2018/19 Annual Result Analyst Presentation 3 June 2019
18/19 Annual Results Link Today Page 2 (1) 131 Assets Geographical Split Total portfolio value HK$218B (+7.6%YoY) Mainland Mainland China Office China Retail 3.5% 9.7% HK Retail 66.0% HK Office 4.8% Beijing 2015 / 2019 HK 01 | 2019 Car park Acquisition of Shanghai China 16.0% Roosevelt Plaza, Beijing 2015 Guangzhou Shenzhen 2017 2019 Hong Kong Since 2005 Hong Kong | 86.8% 03 | 2019 03 | 2019 Disposal of 12 properties in Mainland China | 13.2% Acquisition of Hong Kong CentralWalk, Shenzhen Note: (1) By valuation as at 31 March 2019 2018/19 Annual Results | P.2
18/19 Annual Results Our Financial Achievements Page 3 Sustained Growth DPU | HK$ NAV per unit | HK$ Revenue | HK$’M NPI | HK$’M 10,037 7,689 89.48 2.7117 +7.2% YoY (1) +8.6% YoY +7.7% YoY +7.1% YoY (1) (2) incl. HK$0.0251 Discretionary distribution per unit Return of Capital to Unitholders 42.1M 11% 41% (3) (4) Units repurchased Total Book Return Total Unit Return Notes: (1) On like-for-like basis, excluding any properties acquired, divested and/or newly operational (as applicable) during the years under analysis (2) Discretionary distribution in 2018/2019 is to address the shortfall in unit buyback (3) A combination of unit price appreciation and distribution of 2018/2019 (4) A combination of NAV per unit appreciation and distribution of 2018/2019 2018/19 Annual Results | P.3
18/19 Annual Results Making a Difference Page 4 Creating Environmental Social Shared Reduce HK$3.2 Values single-use plastics for every HK$1 invested Socio-environmental benefits Solar panel pilot programme HK$14.4M Organic waste Charity and community recycling engagement projects Culture of Governance Excellence Staff development & engagement Expand management bench strength Set-up cross-departmental committees and project team 2018/19 Annual Results | P.4
18/19 Annual Results Value Creation Model Today’s Agenda Page 5 Tenant sales growth Open space initiative Distribution per unit Credit ratings Staff satisfaction Staff attrition rate Management Perception audit result Enhancement Impact of Link Together Initiatives Acquisition Development Customer engagement Thought leadership publications Divestment Re-Development Energy consumption Waste management 2018/19 Annual Results | P.5
Today’s Agenda Our Achievements
Hong Kong Retail 18/19 Annual Results Page 7 Key Figures at a Glance Rental growth (like-for-like) Reversion Occupancy Retail +7.1% 22.5% 97.1% HK retail Average unit rent HK$psf 68.0 +9.0% YoY 2018/19 Annual Results | P.7
Hong Kong Retail 18/19 Annual Results Page 8 Solid Platform for Non-discretionary Tenants Outstanding Healthy (2) (1) tenant sales growth occupancy cost 19.0% 17.0% 6.7% 14.3% 15.0% 13.9% 5.1% 5.0% 5.4% 5.3% 13.5% 13.0% 4.5% 4.3% 12.2% 11.0% 9.0% 1.8% 7.0% 5.0% (3) Food & Supermarkets & General retail Overall FY15/16 FY16/17 FY17/18 FY18/19 beverage foodstuff Food & beverage Supermarkets & foodstuff Apr 18 – Mar 19 (Link) Apr 18 – Mar 19 (HK) (3) General retail Overall Notes: (1) Percentage figures represent year-on-year change in tenants’ average monthly sales per square foot of the respective periods. (2) A ratio of base rent plus management fee to tenants’ gross sales. (3) Including clothing, department store, electrical and household products, personal care/medicine, optical, books and stationery, newspaper, valuable goods, services, leisure and entertainment, and retail others. 2018/19 Annual Results | P.8
Hong Kong Retail 18/19 Annual Results Page 9 Unlock Value through Asset Enhancements 11 projects HK$ 1,019M ROI range completed in 2018/19 13.8% - 35.6% Total CAPEX in 2018/19 AE projects completed in 2H 2018/19 CAPEX ROI (HK$M) (%) Wo Che Plaza (2) 154 15.4 Kai Tin Shopping Centre 22 35.6 (3) Cheung Fat Plaza 108 21.8 Choi Yuen Plaza 45 18.1 (3) 58 26.7 Fu Tai Shopping Centre Shun Lee Commercial Centre 70 15.2 Lok Fu Place 159 16.6 (3) Notes: (1) Estimated return on investment (“ROI”) is calculated based on projected net property income post-project minus net property income pre-project divided by estimated project capital expenditures and loss of rental (2) Included a fresh market upgrade (3) A further phase will be carried out in the future 2018/19 Annual Results | P.9
Hong Kong Retail 18/19 Annual Results Page 10 Asset Enhancement Plans 4 projects CAPEX HK$580M underway to be completed by early 2020 Adding F&Bs and retail shops Choi Ming Shopping Centre Tseung Kwan O Upgrade fresh market and introduce (1) Tseung Kwan O Sheung Tak Plaza Decathlon Consolidated fresh market to one floor Tsz Wan Shan Shopping Centre Tsz Wan Shan and repartitioning Transforming retail space into new (1) Nam Cheong Place Nam Cheong fresh market Another 24 AE projects CAPEX >HK$1.2B in pipeline extended to 2023 No. of projects Expected completion 6 By 2020 Projects to commence 18 By 2023 Others under planning Note: (1) Enhancement included fresh market 2018/19 Annual Results | P.10
Hong Kong Car Park 18/19 Annual Results Page 11 Steady Recurrent Income Rental growth Car park income per Average valuation per (like-for-like) space per month space Carpark +9.4% HK$2,719 HK$625K 2018/19 Annual Results | P.11
Hong Kong Office 18/19 Annual Results Page 12 The Quayside Occupation Permit received in May 2019 Office 65% leased JP Morgan | Link | WeWork | Gammon under documentation and 29% advance negotiation Retail 68% leased Specialty F&B | Gym under documentation and 13% advance negotiation 2018/19 Annual Results | P.12
Active Portfolio Management 18/19 Annual Results Today’s Agenda Page 13 Selective Investments / Divestments Roosevelt Plaza, Beijing CentralWalk, Shenzhen 2 Acquisitions +1.6M sqft retail space 9B portfolio value (RMB) Expect initial reversion rates In line with previous Mainland China acquisitions 12 Assets disposed -0.6M sqft retail space 9B portfolio value (HK$) 2018/19 Annual Results | P.13 P.13
Mainland China Retail 18/19 Annual Results Page 14 Strong Foothold in Mass / Mid-tier Retail 2015 2017 2019 CentralWalk Metropolitan Plaza Roosevelt Plaza EC Mall Retail trade mix | Overall retail Supermarkets & reversion | % 30.2 foodstuff by leased area 14.6% Leisure & F&B entertainment 28.4% Overall retail 13.1% occupancy | % 98.5 General retail & Fashion others 27.6% 16.3% 2018/19 Annual Results | P.14
Mainland China Office 18/19 Annual Results Page 15 Strong Leasing Momentum at Link Square Renewed anchor tenant at high reversion Office Occupancy | % Office Reversion | % 95.5 23.8 Office trade mix | by leased area Others Retailers & 16.9% consumer products 5.2% Professional services Industrial goods & 41.3% services 17.3% Pharmacy 4.1% Technology, 15.2% Media, Telecom 2018/19 Annual Results | P.15
Today’s Agenda Evolving Trends and Link’s Responses
Hong Kong Macro Overview 18/19 Annual Results Page 17 Expect Slower Economic Growth Inflation and staff cost will likely HK economy faces external headwinds continue to rise steadily amid trade war 6% 6% Inflation rate Avg. Nominal Payroll GDP (YoY) 4% 4% 2% 2% 0% 0% 2016 2017 2018 2019F * 2020F 2021F 2016 2017 2018 1Q 2019F 2020F 2021F 2019 *Minimum wage +8.7% from HK$34.5 to HK$37.5 per hour in May 2019 Sources: C&SD, EIU (forecast) Sources: C&SD, EIU (forecast) 2018/19 Annual Results | P.17
Mainland China Macro Overview 18/19 Annual Results Page 18 Economic Growth Should Sustain Economy is likely to grow Inflation is expected to Income growth outpaces at a slower and steady pace economic growth remain stable GDP (YoY) Inflation rate Per capita disposable income – urban (YoY) 12% 8% 12% 10% 10% 6% 8% 8% 4% 6% 6% 2% 4% 4% 0% 2% 2% Mainland China Beijing Shanghai Guangdong Guangzhou Shenzhen Sources: NBS, BMBS, SMSB, SBGP, SBGM, SSB, EIU (forecast) 2018/19 Annual Results | P.18
Interest Rate 18/19 Annual Results Page 19 Market Expects a Dovish Environment Market expects more rate cuts Market expects HIBOR to remain benign 3.0% 3.0% Fed Fund Upper Bound 1-month HIBOR 1-month LIBOR 2.5% 2.5% 2.0% 2.0% 1.5% 1.5% 1.0% 1.0% 0.5% 0.5% 0.0% 0.0% 2018 2019F 2020F 2021F 2016 2017 2016 2017 2018 2019F 2020F 2021F Source: Bloomberg Source: Bloomberg Forward HIBOR/LIBOR as at May-19 Forward Fed Fund Rates as at May-19 2018/19 Annual Results | P.19
Solid Capital Foundation 18/19 Annual Results Page 20 Bringing Certainty in Uncertain Times Total Debt | HK$24.5B 3.12 % 69.8 % HKD Bank loans Effective interest Fixed rate debt/ 27.8% MTN (HKD HK$6.8B and USD) rate (1) total debt (1) 62.0% HK$15.2B RMB Bank 4.8 years 10.7 % loans 10.2% HK$2.5B Average HKD fixed Gearing ratio rate debt maturity 1 st green convertible bond in real estate sector globally 3 ‘A’ Credit Ratings HK$4B Maturity: 5-year (due 2024) A2/Stable A/Stable A/Stable Coupon: 1.6% S&P Conversion price: HK$109.39 Moody’s Fitch Note: (1) Refers to HKD debt portfolio 2018/19 Annual Results | P.20
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