Link Real Estate Investment Trust · HKEX:823
Link Real Estate Investment Trust — Investor Presentation (February 2018)
43 slides from Link Real Estate Investment Trust's investor presentation, February 2018
Slide 1: Link Real Estate Investment Trust Corporate Presentation
Link Real Estate Investment Trust Corporate Presentation February 2018
Slide 2: Completion of Strategic Review and Properties Disposal
Completion of Strategic Review and Properties Disposal
Slide 3: Completion of Strategic Review and Property Disposal
Completion of Strategic Review and Property Disposal Strategic Review Engaged HSBC, UBS and Cushman in July 2017 as advisors to assess strategic options for Link Studied various growth options by referencing to leading international REITs and property investment peers Concluded that capital re
Slide 4: Summary of Disposals
Summary of Disposals Total transacted No. of disposed Premium to Holding period price properties valuation IRR(5) (HK$M) 2014/2015 9 2,956 33%(1) 20% 2015/2016 5 1,716 30%(2) 21% 2016/2017 14 7,288 24%(3) 19% 2017/2018 17 23,000(6) 52%(4) 23% Total 45 34,960 Notes: (1) Compared to valuations as at 3
Slide 5: Capital Recycling through Acquisitions and Disposals to Enhance Portfolio Quality
Capital Recycling through Acquisitions and Disposals to Enhance Portfolio Quality Acquisition Disposal Valuation (1) (No. of properties) (No. of properties) (Since March 2011) +8 – 45 + 196% FY11/12 FY14/15 FY15/16 FY16/17 FY17/18 Total Acquisition 2 properties 2 properties 2 properties (2) 1 proper
Slide 6: Review of Portfolio Valuation by JLL
Review of Portfolio Valuation by JLL In view of the premium achieved in the recent disposal of 17 properties, Link’s valuer JLL carried out a review of the portfolio valuation as at 31 December 2017 5.1% 3.7% Weighted average 4.0% Valuation capitalisation rate (1) (1) (1) (1) Dec-17 Sep-17 Dec-17 Se
Slide 7: About Link REIT
sae LINK About Link REIT
Slide 8: About Link REIT
About Link REIT Link is Our portfolio (1) #1 Includes retail facilities, • REIT listed in Hong Kong car parks and offices • REIT in Asia by market capitalisation Hong Kong • Only internally-managed REIT in Asia 138 61,000 91.2% Properties Car park spaces of portfolio ~ 9M sq ft ~ 0.9M sq ft by value
Slide 9: Robust Financial Performance
Robust Financial Performance 5-Year (2) 5-Year 95.5%(3) 97.9%(3) (2) CAGR CAGR (2) +9.3% Revenue +10.8% NPI (HK$’M) (HK$’M) Occupancy in Occupancy in Hong Kong Mainland China 8,740 4,949 6,513 3,767 59 Enhancement 9,255 6,994 6,506 7,155 7,723 4,616 5,202 5,669 projects 29.6% completed to Reduction
Slide 10: Diverse Funding Base
Diverse Funding Base Total committed facilities % HK$’B Bank loans 51.8 17.5 2.50% Medium Term Notes (MTN) 48.2 16.3 Effective interest rate Total debt (all unsecured) 100.0 33.8 Undrawn facilities - 4.0 (3) 15.1% Total committed facilities - 37.8 Pro-forma Extending maturity with longer tenor debt
Slide 11: Active Financing to Strengthen Capital Base
Active Financing to Strengthen Capital Base Maintained fixed rate debt portion at ~60% Year 8 63% 80% 59% 61% 59% 52% 7 60% 59% 6 40% Fixed rate debt/ 7.2 6.9 5 6.2 6.3 5.8 20% total debt 4 0% Mar-14 Mar-15 Mar-16 Mar-17 Sep-17 Average life of fixed rate debt % of fixed rate debt Key credit metrics
Slide 12: Link's Value Creation Model
Link’s Value Creation Model Our communities Our investors Our business partners Our employees Our tenants Be a world class real estate investor and manager, serving and improving the lives of those around us 1. Building a productive and quality portfolio 2. Maintaining a prudent and flexible capital
Slide 13: One of the Top Global Retail-focused REITs
One of the Top Global Retail-focused REITs Link is the largest REIT in Asia US$B 60.0 49.3 50.0 40.0 30.0 23.0 20.2 20.0 18.5 16.0 14.2 14.0 10.0 8.3 8.1 7.6 7.5 6.8 6.3 6.0 5.4 5.0 3.9 3.6 2.1 0.0 Note: Comparison of selected major REITs in the world based on market capitalisation. Source: Bloomber
Slide 14: Hong Kong Portfolio
sae LINK Hong Kong Portfolio
Slide 15: Resilient Platform Yields Consistent Performance
Resilient Platform Yields Consistent Performance Retail rentals (2) 26.8% Reversion rate (HK$’M) 6,352 6,095 5,711 319 6,000 316 5,326 306 893 5,000 4,872 293 767 805 HK$59.0 258 695 640 Average unit rent psf 4,000 3,324 169 3,000 4,974 5,140 451 4,638 3,974 4,338 +7.4% 2,000 2,704 Retail rentals 5-
Slide 16: Car Park Performance Continues to Grow
Car Park Performance Continues to Grow Car park rentals Income per space HK$2,463 per month Car park income per Rental (HK$) (HK$M) 2,463 space per month 2,239 2,022 1,767 1,566 1,940 (2) 1,378 1,656 1,846 HK$553k 484 1,494 465 Average valuation per space 1,315 432 386 342 1,022 1,108 1,224 1,381 1,
Slide 17: Operational Updates for 3Q 2017/18
Operational Updates for 3Q 2017/18 Stable occupancy Non-discretionary trade mix 8 1 96.0% 96.1% 95.5% 64.7% 94.8% food related 94.4% 7 94.1% trades 6 Trade mix 5 by Food and monthly 2 beverage rent 4 Personal care / Medicine 3 Services Dec-17 1. Food and beverage 28.0% 2. Supermarket and foodstuff 2
Slide 18: Tenants' Performance Remains Strong in 3Q 2017/18
Tenants’ Performance Remains Strong in 3Q 2017/18 Strong tenants sales growth (1) amid a Stable rent-to-sales ratio (2) implies rent recovering retail sales environment is still within tenants’ affordable range (YoY) 11.9% 14.5% 12.9% 12.8% 11.2% 7.6% 7.0% 5.2% 4.1% 3.9% 3.8% 1.8% Food & Beverage Su
Slide 19: Efficient Asset Enhancement to Unlock Values
Efficient Asset Enhancement to Unlock Values Overview >15% 59 ~HK$800M No. of projects Estimated CAPEX Project ROI target completed since IPO per year Projects completed in 1H 2017/18 (1) T Town Tin Tsz Lung Hang Cheung Wah (formerly Chung Fu) Shopping Centre Commercial Centre Shopping Centre CAPEX:
Slide 20: Continuous Asset Enhancement Pipeline to 2021 and Beyond
Continuous Asset Enhancement Pipeline to 2021 and Beyond 14 AE projects underway 6 Total CAPEX = HK$1,097M(1) 1. Temple Mall South 2. Siu Sai Wan Plaza 3. Lok Wah HK$153M / mid 2017 HK$45M / late 2017 Commercial Centre HK$49M / late 2017 14 AE projects 4. Tsz Wan Shan Shopping 5. Tsui Ping North und
Slide 21: Park & Dine App Innovative Features to Advance Digital Experience
Park & Dine App Innovative Features to Advance Digital Experience Estimated date Partnering with 9 major e-payment New features of release service providers E-Parking March 2018 Reward scheme Year 2019/20 Linking mobile e-payment Year 2019/20 to tenants ~250,000 (1) downloads since launch Note: (1)
Slide 22: Iconic Projects to Support Business Growth
Iconic Projects to Support Business Growth 700 Nathan Road The Quayside Artist rendering Artist rendering Opening dates Target completion date End 2017 Tower 2019 soft opening Mid 2018 Certifications in Podium sustainability target opening Floor area: ~283,000 sq ft Floor area: ~0.9M sq ft Committed
Slide 23: Mainland China Portfolio
aR LINK Mainland China Portfolio
Slide 24: EC Mall in Beijing Continues to Deliver Outstanding Performance
EC Mall in Beijing Continues to Deliver Outstanding Performance Retail area: ~55,000 sqm Attractive events to boost footfall and sales Trade mix (by leased area) (1) Latest updates 20.6% Food and beverage 28.8% Fashion 96.2% 30.7% 10.5% 41.9% Services Occupancy (1) Reversion (2) 40.1% General retail
Slide 25: Link Square in Shanghai Affirms as High Quality Premium Grade A Office
Link Square in Shanghai Affirms as High Quality Premium Grade A Office Office tenant mix (by leased area) (1) Professional services 14.3% TMT 2.6% Pharmacy Industrial Goods and 15.9% 48.8% Services Retailers and 4.4% Consumer Products 14.0% Others Latest updates Office area: ~76,000 sqm 98.2% 17.2%
Slide 26: Metropolitan Plaza in Guangzhou Proven High Growth Potential
Metropolitan Plaza in Guangzhou Proven High Growth Potential Agreed Property Retail Value: RMB area = ~89,000 4,065M sqm Total Retail GFA = ~88,726 sqm Trade mix (by leased area) (1) 8.4% Food and beverage 12.8% 30.4% Fashion General retail and others 20.5% Leisure and entertainment 27.9% Supermarke
Slide 27: Strategy and Outlook
aR LINK Strategy and Outlook
Slide 28: Capture Opportunities In Recovering Economic Environment
Capture Opportunities In Recovering Economic Environment Hong Kong Strong Continuously low Moderate monthly median household income growth in GDP growth unemployment rate public housing residents +3.4% 2.9% 12% Overall Public rental housing +9.2% (4Q 2017, YoY) (4Q 2017) 8% Non-discretionary retail
Slide 29: Key Growth Drivers to Sustain DPU Growth
Key Growth Drivers to Sustain DPU Growth Our business growth drivers… …To sustain DPU growth DPU (1) Improving asset quality and DPU growth Future Property through Re-development New Asset Property Disposal Development Asset Asset Asset Core Management Enhancement Acquisition FY2006 FY2010 FY2015 FY
Slide 30: Appendix
LINK INK A ppendix
Slide 31: HK Portfolio – Revenue Analysis
Additional Data 1: HK Portfolio – Revenue Analysis Six months Six months ended ended Year ended Year ended 30 Sep 2017 30 Sep 2017 31 Mar 2017 31 Mar 2017 (1) Pro-forma Actual Pro-forma (1) Actual (HK$’M) (HK$’M) (HK$’M) (HK$’M) Retail rentals: Shops (2) 2,447 2,704 4,528 5,140 Markets / Cooked Food
Slide 32: HK Portfolio – Expense Analysis
Additional Data 2: HK Portfolio – Expense Analysis Six months Six months ended ended Year ended Year ended 30 Sep 2017 30 Sep 2017 31 Mar 2017 31 Mar 2017 Pro-forma (1) Actual Pro-forma (1) Actual (HK$’M) (HK$’M) (HK$’M) (HK$’M) Property managers’ fees, security 244 280 467 557 and cleaning Staff co
Slide 33: HK Retail Portfolio – Operational Data
Additional Data 3: HK Retail Portfolio – Operational Data By Shopping Centre Categories Average monthly No. of properties Total area Valuation Retail rentals unit rent Occupancy rate (‘000 sq. ft.) (HK$’M) (HK$’M) (HK$ psf) (%) Six Six months months As at As at As at As at As at As at ended ended As
Slide 34: Additional Data 4: Valuation
Additional Data 4: Valuation As at As at HK$’M 31 Dec 2017 30 Sep 2017 Retail properties 139,930 132,528 Car parks 33,637 32,792 Property under development 7,929 7,691 Properties in Mainland China 17,429 16,807 Total 198,925 189,818 Income Capitalisation Approach – Capitalisation Rate As at As at Ho
Slide 35: HK Portfolio – Portfolio Metrics
Additional Data 5: HK Portfolio – Portfolio Metrics As at As at 30 Sep 2017 31 Mar 2017 Change Average monthly unit rent (psf pm) Shops HK$59.4 HK$55.2 +7.6% Overall (ex Self use office) HK$59.0 HK$55.3 +6.7% Occupancy rate Shops 97.1% 97.1% - Markets/Cooked Food Stalls 91.1% 90.3% +0.8ppts
Slide 36: HK Portfolio – Lease Expiry Profile
Additional Data 6: HK Portfolio – Lease Expiry Profile As % of total area As % of monthly rent As at 30 September 2017 (%) (%) 2017/2018 17.2 17.5 2018/2019 29.8 27.1 2019/2020 and Beyond 47.0 52.7 Short-term Lease and Vacancy 6.0 2.7 Total 100.0 100.0 P.36
Slide 37: Mainland China Portfolio – Lease Expiry Profile
Additional Data 7: Mainland China Portfolio – Lease Expiry Profile EC Mall retail lease expiry profile As % of total area As % of monthly rent As at 30 September 2017 (%) (%) 2017/2018 13.5 16.5 2018/2019 10.0 13.2 2019/2020 and beyond 68.9 70.3 Vacancy 7.6 0.0 Total 100.0 100.0 Metropolitan Plaza r
Slide 38: HK Retail Sales Value & Restaurant Receipts
Additional Data 8: HK Retail Sales Value & Restaurant Receipts Year-on-Year Change of Retail Sales Value & Restaurant Receipts 60% Global financial crisis 50% Foods & alcoholic drinks 40% Supermarkets 30% Tech bubble burst 20% Restaurant receipts 10% Jewellery 0% Department stores -10% -20% Clothing
Slide 39: Kowloon East Market Update
Additional Data 9: Kowloon East Market Update Rental gap between Location of The Quayside Central and Kowloon East 120 100 HKD per sq ft per month, NFA Kai Tak (under construction) 80 HK$ 86 Kowloon Bay 60 The Quayside 40 Kowloon East Ngau Tau Kok Action Area Kwun Tong 20 0 4Q 2009 4Q 2010 4Q 2011 4
Slide 40: Grade A Office Supply in Shanghai Core CBDs
Additional Data 10: Grade A Office Supply in Shanghai Core CBDs 450 400 Huangpu (Puxi) City Link (Hutchison Whampoa Xinzha Road) 350 Jing’an (Puxi) Thousand Square Meters (GFA) Luijiazui 300 (Pudong) One Museum Place 250 200 Lujiazui Finance Plaza 150 Taikang Insurance Tower 100 JC Mandarin Renovati
Slide 41: Large Scale Retail Supply in Guangzhou
Additional Data 11: Large Scale Retail Supply in Guangzhou 600 Urban Suburban 550 Zhujiang New Huadu Town 500 Beijing Road Luogang Thousand Square Meters (GFA) 450 Panyu Wanbo 400 Jinshazhou Huadu Wanda Plaza 350 Zengcheng 300 Luogang Aoyuan Plaza AEON Mall 250 Zengcheng Project K11 (Guangzhou Luoga
Slide 42: Land Utilisation in Hong Kong 2016
Additional Data 12: Land Utilisation in Hong Kong 2016 0.6% 2.7% Woodland/Shrubland/Grassland/Wetland 6.9% 0.4% Agriculture 2.3% 2.3% Other Urban or Built-up Land 2.3% Transportation 5.0% Open Space 5.0% Institutional Industrial 6.1% 66.2% Commercial Residential Water Bodies Barren Land Very limited
Slide 43: Disclaimer
Disclaimer This document has been prepared by Link Asset Management Limited in its capacity as the Manager (the “Manager”) of Link Real Estate Investment Trust (“Link REIT”) solely for use at the presentations/meetings held and may not be reproduced or redistributed without permission. Neither this
Link Real Estate Investment Trust — Investor Presentation (February 2018) on 6ix