Kore Us Reit · SGX:CMOU
Kore Us Reit — Keppel Pacific Oak US REIT — Shareholder Meeting (April 2024)
31 slides from Kore Us Reit's shareholder meeting presentation, Apr 17, 2024
Slide 1: Annual General Meeting
Annual General Meeting 17 April 2024
Slide 2: Important Notice and Content Outline
Important Notice The past performance of Keppel Pacific Oak US REIT is not necessarily indicative of its future performance. Certain statements made in this Content Outline release may not be based on historical information or facts and may be “forward-looking” statements due to a number of risks, u
Slide 3: Recapitalisation Plan
Recapitalisation Plan Great Hills Plaza Austin, Texas
Slide 4: Why Recapitalisation Was Necessary
Why Recapitalisation Was Necessary Leverage had risen to 43.2% post-FY 2023 valuation. Lenders were concerned about the United States (U.S.) office market. The Monetary Authority of Singapore (MAS) and bank covenants limit KORE to 50% leverage. Banks were, and are, reluctant to lend above 45
Slide 5: Recapitalisation Options and Decision
Recapitalisation Options and Decision Recapitalisation Options: • Several options were evaluated to recapitalise KORE’s balance sheet. Divestments – not possible at that point because of the difficult U.S. real estate market. Equity fund raising (EFR) – Unlikely to raise enough at that point in
Slide 6: Additional Background
Additional Background Capital Requirements For U.S. Office: • U.S. office requires a lot more capital to build out and lease office space, which is very different from the Singapore office market. • Capital needs are funded by landlords, not tenants. Without the necessary capital investments, U.S. l
Slide 7: Recapitalisation Plan Goals
Recapitalisation Plan Goals • Maintain leverage within the MAS limits and bank debt covenants. There is always the risk that asset valuations could change enough to cause KORE to exceed MAS limits or breach the bank debt covenants. KORE plans to invest capital strategically to preserve the capit
Slide 8: US Office S-REITs Differentiators
US Office S-REITs Differentiators • There are various factors that impact the operational performance and differentiate the U.S. office S-REITs. These include: Market Presence – KORE invests in key growth markets, primarily 18-hour and Super Sun Belt Cities. Tenant Concentration – KORE’s top 10
Slide 9: US Office S-REITs Capex and Occupancy Comparison
US Office S-REITs Capex and Occupancy Comparison FY2020 KORE PRIME MUST US office S-REITs occupancy AUM (1) (US$ mil) 1,282.8 1,427.4 2,120.6 Capex (1) (US$ mil) 26.3 9.5 25.6 -3.3pp % Capex Per AUM 2.1 0.7 1.2 -10.4pp -11.4pp -3.6pp -6.6pp FY2021 KORE PRIME MUST AUM (1) (US$ mil) 1,415.4 1,687.7 2,
Slide 10: Commitment Towards Recovery
Commitment Towards Recovery KORE will continue to invest in the portfolio, with the goal of maximising NPI by the end of 2025 and restarting distributions for FY 2026 at the highest appropriate level, balancing the capital needs of the REIT and the desire to distribute income to Unitholders. Commitm
Slide 11: Important: Submission Of Relevant Tax Forms
Important: Submission Of Relevant Tax Forms It is important for Unitholders to continue to comply with the relevant documentation requirements or they will be subject to U.S. withholding tax under the IRC, including under FATCA. • While distributions to Unitholders are expected to be suspended throu
Slide 12: FY 2023 Key Highlights
FY 2023 Key Highlights Bridge Crossing Nashville, Tennessee
Slide 13: FY 2023 Key Highlights
FY 2023 Key Highlights Portfolio Valuation Net Property Income (NPI) Leasing momentum US$1.33 billion 2.2% YoY 704,191 sf Portfolio valuation decreased by leases signed in FY 2023 Despite the disposal of the two Atlanta assets in 6.8% or US$97.1 million year-on-year 2H 2022, NPI increased by 2.2% y-
Slide 14: Key Growth Markets
Key Growth Markets Neighborhood Seattle – Bellevue/Redmond
Slide 15: KORE's Presence In Key Growth Markets
KORE’s Presence In Key Growth Markets Popular in-migration destinations due to attractive lifestyle, culture and employment opportunities Seattle, Washington The Plaza Buildings SEATTLE Bellevue Technology Center #10 Seattle The Westpark Portfolio Austin, Texas Westech 360 #5 Great H
Slide 16: 2023 Rankings for Overall State Taxes
2023 Rankings for Overall State Taxes Lower overall tax rates in KORE’s key growth markets vs gateway cities Overall State Rankings(1) Best Key Growth 22 46 Markets *Florida 4 where KORE is present *Texas 13 Gateway *Tennessee 14 Markets Colorado 21 Washington 28 Average of Key Growth Massachusetts
Slide 17: Blue States Losing Taxpayers and Income
Blue States Losing Taxpayers and Income Net Gain and Loss in State Adjusted Gross Income Due to Domestic Migration(1) $ billion • Chicago lost at least 249,000 people over the last five 50 years(2). 40 • New York City lost almost 550,000 residents from Apr 2020 30 to Jul 2023(3); whilst the San Fran
Slide 18: Deteriorating Situation in Gateway Cities
Deteriorating Situation in Gateway Cities San Francisco Store Closures Since 2020(1) Rise in felony crimes in New York City List of companies that moved out of Chicago(3) (2021 to 2022)(4) Date announced Store May 2023 Nordstrom Tyson Foods March 2023 Amazon Go January 2023 Banana Republic Boeing Fe
Slide 19: Business Migrations To The South
Business Migrations To The South Net migration of businesses across the United States, 2021(1)** Headquarter Relocations(2) *Florida +399 Top 5 markets that Top 5 markets that North Carolina +148 gained headquarters lost headquarters * Texas +44 *Austin: 66 San Francisco/ San Jose: 79 * Tennessee +1
Slide 20: Relocations Out of California
Relocations Out of California Top 6 states for California relocations (1) Fortune 1,000 Headquarters that left California, 2018 – 2021(1) Company California Location Destination 2022 Rank State Known Relocations Fortune Ranking 1 Texas* 132 McKesson San Francisco Texas > Irving/ 9 Corp Las Colinas 2
Slide 21: 1Q 2024 Key Business and Operational Updates
1Q 2024 Key Business and Operational Updates Bellevue Technology Center Amenity Building Patio Seattle – Bellevue, Washington
Slide 22: Financial Highlights
Financial Highlights 1Q 2024 1Q 2023 % (US$ ’m) (US$ ’m) Change Gross Revenue 37.1 37.1 - Income Available for Distribution Net Property Income (NPI) 21.0 21.2 (0.8) for 1Q 2024 was down 8.8% year- on-year to US$11.9m mainly due Adjusted NPI to: (excludes non-cash straight-line rent, 21.6 21.5 0.4 •
Slide 23: Financial Position
Financial Position As at 31 March 2024 Interest Rate Exposure Total Debt • US$607.2 million of external loans Sensitivity to SOFR(3) Floating Debt Every + 50bps in SOFR translates Available Facilities • US$50.0 million of uncommitted 31.0% to approximately - US$0.9 million Due revolving credit facil
Slide 24: Committed Occupancy By Property
Committed Occupancy By Property 100.0% 100.0% 100.0% 95.9% 96.7% 95.3% 94.5% 94.6%93.6% 91.5% 90.2% 90.7% 90.7% 91.9% 92.1%92.3% 91.7% 90.3%90.1% 88.3% 86.8% 87.3% 87.7% 83.7% 78.0% 70.2% 64.2% 60.0% The Plaza Bellevue The Great Hills Westech Westmoor 105 Bridge 1800 West Bellaire One Maitland Iron
Slide 25: Steady Income with Visible Organic Growth
Steady Income with Visible Organic Growth New Renewal Expansion New leasing demand and expansions from: 335,437 sf Leased spaces for 1Q 2023, equivalent TAMI(2) 41.5% to 7.0% of portfolio NLA. Portfolio WALE of 3.8 years(1) by CRI. 14.1% Professional Services(3) 32.8% 64.3% Leases signed Finance and
Slide 26: Resilient Portfolio with Diversified Tenant Composition
Resilient Portfolio with Diversified Tenant Composition KORE’s buildings and business campuses in ~52% of KORE’s portfolio NLA comprises the tech hubs of Seattle – Bellevue/Redmond, high-quality tenants from the growing and Austin and Denver contribute ~66% of NPI(1) defensive sectors of TAMI, medic
Slide 27: Low Tenant Concentration Risk
Low Tenant Concentration Risk Top 10 Tenants Sector Asset Location % of CRI % of NLA Comdata Inc TAMI Bridge Crossing Nashville 3.8 3.9 Ball Aerospace TAMI Westmoor Center Denver 3.4 4.5 Gogo Business Aviation TAMI 105 Edgeview Denver 3.0 2.5 Seattle – KORE has over Lear Cooperation TAMI The Plaza B
Slide 28: First choice US office S-REIT focused on TAMI, medical and healthcare
First choice US office S-REIT focused on the fast-growing TAMI, medical and healthcare sectors across key growth markets in the U.S. Strategic presence Exposure to the Highly diversified Resilient operating in several of the fast-growing TAMI, portfolio with low metrics with built-in fastest growing
Slide 29: Thank You
Thank You For more information, please visit www.koreusreit.com Connect with us on: The Plaza Building Seattle – Bellevue/Redmond
Slide 30: Additional Information
Additional Information 1800 West Loop South Houston, Texas
Slide 31: First Choice Submarkets Outlook
First Choice Submarkets Outlook Property Submarket Last 12M Last 12M Under Last 12M Projected Submarket Vacancy Rate Vacancy Rate Deliveries Absorption Construction Rental Growth Rental Growth Property (%) (%) (sf’000) (sf’000) (sf’000) (%) (%) Seattle, Bellevue CBD 9.8 11.2 2100 1600 2,630(1)* (2.3
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