Link Real Estate Investment Trust · HKEX:823
Link Real Estate Investment Trust — FY2019/2020 Earnings Presentation
46 slides from Link Real Estate Investment Trust's earnings presentation, Jun 1, 2020
Slide 1: 2019/2020 Annual Results Analyst Presentation
2019/2020 Annual Results Analyst Presentation June 2020
Slide 2: Unprecedented Challenges
Unprecedented Challenges Operating Challenges Immediate Responses COVID-19 outbreak Strengthened ❑ HK$300M to support our tenants in Hong Kong, plus tenant support separate programme in Mainland China Social incidents ❑ Other support measures including lease extension in HK scheme and restructuring
Slide 3: Financial Results
Financial Results Revenue NPI HK$10,718M HK$8,220M +5.6% YoY (1) +6.3% YoY (1) DPU NAV per share HK$2.8719 HK$77.61 +5.9% YoY (2) -13.3% YoY Notes: (1) On a like-for-like basis, excluding any properties acquired, divested and/or newly operational (as applicable) during the years under analysis. (2)
Slide 4: Current Portfolio
Current Portfolio Portfolio Value HK$196B (1) Geographical Split (1) Retail – 74.6% (by value) 3.1% 1.7% 125 in HK 9.7% 4 in Mainland China 4.4% Hong Kong Car Park – 16.2% 85.5% Mainland China ~ 57,000 16.2% 12.8% Car park spaces in HK Australia 1.7% Office – 9.2% 64.9% 1 in HK HK retail HK car park
Slide 5: Delivering on Vision 2025
Delivering on Vision 2025 Portfolio Growth (1) (1) 96.5% 97.8% Hong Kong occupancy Mainland China occupancy 1 1 Completed development Acquisition outside Greater China Culture of Excellence Visionary Creativity Group headquarters & 750 scholarships regional centres Granted since inauguration in 2015
Slide 6: Business As Mutual
Business As Mutual As an integral part of the community, our job is to find mutual value for the various stakeholders by being agile and connected with the community as we evolve with trends P.6
Slide 7: Results Overview
2A FR LINK Results Overview
Slide 8: Hong Kong Portfolio: A Challenging Year
Hong Kong Portfolio A Challenging Year Retail Revenue growth 7.0% (2) Reversion rate 12.6% (3) Occupancy 96.5% (3) Average unit rate HK$70.3psf Car Park (2) Revenue growth 4.2% Car park income per HK$ 2,827 space per month (3) Average valuation per HK$ 561K space Notes: (1) All figures for the year
Slide 9: Hong Kong Portfolio Versus Overall Hong Kong Retail Market
Hong Kong Portfolio Versus Overall Hong Kong Retail Market Tenant Sales Growth (1) Occupancy Cost (3) 8.3% 20% 18% 16.8% -1.3% -1.7% 15.7% 16% -3.4% 14.7% -6.8% 14% 12% 11.9% -14.8% 10% -19.1% 8% -24.9% 6% Food & Supermarkets & General retail (2) Overall FY15/16 FY16/17 FY17/18 FY18/19 FY19/20 bever
Slide 10: Hong Kong Portfolio: Update on The Quayside
Hong Kong Portfolio Update on The Quayside ✓ Three new tenants, Manulife, ✓ 15 F&B and takeaway outlets ~80% a local finance firm and ~72% to serve surrounding catchment Office Adidas, have committed Retail Occupancy (1) over 2 floors Occupancy (1) Note: (1) Committed as of date of the announcement.
Slide 11: Mainland China Portfolio: Stable Performance
Mainland China Portfolio Stable Performance Retail ✓ Full year results remained 97.8% intact despite business Retail disruption in February Occupancy (1) 2020 ✓ Gradual recovery since 29.6% April with only about 60% of previous years footfall Retail Reversion (2) (3) Office ✓ Tenants have gradually
Slide 12: Asset Enhancement: Completed Projects in 2019/2020
Asset Enhancement Completed 7 Projects in 2019/2020 Projects completed in 2H 2019/2020 4 Underway ROIs were impacted by softened sentiment CAPEX HK$411M 2H 2019/2020 CAPEX ROI to be completed Tsz Wan Shan 157M 10.2% 12.0% by early 2021 TKO Spot (2) 183M Fung Tak (2) 60M 15.8% >19 Under Planning Hin
Slide 13: Asset Enhancement: Planning to Revamp CentralWalk in Shenzhen
Asset Enhancement Planning to Revamp CentralWalk in Shenzhen Strengthen its appeal as the Goal “go-to” destination for Shenzhen shoppers Timing Expect to commence in Q3 2020 CAPEX ~RMB400M Duration ~12 months in five phases (1) Shop repartitioning, interior renovation, façade facelift and Scope reva
Slide 14: 100 Market Street: First Outside Greater China
100 Market Street First Outside Greater China A$683M Apr 20 100% Acquisition Transaction Office Price Completed Occupancy (1) ✓ Acquisition completed on 7 April 2020 with 100% A$ financing secured ✓ Fully let to three high quality tenants with WALE of over 8 years and annual rental escalation of ~4%
Slide 15: Capital Management: Sound Capital Position
Capital Management Sound Capital Position Average Effective Fixed Rate Debt / Gearing Ratio Debt Maturity Interest Rate (1) Total Debt (1) 16.7% 4.0 years 2.94% 56.5% Diversified Funding Sources with Strong Credit Ratings Convertible bonds 11.6% Credit Ratings HK$4.0B HKD bank loans 34.1% HK$11.8B S
Slide 16: Capital Management: Well-prepared with Ample Liquidity
Capital Management Well-prepared with Ample Liquidity Recent Transactions Sealed with Favourable Terms Apr 19 ✓ First green convertible bonds Launched globally in the real estate sector and for Hong Kong issuers HK$4B guaranteed convertible bonds due 2024 at 1.6% p.a. Jul-Aug 19 ✓ Issued 5Y and 7Y n
Slide 17: Capital Management: Maturity Profile Staggered Evenly
Capital Management Maturity Profile Staggered Evenly As at 31 March 2020 (1) HK$ billion 8 7.2 7 0.2 6 5.7 5.6 5.6 5.7 5.6 0.1 0.2 0.2 0.3 1.0 5 0.2 - 4 4.0 7.0 4.0 3 5.4 4.5 2 1.5 1.1 1.2 1.3 1.0 0.2 1 0.1 0.7 0.2 0.6 0.5 0.5 1.5 1.2 0.9 1.0 0.7 0.4 0.2 0 - - 20/21 21/22 22/23 23/24 24/25 25/26 26/
Slide 18: March 2020 Valuation Review
March 2020 Valuation Review Reflecting Dampened Economic Environment Valuation Capitalisation Rate As at As at 31 March 31 March As at As at 2020 2019 31 March 31 March HK$’M HK$’M 2020 2019 Hong Kong Retail properties 127,515 144,096 3.10% - 4.50% 3.00% - 4.20% Car parks 31,732 35,059 3.10% - 5.30%
Slide 19: Outlook and Challenges
2A FR LINK Outlook and Challenges
Slide 20: What will be the New Normal?
Market Trends and Behavioral Changes What will be the “New Normal”? Property Market Shopper Health and Money invested in direct real estate investment in Preference Safety 1Q 2020 -26% yoy -62% yoy +38.9% ~2.6 billion Asia Pacific Mainland China (2023 vs 2020) Globally under a certain Estimated reve
Slide 21: Business as Mutual
Business as Mutual Headwinds & Trends Vision 2025 Creating Shared Values Financial Property Market Portfolio Growth Tenant Credit Outlook Relationship Culture Digitalisation of Excellence Placemaking Shopper Preference Innovation Visionary Creativity Environmental Health & Safety P.21
Slide 22: Vision 2025: Portfolio Growth
Vision 2025 Portfolio Growth ✓ Consider support ✓ Continue to look for opportunities measures for in Hong Kong, Mainland China tenants and and overseas community ✓ Remain prudent in capturing Asset Portfolio ✓ Extracting more displacement opportunities Management potential from Management organic po
Slide 23: Vision 2025: Culture of Excellence and Visionary Creativity
Vision 2025 Culture of Excellence and Visionary Creativity Culture of Excellence ✓ Board to provide guidance for Link’s long-term strategy ✓ Strengthen Mainland China Talent platform ✓ Align management across regions Management ✓ Linkers’ Panel to collect employees’ feedback Visionary Creativity ✓ F
Slide 24: Updates and Outlook: Asset Management
Updates and Outlook Asset Management v Asset Management Tenant Sales Forward Guidance • April sales were impacted by social • Expect slower lease negotiations distancing measures except with more cases of negative supermarket which maintained its reversions resilience • Focus to maintain a steady oc
Slide 25: Updates and Outlook: Portfolio and Capital Management
Updates and Outlook v Portfolio and Capital Management Portfolio Management Capital Management • Continue to explore • Maintain strong balance sheet to prudent growth weather both downside and opportunities in selected upside markets including Hong • Resume distribution reinvestment Kong, Mainland C
Slide 26: Distribution Calendar
Distribution Calendar Distribution period October 2019 – March 2020 Last day of trading on a “cum” basis 11 June 2020 Ex-distribution date 12 June 2020 16 June – 18 June 2020 Distribution book close (both days inclusive) Record date for entitlement to distribution 18 June 2020 Five trading days to d
Slide 27: Appendix
2A FR LINK Appendix “4 ff
Slide 28: Like-for-like Figures – Key Financial Data
Appendix 1 Like-for-like(1) Figures – Key Financial Data FY19/20 FY18/19 YoY Consolidated HK$’M HK$’M % Revenue 10,096 9,564 +5.6 Net property income 7,814 7,348 +6.3 Hong Kong portfolio Retail rental 6,807 6,381 +6.7 Car park rental 1,909 1,835 +4.0 Other revenue 411 365 +12.6 Total revenue 9,127 8
Slide 29: Financials – Income Statement Summary
Appendix 2 Financials – Income Statement Summary Year ended Year ended 31 Mar 2020 31 Mar 2019 YoY (HK$’M) (HK$’M) % Revenue (1) 10,718 10,037 +6.8 Property operating expenses (2,498) (2,348) +6.4 Net property income 8,220 7,689 +6.9 General and administrative expenses (416) (405) +2.7 Interest inco
Slide 30: Financials – Distribution Statement Summary
Appendix 3 Financials – Distribution Statement Summary Year ended Year ended 31 Mar 2020 31 Mar 2019 YoY (HK$’M) (HK$’M) % (Loss) / profit for the year, before transactions with (17,122) 20,329 -184.2 Unitholders Change in fair values of investment properties 23,831 (12,151) -296.1 attributable to U
Slide 31: Financials – Financial Position & Investment Properties
Appendix 4 Financials – Financial Position & Investment Properties Financial Position Summary As at As at As at HK$’M 31 Mar 2020 30 Sep 2019 31 Mar 2019 Total assets 207,619 231,902 226,937 Total liabilities 47,502 41,414 37,611 Non-controlling interest 406 562 587 Net assets attributable to Unitho
Slide 32: Financials – Capital Management
Appendix 5 Financials – Capital Management Committed Debt Facilities HK$ B % Mar-20 Sep-19 Mar-20 Sep-19 HK$ Bank loans 11.8 5.4 34.1 19.4 A$ Bank loan 1.0 - 2.9 - Medium Term Notes 15.6 16.2 45.1 58.3 Convertible bonds 4.0 4.0 11.6 14.4 RMB Bank loans 2.2 2.2 6.3 7.9 Total debt 34.6 27.8 100.0 100.
Slide 33: HK Portfolio – Retail Revenue Analysis
Appendix 6 HK Portfolio – Retail Revenue Analysis Percentage Like-for-like contribution Year ended Year ended basis Year ended 31 Mar 2020 31 Mar 2019 YoY YoY(2) 31 Mar 2020 (HK$’M) (HK$’M) % % % Retail rentals: Shops (1) 5,592 5,420 +3.2 +7.6 77.4 Markets / cooked food stalls 916 925 -1.0 +2.8 12.7
Slide 34: HK Portfolio – Car Park Revenue Analysis
Appendix 7 HK Portfolio – Car Park Revenue Analysis Percentage Year ended Like-for- contribution Year ended 31 Mar like basis Year ended 31 Mar 2020 2019 YoY YoY(1) 31 Mar 2020 (HK$’M) (HK$’M) % % % Car park rentals: Monthly 1,494 1,496 -0.1 +8.0 77.9 Hourly 418 483 -13.5 -8.2 21.8 Expenses recovery
Slide 35: HK Portfolio – Expenses Analysis
Appendix 8 HK Portfolio – Expenses Analysis Percentage Year Year Like-for- contribution ended ended like basis Year ended 31 Mar 2020 31 Mar 2019 YoY YoY(2) 31 Mar 2020 (HK$’M) (HK$’M) (%) (%) (%) Property managers’ fees, security 578 542 +6.6 +7.9 26.7 and cleaning (1) Staff costs (2) 380 484 -21.5
Slide 36: HK Portfolio – Retail Portfolio Data
Appendix 9 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 As at As at As at As at As at As at As at 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 202
Slide 37: HK Portfolio – Retail and Car Park Portfolio Data
Appendix 10 HK Portfolio – Retail and Car Park Portfolio Data As at As at 31 Mar 2020 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$70.3 HK$68.0 +3.4% Occupancy rate ◼ Shops 96.4% 97.4% -1.0% ◼ Markets/cooked food stalls 95.0% 9
Slide 38: HK Portfolio – Retail Lease Expiry Profile
Appendix 11 HK Portfolio – Retail Lease Expiry Profile As % of total area As % of monthly rent As at 31 March 2020 % % FY20/21 23.1 25.5 FY21/22 28.8 26.9 FY22/23 and beyond 41.3 44.0 Short-term lease and vacancy 6.8 3.6 Total 100.0 100.0 P.38
Slide 39: HK Portfolio – Retail Trade Mix
Appendix 12 HK Portfolio – Retail Trade Mix Retail Mar-20 Sep-19 8 1 1. Food and beverage 28.9% 28.9% 2. Supermarket and foodstuff 20.6% 20.7% 7 6 3. Markets/ cooked food stalls 14.6% 13.6% 5 Retail Trade Mix Food and By Monthly Rent beverage 4. Services 11.1% 11.2% 2 4 Personal care / 5. Personal c
Slide 40: Mainland China Portfolio – Trade Mix
Appendix 13 Mainland China Portfolio –Trade Mix 1 Food Related 6 1 Non-financial 5 Trades Sectors 43.1% 100.0% Retail Trade Mix 5 Office Trade Mix By Area Food and beverage By Area Food and beverage 4 2 Personal care / Personal 4 care / Medicine Medicine 3 2 3 Services Services Retail Mar-20 Sep-19
Slide 41: 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 31 March 2020 (%) (%) (%) (%) FY20/21 17.8 24.4 20.8 21.7 FY21/22 26.6 23.9 33.4 33.6 FY22/23 and beyond 53.4 51.7 43.2 44.7 Vacancy 2.2 - 2
Slide 42: Hong Kong Car Park Demand and Supply
Appendix 15 Hong Kong Car Park Demand and Supply Private Car Demand and Supply (YoY) No. of Registration of Vehicles and Parking Spaces (Private Cars) 684,378 5.4% 617,732 4.1% 631,808 3.1% 2.7% 2.0% 2.3% 1.5% 1.2% 1.3% 1.3% 0.5% 0.8% 0.3% 421,062 -0.6% 2014 2015 2016 2017 2018 2019 1Q 2020 No. of p
Slide 43: Hong Kong Operating Environment
Appendix 16 Hong Kong Operating Environment Median Monthly Household Income (1) (YoY) Overall Public rental housing 10% 4.2% Unemployment (1) 5% -8.9% GDP Growth (1) 0% -2.7% -4.1% -5% 2015 2016 2017 2018 2019 1Q 2020 Note: (1) Figures for 1Q 2020. Source: Census & Statistics Department P.43
Slide 44: Hong Kong Retail Sales
Appendix 17 Hong Kong Retail Sales Retail Sales Year-on-year Change (YoY) 60% Global financial crisis Trade war and 40% political unrest Tech bubble burst 20% 0% -20% SARS outbreak Anti-graft -40% campaign Asian financial -60% crisis COVID-19 -80% outbreak 92 93 94 95 96 97 98 99 00 01 02 03 04 05 0
Slide 45: Mainland China Operating Environment
Appendix 18 Mainland China Operating Environment GDP Growth (YoY) National Beijing Retail Sales Shanghai Guangzhou 1Q 2020 YoY change 15% Shenzhen 10% 5% Beijing -21.5% 0% -5% Guangzhou -15.0% -10% 2017 2018 2019 1Q 2020 2020F 2021F 2022F Shenzhen -22.9% Urban Income Growth (1) National Beijing (YoY
Slide 46: 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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