Frasers Property Industrial REIT Management (Thailand) Co.,Ltd - - PowerPoint PPT Presentation

Frasers Property Industrial REIT Management (Thailand) Co.,Ltd

2QFY19 Results Presentation

14 May 2019

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Important notice

This presentation is for information purposes only and does not constitute or form part of an offer, solicitation, recommendation or invitation for the sale or purchase

• r subscription of securities, including units in Frasers Property Thailand Industrial Freehold & Leasehold REIT (“FTREIT”, and the units in FTREIT, the “Units”) or

any other securities of FTREIT. No part of it nor the fact of its presentation shall form the basis of or be relied upon connection with any investment decision, contract or commitment whatsoever. The past performance of FTREIT and Frasers Property Industrial REIT Management (Thailand) Company Limited, as the REIT manger of FTREIT (the “Manager”), is not necessarily indicative of the future performance of FTREIT and the Manager. This presentation may contains “forward-looking statements”, including forward-looking financial information, that involve assumptions, known and unknown risks, uncertainties and other factors which may cause the actual results, performance, outcomes or achievements of FTREIT or the Manger, or industry results, to be materially different from those expressed in such forward-looking statements and financial information. Such forward-looking statements and financial information are based on certain assumptions and expectations of future events regarding FTREIT’s present and future business strategies and the environment in which FTREIT will operate. The Manager does not guarantee that these assumptions and expectations are accurate or will be realized. The Manager does not assume any responsibilities to amend, modify or revise any forward-looking statement, on the basis of any subsequent developments, information or events, or otherwise, subject to compliance with all applicable laws and regulations and/or the rules of the Securities and Exchange Commission, Thailand (“SEC”) and the Stock Exchange of Thailand (“SET”) and/or any other regulatory or supervisory body or agency The information and opinions in this presentation are subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning FTREIT. None of FPT, FTREIT, the Manager, or any of their respective holding companies, subsidiaries, affiliates, associated undertaking or controlling persons, or any of their respective directors, officers, partners, employees, agents, representatives, advisers or legal advisers makes any representation or warranty, express or implied, as to the accuracy, completeness or correctness of the information contained in this presentation or otherwise made available or as to the reasonableness of any assumption contained herein or therein, and any liability whatsoever (in negligence or otherwise) for any loss howsoever arising, whether directly or indirectly, from any use, reliance or distribution of this presentation or its contents or otherwise arising in connection with this presentation is expressly disclaimed. Further, nothing in this presentation should be construed as constitution legal, business, tax or financial advice. The value of Units and the income derived from them, if any, may fall or rise. Unit are not obligations of deposits of, deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in the Units is subject to investment risks, including the possible loss of the principal amount invested. Investors should note that they have no right to request the Manager to redeem their Units are listed. It is intended that holders of Units may only deal in their Units through trading on SET. Listing of the Units on the SET does not guarantee a liquid market for the Units. Please study relevant information carefully before making any investment decision. Investors are encouraged to make an investment only when such decision correspond with their own objective and only after they have acknowledged all risks and have been informed that the returns may be more or less than initial sum.

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Content

▪ Highlight and financial review ▪ Completion of AEI in period ▪ Asset Performance and Capital Management ▪ REIT Strategy

Highlight and Financial Review

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2QFY19 Highlights 82.9%

Occupancy Rate

22.94%

Aggregate Leverage DPU from 2QFY19 performance

• High Occupancy rate at 82.9%
• Weighted average lease expiry at around 2.06 years/1
• Retention rate 78.3%/2 and Reversion rate 1.05%/2
• Completion of AEI/3 1,700 sqm of factory at Amata City Rayong

❖ Asset Performance and AEI ❖ Financial Performance ❖ Capital Management

1. By GRI 2. In period 2QFY19 3. AEI = Asset Enhancement Initiative.

• 4. Gearing ratio = IBD/TAV as of 31 March 2019
• 5. Fixed = Debentures, Float = Short term loan.
• Higher net investment income of THB 463 Million for

2QFY19, up 10% from THB 420 Million a year ago

• Repayment short-term loan THB 300 Million
• Healthy balance sheet with gearing of 22.94%/4 and 87%/5 of

borrowings were at fixed rate

• Cost of borrowing is around 3.25% WAM 4.03Yrs

❖ Distribution for period 2QFY19

• DPU THB 0.1670 per unit for 2QFY2019

THB 0.1670

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Financial Performance 2QFY19: 1 January 2019 – 31 March 2019

Overall performance 2QFY19 is better than 1QFY18 (Jan – Mar’18)/3

TOTAL Revenue 2QFY19

718

1QFY18

640

THB million

+78/+12%

Compare with

Change YoY :

92 86

+6/+7%

Compare with

YoY : OPEX

88

Total Fee

463 420

+43/+10% YoY : Net Investment Income Finance Cost

40

THB million THB million/%

Change

THB million/%

87

YoY :

70

+30/+75% YoY :

Compare with

Change

THB million/%

Rationale Rationale Rationale

▪ Revenue increased mainly came from new assets value THB 3.6 bn which been transferred from Sponsor on Aug’18 and Dec’18. ▪ OPEX increased from additional assets.. ▪ Total fee slightly decreased from operation in period. ▪ Increased in IBD THB5.5bn > THB 8.5bn.

Mar’18 Mar’19

▪ Increased in COD/2 2.87% > 3.25%/1

1. WAM 1.46 Yrs(Mar’18) , 4.03yrs(Mar’19) 2. COD = Cost of debt 3. FY2018 start from 1 January 2018 to 30 September 2018. FY2019 start from 1 October 2018 to 30 September 2019.

• 1/-1%

Jan - Mar’18 Jan - Mar’19

1QFY18

THB million Jan - Mar’18

1QFY18

THB million

Jan - Mar’18

2QFY19

THB million Jan - Mar’19

2QFY19

THB million

Jan - Mar’19

▪ Net investment income increased from additional assets.

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Financial Performance HYFY19: 1 October 2018 – 31 March 2019

Overall performance for period (Oct’18 – Mar’19) is better than period (Oct’17 – Mar’18)/2

TOTAL Revenue

1,395

YoY :

Oct’17 – Mar’18 THB million

+564/+68%

Compare with

Change

185

Compare with

OPEX

Total Fee

885

Net Investment Income Finance Cost

THB million THB million THB million

THB million/%

Change

THB million/%

179 127

Compare with

THB million THB million

Change

THB million/%

Rationale Rationale Rationale

831 103 538 120 59

Oct’18 – Mar’19 Oct’17 – Mar’18 Oct’18 – Mar’19 Oct’17 – Mar’18 Oct’18 – Mar’19

YoY : +82/+80% YoY : +59/+49% YoY : +68/+115% YoY : +347/64%

1. WAM 1.46 Yrs(Mar’18) , 4.03yrs(Mar’19) 2. PFPO conversion to FTREIT completed on 20 December 2017

▪ Net investment income increased from additional assets. ▪ Change policy to collect property tax (start FY18) ▪ Mainly from additional assets from PFPO and investment in FY18 – 1QFY19 ▪ Mainly from additional assets from PFPO and investment in FY18 – 1QFY19 ▪ Mainly from additional assets from PFPO and investment in FY18 – 1QFY19 ▪ Increased in IBD THB5.5bn > THB 8.5bn.

Mar’18 Mar’19

▪ Increased in COD 2.87% > 3.25%/1

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Healthy Balance sheet as of 31 March 2019

With total asset around THB 37 billion, FTREIT still the largest industrial and logistics REIT in Thailand.

35,433

TOTAL

ASSETS

30 Sep 18

THB million Compare with

37,231

31 Mar 19

THB million

Change

THB million/%

+1,798/+5%

6,933

Interest Bearing Debt

30 Sep 18

THB million

Compare with

8,540

31 Mar 19

THB million

Change

THB million/%

+1,607/+23%

10.5141

NAV Per Unit

30 Sep 18

THB per Unit Compare with

10.5643

31 Mar 19

THB Per Unit

Change

THB Per Unit/%

+0.0502/+0.5%

▪ MK Price ▪ Premium 13.70 11.80 12.23% 29.68% +17.45%

+1.9/+16%

Rationale Rationale Rationale

1. New assets + AEI = THB 1,947 Million. 2. Additional unrealized gain from new assets. 3. Divested 1 factory and 1 warehouse, gain from divested THB 52 million.

▪ Leveraged for asset acquisition ▪ COD = 3.25%, WAM = 4.03 Yrs ▪ Fixed/Float : 87%:13% ▪ Increased from cash and receivables that came from operation in period. ▪ Increased in investment property value which came from investment and AEI ▪ Acquired assets from sponsor and value increased from AEI/1. ▪ Unrealized gain from new assets/2. ▪ Divested 1 FAC and 1WH/3 ▪ Tenants paid property tax which accrued to FTREIT ▪ Repaid ST-Loan 300MB

0.1600 0.1600 0.1600 0.1670 0.1670 1QFY2018 2QFY2018 3QFY2018 1QFY2019 2QFY2019

Distribution 2QFY19

Unit : THB per Unit

/1

Note : 1. Distribution = Dividend + Capital Reduction

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• The higher DPU in 1QFY19 and 2QFY19 at THB 0.1670 per unit by 4.4% as compared to THB 0.1600 per

unit for FY2018 due to better overall performance and additional income from new assets acquisition.

Completion of AEI in period 2QFY19

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Completion of Asset Enhancement Initiative

Project Completed on 16 January 2019

WALE for AEI Area

+1,700 sqm 14,250 sqm

Internal External

Height Floor Loading

AEI Specification

3 Tons 7 Meters

AEI Area

1,700 sqm

Total Area After AEI 15,950 sqm

7 Years

• Board of REIT Manager has approved/1 for the expansion area

1,700 SQ.M of factory unit AAA14.2 at Amata City Rayong/2.

• This investment shall increase rental income generated from the

expansion area

• long WALE of expansion area by contract will be start on

1 February 2019 and will be ended on 31 January 2026 (7 years).

1. Board approved on 14 May 2018 2. Start rent extension area on 1 Feb 2019, NLA increased from 14,250 SQ.M to 15,950 SQ.M), WALE 7 Years

• 3. NOI Yield% = Net operating income / Investment value.

Utilized Area of Assets

NOI Yield 10.17%/3

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Summary Investment Properties Growth in 2QFY19

Total Investment Property Value over THB 35,700 million with net growth by THB 39.7 million in 2QFY19

Investment in properties at fair value 31 Dec 2018

35,696

THB million/1

547Units

Investment AEI 16 Jan 2019

+40

THB million /1

• Units

Investment in properties at fair value 31 Mar 2019

35,736

THB million /1

547

Units [Beginning Balance] [Ending Balance]

+AEI

1,629,471 sqm +1,700 sqm 1,631,171 sqm

• 1. Round up value to integer

Freehold 73% Leasehold 27%

Factory 48% Warehouse 52%

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FTREIT Portfolio Snapshot

Quality portfolio within prime Industrial and logistics locations

547

Properties/1 WALE/4

2.06 Yrs ~THB 35.7 bn

Portfolio Value/2

Avg Property Ages/5

10 Years ~1.63 million sq m

Net Leasable Area/3

Occupancy Rate

82.9%

Frasers Property Thailand Industrial Freehold & Leasehold REIT

FTREIT listed real-estate investment trust with a quality portfolio located within prime industrial and logistics locations in Thailand. Remaining LH Years

~ 26 Years

No of Tenants

265

Geographically diversified, Type

• f assets and

predominantly freehold or long leasehold

North 26% East 14% EEC 60%

Type

• f Assets

Breakdown By Area

1. Factory 315 units and Warehouse 232 units

• 2. Value of Factory THB 19,221 million (54%) and value of warehouse THB 16,515 million (46%)
• 3. Area of Factory 790,560 sq.m (48%) and area of warehouse 840,611 sq.m (52%) – total 1,631,171 sq.m

4. WALE refers to the weighted average lease expiry based on gross rental income (GRI), being the contracted rental income and estimated recoverable outgoings for the month of March 2019. Excludes straight lining rental adjustments.

• 5. Factory avg ages 12 years and Warehouse avg ages 6.7 years

The Largest Industrial & Logistics REIT in Thailand

Breakdown By Right on assets

Asset Performance and Capital Management

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Occupancy rate by area as of Mar’19

OCR%

Dec’18

84.2%

Mar’19 WALE Dec’18

2.09Y

Mar’19

Weighted average by GRI

Renewal Rate

78.3%

Northern Bangkok Area/1 Eastern Bangkok Area /1 EEC Area /1

OCR% Trend OCR% Trend OCR% Trend

▪ Demand came from Automotive and Electronics ▪ HDD producer expand their production capacity in Northern Bangkok area. ▪ Eastern Bangkok is the location hub for Logistics. This area is the best performance of TREIT. ▪ Most of logistics and E-Commerce choose to settle their business in this location. ▪ Fully occupied 100% ▪ Overall tenants looking for factories and warehouses in EEC area due to tax benefit from government. ▪ Some of producers relocate their production to their built factory since business is operating-well. 66% 67% 67% 68% 69% 77%

75%

0% 20% 40% 60% 80% 100%

2016 2017 Mar'18 Jun'18 Sep'18 Dec'18 Mar'19

Total Unit = 151 Units Total Unit = 59 Units

92% 88% 92% 92% 96% 100% 0% 20% 40% 60% 80% 100%

2016 2017 Mar'18 Jun'18 Sep'18 Dec'18 Mar'19

Total Unit = 337 Units

80% 81% 82% 80% 80% 84%

82%

0% 20% 40% 60% 80% 100%

2016 2017 Mar'18 Jun'18 Sep'18 Dec'18 Mar'19

(-1.3%)

[Jan’19 – Mar’19]

FTREIT can maintain high OCR at average 83% with WALE around 2 Years

99%

• 1. Northern Bangkok area = Ayutthaya and Pathumthani, Eastern Bangkok = Samutprakarn and Prachinburi, EEC area = Chonburi, Rayong and Chachoengsao

82.9%

2.06Y

Reverson Rate

+1.05%

[Jan’19 – Mar’19]

Tenants Industry % of GRI(1) Siam Makro Retail 4.84% Leschaco Logistics 2.65% Lazada E-Commerce 1.99% BJC Logistics Logistics 1.94% DTS Automotive 1.57% Kintetsu Logistics 1.48% Samsung Electronics 1.42% DHL Logistics 1.41% Denso Automotive 1.40% Trancy Logistics 1.24%

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Well-diversified Tenant Base

Top 10 tenants of FTREIT have low concentration risk and longer WALE Top 10 Tenants1 (GRI 19.96%/2/WALE 3.23 Yrs)

1. WALE refers to the weighted average lease expiry based on gross rental income (GRI), being the contracted rental income and estimated recoverable outgoings for the month of March 2019. Excludes straight lining rental adjustments. 2. Concentration risk has stable at around 20%.

Breakdown of Tenants1 2

By Industry GRI%

Automotive 28%

Logistics 22% Electronics 23% Others 16% Retails 8% E-Commerce 3%

By Nationality GRI%

Japan 47% EU 20% Thais 15% Other Asian 13% US 4% Other 1%

Automotive sector tenants Logistics sector tenants Electronics sector tenants Retails sector tenants

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Capital Management

As at 31 March 2019 Aggregate level 22.94% Total Gross Borrowings THB 8,540 million Weighted Average Cost of Borrowings 3.25% Average Weighted Debt Maturity 4.03 Years Interest Rate Exposure Fixed 87% Interest Coverage Ratio for 2Q19/HY19 7.73 times/ 8.10 times/1 Credit Rating A (Stable Outlook)/2 Debt Maturity Profile/3

Bridging Loan Debentures

Interest Fixed/Float

87% 13%

Unit: THB Million Fixed Float

1. Interest Coverage ratio = EBITDA (excluded gain from divestment)/Interest Expense. 2. Official announcement rating by TRIS on 3 May 2019. 3. Fiscal year ending 30 September.

Summary Distribution

DPU 1QFY2019 Payment Timeline

DPU Announcement 14 May 2019 XD 27 May 2019 Record Date 28 May 2019 Book Closing Not required Distribution Date 7 June 2019 0.1600 0.1600 0.1600 0.2028 0.1100 0.1600 0.1600 0.1600 0.1670

0.1670

4QFY2016 1QFY2017 2QFY2017 3Q and Oct'17 Nov'17 - Dec'17 1QFY2018 2QFY2018 3QFY2018 1QFY2019 2QFY2019

Sustainable Distribution Per Unit

Unit : THB per Unit /1

Distribution Policy

• In line with SEC regulations, FTREIT’s policy is to distribute at least 90% of adjusted net investment income
• Distributions will be made on a quarterly basis or every calendar quarter. The actual level of distribution above

90% is to be determined by Board of Directors of REIT manager.

Note : 1. Distribution = Dividend + Capital Reduction

/1

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19

Key Summary for HYFY19 (Oct’18 – Mar’19)

THB 938 million/1

Distributable Income

1. Distributable income = adjusted net investment income. 2. Divested 1 factory at Amata City Chonburi and 1 Warehouse at Rojana Industrial Park Prachinburi. 3. As of 31 March 2019

83%/2.06 Yrs/3

Occupancy and WALE

Higher occupancy rate

THB 1,947 million

Investment in period

Portfolio value increased to approximately THB 36 bn

THB 275 million

Divestment value

At significant premium to book value/2

4.03 Years

Weighted Avg Debt Maturity

87%

Proportion of Fixed Debt

[As of 31 March 2019] [As of 31 March 2019]

22.94%

Aggregate leverage

[As of 31 March 2019]

Retention/Reversion

77%/+1.07%

[Oct’18 – Mar’19]

REIT Strategy

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Principal Objective and Strategy

Active Asset Management Deliver consistently growing and sustainable distributions to unitholders

Active Asset Management

Strategies to support the Principal Objective

1

Investment Growth

2 ▪ Proactive leasing: Maintain high retention rate,

• ccupancy rate, and well- diversified tenant base.

▪ Asset Enhancement Initiative (AEI): Assess and undertake AEI on the FTREIT portfolio to unlock further value. ▪ ROFR/1 for industrial properties from FPT’s Sponsor. ▪ Third-party asset acquisition.

1. Right of first refusal

Capital Management

3 ▪ Optimize capital mix and prudent capital management. ▪ Manage schedule of debt repayment matching with asset portfolio performance