Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — CapitaLand Commercial Trust — Q1 2020 Earnings Presentation
64 slides from Singapore Exchange's earnings presentation, Apr 29, 2020
Slide 1: CapitaLand Commercial Trust 1Q 2020 Financial Results
CAPITALAND COMMERCIAL TRUST 1Q 2020 Financial Results 29 April 2020
Slide 2: Important Notice
Important Notice This presentation shall be read in conjunction with CCT’s 1Q 2020 Unaudited Financial Statement Announcement. This presentation may contain forward-looking statements. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking state
Slide 3: Contents
Contents Slide No. 1. Highlights 04 2. Steering through COVID-19 10 3. Financials and Capital Management 16 4. Steady Portfolio Performance 24 5. Market Information 35 6. Committed to Sustainability 44 7. Value Creation Strategy for Sustainable Returns 46 8. Additional Information 54 *Any discrepanc
Slide 4: 1. Highlights
1. Highlights Capital Tower, Singapore
Slide 5: Resilient operating results
Resilient operating results 1Q 2020 1Q 2019 Change Remarks S$ mil S$ mil % Gross Revenue 103.6 99.8 3.8 Property Operating Expenses (23.3) (20.0) 16.6 Please see note (1) Net Property Income 80.3 79.8 0.7 Income for distribution to Unitholders 70.2 82.7 (15.2) Distributable Income to Unitholders 63.
Slide 6: 79% of gross rental income contributed by office
79% of gross rental income contributed by office and 21% by retail and hotels & convention centre CCT’s gross rental income contribution by sector Hotels & Convention Centre, 10% Master lease to hotel operator Office, 79% Mainly with approximately 78% of rent Gross Rental on fixed basis Income from
Slide 7: Despite COVID-19, CCT inked leases for 303,000 sq ft in 1Q 2020
Despite COVID-19, CCT inked leases for 303,000 sq ft in 1Q 2020 1Q 2020 new leases and renewals: 303,000 sq ft (22% are new leases) CCT Portfolio (1) (Singapore & Germany) 95.2% 265,000 95.1% CCT Singapore Portfolio (1) Singapore Core CBD occupancy: 38,000 95.4% (CBRE) 1Q 2020 Retail space (sq ft) O
Slide 8: New demand supported by tenants from diverse trade sectors
New demand in CCT’s Singapore portfolio supported by tenants from diverse trade sectors Trade mix of new leases signed in 1Q 2020 35% 28% 10% 9% 9% 5% 3% 1% Financial Services Legal Energy, Banking Real Estate and Food and Beverage Business Retail Products and Commodities, Property Services Consulta
Slide 9: Obtained three green loans amounting to S$600 million
Obtained three green loans amounting to S$600 million In line with CCT’s Sustainability Financing Framework • A total of S$600.0 million of borrowings had been converted into green loans to replace existing bank borrowings for Asia Square Tower 2 • Partnered with three banks for the green loans, nam
Slide 10: 2. Steering through COVID-19
2. Steering through COVID-19 CapitaGreen, Singapore
Slide 11: Measures addressing COVID-19
Measures addressing COVID-19 Singapore Germany • Singapore announced Unity Budget (S$6.4 • Germany rescue package includes EUR750 billion), Resilience Budget (S$48 billion) and billion emergency aid, new law prohibiting Solidarity Budget (S$5.1 billion) owners from terminating leases due to arrears
Slide 12: Supporting tenants during challenging period
Supporting tenants during challenging period Committed ~S$25.8 million(1) to support affected tenants inclusive of applicable property tax rebate Office tenants • Passing on 30% property tax rebate • Targeted assistance provided to affected tenants Retail tenants (including tenants at RCS and CCT’s
Slide 13: Responses and impact of COVID-19
Responses and impact of COVID-19 Committed to the long term sustainability of CCT; Focused on the health, well-being and safety of our stakeholders Responses Impact 1. Safety measures in place to comply with 1. Leasing environment: the applicable policies and regulations • Circuit breaker in Singapo
Slide 14: Diverse tenant mix providing resilience to portfolio
Diverse tenant mix providing resilience to portfolio Education and Services, 2% Legal, 3% Government, 2% Manufacturing and Distribution, 5% Banking, 23% Food and Beverage, 5% Business sectors more affected by COVID-19 Travel and Hospitality 9% Insurance, 6% Committed Monthly Gross Flex space operato
Slide 15: Status of ongoing and upcoming projects
Status of ongoing and upcoming projects Work at project sites have temporarily halted and will continue post circuit breaker; evaluating potential impact on supply chain and labour Expected completion 3Q 2021 (potential delay) 4Q 2020 (on track) 1H 2021 (on track) SIX BATTERY ROAD 21 COLLYER QUAY CA
Slide 16: 3. Financials and Capital Management
3. Financials and Capital Management Asia Square Tower 2, Singapore
Slide 17: 1Q 2020 gross revenue 3.8% higher YoY
1Q 2020 gross revenue 3.8% higher YoY Increase mainly from CapitaGreen, 21 Collyer Quay, Gallileo and Main Airport Center S$ million 1Q 2019 1Q 2020 27.6 26.4 22.6 22.8 18.2 18.1 16.8 13.7 6.9 6.6 6.8 6.4 5.1 2.9 2.4 - (1) (2) Asia Square CapitaGreen Capital Tower Six Battery Road 21 Collyer Quay Ga
Slide 18: 1Q 2020 net property income 0.7% higher YoY
1Q 2020 net property income 0.7% higher YoY Increase mainly from CapitaGreen, 21 Collyer Quay and Main Airport Center S$ million 1Q 2019 1Q 2020 21.4 21.1 18.1 18.5 13.9 13.7 13.3 10.0 6.6 5.6 5.4 5.1 4.3 2.4 0.6 - (1) (2) Asia Square CapitaGreen Capital Tower Six Battery Road 21 Collyer Quay Gallil
Slide 19: 1Q 2020 performance of joint ventures
1Q 2020 performance of joint ventures (100.0% basis) Notes: (1) CCT owns 60.0% interest in Raffles City Singapore (2) CCT owns 50.0% interest in OGS LLP 19 CapitaLand Commercial Trust Presentation April 2020
Slide 20: Strong balance sheet
Strong balance sheet Statement of Financial Position As at 31 Mar 2020 S$ million S$ million Non-current Assets 9,932.9 Deposited Property (2) 11,713.1 . Current Assets 199.6 Total Assets 10,132.5 Net Asset Value Per Unit $1.84 Current Liabilities (1) 300.4 Adjusted Net Asset Value Per Unit $1.83 No
Slide 21: Robust financial indicators
Robust financial indicators 4Q 2019 1Q 2020 Remarks (1) S$4,134.1m S$4,160.7m Higher Total Gross Debt (Higher borrowings) (2) 35.1% 35.5% Higher Aggregate Leverage (Higher borrowings) Unencumbered Assets as % of 91.0% 91.0% Stable Total Assets (3) (4) 3.8 years 3.5 years Lower Average Term to Maturi
Slide 22: Proactive capital management
Proactive capital management S$600 million green loans obtained, increasing percentage of sustainability funding $31m (1%) Debt Maturity Profile as at 31 Mar 2020 $75m (2%) S$ million (% of total borrowings) $315m (8%) $50m (1%) $300m (7%) $102m (2%) $108m (3%) $103m (2%) $200m (5%) $300m (7%) $60m
Slide 23: 85% of borrowings on fixed rate
85% of borrowings on fixed rate provides certainty of interest expense Assuming +0.5% p.a. Proforma impact on: increase in interest rate Borrowings Estimated additional annual +$3.1 million p.a. on Floating Interest expense Rate 15% -0.08 cents Annualised YTD Mar 2020 DPU (1.2% of annualised YTD Mar
Slide 24: 4. Steady Portfolio Performance
4. Steady Portfolio Performance CapitaGreen, Singapore
Slide 25: High portfolio occupancy of 95.2%
High portfolio occupancy of 95.2% Occupancy for Singapore: Occupancy for Germany: CCT’s portfolio: 95.1% CCT’s portfolio: 95.4% (4) Core CBD: 95.4% Frankfurt market: 93.2% As at 31 Dec 2019 As at 31 Mar 2020 100.0% 100.0% 100.0% 98.7% 100.0% 100.0% 98.1% 95.6% 100.0% 100.0% 100.0% 100.0% 95.4% 96.4%
Slide 26: Continued positive reversion trend for most leases
Continued positive reversion trend for most leases signed in 1Q 2020 Average Market Rents of Committed Comparative Sub-Market (S$) Expired (1) Sub-Market Building Rents Rents Cushman & (S$) Knight Frank(3) (S$) Wakefield(2) Grade A Asia Square Tower 2 11.00 11.50 – 12.50 12.52 12.10 –12.60 Marina Ba
Slide 27: Well spread portfolio lease expiry profile
Well spread portfolio lease expiry profile Lease expiry profile as a percentage of committed monthly gross rental income(1) 21% 17% 17% 13% 10% 8% 7% 4% 3% 3% 8% 3% 1% 0% 1% 2020 2021 2022 2023 2024 2025 and beyond Office Retail Hospitality Completed Portfolio Weighted Average Lease term to Expiry (
Slide 28: Committed two-third of expiring 2020 leases
Committed two-third of expiring 2020 leases Proactive engagement with tenants to manage their requirements Total Office Portfolio(1) Lease Expiry Profile as at 31 March 2020 26% (3) 26% 23% 21% 20% 21% (2) 16% 15% 12% 13% 10% 8% 10% 10% 2020 2021 2022 2023 2024 2025 and beyond Monthly Gross Rental I
Slide 29: Majority of remaining 2020 leases under advanced negotiation
Majority of remaining leases due in 2020 are under advanced negotiation 1Q 2020 Grade A office market rent at S$11.50 psf per month(1) 2020 (2) Average rent of leases expiring is S$9.37 psf 20% 16 Period 1H 2020 2H 2020 Rental Rental % of % of 11.58 Rates of Rates of 15% 12 Building Expiring Expirin
Slide 30: Proactively manage major leases expiring in next 2 years
Continue to proactively manage major leases expiring in the next 2 years 2021 2022 (1) (1) Average rent of leases expiring is S$10.68 psf Average rent of leases expiring is S$9.14 psf 20% 16 20% 16 13.74 12.22 11.50 11.23 11.51 15% 12 15% 11.01 12 9.05 8.27 8.43 10% 8 10% 8 8.3% 6.14 5.2% 5.4% 5.1%
Slide 31: In place average portfolio rent has grown steadily
CCT’s in place average portfolio rent has grown steadily despite Grade A office market rent cycle Index 140 140.0% 120 130.0% 100 120.0% 80 110.0% 60 100.0% 40 20 90.0% 0 80.0% Jul-12 Jul-19 Jul-11 Jul-13 Sep-13 Jul-15 Jul-16 Jul-17 Jul-18 Sep-10 Nov-10 Jan-11 Sep-11 Nov-11 Nov-13 Jul-14 Nov-14 Jan-
Slide 32: Diverse tenant mix in CCT's portfolio
Diverse tenant mix in CCT’s portfolio Education and Services, 2% Legal, 3% Government, 2% Manufacturing and Distribution, 5% Banking, 23% Food and Beverage, 5% Insurance, 6% Committed Monthly Gross Retail Products and Services, Rental Income as 7% at 31 March 2020 Financial Services, 13% Real Estate
Slide 33: Top 10 tenants contribute 37% of monthly gross rental income
Top 10 tenants contribute 37% of monthly gross rental income Based on monthly gross rental income as at 31 March 2020, excluding retail turnover rent 8% 6% 4% 4% 4% 3% 3% 2% 2% 2% (1) (2) (1)(3) RC Hotels (Pte) The Hongkong Commerzbank GIC Private Mizuho Bank, Ltd JPMorgan Chase CapitaLand Allianz A
Slide 34: Looking ahead: 2020
Looking ahead: 2020 Portfolio • Proactive asset management and leasing to drive organic growth • Partial closure of Six Battery Road from 1Q 2020 and complete closure of 21 Collyer Quay by May 2020 for refurbishment Real Estate Markets • Singapore: New supply remains limited while vacancy is low • F
Slide 35: 5. Market Information
5. Market Information Gallileo, Frankfurt, Germany
Slide 36: Annual new supply to average 0.7 mil sq ft over 5 years
Singapore Annual new supply to average 0.7 mil sq ft over 5 years; CBD Core occupancy at 95.4% as at end Mar 2020 Singapore Private Office Space (Central Area) (1) – Net Demand & Supply 3.0 Forecast average annual 2.7 Post-Asian financial crisis, SARs & GFC - gross new supply 2.5 weak demand & under
Slide 37: Known future office supply in Central Area (2020 – 2022)
Singapore Known future office supply in Central Area (2020 – 2022) Construction slippages may happen due to supply chain disruption and restriction of labour movement Expected Proposed Office Projects Location NLA (sq ft) completion 1H 2020 79 Robinson Road(1) Robinson Road 514,000 1H 2020 Afro-Asia
Slide 38: Grade A office market rent down 0.4% QoQ
Singapore Grade A office market rent down 0.4% QoQ and up 3.1% YoY 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Mthly rent (S$ / sq ft ) 9.40 9.70 10.10 10.45 10.80 11.15 11.30 11.45 11.55 11.50 % change 3.3% 3.2% 4.1% 3.5% 3.3% 3.2% 1.3% 1.3% 0.9% -0.4% $20 S$18.80 $18 Monthly gross
Slide 39: Frankfurt and two submarkets take-up and supply
Germany Frankfurt and two submarkets take-up and supply 1,000 sqm Overall Frankfurt Office Vacancy Rate (%) 1,000 sqm Banking District Vacancy Rate (%) 800 16.0% 800 16.0% 700 14.0% 700 14.0% 600 12.0% 600 12.0% 500 10.0% 500 10.0% 400 8.0% 400 6.8% 8.0% 4.6% 300 6.0% 300 6.0% 200 4.0% 200 4.0% 100
Slide 40: Overall office vacancy remains tight in Frankfurt
Germany Overall office vacancy remains tight in Frankfurt 6.8% 4.6% 3.2% 2014 2015 2016 2017 2018 2019 Banking District Vacancy Rate Airport Office District Vacancy Rate Frankfurt Office Vacancy Rate Source: CBRE Research, Q4 2019 CapitaLand Commercial Trust Presentation April 2020 40
Slide 41: New office supply in Frankfurt
Germany New office supply in Frankfurt About 63% of new supply in 2020F and 2021F are either pre-committed or owner-occupied 1,000 sqm 300 Actual New Supply Forecast New Supply 250 200 150 5-Year (2015-2019) Average: 131,200 sqm 100 50 0 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F Banking Di
Slide 42: Frankfurt's office market has stable and resilient rents
Germany Frankfurt’s office market is characterised by stable and resilient rents • Frankfurt has the highest prime office rent in comparison to other major cities in Germany • Prime office rent in Frankfurt has been resilient through property and economic cycles • Positive supply-demand dynamics exp
Slide 43: Rental range in Frankfurt
Germany Rental range in Frankfurt Rental range by submarket Frankfurt West City CBD (€ / square metre / month) C Westend B 44.0 44.0 D Gallileo Banking 27.0 District 34.1 23.0 21.80 A5 B43 Niederrad South 18.0 19.0 7.0 MAC A3 Frankfurt Frankfurt airport office Frankfurt Total Banking District submar
Slide 44: 6. Committed to Sustainability
6. Committed to Sustainability CapitaSpring, Singapore
Slide 45: CCT Sustainability Value Creation Model
CCT Sustainability Value Creation Model • Generate organic growth • Enhance/Refurbish assets • Capital recycling • Grow portfolio • Proactive capital management • Maximise potential and enhance portfolio • Enhance accessibility (Social integration) • Embrace innovation • Manage resources efficiently
Slide 46: 7. Value creation strategy for sustainable returns
7. Value creation strategy for sustainable returns I. Asset enhancement initiatives II. Development Six Battery Road, Singapore
Slide 47: CCT's value creation strategy
CCT’s value creation strategy Manage debt maturity Optimise asset value profile to enhance and performance financial flexibility Acquire Unlock value from quality an asset at optimal Enhance value and assets with stage of life cycle positioning of assets to growth stay competitive potential in ident
Slide 48: Six Battery Road: Refreshing podium
Six Battery Road: Refreshing podium Connecting Raffles Place to Singapore River with new F&B offerings and Standard Chartered Bank’s flagship branch Six Battery Road from across Singapore River New through-block link New façade facing Raffles Place Green • ~S$35 million AEI to be completed in phases
Slide 49: Six Battery Road: Opportunity to create value by reconfiguring space
Six Battery Road: Opportunity to create value by reconfiguring space Standard Chartered remains an anchor tenant, leasing over 30k sq ft of office and retail space for their flagship branch at Six Battery Road Cross section of property Levels Upgrading phase L1 to L2, L6 to L10 1Q 2020 to 3Q 2020 L3
Slide 50: 21 Collyer Quay: New occupier from early 2021
21 Collyer Quay: New occupier from early 2021 and upgrading during transitional downtime • HSBC lease expires end April 2020 • Entire building leased to WeWork Singapore for 7 years from 2Q 2021 • ~S$45 million upgrading works: ✓ Capitalise on transitional downtime ✓ Entire building will be closed f
Slide 51: CapitaSpring – new integrated development at Market Street
CapitaSpring – new integrated development at Market Street Description 51-storey integrated development comprising Grade A office, serviced residence with 299 rooms, ancillary retail and a food centre Joint Venture Interest CCT (45%), CapitaLand (45%), Mitsubishi Estate (10%) Height 280m (on par wit
Slide 52: CapitaSpring drawn down S$47.0 mil in 1Q 2020
CapitaSpring drawn down S$47.0 mil in 1Q 2020 – CCT’s 45.0% share amounts to S$21.2 mil CCT’s 45% interest in Drawdown (2) CCT’s 45% interest Glory Office Trust and as at Mar 2020 Balance Glory SR Trust Debt at Glory Office Trust and Glory SR Trust (1) S$531.0m (S$377.6m) S$153.4m Equity inclusive o
Slide 53: Thank you
Thank you For enquiries, please contact: Ms Ho Mei Peng , Head, Investor Relations, Direct: (65) 6713 3668 Email: ho.meipeng@capitaland.com CapitaLand Commercial Trust Management Limited (http://www.cct.com.sg) 168 Robinson Road, #28-00 Capital Tower, Singapore 068912 Tel: (65) 6713 2888; Fax: (65)
Slide 54: 8. Additional Information
8. Additional Information Raffles City Singapore
Slide 55: Portfolio diversification with income contribution from 10 properties
Portfolio diversification with income contribution from 10 properties Raffles City Singapore and six Grade A offices contributed 89% of Portfolio NPI Main Airport Center (94.9%), 4% One George Street Bugis Village, 1% (50%), 4% Galilleo, Frankfurt Raffles City Singapore (94.9%), 5% (60%), 23% 21 Col
Slide 56: Singapore portfolio occupancy of 95.1%
Singapore portfolio occupancy of 95.1% (2) CCT Committed Occupancy(1) Market Occupancy Level Singapore 1Q 2020 4Q 2019 1Q 2020 4Q 2019 Grade A office 94.7% 98.6% 97.6% 96.1% Portfolio 95.1% 98.6% 95.4% 95.8% CCT's Committed Occupancy Since Inception 99.4% 99.1% 98.2% 98.1% 97.8% 97.0% 97.3% 96.0% 95
Slide 57: Portfolio committed occupancy rate at 95.2%
Portfolio committed occupancy rate at 95.2% 1Q 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Capital Tower 100.0 100.0 99.9 99.9 99.9 100.0 100.0 100.0 100.0 94.1 99.0 99.4 99.7 100.0 100.0 Six Battery Road 100.0 99.9 98.6 99.2 99.7 85.4 93.0 98.6 99.2 98.9 98.6 99.9 100
Slide 58: Breakdown of property values
Breakdown of property values 12-month 12-month 6-month Variance Variance Variance 30-Jun-19 31-Dec-18 31-Dec-19 31-Dec-19 Investment Properties (1) (Dec 2018 to (Dec 2018 to (Jun 2019 to Dec Dec 2019) Dec 2019) 2019) S$m S$m S$m S$m % S$ per sq foot % Asia Square Tower 2 2,182.0 2,143.0 2,186.0 43.0
Slide 59: Key portfolio valuation assumptions
Key portfolio valuation assumptions • Terminal yields are 0.25% higher than capitalisation rates for the portfolio except for Six Battery Road and 21 Collyer Quay where terminal yields are the same given their 999-year lease tenures. • Office rent growth rates(1) assumed for the discounted cashflow
Slide 60: CCT's profile
CCT’s profile S$5.8b(1) 10 properties 596 (2) S$11.7b About 5.2 million sq ft(3) Market Capitalisation 8 properties in Singapore Tenants Deposited NLA (100% basis) and 2 in Germany Property Main Airport Center (MAC) One George Street (94.9% interest) Capital Tower CapitaGreen (50.0% interest) Gallil
Slide 61: Owns 8 centrally-located quality commercial properties in Singapore
Owns 8 centrally-located quality commercial properties in Singapore New integrated development, CapitaSpring in Raffles Place under construction 7 21 Collyer Quay 1 Capital Tower 3 CapitaGreen 5 One George Street (1) 2 Asia Square Tower 2 4 Six Battery Road 6 Raffles City Singapore (2) 8 CapitaSprin
Slide 62: Owns 2 properties strategically located in Frankfurt
Owns 2 properties strategically located in Frankfurt Airport office submarket and Banking District Excellent connectivity between Frankfurt airport and Frankfurt city centre via a comprehensive transportation infrastructure network Close proximity between Frankfurt airport office district and Frankf
Slide 63: Property details (1)
Property details (1) Asia Square Six Battery Raffles City Singapore Capital Tower CapitaGreen Tower 2 Road (100.0%) 250/252 North Bridge 168 Robinson Address 12 Marina View 138 Market Street 6 Battery Road Road; 2 Stamford Road; Road 80 Bras Basah Road 808,100 NLA (sq ft) 734,000 777,000 701,000 494
Slide 64: Property details (2)
Property details (2) Main Airport Center One George Street 21 Collyer CapitaSpring (100.0%) Gallileo (100.0%) (100.0%) Quay (100.0%) (1) Contribution from 18 Sep 2019 Gallusanlage 7/ Unterschweinstiege 2- 21 Collyer 86 & 88 Neckarstrasse 5, 14, 60549 Frankfurt, Address 1 George Street Quay Market St
CapitaLand Commercial Trust — Q1 2020 Earnings Presentation on 6ix