Spring Real Estate Investment Trust · HKEX:1426
Spring Real Estate Investment Trust — FY2022 Earnings Presentation
26 slides from Spring Real Estate Investment Trust's earnings presentation, Mar 22, 2023
Slide 1: Final Results 2022 Presentation
Final Results 2022 Presentation 22 Mar 2023
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 OVERVIEW OF FY 2022 2 FY 2022 RESULTS SUMMARY 3 CCP PROPERTY OPERATION REVIEW 2 4 HUAMAO PLACE OPERATION REVIEW 5 UK PORTFOLIO OPERATION REVIEW 3 6 OUTLOOK & STRATEGIC PRIORITIES 2
Slide 4: Performance Overview of FY 2022
PERFORMANCE OVERVIEW OF FY 2022 ◼ After a strong start for China’s economy in early 2022, the largest wave of COVID-19 in two years disrupted the country’s growth trajectory. Globally, The high inflation environment of 2022 led to significant rises in global interest rates, which in turn led to vola
Slide 5: Agenda
AGENDA 1 1 OVERVIEW OF FY 2022 2 FY 2022 RESULTS SUMMARY 3 CCP PROPERTY OPERATION REVIEW 2 4 HUAMAO PLACE OPERATION REVIEW 5 UK PORTFOLIO OPERATION REVIEW 3 6 OUTLOOK & STRATEGIC PRIORITIES 4
Slide 6: FY 2022 Results Summary
FY 2022 RESULTS SUMMARY ◼ On the back of stable operation in Beijing and maiden contributions from Huizhou Huamao Place (68% stake acquired on 28 Sep 2022), consolidated revenue increased 9.4% yoy to RMB 577.85 million and NPI increased 11.1% yoy to RMB440.43 million. ◼ Total distributable income in
Slide 7: Stable Operating Performance
STABLE OPERATING PERFORMANCE NEWLY ACQUIRED SHOPPING MALL IN HUIZHOU CONTRIBUTED TO 4Q 2022 ▪ Spring REIT: Overall stable operation despite the challenging economic environment. Revenue was RMB 577.85 million, 9.4% higher than that in 2021. NPI increased by 11.1% YoY to RMB 440.43 million , while NP
Slide 8: Proactive Capital Management, to Mitigate Interest Rate Hikes
PROACTIVE CAPITAL MANAGEMENT, TO MITIGATE INTEREST RATE HIKES Gearing at 37.6% after debt-funded acquisition, remaining at healthy level Debt Profile, by notional amounts Cash Interest Expenses, net of interest rate hedges (RMB million equivalent) (RMB million) Total 4,890.0 3.0% (RMB 768 mn) 2.1% 7
Slide 9: Agenda
AGENDA 1 1 OVERVIEW OF FY 2022 2 FY 2022 RESULTS SUMMARY 3 CCP PROPERTY OPERATION REVIEW 2 4 HUAMAO PLACE OPERATION REVIEW 5 UK PORTFOLIO OPERATION REVIEW 3 6 OUTLOOK & STRATEGIC PRIORITIES 8
Slide 10: Beijing Leasing Market Condition
BEIJING 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% 93% 95% 95% 96% 95% 95% 95% 1,500,000 88% 91% 89% 88% 90% 100% 750,000 91% 94% 88% 100% 85% 87% 90% 84% 8
Slide 11: Beijing Future Grade-A Office Supply
BEIJING FUTURE GRADE-A OFFICE SUPPLY Of the 435,900 sqm GFA of new supply in 2023 and 2024, none will be located in the CBD area Grade-A office supply by year (sqm, GFA) 1,000,000 East 2nd Ring Road 900,000 Others* 800,000 700,000 Historic supply in all of Beijing 600,000 500,000 400,000 Relatively
Slide 12: Comparison of Grade-A Office Markets Across China
COMPARISON OF GRADE-A OFFICE MARKETS ACROSS CHINA ▪ Beijing has highest office occupancy of 90%. Guangzhou and Shanghai have occupancy rate of over 80%. ▪ Low new supply in Beijing in the next 4 years, only 0.4 % p.a. of existing stock (vs avg. 12.7% p.a. of other selected cities) Office GFA 2H22 To
Slide 13: CCP Property: Operations Summary
CCP PROPERTY: OPERATIONS SUMMARY ▪ Total revenue was increased by 0.4% YoY, reflecting slightly lower rental income due to softer rental rates, but higher other income. ▪ Property operating expenses declined by 4.5% mainly due to lower leasing commission incurred. ▪ Cost structure remained stable, w
Slide 14: CCP Property: Leasing Performance
CCP PROPERTY: LEASING PERFORMANCE ▪ Average passing rent increased slightly by 0.3% HoH, and decreased slightly by 0.1% YoY. ▪ The CCP Property registered an average occupancy of 93% in 2H 2022. Average Passing Rents Average Occupancy Rates (RMB per sqm per month) (%) 95% 94% 94% 96% 93% 92% 93% 95%
Slide 15: CCP Property: Tenant Base
CCP PROPERTY: TENANT BASE Diverse and high-quality tenant mix Tenants by Industry Top 5 Tenants % of total leased Tenants As % of leased office GFA GFA (As of 31 Dec 2022) Epson 6.0% Zhong De Securities 4.3% Technology Real estate/ Business center retail/ and others Global Law 4.2% 21.8% consumer pr
Slide 16: CCP Property: Expiring Lease Profile
CCP PROPERTY: EXPIRING LEASE PROFILE ▪ Average lease expiry of existing leases (in GFA terms) as of 31 Dec 2022 was 747 days. ▪ Lease expiries in 2023 – about 21% of the leasable GFA, with an average expiring rental rate of RMB343 per sqm. ▪ As of 31 Dec 2022, rental arrears amounted to RMB 0.9 mill
Slide 17: CCP Property: Cost Structure
CCP PROPERTY: COST STRUCTURE Most property expenses are revenue-linked or fixed. Stable NPI margin. FY 2022 ◼ Property taxes Property Other taxes Management fee – Includes real estate tax and land use tax – Land use tax based on the site area of the Others development 9% 0.3% 4% ◼ Withholding tax Pr
Slide 18: Agenda
AGENDA 1 1 OVERVIEW OF FY 2022 2 FY 2022 RESULTS SUMMARY 3 CCP PROPERTY OPERATION REVIEW 2 4 HUAMAO PLACE OPERATION REVIEW 5 UK PORTFOLIO OPERATION REVIEW 3 6 OUTLOOK & STRATEGIC PRIORITIES 17
Slide 19: Huizhou Market Overview
Huizhou Market Overview Local shopping mall industry has been expanding, and expected to regain momentum after COVID • Huizhou’s shopping mall industry has experienced robust • The overall Gross Merchandise Value (“GMV”) of shopping growth, driven by high economic growth potential, malls in Huizhou
Slide 20: Huamao Place in Huizhou: Operation Performance
HUAMAO PLACE IN HUIZHOU: OPERATION PERFORMANCE ▪ From 28 September to 31 December 2022, the mall was adversely affected by the pandemic. Fortunately its operating performance remained encouraging due to the conclusion of the litigation with the supermarket lessee and the reletting of the space previ
Slide 21: Ongoing Optimization to our Tenant Mix
Ongoing Optimization to our Tenant Mix Trade sector in terms of GLA (as at 31 Dec 2022) Entertainment, Kids, 6.0% 9.0% Food and Leather goods, 2.0% Beverages, 29.0% Household, 5.7% Beauty and Personal Care, 3.0% Others, 6.0% Jewellery and Apparel, 33.0% Accessories, 6.3% ✓ Reconfiguration of the tra
Slide 22: Agenda
AGENDA 1 1 OVERVIEW OF FY 2022 2 FY 2022 RESULTS SUMMARY 3 CCP PROPERTY OPERATION REVIEW 2 4 HUAMAO PLACE OPERATION REVIEW 5 UK PORTFOLIO OPERATION REVIEW 3 6 OUTLOOK & STRATEGIC PRIORITIES 21
Slide 23: Location of the properties
Location of the properties 22
Slide 24: UK Portfolio Operation Summary
UK PORTFOLIO OPERATION SUMMARY Long-term, quality cash flow backed by guarantee, with upward-only revisions • Each of the 84 properties in the UK Portfolio is under a long-term lease with the tenant Kwik-Fit (GB) Limited, a leading car servicing operator in the United Kingdom, with all but one of th
Slide 25: Agenda
AGENDA 1 1 OVERVIEW OF FY 2022 2 FY 2022 RESULTS SUMMARY 3 CCP PROPERTY OPERATION REVIEW 2 4 HUAMAO PLACE OPERATION REVIEW 5 UK PORTFOLIO OPERATION REVIEW 3 6 OUTLOOK & STRATEGIC PRIORITIES 24
Slide 26: Outlook & Strategic Priorities
OUTLOOK & STRATEGIC PRIORITIES ▪ Market sentiment in Beijing has improved with a pickup in activities across all areas of life. The number of tenant enquiries has also risen to an extent, and the situation regarding rental arrears and concessions and early terminations has continued to improve. Stif
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