Swire Properties Limited · HKEX:1972
Swire Properties — H1 2020 Earnings Presentation
55 slides from Swire Properties's earnings presentation, Aug 13, 2020
Slide 1: 2020 Interim Results | Analyst Briefing
One Taikoo Place 2020 INTERIM RESULTS | ANALYST BRIEFING ----- 13TH AUGUST 2020
Slide 2: Disclaimer
DISCLAIMER ----- This presentation has been prepared by Swire Properties Limited (“the “Company”, and together with its subsidiaries, the “Group”) solely for information purposes and certain information has not been independently verified. No representation or warranty, express or implied, is made a
Slide 3: Agenda
AGENDA ----- 1. Results Highlights Guy Bradley, 2. Investment Portfolio Chief Executive 3. Trading Portfolio Fanny Lung, 4. Hotel Portfolio Finance Director 5. Financial Highlights 6. Sustainable Development 7. Prospects 8. Q&A 3
Slide 4: 2020 Interim Results Highlights
2020 INTERIM RESULTS HIGHLIGHTS ----- ▪ Sustainable growth in dividends and resilient recurring 3% 9% underlying profit from property investment despite y-y y-y tough market conditions. Dividend per Recurring ▪ Strong recovery in footfall and retail sales in the Share Underlying Chinese mainland mal
Slide 5: Key Developments
KEY DEVELOPMENTS ----- MAJOR DISPOSAL GREEN FINANCING TWO AND THREE SUSTAINABILITY- BRICKELL CITY LINKED LOAN/ CENTRE GREEN BOND ▪ Sale completed. ▪ Launched two Sustainability- EDEN Linked Loans, totalling HK$ 2,000 M Artist Impression ▪ Launched green bonds, totalling HK$ 1,934 M July 2020 by June
Slide 6: Investment Portfolio
One Taikoo Place Taikoo Li Sanlitun INVESTMENT PORTFOLIO ----- 6
Slide 7: Hong Kong Office
HONG KONG OFFICE TAIKOO PLACE SHOWING RESILIENCE ----- 2.2 M sq ft GFA 2.6 M sq ft GFA 3.1 M sq ft GFA 97 % Overall Occupancy Pacific Place One Island East & One Taikoo Place Taikoo Place Office Towers Occupancy 97% 100% 98% Rental Reversion (1) +2% +11% +12% Latest Rentals One/Two PP : 115 – 135 mi
Slide 8: Hong Kong Retail
HONG KONG RETAIL ROBUST OCCUPANCY DESPITE A TOUGH MARKET ----- 0.7 M sq ft GFA 1.1 M sq ft GFA 0.8 M sq ft GFA The Mall, Pacific Place Cityplaza Citygate Outlets Occupancy 100% 100% 99% Retail Sales -47.1% -20.3% -25.6% Attributable 3% Valuation (vs Dec 2019) HK$ 47.0 bn 8 (1) Occupancy at 30th June
Slide 9: Hong Kong Portfolio: Lease Expiry and Tenant Mix
HONG KONG PORTFOLIO SMALL PROPORTION OF LEASES EXPIRING IN 2H ----- Lease Expiry Profile (1)(2) HK Portfolio Tenant Mix (3) (2) Jul-Dec 2020 2021 2022 and later ▪ Strong and diverse tenant base. ▪ Top 10 office tenants occupied approx. 19% of office area in HK. ▪ Top 10 retail tenants occupied appro
Slide 10: Hong Kong Portfolio: Growth Strategy Remains Unchanged
HONG KONG PORTFOLIO GROWTH STRATEGY REMAINS UNCHANGED ----- Expected Attributable GFA of Completed Property Portfolio in Hong Kong (1)(2) GFA (‘000 sq ft) TWO TAIKOO PLACE ▪ 100% owned. +9% ▪ Superstructure works in 14,444 progress. 14,226 2022 13,199 13,208 13,208 46-56 QUEEN’S ROAD EAST, 1A-11 LAN
Slide 11: Chinese Mainland Portfolio
CHINESE MAINLAND PORTFOLIO CHINESE MAINLAND RETAIL NOW THE SECOND LARGEST RENTAL CONTRIBUTOR ----- 28% of total attributable gross Chinese mainland Attributable Gross Rental Income HK$M rental income from the Chinese mainland in 1H 2020. Nearly doubled 4,246 since 2014 3,958 3,311 1H 2020 2,463 2,61
Slide 12: Chinese Mainland Portfolio: Tenant Mix and Lease Expiry
CHINESE MAINLAND PORTFOLIO WELL-BALANCED TENANT MIX AND LEASE EXPIRY PROFILE ----- Lease Expiry Profile (1)(2) Chinese mainland Portfolio Tenant Mix (3) ( Chinese mainland Retail Jul-Dec 2020 2021 2022 and later ▪ Diverse tenant base. ▪ Lease expiry profile well spread-out. Chinese mainland Office (
Slide 13: Chinese Mainland Portfolio: Retail Sales Rebound
CHINESE MAINLAND PORTFOLIO STRONG REBOUND IN RETAIL SALES IN 2Q ----- Beijing Guangzhou & Chengdu Shanghai Taikoo Li Sanlitun Taikoo Hui HKRI Taikoo Hui Occupancy 96% 99% 94% Retail Sales -38.1% ( 9% pt vs 1Q 2020) +3.4% ( 25% pt vs 1Q 2020) +1.6% ( 32% pt vs 1Q 2020) INDIGO Sino-Ocean Taikoo Li Che
Slide 14: Chinese Mainland Project Pipeline
CHINESE MAINLAND PROJECT PIPELINE A CONTINUING GROWTH STORY Attributable GFA of Chinese mainland ----- Beijing Shanghai Completed Property Portfolio (1) GFA (‘000 sq ft) 9,726 8,847 Artist Impression Taikoo Li Sanlitun West Taikoo LI Qiantan Taikoo Li Sanlitun West Taikoo Li Qiantan ▪ Refurbishment
Slide 15: Chinese Mainland Office
CHINESE MAINLAND OFFICE HIGH OCCUPANCY IN GUANGZHOU AND SHANGHAI ----- 1.7 M sq ft GFA 1.8 M sq ft GFA Taikoo Hui HKRI Taikoo Hui Taikoo Hui Guangzhou HKRI Taikoo Hui Shopping Mall Shanghai Office Occupancy 95% Office Occupancy 97% Latest Rentals Latest Rentals mid 100s – low 200s mid 300s – mid 400
Slide 16: Brickell City Centre, Miami
BRICKELL CITY CENTRE, MIAMI CAPITAL RECYCLING TO SUPPORT FUTURE GROWTH ----- Two and Three Brickell City Centre Shopping Mall Artist Impression Taikoo Li Sanlitun West (2) ▪ Office Occupancy : ~100% ▪ Retail Occupancy : 93% (3) ▪ Sale completed in July 2020. ▪ Retail Sales : -48.2% (1) Occupancy at
Slide 17: Trading Portfolio
Better resolution pic to be provided EDEN EDEN South Jakarta Project TRADING PORTFOLIO ––– 17
Slide 18: Trading Portfolio: Upcoming Projects in Hong Kong
TRADING PORTFOLIO UPCOMING PROJECTS IN HONG KONG ----- Expected Attributable Residential GFA Completions in Hong Kong 8 STAR STREET GFA (‘000 sq ft) ▪ 100% owned. ▪ Superstructure works in progress. WONG CHUK HANG MTR STATION PACKAGE FOUR ▪ 25% owned. ▪ Design in progress. ~800 units (1) CHAI WAN IN
Slide 19: Trading Portfolio: Miami and Southeast Asia
TRADING PORTFOLIO CONTINUING SALES IN MIAMI AND DEVELOPMENT IN SOUTHEAST ASIA ----- Miami Singapore Jakarta Artist Impression Reach Rise EDEN South Jakarta Project Average Price ▪ 100% owned. ▪ 50% owned. mid US$ 600s psf (2) high US$ 600s psf (2) ▪ 20 residential units. ▪ Over 400 residential units
Slide 20: Hotel Portfolio
Replace divider slide- to keep new opening low profile TheThe Upper House Opposite HOTEL PORTFOLIO ––– 20
Slide 21: Hotel Portfolio: Tough Trading Conditions
HOTEL PORTFOLIO TOUGH TRADING CONDITIONS ----- Managed Hotels ▪ Operating loss (before depreciation) : HK$ 86 M in 1H 2020 under challenging trading conditions. ▪ Drastic effect of COVID-19 on occupancy and revenue, partly offset by cost savings. The Opposite House Non-managed Hotels ▪ The Silveri H
Slide 22: Financial Highlights
One Taikoo Taikoo Place officePlace towers FINANCIAL HIGHLIGHTS ––– 22
Slide 23: Underlying Profit
UNDERLYING PROFIT ––– Underlying Profit Movement in Underlying Profit HK$M HK$M 2018 2019 1H 2019 1H 2020 Underlying Decrease in Increase in Increase in Increase in Underlying profit profit from profit from losses from losses from profit Recurring Underlying Profit the sale of props trading props ho
Slide 24: Rental Income
RENTAL INCOME POSITIVE OFFICE RENTAL GROWTH IN HONG KONG ----- Attributable Gross Rental Income (1) HK$M HK OFFICE +2% ▪ Positive rental reversions and increased rental income at One Taikoo Place. 13,849 14,117 ▪ Partly offset by rental loss from disposals. HK RETAIL -7% (-6% disregarding amortised
Slide 25: Dividend
DIVIDEND CONTINUOUS GROWTH DESPITE LOWER UNDERLYING PROFIT ---- Dividend Policy Dividend Per Share HK$/sh To deliver sustainable growth in 0.88 dividends and to pay out 0.84 approximately half of our underlying profits in ordinary 0.77 dividend over time. 0.71 0.71 0.59 0.57 0.52 0.48 0.48 Dividend
Slide 26: Movement in Investment Properties Valuation
MOVEMENT IN INVESTMENT PROPERTIES VALUATION ----- Movement in Investment Properties Valuation (1) The decrease in the valuation of the (excl. hotels and investment properties held under JVCs) investment property portfolio HK$M principally reflects the effect of adverse market conditions and (2,621)
Slide 27: Net Debt and Gearing
NET DEBT AND GEARING ----- Net Debt Reconciliation (HK$M) June Financial Ratios (1) 2016 2017 2018 2019 2020 Net debt at 31st December 2019 (15,292) Total equity (HK$M) 227,225 259,378 281,291 288,911 285,731 Net rental, fee receipts and proceeds from 4,349 property trading / development and Net deb
Slide 28: Maturity Profile & Liquidity
MATURITY PROFILE & LIQUIDITY ----- Maturity Profile of Available Committed Facilities (at 30th June 2020) Total 36,973 2,325 6,550 11,751 1,533 1,100 1,940 4,575 2,140 4,255 - 804 HK$M Dec 2019 Jun 2020 Drawn 27,731 2,325 1,825 7,900 867 1,100 1,940 4,575 2,140 4,255 - 804 Cash 14,985 11,237 HK$M Un
Slide 29: Capital Commitments
CAPITAL COMMITMENTS ----- Profile of Capital Commitments for Investment Properties and Hotels – at 30th June 2020 HK$M Expenditure Forecast Expenditure Commitments* Six months ended Six months ending 2021 2022 2023 & At 30th June 2020 30th Jun 2020 31st Dec 2020 later Hong Kong 499 1,974 5,489 1,994
Slide 30: Sustainable Development
Taikoo Place Taikoo Place SUSTAINABLE DEVELOPMENT Sustainable ESG Updates for ––– Development Report 2019 Investors (Jun 2020) 30
Slide 31: Performance (Environment)
PERFORMANCE (ENVIRONMENT) GOOD PROGRESS MADE IN 1H TO MEET 2020 TARGETS ----- Energy Reduction Decarbonisation (4) Commercial Waste – % Diverted from Landfill (3) Current 2020 Target Current 2020 Target Current 2020 Target (1) (5) Hong Kong Portfolio 26.9% 26% 29.4% 27% 24.3% Estimated savings HK$ 7
Slide 32: Places Impact Report
PLACES IMPACT REPORT SUPPORTING DECENTRALISATION WITH A THRIVING COMMUNITY ----- Places Impact Report Issued first-ever Impact Report for Taikoo Place and Island East. Population Balance Employment Density CITY PLACE • City-Wide Objectives 60% : 40% 1,100 INVESTMENT • Livelihood • Vibrancy workers r
Slide 33: Sustainability
Sustainability We All Count ,, Find out more about $020303% DE@ SwikE PROPERTIES
Slide 34: Prospects
One Taikoo Hui Island East Taikoo Li Sanlitun PROSPECTS ––– 34
Slide 35: Prospects
PROSPECTS OFFICE PORTFOLIO RETAIL PORTFOLIO and HOTELS OVERALL ✓ Only a small proportion of ✓ Strong recovery in footfall and ✓ Well-placed with a strong Hong Kong office leases retail sales in the Chinese balance sheet to get through expiring in 2H 2020. mainland since March 2020; this difficult ti
Slide 36: Upcoming Projects
UPCOMING PROJECTS ACTIVELY LOOKING FOR OPPORTUNITIES TO EXTEND PROJECT PIPELINE ----- Expected Attributable GFA 2020 Taikoo Li Qiantan of Upcoming Projects GFA (M sq ft) 5,000 2021 ChartWest Taikoo Li Sanlitun Title 4,500 4,000 3,500 Two Taikoo Place 3,000 2022 8 Star Street 2020 2,500 Taikoo Li Qia
Slide 37: Q&A
Sino-Ocean Taikoo Li Chengdu Q&A ––– 37
Slide 38: Appendix
Sino-Ocean Taikoo HKRI One Taikoo LiTaikoo Chengdu Hui Island Hui East APPENDIX ––– 38
Slide 39: 2020 Interim Results Summary
2020 INTERIM RESULTS SUMMARY ----- HK$M 1H 2019 1H 2020 Change Revenue 7,510 6,551 13% Valuation gains/ (losses) on investment properties 3,837 (2,621) N/A Operating profit 9,725 1,473 85% Underlying profit 18,606 3,753 80% Recurring underlying profit 4,049 3,702 9% Reported profit 8,973 1,029 89% U
Slide 40: Revenue Analysis
REVENUE ANALYSIS ----- 1H 2020 Revenue Breakdown by Segment 1H 2020 Revenue Breakdown by Region The turnover decreased by 13% principally due to lower revenue from hotels, property trading and gross rental income from investment properties. 6,551 6,551 HK$M HK$M Comparison 1H 2019 1H 2020 Comparison
Slide 41: SD 2030 Strategy: 1H2020 Highlights
SD 2030 STRATEGY: 1H2020 HIGHLIGHTS Green Financing Talent Attraction Impact Reporting Suppliers Climate Change Launched two more HK’s Most Attractive Employer per Published 1st Places Impact Report Working with suppliers to offer Physical risk assessment on global sustainability-linked loans, total
Slide 42: Sustainable Development Publication
SUSTAINABLE DEVELOPMENT PUBLICATION ----- Sustainable Development Report 2019 published. First Places ESG Updates for Impact Report Investors (Jun 2020) 42
Slide 43: Property Portfolio at 30th June 2020
PROPERTY PORTFOLIO AT 30TH JUNE 2020 ----- Investment Props / Hotels Office Retail Hotels (1) Resid./Serviced Apartments Under Planning Total Attributable Investment Props by Region (GFA M sq ft) Attributable GFA (M sq ft) Completed ––– ▪Hong Kong 9.3 2.5 0.8 0.6 - 13.2 U.S.A. Chinese mainland 2.9 4
Slide 44: Completed Investment Portfolio
COMPLETED INVESTMENT PORTFOLIO ----- Expected Attributable GFA of Completed Investment Portfolio (incl. Hotels) (1)(2) GFA (‘000 sq ft) 23,208 23,576 23,832 24,850 25,068 46-56 Queen’s Citygate Taikoo Li Qiantan (50%) Road East, 1A-11 Two Taikoo Outlets’new Taikoo Li Landale Street, 2A- Place 12 Ant
Slide 45: Key Business Strategies
KEY BUSINESS STRATEGIES ----- ▪ 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 through active asset management and by reinforcing
Slide 46: Hong Kong Portfolio Map
HONG KONG PORTFOLIO MAP ----- East Residences (1) The simplified maps are not to scale and are for illustrative purpose only. 46 (2) GFA figures are for reference only.
Slide 47: Hong Kong Portfolio Map (Cont'd)
HONG KONG PORTFOLIO MAP (CONT’D) ----- (1) Citygate Outlets extension (Tung Chung Town Lot No. 11 Retail Portion) (1) MGallery is expected to open later this year or next year. 47 (2) The simplified maps are not to scale and are for illustrative purpose only. (3) GFA figures are for reference only.
Slide 48: Completed Chinese Mainland Portfolio – Beijing
COMPLETED CHINESE MAINLAND PORTFOLIO – BEIJING ----- Taikoo Li Sanlitun, Beijing 1.47 M sq ft GFA (1) Project Summary (100% Basis) Components TKL Sanlitun South TKL Sanlitun North TKL Sanlitun West The Opposite House (TOH) Interest Retail : 100% TOH : 100% Yr of Opening 2008 (TKL South) 2008 (TOH) 2
Slide 49: Completed Chinese Mainland Portfolio – Guangzhou and Chengdu
COMPLETED CHINESE MAINLAND PORTFOLIO – GUANGZHOU AND CHENGDU ----- Taikoo Hui, Guangzhou 3.84 M sq ft GFA Project Summary (100% Basis) Components Retail Taikoo Hui Towers 1&2 Mandarin Oriental GZ Interest 97% Yr of Opening 2011 / 2012 / 2013 Retail Sales Occupancy +3.4% 99% 95% Retail Office Sino-Oc
Slide 50: Completed Chinese Mainland Portfolio – Shanghai
COMPLETED CHINESE MAINLAND PORTFOLIO – SHANGHAI ----- HKRI Taikoo Hui, Shanghai 3.54 M sq ft GFA Project Summary (100% Basis) Components Retail HKRI Centre 1 & Centre 2 The Middle House and The Sukhothai Shanghai The Middle House Residences Interest 50% Yr of Opening 2016 / 2017 / 2018 Retail Sales
Slide 51: U.S.A. Portfolio – Miami
U.S.A. PORTFOLIO – MIAMI ----- Brickell City Centre BCC: 1.03 M sq ft GFA OBCC: 1.97 M sq ft GFA Project Summary (100% Basis) Components Retail EAST Miami (w Serv Apmt) 2 Condo Towers (Reach / Rise) One BCC and a Condo Tower (under planning) Interest Retail: 62.93% Others: 100% Yr of Opening 2016 (B
Slide 52: Completed U.S.A. Trading Portfolio
COMPLETED U.S.A. TRADING PORTFOLIO ----- Trading Properties Total Units Actual Actual Units for which Profit Recognised or Interest (At 11th August 2020) Units Sold Completion Handover Expected to be Recognised (Year) from ▪ ––– Miami, Florida, U.S.A. 347(2016), 12(2017), 2(2018), Reach, Brickell Ci
Slide 53: Hotel Portfolio
HOTEL PORTFOLIO ----- No. of No. of Managed Hotels Interest Owned but Non-managed Hotels Interest Rooms Rooms (100% (100% Completed basis) Completed basis) 2,138 Hong Kong The Upper House 117 100% Hong Kong Island Shangri-La Hong Kong 565 20% EAST, Hong Kong 345 100% JW Marriott Hotel Hong Kong 608
Slide 54: Valuation of Completed Investment Properties
VALUATION OF COMPLETED INVESTMENT PROPERTIES ----- 2009 – June 2020 Valuation of Completed Investment Properties (excl. Hotels) HK$M 272,927 276,791 273,430 Valuation of investment 78% properties portfolio in 10 years Value creation through continuous property investment and asset reinforcement over
Slide 55: © Swire Properties Limited
DI SwirRE PROPERTIES © Swire Properties Limited