4QFY2013 and 2HFY2013 Results Presentation January 2014 1
Disclaimer This presentation should be read in conjunction with the financial statements of Soilbuild Business Space REIT for the period from 1 October 2013 to 31 December 2013 (hereinafter referred to 4QFY2013). 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 Business Space REIT ( Soilbuild REIT, and 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 are the joint global coordinators, issue managers, bookrunners & underwriters of the initial public offering of Soilbuild REIT. 2
Content Key Highlights 4 4Q FY2013 and 2H FY2013 Financial Performance 6 Financial Position / Capital Management 11 Portfolio Update 15 Market Update and Outlook 22 3
4 Key Highlights
Key Highlights of 4Q FY2013 and 2H FY2013 Results 4Q FY2013 Results Distribution per Unit for 4Q FY2013 (1 October 2013 to 31 December 2013) at SGD 1.510 cents 3.4% above the Forecast (1). Portfolio Gross Revenue and Net Property Income for 4Q FY 2013 outperformed the Forecast (1) by 0.9% and 2.1% respectively. 2H FY2013 Results Distribution per Unit for 2H FY2013 (16 August 2013 to 31 December 2013) at SGD 2.270 cents 3.2% above the Forecast (1). Portfolio Gross Revenue and Net Property Income for 2H FY2013 outperformed the Forecast (1) by 0.9% and 2.1% respectively. Financial Position 100% of debt hedged. Average all-in interest cost of 3.12% as at 31 December 2013. Conservative gearing at 29.3% as at 31 December 2013 provides debt headroom for future acquisitions. Healthy interest cover ratio of 5.5 times. Portfolio Update Portfolio occupancy rate increased from 99.8% to 99.9% during 4Q 2013 due to expansion by an existing tenant in Eightrium. 17% of portfolio NLA due for renewal in FY2014. Portfolio market value as at 31 December 2013 is S$935 million (2). Notes: 1) The Forecast is derived from the Forecast Year 2013 figures disclosed in the Prospectus dated 7 August 2013 (the Prospectus ). 2) Based on the Colliers valuations dated 31 December 2013. 5
6 4Q FY2013 Financial Performance
Distribution per Unit 4Q FY2013 For the period from 01 October 13 to 31 December 13 Actual Forecast Variance (%) Distributable Income (S$000) 12,150 11,741 3.5% Distribution per Unit ( DPU ) (cents) 1.510 1.461 3.4% Annualised DPU (cents) (1) 5.99 Annualised Distribution Yield (2) 7.8% 2H FY2013 For the period from 16 August 13 to 31 December 13 Actual Forecast Variance (%) Distributable Income (S$000) 18,263 17,671 3.4% Distribution per Unit ( DPU ) (cents) 2.270 2.199 3.2% Annualised DPU (cents) (1) 6.00 Annualised Distribution Yield (2) 7.8% Note: (1) Based on 804.5 million units in issue as at 31 December 2013 (2) Based on closing price as at 31 Dec 2013 of $0.770 7
4Q FY2013 Financial Results P&L For the period from 01 October 13 to 31 December 13 Actual (S$000) Forecast Variance (%) Revenue 16,333 16,189 0.9% Less Property Expenses (2,637) (2,776) 5.0% Net Property Income 13,696 13,413 2.1% Manager s Fees (1,365) (1,182) (15.5%) Other Trust Expenses (227) (213) (6.6%) Finance Expenses (1) (2,206) (2,302) 4.2% Total return for the period 9,898 9,716 1.9% Add back Non-Tax Deductible Items (2) 2,252 2,025 11.2% Distributable Income 12,150 11,741 3.5% Note: (1) Finance Expenses comprise net interest expense and amortisation of debt arrangement fees. (2) Non-tax deductible items comprise the Manager s management fees, property management and lease management fees paid or payable in Units, rent free amortisation, Trustee s fees and amortisation of debt arrangement fees. 8
2H FY2013 Financial Results P&L For the period from 16 August 13 to 31 December 13 Actual (S$000) Forecast Variance (%) Revenue 24,565 24,353 0.9% Less Property Expenses (3,960) (4,164) 4.9% Net Property Income 20,605 20,189 2.1% Manager s Fees (1,976) (1,775) (11.3%) Other Trust Expenses (337) (326) (3.4%) Finance Expenses (1) (3,307) (3,465) 4.6% Net Investment Income before Tax and fair value change 14,985 14,623 2.5% Fair value change in investment properties 29,748 - n.m. (3) Total return for the period 44,733 14,623 n.m. (3) Add back Non-Tax Deductible Items (2) (26,470) 3,048 n.m. (3) Distributable Income 18,263 17,671 3.4% Note: (1) Finance Expenses comprise net interest expense and amortisation of debt arrangement fees. (2) Non-tax deductible items comprise the Manager s management fees, property management and lease management fees paid or payable in Units, rent free amortisation, net change in fair value of investment properties, Trustee s fees and amortisation of debt arrangement fees. (3) n.m. denotes not meaningful. 9
4Q FY2013 Distribution Distribution Details 4Q FY2013 Distribution Period 1 October 2013 31 December 2013 Distribution Amount 1.510 cent per unit Distribution Timetable 4Q FY2013 Last Day of Trading on cum Basis Tuesday, 28 January 2014 Ex-Date Wednesday, 29 January 2014 Books Closure Date Monday, 3 February 2014 Distribution Payment Date Friday, 28 February 2014 10
11 Financial Position/ Capital Management
4Q FY2013 Financial Results Balance Sheet All figures S$000 unless otherwise stated Actual as at 31 December 2013 Pro-forma as at 31 December 2012 Investment Properties 935,000 935,000 Other Assets 20,292 1,000 Total Assets 955,292 936,000 Current Liabilities 9,149 8,351 Bank Borrowings 275,331 274,656 Other Liabilities 23,514 13,766 Net Assets 647,298 639,227 Units in Issue ( 000) 804,541 804,303 Net Asset Value per Unit (S$) 0.80 0.80 12
Proactive Capital Management Borrowing Details Total Debt Facility Total Debt Drawn Down Aggregate Leverage (1) 29.3% Average All-in Interest Costs (2) 3.12% S$285 million S$280 million Weighted Average Debt Maturity 2.6 years (as at 31 Dec 2013) Interest Coverage Ratio 5.5x 100% of Debt already hedged 75% of the initial debt drawn down at IPO fixed with 2, 3 and 4 year interest rate swaps The remaining 25% of the initial debt drawn down at IPO fixed with a 1 year interest rate swap on 5 Nov 2013 (maturity on 19 Nov 2014) Weighted average swap rate is 0.82% S&P Credit Rating (assigned on 22 Jan 2014) BBB- Debt Maturity Profile (S$ Million) No Near Term Refinancing Risks Well spread maturity profile with weighted average debt maturity of 2.6 years as at 31 Dec 2013 $95.0 $95.0 $90.0 2014 2015 2016 2017 % of Debt Maturing 0% 34% 34% 32% % of Fixed Debt 100% Note: (1) Ratio of Debt over Deposited Properties under the Property Funds Appendix. (2) Inclusive of margins and amortisation of debt arrangement fees. 13
Credit Rating Standard & Poor s ( S&P ) assign investment grade credit rating of BBB- with stable outlook on 22 January 2014 Corporate Credit Rating ASEAN Regional Scale Rating BBB-/Stable/-- axa-/-- Profile Assessments BUSINESS RISK FINANCIAL RISK SATISFACTORY INTERMEDIATE S&P Overview of Soilbuild REIT s credit rating: Singapore-based has good asset quality, almost-full occupancy rates, and a moderate financial policy However, the industrial REIT's portfolio size is limited, its expiry profile is slightly uneven, and bank covenants constrain its leverage The stable outlook reflects our expectation that the REIT will continue generating steady cash flows and its ratio of debt to assets will not exceed 40% over the next 24 months. 14
15 Portfolio Update
Portfolio Overview Soilbuild REIT Properties are located in key technology, media and back office hubs and logistics clusters, which are near air and sea transportation ports such as Changi Airport, Jurong Port and the planned mega container port at Tuas expected to be operational around 2022. Portfolio Summary (1) COS Printers NLA: 58,752 sq ft Valuation: S$11.0 million Total Valuation (2) S$935 million Total NLA 2,955,338 sq ft WALE (3) 3.6 years Occupancy 99.9% NK Ingredients NLA: 312,375 sq ft Valuation: S$62.0 million Industrial Properties Business Park Properties Second Link (Tuas Checkpoint) BOON LAY SIMEI CHANGI PIONEER JOO KOON BUONA VISTA ONE-NORTH EXPO Tuas Connection NLA: 651,072 sq ft (4) Valuation: S$126.0 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 West Park BizCentral NLA: 1,240,583 sq ft Valuation: S$319.0 million (1) As at 31 December 2013. (2) Based on the Colliers valuations dated 31 December 2013. (3) By Gross Rental Income for the month of 31 December 2013. (4) NLA includes some dedicated common areas within tenants compounds but does not constitute GFA. Solaris NLA: 441,533 sq ft Valuation: S$300.0 million 16
Portfolio Summary Portfolio occupancy as at 31 Dec 2013 increased by 0.2% since IPO due to space expansion of existing tenants Property Solaris Type Business Park Lease Arrangement Master Lease Property Age (1) (Years) Remaining Land Lease (Years) Occupancy Rate (2) as at 31 Dec 13 Occupancy Rate as at IPO Purchase Price (S$ Million) 2.3 54 100.0% 100.0% $293.4 West Park BizCentral Eightrium Multi-User Ramp-up Factory Business Park Multi Tenanted Multi Tenanted 1.3 55 100.0% 100.0% $313.0 6.3 52 98.5% 95.3% $91.4 Tuas Connection NK Ingredients Multi-User Land Based Factory Single-User Factory Multi Tenanted Master Lease 3.5 37 100.0% 100.0% $122.7 Ph1: 22.5 Ph2: 6.4 (3) 33 100.0 % 100.0 % $60.0 COS Printers Single-User Factory Master Lease 17.0 29 100.0% 100.0% $10.3 Beng Kuang Marine Single-User Factory Master Lease 13.7 43 100.0% 100.0% $14.5 Portfolio 3.9 50 (4) 99.9% 99.7% $905.3 (1) Age from issue of CSC (as at Dec 31, 2013). (2) Assumes master leases in place. (3) Phase 1 of development received CSC in July 1991 and Phase 2 of development received CSC in Aug 2007. (4) As at Dec 31, 2013. 17
Key Portfolio Metrics 1 Portfolio Income by Property 2 Well Spread Trade Sectors (1) West Park BizCentral 34% Solaris 26% 4Q FY2013 Gross Revenue of S$16.3 million NK Ingredients 7% COS Printers 1% BK Marine 2% Tuas Connection 16% Eightrium @ Changi Business Park 14% 22.5% 4.5% 4.6% 4.6% 7.2% % of Occupied NLA of 2.95 million sq ft 11.8% 16.4% 16.2% 12.4% Marine Offshore, Oil & Gas Precision Engineering, Electrical and Machinery products Supply Chain Management, 3rd Party Logistics, Freight Forwarding Chemicals Fabricated Metal Products Electronics Publishing, Printing & Reproduction of Recorded Media Construction Others (1) Inclusive of underlying tenants for Solaris 3 Diversified Tenant Base (1) (2) 4 Balanced portfolio with Growth Upside MNC 69% Total of 104 tenants in portfolio SME 25% Government Agency 6% Multi-tenanted Properties 58% 4Q FY2013 NPI: S$13.7 million Properties under Master lease 42% (1) Inclusive of underlying tenants for Solaris. (2) Based on Gross Rental Income. 18
Leasing Update Total No. of Leases Due for Renewal 3 (2.2% of NLA) (1) Inclusive of forward renewal of future lease expiries Year to date (16 Aug 2013 to 31 Dec 2013) No. of Leases Retention Rate Rental Reversion Renewed (1) (by area) Achieved 3 100% 7.9% Lease Expiry Profile After Renewals 35% 30% 25% 20% 15% All the expiries due in 2013 have been renewed 1.2% 33.2% 1.0% 31.0% 10% 5% 0% 15.8% 12.0% 2.2% 5.8% 2013 2014 2015 2016 2017 >2017 Area up for expiry as % of total NLA 2H 2013 Lease expiry renewed 19
Well Staggered Lease Expiry Profile Tenant Lease Expiry Profile (% of Occupied NLA & Gross Rental Income) WALE (by NLA) 3.7 years 40.0% WALE (by Gross Rental Income) 3.6 years 37.0% 35.0% 33.2% 30.0% 28.2% 31.0% 25.0% 20.0% 17.0% 15.0% 14.9% 13.0% 12.3% 10.0% 5.0% 5.8% 7.6% 0.0% 2014 2015 2016 2017 >2017 Lease Expiry Profile By Occupied NLA Lease Expiry Profile By Gross Income 20
Quality and Established Tenant Base Top 10 Tenants (By Gross Rental Income) (1) Mitigation for Sponsor Concentration Risk: Huawei International Pte Ltd 1.4% Best-in-class properties with strong demand C.O.S Printers Pte Ltd 1.5% Strong underlying tenant base of established tenants Knowledge Universe Singapore Pte Ltd 1.6% Established Sponsor with successful track record PICCO Enterprise Pte Ltd 1.8% Rentals secured with 12-months rental deposits and corporate guarantee Dyson Operations Pte Ltd 2.0% Barclays Technology Centre Limited 2.5% Nestle Singapore (Pte) Ltd 4.6% Schenker (Singapore) Pte Ltd 5.6% NK Ingredients Pte Ltd 7.7% Soilbuild(2) 26.9% Top 10 tenants (excluding Soilbuild) accounts for less than 30% of Gross Rental Income (1) For the month of December 2013 (2) Soilbuild s exposure includes SB Solaris (Investment) Pte.Ltd. and SB Storage Pte Ltd. 21
22 Market Update and Outlook
Median Rents of Business Space $ psf per month $ psf per month $ psf per month $ psf per month 1 Median Rents for Private Business Park 2 Median Rents for Private Single-user Factory 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2007 2008 2009 2010 2011 2012 3Q 2013 Islandwide IBP CBP MBC and Singapore Science Park 4.30 4.00 2.50 2.00 1.50 1.00 0.50 0.00 2.14 1.65 2007 2008 2009 2010 2011 2012 3Q 2013 Islandwide West Region 3 Median Rents for Private Multiple-user Factory 4 Median Rents for Private Warehouse 2.50 2.50 2.00 1.50 2.20 1.99 2.00 1.50 1.96 1.80 1.00 1.00 0.50 0.50 0.00 2007 2008 2009 2010 2011 2012 3Q 2013 0.00 2007 2008 2009 2010 2011 2012 3Q 2013 Islandwide West Region Islandwide West Region Source: URA 23
Market Update and Outlook Singapore s Economy Singapore s economy grew 3.7% for the full year of 2013. This was largely contributed by the strong third and fourth quarter year-on-year growth of 5.9% and 4.4% respectively. However, manufacturing activity contracted for the first time in 9 months in December 2013, with the overall Singapore s Purchasing Managers Index ( PMI ) of 49.7, down from 50.8 in November 2013. Industrial Property Sector For the third quarter of 2013, the industrial property market appeared to be tracking well, despite the recent policy cooling measures set by JTC and MAS. The URA All Industrial Property Price and Rental index recorded growth of 6.1% and 8.8% respectively, on a year-on-year basis and by 2.8% and 4.4% respectively, on a quarter-onquarter basis. According to DTZ, industrial rents are projected to continue the upward trend in 2014, due to the growth in the manufacturing and externally orientated industries and a moderate supply of available space coming on to the market backed by high levels of pre-commitment. Soilbuild Business Space REIT Since listing, portfolio renewals have recorded a positive reversion of 7.9%. Approximately 17% of portfolio NLA is due for renewal in 2014. Barring any unexpected non-renewals, Management believes that Soilbuild REIT is well placed to deliver on its forecast distribution for 2014 financial year. Source: Ministry of Trade and Industry, URA, DTZ 24
Thank You Key Contacts: Shane Hagan Chief Executive Officer Tel: (65) 6415 5980 Email: shane.hagan@soilbuild.com Roy Teo Chief Operating Officer Tel: (65) 6415 5983 Email: roy.teo@soilbuild.com 25