ASCOTT RESIDENCE TRUST Sep 2006

Transcription

1 ASCOTT RESIDENCE TRUST Sep Sept 2006

2 Disclaimer IMPORTANT NOTICE The value of units in ART and the income derived from them may fall as well as rise. Units in ART are not obligations of, deposits in, or guaranteed by the Manager or any of its affiliates. An investment in the units in ART is subject to investment risks, include the possible loss of the principal amount invested. The past performance of ART is not necessarily indicative of its future performance. 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, 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. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of the Manager on future events. Investors have no right to request the Manager to redeem their units in ART while the units in ART are listed. It is intended that unitholders may only deal in their units in ART through trading on the SGX-ST. Listing of the units in ART on the SGX-ST does not guarantee a liquid market for the units in ART

3 Introduction Financial Highlights Proposed Acquisitions & Asset Enhancement Programmes Management Strategies Conclusion

4 ART s Pan-Asian Portfolio Singapore Somerset Liang Court Property Grand Somerset Cairnhill S$952 million portfolio value 14 properties 2,304 apartment units Japan Somerset Roppongi Tokyo* China The Ascott Somerset Grand Beijing Fortune Garden Property Singapore China Vietnam Indonesia Japan Philippines The Philippines Somerset Somerset Millenium Salcedo Property Somerset Xu Hui Somerset Olympic Tower Property* The Ascott Jakarta Indonesia Somerset Grand Citra Country Woods Vietnam Somerset Somerset Grand Hanoi Ho Chi Minh City * Proposed acquisitions

5 Serviced residences an attractive asset class Lease structure & terms Seasonality Range of services Cost structure Apartments for rent Long-term leases Dependent on general property sector conditions No service provided Minimal staff cost and low maintenance costs Serviced residences Hybrid between hotels and apartments/condominiums Variable lease terms from one week to one year or longer Some seasonality of hospitality industry, though longer lease terms provide certain level of rental support Limited services provided Role and involvement of property manager less intensive compared to hotels Less intensive staffing requirements as only limited services are provided Lower maintenance costs as average length of stay is longer Hotels Short-term accommodation Seasonal nature of hotel industry Highly correlated with the tourism industry Full range of hospitality service Role and involvement of property manager most intensive More intensive staffing requirements due to need to cater complete range of services High maintenance due to significant wear and tear

6 Structure of ART Manager (Ascott Residence Trust Management Limited) Holding of units Management services Management fees Net profit Ownership of assets Unitholders ART Distributions Acts on behalf of Unitholders Trustee s fees Dividends Ownership of shares Trustee (for Unitholders) Singapore properties Overseas properties Each of the overseas properties are held indirectly through property holding companies Serviced residence management services Serviced residence management fees Serviced residence management services Serviced residence management fees Serviced residence management companies

7 Financial Highlights

8 1H2006 Performance Better Than Forecast % Forecast Actual (unaudited) Distribution ($million) DPU (cents) Annualised DPU (cents) Net Distributable Income and DPU For 1H 2006 Exceeded Forecast by 11% * Excludes recent proposed acquisitions of Somerset Olympic Tower Property and Somerset Roppongi Tokyo

9 Statement of Total Return For the period 31 March June 2006 Public Trust S$m Actual Forecast Growth % Revenue % Gross Profit % Total Return * % Unitholders' Distribution % * Comprised: Profit From Operations % Foreign Exchange Gain/ (Loss) (2.5) 0.0 nm - (mainly due to unrealised exchange loss) Profit From Operations Exceeded Forecast by S$1.2 million Distributable Income Exceeded Forecast by S$0.8 million

10 Distribution Statement For the period 31 March June 2006 S$m Actual Forecast % Total return for the period attributable to unitholders % Net effect of non-tax deductible / chargeable items and other adjustments* % Total Unitholders distribution % *Items include trustee s fees, depreciation (net of MI), unrealised exchange loss and manager s management fees paid in units

11 Double Digit RevPAU Growth in Singapore and the Philippines S$/ day % Expiry of leases of some key accounts - Lower demand for larger apartments % % % % Singapore China Vietnam Indonesia Philippines Overall Q Q * Excludes recent proposed acquisitions of Somerset Olympic Tower Property and Somerset Roppongi Tokyo

12 Growth in Projected DPU DPU growth (annualised) Commitment to pay out 100% of ART s taxable income and net overseas income for FY2006 and FY2007 and at least 90% thereafter Semi-annual distributions, calculated as at 30 June and 31 December each year 2006F (As stated in the Prospectus) 2006F (Following 1H2006 Results) 2007P

13 Proposed Acquisitions & Asset Enhancement Programmes

14 Yield-Accretive Acquisitions 2 yield-accretive acquisitions announced since listing on 31 March 2006: Somerset Olympic Tower Property in Tianjin, China Somerset Roppongi, Tokyo in Japan To be funded by equity and assumption of bank debt Post-acquisition gearing of 30.1% Somerset Olympic Tower Property 11% increase in portfolio value to S$952 million and 11% increase in number of apartment units to 2,304 Diversification of portfolio to 6 countries, 9 cities Somerset Roppongi Tokyo

15 Somerset Olympic Tower Property, Tianjin Acquisition Details Conditional S&P agreement for 100% of the serviced residence portion of Somerset Olympic Tower in Tianjin at enterprise value of US$47.3 million (S$75.6 million) signed on 24 July 2006 The agreement also includes a master lease for the commercial portion which houses a retail podium and clubhouse Total Gross Floor Area (GFA) of approximately 41,325 sqm Serviced residence portion with GFA of 32,946 sqm (lease ends 2062) Commercial podium with a GFA of 8,379 sqm (lease ends 2039) Somerset Olympic Tower Property Number of Units 172 units Investment S$75.6 million Occupancy About 90%

16 Somerset Olympic Tower Property, Tianjin Acquisition Highlights Yield-accretive Annualised property yield 1 of 7% accretive compared to the annualised portfolio s property yield 2 of 4.7% Potential for asset enhancement Portfolio geographical diversification Diversifies portfolio in China to 3 cities Attractive location in one of China s fastest growing and high FDI cities 3 Highly accessible established airport, seaport, railway & road network Location of established international companies, e.g. Airbus assembly plant, Otis manufacturing base, Motorola, Toyota and Samsung factories, etc. Somerset Olympic Tower Property 1 For the forecast year Based on initial portfolio of 12 properties for the forecast year Source: DTZ Research Tianjin Property Times 4Q

17 Somerset Roppongi, Tokyo Acquisition Details Conditional S&P agreement for effective stake of 40% in Somerset Roppongi Tokyo in Japan at a proportionate (40%) enterprise value of 1.48 billion (approximately S$20.7 million) signed on 4 September storey freehold property with one basement level located in the heart of Minato-Ku in Tokyo s Central Business District and a 5- minute walk from the Roppongi subway station/ Roppongi Crossing GFA of approximately 4,868 sqm Number of Units Investment Somerset Roppongi Tokyo 64 units S$20.7 million (40% share) Occupancy About 85%

18 Somerset Roppongi, Tokyo Acquisition Highlights Yield-accretive Annualised property yield 1 of 5% accretive compared to the annualised portfolio s property yield 2 of 4.7% Somerset Roppongi Tokyo Portfolio geographical diversification First and only S-REIT to invest in Japan Increase geographical diversity by providing exposure to a new country in ART s portfolio Tap into Tokyo s strong demand for serviced residences and expatriate housing Leverage on strategic relationship with The Ascott Group Established pipeline of assets with ART having right of first refusal Tap on Ascott s expertise and experience to acquire serviced residence assets 1 For the forecast year Based on initial portfolio of 12 properties for the forecast year

19 Asset enhancements for better yield The Ascott Beijing (China) Work to reconfigure layout of some of the larger units into smaller onebedroom units will start in Q Tap on the higher yielding short and medium term business segments Somerset Xu Hui, Shanghai (China) Clubhouse layout reconfigured 15,000 sqf NLA of commercial space The Ascott Beijing Somerset Xu Hui

20 Diversification across geography and economic cycles Property Values Singapore 30% ART s Share of Gross Profit For the Forecast Year 2006 Singapore 21% Vietnam 13% Philippines 3% Japan 2% Indonesia 10% China 42% Total Property Value = S$952.1m 1 Vietnam 19% China 41% Philippines 3% Japan 1% Indonesia 15% Total Gross profit = S$48.6m 2 Diversification enhances earnings stability Low reliance of ART s earnings on any single market Reduced portfolio volatility Strong growth potential in key Asian cities ¹ Based on ART s share of interest in the Properties. 2 Based on the assumptions set out in the Prospectus and ART s proportionate share of the gross profit of the Properties for the Forecast Year Assumes the proposed acquisitions of the Somerset Olympic Tower Property and Somerset Roppongi Tokyo took place on 1 January

21 Geographic Diversification of Gross Profit - And further diversification of China portfolio Pre-Acquisitions Singapore 24% Vietnam 22% Philippines 3.5% Post-Acquisitions* Singapore 21% Vietnam 19% Philippines 3% Japan 1% China 34% Indonesia 16.5% China 41% Indonesia 15% Shanghai 11% Shanghai 15% Tianjin 26% Beijing 85% Beijing 63% * Assuming the proposed acquisitions took place on 1 January

22 Extended length of stay profile and diversity in market segment Apartment rental income by length of stay 1 Apartment rental income by market segment 1 6 to 12 months 18% > 12 months 38% Project 19% Family/ Leisure 3% Others 4% Relocation 44% 1 to 6 months 21% <1 month 23% Business Trip 30% Stability in earnings ¹ For the 6 months ended 30 June Assuming the proposed acquisitions took place on 01 Jan

23 Diverse tenant mix and quality clientele Apartment rental income by industry 1 Healthcare 1% Real estate/ lodging 1% Legal 1% Capital Goods/ Unlisted 2% Others 39% Industrial 3% Consumers 4% Media & Telecom 5% Government/ NGOs 5% Energy & Utilities 6% Manufacturing 14% IT 9% Financial Institutions 10% Earnings not reliant on a single industry or tenant ¹ For the 6 months ended 30 June Assuming the proposed acquisitions took place on 01 Jan

24 Management Strategies

25 Management Strategies Growth By Acquisition Active Asset Management Capital and Risk Management Deliver Stable and Growing Distributions

26 Growth By Acquisition Key Acquisition Strategies Focus on acquisitions in the Pan-Asian region Acquisition of Ascott s remaining Pan-Asian portfolio Acquisition by leveraging on strategic relationship with the CapitaLand Group

27 Focus on acquisitions in the Pan-Asian region Growth by Acquisition Singapore Thailand India Malaysia Indonesia Countries with existing ART-owned properties Countries with investment opportunities China Korea Japan Vietnam Philippines Australia New Zealand Explore attractive investment opportunities in the Pan-Asian region Focus on locations where Ascott has an established presence Tap growth of Asia economies Leverage on the increasing popularity of serviced residences as an alternative accommodation concept Increasing trend in business travel into Asia Increasing preference of corporate executives for home-styled accommodation for extended stays

28 Potential acquisitions of assets owned or managed by Sponsor Growth by Acquisition Ascott-managed and/or leased portfolio Ascott-owned portfolio¹ Incubator Pipeline of developments Right of first refusal ¹ Companies either wholly owned, majority or minority stake

29 Ascott s Recent Investments and Management Contracts Management contracts Feb 2005 Somerset Berlian Mar 2005 Somerset Park Suanplu Oct 2005 Somerset Grand Sukhumvit Somerset Jadaf Dec 2005 Somerset Nusasiri Pattaya Citadines Emerald City Apr 2006 Citadines Xi an Central Agreement with Addax to manage 15 MENA properties 2005 Equity Investment Of Of More Than S$550 million 2006 Jan 2005 The Ascott Guangzhou Dec 2005 Citadines Bangkok Sukhumvit 16 Jan 2006 Citadines Bangkok Sukhumvit 23 Apr 2006 Citadines Suzhou Xinghai Citadines Suzhou Lejia Citadines Hong Kong Tsimshatsui Ashley May 2006 Citadines Bangkok Sukhumvit 11 Citadines Bangkok Sukhumvit 8 Jul 2006 Ascott Raffles Place Hotel Asia, S pore Aug 2006 Somerset Zhong Guan Cun, Beijing Somerset Youyi, Tianjin Master development agreement with Rattha Holdings for seven properties in South India First property Somerset Greenways, Chennai 2005 Divestment Proceeds Of Of S$650 million 2006 Mar 2006 Sale of 12 properties to Ascott Residence Trust May 2006 Liang Court Shopping Centre Aug 2006 The Ascott Mayfair

30 Assets owned* by Ascott within the Pan-Asian Region (1/2) Growth by Acquisition Properties in operation Singapore Somerset Orchard (Singapore) China The Ascott Pudong (Shanghai) Malaysia The Ascott Kuala Lumpur Somerset Seri Bukit Ceylon (Kuala Lumpur) Thailand The Ascott Sathorn (Bangkok) Vietnam Somerset West Lake (Hanoi) Somerset Chancellor Court (Ho Chi Minh City) * Companies either wholly owned, majority or minority stake

31 Assets owned* by Ascott within the Pan-Asian Region (2/2) Growth by Acquisition Properties under development Singapore Ascott Raffles Place Hotel Asia Thailand Citadines Bangkok Sukhumvit 16 Citadines Bangkok Sukhumvit 11 Citadines Bangkok Sukhumvit 23 Citadines Bangkok Sukhumvit 8 China The Ascott Guangzhou Somerset Zhong Guan Cun (Beijing) Somerset Youyi (Tianjin) Citadines Hongkong Tsimshatsui Ashley Citadines Suzhou Xinghai Citadines Suzhou Lejia India Somerset Greenways, Chennai Ascott owns* about 3,100 apartment units in 12 cities * Companies either wholly owned, majority or minority stake

32 Pan-Asian assets managed and/ or leased by Ascott* About 6,000 units in 20 cities Growth by Acquisition China 1,333 units Singapore 470 units Beijing Shanghai Singapore Dalian Guangzhou Suzhou Xi an South Korea 432 units Indonesia Jakarta Japan Tokyo Malaysia Kuala Lumpur Philippines Manila Surabaya Kuching 601 units 272 units 124 units 134 units Seoul Thailand 1,767 units Bangkok Pattaya Australia & New Zealand 770 units Sydney Melbourne Hobart Auckland * As at 4 September Excludes ART portfolio, owned assets in Pan-Asian region and assets in Europe and the Gulf region

33 Acquisitions by leveraging on strategic relationship with the CapitaLand Group Growth by Acquisition May tap into CapitaLand s real estate expertise, experience and knowledge to source for potential acquisitions for ART E.g. Ascott acquired a serviced residence development in Guangzhou in the prime Tianhe East Road from CapitaLand Group in January 2005 The Ascott Guangzhou, China

34 Asset Management Strategies Active Asset Management Responsive yield management to maximise RevPAU Leverage on the branding and marketing expertise of serviced residence management company to attract quality clientele Ensure effective cost management by improving operating efficiencies and economies of scale Implement asset enhancement plans to enhance property yields and maintain quality of portfolio

35 Capital and Risk Management Maintain strong balance sheet and optimise gearing Gearing of 30.1% after the acquisitions in Tianjin and Tokyo Adopt proactive interest rate management strategy ART gearing profile Debt S$300.3mm (30.1%) Equity & Other Liabilities S$695.8mm (69.9%) ART s proportionate share of asset value S$996.1mm Bank Loans Floating S$43.9 mm # Fixed/5-years S$256.4 mm * Notes: * 100% of ART s borrowings (amounting to S$220.3 million) and 45% of its subsidiaries borrowings (amounting to S$36.1 million ART s share) # 55% of subsidiaries borrowings (amounting to S$43.9 million ART s share) are on a floating basis

36 Managing foreign exchange exposure Capital & Risk Management Capital values Adopt natural hedge strategy, as far as possible Borrowing in the same currency as underlying asset Cashflows Manage volatility of foreign currency cash flow from overseas assets, examples: In China, majority of revenue and operating expenses are in RMB For Indonesia, Philippines & Vietnam, majority of revenue in US$ while operating expenses are in local currencies In Japan, majority of revenue and operating expenses are in Yen Monitor foreign exchange risks associated with remitting RMB, US$ and Yen to Singapore for distribution, to the extent feasible, hedge these currency risks

37 Conclusion

38 Conclusion Key attractions of ART Exposure to growing serviced residence industry in the fastest growing region Asia Quality Portfolio Well located and quality assets in key gateway cities Stable and Growing Distributions Strong Sponsorship from The Ascott Group