Link Real Estate Investment Trust · HKEX:823
Link Real Estate Investment Trust — 1H FY2022/23 Earnings Presentation
51 slides from Link Real Estate Investment Trust's earnings presentation, Nov 9, 2022
Slide 1: Interim Results Analyst Presentation
Interim Results Analyst Presentation 2022/2023 9 November 2022
Slide 2: Market Outlook and Mitigations
01 Market Outlook and Mitigations
Slide 3: Macroenvironment
3 Macroenvironment Geopolitics, continued interest rate hikes and inflationary pressures dominate the current landscape Geopolitics ❑ Continued economic decoupling between US allies and China ❑ Prolonged Ukraine Russia war adds to recessionary risk and polarisation ❑ Increased military activities in
Slide 4: Market Outlook
4 Market Outlook Markets remain volatile and shrouded with uncertainty Geopolitics ➢ Post National Congress, focus is to pursue high-quality economic development ➢ China remains committed to Hong Kong’s economic success and major role in GBA ➢ Hong Kong government has huge reserves to support and ju
Slide 5: Mitigations
5 Mitigations We have mitigations in place to lessen the impact Geopolitics ✓ Continue to explore opportunities for diversifications across APAC and asset classes to increase the resilience of the portfolio ✓ Remain at-the-table for attractive acquisition and divestment opportunities Interest Rates
Slide 6: Operational Update
02 Operational Update
Slide 7: 1H FY2022/23 Highlights
7 1H FY2022/23 Highlights A diverse cycle-resilient portfolio solidifies our results HK$6,042M ↑4.6% YoY HK$4,587M ↑4.5% YoY Revenue Net Property Income HK$1.5551 ↑1.9% YoY (1) HK$80.86 ↑4.9% vs Mar 22 DPU NAV per unit ❑ Steady top-line growth amid economic headwinds ❑ New contribution from Australi
Slide 8: Hong Kong Retail
8 Hong Kong Retail Non-discretionary commercial enjoying strong footfall and high occupancy Strong Momentum on Reversion (1) 1H 2H 8.5% 97.5% HK$63.2 Occupancy Average unit rent psf 5.9% 3.4% 0.0% -4.0% 1H 2020/2021 2020/2021 2021/2022 2021/2022 2022/2023 2022/2023 ❑ Continues to deliver positive re
Slide 9: Hong Kong Retail Leasing
9 Hong Kong Retail Leasing Chain stores migrate from traditional shopping districts into our community commercial properties >400 New Leases Signed in 1H FY 2022/23 ❑ Active asset management to evolve the trade mix and bring in new tenants ❑ Brand mix balance local and regional offerings which bring
Slide 10: Hong Kong Retail Sales
10 Hong Kong Retail Sales Tenant sales growth continues to outperform the market 3.8% 12.6% Tenant sales growth benefits from better sentiment Occupancy cost remains healthy (1) (3) Tenant Sales Growth Occupancy Cost 1H 2022/23 Link Hong Kong Food & beverage Supermarket & foodstuff General retail (2
Slide 11: Hong Kong Asset Enhancement
11 Hong Kong Asset Enhancement Revitalise assets to enhance productivity and resilience Capital Projects Completed Expenditure ROI Lok Fu Market $35M 23.7% Tai Yuen Market $27M 21.8% Tak Tin Market $74M 9.3% Capital Target Projects Underway Expenditure Completion Date Fung Tak $26M Early 2023 Tung T
Slide 12: Hong Kong Car Park and Related Business
12 Hong Kong Car Park and Related Business Steady organic growth supplemented by new contributions +12.7% Continuous improvement in parking rental income Revenue growth YoY ~HK$700k Hourly car park Monthly car park Car park related business (1) +15.3% HoH 103 52 HK$3,167 Average car park Car park in
Slide 13: Hong Kong Property Development – Anderson Road
13 Hong Kong Property Development – Anderson Road Community commercial property to deliver new sustainable growth 12,936sqm ~HK$1.6B (comprise land premium of Max. GFA HK$766M) Total Development Cost (1) ❑ Synergy with our existing portfolio ❑ Attractive standalone commercial land with potential to
Slide 14: Mainland China Retail
14 Mainland China Retail Facing headwinds due to COVID prevention measures 8.4% Reversion (1, 2) (1) 92.1% ❑ Swiftly adjusted leasing and marketing strategies to boost sales and attract Occupancy footfall: • Offered flexible arrangements to maintain occupancy rate • Introduced new and trend-setting
Slide 15: Asset Enhancement Update
15 Asset Enhancement Update Enhance attractiveness and unlock the value of the asset Retail – Happy Valley Shopping Mall (Phase 1) Office – Link Square Sep 2022 Commenced ~RMB200M CAPEX Rendering of Happy Valley Shopping Mall Upgraded amenities at Link Square ❑ Repartition and revamp the vacated dep
Slide 16: Mainland China Logistics
16 Mainland China Logistics Located at proven transportation hubs to offer steady rental growth and good return 100% 2.1 years Occupancy WALE ❑ Strong leasing demand with 4%-5% annual rental escalations embedded ❑ Completed the acquisition of Jiaxing property on 29 June 2022 ❑ Expect the logistics s
Slide 17: Australia Retail
17 Australia Retail Occupied by leading local and international tenants ❑ Started contributing from July 2022 ❑ Healthy footfall and tenant demand supported by strong economic fundamentals ❑ Retail sales in overall Australian market in September recorded an (1) increase of 26.3% compared with pre-CO
Slide 18: Overseas Offices
18 Overseas Offices Prime office portfolio with long WALE and excellent building specifications (1) 91.8% 6.1 years Occupancy Overall WALE ❑ Completed acquisition of the prime office portfolio in Australia in June 2022 ❑ Back-to-office rates in Australia and UK gradually recover ❑ “Flight-to-quality
Slide 19: Capital Management
19 Capital Management Well-staggered maturity Key Debt Metrics 22.7% (1) HK$15.3B (2) 3.4 years 2.5% Average debt Average borrowing Gearing ratio Available liquidity maturity costs Maturity Profile (HK$ billion) (3) 11.9 12 11.1 Medium Term Notes Convertible Bond Bank Loans 10 9.0 9.0 5.7 8 1.8 6.6
Slide 20: Capital Management
20 Capital Management Prudently maintain healthy balance sheet and strong credit ratings amid rate hike environment Debt Profile Breakdown Credit Rating (Face Value as at 30 September 2022) √ Credit √ Rating A/Stable A2/Stable A/Stable Debt Mix by √ S&P Moody’s Fitch 22.8 0.8 31.5 Types (41.4%) (1.5
Slide 21: Valuation
21 Valuation Backed by portfolio resilience As at As at As at As at HK$’M 30 Sep 2022 31 Mar 2022 30 Sep 2022 31 Mar 2022 Hong Kong Retail properties 129,954 122,878 3.10% – 4.50% 3.10% – 4.50% Car parks and related business 45,358 40,102 2.60% – 4.80% 2.90% – 5.30% (1) Office property 8,802 (1) 8,8
Slide 22: Strategy Update
03 Strategy Update
Slide 23: Link Today
23 Link Today Hong Kong remains as our core 152 assets across sectors and geographies 78.3% 6.4% 15.3% 1.2% 5.2% Hong Kong Mainland Overseas 1.2% 2.6% 11.5% Portfolio 3.3% Value (1) HK$234B 55.6% 19.4% Hong Kong Hong Kong Hong Kong Retail Car park and Office Related Business (2) Mainland Mainland Ma
Slide 24: Strengthening and Diversifying Portfolio with Prime Assets
24 Strengthening and Diversifying Portfolio with Prime Assets Acquisitions completed in 1H 2022/23 ❑ Strengthened and diversified portfolio with prime quality assets ❑ Delivered new income streams to our unitholders ❑ Australian assets and incomes are fully hedged ❑ Continue to explore development o
Slide 25: Portfolio Diversification and Growth
25 Portfolio Diversification and Growth Focus on APAC; Patient and Selective Stay Disciplined, yet Opportunistic Diversification Outcome ❑ Hong Kong: maintain our strong position, with upside from recovery ✓ Reduce geographical concentration risks ❑ Mainland China: longer-term outlook remains promis
Slide 26: Portfolio Diversification and Growth
26 Portfolio Diversification and Growth Embrace growth through capital partnerships What are capital Benefits partnerships? ❑ Blended use of our balance sheet and ✓ Supports profitability through fee income external capital streams ❑ Encompasses both existing portfolio ✓ New operating models, market
Slide 27: Visionary Creativity
27 Visionary Creativity Pioneer in sustainability front among Asia real estate industry 21 sites installed with electric vehicle charging stations ~5% Green leases across Hong Kong and Mainland China portfolios Retained “Green HK$18M Star” rating for 11th MSCI ESG Ratings: A Committed for Link Toget
Slide 28: Culture of Excellence
28 Culture of Excellence Strengthen our core competencies and teamwork 1,168 No. of permanent staff 17,760 Staff training hours ❑ Solidify management bandwidth with new hires ❑ Tailor-made learning programme to the newly- promoted Linkers ❑ Formed staff-led sports clubs, a family club and a voluntee
Slide 29: Distribution Calendar
29 Distribution Calendar Distribution period April 2022 – September 2022 Last day of trading on a “cum” basis 18 November 2022 Ex-distribution date 21 November 2022 23 November – 24 November 2022 Distribution book close (inclusive) Record date for entitlement to distribution 24 November 2022 Ten tra
Slide 30: Appendix
04 Appendix
Slide 31: Why invest in Link REIT
31 Appendix 1 Why invest in Link REIT Only internally-managed REIT in Asia 100% free float held by institutions and private investors Quality assets diversified across regions Heavily exposed to resilient non- discretionary community commercials (including fresh markets) and car parks Track record o
Slide 32: Net asset value per unit
32 Appendix 2 Net asset value per unit NAV per unit (HK$) 95 90 NAV per unit 85 March 2022: HK$77.10 September 2022: HK$80.86 80 75 70 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 NAV per unit (HK$) NAV per unit dropped from HK$90.58 when the weighted average capitalisation
Slide 33: Australia retail sales far exceed pre-covid level
33 Appendix 3 Australia retail sales far exceed pre-covid level National Extended Melbourne Extended Sydney (Jun-Oct 2021) lockdown lockdown (Jun-Oct 2020) and Melbourne lockdown (Aug- (Mar-May 2020) and shorter regional Oct 2021), and shorter regional Total retail sales lockdown in Victoria lockdow
Slide 34: ESG achievements
34 Appendix 4 ESG achievements Scheme Participation Since Performance Score: 79/100 2012 Rank: #6 in East Asia Renewed index membership 2013 Score: 71 Percentile score: 97 Rating: A 2015 Industry Adjusted Score: 5.6 Classified as “Low Risk”¹ 2017 ESG Risk Rating²: 10.5/100 Renewed index membership 2
Slide 35: Key financial data
35 Appendix 5 Key financial data Percentage contribution Six months Six months six months ended ended ended 30 Sep 2022 30 Sep 2021 YoY 30 Sep 2022 Consolidated HK$’M HK$’M % % Revenue 6,042 5,778 +4.6 - Net property income 4,587 4,391 +4.5 - Rentals Hong Kong retail properties and offices 3,241 3,2
Slide 36: Property operating expenses analysis
36 Appendix 6 Property operating expenses analysis Percentage contribution Six months Six months Six months ended ended ended 30 Sep 2022 30 Sep 2021 YoY 30 Sep 2022 (HK$’M) (HK$’M) (%) (%) Property managers’ fees, security 349 340 +2.6 24.0 and cleaning Staff costs 282 271 +4.1 19.4 Repair and main
Slide 37: Financials – income statement summary
37 Appendix 7 Financials – income statement summary Six months Six months ended ended 30 Sep 2022 30 Sep 2021 YoY HK$’M HK$’M % Revenue 6,042 5,778 +4.6 Property operating expenses (1,455) (1,387) +4.9 Net property income 4,587 4,391 +4.5 General and administrative expenses (328) (237) +38.4 Interes
Slide 38: Financials – distribution statement summary
38 Appendix 8 Financials – distribution statement summary Six months ended Six months ended 30 Sep 2022 30 Sep 2021 YoY HK$’M HK$’M % Profit for the period, before transactions with Unitholders 13,993 6,288 +122.5 attributable to Unitholders Change in fair values of investment properties attributabl
Slide 39: Financials – financial position & investment properties
39 Appendix 9 Financials – financial position & investment properties Financial Position Summary As at As at As at HK$’M 30 Sep 2022 31 Mar 2022 30 Sep 2021 Total assets 238,691 225,716 217,895 Total liabilities 67,833 62,726 54,828 Non-controlling interest 289 302 27 Net assets attributable to Unit
Slide 40: Financials – capital management
40 Appendix 10 Financials – capital management HK$ B % Committed Debt Facilities Sep-22 Mar-22 Sep-22 Mar-22 HK$ Bank loans 15.7 11.3 28.4 22.5 RMB Bank loans 3.4 3.6 6.2 7.2 AUD Bank loans 8.9 4.0 16.2 8.0 GBP Bank loans 3.5 3.8 6.3 7.5 HK$ Medium Term Notes 21.0 21.5 38.1 42.8 RMB Medium Term Note
Slide 41: Hong Kong portfolio – retail revenue analysis
41 Appendix 11 Hong Kong portfolio – retail revenue analysis Percentage contribution Six months Six months Six months ended ended ended 30 Sep 2022 30 Sep 2021 YoY 30 Sep 2022 (HK$’M) (HK$’M) % % Retail rentals: Shops (1) 2,460 2,457 +0.1 67.5 Markets / cooked food stalls 502 486 +3.3 13.8 Education
Slide 42: Hong Kong portfolio – car park and related business revenue analysis
42 Appendix 12 Hong Kong portfolio – car park and related business revenue analysis Percentage contribution Six months Six months Six months ended ended ended 30 Sep 2022 30 Sep 2021 YoY 30 Sep 2022 (HK$’M) (HK$’M) % % Rental income: Monthly car park 780 754 +3.4 66.1 Hourly car park 294 288 +2.1 24
Slide 43: Hong Kong portfolio – retail portfolio data
43 Appendix 13 Hong Kong portfolio – retail portfolio data Retail properties Retail Average monthly No. of Total area Valuation (2) rentals unit rent (1) Occupancy rate properties (’000 sq. ft.) (HK$’M) (HK$’M) (HK$ psf) (%) As at As at As at Six months As at As at As at As at 30 Sep 30 Sep 30 Sep e
Slide 44: Hong Kong portfolio – retail and car park portfolio data
44 Appendix 14 Hong Kong portfolio – retail and car park and related business portfolio data As at As at 30 Sep 2022 31 Mar 2022 Change Average monthly unit rent (psf pm)(1) ◼ Shops 61.4 HK$61.2 +0.3% ◼ Overall (ex self use office) 63.2 HK$62.7 +0.8% Occupancy rate ◼ Shops 97.7% 98.1% -0.4% ◼ Market
Slide 45: Hong Kong portfolio – retail lease expiry profile
45 Appendix 15 Hong Kong portfolio – retail lease expiry profile (1) As % of total area As % of monthly rent As at 30 September 2022 % % FY22/23 15.7 17.2 FY23/24 28.3 30.6 FY24/25 29.6 28.2 FY25/26 and beyond 19.0 18.2 Short-term lease and vacancy 7.4 5.8 Total 100.0 100.0 Note : (1) Refers to base
Slide 46: Hong Kong portfolio – trade mix
46 Appendix 16 Hong Kong portfolio – trade mix 3.6% 1.1% 0.4% 15.1% 27.6% 13.4% 7 89 0.7% 8 6 1.0% 7 1.8% 6 1 5.5% 5 1 5 5 6.7% 47.4% 5 Retail Trade Mix 4 Office Trade Mix 4 (by rent)(1) (by rent) (1) 10.5% 1 4 3 2 10.8% 4 2 3 22.2% 2 17.4%3 14.8% Retail Sep-22 Mar-22 Office Sep-22 Mar-22 1. Food an
Slide 47: Mainland China portfolio – lease expiry profile
47 Appendix 17 Mainland China portfolio – lease expiry profile (1) Retail Office As % of As % of monthly As % of As % of monthly total area rent (2) total area rent (2) As at 30 September 2022 (%) (%) (%) (%) FY22/23 14.7 15.7 21.6 25.1 FY23/24 15.0 24.4 12.6 14.8 FY24/25 29.8 36.9 12.3 13.6 FY25/26
Slide 48: Mainland China portfolio – trade mix
48 Appendix 18 Mainland China portfolio – trade mix 2.9% 26.7% 4.3% 6 4 5 3 32.3% 1 28.4% 38.4% Retail Trade Mix Office Trade Mix (by rent)(1) (by rent) (1) 1 5 4.7% 4 11.1% 3 2 2 32.1% 4.1% 15.0% Retail (2) Sep-22 Mar-22 Office Sep-22 Mar-22 1. Food and beverage 32.3% 30.6% 1. Professional services
Slide 49: Overseas portfolio – tenant mix
49 Appendix 19 Overseas portfolio – tenant mix 4.5% 2.6% 2.8%2.2% 2.0% 4.4% 7 6 12.0% 678 5 5 9.4% 4 4.6% 39.1% 42.1% 4 1 3 Retail Trade Mix 1 3 Office Trade Mix 17.3% (by rent) (1, 2) (by rent) (1,3) 1 1 18.8% 1 2 2 19.7% 18.4% Retail Sep-22 Office Sep-22 1. Apparel & footwear 42.1% 1. Financial an
Slide 50: Our strategic partners
50 Appendix 20 Our strategic partners First Priority Group Fujian Dongbai Group Investa Nan Fung Group Oxford Properties Group Vanke Vicinity
Slide 51: Disclaimer
51 Disclaimer ◼ This document has been prepared by Link Asset Management Limited in its capacity as the Manager (the “Manager”) of Link Real Estate Investment Trust (“Link REIT”) solely for use at the presentations/meetings held and may not be reproduced or redistributed without permission. Neither
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