Link Real Estate Investment Trust · HKEX:823
Link Real Estate Investment Trust — Citi 2024 Global Property CEO Conference
45 slides from Link Real Estate Investment Trust's conference presentation, Mar 14, 2024
Slide 1: Citi 2024 Global Property CEO Conference
Citi 2024 Global Property CEO Conference March 2024
Slide 2: Agenda
2 Agenda Link – At a glance 3 • Link Today 4 • Creating Long-term Unitholder Value 5 • Portfolio Overview 6 Hong Kong 9 • Hong Kong Retail Overview 10 • Hong Kong Asset Enhancement 11 • Hong Kong Car Parks and Related Business 12 Mainland China 13 • Mainland China Overview 14 • Asset Enhancement – L
Slide 3: Link At a glance
AR LINK Link At a glance
Slide 4: Link Today
4 Link Today No.1 154 Investments A 3 ‘A’ Credit Ratings The most liquid and the largest Covering Assets in Hong Kong, High Credit Ratings by International REIT in Asia in terms of market Mainland China, Australia, Agencies (S&P, Moody’s, Fitch) capitalisation Singapore, United Kingdom 100% Only 1 1
Slide 5: Creating Long-term Unitholder Value
5 Creating Long-term Unitholder Value Driving growth and stability in distributable amount organically and through M&As since IPO (2) Market cap evolution since IPO (HK$bn) Link REIT’s total distributable amount (HK$ million) 6,273 6,311 5,670 5,674 5,720 5,281 4,992 4,567 4,064 3,830 3,349 100 2,92
Slide 6: Portfolio Management: Delivering on Growth and Diversification
6 Portfolio Management : Delivering on Growth and Diversification Acquisition since 2011: 33 properties amounting HK$91B Going forward, in terms of geographical scope, Link will continue to focus on the $24B APAC region. $15B $11B $11B Remain disciplined and selective for new investments $7B $6B $5B
Slide 7: Portfolio Overview
7 Portfolio Overview Growing AUM while making inroads into the international market 140 Retail, Car Zhejiang & Jiangsu Parks and Related Province Shanghai (1) Business HK$ 241B Beijing 3 Logistics 1 Retail Portfolio Value 1 Office 9 Office 2 Retail Hong Kong Guangdong 5 Logistics Province Guangzhou
Slide 8: Why Invest in Link REIT
8 Why Invest in Link REIT The largest in terms of market capitalisation, the most liquid, and the only internally-managed REIT in Asia 100% free float held by institutions and private investors Quality assets diversified across regions Heavily exposed to resilient non- discretionary community commer
Slide 9: Hong Kong
Hong Kong
Slide 10: Hong Kong Retail Overview
10 Hong Kong Retail Overview Community Commercial with Good Connectivity and Strong Footfall Sustained robust momentum Occupancy in reversion 98.0% Assets Unit Rent psf 130 properties 52 fresh markets 1H 2H 8.5% 8.7% HK$64.3 (1) 5.9% 6.1% New Leases 3.4% Reversion (2) 8.7% >300 (118 new brands) sign
Slide 11: Hong Kong Asset Enhancement
11 Hong Kong Asset Enhancement Transforming retail experience through asset enhancement Estimated CAPEX under planning & statutory approval >HK$700M 95 projects completed since listing >50 fresh market upgrades have been done Optimise retail spaces through revitalisation, target to generate lucrativ
Slide 12: Hong Kong Car Parks and Related Business
12 Hong Kong Car Parks and Related Business Rise in car park tariffs powers rental income growth Revenue • Consistent improvement in both monthly and hourly car 5.2% YoY park income • Structural imbalance of supply and demand continually Car Park Income per space per month bolsters car park business
Slide 13: Mainland China
13 Mainland China
Slide 14: Mainland China Overview
14 Mainland China Overview Progressing along the path of recovery Retail Office Logistics Stable Market Outlook (1) Some economic activity stabilisation since Occupancy 95.8% 91.5% 95.0% 2023 -5.2% (1,2) 4%-5% (3) Reversion Excluding LPTH & N/A Annual Rental Strategic Location CW +6.1% increments we
Slide 15: Asset Enhancement – Link Plaza Tianhe
15 Asset Enhancement – Link Plaza Tianhe Tapping spending power of the rising middle class A New Social Hive Where Connections Come Alive Before AEI Ph. 1 Reopens Est. CAPEX Est. ROI September 2023 ~RMB 300M (1) ~12.0%(1) ▪ Committed occupancy was 95% as at 31 Oct 2023 ▪ Footfall soared by more than
Slide 16: International
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Slide 17: International Retail Overview
17 International Retail Overview A Solid asset fundamentals anchored solidifies our results Australia Retail Australia Retail 98.1% occupancy rate Singapore Retail 99.3% occupancy rate Queen Victoria Building The Strand Arcade The Galeries ▪ Resilient retail sentiment and tenant sales are rebounding
Slide 18: International Office
18 International Office Harnessing the flight-to-quality thematic 95.1% (1) ~5.3 years occupancy rate overall WALE ▪ Proactive approach positions assets as beneficiaries of the flight-to- 151 Clarence Street 567 Collins Street The Cabot (3) quality trend in the face of external macro headwinds ▪ Emb
Slide 19: Capital Management
Capital Management
Slide 20: 1H 2023/24 Strong Financial Position
20 1H 2023/24 Strong Financial Position Healthy balance sheet reinforced by solid financial metrics 18.0% 3.74% Net Gearing Ratio Average Borrowing Cost K E Y TA K E AWAY S 69.8% 3.4 years Proactive fixed-debt ratio hedging Fixed-rate Debt Ratio Average Debt Maturity Sustained competitive finance co
Slide 21: Prudent Capital Management
21 Prudent Capital Management Solid capital base to buffer interest rate risks Committed to maintaining a healthy balance sheet and Available Liquidity stable cashflow. (1) HK$22.8B Debt Maturity Profile Debt Profile Breakdown Debt Mix 22.7 4.1 32.9 by (HK$ billion) Medium Term Notes (38.0%) (6.9%)
Slide 22: Valuation Remains Robust
22 Valuation Remains Robust Cap rate expansion mitigated by increasing rental cashflows As at As at As at As at HK$’M 30 Sep 2023 31 Mar 2023 30 Sep 2023 31 Mar 2023 Hong Kong Retail properties 126,506 129,819 3.25% - 4.60% 3.10% - 4.50% Car parks and related business 47,448 46,823 2.70% - 4.90% 2.6
Slide 23: Corporate Strategy
== Corporate +, Strategy
Slide 24: Adopting an Asset-lighter Approach
24 Adopting an Asset-lighter Approach Three Core Components under Link 3.0 To be a World-Class APAC REAL ESTATE INVESTOR & MANAGER Assets on Fund Management Operating Platform Balance Sheet Platform Adopt an asset- Expand our Diversify our income lighter approach by capabilities Active capital 1 2 3
Slide 25: Latest Acquisition
25 Latest Acquisition Acquisition of Remaining 50% interest in Qibao Vanke Plaza Estimated Total Acquisition Cost RMB 2,383.8M (for 50% Stake) (1) 31.3% YoY Agreed Property Value REVENUE RMB 5,200M (discount of 26.3% to Appraised Property Value) o Proposed acquisition of Appraised Property Value (2)
Slide 26: Strong Confidence in Shanghai as the Leading City in China
26 Strong Confidence in Shanghai as the Leading City in China S H A N G H A I E C O N O M I C I N D I C AT O R S ( 2 0 2 3 ) GDP 5.0% Shanghai led Tier 1 cities in post-pandemic retail recovery GDP Growth Retail Sales 60% Growth Beijing Guangzhou National Shanghai Shenzhen %YoY 0.3% 40% CPI Growth 2
Slide 27: Enhanced Connectivity with the Build-outs of New Metro Lines
27 Enhanced Connectivity with the Build-outs of New Metro Lines Convenient Location TRANSIT ORIENTED DEVELOPMENT 10 mins to Hongqiao Airport by car 30 mins to The Bund by car Existing Metro Line Qibao Station (Metro Line No.9 ) Metro Lines Anticipated Airport Connection Line (expected end-2024) Hong
Slide 28: Amplify Marketing Efforts to Strengthen Tenant Sales
28 Amplify Marketing Efforts to Strengthen Tenant Sales Marketing Campaigns
Slide 29: Closer Look at Qibao Vanke Plaza
29 Closer Look at Qibao Vanke Plaza
Slide 30: Increased Management Capacity to Seize Potential Growth Prospects
30 Increased Management Capacity to Seize Potential Growth Prospects Duncan Gareth Owen John Saunders Chair Elect & Group Chief Investment Officer Independent Non-Executive Director Diversity is deep-rooted in the Link management team. It encompasses not only deep commercial acumen, skillset, knowle
Slide 31: Frequent Questions from Investors
Frequent Questions from Investors
Slide 32: Frequent Questions from Investors - Operational
32 Frequent Questions from Investors - Operational Mainland China Impact of Leakage Outlook for Outlook to Shenzhen Hong Kong • Stable economic outlook – low inflation • Background: Hong Kongers shopping in • Further minimum wage hikes to help Link allows room for fiscal and monetary stimulus to She
Slide 33: Frequent Questions from Investors - Strategy
33 Frequent Questions from Investors - Strategy Role of the New Progress of Link Portfolio CIO in Link 3.0 3.0 Strategy Optimisation • John Saunders to be Group CIO effective 4 • Potential strategies: outright divestment of • Financial headroom allows Link to be patient March 2024, reporting to CEO
Slide 34: Frequent Questions from Investors - Financial
34 Frequent Questions from Investors - Financial Making Progress of the Capital Acquisitions Unit Buyback Management Accretive • HK: Challenging due to lower cap rates • Targeted fixed debt ratio ~ 50 – 70% • Rationale: Accretive to unitholders given unit price discount to NAV and high yield • Austr
Slide 35: Appendix
Appendix
Slide 36: Corporate Milestones
36 Corporate Milestones First retail asset acquisition Issued inaugural green overseas Completed Asia’s Acquisition of bond, a first for Hong • The Strand Arcade, Queen largest-ever rights issue remaining 50% Became the 1st issuer of Became a constituent Kong business Victoria Building and The in th
Slide 37: 1H 2023/24 Interim Results Highlights
37 1H 2023/24 Interim Results Highlights Resilient performance and robust financial strength despite persistent challenges Revenue Net Property Income HK$6,725M HK$5,063M 11.3% YoY 10.4% YoY Lok Fu Place, Hong Kong Distribution Amount Net Asset Value per unit HK$3,333M HK$70.72 Jurong Point, Singapo
Slide 38: “Properties” and “People” Combined under Link
38 “Properties” and “People” Combined under Link Our Unitholders Properties People • ~HK$270bn GAV now • Under Link Asset Management Limited (“LAML”), a dedicated • Core/Core+ return Link 3.0 internal manager now on cost • Sizeable HK non-discretionary recovery basis retail exposure • Fully fledged
Slide 39: ESG Initiatives
SAR ESG Initiatives
Slide 40: Sustainability Priorities
40 Sustainability Priorities Focus on four strategic areas, portfolio-wide over the next five years Climate Resilience Net Zero Strategy Sustainability Reporting Stakeholder Engagement ▪ Participated in the United Nations • Established our 2035 Net Zero • Early adoption of ISSB Exposure ▪ Establishe
Slide 41: ESG Benchmarking Performance
41 ESG Benchmarking Performance Our sustainability efforts are recognised by various global and industry ESG benchmarks ESG Indices Performance Rank 5th In East Asia BBB Score 87/100 Industry Adjusted Score 5.7 2022: 79/100 2021: 5.8 (A) Asia Pacific Index “Low Risk” Rating Score 68/100 Score 10.2/1
Slide 42: Our Goal to reach Net Zero by 2035
42 Our Goal to reach Net Zero by 2035 Submitted our SBT Net Zero target for validation in April 2023 2022/2023 Progress Since 2010 ✓ 3.1% reduction in electricity intensity ~40% absolute Moving forward, Link has ✓ 13.8% reduction in carbon emissions intensity reduction Announced Net identified 5 app
Slide 43: ESG Targets and Progress
43 ESG Targets and Progress Prioritised 9 material ESG KPIs overseen by Board based on our materiality assessment and risk register exercise Key Topic Key Target 2022/2023 Progress Carbon Intensity 25% 13.8% Reduction(1,2) By 2025/2026 Compared to Base Line Electricity Intensity 5% 3.1% Reduction(1)
Slide 44: ESG Targets and Progress
44 ESG Targets and Progress Prioritised 9 material ESG KPIs overseen by Board based on our materiality assessment and risk register exercise Key Topic Key Target 2022/2023 Progress General Waste >50% 15.6% Recovered/Recycled By 2035 compared to 6.7% in 2021/2022 Customer Satisfaction Score >80% 90.8
Slide 45: Disclaimer
45 Disclaimer ◼ This document has been prepared by Link Asset Management Limited in its capacity as the Manager (the “Manager”) of Link Real Estate Investment Trust (“Link REIT”) solely for use at the presentations/meetings held and may not be reproduced or redistributed without permission. Neither
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