CapitaLand Ascendas REIT · SGX:A17U
CapitaLand Ascendas REIT — A-Reit — H1 FY05/06 Earnings Presentation
40 slides from CapitaLand Ascendas REIT's earnings presentation, Oct 18, 2005
Slide 1: FY 05/06 Half Year Results
FY 05/06 Half Year Results 18 October 2005
Slide 2: Disclaimer
Disclaimer This Presentation is focused on comparing actual results for the six months ended 30 September 2005 (“Half Year”) versus forecasts derived on the best estimate as stated in the A-REIT Circular of 20 September 2005 and actual results in the prior corresponding period (“pcp”). This shall be
Slide 3: Agenda
Agenda • Half year highlights • Financial performance • Capital and funds management • Portfolio highlights • Portfolio diversification • Conclusion A-REIT 1H FY 05/06 Results .. 3
Slide 4: Half year highlights
Half year highlights • Net investment income available for distribution of S$67.0m, up 99% on pcp • Second Quarter DPU 2.91 cents up 25% on pcp • Acquired nine properties for S$215.8m • Total assets grew to S$2.3b • Portfolio occupancy 94.9% as at 30 Sep 05 • Leased and renewed 58,460 sqm of space •
Slide 5: Agenda
Agenda • Half year highlights • Financial performance • Capital and funds management • Portfolio highlights • Portfolio diversification • Conclusion A-REIT 1H FY 05/06 Results .. 5
Slide 6: Half year DPU - 29% above pcp
Half year DPU - 29% above pcp Actual (1) Actual (1) % 1H FY 05/06 1H FY05/06 Change (S$’000) (S$’000) Gross revenue 102,119 54,399 88 Property operating expenses (21,608) (15,599) 39 Net property income 80,511 38,800 108 Non-property expenses (16,261) (6,949) 134 Net investment income 64,250 31,851
Slide 7: DPU – 14% above forecast of 18 November 2004
DPU – 14% above forecast of 18 November 2004(1) Actual Forecast (1) % 1H FY 05/06 1H FY 05/06 Change (S$’000) (S$’000) Gross revenue 102,119 82,093 24 Property operating expenses (21,608) (20,747) 12 Net property income 80,511 61,437 31 Non-property expenses (16,261) (10,995) 48 Net investment incom
Slide 8: DPU – in line with forecast of 20 September 2005
DPU – in line with forecast of 20 September 2005(1) Actual Forecast (1) % 1H FY 05/06 1H FY 05/06 Change (S$’000) (S$’000) Gross revenue 102,119 101,640 0 Property operating expenses (21,608) (22,184) 3 Net property income 80,511 79,456 1 Non-property expenses (16,261) (16,360) 1 Net investment inco
Slide 9: Balance sheet
Balance sheet Actual (S$b) As at 30 Sep 05 As at 30 Sep 04 Total Assets 2.3 1.2 Borrowings 0.8 0.4 Net assets attributable to 1.4 0.8 unitholders Gearing 32.7% 28.7% Net asset value per unit 124 cents 106 cents Net asset value per unit as at 5 Oct 05 is 132 cents A-REIT 1H FY 05/06 Results .. 9
Slide 10: Financial Performance Growing Steadily
Financial Performance Growing Steadily S$m 120 102 100 1H FY 81 80 75 05/06 57 1H FY 60 54 2H FY 05/06 04/05 39 2H FY 40 32 34 1H FY 04/05 04/05 24 26 23 1H FY 1H FY 2H FY 17 20 133 days 03/04 03/04 04/05 1H FY 2H FY FY 133 days FY 03/04 03/04 02/03 02/ 03 0 Gross Revenue Net Property Income A-REIT
Slide 11: DPU growth since listing
DPU growth since listing Regular and stable distributions Cents 12 + 18.9% 11.37 + 17.0% 9.56 + 6.9% 8.16 FY 05/06 FY 04/05 Projected 8 7.63 Actual DPU (2) DPU 2H - FY 02/03 FY 03/04 5.10 cts Actual Actual 4 DPU (1) DPU 1H - 1H - 5.75 cts 4.46 cts 0 2002/03 2003/04 2004/05 2005/06 Notes: (1) FY 02/0
Slide 12: Comparable returns
Comparable returns 6.0 5.5 4.3 4.0 3.0 2.5 2.0 2.0 0.7 0.2 0.0 Bank savings Bank fixed deposit Interbank CPF (ordinary 10 Year STI Index (5) A-REIT annualised deposits (12 months) (1) overnight interest account) (3) government bond yield (6) rate (2) (4) Notes: (1) Bank fixed deposit rate (12 months
Slide 13: 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 3.9% to high of 6.1% % % 8.0% 8.0% 6.0% 6.0% 6.1% 5.0% 5.0% 5.5% 5.0% 4.0% 310 bps 250 bps 90 bps 4.0% spread spread spread 3.9% 3.0% 3.0% 3.0% 2.0% 2.0% 0.0% 0.0% S-REIT High A-REIT S-REIT Low Yield (LHS) 10-year bon
Slide 14: Cumulative Distribution Details
Cumulative Distribution Details Stock counter Distribution Period Distribution per unit (cents) Ascendasreit 1 Jul 05 to 30 Sep 05 2.91 1 Oct 05 to 4 Oct 05 0.12 3.03 Distribution Timetable Notice of books closure date 21 September 2005 Last day of trading on “cum” basis 29 September 2005 Ex-date 30
Slide 15: Agenda
Agenda • Half year highlights • Financial performance • Capital and fund management • Portfolio highlights • Portfolio diversification • Conclusion A-REIT 1H FY 05/06 Results .. 15
Slide 16: Performance to date: Market cap and liquidity
Performance to date Market cap and liquidity 2746 70,000 2655 2700 2607 2570 2548 2523 60,000 Total Monthly Vol. ('000 Units) 2302 2300 2182 50,000 Market Cap (S$m) 2070 2080 40,000 1900 1797 30,000 20,000 1441 1500 1227 1235 10,000 1100 0 Sep '04 Dec '04 Mar '05 Jun '05 Sep '05 1 Oct 04 to 17 Oct 0
Slide 17: Capital Management
Capital Management Debt Profile 30 Sep 31 Mar 2005 2005 - Gearing 32.7% 26.3% - Total debt S$763m S$556m • Fixed rate debt S$523m S$423m - Weighted average all-up funding cost (1) 2.97% 2.77% - Interest cover ratio 7.5 times 9.8 times (1) Including margins and weighted swap rates for hedged debt and
Slide 18: Hedging of existing debt
Hedging of existing debt As at 30 Sept 2005 Including Excluding interest cap interest cap - Fixed as a % of total debt 85.2% 68.5% - Weighted average term for fixed debt 3.08 yrs 4.1 yrs 100% 15 15 80% 16 16 45 56 56 74 60% 87 40% 69 69 55 20% 44 44 26 13 0% Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11
Slide 19: DPU sensitivity in relation to rising interest rates
DPU sensitivity in relation to rising interest rates 11.8 4.00% 3.50% 3.25% 3.50% 3.00% 2.75% 3.00% 11.6 2.50% 2.31% 2.50% DPU (cents) Interest rate 2.00% 1.50% 11.4 11.37 11.35 11.34 11.33 11.33 11.32 1.00% 0.50% Current status Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 11.2 0.00% • Ris
Slide 20: Pro-active management
Pro-active management • Management (base fee) fee structure for first 17 properties since IPO • 50% in units • 50% in cash • Management fees for the subsequent 28 properties after November 2004 is 100% in cash. • Reduces any significant fluctuations in DPU in the future. • The gap between DPU and EP
Slide 21: Impact of impending regulatory changes - scenario
Impact of impending regulatory changes - scenario • As recommended in the MAS consultation paper dated 10 June 05, gearing of REITs to be allowed to increase up 60% if the REIT has a corporate rating • Assuming: • Additional acquisitions of S$400m with property yields of 6.5% funded fully by debt; •
Slide 22: Agenda
Agenda • Half year highlights • Financial performance • Capital and funds management • Portfolio highlights • Portfolio diversification • Conclusion A-REIT 1H FY 05/06 Results .. 22
Slide 23: Acquisitions since 1 April 2005
Acquisitions since 1 April 2005 Properties Purchase Acquisition Price date 1 Da Vinci Building $19.5 m 1 Apr 2005 2 MSL Building $12.6 m 1 Apr 2005 3 AEM-Evertech Building $14.0 m 4 Apr 2005 4 Hyflux Building $19.0 m 4 Apr 2005 5 Xilin Districentre Building C $30.6 m 5 May 2005 (formerly 7 Changi So
Slide 24: Acquisitions on 5 Oct 2005
Acquisitions on 5 Oct 2005 Properties Purchase Price 1 1 Changi South Lane $34.8 m 2 11 Tampines Street 92 $16.75 m 3 Cityneon Design Centre $10.0 m 4 Hoya Building $5.3 m 5 NNB Industrial Building $12.0 m 6 LogisHub@Clementi $18.1 m 7 Techquest $7.5 m 8 Techview $76.0 m Sub-total $180.45 m TOTAL fo
Slide 25: Agreements signed
Agreements signed Properties Purchase Signing Expected to Price date complete 1 Ness Building $22.0 m 1 Nov 2004 Oct 2005 2 Hamilton Sundstrand Building $31.0 m 26 Jul 2005 Oct 2005 3 Thales Building $ 5.7 m 26 Jul 2005 Jan 2006 4 138 Depot Road $42.3 m 26 Jul 2005 April 2006 5 1 Jalan Kilang $18.7
Slide 26: Portfolio Highlights
Portfolio Highlights As at As at 30 Sep 05 30 Sep 04 A-REIT Portfolio occupancy (%) 94.9 92.7 A-REIT MTB (1) occupancy (%) 89.7 88.5 Portfolio renewals / new leases (sqm) in six months 58,460 52,071 New leases/Expansions (sqm) in six months 22,577 20,641 Renewals (sqm) in six months 35,883 31,430 Re
Slide 27: Sources of demand
Sources of demand Tenants sector by net lettable area (1H FY 05/06) Chemicals Biomedical 2% 3% Eg of tenant: Akzo Nobel Eg of tenants: Transport & Storage 1. Singapore Technologies 9% Precision Logistics Engineering 2. Fedex 34% Eg of tenants : 3. Zuellig Pharma 1. Faro Singapore, 2. Unaxis Singapor
Slide 28: Improvement in occupancy rates
Improvement in occupancy rates Properties As at 30 As at 5 Oct Jun 2005 2005 1 LogisHub@Clementi 52.7% 70.9% 2 Techquest 71.6% 78.0% 3 Techview 87.0% 91.9% 4 Cityneon Design Centre 97.8% 100.0% 5 The Alpha 65.6% 72.0% 6 The Gemini 66.2% 70.3%* * In December 2005, National Environment Agency's lease
Slide 29: A-REIT Portfolio Occupancy Higher Than Market
A-REIT Portfolio Occupancy Higher Than Market A-REIT, 98.6% 100.0% A-REIT, 94.7% A-REIT, 93.0% URA, 87.5% A-REIT, 82.1% URA, 82.7% URA, 82.7% URA, 77.7% 80.0% Occupancy Rate (%) 60.0% 40.0% 20.0% 0.0% Business Park Light Industrial Hi-Tech Industrial Logistics Notes: (1) URA classifies Light Industr
Slide 30: Industrial Rental Index
Industrial rental index URA Industrial Rental Index improved by 0.3% during 2nd quarter 2005 (Apr to Jun 05) 72.0 Industrial Rental Index 140 about 3.8% increase Industrial Rental Index 70.0 120 68.0 100 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 80 60 4Q96 2Q97 4Q97 2Q98 4Q98 2Q99 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02
Slide 31: Agenda
Agenda • Half year highlights • Good financial performance • Capital and funds management • Portfolio highlights • Portfolio diversification • Conclusion A-REIT 1H FY 05/06 Results .. 31
Slide 32: Tenant Concentration
Tenant Concentration Top 10 tenants after the acquisition of the 14 properties as stated in A-REIT circular dated 20 September 2005 (by pro forma gross rental income) Percentage of Total Pro Forma 10.0% 9.5% 8.5% Gross Rental Income 7.5% 5.0% 3.3% 2.9% 2.3% 2.2% 2.0% 2.0% 2.5% 1.8% 1.8% 0.0% fi c l
Slide 33: Portfolio Diversification by Value
Portfolio Diversification by Value Asset Class Mix of long term leases vs Diversification short term leases Business Park Logistics & Distribution Centres Long term leases 22% 32% 45% 23% 55% Short term leases 23% Hi-Tech Industrial Light Industrial A-REIT 1H FY 05/06 Results .. 33
Slide 34: % of Portfolio with stepped rental increases
% of Portfolio with stepped rental increases 100% 80% 45.7% % of portfolio gross revenue 54.2% 60% 40% 54.3% 20% 45.8% leases with leases with stepped rental stepped rental increases increases 0% As at 30 Sep 04 As at 30 Sep 2005 A-REIT 1H FY 05/06 Results .. 34
Slide 35: Weighted Average Lease Term to Expiry
Weighted Average Lease Term to Expiry The lease expiry profile is well balanced. Weighted Lease Expiry Profile (By Income) 20% % of A-REIT Property Income 21.2% 10% 17.2% 14.5% 13.8% 12.6% 12.3% 10.0% 9.7% 8.7% 7.8% 7.6% 7.4% 6.7% 6.5% 5.9% 5.6% 4.7% 4.6% 4.3% 4.3% 3.8% 0.0% 2.7% 0.0% 1.3% 0.0% 1.4%
Slide 36: Agenda
Agenda • Half year highlights • Financial performance • Capital and funds management • Portfolio highlights • Portfolio diversification • Conclusion A-REIT 1H FY 05/06 Results .. 36
Slide 37: A-REIT's strengths
A-REIT's strengths • Market leader • Well diversified: - Focus in business space and industrial property sector - Four property asset classes - Well-located quality properties - No single property accounts for no more than 9% of gross revenue - Balance of long term vs short term leases - More than 6
Slide 38: A-REIT's strategies
A-REIT's strategies Total returns Predictable Predictable income income Capital Capital stability stability Proactive and dedicated Outcome Stability Stability Growth Growth manager with track record Proactive Proactive Strategies Strategies Optimise Optimise Yield Yield accretive accretive asset as
Slide 39: Conclusion
Conclusion A-REIT will continue to deliver stable returns via: • pro-actively managing the portfolio • Occupancy rates • Rental rates • Cost management • acquisition opportunities • optimising capital structure A-REIT 1H FY 05/06 Results .. 39
Slide 40: 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