Keppel REIT · SGX:K71U
Keppel REIT — H1 2016 Earnings Presentation
41 slides from Keppel REIT's earnings presentation, Jul 19, 2016
Slide 1: First Half 2016 Financial Results
First Half 2016 Financial Results 19 July 2016
Slide 2: Outline and Important Notice
Outline 1. Key Highlights ………………………………………………. 5 2. Financial Highlights ……………………………………….10 3. Portfolio Analysis …………………………………………. 15 4. Capital Management ……………………………………. 26 5. Market Review & Outlook ……….…………………… 29 6. Community Engagement ……….…………………….. 32 Important Notice The value of Units and
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 11 office towers in 8 quality 300 tenants Premium Grade and Grade A assets in the 3.3 million sf S$8.3 billion diversif
Slide 4: Youngest Premium Grade A Office Portfolio
Youngest Premium Grade A Office Portfolio » 90% of portfolio in Singapore and 10% in Australia » Youngest and largest portfolio of premium Grade A office assets in Singapore’s business district Strategically located in the prime Raffles Place and Marina Bay precinct Average portfolio age of appr
Slide 5: 1. Key Highlights
1. Key Highlights Additional Information HARNESSING COMPETENCIES We leverage our strengths to invest in growth and capture opportunities with agility Marina Bay Financial Centre, Singapore 5
Slide 6: Key Highlights for 2Q 2016
Key Highlights for 2Q 2016 Delivers creditable set of results amidst market headwinds Almost all the leases expiring in 2016 have been renewed, with only a minimal 0.6% of expiring leases due for renewal in 2H 2016 Retained almost every expiring tenant Achieved 99.7% portfolio occupancy rate
Slide 7: Key Financial Highlights
Key Financial Highlights » Continued to show resilience in performance amidst market headwinds » Due mainly to the absence of contribution from 77 King Street which was divested in 1Q 2016, PI and NPI for 2Q 2016 were marginally lower by 1.5% and 1.4% q-o-q respectively » Share of results of associa
Slide 8: Key Portfolio Highlights
Key Portfolio Highlights » Continued focused and proactive marketing and leasing efforts Only a minimal 0.6% of expiring leases due for renewal in 2H 2016, a significant improvement from 13.4% as at beginning of 2016 Forward renewal efforts brought the proportion of expiring leases in 2017 and 2
Slide 9: Key Capital Management Highlights
Key Capital Management Highlights » Aggregate leverage remained stable at 39% as at 2Q 2016 » Extended the weighted average term to maturity to a healthy 3.9 years with minimal refinancing requirements until 2H 2018 » Significantly improved the percentage of unencumbered assets from 72% to 83% follo
Slide 10: 2. Financial Highlights
2. Financial Highlights 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. One Raffles Quay, Singapore 10
Slide 11: Delivering Healthy Returns
Delivering Healthy Returns » Continued to show resilience in performance amidst market headwinds » Due mainly to the absence of contribution from 77 King Street which was divested in 1Q 2016, PI and NPI for 2Q 2016 were marginally lower by 1.5% and 1.4% q-o-q respectively » Share of results of assoc
Slide 12: Attractive Yield
Attractive Yield » Keppel REIT continues to offer an attractive yield for Unitholders (1) Keppel REIT DPU Yield 6.3% (2) FTSE ST REIT Index Dividend Yield 5.9% (2) FTSE ST RE Index Dividend Yield 4.6% (2) STI Dividend Yield 4.0% CPF Ordinary Account 2.5% 10-year SG Govt Bond Yield 1.8% 5-year SG Gov
Slide 13: Resilient Balance Sheet
Resilient Balance Sheet As at 30 June 2016 As at 31 March 2016 Non-current Assets $7,154 mil $7,132 mil Total Assets $7,442 mil $7,429 mil 1 Borrowings $3,320 mil $3,321 mil Total Liabilities $2,624 mil $2,626 mil Unitholders’ Funds $4,666 mil $4,650 mil 2 Adjusted NAV Per Unit $1.41 $1.42 (1) These
Slide 14: 2Q 2016 Distribution Per Unit
2Q 2016 Distribution Per Unit Distribution Per Unit (DPU) Distribution Period 1.61 cents 1 April 2016 – 30 June 2016 Distribution Timetable Trading on “Ex” Basis Monday, 25 July 2016 Books Closure Date Wednesday, 27 July 2016 Distribution Payment Date Friday, 26 August 2016 14
Slide 15: 3. Portfolio Analysis
3. Portfolio Analysis STRATEGIC INTENT Our focus on the triple bottom line spurs us to make strategic decisions to ensure sustainable growth for our business. Ocean Financial Centre, Singapore 15
Slide 16: Proactive Leasing efforts
Proactive Leasing efforts » Only a minimal 0.6% of expiring leases due for renewal in 2H 2016, a significant improvement from 13.4% as at beginning of 2016 » Forward renewal efforts brought the proportion of expiring leases in 2017 and 2018 down substantially to 9.5% and 5.5% respectively, from 11.5
Slide 17: Healthy Leasing Activities in 1H 2016
Healthy Leasing Activities in 1H 2016 » Concluded a total of 69 leases or approximately 900,000 sf (attributable space of 615,000 sf) of prime office space in 1H 2016 » New tenants secured in the first half of 2016 were mainly from the banking, financial and insurance, real estate and property servi
Slide 18: Singapore Average Net Office Demand and Supply
Singapore Average Net Office Demand and Supply » No new office supply in the CBD from 2019 to 2021 which is unprecedented » New supply from Marina One and Guoco Tower are progressively being absorbed 6 years (2010 – 2015) Ave annual net demand (1) ~1.1 mil sf (1) 6 years (2010 – 2015) Ave annual net
Slide 19: Healthy Lease Expiry Profile
Healthy Lease Expiry Profile » Only a minimal 0.6% of expiring leases due for renewal in 2H 2016, a significant improvement from 13.4% as at beginning of 2016 » Forward renewal efforts brought the proportion of expiring leases in 2017 and 2018 down substantially to 9.5% and 5.5% respectively, from 1
Slide 20: Strong Track Record of Rents Above Market
Strong Track Record of Rents Above Market » Continued to command above-market rents for Singapore leases, achieving average committed rent of $10.10 psf for new, renewal and forward renewal leases in 2Q 2016, higher than CBRE’s average Grade A rent of $9.50 psf $12.90 $12.50 $12.10 $11.60 $11.40 $11
Slide 21: Strong Singapore Portfolio Occupancy
Strong Singapore Portfolio Occupancy » Keppel REIT’s Singapore portfolio occupancy was 99.7% compared to core CBD occupancy of 95.1% in 2Q 2016 Consistently above core CBD occupancy levels since listing in 2006 » Almost full portfolio occupancy achieved not at the expense of rental to-date 100.0%
Slide 22: High Committed Occupancy Levels
High Committed Occupancy Levels » Maintained almost full portfolio occupancy of 99.7% Singapore Australia Overall 99.7% 99.5% 99.7% 100.0% 100.0% 99.4% 99.6% 99.7% 100.0% 100.0% 99.7% 98.8% Singapore core CBD occupancy at 95.1%(1) (2) Australia total CBD occupancy at 87.6% Bugis Junction Ocean Finan
Slide 23: Long Weighted Average Lease Expiry
Long Weighted Average Lease Expiry » Maintained a long WALE of approximately 8 years for top 10 tenants and 6 years for the overall portfolio Long leases in Singapore are embedded with mark-to-market rent mechanisms at pre-determined anniversaries, throughout the long lease terms Leases in Austr
Slide 24: Well-Diversified Tenant Base
Well-Diversified Tenant Base » Continue to maintain well-diversified tenant base from various business sectors TMT, 9% Legal, 9% Energy, Natural resources, Shipping Number of tenants and Marine, 9% (1) 300 Real estate & property services, 8% Banking, insurance Accounting & & financial services, cons
Slide 25: Steady Appreciation of Current Portfolio
Steady Appreciation of Current Portfolio » Average fair value gain of approximately 30% for current portfolio, or an approximate 6.5% appreciation per annum to-date » Approximate 4.5 years portfolio holding period to-date Singapore Portfolio Australia Portfolio S$412m S$522m A$42m A$34m A$36m A$33m
Slide 26: 4. Capital Management
4. Capital Management UNRELENTING TENACITY Our steadfast discipline and prudent capital management approach propel us towards operational efficiency in all that we do. Bugis Junction Towers, Singapore 26
Slide 27: Prudent Capital Management
Prudent Capital Management » Disciplined and prudent approach towards capital management saw aggregate leverage maintained at 39% as at 2Q 2016 » Significantly improved the percentage of unencumbered assets from 72% to 83% following the recent refinancing of $505 million secured loan facilities with
Slide 28: Well-staggered Debt Maturity Profile
Well-staggered Debt Maturity Profile » Completed all refinancing requirements in 2016 and almost all refinancing requirements in 2017 » Maintained well-staggered debt maturity profile and extended the weighted average term to maturity to a healthy 3.9 years Minimal refinancing requirements until 2H
Slide 29: 5. Market Review & Outlook
5. Market Review & Outlook UNLEASHING POTENTIAL Building on firm foundations, we push boundaries and unlock greater potential to drive continual growth. 275 George Street, Brisbane 29
Slide 30: Market Outlook – Singapore
Market Outlook – Singapore Singapore » Advance estimates indicate that the economy grew 2.2% y-o-y in 2Q 2016, marginally higher than the 2.1% growth in 1Q 2016. Growth in the quarter was led by the construction and services sectors and expansion in the manufacturing sector » The Ministry of Trade a
Slide 31: Market Outlook – Australia
Market Outlook – Australia Australia » Economy grew 3.1% y-o-y in 1Q 2016, supported by growth in the tourism, healthcare and education sectors as well as higher mining and resource-related exports » In a preemptive move to stave off deflation and spur inflation to its target range of 2-3%, RBA cut
Slide 32: 6. Community Engagement
6. Community Engagement 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. Marina Bay Financial Centre, Singapore 32
Slide 33: Community Engagement Efforts
Community Engagement Efforts 4 June 2016 REITs Symposium » 22 REITs and approximately 1,200 investors participated in the event, jointly organised by REITAS and Share Investor » Existing and potential unitholders were given the opportunity to learn more about Keppel REIT’s business operations throug
Slide 34: Harnessing Strengths
Harnessing Strengths » In July 2016, Keppel Corporation completed the consolidation of its interests in all four of its subsidiaries in business trust management, REIT management and fund management under Keppel Capital » This includes 100% interest in Keppel REIT Management Limited, the Manager of
Slide 35: Thank You
ENGAGING TENANTS Tenants are the heart of our buildings. Keen understanding of their business and regular interactions help us create enduring partnerships. Thank You 8 Exhibition Street, Melbourne 35
Slide 36: Additional Information
Additional Information EXTENSIVE EXPERIENCE We leverage our Board of Directors’ depth of experience and wealth of expertise to shape Keppel REIT’s growth into the future. 8 Chifley Square, Sydney 36
Slide 37: Capturing Value. Sustaining Returns
Capturing Value. Sustaining Returns 37
Slide 38: Best-In-Class Assets in Strategic Locations
Best-In-Class Assets in Strategic Locations 38
Slide 39: Capturing Value for Unitholders
Capturing Value for Unitholders » As part of portfolio transformation, assets were divested at an average of approximately 50% above original purchase prices, and an approximate 13% premium to last appraised values, excluding income earned from these assets throughout holding period » Average holdin
Slide 40: Portfolio Information: Singapore
Portfolio Information: Singapore » Keppel REIT’s AUM is approximately $8.3 billion as at 30 June 2016 » 90% of portfolio in Singapore and 10% in Australia Ocean Financial Centre(2) Marina Bay Financial Centre (2) (4) One Raffles Quay(2) Bugis Junction Towers Comprises three premium A pair of 50 and
Slide 41: Portfolio Information: Australia
Portfolio Information: Australia 8 Chifley Square, 8 Exhibition Street, 275 George Street, David Malcolm Justice Centre, Sydney(3) Melbourne(4) Brisbane(3) Perth(3) 35-storey Grade A office 34-storey Grade A office 30-storey Grade A office 33-storey Grade A office tower Description tower and tower t