Another Year of Record High Distributable Income

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Bernadette Sharp
5 years ago
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1 Annual Results 2017

2 Another Year of Record High Distributable Income Stable growth across all properties Signs of retail market recovery in 2H17 Financial Highlights FY 2016 FY 2017 Change Total Rental Income (HK$mm) 2,299 2, % Net Property Income (HK$mm) 2,027 2, % Distributable Income (HK$mm) 1,408 1, % Distribution per Unit (HK$) % Rental Income (by Property) - HK$mm Net Property Income (by Property) - HK$mm Three Garden Road Langham Place Office Three Garden Road Langham Place Office Langham Place Mall +5.7% 2,299 2,431 Langham Place Mall 2, % 2, ,157 1,232 1,040 1,112 FY 2016 FY 2017 FY 2016 FY

3 Solid Growth in Asset Value Valuation increased to HK$76.7 bn on higher rental assumptions; cap rate compression for Langham Place Mall Solid growth in NAV per unit; Gearing ratio lowered to 18.9% Financial Highlights Dec-16 Dec-17 Change Net Asset Value Per Unit (HK$) % Gearing Ratio (%) 21.7% 18.9% 2.8 pp Value of Property Portfolio Langham Place Valuation: HK$30.5 bn Value psf: - Office: HK$13,444 - Retail: HK$34,772 Cap Rate: - Office: 4.00% - Retail: 3.75% 40% 60% Three Garden Road Valuation: HK$46.2 bn Value psf: HK$28,250 Cap Rate: 3.60% 2

4 Proactive Liability Management Fixed rate debt ratio increased to 50%, significantly higher than 21.5% in Dec 2016 Effective interest rate at 2.6% as at 31 December 2017 Debt Maturity Profile as at 31 Dec 2017 (HK$mm) Total Debt / Total Assets Secured Bank Loan MTN 4,425 5,800 Bank loan: 69% MTN: 31% 21.7% 18.9% FY 2016 FY ,998 Secured Bank Loan / Total Assets % 13.0% FY 2016 FY

5 Three Garden Road

6 Profound Rental Reversion for Three Garden Road Sustainable growth in passing rents Latest leasing transaction has reached HK$120 per sq. ft. (lettable) Passing Office Rents as at 31 Dec 2017 Effective Rent per sq. ft. (Lettable) (HK$) Office Lease Expiry as at 31 Dec 2017 Vacant Leases Expiring Rent Review +18.3% % 31.8% 1.4% 23.2% 5.8% 10.5% 4.9% Vacant & After 5

7 Improving Occupancy Leasing activities picked up in the Q Occupancy improvement mainly driven by demand from Chinese financial institutions Office Occupancy Rate as at 31 Dec 2017 Office Tenant Profile as at 31 Dec % Media 5% Others 5% Vacant 6% Corporate 7% Banking 35% 92.4% Consultancy 2% Medical 2% Legal 4% Business Centre/ Co-working Space 2% 1H 2017 FY 2017 Asset Management 32% 6

8 Langham Place

9 Stable Growth at Langham Place Office Tower Greater focus on lifestyle tenants to ease potential competition from decentralized office supply Passing rents over HK$40 per sq. ft. (gross floor area) Latest achieved rents surpassing HK$50 per sq. ft. Office Tenant Profile as at 31 Dec 2017 Medical Services 5% Others 3% Vacant 3% Office Lease Expiry as at 31 Dec 2017 Vacant Leases Expiring Rent Review 1.3% Professional & Sales Services 14% Health Care & Beauty 42% 40.0% Merchandising & Trading 23% 23.0% 22.2% Lifestyle 10% 2.9% 3.0% 7.6% Vacant & After 8

10 Promising Performance of Langham Place Mall Retail sales growth consistently outperformed the market Turnover rent hit record high of HK$116 million due to solid performance of beauty and skincare tenants Rent to Sales remained stabled at ~20% Retail Sales Growth Outperforming Market Rental Income - HK$mm Langham Place Mall HK Retail Base rent Turnover rent % % % 8.5% % % 5.3% 5.0% 2.2% FY17 vs FY16 2H17 vs 2H

11 Langham Place Mall Introducing Firsts in Hong Kong Stores Again Remained fully occupied Introduced firsts in Hong Kong F&B stores once again Retail Lease Expiry as at 31 Dec 2017 New Shops Welcomed by the Crowd Leases Expiring Rent Review Retail Tenant Profile as at 31 Dec % 31.5% 20.9% Health & Beauty 10% Others 13% Entertainment 15% 15.5% 9.5% Food & Beverage 22% Fashion & Accessories 40% & After 10

Enhancing Experimental Retail Experimental events aiming to

Collaboration with popular tenant LINE Friends to introduce

providing a 360 photo booth, generating overwhelming customer

and DIY greeting cards Award-winning Spider-Man Promotion

12 Enhancing Experimental Retail Experimental events aiming to make shoppers visits at Langham Place Mall more memorable Collaboration with popular tenant LINE Friends to introduce virtual reality promotion Spider-Man: Homecoming event providing a 360 photo booth, generating overwhelming customer visits Chinese New Year Promotion: AR fortune telling games and DIY greeting cards Award-winning Spider-Man Promotion Event LINE Friends VR Christmas Event 2017 Chinese New Year AR Promotion Event 11

13 Guidance Outlook of properties performance: Office portfolio passing rents below spot rents positive rental reversion should continue Retail recovery of retail sales in 2H17, prudently optimistic for 2018 Potential rises in interest rates may lead to higher finance costs, impacting DPU growth Ongoing exploration of portfolio rebalancing opportunities to enhance unitholders value 12

14 13 Important Notice This presentation may contain information which is proprietary, confidential and/or legally privileged and has been prepared by Eagle Asset Management (CP) Limited, in its capacity as the manager (the REIT Manager ) of Champion Real Estate Investment Trust (the Trust ). This presentation is being communicated for information purposes only and its intended recipients are professional investors in Hong Kong (as defined by Part 1 of Schedule 1 to the Securities and Futures Ordinance(Cap.571)) and professional investors outside of Hong Kong to whom it is lawful to communicate the presentation. Any other persons should not rely or act upon this presentation or any of its contents. The information contained in this document, including any obtained from external data sources, has not been verified. The information and opinions in this presentation are subject to change without notice and the REIT Manager is under no obligation to update or keep current the information contained in this presentation. No representation or warranty, express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. It is not the intention to provide, and you may not rely on this document as providing, a complete or comprehensive analysis of the Trust s financial or operational position. Furthermore, this presentation should not be construed as legal, tax, investment, or other advice. None of the REIT Manager, the Trust, nor any of their respective affiliates, advisors or representatives shall be held liable for any damages, losses or expenses of any kind, whether direct, indirect, special, consequential or incidental, arising out of or in connection with the presentation. In this regard, all warranties or representations of any kind, whether expressed or implied by law, equity or statutes, are excluded to the extent permissible under the applicable law. All liabilities whatsoever arising from or incidental to the document are hereby expressly disclaimed. Certain information and statements made in this presentation contain forward-looking statements. All forward-looking statements are based on current expectation of future events and are subject to a number of factors that could cause actual results to differ materially from those described in the forward-looking statements. Caution should be taken with respect to such statements and you should not place undue reliance on any such forward-looking statements. This document does not constitute a prospectus, notice, circular, brochure or advertisement offering to sell or inviting offers to acquire, purchase or subscription for any units ( Units ) or other securities of the Trust. The value of Units and the income from them, if any, may fall as well as rise from time to time. Units are not obligations of, deposits in, or guaranteed by the REIT Manager, the Trust, nor any of their respective affiliates, advisors or representatives. An investment in Units or other securities of the Trust is subject to investment risks, including the possible loss of the principal amount invested. It is intended that holders of Units may only deal in their Units through trading on the Stock Exchange of Hong Kong and investors have no right to request the REIT Manager to redeem their Units. Listing status does not guarantee a liquid market for the Units. All copyright, patent, intellectual and other property rights in information contained herein is owned by the REIT Manager or other third parties. No rights of any kind are licensed or assigned or shall otherwise pass to persons accessing such information. Without the expressed written permission of the REIT Manager under no circumstances should information contained herein or any part of it be quoted, reproduced, redistributed or transmitted in any form, by any means, electronic or otherwise.

UK ACQUISITION AND THE LEASE CCTS

UK ACQUISITION AND THE LEASE CCTS 0 DISCLAIMER This presentation may contain information which is proprietary, confidential and/or legally privileged and has been prepared by Spring Asset Management Limited,