Swire Properties Limited · HKEX:1972
Swire Properties — H1 2024 Earnings Presentation
62 slides from Swire Properties's earnings presentation, Aug 8, 2024
Slide 1: 2024 Interim Results | Analysts Briefing
2024 INTERIM RESULTS | ANALYSTS BRIEFING 8TH AUGUST 2024
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by Swire Properties Limited (the “Company”, together with its subsidiaries, the “Group”) solely for information purposes and the information contained herein has not been independently verified. No representation or warranty, express or implied, is made
Slide 3: Agenda
AGENDA 1. Strategy and Results Highlights 2. Investment Portfolio Tim Blackburn, 3. Residential Trading Portfolio Chief Executive 4. Hotel Portfolio 5. Financial Highlights Fanny Lung, 6. Sustainability Highlights Finance Director 7. Digital Highlights 8. Outlook 9. Q&A 3
Slide 4: 2024 Interim Results Highlights
2024 INTERIM RESULTS HIGHLIGHTS RESILIENT PERFORMANCE DESPITE MARKET HEADWINDS ▪ A slight decrease in underlying profit mainly Dividend per Share reflecting higher net finance charges and lower Underlying Profit (1st interim) rental income from Hong Kong (partly due to rental loss from disposals), o
Slide 5: Key Developments
KEY DEVELOPMENTS DEVELOPING NEW PIPELINE PROJECTS AND ONGOING ASSET REINFORCEMENT Projects Updates Artist Impression No. 387 Tianhe Road, INDIGO Phase Two, Julong Wan Project, Six Pacific Place, Guangzhou August 2024 Beijing August 2024 Guangzhou August 2024 Hong Kong February 2024 Addition to Taiko
Slide 6: HK$100 Billion Investment Plan
HK$100 BILLION INVESTMENT PLAN A CLEAR PATH FOR GROWTH OVER THE NEXT DECADE Investing in Long-term Growth Chinese Mainland ▪ Taikoo Li Xi’an ▪ Taikoo Li Sanya (2) ▪ Increased stake at Taikoo Li Chengdu ▪ New Bund Mixed-use Project, Shanghai ▪ Lujiazui Taikoo Yuan, Shanghai (3) ▪ Julong Wan Project,
Slide 7: Upcoming Projects
UPCOMING PROJECTS (1) STRONG AND DIVERSE PIPELINES Expected Attributable GFA Expected Completion Year to be Completed 2024 2025 2026 2027 onwards 13.5M sq ft As at 6th August 2024 Artist Impression Artist Impression Artist Impression Artist Impression 12.3 M sq ft Empire City, as at 30th June 2024 L
Slide 8: Julong Wan Project
JULONG WAN PROJECT EXPANSION IN GREATER BAY AREA ▪ ~0.4M → ~1.6M sq ft GFA (1) (2) ▪ Located in Liwan district, the centre of the Guangzhou-Foshan metropolis circle. ▪ Participation in the retail portion of a mixed-use development with ~5.7 M sq ft GFA. ▪ From late 2025, exhibitions, events, pop-up
Slide 9: No. 387 Tianhe Road, Guangzhou
NO. 387 TIANHE ROAD, GUANGZHOU SCALING UP TAIKOO HUI ▪ ~655,000 sq ft GFA (1) ▪ Connected to the shopping mall at Taikoo Hui (43% expansion in GFA). ▪ 97% - owned. ▪ Successful bid via a public auction in August 2024. ▪ To be renovated as a luxury retail addition to Taikoo Hui. ▪ Refurbishment is ex
Slide 10: Investment Portfolio
INVESTMENT PORTFOLIO Taikoo Place, Hong Kong
Slide 11: Hong Kong Office
HONG KONG OFFICE RESILIENT PERFORMANCE SUPPORTED BY STRONG PLACEMAKING ATTRIBUTES Overall Occupancy (4) 2.2M Pacific Place (5) sq ft Occupancy 97% 93% GFA Rental Reversion 16% Consistently outperformed One/Two PP : 90 – 100 Latest Rentals (HK$ psf) the submarkets we Three PP : 85 – 95 operate in One
Slide 12: Hong Kong Retail
HONG KONG RETAIL ALMOST FULLY LET THROUGHOUT 1H 2024 The Mall, Pacific Place Cityplaza Citygate Outlets GFA (M sq ft) 0.7 1.1 0.8 Occupancy 100% 100% 100% Retail Sales 13.1% 4.3% 2.6% Attributable Gross Rental Income Attributable Valuation (5) (1) Occupancy as at 30th June 2024. (2) Retail sales yea
Slide 13: Taikoo Place Redevelopment
TAIKOO PLACE REDEVELOPMENT TRANSFORMATION INTO GLOBAL BUSINESS DISTRICT COMPLETED ▪ Pacing development of Taikoo Place new stock to match ▪ Taikoo Garden and Taikoo Square anticipated future newly opened - an additional demand. 70,000 sq ft of green space to promote urban biodiversity. ▪ Climate-con
Slide 14: Chinese Mainland Portfolio
CHINESE MAINLAND PORTFOLIO AN INCREASINGLY KEY CONTRIBUTOR TO RENTAL INCOME ▪ Chinese Mainland portfolio contributed 41% attributable gross rental income in 1H 2024. (1) ▪ Balanced contributions between Chinese Mainland retail and Hong Kong office portfolios. HK$M Attributable Gross Rental Income (1
Slide 15: Chinese Mainland Portfolio
CHINESE MAINLAND PORTFOLIO WELL-POSITIONED TO INCREASE MARKET SHARE Growing Presence Artist Impression 6 to 11 Taikoo Li Qiantan, Shanghai INDIGO, Beijing Taikoo Hui, Guangzhou major retail-led developments by ▪ Shanghai New Bund Mixed-use ▪ INDIGO Phase Two under ▪ No.387 Tianhe Road to be 2027 Pro
Slide 16: Chinese Mainland Retail
CHINESE MAINLAND RETAIL RETAIL SALES WELL ABOVE PRE-PANDEMIC LEVELS 0.9M 1.5M Overall Attributable 1.2M sq ft sq ft sq ft Retail Sales in 1H 2024 GFA GFA GFA 7% (vs 1H 2023) 69% (4) Taikoo Li Qiantan, Shanghai INDIGO, Beijing Taikoo Hui, Guangzhou (vs 1H 2019) Occupancy 99% 97% 100% Attributable Gro
Slide 17: Chinese Mainland Office
CHINESE MAINLAND OFFICE STEADY OCCUPANCY Attributable Gross 1.7M 0.6M 1.9M sq ft sq ft sq ft Rental Income GFA GFA GFA Flat (HKD) 4% (RMB) (vs 1H 2023) Attributable Valuation Taikoo Hui, INDIGO, HKRI Taikoo Hui, 3% Guangzhou Beijing Shanghai (vs Dec 2023) Occupancy 91% 84% 96% HK$ 12.5 bn Latest Ren
Slide 18: Chinese Mainland Pipeline
CHINESE MAINLAND PIPELINE TWO NEW PROJECTS IN GUANGZHOU ANNOUNCED Attributable Completed GFA in Chinese Mainland (1) Chinese Mainland M sq ft From INDIGO Phase Two, Beijing (2) Artist Impression 25 2025 (35% → 49.895% interest) Expected Completion Year (by phases) Existing Taikoo Li Sanya (2) (3) (5
Slide 19: Miami Retail
MIAMI RETAIL FULLY LEASED WITH HIGHER RETAIL SALES Occupancy 0.5M sq ft 100% (1) GFA (3) Retail sales 4% (2) (1) Occupancy as at 30th June 2024. Including space allocated to prospective tenants who have signed letters of intent. (2) Retail sales (excluding sales by vehicle retailers) year-on-year gr
Slide 20: Residential Trading Portfolio
RESIDENTIAL TRADING PORTFOLIO Lujiazui Taikoo Yuan, Shanghai Artist Impression
Slide 21: Residential Trading Portfolio
RESIDENTIAL TRADING PORTFOLIO A DIVERSE PIPELINE ACROSS REGIONS Completed / Expected Residential GFA Hong Kong Completions (Attributable Basis) (1) 3.6M Actual / Expected Completion Year GFA (‘000 sq ft) sq ft in total 2022 EIGHT STAR STREET (100% interest) Chinese ▪ Average selling price: ~ HK$39,8
Slide 22: Residential Trading Portfolio: New Bund Pre-Sales
RESIDENTIAL TRADING PORTFOLIO SATISFACTORY PRE-SALES ACHIEVED BY NEW BUND PROJECT IN SHANGHAI ▪ 40% Interest. ▪ 40% Interest. Chinese Mainland ▪ Also known as Century Summit ▪ Exp. completion from 2027 and Century Heights. and presale planned in late ▪ ~ 88% of total saleable area 2024. pre-sold. (1
Slide 23: Hotel Portfolio
HOTEL PORTFOLIO The Upper House, Hong Kong
Slide 24: Hotel Portfolio
HOTEL PORTFOLIO STEADY IN CHINESE MAINLAND; RECOVERY SLOWER-THAN-EXPECTED IN HONG KONG ▪ The speed of recovery of hotel businesses in Hong Kong was slower than anticipated, while the performance of Chinese Mainland hotels was relatively stable. ▪ Recorded EBITDA profit (1) of HK$25M at managed hotel
Slide 25: Financial Highlights
FINANCIAL HIGHLIGHTS Taikoo Li Qiantan, Shanghai
Slide 26: Underlying Profit
UNDERLYING PROFIT LARGELY STEADY REFLECTING DISPOSAL GAINS Underlying Profit Non-recurring ▪ Underlying profit decreased by 1% in 1H 2024, mainly due to higher net finance HK$M Recurring charges and a reduction in the office rental income, partly offset by the increase 11,570 in profit from sale of
Slide 27: Rental Income
RENTAL INCOME RESILIENT IN CHINESE MAINLAND; LOWER IN HONG KONG Attributable Gross Rental Income HK$M ▪ Disregarding the revenue loss arising from the disposal of nine floors of One 15,205 HK Office Island East, attributable gross rental income decreased by 4%. 14,121 7% ▪ Resilient despite new offi
Slide 28: Progressive Dividends and Share Buy-back
PROGRESSIVE DIVIDENDS AND SHARE BUY-BACK Dividends HK$ 0.34 Dividend Per Share 3% HK$ / Share Dividend per share ▪ Aiming to deliver mid-single digit annual vs 1st Interim 2023 1st Interim 2024 growth in dividends and to pay out approximately half of underlying profit in ordinary dividends over time
Slide 29: Investment Properties Valuation
INVESTMENT PROPERTIES VALUATION PARTLY SUPPORTED BY FAIR VALUE GAINS IN CHINESE MAINLAND Movement in Investment Properties Valuation (1) ▪ The decrease in the valuation of the investment (excl. hotels and investment properties held under JVCs) property portfolio primarily reflected net fair value lo
Slide 30: Net Debt and Gearing
NET DEBT AND GEARING HEALTHY GEARING RATIO, THANKS TO CAPITAL RECYCLING Net Debt Reconciliation (HK$M) Financial Ratios (1) 2020 (2) 2021 (2) 2022 2023 Jun 2024 Net debt at 31st December 2023 (36,679) Total equity (HK$M) 290,144 293,610 292,258 288,149 284,155 Net rental, fee receipts and proceeds N
Slide 31: Continued Active Capital Recycling
CONTINUED ACTIVE CAPITAL RECYCLING SUPPORTING HK$100 BILLION INVESTMENT PLAN Disposal Proceeds vs. Commitment under HK$100 billion Investment Plan (1) HK$ 287 M Underlying Profit HK$’bn HK$ 51.4 bn from Divestments (1H 2024) 80 Cumulative Disposal Proceeds Cityplaza Three & One Island East (up to 1H
Slide 32: Maturity Profile and Liquidity
MATURITY PROFILE AND LIQUIDITY SUFFICIENT LIQUIDITY HEADROOM AND MATURITY PROFILE WELL-SPREAD Maturity Profile of Available Committed Facilities (at 30th Jun 2024) HK$M Dec 2023 Jun 2024 HK$M Available committed facilities 54,041 55,307 Bonds Drawn - committed (41,341) (42,907) 5,436 RCL / Term Loan
Slide 33: Capital Commitments
CAPITAL COMMITMENTS Profile of Capital Commitments for Investment Properties and Hotels – at 30th Jun 2024 HK$M Expenditure Forecast Expenditure Total Commitments Commitments (1) relating to JVCs (2) Six months Six months 2025 2026 2027 & At 30th Jun 2024 At 30th Jun 2024 ended 30th ending 31st late
Slide 34: ESG Updates: Sustainability Highlights
ESG SUSTAINABILITY UPDATES SUSTAINABILITY HIGHLIGHTS Sustainability Report 2023
Slide 35: Global Leadership in Sustainability
GLOBAL LEADERSHIP IN SUSTAINABILITY ADVANCING TO NET-ZERO THROUGH CONTINUED PARTNERSHIP AND INNOVATION Sustainability Indices & Benchmarks "Top 1% of S&P Global ESG Scores (China)" (2nd consecutive year) LEED Communities - Taikoo Place 1st and only development in Hong Kong since Jun 2024 2024 ULI As
Slide 36: Accelerating Actions to Advance to Net Zero
ACCELERATING ACTIONS TO ADVANCE TO NET ZERO MAKING STEADY PROGRESS TOWARDS 1.5°C-ALIGNED SBT Continual Increase in Renewable Electricity Adoption Progressive Electrification of Heating of Chinese Mainland portfolio is powered by (1) Air-source Heat Pumps 100% renewable electricity, including INDIGO
Slide 37: Bespoke Tenant Engagement Programmes
BESPOKE TENANT ENGAGEMENT PROGRAMMES ADVANCING ENVIRONMENTAL PERFORMANCE THROUGH COLLECTIVE EFFORTS Green Performance Pledge (GPP) Smart Reusable Cup and Food Box Programme (1) (4) Latest Progress (1) 23 F&B tenants participating 110+ > 4.2 M sq ft / 50% 30,000+ Borrows tenants participating of HK &
Slide 38: Make Way for Nature
MAKE WAY FOR NATURE INTEGRATING NATURE AND BIODIVERSITY CONSIDERATIONS INTO OUR BUSINESS LAUNCH OF TAIKOO SQUARE & TAIKOO GARDEN A nature-based solution to promote biodiversity & community wellbeing As one of the 40 TNFD Taskforce members, partnered with TNFD to officially launch the TNFD framework
Slide 39: Digital Highlights
DIGITAL HIGHLIGHTS Taikoo Garden, Hong Kong
Slide 40: Digital Highlights
DIGITAL HIGHLIGHTS NEW SOLUTIONS TO ENHANCE PRODUCTIVITY Rollout of PMP Mobile provides a seamless solution for portfolio teams in Hong Kong and Chinese Mainland to access the Portfolio Management Platform and the tools to support their daily inquiries and operations, anytime, anywhere. Launch of Re
Slide 41: Outlook
OUTLOOK 41 Taikoo Place, Hong Kong
Slide 42: Outlook
OUTLOOK WELL-PLACED TO WEATHER INCREASING HEADWINDS AND FOR LONG-TERM GROWTH ▪ Committed to a long-term strategy of continuous investment in key markets to deliver sustainable dividend growth. Hong Kong office Subdued with a prevailing ‘flight-to-quality’ trend Resilient sales at our malls despite w
Slide 43: End of Presentation
END OF PRESENTATION Two Taikoo Place, Hong Kong
Slide 44: Q&A Appendix
Q&A APPENDIX Taikoo Li Qiantan, Shanghai
Slide 45: 2024 Interim Results Summary
2024 INTERIM RESULTS SUMMARY SOLID FINANCIAL RESULTS HK$M 1H 2023 1H 2024 Change Revenue 7,297 7,279 0% Valuation losses on investment properties (1,332) (842) n.a. Operating profit 2,873 3,217 12% Underlying profit 3,901 3,857 1% Recurring underlying profit 3,892 3,570 8% Reported profit 2,223 1,79
Slide 46: Property Portfolio at a Glance
PROPERTY PORTFOLIO AT A GLANCE A LEADING PROPERTY DEVELOPER, OWNER AND OPERATOR Investment Props / Hotels Office Retail Hotels (1) Residential / Under Total Attributable Investment Props / Attributable GFA (M sq ft) Serv. Apts Planning Hotels by Region (GFA M sq ft) Completed Hong Kong 9.4 2.6 0.8 0
Slide 47: Hong Kong Portfolio
HONG KONG PORTFOLIO EXPANDING OUR OFFICE PORTFOLIO Expected Attributable GFA of Completed Commercial Property Portfolio (incl. Hotels) (‘000 sq ft) 14,219 15,000 13,217 13,440 13,440 779 13,000 Taikoo Place 11,000 9,000 13,217 13,440 13,440 13,440 7,000 5,000 2023 2024F 2025F 2026 onwards Existing P
Slide 48: Key Business Strategies
KEY BUSINESS STRATEGIES SUSTAINABLE GROWTH IN SHAREHOLDER VALUE IN THE LONG-TERM ▪ Continue to create long-term value by conceiving, designing, developing, owning and managing transformational mixed-use and other projects in urban areas. ▪ Maximise the earnings and value of our completed properties
Slide 49: Geographical Analysis
GEOGRAPHICAL ANALYSIS TOWARDS A MORE BALANCED PORTFOLIO Attributable Gross Rental Income by Region (1) Net Assets Employed Hong Kong Chinese Mainland U.S.A. and elsewhere Hong Kong Chinese Mainland U.S.A. and elsewhere 30th Jun 1H 2024 56% 41% 3% 2024 74% 23% 3% 31st Dec FY 2023 58% 40% 2% 2023 74%
Slide 50: Tenant Mix
TENANT MIX A BALANCED TENANT PROFILE Jewellery & Watches 1.8% Others 18.4% Food & Fashion & Beverages Accessories 20.5% 27.3% Jewellery & Fashion & Watches Accessories 3.3% Chinese 44.3% HK Retail Supermarkets 4.9% Mainland Supermarkets Retail Department Cinemas 5.5% Stores 5.5% 15.3% Cinemas 4.2% I
Slide 51: Lease Expiry Profile
LEASE EXPIRY PROFILE WELL-SPREAD EXPIRY ▪ Hong Kong Office ▪ Hong Kong Retail ▪ Chinese Mainland Retail ▪ Chinese Mainland Office ▪ Top ten office tenants occupied ▪ Top ten retail tenants occupied ▪ Top ten retail tenants occupied ▪ Top ten office tenants occupied approx.23 % office area in approx.
Slide 52: Capital Recycling Continued
CAPITAL RECYCLING CONTINUED Disposal Proceeds (Investment Properties & Hotels) Asset Disposal Disposal Proceeds Total HK$ Bn Before 2019 2020 2021 2022 2023 2024 + 2019 Cityplaza One - - 8.2 0.8 - 0.5 - 9.5 Cityplaza Three & Four (1) 3.0 12.0 - - - - - 15.0 One Island East (42/F - 54/F) (2) - - - -
Slide 53: Hong Kong Portfolio Map
HONG KONG PORTFOLIO MAP Completed Investment Props 1,308,804 sf (incl. Hotels) (100% basis) 5.69 M sq ft GFA Pacific Place 4.3 M (Attri. basis) 5,901 sf Completed Investment Props (incl. Hotels) (100% basis) 145,903 sf 8.43 M sq ft GFA 222,953 sf Taikoo Place & Cityplaza 7.9 M (Attri. basis) 53
Slide 54: Hong Kong Portfolio Map
HONG KONG PORTFOLIO MAP Completed Investment Props (incl. Hotels) (100% basis) 1.33 M sq ft GFA Citygate 0.36 M (Attri. basis) 54
Slide 55: Chinese Mainland – Guangzhou & Chengdu Portfolio
CHINESE MAINLAND – GUANGZHOU & CHENGDU PORTFOLIO Completed Investment Props Investment Props under Renovation (incl. Hotel) (100% basis) (100% basis) 3.78 M sq ft GFA 0.66 M sq ft GFA Taikoo Hui, No. 387 Tianhe Road, Guangzhou Guangzhou Taikoo Li Chengdu The Temple House Retail Occupancy 98% 3.67 M
Slide 56: Chinese Mainland – Beijing Portfolio
CHINESE MAINLAND – BEIJING PORTFOLIO Completed Investment Props Investment Props under Redevelopment (1) (100% basis) (100% basis) INDIGO Mall ONE INDIGO 1.62 M sq ft GFA 0.17 M sq ft GFA EAST Beijing Retail occupancy 97% Taikoo Li Sanlitun The Opposite House INDIGO Phase Two Office occupancy 84% (u
Slide 57: Chinese Mainland – Shanghai Portfolio
CHINESE MAINLAND – SHANGHAI PORTFOLIO Completed Investment Props (incl. Hotel) (100% basis) 3.73 M sq ft GFA HKRI Taikoo Hui, Shanghai Taikoo Li Qiantan Retail Occupancy 99% 1.87 M (50% basis) Completed Investment Props HKRI Taikoo Hui Mall (100% basis) HKRI Centre 1&2 The Middle House The Sukhothai
Slide 58: Chinese Mainland – Shanghai Portfolio
CHINESE MAINLAND – SHANGHAI PORTFOLIO Revitalisation and management of the JV Management Company - 60% owned ZHANGYUAN Shikumen Compound in Jing’an district (2) ~1.63 M sq ft GFA (1) Phased opening ZHANGYUAN in 2022 and 2026 (1) Above ground 0.67M sq ft / below ground 0.96M sq ft. (2) The Group does
Slide 59: Miami Portfolio
MIAMI PORTFOLIO Completed Investment Props (incl. Hotels) (100% basis) 0.5 M sq ft GFA Brickell City Centre 0.31 M (Attri. Basis) Shopping Mall Retail occupancy 100% (1) Held for Development or Sale (100% basis) 1.51 M sq ft GFA Brickell City Centre land (1) Including space allocated to prospective
Slide 60: Hotel Portfolio
HOTEL PORTFOLIO Managed Hotels No. of Rooms Interest Owned but Non-managed Hotels No. of Rooms Interest (100% basis) (100% basis) Hong Kong The Upper House 117 100% Hong Kong Island Shangri-La Hong Kong 544 20% EAST Hong Kong 331 100% JW Marriott Hotel Hong Kong 608 20% Headland Hotel (1) 501 0% Con
Slide 61: Business Outlook
BUSINESS OUTLOOK HK ▪ Recovery slower than expected in the wake of the pandemic. The CM ▪ 2024 will be a year of normalisation following the 2023 peak. Office market is likely to remain subdued for the rest of 2024 due to Retail ▪ Overall demand for retail space is expected to remain solid and subdu
Slide 62: © Swire Properties Limited
Di SwirRE PROPERTIES © Swire Properties Limited