Keppel REIT · SGX:K71U
Keppel REIT — FY2015 Earnings Presentation
41 slides from Keppel REIT's earnings presentation, Jan 18, 2016
Slide 1: Full Year 2015 Financial Results
Full Year 2015 Financial Results 18 January 2016 1
Slide 2: Outline
Outline 1. Key Highlights ……………………………………………… 5 2. Financial Highlights ……………………………………… 9 3. Capital Management …………………………………… 15 4. Portfolio Analysis ………………………………………… 19 5. Market Review & Outlook ……….………………….. 32 Important Notice The value of Units and the income from them may fall as well as rise
Slide 3: Keppel REIT: Overview
Keppel REIT: Overview Largest Portfolio of Best-in-Class Assets Assets Under Well-Diversified Youngest Premium in Strategic Locations Management Tenant Base Portfolio Office Assets 12 office towers in 9 quality 311 tenants Premium Grade and Grade A assets in the 3.5 million sf S$8.4 billion diversif
Slide 4: Well-located Premium Grade A Office Portfolio
Well-located Premium Grade A Office Portfolio » 89% of portfolio in Singapore and 11% in Australia » Youngest and largest portfolio of premium Grade A office assets in Singapore’s central business district Average portfolio age of approximately 5 years » 93% of Singapore properties in the prime Ra
Slide 5: 1. Key Highlights
1. Key Highlights UNLEASHING POTENTIAL Building on firm foundations, we push boundaries and unlock greater potential to drive continual growth. Ocean Financial Centre, Singapore 5
Slide 6: Key Financial Highlights
Key Financial Highlights » Higher distributable income y-o-y of $54.0m for 4Q 2015 Ocean Financial Centre and $217.3m for FY 2015 17.8% over 4Q 2014 and 5.4% over FY 2014 respectively, and sustained on a q-o-q basis Higher property income from all assets in Singapore and Australia Full-yea
Slide 7: Key Capital Management Highlights
Key Capital Management Highlights » Gearing level reduced significantly by approximately 8% to 39.3% » Maintained fixed-rate loans of 70%, which safeguards against interest rate volatility and provides certainty of interest expenses » Average cost of debt remained stable at 2.5% and interest coverag
Slide 8: Key Portfolio Highlights
Key Portfolio Highlights » Concluded a total of 114 leases or approximately 1.6 mil sf (attributable space of 800,000 sf) of prime office spaces in 2015 Healthy demand from firms in the TMT sector in 2015 » High overall portfolio occupancy of 99.3% as at end-2015 » Continued to intensify efforts t
Slide 9: 2. Financial Highlights
2. Financial Highlights STRATEGIC INTENT Our focus on the triple bottom line spurs us to make strategic decisions to ensure sustainable growth for our business. One Raffles Quay, Singapore 9
Slide 10: Delivering Sustained Returns
Delivering Sustained Returns » Distributable income 17.8% y-o-y for 4Q 2015 and 5.4% y-o-y for FY 2015, despite: Lack of income from the divested Prudential Tower Absence of rental support from the 87.5% interest in Ocean Financial Centre and MBFC Phase One » Higher distributable income due
Slide 11: Distribution Yield of 7.3%
Distribution Yield of 7.3% » DPU for FY 2015 was 6.80 cents, translating to a distribution yield of 7.3% (1) FY 2015 FY 2014 Remarks Property Income $170.3m $184.1m Absence of income from Prudential Tower, and higher property income Net Property Income $137.5m $151.4m from all assets in Singapore an
Slide 12: Attractive Yield
Attractive Yield » Keppel REIT continues to offer an attractive yield compared to other investments (1) Keppel REIT DPU Yield 7.3% (2) FTSE ST REIT Index Dividend 6.4% Yield FTSE ST RE Index Dividend Yield(2) 5.60% STI Dividend Yield(2) 4.2% 10-year SG Govt Bond Yield 2.6% CPF Ordinary Account 2.5%
Slide 13: Robust Balance Sheet
Robust Balance Sheet As at 31 December 2015 As at 30 September 2015 Non-current Assets $7,261 mil $7,041 mil Total Assets $7,425 mil $7,273 mil 1 Borrowings $3,341 mil $3,554 mil Total Liabilities $2,648 mil $2,828 mil Unitholders’ Funds $4,626 mil $4,444 mil 2 Adjusted NAV Per Unit $1.42 $1.37 (1)
Slide 14: 4Q 2015 Distribution Per Unit
4Q 2015 Distribution Per Unit Distribution Per Unit (DPU) Distribution Period 1.68 cents 1 October 2015 – 31 December 2015 Distribution Timetable Trading on “Ex” Basis Friday, 22 January 2016 Books Closure Date Tuesday, 26 January 2016 Distribution Payment Date Friday, 26 February 2016 Singapore Aus
Slide 15: 3. Capital Management
3. Capital Management UNRELENTING TENACITY Our steadfast discipline and prudent capital management approach propel us towards operational efficiency in all that we do. Marina Bay Financial Centre, Singapore 15
Slide 16: Disciplined Capital Structure
Disciplined Capital Structure » Gearing level reduced significantly by approximately 8% to 39.3% » Maintained fixed-rate loans of 70% Safeguards against interest rate volatility and provides certainty of interest expenses » Average cost of debt remained stable at 2.5% and interest coverage ratio a
Slide 17: Hedged almost 100% of Income from Australia
Hedged almost 100% of Income from Australia » Almost 100% of income from Australia hedged up till 3Q 2016 » Impact of AUD movement on Keppel REIT’s DPU, NAV and gearing: Assuming AUD 1:SGD 0.95 DPU Minimal NAV by 2 cents Gearing by 0.3% Office tower on the Old Treasury 8 Chifley Square, Sydney 8 Exh
Slide 18: Well-staggered Debt Maturity Profile
Well-staggered Debt Maturity Profile » Completed almost 100% of refinancing requirements in 2016 » Continued to maintain well-staggered debt maturity profile with weighted average term to expiry at a healthy 3.7 years Millions ~100% of loans not due till 2017 and beyond 1,200 31% 1,000 800 22% 600 1
Slide 19: 4. Portfolio Analysis
4. Portfolio Analysis ENGAGING TENANTS Tenants are the heart of our buildings. Keen understanding of their business and regular interactions help us create enduring partnerships. 275 George Street, Brisbane 19
Slide 20: Sustaining High Occupancy
Sustaining High Occupancy » Achieved high overall portfolio occupancy of 99.3% as at end-2015 Ongoing proactive marketing and rigorous leasing efforts to manage the challenging operating environment due to impending supply » Concluded total of 114 leases or approximately 1.6 mil sf (att. space of
Slide 21: Long Weighted Average Lease Expiry
Long Weighted Average Lease Expiry » Top 10 tenants accounted for approximately 43% of portfolio NLA » Long WALE of approximately 8 years and 6 years for top 10 tenants and portfolio respectively Enhance income sustainability and resilience over a long period Weighted Average Lease Expiry (WALE) T
Slide 22: Singapore Average Net Office Demand and Supply
Singapore Average Net Office Demand and Supply » Healthy demand for office space of approximately 1.2 mil sf p.a. in the last 5 years » Average supply of approximately 0.9mil sf p.a. over the next 5 years till end-2020 » Limited new office supply after 2018 5 years (2010 – 2014) Ave annual net deman
Slide 23: Healthy Lease Expiry Profile
Healthy Lease Expiry Profile » The Manager is in advanced negotiations with tenants whose leases are expiring in 2016 and is likely to achieve high retention » Similarly, for leases expiring in 2017, the Manager is also proactively engaging tenants and is likely to renew most of the leases as the ma
Slide 24: Leasing Demand in 2015
Leasing Demand in 2015 » Concluded total of 114 leases or approximately 1.6 mil sf (att. space of 800,000 sf) for the whole of 2015 » Healthy demand from tenants for Keppel REIT's prime office spaces in Singapore in 2015 Half were new to Keppel REIT's portfolio One quarter were tenants new to Si
Slide 25: Leasing Activities in 4Q 2015
Leasing Activities in 4Q 2015 » Concluded a total of 32 leases or approximately 480,000 sf of space in 4Q 2015 » Of the new leases secured in 4Q 2015 60% were tenants new to Keppel REIT's portfolio 20% were tenants new to Singapore 20% were expansion by existing tenants » Healthy demand from f
Slide 26: Well-Diversified Tenant Base
Well-Diversified Tenant Base » Continued to maintain well-diversified tenant base from various business sectors TMT, 11% Legal, 9% Energy, Natural resources, Number of tenants Shipping and Marine, 9% (1) 311 Real estate & property services, 7% Accounting & consultancy Banking, insurance & services,
Slide 27: Stable Committed Occupancy Levels
Stable Committed Occupancy Levels » Maintained high portfolio committed occupancy of 99.3% Singapore Australia Overall 99.3% 99.2% 99.3% 100.0% 99.7% 99.8% 100.0% 100.0% 100.0% 99.3% 100.0% 98.5% 97.9% 98.4% 95.0% Singapore core CBD occupancy at 94.8%(1) 90.0% (2) Australia total CBD occupancy at 88
Slide 28: Strong Singapore Portfolio Occupancy
Strong Singapore Portfolio Occupancy » Keppel REIT’s Singapore portfolio occupancy consistently above Core CBD occupancy levels Keppel REIT Historical Occupancy Keppel REIT 100.0% 100% 99.5% 99.3% 98.5% 95% 95.7% 95.2% 94.8% Singapore Core CBD(1) 92.2% 90% 85% 80% 1Q 12 2Q 3Q 4Q 1Q 13 2Q 3Q 4Q 1Q 14
Slide 29: Office Tower in Perth, Western Australia
Office Tower in Perth, Western Australia » Government of Western Australia commenced its 25-year lease in November 2015 » Effective return of 7.15% » Fixed annual rental escalation throughout lease term, with options for another 25 years Key Highlights / Financial Highlights / Capital Management / P
Slide 30: 4Q 2015 - Community Engagement Efforts
4Q 2015 - Community Engagement Efforts SGX Bull Charge Charity Run » Keppel Group contributed a total of $30,000 to support the annual SGX Bull Charge » Keppel REIT staff joined participants from the finance industry and SGX-listed companies in raising funds for the underprivileged Christmas Cheer »
Slide 31: FY 2015 - Awards and Accolades
FY 2015 - Awards and Accolades Singapore Corporate Awards Global Real Estate 16th SIAS Investors’ Choice PUB Water Efficient Building 2015 Sustainability Benchmark Awards 2015 (WEB) Certification 2015 Conferred (GRESB) Awarded runner-up for Most Ocean Financial Centre, MBFC Best Investor Relations (
Slide 32: 5. Market Review & Outlook
5. Market Review & Outlook HARNESSING COMPETENCIES We leverage our strengths to invest in growth and capture opportunities with agility 8 Exhibition Street, Melbourne 32
Slide 33: Market Outlook – Singapore
Market Outlook – Singapore Singapore » Advance estimates indicate that the Singapore economy is expected to record 2.0% y-o-y growth in 4Q 2015, supported by expansion in the construction and services sectors » Modest growth of close to 2.1% for the whole of 2015, and between 1-3% for 2016 on the ba
Slide 34: Core CBD Occupancy
Singapore Office Market Review » Occupancy in Singapore’s core CBD remained stable at 94.8% » Average Grade A rents at approximately $10.40 psf in 4Q 2015 $15 100% 95.8% 96.6% 96.1% 96.2% 95.8% 95.0% 95.2% 95.7% 95.7% 94.8% 93.2% 93.5% 92.2% $12 $11.40 $11.30 90% $10.95 $11.20 $10.90 Average Grade A
Slide 35: Market Outlook – Australia
Market Outlook – Australia Australia » The Australia economy grew 2.5% y-o-y in 3Q 2015, exceeding economists’ median forecast of 2.4% » 4Q 2015 growth expected to remain steady at 2.5%, while growth in 2016 is forecast to be between 2-3% » Improving economic conditions prompted the Reserve Bank of
Slide 36: Thank You
ACTIVE LISTENING People are the cornerstone of our business. We believe in creating a cohesive workplace that nurtures and brings out the best in our talent. Thank You Ocean Financial Centre, Singapore 36
Slide 37: Additional Information
Additional Information ENLIGHTENING COMMUNITIES We believe in doing well and doing good. We seek to enrich the lives of the people in the communities where we operate. Ocean Financial Centre, Singapore 37
Slide 38: Singapore’s Leading Office REIT
Singapore’s Leading Office REIT Vision To be a successful commercial real estate investment trust with a sterling portfolio of assets pan-Asia. Mission Guided by our operating principles and core values, we will deliver stable and sustainable returns to Unitholders by continually enhancing our asset
Slide 39: Growth Record
Growth Record 8 Exhibition Street Bugis Junction Towers MBFC Phase One Office Tower on the MBFC Tower 3 Prudential Tower 275 George Street 8 Chifley Square Old Treasury Building site Acquired the three One Raffles Quay Increased Divested stake in remaining prime interest in Prudential Tower street-f
Slide 40: Portfolio Information
Portfolio Information » Keppel REIT’s AUM is approximately $8.4 billion as at 31 December 2015 » 89% of portfolio in Singapore and 11% in Australia Marina Bay Financial Bugis Junction Towers One Raffles Quay(1) Ocean Financial Centre(2) Centre (1) Comprises of three premium A pair of 50 and 29 store
Slide 41: Portfolio Information
Portfolio Information Office Tower on the 8 Chifley 8 Exhibition Street, 275 George Street, 77 King Street Office Old Treasury Building Square, Sydney(1) Melbourne(2) Brisbane(1) Tower, Sydney(3) site, Perth(1) 35-storey Grade A 34-storey Grade A 30-storey Grade A 33-storey Grade A office 18-storey