Capitaland Ascendas Reit · SGX:A17U

Capitaland Ascendas Reit — Ascendas Real Estate Investment Trust — 1Q FY17/18 Earnings Presentation

60 slides from Capitaland Ascendas Reit's earnings presentation, August 2017

  1. Slide 1: Investor Presentation

    Investor Presentation August 2017 52 Fox Drive, Dandenong South, 12, 14 & 16 Science Park Drive, Singapore Melbourne, Australia

  2. Slide 2: Disclaimers

    Disclaimers This material shall be read in conjunction with Ascendas Reit’s financial statements for the financial period ended 30 June 2017. This presentation may contain forward-looking statements that involve assumptions, risks and uncertainties. Actual future performance, outcomes and results ma

  3. Slide 3: Agenda

    Agenda Overview of Ascendas Reit 4 Key Highlights for 1Q FY17/18 12 Financial Performance 15 Investment Management 18 Capital Management 23 Asset Management: Portfolio Update 28 Asset Management: Portfolio Resilience 40 Market Outlook 46 Ascendas Reit’s Strengths 48 3

  4. Slide 4: Overview of Ascendas Reit

    DB ascendas Reit Overview of Ascendas Reit

  5. Slide 5: Overview of Ascendas Real Estate Investment Trust

    Overview of Ascendas Real Estate Investment Trust  First and largest business space and industrial REIT listed on the Singapore Exchange and a constituent of the FTSE Straits Times Index effective 4 June 2014  Total assets of about S$10.2bn (US$7.3bn)  Issuer and senior unsecured rating of A3 by

  6. Slide 6: Singapore: Diversified Portfolio Positioned for Future Growth of the Singapore Economy

    Singapore: Diversified Portfolio Positioned for Future Growth of the Singapore Economy Sub-sector Business Parks Science Parks (as at 1 Aug 2017) Portfolio GFA (sqm) 410,647 411,587 % of Ascendas Reit - by GFA 11% 11% - by asset value 18% 19% Characteristics Zone is defined by Govt Master Plan. Subu

  7. Slide 7: Singapore: Diversified Portfolio Positioned for Future Growth of the Singapore Economy

    Singapore: Diversified Portfolio Positioned for Future Growth of the Singapore Economy Sub-sector Integrated Development, Hi-Specs Industrial Data Centres (as at 1 Aug 2017) Amenities & Retail (IDAR) Portfolio GFA (sqm) 157,299 580,942 109,756 % of Ascendas Reit - by GFA 4% 15% 3% - by asset value 7

  8. Slide 8: Singapore: Diversified Portfolio Positioned for Future Growth of the Singapore Economy

    Singapore: Diversified Portfolio Positioned for Future Growth of the Singapore Economy Sub-sector Light Industrial Flatted Factories Logistics & (as at 1 Aug 2017) Distribution Centres Portfolio GFA (sqm) 323,203* 197,143 783,678# % of Ascendas Reit - by GFA 11% 5% 21% - by asset value 6% 3% 12% Cha

  9. Slide 9: Ascendas Reit's Singapore Property Map

    Ascendas Reit’s Singapore Property Map  Strategically located along major expressways  Several properties e.g. Business Park, Science Park and some High-Specs Industrial properties are in close proximity to MRT stations  Light Industrial and Hi-Specs Industrial properties are primarily centrally

  10. Slide 10: Australia Portfolio – 29 Properties

    Australia Portfolio – 29 Properties (28 Logistics, 1 Business Park) Brisbane 155,966 sm Sub-sector Logistics Business Park Perth 20,895 sm Logistics 7 properties No. of 28 1 Properties Logistics 1 property Portfolio 685,977 22,628 GLA/NLA (sqm) % of Ascendas Reit 18% 1% - by GFA 12% 2% - by asset Qu

  11. Slide 11: Ascendas Reit's Steady Growth since Listing

    Ascendas Reit’s Steady Growth since Listing 11

  12. Slide 12: Key Highlights for 1Q FY17/18

    Key Highlights for 1Q FY17/18 12

  13. Slide 13: Key Highlights for 1Q FY17/18

    Key Highlights for 1Q FY17/18  Total amount available for distribution rose by 10.9% y-o-y to S$118.5m  DPU improved 4.3% y-o-y to 4.049 cents  Key performance contributors were the new acquisitions in Singapore and Australia • Singapore: 12, 14 & 16 Science Park Drive • Australia: 197-201 Coward

  14. Slide 14: Key Highlights for 1Q FY17/18

    Key Highlights for 1Q FY17/18  Investment highlights • Acquisition of 52 Fox Drive, Dandenong South in Melbourne for S$26.5 million(1) • Completed the handover of 50 Kallang Avenue for S$45.2 million  Proactive Capital Management • Ascendas Reit’s A3 credit rating maintained • Aggregate leverage a

  15. Slide 15: Financial Performance

    DB ascendas Reit Financial Performance 15

  16. Slide 16: 1Q FY17/18 vs 1Q FY16/17

    1Q FY17/18 vs 1Q FY16/17 1Q 1Q % (S$’000) FY17/18(1) FY16/17(1) Fav/ (Unfav) Gross revenue(2) 213,259 207,588 2.7 Net property income(2) 153,364 149,480 2.6 Total amount available for distribution(3) 118,498 106,855 10.9 DPU (cents)(4) 4.049 3.882 4.3 (1) The Group had 132 properties and 131 propert

  17. Slide 17: 1Q FY17/18 vs 4Q FY16/17

    1Q FY17/18 vs 4Q FY16/17 1Q 4Q % (S$’000) FY17/18(1) FY16/17(1) Fav/ (Unfav) Gross revenue(2) 213,259 208,937 2.1 Net property income(3) 153,364 154,069 0.5 Total amount available for distribution(4) 118,498 111,862 5.9 DPU (cents)(5) 4.049 3.852 5.1 (1) The Group had 132 properties and 131 properti

  18. Slide 18: Investment Management

    DB ascendas Reit Investment Management 18

  19. Slide 19: Investment Highlights in 1QFY17/18

    Investment Highlights in 1QFY17/18 Purchase Completion/ Country Consideration / Handover Date Value (S$m) Acquisition 26.5 52 Fox Drive, Dandenong South Australia 26.5(1) 3 Apr 2017 (formerly Stage 4 Power Park Estate) (Melbourne) Redevelopment 45.2 50 Kallang Avenue Singapore 45.2 21 Jun 2017 Grand

  20. Slide 20: Expanded Portfolio in Australia: Fox Drive, Dandenong South

    Expanded Portfolio in Australia: 52 Fox Drive, Dandenong South (formerly Stage 4 Power Park Estate) Purchase Consideration (1) A$24.8m (S$26.5m) Acquisition Fee, Stamp Duty A$0.8m (S$0.85m) and Other transaction costs (1) Total Acquisition Cost (1) A$25.6m (S$27.3m) Vendor Goodman Dandenong Trust La

  21. Slide 21: Value-adding Re-developments: Kallang Avenue

    Value-adding Re-developments: 50 Kallang Avenue Description Façade cladding, reconfiguration of spaces, lift modernisation, new air conditioning system and enlarging windows for natural lighting etc. Gross Floor Area 18,970 sqm Occupancy 100% Estimated Cost S$45.2m 50 Kallang Avenue Handover Date 21

  22. Slide 22: Capital Recycling Initiative: Woodlands Link

    Capital Recycling Initiative: 10 Woodlands Link Description Light industrial building comprising a three-storey warehouse Remaining Land Tenure ~38.8 years (as at 31 March 2017) Net Lettable Area 11,537 sqm Acquisition Year/ Price 2005/ S$12.0m Book Value S$16.5m (as at 31 March 2017) 10 Woodlands L

  23. Slide 23: Capital Management

    DB ascendas Reit Capital Management 23

  24. Slide 24: Healthy Balance Sheet

    Healthy Balance Sheet  Aggregate leverage remains stable at 33.9%  Available debt headroom of S$2.1b to reach 45.0% aggregate leverage As at As at 30 Jun 17 31 Mar 17 Total debt (S$m) (1) 3,453 3,442 Total assets (S$m) 10,183 10,171 Aggregate leverage 33.9% 33.8% Unitholders' funds (S$m) 6,080 6,0

  25. Slide 25: Well-spread Debt Maturity Profile

    Well-spread Debt Maturity Profile  Well-spread debt maturity with the longest debt maturing in 2029  Average debt maturity: 3.1 years 18% 43% Diversified 800 Financial 12% Resources 700 600 248 27% 500 100 S$ (million) 95 400 296 300 615 200 446 200 350 357 100 200 200 192 154 0 - - - - - - - - -

  26. Slide 26: Key Funding Indicators

    Key Funding Indicators  Robust indicators enable Ascendas Reit to borrow at competitive costs As at As at 30 Jun 17 31 Mar 17 Aggregate Leverage 33.9%(1) 33.8% Unencumbered properties as % of total investment 89.5% 89.3% properties(2) Interest cover ratio 5.8 x 5.7 x Debt / EBITDA 6.2 x 6.3 x Weigh

  27. Slide 27: Prudent Interest Rate Risk Management

    Prudent Interest Rate Risk Management  72.2% of borrowings are on fixed rates with an average term of 3.2 years  50 bps increase in interest rate is expected to have a pro forma impact of S$4.8m decline in distribution or 0.16 cent in DPU Increase in Decrease in Change as Pro forma DPU interest ra

  28. Slide 28: Asset Management: Portfolio Update

    Asset Management: Portfolio Update 28

  29. Slide 29: Overview of Portfolio Occupancy

    Overview of Portfolio Occupancy 99.8% 100.0% 96.3% 89.2% 88.6% 88.3% 90.9% 91.6% 90.2% 88.2% 90.0% 80.0% 70.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% N.A.(1) N.A.(1) 0.0% Singapore Australia China Total Jun-17 Mar-17 Jun-16 Gross Floor 3,044,793 (3) 708,605 (4) N.A. 3,753,398 Area (sqm)(2) Note:

  30. Slide 30: Singapore: Occupancy

    Singapore: Occupancy  Occupancy rose by 60 bps to 89.2% mainly due to new take ups at 50 Kallang Avenue, 40 Penjuru Lane and Pioneer Hub As at 30 Jun 2017 31 Mar 2017 30 Jun 2016 Total Singapore Portfolio GFA (sqm) 3,044,793(1) 3,025,823(1)(2) 2,965,535(1) Singapore Portfolio occupancy (same store)

  31. Slide 31: Australia: Occupancy

    Australia: Occupancy  Occupancy rose by 350 bps to 99.8% as both 62 Stradbroke Street and 494 Great East Highway achieved full occupancies during the quarter As at 30 Jun 2017 31 Mar 2017 30 Jun 2016 Total Australian Portfolio GFA (sqm) 708,605 692,153 669,525 Australian Portfolio occupancy (same s

  32. Slide 32: Singapore: Sources of New Demand

    Singapore: Sources of New Demand  Continues to attract demand from a wide spectrum of industries Transport and Storage Precision Engineering Others IT Biomedical Structural Engineering Electronics General Manufacturing Food Products & Beverages 9.1% 11.3% 3.7% 2.8% 1.7% 1.3% 0.6% 15.7% 53.8% 32

  33. Slide 33: Achieved Positive Portfolio Rental Reversions

    Achieved Positive Portfolio Rental Reversions  Singapore and Australian portfolios achieved 1.1% and 3.5% positive rental reversion respectively in 1Q FY17/18  Rental reversion is expected to be subdued or flat in view of current global uncertainty, lower anticipated demand and excessive supply of

  34. Slide 34: Weighted Average Lease Expiry

    Weighted Average Lease Expiry (By gross revenue)  Portfolio Weighted Average Lease Expiry (WALE) at 4.3 years WALE (as at 30 Jun 2017) Years Singapore 4.2 Australia 5.5 Portfolio 4.3 34

  35. Slide 35: Portfolio Lease Expiry Profile

    Portfolio Lease expiry profile (as at 30 Jun 2017) Breakdown of expiring leases  Portfolio weighted average lease to expiry (WALE) of 4.3 years for FY17/18 and FY18/19  Lease expiry is well-spread, extending beyond 2032  About 11.8% of gross revenue is due for renewal in FY17/18 17% 25%  Weighte

  36. Slide 36: Singapore: Lease Expiry Profile

    Singapore: Lease expiry profile (as at 30 Jun 2017) Breakdown of expiring leases for FY17/18 and FY18/19  Singapore portfolio weighted average lease to expiry (WALE) of 4.2 years 17%  Lease expiry is well-spread, extending beyond 2032 25%  13.3% of Singapore’s gross revenue is due for renewal for

  37. Slide 37: Australia: Lease Expiry Profile

    Australia: Lease expiry profile (as at 30 Jun 2017) Breakdown of expiring leases for FY18/19  Australia portfolio weighted average lease to expiry (WALE) of 5.5 years  Lease expiry is well-spread, extending beyond 2031 27% 38%  There are no more leases due for renewal in FY17/18 FY18/19 25% 35% 2

  38. Slide 38: Ongoing Projects: Improve portfolio quality

    Ongoing Projects: Improve portfolio quality Purchase Consideration / Estimated Value (S$m) Completion Date Redevelopment 61.4 20 Tuas Avenue 1 61.4 1Q 2018 Asset Enhancement Initiatives (AEI) 12.1 The Gemini 7.6 3Q 2017 21 Changi South Avenue 2 (NEW) 4.5 2Q 2018 (formerly Sim Siang Choon Building) G

  39. Slide 39: Enhancing Converted Building: Changi South Avenue

    Enhancing Converted Building: 21 Changi South Avenue 2 (NEW) Estimated Completion 2Q 2018 Description Addition of new cargo lifts, enhancement of the interior of existing cargo lift, layout regularization of 3rd and 4th storey warehouse, upgrading of existing toilets and installation of fire protect

  40. Slide 40: Asset Management: Portfolio Resilience

    Asset Management: Portfolio Resilience 40

  41. Slide 41: Well Diversified Portfolio

    Well Diversified Portfolio By value of Investment Properties 6.9% Logistics & 31.2% Distribution Business & Hi-Specs & Integrated Centres Singapore Logistics and Science Park Development, Data Centres 12% Distribution Singapore Amenities & Retail Centres Australia Business Park Australia 68.8% 7% 12

  42. Slide 42: Tenants' Industry Diversification

    Tenants’ Industry Diversification By Monthly Gross Revenue 3rd Party Logistics, Freight Forwarding 10.9% Distributors, trading company 9.9% Financial 9.6% M&E and Machinery & Equipment 9.0% Life Science & Other Scientific Activities 7.8% Information Technology 7.3% Telecommunication & Datacentre 6.9

  43. Slide 43: Quality and Diversified Customer Base

    Quality and Diversified Customer Base  Total customer base of around 1,380 tenants  Top 10 customers (as at 30 Jun 2017) account for about 20.4% of portfolio gross rental income  On a portfolio basis, weighted average security deposit is about 4 months of rental income 4.8% 3.1% 2.1% 2.1% 1.8% 1.

  44. Slide 44: Diversified Portfolio

    Diversified Portfolio Aperia, 5.4% ONE @ Changi City, 4.1% 12, 14 & 16 Science Park Drive, 3.5% 1, 3 & 5 Changi Business Park Crescent, 3.3% Kim Chuan Telecommunication Complex , 2.7% Neuros & Immunos, 2.5% TelePark, 2.4% 40 Penjuru Lane, 2.4% 31 International Business Park, 2.3% Pioneer Hub , 2.1%

  45. Slide 45: MTB Occupancy: NPI & DPU Sensitivity

    MTB Occupancy: NPI & DPU Sensitivity  100 bps increase in MTB occupancy is expected to result in a 0.9% increase in portfolio net property income or about 0.18 cents increase in DPU Change in MTB Expected change in Change in portfolio Impact on full FY occupancy annualised MTB NPI NPI (%) DPU (cent

  46. Slide 46: Market Outlook

    DB ascendas Reit Market Outlook 46

  47. Slide 47: Market Outlook

    Market Outlook Singapore  GDP growth is expected to maintain at 1.0% to 3.0% in 2017 (source: MTI).  Potential incoming supply of about 1.4 m sqm of industrial space in the second half of 2017 (source: JTC) will continue to put pressure on rental rates and occupancy.  There is growing optimism ov

  48. Slide 48: Ascendas Reit's Strengths

    Ascendas Reit’s Strengths 48

  49. Slide 49: Ascendas Reit's Strengths

    Ascendas Reit's Strengths Diversity and Depth  Solid and well diversified portfolio  Five main property segments  Well-located and high quality properties  Balance of long term vs. short term leases provides stability with potential for positive rental reversions  No single property accounts fo

  50. Slide 50: Ascendas Reit's Strengths

    Ascendas Reit's Strengths  Downside protection in earnings • Stable portfolio with 88.2% of portfolio revenue committed for FY17/18 and a portfolio average lease to expiry of about 4.3 years • Mix of long term and short term leases provide earnings stability  Long term leases have a weighted avera

  51. Slide 51: Ascendas Reit's Strengths

    Ascendas Reit's Strengths  Development capability • Has capability and capacity to create own assets which could be more yield accretive than acquisitions of income producing properties  Operational platform (Property Manager, Ascendas Services Pte Ltd) • Dedicated asset management, sales/marketin

  52. Slide 52: Ascendas Reit's Strategies

    Ascendas Reit's Strategies FUND MANAGER: Ascendas OUTCOME: Funds Stability Management (S) Our Mission + Limited To deliver predictable Returns distributions and achieve long-term PROPERTY capital stability for TOTAL RETURNS MANAGER: unitholders Predictable Ascendas Income Services + Pte Ltd Capital

  53. Slide 53: Additional Information

    Additional Information (1) Quarterly Results (2) Ascendas Reit Singapore Occupancy vs Industrial Average (3) Singapore Industrial Property Market 53

  54. Slide 54: Quarterly Results

    Quarterly Results FY16/17 FY17/18 Summary (S$ m) 1Q 2Q 3Q 4Q Total 1Q Gross Revenue 208 205 209 209 831 213 Net Property Income 149 152 155 155 611 153 Total amount available for 107 113 115 111 446 118 distribution No. of Units in issue (m) 2,674 2,816 2,851 2,925 2,925 2,927 Distribution Per Unit

  55. Slide 55: Ascendas Reit Singapore Occupancy vs Industrial Average

    Ascendas Reit Singapore Occupancy vs Industrial Average 100% 95% 93.0% 89.0% 87.9% 89.0% 88.1% 90% 87.2% 85.7% 86.3% 85% 80% Occupancy Rate 75% 70% 65% 60% 55% 50% Business and Science Hi-Specs Industrial Light Industrial Logistics Park Ascendas Reit JTC Source : Ascendas Reit’s Singapore portfolio

  56. Slide 56: Average Market Rents by Segment (Singapore)

    Average Market Rents by Segment (Singapore) 120.00 2Q2017: Industrial Rental Index 100.00 92.3 80.00 4Q2016: 1Q2017: 93.8 93.0 60.00 40.00 20.00 Source : JTC 0.00 2002 2011 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016 2017 5.5 $5.50 Rental ($/psfpm) 4.5 $4.00 3.5 $3.70

  57. Slide 57: Singapore: In-place rent for MTB space due for renewal

    Singapore: In-place rent for MTB space due for renewal in FY17/18 and FY18/19  Actual rent reversion achieved depends on various factors such as location of property/ unit, lease terms etc. * * * Left Axis: Right Axis: * Rates for ground floor space 57

  58. Slide 58: Singapore Industrial Market: New Supply

    Singapore Industrial Market: New Supply  Total stock (net) : 46.7m sqm, of which • Business & Science Parks account for 2.1m sqm (4.6%) • Logistics & Distribution Centres account for 9.6m sqm (20.6%) • Remaining stock are factory space  Potential new supply (net) of about 2.7 m sqm (~5.8% of exist

  59. Slide 59: Singapore Business & Science Parks: New Supply

    Singapore Business & Science Parks: New Supply  Limited speculative business & science park supply going forward % Pre- Expected Location Developer NLA (sqm)* committed Completion (estimated) Under Construction 2018 Pasir Panjang Road Singapore Science Park Ltd 9,288 100% Changi Business Park 2018

  60. Slide 60: The End

    The End Important Notice This presentation has been prepared by Ascendas Funds Management (S) Limited as Manager for Ascendas Real Estate Investment Trust. The details in this presentation provide general information only. It is not intended as investment or financial advice and must not be relied u

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