Spring Real Estate Investment Trust · HKEX:1426
Spring Real Estate Investment Trust — FY2018 Earnings Presentation
25 slides from Spring Real Estate Investment Trust's earnings presentation, Mar 26, 2019
Slide 1: Final Results 2018 Presentation
Final Results 2018 Presentation 26 March 2019
Slide 2: Disclaimer
DISCLAIMER This presentation may contain information which is proprietary, confidential and/or legally privileged and has been prepared by Spring Asset Management Limited, in its capacity as the manager (the “Manager”) of Spring Real Estate Investment Trust (the “Trust”). This presentation is being
Slide 3: Agenda
AGENDA 1 1 OVERVIEW OF FY 2018 2 FY 2018 RESULTS SUMMARY 3 CCP OPERATION REVIEW 4 UK PORTFOLIO OPERATION REVIEW 2 5 KEY EVENTS 3 6 OUTLOOK & STRATEGIC PRIORITIES 2
Slide 4: Overview of FY 2018
OVERVIEW OF FY 2018 ◼ Spring REIT will pay a final distribution of HK 7.2 cents. Total distribution for the Reporting Year amounts to HK 19.2 cents per Unit (2017: HK21.1 cents per Unit). ◼ DPU for the full year was down by 9.0% YoY, due to the impact of costs associated with various extraordinary e
Slide 5: Agenda
AGENDA 1 1 OVERVIEW OF FY18 2 FY 2018 RESULTS SUMMARY 3 CCP OPERATION REVIEW 4 UK PORTFOLIO OPERATION REVIEW 2 5 KEY EVENTS 3 6 OUTLOOK & STRATEGIC PRIORITIES 4
Slide 6: FY2018 Results Summary
FY2018 RESULTS SUMMARY ▪ Growth at the CCP Property, the effect of a full-year of contribution from the UK Portfolio (which was acquired in July 2017), and to a limited extent, a higher average RMB/US$ exchange rate during the year, attributed to the improvements in both revenue and net property inc
Slide 7: Financial Performance: Total Revenue
FINANCIAL PERFORMANCE: TOTAL REVENUE ▪ As the main driver of our profit, CCP Property revenue increased by 6.5% yoy on the back of moderate improvements in passing rent, stable occupancy rates, and a stronger RMB currency vs USD (average rate). ▪ With revenue from UK Portfolio doubling thanks to ful
Slide 8: Financial Performance: NPI & TDI
FINANCIAL PERFORMANCE: NPI & TDI ▪ Net property income margin remained stable at 75.1% (FY17: 74.4%) while NPI grew by 11.0% yoy ▪ TDI was down by 6.3% yoy, primarily due to one-off expenses. ▪ If one-off expenses are excluded, TDI would have increased at 12.3% yoy. Net Property Income Total Distrib
Slide 9: Debt Profile
DEBT PROFILE ▪ Refinancing of UK loans were completed in Jan 2018, resulting in a lower borrowing and more distant loan maturity profile ▪ The repayment was financed by (i) a GBP50 mil new loan facility, (ii) a US$18 mil USD revolving facility, and (iii) internal resources. ▪ To mitigate USD interes
Slide 10: Agenda
AGENDA 1 1 OVERVIEW OF FY18 2 FY 2018 RESULTS SUMMARY 3 CCP OPERATION REVIEW 4 UK PORTFOLIO OPERATION REVIEW 2 5 KEY EVENTS 3 6 OUTLOOK & STRATEGIC PRIORITIES 9
Slide 11: Leasing Market Condition
LEASING MARKET CONDITION Beijing Overall Beijing CBD Beijing Overall – Supply, Absorption, Occupancy Beijing CBD – Supply, Absorption, Occupancy (sqm, GFA) (sqm, GFA) 97% 97% 96% 95% 1,200,000 93% 100% 95% 96% 95% 95% 95% 350,000 100% 80% 900,000 80% 60% 600,000 60% 40% 150,000 40% 300,000 20% 20% 0
Slide 12: Future Grade-A Office Supply
FUTURE GRADE-A OFFICE SUPPLY Of the 907,000 sqm GFA of new supply in 2019:- ▪ 69% of the GFA will be located in the CBD area ▪ Of which, 57% of the GFA are going to be self-occupied or already pre-committed Grade-A office supply by year (sqm, GFA) 1,000,000 903,294 900,000 New Supply in CBD 800,000
Slide 13: Comparison of Grade-A Office Markets Across China
COMPARISON OF GRADE-A OFFICE MARKETS ACROSS CHINA ▪ Beijing has highest office occupancy of 95% ▪ Low new supply in the next 4 years, only 3.4% p.a. of existing stock (vs avg. 15.6% p.a. of other selected cities) Office GFA 2H 2018 Stock New Supply 2018 - 2022 2H18 Occupancy rate (RHS) (‘000 sqm) Oc
Slide 14: CCP Property Operations Summary
CCP PROPERTY OPERATIONS SUMMARY ▪ Rental income at CCP Property recorded a healthy growth of 3.4% yoy, exceeding FY17’s yoy growth rate of 1.0% ▪ Cost structure remained stable, with NPI margin remained the same at 73.6% (FY17: 73.6%) ▪ Withholding tax increment was slightly bigger due to timing iss
Slide 15: Leasing Performance
LEASING PERFORMANCE Moderate growth in passing rent and stable occupancy rates despite upcoming CBD office supply Average Passing Rents Average Occupancy Rates (RMB per sqm per month) (%) 94% 96% 95% 96% 95% 362 362 363 357 359 343 337 334 2014 2015 2016 2017 2018 2H 1H 2H 2017 2018 2H 2017 1H 2018
Slide 16: Tenant Base
TENANT BASE Diverse and high quality tenant mix Tenants by Industry Top 5 Tenants % of total leased Tenants As % of leased office GFA GFA (As of 31 December 2018) Epson 5.9% Business center and others Delsk 4.5% Education/ Energy/ Technology Real estate/ media/sports/ resources/ Condé Nast 4.2% 23.0
Slide 17: Expiring Lease Profile
EXPIRING LEASE PROFILE ▪ Average lease expiry of existing leases (in GFA terms) as of 31 December 2018 was 715 days. ▪ Lease expiries in 2019 – about 14.9% and 10.7% of the leasable GFA at CCP Property expiring in the first and second half of 2019 respectively, with an average expiring rental rate o
Slide 18: Cost Structure of CCP Property
COST STRUCTURE OF CCP PROPERTY More than 95% of property expenses are revenue-linked or fixed FY 2018 ◼ Property taxes Others Property management fee – Includes real estate tax and land use tax – Starting from 2H 2016, real estate tax calculated 3% based on 12% of revenue for leased area, and 1.2% o
Slide 19: Agenda
AGENDA 1 1 OVERVIEW OF FY18 2 FY 2018 RESULTS SUMMARY 3 CCP OPERATION REVIEW 4 UK PORTFOLIO OPERATION REVIEW 2 5 KEY EVENTS 3 6 OUTLOOK & STRATEGIC PRIORITIES 18
Slide 20: Location of the properties
Location of the properties 19
Slide 21: UK Portfolio Operation Summary
UK PORTFOLIO OPERATION SUMMARY Long-term, quality cash flow backed by guarantee, with upward-only revisions FY 2018 GBP Revenues - Rental income 4,423,162 Expenditure - Head rents on leasehold properties (101,429) - Property management fees (63,000) Net Property Income 4,258,733 Portfolio Highlights
Slide 22: Agenda
AGENDA 1 1 OVERVIEW OF FY18 2 FY 2018 RESULTS SUMMARY 3 CCP OPERATION REVIEW 4 UK PORTFOLIO OPERATION REVIEW 2 5 KEY EVENTS 3 6 OUTLOOK & STRATEGIC PRIORITIES 21
Slide 23: Key Events
KEY EVENTS 26 Sep 2018 29 Oct 2018 An unsolicited general offer (the Initial closing date of the Offer; minimum “Offer”) is made by a significant acceptance condition was not met. shareholder (the “Offeror”) Subsequently, the Offeror made a Revised Offer 19 Sep 2018 26 Sep 2018 29 Oct 2018 28 Nov 28
Slide 24: Agenda
AGENDA 1 1 OVERVIEW OF FY18 2 FY 2018 RESULTS SUMMARY 3 CCP OPERATION REVIEW 4 UK PORTFOLIO OPERATION REVIEW 2 5 KEY EVENTS 3 6 OUTLOOK & STRATEGIC PRIORITIES 23
Slide 25: Outlook & Strategic Priorities
OUTLOOK & STRATEGIC PRIORITIES Outlook in 2019 ▪ The market is at a critical juncture as a large supply of new offices is expected to come onto Beijing market in 2019, coupled with uncertainty in global political and economic environment. However, we do not anticipate a serious oversupply for a numb
Spring Real Estate Investment Trust — FY2018 Earnings Presentation on 6ix