First Quarter 2007 Financial Results - listed companystarhillglobalreit.listedcompany.com/newsroom/present_23april2007.… · First Quarter 2007 Financial Results ... Annualised distribution

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MACQUARIE MEAG PRIME REIT

First Quarter 2007 Financial Results

23 April 2007

Macquarie MEAG Prime REIT 223 April 2007

Agenda

Financial Highlights

Portfolio Performance Update

Asset Enhancement Update

Acquisition Strategy and Update


2.1%1.44 cents1.47 cents (1)DPU

2.7%$13.6 mil$14.0 milDistributable Income

Net Property Income

Gross Revenue

Period: 1 Jan - 31 Mar 2007

$17.3 mil

$23.4 mil

1Q 2007

$17.3 mil

$22.5 mil

1Q 2006 % Change

-

4.1%

1Q 2007 financial highlights

Note: 1. The computation of DPU is based on number of units entitled to distributions comprising: (a) number of units in issue as at 31 March 2007 of

948,375,699 units and (b) units issuable to the Manager as partial satisfaction of management fee (base fee) earned for 1Q 2007 of 932,968 units

DPU of 1.47 cents exceeded 1Q 2006 by 2.1%


1Q 2007 DPU outperformed 1Q 2006

2.1%5.84 cents

4.79%5.96 cents

4.89%

Annualised DPU

Annualised distribution yield (based on unit price of $1.22 on 20 Apr 07)

1Q 2007 1Q 2006 OutperformanceDPU

1.47 cents

1.47 cents

1.44 cents

1.44 cents

1.44 cents

1Q 2007 (1 Jan – 31 Mar 2007)

4Q 2006 (1 Oct – 31 Dec 2006)

3Q 2006 (1 Jul – 30 Sep 2006)

2Q 2006 (1 Apr – 30 Jun 2006)

1Q 2006 (1 Jan – 31 Mar 2006)

Actual DPU


1Q 2007 financial results

1Q 2007 gross revenue exceeded 1Q 2006 by 4.1% due to higher rental rates from renewals and new leases

Increase in non-tax deductibles due to the goodwill payment and depreciation charge for the installation of the new escalators at WA

2.7%13,61913,988Distributable Income

61.7%1,8883,053Add: Non-Tax Deductibles (3)

(6.8%)11,73110,935Net Income Before Tax

% Change1Q061Q07$’000

(58.6%)

-

7.1%

n.m.

(273)

(3,352)

(1,960)

-

(113)

(3,352)

(2,100)

(750)

Less: Fair Value Adjustment (1)

Borrowing Costs

Other Trust Expenses

Goodwill payment (2)

-17,31617,250Net Property Income

Less: Property Expenses

Gross Revenue

(6,128)

23,378

(5,148)

22,464

19.0%

4.1%

2.1%1.44 cents1.47 centsDPU

Notes: 1. Being accretion of tenancy deposit and retention sum stated at amortised cost in accordance with Financial

Reporting Standard 39. Such a financial adjustment has no impact on the DPU2. A goodwill payment to WA tenants for operating under circumstances arising from the temporary closure of the

Orchard MRT linkway3. Includes the adding back of the goodwill payment 4. n.m. - not meaningful


4.894.52

2.66 2.50 2.45

0.83

-

1

2

3

4

5

6

MMP REITFY2006 yield

SREIT annualisedaverage yield (ex

MMP REIT)

10 Year SporeGovt Bond

CPF OrdinaryAcount

5 Year SporeGovt Bond

Bank FixedDeposit Rate (12

Month)

Attractive trading yield

Notes: 1. Based on MMP REIT’s closing price of $1.22 per unit as at 20 Apr 2007 and actual annualised distribution for 1Q 20072. SREITs 2007F DPU per IBES consensus as at 20 Apr 2007 and using last closing price as at 20 Apr 20073. As at 20 Apr 2007 (Source: Singapore Government Securities website)4. Based on interest paid on Central Provident Fund (CPF) ordinary account from Apr to Jun 2007 (Source: CPF website)5. As at 20 Apr 2007 (Source: DBS website)

2.45%2.66% 2.50%

0.83%

(5)

Difference of 4.06%

(4) (3)(3)(1)

4.52%

(2)

4.89%


MMP REIT unit price and volume (IPO to Apr 07)

0.80

0.90

1.00

1.10

1.20

1.30

Sep-

05

Oct

-05

Nov

-05

Dec

-05

Jan-

06

Feb-

06

Mar

-06

Apr-

06

May

-06

Jun-

06

Jul-0

6

Aug-

06

Sep-

06

Oct

-06

Nov

-06

Dec

-06

Jan-

07

Feb-

07

Mar

-07

Apr-

07

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Volume ('000) Last Price S$ (LHS)

Unit price performance

75.7%Estimated free float

$1,157 milMarket cap (20 Apr 07)

Last 3 months average daily trading volume (units)

Liquidity statistics

3.7 mil

24% unit price appreciation since IPO 2

1

Source: Bloomberg

Notes: 1. Excluding the 24.3% stake (approximately 230.5 million units) held by Macquarie Bank Limited as at 1 March 2007 2. By reference to MMP REIT’s closing price of $1.22 as at 20 Apr 2007 and IPO price of S$0.98


Distribution timetable

27 April 2007, 9.00 amEx-Date

23 April 2007Notice of Books Closure Date

26 April 2007, 5.00 pmLast Day of Trading on “Cum” Basis

2 May 2007, 5.00 pmBooks Closure Date

30 May 2007Distribution Payment Date

1 January to 31 March 2007Distribution Period

1.47 cents per unitDistribution Amount

Distribution Timetable


Debt profile

Gearing will increase to 34% with 100% debt funding for the Japan acquisitions

Capacity for up to $340 million worth of acquisitions without raising additional equity 2

97.7%Fixed Rate Debt (up to Sept 2010)

Sept 2010Debt Maturity - CMBS

$’000As at 31 Mar 2007

Baa1

3.2% p.a.

4.3 x

25.5%

389,000

9,000

380,000

MMP REIT corporate rating 3

Weighted Average Interest Rate

Interest Cover

Gearing Ratio 1

Total Debt

Revolving Credit Facilities

CMBS

Notes:1. Based on deposited property as defined in the Trust Deed2. Assuming optimal debt level of 45%3. By Moody’s Investors Service

Gearing below 35% including Japan acquisitions


23% increase in NAV per unit since IPO 1

Balance sheet

$’000As at 31 Mar 2007

948,375

1,096,583

(428,451)

(386,389)

(42,062)

1,525,034

23,935

1,501,099

Units In Issue (’000)

Net Assets

Total Liabilities

Non Current Liabilities

Current Liabilities

Total Assets

Current Assets

Non Current Assets

$1.14Adjusted NAV Per Unit (2)

(excluding distributable income)

$1.22Last traded price as at 20 Apr 07

NAV statistics

5.2%

7.0%

$1.16

Unit Price Premium/(Discount) To:NAV Per Unit

Adjusted NAV Per Unit

NAV Per Unit (as at 31 Mar 2007) (2)

Notes:1. NAV of $0.94 per unit at IPO2. The number of units used for computation of NAV per unit is 949,308,667. This comprises: (a) number of units in issue as at 31 March 2007 of 948,375,699

units; and (b) units issuable to the Manager as partial satisfaction of management fee (base fee) earned for 1Q 2007 of 932,968 units


Agenda






WA Gross Revenue by Retail and Office (1Q07)

Retail87%

Office13%

Portfolio summary

Portfolio WA and NAC

NAC Gross Revenue by Retail and Office (1Q07)

Office19%

Retail81%

Gross Revenue by Property (1Q07)

NAC45%

WA55%

Gross Revenue by Retail and Office (1Q07)

Retail84%

Office16%


Portfolio Lease Expiry (as at 31 March 07)

18.3%

24.7%

11.6%

2.6%

21.4%

14.3%

3.2%

24.4%

0%

5%

10%

15%

20%

25%

30%

FY2007 FY2008 FY2009 FY2010

% o

f Tot

al

By NLA By Gross Rent

Portfolio lease expiry

Weighted average lease term of 3.2 and 3.0 Years (by NLA and gross rent respectively)

7,513

24,666

60,017

34,874

Retail

154,07294,055FY 2008

72,44747,781FY 2009

16,436

114,399

Total

8,923

79,525

Officesq ft

FY 2010

FY 2007


Portfolio top 10 tenants

Top 10 tenants contribute 51% of the Portfolio gross rent

1.2%1.7%7,782Nov 2011FashionWAFJ Benjamin Lifestyle PL (GAP)

3.7%2.4%23,121Sep 2011Food & Beverage

WAMWA PL (Food Republic)

% of Portfolio NLA (2)

% of Portfolio Gross Rent (1)

NLA (sq ft)

Lease ExpiryTrade SectorPropertyTenant

0.6%1.3%3,563Mar 2007, Oct 2007FashionWARSH (Singapore) PL

0.6%1.4%3,638Oct 2007, Mar 2008, Oct 2008FashionWAGamut Marketing PL

2.7%1.6%16,781Feb 2008LibraryNACNational Library Board

4.6%1.7%28,510Apr 2007OfficeNACMetro Holdings Ltd

0.7%2.0%4,112Sep 2007FashionWAFashion Retail PL

0.6%2.1%3,520May 2007, Aug 2007FashionWAG2000 Apparel (S) PL

2.7%4.4%17,104Mar 2007, May 2008, Oct 2008

FashionWAWing Tai Retail PL

36.2%32.8%225,969Jun 2013Master tenantNACToshin Development Co Ltd

Notes: 1. For the month of Mar 072. As at 31 Mar 07


Retail asset enhancement

Wisma Atria as the preferred fashion destination

Reconfiguring trade mix with higher fashion-related content

Strengthening retail mix for each level

Increasing turnover rent contribution and introducing more step rents

Retail Office


Retail occupancy consistently at 100%

Occupancy for retail remains strong at 100%

Supply of prime retail space continues to be tight in Orchard Road supported by buoyant demand

Retail Office

Retail - Occupancy Rates

100% 100%100% 100%100% 100%100%100%

50%

60%

70%

80%

90%

100%

NAC WAAs at 31 Mar 07 As at 31 Dec 06 As at 30 Sept 06 As at 30 Jun 06


Steady increase in turnover rent contribution

Introduction of more step-rent structures to deliver incremental growth over lease term

Scope for higher revenue as retailers boost sales and base rent not eroded

Turnover rent accounted for 3%1 of WA retail gross revenue in 1Q07

Retail Office

Lease structure (by % of WA retail NLA)

33%

53%

47%

66%

0%

10%

20%

30%

40%

50%

60%

70%

Higher of base/GTO; and step up Base rent plus GTO

Dec 05 Mar 07

Note: 1. Includes component of December 2006 turnover rent


Toshin88.3%

Library6.6%

Beauty & Wellness4.0%

General Trade0.5%Services

0.7%

Fashion57.3%

Beauty & Wellness2.3%

General Trade2.9%

Services3.6%

Jew eller/Timepieces4.7%

F&B29.2%

Diversified retail tenant base

WA trade mix – by % NLA(as at 31 March 2007)

NAC trade mix – by % NLA(as at 31 March 2007)

Retail Office


Strong retail fundamentals, particularly along prime Orchard Road space

The healthy momentum in the retail sector and the uptrend of prime rents continued into the first quarter of 2007

A record 825,000 visited Singapore in January 2007, a 7.4% y-o-y increase. Among Singaporeans, consumer sentiment was also encouraging. The MasterIndex of Consumer Confidence by MasterCard Worldwide revealed a score of 82.5 for the first half of 2007, higher than the score of 73.9 six months ago and 74.8 a year ago

Leasing interest continued to be strong as new players entered the market, while existing fashion retailers and F&B operators expanded

According to CBRE, modest quarterly growth was seen in average prime Orchard Road rents, which rose 1.0% to $34.80 psf pm. Orchard Road prime rents are likely to increase by 4-7% in 2007

Retail prospects remain bright against strong economic growth projections, with take-up of new retail space progressing well

Source: CBRE (1Q 2007)

Retail Office


Capitalising on strengthening office sector

Office strategy to increase rental with rising office market

Capitalising on robust office rental market and limited supply

Advanced leasing of large office spaces currently below market rents

Reducing tenancy turnaround time and costs

Retail Office


Office occupancy remains strong at 98%

Tightening office supply and rising office rents continued in 1Q07

Continue to ride on strengthening rents

Retail Office

Office - Occupancy Rates98.4%

95.2%97.8%97.5%98.4% 98.6%

96.7%95.9%

50%

60%

70%

80%

90%

100%

NAC WAAs at 31 Mar 07 As at 31 Dec 06 As at 30 Sept 06 As at 30 Jun 06


Pro-active office leasing

Total

Renewals

New Leases

WA and NAC

67%23%55,19016

60%3%7,0613

68%20%48,12913

% of total Portfolio NLAsq ft

Avg increase in current vs preceding rents

NLA

Number

Retail Office

Robust office market evident with average rental increase of 67% over preceding rents for renewals and new leases contracted in 1Q 2007

Orchard Road asking rents as high as $10.00 psf pm at the end of 1Q 2007

Rents are expected to strengthen further given limited supply and very high occupancy rates for prime Orchard Road office buildings


Diversified office tenant base

Portfolio office – by % NLA(as at 31 March 2007) Tenants

Retail Office

Trading24%

Medical3%

Beauty/ Health2%

Jew ellery2% Govt/Diplomatic

Off ice 1%

Investments4%

Banking & Fin Svcs5%

Aerospace6%

Travel & Leisure6%

Real Estate & Property Services

7%Oil/Chemical Trading

11%

Consultancy/ Services

14%

Others15%


Significant rent upside in 2007 given tight supply and strong demand

Opportunity for at least 60%rental uplift for 2007 renewals and new leases given robust office market outlook

Properties are well placed to take advantage of robust office market in 2008 and 2009

Orchard Road asking rents up to $10 psf/month in 1Q 2007 (Colliers, office asking rental guide, 1Q07)

Note:1. Average monthly gross rent rounded to nearest cent

$ psf/ monthNLA (sq ft)

Office Expiry (by NLA) - LHS Expiring Office Leases Ave Monthly Gross Rent ($ psf pm)(1)

Continue to capitalise on rising office rents

Retail Office

Portfolio Office Lease Expiry and Average Monthly Gross Rent

79,525

94,055

8,923

47,781

7.40

4.905.00

6.30

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

FY2007 FY2008 FY2009 FY20102

3

4

5

6

7

8

9


Robust office rentals continue

The leasing market remained active in the first quarter of 2007 despite the tight supply situation. Vacated pocket space was quickly taken up

Supply remains extremely tight in the CBD with vacancy under 5%

Vacancy of Grade A office space dropped even further from 0.8% in 4Q06 to 0.4% in 1Q07

According to CBRE, prime office rents rose 10.1% q-o-q and 53.6% y-o-y to average $8.60 psf pm. Grade A office rents averaged $10.60 psf pm, up 21.4% q-o-q and 76.7% y-o-y

There is greater fluidity in the market as tenants seek to contain occupancy costs

CBRE expects demand drivers to remain strong albeit demand levels in 2007 may lie below the exceptional 2.4 million sq ft in 2006 principally due to the constraints imposedby the lack of new supply as well as low vacancy

Source: CBRE (1Q 2007)

Retail Office


Agenda






Planned 2007 Wisma Atria enhancements

Level 2 units will be reconfigured to create more shops with Orchard Road frontage by end Q2

$2,044,000$1,389,000Annualised Rental Revenue pa(on a stabilised basis)

4,711 sq ft4,711 sq ftNLA of affected units

After EnhancementCurrent

Before Reconfiguration After Reconfiguration

Orchard Road Orchard Road



Artist impressions

Increasing the size of Orchard Road fronting units

Improving circulation and shop front visibility

Preparing for future connectivity with Orchard Turn

Level 2 Reconfiguration



After Reconfiguration

Level 1 F&B unit expected to be converted and concierge counter relocated to improve retail offering by end Q3

Remixing of areas to create a more interesting retail offering

Macquarie MEAG Prime REIT 3023 April 2007 Potential zones for tenant remix


Basement tenancies will be remixed to enhance casual lifestyle positioning

Introduce larger retail concepts that would anchor basement level positioningThe new retail mix complements Isetan Department Store’s upgraded basement floor (which was completed in December 2006), which features international cosmetics, skin care products and fashion accessories


Value creation initiatives

Target CompletionIndicative Timetable

2nd Quarter 2007L2 Reconfiguration

2nd and 3rd Quarter 2007

3rd Quarter 2007

Basement Remix

L1 Remix

* Forecast value creation based on the Manager’s estimates over a full year stabilised basis

15,600Capital value of initiative

(assumed at 5.5% capitalisation rate)

1,045Incremental Rent

860Incremental NPI

13,900

51%

1,700

WA Budget *

(S$‘000)

Increase in value (net of investment cost)

Return on investment

Capital Expenditure

Capital expenditure for asset enhancements will be recovered in just over 1 year


Agenda






Other acquisitions work in progress after Japan deals

China

South Korea

Japan

Thailand

Malaysia

Taiwan

Indonesia

Philippines

Singapore

India

Australia

Note: Map not drawn to scale; meant as graphical representation only

Vietnam


Growth from other three non-master lease properties on short term leases of 2-3 years and right of lessor to pre-terminate master lease for FLEG America-Bashi Building after 3 years

Stable property income from three master lease properties under Fund Creation portfolio which expires in next 8-9 nine years

Income and geographical diversification with Japan assets representing 11% of MMP REIT’s enlarged asset base

Inherent upside with rising retail and real estate markets in Japan

Opportunity to develop long-term relationships with key market players in the Japanese real estate industry

Yield accretive by 0.108 cents per unit (or 1.8%) (1)

Key highlights of the Japan deals

The Japan acquisition marks the entry into the world’s second largest economy

Note: 1. Pro forma financial effect of the acquisitions for the financial year ended 31 December 2006


FLEG America-Bashi Building

Purchase Price: ¥8,727 mil (S$110.4 mil)Aggregate GFA: Approx. 3,800 sqmLand Tenure: FreeholdStatus: Income producing, completed propertiesVendor: Fund Creation Co., Ltd. (www.fundcreation.co.jp)Leases: Three properties under fixed rental master lease

Fund Creation Portfolio

High quality assets with oldest property completed in Aug 04

Purchase Price: ¥ 5,700 mil (S$72.1 mil)GFA: Approx. 2,700 sqmLand Tenure: FreeholdStatus: Under construction, completed by end Sept 07Vendor: F.L.E.G. International Co. Ltd (www.e-fleg.com)Lease: Master lease (5 years). Lessor can pre-terminate

after 3 years

Roppongi Primo FLEG Daikanyama FLEG Nakameguro

Holon L FLEG Harajyuku Secondo FLEG Roppongi Terzo

Property net yields range between 4% to 4.2%


Strategically located in Tokyo’s prime districts

Map of TokyoSource: Colliers Halifax

Meguro:1) FLEG Nakameguro

Ebisu:1) FLEG Daikanyama2) FLEG America-Bashi Building

Harajyuku:1) FLEG Harajyuku Secondo

Omotesando:1) HOLON L

Roppongi:1) Roppongi PRIMO2) FLEG Roppongi Terzo

Meguro

ShibuyaMinato

Note: Maps not drawn to scale; meant as graphical representations only


1Q 2007 results outperformed 1Q06 results

Delivered DPU of 1.47 cents in 1Q07, 2.1% higher than 1.44 cents in 1Q06

Increase DPU through active management of existing assets and through additional

acquisitions

In summary

Objectives for 2007

Reinforce NAC and WA retail positioning

Capitalise on strengthening office market

Pursue other acquisitions via multi-pronged strategies


References used in this presentation

1Q, 2Q, 3Q, 4Q means the periods between 1 January to 31 March; 1 April to 30 June; 1 July to 30 September; and 1 October to 31 December respectively

CMBS means Commercial Mortgaged Backed Securities

DPU means distribution per unit

FY means financial year for the period from 1 January to 31 December

GTO means gross turnover

IPO means initial public offering (MMP REIT was listed on the SGX-ST on 20 September 2005)

NLA means net lettable area

NPI means net property income

pm means per month

psf means per square foot

WA and NAC mean the Wisma Atria Property (74.23% of the total share value of Wisma Atria) and the Ngee Ann City Property (27.23% of the total share value of Ngee Ann City respectively). Collectively, known as the “Properties” or “Portfolio”

All values are expressed in Singapore currency unless otherwise stated


Disclaimer

This presentation has been prepared by Macquarie Pacific Star Prime REIT Management Limited (the “Manager”), solely in its capacity as Manager of Macquarie MEAG Prime Real Estate Investment Trust (“MMP REIT”). A press release has been made by the Manager and posted on SGXNET on 23 April 2007 (the “Announcements”). This presentation is qualified in its entirety by, and should be read in conjunction with the Announcement posted on SGXNET on 23 April 2007. Terms not defined in this document adopt the same meanings in the Announcements.

The information contained in this presentation has been compiled from sources believed to be reliable. Whilst every effort has been made to ensure the accuracy of this presentation, no warranty is given or implied. This presentation has been prepared without taking into account the personal objectives, financial situation or needs of any particular party. It is for information only and does not contain investment advice or constitute an invitation or offer to acquire, purchase or subscribe for MMP REIT units (“Units”). Potential investors should consult their own financial and/or other professional advisers.

This document 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 fromsimilar developments, shifts in expected levels of property rental income, changes in operating expenses (including employee wages, benefits and training costs), property expenses and governmental and public policy changes. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the Manager’s view of future events.

The past performance of MMP REIT is not necessarily indicative of the future performance of MMP REIT. The value of Units and the income derived from them may fall as well as rise. The 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 theprincipal amount invested. Investors have no right to request that the Manager redeem their Units while the Units are listed. It is intended that unitholders of MMP 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.

Macquarie Bank Limited ABN 46 008 583 542 (“MBL”) holds a 50% indirect interest in the Manager. MBL is authorised by The Australian Prudential Regulation Authority in the Commonwealth of Australia and The Financial Services Authority in the United Kingdom, to carry out banking business or to accept deposits in those respective jurisdictions. Members of the Macquarie Bank Group are not otherwise currently authorised to carry out banking business or to accept deposits in any other country. The Manager is not an authorized deposit-taking institution for the purposes of the Banking Act (Commonwealth of Australia) 1959 and the Manager’s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of the Manager. MBL does not carry on banking business in Singapore. MBL does not hold a license under the Banking Act (Cap. 19) of Singapore and is therefore not subject to the supervision of the Monetary Authority of Singapore.


Macquarie Pacific Star Prime REIT Management Limited391B Orchard Road #21-08 Ngee Ann City Tower B

Singapore 238874

Investor, Analyst and Media Contact:Ms Mok Lai Siong

Vice PresidentTel : +65 6835 8633

Email : [email protected] us at : www.mmpreit.com

End of Presentation

Documents

First Quarter 2007 Financial Results - listed companystarhillglobalreit.listedcompany.com/newsroom/present_23april2007.… · First Quarter 2007 Financial Results ... Annualised distribution