Link Real Estate Investment Trust · HKEX:823
Link Real Estate Investment Trust — 1H 2023/24 Earnings Presentation
71 slides from Link Real Estate Investment Trust's earnings presentation, Nov 8, 2023
Slide 1: Interim Results Presentation 2023/2024
Interim Results Presentation 2023/2024 8 November 2023
Slide 2: Agenda
Agenda Market Outlook Strategy and Mitigation Update Operational Distribution Excellence Calendar Operational Q&A Updates Capital Appendix Management
Slide 3: 1H 2023/24 Interim Results Highlights
3 1H 2023/24 Interim Results Highlights Resilient performance and robust financial strength despite persistent challenges Revenue Net Property Income HK$6,725M HK$5,063M 11.3% YoY 10.4% YoY Lok Fu Place, Hong Kong Distribution Amount Net Asset Value per unit HK$3,333M HK$70.72 Jurong Point, Singapor
Slide 4: Consistent Growth in Distributable Amount
4 Consistent Growth in Distributable Amount Driving growth and stability in distributable amount organically and through M&As since IPO Link REIT’s total distributable amount (1) (HK$ million) Market cap increase since IPO 6,273 6,311 (HK$bn) 5,670 5,674 5,720 5,281 4,992 4,567 3,830 4,064 3,349 102
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Slide 6: Key Themes Shaping the Macroenvironment
6 Key Themes Shaping the Macroenvironment Geopolitical Tensions Interest Rates / Inflation Climate Change % The Global Economy Enters an Era Higher-For-Longer Interest Rates Climate-related Risks and Extreme of Upheaval Hence Supply Chain Weather Events Reconfiguration ▪ Hawkish outlook ▪ More frequ
Slide 7: Market Prospects
7 Market Prospects Our markets exhibit notable economic strength Hong Kong Mainland China Unemployment Rate (%) Remains Low GDP Growth YoY% Sustains in the Positive Territory 8.4% 6.3% 5.8% 5.2% 4.5% 4.9% 4.3% 3.1% 2.9% 2.2% 3.0% 2020 2021 2022 1Q 2023 2Q 2023 2020 2021 2022 1Q 2023 2Q 2023 3Q 2023
Slide 8: Market Prospects
8 Market Prospects Our markets exhibit notable economic strength Singapore Australia Unemployment Rate (%) Hovers at Low Levels Population Change (%) 3.0% 2.7% 2.1% 1.8% 1.9% 1.5% 2.0% 2.2% 0.4% 0.6% 2020 2021 2022 1Q 2023 2Q 2023 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Mar 2023 ▪ Recovery of inbound to
Slide 9: Strategic Resilience
9 Strategic Resilience Mitigating current macro challenges and capitalising on future opportunities Retail / Car park Link 3.0 Stability anchored by Strategic transition to non-discretionary consumption asset-lighter approach Operational Excellence Growth Strategy Capital Management Macro Environmen
Slide 10: Operational Excellence
‘9 So | Operational Excellence
Slide 11: Driving Operational Excellence
11 Driving Operational Excellence Provide organic and inorganic value to Link Focus on generating resilient Utilise our operational capabilities cashflow and delivering organic in real asset management to growth in the near-term support Link 3.0 strategy Integrated Operating Platform Improve efficie
Slide 12: Sustainability Priorities
12 Sustainability Priorities Focus on four strategic areas, portfolio-wide over the next five years Climate Resilience Net Zero Strategy Sustainability Reporting Stakeholder Engagement • Participated in the United Nations • Established our 2035 Net Zero • Early adoption of ISSB Exposure • Establishe
Slide 13: ESG Benchmarking Performance
13 ESG Benchmarking Performance Our sustainability efforts are recognised by various global and industry ESG benchmarks 2022/23 ESG Indices Performance Rank 5th In East Asia A Score 87/100 Industry Adjusted Score 5.8 2022: 79/100 2021: 5.8 (A) Asia Pacific Index “Low Risk” Rating Score 67/100 Score
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Slide 15: 1H 2023/24 Retail Assets Highlights
15 1H 2023/24 Retail Assets Highlights Unyielding stability underpinned by retail and car parks Hong Kong retail reversion continued to be stable through the cycles, including the pandemic Sau Mau Ping Shopping Centre Lei Yue Mun Plaza High occupancies were maintained, and tenant sales largely recov
Slide 16: Hong Kong Retail Overview
16 Hong Kong Retail Overview Strong operational performance derived from our resilient retail portfolio 98.0% 8.7% HK$64.3 Occupancy (1) Reversion (1) Unit Rent psf Occupancy Consistently at Sustained robust momentum Average unit rent surpassed Record High in reversion pre-COVID level 64.3 1H 2H Pre
Slide 17: Hong Kong Retail Leasing
17 Hong Kong Retail Leasing A curation of diverse trade mixes to keep shoppers engaged > 300 New Leases (1) Signed in 1H 2023/2024 (118 new brands) Leasing Trend Top 5 retail trades signed 1 Specialty Restaurants 2 Learning Institutions 3 Fashion 4 Confectionery 5 Light Refreshments Notes: (1) Inclu
Slide 18: Hong Kong Retail Sales
18 Hong Kong Retail Sales Tenant sales maintained steady growth 3.1% 12.4% (1) (3) Tenant Sales Growth Occupancy Cost Kai Tin Shopping Centre, Hong Kong Butterfly Plaza, Hong Kong FOR THE PERIOD TENANT SALES O C C U PA N C Y C O S T APR 2023 – SEP 2023 G R O W T H (1) Food & Beverage Supermarket & F
Slide 19: Hong Kong Car Parks and Related Business
19 Hong Kong Car Parks and Related Business Rise in car park tariffs powers rental income growth 5.2% YoY HK$3,335 HK$737K 5.3% YoY 1.7% vs 31 Mar 2023 Revenue Car Park Income per Average Car Park space per month Valuation per space ❑ Consistent improvement in both monthly and 104 103 hourly car par
Slide 20: Asset Enhancement
20 Asset Enhancement Driving value through asset optimisation Estimated Target Underway EST. CAPEX Costs Completion Date Before After under planning & statutory approval Kai Tin $139M Late 2023 TUNG TAU MARKET COMPLETED CAPEX ROI >HK$690M Butterfly $26M Early 2024 $28M 15.9% Kin Sang $60M Early 2024
Slide 21: Restoration of Temple Mall North LG Floor
21 Restoration of Temple Mall North LG Floor Testament to our strong capability in asset management
Slide 22: Prompt Response and Recovery at Temple Mall
22 Prompt Response and Recovery at Temple Mall Exhibiting our operational excellence Severely Inundated Working Around the Clock Rapid Recovery Connectivity Restored Temple Mall North was Demonstrated Remedial Actions Connectivity Restored Heavily Flooded Operational Effectiveness • Caused by the he
Slide 23: Hong Kong Policy Address 2023 Infrastructure Plan
23 Hong Kong Policy Address 2023 Infrastructure Plan Prospective positive impact on Kowloon and New Territories Northern Link Eastern Extension(1) Northeast New Territories Line(1) 13 assets 24 assets 3 assets In Northern area In Kwun Tong area In Kwai Chung area Northern Link Spur Line(2) Northern
Slide 24: Singapore Retail
24 Singapore Retail Solid asset fundamentals anchored by nearly full occupancy 99.3% Occupancy(1) ▪ Maiden contribution from two suburban retail assets and a management service agreement from a third-party owned asset ▪ Full integration of Singapore into our operation platform Jurong Point Swing By
Slide 25: Australia Retail
25 Australia Retail Experience-oriented retail a boon for portfolio performance 98.1% Occupancy ▪ Firm Demand: Tenant interest in expansion signals promising prospects ▪ Enhanced Retail Experience: Captivating products and socialisation elevate the retail experience ▪ Curated Tenant Mix: Unique blen
Slide 26: International Office
26 International Office Harnessing the flight-to-quality thematic 95.1% ~5.3 years Occupancy (1) Overall WALE ▪ Embedded annual rental escalation terms in the majority of leases ▪ Proactive approach positions assets as beneficiaries of 151 Clarence Street 567 Collins Street The Cabot (3) the flight-
Slide 27: Mainland China Retail
27 Mainland China Retail Progressing along the path of recovery 95.8% (1) Occupancy -5.2% (1, 2) Reversion Swiftly adjusting leasing and marketing strategies to boost sales and attract footfall ▪ Consistent recovery with footfall and gross sales per square foot surpassing pre-COVID levels ▪ The Elec
Slide 28: Asset Enhancement – Link Plaza Tianhe
28 Asset Enhancement – Link Plaza Tianhe The latest asset enhancement project in Mainland China
Slide 29: Asset Enhancement – Link Plaza Tianhe
29 Asset Enhancement – Link Plaza Tianhe Tapping spending power of the rising middle class A New Social Hive Where Connections Come Alive Ph. 1 Reopens Est. CAPEX (1) Est. ROI(1) September 2023 ~RMB 300M ~12.0% Before AE ▪ Committed occupancy was 95% as at 31 Oct 2023 ▪ Footfall soared by more than
Slide 30: Asset Enhancement - Link Plaza Tianhe
30 Asset Enhancement - Link Plaza Tianhe High committed occupancy of AE space underscores positioning aligned with consumption patterns Before AEI After AEI
Slide 31: Mainland China Logistics
31 Mainland China Logistics Prime locations near transportation hubs with stable demand Dongguan Warehouse Foshan Warehouse Jiaxing Warehouse Changshu South Warehouse Changshu North Warehouse 95.0% Occupancy ▪ Acquisitions in Changshu South and North were completed in April and May 2023, respectivel
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Slide 33: 1H 2023/24 Strong Financial Position
33 1H 2023/24 Strong Financial Position Healthy balance sheet reinforced by solid financial metrics K E Y TA K E AWAY S 18.0% 3.74% Net Gearing Ratio Average Borrowing Cost Proactive fixed-debt ratio hedging Sustained competitive finance costs 69.8% 3.4 years Fixed-rate Debt Ratio Average Debt Matur
Slide 34: Prudent Capital Management
34 Prudent Capital Management Solid capital base to buffer interest rate risks Net Gearing Ratio Average Debt Maturity Average Borrowing Cost 18.0% 3.4 years 3.74% Debt Maturity Profile Average Borrowing Cost 6.0% (HK$ billion) Medium Term Notes 18 17.3 Convertible Bonds 5.5% 15.1 Bank Loans 5.0% 15
Slide 35: Debt Profile and Financial Position Highlights
35 Debt Profile and Financial Position Highlights Substantial and diversified hedging with ample liquidity Fixed-rate Debt ratio Available Liquidity (1) 69.8% HK$22.8B Debt Profile Breakdown Debt Mix 22.7 4.1 32.9 by (38.0%) (6.9%) (55.1%) ❑ Fixed rate debt ratio in the upper range of 50-70% Type Me
Slide 36: Favourable Capital Access
36 Favourable Capital Access Finance costs stayed competitive Sound Credit Ratings Moody’s : A2/Stable S&P : A/Stable Fitch : A/Stable S&P Moody’s Fitch As at As at requirement requirement requirement (1) 30 Sep 2023 31 Mar 2023 (A / Stable) (A2 / Stable) (A / Stable) Net debt / IP 19.9% 20.3% N/A N
Slide 37: Valuation Remains Robust
37 Valuation Remains Robust Cap rate expansion mitigated by increasing rental cashflows As at As at As at As at HK$’M 30 Sep 2023 31 Mar 2023 30 Sep 2023 31 Mar 2023 Hong Kong Retail properties 126,506 129,819 3.25% - 4.60% 3.10% - 4.50% Car parks and related business 47,448 46,823 2.70% - 4.90% 2.6
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Slide 39: Link Today
39 Link Today Growing AUM while making inroads into the international market 140 Retail, Car Zhejiang & Jiangsu Parks and Related Province Shanghai (1) Business HK$ 238B Beijing 3 Logistics 1 Retail Portfolio Value 1 Office 9 Office 2 Retail Hong Kong Guangdong 5 Logistics Province Guangzhou 130 Ret
Slide 40: “Properties” and “People” Combined under Link
40 “Properties” and “People” Combined under Link Our Unitholders Properties People • ~HK$270bn GAV now • Under Link Asset Management Limited (“LAML”), a dedicated • Core/Core+ return Link 3.0 internal manager now on cost • Sizeable HK non-discretionary recovery basis retail exposure • Fully fledged
Slide 41: Adopting an Asset-lighter Approach
41 Adopting an Asset-lighter Approach Three Core Components under Link 3.0 To be a World-Class APAC REAL ESTATE INVESTOR & MANAGER Assets on Fund Management Operating Platform Balance Sheet Platform Adopt an asset- Expand our Diversify our income lighter approach by capabilities Active capital 1 2 3
Slide 42: Distribution Calendar
Z| 4 AW 1 Distribution Calendar
Slide 43: Distribution Calendar
43 Distribution Calendar Distribution period April 2023 – September 2023 Last day of trading on a “cum” basis 17 November 2023 Ex-distribution date 20 November 2023 22 November – 23 November 2023 Distribution book close (inclusive) Record date for entitlement to distribution 23 November 2023 Ten tra
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Slide 46: Why invest in Link REIT
46 Appendix 1 Why invest in Link REIT The largest in terms of market capitalisation, the most liquid, and the only internally-managed REIT in Asia 100% free float held by institutions and private investors Quality assets diversified across regions Heavily exposed to resilient non- discretionary comm
Slide 47: Net asset value per unit
47 Appendix 2 Net asset value per unit NAV per unit (HK$) 100 80 NAV was down due to NAV per unit (HK$) 60 the weighted average capitalisation rate September 2023: HK$70.72 being adjusted 40 upwards during the March 2023: HK$73.98 social event 20 0 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Se
Slide 48: Interest Rates Expected to Stay at Elevated Levels
48 Appendix 3 Interest Rates Expected to Stay at an Elevated Levels Although there were indications that the interest rate hike cycle approached its peak, interest rates are expected to stay at elevated levels for an extended period. Fed Funds Rate & 10-year Treasury Yield AUD BBSY SGD SORA 10-year
Slide 49: Australia retail sales far exceed pre-COVID level
49 Appendix 4 Australia retail sales far exceed pre-COVID level National Extended Melbourne Extended Sydney (Jun-Oct 2021) lockdown lockdown (Jun-Oct 2020) and Melbourne lockdown (Aug- (Mar-May and shorter regional Oct 2021), and shorter regional Total retail sales 2020) lockdown in Victoria lockdow
Slide 50: Key financial data
50 Appendix 5 Key financial data Percentage contribution Six months Six months Six months ended ended ended 30 Sep 2023 30 Sep 2022 YoY 30 Sep 2023 Consolidated HK$’M HK$’M % (%) Revenue 6,725 6,042 +11.3 - Net property income 5,063 4,587 +10.4 - Rentals Hong Kong retail and office properties 3,881
Slide 51: Financials – income statement summary
51 Appendix 6 Financials – income statement summary Six months Six months ended ended 30 Sep 2023 30 Sep 2022 YoY HK$’M HK$’M % Revenue 6,725 6,042 +11.3 Property operating expenses (1,662) (1,455) +14.2 Net property income 5,063 4,587 +10.4 General and administrative expenses (383) (328) +16.8 Inte
Slide 52: Property operating expenses analysis
52 Appendix 7 Property operating expenses analysis Percentage contribution Six months Six months Six months ended ended ended 30 Sep 2023 30 Sep 2022 YoY 30 Sep 2023 HK$’M HK$’M (%) (%) Property managers’ fees, security 422 349 +20.9 25.4 and cleaning Staff costs 319 282 +13.1 19.2 Repair and mainte
Slide 53: Financials – distribution statement summary
53 Appendix 8 Financials – distribution statement summary Six months ended Six months ended 30 Sep 2023 30 Sep 2022 YoY HK$’M HK$’M % (Loss)/profit for the period, before transactions with Unitholders (3,374) 13,993 -124.1 attributable to Unitholders Change in fair values of investment properties an
Slide 54: Financials – Movement of financial position & investment properties
54 Appendix 9 Financials – Movement of financial position & investment properties Financial Position Summary As at As at As at HK$’M 30 Sep 2023 31 Mar 2023 30 Sep 2022 Total assets 253,689 267,919 238,691 Total liabilities 72,699 78,859 67,833 Non-controlling interests (179) 120 289 Net assets attr
Slide 55: Financials – Capital management
55 Appendix 10 Financials – Capital management HK$ B % Committed Debt Facilities Sep-23 Mar-23 Sep-23 Mar-23 HK$ Bank Loans 7.0 10.8 11.7 16.5 RMB Bank Loans 2.8 3.2 4.7 4.8 AUD Bank Loans 7.4 7.8 12.4 11.9 GBP Bank Loans 2.9 3.7 4.9 5.6 SGD Bank Loans 12.8 13.2 21.4 20.1 HK$/US$ Medium Term Notes 2
Slide 56: HK Portfolio – Retail revenue analysis
56 Appendix 11 HK Portfolio – Retail revenue analysis Percentage contribution Six months Six months Six months ended ended ended 30 Sep 2023 30 Sep 2022 YoY 30 Sep 2023 HK$’M HK$’M % % Retail rentals: Shops (1) 2,518 2,460 +2.4 67.5 Markets / cooked food stalls 529 502 +5.4 14.2 Education / welfare
Slide 57: HK Portfolio – Car parks and related business revenue analysis
57 Appendix 12 HK Portfolio – Car parks and related business revenue analysis Percentage contribution six Six months ended Six months ended months ended 30 Sep 2023 30 Sep 2022 YoY 30 Sep 2023 HK$’M HK$’M % % Rental income: Monthly car parks 815 780 +4.5 65.6 Hourly car parks 316 294 +7.5 25.5 (1) C
Slide 58: HK Portfolio – Retail portfolio data
58 Appendix 13 HK Portfolio – Retail portfolio data Retail properties Retail Average monthly (2) No. of Total area Valuation rentals unit rent (1) Occupancy rate properties (’000 sq. ft.) (HK$’M) (HK$’M) (HK$ psf) (%) As at As at As at Six months As at As at As at As at 30 Sep 30 Sep 30 Sep ended 30
Slide 59: HK Portfolio – Retail and car parks portfolio data
59 Appendix 14 HK Portfolio – Retail and car parks and related business portfolio data As at As at 30 Sep 2023 31 Mar 2023 Change Average monthly unit rent (psf pm)(1) ◼ Shops HK$62.3 HK$61.9 +0.6% ◼ Overall (ex self use office) HK$64.3 HK$63.8 +0.8% Occupancy rate ◼ Shops 98.4% 98.3% +0.1% ◼ Market
Slide 60: HK Portfolio – Retail lease expiry profile
60 Appendix 15 HK Portfolio – Retail lease expiry profile (1) As % of total area As % of monthly rent As at 30 September 2023 % % 2023/2024 14.9 15.2 2024/2025 33.2 31.6 2025/2026 24.7 27.6 2026/2027 and beyond 20.4 19.6 Short-term Lease and Vacancy 6.8 6.0 Total 100.0 100.0 Note : (1) Refers to bas
Slide 61: HK Car Park Demand and Supply
61 Appendix 16 HK Car Park Demand and Supply No. of Registration of Vehicles and Private Car Demand and Supply (YoY) Parking Spaces (Private Cars) 707,984 5.4% 631,976 3.1% 2.7% 642,972 2.0% 2.3% 1.5% 1.4% 1.3% 1.2% 1.3% 1.3% 1.2% 0.5% 0.8% 0.6% 0.8% -0.2% 471,685 -1.7% 2015 2016 2017 2018 2019 2020
Slide 62: Hong Kong portfolio – Trade mix
62 Appendix 17 Hong Kong portfolio – Trade mix 4.3% 1.9% 0.5% 15.2% 8.9% 7 89 8 0.7% 6 1.0% 7 28.5% 2.2% 6 1 5 5.3% 5 1 6.7% 4 5 Retail Trade Mix Office Trade Mix 4 (by rent)(1) (by rent) (1) 1 10.3% 47.7% 3 4 2 13.9% 2 3 21.6% 17.4% 3 2 13.9% Retail Sep-23 Mar-23 Office Sep-23 Mar-23 1. Food and be
Slide 63: Mainland China portfolio – Retail lease expiry profile
63 Appendix 18 Mainland China portfolio – Retail lease expiry profile (1) Retail Office As % of As % of monthly As % of As % of monthly total area rent (2) total area rent (2) As at 30 September 2023 (%) (%) (%) (%) 2023/2024 14.2 16.6 6.8 8.8 2024/2025 19.4 29.4 13.1 15.7 2025/2026 15.2 19.1 9.9 11
Slide 64: Mainland China portfolio – Trade mix
64 Appendix 19 Mainland China portfolio – Trade mix 5.3% 1.9% 4 5 25.6% 6 34.3% 28.7% 1 1 Retail Trade Mix Office Trade Mix 40.3% (by rent)(1,2) (by rent) (1) 3 2.9% 5 4 2 16.0% 3 2 29.8% 10.8% 4.4% Retail Sep-23 Mar-23 Office Sep-23 Mar-23 1. Food and beverage 34.3% 33.5% 1. Professional services 4
Slide 65: International portfolio – Retail lease expiry profile
65 Appendix 20 International portfolio – Retail lease expiry profile (1) (2) Australia Retail Singapore Retail As % of As % of monthly As % of As % of monthly total area rent (3) total area rent (4) As at 30 September 2023 (%) (%) (%) (%) 2023/2024 12.0 21.3 12.6 10.2 2024/2025 24.9 23.5 19.7 22.3 2
Slide 66: International retail portfolio – Trade mix
66 Appendix 21 International retail portfolio – Trade mix 3.2% 0.9% 10.5% 14.4% 5 6 4.7% 8 4 7 5.0% 36.7% 6 Australia 46.0% Singapore 1 14.3% 1 6.3% 5 3 Retail Trade Mix Retail Trade Mix (by rent) (1,3) (by rent) (2,4) 4 1 8.8% 3 2 2 21.2% 12.9% 15.1% Retail Sep-23 Mar-23 Retail Sep-23 Mar-23 1. Fas
Slide 67: International portfolio – Office lease expiry profile
67 Appendix 22 International portfolio – Office lease expiry profile (1,2) International Office As % of As % of monthly total area rent As at 30 September 2023 (%) (%) 2023/2024 1.4 1.3 2024/2025 7.1 7.1 2025/2026 1.8 2.4 2026/2027 and beyond 84.8 89.2 Vacancy 4.9 - Total 100.0 100.0 Notes: (1) Refe
Slide 68: International office portfolio – Tenant mix
68 Appendix 23 International office portfolio – Tenant mix 10.1% 6 10.6% 5 32.5% 4.3% 1 4 Office Trade Mix (by rent) (1,2) 1 24.4% 3 2 18.1% Office Sep-23 Mar-23 1. Financial and insurance services 32.5% 33.1% 2. Government 18.1% 18.4% 3. Professional services 24.4% 25.4% 4. Industry 4.3% 4.5% 5. Re
Slide 69: Our strategic partners
69 Appendix 24 Our strategic partners First Priority Group Fujian Dongbai Group Investa Mercatus Co-operative Nan Fung Group Oxford Properties Group Vanke Holdings Vicinity Centres Notes: (1) In alphabetical orders.
Slide 70: Link Together Initiatives
70 Appendix 25 Link Together Initiatives 2023/24 Sponsored Projects Link Together Initiatives is our flagship charity and community engagement programme. It was established in 2013 to engage stakeholders in the communities we serve to help us identify changing social needs and find the most effectiv
Slide 71: Disclaimer
Disclaimer ◼ This document has been prepared by Link Asset Management Limited in its capacity as the Manager (the “Manager”) of Link Real Estate Investment Trust (“Link REIT”) solely for use at the presentations/meetings held and may not be reproduced or redistributed without permission. Neither thi
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