Rec ecor ord R d Reta etail Sale il Sales Dr s Drove R ove Rob obust P ust Perf erformance ormance Wharf Real Estate Investment Company Limited 2018 Interim Results 7 Aug 2018
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement Highlights 999-yea 999 ear r Land d Lea ease ses s Of Offer er a Di Differ erent entiati iation* on* HKIP HK IP & Ho Hotel el – 6 C 6 Core e As Asse sets Mall lls s – 73% 73% o of HK HKIP IP Rev even enue ue Record Revenue Record Market Share Record Retail Sales $7 $7.9B .9B $24 $24.6B .6B 9.9% 9.9 (+9.8%) (+31.4%) (Harbour City 7.5%) Harbour Ha bour Ci City – 11% 11% R Rev evenu enue e Gr Growth th Oc Occu cupancy ancy Co Cost st^ ^ – Ra Rapid d Imp mprove ovement ment HC 63% 63% TS 72% 72% 18.2% 18. 2% 20.5% 20. 5% of Group Revenue of Group Operating Profit (1H17: 21.3%) (1H17: 25.2%) (OP Margin 89%) *999-yr Leasehold (Excl. Ocean Terminal & Pacific Club at Harbour City, Plaza Hollywood and The Murray, Hong Kong) ^Occupancy Cost = Retail Rent/Retail Sales 1
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Plaza Pl za Ho Hollyw lywood ood Financi cial al Management agement Solid Income Base HKIP Revenue Split # Retail Pure IP Play • 73.2% 5 Core HKIP , $255B Valuation* • Expertise Retail, $151B Valuation • HKIP Revenue $7.1B Incessant Value Creation Initiatives • Comprehensive Tenant Mix • Serviced Apts * Excl. $16B of Hotels, which are Carried at Cost 1.7% Office 25.1% # Excl. Hotel 2
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement HK Retail Sales - Normalizing HK Retail Sales (HKD billion) 1H18 $247.8B (+13.4%) 1H 2H Back to 2013 & 2014 Retail Peak • 242 244 230 Previous Downturn Driven by • 226 228 217 211 Unfavourable Currency Movements etc. 169 134 142 1H18 Total Tourist Arrivals +10.1% • 128 (Mainlander +13.4%) 253 250 248 246 220 220 218 194 156 139 133 120 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Currency Impact 3
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement Resilience HC Total Retail Revenue Growth vs HK Retail Sales Growth 2007-201 2007 2017 7 CAGR GR 14.0% 6.1% Market Downturn Market Downturn 24.9% 22.0% 22.0% 20.6% 18.3% 17.7% 16.2% 15.6% 15.3% 18.3% 12.8% 14.8% 10.3% 9.8% 13.4% 11.0% 6.2% 4.8% 4.3% 2.2% 0.6% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1H18 -0.2% -3.7% -8.1% HC Retail Revenue HK Retail Sales Growth 4
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement 2H18 Uncertainties Trade Tension between US & China • RMB Depreciation & Global Currency Movements • Reduction of Import Tariff by Mainland China • High Comparison Base in 2H17 • 5
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement Financial Highlights 1H 1H18 18 1H17 1H 17 % Ch % Chg Revenue & OP Declined – Due to Orderly HK HKD Million ion • Group Revenue 8,154 9,546 -15% Exit from DP of HCDL # Operating Profit 6,352 7,050 -10% Group Core Profit +8% to $5.0B • Core Profit** 5,022 4,646 +8% ($1.65/Share); IP Core Profit +14% Profit Before IP Revaluation Surplus 5,022 4,428 +13% IP Valuation Surplus $5.2B • Net IP Revaluation Surplus 5,157 472 +993% Profit After IP Revaluation Surplus 10,179 4,900 +108% HKIP & Hotel Valuation $271B* • Earnings Per Share (HK$) DPS $1.05 (65% of Realised HKIP Core - Attributable to Shareholders 3.35 1.61 +108% • - Core** 1.65 1.53 +8% Profit for 1H18) Dividend Per Share (HK$) $1.05 NA # 72%-owned Subsidiary **Excl. IP Revaluation Surplus and Exceptional Items *As of End-Jun18. Incl. Valuation of 3 Marco Polo Hotels & The Murray, Hong Kong; but All Hotels are Booked at Cost in Wharf REIC’s Balance Sheet 6
Agenda Harbour City (HC) Times Square (TS) Central Portfolio Plaza Hollywood (PH) Financial Management 7
Agenda Ha Harbou rbour r Ci City ty (H (HC) C) Times Square (TS) Central Portfolio Plaza Hollywood (PH) Financial Management 8
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement Productivity – A New Record Ret etail il Sa Sale les Ret etail il Rev even enue ue $18 $18.6B .6B $3,755M $3, 755M +36.1% +15% Ret etail il Sa Sale les s psf sf/mth mth Market ket Sh Share* e* ~$2,700 ~$2 ,700 7.5 7.5% HC is a 999-yr Leasehold Property (Excl. Ocean Terminal, Pacific Club) *HK Incl. Wet Market, Motor Vehicles & Parts, but Excl. F&B 9
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement Retail Sales Growth (YoY) 36.1% 33.8% 30.0% 1H18 Outperformed HK by 22.7 ppts • 27.3% 24.9% (Historical High) 18.3% 18.3% 15.8% Retail Sales Growth Surpassed Previous 13.4% • 12.8% 13.2% 9.1% 11.0% Peak 10.3% 9.8% 10.0% 3.3% 2.2% 1H18 HK Market Share* 7.5% • 0.6% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1H18 -0.2% -3.7% -8.1% -9.9% Harbour City Hong Kong -12.1% *HK Incl. Wet Market, Motor Vehicles & Parts, but Excl. F&B 10
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement Stable Income HC Revenue Breakdown (HKD billion) 1H18 $5.2B (+11%) Retail Office S.A. +30% Retail Revenue +15% (73% of HC Total • 0.1 Revenue) 0.2 0.2 1.3 0.2 Retail Sales Spurs Rental Growth • 0.2 1.2 1.2 1.1 Solid Rental Reversions (Retail & Office) • 1.0 Hampton Court Conversion (to Office) by • 3.8 3.3 Mid-2019 – New Growth Impetus 3.1 3.0 2.8 1H14 1H15 1H16 1H17 1H18 11
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement OTE (Opened in Summer 2017) New Icon with Foster-designed Terminal • Tip Value-creation Exercises Drive Shopper • Traffic Enhanced Ocean Terminal’s Destination • 7 Out of 11 Dining Outlets Opened (All HK • Xihe Ya Yuan Beijing FU-RONG ANA Ten HEXA Debuts) Duck Restaurant Tsukada Nojo A Nu Retrouvez-vous Paper Moon 12
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement Canton Road Hotels 3 Marco Polo Hotels at HC • – 4 Consecutive Outstanding Quarters Prince Hotel – Total Revenue +16.8% – Total GOP +32.1% – Overall Occupancy 94.2% High Guest Satisfaction • Hong Kong Hotel Gateway Hotel 13
Agenda Har arbou bour Ci City ty (H (HC) C) Tim imes es Sq Squar uare e (T (TS) S) Central Portfolio Plaza Hollywood (PH) Financial Management 14
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement Vertical Landmark Ret etail il Sa Sale les Ret etail il Rev even enue ue Cluster of Luxury Brands • $4.6B $4. 6B $1, $1,062M 062M New Tenants Well Received by Shoppers • +21.6% Stable Tenant Mix Optimization Providing Upside • Ret etail il Sa Sale les s psf sf/mth mth Market ket Sh Share* e* ~$1,400 ~$1 ,400 1.9 1.9% TS is a 999-yr Leasehold Property *HK Incl. Wet Market, Motor Vehicles & Parts, but Excl. F&B 15
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement Vertical Landmark TS Revenue Breakdown (HKD billion) $1.4B (Flat) Retail Office 0.3 0.3 0.3 0.3 0.3 1.1 1.1 1.1 1.0 0.9 1H14 1H15 1H16 1H17 1H18 16
Agenda Har arbou bour Ci City ty (H (HC) C) Times Square (TS) Ce Centra ntral l Por ortf tfolio olio Plaza Hollywood (PH) Financial Management 17
Ov Overview Ha Harbo bour r City Times s Squ quare Central ral Portfolio tfolio Pl Plaza za Ho Hollyw lywood ood Financi cial al Management agement Premier Commercial Properties Wh Whee eelock lock Hou ouse se Ground Zero Location • Valuable Commercial Property • Cr Crawfor awford d Ho House use Diversity of Tenants • Wheelo eelock ck Ho House se Office ce Crawfo wford d Ho House se Office ce Spot Rent psf/mth Rental Reversion Spot Rent psf/mth Rental Reversion Home to Zara’s HK Flagship • $108 $108 +28% +28% $69 $69 +14% +14% +20% +12% Wheelock House & Crawford House are 999-yr Leasehold Properties 18
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