Proposed Merger of CMT and CCT Briefing

Thank you, Manuel. Good morning ladies and gentlemen. I'm sure you're more interested in the topic next to after this. So I'll keep the briefing quite brief. It's supposed to be very brief. Anyway, the results have been out this morning. Some of the highlights are already quite evident. So I'll just quickly run through some of the key items to look at. So this gives you a... Anyway, this is just for formality. Just take a look at this quickly. So this is an overview of the full year. In 2019, we achieved a positive rental reversion of 0.8%. Shoppered traffic went up by 1.4%, which is an improvement

from in fact third quarter. We end the year at a pretty high occupancy, 99.3%, and tenant sales has declined marginally 0.1, 0.4%. This year also marked the opening of after three years of development. So it's been well received in the market and Funan is trading and doing well. We also embark on the part of the rejuvenation of one of the older assets, Lot 1, beginning with the rejuvenation of the library and cinema and we expect the work to be completed progressively progressively from second half of 2020. This year we sold it to essentially two issuance, two capital market issuance. First one was a seven year hundred million

debt that was issued at an interest rate of 3.5%. Second one was a three hundred million US dollar ten year note and it was a swap back to Singapore at the all interest rate of 3.2 to 3%. On the sustainability fund we continue our effort to further the agenda. We managed to secure our first $200 million green loan to finance the BCA mark certified properties. And to show our commitment to greening all our portfolio, in fact, we met our 2020 target after having all the properties certified by BCA green mark following the certification of basically Clark Key.

key financial highlights. In the fourth quarter, distributed double income increased by 6%. We were also very pleased to announce that the unit holder will be receiving 3.11 cents, which is 4% improvement from last year on year basis. On an annual life basis, it adds up to about 12.34 cents, representing about 4% year-on-year growth as well. For the full year, DPU arrived at BPU at 11.97%, which is 4.1% improvement from last year. So I think that's probably the record that we have achieved.

On the gross revenue front, you can see the chart here broken down by different property. All more registered increases, except for log 1, which is undergoing AEI, understandably, other assets, largely due to the divestment of Samba Wang Shopping Centre. On a comparable more basis, which means excluding Fonan, excluding Samba Wang and Westgate, portfolio revenue grew at 0.6%. On the OPEC side, it's gone up by 12% for the same reason, but on a comparable On a comparable basis, our packs actually went down by 1.2%. So this leads us to on the MPI level achieving for the full

Year 13.1% increase and on a comparable basis increased by 1.3%. On the joint venture front, Overall is down by 15%, but that's largely because west gate Is no longer classified as joint venture this year, sorry, In 2019. So it's not really comparable. On a comparable basis, we are left with RFLCT, MPI increased by 1.7%. On the debt majority front, essentially we don't have a huge tower this year to deal with, so I think we are quite okay. We managed to achieve more than 96% fixed rate.

Just some other financial indicator to note, we end the year with all assets unencumbered, 100% unencumbered. Our leverage has gone down below 33%. Net debt EBITDA improved from 6.7 times to 6.4 times. And our average term to maturity went up to five years. Average cost for debt remains about the same, and we are still having the A2 rating for Moody's. On the valuation side, for the second half, we clocked in 149 million in CMT. In Raffles City, our share of the valuation gain is $17.6 million. All these valuation gains are largely driven by improvement in our financial performance.

Funan clocking a nice gain, largely because of the lower than expected cost in the development. Just some portfolio update. Render of reversions, like I mentioned earlier, went up for the full year at 0.8%. But if you look at the atrium, there was a large markdown, negative 6.5%. It's essentially due to a change in the one-dollar tenant, one-dollar mini-anchor from a bank, financial institution, to a more lifestyle trade. So we brought in a lifestyle trade into atrium, resulting in a, which is large space, resulting in a 6.5% decline.

If you take that out of the equation, H1M will have a 1% improvement in the reversion. And overall impact to the portfolio will have been a 1.1% improvement. We achieved a high 99.3% as of 31st December, if you can see from the chart here. Lastly, I think majority of the property has improved in occupancy side. So I think I'll stop here and I promise to be brief and I'll pass the mic to Kevin to brief you on the peace results.

First of all before I begin, I have to make one big apology for the very last minute cancellation of Rana's rescheduling of our results briefing last night. So for those who actually came all the way down and got turned away at the door, I apologize. So really a good morning to all of you. Let me just get to the slide. Really happy to share another good set of results to cap off 2019 for CCT. Just some highlights. For 4Q 2019, distributable income increased 5.5% year on year to 87.6 million dollars, right? GPU for the quarter was 2.28 cents,

a 2.7 year on year increase. An increase in DI was due to higher portfolio NPI and higher tax exam income attributable to our new acquisition main airport centre. The higher net property income was driven largely by high revenue from 2-in-1 colloquy arising from our step-up rent from the 1E extension and capital tower. Of course, we also saw a full quarter contribution from main airport centre post our acquisition. And this was offset by the inclusion of operating expenses for Main Airport Center. For the full year 2018, for the full year 2019, this full income increased 4.9% year-on-year

to $337.6 million, while DPU was an auspicious $0.8 cents. A 2.1% year-on-year increase. Not deliberate, really $0.8 cents. a nice Hongpao for Chinese New Year which is around the corner. The increase in district income was due to higher net property income, lower interest expense arising from a lower average cost of debt, and then tax exam income contributions mainly from Galileo and Main Airport Centre. Similar to 4Q, the higher net property income was largely attributed to a better performance from 21 Collier T, Asia Square and Capital Tower.

In the case of our German assets, we saw a full year contribution from Galileo versus roughly half a year last year. And of course, we saw also a full quarter of contribution from Main Airport Centre. These as you all know were offset by the divestment that we did last year of 2010 in August of 2018. So for the total year 2019, CCT delivered a total return of 18.8%. Again derived through unit price appreciation and dividend distribution. Our unit price increased 13.7% for the full year, one of the highest among all the S-weets in Singapore.

Our investment property value is a bit small, but our investment property value as an end 2019 increased by approximately half a billion dollars. Again this is a full year and year comparison, full year 2019 versus December 2018 and this was largely driven by our acquisition of main airport center contributing 385 million and then the rest of it was from our Singapore property portfolio where we saw an increase about 125 million year in part due to asset performance, improved asset performance, a marginal compression in our capitalization rate of about five basis points, and also the appreciation of our Raffle City hotel assets following

the completion of Fairmont and Sys Hotel upgrading. At the end of 2019 our portfolio commited occupancy including our German assets was 98.98% while that for our Singapore portfolio was 98.6%. Higher than the CBD core number of 95.8% for 4Q 2019. Our leasing team, kudos to them, worked tirelessly through the year to conclude 1.36 million square feet of new and renewal leases and achieved a retention rate of 82%. So that's really a good result from the team. We are really on track to positioning our portfolio for growth. Asset enhancement

works for six battery roads that we reported and our intentions to start this year have begun and as far as capital spring with increased our pre-commitment occupancy rate to 34.8% from 31% a quarter ago. At the end of December the finance team kicked in, we established a sustainability financing framework for the future issuances of sustainable debt and really this is about enabling CCT to diversify our funding sources and also to widen our debt investor base. We issued our first green bond, a Japanese yen 10 billion debt facility due

2027 and the proceeds were swapped into SING dollars at a fixed rate of 2.84%. So through prudent and proactive capital management our aggregate leverage has gone down marginally to 35.1%. The percentage of our unencumbered assets has increased to 91% from 78% the previous quarter. This was because of the repayment of the debt that was linked to capital green. Our average cost of funds was reduced marginally to 2.4% and our NAV per unit increased marginally to $1.82 per unit. So as highlighted earlier total distribution for second half 2019 was 4.48 cents.

If you recall we made an advanced distribution of 0.62 cents on 29th of August last year. This was post our private placement in July. So the balance of 3.86 cents is expected to be paid out on the 28th of February 2020. So with this I'll end my presentation for a full year results. Tony and I will now share the floor to present our big announcement. Kenya, behind Kenya. So good morning again. Let me, I'm sure you all been waiting for

this moment. Kevin and I are actually very excited today to be here to present to you the new vehicle that we are talking about. Essentially the proposed merger between CMT and CCT. Both CMT and CCT we are the best in class in Singapore in our respective area. Therefore, we see this merger as really a merger of equal, leveraging on each other's strengths, creating a platform that opens up new horizons for growth drivers. We think that with the combination, we will be creating the best-in-class portfolio, comprising retail, office, and now even integrated development. With enhanced size and scale, I think we are

uniquely positioned to capitalize on large scale. Sorry. Yeah. Yeah. So, sorry. We're supposed to show you the handshake. It's a little bit later, but we do it now. And i think we are we've been sparring a lot in sharing ideas and today we are coming together to consummate this marriage

So with enhanced skills and size i think we can capitalize on large-scale opportunity whether it's acquisition or redevelopment Better than what we can do on our own. So this transaction is going to be conducted by way of a Trusskimm arrangement. So essentially for every unit That unit holder owns in cct, you will receive 0.72 units in Cmt and a cache of 25.9 cents. Very simple math. That works out to be about from a split equity cache ratio split perspective roughly around 88% to 12%. So if you look at this chart on a combined

basis, especially on the pie chart on the right, you have a very nice balanced portfolio, really unparalleled in the market, split quite equally between retail office and integrated development, which is one of the next drivers that we are looking at. A lot of investors like both CMT and CCT essentially because of our Singapore portfolio. By coming together, we are not diluting the effect. In fact, the enlarged portfolio will still be predominantly Singapore focus, but we have a little leeway now to look at overseas investment. So we put a 20% here, it's not a target. It's something that we want to signal to the market that we are not going to go all out in overseas.

But in the absolute term, actually, the firepower is quite great. 20% on an enlarged base represent about $4.6 billion. That's a sizable market. Upon merger, our focus will continue to look at retail office. We will not change. But now, it's actually enlarged to look at the larger scale kind of integrated development. In fact, within CMT, we have already started the process. If you look at full nine, essentially it's looking at integrated development. Even for CCT, they touch a little bit on capital stream, which essentially comprises some element other than the office. So this is not going to be something new.

Upon a merger, you can see on the right side, that's how it look like. Essentially CCT will become a sub-trance of CMT. So quite simple structure. So to this merger, we see a few benefit. First, I think it reinforce our leadership position certainly will be the largest in Singapore and prepare us to number three in Asia pack. That's I think a different, putting ourselves up there in the market now. We can compete with the best in the world essentially. You also better position us for further growth opportunity like I mentioned earlier. You can look at larger size scale including integrated development. And most of you will probably know, integrated development,

usually the ticket size can be sizable. So on a combined basis, we could look at something even broader now. That give us a lot of optionality. And putting all this together, it's all this price chart. The three key component retail office integrated really to bring fans our portfolio and enhance our resilience through market cycle. So we have the added optionality to look at different market cycles. Today may be office, some days it may be retail, but because we have that expanded mandate, I think we have a lot more leeway to do. And of course, importantly, I think this deal is structured to ensure that both side of the unit holders benefit from accretion.

just to cap it up. So I'll pass the mic to Kevin. Kevin will elaborate a little bit more on some of the points I mentioned earlier. Can I find the mic, please? Thank you. So really, what are these pillars? Can you hear me? I've got the, okay, very good. So what are these pillars of leadership, growth, and resilience that Tony talked about? First of all, leadership is about strength. CMT and CCT each have our best in class retail and office platforms, right? With proven track records of portfolio performance and value creation, CMT has got a very balanced portfolio of very well-located, very well-connected assets,

both suburban and central. CMTCT has a widest footprint of assets in the CBD and also the largest portfolio of grade A assets in the CBD. We are heading into this merger as equals from position of strength to create an even more robust and efficient platform. And that also leverages on our considerable experience as partners since 2006. If you all recall, between CCT and CMT, we acquired ruffle city in 2006. So we've been actually partners. There's no need for marriage already. We already married since 2006. Leadership is also about dominance.

We will be by far the largest Singapore wheat. We will also, when merged, become the third largest Reed in APAC. The large scale will allow us to compete even better in Singapore and also in developed markets to drive new new opportunities for growth. And the developed and the merged entity has all the right ingredients to attract greater visibility, generate even higher trading liquidity and increase and possibly enjoy an increased potential for positive re-rating. All the factors that investors are looking for. Growth, what

is growth about? Growth is about growth will come from having the optionality to invest. You know Tony Allian shared that the merge entity will be predominantly Singapore focused with up to 20% overseas in developed markets. So we will continue with this push and look for opportunities to grow and add value in Singapore. But you know when you have a 23 investment portfolio that's only 4% invested overseas. We really have plenty of headroom to hand for large accretive acquisitions across developed geographies without shifting our focus in Singapore. Growth also comes from

capitalizing on a combined domain expertise. We each have proven short records of pushing boundaries, repositioning our portfolios, and also staying abreast of evolving real estate trends. So I'll ask you to think of Funan, which CNT completed recently. A couple of years back, we saw, CCT enjoyed an uplift from the completion of Capital Green, and we are certainly looking forward to a new uplift when Capital Spring is completed first half, 2021. So we will continue to leverage this expertise to drive office and retail investments and increasingly integrated commercial developments. Growth is also

about capitalizing on future resident trends. As we all are very very well aware. Occupier sentiments are shifting, shopper preferences are changing. There's also a a growing focus on urban planners, on rejuvenation, on intensification of land use. And this is driving the market towards more integrating retail and office offerings. So this really reinforces the rationale for CMT and TCT to converge, to capitalize on this trend, and also future-proof assets, which in a real estate business is critical. You always need to

think about future pro-fino assets. Growth can be derived from the optionality and flexibility to undertake larger redevelopment within the portfolio to drive future growth, future income streams. Both CMT and CCT have enjoyed uplifts. I talked about that just now, Funan from CCT, Capital Green and Capital Spring upcoming. The merge entity will have a significant development headroom, just assuming the maximum 25% to 10 plus additional 15% if we get unit holder approval for assets that we hold held for last three years, at least three years. Our development headroom is a significant advantage of six, we have a significant development headroom

advantage of 6 billion Singapore dollars, unmatched by any Singapore wheat. And then this combined with a enhanced debt headroom of 2.9 billion which on our own we will never smell or breathe or aspire to, right? That allows us to really act more swiftly, to seize opportunities when they arise, and also gives us the flexibility to undertake larger transactions, portfolio advancements, and reconstitution initiatives. You know as we grow, being a REITs we are always also very conscious about making sure that we continue to deliver

sustainable distribution to our unit holders. Our home base must be covered. So our combined size and balance diversification across retail, office and integrated commercial assets will result in a more resilient platform. And this provides a hedge against market volatility and improves the ability of the merge entity to compete through cycles. So as individual platforms we will invariably on our own go-through different cycles, right? Sometimes resulting in us being sometimes more competitive and sometimes less competitive. But as a combined entity, our platform becomes more balanced and we are able to cut through all that and invest through cycles. Resilience is also about reducing

single asset concentration risk and income vulnerability. If you were to compare the top five NPI contributors in terms of assets of the merge entity versus that of CNT and CCT. For CTT it reduces from 83% currently the top five assets in CCT's portfolio contribute 83% upon net property income. With the merge entity as we end it has become one with a CCT that reduces to 43% a significant drop. For CNT, it reduces from 51% to 43%. And this increases the flexibility to undertake

redevelopment or asset enhancements because the income impact from such projects is reduced. So it then translates, in fact it translates to stronger value creation in the longer term while supporting stable distribution in the near term. So while we outline the benefits of leadership, growth, resilience that will drive performance in the near to longer term, I think the immediate financial benefits of this transaction are also very important and something which all unit holders hold to heart. For CMT unit holders, the transaction will be DPU accretive.

Based on a full year 2019 distribution of 11.97 cents that Tony just reported, the performer DPU accretion is 1.6%. For CCT unit holders, the transaction is also expected to be DPU accretive and based on our very auspicious 8.88 cents, the performer DPU accretion is 6.5%. Thank you, Kevin. So let me just sum up a few points that Kevin elaborated so that you end this, leave this place with a clear mind. The merged entity will still be predominantly Singapore focused, I think we need to emphasize that.

An investor like us to be that way. So open merger, although CCT has ventured out to overseas in Germany, and it represents about 4% of the portfolio, but our focus will still be Singapore. Having said that, I think we talk about the 4.6 billion is a big fire power that we have without changing the nature of the merchant entity, still predominantly Singapore exposure. We continue to invest in retail, office, and now integrated development depending on the market cycle. So we have a lot of optionality now. And with multiple drivers to create value, it will be supported by a very prudent capital management. So I think we will still instill that very disciplined

capital management going forward. So both of us are very excited about the prospect and the future. And we think that we can deliver a lot of value to both the combined unit holders. In fact, quite many of them are already, they're already owned CCT and CMT collectively. So I think the alignment interest is there. So let me introduce the new Capital Land Integrated Commercial Trust. This is what we plan to name it. Essentially a combination of Capital More Trust, Capital Commercial Trust. We will be the largest in Singapore for sure by far. And we will be the third largest in Asia pack.

I think we will be a major player out there. And supported by key attributes to member leadership, we are cementing our position, leadership position. We are creating growth opportunity, multiple growth driver, and we are actually enhancing the resilience of portfolio. So these three attributes do remember, leadership, growth, resilience. That's something that Capital plan integrated commercial trust represent. With that, we end here. Thank you. We're happy to answer some questions. The timeline, the timeline. The timeline. Do you want to go? The next one is just a rough idea at the timetable, right?

So the next milestone obviously is the uni holder meeting that But potentially around April, May, we are working hard on it. We're working on the circular. Obviously, circular has to be out. So that's some road map to remember. Upon if we are if you didn't hold the support both of us to be Together as a much entity, then we expect the deal to be Completed by before end of June, hopefully. So there's some milestone. I think more details will be announced at the end of the course. So we will complete our presentation. I'm happy to take some questions. We can take some questions from the floor.

So thank you, Tony and Kevin, for the clear and succinct presentation. We hope that all of you are excited and look forward to Capital Land Integrated Commercial Trust, just as we are. Now we are going into the next segment, which is the question and answer session. Before we start, I would like to invite our panelists to come on stage. We will have Mr. Tony Tan, CEO, and Ms. Cindy Chu, CFO from CMT. And we will also have Mr. Kevin Chi, CEO, and Ms. An Chua, CFO from CCT. If you have any questions, please raise your hand so that my colleagues can hand you a microphone.

Please state your name and company before you ask the question. For those watching the webcast and would like to ask questions via the webcast, please click on the post question tab and submit the questions. Now who's ready to ask the first question? Yes, Mervin. Hi, Mervin from JP Morgan. Congrats Tony and Kevin on the transaction. Looks like exciting future ahead. I guess you can, through the dead head room as well as the development head room, clearly can accelerate your growth options. Maybe Tony, I think you touched on maybe some AIs or redevelopment potential in your portfolio. Which assets you think is easier to kickstart,

maybe next year, post a merger? In terms of overseas expansion, in terms of opportunities where you think the greatest opportunity resides, is that more retail office? And I guess Kevin, back to operations, maybe some commentary on what's tenant behavior in terms of the office. Are there people too cautious or looking to expand post-rebound and global PMIs?

So just to address the first question is on what are the potential opportunities within the portfolio? There are plenty of them, right? We can't name any. Obviously they require, I think I've briefed some of investors and this before, it's a constant dialogue. I think we have a dialogue with the authority. Certainly, there's clear indication to steer towards more of a mixed use development, then a standalone single asset use. So I think we, if you look at our portfolio of 15 shopping malls, some of them obviously at a different stage of age, they're prime for rejuvenation. So the skill and size all depends on the final outcome

that we can engage authority. But certainly the authority wish for us to come up with something interesting. So I think we touch upon what the merge entity can do together. Obviously, there could be a component of the office element, maybe plus other things. And each location will be quite different, because each location are driven by different dynamics. So we have to assess the best use of each location and we take it from there. So I cannot pinpoint, but I think there are a lot of opportunity out there. So Marvin, second question you can overseas. First of all, to highlight that for the new entity, CICT,

we will focus on retail, office, and integrated developments. No change as far as the office strategy is concerned. We are already in Germany with two assets in Frankfurt. We like the market. We think there's a tremendous potential for that market and we'll continue to look for new office assets and new opportunities to invest in the other cities of Germany. We have shared also that we would evaluate whether the other markets look at. But at this point in time, the focus is there. I think Tony has also communicated that from a CMT platform, they are evaluating opportunities, the possibility of investing in also developed markets.

So I think that strategy, that trend, that line of direction does not change. So that would continue while at the same time from the home base, we look at potential more exciting, larger developments like integrated commercial assets. So to add on what Kevin mentioned about the overseas, obviously now with a merged entity we will cast an eye on overseas opportunity very differently, right? Essentially we have optionality in office, retail or even mixed use. So if this deals with the blessing or union holder we get pushed through the finishing line, certainly we sit down together and evaluate our options.

Okay, yes. Hi, this is Donald from Bank of America. Couple of questions. First is, I'd like to ask, when did this conversation, the merger, really started and what was really the trigger? My question really surrounds whether bigger is really better in your analysis in doing this merger because you see within APAC as well big REITs doesn't necessarily mean to trade at a premium while smaller REITs actually can trade at premium. So how confident you are on that in the enhanced entity to have a much better cost of capital

versus your competitors which is a bigger pool now. That's the first question. The second question is on the redevelopment. As a large entity, you have a bigger fire power to do mixed use redevelopment. How would this conflict with capital land? If capital land is also looking for large development, would we be under capital land now, or would we be under the merge entity? How do you solve this? This is the second question. The third question, I'll just get it out of the way. I guess people will ask is, how would be the management allocation like post merger? Especially not only just on that, on overseas acquisitions

as you grow more, how do you allocate management on that front end of things? Maybe we start the answers in reverse order easier. So the question on management allocation. And Donald, clearly it's a good question. Leadership and management is critical to any business to grow. And you can be rest assured that this is one of our priorities. But really, at this point in time, we do know there's strong complementarity between CMT and CCT. And clearly what we want to do is leverage off the expertise on both sides, and we can expect management from both teams to be working closely going forward. But we can't go into specifics now.

Really, the focus is about getting this merger completed. And in due course, the question on management, how exactly the structure is going to look like and all that will be addressed once the transaction is approved.

So I can take the other questions. You talk about conversation. We talk a lot together. I mean, we are joint venture partner. To me, it's a natural progression. You do know the retail market is not easy, Singapore, not easy market. To do a third party acquisition, challenging. So where should we find growth? I have a natural partner next to me. So to me, this is a very natural progression. So it doesn't involve who talked to who first. We are talking to each other all the time. Raffa City, we work so closely together. We have Fu Nan. We also seek his view about the market, the office market

in that locality and we form the way forward. So there's really a lot of collaboration. So I think it's ongoing diet even before this has been proposed. Your question about conflict with the, I don't think there will be conflict. I think we, CapitalN and obviously with the combined read or even on our own, I think we actually offer different value proposition to different investor, depends on what they are reached appetite. CapitalN obviously has a wider scope, the emerging market, we are very, very focused on developed market and we are read, right? So at the end of the day, I think investor will choose where they want to invest based

on their reach appetite. So I don't think there's a conflict in that sense. Obviously there are also potential for even the combined route to partner with Capital Land for even large scale, super large scale kind of opportunity. CMT has already done that before. We have joint venture with Capital Land on West Gate as you know. And eventually, obviously we bought out the remaining stake. So it's nothing new. So it doesn't preclude us from even joint venture. In the case of our CCT, we now have a joint venture with Capital N in Capital Spring. When we did that deal, why did we bring in joint venture partners?

Because it made sense. Not because we couldn't do it on our own. Because it made sense. So this is the approach when we make any investment development, brownfield, greenfield or even a new investment opportunity. It's all about making sure the deal makes sense from a capital funding point of view and trying to work out the best result and best optimal outcome. If I may add your question about cost of capital and potential or what it means, I think first of all, we need to understand that this is a merger of equals. We are bringing together two best in class platforms. So you shouldn't be looking at one or each entity separately.

It's really about creating a brand new, more resilient, more robust platform that can do a lot more with all the right ingredients for success. And again, the ingredients that we talked about, the combined domain expertise, the dead headroom that we have, the development limit, headroom that we have, all these suddenly adds to a lot more optionality and flexibility to make investments. So it's almost like a new, jumping a new S-curve, and pushing a new phase of growth. Okay, I think Gula has a question. Yeah, sorry, yes, happy new year to everybody and congratulations, but I've got three questions

on the merger and a couple on each one of the reads. The first one is on fees because both of you have different fee structures and CCT's fees are, as we all know, much lower than CMT's fees. And then there's your A2 rating because, Tony, you've often said you want to keep your A2 rating. So CCT was downgraded a couple of years ago on one of your acquisitions. And then there is the equity raising part because CMT has a significant equity component in the price. equity component in the price. I mean a price of the cash component. So the equity raising. So there's another merger.

Then individually, do you expect lot one's occupancy to decline? I mean, because you've started the AEI. So what's your expectation and what will that do to the NPI contribution to the portfolio? And then of course for CCT, what's the status of the HSBC building given all the negative news we've had over WeWorks. I'll take the last questions. Okay, sure. So, Gula, thank you for your questions. I'll start from the end. You talked about Lot 1. I won't go into specifics of each deal or each enhancement that you mentioned, Lot 1 and in the case of HSBC, but I want to bring you back to what you spoke about,

improving the resilience or having a stronger resilient platform, right? Reducing single asset concentration risk and earnings vulnerability. So, be it a lot one or HSBC, right? The composition or contribution from each of these assets to the enlarged entity is a lot smaller than if it were in the respective own platforms, right? So, we can still push ahead to do these very important deals and enhancements and still at the same time have a very, very stable distribution base to protect distributions to unit holders while these AEI's go on. In the case of our HSBC building, just a quick one,

we have signed a lease with V-Welp. They are doing well in Singapore. We are happy for them to continue and things are still going on as planned, right? No, no, no, we are fully confident and fully behind that deal. Okay, so I'll just address the question from the first one, the fee structure. Essentially we are grandfathering the fee structure into the merged entity. The existing assets coming to the merged entity continue to enjoy the same fee structure. So I think there's a lot of alignment interest. We are constantly aware that the CCTs unit holder like that, therefore to ensure that there's alignment, the current fee structure in CCT will be morphed into it. Obviously for new

investment going forth, you will follow that of capital more trust like what we do normally anyway, right? So that's the question on fee. On the A2 rating, I did mention as far as possible, we would like to defend that. I think we do see tremendous benefit of having a highly In fact, the top rated profile in Singapore. But we have to measure that against the business Opportunity. At the end of the day, it's a Core, right? So everything else being equal, We will say that the business opportunity would probably Overwrite, because over time, if we deliver our execution Well, our number will show, and our balance will improve.

So even we may, hypothetically, if we have to face any kind of risk of a downgrade, I think over time we will work hard to ensure we get it up again. So I think that address your questions. The question that Gula had was on equity raising. It's not like I do an investment and I need to go out to raise new equity. It's slightly different. In this case, the scheme consideration comprises CMT issuing new units for every CCT unit. unit out there and in this case is 0.72 units. So CCT unit holders stay invested. Largely invested. It's just in a different entity but largely invested in CMC and of course the cash component and the cash component would

be funded through additional debt that CMT will be raising. So if you look at it from a structuring point of view, it's no different from how you would go out to do an acquisition, if you were to do it, you know, the form of funding structure, you will have a different component of equity in that, so it's the same. Obviously, when we talk about this merger is really merging of equal, so we factor that into consideration. We want both party, both unit holder, to be able to enjoy the benefits from this merger. Okay, yes, we have David. David, I'm from Diagua, Happy New Year.

The first question is, the cost of capital of the merch entity, how confident are you that it should be lower than each of you as individually? And if it's much lower, do you think you could acquire assets or best-in-class assets in Singapore and in developed markets that you would not have acquired if you were individually listed or how confident are you? So David, we are confident of the new platform, the merge entity. We are confident about what it represents, combination of domain experience and expertise, a large capacity to do more, and all the right ingredients are there to grow and make accretive

acquisitions. We can't tell, I can't say exactly what it means in terms of the volume of liquidity or whether the counter will re-rate but suddenly all the right ingredients are there. Visibility, resilience, growth, leadership in the market. So I guess I can only believe that if investors believe, as we believe in the merge entity there is certainly a potential for a cost of equity to come down. And your A2 rating is that the highest rating a REIT can achieve or is there a case to even deserve a higher rating after the murder?

I think in the S3 space yes we are the highest rated. Weather can go even higher Between A2, A1 is quite a long, it's a tall order. But we're happy A2. I think A2 is very credible. You look at the top reads around the world, the most highly rated reads are also in the A2 space. Between A2, A3, yeah. Okay, and my last question. Has there been any serious consideration of moving to an internally managed read because now that you're bigger, you have more scale, shouldn't that lead to, you know, more cost savings for unit holders if you did that and more alignment of interest.

In the case of CICT and well to begin with CCT and CNT the structure that we have is an externally managed suite works not only for us but I guess for the Singapore street space. There's no real reason to change that at this point in time. I think we have tremendous alignment with our sponsor We don't face the constraints or perceived constraints that externally manage, or people believe that externally managed retasks, right? So everything has not, this issue has not been an issue for us. So we don't think that, we don't believe that this is something that we will consider in the near term or in the future.

Okay, yes, Brendan. Yeah, hi, morning. This is Brendan from Sydney. Just a couple of questions. I mean, for Tony, I guess you've been sort of guiding the market that you've been looking at, like Australia, as well as other developed markets. What actually propelled you to make this decision to pay like 1.1 times book and 4.2% yield for an office read where the cycle is near instead of looking at something else listed in other developed markets? I'll take the question first. So when we explore overseas, I did mention Australia's interesting market.

Obviously, we're wearing a hat of retail space, right? But now it's a different ballgame. Now we can look at something wider than just pure retail. We have opportunity to look at even office depending on market cycle. So one of the challenges of going overseas is retail market and some of the developed market are not easy. That's for sure. But that's the cycle now. The cycle may change over time. So it makes a lot of sense for us to refocus back to the fundamental. Our fundamental is to create this platform ready in time when the cycle change. And we have that balance sheet to do in a large scale,

other than to be on our own. So the question would be very different once we merge. What are you gonna look at? Previously we were looking at retail. Today I think it opens up a lot more opportunity. I'm sure a lot of people have been knocking out the door. Looking at perhaps even partnership opportunity, participating in large scale kind of perhaps development where we may participate in one component of it, maybe. What I'm saying is that this final form, obviously it opens up a more optionality for both CCT and CMT on a combined basis. Yeah. I'll add on further, Brendan. It's, your question is basically,

status quo versus transformational strategic, right? Clearly transformational strategic makes more sense for unit holders because it drives future growth, right? and we should be able to do it better and faster.

Yeah, just to follow up as well on the post merger gearing, it seems a bit high at 38 plus percent. Is there a consideration to sort of guide for higher gearing post merger? I can take, yeah. So we continue to as prudent as discipline in our capital management. This obviously is a transaction. Well, we want, it's a merger, but then it's transacted. Actually, structure is like a transaction with a acquirer and acquirer. So obviously, there will be some, that element. So I think that sets the stage for day one, 30-old percent, I think we mentioned 38.2 or 3 percent as a day one gathering.

But going forward, we'll be very disciplined. look at how we will assess opportunity appropriately, how we want to fund any kind of third party acquisition, for example external acquisition. But we also can really look at within our portfolio, what we want to do internally. There are a lot of things we can do once this is completed, yeah. If I may add, Brendan, would be even on our own, respective platforms, use our gearing, unnecessarily. The answer is no. We've always been very prudent in doing things. And we'll only unleash our firepower if the deal makes sense. If you look back for CTT, when we acquired

Asia Square Tower 2, it made sense. It was a strategic deal. It made sense. And we were willing to bring our gearing up for that deal, but not just any deal. And in this case, I'll go back to the point about being transformational, being strategic, it makes sense, right? And don't forget, as upon merger, as we create more value, right, our balance sheet becomes bigger and that would also help to drive our gearing downwards, okay? Okay, maybe at this point, before we have any more questions on the floor, there's some related asset class questions from the webcast. So I think there are three related ones.

One is asking whether if we're looking at integrated commercial development of future and Raffles city assets in China are designed as such, would these China assets fit within the combined group in the future? Okay, that's question one. And the other question is about whether we would expand into other asset type, like logistics, because that's also a possibility that's raised, and commercial assets. And the third part is asking about if we're looking at integrated development, What is the priority? Is it the sponsor-led development and subsequent sell-down to the REIT, or is it a third-party acquisition of integrated development, or we are looking at redevelopment within the REIT?

So it's asking about where would the priority be for the merged entity? I'll take the last question. It's just fresh on top of mind. Integrated, where will our priority be? Right now, CICT would have a very balanced portfolio of office, retail, and integrated developments. We will continue to look for opportunities across office, retail, and integrated developments. It doesn't stop us from, we're not just focusing on one particular area. So, a lot depends on the opportunities that present themselves, right? But we expect that with our mandate and the larger platform, there will be a lot more opportunities presenting themselves

and that gives us optionality. So when that happens, then it's for us to assess which deal makes the most sense. So the question is, will it be sponsored, third party or within? My answer is that it's all of the world. Because as they present themselves, we look at it, we see does this one make sense or does this next one make sense? And then we allocate capital accordingly. Yeah. OK. So I was about reference city, China portfolio. I think today, I think we've been very clear. We want to stay focused on the developed market. So immediate priority, the most entity is going to be a developed market.

And there's a lot of things to do. I'm talking about even Singapore and even some developed market out there. I think there will be a lot of things for us to be busy with. So I hope they answered the questions. There was a question about logistic. There's a lot of possibilities. Logistic commercial, which kind of geography? So the way we look at it is which is the best use for that location? I mean, we own, for example, within CMT, we own IMM, which is, yeah, we have retail, but we also have a warehouse. But that fits the business there. We continue to look at such opportunity.

Well, if there's opportunity out there, suddenly we will consider whether this is the best form. So I don't think we want to rule it out. But if you look at it at the end of the day, both of us combined, largely it's going to still be off-face and retail. I think that will not shift the equation for a long time. Then I think Jason has a question. Hi. Hi, it's Jason from Goldman. I've got one question on your higher debt development headroom, does that mean you're more willing to Take on development risks, so either greenfield projects or Even acquiring older assets to tear down and rebuild?

So higher that headroom, higher development headroom, it, i go Back to the point about optionality and flexibility, right? Just it gives us the ability to do it. It doesn't mean that we mean that we will definitely deploy it. The deploy of how we deploy our capacity depends on the opportunity. So if it's the right opportunity to invest in, we will certainly look at it. In case of, say, dead headroom, you know, both CMT and CCT have said that we are comfortable to stay within below 40 percent, even though the regulatory limit today is 45 percent. But if the right opportunity comes about and we

may have to maybe a fringe closer to the 40% for a short period of time because the deal makes sense, we would look at it. But if the deal makes sense, it would then result to virtuous benefits which would then eventually lead to our gearing coming down again because you can create value, you can value add, you can achieve a high evaluation which then in turn lead to low evaluation. But ultimately, the bottom line is it makes sense to the read, it makes sense to the unit holders. And then on the day, our asset is got to deliver. So without the merger, we are working on asset hard so that we create value at asset level.

So naturally that will help to cushion your gearing impact because the valuation naturally You will catch up once you try value in your individual property. Then Kevin obviously touched about whether they do something extra. Then we have to measure the risk reward. We look at the, what kind of timeline. We look at how we're going to fill the gap. So the many multiple considerations that has to be taken into consideration. But this capacity gives us added competitiveness. Yeah. Right? That's very important. So if you put ourselves against our peers, like for like, we can probably do it faster, better, quicker. Okay, I think we have a question.

Terrence first, then we go to Shen. Hi, this is Terrence from J.P. Morgan. Congrats, Tony and Kevin. I just wanted to ask, with the much larger combined entity, would you consider finally acquiring ION or CHET from the sponsor? And also, what about potential assets in Japan? Thank you. I like Aion, let's put it this way. I think it's definitely very, it's an asset, the represent of children. So if you want to be, you want to represent the off-road, I think Aion is the asset to own. So I think that's quite clear. Japan obviously we'll look at it.

I mean, the market we mentioned, obviously cover Japan, but you have to look at the very specific, what kind of assets we're looking at, whether it's office or retail or combination. But the CNET is a market that we won't do well. Okay, I think Shane. Hi, this is Tanjir from CLSA. I have two questions. Firstly, Shane is going to speak up a bit. Hi, can you hear me? No, a bit softer. This is Tanjir from CLSA.

My first question is on cost energy. Do you think there will be any cost synergy from the merger? And also, is there any synergies imputed in the pro forma calculation? And secondly, is there also a 1% acquisition fee for this transaction as well? Thank you.

Well, there potentially could be some cost synergy by coming together, perhaps. But importantly, return and office asset class, I mean, they are unique in their own way, so they will be managed quite differently in a sense. Of course, coming together as an integrated project, like a reference city, that's another new dimension. So we certainly, as what we normally do, a responsible manager would try to strive to have as much synergy as possible and to be more as efficient as possible without the merger. So I think that's what you can rest assured. On the second question of acquisition, acquisition fee, I think we did apply a 50% reduction.

I think because we want the deal, I think at the end of the day it's really a merger. We want this merger to happen. So we look at different parameter. I think at the end of the day it was a call to apply a 50% reduction. I think it's also in line with some of the merger that's happened out there. Yeah. Okay. Yes, Vijay. Hi, Doni, Kevin. Can you hear me? Yes, sir. Yeah. Good morning. Just two questions. Firstly, I think on the key reasons for the deal, one of the reasons you mentioned during your presentation is that globally it has been challenging retail market and retail

market is on a downtrend. How much of this played a role in terms of this deal coming forward and going forward will it be more of office acquisitions which we will expect for the combined trust? So on acquisitions, right, I think what we see in the retail market is apparent for all to see, right, the disruption from retail, from online and so on and so forth. But I think all we need to look at is Singapore. We need to bring back, come back to Singapore. Singapore is a very different market. Tony will say, he's the PM and expert on this, right? Singapore is a very different market.

CMT is a different platform. It's by far the best in class retail. So for us, we are very happy to be having a partner who is the best of retail in Singapore. Yeah, so clearly I think we in Singapore we can look at integrated developments which combine office and retail and in the case of Office assets we will continue to look for assets overseas as we've already doing So suddenly in Singapore if the opportunities arise and the numbers make sense we would like to look at it, too so You touch upon retail. Yes, I say it's not easy market, but mark the retail market is evolving

I think it's important to note that this is not a new phenomenon. Of course e-commerce these days is the password online, hitting the mark. Every day hit lines about online. But retail market has been evolving for the last one, two decades. Decentralization, centralization, economic development, your infrastructure development, it all drives behavior of consumer. And we have to react. So we have to react accordingly. So today, the password against our new retail. What exactly is new retail? I mean everybody's trying to figure out we have a little bit our own formula to do it you see for none is Crystalize a little bit of component of that new retail

You probably also notice is we have element of office you have element of co-working space So we work is co-located in our shopping mall And it's not unique to CNT you look at some other assets is already happening. So it's about how you're going to evolve with it. And we have a very strong platform, our sponsor, Capital Land, is probably the most progressive retail management player in Singapore. All constantly evolving, constantly investing. So we are confident. No doubt there are hate wins, but over time I think we have a file right formula to tackle it. Yeah. And is there any index inclusion also which you are aiming out for

the combined? Index inclusion. Is there any other index inclusions also which you are aiming out for the combined read as a factor for- Well, as far as index inclusion, we are already in all the indices, right? We probably feature this higher in the indices. And I got- Thanks. Thank you Vijay. I think Wi-Fi has a question. Hi, Wi-Fi from UBS. I have three questions. Firstly, can I just confirm that you mentioned now the fee structure will follow CCT and it would mean lower fee for capital and going forward, and that you are taking 50% of fees and units now. That's my first question. Second question, are you looking to do anything

to your stake in CRCT now that you are merged? And thirdly, just on results, can you comment on the negative rent version at Asia Square Tower 2? And with Allianz moving out, have you managed to find any post-b going forward for new assets that the merge entity acquires, it will follow the CMT fee structure, which is comparable to market. CRCT, I'll leave it. So, a question about CRCT. At the end, please remember we are looking at the

developed market today. The whole reason why we want to do it, I think we explained earlier, we want to be a clear leader in Singapore. This much certainly prepares us to be clear number one, right? We are number three in Asia Bank, in the Asia Pacific region, so that brings up a lot more opportunity. Putting this together, we have so much things to do. Today's CRCT on a much basis probably represent at most 1% of our exposure. So I think our attention is really focused about getting this through. So why find your question on Asia Square?

Thank you for giving some attention to our results as well. So for Asia Square, I think your perception of negative reversion arises from our table where you compared the range previous quarter versus current quarter. We've now in the past shared that we can't exactly compare that way because it very much depends on the leases that are renewed in that particular quarter. That's why we do not, however, we do not show the number, direct rent reversion number. And in this case of an ages square in fourth quarter, the leases were larger compared to previous quarter where the leases were smaller. So naturally, when you have a larger lease,

The rents expected to achieve for a larger area, larger space, is slightly lower than what you expect from a smaller space. And if you recall, I also shared that for full year 2019, one of the contributing factors to improvement was the performance of AG Square. So I think what you saw may have been just specific to the quarter. But it's based in the R lens is vacating, we are in and talked with different prospects, right? And we in due course, we will be able to share more information about it. Okay.

Hi, morning, it's Wilson from Morgan Stanley. So just two questions. In terms of rationale for the transaction, I think one of the listed reasons was to acquire integrated development capabilities and mandate. From that perspective, now you have retail and office. would you say it would be ideal to add on the hospitality portion as well? Second question is again on the rationale for transaction leadership in scale was one of the reasons that was stated. Would it be fair to say that post transaction moving forward scaling up further would be one of the primary objectives of the week?

So first question I can touch maybe you want to touch second. I think obviously we would not rule out hospitality. Again, the main point is that every prospect will be different, depends on where you're located. So we always have to access what's the best use for that location. So it may have hospitality. So one final example for that, Wilson, is our capital spring project. We have a 635,000 square feet of NLA in our up and coming building plus 299 service resident apartments. When we evaluated the options for that scheme, it made absolute sense because it serves a

CBD market for people working in CBD wanting a convenient and luxurious environment to live and then pop to work just next door. It makes sense. Did it make sense to put retail there? not given where how the CBD is not exactly the most bustling area for retail versus places like Orchard Road or some of the suburban centers. So going back to the point, very much identifying the best scheme for the best location, for the particular location and that's what you'll have to evaluate. From the second point about leadership and scale, again, it's not scale for scale's sake. We are looking at achieving very, very measured growth that makes sense, deploying capital

when it makes sense, not deploying capital just because we want to bulk out. And I think that's a principle that both CCT and CMT have lived by from inception, and It will continue with the principle that we live by going forward. So the enlarged base obviously give you a lot, again, I'm not going to, the reason of repeating myself will actually give us more options now. We can take a large size transaction if there are opportunity out there. Yeah. Are there any more questions? Yes, Jana, behind. Hi, morning, Simon from DBS. Thanks a lot for the presentation.

I just had a couple of questions, more on the operational aspect. Can I ask, in terms of the merger decision, how much of the consideration of a potential I believe in terms of the MES leverage ratio was considered? Given that you mentioned that the development hit room was a consideration, that hit room is a consideration. So if the MES leverage ratio is going to be raised, how would that change and interplay with your merger decision, that's the first one. Second one is more on the semi-adional reporting. Do you, if the merger is effective in June, do you still intend to make a quarterly report in June?

Or will you skip that and kind of do one in September? I don't know when is the next one. And then the third question I had is, I think the struggle that I have is that on an immediate basis, I see the benefits for capital land. But I just wanted to get your sense in terms of the benefits that you talked about, whether it's scale, additional capital for the combined group. In the next 12 months, which of those benefits do you see being most apparent for the group? Yeah. So straightforward answer, MES, there's nothing to do with it. That's not part of the consideration at all.

We really come to this purpose merger based on the merits. We think there's strong case for us to build a platform that will, all the benefits we mentioned earlier to give us that additional optionality, the firepower, the market, you know, to explore. So I think that's last of the consideration. On December, annual or quarterly, I think that's something that we have to deliberate. It's been just announced in January, early January. Certainly, it's something that we have discussed in the board, how to bring forward, subject to clarifying with the exchange, the rules behind semi-quarter distribution and half-year distribution. So I think that's something that's still under discussion.

Yeah. We announced in due course. And then in terms of immediate benefit, I mean, we shared in terms of accretion, right? That's the immediate, immediate benefit that we see. CMT unit holders, 1.6% increase in. CCT unit holders, 6.5% increase in. Of course, there will be added benefits as we, when we merge and we acquire new assets on the merge platform. And then those will flow through in due course accordingly. Is it also right for us to assume that for 2020, the talks about overseas acquisitions, that will be something like a 2021 kind of, do you see opportunities also happening in

second half of 2020? Even though this deal is happening and we are looking forward to concluding a merger, it does not stop our investment teams from continuing to be out there looking for opportunities and deals. Right? So, again, we can't talk about deals that may or may not, may or may happen. We only talk about deals when and when there's something to announce. But believe you me, our teams are also still busy looking for opportunities out there. We do have a couple of questions on Redcast because I think we have different audience there. of questions is asking about how do we consider the various, the scheme consideration, how do we,

can we share a bit of like why it's not 100% cash basis? Maybe I'll start off on the question. I think the starting point on this merger, is that we approach this as CMT, CCT coming in together as equals, so it's a merger of equals. So, with that mindset in play, the decisions and on the basis of coming about with this same consideration was very much to achieve a win-win outcome for both CMT and CCT unit holders. So, as we shared, there is DPU equation for both. And we also want to make sure that after the merger happens, the merge and CCT has all

the right ingredients and has the right foundations for success. So that's how we came about with the deal mechanics. So it's, I mean from a pricing mechanism obviously it's a market to market pricing. And obviously we take reference to both the trading price of CCT and CMT into consideration. So it's really a market pricing mechanism. And then the component equity cash ratio, that's where Kevin mentioned, how do we structure something that allow both parties, both sides of the union to really enjoy this, at least an onset accretion arising from this transaction. Yeah. Am I full of time? So Donald, you want to ask the last question?

And then I'll have one more question for the webcast. Just so, Donald from Denmark, just very quick question. Now to the closure of the deal, can any of you make an acquisition? Meanwhile, if you make an acquisition and the financials change, what's going to happen? So it's provided for in the agreement that we do have the space to look at BAU, business as usual, up to a certain cap, obviously. But really there's no stopping. I mean, of course, if a deal makes sense and we talk about it and discuss it, and Both parties believe it's good for the merch entity, we would consider it. We'll have to, again, that has to be taken in consideration what the impact is going to be, right?

But I think all I'm saying is it does not stop us from being out there looking for opportunities. Okay, the last question from the webcast, I think, is also something that everyone will be interested in. So who will be the new boss for Capital Land Integrated Commercial Trust? We did answer that. But just to repeat, I think at this moment, our focus is really to make sure you cross over the finishing. I think that's the number one priority. Both teams, in fact, both teams, the commercial teams and the retail teams are already working alongside for this deal, and even as a joint venture partner.

So I think you see a lot complementary effect between the two team. But I think importantly, we need to reach the finishing line. I think that's really the crux of it. I think we want to thank Kevin, Tony, for taking so much time to answer, address all your questions. And also that we know we have not addressed all the questions. I think we still have some questions on webcast. But we will reach out to you to address all your questions. So given the time, we will have to end today's session. So thank you for taking time to join us this morning. And lastly, we wish everyone a happy Lula New Year.

Yeah, happy Lula New Year. Yeah, Sinekwala. Thanks for coming today. Hola. Okay. Thank you.