Viva Industrial Trust Financial Results for the Period from 4 November 2013 to 31 December 2013 25 February 2014
Important Notice This presentation is for information purposes only and does not constitute or form part of an offer, invitation or solicitation of any offer to purchase or subscribe for any Stapled Securities of Viva Industrial Trust ( VIT )in Singapore or any other jurisdiction nor should it or any part of it form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. The value of the Stapled Securities and the income derived from them may fall as well as rise. The Stapled Securities are not obligations of, deposits in, or guaranteed by Viva Industrial Trust Management Pte. Ltd., ( REIT Manager ), Viva Asset Management Pte. Ltd. ( BT Trustee- Manager ), and together with the REIT Manager, ( Managers ), The Trust Company (Asia) Limited as trustee of Viva Industrial Real Estate Investment Trust ( VI-REIT ), or any of their respective affiliates. An investment in the Stapled Securities is subject to investment risks, including the possible loss of the principal amount invested. Stapled Securityholders have no right to request that the Managers redeem or purchase their Stapled Securities while the Stapled Securities are listed. It is intended that Stapled Securityholders may only deal in their Stapled Securities through trading on Singapore Exchange Securities Trading Limited ( SGX-ST ). Listing of the Stapled Securities on the SGX-ST does not guarantee a liquid market for the Stapled Securities. This presentation 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. Predictions, projections or forecasts of the economy or economic trends of the markets are not necessarily indicative of the future or likely performance of VIT. The forecast financial performance of VIT is not guaranteed. A potential investor is cautioned not to place undue reliance on these forward-looking statements, which are based on the Managers current view of future events. Standard Chartered Securities (Singapore) Pte. Limited, Merrill Lynch (Singapore) Pte. Ltd. and The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch are the Joint Global Coordinators and Issue Managers for the initial public offering and listing of Viva Industrial Trust (the Offering ). Standard Chartered Securities (Singapore) Pte. Limited, Merrill Lynch (Singapore) Pte. Ltd., The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch, CIMB Securities (Singapore) Pte. Ltd., Maybank Kim Eng Securities Pte. Ltd. and Credit Suisse (Singapore) Limited are the Joint Bookrunners and Underwriters for the Offering. 2
Agenda Highlights Financial Performance Capital Management Portfolio Highlights Looking Ahead 3
Highlights 1 Actual FP2013 1 performance consistent with forecast, delivering 8.8% annualised distribution yield Distributable income for FP2013 largely in line with forecast Distribution per Stapled Security ( DPS ) of 1.080 cents 2 Resilient portfolio Relatively young portfolio, with UE BizHub EAST and Mauser Singapore having only obtained TOP in 2012 Strategically located properties, in business parks and established clusters in close proximity to major transportation networks, facilities and amenities 3 Prudent Capital Management Well-hedged loan profile locked in at today s low interest rates 1. For the period from 4 Nov 2013 (the Listing Date ) to 31 Dec 2013 4
Agenda Key Highlights Financial Performance Capital Management Portfolio Highlights Looking Ahead 5
Stable Distributable Income FP2013 S$ 000 Actual Forecast 1 % Change Gross Revenue 9,017 8,781 2.7 Net Property Income (NPI) 6,004 5,674 5.8 Net Income 2 5,229 5,012 4.3 Distributable Income 2 6,421 6,429 (0.1) DPS (Singapore cents) 1.080 1.082 (0.2) Annualised DPS (Singapore cents) 6.797 6.809 (0.2) Annualised Distribution Yield (based on closing price of S$0.775 per Stapled Security on 31 Dec 2013) 8.8% 8.8% Nil 1. The forecast results for the period from the Listing Date to 31 December 2013 were derived from the Prospectus dated 28 October 2013 and have been pro-rated for the 58 days in the period under review. 2. As at the date of this results announcement, the Inland Revenue Authority of Singapore ( IRAS ) has not issued a final tax ruling to VI-REIT on whether tax transparency treatment is applicable to the rental income support in respect of the UE BizHub EAST ( UEBH ) rental arrangement. In the absence of such final tax ruling from IRAS, the financial statements of VI-REIT have been prepared on the basis that the tax transparency treatment would not be applicable to the rental income support in respect of the UEBH rental arrangement. Consequently, VI-REIT has made an income tax provision of approximately S$382,000 in respect of the rental income support arising from the UEBH rental arrangement for the period ended 31 December 2013. 6
Segmental Revenue Contribution S$ 000 8,000 7,003 7,215 6,000 4,000 2,000 1,490 1,500 0 Business Parks Hotel Logistics 288 302 Forecast Actual 7
Attractive Yield Versus Other Investments % 10 8.8 8 6 6.6 4 2 0 VIT Annualised Yield 2.5 10-yr SG Govt Bond Average yield: 2.2 0.8 5-yr SG Govt Bond 2.5 CPF Ordinary Account 0.3 12-mth Fixed Deposit (S$) 3.4 STI 12-mth yield 3.7 STI Real Estate Index 12-mth Yield Source: Bloomberg, Central Provident Fund Board, Monetary Authority of Singapore, 20 February 2014 8
Distribution Details For the Period from 4 November 2013 to 31 December 2013 Distribution per Stapled Security (Singapore cents) 1.080, comprising (a) taxable income: 0.774 (b) tax exempt income: 0.306 Ex-Date 3 March 2014 Books Closure Date 5 March 2014 Distribution Payment Date 27 March 2014 9
Agenda Key Highlights Financial Performance Capital Management Portfolio Highlights Looking Ahead 10
Balance Sheet As at 31 December 2013 S$ mil Investment Properties 725.6 Intangible Assets 17.6 1 Current Assets 29.4 Total Assets 772.6 Borrowings (net of transaction costs) 294.5 Other Liabilities 29.5 Total Liabilities 324.0 Net Assets 448.6 No. of Stapled Securities issued and issuable (in mil) 595.1 Net Asset Value per Stapled Security 75 Singapore cents 1. This represents the carrying amounts of unamortized rental differential to be provided to VI-REIT by the respective vendors of UEBH and Technopark@Chai Chee ( TPCC ) pursuant to the UEBH rental arrangement and the TPCC rental support arrangement. 11
Prudent Capital Management S$ mil Debt Maturity Profile 1 150 135 135 100 50 0 na No refinancing due till 2016 na 2014 2015 2016 2017 As at 31 December 2013 Total Borrowings S$300 mil Gearing Ratio (Total Debt over Total Assets) 38.8% All-in Cost 3.5% Weighted Average Maturity 1 3.4 years Interest Rate Exposure Fixed 2 76.7% Interest Cover 5.5 times Credit Rating 3 BB+ 1. Excludes the outstanding revolving credit facility of S$30 mil. 2. Based on outstanding borrowings as at 31 December 2013 3. Rating performed by Standard & Poor s on 4 November 2013 12
Agenda Key Highlights Financial Performance Capital Management Portfolio Highlights Looking Ahead 13
Strategically Located Portfolio 1 building 1 tenant WOODLANDS CHECKPOINT Near Jurong Port, Singapore s only international multipurpose port operator and Tuas Checkpoint WOODLANDS / KRANJI Technopark @Chai Chee 6 buildings 70 tenants Within walking distance from Bedok and Kembangan MRT stations and Bedok Bus Interchange Mauser Singapore Accessibility to improve upon completion of Tuas West MRT line ANG MO KIO / SERANGOON NORTH LOYANG / CHANGI TUAS CHECKPOINT TUAS LINK TUAS WEST GUL TUAS CIRCLE CRESCENT JOO KOON TUAS JURONG PORT INTERNATIONAL BUSINESS PARK ONE-NORTH SCIENCE PARK PAYA LEBAR / UBI / KAKI BUKIT KEMBANGAN BEDOK EXPO CHANGI BUSINESS PARK 4 buildings 37 tenants CHANGI AIRPORT Planned development of Tuas Port, where all of Singapore s port operations will be consolidated VIT S PROPERTY LOGISTICS BUSINESS PARK MRT STATION PROPOSED MRT EXTENSION MAJOR BUSINESS PARK CLUSTER MAJOR INDUSTRIAL CLUSTER PSA SINGAPORE TERMINALS UE BizHub EAST Strategically located within Changi Business Park, the CBD of the East Accessibility via current Expo MRT station and will be directly linked to upcoming Downtown Line MRT line 14
15 1. Being the average of the independent valuations as at 31 December 2013 by Suntec Real Estate Consultants Pte Ltd and Jones Lang LaSalle Property Consultants Pte Ltd, after taking into account the rental arrangement to be provided by the vendor of UE BizHub EAST in respect of the Business Park Component for a period of five years from the Listing Date ( UEBH rental arrangement ) and the rental support to be provided by the vendor of Technopark@Chai Chee for a period of two years from the Listing Date ( TPCC rental support arrangement ). The average of the independent valuations as at 31 December 2013 without taking into account the UEBH rental arrangement and TPCC rental support arrangement is S$725.6 million. Business Park Focused Portfolio Portfolio Summary as at 31 December 2013 Total Number of Properties 3 Total Portfolio GFA (sq ft) 2,416, 254 sq ft Net Lettable Area (NLA) 1,907,543 sq ft Weighted Average Land Lease (by valuation) 44.4 years Weighted Average Age of Building (by valuation) 6.6 years Total Portfolio Value S$743m 1 ASSET TYPE BY AVERAGE VALUATION ASSET TYPE BY GFA 18.6 % 3.8% 7.1 % 4.5 % 77.6 % 88.4% Business Park Hotel Logistics Business Park Hotel Logistics
UE BizHub EAST (Business Park Component) Property Type GFA Age Remaining land lease as at 31 December 2013 Occupancy as at 31 December 2013 Occupancy as at IPO Valuation as at 31 December 2013 Number of Tenants / Sub - Tenants Business Park - White 611,471 sq ft 1.7 years 54 years 84% 64.2% S$381.5m 32 16
UE BizHub EAST (Hotel Component) Property Type GFA Age Remaining land lease as at 31 December 2013 Occupancy as at 31 December 2013 Occupancy as at IPO Valuation as at 31 December 2013 Number of Tenants / Sub -Tenants Hotel 172,532 sq ft 1.7 years 54 years 100% 100% $138.5m 5 17
Technopark@Chai Chee Property Type GFA Age Remaining land lease as at 31 December 2013 Occupancy as at 31 December 2013 Occupancy as at IPO Valuation as at 31 December 2013 Number of Tenants / Sub -Tenants Business Park 1,524,685 sq ft 21 years 17 years 60.8% 60.7% S$195.0m 70 18
Mauser Singapore Property Type GFA Age Remaining land lease as at 31 December 2013 Occupancy as at 31 December 2013 Occupancy as at IPO Valuation as at 31 December 2013 Number of Tenants / Sub -Tenants Logistics 107,566 sq ft 1.5 years 53 years 100% 100% S$28.0m 1 19
Diversified Tenant Mix 1 Top 10 tenants/sub-tenants account for 53.7% of monthly committed rental Income Cisco Systems (USA) Pte Ltd 11.5% 1-Net Singapore Pte Ltd NTUC Fairprice Co-operative Ltd Johnson Controls (S) Pte Ltd BT Singapore Pte Ltd CSC Technology Singapore Pte Ltd DFS Venture Singapore (Pte) Ltd Mauser Singapore Pte Ltd DTZ Facilities & Engineering (S) Ltd Alcatel-Lucent Singapore Pte Ltd 6.8% 6.7% 5.6% 4.7% 4.3% 4.0% 3.9% 3.3% 2.9% Total 53.7% 0% 10% 20% 30% 40% 50% 60% 1. Excluding UED as lessee of the UEBH hotel and convention centre 20
Diversified Tenant Mix BREAKDOWN OF TENANT TYPE BY UNDERLYING GROSS INCOME BREAKDOWN OF TRADE SECTOR BY UNDERLYING GROSS INCOME SMEs 15.8% Government- Linked 7.7% Telecomm & Data Warehousing 11.1% Healthcare 4.6% F&B 5.7% Electronics 6.9% Engineering 6.3% ICT 46.5% Retail 10.7% MNCs 76.5% Other 8.2% 21
Weighted Average Lease Expiry Lease Profile of underlying tenants as at 31 December 2013 Expires by % Leased Area 1 Expires by % of Underlying Gross Rental Income 1 60% 50% 55.2% 60% 50% 56.0% 40% 40% 30% 20% 22.2% 22.6% 30% 20% 20.6% 23.4% 10% 10% 0% FY2014 FY2015 FY2016 & Beyond 0% FY2014 FY2015 FY2016 & Beyond Weighted Average Lease Expiry ( WALE ) Profile 1 Portfolio Underlying Tenancies and Sub-Tenancies WALE by Leased Area as at 31 December 2013 3.4 years WALE by Underlying Gross Rental Income for the month of December 2013 3.9 years 1. Based on the assumption that renewal options are not exercised. 22
Agenda Key Highlights Financial Performance Capital Management Portfolio Highlights Looking Ahead 23
Economic Growth The Singapore economy grew by 4.1% in 2013, up from 1.9% in 2012. According to the Ministry of Trade and Industry, the Singapore economy is expected to grow by 2.0 4.0% in 2014. 1 1. Ministry of Trade and Industry: MTI Maintains 2014 GDP Growth Forecast at 2.0 to 4.0 Per Cent in 2014, 20 February 2014 24
Industrial Sector Outlook For the business park sector, net new demand increased toward the end of 2013 bolstering occupancy rates from 80.9% in Q4 2012 to 84.1% in Q4 2013. For the logistics sector, net new supply in Q4 2013 was above net new demand, which led the average occupancy rate to ease to 90.8% in Q4 2013. Source: Urban Redevelopment Authority, JTC Corporation, Colliers International Singapore Research 25
Industrial Sector Outlook The monthly median rent for business park space rose by 17.8% year-on-year to S$48.33 psm pm (S$4.49 psf pm) as of Q4 2013. The monthly median rent for logistics warehouse space rose by 5.4% year-on-year to S$20.99 psm pm (S$1.95 psf pm) as of Q4 2013. Source: Urban Redevelopment Authority, JTC Corporation, Colliers International Singapore Research 26
Looking Ahead Economic Outlook Robust economic growth of 2 4% in 2014, underpinning demand in the industrial property sector. Singapore s infocomm industry is enjoying structural upward growth trend, with industry revenues growing at a CAGR of 12.3% from S$32.2 bil in 2002 to S$102.5 bil in 2012 1. Industrial Space Outlook Limited new supply and strong demand contribute to maintaining occupancy and rental levels. VIT Outlook Occupancy at UEBH and TPCC looks set to continue to grow VIT is well positioned to deliver on its forecast distribution for FY2014 1. Source: Infocomm Development Authority of Singapore 27
Asset Enhancement Project VivaCity 1 1. Subject to further feasibility studies, tenant commitments and regulatory and Board approval, the REIT Manager plans to embark on an asset enhancement initiative to rejuvenate TPCC so as to enliven the premises and boost the attractiveness of the business park. 28
Thank you For enquiries, please contact: Lawrence Chan Financial Controller lawrence.chan@vivaitrust.com Sherena Seow Senior Investor Relations Manager sherena.seow@vivaitrust.com 750 Chai Chee Road, #04-03 Technopark@Chai Chee, Singapore 469000 T. +65 6229 5555 F. +65 6229 5550 www.vivaitrust.com