Swire Properties Limited · HKEX:1972
Swire Properties — H1 2018 Earnings Presentation
51 slides from Swire Properties's earnings presentation, Aug 9, 2018
Slide 1: 2018 Interim Results | Analyst Briefing
One Taikoo Place, Artist Impression 2018 Interim Results | Analyst Briefing 9th August 2018 © Swire Properties Limited
Slide 2: Agenda
Agenda Speakers : Guy Bradley, Chief Executive and Fanny Lung, Finance Director 1. Results Highlights 2. Financial Highlights 3. Investment Portfolio 4. Trading Portfolio 5. Financing 6. Prospects 7. Q&A
Slide 3: 2018 Interim Results Highlights
2018 Interim Results Highlights Strong underlying earnings growth driven by better performance of our investment properties and profits from sales of non-core properties. Active capital recycling puts the company in a stronger financial position to pursue growth opportunities. Three key projec
Slide 4: Active Capital Recycling
Active Capital Recycling Conditional Sale of Our Interests in Cityplaza Three and Cityplaza Four Properties (1) Completion expected in or before April 2019. Sale proceeds intended for reinvestments. HK $15 bn Consideration 88% Sales of Other Non-core(1)Properties and Property Interests in 1H 201
Slide 5: Building Project Pipeline
Building Project Pipeline Continue to look for synergistic investment opportunities. 2018 2019 2020 2021 2022 & After (1) • One Taikoo Place • Beijing Sanlitun • Qiantan Project • Two Taikoo Place • Po Wah Building, 1-11 Landale • South Island Place Yashow Building • 21-31 Wing Fung Street and 2-1
Slide 6: Key Developments
Key Developments Artist impression Cityplaza Three/ Cityplaza Four Kowloon Bay Office Building Citygate Outlets Extension Conditionally agreed to sell for HK$15bn. Sale of project company completed. Topped out. ~ 474,000 sq ft GFA June 2018 June 2018 May 2018 Artist Impression Artist Impression Arti
Slide 7: Financial Highlights
Sustainable Financial Development Strategies Highlights
Slide 8: Financial Highlights
Financial Highlights Underlying Profit Gross Rental Income Equity Attri. to Shareholders HK$ 6,219 M 34% HK$ 5,996 M 8% HK$ 275.0 bn 7% Adjusted 10,773 11,252 7,112 7,834 Underlying Profit 416 512 7,112 6,219 6,219 4,304 4,616 2,487 4,616 275.0 4,628 4,628 5,996 4 5,555 276 4,624 6,053 6,124 239 257
Slide 9: Financial Summary
Financial Summary HK$M 1H 2017 1H 2018 Change Revenue 11,525 7,309 37% Valuation gains on investment properties 9,946 15,535 56% Operating profit 15,537 21,309 37% Underlying profit 4,628 6,219 34% Adjusted underlying profit 4,624 3,732 19% Reported profit 14,763 21,205 44% Underlying earnings per s
Slide 10: Movement in Underlying Profit
Movement in Underlying Profit Earnings Reconciliation Movement in Underlying Profit HK$’M Underlying Profit by Segment 1H 2017 1H 2018 Change Property investment 3,414 3,734 9% + 321 (1,200) Property trading 1,221 22 98% + 2,483 Hotels (11) (24) N/A Sale of interests in 4 2,487 N/A (13) 6,219 invest
Slide 11: Movement in Investment Properties
Movement in Investment Properties Movement in Investment Properties (excl. hotels & investment properties held under JVCs) HK$’M The increase in the valuation of + 2,910 (304) + 15,535 270,473 the investment property (14,577) 267,292 (383) portfolio is mainly due to an increase in the valuation of t
Slide 12: Investment Portfolio
SustainablePortfolio Investment Development Strategies
Slide 13: Rental Income – Growth from All Segments
Rental Income – Growth from All Segments HK Office 10,320 2% Attributable Gross Rental Income (1) Higher rental income driven by positive HK$’M rental reversions and close to 100% HK$ 6,868 M , 11% occupancy. Strong demand for office space. 12,639 HK Retail 4% 11,729 Rental income grew 10% at Cit
Slide 14: HK Office – Good Momentum across Portfolio
HK Office – Good Momentum across Portfolio Pacific Place One Island East TKP office towers GFA (M sq ft) 2.2 GFA (M sq ft) 1.5 3.1 Occupancy 100% Occupancy 100% 100% Rental Reversion (1) +25% Rental Reversion (1) +7% +5% Cityplaza (2) Hong Kong Island Latest Rentals (HK$ psf) One/Two Pacific Place 1
Slide 15: HK Retail – Encouraging Retail Sales Growth
HK Retail – Encouraging Retail Sales Growth The Mall, Pacific Place Cityplaza Citygate Outlets GFA (M sq ft) 0.7 1.1 0.5 Occupancy 100% 100% 100% Retail Sales Growth + 21.7% + 6.3% +9.3% (1) HK$ 47.8 bn, 2% (Vs. Dec 2017) Attributable Valuation 15 (1) Excluding area closed for renovation and upgradi
Slide 16: HK Portfolio – Tenant Mix and Lease Expiries
HK Portfolio – Tenant Mix and Lease Expiries Lease Expiry Profile (1)(2) HK Office HK Retail Strong and diverse tenant base. Well-spread lease expiry profile. Top 10 office tenants occupied approx. 23% of office area in HK. Top 10 retail tenants occupied approx. 25% of retail area in HK. (1)
Slide 17: One Taikoo Place – High Leasing Pre-commitment Achieved
One Taikoo Place – High Leasing Pre-commitment Achieved One Taikoo Place 88% occupancy (1) 100% occupancy 90% of space committed (1) (1) Over ~1,020,000 sq ft GFA. Interior finishing works in progress. Expected completion in late 2018. Office tenants include: Baker McKenzie MetLife Asia
Slide 18: Hong Kong Investment Properties To Be Completed in 2018
Hong Kong Investment Properties To Be Completed in 2018 South Island Place 50% owned office building. Interior finishing works in progress. ~ 382,500 sq ft GFA (1) Artist Impression Tung Chung Town Lot No. 11 20% owned commercial building with retail and hotel GFA. Fitting out works in progr
Slide 19: Continuing Transformation of Core Hubs in Hong Kong
Continuing Transformation of Core Hubs in Hong Kong Hong Kong investment properties pipeline beyond 2018. Taikoo Place Two Taikoo Place Location Quarry Bay Interest 100% GFA (100% basis) ~1,000,000 sq ft Components Office Status Foundation works in progress. Expected Completion 2021/2022 Pacific P
Slide 20: Hong Kong Portfolio – Well-positioned for Growth
Hong Kong Portfolio – Well-positioned for Growth Expected Attributable GFA of Completed Property Portfolio in Hong Kong (1)(2) Under Planning GFA (‘000 sq ft) Po Wah Building, 1-11 Landale Street and 2-12 Anton Street 12% Site area: ~14,400 sq ft Redevelopment under planning. 14,381 Other Wah Ha
Slide 21: Mainland China Portfolio – Strong Rental Growth
Mainland China Portfolio – Strong Rental Growth Attributable Gross Rental Income (1) Retail Tenant Mix (2) HK$’M Almost tripled HK$1,995 M, 30% since 2012 (3) RMB 1,622 M, 20% Others 3,311 19.8% Food & 2,614 Beverages 2,463 26.9% Cinemas 2,153 4.9% 1,995 PRC Retail 1,751 1,457 Supermarkets Jewellery
Slide 22: Mainland China – Fruitful Results from Earlier Investments
Mainland China – Fruitful Results from Earlier Investments Mainland China Portfolio (1) Taikoo Li Sanlitun Retail Sales Occupancy 5 projects +9.7% 97% Retail Year of Opening : 2008/2010 completed INDIGO Retail Sales Occupancy +6.1% 100% 99% Retail Office Year of Opening : 2011/2012 HKRI Taikoo Hui B
Slide 23: The Middle House, Shanghai – Opened
The Middle House, Shanghai – Opened Opened in May 2018 111 hotel rooms 102 serviced apartments 23
Slide 24: Mainland China Project Pipeline
Mainland China Project Pipeline Attributable GFA of PRC Completed Property Portfolio (1)(2) Qiantan Project, Shanghai HK$ 49.3 bn 9.4 M sq ft Attributable Valuation Exp. Attributable (Investment Props) Completed GFA (1) (Investment Props) GFA Shanghai (‘000 sq ft) 9,395 8,772 50% owned retail proj
Slide 25: Brickell City Centre, Miami
Brickell City Centre, Miami Brickell City Centre 89% occupancy (1)(2) Shanghai Shopping Centre 80% of shops opened (1) Chengdu 100% occupancy (1) Office Retail Tenants Office Tenants Saks Fifth Avenue WeWork Apple Akerman CMX The VIP Cinema McKinsey&Company La Centrale Italian Food Hal
Slide 26: Trading Portfolio
Sustainable Trading Development Strategies Portfolio
Slide 27: Trading Portfolio
Trading Portfolio Hong Kong WHITESANDS HK$20,610 psf 21-31 Wing Fung Street ~ 29,928 sq ft GFA (3) All Sold or 28 houses sold (avg price) (2) Redevelopment under planning. Profit from the sale of 6 houses expected to be recognised in 2H 2018. Expected to be completed in 2021. Artist Impression B
Slide 28: Financing
Sustainable Development Strategies Financing
Slide 29: Net Debt and Gearing
Net Debt and Gearing Net Debt Reconciliation (HK$M) Gearing Net debt at 31st Dec 2017 (35,347) Net rental and fee receipts 4,818 37,055 33,474 Proceeds from property trading / development 674 Capex – PP&E and property investment (2,657) Development costs – property trading (113) Net proceeds after d
Slide 30: Maturity Profile & Liquidity
Maturity Profile & Liquidity Maturity Profile of Available Committed Facilities (at 30th June 2018) HK$M Dec 2017 Jun 2018 Total 45,547 3,457 3,391 5,623 7,550 11,848 700 1,100 1,940 4,624 1,390 3,924 Cash 1,708 2,612 Drawn 33,431 3,457 1,150 4,823 2,825 7,998 200 1,100 1,940 4,624 1,390 3,924 Undra
Slide 31: Capital Commitments
Capital Commitments Profile of Capital Commitments for Investment Properties and Hotels – at 30th June 2018 HK$’M Expenditure Forecast Year of Expenditure Commitments* Six months Six months 2019 2020 2021 & later At 30th Jun 2018 ended ended 30th Jun 2018 31st Dec 2018 Hong Kong 3,209 1,778 1,542 4,
Slide 32: Increased Capital Commitments
Increased Capital Commitments Movement in Capital Commitments Historical Profile of Capital Commitments (1) HK$’M HK$’M 29,454 + 8,651 (3,876) 24,140 (27) 18,948 19,798 18,328 18,948 432 15,914 2,323 14,200 14,200 477 1,553 16,193 12,170 New Commitments Other Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-1
Slide 33: Prospects
Sustainable Development Strategies Prospects
Slide 34: Prospects
Prospects Hong Kong High occupancy is expected to result in upward pressure on office rents at Pacific Place and resilience in office rents in our Taikoo Place development. Improved market sentiment and a better tenant mix should support stable sales growth at our retail malls. Rental demand f
Slide 35: Sustainable Development (SD) 2030 Strategy: 1H2018 Highlights
Sustainable Development (SD) 2030 Strategy: 1H2018 Highlights Progress Progress Safety, Health and Launched Employee Wellness Programme 2018 Suppliers No high risk suppliers identified from the Wellbeing which comprises of sponsorship fund for annual supplier risk assessment1 interest clubs, photo c
Slide 36: Q&A
QSustainable &A Development Strategies
Slide 37: Appendix
Appendix D4 SwiRE PROPERTIES
Slide 38: Key Business Strategies
Key Business Strategies 1 Continue to create long-term value by conceiving, designing, developing, owning and managing transformational mixed-use and other projects in urban areas. 2 Maximise the earnings and value of our completed properties through active asset management and by reinforcing our as
Slide 39: Property Portfolio
Property Portfolio Investment Props / Hotels Office Retail Hotels(2) Resid./Serviced Under Total Attributable Investment Props by Attributable GFA (M sq ft)(1) apartments Planning Region (GFA M sq ft) Completed 10% Hong Kong 8.3 (3) 2.5 0.7 0.6 - 12.1 U.S.A. and Mainland China 2.9 4.5 1.2 0.2 - 8.8
Slide 40: Completed Investment Portfolio
Completed Investment Portfolio Expected Attributable GFA of Completed Investment Portfolio (incl. Hotels) (1)(2)(3) GFA (‘000 sq ft) 22,486 23,313 23,390 24,013 25,017 25,017 25,017 26,461 Tung Chung (TCTL 11) (20%) South Island Place (50%) One Brickell City Centre (4) One Taikoo Place Two Taikoo Pl
Slide 41: Revenue Analysis
Revenue Analysis 1H 2018 Revenue Breakdown by Segment 1H 2018 Revenue Breakdown by Region HK$’M HK$’M 7,309 7,309 HK$’M HK$’M Comparison Comparison 1H 2017 1H 2018 1H 2017 1H 2018 Rental 5,555 5,996 HK 9,759 5,339 Trading 5,258 530 Mainland China 1,244 1,473 Hotels 651 720 U.S.A. 522 497 Others 61 6
Slide 42: HK Portfolio Map
HK Portfolio Map Pacific Place Taikoo Place Cityplaza (1) The simplified maps are not to scale and are for illustrative purpose only. 42 (2) GFA figures are for reference only.
Slide 43: Taikoo Li Sanlitun, Beijing
Taikoo Li Sanlitun, Beijing Retail Sales Occupancy (1) +9.7% 97% Gross rental income at Taikoo Li Sanlitun in Beijing increased Project Summary (100% Basis) in the first half of 2018. Retail GFA 1.47 M sq ft Demand for retail space in Taikoo Li Sanlitun remains solid as Components TKL Sanlitun S
Slide 44: TaiKoo Hui, Guangzhou
TaiKoo Hui, Guangzhou Retail Sales Occupancy (1) Gross rental income at TaiKoo Hui in Guangzhou increased in Project Summary (100% Basis) +11.8% 98% the first half of 2018, reflecting in part improvements to the Retail GFA 3.84 M sq ft tenant mix and a customer loyalty programme. Components Shoppi
Slide 45: INDIGO, Beijing
INDIGO, Beijing Retail Sales Occupancy (1) +6.1% 100% Improvements to the tenant mix have been made. The mall Project Summary (100% Basis) is becoming a significant quality family shopping centre in GFA 1.89 M sq ft Retail north-east Beijing. Components Shopping Mall 99% Demand for office space
Slide 46: Sino-Ocean Taikoo Li Chengdu
Sino-Ocean Taikoo Li Chengdu Artist’s Impression Artist’s Impression Artist’s Impression Artist’s Artist’s Impression Impression Artist’s Impression Artist’s Impression Retail Sales Occupancy (1) Artist’s Impression Sino-Ocean Taikoo Li Chengdu is our second Taikoo Li Project Summary (100% Basis)
Slide 47: HKRI Taikoo Hui, Shanghai
HKRI Taikoo Hui, Shanghai Artist Impression Artist’s Impression Occupancy (1) HKRI Taikoo Hui is our second Taikoo Hui project in Mainland Project Summary (100% Basis) 96% 91% China. The shopping mall officially opened in November 2017. Retail Office GFA 3.47 M sq ft Gross rental income at HKRI
Slide 48: Brickell City Centre, Miami
Brickell City Centre, Miami RISE REACH Artist Impression Artist Impression Artist Impression Artist Impression Occupancy (1) The first phase of the Brickell City Centre development was Project Summary (100% Basis) 89% 100% completed in 2016, and its components opened between Retail Office GFA 1.39
Slide 49: Trading Portfolio
Trading Portfolio Trading Properties Sold or Being Total Units/ Actual Actual Units/Houses for which Profit Interest Sold Units/ Houses Completion Handover Recognised or (At 7th August 2018) Houses Sold (from) Expected to be Recognised (Year) Hong Kong - 1(2015), 1(2016), 14(2017), 6(1H2018) WHITESA
Slide 50: Hotel Portfolio
Hotel Portfolio Managed Hotels No. of Rooms Interest Owned but Non-managed Hotels No. of Rooms Interest Completed (100% basis) Completed (100% basis) Hong Kong The Upper House 117 100% Hong Kong Island Shangri-La HK 565 20% EAST, Hong Kong 345 100% JW Marriott Hotel HK 602 20% (1) Headland Hotel 501
Slide 51: Valuation of Completed Investment Properties
Valuation of Completed Investment Properties Consistent value creation through continuous property investment and asset reinforcement. 2007 – Jun 2018 Valuation of Completed Investment Properties (excl. Hotels) * HK$ M Valuation of investment properties portfolio more 270,473 than doubled in 11 ye