Wharf Real Estate Investment Company Limited · HKEX:1997
Wharf Real Estate Investment — Wharf Real Estate Inv — FY2020 Earnings Presentation
37 slides from Wharf Real Estate Investment's earnings presentation, Mar 4, 2021
Slide 1: Unprecedented Pandemic Spared No One
Unprecedented Pandemic Spared No One Wharf Real Estate Investment Company Limited 2020 Final Results 4 Mar 2021 1
Slide 2: Biggest Pandemic in a Century
Biggest Pandemic in a Century HK$ Billion HK Retail Sales & Visitor Arrivals Million 700 65.1 70 • Hotel & IP Sectors Badly Hit 58.5 600 56.7 55.9 60 ‒ Cross-border Tourism Largely at a Standstill 500 446 485 50 437 431 ‒ Ongoing Social Distancing Savaged Retail, F&B 400 326 (-24%) 40 300 30 ‒ HK Re
Slide 3: $2B+ of Retail Rent Relief
$2B+ of Retail Rent Relief 3 Malls Retail Revenue vs HK Retail Sales (YoY Chg.) 30% 25% 20% 17% 15% 15% 19% 9% • $2B+ of Rent Relief to Support Mall Tenants 10% 10% 11% 5% 5% 5% 9% 0% -2% (Majority as Base Rent) 0% -4% 2% -10% 1H: -33% • Negative Rental Reversion in Line with Market -8% -11% 2H: -13
Slide 4: HKIP Revenue – Narrowing Decline in 2H
HKIP Revenue – Narrowing Decline in 2H HKIP Revenue (HK$B) HK$ Billion 2020: $11.5B (-19%) 16 0.2 0.2 14 0.3 • Retail Revenue -26% YoY to $7.6B 12 0.3 3.7 3.8 0.2 3.4 3.5 • Mall Net Operating Cash Flow -36% after Rental Drop, 10 3.7 (-20%) (-18%) 8 Rent Relief & Tripling in Marketing Expenses 6 0.1
Slide 5: Recovery Bolstered by Marketing Support
Recovery Bolstered by Marketing Support • Tripling of Marketing Expenses • Extensive Campaigns to Subsidise Shoppers’ Consumption • Proactive Retenanting to Bring Constant Excitement • Robust Footfall & Sales Recovery between COVID-19 Waves • Mall Sales Drop Slowed during 4Q20 5 5
Slide 6: Financial Highlights
Financial Highlights HK$ Million 1H20 2H20 2020 2019 Group Revenue 6,775 8,740 15,515 16,043 • Group Revenue -3% & UNP -24% Operating Profit 4,966 5,007 9,973 12,711 – IP UNP -23% & Loss in Hotel Underlying Net Profit (UNP)* 3,844 3,633 7,477 9,791 Net IP Fair Value Change (7,350) (6,415) (13,765) (
Slide 7: Agenda
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 7 7
Slide 8: Market Adjustment in Process
Market Adjustment in Process HC Revenue Breakdown HK$ Billion 2020: $8.7B (-25%) 14.0 0.2 • Retail – Activity Gradually Reviving; Tenants Turnover 12.0 0.3 0.3 1.5 0.2 1.2 10.0 1.4 1.3 0.2 • Office – Subdued Demand amid Cautious Sentiment 8.0 2.5 2.6 2.7 0.4 2.4 2.7 (-28%) (-22%) • Hotel – Severely
Slide 9: Core Strength Mitigates Pressure
Core Strength Mitigates Pressure Rental Income Category Breakdown Fashion 39% • Unique Critical Mass w/ 500+ Diverse Tenants Kid's Related 3% • Comprehensive Mix Mitigates Market Risk to Tenants Rental Income F&B & Ent. Jewellery, Beauty • Tenants Take Long Term View, Selective Location & 5% $4.9B &
Slide 10: Tenant Demand Continues
Tenant Demand Continues Brands & Restaurants Openings in 2020 Expansions by World Renowned Brands HK/ Kowloon Debuts Hermès Alexander McQueen (Kowloon Flagship) (Kowloon Flagship) Other Brand Commitments Christian Louboutin Jimmy Choo (Kowloon Flagship) (Kowloon Flagship) New Restaurant Commitments
Slide 11: Canton Road Hotels
Canton Road Hotels Million HK Visitor Arrivals & Hotel Occupancy 100 100% 86% 89% 84% 80 74% 80% 65.1 • Decimated Occupancy & Room Rate amid Travel Halts 60 56.7 58.5 55.9 60% • Operating Deficits in spite of Stringent Cost Control 40 40% • Prince Hotel Closed for Major Renovation 20 20% 24% 3.6 0 0
Slide 12: Agenda
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 12 12
Slide 13: Market Adjustment in Process
Market Adjustment in Process TS Revenue Breakdown HK$ Billion 2020: $2.3B (-18%) 3.0 • Consolidation Allows New Brands to Enter 2.5 0.7 0.7 0.7 0.8 2.0 • Marketing Support Brings Rise in Footfall 0.7 1.5 (-19%) (-17%) • YoY Sales Growth Resumed in 4Q 1.0 2.1 2.1 2.1 2.0 0.3 0.4 1.6 • Occupancy*: Ret
Slide 14: Agenda
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 14 14
Slide 15: CBD2 Local Potential
CBD2 Local Potential • Atop Diamond Hill MTR Station – Interchange of Tuen Ma Line & Kwun Tong Line • CBD2 Supported by Local Consumption • Relatively Stable Demand & Footfall • Occupancy* 95%; Retail Revenue -13% *As at 31 Dec 2020 15 15
Slide 16: Agenda
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 16 16
Slide 17: Central Premium Commercial
Central Premium Commercial • Prime Locations Attract Sturdy Demand Occupancy* Office Retail Wheelock House 94% 100% Crawford House 95% 100% *As at 31 Dec 2020 Wheelock House Crawford House 17 17
Slide 18: The Murray
The Murray • Focus on Local Market to Sustain Business • Outperforming Occupancy & Top RevPAR* vs Comp. Set • Operating Deficits Partially Offset by Stringent Cost Control * Revenue per Available Room 18 18
Slide 19: Agenda
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 19 19
Slide 20: Singapore Portfolio
Singapore Portfolio • Prime Location at Key Orchard Road Intersection • Mild Sequential Retail Recovery Post-“Circuit Breaker” Occupancy* GFA (s.f) Wheelock Place 93% 465,700 Scotts Square 91% 130,900 *As at 31 Dec 2020 20 20
Slide 21: Agenda
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 21 21
Slide 22: Prudent Financial Management
Prudent Financial Management Debt Maturity (HK$B) HK$ Billion (As at 31 Dec 2020) 16 • Net Debt $52.0B (Total Asset: $277.9B) 14 12 • Low Interest Cost 1.9% 10 8 • Comfortable Gearing 24.8% 13.3 13.6 6 • Premium Credit Rating: Moody’s A2 Issuer Rating 4 6.6 9.3 6.1 5.4 2 0 2021 2022 2023 2024 2025 2
Slide 23: Coming Attraction
Coming Attraction 23 23
Slide 24: Niccolo Suzhou – The Beacon of the Future
Niccolo Suzhou – The Beacon of the Future • 5th Hotel in the Highly Successful Niccolo Collection • Opening in Suzhou on 1st Apr 2021 • Sky Hotel with Stunning View of Jinji Lake 24 24
Slide 25: Niccolo Suzhou – The Beacon of the Future
Niccolo Suzhou – The Beacon of the Future “The Most Anticipated Luxury Hotel of the Year” Award 2020 Hotel Awards Suzhou First Journey Enchante Hotel Awards Shanghai WOW Travel Award The Anticipated Hotel The Most Anticipated The Most Anticipated Most Anticipated Awards of the Year Luxury Hotel of t
Slide 26: Outlook
Outlook 26 26
Slide 27: Outlook
Outlook • COVID-19 Vaccine Rollout has Helped Economies & Borders to Reopen • Mainland China Leads the World with Rapid Recovery • Tepid & Uneven Economic Recovery Around the World in 2021 • Lingering Sino-US Conflicts • Uneven Road to Recovery for Different Business Segments 27 27
Slide 28: Sustainability
Sustainability 28 28
Slide 29: Sustainability Highlights
Sustainability Highlights • Wharf Emergency Relief Fund to Support the Needy • Published 3rd Standalone Sustainability Report Affected by COVID-19, Incl.: Adopting Core Option of GRI Standards – Aaron Kwok Love & Concern International Charity • Hang Seng Corporate Sustainability Index Series Fund Me
Slide 30: Sustainability Highlights
Sustainability Highlights The Wharf HK Secondary School Art Competition “Morning Star” Launched by The “Star” Ferry • Introduced since 2011, with an Ultimate Goal of • 1 Low Emission Green Ferry in the Fleet st Promoting Art Development in HK • Powered by Diesel-Electric Propulsion System (“DEPS”) •
Slide 31: Data at a Glimpse
Data at a Glimpse 3% Air Emissions Particularly NOx from Over 50,000 Training Hours Offered to the “Star” Ferry Dropped Employees Project WeCan, Over 75,000 Students 6% GHG Emissions of the Portfolio of of 76 Schools Benefitted. CO2 Premier Quality Assets in HK* Our Business Units are Now Partnering
Slide 32: Appendix
Appendix 32 32
Slide 33: HC/TS/PH Performance
HC/TS/PH Performance Harbour City Times Square Plaza Hollywood 2020 (HK$M) Revenue % Chg Revenue % Chg Revenue % Chg Retail 5,366 -28% 1,574 -22% 479 -13% Office 2,705 -2% 696 -6% - - Hotels & Club 410 -65% - - - - Serviced Apt. 193 -13% - - - - Total 8,674 -25% 2,270 -18% 479 -13% Valuation* as of
Slide 34: Premium Quality Portfolio
Premium Quality Portfolio Revenue Valuation* GFA Harbour City Harbour City Harbour City 70.0% 66.4% 68.5% 2020 Revenue Valuation GFA $12.4B $259B 12.3M s.f Singapore Portfolio Singapore Singapore Times Square 2.2% Plaza Times Square Times Square Portfolio Portfolio 16.1% Hollywood Central 2.3% Plaza
Slide 35: Overview of Application of Funds
Overview of Application of Funds Major Capital & Development Expenditure 2020 2021 HK$ (Actual) (Projected) HKIP $221M $469M Singapore IP $10M $34M Mainland Properties $605M $672M Hotels & Others $320M $283M Total $1,156M $1,458M 35 35
Slide 36: Thank You
Unprecedented Pandemic Spared No One Thank You 36 36
Slide 37: End of Presentation
End of Presentation Wharf Real Estate Investment Company Limited [HKEx Stock Code: 1997.HK] Disclaimer All information and data are provided for information purposes only. All opinions included herein constitute our judgment as of the date hereof and are subject to change without notice. The Group,