Wharf Real Estate Investment Company Limited · HKEX:1997
Wharf Real Estate Investment — Wharf Real Estate Inv — H1 2021 Earnings Presentation
32 slides from Wharf Real Estate Investment's earnings presentation, Aug 5, 2021
Slide 1: Rental Income Remains Depressed
Rental Income Remains Depressed Wharf Real Estate Investment Company Limited 1H21 Interim Results 5 Aug 2021 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 2: Tremendous Pressure until Borders Relax
Overview Tremendous • Inbound Tourism Remains Frozen HK Visitor Arrivals HK Retail Sales Pressure until ‒ Hotels Keep Bleeding Million 40 HK$ Billion 300 Borders Relax Millions 35 35 ‒ Gov’t Assistance Ended 35 250 248 237 241 31 ‒ Recovery Uncertain 30 Local Social Unrest 200 190 25 174 21 161 166
Slide 3: Heated Competition
Overview Heated • Local Consumption Sentiment Improves 3 Malls Retail Revenue vs HK Retail Sales (YoY Chg.) Competition 30% ‒ Recovering GDP & Falling Unemployment 20% 17% ‒ Gradual Lifting of Social Distancing 15% 15% 9% 8% 10% • Heated Competition in Absence of Tourists 10% 11% 5% 5% 5% 9% 0% 2% -
Slide 4: HKIP Weak Market Rents
Overview HKIP Weak • Retail Revenue Drop Narrowed HKIP Revenue Breakdown 1H21: $5.3B (-11%) Market Rents ‒ Improved Turnover Rents HK$ Billion 8 0.1 ‒ Negative Rental Reversions in-line with Market 0.1 7 (-20%) 0.2 0.2 1.9 0.1 (-11%) 6 1.8 • Soft Office Demand & Inflated Supply 1.6 1.7 0.1 5 1.9 ‒ E
Slide 5: Proactively Outperform
Overview Proactively • Above-market Sales Growth at HC & TS Outperform ‒ Irresistible Marketing & Promotion ‒ Selective Retenanting Strengthens Critical Mass • Stabilised Occupancy Supported by Productivity • Sophisticated Tenants Use Opportunity to Enhance Store Locations & Sizes • Sophisticated La
Slide 6: Financial Highlights
Overview Financial • Group Revenue +10% & UNP -15% HK$M 1H21 1H20 % Chg. Highlights ‒ IP UNP -14%, due to Weaker Rental Income & Group Revenue 7,485 6,775 +10% Investment in Marketing Operating Profit 4,428 4,966 -11% ‒ Loss in Hotel Narrowed Underlying Net Profit (UNP)* 3,272 3,844 -15% Net IP Fair
Slide 7: Harbour City
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 8: Harbour City: Challenges Persist
Harbour City Challenges • Local Consumption Mostly Resumed; Pending HC Revenue Breakdown 1H21: $4.0B (-11%) Persist Tourists Return HK$ Billion 7 • Soft Office Demand with New Supply 6 0.1 0.1 0.7 0.2 0.7 5 0.2 (-28%) • Hotels Still Battered from Travel Halts 0.6 0.6 1.4 0.1 (-11%) 1.3 0.2 0.1 4 1.2
Slide 9: Uniquely Positioned
Harbour City Uniquely • Diverse & Balance mix of 500+ Tenants Rental Income Category Breakdown Positioned • Constant Retenanting & Stringent Selection Fashion 36% Kid's Related ‒ Maintains Desirable Tenant Base 2% Jewellery, ‒ Strengthens Critical Mass Beauty & Rental Income F&B & Ent. Accs. • Above
Slide 10: Sustained Demand
Harbour City Sustained Demand HK/Kowloon Valentino Beauty Debut Brands Expansion/Upgrade Incoming Brands Sushi F&B Additions Hisayoshi 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 11: Canton Road Hotels
Harbour City Canton Road • Competitive Staycation & Dining Packages to Tariff A Hotel Occupancy Hotels Sustain Operation 100% 89% • Deficits Inevitable despite Tight Cost Control 84% 86% 80% 74% • Prince Hotel Ready to Reopen w/ Fresh Look 60% When Borders Re-Open 40% 36%* • Post-Pandemic Manpower a
Slide 12: Times Square
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 13: Adjustment Underway
Times Square Adjustment • Positive Sales Growth since 4Q20 & TS Revenue Breakdown 1H21: $1.1B (-8%) Underway Outperformed Market for 3 Consecutive Qtrs HK$ Billion 1.6 • Consolidation Makes Space for New Impetus 1.4 (-19%) 0.3 0.3 0.3 0.3 (-8%) 1.2 • Office Demand - Cautious & Cost-conscious 1.0 0.4
Slide 14: Plaza Hollywood
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 15: Local-oriented
Plaza Hollywood Local-oriented • Atop Diamond Hill MTR station Interchange Station of Tuen Ma Line & Kwun Tong Line CBD2 ‒ Tuen Ma Line Amplifies Geographical Advantage ‒ Enhanced Transportation Hub of Kowloon East • Stable Demand amid Prolonged Weak Market • Occupancy* 96%; Retail Revenue -10% *As
Slide 16: Central Portfolio
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 17: Premium Commercial
Central Portfolio Premium • Sturdy Demand from Diversified Tenants Commercial Occupancy* Office Retail Wheelock House 95% 100% Crawford House 94% 100% *As at 30 Jun 2021 Wheelock House Crawford House 17 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 18: The Murray
Central Portfolio The Murray • Well-received Staycation & Dining Packages ‒ Outperforming RevPar vs. Competitive Set • Events & Banquets Still Badly Hit • Achieving Operating Breakeven under Improved Occupancy & Tight Cost Control 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 19: Singapore Portfolio
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 20: Singapore Portfolio
Singapore Portfolio Singapore • Prime Location at Key Orchard Road Intersection Portfolio (Scotts Rd. & Orchard Rd.) • Resilient Occupancy & Rental amid Ongoing Pandemic Occupancy* Office Retail Wheelock Place 91% 96% Scotts Square n/a 86% *As at 30 Jun 2021 20 2021 Interim Results Wharf Real Estate
Slide 21: Financial Management
Agenda Harbour City Times Square Plaza Hollywood Central Portfolio Singapore Portfolio Financial Management 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 22: Financial Management
Financial Management Financial • Net Debt $50.4B (Total Asset: $278.3B) Debt Maturity (HK$B) (As at 30 Jun 2021) Management HK$ Billion 16 • Comfortable Gearing 23.8% 13.5 14 12.2 • Interest Cost Lowered to 1.4% 12 11.0 10 8.9 • Moody’s A2 Issuer Rating 8 6 5.7 4 2.1 2 0 Jul – Jun: 2021/22 2022/23 2
Slide 23: Outlook: Recovery Uncertain
Outlook Recovery • Cross-border Activities Unlikely to Revive in Near Term Uncertain • Retail to Heavily Depend on Locals • Hospitality Recovery Remains Uncertain • Office Demand Stays Soft w/ Inflated Supply • Macro Challenges Persist w/ Geo-political Risks & Pandemic Hangover 23 2021 Interim Resul
Slide 24: Sustainability
Agenda Sustainability 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 25: Performance Highlights
Overview Performance Highlights • Sustainability Report 2020 follows GRI Standards (core option) and references SASB Standards • Constituent member of Hang Seng Corporate Sustainability Index and Hang Seng ESG 50 Index • Caring Company Logo, CSR Index Plus Mark and Social Capital Builder Logo Award
Slide 26: Data at a Glimpse
Overview Data at a Glimpse 24% 33% 9% 33% 26 Data comparison of 2019 and 2020; Reporting scope covers operations as identified in WREIC’s Sustainability Report 2020. https://www.wharfreic.com/en/sustainability/reports 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 27: Appendix
Agenda Appendix 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 28: HC/TS/PH Performance
HC/TS/PH Harbour City Times Square Plaza Hollywood Performance 1H21 (HK$M) Revenue % Chg Revenue % Chg Revenue % Chg Retail 2,473 -11% 728 -11% 223 -10% Office 1,220 -13% 344 -1% - - Hotels & Club 186 +3% - - - - Serviced Apt. 81 -16% - - - - Total 3,960 -11% 1,072 -8% 223 -10% Valuation* as of 30 J
Slide 29: Premium Quality Portfolio
Premium Revenue Valuation* GFA Quality Harbour City Harbour City Harbour City Portfolio 68.7% 66.4% 68.5% 1H21 Revenue Valuation GFA $5.8B $259B 12.3M s.f Singapore Portfolio Singapore Singapore Times Square 2.6% Plaza Times Square Times Square Portfolio Portfolio 16.1% Hollywood Central Plaza Centr
Slide 30: Overview of Application of Funds
Overview of Application Major Capital & Development Expenditure of Funds 1H21 2021 HK$ (Actual) (Projected) HKIP 61M 346M Singapore IP 1M 1M Mainland Properties 361M 1,040M Hotels & Others 143M 194M Total 566M 1,581M 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 31: Thank You
Rental Income Remains Depressed Thank You 2021 Interim Results Wharf Real Estate Investment Company Limited
Slide 32: End of Presentation
End of Presentation Wharf Real Estate Investment Company Limited [HKEx Stock Code: 1997.HK] Disclaimer All information and data are provided for information purposes only. All opinions included herein constitute our judgment as of the date hereof and are subject to change without notice. The Group,
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