MTR Nordic The Rail+Property model to finance public transport Robert Westerdahl Business Development Director 15-03-06 Sid 1 Overview • Introduction to MTR internationally and in Sweden • The Rail+Property model to finance public transport infrastructure • Rail+Property in Sweden? 2 MTR’s vision: “We aim to be a leading multinational company that connects and grows communities with caring services” 15-03-06 Sid 3 3 MTR Corporation short facts One of the worlds largest global railway corporations with ~11 million passengers every working day Founded in Hong Kong 1975 as ”Mass Transit Railway Corporation” to build and operate the metro in Hong Kong Listed on the Hong Kong stock exchange since the year 2000 The Nordic countries are one of the prioritized growth regions for MTR 15-03-06 Sid 4 4 MTR is today operating 9 train systems on 3 continents Stockholm metro Beijing metro line 4, 14, 16 • 1,2 m pass./day (under construction) • 108 km tracks, 100 • 1,5 m pass./day stations • 55 km tracks, 41 stations Stockholm–Gothenburg Hangzhou Metro • High-speed train (Open • 0,2 m pass./day Access), start 21/3 2015 • 48 km tracks, 31 stations London Overground Hong Kong/Shenzen* • 2,3 m pass./day • 4,4 m pass./day • 110 km tracks, 55 stations • 212 km tracks, 152 stations Sydney NWRL commuter train London Crossrail • A new 15-year PPP contract to • New Metro under construct and operate 36km new construction. Mobilization commuter train line with 13 ongoing stations. Melbourne commuter train • 0,7 m pass./day • 372 km tracks, 212 stations OBS: passegers per working day 15-03-06 Sid 5 5 MTR operates the Stockholm Metro since 2009 MTRS facts Lines, # 3 Stations, # 100 Length, km 108 km Annual 329 mn journeys Daily 1.2 mn patronage Concession 8 years + 6 yrs Turnover 2.6 bn SEK Employees 3,000 Fleet size 271 three-car trains 204 single-car trains 15-03-06 Sid 6 6 Our latest investment is the open access operation MTR Express between Gothenburg and Stockholm • MTR invested ~1 bn SEK to start MTR Express • Currently ~18,000 persons travel every weekday with new trains from Swiss manufacturer Stadler (~55% road, ~15% air, ~30% rail) • Starting service 21st of March between • MTR Express aims to attract customers from all Stockholm and Gothenburg with stops in segments and offers the most environmentally Södertälje Syd, Skövde, Herrljunga friendly way to travel between the cities ~90 departures per week from August 2015 7 7 MTR’s business covers a broader spectrum than just railway operations MTR has a broad business, covering MTR financials a large part of the public transport Billion Hong Kong Dollars (1 HKD ~ 0.95 SEK) system Revenues • Property development: Profit 38 36 51 stations with properties ~13 33 million m2 GFA developed 30 • Property Management 12 shopping malls, 760,000m2 commercial/office space 86,000 residential units 9 10 10 9 • Infrastructure development and Engineering Rail projects of ~180 2010 2011 2012 2013 bn SEK ongoing in Hong Kong, China, Australia Source: MTR Corporation Financial Statement 2013 8 The railway operations covered in 2013 ~25% of the profit, 75% comes from the public transport system In Hong Kong, the metro runs without tax subsidies A 1-way ticket 24% costs ~7 SEK 31% vs. 36 SEK in Property Property rental Rental RailwayRailway Operation operations Stockholm metro 14% 31% Capturing the value in the public transport system is a significant source of financing Property development Station CommercialStation commercial 9 Overview • Introduction to MTR internationally and in Sweden • The Rail+Property model to finance public transport infrastructure • Rail+Property in Sweden? 10 Railway Expansion in Hong Kong: Five recent and ongoing projects led by MTR Shenzhen Rail Infrastructure Route No. of Target projects length km stations completion Cost West Island 3 3 Dec 2014 15 bn SEK East(Rail(Line Northern(Link Lok(Ma(Chau( Line Spur(Line South Island 7 5 2015 13 bn SEK Line (East) Express(Rail(Link Ma(On(Shan(Line West(Rail(Line Kwun Tong 3 2 2015 5 bn SEK Line Extension Tsuen Wan(Line Airport(Express(Line Shatin Central(Link Express Rail Link 26 1 2017 54 bn SEK Kwun(Tong(Line High speed rail Kwun(Tong(Line(Extension Kowloon(Southern(Link Disneyland(Resort(Line Tseung Kwan(O(Line Shatin Central 2018 (Phase I) (LOHAS(Park(Station) 17 9 73 bn SEK West(Island(Line Link 2020 (Phase II) Island(Line Tung(Chung(Line Total 160 bn SEK South(Island(Line((E) 15-03-06 Sid 11 11 MTR works mainly with the PPP-model for infrastructure projects – NWRL example North West Rail Link a A$8.3 bn (~54 bn SEK) The PPP contract covers: railway project Upgrade of 13km existing line with 5 - Building 8 new railway stations; stations and 23 km new construction with 8 new stations - Installing tracks, signalling, mechanical and electrical systems; - Supplying fully-automated trains; - Building and operating depot - Delivering 4,000 commuter car parks - Upgrading and converting the existing railway to rapid transit status - Operations and maintenance, 15 years Financing - Availability model with renumeration based on availability, punctuality, customer satisfaction and other KPIs PPP consortium: MTR, John Holland, Leighton Contractors, UGL Rail Services, Plenary Group ECRL: Existing line; Epping Chatswood Rail Link, Source: http://nwrail.transport.nsw.gov.au 12 The Rail+Property model is a financing model for PPP projects. Example: Airport Express Line Project data Airport Express Line Tung Chung Line Route length (km) 35 31 Stations (no) 5 7 Depot Siu Ho Wan Construction period 1993 – 1998 Initial construction cost HK$35.1 billion Property development rights at five sites along the Funding support railway (Hong Kong, Kowloon, Olympic, Tsing Yi, and Tung Chung) 13 Case Study – Airport Express Line Five sites by new stations identified for property development to finance extension Total GFA (m2) Hong Kong 415,900 Kowlo 1,090,01 on 1 Olympi c 667,652 Tsing Yi 291,870 Tung 1,028,91 Chung 0 3,494,34 Total 3 14 LOHAS Park is one example where MTR developed a city integrated with the metro Before development, when an extension of the Tseung Kwan O Line was planned 15-03-06 Sid 15 15 LOHAS Park Station – construction plan Construction plan • Site Area: 33 hectares • Total GFA: 1.6 M m2 • 50 residential towers Station • 45,000 m2 shopping centre • Community facilities incl. schools • Transport interchange facilities Depot • Extensive landscaped open space 15-03-06 Sid 16 16 Overview • Introduction to MTR internationally and in Sweden • The Rail+Property model to finance public transport infrastructure • Rail+Property in Sweden? 17 Applying Rail+Property in Sweden? In Stockholmsförhandlingen, the agreement included • New metro, trains and depot at ~26 bn SEK • 78’000 new residential units (~6’500’000 m2 GFA) What if the Rail + Property model had been used? 15-03-06 Sid 18 18 Applying Rail+Property in Sweden? In Stockholmsförhandlingen, the agreement included • New metro, trains and depot at ~26 bn SEK • 78’000 new residential units (~6’500’000 m2 GFA) What if the Rail + Property model had been used? • <4’000 SEK/m2 would have financed the metro extension completely (vs a selling price in Stockholm of 40’000-60’000 SEK/m2) • That excludes all value creation from commercial property and retail 15-03-06 Sid 19 19 Applying Rail+Property in Sweden? In Stockholmsförhandlingen, the agreement included • New metro, trains and depot at ~26 bn SEK • 78’000 new residential units (~6’500’000 m2 GFA) What if the Rail + Property model had been used? • <4’000 SEK/m2 would have financed the metro extension completely (vs a selling price in Stockholm of 40’000-60’000 SEK/m2) • That excludes all value creation from commercial property and retail Upcoming projects that could be addressed? • Additional metro extension in Stockholm – Yellow line to Älvsjö? • High-speed rail project with large urban development at key stations? • Upgrade and extension of existing systems; Malmö, Gothenburg, Stockholm? • The HH-link? 15-03-06 Sid 20 20 The value creation potential for public transport is significant but yet to be fully realized Stockholm example Station development Estimated number of passengers Thousands per working day • Unlocks value from the existing T-Centralen 250 public transport system Slussen 141 Fridhemsplan 79 • Can finance and support further Gullmarsplan 77 build-out of the system and Copenhagen airport 64 other investments Liljeholmen 53 • Increases attractiveness of Stockholm airport 52 public transport Tekniska högskolan 50 Helsinki airport 44 • Focus on traffic hubs increases Alvik 39 effectiveness in exchanges Ropsten 36 Danderyds sjukhus 29 • Station development should Sundbyberg 26 include residential units, Hornstull 25 commercial property, retail etc. Brommaplan 25 Vällingby 20 • Relieves the commuters daily Älvsjö 20 life with all services close by the Gothenburg airport 14 daily commute 15-03-06 Sid 21 21 MTR Nordic The Rail+Property model to finance public transport Robert Westerdahl Business Development Director 15-03-06 Sid 22 .