Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — Suntec REIT — FY2023 Earnings Presentation
70 slides from Singapore Exchange's earnings presentation, Jan 24, 2024
Slide 1: Suntec REIT Financial Results
SUNTEC REIT FINANCIAL RESULTS For the 2H and Financial Year ended 31 December 2023 24 January 2024
Slide 2: Agenda
03 19 FY 23 Financial Overview Singapore Office Portfolio Performance 04 30 FY 23 Operational Overview Australia Portfolio Performance 05 36 Financial Highlights UK Portfolio Performance 16 39 Capital Management Singapore Retail Portfolio Performance Agenda 50 Suntec Convention Performance 54 Our ES
Slide 3: FY 23 Financial Overview
FY 23 Financial Overview Asset Under Management Distributable Income to Distribution Per Unit S$12.2 billion Unitholders to Unitholders S$206.8 million 7.135 cents Divestment -19.1% y-o-y -19.7% y-o-y Divested S$94.4 million of Distribution Income DPU from strata units1 at Suntec City Office from Op
Slide 4: FY 23 Operational Overview
FY 23 Operational Overview Portfolio Committed Occupancy Portfolio WALE 94.9% 95.2% 4.2 2.1 Office Portfolio Retail Portfolio Office Portfolio Retail Portfolio Office Portfolio 74% 26% Work Done 1.17M sq ft Retail Portfolio 69% 31% Renewal Leases New Leases 4
Slide 5: Financial Highlights
Suntec City MBFC Properties One Raffles Quay Olderfleet, 477 Collins Street Financial Highlights The Minster Building 177 Pacific Highway 55 Currie Street Nova Properties 21 Harris Street Southgate Complex
Slide 6: Portfolio Financial Performance Remained Resilient
Portfolio Financial Performance Remained Resilient Gross Revenue Improved 8.3% in FY 23 Mainly due to: 35.4M or 8.3% Gross Revenue & Net Property Income: 462.7 Higher contribution from Suntec City Office, Suntec City 427.3 (2.6M or 0.8%) Mall and Suntec Convention 313.2 Higher contribution from The
Slide 7: Improvement in Operations Eroded By Higher Financing Costs
Improvement in Operations Eroded By Higher Financing Costs (48.7M or 19.1%) (1.749 ¢ or 19.7%) 206.8 7.135 255.5 8.884 Mainly due to: 2H 105.9 (Operations) 3.674 Higher financing cost (2H 23: $20.1m; FY 23: $55.7m) 94.8 Weaker AUD against SGD (2H 23: $2.3m; FY 23: $6.0m) 3.263 Higher maintenance fun
Slide 8: Distribution Payment
Distribution Payment Distribution Payment Distribution Period 1 Oct 2023 – 31 Dec 2023 Amount (cents/unit) 1.8661,2 Ex-date 31 Jan 2024 Record date 1 Feb 2024 Payment date 28 Feb 2024 Notes: 1. Total of 7.135 cents for FY 2023. 2. The Manager has elected to continue to receive 50% of its asset manag
Slide 9: Singapore Office Portfolio Revenue and NPI Strengthened
Singapore Office Portfolio Singapore Office Portfolio Revenue and NPI Strengthened JV Income Impacted by Higher Interest Expense Singapore Office Portfolio Performance 4.0M or 5.8% Mainly due to: Gross Revenue & Net Property Income: Higher occupancy and rent at Suntec City Office 1.0M or 1.8% Higher
Slide 10: Australia Portfolio Impacted by Vacancies, Incentives and Interest Expense
Australia Portfolio Australia Portfolio Impacted by Vacancies, Incentives and Interest Expense In AUD Mainly due to: (1.3M or 2.5%) Gross Revenue & Net Property Income: (3.9M or 9.5%) Incentives for new leases and renewals at 177 52.6 Pacific Highway (Sydney) 51.3 41.2 37.3 (5.1M or 81.0%) Lower occ
Slide 11: UK Portfolio Remained Stable YoY
UK Portfolio UK Portfolio Remained Stable YoY In GBP 0.9M or 11.1% (0.2M or 2.7%) Mainly due to: 8.1 9.0 Gross Revenue & Net Property Income: 7.8 7.8 7.3 7.1 Higher operating expenses at The Minster Building due to vacancies 2H 22 2H 23 2H 22 2H 23 2H 22 2H 23 Gross Revenue Net Property Income JV In
Slide 12: Singapore Retail Portfolio Revenue Improved
Singapore Retail Portfolio Singapore Retail Portfolio Revenue Improved NPI Impacted by Higher Expenses Mainly due to: Gross Revenue & Net Property Income: 2.5M or 3.8% Higher occupancy and rent at Suntec City Mall One-off property tax refund at Suntec City Mall (1.7M or 3.4%) Higher maintenance fund
Slide 13: Robust Recovery for Suntec Convention
Suntec Convention Robust Recovery for Suntec Convention Mainly due to: 11.5M or 40.9% Higher revenue from MICE, long term licences and advertising Higher variable costs in line with higher MICE revenue Higher fixed costs mainly due to ramping up of 39.6 staff recruitment, increase in facilities expe
Slide 14: Portfolio Valuation Remained Stable
Portfolio Valuation Remained Stable Singapore Assets Strengthened while Overseas Assets’ Cap Rates Expanded Investment 31 Dec 22 31 Dec 23 Against 31 Dec 22 Range of Cap Rates Range of Cap Rates Properties as at 31 Dec 22 as at 31 Dec 23 Variance ($) Variance (%) Singapore 1 S$8,769.7M S$9,041.1M S$
Slide 15: Diversified Portfolio Across Geography and Sector
Diversified Portfolio Across Geography and Sector Singapore Market and Office Assets Are Mainstays Income Contribution by Geography 69% 18% 13% AUM Breakdown by Geography 76% 14% 10% Singapore Australia UK Singapore Australia UK Income Contribution by Sector 73% 23% 4% AUM Breakdown by Sector 77% 21
Slide 16: Capital Management
Capital Management Olderfleet, 477 Collins Street, Melbourne
Slide 17: Key Financial Indicators
Key Financial Indicators As at 31 Dec 22 As at 31 Dec 23 NAV Per Unit S$2.12 S$2.10 Total Debt Outstanding S$4,865 mil S$4,277 mil Aggregate Leverage Ratio1 42.4% 42.3% Weighted Average Debt Maturity 2.85 years 3.00 years All-in Financing Cost2 2.94% p.a. 3.84% p.a.3 Adjusted ICR4 2.4X 2.0X Weighted
Slide 18: Refinanced S$500 mil loan with Sustainability-Linked Loan
Refinanced S$500 mil loan with Sustainability-Linked Loan ~50% of Total Debt are Green / Sustainability-Linked Loans Debt Maturity Profile Perpetual Securities 1200 1,000 (First Reset) 900 1000 800 302 700 800 500 500 600 600 500 202 700 400 759 180 400 300 300 200 200 400 366 200 200 100 200 168 15
Slide 19: Singapore Office Portfolio Performance
Singapore Office Portfolio Performance 19 One Raffles Quay, Singapore
Slide 20: Singapore Office Portfolio Near Full Occupancy
Singapore Office Portfolio Singapore Office Portfolio Near Full Occupancy Committed Occupancy Lease Expiry Profile As at 31 Dec 23 % of Total NLA4 Comparison Core CBD Occupancy: 94.8%3 0.7% 100% 99.4% 99.2% 99.7% 24.0% 23.2% 16.3% 16.3% 13.8% 5.7% Suntec City One Raffles MBFC Towers 1 Singapore 2024
Slide 21: Strong Rent Reversion +12.3% for FY 23
Singapore Office Portfolio Strong Rent Reversion Positive Rent Reversion Across 22 Quarters Rent Reversion Work Done1 +12.3% for FY 23 729,200 sq ft in FY 23 +13.7% for 2H 23 72% 14.0% 13.1% 61% 11.2% 10.5% 39% 28% 1Q 23 2Q 23 3Q 23 4Q 23 FY 22 FY 23 Renewal Leases New Leases Note: 1. Reflects net l
Slide 22: Suntec City Office Performance
Suntec City Office Performance Suntec City Office, Singapore
Slide 23: Occupancy and Rent Continue to Outperform Market
Suntec City Office Occupancy and Rent Continue to Outperform Market Suntec 4Q 23 CBRE $9.71 $9.84 $9.85 Core CBD $9.35 $9.79 $9.25 100.0% $10 $8.84 $8.85 95.0% $9 90.0% $8 85.0% 80.0% $7 99.9% 100.0% 99.9% 100.0% 100.0% 75.0% 95.6% 97.2% 94.8% $6 70.0% 65.0% $5 60.0% $4 55.0% $3 50.0% FY 20 FY 21 FY
Slide 24: Strong Rent Reversion With High Tenant Retention
Suntec City Office Strong Rent Reversion With High Tenant Retention Rent Reversion Work Done1 +12.4% for FY 23 504,700 sq ft in FY 23 +13.4% for 2H 23 14.0% 71% 12.2% 56% 10.5% 10.8% 44% 29% 1Q 23 2Q 23 3Q 23 4Q 23 FY 22 FY 23 Renewal Leases New Leases Note: 1. Reflects net lettable area of new leas
Slide 25: Well Spread Expiry Profile
Suntec City Office Well Spread Expiry Profile 60.0% $12.0 50.0% $10.7 $10.8 $11.0 $10.6 $10.2 $10.0 40.0% $9.6 $10.0 30.0% $9.0 22.6% 20.0% $8.0 15.3% 25.5% 24.8% 10.0% $7.0 1.9% 14.2% 11.3% 3.7% 0.9% 1.7% 0.0% $6.0 2024 2025 2026 2027 2028 2028 & Beyond 1Q 24 2Q 24 3Q 24 4Q 24 Expiry Rent 25
Slide 26: Performance of One Raffles Quay and MBFC Towers 1 & 2
Performance of One Raffles Quay and Marina Business Financial Centre Towers 1 & 2 MBFC Properties, Singapore
Slide 27: Strong Rent Reversion with High Tenant Retention
One Raffles Quay & MBFC Towers 1 & 2 Strong Rent Reversion with High Tenant Retention Rent Reversion Work Done1 +12.2% for FY 23 224,500 sq ft in FY 23 +14.7% for 2H 23 76% 14.4% 15.0% 67% 11.9% 10.3% 33% 24% 1Q 23 2Q 23 3Q 23 4Q 23 FY 22 FY 23 Renewal Leases New Leases Note: 1. Based on Suntec REIT
Slide 28: Asset Enhancement Initiatives
One Raffles Quay Asset Enhancement Initiatives At Main Office Lobbies & Garden Plaza with Target Completion in 4Q 2024 Arrival Experience at Garden Plaza New Outdoor F&B Unit at Garden Plaza Refurbished South Tower Lobby New F&B Unit at North Tower Note: Perspectives shown are for illustration purpo
Slide 29: Singapore Office Outlook and Focus
Singapore Office Outlook and Focus Geo-political tensions Moderate rent growth and economic headwinds Lackluster office market amidst cautionary weigh on projected GDP with limited demand demand and onstream growth of 1% to 3% drivers CBD supply Revenue continues to Rent reversions remain strengthen
Slide 30: Australia Portfolio Performance
Australia Portfolio Performance 21 Harris Street, Sydney
Slide 31: Portfolio Committed Occupancy Outperforms Market
Australia Portfolio Portfolio Committed Occupancy Outperforms Market Committed Occupancy As at 31 Dec 23 85.6% 85.1% 82.0% 81.8% 100% 98.8% 100% 85.1% 88.6% 56.2% 177 Pacific Highway 21 Harris Street Southgate Complex 477 Collins Street 55 Currie Street Australia Overall Sydney Melbourne Adelaide CB
Slide 32: Active Leasing to Bring in New Tenants
Australia Portfolio Active Leasing to Bring in New Tenants Healthy Rent Reversion and Majority of Leases Expiring 2028 and Beyond Work Done1 Lease Expiry Profile 160,600 sq ft in FY 23 % of Total NLA2 Comparison Renewal Leases New Leases 82% 66% 34% 40.7% 18% FY 22 FY 23 11.4% 19.3% 8.8% 10.4% 5.6%
Slide 33: Asset Enhancements to Elevate Asset Appeal
55 Currie Street Asset Enhancements to Elevate Asset Appeal BEFORE AFTER Rejuvenated lobby space Rejuvenated lobby space Refreshed conference and meeting facilities New third spaces and cafe 33
Slide 34: Asset Enhancements to Support Tenant Retention
177 Pacific Highway Asset Enhancements to Support Tenant Retention BEFORE AFTER Refurbished lobby Refitted cafe with new counter seating 34
Slide 35: Australia Outlook and Focus
Australia Outlook and Focus Macroeconomic Negative net absorption challenges remain with Stable prime rents with and new completions low GDP growth and incentives in Melbourne inflationary pressure drove nationwide CBD and Adelaide on the despite low office market vacancy to uptrend unemployment rat
Slide 36: UK Portfolio Performance
UK Portfolio Performance 36 Nova Properties, London
Slide 37: Portfolio Committed Occupancy Outperforms Market
UK Portfolio Portfolio Committed Occupancy Outperforms Market Committed Occupancy Lease Expiry Profile As at 31 Dec 23 % of Total NLA2 Comparison 70.6% of lease expiries will be in 2029 and Central beyond if tenants do not London Office exercise lease breaks Occupancy: 90.4%1 4.0% 100% 93.5% 87.3% 5
Slide 38: UK Office Outlook and Focus
UK Office Outlook and Focus Central London Global uncertainties and Good quality office space occupancy of 90.4%1 economic challenges in prime locations continue to weigh on expected to improve on continue to be sought business sentiments the back of slowing after supply Revenue will be impacted Bac
Slide 39: Singapore Retail Portfolio Performance
Singapore Retail Portfolio Performance Suntec City, Singapore
Slide 40: Portfolio Committed Occupancy Remained Healthy
Singapore Retail Portfolio Portfolio Committed Occupancy Remained Healthy Committed Occupancy Lease Expiry Profile As at 31 Dec 23 % of Total NLA2 Comparison Central Area Outside Orchard occupancy: 91.4%1 4.4% 95.6% 96.5% 95.6% 33.2% 25.7% 21.6% 9.0% 1.4% 4.7% Suntec City Mall Marina Bay Link Overal
Slide 41: Suntec City Mall Performance
Suntec City Mall Performance Suntec City Mall, Singapore
Slide 42: Strong Full Year Performance from Suntec City Mall
Suntec City Mall Strong Full Year Performance from Suntec City Mall Improvement Across Key Operating Indicators Revenue Rent New S$133.3M Reversion Brands +6.5% y-o-y 21.8% 43 Shopper Tenant Suntec+ Traffic Sales psf Members 8.0% 4.1% 16.0% y-o-y y-o-y y-o-y 42
Slide 43: Positive Rent Reversion for 7 Consecutive Quarters
Suntec City Mall Positive Rent Reversion for 7 Consecutive Quarters Rent Growth Supported by Strong Rent Reversion Rent Reversion Work Done1 +21.8% for FY 23 241,600 sq ft in FY 23 +25.9% for 2H 23 25.3% 25.7% 68% 69% 16.5% 18.2% 32% 31% 1Q 23 2Q 23 3Q 23 4Q 23 FY 22 FY 23 Renewal Leases New Leases
Slide 44: Refreshed Tenant Mix at Suntec City Mall
Suntec City Mall Refreshed Tenant Mix at Suntec City Mall 18 New-to-Market and 25 New-to-Suntec Brands in FY23 New-to-Market1 New-to-Suntec1 Note: 1. Does not reflect all the leases which commenced operations in FY 23. 44
Slide 45: Strategic Marketing Partnerships Throughout 2023
Suntec City Mall Strategic Marketing Partnerships Throughout 2023 Strengthened Mindshare Amongst Shoppers and Partners LEGO Lunar New Year Campaign Warner Brothers 100th Anniversary LINE Christmas Campaign Carnival & Snow Show at Suntec Plaza Nespresso Pop-Up Activation Mobile Legends Playoffs 45
Slide 46: 16% Increase in Suntec+ Members
Suntec City Mall 16% Increase in Suntec+ Members Maintained High Engagement Levels # of Suntec+ Members and Member Spend 450,000 100,000,000 +20% -1% Transactions per Member 400,000 90,000,000 +47% 80,000,000 6.9 in 2019 350,000 300,000 70,000,000 7.7 in 2022 250,000 -16% 60,000,000 7.2 in 2023 50,0
Slide 47: Average Daily Traffic
Suntec City Mall FY 23 Traffic Improved +8% YoY YoY Traffic Variance 140,000 2019 Avg +34% +2% Daily Traffic 120,000 +18% +11% -9% +38% +4% +6% -3% +8% -7% -1% +23% 100,000 Average Daily Traffic 80,000 60,000 40,000 20,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec FY 2022 2023 47
Slide 48: FY23 Tenant Sales Continued to Grow
Suntec City Mall FY23 Tenant Sales Continued to Grow Sales Remained 14% Above 2019 Levels Despite Slower Recovery in Traffic 80.0 Tenant Sales psf ($) YoY Variance 70.0 -3% 60.0 +6% +14% +20% -1% -1% +5% -4% +4% +7% -1% -2% 2019 Avg Tenant Sales psf ($) 50.0 +28% Tenant Sales psf 40.0 ($) 30.0 20.0
Slide 49: Singapore Retail Outlook and Focus
Singapore Retail Outlook and Focus Cautious domestic Ongoing tourism Rent growth and consumption due to recovery remains key occupancy underpinned inflationary pressures factor for retail sales by active leasing demand and GST hike1 growth2 and limited supply Curate differentiated Improvement in rev
Slide 50: Suntec Convention Performance
Suntec Convention Performance Suntec Singapore
Slide 51: Year of Strong Performance for Suntec Convention
Suntec Convention Year of Strong Performance for Suntec Convention Earlier Than Expected Recovery to Pre-COVID Levels Revenue S$63.8M New Events to SG +57.9% y-o-y +3.4% vs. 2019 15 NPI World’s Leading S$14.8M Hi-Tech Meeting & +31.0% y-o-y Convention Centre +11.3% vs. 2019 51
Slide 52: Diverse Line Up of MICE Events
Diverse Line Up of MICE Events Legacy Dance Festival - Glowheart 25th World Congress of Dermatology WorldSkills ASEAN 2023 1 Jun 3 – 8 Jul 23 – 25 Jul Comex Asia 2023 World Conference on Lung Cancer 2023 Anime Festival Asia 2023 31 Aug – 3 Sep 9 – 12 Sep 24 – 26 Nov 52
Slide 53: Suntec Convention Outlook and Focus
Suntec Convention Outlook and Focus Delay in Marina Bay Full tourism recovery MICE growth in tandem Sands expansion offers highly dependent on with SG tourism recovery opportunity to capture Chinese market1 convention uptick Growth supported by Higher dividend long-term licences, MICE Maintain stric
Slide 54: Our ESG Commitment
Our ESG Commitment 21 Harris Street, Sydney
Slide 55: ESG Initiatives
ESG Initiatives Environmental Social Governance Upgraded Building Management System for 55 Currie and Toy collection drive at Suntec City in Nominating and Southgate Complex. support of Food from the Heart Toy Buffet Remuneration Committee Carnival benefitted around 2,000 (NRC) formed to oversee Cyc
Slide 56: Continual Commitment to ESG
Continual Commitment to ESG Achievement All assets Green Building certified 177 Pacific Highway 55 Currie Street 477 Collins and Nova Properties Carbon Neutral achieved WELL Platinum Certification Attained highest GRESB 5 Star rating for 21 Harris Street, 477 Collins 4 consecutive years Street, Nova
Slide 57: Roadmap Towards Net-Zero Carbon Emission Target by 2050
Roadmap Towards Net-Zero Carbon Emission Target by 2050 All AUS assets to be All SGP assets to be Net-Zero carbon on 100% Renewable on 100% Renewable emission for all Energy Energy assets Net-Zero carbon 21 Harris & 477 Collins emission for fully owned All SGP assets to to be Carbon Neutral assets c
Slide 58: Looking Ahead
Looking Ahead 55 Currie Street, Adelaide
Slide 59: Earnings Expected to Remain Impacted
Earnings Expected to Remain Impacted Singapore Australia UK Interest Rates • Lackluster office market and moderate office rent • Macroeconomic • Geopolitical uncertainties growth challenges remain and economic challenges weigh on business • Cautious optimism in • Office vacancy to sentiments retail
Slide 60: Navigating Challenges
Navigating Challenges Unlock Value from Asset Proactive Capital Enhancement Initiatives and Management Divestment of Mature Assets Explore Good Quality, Accretive Continual Commitment to Assets Sustainability Practices 60
Slide 61: Thank you
Thank you For enquiries, please contact: Melissa Chow Eugenia Ong Manager, Investor Relations Manager, Portfolio Management Melissa.chow@esr.com Eugenia.ong@esr.com The Minster Building, London
Slide 62: Disclaimer
Disclaimer This presentation is focused on the comparison of the actual results for the half year and financial year ended 31 December 2023 versus results achieved for the half year and financial year ended 31 December 2022. The information included in this release does not constitute an offer or in
Slide 63: About Suntec REIT
About Suntec REIT 177 Pacific Olderfleet,477 Highway, Collins Street, Sydney Melbourne
Slide 64: About Suntec REIT
About Suntec REIT Singapore’s First Composite REIT Market Capitalisation S$3.6 Billion1 London Asset Under Management S$12.2 Billion2 Listed on 9 Dec 2004 on the SGX-ST High quality office assets, complemented by Singapore retail and convention components 10 properties – 3 in Singapore, 2 in Sydney,
Slide 65: Portfolio Snapshot
Portfolio Snapshot Singapore and UK Properties Suntec City One Raffles MBFC The Minster Nova Properties Suntec City – Suntec Convention Quay Properties Building Office & Retail Description Integrated commercial World-class convention Two premium Two premium Two Grade A Grade A Office development com
Slide 66: Portfolio Snapshot
Portfolio Snapshot Australia Properties 177 Southgate Olderfleet 477 55 Currie Street 21 Harris Street Pacific Highway Complex Collins Street Description 31-storey Grade A office Integrated development Premium Grade, 40- Twelve-storey, Grade A Nine-storey, Grade A building comprising two A-Grade lev
Slide 67: Appendix
Appendix 67 Olderfleet, 477 Collins Street, Melbourne
Slide 68: Singapore Portfolio Increased by S$271.4 million or 3.1%
Singapore Portfolio Increased by S$271.4 million or 3.1% Increase in Valuation Across All Asset Classes Investment 31 Dec 22 31 Dec 23 31 Dec 23 Against 31 Dec 22 Cap Rates as at Properties 31 Dec 23 Variance Variance ($) (%) Singapore 1 Suntec City Office S$3,145.0M S$3,272.0M S$2,635 psf S$127.0M
Slide 69: Australia Portfolio Decreased by A$90.8 million or 4.5%
Australia Portfolio Decreased by A$90.8 million or 4.5% Cap Rate Expansion of ~25 to 60 bps Investment 31 Dec 22 31 Dec 23 31 Dec 23 Against 31 Dec 22 Cap Rates as at Properties 31 Dec 23 Variance Variance ($) (%) Australia 177 Pacific A$712.0M A$688.0M A$17,186 psm -A$24.0M -3.4% 5.50% Highway 21 H
Slide 70: UK Portfolio Decreased by £76.4 million or 10.2%
UK Portfolio Decreased by £76.4 million or 10.2% Cap Rate Expansion of ~50 to 60 bps Investment 31 Dec 22 31 Dec 23 31 Dec 23 Against 31 Dec 22 Cap Rates as at Properties 31 Dec 23 Variance Variance ($) (%) UK Nova Properties £434.0M £395.0M £1,414 psf -£39.0M -9.0% 4.96% (50%) 1 The Minster £314.3M