Link Real Estate Investment Trust · HKEX:823
Link Real Estate Investment Trust — FY2022/2023 Earnings Presentation
60 slides from Link Real Estate Investment Trust's earnings presentation, May 31, 2023
Slide 1: Annual Results Analyst Presentation 2022/2023
Annual Results Analyst Presentation 2022/2023 31 May 2023
Slide 2: Market Outlook & Mitigations
Market Outlook & Mitigations
Slide 3: Key Themes
Key Themes Driving scale and reach On the Path to a Firm Post-COVID Recovery Strengthened Capital Base to Navigate Interest Rates Headwinds Diversification Strategy Drives Resilient Earnings and Valuation Link 3.0 - Grow Asset Lighter Business and Capital Partnerships 3
Slide 4: Geoeconomic Fragmentation Compounded by Financial Threats
Geoeconomic Fragmentation Compounded by Financial Threats The macro outlook remains volatile amidst interest rate hikes APAC continues to be viewed as a safe investment destination Geoeconomic confrontation Financial turmoil • Persistent trade disputes and sanctions • Rising inflation, massive tight
Slide 5: Market Prospects
Market Prospects Ushering in the post-pandemic era Hong Kong Mainland China ► Border reopened between Hong Kong and Mainland China ► Scrapped strict zero-COVID policy ► Ended mask-wearing mandate and lifted all social distancing ► Despite slowing growth, Mainland China is still one of the measures f
Slide 6: Market Prospects (cont'd)
Market Prospects Ushering in the post-pandemic era (cont’d) Singapore Australia ► Low unemployment rate and high disposable income ► Stable economy continues to drive real estate return and attract inbound/ local capital ► More corporations positioning Singapore as a regional hub ► Population growth
Slide 7: Operational Updates
Operational Updates
Slide 8: Financial Highlights
Financial Highlights Sustained NPI growth demonstrated strength of our diversified platform ► Steady growth of revenue and NPI REVENUE NET PROPERTY INCOME ► New contributions from Australia retail and office, Mainland China logistics and HK$12,234M +5.4% YoY HK$9,198M +4.8% YoY full-year contributio
Slide 9: Hong Kong Retail
Hong Kong Retail Resilient operational performance from non-discretionary retail Occupancy at All-Time High Strong Momentum on Reversion (1) HK$63.8 Unit Rent psf 7.1% 96.8% 4.8% 2020/2021 ► Occupancy hit record high 97.7% 2021/2022 ► Average unit rent grew further 98.0% -1.8% ► Rental reversion con
Slide 10: Hong Kong Retail Leasing
Hong Kong Retail Leasing Garnered strong leasing interests in the market Leasing Trend Top 5 retail trades signed 1 Fashion 2 Specialty Restaurants (1) >670 New Leases Signed in 2022/2023 3 Learning Institutions (over 260 new brands) 4 Light Refreshments 5 Bakery & Cake Shops Notes: (1) Including re
Slide 11: Hong Kong Retail Sales
Hong Kong Retail Sales Tenant sales surpassed pre-COVID level in 2019 (1) (3) TENANT SALES GROWTH TENANT OCCUPANCY COST +6.2% YoY 12.5% For the period (1) Tenant sales growth Apr 2022 – Mar 2023 Food & Beverage Supermarket & Foodstuff General Retail (2) Overall Food and beverage 10.5% 13.2% Supermar
Slide 12: Hong Kong Car Parks and Related Business
Hong Kong Car Parks and Related Business Uplift driven by full-year contribution of new high-quality earnings stream ► Both monthly and hourly car park income REVENUE GROWTH CAR PARK INCOME exceeded pre-COVID levels +12.3% YoY HK3,226 per space per month +5.3% YoY ► Full-year contribution from two c
Slide 13: Mainland China Retail
Mainland China Retail Outlook brightens as positive signs of retail sales emerge ► COVID-related measures have dampened retail and leasing sentiment in 2022, but rapidly recovered after the Chinese New Year OCCUPANCY (1) REVERSION (1, 2) ► Occupancy level improved significantly to 95.2%, tenant sale
Slide 14: Mainland China Logistics
Mainland China Logistics Steady organic growth backed by annual rental increments Jiaxing warehouse Dongguan Warehouse Changshu South Warehouse Foshan Warehouse OCCUPANCY WALE 100% 1.7 years ► Completed the acquisitions of Jiaxing in June 2022, Changshu North and South in April and May 2023, respect
Slide 15: Singapore Retail
Singapore Retail Positive outlook supported by healthy operational metrics ► Completed the strategic acquisition of Jurong Point and Swing By @ Thomson Plaza by end-March 2023 to tap into market opportunities OCCUPANCY(1) ► Commenced management contract of AMK Hub to generate recurring 99.9% third-p
Slide 16: Australia Retail
Australia Retail Continuous improvement in operating metrics ► Began contributing in July 2022 OCCUPANCY (1) ► Resilient retail sentiment and demand with tenant sales reported 96.9% 12.5% growth since the acquisition ► Higher occupancy supported by improving economic fundamentals Queen Victoria Buil
Slide 17: International Office
International Office High-quality prime office assets underpinned by long WALE (1) (1) OCCUPANCY OVERALL WALE ~90% ~5.7 years ► Completed the acquisition of 49.9% interest in a trust which holds five prime office assets in Australia in 151 Clarence Street 567 Collins Street The Cabot (3) June 2022 ►
Slide 18: Asset Enhancements
Asset Enhancements Unlocking latent asset value HONG KONG - Fung Tak MAINLAND CHINA – Link Square Before After After Target Capital Capital Projects Completed ROI Projects Underway Completion Expenditure Expenditure(2) Date Fung Tak HK$23M 14.0% >HK$640M Link Plaza Tianhe Phase 1 ~RMB200M Late 2023
Slide 19: Sustainability
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Slide 20: Sustainability Priorities
Sustainability Priorities We have identified four strategic areas to focus on portfolio-wide over the next five years Climate Resilience Net Zero Strategy Sustainability Reporting Stakeholder Engagement • Participated in the United Nations • Developed our 2035 Net Zero • Early adoption of ISSB Expos
Slide 21: Material ESG KPIs
Material ESG KPIs We received external assurance on the 9 material ESG KPIs overseen by the Board and prioritised based on our materiality assessment and risk register exercise 87% 3.1% 76% Employee Engagement Electricity Intensity Positive Brand Survey Response Rate Reduction(1) Perception 4.00 out
Slide 22: Sustainability Recognitions
Sustainability Recognitions Our sustainability leadership is recognised by various global and industry ESG benchmarks 2022/2023 ESG Indices Performance Rank 6th In East Asia A Score 79/100 Industry Adjusted Score 5.8 2021: 73/100 2021: 5.8 (A) Asia Pacific Index “Low Risk” Rating Score 71/100 Score
Slide 23: Capital Management
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Slide 24: Interest Rates Expected to Stay at an Elevated Level
Interest Rates Expected to Stay at an Elevated Level Fixed-rate debt ratio maintained at around 60% While indications are that the interest rate hike cycle is close to an end, rates are expected to remain at an elevated level throughout 2023 Fed Funds Rate & 10-year Treasury Yield AUD BBSY SGD SORA
Slide 25: Prudent Capital Management
Prudent Capital Management Strong balance sheet with financial flexibility and funding certainty NET GEARING RATIO AVAILABLE LIQUIDITY AVERAGE DEBT MATURITY AVERAGE BORROWING COSTS (2) 17.8% HK$27.3B 3.7 years 3.0% Maturity Profile (4) (HK$ billion) ► Strengthened financial position via HK$18.8B rig
Slide 26: Prudent Capital Management
Prudent Capital Management Stable credit ratings bolstered by disciplined debt management Debt Profile Breakdown (Face Value as at 31 March 2023, in HK$ B) CREDIT RATING 22.9 Debt Mix by Type (34.9%) 4.1 (6.2%) 38.7 (58.9%) A/Stable A2/Stable A/Stable S&P Moody’s Fitch Medium Term Notes Convertible
Slide 27: Valuation
Valuation Diversification strategy providing valuation support As at As at As at As at HK$’M 31 Mar 2023 31 Mar 2022 31 Mar 2023 31 Mar 2022 Hong Kong Retail properties 129,819 122,878 3.10% - 4.50% 3.10% – 4.50% Car parks and related business 46,823 40,102 2.60% - 4.80% 2.90% – 5.30% (1) (1) TOTAL
Slide 28: Strategy Update
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Slide 29: Link Today
Link Today Growing AUM while making inroads into the international market 1.2% 5.5% 4.8% 154 assets across 1.2% sectors and geographies 2.6% 10.6% (1) Hong Kong 74.1% 2.9% HK$ 248B Portfolio Value 52.4% 18.8% Mainland China 14.4% Hong Kong Retail Mainland China Office International 11.5% Hong Kong C
Slide 30: Pivotal Year in Link's History
Pivotal Year in Link’s History Leveraging our strengths to build a solid platform for growth Relentless effort on Link’s strategic evolution, while dealing with challenges from COVID pandemic New senior team on board Diversification continues to contribute The largest-ever Asian rights issue in ► Re
Slide 31: Link 3.0 Strategy
Link 3.0 Strategy Our New Phase of Growth Link 3.0 • Achieve organic growth through active asset management • Optimise our portfolio and diversify our income source through accretive investments and asset recycling • Adopt an asset-lighter approach by working with capital partners to grow AUM and ma
Slide 32: Link's Investment Strategies
Link’s Investment Strategies Focus on resilience and growth potential in APAC; stay patient and selective Geographical Focus Sector Focus ► Key developed markets in APAC, Australia, ► Non-discretionary retail and logistics with synergies Hong Kong, tier-one cities in Mainland China, with existing bu
Slide 33: Distribution Calendar
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Slide 34: Distribution Calendar
Distribution Calendar Distribution period October 2022 – March 2023 Last day of trading on a “cum” basis 14 June 2023 Ex-distribution date 15 June 2023 19 June 2023 – 23 June 2023 Distribution book close (both days inclusive) Record date for entitlement to distribution 23 June 2023 Ten trading days
Slide 35: Q&A
Q&A
Slide 36: Appendix
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Slide 37: Why invest in Link REIT
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 communi
Slide 38: Net asset value per unit
Appendix 2 Net asset value per unit NAV per unit (HK$) 100 80 NAV per unit (HK$) NAV was down due to 60 the weighted average capitalisation rate March 2023: HK$73.98 being adjusted March 2022: HK$77.10 40 upwards during the social event 20 0 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Ma
Slide 39: Australia retail sales far exceed pre-COVID level
Appendix 3 Australia retail sales far exceed pre-COVID level National Extended Melbourne Extended Sydney (Jun-Oct 2021) lockdown lockdown (Jun-Oct 2020) and Melbourne lockdown (Aug- (Mar-May and shorter regional Oct 2021), and shorter regional Total retail sales 2020) lockdown in Victoria lockdown i
Slide 40: Key financial data
Appendix 4 Key financial data Percentage contribution Year ended 2022/2023 2021/2022 YoY 31 Mar 2023 Consolidated HK$’M HK$’M % % Revenue 12,234 11,602 +5.4 - Net property income 9,198 8,776 +4.8 - Rentals Hong Kong retail and office properties 6,555 6,425 +2.0 53.5 Hong Kong car parks and related b
Slide 41: Financials – Income statement summary
Appendix 5 Financials – Income statement summary Year ended Year ended 31 Mar 2023 31 Mar 2022 YoY HK$’M HK$’M % Revenue 12,234 11,602 +5.4 Property operating expenses (3,036) (2,826) +7.4 Net property income 9,198 8,776 +4.8 General and administrative expenses (653) (512) +27.5 Interest income 106
Slide 42: Financials – Distribution statement summary
Appendix 6 Financials – Distribution statement summary Year ended Year ended 31 Mar 2023 31 Mar 2022 YoY HK$’M HK$’M % Profit for the year, before transactions with Unitholders 15,451 6,894 +124.1 attributable to Unitholders Change in fair values of investment properties and impairment of of propert
Slide 43: Financials – Movement of financial position & investment properties
Appendix 7 Financials – Movement of financial position & investment properties Financial Position Summary As at As at As at HK$’M 31 Mar 2023 30 Sep 2022 31 Mar 2022 Total assets 267,919 238,691 225,716 Total liabilities 78,859 67,833 62,726 Non-controlling interests 120 289 302 Net assets attributa
Slide 44: Financials – Capital management
Appendix 8 Financials – Capital management HK$ B % Committed Debt Facilities Mar-23 Sep-22 Mar-23 Sep-22 HK$ Bank Loans 10.8 15.7 16.5 28.4 RMB Bank Loans 3.2 3.4 4.8 6.2 AUD Bank Loans 7.8 8.9 11.9 16.2 GBP Bank Loans 3.7 3.5 5.6 6.3 SGD Bank Loans 13.2 - 20.1 - HK$/US$ Medium Term Notes 20.2 21.0
Slide 45: HK Portfolio – Retail revenue analysis
Appendix 9 HK Portfolio – Retail revenue analysis Percentage contribution Year ended Year ended Year ended 31 Mar 2023 31 Mar 2022 YoY 31 Mar 2023 (HK$’M) (HK$’M) % % Retail rentals: Shops (1) 4,965 4,919 +0.9 67.6 Markets / cooked food stalls 1,025 977 +4.9 14.0 Education / welfare and ancillary 14
Slide 46: HK Portfolio – Car parks and related business revenue analysis
Appendix 10 HK Portfolio – Car parks and related business revenue analysis Percentage contribution Year ended Year ended Year ended 31 Mar 2023 31 Mar 2022 YoY 31 Mar 2023 (HK$’M) (HK$’M) % % Rental income: Monthly car parks 1,587 1,517 +4.6 66.1 Hourly car parks 601 561 +7.1 25.0 (1) Car parks rela
Slide 47: HK Portfolio - Property operating expenses analysis
Appendix 11 HK Portfolio - Property operating expenses analysis Percentage contribution Year ended Year ended Year ended 31 Mar 2023 31 Mar 2022 YoY 31 Mar 2023 (HK$’M) (HK$’M) (%) (%) Property managers’ fees, security 611 599 +2.0 26.3 and cleaning Staff costs 436 460 -5.2 18.8 Repair and maintenan
Slide 48: HK Portfolio – Retail portfolio data
Appendix 12 HK Portfolio – Retail portfolio data Retail properties Retail Average monthly 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 31 Mar 3
Slide 49: HK Portfolio – Retail and car parks portfolio data
Appendix 13 HK Portfolio – Retail and car parks and related business portfolio data As at As at 31 Mar 2023 31 Mar 2022 Change Average monthly unit rent (psf pm)(1) ◼ Shops HK$61.9 HK$61.2 +1.1% ◼ Overall (ex self use office) HK$63.8 HK$62.7 +1.8% Occupancy rate ◼ Shops 98.3% 98.1% +0.2% ◼ Markets/c
Slide 50: HK Portfolio – Retail lease expiry profile
Appendix 14 HK Portfolio – Retail lease expiry profile (1) As % of total area As % of monthly rent As at 31 March 2023 % % 2023/2024 30.0 31.9 2024/2025 32.4 31.0 2025/2026 20.8 22.9 2026/2027 and beyond 10.0 8.5 Short-term Lease and Vacancy 6.8 5.7 Total 100.0 100.0 Note : (1) Refers to base rent (
Slide 51: HK Car Park Demand and Supply
Appendix 15 HK Car Park Demand and Supply No. of Registration of Vehicles and Private Car Demand and Supply (YoY) Parking Spaces (Private Cars) 705,202 5.4% 631,976 3.1% 650,816 2.7% 2.0% 2.3% 1.5% 1.7% 1.4% 1.3% 1.5% 0.8% 1.2% 1.3% 0.8% 0.5% 0.6% -0.2% 471,685 -1.7% 2015 2016 2017 2018 2019 2020 20
Slide 52: Hong Kong portfolio – Trade mix
Appendix 16 1.5% 0.4% 3.4% Hong Kong portfolio – Trade mix 15.1% 15.2% 7 89 27.6% 0.7% 8 6 1.0% 7 6 1 1.8% 5.3% 5 5 1 5 6.5% Office Trade Mix 4 5 Retail Trade Mix (by rent) (1) 1 45.4% 4 (by rent)(1) 10.4% 3 4 2 10.4% 2 3 2 22.5% 17.4% 3 15.4% Retail Mar-23 Sep-22 Office Mar-23 Sep-22 1. Food and be
Slide 53: Mainland China portfolio – Retail lease expiry profile
Appendix 17 Mainland China portfolio – Retail lease expiry profile (1) Retail Office As % of As % of monthly As % of As % of monthly total area rent (2) total area rent (2) As at 31 March 2023 (%) (%) (%) (%) 2023/2024 26.5 30.8 14.0 15.5 2024/2025 17.4 27.3 13.5 16.5 2025/2026 14.2 17.6 12.9 14.7 2
Slide 54: Mainland China portfolio – Trade mix
Appendix 18 Mainland China portfolio – Trade mix 3.7% 6.2% 5 4 26.8% 6 33.5% 1 1 Retail Trade Mix Office Trade Mix 39.7% 32.3% (by rent) (1) 3 (by rent)(1,2) 2.7% 5 4 11.3% 2 3 2 24.3% 4.2% 15.3% Retail Mar-23 Sep-22 Office Mar-23 Sep-22 1. Food and beverage 33.5% 32.3% 1. Professional services 39.7
Slide 55: International portfolio – Retail lease expiry profile
Appendix 19 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 (3) total area rent (4) As at 31 March 2023 (%) (%) (%) (%) 2023/2024 31.8 39.9 25.4 25.7 2024/2025 22.8 19.3 18.9 21.7 2025/202
Slide 56: International retail portfolio – Trade mix
Appendix 20 International retail portfolio – Trade mix 3.3% 0.9% 11.1% 14.5% 5 6 4.4% 8 4 7 4.7% 37.0% 6 Australia 45.8% Singapore 1 14.8% 1 6.4% 5 3 Retail Trade Mix Retail Trade Mix (by rent) (1, 3) (by rent) (2,4) 4 1 8.4% 3 2 2 20.7% 13.2% 14.8% Retail Mar-23 Retail Mar-23 1. Fashion & Accessori
Slide 57: International portfolio – Office lease expiry profile
Appendix 21 International portfolio – Office lease expiry profile (1,2) International Office As % of As % of monthly total area rent As at 31 March 2023 (%) (%) 2023/2024 7.2 7.9 2024/2025 1.5 1.5 2025/2026 1.7 2.2 2026/2027 and beyond 79.5 88.4 Vacancy 10.1 - Total 100.0 100.0 Notes: (1) Refers to
Slide 58: International office portfolio – Tenant mix
Appendix 22 International office portfolio – Tenant mix 3.1% 2.2% 2.1% 11.2% 67 8 5 4.1% 38.9% 4 1 1 Office Trade Mix (by rent) (1,2) 19.8% 1 3 2 18.6% Office Mar-23 Sep-22 1. Financial and insurance services 38.9% 39.1% 2. Government 18.6% 18.5% 3. Professional services 19.8% 18.8% 4. Energy, utili
Slide 59: Our strategic partners
Appendix 23 Our strategic partners First Priority Group Fujian Dongbai Group Investa Mercatus Co-operative Nan Fung Group Oxford Properties Group Vanke Holdings Vicinity Centres 59
Slide 60: 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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