Sunway Real Estate Investment Trust · MYX:SUNREIT
Sunway Real Estate Investment Trust — Citigroup Asia Pacific Property Conference 2012
72 slides from Sunway Real Estate Investment Trust's conference presentation, May 11, 2012
Slide 1: Sunway REIT Corporate Presentation
Sunway REIT Corporate Presentation For Citigroup Asia Pacific Property Conference 10-11 May 2012 0
Slide 2: Disclaimer
DISCLAIMER This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed or implied in forward-looking statements as a result of a number of risks, uncertainties and assumption
Slide 3: Table of Contents
Table of Contents 1. Background 2. Financial Highlights 3. Growth Driver 1: Organic Growth 4. Growth Driver 2: Acquisition Growth 5. Growth Driver 3: Asset Turnaround 6. Capital Management 7. The Largest REIT in Malaysia 8. Conclusion Appendices 2 2
Slide 4: 1. Background
$ SUNWAY REIT Www.Sunway REIT.com 1. Background
Slide 5: Largest REIT in Malaysia
Largest REIT in Malaysia Property Value Office 10% RM 4.4 billion^ Gross Floor Area Hotel 10,621,086 sq. ft^ 24% Portfolio by Property Value Retail 66% Market Capitalisation RM 3.4 billion* ^ As at 31 March 2012 * As at 30 April 2012 and closing price of RM1.27 4 4
Slide 6: Largest REIT in Malaysia
Largest REIT in Malaysia Perak 1% Penang Office 7% 10% Kuala Lumpur 18% Hotel 23% Portfolio by Portfolio by Geographical NPI Contribution Diversification Retail 67% Selangor 74% Notes: As at 31 March 2012 5 5 Including Sunway Putra Place
Slide 7: Sponsor
Sponsor -Bigger, Better, Stronger Size Sunway City Berhad Enhances pipeline Sunway opportunities^ Synergy + Berhad* Sunway REIT Sunway REIT Management Sdn. Bhd. Branding Sunway Holding Berhad * Sunway Berhad was listed on the Main Board of Bursa Malaysia on 23 August 2011 ^ Right of First Refusal 6
Slide 8: Portfolio Overview
Portfolio Overview -11 assets worth RM4.4 billion Pusat Bandar Seberang Jaya Bandar Sunway Perlis Sunway Carnival Sunway Hotel Sunway Resort Pyramid Tower Shopping Mall Seberang Jaya Kedah Hotel & Spa Hotel Penang Kelantan Terengganu Perak Pahang Kuala Lumpur Room: 202 guest Selangor NLA: 487,178sq
Slide 9: Key Milestones
Key Milestones Constitution Listing on Main Market Inaugural of the Deed of Bursa Malaysia Acquisition 20 May 2010 19 April 2011 8 July 2010 5 June 2010 20 December Launching of 2010 Prospectus Inclusion in the FTSE-Bursa Malaysia Mid 70 Index (The only REIT included in the Index)1 8 1 Sunway REIT w
Slide 10: Awards and Accolades
WWW.SUNWAY REIT.com THEEDGE MALAYSIA ASUAPACINC REAL ESTATE ASSOCIATION UMAITED 2010 Deal of the Year Waetate ee paras re Best IPO - Notable Mention, awarded by The Edge Malaysia APREA MERIT AWARD CATEGORY - EMERGING MARKETS MARKET DISCLOSURE inmates | oT MILR A MALAYSIAN INVESTOR RELATIONS ASSOCIAT
Slide 11: 2. Financial Highlights
2. Financial Highlights 10 10
Slide 12: Report Card
Report Card - Net Property Income Soared 25% YTD FY2012 Variance YTD YTD Variance (RM mil) 3Q2012 3Q2011 (%) FY2012 FY2011 (%) Revenue 98.1 82.3 +19.1 303.9 240.1 +26.5 Net Property income 74.4 61.0 +21.9 223.3 179.0 +24.7 Realised Net Income: -Initial 8 IPO assets 47.1 43.2 +9.1 141.3 126.2 +11.9 -
Slide 13: Earnings Trend
Earnings Trend - Riding on Sustainable Uptrend 120.0 Revenue, NPI & DPU Trend 1.99 2.00 1.75 1.87 1.75 1.80 1.70 100.0 1.62 1.60 1.51 1.40 80.0 1.20 60.0 1.00 0.80 40.0 0.60 0.40 20.0 0.20 0.0 0.00 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 12 Gross Revenue (RM mil) NPI (RM mil) DPU (sen) 12
Slide 14: Key Statistics and Ratio
Key Statistics and Ratio Highlights 3QFY2012 No. of Units in circulation1 2,694,194,700 Unit Price (as at 30 April 2012) (RM) 1.27 Net Asset Value (NAV) per unit (RM)2 1.0137 Premium to NAV 25.3% Earnings Per Unit (EPU) (sen)3 7.05 Distribution Per Unit (DPU) (sen)4 7.20 Annualised Distribution Yiel
Slide 15: 3. Growth Driver 1: Organic Growth
3. Growth Driver 1: Organic Growth 14 14
Slide 16: Organic Growth
Organic Growth - Target NPI CAGR Growth of at least 5% over the next 3 years Vibrant and Growing Asset Management Initiatives Asset Enhancement Initiatives Township (AMIs) (AEIs) o Captive market with large o Rental reversion o Increase in NLA population catchment and o Optimization of tenancy mix o
Slide 17: The Power of SIRC
The Power of SIRC - One of its Kind Township Assets 16 * Sunway REIT’s assets 16
Slide 18: The Pinnacle
The Pinnacle -The only Grade A office in Bandar Sunway with more than 5,000 office population Construction progress photo taken at actual site on 17 Feb 2012. 1. Expect new 5,000 office population Artist’s impression of The 2. NLA: Approx 560,000 sq. ft. Pinnacle as at 28 July 2011 3. Floor plates:
Slide 19: New Infrastructure Proposals within Bandar Sunway
New Infrastructure Proposals within Bandar Sunway - Proposed Road Upgrading for Bandar Sunway Proposed road upgrading and infrastructure improvement around Bandar Sunway, Subang Jaya and USJ area o Road widening along New Pantai Expressway (NPE) from Sunway Pyramid to Jalan Kewajipan junction. o Pro
Slide 20: YTD 3Q FY 2012 Rental Reversion
YTD 3Q FY 2012 Rental Reversion - Strong Rental Reversion No. of NLA NLA due for % NLA Total increase Properties renewed renewed renewal in FYE renewed in 3 years tenancies sq.ft. 2012 Sunway Pyramid 182 294,968 316,256 93.3% 17.2% Sunway Carnival 32 57,880 65,373 88.5% 4.0% Menara Sunway 9 30,354 8
Slide 21: Asset Enhancement Initiatives (AEIs)
Asset Enhancement Initiatives (AEIs) -Completed AEIs Sunway Pyramid Extension Near doubling of NLA Average Net Total NLA Occupancy Year Rental Rate (sq. ft.) (%) (RM psf/month) (RM mil) SP2 2006 886,000 98 6.18 5.5 2008 1,656,000 97 7.58 12.5 Incremental 7.0 Original mall Annual Incremental 84.0 Exp
Slide 22: Asset Enhancement Initiatives (AEIs)
Asset Enhancement Initiatives (AEIs) -Completed AEIs Refurbishment of Sunway Tower Before refurbishment After refurbishment Average Net Total NLA Occupancy Year Rental Rate (sq. ft.) (%) (RM psf/month) (RM mil) 2008 268,412 70 4.05 0.76 2010 268,412 94 5.40 1.36 Incremental 0.6 Annual Incremental 7.
Slide 23: Asset Enhancement Initiatives (AEIs)
Asset Enhancement Initiatives (AEIs) -Completed AEIs Refurbishment of Fuzion (Coffee House) Description Value Creation Investment RM 12.0 million Additional NLA N.A ROI Achieved 6.0% 22 22
Slide 24: Asset Enhancement Initiatives (AEIs)
Asset Enhancement Initiatives (AEIs) - Completed AEIs Canopy Walk Extension Phase 3 Description Value Creation Investment RM 4.0 million Additional 1,294 sq. ft. NLA Expected 20.7% ROI Duration 3 months (Oct – Dec 2011) 23 Source: Sunway REIT 23
Slide 25: Asset Enhancement Initiatives (AEIs)
Asset Enhancement Initiatives (AEIs) - Ongoing AEIs Proposed Link Bridges and Alfresco Dining The Pinnacle Menara Sunway 3 level alfresco Link dining area bridge Sunway Resort Link Hotel & Spa bridge Artist impression of link bridge from The Pinnacle to alfresco dining as at 28 July 2011. 24 Source:
Slide 26: Asset Enhancement Initiatives (AEIs)
Asset Enhancement Initiatives (AEIs) - Ongoing AEIs Proposed Link Bridges and Alfresco Dining Expected Investment (RM) 61,552,000 Expected NLA created (sq. ft.) from alfresco dining 34,815 Expected net rental rate (RM) 7.00 Expected monthly rental income (RM) 243,705 Expected yearly rental income fr
Slide 27: Asset Enhancement Initiatives (AEIs)
STRICTLY PRIVATE & CONFIDENTIAL Asset Enhancement Initiatives (AEIs) - Ongoing AEIs Sunway Hotel Seberang Jaya Refurbishment Artist impression as at December 2011 Description Value Creation Investment RM 12.1 million Additional NLA n.a Expected ROI 11.6% Source: Sunway REIT 26 Duration 11 months (De
Slide 28: Asset Enhancement Initiatives (AEIs)
STRICTLY PRIVATE & CONFIDENTIAL Asset Enhancement Initiatives (AEIs) - Ongoing capex of RM300m over a period of 3 years Time FY2011 (Completed) FY2012 FY2013 FY 2014 SRH: Fuzion SP: Canopy Walk 3 MSW Extension Investment: RM12.0 mil Investment: RM4.0mil Investment: RM4.5mil ROI Achieved : 6.0% Est R
Slide 29: 4. Growth Driver 2: Acquisition Growth
4. Growth Driver 2: Acquisition Growth 28 28
Slide 30: Investment Strategy
Investment Strategy - For Sustainable Growth Investment Strategy1 Compatibility High growth Retail and and cities and Large ticket mixed used synergistic to townships in size assets assets Malaysia2 portfolio Foundation of Sustainability in Growth 1 Investment decisions will be based on a combinatio
Slide 31: Active Acquisition Strategy
Active Acquisition Strategy - Driving Sustainable Growth July 2010 March 2011 5-7 years from IPO Acquisition of Pipeline assets and IPO Sunway Putra Place 3rd party asset (3rd part acquisition) acquisitions Property Appraised Property Appraised Property Appraised Value: RM 3.7bn Value: RM 4.3bn Valu
Slide 32: Strong Pipeline Assets
Strong Pipeline Assets - Completed Assets Sunway University Monash University, Sunway Campus Sunway Giza Shopping Mall Educational institutions with more than 1,467,000 sq. ft. of combined GFA NLA of approximately 98,000 sq. ft. Sunway Medical Centre GFA of 755,940 sq. ft. 31 31 Source: Sunway Berha
Slide 33: Strong Pipeline Assets
Strong Pipeline Assets -Under construction assets Sunway Velocity: Artist impression. Shopping Mall with NLA of more than 800,000 sq. ft. and more than 2,000 car parks Sunway Pyramid 3: The Pinnacle: Artist Artist impression. Retail Mall with impression. Only Grade NLA of 62,000 sq.ft. and 435 A off
Slide 34: 5. Growth Driver 3: Asset Turnaround
5. Growth Driver 3: Asset Turnaround 33 33
Slide 35: Putra Place, Kuala Lumpur
Putra Place, Kuala Lumpur -A Gem in the Making 34 34 34
Slide 36: Site: Road, Rail & River Access
ROAD, RAIL & RIVER ACCESS STRATEGIC LOCATION WITH CLOSE PROXIMITY TO PUBLIC TRANSPORTATION RIVER OF LIFE Bistari Condominium Putra World Trade Center Serviced Apartments Best Western car park Seri Pacific Hotel SITE LRT Villa Putera KTM Villa Puteri BUKIT TUNKU CHOW KIT Royal Regent RIVER OF LIFE TR
Slide 37: Site
NEW DEVELOPMENT PLAZA DAMAS 7.5km 2.5km 5km HARTAMAS SITE SHOPPING CENTRE KLCC PAVILION BUKIT BITANG DAMANSARA BANSAR CITY SHOPPING CENTRE TIMES SQUARE SURROUNDING SITE ZONING Upper middle residential area Up market residential area Government land Retail Centre 3636
Slide 38: An Opportunistic Acquisition
An Opportunistic Acquisition Asset NLA No of Initial cost Related Total cost psf / 1 room acquisition acquisition room expenses cost (sq.ft.) (MYR mil) (MYR mil) (MYR mil) (MYR) Sunway Putra Mall 505,448 n.a 219.50 3.47 222.96 434 Sunway Putra Tower 317,051 n.a 80.30 1.27 81.57 253 Sunway Putra Hote
Slide 39: Market Positioning
Market Positioning - To position as urban-chic mall Mall • Lifestyle urban-chic mall Positioning • Caters to mid to mid-upper level income shoppers • Working crowd (CBD area) Shoppers’ • Family (neighbourhood catchment (eg. Kenny Hills, Profile Bangsar, Damansara Heights, Taman Duta, Jalan Ipoh) • T
Slide 40: Sunway Putra Mall Merchandise Mix-Spectrum
Merchandise Mix-Spectrum Category Definition 1st Liner Louis Vuitton, Prada, Christian Dior, Chanel, Hermes, YSL 2nd Liner Emporio Armani, Burberry, DKNY, Dunhill, Tods Bridge FENDI, BCBG, MAX & Co, Ralph Lauren Low Bridge Polo Jeans, Coach, A/X, DKNY Jeans, FCUK SUNWAY PUTRA MALL High Guess, ZARA,
Slide 41: Preliminary Timeline for Refurbishment Plan
Preliminary Timeline for Refurbishment Plan Time 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q FY2012 FY2012 FY2012 FY 2013 FY2013 FY2013 FY2013 FY2014 FY2014 FY2014 FY2014 FY2015 FY2015 Approval from relevant authorities / tender exercise (Estimated duration : 15 Months) Refurbishment of Sunway Putra Mall
Slide 42: KPIs for Sunway Putra Place
KPIs for Sunway Putra Place - Potential doubling of NPI post refurbishment Current Post refurbishment Targets RETAIL MALL: NLA 505,448 sf 620,000 sf ARR1 RM4.00 – RM4.50 psf RM6.00 – RM7.00 psf Occupancy Rate 79.8% 99.0% OFFICE: ARR1 RM1.80 – RM2.00 psf RM2.70 – RM3.20 psf2 Occupancy Rate 90.4% 95.0
Slide 43: Double Digit ROI
Double Digit ROI -Retail Mall NPI doubled post refurbishment Description Value Creation Estimated RM 200.0 million Investment Estimated RM 25.0- 30.0 million Incremental Income Expected 12.5% - 15.0% ROI Estimated 15 - 18 months Construction Duration Illustrations are artists’ impression only, subje
Slide 44: Litigations - Certainty over possession and control
Litigations - Certainty over possession and control • OSK Trustees Berhad and Sunway REIT brought the action against Metroplex to deliver possession and control of Putra Place • The High Court declared OSK Trustees Berhad as the legal owner of Putra Place. High Court • To deliver possession by 1 Jul
Slide 45: 6. Capital Management
$ SUNWAY REIT _ www.Sunway REIT.com 6. Capital Management
Slide 46: Capital Management (CM)
Capital Management (CM) - Proactive Capital Management The main objective of initiating the exercise is to manage: 1. Refinancing risk –Staggering debt maturing 2. Interest rate management – optimize debt profile (floating vs. fixed) The prevailing low interest rate environment offers opportunit
Slide 47: Capital Management (CM)
Capital Management (CM) - Proactive Capital Management The key features of the CP programme include: (a) 7-year programme rated P1(S) by RAM Ratings (b) Fully underwritten by a local financial institution (c) RM1.25 billion in nominal value for the first three (3) years (commencing on the date of
Slide 48: Capital Management (CM)
Capital Management (CM) - Proactive Capital Management Debt Profile 30.9.2011 26.4.2012 Term Loan (RM’ million) 1,514.01 1,560.8 Average cost of Debt 4.67% 3.99% Debt service cover ratio (DSCR) 3.8 4.9 Gearing ratio 35.3% 34.6% Loan Maturity Profile (30.9.2011) Loan Maturity Profile (26.4.2012) Term
Slide 49: Capital Management (CM)
Capital Management (CM) - Proactive Capital Management Debt Profile (30.9.2011) Debt Profile (26.4.2012) Fixed vs Floating Rate Fixed vs Floating Rate Fixed 26% Fixed Floating rate rate Floating 46% 54% 74% 1 Based on 3Q FYE June 2012 information as at 31 March 2012 48 48 Source: Sunway REIT
Slide 50: 7. The Largest REIT in Malaysia
7. The Largest REIT in Malaysia 49 49
Slide 51: Dominant REIT in Malaysia
Dominant REIT in Malaysia Total Asset Value (RM million) (RM millions) 4,516 3,681 2,919 1,804 1,176 1,329 1,411 1,421 854 867 1,036 1,041 609 171 184 Amanah Atrium REIT Tower REIT Quill Capita Hektar REIT UOA REIT AmanahRaya AmFirst REIT Al-Hadharah Axis REIT Al-Aqar KPJ Starhill REIT Capitamalls P
Slide 52: Dominant REIT in Malaysia
Dominant REIT in Malaysia Average Daily Trading Volume (no. of units)* 5,199^ ( 000’ Units) 1,288 380 640 19 43 52 105 110 140 125 131 190 192 241 Amanah UOA REIT Atrium REIT Hektar REIT Al-Aqar KPJ Al-Hadharah Quill Capita Tower REIT Starhill REIT Axis REIT AmanahRaya AmFirst REIT Capitamalls Sunwa
Slide 53: Sunway REIT Unitholders Information
Sunway REIT Unitholders Information: -Solid institutional backing Individual 7% Foreign 21% Sunway Berhad 37% Domestic 79% Institutions 56% Total number of unit holders as at 31 March 2012: 6,375 (6,127 as at 31 Dec 2011) 52 52
Slide 54: 8. Conclusion
$ SUNWAY REIT Www.Sunway REIT.com 8. Conclusion
Slide 55: Conclusion
Conclusion The largest REIT in Malaysia (Asset size and market capitalization) Core assets in townships with robust growth Reputable sponsor with large visible pipeline assets Key growth drivers through acquisitions and organic growth Proactive capital management 54 54
Slide 56: Appendices
Appendices Appendix 1: Putra Place Acquisition Appendix 2: Recent Development in Bandar Sunway Appendix 3: Organic Growth Information Appendix 4: Summary of Key Agreements Appendix 5: REIT Manager Fees’ Structure 55 55
Slide 57: Appendix 1: Putra Place Acquisition
Appendix 1: Putra Place Acquisition 56 56
Slide 58: Growing Foothold in Kuala Lumpur
Growing Foothold in Kuala Lumpur Existing Putra Place Enlarged Portfolio Portfolio Number of assets class: Retail 3 1 4 Hospitality 3 1 4 Office 2 1 3 Sub total 8 3 11 Asset value (RM’million) 3,803 5761 4,379 Geographical diversification (by asset value) Bandar Sunway, Petaling Jaya 85.5% - 74.4%
Slide 59: Putra Place – Property Auction History
Putra Place – Property Auction History Reserve Price (RM mil) 800 705 -10% 700 635 -10% 600 571 -10% 514 500 400 300 200 100 0 Apr-08 Jan-09 Apr-10 Mar-11 58 58
Slide 60: Appendix 2: Recent Development in Bandar Sunway
Appendix 2: Recent Development in Bandar Sunway 59 59
Slide 61: Sunway University
Sunway University -GFA of >600,000 sq. ft. , More than 9,000 students Proposed new 12-storey academic block Historical moment on 17 Dec 2010: The Chancellor Yang Berbahagia Tan Sri Dato’ Seri Dr. Jeffrey Cheah, AO receiving the letter of approval from YB Dato' •New expansion completed Jan 2011 Seri
Slide 62: Monash University, Sunway Campus
Monash University, Sunway Campus -GFA of >850,0000 sq. ft, More than 4,000 students New Monash University Sunway Monash student residence University, Sun way Campus • Expect more than Jeffrey Cheah School of 2,000 students Medicine and Health • More than 500 car Sciences, Monash parks University, Su
Slide 63: Sunway South Quay: International lakeside metropolis
Sunway South Quay: International lakeside metropolis -potential 4,000 new units boasting 20,000 new residents with high spending power A’marine Lakeside Artist’s impression of Sunway Condominiums South Quay upon full completion. Expected 4,000 •242 units; •540 car parks new units or 20,000 new high
Slide 64: Appendix 3: Organic Growth Information
Appendix 3: Organic Growth Information 63 63
Slide 65: 8.5% growth of visitations to Sunway township over next 3 years
Organic growth -Bustling township factor Thriving developments around Sunway Integrated Resort City (SIRC): New projects/expansions Brief description Additional population forecast undertaken by sponsor over next 3 years 1. The Pinnacle Grade A office building 5,000 office staff 2. Sunway Pyramid 3
Slide 66: Appendix 4: Summary of Key Agreements
Appendix 4: Summary of Key Agreements 65 65
Slide 67: Hotel Master Lease Agreement
HOTEL MASTER LEASE AGREEMENT Calculation of Total Rent: The higher of Variable Rent or Guaranteed Rent (1) Total Rent − Variable Rent: Base Rent plus 70.0% of (Gross Operating Profit less Master Lease Expenses) − Base Rent: 20.0% of Revenue − Gross Operating Profit: Revenue less Operating Expenses
Slide 68: Hotel Master Lease Agreement
HOTEL MASTER LEASE AGREEMENT Calculation of Rent: Base Rent plus 95.0% of Gross Operating Profit Rent − Base Rent: 20.0% of Gross Operating Revenue − Gross Operating Profit: Gross Operating Revenue less Operating Costs less Base Rent Duration Term: Three years commencing from the Completion Date
Slide 69: Right of First Refusal
RIGHT OF FIRST REFUSAL Future Investment properties that: properties − Are located in Malaysia and the Asia-Pacific region involved − Are from time to time owned by Sunway Berhad and its 100% owned subsidiaries ("Sunway Entity"); and Mechanics In the event that any Sunway Entity intends to offer
Slide 70: Appendix 5: REIT Manager Fees' Structure
Appendix 5: REIT Manager Fees’ Structure 69 69
Slide 71: Annual Manager Fee for Sunway REIT Manager Sdn. Bhd.
Annual Manager Fee for Sunway REIT Manager Sdn. Bhd. 1. Base fee 0.3% per annum of Total Asset Value (exclusive of tax, if any) accruing monthly and payable to the Manager every Quarter Year in arrear; 2. Performance fee 3.0% of Net Property Income (exclusive of tax, if any) but before deduction of
Slide 72: For further information, please contact
For further information on this presentation kit, please kindly contact: Crystal Teh Sunway REIT Management Sdn. Bhd. (The Manager of Sunway REIT) Email: crystalt@sunway.com.my Contact: +603 5639 8864 Website of Sunway REIT: www.sunwayreit.com 71 71
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