DBS Pulse of Asia Conference. 5 January 2015

Transcription

1 DBS Pulse of Asia Conference 5 January 2015

2 Disclaimer This presentation should be read in conjunction with the financial statements of Soilbuild Business Space REIT ( Soilbuild REIT ) for the period from 1 January 2014 to 30 September 2014as detailed in the 3Q 2014 SGX announcement. This presentation is for information only and does not constitute an offer or solicitation of an offer to subscribe for, acquire, purchase, dispose of or sell any units in Soilbuild REIT ( Units ) or any other securities or investment. Nothing in this presentation should be construed as financial, investment, business, legal or tax advice and you should consult your own independent professional advisors. This presentation may contain forward-looking statements that involve risks, uncertainties and assumptions. 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. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of management of future events. The value of Units and the income derived from them, if any, may fall or rise. Units are not obligations of, deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Investors should note that they will have no right to request the Manager to redeem or purchase their Units for so long as the Units are listed on Singapore Exchange Securities Trading Limited (the SGX-ST ). It is intended that holders of Units may only deal in their Units through trading on the SGX-ST. The listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. The past performance of Soilbuild REIT is not indicative of the future performance of Soilbuild REIT. Similarly, the past performance of SB REIT Management Pte. Ltd. ( Manager ) is not indicative of the future performance of the Manager. Citigroup Global Markets Singapore Pte. Ltd., DBS Bank Ltd. and Oversea-Chinese Banking Corporation Limited were the joint global coordinators, issue managers, bookrunners & underwriters of the initial public offering of Soilbuild REIT 2

3 Content Overview and Key Highlights 4 Portfolio Details 7 Market Update 16 Financial Highlights / Capital Management 19 Growth Strategies 23 Sponsor / Fee Structure 28 Conclusion 31 3

4 Overview

5 Overview Vision Soilbuild Business Space REIT aims to be a successful business space real estate investment trust with a quality portfolio of assets to deliver stability and growth Mission To deliver stable and growing returns to Unitholders by actively managing our assets and expanding our portfolio Our Competitive Advantage Integrated Platform of Sponsor Location, Quality and Specification of Assets 5

6 Key Highlights 2. Favourable tenancy / lease profile 3. Well-defined growth plans 4. Robust financial performance Well-staggered lease expiry profile with WALE of 4.0 years (1) by Gross Rental Income Strategically located portfolio Good balance between multitenanted and master lease properties High proportion of business park properties Longest remaining land lease tenure of 49 years (1) Well-diversified tenant base and trade sectors Quality building specifications and designs with established tenant base 1. Best-in-class portfolio Portfolio occupancy of 99.9% (2) Stable and growing cashflow from master lease properties Upside potential from multitenanted properties Active acquisition strategy from ROFR pipeline and third party opportunities Acquisition of 3 properties since IPO taking portfolio size in excess of S$1 bn DPU of SGD1.546 cents for 3Q 2014 exceeding IPO Forecast (3) by 2.0% FY2014 DPU yield of c.7.8% (4) Post-acquisitions gearing of 36.5% (5) provides further debt headroom of S$59.0 million Investment grade rating of BBB- from S&P Sponsor provides access to integrated real estate platform Management team has delivered DPU outperformance for five consecutive quarters Management fee structure pegged to DPU, providing alignment with unitholders 5. Committed Sponsor / Mgmt Continuing to deliver on key investment merits Notes: (1) As at 31 Dec 2014 (2) As at 30 Sep 2014 (3) The IPO Forecast is derived from the Forecast Year 2014 figures disclosed in the Prospectus dated 7 August 2013 (the Prospectus ) (4) Annualised DPU yield based on 31 Dec 2014 closing price of S$0.79 (5) Based on aggregate leverage of up to 40.0% 6

7 Portfolio Details

8 Portfolio Overview Soilbuild REIT portfolio features include optimal locations for the various asset types, above average specifications, young properties and very long remaining land leases Portfolio Summary Valuation S$1,033.5 million NK Ingredients NLA: 312,375 sq ft Valuation: S$62.0 million COS Printers NLA: 58,752 sq ft Valuation: S$11.0 million SEMBAWANG Tellus Marine NLA: 95,250 sq ft Valuation: S$18.3 million Total NLA 3,352,412 sq ft WALE (by NLA) 4.0 years (1) Occupancy 99.9% (2) Tuas Connection NLA: 651,072 sq ft Valuation: S$126.0 million Second Link (Tuas Checkpoint) PIONEER BOON LAY SIMEI CHANGI JOO KOON BUONA VISTA ONE-NORTH EXPO KTL Offshore NLA: 208,057 sq ft Valuation: S$56.0 million Tuas Port (2022) Jurong Port Jurong Island PSA Terminal Sentosa CBD Keppel Terminal Eightrium NLA: 177,286 sq ft Valuation: S$102.0 million BK Marine NLA: 73,737 sq ft Valuation: S$15.0 million Speedy-Tech NLA: 93,767 sq ft Valuation: S$24.2 million West Park BizCentral NLA: 1,240,583 sq ft Valuation: S$319.0 million Solaris NLA: 441,533 sq ft Valuation: S$300.0 million Industrial Properties Business Park Properties 8 Notes: (1) As at 31 December 2014 (2) As at 30 September 2014

9 Portfolio Summary Soilbuild REIT s portfolio consists of ten properties with long underlying land leases and an average age of 49 years Property Type Lease Arrangement Property Age (1) (Years) Remaining Land Lease (Years) Occupancy Rate (3) Occupancy Rate as at IPO Valuation (S$ Million) Solaris Business Park Master Lease % 100.0% West Park BizCentral Multi-User Ramp-up Factory Multi Tenanted % 100.0% CBP Business Park Multi Tenanted % 95.3% Tuas Connection Multi-User Land Based Factory Multi Tenanted % 100.0% NK Ingredients Single-User Factory Master Lease Ph1: 23.5 Ph2: 7.4 (2) % 100.0% 62.0 COS Printers Single-User Factory Master Lease % 100.0% 11.0 Beng Kuang Marine Single-User Factory Master Lease % 100.0% 15.0 Tellus Marine Single-User Factory Master Lease % n.a 18.3 (4) KTL Offshore Single-User Factory Master Lease No. 61: 5.4 No. 71: % (5) n.a 56.0 Speedy-Tech Single-User Factory Master Lease % (5) n.a 24.2 Total Portfolio (3) 99.9% 99.7% 1,033.5 Notes: (1) Age from issue of CSC (as at 31 Dec 2014) (2) Phase 1 of development received CSC in Jul 1991 and Phase 2 of development received CSC in Aug 2007 (3) As at 30 Sep 2014 (4) Valuation assumes the completion of construction of a new annex to Tellus Marine (5) Occupancy at completion of acquisition 9

10 one-north Property Information GFA NLA No. of Floors Occupancy 551,811 sq ft 441,533 sq ft 9-storey in North Tower; 15-storey in South Tower 100% (underlying basis) No. of Sub-Tenants 26 Car Park Lots 292 Floor-to-Ceiling Height Up to 6 meters Established Sub-Tenant Base Building Awards Iconic award winning development offering plethora of green innovations easy Minutes from one-north / Buona Vista MRT stations and accessibility to AYE and PIE 10

11 Changi Business Park Property Information GFA NLA No. of Floors Occupancy 100% No. of Tenants 13 Car Park Lots Floor-to-Ceiling Height 213,835 sq ft 177,835 sq ft 8-storey East and 6-storey West Wings interlinked by a distinctive 5-storey high atrium 132 lots High ceiling height of up to 3 metres Established Tenant Base Located in one of Singapore s most sought after business park locations One of the few multiple-user business park properties in Changi Business Park Close proximity to Expo MRT and major expressways with facilities and amenities abound 11

12 West Park BizCentral Property Information GFA NLA 1,414,600 sq ft 1,240,583 sq ft No. of Floors 6-storey ramp-up factory and 11- storey air-conditioned hi-tech facility Occupancy 99.8% No. of Tenants 47 Car Park Lots 542 Floor-to-Ceiling Height Ramp-up factory: Up to 9.1 meters; Air-conditioned hi-tech facility: Up to 5.0 meters Established Tenant Base Award winning design with safety feature including traffic segregated system Flexible configuration allows for innovative use of space Individual substations for each stack providing tenants with stable power sources 12

13 Tuas Connection Property Information GFA 607,994 sq ft NLA 651,072 sq ft Occupancy 100.0% No. of Tenants 15 Car Park Lots Nil Floor-to-Ceiling Height High ceiling height of up to 12 metres Established Tenant Base Features detached and semi-detached business space, offering exclusivity to tenants Functional layouts featuring wide production spaces and ceilings as high as 12m, with well-organised office spaces on the 2nd storey Strategically located close to Tuas Checkpoint, Petrochemical, Pharmaceutical and Green Energy Zones 13

14 Diversified Portfolio (as at 30 September 2014) 1. Portfolio Income Spread By Property 2. Well-spread trade sectors (1) By NLA 25% 7% 1% 2% 2% 3Q FY2014 Gross Revenue S$16.9 million 13% 16% Changi Business Park Tuas Connection West Park BizCentral Solaris NK Ingredients COS Printers 2.5% 2.8% 3.6% 21.4% 4.2% % of Total NLA of 3.05 million sq ft 19.9% 17.0% Precision Engineering, Electrical and Machinery Products Marine Offshore, Oil & Gas Chemicals Fabricated Metal Products Electronics Publishing, Printing & Reproduction of Recorded Media Supply Chain Management, 3rd Party Logistics, Freight Forwarding Information Technology 34% Beng Kuang Marine 4.5% 4.6% 8.1% 11.3% Construction Food Products & Beverages Others 3. Diversified Tenant Base (1) By Gross Rental Income 4. Balanced Portfolio with Growth Upside By Net Property Income SME 30% Multi-Tenanted 58% 104 tenants in portfolio 3Q FY2014 NPI S$14.2 million MNC 65% Master Lease 42% Government Agency 5% Notes: (1) Inclusive of underlying tenants at Solaris 14

15 Work has began on FY2015 lease expiries Lease expiry profile As % of NLA 23.6% Eightrium: 10,699 sq ft Tuas Connection: 261,243 sq ft West Park BizCentral: 486,091 sq ft 27.4% West Park 15.1% 17.6% 19.5% 11.9% Tuas Conn. 8.1% Eightrium 0.3% >2018 Lease Expiry by NLA 15

16 Market Update

17 Industrial Sector Market Outlook Limited Supply Pipeline for Business Park Properties In 000 sq m Improving Occupancies for Business Park Vacancy rate (%) , >2018 Multiple-user factory Warehouse Single-user factory Business Park Q Q Q 2012 Source: JTC (3Q 2014) Source: JTC (3Q 2014) 2Q Q Q 2012 Multiple-user factory Warehouse 1Q Q Q Q Q Q 2014 Single-user factory Business Park The business park segment has performed relatively well in 2014 YTD, benefitting from the spill-over from higher office rents, with business park rents growing at an average of 2.2% every quarter this year While demand for business park space is expected to remain healthy, especially for the newer and centrally located ones, the higher supply in 2016 is likely to contain rental growth Rental for prime conventional industrial space expected to ease further in 4Q 2014 on the back of supply pressures 3Q 2014 Source: DTZ, Colliers - 3Q 2014 Research Report 17

18 Located in Business Park Clusters that Command Premium Rents Soilbuild REIT s business park properties are located in Fusionopolis within one-north and Changi Business Park, which commands some of the highest rents among the business parks in Singapore. Major Business Parks in Singapore (S$ psf per month) Cleantech Park (50 ha) Market Rent: ~S$3.20 psf pm one-north (200 ha) Market Rent: S$ psf pm Changi Business Park (71.1ha) Market Rent: S$ psf pm WEST REGION EAST REGION CENTRAL REGION International Business Park (37 ha) Market Rent: S$ psf pm 18 Singapore Science Park (65 ha) Market Rent: S$ psf pm Mapletree Business City (13.5 ha) Market Rent: ~S$6.00 psf pm One-north + MBC Location Amenities Physical Specs Usage CBP SSP / IBP Higher rents for one-north and MBC vs. SSP and IBP

19 Financial Highlights / Capital Management

20 Financial Performance vs Unit Price Relative Trading Performance 16 Aug 2013 (IPO) 31 Dec % 115% 110% 105% 100% 95% SB REIT +10.5% S-REIT +6.4% STI +5.2% 90% 85% Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Source: Bloomberg closing prices Actual DPU exceeding IPO Forecast for 5 consecutive quarters Actual & Forecast DPU for periods ending 30 Sep Sep % % % % % Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual 3Q 2013 Announcement 4Q 2013 Announcement 1Q 2014 Announcement 2Q 2014 Announcement 3Q 2014 Announcement 20

21 3Q FY2014 Financial Results Balance Sheet All figures S$ 000 unless otherwise stated Unaudited Actual as at 30 September 2014 Audited Actual as at 31 December 2013 Investment Properties 949, ,000 Other Assets 22,412 20,292 Total Assets 972, ,292 Bank Borrowings 289, ,331 Other Liabilities 33,371 32,663 Net Assets 649, ,298 Units in Issue ( 000) 810, ,541 Net Asset Value per Unit (S$)

22 Prudent Capital Management 1) Modest aggregate leverage allows significant headroom Total Financing Facilities Available S$385 million Total Debt Drawn Down (1) S$374 million Debt headroom (1)(2) S$59 million Aggregate Leverage (1) 36.5% Average All-in Interest Cost (1)(3) 3.19% Weighted Average Debt Maturity (4) 2.1 years 2) No more than 26% of debt expires in any 1-year (S$ Million) To mitigate interest rate risk, over 80% of total debt hedged with interest rate swaps % of Debt Maturing 25.4% 25.4% 24.1% 25.1% 3) Standard & Poor s has on 31 July 2014, re-affirmed its long term corporate credit rating of BBB- with a stable outlook for Soilbuild REIT Notes: (1)Post-acquisition of 61 & 71 Tuas Bay Drive and 20 Kian Teck Lane (2) Based on aggregate leverage of 40% (3) Excluding debt arrangement fees relating to undrawn loans (4) As at 31 Dec

23 Growth Strategies

24 Three Pronged Growth Strategy Soilbuild REIT is well positioned for robust growth through organic rental growth and the acquisition and development of properties. 1 Stability and Growing Cashflows from Master Leases 2 Upside Potential from Multi-Tenanted Properties 3 Acquisition Opportunities 24

25 Growth Strategy 1 Cashflow from Master Leases Long-term Master Leases Lease Term from start of Master Lease Agreement NK Ingredients 15 Years Fixed Annual Rental Escalation of Master Leases Rental Revenue (S$ million) % 2.5% COS Printers Tellus Marine Speedy-Tech 10 Years 10 Years 10 Years BK Marine KTL Offshore Solaris 5 Years 7 Years 7 Years Solaris NK Ingredients COS Printers BK Marine Tellus Marine KTL Offshore Speedy-Tech Expected Stable and Growing Cash Flows from the Master Leases A Masters lease feature long term leases ranging from 5 to 15 years providing stability as well as growth from the annual or bi-annual rental step-ups B Minimal counterparty risk given 12-month rental deposits from the Master Lessees and blue chip sub-tenant base C Master Leases structured on a double and triple net lease basis, minimizing expenses to Soilbuild REIT D Minimal capital expenditure expected for FY2015 given that the Properties are relatively young and modern 25

26 Growth Strategy 2 Upside Potential from Multi-Tenanted Properties Rental rates for West Park BizCentral, Eightrium and Tuas Connection are below current market rents and are expected to revert positively as existing leases are renewed West Park BizCentral (Lease Expiry by NLA) Eightrium (Lease Expiry by NLA) Tuas Connection (Lease Expiry by NLA) Current Market Rent: S$1.60 psf per month $1.46 $1.58 $1.54 $1.35 Current Market Rent: S$ psf per month $4.13 $3.91 $3.81 $4.39 Current Market Rent: S$ psf per month $1.35 $1.44 $1.63 $ % 31% 35% 40% 40% 16% 13% 19% 21% 19% 21% >2018 6% > >2018 Lease Expiry by NLA Expiring Rents Lease Expiry by NLA Expiring Rents Lease Expiry by NLA Expiring Rents 26

27 Growth Strategy 3 Acquisition growth mechanisms on track (i) Acquisition of Tellus Marine, 39 Senoko Way Soilbuild REIT s maiden acquisition since IPO Four-storey industrial building with proposed single storey workshop to be constructed Accessible via SLE and BKE Master lease to Tellus Marine Engineering Pte. Ltd. (ii) Acquisition of 61 & 71 Tuas Bay Drive 2 nd acquisition located in the upcoming Tuas South area Two adjacent detached purpose-built factories with ancillary offices located along Tuas Bay Drive Master lease to KTL Offshore Pte. Ltd., a subsidiary of SGX listed, KTL Global Ltd. GFA Phase 1: 77,162 sq ft and Phase 2: 18,088 sq ft GFA 208,057 sq ft Land details Business 2, 30 years + 30 years from 16 February 1994 Land details Business 2, 60 years from 19 July 2006 Acquisition cost $18.3m (comprising consideration of $18.0m and acquisition-related costs) Acquisition cost $55.7m (comprising consideration of $55.0m and acquisition-related costs) Lease scheme 10 year triple-net lease Lease scheme 6.8 years double-net lease (1) (iii) Acquisition of Speedy-Tech, 20 Kian Teck Lane 3 rd acquisition of a light industrial building in Jurong industrial zone Part 3 / part 6-storey light industrial building Master lease to Speedy-Tech, a subsidiary of Integrated Micro-Electronics, Inc Accessible via AYE and PIE (iv) First ROFR property due for completion Potential acquisition opportunity in 2015 Nine-storey ramp-up light industrial building Close to Jurong and Woodlands industrial zones Close to PIE, BKE, KJE GFA 93,767 sq ft Location 566 Bukit Batok St 23, Singapore Land details Business 1, years from 1 May 2000 GFA 403,946 sq ft Acquisition cost $24.3m (comprising consideration of $22.4m, S$1.6m land premium and acquisition-related costs) Land details Business 1, 30 years from 29 August 2012 Expected TOP 1Q 2015 Lease scheme 10 year triple-net lease Expected lease scheme Multi-tenanted 27 Note: (1) Novation Agreement to be entered into between the Trustee, Vendor and the existing tenant, KTL Offshore Pte. Ltd., to transfer the existing lease from the Vendor to the Trustee. Double-net lease with land premium fully paid up for the balance of the land lease tenure

28 Sponsor / Fee Structure

29 Sponsor has Integrated Real Estate Platform A Singapore integrated property group with a long track record in end-to-end construction and development expertise Leading Integrated Property Group with ~40 Years of Experience Graded A1 by BCA which allows tender for public sector projects without any value limitations Strong expertise in design, build and lease/sell through years of close collaboration with JTC Corporation under the Developer Partnership Programme Committed to support Soilbuild REIT over the long term with Sponsor stake of more than 26% B Construction Development Lease Management Asset / Property Management Fund Management Only Industrial REIT Sponsor with End-to-End Integrated Capabilities End-to-End Construction BCA Construction Grade of A1 Multi-Discipline Team Public & Private Sector Range of Asset Classes Balance Sheet Focus on End Users Innovative Designs Quality Location Tenant Retention Relationship with Brokers Dedicated Team Asset Enhancements Income Optimisation Established Relationships with Govt. Agencies Capital Management Relationship with Vendors Experienced Management Team Integrated Real Estate Platform Operations cover full spectrum of value chain 29

30 Strong Alignment with Unitholders A Calculated on Distributable Income and not AUM 10.0% of Annual Distributable Income Base Fee First industrial REIT to adopt such a Unitholder-aligned fee structure Strongest alignment of interest with Unitholders as it ensures focus on distributions rather than on asset size Management will be conscious of all expenses affecting distributable income on the P&L (e.g. cost of funding) B Requires growth in DPU Performance Fee 25.0% of the difference in DPU in a financial year with the DPU in the preceding financial year multiplied by the weighted average number of Units in issue for such financial year Compares favourably to other S-REIT performance fees which are based on a percentage of revenue or net property income Management aligned with Unitholders to deliver sustainable and quality DPU growth 30

31 Conclusion

32 Conclusion 1 Strong operational performance from business parks exposure, favourable locations, stable master leases and upside from multi-tenanted leases 2 Robust financial performance and prudent capital management 3 Future growth from ROFR and third party acquisitions 32

33 Thank You Key Contacts: Shane Hagan Chief Executive Officer Tel: (65) Roy Teo Chief Operating Officer Tel: (65)