Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — Suntec REIT — FY2022 Earnings Presentation
66 slides from Singapore Exchange's earnings presentation, Jan 20, 2023
Slide 1: Suntec REIT Financial Results
SUNTEC REIT FINANCIAL RESULTS For the 2H and Financial Year ended 31 December 2022 20 January 2023
Slide 2: Agenda
03 19 FY 22 Financial Overview Singapore Office Portfolio Performance 04 29 FY 22 Operational Overview Australia Portfolio Performance 05 33 Financial Highlights UK Portfolio Performance 16 36 Capital Management Singapore Retail Portfolio Performance Agenda 46 Suntec Convention Performance 49 Our ES
Slide 3: FY 22 Financial Overview
FY 22 Financial Overview Capital Management Distributable Income to Distribution Per Unit Fixed Interest Rate Unitholders to Unitholders Borrowings S$255.5 million 8.884 cents 66% +3.4% y-o-y +2.5% y-o-y % of Foreign Currency Income Hedged Distribution Income DPU from from Operations Operations 60%
Slide 4: FY 22 Operational Overview
FY 22 Operational Overview Portfolio Committed Occupancy Portfolio WALE 98.3% 97.5% 4.5 2.4 Office Portfolio Retail Portfolio Office Portfolio Retail Portfolio Office Portfolio 61% 39% Work Done 1.17M sq ft Retail Portfolio 68% 32% Renewal Leases New Leases 4
Slide 5: Financial Highlights
Suntec City MBFC Properties One Raffles Quay Olderfleet, 477 Collins Street Financial Highlights The Minster Building 177 Pacific Highway 55 Currie Street Nova Properties 21 Harris Street Southgate Complex
Slide 6: Portfolio Financial Performance Improved
Portfolio Financial Performance Improved NPI Grew 24% in FY 22 2H 22 vs 2H 21 2H 21 Mainly due to: 16.9% 2H 22 Gross Revenue & Net Property Income: 14.6% Higher contributions from Suntec City 223.7 Higher contributions from The Minster 191.3 162.8 0.9% 142.0 Building7 56.9 57.4 1,2 1,2 3,4,5 Lower o
Slide 7: Financing Costs Eroded Improvement in NPI
Financing Costs Eroded Improvement in NPI Distributable Income DPU (S$ mil) (SG cents) From Operations 9.0% 9.7% From capital 117.4 4.074 11.5 0.400 129 105.9 4.512 Mainly due to: 3.674 Higher interest rates 2H 21 2H 22 2H 21 2H 22 Higher proportion of asset management fees in cash (50%) vs 2H & FY
Slide 8: Distribution Payment
Distribution Payment Distribution Payment Distribution Period 1 Oct 2022 – 31 Dec 2022 Amount (cents/unit) 1.9901,2 Ex-date 31 Jan 2023 Record date 1 Feb 2023 Payment date 28 Feb 2023 Note: 1. Total of 8.884 cents for FY 2022, of which 6.894 cents has been paid. 2. The Manager has elected to receive
Slide 9: Singapore Office Portfolio Continued to Strengthen
Singapore Office Portfolio Singapore Office Portfolio Continued to Strengthen NPI and JV Income Increased by 7.0% and 1.4% 4.6% 2H 21 2H 22 7.0% Mainly due to: Gross Revenue & Net Property Income: Higher occupancy and rent at Suntec City Office 1.4% 65.7 68.7 51.1 54.7 JV Income: 36.7 37.2 Higher oc
Slide 10: Lower Contribution from Australia Portfolio
Australia Portfolio Lower Contribution from Australia Portfolio Impacted by Weaker Australian Dollar and Leasing Downtime In AUD 2H 21 4.0% 2H 22 6.6% Mainly due to: 54.8 52.6 Gross Revenue & Net Property Income: 44.1 41.2 12.5% 5.6 6.3 Absence of surrender fee received in 2H 21; 1,2 1,2 3 lower occ
Slide 11: UK Portfolio Remained Resilient
UK Portfolio UK Portfolio Remained Resilient Weaker British Pound Impacted Earnings In GBP 2H 21 2H 22 14.7% 8.0% Same Store5 7.8 17.7% 7.1 7.8 7.3 7.5 8.1 6.8 6.2 Mainly due to: 1 1 2 Gross Revenue & Net Property Income: Gross Revenue (£ mil) Net Property Income (£ mil) JV Income (£ mil) Full half
Slide 12: Strong Performance from Singapore Retail Portfolio
Singapore Retail Portfolio Strong Performance from Singapore Retail Portfolio Gross Revenue and NPI Grew by 27.3% and 38.8% 2H 21 27.3% 2H 22 Mainly due to: Gross Revenue & Net Property Income: 38.8% Higher occupancy, rent (fixed and GTO) and marcoms revenue at Suntec City Mall Absence of rental reb
Slide 13: Suntec Convention Continued to Recover
Suntec Convention Suntec Convention Continued to Recover Returned to Profitability for Full Year 2H 21 2H 22 274.7% Mainly due to: Higher revenue from corporate events, conferences and long-term licences Higher costs (operating and maintenance 28.1 expenses, property tax, and absence of Job n.m. Sup
Slide 14: Portfolio Valuation Remained Stable
Portfolio Valuation Remained Stable Cap Rate Expansion for Overseas Properties due to Weak Market Conditions Investment 31 Dec 21 30 Jun 22 31 Dec 22 Against 30 Jun 22 Range of Cap Rates Properties as at 31 Dec 22 Variance Variance ($) (%) Singapore S$8,369.2M S$8,488.3M S$8,769.7M S$281.4M 3.3% Off
Slide 15: Diversified Portfolio Across Geography and Sector
Diversified Portfolio Across Geography and Sector Singapore Market and Office Assets Are Mainstays Income Contribution by Geography 69% 20% 11% AUM Breakdown by Geography 74% 16% 10% Singapore Australia UK Singapore Australia UK 4% 2% Convention Convention Income Contribution by Sector 73% 23% AUM B
Slide 16: Capital Management
Capital Management Olderfleet, 477 Collins Street, Melbourne
Slide 17: Key Financial Indicators
Key Financial Indicators Increase in Fixed Interest Rate Borrowings and Foreign Currency Income Hedging As at 31 Dec 21 As at 31 Dec 22 NAV Per Unit1 S$2.11 S$2.12 Total Debt Outstanding S$4,944 mil S$4,865 mil Aggregate Leverage Ratio2 43.7% 42.4% Weighted Average Debt Maturity 2.92 years 2.85 year
Slide 18: Refinanced S$400 mil loan with Sustainability-Linked Loan
Refinanced S$400 mil loan with Sustainability-Linked Loan ~27% of Total Debt are Green/Sustainability-Linked Loans Debt Maturity Profile Perpetual Securities 1600 1,600 (First Reset) 1400 1,400 204 1200 1,200 1000 1,000 400 800 800 204 400 600 1185 600 280 300 900 300 400 400 200 366 200 326 200 200
Slide 19: Singapore Office Portfolio Performance
Singapore Office Portfolio Performance 19 One Raffles Quay, Singapore
Slide 20: Singapore Office Portfolio Remained Strong
Singapore Office Portfolio Singapore Office Portfolio Remained Strong High Occupancies with Well-Spread Lease Expiries Committed Occupancy Lease Expiry Profile As at 31 Dec 22 % of Total NLA4 Comparison Core CBD Occupancy: 94.7%3 1.5% 99.9% 100.0% 98.5% 94.1% 25.4% 19.2% 20.1% 14.0% 11.1% 8.7% Sunte
Slide 21: Positive Rent Reversion Continued
Singapore Office Portfolio Positive Rent Reversion Continued 18 Quarters of Rent Growth New Tenants by Sector (sq ft) Work Done1 39% Technology, Media and Telecommunications 24% New Leases Banking, Insurance and Financial Services 22% 631,700 sq ft 61% Renewal Leases Shipping and Freight Forwarding
Slide 22: Suntec City Office Performance
Suntec City Office Performance Suntec City Office, Singapore
Slide 23: Occupancy and Rent Outperformed Market Level
Suntec City Office Occupancy and Rent Outperformed Market Level 99.9% Occupancy Achieved $9.25 $9.26 $9.28 $9.28 $9.35 $10 $8.78 $9.09 $9.08 100.0% $8.84 $8.91 $8.80 95.0% $9 90.0% $8 85.0% 80.0% $7 98.6% 99.4% 99.6% 99.9% 75.0% 97.0% 95.6% 96.0% 95.5% 97.2% $6 93.4% 94.7% 70.0% $5 65.0% 60.0% $4 55
Slide 24: Healthy Rent Reversion
Suntec City Office Healthy Rent Reversion Diversified Demand Across Industries New Tenants by Sector (sq ft) Work Done1 44% Shipping and Freight Forwarding 19% New Leases 362,600 sq ft 56% Renewal Leases Technology, media and telecommunications 16% for FY 22 Banking, Insurance and Financial Services
Slide 25: Opportunities from Expiring Leases
Suntec City Office Opportunities from Expiring Leases Comfortable Expiry Rent Baseline Expiry Rent 100.0% $10.5 90.0% $10.12 $10.0 80.0% $9.58 $9.47 $9.51 $9.5 $9.29 $9.26 70.0% $9.0 60.0% $8.5 50.0% $8.0 40.0% $7.5 30.0% $7.0 20.0% 36.2% 10.0% 21.8% 19.3% $6.5 11.5% 7.7% 3.5% $6.0 2023 2024 2025 20
Slide 26: Performance of One Raffles Quay and MBFC Towers 1 & 2
Performance of One Raffles Quay and Marina Business Financial Centre Towers 1 & 2 MBFC Properties, Singapore
Slide 27: Robust Rent Reversion
One Raffles Quay & MBFC Towers 1 & 2 Robust Rent Reversion Strong Demand from TMT and Financial Services New Tenants by Sector (sq ft) 31% Work Done1 Technology, media and telecommunications 42% 269,200 sq ft 69% for FY 22 Banking, Insurance and Financial Services 36% New Leases Legal 7% Renewal Lea
Slide 28: Singapore Office Outlook and Focus
Singapore Office Outlook and Focus Economic slowdown Office market softening Limited new supply amid global uncertainties with easing of demand remains the silver lining and volatile financial for office space in soft office market markets Maintaining occupancy Rent reversion will Revenue will stren
Slide 29: Australia Portfolio Performance
Australia Portfolio Performance 21 Harris Street, Sydney
Slide 30: Australia Portfolio Occupancy Improved Further
Australia Portfolio Occupancy Improved Further WALE Extended with Renewals of 2023 Expiries Committed Occupancy Lease Expiry Profile As at 31 Dec 22 % of Total NLA3 Comparison Nationwide CBD Office Occupancy: 85.9%1 55.6% 100.0% 97.0% 99.5% 100.0% 97.6% 92.3% 3.2% 16.5% 8.6% 7.6% 2.8% 5.7% 177 Pacif
Slide 31: Strong Rent Reversions
Strong Rent Reversions Reflect Improving Market Rents for Well-Located Prime Assets New Tenants by Sector (sq ft) 34% Banking, Insurance and Financial Services 38% Work Done1 66% Government and Government-Linked 237,500 sq ft Offices 15% for FY 22 Manufacturing & Distribution 12% New Leases Real Est
Slide 32: Australia Outlook and Focus
Australia Outlook and Focus Flight to quality trend Economic growth Small increase in persists with Sydney and slowing; but high nationwide CBD office employment expected to Melbourne prime rents vacancy expected as new remain expected to continue supply hits market improving Asset enhancement Posit
Slide 33: UK Portfolio Performance
UK Portfolio Performance Nova Properties, London
Slide 34: UK Portfolio Remain Resilient
UK Portfolio Remain Resilient Majority of Lease Expiries from 2028 & Beyond Committed Occupancy Lease Expiry Profile As at 31 Dec 22 % of Total NLA2 Comparison 92.2% of lease expiries will be in 2028 and beyond if tenants do not exercise lease breaks Central London Office Occupancy: 91.9%1 6.8% 92.2
Slide 35: UK Office Outlook and Focus
UK Office Outlook and Focus Leasing demand Recessionary challenges Slight fall in Central remained active although may continue to London office occupancy 3Q 22 take up rate negatively impact office to 91.9%1 slightly below 10-year market quarterly average Proactive lease Maintain high quality of Re
Slide 36: Singapore Retail Portfolio Performance
Singapore Retail Portfolio Performance Suntec City, Singapore
Slide 37: Portfolio Committed Occupancy Improved to 98.1%
Singapore Retail Portfolio Portfolio Committed Occupancy Improved to 98.1% Committed Occupancy Lease Expiry Profile As at 31 Dec 22 % of Total NLA2 Comparison Central Area Outside Orchard occupancy: 89.3%1 2.1% 98.3% 92.7% 98.1% 25.9% 25.6% 19.5% 18.8% 5.0% 3.1% Suntec City Mall Marina Bay Link Over
Slide 38: Portfolio Rent Reversion Continued to Improve
Singapore Retail Portfolio Portfolio Rent Reversion Continued to Improve Healthy Leasing Demand Expected in 2023 Work Done1 Rent Reversion 274,600 sq ft for FY 22 +4.4% for FY 22 +7.0% (2H 22) 32% New Leases Renewal Leases +10.6% 68% +4.8% +2.7% -0.9% 1Q 22 2Q 22 3Q 22 4Q 22 Note: 1. Reflects net le
Slide 39: Suntec City Mall Performance
Suntec City Mall Performance Suntec City Mall, Singapore
Slide 40: 3 Consecutive Quarters of Positive Rent Reversion
Suntec City Mall 3 Consecutive Quarters of Positive Rent Reversion Driven by Both Replacement and Renewal Leases Work Done1 Rent Reversion 261,200 sq ft for FY 22 +4.8% for FY 22 +7.1% (2H 22) 32% New Leases Renewal Leases 68% +9.9% +5.6% +3.2% 0.0% 1Q 22 2Q 22 3Q 22 4Q 22 Notes: 1. Reflects net let
Slide 41: Tenant Sales Surpassed 2019 Levels Since Reopening
Suntec City Mall Tenant Sales Surpassed 2019 Levels Since Reopening Mall Traffic Increased Steadily Shopper Traffic and Tenant Sales psf (vs 2019) 140% Reopening (26 Apr) 121% 121% 115% 115% 117% 112% 113% 117% 120% 104% 100% 2019 103% 106% 105% 102% 102% 108% Average 104% 101% 94% 91% 80% 89% 87% 8
Slide 42: Elevated Retail and Dining Experiences
Suntec City Mall Elevated Retail and Dining Experiences Introduced 57 New-to-Market and/or New-to-Suntec Brands eggslut’s 2nd outlet Tai Er’s largest outlet in Singapore in Singapore The Grande Whisky Museum’s True Cost New tenants commenced operations after multi-concept flagship New-to-market conc
Slide 43: Strong Return of Events and Roadshows
Suntec City Mall Strong Return of Events and Roadshows Atrium Occupancy Close to 2019 Levels Klook Travel Fest 2022 Amazon.sg House Electric Vehicle (EV) Weekend Clarins in the City Cool Haus Tiger Broker Pop-Up 43
Slide 44: Leveraged On Suntec+ to Drive Growth
Leveraged On Suntec+ to Drive Growth Increased Member Spend Through Engaging and Rewarding Shoppers # of Suntec+ Members and Member Spend Transactions per Member 400,000 $100M 6.9 in 2019 +20% 6.5 in 2021 +47% 300,000 7.7 in 2022 -16% Sales per Transaction 200,000 $50M +15% +6% Y-o-Y +21% 100,000 +2
Slide 45: Singapore Retail Outlook and Focus
Singapore Retail Outlook and Focus Retail rent growth and Rebound of MICE and Growth in tenant sales occupancy underpinned tourism will help increase likely to slow down in by active leasing demand tenant sales and footfall FY23 and limited supply Proactive lease Revenue expected to Improve returns
Slide 46: Suntec Convention Performance
Suntec Convention Performance Suntec Singapore
Slide 47: 2H 22 Marked by Return of Larger Scale Events
Suntec Convention 2H 22 Marked by Return of Larger Scale Events Suntec City Mall Benefited From Strong Footfall Large Scale Consumer Events COMEX 2022 Anime Festival Asia 2022 Bookfest @ Singapore 2022 1 – 4 Sep 22 25 – 27 Nov 22 9 – 18 Dec 22 47
Slide 48: Suntec Convention Outlook and Focus
Suntec Convention Outlook and Focus Recovery momentum to Positive impact from Domestic consumer and continue into 2023 with easing of China’s travel corporate events to strong pipeline of restrictions will be gather pace international MICE events observed in 2H 23 Full recovery expected in Growing s
Slide 49: Our ESG Commitment
Our ESG Commitment 21 Harris Street
Slide 50: Green Initiatives
Green Initiatives Singapore • Installed EV charging stations at Suntec City • Replacement of air handling unit with energy-efficient electronically commutative motors at One Raffles Quay Australia • 20% increase in utilization of Renewable Energy for 55 Currie Street Energy • Upgraded Building Manag
Slide 51: Continual Commitment to ESG
Continual Commitment to ESG Green Mark Platinum Suntec City Office Towers All 12 assets certified “Water Efficient Award for Suntec City Green Building certified Building” by the Public Office Towers in 2022 Utilities Board (PUB) in 2022 Awarded GRESB highest accolade of Global Sector Leader for Off
Slide 52: ESG Environmental – De-carbonization Target
ESG Environmental – De-carbonization Target • Attain Carbon Neutral status for all Australia and UK assets Carbon Neutral • Target to attain Net-Zero Carbon status by 2030 for assets with full ownership control • Target to attain Net-Zero Carbon status by 2050 for all assets across portfolio • Net-Z
Slide 53: Commitment to Corporate Social Responsibility
Commitment to Corporate Social Responsibility Community Partner for the Annual Purple Parade 53
Slide 54: Our Focus
Our Focus 55 Currie Street, Adelaide
Slide 55: Looking Ahead
Looking Ahead Earnings Impacted by Macro Factors Rising Interest Rates Improvements in Weaker FX Reduced Operating Earnings Performance Higher Energy Costs 55
Slide 56: Navigating Challenges Ahead
Navigating Challenges Ahead Key Focus Unlock Value from Asset Proactive Capital Enhancement Initiatives and Potential Management Divestment of Mature Assets Explore Good Quality, Accretive Continual Commitment to Assets Sustainability Practices 56
Slide 57: Thank you
Thank you For enquiries, please contact: Melissa Chow Eugenia Ong Manager, Investor Relations Manager, Portfolio Management Melissa.chow@esr.com Eugenia.ong@esr.com The Minster Building, London
Slide 58: Disclaimer
Disclaimer This presentation is focused on the comparison of actual results for the half year and financial year ended 31 December 2022 versus results achieved for the half year and financial year ended 31 December 2021. The information included in this release does not constitute an offer or invita
Slide 59: About Suntec REIT
About Suntec REIT 177 Pacific Olderfleet,477 Highway, Collins Street, Sydney Melbourne
Slide 60: About Suntec REIT
About Suntec REIT Singapore’s First Composite REIT Market Capitalisation S$4.0 Billion1 London Asset Under Management S$12.3 Billion2 Listed on 9 Dec 2004 on the SGX-ST High quality office assets, complemented by Singapore retail and convention components 10 properties – 3 in Singapore, 2 in Sydney,
Slide 61: Portfolio Snapshot
Portfolio Snapshot Singapore and UK Properties Suntec City One Raffles MBFC The Minster Nova Properties Suntec City – Suntec Convention Quay Properties Building Office & Retail Description Integrated commercial World-class convention Two premium Two premium Two Grade A Grade A Office development com
Slide 62: Portfolio Snapshot
Portfolio Snapshot Australia Properties 177 Southgate Olderfleet 477 55 Currie Street 21 Harris Street Pacific Highway Complex Collins Street Description 31-storey Grade A office Integrated development Premium Grade, 40- Twelve-storey, Grade A Nine-storey, Grade A building comprising two A-Grade lev
Slide 63: Appendix
Appendix 63 Olderfleet, 477 Collins Street, Melbourne
Slide 64: Singapore Portfolio Increased by S$281.4 million or 3.3%
Singapore Portfolio Increased by S$281.4 million or 3.3% Increase in Valuation Across All Asset Classes Investment 31 Dec 21 30 Jun 22 31 Dec 22 31 Dec 22 Against 30 Jun 22 Range of Cap Properties Rates as at Variance Variance 31 Dec 22 ($) (%) Singapore Suntec City S$2,975.0M S$3,036.0M S$3,145.0M
Slide 65: Australia Portfolio Decreased by A$43.5 million or 2.1%
Australia Portfolio Decreased by A$43.5 million or 2.1% Expansion of Cap Rate for 177 Pacific Highway, 21 Harris Street and Southgate Investment 31 Dec 21 30 Jun 22 31 Dec 22 31 Dec 22 Against 30 Jun 22 Range of Cap Properties Rates as at Variance Variance 31 Dec 22 ($) (%) Australia 177 Pacific A$7
Slide 66: UK Portfolio Decreased by £51.1 million or 6.4%
UK Portfolio Decreased by £51.1 million or 6.4% Expansion of Cap Rate for Both Properties Investment 31 Dec 21 30 Jun 22 31 Dec 22 31 Dec 22 Against 30 Jun 22 Range of Cap Properties Rates as at Variance Variance 31 Dec 22 ($) (%) UK Nova Properties £449.8M £451.0M £434.0M £1,528.6 psf -£17.0M -3.8%