Frasers Property Thailand Industrial Freehold & Leasehold REIT - - PowerPoint PPT Presentation

Frasers Property Thailand Industrial Freehold & Leasehold REIT

3QFY19 Results Presentation

14 August 2019

FPIT Bangplee 1, Samutprakarn

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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

▪ 3QFY19 Highlight ▪ Financial Review ▪ Portfolio Overview ▪ REIT Strategy and Objective

3QFY19 Highlights

FPIT Bangna FPT Properties Chonburi

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3QFY19 Highlights 82.0%

Occupancy Rate

22.97%

Aggregate Leverage DPU from 3QFY19 performance

• High Occupancy rate at 82.0%
• Weighted average lease expiry at around 2.18 years(3)
• 123,466 sq m of forward renewals, representing 7.6% of

portfolio net leasable area, renewal rate is around 81%

• Reversion rate is around +1.73%(4)

❖ Portfolio Management ❖ Financial Performance ❖ Capital Management

• Higher net investment income of THB 446 Million for

3QFY19, up 11.7% from THB 399 Million a year ago

• Healthy balance sheet with gearing of 22.97%(1) and 87% of

borrowings were at fixed rate as at 30 June 2019

• Weighted average cost of debt is around 3.3%(2)
• Weighted average debt maturity is around 3.78(2) Years

❖ Distribution for period 3QFY19

• DPU THB 0.1670 per unit for 3QFY2019

THB 0.1670

(1) Gearing ratio = IBD/TAV as of 30 June 2019 (2) Only Debentures cost = 3.35% WAM is around 4.32 Years (3) By Gross Rental income (4) Retention and reversion that incurred in 3QFY2019

Financial review

FPT Properties Chonburi

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Financial Performance Quarter ended 30 June 2019

Unit: (THB Million) Apr’19 – Jun’19 (3QFY19) Apr’18 – Jun’18 (2QFY18)(1) Change % Remarks

Revenue 694.5 665.4 4

• Contribution from the FY2018/2019 Sponsor asset acquisition

value THB 3,600 Million and the third party asset acquisition value THB 90 Million. Cost of rental and Operating Expense 84.7(6) 142.2(6) (40)

• Cost of rental and operating expense in Apr’18 – Jun’18 was

higher than Apr’19 – Jun’19 came from property tax for period 1QFY18 (Jan – Mar’18) which recorded in 2QFY18 (Apr – Jun’18) since FTREIT required tenants paid property tax via trust. Trust Management fee 85.9 77.4 11

• Additional trust management fee came from new assets.

Finance Costs 70.6 39.7 78

• Higher borrowing drawn to finance acquisition in FY2018 and

FY2019.

• The weighted average interest rate for 3QFY2019 was 3.25%

per annum and Weighted average debt maturity is around 3.78 years Net Investment Income 446.3 399.2 12

• Came from better performance in period

Net Investment Income + Net realized gain(5) + Net unrealized gain 447.6 404.5 11

• The fair value adjustments made based on independent

valuations for the expansion area 1,700 sq m of factory which located at Amata City Rayong; and

• No divestment asset in 3QFY2019 when compare to 2QFY18

Distributable income to Unitholders(2) 447.7 404.5(4) 11

• Contributions from the FY2018 and FY2019 acquisition

deducted by:

• Higher finance costs; and
• Higher trust management fee

DPU (THB per Unit) 0.1670 0.1600(3) 4.4

• Higher distribution per unit came from better performance of

3QFY2019 compared to 2QFY2018

(1) FY2019 period start from 1 October 2018 to 30 September 2019, FY2018 start from 1 January 2018 to 30 September 2018. (2) Distributable income to unitholders = Net investment income adjusted by non cash item (3) Included capital reduction (4) DPU of 2QFY18, FTREIT paid from retained earning and capital reduction.

Overall performance 3QFY19 is better than performance in the same period of last year

(5) In 2QFY18 (Apr’18 – Jun’18), FTREIT divested factory 1 at Pinthong Industrial Estate. (6) Property tax of 1QFY18 and some portion of FY2017 recorded in 2QFY18 was around THB 40 Million.

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Financial Performance 1 October 2018 – 30 June 2019

Unit: (THB Million) Oct’18–Jun’19 Oct’17–Jun’18(1) Change % Remarks

Revenue 2,089.2 1,496.6 40

• Contribution from 3PFPO’s assets which transfer to FTREIT on

Dec’18

• Contribution from the FY2018/2019 Sponsor asset acquisition

value THB 3,600 Million and the third party asset acquisition value THB 90 Million. Cost of rental and Operating Expense 269.2 245.7 10 Trust Management fee 264.6 196.9 34

• Additional trust management fee came from new assets.

Finance Costs 197.5 98.8 100

• Higher borrowing drawn to finance PFPOs assets and

acquisition in FY2018 and FY2019.

• The weighted average interest rate for 3QFY2019 was 3.25%

per annum and Weighted average debt maturity is around 3.78 years Net Investment Income 1,334.8 937.4 42

• Came from contribution from new assets and better performance

in period Net Investment Income + Net realized gain(5)

• Net unrealized losses(6)

1,429.2 850.1 68

• Contribution from conversion assets and acquisition in FY2018

and FY2019. Distributable income to Unitholders(2) 1,386.5 942.8(4) 47

• Contributions from the PFPO assets and FY2018 and FY2019

acquisition deducted by:

• Higher finance costs; and
• Higher trust management fee

DPU (THB per Unit) 0.5010 0.4781(3) 4.8

• Higher distribution per unit came from better performance of

3QFY2019 compared to 2QFY2018

(1) FY2019 period start from 1 October 2018 to 30 September 2019, FY2018 start from 1 January 2018 to 30 September 2018. (2) Distributable income to unitholders = Net investment income adjusted by non cash item. (3) DPU Oct’17 performance was THB 0.0481 per unit, Dividend + Capital reduction of Nov’17 – Jun’18 = 0.4300. (4) For period Oct’17 to 20 Dec’17 is period before conversion thus dividend is for only FTREIT unitholders and period from 21 December 2017 to 30 June 2018 is dividend for unitholders after conversion (5) In 2QFY18 (Apr’18 – Jun’18), FTREIT divested factory 1 at Pinthong Industrial Estate. (6) Net Unrealized losses from revaluation in period.

Information in Income Statement for period Oct’17 – Dec’17 was performance before converted 3PFPO into FTREIT

▪ 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.

0.1600 0.1670 2QFY18 3QFY19

Distribution 3QFY19

Unit : THB per Unit

1. Distribution = Dividend + Capital Reduction 2. FY2019 period start from 1 October 2018 to 30 September 2019, FY2018 start from 1 January 2018 to 30 September 2018.

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▪ The higher DPU of THB 0.5010 by 4.8% as compared to THB 0.4781 for 9 months (Oct’17 – Jun’18), and higher DPU of THB 0.1670 by 4.4% as compared to THB 0.1600 for 2QFY18 (Apr’18 – Jun’18) was mainly to contribution from new assets. ▪ Expected distribution date is 12 September 2019 Distribution per Units(2)

0.4781 0.5010 Oct'17 - Jun'18 Oct'18 - Jun'19

9 Months 9 Months

Distribution Policy

(1) (1)

Balance Sheet

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Unit: (THB Million) As of 30 Jun 19 As of 30 Sep 18 Change % Investment Properties 35,737.1 33,987.4 5 Investment in Securities at fair value and cash 1,136.7 1,137.9

• Other Assets

304.3 307.9 (1) Total Assets 37,178.1 35,433.3 5 Interest Bearing Debt 8,540.0 6,933.0 23 Other liabilities 1,132.5 1,138.3 (1) Total Liabilities 9,672.5 8,071.3 20 Net Asset Value per Unit (THB) 10.5693 10.5141 1 ▪ The value of investment properties increased 5% from THB 33,987 Million as at 30 September 2018 to THB 35,737 Million at 30 June 2019, due mainly to: ✓ Completion of the FY2019 Sponsor asset acquisition on 19 December 2018; ✓ Completion of expansion net leasable area and fair value adjustment on factory at Amata City Rayong; Deducted Divestment in period ✓ Completion of 1 unit of factory at Amata City Chonburi on 1 November 2018 ✓ Completion of 1 unit of warehouse at Rojana Industrial Park Prachinburi on 26 November 2018 ▪ Interest bearing debt increased THB 1,607 Million came from short term loan for asset acquisition in period(1).

1. FTREIT borrow short term loan THB 1,907 Million and repaid loan THB 300 Million by using cash from divestment properties.

1,100 800 2,100 1,300 1,000 380 1,260 600 FY2019 FY2020 FY2021 FY2022 FY2024 FY2025 FY2028 FY2029 11

Capital Management

As at 30 June 2019 Leverage ratio (5) 22.97% Total Gross Borrowings THB 8,540 million Weighted Average Cost of Borrowings ~3.3% Average Weighted Debt Maturity 3.78 Years Interest Rate Exposure Fixed 87% Interest Coverage Ratio for 3QFY19/9MFY19 7.42 times/ 7.85 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. 4. Refinanced by debentures on Aug’19. 5. IBD/total asset Value (4)

Portfolio Overview

FPIT Bangna

Freehold 73% Leasehold 27% Factory48% Warehouse 52%

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FTREIT Portfolio Snapshot as of 30 June 2019

Quality portfolio concentrated within major industrial and logistics markets

547

Properties/1 WALE/4

2.18 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

82.0%

Frasers Property Thailand Industrial Freehold & Leasehold REIT

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

~ 25.3 Years

No of Tenants

266

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 789,660 sq.m (48%) and area of warehouse 840,611 sq.m (52%) – total 1,630,271 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 June 2019. Excludes straight lining rental adjustments.

• 5. Factory avg ages around 12 years and Warehouse around ages 7 years

The Largest Industrial & Logistics REIT in Thailand

Breakdown By Right on assets

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Occupancy rate by area as of Jun’19

OCR %

Mar’19 WALE Jun’19

Weighted average by GRI

Renewal Rate

81.0%

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

OCR% Trend OCR% Trend OCR% Trend

▪ Overall occupancy rate decreased mainly due to logistics providers were not continue lease warehouse since they have completed project with their customers. ▪ 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. ▪ Performance increased from Automotive and logistics tenants . 67% 67% 68% 69% 77% 75% 69%

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

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

Total Unit = 151 Units Total Unit = 59 Units

88% 92% 92% 96% 99% 100% 0% 20% 40% 60% 80% 100%

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

Total Unit = 337 Units

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

83%

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

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

(-0.9%)

[Apr’19 – Jun’19]

FTREIT maintain high OCR at average 82% with WALE around 2 Years

100%

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

82.9%

2.18Y

Reversion Rate

+1.73%

[Apr’19 – Jun’19]

Jun’19

82.0%

Mar’19

2.06Y

Tenants Industry % of GRI(1) Nationality Siam Makro Retail 4.6% 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% Mitsubishi Automotive 1.24%

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Well-diversified Tenant Base

High quality, diversified tenant base underpinned by primary industries including Automotive, logistics services, electronics, retails and e-commerce. Top 10 Tenants (GRI 20%(2) / WALE 3.15Years(1)) Breakdown of Tenants1 2

By Industry

Automotive 28%

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

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

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 June 2019. Excludes straight lining rental adjustments. 2. Concentration risk has stable at around 20%.

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Key Summary for 9MFY19 (Oct’18 – Jun’19)

THB 1,387 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 30 June 2019

82%/2.18 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

3.78 Years

Weighted Avg Debt Maturity

87%

Proportion of Fixed Debt

[As of 30 June 2019] [As of 30 June 2019]

22.97%

Aggregate leverage

[As of 30 June 2019]

Retention/Reversion

79%/+1.20%

[Oct’18 – Jun’19]

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Proposed Acquisition of Sponsor Properties in 4QFY19

FPIT Properties

29,850 sqm

22,500 sqm 4,900 sqm 2,450 sqm

6 prime logistics properties located in key logistics hubs and centralized in industrial estate 100% Freehold portfolio(1) Net Leasable Area (“NLA”): 29,850 sqm 100% occupancy Rate 3.6 Years Weighted Average Lease Expiry (“WALE”)/(2) Property age: Average 6.2 Years/(3)

Note: Use property information as of 30 June 2019 (1) Freehold on land and building (2) 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 June 2019. Excludes straight lining rental adjustments., (3) Based on Property document and weighted from NLA of each asset. (4) Excluding transfer fee, advisor fee and other transaction cost

19 July 2019: Announced the proposed acquisition of 6 prime logistics properties at a purchase consideration not

• ver than THB 637 Million(4).

Subsequent Event

6 Units

Target transfer properties within Sep’19

FTREIT Strategy

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Principal Objective and Strategy

Active Asset Management

Active Asset Management

Strategies to support the Principal Objective

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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

Deliver Consistent growth and sustainable distributions to unitholders