Keppel REIT · SGX:K71U
Keppel REIT — K-REIT Asia — Q1 2007 Earnings Presentation
31 slides from Keppel REIT's earnings presentation, Apr 16, 2007
Slide 1: 1Q2007 Financial Results
1Q2007 FINANCIAL RESULTS (1 January to 31 March 2007) 16 April 2007 1
Slide 2: Contents
Contents Highlights Financial Results Portfolio Performance Market Review and Outlook Going Forward 2
Slide 3: Highlights
Highlights Financial Results (1 Jan to 31 Mar 2007) ¾ Distribution Per Unit (DPU) of 1.77 cents (7.18 cents annualised) ¾ 99.4% committed occupancy, higher than Core CBD occupancy of 96.8% and Fringe CBD occupancy of 95.1% ¾ Total return of 28.7%(1) for 1Q2007 and 213.8% since listing (2) (1) Total
Slide 4: Financial Results
K-REITaSla Financial Results
Slide 5: Higher Distributable Income
Higher Distributable Income Distributable Income of $4.3m in 1Q2007 outperforms 1Q2006 by 23.6% 1Q2007 1Q2006 4Q2006 (1) ($'000) Actual Pro forma % Chg Actual % Chg Property Income 8,866 7,868 12.7 9,102 (2.6) Property Expenses (2,404) (2,302) 4.4 (2,888) (16.8) Net Property Income 6,462 5,566 16.
Slide 6: Stable DPU
Stable DPU DPU holds steady at 1.77 cents for 1Q2007 Annualised DPU for 1Q2007 improves to 7.18 cents 1Q2007 4Q2006 Actual Actual % Chg Distribution Per Unit (DPU) 1.77 ¢ 1.76 ¢ 0.6% Annualised DPU (1) 7.18 ¢ 6.98 ¢ 2.9% Distribution Yield (2) 2.24% 2.18% 2.8% (1) Annualised DPU of 7.18 cents is
Slide 7: Balance Sheet Highlights
Balance Sheet Highlights As At ($m) 31-Mar-07 31-Dec-06 Non-current Assets (1) 677.0 677.0 Total Assets 690.6 694.9 Borrowings 189.1 189.0 Total Liabilities 202.2 202.5 Unitholders' Funds 488.4 492.4 Net Asset Value Per Unit $2.02 $2.04 Adjusted NAV Per Unit (2) $2.00 $2.00 (1) Investment properties
Slide 8: Gross Revenue by Asset
Gross Revenue by Asset Bugis 36% Junction Towers 1Q2007 1Q2006 4Q2006 ($ '000) Actual Pro forma % Chg Actual % Chg (1) Prudential Tower 1,632 1,293 26.2 1,609 1.4 Keppel Keppel Towers & GE Tower 4,046 3,634 11.3 4,379 (7.6) Towers & GE Tower 46% Bugis Junction Towers 3,188 2,941 8.4 3,114 2.4 Total
Slide 9: Net Property Income by Asset
Net Property Income by Asset Bugis Junction 36% Towers 1Q2007 1Q2006 4Q2006 ($ '000) Actual Pro forma % Chg Actual % Chg (1) Prudential Tower 1,283 993 29.2 1,218 5.3 Keppel Towers Keppel Towers & GE Tower 2,863 2,340 22.4 2,980 (3.9) and GE 44% Tower Bugis Junction Towers 2,316 2,233 3.7 2,016 14.9
Slide 10: Capital Management
Capital Management Fixed rate loans locked in to mitigate risk of interest rate hike ¾ 100% fixed for five years until May 2011 As At 31-Mar-07 31-Dec-06 Borrowings $190.1m $190.1m Gearing (1) 27.5% 27.4% Interest Coverage Ratio (2) 3.0 times 2.7 times All-in Interest Rate (3) 4.06% 4.06% Weighted
Slide 11: Portfolio Performance
K-REI!ITasSla Portfolio Performance
Slide 12: Broad Tenant Diversity
Broad Tenant Diversity Top 10 Tenants : 54.1% of NLA (73,027 sm ) @ 31 Mar 2007 International Enterprise Singapore 10.8% GE Pacific 10.1% Keppel Land Int'l 6.7% J.V. Fitness 4.1% Seadrill Management 3.9% Prudential Assurance Co. S'pore 3.6% Singapore Business Federation 3.2% Aedas 3.1% Intercontinen
Slide 13: Broad Tenant Diversity
Broad Tenant Diversity Wide tenant base ¾ A total of 96 tenants from various different industries Financial and business services Hospitality Government agencies Pharmaceuticals and healthcare IT services and consultancy Income diversification to reduce risk ¾ The top tenant by NLA con
Slide 14: Continual Rental Growth
Continual Rental Growth Rise in average portfolio Average Portfolio Gross Rentals Rising $4.10 gross rentals continues $4.05 $4.00 $3.90 Steeper rental increase $3.80 $3.80 in 1Q2007 $3.65 $3.71 $3.70 $3.60 Potential for further $3.50 increase in renewal 30 Jun 06 30 Sep 06 31 Dec 06 $3.40 31-
Slide 15: Riding Rental Uptrend
Riding Rental Uptrend Expiry of old leases allows for positive rent reversions About 16% of the total NLA at Keppel Towers and GE Tower was secured by new tenants at more than 50% higher than preceding rents 15
Slide 16: Occupancy Remains High
Occupancy Remains High 100 99.7 99.4 100% 98.4 Committed occupancy of 95.5 96.4 96.8 99.4% as at 31 Mar 2007 95% 92.9 ¾ Ahead of Core CBD 90% occupancy of 96.8% and Fringe CBD occupancy of 85% 95.1% (Source : CBRE) 80% 30-Jun-06 30-Sep-06 31-Dec-06 31-Mar-07 K-REIT portfolio Core CBD Occupancy 16
Slide 17: Positive Lease Expiry Profile
Positive Lease Expiry Profile K-REIT Asia is able to Lease Expiry as a Percentage of NLA @ 31 Mar 2007 capitalise on rising rents 30% 27.6% 27.5% 24.8% ¾ About 72% of net lettable area 25% (NLA) due for renewal from 2007 to 2010, during which 20% new supply averages less than 14.3% 700,000 sf per
Slide 18: Market Review and Outlook
K-REI!ITasSla Market Review and Outlook
Slide 19: Economy Remains Strong
Economy Remains Strong 1Q2007 Advance GDP growth estimate at 6.0% Continued growth in manufacturing, construction and financial services sectors Government expecting economy to grow at healthy 4.5 – 6.5% in 2007 Steady regional growth to benefit Singapore’s economy 19
Slide 20: Strong Office Demand Continues
Strong Office Demand Continues Continued high demand Prim e Office Occupancy and Rentals for prime office space $9 100% drove rents significantly 98% higher $8 96% ¾ Average prime rents reached $8.60 psf at end of 1Q2007* $7 94% 92% Office take-up increased $6 to 2.4 mil sf in 2006 90% $5 88%
Slide 21: Supply Remains Tight
Supply Remains Tight No substantial new supply Future Supply of Office Space until Marina Bay Financial mil sf 2.6 FY2006 annual take-up Centre (Phase I) comes on 2.4 2.2 stream in 2010 2.0 1.8 1.6 15 - 20 yr average annual take-up ¾ CBD office stock to reduce by 1.4 0.50 1.2 over 1 mil sf from 20
Slide 22: Limited Potential Supply
Limited Potential Supply Office Supply in the Pipeline Year Development NFA (sf) 2007 LKN Building Redevelopment 80,080 VisionCrest 139,940 Central 179,000 SUBTOTAL 399,020 2008 Selegie Road Development 120,300 Limited supply of Straits Trading Building 156,000 Mapletree Lighthouse (fully taken up)
Slide 23: Going Forward
K-REITaSla Going Forward
Slide 24: Forward Strategy
Forward Strategy Actively seek potential acquisitions that will value-add to the portfolio Proactive management and continuous active leasing to achieve better returns for unitholders Continuous evaluation of property portfolio to identify possible asset enhancement initiatives to better meet
Slide 25: A Pan-Asian Commercial REIT
A Pan-Asian Commercial REIT Grow the portfolio by identifying and pursuing quality assets in Singapore and other Asian growth cities. Able to ride on different market cycles to allow for diversification of risks across countries Target Assets Under Management of $2 bln within the next few year
Slide 26: Additional Information
K-REI!ITasSla Additional Information
Slide 27: Snapshot of K-REIT Asia
Snapshot of K-REIT Asia Manager K-REIT Asia Management Limited Property Portfolio Four quality office buildings valued at $677.0m Listing and Trading Date 28 Apr 2006 on Singapore Stock Exchange (1) Market Capitalisation $764.7 million (as at 13 Apr 2007) Unit Price $3.16 (closing price on 13 Apr 20
Slide 28: Property Portfolio
Property Portfolio (1) Prudential Tower Keppel Towers GE Tower Bugis Junction Towers Total Lettable Area (sm) 10,074 39,963 22,990 Car Park Lots - 288 - Number of Tenants 14 69 13 GE Pacific IE Singapore McGraw-Hill Companies Seadrill Management Principal Tenants J.V. Fitness The Executive Centre Si
Slide 29: Total Return
Total Return Total return of 213.8% since listing (1) Total Returns, Distribution Yield and Unit Price $/% % 5 150 140 130 120 4 110 100 90 3 80 70 60 50 2 40 30 20 10 1 0 -10 -20 0 -30 11-Jul-06 25-Jul-06 13-Feb-07 15-Mar-07 29-Mar-07 16-Jan-07 30-Jan-07 16-May-06 30-May-06 13-Jun-06 27-Jun-06 1-
Slide 30: Comparable Returns
-20% 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% 220% 240% 4/28/2006 5/14/2006 5/30/2006 6/15/2006 As at 30 Mar 2007 Source : Bloomberg 7/1/2006 7/17/2006 8/2/2006 K-REIT Asia 8/18/2006 9/3/2006 9/19/2006 10/5/2006 10/21/2006 STI Index 11/6/2006 % Total Return 11/22/2006 12/8/2006 12/24/2006 1/
Slide 31: Thank You
Thank You Important Notice The value of units in K-REIT Asia (“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 l