Kore Us REIT · SGX:CMOU
Kore Us REIT — Keppel-KBS US REIT — Q2 2019 Earnings Presentation
31 slides from Kore Us REIT's earnings presentation, Jul 16, 2019
Slide 1: Second Quarter and First Half 2019 Financial Results
Second Quarter and First Half 2019 Financial Results 16 July 2019
Slide 2: Content Outline / Important Notice
Content Outline • Key Highlights 3 • Financial Performance & Capital Management 6 • Portfolio Overview 10 • Market Outlook 13 • Looking Ahead 24 Important Notice The past performance of Keppel-KBS US REIT is not necessarily indicative of its future performance. Certain statements made in this releas
Slide 3: Key Highlights
Key Highlights Indoor courtyard, Great Hills Plaza Austin, Texas
Slide 4: Positive Growth in 1H 2019
Positive Growth in 1H 2019 Distributable Income Occupancy US$24.8 million 2.4% 30.9% from end-2018 Outperformed 1H 2018 and IPO ~376,000 sf of total space leased in Forecast by 30.9% and 23.1% 1H 2019, equivalent to 8.8% of the respectively portfolio, bringing portfolio committed occupancy to 94.0%
Slide 5: Key Growth Markets – Driven by Innovation and Technology
Key Growth Markets – Driven by Innovation and Technology Seattle, Washington Atlanta, Georgia Overview 13 freehold offices buildings and The Plaza Buildings Bellevue Technology The Westpark Portfolio Northridge Center Powers Ferry business campuses across Occupancy: 96.5% Center Occupancy: 97.8% I &
Slide 6: Financial Performance & Capital Management
Financial Performance & Capital Management Tenant space, Westmoor Center Denver, Colorado
Slide 7: Financial Performance for 1H 2019
Financial Performance for 1H 2019 Distributable income for 1H 2019 outperformed both IPO Forecast and 1H 2018 Actual Actual Forecast Actual Actual % % 1H 2019 1H 2019(1) 1H 2019 1H 2018 Change Change (US$’000) (US$’000) (US$’000) (US$’000) Gross Revenue 58,724 48,201 21.8 58,724 46,351 26.7 Property
Slide 8: Healthy Balance Sheet
Healthy Balance Sheet As at 30 June 2019 (US$’000) Total Assets 1,125,830 Investment Properties 1,086,026 Cash and Cash Equivalents 35,606 Other Assets 4,198 Total Liabilities 473,521 Gross Borrowings 424,440 Tenant space, Westmoor Center, Denver, Colorado Other Liabilities 49,081 1H 2019 DPU: 3.00
Slide 9: Prudent Capital Management
Prudent Capital Management Limited interest rate exposure with term loans significantly hedged Debt Maturity Profile As at 30 June 2019 100% Unsecured US$424.4 million of external loans Total debt 34.1% 34.1% (100% unsecured) 18.8% 11.8% ▪ US$50 million of revolving credit facility 1.2% (1) Availabl
Slide 10: Portfolio Overview
Portfolio Overview Maitland Promenade II Orlando, Florida
Slide 11: Continued Organic Growth: Healthy Leasing Momentum in 1H 2019
Continued Organic Growth • Another 173,000 sf leased in 2Q 2019 for a total of New Leases ~376,000 sf leased in 1H 2019, equivalent to about 25.5% 8.8% of portfolio • Over two-thirds of leasing activities were in its business campuses in the tech hubs of Seattle, Austin and Denver • Leasing demand m
Slide 12: Well-Diversified Tenant Base Across Key Growth Sectors
Well-Diversified Tenant Base Across Key Growth Sectors Resilient portfolio with low tenant concentration risk • KORE’s business campuses are popular among tenants in the tech hubs of Seattle, Austin and Denver which contribute 60% cash rental income. • Top 10 tenants contribute 20.4% of cash rental
Slide 13: Market Outlook
Market Outlook Lobby, The Plaza Buildings Bellevue, Seattle
Slide 14: Sound US Economic Fundamentals
Sound US Economic Fundamentals 4% 7% 6% 3% 5% 4% 2% 3% 2% 1% Fitness centre, The Plaza Buildings, Bellevue, Seattle 1% US Economy at a Glance 0% 0% 2014 2015 2016 2017 2018 1Q 2014 2015 2016 2017 2018 Jun-19 3.1% 3.7% GDP (1) 2019 Unemployment (2) Real GDP growth Low unemployment(2) in 1Q 2019(1) •
Slide 15: Attractive US Office Outlook
Attractive US Office Outlook Technology sector remains a key driver of leasing demand, especially in strong growth markets Overall Net Absorption(1) Deliveries & Demolitions(1) 100.0 Forecast 90.0 80.0 70.0 60.0 MSF 50.0 40.0 30.0 20.0 10.0 0.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Net A
Slide 16: Notable Tech Occupiers in Seattle
Notable Tech Occupiers in Seattle Seattle is a choice office location for tech giants and one of only two major tech markets in the US Apple, Google, Uber, Facebook, Compass and Cruise Automation: Opening Seattle offices in 2019(1) Map data ©2019 Google Note: Shaded areas depict the territory where
Slide 17: Suburban Neighbourhoods Becoming Tech Campuses of Choice
Suburban Neighbourhoods Becoming Tech Campuses of Choice The Innovation Triangle: Bellevue – Kirkland – Redmond • Amazon is relocating its worldwide operations team to Bellevue(1). Its occupancy is expected to increase from 12m sf in 2019 to over 15m sf by 2024(2). • Microsoft’s Redmond Campus is be
Slide 18: Apple: A True Campus Community in Austin
Apple: A True Campus Community in Austin Apple’s Office Distribution in Austin, Texas • Apple currently occupies ~1.7m sf of office space in Austin(1) and employs ~6,200 people(2). • On 13 December 2018, Apple announced plans to build a new US$1b campus in Austin, spanning 133 acres and adding an ad
Slide 19: Positive Economics in KORE's Key Growth Markets
Positive Economics in KORE’s Key Growth Markets KORE’s key growth markets have outperformed the national average over the last 5 years Real GDP Growth Average (1) 7.0% 6.4% 2013-2017 Key Growth Markets Gateway Cities 6.0% 5.0% 4.7% 4.0% 4.0% 3.7% 3.3% 3.5% 3.0% 3.0% 3.0% 2.6% 2.2% 2.3% 2.0% 2.2% 1.3
Slide 20: Rising Employment in KORE's Key Growth Markets
Rising Employment in KORE’s Key Growth Markets KORE’s key growth markets have outperformed the national average over the last 5 years Employment Growth Average (1) 5.0% 2014-2018 Key Growth Markets Gateway Cities 4.0% 4.0% 3.6% 2.8% 3.0% 3.0% 2.8% 2.9% 2.8% 2.9% 2.0% 1.6% 1.7% 1.9% 1.7% 1.8% 1.3% 1.
Slide 21: Expanding Population in KORE's Key Growth Markets
Expanding Population in KORE’s Key Growth Markets KORE’s key growth markets have outperformed the national average over the last 5 years 4.0% Population Growth Average (1) 2014-2018 Key Growth Markets Gateway Cities 3.0% 2.9% 2.5% 2.0% 1.8% 2.0% 1.9% 1.5% 1.7% 1.2% 0.9% 1.0% 1.0% 0.7% 0.7% 0.3% 0.5%
Slide 22: Positive Outlook in KORE's Key Growth Markets
Positive Outlook in KORE’s Key Growth Markets KORE’s key growth markets are forecasted to outperform national average 4.0% Real GDP Growth Average Forecast (1) 2018-2022F Strength from the ground up 3.0% 3.0% • Fast growing and defensive sectors such as technology, government, medical and 2.0% 2.1%
Slide 23: First Choice Submarkets Outlook
First Choice Submarkets Outlook Submarket Last 12M Last 12M Average Submarket Last 12M Projected Submarket Vacancy Rate Deliveries absorption Rent Rental Growth Rental Growth Property (%) (sf’000) (sf’000) (US$ p.a.) (%) (%) Seattle, Bellevue CBD The Plaza Buildings 4.2% - 137.0 51.3 9.4% 7.8% Seatt
Slide 24: Looking Ahead
Looking Ahead Tenant space, Great Hills Plaza Austin, Texas
Slide 25: Delivering Stable Distributions and Long Term Value
Delivering Stable Distributions and Long Term Value Portfolio Optimisation • Focused leasing strategy targeting growth sectors • Proactive and effective asset management • Maximise rental rates and capture positive rental reversions Value Accretive Investments • Pursue growth opportunities to create
Slide 26: Thank You
Thank You For more information, please visit www.kepkbsusreit.com Westech 360 Austin, Texas
Slide 27: Additional Information
Additional Information Bellevue Technology Center Bellevue, Seattle
Slide 28: Financial Performance for 2Q 2019
Financial Performance for 2Q 2019 Actual Forecast Actual Actual % % 2Q 2019 2Q 2019(1) 2Q 2019 2Q 2018 Change Change (US$’000) (US$’000) (US$’000) (US$’000) Gross Revenue 29,280 24,101 21.5 29,280 22,641 29.3 Property Expenses (11,292) (10,036) 12.5 (11,292) (8,847) 27.6 Net Property Income 17,988 1
Slide 29: Tax-Efficient Structure
Tax-Efficient Structure Sponsors(1) KPA Unitholders Keppel Keppel Capital relevant Tax-efficient structure for holding US properties Capital International entity ▪ No US corporate tax (21%) and Keppel Management US withholding tax (30%) Agreement Trustee Management ▪ No Singapore corporate tax (17%)
Slide 30: Portfolio Overview
Portfolio Overview NLA Committed occupancy WALE Carrying Value Property City Location (sf) (by NLA) (in years) (US$m) The Plaza Buildings Seattle Bellevue CBD, one of the most active leasing submarket in 490,994 96.5% 3.5 258.8 Seattle Bellevue Technology Seattle Bellevue, one of the most active lea
Slide 31: Positive Fundamentals in KORE's Key Growth Markets
Positive Fundamentals in KORE’s Key Growth Markets Growing educated workforce and rising household income Educational Attainment – % of population with at least a Bachelor’s Degree (1) • Maitland has one of the largest percentages of graduates 2013 2014 2015 2016 2017 with advanced degrees in the me