Axis Real Estate Investment Trust · MYX:AXREIT
Axis Real Estate Investment Trust — Q2 2017 Earnings Presentation
70 slides from Axis Real Estate Investment Trust's earnings presentation, Jul 25, 2017
Slide 1: 2Q 2017 Results Presentation
2Q Axis REIT Managers Berhad Results Presentation 2017 25 July 2017 1
Slide 2: Our Milestones
Our Milestones Assets Under Management RM296 million RM2.25 billion Space Under Management 978,000 sq ft 7,432,482 sq ft Properties 5 38 Fund Size RM206 million RM1.39 billion Valuation Gain since listing RM301,000,000 First REIT to be listed on Bursa Malaysia First REIT to convert int
Slide 3: 1H2017 Highlights
1H2017 HIGHLIGHTS 3
Slide 4: 1H2017 Highlights
1H2017 Highlights RM 2,202,323,000 Investment Properties 4
Slide 5: YTD Highlights
YTD Highlights Completed the disposal of Axis Eureka for RM56.1 million on 8 March 2017. Completed the acquisition of Kerry Warehouse located at Pasir Gudang, Johor for RM33.0 million on 24 July 2017. Successfully signed the Sales & Purchase Agreement for the acquisition of an industrial facil
Slide 6: 1H2017 Return Comparatives
1H2017 Return Comparatives 8.00% 7.16% 7.00% 6.00% 5.70% 5.20% 5.00% 3.91% 4.00% 3.28% 3.00% 3.00% 2.00% 1.00% 0.00% Axis-REIT Total Axis-REIT EPF Dividend 10-yr MGS 12 Months FD Rate OPR Return * Distribution Yield Return * (Based on annualised DPU from operations + movement in market price)/openin
Slide 7: 2Q2017 Finance Report
2Q2017 FINANCE REPORT
Slide 8: 1H2017 Summary
1H2017 Summary 1H2017 Total Net Income (“Realised”)(RM' 000) 46,345 Income Available for Distribution ("Realised") (RM' 000) 47,953 Earnings per Unit ("EPU") ("Realised") (Sen) 4.19 Income Distribution Declared (RM'000) 47,743 Distribution per Unit ("DPU") (Sen) * 4.32 Number of Investment Propertie
Slide 9: Income Statement 2Q2017 vs 2Q2016
Income Statement 2Q2017 vs 2Q2016 2Q2017 2Q2016 Changes (RM ‘000) (RM’000) No. of Properties 38 38 - Property Income 41,468 41,615 - 0.35% Property Expenses (6,221) (6,839) - 9.04% Net Property Income 35,247 34,776 + 1.35% Profit Income / other income 171 161 Non-Property Expenses (4,044) (4,572) -
Slide 10: Income Statement 1H2017 vs 1H2016
Income Statement 1H2017 vs 1H2016 1H2017 1H2016 Changes (RM ‘000) (RM’000) No. of Properties 38 38 - Property Income - Note 1 83,983 82,690 + 1.56% Property Expenses - Note 2 (12,762) (13,376) - 4.59% Net Property Income 71,221 69,314 + 2.75% Profit Income / other income 349 301 Loss on disposal of
Slide 11: Income Statement 1H2017 vs 1H2016 Notes
Income Statement 1H2017 vs 1H2016 Note 1 – Property Income Increase in property income as compared to preceding year corresponding period is mainly due to contribution of rental proceeds from Scomi Facility @ Rawang coupled with positive rental revision across the portfolio and rental of 17.6 acres
Slide 12: Gain on disposal computation
Income Statement 1H2017 vs 1H2016 Note 5 – Loss on disposal of property Computation of distributable gain on disposal : RM'000 Disposal price 56,132 Less: Market value (55,000) 1,132 Less : Incidental cost Legal fees - SPA (106) Valuation fee (28) Agency fee (1,059) Disposal fee, RPGT & others (352)
Slide 13: Gross Yield of Investment Properties
Gross Yield of Investment Properties Properties Gross yield (%) Average YTD gross yield = 9.5% 1 Wisma Kemajuan 17.77% 21 Axis Vista 8.33% 2 FCI Senai 14.85% 22 Axis Technology Centre 8.27% 3 Crystal Plaza 14.52% 23 Beyonics i-Park Campus Block C 8.08% 4 Menara Axis 13.69% 24 Beyonics i-Park Campus
Slide 14: Net Yield of Investment Properties
Net Yield of Investment Properties Properties Net yield (%) Average YTD net yield = 8.2% 1 Wisma Kemajuan 13.65% 21 Axis Business Park 7.25% 2 FCI Senai 13.48% 22 Axis MRO Hub 7.21% 3 Crystal Plaza 12.31% 23 Axis Steel Centre@ SiLC 7.14% 4 Strateq Data Centre 11.37% 24 Axis Vista 7.05% 5 Menara Axis
Slide 15: Income Available for Distribution
Income Available for Distribution 25 Adjusted Income Before Taxation/ Income Available For Distribution: Gain on disposal 1.35 20 15 RM' million 23.23 23.26 23.34 22.58 22.69 22.62 10 5 0 15 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017
Slide 16: 2nd Interim 2017 Income Distribution
2nd Interim 2017 Income Distribution Proposed : 2.17 sen DPU The 2.17 sen DPU is based on 99.6% income available for distribution from performance of properties for the period from 1 April 2017 to 30 June 2017 and the balance gain on disposal of Axis Eureka. DPU - on core performance : 2.10 sen DPU
Slide 17: 2nd Interim 2017 Income Distribution: Gain on disposal
2nd Interim 2017 Income Distribution Gain on disposal of property The disposal of Axis Eureka has resulted in a total realised gain on disposal of RM1.35 million. This gain translates to an additional income distribution of 0.12 sen per unit. The clearance of RPGT from tax department has been obtain
Slide 18: Summary of Realised EPU and DPU
Summary of Realised EPU and DPU 10.00 1.18 9.30 0.65 9.23 9.25 9.00 8.64 8.71 0.10 8.70 8.35 8.40 8.19 8.25 8.01 8.00 8.50 8.65 8.00 7.89 7.90 7.73 7.64 7.00 6.80 6.82 6.00 5.00 0.12 4.19 4.00 4.20 3.00 2.00 1.00 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Gain on disposal DPU EPU (real
Slide 19: Statement of Financial Position
Statement of Financial Position 30/06/17 31/12/16 (RM’000) (RM’000) Changes Investment Properties – Note 1 2,202,323 2,198,149 + 4,174 Fixed Assets 2,689 2,899 - 210 Other Assets – Note 2 47,604 43,226 + 4,378 TOTAL ASSETS 2,252,616 2,244,274 + 8,342 Borrowings – Note 3 776,368 780,665 - 4,297 Other
Slide 20: Statement of Financial Position Notes
Statement of Financial Position Note 1 – Investment Properties Disposal of Axis Eureka was completed on 8 March 2017. During the year, a total of RM6.2 million was spent on enhancement works of the properties in the portfolio and RM53.0 million has been incurred for development cost for the Nestle D
Slide 21: Statement of Financial Position – Borrowings
Statement of Financial Position – Note 3 Borrowings 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total Borrowings (RM’000) 230,456 308,932 416,609 311,338 548,920 528,004 683,769 731,814 780,665 776,368 Total Assets (RM’000) 726,371 907,745 1,208,897 1,298,431 1,589,408 1,616,523 2,085,883 2,14
Slide 22: Gearing Levels
10% 15% 20% 25% 30% 35% 40% 0% 5% 1Q2008 27% 2Q2008 29% 32% 3Q2008 4Q2008 32% 1Q2009 33% 2Q2009 33% 3Q2009 27% 4Q2009 34% 1Q2010 35% 2Q 2010 Gearing Levels 36% 3Q 2010 31% 4Q 2010 35% 1Q 2011 36% 38% 2Q 2011 3Q 2011 38% 4Q 2011 24% 1Q2012 29% 2Q2012 30% 22 34% 3Q2012 4Q2012 35% 1Q2013 34% 2Q2013 33%
Slide 23: Unitholders' Capital
Unitholders’ Capital – Note 4 2,500.0 2,244.3 2,252.6 2,141.5 2,085.7 2,000.0 1,589.4 1,616.5 1,500.0 1,298.4 RM mil 1,208.9 1,044.7 1,052.3 1,060.3 1,060.3 1,000.0 907.7 726.4 728.2 735.4 751.0 581.8 540.3 500.0 406.9 323.3 234.9 - 31-Dec-07 31-Dec-08 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-
Slide 24: Total returns on placements
Unitholders’ Capital – Note 4 … resulting in good total returns to unitholders. 360% Total returns on placements 317% 320% 280% 240% 155% 200% 181% 172% 160% 83% 128% 90% 120% 62% 75% 80% 162% 98% 41% 40% 82% 66% 8% 34% 13% 0% -5% IPO @ RM1.25 Placement '08 @ Placement '09 @ Placement '10 @ Placemen
Slide 25: Non-distributable Reserve
Statement of Financial Position – Note 5 Non-distributable Reserve Non-distributable reserve mainly comprises the favorable gain in fair value of approximately RM301 million to date. Property Gain/(loss) RM’000 Property Gain/(loss) RM’000 Crystal Plaza 44,754 Seberang Prai Logistic Warehouse 3 3,183
Slide 26: 2Q2017 Property Report
BRD i = rai pent — ~ pysat SERVIS —— se oo AP ae a e oe BBRE RE SWS: 26
Slide 27: Overview
Overview As at 30 June 2017, the occupancy rate of Axis-REIT’s portfolio of properties stands at 89% with a stable weighted average lease expiry period of 4.51 years (based on rental). As at year to date 30 June 2017, the Manager achieved positive rental reversion of 5.94% from tenancies renewal. Cl
Slide 28: Key Metrics
Key Metrics 2Q2017 1Q2017 Movement No of properties 38 38 - Weighted Average Lease Expiry 4.41 4.36 (WALE) by NLA Weighted Average Lease Expiry 4.51 4.46 (WALE) by Rental Occupancy 89.10% 91.86% The Fund has completed the Kerry Warehouse acquisition on 24 July 2017, taking the total number of proper
Slide 29: Key Metrics: Average Rental Rates
Key Metrics Average Rental Rates: Type of Properties 2Q2017 1Q2017 Movement Office (RM/sq. ft.) 4.74 4.74 - Office Industrial (RM/sq. ft.) 2.71 2.73 0.02 Manufacturing Facilities (RM/sq. ft.) 1.29 1.29 - Warehouse Logistics (RM/sq. ft.) 1.57 1.55 0.02 Hypermarket (RM/sq. ft.) 2.36 2.36 - 29
Slide 30: Space Under Management (sq. ft.)
Space Under Management (sq. ft.) Space Under Management (sq ft) 8,000,000 7,606,863 7,432,482 7,015,242 6,859,474 7,000,000 6,000,000 5,463,599 5,464,124 5,000,000 4,449,580 4,288,054 ( sq ft) 4,000,000 3,679,796 3,000,000 2,858,121 2,175,522 2,000,000 1,656,943 1,186,052 1,000,000 - 2005 2006 2007
Slide 31: Portfolio Occupancy Rate
Portfolio Occupancy Rate As at 30 June 2017, Axis-REIT has only 12 out of 38 properties that carry vacancy, while 1 is undergoing development. Occupancy Rate 25 properties enjoy 100% occupancy. Vacant 10.90% Occupancy As at 30 June 2016 89.10 % Vacancy As at 30 June 2017 10.90 % Space to be let out
Slide 32: Occupancy Rates by Property
Occupancy Rates by Property as at 30 June 2017 1 Menara Axis 86% 20 Axis Steel Centre 100% 2 Crystal Plaza 81% 21 Bukit Raja Distribution Centre 100% 3 Quattro West 50% 22 Seberang Prai Logistic Warehouse 1 100% 4 Axis Business Park 65% 23 Seberang Prai Logistic Warehouse 2 100% 5 Infinite Centre 58
Slide 33: Properties With Vacancy
Properties With Vacancy Menara Axis 86% Axis Tech Centre 86% Fonterra HQ 85% Wisma Academy 83% Crystal Plaza 81% Axis Business Park 65% Infinite Centre 58% Quattro West 50% Axis Business Campus 12% BMW Centre PTP - Delfi Warehouse - Axis PDI Centre Under Development Note: • Fonterra HQ: Vacant space
Slide 34: Diversified Portfolio
Diversified Portfolio Portfolio Diversification by Type and NLA 7% 25% 21% 5% 42% Office Office/ Industrial Hypermarkets Warehouse Logistic Manufacturing Facilities - Light Industrial 34
Slide 35: Diversified Portfolio: NLA by Industry Sector
Diversified Portfolio NLA by Industry Sector Services Others 5% Healthcare & 1% Lifestyle Consumer Products Vacant 3% 2% 11% Retail 6% Engineering/Building IT/Electronics Materials 10% 21% Automotive 4% Financial Services 1% Logistics 35% 35
Slide 36: Portfolio Location
Portfolio Location Portfolio Diversification by Geographical Location Petaling Jaya 26.82% Johor 26.60% Shah Alam 21.72% Penang 10.07% Klang 4.94% Rawang 4.07% Nilai 3.92% Kedah 1.86% 36
Slide 37: Tenancy Mix
Tenancy Mix Single Tenant vs Multi-Tenants 4% 39% 57% Single Tenant Multi Tenants Vacant 37
Slide 38: Lease Expiry Profile
Lease Expiry Profile % of Rental Year Area Up for Renewal % of Total NLA Income 2017 1,299,012 sq. ft. 17.48% 22.83% 2018 1,116,159 sq. ft. 15.02% 15.78% 2019 1,263,784 sq. ft. 17.00% 23.02% 38
Slide 39: Lease Expiry Profile by Location and Type
Lease Expiry Profile 5.94% positive rental reversion year to date By Location Year % of % of Rental Year % of % of Rental Year % of % of Rental Location Income/ Income/ Income/ 2017 Total NLA month 2018 Total NLA month 2019 Total NLA month Petaling Jaya 565,548 7.61 13.24 281,973 3.79 5.66 576,917 7
Slide 40: Portfolio Efficiency (PE)
Portfolio Efficiency (PE) The Portfolio Efficiency Ratio = Operating Cost for the Portfolio / Gross Property Income 2Q2017 1Q2017 15.20% 15.39% 40
Slide 41: Top 10 Tenants – Strong Rental Covenants
Top 10 Tenants – Strong Rental Covenants 1. LF Logistics Services (M) Sdn Bhd 2. POS Logistics Berhad (formerly known as Konsortium Logistik Berhad) 3. Yongnam Engineering Sdn Bhd 4. Tenaga Nasional Berhad 5. Tesco Stores (M) Sdn Bhd 6. Schenker Logistics (M) Sdn Bhd 7. DHL Properties (M) Sdn Bhd 8.
Slide 42: 2Q2017 Asset Enhancements
2Q2017 ASSET ENHANCEMENTS 42
Slide 43: Enhancements To Date: Completed Works
Enhancements To Date Completed Enhancement Works Bayan Lepas Distribution Centre Improvement to loading area and driveways Delfi Warehouse New metal deck roofing 43
Slide 44: Enhancements To Date: Completed Works
Enhancements To Date Completed Enhancement Works Axis Shah Alam DC 1 New metal deck roofing and repainting Axis Shah Alam DC 3 New metal deck roofing and stainless steel gutter 44
Slide 45: Enhancement Works In Progress
Enhancement Works In Progress Crystal Plaza New metal deck roofing, waterproofing and new water tank for cooling towers Wisma Academy Building painting and waterproofing 45
Slide 46: Property Development
2017 PROPERTY DEVELOPMENT 46
Slide 47: Axis PDI DC Centre – Nestle Development
Axis PDIDC Nestle Centre – Proposed at Axis PDI Centre Development The Manager is pleased to announced that on 19 August 2016, RHB Trustees Berhad signed an Agreement to Build and Lease with Nestle Products Sdn Bhd to develop a 515,000 sq. ft. distribution warehouse facility for Nestle as their nati
Slide 48: Nestle DC at Axis PDI Centre (Before)
Nestle Axis PDIDC at Axis Centre PDI Centre (Before) – Proposed Development (Before) 50 acre site 48
Slide 49: Nestle DC at Axis PDI Centre (After)
Nestle DC at Axis PDI Centre (After) Artists’ Impression 49
Slide 50: Nestle DC at Axis PDI Centre
Nestle DC at Axis PDI Centre Artists’ Impression 50
Slide 51: Nestle DC at Axis PDI Centre (Current)
Nestle DC at Axis PDI Centre (Current) Phase 2 land – Rented as vehicle storage yard 51
Slide 52: CSR Initiatives
2017 CSR INITIATIVES 52
Slide 53: Donation to Malaysian Association of the Blind (MAB)
Donation to Malaysian Association of the Blind (MAB) Axis-REIT donated a 14-seater Jinbei van to the Malaysian Association of the Blind (MAB). 53
Slide 54: The Edge Kuala Lumpur Rat Race 2017
The Edge Kuala Lumpur Rat Race 2017 Axis-REIT will be sending a team of 5 runners for the annual Rat Race which is scheduled for this afternoon! 54
Slide 55: 2Q2017 Investments Report
2Q2017 INVESTMENTS REPORT 55
Slide 56: Completed Acquisition
Completed Acquisition Kerry Warehouse – Pasir Gudang, Johor Completion Date : 24 July 2017 Land Area : Approx. 6 acres Land Tenure : Leasehold Occupancy : 100% Purchase Price : RM33 million Projected Net Property Yield : 7.5% WALE : 3.5 years 56
Slide 57: Ongoing Acquisitions
Ongoing Acquisitions Wasco Facility – Gebeng, Pahang Target Completion Date : 2H2017 (SPA signed on 24 July 2017) Land Area : Approx. 120 acres Land Tenure : Leasehold Occupancy : 100% Purchase Price : RM155 million WALE : 15 years 57
Slide 58: Wasco Facility – East Coast Rail Line
Wasco Facility East Coast Rail Line (ECRL) • A 600 km rail line • Project start in 2017 • Construction of the five-year ECRL The 3 Phases 1st Phase :Klang Valley to Kuantan 2nd Phase : Kuantan to Kuala Terengganu 3rd Phase : Kuala Terengganu to Kota Bharu and Tumpat 58
Slide 59: Wasco Facility
Wasco Facility • The East Coast Rail Line project (ECRL) will connect ports on the east and west coasts of Peninsular Malaysia and could alter regional trade routes which currently ply between the busy Strait of Malacca and the South China Sea via Singapore. • The upgrading of Kuantan Port, which wi
Slide 60: Ongoing Acquisitions
Ongoing Acquisitions Manufacturing Facility – Iskandar Puteri, Johor Target Completion Date : 3Q2017 Land Area : Approx. 9.0 acres Land Tenure : Freehold Occupancy : 100% Purchase Price : RM50 million WALE : 21 years 60
Slide 61: Prospective Acquisition Targets
Prospective Acquisition Targets The Manager continues to aggressively source and evaluate potential acquisition targets that are deemed investable by Axis-REIT. The selection of properties will continue to focus on: • Grade A logistics facilities and manufacturing facilities with long leases from te
Slide 62: 2Q2017 Investor Relations Report
2Q2017 INVESTOR RELATIONS REPORT 62
Slide 63: Unit Price Performance 2Q2017
Unit Price Performance 2Q2017 4.00 AXREIT: 1 Jan 2014 – 30 Jun 2017 3.69 3.69 3.62 3.62 3.62 3.55 3.54 3.55 3.58 3.50 3.53 3.53 3.45 3.50 3.38 3.37 3.31 3.34 3.27 3.09 3.00 2.85 2.50 2.00 1.77 1.80 1.75 1.69 1.70 1.70 1.72 1.72 1.65 1.66 1.68 1.68 1.61 1.64 1.61 1.61 1.63 1.65 1.64 1.64 1.55 1.55 1.
Slide 64: Unit Price Movement 2Q2017
80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 1/1/2014 1/2/2014 1/3/2014 1/4/2014 1/5/2014 1/6/2014 1/7/2014 1/8/2014 1/9/2014 1/10/2… 1/11/2… 2Q2017: Unit Price @ 30 Jun 2017 1Q2017: Unit Price @ 31 Mar 2017 1/12/2… 1/1/2015 1/2/2015 1/3/2015 1/4/2015 RM1.65 RM1.64 1/5/2015 1/6/2015 1/7/2015 KLCI 1
Slide 65: Volume Movement 2Q2017
Volume Movement 2Q2017 45,000,000 AXREIT: 1 Jan 2014 – 30 Jun 2017 40,208,000 39,783,200 40,000,000 35,000,00033,826,000 32,708,200 30,000,000 27,806,000 27,347,800 25,000,000 23,451,400 23,438,700 22,491,600 21,092,600 21,028,800 20,000,000 18,616,000 15,849,600 16,046,400 13,159,100 15,009,300 14,
Slide 66: Top 10 Unitholders 2Q2017
Top 10 Unitholders 2Q2017 1 EMPLOYEES PROVIDENT FUND 9.39% 2 AMANAH SAHAM BUMIPUTERA 9.00% 3 LEMBAGA TABUNG HAJI 5.43% 4 TEW PENG HWEE @ TEOH PENG HWEE 5.04% 5 ALEX LEE LAO 4.53% 6 PERMODALAN NASIONAL BERHAD 3.95% 7 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) 3.79% 8 AMANAH SAHAM BUMIPUTERA 2 2.26% 9 AM
Slide 67: Analysis of >2 million Unitholders
Analysis of >2 million Unitholders Top 5 increases in unitholdings: Last Quarter Increase BNP PARIBAS SECS SVS PARIS FOR REIT ASIEN 1 0.4% AMANAH SAHAM MALAYSIA 0.3% FOR BANK KERJASAMA RAKYAT MALAYSIA BERHAD 0.2% EMPLOYEES PROVIDENT FUND 0.1% EXEMPT AN FOR BNP PARIBAS SECURITIES SERVICES (DUB-CLTS 0
Slide 68: Investor Visibility and Liquidity 2Q2017
Investor Visibility and Liquidity 2Q2017 No. of CDS Accounts 4,500 3,934 4,011 3,790 3,891 4,000 3,718 3,776 3,611 3,500 3,200 3,219 3,309 3,176 3,009 3,000 2,850 2,702 2,420 2,500 2,080 2,000 1,652 1,500 1,000 500 - 2008 2009 2010 2011 2012 2013 2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016
Slide 69: Analyst Coverage 2Q2017
Analyst Coverage 2Q2017 Coverage Rating Target Price (RM) Published Date Alliance DBS Hold 1.73 26-Apr-17 Hong Leong IB Hold 1.71 26-Apr-17 CIMB Hold 1.72 26-Apr-17 Kenanga Hold 1.66 26-Apr-17 Maybank Hold 1.70 26-Apr-17 MIDF Hold 1.68 26-Apr-17 UOBKayHian Hold 1.65 26-Apr-17 RHB Hold 1.64 26-Apr-17
Slide 70: Thank You
THANK YOU 70
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