Keppel REIT · SGX:K71U
Keppel REIT — Q3 2014 Earnings Presentation
43 slides from Keppel REIT's earnings presentation, Oct 16, 2014
Slide 1: Financial Results for the Third Quarter and Nine Months Ended 30 September 2014
Financial Results for the Third Quarter and Nine Months Ended 30 September 2014 16 October KEPPEL REIT 2014 | THIRD QUARTER 2014 FINANCIAL RESULTS
Slide 2: Important Notice
Important Notice The past performance of Keppel REIT is not necessarily indicative of its future performance. Certain statements made in this presentation may not be based on historical information or facts and may be “forward‐looking” statements due to a number of risks, uncertainties and assumptio
Slide 3: Overview
Overview Portfolio of nine quality Premium Grade and Grade A 1 assets with 11 office towers, tenanted to established corporations across various business sectors Premium office buildings located in the prime CBDs 2 of Singapore and Australia, both countries with AAA sovereign ratings 3 Total portfol
Slide 4: Quality Portfolio of Prime Assets
Quality Portfolio of Prime Assets Singapore Properties Ocean Financial Centre Marina Bay Financial Centre Phase 1 One Raffles Quay Bugis Junction Towers Marina Bay Financial Centre Prudential Tower (99.9% interest) (33.3% interest) (33.3% interest) Tower 3 (33.3% interest) (92.8% interest) *Announce
Slide 5: Leading Landlord in Singapore's Raffles Place and Marina Bay
Leading Landlord in Singapore’s Raffles Place and Marina Bay » Leading landlord of iconic office buildings strategically located in the prime precincts of Raffles Place and Marina Bay, the new downtown core of Singapore’s Central Business District Marina Bay Financial Centre One Raffles Quay Ocean F
Slide 6: Agenda: Key Highlights
1. Key Highlights 2. Financial Highlights 3. Capital Management 4. Portfolio Analysis 5. Market Review and Outlook Marina Bay Financial Centre, Singapore KEPPEL REIT | THIRD QUARTER 2014 FINANCIAL RESULTS
Slide 7: Key Highlights
Key Highlights Overview YTD Sept 2014 Net Property Income 16.1% y‐o‐y to $117.2 million Achieved positive rental reversion of 32.3% in 3Q 2014 Maintains healthy annualised distribution yield of 6.4% Strategic rejuvenation of property portfolio with the proposed acquisition of a one‐third interest
Slide 8: Key Highlights
Key Highlights Overview All‐in interest rate remains at 2.2% as at 30 Sept 2014 Proactive leasing strategy with forward renewals of approximately 175,000 sf for YTD Sept 2014 Attained high tenant retention rate of 92% in 3Q 2014 Maintained strong committed portfolio occupancy of 99.3%, with seven of
Slide 9: Key Financial Highlights
Key Financial Highlights Steady and Sustainable Performance » YTD Sept 2014 Net Property Income 16.1% y‐o‐y to $117.2 million » YTD Sept 2014 Property Income 12.0% y‐o‐y to $141.8 million » Better performance mainly from Ocean Financial Centre and additional income from 8 Exhibition Street » DPU
Slide 10: Key Capital Management Highlights
Key Capital Management Highlights Weighted Average Term to Maturity of Borrowings » All‐in interest rate of 2.2% as at 30 Sept 2014 » Aggregate leverage decreased to 42.1% as at 30 Sept 2014 » No refinancing requirements for next 14 months, with a weighted average term to expiry of debt of 3.5 years
Slide 11: Key Portfolio Highlights
Key Portfolio Highlights Overall Portfolio » Maintained healthy average committed occupancy of 99.3% » Positive rental reversion of 32.3% » High tenant retention rate of 92% in 3Q 2014 » Seven out of the 11 office towers are fully committed » Proactive leasing strategy with forward renewals of appro
Slide 12: Strategic Rejuvenation of Portfolio
Strategic Rejuvenation of Portfolio » Keppel REIT successfully completed the divestment of its 92.8% interest in the 16‐year‐old Prudential Tower on 26 Sept 2014 » On 18 Sept 2014, Keppel REIT announced the proposed acquisition of a one‐third interest (1) in the two‐year‐old Marina Bay Financial Cen
Slide 13: MBFC Tower 3: Transaction Summary
MBFC Tower 3: Transaction Summary Proposed Acquisition » Acquisition of Keppel Land’s one‐third interest in Marina Bay Financial Centre Tower 3 Agreed Property Value Funding Structure » Agreed property value: $1,248.0 million or $2,790 psf » Consideration Units to be (1) ‐ Inclusive of a five‐year r
Slide 14: Strategic Rejuvenation of Portfolio
Strategic Rejuvenation of Portfolio » Post‐acquisition, Keppel REIT’s average portfolio age will improve to approximately 5.5 years, making it the REIT with the youngest portfolio of premium assets in Singapore’s prime Raffles Place and Marina Bay precincts » Greater opportunity for Unitholders to p
Slide 15: Agenda: Financial Highlights
Ocean Financial Centre, Singapore 1. Key Highlights 2. Financial Highlights 3. Capital Management 4. Portfolio Analysis 5. Market Review and Outlook KEPPEL REIT | THIRD QUARTER 2014 FINANCIAL RESULTS
Slide 16: Net property income up 16.1% y-o-y to $117.2m
Net property income 16.1% y‐o‐y to $117.2m YTD Sept 2014 YTD Sept 2013 Property Income $141.8m $126.6m Net Property Income $117.2m $100.9m Share of Results of Associates $44.6m $46.4m (1) Distributable Income to Unitholders $160.3m $159.1m Distribution Per Unit 5.72 cents 5.91 cents ‐ For the Peri
Slide 17: Balance Sheet
Balance Sheet As at 30 Sept 2014 As at 30 June 2014 Non‐current Assets $ 6,305 m $6,226 m Total Assets $6,939 m $6,884 m Borrowings(1) $2,888 m $3,117 m Total Liabilities $2,724 m $2,972 m Unitholders’ Funds $4,213 m $3,910 m Net Asset Value (NAV) Per Unit $1.40 $1.40 Adjusted NAV Per Unit(2) $1.39
Slide 18: 3Q 2014 Distribution Per Unit
3Q 2014 Distribution Per Unit » 3Q 2014 DPU of 1.85 cents ‐ Advanced distribution: 1.80 cents (to be distributed on 12 Nov 2014) ‐ Remaining distribution: 0.05 cents (to be distributed on 28 Nov 2014) Advanced Distribution Remaining Distribution Distribution Per Unit (DPU) 1.80 cents 0.05 cents Dist
Slide 19: Agenda: Capital Management
8 Chifley Square, Sydney 1. Key Highlights 2. Financial Highlights 3. Capital Management 4. Portfolio Analysis 5. Market Review and Outlook KEPPEL REIT | THIRD QUARTER 2014 FINANCIAL RESULTS
Slide 20: Proactive Capital Management Strategy
Proactive Capital Management Strategy » Continue to adopt a proactive capital management strategy to mitigate refinancing risks » Financing is diversified across 16 lenders, majority of which are rated “A” and above by Moody’s » Local banks make up majority of lenders 275 George Street, Brisbane Div
Slide 21: Proactive Capital Management Strategy
Proactive Capital Management Strategy » No refinancing requirements for next 14 months Loans Due in 2015 Loans Due in 2016 Early refinanced 48% $275 million Early refinanced 16% Repayment of $250 million $75 million secured term loan All‐in Interest Rate Weighted Average Term to Expiry 2.2% 3.5 year
Slide 22: Proactive Capital Management Strategy
Proactive Capital Management Strategy As at 30 Sept 2014 Gross Borrowings $2,888 m Aggregate Leverage 42.1 % Interest Coverage Ratio 5.1 times Debt Maturity Profile as at 30 Sept 2014 Millions 800 700 600 500 275 75 400 733 715 300 200 404 387 350 300 100 0 0 2014 2015 2016 2017 2018 2019 2020 KEPPE
Slide 23: Agenda: Portfolio Analysis
Bugis Junction Towers, Singapore 1. Key Highlights 2. Financial Highlights 3. Capital Management 4. Portfolio Analysis 5. Market Review and Outlook KEPPEL REIT | THIRD QUARTER 2014 FINANCIAL RESULTS
Slide 24: Positive Committed Occupancy Levels
Positive Committed Occupancy Levels » Overall portfolio committed occupancy at healthy levels of 99.3% » Seven out of 11 office towers are fully committed Singapore Australia Overall 99.8% 97.9% 99.3% 100.0% 100.0% 100.0% 99.4% 100.0% 100.0% 99.3% 97.1% 92.0% Singapore core CBD occupancy at 96.6%(1)
Slide 25: Positive Committed Occupancy Levels
Positive Committed Occupancy Levels » Keppel REIT’s Singapore portfolio occupancy is consistently above Singapore’s Core CBD occupancy levels Keppel Keppel REIT Historical Occupancy 99.5% 99.8% REIT 100% 99.1% 98.5% 98.0% 96.6%(1) 94.9% Singapore 95% Core CBD 90% 85% 80% 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4
Slide 26: Portfolio WALE
Long Weighted Average Lease Expiry » Top 10 tenants, accounting for approximately 44% of portfolio NLA, have a long WALE of 8.2 years and are diversified across seven office towers in Singapore and Australia Weighted Average Lease Expiry (WALE) Top 10 Tenants (by NLA) 8.2 years(1) Australia and New
Slide 27: Healthy Occupancy
Healthy Occupancy » In 3Q 2014, approximately 25,000 sf of new leases were signed and renewed Positive rental reversion of 32.3% High tenant retention rate of 92% Some of the new leases signed include Avepoint, Lukoil, Power Construction Corporation of China and The Executive Centre Tenants
Slide 28: Healthy Lease Expiry Profile
Healthy Lease Expiry Profile » Well‐staggered lease profile with not more than 19.9% of the portfolio expiring in any one year over the next six years » Only 0.2% (~5,500 sf) of Keppel REIT’s portfolio remains to be renewed for rest of 2014 » Manager in advanced negotiation with tenants for the revi
Slide 29: Tenants Diversified across Various Business Sectors
Tenants Diversified across Various Business Sectors Retail (Exclude F&B and Services), 0.9% Accounting & consultancy Telecommunications & Number of tenants multimedia, 8.8% services, 5.9% (1) 227 Legal, 9.2% F&B, 1.3% Energy & natural resources, 8.9% Banking, insurance & financial services, 46.6% Sh
Slide 30: 3Q 2014 Key Singapore Portfolio Highlights
3Q 2014 Key Singapore Portfolio Highlights Ocean Financial Centre » Ocean Colours continues to be the choice location for businesses wanting to reach out to potential customers » In end‐Sept 2014, Citibank embarked on a campaign to promote its banking services » Other advertisers include Tumi, SIM U
Slide 31: 3Q 2014 Key Australia Portfolio Highlights
3Q 2014 Key Australia Portfolio Highlights New Office Tower at the Old Treasury Building site » Construction of the new office tower at the Old Treasury Building site in Perth has reached level 23 » Artwork around the site creates a poetic engagement for visitors that is both quiet and contemplative
Slide 32: Community Engagement
Community Engagement Arts in the City » Evening concert at Ocean Financial Centre showcasing performances by children aged 15 and below from Symphony 92.4FM’s Young Talents Project » In partnership with the National Arts Council, a seven‐day musical performances was held at Marina Bay Link Mall » Te
Slide 33: Community Engagement
Community Engagement Lighting Up Singapore’s Skyline » Ocean Financial Centre was lit up in a spectacular LED lighting display during the National Day Parade and Formula 1 Night Race KEPPEL REIT | THIRD QUARTER 2014 FINANCIAL RESULTS 33
Slide 34: Sustainability Efforts
Sustainability Efforts Global Real Estate Sustainability Benchmark (GRESB) 2014 » Internationally‐recognised benchmark for integrated approach towards sustainability » Keppel REIT was ranked: No. 1 in Asia for Office Sector The Regional Leader in Asia for Office Sector Top 3 in Asia and top 5%
Slide 35: Agenda: Market Review and Outlook
1. Key Highlights 2. Financial Highlights 3. Capital Management 4. Portfolio Analysis 5. Market Review and Outlook 275 George Street, Brisbane KEPPEL REIT | THIRD QUARTER 2014 FINANCIAL RESULTS
Slide 36: Office Market Review – Singapore
Office Market Review – Singapore » Average Grade A occupancy in the core CBD area held firm at 96.6% » Grade A office rents continued to lead growth, rising 3.3% q‐o‐q to reach $10.95 psf $15 96.6% 100% 95.0% 95.2% 95.7% 95.8% 93.2% 93.2% 93.5% 92.3% 91.6% 92.2% 91.2% 90.7% Average Grade A Office Re
Slide 37: Market Outlook
Market Outlook Singapore » Singapore’s economy expanded 1.2% quarter‐on‐quarter to reach 2.4% in 3Q 2014 » Singapore’s economy is expected to grow at a moderate pace for the rest of 2014 and in 2015 » Rental rates and leasing demand are expected to remain positive over the next few quarters, underpi
Slide 38: Additional Information
Additional Information One Raffles Quay, Singapore KEPPEL REIT | THIRD QUARTER 2014 FINANCIAL RESULTS
Slide 39: Singapore's Leading Office REIT
Singapore’s Leading Office REIT Vision To be a successful commercial real estate investment trust with a sterling portfolio of assets pan‐Asia Mission To deliver stable and sustainable returns to Unitholders by continually enhancing our assets and expanding our portfolio Key Thrusts Prudent capital
Slide 40: Growth Record
Growth Record • Divested stake in Prudential Tower • Proposed • Acquisition of the acquisition of a • Increased interest new office tower one‐third in OFC to 99.9% at the Old interest in • Obtained tax Treasury Building MBFC Tower 3 • First overseas transparency acquisition • First forward in Perth
Slide 41: Portfolio Information
Portfolio Information » Post‐acquisition of MBFC Tower 3, Keppel REIT’s AUM will increase to over $8.1 billion with 88%of portfolio in Singapore, and 12% in Australia » Approximately 93%(1) of Keppel REIT’s Singapore portfolio is located in the prime Raffles Place and Marina Bay precincts Marina Bay
Slide 42: Portfolio Information
Portfolio Information Office Tower to be built 8 Chifley 77 King Street Office 8 Exhibition Street, 275 George Street, at the Old Treasury Square, Sydney(1) Tower, Sydney Melbourne(1) Brisbane(1) Building site, Perth(1) 33‐storey Grade A office tower scheduled for 34‐storey Grade A 18‐storey Grade A
Slide 43: KEPPEL REIT THIRD QUARTER 2014 FINANCIAL RESULTS
KEPPEL REIT | THIRD QUARTER 2014 FINANCIAL RESULTS 43