Link Real Estate Investment Trust · HKEX:823
Link Real Estate Investment Trust — H1 2019/20 Earnings Presentation
45 slides from Link Real Estate Investment Trust's earnings presentation, November 2019
Slide 1: Interim Results Presentation 2019/2020
Interim Results Presentation 2019/2020 November 2019
Slide 2: Interim Financial Results
Interim Financial Results Revenue | HK$’M 5,332 +7.8% YoY (1) NPI | HK$’M DPU | HK$ NAV per unit | HK$ 4,071 1.4147 90.58 +8.5% YoY (1) +8.3% YoY (2) +6.1% YoY Notes: (1) On a like-for-like basis, excluding any properties acquired, divested and/or newly operational (as applicable) during the periods
Slide 3: Quality Asset Portfolio
Quality Asset Portfolio v Portfolio Mix 131 Assets Across Hong Kong and Mainland China 126 Properties Mainland Mainland China Retail China Office Hong Kong ~8M Retail space (sqft) 9.2% 3.3% HK Office 3.9% 87.5% ~0.7M Office space (sqft) Total ~57k Car park space HK Car park portfolio value (1) 17.0%
Slide 4: Value Creation Model to Achieve Our Vision
Value Creation Today’s AgendaModel to Achieve Our Vision Our Portfolio KPIs →Sustain DPU growth →Maintain A ratings →Staff satisfaction > 80% Key Strengths →Low attrition rate of high performing staff Asset Management → Management → Enhancement →Tenant sales growth outperforms market Portfolio Manag
Slide 5: Vision 2025: Portfolio Growth
Vision 2025: Portfolio Growth GOAL Achieve high single-digit AUM growth Valuation (1) +0.9% vs Mar 19 Grow at high single-digit CAGR DPU (2) +8.3% YoY Sustain DPU growth Credit A A2 A Ratings S&P Moody’s Fitch Maintain A ratings Notes: (1) As at 30 September 2019. (2) For the period ended 30 Septemb
Slide 6: Vision 2025: Culture of Excellence
Vision 2025: Culture of Excellence GOAL Employer of Choice Learning LinkREAD Culture Launched e-library to provide unlimited access to publications Recruiting 6 Management Associates Talent >40 Summer Interns Build sustainable talent pipeline for future growth and development Staff Health & Well-bei
Slide 7: Vision 2025: Visionary Creativity
Vision 2025: Visionary Creativity Tenant GOAL Placemaking through Innovation Academy Star talk series Management talks help tenants to improve business operation skills and their sales performances Link Together $14.1M Initiatives Earmarked for 6 projects and Link University Scholarships for 190 stu
Slide 8: Operational Updates
Operational Updates ™ aE 2 tie LINK
Slide 9: Resilient Hong Kong Retail Portfolio
Resilient Hong Kong Retail Portfolio (2) 8.9% 18.1% Revenue growth Reversion rate Like-for-like (3) (3) 96.9% HK$69.6psf Occupancy Average unit rent Notes: (1) All figures for the period ended 30 September 2019. (2) On a like-for-like basis, excluding any properties acquired, divested and/or newly o
Slide 10: Non-Discretionary Trade Mix Offering Stability
Non-Discretionary Trade Mix Offering Stability Hong Kong 8 1 1. Food & beverage 28.9% Trade Mix by 2. Supermarket & foodstuff 20.7% Monthly 7 3. Markets/cooked food stalls 13.6% 6 Rental 63.2% 4. Services 11.2% 5 (as at 30 Sep 19) 5. Personal care/medicine 5.8% Food Related 2 6. Education/welfare &
Slide 11: Hong Kong Tenant Performance Bucking Market Trend
Hong Kong Tenant Performance Bucking Market Trend (1) (3) Continuous Sales Growth Healthy Occupancy Cost 4.5% 2.1% 1.4% -1.0% -0.6% 16.2% 14.7% Food & Supermarkets & General retail (2) Overall 14.4% beverage foodstuff 12.3% -6.2% -9.8% -13.2% Apr 19 – Sep 19 (Link) Apr 19 – Sep 19 (HK) Food & bevera
Slide 12: Asset Enhancement
Asset Enhancement Completed Projects Ongoing Projects Choi Ming CAPEX: HK$104M Underway Under Planning ROI: 18.3% Enriched F&B choices and retail 8 >15 offerings CAPEX HK$835M CAPEX >HK$900M to be completed extending by 2021 to 2025 Note: (1) Estimated return on investment (“ROI”) is calculated base
Slide 13: Asset Enhancement Case Study: Nam Cheong Place Makeover
Asset Enhancement Case Study: Nam Cheong Place Makeover Asset Overview as at 30 Sep 2019 Location Potential Location Sham Shui Po ✓ Growing catchment from ~37,000 Age 17 years population to ~56,000 with completion of IFA ~56,000 public residential units in coming 5 years Car park spaces ~500 Valuati
Slide 14: Asset Enhancement Case Study: Our First Retail-to-Market Transformation
Asset Enhancement Case Study: Our First Retail-to-Market Transformation Overall ✓ Synergise with neighbouring developments ✓ Well-received by our shoppers ✓ Prepared for the growing catchment in the coming years Fresh market ✓ Addition of ~40 stalls offering fresh produce ✓ Introduced food area that
Slide 15: Hong Kong Car Park Portfolio
Hong Kong Car Park Portfolio (2) 8.2% Revenue growth Like-for-like HK$2,929 Car park income per space per month (3) HK$663K Average valuation per space Notes: (1) All figures for the period ended 30 September 2019. (2) On a like-for-like basis, excluding any properties acquired, divested and/or newl
Slide 16: Mainland China Retail Portfolio Remains Robust
Mainland China Retail Portfolio Remains Robust ✓ Newly-acquired Roosevelt Plaza and CentralWalk are trading well with reversions above 40% 26.9% 28.7% (1) 99.0% Trade Mix (1) Retail (by leased area) Occupancy 14.9% 16.8% 31.5% (2) 12.7% Retail Reversion Food & beverage Fashion General retail & other
Slide 17: Mainland China Office Portfolio
Mainland China Office Portfolio ✓ We are setting Mainland China headquarters in 20.5% Shanghai to strengthen our operations and 41.3% structure 3.6% (1) Trade Mix (1) (by leased area) 95.1% Office 12.5% Occupancy 6.8% 15.3% 13.5% (2) Office Professional services Reversion TMT Pharmacy Industrial goo
Slide 18: Well-balanced Financial Position
Well-balanced Financial Position Diversified Funding Sources Gearing ratio Effective interest rate (1) Convertible bonds HKD bank loans HK$4.0B / 14.4% HK$5.4B / 19.4% 11.9% 3.23% Fixed rate debt/ Average fixed RMB bank loans Total Debt HK$2.2B / 7.9% total debt (1) rate debt maturity (1) HK$27.8B M
Slide 19: Macro-environment and Our Strategy
Macro-environment and Our Strategy
Slide 20: Hong Kong Economy
Hong Kong Economy Median Monthly Household Income (1) Ongoing uncertainties from (YoY) Overall Public rental housing both international 15% and domestic markets continued 10% 8.5% to impact the Hong Kong economy 5% 5.1% and consumer sentiment 0% 2011 2012 2013 2014 2015 2016 2017 2018 1Q 2Q 2019 201
Slide 21: Hong Kong Retail Sales & Restaurant Receipts
Hong Kong Retail Sales & Restaurant Receipts Year-on-year Change Sales performance of 60% non-discretionary Global financial crisis Trade war and political unrest trades, 40% in particular supermarkets, 20% Tech bubble burst remained resilient and relatively 0% defensive -20% SARS outbreak Anti-graf
Slide 22: Mainland China Retail Sales and Office Rental Index
Mainland China Retail Sales and Office Rental Index ▪ Mainland China economy remains among one of the fastest-growing in the world ▪ Steady growth in disposable income and consumer spending in Beijing, Guangzhou and Shenzhen ▪ In Shanghai, office rents in Puxi core CBD is expected to hold up due to
Slide 23: Multi-Faceted Strategies in Place
Multi-Faceted Strategies in Place Our Strengths Asset Portfolio Capital Management Management Management Management Acquisition Funding cost Disposal Capital return Enhancement Development 2019/20 Interim Results | P.23
Slide 24: Vision 2025 Portfolio Growth
Vision 2025 Portfolio Growth Targeting Quality Assets with Resilient Performance Active asset management Increased effort on inorganic ✓ Maximise potential of growth organic portfolio ✓ Continue investments ✓ Focus on reaching our targeting Hong Kong and first AUM goal by 2025 tier cities and surrou
Slide 25: Vision 2025 Culture of Excellence
Vision 2025 Culture of Excellence Sustaining Talent Pipeline and Shaping Collaborative Culture Establishing Mainland Leadership development China headquarters ✓ Offer performance ✓ Improve reporting development plans & lines & tap into local training opportunities talent pool 2019/20 Interim Results
Slide 26: Vision 2025 Visionary Creativity
Vision 2025 Visionary Creativity Managing our Business with Innovation Launch of Link Plaza LINK ✓ Rebranding shopping centres in our current PLAZA Mainland China portfolio Placemaking ✓ Cementing our assets’ popularity as “extension of living rooms” Technology ✓ Innovative ways to engage stakeholde
Slide 27: Interim Distribution Calendar
Interim Distribution Calendar Distribution period April 2019 – September 2019 Last day of trading on a “cum” basis 26 November 2019 Ex-distribution date 27 November 2019 29 November – 3 December 2019 Distribution book close (both days inclusive) Record date for entitlement to cash distribution (1) 3
Slide 28: Appendix
Appendix ™ aE al = =LINK
Slide 29: Like-for-like Figures – Key Financial Data
Appendix 1 Like-for-like(1) Figures – Key Financial Data Six months Six months ended ended 30 Sep 2019 30 Sep 2018 YoY Consolidated (HK$’M) (HK$’M) % Revenue 5,059 4,694 +7.8 Net property income 3,888 3,584 +8.5 Hong Kong portfolio Retail rental 3,389 3,112 +8.9 Car park rental 988 912 +8.3 Other re
Slide 30: Financials – Income Statement Summary
Appendix 2 Financials – Income Statement Summary Six months Six months ended ended 30 Sep 2019 30 Sep 2018 YoY (HK$’M) (HK$’M) % Revenue (1) 5,332 4,930 +8.2 Property operating expenses (1,261) (1,171) +7.7 Net property income 4,071 3,759 +8.3 General and administrative expenses (201) (151) +33.1 In
Slide 31: Financials – Distribution Statement Summary
Appendix 3 Financials – Distribution Statement Summary Six months Six months ended ended 30 Sep 2019 30 Sep 2018 YoY (HK$’M) (HK$’M) % Profit for the period, before transactions with Unitholders 6,742 9,226 -26.9 Change in fair values of investment properties (3,644) (6,591) -44.7 attributable to Un
Slide 32: Financials – Financial Position & Investment Properties
Appendix 4 Financials – Financial Position & Investment Properties Financial Position Summary As at As at As at HK$’M 30 Sep 2019 31 Mar 2019 30 Sep 2018 Total assets 231,902 226,937 215,269 Total liabilities 41,414 37,611 34,308 Non-controlling interest 562 587 583 Net assets attributable to Unitho
Slide 33: Financials – Valuation
Appendix 5 Financials – Valuation As at As at HK$’M 30 Sep 2019 31 Mar 2019 Retail properties 146,771 144,096 Car parks 37,486 35,059 Office property 8,698 - Property under development - 10,548 Properties in Mainland China 27,479 28,793 Total 220,434 218,496 As at As at Income Capitalisation Approac
Slide 34: Financials – Capital Management
Appendix 6 Financials – Capital Management Committed Debt Facilities % (HK$B) Sep-19 Mar-19 Sep-19 Mar-19 Hong Kong – HKD Bank loans 5.4 6.8 19.4 27.8 Hong Kong – Medium Term Notes 16.2 15.2 58.3 62.0 Hong Kong – Convertible bonds 4.0 - 14.4 - Mainland China – RMB Bank loans 2.2 2.5 7.9 10.2 Total d
Slide 35: Financials – Maturity Profile
Appendix 7 Financials – Maturity Profile As at 30 Sep 2019 MTN (HK$ and US$) HK$ billion Convertible bond (HK$) 14 HK$ Bank loans 12.2 RMB Bank loans 12 HK$ Undrawn facilities 10 8 6.2 6 4.0 5.6 4.8 0.2 3.8 0.2 4 3.0 3.2 2.5 0.1 0.1 5.4 1.7 0.2 4.6 2 2.5 0.8 1.1 1.2 1.3 0.6 1.4 0.6 0.2 0.2 0.2 0.6 0
Slide 36: HK Portfolio – Retail Revenue Analysis
Appendix 8 HK Portfolio – Retail Revenue Analysis Percentage contribution Six months Six months Like-for-like six months ended ended basis ended 30 Sep 2019 30 Sep 2018 YoY YoY(2) 30 Sep 2019 (HK$’M) (HK$’M) % % % Retail rentals: Shops (1) 2,778 2,659 +4.5 +9.8 77.4 Markets / cooked food stalls 451
Slide 37: HK Portfolio – Car Park Revenue Analysis
Appendix 9 HK Portfolio – Car Park Revenue Analysis Percentage contribution Six months Six months Like-for-like six months ended ended basis ended 30 Sep 2019 30 Sep 2018 YoY YoY(1) 30 Sep 2019 (HK$’M) (HK$’M) % % % Car park rentals: Monthly 759 745 +1.9 +10.8 76.7 Hourly 229 243 -5.8 +0.9 23.2 Expe
Slide 38: HK Portfolio – Expenses Analysis
Appendix 10 HK Portfolio – Expenses Analysis Percentage contribution Six months Six months Like-for- Six months ended ended like basis ended 30 Sep 2019 30 Sep 2018 YoY YoY(2) 30 Sep 2019 (HK$’M) (HK$’M) (%) (%) (%) Property managers’ fees, security 286 269 +6.3 +9.2 25.8 and cleaning (1) Staff cost
Slide 39: HK Portfolio – Retail Portfolio Data
Appendix 11 HK Portfolio – Retail Portfolio Data Retail properties Retail Average monthly Total area Valuation rentals unit rent Occupancy rate No. of (’000 sq. ft.) (HK$’M) (HK$’M) (HK$ psf) (%) properties Six months As at As at ended As at As at As at As at 30 Sep 30 Sep 30 Sep 30 Sep 31 March 30
Slide 40: HK Portfolio – Retail Portfolio Data
Appendix 12 HK Portfolio – Retail Portfolio Data As at As at 30 Sep 2019 31 Mar 2019 Change Average monthly unit rent (psf pm) ◼ Shops HK$70.6 HK$68.2 +3.5% ◼ Overall (ex self use office) HK$69.6 HK$68.0 +2.4% Occupancy rate ◼ Shops 96.9% 97.4% -0.5% ◼ Markets/cooked food stalls 95.3% 92.2% +3.1% ◼
Slide 41: HK Portfolio – Retail Lease Expiry Profile
Appendix 13 HK Portfolio – Retail Lease Expiry Profile As % of total area As % of monthly rent As at 30 September 2019 % % FY19/20 11.9 12.9 FY20/21 21.8 24.5 FY21/22 and beyond 58.9 58.4 Short-term lease and vacancy 7.4 4.2 Total 100.0 100.0 2019/20 Interim Results | P.41
Slide 42: Mainland China Portfolio – Lease Expiry Profile
Appendix 14 Mainland China Portfolio – Lease Expiry Profile Retail Office As % of As % of As % of As % of total area monthly rent total area monthly rent As at 30 September 2019 (%) (%) (%) (%) FY19/20 9.9 14.3 9.3 10.5 FY20/21 16.6 22.7 19.7 21.0 FY21/22 and beyond 72.5 63.0 66.1 68.5 Vacancy 1.0 -
Slide 43: Hong Kong Car Park Demand and Supply
Appendix 15 Hong Kong Car Park Demand and Supply Private Car Demand and Supply No. of Registration of Vehicles and Parking Spaces (Private Cars) 681,568 5.4% 613,191 4.6% 4.1% 626,037 3.1% 2.7% 2.3% 2.0% 2.0% 1.2% 1.2% 0.8% 406,995 0.3% 0.5% 0.3% 2013 2014 2015 2016 2017 2018 3Q 2019 Number of Parki
Slide 44: Hong Kong Market Update – Kowloon East
Appendix 16 Hong Kong Market Update – Kowloon East Location of The Quayside Rental gap between Central and Kowloon East 140 120 HKD per sq ft per month, NFA Kai Tak (under 100 construction) HKD 91 Kowloon Bay 80 The Quayside 60 40 Kowloon East Ngau Tau Kok Action Area 20 Kwun Tong 0 3Q11 3Q12 3Q13 3
Slide 45: Disclaimer
Disclaimer ◼ This document has been prepared by Link Asset Management Limited in its capacity as the Manager (the “Manager”) of Link Real Estate Investment Trust (“Link REIT”) solely for use at the presentations/meetings held and may not be reproduced or redistributed without permission. Neither thi
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