Annual Results 2017
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$mm) 2,299 2,431 5.7% Net Property Income (HK$mm) 2,027 2,166 6.9% Distributable Income (HK$mm) 1,408 1,487 5.6% Distribution per Unit (HK$) 0.2292 0.2426 5.8% 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 2,027 +6.9% 2,166 817 856 692 736 325 344 295 318 1,157 1,232 1,040 1,112 FY 2016 FY 2017 FY 2016 FY 2017 1
Solid Growth in Asset Value Valuation increased to HK$76.7 bn on higher rental assumptions; cap rate compression for Langham Place Mall Solid growth in NAV per unit; Gearing ratio lowered to 18.9% Financial Highlights Dec-16 Dec-17 Change Net Asset Value Per Unit (HK$) 8.72 10.36 18.8% 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$28,250 Cap Rate: 3.60% 2
Proactive Liability Management Fixed rate debt ratio increased to 50%, significantly higher than 21.5% in Dec 2016 Effective interest rate at 2.6% as at 31 December 2017 Debt Maturity Profile as at 31 Dec 2017 (HK$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 2017 2,998 Secured Bank Loan / Total Assets 643 775 16.0% 13.0% 200 2018 2019 2020 2021 2022 2023 2024 2025 FY 2016 FY 2017 3
Three Garden Road
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% 92.52 78.20 22.4% 31.8% 1.4% 23.2% 5.8% 10.5% 4.9% 2016 2017 Vacant 2018 2019 2020 2021 & After 5
Improving Occupancy Leasing activities picked up in the Q4 2017 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 2017 94.2% 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
Langham Place
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 2018 2019 2020 2021 2022 & After 8
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 766 +4.6% 801 86 11% 116 14% 8.5% 681 89% 685 86% 5.3% 5.0% 2.2% FY17 vs FY16 2H17 vs 2H16 2016 2017 9
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 2017 22.6% 31.5% 20.9% Health & Beauty 10% Others 13% Entertainment 15% 15.5% 9.5% Food & Beverage 22% Fashion & Accessories 40% 2018 2019 2020 2021 2022 & After 10
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
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
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