Keppel REIT · SGX:K71U
Keppel REIT — FY2014 Earnings Presentation
41 slides from Keppel REIT's earnings presentation, Jan 19, 2015
Slide 1: Full Year 2014 Financial Results
Full Year 2014 Financial Results 19 January 2015 KEPPEL REIT I FULL YEAR 2014 FINANCIAL RESULTS 1
Slide 2: Important Notice
Important Notice Important Notice The value of Units and the income from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by the Manager, or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the princip
Slide 3: Leading Landlord in Singapore's Raffles Place and Marina Bay
Leading Landlord in Singapore’s Raffles Place and Marina Bay » Strategic portfolio transformation in 2014 » Acquisition of MBFC Tower 3 positions Keppel REIT as the S-REIT with the youngest and largest portfolio of premium Grade A office assets in Singapore’s central business district Marina Bay Fin
Slide 4: Keppel REIT: Overview
Keppel REIT: Overview S$8.2 billion 3.3 million sf (1) Assets Under Management Total attributable NLA 12 Office Towers In 9 Quality Premium Grade and Grade A assets in CBDs of Singapore and Australia 289 tenants S$3.9 billion (2) Diversified across various business sectors Market Capitalisation The
Slide 5: Quality Portfolio of Prime Assets
Quality Portfolio of Prime Assets » With 88% of portfolio in Singapore and 12% in Australia Singapore Properties Ocean Financial Centre Marina Bay Financial Centre One Raffles Quay Bugis Junction Towers (99.9% interest) (33.3% interest) (33.3% interest) Australia Properties 8 Chifley Square, Sydney
Slide 6: Key Milestones in 2014
Key Milestones in 2014 1Q 2014 2Q 2014 3Q 2014 4Q 2014 » Ocean Colours at » Announced the » Announced the » Overwhelming Ocean Financial divestment of acquisition of response from Centre is fully Prudential Tower for one-third interest in Unitholders for operational $512 million MBFC Tower 3 all 3 r
Slide 7: Key Highlights
Marina Bay Financial Centre, Singapore 1. Key Highlights 2. Financial Highlights 3. Capital Management 4. Portfolio Analysis 5. Market Review and Outlook KEPPEL REIT I FULL YEAR 2014 FINANCIAL RESULTS 7
Slide 8: FY 2014 Key Financial Highlights
FY 2014 Key Financial Highlights » Net Property Income and Property Income 12% and 9% y-o-y for current portfolio(1) » Contributions from: Ocean Financial Centre 14.3% y-o-y to $82.7 mil 8 Exhibition Street 91.5% y-o-y to $13.1 mil » Share of Results of Joint Ventures grew more than 3 time
Slide 9: FY 2014 Key Capital Management Highlights
FY 2014 Key Capital Management Highlights » Completed the early refinancing of a total of $275 million and $75 million of borrowings due in 2015 and 2016 respectively » Approximately 65% of Keppel REIT’s total borrowings is on fixed rate basis » Weighted average term to expiry of debt of 3.6 years »
Slide 10: FY 2014 Key Portfolio Highlights
FY 2014 Key Portfolio Highlights » Positive rent reversions of 17% for the entire portfolio on average » Achieved rental upside averaging 23% for new office leases » Rental growth of 16% for office renewals and reviews » High tenant retention rate of 85% for office tenants » Average rental rates ach
Slide 11: Financial Highlights
One Raffles Quay, 1. Key Highlights Singapore 2. Financial Highlights 3. Capital Management 4. Portfolio Analysis 5. Market Review and Outlook KEPPEL REIT I FULL YEAR 2014 FINANCIAL RESULTS 11
Slide 12: Net Property Income for current portfolio up 12% y-o-y
Net Property Income for current portfolio 12% y-o-y (1) » Net Property Income and Property Income for the current portfolio 12% and (1) 9% y-o-y respectively » Net increase in Net Property Income and Property Income of 9.5% y-o-y to $151.4 mil and 5.8% y-o-y to $184.1 mil, despite the absence of
Slide 13: Distribution Yield of 5.9%
Distribution Yield of 5.9% » Strong performance of Net Property Income Ocean Financial Centre 14.3% y-o-y to $82.7 mil 8 Exhibition Street 91.5% y-o-y to $13.1 mil, due to full-year contribution from the 50% interest acquired in Aug 2013 » Share of Results of Joint Ventures grew more than 3
Slide 14: Balance Sheet
Balance Sheet As at 31 Dec 2014 As at 31 Dec 2013 Non-current Assets $ 7,104 m $6,650 m Total Assets $7,329 m $6,776 m (1) Borrowings $3,545 m $3,031 m Total Liabilities $2,870 m $2,877 m Unitholders’ Funds $4,457 m $3,897 m Net Asset Value (NAV) Per Unit $1.41 $1.40 (2) Adjusted NAV Per Unit $1.40
Slide 15: 4Q 2014 Distribution Per Unit
4Q 2014 Distribution Per Unit » 4Q 2014 DPU of 1.51 cents Advanced distribution: 1.25 cents Remaining distribution: 0.26 cents » One-off impact to distribution due to absence of income contribution from Prudential Tower which has been divested and only a two-week contribution from MBFC Tower 3 »
Slide 16: Attractive yield compared to other investments
Attractive yield compared to other investments » Keppel REIT offers attractive yield compared to other investments (1) Keppel REIT DPU Yield 5.9% (2) FTSE ST REIT Index Dividend Yield 5.60% (2) FTSE ST RE Index Dividend Yield 4.0% (2) STI Dividend Yield 3.3% CPF Ordinary Account 2.5% 10-year SG Govt
Slide 17: Capital Management
8 Exhibition Street, Melbourne 1. Key Highlights 2. Financial Highlights 3. Capital Management 4. Portfolio Analysis 5. Market Review and Outlook KEPPEL REIT I FULL YEAR 2014 FINANCIAL RESULTS 17
Slide 18: Proactive Capital Management Strategy
Proactive Capital Management Strategy » Continue to adopt a prudent and proactive capital management strategy Borrowings on Fixed-rate As at 31 Dec 2014 35% % Fixed loans Gross Borrowings $3,545 m % Non-fixed loans 65% Interest Coverage Ratio 5.0 times All-in Interest Rate 2.23% Percentage of Assets
Slide 19: Well-distributed Debt Maturity Profile
Well-distributed Debt Maturity Profile » Early refinancing of loans due in 2015 and 2016 extended debt maturity to 2020 » More than 80% of the loans are not due for repayment until 2017 and beyond Loans Due in 2015 Loans Due in 2016 Early refinanced 48% Early refinanced 16% $275 million $75 million
Slide 20: Portfolio Analysis
1. Key Highlights 2. Financial Highlights 3. Capital Management 4. Portfolio Analysis 5. Market Review and Outlook Ocean Financial Centre, Singapore KEPPEL REIT I FULL YEAR 2014 FINANCIAL RESULTS 20
Slide 21: Proactive Lease Management
Proactive Lease Management Overall Rents from Rents from Office Rental Reversions New Office Tenants Renewals and Reviews +17% +23% +16% Marina Bay Financial Centre, » Approximately 450,000 sf of leases were secured, renewed Singapore and reviewed in FY 2014 Positive rental reversions of 17% for o
Slide 22: Leasing Demand in 2014
Leasing Demand in 2014 » Over 50% of new leasing demand in 2014 came from industries including the TMT sector, energy and natural resources as well as real estate and property services » Demand from firms in TMT sector more than doubled that of 2013 » These companies chose to locate to prime busines
Slide 23: Diversified Tenant Business Sectors
Diversified Tenant Business Sectors » In 4Q 2014, tenants who signed on ranged from various business sectors » Office Tenants Retail Tenants KEPPEL REIT I FULL YEAR 2014 FINANCIAL RESULTS 23
Slide 24: Diversified Tenant Business Sectors
Diversified Tenant Business Sectors Number of tenants Legal, 9.8% 289 TMT Sector, 11.0% ~10% from FY 2013 Energy & natural resources, 9.4% (1) Real estate & property services, 5.3% Accounting & consultancy services, 5.1% Services, 3.4% Others, 2.9% Banking, insurance & financial services, 47% Gove
Slide 25: Positive Committed Occupancy Levels
Positive Committed Occupancy Levels » 9 out of the 11 completed office towers are fully committed » Overall portfolio committed occupancy at healthy levels of 99.3% Singapore Australia Overall 99.5% 98.5% 99.3% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 99.3% 98.7% 92.5% (1) Singapore core CBD occupa
Slide 26: Singapore Portfolio Occupancy above Market
Singapore Portfolio Occupancy above Market » Keppel REIT’s Singapore portfolio occupancy is consistently above Singapore’s Core CBD occupancy levels 100% Keppel REIT Historical Occupancy 98.7% 100.0% 99.5% Keppel REIT 98.5% 95.0% 93.9% 95% 95.7%(1) Singapore Core CBD 90% 85% 80% 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Slide 27: Long Weighted Average Lease Expiry
Long Weighted Average Lease Expiry » Top 10 tenants account for approximately 42% of portfolio NLA » Long WALE of 9 years and are diversified across 7 office towers in Singapore and Australia Weighted Average Lease Expiry (WALE) Top 10 Tenants (by NLA) 9.0 years(1) Australia and New Zealand Banking
Slide 28: Healthy Lease Expiry Profile
Healthy Lease Expiry Profile » Proactive leasing efforts for the approximate 420,000 sf of office space due for renewal and review in 2015 » Well-staggered lease profile with not more than 18.2% of the portfolio expiring in any one year over the next five years Portfolio Lease Profile (by NLA) as at
Slide 29: Project Update: New Office Tower in Perth
Project Update: New Office Tower in Perth New Office Tower at the Old Treasury Building site » Construction for the 35-storey building has reached level 32 » On track for completion in 2H 2015 Construction Progress Artist Impressions Town Hall Office Tower Office Tower Treasury Hotel Treasury Hotel
Slide 30: 4Q 2014 - Ongoing Community Engagement
4Q 2014 - Ongoing Community Engagement Arts for all WTA Christmas Cheer SG50 » National Arts Council’s » Public awareness event for » Tenants at Ocean Financial » Ocean Financial Centre (NAC) “Arts in your the Women’s Tennis Centre and Bugis Junction joined the nation in Neighbourhood” Association (
Slide 31: FY 2014 - Awards and Accolades
FY 2014 - Awards and Accolades Global Real Estate Sustainability Benchmark (GRESB) » Ranked No. 1 in Asia for Office Sector » Ranked the Regional Leader in Asia for Office Sector » Top 3 in Asia across all diversified entities and sectors » Top 5% globally across all diversified entities and sectors
Slide 32: Market Review and Outlook
Bugis Junction Towers, Singapore 1. Key Highlights 2. Financial Highlights 3. Capital Management 4. Portfolio Analysis 5. Market Review and Outlook KEPPEL REIT I FULL YEAR 2014 FINANCIAL RESULTS 32
Slide 33: Office Market Review – Singapore
Office Market Review – Singapore » Average Grade A occupancy in the core CBD area held firm at 95.7% » Grade A office rents continued to lead growth, rising an average of 14.9% y-o-y to reach $11.20 psf $15 96.6% 100% 95.0% 95.2% 95.7% 95.8% 95.7% 93.2% 93.2% 93.5% 91.2% 91.6% 92.2% 90.7% Average Gr
Slide 34: Market Outlook – Singapore
Market Outlook Singapore » Economy expected to record 2.8% growth in 2014 » Government forecast a 2% to 4% growth in 2015, on the back of modest global growth and the tightening labour conditions domestically » Positive office demand sentiment expected to continue into 2015 driven by various industr
Slide 35: Market Outlook – Australia
Market Outlook Australia » Recorded an economic growth of 2.7% y-o-y in 3Q 2014 » Reserve Bank of Australia will continue to maintain interest rate at 2.5% to encourage sustainable economic growth » Demand for office remained relatively stable across Australia and was driven largely by the technolog
Slide 36: Thank You
Thank You KEPPEL REIT I FULL YEAR 2014 FINANCIAL RESULTS 36
Slide 37: Additional Information
Additional Information Marina Bay Link Mall Singapore KEPPEL REIT I FULL YEAR 2014 FINANCIAL RESULTS 37
Slide 38: Singapore's Leading Office REIT
Singapore’s Leading Office REIT Vision To be a successful commercial real estate investment trust with a sterling portfolio of assets pan-Asia Mission To deliver stable and sustainable returns to Unitholders by continually enhancing our assets and expanding our portfolio Key Thrusts Prudent capital
Slide 39: Growth Record
Growth Record • Divested stake in Prudential Tower • Completed the acquisition of a • Increased interest • Acquisition of the one-third in OFC to 99.9% new office tower interest in at the Old MBFC Tower 3 • Obtained tax • First overseas transparency Treasury Building acquisition • First forward in P
Slide 40: Portfolio Information
Portfolio Information » Keppel REIT’s AUM is approximately $8.2 billion as at 31 December 2014, with 88% of portfolio in Singapore and 12% in Australia » Around 93% of Keppel REIT’s Singapore portfolio is located in the prime Raffles Place and Marina Bay precincts Marina Bay Marina Bay Financial Oce
Slide 41: Portfolio Information
Portfolio Information Office Tower to be built 8 Chifley 77 King Street Office 8 Exhibition Street, 275 George Street, at the Old Treasury Square, Sydney(1) Tower, Sydney Melbourne(1) Brisbane(1) Building site, Perth(1) 33-storey Grade A office tower scheduled for 34-storey Grade A 18-storey Grade A