Spring Real Estate Investment Trust · HKEX:1426
Spring Real Estate Investment Trust — H1 2014 Earnings Presentation
25 slides from Spring Real Estate Investment Trust's earnings presentation, Aug 19, 2014
Slide 1: Spring REIT Interim Results 2014
SPRING REIT (1426.HK) Interim Results 2014 19 August 2014
Slide 2: Disclaimer
Disclaimer This presentation may contain information which is proprietary, confidential and/or legally privileged and has been prepared by Spring Asset Management Limited, in its capacity as the manager (the “Manager”) of Spring Real Estate Investment Trust (the “Trust”). This presentation is being
Slide 3: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Investment Highlights 4 Market Outlook 5 Strategies 6 Appendix 2
Slide 4: Key Messages
Unsaved Document / 7/15/2013 / 17:51 Key Messages 3
Slide 5: Key Messages: Five Competitive Strengths
Key Messages Five Competitive Strengths with Rental Reversion Delivered Exposure to Premium Grade office buildings 1 in Beijing CBD Part of China Central Place – a prime 2 mixed-use complex in Beijing CBD and a well recognized brand Maintains high occupancy rate of 95% with 3 a diverse and high qual
Slide 6: Results Highlights
Unsaved Document / 7/15/2013 / 17:51 Results Highlights 5
Slide 7: Results Highlights: Excellent Performance for First Half of 2014
Results Highlights Excellent Performance for the First Half of 2014 Excellent Operating Performance - Total revenue +30.4% YoY to US$39.79 million 1 - Net property income +33.5% YoY to US$30.39 million - Occupancy stayed high at 95% Strong Rental Reversion Delivered - 27% of the existing leases (in
Slide 8: Results Highlights: Financial Summary Table
Results Highlights Excellent Performance for the First Half of 2014 For the six months ended 30 June 1H14 1H13 Change Total Revenue (US$ million) 39.79 30.51 + 30.4% Net Property Income (US$ million) 30.38 22.76 + 33.5% Net Property Income Margin 76.4% 74.6% + 1.8 ppts 30 Jun 31 Dec As at 2014 2013
Slide 9: Positive Rental Reversion Delivered
Results Highlights Positive Rental Reversion Delivered Spot Rents vs Passing Rents (RMB per sq.m. per month) (1) (2) 375 376 377 332 345 241 288 +28.7% 268 198 226 Seized opportunities to 201 188 bring passing rents closer to spot rents 2010 2011 2012 2013 1H 2013 1H 2014 Average monthly spot rental
Slide 10: Reduced Gearing & Interest Expense
Reduced Gearing & Interest Expense Early Loan Repayment Now: Secured Term Loan facility US$50 million repaid on 28 Jan 2014 Principal amount: US$465 million Loan principal reduced to US$465 mn Borrower: RCA01 Gearing at end of 1H14 -2.5 ppts to Tenor: 3 years 33.5% Repayable: 27 Jan 20
Slide 11: Total DPU of HK15.5 cents
Results Highlights To declare total DPU of HK15.5 cents (2014 interim and 2013 final) Interim Final Special Distribution Distribution Distribution 2014 2013 2013 Distribution per Unit (HK cents) 13.9 1.6 7.0 Announcement Date 18 August 2014 18 March 2014 Ex-Dividend Date 8 September 2014 3 April 201
Slide 12: Investment Highlights
Unsaved Document / 7/15/2013 / 17:51 Investment Highlights 11
Slide 13: Property Overview
Property Overview Premium Grade Office Buildings at Beijing CBD Two Premium Grade office buildings (total GFA The Property 120,245 sqm) in China Central Place (“CCP”) (华贸中心) and approximately 600 car parking spaces (the “Property”). China Central Place is a prime mixed-use complex with well-reco
Slide 14: Diverse and high quality tenant base
Diverse and high quality tenant base Focus on optimizing our tenant mix – 170 leases in total(1) Diversified tenant profile High quality tenant base By leased office GFA By monthly rental revenue Top 5 tenants(1) % of (As of 30 June 2014) (For the month of June 2014) Tenants Total Office GFA Busines
Slide 15: Transparent and Stable Cost Structure
Transparent and Stable Cost Structure All of the property expenses are revenue-linked or fixed Property Operating expenses breakdown Property management fee 2.4% – 2% of the total revenue 1.1% Property taxes – Includes real estate tax and land use tax 0.2% 2.6% 2.6% 38.7% – Real estate tax based
Slide 16: Outperforming Peers and Benchmarks
Outperforming Peers and Benchmarks Total Return Year-To-Date (1 Jan 2014 – 15 Aug 2014) Spring REIT Hang Seng Index Hang Seng REIT Index 25% 20.5% Hang Seng China Enterprises Index Spring REIT 20% Hang Seng 15% REIT Index 10.7% 10% 5% Hang Seng Index 10.3% 0% -5% Hang Seng China Enterprises Index -1
Slide 17: Market Outlook
Unsaved Document / 7/15/2013 / 17:51 Market Outlook 16
Slide 18: Office Market Conditions across China
Office Market Conditions across China Beijing enjoys the best supply-demand dynamics Grade A Office GFA (‘000 sqm) Occupancy 8,000 100% 7,000 90% 80% 6,000 70% 5,000 60% 4,000 Beijing 50% - highest occupancy > 97% 40% 3,000 - lowest future supply as % of current stock of 14% in 3 yrs 30% 2,000 20% 1
Slide 19: Current Market Condition
Current Market Condition Tight supply & high occupancy in Beijing Grade-A offices Beijing Overall – Supply, Absorption, Occupancy Beijing CBD – Supply Absorption, Occupancy (sq.m., GFA) (sq.m., GFA) 96.2% 97.2% 97.4% 97.7% 94.4% 96.5% 95.1% 96.6% 1,200,000 100% 800,000 100% 86.8% 86.5% 80.1% 82.8% 8
Slide 20: Future Grade-A Office Supply
Future Grade-A Office Supply Grade-A Supply Pipeline Grade-A office supply by year Approx. GFA (sq.m., GFA available for leases) 535,386 Completion available for (1) (2) (3) Project Name District Year lease (sqm) Avg 2H14-2017: ZGC Internet Financial Centre Zhongguancun 2014 51,000 331,000 ~279,000
Slide 21: Expiring Lease Profile
Expiring Lease Profile Positive Rental Reversion to Continue Average monthly spot rent: 377(1) (Rent in RMB per sqm per month) 450 400 390 357 350 344 300 268 279 250 45% 200 27% 28% 150 19% 100 8% 50 – 1H 2014 2H 2014 2015 2016 2017 and beyond Expiring leases as a % of leased office GFA Average exp
Slide 22: Strategies
Unsaved Document / 7/15/2013 / 17:51 Strategies 21
Slide 23: Strategies
Strategies 1. Asset Management Strategy Maintain high occupancy rates Optimize tenant mix Control property expenses Increase returns through asset enhancement 2.Capital and Risk Management Strategy Prudent financial and capital management policy Seek opportunities to reduce finance costs
Slide 24: Value Creation for Unitholders
Value Creation for Unitholders Close valuation Building track records, while enhancing investor relations Best total return in 2014 year-to-date(1), vs peers & overall market gap Quarterly operating updates. Ongoing communication w/ investors & analysts Deliver stable Simple cost structure maxim
Slide 25: Thank You
EEEEYES'S‘SU I SpringREIT Thank You
Spring Real Estate Investment Trust — H1 2014 Earnings Presentation on 6ix