Fortune Real Estate Investment Trust · HKEX:778
Fortune Real Estate Investment Trust — H1 2024 Earnings Presentation
46 slides from Fortune Real Estate Investment Trust's earnings presentation, Aug 6, 2024
Slide 1: Financial Results
Financial Results For the six months ended June 2024 6 August 2024
Slide 2: Go Green and Paperless with us
Go Green and Paperless with us Scan the QR Codes for our Financial Results Presentation Announcement
Slide 3: Results Overview and agenda
Results Overview Capital Management Portfolio Performance Marketing Campaigns Enhancement Initiatives Outlook & Strategies Sustainability Progress Appendix Exterior, Fortune Metropolis
Slide 4: 1H2024 Results Overview
1H2024 Results Overview Revenue | NPI | Margin Finance Cost1 | Eff. Borrowing Cost DPU 1,200 50.0% 908.7 4.1% 4.1% 877.2 871.8 1,000 45.0% 350 5% 22.36 3.2% 4% 300 671.9 18.02 18.23 800 40.0% 633.1 4% 627.5 250 600 35.0% 198.8 198.1 3% 200 152.2 3% 26.2% 2% 150 400 30.0% 25.1% 23.8% 100 2% 200 25.0%
Slide 5: High Base Rent Model Ensures Stable Revenue Stream
High Base Rent Model Ensures Stable Revenue Stream Over 90% of revenue from stable streams 78.5% Base rental1: HK$683.9M 1H2024 Revenue 14.0% Charge-out income2: HK$122.4M HK$871.8M 6.9% Carpark income: HK$60.1M 0.5% Turnover rent: HK$4.7M 0.1% Other income: HK$0.7M Notes: 1. Including license incom
Slide 6: Capital Management
Results Overview Capital Management Portfolio Performance Marketing Campaigns Enhancement Initiatives Outlook & Strategies Sustainability Progress Appendix CNY Lion Dance, Fortune Metropolis
Slide 7: Prudent Debt Management
Prudent Debt Management Debt Maturity Profile1 (HK$M) Loan in SGD3 24.8% 4.1% No refinancing need Loan in HKD Gearing Effective borrowing cost2 3,800 until Oct 2025 2,500 2.4 yrs 2.5 yrs 577 1,800 Avg. debt maturity Avg. swap maturity 1,200 600 2024 0 2025 2026 2027 2028 Un-committed 2.9x 55% Intere
Slide 8: Stable Portfolio Valuation
Stable Portfolio Valuation Portfolio Total Hong Kong Portfolio Singapore Asset HK$ 38,715M HK$ 38,167M SG$ 95M 0.7% from Dec 2023 0.7% from Dec 2023 Remains Unchanged Per sf (G) retail HK$12,700 psf NAV Per Unit Acquisition of Stars of HK$ 13.67 Per carpark lot HK$784,000 Kovan Property 1.9% from De
Slide 9: Portfolio Performance
Results Overview Capital Management Portfolio Performance Marketing Campaigns Enhancement Initiatives Outlook & Strategies Sustainability Progress Appendix Car show at atrium, +WOO Phase 2
Slide 10: Portfolio Performance Highlights
Portfolio Performance Highlights Occupancy Occupancy at +WOO improved 11 out of 17 malls with as AEIs completed, with 94.8% occupancy >97% further pick up expected in As at 30 Jun 2024 2H2024 Retention Signed 424K sq.ft. of 560K sq.ft. (18.5% of total 83% leases (new lettings & renewals) in 1H2024 G
Slide 11: A Strategic Focus on Necessity Trades
A Strategic Focus on Necessity Trades Necessity Trades WALE Lease Expiry in 2H 2024 72% 1.7 Yrs 0.6million sq.ft OR 19% of rental By rental income By rental income By Gross Rentable Area Tenant’s Trade Mix By Gross Rental Income (as at 30 Jun 2024) 1.7% Community Services 0.8% 25.9% Food & Beverages
Slide 12: Proactive Leasing Efforts
Proactive Leasing Efforts New F&B that Boost Customer Appeal New Daily Essential Goods & Services Openings Fortune City One Convenient store in +WOO Grocery store and medical centre in Belvedere Sq. Ma On Shan Plaza Beauty in MOSP Education centres in Jubilee Sq. & Caribbean FORTUNE REIT | 1H2024 Fi
Slide 13: Hourly Carpark Income & Footfall
Hourly Carpark Income & Footfall Case Study Hourly Carpark Income 1.1% YoY 2.2% HoH Popular F&B drew higher traffic at Waldorf As % of 2018-average 122% 2018-Avg 2024 2023 120% 111% 113% 109% 110% 108% 107% 106% 104% 99% 101% 107% 99% 100% 102% 107% 102% 97% 94% 80% Jan Feb Mar Apr May Jun Jul Aug S
Slide 14: Marketing Campaigns
Results Overview Capital Management Portfolio Performance Marketing Campaigns Enhancement Initiatives Outlook & Strategies Sustainability Progress Appendix Family Carnival
Slide 15: Marketing & Events to Drive Footfall and Tenants' Sales
Marketing & Events to Drive Footfall and Tenants’ Sales CNY & Easter festive celebrations and stage events Family Carnival that connects educational tenants and families Free parking promotion & shopping reward campaigns FORTUNE REIT | 1H2024 Financial Results | Page 15
Slide 16: Enhancement Initiatives
Results Overview Capital Management Portfolio Performance Marketing Campaigns Enhancement Initiatives Outlook & Strategies Sustainability Progress Appendix +WOO Playground
Slide 17: +WOO – Completion of AEIs
+WOO – Completion of AEIs Refreshed brand image CAPEX HK$300M Completion July 2024 Occupancy 93.4% Re-opening of main entrance Jun 2024 Atrium with new tenants FORTUNE REIT | 1H2024 Financial Results | Page 17
Slide 18: +WOO – The transformation
+WOO – The transformation BEFORE BEFORE BEFORE Escalator relocated to open up prime atrium space Connecting platform removed Iconic mascots as photo spots. New ceiling Create a coffee shop space and better retail Brighter and modernized interior to improve energy efficiency and ambience shopfront AF
Slide 19: +WOO - Revitalized with Upgraded Amenities
+WOO - Revitalized with Upgraded Amenities Inclusive amenities New directory and service counter Improved accessibility with new ramp Kid’s playground, engaging games and visuals Nursery room Smart toilet with digital display Free filter water FORTUNE REIT | 1H2024 Financial Results | Page 19
Slide 20: +WOO – Leading Mall in Tin Shui Wai
+WOO – Leading Mall in Tin Shui Wai 18 16% 31% New-to- Lifestyle & F&B (by GRA) Mall F&B Entertainment (by GRA) 35 9 F&B 140+ Popular The Only Tenants Eateries Branch in TSW Others include: retail, services & education, supermarket, homewares etc. Game House F&B F&B Cinema Gym FORTUNE REIT | 1H2024
Slide 21: Fortune Metropolis – Repositioning Opportunity
Fortune Metropolis – Repositioning Opportunity CAPEX Commencement Target Completion HK$200M 4Q2024 2026 Improve atrium and spandrel design To MTR ▪ A modernized atrium for a pleasant and more inviting & University experiencing Enhance space efficiency ▪ Removal of bubble lifts that currently block s
Slide 22: Outlook & Strategies
Results Overview Capital Management Portfolio Performance Marketing Campaigns Enhancement Initiatives Outlook & Strategies Sustainability Progress Appendix Metro Town
Slide 23: Outlook and Strategies
Outlook and Strategies Market Cost and Portfolio Dynamics Capital Management Optimization ▪ Slow recovery amid structural changes ▪ Cost optimization and operational ▪ Occupancy at +WOO to pick up as we efficiency initiatives to ease pressure on continue to lease out the remaining ▪ Expansion of Ind
Slide 24: Sustainability Progress
Results Overview Capital Management Portfolio Performance Marketing Campaigns Enhancement Initiatives Outlook & Strategies Sustainability Progress Appendix Farm@Fortune at Fortune City One
Slide 25: Persistent Commitments to Sustainability
Persistent Commitments to Sustainability 85% GRA 100% Equipped with BMS HK assets certified as Green Buildings 5 5 CSR Fortune Malls equipped Events in 1H2024 with EV chargers 62% 152 kgs of produce Sustainability-linked Grown and donated by Loans Farm@Fortune in 1H2024 FORTUNE REIT | 1H2024 Financi
Slide 26: Appendix
Results Overview Capital Management Portfolio Performance Marketing Campaigns Enhancement Initiatives Outlook & Strategies Sustainability Progress Appendix Festive decoration at Ma On Shan Plaza
Slide 27: Investment Highlights
Investment Highlights HK$7.6B HK$38.7B HK$13.67 72% income MSCI index Highest 5-Star Market Portfolio NAV from non-discretionary Inclusion in World GRESB Rating Cap Valuation per Unit trades Small Cap Fortune City One Ma On Shan Plaza +WOO Fortune Metropolis Laguna Plaza 20+ years A pure-play in of
Slide 28: Sustainability Highlights
Sustainability Highlights 5-Star 1st HK REIT Received SBTi’s approval Highest rating in GRESB for near-term emission reduction for 3 consecutive years target 7-Yr AA- Low Risk in consecutive Sustainability Rating by Morningstar Hang Seng Corporate Hong Kong Quality Assurance Sustainalytics ESG Risk
Slide 29: A Hong Kong-Focused Neighborhood Mall Portfolio
A Hong Kong-Focused Neighborhood Mall Portfolio 17 Assets 2 Flagship Malls in HK 16 neighborhood malls in Hong Kong 1 suburban retail property in Singapore 1 Fortune City One New 3 10 2 +WOO Territories Tai Wai 1 City One 8 5 Fortune Metropolis 15 16 6 Tsuen Wan West 11 3 million sq.ft. 12 Kowloon D
Slide 30: Portfolio Valuation Breakdown
Portfolio Valuation Breakdown (13) Stars of Kovan Portfolio Valuation1 (HK$M) Property 1.4% (1) Fortune City One 7,912 Portfolio valuation (2) +WOO 7,660 (3) Ma On Shan Plaza 5,545 HK$38,715M (4) Metro Town 3,514 (9) 3.1% (1) 20.4% (5) Belvedere Square 2,387 (8) 4.5% (6) Laguna Plaza 2,371 (7) Fortu
Slide 31: Stable Portfolio Occupancy
Stable Fortune REIT’s portfolio GRA(sq.ft.) Occupancy Portfolio 30 Jun 24 31 Dec 23 30 Jun 23 1. Fortune City One 414,469 97.1% 97.8% 98.7% Occupancy 2. +WOO 665,244 93.4% 91.8% 89.1% 3. Ma On Shan Plaza 310,084 98.4% 98.7% 99.2% 4. Metro Town 180,822 100.0% 100.0% 100.0% 5. Belvedere Square 276,862
Slide 32: Resilient Asset Class with Attractive Yield
Resilient Asset Class An attractive distribution yield of 9.7% with Attractive Yield 9.7% 7.5% 4.2% 3.5% 2.6% Fortune REIT's HS Property Index HS Index HK 10-yr Govt. HK Composite Annualized Dividend Yield 2 Dividend Yield 2 Bond Yield 2 Interest Rate2 Distribution Yield 1 Sources: Company Data, Han
Slide 33: Income Statement
Income (HK$’M) 1H2024 1H2023 YoY% 2H2023 HoH% Statement Revenue 871.8 908.7 -4.1% 877.2 -0.6% Property operating expenses (219.1) (216.0) +1.4% (230.2) -4.8% Manager’s performance fee (19.6) (20.8) -5.8% (19.4) +0.9% Net property income 633.1 671.9 -5.8% 627.5 +0.9% Manager’s base fee (58.1) (58.8)
Slide 34: Balance Sheet
Balance Sheet HK$’000 30 Jun 2024 31 Dec 2023 Gearing ratio Current assets 208,506 205,134 24.8% Non-current assets 38,992,545 39,305,164 Total assets 39,201,051 39,510,298 Portfolio valuation Current liabilities 1,779,366 1,744,536 HK$38,715M Non-current liabilities 9,701,045 9,685,662 Total liabil
Slide 35: Distribution Details
DISTRIBUTION DETAILS 22 August 2024 E x - d a te 18.23 HK cents 23 August 2024 D P U f o r the 6 m o n ths e n d e d 3 0 J u n 2 0 2 4 Reco r d D a te 17 September 2024 P a ym e nt D a te FORTUNE REIT | 1H2024 Financial Results | Page 35
Slide 36: Acquisitions for Growth
Acquisitions for Growth Asset Portfolio grew >10 times in 20 years AUM increased to HK$38.7 billion from HK$3.3 billion since IPO 17 17 17 14 16 Malls Malls 16 Malls Malls Malls 11 Malls Malls +WOO Laguna Plaza Stars of Kovan Property 5 Provident Square Malls Rhine Avenue Metro Town Caribbean Square
Slide 37: Proven Track Record in AEIs
Proven Track Record in AEIs Property / Enhanced Area Completion CAPEX (HK$) ROI1 Metro Town –10,000 sf 1Q 2023 5.3M 11% +WOO Phase 1 – 200,000 sf 3Q 2019 150M 10.5% Belvedere Square - 126,000 sf 4Q 2015 80M 20.3% Ma On Shan Plaza - 59,000 sf 4Q 2013 15M 60% (previously a supermarket) Fortune City On
Slide 38: AEIs at Metro Town
AEIs at Metro Town CAPEX Completion Return on Investment HK$5.3M Jan 2023 11% ▪ Subdivided a 8,500 sq.ft. vacant kindergarten together with 2 adjacent shops into three shops to cater for new demand ▪ Introduced new F&B and Household tenants ▪ More efficient layout with widen and more prominent shop
Slide 39: AEIs at Belvedere Square
AEIs at Belvedere Square Phase 3 CAPEX Completion ROI HK$80M 4Q2015 >20% Enhanced offerings after AEIs F&B Toy Shop Health Food FORTUNE REIT | 1H2024 Financial Results | Page 39
Slide 40: AEIs at Fortune City One
AEIs at Fortune City One CAPEX Completion ROI HK$150M 3Q2013 >20% FORTUNE REIT | 1H2024 Financial Results | Page 40
Slide 41: Hong Kong Economy – Macro Conditions
Hong Kong Economy – Macro Conditions 3.4 3.4 4.3 3.3 GDP 3.0 3.1 2.9 2.6 1.9 1.1 YoY % Change -3.6 -3.5 4.8 -4.3 +3.3% YoY GDP in real terms Q2 2024 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 4Q 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 5.7 4.3 4.9 Composite 3.7 2.9 2.4 2.5 2.4 2.42.
Slide 42: Hong Kong Retail Sales and Restaurant Receipts
Hong Kong Retail Sales and Restaurant Receipts Retail Sales Value (as % of 2018 level) ▪ In 1H 2024, total retail sales value decreased by 6.6% YoY, only reached 110% 79.1% of 2018-level in Jun 2024. 94.6% Supermarkets ▪ Impacted by increased outbound travels 90% 79.1% Total Retail Sales and slow to
Slide 43: Tourist Arrivals and Outbound Travels
Tourist Arrivals and Outbound Travels Inbound Tourist Arrivals ▪ 21 million tourists (i.e. an average of 3.5 4,500,000 72% 76% 72% 80% million per month) visited HK in 1H 2024. 4,000,000 66% 69% 68% 64% 69% 66% 70% About 76% came from Mainland China. 59% 59% 60% 3,500,000 55% 3,000,000 60% 50% ▪ In
Slide 44: Singapore - Retail Market Performance
Singapore - Retail Market Performance S$B Retail sales picking up steadily post-covid +2.9% GDP 5.00 50% +3.0% YoY in 1Q2024 YoY MTI expects GDP to grow by Retail Sales Value (Excl. Motor Vehicles) Online Sales Proportion 4.19 For 2Q 2024 1.0% to 3.0% in 2024 4.00 3.52 40% 3.00 30% -0.6% Retail Sale
Slide 45: Disclaimer
Disclaimer This document has been prepared by ESR Asset Management (Fortune) Limited, in of the Fortune REIT’s financial or trading position or prospects. This document its capacity as the manager (“REIT Manager”) of Fortune Real Estate Investment may contain forward looking statements. Investors ar
Slide 46: Contact Us
CONTACT US ESR Asset Management (Fortune) Limited Justina Chiu Chief Executive Officer justina.chiu@esr.com Jenny Hung Deputy Chief Executive Officer jenny.hung@esr.com Maggie Mui Assistant Director, Investor Relations maggie.mui@esr.com www.fortunereit.com www.fortunemalls.com.hk
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