Spring Real Estate Investment Trust · HKEX:1426
Spring Real Estate Investment Trust — FY2015 Earnings Presentation
24 slides from Spring Real Estate Investment Trust's earnings presentation, Mar 17, 2016
Slide 1: Annual Results 2015 Presentation
Annual Results 2015 Presentation 17 March 2016
Slide 2: Disclaimer
DISCLAIMER This presentation may contain information which is proprietary, confidential and/or legally privileged and has been prepared by Spring Asset Management Limited, in its capacity as the manager (the “Manager”) of Spring Real Estate Investment Trust (the “Trust”). This presentation is being
Slide 3: Agenda
AGENDA 1 KEY MESSAGES 2 2015 RESULTS 3 INVESTMENT HIGHLIGHTS 4 MARKET OUTLOOK 5 OUTLOOK & STRATEGY 2
Slide 4: Overview of 2015
OVERVIEW OF 2015 Delivering stable distribution despite macro uncertainties Final distribution HK12.6 cents. Full-year total distribution HK26.6 cents, +0.8% yoy. Superior asset quality and location of China Central Place office towers contributed to stable leasing performance. Property valuat
Slide 5: Historical Distributions Since IPO
HISTORICAL DISTRIBUTIONS SINCE IPO IPO was on 5 Dec 2013 Two full years of listing history. So far, total DPU of HK61.6 cents, or a return of 20.3% on the unit price at end-2015. Distribution per Unit (HK cents, LHS) Annualized Distribution Yield (%, RHS) Excluding 2.2% of 40 special distribut
Slide 6: Historical Leasing Performance Since IPO
HISTORICAL LEASING PERFORMANCE SINCE IPO Quarterly leasing performance shows a track record of stable operation. Passing rent stabilizing and occupancy maintained at high levels. 400 353 359 361 361 353 352 352 337 350 100% Monthly Passing Rent (RMB/sqm) 300 80% 250 Occupancy (%) 200 60% 95% 95%
Slide 7: Agenda: Review of 2015
AGENDA 1 REVIEW OF 2015 2 2015 RESULTS 3 INVESTMENT HIGHLIGHTS 4 MARKET OUTLOOK 5 OUTLOOK & STRATEGY 6
Slide 8: 2015 Results Summary
2015 RESULTS SUMMARY Financial Performance FY 2015 FY 2014 Change Total Revenue (US$ million) 80.52 81.46 - 1.2% Net Property Income (US$ million) 61.28 62.17 - 1.4% Net Property Income Margin 76.1% 76.3% - 0.2 ppts Total Distributable Income (US$ million) 41.24 37.70 + 9.4% Distribution per Unit (H
Slide 9: 2015 Results Highlights
2015 RESULTS HIGHLIGHTS Stable Operations and Distribution - Avg monthly passing rent at RMB355/sqm, +0.9% yoy 1. Leasing Performance - Avg Monthly Occupancy stayed high: 95% - Leases entered into (as % of end-December occupied GFA): 25.2% - Revenue: US$80.52 mn, -1.2% yoy 2. Financial Performance -
Slide 10: Leasing Performance
LEASING PERFORMANCE Solid performance despite slowing China growth Average Passing Rents Average Occupancy Rates (RMB per sqm per month) (%) +0.9% 96% 96% 96% 96% 95% 90% 352 355 288 226 201 188 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Occupancy stable at 95% Avg monthly passi
Slide 11: Financial Performance
FINANCIAL PERFORMANCE Stable but affected by RMB depreciation Revenue Net Property Income (US$ million) (US$ million) -1.2% 76.3% 76.1% 80.0% 81.46 80.52 80 62.17 -1.4% 61.28 70.0% 60 60.0% 40 20 50.0% 0 40.0% FY 2014 FY 2015 FY 2014 FY 2015 NPI NPI margin Overall, revenue reflected stable passing
Slide 12: Debt Profile
DEBT PROFILE Cash interest savings of new loan kicked in Maturity of Loan Principal Cash Interest Expenses (US$ million) (US$ million) 19 17.84 480 15.74 17 465 15 13 11 9 7 5 2015 2016 2017 2018 2019 2020 FY 2014 FY 2015 Refinancing completed in Apr 2015 Cash Interest payments: US$15.74 mn, - 1
Slide 13: Agenda: Investment Highlights
AGENDA 1 REVIEW OF 2015 2 2015 RESULTS 3 INVESTMENT HIGHLIGHTS 4 MARKET OUTLOOK 5 OUTLOOK & STRATEGY 12
Slide 14: Property Overview
PROPERTY OVERVIEW Premium Grade Office Buildings in Beijing CBD Premium Assets The Property • Two Premium Grade office buildings (total GFA 120,245 sqm) in China Central Place (“CCP”) (华贸中心) and approximately 600 car parking spaces (the “Property”). • China Central Place is a prime mixed-use complex
Slide 15: Tenant Base
TENANT BASE Diverse and high quality tenant mix Tenants by Industry Top 5 Tenants % of total Tenants As % of leased office GFA leased GFA (As of 31 December 2015) Deutsche Bank 6.2% EPSON 5.8% Business Education/ center and media/sports/ Condé Nast 4.7% 24.7% others Energy/ Technology resources/ Zho
Slide 16: Expiring Lease Profile
EXPIRING LEASE PROFILE Typical office lease has a term of 3 years. In 2016, 46.4% of leased GFA scheduled to expire. Good progress on negotiations with upcoming expires. Expiring leases as a % of leased office GFA 46% 28% 26% 2016 2017 2018 and beyond 15
Slide 17: Cost Structure
COST STRUCTURE More than 90% of property expenses are revenue-linked or fixed FY 2015 Withholding tax Property Others management fee – 10% of revenues received from rental operations 4.8% 8.4% Business tax and other taxes Property – Business tax, urban construction and taxes maintenance tax, and
Slide 18: Peer Comparison
PEER COMPARISON Quality Assets with Attractive Distribution Yield Company Name Share Price Market Cap DPU Yield Discount (LCC)(1) (US$m) (1) (Last 12 months)(2) to NAV (3) Spring REIT 3.09 446 8.6% (48.4%) Link REIT 44.35 12,851 4.3% (18.3%) Hui Xian REIT 3.20 2,644 8.3% (39.6%) Champion REIT 3.88 2
Slide 19: Agenda: Market Outlook
AGENDA 1 REVIEW OF 2015 2 2015 RESULTS 3 INVESTMENT HIGHLIGHTS 4 MARKET OUTLOOK 5 OUTLOOK & STRATEGY 18
Slide 20: Comparison of Grade-A Office Markets Across China
COMPARISON OF GRADE-A OFFICE MARKETS ACROSS CHINA Beijing enjoys the best supply-demand dynamics Grade A Office GFA (‘000 sqm) Occupancy Highest office occupancy of about 97% Low new supply in the next 4 years, only 6% p.a. of existing stock (vs avg. 25.7% p.a. of selected cities) GFA (‘000 sqm)
Slide 21: Current Market Condition
CURRENT MARKET CONDITION Tight supply & high occupancy in Beijing Grade-A offices Beijing Overall Beijing CBD Beijing Overall – Supply, Absorption, Occupancy Beijing CBD – Supply Absorption, Occupancy (sqm, GFA) (sqm, GFA) 95% 95% 97% 97% 94% 95% 96% 88% 91% 100% 91% 88% 100% 1,500,000 950,000 74% 7
Slide 22: Future Grade-A Office Supply
FUTURE GRADE-A OFFICE SUPPLY Beijing CBD to see tight supply in the next 3 years All of Beijing CBD submarket • 2016-2018 average new supply : 395k sqm • 2016-2018 average new supply : 111k sqm = 5.9% p.a. of current stock of 6.71 mn sqm = 6.1% p.a. of current stock of 1.83 mn sqm Grade-A office sup
Slide 23: Agenda: Outlook & Strategy
AGENDA 1 REVIEW OF 2015 2 2015 RESULTS 3 INVESTMENT HIGHLIGHTS 4 MARKET OUTLOOK 5 OUTLOOK & STRATEGY 22
Slide 24: Outlook & Strategic Priorities
OUTLOOK & STRATEGIC PRIORITIES Outlook mixed in 2016 Strategic Priorities Slowing economic growth In China and weak Maintain stable distributions to Spring REIT’s RMB may affect business confidence. unitholders. But a fast-growing service sector – which Focus on core strategy on leasing mana
Spring Real Estate Investment Trust — FY2015 Earnings Presentation on 6ix