2020 interim results | analyst briefing · investment property portfolio principally reflects the...

2020 INTERIM RESULTS | ANALYST BRIEFING-----13TH AUGUST 2020

One Taikoo Place

This presentation has been prepared by Swire Properties Limited (“the “Company”, and together with itssubsidiaries, the “Group”) solely for information purposes and certain information has not been independentlyverified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on,the accuracy, fairness, completeness, reasonableness or correctness of the information or opinions presentedherein or any verbal or written communication in connection with the contents contained herein. Neither theCompany nor any of its affiliates, directors, officers, employees, agents, advisers or representatives shall haveany responsibility or liability whatsoever, as a result of negligence, omission, error or otherwise, for any losshowsoever arising in relation to any information presented or contained in this presentation. The informationpresented or contained in this presentation is subject to change without notice and shall only be consideredcurrent as of the date of this presentation.

This presentation may contain certain forward-looking statements that reflect the Company’s beliefs, plans orexpectations about the future or future events. These forward‐looking statements are based on a number ofassumptions, current estimates and projections, and are therefore subject to inherent risks, uncertainties andother factors beyond the Company’s control. The actual results or outcomes of events may differ materiallyand/or adversely due to a number of factors, including changes in the economies and industries in which theGroup operates (in particular in Hong Kong and Chinese mainland), macro-economic and geopoliticaluncertainties, changes in the competitive environment, foreign exchange rates, interest rates and commodityprices, and the Group’s ability to identify and manage risks to which it is subject. Nothing contained in theseforward-looking statements is, or shall be, relied upon as any assurance or representation as to the future or asa representation or warranty otherwise. Neither the Company nor its directors, officers, employees, agents,affiliates, advisers or representatives assume any responsibility to update these forward‐looking statements orto adapt them to future events or developments or to provide supplemental information in relation thereto orto correct any inaccuracies.

This presentation is for information purposes only and does not constitute or form any part of, and should notbe construed as, an invitation or offer to acquire, purchase or subscribe for securities nor is it calculated toinvite any such offer or invitation, whether in Hong Kong, the United States, or elsewhere.

This presentation does not constitute, and should not be construed as, any recommendation or form the basisfor any investment decisions regarding any securities of the Company. Potential investors and shareholders ofthe Company should exercise caution when investing in or dealing in the securities of the Company.

DISCLAIMER-----

2

1. Results Highlights

2. Investment Portfolio

3. Trading Portfolio

4. Hotel Portfolio

5. Financial Highlights

6. Sustainable Development

7. Prospects

8. Q&A

AGENDA

Guy Bradley, Chief Executive

Fanny Lung, Finance Director

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3

HK$ 3,702 M

Recurring Underlying

Profit

Underlying Profit

HK$ 3,753 M

9%y-y

2020 INTERIM RESULTS HIGHLIGHTS-----

4

3%y-y

Dividend per Share

(1st interim)

HK$ 0.30

Equity Attributable to Shareholders

HK$ 48.52per share

▪ Sustainable growth in dividends and resilient recurring underlying profit from property investment despite tough market conditions.

▪ Strong recovery in footfall and retail sales in the Chinese mainland malls since March 2020.

▪ Well positioned for long-term growth with continuing capital recycling and a strong balance sheet.

1%h-h

80%y-y

KEY DEVELOPMENTS

EDEN

SUSTAINABILITY-LINKED LOAN/GREEN BOND▪ Launched two Sustainability-

Linked Loans, totallingHK$ 2,000 M

▪ Launched green bonds, totalling HK$ 1,934 M

by June 2020

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Artist Impression

5

MAJOR DISPOSAL GREEN FINANCING

TWO AND THREE BRICKELL CITY CENTRE▪ Sale completed.

July 2020

INVESTMENT PORTFOLIO-----6

One Taikoo PlaceTaikoo Li Sanlitun

HONG KONG OFFICE TAIKOO PLACE SHOWING RESILIENCE

(1) Reversion is the percentage change in rent on lease renewals, entry into new leases and rent reviews.

(2) Occupancy at 30th June 2020. GFA based on 100% basis.

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7

One Island East & One Taikoo Place Taikoo Place Office Towers

Occupancy 97% 100% 98%

Rental Reversion (1) +2% +11% +12%

Latest Rentals (HK$ psf)

One/Two PP : 115 – 135

Three PP : 105 – 110

mid 50s to low 70s mid 40s to mid 50s

Pacific Place

Attributable Valuation

(vs Dec 2019) HK$ 170.1 bn

97%

Overall Occupancy

2.6 M sq ft GFA2.2 M sq ft GFA 3.1 M sq ft GFA

Flattish

3%

The Mall, Pacific Place Cityplaza Citygate Outlets

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8

HONG KONG RETAILROBUST OCCUPANCY DESPITE A TOUGH MARKET

Occupancy 100% 100% 99%

Retail Sales -47.1% -20.3% -25.6%


(vs Dec 2019) HK$ 47.0 bn

(1) Occupancy at 30th June 2020. GFA based on 100% basis. Retail sales year-on year growth for the six months ended 30th June 2020.

1.1 M sq ft GFA0.7 M sq ft GFA 0.8 M sq ft GFA

▪ Strong and diverse tenant base.

▪ Top 10 office tenants occupied approx. 19% of office area in HK.

▪ Top 10 retail tenants occupied approx. 26% of retail area in HK.

HONG KONG PORTFOLIO SMALL PROPORTION OF LEASES EXPIRING IN 2H

Lease Expiry Profile (1)(2)

(1) At 30th June 2020. (2) Based on the percentage of attributable gross rental income for the month ended 30th June 2020.(3) Based on the percentage of area at 30th June 2020.

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9

HK Portfolio Tenant Mix (3) (2)

Jul-Dec 2020 2021 2022 and later

2021F2020F

HONG KONG PORTFOLIO GROWTH STRATEGY REMAINS UNCHANGED

Expected Attributable GFA of Completed Property Portfolio in Hong Kong (1)(2)

GFA (‘000 sq ft)

(1) Includes GFA of the hotels and excludes the two sites (Wah Ha Factory Building and Zung Fu Industrial Building) which are under compulsory sale applications.(2) At 30th June 2020.(3) Proposed development subject to the Company having successfully bid in the compulsory sale.

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10

13,208

14,22614,444

13,199

2019 2022F 2023F

Existing Portfolio

TWO TAIKOO PLACE▪ 100% owned.▪ Superstructure works in

progress.

46-56 QUEEN’S ROAD EAST, 1A-11 LANDALE STREET, 2A-12 ANTON STREET▪ 100% owned.▪ Office development. Foundation works in progress.

WAH HA FACTORY BUILDING and ZUNG FU INDUSTRIAL BUILDING (3)

▪ ~779,000 sq ft GFA.▪ Redevelopment for office and other commercial uses.▪ Compulsory sale applications submitted in 2018. TBD

2023

2022

Other

+9%

13,208

2,4632,153

2,614

3,958

HK$M

3,311

Nearly doubled since 2014

4,246

Chinese mainland Attributable Gross Rental Income

20172016 20192014 2015 2018

1,941

CHINESE MAINLAND PORTFOLIOCHINESE MAINLAND RETAIL NOW THE SECOND LARGEST RENTAL CONTRIBUTOR -----

11

28% of total attributable gross

rental income from the Chinese

mainland in 1H 2020.

1H 2020


(at 30th June 2020)

53.8HK$bn

2020

▪ Diverse tenant base.

▪ Lease expiry profile well spread-out.

CHINESE MAINLAND PORTFOLIO WELL-BALANCED TENANT MIX AND LEASE EXPIRY PROFILE

Lease Expiry Profile (1)(2)

(1) At 30th June 2020. (2) Based on the percentage of attributable gross rental income for the month ended 30th June 2020.(3) Based on the percentage of area at 30th June 2020.

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12

Chinese mainland Portfolio Tenant Mix (3) (

Jul-Dec 2020 2021 2022 and later

Chinese mainland

Office

Chinese mainland

Retail

INDIGO Sino-Ocean Taikoo Li Chengdu

Occupancy 96% 95%

Retail Sales -6.3% ( 18% pt vs 1Q 2020) -15.0% ( 19% pt vs 1Q 2020)

Guangzhou & Chengdu

CHINESE MAINLAND PORTFOLIOSTRONG REBOUND IN RETAIL SALES IN 2Q

Beijing

(1) Retail sales year-on-year growth quoted in RMB for the six months ended 30th June 2020.(2) Occupancy at 30th June 2020.(3) Retail sales year-on-year growth quoted in RMB for the three months ended 31st March 2020: -46.6% at Taikoo Li Sanlitun; -21.2% at Taikoo Hui; +11.4% at INDIGO;

-33.9% at Sino-Ocean Taikoo Li Chengdu and -30.4% at HKRI Taikoo Hui.

Shanghai-----

13

Taikoo Li Sanlitun Taikoo Hui HKRI Taikoo Hui

Occupancy 96% 99% 94%

Retail Sales -38.1% ( 9% pt vs 1Q 2020) +3.4% ( 25% pt vs 1Q 2020) +1.6% ( 32% pt vs 1Q 2020)

Beijing Shanghai

CHINESE MAINLAND PROJECT PIPELINEA CONTINUING GROWTH STORY

-----

(1) Includes GFA of the hotel but excludes GFA of car parks at these projects at 30th June 2020.(2) GFA on 100% basis.

Attributable GFA of Chinese mainland Completed Property Portfolio (1)

14

Taikoo Li Sanlitun West

▪ Refurbishment as an extension to Taikoo Li Sanlitun.

▪ Expected completion in 2021.

Artist ImpressionTaikoo Li Sanlitun West

~1,250,000 sq ft GFA (2)~256,000 sq ft GFA

GFA (‘000 sq ft) 9,726

8,847

Jun 2020 2021 and later

Taikoo LI Qiantan

Taikoo Li Qiantan

▪ 50%-owned; a low-rise retail development.

▪ Construction and pre-leasing in progress.

▪ Expected completion by the end of 2020.

CHINESE MAINLAND OFFICE HIGH OCCUPANCY IN GUANGZHOU AND SHANGHAI

(1) Occupancy at 30th June 2020. GFA based on 100% basis.

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15

Shopping MallTaikoo Hui

Offices

HKRI Taikoo HuiTaikoo Hui

Guangzhou

Office Occupancy 95%

Latest Rentals(RMB psm)

mid 100s – low 200s

HKRI Taikoo HuiShanghai



mid 300s – mid 400s

INDIGOBeijing



high 200s – low 300s

1.8 M sq ft GFA1.7 M sq ft GFA

0.6 M sq ft GFA

BRICKELL CITY CENTRE, MIAMI CAPITAL RECYCLING TO SUPPORT FUTURE GROWTH

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16

▪ Office Occupancy : ~100%

▪ Sale completed in July 2020.

Artist ImpressionTaikoo Li Sanlitun West

Two and Three Brickell City Centre

▪ Retail Occupancy : 93%▪ Retail Sales : -48.2%

Shopping Mall

(1) Occupancy at 30th June 2020.(2) Taking into account letters of intent. (3) Retail sales year-on-year growth for the six months ended 30th June 2020. The mall was closed because of COVID-19 from the second half of March to the end of May.

(2)

(3)

TRADING PORTFOLIO–––17

South Jakarta ProjectEDEN

Better resolution pic to be provided

EDEN

HK Residential –Expected Attri. Completed GFA

(at 30th June 2020)

TRADING PORTFOLIOUPCOMING PROJECTS IN HONG KONG-----

18

Expected Attributable Residential GFA Completions in Hong Kong

946‘000 sq ft

GFA (‘000 sq ft)8 STAR STREET▪ 100% owned.▪ Superstructure works in progress.

WONG CHUK HANG MTR STATION PACKAGE FOUR ▪ 25% owned.▪ Design in progress.

CHAI WAN INLAND LOT NO. 88 (2)

▪ 80% owned.▪ The acquisition of the relevant land completed in September 2019.

983-987A KING’S ROAD AND 16-94 PAN HOI STREET, QUARRY BAY (2)

▪ 50% owned. ▪ Compulsory sale application submitted in 2018.

~800 units

(1) Excluding a retail podium of approximately 2,835 sq ft which will be retained for investment purposes.(2) Proposed developments subject to the JV having successfully bid in the compulsory sale and applicable town planning controls (for 983-987A King’s Road and

16-94 Pan Hoi Street) and the agreement on land premium with the Hong Kong government (for Chai Wan Inland Lot No. 88).

(1)

2022 2024 Beyond 2024

TRADING PORTFOLIOCONTINUING SALES IN MIAMI AND DEVELOPMENT IN SOUTHEAST ASIA-----

19

Miami

(1) At 11th August 2020. The profit from the sale of three units from Rise is expected to be recognised in 2H 2020.(2) Average selling price is based on saleable area.(3) GFA on 100% basis.

Jakarta

Reach Rise

Average Price mid US$ 600s psf (2) high US$ 600s psf (2)

Units Sold (1) 364 / 93% 286 / 73%

EDEN South Jakarta Project

▪ 100% owned.▪ 20 residential units.▪ Completed in November 2019 and

available for sale.

▪ 50% owned.▪ Over 400 residential units.▪ To be completed in 2023.▪ Piling works in progress.

~1.1M sq ft GFA (3)~77,200 sq ft GFA

Singapore

Artist Impression

HOTEL PORTFOLIO–––20

The Opposite House

Replace divider slide- to keep new opening low profile

The Opposite HouseThe Upper House

Managed Hotels

▪ Operating loss (before depreciation) : HK$ 86 M in 1H 2020 under challenging trading conditions.

▪ Drastic effect of COVID-19 on occupancy and revenue, partly offset by cost savings.

Non-managed Hotels

▪ The Silveri Hong Kong – MGallery (1) at Tung Chung is expected to open later this year or next year.

HOTEL PORTFOLIOTOUGH TRADING CONDITIONS-----

21

The Middle HouseThe Opposite House

(1) 20% owned.

East Hong Kong

The Opposite House

The Opposite House

FINANCIAL HIGHLIGHTS–––22

Taikoo Place office towersOne Taikoo Place

Recurring underlying profit decreased by 9% in 1H2020, principally reflected an underlying loss fromhotels, partly offset by a slight increase in recurringunderlying profit from property investment.

23

UNDERLYING PROFIT–––Underlying Profit Movement in Underlying Profit

By Segment (HK$M) 1H 2019 1H 2020 Change

Property investment 3,995 4,060 2%

Property trading 2 (45) n.m.

Hotels 52 (313) n.m.

Recurring Underlying Profit 4,049 3,702 9%

Sale of interests in investment properties 14,557 51 n.m.

Underlying Profit 18,606 3,753 80%

HK$M HK$M

Underlying profit

1H 2019

Increase in losses from

trading props

Increase in losses from

hotels

Underlying profit

1H 2020

Decrease in profit from the sale of investment

props

Increase in profit from

props investment

(1) 2020 Interim Results Summary is included in the Appendix.

Recurring Underlying Profit

2018 1H 2019 1H 20202019

RENTAL INCOMEPOSITIVE OFFICE RENTAL GROWTH IN HONG KONG -----

24

RiseRISE

Attributable Gross Rental Income (1)

(1) Reported gross rental income (excluding rental contributions from JVCs and associates) was HK$ 3,109 M for Hong Kong office portfolio, HK$ 1,269 M for Hong Kong retail portfolio, HK$ 1,099 M for Chinese mainland retail portfolio and HK$ 176 M for Chinese mainland office portfolio.

HK$ 6,957 M

1H 2019

6,9577,278

HK$M

1H 2020

4%Attributable Gross Rental

Income (1)

HK OFFICE +2%▪ Positive rental reversions and increased rental income at One Taikoo Place.▪ Partly offset by rental loss from disposals.

HK RETAIL -7% (-6% disregarding amortised rental concessions) ▪ Lower turnover rents and higher rental concessions.▪ Effectively fully let during 1H 2020.

CHINESE MAINLAND RETAIL -9% (+2% disregarding amortised rental concessions in RMB terms)▪ Lower retail sales and rental concessions amortised.▪ Strong recovery in footfall and retail sales beginning in March.

OTHERS -14%▪ Demand for residential investment properties in Hong Kong, the

Chinese mainland and Miami affected by COVID-19.

CHINESE MAINLAND OFFICE -9% (-4% in RMB terms)▪ Reduced demand due to COVID-19.

2018 2019

14,11713,849

0.48 0.480.52

0.570.59

0.23 0.23 0.25 0.27

25

DIVIDENDCONTINUOUS GROWTH DESPITE LOWER UNDERLYING PROFIT

Dividend Policy

To deliver sustainable growth in dividends and to pay out approximately half of our underlying profits in ordinary dividend over time.

Dividend Per ShareHK$/sh

0.71 0.71

0.77

0.84

0.88

20162015 20182017 2019

0.29

----

2020

0.303%Dividend per

Share(2020 1st interim)

HK$ 0.30

MOVEMENT IN INVESTMENT PROPERTIES VALUATION

(1) Valuation before initial leasing costs is shown above.

1%

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26

The decrease in the valuation of theinvestment property portfolioprincipally reflects the effect ofadverse market conditions andCOVID-19 on the valuation ofinvestment properties in Hong Kongand retail investment properties inthe U.S.A., and the reclassification ofTwo and Three Brickell City Centre inMiami to Assets Held for Sale as theassets were disposed in July 2020.

Investment Props. Valuation

(1H 2020) HK$ 273,430 M

273,430

+ 583

31st Dec 2019

(634)

Translation differences

(589)

Net transfers

Net capital expenditure

(2,621)

Net fair value losses

30th Jun 2020

(100)

Disposals

Movement in Investment Properties Valuation (1)

(excl. hotels and investment properties held under JVCs)

276,791

HK$M

NET DEBT AND GEARING-----

Net Debt Reconciliation (HK$M)

Net debt at 31st December 2019 (15,292)

Net rental, fee receipts and proceeds from property trading / development and disposals of investment properties

4,349

Capex – PP&E and property investment and development cost for property trading

(565)

Cashflow from JVCs, associates and other investments

210

Dividends paid to the Company’s shareholders

(3,451)

Tax paid (1,113)

Other net cash paid (605)

Sub-total 4,559 (5,734) (16,467)

Lease liabilities (519)

Net debt at 30th June 2020 (16,986)

27

HK$M

(1) Financial ratios as at respective December year-ends except for June 2020.

Dec 2019 Jun 2020

5.9%

Gearing

Financial Ratios (1) 2016 2017 2018 2019June 2020

Total equity (HK$M) 227,225 259,378 281,291 288,911 285,731

Net debt (HK$M) 35,377 35,347 29,905 15,292 16,986

Gearing 15.6% 13.6% 10.6% 5.3% 5.9%

Underlying interest cover (x) 8.9 10.7 12.6 48.2 22.6

Underlying cash interest cover (x)

6.3 7.5 9.7 31.5 13.0

Major financing activities in 1H 2020▪ Issue of medium term notes of HK$ 1,934 M. ▪ Repayment of medium term notes of US$ 500 M.

MATURITY PROFILE & LIQUIDITY-----

HK$M

Maturity Profile of Available Committed Facilities (at 30th June 2020)HK$M Dec 2019 Jun 2020

Cash 14,985 11,237

Undrawn - committed 10,083 9,242

25,068 20,479

Undrawn - uncommitted 747 737

25,815 21,216

Cash & Undrawn Committed Facilities

HK$ 20,479 M

Available Committed Facilities

HK$ 36,973 M

Fixed : Floating

78% : 22%

Credit Rating

Fitch “A”Moody’s “A2”

28

Total 36,973 2,325 6,550 11,751 1,533 1,100 1,940 4,575 2,140 4,255 - 804

Drawn 27,731 2,325 1,825 7,900 867 1,100 1,940 4,575 2,140 4,255 - 804

CurrencyProfile

Subsequent to 30th June 2020▪ Term and revolving loan facilities aggregating HK$ 2,000 M were raised.

CAPITAL COMMITMENTS-----

* The capital commitments represent the Group’s capital commitments of HK$ 15,271 M plus the Group’s share of the capital commitments of joint venturecompanies of HK$ 632 M. The Group is committed to funding HK$ 438 M of the capital commitments of joint venture companies.

Profile of Capital Commitments for Investment Properties and Hotels – at 30th June 2020

HK$M Expenditure Forecast Expenditure Commitments*

Six months ended 30th Jun 2020

Six months ending 31st Dec 2020

2021 2022 2023 & later

At 30th June 2020

Hong Kong 499 1,974 5,489 1,994 4,900 14,357

Chinese mainland 333 908 153 217 257 1,535

U.S.A. and elsewhere 63 11 - - - 11

Total 895 2,893 5,642 2,211 5,157 15,903

29

SUSTAINABLE DEVELOPMENT–––30

Taikoo PlaceTaikoo Place

ESG Updates for Investors (Jun 2020)

Sustainable Development Report 2019

Current 2020 Target Current 2020 Target Current 2020 Target

Hong Kong Portfolio 26.9% 26% 29.4% 27% 24.3%

25%Estimated savings in 2020 against baseline

HK$ 79.7 M

Chinese mainland Portfolio 20.5% 20% 25.9% 21% 29.7%Estimated savings

in 2020 against baselineHK$ 21.4 M

Commercial Waste –% Diverted from Landfill

PERFORMANCE (ENVIRONMENT)GOOD PROGRESS MADE IN 1H TO MEET 2020 TARGETS-----

31

(1) Including office, retail portfolios and hotels. (2) Including office and retail portfolio, excluding hotels. (3) Energy consumption refers to purchased electricity for the provision of shared services for and in the common parts of our buildings with reference to the business-as-usual

(“BAU”) baseline year of 2008 for our Hong Kong portfolio, and the first BAU baseline year for which a complete calendar year of data was available for projects in our Chinese mainland portfolio.

(4) In addition to energy reduction, the improvement in emission factors in local electricity grids have also been considered in the calculations of the progress of decarbonisation.(5) Including office and retail portfolio, excluding hotels. (6) At 30th June 2020.

(4)

Energy Reduction Decarbonisation

(5)

(5)

(3)

(1)

(2)

PLACES IMPACT REPORTSUPPORTING DECENTRALISATION WITH A THRIVING COMMUNITY

32

Places Impact ReportIssued first-ever Impact Report for

Taikoo Place and Island East.

1,

-----

1,100jobs/hectare

Employment Density

Economic Value Pedestrian Accessibility

HK$ 88 bn

(~3% of HK GDP)

Gross Value Added

Population Balance

60% : 40%workers residents

INVESTMENT• Hardware• Software

PLACE• Livelihood• Vibrancy• Wellbeing• Resilience

CITY• City-Wide

Objectives

95%of pedestrian network

barrier-free

33

https://weallcount.swireproperties.com/en/

PROSPECTS

34

Taikoo Hui

–––

One Island EastTaikoo Li Sanlitun

PROSPECTS

35

OFFICE PORTFOLIO

✓ Only a small proportion of Hong Kong office leases expiring in 2H 2020.

❖ Weak demand for office space expected in Hong Kong, Beijing, Guangzhou and Shanghai in 2H 2020.

✓ Strong recovery in footfall and retail sales in the Chinese mainland since March 2020; continued improvement in retail sales expected.

✓ Relatively high occupancy in our Hong Kong malls expected.

❖ Severe impact of social unrest and COVID-19 on retail business in Hong Kong; rental concessions expected to continue, in order to support our tenants.

❖ Difficult trading conditions due to COVID-19 and associated travel restrictions expected for our hotels for the rest of 2020.

✓ Well-placed with a strong balance sheet to get through this difficult time and to take advantage of new opportunities that may arise.

✓ A healthy project pipeline to support future rental income growth.

RETAIL PORTFOLIO and HOTELS OVERALL

✓ Resilient demand in Hong Kong in the medium and long term supported by low interest rates and limited housing supply.

❖ Buyers in Hong Kong turning more cautious in the light of COVID-19, social unrest and international trade tensions.

RESIDENTIAL PORTFOLIO

UPCOMING PROJECTSACTIVELY LOOKING FOR OPPORTUNITIES TO EXTEND PROJECT PIPELINE -----

2021

2022

2023

Expected Attributable GFA of Upcoming Projects

GFA (M sq ft)

2020 & later

Trading PropertiesInvestment Properties


Taikoo Li Qiantan

Two Taikoo Place

8 Star Street

Office development in Wan Chai (1)

Residential projects in Quarry Bay, Chai Wan and Wong Chuk Hang (2)

Office development in Quarry Bay (3)

2020

Residential project, South Jakarta

Brickell City Centre(Future development)

2024 & later

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2019 2020 2021 2022 2023 & After

Chart Title

Hong Kong Mainland China Southeast Asia U.S.A.

(1) Representing 46-56 Queen’s Road East, 1A-11 Landale Street and 2A-12 Anton Street. (2) Including (i) 983-987A King’s Road and 16-94 Pan Hoi Street, Quarry Bay (subject to the JV having successfully bid in the compulsory sale and applicable town planning

controls); (ii) Chai Wan Inland Lot No. 88 (subject to agreement on land premium with the Hong Kong government) and (iii) Wong Chuk Hang Station Package Four Property Development.

(3) Representing Wah Ha Factory Building and Zung Fu Industrial Building (subject to the Company having successfully bid in the compulsory sale).(4) Expected years of completion are shown above.

Chinese mainland

36

Taikoo Li Qiantan

Q&A

37

–––

Sino-Ocean Taikoo Li Chengdu

APPENDIX

38

Taikoo Hui

–––

One Island EastSino-Ocean Taikoo Li ChengduHKRI Taikoo Hui

HK$M 1H 2019 1H 2020 Change

Revenue 7,510 6,551 13%

Valuation gains/ (losses) on investment properties 3,837 (2,621) N/A

Operating profit 9,725 1,473 85%

Underlying profit 18,606 3,753 80%

Recurring underlying profit 4,049 3,702 9%

Reported profit 8,973 1,029 89%

Underlying earnings per share (HK$) 3.18 0.64 80%

Recurring underlying earnings per share (HK$) 0.69 0.63 9%

Reported earnings per share (HK$) 1.53 0.18 89%

First interim dividend per share (HK$) (1) 0.29 0.30 3%

HK$M Dec 2019 Jun 2020 Change

NAV attributable to the Company’s shareholders (2) 286,927 283,860 1%

Net debt 15,292 16,986 11%

Gearing ratio 5.3% 5.9% 0.6%pt

NAV per share (HK$) 49.05 48.52 1%

2020 INTERIM RESULTS SUMMARY-----

(1) First interim dividend for 2020 was declared on 13th August 2020 and will be paid on 6th October 2020. (2) NAV refers to total equity attributable to the Company’s shareholders.

39

The turnover decreased by 13% principally due to lower revenue from hotels, property trading and gross rental income from investment properties.

40

REVENUE ANALYSIS-----

1H 2020 Revenue Breakdown by Segment 1H 2020 Revenue Breakdown by Region

Comparison 1H 2019 1H 2020

n Rental Income 6,346 6,101

n Property Trading 392 130

n Hotels 706 274

n Others 66 46

Total 7,510 6,551

Revenue (1H 2020) HK$ 6,551 M13%

6,551HK$M

Comparison 1H 2019 1H 2020

n Hong Kong 5,261 4,733

n Chinese mainland 1,557 1,341

n U.S.A. 692 477

Total 7,510 6,551

6,551HK$M

Energy Consumption1

Hong Kong2 Chinese mainland3

67 M 24.6 MkWh/year kWh/year

26.9% 20.5%

Launched two moresustainability-linked loans, totalling HK$ 2,000 M;

Launched a few more green bonds,totalling HK$ 1,934 M

HK’s Most Attractive Employer per 2020 Randstad Employer Brand Research

Tenants

SuppliersImpact ReportingTalent Attraction

Safety, Health & Wellbeing

Talent Retention

SD 2030 STRATEGY:1H2020 HIGHLIGHTS

Green Financing

Disclosure & Reporting

Climate Change

Energy

Building Asset/ Investments

Launched new initiative to foster dynamic and creative mindsets

Lost Time Injury Rate (“LTIR”): 1.09 ( 41%)

Working with suppliers to offer more low-carbon concrete and steel for new projects

To date, 21 F&B tenants in HK and Chinese mainland recognised with Green Kitchen Awards

97% of all existing buildings4 are certified green buildings, of which 84% achieved the highest ratings5

Published 1st Places Impact Reportof Island East, HK

“AAA” rating

Global Top 10; No. 1 in Asia

Global Sector Leader

(1) Energy consumption refers to purchased electricity for the provision of shared services for and in the common parts of our buildings, with reference to the BAU baseline year of 2008 for our Hong Kong portfolio and the first BAU baseline year for which a complete calendar year of data was available for projects in our Chinese mainland portfolio.(2) Hong Kong portfolio refers to our office and retail portfolios and hotels in Hong Kong.

(3) Chinese mainland portfolio refers to our office and retail portfolios in Chinese mainland excluding hotels.(4) Measured as the percentage of total gross floor area.(5) BEAM Plus/LEED/China Green Building Design Label/WELL certification.

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Physical risk assessment on global assets completed based on future climate scenarios; enhancement measures identified for buildings

SUSTAINABLE DEVELOPMENT PUBLICATION

42

First Places Impact Report

ESG Updates for Investors (Jun 2020)

Sustainable Development Report 2019 published.

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Hong Kong14.4 54%

Chinese mainland

9.7 37%

U.S.A.2.4 9%

26.5 M sq ft

▪ –––

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Trading PropsAttributable GFA (M sq ft)

Completed Prop Held for Sale

Under Development / Held for Development

Total

Hong Kong - 0.7 0.7

U.S.A. and elsewhere 0.3 2.5 2.8

Total 0.3 3.2 3.5

Investment Props / HotelsAttributable GFA (M sq ft)

Office Retail Hotels (1) Resid./Serviced Apartments

Under Planning

Total

Completed

Hong Kong 9.3 2.5 0.8 0.6 - 13.2

Chinese mainland 2.9 4.5 1.2 0.2 - 8.8

U.S.A. - 0.3 0.5 0.1 - 0.9

Sub-Total (A) 12.2 7.3 2.5 0.9 - 22.9

Under Development or Held for Future Development

Hong Kong 1.2 - - - - 1.2

Chinese mainland - 0.9 - - - 0.9

U.S.A. - - - - 1.5 (2) 1.5

Sub-Total (B) 1.2 0.9 - - 1.5 3.6

TOTAL = (A) + (B) 13.4 8.2 2.5 0.9 1.5 26.5

Attributable Investment Props by Region (GFA M sq ft)

Attributable Investment Portfolio

26.5 M sq ft

Attributable Trading Portfolio

3.5 M sq ft

Total Attributable Property Portfolio

30.0 M sq ft

PROPERTY PORTFOLIO AT 30TH JUNE 2020-----

(1) Hotels are accounted for in the financial statements under property, plant and equipment and, where applicable, the leasehold land portion is accounted for under right-of-use assets.

(2) This property is accounted for under properties held for development in the financial statements.

2020F 2019

44

-----

(1) Hotels are accounted for in the financial statements under property, plant and equipment and, where applicable, the leasehold land portion is accounted for under right-of-use assets.

(2) Excludes GFA of property trading components, two sites (Wah Ha Factory Building, No. 8 Shipyard Lane and Zung Fu Industrial Building, No. 1067 King’s Road), and car parks but includes GFA of the hotel portion of these projects.

(3) MGallery is expected to open later this year or next year.(4) The lower attributable GFA of the U.S.A. portfolio in 2020 primarily reflected the sale of Two and Three Brickell City Centre.

Expected Attributable GFA of Completed Investment Portfolio (incl. Hotels) (1)(2)

GFA(‘000 sq ft) 23,832 24,85023,576 25,06823,208

Two Taikoo Place

Citygate Outlets’new

extension (retail) (20%)

Taikoo Li Qiantan (50%)

46-56 Queen’s Road East, 1A-11

Landale Street, 2A-12 Anton Street

COMPLETED INVESTMENT PORTFOLIO

(4)

The Silveri Hong Kong MGallery (20%)

2021F 2022F 2023F


(3)

▪ Continue to create long-term value by conceiving, designing, developing, owning and managing transformational mixed-use and other projects in urban areas.

▪ Maximise the earnings and value of our completed properties through active asset management and by reinforcing our assets through enhancement, redevelopment and new additions.

▪ Continue with our luxury and high quality residential property activities.

▪ Remain focused principally on Hong Kong and Chinese mainland.

▪ Manage our capital base conservatively.

KEY BUSINESS STRATEGIES-----

45

Taikoo Place

Taikoo Place

Taikoo Li Sanlitun

Taikoo Place

46

HONG KONG PORTFOLIO MAP-----

(1) The simplified maps are not to scale and are for illustrative purpose only.(2) GFA figures are for reference only.

East Residences

47

HONG KONG PORTFOLIO MAP (CONT’D)-----

(1) MGallery is expected to open later this year or next year.(2) The simplified maps are not to scale and are for illustrative purpose only.(3) GFA figures are for reference only.

Citygate Outlets extension (Tung Chung Town Lot No. 11 Retail Portion)

(1)

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COMPLETED CHINESE MAINLAND PORTFOLIO – BEIJING-----

Project Summary (100% Basis)

Components TKL Sanlitun SouthTKL Sanlitun NorthTKL Sanlitun WestThe Opposite House (TOH)

Interest Retail : 100%TOH : 100%

Yr of Opening 2008 (TKL South) 2008 (TOH)2010 (TKL North)Expected in 2021 (TKL West)

Retail Sales Occupancy


Components RetailONE INDIGOEAST, Beijing

Interest 50%

Yr of Opening 2011 / 2012


1.47 M sq ft GFA (1)

(1) Excluding Taikoo Li Sanlitun West which is expected to be completed in 2021.(2) Occupancy at 30th June 2020. GFA based on 100% basis. Retail sales year-on-year growth for the six months ended 30th June 2020.

96% -38.1%

Taikoo Li Sanlitun, Beijing

1.89 M sq ft GFAINDIGO, Beijing

96% -6.3%Retail

74% Office

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COMPLETED CHINESE MAINLAND PORTFOLIO – GUANGZHOU AND CHENGDU


Components RetailTaikoo Hui Towers 1&2Mandarin Oriental GZ

Interest 97%

Yr of Opening 2011 / 2012 / 2013



Components Retail The Temple House

Interest 50%

Yr of Opening 2014 / 2015


Taikoo Hui, Guangzhou 3.84 M sq ft GFA

Sino-Ocean Taikoo Li Chengdu 1.66 M sq ft GFA

99% +3.4%Retail

95% Office

95% -15.0%Retail

-----

(1) Occupancy at 30th June 2020. GFA based on 100% basis. Retail sales year-on-year growth for the six months ended 30th June 2020.

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COMPLETED CHINESE MAINLAND PORTFOLIO – SHANGHAI


Components RetailHKRI Centre 1 & Centre 2The Middle House and The Sukhothai ShanghaiThe Middle House Residences

Interest 50%

Yr of Opening 2016 / 2017 / 2018


HKRI Taikoo Hui, Shanghai 3.54 M sq ft GFA

94% +1.6%Retail

97% Office

-----

(1) Occupancy at 30th June 2020. GFA based on 100% basis. Retail sales year-on-year growth for the six months ended 30th June 2020.

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U.S.A. PORTFOLIO – MIAMI


Components RetailEAST Miami (w Serv Apmt)

2 Condo Towers (Reach / Rise)

One BCC and a Condo Tower (under

planning)

Interest Retail: 62.93%Others: 100%

Yr of Opening 2016 (BCC)TBC (OBCC & others)


Brickell City Centre BCC: 1.03 M sq ft GFA OBCC: 1.97 M sq ft GFA

(1) Occupancy at 30th June 2020. GFA based on 100% basis. Retail sales year-on-year growth for the six months ended 30th June 2020.(2) Retail occupancy after taking into account letters of intent.(3) In July 2020, Swire Properties completed the sale of the two office buildings (Two and Three Brickell City Centre) in Miami.

93% -48.2%

Retail

~100% Office

-----

(2)

▪ –––

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COMPLETED U.S.A. TRADING PORTFOLIO

(1) The profit from the sale of these units is expected to be recognised in 2H 2020.

Trading Properties(At 11th August 2020)

Total Units

UnitsSold

Actual Completion

Actual Handover

from

Units for which Profit Recognised or Expected to be Recognised (Year)

Interest

Miami, Florida, U.S.A.

Reach, Brickell City Centre 390 364 2016 2016347(2016), 12(2017), 2(2018), 2(2019) and 1(1H 2020)

100%

Rise, Brickell City Centre 390 286 2016 2016 171(2016), 28(2017), 35(2018), 38(2019), 11(1H 2020) and 3(2H 2020) (1)

100%

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Managed Hotels No. of

RoomsInterest Owned but Non-managed Hotels

No. of Rooms

Interest

Completed (100% basis)

Completed (100% basis)

Hong Kong The Upper House 117 100% Hong Kong Island Shangri-La Hong Kong 565 20%

EAST, Hong Kong 345 100% JW Marriott Hotel Hong Kong 608 20%

Headland Hotel (1) 501 0% Conrad Hong Kong 513 20%

Chinese mainland

The Opposite House, Beijing 99 100% Novotel Citygate Hong Kong 440 20%

EAST, Beijing 369 50%Chinese mainland

Mandarin Oriental, Guangzhou (3) 287 97%

The Temple House, Chengdu (2) 142 50% The Sukhothai, Shanghai 201 50%

The Middle House, Shanghai (2) 213 50% U.S.A. Mandarin Oriental, Miami 326 75%

U.S.A. EAST, Miami (3) 352 100%

Sub-Total 2,138 Sub-Total 2,940

Under development

Hong Kong The Silveri Hong Kong - MGallery 206 20%

Total 2,138 Total 3,146

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HOTEL PORTFOLIO

(1) Headland Hotel is owned by Airline Property Limited, a wholly-owned subsidiary of Cathay Pacific Airways Limited. (2) Comprising one hotel tower and one serviced apartment tower.(3) Including serviced apartments in a hotel tower.

Total Managed

Rooms

2,138

-----

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VALUATION OF COMPLETED INVESTMENT PROPERTIES-----HK$M

Value creation through continuous property investment and asset reinforcement over time.

2009 – June 2020 Valuation of Completed Investment Properties (excl. Hotels)

Valuation of investment properties portfolio in

10 years78%

Per June 2020 financial statements on accounting basis (before initial leasing costs). Hotels are accounted for under property, plant and equipment in the financialstatements. Valuation after 2010 does not include Festival Walk (which was sold in August 2011 for HK$ 18.8 bn). Valuation after 2017 excludes Cityplaza Three andCityplaza Four, of which the sale was completed in April 2019 for HK$ 15.0 bn. Valuation after 2018 excludes 625 King’s Road office building. The sale of SwireProperties’ entire 50% interest in a company that owned 625 King’s Road office building was completed in July 2019 for HK$ 2.4 bn. Valuation in Jun 2020 excludesTwo and Three Brickell City Centre, of which the sale was completed in July 2020.

272,927 276,791 273,430

2020 interim results | analyst briefing · investment property portfolio principally reflects the...

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