Link Real Estate Investment Trust Corporate Presentation September 2018
About Link REIT
About Link REIT Link is Our Portfolio (1) Link is #1 Includes retail facilities, • REIT listed in Hong Kong car parks and offices • REIT in Asia by market capitalisation Hong Kong • Only internally-managed 138 ~ 61,000 91.0% REIT in Asia Properties Car park spaces of portfolio ~ 9M sq ft ~ 0.9M sq ft by value 100% Retail space Under development • Free float held by institutions and private Mainland China investors (Across Beijing, Shanghai and Guangzhou) 9.0% 3 ~ 3M sq ft Properties Retail and of portfolio office space by value Note: (1) As at 31 March 2018. P.3
Robust Financial Performance Revenue (HK$’M) (3) (3) NPI (HK$’M) 94.8% 99.0% 5-Year CAGR (2) : +9.0% 5-Year CAGR (2) : +10.7% Occupancy in Occupancy in Hong Kong Mainland China 10,023 8,740 6,513 7,663 67 Enhancement 31.3% 6,506 7,155 7,723 9,255 4,616 5,202 5,669 6,994 projects Reduction in energy completed to 13/14 13/14 17/18 12/13 14/15 15/16 16/17 12/13 14/15 15/16 16/17 17/18 consumption since 2010 date ~ HK$9 million Valuation (HK$’M) DPU (HK cents) 5-Year CAGR (2) : +16.3% 5-Year CAGR (2) : +11.3% Earmarked under Link Together Initiatives for the year ending 31 March 2018 Global recognitions 109,899 160,672 203,091 138,383 174,006 95,366 146.46 165.81 182.84 206.18 228.41 249.78 13/14 Mar 14 Mar 13 Mar 15 12/13 14/15 15/16 16/17 17/18 Mar 16 Mar 17 Mar 18 Notes: (1) All figures as at 31 March 2018 (unless stated otherwise). (2) CAGR from FY2012/13 to FY2017/18. P.4 (3) As at 30 June 2018.
One of the Top Global Retail-focused REITs Link is the largest REIT in Asia US$B 60.0 56.1 50.0 40.0 29.4 30.0 21.2 21.2 20.0 16.9 15.8 9.6 8.3 8.2 7.8 7.4 10.0 7.2 6.3 5.5 4.7 4.0 2.8 2.0 0.0 Note: Comparison of selected major REITs in the world based on market capitalisation. P.5 Source: Bloomberg as of 31 August 2018.
Improved Portfolio Quality through Active Portfolio Management Total portfolio value NAV per unit Portfolio mix (1) +33.0% vs 31 Mar 2017 +25.4% vs 31 Mar 2017 Like-for-like (2) +16.7% vs 31 Mar 2017 5.3% 3.7% HK$203,091M HK$83.06 4.3% Weighted average Valuation Hong Kong capitalisation rate 17.0% 91.0% Mar-18 Mar-18 Change Change (HK$’M) (%) vs Mar-17 vs Mar-17 Hong Kong Mainland China Retail 141,513 3.98 +13.4% -0.55 ppts 9.0% Car park 34,510 +12.0% 4.14 -0.60 ppts 69.7% Office (3) 8,733 +18.8% - N/A Mainland China Retail 10,701 +142.7% 4.50 - 4.75 - Office 7,634 +14.0% 4.25 - Compression of capitalisation rates to reflect transacted price of properties divested in FY17/18 Notes: (1) By valuation as at 31 March 2018. (2) Excluding properties divested and acquired during the periods under analysis. P.6 (3) Hong Kong office is under development and is valued using residual method.
Improved Debt Metrics Post Divestment % HK$’B Mar-18 Sep-17 Mar-18 Sep-17 Effective Gearing Total Bank loans 10.0 17.5 38.0 51.8 interest rate ratio liquidity Medium Term Notes 16.3 16.3 62.0 48.2 +HK$18.1M (3 ) -5.5% ppts (3) Total debt 26.3 33.8 100.0 100.0 (all unsecured) Cash 11.7 0.6 51.5 13.0 2.89% 11.9% HK$22.7B Undrawn facilities 11.0 4.0 48.5 87.0 Total liquidity 22.7 4.6 100.0 100.0 Diverse funding sources with long maturity (2) MTN Bank loans Undrawn facilities HK$’B 4.0 4.0 2.9 2.6 2.6 2.7 4.4 1.5 3.9 1.5 2.5 2.9 2.8 0.3 2.5 1.9 1.4 1.3 1.2 1.1 0.2 1.0 0.9 0.7 0.7 Year 0.4 0.4 ended Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Mar-26 Mar-27 Mar-28 Mar-29 Mar-30 Notes: (1) All figures as at 31 March 2018. (2) All amounts are at face value. (3) Compared with figure as at 30 September 2017. P.7
Maintained a Strong Financial Position Ample protection from rise in interest rates Years 8 59% 100% 63% 61% 52% Fixed rate debt/ 76% 80% 6 total debt 60% 4 7.2 6.9 40% 6.2 6.3 5.3 2 20% 0 0% As at Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 76% Average life of fixed rate debt % of fixed rate debt Credit ratings Key credit metrics by rating agencies Moody’s S&P As at As at requirement requirement (2) 31 Mar 2018 30 Sep 2017 (A / Stable) (A2 / Stable) A/Stable Total debt / total assets 11.9% 17.4% N/A < 30% S&P FFO (1) / debt (2) 21.2% 16.6% > 12% N/A A2/Stable EBITDA interest coverage 8.5 x 8.5 x N/A > 5.0x Total debt / EBITDA 3.5 x 4.8 x N/A < 5.5x Moody’s Notes: (1) Funds from operations is net cash generated from operating activities adjusted by operating lease expenses, interest expenses and income. (2) Preliminary figures to be confirmed by rating agencies. P.8
Hong Kong Portfolio
Retail Performance Remains Consistent Reversion rate Retail rentals (1) Actual YoY (1) : 5.3% Like-for-like YoY (1,2) : 9.5% 29.1% ( HK$’M) 6,691 7,000 Occupancy (5) 6,352 326 6,095 319 5,711 6,000 316 905 94.8% 5,326 893 306 805 4,872 293 5,000 767 Average unit rent 258 695 640 4,000 HK$62.4 psf 5,460 5,140 3,000 4,974 4,638 4,338 3,974 Tenants sales growth (6) 2,000 8.0% 1,000 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Rent-to-sales ratio (6) (4) (3) Shops Markets / Cooked Food Stalls Others Notes: (1) All figures for the year ended 31 March 2018, unless stated otherwise (2) Excluding properties divested and acquired during the periods under analysis (3) Rental from shops includes base and turnover rents 13.5% (4) Include education/welfare and ancillary and mall merchandising (5) As at 30 June 2018 (6) From 1 April 2018 to 30 June 2018 P.10
Car Park Performance Stays Satisfactory Car park rentals Car park income per space per month Actual YoY (1) : 5.5% Like-for-like YoY (1,2) : 10.9% Income per space Rental per month (HK$M) (HK$) 2,492 2,239 HK$2,492 2,022 1,767 2,046 1,940 1,566 1,846 Average valuation per space 1,378 1,656 509 484 1,494 465 1,315 432 386 342 1,537 1,456 1,381 1,224 1,108 HK$567K 973 Notes: 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 (1) Data as at 31 March 2018, unless stated otherwise (2) Excluding properties divested and acquired during Hourly Monthly Car park income per space per month the periods under analysis. P.11
Operational Updates for 1Q 2018/19 Non-discretionary trade mix Jun-18 1. Food and beverage 27.8% 8 1 2. Supermarket and foodstuff 21.2% 3. Markets/ cooked food stalls 14.8% 7 6 By 4. Services 10.7% 5 Food and monthly rent beverage 5. Personal care/ medicine 5.7% 2 4 Personal care / 6. Education/ welfare and ancillary 1.0% Medicine 7. Valuable goods (jewellery, watches and 0.9% Services 3 clocks) 8. Others (1) 17.9% 63.8% Total 100% Food related trades Note: P.12 (1) Include clothing, department store, electrical and household products, optical, books and stationery, newspaper, leisure and entertainment.
Tenants’ Performance in 1Q 2018/19 Non-discretionary tenant sales (1) Rent-to-sales ratio (2) is still within remain healthy amidst a strong rebound tenants’ affordable range in discretionary sales in Hong Kong (YoY) 14.7% 14.6% 13.7% 13.5% 11.2% 12.2% 10.3% 10.4% 8.0% 6.6% 3.6% 3.0% (3) (3) Food & Supermarkets & General retail Overall Food & Supermarkets & General retail Overall beverage foodstuff beverage foodstuff Apr – Jun 18 (Link) Apr – Jun 18 Apr – Jun 18 (Hong Kong) Notes: (1) Percentage figures represent year-on- year change in tenants’ average monthly sales per square foot of the respective periods. (2) A ratio of base rent plus management fee to tenants’ gross sales. (3) Including clothing, department store, electrical and household products, personal care/medicine, optical, books and stationery, newspaper, valuable goods, services, leisure and entertainment, and retail others. P.13
Extensive Asset Enhancement Pipeline To Improve Asset Quality Project ROI target Project estimates 5 Project estimates CAPEX (HK$’M) properties >15% Mid 18 Wan Tsui 151 Homantin (2) 124 10 No. of projects Sam Shing 32 AE projects underway completed since IPO Fu Shin (2) 93 4 Late 18 Kai Tin 34 properties 67 Cheung Fat 98 Fu Tai 59 Estimated CAPEX Early 19 Shun Lee 76 per year 1 Lok Fu Place 151 ~HK$800M property Choi Ming 94 AE pipeline FY18/19 FY19/20 FY20/21 FY21/22+ Projects underway 10 (HK$912M) 4 (HK$559M) Projects to commence Others under planning >20 (>HK$1,300M) Notes: (1) As at 31 March 2018. P.14 (2) Include fresh market upgrade.
Successful Fresh Market Revitalisation No. of fresh market asset enhancement completed (1) 12 8 7 3 2 2 1 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Fresh market AE projects completed to date 35 Red Market, Kwong Yuen Shopping Centre Notes: (1) As at 31 March 2018. (2) Include both direct management and single letting markets’ asset enhancement projects. P.15
T.O.P This is Our Place Landmark Project in Mongkok First Comers in Hong Kong Urban Write The Charcoal Room Bookstore, 4/F F&B, 5/F New Shopping Experience T.O.P This is Our Place ➢ Bridging online and offline Floor area: ~283,000 sq ft e-Coupon e-Ordering Leasing update (1) e-Booking e-Queuing ~70.0% ~90.0% Music Show Tower Podium Free Wifi Clinics Specialty F&B Beauty / spa Fashion Dinning & Shopping Buddy Co-working space Lifestyle Note: As at August 2018 P.16
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