2Q FY2009/10 Financial Results Presentation 19 October ... · Financial Results Presentation 19 October 2009 This presentation may contain forward -looking statements that involve

2Q FY2009/10

Financial Results Presentation

19 October 2009

This presentation may contain forward-looking statements that involve risks and uncertainties. Actual

Disclaimers

This Presentation is focused on comparing results for the three months ended 30September 2009 versus actual results year-on-year (“yoy”). This shall be read inconjunction with A-REIT’s Results for the period from 1 April 2009 to 30 September2009 in the SGXNet announcement.

A-REIT 2Q FY2009/10 Results .. 2

This presentation may contain forward-looking statements that involve risks and uncertainties. Actualfuture performance, outcomes and results may differ materially from those expressed in forward-lookingstatements as a result of a number of risks, uncertainties and assumptions. Representative examples ofthese factors include (without limitation) general industry and economic conditions, interest rate trends,cost of capital and capital availability, competition from similar developments, shifts in expected levels ofproperty rental income and occupancy, changes in operating expenses, including employee wages,benefits and training, property expenses and governmental and public policy changes and the continuedavailability of financing in the amounts and the terms necessary to support future business. You arecautioned not to place undue reliance on these forward looking statements, which are based on theManager’s current view of future events.

Agenda

• Key Highlights

• Financial Performance

• Investment Management

• Capital Management

• Asset Management



� Portfolio Update

� Portfolio Resilience

� Portfolio Growth

• Market Outlook

• Conclusion

Key Highlights

• Distributable income grew 15.4% yoy to S$61.6m from S$53.4m

• Net property income of S$81.1m is 11.7% above prior year NPI of

S$72.6m

• YTD organic growth contributed about 41.8% of the NPI growth

• Completed 2 development projects (Phase 2, Plaza 8 Changi Business

Park and the Built-to-Suit Logistics facility at ALPS) at about 7.3% below

budgeted development cost


• Aggregate leverage of 30.5% with interest cover of 4.8x

• Refinanced CMBS due in Aug 09 with existing unsecured credit facilities.

Financial flexibility enhanced as unencumbered properties increased to

31 properties worth about S$2bn

• Next refinancing is a S$300m term loan facility due in March 2010

• Occupancy rate for portfolio is 96.8% and 93.3% for multi-tenanted

properties

• 5.8% of portfolio revenue due for renewal for balance of FY2009/10

Agenda

• Key Highlights










• Market Outlook

• Conclusion

(S$’000) 2Q FY2009/10(1) 2Q FY2008/09(1) % incr/(decr)

Gross revenue 102,281 97,330 5.1

Less: Property operating expenses(2) (21,156) (24,714) (14.4)

Net property income 81,125 72,616 11.7

Interest Expense (14,555) (14,270) 2.0

Other borrowing costs(3) (243) (729) (66.7)

2Q FY2009/10 vs 2Q FY2008/09



Non-property expenses(4) (6,518) (6,523) (0.1)

Net change in fair value of financial derivatives(5) (8,880) - nm

Net income 50,929 51,094 (0.3)

Notes:(1) Based on 90 properties as at 30 Sep 2009 and 88 properties as at 30 Sep 2008(2) Property expenses decreased by 14% due primarily to lower utilities costs and property tax rebates. (3) Other borrowing costs include amortisation of setup fees and maintenance costs incurred for loans, fair value

adjustments on deferred payments and refundable security deposits in accordance to FRS39(4) Non-property expenses include manager fee and trust expenses, net of interest income(5) Non-cash fair value adjustments on Interest Rate Swaps which are considered ineffective in accordance with FRS39

(S$’000) 2Q FY2009/10(1) 2Q FY2008/09(1) % incr/(decr)

Net income 50,929 51,094 (0.3)

Non tax deductible expenses(2) 10,632 2,258 370.9

Available for distribution 61,561 53,352 15.4

No. of units in issue (mil) 1,869.9 1,329.6 40.6

DPU – 2Q FY2009/10 vs 2Q FY2008/09


Distribution Per Unit (cents) 3.48 4.01 (13.2)

Proforma DPU - 3.02(3) 15.2

Notes:(1) Based on 90 properties as at 30 Sep 2009 and 88 properties as at 30 Sep 2008(2) Non tax deductible expenses for 2Q FY2009/10 include net change in fair value of interest rate swaps which are

considered ineffective in accordance with FRS39. This is added back for the computation of Distributable Income. (3) DPU based on number of units in issue as at 30 Sep 2009, including new units issued in Aug 2009 in relation to a

private placement. Applicable number of units for 2Q FY2009/10 is 1,769.4 mil

(S$’000) 2QFY2009/10(1) 1QFY2009/10(1) % Change

Gross revenue 102,281 102,441 (0.2)

Less: Property operating expenses

(21,156) (21,730) (2.6)

Net property income 81,125 80,711 0.5

Borrowing costs (14,555) (14,811) (1.7)


DPU – 2Q FY2009/10 vs 1Q FY2009/10


Non-property expenses (6,518) (6,330) 3.0

Net change in fair value of financial derivatives

(8,880) - nm

Net income 50,929 58,871 (13.5)

Available for distribution 61,561 61,037 0.9

Distribution per unit 3.48 3.62 (3.9)(3)

Notes:(1) Based on 90 properties as at 30 Sep 2009 and 89 properties as at 30 Jun 2009(2) Other borrowing costs include amortisation of setup fees and maintenance costs incurred for loans, fair value

adjustments on deferred payments and refundable security deposits in accordance to FRS39(3) Decrease in DPU due to new equity of about S$300m issued in Aug 2009

Distribution Details

Distribution Timetable

Stock counter Distribution Period Distribution per unit (cents)

Ascendasreit 1 Jul 09 to 19 Aug 09 1.94

(Paid on 23 Sep 09)

Ascendasreit 20 Aug 09 to 30 Sep 09 1.54


Last day of trading on “cum” basis 26 October 2009

Ex-date 27 October 2009

Books closure date 29 October 2009

Distribution payment date 26 November 2009

Distribution Timetable

Sources of NPI Growth

Organic growth contributed 41.8% to YTD NPI growth of 13.7%

Organic growth(rental rate growth,


* Investments made in FY2008/09 contributing full NPI impact in 1HFY2009/10

(rental rate growth, savings in property expense), 41.8%Investments

made in FY2008/09*,

58.2%

Agenda

• Key Highlights










• Market Outlook

• Conclusion

Investment Highlights

Expected Development Cost (S$m)

Expected Completion

Date

Development-in-progress:

Built-to-suit Hi-Tech Industrial building for SingTel 175.4 4Q FY2009/10

Amount funded 100.5

Development cost to be funded 74.9


Development cost to be funded 74.9

Development-in-progress:Built-to-Suit for Singtel

• Development of a 9-storey Hi-Tech Industrial building at Kim Chuan for SingTel

• Development is located next to Kim Chuan Telecommunications Complex, an existing building owned by A-REIT and currently leased to SingTel

Oct 09


Artist impression

and currently leased to SingTel

• 20 + 10 years lease with annual rental escalation

Completed Developments

Completed development Expected development cost (S$m)

Actual development cost (S$m)

Built-to-suit logistics facility at Airport Logistics Park Singapore for Expeditors

25.6 24.2

Phase 2, Plaza 8 Changi Business Park 107.1 98.8

132.7 123.0


132.7 123.0

Completed Developments

Built-to-Suit for Expeditors Singapore

• Part 2-storey / part 4-storey logistics facility at Plot 6 of Airport Logistics Park (within Airport Free Trade Zone) with 100% leased to Expeditors Singapore Pte Ltd


Phase 2, Plaza 8 Changi Business Park

• Multi-tenanted building with about 8,000 sq m of amenity space to serve the needs of the growing CBP population and surrounding area

Agenda

• Key Highlights










• Market Outlook

• Conclusion

Strong Balance Sheet

(S$ mil) As at 30 Sep 09 As at 30 Sep 08

Total Assets 4,695 4,572

Aggregate Leverage(1) 1,430 1,895

Net assets attributable to unitholders

2,983 2,458


unitholders2,983 2,458

Aggregate Leverage 30.5% 41.4%

Net asset value per unit 160 cents 185 cents

Units in Issue (mil) 1,869.9 1,329.6

(1) Aggregate leverage includes deferred payments on purchase price of certain properties

Interest Rate Risk Management

Debt Profile 30 Sep 2009 30 Sep 2008

Aggregate leverage 30.5% 41.4%

Total debt S$1,406.8m S$1,866.5m

Fixed as a % of total debt 100.0% 76.7%

Weighted average all-in funding cost(1) 3.9% 3.3%

100% of interest rate exposure fixed for the next 2.8 years


Weighted average all-in funding cost(1) 3.9% 3.3%

Weighted average term for fixed debt 2.8 years 3.9 years

Interest cover ratio 4.8 times 4.8 times

Note:(1) Including annual maintenance costs and amortisation establishment cost of loans

Debt Maturity Profile No refinancing until 2010. Offer to extend loan received

$395$87200

250

300

350

400

450 S

GD

'mill

ion


$350$395

$150$125

$300

$87

-

50

100

150

200

2010 2011 2012 2013 2014

SG

D'm

illio

n

Commercial Mortgage Backed Securities Medium Term Note

Term Loan Facility Committed Revolving Credit Facility*

* Loan is taken on a short-term basis from the committed facility

Agenda

• Key Highlights










• Market Outlook

• Conclusion

High Occupancy; Long Leases

As at 30 Sep 09 As at 30 Sep 08

Total Portfolio GFA (sqm) 2,313,918 2,242,001

Portfolio occupancy

MTB(1) occupancy

96.8%93.3%

98.0%95.6%

• MTB occupancy rate moderated 93.3% from 94.0% in previous quarter• New demand for space is about 86% compared to a year ago


Total portfolio renewals/new leases (sqm)

Total New leases/Expansions (sqm)

Total Renewals (sqm)

78,378(3)

22,293(3)

56,085(3)

55,352(2)

26,002(2)

29,350(2)

Weighted Average Lease to Expiry (years) 4.9 5.5

Notes : 1) MTB = Multi-tenanted buildings which accounts for about 54% of portfolio value2) For the three months ended 30 Sep 083) For the three months ended 30 Sep 09

2Q FY2009/10 Sources of new demand

Continue to attract new demand from tenants from various sectors due to diversity of properties in the portfolio

IT20%

Food Products & Beverages

Telecommunication & Datacentre

6%

Others16%


By net lettable area

Biomedical23%

Electronics14%General Manufacturing

3%

Precision Engineering

7%

Transport and Storage7%

Lifestyle and Apparels1%

Food Products & Beverages3%

Portfolio Occupancy Rates vs Market Average

93.0%94.7%

97.4%98.8%

90.3%

87.5% 87.5%

91.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

Oc

cu

pa

nc

y R

ate

(%

)


Source: URA Official Statistics as at 2Q2009A-REIT’s occupancy as at 30 September 2009

50.0%

55.0%

60.0%

65.0%

70.0%

Business Park Hi-Tech Industrial Light Industrial Logistics

A-REIT URA

Oc

cu

pa

nc

y R

ate

(%

)

20%

RE

IT R

en

tal

Re

ve

nu

e

Lease Expiry Profile

• Weighted average lease to expiry for the portfolio of about 4.9 years• Stable portfolio – more than half of revenue due for renewal in FY2009/10 completed;

5.8% of revenue due for renewal in balance of FY2009/10

Business & Science Parks,

25.5%

Hi Tech, 33.8%Logistics,

10.3%

Light Industrial, 30.4%


5.8

%

16.3

%

15.2

%

9.3

% 13.7

%

8.8

%

7.7

%

5.9

%

1.6

%

3.5

%

1.7

%

1.7

%

0.0

%

0.5

%

8.1

%

0%

10%

% o

f A

-RE

IT R

en

tal

Re

ve

nu

e

Agenda

• Key Highlights










• Market Outlook

• Conclusion

Well Diversified Portfolio - by Lease Tenure

Mix of Single-tenanted vs Multi-tenanted Buildings

Typically 3-year rolling leases


Typically long term leases with annual rental

escalation

By value

Multi-Tenanted54%

Single-Tenanted

46%

Well Diversified Portfolio - by Asset Class

By Value

33.8%

66.2%

77.0%

23.0%

Business & Science Parks

32%

Logistics & Distribution Centres

26%

Warehouse Retail Facilities

3%


20.7%

79.3%60.3%

39.7%

32%

Hi-Tech Industrial21%Light Industrial

12%

Flatted Factories6%

26%

By value Short Term Leases Long Term Leases

Tenants’ Industry Diversification

2.7%

3.2%

3.3%

3.5%

4.7%

5.8%

6.2%

11.1%

12.3%

15.5%

19.1%

Rubber and Plastic Products

Textiles & Wearing Apparels

Food Products & Beverages

Financial

Life Science

Distributors, trading company

3rd Party Logistics, Freight Forwarding

Telecommunication & Datacentre

Information Technology

M&E and Machinery & Equipment

Electronics


Others include shipping, technology support industries , testing & certification and technical centre for systems and repair and tenants in the warehouse retail facilities By gross revenue

18.7%

1.1%

1.2%

1.4%

1.4%

1.6%

1.8%

2.0%

2.0%

2.7%

Others

Hotels and restaurants

Medical, Precision & Optical …

Construction

Repair and Servicing of vehicles

Printing & Reproduction of Recorded …

Chemical

Healthcare Products

Fabricated Metal Products

Rubber and Plastic Products

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Low exposure to conventional manufacturing

2Q FY2008/09 tenants’ business activities by net lettable area

• 21% of NLA occupied by tenants engaged in conventional manufacturing activities

• Manufacturing activities include food & beverages, aeronautical auxiliary

Manufacturing, 21%


beverages, aeronautical auxiliary equipment, precision engineering etc.

• Non-manufacturing activities include R&D, backroom offices, telecommunications & data centre, software and media consultancy services as well as transport & storage

Non Manufacturing,

79%

Quality and Diversified Tenant Base• Total tenant base of about 900 tenants• Top 10 tenants account for 26.5% of total portfolio income

5.9%

4.5%

3.6%4.0%

8.0%

% o

f G

ross R

eve

nu

e In

co

me


* TT International Limited, the parent of TT International Tradepark Pte Ltd, has defaulted on a $2 million loan and has entered into a negotiationwith its creditors for a scheme of arrangement on 21 Jan 2009. On 21 Jul 2009, it obtained court approval for an extension of time to 22 Oct 2009for the signing of the proposed scheme of arrangement with its creditors. The Manager is monitoring the situation closely and A-REIT has asecurity deposit equivalent to about 10 months’ rent from the tenant.

2.0% 2.0% 2.0% 1.8% 1.6% 1.6% 1.5%

0.0%

% o

f G

ross R

eve

nu

e In

co

me

Tenants Risk Analysis

• Excluding TT International Tradepark, A-REIT has about 12,098 sqm(about S$0.1m or 0.4% of monthly gross revenue) within its portfolio ofabout 2m sqm in net lettable area which are considered vulnerable

• A-REIT has about S$1.1m in security deposits from these tenants

• As at 30 September 2009, outstanding accounts receivable past due


• As at 30 September 2009, outstanding accounts receivable past duefor more than two months is about S$430,710 (about 0.1% ofannualised gross revenue)

Security Deposits for Single Tenanted Properties

No. of single tenanted properties

Weighted average security deposit*(no. of months)

Business & Science Parks 3 14

• Weighted average security deposits for single tenanted properties range from 7 to 14 months of rental income

• On a portfolio basis, weighted average security deposit is 7 months of rental income


Business & Science Parks 3 14

Hi-Tech Properties 7 7

Light Industrial 26 11

Logistics & Distribution Centres 14 9

Warehouse Retail Facilities 2 11

52 9.4

* Excluding cases where rental is paid upfront

MTB Occupancy & Rental Rate : NPI / DPU Sensitivity

% decline in MTB occupancy / rental

rates

Expected decline in annualised MTB

NPI (S$ m)

Decline in portfolio NPI (%)

Impact on full FY DPU (cents)*

5% 11.1 3.7% 0.59

Every 5% decline in MTB occupancy or rental rate will result in a 3.7% decline in portfolio net property income or about 0.59 cents decrease in DPU


5% 11.1 3.7% 0.59

10% 22.2 7.5% 1.19

15% 33.3 11.2% 1.78

20% 44.4 15.0% 2.38

Based on number of units in issue as at 30 Sep 09

Agenda

• Key Highlights










• Market Outlook

• Conclusion

Subsector Performance

Multi-tenanted properties

Net lettable area (sqm)

Vacant space (Sqm)

Increase / (decrease) in YTD renewal

rates(1)

Increase / (decrease) in new take up

rates(2)As at 30 Sep 09

Business & Science Park 239,071 22,951 23.1% (6.5)%

• Positive rental reversion on renewals in Business & Science Parks, Hi-Tech Industrial and Logistics & Distribution Centres space, albeit at a more modest rate

• Decline in new take-up rates in 2Q FY2009/10 reflecting market trends


239,071 22,951 23.1% (6.5)%

Hi-Tech Industrial 203,663 17,719 10.2% (6.4)%

Light Industrial 193,840 12,406 (4.3)% (9.1)%

Logistics & Distribution Centres 276,525 8,572 3.2% 31.6%(3)

(1) YTD renewal rental rates versus previously contracted rates(2) Rental rates for new take up (including expansion by existing tenants) in 2Q FY2009/10 versus similar rates in 1Q FY2009/10(3) New take-up rental rate for 2Q FY2009/10 was for ground floor space which commands a higher rental rate

This page is left blank intentionally


This page is left blank intentionally

In-place rent of space due for renewalFY09/10 & 10/11

$2.90

$2.28

$1.71

$1.48 $1.36 $1.50

$2.00

$2.50

$3.00

600

800

1,000

1,200

$2.63

$2.18

$1.48 $1.50

$2.00

$2.50

$3.00

600

800

1,000

1,200

Avg

. e

xis

itin

g r

en

tal ra

tes (

psf)

Are

a d

ue

fo

r re

ne

wal (

'00

0 s

f)


$-

$0.50

$1.00

0

200

400

Area (sf) for Renewal in FY10/11 Avg. Existing rates (psf) for FY10/11

$1.17 $1.33

$-

$0.50

$1.00

0

200

400

Business & Science Parks

Hi-Tech Industrial Light Industrial Flatted Factory Logistics & Distribution Centres

Avg

. e

xis

itin

g r

en

tal ra

tes (

psf)

Are

a d

ue

fo

r re

ne

wal (

'00

0 s

f)

Area (sf) for Renewal in FY09/10 Avg. Existing rates (psf) for FY09/10

Right AxisLeft Axis

Average Market Gross Rents by Sector

$2.50

$3.00

$3.50

$4.00

$4.50

$3.33

$2.80


Source : CBRE 2Q2009 Report;URA

$0.50

$1.00

$1.50

$2.00

Business & Science Parks Hi Tech Light Industrial Logistics

$1.40

$1.35

Agenda

• Key Highlights










• Market Outlook

• Conclusion

Market Outlook

• Ministry of Trade & Industry advance estimates indicate that GDPexpanded by 0.8% y-o-y in 3Q 2009

• Revised 2009 GDP estimate to a contraction of between 2.0%and 2.5% (previously between 6% and 9%)

• Economy seems to be recovering at a modest pace. However,


• Economy seems to be recovering at a modest pace. However,macro operating environment remains a challenge as demand inkey export markets remained weak

• In the industrial property market, the rate of decline in rental ratesare have slowed as business sentiments improved

Potential New Supply• Current total stock of 36.06m sqm• Potential new supply of about 3 m sqm of industrial space expected over

next three years; majority of potential supply is precommitted

Sector(‘000 sqm)

New Supply(total)

2009 2010 2011

Business & Science Park 474 187 243 44

% pre-committed (est) 43% 54% 42% -


% pre-committed (est) 43% 54% 42% -

Industrial (Hi-tech and Light industrial)*

1,884 703 883 298

% pre-committed (est) 84% 91% 82% 75%

Logistics & Distribution Centres 614 132 266 217

% pre-committed (est) 68% 67% 65% 73%

* Includes A&A works to existing properties amounting to about 268,000 sqm & about 280,000 sqm of development for strata title sales. Excludes projects under 7,000 sqm.

Source: URA Q2 Report, A-REIT internal research

Agenda

• Key Highlights










• Market Outlook

• Conclusion

A-REIT's strengths

Diversity and Depth• Largest business and industrial REIT in Singapore • Solid and well diversified portfolio

� Six property asset classes� Well-located quality properties� Balance of long term vs short term leases provides stability with potential

for positive rental reversions� No single property accounts for more than 5% of revenue� High predictability and sustainability in income


� High predictability and sustainability in income

Strong Sponsor • Sponsor Ascendas has a track record of more than 20 years in this

sector • Committed sponsor and alignment of interest with A-REIT unitholders

• Downside protection in earnings

• Stable portfolio with about 94% of portfolio revenue committed and a portfolio average lease to expiry of about 4.9 years

• Mix of long term and short term leases provides earnings stability

� Long term leases have a weighted average lease to expiry of about 7 years and are backed with an average of 9.4 months rental in security deposits

� Long term leases have stepped rental escalation

A-REIT's strengths


� Long term leases have stepped rental escalation

• Diversified portfolio capable of serving the needs of various sectors

• No significant re-financing requirements

• No exposure to fluctuations in interest rates

• Hedge against Inflation

• 46% of leases are long term with annual rental escalation, of which about 32% have CPI pegged adjustments

A-REIT's strengths

Development capability• Has development capability to create own assets which are more yield

accretive than acquisitions of income producing properties

Operational platform (Property Manager, Ascendas Services Pte Ltd)• Dedicated asset management, sales/marketing, leasing and property

management team of over 80 people• Possess in-depth understanding of this property sector

Customer focus


Customer focus• About 900 tenants from international and local companies• Track record of customers growing with us

Size advantages• Accounts for 13% of S-REIT market capitalization and 5.3% of Asian ex

Japan REIT sector • Accounts for about 12% of S-REIT total trading volume in 2QFY2009/10• Included in major indices (eg. MSCI, FTSE ST Mid Cap Index)

A-REIT's strategies

StabilityStability GrowthGrowth

Predictable incomePredictable income Capital stabilityCapital stabilityTotal

returns

Outcome

Proactive

and

dedicated

manager

with track


Prudent

Capital & Risk

Management

Prudent

Capital & Risk

Management

Value-Adding

Investments

Value-Adding

Investments

Proactive

Asset

Management

Proactive

Asset

Management

StrategiesStrategies

with track

record

Fund Manager:

Ascendas Funds

Management

(S) Ltd

Property Manager:

Ascendas

Services Pte Ltd

Fund Manager:

Ascendas Funds

Management

(S) Ltd

Perfor-

mance

Drivers

Thank you


Important Notice

This presentation has been prepared by Ascendas Funds Management (S) Limited as Manager for Ascendas Real Estate Investment Trust. The details in this

presentation provide general information only. It is not intended as investment or financial advice and must not be relied upon as such. You should obtain

independent professional advice prior to making any decision. This presentation is not an offer or invitation for subscription or purchase of securities or other

financial products. Past performance is no indication of future performance. All values are expressed in Singaporean currency unless otherwise stated.

October 2009


2Q FY2009/10

Financial Results Presentation

19 October 2009

Documents

2Q FY2009/10 Financial Results Presentation 19 October ... · Financial Results Presentation 19 October 2009 This presentation may contain forward -looking statements that involve