Sabana Shari’ah Compliant Industrial Reit 3q 2017: Third Quarter Ended 30 September 2017 Financial Results Presentation

Transcription

1. SABANA SHARI ’AH COMPLIANT INDUSTRIAL REIT 3Q 2017: Third Quarter Ended 30 September 2017 Financial Results Presentation 23 October 2017
2. Important Notice Disclaimer This presentation shall be read in conjunction with the financial information of Sabana Shari ’ah Compliant Industrial Real Estate Investment Trust (“Sabana REIT” or the “Trust”) for the third quarter from 1 July 2017 to 30 September 2017 (“3Q 2017”). 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. 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, property expenses and governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on these forward looking statements, which are based on current view of management on future events. Any discrepancies in the tables included in this presentation between the listed amounts and total thereof are due to rounding. 2
3. Contents I . Key Highlights 5 II. Financial Performance 7 III. Capital Management 12 IV. Portfolio Performance 15 V. 25 Outlook and Strategy VI. 3Q 2017 Non-Shari’ah Income 28 VII. Distribution Details 30 3
4. Contents I . Key Highlights 5 II. Financial Performance 7 III. Capital Management 12 IV. Portfolio Performance 15 V. 25 Outlook and Strategy VI. 3Q 2017 Non-Shari’ah Income 28 VII. Distribution Details 30 4
5. Key Highlights for 3Q 2017 Results • Distribution per Unit (“DPU”) and distributable income of 0.79 Singapore cents and S$8.3 million respectively for 3Q 2017 Balance sheet • Aggregate leverage and weighted average all-in cost of borrowings in 3Q 2017 reduced to 36.0% and 3.9% respectively • Total value of unencumbered assets increased from S$323.3 million (including 218 Pandan Loop) in second quarter to S$507.2 million (excluding divested 218 Pandan Loop) in third quarter • The net sales proceeds from the divestment of 218 Pandan Loop was used mainly to reduce the Trust’s existing borrowings and lower its recurring financing costs • The proceeds from the rights issue, as previously announced, has been fully utilized to primarily repay maturing short-term borrowings, lowering the gearing from 43.2% as at 31 December 2016 to 36.0% as at 30 September 2017 Tenancy • As at 30 September 2017, multi-tenancy and overall portfolio occupancy levels stood at 80.4%(1) and 88.4%(2) respectively Strategic Review • Strategic Review is still underway; talks are ongoing but no binding agreements have been entered into (1) 151 Lorong Chuan, 8 Commonwealth Lane, 9 Tai Seng Drive, 15 Jalan Kilang Barat, 23 Serangoon North Avenue 5, 508 Chai Chee Lane, 34 Penjuru Lane, 2 Toh Tuck Link, 123 Genting Lane and 39 Ubi Road 1. (2) By Net Lettable Area (“NLA”). 5
6. Contents I . Key Highlights 5 II. Financial Performance 7 III. Capital Management 12 IV. Portfolio Performance 15 V. 25 Outlook and Strategy VI. 3Q 2017 Non-Shari’ah Income 28 VII. Distribution Details 30 6
7. Financial Performance For the quarter ended 30 September 2017 (in S$'000) 3Q 2017 2Q 2017 Variance 3Q 2017 (%) 3Q 2016 Variance (%) Gross revenue 20,859 21,964 (5.0) 20,859 23,031 (9.4) Net property income (“NPI”) 13,400 12,933 3.6 13,400 13,911 (3.7) Income available for distribution 8,336 8,568 (2.7) 8,336 8,858 (5.9) 0.79(1,2) 0.81(3) (2.5) 0.79(1,2) 1.06(4) (25.5) 3.13 3.25 (3.7) 3.13 4.22(4) (25.8) DPU (cents) Annualised DPU (cents) (1) Based on 1,053,083,530 units issued as at 30 September 2017. (2) For 3Q 2017, the Manager received 100% of its fees fully in cash as the ordinary resolution to authorise the Manager to issue units and to make or grant convertible instruments was not passed at the Annual General Meeting held on 28 April 2017. Without the general mandate to issue new units, the Manager is not able to continue to receive 80.0% of its base fee in units and has to receive its fees fully in cash from 1Q 2017 onwards. The DPU for 3Q2017 of 0.79 cents would have instead been approximately 0.88 cents had the Manager been able to continue receiving 80.0% of its base fee in units. (3) The DPU for 2Q2017 of 0.81 cents would have instead been approximately 0.87 cents had the Manager been able to continue receiving 80.0% of its base fee in units and approximately 0.78 cents had the Manager not elected to forgo 25% of its fees for 2Q2017. (4) DPU for prior periods has been restated to reflect the effect of bonus element in the Rights Issue. 7
8. 3Q 2017 QoQ Financial Performance (in S$'000) 3Q 2017 Variance (%) 2Q 2017 Gross revenue 20,859 21,964 (5.0) Property expenses (7,459) (9,031) 17.4 NPI 13,400 12,933 3.6 Net finance costs (4,066) (3,974) (2.3) Manager's fees (1,238) (930) (33.1) Trustee's fees (104) (106) 1.9 Other trust expenses (630) (1,296) 51.4 Net income 7,362 6,627 11.1 236 (556) 142.4 - (27,876) 100.0 Gain on divestment of investment properties 1,816 - NM Total return for the period 9,414 (21,805) 143.2 Distribution adjustments(1) (1,078) 30,373 (103.5) 8,336 8,568 (2.7) Net change in fair value of financial derivatives Net change in fair value of investment properties Income available for distribution Gross Revenue decreased by 5.0% mainly due to non-recognition of revenue for master leases at 1 Tuas Avenue 4 and 6 Woodlands Loop as collections are no longer probable. Net Property Income increased by 3.6% mainly due to 17.4% savings in property expenses. Property expenses decreased by 17.4% mainly due to lower impairment losses on master tenants at 1 Tuas Avenue 4 and 6 Woodlands Loop, arising from revenue not recognized in 3Q 2017. Net finance costs increased marginally by 2.3% despite lower profit expense in 3Q2017 mainly due to lower Ta’widh charged to tenants and hence lower finance income compared to 2Q2017. Other trust expenses decreased by 51.4% mainly due to the one-time legal, professional and advisory fees relating to the Extra-ordinary General Meeting in 2Q 2017. Income available for distribution decreased by 2.7% mainly due to higher manager’s fees payable in cash in 3Q 2017 due to a 25% manager’s fee waiver in 2Q 2017 only. NM denotes “not meaningful”. (1) Comprise Trustee’s fees, donation of non-Shari’ah compliant income, amortisation of capitalised transaction costs incurred on borrowings, straight-lining adjustments on rental income for accounting purposes, net change in fair value of financial derivatives and investment properties, gain on divestment of investment properties and other expenses which are nondeductible for tax purposes. 8
9. 3Q 2017 YoY Financial Performance (in S$'000) 3Q 2017 Variance(1) (%) 3Q 2016 Gross revenue 20,859 23,031 (9.4) Property expenses (7,459) (9,120) 18.2 NPI 13,400 13,911 (3.7) Net finance costs (4,066) (5,295) 23.2 Manager's fees (1,238) (1,332) 7.1 (104) (111) 6.3 - (23) 100.0 Other trust expenses (630) (225) (180.0) Net income 7,362 6,925 6.3 236 (464) 150.9 Gain on divestment of investment properties 1,816 - NM Total return for the period 9,414 6,461 45.7 Distribution adjustments(2) (1,078) 2,397 (145.0) 8,336 8,858 (5.9) Trustee's fees Donation of non-Shari'ah compliant income Net change in fair value of financial derivatives Income available for distribution Gross revenue decreased by 9.4% year-on-year (“YoY”) due to non-recognition of revenue for master leases at 1 Tuas Avenue 4 and 6 Woodlands Loop as collections are no longer probable, conversion of 39 Ubi Road 1 into multi-tenanted arrangements in 4Q2016, and lower contribution from 151 Lorong Chuan, 8 Commonwealth Lane, 508 Chai Chee Lane and 2 Toh Tuck Link; positively offset by higher contribution from 9 Tai Seng Drive and 15 Jalan Kilang Barat on a YoY basis. Property expenses decreased by 18.2% YoY as a result of lower property tax, land rent, utilities and marketing expenses from certain multi-tenanted and non-triplenet master tenanted properties, as well as lower impairment loss on master tenant at 1 Tuas Avenue 4. Net finance costs decreased by 23.2% mainly due to lower profit expense from lower outstanding borrowings YoY due to repayment of the then outstanding borrowings using the net proceeds from the Rights Issue and the net divestment proceeds from 218 Pandan Loop. Other trust expenses increased by 180.0% mainly due to higher professional and advisory fees relating to the on-going strategic review on YoY basis. Income available for distribution lowered by 5.9% mainly due to lower NPI and higher Manager’s fees paid in cash, positively offset by lower profit expense arising from lower outstanding borrowings and lower non-taxable straight-lining adjustments on rental income. (1) Please refer to section 8 of the financial statements and distribution announcement for 3Q 2017 for a more detailed explanation of the variances. (2) Comprise the portion of Manager’s fees paid/payable in units, Trustee’s fees, donation of non-Shari’ah compliant income, amortisation of capitalised transaction costs incurred on borrowings, straight-lining adjustments on rental income for accounting purposes, net change in fair value of financial derivatives, gain on divestment of investment properties and other expenses which are non-deductible for tax purposes. 9
10. Resilient Balance Sheet As at 30 September 2017 Investment properties S $'000 955,451 Investment properties held for divestment 12,250 Other assets 14,672 Total assets 982,373 Borrowings, at amortised cost 351,392 Other liabilities 29,340 Total liabilities 380,732 Net assets attributable to Unitholders 601,641 Units in issue 1,053,083,530 NAV per unit (S$) 0.57 Adjusted NAV per unit(1) (S$) 0.56 (1) Excludes distributable income of approximately S$8.3 million available for distribution for the quarter ended 30 September 2017. 10
11. Contents I . Key Highlights 5 II. Financial Performance 7 III. Capital Management 12 IV. Portfolio Performance 15 V. 25 Outlook and Strategy VI. 3Q 2017 Non-Shari’ah Income 28 VII. Distribution Details 30 11
12. Stronger Capital Structure At A Glance As at 30 September 2017 Borrowings S $353.0 million Aggregate leverage(1) 36.0% Proportion of total borrowings on fixed rates 79.3% Average all-in financing cost(2) Outstanding Term Commodity Murabaha Facility (“CMF”) Revolving Murabahah Facility Trust Certificates 3.9% S$120.0 million S$43.0 million S$190.0 million Weighted average tenor of borrowings 1.5 years Profit cover(3) 3.6 times Unencumbered assets S$507.2 million (1) Ratio of total borrowings and deferred payment over deposited property as defined in the Property Funds Appendix of the Code on Collective Investment Schemes. (2) Inclusive of amortisation of transaction costs. (3) Ratio of Net Property Income over profit expense (excluding amortisation of transaction costs and other fees) for the period from 1 July 2017 to 30 September 2017. 12
13. Evenly Staggered Borrowings Maturity As at 30 September 2017 250 200 133 .0(1) S$ millions 150 130.0 43.0(1) 100 90.0(2) 100.0 50 90.0 90.0 30.0 0 2017 CMF 2018 Multicurrency Islamic Trust Certificates 2019 2020 Revolving Murabahah Facility Maturities of total outstanding borrowings of S$353.0 million evenly staggered over next 3 years. (1) Excludes S$5.9 million of undrawn Revolving Murabahah Facility. (2) Excludes S$18.0 million of undrawn Revolving CMF. 13
14. Contents I . Key Highlights 5 II. Financial Performance 7 III. Capital Management 12 IV. Portfolio Performance 15 V. 25 Outlook and Strategy VI. 3Q 2017 Non-Shari’ah Income 28 VII. Distribution Details 30 14
15. Property Locations Our properties are diversified into four industrial segments across Singapore , close to expressways and public transportation. 15
16. Occupancy Rates As at 30 September 2017 As at 30 June 2017 4 ,353,300 sq ft(1) 4,403,674 sq ft 10 properties, master leases(2) 100.0% 100.0% 10 properties, multi-tenanted(3) 80.4% 80.4% 20 properties, total portfolio(4) 88.4% 87.3% 2.1 years 2.4 years 33.8 years 34.1 years 2.3 years 2.4 years Total portfolio GFA Portfolio occupancy Weighted average master lease term to expiry(5) Weighted average unexpired lease term for the underlying land(6) Weighted average portfolio lease term to expiry(7) (1) Adjusted due to divestment of 218 Pandan Loop. (2) 5 triple net & 5 single net master leases. (3) 151 Lorong Chuan, 8 Commonwealth Lane, 9 Tai Seng Drive, 15 Jalan Kilang Barat, 23 Serangoon North Avenue 5, 508 Chai Chee Lane, 34 Penjuru Lane, 2 Toh Tuck Link, 123 Genting Lane and 39 Ubi Road 1. (4) By Net Lettable Area (“NLA”). (5) Weighted by gross rental income (master leases of 10 properties). (6) Weighted by Gross Floor Area (“GFA”) (7) Weighted by gross rental income (10 master leases and 10 multi-tenanted properties). 16
17. Occupancy Levels Comparisons to Singapore industrial average occupancy levels 100 % 90% 80% 70% 60% (2) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 2012 Sabana REIT Portfolio 2013 2014 (1) Industry (Factory) 2015 2016 2017 Industry (Warehouse) (1) (1) Source: Property Market Information by Urban Redevelopment Authority and Quarterly Market Report by Jurong Town Corporation. (2) 3Q 2017 data are not available as at 30 September 2017 from Jurong Town Corporation. 17
18. Diverse Asset Types Sabana REIT ’s portfolio is diversified in the following asset types: • • High-tech Industrial Chemical Warehouse & Logistics Asset Breakdown by NLA for 3Q 2017(1) Chemical Warehouse & Logistics 9.3% General Industrial 15.1% High-tech Industrial 41.4% • • Warehouse & Logistics General Industrial Gross Revenue by Asset Type for 3Q 2017 Chemical Warehouse & Logistics 8.3% General Industrial 9.3% Warehouse & Logistics 24.6% High-tech Industrial 57.8% Warehouse & Logistics 34.2% (1) As at 30 September 2017. 18
19. Long Weighted Average Leasehold For Underlying Land Percentage of unexpired land lease term by GFA (1) 51.4% 19.6% 12.8% 9.5% 6.7% - 2032 - 2036 2037 - 2041 2042 -2046 2047 -2051 2052 - 2056 2057- 2061 Beyond 2061 Well distributed, long underlying land leases, with an average of 33.8 years by GFA. (1) As at 30 September 2017. 19
20. Quality Assets Attract Quality Tenants As at 30 September 2017 As at 30 June 2017 3 ,561,627(1) 3,604,730 Total number of direct and sub-tenants 118 118 Weighted average lease term to expiry (mths)(2) 28.4 28.9 Total NLA (sq ft) (1) Adjusted due to divestment of 218 Pandan Loop. (2) Weighted by sub-tenancy gross rental income. 20