Sunway Real Estate Investment Trust · MYX:SUNREIT
Sunway Real Estate Investment Trust — HLIB Institutional Client Webinar (March 2021)
45 slides from Sunway Real Estate Investment Trust's conference presentation, Mar 22, 2021
Slide 1: HLIB Institutional Client Webinar: Bracing the COVID-19 Pandemic
HLIB INSTITUTIONAL CLIENT WEBINAR BRACING THE COVID-19 PANDEMIC 22 March 2021 1
Slide 2: Disclaimer
Disclaimer This presentation is for information purposes only and does not constitute an offer, solicitation or advertisement with respect to the purchase or sale of any security of Sunway Real Estate Investment Trust (“Sunway REIT”) and no part of it shall form the basis of, or be relied on in conn
Slide 3: Table of Contents
Table of Contents 1. A Flu-conomic Crisis That Shook The World 2. How Are The Sectors Faring? • Retail – Challenging; Expect encouraging recovery ahead • Hotel – Tough times ahead as borders remain closed • Office – Heading towards a new paradigm shift • Industrial – Supported by strong e-commerce g
Slide 4: A Flu-conomic Crisis That Shook The World
A Flu-conomic Crisis That Shook The World Empowering Businesses • Curating Experiences • Enriching Lives 4
Slide 5: Impact Of COVID-19 Continues To Linger
Impact Of COVID-19 Continues To Linger COVID-19 Outbreak and Resurgence • For the year 2020, Malaysia’s GDP saw a 5.6% contraction where this is the second Chart 1 Y-o-Y Real GDP Growth (%) lowest contraction recorded post-Asian Financial Crisis where GDP suffered a 7.4% contraction in 1998. Economi
Slide 6: Challenging Operating Environment
Challenging Operating Environment 1Q 2020 2Q 2020 3Q 2020 4Q 2020 National Statistics 1st round of MCO 2nd round of Economic Overview Pre-COVID-19 RMCO reopening / CMCO CMCO Daily COVID-19 cases 0 - 2 digits 2 - 3 digits 1 - 3 digits 4 digits GDP (% Y-o-Y) +0.7% -17.1% -2.6% -3.4% Sectorial Analysis
Slide 7: Light At The End Of Tunnel
Light At The End Of Tunnel Pandemic vs Financial Crisis: ▪ Unlike the Asian Financial Crisis 1997 and Global Financial Crisis 2008, the virus inflicted health crisis in 2020 is primarily caused by the global viral pandemic and movement restrictions instead of financial market Economic Overview drive
Slide 8: How Are The Sectors Faring?
Retail Hotel How Are The Sectors Faring? Office Industrial Empowering Businesses • Curating Experiences • Enriching Lives 8
Slide 9: Leading Malls Registered Stable Occupancy
Leading Malls Registered Stable Occupancy Despite the lower retail footfall in 2020, occupancy rates for well-managed leading retail malls in Greater KL area are demonstrating high level of resiliency. Economic Overview Sectorial Analysis – Retail Sunway Pyramid Mall, Selangor Mid Valley, Kuala Lump
Slide 10: Retail Growth Adversely Affected But Fundamentals Intact
Retail Growth Adversely Affected But Fundamentals Intact Economic and demographic fundamentals support long-term potential ✓ GDP growth of Malaysia is projected to rebound to 6.5% – 7.5% in 2021 (2020: -5.6%) Economic Overview ✓ MIER Consumer Sentiment Index* dropped to 85.2 pts in 4Q2020 (3Q2020: 9
Slide 11: Medium Term Outlook – Pent-up Demand To Boost Retail Footfall
Outlook – Pent-up Demand To Boost Retail Footfall Retail landscape in Malaysia will continue to evolve with global trends albeit at a different pace Economic Overview • Retail sector will continue to see a challenging period where shoppers and Short Term frequent travelers are shying away from crowd
Slide 12: Hotel – Visit Malaysia 2020 Never Came About Due To COVID-19
Hotel – Visit 2020 Never Came About Due To COVID-19 Visit Malaysia Year Tourist Arrival (mil) Visit Malaysia 2020 was the Fifth instalment of Visit 40 Malaysia Programme. 30 Economic Overview 20 A significant event that has been supporting and boosting 27.4 25.7 10 21.0 the tourism sector, but was f
Slide 13: Medium Term Outlook – Recovery To Happen Gradually
Outlook – Recovery To Happen Gradually Uncertainty surrounding the hotel segment to persist but vaccine rollout is optimistic; recovery will be gradual as the vaccine distribution speed across the globe varies Economic Overview • Domestic travel to be the industry’s focus before border reopening; to
Slide 14: Office – Occupancy Rate Continues To Face Pressure
Office – Occupancy Rate Continues To Face Pressure Cumulative supply in Klang Valley office Office Space Trend (NLA million sq.ft.) space in stood at approximately 120 Economic Overview 109.5 million sq.ft. 100 22.2 23.4 23.9 19.9 20.6 80 17.7 New office space estimated at circa 60 12.8 million sq.f
Slide 15: Medium Term Outlook – Paradigm Shift to Drive Demand for Office
Outlook – Paradigm Shift to Drive Demand for Office Despite the office segment is relatively less impacted compared to the retail and hotel segments, there are other lasting impacts from the pandemic which may lead to a paradigm shift in demand-supply for office space. Economic Overview • Uncertaint
Slide 16: Industrial – Continued Investment A Boon
Industrial – Continued Investment A Boon Manufacturing sector charted a 10.3% Number of approved projects growth in investment from RM82.7 billion Economic Overview in 2019 despite COVID-19 pandemic. grew 6.2% y-o-y Manufacturing DDI surged 22.6% y-o-y as a result of Manufacturing FDI increased by 3
Slide 17: Medium Term Outlook – A Resilient Sector
Outlook – A Resilient Sector The outlook for the industrial sector continues to be positive backed by the increase in demand in the manufacturing and logistics sectors Economic Overview Short Term • The exponential growth of the e-commerce sector during the pandemic has created a surge in demand for
Slide 18: The Next Normal Trend And Business Adaptation
The Next Normal Trend And Business Adaptation Empowering Businesses • Curating Experiences • Enriching Lives 18
Slide 19: Inevitable Rise of E-Commerce
Inevitable Rise of E-Commerce The Rise of E-Commerce with Short to Medium Term Boosters Economic Overview COVID-19 has significantly accelerated e-commerce penetration and spending in Malaysia Online 2020 vs 2019 Retail Sectorial Trend – Sales Oct Nov Dec Retail Y-o-Y +26.3% +27.7% +37.3% growth Mal
Slide 20: Digital Economy A Synergy For Brick And Mortar Retail
Digital Economy A Synergy For Brick And Mortar Retail The relationship between e-commerce and brick-and-mortar retail are symbiotic and will co-exist to complement one another Economic Overview Lifestyle retail malls with diverse services, experience and community-oriented offerings that GrabFood fo
Slide 21: Seamless Ecosystem Provision The Way Forward
Seamless Ecosystem Provision The Way Forward i. Growing Trend of Gross Turnover Rent (GTO) Structure • Both landlord and tenant are incentivized by a common goal of growing sales value, with risk mitigation for tenants (minimal base rent) and potential upside for landlord (revenue share). • Opportun
Slide 22: Change of Space Use To Enhance Rent Structure
Change of Space Use To Enhance Rent Structure Case Study: CloudKitchen ✓ Centralised kitchens for delivery-focused F&B outlets, also known as ‘commissary kitchens’, ‘smart kitchens’ and ‘virtual kitchens’ Economic Overview ✓ Enhances efficiency and decreases upfront & operational costs as well as tu
Slide 23: Integration & Connectivity
Integration & Connectivity ▪ Regional malls within integrated township or development comprising hotels, offices, service residences, medical centers and educational institutions, along with ‘draw factors’ e.g. convention centers, parks and state-of-the-art architectural designs serve to attract vis
Slide 24: Hotel – Unique Experience Key To Winning Guests
Hotel – Unique Experience Key To Winning Guests Smart Hotels • Guest experience to be elevated by the latest technological solutions. Economic Overview • Great service starts at reception seamless check-in, stay, and check-out process. Unique brand experience • Experience matters and no longer “one
Slide 25: Office – Shift In Demand To Widen Gap Further
Office – Shift In Demand To Widen Gap Further • Adaptation of WFH to change of demand for office space, such as Work from Economic Overview the open and flexible working space. Home • WFH practices may not be fully adopted once the pandemic is over Practices but companies are more likely to implemen
Slide 26: Industrial – Fueled by E-commerce Growth
Industrial – Fueled by E-commerce Growth The exponential growth of the e-commerce sector fueled by the increasing adaptation of consumers to transact via online platforms as the shopping alternative during the COVID- Economic Overview 19 pandemic. Online shopping has now become the new norm, and man
Slide 27: From The Perspective Of Sunway REIT
From The Perspective Of Sunway REIT Empowering Businesses • Curating Experiences • Enriching Lives 27
Slide 28: Sunway REIT - Portfolio Summary
Sunway REIT - Portfolio Summary One Of Malaysia’s Largest Diversified Real Estate Investment Trusts (REITs) Economic Overview More than 75% of the 1% SunREIT’s assets are 1 11% 2 strategically located within Klang Valley 11% 3 18 Assets Sectorial Trend - Retail 1. Penang Island - Sunway Hotel George
Slide 29: Sunway REIT - Uplifting Fundamentals to New Growth
Sunway REIT - Uplifting Fundamentals to New Growth Empowering Businesses • Curating Experiences • Enriching Lives 29
Slide 30: Response in Covid-19 Management and Emerging Trends
Response in Covid-19 Management and Emerging Trends Focus Moving Forward Economic Overview Retail Office • Re-building shoppers’ confidence • Customisable office enhancements to suit tenants requirements • Retaining tenants and business partners • Explore the new trend of co-working • Initiatives to
Slide 31: Retail – Tenants' Safety and Business Continuity Our Utmost Priority
Retail – Tenants’ Safety and Business Continuity Our Utmost Priority Rebuilding shoppers’ confidence Strengthening sustainable by improving safety and hygiene landlord-tenant partnerships standards Economic Overview Sectorial Trend - Retail Asset Enhancement Initiative to Digitalisation of retail ma
Slide 32: Hotel – Staying Lean And Mean With Creativity
Hotel – Staying Lean And Mean With Creativity Distinctive marketing and Opportunity to upgrade and collaboration – Gordon Ramsay renovate Restaurant Economic Overview Sectorial Trend - Retail Implementation of the rooms- Cost containment measures and Improve & Enhance only business model lean operat
Slide 33: Office – Embracing New Shifts
Office – Embracing New Shifts Allocation for open space to New trend of collaborative cater for WFH spaces (co-living, co-working) Economic Overview Sectorial Trend - Retail Customisable office Improve & Enhance enhancements to suit tenants Sunway REIT – requirements Strategy Forward Empowering Busi
Slide 34: Industrial, Services & Others - On the Lookout
Industrial, Services & Others - On the Lookout Industrial • To explore and pursue data centre assets as Internet of Things (IoT) continues to grow. Economic Overview • Continues to seek opportunities in this segment in view of Malaysia’s strong fundamental and resiliency in the industrial sector, es
Slide 35: Key Growth Strategies
Key Growth Strategies Economic Overview Diversified REIT Expand investment into Geographic diversification emerging growth sub- Sectorial Trend - Retail within and beyond Malaysia sectors to capitalize on global megatrends Sunway REIT long term growth strategy Sunway REIT Embrace Environment, Proper
Slide 36: Effective Capital Management Strategy
Effective Capital Management Strategy Driver Of Long-term Value Creation Lowest average cost of debt amongst M-REITs1 Economic Overview Active Capital Management To Achieve Stable Return Substantial interest savings arising from lower average cost of debt Clear Assessments Of Capital Risks And Oppor
Slide 37: Diverse Financing Options
Diverse Financing Options Ease of access to capital and debt market for flexibility to pursue new yield accretive acquisitions and asset enhancement initiatives. Economic Overview Diverse financing programme Sectorial Trend - Retail Equity financing Sunway REIT • Sufficient liquidity and access to e
Slide 38: Growing Assets and Improving Unitholders' Return: Transcend 2025
Growing Assets and Improving Unitholders’ Return TRANSCEND 2025 is a strategy charted out to form actionable roadmap to capitalise on the growth trajectory of Sunway REIT, leveraging its strategic pillars through a Economic Overview diversified asset portfolio and to achieve a property value of betw
Slide 39: Forefront In Performance Benchmarking
Forefront In Performance Benchmarking Comprehensively represented in 15 established indices drawing and expanding large investor base globally. Sunway REIT always benchmarks against international Economic Overview corporations for improvements as one of the leading REITs in Malaysia. Sectorial Trend
Slide 40: Profit With A Purpose
Profit With A Purpose Advocate of ESG initiatives Sunway REIT joins global push for climate- related financial disclosures Economic Overview • A push to support the recommendations of the Task Force Environmental on Climate-Related Financial Disclosures (TCFD). • GHG emissions: Avoided 12,671 CO2e e
Slide 41: Commitment To Fight Climate Change
Commitment To Fight Climate Change Environmental Economic Overview • Sunway REIT has been an advocate of the United Nation’s Sustainable Development Goals (UNSDG), driving sustainable initiatives such as: – Energy saving, waste reduction and recycling Food waste composting - Sunway Water Treatment P
Slide 42: COVID-related Proactive Measures
COVID-related Proactive Measures Social Rental Support Programme COVID-19 vaccination centre Economic Overview • One of the first retail mall owner in Malaysia to • Sunway Pyramid Convention Centre proactively established a rental support designated as the appointed Vaccination Centre programme to e
Slide 43: Robust Governance Framework
Robust Governance Framework Governance Economic Overview 100% of Audit Committee Majority of the Board Members comprise of Members comprise of Independent Non- Independent Non- Sectorial Trend - Retail Executive Directors Executive Directors Sunway REIT Chairman of the Board is an 43% of Board Compo
Slide 44: Awards and Recognition
Awards and Recognition Economic Overview National Annual Corporate Report Awards (NACRA) 2019 NACRA Best Integrated Reporting 2018 Gold Winner Sectorial Trend - Retail The Asset ESG Corporate Award 2019 Highly Commended Initiative The Asset Corporate Award Environmental Responsibility 2019 Gold Awar
Slide 45: Thank You
THANK YOU For further information on this presentation kit, please kindly contact: Sunway REIT Management Sdn Bhd (Manager of Sunway REIT) Email: irsunreit@sunway.com.my Contact: (603) 5639 8889 Website: http://www.sunwayreit.com Empowering Businesses • Curating Experiences • Enriching Lives 45
Sunway Real Estate Investment Trust — HLIB Institutional Client Webinar (March 2021) on 6ix