Strong Office Reversion Delivering Promising Income Growth

Financial Highlights 1H 2018 1H 2019 Change Y/Y

Total Rental Income (HK$mm) 1,303 1,400 ↑ 7.5%

Net Property Income (HK$mm) 1,177 1,263 ↑ 7.3%

Distributable Income (HK$mm) 812 869 ↑ 7.0%

Distribution per Unit (HK$) 0.1250 0.1335 ↑ 6.8%

Rental Income (by Property) - HK$mm

672 738

167 185

464 477

1H 2018 1H 2019

Three Garden Road Langham Place Office

Langham Place Mall

1

1,303

1,400 + 7.5%

Net Property Income (by Property) - HK$mm

607 666

155 170

415 427

1H 2018 1H 2019

Three Garden Road Langham Place Office

Langham Place Mall

1,177

1,263 + 7.3%

Solid Income Stream with >90% of Total Income being Base Rent

Rental Income (by Rent Type) – HK$mm

1H 2018: HK$1,303mm

91.9%

6.5%

1.7%

Base Rent Turnover Rent Carpark Income

1H 2019: HK$1,400mm

91.0%

7.2%

1.8%

Base Rent Turnover Rent Carpark Income

2

Steady Growth in Asset Value

3

Property Valuation: HK$85.6 bn

Langham Place

Valuation: HK$34.6 bn

- Office: HK$10.9 bn

- Retail: HK$23.7 bn

Value psf:

- Office: HK$15,441

- Retail: HK$39,119

Cap Rate:

- Office: 4.00%

- Retail: 3.75%

- No change in cap rate

60%

40%

11.42

11.82

Dec-18 Jun-19

Net Asset Value per Unit

(HK$)

Gearing Ratio (%)

17.6

17.1

Dec-18 Jun-19

Three Garden Road

Valuation: HK$51.0 bn

Office Value psf: HK$31,249

Cap Rate: 3.60%

No change in cap rate

+ 3.5%

- 0.5pp

Refinancing Completed on an Unsecured Basis

Secured Debt / Total Assets (%)

4

Net Debt / EBITDA (x)

11.1

4.2

Dec-18 Jun-19

6.3

6.0

Dec-18 Jun-19

• Effective interest rate for 1H 2019: 2.90%

• Refinancing completed at a favourable margin on an

unsecured basis

• Partial prepayment of loan due in 2021

Latest Debt Maturity Profile

(HK$mm)

3,685

5,814

200 643

2,998

200

1,225

275

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Bank Loan (Secured) Bank Loan (Unsecured) MTN

Mitigating Interest Rate Risks

5

• Latest fixed-rate debt portion being 58.2% after entering into new interest rate swap arrangements recently (Dec 2018: 54.2%)

• Will continue to monitor the interest rate risks proactively

2019 HIBOR Rates (%)

0.91

2.99

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jan Feb Mar Apr May Jun Jul Aug

1-Month HIBOR 3-Month HIBOR 1-Month HIBOR Average

Source: Bloomberg, data up till 13 August, 2019

2019 YTD 1-month HIBOR Average: 1.77%

Spot Rent Substantially Above Passing Rent

7

Office Lease Expiry as at 30 Jun 2019 Passing Office Rents as at 30 Jun 2019

Effective Rent per sq. ft. (Lettable) (HK$)

98.61

105.35

Dec-18 Jun-19

+ 6.8%

4.2%

4.5%

21.6% 18.9%

14.6%

2.8%

2.7%

13.7%

2.8%

4.1%

10.1%

Vacant 2019 2020 2021 2022 2023

Vacant Leases Expiring Rent Review

Slight Retrace in Occupancy with a Well-diversified Tenant Mix

Office Tenant Profile as at 30 Jun 2019

8

Office Occupancy Rate as at 30 Jun 2019

99.1% 95.8%

Dec-18 Jun-19

Banking 34%

Asset Management

31%

Business Centre / Co-

working Space 6%

Legal 4%

Medical 2%

Consultancy 2%

Corporate 7%

Media 5%

Others 4%

Vacant 4%

Strengthened Positioning as a Lifestyle Hub

10

Office Tenant Profile as at 30 Jun 2019 Office Occupancy Rate as at 30 Jun 2019

100.0% 98.8%

Dec-18 Jun-19

Healthcare & Medical

25%

Beauty 21%

Fitness Centre 10% Business

Centre / Co-working

Space 7%

Corporate Sales & Services

33%

Others 2%

Vacant 1%

Lifestyle-related tenants being

location-sensitive

Spot Rent of HK$50+ with Extended Lease Expiry Profile

Passing Rents (HK$)

Effective Rent per sq. ft. (HK$)

11

Office Lease Expiry as at 30 Jun 2019

42.68

44.73

Dec-18 Jun-19

+ 4.8%

1.2% 5.5%

26.3%

11.1%

16.4%

19.2% 19.7%

0.7%

Vacant 2019 2020 2021 2022 2023 2024 &After

Vacant Leases Expiring Rent Review

Showing Resilience Amid Market Uncertainties

Retail Sales Proven Resilient Breakdown of Base and Turnover Rent Income - HK$mm

13

• Rent to sales remained stable at ~19%

-0.6%

-2.6%

Langham Place Mall HK Retail Average

341 356

94 90

1H 2018 1H 2019

Base Rent Turnover Rent

435 447

20% 22%

+ 2.7%

80% 78%

Mall Remained Fully-occupied with a Comfortable Lease Expiry Profile

14

Lease Expiry Profile as at 30 Jun 2019

1.6%

20.7%

23.4%

27.8% 26.5%

2019 2020 2021 2022 2023 & After

Office Occupancy Rate as at 30 Jun 2019

100.0% 100.0%

Dec-18 Jun-19

Active Tenant Management – Introduced “First in Hong Kong” Stores

Recently Opened New Restaurants Attracting Long Queues

15

Retail Tenant Profile as at 30 Jun 2019

Japanese Tempura Don - Tenkichiya

Taiwan Cuisine - Sheng Mian

Fashion & Accessories

39%

Food & Beverage

22%

Entertainment 15%

Others 14%

Health & Beauty 10%

Active Tenant Management – Existing Tenants Expansion and New Tenants

16

Newly Opened Stores Stores Expanding to Larger Stores

Beauty

Fashion &

Accessories

F&B and

Confectionary

Others

Health & Beauty

Active Tenant Management - Extend Beauty Zone to B1/F

17

Current B1/F

• Will extend beauty / skincare zone and increase

Health and Beauty tenants to 12%

• Some of the current shoes & bags tenants will be

relocated or replaced

Future B1/F

Active Tenant Management - New Confectionary and F&B Tenants on B2/F

18

B2/F Before B2/F After

• Tenants from various trade mix on B2/F • New Confectionary and F&B tenants

KAKAO FRIENDS Summer Hotel at Langham Place (Jul-Sept)

The first large scale KAKAO FRIENDS event in Hong Kong

Pop-up store with exclusive product launch

On-offline “hotel check-in game” utilizing facial recognition

technology

Omni Channel Summer Promotion Campaign

19

Sustainability Constitutes an Integral Part of Our Business

20

Internet of Things (IoT)

• Installed IoT sensors in carpark

for demand control

• Estimated energy saving:

30% reduction yearly

Champion Our Wellness

• Mindful eating and running

events

• Internship programmes for local

and overseas students

Corporate Governance

• Sustainability Working Group chaired by CEO

• Risk management: assessment and review

• Materiality assessment

Social

Governance

Environment

Guidance

21

Properties Outlook:

Office – Solid growth continues given the substantial gap between passing rent and spot rent

Retail – Retail sales will be dragged by reduced visitors & current social unrest

Liabilities Management:

Proactively manage our debt profile by monitoring global macro and interest rates movements

Continue to Look at Global Investment Opportunities

1

2

3

22

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