Keppel REIT · SGX:K71U
Keppel REIT — Merger or Acquisition (April 2019)
23 slides from Keppel REIT's merger presentation, Apr 23, 2019
Slide 1: Acquisition of a 99.38% Stake in T Tower in Seoul's CBD
Acquisition of a 99.38% Stake in T Tower in Seoul’s CBD 23 April 2019
Slide 2: Outline
Outline • Transaction Overview 3 • Seoul Office Market 6 • Property Highlights 10 • Impact to Portfolio 14 IMPORTANT NOTICE: The past performance of Keppel REIT is not necessarily indicative of its future performance. Certain statements made in this presentation may not be based on historical inform
Slide 3: Transaction Overview
Transaction Overview ▪ Acquiring 99.38%(1) of T Tower, a freehold Grade A office building in Seoul’s central business district (CBD) ▪ Entry into Seoul which has a deep office market with favourable fundamentals ▪ Ability to leverage Keppel Capital’s on-the-ground presence and experience to seek opp
Slide 4: Transaction Overview (Cont'd)
Transaction Overview (Cont’d) ▪ DPU-accretive acquisition with NPI yield of 4.7% 99.38% of T Tower KRW S$ is part of ongoing portfolio optimisation efforts to improve portfolio yield Independent Valuation by 259.0b 309.0m Cushman & Wakefield(1) ▪ Agreed property value of KRW 252.6 billion(1,3) (appr
Slide 5: Investment Rationale
Investment Rationale Entry into Seoul which has a deep office market with 1 favourable fundamentals 2 Freehold Grade A commercial building in the CBD 3 DPU-accretive acquisition 4 Geographical and income diversification Leverage Keppel Capital’s on-the-ground presence 5 and experience in South Korea
Slide 6: Seoul Office Market
Seoul Office Market T Tower: Located in CBD
Slide 7: Seoul: Deep Office Market
Seoul: Deep Office Market Economy South Korea Office Transactions(4) (by Buyer Type) ▪ South Korea is Asia’s fourth largest economy(1) KRW Trillion 14.0 ▪ The Korean economy is projected to expand by 2.5% in 2019 and 2.6% in 2020(2) 12.0 10.0 ▪ Korean won (KRW) to Singapore dollar (S$) has been 8.0
Slide 8: Seoul Office Market: Favourable Fundamentals
Seoul Office Market: 3 Key Business Districts in Seoul(1) Favourable Fundamentals Central Business District (CBD): The traditional CBD, a well-established market ▪ Grade A office buildings will continue to be in high demand across the three business districts(2) Gangnam Business District (GBD): Fast
Slide 9: Seoul CBD: Limited Upcoming Supply
Seoul CBD: Limited Upcoming Supply ▪ Vacancy rate will peak in 2020 at 16% before lowering to 13% in 2022 with the limited supply for the subsequent years(1) CBD Supply and Vacancy(1) CBD Effective Rent(1) sqm % KRW per py 300,000 18.0% 90,000 16.0% 85,000 250,000 14.0% 80,000 200,000 12.0% 75,000 1
Slide 10: Property Highlights
Property Highlights T Tower: High Accessibility
Slide 11: Freehold Grade A Property
Freehold Grade A Property ▪ Located in the CBD, Seoul’s well-established business district ▪ Close to Seoul Station and well-served by various rail, subway and bus networks, including direct connections across the Seoul metropolitan area and regionally via high speed KTX train ▪ Strong connectivity
Slide 12: Tenant-Centric Building
Tenant-Centric Building ▪ Freehold 28-storey office building offering efficient, column-free office space ▪ Close proximity to a wide range of food & beverage outlets and auxiliary retail Modern lobby Proximity to amenities Pleasant work environment 12
Slide 13: Fully Leased to Established Tenant Base
Fully Leased to Established Tenant Base Tenant Mix (% of NLA) ▪ 100% leased to established national and 5.8% international tenants mainly from the technology, 11.6% media and telecommunications (TMT), 33.2% manufacturing and distribution, and services sectors ▪ Notable tenants include: 19.8% ▪ Phili
Slide 14: Impact to Portfolio
Impact to Portfolio T Tower: Complements Existing Portfolio
Slide 15: DPU-Accretive Acquisition
DPU-Accretive Acquisition ▪ Acquisition of T Tower brings 2.5%(1) DPU accretion on a pro forma basis for FY 2018 FOR ILLUSTRATIVE PURPOSES ONLY: Pro forma financial effects of the acquisition on DPU Pro Forma Impact of Before After the Acquisition (FY 2018) (Assuming acquisition was completed on 1 J
Slide 16: DPU-Accretive Acquisition (Cont'd)
DPU-Accretive Acquisition (Cont’d) ▪ Acquisition will be funded by debt, including proceeds from issuance of 1.90% convertible bonds ▪ Aggregate leverage will increase from 35.7% to approximately 38.1% ▪ Investment will be approximately 50% natural hedged with a KRW denominated loan FOR ILLUSTRATIVE
Slide 17: Income Diversification
Portfolio Income Income Diversification Before Acquisition After Acquisition 275 George Street T Tower 8 Chifley Square 275 George Street 4.1% 5.3% 4.3% Owning assets across 5.0% David Malcolm Marina Bay 8 Chifley Square 4.7% Marina Bay Financial Justice Centre David Malcolm Centre Singapore, Austra
Slide 18: Geographical Diversification
Assets Under Management Geographical Diversification Before Acquisition After Acquisition David Malcolm T Tower 275 George Street Justice Centre 3.6% 311 Spencer Street 275 George Street David Malcolm 2.7% 2.5% 2.8% Justice Centre Entry into a third market for 3.0% 8 Chifley Square 2.6% 8 Chifley Sq
Slide 19: Complements Existing Portfolio
Complements Existing Portfolio ▪ Freehold portion of portfolio increases from 14.9% to 20.6% ▪ Portfolio committed occupancy level rises from 98.7% to 98.8% ▪ Portfolio WALE remains long at approximately 5.5 years while lease expiry remains well spread Portfolio Lease Expiry Profile (by committed at
Slide 20: Pan-Asia REIT with Premium Office Portfolio
Pan-Asia REIT with Premium Office Portfolio S$8.4b portfolio of 10 prime commercial assets in key business districts of Singapore, Australia and South Korea T Tower, Seoul 311 Spencer Street, 99.38% Interest Melbourne (Pending Completion) Ocean Financial 50% Interest South Korea Centre (Under develo
Slide 21: Leverage Keppel Capital's Expertise in South Korea
Leverage Keppel Capital’s ▪ Keppel Capital has been operating in South Korea since 2004 and has managed various commercial assets in Seoul Expertise in South Korea 15 years of operations S$3 billion of AUM managed Jongno Tower Seoul Square Center Place ▪ Keppel Investment Management, the asset manag
Slide 22: Merits of Acquisition
Merits of Acquisition 1 Entry into Seoul which has a deep office market with favourable fundamentals 2 Freehold Grade A commercial building in the CBD 3 DPU-accretive acquisition 4 Geographical and income diversification 5 Leverage Keppel Capital’s on-the-ground presence and experience in South Kore
Slide 23: Thank You
Keppel Gis 4 Thank You (