TICON Freehold and Leasehold Real Estate Investment Trust Annual - - PowerPoint PPT Presentation

28 January 2019

TICON Freehold and Leasehold

Real Estate Investment Trust

Annual General Meeting 2019

Year in Review Key Highlights

Distributable Income Assets Under Management

• 516 units of Properties under management (Factory = 299 units, Warehouse = 217 units).
• Properties Value THB 33,987 mm.
• TREIT is the largest industrial and logistic REIT in Thailand.

Assets Performance

• As of 30 September 2018: Occupancy rate at 79.2% and WALE of 2.21 Years.
• Net add (including new assets acquired in the period) is 69,331 SQ.M.

Acquisition & Divestment

• Gearing/1 of 19.57%.
• Cost of borrowing as of 30 September 2018 is 3.13% p.a.
• 80% of borrowing at fixed interest rates/3.

Capital Management

• 9MFY2018 Distributable Income (“DI”) of THB 1,249.14 million.
• 9MFY2018 Distribution Per Unit (“DPU”) of THB 0.4800 per unit.
• Acquisition factories and warehouses of 27 units with Net Leasable area of 85,106 SQ.M.
• Completed divestment of 1 factory unit which located at Pinthong Industrial Estate.
• On Progress of Asset Enhancement Initiative project (AEI) for expansion factory lease area

1,700 SQ.M. Expected Investment Value of THB 28 mm (Currently invested THB 3 mm).

1

1.Gearing ratio = total Interest bearing debt (as of 30 Sep 2018) / total asset value (as of 30 Sep 2018). 2.TICON 2nd batch of assets value THB 1,907 Million was transferred to TREIT on 19 December 2018

• 3. IBD (ST-Loan) have step-up interest rate.

2

Year in Review Key Results (1/2)

TOTAL Revenue

1,954

THB million

+1,550/+384%

9M’17

THB million

9M’18

404

THB million

%

Increased

1,625

THB million

+1,263/+349%

9M’17

THB million

9M’18

362

THB million

%

Increased

Net Property Income

1,249

THB million

+953/+322%

9M’17

THB million

9M’18

296

THB million

%

Increased

Distributable Income to unitholders Overall performance FY2019 growth came from asset acquisition and operation in period Distribution Per Unit/ Quarter

0.1582

THB Per Unit/Quarter

FY2017

0.1600

THB Per Unit/Quarter

FY2018

+0.0018/+1.14%

THB Per Unit %

Increased

3

Year in Review Key Results (2/2)

35,433

THB million

+3,472/+11%

Dec’17

THB million

Sep’18

31,961

THB million

%

Increased

6,933

THB million

+1,393/+25%

Dec’17

THB million

Sep’18

5,540

THB million

%

Increased

10.5141

THB Per Unit

+0.7277/+7.44%

Dec’17

THB Per Unit

Sep’18

9.7864

THB Per Unit

%

Increased

With total asset value around THB 35,000, TREIT still largest industrial REIT in Thailand/1

TOTAL

ASSETS

Interest Bearing

DEBT

NAV

Per Unit

1.As of 30 Sep 2018

Investment and Divestment

4

ทางอุตสาหกรรมและโลจิสติคส์ของประเทศไทย

Acquisition of assets from TICON

• 9 months FY2018, TREIT has acquired assets/1 from TICON group (Sponsor).Total investment value is

THB 1,693 million and Net leasable area (NLA) = 79,106 SQ.M.

• Assets are located in 2 provinces (Chonburi and Samutprakarn), 3 locations which are strategic

locations for logistic hubs in Thailand.

Investment Highlight and asset performance as of 30 September 2018

1.Assets means new assets and conversion assets.

• 2. Without guarantee OCR = 81%, WALE 1.38 years

3.Not including conversion LH to FH at AMC (Chonburi) 35,250 Sq.m.

NLA/3 OCR%/2

Quality tenants

79,106 SQ.M.

100% 10

Total Inv Value

THB 1,693 Million

Located in

2 Provinces 3 Locations

5

ทางอุตสาหกรรมและโลจิสติคส์ของประเทศไทย

1.Star Micronics Precision (Thailand) Co., Ltd is electronics applicant producer– printer and visual card reader

1st Acquisition of assets from Third-Party

• TREIT has acquired assets from Third party (Star Micronics Precision (Thailand) Co.,Ltd. (1st time

third party asset investment) Total investment value is THB 90 million which are 2 unit of factory and Net leasable area (NLA) = 6,000 SQ.M.

• Sales and leaseback investment which guarantee 10 years of lease agreement and high rental
• rate. This investment generate high return to trust.

Investment Highlight and asset performance as of 30 September 2018

Total Inv Value

THB 90 Million

NLA

90

SQ.M.

OCR%

100%

WALE

10Y

1st investment in 3rd part assets

6

Divestment of factory at Pinthong (Chonburi)

• Completed divestment 1 unit of factory at Pinthong Industrial Estate, Chonburi province to an

unrelated third party for THB 55 million on 28 May 2018.

• Sales price was above around 17% of initial purchase price/1
• Net gain from divestment of THB 8.3 million/2 over book value
• Asset had been vacant around 0.5 Years and property ages is around 13 years (on the date of divest)
• Divestment proceeds used to fund assets acquisition from TICON group

1.Asset was transferred from TFUND since conversion PFPOs into TREIT, purchased value is THB 46.7 million 2.Excluding acquisition expense. 3. Thai Sankyo (Buyer) is motorcycle part producer.

Sales Consideration

THB 55 million

Gain from Divestment

THB 8.3 Million

• r

17% from book value Reduce Expenses from holding

• f unoccupied

assets

7

Asset Enhancement Initiative in FY2018

Boost Revenue of assets/2 Long WALE/2 Utilized Area of Assets/2

Progress as of 30 Sep 2018 Progress as of 31 Dec 2018

• Asset Enhancement Initiative (AEI) increases NLA of assets

and/or building improvement which lead to extend useful life and/or increased building efficiency.

• Board of REIT Manager has approved for the expansion

area 1,700 SQ.M of factory at Amata City Rayong/1.

• This investment shall increase rental income generated from

the expansion and guarantee long WALE of expansion area.

1.Current size of building is around 14,250 SQ.M

+DPU to Unitholders Criteria to do AEI Expected completion end of Jan’18

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

Dec’17

30,451

TREIT Assets Sponsor Assets acquisition In period

THB 30.5 bn (USD 0.92 bn)

Summary Investment Properties Growth in FY2018

3rd Party Assets acquisition In period

Note : Exchange rate 1 USD = THB 33

1st Third Party Asset

AEI in Period

Total Investment Property Value over THB 33,000 million with net growth by THB 3.53 bn in FY2018

Divest Factory Unit M1.6/2 at Pinthong TICON 1st Batch/1 Invest Star Micronics

(47) 28 May 18

+1,693

30 Aug 18

+90

27 Sep 18

THB 33.9 bn (USD 1.03 bn)

33,987

Sep’18

Unrealized gain on Revaluation

+1,798

Unit : THB million

+ 3,537(12%)

7,302

Sep’17 THB 7.30 bn (USD 0.22 bn)

+23,149

PFPO Conversion to TREIT + Revalue Assets

FY2018

98 Units 490 Units 516 Units 516 Units Unrealized gains

• n revaluation

2 AEI Project

Under development (Expected total Project Value THB 28 million)

30 Sep 18 30 Sep 18

Divestment in period

8

1.TICON Batch 2 of assets value 1,907 MB was transferred to TREIT on 19 December 2018

Portfolio snapshot as of Sep’18

Factory Asset Value THB 17,964 mm (USD 544 mm) Occupancy Rate 79.1% No of Property 299 Units WALE 2.00 Years NLA 750,485 SQ.M No of Tenant 177 LH / FH 110,500 / 639,985 SQ.M. Warehouse Asset Value THB 16,024 mm (USD 486 mm) Occupancy Rate 79.2% No of Property 217 Units WALE 2.45 Years NLA 818,231 SQ.M No of Tenant 80 LH / FH 360,254 / 457,977 SQ.M.

Total Investment Property Value NLA No of Property LH/FH/2 Remaining LH year Occupancy Rate (As of Sep’18) WALE THB 33,987 mm (USD 1,030 mm)/1 1.57 Million SQ.M 516 30%/70% 26 Years/3 79.2% 2.21 Years

TREIT is the largest industrial REIT in Thailand, with high quality assets in prime location

Note : 1. Exchange rate USD 1 = THB 33

• 2. Total area of LH and FH are 470,754 SQ.M (30%) and 1,097,962 SQ.M (70%), respectively.

Picture is reference from TPARK

9

• 3. Remaining LH is 25.95 years weighted by net leasable area

Picture is reference from TICON

62% 26% 12%

Enlarged and Diversified TREIT Portfolio

Rojana Ayutthaya

FAC 54 units WH 3 units

HITECH

FAC 36 units

Navanakorn

FAC 17 units

Wangnoi 1 and 2

WH 17 units

Bangpa-In

FAC 13 units

Bangpoo

FAC 11 units

Bangplee3

WH 28 units

Bangplee1

WH 10 units

Rojana Prachinburi

WH 1units

Amata City Chonburi

FAC 94 units WH 7 units

Amata City Rayong

FAC 30 units

Phan Thong

WH 5 units

Hemaraj Chonburi

FAC 3 units WH 9 units

Bangna

WH 81 units

Sriracha

WH 5 units

Pinthong Phase 1 - 3

FAC 41 units

ES1(A)&(B)

WH 11 units

ES2(A)

WH 4 units

Laem Chabang 1 and 2

WH 36 units

Northern BKK/1 Eastern BKK/1 EEC/1

Enhanced Geographical Diversification Increased Proportion of Freehold Assets Sep 2018

10

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

516 Units 69% 31% 70% 30% Dec’17 Sep’18

Freehold Leasehold Freehold Leasehold 1,484,660 SQ.M 1,568,716 SQ.M

60% 25% 15%

Northern BKK EEC Northern BKK Eastern BKK EEC Eastern BKK

Dec’17 Sep’18 Proportion of Factory and Warehouse 50% 50% 52% 48% Dec’17 Sep’18

Warehouse Factory Warehouse Factory

Dec 2017 490 Units

Asset Performance Capital Management

Summary Asset Performance

TREIT can maintain high OCR for 9M average 79% with WALE around 2 Years

11

OCR%

Dec’17

79.2% 78.9%

Sep’18 WALE Dec’17

2.21Y 2.10Y

Sep’18

Weighted average by GRI

Renewal Rate

73%

Northern Bangkok Area/1 Eastern Bangkok Area /1

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

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. ▪ Some of producers relocate their production to their built factory since business is operating-well. 61% 66% 67% 67% 68%

69%

0% 20% 40% 60% 80% 100% 2015 2016 2017 Mar'18 Jun'18 Sep'18

Total Unit = 140 Units Total Unit = 50 Units

87% 92% 88% 92% 92%

96%

0% 20% 40% 60% 80% 100% 2015 2016 2017 Mar'18 Jun'18 Sep'18

Total Unit = 326 Units

83% 80% 81% 82% 80%

80%

0% 20% 40% 60% 80% 100% 2015 2016 2017 Mar'18 Jun'18 Sep'18

(+0.3%) [Jan – Sep’18]

48% 20% 13% 14% 5%

US

50% 21% 13% 12% 4%

European

28% 23% 22% 2% 11% 2% 12% 30% 23% 18% 1% 7% 4% 17%

New Assets Enlarge and Diversify TREIT Portfolio

Tenants Breakdown by Industry/1

Automotive

Enhanced Nationality Diversification/1

Dec’17

Electronics Logistics Packaging Retail FMCG Others Electronics Automotive Logistics Packaging Retail FMCG Others Japanese Thai Asian (Except) Japanese Japanese European Asian (Except) Japanese Thai US

Well - Mix of Tenant Industry ✓ 4% Increase in logistic industry which reflect a good trend and compare to previous year TREIT still maintain automotive and electronics industry in the same proportion. Nationality of Tenants ✓ Maintain well diversify nationality of tenant.

Sep’18

1.Breakdown by Revenue

Dec’17 Sep’18

12

Lease expiry profile as of Sep’18

TREIT can well-spread lease expiry profile

13

• Well-spread lease expiry profile provides income stability and defensiveness

31% 28% 22% 2% 17%

0% 5% 10% 15% 20% 25% 30% 35% FY2019 FY2020 FY2021 FY2022 FY2023 onward

Portfolio Lease expiry by area

Capital Management

As at 30 September 2018 Aggregate level 19.57% Total Gross Borrowings THB 6,933 million Weighted Average Cost of Borrowings 3.13% Average Weighted Debt Maturity 4.16 Years Interest Rate Exposure Fixed 80%/3 Credit Rating A (Stable Outlook)/1 Debt Maturity Profile/2

1,260 800 1,800 300 1,000 380

• 1,393

FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 Bridging Loan Debentures

Interest Fixed/Float

80% 20%

1. TRIS rated at 23 April 2018 2. Fiscal year ending 30 September.

14

Unit: THB Million Fixed Float

• 3. IBD (ST-Loan) have step-up interest rate.

Distribution Details

0.1600 0.1600 0.2028 0.1100

0.6328

0.1600 0.1600 0.1600

0.4800

1QFY2017 2QFY2017 3Q and Oct'17 Nov'17 - Dec'17 FY2017 1QFY2018 2QFY2018 3QFY2018 FY2018

Sustainable Distribution Per Unit

Unit : THB per Unit /1

Distribution Policy

• In line with SEC regulations, TREIT’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

15

12 Months Operation 9 Months Operation

FY2017 (12M) THB 0.6328 Per Unit Change THB 0.1582 Per Unit

Avg by Quarter

THB 0.4800 Per Unit THB 0.1600 Per Unit FY2018 (9M) FY2017 4 Quarters FY2018 3 Quarters

+1.14%

DPU

Key Take Away Summary Highlight FY2018

Financial Highlight Capital Management Investment

Total Income

THB 1,954 million

Net increase in

net assets from operation THB 3,013 million

Distribution

For the 9-month THB 0.4800 Per Unit

Gearing Ratio

(LTV%)

19.57%

Net Asset value

THB 10.5141 Per Unit

Weighted Average

Cost of Debt at the end of year

3.13%

Investment in Period

THB 1,786 million 16

TREIT Audited Financial Statement FY2018

Unit: THB Thousand Unit: THB Thousand

Auditor Opinion: The accompanying financial statements present fairly, in all material respects, in accordance with Thai Financial Reporting Standards (TFRSs)

17

Balance Sheet As of September 30, 2018 As of December 31, 2017 Total Assets 35,433,325 31,961,304 Total liabilities 8,071,384 6,493,211 Net Assets 27,361,941 25,468,093 NAV per unit (THB) 10.5142 9.7864 Number of unit issued - end of period (units) 2,602,387,048 2,602,387,048 Income Statement 9MFY2018 12MFY2017 Total Income 1,953,894 595,246 Total Expenses 747,524 226,149 Net Investment Income 1,206,370 369,096 Net Realized Gain from Investment 8,300

• Net Unrealized gain/(loss) from valuation

1,798,204 (142,250) Net Increase in net assets resulting from operations 3,012,874 226,847

EMAIL: ir.treit@tmanrm.com Website: treit.co.th

Beyond The Property