Activia Properties Inc. Financial Results Presentation for the 14Th Fiscal Period (November 2018) January 2019
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Activia Properties Inc. Financial Results Presentation for the 14th Fiscal Period (November 2018) January 2019 (Security Code: 3279/API) 1. Financial Highlights 2. Internal Growth, External Growth, Financial Strategies and ESG 3. Financial Forecasts 4. Others 5. Acquisition Highlights 6. Appendix 1. Financial Highlights Highlights of the Period Ended November 2018 (the 14th Period) and Onwards 2 Internal Growth External Growth Financial Strategies Progressively achieved Conducted the 6th PO to Further lowered through tenant replacement enhance API’s portfolio quality average interest rate Tokyu Plaza Q plaza EDGE w/rent rise and upward rent UR-16 UR-17 AA-13 ■Refinanced ¥23.6bn and newly borrowed Ginza (Land) HARAJUKU Shinsaiba shi ¥35bn from the 14th Period onwards revision in each category Acquisition price: Acquisition price: ¥37.5bn ¥13.2bn Acquisition price: Ave. interest rate: 0.66% → 0.58% (30% co-ownership (60% co-ownership ¥19.8bn Tokyo Office interest) interest) ■Upward rent revision in 3,262 tsubo in the Ave. period remaining: 4.6 years → 4.4 years ■AUM ¥ bn (as of May 31, 2018) (as of Jan. 17, 2019) 14th Period and uptrend continues in the 502.0 to maturity ■Acquisition 15th & 16th Periods approx. ¥44.5bn Began preparation for Capacity Retail properties (as of Jan. 17, 2019) issuance of Green Bonds ■Change in rent of ¥44mn/period from the Replaced assets at the PO ■Amendment to the shelf registration statement 14th Period onwards allowing stable earning (disposed A-FLAG AKASAKA) to submit simultaneously with the financial secured in long term statement disclosure for issuance of API’s first Activia Account (office) UR-6 UR-17 ■Gain on sale will be green bonds Replace recorded over the Offer ESG investment ■Rent increase achieved in 648 tsubo in the A-FLAG ment Q plaza two periods 1opportunities AKASAKA HARAJUKU Strengthen 14th Period and already achieved in over ending May 2019 and 2Promote 3 1,000 tsubo in the 15th Period ending Nov. 2019 ESG initiatives financial formation Continual growth in unitholders’ value Achieved increase in DPU Achieved continual growth DPU: ¥9,584 (period ended Nov. 2018) in NAV per unit NAV per unit: ¥437,302 (end of Nov. 2018) (vs. May 2018: +¥122 / +1.3% ) (vs. end of May 2018: +¥10,991 / +2.6%) (vs. forecast: +¥84 / +0.9% ) 1. Financial Highlights Financial Results for the Period Ended Nov. 2018 (the 14th Period): Statement of Income 3 Both revenue and profit increased vs. the 13th Period results and the 14th former forecasts due to (i) full operation of the 3 properties acquired in connection with previous PO and (ii) consistent internal growth DPU is ¥9,584, up ¥122 from the previous period and up ¥84 from the former forecast 1. 14th Period actual vs. 13th Period results/ 2. Variance analysis (vs. 13th results) former 14th Period forecasts(2018.7.13)(in millions of yen) (in millions of yen) 13th 14th Period 14th Period vs. 13th Details Period (period ended Nov. 2018) (forecasts) results vs. 13th Period Change Full-period operation +225, sales-linked rent at hotels +203, Forecasts Increase Utilities fee income +144, Other revenue +10, Results Results (vs. former Operating Difference (%) 2018.7.13 +488 Cancellation penalty +7, Facility usage fee +3 forecasts) revenue Existing rent -102, Parking lot fee -4, Restauration works fee Operating Decrease 13,327 13,815 +488 +3.7% 13,717 +97 -1 revenue Full-period operation +71, Utilities expense +120, Operating Taxes & Public dues +92, Repair & Maintenance expenses +7.1% Expenses Increase 5,855 6,268 +413 6,230 +38 +53, Depreciation +26, Other expenses related to rent expenses related to rent +370 business +16 business Taxes & Advertisement fee -5, Administrative service fee -3, 895 988 +92 +10.3% 987 +0 Decrease Public dues Payment commission -2 NOI after Operating profit 7,471 7,546 +75 +1.0% 7,487 +59 +118 depreciation Ordinary profit 6,611 6,697 +85 +1.3% 6,639 +58 General Increase Asset management fee +43, Miscellaneous expenses +1 administrative +43 Profit 6,610 6,696 +85 +1.3% 6,638 +58 expenses Decrease Taxes & Public dues -2 Operating +75 DPU ¥9,462 ¥9,584 +¥122 +1.3% ¥9,500 +¥84 profit 3. Variance between the 14th and the 13th Period results 4. Variance analysis (vs. 14th former forecasts) (DPU) (in millions of yen) vs. 13th Period vs. 14th former Details +¥122 forecasts Rent of existing properties +46, Facilities usage fee +22, ¥ Operating Increase Other fees +19, Utilities fee +4, Restoration work fee +2, 9,584 +97 ¥9,462 revenue Cancellation penalty +2 Decrease Expenses Repair & Maintenance +24, Utilities expenses +12, Operating Rent General Interest Expenses Increase related to rent +40 Administrative service fees +9, Depreciation +4 revenue business administrati expenses related to business Decrease Other rent business expenses -6, Advertisement fee -3 expenses ve expense and others PO NOI after +¥699 -¥530 -¥62 +¥26 -¥12 +57 depreciation General Increase Asset management fee +8 ~ ~ administrative -1 expenses Decrease Miscellaneous expenses -7, Payment commission -1 Operating +59 Results of period Results of period profit ended May 2018 ended Nov 2018 (13th Period) (14th Period) 1. Financial Highlights Financial Results for the Period Ended Nov. 2018 (the 14th Period): Balance Sheet 4 Balance at the end of the 14th Period marks no significant fluctuation compared to the previous period as no property acquisition recorded, though AUM decreased by ¥0.5bn LTV stood at 44.8%, slightly increased from the previous period, and unrealized gain grew to ¥81.7bn, up ¥7.6bn from the previous period due to lowered Cap Rate and improved NOI by internal growth 1. Comparison of the 13th and 14th Periods (in millions of yen) 2. Changes in LTV 13th Period 14th Period End of the End of the Change (2018/5) (2018/11) 13th Period 14th Period Change (2018/5) (2018/11) Assets Current assets 13,770 14,237 +466 44.7% 44.8% +0.1pt Cash and deposits 12,615 13,090 +475 Other 1,155 1,146 -8 Non-current assets 432,171 431,227 -943 Total property, plant and Depreciation -1,267, 421,768 420,854 -913 equipement Capital expenditure +352, Other +2 Total intangible assets 9,132 9,132 +0 Other 1,270 1,240 -29 Total assets 445,941 445,464 -477 Liabilities Short-term borrowings 9,100 9,100 +0 Tenant leasehold and security deposits Long-term loans payable to be -1,110, unpaid consumption tax +457, 18,500 19,600 +1,100 repaid within a year Other +112 Investment corporation bonds 14,000 14,000 +0 Long-term loans payable to be 153,750 152,650 -1,100 repaid within a year Tenant leasehold and security 3. Changes in unrealized gain on portfolio 26,814 26,272 -541 deposits (in millions of yen) End of the End of the Total liabilities 222,164 221,622 -541 Change 13th Period 14th Period Net assets Unitholder's equity 223,777 223,842 +64 74,088 81,702 +7,614 Unitholders' capital 217,091 217,091 +0 Surplus 6,686 6,750 +64 Cap Rate lowered in 10 properties Total net assets 223,777 223,842 +64 NOI improved in 13 properties (out of 42) Total liabilities and net assets 445,941 445,464 -477 2. Internal Growth, External Growth, Financial Strategies and ESG Internal Growth ~Management of Office Properties 1~ 5 Continuous uptrend 1. Upward rent revisions (Tokyo Office properties) in the 15th Period Rent increase achieved for 13 consecutive periods from the 4th Period ended Nov. 2013 and onwards Rent increase in 2nd & 3rd revisions to the 16th Period ending Nov. 2019 (from 14th Period onwards) (tsubo) Area subject to 10,345 Maintained high increase even from 7,00010,000坪 Area (Up) Area (Down) 改定対象面積 増額面積 減額面積 lease renewal tsubo 2nd revision onwards 6,000坪 Increase in 2nd & 3rd Total leasable area +5.2% revisions (area) (Tokyo Office) +5.6% +7.3% 5,0005,000坪 +4.8% 5,343 ~ 25% 1回転目増額1st cycle 5,336 34,709 tsubo tsubo tsubo 2回転目増額2nd cycle 4,0004,000坪 3回転目増額3rd cycle 3,000坪 Ave. rent 3,000 increase 4,879 +7.1% 4,728 4,977 tsubo +10.7% tsubo tsubo in 2nd & 3rd 2,0002,000坪 rent revisions +12.9% 3,262 2,299 tsubo 2,614 +8.6% 1,987 tsubo +8.5% 1,0001,000坪 +6.8% +7.5% 1,355 tsubo tsubo 974 tsubo 537 +3.6% 547 tsubo 535 Average tsubo 0坪 tsubo tsubo increase 0 69 626 tsubo 159 47 17 tsubo tsubo tsubo tsubo in 1st revision 1,000-1,000坪 (as of Dec.31, 2018) +7.2% 2013.11 2014.5 2014.11 2015.5 2015.11 2016.5 2016.11 2017.5 2017.11 2018.5 2018.11 2019.5 2019.11 (4th (5th (6th (7th (8th (9th (10th (11th (12th(12th (13th (14th (15th (16th Total rent-increased area (第4期) (第5期) (第6期) (第7期) (第8期) (第9期) (第10期) (第11期) (第12期) (第13期) (第14期) (第15期) (第16期) Period) Period) Period) Period) Period) Period) Period) Period) period)Period) Period) Period) Period) Period) 6,411 tsubo 2. Trends in average rent and rent gap *Figure above bar graph represents rent increase in each period Increased rent with securing capacity for further internal growth backed by widening rent gap Tokyo Office properties (overall) Tokyo Office properties (in greater Shibuya area) (per month per tsubo) (per month per tsubo) Tokyo Office properties (Greater Shibuya) 28,000¥28,000円 TOTokyo平均賃料 Office properties (overall) 28,000¥28,000円 広域渋谷圏平均賃料 マーケット平均賃料Market rent マーケット平均賃料Market rent 26,000¥26,000円 26,000¥26,000円 24,000¥24,000円 24,000¥24,000円 -5% -8% -9% -6% ¥22,000 22,000¥22,000円 -6% -6% -6% 22,000円 -4% -16% -19% -16% ¥20,000 +5% -3% ¥20,000 +3% -15% 20,000円 20,000円 -16% -18% -15% -18% ¥18,000 -1% *Excludes TAMACHI SQUARE (Land) ¥18,000 -5% -15% 18,000円 18,000円 2013.11 2014.5 2014.11 2015.5 2015.11 2016.5 2016.11 2017.5 2017.11 2018.5 2018.112018.11 2013.11 2014.5 2014.11 2015.5 2015.11 2016.5 2016.11 2017.5 2017.11 2018.5 2018.112018.11 (第(4th4期 ) (第(5th5期 ) (第(6th6期 ) (第(7th7期 ) (第(8th8期 ) ((9th第9 期) (第(10th10期 ) (第(11th11期 ) (第(12th12期 ) (第(13th13期 ) ((14th第14期) ((4th第4 期) (第(5th5期 ) (第(6th6期 ) (第(7th7期 ) (第(8th8期 ) (第(9th9期 ) (第(10th10期 ) (第11(11th期) (第12(12th期) (第13(13th期) (第14(14th期) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) Period) 2.