CapitaCommercial Trustcct-trust.listedcompany.com/newsroom/20130626_173544_C61... · 2013. 6. 26. · Case Study 1: Ongoing Asset Enhancement Initiative for Six Battery Road Occupancy

CapitaCommercial Trust Singapore’s First Listed Commercial REIT

Real Estate Investment World Asia 2013 Presentation

by Ms Lynette Leong, CEO

26 June 2013

1

This presentation shall be read in conjunction with CCT’s 1Q 2013 Unaudited Financial Statement

Announcement.

The past performance of CCT is not indicative of the future performance of CCT. Similarly, the past performance

of CapitaCommercial Trust Management Limited, the manager of CCT is not indicative of the future performance

of the Manager.

The value of units in CCT (CCT Units) and the income derived from them may fall as well as rise. The CCT Units

are not obligations of, deposits in, or guaranteed by, the CCT Manager. An investment in the CCT Units is

subject to investment risks, including the possible loss of the principal amount invested. Investors have no right

to request that the CCT Manager redeem or purchase their CCT Units while the CCT Units are listed. It is

intended that holders of the CCT Units may only deal in their CCT Units through trading on Singapore Exchange

Securities Trading Limited (SGX-ST). Listing of the CCT Units on the SGX-ST does not guarantee a liquid

market for the CCT Units.

This presentation may contain forward-looking statements that involve assumptions, 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 other developments or companies, shifts in expected levels of

occupancy rate, property rental income, charge out collections, changes in operating expenses (including

employee wages, benefits and training costs), 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

current view of the CCT Manager on future events.

Important Notice

2 CapitaCommercial Trust Corporate Presentation *June 2013*

Content

1. About CCT 04

2. CCT’s Growth Drivers 10

3. Market Cycle Considerations 13

4. Case Studies of AEI 17

5. Case Studies of External Growth 26

6. Prudent Capital Management 32

7. Summary 36

Slide No.


CapitaCommercial Trust Corporate Presentation *June 2013*

1. About CCT

4

Singapore’s First Listed Commercial REIT

Listing May 2004 on Singapore Exchange Securities Trading Limited

Portfolio

- Singapore

10 quality commercial assets in the Central Area of Singapore

Total net lettable area of about 3 million sq ft

Total number of tenants – About 550 (office, retail and hotel)

Investments 30% stake in Quill Capita Trust who owns 10 commercial

properties in Kuala Lumpur, Cyberjaya and Penang - Malaysia

(less than 1% of total assets)

Total assets S$6.95 billion (US$5.6 billion) (as at 31 March 2013)

Market cap S$4.1 billion (US$3.2 billion) Based on CCT’s closing price of S$1.42 on 25 Jun 2013 and 2,874,598,116 total units on issue

Sponsor CapitaLand Group: About 32%



10

1. Capital Tower

2. Six Battery Road

3. One George Street

4. HSBC Building

5. Raffles City

1 2

3 4

5

6

7

9 10 8

6. Bugis Village

7. Wilkie Edge

8. Golden Shoe Car Park

9. CapitaGreen (development)

10. Twenty Anson

Owns 10 centrally-located quality commercial properties

Legend

Mass Rapid Transit

(MRT) station

6

CapitaCommercial Trust Corporate Presentation *June 2013* 7

CCT’s portfolio occupancy consistently above market level Decline in CCT’s 1Q 2013 occupancy is temporary

Notes:

(1) Source: CBRE Pte. Ltd.

(2) Covers Raf f les Place, Marina Centre, Shenton Way and Marina Bay, data only available f rom 3Q2005 onwards

(2)

95.9%

99.6% 99.4% 99.3%

96.7%

95.1%

98.2%

96.0%95.3%

85.0%

88.0%

90.9%

92.3%

90.0%

87.5% 87.9% 88.3%

90.8%90.8%

97.0%98.0%

93.7%92.4%

94.4%

90.7%

93.2%

80%

90%

100%

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CCT's Committed Occupancy Since Inception

CCT URA CBRE's Core CBD Occupancy Rate


Diverse tenant mix in CCT’s portfolio(1)

Note:

(1) Based on monthly gross rental income of tenants as at 31 Mar 2013

Of the 36%, the following key tenants

contribute around 63% collectively:

- HSBC

- JPMorgan

- GIC

- Standard Chartered Bank

- Mizuho

Banking, Insurance & Financial Services, 36%

Hospitality, 15% Retail Products and

Services, 13%

Food & Beverage, 7%

Business Consultancy, IT & Telecommunications, 7%

Manufacturing and Distribution, 6%

Legal, 4%

Education and Services, 4%

Energy and Maritime, 3%

Government, 3% Real Estate & Property Services, 2%


14.3%

6.1% 5.2% 4.9%

4.1%

2.4% 2.3% 1.7% 1.6% 1.6%

RC Hotels (Pte) Ltd

The Hongkong and Shanghai Banking

Corporation Limited

JPMorgan Chase Bank, N.A.

Government of Singapore Investment Corporation

Private Limited

Standard Chartered Bank

Mizuho Corporate Bank Ltd

Robinson & Company

(Singapore) Private Limited

Economic Development

Board

The Royal Bank of Scotland PLC

WongPartnership LLP

Top ten blue-chip tenants(1) contribute 44% of monthly

gross rental income

Note:

(1) Based on monthly gross rental income of top ten tenants as at 31 Mar 2013 (excluding retail turnover rent)

Weighted Average Lease Term to Expiry “WALE” (by NLA) as at 31 Mar 2013

improved due to renewal of JPMorgan and The Royal Bank of Scotland

WALE by NLA 1Q 2013 4Q 2012

Top 10 Tenants 17.6 years 17.4 years

Top 10 Tenants

excluding RC Hotels (Pte) Ltd3.8 years 3.0 years


2. CCT’s Growth Drivers

10

Growth drivers


• Achieve higher rental reversion

• Increase occupancy

• Revitalise asset quality through physical and technical improvements

Grow portfolio revenue

• Leverage on market cycles Grow by

acquisition

• Invest in select development projects that have strategic fit with CCT’s existing portfolio

Grow by development

projects

Increase

Economic

Value

of

CCT

Revitalised portfolio for further growth

12

Acquire good quality asset

Enhance /

refurbish asset

Unlock value at optimal stage of life cycle

Recycle capital

Flexibility and speed to

seize growth opportunities

Funding

flexibility

Organic

growth

Value creation

Acquisition of

Twenty Anson

1. Asset enhancement at Raffles

City Singapore (completed)

2. S$92m upgrading at Six Battery

Road (ongoing till end-2013)

3. S$34.7m upgrading at Raffles

City Tower (Nov 12 to Q2 2014)

Redevelopment

of Market Street

Car Park into

Grade A office

– CapitaGreen

Divestments:

2010 - Robinson

Point and

StarHub Centre

2011 - Market

Street Car Park

Total proceeds:

S$634m



3. Market Cycle Considerations

13

CBD Core office space currently constitutes

43% of total office stock

14

Source: Jones Lang LaSalle (4Q 2012)

Region Area (sq ft) % of total

stock

CBD Core

- Grade A office stock 27.5 mil

14.6 mil

43%

Rest of Central Area 10.2 mil 16%

Orchard Road 5.1 mil 8%

Marina Centre 3.8 mil 6%

Decentralised Areas 17.3 mil 27%


0.8 0.7 0.6

1.8

2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

3

3.5

Net Supply Net Demand


Singapore Private Office Space (Central Area) – Net Demand & Net Supply

Notes:

(1) Central Area comprises ‘The Downtown Core’, ‘Orchard’ and ‘Rest of Central Area’

(2) Supply is calculated as net change of stock over the quarter and may include office stock removed from market due to conversions or demolitions

(3) Excludes Strata-titled Office developments

(4) Source: URA, CBRE (1Q2013 preliminary figures)

Forecast Supply

New office supply in CBD not excessive

Mil sq ft

CapitaGreen

by 4Q

Periods Average annual net supply Average annual net demand

1993 – 1997 (growth phase) 2.1 mil sq ft 1.9 mil sq ft

1993- 2012 (through 20-year property market cycles) 1.1 mil sq ft 1.0 mil sq ft

2013 – 2016 & beyond (forecast till 2017) 1.3 mil sq ft N.A.

Post-Asian financial crisis, SARs &

GFC -weak demand & undersupply

Singapore as a global city


$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

Prime Grade A

Rate of office market rent decline is receding

*No historical data for Grade A rents prior to 2002.

Source of data: CB Richard Ellis (Pte) Ltd (figures as at end of each quarter). CBRE no longer tracks prime rents from 3Q 2011.

S$18.80

S$4.48

S$4.00

S$9.55

Global

financial

crisis Post-SARs, Dot.com crash

S$7.50

S$8.00

Euro-zone

crisis

Mo

nth

ly g

ross r

en

t b

y p

er

sq

ua

re fo

ot

S$11.06

1Q 12 2Q 12 3Q 12 4Q 12 1Q 13*

Mthly rent

(S$ / sq ft )

10.60 10.10 9.80 9.58 9.55

% change -3.6% -4.7% -3.0% -2.2% -0.3%


4. Case Studies of AEI

17


Case Study 1: Ongoing Asset Enhancement Initiative

for Six Battery Road Occupancy Rate Total AEI budget Target return on

investment (ROI)

AEI Period

93.2% (1Q 2013) versus

86.2% (1Q 2012)

S$92.0 mil 8.1% 4Q 2010 to 4Q 2013

Revitalised main lobby with

vertical garden

• Revitalised main lobby and concierge

• Upgrading of office space includes

installation of CO2 sensors, increased

ceiling height, sprinkler system

replacement and new chillers

• First operating office building in

Singapore to achieve Green Mark

Platinum award

• Reduced energy consumption by 27%

translating to c. S$560,000 savings

• Achieved rents of 20 - 25% premium over

comparable buildings in Raffles Place


Case Study 2: Ongoing Asset Enhancement Initiative

for Raffles City Tower

Occupancy Rate

(as at 1Q 2013)

Total AEI budget Target return on

investment

AEI Period

99.8% S$20.8 mil (60% interest) 8.6% 4Q 2012 to 2Q 2014

Artist’s impression of

revitalised main lobby

• Progressive upgrading of typical

lift lobbies

– Typical lift lobby corridors

– Restrooms and Pantry

• Upgrading of ground floor

– Canopy and drop off area

– Ground floor lobby and reception

– Entrance from retail area

2007 2008 2009 – 2010

Asset

Enhancement

Initiatives

(AEI)

Completed

• Created 3-storey island

podium block in atrium

• Extended Basement 1

Marketplace by

converting car park lots

• Extended lease lines

and reconfigured retail

spaces

• New F&B and Outdoor

Restaurant Area (ORA)

Extended existing ORA

• Reconfigured

Basement 1 retail area

• Linked Basement 2 to

Esplanade MRT station

Additional NLA

Created +40,000 sq ft +3,500 sq ft +16,000 sq ft

Cost S$75.4m S$7.5m S$34.6m(1)

Incremental

Net Property

Income (NPI)

S$7.6m S$1.1m S$3.1m

Return on

Investment 10.1% 10.0% 9.0%

Completion End-2007 End-2008 End-2010

Note:

(1) Subject to change as final account is not finalized. Revised total project cost includes marketing assistance of S$1.4m to affected tenants

Case Study 3: Value Creation for Raffles City

Retail Space Since Acquisition


Created 3-storey Island Podium in Raffles City

Atrium

Before creation of island podium

Created 3-storey island podium;

Retail shops on levels 1 and 2 and event

venue on level 3

Additional Net Lettable Area Created


Converted Part of Car Park into Retail Space

Created 26,400 square feet of retail space

Previous excess car park spaces

Higher Value Space Created


Reconfigured Space at Raffles City Basement 1

New Basement 2 Link to Esplanade MRT Station

Additional Shopper Traffic Generated



Case Study 4: Completed Asset Enhancement

Initiative for Golden Shoe Car Park

• Converted storeroom space to lettable office

space and enhancement of level 10 office lift

lobbies in August 2012.

• Secured a new tenant for the new office space

on a five-year lease.

• Achieved ROI of 18.6%, higher than projected.

Lift Lobby - Before

Enhanced Lift Lobby

Scope of Work Projected Achieved

Project Development Cost $590,000 $590,000

Incremental Cashflow (p.a.) $83,000 $110,000

ROI 14% 18.6%


Other growth driver: Upside from revised car

park rates

• Increased car park rates for CCT

properties implemented with effect from

1 June 2012.

• To ensure price competitiveness and

increase non-rental revenue for our

properties

• CCT tenants enjoyed additional 2

months’ notice period. Revised tenant

season parking was effective from 1

August 2012.

• Implementation of ‘Golden Lots Parking

Scheme’: exclusive reserved parking lot

at convenient location within Golden

Shoe Car Park Golden Shoe Car Park

Car parkers are greeted in the morning


5. Case Studies of External Growth

26

Case Study 1: Acquired Twenty Anson, a new Green Mark Platinum

office building, for property price of S$430 mil. 100% leased

Location 5-minute walk with sheltered access to the

Tanjong Pagar Mass Rapid Transit (MRT)

station and Capital Tower

Net Lettable Area Approximately 202,500 sq ft

Date of Building

Completion

05 Oct 2009

Committed Occupancy 100% (as at 21 Feb 2012)

Average Passing Rent S$6.18 psf per month

Key Tenants Toyota , BlackRock, CSC Technology

Value Proposition • Buying a new, significantly under-rented

property with good location and

specifications

• Only 6% of NLA due for renewal in 2012

• 94% of lease renewals in under-supplied

office market (2013 and 2014) with

significant rental upside

• Close proximity to Capital Tower

improves operating efficiency

• DPU accretion

• No equity raising Twenty Anson


Increased CCT’s footprint in Tanjong Pagar in view of

on-going rejuvenation of area


Key Developments

Commercial

1. Twenty Anson

2. Capital Tower

3. New office development

4. Robinson Square

Residential

5. Keppel Towers and GE Tower

(residential redevelopment)

6. The Icon (with retail podium)

7. Altez

8. Sky Suites@Anson

Mixed-use

9. PS100 (Hotel with

commercial/residential

component)

10. Mixed-use development

Future developments

11. Development of land parcels

around Tanjong Pagar Railway

Station

12. Future development sites after

port’s lease expires in 2027

Source: Map extracted from SLA’s OneMap website.

12

11

5

4

3

8 7

6

10

9

Twenty Anson

Capital Tower

Sheltered access to MRT

station

1

2

According to URA’s Masterplan

2008, Tanjong Pagar has been

planned as an attractive

business hub within the Central

Business District (CBD) – a

mixed-use precinct with a vibrant

work-play-live environment with

round-the-clock buzz.

6%

$6.05

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2012

Market gross rental of S$8.44 psf

per month in Shenton Way /

Tanjong Pagar as at 4Q 2011 (1)

Higher income expected from potential positive rental

reversions


Note:

(1) Data from Colliers International Singapore Research.

Existing leases in Twenty Anson were signed during the global financial crisis.

Average passing rentals of existing leases are significantly below current

market rentals.

50%

44%

$6.12 $6.28

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2013 2014

Expiry based on property's NLA (%)

Average rent of leases expiring in the year (S$ psf NLA)

Potential rental upside

Improved operating efficiency


Higher operating efficiency is expected due to Green Mark Platinum

design features of property and clustering of operational support.

Economies of scale and

sharing of resources

Twenty Anson

Capital Tower

Energy consumption

Based on Green Mark Platinum

certification, Twenty Anson is expected

to achieve savings of 25% - 30% in

energy consumption compared to a

Green Mark certified office building.


Case Study 2: CCT’s first development project,

CapitaGreen to be completed 4Q 2014

138 Market Street

CapitaGreen

• Only Grade A office building

completing in 2014 which will deliver

700,000 sq ft of net lettable area

• CCT owns 40% interest in

development on site of former

Market Street Car Park

• Call option to acquire balance 60%

from CapitaLand & Mitsubishi

Estate Asia within 3 years after

building’s TOP


6. Prudent Capital Management

32

Strong Financial Position Total assets at S$6.95 billion;

Adjusted NAV at S$1.62 per unit


Statement of Financial Position

As at 31 March 2013

S$ '000

Non-current Assets 6,854,864 Net Asset Value Per Unit $1.64

Current Assets 98,790 $1.62

Total Assets 6,953,654

Current Liabilities 155,639

Non-current Liabilities 2,137,061 CCT Credit Rating

Total Liabilities 2,292,700 Baa1 by Moody's/ BBB+ by S&P

Net Assets 4,660,954

Unitholders' Funds 4,660,954

Units in issue ('000 units) 2,845,051

Outlook stable by both rating agencies

Adjusted Net Asset Value Per

Unit

Moody's replaced CCT Corporate Family

Rating with issuer rating and upgraded CCT's

unsecured issuer rating from Baa2 to Baa1.

34

Robust capital structure; gearing at 30.4%

4Q 2012 1Q 2013 Remarks

2,105.8 2,113.6Increased

(MSO Trust draw down bank banks)

30.1% 30.4%Increased

(Additional drawdown by MSO Trust)

7.7 times 7.5 times Improved

69.7% 69.3% Decreased

3.2 years 3.0 yearsDecreased

(Passing of time)

Average Cost of Debt 3.1% 3.0% Improved

Interest Coverage 4.4 times 4.7 times Improved

Total Gross Debt (S$'m)

Gearing Ratio

Net Debt / EBITDA

Unencumbered Assets as % Total Assets

Average Term to Maturity

Average Cost of Debt

Interest Coverage

(1)

Note:

(1) In May and June 2013, $32.25 million of CB due 2015 were converted into CCT units @ conversion price of $1.2324.

Accordingly, the pro-forma Total Gross Debt would be reduced to $2,081.3 million and gearing would be 29.9%.

(1)



High proportion of debt on fixed interest rates

mitigates interest rate risk - Due to expiry of $370m interest rate swap in March 2013

78%

Borrowings

on Floating

Rate, 22%

Borrowings on Fixed Rate, 78%

Note:

(1) In May and June 2013, $32.25 million of CB due 2015 were converted into CCT units @ conversion price of $1.2324.

Accordingly, the % of borrowings on fixed rate would be 77% and on floating rate would be 23%


7. Summary

36

37

• Robinson Point

(S$203.25 million)

• Starhub Centre

(S$380.0 million)

CCT’s total assets in Singapore grew from S$2.1 bn

since inception in May 2004 to S$6.95 bn in 1Q 2013

• HSBC Building

(S$147.0 million)

• 60.0% stake in

Raffles City

(S$1,299.6 million)

1. Capital Tower

2. Six Battery Road

3. Starhub Centre

4. Robinson Point

5. Bugis Village

6. Golden Shoe Car Park

7. Market Street Car Park

• One George Street

(S$1,165 million)

• Wilkie Edge

(S$182.7 million)

Listing

• Market Street Car

Park

(S$56.0 million)

Due to 7 Acquisitions & 3 Divestments and ongoing AEIs over 8 Years

• Twenty Anson

(S$430.0 million)

• 30% stake in Quill Capita

Trust (about S$58.8 million)

2012 2011 2010 2009 2008 2007 2006 2005 2004

• 40.0% stake in

CapitaGreen

development

(Committed

S$560.0 million)

Divestments

Asset Enhancement Initiative

• Raffles City AEI (2007, 2008, 2010)

• Six Battery Road AEI (2010 to 2013)

• Raffles City Tower AEI (2012 to 2014)



Delivered higher returns in 2012 despite

challenging environment

Distributable Income Distribution Per Unit

S$ million (cents)

(2) Annualised

(3) After taking into consideration the issue of rights

units in July 2009

(2)

(3)

Global financial crisis and

Euro-zone debt crisis Global financial crisis and

Euro-zone debt crisis

45.1 59.9

78.9

120.4

153.0

198.5

221.0 212.8

228.5

0.0

50.0

100.0

150.0

200.0

250.0

2004 2005 2006 2007 2008 2009 2010 2011 2012

5.97

6.81 7.33

8.70

11.00

7.06

7.83 7.52

8.04

0.00

2.00

4.00

6.00

8.00

10.00

12.00

2004 2005 2006 2007 2008 2009 2010 2011 2012

(1) CAGR: Compounded Annual Growth Rate

+7.4%

+6.9%

Attractive yield compared to other investments(1)


0.03%

0.1%

0.3%

1.5%

2.5%

2.5% to 3.5%

2.9%

4.7%

4.8%

5.5%

Interbank overnight interest rate

Bank savings deposit

Bank f ixed deposit (12-month)

10-year Government bond

CPF (ordinary) account

Straits Times Index

Off ice property transaction yield

FTSE ST REIT Index

CCT Portfolio Property Yield

CCT's Distribution Yield(2)

(3)

Notes:

(1) All information as at 31 March 2013. Sources: Bloomberg, Monetary Authority of Singapore, Central Provident Fund,

Singapore Government Securities

(2) CCT’s distribution yield is based on annualised 1Q 2013 DPU over closing price of S$1.42 on 25 Jun 2013

(3) CCT portfolio property yield based on annualised 1Q 2013 net property income and December 2012 valuation


CapitaCommercial Trust Management Limited

39 Robinson Road

#18-01 Robinson Point

Singapore 068911

Tel: (65) 6536 1188

Fax: (65) 6533 6133

http://www.cct.com.sg

For enquiries, please contact:

Ms Ho Mei Peng

Head, Investor Relations & Communications

Direct: (65) 6826 5586

Email: [email protected]

40

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CapitaCommercial Trustcct-trust.listedcompany.com/newsroom/20130626_173544_C61... · 2013. 6. 26. · Case Study 1: Ongoing Asset Enhancement Initiative for Six Battery Road Occupancy