# CapitaLand Investment Limited — 1H 2022 Financial Results Briefing

- Event: 1H 2022 Financial Results Presentation & Analyst Q&A
- Date: 11 August 2022
- Kind: automated speech recognition (ASR) transcript, unverified, no speaker labels
- Source webcast: https://www.youtube.com/watch?v=uq1dxWhWvkM
- Duration: 01:34:41 (~14,744 words)
- Management named in this briefing: Mr. Lee Chee Koon - Group Chief Executive Officer; Mr. Paul Tham - Group Chief Financial Officer; Mr. Andrew Lim - Chief Operating Officer; Ms. Grace Chen - Head, Investor Relations

Unofficial machine transcript. Prepared by SMID Research from the issuer's public results webcast recording by automated speech recognition, without a full manual check: expect mis-heard names and figures. No speaker labels are given; timestamps refer to the recording. Not a company publication. CLI's results webcast is the authoritative record. Copyright in the briefing rests with CapitaLand Investment Limited; contact contact@smidresearch.com for corrections or removal.

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## Opening & Executive Presentation (Management Panel)

[00:00:01] Good morning everyone. Welcome to Capital N Investments Financial Results Briefing for FISHAF 2022. I'm Grace Chen, Head of Investor Relations for Capital N Investment or CLI. Before we know it, we are more than halfway through the year and in just a moment we will invite our group CEO, Miss Le Chikun and group CFO, Miss Andrew Lim to share with you how we have done for the year so far. And our CEO's overseeing CLI's various keeping businesses are also here to answer your questions. And today we are very happy to be joined here at our broadcast venue at Capital Tower by analysts from various research houses as well as members of the media. They will be asking questions during a Q&A later.

[00:00:51] And if you're watching this broadcast, you are also very welcome to send in your questions by typing in the Q&A box at the bottom of your screens. And without further ado, I would like to introduce the members of our panel today. So first and foremost, we have Mr. Le Chikun, CLI's group CEO. This I Chikun is Mr. Andrew Lim, CLI's group CFO. Next we have Mr. Jonathan Yap, CEO of CLI's listed funds, Mr. Kevin Go, CEO of lodging and the escot's message. Moving on to my left, we have the heads of our real assets teams. Mr. Simon

[00:01:37] Tracy, CEO of private equity real estate, as well as Mr. Patrick Buchalk, our CEO of private equity alternative assets. And bring us first hand news from China, a very core market to us. We have Mr. Pwatsi-Siang, CEO of China joining us virtually from Shanghai. So now I'd like to invite Mr. Le Chikun to address us. Hi, morning, everyone. So nice to see so many of you in person. At least I don't have to speak into the camera. Again, I mean, in the last two years, many of the briefings, you know, we're just talking directly into the camera. I think the darkest days of COVID-19

[00:02:24] that affected many of us in the corporate world and the personal life should be behind us. Actually, we are all quite hopeful when the year started, you know, when the global economy started to open up countries started to live restrictions. And we actually see the incomes and portfolio, actually performing quite well across the various asset classes and markets. Well, you know, shortly into the early parts of the year, we started to see things getting a little bit g-tary. First with the Russian-New Korean conflict. And then the FETs and the various central banks around the world started to, you know, live interest rates.

[00:03:09] I think faster than many of the economies have predicted or will prepare at least towards the end of last year. And of course, the other thing that true or spanner in the works was, you know, China implementing a strict COVID-0 policy, especially in Shanghai, which led to a major lockdown. And that's the backdrop, you know, that we were dealing with in the first half of the year. I mean, despite that, you know, I think we produce a credible set of results operating PEPME has strengthened. And that's a largely due to the increase in terms of the fund management fees. And also in the improvement in the lodging business. I still recall, you know, in the

[00:03:58] in the many conversations that I have with the investors and the analysts last year when we were doing the restructuring, you know, asking whether the lodging business should be part of the CRI business. But I think with the recovery that we are seeing in the lodging business with the greater signings and the recent acquisition of an awkward done by Kevin Steem, I think it's starting to demonstrate that, you know, it delivers strong income and we'll continue to do so as the lodging sector continues to improve and we'll fit nicely to the bottom line. I think the from a results perspective, overall, I've known numbers could have done better if not for two reasons. One is really around the COVID-0 policy in China, especially in Shanghai,

[00:04:48] where we have the biggest exposure that affected the contributions from the lodging sector. Secondly, in terms of the rebates that we need to provide for to help the retail, the tenants, now we're shopping malls. But I think that's largely going to be one of as the economy start to open up and, you know, the Chinese government taking a more enlightened approach towards the management of COVID and around all the restrictions, we believe that the sector will continue to improve. The other reason, okay, is largely around the capital recycling. First half last year, we recycle about 13 billion, largely due to a recapitalization of the RFO city portfolio,

[00:05:40] 13 billion, you know, that's quite a significant. This year so far, today we've done about 1.6 billion. I think we are still quite confident that we should be able to deliver the 3 billion target that we have set out to do. So there's quite a bit of work to catch up in the second half of the year, apart from capital recycling. We'll continue to focus in terms of the execution of the funds strategies. Happy to highlight that, you know, we have strengthened the teams at the country levels to look at the off market type views and Simon has also built up capital raising teams. Over the next few months, one to two months, we should be able to share more fun products and also

[00:06:25] in terms of the acquisition. I just want to highlight that. I mean, things do take time to cook, so just be patient with us, but definitely things are happening. And before I bust a mic to Andrew who will go through the numbers in greater detail, I just want to, I mean, something that that's not news to us. We are entering into a very volatile environment. Things are extremely uncertain. We have economies and many of the major firms predicting that we will go into recession. Interest rates have gone up. Because of capital have gone up for many, many companies. And that's why, you know, we have to be a lot more careful in the way we look for deals. We have seen

[00:07:10] corrections in the public markets. And we have not seen the same level of correction in the private market site. So, you know, we are definitely on the lookout for deals, but we will be very careful in the way we pursue growth. Okay, growth is still at the top of our mind, but we are not going to pursue growth or growth. Growth must be done on the basis of how we can create value for the LP's for unit holders and how do we create long-term value on earnings per share basis for CLI investors. So, that's really the message that I hope to be able to share with all of you. So, without further ado, I pass it to Andrew. We'll go through the details and we can have a

[00:07:56] mock you and later. Thanks, Andrew. Thanks, Andrew. Thanks, Chikun. Good morning, everyone. Just a quick one. First of all, thank you for joining us this early with apologies to CDL. We'll try to get you away so that you can attend CDL. We call last time we had the same problem. So, we seem to keep converging. This must be an auspicious date that we keep picking. I'm actually reminded that we're not even one year old. So, to Chikun's point, if you think about the last 10, 11 months, a lot has happened. And we are executing as quickly and as sensibly as we can. But at the same time, very mindful of the very rapidly evolving macroeconomic environment. So, as you look at our results and you look at what we're focused on, it's actually helpful for

[00:08:45] me to anchor back to the fact that, and this time last day, we were still capital land. We're not even CLI yet. So, we are still early days in our journey. Okay, very quickly on summary of one H to us, this was a half of two halves. Right? Q1, very strong, lots of evidence of recovery coming out of pandemic operating environments, normalizing travel, opening up. And then I think everyone was hit by a lot of events, conflating to produce a difficult elevated VUCA environment. As you can mention, rapid inflation supply site, demand site coming together, unprecedented. None of us have seen this in over 30 years. Conflated by geopolitical concerns, Russia,

[00:09:33] Ukraine, adding to energy, adding to food shortage. And then China having to deal with COVID, having to deal with 20th party Congress, having to deal with geopolitics. And as you can see, from the results, China affected us. I'll give you a bit more color as we get into it. I go straight to the overview of performance. So, again, I'll focus on operating Pat me because this is what we are focused on, ultimately. And they like to report that operating Pat me year on year up 31%, principally on the back of our fee income. And that gives us confidence that we are on the right track. So, on the fund management side, I'll give you some color later. But also equally on the lodging management side, both of our principal fee income generators

[00:10:20] generated strong year and year growth in operating Pat me. On the Yupida and Pat me side, we see 30 plus percent drop essentially coming from fall off in capital recycling. Right? And as you can mention, 11 billion last year, all time high, coming back down to a more normalized run rate of at least three billion. And then exacerbated by, as I mentioned, the lost quarter in China, where we essentially were not able to recycle any capital. So, the zero capital recycle in China in two queue. Despite a very healthy planned amount of recycling at the start of the year. So, again, something for us to catch up on, hopefully, if China

[00:11:05] approaches a more normalized operating environment in the second half of the year, it will give us an opportunity to catch up on some of that plan recycling that we have. On the capital stack and the balance sheet, I think very stable. Nothing really to report other than the market has continued to support us. We are trading now at a healthy 1.4 times any V gives us shared currency to grow and look for opportunities. If these difficulties persist and start to afflict other asset owners, and a year-to-date shareholder return of 25 percent, which we are honored and blessed to continue to enjoy. Balance sheet net debt to equity, cash and available on drone facilities all there to be able to deploy when we find something that we feel is worthy of our capital. As I mentioned, on the

[00:12:00] focus on fee income, we are much more diversified business than we were pre-reorganization. So, our view as a diversified remiss to have as balanced a sector contribution as we can. And as you can see today, out of the 833 million, it is a fairly even split between the four key sectors. And for those of you who have been following us before, you will know that in the past, this was not always the case. So, we are striving to achieve a well calibrated balance across sectors and I think we are getting there. I mentioned the focus on fee income growth and again, delighted that both on lodging management and on fund management. You see very healthy, year-on-year, FRE (Fee-Related Earnings) growth and on LM growth. On the execution side, the entire team is very focused

[00:12:47] on delivering on what we set out to do. We were still able to transact over 4 billion worth of assets, both on the buying and the selling. Despite difficulties in China, we launched our first ever RMB fund and strategically, I can tell you this is incredibly important for us in light of what we see evolving in China and Zsiang and Chikun can give you some more color on this. And obviously, on the capital management side, as I mentioned, we will continue to remain very prudent of making sure we have dry powder to deploy as needed. Okay, second half, the focus is on two key areas. One is to continue to be very steadfast in how we execute.

[00:13:32] Okay, on the fund management side, five of our six REITs were active in first half. We want to continue that. See LCT again, difficult first half in China, very eager to get going and we hope to to be able to get her going in the second half. On the PRAS side, Simon Patrick, Travis, traversing the world, developing partner relationships and preparing fund product for launch when the environment is conducive for us to do so. So we managed to get actually quite a few new funds underway in the first half. We were four times as more active in the first half of 2022, compared to the first half of 2021 on the fund side. So there is evidence that we are still able to

[00:14:18] generate very good demand, very good interest across our LPs, cultivating new capital. We are just faced with a difficult environment and people are going to be much more selective, much more circumspect before they put capital to work. I think that affects not just us but all REIMs. Launching management sector tailwinds are strong. We will show you how we have done in the first half. Not only were we able to grow organically, we were able to acquire a very strong, healthy platform that we believe is highly complementary to our existing service residents business. And as we mentioned, capital recycling was not hitting the highs of last year, which were extraordinary. We are on track to deliver the run rate of at least $3 billion.

[00:15:04] The other part of the strategy for the second half of the year, I think as Jucun mentioned, two P's, right, be patient, be prudent on capital deployment. We are extensively stressed testing every deal that comes to investment committee to ensure that all of the uncertainties around interest rates, around inflation, around cap rates. When we are entering, when we are extensively stressed to ensure that we are able to meet the respective hurdle rates of our LPs and our funds, as well as to be deep, be creative over time for our REITs. It is about capital management. It is about being a student to third party capital. We are now in the business to grow for growth as we say. So when you look at our 86 billion, some of you may say hey, it's flat, it didn't move.

[00:15:50] I mean, there's a reason for that. We were being very careful about deploying only when we felt it is right to do so. As I mentioned, we have ample dry powder, ready for deployment. That that is where it is 0.5. That gives me roughly a 2 billion per turn of net DE. So if I go from 0.5 to 0.7, I've got 4 billion of hit room that we can use to deploy for the right opportunities. We have introduced a concept called embedded FUM (Funds Under Management). When you talk a little bit about that later, we have about 3.5 billion to 3.7 billion of what I call embedded FUM (Funds Under Management), which is basically a FUM (Funds Under Management) that is already spoken for and will materialize in the near future. And then we will proactively manage the balance sheet to make sure that the capital is working as effectively as it

[00:16:37] can for us. Our targets of capital recycling 3 billion annually, 160,000 lodging keys under management by 2023, 100 billion organic growth in FUM (Funds Under Management) by 2024 are all in place. And we are confident we meet each and every one of those. Okay, I'll cycle quickly through some of the high numbers. So here you see the breakdown of Pat Me operating Pat Me, as I mentioned up 31%, very proud of this number. It is mainly due to both FMPs coming out of carry on two of our funds as well as growth in recurring income, both on our REITs and our funds. And then particularly on the lodging management site, that belief and confidence that lodging

[00:17:22] was catching a nice tailwind is coming to pass. We see very healthy growth 44% up in REV power on a year-on-year basis. Both of these fee income generators are contributing nicely to the core growth in operating Pat Me. Offset, unfortunately, through portfolio gains, last year, 11.3 billion by first half. We did this at about a 10.5% premium to fair value. There's also last year. As you can mention, the RC6 was the bulk of that. We also sold all in us. We also sold Galaxes converting Galaxes into FUM (Funds Under Management) and converting the RC6 on retaining that as FUM (Funds Under Management) as well, largely. This year, essentially, it's been 79R, 1.6 billion as well as JQ, which was a

[00:18:15] non-core asset, but sold to our sister company in the hopes that one day we will get it back. Now, the premium is no less. It's 11%. So we are continuing to sell well. We are coening to sell at a discipline rate, not generating capital recycling for the sake of it. Right? We are not a distress seller by any stretch of the imagination. But as you can see, coming off the high, 4.38 million last year on that extraordinary level of capital recycling, coming back down to a more run rate, half-year level, the portfolio gains naturally has come off. And as a result, the total Pat Me, which is all cash, is down 38% year-on-year to 4.33. Still a very healthy number. Okay. Running across the EBITDA stack, I will give you a bit more flavor on our FRB

[00:19:09] operating contributions. It now contributes 31% to overall EBITDA. That is up year-on-year. Again, you want to see that trajectory. From a geographic perspective, the thing that strikes out is me is that China is down to 12% contribution. For fiscal 21, we were at about 28%, 29%, and contribution from China, which is roughly where we would like it to be, around one third. So you can see that China really affected us first half of 2022, lost quarter, basically, very little got done. And then, as I mentioned earlier, on the asset class, you see well calibrated, increasingly diversified portfolio, which is what we aim to be. Okay. This, again, breaks down the EBITDA, gives you some more flavor. I won't get into too much

[00:19:58] detail. But really, what you want to see on the operating EBITDA side, left hand side, is that the FRB operating pad, means it starts to replace the investment or the balance sheet operating pad. And we were almost able to get there. So we want to see operating pad coming from our fee income business. So we see that rising from 135 to 225-year-on-year up 67%. And you really want to see that offsetting your balance sheet operating pad, which has come off from 599 to 505. So we are almost there. On a year and year basis, we went from 734 to 730. We dropped about 4 million in operating EBITDA. But the idea is to replace balance sheet operating EBITDA with

[00:20:45] fee income operating EBITDA. And this is something we will continue to strive towards. Driving into FRB, I think the numbers speak for themselves. Steady growth and listed funds management, private funds management, strong growth on event driven performance fees coming out of Vietnam and Singapore, lodging management, tailwind recovery, all of these showing healthy year and year growth and then property management as a supporting relatively non-core part of the FRB overall FRB income up 16% year on year. Capital recycling. So again, as I mentioned, we are run rate capital recycling 1.6 billion at the half year mark. A fair amount of activity going on,

[00:21:32] total transaction value 4.1 billion of which 93% of that generated FRA. So this is again what we are in the business of doing, investing smartly, divesting when it makes sense. And if we can retaining that FUM (Funds Under Management) moving from one product to another product and generating event driven FRA in the process and this is exactly what we were able to do. Increased investment activities by CLI's private funds. So this is where I mentioned last year at this time, we only had two funds that were active. I think it was the Ask Good Fund and one of our Indian logistics funds. This year first half we have four funds active. We are core F with ASRGF. We had saved our new service residence fund

[00:22:19] and we had India logistics fund also active. So there is activity ramping up the pace of which ramp up is going to be dictated by the economic environment in the second half of the year. But again, we are very focused on executing and executing well. Okay, cap management. I think nothing much to say here as you see, it's a strong balance sheet with capital ready to deploy. In terms of the contribution from FRB and REIB, so our fee income business and our balance sheet business, this is the proportion change that we are striving towards on an e-bit databases from this time last year. We were 18% contribution from FRB now moving to 31% at this point in 2020.

[00:23:13] On a patme level, the shift is more pronounced. We went from 31% to now roughly a 50-50 contribution split. And for those of you who are doing your SOTPs $1 of FRB patme, it's not the same as $1 of REIB patme because the street values that vary differently. So this is exactly what we are trying to accomplish, moving the patme stack from balance sheet to fee income. Can I spend a bit of time here on fund management quite a lot to unpack? I'm sure of your focus on the FRB number is flat, what's going on? There's quite a bit going on. So let's look at the REIT side first. The REIT side was up to $2 billion, $58 to $60 billion, and the color is in the subsequent slides. Now that $2

[00:24:03] billion was offset by the PRA side, which was down $2 billion. And essentially, what caused the $2 billion drop in FUM (Funds Under Management) as three things. One, we exited our Vietnam Fund. There was about $7 billion. Now, the Vietnam Fund exited at a very healthy IRR that generated substantial FRE (Fee-Related Earnings) for us, which you see on the right-hand side of the slide, when the event driven private equity funds event driven going up from $6 to $43 million. So this is exactly what you want to be doing in the PRA business. You want to be exiting at the right number at the right time and generating substantial carry for your LPs and for ourselves. The other thing that happened was a net divestment. This was $79R. That was divested to two products. So essentially, we retained overall

[00:24:52] FUM (Funds Under Management) on $79R. It's just that some of that FUM (Funds Under Management), $800 out of the $1.2 billion went to CICT. So PRA's loss was SWEET gain. So it went actually from the $28 billion to the $58 billion moving from PRA to V. And then the last amount is actually an FX change because the RMB depreciated about three, not a 3% for the year first half. And when you translate a lot of our China products into we dropped about $8 billion of FX translation. So on a $6 basis, you can see there's the reason why the PRA FUM (Funds Under Management) is essentially down, but there's three good reasons why that is the case.

[00:25:42] Now let's look at this thing called embedded FUM (Funds Under Management). So we've taken the $86 billion and what we've done is we've looked at the available capital that we have committed from the LP's that is ready for deployment. That's roughly about one to 1.2, 1.3 billion. We add relative gearing levels that each fund is able to deploy and it gets us to an embedded FUM (Funds Under Management) of about $3.5 billion. In addition to that, some of our REITs have announced transactions that have yet to close. So, great examples, AREAT on Philips, CLMT on the logistics properties that there was announced, but yet to close. So that is not counter this FUM (Funds Under Management) as of today, but I think that's embedded because it will be FUM (Funds Under Management) in the not too distant future, barring something very strange happening. So on the REIT

[00:26:33] site, I can add about $250 million of announced but not closed acquisitions to that $3.5 billion of embedded FUM (Funds Under Management). So altogether, we have about $3.7 billion of incoming FUM (Funds Under Management) if you will, if that makes sense to you. Hopefully it does. On the right hand side, again, gives you a flavor of how the FRE (Fee-Related Earnings) is taking shape. So we are driving FRE (Fee-Related Earnings) growth even though FUM (Funds Under Management) is staying relatively flat. Our funds and our REITs are starting to become more profitable because the new funds, that Simon and Patrick are putting in place, have much more market-oriented FRE (Fee-Related Earnings) structures. And at the same time, we are able to deliver event-driven fees. Although some of you will,

[00:27:20] I will agree with you that event-driven fees need to be proven over time to become quasi-reoccurring. So I understand if you will take the event-driven with a pinch of salt, I would not argue with that. But on the recurring site, you can still see growth on recurring income from REITs going from 1.1.7 to 1.25 growth in recurring income from private funds going from 41 to 42. So the highest quality level of our FRE (Fee-Related Earnings) remains growing. Our FRE (Fee-Related Earnings) to FUM (Funds Under Management) is up from 50 to 52 basis points and our e-bit-darm margin is up from 50 to 61. So the main metrics that we look at to measure the health of our funds management business are pointing the right direction. Okay, just some flavor here. I

[00:28:09] won't spend too much time. But look through these, these are REITs. Five out of our six REITs, active in first half, despite the challenge for core product, given higher rates, higher inflation, five out of our six REITs with the understandable exception of CLCT were active. And on the private fund side, we were able to generate $830 million of total gross investments. Multiple funds were active and most notably our first RMB fund, which is the second one from the right, capitalizing on our new RMB license strategically. We can deal with this in Q&A. This is very important for us as a business when it comes to being able to continue to grow a China strategy and our China

[00:28:57] funds management business. So I think we lots more to come from the RMB capital pool in China. Now let's just young and Simon and Chikun share more on about that. And then you see the successful exit on the CV, CVF fund over 34% IRR in equity multiple of north of 2.5x, which generated very substantial carry fees for us. Okay. Loging management won't spend too much time, Kevin is here. He will take you through a lot of this. But all the tailwind metrics are there. IRR is up 37% year and year. We continue to sign record number of new keys whilst opening keys that we assigned have been signed to the three years ago. You add the output acquisition

[00:29:46] onto that. And we are already very close to the 160,000 keys in the system by 2023. So I think safe to say that Kevin is cautiously optimistic that he will hit his 160,000 keys long before his data target. I'm sure Chikun or give him a new one very soon. Okay. You see higher daily rates up 21% occupies up 9% this generates that 44% increase in ref power. All of our geographies are showing reflecting that tailwind with the exception again of China. And this is where you see lost quarter in two Q across the board across many of our sectors and exposures in China. One touch on open. Okay. And then very quickly on the balance sheet side of things, NAV drop by 0.7.

[00:30:41] This is largely due to two things. One, the dividend we paid 700 million and secondly FCTR. So currency translation moved us down by about 400 million. So we're back into the RMB drop again after making all of that back in the last year. So call market updates. I think the CEOs are here to search on the phone. So I won't go too much into it. We can give you some color on operating environments, retail, office, new economy and so on and so forth for China, for India. And then for other markets as well. Okay. We're spending a lot of time on sustainability. You can see a very healthy section to round out our IR deck. Our march towards our 2030 SMP targets continues.

[00:31:32] In some cases, we are way ahead of plan. For example, in energy and water intensity. But in other cases, we are still got some serious work to do, most notably in percentage of renewable energy. I think that's something that many companies are focused on. We have a new CSO. I hope many of you have met him. Vince has hit the ground running. He's already out there talking to our ESG-minded investors and getting the word out about our commitment to embed sustainability into everything that we do. And not wasting talent. We have asked Linette to look after work with Patrick on thinking about how we can craft fund management products using our strength and our leadership position

## Analyst Q&A Session

[00:32:20] in ESG. He's one of the events that we think gives us a competitive advantage, not only in greening our business, but also in turning opportunities into management and funds management, investment opportunities as well. CSXC was a great success. It's a good example of something that's worked really well for us in terms of energy saving. And we continue to remain fully committed on our CSR commitments, helping those in the community who are less fortunate than ourselves. And there are many. Okay. So let me wrap up again, apologies for taking too long. As she could mention, 2022, second half, a lot of question marks. We think China will gradually come out of the most

[00:33:10] difficult period, which was too cute. There is a timing element to that. Obviously, centered around party Congress, probably in October, November, post that. If things go well and smoothly, we think China has a lot of opportunity to make up for lost time. And we want to be ready to take full advantage of that. We are a long China. We are strategic China. We have a competitive advantage in China. We were absolutely focused on growing our fee and company business. As you can see, we will maintain our capital management discipline and be ready to take advantage. We will continue to exercise patients and Putin. And sustainability will continue to be a part of everything that we do. Okay. Thanks again, Chris. Thank you, Chikun and Andrew. And now we will start our Q&A. But before

[00:34:01] we take questions from the floor. Just give me a second. I just need to speak to our online viewers. If you have questions, please feel free to also join us. Type in your questions in the Q&A box at the bottom of your screens. I'll take the first, okay, move in, head to his hands off first. Well, good to move in. Fantastic. We are moving from JP Morgan. Congrats on the strong operating battery performance. Maybe we can start with the financial business. Appreciate the color on the embedded FUM (Funds Under Management). That sounds quite positive. But I think in the first quarter business update, the commentary was that North American investors are a bit more cautious. You are a hopeful post-reopening China that the fund grew from China kicking maybe in second half. Maybe some

[00:34:50] updates on how investors are feeling at this point in time. Second question is in terms of China, obviously some headwinds in first half. Whether you can quantify the impact in terms of tenant support they had to provide loss in earnings from, I guess, lack of travel. And then third question in terms of carrier expansion, recession risk. How should we be thinking about revaluation gains by year-end? Should we still expect an uplift given higher earnings this year? Thanks. So, may you want to take the question on funds? Good morning. Thank you for the question. So, from a global investor perspective, looking outside into Asia specifically China,

[00:35:35] North American investors are being hit by the denominating factor in terms of equities coming down, which is pushing their real asset allocations up towards their benchmarks. That said, they are underweight in Asia and they're very keen for 2023 to increase their allocations. They're also very encouraged by the capital land platform, which we've been introducing to them over the last six months in earnest. The points of difference they see with us is our very strong presence in China and our ability to execute and understand risk. So, that is of particular interest and notwithstanding the noise. There are various investors that will take steps to take this

[00:36:22] opportunity to exploit the arbitrage in the private market. So, overall, we're quite encouraged what 2023 could bring us. And, did you want to talk about the China-to-sound? It wasn't. Do you want to? Can we bring to the China-to-sound? Yes. Can you hear me? Yep. Thanks so much. So, first of all, on the support, we are looking at a game of two halves as this Andrew has a chat. First quarter, it started really well for operating properties, you know, much stronger than 2021 second half. And then we were hit with thanks back to the events

[00:37:13] in the second half. So, in terms of operating properties, we are supporting tenants. We are leveraging what we have learned in 2020 when the COVID first struck. And then we have provided four for the months of April to May essentially. These are the two months where the impact was greater for us. If we look at the start of the year, we had sporadic COVID hits to Xi'an and then to Shenzhen and later on to a team where we are no presence. But it was later really in the second quarter that our East China or Shanghai properties was hit. So, in terms of a hit line or a top line, actually happy to share our second quarter, in fact, our first half

[00:38:06] top line were in line with last year. Yeah, that did not take it. But you are operating numbers or operating pack me to hit because we provided for the months of April and May in terms of rental debates. You will look at Whan in the 2020 we provided about on month, right? Because it was essentially much right now for 2022 that essentially providing about two months which is capable than me. That is in terms of what are the impact to the operating scenes. We are now looking at a reopening from very desolate second quarter. Say for example in Shanghai right now we are back to

[00:38:53] the days by fighting traffic to get back to work and the restaurants and the F&B scene is again active. So, slowly but surely the falls are returning, the sales is improving. So, we are looking forward to a more regular second half. We don't need borrowing, you know, lockdowns again which we do not expect. We think there is again half to be a lot stronger. In terms of domestically the funds flow, the liquidity is there and then domestic capital sources are active looking to deploy. So, as Andrea has mentioned, we are very happy, very fortunate that we were able to at least get one of our pipeline reminifence launched in the first half. We were in fact affected also by

[00:39:41] the lockdown because we were essentially at home. We can't even get our bar homes. We were a lot registered our various fund initiatives. So, second half, we are cautiously optimistic that we were able to put forth some of our pursuits and then the special situations, opportunities that we are seeing in China, we will give us a good pipeline and then we are looking forward to more reminifence in the second half, again borrowing of it. Thank you. Thanks, Suzanne. Just to clarify, the two months is for Shanghai, if I'm not mistaken on a portfolio basis, it's something around the likes of 1.2 and this is only on retail if I'm not mistaken. Yes, so Andrea, right? Hey, Covid has actually affected our retail properties. In fact,

[00:40:33] our business park properties, very resilient rental reversions, you know, positive, a close double digit and then our office, if you look at the slide on China, the office occupancy is also steady. In fact, our retail occupancy is a north of 90%, right? It's really because we are provided for rental rebates that our admin numbers are affected. Just addition to point on China, I mean, China, no matter what we say, still the second largest economy, you know, the more than a billion population, I would say, the largest in terms of the

[00:41:19] meter class that generally can spend strong consumption ability. And we have a pretty diverse, a fight asset class, a team has been around for more than 20 years, ability to source deals, reputation-wise is great, whether it's with the local governments, with the people who work for us, with the banks, I mean, for the since, you know, ever since the first day, you know, even pre-capital and days, you know, in the pedemcore DBS land days when, you know, the capital has started investing in China. We've always completed every single project, developed very deep relationship and trust in the local community. So I do believe that that puts

[00:42:05] the team in China in a pretty good position to be able to capitalize. There are definitely strong pent up demand from the local domestic capital to look for quality assets, good portfolio. In terms of being able to deploy the capital, that's put the capital with managers that, you know, they feel comfortable in portfolio that is generally well managed. So I think that's an important point I want to stress. So China will continue to be an important part. And you will see us leveraging a lot more on domestic capital to help fund the growth of the China business. On the refill. So, Melvin, your question or is on second half?

[00:42:54] Currently, we don't think there will be a material impact to fail. So we had to do it for first half informally internally, because there's a statement we need to make in our official earnings release. We sample about 70% of the entire IP portfolio, either through our reads or funds ourselves. And on a portfolio level, it's flat. Obviously, some selectively down in some China retail, but overall, China is also roughly flat because you've got strong business part, reverse positive reversion as well and DC reversions. So China itself, while probably being the main concern is flat. And then the rest of the markets, I mean Singapore, you guys know well, is the place to be right now in terms of investment properties. So we don't see that being an issue

[00:43:44] second half. And the rest of the world, yes, we still, we will see some pressures. We have no real evidence of cap rates moving anytime, anywhere soon, given the still healthy appetite, as she couldn't say on the private side, particularly for people to hold their valuations and want to sell at the high price. There's no desire for distress sales at this point in time just yet. So transactions being what they are and usually material input to as a thing of valuations, we don't see that being a factor as yet. I don't know if anyone else has a comment, John. Do you see how? I assume zero. If you look at our focus on cash,

[00:44:44] right, we are very focused on cash, but you know, and delivering an ROE that essentially is cash base. If I get a 1% increase in fare value, we'll take it, but it's no longer a key component in how we return equity, measure return equity to investors. If that helps, thanks, moment. Lewis. Thank you. Morning. Lewis from Credit Swiss. I've just got two questions. One is really a clarification. So I noticed that yes, on the EBITDA basis, 1.2 months of rental rebates from China. I think that caused the ROE IB operating EBITDA decline. But when I look at the, you know, the appendix, if I look at the NPI in China for earning office retail, I think NPI has been flat,

[00:45:35] but the new economy and PPI is actually up. So I just wanted to square the EBITDA decline versus the NPI, which seems to be quite stable or even up. And the second is really more broader question. I understand that I think Chikun and Andrew have both mentioned that in the current environment is important for us to be approved. And at the same time, if I look at some of the other peers, they have still been able to grow every MAAOM. And at the same time, at the end, Joe's mentioned that right now, valuation's still holding up, especially in the private markets. So I would imagine that when it comes to divestments, it would be a lot easier as opposed to investments, but both seem to be relatively low at this point in time. So even if we do hit three billion, it would be closer to 2020 kind of COVID levels versus say, even in 2019,

[00:46:26] I think it was closer to six billion under the whole capital and so I just wanted to understand if you're able to share a bit more color as to what is actually holding back management when it comes to both the investment side as well as the divestment side. Okay, let me take a stab at it. And I'm sure my colleagues may have something to add. So on our R.E.I.B.E. bit, the two things that essentially happened. One was rental rebates. So about 1.2 months worth on a system basis in China retail. The other thing that happened is actually our share of the assets we own, either through funds, REITs or on balance sheet, has come down

[00:47:12] as we are recycling. So there's a lower amount of share of EBITDA, particularly from R.C.6, which is quite substantial as you could imagine. And then you have all the units coming off galaxies coming off your and your basis and so on and so forth. So as we are recycling capital, this is the point I made around the operating EBITDA, right? As we are recycling capital and we're losing operating EBITDA from the REIT part of the business, the important thing for us to be able to do is to replace that with operating REIT operating EBITDA from the FRB side of the business. So our fee income has to grow to replace the loss of operating EBITDA from REIT as you convert things that balance sheet into FUM (Funds Under Management) and you are making net investments in platforms, in lodging

[00:48:03] platforms, in funds management platforms and lodging new funds and so on and so forth. So this is not easy to do, but you want to try and continue that process as quickly as possible and get there so that we can seamlessly replace one stack of operating EBITDA with a much more valuable stack of operating EBITDA in the eyes of the market. As I mentioned, that dollar from REIB is worth to the market very different terms to one dollar of FRB operating EBITDA. And then sorry, does recycling? Okay, so give you a couple of scenarios. If it's all about China, how where we land on it's recycling honestly is going to be about China, what China does in the next

[00:48:54] six months. If China continues on this trajectory or gradually reopening, I think we will comfortably pass three billion because the Xiang will be able to catch up. As I mentioned, we have north of five billion RMB that had to be deferred because of the loss quarter. If we get that back in the second half and we're able to recycle, then we are comfortably past three where maybe into the force and the fives. If China switches off, let's say I don't know Vember because of 20th party Congress. Then X China recycling, we can still get to three, but it may be one of those years where we just have to take a pause and recognize that this is going to take longer than we had hoped.

[00:49:42] And then if we get a full recovery and we've got all the tabs are open, the original plan this year was actually a very ambitious amount of capital recycling. So there is a way upside case for which we get a very nice level. But honestly, we are running out of time. We are already in August. If we can settle for the first case where China gets to catch up in some way, then I think we will take that as a good year and a typical year for CLI going forward. So, Sam, would you agree with that? Thank you, Andrew. Yeah. So, Andrew, much of our assets recycling plants, as you rightfully put it,

[00:50:29] there are not off. They're just different because of the lost quarter. The state of the business environment for second half is still subjected to many things that the government actually has a lot of control over COVID-0 geopolitics, the leveraging. To some extent, these are all pretty much enhanced of the policy makers and men-made. We do feel that China has a lot of tools, both fiscal and monetary tools to revive growing a second half. There are some expectations, but everyone is looking forward to some upside for second half. We may not get back to five and a half percent, but general consensus on the street probably between three to four percent. So, with that backdrop,

[00:51:16] activities on the investments funds will recover to some extent. Our properties are very well run. As a chickenist mentioned, we have a strong asset management team on the ground, close to 30 years of experience. So robust earnings, despite COVID, that's our offering. We still remain confident that if the general market recovers, we should be able to continue and catch up in the second half. We will generate, in the opinion, that the government is wary of that built up again. So, all broad-based easing is not likely to happen, but at least the liquidity at the domestic capital sources. We have at a great partnership with one of the largest

[00:52:08] domestic capital institutional investors last year in recycling and recapitalizing our refositive portfolio. We're going to continue to leverage that momentum, and we remain confident that we should be able to pick up in the second half. Do we just do just to add another point, perspective? I mean, if you look at the China site, the large part of the plan recycling, it's in the retail sector. It's affected by COVID. I mean, if you look at the retail scene in Singapore, post COVID, you look at how the malls are performing. You look at the, I mean, during the picks of COVID, you know, there were a rent, a negative rent, the reversion types of pressure. There's really no point to rush to recycle or to exit any investment when the

[00:53:02] environment is not the most favorable, because we do want to make sure that we can, I mean, especially when we know that we have the ability to manage and to lease up the property, there's no need to rush to do something that I, we do not believe that's in the long-term interest of our investors. Yeah. Next question, David. Good morning, David Lam from Dyewur. Chiku, and I want to follow up on a statement you made in your presentation. You're going to be careful in the way you look at deals. I thought all along that was the operating procedure. Is there anything,

[00:53:49] you know, geopolitical macro or certain red flags and asset classes or countries that make you want to look at deals more carefully now or was that a general statement? It is more a general statement, but actually I am of the view that I think we're, if the major economies are right, that we are going into a recession. The interest rates are going to normalize about 3.5% I do believe that there could be more potential opportunities in some of the asset classes where the cap rates have been low and there should be opportunities. There's no need to rush to do

[00:54:36] deals that we believe, you know, it's not going to cross our investment hurdle. I mean, if you look at our portfolio today, it's diversified, extremely cash-generative. And you look at the balance sheet, the health of our balance sheet today has never been better than ever before in the history of capital and actually position us very well for us to take counter-cyclical positions. If you, I mean, if you turn the back clock into a capital and say, oh, eight or nine during the great financial crisis, that was good opportunity at a point in time to take counter-cyclical position because, you know, you see asset prices correcting, you see portfolio becoming available. But at

[00:55:27] that point in time, capital and was had to deal with many of the comp amendments on development projects that we had to make sure that we support and see true. And as a result, you know, there was very little ammunition that was available for us to take big positions that could really position us well and as the economy continues to recover. And that really will set us apart from competition. So I want to say is that, I mean, we are entering into volatile environment. We want to to be careful that's don't need to rush and jump. But we want to make sure that when we look at use, use that can really make a difference, move the needle and we are prepared to use the balance sheet that I believe can really put us in a much stronger position going to the future. So that's really

[00:56:13] the context around my comment. Sure. Hi, morning. This is Tanchant here from Goldman. The first question is on ROE. Can you comment a bit on first half round rate and also thoughts on food year ROE? And then secondly, it's on FUM (Funds Under Management) growth. How confident are you to get to about 10 percent this year? And is it more likely to come from REIT or private funds? Thank you. Thanks, Shand. ROE, if we can get to about an 8 percent cash ROE, I think we'll say that in this current context would be pretty decent. Let's see how the second half turns out.

[00:56:59] In terms of FUM (Funds Under Management), I would say again similarly whilst we would try to aim for 10 percent organic growth. I think this year might be challenging given before we lost one quarter. A lot of that FUM (Funds Under Management) growth is anchored in by China. Unless we get that nice upsides in everywhere, everything opens up very quickly, we may have to defer some of that growth to first half of 23 post-party Congress. So the pipe is there. The opportunities are there. The capital is there. It's just that the environment is not conducive enough for us to execute. And to Chico's point, actually we don't see the need to rush because you can go into earlier in these things. And if you

[00:57:49] are a bit patient and you allow the situation to evolve and if we believe things are going to get worse, macroeconomically before they get better, then logic dictates that we should wait and just keep the powder dry. It's continued to execute. Demonstrating we know what we're doing in terms of operations. Sell when we can, which we have been doing and recycle capital when we can. And if we don't hit our target, that's fine. If we have a good reason why, it doesn't mean that we're not going to make up for it later down the road. And again we've done this before and we'll do this again in the invest today. If you time it right, you actually can reap the benefits for many years going down. Once you have a crisis that is not of your own doing, but the key is to take full advantage

[00:58:36] of that crisis. And part of that, a lot of that actually is timing based. So, just because preaching patients bought is happy to be patient. What is important is we keep the powder dry and we keep our shareholders and stakeholders informed as to what our plans are. So, that when we do pull the trigger, then everyone understands why we've done that. Sorry. Morning from DBS here. I'll just have two questions. One is on back to China. I'll just run through weather. In terms of investors appetite and type of assets, they'd like to invest in has a change like since like one year ago because of how China is politically, I think the whole

[00:59:21] risk profile of China has changed. So, I just wondering what are you hearing on the ground? It does like our investors feedback. Then secondly, if I cannot, it's a bit sensitive, but if there's a strategy opportunity in Singapore, would a sponsor be happy to learn your balance sheet? For example, let's say your listed platforms or platforms can't take you on your own. Hypothetically, hypothetically, hypothetically. On China, I think investors generally quite keen to support deployment of assets that are in line with the broad policy direction of the Chinese government. So, whether it is retail assets that cater to mass consumption, business parts that continue to

[01:00:13] drive manufacturing, ability, R&D type of abilities, life sciences type project, data centers, logistics that helps, especially co-chain logistics type that helps in the overall development of the economy or rent housing that generally cater to demand for for housing, I think that's generally in line. If you look at CR, that's generally the asset classes that we are in. In terms of residential sector, typically the the built to sell the things that the old capital and used to do now is done our buy-offs to the company. That is something that many of the investors, especially from investors, are a bit more careful. I mean, a lot of

[01:00:59] especially foreign investors, they are not sure how the boycott of the mortgages and the extent of the issues would be happening. But actually, you see the SOE source that brings up to the plate and doing that. But we are not in that space, so we are generally not so worried about that. And then in terms of your second question, I think having the balance sheet gives us the flexibility to be prepared to support the vehicles, whether it is the reach or the private funds to take strategic positions. And we are going to use our balance sheet. We do want to make sure that it must be able to drive long-term shareholder value for the CRI investors. Because if we are going

[01:01:45] to use a balance sheet just to support the vehicles and in the end, it doesn't benefit the CRI investors. I think the investors are going to be very unhappy with us. So you will be prepared to consider to use and join partnership so that in the end we create not just values for either the LP's or for the unit holders, but also for the CRI investors. The other thing not to not to forget you know, when the whole restructuring was done, we created a CL ecosystem where the CRI and the CRI so you know where there are interesting opportunities that could happen. You can see us working in partnership with CRI folks to undertake some of the development type projects or say they're

[01:02:31] portfolio where they may development and we take the income producing asset. So all these are possible. We'll have next question from Joy. We'll move on to the right hand side of the whole. Thank you. Joy from HSBC. Two questions from me first. Just to clarify. As I'm I think you mentioned that the investors are generally underweight Asia. Is that underweight sort of driven by China alone or this is across Asia region? And two, if I can just understand a little bit more on China domestic sort of capital market, where are your key capital sources coming from

[01:03:22] and how has that changed or does any sort of regulatory environment change the source of capital? And then just lastly on overall FUM (Funds Under Management) given where we are in property cycles, would you be open to actually divest more and take a temporary sort of pause on your FUM (Funds Under Management) growth in the near term? Yeah, thank you. Thanks Joy. In terms of investors under allocation to Asia, it's a function of a few primarily in the US for instance and even in the UK, the returns from the core markets have been particularly strong. The calendar year last year was 20% in the core odyssey space in the US and about

[01:04:08] 15% in UK. So that's been spoiled for returns locally and therefore haven't really needed to pay that much attention to Asia at a time when they couldn't really move freely to come and evaluate managers and the markets. The most recent core returns have come off quite significantly and therefore they are turning back to the diversification route, actively pursuing and starting to travel. There is a quasi-weighted sea in terms of China, no doubt, but it is a needle in the haystack type of opportunity and we are finding various investors that will look to take contrarian views and position their capital early to really capitalize upon the opportunities. The other aspect is

[01:04:59] we've recently launched some research papers that hopefully you've downloaded from the website. They're getting very well read internationally because they're very down to a practical on where we see value, where we see risk and that's been the platform for our discussions globally within investors and that's really at the time when they're seeing the new capital land as being a different type of GP from the others in the market. Similarly, you have at the moment a tsunami effect where GP's with large committed capital have had to turn off China, the target people in and out as opposed to us and therefore that the money is washing down into the more mature markets, Japan, Australia, Korea and obviously quite significantly here in Singapore. There's a little bit of the

[01:05:51] weight for us here to just make sure we're picking off the right opportunities. There's a lot of enthusiasm here. There's a lot of value-add capital pricing down at core, core plus levels, which we're quite happy just to step back from. So let's just a few comments. On recycling, I think I mentioned earlier, we will not grow a UM for EUM-6. It must be found on the basis that we are doing everything on how do we think about the returns to the LP is the union holders and for the larger CLI investor space. So if there's a need to recycle to reconsider the portfolio, we can get a good value, improve the quality of the portfolio. We will

[01:06:36] definitely do that. At the end of the day, being asset managers for at least for the reach portfolio, we want to make sure that the various fees will continue to own assets, good locations, those assets are in positions where we can asset manage, continue to try a friend to growth, and there's still value to be done. But if there are some assets that we feel that, you know, in terms of the positions, it may no longer be so core and we are unable to add further value, we definitely will look for opportunities to divest them. I think Jonathan and his team has done quite a bit of debt on their front. Jon, you want to give a bit more color? Jon, thanks for the question. I think as far as divestment, I see divestment on two level,

[01:07:23] two levels. One is at the CLI level. Obviously, CR can divest more. And we can divest to the market or can divest to also eight our funds to grow, whether it's public or private. I think that's where we need to take both short term and long term consideration. In fact to them, clearly, the investing at asset to the reach, it helps CRI. It also help basically the various reads or the private funds to basically further their income. So just because the market is such that it probably makes more sense at this point potentially to a lock value. We also think there was intrinsic value that comes with any divestment. At the reach level, which is basically what you could mention in terms of reconsidering portfolio, you see that we are not attached to our assets.

[01:08:11] Where it makes sense, we obviously are happy to divest and recycle. And this is how idea of recycling is you have to look at investment divestment at the same time. What's the use of proceed? What does it do to the equity returns to our shareholders and our unit holders? So if we are able to create more value by selling and redeploy the money to enhance the returns of the student do that. But if we're just going to sell, of course, we can pay down debt. If interest costs is that high, that is to a very possible reason why we want to do it. But what I'm trying to say is divestment is not action on its own. It's also what do we do with the money? There's something we also have to put it. Take the consideration. And I think in the current market, we do see opportunity to also squeeze their asset performance a bit more. We've just in the midst of finalizing

[01:08:58] every little bit of the asset enhancement and Raffo City Singapore. We have announced our intention to do a clock key. Earlier on you see, you saw in Andrew's slide on Boogie's town and Huntsman. So we do see opportunity to also write on the tailwind at the asset level to basically enhance the performance to put the asset in a stronger position. At the point, I'm against you. Look at the whole portfolio of the constitution. See, whether it makes sense to do any of those action at the point. Hope that also addresses not just your question, but also there was another question. Okay. I joined. I think you had a second question more on the regulatory aspects, right? Right. So Joyce questions was, where are the key capital sources coming from for China?

[01:09:50] China? To sound what you'd like to take this question, the key capital sources. Thanks, Joe. Thanks, Joe, for the question. So in China itself, I think we are really looking to tap the largest source of liquidity, which presently recites with the insurance companies. That's the largest. We're also looking to work with the asset management course. There are backed by the banks and also that state owned. So they also have a large pool of capital that will do deploy. And then the third source is state owned state owned enterprises. state owned enterprises are also endowed with sufficient liquidity. And they are also

[01:10:36] looking to deploy. So these are the three major sources of capital. In terms of regulatory control, I think in the second half, the government is actually looking to support the property sector. We recall in 2021, the regulation was actually against developers. And then a lot of the financing channels, whether it's China sales, bank financing or bonds market, they were quite restricted. But in the, I think, going towards the second half, there should be policy easing. And then the regulation should favor the deployment of capital towards real estate, not so much to turn a blessing to a boom, but to support the regular execution. So it's really looking to this big

[01:11:27] capital sources, especially the insurance companies. And I hope to also be able to work with the pension funds moving forward. Maybe I'll also ask Patrick and Simon about capital sources that we've probably been working with outside of China who may be interested in China, maybe you want to give some color, Patrick. Hello. So there, I would describe investors that are outside of China that are interested in China as being very selective. Often they are large sovereign wealth funds or very large pension funds who have been investing in China for many years. For those who have been investing in many years, they continue to see the growth in China. They, they see how, you know, the economy circulates every day, just like any other market in the

[01:12:16] western world and they're very confident in the future of China. For some of the smaller funds who have not had a lot of exposure or frankly haven't had any exposure in China, I think in the current environment, our largely saying, we're not, we're just not interested. It's just not a market we're we're able to invest in now unless it was part of a, you know, a much larger fund that had a, you know, called a small allocation to China. So I mean, did you have some views? I mean, again, it's a global weight in what's on China, but each investor has a policy statement in what they're allowed to invest in and not. Sometimes it's just a straight red line through China, given the current environment. There's other pension funds and sovereign funds who can invest

[01:13:03] in a diversified fund which has a component which can invest in China. That's a tick. There's also investors who can invest if China's part of the MSCI index as well, which is what I heard in the States last week. So it comes back to the investment policy statement of these investors. But generally investors morally unagainst investing in China, it's more a matter of when they start their program up again. Again, our debt research paper that you'll find on the internet covers off all the issues that are on their mind that they're actively monitoring. But there are several that are starting to just pick up the pencil again and start analyzing how they would want to

[01:13:49] re-enter. And I think that's where we're really, really well positioned. Thank you, Simon Patrick. I'll go to Donald before Brandon. I don't know if I'm going to make a bank of America. Two questions from me. First is outside of China. Where should we expect the new fund formations to come from to make up the remaining recycling target that I do mention earlier. Also maybe some updates and any progress on the real assets, real assets kind of business in terms of infrastructure, are we looking at these kind of platforms already? That's the first

[01:14:37] question. The second question is more on the EBITDA contribution. Andrew you mentioned that it takes a while. It takes a while for the fee EBITDA to catch up to the real estate EBITDA that you're lost right now. But is there a way that you're looking to balance this as fee EBITDA next time to come through? And also when you look at your contribution with APRA, being in APRA, is that consideration where you manage your EBITDA? Because now it's at 31% from fee income. So it's this would this be something that you're watching for your shareholders. Thanks. So I'll start on with the funds and pass over to Simon. But I think in general for

[01:15:29] investor for investment opportunities outside of China, knowing that we want to focus largely on Asia Pacific. I think the next big market we are focused on and where we have a decent track record is India. We do believe that there's an increasing investor interest into India in various forms. And then the other obvious countries are Korea, Japan, and Australia where we have a decent team on the ground in all three of those countries. We're building capabilities. We're developing investment strategies. And we believe, and obviously global investors would find those markets very attractive in particular. The second part of your question was, have we advanced or are we continuing to look

[01:16:16] at infrastructure related investment strategies? On that I would say absolutely we're continuing to to plant the seeds, build capabilities, develop strategy. I think the for us we're looking for strategies that are closely related or approximate to our core real estate DNA. And right out of the gate one can see things like renewable energy as fitting that box. But as I said, we are planting the seeds and building capabilities. And we'll get there soon. In terms of funds, we have the core plus open ended fund. That continues to receive good feedback from investors. We have several studying that a lot closer, which is encouraging.

[01:17:04] As you are aware, we acquired our fourth property in Melbourne, Australia for that core plus fund. And we have a very active pipeline. And we have a very active season in Europe coming up to talk to investors about coming into that fund. In terms of China, again, there are special situations which we're capitalising upon in country with the R&B fund. And externally we have US dollar interest to also capitalise upon those opportunities. And again, we're very encouraged by the activity we have at the moment there. And looking to pick the right time to capitalise on on what we're seeing on the ground with the country team. So don't your second question.

[01:17:56] What's on EBITDA? Was it? So it's an art and science. You have to, as we sit down and do the budget every year, the three year budget. It's more a process of getting there. It will be lumpy. There will be times when you are able to recycle successfully. You lose that operating EBITDA of the balance sheet or share of. And then you take time for the FUM (Funds Under Management) to build. So I wouldn't say that I will get it spot on every year. But the idea is to arrive at an operating model that allows us to deliver an operating EBITDA that is based off largely of FRB. At an operating model, which quite frankly, we haven't landed on yet, right? As you know, when we

[01:18:45] first did this, we have the ability to go all the way to a very asset-like business. We have the ability to stop somewhere in between. If we find that there is merit to retaining some of that REIB business because that gives us flexibility that she couldn't talk about. It gives us that balance sheet headroom to incubate, to take positions ahead of FUM (Funds Under Management) formation at a time where it could be a case where your core product is jammed, cannot move, right? It could be entering the REIB unit next month. Who knows? So having a balance sheet to us gives us actually other flexibility, add the agility to be able to take positions in advance of FUM (Funds Under Management) formation. So that may be a timing differential there. And then at some point in time, we take the off the balance sheet. And we did

[01:19:34] this by design because we knew that there would be times when to direct question, we may need to step in to help. We may need to step in to take first and then be very disciplined about when that comes off. That's the difference we see a light today and see perhaps prior to REIB. Right? If we take this on, we have a date circle as to when it comes off and there are people in the organization responsible for making that happen. And if it doesn't happen, then questions will be asked. So it is again an un and a science, it goes into the planning process. We have a strategic flexibility that in the next three to five years as to where we land up on the operating model. And we like it that we because there's a lot that's happening out there that may result in having a balance sheet

[01:20:24] being a good strategic tool. So I'm sorry I didn't answer your question specifically, but there actually is it is really looking forward three to five years and figuring out how much how much flexibility do we really need? How fast do we want to go to an asset-like model? Because there's a lot of stuff that may require hit room and balance sheet to incubate to help our funds, help our REITs and so on and so forth. And you see some of these things appearing right now and some of these things can be very material. But if you're on your own, it's one vehicle and you can acquire having a having a sibling having a cousin having an ecosystem, shall I say, that can come in and we all can take different bits and pieces. I think it's strategically very useful in the next

[01:21:14] little while. And our last question was would see any REIT? We are prepared to one day drop off if the operating model takes us there. No, it won't happen this year. We'll be fine. And we have a kill period as well. So even if we don't make it in terms of feeding common, is it 50% 75% 50% 25% so even if we get past 25% we will have a kill period and we may decide that we can sustain this and it's time for us to be seen as a REIT and drop off for scenario. We're absolutely prepared for that to happen. I think the important thing is whether we have a resilient business model that's, you know,

[01:22:01] generate strong cash flow and gives us the optionality. So to me, whether we need to be the Nari index, to me honestly, I'm not so worried as long as the business model is strong, you have a competitive offering ability to find good views, ability to generate a lot of interest from investors. They want to support us in terms of the various products. I think if we can do that and you can create long-term shareholder value, frankly speaking, I'm not so worried about that. I just want to give Kevin an opportunity because lodging is very active right now and I know you guys are all focused on China. So I want to give Kevin an opportunity to talk about some of his funds. I mean, they are busy working on a lot of FM product. It's not just about China.

[01:22:53] I know it's China's focus today but there's a lot of FM products in the works. So let me try to give some flavor on some of the FM products that were there. So just a quick one, we have actually two parts of the business that I'm managing. One is really the lodging management as well as the lodging funds. So you have seen that lodging management, the numbers are very encouraging. You look at us coming off the back of a record year last year, we said about 15,000 key stars here. Now we meet here at 7,000 five and it's actually 30 plus percent more than last year. We're also opening more units. So everything that we signed in the past few years are coming online. And as they come online, we're unfeast and the feast will through and that's where we get a nice

[01:23:42] margin. On top of that, we're also growing in organically. We added a good, a good comes with 15,000 keys. 8,500 of them are operational. So those ones again contribute very nicely to the feast. We have a new brand to grow. We see awkward as global brands got very sticky brand recall in the US and Japan in Korea, even in Australia, but we certainly opened a new one. So it gives us another engine of growth to boost lodging fee income. On the fun side of things, you will see that we've been quite active. We set up the student accommodation fund. We re-out capital earlier on this year. We've been deploying. We bought one. We have another couple more in the pipe that is going to come very soon.

[01:24:30] We're going to sign very soon. We have the escar residence global fund, which has been very active. We bought, we just bought Tokyo, Ginza for life last week. We bought Bondi in Sydney, I think, last month. We continue deploying. We bought Amsterdam as well. Very rare freehold property in the canal district that is really really a priced asset for us. I feel very encouraged by a few things. I think number one, we see the lodging demand coming through very, very strong. We started first quarter a little bit unsure. But as we go into the second quarter, the recovery is very apparent. Although we hear about inflation, of course, power, or raw materials, the rates that we are able

[01:25:20] to command far outpace the cost of doing business in the respective countries. So we see that momentum going into the third quarter, even the fourth quarter. So I am very positive about launching this year. We're careful about next year because of the heat winds that Jikun mentioned, weather recession, interest rates. But I think we are in a very good position. And it's a very simple business model. We scale, we operate, we collect fees, we push everything down to the bottom line. That's why you see the fee income contribution coming from launching, coming along very strongly. And I think there's a lot of momentum behind us because of all the signings we have done. This year, we're probably going to hit 30,000 keys or close to 30,000 keys with both organic

[01:26:10] and organic acquisitions. So I just want to leave you with that. I'm very hopeful about lodging. And I think lodging can play a bigger part in terms of contributing to the overall of CLI. I just want to add to that. I knew there's a reason I asked Kevin to chime in. And that's to your point on operating EBITDA. So in the past, right, in the last few years, lodging contributed very little to our operating EBITDA because they were going through an awful time of COVID. If we get this title tailwind continuing and the LM platform starts to really get hit, it's straight and get skilled. You're getting these keys that are coming into the system, turning operational. Magins that are expanding, all of this starts to, as Kevin says, the

[01:26:59] operating model kicks it right down to EBITDA. So the operating EBITDA contribution doesn't just come from FM. It actually comes a lot from LM increasingly going forward. So as we hit 160,000 keys and beyond through organic growth, as LM hits critical mass and margins start to hit the type of levels that one would expect from your best in class lodging operators, then you start to see a very healthy component of operating EBITDA start to come in from the LM site, where typically, historically, we haven't had to enjoy that largely because of COVID. So this is actually very important pillar of the operating model for our CLI, something that many other reams do not have. He actually gets two bytes of the cherry. He gets to take FM fee

[01:27:49] and then if he's operating the product, he takes an LM fee on the fund that he manages or the reed that he manages. So lodging is double layer for the right reason. We are all preyed there as well as as fund manager. And if you get it right, it's actually a very interesting part of business that not many people can do. So I think, sorry, on China, it is not, it's actually positive for us of the 7,500 keys that we sign first half. I think half of it comes from China, and we're focusing on products that are very policy aligned. We're saying rental apartments, management contracts, we local SOEs, we local governments, we continue to sign the citizens of Somerset and the escorts. So despite all these hit wins in China, it's actually performing very

[01:28:39] well for us on the asset-like front of signing up new keys and generating fee income. So I just also want to leave you with that to say that actually there are break sparks in China and people are still confident because if they're not confident, they wouldn't be signing up new buildings and new contracts with us. So I also do see that China will probably turn around at some point, hopefully this year and things will go back on track soon. Okay, I'm just mindful of time. We'll take one last question from Brandon and I'm sorry, I see a few more raised hands but we have to take this offline. We'll get to Brandon. One quick question please. Give two of us, possible. Yeah, the first one is for Chikun, right? I think just wanted to find out whether there's been any updates on strategic platforms. I think this was something which you mentioned when CRI was

[01:29:30] first form. Are there any interesting opportunities in the market now and given an existing environment, what kind of multiples we will be willing to pay? Yeah, that's my first one. The second one is more for Andrew. It's about the third in for this year, second half. Let's say we were to really not see China recover and the divestment goes to about just north of the tree. Could we still look at that 11, 12 cents kind of number or the 40%, 50% of cash gone in? Thanks. Thanks, on question one, definitely we are extremely active in looking at platform opportunities. Whether it's, I mean the initial focus is really around Asia, Pakistan. That's, you know,

[01:30:20] mentioned before, where we look at platforms, we look at, you know, what strategic capabilities are we adding? Whether it's in the form of certain asset classes in a certain geography or capital raising ability. So we need to be very clear. Point number one. Point number two, it's in terms of the pricing. The, I'm not so concerned about the multiple that you pay. The, I'm more concerned about, even if you pay 20, 25 times, are you able to be, is it going to be additive to the bottom line or for CRI in the long run? I mean, if I, if it's a platform I paid 10 times multiple and it doesn't do very much to my multiple and doesn't create a new growth engine to me. It's not so interesting. But if I can, if I'm prepared to look at a platform that's strategic at new growth engine and have

[01:31:12] a little bit, but in the end it drives long term value creation. I think that's something that I'm prepared to do. And at that consideration, it's whether we have the team to be able to execute the strategy and to be able to integrate the capabilities. So these are the few considerations. Of course, there could be possibilities where, you know, we may just own a very strategic state in a platform and let it continue to run. And then under that situation, you know, in terms of leading to integrate may not be top of mind and just let it continue to operate on its own. So it depends. But I must say that, you know, M&A looking for capabilities to add on is something definitely at the top of our mind. And on your second question, so there's no real change to the

[01:32:00] appliance on the core diff. If you look at our historical track record, we've always aimed to deliver on the core dividend brand. And so not much I can say in addition to that at this point in time. Thanks. Okay. Maybe I'll invite Chikal for some closing remarks. Maybe I'll just say that, you know, we're wrestling some reaction to the top line numbers on our share price. So maybe Chikal, you can address that, you know. Not because I'm confident. No, I mean, we're not not surprising that the market will react. I think the key about building the business, I mean, we make the commitment to do the restructuring to build the to go asset like to build a fee in-com business. It takes time to make things happen. You know, I we're generally confident because of the teams

[01:32:50] that we have built up the opportunities that we are seeing. Sometimes, you know, things do, I mean, the timing, if everything goes according to to plan and according to the timing of the results briefing, then it's all good. But, you know, life doesn't operate in that manner. I mean, we are actually quite confident about the team and the ability to execute. I think the most important thing I want to reassure, I mean, let the results speak for itself. Let the see what's going to happen over the next few months. You continue to see capital recycling or continue to see new funds initiative been launched and including in China ability to launch new roaming people. I think that's once you see those happening, I think you will be a lot more more real. I mean, the like I said,

[01:33:40] the portfolio is extremely resilient. Many of the assets that we own are in good locations and rental escalations embedded in, you know, most of the assets, whether it's in the REITs or the funds. So, you know, I, I mean, I'm balance sheeted. It's extremely healthy. So, do look forward to, you know, just be patient in working through the journey with us as we build the CLI business model. Yeah. Thank you. Thank you. And with that, we will come to today's briefing. Thank you for tuning in to our viewers online and thank you to our analysts and members of the media for joining us here. We

[01:34:25] show a good day ahead.