1H 2022 Financial Results Briefing

[00:00:04] Opening & 1H 2022 Financial Results Presentation

Terrence (IR), Yeow Kit Peng (Head CM & IR)

The moderator opens with headline results: distributable income rises 6.3% to $330.7 million and DPU increases 2.8% to 7.873 cents, with portfolio occupancy at 94% and 9.4% positive rental reversions for renewed leases. Yeow Kit Peng details revenue growth, new acquisitions in Australia and the US, the UBIX redevelopment, gearing at 36.7%, green financing, and a 2.1% average interest cost, before covering market outlook.

[00:00:04] Terrence (IR):

“We are pleased to report a 6.3% growth in distributable income to 330.7 million dollars and a 2.8% increase in dpu”

[00:15:19] Q&A - Question 1: Post-COVID Recovery & Singapore Industrial Rent Spreads (Mervin Song, J.P. Morgan)

Mervin Song (Analyst, J.P. Morgan), William Tay (CEO)

Mervin Song asks whether improving Singapore occupancy is sustainable given tech-sector hiring freezes, and about the rental reversion guidance upgrade and acquisition strategy. William Tay replies that Singapore occupancy has crossed 90.9%, driven by bio R&D, engineering, electronics and logistics demand rather than tech, that reversion guidance has moved to mid single digits after an exceptional double-digit quarter, and that acquisition cap rates have seen only minor movement.

[00:15:22] Mervin Song (Analyst, J.P. Morgan):

“Singapore seems be continued to improve from the 90% which was quite hard to achieve previously, but they can touch on that is that sustainable?”

[00:16:34] William Tay (CEO):

“We actually the first time we crossed the night. So it's 90.9% right now and overall in Singapore.”

[00:27:48] Q&A - Question 2: Focus on Logistics & Rising Interest Rates (Derek Tan, DBS Bank)

Derek Tan (Analyst, DBS Bank), William Tay (CEO)

Derek Tan asks about the rationale for focusing on logistics given post-pandemic risk of overexpansion, which countries offer growth, and whether the Alpha project is an enhancement rather than a redevelopment. William Tay explains logistics demand is broad-based beyond e-commerce, driven by 3PL and diverse distributors, that "just in case" inventory behaviour persists, and that Alpha is an asset enhancement with future built-to-suit potential rather than a redevelopment.

[00:27:48] Derek Tan (Analyst, DBS Bank):

“Could you run through with us the rationale because near them there might be some hit win for example during the covid.”

[00:30:26] William Tay (CEO):

“Is just in case mentality instead of just in time. During covid. I think you have seen that in terms of warehouse space.”

[00:41:52] Q&A - Question 3: Ascent Ready Status & Singapore Science Park Reversion (Tan Yew Kiam, CLSA)

Tan Yew Kiam (Analyst, CLSA), William Tay (CEO)

Tan Yew Kiam asks about utility rate renegotiation, the likelihood of reaching one billion dollars in acquisitions this year, and whether CLD assets like Ascent are now stabilized. William Tay says next year's fuel price assumption has moved from about 80 or 90 dollars to about 100 dollars, calls a billion-dollar acquisition unlikely, and says Ascent's occupancy and rental trends look stabilized and ready, though CLD cannot yet comment.

[00:41:52] Tan Yew Kiam (Analyst, CLSA):

“You mentioned earlier that you are really negotiating your utility rates. For next year.”

[00:42:13] William Tay (CEO):

“The fuel price that they have used previously last year is about 80 or 90 dollars.”

[00:54:25] Q&A - Question 4: Build-to-Suit Opportunities & UBIX Returns (Joy Wang, HSBC)

Joy Wang (Analyst, HSBC), William Tay (CEO)

Joy Wang asks about build-to-suit opportunities and UBIX's actual return on investment against the original target. William Tay says UBIX's initial expected yield of about seven percent has settled at about six point seven percent because of higher construction costs during the pandemic, and that new build-to-suit deals are now structured as open-book arrangements where tenants absorb construction cost risk rather than the REIT.

[00:54:25] Joy Wang (Analyst, HSBC):

“you mentioned UBIX you have a chief better than expected return. Could you share your Roi actual achieve Roi?”

[00:54:55] William Tay (CEO):

“Yeah six points seven right now in terms of the actual final course that because of a higher cost construction cost.”