corporate presentation th quarter 2015 financial results mqreit 4q 2015... · through trading on...

Corporate Presentation

4th Quarter 2015

Financial Results

22 January 2016

Important Notice

This presentation is for information only and does not constitute an invitation or offer toacquire, purchase or subscribe for units in MRCB-Quill REIT (formerly know as Quill Capita Trust)(“MQReit”). The past performance of MQReit is not necessarily indicative of the futureperformance of MQReit.

This presentation may contain forward-looking statements that involve risks and uncertainties.Actual future performance, outcomes and results may differ materially from those expressedin forward-looking statements as a result of a number of risks, uncertainties and assumptions.Representative examples of these factors include (without limitations) general industry andeconomic conditions, interest rate trends, cost of capital and capital availability, competitionfrom similar developments, shifts in expected levels of property rental income andoccupancy, changes in operating expenses including employee wages, benefits andtraining, property expenses and governmental and public policy changes. You arecautioned not to place undue reliance on these forward-looking statements which arebased on the manager’s current view of future events.

The value of units in MQReit (Units”) and the income derived from them may fall as well asrise. Units are not obligations of, deposits in, or guaranteed by, the manager or any of itsaffiliates. An investment in Units is subject to investment risks, including the possible loss of theprincipal amount invested. Investors have no right to request the manager to redeem theirUnits while the Units are listed. It is intended that unitholders may only deal in their Unitsthrough trading on the Main Board of Bursa Malaysia Securities Berhad. Listing of the Units onthe Bursa Securities does not guarantee a liquid market for the Units.

The information in this Announcement must not be published outside Malaysia.

MRCB-Quill REIT Presentation *January 2016*

Contents


• Financial Results

• Portfolio Update

Kuala Lumpur & Cyberjaya

Office Market Outlook

Penang Retail Market

Outlook

• Conclusion

Slide No.

4

12

23


Quill Building 5 - IBM

Financial Results

4Q 2015 EPU increased by 13.6%

(RM’000) (Audited)

4Q 2014

18,183

13,414

8,506

2.18 sen

(Unaudited)

4Q 2015

32,578

26,793

16,375 Net Income 1

EPU 2

Net Property Income

Gross Revenue

1 Net Income refers to realised income after taxation (exclude gain from re-measurement of derivatives and revaluation surplus)

2 EPU refers to Realised Earnings Per Unit

2.48 sen

4

Variance

+79.2%

+99.7%

+92.5%

+13.6%


FY 2015 DPU Up 1.1% Year-on-Year

(RM’000) (Unaudited)

FY 2015

115,274

90,272

54,021 Total Income for

Distribution1

EPU 2

Net Property Income

Gross Revenue

1 Total Income for Distributions refers to realised income after taxation (exclude gain from re-measurement of derivatives and revaluation surplus)

2 EPU refers to Realised Earnings Per Unit

3 DPU refers to Distribution Per Unit. DPU of 8.38 sen is 95.7% of realised EPU of 8.76 sen for FY 2014 and DPU of 8.47 sen is 94.3% of realised EPU of 9.06 sen for FY 2015

9.06 sen

Variance

+63.9%

+69.3%

+58.1%

+3.5%


DPU 3 8.47 sen +1.1%

(Unaudited)

FY 2014

70,249

53,325

34,163

8.76 sen

8.38 sen

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

as at as at as at as at

31 Mar 15

(RM’000)

30 Jun15

(RM’000)

30 Sept 15

(RM’000)

31 Dec 2015

(RM’000)

Non Current Assets 1,588,244 1,590,200 1,569,724 1,573,632

Current Assets 34,151 41,999 37,956 51,675

Total Assets 1,622,395 1,632,199 1,607,680 1,625,307

Current Liabilities 21,284 19,445 20,133 16,158

Non Current Liabilities 729,133 733,212 703,150 705,294

Net Assets 871,978 879,541 884,397 903,855

No of Units 661,381 661,381 661,381 661,381

NAV per Unit (RM) 1.3184 1.3299 1.3372 1.3666

Total Assets – RM1.62 billion

NAV per unit – RM1.3666


Quill Capita Trust Presentation*January 2016*

Market Valuation as at 31 December 2015

(a) The Net Book Value of investment properties as at 31 December 2015 (prior to the Proposed Revaluation) comprise of the brought forward

net book value as at 31 December 2014 together with asset enhancement related costs incurred during the year.

(b) The Properties were valued by DTZ Nawawi Tie Leung Property Consultants Sdn Bhd, an independent firm of professional valuer,

registered with the Board of Valuers, Appraisers & Estate Agents Malaysia.

(c) The Properties were valued by CH Williams Talhar & Wong Sdn Bhd, an independent firm of professional valuer, registered with the Board of

Valuers, Appraisers & Estate Agents Malaysia.

Name of Properties Net Book Value as

at 31 Dec 2015(a)

(prior to Proposed

Revaluation)

(’000)

Market

Valuation at as

31 Dec 2015

(’000)

Surplus

/(Deficit)

incorporated

into fund

(’000)

%

increase

/

(decrease)

Quill Building 1- DHL1 & Quill Building 4- DHL 2(b) RM125,700 RM126,000 RM300 0.24

Quill Building 2- HSBC(b) RM120,633 RM120,700 RM67 0.06

Quill Building 3- BMW(b) RM 74,400 RM 75,500 RM1,100 1.48

Wisma Technip(c) RM169,704 RM172,000 RM2,296 1.57

Part of Plaza Mont’ Kiara(c) RM112,465 RM114,000 RM1,535 1.36

Quill Building 5 – IBM(b) RM 45,200 RM 45,200 - -

Quill Building 8 – DHL (XPJ) (b) RM 26,400 RM 26,400 - -

Tesco Building, Penang(b) RM139,700 RM140,000 RM300 0.21

Platinum Sentral(c) RM748,921 RM750,000 RM1,079 0.14

Total RM1,563,123 RM1,569,800 RM6,677 0.43

Unaudited Unaudited Unaudited Unaudited

as at as at as at as at

31 Mar 15 30 Jun 15 30 Sept 15 31 Dec 15

Total Debts (RM’000) 720,444 718,462 688,170 689,722

Gearing Ratio ¹ 0.44x 0.44x 0.43x 0.42x

Interest Coverage 2 3.51x 3.03x 3.03x 3.57x

Average Term to Maturity (year) 3 3.79 3.57 3.35 3.09

Average Cost of Debt (p.a) 4 4.3% 4.4% 4.4% 4.4%

Stable Financial Indicators

Notes:1.Gearing ratio refers to Gross Debt over Total Assets.2.Interest coverage refers to year to date (YTD) EBITDA / YTD Interest Expense3.Average Term to Maturity means weighted average time lapse to maturity4.Average Cost of Debt is calculated based on YTD Interest Expense / Average Weighted Borrowing


Capital Management


CPs RM118m MTN

RM117mRM118mCPs

Prudent Capital Management

Average cost of debt

4.4%

100%* of borrowings on fixed rate

Total average borrowings :RM696 mil

Gearing level

42%

Below SC limit of 50%

* MQReit had on 21 April 2015, entered into an interest rate swap (“IRS”) for a nominal sum of RM279 million to swap its floating

interest rate facility to fixed interest rate. MQReit’s borrowings are all on fixed rate, effective from 21 April 2015.

SC Limit

Fixed

rate

100%

42.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

31-Dec

Gearing Ratio

0

50

100

150

200

250

300

350

400

450

2015 2016 2017 2018 2019 2020

Next Refinancing Due in September 2016

Debt Maturity Profile


CPs RM118m

TLRM72.2m

RM118mCPs

RM(mil)

17%

Average debt to maturity : 3.09 years

27%

Note;

1. MTN - Medium Term Notes

2. CP – Commercial Papers

3. TL – Term Loan

MTN RM60m

56%

CP RM279mil

TLRM110mil

CP RM130mil

MTNRM60 mil

TLRM117m


Quill Building 3 - BMW

Portfolio Update

Portfolio of Quality Assets

a) The Properties were valued by DTZ Nawawi Tie Leung Property Consultants Sdn Bhd, an independent firm of professional

valuer registered with the Board of Valuers, Appraisers & Estate Agents Malaysia.

b) The Properties were valued by CH Williams Talhar & Wong Sdn Bhd, an independent firm of professional valuer, registered

with the Board of Valuers, Appraisers & Estate Agents Malaysia.

Quill Building 4

- DHL 2(a)

Quill Building 2

- HSBC (a)

Quill Building 3

- BMW(a)

Quill Building 5

- IBM(a)

Part of Plaza

Mon’t Kiara(b)

Quill Building 1

- DHL 1(a)

TESCO Building

Penang(a)

10 Properties

valued at

RM1.57 bil


Platinum Sentral

- KL Sentral (b)

Wisma Technip (b)

new

Quill Building 8

- DHL (XPJ) (a)Total NLA of

1.70 mil sq ft*Excluding car park

area

Portfolio

Occupancy

Rate

97.5%

Geographical Diversification

By Valuation

¹

Notes:(1) Other Klang Valley Area refers to Klang Valley generally excluding KL city centre and Mont’ Kiara. Klang Valley refers to

Kuala Lumpur and Selangor State excluding Kuala Selangor, Sepang and Sabak Bernam(2) The Properties were valued by DTZ Nawawi Tie Leung Property Consultants Sdn Bhd, an independent firm of professional

valuer registered with the Board of Valuers, Appraisers & Estate Agents Malaysia.(3) The Properties were valued by CH Williams Talhar & Wong Sdn Bhd, an independent firm of professional valuer, registered

with the Board of Valuers, Appraisers & Estate Agents Malaysia.

Klang

Valley

68%

Cyberjaya 23%

Penang 9%


Cyberjaya

23%

Kuala Lumpur

City Centre

11%

KL Sentral

48%

Penang

9%

Mont' Kiara

7%

Other Klang

Valley Area

2%

Diversified Segmental Contributions

Notes: (1) Office comprises Quill Buildings (excluding Quill Building 8-DHL (XPJ) at Glenmarie, Shah Alam), Platinum Sentral and

Wisma Technip

(2) Retail refers to retail portion of Plaza Mont’ Kiara & TESCO Building Penang

(3) Car Park refers to car parking bays in Plaza Mont’ Kiara

(4) Other commercial building refers to Quill- Building 8- DHL (XPJ) at Glenmarie, Shah Alam

(5) The Properties were valued by DTZ Nawawi Tie Leung Property Consultants Sdn Bhd and CH Williams Talhar & Wong SdnBhd, independent firm of professional valuers registered with the Board of Valuers, Appraisers & Estate Agents Malaysia.

By Valuation


Office

82%

Retail Assets

13%

Car Park

3%

Other

Commercial

Building

2%

Tenant Mix

By Net Lettable Area


Well Balanced Tenancy Mix

Government Linked

Office 18%

Retail

24%

Education

1%Banking

11%

Automotive

2%

Logistics

15%

Oil & Gas

21%

IT/ Electronics

7%

Lease Expiry Profile- 94% of Total NLA Due in 2015 Renewed

% of net lettable area that are due for renewal

sq ft


Note* New Leases had been subsequently entered into for 70% of these Not Renewed spaces in 4Q 2015

1.6%

23.7%

7%10%

18%

40%

0

100000

200000

300000

400000

500000

600000

700000

2015 2016 2017 2018 2019 - 2032

Lease Up for Renewal by NLA - 31 December 2015

Lease Expiring

Renewed

Not Renewed

Lease Expiry Profile

% of net lettable area that are due for renewal

sq ft


7%

13%

26%

11%

42%

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2016 2017 2018 2019 2020 - 2032

Lease Up for Renewal by NLA - 31 January 2016

Lease Expiring

Renewed

Not Renewed


•Kuala Lumpur & CyberjayaOffice Market Outlook •Penang Retail Market Outlook

Wisma Technip

KL & Cyberjaya Office Market Outlook


Kuala Lumpur office market (extracted from the report prepared by DTZ Nawawi Tie Leung Property

Consultants Sdn Bhd dated Dec 2015)

Average occupancy rate in 2015 thus far remains healthy at 81%,

despite the large supply of office space entering the market. The

average rental rate in the city centre has also remained stable at

RM6.25 per sq. ft.

To stay competitive in the midst of a tenant-favoured market, building

owners are refurbishing older buildings to improve the building’s

attractiveness while offering better services and competitive rental rates.

Capital value has seen a marginal increase in 2015 and is currently at

RM933 per sq. ft.

Overall, the office sector is expected to remain challenging in the near

future. Nevertheless, the Ringgit’s depreciation and the competitive cost

of occupancy in Malaysia will continue to provide a plus point for MNCs

seeking a presence in the region, especially with the commencement of

the ASEAN Economic Community in 2016.

KL & Cyberjaya Office Market Outlook


Growing demand in Cyberjaya(extracted from the report prepared by DTZ Nawawi Tie Leung PropertyConsultants Sdn Bhd dated Dec 2015)

Currently, office stock in Cyberjaya stands at about 8.6 million sq ft.

Typical rental rates in Cyberjaya are still competitive ranging from RM2

to RM5 per sq. ft.

Cyberjaya’s average occupancy rates have also remained stable at

approximately 76%.

Cyberjaya is making a significant step forward from the known ICT hub

of Malaysia to become a global technological hub with . Cyberjaya

City Centre, a mega project sandwiched between Cyberjaya and

Putrajaya, will be the catalyst project under the Cyberjaya Global Tech

Hub Blueprint.

Cyberjaya is expected to continue growing as an office location

especially for IT companies, aligned with becoming a global tech hub.

The development of a MRT station near the upcoming catalyst project,

Cyberjaya City Centre is also expected to increase the attractiveness of

Cyberjaya as an IT tech hub.

Penang Retail Market Outlook


Prospect for retail sector in Penang is expected to be stable(extracted from the report prepared by DTZ Nawawi Tie Leung PropertyConsultants Sdn Bhd dated Dec 2014)

As of 2Q 2015, the National Property Information Centre (NAPIC)

reported that the total retail space supply in Penang stood at 18.0

million sq. ft.

Rental rates of retail malls in Penang have stayed competitive with

prime malls commanding overall rental of approximately between RM6

per sq. ft. – RM8 per sq. ft. per month, while individual prime shop lots

are fetching rental rates of RM15 per sq. ft. to RM20 per sq. ft. per

month.

Penang is experiencing an increased commercial vibrancy and the

mall lifestyle is catching up among the local population supported by

influx of domestic and foreign tourists. In view of the above, more retail

malls are expected to come on board in the coming years, mainly in

the Penang mainland where there has been an increase in property

development activities.


Conclusion

Quill Building 1 – DHL 1

In Summary


Proactive asset management strategies to focus on tenant relations andcontinuous building improvements

Prudent capital management strategies

Continue to explore yield accretive acquisition opportunities

4Q 2015 : FY 2015 DPU of [ ] sen is

FY 2015 DPU of 8.47 sen declared, 1.1% higher than FY DPU of 8.38 sen

Revaluation gains of RM6.7 million from investment properties

Completed renewals due in 2015 with 94% renewals successfully in place

Executed Head of Agreement for the acquisition of Menara Shell on 3December 2015

Year 2016 Prospects – Ongoing Strategies

Thank you

For enquires, please contact:

Ms Yong Su Lin

Ms Joyce Loh

Mr Victor Wong

(General Line: 603-27888188)

(Fax : 603-27888199)

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