Spring Real Estate Investment Trust · HKEX:1426
Spring Real Estate Investment Trust — H1 2018 Earnings Presentation
22 slides from Spring Real Estate Investment Trust's earnings presentation, Aug 23, 2018
Slide 1: Interim Results 2018 Presentation
Interim Results 2018 Presentation 23 August 2018
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 1 OVERVIEW 2 1H 2018 RESULTS 3 CCP OPERATION REVIEW 4 UK PORTFOLIO 2 5 OUTLOOK & STRATEGY 2
Slide 4: Overview
OVERVIEW ◼ Spring REIT will pay a interim distribution of HK 12.0 cents, which represents a 26.3% YoY increase. ◼ Revenue and net property income increased 21.9% and 24.0% YoY respectively in USD terms, thanks to the strong performance of the CCP Property, contribution from the UK Portfolio and a hi
Slide 5: Agenda
AGENDA 1 1 OVERVIEW 2 1H 2018 RESULTS 3 CCP OPERATION REVIEW 4 UK PORTFOLIO 2 5 OUTLOOK & STRATEGY 4
Slide 6: Results Summary
RESULTS SUMMARY ▪ Stable rental growth from the CCP Property, the contribution of the UK Portfolio and the effects of a stronger RMB/US$ throughout 1H 2018 plays a part in the improved revenue comparing to first half of 2017. ▪ Excluding the UK Portfolio, revenue and net property income would still
Slide 7: Financial Performance
FINANCIAL PERFORMANCE Revenue Net Property Income (US$ million) Total: (US$ million) +21.9% yoy 45 incl. UK 43.4 Total: contribution 45 CCP Property CCP Property 2.9 40 +24.0% yoy UK Portfolio 40 UK Portfolio incl. UK 35.6 35 contribution 32.7 35 30 2.8 30 26.4 40.5 25 25 35.6 CCP Property : 29.9 26
Slide 8: Debt Profile
DEBT PROFILE ▪ In January 2018, Spring REIT fully repaid the two GBP denominated bank borrowings, amounting approximately US$98.8 mil. ▪ The repayment was financed by (i) a GBP50 mil new loan facility, (ii) a US$18 mil revolving facility, and (iii) internal resources. ▪ To manage the interest rate r
Slide 9: Agenda
AGENDA 1 1 OVERVIEW 2 1H 2018 RESULTS 3 CCP OPERATION REVIEW 4 UK PORTFOLIO 2 5 OUTLOOK & STRATEGY 8
Slide 10: Leasing Market Condition
LEASING MARKET CONDITION Beijing Overall Beijing CBD Beijing Overall – Supply, Absorption, Occupancy Beijing CBD – Supply, Absorption, Occupancy (sqm, GFA) (sqm, GFA) 95% 95% 97% 97% 96% 97% 95% 96% 95% 95% 97% 91% 93% 100% 94% 100% 88% 91% 1,500,000 950,000 88% 74% 72% 80% 74% 80% 1,200,000 750,000
Slide 11: Future Grade-A Office Supply
FUTURE GRADE-A OFFICE SUPPLY Beijing CBD to see more supply in 2019-20 Grade-A office supply by year (sqm, GFA) 800,000 628,000 700,000 New Supply in CBD 600,000 Financial Street 500,000 East 2nd Ring Road 400,000 300,000 240,000 East Chang'an Avenue 200,000 Others* 100,000 – Historic supply in all
Slide 12: Comparison of Grade-A Office Markets Across China
COMPARISON OF GRADE-A OFFICE MARKETS ACROSS CHINA ▪ Beijing has the highest office occupancy of 93% ▪ Low new supply in the next 4 years, only 6.0% p.a. of existing stock (vs avg. 18.6% p.a. of other selected cities) Office GFA 1H 2018 Stock New Supply 2018 - 2021 1H 2018 Occupancy Rate (RHS) (‘000
Slide 13: CCP Property Operations Summary
CCP PROPERTY OPERATIONS SUMMARY ▪ Upward momentum continued with revenue rising by 1.3% half-on-half (“HoH”) and by 5.3% YoY. ▪ After deducting property operating expenses, net property income rose of 2.1% HoH and 4.9% YoY respectively. 1H 2017 HoH Change 2H 2017 HoH Change 1H 2018 RMB mn RMB mn RMB
Slide 14: CCP Leasing Performance
CCP LEASING PERFORMANCE ▪ Operating performance was encouraging, with an average occupancy of 96.1% (2H 2017: 95.0%; 1H 2017: 93.5%). ▪ The monthly average passing rent (net of VAT) stood at RMB362 per sqm, up 0.8% HoH and 2.3% YoY on the back of a respectable average rental reversion of 4.5% (2H 20
Slide 15: CCP Tenant Base
CCP TENANT BASE ▪ CCP Property had a total of 192 tenancies as at 30 June 2018. ▪ The top five tenants accounted for 21.0% of total revenue for the Reporting Period and occupied 22.8% of the total GFA as at 30 June 2018 Tenants by Industry Top 5 Tenants % of total leased Tenants As % of leased offic
Slide 16: CCP Expiring Lease Profile
CCP EXPIRING LEASE PROFILE ▪ As at 30 June 2018, average lease expiry in terms of GFA was 771 days. Leases expiring in the second half of 2018 and in the year ending 31 December 2019 accounted for 9% and 28% of the total leased GFA respectively, and the average unit rents for the expiring leases wer
Slide 17: Cost Structure of CCP Property
COST STRUCTURE OF CCP PROPERTY ▪ A 0.9% HoH decrease in property operating expenses was seen during the Reporting Period. ▪ This was primarily due to a 70.9% HoH decrease in leasing commission, which helped lower operating expenses despite increases in tax expenses and in the property management fee
Slide 18: Agenda
AGENDA 1 1 OVERVIEW 2 1H 2018 RESULTS 3 CCP OPERATION REVIEW 4 UK PORTFOLIO 2 5 OUTLOOK & STRATEGY 17
Slide 19: Location of the properties
Location of the properties 18
Slide 20: The UK Acquisition and Operation Summary
THE UK ACQUISITION AND OPERATION SUMMARY Long-term, quality cash flow backed by guarantee, with upward-only revisions 1H 2018 GBP Revenues - Rental income 2,193,404 Expenditure - Head rents on leasehold properties (43,845) - Property management fees (31,500) Net Property Income 2,118,059 Portfolio H
Slide 21: Agenda
AGENDA 1 1 OVERVIEW 2 1H 2018 RESULTS 3 CCP OPERATION REVIEW 4 UK PORTFOLIO 2 5 OUTLOOK & STRATEGY 20
Slide 22: Outlook & Strategic Priorities
OUTLOOK & STRATEGIC PRIORITIES Outlook in 2H 2018 ◼ Our CCP Property continued its healthy organic growth with a respectable rental reversion of 4.5% and improved occupancy rate. Barring unforeseen circumstances, we expect a steady leasing operation for CCP Property in 2H 2018 as we are seeing delay
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