Link Real Estate Investment Trust · HKEX:823
Link Real Estate Investment Trust — The Link Real Estate Investment Trust — Investor Presentation (September 2014)
24 slides from Link Real Estate Investment Trust's investor presentation, September 2014
Slide 1: Corporate Presentation September 2014
Corporate Presentation September 2014
Slide 2: Profile of The Link REIT
Profile of The Link REIT Chung Fu Plaza Choi Yuen Plaza First REIT listed on the Stock Exchange of Hong Kong on 25 November 2005 (0823.HK) 100% free float publicly held by institutions and private investors 179 properties with an internal floor area of approx. 11M sq ft of retail facilities an
Slide 3: One of the Largest Retail REITs in the World
10.0 20.0 30.0 40.0 50.0 0.0 60.0 US$B SIMON PROPERTY 51.4 (US) UNIBAIL RODAMCO 26.3 (Europe) GENERAL GROWTH 21.0 (US) Source: Bloomberg as of 15 Sep 2014 SCENTRE GROUP 16.2 (Australia) WESTFIELD CORP 14.2 (Australia) THE LINK REIT 13.8 (HK) REALTY INCOME (US) 9.5 KIMCO REALTY 9.2 (US) MACERICH 9.0
Slide 4: Delivering Sustainable Growth
Delivering Sustainable Growth Distribution Yield Capital Gain HK Cents HK$ (3) Financial As at Year (4) Compound Annualised Total Return Since Listing +20.7% Notes: (1) Compound average growth rate (“CAGR”) of annualised distribution per unit (“DPU”) since listing in November 2005. (2) Increase in N
Slide 5: Building our Business Model on Sustainability Framework
Building our Business Model on Sustainability Framework Vision To be a world class real estate investor and manager serving and improving the lives of those around us Business Model Mission Building relationships with our stakeholders through Sustainability Providing value and quality service Frame
Slide 6: The Link REIT's Business Model
The Link REIT’s Business Model Asset Management Refine tenant mix Improve service standards Support tenants’ sales Manage operating costs Asset Enhancement District strategy Further upgrade of assets Fresh market strategy Beyond top 50 properties Asset Investment Identify investmen
Slide 7: Multiple Drivers to Growing Total Return
Multiple Drivers to Growing Total Return Delivering the core earnings growth Asset Net property income increased 12.7% yoy (1) Management Expense to income ratio decreased to 27.3% (1) 35 Projects completed since IPO (2) Asset Weighted average return on investment of approximately 21% (2)
Slide 8: Asset Management – Revenue Drivers
Asset Management – Revenue Drivers Introduce Improve Refine innovative Support service tenant mix marketing tenants’ sales standards campaigns Selected Newly Joined Tenants Selected Existing Tenants Expanding in Our Portfolio Active asset management with expanding tenant base P.8
Slide 9: Asset Management – Resilient Growth
Asset Management – Resilient Growth Retail Trade Mix by Monthly Rent (1) S Food and Beverage Supermarkets and Foodstuff Supermarkets and Foodstuff Markets/ Cooked Food 17.2% 24.9% Stalls Markets/ Cooked Food Education/ Stalls Welfare, Office and Ancillary 8.3% Education/ Welfare, Office Services and
Slide 10: Hong Kong Economy – Retail Sales Market Remains Resilient
Hong Kong Economy – Retail Sales Market Remains Resilient YoY Change of Retail Sales Value 50% 40% 30% Positive consumer sentiment 20% Sales growth in non-discretionary 10% items remains stable 0% 09 10 11 12 13 1H14 -10% Decline in luxury goods sales dragged -20% overall sales growth in 1H14
Slide 11: Asset Management – Proactive Cost Saving Initiatives
Asset Management – Proactive Cost Saving Initiatives Well-controlled Utilities Expense Continuous Margin Improvement (HK$’M) (M kWh) Net Property Income Margin (%) 340 317 350 296 80.0% 280 300 330 263 243 250 75.0% 72.7% 320 (1) 70.5% 70.9% 200 310 70.0% 68.1% 150 66.7% 300 316 100 310 307 65.0% 30
Slide 12: Asset Enhancement – Steady Project Pipeline
Asset Enhancement – Steady Project Pipeline Capex No. of (HK’B) >13 Projects • Lok Fu • Stanley • Leung • Lok Fu • Yau Oi • Choi Yuen King Market • On Ting • Tai Yuen • Chung Fu • Lung Market Cheung >1.60 (1) 1.36 (1) Financial year No. of projects for the period Note: (1) Estimated figures as at 31
Slide 13: Asset Enhancement Projects – Refurbishment and Repositioning
Asset Enhancement Projects – Refurbishment and Repositioning Refurbishment Limited Partial re-layout tenant Internal furnishing choices Poor • Size and layout Upgrade physical property constraints appearance conditions • Serves local community Aging Increase trade varieties properties Outdat
Slide 14: Asset Enhancement – Second Asset Enhancement
Asset Enhancement – Second Asset Enhancement Further value creation Value creation Tenants sales uplift Improved Increased household Improved property occupancy More conditions Growth potential income Further improve tenant choices Changes in demographics Growing tenant pool Achieved critica
Slide 15: Asset Enhancement – Lung Cheung Plaza
Asset Enhancement – Lung Cheung Plaza – An example of second asset enhancement Refurbishment Layout of Lung Cheung Plaza Repositioning (Completed in 2008) (To be completed by 2015) • Convert service space to Level 2 retail space New retail • Repartition to create more space created shops to add vari
Slide 16: Asset Enhancement – Value Creation
Asset Enhancement – Value Creation 8 AE projects +153% 8 AE projects 21 AE projects Value Creation 5 AE projects 1 AE project Top 10 51 - 100 Beyond 100 Valuation of enhanced assets outperformed remaining portfolio P.16
Slide 17: Asset Investment – Cautious Sustainable Growth Strategy
Asset Investment – Cautious Sustainable Growth Strategy Organic Growth Inorganic Growth Mainland China HK HK HK Mid-Market Mid-Market Non-Discretionary Non-Discretionary HK Mass Market HK HK Non Mass Market Mass Market Discretionary Non Non Discretionary Discretionary Asset Management and Enhancemen
Slide 18: Asset Investment – Acquisition of Lions Rise Mall
Asset Investment – Acquisition of Lions Rise Mall HK$1,380m acquisition completed on 18 Sep 2014 Potential upside from improvement in occupancy (currently 84%), market reversion and district’s population growth Lions Rise Mall Quality new asset located under large-scale Connected footbridge resi
Slide 19: Asset Investment – Expanding into Mainland China
Asset Investment – Expanding into Mainland China Economy Emerging Consumer Urbanisation Income growth growth middle class Demand Improving infrastructure in Pearl River Delta facilitates regional integration Benefitted from the fast growing middle class shoppers Large tenants from Hong Kong al
Slide 20: Asset Investment – Capital Recycling Strategy
Asset Investment – Capital Recycling Strategy Asset Continue to assess performance of individual disposal properties Identify and capitalise strength of districts with growth dynamics Capital Dispose assets with outlying growth potential recycling Focus resources on areas with expansion Asse
Slide 21: Capital Management – Strong Funding Base
Capital Management – Strong Funding Base Corporate Credit Rating Funding Status as at 31 Mar 2014 Moody’s A2 / Stable Bank Loans(1) HK$3.21B 25% 19% Standard & Poor’s A / Stable Secured Loan(2) Undrawn Total debt Gearing HK$3.00B 18% facilities(1) 11.0% HK$12.56B HK$4.31B MTN Notes(1) 38% Debt Matur
Slide 22: Capital Management – Improving Financial Positions
Capital Management – Improving Financial Positions Decreased Average Interest Rate (1) Increased Available Liquidity (3) HK$’B 5.0% 10.0 4.30% 3.72% 7.1 4.0% 3.35% 8.0 3.07% 6.2 2.77% 3.0% 6.0 4.7 2.0% 4.0 2.4 2.0 1.0% 2.0 0.0% 0.0 As at Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 10 Mar 11 Mar 12 Mar 13
Slide 23: Summary
Summary Strong Hong Kong economic foundation supports steady retail sales growth Proven track record of asset management and asset enhancement Large portfolio with high operating leverage provides stable income source Capital management well positioned to counter potential interest rate hike Discipl
Slide 24: Disclaimer
Disclaimer This document has been prepared by The Link Management Limited in its capacity as the Manager (the “Manager”) of The Link Real Estate Investment Trust (“The Link REIT”) solely for use at the presentations/meetings held and may not be reproduced or redistributed without permission. Neith
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