Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — Suntec REIT — H1 2023 Earnings Presentation
64 slides from Singapore Exchange's earnings presentation, Jul 26, 2023
Slide 1: Suntec REIT Financial Results Half Year ended 30 June 2023
SUNTEC REIT FINANCIAL RESULTS For the Half Year ended 30 June 2023 26 July 2023
Slide 2: Agenda
03 18 1H 23 Financial Overview Singapore Office Portfolio Performance 04 31 1H 23 Operational Overview Australia Portfolio Performance 05 35 Financial Highlights UK Portfolio Performance 15 38 Capital Management Singapore Retail Portfolio Performance Agenda 48 Suntec Convention Performance 51 Our ES
Slide 3: 1H 23 Financial Overview
1H 23 Financial Overview Capital Management Distributable Income to Distribution Per Unit Fixed Interest Rate Borrowings Unitholders to Unitholders 3.476 cents 58%1 S$100.5 million -27.2% y-o-y -27.7% y-o-y % of Foreign Currency Income Hedged Distribution Income DPU from from Operations Operations 6
Slide 4: 1H 23 Operational Overview
1H 23 Operational Overview Portfolio Committed Occupancy Portfolio WALE 98.6% 97.5% 4.3 2.2 Office Portfolio Retail Portfolio Office Portfolio Retail Portfolio Office Portfolio 75% 25% Work Done 551,400 sq ft Retail Portfolio 67% 33% Renewal Leases New Leases 4
Slide 5: Financial Highlights
Suntec City MBFC Properties One Raffles Quay Olderfleet, 477 Collins Street Financial Highlights The Minster Building 177 Pacific Highway 55 Currie Street Nova Properties 21 Harris Street Southgate Complex
Slide 6: Portfolio Financial Performance Held Steady
Portfolio Financial Performance Held Steady Gross Revenue and NPI Grew 10.2% and 0.3% Respectively in 1H 23 Mainly due to: 20.8M 1H 22 Gross Revenue & Net Property Income: 10.2% 1H 23 Higher contribution from Suntec City Office, Suntec City Mall and Suntec Convention Lower contribution from the Aust
Slide 7: Improvement in Operations Eroded By Higher Financing Costs
Improvement in Operations Eroded By Higher Financing Costs Distributable Income (S$ mil) From Operations 138.1 (37.6M) 11.5 (27.2%) From capital 100.5 11.5 126.6 Mainly due to: 89.0 Higher financing cost ($36.3m) 1H 22 1H 23 Weaker AUD and GBP against SGD DPU Higher maintenance fund contribution in
Slide 8: Distribution Payment
Distribution Payment Distribution Payment Distribution Period 1 April 2023 – 30 June 2023 Amount (cents/unit) 1.7391,2 Ex-date 2 Aug 2023 Record date 3 Aug 2023 Payment date 29 Aug 2023 Note: 1. 1.737 cents had been paid on 30 May 2023. Total of 3.476 cents for 1H 2023. 2. The Manager has elected to
Slide 9: Singapore Office Portfolio Revenue and NPI Strengthened
Singapore Office Portfolio Singapore Office Portfolio Revenue and NPI Strengthened JV Income Impacted by Higher Interest Expense 1H 22 5.4M 1H 23 8.1% Mainly due to: Gross Revenue & Net Property Income: 0.6M Higher occupancy and rent at Suntec City Office 1.1% Higher maintenance fund contribution an
Slide 10: Australia Portfolio Operational Performance Remained Stable
Australia Portfolio Australia Portfolio Operational Performance Remained Stable Impacted by Higher Interest Expense and Weaker AUD In AUD 1H 22 Mainly due to: 1.4M 1H 23 Gross Revenue & Net Property Income: 2.7% 0.6M 1.5% Higher occupancy at 21 Harris Street (Sydney), 477 Collins Street (Melbourne)
Slide 11: UK Portfolio Remained Resilient
UK Portfolio UK Portfolio Remained Resilient Weaker GBP Impacted Earnings 1H 22 In GBP Mainly due to: 1H 23 0.9M 1.1M Gross Revenue & Net Property Income: 11.5% 15.3% (0.3M) (3.9%) Break penalty received from tenant who exercised lease break in 2Q23 8.7 8.3 JV Income: 7.8 7.2 7.7 7.4 Higher revenue
Slide 12: Singapore Retail Portfolio Improved
Singapore Retail Portfolio Singapore Retail Portfolio Improved Gross Revenue and NPI Grew 9.5% and 2.7% Respectively 1H 22 5.7M 1H 23 9.5% Mainly due to: Gross Revenue & Net Property Income: 1.2M 2.7% Higher occupancy and rent at Suntec City Mall Higher maintenance fund contribution and commencement
Slide 13: Continued Recovery for Suntec Convention
Suntec Convention Continued Recovery for Suntec Convention NPI Recovery Impacted by Higher Expenses 1H 22 1H 23 11.8M 95.2% Mainly due to: Higher revenue from MICE and long-term licences offset by higher variable costs Higher fixed costs mainly due to ramping up of 24.2 staff recruitment and facilit
Slide 14: Diversified Portfolio Across Geography and Sector
Diversified Portfolio Across Geography and Sector Singapore Market and Office Assets Are Mainstays Income Contribution by Geography 67% 20% 13% Singapore Australia UK 2% Convention Income Contribution by Sector 75% 23% Office Retail 14
Slide 15: Capital Management
Capital Management Olderfleet, 477 Collins Street, Melbourne
Slide 16: Key Financial Indicators
Key Financial Indicators As at 31 Dec 22 As at 30 Jun 23 NAV Per Unit S$2.12 S$2.12 Total Debt Outstanding S$4,865 mil S$4,322 mil Aggregate Leverage Ratio1 42.4% 42.6% Weighted Average Debt Maturity 2.85 years 2.90 years All-in Financing Cost2 2.94% p.a. 3.64% p.a.3 Adjusted ICR4 2.4X 2.1X Weighted
Slide 17: Minimal Debt Expiries for FY 23
Minimal Debt Expiries for FY 23 Debt Maturity Profile Perpetual Securities 1200 1,600 (First Reset) 1,400 1000 203 1,200 800 Debt re-financed 1,000 in 2Q 23 600 800 203 700 900 798 180 600 400 300 400 200 366 200 172 200 200 200 100 150 0 0 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2025 FY2
Slide 18: Singapore Office Portfolio Performance
Singapore Office Portfolio Performance 18 One Raffles Quay, Singapore
Slide 19: Singapore Office Portfolio Near Full Occupancy
Singapore Office Portfolio Singapore Office Portfolio Near Full Occupancy Committed Occupancy Lease Expiry Profile As at 30 Jun 23 % of Total NLA4 Comparison Core CBD Occupancy: 94.8%3 99.9% 100.0% 97.6% 99.3% 24.8% 21.7% 0.7% 18.8% 16.8% 9.8% 7.4% Suntec City One Raffles MBFC Towers 1 Singapore 202
Slide 20: Robust Rent Reversion
Singapore Office Portfolio Robust Rent Reversion 20 Quarters of Positive Rent Reversion Rent Reversion Work Done1 +10.8% for 1H 23 336,300 sq ft for 1H 23 10.6% 11.2% 10.5% 69% 70% 5.9% 31% 30% 3Q 22 4Q 22 1Q 23 2Q 23 1H 22 1H 23 Renewal Leases New Leases Notes: 1. Reflects net lettable area of new
Slide 21: Tenant Mix Remained Stable
Singapore Office Portfolio Tenant Mix Remained Stable Banking, Insurance & Finance Services and TMT Remained as Mainstays Tenant Mix (sq ft)1 Tenant Mix (sq ft)1 As at 30 Jun 22 As at 30 Jun 23 Banking, Insurance and Financial Services 33% Banking, Insurance and Financial Services 31% Technology, Me
Slide 22: Suntec City Office Performance
Suntec City Office Performance Suntec City Office, Singapore
Slide 23: Occupancy and Rent Outperformed Market Level
Suntec City Office Occupancy and Rent Outperformed Market Level Suntec 2Q 23 CBRE Core CBD $9.71 $9.79 $9.25 $9.35 $8.85 100.0% $10 $8.84 95.0% $9 90.0% $8 85.0% 80.0% $7 99.9% 100.0% 99.9% 75.0% 95.6% 97.2% 94.8% $6 70.0% 65.0% $5 60.0% $4 55.0% $3 50.0% FY 4Q 20 FY 4Q21 21 FY 4Q 22 1Q 23 23 2Q 23
Slide 24: Maintained Strong Positive Rent Reversion
Suntec City Office Maintained Strong Positive Rent Reversion Focused on Renewals to Maintain Occupancy and Minimize Downtime Rent Reversion Work Done1 +10.7% for 1H 23 193,600 sq ft in 1H 23 66% 10.5% 10.8% 55% 7.7% 45% 34% 3.9% 3Q 22 4Q 22 1Q 23 2Q 23 1H 22 1H 23 Renewal Leases New Leases Notes: 1.
Slide 25: Well-Diversified Tenant Mix
Suntec City Office Well-Diversified Tenant Mix Tenant Mix (sq ft)1 Tenant Mix (sq ft)1 As at 30 Jun 22 As at 30 Jun 23 Technology, Media and Telecommunications 39% Technology, Media and Telecommunications 37% Banking, Insurance and Financial Services 13% Banking, Insurance and Financial Services 13%
Slide 26: Positive Rent Reversion Opportunities
Suntec City Office Positive Rent Reversion Opportunities 60.0% $11.0 $10.6 50.0% $10.0 $10.0 $10.1 $10.0 $9.6 $9.6 40.0% $9.0 35.0% 30.0% $8.0 14.8% 20.0% $7.0 3.1% 8.8% 10.0% 21.3% $6.0 18.4% 10.5% 8.3% 9.5% 5.2% 0.0% $5.0 2023 2024 2025 2026 2027 2028 & Beyond 1Q 24 2Q 24 3Q 24 4Q 24 Expiry Rent 2
Slide 27: Performance of One Raffles Quay and Marina Bay Financial Centre Towers 1 & 2
Performance of One Raffles Quay and Marina Business Financial Centre Towers 1 & 2 MBFC Properties, Singapore
Slide 28: Strong Positive Rent Reversion
One Raffles Quay & MBFC Towers 1 & 2 Strong Positive Rent Reversion Rent Reversion Work Done1 +10.9% for 1H 23 142,700 sq ft in 1H 23 11.9% 93% 10.3% 80% 9.1% 7% 20% FY 22 1Q 23 2Q 23 1H 22 1H 23 Renewal Leases New Leases Notes: 1. Based on Suntec REIT’s interests in One Raffles Quay and Marina Bay
Slide 29: Diversification of Tenant Mix
One Raffles Quay & MBFC Towers 1 & 2 Diversification of Tenant Mix Tenant Mix (sq ft)1 Tenant Mix (sq ft)1 As at 30 Jun 22 As at 30 Jun 23 Banking, Insurance and Financial Services 59% Banking, Insurance and Financial Services 53% Technology, Media and Telecommunications 14% Technology, Media and Te
Slide 30: Singapore Office Outlook and Focus
Singapore Office Outlook and Focus Global economic outlook Muted office demand Rents likely to plateau remains uncertain with occupiers focusing amidst soft market on cost management conditions Revenue continues to Tenant retention remains Positive rent reversion strengthen from past key priority ex
Slide 31: Australia Portfolio Performance
Australia Portfolio Performance 21 Harris Street, Sydney
Slide 32: Committed Occupancy Outperforms Market
Australia Portfolio Committed Occupancy Outperforms Market Committed Occupancy Income Contribution by Asset As at 30 Jun 23 As at 30 Jun 23 100.0% 100.0% 100.0% 95.3% 96.6% 88.6% 85.6% 85.6% 13% 84.0% Adelaide 83.8% 54% Sydney 33% Melbourne 177 Pacific 21 Harris Southgate 477 Collins 55 Currie Austr
Slide 33: Renewals Completed in Sydney and Melbourne Reflect Demand for Office Space
Australia Portfolio Renewals Completed in Sydney and Melbourne Reflect Demand for Office Space Work Done1 Lease Expiry Profile As at 30 Jun 23 % of Total NLA2 Comparison 4% 97,400 sq ft Sydney 34,400 sq ft 96% Melbourne 57.7% 63,000 sq ft Renewal Leases New Leases 3.4% 10.8%3 9.1% 10.5% Rent Reversi
Slide 34: Australia Outlook and Focus
Australia Outlook and Focus Slight increase in Sydney Leasing momentum Significant new supply in and Melbourne CBD slows due to Adelaide in 2H2023 will macroeconomic market office vacancy increase market office uncertainties expected with new vacancy supply Asset enhancement initiatives for 177 Paci
Slide 35: UK Portfolio Performance
UK Portfolio Performance Nova Properties, London
Slide 36: Full Occupancy for UK Portfolio
UK Portfolio Full Occupancy for UK Portfolio Committed Occupancy Lease Expiry Profile As at 30 Jun 23 % of Total NLA2 Comparison 93.9% of lease expiries will be in 2028 and beyond if tenants do not Central exercise lease breaks London Office Occupancy: 91.1%1 8.5% 100.0% 100.0% 100.0% 62.5% 3.0% 3.1
Slide 37: UK Office Outlook and Focus
UK Office Outlook and Focus Good quality office space Office market continues Central London office in prime locations to be impacted by occupancy falls by 0.4% economic challenges continue to be sought to 91.1%1 in slow market after Enhancement initiatives Revenue remains Proactive lease to the out
Slide 38: Singapore Retail Portfolio Performance
Singapore Retail Portfolio Performance Suntec City, Singapore
Slide 39: Portfolio Committed Occupancy Remained Healthy
Singapore Retail Portfolio Portfolio Committed Occupancy Remained Healthy Committed Occupancy Lease Expiry Profile As at 30 Jun 23 % of Total NLA2 Comparison Central Area Outside Orchard occupancy: 90.0%1 98.3% 95.6% 98.2% 28.2% 25.7% 26.3% 1.8% 8.7% 5.9% 3.4% Suntec City Mall Marina Bay Link Mall O
Slide 40: Suntec City Mall Performance
Suntec City Mall Performance Suntec City Mall, Singapore
Slide 41: Positive Rent Reversion for 5 Consecutive Quarters
Suntec City Mall Positive Rent Reversion for 5 Consecutive Quarters Refreshed Tenant Mix With Better Brands at Higher Rents Rent Reversion Work Done1 +17.5% for 1H 23 104,400 sq ft for 1H 23 18.2% 16.5% 69% 66% 9.9% 31% 34% 5.6% 3Q 22 4Q 22 1Q 23 2Q 23 1H 22 1H 23 Renewal Leases New Leases Notes: 1.
Slide 42: Tenant Sales Remained Above 2019 and 2022
Suntec City Mall 1H 23 Tenant Sales Remained Above 2019 and 2022 May 23 and Jun 23 Tenant Sales Comparable to High Base from May 22 Tenant Sales psf ($) YoY Variance May 22 was the first full month post re-opening 60.0 +14% +20% -1% -1% +8% +7% 2019 Avg 50.0 +28% Tenant Sales psf ($) Tenant Sales ps
Slide 43: 1H Traffic Improved Over 1H 2022
Suntec City Mall 1H 23 Traffic Improved Over 1H 22 Drop in June 23 Traffic Likely Due to Resumption of Overseas Travel YoY Traffic Variance 140,000 2019 Avg +34% Daily Traffic 120,000 +18% +18% +11% +38% -7% +23% Average Daily Traffic 100,000 80,000 60,000 40,000 20,000 0 1H Jan Feb Mar Apr May Jun
Slide 44: 4 New-to-Market and 10 New-to-Suntec Brands in 1H 23
Suntec City Mall 4 New-to-Market and 10 New-to-Suntec Brands in 1H 23 New-to-Market New-to-Suntec 44
Slide 45: Return of Large-Scale School Holiday Event
Suntec City Mall Return of Large-Scale School Holiday Event Drove Footfall, Increased Sales and Attracted Widespread Media Coverage Warner Brothers 100th Anniversary In partnership with Warner Bro. Studios, shoppers enjoyed attractive spend and redeem merchandise featuring mash-up of different Loone
Slide 46: More Exciting Offerings to Come in 2H 23
More Exciting Offerings to Come in 2H 23 New-to-Market New-to-Suntec 46
Slide 47: Singapore Retail Outlook and Focus
Singapore Retail Outlook and Focus MICE and tourism Retail sales growth Rent growth and recovery expected to expected to slow but occupancy underpinned drive traffic and tenant overall sales to remain by active leasing demand sales above pre-Covid and limited supply Curate differentiated Improvement
Slide 48: Suntec Convention Performance
Suntec Convention Performance Suntec Singapore
Slide 49: Return of International Headline Events in 1H 23
Suntec Convention Return of International Headline Events in 1H 23 Domestic Market Remained Key Pillar International and Domestic Events Consumer Electronics Exhibition RNA Society Annual Conference 2023 Olympic E-Sports Week 25 – 28 May 23 30 May – 4 Jun 23 22 – 25 Jun 23 49
Slide 50: Suntec Convention Outlook and Focus
Suntec Convention Outlook and Focus Domestic market remains Return of international Positive impact from important pillar for headline events to gather China’s reopening likely business recovery and pace to be seen in 2H 23 growth Full recovery expected in Grow higher yielding Income contribution fo
Slide 51: Our ESG Commitment
Our ESG Commitment 21 Harris Street, Sydney
Slide 52: ESG Initiatives
ESG Initiatives Environmental Communication with tenants through engagement programs, audit of energy consumption, and opportunities to reduce energy use Completion of new bicycle parking facility in Suntec City with over 70 bicycle lots and locker facilities Awareness activity on waste reduction an
Slide 53: Working Towards De-Carbonization Targets
Working Towards De-Carbonization Targets Performance Achieved 19.8% reduction in energy intensity in FY 2022 from FY 2019 level 11,334 MWh increase in use of renewable energy in FY 2022 from FY 2019 level Energy Achieved 13.6% reduction in water intensity in FY 2022 from FY 2019 level Water
Slide 54: Continual Commitment to ESG
Continual Commitment to ESG Achievement 177 Pacific Highway All assets 55 Currie Street Green Building certified Carbon Neutral Highest accolade of Global Sector Leader (Office-Listed) for second successive year 21 Harris Street, 477 Collins About 35% of total debt are Street, Nova Properties and gr
Slide 55: ESG Environmental – De-carbonization Target
ESG Environmental – De-carbonization Target • Carbon Neutral status for all Australia and UK assets Carbon Neutral • Net-Zero Carbon status by 2030 for assets with full ownership control • Net-Zero Carbon status by 2050 for all assets across portfolio Net-Zero Carbon 55
Slide 56: Looking Ahead
Looking Ahead 55 Currie Street, Adelaide
Slide 57: Future Earnings Continued to be Impacted by Macro Factors
Future Earnings Continued to be Impacted by Macro Factors Elevated Interest Rates Improvements in Weaker FX Reduced Operating Earnings Performance Higher Energy Costs 57
Slide 58: Navigating Challenges
Navigating Challenges Unlock Value from Asset Proactive Capital Enhancement Initiatives and Management Divestment of Mature Assets Explore Good Quality, Accretive Continual Commitment to Assets Sustainability Practices 58
Slide 59: Thank you
Thank you For enquiries, please contact: Eugenia Ong Manager, Portfolio Management Eugenia.ong@esr.com The Minster Building, London
Slide 60: Disclaimer
Disclaimer This presentation is focused on the comparison of the actual results for the half year ended 30 June 2023 versus results achieved for the half year ended 30 June 2022. It should be read in conjunction with Suntec REIT’s interim financial information for the six-month period ended 30 June
Slide 61: About Suntec REIT
About Suntec REIT 177 Pacific Olderfleet,477 Highway, Collins Street, Sydney Melbourne
Slide 62: About Suntec REIT
About Suntec REIT Singapore’s First Composite REIT Market Capitalisation S$4.1 Billion1 London Asset Under Management S$12.3 Billion2 Listed on 9 Dec 2004 on the SGX-ST High quality office assets, complemented by Singapore retail and convention components 10 properties – 3 in Singapore, 2 in Sydney,
Slide 63: Portfolio Snapshot
Portfolio Snapshot Singapore and UK Properties Suntec City One Raffles MBFC The Minster Nova Properties Suntec City – Suntec Convention Quay Properties Building Office & Retail Description Integrated commercial World-class convention Two premium Two premium Two Grade A Grade A Office development com
Slide 64: Portfolio Snapshot
Portfolio Snapshot Australia Properties 177 Southgate Olderfleet 477 55 Currie Street 21 Harris Street Pacific Highway Complex Collins Street Description 31-storey Grade A office Integrated development Premium Grade, 40- Twelve-storey, Grade A Nine-storey, Grade A building comprising two A-Grade lev