Spring Real Estate Investment Trust · HKEX:1426
Spring Real Estate Investment Trust — FY2016 Earnings Presentation
21 slides from Spring Real Estate Investment Trust's earnings presentation, Mar 23, 2017
Slide 1: Final Results 2016 Presentation
Final Results 2016 Presentation 23 March 2017
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 KEY MESSAGES 2 FY 2016 RESULTS 3 OPERATION REVIEW 4 BEIJING MARKET 2 5 OUTLOOK & STRATEGY 2
Slide 4: Overview of FY 2016
OVERVIEW OF FY 2016 Rental income was supported by encouraging rental reversion and steady occupancy rate. In 2H 2016, net property income was held back by increase in property tax. For FY17, such increase would have full year impacts. Financial performance was affected by weaker RMB. Proper
Slide 5: Agenda
AGENDA 1 1 KEY MESSAGES 2 FY 2016 RESULTS 3 OPERATION REVIEW 4 BEIJING MARKET 2 5 OUTLOOK & STRATEGY 4
Slide 6: FY2016 Results Summary
FY2016 RESULTS SUMMARY (in US$' million unless otherwise specified) 2016 2015 Change For the Year Ended 31 December Revenue 75.43 80.52 (6.3%) Property operating expenses (18.59) (19.24) (3.4%) Net property income 56.84 61.28 (7.2%) Net property income margin (%) 75.4 76.1 Total distributable income
Slide 7: Distributions
DISTRIBUTIONS The Board of Directors declared an final distribution per unit of HK 10.0 cents, implying a full-year payout ratio of 93%. Interim DPU Final DPU Annualized Distribution Yield (%, RHS) 40 10 8.8 Ann. Distribution Yield (%) 9 7.2 7.1 8 DPU (HK cents) 30 7 6 20 12.5 12.6 5 10.0 4 3 10 1
Slide 8: Financial Performance
FINANCIAL PERFORMANCE Revenue Net Property Income (US$ million) (US$ million) -6.3% 76.1% 75.4% 80.0% 80.52 80 75.43 61.28 -7.2% 70.0% 56.84 60 60.0% 40 20 50.0% 0 40.0% 2015 2016 2015 2016 NPI NPI margin Overall, revenue reflected stable passing rents and Decrease in NPI mostly due to an increa
Slide 9: Debt Profile
DEBT PROFILE Interest Coverage Ratio Cash Interest Expenses (US$ million) 3.89x 5.1% 16.54 -11.6% 15.74 3.44x 2015 2016 2015 2016 USD Term Loan Cash interest expenses: US$16.54 mn, - Notional Amount: US$480 mn +5.1% yoy, due to lower interest margin - Interest rate: 3-month USD LIBOR + offset by
Slide 10: Agenda
AGENDA 1 1 KEY MESSAGES 2 FY 2016 RESULTS 3 OPERATION REVIEW 4 BEIJING MARKET 2 5 OUTLOOK & STRATEGY 9
Slide 11: FY2016 Operations Summary
FY2016 OPERATIONS SUMMARY (in RMB MN unless otherwise specified) 2016 2015 Change For the Year Ended 31 December Revenues - Rental income 477.90 486.58 (1.8%) - Car park income 3.77 4.26 (11.5%) - Other income 19.24 15.05 27.8% 500.91 505.89 (1.0%) Property Operating Expenses - Property management f
Slide 12: Leasing Performance
LEASING PERFORMANCE Solid performance despite slower China growth Average Passing Rents Average Occupancy Rates (RMB per sqm per month) (%) 372 352 355 96% 96% 96% 96% 95% 94% 90% 288 343 334 337 226 201 274 188 215 179 191 2010 2011 2012 2013 2014 2015 2016 Gross average monthly passing rent Net av
Slide 13: Tenant Base
TENANT BASE Diverse and high quality tenant mix Tenants by Industry Top 5 Tenants % of total Tenants As % of leased office GFA leased GFA (31 December 2016) Deutsche Bank 6.4% Business EPSON 6.0% center and Education/ Technology others media/sports/ Condé Nast 4.8% 25.4% Real estate/ Energy/ retail/
Slide 14: Cost Structure
COST STRUCTURE More than 95% of property expenses are revenue-linked or fixed FY2016 Withholding tax Property Others management fee – 10% of revenues received from rental operations Business tax and other taxes(1) 5% 9% – Business tax, urban construction and maintenance Property taxes tax, and e
Slide 15: Expiring Lease Profile
EXPIRING LEASE PROFILE Typical office lease has a term of 3 years. In FY2016, 48.9% of leases (GFA terms) became effective with high retention rate Good progress on negotiations with upcoming expiries. 383 343 340 334 32% 28% 19% 21% 2017 2018 2019 2020 and beyond Expiring leases as a % of lea
Slide 16: Agenda
AGENDA 1 1 KEY MESSAGES 2 FY 2016 RESULTS 3 OPERATION REVIEW 4 BEIJING MARKET 2 5 OUTLOOK & STRATEGY 15
Slide 17: Comparison of Grade-A Office Markets Across China
COMPARISON OF GRADE-A OFFICE MARKETS ACROSS CHINA Beijing has highest office occupancy of 95% Low new supply in the next 4 years, only 6.4% p.a. of existing stock (vs avg. 24.2% p.a. of selected cities) Grade A Office GFA (‘000 sqm) 2016 Stock New Supply 2017 - 2020 2016 Occupancy rate (RHS) Occ
Slide 18: Current Market Condition
CURRENT 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% 95% 96% 95% 91% 100% 94% 100% 88% 91% 1,500,000 950,000 88% 74% 72% 80% 74% 80% 1,200,000 750,000 60% 60% 60% 900,
Slide 19: Future Grade-A Office Supply
FUTURE GRADE-A OFFICE SUPPLY Beijing CBD to see more supply in 2019 Grade-A office supply by year (sqm, GFA) 800,000 730,000 New Supply in CBD 700,000 600,000 266,000 Financial Street 70,423 500,000 Lufthansa 400,000 154,000 East Chang'an Road 300,000 200,000 Others* 100,000 Historic supply in all o
Slide 20: Agenda
AGENDA 1 1 KEY MESSAGES 2 FY 2016 RESULTS 3 OPERATION REVIEW 4 BEIJING MARKET 2 5 OUTLOOK & STRATEGY 19
Slide 21: Outlook & Strategic Priorities
OUTLOOK & STRATEGIC PRIORITIES Outlook mixed in 2017 Strategic Priorities Geopolitical uncertainty will continue in Execute the UK acquisition to 2017, the Manager would continue to strengthen the distributable income to keep monitoring the risks relevant to our Unitholders. operations. Contin
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