Q4 2025 Mapletree Pan Asia Commercial Trust Earnings Call
Full year FY 'twenty.
Hi.
And today our results briefing, we have the breweries.
They are Ms, Sharon Ding, Chief Executive Officer, and MS, Jenny <unk> Chief Financial Officer.
Mr. Carrillo: Mr Carrillo, our head of investments and asset management.
Mr. Carrillo: Will be presenting our financial results, providing business development update and sharing some market insights. Following the presentation. We will open the floor for a Q&A session, where we invite you to ask questions and seek further clarification, we don't put a do I will hand, the floor over to our CFO Jacob.
Jacob: Thank you Lee is a very good morning to everybody. We have just announced our result. This morning. So maybe you can just go to flex if you quickly go through the financials.
Speaker Change: Okay, Paul fourth quarter FY 'twenty four 'twenty five gross revenue was $222 9 million in NPI and $169 5 million. These were lower by six 8% and seven 4% year on year, respectively, and this was largely due and this largely reflects the absence of <unk>.
Speaker Change: And since contribution following its divestment in order in July 2024, and it was obviously contributions.
Speaker Change: As you May recall, we have divested me between Ensign our noncore assets.
Speaker Change: 31 July 2024, and we have to apply protein anti proceed through the reduction of borrowing.
Speaker Change: Okay moving onto the Opex opex improved by four 9% year on year during the quarter and this was largely due to the unique which we insist that beckman and lower utility costs in particular, the Singapore portfolio.
Speaker Change: Net finance expense for the quarter at nine 4% lower at $61 1 million as compared to fourth quarter last year and this was mainly due to the repayment of borrowings using the net proceeds from the divestment complete between incident.
Speaker Change: But this was partly offset by the higher risk on the singular alcohol in Japan ECM borrowing at our legacy interest rate swaps continue to grow our progressive fleet.
Speaker Change: So consequently, the amount available for distribution was $103 6 million and GPU, 195% now.
Speaker Change: 14, 8% year on year.
Speaker Change: Okay moving onto next slide this shows the contribution by different market and a positive contribution increased by one 4% year on year.
Speaker Change: Excluding that between.
Speaker Change: And these account for about 53% to both fourth quarters portfolio gross revenue and NPI.
Speaker Change: On a full year basis, and have reported gross revenue and NPI of $98 8 million and $683 5 million respectively.
Speaker Change: By five 1% at six 1% year on year, the higher contribution by Singapore portfolio on a comparable basis, which is we felt made with janssen as far as lower Opex and net finance costs provided partial offset to the overseas and he wins.
Speaker Change: Correct.
Speaker Change: <unk>.
Speaker Change: So consequently, the multiple hurricanes 3 million Btu.
Speaker Change: Two things.
Speaker Change: Okay.
Speaker Change: Okay. The next few slides are on our portfolio valuation.
Speaker Change: And the next portfolio valuation is approximately $16 billion equity first mark screening 25, excluding the effect from me between says divestment the portfolio.
Speaker Change: <unk> rose <unk>, $9 4 million or two 2%.
Speaker Change: From the respective loss available independent valuation either because much really 24 or in the case of the <unk> in Japan as at September 2024.
Speaker Change: On a year on year basis, and excluding <unk>. So I think the valuation increased by $225 5 million or one 4%.
Speaker Change: He obviously properties recorded lower valuation largely stemming from the revised market expectations in greater China, and cap rate and discovery expansion applied business to boardwalk.
Speaker Change: Okay moving onto the next slide this is the valuation, forcing about properties that are at least $660 million or 10, 9% and this more than offset the decline in the valuation of the overseas properties.
Speaker Change: <unk> growth was led by vivo city is better performance and tight tighter cap rate applied by the Valuers would be velocity and business at Lynn of NBC.
Speaker Change: For Japan.
Speaker Change: The year on year valuation decline was largely due to the three properties located in local hiring in Japan and has been captured in the September results. The current six months change in valuation was largely due to forex impact while MVP shows some gain due to a successful vaccine.
Speaker Change: Moving onto balance sheet with the update of the portfolio valuation NPV per unit is now at $1 70 expense exit September 25, and this was high as compared to March 30 to any fall by one 7%.
Speaker Change: On capital punishment.
Speaker Change: The deployment of me between incidence divestment proceeds to reduce outstanding borrowings to $6 1 billion and together with the higher overall valuation aggregate leverage ratio improved.
45% a year ago to 37, 7%, except that it was not.
Speaker Change: <unk> 35, with an average all in cost of debt maintenance labor around mid threes.
Speaker Change: At two eight times on a 12 month trailing basis.
Speaker Change: During the quarter and pay issue a seven year green bonds in Washington, when five in this extended the average term to maturity of debt to three three years much.
Speaker Change: <unk>.
Speaker Change: And by the close of the reporting period and to hit the financial effects of $1 2 billion in cash and Undrawn committed facilities. So this is sufficient while working capital and financial obligation.
Speaker Change: We will continue to ensure our natural balance sheet hedged by closely align the mix.
Speaker Change: <unk> got pretty good distribution of empathy and less visible.
Speaker Change: Okay.
Operator: and Live Webcast for our results for the fourth quarter in the full year FY 2024-25.
Speaker Change: Profile remain balanced with no single financial year, 15, more than 23% of that need for refinancing.
Operator: I'm Liying, and today for our results briefing, we have the following speakers.
Speaker Change: Moving on to risk management.
Operator: They are Ms. Sharon Lin, Chief Executive Officer of MPACT, Ms. Janica Tan, Chief Financial Officer, and Mr. Kho Wee Leong, our Head of Investments and Asset Management. They'll be presenting our financial results, providing business development updates and sharing some market insights. Following the presentation, we'll open the floor for Q&A session, where we invite you to ask questions and seek further...
Speaker Change: The fixed rate debt portion was lowered from 81, 5% to 79, 9% during the quarter.
Speaker Change: We stopped the seven year fixed rate bonds issued in March seemingly <unk> the percentage of fixed rate debt will be at 70 776, 6%.
Speaker Change: So about 80% of our debt fixed rate every 50 bps change in benchmark <unk> estimate that the impact of GPU by dual 0.1 thing but anyway.
Jianqian Wang: Without further ado, I will hand the floor over to our CFO, Jianqian Wang.
Jianqian Wang: Thank you, Lee.
Jianqian Wang: A very good morning to everybody. We have just announced our results this morning, so maybe we'll just go through the statistics, quickly go through the financials. For 12 quarters FY24-25, gross revenue was $222.9 million and NPI $169.5 million. These were lowered by 6.8% and 7.4% year-on-year respectively, and this largely reflects the absence of Mapletree insurance contributions, along with its divestment on 31 July 2024 and lower overseas contributions. As you may recall, we have divested Mapletree Anson, our non-core asset, on 31 July 2024, and we have applied the entire proceeds to the reduction of borrowing. Okay, moving on to the OPEX, OPEX improved by 4.9% year-on-year during the quarter and this was largely due to the Mapletree entrance divestment and lower utility costs, in particular the Singapore portfolio.
Speaker Change: And lastly at the close of the quarter approximately 90% of impacts expected distributable income was derived from our hedged into dollars.
Speaker Change: The next slide is on the total return so for this year the total return.
Speaker Change: From capita and.
Speaker Change: Dividend payout is three 9%.
Speaker Change: And last but not least on the distribution detail bcd's, we receive a truck medium duty five <unk> six <unk>.
William: With that I will now handle with the William Thank you.
Speaker Change: Good morning, everyone, maybe just move on to the occupancy.
Speaker Change: So you can see the portfolio occupancy declined very slightly since December 220 to four.
Speaker Change: That's largely driven by.
Speaker Change: This is largely driven by the Japan properties, where there were a number of them.
Speaker Change: Renewals.
Speaker Change: Particularly in the Macquarie.
And then moving onto the small placements.
Speaker Change: We see occupancy now stands at 91, 2%.
Speaker Change: In a number of non renewals in the current.
Jianqian Wang: Net finance expense for the quarter, 9.4% lower at $51.1 million as compared to fourth quarter last year. And this was mainly due to the repayment of borrowings using the net proceeds from the divestment of Mapletree and CERN. But this was partly offset by the higher rates on the SingDollar, Hong Kong dollar and Japanese yen borrowing as our legacy interest rate swap continued to roll off progressively. So consequently, the amount available for distribution was $103.6 million and DPU $1.95, down 14.8% year-on-year for both.
Speaker Change: <unk> financial had just passed the most of those pieces are still in the process of being installed.
Speaker Change: Over the last three to six months or two months tenants will be taking a far longer time to make decisions.
Speaker Change: Commitments are typically a lot further into the future.
Speaker Change: We remain hopeful that we can bring up the occupancy.
Speaker Change: In the coming financial year are largely due to effective cost pressures for tenants in Singapore.
Speaker Change: Our drives in them from CBD.
Speaker Change: Into lower cost locations like like NBC.
Speaker Change: For the UCB occupancy remains strong with a small amount of our business.
Jianqian Wang: Okay, moving on to next slide, this shows the contribution by different markets. Singapore Properties' contribution increased by 1.4% year-on-year, excluding Mapletree and NSENC. And this accounted for about 53% to both fourth quarters portfolio gross revenue and MPI. On a full-year basis, MPEG reported gross revenue and NPI of $908.8 million and $683.5 million respectively, lower by 5.1% and 6.1% year-on-year. The higher contribution by Singapore Portfolio on a comparable basis, which is without Mapletree Anson, as well as lower OPEX and net finance costs, provided partial offset to the overseas and Forex headwinds. So consequently, BI amounted to $423 million and BPU $8.02 cent.
Speaker Change: Based largely due to aes, which are currently ongoing.
Speaker Change: Empower is a main beneficiary of increasing occupancy for the other SG properties again, we've been the beneficiary for.
Beneficiary of the movement of tenants out from CBD.
Speaker Change: Looking for slightly lower cost confusion.
Speaker Change: <unk> benefited because youre able to offer smaller spaces.
Speaker Change: The building.
Speaker Change: It has been more competitive to us for a long time.
Speaker Change: <unk> 1000, 2000, 5000 square feet easily available.
Speaker Change: <unk> managed to retain a lot of the two thirds from tenants that recently departed and there's a lot of incoming tenants to reduce your moving cost.
Speaker Change: Making the beauty a lot more attractive.
Speaker Change: So first of all work that a little bit of vacancy is largely due to the office.
Jianqian Wang: Okay, the next few slides are on our portfolio valuation. MPEG's portfolio valuation is approximately $16 billion as at 31st March 2025. Excluding the effect from Mapletree Inc's divestment, the portfolio valuation rose $339.4 million or 2.2% from their respective last available independent valuation either as at 31st March 2024 or in the case of the three Makuhari assets in Japan as at September 2024. On a year-on-year basis, and excluding Mapletree and Insurgent, the valuation increased by $225.5 million, or 1.4%. The overseas properties recorded lower valuation, largely stemming from the revised market expectations in Greater China, and cap rate and discount rate expansion applied to festival work.
Speaker Change: This component of the building. So we had one kind of more earlier in the yogurt back to about 40%, 50% of the space and we're looking to fill up the rest of the spaces.
Speaker Change: China remains one of our more challenging markets.
Speaker Change: Look on a year on year basis.
Speaker Change: Give me pause actually lots of visibility since Europeans March last year.
Speaker Change: <unk> Plaza as actually improve occupancy striping.
Speaker Change: Bob <unk>, Bob both assets performed better than most of the market most of the market Comparables.
Speaker Change: Leasing demand still remains fairly weak both in Shanghai and Beijing.
Speaker Change: In particular for Shanghai.
Speaker Change: We won't we won't build rebuild RBC, a little bit shipments going forward.
Speaker Change: The downtown area of the business.
Speaker Change: I'll speak a little bit more pressure.
Speaker Change: Due to the trade tensions.
Speaker Change: Mainly be focused on manufacturing as well as on specifically on semiconductors Microelectronics industries.
Jianqian Wang: Okay, moving on to the next slide. This is the valuation for Singapore property. There's an uplift of $660 million or 7.9%, and this more than offset the decline in the valuation of the overseas property. Singapore's growth was led by VivoCity's better performance and tighter cap rate applied by devaluers to VivoCity and the Business Park segment of MVC. For Japan, the year-on-year valuation decline was largely due to the three properties located in Makuhari in Japan and has been captured in the September results. The current six-month change in valuation was largely due to forex impact, while MVP shows some gain due to successful backfilling.
Speaker Change: For the Japan properties. This is largely due to the Peter Gassner.
Speaker Change: Largely due to a combination of lease this fall.
Speaker Change: The single tenant property.
So as well as the non renewal of the master lease was at.
Speaker Change: At MVP.
Speaker Change: For pinnacle.
Speaker Change: One of the bright spots in the portfolio.
Speaker Change: All of the all other business pieces into booties have been currently taken up except for a small until youre missing between two.
Speaker Change: And the exposure.
Speaker Change: The.
Speaker Change: We expect clinical trial under continued performing well over the next one year or so.
Speaker Change: Okay, so moving onto specialty William.
Speaker Change: So NBC NBC.
Speaker Change: Singapore properties in general.
Jianqian Wang: Moving on to balance sheet, with the uplift of the portfolio valuation, MAV per unit is now at $1.78 as of September 2025, and this was higher as compared to March 2024 by 1.7%. On capital management, the deployment of Mapletree Anson's divestment proceeds reduced outstanding borrowings to $6.1 billion and together with the higher overall valuation, aggregate leverage ratio improved from 40.5% a year ago to 37.7% as at 31 March 2025. With an average all-in cost of debt-maintained sliver at around mid-3, ICR capped at 2.8 times on a 12-month trading-based basis. During the quarter, MPEG issued a 7-year green bond in March 2025 and this extended the average term to maturity of debt to 3.3 years as at March 2025.
Speaker Change: A lot better NBC diversity and.
Speaker Change: Our particular have seen healthy the revisions.
Speaker Change: First of all continued to see net debenture divisions. That's also in the dental suite vessels have been pressured because of the current trade tensions and.
Speaker Change: The potential impact on the economy shut off.
Speaker Change: On the call me up with Hong Kong and China.
Speaker Change: The China assets.
Speaker Change: You had mentioned we've just been mentioned in previous quarters. There has been not defensive revisions market rentals has been falling.
Speaker Change: While we while.
Speaker Change: While we have managed to continues to.
Speaker Change: Negative 9%.
Speaker Change: So to be Lp's market rent those are quite a little bit quite a bit below our.
Speaker Change: Our passing rentals in the past just to give a sense.
Speaker Change: <unk> Plaza in the past years to sign leases and $5 to 650 per day.
Speaker Change: RMB per day.
Jianqian Wang: And by the close of the reporting period, MPEG has a financial flexed of $1.2 billion in cash and undrawn committed facilities. So this is sufficient for working capital and financial obligations. We will continue to ensure a natural balance sheet hedge by closely aligning the debt mix with the geographical distribution of MPEG-AUN. MPEG's debt profile remains balanced, with no single financial year facing more than 23% of debt for refinancing.
Most of the rentals, we are concluding knowledge and the 250 to $4 range.
Speaker Change: Okay. So for Japan led us again, largely due to the say computing and MVP and the master lease with MVP, whereas Athena Luca.
Speaker Change: <unk> performed well.
Speaker Change: Yes.
Speaker Change: This improvement in <unk>.
Speaker Change: The revision is largely due to the office office leases.
Speaker Change: Lot of the.
Speaker Change: Due to the run up in OCC.
Speaker Change: Office rentals in that area.
Speaker Change: We still have quite a component of the building.
Speaker Change: Passing lenders credit current vessels are below the market. So we can probably expect to see a positive equity business opportunities with our loan portfolio.
Jianqian Wang: Moving on to Waste Management. The fixed rate debt portion was lowered from 81.5% to 79.9% during the quarter. Without the 7-year fixed rate bonds issued in March 2025, the percentage of fixed rate debt would be at 76.6%. So at about 80% of our debt on fixed rate, every 50 days change in benchmark rate is estimated to impact the DPU by 0.1 cents per annum. And lastly, at the close of the quarter, approximately 90% of MPEG's expected distributable income was derived from or hedged into SIN dollars.
Speaker Change: Just a quick note.
Speaker Change: His expiry profile.
Speaker Change: Full year, two three years retail assessing number with office anticipated two three you will see that we actually have quite a large chunk of our offer.
Speaker Change: The space is coming up for renewal in the current.
Speaker Change: Current FY 'twenty five 'twenty six and we are in negotiations we saw with.
Speaker Change: All of these tenants.
Speaker Change: In the current indications are that most of these tenants.
Speaker Change: We will be renewing their leases.
Speaker Change: 102, or they might have some reduction in spaces.
Keith: Keith will move forward.
Jianqian Wang: The next slide is on the total return. So for this year, the total return from capital and dividend payout is 3.9%.
Speaker Change: On the performance of the office and BP assets, So Singapore continues to perform well.
Keith: David.
Keith: Slide increased frequency at MPC, which we hope to which you hope to substitute if you hold the closeouts.
Jianqian Wang: And last but not least, on the distribution detail, BCD is 25th April 2025 and the payout date is on 6th June 2025.
Keith: Throughout this financial year.
Wei Liao: With that, I will now hand over to Wei Liao.
Keith: China continues to continues to be to be challenging retention rate. After you book, we do have demonstrated we have been moving.
Wei Liao: Good morning, everyone. Maybe let's move on to the occupancy performance. So, you can see that the portfolio occupancy has declined very slightly since December 2024. That's largely driven by the... That's largely driven by the Japan properties where there were a number of non-renewals, particularly in the Makuhari area. But then moving on to the Singapore assets, so for MBC, occupancy now stands at 91.2 percent. They're having a number of non-renewals in the current year in the financial year that just passed, and most of those bases are still in the process of being leased out. The experience over the last three to six months has been that tenants have been taking a far longer time to make decisions, and commitments are typically a lot further into the future.
Keith: And you will do this in particular in Shanghai.
Keith: Best off with Japan.
Keith: <unk> signed up a good number a day. So some of this is actually somewhat.
Keith: <unk> in the in.
Keith: In the mass dependent.
Keith: Continued in the building.
Keith: And rental revisions are deemed to be especially Mojave.
Keith: So Korea I mentioned earlier continues to be funded.
Keith: Performance of the portfolio.
Keith: Yes.
Keith: Yes.
Keith: So moving on to performance.
So shopper traffic it sounds very marginally against the year on year, whereas tenancies.
Keith: <unk> been down about 2.1% against the against year on year.
Keith: Part of the impact on tenant sales has been better.
Keith: <unk> had been the more recently you've seen that we have had quite a lot of us.
Wei Liao: We remain hopeful that we can bring up the occupancy in the coming financial year, largely due to the fact that the cost pressures for tenants in Singapore are driving them from CBD assets into lower-cost locations like MBC. For VOCs, the occupancy remains strong and a small amount of vacant space largely due to AEIs which are currently ongoing. M-Tower is the main beneficiary of the increase in occupancy for the other SG properties. Again, we have been the beneficiary of the movement of tenants out from CBD, looking for slightly lower cost locations. M-Tower also benefited because we were able to offer smaller spaces.
Keith: <unk> has been what's ongoing and that contributed to.
Keith: It can be more downtime discounting financially get them against the previous financial year.
Keith: Okay.
Keith: Looking at the <unk>.
Keith: Sam Hoffman books so.
Keith: Our basements movie has two phases of whats ongoing.
Keith: One phases in.
Keith: A bit of that.
Keith: <unk> as well as increase the number that largely compressed largely complete adjusted one.
Keith: Just a few months.
Keith: Which will be done by the end of this quarter.
Keith: For phase two we just started a few months ago.
Keith: We'll be expanding the retail footprint into the copper area.
Keith: Currently ongoing.
Keith: We will largely be complete by the third quarter of the year.
Wei Liao: The building has been multi-tenanted for a long time. Smaller spaces of 1,000, 2,000, 5,000 square feet are easily available. We have also managed to retain a lot of the fit-outs from tenants that recently departed. This allowed incoming tenants to reduce their moving costs, making the building a lot more attractive. For Festival Walk, that little bit of vacancy is largely due to the office component of the building. We had one tenant move out earlier in the year, we had back-filled about 40-50% of the space, and we are working to fill up the rest of the space.
Keith: The pieces have already been permitted out just a few more pieces left to finish up.
Keith: So this slide just gives you a few of them.
Keith: Tenants that we have signed up over the over the current quarter.
Keith: As well as how the Aetna A&P activities such as ongoing.
Keith: Moving onto festival.
Keith: First of all.
Keith: So on.
Keith: The shopper traffic has been up over 6% I think this has largely been contributed by <unk>.
Keith: Firstly increased.
Keith: Increased travel from from.
Keith: From China into Hong Kong.
Wei Liao: China remains one of our more challenging markets. If you look on a year-on-year basis, Gateway Plaza actually lost a little bit of occupancy against March last year, whereas Sand Hill Plaza has actually improved occupancy slightly. But while both assets performed better than most of the market comparables, leasing demand still remains fairly weak both in Shanghai and Beijing. In particular for Shanghai, we will likely see a little bit of headwinds going forward as the Changjiang area, being a business park, does face a little bit more pressure due to the trade tensions, which have mainly been focused on manufacturing as well as specifically on semiconductors and microelectronics-related industries.
Keith: Although that hasnt really translated into tenant sales.
Keith: If you look at the Hong Kong.
Keith: Statistics.
Keith: While the number of arrivals have improved increased the <unk>.
Keith: Spend by tourists either dose with sleep overnight all.
That only on a day trip have decreased quite significantly from.
Keith: From what they were doing pre COVID-19 and even even against the previous year.
Keith: Tenant sales continues to remain weak.
Keith: We do think that bad debt is slightly EBIT. This type of technology. If you look at our Boston six for Hong Kong that number actually is starting to flatten out in previous years the previous months over there.
Keith: This financial year that could have been easily a 34% to 50% increase over the last one month or so.
Keith: That increase has been.
Keith: If any new debt.
Wei Liao: For the Japan properties, this is largely due to the termination of leases from the single-tenanted property, ZECO, as well as the non-renewal of the master leases at MBP. For Pinnacle Gangnam, one of the bright spots in the portfolio, all of the vacant spaces in the building have been currently taken up, except for a small retail unit in Basement 2. And we expect Pinnacle Gangnam to continue performing well over the next one year or so.
Keith: Thanks.
Keith: So.
Keith: The mall continues to improve the tenant mix.
Keith: A couple of new tenants that we brought in.
Keith: As well as a number of stores that were put through to the mall.
Keith: <unk> continues to be very strong in running marketing activities to drive footfall and.
Keith: It means very popular with beef.
Keith: With social media related.
Keith: Defense as well as the sponsors.
Okay.
Keith: We can comprehend presentation and effectively.
Speaker Change: Thank you Jenny can be now maybe due to your question can you quantify how annually.
Wei Liao: Moving on to rental reversion, Singapore properties in general have performed a lot better. NBC, VivoCity and M Tower in particular have seen healthy rental reversions. Festival Hall continues to see negative rental reversions. There has also been pressure because of the current trade tensions and the potential impact on the economy of both Hong Kong and China. The China assets, as mentioned in previous quarters, there has been negative rental reversions. Market rentals have been falling. While we have managed to contain this to a negative 9%, the reality is market rentals are quite a bit below our passing rentals in the past.
Speaker Change: Mean, Amazon before asking your question.
Keith: We released our hand to repeat like.
Keith: Accordingly.
Speaker Change: Unlikely. Thank you we invite you to send your questions through the online platform.
Speaker Change: So first we have not counting on getting more Green County <unk>.
Speaker Change: Thanks, Thanks, so much.
Speaker Change: This is <unk> from Jpmorgan, just wanted to ask on Japan, Occupancies, especially for MVP Michael Henry.
Speaker Change: Is this the load that we are seeing.
Speaker Change: Any more.
Speaker Change: Okay.
Speaker Change: They can see as expected.
Speaker Change: FY 'twenty six.
Speaker Change: Okay, the Afghan property.
Speaker Change: As we have announced and shared that in the market.
Wei Liao: Just to give a sense, St Hugh Plaza in the past used to sign leases in the $5 to $6.50 RMB per day. Most of the rentals we are concluding now are actually in the $3.50 to $4.00 range. So, for Japan, that's again actually due to the Seiko building and the master leases at MBP, whereas Peninsular Gangnam continues to perform well, as this improvement in rental reversion is largely due to office leases, where due to the run-up in office rentals in the Gangnam area, we still have quite a component of the building where the passing rentals are below the market, so we can probably expect to see a positive rental reversion for Peninsular Gangnam going forward.
Speaker Change: We're adding to.
Speaker Change: In terms of valuation, we have picked up and down in terms of the number in that occupancy when you see the number.
Speaker Change: Come to zero two states there will be a drop due to projectors.
Speaker Change: But valuation wise that the majority of our valuation down already for the engine.
Speaker Change: Is that from a master lease all of them after the call.
Speaker Change: Yes.
Speaker Change: Okay.
Two master leases that we ship it.
Speaker Change: Two big clients purchase cycle.
Speaker Change: We have already taken down both the average I think another sale occupancy is showing up already or hashana for ethical asset, which is now call MDT. Okay.
Wei Liao: Just a quick note on lease expiry profile, so our portfolio is 2.2 years, retail is that same number, whereas office and business part is at 2.3. You will see that we actually have quite a large chunk of spaces coming up for renewal in the current FY25-26, and we are in negotiations with all of these tenants. In the current indications are that most of these tenants will be renewing their leases, although one or two of them might have some reduction in spaces.
Speaker Change: Now for.
Speaker Change: <unk> valuations taken out, but the occupancy you will see it coming down into your sourcing.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks, and in terms of the negative revisions how should we expect negative how should we expect reverses the trend.
Speaker Change: Overseas.
Speaker Change: First of all what China and Japan.
Speaker Change: Okay. I think if you look at our entire portfolio refresh and if you look at the whole portfolio is a positive three overarching over to sand and that is led by Keith was achieved against the rest of the rest of the overseas.
Wei Liao: Okay, so moving forward on the performance of the office and BP assets. So, Singapore continues to perform well, albeit with a slightly increased vacancy at MPC, which we hope to close up throughout this financial year. China continues to be challenging. Retention rates are fairly low. We do have tenants who have been moving out to newer buildings, in particular in Shanghai. Whereas for Japan, while we have signed up a good number of leases, some of this is actually some of the underlying leases in the master tenant, which have continued in the building. And rental reversions continue to be weak, especially in Makuhari.
Speaker Change: Okay. If we're talking about oncology in China, they're talking about and the digit I think right now there is still a little bit of uncertainty, but I think we're trying to keep.
Speaker Change: And try not to expanding this negative reversion beyond what the FTE.
Speaker Change: Thank you and finally for me just wanted to ask on the capital distribution. This point in time.
Speaker Change: Then can I ask how much has been utilizing.
Speaker Change: Much remains to be distribute.
Speaker Change: Can you repeat your question again please.
Speaker Change: Seven 7 million I understand that does that 7.7 million.
Wei Liao: So Korea, I mentioned earlier, continues to be one of the better performers in the portfolio.
Speaker Change: Capital distribution.
From the balance allowance from the divestment of the poultry ensign.
Wei Liao: So moving on to the business performance. So, shopper traffic is down very marginally against the year-on-year, whereas tenant sales have been down about 2.1% against year-on-year. Part of the impact on tenant sales has been that if you have been to the mall recently, you have seen that we have had quite a lot of asset enhancement works ongoing, and that's contributed to significantly more downtime this current financial year than against the previous financial year. Looking at the asset enhancement work, for Basement 2, we have two phases of work ongoing. One phase is the upgrade of the foot kiosks as well as to increase the number.
Speaker Change: No you've got it wrong, we do not we do not distribute.
Speaker Change: Any divestment keen on <unk>.
Speaker Change: If you are referring to.
Speaker Change: Our footnote in the financial in the net debt on a debt net debt.
Speaker Change: The allowance as relating to.
Speaker Change: And I think this is these days.
Speaker Change: And do we attacks because we use the claim capital allowance on <unk> and some of the catch up in <unk> and addressing a protective coming off.
Speaker Change: Is a deduction from our <unk> and then we just the chassis in the DTC.
Speaker Change: Gentlemen in our profit so we just adjusted EBIT.
Wei Liao: That's largely complete, just a few more kiosks which will be done by the end of this quarter. For Phase 2, which we have started a few months ago, we will be expanding the retail footprint into the carpark area. That's currently ongoing and will largely be complete by the third quarter of the year. Most of the phases have already been committed out, just a few more leases left to finish up. So, this slide just gives you a few of the tenants that we have signed up over the current quarter, as well as some of the A&P activities that are ongoing.
Speaker Change: Effectively we are not in or anything.
Speaker Change: Okay.
Speaker Change: It's just it's just the boot classification, we are not paying 98, yes.
Speaker Change: Okay, great. Thank you I'll leave it to the right.
Speaker Change: Thank you.
Speaker Change: Thank you Karen can we have challenging.
Speaker Change: Anthony.
Speaker Change: Hi, good morning, Sharon.
Speaker Change: Guidance on EPS.
Speaker Change: I think we will see key that you shared with us at the pace I guess, how much of that.
Speaker Change: Thank you Dan is your sector indices valuation uplift.
Wei Liao: Moving on to Festival Walk, the shopper traffic has been up over 5.6%. I think this has largely been contributed by, firstly, increased travel from China into Hong Kong, although that hasn't really translated into tenant sales. If you look at the Hong Kong tourist statistics, while the number of arrivals have increased, the spend by tourists, either those who have stayed overnight or are there only on a day trip, have decreased quite significantly from what they were doing pre-COVID and even against the previous year. Tenant sales continue to remain weak. We do think that it's likely that this is starting to flatten out.
Speaker Change: Okay majority is due to operation, Okay, I think they see the rental revision over the years.
Speaker Change: Yes, it's gone up so operations contribute the majority of it now with a portion of it.
Speaker Change: And a portion.
Speaker Change: Cap rate compression.
Speaker Change: But majority is operation plan.
Speaker Change: Okay. Thank you.
Speaker Change: Well I think.
Speaker Change: We can't get back to that create more attention.
Speaker Change: We expect the tenant vacation.
Speaker Change: Hum.
Speaker Change: Within the <unk>.
Speaker Change: But I think we will be looking to give you a bit more color into the exact.
Speaker Change: Generally.
Speaker Change: We are not the best.
Speaker Change: Asset class that will be hit in terms of attention but.
Wei Liao: If you look at the outbound statistics for Hong Kong, that number actually is starting to flatten out. In the previous months over the past financial year, that could have been easily a 30%, 40% to 50% increase, whereas over the last one month or so, that increase has been fairly muted. So, the mall continues to improve its tenement, a number of new tenants have been brought in. as well as a number of pop-up stores that we have put through to the mall. The mall continues to be very strong in running marketing activities to drive footfall and it remains very popular with social media-related events as well as with the stars in Hong Kong.
Speaker Change: When there is uncertainty.
Speaker Change: Companies will be a little bit slower or a bit more cautious in India.
Speaker Change: India consumption of profit space. Okay. So I think we are expecting a slower decision making.
Speaker Change: But I think we will take the lead from what we see how it all pans out with other sector that it will.
Speaker Change: Slowly trick.
Yeah.
Speaker Change: Trigger.
Speaker Change: Right.
Speaker Change: Slowdown through our epitaph, okay. So I think we don't want to share a bit more on the specific market that.
Speaker Change: <unk> and <unk> that's it okay.
Speaker Change: Okay.
Speaker Change: Maybe let's start with Singapore, if you look at our Singapore.
Operator: Okay, so we can come to the end of the presentation and look back to the links.
Speaker Change: Portfolio.
Speaker Change: <unk> offers at the top of it.
Speaker Change: Second data total office MBP.
Operator: Thank you, Jenica and Wee Long. We are now ready to take your questions.
Speaker Change: If you look at it the majority of our tenants.
Operator: We kindly request that all analysts state your name and the firm before asking your question and also raise your hand to the team so I could allocate the terms accordingly. And for the online participants, we invite you to send your questions to the online chat space.
Speaker Change: The it sector financial sector, as well as well as a revised telehealth departure of government tenders as well.
Speaker Change: Looking through the portfolio review that.
Speaker Change: <unk>.
Speaker Change: Softness is probably from the shipping and transport sector.
Terrence Kee: So first, we have Terrence for J.T. Morgan. Terrence, you may go ahead. Thanks so much, Sharon and team. This is Terence Kee from JPMorgan. I just wanted to ask on Japan occupancies, especially for MBT and Makuhari. Is this the load that we are seeing? Any more vacancies expected for FY26? Okay, the FGM property, as we have announced and shared with the market, their tenancy will end in 2026. So, in terms of valuation, we have taken it down. In terms of the number, in terms of occupancy, when you see the number, come 2026, there will be a drop due to Fujitsu.
Speaker Change: During the last month it was in 2017.
Speaker Change: 74, the ATP risks.
Speaker Change: A lot of our shipping tenants actually have the repeat of weakness and have you had a number of months.
Speaker Change: 100 and yours.
Speaker Change: R&D.
Speaker Change: Early days number of tenders have come to us before is pre termination requests. However.
We have been in discussions with a solid dependent potentially for our expansion of spaces.
Speaker Change: One of them has come back to us to say that there will be news to rather than rather than expense. So we are seeing a little bit of a slowdown in terms of the sector as much as probably as much.
Speaker Change: Uncertainties, and additionally from a direct impact of the tariffs.
Speaker Change: So moving on from our Singapore the sector the country that is.
Speaker Change: Mostly the effect that will likely to be slightly to be in China.
Sharon Lin: But valuation-wise, we have taken the majority of the valuation down already. In terms of master lease, are all the master leases for MBP have they? So the master leases for Sayco, okay, we have two master leases that we share with them. two big ones, which is Seiko and Fujitsu. Seiko, we have already taken down. Both of the assets, we have taken down the VAL. Occupancy is showing up already, or has shown up for the Seiko asset, which is now called MBT. Okay, that's the building. Now, for Fujitsu, it's 2026. Valuation taken down, but the occupancy, you will see it coming down in 2026.
Speaker Change: To set the two assets.
Speaker Change: Different performances.
Speaker Change: If you look at Shanghai Shanghai.
Speaker Change: As a business partner et cetera.
Speaker Change: The operations that are largely supporting manufacturing ophthalmic supporting.
Speaker Change: Semiconductor related activities.
Speaker Change: However, we do have a number of office of U S companies in the.
Speaker Change: In Central Plaza.
Speaker Change: Well they have mostly continues off over the last few years, albeit in close contact with all of the tenants.
Speaker Change: With all of the tenants.
Speaker Change: To know that.
Speaker Change: There will be some impact followed the tenants are looking at.
Speaker Change: Housing with the leases expire, but that's largely related to the slowdown of the economy in China, rather than direct competitor protections.
Sharon Lin: In terms of the negative reversions, how should we expect reversions to trend for the overseas assets, especially for festival walks, China and Japan? Okay, I think if you look at our entire portfolio reversion, if you look at the whole portfolio, it's a positive 3, over 3 over percent, and that is led by people's cities. Okay, the rest of the overseas are in the single digits. Okay, if we're talking about Hong Kong and China, we're talking about single digits. I think right now, there is still a little bit of uncertainty. Okay, but I think we're trying to keep the...
Speaker Change: The Beijing office market.
Speaker Change: In some ways insulator and that's largely because during the previous royalty retention most of a lot of the large American tendencies within our buildings have actually already left and most of those will take a step back too.
Speaker Change: The PT market.
Speaker Change: There's a lot more local local Chinese companies to gas basis.
Speaker Change: You can give me pause.
Speaker Change: We haven't we haven't we haven't heard of any particular for many other tenants about about.
The impact of the tariffs.
Speaker Change: Even though we touch base with our largest tenant.
Speaker Change: Dealer feedback was largely with more data.
Speaker Change: The slowing China automobile market has been a bigger impact on them.
Sharon Lin: and try not to expand this negative rented reversion beyond what we're... Thank you.
Speaker Change: And at high risk already.
Speaker Change: Hum.
Speaker Change: So far for the Japan portfolio, we aren't seeing anything as well.
Sharon Lin: And finally for me, I just want to ask on the capital distribution, this $7.7 million, can I ask how much has been utilised and how much remains to be distributed? Can you repeat your question again, Terence, please? The $7.7 million, I understand that there's a $7.7 million capital distribution from the balance allowance from the divestment of Mapletree Anson. No, I think you got it wrong. We do not, we do not distribute any divestment gain on Mapletree and CERN. If you are referring to Our footnote in the financials in the SGXNet on the allowance that is relating to Mapletree and CERN, I think this is something to do with the tax because we used to claim capital allowance from Mapletree and CERN and some of it has not been claimed and under Singapore Tax, you've got to claim all.
Speaker Change: And Korea, our our tenants within the building are largely serving the local market not so much not so much export related.
Speaker Change: So moving onto the two retail assets I think in particular for Singapore for Singapore in terms of.
Speaker Change: Retail <unk>.
Speaker Change: Usually usually we do see a stronger.
Speaker Change: We see the the cash as per franchisee stronger windows, there's certain amount of uncertainty.
Speaker Change: While the <unk> and <unk>.
Speaker Change: People tend to spend less.
Speaker Change: On on luxuries.
Speaker Change: And discretionary items as non discretionary spending will improve and that would that would that Libya upside for because if you add the majority of independents off.
Speaker Change: We generally do not have luxury tenants.
Speaker Change: First of all.
Speaker Change: We do think that there should be some positive impact as well. However, the larger picture really has been really will continue to be debt.
Sharon Lin: So it's a deduction from our BI and then we just adjust it in the DTC adjustment. It's in our profit so we just adjust it to our BI. So effectively we are not paying out anything. Okay, that clarifies. Thank you so much. It's just a book classification. We are not paying out anything. Okay, thank you. I'll leave it to the rest. Thanks. Thank you.
Speaker Change: Long dollar remains strong and debt.
Speaker Change: The connection with China.
Speaker Change: This is easy.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: The connection to China remains fairly easy and there.
Speaker Change: It will be dealt with stupid smaller there will still be a multiple of spending which will flow through to the center.
Speaker Change: As Sharon mentioned, we do expect the negative revisions do best.
Speaker Change: Expect that to be negative revisions.
Geraldine Wong: Can we have Geraldine from CBS next?
Speaker Change: Probably missing wages as we continue to see.
Sharon Lin: Hi, good morning Sharon and everyone. This is Geraldine from DBS. I think Vivociti's valuation was a surprise. I was just wondering how much of the AEI that you've done is reflected in this valuation uplift? Okay, majority is due to operations, okay? I think you see the rental reversion over the years, the year, it has gone up. So, operations contributed majority of it, then with a portion of AEI and a portion of cap rate compression. But majority is operations-led.
Speaker Change: I mean in general vendors.
Speaker Change: There is uncertainty.
Speaker Change: <unk> spending.
Speaker Change: More towards the discretionary discretionary side and Thats benefit that benefit both of them are more slightly because of the fact that.
Speaker Change: Yes.
Speaker Change: The high end malls.
Speaker Change: First of all this cases located within the last few residential area.
Speaker Change: Serving the consumption of the people who looked at it that we do have that here.
Speaker Change: Pop up you will see us.
Speaker Change: Well.
And we do expect that in <unk>.
Speaker Change: From a volume of tourism.
Speaker Change: We decided to be more muted.
Geraldine Wong: Okay, thank you.
Sharon Lin: Maybe one more, I think, to drag it back to the trade war tensions. Any expected tenant vacation or any talks of pre-term? Not that we are aware of, but I think Wee Lim can give you a bit more colour into the exact, because I think, generally, we are not the first asset class that will be hit in terms of attention. But when there is uncertainty, all companies will be a little bit slower or a bit more cautious in their consumption of office space. Okay, so I think we are expecting a slower decision-making, but I think we will take the lead from what we see, how it all pans out with other sectors, then it will slowly trigger down, sorry.
Speaker Change: So the other the other point that I'll add our.
Speaker Change: Our leasing colleagues sharing is from their dealings in the market today tenants prospects a little bit more.
Speaker Change: More cost conscious.
Speaker Change: So that's where I think we better today because.
Speaker Change: Our office is our offices are slightly in Singapore that need decentralized.
Speaker Change: Nearly naphtha town and off.
Speaker Change: Our FIFA quantity.
Speaker Change: And price that pricing differential that will place us at that although that rate.
Speaker Change: But it's a little bit more uncertain.
Speaker Change: To become more cost conscious and that way I think our at our offices will face.
Speaker Change: We'll be case will be better pace.
Speaker Change: Yeah.
Speaker Change: Thanks Shannon.
Speaker Change: So kind of taking the time to say okay.
Sharon Lin: flow down to our asset class.
Speaker Change: Okay.
Wee Koh: Okay, so I think William will share a bit more on the specific markets that we're in and where we see our tenancies and how they are affected. Okay, so maybe let's start with Singapore. If you look at our Singapore portfolio, and here we're talking about office and BP, we'll talk about retail slightly later. So for office and BP, if you look at it, the majority of our tenants are in the IT sector, financial sector, as well as we've got a fairly healthy portion of government tenants as well. Looking through the portfolio, we feel that the likelihood for softness is probably from the shipping and transport sector.
Speaker Change: Thank you Garik term.
Speaker Change: Thank you Nick.
Speaker Change: Hi morning.
Speaker Change: Hi, Good morning, just want to follow up on that.
Speaker Change: Excellent gains from from Edson. So would you be would you consider paying off divestment gains too sharp GPU, especially as you mentioned the precious on GPU.
Speaker Change: No okay.
Speaker Change: I think from from from the start we did say that we are not.
Speaker Change: We are not distributing the gains.
Speaker Change: We're keeping our keeping it before.
Speaker Change: To improve our balance sheet.
Wee Koh: We saw this during the last round of trade wars in the 2017-2018 period, where a lot of our shipping tenants actually had a bit of weakness, and we had a number of non-renewals. Currently, it's still early days. None of the tenants have come to us with pre-termination requests. However, we have been in discussions with some of the tenants potentially for expansion of spaces, and at least one of them has come back to us to say that they will renew instead rather than expand. So we are seeing a little bit of slowdown in terms of their sector.
Speaker Change: I mean right at that time.
Speaker Change: Our our gearing was upset them at all and I think we have successfully brought up to us comfortable zone at <unk>.
Speaker Change: I think we will see along the way and assess future.
Speaker Change: If there is any potential future positive gains from divestment, we will we may consider.
Speaker Change: But for now.
Speaker Change: We have we have done.
Speaker Change: Send it that we will keep it to strengthen our balance sheet.
Speaker Change: Maybe let me add on that $7 7 million of the deals that you've seen in the next.
Wee Koh: It's probably as much from uncertainty as it is from direct impact of the tariffs.
Speaker Change: That relates to answer it.
Speaker Change: It's got a lot of room.
Wee Koh: So, moving on from Singapore, the sector, the country that is... Most greatly affected is likely to be China, two assets that have quite different performances. If you look at Shanghai, Shanghai is a business park asset, and the operations there are largely supporting manufacturing of semiconductor-related activities. We however do have a number of U.S. companies in San Diego Plaza, and while they have mostly continued with us over the last few years, we are in close contact with all of the tenants. We do know that there will be some pullback, some of the tenants are looking at downsizing when their leases expire, but that's largely related to the slowdown of the economy in San Diego rather than directly with the tenants.
Speaker Change: So for 2015 second Ofcom might exercise income so I have to sleep through capital distributions dependency.
Speaker Change: So we are not distributing any capital gains on the back end.
Speaker Change: <unk>.
Speaker Change: Yep got it understood.
Speaker Change: Correct.
Speaker Change: Scott.
Speaker Change: Mtc Google.
Speaker Change: If we go back filling progress we have yet right now.
Speaker Change: So.
Speaker Change: Florida toothpaste tooth loss at Google gave up during the previous can do well.
Speaker Change: We are currently marketing the space there are a number of tenants who are looking at it.
Speaker Change: The reality is the biggest.
Speaker Change: Because basically spaces, which are large and very very few tenants looking at it currently.
Speaker Change: Engaging the one or two potential tenants or at least six months is about three to six months.
Speaker Change: And we're still working on that working with them on the phone.
Speaker Change: On when they can take over as well.
Speaker Change: What pieces.
Speaker Change: Eventually find legal entity.
Wee Koh: The Beijing office market is in some ways insulated, and that's largely because during the previous round of trade tensions, a lot of the large American tenants within our building have actually already left, and most of those vacancies have been backfilled. So the Beijing market now is a lot more local. There are a lot more local Chinese companies taking up spaces in Gateway Plaza. We haven't heard in particular from any other tenants about the impact of the tariffs. Even when we touched base with our largest tenants, their feedback was largely more that the slowing China automobile market has been a bigger impact on them than the tariffs directly.
Speaker Change: <unk>.
Speaker Change: You mentioned earlier decision, making has slowed down quite a lot.
Speaker Change: And a lot of tenants are tend to be a lot more cost conscious currently costs such as going forward.
Speaker Change: Alright.
Speaker Change: Percentage progress Todd.
Speaker Change: For the two floors that Doug will get up yes.
Speaker Change: Probably nothing but both of those are being looked at by being looked at by by tenants to be picking up.
Speaker Change: Got it.
Speaker Change: Thank you.
Speaker Change: Come to fruition.
Speaker Change: Two you spoke about tenants moving from CBD to talk.
Eric: Sure Eric.
Eric: Could you give a flavor of where which industries therefrom.
Eric: So we have that we have.
Wee Koh: So far, for the Japan portfolio, we aren't seeing anything as well. In Korea, our tenants within the building are largely serving the local market, not so much export-related.
Eric: Yes.
Speaker Change: Fairly wide range across shipping companies financial institutions I thought.
Eric: Got you.
Eric: As usual it companies as well as Mcg.
Eric: Alright.
Wee Koh: So, moving on to the two retail assets, I think in particular for Singapore, in terms of retail, usually, we do see the retail assets performing slightly stronger when there's a certain amount of uncertainty. People tend to spend less on luxuries and discretionary items, whereas non-discretionary spending will usually improve. That will definitely be an upside for Wee Koh City, where the majority of the tenants are, where we generally do not have luxury tenants. For Festival Walk, we do think that there should be some positive impact as well. However, the larger picture really will continue to be that the Hong Kong dollar remains strong and that the connection with China is easy.
Eric: Sure.
Eric: Quite possibly but.
Eric: Definitely is across all sectors.
Eric: When when CVD rentals stopped across 13 $14.
Eric: It becomes a little bit more comfortable for them in terms of.
Eric: Of the kiosk basis.
Eric: Most of the tenants will start looking at what the more cost effective.
Eric: But the more cost effective solution in some cases, they will they will split offices, which we have seen.
Eric: Front office leases in the CBD as well as.
Eric: As well as taking back office spaces or mid office spaces here.
Eric: The tight supply in the CBD.
Eric: That's helped to push up rentals.
Eric:
Eric: It happens.
Eric: More tenders are small tenants will start looking at least the rationalized to office spaces.
Eric: Got it.
Eric: And just last one last question if duplicity once the current occupancy costs.
Eric: And when will these double digit professions come normalized back to single digits.
Wee Koh: The connection to China remains fairly easy and there will still be an amount of spending which will flow through to Shenzhen. That's why, as Sharon mentioned, we do expect there to be negative rental reversions, but probably in the same range as we are currently in. I mean, in general, when there is uncertainty, retail spending does flip more towards the discretionary side, and that does benefit both of our malls slightly because of the fact that they are not particularly high-end malls, and in FestiVox's case, located within a largely residential area and serving the consumption of the people located there.
Eric: Okay, I think 10 over a set of question is actually very very high.
Speaker Change: <unk> hi.
Speaker Change: And I think we are consistently being able to do so but I think we have to be a.
Speaker Change: A little bit more muted in our actions going forward, depending on which at least is coming up so a lot of eventual revisions due to changes in trade.
Speaker Change: Changes in trade or improvement in tenancy type, we didnt SMT.
Speaker Change: So that's where the team has been able to capture such Ethan rental reversion. For example, we have one restaurant.
Wee Koh: We do have that here in Singapore for diversity as well, and we do expect that the impact from tourism is likely to be more muted. So the other point that our leasing colleagues are sharing is from their dealings in the market today, tenants' prospects are a little bit more cost-conscious, so that's where I think we sit better today because our offices are slightly, in Singapore, slightly decentralized, but near enough to town and of good quality, of decent quality, and pricing, there is a differential that will place us better. Although everybody is a little bit more uncertain, they become more cost-conscious, and that's where I think our offices will be better placed.
Speaker Change: Bear with us for 10 years.
Speaker Change: What the partner III and there was just a search of a turn into a better operating one.
Speaker Change: <unk> was that there was a very decent chunk.
Speaker Change: I think vivo itself.
Speaker Change: My worry I think we have seen that domestic spending will continue when they stopped second form of uncertainty in the market on top of that we are also improving our cell operationally with <unk> corn.
Speaker Change: <unk> seen how we have reconfigured order kiosks and macchiato increasing in number using <unk>.
Speaker Change: Moving our customer service office and also using common area spaces to better utilize the floor space to create a.
Speaker Change: But not.
Speaker Change: And then E flow 70, Meg even pallet positions are included.
Operator: Thanks Jemma and Wee Long for the very good color and taking the time to share. Yeah, thank you.
Speaker Change: In the full upgrade.
Speaker Change: The other one the other AI that we are doing is the conversion of compounds.
Derek Tan: Can we have Derek Tan from Mobile Standing Next?
Speaker Change: And reconfiguring space into retail that will be quite interesting.
Sharon Lin: Derek, over to you. Hi, good morning. I just want to follow up on the divestment gains from Anson. So, would you consider paying out divestment gains to short DPU, especially as you've mentioned the pressures on DPU? Okay. I think from the start, we did say that we are not... We are not distributing the gains, we are keeping it to improve our balance sheet. I mean, right at that time, our gearing was off a certain level, and I think we have successfully brought up to a super comfortable zone at 37. I think we will see along the way and assess future, if there is any potential future positive gains from divestment, we will, we may consider, but for Anton, no, we have, we have decided that we will keep it to strengthen our balance sheet.
Speaker Change: Because that is a frac.
Speaker Change: We're the <unk> impact.
Speaker Change: Skip to the mall, so Tennessee has been sign up successfully.
Speaker Change: Very nice.
Speaker Change: Amenities.
Speaker Change: Okay.
Speaker Change: So I think this is diversity major plus point.
Speaker Change: Have a big space.
Speaker Change: We have never stopped overtime here in.
Speaker Change: And continuously upgrading the state aid for revenue off of certification and.
Speaker Change: And so.
Speaker Change: So rent every version of course the team is out we will be very measured at okay, where there is potential to move it will move but I think we I cannot guarantee that we will all be doing.
Speaker Change: And over time every year.
Speaker Change: Actually if you look at the market, but the rental reversion is.
Speaker Change: Consistently if not some.
Speaker Change: Yes.
Speaker Change: In most of the animals again, so I think diversity is a little bit one off yes.
Jianqian Wang: Maybe let me add on, on that $7.7 million that you see in the SGX net, that relates to Anson's capital allowance. So it's been taken off from my taxable income, so I have to do it through a capital distribution to balance it out. So we are not distributing any capital gain from the Anson budget.
Speaker Change: Occupancy cost is always therefore break around 20.
Speaker Change: So while we move up the things we will still have to try to move the sales. So this wrong I think we are talking to retail sales, okay, but we have not.
Derek Tan: Yep, got it, understood.
Speaker Change: Not significantly over the retail sales index across refresh a lot of unit abatement too well.
Sharon Lin: And could I also ask on the NPC Google backfilling progress, where are we at right now? Thank you. For the two floors that Google gave up during the previous renewal, we are currently still marketing the space. There are a number of tenants who are looking at it. But the reality is that spaces which are large have very, very few tenants looking at it currently. We have been engaging the one or two potential tenants for at least six months, about three to six months already. And we are still working with them on when they can take over as well as what spaces they are eventually finally going to take.
While we trash that unit's abatement to EMEA that we are not trading so when we do the sales comparison.
Speaker Change: Do not remove when they are.
When the other going AI, so the way.
Speaker Change: Does it is it is okay. So we do not remove my red doing <unk> and Takeda sales on a per square foot basis. So technically we are not comparing on a like for like basis, but we are still tracking retail sales in that even though even though we have a lot of unit four at that kind of Huntsman works at <unk>.
Speaker Change: So in short answer to you is there.
Speaker Change: Around the same occupancy costs.
Speaker Change: Thank you.
Sharon Lin: We mentioned earlier, decision-making has slowed down quite a lot and a lot of tenants tend to be a lot more cost-conscious going forward.
Speaker Change: Yeah.
Speaker Change: Great.
Speaker Change: And then the question remains.
Speaker Change: No.
Sharon Lin: What is the percentage of progress done? for the two floors that Google gave up, currently nothing. Both floors are being looked at by tenants to be taken up in their entirety.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Alright, Mickey happening again.
Speaker Change: Again with good morning, Mike Good morning.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Can you comment a bit on BMW and.
Speaker Change: For BMW.
Speaker Change: <unk> Pizza, Barry that is still in China office occupying a major leases.
Sharon Lin: You spoke about tenants moving from CBD to business park, cheaper business park area. Can you give a flavour of where, which industries they are from? So, it's a fairly wide range. I've got shipping companies, I've got financial institutions, I've got the usual IT companies as well, FMCG even. So, not quite fast-moving, but definitely it's across all sectors. When CBD rentals start to cross $13, $14, it becomes a little bit more comfortable for them in terms of taking up spaces. Most of the tenants will start looking at what's the more cost-effective solution. In some cases, they will split offices, which we have seen, taking some office spaces in the CBD as well as...
<unk> two zero to BMW is today.
Speaker Change: Okay, and we did renew the lease about two <unk> in December.
Speaker Change: And this is due to 288 pages demand, where we knew that.
Speaker Change: We have renewed the lease.
Speaker Change: So I think in terms of operation staff are stable as of now.
Speaker Change: Thus, the BMW and the feed themselves.
Speaker Change: I think it's a signed contract nobody has a pretax cloth anything you want to treat that it might be negotiated.
Speaker Change: Not a lot you can negotiate with us.
Speaker Change: But not a lot in the contract.
Speaker Change: None of us none at all our contracts allow you the freedom.
Speaker Change: Oh look at that.
Speaker Change: Because Japan is rolling leases right, so enrolling metis by nature.
Sharon Lin: as well as taking back office spaces or mid-office spaces here. I mean, the type of supply in the CBD does help to push up rentals, and when that happens, more tenants will start looking at ways to rationalise their office spaces.
Speaker Change: Not to beat up.
Speaker Change: Okay.
Speaker Change: Singapore, they cannot get walkaway yeah.
Speaker Change: Okay. Okay. So as far as Q4 at the end of June.
Speaker Change: The issue we made them.
Derek Tan: Got it, understood.
Dan: Hey, Dan I can just tell you that they are there.
Derek Tan: And just one last question.
Sharon Lin: At VivoCity, what is the current occupancy cost and when will these double-digit versions kind of normalize back to single-digit? Okay, I think 10 over percent of rental reversion is actually very very high, okay, decently high. And I think we are consistently being able to do so, but I think we have to be a little bit more muted in our actions going forward, depending on which are the leases that's coming up. So a lot of the rental reversions are due to changes in trade, okay, changes in trade or improvement in tenancy type within the same trade.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Maybe <unk> abuse in the Gateway Plaza.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay, Okay, and just going back to first of all I think you mentioned it as soon as bottom up and.
Speaker Change: As for the negative rent reversion rate holiday more do you think that could continue.
Speaker Change: Especially given given the current tariff rule.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: I can't really predict the general economy at this moment okay.
Speaker Change: Right now.
Speaker Change: Everything is a little bit volatile it changes, but for retail itself.
Sharon Lin: So that's where the team has been able to capture such decent rental reversion. For example, we had one restaurant that was there with us for 10 years. It was the bottom three, and there was just a switch of a tenant to a better operating one. The rental reversion was a very decent jump. So I think Vivo itself, at least of my worry, I think we have seen that domestic spending will continue when there is a certain form of uncertainty in the market. On top of that, we are also improving ourselves operationally with all the AERs.
I think.
Speaker Change: When you see the Hong Kong dollar slightly weakening which is technically you're right.
Speaker Change: I believe spending will be.
Speaker Change: Denmark Hong Kong.
Speaker Change: Our total consumption is growing on a consumption has some leakage into September so the Hong Kong dollar strength has some barriers to it.
Speaker Change: So for me I can tell you when.
Speaker Change: The whole world is going to change or when we're going to see the partner now is it feeling a little bit of pressure I think entire Hong Kong.
Speaker Change: So let's think about festival.
Speaker Change: One we are in terms of retail sales, even though it's negative.
Sharon Lin: I think if you have gone to Vivo recently, you have seen how we have reconfigured all the kiosks, and the kiosk is increasing the numbers, using, removing our customer service office, and also using common area spaces to better utilize the floor space to create an L.A. The look, feel, M&E, flow, sparency mix, even toilet provisions are all included in the full upgrade. The other one, the other AI that we are doing, which is the conversion of car... and reconfiguring the space into retail. That will be quite interesting because that is the front of where the MRT Ingress-Egress is, straight to the mall.
Speaker Change: <unk> negative and the general Hong Kong retail shelf.
Speaker Change: It is performing better than the general retail in Hong Kong protected by law.
Speaker Change: So when one icon.
Speaker Change: <unk>.
Speaker Change: That's a good first step that we will see immediate will be banner, Hong Kong dollar weakens a little bit Okay, again, Chinese yuan or whatever then that today, you'll see the spending I believe was that a bit for Hong Kong.
Speaker Change: Okay, but generally where is it going to stop flying Okay is a bigger economic question okay.
Speaker Change: Is there is a bigger question in terms of where Hong Kong Bud light as a financial sector again, so that I think AR.
Speaker Change: It's anybody's guess today.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay, and just one last one on valuations in China, right, you've taken them down quite.
Sharon Lin: So, tenancies have been signed up successfully. It will be very nice. The whole loop field amenities will all be up. So I think this is VivoCity's major plus point. We have a big space. We have never stopped over 10 years in continuously upgrading the space, be it for revenue or be it for beautification and look ambient spaces. So rental reversion, of course, the team is, will be very measured, okay, where there is potential to move, they will move. But I think we, I cannot guarantee that we will all be doing 10 over percent every year.
Speaker Change: Quite a bit this quarter.
Speaker Change: You do think that that's probably.
Speaker Change: The.
Speaker Change: Yes.
Speaker Change: Okay. The more most of it okay the overseas asset okay.
Speaker Change: Is it a huge drop is a reflection of the operation.
Speaker Change: Hey.
Speaker Change: We will talk about really ratios dropped like 40 nano is not in that in that scale, we have not got in that manner. Okay. So I'm not saying that oversees the clock.
Speaker Change: Is directly linked to the operations.
Speaker Change: China Hong Kong drop there is there is a portion of cap rate expansion.
Speaker Change: So are we going to see depending on where the operation goal I think China that will still be a little bit of weakness in terms of valuation.
Sharon Lin: It is, actually, if you look at the market, 10 over percent rental reversion is, consistently is not some, I've not seen it in most of the other malls, okay? So I think VivoCity is a little bit one-off, yeah. Occupancy cost is always will break around $20,000. So while we move up the things, we will still have to try to move the sales. So this round, I think we are tracking retail sales, okay, but we have not significantly over the retail sales index. It's because we trash a lot of units at Basement 2. When we trash the units at Basement 2, it means that we are not trading.
Speaker Change: Hong Kong is majority of the drop is due to the.
Speaker Change: Okay, now where the cap rate will continue to expand it will depend on where the value is at the analyst day. This found at that time.
Speaker Change: Okay.
Speaker Change: Expansion. So it may continue we're not sure.
Speaker Change: But we see ourselves in terms of our financial strength to day after selling and sit in all our plants, our Singapore holding up strongly.
Sharon Lin: So when we do the sales comparison, we do not remove when they are undergoing AEI. So the way MPEG does it is as is, okay? So we do not remove when we are doing AEI and calculate the sales on a per square foot basis. So technically, we are not comparing on a light-for-light basis, but we are still tracking retail sales index even though we have trashed a lot of units for asset enhancement works at the Basement 2. So in short answer to you is we are still around the same occupancy cost.
Speaker Change: Our total Dell actually has gone up by the strength of our 60, <unk>, but that portfolio, which is helped by Singapore.
Singapore has gone up and a 60 or by kind of our portfolio. It brings our getting to about 37 ish.
Speaker Change: So it won't be able to withstand any shops, okay. In terms of any major cap rate changes I'm, not saying there will be any major kept retained by <unk>.
Speaker Change: For China greater.
Speaker Change: Greater China.
Speaker Change: Our portfolio will be able to withstand it okay. So I think our our financial strength to date.
Derek Tan: Thank you.
Speaker Change: Okay.
Speaker Change: So we extend the next one yes, if there is any change.
Derek Tan: Derek, do you have any other questions or may I move on for now?
Speaker Change: Changes in cafe.
Speaker Change: Okay. So valuation even if it drops will be a reflection of the softening operation.
Operator: Okay, it's alright.
Brandon Lee: Next, we have Brandon.
Brandon Lee: Brandon, nice to have you again. Hey, morning. Morning. Hey, good morning, Sharon. All good? Yes.
Speaker Change: In China.
Speaker Change: But we will be able to expand based on our current.
Sharon Lin: Can you comment a bit on BMW and taste? For BMW, do you think that it's actually pre-term? BMW is very there. He's still in our China office, occupying our major. His lease is still 2028. BMW is still there. Okay and we did renew the lease about two over years ago in December so we still and the lease is still 2028.
Speaker Change: Capital structure.
Sharon: Okay. Thank you Sharon obviously, thanks, so much we get here.
Speaker Change: Thank you Brenda.
Speaker Change: Sure Good morning, Amit.
Sharon: Yeah.
Sharon: Okay.
Yeah, it's been a bit about the cap rate compression for Singapore, especially for NBC and people.
Sharon Lin: TASTE. TASTE is still there. We have renewed the we have renewed the lease. So, I think in terms of operations, they are quite stable as of now.
Sharon: Okay.
Sharon: Okay demand. So if you look at it all kept rates are running cat is high for us.
Sharon: Okay. So the margin on cap rate compression. If you look at our past deals is tighter than what it is.
Sharon Lin: Does BMW have any pre-term clause? I think it's a fine contract. Nobody has a pre-term clause. Anything you want to pre-term, it must be negotiated. Not a lot you can negotiate with us. but not allowed in the contract. None of our contracts allow you to pre-term. Only Japan, because Japan is rolling deserts, right? So, rolling deserts by nature, they are allowed to pre-turbine. The rest of the party is very similar to Singapore. They cannot just walk away. Okay, so it's what I assume for BMW, they should remain. Oh, they are there. I can just tell you that they are there.
Sharon: <unk> really had no choice that they really have to give it to me because it was transaction.
Sharon: But majority of vivant valuation gain is operation.
Sharon: Its operation that MBS doesn't doesn't get me to that $600 million by 600 10-K filed on it.
Sharon: Yes.
George the operation now NBC NBC is due to transactions okay.
Sharon: They have done a mixture they have to date typically valley west will have to take in transaction cap.
Sharon: And there will be a bit measured in tons, maybe adjusting market rent down a bit.
Sharon: There was a mixture of debt.
Sharon: The reason behind the change in his majority transaction market transaction lab, and our own operations positive being positive.
Sharon Lin: They are still there. There are many, many, many, many BMWs in the Gateway Plaza car park. Okay, okay.
Sharon: For retail.
Sharon Lin: And just going back to Festival Walk, I think we earlier mentioned that the sales has bottomed out. And as for the negative rent reversion, right, how long more do you think that could continue, especially given the current tariff law? Okay, you see, I can't really predict the general economy at this moment, okay? Right now, everything is a little bit volatile, it changes, but for retail itself, I think when you see the Hong Kong dollar slightly weakening, which is technically U.S. I believe spending will be tilted back a bit more. I was told consumption is going on, but consumption has some leakage into Shenzhen.
Yes.
Sharon: Yes.
Sharon: Okay.
Speaker Change: Second question is on cost of debt. If you look at the debt. That's expiring. This is what youre signing Mr. I expect our cost of debt for the next financial year.
Sharon: It's currently at EBITDA.
Sharon: Now they don't quite see the D D.
Sharon: I would think it will be around this level.
Sharon: For the next 12 months.
Sharon: Okay paper to show us the official expiring.
Sharon: Cost on that.
Sharon: Yeah.
Sharon: Actually average expiring debt cost authentic yet is not quite meaningful because some of the hedge some of the swap. So what I can tell you is for them this coming year financial yet.
Sharon: That is actually about.
Sharon: 262, 7% on a blended BC.
Sharon Lin: So the Hong Kong dollar strength has some bearings to it. So for me, I can't tell you when... the whole world is going to change, or when we're going to see the bottling up. Now, is it feeling a little bit of pressure? I think entire Hong Kong is. But a good thing about Festival Walk is, one, we are, in terms of retail sales, even though it's negative, we are a lesser negative than the general Hong Kong retail sales. So it means it is performing better than the general retail in Hong Kong for Festival Walk.
Sharon: Our net debt rolls off it will be the vertex tool booking the.
Sharon: And the majority of the C suite that is expiring in first quarter of Evo with accounting markedly.
Sharon: There will be some increase but we are also working hot talking to the bank to renegotiate them the margin.
Sharon: And doing a lot of whatever things that we can do within our portfolio to bring down the cost of debt.
Sharon: So that to cushion the impact of when lower re <unk>.
Sharon Lin: So when will I turn? I think a good first step that I will see immediately will be when the Hong Kong dollar weakens a little bit, again, Chinese yuan or whatever, then that's where you see the spending, I believe, will tilt back a bit for Hong Kong. But generally, where is it going to start flying is a bigger economic question. OK, it's a bigger question in terms of where Hong Kong would lie as a financial sector. OK, so that, I think, is anybody's guess today.
Roll off.
Sharon: It will be paying our bills.
At the same time, we are also seeing margin going down because we had been going back to renegotiate.
Sharon: Hopefully that can offset each other and we can keep the Xbox.
Sharon: <unk> continue.
Sharon: Okay got it thank you.
Sharon: Okay.
Sharon: Thank you Duncan.
Sharon: <unk> from GBM.
Sharon: Yeah.
Sharon: Hi, Good morning can you hear me.
Sharon: Yes.
Speaker Change: Good morning, Gary and team I guess two questions right.
Sharon: First one is on your real right could you give us a bit more color.
Sharon Lin: Okay, just one last one on valuations in China, right? You've taken them down quite a bit this quarter. Do you think that that's probably the worst that we have seen? Okay, the most of our, most of our, okay, the overseas assets, okay. Is it a huge drop? It's a reflection of the operation. Okay, if you talk about really, really huge drop, like 30, 40, no, no, no, it's not in that scale. We have not dropped in that manner. Okay, so I'm just saying that overseas drop is directly linked to the operation. China, Hong Kong, there is a portion of cap rate expansion.
Sharon: For the retail office business.
Bob: Hi, Bob.
Speaker Change: Expiries are you expecting any churn or downsizing, maybe some thoughts around that given the current climate. So that's my first question.
Bob: Yes.
Speaker Change: My second question back to what Ghansham Osprey, So janika, you've kept interest rates pretty stable, where it used to carrying for flattish I'm. Just wondering whether are you being conservative on that front or because you have.
Bob: You remove Hong Kong to China right.
Bob: No.
Speaker Change: First Greg down so rightfully I thought that that thank you very much.
Bob: <unk>.
Speaker Change: [laughter]. Thank you for asking that question to my CFO.
Bob: Okay, Let me take that.
Speaker Change: Just a.
Sharon Lin: Okay, so are we going to see, depending on where the operation goes, I think China, there will still be a little bit of weakness in terms of elevation. Hong Kong itself, the majority of the drop is due to the cap rate. Now, where the cap rate will continue to expand, it will depend on where the valuers face it at the end of the time. This round, they did a 10-bit expansion, so it may continue. We're not sure, but what we see ourselves in terms of our financial strength today, after selling Anson and all, plus our Singapore holding up strongly, our total value actually has gone up by the strength of our 60% portfolio, which is held by Singapore.
Bob: Sorry, just to be mindful of that.
Bob: So I just wondering maybe what you think you will see that three five to $3 four autonomy three six autoimmune right.
Bob: Okay.
Bob: [laughter] okay.
Thanks Lee.
Bob: You expect that your interest rates should have.
Bob: That's how we should look at it right.
Speaker Change: No no no no no no no.
Bob: Can we do we do have we do have.
Bob: Interest rates are hiring at the moment and it's going to need to fall.
Bob: Yes.
Bob: Next <unk> up too much screening 27, okay. So when when that piece of.
Bob: The interest we cannot go down too much.
And then after much may need and Kevin with all of our high interest rate swaps expire and we rode and networks English EBIT at depending on the market and if the market seems to date any risky literally now and I can tell you.
Bob: No.
Sharon Lin: Singapore has gone up, and it's 60% of our portfolio. It brings our gearing to about 37-ish. So, it won't be able to withstand any shocks, okay, in terms of any major cap rate changes. I'm not saying there will be any major cap rate changes, but if there is for China or greater China, our portfolio will be able to withstand that, okay? So, I think our financial strength today... can take us to withstand the next 1-2 years, if there is any.
Bob: In a moment.
Bob: I got to gradually manage the high interest rate debt high interest rate swap that we have in our portfolio to.
Bob: Keep it full.
Bob: The Mitre Satcom issue.
Bob: Got it right. So you're seeing that so just a follow up you mentioned that if interest rates remain at.
Bob: Current local you will potentially could go in a low trees that how should we look at it.
Bob: Okay, what is slow tree.
Bob: Yeah, it might it might be paying 15% lower than what we have now.
Bob: Okay. Okay, Okay, yeah, well trained that we'd put it that way if assuming assuming all my debt reprice today and based on today's market rate it will be around three 2%.
Sharon Lin: Changes in Cambridge. Okay, so valuation, even if it drops, it will be a reflection of the softening of operations in China, okay, but we will be able to withstand based on our current temperature Okay, that's very clear, Sharon.
Bob: Got it 332, plus three 3%.
Bob: Alright, great. Thank you that's very good color. Thank you. Thank you.
Bob: Alright, okay.
Speaker Change: Interest rates swap high interest on my portfolio.
Brandon Lee: All good for me. Thanks so much. We get it.
Bob: You won't be too bullish yet just some thoughts around coupons from Brexit yeah. Thanks for that.
Bob: Yeah.
Operator: Xin, good morning.
Bob: Okay, then maybe.
Rachel: Over to you now, Xin.
Bob: Yes.
Bob: Quickly on the on the refurbished lease expiring.
Bob: Generally for retail leases.
Sharon Lin: Can you explain a bit about the cap rate compression for Singapore, especially for MBC and Bebo? Okay, VIVO itself, if you look at it, our running cap is high 4. Okay, so the marginal cash rate compression, if you look at the past deals, is tighter than what it is. The valuers really have no choice. They really have to give it to me because there was transaction. Okay, but majority of VIVO's valuation gain is operation. is operation. The 10 bits doesn't get me to that $600 million. $500 million. It is majority the operation.
Bob: <unk> seen any significant changes to the lease durations.
Bob: Tenants that you're citing slightly longer disclose the majority of retail these last three years.
Bob: A small component of short term leases.
Bob: Within our portfolio that philosophy, there is largely unchanged.
Bob: The bigger changes will probably be on the office side.
Bob: For office, but if you look at previous quarters and in fact going back a few quarters, you'll see that our office there has come down slightly largely due to possible time.
Bob: We have a number do you have a quite a large chunk of our 50 <unk> expiring in FY 'twenty.
Bob: 675 six.
Bob: And because those deals have been lost we havent been renewed yet.
Sharon Lin: Now, NBC. NBC is due to transactions. Typically, valuers will have to take in transaction caps, and they will be a bit measured in terms of maybe adjusting market rents a bit. Then there was a mixture of that. So, the reason behind the changes is majority transaction, market transaction left, and our own operations being positive for retail.
Speaker Change: Yes, savi shorter durations and protocol will slightly.
Bob: Looking at the negotiations with the office tenants currently.
Bob: <unk>.
Bob: We do see a lot of the tenants where previously they were assigned five year leases.
Bob: Lastly, more looking at the future.
Bob: Three year durations.
Bob: I still have five year renewals I still have full year renewals as well, but the the tenant that previously had five diseases potentially asking us for three years, rather than five years. So obviously will come down slightly.
Bob: In terms of the second part of your question in terms of.
Bob: Radio asking about downsizing and the like.
Jianqian Wang: Second question is on cost of debt. If you look at the debt that's expiring versus what you're signing, what's the expected cost of debt for the next financial year? Currently, I think rates are all going down or going down and then quite stable these few days. Uh, I would think it will be around this level, mid-three. for the next 12 months. Would you be able to share what's the average expiring debt cost for the next year? Actually, average expiring debt cost for the next year is not quite meaningful because some of it we hedge, some of it we swap.
Bob: Unfortunately, we do have to be.
Bob: We do have to deal with it.
Bob: You mentioned that the.
Bob: The market remains uncertain.
Bob: The ability for 10 tenants.
Tennant's two to continue to hold lot spaces.
Bob: Especially in the current uncertainty.
Bob: It's not there is not very high.
Bob: While most of the tenants, especially on larger tenants.
Bob: All of this space was not that's not the case for all of our payments.
Bob: A number of attendance at our execute cheapen up spaces.
Bob: Google is a good example of last year.
Bob: You'll have a few of these tenders going forward, they're asking for slight deduction in space.
Jianqian Wang: So, what I can tell you is for this coming year, financial year, the fixed rate debt is actually at about... 2.6-2.7% on a blended basis. So when that get rolls off, it will be reverted to floating rate. And the majority of the fixed rates that is expiring in first quarter are all below the current. So there will be some increase, but we are also working hard, talking to the banks to renegotiate the margin and doing a lot of whatever things that we can do within our portfolio to bring down the cost. So that to cushion the impact of when lower rates IRS roll-off, it will impact in our...
Bob: Our Columbia renewals.
Speaker Change: But as Bob.
Speaker Change: For the for these large tenders does not is not a huge amount based on only about maybe 510.
Speaker Change: 20% of space being given up and it's only for a small proportion of the prepayments with Pwc in particular.
If you go to if you go to Shanghai and Beijing, then therefore, it becomes quite different for some hybrid we do have tenants.
Speaker Change: Asking for a 50% reduction as research.
Speaker Change: Again that still there's still a minority.
Speaker Change: The bigger challenge in Shanghai next year has been a non renewal attendance there.
Speaker Change: Because the market went two weeks ago.
Speaker Change: Because there's a lot of supply in the market.
Speaker Change: We do have a large independent mix.
Speaker Change: Although the property has done has done fairly well.
Derek Tan: So, at the same time, we are also seeing margin going down because we have been going back to win. Hopefully they can offset each other and then we can keep it at about 3 over mid-3s, continue to be at mid-3s. Okay, got it.
Speaker Change: Brought occupancy up from where it was about it was low.
Speaker Change: <unk> about a year ago now at about 86% thereabouts for Shanghai.
Speaker Change: We have a little bit of the same issues in pgi as well, where we do have tenants, who has given up 50% with space.
Speaker Change: And there is competition.
Derek Tan: Derek from DBS, over to you. Hi. Hi, good morning. Can you hear me? Yep, we can hear you. Yeah. Hi. Good morning, Chair and team. I just have two questions. First one is on your whale, right?
Speaker Change: Competition between the lots for Camden.
They're building there that you mentioned the P&L occupancy quite quite.
Speaker Change: Quite healthy level.
Speaker Change: Where on the East Boston.
Speaker Change: Those who are at the Ats meeting this month.
Speaker Change: Okay. Okay. Thank you sorry for that but just one more for N B C right or we could see stable negative revisions or.
Derek Tan: Could you give us a bit more colour whether this year for the retail office business type of expiries, are you expecting any churn or downsizing, maybe some thoughts around there given the current climate? So that's my first question.
Speaker Change: Just one off negative, but just curious.
Speaker Change: Okay.
Speaker Change: Okay, passing rentals market rents those market rentals have remained fairly stable all around.
Sharon Lin: Yeah, okay, so my second question, back to what Tan Shen has asked, right? So I think, Jannica, you have kept interest rates pretty stable and you're still guarding for flattish. I'm just wondering whether are you being a bit conservative on that front? Because you have moved Hong Kong to China, right? And China is going down. Singapore is going down. So rightfully, I thought that... Thank you for doing my job.
Speaker Change: <unk>.
Speaker Change: There'll be versions will come is depending on where the attendance and the.
Which tenant.
Speaker Change: Please turn them into one that debt.
Speaker Change: Ted.
Speaker Change: That has been renewed and what year.
Speaker Change: But the rentals book.
Speaker Change: Within the part.
Speaker Change: Number of tenants.
Speaker Change: The average rent is actually quite a bit higher this year.
Sharon Lin: Thank you for asking that question to my CFO. Okay, let me take the... Interest rate. Oh, sorry, interest rate more important. Yeah, yeah, yeah. So I'm just wondering maybe what you think it will be. 3.5 is mid, 3.4 also mid, 3.6 also mid, right? Okay. But essentially, we should expect that your interest rate should have peak. That's how we should look at it, right? No, no, no, no, no, no, no. We do have interest rates so at high rate at the moment and it's next two years up to March 2020. Okay, so when that says the interest rate cannot go down too much, okay, then when in, after March 2027, when all our high interest rate swaps expire and we roll, then that will, you will see that, and depend on the market then, if the market is same as today, then you will see it going down.
Speaker Change: But when those leases, we built that market. Unfortunately, there will be a little bit negative revision, okay, maybe maybe the way I'll give you another perspective here.
Speaker Change: I think the okay.
Speaker Change: Our current most of our tenants has named with US Paul what five years 10 years and all.
Speaker Change: Certain amount if we want to seek out tenant compare switching out a tenant and a negative revision.
Speaker Change: Sure.
Speaker Change: And what percent.
Speaker Change: 8% rental reversion negative that may sound like catastrophe.
Speaker Change: Okay.
Speaker Change: If you look at what does that translate into the number of mines for a least hub.
Speaker Change: Talking to over months.
Speaker Change: I'd be on a cash flow basis, it may be better off as compared to switching in an abandoned.
Sharon Lin: Then I can safely tell you it's a low 3. But at the moment, not yet. I got to gradually manage the high interest rate swap that we have in our portfolio. Keep it cool, cool, cool, the Midtree Diet Commission. Got it, got it. So you're saying that, so just to follow up, you mentioned that if interest rates remain at current level, you potentially could go in at low 3. Is that, how should you look at it? um okay what is low three yeah it might it might be 10 15 lower than what we have now okay okay okay yeah put it that way put it that way if assuming if assuming all my debt repriced today and based on today's market rate it will be around 3.3 3.3, 3.2 plus, 3.3 plus.
Speaker Change: Switching it up then.
Speaker Change: Yeah.
Speaker Change: <unk> of it being back to back and not giving rent free is absolutely our data in a typical business. Please.
Speaker Change: Please as we size that are good fit out Ramsey III and Ham overall unit is never perfect.
Speaker Change: So I think I've always said that for business by at all.
Speaker Change: I really prefer them to state my cash flow is definitely better okay.
Speaker Change: And anything there is single digit is nothing to worry about even.
Speaker Change: Even better than I think tenant and get a positive reversion.
That is from my operations perspective, okay.
Speaker Change: And in terms of.
Paul: Paul maybe I don't share the other point is.
Sharon Lin: Got it, got it.
Paul: That leads to your question pertaining to our lease expiry.
Sharon Lin: Thank you, that's very good, Kyla. Thank you, thank you.
Sharon Lin: Sorry, on your eyes, sorry. But I've got the interest rate swap, high interest rate swap on my portfolio. I know, I know. You won't be too bullish. Just some thoughts around. Keep up the price. Thanks.
Paul: Turning to my customer.
Paul: Come to maturity in terms of our leases.
Paul: The feel of our top end by Black shell time coming close out. So good thing is one of our one of our top 10 tenants in MPT is renewed okay. So that means that necessarily it will improve.
Sharon Lin: Okay, then maybe let me just comment quickly on the way the average lease is expiring. Generally, for retail leases, we aren't seeing any significant changes to the lease durations. Larger tenants are still signing slightly longer leases. The majority of retail leases are still three years. And we still have a small component of short-term leases within our portfolio that's largely unchanged.
Paul: Lease expiry profile okay.
Speaker Change: <unk> disease for NBC.
Speaker Change: I think when you look at rent a revision, especially for fall business partner.
Sharon Lin: The bigger changes will probably be on the office side. If you look at our previous quarters, and in fact going back a few quarters, you'll see that our office bill has come down slightly. That's largely due to the passing of time, where we have quite a large chunk of office leases expiring in FY25 and FY26. And because those visas haven't, largely haven't been renewed yet, their slightly shorter durations have brought down our will slightly. Looking at the negotiations with the office tenants currently, We do see a lot of the tenants where previously they were assigned five-year leases are now largely more looking at three-year durations.
Speaker Change: Changing a tendon you'll see that percentage.
Speaker Change: <unk>, we have to keep minimum three to four months.
Speaker Change: Our survey downtime because we cannot back to back today I think that the key tomorrow I head up the key to another tenant in terms of cash flow impact. It is worse in my pocket on that basis. So if I can renew and the rental reversion is slightly negative and more than happy to.
Speaker Change: So the cost overall on a casual basis and better.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Okay, Okay very clear thanks, everyone. Thank you.
Okay.
Speaker Change: Thank you Gary.
Sharon Lin: I still have five-year renewals, I still have four-year renewals as well, but the tenants that previously had five-year leases are potentially asking us for three years rather than five years. So the office bill will come down slightly.
Speaker Change: Can we quickly move on to Jonathan.
Jonathan: Yes. Thanks for taking my question lots of leases expiring for the next two years, you had mentioned potential weakness in Shanghai and Beijing.
Sharon Lin: In terms of the second part of your question, in terms of where you're asking about downsizing and the like, unfortunately we do have a little bit of that. I mean, you mentioned that the market remains uncertain, the ability for tenants to continue to hold large spaces, especially in the current uncertainty, is not very high. While most of the tenants, especially our larger tenants, have retained all of their spaces, that's not the case for all of our tenants. A number of tenants have actually given up the spaces, I mean, Google was a good example last year.
Speaker Change: Are there other markets.
Speaker Change: Those who have potential weakness in terms of downsizing or non renewal and maybe you can share in terms of quantum.
Speaker Change: Some of that.
Speaker Change: Weakness could.
Speaker Change: Could be a second question relates to I think I heard your question.
Speaker Change:
Speaker Change:
Yeah occupancy cost for first of all I think we missed answering that part of the question. Thank you.
Speaker Change: Yes.
Speaker Change: Oh, Okay. Okay. You go ahead.
Speaker Change: So.
Speaker Change: And those are all significant risk in the portfolio I think saw this is generally reflect.
Sharon Lin: We still have a few of these tenants going forward that are asking for a slight reduction of space upon their renewals. But for these large tenants, it's not a huge amount of space. We're talking about maybe 5, 10, at least 20% of space being given up, and it's only for a small proportion of the tenants within MBC in particular.
Speaker Change: Flight before in previous quarters.
Speaker Change: Quarters.
Speaker Change: Risk within that within the portfolio actually is the non renewal of.
Speaker Change: S J beauty in Japan so.
Speaker Change: <unk> was <unk> 12.
Speaker Change: After the end of this current FY <unk> and that will be there will be a drop in occupancy for the Japan portfolio and the corresponding reduction in revenue and net property income.
Sharon Lin: If you go to Shanghai and Beijing, then that story becomes quite different. For Shanghai, we do have tenants who have been asking for 50% reduction in spaces, but again, that's still a minority. The bigger challenge in Shanghai actually has been non-renewal tenants where, because the market rentals have been low, and because there's a lot of supply within the market, we do have a lot of churn within the tenant mix. Although the property has done fairly well, we have brought the occupancy up from where it was low 80, it was actually high 70s about a year ago, we are now at about 86% thereabouts for Shanghai.
Speaker Change: For the current.
Speaker Change: Moving onto other other geographies our careers fairly stable.
Speaker Change: It's doing quite well now that the boutiques that are 100%.
Speaker Change: Yeah.
Speaker Change: For Hong Kong, the office component Handcart.
Speaker Change: That's got a small multi currency for the other tenants we did.
Speaker Change: Building most of the software ecosystem quite recently.
Speaker Change: And especially for the entertainment editor.
Speaker Change: Bob is that extends <unk> study.
If you move onto Singapore.
Speaker Change: Empower has a little bit of.
Sharon Lin: We have a little bit of that, the same issue in Beijing as well, where we do have tenants who have given up 50% of space, and there is also a little bit of competition between landlords for tenants. But for that building, we have actually managed to maintain our occupancy at a quite healthy level, also around the mid-80s market. Okay, okay, thank you.
Speaker Change: We'll have a little bit of occupancy occupancy production towards the end of this current FY <unk> will be out actually the effect that will.
Speaker Change: Moving out from light viewers already.
Speaker Change: Two.
Speaker Change: The audio smoothing.
Speaker Change: <unk>.
Speaker Change: For NBC.
Speaker Change: In negotiations, but the majority of the tenants, which are really started negotiations majority of tenants expiring in the going forward financially in the current financial year.
Sharon Lin: Sorry for that, but just one more for MBC, right? Are we going to see stable or negative reversions or just one-off negative? Just curious. Okay, so passing rentals, market rentals, market rentals have remained fairly stable all around the mid-six range. Where the reversions will come is depending on where the tenant ends their lease, which tenant is the one that is being renewed and what their rentals were. Within the port, there are a number of tenants where the average rent is actually quite a bit higher than 680. So when those leases revert back to market, unfortunately, there will be a little bit of an economic repercussion.
Speaker Change: For the majority of them for the majority of them. They have not indicated that theyre downsizing. There is one tenant that potentially may and August two will conclude deals with them.
Speaker Change: But the downside is not significantly smaller 50% reduction of space is probably closer to the low 20% reduction.
Speaker Change: Present reduction okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: I think the last last question you had was on <unk>.
Speaker Change: The festival walks.
Speaker Change: Occupancy cost rates.
Speaker Change: That's also in the 20 ish percent range.
Speaker Change: Very consistent with where it wasn't in the previous financial year.
Speaker Change: Yeah. Thank you. Thank you yes. Thank.
Jonathan: Thank you Jonathan is now makes me have rejoined.
Sharon Lin: Okay, maybe, Derek, I'll give you another perspective, yeah? I think the... Okay. Our current, most of our tenants have been with us for what, five years, ten years and more. Certain amount, if we were to switch out a tenant, let's compare switching out a tenant and a negative reversion. Just for example, a 8 or 10% rental reversion negative may sound like a catastrophe. Okay, but if you look at what does that translate into the number of months for a lease term? We are talking to a woman. Would I be, on a cash flow basis, I may be better off as compared to switching another tenant because switching another tenant, the likelihood of it being back-to-back and not giving rent-free is absolutely out of this door.
Speaker Change: Sure.
Sharon: Hi, Julian maintain my name is Sharon and.
Sharon: A few questions first of all just on NBC you mentioned about few non-renewals QE can I just get a bit off.
As to the reason all of non renewal does it cause super purchase.
Speaker Change: Yeah, those are those with Venezuela.
Sharon: Google would give up to Florida, right, then you'll know that.
Speaker Change: But no new ones.
Sharon: Okay.
Sharon: No new big ones are small small lines with both label outflow on four pillars.
But it doesn't impact the portfolio consistently.
Sharon: Okay and for those small ones are they moving out because of cost.
Sharon: Some of them.
Sharon: Cost.
Sharon: There is nobody that say that they are closing down the Singapore presented before.
Sharon: Yes.
Sharon: We haven't heard that in quite a while.
Sharon: <unk>.
Sharon: There have been some of the job our consolidate.
Sharon: Consolidations.
Sharon: I feel for the offices.
Sharon: They were looking to consolidate.
Sharon Lin: In a typical business, places we sign where the gift fits out rent-free and hand over a unit is never so perfect. So, I think I always say that for Business Park and all, I really prefer them to stay. My cash flow is definitely better. And anything that is single digit is nothing to worry about. It's even better than I switch tenant and get a positive reversion. That is from my operations perspective.
Sharon: Like I mentioned for the JV that was lost.
Sharon: Cost as well as ex pension issue.
Sharon: Ben.
Speaker Change: Two other tenants, which are largely which are largely driven by costs and consolidation.
Speaker Change: Okay cool and the occupancy rate I can take it as the current physical occupancy rate.
Speaker Change: And anymore NBC NBC.
Speaker Change: Yeah.
Speaker Change: But because we still are committed and physical optimization is very small.
Speaker Change: Okay, Great and then a second one on <unk> you mentioned that the valuation is largely an operational so does that mean that once you're in you guys completed we can expect another one bound out meaningful rebound.
Sharon Lin: And in terms of how, maybe I'll just share the other point that leads to your question pertaining to our lease expiry. The term to maturity in terms of our leases. The few of our top 10 by virtue of lack of time, they are coming closer. So good thing is one of our top 10 tenants in MBC is renewed. Okay, so that has been significantly, it will improve the lease expiring profile, okay, and have de-risk for MBC. So I think when you look at rental reversions, especially for business partners. Changing a tenant, you see the percentage.
Speaker Change: [laughter] okay.
Speaker Change: All depends on if you will see the NPI going up which is that typically the vendor is a reflection of the rental reversion and that will certainly be taken in into the devaluation, but there will always be bought the capital expenditure that we spend on a month to okay. So.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: Maybe.
Speaker Change: It will go up yes.
Speaker Change: Operator, you will come down.
Speaker Change: Got it.
Speaker Change: Cap rates change.
Speaker Change: Big cap rate changes.
Speaker Change: Unlikely.
Speaker Change: Because there is no deal so on that front.
Sharon Lin: Typically, we have to give minimum three to four months, plus a certain downtime because we cannot back-to-back. Today, I take back the key. Tomorrow, I hand out the key to another tenant. In terms of cash flow impact, it is worth in my pocket on that basis. So if I can renew and the rental reversion is slightly negative, I'm more than happy to do so because overall, on a cash flow basis, I'm better. Okay.
Speaker Change: Values were not unlike even move.
Speaker Change: I see.
Speaker Change: And then just lastly.
Speaker Change: <unk> press release.
Speaker Change: Opportunities could you just elaborate a little bit more on the targa to opportunities and I guess.
Speaker Change: Also on you know.
Speaker Change: Uh huh.
Speaker Change: Divestment opportunities in other markets as well.
Speaker Change: When we talk about opportunity sounds very simply okay. If we don't retain my question effectively okay.
Speaker Change: I want to review the constitution of our portfolio. Okay. Now if there is opportunities to sell at least that there is.
Operator: Thanks, everyone.
Operator: Thank you, Derek.
Jonathan Koh: So can we quickly move on to Jonathan? Thanks for taking my question. Lots of leases expiring for the next two years. You have mentioned potential weakness in Shanghai and Beijing. Are there other markets that could also have potential weakness in terms of downsizing or non-renewal? And maybe you can share in terms of quantum, how some of that weakness could be. A second question relates to, I think an earlier question on um uh yeah occupancy cost for festival work i think we missed out answering that part of the question thank you Oh, are they not?
Speaker Change: It's a there's a reason to sell we will consider to England.
Speaker Change: So I think what we have done last year and things.
Ah indication.
Speaker Change: Paul.
Paul: Capitalizing on set of opportunities when the economy and the operating income side. Okay. So we are not yet as it did we find that there is.
Paul: First for doing so we will continue so I think they're just sharing that we'll continue to do that.
Paul: We said, which is to recycle where possible and appropriate.
Paul: Does that give our commercial is a little tougher because our asset size at okay, but that doesn't stop us from thinking of how to Aetna.
Paul: And.
Paul: And capture the opportunities.
Wee Koh: Okay, you go ahead. Let me just... In terms of significant risk in the portfolio, I think some of these things we have already flagged before in previous quarters. One of the bigger risks within the portfolio actually is the non-renewal of Fujitsu at the FJM building in Makuhari, Japan. So when that occurs after the end of this current FY, then there will be a drop in occupancy for the Japan portfolio and the corresponding reduction in revenue and net property income. Moving on to other geographies, Korea is fairly stable, actually doing quite well now. The buildings are up to 100%.
Paul: Yeah. So.
Paul: Maybe I will like to share like for the whole of the year just in summary.
Paul: Yes.
Paul: Why have we done well what are we worried about what have we done well, okay. Maybe I talk about what we what we thing that we have done well with it.
Paul: Number one the valuation increases were supported by operations, that's a net positive.
Paul: 64% of our portfolio is stable.
Paul: In terms of NPI contribution Singapore, it's about 60 over.
Paul: It is about six feet.
Paul: And that is.
Paul: It's a very very stable.
Paul: And that leads to bringing down the worries of last year.
Wee Koh: For Hong Kong, the office component has got a small amount of vacancy for the other tenants within the building. Some of the leases were signed quite recently, especially for the anchor tenant at the festival office that extends all the way out to 2030. If we move on to Singapore, M-Tower will have a little bit of occupancy reduction towards the end of this current FY. One of the tenants has flagged that they will be moving out, actually they have flagged that they are moving out for more than two years already, moving to their own used building.
Paul: Our 40% gearing down to 37 now.
Paul: Now what does this 37 mean to me that is a mean to me is number one investor stop making about my Gary.
Paul: Do I have enough buffer to withstand any shocks in this and stable market. Okay. Right now globally I would think that there's some shakes that okay. How you cannot impose a cap rate I think we still don't know certain projects shown signs of expansion in cap rate valuation I think that done well.
Wee Koh: For NBC, we are in negotiations with the majority of the tenants which are, we have already started negotiations with the majority of the tenants which are expiring in the going forward financial year, in the current financial year, and for the majority of them, for the majority of them, they have not indicated that they are downsizing. There is one tenant that potentially may, and we are still working through the details with them. But that downsizing is not significant, it's not like a 50% reduction of space. It's probably closer to about a 20% reduction, 20-ish percent reduction.
Paul: Let the operation better operation to it was the other thing is the we also actively recycle.
Paul: Capitalizing on and said with a game and doing a very wholesome.
Paul: That is our two retail now you may say that Hong Kong is weak, but I would say that we have built it ourselves we are better than better negative and the general negative in the market okay.
Paul: So on the basis of LSA.
Paul: Capital structure that we have done what we can.
Wee Koh: Okay, Teng, I think the last question you had was on Festival Walk's occupancy cost, right? And that's also in the 20-ish percent range, fairly consistent for what it was in the previous financial year. Thank you.
Paul: Operationally, we push what we can but we are not immune from the slight weakness in the China market and.
Paul: In Japan.
Paul: Assets that we have now so where are the downs.
Japan, I think we have said enough about Japan.
Operator: Thank you, Jonathan, as well.
Joy: Next, we have Joy.
Paul: Our issues with the anchor tenants we have actively.
Joy: Hey, good morning, Sharon. A few questions. First of all, just on NBC, you mentioned about a few non-renewals. Can I just get a bit of a sense as to the reason of non-renewal? Is it cost or just... Those were the previous financiers. So Google gave up two floors, right? Then you know that the EJP... No new ones. No new ones, okay. No new big ones, there are small small ones, those like half-floor, one-floor tenants, which doesn't impact the portfolio that excessively. And for those small ones, they're moving out because of COVID. Some of them are moving out because of costs.
Paul: Second down our our valuation.
Paul: So the books.
Paul: I have already registered.
Paul: Leaving.
Paul: Our two master leases and Japan, it's about less than 10% of our entire portfolio. So what we can do where they've done okay.
Paul: Control of Opex control, the Capex breakdown about Japan, we have done what we can at the manager.
Paul: Hong Kong moving to our Hong Kong retail.
We kept our occupancy high.
Paul: Although the whole market is a bit weak we pushed hard to make sure their occupancy is.
Paul: It is capped.
Sharon Lin: There's nobody that said that we are closing down the Singapore operations and therefore we have to exit MTC. We haven't heard that in quite a while. But there have been some which are consolidations where they have three or four different officers and they were looking to consolidate. Like I mentioned, for BJB, there was largely a cost as well as the expansion issue. Then there were a few other tenants which were largely driven by cost and consolidation. Cool.
Paul: When a revision of that there is a negative is alleged navigate in a market where we see the ton.
Paul: Is there a steel consumption Hong Kong dollar if it weakens it will be a benefit to festival.
Paul: But generally we are not performing behind.
Paul: <unk> retail market.
Paul: Okay, China, China itself, everybody here a lot of bad news.
Paul: <unk> whatever yes, not is not new to us is not new to China at all okay. So in terms of operations from our stability come from occupancy.
Sharon Lin: And the occupancy rate, I can take it as the current physical occupancy rate. for NBC, but the difference between automated and physical automated is very small. Okay, great. And then, second one on VIVO, you mentioned that the valuation is largely on operational. So, does that mean that once your AEI is completed, we can expect another one round of meaningful revalor? Okay, it will all depend on that. If you see the MPI going up, which is typically the reflection of the rental reversion, then that will slowly be taken in into the valuation, but they will always deduct the capital expenditure that we spend on the mall too, okay?
Our occupancy, even though <unk> drop is way.
Paul: Market, Okay, we may be in <unk>.
Paul: <unk>, okay, so our setback.
Paul: Though we have negative same story, we are better we're performing better than the market. So those are our if you ask me where our focus is.
Paul: Our down points, our overseas softening, but we are outperforming the market be on occupancy or PRT sales portfolio.
Paul: Now as a manager I cannot control the macro.
Paul: We can we can control our ops, we can control our costs we can.
Paul: Control our spending.
Speaker Change: They control and push so that Adi plans to to to gain further revenue when we see opportunities that for vivo.
Sharon Lin: So, yeah. If it goes up, it will go up. Yeah, if it comes down, if it's operating, it will come down. But if you say big cap rate changes, big cap rate changes, unlikely, unlikely. Because there is no deal, so on that front, the valuers will not unlikely move.
Paul: I think generally that sums up for what we have done for the year.
Paul: Yeah.
Paul: So I guess going forward next year, we probably acquisition sizable acquisitions to offer card is that fair to say.
Paul: I think right now depends on what acquisition them and the size.
Sharon Lin: And then just lastly, you know, Sharon, you wrote on your press release that pursue targeted opportunities. Could you just elaborate a little bit more on the targeted opportunities? And I guess, you know, also on, you know, divestment opportunities in other markets? Okay, I think when we talk about opportunities, very simply, okay, without reading my press release, very simply, okay, we always review the constitution of our portfolio, okay? Now, if there is opportunities to sell and we see that there is a reason to sell, we will consider doing it, okay? So, I think what we have done last year, in essence, is an indication of capitalizing on certain opportunities when we see it come, when the opportunity comes by, okay?
Paul: <unk>.
Paul: Today, I would say Singapore acquisition.
Paul: <unk> okay.
Paul: <unk> 37, I think most of the acquisitions for the last 10 years unit, Gary to push up for auction.
Paul: Because your underlying portfolio that historically is actually higher yielding them wherever that is selling in the market.
Paul: Yes. So if you ask me is that strictly looking at accretion and not the quality of the asset that youre, bringing in typically higher quality means lower yields.
Paul: Annually Gary.
Paul: Okay. So I think we are.
Paul: I would say that if you if you wanted to check me accretion it will be slightly better.
Paul: But I am not against the idea of improving their quality even neutral.
Sharon Lin: So, we are not here to hug assets. If we find that there is good purpose for doing so, we will continue. So, I think we're just sharing that we'll continue to do whatever that we said, which is to recycle where possible, okay? But of course, recycling for commercial is a little tougher because our asset size are chunkier, okay? But that doesn't stop us from thinking of how to dissect and capture the opportunity when it comes.
Paul: Okay, Okay, sometimes we get too fixated on certain things.
Paul: <unk>.
Paul: Yeah, I think what I'm, saying is okay evenly neutral.
Paul: Is a higher quality asset.
Paul: And in that scenario would you be happy to trade, let's say partial state of your sizeable asset photos.
Paul: Oh, okay.
Paul: So we have.
Sharon Lin: So I think maybe I'd like to share for the whole of the year, just in summary. What have we done well? What are we worried about? What have we not done well? Okay, maybe I talk about what we think that we have done well first. Number one, the valuation increases well-supported by operations is a definite positive. 60 over percent of our portfolio is stable. In terms of FDI contribution, Singapore is about $60 million. It's about 60, and that is a stable, it's a very, very stable piece, okay? And that leads to bringing down the worries of last year, of our 40% gearing down to 30%.
Paul: I wish everybody that market yeah.
Paul: Evil and NBC is nonetheless the impact.
Paul: Okay.
Paul: Now there is no plan of any divestment they are core to us.
Paul: Okay.
Paul: Yes.
Paul: Okay.
Speaker Change: I do not know what you mean, you've got others, yes.
Paul: We will consider is the price effect, yes.
Sharon Shang: Okay, that's very clear thank you Sharon Shang.
Speaker Change: Thank you John.
Speaker Change: We have a retail from Macquarie Victor please.
Speaker Change: Hey, Hello, Hi, money frankly.
Speaker Change: Just a quick question. So I think firstly and Fujitsu are fujitsu's occupancy how much I'm sorry.
Speaker Change: Not be new work how much of it.
Speaker Change: Tom in your lease Expiries for this year.
Speaker Change: Let me see I think too soon to say.
Sharon Lin: Now, what does this 37 mean to me? 37 means to me is, number one, investors stop nagging about my hearing. Two, is I have enough buffer to withstand any shocks in this unstable market, okay? Right now, globally, I would think that there's some shakes, okay? How you pan out in terms of cap rate, I think we still don't know. Certain parts have shown signs of expansion in cap rate. So valuation, I think we've done well, led by operation, better operation. Two, the other thing is we also actively recycle, which capitalizing on answer with a gain and lowering our gearing.
Speaker Change: Absolutely.
Speaker Change: That's helpful.
Speaker Change: Good.
Speaker Change: And England shortly here.
Speaker Change: Sure.
Speaker Change: No.
Speaker Change: Excluding all of that 12, 7% could you please maybe about 2%.
Speaker Change: 2% to 200000.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: To be eliminated.
Speaker Change: Okay got it and one more is a Japan yoga Vanessa.
Speaker Change: Do you need to do AI or anything or any how long.
Speaker Change: All right.
Speaker Change: For the Japan assets.
Speaker Change: Okay.
Speaker Change: We do do a little bit of Adi.
Sharon Lin: Third is our two retail moms, you may say that Hong Kong is weak, but I would say that we are big retail sales, we are better than, better negative than the general negative in the market. Okay. So on that basis, I would say... Capital structure is stronger, we have done what we can, operationally we push what we can, but we are not immune from the slight weakness in the China market and Japan. assets that we have.
Speaker Change: <unk> in particular.
Speaker Change: A little bit. So we do have we do have plans to do.
Speaker Change: More cosmetic type of book to just improve the DC all of the building.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: The fact that like I said, because they're all then there will always be upgrades and replacements that we've done over the course of the life of a duty.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: With that Amy.
Speaker Change: Hello.
Sharon Lin: Now, so where are the dumps? Japan? I think we have said enough about Japan, of our issues with the anchor tenant. We have actively... taken down our valuation, okay? So the books... Ever ready? Registered! the leaving of our two master leaders, and Japan is about less than 10% of our entire portfolio. So what we can do, we have already done, okay? Control the OPEX, control the CAPEX, bring down the veil. Japan, we have done what we can as a manager. Hong Kong, moving to a Hong Kong retail, we kept our occupancy high, although the whole market is a bit weak.
Speaker Change: No.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Your question please.
Speaker Change: Oh.
Speaker Change: Oh boy.
Speaker Change: Oh.
Speaker Change: <unk> okay.
Speaker Change: Okay.
Speaker Change: I had to split it between the Macquarie assets and the rest of the rest of the rescue pen rate.
Speaker Change: No.
Speaker Change: Leasing demand actually has been improving slightly.
Speaker Change: Looking like leaps and bounds.
Speaker Change: At least that we are able to assign the body says we do have a little bit of a little bit more demand in the past I never saw universal tenants that we're late cycle there were more than 50% of feasible of you actually now have kind of looking at it.
Speaker Change: 102, hundreds of books a range. So there is a little bit of that's a little bit of interest, but a bit more interest in the <unk>.
Sharon Lin: We pushed on to make sure that our occupancy is kept. Rental reversion, a bet that is a negative, is the lesser negative in the market. Where we see the turn is there is still consumption. Hong Kong dollar, if it weakens, it will be a benefit to Festival Walk. But generally, we are not performing behind Hong Kong retail market.
Speaker Change: <unk>.
Speaker Change: Macquarie.
Speaker Change: The leasing demand for the rest of the restaurant volatile still remains strong even with the underground.
Speaker Change: Even though I'm on renewals, we generally able to backfill those spaces.
Speaker Change: Even before the tenant leaves or most of it is going to be lumpier.
Speaker Change: The tenant moves out.
Speaker Change: Okay.
Speaker Change: I'm talking about share buyback did you use.
Sharon Lin: Okay, China. China itself, everybody hears a lot of bad news, trade tensions, whatever. It's not new to us. It's not new to China at all, okay? So in terms of operations front, our stability comes from occupancy. If you see our occupancy, even though it has dropped, it's way ahead of market, okay? We may be in the 80s, market is 70s, okay? So I would say that although we are negative, same story, we are performing better than the market. So those are our, if you ask me where our focus is, our down points are our overseas softening, but we are outperforming the market, be it on occupancy or be it on the sales front.
Speaker Change: Oh, the Patterson needs to do share buybacks.
Speaker Change: My estimate all used to be.
Speaker Change: [laughter] so good idea in the world.
Speaker Change: We have the cable I think we have the we have the mandate previously maybe then we are able to do resolve but doesn't mean that we will do so we will balance between keeping our gearing to make sure that because every $100 million.
Speaker Change: Back in a positive to the CPU no doubt.
Speaker Change: But we will balance out and we site alone the whaler, but as of now I would say immediate need now, but we have the capability of doing so.
Speaker Change: This is for Mike Yeah, I think.
Speaker Change: And on if we need to we can do.
Sharon Lin: Now, as a manager, I cannot control the macro. We can control our ops, we can control our costs, we can control our spending, and we can control and push certain AEI plans to gain further revenue when we see opportunities like Obego.
Speaker Change: Okay perfect. Thank you so much have a great getting one.
Speaker Change: Thank you so much just a final question from our online presence and this is done in key IP, if you could share a bit more color on Japan portfolio X spine in coming year.
Speaker Change: I believe the question actually refers to is asking about lease expiries outside of the three Macquarie asset.
Sharon Lin: So I think generally that sums up for what we have done for the year. So I guess going forward next year, we probably acquisition or sizable acquisitions to off the cart. Is that fair to say? I think right now, depends on what acquisition name and the size. Today, I would say, Singapore Acquisition... far and few, okay? Algerian, 37, I think. Most of the acquisitions for the last 10 years, you need a bit of gearing to push up for accretion. Because your underlying portfolio that historically is actually higher-yielding than whatever that is selling in the market.
Speaker Change: I'll answer that.
Speaker Change: So for the rest of for the rest of the assets the largest largest Chinese actually ISP building. That's got a company that is all the way to 2030.
Speaker Change: For the remaining assets.
Speaker Change: They're always exploration there.
Speaker Change: I think the most significant one is where we have a single tenant building at <unk>.
Speaker Change: If you recall.
Speaker Change: Asset.
Speaker Change: The lease Expiries coming up.
Speaker Change: In negotiation of attendance.
Speaker Change: So so far we are still waiting for them to come back to us or whether they are going to scale.
Speaker Change: That would be our space are going to beat the BB entirely so that once you do.
Speaker Change: Yes.
Speaker Change: In any case all of these assets.
Speaker Change: Fairly small.
Sharon Lin: So, if we are strictly looking at accretion and not the quality of the asset that you are bringing in, typically higher quality means lower yield, then you will need gearing. So, I would say that if you want strictly accretion, it will be slightly tougher. But I am not against the idea of improving the quality even at neutral. Okay, sometimes we are too fixated on certain things and yeah, I think what I'm saying is I'm okay even with neutral if it's a higher quality asset.
Speaker Change: In the in the case of video.
Speaker Change: Ron.
Speaker Change: Intermediate again significant okay. I think ensure what is what will be material will be H b.
Speaker Change: So in our pocket.
Speaker Change: And that is 2200.
Speaker Change: The rest is part and parcel of our business and individually very very small.
Speaker Change: But if you see anything there will be significant it will be a hitch beliefs.
Speaker Change: At least equal to zero zero.
Speaker Change: Thank you everyone.
Speaker Change: I would like to thank everyone to.
Speaker Change: Find time to join us today further.
Speaker Change: Further questions feel free to reach out to us anytime we would be happy to take endpoints.
Sharon Lin: And in that scenario, would you be happy to trade, let's say, partial state of your sizable assets for those? Oh, okay. Which one? I think we have always shared with the market, yeah? Vivo and NBC is synonymous to impact. Okay, as of now, there is no plans of any divestment. They are called to us. Okay. Yeah. But if you say others, I do not know what you mean significant, others, yeah, we will consider if the price is right, yeah. Okay, cool. That's very clear.
Speaker Change: Thank you so much.
Speaker Change: And have a good day ahead goodbye.
Speaker Change: Thank you.
Joy: Thank you, Sharon, for sharing. Thank you, Joy.
Rachel: Last, we have Rachel from Aquarii. Rachel, please. Hey, hello. Hi, morning.
Rachel: Finally, just very quick questions. I think firstly, Fujitsu occupancy, how much, sorry, Fujitsu non-renewals, how much would it form in your lease expiry for this year? No, next year, next year, 2026. And once you're up, you can choose your two things or choose your three. No, no, it's 2026, so out of that 12.7%, so it's maybe about 2%, 3%, 2 and a bit lah. Yeah, a little bit less.
Rachel: We really appreciate it. Thank you.
Wee Koh: And one more is, Japan, your Japan has said, are you looking, do you need to do AEI or anything, or any colour or anything, Neiman, or? So, for the Japan assets, we do do a little bit of AEI, the buildings in particular, the Macquarie ones are a little bit old, so we do have plans to do more cosmetic type of work to just improve the basic outlook of the building. That and the fact that, like I said, because they are old, there will always be upgrades and replacements that need to be done over the course of the life of the business.
Wee Koh: but the one is used by us, that's it. Sorry, I didn't quite catch your question. Can you repeat it?
Wee Koh: Oh, so interestingly, I had to split it between the Makuhari assets and the rest of Japan, right? So the Makuhari leasing demand actually has been improving slightly. We're not talking like leaps and bounds, but at the very least, we're able to sign a number of leases. We do have a little bit of a little bit more demand. In the past, I never saw, we never saw tenants that were like, that actually now have tenants that are looking at spaces that are at the 100, 200 zubo range. So there is a little bit of a, there's a little bit of interest, a little bit more interest in the, in the Makuhari market.
Wee Koh: The leasing demand for the rest of the, rest of our Tokyo assets still remains strong. Even when there are a little bit of non-renewals, even when there are non-renewals, we generally able to backfill the spaces, either even before the tenant leaves or not significantly a long period after the tenant moves out.
Sharon Lin: One last one, share buyback, will you use the capital gains or the divestment gains to do share buyback? My investment is all used to reclaim all the retailers. So I have no idea anymore. I think we have the mandate. Previously, we didn't. We are able to do so, but it doesn't mean that we will do so. We will balance between keeping our gearing to make sure that, because every $100 million is a 0.6 effect, and our positive to the TPU, no doubt. But we will balance that and decide along the way. But as of now, I would say immediately no, but we have the capability of doing so.
Sharon Lin: It's a standby. I think if I may add on, if we need to, we can do it.
Operator: Okay, thank you so much. Have a great weekend, everyone. Thank you so much.
Operator: Just a final question from our online participant, Mr Stalin. He is asking if you could share a bit more colours on Japan's portfolio lease expiring and coming year. I believe the question actually refers to, is asking about lease expiries outside of the three Makuhari assets. So I will answer that way. So for the rest of the assets, the largest chunk is actually our HP building and that's got a completed lease all the way to 2030. For the remaining assets, there are always expiries here and there. And I think the most significant one is where we have a single-tenant building at TSI in Ikebukuro.
Wee Koh: That asset, the lease expiry is coming up and we are in negotiation with the tenants. So far, we are still waiting for them to come back to us on whether they are going to stay or going to give up a bit of space or going to leave the building entirely. So that one is still a work in progress. In any case, all of these assets are fairly small. In the case of the EQ Pocoroan, it's insignificant. Okay, I think in short, what will be material will be HP, okay? Hewlett-Packard lease, and that is till 2030.
Wee Koh: The rest is part and parcel of our business, and individually, very, very small. But if you say anything that would be significant, would be HP lease, but that lease is to 2030.
Operator: Thank you everyone. I would like to thank everyone for finding time to join us today. If you have further questions, feel free to reach out to us anytime. We'll be happy to take them on the site. Thank you so much. and have a good day ahead, goodbye. Thank you.