Link Real Estate Investment Trust · HKEX:823
Link Real Estate Investment Trust — FY2023/24 Earnings Presentation
65 slides from Link Real Estate Investment Trust's earnings presentation, May 29, 2024
Slide 1: Annual Results 2023/2024 Analyst Presentation
Annual Results 2023/2024 Analyst Presentation 29 May 2024
Slide 2: Agenda
2 Agenda 01 02 03 Annual Results Operational Capital Highlights Update Management The Quayside 04 05 06 07 Market Outlook Strategy Update Q&A Appendix and Mitigation Queen Victoria Building Jurong Point Link CentralWalk Kai Tin Shopping Centre
Slide 3: Annual Results Highlights
01 Annual Results Highlights
Slide 4: FY2023/24 Key Highlights: Proactive portfolio management
4 FY2023/24 Key Highlights Achievements through proactive portfolio management Link REIT Portfolio Asset Enhancement Capital Management Commitment to Hong Kong portfolio Mainland China Portfolio operational excellence outperforming portfolio bearing fruit diversification remains steadfast Link portf
Slide 5: FY2023/24 Key Highlights: Asset enhancement results
5 FY2023/24 Key Highlights Asset enhancement efforts yielded solid results Link REIT Portfolio Asset Enhancement Capital Management Four assets in Hong Kong One asset in Mainland China Double-digit ROIs achieved completed AEs completed AE Achieved double-digit ROIs from In Hong Kong, HK$230M AEs acr
Slide 6: FY2023/24 Key Highlights: Prudent capital management
6 FY2023/24 Key Highlights Prudent approach to capital management Link REIT Portfolio Asset Enhancement Capital Management Well-staggered debt Strong financial position maturity profile Net gearing ratio maintained below Not more than 20% total debt maturing 20%, average borrowing cost kept in a sin
Slide 7: FY2023/24 Annual Results Highlights
7 FY2023/24 Annual Results Highlights Steady growth from diversification amid headwinds Lok Fu Place Jurong Point Qibao Vanke Plaza HK$13,578M HK$6,718M 19.5% REVENUE D I S T R I B U TAB L E NET GEARING RATIO AM O U N T 11.0% YoY 6.4% YoY (31 March 2023: 17.8%) HK$10,070M HK$2.6265 HK$70.02 N PI D P
Slide 8: Occupancy remained high with sustained revenue and NPI
8 FY2023/24 Annual Results Highlights Occupancy remained high with sustained revenue and NPI HK retail occupancy consistently at near-full level Revenue remained steady 1H 2H 1H 2H 97.5% 97.7% 97.5% 98.0% 98.0% 98.0% 6,725 6,853 5,778 5,824 6,042 6,192 2021/2022 2022/2023 2023/2024 2021/2022 2022/20
Slide 9: Operational Update
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Slide 10: Hong Kong Retail Overview
10 Hong Kong Retail Overview Strong operating metrics underpinned by operational excellence Lei Yue Mun Plaza Temple Mall Sau Mau Ping Shopping Centre OCCUPANCY REVERSION UNIT RENT PSF 98.0% 7.9% HK$64.4 20/21 96.8% 64.4 7.1% 7.9% 63.8 21/22 97.7% 4.8% 62.7 62.4 22/23 98.0% 23/24 98.0% -1.8% Mar-21
Slide 11: Hong Kong Retail Sales
11 Hong Kong Retail Sales Healthy tenant sales growth and occupancy costs (1) (3) TENANT SALES GROWTH OCCUPANCY COST +0.4% YoY 12.6% Food & Beverage Supermarket & Foodstuff FOR THE YEAR TENANT SALES G R O W T H (1, 4) General Retail (2) Overall APR 2023 – M AR 2024 (YOY%) Food and beverage 4.6% Supe
Slide 12: Cross-border Consumption Trends
12 Cross-border Consumption Trends Mitigating the impact of cross-border consumption Lung Hang Commercial Centre Hing Wah Plaza Butterfly Plaza Fu Tung Plaza TENANT SALES Cross-border Strengthen Portfolio (5) Consumption Resilience GROWTH INDEX LINK HK (FY2018/2019 = 100) o Cross-border consumption
Slide 13: Hong Kong Retail Leasing
13 Hong Kong Retail Leasing Maintained leasing momentum despite a softer market TOP 5 LEASING TRENDS Fashion > 660 New Leases (1) Signed in FY 2023/2024 Learning Institution (over 270 new brands & 115 existing brands) Specialty Restaurant Confectionery Bakery & Cake Shop Note: (1) Including retail,
Slide 14: Hong Kong Car Parks and Related Business
14 Hong Kong Car Parks and Related Business Stable revenue bolstered by solid demand REVENUE CAR PARK AVERAGE CAR PARK GROWTH INCOME VALUATION +3.4% YoY +2.6% YoY +3.4% YoY HK$3,337 HK$744,000 per space per month per space (1) Hourly car park Monthly car park Car parks related business 2,470 2,395 2
Slide 15: Operational Excellence: Car Park Management
15 Operational Excellence: Car Park Management Upgrade of systems improving experience and efficiency Chung On Kai Tin Tung Tau Digitalisation Contactless Seamless Revenue From customer payments parking Operations Optimisation to operational workflow E-platform payments Cloud-based platform Dynamic
Slide 16: Hong Kong Asset Enhancement
16 Hong Kong Asset Enhancement Maximising asset value and returns Estimated CAPEX Before After ~HK$640M (projects under planning and statutory approval) Kai Tin Kin Sang Tung Tau Butterfly Market Project Underway (2) Target CAPEX CAPEX CAPEX CAPEX CAPEX Completion Date HK$118M HK$58M HK$28M HK$27M F
Slide 17: Singapore Retail
17 Singapore Retail Tracking in line with the economy (1) REVERSION 9.6% o High occupancy rates across the portfolio o Sales performance continues to be driven by F&B and Beauty & Wellness o Strong rebound in shopper traffic in FY23/24 Jurong Point Swing By @Thomson Plaza AMK Hub Singapore portfolio
Slide 18: Australia Retail
18 Australia Retail Sales and footfall continue on an upward trajectory OCCUPANCY 99.7% o Sales are nearing pre-COVID levels but recovery in footfall is ongoing o Portfolio occupancy improved to 99.7% from 98.1% as at 30 September 2023 o The malls are reaping the benefits of demand for F&B and uniqu
Slide 19: International Office
19 International Office Challenges remain but mitigated by flight-to-quality OVERALL WALE ~5.1 years o Flight-to-quality, particularly in core precincts 151 Clarence Street 567 Collins Street 100 Market Street where there was positive net absorption o Completion of fit-out works, with leasing to fol
Slide 20: Mainland China Retail
20 Mainland China Retail Rental reversion experienced a positive turnaround Link Plaza Tianhe Link Plaza Liwan Link CentralWalk OCCUPANCY REVERSION 96.6% 2.8% Retail Portfolio >560 New Leases in FY2023/2024 Top 5 Leasing Trends • Positive reversion driven by the backfilling of Link 1. Food and Bever
Slide 21: Mainland China Retail: Marketing and tenant mix
21 Mainland China Retail Driving growth by marketing and curating a diverse tenant mix Qibao Vanke Plaza Rendering of Link CentralWalk Basement Rebrand Qibao Vanke Plaza to Renovation of Link Plaza Qibao in July Link CentralWalk Basement Increased contribution from Link Plaza Qibao following EST. CA
Slide 22: Mainland China Asset Enhancement
22 Mainland China Asset Enhancement Optimising asset value to seize higher quality tenants Link Plaza Tianhe Phase 2 EST. CAPEX: ~RMB 120M PROJECTED START DATE: Mid-to-late 2024 • Transform the amenities, ceiling and tiles and atrium of the west wing • Elevate our positioning to create a welcoming L
Slide 23: Mainland China Logistics
23 Mainland China Logistics Occupancy maintained at a healthy level despite heightened competition ANNUAL RENTAL OCCUPANCY ESCALATION 96.2% 3%-5% Foshan Warehouse Jiaxing Warehouse o Completed the acquisitions of Changshu South and North in April and May 2023 respectively o Stable leasing demand in
Slide 24: Capital Management
24 03 Capital Management
Slide 25: Strong Financial Position
25 Strong Financial Position Amid high-for-longer interest rate environment Net Gearing Average Ratio Borrowing Cost Financial Highlights ❑ Fixed rate debt ratio at 70% positioned for 19.5% 3.78% high-for-longer interest rate environment ❑ Non-HKD distributable income and Available EBITDA Interest L
Slide 26: Prudent Capital Management
26 Prudent Capital Management Healthy debt profile Fixed-debt Debt Profile Breakdown Ratio Debt Mix by 22.7 4.1 33.2 Type (37.9%) (6.8%) (55.3%) Medium Term Notes Convertible Bonds Bank Loans Debt Mix by 41.9 18.1 Fixed / Floating (69.8%) (30.2%) Rates (After interest Fixed Rate Floating Rate rate s
Slide 27: Robust Credit Ratings
27 Robust Credit Ratings Bolstered competitive finance costs Credit Ratings A Stable A2 Stable A Stable S&P Moody’s Fitch S&P Moody’s Fitch As at As at requirement requirement requirement (1) 31 Mar 2024 30 Sep 2023 (A / Stable) (A2 / Stable) (A / Stable) Net debt / IP 20.9% 19.9% N/A N/A < 30% Debt
Slide 28: Valuation
28 Valuation Cap rate expansion compensated by increasing rental cashflows As at As at As at As at Total Value of IP HK$’M 31 Mar 2024 30 Sep 2023 31 Mar 2024 30 Sep 2023 Hong Kong Retail properties 126,442 126,506 3.25% - 4.60% 3.25% - 4.60% Car parks and related business 47,559 47,448 2.70% - 4.90
Slide 29: Strategy Update
04 Strategy Update
Slide 30: Portfolio Overview
30 Portfolio Overview Diversification continues to contribute Mainland China 140 Retail, Car Parks (1) and Related Business HK$ 241B Hong Kong Portfolio Value 9 Offices 5 Logistics Singapore 52.4% Retail 74.7% 19.8% Car Parks and Related Business(2) Hong Kong Hong Kong 2.5% Office 11.3% Retail 130 1
Slide 31: Investment Management Strategy
31 Investment Management Strategy Focus on capabilities and value creation to deliver growth of our business Active Management of the Link REIT Portfolio Excellence for Link REIT Portfolio 1 • Operational excellence to deliver resilient results under our integrated operating platform • Diversify to
Slide 32: Market Outlook and Mitigation
05 Market Outlook and Mitigation
Slide 33: Key Themes Shaping the Macro Environment
33 Key Themes Shaping the Macro Environment Navigating the headwinds Butterfly Plaza Lei Yue Mun Plaza Queen Victoria Building Jurong Point Qibao Vanke Plaza Interest rates Labour tightness To be high for longer on Wage growth underpinning delayed prospects of inflation in several markets interest r
Slide 34: Key Operating Market Prospects
34 Key Operating Market Prospects Stable economic outlook but risks to weigh on sentiments Low unemployment of 2.9%, 1Q24 GDP growth Stable economic outlook – low inflation provides of 2.7% and potential minimum wage hike of 4.5% room for fiscal and monetary stimulus to support to HK$41.80 are suppo
Slide 35: Distribution Calendar
35 Distribution Calendar Distribution period October 2023 – March 2024 Last day of trading on a “cum” basis 26 June 2024 Ex-distribution date 27 June 2024 2 July 2024 – 5 July 2024 Distribution book close (both days inclusive) Record date for entitlement to distribution 5 July 2024 Ten trading days
Slide 36: Q&A
06 Q&A
Slide 37: Appendix
07 Appendix
Slide 38: Why invest in Link REIT
38 Appendix 1 Why invest in Link REIT The largest in terms of market capitalisation, the most liquid, and the only internally-managed REIT in Asia 100% free float held by institutions and private investors Quality assets diversified across regions Heavily exposed to resilient non- discretionary comm
Slide 39: Sustainability Leadership
39 Appendix 2 Sustainability Leadership 2022/23 ESG Indices Performance Rank 5th In East Asia BBB Score 87/100 Industry Adjusted Score 5.7 2022: 79/100 2022: 5.8 (A) Asia Pacific Index “Low Risk” Rating Score 68/100 Score 10.2/100 (1) 2022: 71/100 2022: 10.6/100 FTSE4GOOD Index AA Score 3.8/5 Score
Slide 40: Material ESG KPIs
40 Appendix 3 Material ESG KPIs Material ESG KPI (1) Key Target 2023/2024 Progress Progress Tracker Electricity Intensity Reduction 5% 1.3% (2) By 2025/2026 Compared to 2018/2019 Baseline Carbon Intensity Reduction (Scope 1 & 2) (1) 25% 14.6% (2) By 2025/2026 Compared to 2018/2019 Baseline General W
Slide 41: Our Sustainability and ESG progress
41 Appendix 4 Our Sustainability and ESG progress Renewable Energy & Decarbonisation Most Extensive Private Solar Energy Generation Project Installed across Hong Kong • Installed Capacity: 4.5 MW across 57 rooftop areas, generating an estimated 4,200 MWh of renewable electricity annually.* • Income
Slide 42: Valuation Table
42 Appendix 5 Valuation Table As at As at As at As at HK$’M 31 Mar 2024 31 Mar 2023 31 Mar 2024 31 Mar 2023 Hong Kong Retail properties 126,442 129,819 3.25% - 4.60% 3.10% - 4.50% Car parks and related business 47,559 46,823 2.70% - 4.90% 2.60% - 4.80% Office property 6,957 (1) 8,255 (1) 3.30% 3.00%
Slide 43: Net asset value per unit
43 Appendix 6 Net asset value per unit NAV per unit (HK$) 100 80 NAV was down due to NAV per unit (HK$) 60 the weighted average capitalisation rate March 2024: HK$70.02 being adjusted 40 upwards during the September 2023: HK$70.72 social event 20 0 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Se
Slide 44: HK Car Park Demand and Supply
44 Appendix 7 HK Car Park Demand and Supply No. of Registration of Vehicles and Private Car Demand and Supply (YoY) Parking Spaces (Private Cars) 714,060 5.4% 631,976 3.1% 2.7% 634,029 2.0% 2.3% 1.5% 1.3% 1.4% 1.3% 1.5% 1.3% 0.5% 0.8% 1.2% 0.6% 0.8% 1.1% -0.2% 471,685 -1.1% -1.7% 2015 2016 2017 2018
Slide 45: Australia retail sales far exceed pre-COVID level
45 Appendix 8 Australia retail sales far exceed pre-COVID level National Extended Melbourne Extended Sydney (Jun-Oct 2021) lockdown lockdown (Jun-Oct 2020) and Melbourne lockdown (Aug- (Mar-May and shorter regional Oct 2021), and shorter regional Total retail sales 2020) lockdown in Victoria lockdow
Slide 46: Key financial data
46 Appendix 9 Key financial data Percentage contribution Year ended 2023/2024 2022/2023 YoY 31 Mar 2024 Consolidated HK$’M HK$’M % (%) Revenue 13,578 12,234 +11.0 - Net property income 10,070 9,198 +9.5 - Rentals Hong Kong retail and office properties 6,652 6,555 +1.5 49.0 Hong Kong car parks and re
Slide 47: Financials – Income statement summary
47 Appendix 10 Financials – Income statement summary Year ended Year ended 31 Mar 2024 31 Mar 2023 YoY HK$’M HK$’M % Revenue 13,578 12,234 +11.0 Property operating expenses (3,508) (3,036) +15.5 Net property income 10,070 9,198 +9.5 General and administrative expenses (766) (653) +17.3 Interest inco
Slide 48: Property operating expenses analysis
48 Appendix 11 Property operating expenses analysis Percentage contribution Year ended Year ended year ended 31 Mar 2024 31 Mar 2023 YoY 31 Mar 2024 (HK$’M) (HK$’M) (%) (%) Property managers’ fees, security 922 767 +20.2 26.3 and cleaning Staff costs 648 548 +18.2 18.5 Repair and maintenance 329 278
Slide 49: Financials – Distribution statement summary
49 Appendix 12 Financials – Distribution statement summary Year ended Year ended 31 Mar 2024 31 Mar 2023 YoY HK$’M HK$’M % (Loss)/profit for the year, before transactions with Unitholders (1,983) 15,451 -112.8 attributable to Unitholders Change in fair values of investment properties attributable to
Slide 50: Movement of financial position & investment properties
50 Appendix 13 Financials – Movement of financial position & investment properties Financial Position Summary As at As at As at HK$’M 31 Mar 2024 30 Sep 2023 31 Mar 2023 Total assets 252,314 253,689 267,919 Total liabilities 73,872 72,699 78,859 Non-controlling interests (381) (179) 120 Net assets a
Slide 51: HK Portfolio – Retail revenue analysis
51 Appendix 14 HK Portfolio – Retail revenue analysis Percentage contribution Year ended Year ended year ended 31 Mar 2024 31 Mar 2023 YoY 31 Mar 2024 HK$’M HK$’M % % Retail rentals: Shops (1) 5,050 4,965 +1.7 67.3 Markets / cooked food stalls 1,061 1,025 +3.5 14.1 Education / welfare and ancillary
Slide 52: HK Portfolio – Car parks revenue analysis
52 Appendix 15 HK Portfolio – Car parks and related business revenue analysis Percentage contribution Year ended Year ended year ended 31 Mar 2024 31 Mar 2023 YoY 31 Mar 2024 HK$’M HK$’M % % Rental income: Monthly car parks 1,629 1,587 +2.6 65.6 Hourly car parks 634 601 +5.5 25.6 (1) Car parks relat
Slide 53: HK Portfolio – Retail portfolio data
53 Appendix 16 HK Portfolio – Retail portfolio data Retail properties Retail Average monthly (2) No. of Total area Valuation rentals unit rent (1) Occupancy rate properties (’000 sq. ft.) (HK$’M) (HK$’M) (HK$ psf) (%) As at As at As at Year ended As at As at As at As at 31 Mar 31 Mar 31 Mar 31 Mar 3
Slide 54: HK Portfolio – Retail and car parks portfolio data
54 Appendix 17 HK Portfolio – Retail and car parks and related business portfolio data As at As at 31 Mar 2024 31 Mar 2023 Change Average monthly unit rent (psf pm)(1) ◼ Shops HK$62.3 HK$61.9 +0.6% ◼ Overall (ex self use office) HK$64.4 HK$63.8 +0.9% Occupancy rate ◼ Shops 98.4% 98.3% +0.1% ◼ Market
Slide 55: HK Portfolio – Lease expiry profile
55 Appendix 18 HK Portfolio – Lease expiry profile Retail Office (1) As % of As % of monthly(1) As % of As % of monthly total area rent total area rent As at 31 March 2024 (%) (%) (%) (%) 2024/2025 34.5 33.0 3.6 3.6 2025/2026 25.9 29.0 8.1 4.3 2026/2027 19.7 21.2 18.4 19.8 2027/2028 and beyond 12.3
Slide 56: HK portfolio – Trade mix
56 Appendix 19 HK portfolio – Trade mix 9.0% 15.2% 1.8% 8 4.0% 9 0.7% 8 1.0% 7 7 28.9% 6 1 8.3% 5.4% 5 1 6 5 Retail Trade Mix 2.1% 5 Office Trade Mix 4 (by rent)(1) (by rent) (1) 1 43.8% 10.2% 4 6.2% 4 2 2 3 3 12.0% 21.2% 17.4% 3 2 12.8% Retail Mar-24 Sep-23 Office Mar-24 Sep-23 1. Food and beverage
Slide 57: Mainland China portfolio – Retail lease expiry profile
57 Appendix 20 Mainland China portfolio – Retail lease expiry profile Retail Office As % of As % of monthly As % of As % of monthly (1) (1) total area rent total area rent As at 31 March 2024 (%) (%) (%) (%) 2024/2025 28.8 38.1 17.6 19.4 2025/2026 16.6 21.0 5.4 6.7 2026/2027 16.9 16.4 12.1 14.4 2027
Slide 58: Mainland China portfolio – Trade mix
58 Appendix 21 Mainland China portfolio – Trade mix 5.0% 2.0% 4 5 26.3% 6 35.6% 27.9% 1 1 Retail Trade Mix Office Trade Mix 41.7% (by rent)(1,2) (by rent) (1) 3 3.0% 5 4 2 15.4% 3 2 29.5% 2.6% 11.0% Retail Mar-24 Sep-23 Office Mar-24 Sep-23 1. Professional services 41.7% 40.3% 1. Food and beverage 3
Slide 59: International portfolio – Retail lease expiry profile
59 Appendix 22 International portfolio – Retail lease expiry profile (1) (2) Australia Retail Singapore Retail As % of As % of monthly As % of As % of monthly total area rent total area rent (3) As at 31 March 2024 (%) (%) (%) (%) 2024/2025 31.6 35.2 18.8 20.1 2025/2026 9.6 14.8 26.1 30.5 2026/2027
Slide 60: International retail portfolio – Trade mix
60 Appendix 23 International retail portfolio – Trade mix 3.1% 0.5% 11.0% 16.0% 56 4.3% 8 4 7 5.1% 36.9% 6 Australia 44.9% 1 1 6.3% 5 Singapore 13.9% 3 Retail Trade Mix Retail Trade Mix (by rent) (1,3) (by rent) (2,4) 4 1 8.9% 2 3 2 21.6% 12.6% 14.9% Retail Mar-24 Sep-23 Retail Mar-24 Sep-23 1. Fash
Slide 61: International office portfolio – Office lease expiry profile
61 Appendix 24 International office portfolio – Office lease expiry profile (1,2) International Office As % of As % of monthly total area rent As at 31 March 2024 (%) (%) 2024/2025 7.1 7.3 2025/2026 2.0 2.3 2026/2027 10.6 13.6 2027/2028 and beyond 74.3 76.8 Vacancy 6.0 - Total 100.0 100.0 Notes: (1)
Slide 62: International office portfolio – Tenant mix
62 Appendix 25 International office portfolio – Tenant mix 8.9% 11.3% 6 5 33.3% 4.4% 1 4 Office Trade Mix (by rent) (1,2) 1 23.7% 3 2 18.4% Office Mar-24 Sep-23 1. Financial and insurance services 33.3% 32.5% 2. Government 18.4% 18.1% 3. Professional services 23.7% 24.4% 4. Industry 4.4% 4.3% 5. Rea
Slide 63: Our strategic partners
63 Appendix 26 Our strategic partners First Priority Group Fujian Dongbai Group Investa Mercatus Co-operative Nan Fung Group Oxford Properties Group Vicinity Centres Note: (1) In alphabetical orders.
Slide 64: Link Together Initiatives
64 Appendix 27 Link Together Initiatives 2023/24 Sponsored Projects Link Together Initiatives is our flagship charity and community engagement programme. It was established in 2013 to engage stakeholders in the communities we serve to help us identify changing social needs and find the most effectiv
Slide 65: 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 thi
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