AIMS AMP CAPITAL INDUSTRIAL REIT FY2016: Second Quarter Financial Results Ended 30 September 2015 Results Presentation 29 October 2015
Important notice Disclaimer This Presentation is focused on comparing actual results for the financial period from 1 July 2015 to 30 September 2015 ( 2Q FY2016 ) versus actual results year-on-year ( y-o-y ) and quarter-on-quarter ( q-o-q ). This Presentation shall be read in conjunction with AIMS AMP Capital Industrial REIT s ( AA REIT or the Trust ) results for 2Q FY2016 as per the SGXNet Announcement. 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 ( 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 AA REIT is not indicative of the future performance of AA REIT. Predictions, projections or forecasts of the economy or economic trends of the markets are not necessarily indicative of the future or likely performance of AA REIT. The value of the Units and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Management Limited (the Manager ). 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 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 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. You are cautioned not to place undue reliance on these forwardlooking statements, which are based on the Manager's current view of future events. 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 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. 2
CONTENTS Highlights for 2Q FY2016 4 2Q FY2016 Financial Results 9 Prudent Capital Management 14 Portfolio Performance 19 Strategy 30 3
> 1 HIGHLIGHTS FOR 2Q FY2016 4
Highlights for 2Q FY2016 > 1 Active portfolio management driving higher distributions Gross revenue and net property income for 1H FY2016 increased by 10.7% and 4.3% respectively compared to a year ago. Distribution to Unitholders in 1H FY2016 increased by 6.4% y-o-y to S$35.2 million. DPU performance: 2.80 cents per Unit for the quarter (increase of 1.8% q-o-q from 2.75 cents per Unit). Leasing renewals 13 new and renewal leases in 2Q FY2016, representing 53,354.0 sqm at a weighted average rental increase of 4.7% on the renewals. Portfolio occupancy improved to 96.5% from 96.1%, which is above the industrial average of 90.8%. Developing a higher value portfolio Redevelopment of 30 & 32 Tuas West Road commenced on 3 September 2015 and target completion is in January 2017. The redevelopment is currently on time and within budget. Net Asset Value per Unit remains stable at S$1.52 after valuation of portfolio as at 30 September 2015. 5
Highlights for 2Q FY2016 > 1 Prudent capital management 96.0% of the portfolio s interest rate is fixed taking into account interest rate swaps and Fixed Rate Notes with weighted average debt maturity of 2.7 years. Overall blended funding cost (including funding of the Australian asset with Australian dollar loan) remains at 4.20%. Aggregate leverage decreased from 31.2% to 30.9% q-o-q in 2Q FY2016 (average of approximately 31% for > 6 years). 6
Stable and attractive yield > 1 10.00% 7.82% 6.56% % yield per annum 5.00% 2.54% 2.50% 0.34% 0.00% 7 1 2 2 3 2 AA REIT Yield FTSE ST REIT 12mths Yield S'pore Govt 10-yr bond CPF Ordinary Account Bank 12mths FDs 1 Based on closing price of S$1.42 on 28 October 2015 and annualised DPU of 11.10 cents. Annualised DPU is computed based on actual DPU payout for 1H FY2016 and annualised to full year. 2 Source: Bloomberg data as at September 2015. 3 Prevailing CPF Ordinary Account interest rate.
Stable and growing DPU > 1 12.000 10.000 9.922 10.450 10.720 10.530 capital gain 0.300 10.420 11.070 YTD 8Distribution per Unit (cents) 8.000 6.000 4.000 2.000-1 1 5.550 2 FY2011 FY2012 FY2013 FY2014 FY2015 1H FY2016 1 The number of Units used to calculate the distribution per Unit ( DPU ) has been adjusted for the effect of the Unit Consolidation to allow for comparison. 2 The lower DPU is due to equity fund raising in FY2014 which increased the number of Units in issue. 2.800 2.750 2Q FY2016 1Q FY2016
> 2 2Q FY2016 FINANCIAL RESULTS 9
Distribution details > 2 Stock counter Distribution period DPU (cents) AIMSAMP Cap Reit Code: O5RU For 1 July 2015 to 30 September 2015 2.80 Distribution timetable Ex-date 4 November 2015, 9.00am Books closure date 6 November 2015, 5.00pm Return of Tax Declaration Forms 27 November 2015, 5.00pm Distribution payment date 23 December 2015 10
Results for 2Q FY2016 > 2 2Q FY2016 S$ 000 1Q FY2016 S$ 000 Q-o-Q % 2Q FY2015 S$ 000 Y-o-Y % 1H FY2016 S$ 000 1H FY2015 S$ 000 Y-o-Y % 11 Gross Revenue 31,259 30,296 3.2 28,261 10.6 61,555 55,621 10.7 Net Property Income 20,697 20,205 2.4 19,714 5.0 40,902 39,207 4.3 Share of results of joint venture (net of 18,855 3,655 >100.0 3,898 >100.0 22,510 7,620 >100.0 tax) 1 Distribution to Unitholders 2 17,770 17,441 1.9 17,258 3.0 35,211 33,107 6.4 DPU (cents) 2.80 2.75 1.8 2.77 1.1 5.55 5.32 4.3 DPU yield 3 (%) 7.82 1 The share of results of joint venture (net of tax) comprised of the contribution from the Group s 49.0% interest in Optus Centre which is located in Macquarie Park, NSW, Australia. The increase in the share of results of joint venture (net of tax) was mainly due to the share of revaluation surplus of S$15.3 million recognised from the valuation of Optus Centre. The independent valuation was carried out by CBRE Valuations Pty Limited as at 30 September 2015. 2 The Manager resolved to distribute S$17.8 million for 2Q FY2016, comprising (i) taxable income of S$16.5 million from Singapore operations; and (ii) taxexempt income distribution of S$0.1 million and capital distribution of S$1.2 million from distributions remitted from the Group s investment in Optus Centre, Macquarie Park, NSW, Australia. AA REIT s distribution policy is to distribute at least 90.0% of the Trust s Singapore taxable income for the full financial year. For 2Q FY2016, the Manager has resolved to distribute 98.6% of the Singapore taxable income available for distribution to the Unitholders. 3 Based on closing price of S$1.42 on 28 October 2015 and annualised DPU of 11.10 cents. Annualised DPU is computed based on actual DPU payout for 1H FY2016 and annualised to full year.
Balance Sheet > 2 30 September 2015 30 June 2015 31 March 2015 Total Assets (S$ M) 1,453.3 1,455.2 1,458.3 Comprising (S$ M): - Investment properties - Investment properties under development - Joint venture - Trade and other receivables - Derivative financial instruments - Cash at banks and in hand 1,210.6 14.3 210.4 9.6 0.6 7.8 1,235.1-201.9 11.1 0.3 6.8 1,233.5-204.9 9.6 0.2 10.1 Total Liabilities (S$ M) 486.9 489.7 496.2 Net Assets (S$ M) 966.5 965.5 962.1 NAV per Unit (S$) 1.52 1.52 1.52 Total Debt 1 (S$ M) 448.4 454.5 457.2 Aggregate Leverage (%) 30.9 31.2 31.4 1 Excluding unamortised loan transaction costs. 12
Key financial metrics > 2 2Q FY2016 1Q FY2016 Appraised Value of Property Portfolio S$1,435.4 million 2 S$1,437.1 million 1 Market Capitalisation 3 S$901.2 million S$951.3 million NAV per Unit S$1.52 S$1.52 Premium / (Discount) to NAV 3 (6.6)% (1.3)% Aggregate Leverage 4 30.9% 31.2% Interest Cover Ratio 5 4.8 times 4.8 times Weighted Average Debt Maturity 2.7 years 2.9 years 1 Singapore portfolio is based on valuation as at 31 March 2015 appraised by Knight Frank Pte Ltd and Colliers International Consultancy & Valuation (Singapore) Pte Ltd. Optus Centre, Macquarie Park, NSW, Australia is based on 49% interest in the property appraised by Savills Valuations Pty Ltd as at 31 December 2014 and adopted by the Directors as at 31 March 2015. 2 Singapore portfolio comprised (i) investment properties based on 30 September 2015 appraised by Knight Frank Pte Ltd and Colliers International Consultancy & Valuation (Singapore) Pte Ltd and (ii) investment properties under development at 30 & 32 Tuas West Road. Optus Centre, Macquarie Park, NSW, Australia is based on 49% interest in the property appraised by CBRE Valuations Pty Ltd as at 30 September 2015. 3 Based on the closing price per unit of S$1.42 on 28 October 2015 and S$1.50 on 28 July 2015. 4 Total debt as a % of total assets. 5 Based on improved new bank covenant of at least 2.0 times from 2.5 times previously. 13
> 3 PRUDENT CAPITAL MANAGEMENT 14
Debt facilities as at 30 September 2015 > 3 Secured SGD borrowings Consortium of 6 banks comprising regional and foreign banks Total secured facility of S$245.0 million comprising: 4-year term loan facility of S$125.0 million, maturing in November 2018 3-year revolving credit facility of S$120.0 million, maturing in November 2017 80.9% of interest rate fixed for weighted average period of 2.6 years Secured AUD borrowings Secured AUD borrowings as natural hedge for the acquisition of Optus Centre, Australia Total secured facility of A$175.791 million comprising: 5-year onshore term loan facility of A$110.655 million, maturing in February 2019 3-year offshore term loan facility of A$65.136 million, maturing in November 2017 100.0% of interest rate fixed for weighted average period of 2.9 years 15
Debt facilities as at 30 September 2015 > 3 Unsecured borrowings S$100.0 million 4-year Fixed Rate Notes at 4.90% maturing in August 2016 (1 st issuance) S$30.0 million 7-year Fixed Rate Notes at 4.35% maturing in December 2019 (2 nd issuance) S$50.0 million 5-year Fixed Rate Notes at 3.80% maturing in May 2019 (3 rd issuance) Summary Overall blended funding cost of 4.20% 96.0% of the portfolio s interest rate is fixed taking into account interest rate swaps and Fixed Rate Notes Weighted average debt maturity of 2.7 years 16
Debt facilities as at 30 September 2015 > 3 S$32.3m undrawn Maturity date S$ million Due in August 2016 (FY2017) 100.0 65 125 Due in November 2017 (FY2018) 65.1 Due in November 2018 (FY2019) 92.7 Due in February 2019 (FY2019) 110.6 100 Maturing in FY2017 120 Maturing in FY2018 Fully undrawn 111 Maturing in FY2019 5 year S$ fixed rate notes 7 year S$ fixed rate notes 5 year A$ term loan S$ revolving credit facility 30 50 Maturing in FY2020 Due in May 2019 (FY2020) 50.0 Due in December 2019 (FY2020) 30.0 Total debt drawn down 448.4 Undrawn available facilities 152.3 Total committed facilities 600.7 4 year S$ fixed rate notes 3 year A$ term loan 4 year S$ term loan 17
Gearing level since 2009 > 3 60.0 Target LVR between 30 45% 50.0 Maintained gearing at average of approximately 31% for > 6 years 40.0 % Gearing 30.0 28.9 31.9 30.0 34.0 31.7 31.4 30.9 20.0 10.0 0.0 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 2Q FY2016 18
> 4 PORTFOLIO PERFORMANCE 19
Total assets since 2009 > 4 1,600.0 1,400.0 1,405.2 1,458.3 1,453.3 1,200.0 1,056.2 Total Assets (S$mil) 1,000.0 800.0 600.0 657.7 874.7 939.0 400.0 200.0 - FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 2Q FY2016 20
Revenue performance since 2009 > 4 140,000 120,000 108,240 115,432 YTD S$ 000 100,000 80,000 60,000 50,944 52,982 73,245 83,983 59,071 59,896 92,082 71,895 80,013 61,555 40,000 40,353 40,902 20,000 - FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 1H FY2016 NPI (S$'000) Gross Revenue (S$'000) 21 21
Key portfolio statistics > 4 As at 30 September 2015 As at 30 June 2015 As at 19 April 2007 (Listing) Number of Properties 26 26 12 Appraised Value (S$ million) 1,435.4 1 1,437.1 2 316.5 Net Lettable Area (sq m) 607,732.5 3 607,521.5 3 194,980.7 Number of Tenants 144 3 147 3 12 Portfolio Occupancy (%) 96.5 3 96.1 3 100.0 Weighted Average Lease Expiry (WALE) (years) Weighted Average Land Lease Expiry (years) interest. 22 3.05 3 3.11 3 6.7 39.8 4 40.0 4 47.8 Location of Properties Singapore, Australia Singapore, Australia Singapore 1 Singapore portfolio comprised (i) investment properties based on 30 September 2015 appraised by Knight Frank Pte Ltd and Colliers International Consultancy & Valuation (Singapore) Pte Ltd and (ii) investment properties under development at 30 & 32 Tuas West Road. Optus Centre, Macquarie Park, NSW, Australia is based on 49% interest in the property appraised by CBRE Valuations Pty Ltd as at 30 September 2015. 2 Singapore portfolio is based on valuation as at 31 March 2015 appraised by Knight Frank Pte Ltd and Colliers International Consultancy & Valuation (Singapore) Pte Ltd. Optus Centre, Macquarie Park, NSW, Australia is based on 49% interest in the property appraised by Savills Valuations Pty Ltd as at 31 December 2014 and adopted by the Directors as at 31 March 2015. 3 Excludes redevelopment of 30 & 32 Tuas West Road 4 For the calculation of the weighted average land lease, AA REIT s interest in the freehold property, Optus Centre has been assumed as a 99-year leasehold
> 4 Portfolio breakdown By 2Q FY2016 rental income Master Leases vs Multi-tenanted Industrial 13.0% Cargo lift Warehouse 21.2% Business Park 19.1% Ramp up Warehouse 35.1% Hi Tech Space 5.4% Manufacturing 6.2% Total Portfolio 1 (25 properties) Multitenanted, 52.3% Master Leases, 47.7% Occupancy Average security deposit 1,2 96.5 4.6 months Master Leases (9 properties) Multi-tenanted (16 properties) 100.0 6.5 months 93.8 3.7 months 23 1 Excluding redevelopment of 30 & 32 Tuas West Road. 2 Excluding Optus Centre whose lease is guaranteed by SingTel Optus 23
Diversification reduces risk > 4 Fashion and Apparels 2.1% Tenant Base by Industry (By 2Q FY2016 Rental Income) F&B 3.2% IT & Electronics 5.4% Data Centre 1.6% Furniture 1.4% Construction and Engineering 4.7% Energy 6.0% Self-storage 0.7% Telecommunication 15.9% Pharmaceutical/ Healthcare/Cosmetics 7.3% Printing 0.1% Plastic Products and Distribution 1.7% Metal Recycling 1.9% Logistics & Warehousing 48.0% 24 24
Active lease management > 4 50.0% 40.0% Lease Expiry Profile as at 30 September 2013 (by 2Q FY2014 Net Lettable Area) Lease Expiry Profile as at 30 September 2015 (By 2Q FY2016 Rental Income) 2Q FY2016 Sqm Total new/renewal leases signed 13 53,354.0 % of total NLA 8.8 % of Rental Income 30.0% 20.0% Weighted average rental increase (%) 19.5% 27.4% 4.7% 10.0% 7.8% 9.0% 10.4% 5.4% 8.9% 5.5% 6.1% 0.0% FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Note: The lease expiry profile excludes the current leases at 30 & 32 Tuas West Road where the property will be undergoing redevelopment. Please refer to SGX announcement dated 22 May 2015 25
Quality tenant base Top 10 tenants by 2Q FY2016 by rental income Tenant % CWT Limited* 21.7% Optus Administration Pty Limited* 13.1% Eurochem Corporation Pte Ltd 6.0% Schenker Singapore (Pte) Ltd* 3.6% Illumina Singapore Pte Ltd* 2.8% FNA Group International 2.5% LTH Logistics (Singapore) Pte Ltd* (Vibrant Group Limited) 2.3% Broadcom Singapore Pte Ltd* 2.1% Enviro-Hub Group* 1.8% Element14* 1.5% Top 10 tenants 57.4% * Listed Groups or subsidiaries of listed entities 26
Strong and stable cashflows > 4 1 Occupancy of 96.5% 2 Diversified tenancies and industry base 27 5 Built-in rent escalation for Master Leases Strong and aa stable cashflows Average security deposit per property of approx. 4.6 months 4 Weighted average lease expiry of 3.05 years 3
Long land lease expiry 39.8 years > 4 50.0% 45.0% The weighted average unexpired land lease was 39.8 years as at 30 September 2015 45.1% 40.0% 35.0% 30.0% 28.9% % of Net Lettable Area 25.0% 20.0% 15.0% 10.0% 8.8% 10.6% 6.6% 5.0% 0.0% 21-30 yrs 31-40 yrs 41-50 yrs 51-60 yrs > 60 yrs 28 Note: For the calculation of the weighted average land lease of AA REIT, AA REIT s interest in the freehold property, Optus Centre has been assumed as a 99-year leasehold interest.
> 4 Comparisons to Singapore industrial average occupancy levels 100.0% 96.5% 100.0% 97.8% 95.0% 90.0% 90.8% 92.5% 91.9% 87.3% 85.0% 84.4.% 80.0% 75.0% Overall Business/Office Park Warehouse Hi Tech/Industrial & AA REIT JTC's 3Q 2015 Manufacturing 29 Source: Based on JTC s 3rd quarter 2015 statistics.
> 5 STRATEGY 30
Objectives > 5 Stable distributions, Increase Unitholders value and liquidity Prudently manage the Group s capital structure Creating Value Sustaining Growth Intensive asset and lease management Strengthen the portfolio through asset redevelopments and strategic acquisitions 31
Strategy > 5 Yield accretive investments Active asset and leasing management Prudent capital and risk management Focus on successful delivery of current developments on time and within budget. Continual prudent management of lease expiry profile and using this as an opportunity to achieve positive rental reversions. Prudent capital management by splitting of debt maturities. Target leverage between 30% - 45%. Evaluation of further redevelopment opportunities in Singapore. Continued evaluation of yield accretive investment opportunities in Singapore and Australia. Unlocking value of selected asset(s) within the portfolio through asset enhancement. To ensure high occupancy is maintained. Focus on maintaining stable DPU. Maintenance of investment grade rating. 32
> 5 30 & 32 Tuas West Road Redevelopment (Before and After) Before Before Two three-storey detached industrial buildings with an under-utilised plot ratio After After Purpose built five-storey rampup warehouse facility increasing plot ratio. CWT Limited to take up all five storeys under Master Lease arrangement 33
> 5 30 & 32 Tuas West Road Redevelopment (Site Plans Before and After) Before Two three-storey detached industrial buildings with no loading and unloading bays After Purpose built five-storey rampup warehouse facility with exclusive loading and unloading bays at each level 34
30 & 32 Tuas West Road Fact Sheet > 5 Prior to redevelopment Post redevelopment Property Two three-storey detached industrial buildings Valuation S$14.1 million 1 S$60.7 million 2 Five-storey ramp-up warehouse Annual Rental Income S$0.82 million 3 S$4.15 million (when completed) Plot Ratio 1.15 2.07 Land Area 138,801 sqft 138,801 sqft Gross Floor Area (GFA) 159,717 sqft Approx. 287,866 sqft Land Tenure 30+30 years lease wef 1 Jan 96 30+30 years lease wef 1 Jan 96 Lease Term Multi-tenanted Master lease 1. Based on Knight Frank Pte Ltd s valuation dated 31 March 2015. 2. Based on Colliers International Consultancy and Valuation (Singapore) Pte Ltd s valuation dated 20 May 2015 on an as-if-complete basis. 3. Annual Rental Income for FY2015. 35
> 5 30 & 32 Tuas West Road Summary Estimated Financials 1 Gross development value upon completion 1 60.7 S$ million 2 Project redevelopment cost (41.7) 3 Land cost 2 (14.1) 4 Profit 4.9 5 Profit margin 8.8% 6 Net property income yield 7.2% (based on development cost) 7 DPU impact per annum 3 +0.35 cents 1. Based on Colliers International Consultancy and Valuation (Singapore) Pte Ltd s valuation dated 20 May 2015 on an as-if-complete basis. 2. Based on Knight Frank Pte Ltd s valuation dated 31 March 2015. 3. Please note that the DPU impact shown in this announcement is for illustration purposes only and purely on a pro forma basis based on the assumption that AA REIT had completed, held and operated the proposed redevelopment for the whole of the financial year ended 31 March 2015; the proposed redevelopment was funded using 100% debt; and based on units in issue as at 31 March 2015 of 628,935,114. 36
> 5 30 & 32 Tuas West Road Redevelopment Progress Photos Demolition work in progress 37 Set up of site office
Potential opportunities within AA REIT s portfolio > 5 A large proportion of current portfolio remains under-utilised; with select organic opportunities available to AA REIT 10 Soon Lee Rd 3 Tuas Avenue 2 8 Senoko South Rd 10 Changi South Lane 541 Yishun Industrial Park A Potential untapped GFA 801,334 sqft 2 Ang Mo Kio St 65 3 Toh Tuck Link 7 Clementi Loop 11 Changi South St 3 8 and 10 Tuas Ave 20 37
Thank you For enquiries, kindly contact: Management Limited Koh Wee Lih Joanne Loh Chief Executive Officer Assistant Fund Manager Tel: + 65 6309 1050 Tel: + 65 6309 1057 Email: wlkoh@aimsampcapital.com Email: jloh@aimsampcapital.com