Capitaland Ascendas Reit · SGX:A17U

Capitaland Ascendas Reit — Ascendas Reit — Q2 FY16/17 Earnings Presentation

50 slides from Capitaland Ascendas Reit's earnings presentation, Oct 20, 2016

  1. Slide 1: 2Q FY16/17 Financial Results Presentation

    197-201 Coward Street, Australia ONE@Changi City, Singapore 2Q FY16/17 Financial Results Presentation 20 October 2016

  2. Slide 2: Disclaimers

    Disclaimers This material shall be read in conjunction with Ascendas Reit’s financial statements for the financial quarter ended 30 September 2016. This presentation may contain forward-looking statements that involve assumptions, risks and uncertainties. Actual future performance, outcomes and resu

  3. Slide 3: Agenda

    Agenda Key Highlights for 2Q FY16/17 Financial Performance Investment Management Capital Management Asset Management Portfolio Update Portfolio Resilience Market Outlook 3

  4. Slide 4: Key Highlights for 2Q FY16/17

    Key Highlights for 2Q FY16/17  Total amount available for distribution rose by 12.3% y-o-y to S$112.5m  Estimated 2Q FY16/17 DPU1 declined 3.1% y-o-y to 4.030 cents due to the one-off distribution made in 2Q FY15/16 relating to the non-deductibility of certain upfront financing fees from prior yea

  5. Slide 5: Key Highlights for 2Q FY16/17

    Key Highlights for 2Q FY16/17  Total amount available for distribution rose by 5.3% q-o-q to S$112.5 million  Estimated DPU1 grew 3.8% q-o-q to 4.030 cents from 3.882 cents • Boosted by savings in property taxes  Investment highlights • S$148.6m of acquisition in Australia • S$25.7m forward acqui

  6. Slide 6: Agenda

    Agenda Key Highlights for 2Q FY16/17 Financial Performance Investment Management Capital Management Asset Management Portfolio Update Portfolio Resilience Market Outlook 6

  7. Slide 7: 2Q FY16/17 vs 2Q FY15/16

    2Q FY16/17 vs 2Q FY15/16 2Q 2Q % (S$’000) FY16/17(1) FY15/16(1) fav/ (unfav) Gross revenue(2) 205,441 182,625 12.5 Net property income(3) 152,435 123,803 23.1 Total amount available for distribution 112,503 100,159 12.3 DPU(4)(5) 4.030 4.160 (3.1) Recurrent amount available for distribution 112,503

  8. Slide 8: 2Q FY16/17 vs 1Q FY16/17

    2Q FY16/17 vs 1Q FY16/17 2Q 1Q % (S$’000) FY16/17(1) FY16/17(1) fav/ (unfav) Gross revenue(2) 205,441 207,588 (1.0) Net property income(3) 152,435 149,480 2.0 Total amount available for distribution 112,503 106,853 5.3 DPU (cents)(4)(5) 4.030 3.882 3.8 (1) The Group had 131 properties as at 30 Sep a

  9. Slide 9: Distribution Details

    Distribution Details Stock Counter Distribution Period Estimated DPU (cents) # Taxable Tax-exempt Capital Total Income Income Ascendas Reit 11 Aug 2016 to 2.156 0.031 0.090 2.277 30 Sep 2016 Distribution Timetable Last day of trading on “cum” basis 25 Oct 2016 (Tuesday) Ex-distribution date 26 Oct 2

  10. Slide 10: Agenda

    Agenda Key Highlights for 2Q FY16/17 Financial Performance Investment Management Capital Management Asset Management Portfolio Update Portfolio Resilience Market Outlook 10

  11. Slide 11: Investment Highlights in 2Q FY16/17

    Investment Highlights in 2Q FY16/17 Purchase Consideration Country Completion date / Value (S$m) Acquisition 148.6 197 - 201 Coward Street, Mascot, 148.6(1) Australia 9-Sep-16 Sydney (A$143.4) Forward Acquisition 25.7 Stage 4, Power Park Estate, Dandenong 25.7(1) Australia Expected in 1Q 2017 South,

  12. Slide 12: First Australian Business Park Acquisition: 197-201 Coward Street, Mascot, Sydney

    First Australian Business Park Acquisition: 197-201 Coward Street, Mascot, Sydney Purchase Consideration A$143.4m Acquisition Fee, Stamp A$10.0m Duty and Other transaction costs Total Acquisition Cost A$153.4m Vendor Frasers Property Australia Valuation A$144.0m by Knight Frank Land Area 6,714 sm La

  13. Slide 13: Forward Acquisition of Australia logistics property: Power Park Estate

    Forward Acquisition of Australia logistics property: Stage 4, Power Park Estate, Dandenong South, Melbourne Purchase Consideration A$24.8m Acquisition Fee, Stamp Approx A$0.8m Duty and Other transaction costs Total Acquisition Cost A$25.6m Vendor Goodman Dandenong Trust Valuation A$24.8m by Urbis La

  14. Slide 14: Divestment to Realise Value of Business Park Property in Beijing

    Divestment to Realise Value of Business Park Property in Beijing Description Business Park located in Zhongguancun Software Development Area in the Haidian District, Beijing Remaining Land 38 years Tenure NLA 27,595 sm Acquisition Year / 2011/ S$61.8m Price Book Value RMB 690.0m (as at 31 Mar 2016)

  15. Slide 15: Agenda

    Agenda Key Highlights for 2Q FY16/17 Financial Performance Investment Management Capital Management Asset Management Portfolio Update Portfolio Resilience Market Outlook 15

  16. Slide 16: Healthy Balance Sheet

    Healthy Balance Sheet  Aggregate leverage reduced to 34.2% after repayment of borrowings from divestment proceeds and equity fund raising  Available debt headroom of S$1.9 billion to reach 45.0% aggregate leverage  Issued 64m new units to raise approximately S$154.7m in a private placement in Aug

  17. Slide 17: Well-spread Debt Maturity Profile

    Well-spread Debt Maturity Profile  Well-spread debt maturity with the longest debt maturing in 2029 4% 10%  Average debt maturity: 3.8 years 6%  Issued HKD923m (S$162.9m) 2.77% 10-year Notes in Aug 2016 Diversified (MTN#14) 44% Financial Resources  S$157m ECS were converted into Units in Aug 201

  18. Slide 18: Key Funding Indicators

    Key Funding Indicators  Robust indicators enable Ascendas Reit to borrow at competitive costs As at As at 30 Sep 16 30 Jun 16 Aggregate Leverage 34.2% (2) 37.0% Unencumbered properties as % of total investment 78.0% 78.2% properties(1) Interest cover ratio 5.3 x 5.2 x Debt / EBITDA 6.2 x 6.7 x Weig

  19. Slide 19: Prudent Interest Rate Risk Management

    Prudent Interest Rate Risk Management  77.6% of borrowings is hedged for an average term of 3.8 years  50 bps increase in interest rate is expected to have a pro forma impact of S$3.8m decline in distribution or 0.13 cent in DPU Increase in Decrease in Change as Pro forma DPU interest rates distri

  20. Slide 20: Agenda

    Agenda Key Highlights for 2Q FY16/17 Financial Performance Investment Management Capital Management Asset Management Portfolio Update Portfolio Resilience Market Outlook 20

  21. Slide 21: Overview of Portfolio Occupancy

    Overview of Portfolio Occupancy 100.0% 94.2% 90.9% 87.9% 88.3% 89.8% 89.1% 88.2% 89.0% 90.0% 83.4% 80.0% 70.0% 70.6% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% N.A. Singapore Australia China Total Sep-16 Jun-16 Sep-15 Gross Floor 2,965,535* 692,153^ 79,880 3,737,568* Area# (sm) Note: - The Austr

  22. Slide 22: Singapore Occupancy

    Singapore Occupancy  Singapore occupancy declined 40 bps to 87.9% mainly due to non-renewals at 40 Penjuru Lane and Pioneer Hub As at 30 Sep 2016 30 Jun 2016 30 Sep 2015 Total Singapore Portfolio GFA (sm) 2,965,535(1)(2) 2,965,535(1)(2) 2,870,377(3) Singapore Portfolio occupancy (same store) (4) 89

  23. Slide 23: Singapore: Sources of New Demand

    Singapore: Sources of New Demand  Continues to attract demand from a wide spectrum of industries 0.1% 0.1% 0.3% 0.9% 0.6% 31.7% 1.2% 45.4% 1.6% 1.5% 1.8% 2.6% 2.8% 3.9% 4.2% By Gross By NLA Income 5.3% 5.2% 7.4% 8.5% 31.7% 13.7% 29.5% Structural Engineering Telecommunication & Datacentre Lifestyle

  24. Slide 24: Australia: Occupancy

    Australia: Occupancy  Occupancy improved to 94.2% mainly due to a new take up at 494 -500 Great Western Highway (Sydney) As at 30 Sep 2016 30 Jun 2016 Total Australian Portfolio GFA (sm) 692,153(1) 669,525 Australian Portfolio occupancy (same store) (2) 94.0% 90.9% Occupancy of Australian investmen

  25. Slide 25: China: Occupancy

    China: Occupancy Property A-REIT City @Jinqiao Description A-REIT City @Jinqiao is located in Jinqiao Export Processing Zone, a state-level development zone in Shanghai. The well established technology development zone houses prominent MNCs such as GE, Siemens, Hua wei etc. The development has 8 dif

  26. Slide 26: Achieved Positive Rental Reversions

    Achieved Positive Rental Reversions  Rental reversion in Singapore was flat for leases renewed in 2Q FY16/17  Expect modest rental reversion in the low-single digit or flat for FY16/17 Multi-tenant properties (1) 2Q FY16/17 1Q FY16/17 2Q FY15/16 increase in renewal increase in renewal increase in

  27. Slide 27: Weighted Average Lease Expiry

    Weighted Average Lease Expiry (By gross revenue)  Portfolio Weighted Average Lease Expiry (WALE) at 3.7 years WALE (as at 30 Sep 2016) Years Singapore 3.5 Australia 5.1 China 2.9 Portfolio 3.7 27

  28. Slide 28: Portfolio Lease expiry profile

    Portfolio Lease expiry profile (as at 30 Sep 2016) Breakdown of expiring leases  Portfolio weighted average lease to expiry (WALE) of 3.7 years for FY16/17 and FY17/18  Lease expiry is well-spread, extending beyond 2031 1% 10%  About 10.5% of gross revenue is due for renewal in the remaining of 1

  29. Slide 29: Singapore: Lease expiry profile

    Singapore: Lease expiry profile (as at 30 Sep 2016) Breakdown of expiring leases  Singapore portfolio weighted average lease to expiry (WALE) of 3.5 for FY16/17 and FY17/18 years 11%  Lease expiry is well-spread, extending beyond 2030 17%  12.0% of Singapore’s gross revenue is due for renewal in

  30. Slide 30: Australia: Lease expiry profile

    Australia: Lease expiry profile (as at 30 Sep 2016) Breakdown of expiring leases  Australia portfolio weighted average lease to expiry (WALE) of 5.1 years for FY17/18 and FY18/19  Lease expiry is well-spread, extending beyond 2027  No more leases are due for renewal in the remaining of FY16/17 22

  31. Slide 31: China: Lease expiry profile

    China: Lease expiry profile (as at 30 Sep 2016)  Remaining property in China portfolio, A-REIT City @Jinqiao, has a weighted average lease to expiry (WALE) of 2.9 years  Lease expiry is well-spread, extending to 2024  4.5% of A-REIT City @Jinqiao’s gross revenue is due for renewal in the remainin

  32. Slide 32: Ongoing Projects: Improve portfolio quality

    Ongoing Projects: Improve portfolio quality Estimated Value Estimated (S$m) Completion Redevelopment 61.4 20 Tuas Ave 1* 61.4 1Q 2018 Asset Enhancement Initiatives (AEI) 51.7 AzkoNobel House 6.5 4Q 2016 50 Kallang Avenue (NEW) 45.2 2Q 2017 Total AEI + Redevelopment 113.1 * formerly IDS Logistics Cor

  33. Slide 33: Asset Enhancement (New): Kallang Avenue

    Asset Enhancement (New): 50 Kallang Avenue Façade cladding, reconfiguration of spaces, lift Description modernisation, new air conditioning system and enlarging windows for natural lighting etc. AEI Cost S$45.2 m Estimated 2Q 2017 Completion Land Tenure 39 years remaining Artist impression of comple

  34. Slide 34: Agenda

    Agenda Key Highlights for 2Q FY16/17 Financial Performance Investment Management Capital Management Asset Management Portfolio Update Portfolio Resilience Market Outlook 34

  35. Slide 35: Well Diversified Portfolio

    Well Diversified Portfolio By value of Investment Properties 7.9% Logistics & Logistics and 30.0% Distribution Distribution Business & Hi-Specs Centres, 14% Centres Business Park Science Industrial Integrated Australia, 11% Australia, 2% Park Development, 70.0% AREIT Shanghai, Amenities & 92.1% 2% R

  36. Slide 36: Tenants' Industry Diversification

    Tenants’ Industry Diversification By Monthly Gross Revenue 3rd Party Logistics, Freight Forwarding 10.8% Distributors, trading company 10.4% Financial 9.5% M&E and Machinery & Equipment 8.9% Telecommunication & Datacentre 8.3% Information Technology 7.8% Electronics 7.0% Life Science 4.7% Food Produ

  37. Slide 37: Low Exposure to Manufacturing

    Low Exposure to Manufacturing As at 30 Sep 2016  10.2% of NLA occupied by tenants engaged in manufacturing activities 10.2%  Manufacturing activities include food & beverages, aeronautical auxiliary equipment, Tenants’ business precision engineering etc. activities by NLA  Non-manufacturing activ

  38. Slide 38: Quality and Diversified Customer Base

    Quality and Diversified Customer Base  Total customer base of around 1,450 tenants  Top 10 customers (as at 30 Sep 2016) account for about 18.6% of portfolio gross rental income  Security deposits for single-tenant properties range from 3 to 11 months of rental income  On a portfolio basis, weig

  39. Slide 39: Diversified Portfolio

    Diversified Portfolio Aperia, 5.6% One@Changi City, 4.1% 1, 3, 5 Changi Business Park Crescent, 3.2% Kim Chuan Telecommunication Complex , 2.7% TelePark, 2.4% Neuros & Immunos, 2.3% 31 International Business Park, 2.3% 40 Penjuru Lane, 2.2% Hyflux Innovation Centre, 2.1% TechPoint, 2.0% TechPlace II

  40. Slide 40: MTB Occupancy: NPI & DPU Sensitivity

    MTB Occupancy: NPI & DPU Sensitivity  100 bps increase in MTB occupancy is expected to result in a 0.9% increase in portfolio net property income or about 0.20 cents increase in DPU Change in MTB Expected change in Change in portfolio Impact on full FY occupancy annualised MTB NPI NPI (%) DPU (cent

  41. Slide 41: Agenda

    Agenda Key Highlights for 2Q FY16/17 Financial Performance Investment Management Capital Management Asset Management Portfolio Update Portfolio Resilience Market Outlook 41

  42. Slide 42: Market Outlook

    Market Outlook  Singapore’s 3Q 2016 economy grew 0.6% y-o-y (estimate), lower than the 2.0% growth in the previous quarter  Island-wide industrial property market vacancy has increased to 10.6% in 2Q 2016. JTC industrial property price and rental index declined by 2.3% and 1.7% q-o-q respectively

  43. Slide 43: Additional Information

    Additional Information (1) Quarterly Results (2) Ascendas Reit Singapore Occupancy vs Industrial Average (3) Singapore Industrial Property Market 43

  44. Slide 44: Quarterly Results

    Quarterly Results (For illustrative purpose)* FY15/16 FY16/17 Summary (S$ million) 1Q 2Q 3Q 4Q Total 1Q 2Q Gross Revenue 181 183 193 204 761 208 205 Net Property Income 124 124 142 144 534 149 152 Total amount available for 92 94# 97 89 372# 107 113 distribution No. of units in issue (m) 2,408 2,408

  45. Slide 45: Ascendas Reit Singapore Occupancy vs Industrial Average

    Ascendas Reit Singapore Occupancy vs Industrial Average 100% 95% 90.0% 90.8% 90.0% 89.0% 90% 87.0% 87.6% 85.0% 85% 81.0% 80% Occupancy Rate 75% 70% 65% 60% 55% 50% Business and Science Hi-Specs Industrial Light Industrial Logistics Park A-REIT JTC Source : Ascendas Reit’s Singapore portfolio as at 3

  46. Slide 46: Average Market Rents by Segment (Singapore)

    Average Market Rents by Segment (Singapore) 120 Industrial Rental Index 100 80 60 40 20 Source : JTC 0 6.5 5.5 $5.50 4.5 $4.27 3.5 $3.70 $3.10 2.5 $1.70 1.5 $1.67 0.5 Business Park (City Fringe) Business & Science Parks (Median Rents) Business Park (Rest of Island) Hi-Specs Light Industrial Logistic

  47. Slide 47: Singapore: In-place rent for space due for renewal in FY16/17 and FY17/18

    Singapore: In-place rent for space due for renewal in FY16/17 and FY17/18  The weighted average passing rental for most of the multi-tenant space due for renewal in FY16/17 are trending close to current market rates  Expect modest rental reversion in the low-single digit or flat for FY16/17 * * *

  48. Slide 48: Singapore Industrial Market: New Supply

    Singapore Industrial Market: New Supply  Total stock (net) : 45.4 million sm, of which • Business & Science Parks account for 2.1 million sm (4.7%) • Logistics & Distribution Centres account for 9.3 million sm (20.5%) • Remaining stock are factory space  Potential new supply (net) of about 2.1 mil

  49. Slide 49: Singapore Business & Science Parks: New Supply

    Singapore Business & Science Parks: New Supply  No speculative business & science park supply after 2016 % Pre- Expected Location Developer NLA (sm)* committed Completion (est) Completed 2016 Ayer Rajah (One-north) SHINE Systems Assets Pte Ltd 17,144 100% 2016 Science Park Ascendas Land (S) Pte Ltd

  50. Slide 50: The End

    The End Important Notice This presentation has been prepared by Ascendas Funds Management (S) Limited as Manager for Ascendas Real Estate Investment Trust. The details in this presentation provide general information only. It is not intended as investment or financial advice and must not be relied u

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