Keppel REIT · SGX:K71U
Keppel REIT — Q1 2016 Earnings Presentation
45 slides from Keppel REIT's earnings presentation, Apr 14, 2016
Slide 1: 1Q 2016 Financial Results
1Q 2016 Financial Results 14 April 2016
Slide 2: Outline and Important Notice
Outline 1. Key Highlights ……………………………………………… 8 2. Financial Highlights ……………………………………… 13 3. Portfolio Analysis ………………………………………… 17 4. Capital Management …………………………………… 31 5. Market Review & Outlook ……….………………….. 35 Important Notice The value of Units and the income from them may fall as well as ris
Slide 3: Keppel REIT: Overview
Keppel REIT: Overview Largest Portfolio of Best-in-Class Assets Assets Under Well-Diversified Youngest Premium in Strategic Locations Management Tenant Base Portfolio Office Assets 11 office towers in 8 quality 296 tenants Premium Grade and Grade A assets in the 3.3 million sf S$8.2 billion diversif
Slide 4: Youngest Premium Grade A Office Portfolio
Youngest Premium Grade A Office Portfolio » 90% of portfolio in Singapore and 10% in Australia » Youngest and largest portfolio of premium Grade A office assets in Singapore’s business district Strategically located in the prime Raffles Place and Marina Bay precinct Average portfolio age of appr
Slide 5: Celebrating a Decade of Excellence
Celebrating a Decade of Excellence » 2016 marks Keppel REIT’s 10th anniversary since its listing in April 2006 » Over the last decade, Keppel REIT achieved an approximate 40% compounded annual growth rate for its distributable income, and has undergone a portfolio transformation to remain relevant t
Slide 6: Celebrating a Decade of Excellence
Celebrating a Decade of Excellence » As part of the portfolio transformation, Assets were divested at an average of approximately 50% above original purchase prices and an approximate 13% premium to last appraised value Average holding period was approximately 6 years » To ensure long-term incom
Slide 7: Celebrating a Decade of Excellence
Celebrating a Decade of Excellence Keppel REIT’s transformation in the last decade has seen it grow to become a REIT with a young portfolio of best-in-class assets on long land tenures in premium locations. Its portfolio is well-leased to a stable of creditable tenants on long leases with mark-to-ma
Slide 8: 1. Key Highlights – 1Q 2016
1. Key Highlights – 1Q 2016 Continue to deliver sustainable returns to Unitholders amidst a challenging environment Significant reduction of expiring leases to only a minimal 3% for the rest of 2016 99% tenant retention rate 99.4% portfolio occupancy rate Average positive rent reversion of
Slide 9: Key Financial Highlights
Key Financial Highlights » Continue to deliver sustainable returns to Unitholders amidst a challenging 1. Key Highlights environment » Increased distributable income (DI) y-o-y and q-o-q of $54.4m for 1Q 2016 despite the absence of income contribution from 77 King Street in Sydney 2. Financial Highl
Slide 10: Key Portfolio Highlights
Key Portfolio Highlights » Continued proactive marketing and rigorous leasing efforts 1. Key Highlights Only a minimal 3% of expiring leases for the rest of 2016, a significant decrease from the approximate 14% one quarter ago Majority of the remaining 3% of expiring leases for the rest of 2016
Slide 11: Key Portfolio Highlights
Key Portfolio Highlights » Conscious efforts to sign longer leases that will provide income 1. Key Highlights stability over the longer term » Continue to maintain long WALE of approximately 8 years (till year 2024) and 6 Years (till year 2022) for the 2. Financial Highlights top 10 tenants and over
Slide 12: Key Capital Management Highlights
Key Capital Management Highlights » Proactive refinancing efforts saw aggregate leverage reduce to 39% in 1Q 2016 1. Key Highlights » Continue to maintain a well-staggered debt maturity profile Completed 100% of refinancing requirements in 2016 Weighted average term to maturity to 3.6 years 2. F
Slide 13: 2. Financial Highlights
2. Financial Highlights BRIGHTENING ENVIRONMENTS A holistic and proactive approach towards environment management helps us achieve long-term savings for all our stakeholders. Bugis Junction Towers, Singapore 13
Slide 14: Delivering Sustained Returns
Delivering Sustained Returns » DI y-o-y and q-o-q for 1Q 2016 despite the absence of income from 77 King Street 1. Key Highlights » Higher DI due to: Consistent performance across all properties in Singapore and Australia, in particular improved contributions from its joint ventures Better res
Slide 15: Delivering Sustained Returns
Delivering Sustained Returns » In its report dated 4 April 2016, Moody’s reaffirmed its Baa2 corporate rating 1. Key Highlights on Keppel REIT, with a stable outlook Rating reflects Keppel REIT’s ability to continue generating stable and recurring income from its quality tenant base in strategical
Slide 16: Resilient Balance Sheet
Resilient Balance Sheet 1. Key Highlights As at 31 March 2016 As at 31 December 2015 2. Financial Highlights Non-current Assets $7,132 mil $7,261 mil Total Assets $7,429 mil $7,425 mil 3. Portfolio Analysis 1 Borrowings $3,321 mil $3,341 mil Total Liabilities $2,626 mil $2,648 mil 4. Capital Managem
Slide 17: 3. Portfolio Analysis
3. Portfolio Analysis ENGAGING TENANTS Tenants are the heart of our buildings. Keen understanding of their business and regular interactions help us create enduring partnerships. 8 Exhibition Street, Melbourne 17
Slide 18: Robust Leasing efforts
Robust Leasing efforts » Continued proactive marketing and rigorous leasing efforts 1. Key Highlights Completed renewal of more than three quarter of total leases expiring in 2016 Only a minimal 3% of expiring leases for the rest of 2016, a significant decrease from the approximate 14% one quart
Slide 19: Long Weighted Average Lease Expiry
Long Weighted Average Lease Expiry » Conscious efforts to sign longer leases that will provide income stability over the longer term 1. Key Highlights » Continue to maintain a long WALE that will enhance income sustainability and resilience over a long period » Top 10 tenants accounted for approxima
Slide 20: Singapore Average Net Office Demand and Supply
Singapore Average Net Office Demand and Supply » Healthy demand for office space of approximately 1.1 mil sf p.a. in the last 6 years 1. Key Highlights » Average supply of approximately 0.7 mil sf p.a. over the next 6 years till 2021 » Limited new office supply after 2018 2. Financial Highlights 6 y
Slide 21: Strong Track Record of Rents Above Market
Strong Track Record of Rents Above Market 1. Key Highlights » Average Grade A rent for Singapore’s core CBD at approximately $9.90 psf in 1Q 2016 2. Financial Highlights 12.90 12.50 12.10 11.60 11.40 11.30 10.65 10.70 10.35 10.25 10.30 9.85 9.70 3. Portfolio Analysis 11.40 11.30 11.20 10.95 10.90 10
Slide 22: Strong Singapore Portfolio Occupancy
Strong Singapore Portfolio Occupancy » Occupancy in Singapore’s core CBD remained stable at 95.2% in 1Q 2016 1. Key Highlights » Keppel REIT’s Singapore portfolio occupancy has remained consistently above Core CBD occupancy levels since listing in 2006 2. Financial Highlights 100.0% 99.9% 99.8% 99.3
Slide 23: Healthy Lease Expiry Profile
Healthy Lease Expiry Profile » Only a minimal approximate 3% of the portfolio’s total NLA due for renewal for the rest of 2016, 1. Key Highlights a significant decrease from the approximate 14% one quarter ago » Majority of the remaining 3% of expiring leases for the rest of 2016 likely to be renewe
Slide 24: Stable Committed Occupancy Levels
Stable Committed Occupancy Levels » Maintained high portfolio committed occupancy of 99.4% 1. Key Highlights Singapore Australia Overall 2. Financial Highlights 99.3% 99.5% 99.4% 100.0% 99.8% 100.0% 100.0% 99.7% 100.0% 99.4% 98.5% 98.8% 3. Portfolio Analysis Singapore core CBD occupancy at 95.2%(1)
Slide 25: Healthy Leasing Activities in 1Q 2016
Healthy Leasing Activities in 1Q 2016 » Concluded a total of 28 leases or approximately 1. Key Highlights 430,000 sf (attributable space of 353,000 sf) ` of space in 1Q 2016 » 99% tenant retention rate 2. Financial Highlights » Recorded a 7% positive rent reversion on average for all new, renewal, f
Slide 26: Well-Diversified Tenant Base
Well-Diversified Tenant Base 1. Key Highlights » Continue to maintain well-diversified tenant base from various business sectors TMT, 9% Legal, 10% 2. Financial Highlights Energy, Natural resources, Shipping and Number of tenants Marine, 9% (1) 296 3. Portfolio Analysis Real estate & property servic
Slide 27: Steady Appreciation of Current Portfolio
Steady Appreciation of Current Portfolio » Average fair value gain of approximately 30% for current portfolio, or an approximate 1. Key Highlights 7% appreciation per annum to-date » Average 4.5 years portfolio holding period to-date » Compounded annual growth rate for Keppel REIT’s distributable in
Slide 28: Capturing Value for Unitholders
Capturing Value for Unitholders » As part of portfolio transformation, assets were divested at an average of 1. Key Highlights approximately 50% above original purchase prices, and an approximate 13% premium to last appraised values, excluding income earned from these assets throughout holding perio
Slide 29: David Malcolm Justice Centre, Perth
David Malcolm Justice Centre, Perth 1. Key Highlights » The office tower on the Old Treasury Building David Malcolm Justice Centre, site in Perth was named the David Malcolm Perth Justice Centre on 11 March 2016 » The Government of WA commenced its 2. Financial Highlights 25-year lease since end-Nov
Slide 30: Building a Sustainable Future
Building a Sustainable Future » Continues to maintain high standards of environmental 1. Key Highlights protection » Awarded the following sustainable accolades MBFC Tower 3 awarded the highest Green Mark 2. Financial Highlights Platinum Award Ocean Financial Centre recertified as a BCA Green Ma
Slide 31: 4. Capital Management
4. Capital Management UNRELENTING TENACITY Our steadfast discipline and prudent capital management approach propel us towards operational efficiency in all that we do. One Raffles Quay, Singapore 31
Slide 32: Prudent Capital Management
Prudent Capital Management » Continued proactive refinancing efforts saw aggregate leverage decrease to 1. Key Highlights 39.0% as at 1Q 2016 from 39.3% as at end-2015 » Increased fixed-rate loans to over 75% as at 1Q 2016, up from 70% last quarter Provides certainty of interest expenses and safeg
Slide 33: Optimising Capital Structure
Optimising Capital Structure » Ongoing efforts to minimise exposure to currency 1. Key Highlights fluctuations and provide greater certainty over future distributions » Policy of hedging more than 90% of income from 2. Financial Highlights its Australian assets » Hedged almost all of its forecasted
Slide 34: Well-staggered Debt Maturity Profile
Well-staggered Debt Maturity Profile » 100% of refinancing requirements completed for FY 2016 1. Key Highlights » Continue to maintain well-staggered debt maturity profile with weighted average term to expiry at a healthy 3.6 years 2. Financial Highlights No refinancing requirements until second hal
Slide 35: 5. Market Review & Outlook
5. Market Review & Outlook EXTENSIVE EXPERIENCE We leverage our Board of Directors’ depth of experience and wealth of expertise to shape Keppel REIT’s growth into the future. 8 Chifley Square, Sydney 35
Slide 36: Market Outlook – Singapore
Market Outlook – Singapore 1. Key Highlights Singapore » Advance estimates indicate that the economy grew 1.8% y-o-y for 1Q 2016, driven by 2. Financial Highlights expansions in the construction and services sectors » Growth is expected to remain muted in 2016 with full-year GDP growth at between 1
Slide 37: Market Outlook – Australia
Market Outlook – Australia 1. Key Highlights Australia » Economy grew 2.5% in 2015, supported by healthy demand from non-mining sectors 2. Financial Highlights » To drive continued growth, the Reserve Bank of Australia kept its official cash rate at 2% in 1Q 2016 » Australia expects to record steady
Slide 38: Harnessing Strengths
Harnessing Strengths » In January 2016, Keppel Corporation announced its intention to consolidate its interests in all four of its subsidiaries in business trust management, REIT management and fund management under Keppel Capital » This includes Keppel Land’s interest in Keppel REIT Keppel REIT Man
Slide 39: Thank You
ACTIVE LISTENING People are the cornerstone of our business. We believe in creating a cohesive workplace that nurtures and brings out the best in our talent. Thank You Ocean Financial Centre, Singapore 39
Slide 40: Additional Information
Additional Information UNDIVIDED ATTENTION Our attention to details helps ensure that we provide the best value propositions to our stakeholders Marina Bay Financial Centre, Singapore 40
Slide 41: Capturing Value. Sustaining Returns
Capturing Value. Sustaining Returns 41
Slide 42: Celebrating 10 Years of Excellence
Celebrating 10 Years of Excellence 2006 2007 2009 2010 2011 2012 2013 2014 2015 – Mar 2016 42
Slide 43: Best-In-Class Assets in Strategic Locations
Best-In-Class Assets in Strategic Locations 43
Slide 44: Portfolio Information: Singapore
Portfolio Information: Singapore » Keppel REIT’s AUM is approximately $8.2 billion as at 31 March 2016 » 90% of portfolio in Singapore and 10% in Australia Ocean Financial Centre(2) Marina Bay Financial Centre (2) (4) One Raffles Quay(2) Bugis Junction Towers Comprises of three premium A pair of 50
Slide 45: Portfolio Information: Australia
Portfolio Information: Australia 8 Chifley 8 Exhibition Street, 275 George Street, David Malcolm Justice Centre(3) Square, Sydney(3) Melbourne(4) Brisbane(3) 35-storey Grade A office 34-storey Grade A office 30-storey Grade A office 33-storey Grade A office tower Description tower and tower tower an