Retail Drives IP Cashflow. Wharf Real Estate Investment Company Limited 2017 Final Results 5 March 2018

Transcription

1 Retail Drives IP Cashflow Wharf Real Estate Investment Company Limited 2017 Final Results 5 March

2 Overview 6 Unique Properties at Prime Locations 97% 2017 Group Business Assets Diamond Hill Harbour City Times Square Plaza Hollywood Tsimshatsui Central Portfolio Central Causeway Bay Crawford Wheelock The House House Murray 2

3 Overview Highlights Rare 999-year Leases Offer a Differentiation^ HKIP & Hotel 3 Malls Harbour City Retail End-17 Valuation* $265B +4% 2017 Retail Sales $41B +7% 2017 Avg. Sales psf/mth ~$2, % 2017 Revenue $14.6B +4% 2017 Market Share 9.2% (2H17: 9.8%) 2017 Sales +9.1% (2H17:+15%) (10-yr CAGR: +10.2%) *Incl. 3 Marco Polo Hotels & The Murray s Valuation; but All Hotels are Booked at Cost in Wharf REIC s Balance Sheet ^999-yr Leasehold (Excl. Ocean Terminal & Pacific Club at Harbour City, Plaza Hollywood and The Murray) 3

4 Overview Premium Quality Portfolio Revenue Plaza Hollywood 3.9% Central Portfolio 3.2% Valuation* Plaza Hollywood Central Portfolio 3.8% 7.5% GFA Plaza Hollywood 4.8% Central Portfolio 6.3% Times Square 19.3% 2017 Revenue Times Square 21.5% Valuation Times Square 16.9% HKIP & Hotel GFA $14.6B $265B 11.7M s.f Harbour City 73.6% Harbour City 67.2% Harbour City 72.0% The Above Refers to the 6 Key Properties in Hong Kong *Incl. 3 Marco Polo Hotels & The Murray s Valuation; but All Hotels are Booked at Cost in Wharf REIC s Balance Sheet Central Portfolio: Incl. Crawford House, Wheelock House & The Murray 4

5 Overview Investment Highlights Highest HKIP Revenue & Valuation among HK Listed Landlords & REITs Prime Assets with 999-year Leaseholds Valued $200B+ Strong Cashflow, Comfortable Gearing, Premium Credit Rating, Ample Capacity for New Investment Competent & Persistent Management Team & Track Record Portfolio Value Further Enhanced with OTE and The Murray (Completed in 2017) 5

6 Overview Worldwide Retail Leader A Premier HKIP Play with Unrivalled Productivity Coveted Partner of Premium International Retailers A Host of Brands at Harbour City among the World s Best-performing Stores Quality Retail Portfolio with Critical Mass & Unique Showcase Effects Constant Tenant Mix Refinement & Value Creation Initiatives Drive Performance Proven Retail Expertise Facilitates Resilience Through Market Downturns 6

7 Overview IP Strategies Hold & Invest in Premium Quality Commercial Properties in HK, Providing Strong Cashflow & Steady Income Stream Create, Protect & Enhance Value Through Shopper Experience Improvements Incl. Tenant Configuration, Events, AEIs, etc. Maintaining a High Level of Financial Discipline & Flexibility (Gearing <30%; LTV: 20%) To Provide Shareholders with Stable Dividends (Dividend Payout: 65%) 7

8 Overview Sturdy Recurrent Income Base 2017 HKIP Revenue Split Serviced Apts 2.4% Office 26.0% Retail Revenue (72% of Total HKIP Revenue*) HKIP Revenue $13.3B Retail 71.6% 3 Iconic Malls as Main Contributors Relentless Value Creation Initiatives Driving Strong IP Income Base *Excl. Hotel 8

9 Overview Retail Resilience Through Market Down-cycles HC/TS/PH Total Retail Revenue Growth vs HK Retail Sales Growth Total Retail Revenue 24.9% 10-yr CAGR 12.6% 16.1% 12.8% Market Downturn 17.7% 14.6% 18.3% 19.6% 15.1% 14.7% 17.4% Market Downturn 10.3% 13.3% 9.8% 11.0% 5.3% 4.6% 4.7% 0.6% 2.2% % -3.7% -8.1% 3 Malls Retail Revenue HK Retail Sales Growth 9

10 Overview Financial Highlights HKD Million % Chg Group Revenue 20,904 16, % Operating Profit 15,442 11, % Core Profit** 9,500 8, % Profit Before IP Revaluation Surplus 9,236 8,706 +6% Net IP Revaluation Surplus 7,982 1, % Profit After IP Revaluation Surplus 17,218 9, % Core Profit +12% to $9.5B, 94% from 6 Core Properties DPS $0.95 (65% of Recurring HKIP Core Profit for 2H17) NAV $207B ($68.29/Share) Earnings Per Share (HK$) - Attributable to Shareholders % Net Debt to Total Equity 19.9% - Core** % Dividend Per Share (HK$) $0.95 NA **Exclude IP Revaluation Surplus and Exceptional Items 10

11 Harbour City Agenda Harbour City (HC) Times Square (TS) Agenda Central Portfolio Plaza Hollywood (PH) Financial Management 11

12 Harbour City Productivity LFA ( 000 s.f.) (as of 31 Aug 2017) Occupancy Retail 1,286 96% Office 4,239 98% Serviced Apartments % ^ Hotel* & Club NA NA As Part of Asset Enhancement Strategy, Hampton Court will be Converted into Office Premises (Completion: Jun 2019) 2017 Retail Sales $30.2B +9.1% 2017 Sales psf/mth ~$2, Retail Revenue 6,627M +7% Total GFA 8.4M s.f HC is a 999-yr Leasehold Property (Excl. Ocean Terminal, Pacific Club) *3 Marco Polo Hotels: Total 1,459 rooms; ^ Excl. the Vacation of Hampton Court for Premise Conversion 12

13 Harbour City GHC Cluster HC Mall: ~36% of GFA of Key Malls in Greater Harbour City Cluster 8 Michelin-Starred Fine Dining Restaurants* 14% of No. of Hotel Rooms in GHC Harbour City Cluster * Total 55 Relevant Restaurants in GHC Cluster 13

14 Harbour City Global-showcase Stores at HC - Among their Top 3 Best Performing Stores in the World (Selected Brands only) The Largest Retail Offerings in Town (570 Tenants) 2M s.f Mall Incl. 530m Retail Frontage (Canton Rd) Must-have Location & Showcase to Mainland Market for World s Best Brands 2015 Retail Sales: HC US$3,681 psf = 2x U.S. Top 10 Malls Avg. US$1, HK Market Share 6.8%* *HK Incl. Wet Market 14

15 Harbour City Retailtainment Proven Management Driving Rental Bubble Up Art Project Growth Tenant-mix Refinement & AEIs Driving Giants of Christmas Forest Exhibition Value Creation Compelling Marketing Initiatives Driving Patronage Master David Chan Contemporary Chinese Calligraphy Performance & Exhibition Christmas in the Air 15

16 Harbour City Best-in-class-management Retail Sales Growth (YoY) 2017 HK Tourist Arrival +3.2% (Mainlander: +3.9%) 27.3% 30.0% 33.8% 24.9% CAGR HC HK % 6.1% 18.3% 18.3% 15.8% 12.8% 13.2% 9.1% 10.3% 11.0% 9.8% 10.0% 3.3% 2.2% 0.6% % -3.7% -8.1% -12.1% -9.9% Harbour City Outperformance Hong Kong Renewed Outperformance 16

17 Harbour City Rental Growth ( ) A Quantum Jump in Rental Income Total Revenue (2007 vs 2017) 2.8x (CAGR: 11%) +21% % Retail Rental Income* (2007 vs 2017) 4.1x (CAGR: 15%) +11% % HC Revenue Breakdown (HKD billion) 2017 $9.4B (+5%) +15% % % % % % % Retail Office S.A * Excl. Management Fee, Carpark & Others 17

18 Harbour City OT Extension Breathtaking 270 Panorama of Victoria Harbour West-facing Extension Best Sunset & Night Views of HK 11 Dining Outlets (7 are HK Debuts) with Alfresco Area & Upgraded Cruise Terminal Facilities Xihe Ya Yuan Beijing Duck Restaurant FU-RONG HEXA Luna Cake Premium ANA Ten Designed by Foster+Partners Tsukada Nojo Mellow Brown Café by UCC Paper Moon A Nu Retrouvez-vous 18

19 Harbour City New Icon New Driver of Incremental Patronage 19

20 Times Square Agenda Harbour City (HC) Times Square (TS) Central Portfolio Plaza Hollywood (PH) Financial Management 20

21 Times Square Vertical-landmark 2017 Retail Sales 2017 Retail Revenue LFA ( 000 s.f.) (as of 31 Aug 2017) Occupancy $8.2B +1.1% 2,112M -1% Retail % Office 1,026 99% 2017 Sales psf/mth ~$1,300 Total GFA 2.0M s.f TS is a 999-yr Leasehold Property 21

22 Times Square GTS Cluster CWB: Leading Shopping District on HK Island Shopping Malls & Major Pedestrian Streets Hotels & Office Developments Tourist Spots TS Mall: ~28% of GFA of Key Malls in High-Traffic Greater Times Square Cluster 22

23 Times Square Lifestyle-hub Iconic Lifestyle Destination Linked to Causeway Bay MTR Station The Living Room Museum : Centre Stage of Exhibitions Mall: 17-level, ~230 Tenants 23

24 Times Square Excitements Constant Value-accretive Initiatives Winnie the Pooh: Be My Friend Exhibition Driving Performance Exciting Openings of Facesss & LEGO Certified Store Offer Pleasant Surprises Snoopy Celebrate Christmas at Times Square Innovative Cultural Exhibitions/ Events Add Excitements The Picasso and Jacqueline Exhibition 24

25 Times Square Sales-recovery Retail Sales Growth (YoY) 2017 HK Tourist Arrival +3.2% (Mainlander: +3.9%) CAGR TS HK % 6.1% 12.8% 12.4% Market Downturn 10.7% 10.3% 4.8% 0.6% 20.0% 18.3% 24.9% 23.9% 9.8% 11.0% 1.5% 1.6% 11.1% -0.2% Market Downturn Returned to Positive Territory 2.2% 1.1% % -3.7% -12.8% -11.3% Times Square Hong Kong 25

26 Times Square Rental Growth ( ) Total Revenue (2007 vs 2017) 2.4x (CAGR: 10%) +14% % 0.4 Retail Rental Income* (2007 vs 2017) 3.0x (CAGR: 12%) +9% % TS Revenue Breakdown (HKD billion) 2017 $2.8B (Flat) +13% % % % % Flat +6% Retail Office * Excl. Management Fee, Carpark & Others 26

27 Central Portfolio Agenda Harbour City (HC) Times Square (TS) Central Portfolio Plaza Hollywood (PH) Financial Management 27

28 Central Portfolio Central Portfolio Crawford House Wheelock House The Murray, a Niccolo Hotel 28

29 Central Portfolio Crawford House Premium-commercial Strategically Located in HK s Core CBD Houses Zara s HK Flagship 999-yr Leasehold 2017 Office Passing Rent $57 psf/mth (+6%) 2017 Office Rental Reversion +9% 29

30 Central Portfolio Wheelock House Ground-zero Prime Grade A Office, on Top of MTR Station First-rate Management 999-yr Leasehold 2017 Office Passing Rent $74 psf/mth (+7%) 2017 Office Rental Reversion +19% 30

31 Central Portfolio The Murray Contemporary Urban Chic Completion of Preservation of The Murray (20 Dec 2017), as a Celebration for the 20 th Anniversary of HKSAR Converted from Iconic Murray Building Historical Landmark Under Government s Conserving Central Initiative A Signature Piece of Architecture (~50 Yrs) Comes to Life Again Completion 15 Months Ahead of Schedule Attending the Plaque Unveiling Ceremony at The Murray are (from Left) Mr. Douglas Woo, Mr. Peter Woo, Mrs. Carrie Lam, Mr. Stephen Ng & Ms. Yen Leng 31

32 Central Portfolio The Murray Contemporary Urban Chic Strategic Investment in CBD with Longterm Perspective A Luxury Hotel Overseeing the City s CBD & Serene Green Surroundings Soft Opening: 15 Jan 2018 Included in the List of World s Best New Hotel to Discover in 2018 by The New York Times Included in CNN Travel s 2018 List of Must-visit Luxurious New Hotel 32

33 Central Portfolio The Murray Accommodation 298 Rooms & 38 Suites (25 Floors) The Murray Suite Eponymous Suite with Panoramic City Views Offers Ultimate Accommodation Experience & Finest of Creature The Murray Suite Comforts 33

34 Central Portfolio The Murray Restaurants & Bars Popinjays Stunning Rooftop Restaurant, Bar & Terrace Offers Breath-taking Views of CBD & Green Oasis of HK Park The Tai Pan (Modern European) Murray Lane (Lobby Bar) Popinjays (Rooftop Restaurant & Bar) The Garden Lounge Guo Fu Lou ( 國福樓 ) 34

35 Central Portfolio The Murray Facilities Meeting & Event Spaces>20,000 s.f Leisure Facilities: Spa, Gymnasium & Swimming Pool Niccolo Room 35

36 Plaza Hollywood Agenda Harbour City (HC) Times Square (TS) Central Portfolio Plaza Hollywood (PH) Financial Management 36

37 Plaza Hollywood CBD2-destination Exploit Growth Opportunities in Kowloon East (Govt-designated CBD2) Atop Diamond Hill MTR Station (Interchange for Shatin to Central Link) Tai Wai to Hung Hom via Diamond Hill (2019*) Hung Hom to Admiralty (2021*) Mall: 210 Tenants, 24 Restaurants & a Purpose-built Stadium Collaborate with Kai Tak Cruise Terminal to Drive Patronage & Boost Tourist Spending * Commissioning Date 37

38 Plaza Hollywood CBD2-destination 65% GFA Lettable (Highly Efficient) LFA ( 000 s.f.) (as of 31 Aug 2017) Occupancy 2017 Retail Sales $2.5B +1.9% 2017 Retail Revenue 574M +5% Retail % Total GFA 562K s.f 38

39 Financial Management Agenda Harbour City (HC) Times Square (TS) Central Portfolio Plaza Hollywood (PH) Financial Management 39

40 Financial Management Prudent Financial Management Debt Maturity (HKD billion) (As at 28 Feb 2018) Gearing: 19.9% 20.3* Average Interest Cost: 3.2% Jan18-Dec18 Jan19-Dec19 Jan20-Dec20 Jan21-Dec21 Jan22-Dec22 Jan23 & After 2018 Capex for 6 Key Assets: $0.8B (2017: $2.1B) For Debt with Maturity in 2023 & After Incl. the 10-yr Bond of US$600M Issued in Jan 2018 As of Late Feb 2018, Long-term Facility Available for Drawdown Amounted to Approximately $12B, which Could be Utilized to Repay the Bridging Loan ($20B) if Needed. *Incl. Bridging Loan of $20B 40

41 Financial Management Moody s A2 Issuer Rating; Outlook Stable Same Rating as HK Land, Swire Properties & Link REIT Per Moody s, the Rating Reflects WREIC s Sizable & Good Quality Assets, & Diversity of its Asset Types Considers WREIC s Strong Management Ability in Tenancy Management, which Provides Good Revenue & Profit Visibility Reflects that WREIC will Maintain a Sustainable Business Strategy & Prudent Financial Management Source: Moody s Investors Service 41

42 Corporate Social Responsibility 42

43 Business-in- Community The Star Ferry First & Only Public Transport Operator in HK Offering Free Rides to Eligible Elderly & Concessionary Fares to Those in Need, Without Government Subsidies Benefit ~1 Million Elderly Over 65 ~1 Million Children & Vulnerable People 43

44 Business-in- Community Project WeCan Launched in 2011 by Wharf, Project WeCan is a Business-in-Community Initiative Providing Students who are Disadvantaged in Learning with Opportunities and Care. Using an Adopt a School Model, it is Now an Open Platform Encompassing: 34 Companies: 11 Wharf Business Units + 23 External Companies 5 Universities 3 Consulates 3 Organisations Beneficiaries ,000 66,000 (est.) 44

45 Business-in- Community Wharf Architectural Design Internship Project Partners 2 Universities Awardees 24 Architectural Postgraduates Countries Denmark, Dubai, France, Germany, India, Italy, Japan, the Netherlands, Spain, Switzerland, the United Kingdom and the United States 45

46 Business-in- Community Wharf Art Scholarship Launched in 2013 Support Students to Pursue an Undergraduate Degree in Creativity Related Subjects at a Tertiary Institution of Their Choice 12 Students have Received Scholarships to Study Art & Design Related Subjects at Renowned Institutions Around the World 46

47 Retail Drives IP Cashflow Thank You 47

48 End of Presentation Wharf Real Estate Investment Company Limited [HKEx Stock Code: 1997.HK] Disclaimer 1) All information and data are provided for information purposes only. All opinions included herein constitute Wharf s judgment as of the date hereof and are subject to change without notice. The Group, its subsidiaries and affiliates hereby disclaim (i) all express, implied, and statutory warranties of any kind to user and/or any third party including warranties as to accuracy, timeliness, completeness, or fitness for any particular purpose; and (ii) any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the information and data contained herein. 48