Spring Real Estate Investment Trust · HKEX:1426
Spring Real Estate Investment Trust — FY2014 Earnings Presentation
29 slides from Spring Real Estate Investment Trust's earnings presentation, Mar 19, 2015
Slide 1: Annual Results 2014 Presentation
Annual Results 2014 Presentation 19 March 2015 Unsaved Document / 7/15/2013 / 17:51
Slide 2: Disclaimer
Disclaimer This presentation may contain information which is proprietary, confidential and/or legally privileged and has been prepared by Spring Asset Management Limited, in its capacity as the manager (the “Manager”) of Spring Real Estate Investment Trust (the “Trust”). This presentation is being
Slide 3: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 2
Slide 4: Key Messages
Key Messages Five Competitive Strengths of Spring REIT Exposure to Premium Grade office 1 buildings in Beijing CBD Part of China Central Place Complex 2 – a prime mixed-use complex in Beijing CBD and a well recognized brand High occupancy rate with a diverse and 3 high quality tenant base Attractive
Slide 5: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 4
Slide 6: Results Highlights
Results Highlights 2014 – an Excellent Year - Revenue: US$81.46 mn, +22.8% yoy 1. Strong Operating Performance - Net property income (NPI): US$62.17 mn, +25.5% yoy - Avg Monthly Occupancy stayed high: 96% - Leases entered into (as % of end-2014 occupied GFA): 38% 2. Rental Reversion Delivered - Avg
Slide 7: Results Highlights: Strong Operating Performance
Results Highlights Strong Operating Performance For year ended 31 December 2014 2013 Change Total Revenue (US$ million) 81.46 66.35 + 22.8% Net Property Income (US$ million) 62.17 49.54 + 25.5% Net Property Income Margin 76.3% 74.6% + 1.7 ppts As at 31 December 2014 2013 Change Appraised Property Va
Slide 8: Results Highlights: Revenue and Net Property Income
Results Highlights Strong Operating Performance Revenue Net Property Income • Revenue: US$81.46 mn, +22.8% • Property operating expenses US$19.28mn, +14.7% • Driven by positive rental reversion • Most of property operating expenses are a % to revenue or fixed • 38% of leases (as % of end-2014 occupi
Slide 9: Positive Rental Reversion Delivered
Results Highlights Positive Rental Reversion Delivered Passing Rents Occupancy Rates • Strong positive rental reversion in 2014 • Consistently averaged above 90% since 2010 • Average monthly spot rent at RMB378 per sqm, • 2014 average occupancy rate maintained at 96% record high • Supply-demand in B
Slide 10: Enhanced Financial Position
Results Highlights Enhanced Financial Position Early Loan Repayment (in Jan 2014) Debt Profile (as at end-2014) • US$50 million repaid on 28 Jan 2014 • Principal amount: US$465 million • Loan principal (before) : US$515 mn • Interest rate: 3-mth LIBOR + 3.50% • Loan principal (after) : US$465 mn • M
Slide 11: Distributions and Total Return
Results Highlights Distributions and Total Return 2014 Final DPU: HK12.5 cents 2014 Total Return: 23.2% • 100% payout of total distributable income % return(1) • Ex-date: 2 April 2015 Unit price gain 15.5 • Payable: 22 April 2015 Distribution paid in 2014 - assuming payouts reinvested 7.7 Total retu
Slide 12: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 11
Slide 13: Upcoming Refinancing
Upcoming Refinancing Expected in 2015 New Loan Facilities Lead Arrangers: ANZ, Deutsche Bank, Credit Suisse Secured term loan with principal US$480 mn, 5-year term Revolving facility principal US$20 mn, uncommitted Total loan principal US$500 mn Timetable Signing of facility agreement: Com
Slide 14: Comparisons of the facilities
Comparisons of the facilities Longer Tenure. Lower Interest Margin. Terms Existing Loan New Loan Principal US$465 million US$480 million - Term Loan Facility Principal Nil US$20 million, uncommitted - Revolving Facility Borrower RCA01 RCA01 Tenor 3 years 5 years Maturity 27 Jan 2016 Expected April 2
Slide 15: Debt Profile
Debt Profile Before and After Refinancing Before refinancing After refinancing Total debt (US$ million) 465 480 Gearing ratio 33.1% 34.1%(1) Interest margin 3.50% 2.75% Expected April Loan maturity 27 Jan 2016 2020 Note: (1) Pro-forma gearing, calculated assuming drawdown at end-2014. 14
Slide 16: Maturity Profile after Refinancing
Maturity Profile after Refinancing No major refinancing need until 2020 600 500 400 US$ million 300 465 480 200 100 0 2014 2015 2016 2017 2018 2019 2020 Secured 3-yr term loan (existing) Secured 5-yr term loan (existing) Note: Assuming the uncommitted revolving facility is not utilized. 15
Slide 17: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 16
Slide 18: Property Overview
Property Overview Premium Grade Office Buildings in Beijing CBD Premium Assets The Property • Two Premium Grade office buildings (total GFA 120,245 sqm) in China Central Place (“CCP”) (华贸中心) and approximately 600 car parking spaces (the “Property”). • China Central Place is a prime mixed-use complex
Slide 19: Diverse and high quality tenant base
Diverse and high quality tenant base Focus on optimizing our tenant mix Diversified Tenant Base Top 5 Tenants % of total Industry breakdown Tenants leased GFA By leased office GFA Deutsche Bank 6.0% (As of 31 December 2014) SAP AG 5.8% Business Education/ Condé Nast 4.5% 23.8% center and media/sport
Slide 20: Cost Structure
Cost Structure Property expenses are revenue-linked or fixed Property Operating expenses breakdown Property management fee 2.8% – 2% of the total revenue 2.4% Property taxes 1.1% – Includes real estate tax and land use tax 40.7% – Real estate tax based on property residual value 0.2% 2.6% 2.6% 3
Slide 21: Outperforming Benchmarks
Outperforming Benchmarks Total Return (from 31 Dec 2013 to 10 Mar 2015) Spring REIT 35% Hang Seng Index Hang Seng REIT Index 28.2% Hang Seng China Enterprises Index Spring REIT 30% 25% Hang Seng REIT Index 20% 22.4% 15% Hang Seng China 10% Enterprises Index 5% 10.9% 0% -5% Hang Seng Index 7.0% -10%
Slide 22: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 21
Slide 23: Office Market Conditions across China
Office Market Conditions across China Beijing enjoys the best supply-demand dynamics Grade A Office GFA (‘000 sqm) Occupancy 8,000 100% 7,000 90% 80% 6,000 70% 5,000 60% 4,000 Beijing 50% - highest occupancy > 97% 40% 3,000 - lowest new supply as % of current stock of 14% in 3 yrs 30% 2,000 20% 1,00
Slide 24: Current Market Condition
Current Market Condition Tight supply & high occupancy in Beijing Grade-A offices Beijing Overall Beijing CBD Beijing Overall – Supply, Absorption, Occupancy Beijing CBD – Supply Absorption, Occupancy (sqm, GFA) (sqm, GFA) 94.9% 95.0% 97.5% 94.0% 95.0% 1,500,000 87.6% 90.9% 100% 800,000 91.0% 88.0%
Slide 25: Future Grade-A Office Supply
Future Grade-A Office Supply Tight Supply-demand Conditions to Continue All of Beijing : Limited New Supply CBD : Virtually No New Supply • 2010-2014 average new supply : 360k sqm • Only 50k sqm of new supply is expected in 2017 • 2015-2017 average new supply : 305k sqm • 2015-2017 average new suppl
Slide 26: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 25
Slide 27: Strategy
Strategy Maintain high occupancy rates 1. Asset Management Strategy Optimize tenant mix Control property expenses Prudent financial and capital management policy 2. Capital Management Strategy Reduce finance costs & optimize debt maturity profile Seek value-enhancing acquisition opportun
Slide 28: Value Creation for Unitholders
Value Creation for Unitholders Close valuation Build track records, while enhancing investor relations Achieved total return of 23.2% in 2014(1) gap Total return outperforming Hang Seng Index and Hang Seng REIT Index(1) Deliver stable Simple cost structure maximizes distribution Committed to sta
Slide 29: Thank You
EEEEYES'S‘SU I SpringREIT Thank You
Spring Real Estate Investment Trust — FY2014 Earnings Presentation on 6ix