Kore Us Reit · SGX:CMOU
Kore Us Reit — Keppel Pacific Oak US REIT — 3Q 2023 Earnings Presentation
32 slides from Kore Us Reit's earnings presentation, Oct 18, 2023
Slide 1: 3Q 2023 Key Business and Operational Updates
3Q 2023 Key Business and Operational Updates 18 October 2023
Slide 2: Financial Performance
Financial Performance Financial Highlights 3Q 2023 3Q 2022 % 9M 2023 9M 2022 % Distributable Income for 3Q 2023 was (US$ ’m) (US$ ’m) Change (US$ ’m) (US$ ’m) Change down 10.7% year-on-year to US$13.1m due to: Gross Revenue 38.4 37.2 3.3 114.3 111.3 2.7 • Higher financing cost as a result of rising
Slide 3: Stable Financial Position
Stable Financial Position Prudent capital management with 100% unsecured loans provide greater financial flexibility. No long-term refinancing obligation till Q4 2024. As at 30 September 2023 Interest Rate Exposure Total Debt • US$594.9 million of external loans Sensitivity to SOFR(3) • No direct ex
Slide 4: Quality Portfolio Driven By Tech and Innovation
SEATTLE – BELLEVUE/REDMOND, Washington NASHVILLE, Tennessee Quality Portfolio The Plaza Buildings Bellevue Technology Center Occupancy: 91.2% The Westpark Portfolio Bridge Crossing Occupancy: 100% Driven By Occupancy: 89.0% Occupancy: 96.1% ORLANDO, Florida Tech and DENVER, Colorado Innovation Westm
Slide 5: Steady Income with Visible Organic Growth
Steady Income with Visible Organic Growth ~539,179sf New Renewal Expansion Leased spaces for 9M 2023, equivalent to 11.3% of portfolio NLA. Portfolio WALE of New leasing demand and expansions from: 3.6 years(1) by CRI. TAMI(2) 39.6% 49.7% 17.1% ~0.4% Leases signed Professional Services(3) 35.4% In-p
Slide 6: Resilient Portfolio with Diversified Tenant Composition
Resilient Portfolio with Diversified Tenant Composition KORE’s buildings and business campuses in ~50% of KORE’s portfolio NLA comprises the tech hubs of Seattle – Bellevue/Redmond, high-quality tenants from the growing and Austin and Denver contribute ~67% of NPI(1) defensive sectors of TAMI, medic
Slide 7: Low Tenant Concentration Risk
Low Tenant Concentration Risk Top 10 Tenants Sector Asset Location % of CRI Comdata Inc TAMI Bridge Crossing Nashville 3.5 Ball Aerospace TAMI Westmoor Center Denver 3.3 Seattle – Lear Cooperation TAMI The Plaza Buildings 2.8 Bellevue/Redmond Gogo Business Aviation TAMI 105 Edgeview Denver 2.8 KORE
Slide 8: Last 12 Months Rent Growth
Last 12 Months Rent Growth 0.6% Key Growth Markets Average 0.8% United States Average 0.6% Gateway Cities Average -0.4% US Average Seattle, Bellevue CBD 0.2% Seattle, Eastside Bellevue 0.3% Seattle, Redmond 0.1% Austin, Northwest -0.8% Denver, Northwest Denver, Broomfield 0.7% 2.0% 0.8% Nashville, B
Slide 9: Projected 12-Month Rent Outlook
Projected 12-Month Rent Outlook Key Growth Markets Average United States Average -1.0% -1.0% -1.0% Gateway Cities Average -2.2% US Average Seattle, Bellevue CBD -2.4% Seattle, Eastside Bellevue -2.5% Seattle, Redmond -2.6% Austin, Northwest -3.2% Denver, Northwest Denver, Broomfield -0.5% 0.1% -1.0%
Slide 10: Actual Against Forecasted 12-Month Market Rent Growth
Actual Against Forecasted 12-Month Market Rent Growth 5.0% 4.0% 3.0% 2.0% Forecasted 12-month Market Rent 1.0% Growth for KORE's Key Growth Markets 0.0% -1.0% Actual Average of KORE's Key -2.0% Growth Markets preceding 12-month Market Rent Growth -3.0% -4.0% Sep-21 Mar-22 Sep-22 Mar-23 Sep-23 Mar-24
Slide 11: First Choice Submarkets Outlook
First Choice Submarkets Outlook Property Submarket Last 12M Last 12M Under Last 12M Projected Submarket Vacancy Rate Vacancy Rate Deliveries Absorption Construction Rental Growth Rental Growth Property (%) (%) (sf’000) (sf’000) (sf’000) (%) (%) Seattle, Bellevue CBD 11.0 9.5 2100 1400 2,625(1)* 0.2
Slide 12: U.S. Economic Updates
U.S. Economic Updates (2) % Unemployment Rate (2) % Labour Force Participation Rate 20 65 64 • US real GDP increased by 2.1% 15 63 62.8% quarter-on-quarter in 2Q 2023(1), with low 62 10 unemployment rate of 3.8%(2). 61 5 3.8% 60 • Annual inflation rate accelerated to 3.7% in 59 August 2023(3), from
Slide 13: Continued Exodus From America's Gateway Cities
Continued Exodus From America’s Gateway Cities 2021-2022 POPULATION CHANGE AMONG THE TOP 10 • Most of the gateway cities continue to face a tough future. LARGEST METRO AREAS AND WASHINGTON, DC(1) New York continues to lead the country in population Phoenix loss and outmigration(1) with more than 4
Slide 14: Low State Personal Income Taxes
Low State Personal Income Taxes Individuals are moving to states with zero or low personal income taxes, accelerating population growth State Individual Tax Rates (as at January 1, 2023)(1) 5.33% Key Growth Markets Average 2.95% United States Average 5.33% Gateway Cities Average 9.52% US Average Col
Slide 15: Low State Corporate Income Taxes
Low State Corporate Income Taxes Companies are moving to states with zero or low corporate taxes, accelerating population growth State Corporate Income Tax Rates (as at January 1, 2023)(1) 5.99% Key Growth Markets Average 4.21% United States Average 5.99% Gateway Cities Average 8.69% US Average Colo
Slide 16: Continuation of a wave of return-to-office mandates
Continuation of a wave of return-to-office mandates U.S. employees subject to newly effective return- to-office mandates (2) • Most firms adopting hybrid work with minimum of three days in office per week emerging as common standard(1). 1,000,000 • In an analysis of 50 U.S. metros, Oxford Economics
Slide 17: Remote positions decline to lowest share of new job postings in three years
Remote positions decline to lowest share of new job postings in three years • Office leasing volume saw an uptick nationally, Remote share of LinkedIn job postings(2) growing 11.6% to 41.9 million sq ft of 25% transactions signed in Q2 2023(1). 20.7% • Companies are pivoting away from hiring 20% rem
Slide 18: First choice US office S-REIT focused on the fast-growing TAMI, medical and healthcare sectors
Strategic presence in some of the fastest growing states in the U.S. First choice US office S-REIT Exposure to the fast-growing TAMI, medical and healthcare sectors provides income resilience. focused on the fast-growing TAMI, medical and Highly diversified portfolio with low tenant concentration ri
Slide 19: Thank You / Important Notice
Important Notice Thank You The past performance of Keppel Pacific Oak US REIT is not necessarily indicative of its future performance. Certain statements made in this release may not be based on historical information or facts and may be “forward-looking” statements due to a number of risks, uncerta
Slide 20: Additional Information
Additional Information The Plaza Buildings Seattle, Washington
Slide 21: KORE's Presence in Key Growth Markets
KORE’s Presence in • Low or no taxes • Better cost of living Key Growth Markets • • Employment opportunities Attractive lifestyle and culture SEATTLE Seattle Seattle, Washington The Plaza Buildings Bellevue Technology Center #17 The Westpark Portfolio Austin, Texas Westech 360 #4
Slide 22: Business Migrations To The South
Business Migrations To The South Net migration of businesses across the United States, 2021(1) • Suburban properties continue * Florida +399 to attract the most capital. North Carolina +148 In 1Q 2023, US$8.1 billion * Texas +103 was placed in suburban * Tennessee +92 assets, compared to New Jerse
Slide 23: Blue States Losing Taxpayers and Income
Blue States Losing Taxpayers and Income Net Gain in State Adjusted Gross Income Net Loss in State Adjusted Gross Income Due to Domestic Migration(1) Due to Domestic Migration(1) $ billion $ billion 50 0 40 -10 30 -20 20 10 -30 0 -40 2018-19 2019-20 2020-21 2018-19 2019-20 2020-21 North Carolina Ariz
Slide 24: New York City Record High Levels of Felony Crimes in 2022
New York City Record High Levels of Felony Crimes in 2022 • More than 170,000 felony crimes were reported in 2022 – Rise in felony crimes in New York City the most since 2006, when such statistics became publicly (2021 to 2022)(1) available(1) . +32% 172,852 felonies reported in 2022. +27% +25% +2
Slide 25: Spike In Firms Leaving Chicago Traced Back To 2020
Spike In Firms Leaving Chicago Traced Back To 2020 • Number of people leaving Chicago continues to grow(1). List of companies that moved out of Chicago(2) Over the last five years, more people left than moved in (net loss of at least 249,000 people). Only New York and San Francisco saw bigger po
Slide 26: Deteriorating Situation in Downtown San Francisco
Deteriorating Situation in Downtown San Francisco Union Square Area Store Closures • San Francisco shaken by organised crime. Since 2020(3) • Residents are calling on authorities to address the increasingly Date announced Store dangerous situation. May 2023 Nordstrom • The city has become associated
Slide 27: California's Business Exits
California’s Business Exits California lost a total of 352 headquarters in the period January 1, 2018 through December 31, 2021 • Los Angeles and San Francisco counties have experienced the highest number of relocations, several to growth markets where KORE is present. California Headquarters Losses
Slide 28: Relocations Out of California
Relocations Out of California Top 10 states for California relocations (1) Overbearing Rank State Known Relocations regulations 1 Texas 132 Exorbitant 2 Tennessee 31 taxes 3 Nevada 25 4 Florida 24 High costs 5 Arizona 21 6 Colorado 20 7 North Carolina 13 • High cost of buildings are driving large co
Slide 29: 2023 Rankings for Overall State Taxes
2023 Rankings for Overall State Taxes Lower overall tax rates in KORE’s key growth markets vs gateway cities Overall State Rankings(1) Best Key Growth 22 46 Markets *Florida 4 where KORE is present *Texas 13 Gateway *Tennessee 14 Markets Colorado 21 Washington 28 Average of Key Growth Massachusetts
Slide 30: 2022 Sustainability Achievements
2022 Sustainability Achievements Execute sound fiscal and asset management strategy to drive growth and long-term value for Unitholders ENVIRONMENTAL STEWARDSHIP RESPONSIBLE BUSINESS Established a dedicated Board ESG Maintain high standards of ethical Committee business conduct and compliance
Slide 31: Trust Structure
Sponsors(2) Trust Structure Keppel Capital KPA Unitholders Keppel Capital International Keppel No withholding (1)tax in relation to Trustee Management Management Agreement Section 1446(f) Services Fees Keppel Pacific Oak US REIT Trustee Management Trustee Management (Manager) Tax-efficient struc
Slide 32: Strong Sponsors: Keppel and KORE Pacific Advisors
Strong Sponsors: Keppel and KORE Pacific Advisors (2) • A global asset manager and operator with strong • Established commercial real estate investment expertise in sustainability-related solutions spanning manager in the US the areas of infrastructure, real estate and connectivity • Operates in mor
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