Kore Us Reit · SGX:CMOU
Kore Us Reit — Keppel Pacific Oak US REIT — H1 2024 Earnings Presentation
41 slides from Kore Us Reit's earnings presentation, Jul 31, 2024
Slide 1: First Half 2024 Financial Results
First Half 2024 Financial Results 31 July 2024
Slide 2: Important Notice / Content Outline
Important Notice Content Outline The past performance of Keppel Pacific Oak US REIT is not necessarily indicative of its future performance. Certain statements made in this release may not be based on historical information or facts and may be “forward-looking” statements due to a number of risks, 1
Slide 3: 1H 2024 Key Highlights
1H 2024 Key Highlights Bridge Crossing Tenant space Nashville, Tennessee
Slide 4: Recapitalisation Plan
Recapitalisation Plan Why Recapitalisation Was Necessary Recapitalisation Decision • Leverage had risen post-FY2023 • Several other options such as divestments, equity fund raising and the valuation, resulting in lenders being reduction of distributions were considered. However, these options have c
Slide 5: 1H 2024 Key Highlights
1H 2024 Key Highlights Leasing momentum Income Available For Distribution Net Property Income (NPI) 534,931 sf 8.8% Y-o-Y 4.2% Y-o-Y leases signed in 1H 2024 Income available for distribution of NPI decreased by 4.2% y-o-y to This was equivalent to 11.1% of the US$23.8 million for 1H 2024 was lower
Slide 6: Financial Performance & Capital Management
Financial Performance & Capital Management 105 Edgeview Lobby Denver, Colorado
Slide 7: Financial Performance
Financial Performance (US$’000) 2Q 2024 2Q 2023 % Change 1H 2024 1H 2023 % Change Gross Revenue 37,290 38,858 (4.0) 74,372 75,911 (2.0) Net Property Income (NPI) 21,031 22,717 (7.4) 42,015 43,870 (4.2) Adjusted NPI (excludes non-cash straight-line rent, 21,820 22,627 (3.6) 43,426 44,151 (1.6) lease
Slide 8: Balance Sheet
Balance Sheet As at 30 Jun 2024 As at 31 Dec 2023 % US$’000 US$’000 change Total Assets 1,423,011 1,393,676 2.1 Investment 1,355,229 1,326,310 2.2 Properties Cash and 41,950 43,777 (4.2) Cash Equivalents Other Assets 25,832 23,589 9.5 Total Liabilities 679,390 670,472 1.3 Gross 607,220 601,920 0.9 B
Slide 9: Financial Position
Financial Position As at 30 June 2024 Interest Rate Exposure Total Debt • US$607.2 million of external loans Sensitivity to SOFR(3) Floating Every +/- 50bps in SOFR translates Debt Available Facilities • US$50.0 million of uncommitted 31.0% to approx. –/+ US$0.9 million in revolving credit facility
Slide 10: Financial Position (cont'd)
Financial Position (cont’d) Early Refinancing and Extension of Loans Debt Maturity Profile (as at 30 June 2024) • As part of KORE’s proactive capital management and its Recapitalisation Plan goals, KORE has engaged with lenders to 100% of Loans Unsecured explore early refinancing. 31.5% • KORE has s
Slide 11: Portfolio Performance
Portfolio Performance The Plaza Buildings Lobby lounge Seattle – Bellevue, Washington
Slide 12: Quality Portfolio In Key Growth Markets
Quality Portfolio In Key Growth Markets Popular in-migration destinations due to attractive lifestyle, culture and employment opportunities Seattle, Washington The Plaza Buildings SEATTLE Bellevue Technology Center #10 Seattle The Westpark Portfolio Austin, Texas Westech 360 #5 Great
Slide 13: Increase In Occupancy Rates In 2Q 2024
Increase In Occupancy Rates In 2Q 2024 13
Slide 14: KORE's Historical Occupancy Against The US Average and Gateway Cities
KORE’s Historical Occupancy Against The US Average and Gateway Cities 100% 95% 90.7% 90% 86.1% 85% 83.5% 80% 75% 2019 2020 2021 2022 2023 2024 KORE US Average Gateway Cities Source: June and December CoStar reports for the respective years. 14
Slide 15: Demonstrating Steady Leasing Performance
Demonstrating Steady Leasing Performance Executed leases (by NLA) 22.8% 534,931 sf Leased spaces for 1H 2024, equivalent to 17.8% 11.1% of portfolio NLA. 199,494 sf of space 14.3% 14.7% 13.7% leased in 2Q 2024, equivalent to 4.2% of 11.1% portfolio NLA. Portfolio WALE of 7.8% 3.8 years(2) by CRI. 2.
Slide 16: Diversified Tenant Composition Across Regions and Industries
Diversified Tenant Composition Across Regions and Industries KORE’s buildings and business campuses in ~51% of KORE’s portfolio NLA comprises the tech hubs of Seattle – Bellevue/Redmond, high-quality tenants from the growing and Austin and Denver contribute ~67% of NPI(1) defensive sectors of TAMI,
Slide 17: Low Tenant Concentration Risk
Low Tenant Concentration Risk Top 10 Tenants Sector Asset Location % of % of CRI NLA Comdata Inc TAMI Bridge Crossing Nashville 3.8% 3.9% BAE Systems(1) TAMI Westmoor Center / Westpark Denver 3.8% 4.8% Spectrum TAMI Maitland Promenade I & II Orlando 3.2% 2.4% KORE has over 380 distinct tenants Gogo
Slide 18: Last 12 Months Rent Growth
Last 12 Months Rent Growth 0.7% Key Growth Markets Average 0.3% United States Average 0.7% Gateway Cities Average 0.1% US Average Seattle, Bellevue CBD -2.4% Seattle, Eastside Bellevue -2.2% Seattle, Redmond -2.4% Austin, Northwest 1.6% Denver, Northwest Denver, Broomfield 1.1% 1.6% 0.3% Nashville,
Slide 19: Projected 12-Month Rent Outlook
Projected 12-Month Rent Outlook Key Growth Markets Average United States Average -1.4% -0.9% -0.9% Gateway Cities Average -1.7% US Average Seattle, Bellevue CBD-4.2% Seattle, Eastside Bellevue-4.2% Seattle, Redmond-4.2% Austin, Northwest -1.5% Denver, Northwest Denver, Broomfield -1.3% -0.9% -1.4% N
Slide 20: 3-year market rent growth remained stable despite fluctuating forecasted rent growth
3-year market rent growth remained stable despite fluctuating forecasted rent growth 5.0% 4.0% 3.0% 2.0% Forecasted 12-month Market Rent 1.0% Growth for KORE's Key Growth Markets 0.0% -1.0% Actual Average of KORE's Key -2.0% Growth Markets preceding 12-month Market Rent Growth -3.0% -4.0% Dec-21 Mar
Slide 21: Market Outlook
Market Outlook Bellevue Technology Center Amenity Building Patio Seattle – Bellevue, Washington
Slide 22: U.S. Economic Updates
U.S. Economic Updates (2) % Unemployment Rate (2) % Labour Force Participation Rate 20 65 • U.S. real GDP increased by 2.8% 64 quarter-on-quarter in 2Q 2024(1), with low 15 63 62.6% unemployment rate of 4.1%(2). 10 62 61 • U.S. economy added far more jobs than 5 4.1% 60 expected in May, countering f
Slide 23: Back To Office Trends
Back To Office Trends • Gateway cities such as San Francisco and Los Angeles are still seeing U.S. cities average rates of return to physical occupancy rates of below 50% in 1Q 2024(1). office (days)(5) • The share of Manhattan employees that have returned to the office appear to have stabilised at
Slide 24: KORE Outperforms CBD Offices
KORE Outperforms CBD Offices Change in U.S. office occupancy rates(1) 98.0% • Since the late 1990s, CBD office occupancy rates have 94.0% decreased, falling below (2) suburban office occupancy. 90.3% 90.0% • Downtown offices have gone from being trophy assets to toxic(3). 86.0% (1) 83.0% • Large ten
Slide 25: TAMI Sector Leads In Leasing Activity; Reinforcing KORE's Investment Thesis
TAMI Sector Leads In Leasing Activity; Reinforcing KORE’s Investment Thesis 25.0% 20.2% 20.0% 15.7% 14.2% 15.0% 10.8% 9.4% 10.0% 6.8% 6.2% 5.4% 5.0% 4.0% 4.0% 3.3% 0.0% (1) TAMI refers to stands for technology, advertising, media, and information. (2) Others includes all remaining industries tracked
Slide 26: First choice US office S-REIT focused on TAMI, medical and healthcare sectors
First choice US office S-REIT focused on the fast-growing TAMI, medical and healthcare sectors across key growth markets in the U.S. Strategic presence in several of the Exposure to the Highly diversified Resilient operating fastest growing fast-growing TAMI, portfolio with low metrics with built-in
Slide 27: Important: Submission Of Relevant Tax Forms
Important: Submission Of Relevant Tax Forms It is important for Unitholders to continue to comply with the relevant documentation requirements or they will be subject to U.S. withholding tax under the IRC, including under FATCA. • While distributions to Unitholders are expected to be suspended throu
Slide 28: Thank You
Thank You For more information, please visit www.koreusreit.com Connect with us on: Westech 360 Austin, Texas
Slide 29: Additional Information
Additional Information The Plaza Buildings Seattle – Bellevue, Washington
Slide 30: First Choice Submarkets Outlook
First Choice Submarkets Outlook Property Submarket Last 12M Last 12M Under Last 12M Projected Submarket Vacancy Rate Vacancy Rate Deliveries Absorption Construction Rental Growth Rental Growth Property (%) (%) (sf’000) (sf’000) (sf’000) (%) (%) Seattle, Bellevue CBD 11.5 13.5 2600 1800 2025(1)* (2.4
Slide 31: 2023 Sustainability Highlights
2023 Sustainability Highlights Execute sound fiscal and asset management strategy to drive growth and long-term value for Unitholders ENVIRONMENTAL STEWARDSHIP RESPONSIBLE BUSINESS Further progress in 2023 to adopt Dedicated Board ESG Committee Taskforce on Climate-related Financial Disclosures
Slide 32: Continued Exodus From America's Gateway Cities
Continued Exodus From America’s Gateway Cities 2021-2022 POPULATION CHANGE AMONG THE TOP 10 • Most of the gateway cities continue to face a tough future. LARGEST METRO AREAS AND WASHINGTON, DC(1) New York continues to lead the country in population Phoenix loss and outmigration(1) with more than 4
Slide 33: Business Migrations To The South
Business Migrations To The South Net migration of businesses across the United States, 2021(1)** • Suburban properties continue * Florida +399 to attract the most capital. North Carolina +148 In 1Q 2023, US$8.1 billion * Texas +103 was placed in suburban * Tennessee +92 assets, compared to New Jer
Slide 34: Relocations Out of California
Relocations Out of California Top 10 states for California relocations (1) Overbearing Rank State Known Relocations regulations 1 Texas 132 Exorbitant 2 Tennessee 31 taxes 3 Nevada 25 4 Florida 24 High costs 5 Arizona 21 6 Colorado 20 7 North Carolina 13 • High cost of buildings are driving large co
Slide 35: Investment Headquarters Increasingly Moving South
Investment Headquarters Increasingly Moving South New York City and California in the past 3 years lost firms that managed close to US$1 trillion in assets(1) • California confronted with close to US$32 billion deficit for 2023-24, on pace to have a budget deficit of US$68 billion in Investment head
Slide 36: Trends For Business Relocations
Trends For Business Relocations Headquarter Relocations(1) Top 5 markets that Top 5 markets that Number of Relocations by Reason(2) gained headquarters lost headquarters Business Climate/ Lower Taxes 110 *Austin: 66 San Francisco/ San Jose: 79 Consolidate Operations/ Portfolio Optimization 73 *Dalla
Slide 37: Low State Personal Income Taxes
Low State Personal Income Taxes Individuals are moving to states with zero or low personal income taxes, accelerating population growth State Individual Tax Rates (as at January 1, 2024)(1) 5.18% Key Growth Markets Average 2.95% United States Average 5.18% Gateway Cities Average 9.52% US Average Col
Slide 38: Low State Corporate Income Taxes
Low State Corporate Income Taxes Companies are moving to states with zero or low corporate taxes, accelerating population growth State Corporate Income Tax Rates (as at January 1, 2024)(1) 5.85% Key Growth Markets Average 4.21% United States Average 5.85% Gateway Cities Average 8.33% US Average Colo
Slide 39: 2024 Rankings for Overall State Taxes
2024 Rankings for Overall State Taxes Lower overall tax rates in KORE’s key growth markets vs gateway cities Overall State Rankings(1) Best Key Growth 24 46 Markets *Florida 4 where KORE is present *Texas 13 Gateway *Tennessee 15 Markets Colorado 27 Washington 35 Average of Key Growth Massachusetts
Slide 40: Trust Structure
Sponsors(2) Trust Structure Keppel KPA Unitholders Keppel Capital International Keppel No withholding (1)tax in relation to Trustee Management Management Agreement Section 1446(f) Services Fees Keppel Pacific Oak US REIT Trustee Management Trustee Management (Manager) Tax-efficient structure for
Slide 41: Strong Sponsors: Keppel and KORE Pacific Advisors
Strong Sponsors: Keppel and KORE Pacific Advisors (2) • A global asset manager and operator with strong • Established commercial real estate investment expertise in sustainability-related solutions spanning manager in the US the areas of infrastructure, real estate and connectivity • Operates in mor
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