Fortune Real Estate Investment Trust · HKEX:778
Fortune Real Estate Investment Trust — Q1 2004 Earnings Presentation
27 slides from Fortune Real Estate Investment Trust's earnings presentation, May 12, 2004
Slide 1: Results for the quarter ended Mar 2004
Results for the quarter ended Mar 2004 Analyst briefing 12 May 2004
Slide 2: Disclaimer
Disclaimer This presentation is focused on comparing actual results versus forecasts outlined in the Fortune REIT Prospectus dated 28 Jul 2003. It should be read in conjunction with Paragraph 9 of Fortune REIT’s financial results for the period 1 Jan 2004 to 31 Mar 2004 announced on MASNET. The info
Slide 3: Contents
1Q 2004 Contents • Executive summary • Financial highlights • Hong Kong economy • Asset performance • Strategy Asset Management (Singapore) Limited 3
Slide 4: Executive summary
1Q 2004 Executive summary Asset Management (Singapore) Limited 4
Slide 5: Executive summary
1Q 2004 Executive summary Fortune REIT out-performed forecast again • Income available for distribution 9.3% above forecast – third successive out-performance since IPO • Hong Kong’s economy is continuing to strengthen – retail sales showing broad-based trend recovery • Mall rentals rising steadil
Slide 6: Financial highlights
1Q 2004 Financial highlights Asset Management (Singapore) Limited 6
Slide 7: Trust income
1Q 2004 Trust income Income available for distribution 9.3% above forecast Fortune REIT summary results, qtr ended Mar 2004 Actual Forecast1 Var • Costs savings (HK$’000) (HK$’000) (%) target achieved Revenue 57,612 57,357 0.4 Charge-out collections 15,923 18,105 -12.1 – 24% cost-to-total Property
Slide 8: Distribution income
1Q 2004 Distribution income Tax-exempt distribution yield of 6.67% achieved Fortune REIT distribution income, qtr ended Mar 20041 Distribution yield (tax-exempt) Actual F’cast2 Var 8% 7. 30% Distribution per unit (“DPU”)3 - qtr ended Mar 2004 (HK$) 0.0864 0.0791 9.3 7% 6. 68% 6. 67% - annualised (
Slide 9: Distribution yield
1Q 2004 Distribution yield Pre-tax yield of 8.09% is highest of any Asian REIT (ex-Australia) Fortune REIT distribution yield Distribution yield Actual 10% Based on IPO price1 8.86% 9% - pre-tax yield (%)2 8.86 8.09% - tax-exempt yield (%)3 7.30 8% 7.30% Based on 31/3/04 price4 6.67% 7% - pre-tax
Slide 10: Debt management
1Q 2004 Debt management Debt servicing below forecast, more hedging to be set Fortune REIT interest expense Actual F’cast1 Var • Interest expense Borrowing costs (HK$m) 4.2 6.7 -2.5 HK$2.5m below Avg int. rate2 1.74% 3.00% -126 bps forecast Source: ARASL • 37% of debt now Notes: 1. Based on the as
Slide 11: Interest cost analysis
1Q 2004 Interest cost analysis Rise in rates not expected to have significant impact on income Impact of 50 bps interest rate rise1 IPO Rev. 50 bps • Effect of 50 bps rise in (HK$m) f’cast f’cast2 rise Interest exp, 2004 rates is small - Revolving3 n.a. 0.3 0.5 – interest costs to remain - Floatin
Slide 12: Balance sheet
1Q 2004 Balance sheet Unit price currently at book value Fortune REIT balance sheet • Gearing unchanged at 31 Dec 03 31 Mar 04 Ch (HK$m) (HK$m) (%) 28% Total assets 3,379 3,371 (0.2) – room for another Total liabilities (1,062) (1,070) 0.8 $HK220m (35% limit) Net assets 2,317 2,301 (0.7) • Current
Slide 13: Hong Kong economy
1Q 2004 Hong Kong economy Asset Management (Singapore) Limited 13
Slide 14: Economic growth
1Q 2004 Economic growth HK’s economic recovery is genuine Hong Kong real GDP and inflation Hong Kong economic indicators 12% 10% YE Dec 01 02 03 04F 8% Nom. GDP -3.0 0.7 1.4 5.8 Annual % change 6% 4% 10y bond (%) 6.2 4.4 4.4 5.1 2% 0% - real rate 9.7 6.0 6.3 3.8 -2% -4% Current acc (% to GDP)1 5.1
Slide 15: Retail sales
1Q 2004 Retail sales Rise in consumer confidence driving retail sales recovery 10 Hong Kong labour market • Improving labour market . . . 8 – unemployment has peaked; 6 attempting to go below 7% % 4 2 • . . . is lifting consumer confidence 0 Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 • . . . and dr
Slide 16: Asset performance
1Q 2004 Asset performance Asset Management (Singapore) Limited 16
Slide 17: Metropolis Mall
1Q 2004 Metropolis Mall Steady progress being made: shopper traffic and occupancy rising Metropolis singing competition • Committed occupancy now at 64.5% • Shopper traffic rising due to – mall promotions – more Mainland tourists – increase in number of concerts at the adjacent Coliseum – more F &
Slide 18: Occupancy
1Q 2004 Occupancy Portfolio occupancy continues to rise Fortune REIT occupancy profile • Metropolis End Sep 03 Dec 03 Mar 04 – steady increase in lease-up No. of tenants 384 390 394 Portfolio occ. (%) 83.4 84.4 86.2 – to secure one/two more anchors focused on China tourist trades Committed occupan
Slide 19: Expiry profile of portfolio
1Q 2004 Expiry profile of portfolio Well spread out expiry profile Metropolis Mall Ma On Shan Plaza Smartland 80% 80% 80% 60% 60% 60% % of total GFA % of total GFA % of total GFA 40% 40% 40% 20% 20% 20% 0% 0% 0% 1H04 2H04 2005 2006 2007 and 1H04 2H04 2005 2006 2007 and 1H04 2H04 2005 2006 2007 and
Slide 20: Tenant trade mix
1Q 2004 Tenant trade mix Tenant base little change; remains diversified By gross lettable area (%) Metro- Ma On House- polis Shan Smart- hold Jubilee Port- Mall Plaza land Center Court folio Banking & Real Estate Services 18.8 8.3 0.0 0.5 1.3 7.3 Community Services 3.1 0.2 11.1 0.0 22.2 6.5 Electr
Slide 21: Rentals
1Q 2004 Rentals Mall rentals increasing steadily Portfolio rents1 Portfolio passing rents 15.50 Current avg. Quarterly Committed passing rental change occupancy (HK$ psf/mth) (%) (%) 15.25 HK$ psf per month Mar 2003 14.76 81.8 15.00 Jun 2003 14.74 -0.1 82.42 Sep 2003 14.79 0.3 83.4 14.75 Dec 2003
Slide 22: Strategy
1Q 2004 Strategy Asset Management (Singapore) Limited 22
Slide 23: Strategy
1Q 2004 Strategy ARASL expects forecast for 2004 to be comfortably met • Ma On Shan Plaza asset enhancement – work in progress on forthcoming KCRC link – separate mall enhancement works to begin in late 2004 • Metropolis Mall leasing – will secure major tenant(s) in China tourist trade – which wil
Slide 24: Strategy (cont'd)
1Q 2004 Strategy (cont’d) • Acquisitions – potential deals being negotiated – moratorium on CKH properties ends Aug 2004 – acquisitions will be yield accretive Asset Management (Singapore) Limited 24
Slide 25: Unit activity
1Q 2004 Unit activity Unit price and volume1 Yield gap2 9% 4.0% 5.6 8 Volume (daily, mil) 8% Unit price (HKD) 5.4 6 7% 3.5% 5.2 5.0 4 6% 4.8 5% 3.0% 2 4.6 4% 4.4 0 3% 2.5% Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Volume (RHS) Fortune REIT unit
Slide 26: In sum
1Q 2004 In sum • Fortune REIT’s distributable income exceeded forecast by 9.3% • Hong Kong’s economy and retail sales continue to strengthen • Occupancies at Fortune REIT’s malls are improving – upward pressure on rentals materialising • Operating costs rationalisation bearing fruit • Asset enhancem
Slide 27: Contact
1Q 2004 Contact ARA Asset Management (Singapore) Limited #12-03 Suntec Tower 1 John Lim Yung Yu-Ming, CFA 7 Temasek Boulevard CEO Fund Manager Singapore 038987 [email protected] [email protected] Tel: +65 6835 9232 Fax: +65 6835 9672 Unit 5507, 55/F The Center Cheryl Seow, CPA 99 Queen’s Road C
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