1Q FY17/18 Financial Results Presentation 27 July 2017 52 Fox Drive, Dandenong South, 12, 14 & 16 Science Park Drive, Singapore Melbourne, Australia
Disclaimers This material shall be read in conjunction with Ascendas Reit’s financial statements for the financial period ended 30 June 2017. 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. 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 Ascendas Reit's future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the Manager’s current view on future events. The value of Units in Ascendas Reit (“Units”) and the income derived from them, if any, may fall as well as 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 the SGX-ST. It is intended that unitholders of Ascendas Reit may only deal in their Units through trading on the SGX-ST. Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. The past performance of Ascendas Reit is not necessarily indicative of the future performance of Ascendas Reit. Any discrepancies between the figures in the tables and charts and the listed amounts and totals thereof are due to rounding. 2
Agenda Key Highlights for 1Q FY17/18 4 Financial Performance 7 Investment Management 10 Capital Management 15 Asset Management: Portfolio Update 20 Asset Management: Portfolio Resilience 32 Market Outlook 38 3
Key Highlights for 1Q FY17/18 4
Key Highlights for 1Q FY17/18 Total amount available for distribution rose by 10.9% y-o-y to S$118.5m DPU improved 4.3% y-o-y to 4.049 cents Key performance contributors were the new acquisitions in Singapore and Australia • Singapore: 12, 14 & 16 Science Park Drive • Australia: 197-201 Coward Street (Sydney), and 52 Fox Drive, Dandenong South (Melbourne) Portfolio operating performance improved • Portfolio occupancy increased to 91.6% (from 90.2% @ Mar 2017) • Positive rental reversion of +1.7% 5
Key Highlights for 1Q FY17/18 Investment highlights • Acquisition of 52 Fox Drive, Dandenong South in Melbourne for S$26.5 million (1) • Completed the handover of 50 Kallang Avenue for S$45.2 million Proactive Capital Management • Ascendas Reit’s A3 credit rating maintained • Aggregate leverage at 33.9% • 72.2% of borrowings is hedged for an average term of 3.2 years (1) Based on announcement dated 3 Apr 2017. 6
Financial Performance 7
1Q FY17/18 vs 1Q FY16/17 % 1Q 1Q (S$’000) FY17/18 (1) FY16/17 (1) Fav/ (Unfav) Gross revenue (2) 213,259 207,588 2.7 Net property income (2) 153,364 149,480 2.6 Total amount available for distribution (3) 118,498 10.9 106,855 DPU (cents) (4) 4.049 3.882 4.3 (1) The Group had 132 properties and 131 properties as at 30 June 2017 and 30 June 2016 respectively. (2) Higher revenue and net property income mainly attributable to contributions from the acquisition of 197-201 Coward Street, in Sydney, 52 Fox Drive, Dandenong South in Melbourne and 12, 14 and 16 Science Park Drive (DNV/DSO) in Singapore. This was partially offset by the divestment of Ascendas Z-Link and A-REIT City @ Jinqiao as well as the decommissioning of 50 Kallang Avenue for asset enhancement works. (3) Higher amount available for distribution is due to the rollover adjustment of S$5.9 million arising from a ruling by IRAS on the non-tax deductibility of certain upfront fees for certain credit facilities incurred in FY11/12. (4) Includes taxable (1Q FY17/18: 3.822 cents, 1Q FY16/17: 3.709 cents), tax exempt (1Q FY17/18: Nil, 1Q FY16/17: 0.156 cents) and capital (1Q FY17/18: 0.227 cents, 1Q FY16/17: 0.017 cents) distributions. 8
1Q FY17/18 vs 4Q FY16/17 % 1Q 4Q (S$’000) FY17/18 (1) FY16/17 (1) Fav/ (Unfav) Gross revenue (2) 213,259 208,937 2.1 Net property income (3) 153,364 154,069 0.5 Total amount available for distribution (4) 118,498 111,862 5.9 DPU (cents) (5) 4.049 3.852 5.1 (1) The Group had 132 properties and 131 properties as at 30 June 2017 and 31 March 2017 respectively. (2) Higher gross revenue mainly from the acquisition of 12, 14 and 16 Science Park Drive (DNV/DSO) on 15 February 2017 and 52 Fox Drive, Dandenong South, Melbourne in early April 2017. (3) Higher net property income in 4Q FY16/17 is due to an adjustment to property tax expenses arising from the retrospective downward revisions in the annual value of certain properties. (4) Higher amount available for distribution is due to the rollover adjustment of S$5.9 million arising from a ruling by IRAS on the non-tax deductibility of certain upfront fees for certain credit facilities incurred in FY11/12. (5) Includes taxable (1Q FY17/18: 3.822 cents, 4Q FY16/17: 3.576 cents), tax exempt (1Q FY17/18: Nil; 4Q FY16/17: 0.053 cents) and capital (1Q FY17/18: 0.227 cents, 4Q FY16/17: 0.223 cents) distributions. 9
Investment Management 10
Investment Highlights in 1QFY17/18 Purchase Completion/ Country Consideration / Handover Date Value (S$m) 26.5 Acquisition 52 Fox Drive, Dandenong South Australia 26.5 (1) 3 Apr 2017 (formerly Stage 4 Power Park Estate) (Melbourne) 45.2 Redevelopment 50 Kallang Avenue Singapore 45.2 21 Jun 2017 71.7 Grand Total Divestment in 2Q FY17/18 19.3 10 Woodlands Link Singapore 19.3 12 Jul 2017 (formerly NNB Building) (1) Based on announcement dated 3 Apr 2017. 11
Expanded Portfolio in Australia: 52 Fox Drive, Dandenong South (formerly Stage 4 Power Park Estate) Purchase Consideration (1) A$24.8m (S$26.5m) Acquisition Fee, Stamp Duty A$0.8m (S$0.85m) and Other transaction costs (1) Total Acquisition Cost (1) A$25.6m (S$27.3m) Vendor Goodman Dandenong Trust Land Area 33,107 sqm Land Tenure Freehold 52 Fox Drive, Dandenong South, Melbourne Gross Lettable Area 18,007 sqm (comprising of 2 warehouses of 12,200 sqm and Property : 5,807 sqm) Prime single-storey modern logistics facility Occupancy 67.8% physical occupancy Location : (Rental support provided for Power Park Industrial Estate in the industrial suburb remaining space) of Dandenong South. Good connectivity to arterial roads and the proposed Weighted Average Lease to 7.59 years Port Shuttle intermodal terminal. Expiry Fast access to and from the Port of Melbourne in 45 Key Tenant Bunzl Outsourcing Service min. (12,200 sqm) Tenants : Logistics users Initial NPI Yield 6.7% (6.5% post-cost yield) Completion Date 3 Apr 2017 (1) Based on announcement dated 3 Apr 2017. 12
Value-adding Re-developments: 50 Kallang Avenue Description Façade cladding, reconfiguration of spaces, lift modernisation, new air conditioning system and enlarging windows for natural lighting etc. Gross Floor Area 18,970 sqm Occupancy 100% Estimated Cost S$45.2m 50 Kallang Avenue Handover Date 21 Jun 2017 13
Capital Recycling Initiative: 10 Woodlands Link Description Light industrial building comprising a three-storey warehouse Remaining Land Tenure ~38.8 years (as at 31 March 2017) Net Lettable Area 11,537 sqm Acquisition Year/ Price 2005/ S$12.0m Book Value S$16.5m (as at 31 March 2017) 10 Woodlands Link (formerly known as NNB Building) Sales Price S$19.3m In accordance to Ascendas Reit’s Trust Deed, the Manager is entitled Net Property Income Impact S$0.87m to a divestment fee of 0.5% of the sale price of the property. Buyer Sengkang Import & Export Pte Ltd Capital gains over original S$7.3m costs Completion Date 12 Jul 2017 14
Capital Management 15
Healthy Balance Sheet Aggregate leverage remains stable at 33.9% Available debt headroom of S$2.1b to reach 45.0% aggregate leverage As at As at 30 Jun 17 31 Mar 17 Total debt (S$m) (1) 3,453 3,442 Total assets (S$m) 10,183 10,171 Aggregate leverage 33.9% 33.8% Unitholders' funds (S$m) 6,080 6,031 Net asset value (NAV) per Unit 208 cents 206 cents Adjusted NAV per Unit (2) 204 cents 204 cents Units in issue (m) 2,927 2,925 (1) Excludes fair value changes and amortised costs. Borrowings denominated in foreign currencies are translated at the prevailing exchange rates except for JPY/HKD-denominated debt issues, which are translated at the cross-currency swap rates that Ascendas Reit has committed to. (2) Excludes the amount to be distributed for the relevant period after the reporting date. 16
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