Keppel REIT · SGX:K71U
Keppel REIT — H1 2015 Earnings Presentation
41 slides from Keppel REIT's earnings presentation, Jul 20, 2015
Slide 1: First Half 2015 Financial Results
First Half 2015 Financial Results 20 July 2015 1
Slide 2: Outline and Important Notice
Outline 1. Key Highlights ……………………………………………… 5 2. Financial Highlights ……………………………………… 9 3. Capital Management ………………………………….. 14 4. Portfolio Analysis ……………………………………….. 18 5. Market Review & Outlook ……….…………………. 29 Important Notice The value of Units and the income from them may fall as well as ris
Slide 3: Keppel REIT: Overview
Keppel REIT: Overview S$8.2 billion 3.3 million sf (1) Assets Under Management Total attributable NLA 12 Office Towers In 9 Quality Premium Grade and Grade A assets in CBDs of Singapore and Australia 293 tenants S$3.6 billion (2) Diversified across various business sectors Market Capitalisation The
Slide 4: Premium Grade and Grade A Office Portfolio
Premium Grade and Grade A Office Portfolio » 88% of portfolio in Singapore and 12% in Australia’s key financial precincts of Sydney, Melbourne, Brisbane and Perth » Approximately 92% of Singapore properties are located in the Raffles Place and Marina Bay precincts Singapore Properties Australia Prop
Slide 5: 1. Key Highlights
1. Key Highlights Ocean Financial Centre, Singapore 5
Slide 6: Key Financial Highlights
Key Financial Highlights » Distributable income of $54.8mil in 2Q 2015 and $108.8mil in 1H 2015 is 3% over 2Q 2014 and 0.5% over 1H 2014 respectively » Higher distributable income notwithstanding Absence of income contribution from the divested Prudential Tower Absence of rental support from
Slide 7: Key Capital Management Highlights
Key Capital Management Highlights » Completed 100% of refinancing requirements for 2015, early refinanced approximately 70% of loans due in 2016 and commenced early refinancing of loans due in 2017 » Close to 100% of Keppel REIT’s total borrowings not due for repayment till 2017 and beyond » Signifi
Slide 8: Key Portfolio Highlights
Key Portfolio Highlights » Completed the renewal and review of almost all of 2015 leases, and all with positive rent reversions » Focused tenant retention strategy contribute to positive rental reversion of 18% on average as at 1H 2015 » Maintain high portfolio occupancy of 99.3% as at 1H 2015 » Hea
Slide 9: 2. Financial Highlights
2. Financial Highlights Bugis Junction Towers, Singapore 9
Slide 10: Sustained Distributable Income
Sustained Distributable Income » Distributable income 3% y-o-y and 1.5% q-o-q to $54.8 million in 2Q 2015 » Distributable income 0.5% y-o-y to $108.8 million in 1H 2015, notwithstanding: Absence of income contribution from Prudential Tower Absence of rental support from MBFC Phase One and
Slide 11: DPU up 1.2% Q-o-Q
DPU 1.2% Q-o-Q » DPU 1.2% q-o-q to 1.72 cents in 2Q 2015 Stronger performance from Ocean Financial Centre and Bugis Junction Towers, which saw improvements in both PI and NPI » Annualised distribution yield of 6% (1) Distribution Property Income Net Property Income Per Unit 1.3% q-o-q 0.4% q-o
Slide 12: Resilient Balance Sheet
Resilient Balance Sheet As at 30 June 2015 As at 31 March 2015 Non-current Assets $7,042 mil $7,056 mil Total Assets $7,276 mil $7,299 mil (1) Borrowings $3,555 mil $3,544 mil Total Liabilities $2,826 mil $2,826 mil Unitholders’ Funds $4,448 mil $4,470 mil (2) Adjusted NAV Per Unit $1.38 $1.39 (1) T
Slide 13: 2Q 2015 Distribution Per Unit
2Q 2015 Distribution Per Unit Distribution Per Unit (DPU) Distribution Period 1.72 cents 1 April 2015 – 30 June 2015 Distribution Timetable Trading on “Ex” Basis Friday, 24 July 2015 Books Closure Date Tuesday, 28 July 2015 Distribution Payment Date Friday, 28 August 2015 1. Key Highlights 2. Financ
Slide 14: 3. Capital Management
3. Capital Management 8 Chifley Square, Sydney 14
Slide 15: Disciplined Capital Structure
Disciplined Capital Structure » Continue to adopt a prudent and proactive capital management strategy As at 30 Jun 2015 Gross Borrowings $3,555 mil Interest Coverage Ratio 4.5 times All-in Interest Rate 2.5% Weighted Average Term to Expiry 3.9 years Aggregate Leverage 42.6% (1) (2) Rating Baa2 / BBB
Slide 16: Hedged almost 100% of income from Australia
Hedged almost 100% of income from Australia » Hedged almost 100% of distributable income from Australia for the remaining of 2015 » Estimated impact of AUD movement on Keppel REIT’s DPU, NAV and gearing: Assuming AUD 1:SGD 1.00 DPU Minimal NAV by 1 cent Gearing by 0.18% 8 Chifley Square, Office Towe
Slide 17: Well-staggered Debt Maturity Profile
Well-staggered Debt Maturity Profile » Completed 100% of Keppel REIT’s refinancing requirement for 2015 » Completed early refinancing of approx. 70% loans due in 2016 and commenced early refinancing of loans due in 2017 respectively » Significantly lengthened debt maturity profile by 0.8 years and e
Slide 18: 4. Portfolio Analysis
4. Portfolio Analysis Raffles Place and Marina Bay, Singapore 18
Slide 19: Steady Leasing Momentum
Steady Leasing Momentum » Successfully renewed and reviewed almost all of its 2015 leases, and all with positive rent reversions » Focused tenant retention strategy Signed, renewed, forward renewed and reviewed 390,000 sf of office space in 1H 2015 with positive rental reversion of 18% on average
Slide 20: New Tenants in 2Q 2015
New Tenants in 2Q 2015 » Total of 20 new leases signed to-date. Some of the new tenants in 2Q 2015 include 20
Slide 21: Well-Diversified Tenant Base
Well-Diversified Tenant Base » Continue to maintain well-diversified tenant base from various business sectors Technology, Multimedia and Telecommunications (TMT), Legal, 9.8% 10% Number of tenants Energy, Natural resources, Shipping and Marine, 9.4% (1) 293 Real estate & property services, 6.9% Ban
Slide 22: Healthy Lease Expiry Profile
Healthy Lease Expiry Profile » Continued focus on tenant retention strategy » Completed almost all renewals and reviews for 2015 Only 2.4% and 0.2% of leases due for renewal and review respectively for 2015 80% of leases not due for renewal till 2017 and beyond Portfolio Lease Profile (By NLA) a
Slide 23: Maintain Strong Committed Occupancy Levels
Maintain Strong Committed Occupancy Levels » Continue to maintain high portfolio committed occupancy of 99.3% » Eight of 11 completed office towers in Singapore and Australia fully committed Singapore Australia Overall 99.5% 98.2% 99.3% 100.0% 100.0% 100.0% 100.0% 100.0% 99.3% 98.8% 97.6% 95.1% (1)
Slide 24: Singapore Portfolio Occupancy above CBD Core
Singapore Portfolio Occupancy above CBD Core » Keppel REIT’s Singapore portfolio occupancy is consistently above Core CBD occupancy levels Keppel REIT Historical Occupancy 99.8% Keppel 100% 99.2% 99.30% REIT 97.0% Singapore 96.5% Core CBD 95% 96.3% 96.2% 92.1% 90% 85% 80% 1Q 12 2Q 3Q 4Q 1Q 13 2Q 3Q
Slide 25: Long Weighted Average Lease Expiry
Long Weighted Average Lease Expiry » Top 10 tenants account for approximately 43% of portfolio NLA » Long WALE of approximately 8.5 years and 6 years for top 10 tenants and portfolio respectively enhances income sustainability over the long term Weighted Average Lease Expiry (WALE) Top Ten Tenants (
Slide 26: Project Update: New Office Tower in Perth
Project Update: New Office Tower in Perth Office Tower on the Old Treasury Building site » Construction of the office tower is progressing on track » The Government of Western Australia is expected to commence its 25-year lease in 4Q 2015 » The 25-year lease includes options for another 25 years Vie
Slide 27: Community Engagement Efforts
Community Engagement Efforts REIT Symposium » Inaugural REIT Symposium jointly organised by REITAS and Share Investor to promote the growth and development of the S-REIT industry » Over 1,300 investors attended the event on 23 May 2015 to learn more about the industry and investment opportunities »
Slide 28: Awards and Accolades
Awards and Accolades Singapore Corporate Awards 2015 » Conferred the Best Investor Relations (Gold) award in the REITs and Business Trusts category at the annual Singapore Corporate Awards 2015 » Reinforces Keppel REIT’s commitment to ensure quality and fairness in disclosure, as well as to continua
Slide 29: 5. Market Review & Outlook
5. Market Review & Outlook One Raffles Quay, Singapore 29
Slide 30: Market Outlook – Singapore
Market Outlook – Singapore Singapore » Advance estimates indicate that the Singapore economy grew by 1.7% y-o-y in 2Q 2015 » Growth was supported by an expansion in the construction sector due to an increase in public sector construction activities » Net absorption for office space in Singapore’s CB
Slide 31: Core CBD Occupancy
Office Market Review – Singapore » Average Grade A occupancy in the core CBD remained relatively stable at 96.2% » Grade A office rents at approximately $11.00 psf in 2Q 2015 100% 96.3% 96.0% 96.5% 96.4% 95.8% 96.1% 96.2% $15 94.3% 95.0% 94.5% 95.1% 93.2% 92.1% 90.6% Average Grade A Office Rental ($
Slide 32: Singapore Average Net Office Demand and Supply
Singapore Average Net Office Demand and Supply » Net demand for office space in Singapore’s CBD remained stable in 2Q 2015 » Healthy demand for office space of ~1.2 mil sf p.a. in the last 5 years » Average supply of ~0.7mil sf p.a. over the next 6 years till end-2020 Period Ave annual net supply Av
Slide 33: Market Outlook – Australia
Market Outlook – Australia Australia » Australia is expected to grow 2.2% y-o-y in 2Q 2015 » Economists forecast a 2.4% growth for the whole of 2015 » In May 2015, the Reserve Bank of Australia further cut the official cash rate to a historic low of 2.0% to further stimulate economic growth » Austra
Slide 34: Focused on Long-term Sustainable Growth
Focused on Long-term Sustainable Growth » Remain focused on providing Unitholders with income stability and resilience over the long term Continued focus on tenant retention Disciplined approach towards operational efficiency Prudent capital management approach to mitigate financing, interest and fo
Slide 35: Best Proxy to Prime Grade A Office Space
Best Proxy to Prime Grade A Office Space » Best-in-class assets strategically located in Singapore’s prime business and financial districts » S-REIT with the youngest and largest portfolio of premium office assets » Reputable tenant base spanning diverse business sectors Marina Bay Financial Centre
Slide 36: Thank You
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Slide 37: Additional Information
Additional Information Ocean Colours, Singapore 37
Slide 38: 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 Guided by our operating principles and core values, we will deliver stable and sustainable returns to Unitholders by continually enhancing our assets
Slide 39: Growth Record
Growth Record • Divested stake in Prudential Tower • Completed the acquisition of a • Increased interest • Acquisition of the one-third in OFC to 99.9% new office tower interest in at the Old MBFC Tower 3 • Obtained tax • First overseas transparency Treasury Building acquisition • First forward in P
Slide 40: Portfolio Information
Portfolio Information » Keppel REIT’s AUM is approximately $8.2 billion as at 30 June 2015 » 88% of portfolio in Singapore and 12% in Australia Marina Bay Financial Bugis Junction Towers One Raffles Quay(1) Ocean Financial Centre (2) Centre (1) Comprises of three premium A pair of 50 and 29 storey 1
Slide 41: Portfolio Information
Portfolio Information Office Tower being 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