Prosperity Real Estate Investment Trust · HKEX:808
Prosperity Real Estate Investment Trust — FY2014 Earnings Presentation
32 slides from Prosperity Real Estate Investment Trust's earnings presentation, Mar 5, 2015
Slide 1: Final Results for the year ended 31 December 2014
Final Results For the year ended 31 December 2014 5 March 2015
Slide 2: Disclaimer
Disclaimer This document was prepared by ARA Asset Management (Prosperity) Limited, in its capacity as the manager (“REIT Manager”) of Prosperity Real Estate Investment Trust (“Prosperity REIT”) solely for use at the presentation to analysts in relation to the announcement of the results of Prosperi
Slide 3: Table of Contents
Table of Contents Results Highlights Financial Review Operations Review Outlook & Strategies Appendix Prosperity REIT 2014 Final Results Presentation 3
Slide 4: Results Highlights
Results Highlights
Slide 5: Results Highlights
Results Highlights Revenue Net Property Distributable Distribution Income Income Per Unit 18.0% 16.9% 10.7% 9.0% HK$403.4m HK$312.1m HK$231.4m HK$341.9m HK$0.1630 HK$209.1m HK$266.9m HK$0.1495 FY13 FY14 FY13 FY14 FY13 FY14 FY13 FY14 Rental Occupancy Cost-to- Average Reversion Rate revenue Effective
Slide 6: 2014 in Review
2014 in Review Acquisition of 9 Chong Yip Street Contributed to 9.4% NPI growth AEIs at façade, G/F lobby and typical floors completed Refinancing Extended debt maturity profile to Nov 2019 Release of certain pledged properties provides growth opportunities Solid performance of original portfolio St
Slide 7: Outperformance in Unit Price and Yield
Outperformance in Unit Price and Yield Unit Price vs Index Increase in FY2014 16.8% 9.7% 7.2% 1.3% Prosperity REIT HS REIT Index HS Property Index HS Index Yield as at 31 December 2014 6.2%1 5.7% 5.5% 3.6% 2.9% 1.9% Prosperity REIT HS High Dividend HS REIT Index HS Index HS Property Index HK 10 year
Slide 8: Financial Review
Financial Review
Slide 9: Income Statement
Income Statement (HK$’000) FY14 FY13 Change Additional income from 9 Chong Revenue¹ 403,413 341,883 +18.0% Yip Street and strong rental Total property operating expenses (91,357) (74,952) +21.9% reversion across entire portfolio Net property income 312,056 266,931 +16.9% Includes 9 Chong Yip Street
Slide 10: Financial Position
Financial Position As at 31 Dec 2014 2013 Change Out of HK$9,890m investment properties5, Total assets (HK$m) 9,965.2 8,584.8 +16.1% HK$6,280m was pledged after refinancing Borrowings1 (HK$m) 2,800.6 1,778.5 +57.5% Interest Rate6 Other liabilities (HK$m) 495.9 444.9 +11.5% Fixed : Floating 55% : 45%
Slide 11: Debt Maturity Profile
Debt Maturity Profile No major refinancing needs until 2019 3,000 2,500 430 2,000 430 HK$ million 1,500 1,000 2,070 1,770 500 380 404 0 2014 Aug 2015 2016 Jan 2017 2018 Jan 2019 Nov 2019 Unsecured 3-yr term loan @ HIBOR+150 bps Secured 5-yr term loan @ HIBOR+135 bps Secured 5-yr term loan @ HIBOR+14
Slide 12: Portfolio Valuation
Portfolio Valuation (HK$m) 31 Dec 2014 31 Dec 2013 Change The Metropolis Tower 3,042 2,943 +3.4% Prosperity Millennia Plaza 1,824 1,725 +5.7% 9 Chong Yip Street1 1,079 N/A N/A Harbourfront Landmark (portion) 461 461 – Prosperity Place 1,436 1,402 +2.4% Trendy Centre 955 912 +4.7% Prosperity Center (
Slide 13: Operations Review
Operations Review Prosperity REIT 2014 Final Results Presentation 13
Slide 14: Property Income
Property Income Revenue Net Property Income Trendy Centre Trendy Centre Prosperity Prosperity HK$43.1m HK$30.6m Place Place HK$56.1m Prosperity Center Prosperity Center HK$42.0m HK$33.8m HK$25.6m 10.7% 9.8% 13.9% New Treasure 13.5% New Treasure Harbourfront 8.4% Harbourfront 8.2% Centre Centre Landm
Slide 15: Occupancy Rates
Occupancy Rates Portfolio Occupancy Rates Above 95% Since 2006 (As at 31 Dec 2014) • 2014 expiry profile over The Metropolis Tower 100.0% 50% Prosperity Millennia Plaza 99.3% • Pre-acquisition occupancy rate of 94.1% 9 Chong Yip Street 96.6% Harbourfront Landmark (portion) 100.0% • 2014 expiry profi
Slide 16: Lease Expiry Profile
Lease Expiry Profile Lease Expiry by Gross Rental Income 31 Dec 2014 2017 and (As at 31 Dec 2014) 2016 and 2015 Beyond The Metropolis Tower 52.0% 40.9% 7.1% Prosperity Millennia Plaza 31.6% 29.4% 39.0% 9 Chong Yip Street 41.3% 31.8% 26.9% Harbourfront Landmark 0.1% 0.0% 99.9% (portion) Prosperity Pl
Slide 17: Tenant Mix
Tenant Mix Trade Mix by Gross Rentable Area (As at 31 Dec 2014) 29.8% Electronic/Technology 26.6% Manufacturing/Trading 7.6% Textile/Garment 3.6% Logistics 4.5% Advertising/Media 4.7% Consultancy/Research 2.4% Finance/Investment 0.3% Real Estate 4.1% Retail / Services Trade 16.4% Others Premise Size
Slide 18: Commercial Tenants at Prosperity Place
Commercial Tenants at Prosperity Place As at 31 Dec 2014, retail/service trade tenants accounted for around 24.4% of gross rentable area of Prosperity Place. Italian Cooking Kitchen Prosperity REIT 2014 Final Results Presentation 18
Slide 19: Marketing Campaigns for Prosperity Place
Marketing Campaigns for Prosperity Place Facebook page, sales booths and seminars Prosperity REIT 2014 Final Results Presentation 19
Slide 20: AEIs – Prosperity Place
AEIs – Prosperity Place ● Renovated an additional number of selected floors to create a commercial outlook and widen tenant base ● Replaced an existing chiller plant with a more energy-efficient model, enabling about 15% in energy cost savings for air conditioning provision New chiller plant Prosper
Slide 21: AEIs – 9 Chong Yip Street
AEIs – 9 Chong Yip Street Ground Floor Lobby Façade Completed Completed Before Before After After Prosperity REIT 2014 Final Results Presentation 21
Slide 22: AEIs – 9 Chong Yip Street
AEIs – 9 Chong Yip Street Lift Lobbies Completed Common Corridors Completed Before Before After After Prosperity REIT 2014 Final Results Presentation 22
Slide 23: AEIs – 9 Chong Yip Street
AEIs – 9 Chong Yip Street Track record of turning neglected Rooftop Garden space into valuable assets 2015 Work Target 2009 Prosperity Place Prosperity Place 2010 The Metropolis Tower Existing Rooftop of 9 Chong Yip Street The Metropolis Tower Prosperity REIT 2014 Final Results Presentation 23
Slide 24: Outlook & Strategies
Outlook & Strategies Prosperity REIT 2014 Final Results Presentation 24
Slide 25: Outlook & Strategies
Outlook & Strategies Stable and sustainable distribution to continue ● 100% payout ratio ● Defensive investment as proven in economic cycles ● 132%* total return since IPO DPU (HK$) 0.1630 0.1495 0.1354 0.1202 0.1098 0.1101 FY09 FY10 FY11 FY12 FY13 FY14 * Source: Bloomberg; distribution reinvested;
Slide 26: Outlook & Strategies
Outlook & Strategies Kowloon East (accounting for 33.0% of NPI) on track to become “CBD2” Proactive leasing strategies to keep up with competitions Seek yield-accretive acquisitions Prosperity REIT 2014 Final Results Presentation 26
Slide 27: Outlook & Strategies
Outlook & Strategies 9 Chong Yip Street – Completed AEIs to increase rental level Prosperity Place – Cost effective marketing campaigns to drive foot traffic 2015 AEIs to focus in energy saving Feasibility study for wholesale conversion of Trendy Centre Prosperity REIT 2014 Final Results Presentatio
Slide 28: Appendix
Appendix Prosperity REIT 2014 Final Results Presentation 28
Slide 29: Portfolio Map
Portfolio Map The Metropolis 1 Prosperity 5 Total Gross Rentable Area: 1.35m sq.ft. Tower Place GRA: 271,418 sq. ft. GRA: 240,000 sq. ft. Prosperity Trendy 6 Millennia Plaza 2 Centre 6 8 GRA: 217,955 sq. ft. GRA: 173,764 sq. ft. 9 Chong Yip Prosperity Street 3 Center Property 7 GRA: 136,595 sq. ft.
Slide 30: 10-Year Track Record
10-Year Track Record Unique Attractive Operation Defensive Portfolio Valuation Metrics Investment Potential of Historical Kowloon East portfolio 100% payout • To become Near 40% NAV occupancy rates ratio “CBD2” of HK above 95% discount • 33.0% of NPI Stable Industrial Buildings Strong rental distrib
Slide 31: Key Facts
Key Facts Key Facts as at 31 December 2014 IPO Date 16 Dec 2005 IPO Price HK$2.16 6.2% Indicative Yield (based on FY14 DPU of HK$0.1630 and closing unit price of HK$2.64 as at 31 December 2014) Number of Issued Units 1,419,635,074 Market Capitalization HK$3.7 billion (US$480.5 million) Average Daily
Slide 32: Contacts
Contacts ARA Asset Management (Prosperity) Limited (as manager of Prosperity REIT) Ms. Mavis Wong Chief Executive Officer maviswong@ara.com.hk Ms. Carey Kwan Manager, Investor Relations careykwan@ara.com.hk Mr. Abel Mak Assistant Manager, Investment & Research abelmak@ara.com.hk Units 5508-10, 55/F,
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