Investor Day 29 March 2019
We Link People to a Brighter Future TODAY’S AGENDA Today’s Agenda
Link’s Investor Day
1 Lunch with JLL Presentation 1:00pm
George HONGCHOY Andy CHEUNG 2 Link Today and Tomorrow ED & CEO ED & COO 2:00pm – 3:30pm
3 Open Discussion 3:30pm – 4:00pm
Kok Siong NG Eric YAU 4 Coffee Break CFO CSO 4:00pm – 4:30pm
5 Guided tour at CENTRALWALK 4:30pm – 5:30pm
Emmanuel FARCIS Gary FOK Calvin KWAN Asset Management Asset Management Sustainability Hong Kong China
P.2 TODAY’S AGENDA
Link Today
Eric Yau Chief Strategy Officer
P.3 TODAY’S AGENDA About Link REIT
• REIT listed in Hong Kong #1 • REIT in Asia by market capitalisation • Only internally-managed REIT in Asia
100% • Free float held by institutions and private investors
Portfolio (1) • Includes retail facilities, car parks and offices Hong Kong Mainland China
126 ~ 56,000 Properties Car park spaces 5 ~ 5M sq ft ~ 8M sq ft ~ 0.9M sq ft Properties Retail and Retail space Under development office space
Note: (1) As at 31 December 2018, assuming all asset disposals to date and the acquisitions of Beijing Jingtong Roosevelt Plaza and CENTRALWALK are completed
P.4 TODAY’S AGENDA Healthy Financial Track Record
Revenue (HK$’M) NPI (HK$’M)
7,155 7,723 8,740 9,255 10,023
5,202 5,669
4,930
6,513
3,759
6,994 7,663
13/14 13/14
17/18
16/17
14/15
15/16
13/14 13/14
17/18
16/17
15/16
14/15
1H18/19 1H18/19
Valuation (HK$’M) DPU (HK cents)
109,899 109,899 160,672 174,006 203,091 209,790
165.81 182.84 206.18 228.41 249.78 130.62 138,383
Notes:
(1) All figures as at 30 September 2018 (unless stated otherwise)
13/14 13/14
17/18
16/17 14/15
(2) CAGR from FY2012/13 to FY2017/18 15/16
Mar 14 14 Mar
Mar 15 Mar
Mar 18 Mar
Mar 16 Mar
Mar 17 Mar
Sep 18 Sep 1H18/19
P.5 TODAY’S AGENDA Value Creation Model
→Tenant sales growth →Open space
→Distribution per unit →Total return for the year →Credit rating
→Staff attrition rate →Staff / Board diversity →Succession planning
→Perception audit result →Impact of Link Together Initiatives
→Community Sentiment Index →Number of asset enhancement projects
→Energy consumption reduction →Waste diverted from landfill
P.6 TODAY’S AGENDA Largest REIT in Asia
US$B 60.0 56.0
50.0 SECOND LARGEST RETAIL REIT IN THE WORLD
40.0
30.0 24.5 23.0 22.3 20.0 15.5 10.2 9.8 10.0 8.3 7.8 7.0 6.4 6.1 6.1 5.4 3.2 2.1 1.9 0.0
Note: Comparison of selected major REITs in the world based on market capitalisation Source: Bloomberg as of 28 March 2019
P.7 TODAY’S AGENDA Continuously Growing Total Return
Distribution per unit Price per unit (HK cents) (HK$)
80 450 Distribution Per Unit Price Per Unit 70 400 60 350 50 300 249.78 40 250 228.41 206.18 30 182.84 200 165.81 20 146.46 150 129.52 130.62 110.45 10 97.37 83.99 100 67.43 74.40 0 50 21.81 -10 0 -20 Year/period Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep-18 ended Compound annual total return since listing +18.6% (1)
Note: (1) A combination of unit price appreciation and distribution paid since listing in 25 November 2005 to 31 March 2018
P.8 TODAY’S AGENDA Our Strategic Journey So Far
Multiple growth drivers to deliver sustainable
return for unitholders Property Re-development Future
Asset Property Since Disposal Development 2014 / 2015
Asset Asset Asset Since Management Enhancement Acquisition IPO / 2011
P.9 TODAY’S AGENDA Key Questions from Our Stakeholders
1. How sustainable is the organic portfolio?
2. How do you see the Mainland China market?
3. How do you plan to grow your portfolio?
4. What are your capital management priorities?
5. Is Link a responsible investor?
6. How do we see Link in 5 years?
P.10 TODAY’S AGENDA
1. How sustainable is the organic portfolio?
Emmanuel Farcis Head of Asset Planning & Strategy
P.11 TODAY’S AGENDA Hong Kong Portfolio
86.9% Total portfolio value 126 Properties Hong Kong HONG KONG ~56k Spaces Car park
~8M sq ft Retail space
~0.9M sq ft Under development
P.12 TODAY’S AGENDA Hong Kong Retail Operations
OCCUPANCY (1) MONTHLY UNIT RENT (1) REVERSION RATE (2,3) 97.0% 96.0% 96.1% 95.5% $65.7 94.8% $62.4 $55.3 $50.0 $45.4
29.1% 25.9% 22.0% 23.8% 22.5%
Average monthly unit rent Reversion
Mar 15 Mar 16 Mar 17 Mar 18 Sep 18 Mar 15 Mar 16 Mar 17 Mar 18 Sep 18
Notes: (1) As at period/year end (2) Reversion rate refers to the percentage change in per square foot average unit rent between old and new leases on the same unit (3) For the year/period end
P.13 TODAY’S AGENDA Hong Kong Macro Indicators Remain Positive
4Q 2018 Median monthly Public housing household income +8.5% YoY Overall +3.3% YoY GDP +1.3% YoY Non-discretionary +1.4% YoY retail sales & restaurant receipts Unemployment rate 2.8%
Source: Census & Statistics Department
P.14 TODAY’S AGENDA Hong Kong Portfolio Update for 3Q FY2018/2019
Link HK Link Tenant Sales Retail Sales Rent-to-sales Growth (2) Growth Ratio (3)
F&B 5.8% 4.7% 13.8% Supermarkets & 4.4% 2.1% 12.2% foodstuff General retail (4) 8.2% 8.1% 14.3%
Overall 6.1% 6.4% 13.4% Notes: (1) For the period between 1 April to 31 December 2018 (2) Percentage figures represent year-on-year change in tenants’ average monthly sales per square foot of the respective periods (3) A ratio of base rent plus management fee to tenants’ gross sales (4) Including clothing, department store, electrical and household products, personal care/medicine, optical, books and stationery, newspaper, valuable goods, services, leisure and entertainment, and retail others
P.15 TODAY’S AGENDA Hong Kong Car Park Operations
MONTHLY INCOME PER SPACE (1) VALUATION PER SPACE
$2,706 $2,492 $595K $2,239 $567K $2,022 $446K $1,767 $384K $330K
Mar 15 Mar 16 Mar 17 Mar 18 Sep 18 Mar 15 Mar 16 Mar 17 Mar 18 Sep 18
Note: (1) Include monthly and hourly parking
P.16 TODAY’S AGENDA Hong Kong Car Park Market Imbalance Continued
4Q 2018 Private car parking space < Private car license
+1.2% YoY +2.3% YoY
V V V V
Source: Transport Department, Legislative Council - Panel on Transport
P.17 TODAY’S AGENDA Our Asset Management Strategy
District Portfolio Active Study Segmentation Tenant Remixing
Customer Placemaking Innovation Engagement
P.18 TODAY’S AGENDA District Study of Tseung Kwan O
Profile of a typical household in Tseung Kwan O vs Hong Kong average
Tseung Kwan O HK overall (Population: ~400k) (Population: ~7.5M) 42.9 Median age 43.4
52.8% Working population 51.0%
$32,000 Median household income $25,000
23.3% Live in public rental housing 30.4% Live in home ownership scheme / 76.6% 68.3% private housing 3.0 Average household size 2.8
56.4% Families with kids 52.1%
Source: Census and Statistics Department
P.19 PortfolioTODAY’S SegmentationAGENDA Tseung Kwan O District
Ying Ming Po Lam TKO CENTRAL Yan Ming Hang Hau Po Lam TKO North TKO Gateway Nan Fung Plaza Maritime Bay TKO Central TKO Gateway Hang Hau Nan Fung Wo Ming Sheung Tak Maritime Bay Tong Ming Flagship Mall Daily necessities & service
Choi Ming Tseung Kwan O TKO SOUTH TKO NORTH TKO South Tseung Kwan O Tiu Keng Leng Po Lam Sheung Tak Plaza Choi Ming Po Lam Kin Ming TKO Area 65 / 66 / 68 Tiu Keng Leng New Development LOHAS Park
LOHAS Park LOHAS Park New Residential Link Assets Second largest Stabilised Sizeable Link AssetsDevelopment 11 With Fresh mall in TKO Community Mall Neighbourhood Mall market 400m
P.20 PortfolioTODAY’S SegmentationAGENDA TKO Gateway as a Destination Shopping Centre
Introduced “Food Lane” with extended operating hours to serve late night diners Fresh market asset enhancement to fulfil the extended catchment (including Sai Kung) needs
P.21 ActiveTODAY’S Tenant AGENDA Remixing Strategic Tenant at Sheung Tak
HK Velodrome Park
TKO Waterfront Park
Sai Kung water activities
P.22 PlacemakingTODAY’S AGENDA Adding Kids’ Playground at Tsz Wan Shan Shopping Centre
▪ Extension of living room ▪ Utilise open space for the neighbourhood ▪ Place for gathering and family time
P.23 CustomerTODAY’S AGENDA Engagement Chinese New Year Campaign at Temple Mall
Jan Feb ✓ Drive shopper traffic
✓ Stimulate sales CNY – 5th Feb ✓ Lead shopper to targeted areas ✓ Create social media presence CNY Laisee Hunting Campaign with unique shopper experience
P.24 TODAY’S AGENDA Innovation through Technology
Park & Dine app T.O.P app
344,000+ download since launch As of 28 Feb 2019
Launched the tenant staff appreciation campaign to engage both shoppers and tenants through offline & online marketing Won HSBC x HKET Innovative Business Award – Innovative Enterprise (Silver Award)
P.25 TODAY’S AGENDA Exploring Solutions with Technology
FACILITIES MANAGEMENT INFORMATION TECHNOLOGY
Operations Maintenance Preventive Maintenance
Building Planning & Security Management Coordination
P.26 TODAY’S AGENDA Continuous Asset Enhancement Pipeline
Projects FY18/19 FY19/20 FY20/21 FY21/22+ 10 Underway (HK$1,029M) 5 To commence (HK$681M) 19 Under planning (HK$839M)
ROI Target >15% Annual CAPEX ~HK$600-800M
Note: (1) As at 30 September 2018.
P.27 TODAY’S AGENDA
2. How do you see the Mainland China market?
Gary Fok Director (Asset Management – China)
P.28 TODAY’S AGENDA Our Mainland China Portfolio
5 ASSETS ACROSS 4 TIER-1 CITIES
EC Mall Roosevelt Plaza
Link Square
Metropolitan Plaza SHENZHEN CENTRALWALK
P.29 TODAY’S AGENDA Robust Retail Portfolio Performance
Retail Reversion 43.2% (1)
Retail Occupancy 99.1% (2)
Managed by our inhouse management team
Notes: (1) For six months ended 30 September 2018, all retail properties combined. (2) As at 31 December 2018, all retail properties combined.
P.30 TODAY’S AGENDA Steady and Resilient Office Portfolio
Office Occupancy 94.8% (1)
FY2018/2019 expects to achieve double-digit reversion
Note: (1) As at 31 December 2018
P.31 TODAY’S AGENDA Asset Management Capabilities
Market knowledge Leasing expiry profile
Tenant mix Operational efficiency
P.32 TODAY’S AGENDA Strengthening Tenant Base
Growing tenant relationships across a wide range of mass-mid tier brands across our portfolio
Fashion Sportswear F&B Others
H&M Uniqlo Nike Adidas Starbucks Innisfree Xiaomi Huawei
1. EC Mall √ √ √ √ √ √
2. Metropolitan Plaza √ √ √ √ √ √ √ √
3. Roosevelt Plaza √ √ √ √ √
4. CENTRALWALK √ √ √ √ √ √
P.33 TODAY’S AGENDA How We Improve Efficiency
Utility Energy saving measures
Staff Nurturing talents to raise efficiency
Marketing Finetuning shoppers targeting
Process automation and data analytics to Technology improve business operations
P.34 TODAY’S AGENDA Expansion of NIKE Store at EC Mall
FROM ~3,500 sq ft TO ~6,000 sq ft
NIKE Branding in addition to sales NEWS HERE
EC MALL Iconic attraction that expands catchment
P.35 TODAY’S AGENDA Our Recent Acquisitions
Will leverage our strong tenant relationships, property management expertise and asset enhancement experience to optimise mall performance
November 2018 February 2019 Roosevelt Plaza Central Walk Tongzhou, Beijing Futian District, Shenzhen
Opening 2014 Opening 2007 Retail: 7 (B1-6F) Retail: 4 No. of Floors No. of Floors Car Park: 2 (B2 and B3) Car Park: 2 GFA 67,546 sqm (Retail) GFA 83,900 sqm (Retail) Car Park 576 spaces Car Park 741 spaces
P.36 TODAY’S AGENDA Market Outlook
2018 MARKET PERFORMANCE 2019 MARKET FORECAST BEIJING Retail SUPPLY Rental Growth(1) 2.0% YoY 552k RENTAL VACANCY sqm SHANGHAI Pudong Office SUPPLY Rental Growth 2.2% YoY 50k RENTAL VACANCY sqm GUANGZHOU Retail SUPPLY Rental Growth 4.4% YoY 523k RENTAL VACANCY sqm
SHENZHEN Source: JLL Retail Supply for Beijing, Retail Guangzhou and Shenzhen for prime SUPPLY shopping centres. (1) Rental Growth 2.2% YoY RENTAL VACANCY Shanghai office supply at core CBD. 700k Note: sqm (1) Include urban areas only
P.37 TODAY’S AGENDA
3. How do you plan to grow your portfolio?
Andy Cheung Chief Operating Officer
P.38 ThreeTODAY’S Degrees AGENDA of Freedom Expansion and Acquisition
GEOGRAPHY ✓ Hong Kong ✓ Tier 1 Mainland China cities and surrounding river delta areas ✓ Other geographies remain opportunistic
ASSET TYPE NEW DEVELOPMENT ✓ Retail ✓ Changed mandate to allow (HK any positioning, development in 2015 PRC mid-market positioning) ✓ HK focus ✓ Grade A offices ✓ Preference for build-to-suit
P.39 GeographyTODAY’S AGENDA Expansion Focus in Tier-1 Cities
TIER-1 CITIES AND THEIR SURROUNDING RIVER DELTA AREAS
✓ Strategic potential • Continuous government stimulus • Inter-city transportation development Bohai Economic Rim Beijing ✓ Growth potential • Higher GDP growth • Disposable income and retail sales growth • Continuous urbanisation and growing middle Yangtze River Delta ● Shanghai class catchment ✓ Others • Sizeable tertiary industries & positive economic Guangzhou outlook Greater Bay Area ● ● Shenzhen ? Risk of oversupply in certain districts ? Fluctuations in passing rent and occupancy
P.40 GeographyTODAY’S AGENDA Growing in Greater Bay Area
INVESTMENT IN GREATER BAY AREA REACHED HK$36B (1)
▪ Opportunistic acquisitions in Hong Kong, Shenzhen, Mainland China Guangzhou Metropolitan Plaza ▪ Continuous investments in Guangzhou CENTRALWALK asset enhancement Shenzhen
T.O.P The Quayside Hong Kong Hong Kong
Note: (1) Includes acquisition, development and asset enhancement
P.41 TODAY’S AGENDA Case Study of EC Mall
Tsinghua ACQUISITION CRITERIA University
✓ Located in Zhongguancun of Beijing Peking ✓ Affluent area surrounded by high-tech University companies and universities
✓ Adjacent to Haidian Huangzhuang Metro Station
✓ No more new retail development in the vicinity EC Mall ✓ Established management team ✓ Good shopper traffic on both weekdays and weekends
People’s University
P.42 TODAY’S AGENDA Same Criteria Applied to All Our Acquisitions So Far
The EC Link Metropolitan Roosevelt CENTRAL- T.O.P Quayside Mall Square Plaza Plaza WALK
✓ Tier-1 Cities (1) plus Hong Kong √ √ √ √ √ √ √
✓ Mass-mid market retail √ √ √ √ √
✓ Premium grade-A office √ √
✓ Good connectivity √ √ √ √ √ √ √
✓ Limited competition √ √ √ √ √
✓ Sizeable catchment √ √ √ √ √ √ √
✓ Long-term growth potential √ √ √ √ √ √ √
Note: (1) Beijing, Shanghai, Guangzhou and Shenzhen
P.43 AssetTODAY’S Type AGENDA Diversification from Retail to Office
YoY Change of Retail Sales Value & Office Rental in Hong Kong Restaurant Receipts HKD per sq ft per month, NFA 140 Global financial crisis 120
100
Tech bubble burst 80
60
40
SARS outbreak 20
Asian financial crisis 0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
4Q15 4Q11 4Q12 4Q13 4Q14 4Q16 4Q17 4Q18 Foods & alcoholic drinks Supermarkets 4Q10 Restaurant receipts Jewellery Department stores Clothing
Source: Census & Statistics Department Source: JLL
P.44 DevelopmentTODAY’S AGENDA Pros and Cons
Customisation • More sustainable product • Lower asset enhancement need
Developer’s profit • Better returns
Delayed cash inflow • Large CAPEX at initial stage
Leasing risk • Ramp up time • Longer exposure to market conditions
P.45 DisposalTODAY’S AGENDA Selling Non-Core Assets at Premium
PREMIUM TO VALUATION MARKET VALUE > BOOK VALUE 52% WITH UNLEVERED HOLDING PERIOD IRR(1) RANGE IN ~20% 33% 32% 30% 24% Historical premiums attained were above 20%
2015 2016 2017 2018 2019
Note: (1) Median of property level unleveraged IRRs from IPO/acquisition to divestment for the properties divested during the year
P.46 PortfolioTODAY’S AGENDAManagement Strategy Active Management to Maintain Upward Projectile
ACQUISITION – AGGREGATE HK$42B
FY11/12 FY14/15 FY15/16 FY16/17 FY17/18 FY18/19 • Nan Fung • Lions Rise • EC Mall • 700 Nathan • Metropolitan • Roosevelt Plaza Plaza • The Quayside • Link Square Road Plaza • CENTRALWALK • Maritime Bay $11B $11B $7B $6B $5B $2B
$3B $2B 9 assets 5 assets $7B 14 assets $12B 12 assets $23B 17 assets 2011/12 2014/15 2015/16 2016/17 2017/18 2018/19 DISPOSAL – AGGREGATE HK$47B
P.47 PortfolioTODAY’S ManagementAGENDA Strategy Recap
▪ Core portfolio remains in Hong Kong ▪ Focus on tier-1 cities and the surrounding river delta areas in Geography Mainland China ▪ Maintain guidance on Mainland China exposure at 20% ▪ Other geographies will be opportunistic
▪ Prefer quality retail assets with good growth potential in non- Asset type discretionary sector ▪ Selective on grade A offices not exceeding 12.5% of portfolio
Development ▪ Focus on Hong Kong ▪ Limited to 10% of portfolio
▪ Non-core assets Disposal ▪ Less growth potential ▪ Lacking synergy
P.48 TODAY’S AGENDA
4. What are your capital management priorities?
Kok Siong Ng Chief Financial Officer
P.49 HongTODAY’S Kong AGENDA Macro Overview Expect Slower Economic Growth
HK economy faces external Inflation and staff cost will likely headwinds amid trade war continue to rise steadily
6% GDP (YoY) 6% Inflation rate Avg. Nominal Payroll
4% 4%
2% 2%
0% 0% 2016 2017 2018 2019F 2020F 2021F 2016 2017 2018*2018 2019F 2020F 2021F
Sources: C&SD, EIU (forecast) 2018 Payroll is forecast figure Sources: C&SD, EIU (forecast)
P.50 China Macro Overview Economy Growth Should Sustain
Economy is likely to grow slightly Depreciation pressure on RMB eased recently GDP (YoY) 12% 1.4 CNY/HKD Shenzhen Guangzhou Shanghai Beijing 10% Mainland China 1.3
8% 1.2
6% 1.1
4% 1.0 2016 2017 2018 2019F 2020F 2021F Jan-15 Jan-16 Jan-17 Jan-18 JanJan-19-19
Sources: NBS, BMBS, SMSB, SBGM, SSB, EIU (forecast) Source: Bloomberg
P.51 InterestTODAY’S Rate AGENDA Environment Expect to Stabilise
US$ rate hike starting to slow But HIBOR could catch up with LIBOR
3.1% HIBOR LIBOR 2.75% Fed Fund Upper Bound 2.6% 2.25% 2.1% 1.75% 1.6% 1.25% 1.1%
0.75% 0.6%
0.25% 0.1% 2016 2017 2018 2019F 2020F 2021F 2016 2017 2018 2019F 2020F 2021F
Source: Bloomberg Source: Bloomberg Forward Fed Fund Rates as at Feb-19 Forward HIBOR/LIBOR as at Feb-19
P.52 CreditTODAY’S Ratings AGENDA A Strategic Differentiator
3 “A” RATINGS FROM KEY CREDIT RATING AGENCIES
A / Stable
A2 / Stable
INITIATED IN JAN 19
A / Stable
P.53 CapitalTODAY’S Management AGENDA Strategy Maximum Optionality
NEW SOURCES OF FUNDING TIGHT YIELD SPREAD 3.0% Link DPU Yield Spread SEP 2018 (vs 10Y UST) 2.0% BANK LOANS $7.5B MTN $15.2B 1.0%
0.0% Jan 15 Jan 19 MAR 2019 GREEN $4.0B COMPETITVE FUNDING COST CONVERTIBLE BOND 5.0% 3-month HIBOR 0.05 Link's Cost of Debt 10-yr UST ✓ Largest Green CB globally 4.0% 0.04 3.0% 0.03 ✓ 1st Green CB of real estate 2.0% 0.02 sector globally 1.0% 0.01 0.0% 0
Notes: Mar 08 Jan 19 (1) As at 30 September 2018. (2) Source: Bloomberg
P.54 CapitalTODAY’S Management AGENDA Strategy Opportunistic Fund Raising with Green CB
NEW SOURCE OF FUNDING WITH MAJOR BENEFITS AND ACHIEVEMENTS
✓ Low-cost funding ✓ Largest green CB globally half of straight bond yield ✓ 1st green CB of real estate sector ✓ High conversion price globally 22.5% conversion premium to lower dilution ✓ Largest CB offering by HK issuer since 2011
✓ New source of funding ✓ Lowest coupon rate achieved by In addition to bank loans and bonds Asian REITs since 2014
✓ 1st CB by HK listed REITs since 2008 ✓ New investor base Majority demand came from outright long CB investors; balanced split of demand between ✓ Finance green projects including Asia and Europe The Quayside and installation of solar panels
P.55 CapitalTODAY’S Management AGENDA Strategy Strong Capital Structure
GEARING AVERAGE LIFE OF FIXED RATE DEBT PERCENTAGE OF DEBT FIXED
76% 7.2 years 70% 6.9 years 63% 61% 6.3 years 59% 5.3 years 5.2 years
22.0% 21.3% 17.5% 17.3% (1) 14.5%
Gearing Average life of fixed rate debt % of fixed rate debt
Mar 15 Mar 16 Mar 17 Mar 18 Sep 18 Mar 15 Mar 16 Mar 17 Mar 18 Sep 18
Note: (1) Pro forma gearing based on the consolidated financial position as at 30 September 2018, after adjusting interim distribution and the appraised value of Beijing Jingtong Roosevelt Plaza, and assuming disposal of the 12 assets announced on 12 December 2018 was completed and a drawdown of HK$5,967M on Link’s debt facilities
P.56 CapitalTODAY’S Management AGENDA Strategy Our Priorities
MAINTAIN DISCIPLINED CAPITAL STRUCTURE
Gearing Credit ratings Management priorities Capacity for growth • Acquisitions • CAPEX Comfortable at Maintain ~20% “A” Ratings Capital return & stewardship • Unit buyback • Special distribution Fixed vs Distribution Debt repayments floating ratio payout ratio • Largely to pay down revolver loans
Relevant investments Around No change at • Manage short term liquidity 60:40 100%
P.57 TODAY’S AGENDA
5. Is Link a responsible investor?
Calvin Kwan General Manager – Corporate Development & Strategy
Together We Grow P.58 TODAY’S AGENDA Link’s Evolution
Corporate Social Responsibility (CSR) Integrated Value Creation Model Green Finance Sustainability Framework Framework
2018 2010 2011 2013 2019 2009 2017 Integrated Vision, Mission, Reporting (IR) Value (VMV) The United Environmental, Nations Sustainable Social and Development Goals Governance (ESG) (UN SDGs) Note: (1) Not to scale, for illustrative purpose only
P.59 TODAY’S AGENDA Aligning with Global Standards
GLOBAL RECOGNITIONS
LOCAL, REGIONAL AND GLOBAL ADVOCACY
Hong Kong Institute of Certified Public Accountants
P.60 UNEP Property Working Group TODAY’S AGENDA
Co-Chair of UNEP Property Working Group and a voice for Asia Pacific
• Focused on producing global best practice guidelines on topics including • TCFD • ESG • Measuring and reporting positive impact
Aims of the UNEP Property Working Group
• Drive innovation in Responsible Property Investment (RPI) • Demonstrate how RPI can increase financial performance while reducing environmental and social impact • Collaborate with policy-makers and the real estate investment community on developing the regulatory frameworks
P.61 TCFD Investor Pilot TODAY’S AGENDA
• Direct real estate exposure: 20 participating institutions globally
• Establish a methodology • SUSTAINABILITY and modelling for climate Guiding our Long-Term Strategy and transition risk
• Alignment with investors, next step to bring in insurance companies
• Q1 2019 – publication of methodology report and key Working on TCFD Recommendations for investors with a pilot group of 14 investors and 6 real estate companies
P.62 TODAY’S AGENDA Engage with ESG Analysts & Investors
• Understand analyst and investor concerns on 1 ESG issues
• Determine what other policies and procedures 2 are needed
• Align investor, analyst and responders’ understandings of TCFD including align with 3 UNEP with GRESB effort to implement climate change reporting (Apr 19)
4• Materiality and scenario planning
• Determine what international and future 5 standards are needed
P.63 TODAY’S AGENDA
6. How do we see Link in 5 years?
George Hongchoy Chief Executive Officer
P.64 Link’sToday’s Value Agenda Creation Model
→Tenant sales growth →Open space
→Distribution per unit →Total return for the year →Credit rating
→Staff attrition rate →Staff / Board diversity →Succession planning
→Perception audit result →Impact of Link Together Initiatives
→Community Sentiment Index →Number of asset enhancement projects
→Energy consumption reduction →Waste diverted from landfill
P.65 TODAY’S AGENDA Challenges We Are Facing
Downward property New cycle? source of income? Talent Dissolving online & retention and offline development
Sustaining Responsible Investment long-term growth
P.66 TODAY’S AGENDA Vision 2025
Strengths Vision 2025
Leader in Retail Industry Portfolio Growth
Clear Vision & Strong Execution Culture of Excellence Effective Stewardship
Strong Balance Sheet Visionary Creativity
Focus on Growth
P.67 PortfolioTODAY’S GrowthAGENDA Growth and Diversification
(2) 2019 HK$211B
(1) 2005 HK$34B +520% PRC Office PRC Retail 3.4% 9.7% HK Office HK Retail 65.0% HK Car Park 4.7% 19.4% Hong Kong HK Car Park 86.9% Hong Kong 17.2% 100.0% Mainland China 13.1% HK Retail 80.6%
Notes: (1) Valuation as at 30 September 2005 (2) Pro-forma figures assuming all asset disposals to date and the acquisitions of Beijing Jingtong Roosevelt Plaza and CENTRALWALK are completed
P.68 PortfolioTODAY’S GrowthAGENDA Portfolio Shift Since IPO
2005 2019
Hong Kong Hong Kong China No. of properties 180 126 5
No. of cities 1 1 4
Valuation HK$34 B HK$183 B HK$28 B
Capitalisation 5.69%-9.00% 4.02% 4.25%-4.75% rate (1)
Occupancy ~91% ~96% ~99%
Operating Leasing and Asset Asset model Property Management Management Management
Note: (1) Overall weighted average of Hong Kong portfolio
P.69 PortfolioTODAY’S GrowthAGENDA Portfolio Value Today and Tomorrow
2025 HK$?B ?% (1) 2019 HK$211B
PRC Office PRC Retail 3.4% 9.7% HK Office 4.7% Hong Kong 86.9% HK Car Park ? 17.2% Mainland China 13.1%
HK Retail 65.0%
Note: (1) Pro-forma figures assuming all asset disposals to date and the acquisitions of Beijing Jingtong Roosevelt Plaza and CENTRALWALK are completed.
P.70 PortfolioTODAY’S GrowthAGENDA Target AUM in Medium-term
Target 500 Blue sky 450 High single-digit CAGR 400 Portfolio Management 350 Acquisition 300 2018 Disposal 250 (HK$’B) $203B Development 200 CAGR Status quo Mid single-digit 150 15.6% CAGR Innovation 100 2006 Other Investments 50 $36B Technology
0
2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
P.71 CultureTODAY’S of AGENDA Excellence What is Link’s DNA?
1 Professional
2 Productive
3 Progressive
4 Proud of what we do
P.72 CultureTODAY’S of AGENDA Excellence Our Team
Diversified and Professional Alignment of Independent Management interest with Board investors
P.73 CultureTODAY’S of AGENDA Excellence Two-way and Continuous Engagement
Internal External Talent development Best in class in transparency
Succession planning Investment stewardship
Satisfaction & Strong corporate governance motivation
Employer of Choice Create Shared Values
P.74 VisionaryTODAY’S AGENDACreativity Placemaking
COMMUNITY
LIFESTYLE SPACE
“DOING WELL BY DOING GOOD” CREATE SPACES THAT PROMOTE HEALTH, HAPPINESS AND WELL BEING
Together We Grow P.75 Visionary Creativity Solar PanelTODAY’S Installation AGENDA
4 pilot projects to complete in FY19/20
Funded by proceeds from green convertible bond
Potential rollout to ~29 properties within 3 years
P.76 Visionary Creativity Areas to TODAY’SWork Together AGENDA
FACILITIES MOBILE APPS MANAGEMENT o Integrate online and o Explore technological offline platforms solutions to improve operational efficiency
INTELLIGENCE & GREEN LEASES ANALYTICS
o Extend our belief in o Capitalise on data sustainability to our insights and analytics tenants
P.77 TODAY’S AGENDA Deliver Sustainable Returns
Strengths Vision 2025 Targets
Leader in Retail REIT Industry Portfolio Growth Maintain Growth Momentum Clear Vision
Effective Stewardship Culture of Excellence Become Employer of Choice Strong Balance Sheet
Placemaking Focus on Growth Visionary Creativity through Innovation
P.78 Disclaimer
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