Keppel REIT · SGX:K71U
Keppel REIT — K-REIT Asia — Q3 2009 Earnings Presentation
33 slides from Keppel REIT's earnings presentation, Oct 13, 2009
Slide 1: 1 Jan – 30 Sep 2009 Financial Results
1 JAN – 30 SEP 2009 FINANCIAL RESULTS 13 Oct 2009 1
Slide 2: Contents
Contents Operations Review Portfolio Analysis Capital Management Market Review & Outlook Going Forward 2
Slide 3: Highlights
Highlights YTD Sep 2009 distributable income up 25.4% y-o-y Net property income up 27.3% y-o-y Portfolio with 94.9% committed occupancy Average portfolio rent up 6.5% y-o-y in Sep 2009 Proposed rights issue to enhance financial flexibility Increase in funding capacity with proposed right
Slide 4: Operations Review
K-REITAaSla Operations Review
Slide 5: 3Q 2009 Distributable Income Up 18.3%
3Q 2009 Distributable Income Up 18.3% 3Q 2009 3Q 2008 Change Property Income $15.7m $13.9m $1.8m 12.9% Net Property Income $12.3m $9.5m $2.8m 29.1% Distributable Income to $18.0m $15.2m $2.8m 18.3% Unitholders Distribution Per Unit 2.69cts (1) 2.34cts(2) 0.35cts 15.0% Distribution Yield 9.0%(3) 9.7%
Slide 6: YTD Sep 2009 Distributable Income Up 25.4%
YTD Sep 2009 Distributable Income Up 25.4% YTD YTD Change Sep 2009 Sep 2008 Property Income $45.8m $38.4m $7.4m 19.4% Net Property Income $35.4m $27.8m $7.6 m 27.3% Distributable Income to $51.1m $40.8m $10.3m 25.4% Unitholders Distribution Per Unit 7.67cts (1) 6.28cts(2) 1.39cts 22.1% Distribution
Slide 7: Quarter-on-Quarter Performance
Quarter-on-Quarter Performance 3Q 2009 distributable income up 2.7% quarter-on-quarter 3Q 2009 2Q 2009 Change Property Income $15.7m $15.4m $0.3m 1.9% Net Property Income $12.3m $12.3m - - Distributable Income to $18.0m $17.5m $0.5m 2.7% Unitholders Distribution Per Unit 2.69cts (1) 2.64cts(2) 0.0
Slide 8: Healthy Balance Sheet
Healthy Balance Sheet Aggregate leverage of 29.5% (pre-Rights Issue) As at 30 Sep 2009 Non-current Assets $1,921.0m Total Assets $1,970.2m Borrowings $578.5m Total Liabilities $614.7m Unitholders’ Funds $1,355.5m Net Asset Value Per Unit $2.03 Adjusted Net Asset Value Per Unit (1) $2.01 (1) Assumi
Slide 9: Increase in Stake in Prudential Tower
Increase in Stake in Prudential Tower Acquisition of 6 strata floors for about $106.3m • 14.6% discount to appraised value of $124.5m • Gain of majority control (from 44% to 73% stake) of the asset • Guaranteed net property income yield of 5.2% for 5 years(1) • 6 additional tenants Acquisition w
Slide 10: Portfolio Analysis
K-REITAaSla Portfolio Analysis
Slide 11: Diverse Tenant Mix
Diverse Tenant Mix 110 tenants in various business sectors Tenant Business Sector by Net Lettable Area as at 30 Sep 2009 Shipping & marine Accounting & services consultancy services 7.5% 4.0% Services 8.9% Real estate & Banking, insurance & property services financial services 8.3% 35.3% Pharmaceu
Slide 12: Blue-chip Tenants
Blue-chip Tenants Top 10 tenants comprise 51.9% of portfolio’s net lettable area Portfolio’s Top 10 Tenants by Net Lettable Area as at 30 Sep 2009 Deutsche Bank 8.0% I.E.Singapore 7.3% GE Pacific 6.8% UBS AG 6.5% ABN AMRO 5.4% Keppel Land 5.0% Ernst & Young 4.0% One Raffles Quay Credit Suisse 3.1%
Slide 13: Portfolio Occupancy Rate vs Market
Portfolio Occupancy Rate vs Market 94.9% committed occupancy of portfolio as at 30 Sep 2009, higher than core CBD occupancy of 91.2% (1) As at As at Change in K-REIT Asia’s Assets 30 Sep 31 Dec Area 2009 2008 Keppel Towers and GE Tower 92.9% 99.2% 27,182 sf Bugis Junction Towers 91.5% 100% 20,968
Slide 14: Long Lease Terms Provide Income Stability
Long Lease Terms Provide Income Stability Weighted average lease term to expiry for • Portfolio: 5.3 years • Top 10 tenants who account for 51.9% of portfolio’s NLA: 6.8 years Long lease terms(1) account for 31.3% of portfolio’s NLA % of Portfolio’s Net Lettable Area (NLA) with Long Lease Terms
Slide 15: Portfolio Lease Profile
Portfolio Lease Profile Lease expiries and rent reviews well dispersed and staggered from 2010-2013 Lease Profile as a % of Net Lettable Area as at 30 Sep 2009 19.8% 17.5% 15.0% 11.5% 10.9% 9.8% 9.7% 6.1% 3.3% 0% Oct - Dec 2009 2010 2011 2012 2013 Expiring Leases as a Percentage of Portfolio's Tot
Slide 16: 4Q 2009 Lease Profile by Asset
4Q 2009 Lease Profile by Asset Only 3.3% of portfolio’s NLA up for lease expiry in 4Q 2009 Completion of all rent reviews done for 2009 Net Lettable Area (NLA) as at 30 Sep 2009 Leases Expiring % of in Portfolio’s 4Q 2009 (sf) NLA Keppel Towers and GE Tower 23,664 1.9% Bugis Junction Towers - -
Slide 17: Average Portfolio Rent
Average Portfolio Rent Average portfolio rent in Sep 2009: $7.91 psf • $8.22 psf if not for lower income support from 1/3 ORQ (1) Excluding 1/3 ORQ, average portfolio rent: $7.14 psf in Sep $8.06 $8.13 $7.91 $7.43 $7.61 Sep 2008 Dec 2008 Mar 2009 Jun 2009 Sep 2009 (1) The lower income support fr
Slide 18: Portfolio Valuations vs Market Valuations
Portfolio Valuations vs Market Valuations K-REIT Asia’s portfolio valuation: $2 bln(1) as at 29 Sep 2009 • Slight fall of 6.3% from Dec 2008 portfolio valuation of $2.1 bln As at As at 29 Sep 2009 31 Dec 2008 Keppel Towers and GE Tower $1,250 psf $1,347 psf Bugis Junction Towers $1,200 psf $1,265
Slide 19: Capital Management
K-REITAaSla Capital Management
Slide 20: Rights Issue to Enhance Financial Flexibility
Rights Issue to Enhance Financial Flexibility Total debt of $581m as at 30 Sep 2009, comprising • Fixed-rate mortgage loan of $190m maturing in May 2011 • Revolving loan of $391m maturing in Mar 2011 – To be repaid from proceeds of Rights Issue (1) Pre-Rights Issue As at 30 Sep 2009 Gross Borrowin
Slide 21: Impact of Rights Issue
Impact of Rights Issue Aggregate To be lowered to 9.1% from 33% (1) leverage To diversify capital structure To provide greater financial flexibility Gross Increase debt headroom by about proceeds of Funding $438.3m-$647.8m (2) approximately capacity To position K-REIT Asia for $620 million
Slide 22: Market Review & Outlook
K-REITASia Market Review & Outlook
Slide 23: Improvement in Business Confidence
Improvement in Business Confidence Signs of economic recovery • Singapore government revises 2009 GDP forecast upwards to between -2.5% and -2% from -6% to -4% • 2nd consecutive quarter-on-quarter expansion in GDP • Pick-up in office leasing activities Delays in construction of office projects h
Slide 24: Pace of Decline for Rents Easing
Pace of Decline for Rents Easing Flight to quality and opportunistic expansion as rents ease Singapore Office Market Occupancy and Rentals(1) 97.6% 97.1% 96.2% 95.4% $20 93.1% 91.5% 91.2% 100% $18 80% $16 $14 60% $12 18.65 18.80 18.80 $10 16.10 16.10 40% 16.00 15.00 12.90 12.30 $8 10.50 10.15 20%
Slide 25: Singapore: Key Business Destination
Singapore: Key Business Destination Singapore remains a key investment market in Asia • World’s easiest place to do business (“Doing Business 2009” ranking by World Bank) for 4th consecutive year • 4th best financial centre globally in 2009, up from 10th in 2008 (ranking by World Economic Forum) •
Slide 26: Competitive Occupancy Costs in Singapore
Competitive Occupancy Costs in Singapore Global ranking of 170 cities’ office rents (1) • Singapore slipped to 26th position in Jun 2009, compared to 6th in Dec 2008 in terms of occupancy costs • Ranked below Hong Kong, Tokyo and Mumbai Asia Pacific ranking of Grade A office rents (1) • Singapor
Slide 27: Going Forward
K-REITAaSla Going Forward
Slide 28: Key Thrusts
Key Thrusts Pursue opportunities for strategic acquisitions in Singapore and across Asia Source for optimal debt to minimise interest costs Focus on tenant retention Attract creditworthy new tenants Manage K-REIT Asia’s assets efficiently Manage operating cost structure more effectively
Slide 29: Important Notice
IMPORTANT NOTICE The value of units in K-REIT Asia (“Units”) and the income from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the
Slide 30: Additional Information
K-REITASia Additional Information
Slide 31: Snapshot of K-REIT Asia
Snapshot of K-REIT Asia Manager K-REIT Asia Management Limited Property Portfolio 5 commercial office assets valued at $2.0 billion Listing Date 28 Apr 2006 on Singapore Stock Exchange Market Capitalisation $747 million as at 12 Oct 2009 Unit Price $1.12 Number of Units in Issue 666,703,965 Free Flo
Slide 32: Asset Portfolio Information
Asset Portfolio Information Property within/ Keppel Towers and Bugis Junction Prudential Tower(1) One Raffles Quay near Singapore CBD GE Tower Towers Net Lettable Area 10,074 39,963 22,991 41,359(2) (sm) Number of Tenants 11 60 8 31 GE Pacific IE Singapore McGraw-Hill Companies Deutsche Bank Seadril
Slide 33: Asset Portfolio
Asset Portfolio Prudential Tower Keppel Towers GE Tower One Raffles Quay Bugis Junction Towers One Raffles Quay North Tower One Raffles Quay South Tower