Sunway Real Estate Investment Trust · MYX:SUNREIT
Sunway Real Estate Investment Trust — Q3 FY2020 Earnings Presentation
55 slides from Sunway Real Estate Investment Trust's earnings presentation, May 19, 2020
Slide 1: Financial Results Third Quarter Ended 31 March 2020
FINANCIAL RESULTS Third Quarter Ended 31 March 2020 (FYE 30 June 2020) 19 May 2020
Slide 2: Disclaimer
Disclaimer This presentation is for information purposes only and does not constitute an offer, solicitation or advertisement with respect to the purchase or sale of any security of Sunway Real Estate Investment Trust (“Sunway REIT”) and no part of it shall form the basis of, or be relied on in conn
Slide 3: Table of Contents
Table of Contents 1. Financial Highlights (3Q2020) 2. Financial Results (3Q2020) 3. Portfolio Performance (3Q2020) 4. Property Development Activities & Assets Enhancement Initiatives 5. Market Outlook 6. Investor Relations Appendix - Property Performance (3Q2020) Empowering Businesses Curating Exp
Slide 4: Financial Highlights (3Q2020)
FINANCIAL HIGHLIGHTS (3Q2020) Empowering Businesses Curating Experiences Enriching Lives 4
Slide 5: Financial Highlights – 3Q2020
Financial Highlights – 3Q2020 Highlights 3Q 2020 3Q 2019 No. of Properties 17 16 Property Value (RM'billion) 8.098 7.367 Units in Circulation 2,945,078,000 2,945,078,000 Unit Price as at 31 Mar (RM) 1.59 1.80 Market Capitalisation (RM'billion) 4.683 5.301 Net Asset Value ("NAV") Per Unit (RM) 1.4905
Slide 6: Financial Highlights – 3Q2020 (Cont’d)
Financial Highlights – 3Q2020 (Cont’d) Reported in RM’000 Gross revenue Gross Revenue for 3Q2020 decreased by 3Q 140,800 7.1% or RM10.7 million compared to 3Q2019 2020 mainly attributable to lower performance from 7.1% retail and hotel segment resulted from COVID-19 impact, partially offset by 3Q 20
Slide 7: Financial Highlights – YTD 3Q2020
Financial Highlights – YTD 3Q2020 Reported in RM’000 Gross revenue YTD Gross Revenue for YTD 3Q2020 increased by 3Q2020 155,352 155,798 140,800 451,950 2.8% 4.0% or RM17.2 million compared to YTD 4.0% 3Q2019 mainly contributed by newly acquired Sunway university & college campus partially YTD offset
Slide 8: Financial Results (3Q2020)
FINANCIAL RESULTS (3Q2020) Empowering Businesses Curating Experiences Enriching Lives 8
Slide 9: Statement of Comprehensive Income – Consolidated
Statement of Comprehensive Income – Consolidated 3Q 2020 3Q 2019 Change YTD 2020 YTD 2019 Change RM'000 RM'000 % RM'000 RM'000 % Gross revenue 140,800 151,499 -7.1% 451,950 434,740 4.0% Property operating expenses (37,290) (37,725) -1.2% (112,746) (106,227) 6.1% Net property income 103,510 113,774 -
Slide 10: Statement of Comprehensive Income – Consolidated (notes)
Statement of Comprehensive Income – Consolidated 1 Interest income for 3Q2020 was higher by RM0.3 million due to higher short term investment compared to 3Q2019. Interest income for YTD 3Q2020 was lower by RM0.6 million mainly due to lower average interest rate for short term investment and placemen
Slide 11: Statement of Financial Position – Consolidated
Statement of Financial Position – Consolidated 31.03.20 30.06.19 31.03.20 30.06.19 (Unaudited) (Audited) (Unaudited) (Audited) RM'000 RM'000 RM'000 RM'000 ASSETS Non-current assets Units in circulation ('000 units) 2,945,078 2,945,078 Investment properties 8,098,015 8,047,410 Plant and equipment 12,
Slide 12: Statement of Financial Position – Consolidated (notes)
Statement of Financial Position – Consolidated 1 Short-term investment relates to investment in 1-month commercial paper issued by Sunway Berhad Group, at the nominal value of RM80.0 million less the discount on commercial paper of RM0.2 million. 2 Cash and bank balance was lower by RM12.3 million m
Slide 13: Statement of Cash Flows – Consolidated
Statement of Cash Flows – Consolidated Cumulative Quarter ended 31.03.2020 31.03.2019 1 Net cash from operating activities for YTD RM'000 RM'000 3Q2020 was RM322.4 million, higher by RM44.0 OPERATING ACTIVITIES million compared to YTD 3Q2019 mainly Cash receipts from customers 492,008 456,647 contri
Slide 14: Debt Profile as at 31 Mar 2020
Debt Profile as at 31 Mar 2020 Facility Limit Amount RM'million RM'million Maturity Profile (RM'million) Revolving Loan (USD100m) 392.3 357.8 1 Commercial Papers (CP) / 2 3,000.0 1,600.0 Revolving Loan (RL) 3 Unrated MTNs 10,000.0 1,200.0 1,600.0 Total Gross Borrowings 3,157.8 200.0 Discount on Comm
Slide 15: Portfolio Performance (3Q2020)
PORTFOLIO PERFORMANCE (3Q2020) Empowering Businesses Curating Experiences Enriching Lives 15
Slide 16: Revenue & NPI growth in 3Q2020
Revenue & NPI growth in 3Q2020 Reported in RM’million Retail Hotel Office Revenue 11% 35% 3Q2020 98.3 15.3 10.7 3Q2019 110.7 23.4 9.9 8% NPI 3Q2020 67.1 16% 13.5 37% 6.4 3Q2019 79.5 21.5 5.3 22% The retail segment recorded The hotel segment recorded The office segment recorded gross Notes gross reve
Slide 17: Revenue & NPI growth in 3Q2020 (Cont’d)
Revenue & NPI growth in 3Q2020 (Cont’d) Reported in RM’million Services Industrial & Others Overall Revenue 14.9 1.5 140.8 7% 3Q2020 3Q2019 6.0 150% 1.5 151.5 NPI 3Q2020 14.9 1.5 103.5 9% 3Q2019 6.0 1.5 113.8 150% The services segment Sunway REIT Industrial - Shah Revenue of the portfolio Notes cont
Slide 18: Revenue & NPI growth in YTD 3Q2020
Revenue & NPI growth in YTD 3Q2020 Reported in RM’million Retail 3% Hotel 3% Office Revenue YTD 3Q2020 310.6 61.5 31.3 YTD 3Q2019 320.9 63.6 28.4 10% NPI YTD 3Q2020 216.4 7% 56.6 2% 17.6 YTD 3Q2019 57.9 15.5 13% 233.2 The retail segment recorded The office segment recorded gross Notes gross revenue
Slide 19: Revenue & NPI growth in YTD 3Q2020 (Cont’d)
Revenue & NPI growth in YTD 3Q2020 (Cont’d) Reported in RM’million Services Industrial & Others Overall Revenue YTD 3Q2020 44.0 4.6 452.0 YTD 3Q2019 17.5 152% 4.3 6% 434.7 4% NPI YTD 3Q2020 44.0 4.6 339.2 YTD 3Q2019 17.5 152% 4.3 6% 328.5 3% The services segment Sunway REIT Industrial - Shah Revenue
Slide 20: 3Q2020 and YTD 3Q2020 Revenue Contribution (by Property)
3Q2020 and YTD 3Q2020 Revenue Contribution (by Property) YTD 3Q YTD 3Q 3Q 2020 3Q 2019 Variance Change 2020 2019 Variance Change By Property RM'mil RM'mil RM'mil % RM'mil RM'mil RM'mil % Sunway Pyramid Mall 76.2 85.6 (9.4) -10.9% 237.8 246.6 (8.9) -3.6% Sunway Carnival Mall 10.7 12.0 (1.4) -11.3% 34
Slide 21: 3Q2020 NPI and NPI Margin Contribution (by Property)
3Q2020 NPI and NPI Margin Contribution (by Property) NPI NPI Margin 3Q 2020 3Q 2019 Variance Change 3Q 2020 3Q 2019 Variance By Property RM'mil RM'mil RM'mil % % % % Sunway Pyramid Mall 55.9 66.1 (10.1) -15.4% 73.3% 77.2% -3.8% Sunway Carnival Mall 5.9 6.9 (1.0) -14.3% 55.6% 57.6% -2.0% SunCity Ipoh
Slide 22: YTD 3Q2020 NPI and NPI Margin Contribution (by Property)
YTD 3Q2020 NPI and NPI Margin Contribution (by Property) YTD 3Q YTD 3Q NPI YTD 3Q NPI Margin YTD 3Q 2020 2019 Variance Change 2020 2019 Variance By Property RM'mil RM'mil RM'mil % % % % Sunway Pyramid Mall 177.2 192.7 (15.5) -8.1% 74.5% 78.2% -3.6% Sunway Carnival Mall 20.3 20.7 (0.4) -2.0% 59.2% 58
Slide 23: Key Performance Indicators – YTD 3Q2020
Key Performance Indicators – YTD 3Q2020 Industrial & Retail Hotel Office Services Others YTD 3Q 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Average Occupancy 96% 1 97% 66% 69% 78% 71% 100% 100% 100% 100% Rates NPI Margin 70% 73% 92% 91% 56% 55% 100% 100% 100% 100% 1 Empowering Businesses Cur
Slide 24: Property Development Activities & Asset Enhancement Initiatives (AEI)
PROPERTY DEVELOPMENT ACTIVITIES & ASSET ENHANCEMENT INITIATIVES (AEI) (3Q2020) Empowering Businesses Curating Experiences Enriching Lives 24
Slide 25: Property Development Activities
Property Development Activities Expansion of Sunway Carnival Shopping Mall Estimated total property development RM 353.0 million cost (including land) Cummulative cost incurred from initiation RM 88.4 million to YTD 3Q 2020 Duration Approximately 3 years from 3Q 2018 Approximately 350,000 sq ft of a
Slide 26: Market Outlook (3Q2020)
MARKET OUTLOOK (3Q2020) Empowering Businesses Curating Experiences Enriching Lives 26
Slide 27: General Outlook
General Outlook o Global growth prospect has taken a turn following the unprecedented health crisis. The Covid-19 pandemic has caused severe disruptions in global supply chain and economic activities. The International Monetary Fund (IMF) adjusted global growth projection to contract acutely by 3.0%
Slide 28: General Outlook (cont’d)
General Outlook (cont’d) o Malaysia’s Consumer Price Index (CPI) eased 0.2% y-o-y in March 2020, mainly due to lower fuel prices, however, it was offset by an increase in food & non-alcoholic beverages. Meanwhile, CPI in the 1Q CY2020 increased 0.9% y-o-y. Inflationary pressures is expected to remai
Slide 29: Retail Segment
Retail Segment o The Retail Group Malaysia (RGM) has revised Malaysia’s retail sales, from an initial growth projection of 4.6% y-o-y to a contraction of 5.5% y-o-y in CY2020. Preliminary estimation indicated that retail sales has declined by 18.8% y-o-y in 1Q CY2020, mainly due to slower sales ahea
Slide 30: Hotel Segment
Hotel Segment o The hotel industry’s high dependence on the tourism sector placed the industry with high vulnerability to global headwinds. With the looming outlook and global travel restrictions, hotel’s occupancy are expected to remain at historical low in the coming quarters. o To mitigate the ad
Slide 31: Hotel Segment (cont’d)
Hotel Segment (cont’d) o During the MCO period, the restriction from receiving new reservation has presented an opportunity for Sunway Clio Hotel and Sunway Pyramid Hotel to be offered as quarantine centres for returnees to Malaysia. The average occupancy rate has been encouraging thus far for the 2
Slide 32: Office Segment
Office Segment o In the recent Covid-19 pandemic, the office segment is relatively more insulated where the impact at varying degree depending on the nature of business. Acceleration in technology adaptation was exceptionally swift to ensure business continuity. Notably, alternative working arrangem
Slide 33: Investor Relations (3Q2020)
INVESTOR RELATIONS (3Q2020) Empowering Businesses Curating Experiences Enriching Lives 33
Slide 34: Unit Price Performance from IPO to YTD 3Q FY2020
Unit Price Performance from IPO to YTD 3Q FY2020 Unit Price Performance of Sunway REIT versus Benchmarks (8 July 2010 – 31 March 2020) 200.0% GPR APREA Composite REIT Index - Malaysia 135.2% 150.0% 100.0% Sunway REIT 76.7% 50.0% FBM KLCI 2.7% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Pe
Slide 35: Unit Price Performance for YTD 3Q FY2020
Unit Price Performance for YTD 3Q FY2020 Unit Price Performance of Sunway REIT versus Benchmarks (1 July 2019 – 31 March 2020) 5.0% Sunway REIT -15.0% 0.0% Jun 2019 Sep 2019 Dec 2019 Mar 2020 -5.0% -10.0% -15.0% -20.0% Bursa Malaysia REIT Index -25.0% FBM -15.0% KLCI -19.2% -30.0% Performance Statis
Slide 36: Indices Representation
Indices Representation o FTSE Bursa Malaysia Mid 70 Index o FTSE Bursa Malaysia Emas Index o FTSE Bursa Malaysia Top 100 Index o Bursa Malaysia REIT Index o FTSE ASEAN All-Share Index o FTSE ASEAN Malaysia Index o FTSE ASEAN All-Share ex Developed Index o FTSE4Good Bursa Malaysia Index o GPR APREA C
Slide 37: Unitholders’ Composition (as at 31 March 2020)
Unitholders’ Composition (as at 31 March 2020) Retail Foreign 4.2% 10.9% Institutions & Sunway Berhad Corporate 40.9% 55.0% Domestic 89.1% March 2020 December 2019 Q-o-Q Change No of unitholders 15,276 15,369 -93 (10.6%) Retail unitholders 4.2% 6.6% -2.4% Foreign unitholders 10.9% 11.5% -0.6% Sunway
Slide 38: Analysts Recommendation (as at March 2020)
Analysts Recommendation (as at 31 March 2020) Target Price as at 31 March 2020 (RM) Upside / Downside to unit price as at 31 March 2020 (%) 27.0 25.8 22.6 19.5 18.9 18.2 13.8 13.8 9.4 6.3 6.9 5.0 2.02 1.95 1.88 1.81 1.81 1.74 1.69 1.67 1.57 2.00 1.90 1.70 1.55 1.48 1.89 (1.3) (2.5) (6.9) CLSA TA Res
Slide 39: Comparative Yields for Various Assets
Comparative Yields for Various Assets 8.0% 6.992 7.0% 6.0% 5.53%1 5.45%5 5.0% 4.0% 3.35%3 3.0% 2.59%4 2.00%6 2.0% 1.0% 0.0% Sunway REIT M-REITs 10-Year MGS Fixed Deposit EPF Yield OPR Note: 1 Distribution yield is computed based on consensus FY2020 DPU of 8.80 sen and unit price as at 31 March 2020
Slide 40: Appendix: Property Performance (3Q2020)
APPENDIX: PROPERTY PERFORMANCE (3Q2020) Empowering Businesses Curating Experiences Enriching Lives 40
Slide 41: Retail Properties - Sunway Pyramid Shopping Mall
RETAIL PROPERTIES - Sunway Pyramid Shopping Mall Average occupancy rate Projected lease expiry schedule 50.0% 100.0% 98.3% 98.9% 98.5% 98.0% 98.2% 97.6% 40.0% 95.0% 30.0% 90.0% 85.0% 20.0% 80.0% 10.0% 4.0% 6.2% 30.1% 17.3% 40.7% 75.0% 0.0% Jun-16 Jun-17 Jun-18 Jun-19 YTD 3Q YTD 3Q FY2020 FY2021 FY20
Slide 42: Retail Properties - Sunway Carnival Mall
RETAIL PROPERTIES - Sunway Carnival Mall Average occupancy rate Projected lease expiry schedule 35.0% 100.0% 97.6% 97.3% 97.4% 97.9% 96.5% 30.0% 94.4% 95.0% 25.0% 90.0% 20.0% 15.0% 85.0% 10.0% 80.0% 5.0% 28.3% 17.9% 16.1% 33.2% 0.7% 75.0% 0.0% FY2020 FY2021 FY2022 FY2023 Monthly Ju n-16 Ju n-17 Ju n
Slide 43: Retail Properties - SunCity Ipoh Hypermarket
RETAIL PROPERTIES - SunCity Ipoh Hypermarket Average occupancy rate 100% 100% 100% 100% 100% 100% 100% 95% 90% 85% 80% 75% Jun-16 Jun-17 Jun-18 Jun-19 YTD 3Q YTD 3Q 2020 2019 SunCity Ipoh Hypermarket is currently leased to a single tenant, a major hypermarket and retailer chain operating under the “
Slide 44: Retail Properties - Sunway Putra Mall
RETAIL PROPERTIES - Sunway Putra Mall Average occupancy rate Projected lease expiry schedule 60.0% 100.0% 92.4% 90.7% 90.4% 90.8% 86.3% 50.0% 80.0% 74.9% 40.0% 60.0% 30.0% 40.0% 20.0% 20.0% 10.0% 6.7% 57.1% 24.4% 5.7% 0.9% 0.0% 0.0% Jun-16 Jun-17 Jun-18 Jun-19 YTD 3Q YTD 3Q FY2020 FY2021 FY2022 FY20
Slide 45: Retail Properties - Sunway Clio Retail
RETAIL PROPERTIES - Sunway Clio Retail Average occupancy rate Projected lease expiry schedule 50.0% 100.0% 93.1% 89.7% 40.0% 80.0% 65.8% 64.8% 30.0% 60.0% 37.6% 20.0% 40.0% 20.0% 10.0% 3.0% 46.2% 14.5% 29.7% 4.4% 0.0% 0.0% Jun-16 Jun-17 Jun-18 Jun-19 YTD 3Q YTD 3Q FY2021 FY2022 FY2023 Monthly 2020 2
Slide 46: Hospitality Properties - Sunway Resort Hotel & Spa
HOSPITALITY PROPERTIES - Sunway Resort Hotel & Spa Average occupancy rate 100.0% 81.2% 81.5% 80.0% 73.5% 65.4% 65.5% 64.8% 60.0% 40.0% 20.0% 0.0% Ju n-16 Ju n-17 Ju n-18 Ju n-19 YTD 3Q YTD 3Q 2020 2019 Note 1: The hotel properties are under 10-year master leases. The master lease of Sunway Resort Ho
Slide 47: Hospitality Properties - Sunway Pyramid Hotel
HOSPITALITY PROPERTIES - Sunway Pyramid Hotel Average occupancy rate 80.0% 71.8% 71.4% 70.0% 68.1% 67.5% 66.9% 60.0% 56.8% 50.0% Ju n-16 Ju n-17 Ju n-18 Ju n-19 YTD 3Q YTD 3Q 2020 2019 Note 1: The hotel properties are under 10-year master leases. The master lease of Sunway Pyramid Hotel is expiring
Slide 48: Hospitality Properties - Sunway Clio Hotel
HOSPITALITY PROPERTIES - Sunway Clio Hotel Average occupancy rate 80.0% 74.4% 74.8% 72.3% 71.5% 69.9% 70.0% 66.7% 60.0% 50.0% Ju n-16 Ju n-17 Ju n-18 Ju n-19 YTD 3Q YTD 3Q 2020 2019 Note 1: The hotel properties are under 10-year master leases. The master lease of Sunway Clio Hotel is expiring in Feb
Slide 49: Hospitality Properties - Sunway Hotel Seberang Jaya
HOSPITALITY PROPERTIES - Sunway Hotel Seberang Jaya Average occupancy rate 100.0% 80.0% 76.4% 74.7% 74.5% 71.1% 65.5% 62.7% 60.0% 40.0% 20.0% 0.0% Ju n-16 Ju n-17 Ju n-18 Ju n-19 YTD 3Q YTD 3Q 2020 2019 Note 1: The hotel properties are under 10-year master leases. The master lease of Sunway Hotel Se
Slide 50: Hospitality Properties - Sunway Putra Hotel
HOSPITALITY PROPERTIES - Sunway Putra Hotel Average occupancy rate 80.0% 72.8% 68.2% 62.4% 62.9% 62.3% 60.0% 50.2% 40.0% 20.0% 0.0% Ju n-16 Ju n-17 Ju n-18 Ju n-19 YTD 3Q YTD 3Q 2020 2019 Note 1: The hotel properties are under 10-year master leases. The master lease of Sunway Putra Hotel is expiring
Slide 51: Hospitality Properties - Sunway Hotel Georgetown
HOSPITALITY PROPERTIES - Sunway Hotel Georgetown Average occupancy rate 100.0% 91.8% 87.7% 85.7% 84.5% 80.0% 74.0% 69.1% 60.0% 40.0% 20.0% 0.0% Ju n-16 Ju n-17 Ju n-18 Ju n-19 YTD 3Q YTD 3Q 2020 2019 Note 1: The hotel properties are under 10-year master leases. The master lease of Sunway Hotel Georg
Slide 52: Office Properties - Menara Sunway
OFFICE PROPERTIES - Menara Sunway Average occupancy rate Projected lease expiry schedule 100.0% 100.0% 97.1% 94.8% 94.8% 80.0% 95.0% 93.8% 92.1% 89.3% 60.0% 90.0% 40.0% 85.0% 80.0% 20.0% 7.5% 15.1% 73.3% 1.9% 75.0% 0.0% Jun-16 Jun-17 Jun-18 Jun-19 YTD 3Q YTD 3Q FY2020 FY2021 FY2022 FY2023 2020 2019
Slide 53: Office Properties - Sunway Tower
OFFICE PROPERTIES - Sunway Tower Average occupancy rate Projected lease expiry schedule 18.0% 35.0% 32.2% 30.0% 15.0% 25.0% 12.0% 20.7% 21.0% 20.1% 19.6% 19.4% 20.0% 9.0% 15.0% 6.0% 10.0% 3.0% 5.0% 2.5% 11.1% 15.3% 6.2% 0.0% 0.0% Jun-16 Jun-17 Jun-18 Jun-19 YTD 3Q YTD 3Q FY2020 FY2021 FY2022 FY2023
Slide 54: Office Properties - Sunway Putra Tower
OFFICE PROPERTIES - Sunway Putra Tower Average occupancy rate Projected lease expiry schedule 50.0% 100.0% 86.1% 82.0% 80.7% 40.0% 80.0% 60.0% 56.0% 30.0% 40.0% 36.6% 20.0% 26.4% 20.0% 10.0% 40.9% 41.6% 3.7% 0.0% 0.0% Jun-16 Jun-17 Jun-18 Jun-19 YTD 3Q YTD 3Q FY2021 FY2022 FY2023 2020 2019 The avera
Slide 55: Office Properties - Wisma Sunway
OFFICE PROPERTIES - Wisma Sunway Average occupancy rate Projected lease expiry schedule 100.0% 100.0% 60.0% 94.1% 92.1% 90.1% 50.0% 90.0% 86.9% 40.0% 80.0% 78.3% 30.0% 70.0% 20.0% 60.0% 10.0% 30.8% 50.4% 18.6% 50.0% 0.0% Jun-16 Jun-17 Jun-18 Jun-19 YTD 3Q YTD 3Q FY2021 FY2022 FY2023 2020 2019 The av
Sunway Real Estate Investment Trust — Q3 FY2020 Earnings Presentation on 6ix