DBS Pulse of Asia Conference - listed company...2015/01/05 · 2 This presentation should be read...

DBS Pulse of Asia Conference

5 January 2015

2

This presentation should be read in conjunction with the financial statements of Soilbuild Business Space REIT (“Soilbuild REIT”) for the

period from 1 January 2014 to 30 September 2014 as detailed in the 3Q 2014 SGX announcement.

This presentation is for information only and does not constitute an offer or solicitation of an offer to subscribe for, acquire, purchase,

dispose of or sell any units in Soilbuild REIT (“Units”) or any other securities or investment.

Nothing in this presentation should be construed as financial, investment, business, legal or tax advice and you should consult your own

independent professional advisors.

This presentation may contain forward-looking statements that involve risks, uncertainties and assumptions. 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. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of

management of future events.

The value of Units and the income derived from them, if any, may fall or rise. 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 the principal amount

invested.

Investors should note that they will have no right to request the Manager to redeem or purchase their Units for so long as the Units are

listed on Singapore Exchange Securities Trading Limited (the “SGX-ST”). It is intended that holders of Units may only deal in their Units

through trading on the SGX-ST. The listing of the Units on the SGX-ST does not guarantee a liquid market for the Units.

The past performance of Soilbuild REIT is not indicative of the future performance of Soilbuild REIT. Similarly, the past performance of SB

REIT Management Pte. Ltd. (“Manager”) is not indicative of the future performance of the Manager.

Disclaimer

Citigroup Global Markets Singapore Pte. Ltd., DBS Bank Ltd. and Oversea-Chinese Banking Corporation Limited were the joint global

coordinators, issue managers, bookrunners & underwriters of the initial public offering of Soilbuild REIT

Content

3

Overview and Key Highlights 4

Portfolio Details 7

Market Update 16

Financial Highlights / Capital Management 19

Growth Strategies 23

Sponsor / Fee Structure 28

Conclusion 31

Overview

5

5

Integrated Platform

of SponsorLocation, Quality and

Specification of Assets

To deliver stable and growing returns to Unitholders by

actively managing our assets and expanding our portfolio

Soilbuild Business Space REIT aims to be a successful

business space real estate investment trust with a

quality portfolio of assets to deliver stability and growth

Vision

Mission

Our Competitive Advantage

Overview

6

Key Highlights

Continuing to deliver on key investment merits

1. Best-in-class portfolio

– Strategically

located portfolio

5. Committed Sponsor / Mgmt

2. Favourable tenancy / lease profile 3. Well-defined growth plans 4. Robust financial performance

– Longest remaining land lease

tenure of 49 years(1)

– Acquisition of 3 properties

since IPO taking portfolio

size in excess of S$1 bn

– Quality building specifications and

designs with established tenant base

– Well-staggered lease expiry profile with

WALE of 4.0 years(1) by Gross Rental

Income

– Portfolio occupancy of

99.9%(2)

– Good balance between multi-

tenanted and master lease

properties

– Stable and growing cashflow

from master lease properties

– Upside potential from multi-

tenanted properties

– Active acquisition strategy

from ROFR pipeline and third

party opportunities

– DPU of SGD1.546 cents for 3Q 2014

exceeding IPO Forecast(3) by 2.0%

– FY2014 DPU yield of c.7.8%(4)

– Sponsor provides

access to

integrated real

estate platform

– Management team has

delivered DPU outperformance

for five consecutive quarters

– Management fee structure pegged to

DPU, providing alignment with unitholders

Notes:

(1) As at 31 Dec 2014 (2) As at 30 Sep 2014 (3) The IPO Forecast is derived from the Forecast Year 2014 figures disclosed in the Prospectus dated 7 August 2013 (the “Prospectus”) (4) Annualised DPU yield based on 31 Dec 2014 closing

price of S$0.79 (5) Based on aggregate leverage of up to 40.0%

– High proportion of

business park properties

– Post-acquisitions gearing of

36.5%(5) provides further debt

headroom of S$59.0 million

– Investment grade rating

of BBB- from S&P

– Well-diversified tenant base

and trade sectors

Portfolio Details

8

Portfolio Overview

Keppel

TerminalSentosa

Jurong Island

Jurong Port

Second Link

(Tuas Checkpoint)

PSA

Terminal

Tuas Port

(2022)

ONE-NORTH

CHANGISIMEI

EXPOJOO KOON

BOON LAY

PIONEER

BUONA VISTA

SolarisNLA: 441,533 sq ft

Valuation: S$300.0 million

Soilbuild REIT portfolio features include optimal locations for the various asset types, above average specifications, young

properties and very long remaining land leases

Eightrium

NLA: 177,286 sq ft


NLA: 1,240,583 sq ft


COS PrintersNLA: 58,752 sq ft


Tuas ConnectionNLA: 651,072 sq ft


BK Marine

NLA: 73,737 sq ft


West Park BizCentral

NLA: 312,375 sq ft


Valuation S$1,033.5 million

Total NLA 3,352,412 sq ft

WALE (by NLA) 4.0 years(1)

Occupancy 99.9%(2)

Portfolio Summary

CBD

Industrial Properties

Business Park Properties

Tellus MarineNLA: 95,250 sq ft


SEMBAWANG

NLA: 208,057 sq ft


KTL Offshore

NK Ingredients

NLA: 93,767 sq ft


Speedy-Tech

Notes:

(1) As at 31 December 2014

(2) As at 30 September 2014

9

Portfolio Summary

Notes:

(1) Age from issue of CSC (as at 31 Dec 2014) (2) Phase 1 of development received CSC in Jul 1991 and Phase 2 of development received CSC in Aug 2007 (3) As at 30 Sep 2014 (4) Valuation assumes the completion of construction of a

new annex to Tellus Marine (5) Occupancy at completion of acquisition

Property TypeLease

Arrangement

Property

Age(1)

(Years)

Remaining

Land Lease

(Years)

Occupancy

Rate(3)

Occupancy

Rate as at

IPO

Valuation

(S$ Million)

SolarisBusiness

Park

Master

Lease3.3 53 100.0% 100.0% 300.0

West Park BizCentralMulti-User

Ramp-up Factory

Multi

Tenanted2.3 54 99.8% 100.0% 319.0

Eightrium @ CBPBusiness

Park

Multi

Tenanted7.3 51 100.0% 95.3% 102.0

Tuas ConnectionMulti-User

Land Based Factory

Multi

Tenanted4.5 36 100.0% 100.0% 126.0

NK IngredientsSingle-User

Factory

Master

Lease

Ph1: 23.5

Ph2: 7.4(2)32 100.0% 100.0% 62.0

COS PrintersSingle-User

Factory

Master

Lease18.0 28 100.0% 100.0% 11.0

Beng Kuang MarineSingle-User

Factory

Master

Lease14.7 42 100.0% 100.0% 15.0

Tellus MarineSingle-User

Factory

Master

Lease16.3 39 100.0% n.a 18.3(4)

KTL OffshoreSingle-User

Factory

Master

Lease

No. 61: 5.4

No. 71: 5.652 100.0%(5) n.a 56.0

Speedy-TechSingle-User

Factory

Master

Lease11.0 35 100.0%(5) n.a 24.2

Total Portfolio 5.4 48.6(3) 99.9% 99.7% 1,033.5

Soilbuild REIT’s portfolio consists of ten properties with long underlying land leases and an average age of 49 years

10

Solaris @ one-north

Iconic award winning development offering plethora of

green innovationsMinutes from one-north / Buona Vista MRT stations and

easy accessibility to AYE and PIE

Established Sub-Tenant Base

Property Information

GFA 551,811 sq ft

NLA 441,533 sq ft

No. of Floors 9-storey in North Tower; 15-storey in

South Tower

Occupancy 100% (underlying basis)

No. of Sub-Tenants 26

Car Park Lots 292

Floor-to-Ceiling Height Up to 6 meters

Building Awards

http://www.autodesk.com/

http://www.autodesk.com/

Eightrium @ Changi Business Park

11

Established Tenant Base


GFA 213,835 sq ft

NLA 177,835 sq ft

No. of Floors 8-storey East and 6-storey West

Wings interlinked by a distinctive

5-storey high atrium

Occupancy 100%

No. of Tenants 13

Car Park Lots 132 lots

Floor-to-Ceiling

Height

High ceiling height of up to 3

metres

Located in one of Singapore’s most

sought after business park locations

One of the few multiple-user business

park properties in Changi Business Park

Close proximity to Expo MRT and

major expressways with facilities and

amenities abound

http://www.kueducation.com/

http://www.kueducation.com/


12



GFA 1,414,600 sq ft

NLA 1,240,583 sq ft

No. of Floors 6-storey ramp-up factory and 11-

storey air-conditioned hi-tech facility

Occupancy 99.8%

No. of Tenants 47

Car Park Lots 542

Floor-to-Ceiling Height Ramp-up factory: Up to 9.1 meters;

Air-conditioned hi-tech facility: Up to

5.0 meters

Award winning design with safety feature

including traffic segregated system

Flexible configuration allows for

innovative use of space

Individual substations for each stack

providing tenants with stable power sources

http://www.nov.com/Home.aspx

http://www.nov.com/Home.aspx

Tuas Connection

13



GFA 607,994 sq ft

NLA 651,072 sq ft

Occupancy 100.0%

No. of Tenants 15

Car Park Lots Nil

Floor-to-Ceiling Height High ceiling height of up to 12 metres

Features detached and semi-detached business

space, offering exclusivity to tenants

Functional layouts featuring wide production spaces and ceilings as

high as 12m, with well-organised office spaces on the 2nd storey

Strategically located close to Tuas Checkpoint,

Petrochemical, Pharmaceutical and Green Energy Zones

14

% of Total

NLA of 3.05

million sq ft

104

tenants in

portfolio

Notes:

(1) Inclusive of underlying tenants at Solaris

1. Portfolio Income Spread

By Property

Diversified Portfolio (as at 30 September 2014)

2. Well-spread trade sectors(1)

By NLA

3. Diversified Tenant Base(1)

By Gross Rental Income

4. Balanced Portfolio with Growth Upside

By Net Property Income

13%

16%

34%

25%

7%1% 2% 2%

Eightrium @ ChangiBusiness ParkTuas Connection


Solaris

NK Ingredients

COS Printers

Beng Kuang Marine

3Q FY2014

Gross Revenue

S$16.9 million

Multi-Tenanted58%

Master Lease42%

3Q FY2014

NPI

S$14.2 million

19.9%

17.0%

11.3%8.1%4.6%

4.5%

4.2%

3.6%

2.8%

2.5%

21.4%

Precision Engineering, Electrical andMachinery ProductsMarine Offshore, Oil & Gas

Chemicals

Fabricated Metal Products

Electronics

Publishing, Printing & Reproduction ofRecorded MediaSupply Chain Management, 3rd PartyLogistics, Freight ForwardingInformation Technology

Construction

Food Products & Beverages

Others

MNC65%

SME30%

Government Agency

5%

15

Work has began on FY2015 lease expiries…

Lease expiry profile

As % of NLA

Eightrium0.3%

Tuas Conn.8.1%

West Park15.1%

17.6%

11.9%

19.5%

27.4%

2015 2016 2017 2018 >2018

23.6%

Lease Expiry by NLA

• Eightrium: 10,699 sq ft

• Tuas Connection: 261,243 sq ft

• West Park BizCentral: 486,091 sq ft

Market Update

17

Industrial Sector Market Outlook

167

603 590277 400 66

565

1,046

538

111

75

374

613

531

59

113

288

196

2014 2015 2016 2017 2018 >2018

Multiple-user factory Single-user factory

Warehouse Business Park

Limited Supply Pipeline for Business Park Properties

In ‘000 sq m

Improving Occupancies for Business Park

Vacancy rate (%)

9.4

12.7

13.2

5.26.6 6.8

6.4

11.59.6

18.1

15.013.9

3Q2011

4Q2011

1Q2012

2Q2012

3Q2012

4Q2012

1Q2013

2Q2013

3Q2013

4Q2013

1Q2014

2Q2014

3Q2014

Multiple-user factory Single-user factory

Warehouse Business Park

Source: JTC (3Q 2014) Source: JTC (3Q 2014)

The business park segment has performed relatively well in 2014 YTD, benefitting from the spill-over from higher office

rents, with business park rents growing at an average of 2.2% every quarter this year

While demand for business park space is expected to remain healthy, especially for the newer and centrally located ones,

the higher supply in 2016 is likely to contain rental growth

Rental for prime conventional industrial space expected to ease further in 4Q 2014 on the back of supply pressures

Source: DTZ, Colliers - 3Q 2014 Research Report

18

Located in Business Park Clusters that Command Premium Rents

Soilbuild REIT’s business park properties are located in Fusionopolis within one-north and Changi Business Park, which

commands some of the highest rents among the business parks in Singapore.

Major Business Parks in Singapore(S$ psf per month)

WEST REGION

CENTRAL

REGION

EAST REGION

Cleantech Park

(50 ha)

Market Rent: ~S$3.20 psf pm

International Business Park

(37 ha)

Market Rent: S$4.00 - 4.50 psf pm

Singapore Science Park

(65 ha)

Market Rent: S$3.50 - 4.50 psf pm

Mapletree Business City

(13.5 ha)

Market Rent: ~S$6.00 psf pm

one-north

(200 ha)

Market Rent: S$5.00 – 6.00 psf pm

Changi Business Park

(71.1ha)

Market Rent: S$4.00 – 4.50 psf pm

Location Amenities

Physical

Specs Usage

One-north

+ MBC

CBP

SSP / IBP

Higher rents for one-north

and MBC vs. SSP and IBP

Financial Highlights / Capital Management

20

STI

+5.2%

Financial Performance vs Unit Price

S-REIT

+6.4%

SB REIT

+10.5%

85%

90%

95%

100%

105%

110%

115%

120%

Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

Relative Trading Performance

16 Aug 2013 (IPO) – 31 Dec 2014

Actual DPU exceeding IPO Forecast for 5 consecutive quarters

Actual & Forecast DPU for periods ending 30 Sep 2013 – 30 Sep 2014

Source: Bloomberg closing prices

0.738

0.760

Forecast Actual

3Q 2013

Announcement

+3.0%

4Q 2013

Announcement

1.460

1.510

Forecast Actual

+3.4%

1Q 2014

Announcement

1.472

1.562

Forecast Actual

+6.1%

2Q 2014

Announcement

1.481

1.500

Forecast Actual

+1.3%

3Q 2014

Announcement

1.515

1.546

Forecast Actual

+2.0%

21

3Q FY2014 Financial Results – Balance Sheet

All figures S$’000 unless otherwise stated Unaudited Actual

as at

30 September 2014

Audited Actual

as at

31 December 2013

Investment Properties 949,944 935,000

Other Assets 22,412 20,292

Total Assets 972,356 955,292

Bank Borrowings 289,849 275,331

Other Liabilities 33,371 32,663

Net Assets 649,136 647,298

Units in Issue (‘000) 810,933 804,541

Net Asset Value per Unit (S$) 0.80 0.80

22

Prudent Capital Management

1) Modest aggregate leverage allows significant headroom

Total Financing Facilities Available S$385 million

Total Debt Drawn Down(1) S$374 million

Debt headroom(1)(2) S$59 million

95.0 95.0 90.0 94.0

2014 2015 2016 2017 2018

% of Debt Maturing 25.4% 25.4% 24.1% 25.1%

Notes:

(1)Post-acquisition of 61 & 71 Tuas Bay Drive and 20 Kian Teck Lane (2) Based on aggregate leverage of 40% (3) Excluding debt arrangement fees relating to undrawn loans

(4) As at 31 Dec 2014

Aggregate Leverage(1) 36.5%

Average All-in Interest Cost(1)(3) 3.19%

Weighted Average Debt Maturity(4) 2.1 years

2) No more than 26% of debt expires in any 1-year(S$ Million)

To mitigate interest rate risk,

over 80% of total debt hedged

with interest rate swaps

3) Standard & Poor’s has on 31 July 2014, re-affirmed its long term corporate credit rating of BBB- with a stable

outlook for Soilbuild REIT

Growth Strategies

24

Three Pronged Growth Strategy

Soilbuild REIT is well positioned for robust growth through organic rental growth and the acquisition and development of

properties.

Stability and Growing Cashflows from Master Leases1

Acquisition Opportunities3

Upside Potential from Multi-Tenanted Properties 2

25

2015 2016 2017

Solaris NK Ingredients COS Printers BK Marine

Tellus Marine KTL Offshore Speedy-Tech

5 Years

7 Years

7 Years

10 Years

10 Years

10 Years

15 Years

Solaris

KTL Offshore

BK Marine

Speedy-Tech

Tellus Marine

COS Printers

NK Ingredients

Masters lease feature long term leases ranging from 5 to 15 years providing stability as well as growth from the annual or bi-annual

rental step-upsA

Minimal counterparty risk given 12-month rental deposits from the Master Lessees and blue chip sub-tenant baseB

Minimal capital expenditure expected for FY2015 given that the Properties are relatively young and modernD

Expected Stable and Growing Cash Flows from the Master Leases

2.5%3.0%

Master Leases structured on a double and triple net lease basis, minimizing expenses to Soilbuild REITC

Growth Strategy 1 – Cashflow from Master Leases

Long-term Master Leases

Lease Term from start of Master Lease Agreement

Fixed Annual Rental Escalation of Master Leases

Rental Revenue (S$ million)

31.4 32.233.1

26

40%

21%19%

21%

$1.35

$1.08

$1.44

$1.63

2015 2016 2017 2018 >2018

Lease Expiry by NLA Expiring Rents

6%

35%

40%

19%

$4.13$3.91

$3.81

$4.39

2015 2016 2017 2018 >2018


41%

31%

16%13%

$1.46

$1.58$1.54

$1.35

2015 2016 2017 2018 >2018


Rental rates for West Park BizCentral, Eightrium and Tuas Connection are below current market rents and are expected to

revert positively as existing leases are renewed

Eightrium(Lease Expiry by NLA)

Tuas Connection(Lease Expiry by NLA)

Current Market Rent:

S$4.00 – 4.50 psf per month


S$1.50 – 1.80 psf per month

West Park BizCentral (Lease Expiry by NLA)


S$1.60 psf per month

Growth Strategy 2 – Upside Potential from Multi-Tenanted Properties

27

Nine-storey ramp-up light

industrial building

Close to Jurong and

Woodlands industrial zones

Close to PIE, BKE, KJE

Growth Strategy 3 – Acquisition growth mechanisms on track

(i) Acquisition of Tellus Marine, 39 Senoko Way

Soilbuild REIT’s maiden acquisition since IPO

GFA Phase 1: 77,162 sq ft and Phase 2: 18,088 sq ft

Land details Business 2, 30 years + 30 years from 16 February 1994

Acquisition

cost

$18.3m (comprising consideration of $18.0m and

acquisition-related costs)

Lease scheme 10 year triple-net lease

Four-storey industrial building with proposed

single storey workshop to be constructed

Accessible via SLE and BKE

Master lease to Tellus Marine Engineering Pte.

Ltd.

(iv) First ROFR property due for completion

Potential acquisition opportunity in 2015

Location 566 Bukit Batok St 23, Singapore 659566

GFA 403,946 sq ft

Land details Business 1, 30 years from 29 August 2012

Expected TOP 1Q 2015

Expected lease scheme Multi-tenanted

(iii) Acquisition of Speedy-Tech, 20 Kian Teck Lane

3rd acquisition of a light industrial building in Jurong industrial zone

GFA 93,767 sq ft

Land details Business 1, 30 + 20 years from 1 May 2000

Acquisition

cost

$24.3m (comprising consideration of $22.4m, S$1.6m land

premium and acquisition-related costs)

Lease scheme 10 year triple-net lease

Part 3 / part 6-storey light industrial building

Master lease to Speedy-Tech , a subsidiary of

Integrated Micro-Electronics, Inc

Accessible via AYE and PIE

(ii) Acquisition of 61 & 71 Tuas Bay Drive

2nd acquisition located in the upcoming Tuas South area

Two adjacent detached purpose-built factories

with ancillary offices located along Tuas Bay

Drive

Master lease to KTL Offshore Pte. Ltd., a

subsidiary of SGX listed, KTL Global Ltd.

GFA 208,057 sq ft

Land details Business 2, 60 years from 19 July 2006

Acquisition

cost

$55.7m (comprising consideration of $55.0m and

acquisition-related costs)

Lease scheme 6.8 years double-net lease(1)

Note:

(1) Novation Agreement to be entered into between the Trustee, Vendor and the existing tenant, KTL Offshore Pte. Ltd., to transfer the existing lease from the Vendor to the Trustee. Double-net lease with

land premium fully paid up for the balance of the land lease tenure

Sponsor / Fee Structure

29

Sponsor has Integrated Real Estate Platform

Leading

Integrated

Property

Group with

~40 Years of

Experience

A

Only

Industrial

REIT

Sponsor with

End-to-End

Integrated

Capabilities

B Construction

End-to-End Construction

BCA Construction

Grade of ‘A1’

Multi-Discipline Team

Public & Private Sector

Range of Asset Classes

Balance Sheet

Focus on End Users

Innovative Designs

Quality

Location

Tenant Retention

Relationship with Brokers

Dedicated TeamEstablished Relationships

with Govt. Agencies

Asset Enhancements

Income Optimisation

Experienced Management

Team

Capital Management

Relationship with Vendors

Operations cover full spectrum of value chain

DevelopmentLease

Management

Asset / Property

Management

Fund

Management

Integrated

Real Estate

Platform

Singapore integrated property group with a long track record in end-to-end construction and

development expertise

Graded ‘A1’ by BCA which allows tender for public sector projects without any value limitations

Strong expertise in “design, build and lease/sell” through years of close collaboration with JTC

Corporation under the Developer Partnership Programme

Committed to support Soilbuild REIT over the long term with Sponsor stake of more than 26%

30

Strong Alignment with Unitholders

Base Fee

A Calculated on Distributable Income and not AUM

10.0% of Annual Distributable Income

First industrial REIT to adopt such a Unitholder-aligned fee structure

Strongest alignment of interest with Unitholders as it ensures focus on distributions

rather than on asset size

Management will be conscious of all expenses affecting distributable income on the

P&L (e.g. cost of funding)

Performance

Fee

B

Requires growth in DPU

25.0% of the difference in DPU in a financial year with the DPU in the preceding

financial year multiplied by the weighted average number of Units in issue for such

financial year

Compares favourably to other S-REIT performance fees which are based on a

percentage of revenue or net property income

Management aligned with Unitholders to deliver sustainable and quality DPU

growth

Conclusion

32

Conclusion

Strong operational performance from business parks

exposure, favourable locations, stable master leases

and upside from multi-tenanted leases

1

Future growth from ROFR and third party acquisitions3

Robust financial performance and prudent capital

management 2

Thank You

Shane HaganChief Executive OfficerTel: (65) 6415 5980

Email: [email protected]

Roy TeoChief Operating OfficerTel: (65) 6415 5983

Email: [email protected]

Key Contacts:

DBS Pulse of Asia Conference - listed company...2015/01/05 · 2 This presentation should be read...

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