Capitaland Ascendas Reit · SGX:A17U
Capitaland Ascendas Reit — A-REIT (Ascendas Real Estate Investment Trust) — FY2006/07 Earnings Presentation
47 slides from Capitaland Ascendas Reit's earnings presentation, Apr 18, 2007
Slide 1: FY2006/07 Financial Results Presentation
Business & Light Industrial Warehouse Science Park Retail Facilities Logistics and Hi-Tech Industrial Distribution FY2006/07 Financial Results Presentation 18 April 2007
Slide 2: Disclaimers
Disclaimers This Presentation is focused on comparing results for the full year ended 31 March 2007 versus results achieved for the full year ended 31 March 2006. This shall be read in conjunction with A-REIT’s Results for the period from 1 April 2006 to 31 March 2007 in the SGXNet announcement. Thi
Slide 3: Agenda
Agenda • Key highlights • Financial performance • Capital and funds management • Investment update • Portfolio update • Market outlook • Going forward A-REIT FY06/07 Results .. 3
Slide 4: Key Highlights
Key Highlights • FY06/07 net income available for distribution of $163.8m, up 14.9% yoy • FY06/07 DPU of 12.75 cents, up 9.2% yoy • Achieved organic growth of 2.7% • Portfolio occupancy 96.6% at 31 March 2007 vs 95.0% at 31 Mar 2006. MTB occupancy was 93.7% vs 91.4% at 31 Mar 2006 • Asset values inc
Slide 5: Agenda
Agenda • Key highlights • Financial performance • Capital and funds management • Investment update • Portfolio update • Market outlook • Going forward A-REIT FY06/07 Results .. 5
Slide 6: Distribution Details
Distribution Details Stock counter Distribution Period Distribution per unit Ascendasreit 1 Jan 07 to 31 Mar 07 (cents) 3.30 AscendasreitA 26 Feb 07 to 31 Mar 07 1.198 Distribution Timetable Notice of books closure date 18 April 2007 Last day of trading on “cum” basis 25 April 2007 Ex-date 26 April
Slide 7: DPU – FY06/07 is 9.2% above FY05/06
DPU – FY06/07 is 9.2% above FY05/06 (S$’000) FY06/07 (1) FY05/06 (1) % Change Gross revenue 283,007 227,153 25 Property operating expenses (72,660) (53,595) 36(2) Net property income 210,347 173,558 21 Borrowing costs (38,777) (22,293) 74(3) Non-property expenses (23,188) (19,273) 20 Net income 148,
Slide 8: DPU – 4QFY06/07 is 3.1% above 3QFY06/07
DPU – 4QFY06/07 is 3.1% above 3QFY06/07 (S$’000) 4Q FY06/07 (1)(2) 3Q FY06/07 (1) % Change Gross revenue 74,041 71,069 4 Property operating expenses (18,439) (18,309) 1 Net property income 55,602 52,760 5 Borrowing costs (11,248) (9,502) 18(3) Non-property expenses (4,542) (4,264) 7 Net income 39,81
Slide 9: Revenue and NPI
0 10 20 30 40 50 60 70 4Q FY03 80 $'m 1Q FY04 2Q FY04 3Q FY04 4Q FY04 1Q FY05 2Q FY05 3Q FY05 4Q FY05 1Q FY06 2Q FY06 Gross Revenue 3Q FY06 Revenue and NPI 4Q FY06 1Q FY07 2Q FY07 3Q FY07 4Q FY07 0 10 20 30 40 50 60 4Q FY03 $'m 1Q FY04 2Q FY04 3Q FY04 4Q FY04 1Q FY05 2Q FY05 3Q FY05 4Q FY05 1Q FY06
Slide 10: Yield returns compared to 10-year bond and S-REITs
Yield returns compared to 10-year bond and S-REITs S-REITs yield range from low of 2.0% to high of 8.7% 10.0% 10.0% 8.0% 8.0% 582 bps spread 6.0% 243 bps 6.0% 8.7% spread Wtd avg yield = 4.1% 4.0% 4.0% 5.3% -92 bps 2.0% spread 2.0% 2.9% 2.9% 2.9% 2.0% 0.0% 0.0% S-REIT High A-REIT S-REIT Low Yield (L
Slide 11: Agenda
Agenda • Key highlights • Financial performance • Capital and funds management • Investment update • Portfolio update • Market outlook • Going forward A-REIT FY06/07 Results .. 11
Slide 12: Balance sheet
Balance sheet (S$bn) As at 31 Mar 07 As at 31 Mar 06 Total Assets 3.3 2.8 Borrowings 1.2 1.0 Net assets attributable to unitholders 2.0 1.7 Aggregate Leverage 37.3% 36.9% Net asset value per unit 149 cents 134 cents Strong balance sheet which provides additional debt capacity of more than $450m to f
Slide 13: Capital Management
Capital Management Debt Profile 31 Mar 2007 31 Mar 2006 Aggregate leverage (1) 37.3% 36.9% Total debt S$1,185m S$973m • Fixed rate debt S$990.7m S$733m Fixed as a % of total debt 83.6% 75.3% Weighted average all-up funding cost (2) 3.37% 3.49% Weighted average term for fixed debt 3.6 years 4.3 years
Slide 14: Proactive interest rate management
Proactive interest rate management • Staggered maturities in hedging profile to manage interest rate risks • Interest rate cap which is expiring in May 2007 has been replaced with fixed rate swaps • For FY07/08, 95% of interest exposure is fixed with an weighted average term of 4.5 years at a weight
Slide 15: Agenda
Agenda • Key highlights • Financial performance • Capital and funds management • Investment update • Portfolio update • Market outlook • Going forward A-REIT FY06/07 Results .. 15
Slide 16: Investment highlights
Investment highlights • Secured $488m worth of acquisitions and development deals in FY06/07 • $340m has been completed during the year • $148m worth of investments awaiting completion as follows : Value (S$m) Expected completion HansaPoint @ CBP 29 1Q 2008 Plot 7 & 8 Changi LogisPark 32 1Q 2008 (No
Slide 17: Status of development projects
Status of development projects • Completed 1st 2 development projects, Courts Megastore in December 2006 and Giant Hypermarket in February 2007 • Projects were completed on schedule and total development costs were within budget • Unrealised revaluation gains of about $24.3m Courts Megamart Giant Hy
Slide 18: Status of development projects
Status of development projects HansaPoint @ CBP (Plot 15 Changi Business Park) • Construction commenced in Nov 2006. On schedule to complete in Q1 2008 • Pre-committed space increased from 28% to 42% Artist impression Dec 06 - Site cleared for construction April 07 – Piling works completed A-REIT FY
Slide 19: Status of development projects
Status of development projects Plot 7 & 8 Changi LogisPark (North) • Partial built-to-suit logistics facility for Zuellig Pharma • Construction commenced in Feb 2007 and expected to complete in Q1 2008 Artist impression April 2007 - Site cleared for construction A-REIT FY06/07 Results .. 19
Slide 20: Agenda
Agenda • Key highlights • Financial performance • Capital and funds management • Investment update • Portfolio update • Market outlook • Going forward A-REIT FY06/07 Results .. 20
Slide 21: Portfolio Highlights – 13% increase in new demand
Portfolio Highlights – 13% increase in new demand As at As at 31 Mar 07 31 Mar 06 A-REIT Portfolio occupancy 96.6% 95.0% A-REIT MTB (1) occupancy 93.7% 91.4% Total Portfolio renewals/new leases (sqm) 209,400(2) 151,163(3) Total New leases/Expansions (sqm) 61,074(2) 53,941(3) Total Renewals (sqm) 148
Slide 22: Sources of demand for new leases – broad based
Sources of demand for new leases – broad based FY06/07 tenants sector by net lettable area R&D Others 4% 11% IT 14% Lifestyle and Apparels 6% Biomedical 5% Transport and Storage 23% Electronics 16% General Manufacturing Precision Engineering 9% 12% A-REIT FY06/07 Results .. 22
Slide 23: Subsector Performance
Subsector Performance Strong occupancy improvement and increase in rental rates achieved for suburban office space in FY06/07 Increase in Increase in Occupancy Occupancy renewal new take Multi-tenanted properties @ 31 Mar 06 @ 31 Mar 07 rates up rates Science and Business Park 89.5% 92.8% 13.1% 23.3
Slide 24: A-REIT Portfolio Occupancy Higher Than Market
A-REIT Portfolio Occupancy Higher Than Market 100.0% 98.0% 96.9% 97.0% 95.0% 90.1% 90.0% 88.7% 85.8% 85.9% 85.9% 85.0% Occupancy Rate (%) 80.0% 75.0% 70.0% 65.0% 60.0% 55.0% 50.0% Business Park Light Industrial Hi-Tech Industrial Logistics A-REIT URA Source: URA: Urban Redevelopment Authority Offici
Slide 25: Asset Enhancement
Asset Enhancement • Asset enhancement potential for existing properties where plot ratio could be maximised • Telepark (Completed) • Converted part of existing vehicle access to increase GFA. Additional space has been fully tenanted, resulting in a 0.3% yield increase on the property, which is worth
Slide 26: Portfolio Diversification by Value
Portfolio Diversification by Value Asset Class Mix of Sale-&-Leaseback vs Diversification Multi-tenanted Buildings 4% 20% 27% 49% 51% 25% 8% 16% A-REIT FY06/07 Results .. 26
Slide 27: Split of short term & long term leases within sector
Spilt of short term & long term leases within sector Majority of leases in high growth sectors of science and business park and hi-tech industrial are on short term basis. Hence, potential to enjoy positive rental reversion Science and Business Park Hi-tech Industrial 26.1% 35.4% 64.6% 73.9% Logisti
Slide 28: Quality & Well-Diversified Tenant Base
Quality & Well-Diversified Tenant Base Top 10 tenants make up 32.4% of the total portfolio income vs 33.9% at 31 March 06 A-REIT FY06/07 Results .. 28
Slide 29: Weighted Average Lease Term to Expiry
Weighted Average Lease Term to Expiry • Weighted average term to expiry remains stable at 6.8 years • Lease expiry profile is well balanced and extends beyond 2021 20% % of A-REIT Property Income 10% 15.7% 13.4% 13.1% 12.2% 11.8% 11.0% 10.7% 9.1% 8.4% 8.4% 8.3% 8.0% 7.9% 7.6% 6.6% 6.4% 6.4% 5.8% 5.7
Slide 30: Agenda
Agenda • Key highlights • Financial performance • Capital and funds management • Investment update • Portfolio update • Market outlook • Going forward A-REIT FY06/07 Results .. 30
Slide 31: Industrial Rental Index
Industrial Rental Index 20 0 65 70 75 80 85 90 20 0Q 00 1 20 Q 0 2 20 0Q 00 3 20 Q 0 4 20 1Q 01 1 20 Q 01 2 20 Q 0 3 20 1Q 02 4 20 Q 0 1 20 2Q 02 2 20 Q 0 3 20 2Q 0 4 20 3Q 03 1 20 Q 0 2 20 3Q 03 3 20 Q 0 4 20 4Q 04 1 20 Q 04 2 20 Q 0 3 20 4Q 05 4 20 Q 0 1 Recovering Industrial Property Market 20 5Q
Slide 32: Rents by Sub-sectors
Rents by Sub-sectors • Expansion demand as well as relocation of back office functions from more costly CBD offices helped lift rents in suburban business space • Average signing gross rents for Science and Business Parks and Hi-tech Industrial space rose by about 10% to $2.54 psf per month and $2.0
Slide 33: Supply and Demand of Industrial Space
Supply and Demand of Industrial Space 90 Business Parks 100% 80 90% 85.8% 70 80% 70% 60 Area ('000sqm) occupancy 60% 50 50% • New demand exceeded new supply in 40 40% the last 2 years 30 30% 20 20% • Persistent strong demand in relation to 10 10% supply lifted occupancy to a current 0 0% four-year h
Slide 34: Supply and Demand of Logistics Space
Supply and Demand of Logistics Space Logistics & Distribution Centres 95% 450 88.7% 90% 400 350 85% 300 Area ('000sqm) Occupancy 80% 250 200 75% 150 70% 100 65% 50 0 60% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007F 2008F Source : URA • New demand exceeded new supply since 2004, resul
Slide 35: Outlook for Industrial Property Market
Outlook for Industrial Property Market • General outlook positive as economy continues to grow and the Singapore government continues to restructure the manufacturing sector to attract FDI • Positive outlook for Science & Business Parks and Hi-tech Industrial sectors • Limited new supply in the next
Slide 36: Agenda
Agenda • Key highlights • Financial performance • Capital and funds management • Investment update • Portfolio update • Market outlook • Going forward A-REIT FY06/07 Results .. 36
Slide 37: Growth Drivers
Growth Drivers • Investment • acquisitions • development • Organic Growth • rental rate reversions • occupancy rate improvements • asset enhancement opportunities A-REIT FY06/07 Results .. 37
Slide 38: Asset Growth – target $5bn by end 2010
Asset Growth – target $5bn by end 2010 • On target to achieve asset size of $5bn by 2010 - additional acquisitions and developments of $400m per year required • Remains committed to pursuing quality and sustainable yield accretive acquisitions • Ascendas’ properties in Singapore (about $400m - $500m
Slide 39: Continued Organic Growth Expected
Continued Organic Growth Expected • Stepped rental increases from properties with long term leases • Positive rental reversions from short term leases • 57% of leases (about 103,422 sqm) due for renewal in FY07/08 are under-rented • Gap between market and existing rents is between 6% to 25%, dependi
Slide 40: Continued Organic Growth Expected
Continued Organic Growth Expected • Potential to further increase occupancy rates, especially in Science & Business Parks and Logistics & Distribution Centres MTB occupancy rates @ 31 Mar 07 Science & Business Park 92.8% Hi-tech Industrial 95.5% Flatted Factories 94.5% Light Industrial 97.1% Logisti
Slide 41: A-REIT's strengths
A-REIT's strengths Diversity and Depth • Largest business and industrial REIT in Singapore • Solid and well diversified portfolio 9 Six property asset classes 9 Well-located quality properties 9 Balance of long term vs short term leases provides stability and potential for positive rental reversions
Slide 42: A-REIT's strengths
A-REIT's strengths Development capability • Has development capability to create own assets Operational platform • Dedicated sales/marketing, leasing and property management team of over 80 people • Possess in-depth understanding of this property sector Customer focus • Track record of customers gro
Slide 43: A-REIT's strategies
A-REIT's strategies Total returns Predictable income Capital stability Proactive and dedicated Outcome Stability Growth manager with track record Proactive Strategies Optimise Value-Adding asset capital structure Investments management A-REIT FY06/07 Results .. 43
Slide 44: Regional Expansion
Regional Expansion • Ascendas is in the process of evaluating options with regards to positioning of A-REIT: - Singapore focus - Regional expansion - Take stake in other Ascendas’ funds A-REIT FY06/07 Results .. 44
Slide 45: Critical Issues in Regional Investments
Critical Issues in Regional Investments • Risk-adjusted returns commensurable to different risk profile? • Foreign Exchange risk • Execution: Operational platform A-REIT FY06/07 Results .. 45
Slide 46: Thank you
Thank you Important Notice This presentation has been prepared by Ascendas-MGM Funds Management Limited as Manager for Ascendas Real Estate Investment Trust. The details in this presentation provide general information only. It is not intended as investment or financial advice and must not be relied
Slide 47: FY2006/07 Financial Results Presentation
Business & Light Industrial Warehouse Science Park Retail Facilities Logistics and Hi-Tech Industrial Distribution FY2006/07 Financial Results Presentation 18 April 2007
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