Cambridge Industrial Trust Presentation on 3Q2007 Results. 30 Oct 2007

Transcription

1 Cambridge Industrial Trust Presentation on 3Q2007 Results 30 Oct 2007

2 References in this presentation Unless otherwise stated, all capitalised terms used shall have the same meaning as in the prospectus of CIT ( Prospectus ) dated 14 Jul This presentation should be read in conjunction with CIT s 2007 Third Quarter Financial Statement Announcement made on SGXNET. Actual refers to the results for the quarter ended 30 September 2007, unless otherwise specified. CIT was constituted on 31 Mar 2006 and was dormant between 31 Mar 2006 to 24 Jul Forecast means pro-rated forecast figures derived from the Projection Year 2007 (from 1 Jan 2007 to 31 Dec 2007) based on exercising the Over-allotment Units in full as disclosed in the Prospectus, for the quarter ended 30 September 2007, unless otherwise specified. Forecast annualised figures are as stated in the Prospectus. 2

3 3Q2007 Results Presentation Outline Key Highlights 3Q2007 Financial Results Capital Management Acquisition Highlights Portfolio Strengths Pipeline and Outlook 3

4 Key Highlights

5 3Q2007 Financial Highlights Net property income higher than Forecast (1) by 29.3% Distributable income higher than Forecast (1) by 29.3% Distribution per unit (DPU) of cents vs cents for 2Q2007, an increase of 9.0% quarter on quarter. Annualised DPU of cents higher than Forecast of cents (2) by 31.7% (1) Forecast means prorated forecast figures derived from the Projection Year 2007 (from 1 Jan to 31 Dec 2007) based on exercising the Over-allotment Units in full as disclosed in the Prospectus, for the quarter ended 30 Sep (2) As stated in Prospectus for Projection Year 2007 based on 530,325,500 units (inclusive of 29 million over-allotment units). 5

6 Key Highlights Raised gross proceeds of approximately S$193.9 m in Oct 2007, including a Rule 144A placement to US investors. Portfolio of 33 properties valued at approximately S$672.2 m as at 30 Sep 2007 and 36 properties valued at approximately S$732.5 m as at 30 Oct % occupancy. Weighted average remaining lease of 6.8 years as at 30 Sep 2007, with fixed rental escalations. Completion of acquisition of 4 properties valued at approximately S$130.2 m expected by mid-nov Signed MOUs valued at approximately S$94.0 m as at 30 Oct

7 3 rd Quarter 2007 Financial Results

8 Financial Results 3Q2007 2Q2007 Actual Actual Forecast (1) Change % Gross Revenue S$12.5 m S$13.5 m S$10.8 m +24.9% Net Property Income (NPI) S$11.0 m S$11.6 m S$8.9 m +29.3% Net Income S$7.4 m S$7.6 m S$6.0 m +26.8% Distributable Income S$8.0 m S$8.8 m S$6.8 m +29.3% Distribution Per Unit (DPU) cents cents (2) Actual Actual Forecast Change % Annualised DPU cents cents (3) cents (4) +31.7% Annualised Distribution Yield: 1 Jul to 30 Sep 2007 (3Q2007) IPO price (S$0.68) 9.20% 9.92% 7.53% (4) Current price (S$0.83) (5) 7.54% 8.13% 6.17% (1) Forecast means prorated forecast figures derived from the Projection Year 2007 (from 1 Jan to 31 Dec 2007) based on exercising the Over-allotment Units in full as disclosed in the Prospectus, for the period ended 30 Sep (2) The Actual DPU of cents is based on 515,305,653 applicable units (inclusive of 14,386,000 over-allotment units). (3) Based on annualisation of the Actual DPU of 1.700cents for 3Q2007. (4) As stated in Prospectus for Projection Year 2007 based on 530,325,500 units (inclusive of 29 million over-allotment units). (5) Computed based on closing price of S$0.83 as at 28 Sep

9 Net Income 3Q2007 (1) higher than Forecast by 24.2% S$'000 Actual Forecast Variance % Gross Revenue 13,487 10, % Property expenses (1,936) (1,867) +3.7% Net Property Income (NPI) 11,551 8, % Borrowing costs (2,747) (2,143) +28.2% Other non-property expenses (1) (1,355) (791) +71.3% Net income (1) 7,449 5, % (1) Actual figures exclude the fair value adjustment on financial derivative amounting to S$155,000 for the quarter ended 30 Sep 2007 whereas the Forecast figures assumed nil. This fair value adjustment arose from the 12-month interest rate swap entered into on 25 Jul 2006 to provide fixed rate funding for S$183.0 million at an interest rate of 3.835% p.a. and in accordance with FRS 39, this fair value adjustment is recognized in the Statement of Total Return. This interest rate swap matured in July

10 DPU higher than Forecast By 31.7% Attributable mainly to: 1. Higher rental revenue with contribution from acquisitions and asset enhancement. S$ m % 4.8% 29.3% 31.7% Annualised DPU (cents) Lesser number of applicable units as at 30 Sep 2007 (Actual 515,305,653 vs Forecast 530,325,000) % 29.3% Partially offset by: 3. Higher borrowing costs on increased loan amount. (Loan of S$330.0 m at effective interest rate of 3.8% p.a. vs forecasted loan of S$183.3 m at 4.7% p.a.) Gross Revenue Net Property Income Net Income Distributable Income Annualised DPU (cents) Forecast Actual 10

11 Financial Results YTD 3Q Jan to 30 Sept 2007 (YTD 3Q2007) Actual Forecast (1) Change % Gross Revenue S$ 37.0m S$32.4 m +14.1% Net Property Income (NPI) S$ 31.9m S$26.8 m +19.0% Net Income S$ 21.3m S$18.0 m +18.2% Distributable Income S$24.2 m S$20.3 m +18.9% Distribution Per Unit (DPU) cents (2) Actual Forecast Change % Annualised Distribution Per Unit cents (3) cents (4) +22.6% Annualised Distribution Yield: IPO price (S$0.68) 9.23% 7.53% (4) (1) Forecast means prorated forecast figures derived from the Projection Year 2007 (from 1 Jan to 31 Dec 2007) based on exercising the Over-allotment Units in full as disclosed in the Prospectus, for the period ended 30 Sept (2) The Actual DPU of cents for YTD 3Q2007 is based on 1H2007 DPU of cents already paid plus 3Q2007 DPU of cents calculated based on 515,305,653 applicable units (inclusive of 14,386,000 over-allotment units). (3) Based on annualisation of the Actual DPU of cents for YTD 3Q2007. (4) As stated in Prospectus for Projection Year 2007 based on 530,325,500 units (inclusive of 29 million over-allotment units). (5) Computed based on closing price of S$0.83 as at 28 Sep

12 Revenue Growth Drivers Value of Properties S$ 515m S$ 531m S$ 622m S$ 662m S$ 672m No. of Properties S$m Top line driven by: 1. Full-quarter impact of 5 properties acquired in 1H Acquisition of 31 Changi South Avenue 2 in Jul Increased rent on YCH DistriPark after asset enhancement in Aug Q2006 4Q2006 1Q2007 2Q2007 3Q2007 Gross Revenue Net Propert y Income 12

13 Continuing To Deliver Growth To Unitholders Distributable Income (S$m) DPU (cents) Bottom line driven by: 1. Yield-accretive acquisitions 2. Lower effective interest rate Asset enhancement at YCH Distripark Q2006 1Q2007 2Q2007 3Q Distributable Income (LHS) DPU (RHS) 13

14 Balance Sheet S$' Sep Dec 2006 Investment Properties 672, ,000 Current Assets 7,987 12,926 Total Assets 680, ,926 Borrowings (329,363) (192,850) Other Current Liabilities (4,476) (5,722) Total Liabilities (333,839) (198,572) Net Assets Attributable to Unitholders 346, ,354 Applicable number of Units ('000) 515, ,153 NAV Per Unit S$0.67 S$

15 Capital Management

16 Milestone Equity Fund Raising Completed Equity Fund Raising completed on 18 Oct 2007 : S$193.9 m raised from 51 institutions (1) Rule 144A placement to US investors, the first for a Singapore REIT CIT s investor base broadened in Europe, Asia, USA and Australia Substantial placement : 54% of market capitalisation Placement 1.6x subscribed despite difficult market conditions Geographic split of equity placement (1) Middle East 9% Australia 10% Other Asia 7% Singapore 17% EU 5% USA 27% Hong Kong 25% (1) Source : CLSA 16

17 Capital Management Total term loan and overdraft facilities Gross debt 30 Sep 2007 S$400.0 m S$330.0 m Gearing ratio 48.4% Weighted average effective interest rate 3.8% p.a. Interest cover 3.9 times VFN Facility term to expiry (1) 15 months (1) Variable Funding Note ( VFN ) Facility expires in Feb 2009, with an option to renew for another 2 years, subject to re-pricing. 17

18 Capital Management Strategy Going Forward SGD interest rates Immediate future acquisitions will be debt-financed 3.6% 3.4% Plan to refinance with long term, fixed rate funding : Examining CMBS or other more costeffective structures Will make a decision when ABCP market has found a price level and risk appetite % per annum 3.2% 3.0% 2.8% 2.6% 2.4% Additional short-term funding being sought commensurate with acquisition pipeline 2.2% 2.0% Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 5 year swap (1) 1 month interbank (2) (1)Source : Bloomberg Screen SDSW5 (2)Source : MAS Website 18

19 Capital Structure De-gearing from Equity Fund Raising provides room for further growth Gearing Ratio and Additional Acquisition Capacity S$ million 1, % (2) Gearing Ratio % 50.0% % (1) 38.1% (3) 40.0% % S$479.7 (4) 20.0% (4) % S$0.0 S$ properties 33 properties 40 properties 0.0% Additional debt capacity Gearing Ratio (1) As at 31 Dec 2006 (2) As at 30 Sep 2007 (3) Forecasted as of 31 Oct 2007, assuming completion of the acquisitions of the remaining New Property and the Target Properties, and the assumptions stated in Appendix B of the Unitholders Circular dated 6 Sep (4) Based on acquiring additional properties at the maximum statutory gearing ratio for Singapore REITs of 60%. 19

20 Yield Comparison 8.00% 7.56% 7.00% 6.00% 5.00% 4.00% 486bps 346bps 4.10% 3.00% 2.50% 2.70% 3.23% 2.00% 1.00% 0.29% 0.85% 0.00% Banks Saving Deposits (1) Bank fixed deposit (2) CPF Ordinary Account (3) (1) Bank savings deposits as at end of Sep Source: MAS website (2) Bank FD rate (12 months) as at end of Sep Source: MAS website (3) Interest paid on Central Provident Fund ordinary account from Jul - Sep Source: CPF website (4) Singapore Government Securities 9-year bond yield as at end of Sep Source: SGS website 10 year STI Index government bond dividend yield (5) (4) S-Reit Yield (6) (5) Based on Bloomberg data as at 2 Oct CIT's Annualised yield (7) (6) Weighted average 2007 forecast yield by market capitalization. Source: Merrill Lynch s Singapore REITs Week in Review report as at 22 Oct 2007 (7) Based on CIT s closing price of S$0.83 per unit as at 28 Sep 2007 and annualised YTD DPU of cents 20

21 Distribution Timetable Period 1 Jul 2007 to 17 Oct 2007 DPU (1) cents Last day of trading on "cum" basis 12 Oct 2007 Ex-date 15 Oct 2007 Books closure date 17 Oct 2007, 5:00pm Distribution payment date 7 Nov 2007 (1) Distribution per unit comprises cents per unit from 1 Jul 2007 to 30 Sep 2007 and cents per unit from 1 Oct 2007 to 17 Oct

22 Acquisition Highlights

23 Acquisition Highlights Property Tenant Trade Sector Appraised value Status (S$ m) Completed 5 Properties in 1H Completed Properties Completed in 3Q Changi South Ave 2 Industrial and Warehouse 5.85 Completed Properties Completed since 3Q Bukit Batok Street 22 (2) Light Industrial Completed 120 Pioneer Road (2) Industrial and Warehouse Completed 23 Woodlands Terrace (2) Industrial and Warehouse Completed Total (including 31 Changi South Ave 2) Properties to be Completed by Mid-Nov Defu Lane (1) Light Industrial 5.12 In Progress 48 Toh Guan East (2) Light Industrial In Progress 1 Tuas Ave 3 (2) Logistics and Warehouse In Progress 7 Ubi Close (2) Car Showroom and Workshops In Progress Total MOUs Signed as at 30 Oct Subject to due diligence (1) New Property to be financed by debt (2) Target Properties financed / to be financed by funds from EFR 23

24 Strategically Located New Acquisitions Existing Properties New Properties 24

25 Properties Completed From 3Q Changi South Avenue 2 Trade Sector: Industrial and Warehouse Purchase Price: S$5.80 m First Year Rent: S$0.42 m 120 Pioneer Road Trade Sector: Industrial and Warehouse Purchase Price: S$26.50 m First Year Rent: S$1.94 m 9 Bukit Batok Street 22 Trade Sector: Light Industrial Purchase Price: S$18.30 m First Year Rent: S$1.78 m 23 Woodlands Terrace Trade Sector: Industrial and Warehouse Purchase Price: S$15.41 m First Year Rent: S$1.13 m Total Appraised Value of Properties Completed from 3Q2007 = S$66.16 m 25

26 Properties to be Completed by Mid-Nov 2007 Natural Cool Building Trade Sector: Light Industrial Purchase Price: S$5.00 m First Year Rent: S$0.37 m Enterprise Hub (120 out of 602 Strata units) Trade Sector: Light Industrial Purchase Price: S$71.00 m First Year Rent: S$5.09 m 1 Tuas Avenue 3 Trade Sector: Logistics and Warehouse Purchase Price: S$32.5 m Full Rental/ Annum: S$2.58 m 7 Ubi Close Trade Sector: Four-storey Car Showroom and Workshop Purchase Price: S$20.5 m First Year Rent: S$2.35 m Total Appraised Value of Properties To Be Completed by Mid-Nov 2007 = S$ m 26

27 Continued Strong Portfolio Growth Value and Number of Properties Lettable Area (sq m) 40 S$862.7m 33 S$672.2m 27 properties (1) 27 Existing S$531.0m 33 properties (2) Projected 40 properties (3) Existing 33 properties (2) 27 properties (1) 426, , ,303.0 (1) As at 31 Dec 2006 (2) As at 30 Sep 2007 (3) Aassuming completion of the acquisitions of the remaining New Property and the Target Properties, and the assumptions stated in Appendix B of the Unitholders Circular dated 6 Sep Projected 40 properties (3) 27

28 Enhanced Lease Expiry Profile 27 Properties Projected 40 Properties % of Forecast Gross Revenue (1) Weighted Average Remaining Lease 50% Term: 45% 40% 35% 30% 25% 45.8% 25.5% 22.4% 6.6 years % of Forecast Gross Revenue (2) Weighted Average Remaining Lease 50% Term: 45% 40% 35% 30% 25% 28.9% 43.1% 6.9 years 20% 15% 20% 15% 14.2% 10% 10% 5% 2.8% 3.5% 5% 1.7% 2.2%2.0% 3.0% 2.9% 2.0% 0% % (1) Based on the forecast gross revenue for the month of Oct 2007 calculated from 1 Oct 2007 and the initial portfolio of 27 properties. (2) Based on the forecast gross revenue for the month of Oct 2007 calculated from 1 Oct 2007 assuming completion of the remaining New Property and the Target Properties on 1 October 2007, and the assumptions stated in Appendix B of the Unitholders Circular dated 6 Sep

29 Portfolio Strengths

30 Leases Provide Fixed And Stable Rental Growth (for projected 40 properties) 5, 7 & 8 Year Leases 10 & 15 Year Leases 20% Base rate 8 - year leases 7 - year leases 5 - year leases 5% 5% 5% 30% Base rate 15 - year leases 10 - year leases 7% 7% 7% 7% 0% Year 0% Year 30

31 High Security Deposit And Full Occupancy for Cashflow Stability % 16.5 Percentage 100% 98% 96% 94% 92% 90% 88% 86% 84% Market 91.3% CIT 100.0% 82% Pre-acquisition - 27 Properties Security Deposit Level (months) Post-acquisition - 40 properties Security Deposit Level (months) Total Industrial CIT's Occupancy Rate Market's Occupancy Rate (1) Source: URA (as at 3Q2007) 31

32 Diversified Tenant Mix Tenant Contribution by Trade Sectors (1) 27 properties 3.0% 4.5% 7.3% 13.5% 51.8% Projected 40 properties 5.3% 2.8% 11.8% 8.5% 35.7% 19.9% 35.9% Logistics & Warehousing Light Industrial Industrial Industrial & Warehouse Self Storage Car Showroom Diversified trade sectors reduce financial susceptibility to economic downturns in the industries of its tenants (1) In terms of CIT s forecast gross revenue for the month of Oct

33 Diversified Portfolio Of Quality Tenants Top Ten Tenants % of Forecast Gross Rent, Oct projected 40 properties (1) 0% 2% 4% 6% 8% 10% 12% 14% 16% CWT 14.0% YCH 9.7% Soon Lee Lam Soon 7.4% 7.3% Brilliant Exklusiv Jurong Districentre ODC 5.5% 5.3% 5.1% 4.7% Compact Metal StorHub 2.8% 2.8% (1) Based on the forecast gross revenue for the month of Oct 2007 assuming completion of the remaining New Property and the Target Properties on 1 October 2007, and the assumptions stated in Appendix B of the Unitholders Circular dated 6 Sep (2) Jurong Districentre Pte Ltd, a 70%-owned subsidiary of CWT Limited 33

34 Pipeline and Outlook

35 Acquisition Growth Potential In Singapore Retail, 7.5% Office, 15.1% Total Industrial Stock in Singapore as of March 2007: m sq ft Additional 20 m sq ft to be built before 2010 (1) Owned by I- REITs, 8.5% Other Industrial Stock, 65.0% Inv. Grade Industrial, 26.5% Total Industrial Stock, 77.5% (1) Source : Colliers International Report commissioned by CIT for inclusion in the Offering Circular dated 27 September

36 Growth In Logistics And Industrial Sectors Annual Net Formation of Transport and Storage and Manufacturing Firms Industrial Production Index vs Net New Demand of Factory Space , Net New Demand / Supply ( 000 sq ft) 10,000 8,000 6,000 4,000 2, Industrial Production Index (2003 = 100) Transport and Storage Manufacturing Source: Singstat Timeseries Online, Singapore Department of Statistics Net New Demand Industrial Production Index Source: Economic Development Board / Urban Redevelopment Authority 36

37 Increasing Occupancy for Industrial Properties Occupancy Rates of Islandwide Factory Space Occupancy Rates of Islandwide Warehouse Space 98% 94% 96% 92% 94% 90% 92% 88% 90% 88% 86% 86% 84% 84% 82% 82% 80% (F) 2008(F) (F) 2008(F) Source: Real Estate Information System, URA/Colliers International Singapore Branch Source: Colliers International Singapore Research 37

38 Rising Rents And Values In Industrial Sector FACTORY SPACE Avg. Gross Rents and Capital Values,Prime Multi-User WAREHOUSE SPACE Avg. Gross Rents and Capital Values,Prime Multi-User (S$ psf/month) $3.50 (S$ psf) $350.0 (S$ psf/month) $2.50 (S$ psf) $700.0 $3.00 $300.0 $2.30 $2.10 $600.0 $2.50 $2.00 $250.0 $200.0 $150.0 $1.90 $1.70 $1.50 $1.30 $1.10 $500.0 $400.0 $300.0 $200.0 $1.50 $100.0 $0.90 $0.70 $100.0 $1.00 $50.0 $0.50 $ (F) 2008(F) (F) 2008(F) Gross Rent of Prime Factory Space (Upper Floor) Capital Value for Leasehold Prime Factory Space (Upper Floor) Source: Colliers International Singapore Research Gross Rent of Prime Warehouse Space (Upper Floor) Capital Value for Freehold Prime Warehouse Space (Upper Floor) Source: Colliers International Singapore Research 38

39 Accretive Acquisitions Set To Continue SGD 94.0million of MOUs signed as at 30 Oct 2007 According to Colliers International, approximately 96 million square feet of investment grade industrial property is available for acquisition in Singapore CWT pipeline adds value with acquisition of 1 Tuas Avenue 3 Examining offshore acquisitions China & Malaysia By leveraging off existing tenant & Mitsui relationships Possible within 12 months Freedom to execute options after completion of EFR Approximately SGD 480 million of debt-funded acquisition capacity before further equity needs to be raised 39

40 Key Value Propositions Diversified Portfolio of Industrial & Warehouse Properties Strong Partnerships and Experienced Management Team Accretive Growth Since IPO Attractive Yield and Future Financing Flexibility 40

41 Important Notice The information contained in this presentation is for information purposes only and does not constitute an offer to sell or any solicitation of an offer or invitation to purchase or subscribe for units in Cambridge Industrial Trust ( CIT, and units in CIT, Units ) in Singapore or any other jurisdiction, nor should it or any part of it form the basis of, or be relied upon in any connection with, any contract or commitment whatsoever. The past performance of the Units and Cambridge Industrial Trust Management Limited (the Manager ) is not indicative of the future performance of CIT and the Manager. Predictions, projections or forecasts of the economy or economic trends of the markets which are targeted by CIT are not necessarily indicative of the future or likely performance of CIT. The value of units in CMT ( Units ) and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager or RBC Dexia Trust Services Singapore Limited (in its capacity as trustee of CIT), or any of their respective affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Investors have no right to request that the Manager redeem or purchase their Units while the Units are listed. It is intended that holders of Units ( Unitholders ) may only deal in their Units through trading on Singapore Exchange Securities Trading Limited (the SGX-ST ). Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. This release 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. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of management on future events. 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. 41

42 Important Notice This presentation has been prepared by the Manager. The information in this presentation has not been independently verified. No representation, warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions in this presentation. None of the Manager or any of its agents or advisers, or any of their respective affiliates, advisers or representatives, shall have any liability (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. Neither this presentation, nor any copy or portion of it, may be sent, taken, transmitted or distributed, directly or indirectly, in or into the United States, Japan or Canada, or to any U.S. person (as such term is defined in Regulation S under the Securities Act of 1933, as amended). It is not an offer of securities for sale into the United States. The Units may not be offered or sold into the United States, Canada or Japan or to, or for the account or benefit of, U.S. persons unless they are registered or exempt from registration. The Units have not been and will not be registered under the Securities Act or the securities laws of any state of the United States. There will be no public offer of securities in the United States. 42

43 Thank You CAMBRIDGE INDUSTRIAL TRUST MANAGEMENT LIMITED 61 ROBINSON ROAD, #12-01 ROBINSON CENTRE, SINGAPORE TEL: (65) FAX: (65) Anthony White SVP, Corporate Finance & DID: (65) Investor Relations Tay Chiew Sheng Manager, Investor Relations DID: (65)