Wharf Real Estate Investment Company Limited · HKEX:1997
Wharf Real Estate Investment — Wharf Real Estate Inv — FY2022 Earnings Presentation
33 slides from Wharf Real Estate Investment's earnings presentation, Mar 7, 2023
Slide 1: Pandemic Woes Coupled Financial Cost Escalation
Pandemic Woes Coupled Financial Cost Escalation Wharf Real Estate Investment Company Limited 2022 Final Results | 7 Mar 2023
Slide 2: Results Highlights
Results Highlights • Borrowing Cost ↑ $500M; Annual Rate Hiked from 1.5% in 1H to 3.5% in 2H • IP Portfolio Value -6% (Close to $15B) • Retail Rentals at Recent Low • Office Leasing Top Line Declined Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui ---------
Slide 3: Observing Post-pandemic Trends
Observing Post-pandemic Trends HK Retail Sales & Visitor Arrivals HK$ Billion Million -24.3% +8.1% -0.8% 60 4 Hotel Mainland Mask 50 Quarantine Border Mandate Ended Reopened Ended • 2022: Largely Local Mkt amid Muted Tourism (Sep 22) (Jan 23) (Mar 23) 3 40 • 2023: Year of Readjustment in Initial Reo
Slide 4: Readjusting Marketing Strategies
Readjusting Marketing Strategies • Local-centric Experiences Well-received by Shoppers • Specific Promotions to Attract Tourists Return • Intelligent Investment Balances Sales, Cost & Margin Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui ------------------
Slide 5: Rent Recovery to Lag
Rent Recovery to Lag 3 Malls (HC, TS, PH) Retail Revenue (YoY Chg.) HKIP Revenue Breakdown S.A. 30% HK$ Billion 2022: $10.4B (-2%) 8 Office 20% 17% 0.1 0.1 0.1 15% 15% 0.1 Retail 7 9% 1.8 1.9 1.9 0.1 10% 6 1.9 0.1 0.1 0.1 0.1 5% 5% 5% 0.1 5 1.9 1.8 1.7 1.7 1.7 1.7 0% 4 -2% -8% 3 5.4 -10% -4% 5.2 5.2
Slide 6: Financial Highlights
Financial Highlights HK$M 2022 2021 % Chg. Group Revenue 12,459 16,043 -22% - HKIP 10,353 10,591 -2% • Group UNP -5%; HKIP & Hotel UNP Flat Operating Profit 8,841 9,064 -2% - HKIP 8,482 8,233 +3% • Soft Capital Values Led to 6% Decline in IP Portfolio Value; Underlying Net Profit (UNP)* 6,175 6,518
Slide 7: Prudent Financial Management
Prudent Financial Management Debt Maturity Total Debt: $46.5B (As at 31 Dec 2022) • Total Asset $255.3B; Net Debt $45.2B HK$ Billion 14 12.1 • Gearing 23.2% 12 11.5 10 9.6 • Interest Cost 2.5%; All Floating-rate Debt 8 6.1 • Interest Cover 7.4x 6 4 3.6 3.6 • Premium Credit Rating 2 – Moody’s A2 Issu
Slide 8: Harbour City
Harbour City Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- Harbour City Times Square Plaza Hollywood The Murray, Hong Ko
Slide 9: Times of Change
Times of Change HC Revenue Breakdown 2022: $8.2B (+2%) HK$ Billion S.A. 7 Hotels & Club 0.1 0.1 0.1 Office • Effective Mall Strategies Boosted Local Footfall 6 0.8 0.7 0.1 Retail 0.7 5 0.5 1.4 0.1 1.3 1.4 0.1 0.1 • Retail & Hotels Key Beneficiary to Reopening 4 1.4 0.2 0.2 0.1 0.2 0.1 0.3 0.1 0.2 0.
Slide 10: All in One: Retailtainment & Sightseeing
All in One: Retailtainment & Sightseeing Rental Income Category Breakdown 2022: $4.5B • Largest Mall in HK w/ 500+ Diverse Tenants • Unique Critical Mass Fortified by Value-accretive Zoning Fashion Jewellery, Beauty & Accs. • Instagrammable Landmark – Best Sunset & Night Views of HK 33% 20% F&B & En
Slide 11: Building a "Better" Tomorrow
Building a “Better” Tomorrow Contiguous 530-metre High Fashion Frontage Along Canton Road Miu Van Cleef Dolce & Emporio Dior Chanel LV Bvlgari Gucci De Beers PRADA FERRAGAMO Miu & Arpels Piaget Gabbana MONCLER Hermès Armani Giorgio Armani CANTON ROAD • Fittest-to-survive Brand Portfolio Built in 3 C
Slide 12: Contiguous 530-metre High Fashion Frontage
Contiguous 530-metre High Fashion Frontage Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- Harbour City Times Square Plaza
Slide 13: 100+ New Stores in 2022
100+ New Stores in 2022 Strategic Re-alignment with a New Generation of Brands Selected Brands New Retail Entrants Expansions / Strategic Relocations Fashion / Leather Goods (w/ Bape Café) (Casa Loewe) Jewellery & Accs. Others New F&Bs Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon
Slide 14: Times Square
Times Square Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- Harbour City Times Square Plaza Hollywood The Murray, Hong Ko
Slide 15: Challenges to Last
Challenges to Last TS Revenue Breakdown • Enriching Gen-Z Targeted Brand Mix & Refining Lux HK$ Billion 2022: $1.8B (-12%) 1.6 Office • Fierce Competition with High Vacancy Nearby 1.4 Retail 1.2 0.4 0.4 0.4 0.4 • Office Mkt Soft with Cautious & Cost-conscious Tenants 1.0 0.3 0.3 0.3 0.8 0.3 0.3 0.4
Slide 16: Plaza Hollywood
Plaza Hollywood Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- Harbour City Times Square Plaza Hollywood The Murray, Hong
Slide 17: CBD2 Sustained Local Demand
CBD2 Sustained Local Demand On MTR Kwun Tong Line & Tuen Ma Line • At the Heart of Kowloon East Public Transport Hub • Regional Mall Supported by Strong Local Footfall – Neighbouring Population: 670,000+* • Yr-end Retail Occupancy 97%; Retail Revenue -4% *2021 Population of Kowloon City, Wong Tai Si
Slide 18: Hotels
Hotels Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- Harbour City Times Square Plaza Hollywood The Murray, Hong Kong Mar
Slide 19: The Murray & Marco Polo Hotels
The Murray & Marco Polo Hotels The Murray, Hong Kong • GOP Improved • Gearing up for Border Reopening; Manpower a Challenge Five-Star Award, Forbes Travel Guide “Best City Hotel – Hong Kong” 2022 & 2023 2nd Time Since 2019* • The Murray: Events, Banquets & Corporate Businesses *Award Cancelled in 20
Slide 20: Outlook
Outlook Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- Harbour City Times Square Plaza Hollywood The Murray, Hong Kong Ma
Slide 21: Pandemic's Aftermath & More
Pandemic’s Aftermath & More • Retail & Hotel to Benefit from Reopening Sooner; Entering Readjustment Phase • Office Mkt Still Soft; Over-supply may Take More Years to Digest • Global Recession Risks Lingering with Quantitative Tightening & Geopolitical Tension • Progressive Return to a Post-COVID No
Slide 22: Sustainability
Sustainability Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- Harbour City Times Square Plaza Hollywood The Murray, Hong
Slide 23: 2030 Long-term Targets & 2022 Highlights
2030 Long-term Targets & 2022 Highlights Overall GHG Emissions Electricity Intensity To Reduce 30% by 2030 To Reduce 27% at HKIP by 2030 Using 2014 as Baseline Using 2014 as Baseline 2030 Targets Water Consumption Waste Diversion To Reduce 18% at HK operations by 2030 To Divert Waste Away from Landf
Slide 24: ESG Performances & Recognitions
ESG Performances & Recognitions Hang Seng Corporate Gold Certification: Sustainability Index (AA+ Rating) Social Capital & Sustainability Hang Seng ESG 50 Index Grand Awards Ratings & Awards MSCI ESG Rating ESG Certifications (A Rating) Silver Certification: CSR Index Plus Mark Caring Company Logo B
Slide 25: Environmental: Asset Enhancements & Renewable Energy
Environmental: Asset Enhancements & Renewable Energy • 320 Solar Photovoltaic Panels Installed at HC, 18 at PH & >100 will be Installed in TS to support RE development & FiT* Scheme • 100 Sets Installed at Solar Gateway Apt. since 2009 Solar Thermal Photovoltaic • Offset 27+ Tonnes of CO2 Heater Sys
Slide 26: Social: Community Contributions
Social: Community Contributions 2nd Top Donor Wharf Emergency Relief Fund by The Community Chest • $7.5M Donations to The Community Chest Rainbow Fund Donations for Two Consecutive Years during 5th Wave (2020/2021 & 2021/2022) • Additional $5M to Students in 82 Project WeCan Schools Sponsorship: Sup
Slide 27: People: Governance, Talent Development & Workplace Safety
People: Governance, Talent Development & Workplace Safety Composition of Board of Directors (12 Board Members as of 31 Dec 22) Meeting Attendance* Designation Directors with Executive Functions (33%) Independent Non-executive Directors (67%) Age 50-60 (17%) 61-70 (25%) 71-80 (58%) 95% Gender Male (8
Slide 28: Appendix
Appendix Investment Properties Hotels Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui -------------------------- -------------------------- -------------------------- -------------------------- -
Slide 29: HC/TS/PH Performance
HC/TS/PH Performance Harbour City Times Square Plaza Hollywood 2022 (HK$M) Revenue % Chg Revenue % Chg Revenue % Chg Retail 4,999 +0.1% 1,134 -19% 439 -4% Office 2,462 +3% 689 +4% - - Hotels & Club 564 +29% - - - - Serviced Apt. 150 -6% - - - - Total 8,175 +2% 1,823 -12% 439 -4% Valuation* as of 31
Slide 30: Premium Quality Portfolio
Premium Quality Portfolio Revenue Valuation* GFA Harbour City Harbour City Harbour City 67.3% 68.5% 71.3% 2022 Revenue Valuation GFA $11.6B $242B 12.3M s.f Singapore Assets Singapore Singapore Times Square 2.7% Portfolio Times Square Plaza Times Square Assets 16.1% Central 2.5% Plaza Central 19.7% C
Slide 31: Overview of Application of Funds
Overview of Application of Funds Major Capital & Development Expenditure 2022 2023 HK$ (Actual) (Projected) HKIP 90M 372M Singapore IP 8M 26M Mainland Properties 133M 216M Hotels & Others 201M 104M Total 432M 718M Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha
Slide 32: Thank You
Thank You Pandemic Woes Coupled Financial Cost Escalation Investment Properties Hotels Tsim Sha Tsui Causeway Bay Kowloon East Central Tsim Sha Tsui -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- Harbour City Tim
Slide 33: End of Presentation
End of Presentation Wharf Real Estate Investment Company Limited [HKEx Stock Code: 1997.HK] Disclaimer All information and data are provided for information purposes only. All opinions included herein constitute our judgment as of the date hereof and are subject to change without notice. The Group,