# CapitaLand Investment Limited — 1H 2023 Financial Results Briefing

- Event: 1H 2023 Financial Results Presentation & Analyst Q&A
- Date: 11 August 2023
- Kind: automated speech recognition (ASR) transcript, unverified, no speaker labels
- Source webcast: https://www.youtube.com/watch?v=URCaJzYAllA
- Duration: 01:34:06 (~15,537 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)

[00:00:02] Good morning everyone. Very warm welcome to capital land investments first half 2023 results briefing. I'm Grace Chen head of investor relations TGI F everyone and happy belated national day to Singaporeans here as well as to those watching us virtually now see all I has had quite a week besides celebrating national day our teams who have been working very hard over the past few months and even through National Day finally got us through the finishing line of a few important fun races and I'm thrilled to share that year to date We have fun raised 3.2 billion of Equity commitments and what that means is that we have actually exceeded what we achieved last year for the full year of

[00:00:53] 2022 where we had 2.5 billion of equity commitments so colleagues want to put your hands together to just thank the hard work of our do teams Thank you Okay, just getting back into agenda in a short while we will have our group seal Miss Leechikun group seal. Oh, Mr. Angelim and group CFO Paul Tom to take us through the results as well as their outlook and I would also like to mention that we have members of our senior leadership Council over here and they'll be happy to take questions during the Q&A as well Without further ado our invite and drew for opening remarks Thanks Grace and good morning to everyone. Thanks for coming

[00:01:40] I've got just a few remarks that I want to make before I hand things over to Paul to take you through the numbers We put down five points here that We hope will help to encapsulate what the numbers reveal I Think the first one is the issues that we've been grappling with for some time now as an ecosystem still continue to persist You can pick your poison whether it's climate change whether it's geopolitics whether it's pre post COVID the one we think is most stubborn and gives us a lot of calls for concern is The stubborn inflation that persist throughout the global economy and what rates have done in order to combat that I Think that you can all agree has direct impact on real estate through higher interest rates in funding and also potentially through cap rates in valuation

[00:02:34] We are starting to see the effects of this particularly in some economies where the rate Risers have been very sharp US Europe UK have all started to see these attendant effects and when we look across the spectrum of real estate Companies who are reporting results. We start to see this in this interest rate impacts coming through We are no different. No, we are not immune to that, but I would like to think that our consistently conservative policy high level of fixed rates long whales long terms have insulated us on a relative basis more so than some of our competitors The other thing that gives us I think some case for optimism is that if you look back over 30 years Around about the five to six and a half percent of fed funds rate is where economies starts to take notice and

[00:03:23] start to slow down So if you go back over 30 years This is where the rates start to peak and then it comes back down and tends to come back down very fast So if history is via students of history and we take history as a guide I would like to think that we are close to peak which again is Potentially cause for cautious optimism that recovery is around the corner and stabilization is around the corner Why is this important it is important because without a good visibility on where rates are hidden? No one's going to be doing deals because we can't underwrite them with certainty unless you are very brave or you're very foolish Which brings me to the second point about cautious dealmaking I think Simon will tell you that this year It's the lowest in five or six years in capital raised across the

[00:04:12] private equity space and I think that again is a function of Folks who have put their pens down because they just can't get comfortable with the numbers The models have all been thrown out. They've got to rewrite they can't figure out where interest rates were land and without interest rates certainty unless you have 100% equity which not many people do Then it's very difficult. You have to be brave and and all foolish So this is has led to a slowdown in dealmaking right now we're standing that I think we had a pretty good first half Our reach raised over a billion Being very disciplined about what they what they are seeking to acquire or have acquired and our private equity business as you've read yesterday And today have now crossed over three billion in total equity raised again and we believe the right products

[00:05:01] So I think we are Being very disciplined about how we Race capital or rather we are still able to raise capital from Partners our unit holders our third party equity partners who believe in the platform that we offer Our embedded FUM (Funds Under Management) has now grown to block 10 close to 10 billion Which means that we've got that equity? We've got capital ready to go when we feel the time is right in products like China opportunistic which is I think a very well-placed product for the right time ready to be deployed for the right opportunities Working together with the young and his team on a ground We also raise a new fund in India India now is receiving unprecedented attention Sanjeev is here. So please direct all your questions to him We are long India. We are 30 years in India. We have boots on the ground

[00:05:49] We have expertise in the right sectors and in the right cities business parks logistics and now DC The launch new fund yesterday with one partner and there's we are confident that there's more to come so India is Exciting for us. It is still a small piece of the puzzle But if you are talking about a globally diversify real estate company then India is a core market and it will play an increasing role In how we diversify our business Okay, let's look at the two of our core markets. I think Singapore. We are all here. We know the story It's remained incredibly resilient and that's good for us as a Singapore company Singapore is a destination for capital's destination for talent destination for tourism all of these things play to our strengths Singapore portfolio, which is now a largest market in total asset terms

[00:06:42] It's very resilient right in more by most metrics. We are past COVID numbers already and I think the rest of the world understands this Which is why capital is coming? And we have no shortage of people asking us to help them deployed into Singapore Problem is we don't have enough to pass to them So the hunt is on for interesting assets. We development opportunities up sizing up skilling taking advantage of Singapore's growing place as a center for business tourism talent capital. What have you? On our other core market It is better than it was but that I have to say is not saying much because last year was pretty bad So China is on the way to recovery

[00:07:29] most of the metrics that you see a higher substantially higher NPI occupancy Tenant sales they're all heading in the right direction The problem is it's not heading as quickly as we thought it would so recovery in our view is going to take longer and If you talk to just young what you'll tell you is that what happens in this situation is that it weighs on sentiment and China is a very sentiment driven market I Think what we have going for us is a government is recognizing this and is pulling out all of its tools to kickstart the economy right fiscal monetary Now the tourists can travel around the world right there they're trying to send signals that they recognize the extent of the problem and they need to fix it

[00:08:15] So I think that's a good sign that they are putting the economic recovery as a priority right now and that will help us Help turn sentiment To at least say that China is starting to become investable again in the meantime We are being smart about how we deploy capital opportunistic finding assets that are underpriced for the right reasons and that will write an exponential wave of recovery When sentiment returns that's what sea cob is designed to do we raised another five 500 500 and see come 986 sorry So it's a big number so we Causiously optimistic on China, but it will take time. It will take longer than we hoped

[00:09:03] It remains for me to talk about travel and I think again, this is something we Were lucky to be good or good to be lucky Depending how you look at it. So when we reorganize CLI we decided to put lodging in because we believed in its fee income model We believe in its capital like model. We believe we go turn into a global platform We had to write out a couple of very difficult years with COVID But the model proved resilient more resilient than many other lodging platforms and that actually resulted in the Escut brand Rising in stature and preference among many third party owners because they said these guys can write through the worst times I'm gonna be brand So Kevin is past 160 and he's been forced to reset his targets into a revenue model and I think that again

[00:09:55] resonates with our fee income model Right in a double revenue to 500 million which is without question in that situation a bonafide a Fourth vertical of fee income for CLI So if there's any doubt I think it should be clear now that this Was the right decision to include lodging within CLI As a proper fee income platform for us Okay, so if you look at the numbers that politics is through You can see there's a stock difference right went operating pat me demonstrates that as a recurring business I think we are doing what we are set out to do for all of all of our investors all of us take hold is we are building a business That delivers recurring income yes, there will be ups and downs on the fee event driven side

[00:10:46] That is a function of the business that we are in but generally speaking recurring income will be a resilient Contributor to pat me and we are growing that recurring income base with capital that we are raising The other piece is obviously capital recycling and again going back to a sentiment about the Resistance to do deals We are again a part of that ecosystem unfortunately Right we are not distressed sellers so we're not going to sell for the sake of it But we want to raise capital the right time so that we can redeploy that more efficiently and In the process if we can sell it at a good price than that that delivers an important component to cash pat me By in the meantime you can see this difference between our in our first half results operating pat me resilient

[00:11:34] portfolio gains Will take a little bit more time. We are cautiously optimistic in the second half activity will pick up if these macro economic indicators start to come into line and people become more Confident about their numbers and are able to take deals to their investment committees Okay, so why not stop there and hand it over to Paul. Thank you very much and we look forward to your questions Thanks Andrew Good morning everyone. It's funny listening to Andrew For those of you don't know, Andrew is my predecessor He used to be CFO and used to do the bulk of this presentation most of the time when he was talking about interest rates I thought for a moment there. He would forget and just keep going and I wouldn't have to present No such luck

[00:12:20] So just very high level on our numbers overall for us first half I would say relatively resilient Revenue numbers flat 1% down operating pat me flat 1% down Obviously the big shift for us was in relation to total pat me and you can see there that we're down 19% Really driven by slower portfolio recycling And that is something that well we've picked up a little bit of pace over the last couple of months Most of that happened after 30 of June Which is why when you see a capital recycling number there of 800 and 39 million middle bottom box Not all of that yet translates into portfolio gains So some of that divestment number since that is in as of August 10th number some that will only kick in in our full-year results

[00:13:07] So I won't go through necessary and overall growth drivers Andrew has covered a fair bit of that and where we think of as where we can see growth going forward Right a lot of these topics will discuss later as well when she goon is on stage talking through for our Q&A But really you know we see our listed funds still recurring fees investments a little bit slow But growth on the recurring fee basis Private funds some very good news of the last couple of days We seem to have done this for first half as well made a push right before results I'm starting I've having thinking of having results every month so that the team has more announcements to come out And then lodging has been great for us And so these are for us good drivers geographically a little bit more in the pressure And we'll spend a little bit of time talking about besides Singapore and India where else can we see some growth?

[00:13:58] So looking at our business segments and really starting with our fund management business and this is really our main focus Going forward is really on the fund management component And you can see our numbers Hasn't been as much growth as we would like but you can't see a bump up in what we consider embedded FUM (Funds Under Management) And this is funds under management that we've either raised capital for Or that intended for deployment from the Ritz as well And as you can see we are up to about 99 billion So we're very actually happy about that component I think where we are being a little bit more disciplined is on the deployment of this capital You know it's a very tricky market environment right now We want to make sure that for our investors whether in the private funds or in the Ritz That we are deploying capital for deals that will give them good returns

[00:14:47] And we don't want to just deploy for the sake of deployment So you see a little bit of gap there We've got a little bit more dry powder which we are sitting on waiting for the right opportunities In terms of our fund management fees One positive for us has really been around the recurring fees On the left hand side of your chart you'll see full year 2022 versus the first two quarters For 2023 as you can see a Q2 106 versus 106 last quarter last year second quarter So the listed fees and also from the private funds You know we've gotten some nice stable income Unfortunately what is clearly missing is the event driven fees Which you can see from the middle pair of Middle column pair Now you can see that recurring component has gone up a nice 10%

[00:15:34] Unfortunately the event driven down by quite a fair bit Some of that will pick up Some of our Ritz have made announcements recently on acquisitions Obviously with the new capital that we've raised for the private funds We'll have a little bit deployment But that pays suddenly slower year and year Hopefully picks up a little bit in second half But we think this year will still be challenging in terms of seeing Really strong deal momentum Related to that on the right hand side you can see how FUM (Funds Under Management) to FRE (Fee-Related Earnings) ratio has unfortunately come down And this really relates directly to the performance fees Without the one-off carry from the private funds last year And also with the lower acquisition and divestment fees that number has come down We do expect that number to go back up As a little bit more normal activity

[00:16:20] continues So when we talk about our funds management business It's most of you know we have two main units our listed funds unit which is our Ritz franchise. We have six Ritz Very happy to say at least from an NPI basis We've seen our Ritz perform relatively well We've seen on an overall basis positive rental reversions across the board All of our Ritz have seen that on an overall portfolio level They've been relatively disciplined We think over the last six months as well in terms of reconstituting their portfolio Asset enhancements and really trying to drive higher returns for investors. So good steady growth there Obviously, we've raised about a billion worth from the Ritz market We think over the course of this year and next year as interest rates hopefully turn

[00:17:10] We'll see a little bit more activity and growth there Hopefully back to the numbers we used to see a couple of years ago I think the one challenge our Ritz are facing is just exactly that on the interest rates So on the right-hand side you can see that Higher interest rates has pulled down. We've had a few Ritz who have managed to Have enough NPI improvement offset that high interest costs But I would say generally across our portfolio that interest costs has weighed down such that whether it's DPU or for our joint ventures Some of that cash coming up to the parent company has come down a little bit because of the high interest costs So you know we continue to be very active on our capital management trying to make sure that we are balanced enough Both in terms of being prudent But also making sure that we capture dips in the market to try and lock in some rates

[00:17:57] And hopefully over the next six to twelve months. We see a little bit of turn in this On our private fund side as Grace mentioned at the start, you know, we're very happy We're up to 3.2 billion capital raise this year. That is more than the 2.5 There was raise all of last year and while we are very pleased with the teams as I'm sure Simon will tell you that It's not the target they are expected to continue to grow in the second half and we still expect to be able to raise funds I think one thing we're very pleased on was the announcement yesterday was our new India business development business pump development fund We are seeing an opportunity there for more heightened investor interest in India The team with Sanjay and gari who will speak a little bit later We'll be able to share with you a little bit more on how the market is looking

[00:18:44] But it's suddenly a market where we think future growth for us will be faster than it has been in previous years The other two things we've raised money for our whole open-ended fund and our China special situations fund So the special situations fund has gone up to 2.1 billion in equity now At those numbers levels. We considered this arguably one of our flagship products We think there are a lot of opportunities we can capture to try and pick up And then the one below that even though it was a smaller raise that core open-ended fund which is a core plus focused fund Which is a private fund? We raised another 150 million that for us is good. It's a good sign We believe this means you know We've still seen investor traction for investing Asia Pacific And it also announced about core plus products outside of our rents

[00:19:31] So it's great job by the team and getting these fund raises in this environment We're continuing to look at our products obviously we're continuing to focus on fundraising But we're also looking at our products suite for you know What are investors looking for in this higher interest rate environment? So obviously last year We had a special besides the special situations. We had our self storage We had our logistics for Southeast Asia So we are exploring areas such as credit which we think will do well In markets that have higher interest rate And potentially also more value as special situations type funds Higher returns given the interest rate environment So that is our private funds and our listed funds business moving to our lodging management component So lodging is having a good gear again And we're very thankful that we've got the lodging business

[00:20:18] Rev part is up 35% this is our revenue per available unit This is driven by higher occupancy higher room rates We've seen great numbers across the board particularly Japan Singapore Europe all seeing nice uplifts and numbers Most of you as you try and travel are probably complaining about room rates I do that all the time too actually myself except when I see these numbers. I'm very very thankful that These rates are going up We do think this momentum will hold for a while obviously yesterday China relaxed some measures on group tours We think this continued pickup on tourism will continue to help our lodging business But just to calibrate a little last year second half was also a very good half for us lodging business So while we expect growth

[00:21:05] Whether we can still get 35% up on a full year basis I may be a little bit more challenging But we are still seeing that improve and we are very positive about the outlook for this part of the business We continue with signings and expansions on the properties You know the target for this year. I think we went out to say was 13500 we've been pretty good progress as of August 7,000 units signed 4,500 new opened We always get a little bit of churn as some units drop off But the team is seeing nice growth as the brands expand and For those of you who don't know we have more than 800 properties under our various lodging brands And our goal is to make this into even more sizable pillar and on the right-hand side you can see our fee revenue targets We are a little over 150 for the first half

[00:21:54] So obviously we expect this pace will continue for the rest of the year But it puts us nicely on track for getting to our 500 million target as well So that will increasingly become important for us as a group So I think this one vertical for us Well, it's slightly different from the fund management component Where they share that similarity is really on that recurring income asset light nature So very positive around our lodging business So now moving to our real estate investment business These are the assets or investments we hold on our balance sheet These are our stakes in the ritz of stakes in the funds And also the approximately 10 billion worth of assets that we're hoping to divest off our balance sheet into our Fund of vehicles This just gives you a shape of the portfolio

[00:22:40] And we are Still largely Singapore and China But as you can see those percentages have come down slightly And that's really driven by some growth in acquisitions else other markets But also the growth of our lodging business Where we also do have assets in other markets And as entities such as capital and ascot trust grows overseas We see a little bit of that shift as well So our overall mix as you can see is going in the direction we want We're trying to increase our diversification by geography We're also trying to increase our diversification by asset class Because moving forward we think that helps us in terms of resilience So in terms of how is our real estate portfolio and how our investments doing? Now as I think I've mentioned before if you follow our ritz and our trust

[00:23:26] You get the bulk of how our portfolio is doing right? More than 60 or 10% of our real estate investment business comes from our ownership state So if you see CICT's performance, ascend this ritz, capital and China trust you get a feel of how Our performance in these different markets are going But to give you a little bit more color we thought we'd get some of our leaders in the different Regions to share with you a little bit about how the different markets are going So we're going to start with Singapore and I invite our Southeast Asia investment head Patricia to share a little bit about the market Hi, good morning everyone Actually for Singapore I shouldn't be the only one standing here It is the collective effort of maybe more than a thousand colleagues in Singapore Ringing from doing operations as far as the investment

[00:24:15] And that's headed by Chris Chong Tony and William being our CICT and Claire's Ritz CEO I won't go too much into the operation details because on our balance sheet We only actually have three assets in Singapore and CICT and Claire has already shed most of the operation results and it's largely in line I think three key things a good rental reversion Strong retention and also rental growth So maybe let me just talk a bit more on the investment landscape Which perhaps most of you will be keen to hear from the investor point of view We are still getting interest in Singapore. They like Singapore because it's a safe country

[00:25:03] Our asset value is stable and the rules of engagement is clear Obviously, they have also signaled that the era of low interest rate and getting investment returns just by getting Low interest costs and expecting cap rate to compress is out They are expecting to see managers work harder on assets And this is the reason why they are keen to engage with capital land because we do show the track record of being able to do asset repositioning Bringing up rental growth We have wide net world and connection with our tenants in Singapore We have a tenant base of more than a thousand five for corporate tenants and more than a thousand seven for retail

[00:25:50] Tenants which we engage directly So these are the things that it consistently communicate with us that that's why they want to engage with us Compared to half a year ago. There's also more interest in our assets now Coming from a few angles One is the cam of people who believe that interest rates have close to pick It is relatively easier to price deals right now Because compared to one or two years ago you'll be trying to think about When is interest rate going to pick and how long do we need to make that assumption? So we do see that that's more engagement with investors like what Andrew has pointed out Engaging with us and but we do need to see where the assets that we can offer

[00:26:40] Then on the investment landscape You'll all see that deals are slow in Singapore. There's not much transaction Office-wise, we only see Robinson point being transacted The buyer is an end user young sitting young. There's a couple of free-hole office strata units being transacted as well shop houses are popular Clares active. They have done Seagate in one of as well as top are your and also industrial property. So we are constantly in a lookout In terms of the investment market right now. We do see there is an interesting time We have Sellers whereby they are funds and fund lives are coming to an end

[00:27:26] So there is a timing pressure that they need to exceed We have sellers who want to manage their gearing down And we also have sellers who wants to redeploy or reallocate their real estate assets because of denominator effect And because you have motivated sellers That gives us good opportunity to do bilateral discussion and get good deals for capital and and this is um This is exactly what the ground team is doing now Consistently engaging with owners and agents as well so and Because we have different parts of capital The REITs will take the core asset investment What a private funds will be active looking out for value at

[00:28:15] opportunities which we are in the in the process of Negotiating for some of the deals an example a point of meaning is our self-storage mandate We have funds to deploy And right now we are seeing prices coming to level Where we're able to underwrite double-tute returns for the fund I like that getting a good deals So we're always gonna invite a gallery from India to share with us a little bit on how that market is looking Thank you Paul good morning everyone happy to talk to you today Just a quick rundown on India at the macro level first India is clocking is expected to clock a GDP growth of just about less than 7%

[00:29:03] Comparable to last year inflation is below 5% well below the reserve bank stock it In the first off of 2023 we had close to 3.7 billion dollars of foreign FDA investment into the Indian railroads etc That's almost about 75% of the totally of the eye that had come in in the year 2022 As of today we have close to 1600 global capability centers That are set up shop in India and every year that goes up by about 120 to 150 GCCs In terms of the employment about 300,000 additional IT jobs were taken up in the last six months So the total

[00:29:49] Employment in the sector is about 5.8 million people And if it reflect that into real estate space we calculated at 100 square feet for every employee So that is like a 5.80 million Requirement on the grade A office space IT office space In terms of specifically with the business parks industry itself The first half of the CRB clocked about 26 million square feet of Gross absorption that is comparable to what it was in 2022 2022 was in itself among the best years for IT office of business parks absorption 2020 to clock about 56 million square feet 2023

[00:30:35] 2022 had the benefit of low absorption in 2020 and 2021 because of the pandemic 2023 Despite 2022 22 being a higher is expected to compare value 2022 and We are expected to have a better net option than 2022 at about 36 to 39 million square feet In terms of our own portfolio, we are clocking about 91% occupancy This is at least about 12 to 13% Higher than the industry average which stands at about 78 79% In terms of actual football in our parks we have On an average we have greater than 50% of actual employees showing up at work Most of our tenants have mandated their employees to work in the office at least three days a week usually choose to invest in Thursday

[00:31:29] The number the percentage of our tenants who sort of allow their employees to work from anywhere Is in the single digits and going down? In fact most of the mandates these days require some of the mandates these days require four day work weeks or even five day work weeks in the office In terms of leasing 26 million was across leasing for the industry as compared to that we have punched better than our weight New leases we have signed about 2.2 5 million square feet In the last six months and we have renewed about 1.57 million square feet And as already announced we are all excited by the launch of the new India development fund It's 5 25 million Singapore dollars and

[00:32:16] We will be targeting both green field and brown field development so that fund and 2023 is expected to be An exciting second half and we expect that to continue 24 25 years back to your book. Thanks, Gary. Thank you very much And then lastly just to share a little bit on how things are in China past the start China CEO. It's a share Good morning everyone Paul has given us one minute to say our piece. This is 100 and then fundraising I'll try and do it in two Allow me just to give up to several alternatives. Just allow me to give some color what we see on the ground in China So post covid Plan top demand for domestic tourism Hospitality retail services have been eat made term solid contributions overall while the recovery is in place as we all know

[00:33:11] It has unfortunately fallen short of expectation As we move into three cube hopes of a V shape recovery as we did and I guess against the backdrop of weakening global demand supply chain relocation moderately low domestic consumption and private sector investments and also household savings as increasingly put away We do see a lot of the companies adopting a fairly cautious approach to business expansion and Investments so while overall growth is slowing and the economy is working hard to fan of the patient Beijing has signaled very strongly it will come up to do more to boost consumption and private sector investments And mentally all the businesses are hoping for a far bigger

[00:34:00] Seamless package to rejuvenate the economy further So on our front the house views that we remain cautiously optimistic that further policy relaxation supports as well as a train and Consumption and hunting measures will be rolled up progressively for a second half of 23 so against this Tough operating environment our own operating performances have been very very resilient On a total portfolio basis our revenue and MPIs are up from last year Specifically on the same basket basis revenues and MPIs are four at seven percent respectively up your year Looking at retail our foot falls up about 34% from last year

[00:34:47] Sales on the per square meter basis are up 25% and even on the total sales perspective We are up 8.2% year-in-year so as Paul alluded to the recovery is in place But of course we hope for a greater acceleration as the time goes on For our retail and office occupancy. They've all crept up despite lower rents Simply put we are strategies to prioritize occupancy right now i.e. cash flows We successfully carry out a lot of good ais all of them have given us double digit to our eyes For business parks our occupancy is a health very steady and even we were slight increase in rents That's on the operating site On the fundraising site very happy to share and to bring to re-entry what Andrew is in the morning

[00:35:34] We have continued to drive fundraising efforts and we have closed up another 817 million thing for our C-COP special situation fund where we will Take on special seats in China distress opportunities value opportunities at the right pricing We're also very active on the roaming B funds raising fronts as you know over the last two years We have managed to raise close to 40 billion in a third party capital domestic capital and this year It remained confident that we should be able to add a couple more to our staple Also finally we are looking at the strategic opportunity to potentially sponsor or participate in the seaweed market This is really part of our China overall strategy and

[00:36:19] We really want to broaden our access to alternate additional funding sources We have started with insurance companies and securities companies trust companies by increasing me We want to target more like mid-term long term funds pension funds of So-so security funds and annual defense and alike so such a platform We'll thank you for a great access to as a recycling in the future And it will present credible exit options which are very important to our PE investors both domestic and Foreign okay over to you both Thanks this year I've been in this company for about a year and a half now and I've come to really like this management team But we really can't do one to two minutes around here Not our skill set Okay, so we talked about our three core markets We actually do have teams on the ground in a lot of other markets

[00:37:07] We're working very hard and we are actually seeing progress whether it's Australia, South Korea, Japan, the US and Europe And we do think of the time these markets will also become increasingly important for us So that was to give you a sense of all the different parts of the business and how things are moving along very quickly I'm just gonna run you through now how that translates into the numbers for us So we've mentioned this multiple times For the course of the presentation total pat me numbers on the right-hand side for us down 19% Driven by that middle section lower portfolio divestments where you can see the stunt drop off from 87 down to seven We will see this number improved in the second half as a number of the divestments were post 30 of June But it is still an area of weakness that we think for this over the course of this year

[00:37:55] I think the comfort for us is really on that operating pat me. It's held up Pretty well in the current environment Particularly with the higher interest rates So we're hoping to keep the momentum on that front On an overall e-bidar basis and here the e-bidar may be slightly confusing those of you knows e-bidar is earnings before interest tax depression and amortization For us because of the way where structured we whole stakes in our roots and funds some of that interest is actually accounted for At the investment JV associate level before it floats up into our e-bidar number So because of that you don't see the full effect of the higher interest rates necessarily in this Taken out of this number so this number is partly down because of the higher interest impact that we're seeing and you'd have seen this across a lot of our

[00:38:41] Ritz as well Maybe just two things to highlight on the slide on the left hand side by business As you can see our fee related business is now up to 30 percent So it's the improvement from the 26% last year. This is the part which we want to continue to see grow As we generate higher recurring fees and that stability on that fee income And then in the middle column you can see China has rebounded for us from a 12% contribution to an 18% contribution So that is encouraging for us. We expect nicks here We will also see improvement in this number. We do expect it to contribute a larger part of the portfolio But as you can see the other parts of the business whether it's Singapore or the other developed markets Helping makeup for some of that fee related earnings by unit listed funds generally flat while recurring was up

[00:39:31] Event driven was down similar for private funds. The big swing was the event driven fees The one off of 31 million from last year for the performance fees for Vietnam and Singapore made that a little bit Outsized on a more normal run rate basis. You can see that recurring has actually inched up And then on a total fee basis. Thanks. Really to that star performance from lodging. You can see that we're up slightly here on year On our real estate investment business here. You can see the revenues up 9% and this gives you a better indication. You know generally we are seeing positive rental reversions We are seeing higher revenues at a number of our properties But that's really being a lot of that is being hit by the higher interest rates Which is what gets to our bottom line and then capital recycling last slide on the

[00:40:21] Really on the business performance component of it as you can see recycling. We've put a number there of 839 More than 800 of that came post 30 of June. So we had a very busy couple of months team is working very hard But that's why it doesn't reflect that's why you see a 7 million profit number for diverse for portfolio gains So some of that will flow through we have an annual target of three billion This is going to be a challenging market for us on being able to get to that three billion target Obviously the team is still pressing and trying to get there But we do think that while we have the funds for deployment And we have the assets we want to divest. We also want to make sure we're doing good deals And because of that and I think we're still going to continue to take a prudent approach To transactions. So we're still pushing in the divestment target

[00:41:07] But suddenly it's a little bit of weakness this year And then finally just on our balance sheet Two things to highlight here is you'll see our interest costs now at 3.8% That's inch up slightly from Q1 where we were at 3.6% For the bankers in the room if you could help us bring that number down. We had very much appreciate it And then as you can see we still have a fair bit of healthy debt headroom Where at 0.5 where 0.57 times that number has creeped up because In the first half of the year we pay dividends and we did the special dividend in species of the capital and ascot trusts Units and so that has moved up but we still have very comfortably significant debt headroom if there are potential Portfolios or platforms to acquire

## Analyst Q&A Session

[00:41:53] So those are the two things we'd highlight off that Sustainability very quickly We continue to track well towards our 2030 targets Energy intensity water intensity reductions both of those we've already exceeded our 2030 targets On the others we are making steady progress And if you have questions on this, I'm sure Vince would love to talk about it And then just so that we get to Q&A in terms of our overall conclusion Some of our key to KOA's androids covered a lot of this I think just maybe the one thing to say before we go to Q&A is we do believe there are opportunities for growth I don't think we are one of those players who are Single vertical single industry where you know if that industry goes well or that sector goes well You see great growth from us. We are diversified

[00:42:40] Geographically and product wise and because of that growth for us Will come from multiple sources puts us in good stead in halves like this where you see our earnings being resilient And also means growth for us will have to come from multiple avenues for us to really get that scale And with that let me end and move the Q&A invite Chikun and Andrew and stage to take questions Thank you Paul In addition to Chikun and Drew and Paul who will be on stage I would like to make a few introductions as well of our panel who are sitting in the front row We have Kevin Go CEO of lodging Simon Tracy CEO of PRE and Patrick book called CEO of P E R A A P A

[00:43:30] Yeah, and also to our viewers online if you would like to join in the discussion Please feel free to leave a comment or a question by clicking the post question tab on your screens and with that Maybe I'll get Chikun you want to any remarks from you before we start. Yeah Hi morning everyone. Thank you for joining us in the results briefing Andrew thank you Paul they covered most of the key points that I wanted to do So actually I can do it in less than one minute contrary to what Paul has mentioned Just want to highlight one point. I mean when we restructured the business To split the development business and the asset management business. We are really positioning the company for group

[00:44:17] I mean at this point in time the big Environment is one where we are dealing with other rising interest rates very difficult Joe political environment the key The other dimension of the challenge is the uncertainty of where things will lend and how things will lend And I mean I just want you to note that I mean that's the environment that we're dealing in dealing with We're looking at many many views Deepating on many views The only thing why we are not doing some of the uses because we are just not happy in terms of the pricing that we are getting Because we do believe that you know at the end of the day We want to make sure that we can deliver consistent high quality earnings for our whether it's a unit holders whether it's our

[00:45:05] LPs in the various funds. I mean that's the key including the investors a CRI level So please will pick up if we find that the The big us price is closer to what we are looking for because at the end of the day if you can't deliver the returns There's no point in pursuing growth for growth sick So that's something that we are very very disciplined and something that I want to emphasize The only other thing for me to highlight is Despite all this difficult environment for us to be able to deliver this results here It's really the hard work of many of the People that you don't see. I mean you see other CEOs speaking the recials the the key senior leaders People like Paul and Andrew there many people behind the scene from Chris Chong to Elwin who works so hard to go and

[00:45:56] Convince people to you know to set up shopping Singapore in our various business parks Chris Chong Who does a great job in terms of repositioning all the assets for those of you who are in Singapore? If you visit the malls and the offices you look at how the repositioning has been done the courage I mean the even from shopping malls like full-none to Raffles City for those of you who have visited you look at the comments from the tenants The performances all these are hard work and the courage done by the team So I just thought useful to not to forget Behind all these numbers are really the Google done by the various people in the company. So it opened to Q&A. Thanks Thanks, Chikun

[00:46:41] Marvin as usual always the fastest hand Marvin Please take a look Hey I'm from Jv Morgan To grasp on the strong raising efforts given the tough environment Given potential peak interest rates are you seeing a pickup in interest from your LPs and Wish products that they most interested interested in in term second questions in terms of the 10 billion in better FUM (Funds Under Management) How much of that realistically can be deployed in a second half? And finally we seen Sabana re-re-roof or the Sabana re-roof with a read manager Shall we be worried and how you think about defending your S3 business? Thanks Sabana you're not answered the fundraising

[00:47:30] Part of the question Yeah, good morning everybody. Thanks for the question in terms of Capital raising investors around the world are now starting to see Probably the end game in interest rates and I'm making their 2024 plans based on what those more normalised operating environments look like in terms of higher for long So I think over the next quarter investors are definitely going to Send papers to their boards and investment committees and look at their allocations in 2024 in real estate globally Asia for European and US investors definitely remain underweight and that's good news They see growth and diversification has been the key benefits looking into Asia

[00:48:17] Again, as I've said in previous result debris things The reception we're receiving globally is very attractive. It's very encouraging It does take time. It is a very competitive market But as you can see by the results we're starting to get some headlines. We're starting to get followed by Our very thoughtful research that's online and therefore I think Q1 next year We should really start to see the wallets being opened up And I think that will come from probably the German market and the pension funds in the US. That's our hope That that will add Additional levels of capital then what we've seen before without existing investors who continue to support us in terms of due flow

[00:49:07] We're seeing views. We're just not happy with the pricing So at this point in time in terms of balance sheet application. We are still using it But we use it to do credit type use We like the credit exposure because many of this we are quite prepared to I mean Of course, we hope that the People that we lend money to they will pay but otherwise We are quite happy to own the asset But that's not the intention because we really want to grow the credit business The I mean the big picture is this right we are seeing high interest rates banks essentially withdrawing in many of the developed markets the ability to provide financing and I think that provides a very interesting

[00:49:53] window for us to really build out the credit business and the credit platform We have a credit teams in Australia in Hong Kong in China in India I think looking to really view a Pandation platform during the next few years That's something that we really want to be able to do at this point in time so that will be the focus for the next few months But if they are good views, we are quite prepared to To buy I mean to use balance sheet. We need to be able to deliver Very high returns because of capital so high Why don't I think the question on so bana someone was going to ask it so I thought you probably want to go first so a few General points to make and then one about us as a sponsor. I think so the first point if you

[00:50:44] Look at other read markets if most of us are students of other read markets. I think the there's a general process of maturation that read markets undergo and Internalization is one option for reads to pursue so we've seen this happen before if you think this happened in Australia We've seen this happen in the US And it's happened before and Singapore actually so the subanna is not the first so I think that's we accept it It's a it's an option that reads unit holders read managers may deploy a lot of Reports a lot of studies have been put out to ascertain as to whether the internal models better and all the external models better And I think it's safe to say there is no conclusive evidence either way

[00:51:32] You can make an argument for both sides which is probably why in most mature read markets You have instances of internal managers and you have instances of external managers that do well and that don't do well Which probably leads me to the conclusion where it ultimately goes back to the performance of the read The performance of the manager and if there is a sponsor What is the role of the sponsor in ensuring or determining or playing a key role in the success of the Performance and that is goes back to our position as sponsor and it's a position We take incredibly seriously right? If you look back and We alluded to this earlier the track record of our reads is something we are rightfully proud of I think

[00:52:23] we Take every investment decision Incredibly seriously We can I can share with you that there have been many instances Where we have pulled back from doing deals With our read managers Because we didn't feel it was the right thing or the right time to do and this involves sponsor deals so It to me fundamentally will go back to the role that we see ourselves and the role that we can play for our reads We are happy to defend that if unit holders want to ask us about how do we see The role as sponsor the responsibilities that we take seriously. I think we are Very happy to defend that in front of it. I mean We will look point to the track record of all of our reads as testimony to that now so

[00:53:13] Good luck to Sabana Sabana is specifically has Interesting history as well. All right. We all know that and so it could also be down to a specific case of this particular Dealing with circumstances that are unique to itself So I hope the answers your question. Just just to add on to to Andrew's point. I think it goes back to what fundamentally is the Vision and the responsibility for CRI I mentioned about you know being able to deliver consistent high quality earnings for unit holders for investors for the LP's so being sponsors for the various reads and I mean we are we don't own three five percent. We generally own average 20% or more in the various reviews

[00:54:04] So our fate is very much tied to the performance of the other unit holders. That's point number one and you know for major transactions when we undertook the merger between The then-esque at residence trust and the Sanders hospitality trust We feel that it was important to put the two vehicle together first and foremost because there was a conflicting mandate And we believe that that was strengthened the balance sheet and if we didn't do it during that time I think if just a Sanders hospitality trust on its own During the covid will be very very difficult for them We did it and we waived the fees. I mean not just simply because we are doing it just because we wanted to end the fees We wait if I'm not wrong if I don't remember wrongly. It's about 50% of the fees wave

[00:54:54] And subsequently we did a merger between CCT and CMT to create an integrated Commercial trust Which Tony is running we did it during covid Right, I mean there was a hundred million dollars worth of fees which we totally waive And why do we do that because we believe that at that point in time retail Was you know, there was challenges in terms of e-commerce nobody knew exactly how things were How things were good was going to unfold Then office and as ideally office there was a war from home fears But when you put the two portfolio together you look at the performance the underlying resilience of CICT today Of the Singapore assets and we did that we waived the fees is hundred million dollars worth of fees

[00:55:43] I mean it's a big amount But we did it because we believe it was in the best interest of the unit holders for both CCT and CMT So I think if we are prepared to be responsible sponsors and Undertaker action and be prepared to put the money Where our mouth is I think that long longevity in terms of relationship becomes important you build stress over time Yeah, thanks for that. I think I guess we'll still find out People's cost debt if you don't have a very strong sponsor behind you Okay, thank you. Um, go lie. You go next I think thanks for the presentation. Okay, so you could I need to ask uses

[00:56:30] With the restructuring of CLI fee income is a very important part of it So if there is a conflict between CLI and your REIT and Read the DPO growth Where is your interest? I mean capital and it's been a long-term sponsor of the REIT for many many years So I mean today if we need to do another merger say for The CCT and CMT and the same condition. I don't believe we would take a position that's going to be different Um, you know if you if CLI in the or capital and days We have taken the same decision because if that's what we believe

[00:57:16] It's the right decision. That's something that we will do But I think we have still be on a case by case basis Contaxis is important the market conditions are important And what is ultimately the value that we can create to the unit holders becomes important In good life the conflict is Perceived actually is shouldn't be a conflict in the long term. There's no conflict We own 20% and our REIT's DPO effects us directly if we Take a short term view to earn an acquisition fee because we push an asset down that It's not healthy for the REIT's first of all It is judged on independently. We have no say in the ability for the REIT to acquire that right?

[00:58:02] So we are putting ourselves up in a position where it's very vulnerable and we would be Seen to have acted negatively by independent unit holders for which we have no control and I think one of again going back to Melvin's question one of the strengths of the S3 market and the ecosystem is the legislation that sits behind it and Safe got the interest of minority unit holders and I think this is something that actually In a way differentiates the S3 market from many other markets right sponsors Perception of sponsors disproportionate control or influence actually is mitigated to a great extent Anything that happens between sponsor and REIT is essentially happens without the direct influence of the sponsor The unit holders the independent unit holders decide

[00:58:50] So if we do you know if we do something that is contrary to the benefit of the REIT We may win in the short term But lose in the long term and I think If you look at us and you judge us by a track record that is not what we are about so I don't actually see a conflict of interest The other thing to add is that For for some of you. I mean the the the people who are doing the deals at the REIT level or at the funds level When you negotiate with the banks actually the Capital and franchise does make a difference in terms of the The pricing I mean you can talk to the banks. I mean the being responsible sponsor being Sponsors that stand behind

[00:59:35] The vehicle does make a difference The other question falling from that is I mean you have pared down some of your stakes in some of the REITs we symbol class SLS and I think CICT last year. So would you would you increase that stake to defend it in the event of something like this big becoming more widespread in the case of We are publicly communicated that we will do we'll keep about 20 to 25 percent stakes in our REITs So I don't think that's going to change because we do believe that you do need a certain skin In the game to show that there is alignment. I think anything too low. It's not going to show the alignment Then you know the investors who start to think are you really

[01:00:23] I mean For the purpose of Let's say we want to drive super high ROE the best thing to do is to make sure that there's no stake Then you know that you just collect 100% on the fees But then really all the unit holders will be thinking everything that you're doing. Are you doing it in the best interest? So we do need to make sure that you know whatever that we are buying for the from the perspective of the REITs You know in terms of dpu the dpu accretion Does make a difference to to see our eye and we need to be able to account to the CRI investors as well Yeah Okay, thank you will have Brandon from CT and I'll go over to this side after Brandon Hi, my name is you gonna team. I'll just a few questions the first one would be on China

[01:01:16] I just want to get your thoughts on I think CRI strategy here over the next couple of years. I mean I think China is it's in a very different situation today and I want to understand What's what's your strategy in your base case scenario and in your worst case? scenario That's my first question and the second question would be on India I think you you talk quite a bit on on this geography this time brown is is there a certain target? AUM exposure they are looking at and I think looking at The number of equity funds that have an exiting do you think this is the right time to further accelerate your position here? Thanks I must say that the questions that you asked are things that we discussed in our board room

[01:02:04] In fact, it was we had heavy discussions how board members yesterday on as I clear these two markets Uh The China is a big country. So I mean to be honest when I read the deflationary numbers that China reported it was To be honest a little bit alarming But I think the important thing is to look at it whether it is something that's going to be ongoing and whether it cuts across the whole China because China is big and if you take a step back really capital CRI investments into China really focus on the tier one cities the key provincial cities where there's strong urbanization strong student growth In terms of business activity at least in the in the I was saying the last 20 years

[01:02:55] The there are concerns around China You know whether What is the impact on fdi Demographics or these are big questions. I probably don't have an answer for you today But I personally think that China given its 1.4 billion population if we stay focused on Investing in the few key markets where we have strong operating capability strong execution Capability strong demand if you look at the shopping malls that we have today I mean we are still able to Crip up in terms of the occupancy. I must say that the rents Reversion is lower than our underwriting because we had assumed That the recovering was much stronger

[01:03:43] So I do think that we can still have the ability to execute. It's just that going forward We need to think through what does it mean in terms of the asset classes in terms of that Where else should you be expanding in China? That's something that we are still thinking about. I don't have an answer yet But you can see that From a few years ago we started on the strategy of playing using a lot more Chinese capital for China We started the we make the decision to raise a domestic room in be in 2021 we raise about today. We raised about 40 billion room in be There's still quite a lot of Attraction that's ongoing of course. We are exploring seaweeds

[01:04:30] I mean it's something that we are still exploring their complications, you know seaweed itself is it's not so easy because First and foremost you cannot be the The fund manager you don't you don't have the public fund management license. That's point number one The second thing that happens for seaweed is whenever for any asset that gets recycled into the seaweeds 90% of the proceeds Have to be reinvested whether it's for development or for asset enhancement work So there are these things that we need to think through the implications although As what the same mentioned earlier Seaweed even though it's starting out. I think it's an interesting vehicle for us to look at as potential asset recycling platform I mean if you can create

[01:05:17] in my own view domestic Reming be whether it's on the private or on the seaweed site that can still buy Have a very competitive course of capital Then I believe that you know for whatever Value at type of strategies that we do with offshore investors There are logical exits for many of these investors and today Because we have been in China for so long Right and when you're some of the other foreign players are starting to withdraw You have a people who feel comfortable domestic capital feeling comfortable to put capital with us Because of our reputation because we have been doing things in the proper manner governance financing

[01:06:04] We need to know how to play to that advantage When people are all withdrawing how do you play that to maximize that advantage and the capability If you do it right you can continue to manage a lot of assets deliver returns and still be able to Collecting come from domestic capital. So that's how I would say about the China Aspect I mean of course unless we think that China is going to go through serious Down term which I at least in the planning scenario. We don't think so. I mean My own view is that for every government whether it's the Chinese government or any democratic government Economic progress is important for the legitimacy of every government and I personally don't see why any government

[01:06:52] We want to do anything to to run down the economy. That's my view On India I've been pressuring the San Jiv and his team in terms of driving a lot more growth in India We have been there since 2004 business parks Logistics more recently data centers Marseille that we have been having a lot of requests from foreign investors But wanting to do more in India as a diversification player from China The thing about India is that you know you we have a huge Lambbang and in terms of a square footage of buildings that we manage but the rents are generally quite quite low. It's a dollar. I mean generally

[01:07:41] So you know that the capital value in India is low So even though you can buy a lot of land and you do develop industrial time to to play So there are other things that we are looking at we'll share with you when we are more ready But India is definitely a key area of focus for growth for us Yeah Maybe just to add to what she could mention just particularly on China I think and she can cover really you know there are three things we're doing in both scenarios for us The first is domestic for domestic so whether the economy is up or down We believe there is a play in China for us to raise renmin people renmin pius I think the second is no matter what there are foreign investors who are still interested in China as evidence from our China special situations and our China data center fund is just finding the right product

[01:08:29] And we can still grow in those areas Making sure that our product fits what some investors are looking for And then the third thing just to highlight one of the other things for us are China is similar to other markets But more so for China is capital recycling for us Historically our stakes in a lot of China Joint ventures or efforts has been more closer to the 50% range Think no matter what however the scenarios plan out the intention for us is to reduce those stakes Similar to what we do in all the other markets right where we come down to 10 to 20% So for China, it will just become more meaningful just given the size of our presence there We may end up redeploying it into other funds in China if that grows but that component of recycling Our assets there will continue Thanks so much Don't you have a question? Hi, this is

[01:09:23] You know so long term target and timeline they can do achieve that I Guess that one is me So you know longer term our outreach target has always been to get to a double digit number and for us to get to a double digit number That requires two things it requires us to lighten our balance sheet And it requires us at least of the next few years to see more significant portfolio gains to get us to Above that number over the last couple of years We've been 8.6% then we came down to 5.5% last year because it was more challenging If you look at us on a sort of a rolling last 12 months, we're just an offer 5% We should see some pickup if we can see portfolio gain second half of the year But to get to that double digit will likely be at least a two to three year journey for us

[01:10:10] And it would require us to lighten up Really the assets we have on balance sheet and really see an improvement in terms of performance fees and growth on that fee business Thank you Second question is can you share your thoughts on cascading opportunities within cascading? cascading is Entity that is owned by a separate consortium So I must say that we as a CRI we constantly look at all opportunities in the market So whether there's any possible transaction or depends on whether they use their equity very make sense and whether we can get Agreement between buy-in sell so that's all I can see at this point in time

[01:11:01] Thank you Hi, good morning. I'm Jesse from the business times congregants on your results especially from the lodging business So I have two questions today The first is about a sender's read So how is the outlook like for high tech business parts? Iran starting to soften as some tech companies reduce the space they're leasing and my second question I've asked this but we work as like a major tenant for CICT and I'm sure you guys are aware of the news What is management's view on this and do we know whether we work might be in the rears? Thank you so much

[01:11:47] Thank you First question cannot invite William to answer the answer and question Tony since the two of you are here We got a mic to William. Hi good morning. I didn't know that I'll answer questions Excited time everything The numbers that we have shown has shown positive rent a reversion Those are very strong numbers and if you follow our results We have actually improved our guidance From a low-single for missing a digit to high-single digit positive inventory version For business part as your second part of question talks about the tech Officers or tenants we don't see a huge impact on us

[01:12:38] Given the fact that the leases there's no pre-term initial rights So if there's any requirements or their own needs to do sub leasing they will do it on their own But just recap all these require our approval including JDC's approval We don't see a huge impact on that coming up from the tech tenants Tony I'll soon have expected having to speak here next time I tell my everything So I think the news in the we always nothing new It probably they track the news floor We will see sure it's been well-published in the written For for quite a long period of time I mean as a very active asset manager

[01:13:26] We constantly make sure that we are in a position to ring fence out risk If need to we Just step in to ask this is part and personal how day-to-day job is a BA you to ask No, it's that needs a second largest tenant in a portfolio But I think currently we were able to say that they're doing a cloud gain second-four But if we need to with done before we just have to make sure that we activate our Conticiency plan we have in place and we know how the market is functioning Singapore We know the tenants well You can use three-thirds one some for example, which is the idea of it quite nicely So to us is a

[01:14:11] BA you I don't see any issue Maybe I give just some color around Singapore meaning the the world in the world of great uncertainty Joe political environment You know there's a consensus around all the banking crisis in Europe Singapore actually benefited from all this uncertainty around the world During Covid I mean for those of you who remember you know we feel great work of our Port authorities and lay who used to be from our maritime port authority cab our ports open Make sure that we are critical not in the supply chain and That was a very

[01:15:00] Important decision made by the Singapore government and today you find that many of the high tech Manufacturers Continue to want to look to put their supply chain on high tech manufacturing in Singapore on near Singapore Because they are concerned about supply chain dislocation and Singapore plays a keynote in keeping the global supply chain open So that's point number one The point number two is with all the uncertainty around the world We see so many family offices coming to Singapore I mean the new family offices. I think we don't even know what is the number today But all those people working in the banks you look at other aircraft profits. It's just I mean it's good for the Singapore Bank's but you know you can just see the flows of the capital coming to Singapore

[01:15:50] Family offices people looking for homes people looking for offices so the demand is there Of course, you know, there's a lot of hard work by the team on the ground Chris Chong and his team Continuously looking at Making sure that how you reposition the assets to continue to attract Tenants I think that that plays a big part There's another element here. We do see a number of companies moving you know for Chinese companies that Who well they always wanted to expand overseas whether to Europe or to US of course today Maybe a direct Expansion into Europe and US maybe a bit more challenging so some of them are looking to set up a base in Singapore You know to localize the business here recruit locally use local technology

[01:16:41] You know to build the local teams and that's why you start to see a lot of demand for for office for industrial Spaces even for retail products Coming to Singapore many of you started to see lacking coffee Appearing and when they decide to Come to Singapore you start to you walk almost every corner you start to see lacking coffee So I just want to highlight that I mean Singapore It's actually benefiting from from some of these major trends And I mean that's why Patricia keeps getting from calls on various people looking to acquire assets in Singapore Yeah, so just a big picture on The opportunity for forcing a poll Here we have dry Oh, come on

[01:17:33] Thank you. Joy from HSB. You have a few questions first. She can just follow up. You mentioned about credit Is this using your own balance you do offer credit or this is purely credit fund We It's important that when we want to start something new we are prepared to put the money where our office So we pull a balance sheet to work built up the business And we start to talk to investors if investors are keen to come in and come in and come in We're quite happy with the returns And I think true building up the track record We will be able to build up their credit funds because there are investors who are interested in the credit space But if you have not built up their credit record to be able to raise the funds, I mean people start to think I mean I mean, where is your credit record? Yeah, how quickly do you think you can scale this up and to start raising funds?

[01:18:22] Patrick you want to I better get them to answer so that they can own the outcome Thanks for the question. We are we are looking to scale up an Australian program this calendar year We're actively speaking to investors After that these loans are fairly short duration and we'll get the second program out in the market I think join the key is that we have a balance sheet So it's an option a strategic option for us as it is for all products So if we need to see it we can see it obviously if you don't have to then all's the better I guess just to follow up on that does that also mean all the deals that you see in the market from equity perspective is not attractive

[01:19:09] And even for markets like China No, no, that's not that's not true. I mean, it's just there is a credit opportunity. We will build it up Equity deals unless we can see a interesting Prize that we are prepared to buy then we just One one proceed with the transaction. Yeah, and just specifically on China deal-makings There are lots of portfolio speak put on markets. I'm sure if you look at it Could you share a little bit you know more about Why are you walking away from some of the young do you want to comment on this point? Thanks, you can Can you hear me? Yeah, so thanks. Thanks for the question. Yes, we see a lot of

[01:19:55] portfolios put up in the market As I'm going back to what you can say we were very disciplined We are not going to rush into any views some of these portfolios come from companies Currently in some form of distress. So it does take time to unwind or to I saw a ring fence out this risk at the end of the day. We will Take the opportunities and we will try to match it with capital sources Back to your question on credit. There are credit opportunities in China. They're also special situations in China There will always be a certain product that a certain Group of capital providers like it's all about matching risk and

[01:20:42] The returns up so China. Yes, there will be opportunities. Yes, they are portfolios. Yes. We are all evaluating and We in the second half. I think we will do both credit use as well as special situations Okay, just one last question for me on lodging I think this is the first half that lodging is the biggest contributor to e-bada Do you think that You know this business can grow to a size which it can potentially stand by itself? Just to clarify what do you mean by stand by itself? It's already standing by itself just to clarify so as in you know It can potentially become a You know sort of a separate entities because it's or it's currently a substantial part of so yeah

[01:21:32] So just to clarify your question is whether it should be you should be what separately listed Would you consider so so the big question is this right when you seek listing? I mean the idea is you need to seek capital for its growth If there is not capital constraint We can get capital to fund its growth through private funds Is delivering strong income and if the value The fee income from the lodging business gets reflected in the valuation of the listed entity and the question is whether we need to do that. I wouldn't say no But I think there are many questions That we need to think through whether it makes sense I mean

[01:22:17] I'm not sure what I mentioned to you before. I mean many many many years ago when I was running the escort business The question is about another ROE was So low why shouldn't why shouldn't capital insult the business But you know to invest in the business it takes time I mean to build the fee income to reduce the balance sheet and I mean I when I used to explain you know it's every time you sign management contract is a 20 years Management contract the fee will flow through it flows through very very nicely and actually what happened during covid and last few years And if you track what is being articulated by me by the major hospitality companies Many of them want to move Seriously into the standard state space

[01:23:05] Why? Because it's not easy to recruit people to work in the hotels and the FMB industry globally And the service apartment business the business that Kevin is running. It's very efficient in terms of the manpower typically even for Askebrand that service apartment The staff to room ratio is about 0.3 That's at least based on my recollection that they used to be the numbers And some as please roll point do something and sitterdings is lower and live product or clothing is even lower That's why you can achieve very very strong healthy margins as compared to many of the hospitality products At least I know in some markets where it's difficult to recruit

[01:23:52] People to work in a major hotels to support the rooms that they need housekeeping and the conference facilities Many of them have to shut down the rooms. They rather operate fewer rooms Just simply because they cannot cope with that. So actually the standard space that Kevin is into the it's actually a nice niche It's unique. It's a the only I would say a global A standard state product. I mean today for anybody that wants to start this business It's gonna take time to build it up to the scale where where capital and it's build up today Yeah, so Kevin you want to share a bit more color. I think you Thank you

[01:24:39] We've got our member from the media. I remember welcome back to you Hi, thanks for the presentation. I'm Selena from Bloom but news I just wanted to ask a few questions about China based on what you guys shared just now So you said that foreign investors are still very interested I'm curious how concerned are they about you know the store the next vector recovery What do they find most investable and then it sounds from your end? What are some areas of expansion that you're considering all looking into? Thank you I'll just highlight a few key points. I like the sound to do the elaboration I think there are pockets of investors

[01:25:25] I mean sound the developed country investors if you can say if you have read in the papers generally There are people who are concerned around China for geopolitics and the slowing economy But there's also a group of investors that like the contrarian play They like the fact that China is the second largest economy There are pockets of opportunities where people can deploy invest. I think we need to be Make sure that the sectors that we invest in in line with the broader policy Policy supported sectors. I think that's roughly the key teams that we will look at and maybe I get the sound to To share more in terms of his responses to them Thanks for the question. So yeah

[01:26:12] From from any investors perspective Not just those that look at China You will look for profitability. So if you view that the outlook of the market Gives you that opportunity to make money. You will be better interested for China itself Many investors are worried over the shorter term issues But they recognize that it's a large market. It is still urbanizing So there are still a lot of opportunities. We see investors who are not yet invested in China they tend to A double wait and see but those were already Invested in China and some of them are also entrenched in China There is this willingness to look for the so they are also long China as as you say

[01:27:00] Joe politics will always be there Currently, I think that investors are just trying to stay out of sensitive sectors which potentially could be a bit more problematic but in terms of real estate which is not Policy sensitive. I think there are a lot of opportunities especially in the arena of Special situations that but the assets are fine right just that the Owners currently experience a bit of a Cash-rotypical tease or the need to monetize for other reasons So so this space the real estate space they were in we continue to see investors who are familiar with China wanting to deploy more But naturally they are a bit more cautious that any other days all of our exits One of the competitive advantages that we have is that we are able to to play with

[01:27:52] scenarios which means that we can help Foreign investors invest and we will give them credible exit option Nalities. I think that is very key. You must stop there The the point not to forget is I mean China's huge population. I mean just look at the insurance sector The number of insurance policies that they sell on a year on your basis and the insurance companies Needing to match the liabilities with assets And sometimes the complex deals for regulatory reasons. They are not able to do if you're able to take over some of these assets fix it Regularize it drive up the occupancy then you have you find a natural tickle He goes so I mean you will see some of these things being executed by by the teams on the ground

[01:28:41] And I will be happy to share when things are more more eddy Yeah, so I mean just just imagine the number of people I mean people are getting Older there's a big meter class and people are buying insurance and Those pools of capital needs to be deployed Just one quick follow-up. Thanks for that any guidance on the outlook for how you're China portfolio will perform in the second half This is yeah Um as I shared earlier doing my presentation. I think our on the operating side. We were certainly outperformed last year in terms of I think numbers we should Trade up and then we are going to try and match our pre-COVID numbers

[01:29:29] Eventually law so so that's on the operating side on the fundraising side. We again We still have institutional investors with us There are long China so we have raised 817 billion so far for C-COP and I am quietly confident I'm going to continue to put on two or three more Reming B-funks and in terms of Ascere recycling while activities have been low in the first half of the year Again, just watch out for this space. We will be able to execute a few of our plans second half of the year That should be in the pipeline as well. Thank you Well, we served the last question for terence Thanks I have a question for this young as well back to China

[01:30:18] It's related to the prior question How negative is the China and retail rental reversions in the first half and could you also share where retail sales are as a percentage of 2019 levels and also what kind of occupancy costs we are looking at Currently versus pre-COVID levels Okay, retail sales right now As I shared earlier, I think with your sales We are basically back to 2019 levels No, wonderful falls about 20% lower than 2019 levels which we typically refer to as pre-COVID Our retail sales on per square meter basis has actually come up to 2019 levels Roughly around 1500 going below, you know, if you definitely do that

[01:31:05] In terms of I think occupancy cost I think occupancy costs We have seen during the COVID years A trend that Above maybe 20% yeah, that's typically where we are But we have this year for first half. Okay, we are seeing it come back down to normal levels So I think that that's also something that has regular rights. Yeah, I hope that answers the question The retail rental reversion that is negative Okay, so rental reversions given the last three years has been COVID right so we were tracking same mid-teens negative Okay, for our whole better part of last year and early part this year

[01:31:50] But we have actually improved to high singles high singles and given the Three COVID years where we have been signing lower rents moving forward The rental reversions that will come in the year 2024 2025 unlike it to become positive. So that's our anticipation And for China new economy, it's a now positive rental reversion But some of your peers and I believe even CLCT is looking at possible negative double digits Would this be a similar look for the portfolio? No, so so for new economy assets right we're largely talking about business parts. That's our we go portfolio business parts goes back to Companies that are investing in China and there is that confidence trap businesses are a bit more conservative

[01:32:40] So for us we see more cautious business expansion plans Okay, but our rental reversions remain positive for our new economy asset Our occupancy is not actually come down. It's okay. Help stable So our outlook is that with more efforts by the government to do investment promotions So we've seen so many delegations from China come to Singapore trying to attract Promotions right investments are into China when the FBI stabilizes and it starts to climb again It will benefit our new economy asset classes. We do not see the rental reversions Going into the negative territory at least from from our projects. I Got it. Thank you very much Okay, thank you Terrence Before we end maybe I'll invite Chikun some key takeaways from you

[01:33:30] There's a thank you all for for coming and for all the support as Always just want to assure you that we are working extremely hard Simon and his team is on the road a lot to to continue with lead to raise money from Investors as well and we'll continue to look for good use and make sure that we do good for the CLI Investors. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you Thanks all of you for coming today The refreshments outside. Please help yourself and thanks our viewers online We'll see you next time actually for year 2023 in February next year take care