Spring Real Estate Investment Trust · HKEX:1426
Spring Real Estate Investment Trust — H1 2015 Earnings Presentation
26 slides from Spring Real Estate Investment Trust's earnings presentation, Aug 20, 2015
Slide 1: Interim Results 2015 Presentation
Interim Results 2015 Presentation 20 August 2015 Unsaved Document / 7/15/2013 / 17:51
Slide 2: Disclaimer
Disclaimer This presentation may contain information which is proprietary, confidential and/or legally privileged and has been prepared by Spring Asset Management Limited, in its capacity as the manager (the “Manager”) of Spring Real Estate Investment Trust (the “Trust”). This presentation is being
Slide 3: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 2
Slide 4: Key Messages
Key Messages Five Competitive Strengths of Spring REIT Exposure to Premium Grade office 1 buildings in Beijing CBD Part of China Central Place Complex 2 – a prime mixed-use complex in Beijing CBD and a well recognized brand High occupancy rate with a diverse and 3 high quality tenant base Attractive
Slide 5: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 4
Slide 6: Results Highlights
Results Highlights 1H2015 – A set of solid results - Revenue: US$40.84 mn, +2.6% yoy 1. Financial Performance - Net property income (NPI): US$31.41 mn, +3.4% yoy - NPI margin: 76.9%, +0.5 ppt - Leases entered into (as % of end-June occupied GFA): 13.9% 2. Leasing Performance - Avg monthly passing re
Slide 7: Results Highlights
Results Highlights For the six months ended 30 June 2015 2014 Change Total Revenue (US$ million) 40.84 39.79 + 2.6% Net Property Income (US$ million) 31.41 30.38 + 3.4% Net Property Income Margin 76.9% 76.4% + 0.5 ppts Total Distributable Income (US$ million) 20.97 19.75 + 6.2% Distribution per Unit
Slide 8: Results Highlights: Financial Performance
Results Highlights Financial Performance Revenue Net Property Income • Revenue: US$40.84 mn, +2.6% yoy • NPI: US$31.41 mn, +3.4% yoy • 13.9% of leases (as % of end-June occupied GFA) • Property operating expenses US$9.43mn, only +0.2% were entered into in 1H2015 • NPI margin expanded due to positive
Slide 9: Results Highlights: Leasing Performance
Results Highlights Leasing Performance Passing Rents Occupancy Rates • Average monthly passing rent at RMB356 per • 1H2015 average occupancy rate maintained at sqm, up 3.2% yoy 95% • Average monthly spot rent at RMB345 per sqm, • Consistently averaged above 90% since 2010 down 8.5% yoy. Excluding ce
Slide 10: Refinancing and interest expenses
Results Highlights Refinancing and interest expenses Completion of Refinancing Interest expenses • Old loan: US$465 mn (refinanced in Apr 2015) • Interest expenses: US$11.61 mn, -1.6% yoy • New Loan (drawdown in Apr 2015) • Cash interest expense benefited from lower - Principal : US$480 mn interest
Slide 11: Results Highlights: Distributions
Results Highlights Distributions 1H15 Interim Distribution Distribution Payout • Distribution per unit: HK14.0 cents • 1H15 payout: 96% of total distributable income • Ex-date: 2 Sep 2015. Payable: 17 Sep 2015 • Thereafter: At least 90% of total distributable • Annualized distribution yield 8.2% inc
Slide 12: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 11
Slide 13: Refinancing
Refinancing Completed in April 2015 New Loan Facilities Secured term loan with principal US$480 mn, 5-year term Revolving facility principal US$20 mn, uncommitted Loan Syndication Lead Arrangers: ANZ, Deutsche Bank, Credit Suisse Oversubscription of 3.06 times coverage by 16 international an
Slide 14: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 13
Slide 15: Property Overview
Property Overview Premium Grade Office Buildings in Beijing CBD Premium Assets The Property • Two Premium Grade office buildings (total GFA 120,245 sqm) in China Central Place (“CCP”) (华贸中心) and approximately 600 car parking spaces (the “Property”). • China Central Place is a prime mixed-use complex
Slide 16: Diverse and high quality tenant base
Diverse and high quality tenant base Focus on optimizing our tenant mix – 130 tenants in total(1) Diversified Tenant Base Top 5 Tenants % of total Industry breakdown Tenants leased GFA By leased office GFA Deutsche Bank 6.2% (As of 30 June 2015) EPSON 5.8% Business Education/ Condé Nast 4.7% 24.5% c
Slide 17: Cost Structure
Cost Structure Property expenses are revenue-linked or fixed Property Operating expenses breakdown Property management fee 2.8% – 2% of the total revenue 2.4% Property taxes 1.1% – Includes real estate tax and land use tax 40.7% – Real estate tax based on property residual value 0.2% 2.6% 2.6% 3
Slide 18: Attractively Priced Premium Quality Assets
Attractively Priced Premium Quality Assets High Distribution Yield. At Discount to NAV. Company Name Share Price Market Cap DPU Growth DPU Yield Discount (LCC)(1) (US$m) (1) (Latest Fiscal Yr) (Last 12 months)(2) to NAV (3) Spring REIT 3.44 495 23.4% 8.1% (44.7%) Link REIT 45.40 13,422 24.8% 4.0% (1
Slide 19: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 18
Slide 20: Office Market Conditions across China
Office Market Conditions across China Beijing enjoys the best supply-demand dynamics Grade A Office GFA (‘000 sqm) Occupancy 12,000 100% 90% 10,000 80% 70% 8,000 60% 6,000 Beijing 50% - highest occupancy ~ 95% 40% - supply as % of current stock of 6.2% 4,000 in 3.5 yrs (avg. selected cities 29.3%) 3
Slide 21: Current Market Condition
Current Market Condition Tight supply & high occupancy in Beijing Grade-A offices Beijing Overall Beijing CBD Beijing Overall – Supply, Absorption, Occupancy Beijing CBD – Supply Absorption, Occupancy (sqm, GFA) (sqm, GFA) 95% 95% 97% 95% 94% 95% 95% 88% 91% 100% 91% 88% 100% 1,500,000 950,000 74% 7
Slide 22: Future Grade-A Office Supply
Future Grade-A Office Supply Tight Supply-demand Conditions to Continue Till 2018 All of Beijing : Supply Normalized CBD : New Supply Visible in 2018 • 2010-1H 2015 average new supply : 363k sqm • 2H 2015-2018 average new supply : 121k sqm • 2015 2H-2018 average new supply : 363k sqm = 6.6% of curre
Slide 23: Agenda
Agenda 1 Key Messages 2 Results Highlights 3 Refinancing 4 Investment Highlights 5 Market Outlook 6 Strategies 22
Slide 24: Strategy
Strategy Maintain high occupancy rates 1. Asset Management Strategy Optimize tenant mix Control property expenses Prudent financial and capital management policy 2. Capital Management Strategy Reduce finance costs & optimize debt maturity profile Seek value-enhancing acquisition opportun
Slide 25: Value Creation for Unitholders
Value Creation for Unitholders Build track Build track records and enhance returns to unitholders Achieved total return of 21.8% since December 2013(1) records Total return outperforming Hang Seng Index(1) Deliver stable Simple cost structure maximizes distribution Committed to stable distributi
Slide 26: Thank You!
EEEEYES'S‘SU I SpringREIT Thank You!
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