Axis Real Estate Investment Trust · MYX:AXREIT
Axis Real Estate Investment Trust — Q3 2013 Earnings Presentation
79 slides from Axis Real Estate Investment Trust's earnings presentation, Oct 21, 2013
Slide 1: Axis-REIT Results 3Q 2013
Axis-REIT Results 3Q 2013 21st October 2013.
Slide 2: Highlights for 3Q
AtalS REAL ESTATE INVESTMENT TRUST
Slide 3: A Quick Snapshot YTD 3Q 2013
A Quick Snapshot YTD 3Q 2013 Total Net Income (RM' 000) 81,913 Income Available for Distribution ("Realised") (RM' 000) 63,415 Earnings per Unit ("EPU") ("Realised") (Sen) 13.78 Income Distribution Declared (RM'000) 63,225 Distribution per Unit* ("DPU") (Sen) 13.80 Number of Investment Properties 31
Slide 4: Highlights YTD 3Q 2013
Highlights YTD 3Q 2013 Net Property Income increased by 8.2% for YTD 3Q 2013. A record DPU of 13.8 sen per unit declared for YTD 3Q 2013. A total of RM17.3 million revaluation gain has been recorded for YTD 3Q 2013; with RM14.6 million recognised in 3Q 2013. Unitholders’ Funds to reach RM1 b
Slide 5: Return Comparatives
Return Comparatives *Total Return = (Movement in share price for YTD 3Q 2013 + Annualized Dividend)/(FY2012 Closing Share Price) 5
Slide 6: Our Strategy
AtalS REAL ESTATE INVESTMENT TRUST
Slide 7: Our Strategy
Our Strategy Targeting Growth in our asset class To build on our SUKUK presence in the market. To continue to improve on our capital management. Continue to enhance existing assets to drive value and income Trading of assets to reward our Unitholders Best Practices & Corporate Governance
Slide 8: Axis-REIT Financials for September 2013
Axis- REIT Financials for 30 September 2013
Slide 9: Financial Results – Income Statement 3Q 2013 vs 3Q 2012
Financial Results – Income Statement 3Q 2013 vs 3Q 2012 3Q 2013 3Q 2012 Changes / (RM ‘000) (RM’000) Movement No. of Properties 31 30 +1 Property Income 35,192 32,695 + 7.64% Property Expenses (5,073) (4,988) + 1.70% Net Property Income 30,119 27,707 + 8.70% Interest Income 115 102 Non-Property Expe
Slide 10: Financial Results – Income Statement YTD 3Q 2013 vs YTD 3Q 2012
Financial Results – Income Statement YTD 3Q 2013 vs YTD 3Q 2012 YTD 3Q 2013 YTD 3Q 2012 Changes / (RM ‘000) (RM’000) Movement No. of Properties 31 30 +1 Property Income - Note 1 105,307 97,767 + 7.71% Property Expenses - Note 2 (15,425) (14,732) + 4.70% Net Property Income 89,882 83,035 + 8.25% Inte
Slide 11: Notes to Financial Results – Property Income and Expenses
Notes to Financial Results – Income Statement Note 1 – Property Income Increase in property income as compared to last year is due to the acquisition of new investment properties, i.e. Wisma Academy and The Annexe and positive revision of rental rate. Note 2 – Property Expenses Increase in property
Slide 12: Notes to Financial Results – Non-Property Expenses, Islamic Financing Cost
Notes to Financial Results – Income Statement Note 3 – Non-Property Expenses The increase in non-property expenses is due to the increase in the Net Asset Value (“NAV”) of the Fund. The Management Expenses Ratio (“MER”) up to 3rd quarter of the financial year is at 1.25% of NAV. Note 4 – Islamic fin
Slide 13: 4th Interim 2013 Income Distribution: 4.70 sen DPU
4th Interim 2013 Income Distribution 4.70 sen DPU This is based on a 99% payout ratio on Income Available for Distribution (after adding back non-cash items as allowed under the Trust Deed Important dates: Ex-date: 1 November 2013 Entitlement date: 6 November 2013 Payment date: 13 December 2013 10
Slide 14: 4th Implementation of IDRP
AtalS REAL ESTATE INVESTMENT TRUST
Slide 15: Implementation of the Income Distribution Reinvestment Plan (IDRP)
Implementation of the Income Distribution Reinvestment Plan (IDRP) 4th round of IDRP implementation for the Fund. Electable portion : 2.20 sen representing 46.8% of the 3rd interim 2013 income distribution of 4.70 sen per unit 5 days VWAMP : RM3.3972 per unit Discount rate : 5.8% Exercise price : :
Slide 16: Total return to Unitholders on the last DRPs
Total return to Unitholders on the last 3 DRP’s 63% 36% 3% in 2.5 months 10
Slide 17: Earnings by Quarter
Notes to Financial Results – Income Statement Adjusted Income Before Taxation/ Income Available For Distribution: 30.00 Earnings by Quarter (1Q 2013, 2Q 2013, 3Q 2013 vs Previous 4 Quarters in FY2012) 25.69 25.00 Gain on disposal RM5.9 21.21 21.32 20.54 19.86 19.81 mil 20.00 19.21 15.00 RM(million)
Slide 18: Balance Sheet Highlights (RM'000)
Balance Sheet Highlights (RM’000) 30/9/13 31/12/12 Changes Investment Properties 1,559,295 1,519,519 + 39,776 Fixed Assets 1,483 521 +962 Other Assets 24,642 69,368 - 44,726 TOTAL ASSETS 1,585,420 1,589,408 - 3,988 Borrowings 523,812 549,285 - 25,473 Other Payables 48,593 50,418 +1,825 TOTAL LIABILI
Slide 19: Capital Return and Dividend Return
Capital Return and Dividend Return 320% 275% 280% 240% 102% 200% 160% 142% 148% 43% 120% 53% 101% 173% 28% 80% 53% 105% 40% 89% 14% 73% 39% 0% IPO @ RM1.25 Placement '08 @ RM1.80 Placement '09 @ RM1.66 Placement '10 @ RM1.97 Placement '11 @ RM2.45 Capital Return Distribution Return 19
Slide 20: Summary of EPU (Realized) and DPU
Summary of EPU (Realized) and DPU Increasing DPU y-o-y since listing 20
Slide 21: Gross Yield Of Investment Properties
Gross Yield Of Investment Properties 18.00% Average gross yield : 10.64% 16.00% 14.00% 12.00% 10.64% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 21
Slide 22: Net Yield Of Investment Properties/Cost
Net Yield Of Investment Properties/ Cost Average net yield for the portfolio is 9.09% 16% 14% 12% 10% 8% 6% 4% 2% 0%
Slide 23: Borrowings
Borrowings YTD 3Q 2006 2007 2008 2009 2010 2011 2012 2013 Total Borrowings 88,089 209,816 230,456 308,932 416,609 311,338 548,920 523,812 (RM’000) Total Assets (RM’000) 411,781 581,857 726,371 907,745 1,208,897 1,298,431 1,589,408 1,585,420 Gearing 21.39% 36.06% 31.73% 34.03% 34.46% 23.98% 34.54% 33
Slide 24: Gearing Levels and Placements Undertaken
Gearing 45.0% Levels Placements Undertaken 40.0% 38.2% 37.5% 36.1% 36.0% 36.0% 35.4% 34.5% 34.2%34.5%33.9% 33.0% 35.0% 34.0% 33.1% 32.6% 33.0% 31.2% 31.8% 31.7% 31.3% 30.0% 30.0% 29.1% 28.8% 26.8% 27.3% 25.0% 25.0% 23.7% 23.5% 24.0% 22.4% 21.4% 20.0% 15.0% 14.0% 11.8% 10.8% 10.0% 5.0% 0.0% 24
Slide 25: Management Expense Ratio (MER)
Management Expense Ratio (“MER”) MER= Total administrative expenses incl. Manager and Trustee’s fees 1,700 10.00 Average net asset value of the Fund. 1,589 1,585 1,600 1,537 1,555 1,500 1,400 1,298 1,267 Total Assets (RM'000,000) 1,300 1,209 1,200 % of NAV 1,100 1,000 953 908 900 800 733 726 700 658
Slide 26: Total Assets and Unitholders' Funds
Total Assets and Unitholders’ Funds 1,800.0 Total Asset & Unitholders' Funds 1,589.4 1,585.4 1,600.0 1,411.1 1,434.8 1,400.0 1,281.6 1,208.9 1,200.0 1,013.0 989.7 1,000.0 952.6 959.3 959.0 907.7 RM mil 800.0 732.9 755.2 751.2 726.4 658.2 581.8 565.2 600.0 550.0 423.2 447.9 450.3 402.3 411.8 416.8 40
Slide 27: Revaluation on Properties
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Slide 28: Asset Enhancement & Appreciation of Values
Asset Enhancement & Appreciation of Values • As at 30 September 2013, 19 properties have undergone a full revaluation, as it is mandatory for the management to have a full valuation done every 3 years for each investment property. • The Portfolio has recorded a favorable gain in fair value of RM240.
Slide 29: Revaluation surplus recorded to date
Revaluation surplus recorded to date (on individual property) 45 Revaluation surplus to date in RM’ million (on individual property) 40 35 RM'mil 30 25 20 15 10 5 0 29
Slide 30: Percentage of revaluation surplus over investment cost
Percentage of revaluation surplus over investment cost 70% % of Revaluation on Properties= Revaluation Surplus to date Investment Cost 65% 60% 58% The increase in value demonstrated the ability of the 50% Manager to create value to the assets 44% 40% 41% 30% 28% 28% 29% 26% 24% 24% 24% 20% 22% 17% 1
Slide 31: Recent revaluation on properties in 3rd Quarter 2013
Recent revaluation on properties in 3rd Quarter 2013 Name of Property Net Book Value as Open Market Surplus/(deficit) to be at 30 September Value incorporated into 2013 (RM’000) Axis-REIT (RM’000) (RM’000) Axis Business Park 109,479 112,000 2,521 Axis Plaza 31,019 32,000 981 Crystal Plaza 103,580 10
Slide 32: Real Estate Report
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Slide 33: Key Metrics
Key Metrics Portfolio Size: As at 30th Sept 2013 the Portfolio have 31 assets comprising 5,464,124 sq. ft. and 132 tenants Occupancy: The Portfolio maintained occupancy of 94.70% as at 3Q 2013. Gross Income Our Gross Income was RM105,307,673 as at 3Q 2013 Property Expenses Our Operation Property Exp
Slide 34: Space Under Management (Sq Ft)
Space Under Management (Sq Ft) 6,000,000 Space Under Management (sq ft) 5,463,599 5,464,124 5,000,000 4,449,580 4,288,054 4,000,000 3,679,796 ( sq ft) 3,000,000 2,858,121 2,175,522 2,000,000 1,656,943 1,186,052 1,000,000 - 2005 2006 2007 2008 2009 2010 2011 2012 3Q 2013
Slide 35: Income Growth – Rental Reversions
Income Growth – Rental Reversions As at Q3 2013 Space Renegotiated Properties (Sq. Ft.) % Rent Movement MENARA AXIS 56,660 +9.12% CRYSTAL PLAZA 107,925 +10.46% AXIS BUSINESS PARK 72,847 +10.41% INFINITE CENTRE 47,656 +9.26% AXIS PLAZA 104,843 +8.12% WISMA KEMAJUAN 72,833 +6.47% QUATTRO WEST 33,300 +
Slide 36: Occupancy Rates – 30th Sept 2013
Occupancy Rates – 30th Sept 2013 As at 30th Sept 2013 Axis REIT has only 9 out of 31 properties that carry vacancy. 22 properties enjoy 100% full occupancy 5.30% Vacant Occupancy As at 30th Jun, 2013 95.64% As at 30th Sept, 2013 94.70% The decline was due to the fact that Axis Business Campus was co
Slide 37: Occupancy Rates – Sept 2013
Occupancy Rates – 30 Sept 2013 120.00 100.00 94.70% 80.00 60.00 40.00 20.00 -
Slide 38: Risk Management- Diversification by Geography and NLA
Risk Management- Keeping a Diverse Portfolio Portfolio Diversification by Geographical and NLA Nilai 5.34% 2.15% Cyberjaya Penang 13.70% Kedah 2.53% Johor 18.31% Klang 7.78% Shah Alam 13.19% 37.01% Petaling Jaya 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%
Slide 39: Risk Management- Diversification by Type and NLA
Risk Management- Keeping a Diverse Portfolio Portfolio Diversification by Type and NLA Light Industrial 7.84% Warehouse Logistic 43.38% Warehouse Retail 6.80% Office/Industrial 30.82% 11.16% Office 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%
Slide 40: Risk Management- Diversification by Tenant Type
Risk Management- Keeping a Diverse Portfolio Portfolio Diversification by Tenant Type 41.57% 58.43% Single Tenant Multi Tenants
Slide 41: Occupancy Rates of properties below 90%
Occupancy Rates Occupancy rates of properties below 90% as of 30th Sept 2013 Occupancy % Fonterra HQ 84.96 Axis Business Campus 0 Wisma Kemajuan 83.86 Axis Plaza 89.27 Note: * Vacant space Fontera HQ is built for their future expansion *Axis Business Campus (formerly Wisma Bintang) is undergoing maj
Slide 42: Risk Profile – Manageable Lease Expiry Profiles
Risk Profile – Manageable Lease Expiry Profiles Year % of % of Rental Year % of % of Rental Year % of % of Rental Property 2013 Total NLA Income/month 2014 Total NLA Income/month 2015 Total NLA Income/month Menara Axis 74,636 1.37 2.56 54,587 1.00 2.19 - - 0.03 Crystal Plaza 120,358 2.20 3.99 7,747
Slide 43: Weighted Average Lease Expiry (WALE)
Weighted Average Lease Expiry (“WALE”) The Weighted Average Lease Expiry For the Portfolio is: Q3 2013 Q2 2013 By NLA 4.01 4.34 By Rental 3.97 4.02
Slide 44: Portfolio Efficiency (PE)
Portfolio Efficiency (“PE”) The Efficiency of the Operating Cost for the Portfolio is: 3Q 2013 2Q 2013 By % 14.65 14.69
Slide 45: Risk Management - Top Ten Tenants
Risk Management -Top Ten Tenants -Strong Rental Covenants 1. Konsortium Logistik Bhd 2. LF Logistics Services (M) Sdn Bhd 3. Schenker Logistics (M) Sdn Bhd 4. Tenaga Nasional Berhad 5. Tesco Stores (M) Sdn Bhd 6. Fuji Xerox Asia Pacific Pte Ltd 7. DHL Properties (M) Sdn Bhd 8. Strateq Data Center Sd
Slide 46: Enhancements: The Value Add Strategy
Enhancements: The Value Add Strategy
Slide 47: 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 Revenue and Value - the key performance drivers of a REIT.
Slide 48: Infinite Centre Enhancement
Infinite Centre Enhancement The New Infinite Centre Before Enhancement
Slide 49: Axis Business Campus Proposed Enhancement
Axis Business Campus Proposed Enhancement Before Enhancement
Slide 50: Axis Business Campus Proposed Enhancement – Perspective
Axis Business Campus Proposed Enhancement Perspective: Upon Completion
Slide 51: Axis Business Campus Proposed Enhancement – Perspective
Axis Business Campus Proposed Enhancement Perspective: Upon Completion
Slide 52: Axis Business Campus Proposed Enhancement – Project aim
Axis Business Campus Proposed Enhancement Project aim: Aggressive Aim – This is a “Product Re-positioning” play Rebranding the building as “Axis Business Campus” We are enhancing to unlock the potential value from 5 acre development of prime PJ land. We anticipate a significant increase in rental
Slide 53: Axis Business Campus (West Block) – Refurbishment nearing completion
Axis Business Campus Proposed Enhancement Axis Business Campus (West Block) – Refurbishment nearing completion
Slide 54: Axis Business Campus (South Block) – Refurbishment nearing completion
Axis Business Campus Proposed Enhancement Axis Business Campus (South Block) – Refurbishment nearing completion
Slide 55: Axis Business Campus (West & South Block) – Refurbishment In Progress
Axis Business Campus Proposed Enhancement Axis Business Campus (West & South Block) – Refurbishment In Progress
Slide 56: Axis Business Campus (West Block) – Refurbishment in Progress
Axis Business Campus Proposed Enhancement Axis Business Campus (West Block)– Refurbishment in Progress Lift Lobby Toilet Entrance Ramp & Landscaping Typical Office
Slide 57: Axis Business Park Block C – Current Condition
Proposed Enhancement Axis Business Park Block C Axis Business Park Block C – Current Condition
Slide 58: Axis Business Park Block C – Enhancement Concept
Proposed Enhancement Axis Business Park Block C Enhancement Concept
Slide 59: Axis Business Park Block C – Main Lobby Concept
Proposed Enhancement Axis Business Park Block C Enhancement Concept Main Lobby
Slide 60: Proposed Enhancement Projects 2013/2014 – Axis Business Park Block C
Proposed Enhancement Projects in 2013/ 2014 AXIS BUSINESS PARK – BLOCK C Project Deliverables: 15 year old building merits an enhancement of the building façade, common toilets, lift lobbies, loading bay, M & E systems, traffic routing re-design to convert building into multi-tenant building Addit
Slide 61: Wisma Academy Parcel & The Annex – Current Condition
Proposed Enhancement Projects in 2013 / 2014 Wisma Academy Parcel & The Annex – Current Condition
Slide 62: Wisma Academy Proposed Enhancement Concept
Proposed Enhancement Projects in 2013 / 2014 Wisma Academy Proposed Enhancement Concept
Slide 63: Wisma Academy Parcel Project Deliverables
Proposed Enhancement Projects in 2013 / 2014 WISMA ACADEMY PARCEL Project Deliverables: Refurbishment of entire building including all common internal areas, external commons areas, façade, lifts, M & E systems Project Aims: Asset repositioning to achieve higher yields Tenants retention Asset
Slide 64: The Annex Proposed Concept
Proposed Enhancement Projects in 2013 / 2014 The Annex Proposed Concept
Slide 65: The Annex Project Deliverables
Proposed Enhancement Projects in 2013 / 2014 THE ANNEX Project Deliverables: Demolition and construction of entirely new building comprising of office + warehouse including adding new carparks Project Aims: Aggressive Aim – this is a “product re-positioning” Asset valuation enhancement – we are
Slide 66: Investor Relations Report
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Slide 67: Unit Price Performance
Unit Price Performance Month End Closing Prices 4.50 4.00 3.98 3.72 3.67 3.50 3.49 3.41 3.40 3.40 3.08 3.27 3.31 3.00 3.00 3.12 3.13 3.11 2.50 2.00 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept 9-Oct 2012 2013 • Closing price peaked on 21st May 2013 at RM3.98. • Prices have eased to RM3.40 at
Slide 68: KLCI vs AXREIT
KLCI vs AXREIT 1 Jan 2013 – 9 Oct 2013 Price & Volume Statistics 1 Jan 2013 = 1 Current Price (9th Oct) : RM3.40 1.30 Average Monthly 1.25 Volume in the last 12 : 7,518,585 1.20 months 1.15 Highest Monthly Volume in the last 12 : 12,959,300 1.10 months @Jun 2013 1.05 Lowest Monthly Volume in the las
Slide 69: Top 10 Unitholders
Top 10 Unitholders 1 EMPLOYEES PROVIDENT FUND BOARD 2 SKIM AMANAH SAHAM BUMIPUTERA 3 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) 4 TEW PENG HWEE @ TEOH PENG HWEE 5 ALEX LEE LAO 6 AIA 7 AMANAH SAHAM DIDIK 8 PUBLIC SMALLCAP FUND 9 AMANAH SAHAM WAWASAN 2020 10 EXEMPT AN FOR EASTSPRING INVESTMENTS BERHAD 69
Slide 70: ROD analysis
ROD analysis Top Unitholders’percentage holdings 1. Top 5 CDS accounts hold 33.6% of total units 2. Top 10 Unitholders hold 48.7% of total units 3. > 1 million Unitholders’total shareholding = 85.9% Top Increases in Unitholdings % of Total % Δ in Δ frm last UNITHOLDERS > 1MILLION UNITS @31 Dec '12 @
Slide 71: Improving Investor Visibility and Liquidity
Improving Investor Visibility and Liquidity 3,500 2,948 2,920 3,000 2,850 2,854 2,702 2,745 2,597 2,420 2,500 2,230 2,080 1,959 2,000 1,652 1,500 1,000 500 - @ 31 Dec'08 @30 Jun '09 @ 31 Dec'09 @30 Jun'10 @31 Dec'10 @30 Jun'11 @ 31 Dec '11 @29 Jun '12 @31 Dec '12 @ Mar '13 @ Jun '13 @ Sep '13 Tota
Slide 72: Volume Performance
Volume Performance Volume decreased to 23.7 million units traded in Q3 compared to 29.9 million units traded in Q2. This is a 20.7% decrease quarter-to-quarter. This quarter’s volume is 129% higher than the same quarter of last year (Q3 2012’s volume = 10.36 mln units). 72
Slide 73: Investor Meetings & Speaking Arrangements
Investor Meetings & Speaking Arrangements Date Investor Meetings and Conferences 09-Jul The Penang Paradigm Seminar 19-Jul The Edge BRC Project 30-Jul Creador Private Equity Fund Company Visit 01-Aug Creador Private Equity Fund iPark Visit 01-Aug Mondrian Emerging Markets Equity Fund 05-Aug Hwang DB
Slide 74: New Website
New Website Launch Date on Merdeka Day 31st August, 2013 74
Slide 75: New Website – Mobile Help Section
New Website Mobile Help Section Due to the high cost of creating a full Axis-REIT mobile application, the manager made a decision to put this feature off in order to save costs for the fund. However, the manager has negotiated with the web developer to create a menu logo at zero cost to the fund
Slide 76: New Website
New Website The new website is fully adjustable to the varying screen sizes of mobile devices 76
Slide 77: Business Development Report – Acquisitions Under Consideration
Business Development Report- Acquisitions Under Consideration
Slide 78: Summary of Target Acquisitions for 2013
Summary of Target Acquisitions for 2013 An Industrial Building in Johor An Industrial facility in Prai Penang. 2 Logistics Warehouses in Shah Alam An Office Industrial building in Petaling Jaya Total value of assets currently under negotiation is RM 317 Million 78
Slide 79: Thank You
AtalS REAL ESTATE INVESTMENT TRUST
Axis Real Estate Investment Trust — Q3 2013 Earnings Presentation on 6ix