Axis Real Estate Investment Trust · MYX:AXREIT
Axis Real Estate Investment Trust — Q4 2010 Earnings Presentation
73 slides from Axis Real Estate Investment Trust's earnings presentation, Jan 18, 2011
Slide 1: Axis-REIT Results Presentation 4Q 2010
Axis-REIT RESULTS PRESENTATION 4Q 2010 ANALYSTS & FUND MANAGERS BRIEFING January 18th 2011 WESTIN HOTEL KUALA LUMPUR
Slide 2: Disclaimer
Disclaimer This the information contained in this document is provided for information purposes only and in no way constitutes an offer of services or solicitation. Past performance is not indicative of future performance We decline any responsibility with respect to direct or indirect damages or co
Slide 3: Milestones
Milestones Increased Approved Fund Size to 375,901,000 units Market Cap increased to Acquired Investment Property RM891million ; worth Closing price 30 December RM 237.4 million RM2.37 AUM now RM1.18 billion Winner Declared a record DPU of 2010 Best Practices Award 16 sen for 2010 Asia Pacific Real
Slide 4: Snapshot
Snapshot Approved Fund Size 375,901,000 units Manager Axis REIT Managers Bhd Investment Properties 26 Properties worth RM1.18 billion (as at 31 December 2010 – Unaudited) Market Capitalisation RM891 million (as at 31 December 2010) Unit Price RM2.37 (as at 31 December 010) Gearing RM416.6 million (3
Slide 5: Financial Results – Income Statement
Financial Results – Income Statement Net Property Income exceeds 3Q2010 by 43.62% Changes / 4Q2010 4Q2009 Movement No. of Properties 26 21 +5 Property Income (RM’000) 26,435 19,387 + 36.35% Net Property Income (RM’000) 23,204 16,156 + 43.62% Profit before Taxation (RM’000) 16,180 11,625 + 39.18% Ear
Slide 6: Financial Results – Balance Sheet
Financial Results – Balance Sheet Trading at premium to NAV of 17.91% 4Q 2010 31 DEC 2009 (RM ‘000) (RM’000) Total Assets 1,208,897 907,745 Investment Properties 1,178,682 884,962 Borrowings 416,609 308,932 Net Asset Value 755,230 565,650 Unitholders’ Funds 540,281 406,854 Gearing 34.46% 34.03% NAV
Slide 7: 31 December 2010 Financial Results
31 December 2010 Financial Results
Slide 8: Financial Results – Income Statement
Financial Results – Income Statement 4Q 2010 4Q 2009 Changes / (RM ‘000) (RM’000) Movement No. of Properties 26 21 +5 Property Income 26,435 19,387 + 36.35% Property Expenses (3,231) (3,231) - Net Property Income 23,204 16,156 + 43.62% Interest Income 158 121 + 30.58% Non-Property Expenses (2,270) (
Slide 9: Financial Results – Income Statement
Financial Results – Income Statement 4Q 2010 3Q 2010 2Q 2010 1Q 2010 (RM’000) (RM ‘000) (RM’000) (RM’000) No. of Properties 26 23 23 23 Property Income 26,435 22,003 20,978 19,798 Property Expenses (3,231) (3,430) (3,225) (3,076) Net Property Income 23,204 18,573 17,753 16,722 Interest Income 158 38
Slide 10: Financial Results – Income Statement
Financial Results – Income Statement YTD Dec 10 YTD Dec 09 Changes / (RM ‘000) (RM’000) Movement No. of Properties 26 21 +5 Property Income – Note 1 89,213 71,598 + 24.60% Property Expenses – Note 2 (12,961) (11,661) + 11.15% Net Property Income 76,252 59,937 + 27.22% Interest Income - Note 3 638 27
Slide 11: Notes to Financial Results – Income Statement
Notes to Financial Results – Income Statement Note 1 – Property Income Property Income has increased by 24.6% compared to last year mainly due to: a) Positive rental reversion recorded during the year of 8.9%; b) Rental income from the newly completed acquisitions: Tesco Bukit Indah -on 1 October 20
Slide 12: Notes to Financial Results – Income Statement
Notes to Financial Results – Income Statement Note 4 – Non- Property Expenses The increase in non-property expenses are due to the RM70,000 Corporate Social Responsibility (“CSR”) donation made to Selangor and Federal Territory Association for Mentally Handicapped Children and also the increase in m
Slide 13: Summary of EPU (Realised) and DPU
Summary of EPU (Realised) and DPU 18.00 16.06 16.01 16.00 15.4615.27 15.77 15.80 16.00 14.00 13.60 13.63 12.82 12.95 12.00 10.00 8.00 6.00 4.874.70 4.00 2.00 - 2005 2006 2007 2008 2009 2-Jul-05 2010 EPU (realised) DPU 13
Slide 14: Summary of DPU growth per Quarter
Summary of DPU growth per Quarter Distribution per Unit per Quarter 2010 4.40 4.30 4.30 4.20 4.10 4.00 4.00 4.00 Sen per Unit 3.90 3.80 3.70 3.70 3.60 3.50 3.40 1Q 2Q 3Q 4Q 14
Slide 15: Total Return to Unitholders
Total Return to Unitholders 160% 152% 140% 120% 100% 80% 56% 52% 60% 40% 23% 20% 0% IPO - RM1.25 Placement '08 - Placement '09 - Placement '10- RM1.80 RM1.66 RM1.97 Movement in market price Distribution return 15
Slide 16: Detailed Property Performance Analysis (RM’000)
Detailed Property Performance Analysis (RM’000) Book Value Fair Value Acq Cost + Annualised Gross Yield 31 Dec 2010 (a) Adjust (b) Enhancement (c) Revenue (d) (d) / (c) 1 ABP 107,005 21,883 85,122 11,353 13.34% 2 Axis Plaza 31,000 8,498 22,502 2,707 12.03% 3 Crystal Plaza 96,036 39,458 56,578 9,850
Slide 17: Management Expense Ratio and Total Assets
Management Expense Ratio (“MER”) MER= Total administrative expenses incl. Manager and Trustee’s fees Average net asset value of the Fund. 1,300 10.00 1,209 1,200 1,100 1,000 953 908 Total Assets (RM'000) 900 % of NAV 800 726 733 700 658 582 600 500 417 400 300 200 1.47 1.38 1.37 1.35 100 1.29 1.22 1
Slide 18: Balance Sheet Highlights (RM’000)
Balance Sheet Highlights (RM’000) 31/12/10 31/12/09 Changes Investment Properties 1,178,682 884,962 + 293,720 Other Assets 30,215 22,783 + 7,432 TOTAL ASSETS 1,208,897 907,745 + 301,152 Borrowings 416,609 308,932 + 107,677 Other Payables 37,058 33,163 + 3,895 TOTAL LIABILITIES 453,667 342,095 + 111,
Slide 19: Total Assets & Unitholders’ Funds
Total Assets & Unitholders’ Funds 1,400.0 Total Asset & Unitholders' Funds 1,208.9 1,200.0 1,000.0 952.6 907.7 800.0 732.9 755.2 726.4 RM mil 658.2 581.8 565.2 600.0 550.0 447.9 450.3 402.3 411.8 416.8 423.2 400.0 339.6 334.7 277.9 286.5 294.1 294.2 200.0 - 31-Dec-05 30-Jun-06 31-Dec-06 30-Jun-07 31
Slide 20: Borrowings
Borrowings 2006 2007 2008 2009 2010 Total Borrowings (RM’000) 88,089 209,816 230,456 308,932 416,609 Total Assets (RM’000) 411,781 581,857 726,371 907,745 1,208,897 Gearings 21.39% 36.06% 31.73% 34.03% 34.46% Effective Interest Rate 4.38% 4.39% 4.28% 4.11% 4.48% Percentage of short term 100% 100% 10
Slide 21: Summary of Fair Value movement in 4Q 2010
Summary of Fair Value movement in 4Q 2010 Book Value (in RM’000) before Revaluation Surplus to be Name of Properties Revaluation Amount incorporated 1 Bukit Raja Distribution Centre 80,200 80,600 400 2 Tesco Bukit Indah 76,750 85,000 8,250 3 Axis PDI Centre 86,146 92,000 5,854 4 Axis Technology Cent
Slide 22: Gearing Levels
Gearing Levels 40.0% Placements Undertaken 36.1% 36.0% 35.4% 34.5% 35.0% 33.0% 33.1% 34.0% 31.2% 31.8% 31.7% 31.3% 30.0% 29.1% 26.8% 27.3% 25.0% 25.0% 23.7% 23.5% 22.4% 21.4% 20.0% 15.0% 14.0% 11.8% 10.8% 10.0% 5.0% 0.0% 22
Slide 23: Fair Valuation Gain on Investment Properties
Fair Valuation Gain on Investment Properties 120,000 Properties Appreciation Value as at 31 December 2010 100,000 80,000 RM'000 60,000 40,000 20,000 - Fair Value Adjustment Acquisition Cost + Enhancement 23
Slide 24: 2010 Completed Acquisitions
2010 Completed Acquisitions
Slide 25: 2010 Completed Acquisitions
2010 Completed Acquisitions IDS, Seberang Prai Tesco, Johor Land Area : 2.677 hectares Land Area : 9.69 acres (422,370 sq ft) Built Up : 147,985 sq ft Gross Built Up : 308,128 sq ft Land Tenure : Freehold Land Tenure : Freehold Tenant : IDS Logistics Services (M) Sdn Bhd Occupancy : 100% Occupancy :
Slide 26: 2010 Completed Acquisitions
2010 Completed Acquisitions Axis PDI Axis Tech Center Land Area : 4.13 acres (179,897 sq ft) Land Area : 48.29 acres (2,103,395 sq ft) Gross Built Up : 214,868 sq ft Gross Built Up : 51,504 sq ft Land Tenure : leasehold land with 57 yrs Land Tenure : leasehold land with 81 yrs expiring January 2067
Slide 27: 2010 Acquisitions Pending Completion
2010 Acquisitions Pending Completion
Slide 28: 2010 Acquisitions Pending Completion
2010 Acquisitions Pending Completion D8, PTP Axis Eureka Land Area : 6.12 acres (266,587 sq ft) Land Area : 2.06 acres (89,760 sq ft) Gross Built Up : 187,000 sq ft Gross Built Up : 218,662 sq ft Land Tenure : leasehold land with 47 yrs Land Tenure : Freehold sub-lease expiring March 2055 Occupancy
Slide 29: Impact to Assets Under Management
Impact to Assets Under Management Note * : assume includes acquisition of D8, PTP and Axis 29 Eureka and disposal of Axis North Port LC1
Slide 30: Potential Pipelines
¥ Potential Pipelines ~
Slide 31: Potential Pipeline – Private Equity
Potential Pipeline – Private Equity Axis Technology Center 2 Site Area = 2.84 acres (123,710 sq ft) Gross Built Up Area = 121,800 sq ft Land Tenure = 99 yrs expiring May 2067 6-storey office block = 66,000 sqft Single storey warehouse = 55,800 sqft Car Parks = 130 lots Warehouse is currently 100% oc
Slide 32: Potential 3rd Party Acquisitions
Potential 3rd Party Acquisitions The Manager is currently assessing for the following assets as potential acquisition targets : 1. 1 logistics warehouse in Johor with a long lease arrangement and step ups. 2. 1 warehouse in Pasir Gudang Johor 3. 1 warehousing/logistic and manufacturing facility with
Slide 33: Our First Disposal
~/7 Our First Disposal /a P
Slide 34: Axis North Port Logistic Center
Axis North Port Logistic Center Proposed Disposal Price = RM14,500,000 Estimated net gain on disposal = RM803,000 Estimated RPGT = RM41,000 Estimated net gain available for distribution = RM762,000 34
Slide 35: Axis North Port Logistic Center – Rationale
Axis North Port Logistic Center Rationale In less than 5 years of ownership of the property by Axis-REIT; the Manager believes it has optimized the potential of Axis North Port LC 1. The Manager also feels that there is a limited upside to future rental growth and therefore this is an opportune time
Slide 36: Capital Raising
we Capital Raising
Slide 37: Capital Raising
Capital Raising 2.60 Premium of 17.91% 2.40 2.37 2.20 2.12 2.16 2.00 2.00 2.02 2.01 1.93 1.80 1.85 1.84 1.84 1.86 1.75 1.75 1.76 1.78 1.79 1.79 1.70 1.68 1.74 1.60 1.63 1.65 1.65 1.62 1.65 1.50 1.40 1.31 1.20 1.12 1.00 NAV Market price 37
Slide 38: Capital Raising – Placement Exercise
Capital Raising – Placement Exercise Third successfully placement since IPO. Issued another 68,819,800 units via private placement and new units were listed on 15 September 2010. Total units issued via placement post IPO – 170,000,000 units The private placement received strong response from the exi
Slide 39: MRMA Malaysian REIT Managers Association
MRMA Malaysian REIT Managers Association
Slide 40: MRMA sponsored Investors Outreach Program
MRMA sponsored Investors Outreach Program The MRMA commenced organizing the Retail Road show in 2010 since it was formed. In total 3 roadshows were conducted – Melaka, Kuching and Johor. The first two were done in collaboration with with AmFirst REIT, AmanahRaya REIT, Regroup Associates and Maybank
Slide 41: Malaysian REIT Managers Association
Malaysian REIT Managers Association The MRMA held its AGM on the 22nd July 2010 and duly elected its Board of Directors and Executive Board for 2010- 2011. The Association now has 11 REIT Managers as members and form a strong lobby group for initiating change in the industry Two committees have been
Slide 42: Investor Relations
vs Investor Relations ~
Slide 43: Improving Unit Price & Unitholders
Improving Unit Price & Unitholders 2.40 2.37 2.35 Dec’10 2.33 2,420 2.30 2.25 Dec’09 2.22 2,109 2.20 2.15 2.16 Dec’08 2.10 2.12 1,652 2.09 2.05 Dec’07 2.00 2.032.02 1,166 2.002.01 1.95 1.961.95 1.90 Dec’06 1.85 941 1.80 Jan Feb Mar Apr May Jun Aug Sep Nov Dec Jul Oct Unit Price (RM) Unitholders (nos
Slide 44: Improving Investor Visibility and Liquidity
Improving Investor Visibility and Liquidity 2,420 unitholders represents an increase of 15% from end 2009. The largest unitholder (non-related party) is PNB with 63.3 million units or approx 17%. Followed by EPF with 39.9 million units or approx 11%. Kumpulan Wang Persaraan has 21.1 million units fo
Slide 45: Governance - APREA Best Practices Award
Governance- APREA Best Practices Award Recently won the Asia Pacific Real Estate Association (APREA) Best Practices Award 2010 (Emerging Markets Category) 45
Slide 46: Property Portfolio Performance
Property Portfolio Performance
Slide 47: Asset Performance - 2010
Asset Performance - 2010 It is all about ….. INCOME GROWTH RISK MANAGEMENT ASSET ENHANCEMENT
Slide 48: Income Growth – The Four Paths to Success
Income Growth – The Four Paths to Success 1. Acquisitions 2. Organic Growth - rental reversions 3. Increase Occupancy 4. Improve Efficiency
Slide 49: Organic Growth – Rental Reversions in 2010
Organic Growth – Rental Reversions in 2010 Properties Space Negotiated Sq Ft % Movement Menara Axis 55,970 + 5.6% Crystal Plaza 169,146 + 8.4% Axis Business Park 40,189 + 3.2% Infinite Centre 77,753 + 7.2% Axis Plaza 32,873 No change Wisma Kemajuan 78,147 + 5.6% Kayangan Depot 76,278 No Change North
Slide 50: Increasing Occupancy Rates for 2010
Increasing Occupancy Rates for 2010 As at 31st Dec, 2009 92.27% As at 31st Dec 2010 95.73% A Comparison to the Market Selangor Office Occupancy Rates Q4. 2010 78.20% Axis Multi-tenanted Buildings * Q4. 2010 90.09%
Slide 51: Occupancy Rates - 2010
Occupancy Rates - 2010 4.27% As at 31st Dec 2010 we have only 6 of our 26 buildings that carry any vacancy. This is only 4.27% of NLA 95.73%
Slide 52: Occupancy Rates - 2010
Occupancy Rates - 2010 Occupancy rates of the 6 buildings as of 31 December 2010 are: Kayangan Depot 60.52 Wisma Kemajuan 82.18 Infinite Centre 93.42 Axis Plaza 76.70 Axis Business Park 95.05 Quattro West 72.59 - 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 Occupancy %
Slide 53: Increasing Efficiency of Building Operations - 2010
Increasing Efficiency of Building Operations - 2010 Income less operational building costs produce our Net Operating Income [NOI] for the assets. Measures to improve operational efficiency include: Life cycle Management of Assets Vendor / contractor management and benchmarking Improved building oper
Slide 54: Top Ten Tenants - Strong Rental Covenants
Top Ten Tenants -Strong Rental Covenants 1. Konsortium Logistik Bhd 2. IDS Logistics Services (M) Sdn Bhd 3. Fuji Xerox Asia Pacific 4. Tenaga Nasional Bhd 5. BMW Asia Technology Centre Sdn Bhd 6. Kompakar CRC Sdn Bhd 7. Scope International (M) Sdn Bhd 8. GCH Retail (M) Sdn Bhd 9. Cycle & Carriage B
Slide 55: Diversified Asset Base Mitigates Risk
Diversified Asset Base Mitigates Risk Single vs Multi Tenanted Portfolio Diversification by Type and Buildings NLA Multiple tenants Ofiice Office/Industrial Warehouse Retail Warehouse Logistic Single tenants Light Industrial 3% 44% 11% 56% 40% 37% 9%
Slide 56: Diversified Asset Base Mitigates Risk
Diversified Asset Base Mitigates Risk Portfolio Diversification by Geographical & NLA Petaling Jaya Shah Alam Klang Johor Kedah Prai 3% 4% 19% 41% 13% 20%
Slide 57: Lease Expiry Profile
Lease Expiry Profile Year % of % of Rental Year % of % of Rental Year % of % of Rental Income/ Income/ Income/ Property 2010 Total NLA month 2011 Total NLA month 2012 Total NLA month Menara Axis 58,002 1.35 2.44 15,931 0.37 0.99 - 0.03 Crystal Plaza 169,146 3.94 6.46 9,118 0.21 0.40 12,433 0.29 0.55
Slide 58: Asset Enhancement
¥ Asset Enhancement ~
Slide 59: Asset Enhancement
Asset Enhancement The aim of asset enhancement is to assess the REIT’s portfolio from a “property player’s” perspective. We employ our experience as a group to enhance and reposition these assets to increase their performance.
Slide 60: Asset Enhancement: Quattro West
Asset Enhancement In 2010 it was Quattro West
Slide 61: Asset Enhancement – Award Winning Designs
Asset Enhancement – Award Winning Designs Quattro West won the Bloomberg, Asia Pacific Commercial Property Awards – “Best Redevelopment Malaysia” 2010.
Slide 62: Quattro West: The Results
Asset Enhancement Quattro West : The Results Occupancy 72.6% (will be 80.3% in 1Q) Rental increases up by 25% Valuation of the property 2009 RM38 mil 2010 RM52 mil Up by 37%
Slide 63: Enhancements Underway - 2011
Asset Enhancement Enhancement s Underway - 2011 Menara Axis Expanding NLA. New penthouse Level - 7,000 sq.ft. Projecting additional income Crystal Plaza Upgrading façade & common areas. Strategy is the retention of tenants. Fuji Xerox New lifts, facelift for common areas. New lease signed. Infinite
Slide 64: Menara Axis – A New Penthouse Level Launched
Menara Axis – A New Penthouse Level Launched Previously unused area comprising 7,000sf, will be converted to grade A office space with high grade toilets and fittings will come on stream 2Q 2011
Slide 65: Crystal Plaza Refurbishment
Crystal Plaza Refurbishment New drop off area New toilets and lobbies Improvements to M&E systems New restaurants at ground floor
Slide 66: Crystal Plaza Refurbishment
Crystal Plaza Refurbishment
Slide 67: Other Major Asset Enhancements Planned for 2011
Asset Enhancement Other Major Asset Enhancements Planned for 2011 Kayangan Depot Reposition the building to face the Section 15, Shah Alam roundabout. Improve building cladding systems and power upgrade. Cycle & Carriage complex. Refurbish existing buildings, enhanced exteriors, add new space and re
Slide 68: Kayangan Depot
Kayangan Depot The building has excellent frontage onto the Section 15 round-about in Shah Alam. Our refurbishment will focus on enhancing the three levels of space at the ‘Front’ and reposition it to orient it towards the round-about. Repositioning asset to realize its potential as a showroom, offi
Slide 69: Kayangan Depot
Kayangan Depot New entrance and piazza level at front of the building. Improved building cladding / features.
Slide 70: Cycle & Carriage – existing site
Cycle & Carriage – existing site A A. Vacant land – we can build green field building. B. Large building B with car ramps. Ideal for car 3S centre
Slide 71: Cycle & Carriage
Cycle & Carriage Enhance existing buildings.
Slide 72: Cycle & Carriage
Cycle & Carriage Add an additional Car Showroom or service centre on the vacant land. We are currently in discussion with two potential tenants.
Slide 73: Thank You
Thank You 73
Axis Real Estate Investment Trust — Q4 2010 Earnings Presentation on 6ix