Keppel REIT · SGX:K71U
Keppel REIT — Q3 2015 Earnings Presentation
42 slides from Keppel REIT's earnings presentation, Oct 19, 2015
Slide 1: Third Quarter 2015 Financial Results
Third Quarter 2015 Financial Results 19 October 2015 1
Slide 2: Outline
Outline 1. Key Highlights ……………………………………………… 5 2. Financial Highlights ……………………………………… 9 3. Capital Management ………………………………….. 13 4. Portfolio Analysis ……………………………………….. 17 5. Market Review & Outlook ……….…………………. 31 Important Notice The value of Units and the income from them may fall as well as ris
Slide 3: Keppel REIT: Overview
Keppel REIT: Overview S$8.2 billion 3.5 million sf Assets Under Management Total attributable NLA 12 Office Towers In 9 Quality Premium Grade and Grade A assets in CBDs of Singapore and Australia 299 tenants S$3.1 billion (1) Diversified across various business sectors Market Capitalisation The abov
Slide 4: Well-located Premium Grade A Office Portfolio
Well-located Premium Grade A Office Portfolio » 88% of portfolio in Singapore and 12% in Australia » Youngest and largest portfolio of premium Grade A office assets in Singapore’s central business district Average portfolio age of approximately 5 years » 92% of Singapore properties in the prime Ra
Slide 5: 1. Key Highlights
1. Key Highlights Ocean Financial Centre, Singapore 5
Slide 6: Key Financial Highlights
Key Financial Highlights » Higher distributable income y-o-y of $54.4 mil in 3Q 2015 and $163.2 mil for YTD 2015 4.6% over 3Q 2014 and 1.8% over YTD 2014 respectively, and sustained on a q-o-q basis Ocean Financial Centre Due mainly to better performance from Ocean Financial Centre, Bugis Ju
Slide 7: Key Capital Management Highlights
Key Capital Management Highlights » Increased fixed-rate loans to over 70%, which will insulate against interest rate fluctuations, while allowing for financial and operational flexibility » All-in interest rate remained stable at 2.5% » Maintained long weighted average term to maturity of 3.6 years
Slide 8: Key Portfolio Highlights
Key Portfolio Highlights » Concluded a total of 82 leases or approximately 1.1 mil sf to-date » Continued to intensify efforts to retain and secure tenants High tenant retention rate of 90% in Singapore Portfolio occupancy of 98.5% » Notwithstanding office supply from upcoming and existing build
Slide 9: 2. Financial Highlights
2. Financial Highlights Marina Bay Financial Centre, Singapore 9
Slide 10: Sustained Returns
Sustained Returns » Distributable income 4.6% y-o-y for 3Q 2015 and 1.8% y-o-y for YTD 2015, and sustained on a q-o-q basis Due mainly to better performance from Ocean Financial Centre, Bugis Junction Towers and 8 Chifley Square in Sydney » DPU of 1.70 cents for 3Q 2015 YTD 2015 3Q 2015 3Q 201
Slide 11: Strong Balance Sheet
Strong Balance Sheet As at 30 September 2015 As at 30 June 2015 Non-current Assets $7,041 mil $7,042 mil Total Assets $7,273 mil $7,276 mil 1 Borrowings $3,554 mil $3,555 mil Total Liabilities $2,828 mil $2,826 mil Unitholders’ Funds $4,444 mil $4,448 mil 2 Adjusted NAV Per Unit $1.37 $1.38 (1) Thes
Slide 12: 3Q 2015 Distribution Per Unit
3Q 2015 Distribution Per Unit Distribution Per Unit (DPU) Distribution Period 1.70 cents 1 July 2015 – 30 September 2015 Distribution Timetable Trading on “Ex” Basis Friday, 23 October 2015 Books Closure Date Tuesday, 27 October 2015 Distribution Payment Date Friday, 27 November 2015 Singapore Austr
Slide 13: 3. Capital Management
3. Capital Management One Raffles Quay, Singapore 13
Slide 14: Disciplined Capital Structure
Disciplined Capital Structure » Increased fixed-rate loans to over 70%, which will insulate against interest rate fluctuations, while allowing for operational and financial flexibility » All-in interest rate remained stable at 2.5% As at 30 Sep 2015 Gross Borrowings $3,554 mil Interest Coverage Rati
Slide 15: Hedged almost 100% of income from Australia
Hedged almost 100% of income from Australia » Hedged almost 100% of distribution payment from Australia up till 1Q 2016 Reduces volatility and provides greater certainty over future income distributions » Impact of AUD movement on Keppel REIT’s DPU, NAV and gearing: Assuming AUD 1:SGD 0.95 DPU Min
Slide 16: Well-staggered Debt Maturity Profile
Well-staggered Debt Maturity Profile » Maintained stable weighted average term to maturity of 3.6 years » Healthy interest coverage ratio of 4.4 times » Continued to maintain low refinancing obligations, with close to 100% of total borrowings not due for repayment till 2017 Millions ~100% of loans n
Slide 17: 4. Portfolio Analysis
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Slide 18: Unwavering Focus on Tenant Retention
Unwavering Focus on Tenant Retention » Continued to intensify lease management efforts to retain and secure tenants » Concluded a total of 82 leases or approximately 1.1 mil sf of office spaces to-date Approximately 43% or 470,000 sf committed in 3Q 2015 Portfolio occupancy stood at 98.5% as at
Slide 19: Healthy Lease Expiry Profile
Healthy Lease Expiry Profile » Continued focus on tenant retention » Notwithstanding office supply from upcoming and existing buildings, completed 100% of all leases due for review and almost all leases due for renewal in 2015 » 70% of leases not due for renewal till 2018 and beyond » Despite challe
Slide 20: Active Leasing Activities in 3Q 2015
Active Leasing Activities in 3Q 2015 » Concluded a total of 34 leases or approximately 470,000 sf of space in 3Q 2015 » Of the new office leases secured in 3Q 2015 One-third were from tenants setting up presence and operations in Singapore One-third were from first-time entrants to Keppel REIT’s
Slide 21: Well-Diversified Tenant Base
Well-Diversified Tenant Base » Continue to maintain well-diversified tenant base from various business sectors TMT, 10.2% Legal, 9.8% Number of tenants Energy, Natural resources, (1) Shipping and Marine, 9.6% 299 Real estate & property services, 7.1% Accounting & consultancy Banking, insurance & fin
Slide 22: Stable Committed Occupancy Levels
Stable Committed Occupancy Levels » Maintained high portfolio committed occupancy of 98.5% Singapore Australia Overall 98.8% 97.3% 98.5% 100.0% 99.7% 99.8% 100.0% 100.0% 98.5% 97.3% 95.1% 95.0% Singapore core CBD occupancy at 95.8%(1) Australia total CBD occupancy at 88.4%(2) Bugis Junction Ocean Ma
Slide 23: Strong Singapore Portfolio Occupancy
Strong Singapore Portfolio Occupancy » Keppel REIT’s Singapore portfolio occupancy is consistently above Core CBD occupancy levels Keppel REIT Historical Occupancy 99.8% Keppel 100% 99.5% 98.8% REIT 98.0% Singapore Core CBD(1) 96.6% 95% 95.8% 93.5% 93.2% 90% 85% 80% 1Q 12 2Q 3Q 4Q 1Q 13 2Q 3Q 4Q 1Q
Slide 24: Long Weighted Average Lease Expiry
Long Weighted Average Lease Expiry » Top 10 tenants account for approximately 43% of portfolio NLA » Long WALE of approximately 8.5 years and 6 years for top 10 tenants and portfolio respectively will enhance income sustainability over the long term Weighted Average Lease Expiry (WALE) Top Ten Tenan
Slide 25: Enhancement Works at Ocean Financial Centre
Enhancement Works at Ocean Financial Centre » Enhanced ambience and added convenience at Ocean Financial Centre » Two new retail units – DailyGrind and Spinelli Coffee Roasters » Improved vibrancy with the addition of “Tales from the Ocean”, a hanging sculpture by Israeli artist, Uri Dushy Before Af
Slide 26: New F&B Establishments at Ocean Financial Centre
New F&B Establishments at Ocean Financial Centre Before DailyGrind Before Spinelli Coffee Roasters 26
Slide 27: Project Update: Office Tower in Perth
Project Update: Office Tower in Perth » Received Certificate of Practical Completion in end-August 2015 » Government of Western Australia is expected to commence its 25-year lease in 4Q 2015 » Effective return of 7.15% upon lease commencement » Fixed annual rental escalation throughout lease term, w
Slide 28: Lauded for Sustainable and Good Corporate Governance (GRESB)
Lauded for Sustainable and Good Corporate Governance Global Real Estate Sustainability Benchmark (GRESB) 2015 » Internationally-recognised benchmark on companies’ integrated organisational approach and performance in environmental measurement and management » First Asian REIT to maintain its pole po
Slide 29: Lauded for Sustainable and Good Corporate Governance (Awards)
Lauded for Sustainable and Good Corporate Governance 16th SIAS Investors’ Choice Awards 2015 » Recognises companies for outstanding efforts in upholding and improving corporate disclosure and transparency standards Most Transparent Company in the REITs and Business Trusts category, Runner-Up PUB W
Slide 30: Celebrating Singapore's Golden Jubilee
Celebrating Singapore’s Golden Jubilee » Keppel REIT’s office buildings were decked out to commemorate SG50 » Ocean Financial Centre featured a SG50 green wall, and the building façade was lit up in a spectacular LED lighting display during the National Day Parade Ocean Financial Centre Plaza After
Slide 31: 5. Market Review & Outlook
5. Market Review & Outlook Bugis Junction Towers, Singapore 31
Slide 32: Market Outlook – Singapore
Market Outlook – Singapore Singapore » Advance estimates indicate that the Singapore economy expanded 1.4% y-o-y in 3Q 2015, supported by growth in the construction and services sectors » Singapore’s economy is expected to record a modest 2.0% to 2.5% growth for the whole of 2015 » Landlord’s proact
Slide 33: Singapore Office Market Review: Core CBD Occupancy
Singapore Office Market Review » Occupancy in Singapore’s core CBD remained stable at 95.8% » Office rents recorded a second quarter of correction, with average Grade A rents at approximately $10.90 psf in 3Q 2015 $15 100% 95.8% 96.6% 96.1% 96.2% 95.8% 95.0% 95.2% 95.7% 95.7% 93.2% 93.2% 93.5% 91.6%
Slide 34: Singapore Average Net Office Demand and Supply
Singapore Average Net Office Demand and Supply » Healthy demand for office space of approximately 1.2 mil sf p.a. in the last 5 years » Average supply of approximately 0.7mil sf p.a. over the next 6 years till end-2020 Period Ave annual net supply Ave annual net demand(2) 5 years (2010 – 2014) 1.0 m
Slide 35: Market Outlook – Australia
Market Outlook – Australia Australia » The Australia economy grew 2.0% y-o-y in 2Q2015, with full-year growth expected at 2.5% » The Reserve Bank of Australia maintained the official cash rate at 2.0% to foster growth, particularly in the housing and infrastructure sectors » Sydney and Melbourne rec
Slide 36: Strategically-located Premium Grade Assets in Singapore
Strategically-located Premium Grade Assets in Singapore » Best-in-class assets strategically located in Singapore’s prime business and financial districts » S-REIT with the youngest and largest portfolio of premium office assets » Reputable tenant base spanning diverse business sectors Marina Bay Fi
Slide 37: Thank You
Thank You Ocean Financial Centre, Singapore 37
Slide 38: Additional Information
Additional Information One Raffles Quay Singapore 38
Slide 39: Singapore's Leading Office REIT
Singapore’s Leading Office REIT Vision To be a successful commercial real estate investment trust with a sterling portfolio of assets pan-Asia. Mission Guided by our operating principles and core values, we will deliver stable and sustainable returns to Unitholders by continually enhancing our asset
Slide 40: Growth Record
Growth Record 8 Exhibition Street Bugis Junction Towers MBFC Phase One Office Tower on the MBFC Tower 3 Prudential Tower 275 George Street 8 Chifley Square Old Treasury Building site Acquired the three One Raffles Quay Increased Divested stake in remaining prime interest in Prudential Tower street-f
Slide 41: Portfolio Information
Portfolio Information » Keppel REIT’s AUM is approximately $8.2 billion as at 30 September 2015 » 88% of portfolio in Singapore and 12% in Australia Marina Bay Financial Bugis Junction Towers One Raffles Quay(1) Ocean Financial Centre (2) Centre (1) Comprises of three premium A pair of 50 and 29 sto
Slide 42: Portfolio Information
Portfolio Information Office Tower on the 8 Chifley 77 King Street Office 8 Exhibition Street, 275 George Street, Old Treasury Building Square, Sydney(1) Tower, Sydney Melbourne(1) Brisbane(1) site, Perth(1) 34-storey Grade A 18-storey Grade A 35-storey Grade A 30-storey Grade A 33-storey Grade A of