increase the likelihood that tenants will renegotiate their lease agreement upon contract expiration.

Every fall, a tenant survey is distributed through "Norsk Leietaker indeks", asking all ten-ants to answer questions about their satisfaction with their lease, the property, the operation of common areas, and the landlord.

The results of the survey are analyzed before the company sets its goals for the next 12 months. For the current period, from fall 2022 to fall 2023, the following three goals have been set:

These three goals will ensure that tenants experience a predictable everyday life and easy dialogue with the landlord. The likelihood is high that the degree of tenant satisfaction will increase throughout the period of the lease, which will in turn ensure better scores for “customer satisfaction”.

For the current period from 2022 to 2023, three goals have been set:

1

Ensure that tenants have fixed contact persons

2

Close dialogue and rapid feedback to tenants

3

Good information to tenants about the operation of the property

Largest lease contracts

Tenants - December 31st 2022	Annualized Rent NOK	Number of sqm.	CPI adjustment	Avg. Lease Period
OsloMet	55,856,254	27,095	100%	31/12/2024
Kristiansand Municipality	33,248,523	11,751	100%	31/03/2025
Øst Politidistrikt	26,144,951	15,142	100%	31/12/2026
Domstoladministrasjonen	25,146,295	12,941	84%	30/10/2028
Politiets fellestjenester	23,876,531	14,027	87%	15/10/2030
Statistisk Sentralbyrå	18,630,318	12,638	80%	15/07/2025
Direktoratet for Samsunnssikkerhet og Beredskap	17,042,920	8,466	80%	30/06/2030
Sør-Øst Politidistrikt	16,847,742	8,700	80%	01/04/2028
Sykehuset i Vestfold HF	12,865,043	4,891	100%	01/03/2027
NAV Agder	12,165,737	6,799	92%	01/03/2027
Vest Politidistrikt	11,915,171	6,200	90%	31/12/2030
Various	324,768,905	182,192
Sum / Weighted average	578,508,391	310,842	93%	5,4

Development

Development of current properties is one of the strategies for increasing the value of the company and create the highest possible return for shareholders.

The development team has prioritized properties where public regulatory processes provoke attention, as well as properties with shorter time to contract expiration. This work can include upgrades of existing buildings, extensions, or new construction within both commercial and residential sectors.

Throughout 2022, the development potential of 1/3 of the property portfolio has been surveyed. The preliminary conclusion is that up to 40 000 sqm of net potential, equivalent to ~13 % of current building mass, is untapped in this part of the portfolio. Eight feasibility studies have been conducted with local architects, revealing, among other things, the potential for 300 to 350 residential units in this part of the portfolio. During 2023, the development team will survey the development potential of the remaining 2/3 of the portfolio and begin development of the remaining properties with the highest value development.

ESG

PPI focuses on all three aspects of sustainability, environmental, social and governance in our strategic work. This is a journey that has just started and will evolve throughout 2022 and further.
Here is a summary on our ESG-policy.
Sustainability

Throughout 2022 our work on sustainability has consisted of establishing an overview and baseline of the portfolio, risk and strategy work, and conducting due diligence in accordance with the Transparency Act.

The work has provided insight, increased competence and established a better understanding of sustainability within the company. Through this work we have established an understanding of the importance of including climate, environmental, social and business ethics in the risk management of the company and in the overall strategy. In 2022, we have also learned that our financial partners increasingly demand plans and measures related to sustainability, and we expect this to be an increasing trend in the future.

As new regulations are being developed and implemented within the EU and nationally, our company needs to be aligned with the market and establish an awareness and understanding of the consequences both short and long term.

We expect increasing demands from our tenants regarding sustainable buildings, and our development will be dependent on how we manage to deliver on these expectations.
Environmental

Throughout 2022 our main priority has been to establish comprehensive baselines for all 48 properties. We have carried out a diligent gathering and mapping of data on energy, waste and water usage over the past five years, creating a robust foundation for comparison.

These baselines will serve as benchmarks against which we can evaluate our progress in reducing energy use, water consumption and waste for each asset. This enables us to calculate the baseline for CO2-emissions for our portfolio using the GHG-protocol. Moving forward, we will conduct annual reviews of this process and present the results in our upcoming annual reports.

Reducing our environmental impact requires proactive measures. It demands continuous surveillance, thorough understanding and a clear perspective. To meet these requirements, we are currently implementing energy monitoring systems for all our assets. These systems will automatically gather data from electric, district heating, and cooling meters. Expert analysis of this data will enable us to effectively manage and regulate usage while promptly identifying any operational errors related to the asset’s technical equipment.

Ensuring that sustainability remains a top priority, we are in the final stages of developing our strategy for the upcoming period. This strategy will incorporate key performance indicators (KPIs) focused on energy efficiency, water consumption reduction, overall CO2-emissions reduction, a sustainable material strategy, and plans for social improvements and governance enhancements.
Social

PPI focus diligently on ensuring good working conditions for our own as well as our partners’ employees. Our board of directors consists of five members, of which two are female.

During 2022 a new set of national regulations on transparency came into force, entailing that companies of PPI’s size conduct a due diligence and evaluation of stakeholders in our value chain. As a direct result of this process, we have established a channel for whistleblowing and a code of conduct for all our partners.
Governance

Transparency, structure and internal control mechanisms are areas we have been working on the last year, to ensure we are compliant with regulatory demands and provide a safe and stable business environment.

December 31st 2022

Financing

60.8%

Loan to Value (LTV)

532.5

Net Rental Income (MNOK)

5.4

WALT (years)

9450

Property Value (MNOK)

Bond financing per January 1st 2023

Here is an overview of the company’s financing and interest rate hedging instruments

Financing	Balance	Instalments	Interest rate	Expiry date
Bond Financing	1 100 000 000	-	3,00%	23/09/2024
Bond Financing	962 000 000	-	3,48%	23/09/2024
Bond Financing	211 000 000	-	4,16%	01/09/2025
Bond Financing	267 000 000	-	4,40%	07/06/2023
Bond Financing	425 000 000	-	4,22%	18/07/2023
Bond Financing	70 000 000	-	4,35%	08/07/2023
Bank Financing	2 697 750 000	80 392 950	5,17%	14/01/2025
Total / weighted	5 732 750 000	80 392 950	4,32%

Bank financing per January 1st 2023

Here is an overview of the company’s financing and interest rate hedging instruments

Interest rate hedging	Balance	Reference rate	Rate/cap	Expiry date
OTC Nordea IRS	238 500 000	3M NIBOR	1,34%	30/06/2026
OTC Nordea IRS	100 000 000	3M NIBOR	1,03%	27/03/2025
OTC Nordea IRS	150 000 000	3M NIBOR	1,65%	18/04/2028
OTC cap (2.75%)	57 100 000	3M NIBOR	2,75%	17/04/2023
OTC cap (2.75%)	178 875 000	3M NIBOR	2,75%	15/04/2024
OTC Nordea IRS	313 392 500	3M NIBOR	3,46%	30/06/2025
OTC Danske IRS	313 392 500	3M NIBOR	3,39%	30/06/2025

Leaders in socially beneficial and essential property.

First full year of operation

Key Figures

Our Properties

New properties
in 2022

#1 Kunnskapsveien 55
Lillestrøm

#2 Vogts Gate 17
Moss

#3 Rambergveien 5
Tønsberg

#4 Rambergveien 9
Tønsberg

#5 Jærveien 12
Sandnes

#6 Askveien 4
Hønefoss

#7 Jul Pettersens gate 2
Lillehammer

48 properties in
key cities central locations urban areas

"We have the world's best tenants; the Norwegian state and Norwegian municipalities."

Tenants

Achieved an increased net leasing rate in 2022

Tenant meetings and surveys

Largest lease contracts

Development

ESG

Sustainability

Environmental

Social

Governance

Financing

Bond financing per January 1st 2023

Attachment

Leaders in socially beneficial and essential property.

First full year of operation

Key Figures

Our Properties

New properties in 2022

#1 Kunnskapsveien 55 Lillestrøm

#2 Vogts Gate 17 Moss

#3 Rambergveien 5 Tønsberg

#4 Rambergveien 9 Tønsberg

#5 Jærveien 12 Sandnes

#6 Askveien 4 Hønefoss

#7 Jul Pettersens gate 2 Lillehammer

"We have the world's best tenants; the Norwegian state and Norwegian municipalities."

Tenants

Achieved an increased net leasing rate in 2022

Tenant meetings and surveys

Largest lease contracts

Development

ESG

Sustainability

Environmental

Social

Governance

Financing

Bond financing per January 1st 2023

Attachment

New properties
in 2022

#1 Kunnskapsveien 55
Lillestrøm

#2 Vogts Gate 17
Moss

#3 Rambergveien 5
Tønsberg

#4 Rambergveien 9
Tønsberg

#5 Jærveien 12
Sandnes

#6 Askveien 4
Hønefoss

#7 Jul Pettersens gate 2
Lillehammer