Business & Light Industrial Warehouse ... - Ascendas REIT · A-REIT FY06/07 Results .. 22 Sources...
Transcript of Business & Light Industrial Warehouse ... - Ascendas REIT · A-REIT FY06/07 Results .. 22 Sources...
FY2006/07 Financial Results Presentation
18 April 2007
Business & Science Park
Light Industrial
Logistics and DistributionHi-Tech Industrial
Warehouse Retail Facilities
A-REIT FY06/07 Results .. 2
This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected levels of property rental income and occupancy, changes in operating expenses, including employee wages, benefits and training, property expenses and governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on these forward looking statements, which are based on the Manager’s current view of future events.
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.
A-REIT FY06/07 Results .. 3
Agenda
• Key highlights
• Financial performance
• Capital and funds management
• Investment update
• Portfolio update
• Market outlook
• Going forward
A-REIT FY06/07 Results .. 4
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 increased by $148.9m (4.9%) following recent revaluation exercise. NAV increased by 11.2% to $1.49
• Completed 1st two development projects on schedule and at lower than expected development cost
• Secured acquisition and development projects of $488m in FY06/07. $148m is pending completion
• Total assets increased from $2.8bn to $3.3bn as at 31 Mar 2007
A-REIT FY06/07 Results .. 5
Agenda
• Key highlights
• Financial performance
• Capital and funds management
• Investment update
• Portfolio update
• Market outlook
• Going forward
A-REIT FY06/07 Results .. 6
Distribution Details
30 May 2007Distribution payment date
30 April 2007, 5.00 pmBooks closure date
26 April 2007, 9.00 amEx-date
25 April 2007Last day of trading on “cum” basis
18 April 2007Notice of books closure date
Distribution Timetable
1.198 26 Feb 07 to 31 Mar 07 AscendasreitA
3.301 Jan 07 to 31 Mar 07 AscendasreitDistribution per unit
(cents)Distribution PeriodStock counter
A-REIT FY06/07 Results .. 7
12.75163,824148,382(23,188)(38,777)210,347(72,660)283,007
FY06/07 (1)
20(19,273)Non-property expenses
74(3)(22,293)Borrowing costs
911.68Distribution per unit
15142,633Available for distribution
12131,992Net income
173,558(53,595)227,153
FY05/06 (1)
36(2)Property operating expenses
21
25
% Change
Net property income
Gross revenue
(S$’000)
DPU – FY06/07 is 9.2% above FY05/06
Notes:• Based on 77 properties as at 31 March 2007 versus 64 properties as at 31 March 2006• Property expenses have increased by a greater percentage due to aggregating energy costs for some properties and
on-charging such costs to tenants, resulting in higher costs as well as higher revenue. If such energy costs are excluded, property expenses would have only increased by 15%
• If non-cash adjustments under FRS39 are excluded, borrowing costs increased by 56% due to higher interest rates as well as increased borrowings to fund property acquisitions in FY06/07
A-REIT FY06/07 Results .. 8
3.3042,72439,812(4,542)
(11,248)55,602
(18,439)74,041
4Q FY06/07 (1)(2)
7(4,264)Non-property expenses
18(3)(9,502)Borrowing costs
33.20Distribution per unit
440,959Available for distribution
138,994Net income
1(18,309)Property operating expenses
5
4
% Change
52,760Net property income
71,069
3Q FY06/07 (1)
Gross revenue
(S$’000)
DPU – 4QFY06/07 is 3.1% above 3QFY06/07
Notes:• Based on 77 properties as at 31 March 2007 versus 68 properties as at 31 December 2006• For quarter to quarter comparison, performance fees of $6.6 million were excluded from the non-property
expenses• If non-cash adjustments under FRS39 are excluded, borrowing costs only increased by 9% over the period
due to additional debt drawn down to fund new acquisitions and slightly higher interest rates over the quarter
A-REIT FY06/07 Results .. 9
Revenue and NPI - 17 quarters of continued growth since IPO
Net Property Income
0
10
20
30
40
50
60
4Q F
Y03
1Q F
Y04
2Q F
Y04
3Q F
Y04
4Q F
Y04
1Q F
Y05
2Q F
Y05
3Q F
Y05
4Q F
Y05
1Q F
Y06
2Q F
Y06
3Q F
Y06
4Q F
Y06
1Q F
Y07
2Q F
Y07
3Q F
Y07
4Q F
Y07
$'mGross Revenue
0
10
20
30
40
50
60
70
80
4Q F
Y03
1Q F
Y04
2Q F
Y04
3Q F
Y04
4Q F
Y04
1Q F
Y05
2Q F
Y05
3Q F
Y05
4Q F
Y05
1Q F
Y06
2Q F
Y06
3Q F
Y06
4Q F
Y06
1Q F
Y07
2Q F
Y07
3Q F
Y07
4Q F
Y07
$'m
A-REIT FY06/07 Results .. 10
Yield returns compared to 10-year bond and S-REITs
Source: IBES Estimates, Bloomberg
S-REITs yield range from low of 2.0% to high of 8.7%
2.0%
5.3%
8.7%
2.9% 2.9% 2.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
S-REIT High A-REIT S-REIT Low0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Yield (LHS) 10-year bond yield (RHS) Weighted average S-REITs' yield
582 bps spread
-92 bps spread
243 bps spread
Wtd avg yield = 4.1%
A-REIT FY06/07 Results .. 11
Agenda
• Key highlights
• Financial performance
• Capital and funds management
• Investment update
• Portfolio update
• Market outlook
• Going forward
A-REIT FY06/07 Results .. 12
Balance sheet
134 cents149 centsNet asset value per unit
36.9%
1.7
1.0
2.8
As at 31 Mar 06
37.3%Aggregate Leverage
2.0Net assets attributable to unitholders
1.2
3.3
As at 31 Mar 07
Borrowings
Total Assets
(S$bn)
Strong balance sheet which provides additional debt capacity of more than $450m to fund acquisition and development activities before optimal gearing reached
A-REIT FY06/07 Results .. 13
Capital Management
Notes:
(1) Aggregate leverage includes deferred settlements
(2) Including margins and weighted swap rates for hedged debt and current floating rates on unhedged debt, and amortisation of CMBS’ establishment and annual maintenance costs
4.3 years3.6 years Weighted average term for fixed debt
75.3%83.6%Fixed as a % of total debt
6.96 times6.58 timesInterest cover ratio
36.9%37.3%Aggregate leverage (1)
3.49%3.37%Weighted average all-up funding cost (2)
S$733mS$990.7m• Fixed rate debt
S$973mS$1,185mTotal debt
31 Mar 200631 Mar 2007Debt Profile
A-REIT FY06/07 Results .. 14
Proactive interest rate management• Staggered maturities in hedging profile to manage interest rate risks
• Interest rate cap which is expiring in May 2007 has been replaced with fixed rate swaps
• For FY07/08, 95% of interest exposure is fixed with an weighted average term of 4.5 years at a weighted average cost of 3.38%
• The balance 5% and any further debt drawdown will be at prevailing market rate
Hedging Profile
27%
5% 9%21%
35%47%
71%87%
62%
95% 91%79%
65%53%
29%13%
Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14
Floating Rate Cap Fixed Rate
11%
A-REIT FY06/07 Results .. 15
Agenda
• Key highlights
• Financial performance
• Capital and funds management
• Investment update
• Portfolio update
• Market outlook
• Going forward
A-REIT FY06/07 Results .. 16
Investment highlights
1Q 200832Plot 7 & 8 Changi LogisPark (North)
1Q 200864Asset enhancement of SENKEE Logistics Hub
1H 200823Logistic & Distribution Centre at Pioneer Walk
1Q 200829HansaPoint @ CBP
148Total
Value (S$m) Expected completion
• 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 :
A-REIT FY06/07 Results .. 17
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
Giant Hypermart
Courts Megamart
A-REIT FY06/07 Results .. 18
Status of development projectsHansaPoint @ 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 FY06/07 Results .. 19
Status of development projectsPlot 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 .. 20
Agenda
• Key highlights
• Financial performance
• Capital and funds management
• Investment update
• Portfolio update
• Market outlook
• Going forward
A-REIT FY06/07 Results .. 21
Portfolio Highlights –13% increase in new demand
6.8
209,400(2)
61,074(2)
148,326(2)
96.6%93.7%
As at
31 Mar 07
95.0%91.4%
A-REIT Portfolio occupancy A-REIT MTB (1) occupancy
151,163(3)
53,941(3)
97,222(3)
Total Portfolio renewals/new leases (sqm) Total New leases/Expansions (sqm) Total Renewals (sqm)
6.7Weighted Average Lease to Expiry (years)
As at
31 Mar 06
Notes : 1) MTB = Multi-tenanted buildings which accounts for about 51% portfolio value2) For the financial year ended 31 Mar 073) For the financial year ended 31 Mar 06
A-REIT FY06/07 Results .. 22
Sources of demand for new leases – broad based
FY06/07 tenants sector by net lettable area
R&D4%
IT14%
Biomedical5%
Electronics16%
General Manufacturing9%Precision Engineering
12%
Transport and Storage23%
Lifestyle and Apparels6%
Others11%
A-REIT FY06/07 Results .. 23
Subsector Performance
91.4%
92.5%
95.2%89.6%
90.8%89.5%
Occupancy@ 31 Mar 06
4.3%4.3%94.5%Flatted Factories
93.7%Total Portfolio (MTB)
5.2%2.5%97.1%Light Industrial
-2.6%3.1%90.4%Logistics & Distribution Centres
95.5%92.8%
Occupancy @ 31 Mar 07
11.8%18.5%Hi-Tech Industrial23.3%
Increase in new take up rates
13.1%
Increase in renewal
rates
Science and Business Park
Multi-tenanted properties
Strong occupancy improvement and increase in rental rates achieved for suburban office space in FY06/07
A-REIT FY06/07 Results .. 24
A-REIT Portfolio Occupancy Higher Than Market
Source: URA: Urban Redevelopment Authority Official Statistics as at www.ura.gov.sg and Ascendas-MGM Funds Management Limited (“A-MGM”) as at 31 March 2007.
98.0%
90.1%
97.0%96.9%
85.8% 85.9% 85.9%88.7%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
90.0%
95.0%
100.0%
Business Park Light Industrial Hi-Tech Industrial Logistics
A-REIT URA
Occ
upan
cy R
ate
(%)
A-REIT FY06/07 Results .. 25
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 about $191m
• Alpha (In progress) • Property is located in Singapore Science Park 2. In process of constructing
additional 3,527sq m of space which will be leased to FJ Benjamin upon completion, which is expected in December 2007
• Property yield expected to increase by about 0.5% after asset enhancement. Current property value = $56m
A-REIT FY06/07 Results .. 26
Portfolio Diversification by Value
Asset Class Diversification
49% 51%
Mix of Sale-&-Leaseback vs Multi-tenanted Buildings
27%
8%16%
25%
20%
4%
A-REIT FY06/07 Results .. 27
Spilt of short term & long term leases within sector
Science and Business Park
73.9%
26.1%
Hi-tech Industrial
64.6%
35.4%
Logistics and Distribution Centres
31.4%
68.6%
Multi tenanted
Sale and leaseback
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
Light Industrial
17.2%
82.8%
A-REIT FY06/07 Results .. 28
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 .. 29
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
13.4
%
12.2
%
10.7
%
7.9%
6.6%
1.2%
2.2% 6.
4% 8.0%
7.6%
5.8%
1.1%
3.2%
2.4%
2.2%
9.1%
0.0%
11.0
%
13.1
%
15.7
%
8.4%
2.1%
2.0%
8.4%
8.3%
6.4%
5.7%
1.6%
2.5%
1.2%
1.8%
11.8
%
0%
10%
20%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
>202
1
Year Ending 31 Mar
64 properties @ 31 Mar 06 77 properties @ 31 Mar 07
% o
f A-R
EIT
Prop
erty
Inco
me
6.8 yearsBased on 77 properties
As at 31 Mar 2007 6.7 years
Based on 64 properties
As at 31 Mar 2006Weighted average lease term to expiry
A-REIT FY06/07 Results .. 30
Agenda
• Key highlights
• Financial performance
• Capital and funds management
• Investment update
• Portfolio update
• Market outlook
• Going forward
A-REIT FY06/07 Results .. 31
Recovering Industrial Property MarketURA industrial rental index improved by 3.1% in 4Q 2006 and by 4.2% in 2006
65
70
75
80
85
90
2000
Q120
00Q2
2000
Q320
00Q4
2001
Q120
01Q2
2001
Q320
01Q4
2002
Q120
02Q2
2002
Q320
02Q4
2003
Q120
03Q2
2003
Q320
03Q4
2004
Q120
04Q2
2004
Q320
04Q4
2005
Q120
05Q2
2005
Q320
05Q4
2006
Q120
06Q2
2006
Q320
06Q4
Indu
stria
l Ren
tal I
ndex
A-REIT FY06/07 Results .. 32
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 $2.00 psf per month respectively in 2006
Source : Colliers for Hi-tech Industrial, Light Industrial and Logistics & Distribution Centres rents
JTC for Science and Business Parks rents
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06
Ren
tal r
ates
($ps
f pm
)
Light industrial Logistics and Distribution Centres
Hi-tech Industrial Science and Business Parks
$2.54
$2.00
$1.31
$1.17
A-REIT FY06/07 Results .. 33
0
10
20
30
40
50
60
70
80
90
2003 2004 2005 2006 2007F 2008F
Are
a ('0
00sq
m)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
occu
panc
y
85.8%
-200
-100
0
100
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007F 2008F
Are
a ('0
00 s
q
40%
50%
60%
70%
occu
panc
200
300
400
m)
80%
90%
100%
y
Net New Supply Net New Demand Occupancy Rate
85.9%
Supply and Demand of Industrial Space
• New demand exceeded new supply in the last 2 years
• Persistent strong demand in relation to supply lifted occupancy to a current four-year high
• Limited new supply in business park sector in next 2 years
• New supply in factory space is primarily in light industrial sector. No current known new supply in hi-tech industrial sector for next 1 year
Business Parks
Factory Space (light industrial & hi-tech industrial)
Source : URA
A-REIT FY06/07 Results .. 34
Supply and Demand of Logistics Space
• New demand exceeded new supply since 2004, resulting in current high occupancy of 88.7%
• Significant new supply expected in 2007 (471,000sm), the highest in past 10 years
0
50
100
150
200
250
300
350
400
450
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007F 2008F
Area
('00
0sqm
)
60%
65%
70%
75%
80%
85%
90%
95%
Occ
upan
cy
88.7%
Logistics & Distribution Centres
Source : URA
A-REIT FY06/07 Results .. 35
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 2 – 3 years• Increasing demand due to spillover effect from backroom operations of financial
institutions currently located in CBD • New demand from MNCs setting up operations in S’pore due to government’s
continued incentives for regional headquarter and other services• 74% of science and business park sector & 65% of hi-tech industrial sector are on
short term leases
• Outlook for logistics sector weak• Given expected significant new supply, demand in 2007 has to almost double that
of 2006 to maintain occupancy and rental rates• As such, increase in occupancy and rental rates experienced in 2006 may not
follow through in 2007. • 69% of portfolio are long term committed leases
• Outlook for light industrial sector subdued• Although new supply in next 2 years is not significant compared to logistics sector,
occupancy and rental rates performance will depends on the strength of future demand
• 83% of portfolio are long term committed leases
A-REIT FY06/07 Results .. 36
Agenda
• Key highlights
• Financial performance
• Capital and funds management
• Investment update
• Portfolio update
• Market outlook
• Going forward
A-REIT FY06/07 Results .. 37
Growth Drivers
• Investment• acquisitions• development
• Organic Growth• rental rate reversions• occupancy rate improvements• asset enhancement opportunities
A-REIT FY06/07 Results .. 38
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)
• Sizable acquisition opportunity in JTC’s portfolio for trade sale
• Total current development commitments of about $61m, i.e. available development capacity is $269m. Have a healthy development pipeline to maximise this capacity
• Every $100m of acquisitions at current cap. rates translate to increase DPU of 0.10 cents
• Impact of development projects on DPU could be double that of acquisitions projects but with longer time lag
A-REIT FY06/07 Results .. 39
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%, depending on sectors
Existing rents -------- Market rents Area which is under-rented
$2.04
$1.74
$1.18 $1.16
$0.90
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Science & BusinessPark
Hi-tech Industrial Flatted Factories Light Industrial Logistics &Distribution Centres
Area
due
for r
enew
al w
hich
is u
nder
-ren
ted
(sqm
)
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
Aver
age
rent
s ($
psf p
m)
$2.54
$1.35
$1.00
$2.10
$1.25
A-REIT FY06/07 Results .. 40
Continued Organic Growth Expected• Potential to further increase occupancy rates, especially in Science &
Business Parks and Logistics & Distribution Centres
90.4%Logistics and Distribution Centres
97.1%Light Industrial
94.5%Flatted Factories
95.5%Hi-tech Industrial
92.8%Science & Business Park
MTB occupancy rates @ 31 Mar 07
• Continue with cost management measures to benefit from economy of scale operations
A-REIT FY06/07 Results .. 41
A-REIT's strengthsDiversity and Depth• Largest business and industrial REIT in Singapore • Solid and well diversified portfolio
Six property asset classes
Well-located quality properties
Balance of long term vs short term leases provides stability and potential for positive rental reversions
No single property accounts for more than 6% of revenue
High predictability and sustainability in income
Market leader• Ascendas has a track record of more than 20 years• Committed sponsors• Market leader in business space in Singapore
• 38% share of Hi-tech Industrial space • 29% share of Science and Business Parks space • 11% share of Logistics & Distribution Centres space - 30% in the Eastern region
and 13% in Western region of Singapore
A-REIT FY06/07 Results .. 42
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 growing with us• High retention ratio of 92.5%
Size advantages• Market capitalization in excess of $3.3bn • 12% of S-REIT sector• 8% of Asian REIT sector ex Japan• Accounts for about 12% of total trading volume for S-REITs• Ranked 6th in the BT Transparency Index amongst all companies listed on SGX• Included in major indices (eg. MSCI, STI)
A-REIT FY06/07 Results .. 43
A-REIT's strategies
Optimisecapital structure
Optimisecapital structure
Value-Adding Investments
Value-Adding Investments
Proactive asset
management
Proactive asset
management
StabilityStability GrowthGrowth
Predictable incomePredictable income Capital stabilityCapital stabilityTotal returns
Outcome
StrategiesStrategies
Proactive and
dedicated manager
with track record
A-REIT FY06/07 Results .. 44
Regional Expansion
• Ascendas is in the process of evaluating options with regards topositioning of A-REIT:
- Singapore focus
- Regional expansion
- Take stake in other Ascendas’ funds
A-REIT FY06/07 Results .. 45
Critical Issues in Regional Investments
• Risk-adjusted returns commensurable to different risk profile?
• Foreign Exchange risk
• Execution: Operational platform
A-REIT FY06/07 Results .. 46
Important NoticeThis 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 upon as such. You should obtain independent professional advice prior to making any decision. This Report is not an offer or invitation for subscription or purchase of securities or other financial products. Past performance is no indication of future performance. All values are expressed in Singaporean currency unless otherwise stated. January 2006
Thank you
FY2006/07 Financial Results Presentation
18 April 2007
Business & Science Park
Light Industrial
Logistics and DistributionHi-Tech Industrial
Warehouse Retail Facilities