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

Frasers Property Thailand Industrial Freehold & Leasehold REIT 1QFY19 Results Presentation 14 February 2019 Important notice This presentation is for information purposes only and does not constitute or form part of an offer, solicitation,


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Frasers Property Thailand Industrial Freehold & Leasehold REIT

1QFY19 Results Presentation

14 February 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 ▪ Investment and divestment ▪ Asset Performance and Capital Management ▪ REIT Strategy

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Highlight and Financial Review

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1QFY19 Highlights 84%

Occupancy Rate

23.6%

Aggregate Leverage

THB 1.9 bn

Asset Acquisition

  • Occupancy rate improve to 84%
  • Weighted average lease expiry at around 2.09 years/1
  • Retention rate 76%/2
  • Net add of around 130,000 SQ.M/3

❖ Asset Performance

  • Completed THB 1.9 billion of assets acquisition from

the Sponsor.

  • On-going assets enhancement initiative.
  • Divested one factory in Amata City Chonburi and one

warehouse in Rojana Industrial Park Prachinburi at premium to investment cost.

❖ Portfolio value increased to THB 35.7 billion

  • Issued THB 1.9 billion Debentures and drawdown

bridge loan for assets acquisition.

  • Healthy balance sheet with gearing of 23.61%/4 and

84%/5 of borrowings at fixed rate

  • Cost of borrowing is around 3.19% WAM 4.15Yrs

❖ Capital Management

1. By GRI 2. In period 1QFY19 3. New lease – terminate 4. Gearing ratio = IBD/TAV as of 31 Dec 2018

  • 5. Fixed = Debentures, Float = Short term loan

Completed

1Q19

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Strong Financial Performance 1 October 2018 – 31 December 2018

Overall performance 1QFY19 (Oct – Dec’18) is better than 4QFY17 (Oct – Dec’17)

TOTAL Revenue

677 191

+486/254%

Compare with

Change YoY :

92 18

+74/411%

Compare with

YoY : OPEX

32

Total Fee

422 118

+304/258% YoY : Net Investment Income Finance Cost

20

THB million/%

Change

THB million/%

92

+60/188% YoY :

57

+37/185% YoY :

Compare with THB million

Change

THB million/%

Rationale Rationale Rationale

▪ Occupancy improve from 78%>84.%

Dec’17 Dec’18

▪ Additional leased area came from assets acquisition from sponsor in period. ▪ Change policy to collect property tax(start FY18) ▪ Mainly from additional assets from PFPO and investment in FY18 – 1QFY19 ▪ Increased in IBD THB5.5bn>THB 8.8bn.

Dec’17 Dec’18

▪ Increased in COD 2.87 > 3.19%/1

1. WAM 1.71Yrs(Dec’17)>4.15yrs(Dec’18)

▪ Net investment income increased from additional assets.

[Oct – Dec’17]

THB million

[Oct – Dec’17]

4QFY17 THB million

[Oct – Dec’17]

1QFY19 THB million

[Oct – Dec’18]

THB million

[Oct – Dec’18]

THB million

[Oct – Dec’18]

4QFY17 1QFY19 4QFY17 1QFY19 ▪ Mainly from additional assets from PFPO and investment in FY18 – 1QFY19

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Healthy Balance sheet as of 31 December 2018

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

37,437

31 Dec 18

THB million

Change

THB million/%

+2,004/6%

6,933

Interest Bearing Debt

30 Sep 18

THB million Compare with

8,840

31 Dec 18

THB million

Change

THB million/%

+1,907/28%

10.5141

NAV Per Unit

30 Sep 18

THB Per Unit Compare with

10.5403

31 Dec 18

THB Per Unit

Change

THB Per Unit/%

+0.0262/0.2%

▪ MK Price ▪ Premium 11.50 11.80 12.23% 9.11%

  • 3.12%
  • 0.30/-2.5%

Rationale Rationale Rationale

▪ Acquired THB 1.9 billion assets from sponsor/1. ▪ Unrealized gain from new assets/2. ▪ Divested 1 FAC and 1WH

1. Investment value THB 1,907 million

  • 2. Additional unrealized gain from conversion assets.

▪ COD = 3.19%, WAM = 4.15 Yrs ▪ Fixed/Float : 84%:16% ▪ Increased from operation in period. ▪ Increased from asset acquisition and cash in period.

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0.1600 0.1600 0.1600 1QFY2018 2QFY2018 3QFY2018 1QFY2019

Distribution 1QFY19

Unit : THB per Unit

/1

  • The higher DPU at THB 0.1670 per unit by 4.4% as compared to THB 0.1600 per unit for 3QFY2018 due to better
  • verall performance and additional income from new assets acquisition.

Note : 1. Distribution = Dividend + Capital Reduction

8

0.1670

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Investment & Divestment

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Acquisition of assets from FPT (2nd Batches)

  • In 1QFY2019, FTREIT has acquired assets/1 from FPT/5 (Sponsor).
  • Total investment value is THB1,907 million/3 and Net leasable area (NLA) for new assets = 72,775 SQ.M (33 Units).
  • Assets are located in 5 provinces (Chonburi, Samutprakarn, Ayutthaya, Pathumthani and Prachinburi), 8 locations

which are strategic locations for logistic hubs in Thailand. Investment Highlight and asset performance as of 30 September 2018

1. Not including conversion LH to FH at AMC (Chonburi) 28,100 Sq.m (10 Units). 2. Without guarantee OCR = 92%, 4.As of Dec’18 (with guarantee)= OCR 100%

NLA/1 OCR%/2

Quality tenants

72,775 SQ.M.

100% 14

Total Inv Value

THB 1,907 Million

Located in

5 Provinces 8 Locations

S1.5 MPM Technology Kuehne+Nage W1 S1.5 Seat Metal Parts M2.5/1

3.Total asset value THB 1,907 million (including conversion assets) 5.Frasers Property (Thailand) PCL.

Tenants

Logistics Electronics Automotive Others

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Divestment of factory and warehouse

  • Divested 1 unit of factory at Amata City Chonburi province to MIC Industry/3 on 1 Nov 2018 and
  • Divested 1 unit of warehouse at Rojana Industrial Park Prachinburi to Siam Nistrans/4 on 26 Nov 18
  • Sales price was above around 23% of initial purchase price/1
  • Net gain from divestment of THB 52 million/2 over investment cost
  • Asset had been vacant around 1 Year (for WH)
  • Factory ages is around 22 years and warehouse ages is around 4 years (on divestment date)

1.Assets were original FTREIT properties, investment cost is THB 223 million 2.Excluding acquisition expense. 3.MIC Industry is electronics parts producer (air conditioner, electronics panel) 4.Siam Nistrans is Ground/Air/Maritime logistics provider

THB 275 million

A1.75 W1 RP1 AMN

Sales Considerations Investment cost

THB 223 million

Gain/5

THB 52 million

  • [Gain over investment

cost = 23%]

5.Gain from divestment in PL= Sales considerations – investment cost

Gain from divestment Reduce Expenses from holding

  • f unoccupied

assets

=

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Progress of Asset Enhancement Initiative

Progress as of 16 January 2019

  • Board of REIT Manager has approved 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 7 years

Project Completed on 16 January 2019

1. Board approved on 14 May 2018

  • 2. Start rent extension area on 1 Feb 2019, NLA increased to 15,950 SQ.M), WALE 7 Years

AEI Cost THB 23 million WALE 7 Years

Utilized Area of Assets

External Internal Internal

+DPU to Unitholders

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Summary Investment Properties Growth in 1QFY19

Total Investment Property Value over THB 35,000 million with net growth by THB 1.71 bn in 1QFY19

Investment in properties at fair value 30 Sep 2018

33,987

THB million

516Units

Investment 19 Dec 2018

+1,907

THB million

+33 Units

Divestment 1 Nov 2018

  • 248

THB million

  • 2 Units

26 Nov 2018 Investment in properties at fair value 30 Dec 2018

35,696

THB million

547

Units [Beginning Balance] [Ending Balance]

Sales

  • Note. Net increased value THB 1.71 million and 31 units

Revalue Assets

THB million

  • Units

[For conversion assets]

19 Dec 2018

+ 50

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Factory 48% Warehouse 52%

Freehold 73% Leasehold 27%

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FTREIT Portfolio Snapshot

Quality portfolio concentrated within major industrial and logistics markets

547

Properties/1 WALE/4

2.09 Yrs ~THB 35.7 bn

Portfolio Value/2

Avg Property Ages/5

10 Years ~1.6 million sq m

Net Leasable Area/3

Occupancy Rate

84%

Frasers Property Thailand Industrial Freehold & Leasehold REIT

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

~ 26 Years

No of Tenants

275

Geographically diversified, Type

  • f assets and

predominantly freehold or long leasehold

North 26% East 14% EEC 60%

Type

  • f Assets

Breakdown By Location

1. Factory 315 units and Warehouse 232 units

  • 2. Value of Factory THB 19,181 million (54%) and value of warehouse THB 16,515 million (46%)
  • 3. Area of Factory 788,860 sq.m (48%) and area of warehouse 840,611 sq.m (52%)

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 December 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 land Tenure

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Asset Performance and Capital Management

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Occupancy rate by area

OCR%

Sep’18

84% 79%

Dec’18 WALE Sep’18

2.09Y 2.21Y

Dec’18

Weighted average by GRI

Renewal Rate

76%

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. ▪ Overall tenants looking for factories and warehouses in EEC area due to tax benefit from government. 66% 67% 67% 68% 69%

77%

0% 20% 40% 60% 80% 100% 2016 2017 Mar'18 Jun'18 Sep'18 Dec'18

Total Unit = 151 Units Total Unit = 59 Units

92% 88% 92% 92% 96% 0% 20% 40% 60% 80% 100% 2016 2017 Mar'18 Jun'18 Sep'18 Dec'18

Total Unit = 337 Units

80% 81% 82% 80% 80%

84%

0% 20% 40% 60% 80% 100% 2016 2017 Mar'18 Jun'18 Sep'18 Dec'18

(+5.0%) [Oct – Dec’18]

TREIT can maintain high OCR at average 84% with WALE around 2 Years

99%

  • 1. Northern Bangkok area = Ayutthaya and Pathumthani, Eastern Bangkok = Samutprakarn and Prachinburi, EEC area = Chonburi, Rayong and Chachoengsao
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Well-diversified Tenant Base

Top 10 tenants of FTREIT have low concentration risk and longer WALE

Tenants Industry % of GRI(1) Siam Makro Retail 4.77% Leschaco Logistics 2.63% Lazada E-Commerce 1.98% Kintetsu Logistics 1.94% BJC Logistics 1.92% DHL Logistics 1.40% DTS Draexlmaier Automotive 1.39% Denso Automotive 1.39% Samsung Electronics 1.26% Trancy Logistics 1.23%

Top 10 Tenants1 2 (GRI 19.92%/3/WALE 3.44 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 December 2019. Excludes straight lining rental adjustments. 2. Includes the New Property. 3. Concentration risk has reduced from 20.42% to 19.92%.

Breakdown of Tenants1 2

By Industry GRI%

Automotive 27% Logistics 24% Electronics 22% Others 17% Retails 8% E-Commerce 3%

By Nationality GRI%

Japan 48% EU 20% Thai 15% Other Asian 12% 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 December 2018 Aggregate level 23.61% Total Gross Borrowings THB 8,840 million Weighted Average Cost of Borrowings 3.19% Average Weighted Debt Maturity 4.15 Years Interest Rate Exposure Fixed 84%/3 Credit Rating A (Stable Outlook)/1 Debt Maturity Profile/2

Bridging Loan Debentures

Interest Fixed/Float

84% 16%

Unit: THB Million Fixed Float

. 1. TRIS rated at 23 April 2018 2. Fiscal year ending 30 September. 3. IBD (Short term Loan)

1,400 800 2,100 1,300 1,000 380 1,260 600

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Summary Distribution

DPU 1QFY2019 Payment Timeline

DPU Announcement 14 February 2019 XD 27 February 2019 Record Date 28 February 2019 Book Closing Not required Distribution Date 14 March 2019 0.1702 0.1600 0.1600 0.1600 0.1600 0.2028 0.1100 0.1600 0.1600 0.1600

0.1670

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

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

19

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Key Summary for 1QFY19

THB 474 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

84%/2.09 Yrs

Occupancy and WALE

Higher occupancy rate

THB 1,907 million

Investment in period

Portfolio value increased to approximately THB 36 bn

2 Units

Divestment

Divest vacant units /2

4.15 Years

Weighted Avg Debt Maturity

84%

Proportion of Fixed Debt

[As of 31 December 2018] [As of 31 December 2018]

23.61%

Aggregate leverage

[As of 31 December 2018]

Retention/Reversion

76%

[Oct’18 – Dec’18]

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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

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