Kore Us REIT · SGX:CMOU
Kore Us REIT — Keppel Pacific Oak US REIT — FY2019 Earnings Presentation
38 slides from Kore Us REIT's earnings presentation, Jan 21, 2020
Slide 1: Fourth Quarter and Full Year 2019 Financial Results
Fourth Quarter and Full Year 2019 Financial Results 21 January 2020
Slide 2: Important Notice
Important Notice The past performance of Keppel Pacific Oak US REIT is not necessarily indicative of its future performance. Certain statements made in this release may not be based on historical information or facts and may be “forward-looking” statements due to a number of risks, uncertainties and
Slide 3: Key Highlights
Key Highlights One Twenty Five Dallas, Texas
Slide 4: Delivered Growth in FY 2019
Delivered Growth in FY 2019 Distribution per Unit Distribution Yield 6.01 US cents 11.3% YoY 7.7% FY 2019 DPU was 31.2% above Based on the market closing price actual FY 2018 adjusted DPU and of US$0.780 per Unit as at 26.0% above IPO Forecast adjusted 31 December 2019 DPU One Twenty Five in the key
Slide 5: Growth Trajectory since IPO
Growth Trajectory since IPO 31 December 2019 November 2019 Portfolio value: US$1.26 billion 9 November 2017 January 2019 December 2018 One Twenty Five Portfolio value: Dallas, Texas 13 office buildings US$0.83 billion Maitland Promenade I and business The Westpark Portfolio Orlando, Florida IPO with
Slide 6: Financial Performance & Capital Management
Financial Performance & Capital Management Bellevue Technology Center Seattle, Washington
Slide 7: Financial Performance for FY 2019
Financial Performance for FY 2019 FY 2019 Distributable Income and DPU outperformed both IPO Adjusted Forecast and FY 2018 Actual Distribution per Unit (US cents) Actual Forecast Actual Actual 6.01 FY 2019 FY 2019 % Change FY 2019 (1) FY 2018 % Change 4.77 4.58 (US$’000) (US$’000) (US$’000) (US$’000
Slide 8: Healthy Balance Sheet
Healthy Balance Sheet As at 31 December 2019 (US$’000) Total Assets 1,300,615 Investment Properties 1,256,500 Cash and Cash Equivalents 38,226 Other Assets 5,889 Total Liabilities 552,064 Gross Borrowings 480,440 Other Liabilities 71,624 Unitholders’ Funds 748,551 Units in issue and to be issued (‘0
Slide 9: Prudent Capital Management
Prudent Capital Management Limited interest rate exposure with term loans significantly hedged As at 31 December 2019 Debt Maturity Profile 100% Unsecured • US$480.4 million of external loans Total Debt • 100% unsecured 30.1% 30.1% 16.7% 18.7% ▪ US$80 million of revolving credit 4.4% (1) facility Av
Slide 10: Portfolio Performance
Portfolio Performance Tenant space at The Westpark Portfolio Seattle, Washington
Slide 11: First Choice Submarkets in Key Growth US Markets
First Choice Submarkets in Key Growth US Markets SEATTLE, Washington (42.4%) ATLANTA, Georgia (6.5%) Overview 13 freehold office buildings The Plaza Buildings Bellevue Technology The Westpark Northridge Center Powers Ferry and business campuses Occupancy: 97.3% Center Portfolio I & II Occupancy: 93.
Slide 12: Diversified Portfolio with Low Tenant Concentration Risk
Diversified Portfolio with Low Tenant Concentration Risk Over 36% of portfolio NLA in key growth sectors of technology and healthcare • KORE’s buildings and business campuses in the tech hubs of Seattle, Austin and Denver contribute ~58% of CRI • Top 10 tenants contribute only 19.4% of cash rental i
Slide 13: Continued Organic Growth
Continued Organic Growth New Leases Renewals 25.1% 60.8% • Another ~228,000 sf leased in 4Q 2019 for a total of ~836,000 sf leased for FY 2019 • Over two-thirds of leasing activities were in the tech hubs of Seattle, Austin and Denver 2019 • Leasing demand mainly from the fast-growing technology sec
Slide 14: High Tax States are Losing People to Low Tax States
High Tax States are Losing People to Low Tax States Individuals are moving to zero or low income tax states, accelerating population growth in KORE’s key growth markets State Individual Tax Rates (as at July 1, 2019)(1) Key Growth Markets 13.30% 13.30% Gateway Markets 10.75% 8.82% 8.95% 8.40% 6.99%
Slide 15: Low Corporate Tax States are Attracting New Businesses
Low Corporate Tax States are Attracting New Businesses Companies are relocating to where they have the greatest competitive advantage State Corporate Income Tax Rates (as at July 1, 2019)(1) Key Growth Markets Gateway Markets 11.50% 9.50% 8.84% 8.84% 8.00% 8.25%8.51% 6.99% 6.50% 5.75% 6.25% 5.50% 4.
Slide 16: 2020 Rankings for Overall State Taxes
2020 Rankings for Overall State Taxes Lower overall tax rates in KORE’s key growth markets vs gateway cities Overall State Rankings(1) Best 22 45 Key Florida 4 Growth Texas 13 Gateway Colorado 17 Markets Washington 19 Georgia 32 Illinois 35 Key Massachusetts 36 Growth Markets Connecticut 47 Average
Slide 17: Last 12 Months Rent Growth
Last 12 Months Rent Growth Last 12M Rental Growth(1) 10.0% 10.0% 8.2% Key Growth Markets Gateway Cities 8.0% 7.4% 8.0% 6.2% 5.9% 6.0% 5.4% 6.0% 3.6% 3.5% 3.3% 4.0% 3.1% 3.8%4.0% 2.7% 2.8% 2.2% 2.3% 2.0% 1.9% 2.0% 0.8% 1.1% 0.0% 0.0% 0.0% -0.1% -2.0% -1.3% -2.0% Last 12M Rental Growth Key Growth Mark
Slide 18: Projected 12 Month Rent Growth
Projected 12 Month Rent Growth 8.0% Projected 2020 Rental Growth(1) 8.0% 7.3% 7.0% Key Growth Markets Gateway Cities 7.0% 5.9% 6.0% 6.0% 5.0% 4.5% 4.3% 5.0% 4.2% 4.0% 4.0% 3.2% 2.9% 2.9% 2.8% 2.9% 3.0% 3.0% 2.7% 1.8% 1.7% 2.0% 1.1% 1.2% 1.7% 2.0% 0.8% 1.6% 1.0% 0.5% 1.0% 0.5% 0.0% 0.0% -1.0% -1.0% -
Slide 19: Market Outlook
Market Outlook Tenant lounge, 1800 West Loop South Houston, Texas
Slide 20: Sound US Economic Fundamentals
Sound US Economic Fundamentals % GDP Growth % Labour Force Participation 3.5 67 3.0 66 2.5 65 2.0 64 1.5 63 1.0 62 Fitness centre, The Plaza Buildings, Bellevue, Seattle 61 0.5 60 US Economy at a Glance 0.0 2.1% 3.5% GDP (1) Labour Force Participation Rate (2) Real GDP growth Unemployment rate in 3Q
Slide 21: Overall US Office Outlook
Overall US Office Outlook Technology sector remains a key driver of leasing demand, especially in strong growth markets Overall Asking Rents & Vacancy(1) 36 34 Forecast 11.0% 41.8m 75.5m 10.5% 32 Last 12M Net Absorption Last 12M Deliveries 30 10.0% 28 26 9.5% 1.9% 9.9% 24 9.0% 2015 2016 2017 2018 20
Slide 22: First Choice Submarkets Outlook
First Choice Submarkets Outlook Property Submarket Last 12M Last 12M Average Last 12M Projected Submarket Vacancy Rate Vacancy Rate Deliveries Absorption Submarket Rent Rental Growth Rental Growth Property (%) (%) (sf’000) (sf’000) (US$ p.a.) (%) (%) Seattle, Bellevue CBD 2.7 3.9 - 156.0 53.0 8.2 7.
Slide 23: Delivering Stable Distributions and Long Term Value
23 Delivering Stable Distributions and Long Term Value Portfolio Optimisation • Focused leasing strategy targeting growth sectors • Proactive and effective asset management • Maximise rental rates and capture positive rental reversions Value Accretive Investments • Pursue growth opportunities to cre
Slide 24: Thank You
Thank You For more information, please visit www.koreusreit.com Westech 360 Austin, Texas
Slide 25: Additional Information
Additional Information Tenant space, Westmoor Center Denver, Colorado
Slide 26: Financial Performance for 4Q 2019
Financial Performance for 4Q 2019 Actual Forecast Actual Actual 4Q 2019 4Q 2019(1) % Change 4Q 2019 4Q 2018 % Change (US$’000) (US$’000) (US$’000) (US$’000) Gross Revenue 33,771 24,100 40.1 33,771 24,502 37.8 Property Expenses (13,704) (10,037) 36.5 (13,704) (9,866) 38.9 Net Property Income 20,067 1
Slide 27: Tech hubs of Austin, Seattle and Denver make up ~58% of KORE's portfolio CRI
Tech hubs of Austin, Seattle and Denver make up ~58% of KORE’s portfolio CRI Ranking of Top 10 US Industry Sectors Gross Product (Economic Impact), 2018 est. Manufacturing $2,265 Government $2,264 Lobby, The Plaza Buildings, Seattle, Washington Tech Industry $1,839 Technology – US$ billion Finance a
Slide 28: Suburban Neighbourhoods Becoming Tech Campuses of Choice
Suburban Neighbourhoods Becoming Tech Campuses of Choice The Innovation Triangle: Bellevue – Kirkland – Redmond • Amazon is relocating its worldwide operations team to Bellevue(1). Its occupancy is expected to increase from 12m sf in 2019 to over 15m sf by 2024(2). • Microsoft’s Redmond Campus is be
Slide 29: Apple: A True Campus Community in Austin
Apple: A True Campus Community in Austin Apple’s Office Distribution in Austin, Texas • Apple currently occupies ~1.7m sf of office space in Austin(1) and employs ~6,200 people(2). NEW CAMPUS • On 13 December 2018, Apple announced plans to build a new US$1 billion campus in Austin, spanning 133 acre
Slide 30: Denver – An Innovative Community where Aerospace and Technology Thrive
Denver – An Innovative Community where Aerospace and Technology Thrive • A low corporate tax rate, an educated workforce and a wealth of resources make Denver business-friendly. • Colorado is home to over 500 aerospace related companies and suppliers. • Top aerospace contractors include: Ball Aerosp
Slide 31: Positive Economics in KORE's Key Growth Markets
Positive Economics in KORE’s Key Growth Markets KORE’s key growth markets outperformed national average over the last 5 years Real GDP Growth Average(1) 5.6% 5.4% 2014-2018 Key Growth Markets Gateway Cities 5.0% 4.0% 4.0% 3.9% 4.1% 3.7% 3.9% 3.2% 2.9% 2.8% 2.5% 1.8% 1.9% 1.6% 1.2% Atlanta Austin Dal
Slide 32: Rising Employment in KORE's Key Growth Markets
Rising Employment in KORE’s Key Growth Markets KORE’s key growth markets outperformed national average over the last 5 years Employment Growth Average(1) 2014-2018 Key Growth Markets Gateway Cities 4.0% 3.6% 2.8% 3.0% 2.9% 3.0% 2.8% 2.8% 2.9% 1.6% 1.7% 1.9% 1.7% 1.8% 1.3% 1.4% Atlanta Austin Dallas
Slide 33: Expanding Population in KORE's Key Growth Markets
Expanding Population in KORE’s Key Growth Markets KORE’s key growth markets outperformed national average over the last 5 years Population Growth Average(1) 2014-2018 Key Growth Markets Gateway Cities 2.9% 2.5% 2.0% 2.0% 1.8% 2.0% 1.5% 1.7% 1.2% 0.9% 1.0% 0.7% 0.7% 0.3% 0.5% 0.1% -0.1% Atlanta Austi
Slide 34: Positive Economic Outlook in KORE's Key Growth Markets
Positive Economic Outlook in KORE’s Key Growth Markets KORE’s key growth markets are forecasted to outperform national average Real GDP Growth Average Forecast(1) 4.0% 2018-2022F Key Growth Markets Gateway Cities 3.5% 3.5% 3.1% 3.1% 2.9% 3.0% 3.0% 3.0% 2.7% 2.5% 2.6% 2.2% 2.2% 2.0% 2.1% 2.0% 1.8% 1.
Slide 35: Positive Job Outlook in KORE's Key Growth Markets
Positive Job Outlook in KORE’s Key Growth Markets KORE’s key growth markets are forecasted to outperform national average Employment Growth Average Forecast(1) 3.0% 2018-2022F Key Growth Markets Gateway Cities 2.6% 2.3% 2.0% 2.0% 2.0% 1.7% 1.9% 1.5% 1.6% 1.5% 1.4% 1.2% 0.9% 0.9% 1.0% 1.0% 0.7% 0.7%
Slide 36: Portfolio Overview
Portfolio Overview NLA Committed occupancy WALE(1) Valuation Property City Location (sf) (by NLA) (in years) (US$m) Bellevue CBD, one of the most active leasing submarket in The Plaza Buildings Seattle 490,994 97.3% 4.3 275.0 Seattle Bellevue Technology Seattle Bellevue, one of the most active leasi
Slide 37: Growing in Value
Growing in Value As at 31 December 2019 As at 31 December 2018 Change Change Property (US$ ‘million) (US$ ‘million) (US$ ‘million) (Percentage) The Plaza Buildings 275.0 252.5 22.5 8.9% Seattle, Bellevue CBD Bellevue Technology Center 144.0 136.0 8.0 5.9% Seattle, Eastside The Westpark Portfolio 199
Slide 38: Tax-Efficient Structure
Tax-Efficient Structure Sponsors(1) Keppel KPA Unitholders Keppel Capital Tax-efficient structure for holding US properties Capital International ▪ No US corporate tax (21%) and Keppel US withholding tax (30%) Management Trustee Management Agreement ▪ No Singapore corporate tax (17%) and Services Fe
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