Keppel REIT · SGX:K71U
Keppel REIT — K-REIT Asia — Investor Presentation (February 2007)
36 slides from Keppel REIT's investor presentation, February 2007
Slide 1: Investor Meetings February 2007
INVESTOR MEETINGS February 2007 1
Slide 2: Contents
Contents Introduction Highlights Portfolio Performance Market Review and Outlook Going Forward 2
Slide 3: Introduction
K-REITaSla Introduction
Slide 4: Introduction
Introduction • Pan Asian commercial REIT listed on SGX on 28 Apr 06 • Initial portfolio of four quality office buildings valued at $677m as at 31 Dec 06 – Prudential Tower (approx. 44% of strata area) – Keppel Towers – GE Tower – Bugis Junction Towers • Sponsored by Keppel Land, one of the largest o
Slide 5: Key Investment Attractions
Key Investment Attractions Better Returns Quality Portfolio Growth Potential • High Payout Ratio • Quality Assets • Benefit from a Rising • Benefit of Tax • Quality Tenants Office Market Transparency • Good Occupancy • Potential Acquisitions Company Strengths • Experienced and Professional Managemen
Slide 6: Growth Strategy
Growth Strategy • Generate stable returns to unitholders by owning and investing in quality income-producing commercial real estate assets • Target AUM of $2 billion within next few years • Identify and pursue prime properties for acquisition in Singapore and other Asian growth cities 6
Slide 7: Highlights
K-REITaSla Highlights
Slide 8: Highlights
Highlights FY2006 Financial Results Outperformed Forecast Distribution Per Unit (DPU) of 4.63 cents (6.76 cents annualised) exceeds forecast by 24.5% 100% occupancy, higher than Core CBD occupancy of 96.4% and Fringe CBD occupancy of 93.1% Total return of 229.5% since listing (1) (1) Total return is
Slide 9: Outperformed: Distributable Income
Outperformed: Distributable Income Distributable Income surpasses forecast by 23.9% to reach $11.2m 26 Apr to 31 Dec 2006 (1) ($'000) Actual Forecast % Chg Property Income 23,861 21,632 10.3 Property Expenses (7,047) (6,521) 8.1 Net Property Income 16,814 15,111 11.3 Non-Property Expenses (8,447) (8
Slide 10: Outperformed: DPU
Outperformed: DPU DPU of 4.63 cents exceeds forecast by 24.5% Annualised DPU of 6.76 cents versus forecast of 5.43 cents (1) From 26 Apr to 31 Dec 2006 Actual Forecast (2) % Chg Distribution Per Unit (DPU) 4.63 ¢ 3.72 ¢ 24.5% Annualised DPU 6.76 ¢ 5.43 ¢ 24.5% Distribution Yield (3) 2.7% 2.2% 22.7%
Slide 11: Continual Growth in DPU
Continual Growth in DPU Achieved higher distribution for FY2006 relative to forecast (1) DPU Consistently Outperform ed Forecast 6.76 ¢ 5.43 ¢ 4.63 ¢ 3.72 ¢ 2.87 ¢ 2.35 ¢ 1.16 ¢ 0.982 ¢ 26 Apr - 30 Jun 26 Apr - 30 Sep 26 Apr -31 Dec Annualised 2006 2006 2006 Actual Forecast 11 (1) Forecast DPU of 5.
Slide 12: Balance Sheet Highlights
Balance Sheet Highlights As At ($m) 31-Dec-06 30-Sep-06 30-Jun-06 30 Sep 05 (2) Non-current Assets (1) 677.0 630.7 630.7 630.7 Total Assets 694.9 643.7 641.4 635.2 Borrowings 189.0 189.0 188.8 189.3 Total Liabilities 202.5 201.8 200.8 196.6 Unitholders' Funds 492.4 441.9 440.6 438.6 Net Asset Value
Slide 13: Gross Revenue by Asset
Gross Revenue by Asset From 26 Apr to 31 Dec 2006 17.5% (1) 34.8% Actual Forecast % Chg (2) Prudential Tower 4,187 3,354 24.8 Keppel Towers & GE Tower 11,364 10,069 12.9 Bugis Junction Towers 8,310 8,209 1.2 47.6% Total Property Income 23,861 21,632 10.3 Prudential Tow er Keppel Tow ers & GE Tow er
Slide 14: Net Property Income by Asset
Net Property Income by Asset $ '000 Forecast 8,000 From 26 Apr to 31 Dec 2006 Actual 7,000 (1) Actual Forecast % Chg 6,000 (2) Prudential Tower 3,166 2,345 35.0 5,000 4,000 Keppel Towers & GE Tower 7,824 6,791 15.2 3,000 Bugis Junction Towers 5,824 5,975 (2.5) 2,000 Total Net Property Income 16,814
Slide 15: Capital Management
Capital Management Fixed rate loans locked in to mitigate risk of interest rate hike 100% fixed for five years until May 2011 As At (1) 31-Dec-06 30-Sep-06 30-Jun-06 30 Sep 05 Borrowings $190.1m $190.1m $190.1m $190.6m Gearing (2) 27.4% 29.5% 29.6% 30.0% Interest Coverage Ratio (3) 2.7 times 2.7 tim
Slide 16: Portfolio Performance
K-REI!ITasSla Portfolio Performance
Slide 17: Occupancy Hits 100%
Occupancy Hits 100% 100% Com m itted Occupancy 99.7% 100.0% 100% committed occupancy 100% 98.4% as at end-Dec 2006 95.5% 96.4% 95% 92.9% Ahead of Core CBD 90% occupancy of 96.4% and Fringe CBD occupancy of 85% 93.1% (Source : CBRE) 80% 30-Jun-06 30-Sep-06 31-Dec-06 K-REIT portfolio Core CBD Occupanc
Slide 18: Committed Occupancy on the Rise
Committed Occupancy on the Rise 100% 99% 98% 97% 96% 95% 30-Jun-06 30-Sep-06 31-Dec-06 Keppel Tow ers & GE Tow er 98.2% 99.8% 100.0% Bugis Junction Tow ers 98.5% 99.4% 100.0% Prudential Tow er (1) 99.0% 100.0% 100.0% (1) Approximately 44% of strata area of the building 18
Slide 19: Continued Rental Growth
Continued Rental Growth Im provem ent in Average Portfolio Gross Rentals $3.85 Steady rise in average $3.80 $3.80 portfolio gross rentals $3.75 $3.71 Potential for further $3.65 $3.70 increase in renewal $3.65 rates $3.60 $3.55 30 Jun 06 30 Sep 06 31 Dec 06 19
Slide 20: Favourable Lease Renewal Cycle
Favourable Lease Renewal Cycle Lease expiry profile is well balanced Lease Expiry as a Percentage of NLA @ 31 Dec 2006 About 53% of net lettable area 25% 22.2% (NLA) due for renewal from 2007 to 2009, during which 19.4% new supply averages less than 20% 600,000 sf per annum 16.3% 14.6% 14.7% 15% 12.
Slide 21: Broad Tenant Diversity
Broad Tenant Diversity Top 10 Tenants : 53% of NLA (73,108 sm ) @ 31 Dec 2006 International Enterprise Singapore 10.8% GE Pacific 10.1% Keppel Land Int'l 6.7% Sw an Trustees 5.9% J.V. Fitness 4.1% Prudential Assurance Co. S'pore 3.6% Singapore Business Federation 3.2% InterContinental Hotels Group (
Slide 22: Broad Tenant Diversity
Broad Tenant Diversity Wide tenant base A total of 95 tenants from various different industries Financial and business services Hospitality Government agencies Pharmaceuticals and healthcare IT services & consultancy Income diversification to reduce risk The top tenant by net lettable area contribut
Slide 23: Retention Rate Near 100%
Retention Rate Near 100% High tenant retention rate of 99.5%, reflecting good tenant relationships As at 31 Dec 2006 Area Renewed (sm) Tenant Retention Rate Prudential Tower (1) 2,219 100% Keppel Towers & GE Tower 7,393 98.6% Bugis Junction Towers 6,876 100% Overall Portfolio 16,488 99.5% (1) Approx
Slide 24: Market Review and Outlook
K-REI!ITasSla Market Review and Outlook
Slide 25: Bright Economic Outlook
Bright Economic Outlook 2006 GDP growth rate at 7.9% Strong growth in manufacturing, % Real GDP Growth and banking and financial 14 12 sectors 10 8 Integrated resorts expected to 6 draw spin-offs in supporting 4 industries 2 0 -2 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988
Slide 26: Surging Office Demand
Surging Office Demand Prim e Office Occupancy and Rentals High demand for prime office space $8 100% drove rentals significantly higher 98% Average prime rents reached $7.81 $7 psf at end-Dec 2006, up 50.2% y-o-y* 96% New office demand of 2.4 mln sf in $6 94% 2006 (Source: URA) 92% $5 Strong office
Slide 27: Supply Remains Tight
Supply Remains Tight No substantial new supply until Marina Bay Financial 2.4 Future Supply of Office Space Centre (Phase I) comes on 2.2 2.0 1.89 stream in 2010 1.8 0.29 1.6 1.52 CBD office stock reduced by 1.4 0.20 10-15 yr ave rage annual take -up up to 1.3 mln sf from 2007 1.2 1.00 1.0 onwards d
Slide 28: Limited Potential Supply
Limited Potential Supply Office Supply in the Pipeline Year Development NFA (sf) 2007 LKN Building Redevelopment 80,080 VisionCrest 139,940 Central 179,000 SUBTOTAL 399,020 2008 Selegie Road Development 120,300 Limited supply of Straits Trading Building 156,000 < 600,000* sf per annum Mapletree Ligh
Slide 29: Going Forward
K-REITaSla Going Forward
Slide 30: Proactive Asset Management
Proactive Asset Management Experienced management and continuous active leasing to achieve better returns for unitholders Ongoing evaluation of property portfolio to identify value- adding asset enhancements to meet the needs of tenants and grow asset value 30
Slide 31: A Pan Asian Commercial REIT
A Pan Asian Commercial REIT Grow the portfolio by identifying and pursuing quality assets in Singapore and other Asian growth cities. Able to ride on different market cycles to allow for diversification of risks across countries Target Assets Under Management of S$2 bln within the next few years 31
Slide 32: Additional Information
K-REI!ITasSla Additional Information
Slide 33: Snapshot of K-REIT Asia
Snapshot of K-REIT Asia Manager K-REIT Asia Management Limited Property Portfolio Four quality office buildings valued at $677m Listing and Trading Date 28 Apr 2006 on Singapore Stock Exchange Market Capitalisation $818.0 million (as at 26 Feb 2007) (1) Unit Price $3.38 (closing price on 26 Feb 2007
Slide 34: Property Portfolio
Property Portfolio (1) Prudential Tower Keppel Towers GE Tower Bugis Junction Towers Total Lettable Area (sm) 10,074 40,044 22,990 Car Park Lots - 288 - Number of Tenants 14 68 13 GE Pacific Pte Ltd IE Singapore McGraw-Hill Companies, Inc. Swan Trustees Principal Tenants J.V. Fitness Pte Ltd The Exe
Slide 35: Total Return
Total Return Total return of 229.5% since listing (1) % Total Return 220% 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% 10/21/06 11/22/06 12/24/06 4/28/06 5/14/06 5/30/06 6/15/06 7/1/06 7/17/06 8/2/06 8/18/06 9/3/06 9/19/06 10/5/06 11/6/06 12/8/06 1/9/07 1/25/07 2/10/07 2/26/07 K-REIT Asia S
Slide 36: Thank You
Thank You Important Notice The value of units in K-REIT Asia (“Units”) and the income from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in Units is subject to investment risks, including the possible l