3QFY2013 Results Presentation - October 2013 - Soilbuild Business Space ...
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3QFY2013
Results Presentation
October 2013
Disclaimer
This presentation should be read in conjunction with the financial statements of Soilbuild Business Space REIT for the period from 16 August 2013 (“Listing
Date”) to 30 September 2013 (hereinafter referred to 3QFY2013).
This presentation is for information only and does not constitute an offer or solicitation of an offer to subscribe for, acquire, purchase, dispose of or sell any
units in Soilbuild Business Space REIT (“Soilbuild REIT”, and units in Soilbuild REIT, “Units”) or any other securities or investment.
Nothing in this presentation should be construed as financial, investment, business, legal or tax advice and you should consult your own independent
professional advisors.
This presentation may contain forward-looking statements that involve risks, uncertainties and assumptions. 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. You are cautioned
not to place undue reliance on these forward-looking statements, which are based on the current view of management of future events.
The value of Units and the income derived from them, if any, may fall or 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 Singapore
Exchange Securities Trading Limited (the “SGX-ST”). It is intended that holders of Units may only deal in their Units through trading on the SGX-ST. The
listing of the Units on the SGX-ST does not guarantee a liquid market for the Units.
The past performance of Soilbuild REIT is not indicative of the future performance of Soilbuild REIT. Similarly, the past performance of SB REIT
Management Pte. Ltd. (“Manager”) is not indicative of the future performance of the Manager.
Citigroup Global Markets Singapore Pte. Ltd., DBS Bank Ltd. and Oversea-Chinese Banking Corporation Limited are the joint global
coordinators, issue managers, bookrunners & underwriters of the initial public offering of Soilbuild REIT.
1
Content
Key Highlights
3QFY2013 Financial Performance
Financial Position /Capital Management
Portfolio Update
Market Update and Outlook
2Key Highlights
Key Highlights of 3Q FY2013 Results
•Soilbuild Business Space REIT successfully listed on the SGX on 16 August 2013 (hereinafter
Listing of Soilbuild referred to as “Listing Date”)
Business Space •IPO oversubscribed multiple times with strong support from investors amidst challenging market
REIT conditions for REITs
•Strong support shown by Soilbuild Group/Mr Lim Chap Huat with a 26% unitholding post listing
•Distribution per Unit for 3Q FY2013 (Listing Date to 30 September 2013) at SGD 0.760 cents -
3.0% above the Forecast1
3Q 2013 Results
•Portfolio Gross Revenue and Net Property Income for 3Q FY 2013 outperformed the Forecast1 by
0.8% and 2.0% respectively
•75% of debt hedged. Average all-in interest cost of 3.11% as at 30 September 2013
•Conservative gearing at 29.4% as at 30 September 2013 provides debt headroom for future
Financial Position acquisitions
•Healthy interest cover ratio of 5.6 times
•Portfolio occupancy rate increased to 99.8% due to expansion by existing tenant in Eightrium
Portfolio Update •3 lease renewals in Eightrium and Tuas Connection resulted in positive rental reversion of 7.9%.
•No further leases due for renewal for the rest of FY2013
Notes:
1. The Forecast is derived from the Forecast Year 2013 figures disclosed in the Prospectus dated 7 August 2013 (the “Prospectus”).
43QFY2013 Financial Performance
3Q FY2013 Distribution
For the period from
Variance
Listing Date to 30 September 13 Actual Forecast
(%)
Distributable Income (S$000) 6,113 5,929 3.1%
Distribution per Unit (”DPU”) (cents) 0.760 0.738 3.0%
Annualised DPU (cents)(1) 6.03 5.86 2.9%
Annualised Distribution Yield(2) 8.1%
Note:
(1) Based on 803.5 million units in issue as at 30 September 2013
(2) Based on closing price as at 30 Sep 2013 of $0.745
63Q FY2013 Financial Results – P&L
For the period from
Listing Date to 30 September 2013 Variance
Actual Forecast
(%)
(S$000)
Revenue 8,232 8,164 0.8%
Less Property Expenses (1,323) (1,388) 4.7%
Net Property Income 6,909 6,775 2.0%
Managers Fees (611) (593) (3.0%)
Other Trust Expenses (110) (113) 2.7%
Finance Costs (1) (1,101) (1,163) 5.3%
Net Investment Income before Tax
5,087 4,906 3.7%
and fair value change
Fair value change in investment
29,748 - n.m
properties
Net income before tax 34,835 4,906 n.m
Add back Non-Tax Deductible Items(2) (28,772) 1,023 n.m
Distributable Income 6,113 5,929 3.1%
Note:
(1) Finance Costs comprise net interest expense and amortization of upfront debt financing costs.
(2) “Non-tax deductible items” comprise the Manager’s management fees, property management and lease management fees paid or payable in Units, rent free amortisation, net
change in fair value of investment properties, Trustee fees and amortisation of upfront debt financing costs.
73Q FY2013 Distribution
Distribution Details
3Q FY2013
Distribution Period 16 August 2013 – 30 September 2013
Distribution Amount 0.760 cent per unit
Distribution Timetable
3Q FY2013
Last Day of Trading on “cum” Basis Tuesday, 5 November 2013
Ex-Date Wednesday, 6 November 2013
Books Closure Date Friday, 8 November 2013 (5.00 pm)
Distribution Payment Date Wednesday, 4 December 2013
8Financial Position/ Capital Management
3Q FY2013 Financial Results – Balance Sheet
All figures S$000 unless otherwise stated Actual Pro-forma
as at as at
30 September 31 December
2013 2012
Investment Properties 935,000 935,000
Other Assets 17,326 1,000
Total Assets 952,326 936,000
Current Liabilities 12,793 8,351
Bank Borrowings 274,881 274,656
Other Liabilities 21,873 13,766
Net Assets 642,779 639,227
Units in Issue (‘000) 803,469 803,469
Net Asset Value per Unit (S$) 0.80 0.80
10Capital Management
Borrowing Details 75% of Debt already hedged
Total Debt Facility S$285 million 75% of the initial debt drawn down at
IPO has been fixed with 2, 3 and 4 year
Total Debt Drawn Down S$280 million interest rate swaps
Aggregate Leverage(1) 29.4% Weighted average swap rate is slightly
Average All-in Interest Costs(2) 3.11% below 1%
Weighted Average Debt Maturity 2.9 years
Interest Coverage Ratio 5.6x
Debt Maturity Profile
(S$ Million)
$95.0 $95.0
$90.0
Well spread maturity
No Near Term profile with weighted
average debt maturity
Refinancing Risks
of 3 years
2013 2014 2015 2016 2017
% of Debt
0% 0% 34% 34% 32%
Maturing
% of Fixed Debt 0% 0% 25% 25% 25%
Note:
(1) Ratio of Debt over Deposited Properties under the Property Funds Appendix
(2) Inclusive of margins and amortisation of upfront fees
11Portfolio Update
Portfolio Overview
Soilbuild REIT Properties are located in key technology, media and back office hubs and logistics clusters, which are near air and sea
transportation ports such as Changi Airport, Jurong Port and the planned mega container port at Tuas expected to be operational around 2022.
IPO Portfolio Summary (1)
Total Valuation (2) S$935 million
Total NLA 2,955,338 sq ft
COS Printers WALE (3) 3.82 years
NLA: 58,752 sq ft Occupancy (4) 99.8%
Valuation: S$11.0 million
Industrial Properties
Business Park Properties
NK Ingredients
NLA: 312,375 sq ft
Valuation: S$61.0 million
Second Link CHANGI
(Tuas Checkpoint) BOON LAY SIMEI
PIONEER
BUONA VISTA EXPO
JOO KOON
ONE-NORTH
Jurong Port
CBD
Tuas Connection
(5)
Tuas Port
NLA: 651,072 sq ft (2022) Jurong Island Keppel
Valuation: S$125.0 million PSA Terminal
Sentosa
Terminal Eightrium
NLA: 177,286 sq ft
Valuation: S$101.0 million
BK Marine Solaris
NLA: 73,737 sq ft BizCentral NLA: 441,533 sq ft
Valuation: S$15.0 million NLA: 1,240,583 sq ft Valuation: S$303.0 million
Valuation: S$319.0 million
( (1) As at 30 September 2013. (2) Based on the higher of CBRE and Colliers’ valuations. (3) By Gross Rental Income for the month of 30 September 2013.
(4) As at 30 September 2013; (5) NLA includes some dedicated common areas within tenants’ compounds but does not constitute GFA.
13Portfolio Summary
Portfolio occupancy as at 30 Sep 2013 increased by 0.1% since IPO due to space expansion of an existing tenant
Property Remaining Occupancy Occupancy Purchase
Lease Age (1) Land Lease Rate(2) Rate as at Price
Property Type Arrangement (Years) (Years) as at 30 Sep 13 IPO (S$ Million)
Solaris
Business Master
2.0 55 100.0% 100.0% $293.4
Park Lease
West Park BizCentral Multi-User
Multi
Ramp-up 1.0 55 100.0% 100.0% $313.0
Tenanted
Factory
Eightrium
Business Multi
6.0 52 97.4% 95.3% $91.4
Park Tenanted
Tuas Connection Multi-User
Multi
Land Based 3.2 37 100.0% 100.0% $122.7
Tenanted
Factory
NK Ingredients (3)
Single-User Master Ph1: 22.2
33 100.0 % 100.0 % $60.0
Factory Lease Ph2: 6.1
COS Printers
Single-User Master
16.7 29 100.0% 100.0% $10.3
Factory Lease
Beng Kuang Marine
Single-User Master
13.4 43 100.0% 100.0% $14.5
Factory Lease
Portfolio 3.6 50(4) 99.8% 99.7% $905.3
(1) Age from issue of CSC (as at Sep 30, 2013). (2) Assumes master leases in place. (3) Phase 1 of development received CSC in July 1991 and Phase 2 of development received CSC in Aug 2007. (4) As at Sep 30, 2013.
14Key Portfolio Metrics
1 2
Portfolio Income by Property Well Spread Trade Sectors(1)
NK Ingredients Marine Offshore, Oil & Gas
Solaris 7% 16.4%
26% 22.5%
COS Printers Precision Engineering, Electrical and
1% Machinery products
Supply Chain Management, 3rd
BK Marine
2%
Party Logistics, Freight Forwarding
Chemicals
3QFY2013 % of Occupied
Eightrium @ 4.5% NLA of 2.93 16.2% Fabricated Metal Products
Gross
Changi million sq ft
Revenue of
Business Park 4.6% Electronics
West Park S$8.2 million 14%
BizCentral 4.6% Publishing, Printing & Reproduction
34%
of Recorded Media
Tuas 7.2% 12.4% Construction
Connection 11.8%
16% Others
(1) Inclusive of underlying tenants for Solaris
3 4
Diversified Tenant Base(1) Balanced portfolio with Growth Upside
Multi-tenanted
SME Properties
29% 58%
Total of
3QFY2013
104
MNC NPI:
tenants in Properties
65% S$6.9
portfolio under Master
million
lease
42%
Government
Agency
6%
(1) Inclusive of underlying tenants for Solaris
15Leasing Update
3Q FY2013 Leasing Update
No of Leases up for Retention rate Rental reversion
No of Leases Renewed
Renewals achieved
(by area)
2 / (1.8% of NLA) Renewed 3 / (2.2% of NLA) (1) 100% 7.9%
TOTAL 3 / (2.2% of NLA) 100% 7.9%
(1) Inclusive of forward renewal of future lease expiries
40%
35%
30%
25%
20%
1% 37%
33%
15% 1%
All the expiries
10% due in 2013 have
been renewed 16%
12%
5%
2%
0%
2013 2014 2015 2016 >2016
3Q 2013 Lease expiries renewed Area up for expiry as % of total NLA
16Well Staggered Lease Expiry Profile
Tenant Lease Expiry Profile
(% of total NLA & Gross Rental Income)
50.0%
WALE
3.9 years 44.5%
45.0% (by occupied NLA)
40.0% WALE
3.8 years 36.8%
(by Gross Income)
35.0% 33.1%
30.0% 28.2%
25.0%
20.0% 17.3%
15.8%
15.0% 12.7%
11.5%
10.0%
5.0%
0.0% 0.0%
0.0%
2013 2014 2015 2016 >2016
Lease Expiry Profile By total NLA Lease Expiry Profile By Gross Income
No leasing risk for the remainder of 2013
100% YTD retention rate since IPO reflects proactive tenant relationship management
17Quality and Established Tenant Base
Top 10 Tenants
(By Gross Rental Income) (1)
Huawei International Pte Ltd 1.4% Mitigation for
Sponsor Concentration Risk:
C.O.S Printers Pte Ltd 1.5%
Best-in-class properties with strong demand
Knowledge Universe Singapore Pte Ltd 1.6%
Strong underlying tenant base of established tenants
PICCO Enterprise Pte Ltd 1.8%
Established Sponsor with successful track record
Dyson Operations Pte Ltd 1.9%
Rentals secured with 12-months rental deposits
Barclays Technology Centre Limited 2.5%
Nestle Singapore (Pte) Ltd 4.6%
Schenker (Singapore) Pte Ltd 5.6%
NK Ingredients Pte Ltd 7.7%
Soilbuild(2)
Soilbuild(2) 26.8%
Top 10 tenants (excluding Soilbuild) accounts for less than 30% of Gross Rental Income (1)
(1) For the month of September 2013
(2) Soilbuild’s exposure includes SB Solaris (Investment) Pte.Ltd. and SB Storage Pte Ltd
.
18Market Update and Outlook
Median Rents of Business Space
1 2
Median Rents for Private Business Park Median Rents for Private Single-user Factory
5.00 2.50
4.50
4.00 2.00
$ psf per month
$ psf per month
3.50
3.00 1.50
2.50
2.00 1.00
1.50
1.00 0.50
0.50
0.00 0.00
2007 2008 2009 2010 2011 2012 1H 2013 2007 2008 2009 2010 2011 2012 1H 2013
Islandwide IBP CBP MBC and Singapore Science Park
Islandwide West Region
3 4
Median Rents for Private Multiple-user Factory Median Rents for Private Warehouse
2.50
2.50
2.00
$ psf per month
2.00
$ psf per month
1.50
1.50
1.00
1.00
0.50 0.50
0.00 0.00
2007 2008 2009 2010 2011 2012 1H 2013 2007 2008 2009 2010 2011 2012 1H 2013
Islandwide West Region Islandwide West Region
Source: Realis
20Market Update and Outlook
•Singapore’s economy grew 3.8% y-o-y in 2Q 2013 as a result of robust growth in the
manufacturing, wholesale & retail trades, transportation & storage, and finance &
Singapore’s insurance sectors
Economy •Despite modest growth expectations for the advanced and Asian economies and
concerns of future interest rate hikes, Singapore’s economy is forecast to grow between
2.5-3.5%
•For 1H 2013, the URA All Industrial Property price and rent index recorded slower growth
Industrial of 3.8% and 0.35% respectively as a result of new government policies
•Market rents expected to remain steady for conventional industrial premises and record a
Property marginal uptick for higher quality hi-tech and business park space
Sector •Transactions likely to remain subdued for remainder of 2013 given the cooling policy
measures and fragile economic outlook
•Nil leasing risk for the remainder of 2013 with approximately 17% of the portfolio NLA due
Soilbuild for expiry in 2014
REIT •Barring any unforeseen events, Management believes that Soilbuild REIT is well placed
to deliver on its stated forecast distribution for this financial year
Source: Ministry of Trade and Industry, URA, Colliers Research
21Thank You Key Contacts: Shane Hagan Roy Teo Chief Executive Officer Chief Operating Officer Tel: (65) 6415 5980 Tel: (65) 6415 5983 Email: shane.hagan@soilbuild.com Email: roy.teo@soilbuild.com
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