OUE Commercial REIT Presentation for Morgan Stanley Virtual ASEAN BEST Conference 2020 29 June 2020 - SGX
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OUE Commercial REIT Presentation for Morgan Stanley Virtual ASEAN BEST Conference 2020 29 June 2020
Important Notice
This presentation should be read in conjunction with the announcements released by OUE Commercial REIT (“OUE C-REIT”) on 5 May 2020 (in relation to its
Financial Results for 1st Quarter 2020).
This presentation is for information purposes only and does not constitute an invitation, offer or solicitation of any offer to acquire, purchase or subscribe for units in
OUE C-REIT (“Units”). The value of Units and the income derived from them, if any, may fall or rise. The Units are not obligations of, deposits in, or guaranteed by,
OUE Commercial REIT Management Pte. Ltd. (the “Manager”), DBS Trustee Limited (as trustee of OUE C-REIT) or any of its affiliates. An investment in the Units is
subject to investment risks, including the possible loss of the principal amount invested. The past performance of OUE C-REIT is not necessarily indicative of the
future performance of OUE C-REIT.
This presentation may contain forward-looking statements that involve 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. These forward-looking statements speak only as
at the date of this presentation. Past performance is not necessarily indicative of future performance. No assurance can be given that future events will occur, that
projections will be achieved, or that assumptions are correct. 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,
changes in operating expenses (including employee wages, benefits and training costs), property expenses and governmental and public policy changes. You are
cautioned not to place undue reliance on these forward-looking statements, which are based on the Manager’s current view of future events.
Investors should note that they will have no right to request the Manager to redeem their Units while the Units are listed on the Singapore Exchange Securities
Trading Limited (the “SGX-ST”). It is intended that Unitholders 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 information and opinions contained in this presentation are subject to change without notice.
2
Agenda
Overview
Financial Performance and Capital Management
Commercial Segment
Hospitality Segment
Update on COVID-19
Outlook
Appendices
3
Overview
Overview of OUE C-REIT
One of the
Largest Diversified
Total assets under management
7 7 High quality
prime assets
SGX-listed REITS S$ 6.8billion (1)
High quality prime assets
3
6 properties in Singapore and 1 Asset classes
property in Shanghai
OUE Bayfront One Raffles Place OUE Downtown Office Lippo Plaza Mandarin Orchard Singapore Crowne Plaza Changi Airport Mandarin Gallery
Strong Support
Investment Mandate
OUE Group More than
in net lettable area 2.0 mil sq ft
Commercial
47.7% stake (1)
Right of First Refusal (“ROFR”) over OUE Limited’s Assets
1,640 upscale
hotel rooms
Hospitality / Hospitality-related
(1) As at 31 March 2020 5
Milestones Since Listing
Total assets under management increased by more than four-folds since listing in 2014
Transformative merger with OUE Hospitality Trust creates one of the largest diversified S-REITs FY2019
FY2018
S$6.8b
AUM
FY2016 FY2017
FY2015
S$4.5b
S$3.4b S$3.5b AUM
S$3.4b AUM AUM Completed
FY2014 AUM Debut acquisition
Completed Merger
AEI to issuance of of OUE
Maiden by way of a trust scheme
upgrade S$150 million Downtown
acquisition of arrangement (effective
S$1.6b common 3.03% fixed Office
of One from 4 Sep 2019)
AUM Raffles areas and rate notes
Place restrooms due 2020
(67.95% at Lippo
effective Plaza Commenced AEI at
interest) office tower One Raffles Place
Shopping Mall with
Commenced AEI at One co-working operator
Listed on SGX-ST Established S$1.5
Raffles Place Tower 1 to Spaces anchoring
with two assets – billion Multi-Currency
upgrade mechanical and the AEI
OUE Bayfront and Debt Issuance
Programme engineering equipment
Lippo Plaza
6
Premium Portfolio of Assets
OUE Downtown Mandarin Orchard Crowne Plaza
OUE Bayfront One Raffles Place Lippo Plaza Mandarin Gallery Total
Office Singapore Changi Airport
Description Premium Grade A office Comprises two Grade A Grade A office Grade A commercial Prime retail landmark A world class Located at Singapore NLA:
building located at office towers and a retail space, a mixed-used building located in on Orchard Road – hospitality icon in Changi Airport and Office: 1,869,003
Collyer Quay between mall located in development with Huangpu, one of preferred location for Singapore since close to Changi Retail: 307,561
the Marina Bay Singapore’s CBD at offices, retail and Shanghai’s flagship stores of 1971, MOS is the Business Park with Overall: 2,176,564
downtown and Raffles Raffles Place serviced residences established core international brands largest hotel along seamless
Place at Shenton Way CBD locations Orchard Road connectivity to Jewel
Changi Airport 1,640 hotel rooms
Attributable Office: 378,692 Office: 598,814 Office: 530,487 Office: 361,010 Retail : 126,283 1,077 hotel rooms 563 hotel rooms
NLA (sq ft) Retail: 21,132 Retail: 99,370 Retail: 60,776
Occupancy(1) Office: 100.0% Office: 94.0% Office: 94.6% Office: 85.8% Retail: 97.8% - - Office: 93.9%
Retail: 98.9% Retail: 99.1% Retail: 90.7% Retail: 97.0%
Overall: 99.9% Overall: 94.8% Overall: 86.5% Overall: 94.3%
Leasehold OUE Bayfront & OUE Office Tower 1: 99 yrs from 19 July 50 yrs from 2 July 99 yrs from 1 July 99 yrs from 1 July 74 yrs from 1 July -
Tenure Tower: 841 yrs from 1 Nov 1985 1967 1994 1957 1957 2009
99 yrs from 12 Nov 2007 Office Tower 2:
OUE Link: 99 yrs from 26 May 1983
15 yrs from 26 Mar 2010 75% of Retail mall:
Underpass: 99 yrs from 1 Nov 1985
99 yrs from 7 Jan 2002
Valuation(2) S$1,181.0m S$1,862.0m(3) S$912.0m RMB2,950.0m / S$493.0m S$1,228.0m S$497.0m S$6,776.9m
(S$2,954 psf) (S$2,667 psf) (S$1,719 psf) RMB50,409 psm GFA (S$3,904 psf) (S$1.1m / key) (S$0.9m / key)
S$603.9m(4)
(S$1,432 psf)
(1) Committed Occupancy as at 31 March 2020 (3) Based on OUB Centre Limited’s 81.54% interest in One Raffles Place. OUE C-REIT has an indirect 83.33% interest in OUB Centre Limited held via its wholly-owned subsidiaries
(2) As at 31 December 2019 (4) Based on SGD:CNY exchange rate of 1:4.885 as at 31 March 2020
7
Portfolio Composition
Mandarin Crowne Plaza Changi
Gallery Airport Hotel master lease
7.3% 7.2% agreements provide
Crowne Plaza
Changi Airport One Raffles minimum rent of
Lippo Plaza
7.3% Place
8.2% One Raffles Place
S$67.5 million
27.5%
26.7% per annum(3)
Retail Hospitality
18.9% 21.7%
Lippo Plaza
8.9% Mandarin Gallery
By 10.5% By
By
Asset Revenue
Segment
Value(1) Contribution(2)
Contribution(2)
OUE
Downtown OUE Downtown
Office Office
13.5% Mandarin 13.9% OUE Office
Orchard Bayfront 59.4%
Singapore 19.0%
18.1%
OUE Bayfront Mandarin Orchard
17.4% Singapore
14.5%
91.1% of assets under management in No single asset contributes more than Hospitality segment revenue was
Singapore 26.7% to total revenue supported by the minimum rent under
the hotels’ respective master lease
agreements
Commercial segment comprises the office and/or retail contribution from OUE Bayfront, One Raffles Place (67.95% effective interest), OUE Downtown Office, Lippo Plaza (91.2% strata interest) and Mandarin Gallery
(1) Based on independent valuations as at 31 December 2019 and SGD:CNY exchange rate of 1:4.885
(2) For 1Q 2020
(3) Mandarin Orchard Singapore and Crowne Plaza Changi Airport’s master lease agreements are subject to a minimum rent of S$45.0 million and S$22.5 million per annum respectively, totalling S$67.5 million per
annum
8
Financial Performance & Capital Management
1Q 2020 Key Highlights
Financial Revenue Net Property Income Amount Available for
Highlights Distribution
S$77.7million S$62.1 million S$37.6 million
40.5% YoY 42.5% YoY 44.5% YoY
Portfolio Commercial Segment Singapore Office Minimum Rent for
Performance Committed Occupancy Rental Reversions Hospitality Segment
94.3 % 7.9 % - 16.7% S$67.5 million p.a.
1Q 2019: 94.0% provides downside protection
Capital Aggregate Weighted Average % Fixed Rate Debt Issued in June 2020
Management Leverage Cost of Debt
40.2 % 3.2 % 76.6 % S$100.0 million
1Q 2019: 39.4% 1Q 2019: 3.5% 1Q 2019: 71.6% 4.0% Notes due 2025
Commercial segment comprises OUE Bayfront, One Raffles Place (67.95% effective interest), the office components of OUE Downtown (“OUE Downtown Office”), Lippo Plaza (91.2% strata interest) and Mandarin Gallery
101Q 2020 Key Highlights
Rebranding Transformational rebranding to Hilton Singapore Orchard announced on 26 March 2020
of Mandarin
Addition of new income generating spaces to drive growth in sustainable returns and value
Orchard
Singapore Capitalise on weak operating environment due to COVID-19 to position the property to benefit from the
expected recovery in the hospitality sector once travel confidence resumes
Re-branded hotel set to become Hilton’s flagship in Singapore and the largest Hilton hotel in Asia Pacific
Downside protection from the minimum rent embedded within the hotel master lease arrangement
throughout phased renovation and ramping-up period
Capital Expenditure Expected ROI Expected Relaunch of largest
on Stabilised Basis Completion Hilton hotel in Asia Pacific
~S$90.0 million ~10 % End-2021 2022
11Capital Management
Issued S$100.0 million 4.0% notes due 2025 on 24 June 2020 for refinancing existing borrowings. Pro forma average
term of debt expected to increase from 1.9 years as at 31 March 2020, to 2.1 years
2020 debt to be refinanced ahead of maturity, with average cost of debt expected to remain stable
With 76.6% of debt on fixed rate basis, earnings are mitigated against interest rate fluctuations
As at 31 Mar 2020 As at 31 Dec 2019 Debt Maturity Profile as at 31 March 2020
S$ million
Aggregate Leverage 40.2% 40.3%
Total debt S$2,656m(1) S$2,648m(2)
450
Weighted average cost of debt 3.2% p.a. 3.4% p.a. 150
Average term of debt 1.9 years 2.2 years 674
259
425
% fixed rate debt 76.6% 75.0% 346
24
40.7% 150 157
% unsecured debt 40.6%
21
2020 2021 2022 2023 2024
Average term of fixed rate debt 2.1 years 1.9 years Unsecured SGD Loan Secured SGD Loan
Share of OUB Centre Limited's Unsecured SGD Loan MTN
Interest coverage ratio(3) 2.9x 2.9x Secured RMB Loan
(1) Based on SGD:CNY exchange rate of 1:4.885 as at 31 Mar 2020 and includes OUE C-REIT’s share of OUB Centre Limited’s loan
(2) Based on SGD:CNY exchange rate of 1:5.171 as at 31 Dec 2019 and includes OUE C-REIT’s share of OUB Centre Limited’s loan
(3) Interest coverage ratio (“ICR”) as prescribed under Appendix 6 of the Monetary Authority of Singapore’s Code on Collective Investment Schemes (last revised on 16 April 2020). ICR for 31 December 2019 has
been restated accordingly
12Commercial Segment
Portfolio Performance – Commercial Segment
1Q 2020
(S$ million)
10.0%
60.9 8.1%
55.3
47.1
43.6
Revenue Net Property Income
1Q 2020 1Q 2019
The increases in revenue and net property income for 1Q 2020 were mainly due to contribution from Mandarin
Gallery upon completion of the merger with OUE H-Trust in 2019
Overall commercial segment committed occupancy was 94.3% as at 31 March 2020. On a “same-store basis”
excluding Mandarin Gallery, the commercial segment committed occupancy remained stable year-on-year (“YoY”) at
94.1% as at 31 March 2020
14Healthy Commercial Segment Occupancy
Commercial segment committed occupancy of 94.3% as at 31 March 2020, with increased committed office occupancy
at OUE Bayfront and OUE Downtown Office
Lippo Plaza’s committed office occupancy declined 4.1 percentage points (“ppt”) quarter-on-quarter (“QoQ”) to 85.8%
as at 31 March 2020, in line with overall Shanghai CBD Grade A office occupancy of 85.4% for the same period
Mandarin Gallery’s committed occupancy recorded a slight decrease of 0.5 ppt QoQ to 97.8%
Office: 93.9% Retail: 97.8% Commercial: 94.3%
Market: 97.6%(1)
100.0%
97.8%
94.6% 94.3%
94.0% Market: 85.4%(2)
85.8%
OUE Bayfront One Raffles Place OUE Downtown Office Lippo Plaza Mandarin Gallery Commercial Segment
As at 31 Mar 2020
(1) Source: CBRE Singapore MarketView 1Q 2020 for Singapore Grade A office occupancy of 97.6%
(2) Source: Colliers Shanghai Office Property Market Overview 1Q 2020 for Shanghai CBD Grade A office occupancy of 85.4% 15Resilient and Steady Office Occupancy
Singapore
100% 100.0%
97.6%
95% 94.6%
94.0%
90%
85%
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
OUE Bayfront One Raffles Place OUE Downtown Singapore Core CBD Office
Shanghai
100%
95%
90%
85.8%
85%
85.4%
80%
75%
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
Lippo Plaza Shanghai CBD Grade A Office
Source: CBRE, Colliers Shanghai
16Committed Office Rents In Line Or Above Market
OUE C-REIT’s office properties continued to achieve rents which were in line or above their respective market rents
Continued to record positive rental reversions across Singapore office properties in 1Q 2020, ranging from 7.9% to
16.7%
Average Expired Comparable Sub-market Rents
1Q 2020 Committed Rents(1) Sub-market
Rents Colliers(2) Savills(3)
Singapore
New Downtown/
OUE Bayfront S$12.64 S$12.80 – S$15.30 S$12.27 S$12.98
Marina Bay
One Raffles Place S$9.71 S$10.00 – S$11.30 Raffles Place S$10.51 S$10.17
OUE Downtown Shenton Way/
S$7.20 S$8.40 – S$8.90 S$10.31 S$8.91 – S$9.26
Office Tanjong Pagar
Shanghai
Lippo Plaza RMB8.63 RMB8.10 – RMB9.50 Puxi RMB9.15 RMB8.95
(1) Committed rents for renewals and new leases
(2) Source: Colliers Singapore Office Quarterly 1Q 2020 for Singapore comparable sub-market rents; Colliers Shanghai Office Property Market Overview 1Q 2020 for Shanghai comparable sub-market rents
(3) Source: Savills Singapore Office Briefing 1Q 2020 for Singapore comparable sub-market rents; Savills Shanghai Office Market in Minutes Update 3Q 2019 for Shanghai comparable sub-market rents
Note: For reference, CBRE Research’s 1Q 2020 Grade A Singapore office rent is S$11.50 psf/mth. Sub-market rents are not published
17Average Passing Rents
S$ psf/mth
11.75 11.85 11.60 11.65 11.76 11.85 11.98 12.03
10.40 10.58 10.26 10.28
11.43
9.92 9.69
Average passing office rent for all
9.45 9.50 9.56 9.61 9.68
7.27 7.31
Singapore office properties improved
6.94 7.00 7.16 7.21
Singapore as at 1Q 2020 due to consecutive
(Office) quarters of positive rental reversions
(1)
2013 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20
OUE Bayfront One Raffles Place OUE Downtown Office
RMB psm/day
9.89 9.97 9.86
9.79 9.81 9.75 9.65 9.70 Lippo Plaza’s average passing
9.45
Shanghai 9.14 office rent was RMB9.70 psm/day
9.06
(Office) as of March 2020
2013(1) 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20
Lippo Plaza
S$ psf/mth 24.60
23.60 23.60 23.60
22.50 22.30 Average retail rent at Mandarin
21.95 21.95 22.02
21.70
Mandarin Gallery remained stable in 1Q
Gallery
2020
2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20
Mandarin Gallery
(1) Proforma average passing rents as at 30 September 2013 as disclosed in OUE C-REIT’s Prospectus dated 17 January 2014 18Top 10 Tenants – Commercial Segment
Top 10 Tenants
4.9%
By Gross Rental Income 26.3%
4.6% 4.5%
2.3%
2.0%
1.9% 1.7% 1.6%
1.4% 1.4%
(1)
Bank of Deloitte & Luxury L Brands Allen & Overy Aramco Asia Spaces OUE Limited Hogan Lovells Virgin Active
America Merrill Touche LLP Ventures LLP Singapore Pte. Lee & Lee Singapore Pte
Lynch Ltd. Ltd
As of Mar 2020
(1) Including the hotel master lease arrangements for Mandarin Orchard Singapore and Crowne Plaza Changi Airport, where OUE Limited is the master lessee, OUE Limited’s contribution
to the portfolio by gross rental income is 23.4%
19Lease Expiry Profile
- Commercial Segment
14.0% of OUE C-REIT’s commercial segment gross rental income is due for renewal in 2020, with a
further 28.5% due in 2021
By NLA By Gross Rental Income Completed (Year-to-date)
29.8% 28.5%
26.1%
24.4%
5.6%
6.2% 18.3%
16.0%
14.8%
17.7%
10.4%
14.0%
2020 2021 2022 2023 2024 and beyond
WALE of 2.1 years by NLA(1) and 2.4 years by Gross Rental Income
As at 31 Mar 2020
Based on committed tenancies and excludes turnover rent
(1) “NLA” refers to net lettable area
20Lease Expiry Profile by Commercial Property
OUE Bayfront One Raffles Place
WALE: 2.5 years (NLA); 2.6 Years (GRI) WALE: 2.2 years (NLA); 2.3 Years (GRI)
34.7% 30.2%
31.3% 28.9%
24.4% 24.3%
24.5% 24.5% 23.1% 24.1%
23.6%
21.2%
15.1% 15.9% 7.0% 7.5%
11.5% 11.8%
7.8% 8.2%
10.8% 10.9%
4.5% 4.7%
2020 2021 2022 2023 2024 and beyond 2020 2021 2022 2023 2024 and beyond
OUE Downtown Office Lippo Plaza
WALE: 1.4 years (NLA); 1.5 years (GRI) WALE: 2.4 years (NLA); 3.0 years (GRI)
38.8%
0.5%
30.9%
0.4% 28.8%
41.9% 26.1%
37.1%
27.3% 28.1% 22.4%
23.8%
21.2%
8.3% 12.4% 12.6%
6.0% 9.6%
6.4% 7.4%
3.2% 3.6% 10.1% 8.3%
2020 2021 2022 2023 2024 and beyond 2020 2021 2022 2023 2024 and beyond
By NLA By Gross Rental Income Completed (Year-to-date) As at 31 Mar 2020 21Mandarin Gallery – Stable Performance
Committed Occupancy(1)
Differentiated Tenant Mix
4% 2%
99.1% 100.0% 99.5% 4% 1%
96.8% 98.2% 98.3% 97.8% 5%
7%
5%
11%
38%
By NLA
11%
By GRI 58%
17%
3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
14%
WALE: 2.2 years (NLA); 2.9 Years (GRI(2)) 23%
By NLA By Gross Rental Income Completed (Year-to-date) As of Mar 2020
32.6%
Fashion & Accessories Food & Beverage Hair & Beauty
28.3% Living & Lifestyle Travel Watches & Jewellery
23.6% 23.5%
5.6% 19.3%
16.5%
7.0%
12.6%
20.6% 10.6%
12.4%
2020 2021 2022 2023 2024 and beyond
(1) Excludes pop-up stores As at 31 Mar 2020
(2) Excludes turnover rent 22Tenant Base and Lease Expiry Profile –
All Segments
Others
Maritime & 1.6% Pharmaceuticals &
Logistics Healthcare
Services
2.3% 1.4%
3.6%
Manufacturing & (1)
Distribution Hospitality Office Retail Hospitality
4.0% 22.1%
IT, Media &
Telecommunications 21.4%
4.5%
18.5%
Legal 15.8%
4.6%
Real Estate & 10.9%
Property Services 8.7%
4.7%
6.8%
3.8% 4.9%
3.3% 3.5%
Energy & 2.4%
Commodities
4.9%
2020 2021 2022 2023 2024 and
Banking, Insurance &
Food & Beverage Financial Services beyond
5.8% 19.6%
WALE(2) of 3.6 years by Gross Rental Income
Accounting & Consultancy
Services Retail
10.0% 10.9% As of Mar 2020 As at 31 Mar 2020
(1) Refers to contribution from Mandarin Gallery and all other retail components within OUE C-REIT’s portfolio
(2) “WALE” refers to the weighted average lease term to expiry. Based on committed tenancies and excludes turnover rent
23Hospitality Segment
Portfolio Performance – Hospitality Segment
1Q 2020
1Q 2020 1Q 2020 RevPAR (S$)
(S$ million)
47.7% 23.9% 40.2%
16.9 211
15.0 202
185
141
121
110
Mandarin Orchard Crowne Plaza Changi Hospitality Portfolio
Revenue Net Property Income Singapore Airport
1Q 2020 1Q 2019
Both hotel properties saw a strong start to the year but as strict travel restrictions were progressively imposed from end January
2020, there was significant loss of demand from tourist arrivals as well as postponement and cancellation of planned MICE and
social events. Although there was replacement demand from those on self-isolation as well as workers affected by border
shutdowns, the operating environment remained weak
1Q 2020 RevPAR at Mandarin Orchard Singapore declined 47.7% to S$110, while Crowne Plaza Changi Airport recorded a lower
decline of 23.9% to S$141. Revenue for the hospitality segment in 1Q 2020 was at minimum rent of S$16.9 million
25Hospitality Segment Customer Profile
Customer Profile – By Geography Customer Profile – By Segment
1Q 2020 1Q 2020
(By room nights) (By room revenue)
Others
5%
Oceania Corporate
9% 20%
North America
9%
Southeast Asia
40%
Europe
11% Wholesale Transient
22% 58%
South Asia
4%
North Asia
22%
Notes:
Excludes aircrew and delays
“Transient” refers to revenue derived from rental of rooms and suites to individuals or groups, who do not have a contract with the hotel
“Corporate” refers to revenue derived from the rental of rooms and suites booked via a corporate or government company that has contracted annual rates with the hotel
“Wholesale” refers to revenue derived from the rental of rooms and suites booked via a third party travel agent on a wholesale contracted rate basis
26Re-branding of Mandarin Orchard Singapore to
Hilton Singapore Orchard
Transformational re-branding with addition of new income-generating spaces
to drive growth in sustainable returns and value
Rebranding will allow the hotel to leverage on
Hilton’s strong brand recognition and global sales & distribution network
Re-branded hotel set to become Hilton’s flagship in Singapore and
the largest Hilton hotel in Asia-Pacific
Major refurbishments to complete by end-2021 to capitalise on weak operating environment
due to COVID-19
Expected re-launch of hotel in 2022
Income assurance for Unitholders
Downside protection from master lease throughout phased renovation and ramping-up period
Approximately 10% expected return on investment on a stabilised basis
27Rationale for Re-branding of
Mandarin Orchard Singapore
1 Enhance the hotel’s competitive positioning
2 Leverage on Hilton’s strong global distribution network and established partnerships
3 Opportunity to drive more direct booking business on the back of established guest loyalty program
4 Positions the hotel to better tap on long term growth drivers in the Singapore hospitality sector
28Value Creation of Mandarin Orchard Singapore
Re-branding
Expected capital expenditure for the re-branding exercise is approximately S$90.0 million
The Manager intends to draw down on existing loan facilities to fully fund the capital expenditure progressively
over the renovation period
Based on the projected incremental net property income on a stabilised basis, the expected return is
approximately 10.0%
Expected Completion End 2021
Contribution to Capital Expenditure Approximately S$90.0 million
Expected Return Approximately 10%
29Update on COVID-19
COVID-19 Support Measures
Date Support Measures
18 Feb 2020 Unity Budget announced
• Property Tax Rebate: 10% - 30% rebate for qualifying commercial properties depending on classification
• Jobs Support Scheme: 8% co-funding of local employees’ wages for 3 months, based on monthly wage ceiling of up to S$3,600
26 Mar 2020 Resilience Budget announced
• Enhanced Property Tax Rebate: 100% rebate for hotels, retail shops & restaurants; 30% rebate for offices
• Enhanced Jobs Support Scheme: Extended to 9 months with co-funding of wages raised to 25% - 75% depending on sector, based on raised monthly
wage ceiling of S$4,600
31 Mar 2020 OUE C-REIT announces rental relief measures tailored for eligible retail tenants: (a) Waiver of gross rental for April 2020, (b) Passing on in full the
property tax rebates from the Singapore Government, (c) Flexible payment schemes, and (d) Rental reduction of between 15% to 25%, to be reviewed on
a month on month basis
6 Apr 2020 Solidarity Budget announced
• Enhanced Jobs Support Scheme: Increased support to 75% of wages of local employees in all sectors for April 2020 (subsequently extended to May
2020 with the extension of the circuit breaker)
7 Apr 2020 COVID-19 (Temporary Measures) Act passed
• Allows for the suspension of certain contractual obligations of businesses and individuals for 6 months (and up to 12 months), if inability to fulfil
contractual obligations is due to COVID-19
• Law passed to ensure property owners pass on property tax rebates to tenants
26 May 2020 Fortitude Budget announced
• Enhanced Jobs Support Scheme: Extended to 10 months with increased support for sectors affected by travel restrictions/safe distancing measures
5 Jun 2020 Amendments to COVID-19 (Temporary Measures) Act
• Landlords to co-share rental waiver with the Singapore Government for qualifying retail SME (4 months waiver) and office SME (2 months waiver)
tenants who suffered a year-on-year decline of 35% or more in average monthly revenue in April to May, of which the landlords’ share is 2 months and
1 month, respectively.
• SME tenants allowed to repay rental arrears in installments of up to 9 months, with interest payable on arrears capped at 3%
31Impact on OUE C-REIT
SG Office (53.1% of Revenue)
• Passing on in full property tax rebate from the Singapore Government Extended total rental rebates of
• Eligible tenants have been extended flexible rental payment schemes approximately S$18.8 million, of
which an estimated S$13.3 million
SG Hospitality (21.7% of Revenue) relates to property tax rebates from the
• Passing on in full property tax rebate from the Singapore Government Singapore Government
SG Retail (17.1% of Revenue) Less than 10 tenants have invoked the
• Passing on in full property tax rebate from the Singapore Government COVID-19 (Temporary Measures) Act
• Full rental waiver for April 2020 to eligible tenants and other targeted
relief measures depending on tenants’ needs
• Eligible tenants have also been extended flexible rental payment
schemes Additional rental relief will be granted
to qualifying retail and office SME
tenants in Singapore
Shanghai Office & Retail (8.1% of Revenue)
• Rental rebates and flexible payment schemes have been extended to
eligible tenants
32Priorities for 2020
Operations
Suspension of non-essential capital and operating expenditure across
OUE C-REIT’s properties
Tenant retention through
Flexible leasing terms to selected tenants to sustain occupancy and proactive lease management
preserve cash flows
Intensified frequency of cleaning and implemented various safe
management measures to ensure a safe and clean environment for
tenants and visitors
Focus on cost management
and cash conservation, and
maintaining financial flexibility
Capital Management
Issued S$100 million of 4.0% notes due 2025 for refinancing existing
borrowings in June 2020. Balance of borrowings due in latter part of
Preserve sustainable long
2020 to be refinanced ahead of maturity. Average cost of debt is term returns for Unitholders
expected to remain stable
Balance sheet remains healthy, with available credit facilities to tap on
where necessary
Asset values would need to correct by ~20%, before regulatory limit
of 50% is reached
33Appendices
Singapore Office Market
Shanghai Office Market
Singapore Hospitality Market
Singapore Hotel Master
Lease DetailsSingapore Office Market
Supply of new CBD Grade A office space in the medium term is limited.
Nevertheless, in view of business uncertainty in the current economic climate, both occupancy and office rents are
expected to come under pressure.
OUE C-REIT’s office properties are expected to continue to achieve rents which are in line with or above market rents.
As expiring rents for OUE C-REIT’s properties are below that of market rents, operating performance is expected to
remain resilient.
Office Supply Pipeline in Singapore (CBD and Fringe of CBD) Singapore CBD Grade A Rents and Occupancy
('000 sq ft)
11.40 11.5511.50
2,500 11.20 11.30 11.15 11.45
10.95 11.30
10.60 10.9010.40 10.80
10.25 10.45
9.75 9.90 10.10 97.6%
2,000 9.55 9.55 9.55 96.6% 9.50 9.70
9.30 9.10 9.40 96.5%
95.7% 96.1% 95.8% 9.10
8.95
95.2% 8.95 95.2% 96.1%
95.0% 96.2% 95.2% 95.9%
95.8% 95.7% 95.8% 94.6% 96.1%
1,500 95.2% 95.1% 95.6% 94.1%
93.8% 94.8%
1,258 94.1% 94.1%
93.5%
1,000 93.2%
92.5%
500 635
654 650
0 129
2020 2021 2022 and beyond 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20
Shenton Way / Robinson Road Fringe CBD Raffles Place Marina Bay Grade A rents (S$ psf/mth) Core CBD Occupancy
Note: Excluding strata-titled office
Source: CBRE Research 35Shanghai Office Market
Office leasing momentum in the Shanghai CBD Grade A market slowed in 1Q 2020, due to economic uncertainties
posed by the COVID-19 pandemic.
Given intense leasing competition and the significant office supply pipeline which only peaks after 2021, the rental
outlook is expected to remain subdued in the near term.
Focus is on tenant retention to sustain occupancy
Office Supply Pipeline in Shanghai CBD Shanghai CBD Grade A Rents and Occupancy
('000 sq m)
100.0% 10.50 10.40 11.00
600 543 10.10 10.30 10.40 10.30 10.21 10.36 10.35 10.27 10.10
98.0% 9.70 9.90 10.30 10.15 10.26 10.35 10.32 10.20 9.68 10.00
9.20 9.30 9.49
500 96.0% 9.10 95.0% 9.00
94.4%
93.8%
94.0% 96.0% 92.8%
92.8% 8.00
400 372 92.0% 94.0%
328 321 92.2% 92.6%
90.0% 7.00
90.0% 89.8% 89.4%
300 88.4%
90.2% 87.6% 6.00
88.0% 87.1% 89.7%
192 86.1% 87.6% 87.5% 5.00
200 86.0% 87.6%
86.1% 86.5%
84.0% 85.4% 4.00
100
82.0% 3.00
- 80.0% 2.00
2020 2021 2022 2023 2024 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17 4Q17 2Q18 4Q18 2Q19 4Q19
Zhuyuan Old Hongqiao & Gubei
Xujiahui Nanjing Road West CBD Grade A Rents (RMB psm/day) Shanghai CBD Grade A Occupancy
The Bund Huaihai Middle Road & Xintiandi
Source: Colliers International 36Singapore Hospitality Market
International visitor arrivals to Singapore for Jan-Apr 2020 decreased by 57.7% to 2.7 million compared to the same
period a year ago.
Hospitality segment supported by the minimum rent component of S$67.5 million per annum under the hotels’ master
lease arrangements.
Visitor Arrivals in Singapore Singapore Hotel Supply
(million)
Visitor Arrivals YTD Apr 2020 (No. of Hotel Rooms)
80,000
70,000
18.5 19.1
Sub-Prime 17.4 60,000
Sep ‘11 and SARS 16.4
15.6 15.1 15.2
14.5 13.4 -
50,000
13.2 14.3
11.6
40,000
9.8 10.3 10.1 9.7
8.3 8.9
7.6 30,000
6.1
20,000
2.7
10,000
-
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F
2014 2015 2016 2017 2018 2019 2020F 2021F 2022F
Total No. of Rooms Net Increase in Supply New Supply
Source: Singapore Tourism Board, International Visitor Arrival Statistics, JLL Industry Sources 37Singapore Hospitality Market
– Investment in Tourism
Strong Leisure and Events Calendar Tourism Investment
Greater Flight Connectivity
New and increased flights to key markets of China, India, Japan and USA
Partnerships to drive visitor arrivals
STB, CAG and Royal Caribbean collaborated on a new multimillion-dollar five-
year tripartite marketing partnership to promote fly-cruises. The collaboration is
expected to bring some 623,000 international fly-cruise visitors to Singapore and
generate over S$430 million in tourism receipts between end-2019 and 2024
Source: Singapore Tourism Board, Changi Airport Group and Singapore Airlines Media Releases
Upcoming Attractions and Developments
Mandai Nature Precinct
Rejuvenation of Mandai into an
integrated nature and wildlife
destination
New developments include the Bird
Park, Rainforest Park and a Nature
Resorts World Sentosa’s expansion includes new Rejuvenation and Expansion of Mandai
Resort
Greater Southern Waterfront
Rejuvenation of Orchard Road
attractions, hotels and lifestyle offerings (~2027) Nature Precinct (~2020)
Jurong Lake District (JLD)
Set to become the largest commercial
and regional centre outside
Singapore’s CBD
A new tourism development consisting
of an attraction, retail, F&B,
entertainment, hotel and open public
spaces is envisioned to support JLD’s
position as a ‘must visit’ leisure and
Sentosa Redevelopment (~2030) Expansion of Marina Bay Sands to include a 15,000-seat arena, a luxury hotel tower Jurong Lake District recreational cluster
Merlion Gateway (2021 ) and additional MICE space developmental project (~2026)
Information & Image Sources: Websites of Changi Airport Group, Mandai Project, Sentosa Development Corporation, Singapore Tourism Board, Women’s Tennis Association, International Rugby Board, F1, International Champions Cup Singapore, Las Vegas Sands, Resorts World
Sentosa, Singapore Art Week, Singapore Food Festival, Ultra Singapore, Urban Redevelopment Authority of Singapore and The World’s 50 Best Restaurants.
38Singapore Hotel Master Lease Details
Property Mandarin Orchard Singapore Crowne Plaza Changi Airport
No. of Guestrooms 1,077 563
Master Lease Variable Rent Comprising Sum of: Variable Rent Comprising Sum of:
Rental (i) 33.0% of MOS GOR(1) ; and (i) 4% of Hotel F&B Revenues;
(ii) 27.5% of MOS GOP(2); (ii) 33% of Hotel Rooms and Other Revenues not related to F&B;
subject to minimum rent of S$45.0 million(3) (iii) 30% Hotel GOP; and
(iv) 80% of Gross Rental Income from leased space;
subject to minimum rent of S$22.5 million(3)
Master Lessee OUE Limited OUE Airport Hotel Pte. Ltd. (OUEAH)
Tenure First term of 15 years to expire in July 2028 First term of Master Lease to expire in May 2028
Option to renew for an additional 15 years on the same Option to renew for an additional two consecutive 5-year terms
terms and conditions
FF&E Reserve Capital Replacement Contribution
3% of GOR Aligned with hotel management agreement between OUEAH and IHG
Generally at 3% of GOR
(1) GOR: Gross operating revenue
(2) GOP: Gross operating profit
(3) The rental under the master lease will be the minimum rent if the amount of variable rent for that operating year is less than the amount of minimum rent 39Thank You
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