Kore Us REIT · SGX:CMOU
Kore Us REIT — Keppel Pacific Oak US REIT — Investor Presentation (September 2020)
39 slides from Kore Us REIT's investor presentation, September 2020
Slide 1: Investor Meetings September 2020
Investor Meetings September 2020
Slide 2: Important Notice and Content Outline
Important Notice The past performance of Keppel Pacific Oak US REIT is not necessarily indicative of its future performance. Certain statements made in this release may not be based on historical information or facts and may be “forward-looking” statements due to a number of risks, uncertainties and
Slide 3: Overview
Overview Tenant lounge The Westpark Portfolio Seattle, Washington
Slide 4: About Keppel Pacific Oak US REIT (KORE)
Benefitting from Unique exposure solid US office Tax advantaged to key US real estate structure growth markets fundamentals Sponsors ▪ Keppel Capital and KPA US Asset Manager ▪ Pacific Oak Capital Advisors LLC, also advisor for Tenant lounge, Bellevue Technology Center, Seattle, Washington Pacific O
Slide 5: Growth Trajectory since IPO
Growth Trajectory since IPO Delivered Growth since IPO Strengthened Foothold in the Listed on SGX Distributable Income (US$ million) Strong Maitland Portfolio value: US$0.83b submarket IPO with 11 office buildings Maitland 50.8 & business campuses Promenade 1 38.6 26.0 across 7 key growth Orlando, F
Slide 6: First Choice Submarkets in Key Growth Markets
First Choice Submarkets in Key Growth Markets SEATTLE, Washington ATLANTA, Georgia Overview 13 freehold office buildings Powers Ferry Northridge The Plaza Bellevue Technology The Westpark and business campuses Buildings Center Portfolio Occupancy: 93.8% Center I & II Occupancy: 100.0% Occupancy: 85.
Slide 7: KORE Strengths
KORE Strengths Index inclusion Strong will improve rental trading Presence in reversion Stable first choice 100% portfolio liquidity of 14.7% submarkets in Highly unsecured committed key growth debt Constituent to the occupancy diversified Strong average MSCI Singapore markets rental reversion portf
Slide 8: Resilient and Highly Diversified Portfolio
Resilient and Highly Diversified Portfolio KORE’s buildings and business campuses in Highly diversified tenant base, with exposure to the tech hubs of Seattle, Austin and Denver the growth and defensive sectors of technology, contribute ~54% of CRI as well as medical and healthcare Geographic Divers
Slide 9: Low Tenant Concentration Risk
Low Tenant Concentration Risk Top 10 tenants contribute only 19.5% of CRI, with the largest tenant only contributing 3.5% of CRI Top 10 tenants as at 30 June 2020 Tenant Sector Asset % CRI Ball Aerospace Technology Westmoor Center 3.5 Oculus VR Technology Westpark Portfolio 2.4 Lear Technology The P
Slide 10: Positive Economics in KORE's Key Growth Markets
Positive Economics in KORE’s Key Growth Markets KORE’s key growth markets continue to outperform national average Real GDP Growth Average(1) 5.6% 5.4% 2014-2018 Key Growth Markets Gateway Cities 5.0% 4.0% 4.0% 3.9% 4.1% 3.7% 3.9% 3.2% 2.9% 2.8% 2.5% 1.8% 1.9% 1.6% 1.2% Atlanta Austin Dallas Denver H
Slide 11: Rising Employment in KORE's Key Growth Markets
Rising Employment in KORE’s Key Growth Markets KORE’s key growth markets continue to outperform national average Employment Growth Average(1) 3.8% 2015-2019 3.4% Key Growth Markets Gateway Cities 2.9% 2.8% 2.7% 2.7% 2.7% 2.4% 2.4% 1.8% 1.6% 1.5% 1.5% 1.7% 1.6% 1.4% 1.2% Atlanta Austin Dallas Denver
Slide 12: Expanding Population in KORE's Key Growth Markets
Expanding Population in KORE’s Key Growth Markets KORE’s key growth markets continue to outperform national average 2.8% Population Growth Average(1) 2015-2019 Key Growth Markets 2.3% Gateway Cities 1.9% 1.7% 1.6% 1.8% 1.5% 1.5% 1.1% 0.8% 0.5% 0.6% 0.6% 0.1% 0.3% -0.2% -0.1% Atlanta Austin Dallas De
Slide 13: High Tax States are Losing People to Low Tax States
High Tax States are Losing People to Low Tax States Individuals are moving to zero or low income tax states, accelerating population growth in KORE’s key growth markets State Individual Tax Rates (as at July 1, 2019)(1) Key Growth Markets 13.30% 13.30% Gateway Markets 10.75% 8.82% 8.95% 8.40% 6.99%
Slide 14: Low Corporate Tax States are Attracting New Businesses
Low Corporate Tax States are Attracting New Businesses Companies are relocating to where they have the greatest competitive advantage State Corporate Income Tax Rates (as at July 1, 2019)(1) Key Growth Markets Gateway Markets 11.50% 9.50% 8.84% 8.84% 8.00% 8.25%8.51% 6.99% 6.50% 5.75% 6.25% 5.50% 4.
Slide 15: 2020 Rankings for Overall State Taxes
2020 Rankings for Overall State Taxes Lower overall tax rates in KORE’s key growth markets vs gateway cities Overall State Rankings(1) Best 22 45 Key Florida 4 Growth Texas 13 Gateway Colorado 17 Markets Washington 19 Georgia 32 Illinois 35 Key Massachusetts 36 Growth Markets Connecticut 47 Average
Slide 16: COVID-19 Updates
COVID-19 Updates Enhanced health and safety protocols across KORE’s properties
Slide 17: Navigating the COVID-19 Pandemic
Navigating the COVID-19 Pandemic ✓ Strong rent collection is testament to tenant quality: Limited Minimal • Collected ~100% of rent in 1Q 2020 and ~96% of rent in 2Q 2020(1) Retail Exposure Co-Working Tenants • Rental deferrals provided to tenants representing 5.7% of CRI, equivalent to ~2.8% in eco
Slide 18: Facilitating Re-occupancy and Safe Return to Offices
Facilitating Re-occupancy and Safe Return to Offices • Health and safety is a top priority • Enhanced cleaning and social distancing protocols, hand sanitising stations, on-premise signage • Adoption of technological innovations, self-cleaning elevator buttons and door handle wraps, UV disinfecting
Slide 19: The Essential but Ever Changing Office
The Essential but Ever Changing Office Potential Office Paradigm Shifts • Higher levels of remote working and a gradual transition to a more ✓ KORE is well-positioned to benefit flexible working culture from the shift towards well-connected - Employees welcome the flexibility to work from home, but
Slide 20: 1H 2020 Operational Highlights
1H 2020 Operational Highlights Tenant space at The Westpark Portfolio Seattle, Washington
Slide 21: 1H 2020 Results Highlights
1H 2020 Results Highlights Continued Growth Stable Robust in Operating Income Income Stream Financial Position Distributable Income Strong Early Refinanced US$29.1 mil Rental Reversion All 2021 Loans 17.6% YoY 14.7% 3.4 years in WATM (3) DI of US$29.1 million for 1H 2020 was 17.6% Continued positive
Slide 22: Financial Performance for 2Q & 1H 2020
Financial Performance for 2Q & 1H 2020 2Q 2020 2Q 2019 % 1H 2020 1H 2019 % (US$’000) (US$’000) Change (US$’000) (US$’000) Change Gross Revenue 35,174 29,280 20.1 70,500 58,724 20.1 Property Expenses (14,253) (11,292) 26.2 (28,628) (22,548) 27.0 Net Property Income 20,921 17,988 16.3 41,872 36,176 15
Slide 23: Prudent Capital Management
Prudent Capital Management Low aggregate leverage and 100% unsecured loans provide greater financial flexibility As at 30 June 2020 Debt Maturity Profile Total Debt • US$500.4 million of external loans • 100% unsecured 100% of Loans Unsecured 28.9% Committed Available • US$55.0 million of (1) 22.9%
Slide 24: Prudent Capital Management (cont'd)
Prudent Capital Management (cont’d) • In July 2020, KORE announced the early refinancing of borrowings due in November 2021 • Loans obtained during the Initial Public Offering in November 2017 • Restructured the interest rate swap in relation to these borrowings • No long term refinancing requiremen
Slide 25: Portfolio Performance
Portfolio Performance • Committed total of ~196,000 sf of space in 1H 2020 • Equivalent to 4.2% of portfolio NLA, and mainly in Seattle, Atlanta and Houston • Achieved strong rental reversion of 14.7% for the whole portfolio • Rental collections for April, May and June 2020 were ~98%, ~96% and ~93%
Slide 26: Market Outlook
Market Outlook Tenant lounge, 1800 West Loop South Houston, Texas
Slide 27: US Economy at a Glance
US Economy at a Glance % GDP Growth % Labour Force Participation 5 67 0 66 -5 65 -10 64 -15 63 -20 62 -25 61 -30 60 -35 59 2015 2016 2017 2018 2019 1Q 2020 2Q 2020 Feb-15 Jul-07 Jan-14 Mar-16 Jul-20 Dec-12 Apr-17 Aug-08 Nov-11 Oct-10 Sep-09 May-18 Jun-19 Great Hills Plaza, Austin, Texas (1) GDP Grow
Slide 28: Technology – A Key Driver of US Growth and Employment
Technology – A Key Driver of US Growth and Employment Ranking of Top 10 US Occupation Jobs Added During Decade, 2010-2019 Food Preparation and Serving 2,419,416 QCEW + self-employed* Personal Care and Services 2,179,869 Transportation and Material Moving 1,972,500 2-digit SOCs Tech 1,808,837 Managem
Slide 29: First Choice Submarkets Outlook
First Choice Submarkets Outlook Property Submarket Last 12M Last 12M Average Last 12M Projected Submarket Vacancy Rate Vacancy Rate Deliveries Absorption Submarket Rent Rental Growth Rental Growth Property (%) (%) (sf’000) (sf’000) (US$ p.a.) (%) (%) Seattle, Bellevue CBD 2.7 4.3 - (31.4) 53.9 2.8 (
Slide 30: Last 12 Months Rent Growth
Last 12 Months Rent Growth Key Growth Markets Gateway Cities 5.3% 4.7% 3.9% 3.2% 2.9% 2.6% 2.8% 2.7% 2.1% 2.1% 2.3% 2.2% 2.4% 0.7% 0.7% 0.7% 1.4% 1.1% 0.3% -1.3% -2.2% Last 12M Rental Growth Key Growth Markets Average Gateway Cities Average United States Average Source: CoStar Office Report, 2 July
Slide 31: Projected 12-Month Rent Outlook
Projected 12-Month Rent Outlook KORE’s in-place rents are on average, 10.8% below asking rents Key Growth Markets Gateway Cities -2.5% -2.8% -4.3% -4.9% -4.7% -5.5% -6.0% -6.1% -5.3% -5.6% -6.2% -5.4% -5.0% -5.1% -6.3% -6.6% -7.0% -7.4% -7.4% -7.4% -8.4% Projected Rental Growth Key Growth Markets Av
Slide 32: Committed to Deliver Long-Term Value
Strategically-located assets in key growth markets Constituent of: Highly diversified portfolio with tenants from high growth and defensive sectors • MSCI Singapore Small Cap Index Committed Income resilience supported by low tenant concentration and strong tenant mix to Deliver Long-Term • FTSE All
Slide 33: Thank You
Thank You For more information, please visit www.koreusreit.com Connect with us on: Westech 360 Austin, Texas
Slide 34: Additional Information
Additional Information Tenant space, Westmoor Center Denver, Colorado
Slide 35: Trust Structure
Trust Structure Tax-efficient structure for holding US properties ▪ No US corporate tax (21%) and US withholding tax (30%) ▪ No Singapore corporate tax (17%) and Singapore withholding tax (10%) ▪ Subject to limited tax(2) Leverage Sponsors' expertise and resources to optimise returns for Unitholders
Slide 36: Healthy Balance Sheet
Healthy Balance Sheet As at 30 June 2020 US$’000 Total Assets 1,337,395 Investment Properties 1,272,936 Cash and Cash Equivalents 58,620 Other Assets 5,839 Total Liabilities 582,231 Gross Borrowings 500,440 Other Liabilities 81,791 Unitholders’ Funds 755,164 Units in issue and to be issued (‘000)(1)
Slide 37: Class A Work Environments and Tech Campuses of Choice
Class A Work Environments and Tech Campuses of Choice The Innovation Triangle: Bellevue – Kirkland – Redmond • Driven by the tech industry, the Seattle metro added 20,800 office- using services jobs in 2019 – an all- time high for the market and the second highest growth rate in the nation(1) . • Of
Slide 38: Apple: A True Campus Community in Austin
Apple: A True Campus Community in Austin Apple’s Office Distribution in Austin, Texas • In November 2019, announced the NEW CAMPUS start of construction on its new campus in Austin, Texas, as part of its broad expansion in the city(1). • Expected to open in 2022, the new US$1 billion, 3m sf campus s
Slide 39: Denver – An Innovative Community where Aerospace and Technology Thrive
Denver – An Innovative Community where Aerospace and Technology Thrive • A low corporate tax rate, an educated workforce and a wealth of resources make Denver business-friendly. • Colorado is home to over 500 aerospace related companies and suppliers. • Top aerospace contractors include: Ball Aerosp
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