Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — CapitaLand Commercial Trust — Q1 2019 Earnings Presentation
57 slides from Singapore Exchange's earnings presentation, Apr 18, 2019
Slide 1: CapitaLand Commercial Trust First Quarter 2019 Financial Results
CapitaLand Commercial Trust Singapore’s First and Largest Commercial REIT First Quarter 2019 Financial Results 18 April 2019 1
Slide 2: Important Notice
Important Notice This presentation shall be read in conjunction with CCT’s 1Q 2019 Unaudited Financial Statement Announcement. The past performance of CCT is not indicative of the future performance of CCT. Similarly, the past performance of CapitaLand Commercial Trust Management Limited, the manage
Slide 3: Contents
Contents Slide No. 1. Highlights 04 2. Financial Results and Capital Management 10 3. Portfolio Performance 18 4. Singapore Office Market 28 5. Frankfurt Office Market 32 6. Looking Ahead 36 7. Additional Information 40 *Any discrepancies in the tables and charts between the listed figures and total
Slide 4: 1. Highlights
1. Highlights Capital Tower, Singapore 4 CapitaLand Commercial Trust Presentation April 2019
Slide 5: CCT's 1Q 2019 distributable income rose 8.0% YoY
CCT’s 1Q 2019 distributable income rose 8.0% YoY 1Q 2019 Distributable Income 1Q 2019 DPU S$82.7 2.20 million cents 8.0% y-o-y 3.8% y-o-y S$82.7m S$76.6m 2.20 cents 2.12 cents 1Q 2018 1Q 2019 5 CapitaLand Commercial Trust Presentation April 2019
Slide 6: Maintained a strong balance sheet
Maintained a strong balance sheet Lower average cost of debt at 2.5% p.a. Average term to maturity Average cost of debt(1) 3.6 years 2.5% p.a. 1Q 2018: 3.9 years 1Q 2018: 2.7% p.a. Aggregate leverage Gross borrowings on ratio(2) fixed rate 35.2% 92% 1Q 2018: 37.9% 1Q 2018: 90% Notes: (1) Ratio of in
Slide 7: Active leasing activities in Singapore portfolio
Active leasing activities in Singapore portfolio 1Q 2019 new leases and renewals: 225,000 sq ft 99.1% (18% are new leases) CCT Portfolio (1) (Singapore & Germany) 167,000 CCT Singapore Portfolio (1) higher than Singapore Core CBD occupancy of 95.4% 99.1% 58,000 1Q 2019 Retail space Office space Tena
Slide 8: New demand supported by tenants from diverse trade sectors
New demand in CCT’s portfolio supported by tenants from diverse trade sectors Trade mix of new leases signed in 1Q 2019 22% 20% 18% 15% 13% 6% 6% Retail Products and Financial Services Business Consultancy, Energy, Commodities, Manufacturing and Legal Education and Services Services IT, Media and Ma
Slide 9: Bugis Village returned to the State on 1 April 2019
Bugis Village returned to the State on 1 April 2019 Signed one-year master lease with the State • Leasehold interest returned to the State on 1 April 2019 and compensation sum of S$40.7 million received • Commenced new one- year master lease with the State from 1 April 2019 to 31 March 2020; project
Slide 10: 2. Financials and Capital Management
2. Financials and Capital Management One George Street, Singapore 10 CapitaLand Commercial Trust Presentation April 2019
Slide 11: 1Q 2019 distributable income rose 8.0% YoY
1Q 2019 distributable income rose 8.0% YoY Change Remarks 1Q 2019 1Q 2018 (%) Gross Revenue (S$ million) 99.8 96.4 3.5 Please see note (1) Property Operating Expenses (S$ million) (20.0) (19.2) 3.9 Net Property Income (S$ million) 79.8 77.2 3.4 Distributable Income (S$ million) 82.7 76.6 8.0 Please
Slide 12: Gross rental income by sector: office, retail, hotel
77% of gross rental income contributed by office and 23% by retail and hotel & convention centre CCT’s gross rental income contribution by sector Hotels & Convention Centre, 10% Office, 77% Master lease to hotel operator with Gross Rental Mainly Income approximately 75% from 60.0% of rent on fixed 1
Slide 13: Portfolio diversification with income contribution from 9 properties
Portfolio diversification with income contribution from 9 properties Raffles City Singapore and six Grade A offices contributed 93% of Portfolio NPI One George Street (50%), 4% Bugis Village, 2% HSBC Building, 5% Raffles City Singapore Galilleo, Frankfurt (60%), 25% (94.9%), 5% Six Battery Road, 12%
Slide 14: Robust balance sheet
Robust balance sheet Statement of Financial Position As at 31 March 2019 S$ million S$ million (1) Non-current Assets 9,421.4 Deposited Property 11,101.5 . Current Assets 172.0 Total Assets 9,593.4 Net Asset Value Per Unit $1.82 (2) Current Liabilities 223.8 Adjusted Net Asset Value Per Unit $1.79 N
Slide 15: Stable financial indicators
Stable financial indicators 4Q 2018 1Q 2019 Remarks (1) Higher Total Gross Debt S$3,903.7m S$3,904.4m (Increase in borrowings) (2) Higher Aggregate Leverage 34.9% 35.2% (Increase in borrowings) Unencumbered Assets as % of 77.6% 77.4% Stable Total Assets (3) (4) Lower Average Term to Maturity 3.9 yea
Slide 16: Debt Maturity Profile
Debt Maturity Profile as at 31 March 2019 S$ million (% of total borrowings) $17m $75m (2%) $320m (8%) $108m (3%) $102m (3%) $448m (11%) $204m (5%) $300m (8%) $60m (2%) $290m (7%) $90m (2%) $200m (5%) $72m (2%) $20m $100m (3%) $180m (5%) $302m (7%) $300m (8%) $180m (5%) $75m (2%) $165m (4%) $148m (4
Slide 17: 92% of borrowings on fixed rate
92% of borrowings on fixed rate provides certainty of interest expense Assuming +0.5% p.a. Proforma 2019 impact on: increase in interest rate Estimated additional annual +$1.6 million p.a. Interest expense Annualised YTD Mar 2019 -0.04 cents Borrowings on DPU (0.5% of annualised YTD Mar 2019 DPU) Fl
Slide 18: 3. Portfolio Performance
3. Portfolio Performance Raffles City Singapore 18 CapitaLand Commercial Trust Presentation April 2019
Slide 19: Portfolio occupancy at 99.1%
Portfolio occupancy at 99.1% Singapore Portfolio occupancy: 99.1% Singapore Core CBD occupancy: 95.4% Singapore Germany 98.1% 99.7% 99.7% 97.6% 100.0% 100.0% 99.6% 98.7% 100.0% Asia Square CapitaGreen Capital Tower Six Battery 21 Collyer Bugis Village Raffles City One George Gallileo (2) Tower 2 Roa
Slide 20: Positive reversions for leases signed in 1Q 2019
Positive reversions for leases signed in 1Q 2019 Market Rents of Average Committed Comparative Sub-Market Building (1) Sub-Market (S$) Expired Rents Rents (S$) (S$) Cushman & Knight Frank(3) Wakefield(2) Grade A Asia Square Tower 2 10.20 11.00 – 12.50 12.63 11.60 – 12.10 Marina Bay Grade A Six Batte
Slide 21: Monthly average office rent was stable QoQ
Monthly average office rent of CCT’s portfolio(1) was stable QoQ Expected to increase as committed leases commence in 2Q 2019 10500% 10498% 10495% 10493% 10490% 10488% 10486% 10483% 10481% 10478% 10476% 10474% 10471% 9.74 9.70 9.74 9.71 9.71 10469% 10466% 10464% 10462% 10459% 10457% 10454% 10452% 10
Slide 22: Well spread lease expiry profile
Well spread lease expiry profile Portfolio Weighted Average Lease term to Expiry (WALE) by NLA as at 31 March 2019 is 5.7 years 22% 22% 14% 12% 12% 7% 3% 5% 3% 3% 9% 1% 0% 0% 4% 2019 2020 2021 2022 2023 2024 and beyond Office Retail Hospitality Completed 22 CapitaLand Commercial Trust Presentation A
Slide 23: Committed more than half of expiring 2019 leases
Committed more than half of expiring 2019 leases Leasing momentum continues to be steady 28% 27%(2) 27% (3) 24% 19% 18% 17% 17% 15% 15% 11% (1) 4% 3% 10% 2019 2020 2021 2022 2023 2024 and beyond Monthly Gross Rental Income Committed Net Lettable Area Completed Office WALE by NLA as at 31 March 2019
Slide 24: Average expiring rent in 2019 lower than market rent
Average expiring rent in 2019 lower than 1Q 2019 market rent 1Q 2019 Grade A office market rent at S$11.15 psf per month(1) 2019 (2) Average rent of leases expiring is S$10.44 psf 20% 20 Period 1H 2019 2H 2019 Rental Rental % of % of 16 Rates of Rates of Building Expiring Expiring 15% Expiring Expir
Slide 25: Average expiring rents are at the lowest in 2020
Average expiring rents are at the lowest in 2020 2020 2021 (1) (1) Average rent of leases expiring is S$9.60 psf Average rent of leases expiring is S$10.72 psf 20% 20 20% 20 16 16 15% 15% 13.60 11.48 11.26 10.00 10.26 12 12 9.28 10% 8.24 8.71 10% 8.35 8.25 7.8% 8 8 5.9% 6.1% 6.3% 5.1% 5.0% 5% 4.4% 5
Slide 26: Top tenants contribute 37% of monthly gross rental income
Top 10 tenants contribute 37% of monthly gross rental income Based on monthly gross rental income as at 31 Mar 2019, excluding retail turnover rent 9% 5% 4% 4% 4% 3% 3% 2% 2% 2% RC Hotels (Pte) Commerzbank The Hongkong GIC Private Mizuho Bank, Standard JPMorgan CapitaLand Allianz Robinson & Ltd(1) A
Slide 27: Diverse tenant mix in CCT's portfolio
Diverse tenant mix in CCT’s portfolio Education and Services, 2% Legal, 3% Government, 2% Manufacturing and Distribution, 4% Banking, 24% Food and Beverage, 5% Insurance, 7% Committed Monthly Gross Rental Income as at 31 Mar 2019 Retail Products and Services, 8% Financial Services, 11% Real Estate a
Slide 28: 4. Singapore Office Market
Ng Hock How, CapitaLand “Building People” Photography Competition 2012 4. Singapore office market Raffles City Singapore 28 CapitaLand Commercial Trust Presentation April 2019
Slide 29: Annual new supply to average 0.9 mil sq ft over 5 years
Annual new supply to average 0.9 mil sq ft over 5 years; CBD Core occupancy at 95.4% as at end March 2019 Singapore Private Office Space (Central Area) (1) – Net Demand & Supply 3.0 Forecast average annual 2.7 Post-Asian financial crisis, SARs & gross new supply 2.5 GFC -weak demand & undersupply 2.
Slide 30: Known future office supply in Central Area (2019 – 2022)
Known future office supply in Central Area (2019 – 2022) Expected Proposed Office Projects Location NLA (sq ft) completion 2019 18 Robinson Robinson Road 145,000 2019 Redevelopment of Funan DigitaLife Mall (1) Beach Road/City Hall 204,000 2019 HD 139 (139 Cecil Street) Shenton Way 72,000 2019 9 Pena
Slide 31: Grade A office market rent up 3.2% QoQ
Grade A office market rent up 3.2% QoQ and 14.9% from 4Q 2017 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 Mthly rent (S$ / sq ft ) 8.95 8.95 9.10 9.40 9.70 10.10 10.45 10.80 11.15 % change -1.6% 0.0% 1.7% 3.3% 3.2% 4.1% 3.5% 3.3% 3.2% $20 S$18.80 $18 Monthly gross rent by per square foot $
Slide 32: 5. Frankfurt Office Market
5. Frankfurt Office Market 32 CapitaLand Commercial Trust Presentation April 2019
Slide 33: Take up and vacancy rate
Take up and vacancy rate Frankfurt property fundamentals sound; banking district vacancy rates declined from 6.3% in 2017 to 3.9% in 2018 Frankfurt Office and Banking District Take-up and Vacancy Rates • Take-up in Frankfurt and Banking District registered significant increase in year 2017; the high
Slide 34: New supply
New supply Relatively low levels of new office supply in Frankfurt New Supply in Banking District New Supply in Frankfurt (2019F to 2020F) (2019F to 2020F) • Past year’s completion volume far below 10-year average • About 59% of Banking • Future supply pipeline until 2019F at relatively low levels w
Slide 35: Frankfurt office market rents
Frankfurt office market rents Frankfurt’s office market is characterised by stable and resilient rents • Frankfurt has the highest rent in comparison to major cities in Germany across the past 10 years • Prime office rent in Frankfurt has been resilient through property cycles • Positive supply-dema
Slide 36: 6. Looking Ahead
6. Looking Ahead 36 CapitaLand Commercial Trust Presentation April 2019
Slide 37: CCT's value creation strategy
CCT’s value creation strategy Acquire quality assets with growth potential Unlock value from in identified markets an asset at optimal stage of life cycle Enhance value and positioning of assets to stay competitive CREATE Optimise asset value Manage debt maturity and performance VALUE profile to enh
Slide 38: Launch of new flexible spaces and community activities
Launch of new flexible spaces and community activities Enhancing our core and flex offerings and providing more options for tenants at Capital Tower and Asia Square Tower 2 MARK, a members- MARK, The Work Project The Work Project, Asia Square Tower 2 only business at Capital Tower Innovation Hub, Th
Slide 39: Key focus
Key focus Proactive portfolio and asset management as well as capital management to generate growth Immediate focus Future opportunities 21 Collyer Quay (HSBC Building) CapitaSpring (on track for completion in • Extended lease from end-April 2019 to 1H 2021) end-April 2020 • Total annual rental incr
Slide 40: 7. Additional Information
7. Additional Information Six Battery Road 40 CapitaLand Commercial Trust Presentation April 2019
Slide 41: 1Q 2019 Gross Revenue higher by 3.5% YoY
1Q 2019 Gross Revenue higher by 3.5% YoY Higher gross revenue mainly from Asia Square Tower 2 and Gallileo S$ million Negative rent reversions 1Q 2018 1Q 2019 27.6 25.3 23.0 22.6 Largely due to lower occupancy 18.0 18.2 17.4 16.8 Divested on 29 Aug 2018 6.6 5.1 5.1 4.6 3.0 2.9 - - (2) Asia Square Ca
Slide 42: 1Q 2019 Net Property Income higher by 3.4% YoY
1Q 2019 Net Property Income higher by 3.4% YoY Net property income lifted by Asia Square Tower 2 and Gallileo S$ million 1Q 2018 1Q 2019 Largely due to higher marketing expenses 21.4 19.4 19.1 18.1 14.0 13.9 13.8 13.3 Divested on 29 Aug 2018 5.6 5.1 5.1 3.5 2.3 2.4 - (1) (2) Asia Square CapitaGreen
Slide 43: 1Q 2019 performance of joint ventures
1Q 2019 performance of joint ventures (100.0% basis) Note: (1) CCT owns 60.0% interest in Raffles City Singapore. (2) CCT owns 50.0% interest in OGS LLP 43 CapitaLand Commercial Trust Presentation April 2019
Slide 44: Singapore property values largely stable
Singapore property values largely stable 12-month 6-month 31 Dec 17 30 Jun 18 31 Dec 18 31 Dec 18 Variance Variance Investment Properties (1) (Dec 2017 to (Jun 2018 to $m $m $m $ per sq foot Dec 2018) Dec 2018) % % Asia Square Tower 2 2,094.0(2) 2,135.0 2,143.0 2,752 2.3 0.4 CapitaGreen 1,616.0 1,63
Slide 45: Key valuation metrics remained unchanged from June 2018
Key valuation metrics remained unchanged from June 2018 • Terminal yields are 0.25% higher than capitalization rates for the portfolio except for Six Battery Road and 21 Collyer Quay where terminal yields are the same given their 999-year lease tenures. • Office rent growth rates(1) assumed for the
Slide 46: Capitalisation and discount rates stable relative to 10-year SG bond yield
CCT’s valuation capitalisation and discount rates are stable relative to 10-year SG bond yield 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (1) 10-year SG Bond yield CCT Capitalisation rate CCT Discount rate Notes: (1) Source: Monetary Authority of Singa
Slide 47: CCT is largest commercial REIT in Singapore by market cap
CCT is largest commercial REIT in Singapore by market cap, listed since May 2004 S$7.2b (1) 9 properties (2) 625 S$11.1b(3) About 4.6 million 8 properties in Tenants Deposited Market Capitalisation Singapore and Property sq ft (4) NLA (100% basis) one in Germany One George Street Capital Tower Capit
Slide 48: Owns 8 centrally-located commercial properties in Singapore
Owns 8 centrally-located quality commercial properties in Singapore as at 1 April 2019 New integrated development, CapitaSpring in Raffles Place under construction 21 Collyer 7 (HSBCQuay Building) 1 Capital Tower 2 Asia Square Tower 2 3 CapitaGreen 4 Six Battery Road 8 CapitaSpring (3) 5 One George
Slide 49: Gallileo located in Frankfurt's prime banking district
Gallileo located in Frankfurt’s prime banking district Gallileo By Foot (3-10 minutes) – Willy-Brandt-Platz underground – Main railway station – Taunusanlage suburban railway stop By Car (3-20 minutes) – Main railway station – Airport 49 CapitaLand Commercial Trust Presentation April 2019
Slide 50: CapitaSpring – new integrated development at Market Street
CapitaSpring – new integrated development at Market Street Description 51-storey integrated development comprising Grade A office, serviced residence with 299 rooms, ancillary retail and a food centre Use Commercial Height 280m (on par with tallest buildings in Raffles Place) Title Leasehold expirin
Slide 51: CapitaSpring drew down S$20.0 million in 1Q 2019
CapitaSpring drew down S$20.0 million in 1Q 2019 – CCT’s 45.0% share amounts to S$9.0 million CCT’s 45% interest in Glory Drawdown (2) CCT’s 45% interest Office Trust and as at Mar 2019 Balance Glory SR Trust Debt at Glory Office Trust and Glory SR (1) S$531.0m (S$301.5m) S$229.5m Trust Equity inclu
Slide 52: CCT delivered higher distribution YoY through market cycles
CCT delivered higher distribution YoY through property market cycles Due to continual portfolio reconstitution including recycling of capital, AEIs, acquisitions, divestments and developments Distributable Income (S$ million) Distribution Per Unit (cents) Global financial crisis and Global financial
Slide 53: Singapore portfolio occupancy above market occupancy
CCT’s Singapore portfolio occupancy of 99.1% is above market occupancy of 95.4% CCT Committed Occupancy(1) Market Occupancy Level(2) Singapore 1Q 2019 4Q 2018 1Q 2019 4Q 2018 Grade A office 98.9% 99.2% 95.2% 94.9% Portfolio 99.1% 99.3% 95.4% 94.8% CCT's Committed Occupancy Since Inception 99.4% 99.1
Slide 54: Portfolio committed occupancy rate consistently above 90%
Portfolio committed occupancy rate consistently above 90% 1Q 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Capital Tower 100.0 100.0 99.9 99.9 99.9 100.0 100.0 100.0 100.0 94.1 99.0 99.4 99.7 99.7 Six Battery Road 100.0 99.9 98.6 99.2 99.7 85.4 93.0 98.6 99.2 98.9 98.6 99.9 1
Slide 55: Property details (1)
Property details (1) Asia Square Six Battery Raffles City Capital Tower CapitaGreen Tower 2 Road Singapore (100.0%) 250/252 North Bridge 168 Robinson 138 Market 6 Battery Road; 2 Stamford Address 12 Marina View Road Street Road Road; 80 Bras Basah Road 808,900 NLA (sq ft) 736,000 779,000 701,000 495
Slide 56: Property details (2)
Property details (2) One George Street 21 Collyer Quay CapitaSpring Gallileo (100.0%) Contribution from (100.0%) (HSBC Building) (100.0%) (1) 19 Jun 2018 Gallusanlage 7/ Neckarstrasse 5, 86 & 88 Address 1 George Street 21 Collyer Quay 60329 Frankfurt am Market Street Main, Germany NLA (sq ft) 446,00
Slide 57: Thank you
Thank you For enquiries, please contact: Ms Ho Mei Peng , Head, Investor Relations Direct: (65) 6713 3668; Email: ho.meipeng@capitaland.com CapitaLand Commercial Trust Management Limited (http://www.cct.com.sg) 168 Robinson Road, #28-00 Capital Tower, Singapore 068912 57 Tel: (65) 6713 2888; Fax: (6
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