3q fy2007/08 financial results presentation 18 january...

1

3Q FY2007/08

Financial Results Presentation

18 January 2008

A-REIT 3Q FY07/08 Results .. 2

This presentation 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 from similar developments, shifts in expected levels of property rental income and occupancy, changes in operating expenses, including employee wages, benefits and training, property expenses and governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on these forward looking statements, which are based on the Manager’s current view of future events.

Disclaimers

This Presentation is focused on comparing results for the nine months ended 31 December 2007 versus actual results year-on-year (“yoy”). This shall be read in conjunction with A-REIT’s Results for the period from 1 October 2007 to 31 December 2007 in the SGXNet announcement.

2


Agenda

• Key highlights

• Financial performance

• Capital and funds management

• Investment highlights

• Portfolio update

• Market outlook

• Going forward


Key Highlights

• 3Q FY07/08 net income available for distribution of $47.2m, up 15%

year-on-year (yoy) over the same quarter in last financial year

• DPU of 3.56 cents, up 11% yoy

• Portfolio occupancy reached high of 98.7% as at 31 Dec 2007 vs

96.1% as at 31 Dec 2006. MTB occupancy was 97.0% vs 93.1%

yoy

• Achieved 71.5% increase in renewal rental rates for Hi-Tech

Industrial space and 46.1% increase for Business & Science Park

space compared to prevailing rental rates

3


Distribution Details

29 February 2008Distribution payment date

30 January 2008, 5.00 pmBooks closure date

28 January 2008, 9.00 amEx-date

25 January 2008Last day of trading on “cum” basis

Distribution Timetable

3.561 Oct 07 to 31 Dec 07 Ascendasreit

Distribution per unit (cents)Distribution PeriodStock counter


Agenda

• Key highlights





• Market outlook

• Going forward

4


(63)(663)(247)FRS 39 F.V. Adjustments(3)

3.56

47,158

45,540

(4,812)

(10,758)

61,358

(18,868)

80,225

3Q FY07/08 (1)

15(4,178)Non-property expenses

21(8,924)Borrowing costs(2)

113.20Distribution per unit

1540,960Available for distribution

1738,995Net income

3(18,309)Less: Property operating expenses

16

13

% Change

52,760Net property income

71,069

3Q FY06/07 (1)

Gross revenue

(S$’000)

DPU – 3QFY07/08 is 11% above 3QFY06/07

Notes:(1) Based on 79 properties as at 31 Dec 2007 versus 68 properties as at 31 Dec 2006(2) Borrowing costs include interest expense on loans and amortisation of CMBS’ establishment.(3) Fair value adjustments for deferred payments and refundable security deposits.


(131)(107)(247)FRS 39 F.V. Adjustments

3.56

47,158

45,540

(4,812)

(10,758)

61,358

(18,868)

80,225

3Q FY07/08 (1)

2(4,729)Non-property expenses

2(10,528)Borrowing costs(3)

13.51Distribution per unit

246,454Available for distribution

244,781Net income

(6)(20,093)Less: Property operating expenses

2

-

% Change

60,145Net property income

80,238(2)

2Q FY07/08 (1)

Gross revenue

(S$’000)

Notes:(1) Based on 79 properties as at 30 Dec 2007 and 78 properties as at 30 Dec 2007(2) Included in $80.2M was a forfeiture of security deposit of about $1.1M from a tenant. Revenue recognition

also started for our property at 30 Tampines Ind. Ave 3 (previously Ness Building) with effect from July ’07. Excluding this one-time income, 3Q growth would be 1.4% over 2Q.

(3) Borrowing costs include margins and weighted swap rates for hedged debt and current floating rates on unhedged debt, and amortisation of CMBS’ establishment and annual maintenance costs

DPU – 3QFY07/08 vs 2QFY07/08

5


Gross Revenue

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$'m

Revenue and NPI - 20 quarters of continued growth since IPO

Net Property Income

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08

$'m


Subsector Financial Highlights– 3Q FY07/08

16.2

3.0

19.2

3Q

FY2006/07

14.4

3.7

18.1

3Q

FY2007/08

Light Industrial

15.6

7.7

23.3

3Q

FY2007/08

Hi-Tech Industrial

11.7

4.0

15.7

3Q

FY2007/08

Business & Science Parks

12.5

3.8

16.3

3Q

FY2006/07

13.6

7.8

21.4

3Q

FY2006/07

10.0

3.7

13.7

3Q

FY2006/07

3Q

FY2007/08

17.0

2.9

19.9

Logistics & Distribution

Centres

Less: Property operating expenses

Net property income

Gross revenue

(S$’m)

• Net property income increase across all sectors compared to a year ago.

• Hi-Tech and Light Industrial registered largest increase of $2.0 mil and 1.9 mil respectively

• Property operating expenses are well contained

6


Agenda

• Key highlights





• Market outlook

• Going forward


Balance sheet

136 cents149 centsNet asset value per unit

39.5%

1.7

1.1

3.0

As at 31 Dec 06

38.9%Aggregate Leverage

2.0Net assets attributable to unitholders

1.3

3.4

As at 31 Dec 07

Borrowings

Total Assets

(S$bn)

Available debt capacity of about $400m to fund near term acquisition and development activities before optimal gearing of 45% is reached

7


Debt Profile

Notes:

(1) Aggregate leverage includes deferred settlements of about $45m

(2) Including margins and weighted swap rates for hedged debt and current floating rates on unhedged debt, and

amortisation of CMBS’ establishment and annual maintenance costs

4.21yrs3.92yrsWeighted average term for fixed debt

87.9%88.0%Fixed as a % of total debt

5.7 times5.32 timesInterest cover ratio

39.5%38.9%Aggregate leverage (1)

3.38%3.39%Weighted average all-up funding cost (2)

S$991m$1,131m• Fixed rate debt

S$1,126m$1,285mTotal debt

31 Dec 200631 Dec 2007Debt Profile


Proactive interest rate management• Staggered maturities in hedging profile to manage interest rate risks

• Interest rate cap which expired in May 2007 has been replaced with fixed rate swaps

• As at 31 December 2007, 88% of interest exposure is fixed with a weighted average term of 3.9 years at a weighted average cost of 3.39%

• The balance 12% and any further debt drawdown will be at prevailing market rate

Fixed & floating Rates Debt Profile

12% 16%28%

40%51%

74%88%

88% 84%72%

60%49%

26%12%

Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14

Floating Rate Fixed Rate

8


Debt Maturity ProfileA

mo

un

t (S

$'m

)

$395.0$350.0

$300.0

$85.7$-

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$400.0

$450.0

FY2008/09 FY2009/10 FY2012/13 FY2014/15

Short-term Advance Facilities

Commercial Mortage Backed Security (CMBS) I

CMBS II

CMBS III

33.3%

27.2%

30.7%

$154m

18.7%

Hedged with fixed rate in FY2008/09


Agenda

• Key highlights





• Market outlook

• Going forward

9


Investment highlights

1Q FY2008/0932Plot 7 & 8 Changi LogisPark

(Partial Built to Suit Facility for Zuellig Pharma)

4Q FY2007/0829HansaPoint @ Changi Business Park

3Q FY2008/0986Ramp-Up Industrial Facility at Pioneer Walk

4Q FY2008/0961Changi Business Park Build-to-Suit Phase 1

208Total

Value (S$m) Expected Completion Date

Investments in development projects in progress



130Total

4Q FY 2008/09

1Q FY 2008/09

1Q FY 2008/09

Expected Commencement Date

2QFY2009/1028Changi Business Park Amenity Centre

3Q FY2009/1063 Changi Business Park MTB

3Q FY2010/1139Changi Business Park Build-to-Suit Phase 2

Value (S$m) Expected Completion

Date

Investments in developments confirmed for future FYs

10



Completed111 Senoko Avenue

299Total

201Total MOUs signed

Competed23Logistic & Distribution Centre at Pioneer Walk (Goldin Building)

4Q FY2007/0864Phase 2 of SENKEE Logistics Hub

Value (S$ m) Expected completion Acquisitions

YTD Investment activities :


Development projects: UpdatesHansaPoint @ CBP (Plot 15 Changi Business Park)

• Construction commenced in Nov 2006. On schedule to complete in 1Q 2008

• Achieved 100% pre-commitment occupancy

• Rental rates improved from initial $2.40 to more than S$3.50 psf pm

Artist impression

Dec 06 - Site

cleared for

construction

Oct 07 – Construction

on schedule

Dec 07 - On target

for completion

11


Development projects: UpdatesPlot 7 & 8 Changi LogisPark (North)

• Partial built-to-suit logistics facility for Zuellig Pharma

• Construction commenced in Feb 2007 and expected to complete in 2Q 2008


Pioneer Walk Industrial Facility• Two blocks of 6-storey ramp-up high specification industrial facility to be

completed in two phases. • 80% (28,376 sqm) of Phase 1 space and 20% (9,198 sqm) of Phase 2 pre-

committed by tenants • 40% (18,396 sqm) of Phase 2 space is under offer to prospects• Target TOP for whole development : 2/3Q FY2008/09

Development projects: Updates

Dec 07 – Construction

on schedule

Artist impression

12


• Built-to-Suit development to be developed in 2 phases of approx. 21,000 sqm each.

• Phase 1 TOP by 1Q 2009 and Phase 2 by 4Q 2010

• Pre-commitment of minimum 75% of space of each phase by Citigroup

• Phase 1 lease will be for 7+3+3 years with annual rental escalation. Phase 2 lease will be for 6+3+3 years also with annual rental escalation. Balance 25% space is on option to the tenant.

Artist impression of Plot 8 Changi Business Park

Plot 8 Changi Business Park: Suburban business space

Development projects: Updates

• Multi-tenanted building with total GFA of about 33,000 sq m.

• Including approx. 6,000 sq m of amenity space to serve the needs of CBP population and surrounding area.

• Development expected to commence in 1QFY2008/09

Business Park & Amenities Centre


Asset Enhancement Highlights

• Asset enhancement opportunities in response to demand from existing

tenants within portfolio

• Capitalising on under-utilized plot ratio to create additional lettable area and

therefore generate growth for the portfolio

• Total investment for asset enhancement = S$23m

Weighted average yield on investment is expected to be more than 8.5%

• Investments in asset enhancement awaiting completion as follows :

Dec 200810.6TechPlace II

May 2008

Apr 2008

Feb 2008

Expected completion

1.8Hoya

1.6Thales

9.0Alpha

23.0Total

Value (S$m)

13


Asset Enhancement - Work in Progress

Alpha upon completion of asset

enhancement

Hoya

• Property is located along Jalan Ahmad Ibrahim.

• Construction of annex block which will create 1,190 sqm of new lettable space which has been fully committed by existing tenant, Hoya.

• Expected completion in Apr 2008

Alpha

• Located in Singapore Science Park 2, it is in the final stages of constructing additional 3,527 sq m of space which will be leased to FJ Benjamin upon completion.

• Expected completion in Feb 2008

Hoya upon completion of asset

enhancement


Asset Enhancement - Work in Progress

Thales upon completion of asset

enhancement

Thales

• Located in Changi North Rise, the construction of annex block will create 1,415 sqm of new lettable space which has been fully committed by existing tenant, Thales.

• Expected completion in Apr 2008

Techplace II upon completion of

asset enhancement

Techplace II• Property is located at Ang Mo Kio Ave 5.

• Construction of additional block which will create 7,518 sqm of new lettable space• Expected completion in Dec 2008

14


Agenda

• Key highlights





• Market outlook

• Going forward


Portfolio Highlights

6.2

46,933(2)

16,961(2)

29,972(2)

98.7%

97.0%

As at

31 Dec 07

96.1%

93.1%

A-REIT Portfolio occupancy

A-REIT MTB (1) occupancy

51,816(3)

14,942(3)

36,874(3)

Total Portfolio renewals/new leases (sqm)

Total New leases/Expansions (sqm)

Total Renewals (sqm)

6.3Weighted Average Lease to Expiry (years)

As at

31 Dec 06

Notes : 1) MTB = Multi-tenanted buildings which accounts for about 51% portfolio value2) For the three months ended 31 Dec 073) For the three months ended 31 Dec 06

15


A-REIT Portfolio Occupancy Higher Than Market

Source: URA Official Statistics as at Sep 2007 Ascendas-MGM Funds Management Limited (“A-MGM”) as at 31 Dec 2007

97.8%97.6%99.9%

98.5%

87.1% 86.4% 86.4%

90.3%

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

Business Park Light Industrial Hi-Tech Industrial Logistics

A-REIT URA

Oc

cu

pa

nc

y R

ate

(%

)


Sources of demand for new leases – broad based

3QFY2007/08 tenants sector by net lettable area

16


Portfolio Diversification by Value

Asset Class Diversification

Multi-tenanted

Buildings

Sale-&-Leaseback

49% 51%

Mix of Sale-&-Leaseback vs Multi-tenanted Buildings

Science &

Business Parks

Hi-Tech

IndustrialFlatted

Factories

Logistics &

Distribution

Centres

Warehouse

Retail Facilities

Light

Industrial

27%

8%

16%

25%

20%

4%


Weighted Average Lease Term to Expiry

6.2 years

Based on 79 properties

As at 31 Dec 2007

6.3 years

Based on 68 properties

As at 31 Dec 2006

Weighted average lease term to expiry

• Weighted average term to expiry remains stable at 6.2 years• Lease expiry profile is well balanced and extends beyond 2021

3.3

%

12.0

%

12.5

%

13

.9%

6.7

%

2.3

%

2.1

%

5.7

% 9.0

%

6.8

%

8.1

%

1.8

%

2.8

%

2.1

%

3.0

% 8.0

%

1.0

%

11

.2% 1

7.1

%

14

.4%

3.8

%

2.3

%

8.8

%

8.8

%

6.8

%

8.4

%

1.6

%

2.9

%

1.2

%

1.6

%

10

.3%

0%

10%

20%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

>2021

Year Ending 31 Mar

68 properties @ 31 Dec 06 79 properties @ 31 Dec 07

% o

f A

-RE

IT P

rop

ert

y I

nc

om

e

17


Organic Growth – Positive Rental Reversion

• Built-in Rental Growth

• 49% of portfolio by value are sale-&-leaseback

• Incorporates stepped annual rental increment, providing growth in earnings

• Positive Rental Reversion

• 51% of portfolio are multi-tenanted buildings where rental rates are marked to market at renewal

• Significant improvement in the renewal rental rates for Business & Science Park and Hi-Tech Industrial sector by 46.1% and 71.5% respectively.


Subsector Performance

% Increase/(decrease)Occupancy Rate (%)Net Lettable Area

-

23

27

30

20

% of total NLA

687,193

163,515

184,369

203,378

135,903

Area (sqm)

97.0

99.5

94.5

97.6

96.7

As at

31 Dec 07

--93.1Total Portfolio (MTB)

14.73.795.5Light Industrial

40.8*20.2*88.7Logistics & Distribution Centres

94.4

93.1

As at

31 Dec 06

7.171.5Hi-Tech Industrial

6.8

new take up rates (2)

46.1

renewal rates (1)

Business & Science Park

Multi-tenanted properties

• Significant increase in occupancy and rental rates achieved forsuburban properties in 3QFY07/08 compared to a year ago

• Hi-Tech Industrial and Business & Science Parks achieved double-digit growth in rental reversion for renewals

* Includes office space within logistics buildings

(1) Renewal rates versus existing rates

(2) New take up rate versus rates in Q2 FY2007/08

18


Spilt of short term & long term leases within sectorMajority of leases in high growth sectors of business & science park and hi-tech industrial are on short term basis. Hence, potential to enjoy positive rental reversion

Science and Business Park (by NLA)

73.9%

26.1%

Hi-tech Industrial (by NLA)

64.6%

35.4%

Light Industrial (by NLA)

16.7%

83.3%

Multi tenanted

Single-tenanted

Logistics and Distribution Centres (by NLA)

30.4%

69.6%


Breakdown of renewal by sector• 29.2% of total lease in portfolio will expire in the next two financial years• Majority of expiry leases (52.8%) are in the higher growth sectors of Business

Parks and Hi-Tech

Year ended 31 Mar '09

SBP, 25.6%

Hi Tech, 44.5%

Logistics, 8.5%

Light Industrial,

21.4%

Up to 31 Mar '08

SBP, 46.9%

Hi Tech, 15.9%

Logistics, 15.9%

Light Industrial,

21.3%

SBP Hi Tech Logistics Light Industrial

Year Ended 31 Mar '10

SBP, 46.9%

Hi Tech, 15.9%

Logistics, 15.9%

Light Industrial,

21.3%

19


Quality & Well-Diversified Tenant Base

Top 10 tenants make up 28.4% of the total portfolio income compared to 33.8 % as at 31 December 2006

6.9%

5.7%

2.4% 2.3% 2.2% 2.1% 1.9% 1.8% 1.6% 1.5%

0.0%

4.0%

8.0%

SingT

elC&P

Siem

ens

Cold S

tora

ge

TT Inte

rnatio

nal

Hewle

tt Pac

kard

Courts M

egast

ore

Infin

eon T

echnol

ogies

Freig

ht Lin

ks E

xpre

ss Dis

tripar

k Pte

Ltd

Honeyw

ell Pte

Ltd


Agenda

• Key highlights





• Market outlook

• Going forward

20


Recovering Industrial Property Market

65

70

75

80

85

90

95

100

2000

Q1

2000

Q2

2000

Q3

2000

Q4

2001

Q1

2001

Q2

2001

Q3

2001

Q4

2002

Q1

2002

Q2

2002

Q3

2002

Q4

2003

Q1

2003

Q2

2003

Q3

2003

Q4

2004

Q1

2004

Q2

2004

Q3

2004

Q4

2005

Q1

2005

Q2

2005

Q3

2005

Q4

2006

Q1

2006

Q2

2006

Q3

2006

Q4

2007

Q1

2007

Q2

2007

Q3

Rental index improved by 8.7% in 3Q 2007

and by 36.7% since the trough in 2004

Ind

us

tria

l R

en

tal

Ind

ex


Rents by Sub-sectors

• Continued increase in rental due to strong demand and relocation of back office users from more costly CBD offices Average signing gross rents for all industrial space sectors rose by 20% - 40%(as per Colliers) in 3QFY2006/07 corresponding to the respective quarter

Source : Colliers for Hi-tech Industrial, Light Industrial and Logistics & Distribution Centres rents

JTC for Science and Business Parks rents

$3.08

$2.76

$1.60

$1.55

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

Re

nta

l R

ate

(S

$p

sf

pm

)

Science & Business Park High-Tech Industrial Logistics and Distribution Centres Light Industrial

21


Outlook for Industrial Property Market

• Growth moderated in the 4th quarter of 2007.

• Growth in the manufacturing sector decelerated due to cyclical decrease in output in the biomedical manufacturing sector

• Economic growth of 4.5-6.5% expected for Singapore in 2008

• General outlook cautiously positive as economy continues to grow moderately and the manufacturing sector remains healthy


-5

15

35

55

75

95

115

135

2003 2004 2005 2006 2007 2008

Are

a (

'000sqm

)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

occupancy

Net New Supply Net New Demand Occupancy Rate

Outlook for Business Parks Property Market

• Positive outlook for Science & Business Parks sector

• Limited new supply in the next 2 years.

• 74% of science and business park sector is on short term lease; about 30.1% of sector up for renewal in the next 3 years

Source: URA as at Sep 2007

22


Outlook for Hi-Tech Industrial and Light Industrial Property Market

• Expected continued strong demand in Hi-Tech Industrial sector as no new supply is known.

• Moderate outlook for light industrial sector.

-200

-100

0

100

200

300

400

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007F 2008F

Are

a (

'00

0 s

qm

)

40%

50%

60%

70%

80%

90%

100%

occu

pa

ncy


Source: URA as at Sept 2007


0

100

200

300

400

500

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008F

Are

a (

'00

0sq

m)

60%

65%

70%

75%

80%

85%

90%

95%

Occ

up

an

cy


Outlook for Logistic Property Market

• Outlook for logistics sector subdued• Expected continued supply of warehouse space (about 702,000 sqm)

is under construction till end of 2009 and 127,000 sqm is in the planning stage which may dampen rental rate

Source: URA as at Sept 2007

23


Agenda

• Key highlights





• Market outlook

• Going forward


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 and potential for positive rental reversions

� No single property accounts for more than 6.9% of revenue

� High predictability and sustainability in income

Market leader• Ascendas has a track record of more than 20 years• Committed sponsor and alignment of interest with A-REIT unitholders• Market leader in business space in Singapore

• 38% share of Hi-tech Industrial space • 25% share of Science and Business Parks space • 11% share of Logistics & Distribution Centres space - 27% in the Eastern region

and 14% in Western region of Singapore

24


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• Dedicated sales/marketing, leasing and property management team of over 80 people• Possess in-depth understanding of this property sector

Customer focus• Over 750 tenants from international and local companies• Track record of customers growing with us

Size advantages• Market capitalization in excess of $3.2bn (based on 31 Dec 07 closing price)• 13% of S-REIT sector• 7.2% of Asian REIT sector ex Japan• Accounts for about 13% of total trading volume for S-REITs for 3Q FY07/08• Ranked 6th in the BT Transparency Index amongst all companies listed on SGX• Winner of SIAS Corporate Transparency Award 2007• Included in major indices (eg. MSCI, FTSE ST Mid Cap Index)


A-REIT's strategies

Optimise

capital structure

Optimise

capital structureValue-Adding

Investments

Value-Adding

Investments

Proactive

asset

management

Proactive

asset

management

StabilityStability GrowthGrowth

Predictable incomePredictable income Capital stabilityCapital stabilityTotal

returns

Outcome

StrategiesStrategies

Proactive

and

dedicated

manager

with track

record

25


Important Notice

This presentation has been prepared by Ascendas-MGM Funds Management 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 Report 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. January 2006

Thank you

3q fy2007/08 financial results presentation 18 january...

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