Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — Suntec REIT — Q3 2023 Earnings Presentation
59 slides from Singapore Exchange's earnings presentation, Oct 20, 2023
Slide 1: Suntec REIT Business Updates
SUNTEC REIT BUSINESS UPDATES For the Quarter ended 30 September 2023 20 October 2023
Slide 2: Agenda
03 18 3Q 23 Financial Overview Singapore Office Portfolio Performance 04 28 3Q 23 Operational Overview Australia Portfolio Performance 05 32 Financial Highlights UK Portfolio Performance 15 35 Capital Management Singapore Retail Portfolio Performance Agenda 44 Suntec Convention Performance 47 Our ES
Slide 3: 3Q 23 Financial Overview
3Q 23 Financial Overview Distributable Income to Distribution Per Unit ESG - GRESB Unitholders to Unitholders S$52.0 million 1.793 cents Highest 5 Star Rating -13.3% y-o-y -14.0% y-o-y ‘A’ for Public Disclosure Distribution Income DPU from from Operations Operations S$46.2 million 1.595 cents -14.8%
Slide 4: 3Q 23 Operational Overview
3Q 23 Operational Overview Portfolio Committed Occupancy Portfolio WALE 97.4% 97.9% 4.3 2.2 Office Portfolio Retail Portfolio Office Portfolio Retail Portfolio Office Portfolio 77% 23% Work Done 352,600 sq ft Retail Portfolio 73% 27% Renewal Leases New Leases 4
Slide 5: Financial Highlights
Suntec City MBFC Properties One Raffles Quay Olderfleet, 477 Collins Street Financial Highlights The Minster Building 177 Pacific Highway 55 Currie Street Nova Properties 21 Harris Street Southgate Complex
Slide 6: Portfolio Financial Performance Remained Resilient
Portfolio Financial Performance Remained Resilient Gross Revenue and NPI Grew 15.0% and 9.7% Respectively Mainly due to: 16.1M or 15.0% 3Q 22 Gross Revenue & Net Property Income: 3Q 23 Higher contribution from Suntec City Office, Suntec City Mall and Suntec Convention Higher contribution from The Mi
Slide 7: Improvement in Operations Eroded By Higher Financing Costs
Improvement in Operations Eroded By Higher Financing Costs Distributable Income (S$ mil) From (8M or 13.3%) Operations 60.0 5.8 52.0 From capital 5.8 Mainly due to: 54.2 Higher financing cost ($14.3m) 46.2 Weaker AUD against SGD Higher maintenance fund contribution in 2023 3Q 22 3Q 23 Higher NPI on
Slide 8: Distribution Payment
Distribution Payment Distribution Payment Distribution Period 1 Jul 2023 – 30 Sep 2023 Amount (cents/unit) 1.7931,2 Ex-date 27 Oct 2023 Record date 30 Oct 2023 Payment date 29 Nov 2023 Notes: 1. Total of 5.269 cents for YTD Sep 2023. 2. The Manager has elected to continue to receive 50% of its asset
Slide 9: Singapore Office Portfolio Revenue and NPI Strengthened
Singapore Office Portfolio Singapore Office Portfolio Revenue and NPI Strengthened JV Income Impacted by Higher Interest Expense 3Q 22 3Q 23 Mainly due to: 2.5M or 7.4% Gross Revenue & Net Property Income: Higher occupancy and rent at Suntec City Office 0.4M or 1.5% Higher maintenance fund contribut
Slide 10: Australia Portfolio Operational Performance Remained Stable
Australia Portfolio Australia Portfolio Operational Performance Remained Stable Impacted by Higher Interest Expense and Weaker AUD In AUD 3Q 22 3Q 23 Mainly due to: 1.2M or 4.7% Gross Revenue & Net Property Income: (0.1M or 0.5%) Higher occupancy at 21 Harris Street (Sydney) and 477 Collins Street (
Slide 11: UK Portfolio Remained Healthy
UK Portfolio UK Portfolio Remained Healthy 3Q 22 In GBP Mainly due to: 3Q 23 Gross Revenue & Net Property Income: (0.2M or 4.2%) 0.7M or 18.9% 0.4M or 11.4% Higher occupancy and rent at The Minster Building 4.8 Higher operating expenses at The Minster 4.4 4.6 3.7 3.5 3.9 Building JV Income: Gross Re
Slide 12: Singapore Retail Portfolio Improved
Singapore Retail Portfolio Singapore Retail Portfolio Improved Gross Revenue and NPI Grew 7.7% and 10.8% Respectively 3Q 22 3Q 23 2.4M or 7.7% Mainly due to: Gross Revenue & Net Property Income: Higher occupancy and rent at Suntec City Mall 2.4M or 10.8% One-off property tax refund at Suntec City Ma
Slide 13: Strong Recovery for Suntec Convention
Suntec Convention Strong Recovery for Suntec Convention 3Q 22 3Q 23 10.4M or 87.4% Mainly due to: Higher revenue from MICE and advertising, offset by higher variable costs Higher fixed costs mainly due to ramping up of staff recruitment, increase in facilities expenses 22.3 and higher property tax 5
Slide 14: Diversified Portfolio Across Geography and Sector
Diversified Portfolio Across Geography and Sector Singapore Market and Office Assets Are Mainstays Income Contribution by Geography 70% 17% 13% Singapore Australia UK Income Contribution by Sector 70% 23% 7% Office Retail Convention 14
Slide 15: Capital Management
Capital Management Olderfleet, 477 Collins Street, Melbourne
Slide 16: Key Financial Indicators
Key Financial Indicators As at 30 Jun 23 As at 30 Sep 23 NAV Per Unit S$2.12 S$2.09 Total Debt Outstanding S$4,322 mil S$4,300 mil Aggregate Leverage Ratio1 42.6% 42.7% Weighted Average Debt Maturity 2.90 years 2.72 years All-in Financing Cost2 3.64% p.a. 3.78% p.a.3 Adjusted ICR4 2.1X 2.0X Weighted
Slide 17: Completed FY 23 Refinancing
Completed FY 23 Refinancing ~37% of Total Debt are Green / Sustainability-Linked Loans Debt Maturity Profile Perpetual Securities 1200 1,000 (First Reset) 900 1000 800 298 700 800 600 600 500 198 700 791 180 400 900 400 300 300 200 200 366 200 200 100 200 167 150 0 0 FY2023 FY2024 FY2025 FY2026 FY20
Slide 18: Singapore Office Portfolio Performance
Singapore Office Portfolio Performance 18 One Raffles Quay, Singapore
Slide 19: Singapore Office Portfolio Near Full Occupancy
Singapore Office Portfolio Singapore Office Portfolio Near Full Occupancy Committed Occupancy Lease Expiry Profile As at 30 Sep 23 % of Total NLA4 Comparison Core CBD Occupancy: 95.3%3 100.0% 99.7% 98.2% 99.5% 23.6% 22.7% 20.2% 18.8% 12.9% 0.5% 1.3% Suntec City One Raffles MBFC Towers 1 Singapore 20
Slide 20: Robust Rent Reversion
Singapore Office Portfolio Robust Rent Reversion 21 Quarters of Positive Rent Reversion Rent Reversion Work Done1 +12.2% for YTD 3Q 23 251,000 sq ft for 3Q 23 14.0% 77% 10.6% 11.2% 10.5% 57% 43% 23% 4Q 22 1Q 23 2Q 23 3Q 23 3Q 22 3Q 23 Renewal Leases New Leases Note: 1. Reflects net lettable area of
Slide 21: Suntec City Office Performance
Suntec City Office Performance Suntec City Office, Singapore
Slide 22: Occupancy and Rent Outperformed Market Level
Suntec City Office Occupancy and Rent Outperformed Market Level Suntec 3Q 23 CBRE Core CBD $9.71 $9.79 $9.84 $9.35 $9.25 100.0% $10 $8.84 $8.80 95.0% $9 90.0% $8 85.0% 80.0% $7 99.9% 100.0% 99.9% 100.0% 75.0% 95.6% 97.2% 95.3% $6 70.0% 65.0% $5 60.0% $4 55.0% $3 50.0% FY 20 FY 21 FY 21 FY FY 22 22 1
Slide 23: Robust Positive Rent Reversion
Suntec City Office Robust Positive Rent Reversion With Strong Retention of Tenants Rent Reversion Work Done1 +12.5% for YTD 3Q 23 214,600 sq ft in 3Q 23 14.0% 79% 10.5% 10.8% 64% 7.7% 36% 21% 3Q 22 3Q 23 4Q 22 1Q 23 2Q 23 3Q 23 Renewal Leases New Leases Note: 1. Reflects net lettable area of new lea
Slide 24: Well Spread Expiry Profile
Suntec City Office Well Spread Expiry Profile 2024 Expiries Reduced by 20% from Previous Quarter 60.0% $11.0 $10.7 $10.5 $10.6 50.0% $10.2 $10.0 $10.1 $10.0 $9.5 40.0% $9.6 $9.0 30.0% 27.7% $8.5 $8.0 20.0% 14.9% $7.5 2.8% 24.7% 24.2% $7.0 10.0% 5.5% 10.6% 11.3% $6.5 1.5% 4.5% 0.0% $6.0 2023 2024 202
Slide 25: Performance of One Raffles Quay and MBFC Towers 1 & 2
Performance of One Raffles Quay and Marina Business Financial Centre Towers 1 & 2 MBFC Properties, Singapore
Slide 26: Strong Positive Rent Reversion
One Raffles Quay & MBFC Towers 1 & 2 Strong Positive Rent Reversion Rent Reversion Work Done1 +11.6% for YTD 3Q 23 36,400 sq ft in 3Q 23 14.4% 66% 11.9% 54% 10.3% 46% 9.1% 34% 3Q 22 3Q 23 FY 22 1Q 23 2Q 23 3Q 23 Renewal Leases New Leases Note: 1. Based on Suntec REIT’s interests in One Raffles Quay
Slide 27: Singapore Office Outlook and Focus
Singapore Office Outlook and Focus Slowdown in economic growth arising from Office demand expected Slower rent growth uncertainties in global to be soft with occupiers amidst uncertain financial markets and focusing on cost economic outlook economies containment Revenue continues to Tenant retention
Slide 28: Australia Portfolio Performance
Australia Portfolio Performance 21 Harris Street, Sydney
Slide 29: Committed Occupancy Outperforms Market
Australia Portfolio Committed Occupancy Outperforms Market Committed Occupancy As at 30 Sep 23 100% 100% 96.6% 96.4% 95.4% 85.8% 85.8% 85.5% 84.2% 83.8% 177 Pacific 21 Harris Street Southgate Complex 477 Collins Street 55 Currie Street Australia Overall Highway Sydney Melbourne Adelaide CBD Office O
Slide 30: Active Leasing to Bring in New Tenants
Australia Portfolio Active Leasing to Bring in New Tenants Non-renewals Expected for 55 Currie Steet and Southgate Complex Work Done1 Lease Expiry Profile % of Total NLA2 Comparison 31,000 sq ft in 3Q 23 Renewal Leases New Leases 96% 75% 60.0% 4% 25% 1H 23 3Q 23 4.6% 8.0%3 8.8% 10.5% 2.4% 5.7% Rent
Slide 31: Australia Outlook and Focus
Australia Outlook and Focus CBD market office Leasing momentum Incentives in Melbourne vacancy continue to slows due to and Adelaide on the macroeconomic increase; significant new uptrend. Prime rents uncertainties supply expected in remain stable in Sydney Adelaide in 4Q23 Asset enhancement initiat
Slide 32: UK Portfolio Performance
UK Portfolio Performance Nova Properties, London
Slide 33: Drop in Occupancy for The Minster Building
UK Portfolio Drop in Occupancy for The Minster Building 2024 Lease Breaks Removed Committed Occupancy Lease Expiry Profile As at 30 Sep 23 % of Total NLA2 Comparison 87.1% of lease expiries will be in 2028 and Central beyond if tenants do not London Office exercise lease breaks Occupancy: 90.6%1 14.
Slide 34: UK Office Outlook and Focus
UK Office Outlook and Focus Good quality office space Office market continues Central London office in prime locations to be impacted by occupancy falls by 0.5% economic challenges continue to be sought to 90.6%1 in slow market after Improvement works in progress to enhance Proactive lease Revenue w
Slide 35: Singapore Retail Portfolio Performance
Singapore Retail Portfolio Performance Suntec City, Singapore
Slide 36: Portfolio Committed Occupancy Remained Healthy
Singapore Retail Portfolio Portfolio Committed Occupancy Remained Healthy Committed Occupancy Lease Expiry Profile As at 30 Sep 23 % of Total NLA2 Comparison Central Area Outside Orchard occupancy: 90.1%1 98.7% 97.0% 98.6% 34.2% 25.3% 26.7% 1.4% 4.1% 5.9% 2.4% Suntec City Mall Marina Bay Link Mall O
Slide 37: Suntec City Mall Performance
Suntec City Mall Performance Suntec City Mall, Singapore
Slide 38: Positive Rent Reversion for 6 Consecutive Quarters
Suntec City Mall Positive Rent Reversion for 6 Consecutive Quarters Refreshed Tenant Mix With Stronger Brands at Higher Rents Rent Reversion Work Done1 +20.2% for YTD 3Q 23 70,000 sq ft for 3Q 23 25.3% 73% 58% 16.5% 18.2% 42% 9.9% 27% 4Q 22 1Q 23 2Q 23 3Q 23 3Q 22 3Q 23 Renewal Leases New Leases Not
Slide 39: Average Daily Traffic
Suntec City Mall 3Q 23 Traffic Improved Over 3Q 22 Drop in September 23 Traffic Likely Due to School Holidays Overseas Travel YoY Traffic Variance 140,000 2019 Avg Daily Traffic +34% 120,000 +18% +11% +4% +6% +38% -3% +2% -7% +23% 100,000 Average Daily Traffic 80,000 60,000 40,000 20,000 0 Jan Feb M
Slide 40: Tenant Sales psf
Suntec City Mall 3Q 23 Tenant Sales Remained Above 2019 and 2022 Tenant Sales Growth Moderating Tenant Sales psf ($) YoY Variance 60.0 +14% +20% -1% -1% +5% +0.4% +7% -1% -2% 2019 Avg +28% 50.0 Tenant Sales psf ($) Tenant Sales psf ($) 40.0 30.0 20.0 10.0 0.0 Jan Feb Mar Apr May Jun Jul Aug Sep 3Q 2
Slide 41: Introduced New Concepts to Draw Footfall
Suntec City Mall Introduced New Concepts to Draw Footfall 6 New-to-Market and 5 New-to-Suntec Brands1 in 3Q 23 Beautiful Lai Katsu-an Yogibo Compose Coffee Grilled Fish Butahage Famous Tonkatsu restaurant World’s number one beads 1st international outlet of 1st outlet in Singapore, Famous Hokkaido B
Slide 42: Suntec City Mall to Benefit from Tourism Footfall and Spend
Suntec City Mall Suntec City Mall to Benefit from Tourism Footfall and Spend Hub for tourists / locals Relocation of Big Bus embarking on local tours and Duck Tour with new and road trips to Coach Bay to create Malaysia synergy Central location of Coach Bay will benefit Suntec City Mall tenants with
Slide 43: Singapore Retail Outlook and Focus
Singapore Retail Outlook and Focus MICE and tourism Retail sales growth Rent growth and recovery expected to expected to slow but occupancy underpinned drive traffic and tenant overall sales to remain by active leasing demand sales above pre-Covid and limited supply Curate differentiated Improvement
Slide 44: Suntec Convention Performance
Suntec Convention Performance Suntec Singapore
Slide 45: Large-Scale International Headline Events in 3Q 23
Suntec Convention Large-Scale International Headline Events in 3Q 23 Contributed to Footfall Increase at Suntec City Mall International Headline Events 25th World Congress of Dermatology WorldSkills ASEAN 2023 2023 World Conference on Lung Cancer 3 – 8 Jul 23 23 – 25 Jul 23 9 – 12 Sep 23 45
Slide 46: Suntec Convention Outlook and Focus
Suntec Convention Outlook and Focus Twin engines of digital MICE industry driving International, domestic and sustainability to and benefitting from SG and consumer events to power SG into global tourism recovery1 drive growth MICE destination1 Recovery ahead of Grow higher yielding Resumption of di
Slide 47: Our ESG Commitment
Our ESG Commitment 21 Harris Street, Sydney
Slide 48: ESG Initiatives
ESG Initiatives Environmental Upgraded Building Management System for 55 Currie. Implemented energy optimization programme to improve energy efficiency. Cyclical replacement of Air Handling Units at Suntec Office Towers to improve energy efficiency. Improved waste streams and achieved 98% diversion
Slide 49: Continual Commitment to ESG
Continual Commitment to ESG Achievement All assets Green Building certified 177 Pacific Highway 55 Currie Street 477 Collins and Nova Properties Carbon Neutral achieved WELL Platinum Certification Attained highest GRESB 5 Star rating for 21 Harris Street, 477 Collins About 37% of total debt are 4 co
Slide 50: Roadmap Towards Net-Zero Carbon Emission Target by 2050
Roadmap Towards Net-Zero Carbon Emission Target by 2050 All AUS assets to be All SGP assets to be Net-Zero carbon on 100% Renewable on 100% Renewable emission for all Energy Energy assets Net-Zero carbon 21 Harris & 477 Collins emission for fully owned All SGP assets to to be Carbon Neutral assets c
Slide 51: Looking Ahead
Looking Ahead 55 Currie Street, Adelaide
Slide 52: Future Earnings Continued to be Impacted by Macro Factors
Future Earnings Continued to be Impacted by Macro Factors Elevated Interest Rates Improvements in Weaker FX Reduced Operating Earnings Performance Higher Energy Costs 52
Slide 53: Navigating Challenges
Navigating Challenges Unlock Value from Asset Proactive Capital Enhancement Initiatives and Management Divestment of Mature Assets Explore Good Quality, Accretive Continual Commitment to Assets Sustainability Practices 53
Slide 54: Thank you
Thank you For enquiries, please contact: Melissa Chow Eugenia Ong Manager, Investor Relations Manager, Portfolio Management Melissa.chow@esr.com Eugenia.ong@esr.com The Minster Building, London
Slide 55: Disclaimer
Disclaimer This presentation is focused on the comparison of the business updates for the quarter ended 30 September 2023 versus the quarter ended 30 September 2022. The information included in this release does not constitute an offer or invitation to sell or the solicitation of an offer or invitat
Slide 56: About Suntec REIT
About Suntec REIT 177 Pacific Olderfleet,477 Highway, Collins Street, Sydney Melbourne
Slide 57: About Suntec REIT
About Suntec REIT Singapore’s First Composite REIT Market Capitalisation S$3.4 Billion1 London Asset Under Management S$12.2 Billion2 Listed on 9 Dec 2004 on the SGX-ST High quality office assets, complemented by Singapore retail and convention components 10 properties – 3 in Singapore, 2 in Sydney,
Slide 58: Portfolio Snapshot
Portfolio Snapshot Singapore and UK Properties Suntec City One Raffles MBFC The Minster Nova Properties Suntec City – Suntec Convention Quay Properties Building Office & Retail Description Integrated commercial World-class convention Two premium Two premium Two Grade A Grade A Office development com
Slide 59: Portfolio Snapshot
Portfolio Snapshot Australia Properties 177 Southgate Olderfleet 477 55 Currie Street 21 Harris Street Pacific Highway Complex Collins Street Description 31-storey Grade A office Integrated development Premium Grade, 40- Twelve-storey, Grade A Nine-storey, Grade A building comprising two A-Grade lev