2012 final ver1 - champion reit final ver1.2.pdfpresentation is being communicated for information...

1

2012 Final ResultsInvestor Presentation

version 1.2

2

This presentation may contain information which is proprietary, confidential and/or legally privileged and has been prepared by Eagle AssetManagement (CP) Limited, in its capacity as the manager (the “REIT Manager”) of Champion Real Estate Investment Trust (the “Trust”). Thispresentation is being communicated for information purposes only and its intended recipients are professional investors in Hong Kong (asdefined by Part 1 of Schedule 1 to the Securities and Futures Ordinance(Cap.571)) and professional investors outside of Hong Kong to whomit is lawful to communicate the presentation. Any other persons should not rely or act upon this presentation or any of its contents.

The information contained in this document, including any obtained from external data sources, has not been verified. The information andopinions in this presentation are subject to change without notice and the REIT Manager is under no obligation to update or keep current theinformation contained in this presentation. No representation or warranty, express or implied is made as to, and no reliance should be placedon, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. It is not the intention to provide, andyou may not rely on this document as providing, a complete or comprehensive analysis of the Trust’s financial or operational position.Furthermore, this presentation should not be construed as legal, tax, investment, or other advice. None of the REIT Manager, the Trust, norany of their respective affiliates, advisors or representatives shall be held liable for any damages, losses or expenses of any kind, whetherdirect, indirect, special, consequential or incidental, arising out of or in connection with the presentation. In this regard, all warranties orrepresentations of any kind, whether expressed or implied by law, equity or statutes, are excluded to the extent permissible under the

Important Notice

applicable law. All liabilities whatsoever arising from or incidental to the document are hereby expressly disclaimed.

Certain information and statements made in this presentation contain forward-looking statements. All forward-looking statements are based oncurrent expectation of future events and are subject to a number of factors that could cause actual results to differ materially from thosedescribed in the forward-looking statements. Caution should be taken with respect to such statements and you should not place unduereliance on any such forward-looking statements.

This document does not constitute a prospectus, notice, circular, brochure or advertisement offering to sell or inviting offers to acquire,purchase or subscription for any units (“Units”) or other securities of the Trust. The value of Units and the income from them, if any, may fall aswell as rise from time to time. Units are not obligations of, deposits in, or guaranteed by the REIT Manager, the Trust, nor any of theirrespective affiliates, advisors or representatives. An investment in Units or other securities of the Trust is subject to investment risks, includingthe possible loss of the principal amount invested. It is intended that holders of Units may only deal in their Units through trading on the StockExchange of Hong Kong and investors have no right to request the REIT Manager to redeem their Units. Listing status does not guarantee aliquid market for the Units.

All copyright, patent, intellectual and other property rights in information contained herein is owned by the REIT Manager or other third parties.No rights of any kind are licensed or assigned or shall otherwise pass to persons accessing such information. Without the expressed writtenpermission of the REIT Manager under no circumstances should information contained herein or any part of it be quoted, reproduced,redistributed or transmitted in any form, by any means, electronic or otherwise.

3

$3.70

$3.90

$4.10

$4.30

$4.50

Champion REIT 2012 Performance

Total Return Unit Price

final 2011

Distribution

induced CB

conversion

interim 2012

distribution

MTN platform

launch

US$400m MTN

drawdownUnit Price for 2012 was up 27.1% (Hang Seng Index +22.9%)

Including distributions, 2012 Total Return was 34.6%

Unit Price Performance1

2012 in Retrospective2012 in Retrospective

$2.70

$2.90

$3.10

$3.30

$3.50

$3.70

Jan

-12

Fe

b-1

2

Ma

r-12

Ap

r-12

Ma

y-1

2

Jun

-12

Jul-1

2

Au

g-1

2

Se

p-1

2

Oct-1

2

No

v-1

2

De

c-12

Jan

-13

Fe

b-1

3

4

304$1,000

$1,200

$1,400

Gross Revenue (by Property) LP Retail LP Office Citibank Plaza

Gross RevenueGross Revenue

Gross Revenue increased 6.1% to $2,059 mil

Revenue for 2012 is the highest on record, surpassing 2009

At all 3 properties, Revenue was higher in 2H over 1H

Entire Portfolio1

Langham Place Office3

Citibank Plaza2

951990 1011

1048

+ 4.5%($52m) to $1,206 mil

Improvement mainly due to

1.4% increase in Average

Occupancy

+ 3.8%($10m) to $264 mil

Increase due to Improving Spot

59% of Total Revenue


561

645 676

638 594

536 570 584 597 609

20134

135134

135133

126 128 129 135

33

221220 231

230249

254278 285

304

$0

$200

$400

$600

$800

$1,000

1H 08 2H 08 1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12 2H 12

in H

K$

(m

illi

on

s)

951990

Langham Place Mall4

Increase due to Improving Spot

Rent but limited by expiring

space

+ 10.8%($57m) to $589 mil

Increase driven by turnover

rent from strong Tenant Sales


5

$1,200

$1,400

Gross Revenue (with expenses)

Operating Expenses Net Property Income

Net Property IncomeNet Property Income

Net Property Income increased 6.6% to $1,666 mil

Expense Ratio decreased from 19.5% to 19.1%

Operating Expenses +4% to $393 mil

Leasing Commissions –$24m Building Mgt Fee +$15m

Government Rent & Rates +$9m Promotions +$8m

Entire Portfolio1

Langham Place Office3

Citibank Plaza2

NPI +5.8% to $1,001 mil

Expenses –1.5% to $205 mil

Lower Leasing commission

NPI +5.2% to $216 mil

Expenses –2.2% to $48 mil

Lower Leasing commission

60% of NPI

13% of NPI

516

818877

833780

729765

797830 836

97

182 155 171179

188186

192 181213

$0

$200

$400

$600

$800

$1,000

1H 08 2H 08 1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12 2H 12

in H

K$

(m

illi

on

s) Langham Place Mall4

NPI +9.2% to $450 mil

Expenses +16.2% to $139 mil

40% of space leased/renewed

compared to 17% in 2011.

Leasing commission increased

27% of NPI

6Distribution to UnitholdersDistribution to Unitholders

+7.1% to $1,254 mil

NPI increased $104m

Cash Finance Costs down $57m

Current Tax increased $62m

Distributable Income1 Distribution Amount2

+6.8% to $1,186 mil

Payout Ratio of 94.6%

$68 m retained

$2,000Distribution Amount

Distributable Income Retention Distribution Amount

approx Net Profit based on cashflow

Distribution Per Unit3

-6.4% to HK$0.2092

There was 13.7% dilution from

the conversion of CBs into units

Yield is 5.1% (@ $4.10)

$0.40

Distribution per Unit

the actual amount paid out

1,4

08

1,3

12 1,0

84

1,1

70

1,2

54

0-70 -57

-66 -68

1,4

08

1,2

42

1,0

67

1,1

11

1,1

86

-$400

$0

$400

$800

$1,200

$1,600

2008 2009 2010 2011 2012

in H

K$

(m

illi

on

s)

Distributable Income Retention Distribution Amount

0.2170.277

0.228 0.237 0.221

0.101

-0.015 -0.012 -0.013 -0.012

-$0.10

$0.00

$0.10

$0.20

$0.30

2008 2009 2010 2011 2012

Basic Financial Retained

0.216

0.261

0.2240.209

7

Langham Office

$7,184m

Langham Retail

$14,580m

Property Property Valuation and NAVValuation and NAV

25%12%

$23,969 per sq. ft. GFA

Valuation increased by 13.0% in 2H

Implied Rent is $147.75 per sq. ft.

Cap rate reduced from 4.1% to 4.0%




Cap rate reduced from 4.1% to 4.0%NAV -$0.02 to $7.80 per unit

Affected by CB conversions as well

Current discount to NAV is 47% (@ $4.10)

Net Asset Value per Unit 2

Property Value +$2.5bn in 2H to $58.3bn

Increase mainly from Langham Place

Assessed Valuation 1 Langham Place Mall

Langham Place Office

$10.00

Net Asset Value per Unit

Citibank Plaza $36,533m




Cap rate reduced from 3.5% to 3.3%

Total Value$58.3bn

as of Dec 31

65%

Citibank Plaza

$6

.09

$7

.26

$5

.47

$5

.86

$6

.72

$7

.82

$7

.80

$0.00

$2.00

$4.00

$6.00

$8.00

2006 2007 2008 2009 2010 2011 2012

as

of

yea

r e

nd

Net Asset Value per Unit

8

Steps were taken to prepare for 2013 refinancing

and the bottoming out of interest rates

Total Debt was reduced from $14.06bn to

$12.22bn

Induced conversion of $2.34bn of CBs

Draw down of new $500m Bank Loan in December

for working capital purposes.

Key Events of 20121

Debt AnalysisDebt Analysis

14,899 14,879 14,87914,059

12,219

0x

4x

8x

12x

16x

0

5,000

10,000

15,000

20,000

HK

$ (

mil

)

Debt LevelsTotal Borrowings (L) Interest Coverage (R)

Weighted Average Interest Cost = 1.24%

11.6x interest cover using 2012 Net Property

Income of $1,666 mil

Ample cushion as interests rates rise over time

Interest Cover3 Asset Cover2

$58.3bn of properties versus $12.2bn of Debt

Gearing reduced from 25.0% to 20.4%

$4.5bn of property assets is currently unpledged

0x0

2008 2009 2010 2011 2012

9

541

$6,000

$8,000

$10,000

HK

$ m

illi

on

sDebt Maturity

Bank Loans

Convertible Bonds

Other

Outstanding Debt Dec 2012Outstanding Debt Dec 2012

Secured on whole of Langham Place

1% coupon with Redemption at 124%

Strike price = $3.44*, Exercise Threshold = $4.27

Due in June 2013

HK$2.27bn Convertible Bond Secured on HK$30.7bn of Citibank Plaza

LTV of 22.8%

Interest Rate is Hibor +93 bp

Due in May 2014

HK$7.00bn Syndicated Bank Loan

CB

Redemption

Premium

2454

7000

500

2265

541

$0

$2,000

$4,000

2013 2014 2015 2016 2017 2018 2019 2020

HK

$ m

illi

on

s

Secured on whole of Langham Place

LTV of 21.7%


Due in June 2013

HK$2.45bn Syndicated Bank Loan HK$500m Bank Loan

Secured on HK$1.34bn of Citibank Plaza


Due in Sep 2015

* To be reduced to

3.34 on 21 May

10

360

400

Credit Suisse Asian BBB Bucket Index

US$400 mil 10 year unsecured notes with a coupon

of 3.75%

Issued at T+195bp

Dec 2012 Launch1

Champion Medium Term NotesChampion Medium Term Notes

Launch of US$1bn MTN platform in Dec 2012

Diversify Sources of Debt Funding

Lengthen and Spread out Debt Maturities

Lock in long term rates, stabilize financing costs

Jan 2013 Drawdown2

200

240

280

320

Jan

-12

Fe

b-1

2

Ma

r-12

Ap

r-12

Ma

y-1

2

Jun

-12

Jul-1

2

Au

g-1

2

Se

p-1

2

Oct-1

2

No

v-1

2

De

c-12

Jan

-13

Fe

b-1

3S

prea

d ab

ove

Sw

ap

US$400m MTN

drawdown

11

$6,000

$8,000

$10,000

HK

$ m

illi

on

s

Debt MaturityBank Loans

Convertible Bonds

MTN

Hypothetical Debt post 2013 RefinancingHypothetical Debt post 2013 Refinancing



Due in May 2014

HK$7.00bn Syndicated Bank Loan

Unsecured

3.75% coupon

Due in January 2023

$2.8bn used to redeem 2013 CBs

US$400m Medium Term Notes

7000

500

22003100

$0

$2,000

$4,000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

HK

$ m

illi

on

s

MTN

HK$500m Bank Loan



Due in Sep 2015

Secured on Langham Place Office Tower?

Interest Rate is Hibor + ? bp

Due in June 2016 ?

HK$2.20bn Syndicated Bank Loan ?

12

CITIBANK CITIBANK PLAZAPLAZA

13

1.2

1.4

1.6

NE

T F

LOO

R A

RE

A (

mil

lio

n s

q f

t)

HK CENTRAL GRADE A OFFICE SUPPLY (1986 - 2016)

Central Grade ‘A’ Office Supply Central Grade ‘A’ Office Supply

Virtually 0 Grade A supply in Central

Historical average supply about 500,000 sq. ft. p.a.

CGO West Wing redevelopment cancelled

Virtually No Supply1

40,000 sq. ft. from the Forum in 2014 - already

pre-leased to Standard Chartered

95,000 sq. ft. from Shanghai Commercial Bank

redevelopment in 2015

Grade-B: UCB Bldg(2013), WOL Bldg(2014)

Buildings in the Pipe Line 2

Historical Annual Supply

500,000 sq. ft.

0.0

0.2

0.4

0.6

0.8

1.0

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

NE

T F

LOO

R A

RE

A (

mil

lio

n s

q f

t)

ICC in W Kowloon

Shanghai C

omm

Bank B

ldg

The F

orum

CC

B B

ldg

50 CR

C, LH

T T

ower

14

Spot rents around $85 per sq. ft. in 2H 12

Citibank Plaza is priced competitively

Spot Rents1

Citibank Plaza Citibank Plaza

Passing Rents2

US and European Banks are continuing to

reduce headcount

Demand Outlook3

Passing rents have been maintained at around

$85 for 3 years now

$100

$120

Effe

ctiv

e R

en

t p

er

sq.

ft.

(Le

tta

ble

)

Passing Office Rents at Citibank Plaza

reduce headcount

Chinese economy showing signs of

reacceleration

HSI and A50 rebounded after 1H 12

Incremental demand from

upgrading and new PRC banks and

companies

asset management start-ups

New international rep offices

87

.46

90

.49

90

.07

84

.81

84

.67

84

.33

85

.15

86

.10

85

.12

$0

$20

$40

$60

$80

De

c-08

Jun

-09

De

c-09

Jun

-10

De

c-10

Jun

-11

De

c-11

Jun

-12

De

c-12

Effe

ctiv

e R

en

t p

er

sq.

ft.

(Le

tta

ble

)

15

Retail4% Vacant

11%


Tenant Mix 1

Occupancy relatively flat at 89.1% in a highly competitive

environment

Occupancy2

94

.2%

96

.2%

96

.8%

96

.9%

98

.5%

97

.9%

94

.9%

87

.2%

83

.5%

81

.5%

88

.6%

90

.4%

88

.7%

89

.1%

80%

100%

120%

Occupancy at Citibank Plaza

Banking52%

Institutional Funds

8%Hedge Funds4%

Securities3%

Legal4%

Others15% Tenant

ProfileDec 2012

87

.2%

83

.5%

81

.5%

88

.6%

90

.4%

88

.7%

89

.1%

0%

20%

40%

60%

Jun

06

De

c 06

Jun

07

De

c 07

Jun

08

De

c 08

Jun

09

De

c 09

Jun

10

De

c 10

Jun

11

De

c 11

Jun

12

De

c 12

16

40%

50%

Citibank Plaza Expiries (Dec 2012)

Vacant Leases Expiring Rent Review


Expiries in 2013 are relatively low at 12.3% of

total floor area

8.9% office - 2.5% committed

3.5% retail - 3.2% committed

Remaining expiries outstanding = 6.6%

2013 Expiry Exposure Manageable1

10.9% 12.3%

39.5%

9.2%

20.6%

20.1%

7.0%

0%

10%

20%

30%

40%

Vacant 2013 2014 2015 2016

Pe

rce

nta

ge o

f F

loo

r A

rea

Expiring Office Rent: $84 $96 $100 $71

BoAML (15%)

ICBC (12%)

17

LANGHAM LANGHAM PLACEPLACELANGHAM LANGHAM PLACEPLACE

18

6.0

7.0

8.0

NE

T F

LOO

R A

RE

A (

mill

ion

sq

ft)

HKSAR GRADE A OFFICE SUPPLY (1986 - 2016)

Central + ICC Rest of HKSAR

HKSARHKSAR--wide Grade ‘A’ Office Supply wide Grade ‘A’ Office Supply

2013 Supply1

3 projects in Kowloon East

(600,000 sq. ft)

KCC phase 2 in Kwai Chung

(330,000 sq. ft)

2014 Supply2

Historical Annual Supply

2,300,000 sq. ft.


(590,000 sq. ft)

1 project in Kowloon West

(177,000 sq. ft)

2015 Supply3


(1,900,000 sq. ft)

0.0

1.0

2.0

3.0

4.0

5.0

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

NE

T F

LOO

R A

RE

A (

mill

ion

sq

ft)

2,300,000 sq. ft.

19

Spot rents at $32-40+ per sq. ft.

Resilience of the non-financial sectors underpinning

demand

With passing rent at $28.36 per sq. ft. there remains a

sizable positive rental reversion gap

Rents1

LanghamLangham Place Office TowerPlace Office Tower

Over 60% of the building will be marked to market

in 2013

Growth in passing rents will accelerate

25% of floor area for 2013 leases expiring has

already renewed with 19% higher rents

2013 Impact: +$9 mil

2014 Impact: +$12mil

Strong Reversion Potential2

80%Langham Place Office Expiries (Dec 2012)

$35

Passing Office Rents at Langham Place

Expiring Rent: $31 $28 $37 $29

0.8%

50.7%

28.9%

8.4% 10.9%

9.9%

0%

20%

40%

60%

Vacant 2013 2014 2015 2016

Pe

rce

nta

ge o

f Fl

oo

r A

rea


26

.79

26

.77

26

.82

26

.98

26

.40

26

.93

27

.43

28

.09

28

.36

$0

$5

$10

$15

$20

$25

$30

De

c-08

Jun

-09

De

c-09

Jun

-10

De

c-10

Jun

-11

De

c-11

Jun

-12

De

c-12

Effe

ctiv

e R

en

t p

er

sq.

ft.

(GFA

)

Passing Office Rents at Langham Place

20

Location sensitive tenants increased from 54%

to 56%

Tenant Mix 1

LanghamLangham Place Office TowerPlace Office Tower

Merchandizing& Trading

43%

Others4%

Vacant1%

99

.6%

98

.3%

97

.9%

98

.5%

98

.3%

99

.4%

99

.6%

96

.8%

98

.0%

99

.2%

20%

40%

60%

80%

100%

120%

Occupancy at Langham Office

43%

56%

High occupancy levels maintained in good

times or bad

Occupancy2

Tenant Profile

Dec 2012

Professional & Sales Services

16%

Insurance12%

Lifestyle24%

0% Jun

08

De

c 08

Jun

09

De

c 09

Jun

10

De

c 10

Jun

11

De

c 11

Jun

12

De

c 12

21

$955

$1,000

$1,200

Mo

nth

ly A

vera

ge

(p

er

sq. f

t.)

Tenant Sales

104.7 105

110

An

nu

al M

all

Foo

tfa

ll (m

il)

Footfall

LanghamLangham Place MallPlace Mall

Tenant Sales growth of 12% outpaced 2012 HK Retail

Sales - less affected by slowdown in the HK luxury

sector

Sales growth in 1H was 15% yoy, slowing to 8% yoy

in 2H

Spending2 Traffic1

Support from Domestic Shoppers and tourists

remained strong

Our target PRC shoppers are middle-class short-haul

tourists from Southern China

$590 $601

$699

$859

$955

$0

$200

$400

$600

$800

2008 2009 2010 2011 2012

Mo

nth

ly A

vera

ge

(p

er

sq. f

t.)

91.4 93.1

96.0

101.3

104.7

80

85

90

95

100

2008 2009 2010 2011 2012

An

nu

al M

all

Foo

tfa

ll (m

il)

sales figures do not include cinema

Over the past 4 years, footfall increased 14.5% Over the past 4 years, Tenant Sales increased 61.8%

22LanghamLangham Place MallPlace Mall

Passing Rent increased 14% to $114.89 per sq. ft.

The large amount of space rolling over in 2H12

translated to over $12 per. sq. ft. increase in base

rent.

Passing Rent1

Turnover Rent increased 48% to $24.82 per sq. ft.

Composite Market Rent can be approximated as

$114.89 + $24.82 = $139.70 per sq. ft.

Turnover Rent2

2011: $16.71 2012: $24.82

$2

9.4

7

$56 mil

$64 mil

$28

$32

Turnover Rent

10

0.7

7

10

2.6

5

11

4.8

9$100

$120

Passing Retail Rents at Langham Place(exclusive of turnover rent)

$1

1.8

2

$2

2.1

9

$2

0.6

4

$2

9.4

7

$0 mil

$8 mil

$16 mil

$24 mil

$32 mil

$40 mil

$48 mil

$0

$4

$8

$12

$16

$20

$24

1H 11 2H 11 1H 12 2H 12

Se

mi A

nn

ua

l To

tal

Mo

nth

ly A

ve

rage

(pe

r sq

. ft

)87

.93

87

.28

88

.61

89

.13

97

.48

98

.48

10

0.7

7

10

2.6

5

11

4.8

9

$0

$20

$40

$60

$80

$100

De

c-08

Jun

-09

De

c-09

Jun

-10

De

c-10

Jun

-11

De

c-11

Jun

-12

De

c-12

Effe

ctiv

e R

en

t p

er

sq.

ft.

(Le

tta

ble

)

23

Others10%

Vacant0%


More and more international fashion brands like

Aape, American Eagle Outfitters.

Coming in 2013: Agnes b Voyage, Vivienne

Westwood, Cath Kidston, CK Jeans and Coach.

Tenant Mix 1

96

.6%

97

.7%

99

.7%

10

0.0

%

10

0.0

%

99

.2%

99

.9%

99

.9%

99

.9%

99

.9%

20%

40%

60%

80%

100%

120%

Occupancy at Langham Place Mall

Fashion & Accessories

48%

Health & Beauty6%

Entertainment17%

Food & Beverages

19%

With heavy foot traffic and proven track

record, retailers are competing for spaces.

Occupancy2

Tenant Profile

Dec 2012

0% Jun

08

De

c 08

Jun

09

De

c 09

Jun

10

De

c 10

Jun

11

De

c 11

Jun

12

De

c 12

24

50%Langham Place Mall Expiries (Dec 2012)



2013 incremental base rental income from leases

signed in 2012 is $35 mil

21% of floor area for leases expiring in 2013 has

already locked in higher rents

2013 Impact: +$30 mil on base rent

2014 Impact: +$65mil on base rent

Expiry Profile1

0.0%

33.2% 35.2%

21.6%

5.2%

0.7%

4.7%

0%

10%

20%

30%

40%

Vacant 2013 2014 2015 2016

Pe

rce

nta

ge

of

Flo

or

Are

a


25ConclusionConclusion

Near term demand in Central will be stable in light of reaccelerating Chinese economy

Short term risk will be limited by low expiry levels in 2013 and incremental demand from smaller

tenants.

Long term performance will be underpinned by limited new supply.

Citibank Plaza1

Retail Rental Income will surge due to strong positive rental reversion. Much of 2013’s and 2014’s

base rental gains are already locked in.

Langham Place2

Overall Rental Income is expected to continue improving in 2013 due to the strong performance of

Langham Place.

Interest Expenses are set to rise even with reduced debt amount; finance costs which fell in 2012 will

be trending up in 2013.

REIT3

base rental gains are already locked in.

Office Rents are firm, good rental reversion is expected from major leases rolled over.

2012 final ver1 - champion reit final ver1.2.pdfpresentation is being communicated for information...

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