Asset Buyout Partners Annual Report 2019

The Board of Directors’ report 2019 Operations and locations Asset Buyout Partners (“ABP”, “the Company” or “the Group”) is an industrial real estate company with a dedicated investment strategy aimed towards real estate and infrastructure assets located in Norwegian energy and maritime clusters. Mission critical infrastructure characteristics provide comfort for cash flows well beyond contracted lifetime – underpinned by attractiveness and longevity of the Norwegian energy industry, maritime industries such as aquaculture, and alternative energy industries such as hydrogen production, and offshore wind. The Norwegian Economic Zone is a highly attractive region in this regard, due to a combination of access to high quality infrastructure, a stable regulatory environment and vast natural resources. The Company is owned by HitecVision, a leading provider of institutional capital to the North Sea region’s energy industry, ABP management, and non-executive board members. ABP owns a diversified portfolio of mission critical assets strategically located in key energy and maritime clusters. As of 31 December 2019, the Company owned and managed nearly 100 properties, 1.7 million square meters of land and infrastructure including piping for bulk supply, 244,000 square meters of primarily industrial facilities and 750 meters of quays. In addition, ABP has a combined 500,000 square meters of zoned, undeveloped land that provides expansion opportunities for existing as well as new customers. ABP plans to grow the Company in scale over the coming years based on both organic and inorganic growth opportunities. ABP will leverage the Company’s strategic position, scale, portfolio composition and system value to continue to build value for our customers and shareholders. The Company has 15 full time employees with sector-specific expertise and relationships with leading companies in the Norwegian energy and maritime industry. ABP is a professional landlord and seeks long-term partnerships with our customers. The Company’s expertise extends to structuring, owning, developing, financing and managing real estate and infrastructure. ABP is headquartered centrally in Oslo with regional asset management teams serving customers locally. 2019 in brief It has been an exciting year for ABP. ESG, and climate change in particular, has been the topic among authorities and key stakehold- ers, and it is evident that the energy industry is facing new pressures and demands related to the transition to a low-carbon environment. The Norwegian oil and gas industry has a dynamic history, and today, ABP sees a broader trend towards E&P companies looking to consolidate supply services to the top tier supply bases to improve operational efficiencies, reduce costs and lower the carbon footprint of its operations. Moreover, the changing market environment might lead to attractive opportunities for a well-capitalized investor like ABP as financial investors are looking to reduce their exposure to the oil and gas industry, and banks and other financing sources are becoming more restrictive. During 2019, ABP has acquired six assets with an acquisition price of NOK 607 million, further strengthening the Company’s presence in Stavanger, Bergen and Hammerfest, and expanding to Stord, which is recognize as a strategic energy and maritime cluster. The transactions were financed through a combination of bank loans and retained earnings. The Group has optimized its company structure by the merger of several holding companies resulting in a leaner and simplified structure in addition to reduced running costs. Comments related to the financial statements The Group’s gross rental income increased from NOK 409.5 million in 2018 to NOK 524.7 million in 2019, and in the same period net rental income increased from NOK 382.8 million to NOK 488.7 million. The increase in rental income is mainly driven by acquisitions of new investment properties (where income is recognized from the acquisition date). Net profit in 2019 was NOK 740.2 million, as compared to NOK 886.7 million in 2018. The change in net profit is mainly due to changes to fair value adjustments of investment properties which was positive with NOK 691.5 million in 2019 and positive with NOK 952.4 million in 2018. Asset Buyout Partners | Annual Report 2019 10