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Corporate Presentation
4th Quarter 2015
Financial Results
22 January 2016
Important Notice
This presentation is for information only and does not constitute an invitation or offer toacquire, purchase or subscribe for units in MRCB-Quill REIT (formerly know as Quill Capita Trust)(“MQReit”). The past performance of MQReit is not necessarily indicative of the futureperformance of MQReit.
This presentation may contain forward-looking statements that involve risks and uncertainties.Actual future performance, outcomes and results may differ materially from those expressedin forward-looking statements as a result of a number of risks, uncertainties and assumptions.Representative examples of these factors include (without limitations) general industry andeconomic conditions, interest rate trends, cost of capital and capital availability, competitionfrom similar developments, shifts in expected levels of property rental income andoccupancy, changes in operating expenses including employee wages, benefits andtraining, property expenses and governmental and public policy changes. You arecautioned not to place undue reliance on these forward-looking statements which arebased on the manager’s current view of future events.
The value of units in MQReit (Units”) and the income derived from them may fall as well asrise. Units are not obligations of, deposits in, or guaranteed by, the manager or any of itsaffiliates. An investment in Units is subject to investment risks, including the possible loss of theprincipal amount invested. Investors have no right to request the manager to redeem theirUnits while the Units are listed. It is intended that unitholders may only deal in their Unitsthrough trading on the Main Board of Bursa Malaysia Securities Berhad. Listing of the Units onthe Bursa Securities does not guarantee a liquid market for the Units.
The information in this Announcement must not be published outside Malaysia.
MRCB-Quill REIT Presentation *January 2016*
Contents
MRCB-Quill REIT Presentation *January 2016*
• Financial Results
• Portfolio Update
Kuala Lumpur & Cyberjaya
Office Market Outlook
Penang Retail Market
Outlook
• Conclusion
Slide No.
4
12
23
MRCB-Quill REIT Presentation *January 2016*
Quill Building 5 - IBM
Financial Results
4Q 2015 EPU increased by 13.6%
(RM’000) (Audited)
4Q 2014
18,183
13,414
8,506
2.18 sen
(Unaudited)
4Q 2015
32,578
26,793
16,375 Net Income 1
EPU 2
Net Property Income
Gross Revenue
1 Net Income refers to realised income after taxation (exclude gain from re-measurement of derivatives and revaluation surplus)
2 EPU refers to Realised Earnings Per Unit
2.48 sen
4
Variance
+79.2%
+99.7%
+92.5%
+13.6%
MRCB-Quill REIT Presentation *January 2016*
FY 2015 DPU Up 1.1% Year-on-Year
(RM’000) (Unaudited)
FY 2015
115,274
90,272
54,021 Total Income for
Distribution1
EPU 2
Net Property Income
Gross Revenue
1 Total Income for Distributions refers to realised income after taxation (exclude gain from re-measurement of derivatives and revaluation surplus)
2 EPU refers to Realised Earnings Per Unit
3 DPU refers to Distribution Per Unit. DPU of 8.38 sen is 95.7% of realised EPU of 8.76 sen for FY 2014 and DPU of 8.47 sen is 94.3% of realised EPU of 9.06 sen for FY 2015
9.06 sen
Variance
+63.9%
+69.3%
+58.1%
+3.5%
MRCB-Quill REIT Presentation *January 2016*
DPU 3 8.47 sen +1.1%
(Unaudited)
FY 2014
70,249
53,325
34,163
8.76 sen
8.38 sen
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
as at as at as at as at
31 Mar 15
(RM’000)
30 Jun15
(RM’000)
30 Sept 15
(RM’000)
31 Dec 2015
(RM’000)
Non Current Assets 1,588,244 1,590,200 1,569,724 1,573,632
Current Assets 34,151 41,999 37,956 51,675
Total Assets 1,622,395 1,632,199 1,607,680 1,625,307
Current Liabilities 21,284 19,445 20,133 16,158
Non Current Liabilities 729,133 733,212 703,150 705,294
Net Assets 871,978 879,541 884,397 903,855
No of Units 661,381 661,381 661,381 661,381
NAV per Unit (RM) 1.3184 1.3299 1.3372 1.3666
Total Assets – RM1.62 billion
NAV per unit – RM1.3666
MRCB-Quill REIT Presentation *January 2016*
Quill Capita Trust Presentation*January 2016*
Market Valuation as at 31 December 2015
(a) The Net Book Value of investment properties as at 31 December 2015 (prior to the Proposed Revaluation) comprise of the brought forward
net book value as at 31 December 2014 together with asset enhancement related costs incurred during the year.
(b) The Properties were valued by DTZ Nawawi Tie Leung Property Consultants Sdn Bhd, an independent firm of professional valuer,
registered with the Board of Valuers, Appraisers & Estate Agents Malaysia.
(c) The Properties were valued by CH Williams Talhar & Wong Sdn Bhd, an independent firm of professional valuer, registered with the Board of
Valuers, Appraisers & Estate Agents Malaysia.
Name of Properties Net Book Value as
at 31 Dec 2015(a)
(prior to Proposed
Revaluation)
(’000)
Market
Valuation at as
31 Dec 2015
(’000)
Surplus
/(Deficit)
incorporated
into fund
(’000)
%
increase
/
(decrease)
Quill Building 1- DHL1 & Quill Building 4- DHL 2(b) RM125,700 RM126,000 RM300 0.24
Quill Building 2- HSBC(b) RM120,633 RM120,700 RM67 0.06
Quill Building 3- BMW(b) RM 74,400 RM 75,500 RM1,100 1.48
Wisma Technip(c) RM169,704 RM172,000 RM2,296 1.57
Part of Plaza Mont’ Kiara(c) RM112,465 RM114,000 RM1,535 1.36
Quill Building 5 – IBM(b) RM 45,200 RM 45,200 - -
Quill Building 8 – DHL (XPJ) (b) RM 26,400 RM 26,400 - -
Tesco Building, Penang(b) RM139,700 RM140,000 RM300 0.21
Platinum Sentral(c) RM748,921 RM750,000 RM1,079 0.14
Total RM1,563,123 RM1,569,800 RM6,677 0.43
Unaudited Unaudited Unaudited Unaudited
as at as at as at as at
31 Mar 15 30 Jun 15 30 Sept 15 31 Dec 15
Total Debts (RM’000) 720,444 718,462 688,170 689,722
Gearing Ratio ¹ 0.44x 0.44x 0.43x 0.42x
Interest Coverage 2 3.51x 3.03x 3.03x 3.57x
Average Term to Maturity (year) 3 3.79 3.57 3.35 3.09
Average Cost of Debt (p.a) 4 4.3% 4.4% 4.4% 4.4%
Stable Financial Indicators
Notes:1.Gearing ratio refers to Gross Debt over Total Assets.2.Interest coverage refers to year to date (YTD) EBITDA / YTD Interest Expense3.Average Term to Maturity means weighted average time lapse to maturity4.Average Cost of Debt is calculated based on YTD Interest Expense / Average Weighted Borrowing
MRCB-Quill REIT Presentation *January 2016*
Capital Management
MRCB-Quill REIT Presentation *January 2016*
CPs RM118m MTN
RM117mRM118mCPs
Prudent Capital Management
Average cost of debt
4.4%
100%* of borrowings on fixed rate
Total average borrowings :RM696 mil
Gearing level
42%
Below SC limit of 50%
* MQReit had on 21 April 2015, entered into an interest rate swap (“IRS”) for a nominal sum of RM279 million to swap its floating
interest rate facility to fixed interest rate. MQReit’s borrowings are all on fixed rate, effective from 21 April 2015.
SC Limit
Fixed
rate
100%
42.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
31-Dec
Gearing Ratio
0
50
100
150
200
250
300
350
400
450
2015 2016 2017 2018 2019 2020
Next Refinancing Due in September 2016
Debt Maturity Profile
MRCB-Quill REIT Presentation *January 2016*
CPs RM118m
TLRM72.2m
RM118mCPs
RM(mil)
17%
Average debt to maturity : 3.09 years
27%
Note;
1. MTN - Medium Term Notes
2. CP – Commercial Papers
3. TL – Term Loan
MTN RM60m
56%
CP RM279mil
TLRM110mil
CP RM130mil
MTNRM60 mil
TLRM117m
MRCB-Quill REIT Presentation *January 2016*
Quill Building 3 - BMW
Portfolio Update
Portfolio of Quality Assets
a) The Properties were valued by DTZ Nawawi Tie Leung Property Consultants Sdn Bhd, an independent firm of professional
valuer registered with the Board of Valuers, Appraisers & Estate Agents Malaysia.
b) The Properties were valued by CH Williams Talhar & Wong Sdn Bhd, an independent firm of professional valuer, registered
with the Board of Valuers, Appraisers & Estate Agents Malaysia.
Quill Building 4
- DHL 2(a)
Quill Building 2
- HSBC (a)
Quill Building 3
- BMW(a)
Quill Building 5
- IBM(a)
Part of Plaza
Mon’t Kiara(b)
Quill Building 1
- DHL 1(a)
TESCO Building
Penang(a)
10 Properties
valued at
RM1.57 bil
MRCB-Quill REIT Presentation *January 2016*
Platinum Sentral
- KL Sentral (b)
Wisma Technip (b)
new
Quill Building 8
- DHL (XPJ) (a)Total NLA of
1.70 mil sq ft*Excluding car park
area
Portfolio
Occupancy
Rate
97.5%
Geographical Diversification
By Valuation
¹
Notes:(1) Other Klang Valley Area refers to Klang Valley generally excluding KL city centre and Mont’ Kiara. Klang Valley refers to
Kuala Lumpur and Selangor State excluding Kuala Selangor, Sepang and Sabak Bernam(2) The Properties were valued by DTZ Nawawi Tie Leung Property Consultants Sdn Bhd, an independent firm of professional
valuer registered with the Board of Valuers, Appraisers & Estate Agents Malaysia.(3) The Properties were valued by CH Williams Talhar & Wong Sdn Bhd, an independent firm of professional valuer, registered
with the Board of Valuers, Appraisers & Estate Agents Malaysia.
Klang
Valley
68%
Cyberjaya 23%
Penang 9%
MRCB-Quill REIT Presentation *January 2016*
Cyberjaya
23%
Kuala Lumpur
City Centre
11%
KL Sentral
48%
Penang
9%
Mont' Kiara
7%
Other Klang
Valley Area
2%
Diversified Segmental Contributions
Notes: (1) Office comprises Quill Buildings (excluding Quill Building 8-DHL (XPJ) at Glenmarie, Shah Alam), Platinum Sentral and
Wisma Technip
(2) Retail refers to retail portion of Plaza Mont’ Kiara & TESCO Building Penang
(3) Car Park refers to car parking bays in Plaza Mont’ Kiara
(4) Other commercial building refers to Quill- Building 8- DHL (XPJ) at Glenmarie, Shah Alam
(5) The Properties were valued by DTZ Nawawi Tie Leung Property Consultants Sdn Bhd and CH Williams Talhar & Wong SdnBhd, independent firm of professional valuers registered with the Board of Valuers, Appraisers & Estate Agents Malaysia.
By Valuation
MRCB-Quill REIT Presentation *January 2016*
Office
82%
Retail Assets
13%
Car Park
3%
Other
Commercial
Building
2%
Tenant Mix
By Net Lettable Area
MRCB-Quill REIT Presentation *January 2016*
Well Balanced Tenancy Mix
Government Linked
Office 18%
Retail
24%
Education
1%Banking
11%
Automotive
2%
Logistics
15%
Oil & Gas
21%
IT/ Electronics
7%
Lease Expiry Profile- 94% of Total NLA Due in 2015 Renewed
% of net lettable area that are due for renewal
sq ft
MRCB-Quill REIT Presentation *January 2016*
Note* New Leases had been subsequently entered into for 70% of these Not Renewed spaces in 4Q 2015
1.6%
23.7%
7%10%
18%
40%
0
100000
200000
300000
400000
500000
600000
700000
2015 2016 2017 2018 2019 - 2032
Lease Up for Renewal by NLA - 31 December 2015
Lease Expiring
Renewed
Not Renewed
Lease Expiry Profile
% of net lettable area that are due for renewal
sq ft
MRCB-Quill REIT Presentation *January 2016*
7%
13%
26%
11%
42%
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2016 2017 2018 2019 2020 - 2032
Lease Up for Renewal by NLA - 31 January 2016
Lease Expiring
Renewed
Not Renewed
MRCB-Quill REIT Presentation *January 2016*
•Kuala Lumpur & CyberjayaOffice Market Outlook •Penang Retail Market Outlook
Wisma Technip
KL & Cyberjaya Office Market Outlook
MRCB-Quill REIT Presentation *January 2016*
Kuala Lumpur office market (extracted from the report prepared by DTZ Nawawi Tie Leung Property
Consultants Sdn Bhd dated Dec 2015)
Average occupancy rate in 2015 thus far remains healthy at 81%,
despite the large supply of office space entering the market. The
average rental rate in the city centre has also remained stable at
RM6.25 per sq. ft.
To stay competitive in the midst of a tenant-favoured market, building
owners are refurbishing older buildings to improve the building’s
attractiveness while offering better services and competitive rental rates.
Capital value has seen a marginal increase in 2015 and is currently at
RM933 per sq. ft.
Overall, the office sector is expected to remain challenging in the near
future. Nevertheless, the Ringgit’s depreciation and the competitive cost
of occupancy in Malaysia will continue to provide a plus point for MNCs
seeking a presence in the region, especially with the commencement of
the ASEAN Economic Community in 2016.
KL & Cyberjaya Office Market Outlook
MRCB-Quill REIT Presentation *January 2016*
Growing demand in Cyberjaya(extracted from the report prepared by DTZ Nawawi Tie Leung PropertyConsultants Sdn Bhd dated Dec 2015)
Currently, office stock in Cyberjaya stands at about 8.6 million sq ft.
Typical rental rates in Cyberjaya are still competitive ranging from RM2
to RM5 per sq. ft.
Cyberjaya’s average occupancy rates have also remained stable at
approximately 76%.
Cyberjaya is making a significant step forward from the known ICT hub
of Malaysia to become a global technological hub with . Cyberjaya
City Centre, a mega project sandwiched between Cyberjaya and
Putrajaya, will be the catalyst project under the Cyberjaya Global Tech
Hub Blueprint.
Cyberjaya is expected to continue growing as an office location
especially for IT companies, aligned with becoming a global tech hub.
The development of a MRT station near the upcoming catalyst project,
Cyberjaya City Centre is also expected to increase the attractiveness of
Cyberjaya as an IT tech hub.
Penang Retail Market Outlook
MRCB-Quill REIT Presentation *January 2016*
Prospect for retail sector in Penang is expected to be stable(extracted from the report prepared by DTZ Nawawi Tie Leung PropertyConsultants Sdn Bhd dated Dec 2014)
As of 2Q 2015, the National Property Information Centre (NAPIC)
reported that the total retail space supply in Penang stood at 18.0
million sq. ft.
Rental rates of retail malls in Penang have stayed competitive with
prime malls commanding overall rental of approximately between RM6
per sq. ft. – RM8 per sq. ft. per month, while individual prime shop lots
are fetching rental rates of RM15 per sq. ft. to RM20 per sq. ft. per
month.
Penang is experiencing an increased commercial vibrancy and the
mall lifestyle is catching up among the local population supported by
influx of domestic and foreign tourists. In view of the above, more retail
malls are expected to come on board in the coming years, mainly in
the Penang mainland where there has been an increase in property
development activities.
MRCB-Quill REIT Presentation *January 2016*
Conclusion
Quill Building 1 – DHL 1
In Summary
MRCB-Quill REIT Presentation *January 2016*
Proactive asset management strategies to focus on tenant relations andcontinuous building improvements
Prudent capital management strategies
Continue to explore yield accretive acquisition opportunities
4Q 2015 : FY 2015 DPU of [ ] sen is
FY 2015 DPU of 8.47 sen declared, 1.1% higher than FY DPU of 8.38 sen
Revaluation gains of RM6.7 million from investment properties
Completed renewals due in 2015 with 94% renewals successfully in place
Executed Head of Agreement for the acquisition of Menara Shell on 3December 2015
Year 2016 Prospects – Ongoing Strategies
Thank you
For enquires, please contact:
Ms Yong Su Lin
Ms Joyce Loh
Mr Victor Wong
(General Line: 603-27888188)
(Fax : 603-27888199)