Aperia Hyflux Innovation Centre
Investor Presentation January 2015 Disclaimers
This material shall be read in conjunction with A-REIT’s financial statements for the financial period ended 31 December 2014.
This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected levels of property rental income and occupancy, changes in operating expenses, including employee wages, benefits and training, property expenses and governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on these forward looking statements, which are based on the Manager’s current view of future events.
The value of units in A-REIT (“Units”) and the income derived from them, if any, may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Investors should note that they will have no right to request the Manager to redeem or purchase their Units for so long as the Units are listed on the SGX-ST. It is intended that unitholders of A-REIT may only deal in their Units through trading on the SGX-ST. Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. The past performance of A-REIT is not necessarily indicative of the future performance of A-REIT. Any discrepancies between the figures in the tables and charts and the listed amounts and totals thereof are due to rounding.
2 Agenda
Overview of A-REIT Key Highlights for 3Q FY14/15 Financial Performance Investment Management Capital Management Asset Management
Portfolio Update
Portfolio Resilience
Portfolio Growth Market Outlook A-REIT’s Strengths
3 Overview of Ascendas Real Estate Investment Trust . First and largest business space and industrial REIT listed on the Singapore Exchange and a constituent of the FTSE Straits Times Index effective 4 June 2014 . Total assets of about S$7.9bn (US$6.0 bn) as at 31 December 2014 . Issuer and senior unsecured rating of A3 by Moody’s
Diversified portfolio – 104* properties in Singapore and 2 business park Business & properties in China; Tenant base of Science Park around 1,390 local and international companies
Integrated High Specs Development, Industrial / Amenities & Data Centres Retail (“IDAR”)
Light Industrial Logistics & / Flatted Distribution Factories Centres
* As at 31 December 2015 4 Singapore: Diversified Portfolio Positioned for Future Growth of the Singapore Economy
Sub-sector Business Parks (BP) Science Parks (SP) (as at 31 December 2014)
Portfolio GFA (sqm) 331,569 319,168 % of A-REIT - by GFA 11% 10% - by asset value 16% 17% Characteristics Zone is defined by Govt Master Plan. Zone is defined by Govt Master Plan. R&D Suburban office and corporate HQ space equipped with building specifications buildings. Manufacturing activities are not to facilitate R&D works. Manufacturing allowed. activities are not allowed.
Typical tenants Regional corporate HQs of industrial Companies in research & development in companies and MNCs; backroom support various fields including life sciences, food office of financial institutions; IT firms, etc. and chemicals, data analysis and IT research and development, etc.
5 Singapore: Diversified Portfolio Positioned for Future Growth of the Singapore Economy
Sub-sector Integrated Development, Amenities Hi-Specs Industrial (Hi-S) Data Centres (DC) (as at 31 & Retail (IDAR) December 2014)
Portfolio GFA (sqm) 157,299 526,578 109,756 % of A-REIT - by GFA 5% 18% 4% - by asset value 8% 18% 7% Characteristics Two or more types of space within one Vertical corporate campus with Building and M&E integrated development such as business higher office content combined with specifications (eg raised floor, space, retail and warehousing facility. high specifications mixed-use high power capacity) to Typically larger scale developments. industrial space. enable space to be used as Possess requisite infrastructure and data centres. amenities to meet modern business needs. Typical tenants MNCs and corporates that desire quality Multi-national industrial companies Multi-national companies space at prominent location with and large local companies that wish providing data centre services comprehensive range of amenities to to co-locate their HQ functions with such as cloud computing and house their corporate HQ and conduct manufacturing services, data storage. their businesses under one roof. engineering, R&D activities. Companies in the IT services, fast moving consumer goods, engineering, warehousing and retail activities. 6 Singapore: Diversified Portfolio Positioned for Future Growth of the Singapore Economy
Sub-sector Light Industrial (LI) Flatted Factories (FF) Logistics & (as at 31 December Distribution Centres (Log) 2014)
Portfolio GFA (sqm) 412,857 197,143 829,775 % of A-REIT - by GFA 14% 6% 28% - by asset value 9% 4% 18% Characteristics Low office content combined with Stacked-up manufacturing space Warehouses with high floor manufacturing space. used for general manufacturing. loading and floor height. Well Ground floor space tends to located near major transport command higher rental rate due to nodes e.g. airport, seaport & higher floor loading and better expressways. Majority are single accessibility. or multi-storey facilities with vehicular ramp access Typical tenants Large local companies which Local small & medium-size 3rd party logistics providers, house their light manufacturing enterprises engaged in various manufacturers, distributors and activities and HQ operations manufacturing activities. Some trading companies within a single facility. Higher MNC manufacturers also house manufacturing content compared their manufacturing operations in to Hi-Specs Industrial buildings. such buildings.
7 A-REIT’s Singapore Property Map
. Strategically located along major expressways . Several properties e.g. Business Park, Science Park and some High-Specs Industrial properties are in close proximity to CBD . Light Industrial and Hi-Specs Industrial properties are primarily centrally located near major housing areas . Logistics and Distribution Centres are located near airport and seaport
Suburban Business Space Integrated Development, Amenities & Retail Hi-Specs Industrial Light Industrial Logistics & Distribution Centre 8 China: Suburban Business Park Properties to Cater to Growing Demand Sub-sector Business Park (China) Number of 2 Properties Portfolio GFA (sqm) 111,307 % of A-REIT - by GFA 4% - by asset value 3% Location Tier 1 cities: e.g. Shanghai & Beijing Ascendas Z-link Characteristics Suburban office, corporate HQ buildings.
Well located and within easy access to public transportation networks. Typical tenants Higher value-added industries such as IT and software companies as well as corporate HQs of multi- A-REIT City @Jinqiao national companies and large local corporations. 9
A-REIT’s Steady Growth since Listing
’ ’
)
S$m
Unitholders
Funds ( Funds
Total Total
)
S$m
Amount Available Available Amount for Distribution ( Distribution for
10 Agenda
Overview of A-REIT Key Highlights for 3Q FY14/15 Financial Performance Investment Management Capital Management Asset Management
Portfolio Update
Portfolio Resilience
Portfolio Growth Market Outlook A-REIT’s Strengths
11 Key Highlights for 3Q FY14/15
. Total Amount Available for Distribution for 3Q FY14/15 rose by 1.6% y-o-y to S$86.4 million . DPU grew 1.4% y-o-y to 3.59 cents in 3Q FY14/15 from 3.54 cents in 3Q FY13/14 . Positive rental reversion of 7.7% achieved over preceding contracted rental rates . Proactive capital management • Healthy aggregate leverage of 33.6% and debt maturity of 3.9 years
12 Agenda
Overview of A-REIT Key Highlights for 3Q FY14/15 Financial Performance Investment Management Capital Management Asset Management
Portfolio Update
Portfolio Resilience
Portfolio Growth Market Outlook A-REIT’s Strengths
13 3Q FY14/15 vs 3Q FY13/14
3Q 3Q % (S$’000) (1) (1) FY14/15 FY13/14 incr/ (Restated) (decr) Gross revenue(2) 171,734 154,436 11.2 Net property Income(2) 114,599 108,573 5.6 Total amount available for distribution 86,439 85,102 1.6
(3) Explain the restated DPU (cents) 3.59 3.54 1.4 item
(1) 106 properties as at 31 Dec 2014 and 105 properties as at 31 Dec 2013, including 1 which is classified as finance lease receivable. The Group adopted FRS 110 Consolidated Financial Statements with effect from 1 April 2014 which resulted in the Group consolidating Ruby Assets Pte. Ltd. (“Ruby Assets”) and Emerald Assets Limited (“Emerald Assets”) since 1Q FY14/15. The comparative figures for 3Q FY13/14 have been restated on similar basis for comparison. (2) Higher revenue and net property income mainly due to Hyflux Innovation Centre and Aperia acquired in Jun 2014 and Aug 2014 respectively and increase in occupancy at Nexus @one-north and A-REIT City @Jinqiao. Positive rental reversion in certain properties and incentive payment from A-REIT City @Jinqiao and Hyflux Innovation Centre also contributed to the increase. (3) Included taxable (3Q FY14/15 3.56 cents, 3Q FY13/14 3.52 cents) and tax exempt (3Q FY14/15 0.03 cents, 3Q FY13/14 0.02 cents) distributions. 14 3Q FY14/15 vs 2Q FY14/15 % 3Q 2Q (S$’000) incr/ FY14/15(1) FY14/15(1) (decr) Gross revenue(2) 171,734 164,781 4.2 Net property Income(3) 114,599 114,667 (0.1) Total amount available for distribution 86,439 87,846 (1.6) DPU (cents)(4) 3.59 3.66 (1.9)
(1) 106 properties as at 31 Dec 2014 and as at 30 Sep 2014, including 1 which is classified as finance lease receivable. (2) Increase in revenue mainly due to contribution from Aperia acquired in Aug 2014. (3) Slight decline in net property income mainly due to impact from increase in property tax due to revision of annual value by IRAS at certain properties and offset by full quarter contribution by Aperia which was acquired in Aug 2014. (4) DPU for 3Q FY14/15 is lower than 2Q FY14/15 by 0.07 cents because 2Q FY14/15 DPU included semi annual distribution from China (ie exempt distribution of 0.05 cents and distribution of 0.03 cents of income from China subsidiaries which is deemed to be capital from a tax perspective). Excluding these exempt and capital distributions relating to the China subsidiaries which are made semi-annually in the second and fourth quarter, DPU from operations for 3Q FY14/15 is 0.01 cents higher than that for 2Q FY14/15.
15 Agenda
Overview of A-REIT Key Highlights for 3Q FY14/15 Financial Performance Investment Management Capital Management Asset Management
Portfolio Update
Portfolio Resilience
Portfolio Growth Market Outlook A-REIT’s Strengths
16 Investment Highlights
Aperia Hyflux Innovation Centre A-REIT City @Jinqiao
. Update on recent acquisitions • Aperia’s occupancy improved from 27.7% as at end September 2014 to 53.6% as at end December 2014. Including pre-committed leases, occupancy is 63.4%. • As a result of a tenant’s expansion at Hyflux Innovation Centre, physical occupancy improved from 83.9% as at end September 2014 to 89.0% as at end December 2014. Another 4.5% has been committed. • As at end December 2014, A-REIT City @Jinqiao was 46.0% occupied. Including committed leases, occupancy will be 51.5% . . In Nov 2014, the asset enhancement (S$8.1m) at 1 Changi Business Park Crescent was completed, creating more leasable business park space on level 2 17
Agenda
Overview of A-REIT Key Highlights for 3Q FY14/15 Financial Performance Investment Management Capital Management Asset Management
Portfolio Update
Portfolio Resilience
Portfolio Growth Market Outlook A-REIT’s Strengths
18 Healthy Balance Sheet
. Aggregate leverage increased q-o-q to 33.6% from 32.6% after funding asset enhancement works and distributions to Unitholders LT: this is the reason. But just thinking . Debt headroom of S$1.6 billion, before aggregate leverage reaches 45% putting distribution is quite weird - financial flexibility to seize debt-funded growth opportunities
(S$m ) As at 31 Dec 14 As at 30 Sep 14 Total debt (1) 2,664 2,561 Total assets 7,932 7,866 Net assets attributable to unitholders (2) 4,893 4,966 LT: NAV drop due to distributions. 1H Aggregate leverage 33.6% 32.6% distribution is only declared payable after 30 Sep 2014. Net asset value per unit (2) 203 cents 207 cents Units in issue (m) 2,406 2,404
(1) Excludes fair value changes and amortised costs. Borrowings denominated in foreign currencies are translated at the prevailing exchange rates except for JPY/HKD-denominated debt issues, which are translated at the cross-currency swap rates that A-REIT has committed to (2) Decrease in net assets attributable to unitholders and net asset value per unit is due to payment of 1H FY14/15 distributions (7.3 cents) on 28 November 2014
19 Well-spread Debt Maturity Profile
. Well-spread debt maturity with the longest debt maturing in 2029 8% 11% . ECS investors did not exercise options to redeem the ECS on 15% 1 February 2015. Hence, the ECS will mature on 1 February Diversified 2017. Financial 32% Resources
34% 700
600
300 500 Average debt maturity: 3.9 years
400 200 300
SGD(million) 362 200 200 375 248 100 200 200 150 154 95 103 15 62 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2029
Medium Term Notes Term Loan Facilities Committed Revolving Credit Facilities Revolving Credit Facilities Exchangeable Collacteralised Securities (ECS) 20 Key Funding Indicators
. Robust indicators enable A-REIT to borrow at competitive costs
As at As at 31 Dec 14 30 Sep 14 Aggregate Leverage 33.6% 32.6% Unencumbered properties as % of total investment 85.8% 85.8% properties(1) Interest cover ratio 6.1 x(2) 6.2 x(3) Total debt / EBITDA 6.4 x(2) 6.1 x(3) Weighted average tenure of debt outstanding (years) 3.9 4.0
YTD weighted average all-in borrowing cost 2.7%(2) 2.7%(3)
A-REIT’s issuer rating by Moody’s A3 stable
(1) Total investment properties exclude properties reported as finance lease receivable (2) Based on 9 months period ended 31 December 2014 (3) Based on 6 months period ended 30 September 2014
21 Prudent Interest Rate Risk Management
. 66.1% of borrowings is hedged for an average term of 3.3 years . A 0.5% point increase in interest rate is expected to have an annualised pro forma impact of S$4.5 million decline in distributions or 0.19 cent in DPU
Increase in Decrease in Change as % of FY13/14 Pro forma impact interest rates distribution distributions on FY13/14 DPU (S$m) (cents)(1)
0.5% 4.5 1.3% 0.19
1.0% 9.0 2.6% 0.38
1.5% 13.5 4.0% 0.56
2.0% 18.1 5.3% 0.75
(1) Based on number of units in issue as at 31 Dec 2014
22 Agenda
Overview of A-REIT Key Highlights for 3Q FY14/15 Financial Performance Investment Management Capital Management Asset Management
Portfolio Update
Portfolio Resilience
Portfolio Growth Market Outlook A-REIT’s Strengths
23 Occupancy remains Healthy
If we add back 2 Senoko South, . Overall portfolio occupancy improved q-o-q from 85.6% to 86.8% due to Portfolio occupancy (same store) =87.0% . higher occupancy at Aperia (increased to 53.6% from 27.7% in 2Q FY14/15), and MTB occupancy (same store) =86.0% . higher occupancy of the Business Park segment, in particular at Changi Business Park Portfolio occupancy =86.1% MTB occupancy = 82.0% . Multi-tenanted building (“MTB”) same-store occupancy improved to 86.0%
Key properties contributing to improvement: As at 31 Dec 2014 30 Sep 14 31 Dec 2013 - Aperia (+0.73%) Total Portfolio GFA (sqm) 2,971,996(1) 2,995,453 2,900,768 - C&P Log (+0.42%) - 10 TG (+0.23%) Portfolio occupancy (same store) (2) 87.7% 87.2% 89.9% - Hansapoint (+0.18%) - TP II (+0.12%) MTB occupancy (same store) (2) 86.0% 85.1% 84.0% By segment: Occupancy of investments completed in the last 12 73.3% 65.1% - - SP (-0.02%) months - BP (+0.37%) Overall Portfolio occupancy 86.8% 85.6% 89.7% - Lite (+0.13%) - HiSpec (-0.03%) MTB occupancy 82.8% 81.0% 83.6% - Log (+0.04%) - IDAR (+0.73%) Weighted Average Lease to Expiry (yrs) 3.9 4.0 3.9 - China (+0.05%)
(1) Excludes 2 Senoko South which has been decommissioned for asset enhancement works. (2) Same store occupancy rates for previous quarters are computed with the same list of properties as at 3Q FY14/15, i.e. account for changes in space due to new investments completed in the last 12 months and changes in classification of certain buildings from single-tenanted buildings to MTB C&P’s occupancy may fall to 50.8% after 24 Phase 3 expiry. Based on committed leases as at 31 Dec, occupancy may fall to 85.8% A-REIT vs Industrial Average Occupancy
100%
95% 93.0% 91.2% 91.2% 90.4% 90% 88.0% 88.9% 86.1% 86.5% 85%
80%
75%
70%
65% Occupancy Occupancy Rate 60%
55%
50% Business Park Hi-Specs Industrial Light Industrial Logistics
A-REIT JTC Source : A-REIT’s Singapore portfolio as at 31 December 2014. Market: JTC JTC statistics do not breakdown Hi-Specs Industrial and Light Industrial, ie they are treated as one category with occupancy of 91.2% 25 Sources of New Demand – 3Q FY14/15 NTU Transport & Storage: . Continues to attract demand from a wide spectrum of industries DMC New World (1,127sqm) @52SerNorth Fisher Clinical (5,727sqm) @ 10TG SDR Logistics (2,253sqm) @ 5TG United Log & Dist (4,698sqm) @ CnP
27.4% Telecomm : 11.5% Huawei (1,277sqm) @1CBP 28.2%
5.6% Expansion 8.3% By Transport & Storage: 4.0% Aztech Grp (1,338sqm) @ 31Ubi By Gross Shopping Bag (1,891sqm) @CnP NLA 5.1% 3.4% Bata Shoe (1,891sqm) @CnP Income 2.5% Poh Tiong Choon (6,229sqm) @CnP 2.5% 2.3% 1.9% IT: 1.9% 1.9% 1.5% NEC Asia Pac (1,766sqm) @HIC 0.6% 49.3% Mentor Media (11,899sqm) @CnP 1.1% 0.1% 0.6% 39.8% Others: 0.2% Honeywell (1,133sqm) @HWB Intertek Testing Svcs (1,573sqm) @HIC
Lifestyle: F1 Recreation Gym (1,196sqqm) @ Ruth Transport and Storage IT Others Lifestyle and Services Telecommunication & Datacentre Financial Service Food: Five Stars Food (1,029sqm) @ FoodAxis Food Products & Beverages R&D Biomedical Electronics General Manufacturing
26 Achieved Positive Rental Reversion . Achieved +7.7% rental reversion for leases renewed in 3Q FY14/15 . Positive rental reversions registered across all segments
Multi-tenanted Net lettable Vacant space 3Q FY14/15 Increase / (decrease) properties (1) area (sqm) (sqm) increase in in new take up rental renewal rates (3) As at 31 Dec 2014 rates (2)
Business & Science 434,242 59,680 5.3% 0.4% Parks
Hi-Specs Industrial 326,942 54,349 11.1% 28.7%(4)
Light Industrial 327,989 34,106 13.0% 36.1%(5)
Logistics & Distribution 505,257 80,033 6.4% (1.6%)(6) Centres
Weighted Average 7.7%
(1) A-REIT’s Singapore portfolio only. (2) Increase in renewal rental rates for leases renewed in 3Q FY14/15 versus previous contracted rates (3) Rental rates for new take up (including expansion by existing tenants) in 3Q FY14/15 versus new take-up rental rates achieved in 2Q FY14/15 (4) Due to higher rates achieved at buildings which are well-located. (5) Due to new take up and expansion of relatively large areas and at higher rents vs. rents achieved in 2Q FY14/15 (6) Due to large take up of warehouse space, commanding lower rents vs. rents achieved in 2Q FY14/15 27 Update on Properties in China
Ascendas Z-link A-REIT City @Jinqiao
Location Located within Zhongguncun Location Located in north Jinqiao within the Software Park in Haidian District, Jinqiao Economic and Technological Beijing Zone, in Shanghai Tenants Higher value-added industries such Tenants Higher value-added industries such as IT and software companies as as IT and software companies e.g. well as corporate HQs of multi- Baidu, Lite-On (a Taiwan-listed national companies and large local electronics co.) corporations Probability: GFA 79,880 sqm Huawei GFA 31,427 sqm expansion – Occupancy 46.0% (as at 31 Dec 2014) with 80% Occupancy 100% (as at 31 Dec 2014) BOCOM – another 5.5% pre-committed and 50% 9% under negotiation
28 Agenda
Overview of A-REIT Key Highlights for 3Q FY14/15 Financial Performance Investment Management Capital Management Asset Management
Portfolio Update
Portfolio Resilience
Portfolio Growth Market Outlook A-REIT’s Strengths
29 Well Diversified Portfolio By value of Investment Properties 10.4% 12.1%
Science Business Park Park Logistics & Integrated Distribution Development, AREIT Beijing Centres Amenities & 87.9% 1% 89.6% Flatted 18% Retail Factories 8% AREIT 4% Shanghai 2% Light Industrial 23.0% 9% Hi-Specs 46.0% Business Park Light Industrial 54.0% Data Centres 16% Industrial 7% 77.0%
Hi-Specs Industrial Science Park 18% 17% 23.7% 28.1% Integrated Logistics Development, & Amenities & Notes: Distribution • Multi-tenanted buildings account for 77.3% of A-REIT’s portfolio by asset value as at 31 Retail 71.9% December 2014 76.3% • About 58% of Logistics & Distribution Centres (by gross floor area) are single storey / multi-storey facilities with vehicular ramp access. • A-REIT has three data centres of which, two are single-tenanted. Warehouse Retail Multi-tenanted buildings Facilities are single-tenanted properties while flatted factories are multi-tenanted Single-tenanted buildings properties 30 Tenants’ Industry Diversification By Monthly Gross Revenue
Information Technology 11.3% M&E and Machinery & Equipment 10.2% 3rd Party Logistics, Freight Forwarding 9.6% Telecommunication & Datacentre 9.2% Distributors, Trading Companies 9.0% Electronics 8.1% Financial 7.0% Life Science 5.1% More than Food Products & Beverages 2.0% Healthcare Products 1.9% 20 industries Construction 1.8% Chemical 1.5% Hotels and Restaurants 1.4% Medical, Precision & Optical Instruments, Clocks 1.4% KIV: Oil & Gas Based on IBP, SP Textiles & Wearing Apparels 1.2% I & II oil and gas Fabricated Metal Products 0.9% tenants ~3.1% of Repair and Servicing of Vehicles 0.7% monthly gross Printing & Reproduction of Recorded Media 0.7% rent Rubber and Plastic Products 0.5% Others 16.3%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
Note: Others include research & development, manufacturing, technical service and support industries for aerospace, oil and gas, multi-media products etc. 31 Low Exposure to Conventional Manufacturing
As at 31 December 2014 . 13.9% of NLA occupied by tenants engaged in conventional manufacturing activities. 13.9% . Manufacturing activities include food & beverages, aeronautical auxiliary equipment, precision engineering etc. Tenants’ business activities by NLA . Non-manufacturing activities include R&D, backroom offices, telecommunications & data centre, software and media consultancy 86.1% services as well as transport & storage
Manufacturing Area Non-manufacturing Area
32 Quality and Diversified Tenant Base
. Total tenant base of around 1,390 tenants . Top 10 tenants (as at 31 December 2014) account for 19.7% of portfolio gross rental income 5.7%
Swap Hyflux with Biomedical – better credit 2.4% quality up front 2.1%
Biomedical 1.5% 1.5% 1.4% science Inst. has 1.3% 1.3% 1.2% 1.2% always been slightly lower – due to rounding
Singapore Citibank, DBS Siemens Hydrochem Biomedical SenKee C&P Cold Federal Telecomm- N.A Bank Ltd Pte Ltd (S) Pte Ltd Sciences Logistics Holdings Storage Express unications Institutes Pte Ltd Pte Ltd Singapore Corporation Ltd (A*STAR) Pte Ltd
33 Diversified Portfolio
1, 3, 5 Changi Business Park Crescent, 4.1% Aperia, 3.6% Kim Chuan Telecommunication Complex , 3.3% 31 International Business Park, 3.1% Neuros & Immunos, 2.9% TelePark, 2.8% C&P Logistic Hub, 2.7% Hyflux Innvation Centre, 2.4% TechPoint, 2.3% TechPlace II, 2.3% Pioneer Hub , 2.2% TechPlace I, 2.0% The Galen, 2.0% Corporation Place, 2.0% No single property Nexus@One North, 2.0% Techlink, 1.9% accounts for more than 10 Toh Guan Road, 1.9% Techview, 1.9% 4.1% of A-REIT’s The Gemini, 1.8% Nordic European Centre, 1.7% Siemens Centre, 1.6% monthly gross DBS Asia Hub, 1.6% The Capricorn, 1.5% revenue Ascendas - Z-Link, 1.5% Changi Logistics Centre, 1.5% AREIT City @ JinQiao, 1.5% FoodAxis @ Senoko, 1.4% Senkee Logistics Hub (Phase I & II), 1.3% The Alpha, 1.3% Giant Hypermart, 1.2% Honeywell Building, 1.1% HansaPoint @ CBP, 1.1% Infineon Building, 1.1% 138 Depot Road, 1.1% Acer Building, 1.1% LogisTech, 1.0% Others, 30.2% 34 Security Deposits for Single-tenanted Properties
. Weighted average security deposits for single-tenanted properties range from 6 to 12 months of rental income . On a portfolio basis, weighted average security deposit is about 5 months of rental income
No. of single tenanted Weighted average security properties deposit* (no. of months) Business & Science Parks 3 12 Hi-Specs Industrial 8 6 Light Industrial 16 10 Logistics & Distribution Centres 9 9 Integrated Development, 2 10 Amenities & Retail 38 9
* Excluding cases where rental is paid upfront 35 MTB Occupancy & Rental Rate: NPI / DPU Sensitivity
. A 2.0% change in MTB occupancy or rental rate is expected to result in a 2.0% change in portfolio net property income or about 0.38 cents change in DPU
% change in MTB Expected change in Change in portfolio Impact on full FY occupancy / rental annualized MTB NPI NPI (%) DPU (cents)* rates (S$m) 2% 9.1 2.0% 0.38 4% 18.3 4.0% 0.76 6% 27.4 6.0% 1.14 8% 36.6 7.9% 1.52 10% 45.7 9.9% 1.90
* Based on number of units in issue as at 31 December 2014
36 Agenda
Overview of A-REIT Key Highlights for 3Q FY14/15 Financial Performance Investment Management Capital Management Asset Management
Portfolio Update
Portfolio Resilience
Portfolio Growth Market Outlook A-REIT’s Strengths
37 Lease Expiry Profile (as at 31 Dec 2014) Breakdown of expiring . Weighted average lease to expiry of 3.9 years leases for FY14/15 and FY15/16 . Lease expiry is well-spread, extending beyond 2025
. About 3.9% due for renewal in balance of FY14/15 vs. 1% 41% 21.3% as at 31 March 2014 18% FY14/15 25% 12%
20.7% 12% 16%
19.3% 20% 18.3% Science Parks Business Parks Hi-Specs Industrial 15% Multi-tenanted Buildings Light Industrial Single-tenanted Buildings Logistics
16.7% Business Park (China) REIT Property Income Property REIT
- 14.4% 17.8% 10% 8.5%
7.6% 10% % of A of % 25% 5.7% 5.3% 4.7% 19% 5% 3.9% 4.0% 7.9% 5.6% 2.6% 1.3% 3.0% FY15/16 1.6% 3.1% 3.7% 0.8% 0.3% 0.2% 3.9% 4.0% 1.5% 0.6% 2.0% 3.1% 0.9% 1.7% 0.1% 4.0% 19% 0% 0.8% 27%
38 In-place rent for space due for renewal in FY14/15 and FY15/16
. Current market rental rate is above the weighted average passing rental for most of the multi-tenanted space due for renewal in FY14/15 and FY15/16 . Expect positive rental reversion of around mid-to-high single digit for FY14/15
* * *
Left Axis: Right Axis:
* Rates for ground floor space 39 Average Market Rents by Segment
160 140 Industrial Rental Index 6.5 120 100 80 $5.50 5.5 60 40 20 Source : JTC 4.5 0 $4.00 $3.65 3.5 $3.10
2.5 $1.85
1.5 $1.83
0.5
Business Park (City Fringe) Business & Science Parks (Median Rents) Business Park (Rest of Island)
Hi-Specs Light Industrial Logistics
Source : CBRE for Business Park (City Fringe), Business Park (Rest of Island), Hi,Specs, Light Industrial and Logistics JTC for Business Parks (Median Rents)
40 Ongoing Projects: Improve portfolio quality
Ongoing Value (S$m) Estimated Completion
Development 21.8
DBS Asia Hub Phase 2 21.8 2Q 2015
Asset Enhancement Initiatives (AEIs) 110.7
2 Senoko South Road (NEW) 12.1 4Q 2015
C&P Logistics Hub 35.7 4Q 2015
Techlink & Techview 26.2 4Q 2015
Gemini-Aries 17.2 2Q 2015
Science Hub 8.4 1Q 2015
The Alpha 11.1 1Q 2015
Total: Development + AEIs 132.5
41 Agenda
Overview of A-REIT Key Highlights for 3Q FY14/15 Financial Performance Investment Management Capital Management Asset Management
Portfolio Update
Portfolio Resilience
Portfolio Growth Market Outlook A-REIT’s Strengths
42 Market Outlook . Based on the Ministry of Trade and Industry's (“MTI”) advance estimates, Singapore’s economy grew by 1.5% y-o-y in 4Q 2014, and 2.8% for the whole of 2014. The manufacturing sector contracted 2.0% y-o-y in 4Q 2014, against a 1.7% expansion in the previous quarter . Singapore’s GDP is expected to grow by 2.0% to 4.0% in 2015 . JTC industrial property price index and rental index declined by 0.9% and 1.8% q-o-q respectively in 3Q 2014
2Q was 12.8% . Approximately 3.9% of A-REIT’s revenue is due for renewal for the balance of FY14/15 based on and positive rental reversions can be expected committed occupancy. . With 13.2% vacancy in the current portfolio, there could be potential upside in net Previously based on property income when some of these spaces are leased, the speed of which will actual occupancy largely depend on prevailing market conditions . The business environment remains challenging due to ongoing economic restructuring, changing government regulations on manpower and industrial land use policies, and rising operating costs . Barring any unforeseen event and any weakening of the economic environment, the Manager expects A-REIT to maintain a stable performance for the balance of the financial year ending 31 March 2015
43
Agenda
Overview of A-REIT Key Highlights for 3Q FY14/15 Financial Performance Investment Management Capital Management Asset Management
Portfolio Update
Portfolio Resilience
Portfolio Growth Market Outlook A-REIT’s Strengths
44 A-REIT's Strengths Diversity and Depth . Solid and well diversified portfolio Five main property segments Well-located quality properties Balance of long term vs. short term leases provides stability with potential for positive rental reversions No single property accounts for more than 4.1% of revenue High predictability and sustainability in income Strong Sponsor . Sponsor Ascendas Group has a track record of more than 30 years in this sector . Committed sponsor and alignment of interest with A-REIT Unitholders Dedicated Manager . One of eight S-REITs where performance fee is linked to DPU growth . Performance fees are payable to the Manager only if there is a y-o-y growth of at least 2.5% in the DPU
45 A-REIT's Strengths
. Downside protection in earnings • Stable portfolio with 96.1% of portfolio revenue committed for FY14/15 and a portfolio average lease to expiry of about 3.9 years • Mix of long term and short term leases provide earnings stability Long term leases have a weighted average lease to expiry of about 6.6 years and are backed by an average of 9 months’ rent in security deposits Long term leases have built-in rental escalation • Diversified portfolio capable of serving the needs of users in diverse sectors
. Hedge against Inflation • 22.7% of leases are long term with periodic rental escalation, of which about 32.7% have CPI-based adjustment
46 A-REIT's Strengths
Development capability . Has capability and capacity to create own assets which could be more yield accretive than acquisitions of income producing properties Operational platform (Property Manager, Ascendas Services Pte Ltd) . Dedicated asset management, sales/marketing, leasing and property management team of over 100 people . Possess in-depth understanding of the property sector Customer focus . Around 1,390 tenants (international and local companies) . Track record of customers growing with us Size advantages . Largest business and industrial REIT in Singapore . 3rd largest industrial REIT in the world by market capitalisation . Accounts for 9% of S-REIT market capitalisation and 4% of Asia (ex-Japan) REITs as at 31 December 2014 . Accounts for 11% of S-REIT total trading volume in 3Q FY14/15 . Included as one of the 30 FTSE Straits Times Index constituents effective from 4 June 2014, and also in other major indices (e.g. MSCI, S&P)
47 Additional Information (1) Projects In-Progress and Completed (2) Recent Acquisition: Aperia & Hyflux Innovation Centre (3) Singapore Industrial Property Market
48 Asset Enhancement: The Alpha
Completion Estimated 1Q 2015
Description Enhancing building specifications and positioning through improving connectivity from bus stop to the building, converting lobby to natural ventilation, upgrading of lifts and toilets. Converting under-utilized area Central Courtyard into leasable space GFA 28,533 sqm
Occupancy 75.8% (as at 31 Dec 2014)
Cost Estimated S$11.1 million
New amenities space
49 Asset Enhancement: Science Hub renamed Oasis
WL: understand that Completion Estimated 1Q 2015 Science Hub will be renamed Oasis. Singapore Description Located within Singapore Science Park I Science Park will be rebranded SSPark AEI: Reposition Science Hub as a social hub via the upgrading of overall building image, amenities space, improve building specifications and finishes. Upon completion, the property would be a value-add to the Artist impression - tenant community. main entrance GFA 26,283 sqm (including The Rutherford)
Occupancy 69.5% (including The Rutherford, as at 31 Dec 2014)
Cost Estimated S$8.4 million
Artist impression – new reception area 50 Asset Enhancement: The Gemini and The Aries
Completion Estimated 2Q 2015
Description Located within Singapore Science Park II AEI: Maximise plot ratio by creating amenities space, enhancing connectivity between the buildings and enhancing vibrancy within Science Park II Artist impression - New Amenities Space GFA 2,100 sqm of additional GFA
Occupancy The Gemini – 94.7% The Aries – 86.2% (as at 31 Dec 2014) Cost Estimated S$17.2 million
On-going structural works
51 Development: DBS Asia Hub Phase 2
Completion Estimated 2Q 2015 Description Development of a 6-storey business park building next to the existing DBS Asia Hub, which will be fully leased to DBS Bank Ltd upon completion GFA Additional 7,081 sqm from Phase 2
Occupancy 100%; new block will be fully leased to Artist impression - Phase 2 DBS upon completion development (red box)
Cost Estimated S$21.8 million
On-site progress
52 Asset Enhancement: C&P Logistic Hub
Completion Estimated 4Q 2015 Description Located in close proximity to Jurong Port, PSA ports and Jurong Island, and easily accessible via AYE AEI: Increase the plot ratio from existing 2.0x to 2.34x by building a new 4-storey warehouse block
GFA 24,111 sqm of additional GFA Artist impression - Occupancy 74.4% of existing property (as at 31 Dec New Block 2014) • Jul 2014: 63% of existing space expired, of which 60% occupied, additional 5.7% committed, 17% is on offer/under negotiation • Jan 2015: 37% of existing space due to expire of which 25% is committed Cost Estimated S$35.7 million
On-site Progress
53 Asset Enhancement: Techlink & Techview
Completion Estimated 4Q 2015
Description Located within the Kaki Bukit Industrial Estate. Techview is located next to the upcoming Kaki Bukit MRT station. AEI: To achieve the highest and best use, maximise plot ratio and also upgrade interior building finishes to enhance their marketability and Techlink: Structural works for new extension reinforce the desired positioning of the properties GFA 1,820 sqm of additional GFA at Techlink
Occupancy Techlink: 94.0% (as at 31 Dec 2014) Techview: 69.9% (as at 31 Dec 2014)
Cost Estimated S$26.2 million
Techview – canteen wall
54 Asset Enhancement: 2 Senoko South Road
Completion 4Q 2015
Description Located within JTC’s designated Food Zone in the Senoko Area. AEI: To convert the existing single- tenant food factory into a multi-tenant light industrial food building. The proposed works will involve the reconfiguration of floor layout, installation of mechanical ventilation for sub-divided units, new Excluded from pf occ rate computation? – yes, it is loading/unloading bays, new cargo lifts, excluded from 3Q toilets etc. computation and also for same-store Sep14 Dec13 GFA 23,457 sqm (decommissioned for AEI) computation
Occupancy De-commissioned (as at 31 Dec 2014)
Cost Estimated S$12.1 million 2 Senoko South Road
55 Asset Enhancement Completed: 1 Changi Business Park Crescent (Plaza 8)
Completion November 2014
nd Description Conversion of 2 level amenity space to business park space to increase potential income of the property
GFA 32,504 sqm (total GFA of 1 Changi Existing building Business Park Crescent)
Occupancy 95.5% for 1, 3 & 5 Changi Business Park Crescent (as at 30 Dec 2014)
Cost Estimated S$8.1 million
New B1 space converted from amenities space
56 Recent Acquisition: Aperia Completion 8 August 2014 Transaction Value S$458 million Valuation S$488 million by DTZ Debenham Tie Leung (SEA) Pte Ltd
Date of Temporary 16 June 2014 Occupation Permit Land Area 28,348 sqm 8, 10 & 12 Kallang Avenue Land Tenure 60 years expiring 21 Feb 2072 Aperia is an integrated industrial mixed-use Plot ratio 3.0 (of which 0.5 white use) development located in Kallang iPark, at the fringe of Singapore’s Central Business District. GFA 86,696* sqm Aperia is about 5 minutes' walk to the NLA 68,735 sqm Lavender MRT Station and the upcoming Land premium S$218.3 million for 60 years fully Bendemeer MRT Station paid The property consists of two Business-1 towers (GFA 72,290 sqm) and a 3-storey retail Occupancy 53.6% (as at 31 Dec 2014) podium (GFA 14,406 sqm) Another 9.8% committed but yet Lifestyle amenities include a recreational pool, to commence lease childcare and enrichment centres, 11.5% under offer/negotiation supermarket, shops and F&B outlets
* Includes bonus GFA due to Greenmark Platinum certification 57 Recent Acquisition: Hyflux Innovation Centre
Completion 30 June 2014 Purchase Price S$170.0 million Upfront Land S$21.2 million (for the remaining Premium tenure of the first 30-year lease term) Total Purchase S$191.2 million Consideration Acquisition fee to S$1.7 million Manager Other transaction Approximately S$0.96 million costs 80 Bendemeer Road Vendor Hyflux Innovation Centre Pte Ltd Valuation S$197.0 million by DTZ Debenham Tie Hyflux Innovation Centre is located Leung (SEA) Pte Ltd within the Kallang Industrial Estate and is Land Area 17,374 sqm within three minutes’ walk to Boon Keng Land Lease Expiry Dec 2068 MRT station. GFA 43,434 sqm NLA 35,070 sqm The Property is a 10-storey high- specifications building with a basement Occupancy 89.0% physical occupancy (as at 31 Dec 2014); 3-yrs rental support from Hyflux and surface car park. for vacant space 58 Industrial Property Market: New Supply . Current total stock: 42.3 million sqm, of which • Business & Science Parks account for 1.6 million sqm (3.8%) • Logistics & Distribution Centres account for 8.3 million sqm (19.6%) • Remaining stock are factory space . Potential new supply of about 3.8 million sqm (~9% of existing stock) over next 3 years
New Supply Sector ('000 sqm) 2015 2016 2017 2018 (Total) Business & Science Park 481 288 193 0 0 % of Pre-committed (est) 63% 97% 11% 0% 0% Hi-Specifications Industrial 235 137 98 0 0 % of Pre-committed (est) 74% 56% 100% 0% 0% Light Industrial* 2,107 1009 842 101 155 % of Pre-committed (est) 45% 59% 37% 16% 14% Logistics & Distribution Centres 1,026 330 673 24 0 % of Pre-committed (est) 58% 67% 56% 0% 0% Total Pre-committed 52%
* Excludes projects under 7,000 sqm. Based on gross floor area Source: JTC, A-REIT internal research 59
New Supply Sector ('000 sqm) – 2Q 2014 2015 2016 2017 (Total) Business & Science Park 603 122 288 193 0 % of Pre-committed (est) 66% 79% 97% 11% 0% Hi-Specifications Industrial 256 67 137 53 0 % of Pre-committed (est) 77% 100% 56% 100% 0% Light Industrial* 2,649 824 1,131 663 30 % of Pre-committed (est) 61% 81% 60% 38% 34% Logistics & Distribution Centres 1,382 599 344 439 0 % of Pre-committed (est) 67% 88% 69% 38% 0% Total Pre-committed 64% Business & Science Parks: New Supply
Expected % Pre- Location Developer GFA (sqm) Completion committed (est)
2015 Changi Business Park Rigel Technology (S) Pte Ltd 15,990 100% 2015 Mediapolis (One-north) Mediacorp Pte Ltd 77,920 100% 2015 Changi Business Park SKJ Group Pte Ltd 13,050 78% 2015 Science Park Ascendas Land (S) Pte Ltd 45,210 100% Seagate Singapore International Headquarters Ayer Rajah (One-north) 40,880 100% 2015 Pte Ltd 2015 DBS Asia Hub Phase 2 Ascendas Funds Management (S) Ltd 7,080 100% 2015 Fusionopolis (One-north) JTC Corporation 88,070 95% Total (2015) 288,200 97% 2017 / 2018? – no new supply reported for BSP in 2017 and 2018. – 2016 Ayer Rajah (One-north) SHINE Systems Assets Pte Ltd 21,470 100% Next URA report only available on 26 2016 Science Park Ascendas Land (S) Pte Ltd. 46,170 0% Jan 2016 Alexandra Terrace Mapletree Business City Pte Ltd 124,880 0% Total (2016) 192,520 35%
Source: JTC & A-REIT internal research 60 The End
Important Notice This presentation has been prepared by Ascendas Funds Management (S) Limited as Manager for Ascendas Real Estate Investment Trust. The details in this presentation provide general information only. It is not intended as investment or financial advice and must not be relied upon as such. You should obtain independent professional advice prior to making any decision. This presentation is not an offer or invitation for subscription or purchase of securities or other financial products. Past performance is no indication of future performance. All values are expressed in Singaporean currency unless otherwise stated.
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