Spring Real Estate Investment Trust · HKEX:1426
Spring Real Estate Investment Trust — 1H 2017 Earnings Presentation
23 slides from Spring Real Estate Investment Trust's earnings presentation, Aug 24, 2017
Slide 1: Interim Results 2017 Presentation
Interim Results 2017 Presentation 24 August 2017
Slide 2: Disclaimer
DISCLAIMER This presentation may contain information which is proprietary, confidential and/or legally privileged and has been prepared by Spring Asset Management Limited, in its capacity as the manager (the “Manager”) of Spring Real Estate Investment Trust (the “Trust”). This presentation is being
Slide 3: Agenda
AGENDA 1 1 KEY MESSAGES 2 1H 2017 RESULTS 3 OPERATION REVIEW 4 KWIK FIT ACQUISITION 2 5 OUTLOOK & STRATEGY 2
Slide 4: Overview of 1H 2017
OVERVIEW OF 1H 2017 Spring REIT registered a modest rebound in RMB terms with the effect of the tax changes and currency depreciation behind us. Revenue and net property income (in RMB) rose 0.5% and 1.9% HoH respectively. The CCP Property achieved an average occupancy of 93.5% and average ren
Slide 5: Agenda
AGENDA 1 1 KEY MESSAGES 2 1H 2017 RESULTS 3 OPERATION REVIEW 4 KWIK FIT ACQUISITION 2 5 OUTLOOK & STRATEGY 4
Slide 6: 1H 2017 Results Summary
1H 2017 RESULTS SUMMARY ▪ RMB/USD movement offset improvement at the CCP Property to produce a flat NPI HoH. ▪ Total distributable income edged lower HoH primarily due to higher USD LIBOR rate. Operating Results 1H 2017 Change 2H 2016 Change 1H 2016 Revenue US$m 35.60 -1.2% 36.05 -8.5% 39.38 Propert
Slide 7: Financial Performance
FINANCIAL PERFORMANCE ▪ RMB/USD average exchange rate adopted was 1.8% lower compared to that in 2H 2016 ▪ Currency movement offset growth in RMB terms which leads to a flat net property income growth HoH in USD terms. Revenue For illustration only and not to scale Net Property Income For illustrati
Slide 8: Debt Profile
DEBT PROFILE ▪ To manage asset-liability mismatch, Spring REIT raised equity of approx. HK$373 million (or US$47.8 million) and part of the proceeds were directed towards partial repayment of the outstanding loan. Gearing reduced to 31.4%. ▪ The Manager achieved a reduction in the interest margin fr
Slide 9: Agenda
AGENDA 1 1 KEY MESSAGES 2 1H 2017 RESULTS 3 OPERATION REVIEW 4 KWIK FIT ACQUISITION 2 5 OUTLOOK & STRATEGY 8
Slide 10: Leasing Market Condition
LEASING MARKET CONDITION Beijing Overall Beijing CBD Beijing Overall – Supply, Absorption, Occupancy Beijing CBD – Supply Absorption, Occupancy (sqm, GFA) (sqm, GFA) 95% 95% 97% 97% 96% 95% 96% 95% 91% 94% 100% 94% 94% 100% 88% 91% 1,500,000 950,000 88% 74% 72% 80% 74% 80% 1,200,000 750,000 60% 60%
Slide 11: Future Grade-A Office Supply
FUTURE GRADE-A OFFICE SUPPLY Beijing CBD to see more supply in 2019 Grade-A office supply by year (sqm, GFA) 800,000 620,000 New Supply in CBD 700,000 266,000 600,000 Financial Street 500,000 Lufthansa 400,000 154,000 East Chang'an Road 300,000 200,000 Others* 100,000 Historic supply in all of Beiji
Slide 12: Comparison of Grade-A Office Markets Across China
COMPARISON OF GRADE-A OFFICE MARKETS ACROSS CHINA ▪ Beijing has highest office occupancy of 94% ▪ Low new supply in the next 4.5 years, only 6.9% p.a. of existing stock (vs avg. 19.4% p.a. of selected cities) Grade A Office GFA (‘000 sqm) 1H 2017 Stock New Supply 2017 - 2021 Occupancy 12,000 100% 10
Slide 13: 1H 2017 Operations Summary
1H 2017 OPERATIONS SUMMARY ▪ Spring REIT reported a modest rebound in both revenue and net property income HoH in RMB terms, attributable to the healthy performance at the CCP Property. 1H 2017 Change 2H 2016 Change 1H 2016 For the Six Months Ended RMB mn % RMB mn % RMB mn Revenues - Rental income 2
Slide 14: Leasing Performance
LEASING PERFORMANCE Solid performance despite growing CBD supply in the pipeline Average Passing Rents Average Occupancy Rates (RMB per sqm per month) (%) 384 398 355 372 360 95% 94% 96% 93% 94% 337 343 339 346 354 2015 2016 1H 2016 2H 2016 1H 2017 2015 2016 1H 2016 2H 2016 1H 2017 Gross average mon
Slide 15: Tenant Base
TENANT BASE Diverse and high quality tenant mix Tenants by Industry Top 5 Tenants % of total Tenants As % of leased office GFA leased GFA (30 June 2017) EPSON 5.9% Business center and others Education/ Delsk 5.3% media/sports/ Technology Condé Nast 4.8% 24.4% Real estate/ Energy/ retail/ resources/
Slide 16: Expiring Lease Profile
EXPIRING LEASE PROFILE ▪ Average lease expiry of existing leases (in GFA terms) as of 30 Jun 2017 was 1,107 days. ▪ Good progress on negotiations with upcoming expiries. 450 382 400 342 343 347 350 300 250 200 32% 33% 150 19% 16% 100 50 0 2017 2018 2019 2020 & beyond 15
Slide 17: Cost Structure
COST STRUCTURE More than 98% of property expenses are revenue-linked or fixed 1H2017 Withholding tax Property Others management fee – 10% of revenues received from rental operations Business tax and other taxes(1) 2% 8% – Business tax, urban construction and maintenance Property tax, and educati
Slide 18: Agenda
AGENDA 1 1 KEY MESSAGES 2 1H 2017 RESULTS 3 OPERATION REVIEW 4 KWIK FIT ACQUISITION 2 5 OUTLOOK & STRATEGY 17
Slide 19: Location of the properties
Location of the properties 18
Slide 20: The Acquisition
THE ACQUISITION Long-term, quality cash flow backed by guarantee, with upward-only revisions 1. Status: The UK acquisition was completed on 14 July 2017. 2. The portfolio: 84 separate commercial properties in the UK, with a total gross internal area of approx. 500,000 sq.ft. 3. Purchase price: £73,5
Slide 21: Agenda
AGENDA 1 1 KEY MESSAGES 2 1H 2017 RESULTS 3 OPERATION REVIEW 4 KWIK FIT ACQUISITION 2 5 OUTLOOK & STRATEGY 20
Slide 22: Outlook & Strategic Priorities
OUTLOOK & STRATEGIC PRIORITIES Outlook in 2017 Strategic Priorities CCP Property expected to register modest We remain committed to diversification and improvement in FY2017 in RMB terms. growth with a core focus in commercial properties in China along with certain “non- Reduction in the loan
Slide 23: Q&A
EEEEEES'S'/ SpringREIT Q&A
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