1H 2024 Financial Results Briefing

[00:00:01] Opening & 1H 2024 Results Presentation

Johanna (Moderator, IR), Andrea Ong (Director, IR)

The moderator opens the briefing and introduces management. Andrea Ong presents first-half 2024 results: distributable income rises to $313.8 million, portfolio occupancy holds at 93.2%, and average rental reversion reaches 13.4%. Gearing stands at 37.8% with cost of debt at 3.7%. Management also reviews asset enhancement initiatives, occupancy by region, and full-year rental reversion guidance revised upward.

[00:02:07] Andrea Ong (Director, IR):

“Our portfolio occupancy remain high at 93.2%, and we achieve a high renter reversion of 13.4% for leases renew in the first half.”

[00:13:39] Q&A - Question 1: Rental Reversions & Financing Headwinds (Mervin Song, J.P. Morgan)

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

Mervin Song asks about the durability of occupancy in Singapore and the US and about competition from a Malaysia-Singapore special economic zone. William Tay describes portfolio occupancy stabilising near 93 to 94%, softening in US business parks, and steady UK and Europe leasing. He adds that Changi Business Park occupancy fell as financial-institution tenants downsized but rents were reset sharply higher on renewal.

[00:13:42] Mervin Song (Analyst, J.P. Morgan):

“any thoughts of whether we expect for this to be done in Singapore or US going forward?”

[00:21:50] William Tay (CEO):

“If you look at Y two three renter reversion just for CBP, we clocked it in at 18%, one eight.”

[00:26:31] Q&A - Question 2: Geneo Pre-Leasing & Singapore Business Park Demand (Dale Lai, DBS Bank)

Dale Lai (Analyst, DBS Bank), William Tay (CEO)

Dale Lai asks about further US tenant departures and redevelopment plans, and about science park demand as technology tenants consolidate. William Tay says redevelopment is concentrated in Singapore for now, that science park leases have long lead time for planning, and that no tenant has given a firm indication of vacating. He adds that a EI-related returns are targeted at seven and a half to 8%.

[00:26:31] Dale Lai (Analyst, DBS Bank):

“I think the first one being, um, just wanted to follow up on the US occupancy rate.”

[00:38:54] William Tay (CEO):

“Uh, for this, we are looking at seven and a half to 8%, uh, uh, return on the, uh, investment.”

[00:39:13] Q&A - Question 3: US Office Occupancies & Cap Rates (Vijay Natarajan, RHB)

Vijay Natarajan (Analyst, RHB), William Tay (CEO)

Vijay Natarajan asks whether the recently vacated US properties were anticipated at acquisition, what occupancy floor to expect, and for an update on the UK data centre redevelopment and operating expense guidance. William Tay confirms the San Francisco properties remain leased on a sublease basis, declines to give an occupancy floor, and says the UK project awaits confirmation of power allocation before capital expenditure guidance is given.

[00:39:13] Vijay Natarajan (Analyst, RHB):

“First question is, again, on the US properties and, uh, some of the US properties that has been vacated has been recently acquired in 2021”

[00:39:53] William Tay (CEO):

“if you're referring to what we acquired in 2021, which is the San Francisco properties, uh, they're vacant, but they are leased”

[00:45:35] Q&A - Question 4: UK Data Centre Redevelopment Scope (Derek Chang, Morgan Stanley)

Derek Chang (Analyst, Morgan Stanley), William Tay (CEO)

Derek Chang confirms the UK data centre power target and asks whether CLAR intends to operate the asset itself, how much capital is earmarked for redevelopment this year, and which tenants risk departing next year. William Tay confirms the 60 megawatt figure, says CLAR prefers to remain a real estate owner rather than an operator, and names a technology tenant in Galaxis as the lease of interest for next year.

[00:45:35] Derek Chang (Analyst, Morgan Stanley):

“I think six months ago with em, you mentioned a 60 megawatt number in terms of power.”

[00:46:01] William Tay (CEO):

“we are open to customer's requests, uh, but if you let us make a decision, we still prefer to just be a real estate player.”

[00:47:46] Q&A - Question 5: Change of Use for Legacy Industrial Assets (Joy Wang, HSBC)

Joy Wang (Analyst, HSBC), James Goh (Head Portfolio SG)

Joy Wang asks whether change-of-use conversions, such as to data centres, are likely for legacy industrial assets and whether power studies have been done, and whether rental reversion remains the best performance indicator. James Goh confirms data centre conversion is among the options under discussion with regulators, alongside other uses, and describes early regulatory discussions as requiring multiple agencies' agreement rather than a single approval.

[00:47:46] Joy Wang (Analyst, HSBC):

“how, uh, are we likely to see a more significant change of use?”

[00:48:23] James Goh (Head Portfolio SG):

“change of views to data center is one of the options that, uh, we have, uh, we are looking at as well.”

[01:01:37] Q&A - Question 6: Changi & Tuas Logistics Cluster Dynamics (Tan Yew Kiam, CLSA)

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

Tan Yew Kiam asks about the rental gap between two newly signed financial-institution tenants at Changi Business Park and existing tenants there, and how the current lease-up period for logistics space compares with past cycles. William Tay declines to disclose the rental comparison and says logistics assets are reverting to a pre-pandemic norm of about six to twelve months to lease empty space.

[01:01:37] Tan Yew Kiam (Analyst, CLSA):

“in the last 12 months you signed two fis in CBP, I just wanna know the kind of rans versus what the existing”

[01:02:00] William Tay (CEO):

“how does it compare with the past cycles and what kind of period are we looking at?”