Annual General Meeting. 28 April 2010

Transcription

1 CapitaCommercial Trust Annual General Meeting Presentation 28 April 2010

2 Important Notice The past performance of CCT is not indicative of the future performance of CCT. Similarly, the past performance of CapitaCommercial Trust Management Limited, the manager of CCT is not indicative of the future performance of the Manager. The value of units in CCT (CCT Units) and the income derived from them may fall as well as rise. The CCT Units are not obligations of, deposits in, or guaranteed by, the CCT Manager. An investment in the CCT Units is subject to investment risks, including the possible loss of the principal amount invested. Investors have no right to request that the CCT Manager redeem or purchase their CCT Units while the CCT Units are listed. It is intended that holders of the CCT Units may only deal in their CCT Units through trading on Singapore Exchange Securities Trading Limited (SGX-ST). Listing of the CCT Units on the SGX-ST does not guarantee a liquid market for the CCT Units. This presentation may contain forward-looking statements that involve assumptions, 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 other developments or companies, shifts in expected levels of occupancy rate, property rental income, charge out collections, changes in operating expenses (including employee wages, benefits and training costs), 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 current view of the CCT Manager on future events. 2 CapitaCommercial Trust AGM Presentation *Apr 2010*

3 Contents 1. FY 2009 Highlights 2. Proactive and Prudent Capital Management 3. Proactive Asset Management 4. Portfolio Reconstitution Strategy 5. Market Outlook 6. Focus Moving Ahead 3 CapitaCommercial Trust AGM Presentation *Apr 2010*

4 1. FY 2009 Highlights 4 CapitaCommercial Trust AGM Presentation *Apr 2010*

5 Unprecedented Perfect Storm in 2009 Global financial and economic crisis Global recession Singapore s GDP contracted by 2% (vs forecast contraction of 2% to 5%) Sharp shrinkage of credit and capital markets Office market rentals declined 57% from peak (3Q 2008) to end Island-wide office vacancy increased from 8.8% in end-2008 to 12.1% in end CapitaCommercial Trust AGM Presentation *Apr 2010*

6 CCT strengthened balance sheet with S$828 million rights issue Completed rights issue in July 2009 Attractively priced at $0.59 per unit and theoretical ex-rights price at $0.825 per unit Strong unitholders support times oversubscribed Use of rights proceeds Prepaid borrowings of $664 million due 2010 Balance of proceeds used to part repay $150 million MTN due Mar 2010 Result Gearing reduced from 42% to 31% Strengthened balance sheet and enhanced financial i flexibility 6 CapitaCommercial Trust AGM Presentation *Apr 2010*

7 CCT s price per unit trading 42% above TERP of $0.825 and 98% higher than rights issue price of $0.59 Closing price (S$) June: Last day of "cum-rights" trading 3 June: First day of "ex-rights rights" trading 3 July: Trading of rights units Trading volume (million units) Dec 09 $ Dec 08 $0.895 From Dec 2008 to Dec 2009 Market cap up 163% Trading volume increased 91% Source: Bloomberg TERP = theoretical ex-rights price 7 CapitaCommercial Trust AGM Presentation *Apr 2010*

8 Delivering solid financial performance over the years S$ million Gross Revenue S$ million Distributable Income Note: (1) CAGR - Compound Annual Growth Rate 8 CapitaCommercial Trust AGM Presentation *Apr 2010*

9 FY 2009 gross revenue up by 20%; distributable income up by 30% 9 Income contribution from acquisition (11%) and higher rental income (9%) Improved operating margin due to cost savings efforts and lower property tax; income contribution from existing buildings (15%) and acquisitions (14%) Higher revenue and improved operating margin and lower trust expenses contributed to higher distributable income CapitaCommercial Trust AGM Presentation *Apr 2010*

10 DPU outperformance against preceding period 12% 3.73 cts Paid out on 26 Feb % 5.48 cts 7.06 cts 3.33 cts 1H 2009 DPU 2H 2009 DPU FY 2008 FY 2009 DPU (1) DPU Note: (1) Restated with the effects of the rights issue and are computed based on the issued units at end of period plus 1,403,891,000 rights units issued pursuant to the fully underwritten renounceable 1-for-1 rights issue. 10 CapitaCommercial Trust AGM Presentation *Apr 2010*

11 2. Proactive and Prudent Capital Management 11 CapitaCommercial Trust AGM Presentation *Apr 2010*

12 Refinance well ahead of maturity, diversify sources of funding & extend debt maturities S$m 1, $156m $650m secured term loan (25%) $370m 2008 CB Put option (14%) $520m S$16 m RCS - secured facility (0.6%) $580m RCS -CMBS -CMBS $370m (22%) (20%) 2008 $235m CB MTN due in $116m (9%) $100m May - shortterm term MTN (4%) (14%) loan (4%) As at 31 December 2008 S$m 1000 As at 21 April $230m 2008 CB Put option (11%) RCS - $38 m 600 secured $570m facility secured (2%) $520m term loan 400 Refinanced or (28%) RCS -CMBS (26%) repaid $85m MTN (4%) $100m MTN (5%) $143m secured term loan (7%) $230m 2008 CB (11%) S$50m $225m 2009 CB (11%) S$70m MTN (2%) MTN (3%)

13 Target gearing range from 30% to 45% through property market cycles Post 2008 Bond repurchase and issuance of 2010 Convertible Bond repurchase and As at As at 31 Mar 10 As at 31 Dec 09 Total debt (S$'mil) 2, , ,022.7 Gearing ratio % 32.2% 33.2% Interest t service coverage ratio 2 36ti 3.6 times 36ti 3.6 times 33ti 3.3 times Average cost of debt 3.8% 3.9% 3.9% Average fixed rate term to expiry 3 25years years years 2.2 Average debt maturity to put years 1.7 years 1.7 years 13 Notes: 1. Ratio of borrowings over total deposited properties 2. Ratio of net investment income before interest and tax over interest expenses 3. Fixed rate loan portfolio average years to expiry date of loans/hedge 4. Average debt maturity to put based on put date of 2008 bonds on May 2011 and maturity date of borrowings CapitaCommercial Trust AGM Presentation *Apr 2010*

14 Enhanced financial flexibility Total number of unsecured assets : 7 out of 10 Value of unsecured assets : S$2.6 billion (46% of total value of investment properties) S$1.7 billion untapped balance from S$2.0 billion multicurrency medium term note programme Six Battery Road One George Street Starhub Centre Wilkie Edge Bugis Village Golden Shoe Car Park Market Street Car Park 14 CapitaCommercial Trust AGM Presentation *Apr 2010*

15 3. Proactive Asset Management 15 CapitaCommercial Trust AGM Presentation *Apr 2010*

16 16 CapitaCommercial Trust AGM Presentation *Apr 2010*

17 Resilient performance of CCT s portfolio in FY 2009 Grade A office committed occupancy rate rose to 98.7% (market level for Grade A offices: 93.8%) Signed new leases and renewals totaling 1.03 million square feet in FY 2009 (around 30% of portfolio NLA) Proactive Asset Management: Proactive tenant engagement for renewals Renewals ahead of lease expiry dates Locked-in higher rentals ahead of market decline 17 CapitaCommercial Trust AGM Presentation *Apr 2010*

18 Blue-chip tenants contribute about 47% of monthly gross rental income Weighted Average Lease Term to Expiry (by floor area) for Top 10 Tenants as at 31 Dec 2009 = 5.7 years 18 CapitaCommercial Trust AGM Presentation *Apr 2010*

19 4. Portfolio Reconstitution Strategy 19 CapitaCommercial Trust AGM Presentation *Apr 2010*

20 Portfolio reconstitution strategy to further enhance asset quality Flexibility and speed to seize growth opportunities Acquire Redeploy capital good quality asset Funding flexibility Organic growth Unlock value at Asset optimal stage enhancement / of cycle refurbishment Value creation 20 CapitaCommercial Trust AGM Presentation *Apr 2010*

21 Sale of Robinson Point completed on 19 April 2010 Robinson Point Sale of Robinson Point for S$ mil or S$1,527 psf on NLA Estimated gain of S$19.2 mil 11.4% above Dec 2009 valuation of S$182.5 mil 69.7% above 2004 appraised value of S$119.8 mil when acquired by CCT Sale proceeds will be used for growth opportunities 21 CapitaCommercial Trust AGM Presentation *Apr 2010*

22 Asset plan review for Starhub Centre Obtained Outline Planning Permission from the Urban Redevelopment Authority for change of use: from Commercial to Residential (maximum 80% of GFA) and Commercial Gross plot ratio of +4.9 (no change) Still pending other government authorities approval Starhub Centre Only decide next course of action after all relevant approvals are received 22 CapitaCommercial Trust AGM Presentation *Apr 2010*

23 Acquisition track record Initial portfolio (2004) Capital Tower HSBC Building Raffles City Singapore Wilkie Edge One George Street Six Battery Road Starhub Centre Bugis Village Value of investment properties grew 182% from S$2.0 billion in 2004 to S$5.7 billion in 2009 Golden Shoe Car Park Market Street Car Park Robinson Point (sold in 2010) 23 CapitaCommercial Trust AGM Presentation *Apr 2010*

24 5. Market Outlook 24 CapitaCommercial Trust AGM Presentation *Apr 2010*

25 Global economy shown further signs of improvement; while downside risks remain, Singapore sees strong growth in Q1 Advance estimates of Singapore s forecast 2010 GDP : 7.0% to 9.0% (Apr 2010) revised upwards from 4.5% to 6.5% (Feb 2010) (%) uct (GDP) ( s mestic Prod arket prices Gross Dom at 2000 ma Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Quarter-on-Quarter Change Year-on-Year Change Source: Ministry of Trade and Industry, 14 April CapitaCommercial Trust AGM Presentation *Apr 2010*

26 Office market rentals have declined 57% since the peak in 3Q 2008, but rate of decline has eased Rate of Market Rental Decline over preceding Quarter $18.00 $15.00 $12.00 $18.80 $16.10 $15.00 $12.90 $12.30 $10.50 $10.15 Grade A Office Prime Office 4Q % 19.9% 1Q % 18.6% 2Q % 18.1% 3Q % 3% 12.8% 4Q % 10.0% 1Q % 0.7% $9.00 $8.60 $8.80 $7.50 $8.10 $8.00 $6.75 $6.70 $6.00 3Q Q Q Q Q Q Q 2010 Note: Prime Office Average Rent (1) Grade A Office Average Rent (1) (1) Source for office market rent: CBRE (figures as at end of each quarter) 26 CapitaCommercial Trust AGM Presentation *Apr 2010*

27 Net office demand remains positive for three consecutive quarters 1000 Net demand ('000 sqft) Q10: 0.24m sqft Source: Urban Redevelopment Authority, April CapitaCommercial Trust AGM Presentation *Apr 2010*

28 t) Office Sp pace (mil sq ft Future supply in Central Area (1) until 2012 at 6.7 million sq ft of which approx 38% have already been pre-committed; Singapore Private Office Space (Central Area) -- Demand & Supply Ave annual supply = 2.4 mil sq ft Ave annual demand during previous growth phase('93-'97)=2.1 mil sq ft Ave annual supply = 1.8 mil sq ft Ave annual demand =1.6 mil sq ft Post -Asian financial crisis and SARs-weak demand & undersupply Global financial crisis in 2009 Remaking of Singapore as global city % precommitted Supply Demand Forecast supply as at Apr'10 Pre-committed space Notes: (1)Central Area comprises The Downtown Core, Orchard and Rest of Central Area Source: Consensus Compiled from CBRE & JLL ( Apr 10) 28 CapitaCommercial Trust AGM Presentation *Apr 2010*

29 6. Focus Moving Ahead 29 CapitaCommercial Trust AGM Presentation *Apr 2010*

30 Strategies to enhance position of strength Consistent Track Record High quality portfolio in prime locations Diversified tenant mix Consistently high occupancies Portfolio reconstitution strategy re-invest capital in attractive growth opportunities Proactive Asset Management Proactive leasing Astute cost management Prudent Capital Management Plan refinancing ahead, diversify sources of funding and extend debt maturities Strengthens balance sheet Enhances financial flexibility 30 CapitaCommercial Trust AGM Presentation *Apr 2010*