Keppel REIT · SGX:K71U
Keppel REIT — Merger or Acquisition (October 2014)
41 slides from Keppel REIT's merger presentation, October 2014
Slide 1: Proposed Acquisition of a One-third Interest in Marina Bay Financial Centre Tower 3
Proposed Acquisition of a One‐third Interest in Marina Bay Financial Centre Tower 3 Investor Presentation October 2014 KEPPEL REIT I PROPOSED ACQUISITION OF A ONE‐THIRD INTEREST IN MBFC TOWER 3 1
Slide 2: Important Notice
Important Notice Important Notice The value of Units and the income from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by the Manager, or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the princip
Slide 3: Content
Content Overview Transaction Summary Marina Bay Financial Centre Tower 3 Transaction Details Key Benefits of Transaction KEPPEL REIT I PROPOSED ACQUISITION OF A ONE‐THIRD INTEREST IN MBFC TOWER 3 3
Slide 4: Overview – Current
Overview – Current Portfolio of nine quality Premium Grade and Grade A 1 office assets with 11 office towers, tenanted to established corporations across various business sectors Premium office buildings located in the prime CBDs 2 of Singapore and Australia, both countries with AAA sovereign rating
Slide 5: Quality Portfolio of Premium Grade A Office Buildings
Quality Portfolio of Premium Grade A Office Buildings Singapore Properties Ocean Financial Centre Marina Bay Financial Centre Phase 1 One Raffles Quay Bugis Junction Towers Marina Bay Financial Centre Prudential Tower (99.9% interest) (33.33% interest) (33.33% interest) Tower 3 (33.33% interest) (92
Slide 6: Growth Record
Growth Record • Divested stake in Prudential Tower • Proposed acquisition of a • Increased interest • Acquisition of the one‐third in OFC to 99.9% new office tower interest in at the Old MBFC Tower 3 • Obtained tax Treasury Building • First overseas transparency acquisition • First forward in Perth
Slide 7: Transaction Summary
Transaction Summary KEPPEL REIT I PROPOSED ACQUISITION OF A ONE‐THIRD INTEREST IN MBFC TOWER 3 7
Slide 8: Transaction Summary
Transaction Summary Proposed Acquisition » Acquisition of Keppel Land’s one‐third interest in Marina Bay Financial Centre Tower 3 Agreed Value Funding Structure » Agreed value: S$1,248.0 million or S$2,790 psf » Consideration Units to be ‐ Inclusive of a five‐year rental support of issued to Keppel
Slide 9: Leading Landlord in Singapore's Raffles Place and Marina Bay
Leading Landlord in Singapore’s Raffles Place and Marina Bay » Strengthen Keppel REIT’s position as the leading landlord of iconic office buildings strategically located in the prime precincts of Raffles Place and Marina Bay, the new downtown core of Singapore’s Central Business District Marina Bay
Slide 10: Marina Bay Financial Centre Tower 3
Marina Bay Financial Centre Tower 3 KEPPEL REIT I PROPOSED ACQUISITION OF A ONE‐THIRD INTEREST IN MBFC TOWER 3 10
Slide 11: MBFC Tower 3: Premium Grade A Building
MBFC Tower 3: Premium Grade A Building Located in the heart of prime waterfront land MBFC Tower 3 in Marina Bay A 46‐storey Premium Grade A commercial building designed by Kohn Pedersen Fox Associates, a world‐renowned New York‐based architect Large column‐free and symmetrical floor plates of approx
Slide 12: MBFC Tower 3: Key Property Details
MBFC Tower 3: Key Property Details Marina Bay Financial Centre Tower 3 Description 46‐storey Premium Grade A commercial building with ancillary retail space Total NLA 1,341,980 sq ft No. of tenants 49 Principal tenants DBS Bank, WongPartnership, Rio Tinto, Booking.com, McGraw‐Hill, Mead Johnson and
Slide 13: MBFC Tower 3: Well-connected and Highly Accessible
MBFC Tower 3: Well‐connected and Highly Accessible » Seamlessly connected to the Raffles Place MRT interchange and the Downtown MRT stations via an underground pedestrian network » Linked to expressways and major arterial roads Marina Bay MBFC Tower 3 MBFC MBFC Tower 1 Tower 2 Downtown MBS One Raffl
Slide 14: MBFC Tower 3: Well-served by Amenities
MBFC Tower 3: Well‐served by Amenities » Directly linked to other developments in the Marina Bay precinct and the MRT interchange and stations via an underground pedestrian network » Well‐served by a wide range of amenities including banking facilities, retail and F&B outlets KEPPEL REIT I PROPOSED
Slide 15: MBFC Tower 3: Stellar Line-up of Office Tenants
MBFC Tower 3: Stellar Line‐up of Office Tenants • Leading financial services group in Asia with more than 250 branches across 17 markets DBS Bank • Listed on the Singapore Stock Exchange with market capitalisation of approximately S$44bn • Credit ratings of “AA‐” and “Aa1” are among the highest in t
Slide 16: Transaction Details
Transaction Details KEPPEL REIT I PROPOSED ACQUISITION OF A ONE‐THIRD INTEREST IN MBFC TOWER 3 16
Slide 17: Purchase Consideration
Purchase Consideration Agreed value of the MBFC Tower 3 Interest is lower than the two independent valuations Purchase Consideration S$1,281.0 million(1) S$1,276.0 million(1) Agreed Value S$1,248.0 million S$1,248.0 million 2.6% 2.2% Less: Total Adjustments S$537.9 million(2) Purchase Consideration
Slide 18: Agreed Value In Line with Market Transactions
Agreed Value In Line with Market Transactions » Agreed value is within the range of recently‐transacted prices of office properties in the CBD Comparable Office Building Transactions Date Property Approx. Att. NLA Price PSF Tenure Buyer MBFC Tower 3 Dec‐12 447,000 sq ft S$1,150m S$2,555 99 yrs DBS G
Slide 19: Rationale for Consideration Units to be Issued
Rationale for Consideration Units to be Issued » The Manager intends to fund the acquisition with a part payment by way of issuing Keppel REIT Units to Keppel Land at the prevailing price market price(1) Align Keppel Land's interest with that of Keppel REIT and its Unitholders. It also 1 demonstrate
Slide 20: Investment Structure
Investment Structure Hongkong Land DBS Group 33.33% 33.33%(1) 33.33% (1) Marina Bay Suites Pte. Ltd. Central Boulevard 100% Development Pte. Ltd. 100% MBFC Tower 3 Marina Bay Suites (1) The acquisition is structured to effectively exclude the interest in Marina Bay Suites Pte. Ltd, which holds Marin
Slide 21: Key Benefits of Transaction
Key Benefits of Transaction KEPPEL REIT I PROPOSED ACQUISITION OF A ONE‐THIRD INTEREST IN MBFC TOWER 3 21
Slide 22: Key Benefits of Transaction
Key Benefits of Transaction 1 Consistent with Keppel REIT’s Investment and Growth Strategy 2 Strengthen Foothold in Singapore’s Financial District 3 Improve Property Portfolio 4 Strengthen Tenant Base and Enhance Income Diversification 5 Enhance Income Stability and Sustainability over a Longer Term
Slide 23: Consistent with Investment and Growth Strategy
1 Consistent with Investment and Growth Strategy » Proactive strategy to optimise and upgrade portfolio to ensure long‐term sustainable income to Keppel REIT’s Unitholders » Strategic rejuvenation of property portfolio with the proposed accretive(1) acquisition of a one‐third interest in the two‐yea
Slide 24: Consistent with Investment and Growth Strategy
1 Consistent with Investment and Growth Strategy » MBFC Tower 3 is a strategic addition to Keppel REIT’s existing portfolio of prime commercial assets » Greater opportunity for Unitholders to participate in the rental and capital value growth potential of Singapore’s premium grade office market » Wi
Slide 25: Strengthen Foothold in Singapore's Financial District
2 Strengthen Foothold in Singapore’s Financial District » The Raffles Place and Marina Bay precincts have become the epicentre of Singapore’s business and financial district in recent years » Strengthen Keppel REIT’s position as the leading landlord of premium Grade A buildings in Singapore’s prime
Slide 26: Strengthen Foothold in Singapore's Financial District
2 Strengthen Foothold in Singapore’s Financial District » Approximately 93% of Keppel REIT’s Singapore portfolio will be located in the prime business and financial districts of Raffles Place and Marina Bay BUGIS JUNCTION TOWERS Singapore CBD Central Business District OCEAN FINANCIAL CENTRE ONE RAFF
Slide 27: Improve Property Portfolio: Youngest Commercial S-REIT Portfolio
3 Improve Property Portfolio: Youngest Commercial S‐REIT Portfolio » Average portfolio age will improve to approximately 5.5 years » Reduce need for extensive asset enhancement initiatives or large capital expenditure Average Portfolio Age 6.2 years ~11% Youngest portfolio of premium assets in Singa
Slide 28: Improve Property Portfolio: Well-staggered Lease Profile
3 Improve Property Portfolio: Well‐staggered Lease Profile » Well‐staggered lease profile with not more than 18.2% of the Enlarged Portfolio (by NLA) expiring in any one year till year 2018 Enlarged Portfolio 18.2% 15.7 % 15.4% 8.8% 7.0% 8.2% 5.5% 4.9% 4.0% 0.2% 2014 2015 2016 2017 2018 19.9% Existi
Slide 29: Strengthen Tenant Base and Enhance Income Diversification
4 Strengthen Tenant Base and Enhance Income Diversification » Established corporations at MBFC Tower 3 include DBS Bank, WongPartnership, Rio Tinto, Booking.com, McGraw‐Hill, Mead Johnson and Lego » number of tenants in portfolio to 273 » Strengthen Keppel REIT’s portfolio of tenants as well as pr
Slide 30: Enhance Income Stability and Sustainability over a Longer Term
5 Enhance Income Stability and Sustainability over a Longer Term » Lengthen WALE by NLA for top 10 tenants to 9.2 years and portfolio to 6.4 years (1) (1) » Top 10 tenants account for approximately 42% of portfolio NLA, diversified across (2) six buildings in Singapore and Australia Portfolio WALE T
Slide 31: Complete Ownership Interest
6 Complete Ownership Interest » Keppel REIT will have an ownership interest in all three office towers at MBFC » Greater flexibility to optimise leasing and operational efficiencies KEPPEL REIT I PROPOSED ACQUISITION OF A ONE‐THIRD INTEREST IN MBFC TOWER 3 31
Slide 32: Post-acquisition: Capital Management
Post‐acquisition: Capital Management » Continue to adopt a prudent and proactive capital management strategy Loans Due in 2015 Loans Due in 2016 Early refinanced 48% S$275 million Early refinanced 16% Repayment of S$250 million S$75 million secured term loan All‐in Interest Rate Aggregate Leverage R
Slide 33: Post-acquisition: Capital Management
Post‐acquisition: Capital Management Post‐acquisition Weighted Average Term to Expiry 3.5 years Interest Coverage Ratio 4.9 times Million Pro Forma Debt Maturity Profile (S$ million) 1,200 1,000 800 (1) 540 600 275 75 121(2) 400 733 715 200 404 387 300 350 0 ‐ 2014 2015 2016 2017 2018 2019 2020 (1)
Slide 34: Summary
Summary Acquisition of a one‐third interest in Marina Bay Financial Centre Tower 3 for S$1,248.0 million or S$2,790 psf. Excluding the five‐year rental support of approximately S$49.2 million, the net purchase price will be S$1,198.8 million or S$2,680 psf. Key Benefits of Transaction 1. Consistent
Slide 35: Singapore Office Market Outlook
Singapore Office Market Outlook » Over the past three years, the annual net demand of office space (island‐wide) has remained stable at 1.4 million sq ft (in 2013), 1.5 million sq ft (in 2012) and 2.3 million sq ft (in 2011) » New office supply remains limited over the next few years. Excluding pre‐
Slide 36: Singapore Office Market Outlook
Singapore Office Market Outlook » Looking ahead, the Ministry of Trade and Industry expects 2014 GDP growth to be between 2.5% and 3.5% » Positive economic fundamentals, continued business expansion and greater tenant mix diversification will continue to support growth in the Asia Pacific office sec
Slide 37: Additional Information
Additional Information KEPPEL REIT I PROPOSED ACQUISITION OF A ONE‐THIRD INTEREST IN MBFC TOWER 3 37
Slide 38: Singapore's Leading Office REIT
Singapore’s Leading Office REIT Vision To be a successful commercial real estate investment trust with a sterling portfolio of assets pan‐Asia Mission To deliver stable and sustainable returns to Unitholders by continually enhancing our assets and expanding our portfolio Key Thrusts Prudent capital
Slide 39: Post-acquisition: Portfolio Information
Post‐acquisition: Portfolio Information » AUM will increase to over $8.1 billion with 88%of portfolio in Singapore, and 12% in Australia » Approximately 93% of Keppel REIT’s Singapore portfolio is located in the prime Raffles Place and Marina Bay precincts Marina Bay Financial Ocean Financial Marina
Slide 40: Post-acquisition: Portfolio Information
Post‐acquisition: Portfolio Information Office Tower to be built 8 Chifley 77 King Street Office 8 Exhibition Street, 275 George Street, at the Old Treasury Square, Sydney(1) Tower, Sydney Melbourne(1) Brisbane(1) Building site, Perth(1) 33‐storey Grade A office tower scheduled for 34‐storey Grade A
Slide 41: Thank You
Thank You KEPPEL REIT I PROPOSED ACQUISITION OF A ONE‐THIRD INTEREST IN MBFC TOWER 3 41